Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 25, 2016 | Aug. 05, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Wingstop Inc. | |
Entity Central Index Key | 1,636,222 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 25, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 28,728,305 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 25, 2016 | Dec. 26, 2015 |
Current assets | ||
Cash and cash equivalents | $ 10,014 | $ 10,690 |
Accounts receivable, net | 2,581 | 3,404 |
Prepaid expenses and other current assets | 2,063 | 1,752 |
Advertising fund assets, restricted | 1,611 | 3,774 |
Total current assets | 16,269 | 19,620 |
Property and equipment, net | 4,805 | 4,593 |
Goodwill | 45,128 | 45,128 |
Trademarks | 32,700 | 32,700 |
Other non-current assets | 238 | 313 |
Total assets | 116,758 | 120,650 |
Current liabilities | ||
Accounts payable | 1,616 | 1,360 |
Other current liabilities | 6,336 | 7,436 |
Advertising fund liabilities, restricted | 1,611 | 3,774 |
Total current liabilities | 9,563 | 12,570 |
Long-term debt, net | 85,069 | 95,008 |
Deferred revenues, net of current | 7,069 | 7,623 |
Deferred income tax liabilities, net | 12,887 | 13,018 |
Other non-current liabilities | 2,269 | 2,104 |
Total liabilities | 116,857 | 130,323 |
Commitments and contingencies (see note 6) | ||
Stockholders' deficit | ||
Common stock, $0.01 par value; 100,000,000 shares authorized; 28,680,544 and 28,581,182 shares issued and outstanding as of June 25, 2016 and December 26, 2015, respectively | 287 | 286 |
Additional paid-in-capital | 38,074 | 36,870 |
Accumulated deficit | (38,460) | (46,829) |
Total stockholders' deficit | (99) | (9,673) |
Total liabilities and stockholders' deficit | 116,758 | 120,650 |
Customer Relationships [Member] | ||
Customer relationships, net | $ 17,618 | $ 18,296 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 25, 2016 | Dec. 26, 2015 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 28,680,544 | 28,581,182 |
Common stock, shares outstanding | 28,680,544 | 28,581,182 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 25, 2016 | Jun. 27, 2015 | Jun. 25, 2016 | Jun. 27, 2015 | ||
Revenue: | |||||
Royalty revenue and franchise fees | $ 14,305 | $ 11,400 | $ 27,803 | $ 22,557 | |
Company-owned restaurant sales | 8,418 | 7,832 | 16,994 | 15,701 | |
Total revenue | 22,723 | 19,232 | 44,797 | 38,258 | |
Costs and expenses: | |||||
Cost of sales | [1] | 6,184 | 5,516 | 12,261 | 11,252 |
Selling, general and administrative | 8,572 | 10,665 | 16,227 | 18,341 | |
Depreciation and amortization | 727 | 645 | 1,441 | 1,308 | |
Total costs and expenses | 15,483 | 16,826 | 29,929 | 30,901 | |
Operating income | 7,240 | 2,406 | 14,868 | 7,357 | |
Interest expense, net | 707 | 1,177 | 1,468 | 1,964 | |
Other expense, net | 10 | 257 | 38 | 286 | |
Income before income tax expense | 6,523 | 972 | 13,362 | 5,107 | |
Income tax expense | 2,444 | 388 | 4,993 | 1,969 | |
Net income | $ 4,079 | $ 584 | $ 8,369 | $ 3,138 | |
Earnings per share | |||||
Basic (in usd per share) | $ 0.14 | $ 0.02 | $ 0.29 | $ 0.12 | |
Diluted (in usd per share) | $ 0.14 | $ 0.02 | $ 0.29 | $ 0.12 | |
Weighted average shares outstanding | |||||
Basic (in shares) | 28,646 | 26,689 | 28,616 | 26,412 | |
Diluted (in shares) | 28,989 | 26,970 | 28,979 | 26,711 | |
Dividends per share (in usd per share) | $ 0 | $ 0 | $ 0 | $ 1.83 | |
[1] | exclusive of depreciation and amortization, shown separately |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 25, 2016 | Jun. 27, 2015 | |
Operating activities | ||
Net income | $ 8,369 | $ 3,138 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation and amortization | 1,441 | 1,308 |
Excess tax benefit of stock-based compensation | (667) | (822) |
Deferred income taxes | (131) | (438) |
Stock-based compensation expense | 253 | 342 |
Loss on disposal of property and equipment | 0 | 4 |
Amortization of debt issuance costs | 69 | 267 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 823 | (197) |
Prepaid expenses and other assets | (220) | (2,191) |
Accounts payable and other current liabilities | (315) | (1,039) |
Deferred revenue | (440) | 54 |
Other non-current liabilities (attributable to deferred rent and lease incentives) | 165 | 437 |
Cash provided by operating activities | 9,347 | 863 |
Investing activities | ||
Purchases of property and equipment | (975) | (333) |
Cash used in investing activities | (975) | (333) |
Financing activities | ||
Proceeds from issuance of common stock, net of expenses | 0 | 34,766 |
Proceeds from exercise of stock options | 285 | 478 |
Borrowings of long-term debt | 0 | 40,000 |
Principal payments on long-term debt | (10,000) | (33,218) |
Payment of deferred financing costs | 0 | (227) |
Excess tax benefit of stock-based compensation | 667 | 822 |
Dividends paid | 0 | (47,999) |
Cash used in financing activities | (9,048) | (5,378) |
Net change in cash and cash equivalents | (676) | (4,848) |
Cash and cash equivalents at beginning of period | 10,690 | 9,723 |
Cash and cash equivalents at end of period | $ 10,014 | $ 4,875 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 25, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation Basis of Presentation Wingstop Inc. (“Wingstop” or the “Company”) is in the business of franchising and operating Wingstop restaurants. As of June 25, 2016 , 831 franchised restaurants were in operation domestically and 63 international franchised restaurants were in operation across five countries. As of June 25, 2016 , the Company owned and operated 20 restaurants. The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Consequently, financial information and disclosures normally included in financial statements prepared annually in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted. Balance sheet amounts are as of June 25, 2016 and December 26, 2015 and operating results are for the thirteen and twenty-six weeks ended June 25, 2016 and June 27, 2015 . In the Company’s opinion, all necessary adjustments have been made for the fair presentation of the results of the interim periods presented. The results of operations for such interim periods are not necessarily indicative of the results to be expected for the full year. The accompanying interim unaudited consolidated financial statements should be read in conjunction with the audited financial statements and the related notes thereto included in the Company’s annual report on Form 10-K for the fiscal year ended December 26, 2015 . The Company uses a 52/53-week fiscal year that ends on the last Saturday of the calendar year. Fiscal years 2016 and 2015 have 53 weeks and 52 weeks, respectively. Recent Accounting Pronouncements In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity . The amendments in ASU 2014-08 change the criteria for reporting discontinued operations while enhancing disclosures in this area. It also addresses sources of confusion and inconsistent application related to financial reporting of discontinued operations guidance in GAAP. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the organization’s operations and financial results. Examples include a disposal of a major geographic area, a major line of business, or a major equity method investment. In addition, the new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The Company adopted the amendment as of the first day of fiscal year 2016, and the adoption did not have any impact on the Company’s consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) . This update provides a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. This update is effective for annual and interim periods beginning after December 15, 2017, which will require us to adopt these provisions in the first quarter of fiscal 2018. This update permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect this guidance will have on our consolidated financial statements and related disclosures and has not yet selected a transition method. In April 2015, the FASB issued ASU No 2015-03, Simplifying the Presentation of Debt Issuance Costs . This update changes the presentation of debt issuance costs in the balance sheet. ASU 2015-03 requires debt issuance costs related to a recognized debt obligation to be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability rather than being presented as an asset. Amortization of debt issuance costs will continue to be reported as interest expense. In August 2015, the FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements . This ASU clarified guidance in ASC 2015-03 stating that the SEC staff would not object to a company presenting debt issuance costs related to a line-of-credit arrangement on the balance sheet as a deferred asset, regardless of whether there were any outstanding borrowings at period-end. This update is effective for annual and interim periods beginning after December 15, 2015. The Company adopted this pronouncement during the first quarter of 2016 and applied the update on a retrospective basis, wherein the balance sheet of each period presented was adjusted to reflect the effects of applying the new guidance. The Company reclassed deferred financing costs of $431,000 and $492,000 for the periods ended June 25, 2016 and December 26, 2015 , respectively, from Other non-current assets to Long-term debt on the Consolidated Balance Sheets. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective beginning in the first quarter of 2019. Early adoption of ASU 2016-02 as of its issuance is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the impact of adopting the new leases standard on the consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718) . This update requires all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) to be recognized as income tax expense or benefit in the income statement, including recognition of excess tax benefits regardless of whether the benefit reduces taxes payable in the current period. Currently, GAAP requires excess tax benefits to be recognized in additional paid-in capital; tax deficiencies are recognized either as an offset to accumulated excess tax benefits, if any, or in the income statement, and excess tax benefits are not recognized until the deduction reduces taxes payable. ASU 2016-09 further requires that excess tax benefits be classified along with other income tax cash flows as an operating activity on the Statement of Cash Flows. Currently, they are classified as financing activities. The update also allows entities to make an accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur. This update is effective for annual and interim periods beginning after December 15, 2016, which will require us to adopt these provisions in the first quarter of fiscal 2017. Early application is permitted. The Company is evaluating the effect this guidance will have on our consolidated financial statements and related disclosures and has not yet selected a transition method. |
Earnings per Share (Notes)
Earnings per Share (Notes) | 6 Months Ended |
Jun. 25, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share [Text Block] | Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the reporting period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the calculation of diluted net income per share, the basic weighted average number of shares is increased by the dilutive effect of stock options and restricted share awards, determined using the treasury stock method. For the thirteen weeks ended June 25, 2016 we had approximately 7,000 stock options outstanding which were excluded from the dilutive earnings per share calculation because the effect would have been anti-dilutive. For the thirteen weeks ended June 27, 2015 all stock options had a dilutive effect; therefore none were excluded from the calculation of diluted earnings per share. For the twenty-six weeks ended June 25, 2016 and June 27, 2015 , respectively, we had approximately 5,000 and 13,000 stock options outstanding which were excluded from the dilutive earnings per share calculation because the effect would have been anti-dilutive. Basic weighted average shares outstanding is reconciled to diluted weighted average shares outstanding as follows (in thousands): Thirteen Weeks Ended Twenty-Six Weeks Ended June 25, June 27, June 25, June 27, Basic weighted average shares outstanding 28,646 26,689 28,616 26,412 Dilutive stock options 343 281 363 299 Diluted weighted average shares outstanding 28,989 26,970 28,979 26,711 |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 25, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. Assets and liabilities are classified using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value as follows: Level 1 — Unadjusted quoted prices for identical instruments traded in active markets. Level 2 — Observable market-based inputs or unobservable inputs corroborated by market data. Level 3 — Unobservable inputs reflecting management’s estimates and assumptions. The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to their short-term nature. Fair value of debt is determined on a non-recurring basis, which results are summarized as follows (in thousands): Fair Value Hierarchy June 25, 2016 December 26, 2015 Carrying Value Fair Value Carrying Value Fair Value Total debt obligations: Senior Secured Term Loan Facility (1) Level 3 $ 85,500 $ 87,005 $ 95,500 $ 95,500 (1) The fair value of long-term debt was estimated using a discounted cash flow method based on a discount rate, reflecting the applicable credit spread. The Company also measures certain non-financial assets at fair value on a non-recurring basis, primarily long-lived assets, intangible assets and goodwill, in connection with our periodic evaluations of such assets for potential impairment. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 25, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax expense and the effective tax rate were $2.4 million and 37.5% , respectively, for the thirteen weeks ended June 25, 2016 , and $0.4 million and 39.9% , respectively, for the thirteen weeks ended June 27, 2015 . Income tax expense and the effective tax rate were $5.0 million and 37.4% , respectively, for the twenty-six weeks ended June 25, 2016 , and $2.0 million and 38.6% , respectively, for the twenty-six weeks ended June 27, 2015 . |
Debt Obligations
Debt Obligations | 6 Months Ended |
Jun. 25, 2016 | |
Debt Disclosure [Abstract] | |
Debt Obligations | Debt Obligations In February 2016, the Company made a $10.0 million prepayment of the outstanding principal balance of its second amended and restated credit facility. As of June 25, 2016 , the second amended and restated credit facility had an outstanding balance of $85.5 million that bore interest at 3.13% . In connection with the prepayments of $10.0 million and $37.0 million in 2016 and 2015, respectively, under the second amended and restated credit facility, there are no scheduled principal payments due until maturity in March 2020. The second amended and restated senior secured credit facility is secured by substantially all assets of the Company and requires compliance with certain financial and non-financial covenants. As of June 25, 2016 , the Company was in compliance with all financial covenants. On June 30, 2016, the Company completed a refinancing of its outstanding debt obligations. Refer to footnote 9 for a discussion of the subsequent event. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 25, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Wingstop Restaurants, Inc. (“WRI”) leases certain office and retail space and equipment under non-cancelable operating leases with terms expiring at various dates through June 2031. A schedule of future minimum rental payments required under our operating leases, excluding contingent rent, that have initial or remaining non-cancelable lease terms in excess of one year, as of June 25, 2016 , is as follows (in thousands): Remainder of fiscal year 2016 $ 840 Fiscal year 2017 1,697 Fiscal year 2018 1,510 Fiscal year 2019 1,276 Fiscal year 2020 1,150 Fiscal year 2021 994 Thereafter 4,357 Total $ 11,824 Rent expense under cancelable and non-cancelable leases was $456,000 and $487,000 for the thirteen weeks ended June 25, 2016 and June 27, 2015 , respectively, and $921,000 and $959,000 for the twenty-six weeks ended June 25, 2016 and June 27, 2015 , respectively. The Company is subject to legal proceedings, claims and liabilities, such as employment-related claims and slip and fall cases, which arise in the ordinary course of business and are generally covered by insurance. In the opinion of management, the amount of ultimate liability with respect to those actions should not have a material adverse impact on financial position, results of operations or cash flows. Many of the food products the Company purchases are subject to changes in the price and availability of food commodities, including chicken. The Company works with its suppliers and uses a mix of forward pricing protocols for certain items under which we agree with our supplier on fixed prices for deliveries at some time in the future, fixed pricing protocols under which we agree on a fixed price with our supplier for the duration of that protocol, and formula pricing protocols under which the prices we pay are based on a specified formula related to the prices of the goods, such as spot prices. The Company’s use of any forward pricing arrangements varies substantially from time to time and these arrangements tend to cover relatively short periods (i.e., typically twelve months or less). Such contracts are used in the normal purchases of our food products and not for speculative purposes, and as such are not required to be evaluated as derivative instruments. The Company does not enter into futures contracts or other derivative instruments. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 25, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation The following table summarizes stock option activity (in thousands, except per share data): Stock Options Weighted Average Exercise Price Aggregate Intrinsic Value Weighted Average Remaining Term Outstanding - December 26, 2015 1,177 $ 4.66 $ 21,059 7.7 Granted 25 $ 26.16 Exercised (99 ) $ 2.87 Canceled (94 ) $ 5.99 Outstanding - June 25, 2016 1,009 $ 5.24 $ 22,178 7.3 The total grant-date fair value of stock options vested during the twenty-six weeks ended June 25, 2016 was $566,000 . The total intrinsic value of stock options exercised during the twenty-six weeks ended June 25, 2016 was $2.2 million . The Company granted 11,724 shares of restricted stock awards during the twenty-six weeks ended June 25, 2016 with a weighted average grant date fair value of $25.59 . The fair value of the non-vested restricted stock awards is based on the closing price on the date of grant. All of the outstanding restricted stock awards are non-vested and will be recognized over a weighted average period of approximately 3.4 years . Stock-based compensation is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the requisite employee service period (generally the vesting period of the grant). The Company recognized $253,000 in stock compensation expense for the twenty-six weeks ended June 25, 2016 , with a corresponding increase to additional paid-in-capital. As of June 25, 2016 , there was $3.0 million of total unrecognized stock compensation expense related to non-vested stock options and restricted stock awards, which will be recognized over a weighted average period of approximately 2.5 years . Stock compensation expense is included in SG&A in the Consolidated Statement of Operations. |
Business Segments
Business Segments | 6 Months Ended |
Jun. 25, 2016 | |
Segment Reporting [Abstract] | |
Business Segments | Business Segments The Franchise segment consists of domestic and international franchise restaurants, which represent the majority of our system-wide restaurants. As of June 25, 2016 , the franchise operations segment consisted of 894 restaurants operated by Wingstop franchisees in the United States and five countries outside of the United States as compared to 766 franchised restaurants in operation domestically and across six countries outside of the United States as of June 27, 2015 . Franchise operations revenue consists primarily of franchise royalty revenue, sales of franchise and development fees and international territory fees. As of June 25, 2016 , the Company segment consisted of 20 company-owned restaurants, located only in the United States, as compared to 19 company-owned restaurants as of June 27, 2015 . Company restaurant sales are for food and beverage sales at company-owned restaurants. Company restaurant expenses are operating expenses at company-owned restaurants and include food, beverage, labor, benefits, utilities, rent and other operating costs. Information on segments and a reconciliation to income before taxes are as follows (in thousands): Thirteen Weeks Ended Twenty-Six Weeks Ended June 25, June 27, June 25, June 27, Revenue: Franchise segment $ 14,305 $ 11,400 $ 27,803 $ 22,557 Company segment 8,418 7,832 16,994 15,701 Total segment revenue $ 22,723 $ 19,232 $ 44,797 $ 38,258 Segment Profit: Franchise segment $ 6,223 $ 5,022 $ 12,595 $ 10,076 Company segment 1,269 1,512 2,975 2,829 Total segment profit 7,492 6,534 15,570 12,905 Corporate and other (1) 252 4,128 702 5,548 Interest expense, net 707 1,177 1,468 1,964 Other (income) expense, net 10 257 38 286 Income before taxes $ 6,523 $ 972 $ 13,362 $ 5,107 (1) Corporate and other includes corporate related items not allocated to reportable segments and consists primarily of management fees and expenses associated with the refinancings of our credit agreement and our public offerings. |
Subsequent Events (Notes)
Subsequent Events (Notes) | 6 Months Ended |
Jun. 25, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | Subsequent Events On June 30, 2016, the Company entered into a new senior secured credit facility (the “Credit Facility”), which replaced the Company’s second amended and restated credit facility dated March 18, 2015. The Credit Facility includes a term loan facility in an aggregate amount of $70.0 million and a revolving credit facility up to an aggregate amount of $110.0 million . The Company used the proceeds from the Credit Facility and cash on hand to refinance $85.5 million of indebtedness under the Company’s March 2015 debt facility and to pay a dividend of $83.2 million to its shareholders. Borrowings under the facility bear interest, payable quarterly, at our option, at the base rate plus a margin ( 1.00% to 2.00% , dependent on the Company’s reported leverage ratio) or LIBOR plus a margin ( 2.00% to 3.00% , dependent on the Company’s reported leverage ratio). The Credit Facility matures in June 2021. On June 30, 2016, the Board of Directors of the Company declared a special cash dividend of $2.90 per share payable on July 15, 2016 to its holders of common stock of record as of July 12, 2016. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 25, 2016 | |
Accounting Policies [Abstract] | |
Fiscal Year End | The Company uses a 52/53-week fiscal year that ends on the last Saturday of the calendar year. Fiscal years 2016 and 2015 have 53 weeks and 52 weeks, respectively. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity . The amendments in ASU 2014-08 change the criteria for reporting discontinued operations while enhancing disclosures in this area. It also addresses sources of confusion and inconsistent application related to financial reporting of discontinued operations guidance in GAAP. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the organization’s operations and financial results. Examples include a disposal of a major geographic area, a major line of business, or a major equity method investment. In addition, the new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The Company adopted the amendment as of the first day of fiscal year 2016, and the adoption did not have any impact on the Company’s consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) . This update provides a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. This update is effective for annual and interim periods beginning after December 15, 2017, which will require us to adopt these provisions in the first quarter of fiscal 2018. This update permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect this guidance will have on our consolidated financial statements and related disclosures and has not yet selected a transition method. In April 2015, the FASB issued ASU No 2015-03, Simplifying the Presentation of Debt Issuance Costs . This update changes the presentation of debt issuance costs in the balance sheet. ASU 2015-03 requires debt issuance costs related to a recognized debt obligation to be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability rather than being presented as an asset. Amortization of debt issuance costs will continue to be reported as interest expense. In August 2015, the FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements . This ASU clarified guidance in ASC 2015-03 stating that the SEC staff would not object to a company presenting debt issuance costs related to a line-of-credit arrangement on the balance sheet as a deferred asset, regardless of whether there were any outstanding borrowings at period-end. This update is effective for annual and interim periods beginning after December 15, 2015. The Company adopted this pronouncement during the first quarter of 2016 and applied the update on a retrospective basis, wherein the balance sheet of each period presented was adjusted to reflect the effects of applying the new guidance. The Company reclassed deferred financing costs of $431,000 and $492,000 for the periods ended June 25, 2016 and December 26, 2015 , respectively, from Other non-current assets to Long-term debt on the Consolidated Balance Sheets. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective beginning in the first quarter of 2019. Early adoption of ASU 2016-02 as of its issuance is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the impact of adopting the new leases standard on the consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718) . This update requires all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) to be recognized as income tax expense or benefit in the income statement, including recognition of excess tax benefits regardless of whether the benefit reduces taxes payable in the current period. Currently, GAAP requires excess tax benefits to be recognized in additional paid-in capital; tax deficiencies are recognized either as an offset to accumulated excess tax benefits, if any, or in the income statement, and excess tax benefits are not recognized until the deduction reduces taxes payable. ASU 2016-09 further requires that excess tax benefits be classified along with other income tax cash flows as an operating activity on the Statement of Cash Flows. Currently, they are classified as financing activities. The update also allows entities to make an accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur. This update is effective for annual and interim periods beginning after December 15, 2016, which will require us to adopt these provisions in the first quarter of fiscal 2017. Early application is permitted. The Company is evaluating the effect this guidance will have on our consolidated financial statements and related disclosures and has not yet selected a transition method. |
Earnings per Share (Tables)
Earnings per Share (Tables) | 6 Months Ended |
Jun. 25, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation of Basic Shares Outstanding to Diluted Shares Outstanding | Basic weighted average shares outstanding is reconciled to diluted weighted average shares outstanding as follows (in thousands): Thirteen Weeks Ended Twenty-Six Weeks Ended June 25, June 27, June 25, June 27, Basic weighted average shares outstanding 28,646 26,689 28,616 26,412 Dilutive stock options 343 281 363 299 Diluted weighted average shares outstanding 28,989 26,970 28,979 26,711 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 25, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Measurements, Nonrecurring | Fair value of debt is determined on a non-recurring basis, which results are summarized as follows (in thousands): Fair Value Hierarchy June 25, 2016 December 26, 2015 Carrying Value Fair Value Carrying Value Fair Value Total debt obligations: Senior Secured Term Loan Facility (1) Level 3 $ 85,500 $ 87,005 $ 95,500 $ 95,500 (1) The fair value of long-term debt was estimated using a discounted cash flow method based on a discount rate, reflecting the applicable credit spread. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 25, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contractual Obligation, Fiscal Year Maturity Schedule [Table Text Block] | A schedule of future minimum rental payments required under our operating leases, excluding contingent rent, that have initial or remaining non-cancelable lease terms in excess of one year, as of June 25, 2016 , is as follows (in thousands): Remainder of fiscal year 2016 $ 840 Fiscal year 2017 1,697 Fiscal year 2018 1,510 Fiscal year 2019 1,276 Fiscal year 2020 1,150 Fiscal year 2021 994 Thereafter 4,357 Total $ 11,824 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 25, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock Option Activity | The following table summarizes stock option activity (in thousands, except per share data): Stock Options Weighted Average Exercise Price Aggregate Intrinsic Value Weighted Average Remaining Term Outstanding - December 26, 2015 1,177 $ 4.66 $ 21,059 7.7 Granted 25 $ 26.16 Exercised (99 ) $ 2.87 Canceled (94 ) $ 5.99 Outstanding - June 25, 2016 1,009 $ 5.24 $ 22,178 7.3 |
Business Segments (Tables)
Business Segments (Tables) | 6 Months Ended |
Jun. 25, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Information on segments and a reconciliation to income before taxes are as follows (in thousands): Thirteen Weeks Ended Twenty-Six Weeks Ended June 25, June 27, June 25, June 27, Revenue: Franchise segment $ 14,305 $ 11,400 $ 27,803 $ 22,557 Company segment 8,418 7,832 16,994 15,701 Total segment revenue $ 22,723 $ 19,232 $ 44,797 $ 38,258 Segment Profit: Franchise segment $ 6,223 $ 5,022 $ 12,595 $ 10,076 Company segment 1,269 1,512 2,975 2,829 Total segment profit 7,492 6,534 15,570 12,905 Corporate and other (1) 252 4,128 702 5,548 Interest expense, net 707 1,177 1,468 1,964 Other (income) expense, net 10 257 38 286 Income before taxes $ 6,523 $ 972 $ 13,362 $ 5,107 (1) Corporate and other includes corporate related items not allocated to reportable segments and consists primarily of management fees and expenses associated with the refinancings of our credit agreement and our public offerings. |
Basis of Presentation - Overvie
Basis of Presentation - Overview (Details) $ in Thousands | 3 Months Ended | ||
Jun. 25, 2016USD ($)restaurantcountry | Dec. 26, 2015USD ($) | Jun. 27, 2015restaurantcountry | |
Franchised Units [Member] | |||
Franchisor Disclosure [Line Items] | |||
Number of Restaurants | 894 | 766 | |
Franchised Units [Member] | UNITED STATES [Member] | |||
Franchisor Disclosure [Line Items] | |||
Number of Restaurants | 831 | ||
Franchised Units [Member] | Non-US [Member] | |||
Franchisor Disclosure [Line Items] | |||
Number of Restaurants | 63 | ||
Number of Countries in which Entity Operates | country | 5 | 6 | |
Entity Operated Units [Member] | |||
Franchisor Disclosure [Line Items] | |||
Number of Restaurants | 20 | 19 | |
Accounting Standards Update 2015-03 [Member] | |||
Franchisor Disclosure [Line Items] | |||
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | $ | $ (431) | $ (492) |
Earnings per Share (Details)
Earnings per Share (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 25, 2016 | Jun. 27, 2015 | Jun. 25, 2016 | Jun. 27, 2015 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Basic weighted average shares outstanding | 28,646,000 | 26,689,000 | 28,616,000 | 26,412,000 |
Dilutive stock options | 343,000 | 281,000 | 363,000 | 299,000 |
Diluted weighted average shares outstanding | 28,989,000 | 26,970,000 | 28,979,000 | 26,711,000 |
Employee Stock Option [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share, amount | 7,000 | 0 | 5,000 | 13,000 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Nonrecurring - Level 3 - USD ($) $ in Thousands | Jun. 25, 2016 | Dec. 26, 2015 |
Reported Value Measurement [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Senior Secured Term Loan Facility | $ 85,500 | $ 95,500 |
Estimate of Fair Value Measurement [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Senior Secured Term Loan Facility | $ 87,005 | $ 95,500 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 25, 2016 | Jun. 27, 2015 | Jun. 25, 2016 | Jun. 27, 2015 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 2,444 | $ 388 | $ 4,993 | $ 1,969 |
Effective income tax rate | 37.50% | 39.90% | 37.40% | 38.60% |
Debt Obligations - Senior Secur
Debt Obligations - Senior Secured Credit Facility (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 25, 2016 | Jun. 27, 2015 | Dec. 26, 2015 | |
Debt Instrument [Line Items] | |||
Repayments of Long-term Debt | $ 10,000,000 | $ 33,218,000 | |
Secured Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term Line of Credit | $ 85,500,000 | ||
Debt instrument, interest rate, end of period | 3.13% | ||
Repayments of Long-term Debt | $ 10,000,000 | $ 37,000,000 | |
Scheduled principle repayments until March 2020 | $ 0 |
Commitments and Contingencies26
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 25, 2016 | Jun. 27, 2015 | Jun. 25, 2016 | Jun. 27, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Remainder of fiscal year 2016 | $ 840 | $ 840 | ||
Fiscal year 2017 | 1,697 | 1,697 | ||
Fiscal year 2018 | 1,510 | 1,510 | ||
Fiscal year 2019 | 1,276 | 1,276 | ||
Fiscal year 2020 | 1,150 | 1,150 | ||
Fiscal year 2021 | 994 | 994 | ||
Thereafter | 4,357 | 4,357 | ||
Total | 11,824 | 11,824 | ||
Rent expense | $ 456 | $ 487 | $ 921 | $ 959 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Plan (Details) $ / shares in Units, $ in Thousands | 6 Months Ended |
Jun. 25, 2016USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Grant date fair value of stock options, vested | $ 566 |
Intrinsic value of stock options | 2,200 |
Stock-based compensation expense, unrecognized | $ 3,000 |
Restricted Stock [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | shares | 11,724 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ / shares | $ 25.59 |
Stock-based compensation expense, recognition period | 3 years 4 months 24 days |
Employee Stock Option [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Stock-based compensation expense, recognition period | 2 years 6 months |
Additional Paid-in Capital [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Stock-based compensation expense | $ 253 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | Jun. 25, 2016 | Dec. 26, 2015 | Jun. 25, 2016 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Stock options outstanding (in shares) | 1,177 | ||
Stock options granted (in shares) | 25 | ||
Stock options exercised | (99) | ||
Stock options forfeited (in shares) | (94) | ||
Stock options outstanding (in shares) | 1,009 | 1,177 | 1,009 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | |||
Stock options outstanding, weighted average exercise price (in usd per share) | $ 4.66 | ||
Stock options grated, weighted average exercise price (in usd per share) | 26.16 | ||
Stock options exercised, weighted average exercise price (in usd per share) | 2.87 | ||
Stock options forfeited, weighted average exercise price (in usd per share) | 5.99 | ||
Stock options outstanding, weighted average exercise price (in usd per share) | $ 5.24 | $ 4.66 | $ 5.24 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | |||
Stock options outstanding, aggregate intrinsic value | $ 21,059 | ||
Stock options outstanding, aggregate intrinsic value | $ 22,178 | $ 21,059 | $ 22,178 |
Stock options outstanding, weighted average remaining term | 7 years 3 months 18 days | 7 years 8 months 12 days |
Business Segments Business Segm
Business Segments Business Segments - Restaurant Counts (Details) | Jun. 25, 2016restaurantcountry | Jun. 27, 2015restaurantcountry |
Franchised Units [Member] | ||
Franchisor Disclosure [Line Items] | ||
Number of Restaurants | 894 | 766 |
Entity Operated Units [Member] | ||
Franchisor Disclosure [Line Items] | ||
Number of Restaurants | 20 | 19 |
Non-US [Member] | Franchised Units [Member] | ||
Franchisor Disclosure [Line Items] | ||
Number of Restaurants | 63 | |
Number of Countries in which Entity Operates | country | 5 | 6 |
Business Segments (Details)
Business Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 25, 2016 | Jun. 27, 2015 | Jun. 25, 2016 | Jun. 27, 2015 | |
Segment Reporting Information [Line Items] | ||||
Franchise segment | $ 14,305 | $ 11,400 | $ 27,803 | $ 22,557 |
Company segment | 8,418 | 7,832 | 16,994 | 15,701 |
Total revenue | 22,723 | 19,232 | 44,797 | 38,258 |
Operating income | (7,240) | (2,406) | (14,868) | (7,357) |
Interest expense, net | 707 | 1,177 | 1,468 | 1,964 |
Other (income) expense, net | 10 | 257 | 38 | 286 |
Income before taxes | 6,523 | 972 | 13,362 | 5,107 |
Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | 22,723 | 19,232 | 44,797 | 38,258 |
Operating income | (7,492) | (6,534) | (15,570) | (12,905) |
Corporate, Non-Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Operating income | 252 | 4,128 | 702 | 5,548 |
Segment Reconciling Items [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Interest expense, net | 707 | 1,177 | 1,468 | 1,964 |
Other (income) expense, net | 10 | 257 | 38 | 286 |
Franchise Segment [Member] | Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Franchise segment | 14,305 | 11,400 | 27,803 | 22,557 |
Operating income | (6,223) | (5,022) | (12,595) | (10,076) |
Company Segment [Member] | Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Company segment | 8,418 | 7,832 | 16,994 | 15,701 |
Operating income | $ (1,269) | $ (1,512) | $ (2,975) | $ (2,829) |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions | Jul. 15, 2016 | Jun. 30, 2016 | Jun. 25, 2016 |
Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Payments of Ordinary Dividends, Common Stock | $ 83.2 | ||
Common Stock, Dividends, Per Share, Declared | $ 2.90 | ||
Secured Debt [Member] | |||
Subsequent Event [Line Items] | |||
Long-term Line of Credit | $ 85.5 | ||
Secured Debt [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Long-term Line of Credit | $ 70 | ||
Revolving Credit Facility [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Line of Credit Facility, Current Borrowing Capacity | $ 110 | ||
Base Rate [Member] | Minimum [Member] | Secured Debt [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 1.00% | ||
Base Rate [Member] | Maximum [Member] | Secured Debt [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 2.00% | ||
London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member] | Secured Debt [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 2.00% | ||
London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member] | Secured Debt [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 3.00% |