Fogo de Chão, Inc. (NASDAQ:FOGO) today reported financial
results for its 13-week fiscal third quarter ended October 1,
2017.
Key Highlights for the Third Quarter of 2017 compared to the
Third Quarter of 2016 Include:
- Total revenue was $71.4 million, which
represents 3.5% growth on a reported basis and 5.1% growth on a
constant currency basis(1) excluding the benefit of the 2016 Summer
Olympics.
- Total revenue was negatively impacted
by approximately $0.9 million as a result of hurricane
activity.
- Consolidated comparable restaurant
sales decreased 5.1%(2).
- U.S. comparable restaurant sales
decreased 2.1%. Excluding the impact of the hurricane activity
during the quarter, U.S. comparable restaurant sales decreased
1.4%.
- Brazil comparable restaurant sales
decreased 17.1%. Excluding the impact of the two Rio de Janeiro
locations, Brazil comparable restaurant sales increased 3.0%. The
Rio de Janeiro locations’ results included lapping the 2016 Summer
Olympics and current security issues in that city during the
quarter.
- GAAP net income was $2.7 million,
or $0.09 per diluted share.
- Adjusted net income(3) was $3.0
million, or $0.10 per diluted share.
- The Company’s Middle East joint venture
opened its first restaurant, located in Jeddah, Saudi Arabia.
(1) In order to assess
how the business performed in the current period, the Company has
adjusted the prior period on a constant currency basis. Constant
currency calculations compare results between periods as if
exchange rates had remained constant period-over-period. The
Company compares the percent change in the results from one period
to another period using constant currency to exclude the effects of
foreign currency fluctuations. A reconciliation of GAAP revenue to
constant currency revenue is included in the accompanying financial
data. See also "Non-GAAP Financial Measures" below. (2) A
restaurant in the comparable restaurant base that is forced to
close for at least four consecutive days is removed from the
comparable sales calculation for the full quarter in which the
closure occurred until the first full quarter following the
anniversary of the closure. Certain restaurants that were directly
impacted by Hurricane Harvey (two in Houston), Hurricane Irma (one
in Miami) and Hurricane Maria (one in San Juan) were removed from
the comparable restaurant sales base during the third quarter of
2017. Restaurants indirectly impacted include Orlando, Atlanta,
Dunwoody, San Antonio, and Austin. (3) Adjusted net income is a
non-GAAP measure. A reconciliation of GAAP net income to adjusted
net income is included in the accompanying financial data. See also
"Non-GAAP Financial Measures" below.
“While our U.S. traffic was impacted by the three devastating
hurricanes, we continued to outperform both the Knapp-Track
High-End Steakhouses and Black-Box’s Upscale/Fine Dining groups
during the period,” said Larry Johnson, Chief Executive Officer of
Fogo de Chao, Inc. “In today’s competitive environment, providing
both value and a differentiated experience are paramount to
attracting and retaining guests. We believe our brand and strategic
platforms deliver these competitive advantages.”
Third Quarter 2017 Financial Results
Total revenue for the third quarter of Fiscal 2017 was $71.4
million compared to $69.0 million in the third quarter of Fiscal
2016. The $2.4 million increase is primarily attributable to new
restaurant locations opened in the last 18 months, a favorable
foreign exchange impact and an increase in other revenue, partially
offset by a comparable sales decrease of 5.1%. During the third
quarter of Fiscal 2017 the Company recognized a country development
fee and a store opening fee in addition to a recurring license fee
in relation to the Jeddah, Saudi Arabia opening. Excluding the
impact of the 2016 Summer Olympics and favorable foreign exchange
impact, consolidated comparable restaurant sales decreased 2.9%
over the prior year period.
U.S. restaurant revenue for the third quarter of Fiscal 2017 was
$60.9 million compared to $56.8 million for the third quarter of
Fiscal 2016. The $4.0 million increase is due to new restaurant
locations opened in the last 18 months, offset by a U.S. comparable
restaurant sales decrease of 2.1%.
Brazil restaurant revenue for the third quarter of Fiscal 2017
was $10.3 million compared to $12.2 million in the third quarter of
Fiscal 2016. The $1.8 million decrease is attributable to a Brazil
comparable restaurant sales decrease of 17.1%, offset by a
favorable foreign exchange impact. Excluding the impact of the 2016
Summer Olympics and favorable foreign exchange impact, Brazil
comparable restaurant sales decreased 6.4% over the prior year
period.
GAAP net income for the third quarter of Fiscal 2017 was $2.7
million, or $0.09 per diluted share, compared to $4.6 million, or
$0.16 per diluted share in the third quarter of Fiscal 2016.
Adjusted net income in the third quarter of Fiscal 2017 was $3.0
million, or $0.10 per diluted share, compared to $4.7 million, or
$0.16 per diluted share in the third quarter of Fiscal 2016. A
reconciliation between GAAP net income and adjusted net income is
included in the accompanying financial data.
Development Update
As of October 1, 2017, the Company operated 48 restaurants, nine
of which are in Brazil, two joint venture restaurants in Mexico,
and one joint venture restaurant in Saudi Arabia.
The Company’s Middle East joint venture opened its first
restaurant in Jeddah, Saudi Arabia in August 2017. The Company
plans to open at least two additional Company-owned restaurants
during the remainder of Fiscal 2017. The Company has three signed
leases and is negotiating multiple letters of intent for planned
2018 and 2019 Company-owned locations.
Investors are reminded that the actual number and timing of new
restaurant openings is subject to a number of factors outside of
the Company's control including, but not limited to, weather
conditions and factors under the control of landlords, contractors
and regulatory/licensing authorities.
2017 Outlook
Consistent with the October 17, 2017 pre-release, the Company is
updating its guidance for the 52-week fiscal year 2017, which ends
on December 31, 2017. GAAP diluted net income per share is expected
to range between $0.74 and $0.77 (previously $0.92 to $0.95), and
adjusted diluted net income per share is expected to range between
$0.77 and $0.80. Diluted net income per share guidance for Fiscal
2017 is based, in part, on the following annual assumptions:
Updated:
- Total revenue of $306 million to $311
million (previously $315 million to $320 million), assuming an
exchange rate of 3.25 Brazilian reais to 1 U.S. dollar;
- Company-owned comparable restaurant
sales of -1.5% to -2.5% (previously -0.5% to 0.5%);
- Restaurant contribution margin of 27.5%
to 28.0% (previously 28.8% to 29.2%); and
- Depreciation expense of $19.0 million
to $19.5 million (previously $18.5 million to $19.0 million);
Unchanged:
- Pre-opening expenses of $3.0 million to
$3.5 million;
- General and administrative expenses of
$20 million to $22 million;
- Opening up to seven restaurants,
including up to two international joint venture locations;
- Capital expenditures, net of tenant
allowances, of $26 million to $30 million; and
- Tax rate of 32% to 33%.
Guidance Policy
The Company intends to provide annual guidance as it relates to
revenue, comparable restaurant sales growth, restaurant
contribution margin, general and administrative expense, tax
expense, and development schedule. The Company expressly disclaims
any duty to update this guidance.
Conference Call/ Webcast
The Company will host a conference call to discuss its third
quarter 2017 financial results today at 5:00 PM Eastern Time.
Hosting the call will be Larry Johnson, Chief Executive Officer,
Barry McGowan, President, and Tony Laday, Chief Financial
Officer.
The conference call can be accessed live over the phone by
dialing (877) 407-0789 or for international callers by dialing
(201) 689-8562. A replay will be available two hours after the call
and can be accessed by dialing (844) 512-2921 or for international
callers by dialing (412) 317-6671; the passcode is 13652685. The
replay will be available through Tuesday, November 14, 2017. The
conference call will also be webcast live and later archived on
Fogo’s corporate website at ir.fogodechao.com under the ‘News &
Events’ section.
About Fogo de Chão
Fogo de Chão (fogo-dee-shown) is a leading Brazilian steakhouse,
or churrascaria, which has specialized for nearly 40 years in
fire-roasting high-quality meats utilizing the centuries-old
Southern Brazilian cooking technique of churrasco. Fogo delivers a
distinctive and authentic Brazilian dining experience through the
combination of high-quality Brazilian cuisine and a differentiated
service model known as espeto corrido (Portuguese for "continuous
service") delivered by gaucho chefs. Fogo offers its guests a
tasting menu of a variety of meats including beef, lamb, pork and
chicken, simply seasoned and carefully fire-roasted to expose their
natural flavors, a gourmet Market Table with seasonal salads, soup
and fresh vegetables, seafood, desserts, signature cocktails and an
award-winning wine list. The first Fogo de Chão opened in Brazil in
1979. The Company currently operates 37 restaurants in the United
States, nine in Brazil, two joint venture restaurants in Mexico and
one joint venture restaurant in Saudi Arabia. Visit FOGO.com for
more information.
Safe Harbor Statement
This release contains forward-looking statements, within
the meaning of the Private Securities Litigation Reform Act of
1995, which are subject to risks and uncertainties. Forward-looking
statements relate to expectations, beliefs, projections, guidance,
future plans, objectives and strategies, anticipated events or
trends and similar expressions concerning matters that are not
historical facts, such as statements regarding our future financial
condition or results of operations, our prospects and strategies
for future growth, the development and introduction of new
products, and the implementation of our marketing and branding
strategies. Forward-looking statements can also be identified by
words such as “may,” “will,” “should,” “expects,” “plans,”
“anticipates,” “believes,” “estimates,” “predicts,” “potential,”
“seeks,” “intends,” “targets” or the negative of these terms or
other comparable terminology. Forward-looking statements are
not guarantees of future performance and actual results may differ
significantly from the results discussed in the forward-looking
statements. Factors that might cause such differences include, but
are not limited to, those discussed in the section entitled "Risk
Factors" in our recent annual report on Form 10-K for the fiscal
year ended January 1, 2017 filed with the Securities and Exchange
Commission, and our discussion of risks in our quarterly reports on
Form 10-Q. The forward-looking statements included in this press
release are made only as of the date hereof. Except as required by
applicable securities law, we undertake no obligation to update any
forward-looking statement to reflect events or circumstances after
the date on which the statement is made or to reflect the
occurrence of unanticipated events.
Non-GAAP Financial Measures
The Company uses the following non-GAAP financial measures:
EBITDA, Adjusted EBITDA, Adjusted net income (loss), segment
restaurant contribution, and constant currency (collectively the
"non-GAAP financial measures"). The Company also presents certain
results of operations on a constant currency basis to exclude the
effects of foreign currency fluctuations. The Company uses these
non-GAAP financial measures for financial and operational decision
making and as a means to evaluate period-to-period comparisons. The
Company believes that they provide useful information about
operating results, enhance the overall understanding of past
financial performance and future prospects, and allow for greater
transparency with respect to key metrics used by management in its
financial and operational decision making. The non-GAAP measures
used by the Company in this press release may be different from the
methods used by other companies.
Key Financial Data - Fiscal
Quarter Fiscal Quarter Ended Adjusted(a) (in
thousands, except restaurant and per share amounts) October
1,
2017
October 2,
2016
Change Change October 2,
2016
Change Change Comparable
store sales: U.S. -2.1 % -1.0 % Brazil -17.1 % 9.0 % Brazil
adjusted for 2016 Summer Olympics -6.4 % 0.2 % Consolidated -5.1 %
0.6 % Consolidated adjusted for 2016 Summer Olympics -2.9 % -0.8 %
Restaurants opened during period(b) 1 1
Restaurants closed during period(c) (1 ) —
Restaurants
open at period end 48 43
Restaurant revenue(d):
U.S. $ 60,862 $ 56,818 $ 4,044 7.1 % Brazil $ 10,337 $ 12,178 $
(1,841 ) -15.1 % $ 11,131 $ (794 ) -7.1 % Consolidated $ 71,404 $
69,012 $ 2,392 3.5 % $ 67,965 $ 3,439 5.1 %
Adjusted
EBITDA attributable to Fogo
de Chão, Inc.
$ 10,383 $ 12,734 $ (2,351 ) -18.5 % $ 12,398 $ (2,015 ) -16.3 %
Net income attributable to Fogo de Chão, Inc. $ 2,709
$ 4,579 $ (1,870 ) -40.8 % $ 4,228 $ (1,519 ) -35.9 %
Adjusted
net income attributable to Fogo
de Chão, Inc.
$ 2,960 $ 4,650 $ (1,690 ) -36.3 % $ 4,303 $ (1,343 ) -31.2 %
Diluted earnings per share $ 0.09 $ 0.16 $ (0.07 )
-43.8 % $ 0.15 $ (0.06 ) -40.0 %
Adjusted diluted earnings per
share $ 0.10 $ 0.16 $ (0.06 ) -37.5 % $ 0.15 $ (0.05 ) -33.3 %
(a)
Fully adjusted to exclude the revenue
impact of the 2016 Summer Olympics ($1,367) and currency
fluctuation in the Brazilian Real $320 for the thirteen weeks ended
October 2, 2016.
(b) We opened our first Middle East JV restaurant in August 2017.
We do not consolidate the results of our Middle East JV operations.
(c) The lease for an underperforming restaurant in Brazil expired
in September 2017 and was not renewed. The restaurant was fully
impaired as of January 1, 2017. (d) We have two operating segments:
United States and Brazil. Our Mexico JV is included in the United
States for segment reporting purposes as the operations of the
joint venture are monitored by the United States segment
management. Consolidated restaurant revenue includes $205 and $16
of other revenue for the thirteen week periods ended October 1,
2017 and October 2, 2016, respectively.
Key Financial Data - Fiscal Year Thirty-Nine Week Periods
Ended Adjusted(a) (in thousands, except restaurant
and per share amounts) October 1,
2017
October 2,
2016
Change Change October 2,
2016
Change Change Comparable
store sales: U.S. -0.2 % -0.4 % Brazil -7.4 % 2.3 % Brazil
adjusted for 2016 Summer Olympics -3.4 % -0.7 % Consolidated -1.4 %
0.0 % Consolidated adjusted for 2016 Summer Olympics -0.7 % -0.5 %
Restaurants opened during period(b) 4 2
Restaurants closed during period(c) (1 ) —
Restaurants
open at period end 48 43
Restaurant revenue(d):
U.S. $ 194,121 $ 176,787 $ 17,334 9.8 % Brazil $ 31,145 $ 30,576 $
569 1.9 % $ 32,337 $ (1,192 ) -3.7 % Consolidated $ 225,517 $
207,419 $ 18,098 8.7 % $ 209,180 $ 16,337 7.8 %
Adjusted
EBITDA attributable to Fogo
de Chão, Inc.
$ 39,586 $ 41,624 $ (2,038 ) -4.9 % $ 41,556 $ (1,970 ) -4.7 %
Net income attributable to Fogo de Chão, Inc. $
13,162 $ 16,739 $ (3,577 ) -21.4 % $ 16,494 $ (3,332 ) -20.2 %
Adjusted net Income attributable to Fogo
de Chão, Inc.
$ 14,144 $ 17,047 $ (2,903 ) -17.0 % $ 16,818 $ (2,674 ) -15.9 %
Diluted earnings per share $ 0.46 $ 0.58 $ (0.12 )
-20.7 % $ 0.57 $ (0.11 ) -19.3 %
Adjusted diluted earnings per
share $ 0.49 $ 0.59 $ (0.10 ) -16.9 % $ 0.58 $ (0.09 ) -15.5 %
(a)
Fully adjusted to exclude the revenue
impact of the 2016 Summer Olympics ($1,367) and currency
fluctuation in the Brazilian Real $3,128 for the thirty-nine weeks
ended October 2, 2016.
(b) We opened our first Middle East JV restaurant in August 2017.
We do not consolidate the results of our Middle East JV operations.
(c) The lease for an underperforming restaurant in Brazil expired
in September 2017 and was not renewed. The restaurant was fully
impaired as of January 1, 2017. (d) We have two operating segments:
United States and Brazil. Our Mexico JV is included in the United
States for segment reporting purposes as the operations of the
joint venture are monitored by the United States segment
management. Consolidated restaurant revenue includes $251 and $57
of other revenue for the thirty-nine week periods ended October 1,
2017 and October 2, 2016, respectively.
Fogo de Chão, Inc.
Unaudited Condensed Consolidated
Statements of Operations and Comprehensive Income (Loss)
(in thousands, except share and per
share amounts)
Thirteen Week Periods Ended Thirty-Nine
Week Periods Ended October 1,
2017
October 2,
2016
October 1,
2017
October 2,
2016
Revenues: Revenue restaurant sales $ 71,199 $ 68,996 $
225,266 $ 207,362 Other revenue 205 16 251
57 Total revenues 71,404 69,012 225,517
207,419 Restaurant operating costs: Food and beverage costs
21,313 20,118 65,073 59,539 Compensation and benefit costs 17,937
16,321 54,683 48,330 Occupancy and other operating expenses
(excluding
depreciation and amortization)
15,188 13,575 45,306 39,199 Total
restaurant operating costs 54,438 50,014
165,062 147,068 Marketing and advertising costs 1,963 1,705
5,956 5,116 General and administrative costs 5,286 4,975 16,918
15,384 Pre-opening costs 377 1,081 2,410 2,113 Depreciation and
amortization 4,792 3,962 14,092 11,590 Other operating (income)
expense, net 12 38 344 (166 ) Total
costs and expenses 66,868 61,775 204,782
181,105 Income from operations 4,536 7,237 20,735 26,314
Other income (expense): Interest expense, net of capitalized
interest (1,299 ) (1,087 ) (3,709 ) (3,307 ) Interest income 587
648 1,909 1,534 Other income (expense), net — (11 )
12 (14 ) Total other income (expense), net
(712 ) (450 ) (1,788 ) (1,787 ) Income before
income taxes 3,824 6,787 18,947 24,527 Income tax expense
1,305 2,295 6,195 7,977 Net income 2,519 4,492
12,752 16,550 Less: Net loss attributable to noncontrolling
interest
(190 ) (87 ) (410 ) (189 ) Net income
attributable to Fogo de Chão, Inc. $ 2,709 $ 4,579 $ 13,162 $
16,739 Net income $ 2,519 $ 4,492 $ 12,752 $ 16,550 Other
comprehensive income (loss): Currency translation adjustment
4,127 (1,380 ) 3,467 14,735 Total other
comprehensive income (loss) $ 4,127 $ (1,380 ) $ 3,467 $ 14,735
Comprehensive income 6,646 3,112 16,219 31,285 Less: Comprehensive
loss attributable to
noncontrolling interest
(204 ) (227 ) (92 ) (483 )
Comprehensive income attributable to Fogo de Chão, Inc. $ 6,850 $
3,339 $ 16,311 $ 31,768 Earnings per common share attributable to
Fogo de
Chão, Inc.:
Basic $ 0.10 $ 0.16 $ 0.47 $ 0.60 Diluted $ 0.09 $ 0.16 $ 0.46 $
0.58 Weighted average common shares outstanding: Basic 28,234,889
28,119,343 28,220,449 28,094,437 Diluted 28,793,488 28,743,358
28,840,234 28,846,382
Reconciliation to Adjusted Net Income
attributable to Fogo de Chão, Inc.(a)
(in thousands, except share and per
share amounts)
Fiscal Quarter Ended Adjusted(e)
October 1,
2017
October 2,
2016
October 2,
2016
Net income attributable to Fogo de Chão, Inc. $ 2,709 $
4,579 $ 4,228 Corporate office relocation 154 — — Non-recurring
expenses(b) 123 108 113 Income tax expense(c) 1,296
2,279 2,295 Pre-tax adjusted net income 4,282 6,966 6,636
Estimated tax provision(d) 1,322 2,316 2,333
Adjusted net income attributable to Fogo de Chão, Inc. $ 2,960 $
4,650 $ 4,303 Adjusted net income per common share
attributable to
Fogo de Chão, Inc.:
Basic $ 0.10 $ 0.17 $ 0.15 Diluted $ 0.10 $ 0.16 $ 0.15
Weighted average common shares outstanding: Basic 28,234,889
28,119,343 28,119,343 Diluted 28,793,488 28,743,358 28,743,358
(a) Excludes impacts attributable to our joint venture in
Mexico. (b) For the thirteen weeks ended October 1, 2017, amount
consists of closure related costs associated with an
underperforming restaurant in Brazil whose lease was not renewed.
For the thirteen weeks ended October 2, 2016, amount consists of
one-time expenses related to the realignment of management of the
Brazilian subsidiaries. (c) Consists of recorded income tax expense
for the period. Actual taxes are added back and recalculated
against pre-tax adjusted net income shown in (d). (d) The
consolidated effective tax rate for the thirteen weeks ended
October 1, 2017 was 34.1%. The discrete tax items recognized during
the thirteen weeks ended October 1, 2017 had a minimal impact on
the effective tax rate. (e) We have excluded the impact of the 2016
Summer Olympics and foreign currency fluctuations when comparing
the percent change in the results from the prior year period.
Reconciliation to Adjusted Net Income
attributable to Fogo de Chão, Inc.(a)
(in thousands, except share and per
share amounts)
Thirty-Nine Week Periods Ended
Adjusted(e) October 1,
2017
October 2,
2016
October 2,
2016
Net income attributable to Fogo de Chão, Inc. $ 13,162 $
16,739 $ 16,494 Secondary offering costs 715 — — Corporate office
relocation 154 — — Non-recurring expenses(b) 331 456 480 Income tax
expense(c) 6,162 7,926 8,085 Pre-tax adjusted
net income 20,524 25,121 25,059 Estimated tax provision(d)
6,380 8,074 8,241 Adjusted net income attributable to
Fogo de Chão, Inc. $ 14,144 $ 17,047 $ 16,818 Adjusted net
income per common share attributable to
Fogo de Chão, Inc.:
Basic $ 0.50 $ 0.61 $ 0.60 Diluted $ 0.49 $ 0.59 $ 0.58
Weighted average common shares outstanding: Basic 28,220,449
28,094,437 28,094,437 Diluted 28,840,234 28,846,382 28,846,382 (a)
Excludes impacts attributable to our joint venture in
Mexico. (b) For the thirty-nine weeks ended October 1, 2017, amount
consists of $123 in closure related costs associated with an
underperforming restaurant in Brazil whose lease was not renewed
and a $208 increase in reserves related to litigation with The
Union of Workers in Hotels, Apart-Hotels, Motels, Flats,
Restaurants, Bars, Snack Bars and Similar in São Paulo and the
Region. An agreement was reached with the Union of Workers to
resolve the claims and a labor court judge signed an order
approving the agreement during the second quarter of Fiscal 2017.
For the thirty-nine weeks ended October 2, 2016 amount includes
$332 in one-time expenses related to the realignment of management
of the Brazilian subsidiaries, the legal transfer of the Brazilian
subsidiaries to the Company’s Dutch holding company to support the
Company’s expansion into international markets and $124 in other
one-time legal and accounting fees. (c) Consists of recorded income
tax expense for the period. Actual taxes are added back and
recalculated against pre-tax adjusted net income shown in (d);
however the non-recurring item related to Brazil for the
thirty-nine weeks ended October 1, 2017 has no current year tax
effect as it is considered a non-taxable event in Brazil. (d) The
consolidated effective tax rate for the thirty-nine weeks ended
October 1, 2017, excluding the impact of the discrete tax items,
was 33.5%. (e) We have excluded the impact of the 2016 Summer
Olympics and foreign currency fluctuations when comparing the
percent change in the results from the prior year period.
Reconciliation Adjusted EBITDA
attributable to Fogo de Chão, Inc.(a):
(in thousands)
Fiscal Quarter Ended Adjusted(d)
October 1,
2017
October 2,
2016
October 2,
2016
Net income attributable to Fogo de Chão, Inc. $ 2,709 $
4,579 $ 4,228 Depreciation and amortization expense 4,684 3,897
3,909 Interest expense, net 1,299 1,087 1,087 Interest income (587
) (648 ) (666 ) Income tax expense 1,296 2,279
2,295 EBITDA 9,401 11,194 10,853 Pre-opening costs 376 988 988
Share-based compensation 118 208 208 Non-cash adjustments(b) 211
236 236 Corporate office relocation 154 — — Non-recurring
expenses(c) 123 108 113 Adjusted EBITDA
attributable to Fogo de Chão, Inc. $ 10,383 $ 12,734 $ 12,398
(a) Excludes impacts attributable to our joint venture in
Mexico. (b) Consists of non-cash portion of straight line rent
expense. (c) For the thirteen weeks ended October 1, 2017, amount
consists of closure related costs associated with an
underperforming restaurant in Brazil whose lease was not renewed.
For the thirteen weeks ended October 2, 2016 amount consists of
one-time legal and accounting expenses. (d) We have excluded the
impact of the 2016 Summer Olympics and foreign currency
fluctuations when comparing the percent change in the results from
the prior year period.
Reconciliation Adjusted EBITDA
attributable to Fogo de Chão, Inc.(a):
(in thousands)
Thirty-Nine Week Periods Ended
Adjusted(d) October 1,
2017
October 2,
2016
October 2,
2016
Net income attributable to Fogo de Chão, Inc. $ 13,162 $
16,739 $ 16,494 Depreciation and amortization expense 13,787 11,389
11,534 Interest expense, net 3,709 3,307 3,307 Interest income
(1,909 ) (1,534 ) (1,686 ) Income tax expense (benefit)
6,162 7,926 8,085 EBITDA 34,911 37,827 37,734
Pre-opening costs 2,407 1,987 1,987 Share-based compensation 417
620 620 Non-cash adjustments(b) 651 734 735 Secondary offering
costs 715 — — Corporate office relocation 154 — — Non-recurring
expenses(c) 331 456 480 Adjusted EBITDA
attributable to Fogo de Chão, Inc. $ 39,586 $ 41,624 $ 41,556
(a) Excludes impacts attributable to our joint venture in
Mexico. (b) Consists of non-cash portion of straight line rent
expense. (c) For the thirty-nine weeks ended October 1, 2017,
amount consists of $123 in closure related costs associated with an
underperforming restaurant in Brazil whose lease was not renewed
and a $208 increase in reserves related to litigation with The
Union of Workers in Hotels, Apart-Hotels, Motels, Flats,
Restaurants, Bars, Snack Bars and Similar in São Paulo and the
Region. An agreement was reached with the Union of Workers to
resolve the claims and a labor court judge signed an order
approving the agreement during the second quarter of Fiscal 2017.
For the thirty-nine weeks ended October 2, 2016 amount includes
$332 in one-time expenses related to the realignment of management
of the Brazilian subsidiaries, the legal transfer of the Brazilian
subsidiaries to the Company’s Dutch holding company to support the
Company’s expansion into international markets and $124 in other
one-time legal and accounting fees. (d) We have excluded the impact
of the 2016 Summer Olympics and foreign currency fluctuations when
comparing the percent change in the results from the prior year
period.
Reconciliation of Income from
Operations to Total Segment Restaurant Contribution:
(in thousands)
Thirteen Week Periods Ended
Thirty-Nine Week Periods Ended October 1,
October 2, October 1, October
2, 2017 2016 2017 2016 Income from
operations $ 4,536 $ 7,237 $ 20,735 $ 26,314 Less: Other revenue
205 16 251 57 Add: Marketing and advertising costs 1,963 1,705
5,956 5,116 General and administrative costs 5,286 4,975 16,918
15,384 Pre-opening costs 377 1,081 2,410 2,113 Depreciation and
amortization 4,792 3,962 14,092 11,590 Other operating (income)
expense, net 12 38 344 (166 ) Total
segment restaurant contribution $ 16,761 $ 18,982 $ 60,204 $ 60,294
Total revenues $ 71,404 $ 69,012 $ 225,517 $ 207,419 Less:
Other revenue 205 16 251 57 Total
segment revenue and restaurant sales $ 71,199 $ 68,996 $ 225,266 $
207,362
Supplemental Selected Constant Currency
Adjustment Information
Fiscal Quarter Ended Constant Currency
reconciliation October 1,
2017
October 2,
2016
Total revenue as reported $ 71,404 $ 69,012 Effect of
foreign currency(a) — 320 Total revenue at constant
currency $ 71,404 $ 69,332 Adjusted EBITDA $ 10,383 $ 12,734
Effect of foreign currency(a) — 64 Adjusted EBITDA at
constant currency $ 10,383 $ 12,798 Adjusted EBITDA margin at
constant currency 14.5 % 18.5 % Segment restaurant
contribution $ 16,761 $ 18,982 Effect of foreign currency(a)
— 88 Segment restaurant contribution at constant currency $
16,761 $ 19,070 Segment restaurant contribution margin at constant
currency 23.5 % 27.5 %
Thirty-Nine Week Periods Ended
Constant Currency reconciliation October 1,
2017
October 2,
2016
Total revenue as reported $ 225,517 $ 207,419 Effect of
foreign currency(a) — 3,128 Total revenue at constant
currency $ 225,517 $ 210,547 Adjusted EBITDA $ 39,586 $
41,624 Effect of foreign currency(a) — 603 Adjusted
EBITDA at constant currency $ 39,586 $ 42,227 Adjusted EBITDA
margin at constant currency 17.6 % 20.1 % Segment restaurant
contribution $ 60,204 $ 60,294 Effect of foreign currency(a)
— 878 Segment restaurant contribution at constant currency $
60,204 $ 61,172 Segment restaurant contribution margin at constant
currency 26.7 % 29.1 % (a) As exchange rates are an
important factor in understanding period-to-period comparisons, we
believe the presentation of certain results on a constant currency
basis in addition to reported results helps improve investors’
ability to understand our operating results and evaluate our
performance in comparison to prior periods. Constant currency
information compares results between periods as if exchange rates
had remained constant period-over-period. We use results on a
constant currency basis as one measure to evaluate our performance.
We calculate constant currency by retranslating results across all
prior periods presented using a derived exchange rate for the most
current year periods presented based on actual results. The tables
set forth below calculate constant currency at a foreign currency
exchange rate of 3.1601 and 3.1727 Brazilian reais to 1 US dollar,
which represents the derived exchange rate for the thirteen and
thirty-nine week periods ended October 1, 2017, respectively,
calculated as explained above. These results should be considered
in addition to, not as a substitute for, results reported in
accordance with GAAP. Results on a constant currency basis, as we
present them, may not be comparable to similarly titled measures
used by other companies and are not measures of performance
presented in accordance with GAAP.
UNAUDITED SELECTED CONSOLIDATED BALANCE
SHEET DATA
(in thousands)
As of As of October
1,
2017
January 1,
2017
Cash and cash equivalents $ 35,123 $ 31,275 Total assets 535,889
522,395 Long-term debt, including current portion 143,000 150,000
Deferred taxes 23,267 21,838 Total liabilities 226,348 229,536
Total Fogo de Chão, Inc. shareholders' equity 307,591 290,644 Total
equity 309,541 292,859
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version on businesswire.com: http://www.businesswire.com/news/home/20171107006800/en/
Investors:IR@fogodechao.com972-361-6225orMedia:ICRJoy
Murphy, 646-277‐1242Joy.Murphy@icrinc.com
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