Brazil Fast Food Corp. (OTC Bulletin Board: BOBS.OB), the second largest fast-food restaurant chain in Brazil with 781 points of sale, operating under (i) the Bob’s brand, (ii) KFC and Pizza Hut São Paulo as franchisee of Yum! Brands, and (iii) Doggis as franchisee of Grupo de Empresas Doggis S.A., today announced financial results for the first quarter ended March 31, 2011.
“The outlook for our business for the rest of the year remains positive and we will continue to invest in our brands in the quarters ahead.”
First Quarter 2011 Highlights
System-wide sales totaled R$221, million, up 15.3% from the first quarter 2010
Revenue totaled R$54.9 million, up 9.7% from the first quarter 2010
Points of sale totaled 781 at March 31, 2011, up from 737 at the end of first quarter 2010
EBITDA was R$6.6 million, up 43.4% from the first quarter 2010
Operating income was R$4.9 million, up 113.1% from the first quarter 2010
Net income was R$4.2 million, or R$0.52 per basic and diluted share, up 125.0% from the first quarter 2010
“We are very pleased to report strong first quarter results, highlighted by meaningful operating margin improvement and robust net income growth. Our solid start in 2011 reflects our strategy to focus on our most profitable company-owned stores while growing our industry leading brands through new franchise relationships in favorable locations throughout Brazil,” said Mr. Ricardo Bomeny, President and CEO of Brazil Fast Food. “The outlook for our business for the rest of the year remains positive and we will continue to invest in our brands in the quarters ahead.”
First Quarter 2011 Results
System-wide sales grew 15% in the first quarter to R$221 million, driven by an increase in franchised points of sale as well as higher sales from company-owned stores.
Total revenue for the first quarter 2011 increased by 9.7% to R$54.9 million from R$50.1 million in the first quarter 2010. Revenue growth was driven primarily by the continued expansion of Brazil Fast Food’s franchise network, higher sales from company-owned stores.
The Company ended the first quarter of 2011 with 781 points of sale, compared to 737 in the comparable period in 2010.
Net revenue for company-owned and operated outlets was up 4.9% to R$40.1 million over the same period in 2010, reflecting an increase in net revenues across the Company’s KFC, Pizza Hut and Doggis brands, offset somewhat by a decrease in net revenues for the Company’s Bob’s brand due to a reduction in company-owned Bob’s outlets from 59 as of March 31, 2010, to 40 at the end of first quarter 2011. Same store sales, which measure the performance of stores that have been open for more than one year, increased by 6.6% year over year at company-owned Bob’s outlets and grew by 8.8% year over year at company-owned Pizza Hut locations. Company-owned KFC points of sale registered a 10.9% same store sales increase in the first quarter of 2011.
Net revenue from franchisees increased 15.4% year over year to R$7.6 million, driven primarily by an increase in number of franchised retail outlets to 709, up from 646 in the same period a year ago. Other revenue and income totaled R$7.2 million.
Operating expenses grew 4.7% to R$50.1 million in the first quarter of 2011, primarily due to higher administrative costs to support the growth of the business. As a percentage of revenue, operating costs declined from 95.4% of total revenue in the first quarter of 2010 to 91.1% of total revenue in the first quarter of 2011, mainly attributable to the company’s strategy to limit its direct operations to its most profitable outlets and also due to improved franchise margins.
Operating income for the first quarter of 2011 was R$4.9 million, compared to operating income of R$2.3 million in the first quarter of 2010. Operating margin in the first quarter of 2011 was 8.9% compared to 4.6% in the comparable period of 2010.
EBITDA in the first quarter of 2011 was R$6.6 million, compared to R$4.0 million in the first quarter of 2010. EBITDA margin was 12.1% in the first quarter of 2011, compared to 8.1% in the comparable period of 2010. A table reconciling EBITDA to its nearest GAAP equivalent is provided elsewhere in this press release.
Interest expense was R$44 thousand in the first quarter of 2011, compared to R$340 thousand in the first quarter of 2010. The reduction in interest expense is attributable to lower interest rates as well as a reduction in the Companys debt.
Net income for the first quarter of 2011 was R$4.2 million or R$0.52 per basic and diluted share, compared to net income of R$1.9 million, or R$0.23 per basic and diluted share, in the same period of 2010.
As of the balance sheet date on March 31, 2011 the Company had R$21.9 million in cash. Total shareholders equity was R$36.2 million at the end of the first quarter of 2011, compared to R$33.2 million at the end of 2010.
“Our primary goal in 2011 is to profitably grow and strategically position our leading brands in Brazil, while continuing to improve the efficiency and effectiveness of our existing operations. We also will continue to evaluate the acquisition or development of new brands opportunistically," said Mr. Ricardo Bomeny, President and CEO of Brazil Fast Food. "We see a continuation of the current favorable business environment in 2011 and expect to benefit from, among other factors, increased spending associated with the build-out to support the World Cup and Olympics to be hosted in 2014 and 2016, respectively," concluded Mr. Bomeny.
About Brazil Fast Food Corp.
Brazil Fast Food Corp. owns and operates, both directly and through franchisees, the second largest fast-food restaurant chain in Brazil. The Bob’s trade name is used by Venbo Comércio de Alimentos Ltda., a subsidiary of Brazil Fast Food holding company, BFFC do Brasil Participações Ltda (formerly 22N Participações Ltda.). The “KFC” trade name is used by CFK Comércio de Alimentos Ltda. (formerly Clematis Indústria e Comércio de alimentos e Participações Ltda.), also a holding company subsidiary. The “Pizza Hut” trade name is used by Internacional Restaurantes do Brasil (“IRB”), also a 60% subsidiary of Brazil Fast Food holding company, BFFC do Brasil Participações Ltda. Recently, Company entered into an agreement with Grupo de Empresas Doggis S.A (“GED”) to cross-franchise the Bob’s and Doggis brands in Chile and Brazil, respectively. Brazil Fast Food will control the Doggis master franchise in Brazil and GED will control the Bob’s master franchise in Chile.