Pizza Inn Holdings, Inc. Reports Results for First Quarter Fiscal Year 2013

Company Continues to Grow Pie Five Pizza Co. Concept

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| Source: Pizza Inn, Inc.

THE COLONY, Texas, Nov. 7, 2012 (GLOBE NEWSWIRE) -- PIZZA INN HOLDINGS, INC. (Nasdaq:PZZI)

First Quarter Fiscal Year 2013 Highlights:

  • The Company opened an additional Pie Five Pizza Co. restaurant
  • Company-owned restaurant sales increased 41.4% over the first quarter of fiscal 2012 to $1.8 million
  • Net income decreased $0.4 million from the first quarter of fiscal 2012 to a loss of $58,000
  • Compared to first quarter of fiscal 2012, total domestic franchised same store sales declined 6.8%
  • EBITDA decreased $0.4 million to $0.3 million compared to first quarter of fiscal 2012

Pizza Inn Holdings, Inc. (Nasdaq:PZZI) today announced results for the first fiscal quarter ended September 23, 2012. First quarter net income decreased $0.4 million to a loss of $58,000, or $0.01 per share, compared to net income of $0.3 million, or $0.04 per share, for the same quarter of the prior fiscal year. The decline in net income was primarily attributable to lower revenue earned from franchising and food and supply sales and higher costs related to the continued development of the Pie Five Pizza Co. concept when compared to the first quarter ended September 25, 2011.

First quarter revenues decreased to $10.4 million in fiscal 2013 compared to $11.1 million in the prior fiscal year. Food and supply sales decreased by approximately $1.2 million, or 13.4%, due to the combined impact of a decrease in the average number of restaurants open, a 9.4% decrease in total domestic franchisee retail sales and a decrease in non-proprietary items purchased from the Company by franchisees. Compared to the first quarter of fiscal 2012, Company-owned restaurant sales increased 41.4% to $1.8 million due primarily to new store openings. 

"We continue to develop and expand our Pie Five concept with the addition of one new store opened in the fiscal first quarter and our eighth store in October," commented Clinton Coleman, Interim President and Chief Executive Officer. "We are pleased with the performance of the last several new stores and are planning to accelerate the opening of Pie Five stores in the second half of fiscal 2013. Our franchise development activities are ramping up, as experienced multi-unit operators in many markets are indicating a high degree of interest in the Pie Five concept. Meanwhile our Pie Five brand has drawn national attention as a result of being named a Hot Concept for 2012 by Nation's Restaurant News. We continue to invest in people and infrastructure in anticipation of further development of Company-owned and franchised units of our Pie Five concept." 

"The retail sales trend in the Pizza Inn system continued to be impacted during the first quarter by the high level of pricing competition in the pizza market. While food and supply sales relative to total domestic franchisee sales remained below our historical norms during the first quarter, the trend improved from the pace of the third and fourth quarters of fiscal 2012. We continue to evaluate new initiatives for providing high-quality, non-proprietary food products to our franchisees," Mr. Coleman concluded.

Certain statements in this press release, other than historical information, may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are intended to be covered by the safe harbors created thereby. These forward-looking statements are based on current expectations that involve numerous risks, uncertainties and assumptions. Assumptions relating to these forward-looking statements involve judgments with respect to, among other things, future economic, competitive and market conditions, regulatory framework and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of Pizza Inn Holdings. Although the assumptions underlying these forward-looking statements are believed to be reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that any forward-looking statements will prove to be accurate. In light of the significant uncertainties inherent in these forward-looking statements, the inclusion of such information should not be regarded as a representation that the objectives and plans of Pizza Inn Holdings will be achieved. 

Pizza Inn Holdings, Inc. is an owner, franchisor and supplier of a system of restaurants operating domestically and internationally under the trademarks "Pizza Inn" and "Pie Five Pizza Company." The Company and its distribution division, Norco Restaurant Services Company, are headquartered in The Colony, Texas. The Company's common stock is listed on the Nasdaq Capital Market under the symbol "PZZI."

The Pizza Inn logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4933

 
PIZZA INN HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
     
     
  Three Months Ended
  September 23, September 25,
  2012 2011
     
     
REVENUES:  $ 10,438  $ 11,147
     
COSTS AND EXPENSES:    
Cost of sales  8,792  9,250
General and administrative expenses  1,005  895
Franchise expenses  501  452
Pre-opening expenses  79  12
Bad debt  45  15
Interest expense  104  16
   10,526  10,640
     
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE TAXES  (88)  507
Income taxes  (45)  178
(LOSS) INCOME FROM CONTINUING OPERATIONS  (43)  329
     
Loss from discontinued operations, net of taxes  (15)  (16)
NET (LOSS) INCOME  $ (58)  $ 313
     
EARNINGS PER SHARE OF COMMON STOCK - BASIC:    
(Loss) Income from continuing operations  $ (0.01)  $ 0.04
Loss from discontinued operations  --   -- 
Net (loss) income  $ (0.01)  $ 0.04
     
EARNINGS PER SHARE OF COMMON STOCK - DILUTED:    
     
(Loss) Income from continuing operations  $ (0.01)  $ 0.04
Loss from discontinued operations  --   -- 
Net (loss) income  $ (0.01)  $ 0.04
     
Weighted average common shares outstanding - basic 8,021 8,011
     
Weighted average common and potential dilutive common shares outstanding 8,113 8,128
 
PIZZA INN HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
     
  September 23, June 24,
ASSETS 2012 (unaudited) 2012
     
CURRENT ASSETS    
Cash and cash equivalents  $ 1,157  $ 590
Accounts receivable, less allowance for bad debts of $297 and $253, respectively  2,878  3,098
Inventories  1,780  1,852
Income tax receivable  431  431
Deferred income tax assets  1,295  1,078
Prepaid expenses and other  394  256
Total current assets  7,935  7,305
     
LONG-TERM ASSETS    
Property, plant and equipment, net  4,907  4,794
Long-term notes receivable  53  27
Deposits and other  218  372
   $ 13,113  $ 12,498
LIABILITIES AND SHAREHOLDERS' EQUITY    
CURRENT LIABILITIES    
Accounts payable - trade  $ 1,447  $ 1,562
Accrued expenses  1,833  1,756
Deferred revenues  143  200
Bank debt  465  765
Total current liabilities  3,888  4,283
     
LONG-TERM LIABILITIES    
Bank debt, net of current portion  1,835  977
Deferred tax liability  873  699
Deferred revenues, net of current portion  116  125
Deferred gain on sale of property  78  84
Other long-term liabilities  28  22
Total liabilities  6,818  6,190
     
COMMITMENTS AND CONTINGENCIES    
     
SHAREHOLDERS' EQUITY    
Common stock, $.01 par value; authorized 26,000,000 shares; issued 15,140,319 and 15,140,319 shares, respectively; outstanding 8,020,919 and 8,020,919 shares, respectively  151  151
Additional paid-in capital  9,199  9,154
Retained earnings  21,581  21,639
Treasury stock at cost    
Shares in treasury: 7,119,400  (24,636)  (24,636)
Total shareholders' equity  6,295  6,308
   $ 13,113  $ 12,498
PIZZA INN HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
     
  Three Months Ended
  September 23, September 25,
  2012 2011
     
CASH FLOWS FROM OPERATING ACTIVITIES:    
     
Net (loss) income  $ (58)  $ 313
Adjustments to reconcile net (loss) income to cash provided by operating activities:    
Depreciation and amortization  291  176
Stock compensation expense  45  42
Deferred tax  (43)  18
Provision for bad debts  44  15
Changes in operating assets and liabilities:    
Notes and accounts receivable  176  (17)
Inventories  72  (55)
Accounts payable - trade  (115)  (244)
Accrued expenses  77  (20)
Deferred revenue  (72)  --
Prepaid expenses and other  (14)  (109)
Cash provided by operating activities  403  119
     
CASH FLOWS FROM INVESTING ACTIVITIES:    
Capital expenditures  (394)  (115)
Cash used by investing activities  (394)  (115)
     
CASH FLOWS FROM FINANCING ACTIVITIES:    
Borrowings of bank debt  2,560  --
Repayments of bank debt  (2,002)  (83)
Cash provided (used) by financing activities   558  (83)
     
Net increase (decrease) in cash and cash equivalents  567  (79)
Cash and cash equivalents, beginning of period  590  949
Cash and cash equivalents, end of period  $ 1,157  $ 870
     
PIZZA INN HOLDINGS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands)
(Unaudited)
     
  Three Months Ended
  September 23, September 25,
  2012 2011
 Net (loss) income   $ (58)  $ 313
 Interest expense   104  16
 Taxes   (45)  178
 Depreciation and amortization   291  176
 EBITDA   $ 292  $ 683
     
Jerry L. Trojan
Chief Financial Officer
Pizza Inn Holdings, Inc.
469-384-5000