AFC Enterprises reports 5.8% year-over-year increase in global same-store sales in Q4, 3.1% increase for all of 2011
January 26, 2012
– AFC Enterprises, Inc. (NASDAQ: AFCE), the franchisor and operator of Popeyes® restaurants, today reported selected unaudited results for its fiscal fourth quarter and fiscal year which ended December 25, 2011.
Global same-store sales increased 5.8 percent in the fourth quarter, compared to a 6.0 percent increase last year. For the full year 2011, global same store sales increased 3.1 percent, compared to a 2.6 percent increase in 2010, exceeding the Company’s previous full year guidance of positive 2.0 to 2.5 percent.
During the fourth quarter, the Popeyes system opened 32 domestic and 20 international restaurants, bringing full year 2011 openings to 140 restaurants, compared to 106 restaurants last year. Openings were in line with the Company’s previous guidance of 130 to 140 new restaurants in 2011. The Popeyes system permanently closed 75 restaurants in fiscal 2011, resulting in net unit growth of 65 restaurants, compared to 39 net restaurants in 2010. The 2011 net unit growth was in the range of the Company’s previous guidance of 50 to 70 net restaurants.
The Company now expects general and administrative expenses for full year 2011 will be in the range of $61.2-$61.4 million. At approximately 3.1 percent of system-wide sales, the Company’s general and administrative expenses remain among the lowest in the restaurant industry. The Company’s previous guidance was $61.0-$62.0 million, including $1.0 million for the 2011 corporate office relocation.
The Company’s effective tax rate for full year 2011 is now expected to be approximately 35.0-36.0 percent, compared to the previous guidance of 36.0-37.0 percent due to tax credits recognized during the year.
Based on the fourth quarter sales and store opening performance, the Company now expects fiscal 2011 fourth quarter reported earnings per diluted share (“EPS”) will be $0.22-$0.23 and full year reported EPS will be $0.96-$0.97, compared to $0.90 in fiscal 2010. Adjusted EPS for the fourth quarter is now expected to be $0.23-$0.24, bringing full year adjusted EPS to $0.98-$0.99, compared to adjusted EPS of $0.86 in fiscal 2010. This is an increase from the Company's previous guidance of adjusted EPS of $0.93-$0.97. Adjusted earnings per diluted share is a supplemental non-GAAP measure of performance. See Adjusted EPS calculations under the heading entitled "Management's Use of Non-GAAP Financial Measures."
Management expects to provide fiscal 2012 guidance concurrent with the filing of the Company’s 2011 Annual Report on Form 10-K, which is due to be filed no later than March 9, 2012.
AFC Enterprises, Inc. is the franchisor and operator of Popeyes® restaurants, the world's second-largest quick-service chicken concept based on number of units. As of December 25, 2011, Popeyes had 2,034 operating restaurants in the United States, Guam, Puerto Rico, the Cayman Islands and 26 foreign countries. AFC’s primary objective is to deliver sales and profits by offering excellent investment opportunities in its Popeyes brand and providing exceptional franchisee support systems and services to its owners. AFC Enterprises can be found at www.afce.com.
Management’s Use of Non-GAAP Financial Measures
The Company’s adjusted earnings per diluted share is a supplemental non-GAAP financial measure. The Company uses adjusted earnings per diluted share, in addition to net income, operating profit and cash flows from operating activities, to assess its performance and believes it is important for investors to be able to evaluate the Company using the same measures used by management. The Company believes this measure is an important indicator of its operational strength and performance of its business because it provides a link between profitability and operating cash flow. Adjusted earnings per diluted share as calculated by the Company is not necessarily comparable to similarly titled measures reported by other companies. In addition, adjusted earnings per diluted share: (a) do not represent net or earnings per share as defined by GAAP; and (b) should not be considered as an alternative to net income, earnings per share, operating profit, cash flows from operating activities or other financial information determined under GAAP.
Adjusted Earnings per Diluted Share: Calculation and Definition
The Company calculates fiscal 2011 fourth quarter adjusted earnings per diluted share by excluding $0.4 million, or $0.01 per diluted share of expenses related to the Company’s office relocation. The Company calculates fiscal 2011 full year adjusted earnings per diluted share by excluding (i) $1.2 million, or $0.03 per diluted share, of expenses and accelerated depreciation related to the Company’s office relocation, and (ii) $0.3 million of other income, or $0.01 per diluted share, related to the net gain on the sale of assets, partially offset by impairments and disposals of other assets.
The Company defines adjusted earnings for fiscal 2010 as the Company's reported net income after adjusting for certain non-operating items consisting of: (i) $0.7 million for impairments and disposals of fixed assets partially offset by $0.5 million for net gain on sales of assets), (ii) the interest expense associated with the credit facility refinancing, (iii) the tax effect of these adjustments, and (iv) the tax audit benefit. Adjusted earnings per diluted share provides the per share effect of adjusted net income on a diluted basis. The following table reconciles on a historical basis for fiscal year 2010, the Company’s adjusted earnings per diluted share on a consolidated basis to the line on its consolidated statement of operations entitled net income, which the Company believes is the most directly comparable GAAP measure on its consolidated statement of operations to adjusted earnings per diluted share.
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