Pizza Inn Holdings, Inc. Reports Results For Third Quarter Fiscal Year 2014

Company Continues to Grow Pie Five Pizza Co. Concept

Third Quarter Highlights:

  • Adjusted EBITDA decreased $0.2 million to a loss of $0.2 million compared to the same quarter of the prior year
  • Net loss increased $0.1 million from the comparable prior year quarter to a loss of $0.5 million
  • Pizza Inn domestic comparable store franchise retail sales increased 0.8% year over year
  • Company-owned restaurant sales increased 36.2% year over year
  • Pie Five Company-owned average weekly sales per store increased 16.9% year over year
  • Continued growth in pipeline of Pie Five franchise restaurant openings

THE COLONY, Texas, May 14, 2014 // PRNewswire // - Pizza Inn Holdings, Inc. (NASDAQ: PZZI) today announced results for the third fiscal quarter ended March 30, 2014. The Company had a net loss in the third quarter of $0.5 million compared to a net loss of $0.4 million for the comparable period in the prior fiscal year. The increase in net loss from prior year was primarily due to higher general and administrative expenses, franchise costs attributable to growth of the Pie Five brand, and bad debt expense.

"The performance of the Pie Five concept was very strong in the third quarter," said Randy Gier, President and Chief Executive Officer. "Despite some negative weather impact early in the quarter, the average weekly sales per store for our thirteen Company-owned restaurants increased 16.9% year over year due to a 4.4% increase in comparable store sales and very strong results for the new restaurants opened in the past twelve months. I'm particularly pleased that these strong trends have continued into the current quarter."

"The progress we've made at Pie Five to hone our site selection process and concept prototype has had a clear impact on the performance of our four new Company-owned restaurants (including one relocated restaurant) and four new franchised restaurants opened this fiscal year. That group of eight new Pie Five restaurants generated average weekly sales per store in the third quarter that were 45% higher than that of the existing eleven Company-owned and franchised restaurants," continued Gier.

"Later this week, our Richmond franchisee will open the 20th restaurant in the Pie Five chain and we expect the number of Pie Five restaurants in operation to double by the end of the 2014 calendar year as our new franchisees open their first or second restaurants in markets across the country. To fully capitalize on the momentum in the Pie Five concept we are also accelerating the development of Company-owned restaurants in multiple metropolitan areas. To prepare for this growth we recently added several strong, experienced members to our management team, including a new Chief Financial Officer and a Vice President of Real Estate Development," continued Gier.

"The Pizza Inn system also demonstrated improved performance in the quarter, with an improved trend of comparable store sales and store count," said Gier. "The hard work by our restaurant support team and our Pizza Inn franchisees is paying off as we bring stability to the system", added Gier.

Total revenues for the third quarter and the comparable prior year quarter were $10.9 million and $9.8 million, respectively. Third quarter franchise revenue increased slightly as compared to the prior year as franchise fees from new Pie Five franchisees offset decreased international royalties. Additional franchise development fees previously received from Pie Five franchisees have been deferred and will be recognized as future restaurants are opened.

Third quarter food and supply sales increased by approximately $0.4 million, or 5.5%, as compared to the prior year primarily due to an increase in sales to franchisees as a result of increased domestic franchisee retail sales and higher food commodity costs passed through in prices. Third quarter Company-owned restaurant sales increased $0.7 million, or 36.2%, as compared to the prior year as a result of the opening of two new Company-owned Pie Five restaurants in the second half of fiscal 2013 and four new Company-owned Pie Five restaurants in fiscal 2014 (one of which was a relocation of an existing restaurant), partially offset by the closing of one Company-owned Pizza Inn restaurant at the completion of its lease in fiscal 2014. Third quarter general and administrative expenses increased $0.3 million over the prior year to support growth for new Company-owned Pie Five restaurants and a legal settlement related to patent litigation, partially offset by reduced stock compensation expense.

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.

About Pizza Inn Holdings, Inc.

Headquartered in the Dallas suburb of The Colony, TX, 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 Co." Pizza Inn is an international pizza chain featuring traditional and specialty pizzas, as well as freshly made pastas, sandwiches, and desserts. Pie Five Pizza Co. is a fast-casual concept offering individual pizzas made to order and cooked in less than five minutes. Founded in 1958, Pizza Inn Holdings Inc. owns and franchises approximately 275 restaurants. The Company's common stock is listed on the Nasdaq Capital Market under the symbol "PZZI". For more information, please visit www.pizzainn.com.


 

PIZZA INN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)

                     
                     
                     
       

Three Months Ended

 

Nine Months Ended

       

March 30,

    

March 24,

    

March 30,

    

March 24,

       

2014

 

2013

 

2014

 

2013

                     
                     

REVENUES:

$           10,912

 

$             9,781

 

$           31,281

 

$           30,767

                     

COSTS AND EXPENSES:

             
 

Cost of sales

9,570

 

8,460

 

27,028

 

26,127

 

General and administrative expenses

1,130

 

840

 

3,314

 

2,995

 

Franchise expenses

677

 

608

 

2,150

 

1,675

 

Pre-opening expenses

4

 

82

 

160

 

249

 

Bad debt

93

 

45

 

203

 

135

 

Interest expense

34

 

58

 

113

 

197

       

11,508

 

10,093

 

32,968

 

31,378

                     

LOSS FROM CONTINUING OPERATIONS BEFORE TAXES

(596)

 

(312)

 

(1,687)

 

(611)

 

Income tax benefit

(159)

 

(22)

 

(527)

 

(170)

LOSS FROM CONTINUING OPERATIONS

(437)

 

(290)

 

(1,160)

 

(441)

                     
 

Loss from discontinued operations, net of taxes

(14)

 

(100)

 

(39)

 

(127)

NET LOSS

$               (451)

 

$               (390)

 

$            (1,199)

 

$               (568)

                     

EARNINGS PER SHARE OF COMMON STOCK - BASIC:

             
 

Loss from continuing operations

$              (0.05)

 

$              (0.04)

 

$              (0.14)

 

$              (0.05)

 

Loss from discontinued operations

-

 

(0.01)

 

-

 

(0.02)

 

Net loss

$              (0.05)

 

$              (0.05)

 

$              (0.14)

 

$              (0.07)

                     

EARNINGS PER SHARE OF COMMON STOCK - DILUTED:

             
                     
 

Loss from continuing operations

$              (0.05)

 

$              (0.04)

 

$              (0.13)

 

$              (0.05)

 

Loss from discontinued operations

-

 

(0.01)

 

-

 

(0.02)

 

Net loss

$              (0.05)

 

$              (0.05)

 

$              (0.13)

 

$              (0.07)

                     

Weighted average common shares outstanding - basic

8,771

 

8,021

 

8,566

 

8,021

                     

Weighted average common and

             
 

potential dilutive common shares outstanding

9,290

 

8,267

 

9,109

 

8,198

 

 
 
 

PIZZA INN HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

                         
                   

ASSETS

   

 

March 30,

2014

(unaudited)

 

 

June 30,

2013

                   

CURRENT ASSETS

         
 

Cash and cash equivalents

 

$

365

$

919

 

Accounts receivable, less allowance for bad debts

         
   

of $417 and $228, respectively

   

3,679

 

3,139

 

Notes receivable

   

123

 

292

 

Inventories

   

1,601

 

1,615

 

Income tax receivable

   

343

 

343

 

Deferred income tax assets

   

943

 

882

 

Prepaid expenses and other

   

336

 

307

   

 

Total current assets

     

7,390

 

7,497

                   

LONG-TERM ASSETS

         
 

Property, plant and equipment, net

   

5,652

 

4,711

 

Long-term notes receivable

   

14

 

40

 

Long-term deferred tax asset

   

657

 

168

 

Deposits and other

   

430

 

119

   

 

Total assets

   

$

14,143

$

12,535

                   

LIABILITIES AND SHAREHOLDERS' EQUITY

         

CURRENT LIABILITIES

         
 

Accounts payable - trade

 

$

2,178

$

1,572

 

Accrued expenses

   

1,611

 

1,749

 

Deferred revenues

   

154

 

169

 

Bank debt

   

375

 

669

   

 

Total current liabilities

     

4,318

 

4,159

                   

LONG-TERM LIABILITIES

         
 

Bank debt, net of current portion

   

750

 

1,856

 

Deferred revenues, net of current portion

   

680

 

370

 

Deferred gain on sale of property

   

40

 

59

 

Other long-term liabilities

   

70

 

22

   

 

Total liabilities

     

5,858

 

6,466

                   

COMMITMENTS AND CONTINGENCIES  (See Note 3)

         
                   

SHAREHOLDERS' EQUITY

         
 

Common stock, $.01 par value; authorized 26,000,000

         
   

shares; issued 15,849,615 and 15,312,680 shares, respectively;

       
   

outstanding 8,730,215 and 8,193,280 shares, respectively

   

158

 

153

 

Additional paid-in capital

   

13,584

 

10,174

 

Retained earnings

   

19,179

 

20,378

 

Treasury stock at cost

         
   

Shares in treasury: 7,119,400 

   

(24,636)

 

(24,636)

   

 

   Total shareholders' equity

     

8,285

 

6,069

           

$

14,143

$

12,535

 
 
 

PIZZA INN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

                 
           

Nine Months Ended

           

March 30,

     

March 24

           

2014

 

2013

                 

CASH FLOWS FROM OPERATING ACTIVITIES:

     
                 
 

      Net loss

 

$             (1,199)

 

$                (568)

 

      Adjustments to reconcile net loss to 

     
   

cash (used) provided by operating activities:

     
   

Depreciation and amortization

1,056

 

958

   

(Gain) loss on sale of assets

(40)

 

129

   

Stock compensation expense

45

 

135

   

Deferred taxes

(551)

 

(243)

   

Provision for bad debts

203

 

44

 

      Changes in operating assets and liabilities:

     
   

Notes and accounts receivable

(548)

 

(172)

   

Inventories

14

 

330

   

Accounts payable - trade

606

 

(21)

   

Accrued expenses

(90)

 

129

   

Deferred revenue

276

 

61

   

Prepaid expenses and other

(367)

 

(102)

   

Cash (used) provided by operating activities

(595)

 

680

                 

CASH FLOWS FROM INVESTING ACTIVITIES:

     
 

      Proceeds from sale of assets

58

 

184

 

      Capital expenditures

(1,987)

 

(1,547)

   

Cash used for investing activities

(1,929)

 

(1,363)

                 

CASH FLOWS FROM FINANCING ACTIVITIES:

     
 

      Proceeds from sale of stock

3,288

 

-

 

      Proceeds from stock options

82

 

-

 

      Borrowings of bank debt

-

 

3,160

 

      Repayments of bank debt

(1,400)

 

(2,252)

   

Cash provided by financing activities 

1,970

 

908

                 

Net increase (decrease) in cash and cash equivalents

(554)

 

225

Cash and cash equivalents, beginning of period

919

 

590

Cash and cash equivalents, end of period

$                  365

 

$                  815

                 
                 
                 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

                 
                 

CASH PAYMENTS FOR:

     
                 
 

Interest

 

$                  113

 

$                  248

 

Income taxes - net

$                      1

 

$                  (84)

 

                 
                 
                 
   

Three Months Ended

 

Nine Months Ended

   

March 30,

     

March 24,

     

March 30,

     

March 24,

   

2014

 

2013

 

2014

 

2013

 Net loss 

 

$              (451)

 

$              (390)

 

$           (1,199)

 

$              (568)

 Interest expense 

 

34

 

58

 

113

 

197

 Income Taxes - Continuing Operations 

 

(159)

 

(22)

 

(527)

 

(170)

 Income Taxes - Discontinued Operations 

 

(7)

 

(8)

 

(20)

 

(66)

 Stock compensation expense 

 

15

 

45

 

45

 

135

 Depreciation and amortization 

 

370

 

340

 

1,056

 

958

 Adjusted EBITDA 

 

$              (198)

 

$                 23

 

$              (532)

 

$               486

SOURCE Pizza Inn Holdings Inc.

Contact:

Tim Mullany
Chief Financial Officer
Pizza Inn Holdings, Inc.
469-384-5000

###

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