991067 Back Yard Burgers Reports 3rd Quarter ResultsOctober 26, 1999Memphis, TN - Back Yard Burgers, Inc. announced results for the third quarter and first nine months of 1999. Total revenues for the thirteen weeks ended October 2, 1999, rose 8.1% to $7,675,000 from $7,098,000 in the year-earlier period, reflecting primarily an increase in royalty fees from four new franchised stores, and the addition of four new company-operated stores in the past year. EBITDA for the thirteen week period was $630,000 compared with $672,000 in the year-earlier period. The company reported net income for the quarter of $103,000, or $.02 per diluted share, compared with $210,000, or $.05 per diluted share, in the same period last year. The current period has $47,000 of income tax expense compared with no income tax expense in the year-earlier period. The company also incurred $78,000 in consulting expenditures for the thirteen week period related to a strategic study of system operations and facility design. Other income increased by $84,000 over the year-earlier period due to an increase in vendor rebates earned by the company during the thirteen weeks ended October 2, 1999, as well as sub- contractor vending sales which the company began receiving in March of 1999. Net income was also impacted by an 11.5% increase in the cost of beef over the year- earlier period, as well as increases in pre-opening and recruiting costs over the year-earlier period. For the thirty-nine week period ended October 2, 1999, total revenues rose 8.2% to $22,289,000 from $20,598,000 in the prior year. EBITDA for the thirty- nine weeks ended October 2, 1999, was $1,765,000 compared with $1,988,000 in the year-earlier period, and net income was $232,000, or $.05 per diluted share, compared to $741,000, or $.16 per diluted share. Same-store sales at company-operated restaurants decreased 0.9% in the third quarter and increased 1.2% in the year-to-date period, while same-store sales at franchised restaurants rose 2.9% in the third quarter and 2.5% in the year-to- date period. System-wide same-store sales increased 1.2% in the third quarter and 1.9% in the year-to-date period. Commenting on the results, Lattimore M. Michael, Chairman and Chief Executive Officer, stated, “Net of the consulting costs incurred during the third quarter, pre-tax income exceeded prior year results and overall operating margins improved over the first two quarters of 1999. So we are pleased with these improvements. We are refining incentive programs for our operations management, which has created enthusiasm and excitement throughout our organization. We hope to see further improvements in operating margins as a result of these incentives, as well as from the results of the consulting work underway in reviewing our system operations and facility design. As for same- store sales trends, we have seen some cannibalization of company-operated stores in the Memphis area, but we are still experiencing system-wide same-store sales increases.” During the third quarter of 1999, two company-operated stores with dining rooms were opened in the Memphis area. Also, franchised restaurants were opened in Marion, Illinois, and Asheville, North Carolina. Subsequent to the end of the quarter, one new company-operated restaurant opened in Olive Branch, Mississippi, and one franchised restaurant closed in Greer, South Carolina. In addition, four new franchised restaurants are expected to open during the fourth quarter of 1999 and early in 2000. The company also announced that Joseph L. Weiss resigned as President and became a franchisee of the company. Weiss purchased the company-operated store in Collierville, Tennessee on October 3, 1999. Additionally, he was granted rights to develop additional stores in a portion of eastern Shelby County. Weiss will continue to serve on the company's Board of Directors. Michael W. Myers, the Chief Operating Officer of the company, will assume Weiss' responsibilities. As of October 2, 1999, the company's restaurant system was comprised of 88 units, including 37 company-operated stores and 51 franchised stores. Back Yard Burgers operates and franchises quick-service restaurants in Memphis, Little Rock, Nashville and other markets across 16 states. The restaurants specialize in charbroiled, freshly prepared, great-tasting food. As its name implies, Back Yard Burgers strives to offer the same high-quality ingredients and special care typified by outdoor grilling in the backyard. Its menu features made-to-order gourmet hamburgers and chicken sandwiches - charbroiled over an open flame, fresh salads, chili and other special entrees as well as hand-dipped milkshakes, fresh-made lemonade and fresh-baked cobblers.
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