Diversified Restaurant Holdings Reports Strong Comparable Restaurant Sales Growth For The 2013 Second Quarter
- Achieved second quarter revenue of $27.0 million; up 61.2% over prior-year period
- Consolidated comparable restaurant sales increased 6.7% in the second quarter
- Restaurant-level EBITDA, a non-GAAP measure(1), in the quarter was up 73.2% over the prior-year period to $5.2 million; Achieved $9.9 million for the year-to-date period
SOUTHFIELD, Mich. - Aug. 14, 2013 // GLOBE NEWSWIRE // - Diversified Restaurant Holdings, Inc. (Nasdaq:BAGR) ("DRH" or the "Company"), the creator, developer, and operator of the unique, full-service, ultra-casual restaurant and bar Bagger Dave's Legendary Burger Tavern® ("Bagger Dave's") and one of the largest franchisees for Buffalo Wild Wings® ("BWW"), today announced results for the second quarter ended June 30, 2013.
Second quarter revenue of $27.0 million was up $10.2 million, or 61.2%, from the second quarter of 2012. Sales growth was primarily driven by the addition of 18 new restaurants since last year's period and strong comparable restaurant sales performance for both brands. Comparable restaurant sales increased 6.7% on a consolidated basis for the second quarter of 2013. There were 36 comparable restaurants for the period which included 30 BWW and six Bagger Dave's.
"We believe our strong comparable restaurant sales growth demonstrates the quality of our site selection and the strong execution by our team to delight our guests so they keep coming back. We continue to successfully implement our new restaurant growth strategy. We opened three new restaurants in the quarter and recently opened our second Bagger Dave's in Indiana in July," commented Michael Ansley, President and CEO of DRH. "The Bagger Dave's brand continues to expand as we believe the effectiveness of our blend of social and traditional media marketing intensifies word of mouth networking."
At the end of the 2013 second quarter, the Company had 48 restaurants (47 corporate-owned and one franchised) operating, comprised of 13 Bagger Dave's and 35 BWW, an increase of 60.0% from 30 restaurants at the end of the prior-year second quarter (29 corporate-owned and one franchised). DRH acquired eight BWW in September 2012.
Net income in the second quarter of 2013 was break-even compared with a net loss of $0.1 million in the same period of the prior year. Adjusted net income, which excludes unusual items, was $0.1 million, or $0.01 per diluted share, in the 2013 second quarter. (See the reconciliation between GAAP Net Income (Loss) and Adjusted Net Income (Loss) in the supplemental table included in this release.)
Second Quarter Operating Results
Food, beverage, and packaging costs as a percentage of total revenue decreased 150 basis points to 29.7% in the 2013 second quarter from 31.2% in the second quarter of 2012. The improvement was due to lower chicken wing pricing, partially offset by lower wing-per-pound yields.
Compensation costs increased $2.6 million to $6.9 million in the second quarter of 2013 from $4.3 million in the second quarter of 2012 primarily due to more restaurants being operated in 2013. As a percentage of total revenue, compensation costs were consistent at 25.5% in second quarter of 2013 and 2012, respectively.
Total restaurant operating costs in the 2013 second quarter were $21.8 million, or 80.9% of revenue, compared with $13.8 million, or 82.2% of revenue, in the prior-year period.
Second quarter of 2013 general and administrative ("G&A") costs of $2.0 million were up $0.5 million compared with the prior year primarily due to increased marketing and advertising expense, which is consistent with the increase in sales, and hiring personnel critical to our growth. Included in this year's second quarter was approximately $0.1 million of non-recurring expenses associated with the Company's listing on the NASDAQ in April. Excluding the NASDAQ listing expenses, G&A costs were 6.8% of revenue compared with 8.7% in the second quarter of last year.
Pre-opening expenses of $0.8 million in the second quarter reflect the three new restaurants that were opened during the period and expenses associated with seven additional restaurants in the construction phase in the second quarter of 2013 compared with one new restaurant and five in the construction phase in the prior-year period. Pre-opening expenses can vary from quarter to quarter depending on the location, number, and timing of openings.
Second quarter 2013 depreciation and amortization increased to $1.8 million from $1.0 million in the 2012 second quarter, reflecting the increase in capital investments made over the past year.
Restaurant-level EBITDA increased $2.2 million, or 73.2%, to $5.2 million for the second quarter of 2013 from the same period of the prior year. Adjusted EBITDA was $3.3 million for the 2013 second quarter, more than double the $1.5 million in the second quarter of 2012. (1)DRH believes that, when used in conjunction with GAAP measures, restaurant-level EBITDA and adjusted EBITDA, which are non-GAAP measures, provide additional information related to its operating performance. (See reconciliation of restaurant-level EBITDA and adjusted EBITDA in the supplemental tables included at the end of this release.)
Interest expense was $0.6 million in the second quarter of 2013 compared with $0.3 million in the prior-year period and reflects higher debt levels and approximately $0.1 million of non-recurring expenses associated with the Company's debt restructuring activities.
Year-to-Date Review
Total revenue for the six months ended June 30, 2013 was $54.0 million, an increase of $19.6 million, or 56.7%, over $34.5 million during the same period in 2012, which ended June 24, 2012. A significant portion of the increase, approximately $17.5 million, was attributable to revenue generated from new or acquired locations. Consolidated comparable restaurant sales were up $2.1 million, or 5.1%, in the first half of 2013 compared with last year's first half.
Restaurant-level EBITDA was $9.9 million and $6.5 million for the year to date periods of 2013 and 2012, respectively. Adjusted EBITDA increased to $6.5 million for the first half of 2013 from $3.7 million in the corresponding period of 2012. (See reconciliation of restaurant-level EBITDA and adjusted EBITDA in the supplemental tables included at the end of this release.)
For the first six months of 2013, net income attributable to DRH was $0.2 million, or $0.01 per diluted share, compared with $0.6 million, or $0.03 per diluted share, in the first half of 2012. Adjusted net income, which excludes unusual items, was $0.4 million, or $0.02 per diluted share, for the first half of 2013.
Solid Cash Position and Flexibility for Growth
Cash, cash equivalents and investments were $22.4 million at June 30, 2013, compared with $2.7 million at December 30, 2012. The Company issued 6.9 million shares in an underwritten, follow-on offering in April for gross proceeds of $34.5 million, of which $10.0 million was used to pay down existing debt. DRH also entered into a new and expanded $63.0 million credit facility in April. Total debt at the end of the quarter was $40.2 million.
Capital expenditures were $9.9 million during the first six months of 2013 compared with $2.7 million during the first six months of 2012, and reflect new restaurant development. For 2013, DRH estimates capital expenditures to be up to $29.0 million, which is higher than the initial range of $22.5 million to $26.0 million. Approximately 50% will be allocated for 2013 new restaurant openings, 25% for real estate, including the purchase of land and construction of buildings associated with new openings; 15% for restaurant remodels, upgrades, relocations and other general corporate purposes and 10% for new store openings scheduled for early 2014.
Fiscal 2013 Outlook
DRH plans to open six additional restaurants, which will be comprised mostly of Bagger Dave's during the remainder of 2013. Two Bagger Dave's and two BWW locations have already opened this year. By the end of 2017, the Company plans to operate approximately 50 Bagger Dave's and 47 BWW locations.
"We continue to selectively implement our growth strategy and are investing our time and resources into identifying the right expansion opportunities that both increase our footprint and concentrate our positions to enhance brand recognition for our Bagger Dave's restaurants. We will be implementing a Bagger Dave's loyalty program and introducing new menu options to appeal to a broader demographic," commented Mr. Ansley. "We believe the success in attracting guests to Bagger Dave's is due to the brand emerging as a fun, quick casual restaurant and tavern with broad appeal."
DRH reaffirmed revenue guidance for fiscal 2013 to be in the range of $110.0 million to $115.0 million, up approximately 42% to 49% over fiscal 2012. The Company tightened its restaurant-level EBITDA range for fiscal 2013 to be between $21.0 million to $22.0 million from the previous $21.0 million to $23.0 million range. Adjusted EBITDA for fiscal 2013 is now expected to be between $13.5 million to $14.5 million from the previous $15.0 million to $16.0 million, due in part to investments to support the Company's ongoing growth.
Webcast and Conference Call
DRH will host a conference call and webcast on Thursday, August 15, 2013 at 10:00 a.m. Eastern Time, during which management will review the financial and operating results for the second quarter and discuss its corporate strategies and outlook. The review will be accompanied by a slide presentation which will be made available prior to the conference call on the Company's website at www.diversifiedrestaurantholdings.com. A question and answer session will follow.
The teleconference can be accessed by calling (201) 493-6780. The webcast can be monitored on the Company's website at www.diversifiedrestaurantholdings.com.
A telephonic replay will be available from 1:00 p.m. Eastern Time on the day of the teleconference through Thursday, August 22, 2013. To listen to a replay of the call, dial (858) 384-5517 and enter the conference ID number 417138. An archive of the webcast will be available on the Company's website and will include a transcript, once available.
About Diversified Restaurant Holdings
Diversified Restaurant Holdings, Inc. ("DRH" or the "Company") is the creator, developer, and operator of the unique, full-service, ultra-casual restaurant concept, Bagger Dave's Legendary Burger Tavern® ("Bagger Dave's") and one of the largest Buffalo Wild Wings® ("BWW") franchisees. Between the two concepts, the Company currently operates 48 corporate-owned restaurants in Michigan, Florida, Illinois, and Indiana, and one franchised Bagger Dave's in Missouri, for a total of 49 restaurants. The Company routinely posts news and other important information on its website at www.diversifiedrestaurantholdings.com.
Bagger Dave's offers a full-service, family-friendly restaurant and bar with a casual, comfortable atmosphere. The menu features freshly-made burgers, accompanied by more than 30 toppings from which to choose, along with fresh-cut fries, hand-dipped milkshakes, and a selection of craft beer and wine. Signature items include Sloppy Dave's BBQ®, Train Wreck Burger®, and Bagger Dave's Amazingly Delicious Turkey Black Bean Chili®. The Bagger Dave's concept emphasizes local flair by showcasing historical photos of the city in which each restaurant resides and features an electric train that runs above the dining room and bar areas. Currently, there are 13 corporate-owned locations and one franchised location. For more information, visit www.baggerdaves.com.
DRH operates 35 BWW restaurants: 17 in Michigan, 10 in Florida, 4 in Illinois and 4 in Indiana. The Company has opened 21 new BWW restaurants in fulfillment of its 32-restaurant Area Development Agreement ("ADA") with franchisor Buffalo Wild Wings, Inc. (Nasdaq:BWLD). The remaining 11 restaurants under the ADA agreement, along with an additional franchise agreement in Indiana, suggest that the Company will operate 47 BWW restaurants by 2017.
Safe Harbor Statement
The information made available in this news release contains forward-looking statements which reflect DRH's current view of future events, results of operations, cash flows, performance, business prospects and opportunities. Wherever used, the words "anticipate," "believe," "expect," "intend," "plan," "project," "will continue," "will likely result," "may," and similar expressions identify forward-looking statements as such term is defined in the Securities Exchange Act of 1934. Any such forward-looking statements are subject to risks and uncertainties and the Company's actual growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities could differ materially from historical results or current expectations. Some of these risks include, without limitation, the impact of economic and industry conditions, competition, food and drug safety issues, restaurant expansion and remodeling, labor relations issues, costs of providing employee benefits, regulatory matters, legal and administrative proceedings, information technology, security, severe weather, natural disasters, accounting matters, other risk factors relating to our business or industry and other risks detailed from time to time in the Securities and Exchange Commission filings of DRH. Forward-looking statements contained herein speak only as of the date made and, thus, DRH undertakes no obligation to update or publicly announce the revision of any of the forward-looking statements contained herein to reflect new information, future events, developments or changed circumstances or for any other reason.
DIVERSIFIED RESTAURANT HOLDINGS, INC. AND SUBSIDIARIES | ||||
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | ||||
Three Months Ended | Six Months Ended | |||
June 30 2013 |
June 24 2012 |
June 30 2013 |
June 24 2012 |
|
Revenue | $ 26,962,970 | $ 16,728,991 | $ 54,042,084 | $ 34,478,809 |
Operating expenses | ||||
Restaurant operating costs (exclusive of depreciation and amortization shown separately below): | ||||
Food, beverage, and packaging | 8,001,240 | 5,228,330 | 16,577,287 | 10,746,302 |
Compensation costs | 6,882,597 | 4,260,052 | 13,931,499 | 8,665,486 |
Occupancy | 1,571,097 | 910,598 | 3,104,102 | 1,825,717 |
Other operating costs | 5,357,337 | 3,356,113 | 10,663,971 | 6,778,292 |
General and administrative expenses | 1,975,825 | 1,447,542 | 3,499,955 | 2,722,060 |
Pre-opening costs | 803,798 | 218,615 | 1,396,524 | 266,486 |
Depreciation and amortization | 1,813,549 | 957,357 | 3,469,033 | 1,930,415 |
Loss on disposal of property and equipment | 25,667 | 6,603 | 60,741 | 6,603 |
Total operating expenses | 26,431,110 | 16,385,210 | 52,703,112 | 32,941,361 |
Operating profit | 531,860 | 343,781 | 1,338,972 | 1,537,448 |
Change in fair value of derivative instruments | -- | (64,050) | -- | (43,361) |
Interest expense | (585,637) | (253,103) | (1,054,848) | (565,644) |
Other income, net | 22,224 | 13,966 | 24,543 | 47,739 |
Income (loss) before income taxes | (31,553) | 40,594 | 308,667 | 976,182 |
Income tax provision (benefit) | (35,190) | 86,155 | 66,630 | 335,545 |
Net income (loss) | $ 3,637 | $ (45,561) | $ 242,037 | $ 640,637 |
Less: (Income) attributable to noncontrolling interest | $ -- | $ (38,916) | $ -- | $ (78,726) |
Net income (loss) attributable to DRH | $ 3,637 | $ (84,477) | $ 242,037 | $ 561,911 |
Basic earnings per share | $ 0.00 | $ 0.00 | $ 0.01 | $ 0.03 |
Fully diluted earnings per share | $ 0.00 | $ 0.00 | $ 0.01 | $ 0.03 |
Weighted average number of common shares outstanding | ||||
Basic | 24,680,247 | 18,950,153 | 21,820,046 | 18,945,930 |
Diluted | 24,810,611 | 19,115,453 | 21,931,879 | 19,078,126 |
DIVERSIFIED RESTAURANT HOLDINGS, INC. AND SUBSIDIARIES | ||
CONSOLIDATED BALANCE SHEETS | ||
ASSETS | June 30 2013 (unaudited) |
December 30 2012 |
Current assets | ||
Cash and cash equivalents | $ 9,770,166 | $ 2,700,328 |
Investments | 12,665,720 | -- |
Accounts receivable | 307,411 | 248,403 |
Inventory | 1,083,512 | 809,084 |
Prepaid assets | 518,116 | 447,429 |
Total current assets | 24,344,925 | 4,205,244 |
Deferred income taxes | 741,956 | 846,746 |
Property and equipment, net | 46,662,518 | 40,286,490 |
Intangible assets, net | 2,912,377 | 2,509,337 |
Goodwill | 8,578,776 | 8,578,776 |
Other long-term assets | 412,795 | 118,145 |
Total assets | $ 83,653,347 | $ 56,544,738 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Current liabilities | ||
Accounts payable | $ 2,572,005 | $ 3,952,017 |
Accrued compensation | 1,647,478 | 1,647,075 |
Other accrued liabilities | 1,034,564 | 1,013,369 |
Current portion of long-term debt | 6,902,803 | 6,095,684 |
Current portion of deferred rent | 305,161 | 226,106 |
Total current liabilities | 12,462,011 | 12,934,251 |
Deferred rent, less current portion | 2,882,656 | 2,274,753 |
Unfavorable operating leases | 798,441 | 849,478 |
Other liabilities - interest rate swaps | 150,381 | 430,751 |
Long-term debt, less current portion | 33,342,999 | 38,551,601 |
Total liabilities | $ 49,636,488 | $ 55,040,834 |
Stockholders' equity | ||
Common stock -- $0.0001 par value; 100,000,000 shares authorized; 26,093,176 and 18,951,700, respectively, issued and outstanding | 2,580 | 1,888 |
Additional paid-in capital | 35,125,820 | 2,991,526 |
Accumulated other comprehensive loss | (148,362) | (284,294) |
Accumulated deficit | (963,179) | (1,205,216) |
Total stockholders' equity | 34,016,859 | 1,503,904 |
Total liabilities and stockholders' equity | $ 83,653,347 | $ 56,544,738 |
DIVERSIFIED RESTAURANT HOLDINGS, INC. AND SUBSIDIARIES | ||
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | ||
Six Months Ended | ||
Cash flows from operating activities | June 30 2013 |
June 24 2012 |
Net income | $ 242,037 | $ 640,637 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Depreciation and amortization | 3,469,033 | 1,930,415 |
Write off of loan fees | 76,408 | 103,934 |
Loss on disposal of property and equipment | 60,741 | 6,603 |
Share-based compensation | 135,105 | 106,948 |
Change in fair value of derivative instruments | -- | 43,361 |
Deferred income taxes | 34,764 | 263,521 |
Changes in operating assets and liabilities that provided (used) cash | ||
Accounts receivable | (59,008) | (139,206) |
Inventory | (274,428) | 57,694 |
Prepaid assets | (70,687) | (247,476) |
Intangible assets | (557,933) | (102,458) |
Other long-term assets | (294,650) | (3,611) |
Accounts payable | (1,380,012) | (307,787) |
Accrued liabilities | 21,598 | (123,769) |
Deferred rent | 686,958 | 428,619 |
Net cash provided by operating activities | 2,089,926 | 2,657,425 |
Cash flows from investing activities |
||
Purchases of property and equipment | (9,878,354) | (2,745,142) |
Purchases of available-for-sale securities | (12,740,132) | -- |
Net cash used in investing activities | (22,618,486) | (2,745,142) |
Cash flows from financing activities |
||
Proceeds from issuance of long-term debt | 52,402,101 | 17,699,404 |
Repayment of interest rate swap liability | -- | (657,360) |
Repayments of long-term debt | (56,803,584) | (15,991,737) |
Proceeds from sale of common stock, net of underwriter fees | 31,999,881 | -- |
Distributions from noncontrolling interest | -- | (40,000) |
Net cash provided by financing activities | (27,598,398) | 1,010,307 |
Net increase in cash and cash equivalents |
7,069,838 | 922,590 |
Cash and cash equivalents, beginning of period | 2,700,328 | 1,537,497 |
Cash and cash equivalents, end of period | $ 9,770,166 | $ 2,460,087 |
DIVERSIFIED RESTAURANT HOLDINGS, INC. AND SUBSIDIARIES | ||||
Reconciliation Between GAAP Net Income (Loss) and Adjusted Net Income (Loss) | ||||
Three Months Ended | Six Months Ended | |||
June 30 2013 |
June 24 2012 |
June 30 2013 |
June 24 2012 |
|
Net income (loss) attributable to DRH, as reported | $ 3,637 | $ (84,477) | $ 242,037 | $ 561,911 |
NASDAQ listing expenses, net of tax (1) | 91,700 | -- | 91,700 | -- |
Financing fees, net of tax (2) | 53,900 | -- | 53,900 | -- |
Adjusted net income (loss) | $ 149,237 | $ (84,477) | $ 387,637 | $ 561,911 |
Adjusted basic earnings per share | $0.01 | $0.00 | $0.02 | $0.03 |
Adjusted diluted earnings per share | $0.01 | $0.00 | $0.02 | $0.03 |
Weighted average number of common shares outstanding: | ||||
Basic | 24,680,247 | 18,950,153 | 21,820,046 | 18,945,930 |
Diluted | 24,810,611 | 19,115,453 | 21,931,879 | 19,078,126 |
Notes to reconciliation of GAAP Net Income (Loss) to Adjusted Net Income (Loss): | ||||
(1) Reflects $131,000 of non-recurring fees associated with the Company listing on the NASDAQ exchange, net of an estimated 30.0% effective tax rate. | ||||
(2) Reflects $77,000 of non-recurring expenses associated with the Company's debt restructuring activities, net of an estimated 30.0% effective tax rate. | ||||
DIVERSIFIED RESTAURANT HOLDINGS, INC. AND SUBSIDIARIES | ||||
Reconciliation Between Net Income and EBITDA, Restaurant-Level EBITDA and | ||||
Adjusted EBITDA | ||||
Three Months Ended | Six Months Ended | |||
June 30 2013 |
June 24 2012 |
June 30 2013 |
June 24 2012 |
|
Net income (loss) attributable to DRH, as reported | $ 3,637 | $ (84,477) | $ 242,037 | $ 561,911 |
+ Income tax provision (benefit) | (35,190) | 86,155 | 66,630 | 335,545 |
+ Change in fair value of derivative instruments | -- | 64,050 | -- | 43,361 |
+ Interest expense | 585,637 | 253,103 | 1,054,848 | 565,644 |
+ Other income, net | (22,224) | (13,966) | (24,543) | (47,739) |
+ Loss on disposal of property and equipment | 25,667 | 6,603 | 60,741 | 6,603 |
+ Depreciation and amortization | 1,813,549 | 957,357 | 3,469,033 | 1,930,415 |
+ Income attributable to noncontrolling interest | -- | 38,916 | -- | 78,726 |
EBITDA | $ 2,371,076 | $ 1,307,741 | $ 4,868,746 | $ 3,474,466 |
+ Pre-opening costs | 803,798 | 218,615 | 1,396,524 | 266,486 |
+ Non-recurring expenses | 131,000 | -- | 271,000 | -- |
Adjusted EBITDA | $ 3,305,874 | $ 1,526,356 | $ 6,536,270 | $ 3,740,952 |
Adjusted EBITDA margin (%) | 12.3% | 9.1% | 12.1% | 10.9% |
+ Adjusted General and administrative | 1,844,825 | 1,447,542 | 3,368,955 | 2,722,060 |
Restaurant–Level EBITDA | $ 5,150,699 | $ 2,973,898 | $ 9,905,225 | $ 6,463,012 |
Restaurant–Level EBITDA margin (%) | 19.1% | 17.8% | 18.3% | 18.7% |
Restaurant-Level EBITDA represents net income (loss) attributable to DRH plus the sum of non-restaurant specific general and administrative expenses, restaurant pre-opening costs, loss on property and equipment disposals, the change in fair value of derivative instruments, depreciation and amortization, other income and expenses, interest, taxes, income attributable to noncontrolling interest and non-recurring acquisition related expenses in Q1 2013 and non-recurring expenses related to the NASDAQ listing in Q2 2013. Adjusted EBITDA represents net income (loss) attributable to DRH plus the sum of restaurant pre-opening costs, loss on property and equipment disposals, the change in fair value of derivative instruments, depreciation and amortization, other income and expenses, interest, taxes, income attributable to noncontrolling interest, and non-recurring expenses. We are presenting Restaurant-Level EBITDA and Adjusted EBITDA, which are not presented in accordance with GAAP, because we believe they provide an additional metric by which to evaluate our operations. When considered together with our GAAP results and the reconciliation to our net income, we believe they provide a more complete understanding of our business than could be obtained absent this disclosure. We use Restaurant-Level EBITDA and Adjusted EBITDA, together with financial measures prepared in accordance with GAAP, such as revenue, income from operations, net income, and cash flows from operations, to assess our historical and prospective operating performance and to enhance the understanding of our core operating performance. Restaurant-Level EBITDA and Adjusted EBITDA are presented because: (i) we believe they are useful measures for investors to assess the operating performance of our business without the effect of non-cash depreciation and amortization expenses; (ii) we believe investors will find these measures useful in assessing our ability to service or incur indebtedness; and (iii) they are used internally as benchmarks to evaluate our operating performance or compare our performance to that of our competitors.
Additionally, we present Restaurant-Level EBITDA because it excludes the impact of general and administrative expenses and restaurant pre-opening costs, both which are non-recurring at the restaurant level. The use of Restaurant-Level EBITDA thereby enables us and our investors to compare our operating performance between periods and to compare our operating performance to the performance of our competitors. The measure is also widely used within the restaurant industry to evaluate restaurant level productivity, efficiency, and performance. The use of Restaurant-Level EBITDA and Adjusted EBITDA as performance measures permits a comparative assessment of our operating performance relative to our performance based on GAAP results, while isolating the effects of some items that vary from period to period without any correlation to core operating performance or that vary widely among similar companies. Companies within our industry exhibit significant variations with respect to capital structure and cost of capital (which affect interest expense and tax rates) and differences in book depreciation of property and equipment (which affect relative depreciation expense), including significant differences in the depreciable lives of similar assets among various companies. Our management team believes that Restaurant-Level EBITDA and Adjusted EBITDA facilitate company-to-company comparisons within our industry by eliminating some of the foregoing variations.
Restaurant-Level EBITDA and Adjusted EBITDA are not determined in accordance with GAAP and should not be considered in isolation or as an alternative to net income, income from operations, net cash provided by operating, investing, or financing activities, or other financial statement data presented as indicators of financial performance or liquidity, each as presented in accordance with GAAP. Neither Restaurant-Level EBITDA nor Adjusted EBITDA should be considered as a measure of discretionary cash available to us to invest in the growth of our business. Restaurant-Level EBITDA and Adjusted EBITDA as presented may not be comparable to other similarly titled measures of other companies and our presentation of Restaurant-Level EBITDA and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual items. Our management recognizes that Restaurant-Level EBITDA and Adjusted EBITDA have limitations as analytical financial measures, including the following:
• Restaurant-Level EBITDA and Adjusted EBITDA do not reflect our current capital expenditures or future requirements for capital expenditures;
• Restaurant-Level EBITDA and Adjusted EBITDA do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, associated with our indebtedness;
• Restaurant-Level EBITDA and Adjusted EBITDA do not reflect depreciation and amortization, which are non-cash charges, although the assets being depreciated and amortized will likely have to be replaced in the future, nor do Restaurant-Level EBITDA and Adjusted EBITDA reflect any cash requirements for such replacements;
• Restaurant-Level EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;
• Restaurant-Level EBITDA and Adjusted EBITDA do not reflect disposals or other non-recurring income and expenses;
• Restaurant-Level EBITDA and Adjusted EBITDA do not reflect changes in fair value of derivative instruments;
• Restaurant-Level EBITDA and Adjusted EBITDA do not reflect restaurant pre-opening costs; and
• Restaurant-Level EBITDA does not reflect general and administrative expenses.
Contacts:
Investor
Craig P. Mychajluk
Kei Advisors LLC
716.843.3832
cmychajluk@keiadvisors.com
Company
David G. Burke
Chief Financial Officer
248.223.9160
Diversified Restaurant Holdings, Inc.
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