LOS ANGELES, Aug. 9, 2006 (PRIMEZONE) -- Grill Concepts, Inc. (Nasdaq:GRIL) today reported sharp increases in revenues for the three and six-month periods ended June 25, 2006.
Total revenues rose 10.8 percent to $18.7 million for the second quarter of fiscal 2006 from $16.9 million in the year-ago period. Sales at company-owned restaurants grew 8.2 percent to $14.5 million from $13.4 million in the fiscal 2005 second quarter. Management and license fees increased 13.3 percent to $418,000 from $369,000 in the year-ago second quarter.
Same-store sales advanced 7.4 percent and 7.2 percent, respectively, for the 2006 second quarter and six month period.
"The second quarter total revenue increase underscores the growing strength of our branded restaurants and the appreciation of our offering of freshly-prepared classic American grill fare," said Philip Gay, who was named chief executive officer of Grill Concepts in June, after serving as chief financial officer for the past two years. "Our Daily Grill restaurants delivered a 6.8 percent increase in same-store sales for the 2006 second quarter, and our Grill on the Alley restaurants turned an impressive 8.5 percent same store sales increase. We are extremely proud of this accomplishment and attribute the performance to the strength of our brand and the dedication of our team members."
Net income for the 2006 second quarter totaled $1.5 million, or $0.23 per diluted share. The current quarter results included an income tax benefit of $2.0 million related to the release of a valuation allowance with respect to deferred tax assets and a non-recurring expense of $279,000 associated with an early retirement of certain capital obligations.. Net income for the 2005 comparative quarter amounted to $125,000, or $0.02 per diluted share.
Earnings before interest, taxes, depreciation and amortization (EBITDA), in the 2006 second quarter totaled $566,000, compared with $701,000 in the fiscal 2005 second quarter. The decrease in EBITDA for the current second quarter primarily reflects increased general and administrative expenses associated with heightened expansion efforts, management transition and stock-based compensation expense.
Grill Concepts adopted Financial Accounting Standards Board Statement No. 123(R) related to expensing stock-based compensation on a modified prospective basis beginning fiscal 2006, which reduced net income by $57,000 and diluted net income per share by $0.01 in the quarter.
"We have fortified the infrastructure of our organization with recent additions to our management team, including a deeply experienced chief financial officer and highly regarded industry veterans in employee training, purchasing and R&D," Gay said. "In addition, we have established even greater financial flexibility with our new and expanded credit facility to fuel our growth initiatives."
During the quarter, the company announced plans to enter the Memphis market with the 2007 opening of a Daily Grill restaurant adjacent to the FedExForum, home to the NBA's Memphis Grizzlies, and centrally located within the Beale Street entertainment district, one of Tennessee's top tourist attractions. Subsequent to the close of the second quarter, the company also announced plans to enter the Seattle market with a spring 2007 opening of a Daily Grill restaurant in the heart of the city as part of the largest hotel in the downtown area, currently under a major expansion.
In July 2006, the company opened its newest The Grill on the Alley-branded restaurant in Texas, situated at the main entrance of the Dallas Galleria shopping complex, a high-visibility destination that attracts more than 17 million visitors a year.
For the year-to-date period, total revenues rose 11.5 percent to $38.0 million from $34.1 million in the year-ago period. Sales at company-owned restaurants grew 10.3 percent to $29.6 million from $26.8 million in the fiscal 2005 first half. Management and license fees increased 15.6 percent to $838,000 from $725,000 in the year-ago six-month period.
Net income for the current six-month period totaled $2.0 million, or $0.31 per diluted share and includes an income tax benefit of $2.0 million. The company's adoption of FASB 123(R) reduced net income by $91,000 and diluted net income per share by $0.01. In the first half of fiscal 2005, the company posted net income of $807,000, or $0.13 per diluted share.
EBITDA in the first six months of fiscal 2006 totaled $1.7 million, compared with $2.0 million in the fiscal 2005 first half of the year.
About Grill Concepts, Inc.
Grill Concepts owns, manages and licenses upscale casual and fine dining, full service restaurants under two core brand names: The Grill on the Alley and Daily Grill. The company operates 25 restaurants including five The Grill on the Alley-branded restaurants in Beverly Hills, Hollywood, San Jose, California; Chicago; and Dallas, as well as 20 Daily Grill restaurants in Southern and Northern California; the Washington, D.C. metropolitan region; Houston, Texas; Portland, Oregon; and Skokie, Illinois.
Non-GAAP Financial Measure
The company believes that EBITDA, although a non-GAAP measure, provides greater comparability regarding its ongoing operating performance. However, EBITDA should not be considered an alternative to measurements required by accounting principles generally accepted in the United States ("U.S. GAAP"). A reconciliation of the company's U.S. GAAP information to EBITDA is provided in the attached table.
This news release contains forward-looking statements, which are based on current operations, plans and expectations. Such statements include, but are not limited to, the company's ability to continue expanding its restaurant network and projected opening dates of the Memphis and Seattle restaurants. Actual results may differ materially from these statements due to risks and uncertainties beyond the company's control, which are detailed from time to time in the company's filings with the United States Securities and Exchange Commission.
GRILL CONCEPTS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(dollars in thousands, except share data)
(unaudited)
Three Months Ended Six Months Ended
--------------------- ---------------------
June 25, June 26, June 25, June 26,
2006 2005 2006 2005
--------- --------- --------- ---------
Revenues:
Sales $ 14,512 $ 13,417 $ 29,574 $ 26,804
Cost reimbursements 3,796 3,120 7,614 6,589
Management and
license fees 418 369 838 725
--------- --------- --------- ---------
Total revenues 18,726 16,906 38,026 34,118
Operating expenses:
Cost of sales 4,104 3,814 8,278 7,552
Restaurant operating 8,639 8,047 17,579 15,748
Reimbursed costs 3,796 3,120 7,614 6,589
General and
administrative 1,621 1,224 2,862 2,270
Depreciation and
amortization 530 482 1,061 943
Pre-opening costs 124 153 124 244
--------- --------- --------- ---------
Total operating
expenses 18,814 16,840 37,518 33,346
--------- --------- --------- ---------
Income (loss) from
operations (88) 66 508 772
Interest expense, net (86) (43) (107) (80)
Debt extinguishment
costs (279) -- (279) --
--------- --------- --------- ---------
Income (loss) before
provision for income
taxes and minority
interest (453) 23 122 692
Benefit (provision) for
income taxes 2,043 (131) 1,975 (209)
Minority interest in net
(profit) loss of
subsidiaries (80) 233 (105) 324
--------- --------- --------- ---------
Net income 1,510 125 1,992 807
Preferred dividends
accrued (12) (12) (25) (25)
--------- --------- --------- ---------
Net income applicable
to common stock $ 1,498 $ 113 $ 1,967 $ 782
========= ========= ========= =========
Net income per share
applicable to common
stock:
Basic net income $ 0.26 $ 0.02 $ 0.34 $ 0.14
========= ========= ========= =========
Diluted net income $ 0.23 $ 0.02 $ 0.31 $ 0.13
========= ========= ========= =========
Weighted average shares
outstanding:
Basic 5,837,306 5,652,230 5,795,036 5,651,188
========= ========= ========= =========
Diluted 6,456,751 6,064,781 6,415,287 6,018,508
========= ========= ========= =========
GRILL CONCEPTS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-U.S. GAAP MEASURES TO U.S. GAAP
(dollars in thousands)
(unaudited)
Computation of Earnings Before Interest, Taxes, Depreciation
and Amortization (EBITDA):
Three Months Ended Six Months Ended
----------------- -----------------
June 25, June 26, June 25, June 26,
2006 2005 2006 2005
------- ------- ------- -------
Net income $ 1,510 $ 125 $ 1,992 $ 807
Add
Income taxes (2,043) 131 (1,975) 209
Interest expense, net 86 43 107 80
Debt extinguishment costs 279 -- 279 --
Minority interest 80 (233) 105 (324)
Pre-opening costs 124 153 124 244
Depreciation and amortization 530 482 1,061 943
------- ------- ------- -------
EBITDA $ 566 $ 701 $ 1,693 $ 1,959