NPC International: Reports Third Quarter 2016 Results

Overland Park / KS. (npc) NPC International Inc., wholly-owned subsidiary of NPC Restaurant Holdings LLC, reported results for its third fiscal quarter ended September 27, 2016.

Third Quarter Highlights

• Pizza Hut comparable store sales were -2.7 percent.
• Wendy’s comparable store sales were +1.7 percent.
• The Company had a net loss of (4.5) MM USD compared to (2.1) MM USD last year.
• Adjusted Ebitda (reconciliation attached) was 24.7 MM USD; an increase of 2.7 MM USD or 12.4 percent from the prior year.
• Adjusted Ebitda margin improved to 8.5 percent from 7.6 percent last year.

Year-to-date Highlights

• Pizza Hut comparable store sales were +0.3 percent.
• Wendy’s comparable store sales were +1.2 percent.
• Net income was 4.4 MM USD, an increase of 1.5 MM USD from last year.
• Adjusted Ebitda (reconciliation attached) was 91.9 MM USD; an increase of 8.1 MM USD or 9.7 percent from the prior year.
• Adjusted Ebitda margin improved to 10.4 percent from 9.6 percent last year.
• Cash balances were 16.1 MM USD compared to 32.7 MM USD at the prior fiscal year end, after investing 36.8 MM USD in the acquisition of 39 Wendy’s units during the quarter.
• Our leverage ratio improved to 4.33X Consolidated Ebitda, net of allowable cash balances (as defined in our Credit Agreement) from 4.75X at the prior fiscal year end.

NPC’s President and CEO Jim Schwartz said, «Our Wendy’s business rebounded this quarter and posted solid comparable store sales growth of 1.7 percent while driving significant margin improvement and profit growth. Our Pizza Hut operations generated disappointing comparable store sales with a decline of 2.7 percent this quarter but remains in positive comp territory on a year to date basis.

«Our Pizza Hut business had a difficult quarter as top-line momentum has waned since the first quarter and our promotional activities failed to activate the consumer. We are conducting extensive brand research at an unprecedented level and introducing new advertising demonstrating why «No One out Pizzas the Hut»; these changes provide us encouragement heading into fiscal 2017.

«Our Wendy’s business leveraged core product offerings, innovation and unique value to generate profitable sales growth. This top-line momentum combined with lower ingredient prices and improved labor efficiencies drove significant increases in Adjusted Ebitda margins and improved profitability for the quarter.

«Additionally, we completed the acquisition of 39 Wendy’s restaurants in the Raleigh-Durham market early in the quarter. The assimilation of this market is going smoothly and the operations contributed to our impressive Wendy’s results for the quarter.

«We continued to make significant progress against our delco relocation efforts in our Pizza Hut business and image activation efforts in our Wendy’s operations this quarter. We remain on target to fully deliver upon these two key investment initiatives for the full year.

«Finally, after investing 37 million USD in the acquisition, we ended the quarter with significant liquidity and improved credit statistics. We are focused upon closing fiscal 2016 in the best way possible given the relative current performance of the brands in our portfolio while also strategically planning for a successful 2017».

NPC International Inc. is the world’s largest Pizza Hut franchisee and currently operates 1’228 Pizza Hut units in 27 states and 183 Wendy’s units in 5 states.