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Pizza Inn Holdings, Inc. Reports Results for Fourth Quarter and Full Fiscal Year 2013



Pizza Inn Holdings, Inc. Reports Results for Fourth Quarter and Full Fiscal
Year 2013

Fourth Quarter Highlights:

  * Adjusted EBITDA decreased $0.3 million to $0.1 million compared to the
    fourth quarter of fiscal 2012.
  * Net income decreased $0.6 million from the fourth quarter of fiscal 2012
    to a loss of $0.7 million, including impairment expense.
  * The Company continues to invest to grow the Pie Five concept:

    * Company-owned Pie Five restaurant sales increased 51% over the fourth
      quarter of fiscal 2012 to $1.4 million.
    * Three additional Pie Five multi-unit franchise development agreements
      were awarded.
    * Company opened one additional Pie Five Pizza Co. restaurant.

  * Pizza Inn average weekly domestic franchised same store sales decreased
    3.2% compared to fourth quarter of fiscal 2012.
  * Total Company-owned restaurant sales increased 24% over the fourth quarter
    of fiscal 2012 to $2.3 million.
  * Company incurred non-cash impairment expense of $0.8 million.

Fiscal Year 2013 Highlights:

  * Adjusted EBITDA decreased $1.2 million to $0.7 million compared to fiscal
    year 2012.
  * Net income decreased $1.6 million from the prior year to a loss of $1.3
    million, including impairment expense.
  * Total Company-owned restaurant sales increased 35% over prior year to $8.2
    million.
  * Pizza Inn average weekly domestic franchised same store sales decreased
    5.7% compared to prior year.
  * Fiscal year 2013 results include non-cash impairment expense of $0.8
    million and $0.1 million loss on the sale of assets.

THE COLONY, Texas, Sept. 25, 2013 (GLOBE NEWSWIRE) -- Pizza Inn Holdings, Inc.
(Nasdaq:PZZI) today announced results for the fourth fiscal quarter and fiscal
year ended June 30, 2013. Fourth quarter net income decreased to a loss of
$0.7 million compared to a loss of $0.1 million for the same quarter of the
prior fiscal year. The decline in fourth quarter net income as compared to the
prior year quarter was primarily attributable to a non-cash impairment charge
of $0.8 million. The non-cash impairment charge related to two Company-owned
Pizza Inn restaurants, one of which will close in the second quarter of fiscal
2014 when its lease expires, and to one Company-owned Pie Five restaurant that
opened in 2011 and will be relocated to a new site in the second quarter of
fiscal 2014.

"We continued to expand our Pie Five concept with the opening of another
Company-owned restaurant and the opening of our first franchise restaurant
during the fiscal fourth quarter," said Randy Gier, President and Chief
Executive Officer. "We also awarded three additional multi-unit franchise
development agreements during the fourth quarter and another four franchise
development agreements so far in the current quarter, bringing the total
potential development in executed franchise agreements up to 108 Pie Five
restaurants. Two more franchise restaurants have opened in the current quarter
and we expect an acceleration of franchise openings during the remainder of
fiscal 2014. Each of our Pie Five franchisees is expected to have at least one
restaurant open by the end of our current fiscal year ending in June 2014, and
several of our franchisees have already executed leases for their second
restaurants."

Franchisees are typically required to open their first restaurant within six
to nine months of the signing of their development agreement. "It's
encouraging to see the time and energy that has been put into the concept
coming to light as our franchise partners begin to break ground and operate
Pie Five restaurants across the country," added Gier.

Compared to the fourth quarter of fiscal 2012, Company-owned restaurant sales
increased 24% to $2.3 million in the most recent quarter due primarily to new
Pie Five store openings. Noted Gier, "Five of our initial Pie Five
company-owned restaurants have been open more than 18 months. In the
aggregate, these restaurants are performing with positive year over year sales
trends despite one of the stores being negatively impacted by road
construction. Through the first twelve weeks of the current quarter ending in
September, these five stores have same store sales increases of approximately
3%, and approximately 7% excluding the store impacted by road construction."

"We are particularly excited about the performance of our new Pie Five
stores," continued Gier. "In the past eighteen months we have opened seven new
Company-owned Pie Five restaurants. Two of those restaurants are college
campus locations that serve a more captive audience and experience highly
seasonal sales trends. The other five restaurants, including two openings in
the current quarter, represent sites that are our core focus as we move
forward, and each of those five restaurants is generating weekly sales
consistently in excess of the system average. With this success, we will
continue to develop the Dallas-Fort Worth market while also beginning to
develop sites in Houston for our second Company-owned market," added Gier.

The fourth fiscal quarter and fiscal year 2013 had 14 and 53 weeks,
respectively, as compared to 13 and 52 weeks in the prior year periods. Fourth
quarter franchise revenues increased $0.1 million, or 7.6%, as compared to the
prior fiscal year primarily due to increased fees from franchise agreement
renewals and the additional week in fiscal 2013.  Because the franchise
development fees received from Pie Five franchisees are not recognized until
their restaurants open, the fiscal fourth quarter of 2013 included a
relatively small amount of franchise revenue related to Pie Five. Fourth
quarter food and supply sales decreased by approximately $0.3 million, or
3.8%, as compared to the prior year primarily due to a 4.3% decrease in total
domestic franchisee retail sales as the result of a decrease in both the
average number of stores open and same store sales, which effect was partially
offset by sales during the additional week in fiscal 2013.  Fourth quarter
general and administrative expenses increased $0.1 million primarily due to
higher costs associated with the continued growth of the Pie Five concept.

"While the reduction in Pizza Inn franchise store count earlier in fiscal 2013
continued to impact the year over year trends, the rate of franchise store
closures and comparable store sales trends both moderated towards the end of
the year and have improved further in the first quarter of fiscal 2014," said
Gier. "As a result of the closure of lower-revenue stores, the average revenue
per franchise store in operation today is higher than it was at the same time
last year and sales trends have improved."

"We are encouraged by the improving trends and relative stabilization of the
Pizza Inn business, and are working very closely with our franchise leadership
to continue making changes to our product quality, improvements in our
operational consistency, and shifts in our marketing focus to further improve
the trends on this very important brand," concluded Gier.

Certain statements in this press release, other than historical information,
may be considered forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, and are intended to be covered by
the safe harbors created thereby. These forward-looking statements are based
on current expectations that involve numerous risks, uncertainties and
assumptions. Assumptions relating to these forward-looking statements involve
judgments with respect to, among other things, future economic, competitive
and market conditions, regulatory framework and future business decisions, all
of which are difficult or impossible to predict accurately and many of which
are beyond the control of Pizza Inn Holdings, Inc. Although the assumptions
underlying these forward-looking statements are believed to be reasonable, any
of the assumptions could be inaccurate and, therefore, there can be no
assurance that any forward-looking statements will prove to be accurate. In
light of the significant uncertainties inherent in these forward-looking
statements, the inclusion of such information should not be regarded as a
representation that the objectives and plans of Pizza Inn Holdings, Inc. will
be achieved. 

About Pizza Inn Holdings, Inc.:

Headquartered in the Dallas suburb of The Colony, TX, Pizza Inn Holdings,
Inc., is an owner, franchisor and supplier of a system of restaurants
operating domestically and internationally under the trademarks "Pizza Inn"
and "Pie Five Pizza Co." Pizza Inn is an international pizza chain featuring
traditional and specialty pizzas, as well as freshly made pastas, sandwiches,
and desserts. Pie Five Pizza Co. is a fast-casual concept offering individual
pizzas made to order and cooked in less than five minutes. Founded in 1958,
Pizza Inn Holdings, Inc. owns and franchises approximately 300 restaurants.
The Company's common stock is listed on the Nasdaq Capital Market under the
symbol "PZZI".  For more information, please visit www.pizzainn.com.

                                                                  
PIZZA INN HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
                                   
                                  Year Ended           Three Months Ended     
                                  June 30,   June 24,  June 30,  June 24,
                                  2013       2012      2013      2012
                                                                  
REVENUES:                          $ 41,860   $ 43,001  $ 11,093  $ 10,872
                                                                  
COSTS AND EXPENSES:                                               
Cost of sales                      35,423     35,828    9,296     9,104
Franchise expenses                 2,390      2,072     715       507
General and administrative         4,193      3,829     1,198     1,089
expenses
Pre-opening expenses               286        265       37        19
Impairment of long-lived assets    766        --        766       --
and other lease charges
Bad debt                           205        95        70        30
Interest expense                   244        110       47        39
                                   43,507     42,199    12,129    10,788
                                                                  
INCOME (LOSS) FROM CONTINUING      (1,647)    802       (1,036)   84
OPERATIONS BEFORE TAXES
                                                                  
Income taxes                       (526)      419       (356)     167
                                                                  
INCOME (LOSS) FROM CONTINUING      (1,121)    383       (680)     (83)
OPERATIONS
                                                                  
Loss from discontinued             (140)      (61)      (13)      (16)
operations, net of taxes
                                                                  
NET INCOME (LOSS)                  $ (1,261)  $ 322     $ (693)   $ (99)
                                                                  
EARNINGS (LOSS) PER SHARE OF COMMON STOCK - BASIC:                
Income (loss) from continuing      $ (0.14)   $ 0.05    $ (0.09)  $ (0.01)
operations
Loss from discontinued operations  $ (0.02)   $ (0.01)  $ (0.00)  $ (0.00)
Net income (loss)                  $ (0.16)   $ 0.04    $ (0.09)  $ (0.01)
                                                                  
EARNINGS (LOSS) PER SHARE OF COMMON STOCK - DILUTED:              
Income (loss) from continuing      $ (0.13)   $ 0.05    $ (0.08)  $ (0.01)
operations
Loss from discontinued operations  $ (0.02)   $ (0.01)  $ (0.00)  $ (0.00)
Net income (loss)                  $ (0.15)   $ 0.04    $ (0.08)  $ (0.01)
                                                                  
Weighted average common shares    8,031      8,017     8,058     8,021
outstanding - basic
                                                                  
Weighted average common shares    8,310      8,194     8,525     8,143
outstanding - diluted

 
PIZZA INN HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
                                                                      
ASSETS                                                     June 30,  June 24,
                                                           2013      2012
                                                                      
CURRENT ASSETS                                                        
Cash and cash equivalents                                   $ 919     $ 590
Accounts receivable, less allowance for doubtful accounts   3,139     3,027
of $228 and $253, respectively
Notes receivable                                            292       71
Inventories                                                 1,615     1,852
Income tax receivable                                       343       431
Deferred income tax assets                                  882       1,078
Prepaid expenses and other                                  307       256
Total current assets                                        7,497     7,305
                                                                      
LONG-TERM ASSETS                                                      
Property, plant and equipment, net                          4,711     4,794
Long-term notes receivable                                  40        27
Long-term deferred tax asset                                168       --
Deposits and other                                          119       372
                                                            $ 12,535  $ 12,498
LIABILITIES AND SHAREHOLDERS' EQUITY                                  
CURRENT LIABILITIES                                                   
Accounts payable - trade                                    $ 1,572   $ 1,562
Accrued expenses                                            1,749     1,756
Deferred revenues                                           169       200
Bank debt                                                   669       765
Total current liabilities                                   4,159     4,283
                                                                      
LONG-TERM LIABILITIES                                                 
Bank debt, net of current portion                           1,856     977
Deferred tax liability                                      --        699
Deferred revenues, net of current portion                   370       125
Deferred gain on sale of property                           59        84
Other long-term liabilities                                 22        22
Total liabilities                                           6,466     6,190
                                                                      
COMMITMENTS AND CONTINGENCIES                                         
                                                                      
SHAREHOLDERS' EQUITY                                                  
Common stock, $.01 par value; authorized 26,000,000
shares; issued 15,312,680 and 15,140,319 shares,            153       151
respectively; outstanding 8,193,280 and 8,020,919 shares,
respectively
Additional paid-in capital                                  10,174    9,154
Retained earnings                                           20,378    21,639
Treasury stock at cost                                                
7,119,400 shares                                            (24,636)  (24,636)
 Total shareholders' equity                                 6,069     6,308
                                                            $ 12,535  $ 12,498

PIZZA INN HOLDINGS, INC.                                                      
CONSOLIDATED STATEMENTS OF CASH FLOWS                                         
(In thousands)                                                                
                                Year Ended          Three Months Ended
                                June 30,   June 24, June 30,  June 24,
                                2013       2012     2013      2012
                                                               
CASH FLOWS FROM OPERATING                                      
ACTIVITIES:
                                                               
Net income (loss)                $ (1,261)  $ 322    $ (693)   $ (99)
Adjustments to reconcile net
income (loss) to cash provided                                 
by operating activities:
Impairment of goodwill and       766        --       766       --
other assets
Depreciation and amortization    1,304      946      346       283
Loss on the sale of assets       129        --       --        --
Provision for bad debt           25         91       (19)      26
Stock compensation expense       150        121      15        17
Deferred income taxes            (671)      83       (428)     37
Changes in operating assets and                                
liabilities:
Notes and accounts receivable    (283)      (61)     (111)     333
Income tax receivable            88         122      --        222
Inventories                      237        (23)     (93)      (163)
Prepaid expenses and other       247        (42)     437       33
Accounts payable - trade         10         (541)    31        (539)
Accrued expenses                 (7)        154      (197)     138
 Cash provided by operating      734        1,172    54        288
activities
                                                               
CASH FLOWS FROM INVESTING                                      
ACTIVITIES:
                                                               
Proceeds from sale of assets     184        --       --        --
Capital expenditures             (2,244)    (2,482)  (697)     (274)
Cash used for investing          (2,060)    (2,482)  (697)     (274)
activities
                                                               
CASH FLOWS FROM FINANCING                                      
ACTIVITIES:
                                                               
Borrowings of bank debt          3,460      1,795    300       --
Repayments of bank debt          (2,677)    (868)    (425)     (119)
Proceeds from sale of stock      872        --       872       --
Proceeds from exercise of stock  --         24       --        --
options
                                                               
Cash provided by financing       1,655      951      747       (119)
activities
                                                               
Net increase (decrease) in cash  329        (359)    104       (105)
and cash equivalents
Cash and cash equivalents,       590        949      815       695
beginning of year
Cash and cash equivalents, end   $ 919      $ 590    $ 919     $ 590
of year
                                                               
SUPPLEMENTAL DISCLOSURES OF                                    
CASH FLOW INFORMATION
                                                               
CASH PAID FOR:                                                 
                                                               
Interest                         $ 296      $ 81     $ 48      $ 26
Income taxes (refunded) paid     $ (67)     $ 6      $ 17      $ (31)

 
PIZZA INN HOLDINGS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands)
                                                                       
                                        Fiscal Year Ended   Three Months Ended
                                        June 30,   June 24, June 30,  June 24,
                                        2013       2012     2013      2012
Net Income (loss)                        $ (1,261)  $ 322    $ (693)   $ (99)
Interest Expense                        244        110      47        39
Income Taxes---Continuing Operations    (526)      419      (356)     167
Income Taxes---Discontinued Operations  (72)       (31)     (6)       10
Stock compensation expense              150        133      15        30
Impairment of long-lived assets and     766        --       766       --
other lease charges
Loss on the sale of assets              129        --       --        --
Depreciation and amortization           1,304      946      346       283
Adjusted EBITDA                          $ 734      $ 1,899  $ 119     $ 430

CONTACT: Randy Gier
         Chief Executive Officer
         Pizza Inn Holdings, Inc.
         469-384-5000

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