Franchisor and operator of Popeyes restaurants,
AFC Enterprises Inc.
) reported strong third quarter results for the period ended Oct
6, 2013. Adjusted earnings for the quarter were 38 cents per
share, which beat the Zacks Consensus Estimate of 31 cents by
22.5%. The quarterly figure was also up 31.0% from the year-ago
profit of 29 cents per share. The results were driven by stronger
same-store sales and higher average new restaurant sales.
AFC Enterprises' quarterly revenues were $49.3 million, beating
the Zacks Consensus Estimate of $46 million by 7.2%. The reported
number also surged 26.7% year over year. The top-line growth was
mainly driven by positive same-store sales and new restaurant
growth. However, it also includes $1.6 million of one-time fees
associated with the conversion of restaurants acquired in
Minnesota and California.
Total domestic same-store sales were up 5.1%; however, it was
lower than the year ago sales of 7.0%. Meanwhile, International
same-store sales were up 5.1% better than the year ago sales
growth of 2.5%.
Restaurant employee, occupancy and other expenses were up 34.3%
year over year to $9.0 million. Total expenses were $33.9
million, up 21.9% year over year. Increase in operating expenses
was offset by increase in revenue, resulting in an operating
profit of $15.4 million that edged up 38.7% year over year.
Company-operated restaurant operating profit (ROP) increased 50%
year over year to $3.3 million.
During the quarter, 39 restaurants were opened, which include 23
domestic and 16 international units. As many as 6 restaurants
were shut down, which includes 1 domestic unit and 5
international units. Taking into account, the total number of
openings and shutdowns, net openings stood at 33 restaurants.
As of Oct 6, 2013, cash and cash equivalents were $13.2 million,
down from $17.0 million as of Dec 31, 2012. Long-term debt was
$60.5 million, down from $66.8 million as of Dec 31, 2013.
During the quarter, the company repurchased approximately 0.16
million shares of its common stock for approximately $6.5
For fiscal 2013, the company narrowed its adjusted earnings per
share to $1.39 to $1.42 versus its prior expectation of $1.37 to
$1.42. The narrowed guidance reflects muted comp sales growth and
expenses related to restaurant openings.
With comps expected to moderate in fourth quarter, the company
expects same-store sales growth for 2013 in the range of 3.5% to
4.0% versus its prior expectation of 3.5% to 4.5%. The company
now expects global new openings in the range of 185 to 195
compared to its previous expectation of 175-195 restaurants.
The company plans to invest $34 million to $36 million for its
new and existing company-operated restaurants and the restaurants
acquired in Minnesota and California.
Over the next five years, the company expects earnings per share
growth of 13% to 15% and same-store sales growth of 1% to 3% on
an annualized basis driven by its Strategic Plan. This Strategic
Plan focuses on building a unique brand, operating good
restaurants, and enhancing the quality of restaurants while
emphasizing on human capital management.
AFC Enterprises currently has a Zacks Rank #3 (Hold). Stocks that
look better positioned are
Buffalo Wild Wings Inc.
Bob Evans Farms Inc.
Burger King Worldwide Inc.
). While Buffalo Wild Wings carries a Zacks Rank #1 (Strong Buy),
Bob Evans Farms and Burger King Worldwide hold a Zacks Rank #2
AFC ENTERPRISES (AFCE): Free Stock Analysis
BURGER KING WWD (BKW): Free Stock Analysis
BOB EVANS FARMS (BOBE): Free Stock Analysis
BUFFALO WLD WNG (BWLD): Free Stock Analysis
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