World's largest Pizza Hut franchisee NPC International reports fiscal Q3 earnings of US$3.5M, unchanged year-over-year

OVERLAND PARK, Kansas , November 7, 2011 (press release) – NPC International, Inc. (the “Company”), today reported results for its third fiscal quarter ended September 27, 2011.

THIRD QUARTER HIGHLIGHTS:

* Comparable store sales increased 0.4% rolling over a strong increase of 10.9% last year.
* Adjusted EBITDA (reconciliation attached) of $21.5MM was $1.3MM lower than last year.
* Free cash flow (reconciliation attached) was $14.7MM or 68% of Adjusted EBITDA.
* Cash balances were $66.3MM, an increase of $14.7MM from last quarter and debt remained unchanged.
* Net income of $3.5MM was flat with last year.
* The Company opened 13 net new units during the quarter.

YEAR-TO-DATE HIGHLIGHTS:

* Comparable store sales decreased 2.5% rolling over a strong increase of 10.5% last year.
* Adjusted EBITDA (reconciliation attached) of $78.6MM was $2.3MM lower than last year.
* Free cash flow (reconciliation attached) was $50.7MM or 64% of Adjusted EBITDA.
* Cash balances increased by $22.1MM from last fiscal year end to $66.3MM and debt has been reduced by $29.7 million.
* Our leverage ratio declined to 3.60X Consolidated EBITDA, as defined in our Credit Agreement, from 3.80X at last fiscal year end compared to our existing maximum leverage covenant of 4.25X. Including the benefit of excess cash balances of $63.1MM, our leverage ratio improved to 2.99X.
* Net income of $18.1MM was flat with last year.
* The Company opened 17 net new units to date.

The Company’s quarterly financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations are set forth in the Company’s Form 10-Q for the third quarter ended September 27, 2011 which can be accessed at www.sec.gov.

NPC’s President and CEO Jim Schwartz said, “During the third quarter our comparable store sales strengthened from the first half of the year returning to positive territory despite rolling over very strong comparable store sales growth from the prior year.

This quarter we promoted strong value focused on our lower cost carry-out channel with our $10 Any Carry-Out Pizza promotion, coupled with the re-introduction of the $5.00 P’Zone which resonated well with consumers during these challenging economic times.

Our restaurant teams continued to do their part by controlling the business in excellent fashion while providing our customers a great Pizza Hut experience. Despite these efforts, our restaurant level margins were negatively impacted by higher commodity costs and unfavorable mix changes associated with the $10 Any Carry-Out Pizza promotion. However, these increases were partially offset by improvements in our direct labor costs which improved due to reductions in our store level wage structure associated with modifications in our compensation policies and staffing philosophy and excellent labor productivity.

Third quarter Adjusted EBITDA of $21.5 million was $1.3 million or 6% below last year with continued strong free cash flow of $14.7 million or 68% of Adjusted EBITDA. As a result, our cash balances increased by $14.7 million from last quarter to $66.3 million. Additionally, our leverage ratio improved this quarter to 3.60X Consolidated EBITDA compared to 3.80X at last fiscal year end. Including the benefit of our excess cash balances, our leverage ratio at the end of the quarter would have been 2.99X.

This quarter we opened 13 net new Delco units and as a result increased our unit count through new store development by 17 net new units during the year. This growth represents a change in our posture towards new unit development and marks the first time in over ten years that we have grown our business through new unit development activities. The early results of these new Delco’s are compelling and as a result we are targeting a much more aggressive new unit growth plan for next year.

With the continued financial malaise, we expect that value will remain the key driver of consumer response into 2012 in the pizza segment and the QSR category as a whole. To this end, we continue to work on compelling consumer value propositions with Pizza Hut and further pursuit and implementation of the margin management initiatives that we discussed last quarter. We believe that further identification and implementation of these margin management initiatives will allow us to compete profitably in these value conscious times while strengthening our business model and our brand. We look forward to updating our investors about our progress in future quarters.”

NPC International, Inc. is the world’s largest Pizza Hut franchisee and currently operates 1,153 Pizza Hut restaurants and delivery units in 28 states.

For more complete information regarding the Company’s financial position and results of operations, investors are encouraged to review the Company’s quarterly financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations, incorporated into the Company’s Form 10-Q which can be accessed at www.sec.gov.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995

Certain statements contained in this news release that do not relate to historical or current facts constitute forward-looking statements. These include statements regarding our plans and expectations. Forward-looking statements are subject to inherent risks and uncertainties and there can be no assurance that such statements will prove to be correct. NPC’s actual results may vary materially from those anticipated in such forward-looking statements as a result of a number of factors, including lower than anticipated consumer discretionary spending; continued deterioration in general economic conditions; competition in the quick service restaurant market; adverse changes in food, labor and other costs; price inflation or deflation; and other factors. These risks and other risks are described in NPC’s filings with the Securities and Exchange Commission, including NPC’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Copies of these filings may be obtained by contacting NPC. All forward-looking statements made in this news release are made as of the date hereof. NPC does not intend to update these forward-looking statements and undertakes no duty to any person to provide any such update under any circumstances. Investors are cautioned not to place undue reliance on any forward-looking statements.

© 2017 Business Wire, Inc., All rights reserved.