Habit Restaurants, Inc. - FORM 8-K - EX-99.1

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8-K - 8-K - Habit Restaurants, Inc.	habt-8k_20160302.htm

Exhibit 99.1

The Habit Restaurants, Inc. Announces Fourth Quarter and Full Year 2015 Financial Results

IRVINE, CA, March 2, 2016 – The Habit Restaurants, Inc. (NASDAQ: HABT) (“The Habit” or the “Company”), today announced financial results for its fourth quarter and full year ended December 29, 2015.

Highlights for the fourth quarter ended December 29, 2015:

Total revenue was $60.6 million compared to $48.4 million in the fourth quarter of 2014.

Company-operated comparable restaurant sales increased 3.3% as compared to the fourth quarter of 2014.

Net income was $1.3 million, compared to $0.6 million in the fourth quarter of 2014.

Adjusted fully distributed pro forma net income⁽¹⁾ was $1.2 million, or $0.05 per fully distributed weighted average share compared with $0.6 million, or $0.02 per fully distributed weighted average share for the fourth quarter of 2014.

Adjusted EBITDA⁽¹⁾ was $6.8 million compared to $5.3 million for the fourth quarter of 2014.

The Company opened 13 new restaurants and one licensed/franchised location during the fourth quarter and finished the year with 137 company-operated locations and five franchised/licensed locations.

⁽¹⁾	Adjusted fully distributed pro forma net income and adjusted EBITDA are non-GAAP measures. A reconciliation of GAAP net income to each of these measures is included in the accompanying financial data. See also “Non-GAAP Financial Measures,” included herein.

“2015 was another successful year for The Habit as we reported strong EBITDA and earnings growth, in addition to recording our 12th straight year of positive comps. We also continued to make progress with regard to new location development, including the entrance into five new states in 2015 – Florida, Virginia, Idaho, Nevada and Washington – and opening a total of 28 company-operated stores and four franchise locations,” said Russ Bendel, President and Chief Executive Officer of The Habit Restaurants, Inc. “We remain confident that we are well positioned to grow our business over both the near and the long term. In 2016, we expect to further expand our unit base with the opening of 30 to 32 company-operated stores, and four to six new franchised locations. In addition, we believe that our commitment to quality, the warm and inviting atmosphere of our restaurants, and our ability to consistently deliver genuine hospitality all with an exceptional value, will continue to drive consistent comparable sales results.”

Fourth Quarter 2015 Financial Results Compared to Fourth Quarter 2014

Total revenue was $60.6 million in the fourth quarter of 2015, compared to $48.4 million in the fourth quarter of 2014.

Company-operated comparable restaurant sales increased 3.3% for the quarter ended December 29, 2015. The increase in company-operated comparable restaurant sales was driven primarily by a 3.5% increase in average transaction amount partially offset by a 0.2% decrease in transactions.

Net income for the fourth quarter of 2015 was $1.3 million, compared to $0.6 million in the fourth quarter of 2014.

Adjusted fully distributed pro forma net income in the fourth quarter of 2015 was $1.2 million, or $0.05 per fully distributed weighted average share, compared to $0.6 million, or $0.02 per fully distributed weighted average share, in the fourth quarter of 2014. A reconciliation between GAAP net income and adjusted fully distributed pro forma net income is included in the accompanying financial data.

Fiscal Year 2015 Financial Results Compared to Fiscal Year 2014

Total revenue was $230.6 million in fiscal year 2015, compared to $174.6 million in fiscal year 2014.

Company-operated comparable restaurant sales increased 6.4% for the year ended December 29, 2015. The increase in company-operated comparable restaurant sales was driven primarily by a 3.9% increase in average transaction amount and a 2.5% increase in transactions.

Net income for the fiscal year 2015 was $8.9 million, compared to $7.6 million in the fiscal year 2014.

Adjusted fully distributed pro forma net income for fiscal year 2015 was $7.4 million, or $0.29 per fully distributed weighted average share, compared to $4.0 million, or $0.16 per fully distributed weighted average share, in fiscal year 2014. A reconciliation between GAAP net income and adjusted fully distributed pro forma net income is included in the accompanying financial data.

2016 Outlook

The Company currently anticipates the following for its fiscal year 2016:

Total revenue between $286 million to $290 million;

Company-operated comparable restaurant sales growth of approximately 3.0%;

The opening of 30 to 32 company-operated restaurants and four to six franchised/licensed restaurants;

Restaurant contribution margin of 20.6% to 21.1%;

General and administrative expenses of $28.0 million to $28.5 million;

Depreciation and amortization expense of approximately $15.0 million;

Capital expenditures of $36.0 million to $38.0 million; and

An effective pro forma tax rate of approximately 43.0%, which assumes the conversion of all common units of The Habit Restaurants, LLC for shares of our Class A common stock (and cancellation of corresponding shares of our Class B common stock), which would eliminate the non-controlling interests.

Conference Call

The Company will host a conference call to discuss financial results for the fourth quarter and full year 2015 today at 5:00 PM Eastern Time. Russ Bendel, President and Chief Executive Officer, and Ira Fils, Chief Financial Officer will host the call.

The conference call can be accessed live over the phone by dialing (855) 327-6837 or for international callers by dialing (778) 327-3988. A replay will be available after the call and can be accessed by dialing (877) 870-5176 or for international callers by dialing (858) 384-5517; the passcode is 10000678. The replay will be available until Wednesday, March 9, 2016. The conference call will also be webcast live from the Company’s corporate website at ir.habitburger.com under the “Events” page. An archive of the webcast will be available at the same location on the corporate website shortly after the call has concluded.

The following definitions apply to these terms as used in this release:

Comparable restaurant sales reflect the change in year-over-year sales in our comparable restaurant base. A restaurant enters our comparable restaurant base in the accounting period following its 18th full period of operations.

Average Unit Volumes (AUVs) are calculated by dividing revenue for the trailing 52-week period for all company-operated restaurants that have operated for 12 full periods by the total number of restaurants open for such period.

Adjusted fully distributed pro forma net income includes net income attributable to The Habit (i) excluding income tax expense, (ii) excluding the effect of non-recurring items, (iii) assuming the exchange of all common units of The Habit Restaurants, LLC into shares of our Class A common stock (and cancellation of corresponding shares of our Class B common stock), which results in the elimination of non-controlling interests in The Habit Restaurants, LLC, (iv) reflecting an adjustment for income tax expense on fully distributed pro forma net income before income taxes at our estimated long term effective income tax rate, and (v) adjusted for the effects of additional costs of being a public company. Adjusted fully distributed pro forma net income is a non-GAAP financial measure because it represents net income attributable to The Habit, before non-recurring items and the effects of non-controlling interests in The Habit Restaurants, LLC. We use adjusted fully distributed pro forma net income to facilitate a comparison of our operating performance on a consistent basis from period to period that, when viewed in combination with our results prepared in accordance with GAAP, provides a more complete understanding of factors and trends affecting our business than GAAP measures alone and eliminates the variability of non-controlling interests as a result of member owner exchanges of common units of The Habit Restaurants, LLC into shares of our Class A common stock (and cancellation of corresponding shares of our Class B common stock).

Adjusted fully distributed pro forma net income per fully distributed weighted average share is calculated using adjusted fully distributed pro forma net income as defined above and assumes the exchange of all common units of The Habit Restaurants, LLC into shares of our Class A common stock (and cancellation of corresponding shares of our Class B common stock).

EBITDA, a non-GAAP measure, represents net income before interest expense, net, provision for income taxes, and depreciation and amortization.

Adjusted EBITDA, a non-GAAP measure, represents EBITDA plus pre-opening costs, stock-based compensation, loss on disposal of assets, management and consulting fees and offering related costs.

About The Habit Restaurants, Inc.

The Habit Burger Grill is a fast casual restaurant concept that specializes in preparing fresh, made-to-order char-grilled burgers and sandwiches featuring USDA choice tri-tip steak, grilled chicken and sushi-grade albacore tuna cooked over an open flame. The first Habit opened in Santa Barbara, California in 1969. The Habit has since grown to 142 restaurants in 15 markets throughout California, Arizona, Utah, New Jersey, Florida, Idaho, Virginia, Nevada and Washington.

Contacts

Investors:

(949) 943-8692

HabitIR@habitburger.com

Media:

(949) 943-8691

Media@habitburger.com

Forward-Looking Statements

This press release contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this press release are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements because they do not relate strictly to historical or current facts. These statements may include words such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “outlook,” “potential,” “project,” “projection,” “plan,” “intend,” “seek,” “may,” “could,” “would,” “will,” “should,” “can,” “can have,” “likely,” the negatives thereof and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. They appear in a number of places throughout this press release and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected.

While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this press release in the context of the risks and uncertainties disclosed in our soon to be filed Annual Report on Form 10-K for the year ended December 29, 2015, including the sections thereof captioned “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors.” These filings and others are available online at www.sec.gov, ir.habitburger.com or upon request from The Habit.

We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences we anticipate or affect us or our operations in the ways that we expect. The forward-looking statements included in this press release are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use non-GAAP financial measures, including those discussed above. These measures are not intended to be considered in isolation or as substitutes for, or superior to, financial measures prepared and presented in accordance with GAAP. We use non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that they provide useful information about operating results, enhance understanding of past performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. However, when analyzing the Company’s operating performance, investors should not consider adjusted earnings per fully distributed weighted average share or adjusted fully distributed pro forma net income in isolation or as substitutes for net income (loss), cash flows from operating activities or other operation statement or cash flow statement data prepared in accordance with U.S. GAAP. The non-GAAP measures used in this press release may be different from the measures used by other companies.

Consolidated Statement of Operations Data:

	13 Weeks Ended										52 Weeks Ended
(amounts in thousands except share and per share data, presented as a percentage of total revenue, with the exception of operating expenses, which are presented as a percentage of restaurant revenue)	December 29, 2015					December 30, 2014					December 29, 2015					December 30, 2014
Revenue
Restaurant revenue	$	60,462		99.7	%	$	48,335		100.0	%	$	230,258		99.9	%	$	174,544		100.0	%
Franchise/license revenue		179		0.3	%		19		0.0	%		344		0.1	%		75		0.0	%
Total revenue		60,641		100.0	%		48,354		100.0	%		230,602		100.0	%		174,619		100.0	%
Operating expenses
Restaurant operating costs (excluding depreciation and amortization)
Food and paper costs		19,042		31.5	%		16,332		33.8	%		73,797		32.0	%		58,260		33.4	%
Labor and related expenses		19,118		31.6	%		14,536		30.1	%		70,784		30.7	%		51,898		29.7	%
Occupancy and other operating expenses		9,774		16.2	%		7,700		15.9	%		35,495		15.4	%		27,184		15.6	%
General and administrative expenses		6,282		10.4	%		5,261		10.9	%		23,308		10.1	%		17,389		10.0	%
Offering related expenses		504		0.8	%		168		0.3	%		1,721		0.7	%		613		0.4	%
Depreciation and amortization expense		3,149		5.2	%		2,481		5.1	%		11,312		4.9	%		8,472		4.9	%
Pre-opening costs		954		1.6	%		754		1.6	%		2,296		1.0	%		1,902		1.1	%
Loss on disposal of assets		56		0.1	%		26		0.1	%		114		0.0	%		141		0.1	%
Total operating expenses		58,879		97.4	%		47,258		97.8	%		218,827		95.0	%		165,859		95.0	%
Income from operations		1,762		2.9	%		1,096		2.3	%		11,775		5.1	%		8,760		5.0	%
Other expenses
Interest expense, net		110		0.2	%		153		0.3	%		451		0.2	%		909		0.5	%
Income before income taxes		1,652		2.7	%		943		2.0	%		11,324		4.9	%		7,851		4.5	%
Provision for income taxes		384		0.6	%		299		0.6	%		2,473		1.1	%		299		0.2	%
Net income		1,268		2.1	%		644		1.3	%		8,851		3.8	%		7,552		4.3	%
Less: net income attributable to non-controlling interests		(778	)	-1.3	%		(676	)	-1.4	%		(6,082	)	-2.6	%		(7,584	)	-4.3	%
Net income attributable to The Habit Restaurants, Inc.	$	490		0.8	%	$	(32	)	-0.1	%	$	2,769		1.2	%	$	(32	)	0.0	%
Net income attributable to The Habit Restaurants, Inc. per share Class A common stock
Basic	$	0.04				$	(0.00	)			$	0.22				$	(0.00	)
Diluted	$	0.04				$	(0.00	)			$	0.22				$	(0.00	)
Weighted average shares of Class A common stock outstanding:
Basic		13,759,754					8,974,550					12,445,138					8,974,550
Diluted		13,761,493					8,974,550					12,451,962					8,974,550

Selected Balance Sheet and Selected Operating Data:


Balance Sheet Data	December 29, 2015		December 30, 2014
(dollar amounts in thousands)
Balance Sheet Data-Consolidated (at period end):
Cash and cash equivalents	$	46,991	$	49,469
Property and equipment, net^(a)		81,524		65,668
Total assets		256,711		158,622
Total debt^(b)		2,436		2,478
Total stockholders' equity		131,932		116,957

^(a)	Property and equipment, net consists of property owned or leased, net of accumulated depreciation and amortization.

^(b)	Total debt consists of deemed landlord financing.

	13 Weeks Ended
Selected Operating Data	December 29, 2015			December 30, 2014
Other Operating Data:
Total restaurants at end of period		142			110
Company-operated restaurants at end of period		137			109
Company-operated comparable restaurant sales growth^(a)		3.3	%		13.2	%
Company-operated average unit volumes	$	1,919		$	1,823

	52 Weeks Ended
Selected Operating Data	December 29, 2015			December 30, 2014
Other Operating Data:
Company-operated comparable restaurant sales growth^(a)		6.4	%		10.7	%

^(a)	Company-operated comparable restaurant sales growth reflects the change in year-over-year sales for the company-operated comparable restaurant base. A restaurant enters our comparable restaurant base in the accounting period following its 18th full period of operations.

The following table includes a reconciliation of net income to adjusted EBITDA:

	13 Weeks Ended				52 Weeks Ended
Adjusted EBITDA Reconciliation	December 29, 2015		December 30, 2014		December 29, 2015		December 30, 2014
(amounts in thousands)
Net income	$	1,268	$	644	$	8,851	$	7,552
Non-GAAP adjustments:
Provision for income taxes		384		299		2,473		299
Interest expense, net		110		153		451		909
Depreciation and amortization		3,149		2,481		11,312		8,472
EBITDA		4,911		3,577		23,087		17,232
Stock-based compensation expense^(a)		348		211		1,200		515
Management fees^(b)		—		521		—		635
Loss on disposal of assets^(c)		56		26		114		141
Pre-opening costs^(d)		954		754		2,296		1,902
Offering related costs^(e)		504		168		1,721		613
Adjusted EBITDA	$	6,773	$	5,257	$	28,418	$	21,038

^(a)	Includes non-cash, stock-based compensation.

^(b)	Includes management fees and other out-of-pocket costs incurred by us and payable to KarpReilly, LLC (“KarpReilly”). This management agreement was terminated upon the completion of the IPO.

^(c)	Loss on disposal of assets includes the loss on disposal of assets related to retirements and replacements or write-off of leasehold improvements or equipment.

^(d)

Pre-opening costs consist of costs directly associated with the opening of new restaurants and incurred prior to opening, including management labor costs, staff labor costs during training, food and supplies used during training, marketing costs and other related pre-opening costs. These are generally incurred over the three to five months prior to opening. Pre-opening costs also include net occupancy costs incurred between the date of possession and opening date of our restaurants.

^(e)	Public offering related costs.

The following is a reconciliation of GAAP net income and net income per share to adjusted fully distributed pro forma net income and adjusted fully distributed pro forma net income per share:

	13 Weeks Ended					52 Weeks Ended
(dollar amounts in thousands)	December 29, 2015		December 30, 2014			December 29, 2015		December 30, 2014
Net income	$	1,268	$	644		$	8,851	$	7,552
Management fees^(a)		—		521			—		635
Offering related expenses^(b)		504		168			1,721		613
Pro forma incremental public costs^(c)		—		(500	)		—		(2,000	)
Income tax expense as reported		384		299			2,473		299
Fully distributed pro forma net income before income taxes		2,156		1,132			13,045		7,099
Income tax expense on fully distributed pro forma income before income taxes^(d)		967		508			5,630		3,064
Adjusted fully distributed pro forma net income	$	1,189	$	624		$	7,415	$	4,035
Adjusted fully distributed pro forma net income per share of Class A common stock:
Basic	$	0.05	$	0.02		$	0.29	$	0.16
Diluted	$	0.05	$	0.02		$	0.29	$	0.16
Weighted average shares of Class A common stock outstanding used in computing adjusted fully distributed pro forma net income^(e):
Basic		26,001,236		26,002,754			26,001,912		26,002,754
Diluted		26,002,975		26,002,754			26,008,736		26,002,754

^(a)	Includes management fees and other out-of-pocket costs incurred by us and payable to KarpReilly. This management agreement was terminated upon the completion of the IPO.

^(b)	Public offering related costs.

^(c)	Reflects an estimate of recurring incremental legal, accounting, insurance and other compliance costs we expected to incur as a public company.

^(d)

Reflects income tax expense at an effective rate of 43.16% on income before income taxes assuming the conversion of all outstanding common units of The Habit Restaurants, LLC (“LLC Units”) for shares of Class A common stock (with a corresponding cancellation of shares of our Class B common stock). The estimated tax rate includes provisions for U.S. federal income taxes and assumes the highest statutory rates apportioned to each state and local jurisdiction and excludes the impact to the rate of follow-on offering costs.

^(e)

For all periods presented, represents the total number of shares of Class A common stock outstanding including all outstanding LLC Units of The Habit Restaurants, LLC as if they were exchanged on a one-for-one basis for the Company’s Class A common stock (with a corresponding cancellation of shares of our Class B common stock). Diluted earnings per share gives effect during the reporting period to all dilutive potential shares outstanding resulting from employee stock-based awards using the treasury method.

Habit Restaurants, Inc. - FORM 8-K - EX-99.1 - March 2, 2016

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