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

Company Continues to Grow Pie Five Pizza Co. Concept

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| Source: Pizza Inn, Inc.

THE COLONY, Texas, Feb. 6, 2013 (GLOBE NEWSWIRE) -- PIZZA INN HOLDINGS, INC. (Nasdaq:PZZI)

Second Quarter Highlights:

  • The Company opened an additional Pie Five Pizza Co. restaurant
  • Company awarded first two Pie Five Pizza Co. franchise development agreements
  • Company-owned restaurant sales increased 55.8% over the second quarter of fiscal 2012 to $2.0 million
  • Net income decreased $0.2 million from the second quarter of fiscal 2012 to a loss of $120,000
  • Compared to second quarter of fiscal 2012, total domestic Pizza Inn franchised same store sales decreased 4.5%
  • EBITDA decreased $0.2 million to $0.1 million compared to the second quarter of fiscal 2012

Pizza Inn Holdings, Inc. (Nasdaq:PZZI) today announced results for the second fiscal quarter ended December 23, 2012. Second quarter net income decreased $0.2 million to a loss of $120,000, or $0.01 per share, compared to net income of $56,000, or $0.01 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 second quarter ended December 25, 2011.

Second quarter revenues increased to $10.5 million in fiscal 2013 compared to $10.3 million in the prior fiscal year. Food and supply sales decreased by approximately $0.4 million, or 5.4%, due to the combined impact of a decrease in the average number of restaurants open and an 8.7% decrease in total domestic franchisee retail sales. Compared to the second quarter of fiscal 2012, Company-owned restaurant sales increased 55.8% to $2.0 million due primarily to new store openings. 

"We continued to expand our Pie Five concept with the opening of another corporate-owned location during the second fiscal quarter," said Randy Gier, President and Chief Executive Officer. "We also welcomed 2013 with the opening of our ninth corporate-owned Pie Five in January. In the second fiscal quarter we awarded our first two multi-unit franchise agreements to develop up to 18 locations in Utah and North Carolina. At the same time, we have invested in the people and infrastructure for further development of our brands with the addition of Flynn Dekker as Chief Marketing Officer for Pizza Inn Holdings and Chris Smith as Vice President of Operations for Pie Five. We have plans to continue opening new Pie Five locations throughout 2013. The pace of store openings is contingent upon the availability of quality real estate and the completion of new retail centers in which we have leased space.

"The retail sales trend in the Pizza Inn system was negative when compared to the prior year period primarily as a result of significant pricing competition in the pizza market," Gier added. "However, new initiatives are underway to improve product quality and to communicate with loyal customers as well as new audiences about the value of Pizza Inn's legendary menu. We have a very unique product offering that is not matched by larger pizza competitors. We will continue to develop a strategy to leverage this to the benefit of the Pizza Inn system."

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. 

About Pizza Inn Holdings, Inc.:

Headquartered in the Dallas suburb of The Colony, TX, 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 Co." Pizza Inn is an international pizza chain featuring traditional and specialty pizzas, as well as freshly made pastas, sandwiches, and desserts. Pie Five Pizza Co. is a fast-casual concept offering individual pizzas made to order and cooked in less than five minutes. Founded in 1958, Pizza Inn Holdings Inc. owns and franchises approximately 300 restaurants. The Company's common stock is listed on the Nasdaq Capital Market under the symbol "PZZI".  For more information, please visit www.pizzainn.com.

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 Six Months Ended
  December 23, December 25, December 23, December 25,
  2012 2011 2012 2011
REVENUES:        
Food and supply sales  $ 7,701  $ 8,137  $ 15,411  $ 17,044
Franchise revenue  890  943  1,792  1,892
Restaurant sales  1,957  1,256  3,783  2,547
   10,548  10,336  20,986  21,483
         
COSTS AND EXPENSES:        
Cost of sales  8,875  8,611  17,667  17,861
General and administrative expenses  1,153  898  2,158  1,793
Franchise expenses  566  521  1,067  973
Pre-opening expenses  85  164  164  176
Bad debt  45  15  90  30
Interest expense  35  17  139  33
   10,759  10,226  21,285  20,866
         
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE TAXES  (211)  110  (299)  617
Income tax (benefit) expense  (103)  39  (148)  217
(LOSS) INCOME FROM CONTINUING OPERATIONS  (108)  71  (151)  400
         
Loss from discontinued operations, net of taxes  (12)  (15)  (27)  (31)
NET (LOSS) INCOME  $ (120)  $ 56  $ (178)  $ 369
         
EARNINGS PER SHARE OF COMMON STOCK - BASIC:        
(Loss) Income from continuing operations  $ (0.01)  $ 0.01  $ (0.02)  $ 0.05
Loss from discontinued operations  --   --   --   -- 
Net (loss) income  $ (0.01)  $ 0.01  $ (0.02)  $ 0.05
         
EARNINGS PER SHARE OF COMMON STOCK - DILUTED:        
         
(Loss) Income from continuing operations  $ (0.01)  $ 0.01  $ (0.02)  $ 0.05
Loss from discontinued operations  --   --   --   -- 
Net (loss) income  $ (0.01)  $ 0.01  $ (0.02)  $ 0.05
         
Weighted average common shares outstanding - basic 8,021 8,013 8,021 8,012
         
Weighted average common and potential dilutive common shares outstanding 8,184 8,362 8,172 8,292
 
PIZZA INN HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
     
  December 23, June 24,
ASSETS 2012 (unaudited) 2012
     
CURRENT ASSETS    
Cash and cash equivalents  $534  $590
Accounts receivable, less allowance for bad debts of $252 and $253, respectively  3,303  3,098
Inventories  1,531  1,852
Income tax receivable  429  431
Deferred income tax assets  1,070  1,078
Prepaid expenses and other  436  256
Total current assets  7,303  7,305
     
LONG-TERM ASSETS    
Property, plant and equipment, net  5,520  4,794
Long-term notes receivable  115  27
Deposits and other  216  372
   $13,154  $12,498
LIABILITIES AND SHAREHOLDERS' EQUITY    
CURRENT LIABILITIES    
Accounts payable - trade  $1,422  $1,562
Accrued expenses  1,856  1,756
Deferred revenues  128  200
Bank debt  556  765
Total current liabilities  3,962  4,283
     
LONG-TERM LIABILITIES    
Bank debt, net of current portion  2,219  977
Deferred tax liability  553  699
Deferred revenues, net of current portion  107  125
Deferred gain on sale of property  71  84
Other long-term liabilities  22  22
Total liabilities  6,934  6,190
COMMITMENTS AND CONTINGENCIES     
SHAREHOLDERS' EQUITY    
Common stock, $.01 par value; authorized 26,000,000 shares; issued 15,140,319; outstanding 8,020,919  151  151
Additional paid-in capital  9,244  9,154
Retained earnings  21,461  21,639
Treasury stock at cost    
Shares in treasury: 7,119,400   (24,636)  (24,636)
Total shareholders' equity   6,220  6,308
   $13,154  $12,498
PIZZA INN HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
     
  Six Months Ended
  December 23, December 25,
  2012 2011
     
CASH FLOWS FROM OPERATING ACTIVITIES:    
     
Net (loss) income  $ (178)  $ 369
Adjustments to reconcile net (loss) income to cash provided by operating activities:    
Depreciation and amortization  627  389
Stock compensation expense  90  73
Deferred tax  (138)  39
Provision for litigation costs    
Provision for bad debts  1  30
Changes in operating assets and liabilities:    
Notes and accounts receivable  (319)  (282)
Inventories  321  105
Accounts payable - trade  (140)  (8)
Accrued expenses  100  (169)
Deferred revenue  (103)  (78)
Prepaid expenses and other  (26)  (283)
Cash provided by operating activities  235  185
     
CASH FLOWS FROM INVESTING ACTIVITIES:    
     
Capital expenditures  (1,324)  (1,222)
Cash used by investing activities  (1,324)  (1,222)
     
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from exercise of stock options  --  23
Borrowings of bank debt  3,160  741
Repayments of bank debt  (2,127)  (167)
Repayments of bank debt - F&M  --  --
Cash provided by financing activities   1,033  597
     
Net decrease in cash and cash equivalents  (56)  (440)
Cash and cash equivalents, beginning of period  590  949
Cash and cash equivalents, end of period  $ 534  $ 509
     
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
     
CASH PAYMENTS FOR:    
     
 Interest  $ 141  $ 32
 Income taxes - net  --  57
 
PIZZA INN HOLDINGS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands)
(Unaudited)
       
  Three Months Ended  
  December 23, December 25,  
  2012 2011  
 Net (loss) income   $ (120)  $ 56  
 Interest expense   35  17  
 Taxes   (103)  39  
 Depreciation and amortization   326  206  
 EBITDA   $ 138  $ 318  
       
       
  Six Months Ended  
  December 23, December 25,  
  2012 2011  
 Net (loss) income   $ (178)  $ 369  
 Interest expense   139  33  
 Taxes   (148)  217  
 Depreciation and amortization   627  389  
 EBITDA   $ 440  $ 1,008  
Jerry L. Trojan
Chief Financial Officer
Pizza Inn Holdings, Inc.
469-384-5000