Brazil Fast Food Announces Third Quarter 2012 Results

  Brazil Fast Food Announces Third Quarter 2012 Results

Business Wire

RIO DE JANEIRO -- November 14, 2012

Brazil Fast Food Corp. (OTC Bulletin Board: BOBS) (“Brazil Fast Food”, or the
“the Company”), the second largest fast-food restaurant chain in Brazil with
983 points of sale, operating under (i) the Bob’s brand, (ii) the Yoggi brand,
(iii) KFC and Pizza Hut São Paulo as franchisee of Yum! Brands, and (iv)
Doggis as franchisee of Gastronomia & Negocios S.A. (former Grupo de Empresas
Doggis S.A.), today announced financial results for the third quarter 2012
ended September 30, 2012.

Third Quarter 2012 Highlights

  *System-wide sales totaled R$266.5 million, up 12.5% from the third quarter
    2011
  *Revenue totaled R$60.5 million, in line with R$60.4 million in the third
    quarter 2011
  *Points of sale totaled 983 at September 30, 2012, up from 846 at the end
    of third quarter 2011
  *EBITDA was R$9.0 million, up 27.6% from the third quarter 2011
  *Operating income increased 36.0% year-over-year to R$7.5 million
  *Net income was R$5.9 million, or R$0.73 per basic and diluted share

“During the third quarter we achieved strong growth in EBITDA and net income,
reflecting our continued shift towards a more profitable franchise strategy,”
said Ricardo Figueiredo Bomeny, CEO of Brazil Fast Food Corp. “We believe that
our brand portfolio provides the company with multiple avenues for future
growth and will focus on increasing our market penetration, consumer
recognition, and capital efficiency.”

Third Quarter 2012 Results

System-wide sales grew 12.5% in the third quarter to R$266.5 million, driven
by an increase in the number of franchised points of sale.

Total revenue for the third quarter 2012 was R$60.5 million in line with
R$60.4 million in the third quarter 2011, reflecting a reduction owned and
operated stores in line with the Company’s strategy to increase the focus on
franchise operations. In addition, third quarter 2011 results benefited from
the positive impact of the Rock in Rio concert, while there was no comparable
event in the same period of 2012.

Net restaurant sales for company-owned retail outlets declined 5.9%
year-over-year to R$43.3 million in the third quarter 2012, reflecting a
decrease in net revenues for the Company’s Bob’s and Doggis brand, which was
partially offset by increases in net revenues across the Company’s KFC and
Pizza Hut brands.

Net revenue from franchisees increased 28.0% year-over-year to R$11.3 million,
driven primarily by an increase in number of franchised retail outlets to 916,
up from 781 in the same period a year ago. Other revenue and income totaled
R$5.9 million in the third quarter 2012 up from R$5.6 million in the year ago
period.

Operating expenses declined 3.5% to R$53.0 million in the third quarter 2012
from R$54.9 million in the third quarter of 2011. As a percentage of revenue,
operating costs declined to 87.6% of total revenue in the third quarter of
2012 from 90.0% of total revenue in the same period of 2011.

Operating income for the third quarter of 2012 was R$7.5 million, an increase
of 36.0% from R$5.5 million in the third quarter of 2011. Operating margin in
the third quarter of 2012 improved to 12.4% compared to 9.1% in the same
period of 2011.

EBITDA in the third quarter of 2012 was R$9.0 million, up by 27.6% compared to
R$7.0 million in the third quarter of 2011. EBITDA margin was 14.8% compared
to 11.6% in the comparable period of 2011. Please refer Table No. 5 in this
press release for a reconciliation of EBITDA to its nearest GAAP equivalent.

Interest expense was R$0.3 million in the third quarter of 2012, compared to
interest income of R$0.5 million in the third quarter of 2011.

Net income for the third quarter of 2012 was R$5.9 million, or R$0.73 per
basic and diluted share, as compared to a net loss of R$0.5 million, or R$0.07
per basic and diluted share in the same period of 2011.

Nine Months 2011 Results

For the nine months ended in September 30, 2012, total net revenue was R$176.0
million, up 5.8% from R$166.3 million in the comparable period of 2011.
Operating income was R$18.1 million, up 25.1% from R$14.4 million in the
comparable period in 2011. Operating margin was 10.3% for the nine months
ended September 30, 2012 compared to 8.7% in the comparable period in 2011.
Net income for the nine months ended September 30, 2012 was R$13.0 million, up
78.8% from R$7.0 million in the comparable period in 2011. Basic and diluted
earnings per share were R$1.60 for the nine months ended September 30, 2012
compared to R$0.86 for the nine months ended September 30, 2011.

Financial Condition

As of September 30, 2012, Brazil Fast Food had R$28.4 million in cash and cash
equivalents, up from R$21.4 million as of December 31, 2011. Working capital
was R$22.8million, as compared to R$16.9 million as of the end of 2011. Total
shareholders' equity as of September 30, 2012 was R$53.8 million, compared to
R$41.9 million at the end of 2011.

In the first nine months of 2012, Brazil Fast Food generated net cash flow
from operating activities of R$14.7 million, representing an increase of
33.8%, from R$11.0 million for the comparable period in 2011. The Company used
R$12.9 million in cash towards investment in property and equipment to improve
the Company's retail operations, mainly setting up new owned-and-operated KFC
and Pizza Hut stores, and the acquisition of the Yoggi do Brasil Ltda
(“Yoggi”) franchise network of frozen yogurt in Brazil.

Business Outlook

“We expect to see continued positive trends in the business in our seasonally
strong fourth quarter, as we execute our strategy to grow the number of
franchised outlets and pursue operational efficiencies so as to achieve
profitable operations across each of our brands. We have recently reduced the
number of franchises for the Yoggi brand, due to slowing consumer demand for
frozen yogurt, but we are working to modify the store concept and are
optimistic about its longer-term potential. We believe that quick service
restaurant sector remains very underpenetrated in Brazil and our goal is to
develop leading brands that cater to the tastes of modern Brazilian consumer
so as to lead the growth of the industry,” concluded Mr. Bomeny.

About Brazil Fast Food Corp.

Brazil Fast Food Corp. owns and operates, both directly and through
franchisees, the third largest fast-food restaurant chain in Brazil. The Bob’s
trade name is used by Venbo Comércio de Alimentos Ltda., a subsidiary of
Brazil Fast Food holding company, BFFC do Brasil Participações Ltda (formerly
22N Participações Ltda.). The “KFC” trade name is used by CFK Comércio de
Alimentos Ltda. (formerly Clematis Indústria e Comércio de alimentos e
Participações Ltda.), also a holding company subsidiary. The “Pizza Hut” trade
name is used by Internacional Restaurantes do Brasil (“IRB”), also a 60%
subsidiary of Brazil Fast Food holding company, BFFC do Brasil Participações
Ltda. Recently, Company entered into an agreement with Grupo de Empresas
Doggis S.A (“GED”) to cross-franchise the Bob’s and Doggis brands in Chile and
Brazil, respectively. Brazil Fast Food will control the Doggis master
franchise in Brazil and GED will control the Bob’s master franchise in Chile.

Safe Harbor Statement

This press release contains forward-looking statements within the meanings of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities and Exchange Act of 1934, as amended, and within the meaning of the
safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Such statements involve known or unknown risks, uncertainties and other
factors that may cause the actual results to differ materially from those
expressed or implied by such forward looking statements. For a discussion of
such risks and uncertainties, which could cause actual results to differ from
those contained in the forward-looking statements, see the disclosures in the
Company's filings with the Securities and Exchange Commission, including the
risk factors contained in the Company's most recent annual report on Form 10-K
and quarterly report Form 10-Q filed with the Securities and Exchange
Commission.

                          --FINANCIAL TABLES FOLLOW—

                                                              
                                                                  
BRAZIL FAST FOOD CORP. AND SUBSIDIARIES
Consolidated Balance Sheets – Assets (Unaudited)
(in thousands of Brazilian Reais, except share amounts)
                                                                  
                                                 September, 30   December 31,
                                                  2012            2011
                                                  (unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (note 3)                R$  28,362      R$ 21,357
                                                                             
Inventories                                           2,658          3,985
Accounts receivable
                                                                             
Clients                                               5,861          5,660
Franchisees                                           13,888         12,247
                                                                             
Allowance for doubtful accounts                       (600    )      (801    )
                                                                             
Prepaid expenses                                      1,238          1,500
                                                                             
Advances to suppliers                                 2,108          3,478
                                                                             
Receivables from properties sale (notes 4 and         365            3,523
5)
                                                                             
Other current assets (note 4)                        7,593        4,083   
                                                                     
TOTAL CURRENT ASSETS                                  61,473         55,032
                                                                     
Other receivables and other assets (note 4)           12,907         10,862
                                                                     
                                                                     
Deferred tax asset, net                               6,825          8,378
                                                                     
Goodwill (note 2)                                     2,699          799
                                                                     
Property and equipment, net                           37,604         31,342
                                                                     
Intangible assets, net                                6,145          4,472
                                                                  
TOTAL ASSETS                                      R$  127,653    R$ 110,885 
                                                                     
                                                                     
                                                  September, 30   December 31,
                                                  2012            2011
                                                  (unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
                                                                     
CURRENT LIABILITIES:
Notes payable (note 8)                            R$  12,115      R$ 11,523
                                                                             
Accounts payable and accrued expenses                 9,734          11,608
                                                                             
Payroll and related accruals                          6,656          5,618
Taxes                                                 4,555          5,020
                                                                             
Deferred income tax                                   209            1,262
                                                                             
Current portion of deferred income (note 9)           2,519          1,118
                                                                             
Current portion of contingencies and                  2,075          1,940
reassessed taxes
                                                                             
Other current liabilities                            791          -       
                                                                     
TOTAL CURRENT LIABILITIES                             38,654         38,089
                                                                     
Deferred income, less current portion (note           2,412          4,057
7)
                                                                     
NOTES PAYABLE, less current portion (note 8)          9,306          5,068
                                                                     
CONTINGENCIES AND REASSESSED TAXES, less              17,860         18,215
current portion (note 6)
                                                                     
Other liabilities (note 9)                            1,153          -
                                                                  
                                                                     
TOTAL LIABILITIES                                    69,385       65,429  
                                                                     
SHAREHOLDERS’ EQUITY:
Preferred stock, $.01 par value, 5,000 shares
authorized; no
shares issued                                         -              -
Common stock, $.0001 par value, 12,500,000
shares authorized;
8,472,927 shares issued for both 2012 and
2011; and 8,129,437
                                                                             
shares outstanding for both 2012 and 2011             1              1
Additional paid-in capital                            61,148         61,148
                                                                             
Treasury Stock (343,490 shares)                       (2,060  )      (2,060  )
                                                                             
Accumulated deficit                                   (4,210  )      (16,092 )
                                                                             
Accumulated comprehensive loss                       (1,095  )     (1,128  )
                                                                     
TOTAL SHAREHOLDERS’ EQUITY                           53,784       41,869  
Non-Controlling Interest                             4,484        3,587   
                                                                     
TOTAL EQUITY                                         58,268       45,456  
                                                                  
TOTAL LIABILITIES AND EQUITY                      R$  127,653    R$ 110,885 
                                                                             
                                                                             

                                        
                                             
BRAZIL FAST FOOD CORP. AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
(in thousands of Brazilian Reais, except share amounts)
                                             
                                             Three Months Ended September 30,
                                             2012             2011
                                                             
REVENUES
                                                                             
Net Revenues from Own-operated               R$ 43,304          R$ 46,020
Restaurants
                                                                             
Net Revenues from Franchisees                   11,292             8,816
                                                                             
Revenues from trade Partners                    5,236              4,177
                                                                             
Other Income                                   620            1,380     
TOTAL REVENUES                                 60,452         60,393    
                                                                   
OPERATING COSTS AND EXPENSES
                                                                             
Store Costs and Expenses                        (38,699   )        (40,232   )
                                                                             
Franchise Costs and Expenses                    (3,659    )        (3,032    )
                                                                             
Marketing Expenses                              (1,179    )        (1,200    )
                                                                             
Administrative Expenses                         (8,074    )        (8,939    )
                                                                             
Other Operating Expenses                        (1,132    )        (1,843    )
                                                                             
Net Result of Assets Sold                       (213      )        363
                                                              
TOTAL OPERATING COSTS AND EXPENSES             (52,956   )     (54,883   )
                                                                   
                                                              
OPERATING INCOME                               7,496          5,510     
                                                                   
Interest Income (expenses), net                 (293      )        468
                                                              
                                                                   
NET INCOME BEFORE INCOME TAX                   7,203          5,978     
                                                                   
Income taxes                                   (899      )     (6,137    )
                                                                   
                                                                   
NET INCOME BEFORE NON-CONTROLLING              6,304          (159      )
INTEREST
                                                                   
Net (income) loss attributable to               (380      )        (382      )
non-controlling interest
                                                              
NET INCOME (LOSS) ATTRIBUTABLE TO            R$ 5,924        R$ (541      )
BRAZIL FAST FOOD CORP.
                                                                   
NET INCOME PER COMMON SHARE
                                                                             
BASIC AND DILUTED                            R$ 0.73         R$ (0.07     )
                                                                   
                                                                   
WEIGHTED AVERAGE COMMON
                                                                             
SHARES OUTSTANDING: BASIC AND                   8,129,437          8,129,437
DILUTED
                                                                   
                                                                   

                                          
                                               
BRAZIL FAST FOOD CORP. AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
(in thousands of Brazilian Reais, except share amounts)
                                               
                                               Nine Months Ended September 30,
                                               2012           2011
                                                                   
REVENUES
                                                                             
Net Revenues from Own-operated                 127,167          R$ 124,488
Restaurants
                                                                             
Net Revenues from Franchisees                  30,980              24,250
                                                                             
Net Revenues from Trade Partners               15,974              14,744
                                                                             
Other Income                                   1,922             2,842     
                                                                             
TOTAL REVENUES                                 176,043           166,324   
                                                                   
OPERATING COSTS AND EXPENSES
                                                                             
Store Costs and Expenses                       (116,090   )        (112,314  )
                                                                             
Franchise Costs and Expenses                   (10,467    )        (8,510    )
                                                                             
Marketing Expenses                             (3,074     )        (2,591    )
                                                                             
Administrative Expenses                        (24,317    )        (23,617   )
                                                                             
Other Operating Expenses                       (3,917     )        (5,204    )
                                                                             
Net Result of Assets Sold                      (130       )        335
                                                                 
                                                                             
TOTAL OPERATING COSTS AND EXPENSES             (157,995   )        (151,901  )
                                                                 
OPERATING INCOME                               18,048            14,423    
                                                                   
Interest Income (Expense), net                 (666       )        610
                                                                 
NET INCOME BEFORE INCOME TAX                   17,382            15,033    
                                                                   
Income taxes                                   (3,605     )       (7,329    )
                                                                   
NET INCOME BEFORE NON-CONTROLLING              13,777            7,704     
INTEREST
                                                                   
Net (income) loss attributable to              (806       )        (719      )
non-controlling interest
                                                                 
NET INCOME ATTRIBUTABLE TO BRAZIL FAST         12,971          R$ 6,985     
FOOD CORP.
                                                                   
NET INCOME PER COMMON SHARE
                                                                             
BASIC AND DILUTED                              1.60            R$ 0.86      
                                                                   
                                                                   
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING: BASIC AND DILUTED          8,129,437           8,131,147
                                                                             
                                                                             

                                         
                                               
BRAZIL FAST FOOD CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(in thousands of Brazilian Reais)
                                               
                                               Nine Months Ended September, 30
                                               2012              2011
CASH FLOW FROM OPERATING ACTIVITIES:
NET INCOME BEFORE NON-CONTROLLING              R$  13,777          R$ 7,704
INTEREST
Adjustments to reconcile net income to
cash provided by
(used in) operating activities:
                                                                      
Depreciation and amortization                      5,495              5,329
                                                                             
(Gain) Loss on assets sold, net                    130                (335   )
                                                                             
Deferred income tax                                500                5,054
                                                                      
Changes in assets and liabilities:
(Increase) decrease in:
                                                                             
Accounts receivable                                (2,043   )         (1,281 )
                                                                             
Inventories                                        1,327              (534   )
                                                                             
Prepaid expenses, advances to                      (1,878   )         (2,366 )
suppliers and other current assets
                                                                             
Other assets                                       (2,045   )         (1,337 )
(Decrease) increase in:
                                                                             
Accounts payable and accrued                       (1,874   )         (5,452 )
expenses
                                                                             
Payroll and related accruals                       1,038              1,926
                                                                             
Taxes                                              (465     )         (685   )
                                                                             
Deferred income                                    (244     )         2,643
                                                                             
Contingencies and reassessed taxes                 (220     )         289
                                                                             
Other liabilities                                 1,153            (5     )
                                                                      
CASH FLOWS PROVIDED BY (USED IN)                  14,651           10,950 
OPERATING ACTIVITIES
                                                                      
CASH FLOW FROM INVESTING ACTIVITIES:
                                                                             
                                                                             
Additions to property and                          (12,929  )         (4,239 )
equipment
                                                                             
Proceeds from sale of property,                    2,618              3,795
equipment and intangible assets
                                                                             
Yoggi acquisition (note 2)                         (1,109   )         -
                                                                             
Exchange of shares (notes 2 and 4)                 (1,089   )         -
                                                                             
Acquisition of Company's own                      -                (114   )
shares
                                                                      
CASH FLOWS USED IN INVESTING                      (12,509  )        (558   )
ACTIVITIES
                                                                      
CASH FLOW FROM FINANCING ACTIVITIES:
                                                                             
Non-controlling paid in capital                    -                  871
                                                                             
Net Borrowings (Repayments) under                 4,830            (4,376 )
lines of credit
                                                                      
CASH FLOWS PROVIDED BY (USED IN)                  4,830            (3,505 )
FINANCING ACTIVITIES
                                                                      
EFFECT OF FOREIGN EXCHANGE RATE                   33               (8     )
                                                                      
NET INCREASE IN CASH AND CASH                      7,005              6,879
EQUIVALENTS
                                                                      
CASH AND CASH EQUIVALENTS AT BEGINNING            21,357           16,742 
OF PERIOD
                                                                      
CASH AND CASH EQUIVALENTS AT END OF            R$  28,362         R$ 23,621 
PERIOD
                                                                             
                                                                             

                                         
                                              
BRAZIL FAST FOOD CORP. AND SUBSIDIARIES



RECONCILIATION OF EBITDA TO NET INCOME
                                              
                                              Three Months Ended September 30,
                                              2012             2011
                                                                     
NET INCOME                                    R$   5,924         R$  (541   )
Interest expenses, Monetary and                    293               (468   )
Foreign exchange loss
Income taxes                                       899               6,137
Depreciation and amortization                     1,832            1,884  
EBITDA                                        R$   6,658         R$  7,012  

                                          
                                               
                                               Nine Months Ended September 30,
                                               2012            2011
                                                                     
NET INCOME                                     R$  12,971        R$  6,985
Interest expenses, Monetary and                    666               (610    )
Foreign exchange loss
Income taxes                                       3,605             7,329
Depreciation and amortization                     5,495            5,329   
EBITDA                                         R$  22,737        R$  19,033  
                                                                     
                                                                     

EBITDA represents earnings before net interest expense, income tax provision,
depreciation and amortization. Our management believes EBITDA is useful to
investors because it is frequently used by securities analysts, investors and
other interested parties in evaluating companies in our industry. In addition,
our management believes that EBITDA is useful in evaluating our operating
performance compared to that of other companies in our industry because the
calculation of EBITDA generally eliminates the effects of financing and income
taxes and the accounting effects of capital spending, which items may vary for
different companies for reasons unrelated to overall operating performance. As
a result, our management uses EBITDA as a measure to evaluate the performance
of our business. However, EBITDA is not a recognized measurement under
generally accepted accounting principles, or GAAP, and when analyzing our
operating performance, investors should use EBITDA in addition to, and not as
an alternative for, income from operations and net income, each as determined
in accordance with GAAP. Not all companies use identical calculations, and our
presentation of EBITDA may not be comparable to similarly titled measures of
other companies. Furthermore, EBITDA is not intended to be a measure of free
cash flow for our management’s discretionary use, as it does not consider
certain cash requirements such as a tax and debt service payments.

Contact:

Brazil Fast Food Corp
Ricardo Figueiredo Bomeny, CEO
+1-55-21-2536-7501 (Brazil)
ir@bffc.com.br
www.bffc.com.br
or
CCG Investor Relations Inc.
Crocker Coulson, +1-646-213-1915 (New York)
President
crocker.coulson@ccgir.com
www.ccgir.com
 
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