Schlotzsky’s, Inc. (Nasdaq:BUNZ) today announced results for the first quarter of 2001, including net income of
$591,519, or $0.08 per share (diluted). The company reported record revenues for
the quarter of $15.3 million, an increase of 6.4% over the first quarter of 2000.
“We are pleased with the trend of our financial results and quality of our earnings,”
said John C. Wooley, President and CEO. “Our recent earnings growth momentum
is the direct result of our business strategy based on leveraging, through franchising
and licensing, the Schlotzsky’s® Deli premium brand.”
Specific highlights include:
• Same store sales for the entire Schlotzsky’s® Deli system (including
franchised and company-owned restaurants) increased 2.6% over the first
quarter of 2000, representing the 25th consecutive quarterly increase since
the company’s IPO in 1995;
• Systemwide sales increased to $107.2 million, a new first quarter record;
Recurring revenue from royalties, brand contribution and restaurant sales
were 95% of company total revenue, versus 89% for the same period of last
year;
• G&A expenses declined 5.5% compared to the first quarter of 2000, and also
declined 5.5% compared to the fourth quarter of 2000;
Debt reduction continued, with a $1.6 million reduction for the first quarter of
2001; and
• The company repurchased on the open market during the first quarter of
2001 122,500 shares of its outstanding common stock at a cost of $463,000.
On a year-over-year comparison, net income declined 50.2% from $1.2 million, or
$0.16 per share, from the first quarter of 2000. Results from the first quarter of 2000
included transaction-based revenue from the Turnkey Program that has been
discontinued. Excluding $545,000 of such transaction-based revenue, earnings
before interest, taxes, depreciation and amortization (EBITDA) increased 6.2% for
the first quarter of 2001 to $2,476,328, compared to adjusted EBITDA of $2,332,594
for the same period a year ago.
“These results demonstrate the soundness of the changes we made in our business
strategy in 2000,” said Wooley. “Schlotzsky’s has proven its ability to rebuild the
Company’s profitability and financial strength following the significant charge
recorded in the second quarter of 2000 for the cancellation of the Turnkey Program.
“Our strategy has enabled us to establish a strong foundation for ongoing profitable
growth as we leverage a fixed cost structure,” he continued. “The result of these
changes is more predictable earnings based on recurring revenue streams, rather than transaction revenue.”
The Schlotzsky’s® Deli system will continue to open new restaurants and remodel and relocate restaurants to
replace less profitable locations. During the first quarter of 2001, the Schlotzsky’s® Deli system opened 15
restaurants and closed 15. Going forward, Schlotzsky’s will work with new and existing franchisees to open both
3,200 square foot freestanding units as well as lower-cost units located in endcaps of prime retail shopping centers.
Each of the two formats will support the quality brand, with the smaller endcap version being more appealing to
existing franchisees due to its lower construction costs.
Schlotzsky’s said new and existing franchisees will benefit from the premium price Schlotzsky’s® Deli products
command across all economic cycles. In addition, Schlotzsky’s® style of food is increasingly appealing to a public
that is seeking alternatives to burgers as the consumer looks for food that can be enjoyed with less guilt. The
company believes these trends will result in the continued growth of the Schlotzsky’s® Deli system and build on the
nine-year trend of increases in same store sales.
