J. Alexander’s Holdings, Inc. (NYSE: JAX) (the “Company”), owner
and operator of J. Alexander’s, Redlands Grill, Stoney River
Steakhouse and Grill and other restaurants, today provided a
business update and reported results for the first quarter ended
April 4, 2021.
Mark A. Parkey, Chief Executive Officer of the Company, stated,
“I’m excited to announce that even with restaurant capacity
restrictions in many markets our sales in March 2021 reached nearly
100% of sales for March 2019 and were over 155% of sales in March
2020 when the onset of the COVID-19 pandemic occurred. Further, for
April 2021, sales were over 105% of the comparable period for 2019.
We’re optimistic that we will continue to build on the tremendous
momentum we’ve experienced in the first few months of 2021
throughout the remainder of the year and are anxiously awaiting the
day when each of our locations will once again be operating at full
capacity.”
First Quarter 2021 Highlights Compared To The First Quarter
Of 2020
- Cash flow from operations for the first quarter of 2021 was
$4,809,000 as compared to cash flow from operations in the first
quarter of 2020 of $1,830,000.
- Average weekly same store sales per restaurant (1) for the
first quarter of 2021 were up 3.1% to $106,600 for the J.
Alexander’s/Grill restaurants and up 4.0% to $75,300 for the Stoney
River Steakhouse and Grill restaurants compared to the first
quarter of 2020.
- Net sales for the first quarter of 2021 were $57,375,000, up
from $56,972,000 reported in the first quarter of 2020. Several
factors impacted the comparability of net sales between these two
quarters as follows:
- Because our fiscal calendar ends on the Sunday closest to
December 31st, fiscal 2020 contained 53 weeks, which included two
New Year’s Eve holidays with one being in the first quarter and the
other falling in the fourth quarter of 2020. As such, fiscal 2020’s
first quarter contains the benefit of a New Year’s Eve holiday,
traditionally one of the Company’s strongest sales weeks of the
year, while the first quarter of fiscal 2021 does not include the
benefit of that holiday. Management estimates that net sales in the
first quarter of 2021 would have been approximately $650,000 higher
if it had included the benefit of the New Year’s Eve week.
- During February 2021, beginning on Valentine’s Day and lasting
throughout the week that followed, the country experienced severe
winter weather which resulted in the Company’s restaurants being
closed for 54 days across several markets. Management estimates
that the impact of these winter storms cost us approximately
$500,000 in lost net sales for the first quarter of 2021.
- In mid-March 2020 at the onset of novel coronavirus
(“COVID-19”) pandemic, the Company was forced to close its
restaurants for dine-in service due to governmental restrictions
and shifted its business platform entirely to a carry-out model.
The last two weeks of the first quarter of fiscal 2020 were
severely impacted, with sales levels of approximately 15% of the
prior year sales. The first quarter of 2021 continued to be
impacted by government-imposed capacity restrictions at varying
levels throughout the quarter as well, ending the quarter at
approximately 75% capacity company-wide.
- Income from continuing operations before income taxes totaled
$3,162,000 for the first quarter of 2021. This compares to a loss
from continuing operations before income taxes of $18,979,000 in
the first quarter of 2020, which included a goodwill impairment
charge of $15,737,000, a fixed asset impairment charge associated
with the closure of one restaurant of $689,000, approximately
$2,050,000 in charges related to continuing benefits and emergency
sick leave pay for furloughed team members, and the impact of
transaction expenses of $689,000. The first quarter of 2021 was not
impacted by impairment charges and included only approximately
$80,000 of expense related to emergency and other sick leave
benefits and $46,000 of transaction expenses related to the ongoing
evaluation of strategic alternatives. The first quarter of 2021 did
include $445,000 of pre-opening expenses related to the opening of
one restaurant as compared to pre-opening expenses of only $19,000
in the first quarter of 2020.
- Results for the first quarter of 2021 included income tax
expense of $367,000 compared to an income tax benefit of $1,387,000
in the first quarter of 2020.
- Net income for the first quarter of 2021 totaled $3,390,000
compared to a net loss of $17,644,000 in the first quarter of
2020.
- Basic and diluted earnings per share were $0.23 for the first
quarter of 2021 compared to basic and diluted loss per share of
$1.20 for the first quarter of 2020.
- Adjusted EBITDA (2) was $7,192,000 in the first quarter of 2021
compared to $1,964,000 in the first quarter of 2020.
- Restaurant Operating Profit Margin (3) was 15.7% in the first
quarter of 2021 compared to 5.3% for the first quarter of
2020.
- Food and beverage costs as a percentage of net sales in the
first quarter of 2021 were 29.8% compared to 32.6% in the first
quarter of 2020.
As previously disclosed, the Company has been experiencing
positive trends in its sales recovery during 2021. Net sales in
January, February and March 2021 reached approximately 75%, 85% and
155%, respectively, of sales experienced in the comparable periods
of 2020. For the full first quarter of 2021, net sales were nearly
90% of 2019’s first quarter sales and were just over 100% of 2020’s
first quarter sales. Off-premise sales continued to represent a
meaningful portion of the Company’s business during the first
quarter of 2021 as well, comprising approximately 16% of total net
sales for the quarter, which represents approximately $720,000 on
average weekly off-premise sales. Sales results for the first
quarter of 2021 were aided by a price increase and packaging fee on
carry-out orders both implemented in the second half of 2020.
Chief Executive Officer’s Comments
“At the end of the first quarter of 2021, we successfully opened
our first ground-up build of a Redlands Grill in San Antonio, TX in
the La Cantera Heights retail and commercial center, with sales in
its opening week of operations well surpassing our original
expectations. We are extremely encouraged by the reception we’ve
received from our guests in La Cantera Heights over the past month
and are optimistic that this location will continue to thrive in
the weeks, months and years ahead. We believe this successful
opening foretells strong consumer demand in 2021 for the polished
dining experience that we provide to our guests,” stated
Parkey.
“Our input costs for the first quarter of 2021 were manageable.
While we’re closely watching the input costs of our commodities in
light of recent inflation, we believe that if pricing pressure on
beef, seafood or other items narrows our margins in 2021, we have
the room to take price increases on certain menu items if needed.”
Parkey continued, “However, we also believe we can continue to
manage our food and beverage costs through our extensive feature
program and with active menu and recipe management.”
Parkey further noted, “As states and cities continue to ease
capacity restrictions and the warmer spring and summer weather
allows for more comfortable outdoor dining, we believe our guests
will return even more frequently to enjoy the experience of dining
with us, while continuing to enjoy the convenience of our carry-out
offerings. While our first quarter results and our new restaurant
opening exceeded our own expectations, we have learned to take
nothing for granted over the last year. As we emerge from the
pandemic, we will continue to strive to make every guest a loyal
regular and maintain the level of hospitality that our loyal
regulars have come to expect.”
Liquidity and Business Update
As of April 4, 2021, the Company’s cash and cash equivalents
totaled $15,250,000, and total outstanding indebtedness was
$14,333,000, including $11,000,000 outstanding on the Company’s
lines of credit facilities. On April 30, 2021, the Company
voluntarily repaid $6,000,000 on its outstanding lines of credit.
As of May 16, 2021, the Company has available capacity under its
various revolving lines of credit totaling $31,000,000. The Company
was in compliance with all required debt covenants as of April 4,
2021, and expects to be in compliance with its financial covenants
for at least the next twelve months and to continue to meet
conditions required to access its lines of credit.
As of May 16, 2021, the Company had cash on hand of
approximately $13,400,000. The Company anticipates that, based on
current business levels, it will have adequate liquidity for fiscal
2021 from operating cash flows and available borrowings. Further,
as of the date of this release, the Company’s restaurants were
operating at approximately 85% capacity.
Restaurant Development
The Company recently began construction of a new J. Alexander’s
Restaurant in Madison, AL, which is expected to open early in the
fourth quarter of 2021.
2021 Outlook
The Company is not providing guidance for fiscal 2021 in light
of the ongoing evaluation of strategic alternatives and the
continuing uncertainty surrounding governmental restrictions on
restaurant capacity.
(1)Average weekly same store sales per restaurant is computed by
dividing total restaurant same store sales for the period by the
total number of days all same store restaurants were open for the
period to obtain a daily sales average. The daily same store sales
average is then multiplied by seven to arrive at average weekly
same store sales per restaurant. Days on which restaurants are
closed for business for any reason other than scheduled closures on
Thanksgiving and Christmas are excluded from this calculation.
Sales and sales days used in this calculation and amounts of other
“same store” figures in this release include only those for
restaurants in operation at the end of the period which have been
open for more than 18 months. Revenue associated with reduction in
liabilities for gift cards, which is recognized in proportion to
guest redemptions based on historical redemption rates and commonly
referred to as gift card breakage, is not included in the
calculation of average weekly same store sales per restaurant.
Average weekly same store sales are computed from sales amounts
that have been determined in accordance with U.S. generally
accepted accounting principles (“GAAP”).
(2)Please refer to the financial information accompanying this
release for our definition of the non-GAAP financial measure
Adjusted EBITDA and a reconciliation of net income (loss) to
Adjusted EBITDA. Management uses Adjusted EBITDA to evaluate
operating performance and the effectiveness of its business
strategies.
(3)Restaurant Operating Profit Margin is the ratio of Restaurant
Operating Profit, a non-GAAP financial measure, to net sales.
Please refer to the financial information accompanying this release
for our definition of the non-GAAP financial measure Restaurant
Operating Profit and a reconciliation of operating income (loss) to
Restaurant Operating Profit. Management uses Restaurant Operating
Profit to measure operating performance at the restaurant
level.
About J. Alexander’s Holdings, Inc.
J. Alexander’s Holdings, Inc. is a collection of restaurants
that focus on providing high-quality food, outstanding professional
service and an attractive ambiance. The Company presently operates
47 restaurants in 16 states. The Company has its headquarters in
Nashville, TN.
For additional information, visit
www.jalexandersholdings.com
Forward-Looking Statements
This press release issued by J. Alexander’s Holdings, Inc.
contains forward-looking statements, which include all statements
that do not relate solely to historical or current facts, such as
statements regarding our expectations, intentions or strategies
regarding the future, including the impact of the COVID-19 pandemic
on our operations, operating restaurants at increased capacity,
consumer demand, our sales and off-premise sales, cash position,
liquidity, input costs, financial results, compliance with
financial covenants in our loan agreement, borrowing availability,
our ability to manage through the COVID-19 pandemic, and our
ongoing evaluation of strategic alternatives. These forward-looking
statements are based on management's beliefs, as well as
assumptions made by, and information currently available to,
management. Because such statements are based on expectations as to
future financial and operating results and other events and are not
statements of fact, actual results may differ materially from those
projected and are subject to a number of known and unknown risks
and uncertainties, including the health and financial effects of
the COVID-19 pandemic; availability of effective vaccines and
treatments for COVID-19 including any new variants; government
restrictions on indoor and outdoor dining and the Company’s ability
to operate its restaurants at normal capacities, and thereafter to
reestablish and maintain satisfactory guest count levels and
maintain or increase sales and operating margin in its restaurants
under varying economic conditions; the effect of higher commodity
prices, unemployment and other economic factors on consumer demand;
increases in food input costs or product shortages and the
Company’s response to them; the Company’s ability to obtain access
to additional capital as needed; the Company’s ability to comply
with financial covenants under its loan agreement with its lender
and to access available borrowing capacity; the impact of any
impairment of our long-lived assets, including tradename; the
number and timing of new restaurant openings and the Company’s
ability to operate them profitably; competition within the casual
dining industry and within the markets in which our restaurants are
located; adverse weather conditions in regions in which the
Company’s restaurants are located; factors that are under the
control of third parties, including government agencies; changes in
laws, including possible changes in the federal minimum wage rates;
the Company’s evaluation of strategic alternatives; as well as
other risks and uncertainties described under the headings
“Forward-Looking Statements,” “Risk Factors” and other sections of
the Company’s Annual Report on Form 10-K filed with the SEC on
March 18, 2021, as amended on April 29, 2021, and subsequent
filings. The Company undertakes no obligation to update any
forward-looking statements, whether as a result of new information,
future events or otherwise.
J. Alexander's Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited in thousands, except per share amounts)
Quarter Ended
April 4,
March 29,
2021
2020
Net sales
$
57,375
$
56,972
Costs and expenses: Food and beverage costs
17,087
18,567
Restaurant labor and related costs
16,675
20,338
Depreciation and amortization of restaurant property and equipment
2,883
3,094
Other operating expenses
11,722
11,954
Total restaurant operating expenses
48,367
53,953
Transaction expenses
46
689
General and administrative expenses
5,153
4,740
Goodwill impairment charge
-
15,737
Long-lived asset impairment charges and restaurant closing costs
3
689
Pre-opening expense
445
19
Total operating expenses
54,014
75,827
Operating income (loss)
3,361
(18,855
)
Other income (expense): Interest expense
(153
)
(116
)
Other, net
(46
)
(8
)
Total other expense
(199
)
(124
)
Income (loss) from continuing operations before income taxes
3,162
(18,979
)
Income tax (expense) benefit
(367
)
1,387
Income (loss) from discontinued operations, net
595
(52
)
Net income (loss)
$
3,390
$
(17,644
)
Basic earnings (loss) per share: Income (loss) from
continuing operations, net of tax
$
0.19
$
(1.20
)
Income (loss) from discontinued operations, net
0.04
(0.00
)
Basic earnings (loss) per share
$
0.23
$
(1.20
)
Diluted earnings (loss) per share: Income (loss) from
continuing operations, net of tax
$
0.19
$
(1.20
)
Income (loss) from discontinued operations, net
0.04
(0.00
)
Diluted earnings (loss) per share
$
0.23
$
(1.20
)
Weighted average common shares outstanding: Basic
14,757
14,695
Diluted
14,860
14,695
Note: Per share amounts may not sum due to rounding.
J. Alexander's Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations Data as a
Percentage of Net Sales (Unaudited)
Quarter Ended
April 4,
March 29,
2021
2020
Net sales
100.0
%
100.0
%
Costs and expenses: Food and beverage costs
29.8
32.6
Restaurant labor and related costs
29.1
35.7
Depreciation and amortization of restaurant property and equipment
5.0
5.4
Other operating expenses
20.4
21.0
Total restaurant operating expenses
84.3
94.7
Transaction expenses
0.1
1.2
General and administrative expenses
9.0
8.3
Goodwill impairment charge
-
27.6
Long-lived asset impairment charges and restaurant closing costs
0.0
1.2
Pre-opening expense
0.8
0.0
Total operating expenses
94.1
133.1
Operating income (loss)
5.9
(33.1
)
Other income (expense): Interest expense
(0.3
)
(0.2
)
Other, net
(0.1
)
(0.0
)
Total other expense
(0.3
)
(0.2
)
Income (loss) from continuing operations before income taxes
5.5
(33.3
)
Income tax (expense) benefit
(0.6
)
2.4
Income (loss) from discontinued operations, net
1.0
(0.1
)
Net income (loss)
5.9
%
(31.0
)%
Note: Certain percentage totals do not sum due to rounding.
J. Alexander's Holdings, Inc. and Subsidiaries
Other Financial and Performance Data (Unaudited)
Quarter Ended
April 4,
March 29,
2021
2020
Other Financial and Performance Data: Adjusted
EBITDA(1) (in thousands)
$
7,192
$
1,964
As a % of net sales
12.5
%
3.4
%
All
Stores Basis Operating Metrics:
Average weekly sales per restaurant: J. Alexander’s /
Grill Restaurants
$
105,100
$
101,500
Percent change
3.5
%
Stoney River Steakhouse and Grill
$
75,300
$
72,400
Percent change
4.0
%
Average weekly guest counts: J. Alexander’s / Grill
Restaurants
(6.7
)%
(15.5
)%
Stoney River Steakhouse and Grill
(3.5
)%
(15.3
)%
Average guest check per restaurant (including alcoholic
beverages): J. Alexander’s / Grill Restaurants
$
36.30
$
32.99
Percent change
10.0
%
Stoney River Steakhouse and Grill
$
44.97
$
41.77
Percent change
7.7
%
Estimated inflation: J. Alexander’s / Grill
Restaurants (total food costs)
6.1
%
(1.1
)%
J. Alexander’s / Grill Restaurants (beef costs)
11.2
%
(0.4
)%
Stoney River Steakhouse and Grill (total food costs)
2.2
%
(0.8
)%
Stoney River Steakhouse and Grill (beef costs)
5.3
%
(1.2
)%
Same
Store Basis Operating Metrics (2):
Average weekly same store sales per restaurant: J.
Alexander’s / Grill Restaurants
$
106,600
$
103,400
Percent change
3.1
%
Average weekly same store guest counts: J.
Alexander’s / Grill Restaurants
(6.3
)%
(14.6
)%
Average same store guest check per restaurant (including
alcoholic beverages): J. Alexander’s / Grill Restaurants
$
36.24
$
32.92
Percent change
10.1
%
_____________________________ (1) See definitions and
reconciliation attached. (2) All open locations are included in the
same store base for Stoney River for the first quarter of 2021. As
such, average weekly same store sales, guest counts and check
averages shown above under the heading "All Stores Basis Operating
Metrics" are also representative of the Same Store Basis Operating
Metrics for Stoney River.
J. Alexander's Holdings,
Inc. and Subsidiaries Condensed Consolidated Balance
Sheets (Unaudited in thousands)
April 4,
January 3,
2021
2021
Assets Current assets: Cash and cash equivalents
$
15,250
$
12,363
Other current assets
14,568
13,399
Total current assets
29,818
25,762
Other assets
6,215
6,195
Deferred income taxes, net
4,846
4,627
Property and equipment, net
100,494
102,188
Right-of-use lease assets, net
74,030
72,515
Tradename and other indefinite-lived intangibles
25,648
25,648
Deferred charges, net
173
184
$
241,224
$
237,119
Liabilities and Stockholders' Equity Current
liabilities
$
30,936
$
25,425
Long-term debt, net of portion classified as current and
unamortized deferred loan costs
6,375
12,746
Long-term lease liabilities
80,005
78,968
Deferred compensation obligations
8,113
7,973
Other long-term liabilities
1,888
1,902
Stockholders' equity
113,907
110,105
$
241,224
$
237,119
J. Alexander's Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited in thousands)
Quarter Ended
April 4,
March 29,
2021
2020
Cash flows from operating activities: Net income (loss)
$
3,390
$
(17,644
)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: Depreciation and amortization of property and
equipment
2,920
3,146
Equity-based compensation expense
412
455
Asset impairment charges
-
16,426
Other, net
(151
)
(1,241
)
Changes in assets and liabilities, net
(1,762
)
688
Net cash provided by operating activities
4,809
1,830
Cash flows from investing activities: Purchase of property
and equipment
(1,496
)
(1,416
)
Other investing activities
(9
)
(149
)
Net cash used in investing activities
(1,505
)
(1,565
)
Cash flows from financing activities: Proceeds from
borrowings under debt agreement
-
17,000
Payments on long-term debt
(417
)
(1,250
)
Net cash (used in) provided by financing activities
(417
)
15,750
Increase in cash and cash equivalents
2,887
16,015
Cash and cash equivalents at beginning of the period
12,363
8,803
Cash and cash equivalents at end of the period
$
15,250
$
24,818
Supplemental disclosures: Property and equipment obligations
accrued at beginning of the period
$
879
$
1,116
Property and equipment obligations accrued at end of the period
618
1,145
Cash paid for interest
152
93
Cash (refunded) paid for income taxes
(76
)
30
J. Alexander's Holdings, Inc. and Subsidiaries
Non-GAAP Financial Measures and Reconciliations
(Unaudited in thousands)
Non-GAAP Financial Measures
Within this press release, we present the following non-GAAP
financial measures which we believe are useful to investors as key
measures of our operating performance:
We define Adjusted Earnings Before Interest, Taxes, Depreciation
and Amortization, or “Adjusted EBITDA”, as net income (loss) before
interest expense, income tax expense (benefit), depreciation and
amortization, and adding asset impairment charges and restaurant
closing costs, loss on disposals of fixed assets, transaction
expenses, non-cash compensation, (income) loss from discontinued
operations, and pre-opening expense.
Adjusted EBITDA is a non-GAAP financial measure that we believe
is useful to investors because it provides information regarding
certain financial and business trends relating to our operating
results and excludes certain items that are not indicative of our
operations. Adjusted EBITDA does not fully consider the impact of
investing or financing transactions as it specifically excludes
depreciation and interest charges, which should also be considered
in the overall evaluation of our results of operations.
We define “Restaurant Operating Profit” as net sales less
restaurant operating costs, which are food and beverage costs,
restaurant labor and related costs, depreciation and amortization
of restaurant property and equipment, and other operating expenses.
Restaurant Operating Profit is a non-GAAP financial measure that we
believe is useful to investors because it provides a measure of
profitability for evaluation that does not reflect corporate
overhead and other non-operating or unusual costs. “Restaurant
Operating Profit Margin” is the ratio of Restaurant Operating
Profit to net sales.
Our management uses Adjusted EBITDA and Restaurant Operating
Profit to evaluate the effectiveness of our business strategies. We
caution investors that amounts presented in accordance with the
above definitions of Adjusted EBITDA or Restaurant Operating Profit
may not be comparable to similar measures disclosed by other
companies, because not all companies calculate these non-GAAP
financial measures in the same manner. Adjusted EBITDA and
Restaurant Operating Profit should not be assessed in isolation
from, or construed as a substitute for, net income (loss) ,
operating income (loss) or other measures presented in accordance
with GAAP.
A reconciliation of these non-GAAP financial measures to the
closest GAAP measure is set forth in the following tables:
Quarter Ended
April 4,
March 29,
2021
2020
Net income (loss)
$
3,390
$
(17,644
)
Income tax expense (benefit)
367
(1,387
)
Interest expense
153
116
Depreciation and amortization
2,931
3,160
EBITDA
6,841
(15,755
)
Transaction expenses
46
689
Loss on disposal of fixed assets
11
46
Asset impairment charges and restaurant closing costs
3
16,426
Non-cash compensation
441
487
(Income) loss from discontinued operations, net
(595
)
52
Pre-opening expense
445
19
Adjusted EBITDA
$
7,192
$
1,964
J. Alexander's Holdings, Inc. and
Subsidiaries Non-GAAP Financial Measures and
Reconciliations (Unaudited in thousands)
Quarter Ended
April 4,
March 29,
2021
2020
Amount
Percent of Net Sales
Amount
Percent of Net Sales
Operating income (loss)
$
3,361
5.9
%
$
(18,855
)
-33.1
%
General and administrative expenses
5,153
9.0
%
4,740
8.3
%
Transaction expenses
46
0.1
%
689
1.2
%
Goodwill impairment charge
-
0.0
%
15,737
27.6
%
Long-lived asset impairment charges and restaurant closing costs
3
0.0
%
689
1.2
%
Pre-opening expense
445
0.8
%
19
0.0
%
Restaurant Operating Profit
$
9,008
15.7
%
$
3,019
5.3
%
Note: Certain percentage totals do not sum due to rounding.
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J. Alexander’s Holdings, Inc. Jessica Hagler Chief Financial
Officer (615) 269-1900
J Alexanders (NYSE:JAX)
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