Q Financial Results November 14, 2013

Transcription

1 Q Financial Results November 14, 2013 Michael Ansley President, CEO & Board Chairman David G. Burke Chief Financial Officer & Treasurer

2 Safe Harbor Statement The information made available in this presentation contains forward-looking statements which reflect the Company s current view of future events, results of operations, cash flows, performance, business prospects and opportunities. Wherever used, the words "anticipate," "believe," "expect," "intend," "plan," "project," "will continue," "will likely result," "may," and similar expressions identify forward-looking statements as such term is defined in the Securities Exchange Act of Any such forward-looking statements are subject to risks and uncertainties and the Company's actual growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities could differ materially from historical results or current expectations. Some of these risks include, without limitation, the impact of economic and industry conditions, competition, food and drug safety issues, store expansion and remodeling, labor relations issues, costs of providing employee benefits, regulatory matters, legal and administrative proceedings, information technology, security, severe weather, natural disasters, accounting matters, other risk factors relating to our business or industry and other risks detailed from time to time in the Securities and Exchange Commission filings of DRH. Forward-looking statements contained herein speak only as of the date made and, thus, DRH undertakes no obligation to update or publicly announce the revision of any of the forward-looking statements contained herein to reflect new information, future events, 2012 by Columbus developments McKinnon Corp. or changed circumstances or for any other reason. 2

3 Executing our Growth Strategy ($ in millions) Quarterly Revenue $16.8 $26.4 Q revenue up $9.6 mm, or 56.5% 20 new restaurants over the twelve month period ended Sep 29, 2013 Solid consolidated comparable store growth of 3.7% in Q Traffic accounted for 250 basis points Q Q Year-to-Date Revenue $80.4 $51.3 Q Q Two years comparable sales growth of 11.2% On track to open 10 restaurants in 2013 Opened six restaurants to date Two third quarter openings (Traverse City, MI and Avon, IN) Relocated Lincoln Park BWW New units exceeding our expectations Q Adjusted EBITDA nearly doubled yearover-year to $3.0 mm; Up 81.9% year-to-date* * See supplemental information for EBITDA reconciliation 3

4 Executing our Growth Strategy Revenue on track when adjusted for timing of openings Local permitting and utility issues impacted schedule Majority of Bagger Dave s performing well Weekly sales records: Avon, IN and Terre Haute, IN Four of 15 corporate-owned locations developing slow Real estate, culture and breaking into new markets Expect to achieve target restaurant-level EBITDA margins of 20%+ over long term Leverage BWW experience to drive Bagger Dave s success More sophisticated processes Focused on employees and customer service Right strategy to continue growth 4

5 Restaurant Operating Costs ($ in millions, % of revenue) Food, Beverage and Packaging Compensation $5.2 $7.8 $4.2 $ % 29.4% 24.8% 26.4% Q Q Improved 120 basis points as a percent of total revenue with favorable chicken wing pricing Chicken wings expected to continue to soften moderately through remainder of 2013 Q Q Increased staffing consistent with new restaurant locations As a percent of revenue, up due to some temporary labor inefficiencies related to accelerated growth Expect to improve over time and with scale 5

6 Operating Expenses ($ in millions, % of revenue) General & Administrative Pre-Opening Costs $1.6 $1.6 $0.6 $ % 5.9% Q Q basis point improvement from cost control and operating leverage Less marketing expense due to timing Q Q Reflects recent openings, relocation, and new locations under construction Averaging $225 thousand per new location 6

7 Adjusted EBITDA & Margin* ($ in millions, % of revenue) Adjusted EBITDA Restaurant-Level EBITDA 9.0% $ % $14.5 $5.3 $9.6 $1.5 $ % 11.5% 10.3% 11.9% $3.1 $ % 17.4% 18.7% 18.0% Q3 12 Q3 13 Q3 12 YTD Q3 13 YTD Q3 12 Q3 13 Q3 12 YTD Q3 13 YTD Third quarter nearly doubled yearover-year; 250 basis point margin improvement Third quarter increased 47.0% over Q3 2012; Up 51.2% on year-todate basis Increased 81.9% year-to-date * See supplemental information for EBITDA reconciliation 7

8 Flexibility for Growth ($ in millions) Cash, Cash Equivalents and Investments Capital Expenditures $17.3 $20.5 $7.2 $2.7 12/30/2012 9/29/2013 9/23/12 YTD 9/29/13 YTD Stockholders' Equity Cash balance reflects April follow-on $34.0 offering $1.5 12/30/2012 9/29/2013 CapEx focused on new restaurant development, refreshenings and technology Total Debt to Equity was 1.2x compared with 30.0x at year-end 8

9 2013 Guidance & 2014 Outlook Fiscal 2013 Guidance* Revenue Restaurant-Level EBITDA Adjusted EBITDA Capital Expenditures Around $110.0 million $20.0 million to $20.5 million $13.0 million to $13.5 million Up to $27.0 million Fiscal 2014 Outlook* Revenue $127.0 million to $133.0 million Restaurant Unit Growth +11 restaurants / +20% * Guidance provided on 11/13/2013 9

10 Poised for Continued Growth in 2014 Enhancing our Bagger Dave s Brand Ending 2013 Strong On track to open 10 locations, a 22.2% unit volume increase 2014 Planning Expecting eight Bagger Dave s (focused in MI & IN) Three new Buffalo Wild Wings in addition to two relocations and two remodels 2014 locations mostly identified Targeting A locations Regional draw with strong traffic drivers Targeting end caps or standalone Marketing initiatives specific to locations not meeting expectations Improved technology within back of house to drive operational efficiencies 10

11 Poised for Continued Growth in 2014 Enhancing our Bagger Dave s Brand Enhanced menu (Feb 2014) New 8 oz. patty with prime rib blend cooked to desired temp Hormone & antibiotic free chicken Pretzel bun Artichoke dip Enhanced salads Improving shareables Improving décor Enhancing bar experience Upgraded aesthetics Cost-neutral activity Roll-out of loyalty program app with mobile payment available in early

12 Bagger Dave s Exterior (2014) 12

13 Q Financial Results November 14,

14 Supplemental Information 14

15 EBITDA Reconciliation Three Months Ended Nine Months Ended September 29 September 23 September 29 September Net income attributable to DRH, as reported $ 69,810 $ 241,196 $ 311,847 $ 803,107 + Income tax provision (benefit) (14,444) (2,158) 52, ,387 + Change in fair value of derivative instruments ,361 + Interest expense 320, ,919 1,375, ,563 + Other income, net (68,415) (314,421) (92,958) (362,160) + Loss on disposal of property and equipment 22,970 23,374 83,711 29,977 + Depreciation and amortization 2,070,841 1,000,191 5,539,874 2,930,606 + Income attributable to noncontrolling interest - 16,314-95,040 EBITDA $ 2,401,560 $1,242,415 $7,270,306 $4,716,881 + Pre-opening costs 639, ,390 2,036, ,876 + Non-recurring expenses ,000 - Adjusted EBITDA $ 3,041,058 $1,523,805 $9,577,328 $5,264,757 Adjusted EBITDA margin (%) 11.5% 9.0% 11.9% 10.3% + Adjusted General and administrative 1,558,924 1,606,495 4,927,879 4,328, by Columbus McKinnon Corp. Restaurant Level EBITDA $ 4,599,982 $3,130,300 $14,505,207 $9,593,312 Restaurant Level EBITDA margin (%) 17.4% 18.6% 18.0% 18.7% * See next slide for footnotes and references regarding EBITDA 15

16 EBITDA Reconciliation Restaurant-Level EBITDA represents net income (loss) attributable to DRH plus the sum of non-restaurant specific general and administrative expenses, restaurant pre-opening costs, loss on property and equipment disposals, the change in fair value of derivative instruments, depreciation and amortization, other income and expenses, interest, taxes, income attributable to noncontrolling interest and non-recurring acquisition related expenses in Q and non-recurring expenses related to the NASDAQ listing in Q Adjusted EBITDA represents net income (loss) attributable to DRH plus the sum of restaurant pre-opening costs, loss on property and equipment disposals, the change in fair value of derivative instruments, depreciation and amortization, other income and expenses, interest, taxes, income attributable to noncontrolling interest, and non-recurring expenses. We are presenting Restaurant-Level EBITDA and Adjusted EBITDA, which are not presented in accordance with GAAP, because we believe they provide an additional metric by which to evaluate our operations. When considered together with our GAAP results and the reconciliation to our net income, we believe they provide a more complete understanding of our business than could be obtained absent this disclosure. We use Restaurant-Level EBITDA and Adjusted EBITDA, together with financial measures prepared in accordance with GAAP, such as revenue, income from operations, net income, and cash flows from operations, to assess our historical and prospective operating performance and to enhance the understanding of our core operating performance. Restaurant-Level EBITDA and Adjusted EBITDA are presented because: (i) we believe they are useful measures for investors to assess the operating performance of our business without the effect of non-cash depreciation and amortization expenses; (ii) we believe investors will find these measures useful in assessing our ability to service or incur indebtedness; and (iii) they are used internally as benchmarks to evaluate our operating performance or compare our performance to that of our competitors. Additionally, we present Restaurant-Level EBITDA because it excludes the impact of general and administrative expenses and restaurant pre-opening costs, both which are nonrecurring at the restaurant level. The use of Restaurant-Level EBITDA thereby enables us and our investors to compare our operating performance between periods and to compare our operating performance to the performance of our competitors. The measure is also widely used within the restaurant industry to evaluate restaurant level productivity, efficiency, and performance. The use of Restaurant-Level EBITDA and Adjusted EBITDA as performance measures permits a comparative assessment of our operating performance relative to our performance based on GAAP results, while isolating the effects of some items that vary from period to period without any correlation to core operating performance or that vary widely among similar companies. Companies within our industry exhibit significant variations with respect to capital structure and cost of capital (which affect interest expense and tax rates) and differences in book depreciation of property and equipment (which affect relative depreciation expense), including significant differences in the depreciable lives of similar assets among various companies. Our management team believes that Restaurant-Level EBITDA and Adjusted EBITDA facilitate company-to-company comparisons within our industry by eliminating some of the foregoing variations. Restaurant-Level EBITDA and Adjusted EBITDA are not determined in accordance with GAAP and should not be considered in isolation or as an alternative to net income, income from operations, net cash provided by operating, investing, or financing activities, or other financial statement data presented as indicators of financial performance or liquidity, each as presented in accordance with GAAP. Neither Restaurant-Level EBITDA nor Adjusted EBITDA should be considered as a measure of discretionary cash available to us to invest in the growth of our business. Restaurant-Level EBITDA and Adjusted EBITDA as presented may not be comparable to other similarly titled measures of other companies and our presentation of Restaurant-Level EBITDA and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual items. Our management recognizes that Restaurant-Level EBITDA and Adjusted EBITDA have limitations as analytical financial measures, including the following: Restaurant-Level EBITDA and Adjusted EBITDA do not reflect our current capital expenditures or future requirements for capital expenditures; Restaurant-Level EBITDA and Adjusted EBITDA do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, 2012 associated by Columbus with our McKinnon indebtedness; Corp. Restaurant-Level EBITDA and Adjusted EBITDA do not reflect depreciation and amortization, which are non-cash charges, although the assets being depreciated and amortized will likely have to be replaced in the future, nor do Restaurant-Level EBITDA and Adjusted EBITDA reflect any cash requirements for such replacements; Restaurant-Level EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; Restaurant-Level EBITDA and Adjusted EBITDA do not reflect disposals or other non-recurring income and expenses; Restaurant-Level EBITDA and Adjusted EBITDA do not reflect changes in fair value of derivative instruments; Restaurant-Level EBITDA and Adjusted EBITDA do not reflect restaurant pre-opening costs; and Restaurant-Level EBITDA does not reflect general and administrative expenses. 16