Pizza Inn Holdings, Inc. Reports Results for Second Quarter Fiscal Year 2012

Company Continues to Expand and Invest in New Pie Five Concept

Second Quarter Year-to-Year Highlights:

  • Revenue was flat as a decrease in food and supply sales was offset by a 32.2% increase in Company owned restaurant sales
  • Net income decreased $0.3 million to $0.1 million due primarily to $0.2 million of pre-opening costs related to the Pie Five concept
  • EBITDA decreased $0.4 million to $0.3 million
  • Domestic buffet-style restaurant same store sales increased 0.4% while total domestic same store sales declined 0.2%
  • Revenue from international franchising increased 26.4% to $0.3 million
  • The Company opened three additional Pie Five restaurants
  • A total of seven franchised and Company owned restaurants were opened in the quarter

THE COLONY, Texas, Feb. 8, 2012 // GLOBE NEWSWIRE // -- Pizza Inn Holdings, Inc. (Nasdaq:PZZI) today announced results for the second fiscal quarter ended December 25, 2011. Net income decreased $0.3 million year over year to $0.1 million, or $0.01 per share, compared to net income of $0.4 million, or $0.05 per share, for the same quarter of the prior fiscal year. The decline in net income was primarily attributable to $0.2 million of pre-opening costs associated with the opening of three new Company owned Pie Five restaurants during the three months ended December 25, 2011, as well as $0.1 million of costs associated with preparing the Company to support the growth of the Pie Five business and the franchising of Pizza Inn in China. Second quarter revenues were essentially unchanged at $10.3 million compared to $10.4 million for the same quarter of the prior fiscal year. Domestic buffet-style restaurant same store sales increased 0.4% while total domestic same store sales decreased 0.2% from the comparable quarter of the prior fiscal year. Company store restaurant sales increased 32.2% to $1.3 million due primarily to new store openings. Food and supply sales decreased by approximately $0.4 million, or 4.1%, due to a decrease in the average number of restaurants open in the current period when compared to the prior period

.

For the six months ended December 25, 2011, net income was $0.4 million, or $0.05 per share, compared to $0.5 million, or $0.06 per share, for the same period in the prior fiscal year. The decline in net income was primarily attributable to $0.2 million of pre-opening costs associated with the opening of three Pie Five during the six months ended December 25, 2011, as well as $0.1 million of costs associated with preparing the Company to support the growth of the Pie Five business and the franchising of Pizza Inn in China. Revenues increased $0.5 million, or 2.4%, to $21.5 million for the six months ended December 25, 2011 compared to $21.0 million during the same period in the prior fiscal year. Domestic buffet-style restaurant same store sales increased 1.6% while total domestic same store sales increased 1.1% compared to the prior fiscal year. For the first half of fiscal 2012, Company store restaurant sales increased $0.7 million, or 37.4%, to $2.5 million due to new store openings

.

"We continued to develop and expand our Pie Five concept with the addition of three new locations this quarter," commented Charlie Morrison, President and CEO. "We have invested in people and infrastructure in anticipation of continued growth of our Pie Five concept. The Company opened its fifth Pie Five location in the Dallas/Ft. Worth area in January and we expect to open three more Company owned stores before July 2012. We are now offering Pie Five franchises in all non-registration states in the US and are working on registering in all other states."

"We were also pleased to see same store sales growth in our Pizza Inn brand remain solid at 1.1% domestically and 0.9% internationally for the first half of the year," Mr. Morrison concluded.

Certain statements in this press release, other than historical information, may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are intended to be covered by the safe harbors created thereby. These forward-looking statements are based on current expectations that involve numerous risks, uncertainties and assumptions. Assumptions relating to these forward-looking statements involve judgments with respect to, among other things, future economic, competitive and market conditions, regulatory framework and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of Pizza Inn Holdings. Although the assumptions underlying these forward-looking statements are believed to be reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that any forward-looking statements will prove to be accurate. In light of the significant uncertainties inherent in these forward-looking statements, the inclusion of such information should not be regarded as a representation that the objectives and plans of Pizza Inn Holdings will be achieved.

Pizza Inn Holdings, Inc. is an owner, franchisor and supplier of a system of restaurants operating domestically and internationally under the trademarks "Pizza Inn" and "Pie Five Pizza Company." The Company and its distribution division, Norco Restaurant Services Company, are headquartered in The Colony, Texas. The Company's common stock is listed on the Nasdaq Capital Market under the symbol "PZZI."

The Pizza Inn logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4933

     
PIZZA INN HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
         
  Three Months Ended Six Months Ended
REVENUES: December 25,
2011
December 26,
2010
December 25,
2011
December 26,
2010
         
Food and supply sales  $ 8,138  $ 8,489  $ 17,044  $ 17,191
Franchise revenue  943  917  1,892  1,942
Restaurant sales  1,255  949  2,547  1,854
         
   10,336  10,355  21,483  20,987
         
COSTS AND EXPENSES:        
Cost of sales  8,611  8,473  17,861  17,177
Franchise expenses  521  344  973  820
General and administrative expenses  1,062  873  1,969  1,755
Costs associated with store closure  --  --  --  319
Bad debt  15  40  30  55
Interest expense  17  18  33  28
   10,226  9,748  20,866  20,154
         
INCOME FROM CONTINUING OPERATIONS BEFORE TAXES  110  607  617  833
Income taxes  39  213  217  294
INCOME FROM CONTINUING OPERATIONS  71  394  400  539
         
Loss from discontinued operations, net of taxes  (15)  (15)  (31)  (31)
NET INCOME  $ 56  $ 379  $ 369  $ 508
         
EARNINGS PER SHARE OF COMMON STOCK - BASIC:        
Income from continuing operations  $ 0.01  $ 0.05  $ 0.05  $ 0.07
Loss from discontinued operations  --   --   --   (0.01)
Net income  $ 0.01  $ 0.05  $ 0.05  $ 0.06
         
EARNINGS PER SHARE OF COMMON STOCK - DILUTED:        
         
Income from continuing operations  $ 0.01  $ 0.05  $ 0.05  $ 0.07
Loss from discontinued operations  --   --   --   (0.01)
Net income  $ 0.01  $ 0.05  $ 0.05  $ 0.06
         
Weighted average common shares outstanding - basic 8,013 8,011 8,012 8,011
         
Weighted average common and potential dilutive common shares outstanding 8,362 8,012 8,292 8,013
 
PIZZA INN HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
     
ASSETS December 25,
2011 (unaudited)
June 26,
2011
     
CURRENT ASSETS    
Cash and cash equivalents $ 509 $ 949
Accounts receivable, less allowance for bad debts of $189 and $162, respectively  3,280  3,128
Inventories  1,724  1,829/td>
Income tax receivable  653  553
Deferred income tax assets  783  822
Prepaid expenses and other  403  232
Total current assets  7,352  7,513
     
LONG-TERM ASSETS    
Property, plant and equipment, net  4,059  3,196
Long-term notes receivable  39  51
Deposits and other  486  392
   $ 11,936  $ 11,152
LIABILITIES AND SHAREHOLDERS' EQUITY    
CURRENT LIABILITIES    
Accounts payable - trade $ 2,095 $ 2,103
Accrued expenses  1,262  1,557
Deferred revenues  157  202
Bank debt  580  333
Total current liabilities  4,094  4,195
     
LONG-TERM LIABILITIES    
Bank debt, net of current portion  809  482
Deferred tax liability  461  360
Deferred revenues, net of current portion  145  165
Deferred gain on sale of property  96  109
Other long-term liabilities  25  --
Total liabilities  5,630  5,311
     
COMMITMENTS AND CONTINGENCIES     
     
SHAREHOLDERS' EQUITY    
Common stock, $.01 par value; authorized 26,000,000 shares; issued 15,140,319 and 15,130,319 shares, respectively; outstanding 8,020,919 and 8,010,919 shares, respectively  151  151
Additional paid-in capital  9,105  9,009
Retained earnings  21,686  21,317
Treasury stock at cost shares in treasury: 7,119,400   (24,636)  (24,636)
Total shareholders' equity   6,306  5,841
  $ 11,936  $ 11,152
PIZZA INN HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
  Six Months Ended
  December 25,
2011
December 26,
2010
     
CASH FLOWS FROM OPERATING ACTIVITIES:    
     
Net income  $ 369  $ 508
Adjustments to reconcile net income to cash provided by operating activities:    
Depreciation and amortization  389  546
Stock compensation expense  73  60
Deferred tax  39  (92)
Provision for bad debts  30  55
Net income adjusted for non-cash items  900  1,077
Changes in operating assets and liabilities:    
Notes and accounts receivable  (282)  (192)
Inventories  105  (394)
Accounts payable - trade  (8)  (25)
Accrued expenses  (169)  (243)
Deferred revenue  (78)  58
Prepaid expenses and other  (283)  (18)
Net changes in operating assets and liabilities  (715)  (814)
Cash provided by operating activities  185  263
     
CASH FLOWS FROM INVESTING ACTIVITIES:    
     
Capital expenditures  (1,222)  (1,313)
Cash used by investing activities  (1,222)  (1,313)
     
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from exercise of stock options  23  --
Change in bank debt, net  574  615
Cash provided by financing activities   597  615
     
Net decrease in cash and cash equivalents  (440)  (435)
Cash and cash equivalents, beginning of period  949  761
Cash and cash equivalents, end of period  $ 509  $ 326
     
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
     
CASH PAYMENTS FOR:    
     
Interest  $ 32  $ 27
Income taxes - net  57  290
 
PIZZA INN HOLDINGS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands)
     
  Three Months Ended
  December 25,
2011
December 26,
2010
 Net Income   $ 56  $ 379
 Interest Expense   17  18
 Taxes   39  213
 Depreciation and Amortization   206  118
 EBITDA   $ 318  $ 728
     
  Six Months Ended
  December 25,
2011
December 26,
2010
 Net Income   $ 369  $ 508
 Interest Expense   33  28
 Taxes   217  294
 Depreciation and Amortization   389  546
 EBITDA   $ 1,008  $ 1,376

###

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