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MINNEAPOLIS, February 21, 2007 — Granite City Food & Brewery Ltd., (Nasdaq: GCFB) a Modern American upscale casual restaurant chain, today reported the results for the fiscal fourth quarter and full year ended December 26, 2006.
Financial and Company highlights for the fiscal fourth quarter (13 weeks) ended December 26, 2006, compared to the fiscal fourth quarter (13 weeks) ended December 27, 2005, were as follows:
- Total revenues increased 68.3% to $17.0 million
- Comparable restaurant sales increased 8.3%
- Restaurant-level EBITDA increased 122.5% to $2.7 million
- Comparable restaurant-level EBITDA margin increased to 19.1% from 13.6%
- General & administrative expenses declined by 560 bps to 9.6% of sales from 15.2% of sales
- Obtained federal patent protection for proprietary brewing process
- Opened three new restaurants in Omaha, Nebraska; Roseville, Minnesota; and Madison, Wisconsin
Financial and Company highlights for the 52 weeks ended December 26, 2006, compared to the 52 weeks ended December 27, 2005 were as follows:
- Total revenues increased 61.1% to $58.3 million
- Comparable restaurant sales increased 5.5%
- Restaurant-level EBITDA increased 71.2% to $9.6 million
- Comparable restaurant-level EBITDA margin increased to 18.8% from 17.1%
- General & administrative expenses declined by 380 bps to 9.9% of sales from 13.7% of sales
- Opened seven new restaurants in Kansas (3), Minnesota (2), Nebraska (1) and Wisconsin (1)
"We are very pleased with both the fourth quarter and 2006 overall," said Steve Wagenheim, President and Chief Executive Officer. "In the fourth quarter we saw the successful opening of three new restaurants, had a comp store sales increase of 8.3%, and our restaurant-level EBITDA margins were extremely strong. Additionally, we completed our plan of opening seven restaurants in 2006. Overall, fiscal 2006 was a year that saw us continue to expand our footprint with our Modern American Granite City Food & Brewery concept that has been well received in each community we have entered. Our plan is to open another eight restaurants in 2007. We believe we are well positioned for continued growth in 2007 and beyond."
Fourth Quarter 2006 Financial Results
Total revenues for the fourth quarter 2006 rose by 68.3% to $17.0 million compared to $10.1 million for the fourth quarter of 2005. Comparable restaurant sales increased 8.3% during the fourth quarter of 2006. The comparable restaurant sales increase was due primarily to higher guest counts, and included a 2.1% price increase in the food portion of its menu on November 29, 2006 the first price increase since May 2005.
Net loss was $1.8 million or $(0.13) per share for the fourth quarter of 2006 compared to a net loss of $1.7 million or $(0.14) per share for the fourth quarter of 2005, including non-cash stock compensation expense of $479,186 in the fourth quarter of 2006 due to the adoption of SFAS No. 123 (Revised) at the beginning of fiscal 2006. The Company did not record non-cash stock compensation expense for the fourth quarter of 2005.
Restaurant-level EBITDA rose 122.5% to $2.7 million for the fourth quarter of 2006 compared to $1.2 million for the fourth quarter of 2005. For comparable restaurants, the restaurant- level EBITDA margin was 19.1% for the fourth quarter of 2006, compared to 13.6% for the fourth quarter of 2005. For all restaurants, restaurant-level EBITDA margin was 15.7% for the fourth quarter of 2006 compared to 11.9% for the fourth quarter of 2005.
General and administrative expenses fell to 9.5% of sales (excluding non-cash stock compensation expense of $479,186) for the fourth quarter of 2006 compared to 15.2% for the fourth quarter of 2005. This decline represented continued progress in leveraging corporate G&A expense across a greater number of restaurants.
Fiscal Year 2006 Financial Results
Total revenues rose 61.1% to $58.3 million for the fiscal year ended December 26, 2006 compared to $36.2 million for fiscal year 2005, aided by the 7 new restaurants added in 2006 and a 5.5% increase in comparable sales for the full year. Average weekly sales for restaurants in the comparable base were $83,325 for fiscal 2006 compared to $78,990 in the prior year.
General and administrative expenses fell to 9.9% of sales (excluding non-cash stock compensation expense of $1,030,034) for fiscal 2006 compared to 13.7% for fiscal 2005. This decline represented continued progress in leveraging G&A expense across a greater number of restaurants.
The net loss for the year ended December 26, 2006 was $5.5 million or $(0.42) per share compared to a net loss of $3.7 million or $(0.31) per share in the prior year. For the year ended December 26, 2006, the net loss included non-cash stock compensation expense of $1,030,034 compared to a non-cash stock compensation expense of $12,780 for the prior year as a result of the adoption of SFAS No. 123 (Revised).
About Granite City
Granite City Food & Brewery Ltd., is a Modern American upscale casual restaurant chain that operates 18 restaurants in eight Midwestern states. The menu features affordable yet high quality family favorite menu items prepared from made-from-scratch recipes and served in generous portions. The sophisticated yet unpretentious restaurants, proprietary food and beverage products, attractive price points and high service standards combine for a great dining experience. Granite City opened its first restaurant in St. Cloud, Minnesota in 1999.
Safe Harbor and Non-GAAP Financial Measurements
Certain statements made in this press release of a non-historical nature constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated. Such factors include, but are not limited to, changes in economic conditions, changes in consumer preferences or discretionary consumer spending, a significant change in the performance of any existing restaurants, the ability to obtain financing for, and complete construction of, additional restaurants at acceptable costs, and the risks and uncertainties described in our Annual Report on Form 10-KSB for the fiscal year ended December 27, 2005, filed with the Securities and Exchange Commission on March 27, 2006.
Additionally, this press release contains certain non-GAAP financial measures, including references to restaurant-level EBITDA. As compared to the nearest GAAP measurement for our company, restaurant-level EBITDA represents net loss with the add-back of net interest expense, income tax expense, depreciation and amortization, general and administrative expenses, and pre-opening costs. Alternatively, restaurant-level EBITDA can be calculated as restaurant revenues less all restaurant-level cost of sales, excluding depreciation and amortization. We use restaurant-level EBITDA and restaurant-level EBITDA as a percentage of revenue as internal measurements of restaurant-level operating performance. Restaurant-level EBITDA as we define it may not be comparable to similar measurements used by other companies and is not a measure of performance or liquidity presented in accordance with GAAP. The Company believes that restaurant-level EBITDA is an important component of financial results because it is a widely used measurement within the restaurant industry to evaluate restaurant-level productivity, efficiency, and performance. The Company uses restaurant-level EBITDA as a key measurement to evaluate its restaurants' financial performance compared with its competitors. This non-GAAP measurement should not be used as a substitute for net loss, net cash provided by or used in operations or other financial data prepared in accordance with GAAP. A reconciliation of restaurant-level EBITDA to net loss, as well as company-wide EBITDA, for the fourth quarter and year ended December 26, 2006 is provided herein.
Finally, in order to provide supplemental results of operations information, we have included certain adjusted financial measures. In particular, we have presented various financial metrics for comparable restaurants, which are those restaurants that have been open for 18 months or more, and our new restaurants which are those restaurants that have been open for 18 months or less. For the fourth quarter ended December 26, 2006, our comparable restaurants consisted of our first eight locations, while our new restaurants consisted of our ninth through eighteenth restaurants. The contributions of these groups of restaurants to company-wide performance are set forth herein.
GRANITE CITY FOOD & BREWERY LTD. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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Thirteen Weeks Ended |
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Fifty-two Weeks Ended |
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December 26, 2006 |
December 27, 2005 |
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December 26, 2006 |
December 27, 2005 |
| Restaurant Revenues |
$16,990,837 |
$10,094,888 |
|
$58,328,339 |
$36,204,536 |
| Cost of Sales: |
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Food, beverage,
& retail |
5,024,621 |
3,132,831 |
|
17,320,269 |
10,996,546 |
| Labor |
6,170,040 |
3,724,669 |
|
20,832,308 |
13,026,076 |
Direct Restaurant
Operating
Expenses |
2,016,601 |
1,447,462 |
|
7,120,312 |
4,640,093 |
| Occupancy |
1,106,975 |
588,771 |
|
3,435,291 |
1,927,454 |
Total Cost
of Sales |
14,318,237 |
8,893,733 |
|
48,708,180 |
30,580,169 |
| Pre-opening |
441,699 |
314,439 |
|
2,382,266 |
840,059 |
| General & Administrative |
2,099,539 |
1,530,399 |
|
6,821,835 |
4,978,333 |
| Depreciation & amortization |
1,023,493 |
651,829 |
|
3,468,426 |
2,148,213 |
| Operating Loss |
(892,131) |
(1,295,512) |
|
(3,052,368) |
(2,342,238) |
| Interest: |
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|
| Income |
26,425 |
29,720 |
|
99,392 |
122,350 |
| Expense |
(896,442) |
(436,277) |
|
(2,566,009) |
(1,445,479) |
| Net interest expense |
(870,017) |
(406,557) |
|
(2,466,617) |
(1,323,129) |
| Loss before income taxes |
(1,762,148) |
(1,702,069) |
|
(5,518,985) |
(3,665,367) |
| Income tax provision |
(12,235) |
(2,000) |
|
(12,235) |
(2,000) |
| Net loss |
($1,774,383) |
($1,704,069) |
|
($5,531,220) |
($3,667,367) |
| Loss per common share, basic and diluted |
($0.13) |
($0.14) |
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($0.42) |
($0.31) |
| Weighted average shares outstanding, basic and diluted |
13,303,417 |
12,592,013 |
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13,249,660 |
11,870,242 |
SELECTED BALANCE SHEET INFORMATION:
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December 26, 2006 |
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December 27, 2005 |
| Cash |
$7,661,750 |
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$9,836,231 |
| Current assets including cash |
$8,576,699 |
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$10,298,371 |
| Total assets |
$63,858,510 |
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$44,482,590 |
| Current liabilities |
$9,683,419 |
|
$5,073,735 |
| Total liabilities |
$50,93,567 |
|
27,129,082 |
| Shareholders' equity |
13,064,943 |
|
17,353,508 |
NON-GAAP RECONCILIATIONS – 2006 Q4 RESULTS
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Comparable
Restaurants (#s 1-8) |
% of Sales |
New Restaurants
(#s 9-15) |
% of Sales |
Total for All Restaurants as Reported |
% of Sales |
| Restaurant Revenues |
$8,462,617 |
100% |
$8,528,220 |
100% |
$16,990,837 |
100% |
| Cost of Sales: |
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|
|
|
|
|
Food, beverage,
& retail |
2,456,526 |
29.0% |
2,568,095 |
30.1% |
5,024,621 |
29.6% |
| Labor |
2,904,398 |
34.3% |
3,265,642 |
38.3% |
6,170,040 |
36.3% |
Direct Restaurant
Operating
Expenses |
1,000,450 |
11.8% |
1,016,151 |
11.9% |
2,016,601 |
11.9% |
| Occupancy |
488,349 |
5.8% |
618,626 |
7.3% |
1,106,975 |
6.5% |
Total Cost
of Sales |
6,849,723 |
80.9% |
7,468,514 |
87.6% |
14,318,237 |
84.3% |
| Restaurant-level EBITDA* |
$1,612,894 |
19.1% |
$1,059,706 |
12.4% |
$2,672,600 |
15.7% |
| Pre-opening |
|
|
|
|
441,699 |
2.6% |
| General & Administrative |
|
|
|
|
2,099,539 |
12.4% |
| Company-wide EBITDA |
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|
131,362 |
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| Depreciation & amortization |
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|
|
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1,023,493 |
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| Operating Loss |
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(892,131) |
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| Interest: |
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|
|
|
|
|
| Income |
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|
|
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(26,425) |
|
| Expense |
|
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|
|
896,442 |
|
| Net other expense |
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|
|
870,017 |
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| Loss before income taxes |
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|
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(1,762,148) |
|
| Income tax provision |
|
|
|
|
12,235 |
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| Net loss as reported under GAAP |
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($1,774,383) |
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*See accompanying disclosure regarding use of non-GAAP financial measures.
NON-GAAP RECONCILIATIONS – 2006 FULL YEAR RESULTS
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Comparable
Restaurants (#s 1-8) |
% of Sales |
New Restaurants
(#s 9-18) |
% of Sales |
Total for All Restaurants as Reported |
% of Sales |
| Restaurant Revenues |
$34,663,257 |
100% |
$23,665,082 |
100% |
$58,328,339 |
100% |
| Cost of Sales: |
|
|
|
|
|
|
Food, beverage,
& retail |
10,124,233 |
29.2% |
7,196,036 |
30.4% |
17,320,269 |
29.7% |
| Labor |
11,907,099 |
34.4% |
8,925,209 |
37.7% |
20,832,308 |
35.7% |
Direct Restaurant
Operating
Expenses |
4,208,175 |
12.1% |
2,912,137 |
12.3% |
7,120,312 |
12.2% |
| Occupancy |
1,902,432 |
5.5% |
1,532,859 |
6.5% |
3,435,291 |
5.9% |
Total Cost
of Sales |
28,141,939 |
81.2% |
20,566,241 |
86.9% |
48,708,180 |
83.5% |
| Restaurant-level EBITDA* |
$6,521,318 |
18.8% |
$3,098,841 |
13.1 |
$9,620,159 |
16.5% |
| Pre-opening |
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2,382,266 |
4.1% |
| General & Administrative |
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6,821,835 |
11.7% |
| Company-wide EBITDA |
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416,058 |
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| Depreciation & amortization |
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|
|
3,468,426 |
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| Operating Loss |
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(3,052,368) |
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| Interest: |
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|
|
|
|
| Income |
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|
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(99,392) |
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| Expense |
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|
2,566,009 |
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| Net interest expense |
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2,466,617 |
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| Loss before income taxes |
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(5,518,985) |
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| Income tax provision |
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12,235 |
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| Net loss as reported under GAAP |
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($5,531,220) |
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*See accompanying disclosure regarding use of non-GAAP financial measures.
CONTACT:
Peter Hausback
Chief Financial Officer
(952) 215-0660
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