EXHIBIT 99.1
[O'CHARLEY'S INC. LOGO]
NEWS RELEASE
CONTACT: Lawrence E. Hyatt
Chief Financial Officer
(615) 782-8818
O'CHARLEY'S INC. REPORTS FOURTH QUARTER AND YEAR-END RESULTS
NASHVILLE, Tenn. (February 3, 2005) -- O'Charley's Inc. (NASDAQ/NM: CHUX), a
leading casual dining restaurant company, today reported revenues and earnings
per share for the 12-week and 52-week periods ended December 26, 2004. The
Company also provided earnings guidance for the first quarter of 2005.
FINANCIAL AND OPERATING HIGHLIGHTS
- Fourth quarter revenue rose 10.5% to $202.2 million from
$183.0 million in last year's fourth quarter. For fiscal 2004,
revenue rose 14.8% to $871.4 million from $759.0 million in
the prior-year period. The Company's consolidated results for
fiscal 2003 include the results of operations of Ninety-Nine
Restaurant and Pub for the period subsequent to its
acquisition on January 27, 2003.
- Same store sales for the fourth quarter increased 2.7% at
O'Charley's Restaurants and 4.9% at Stoney River Legendary
Steaks, while they declined 0.1% at Ninety-Nine Restaurant and
Pub. For fiscal 2004, same store sales increased 3.1% at
O'Charley's Restaurants, 1.1% at Ninety-Nine Restaurant and
Pub and 6.4% at Stoney River Legendary Steaks.
- Income from operations in the quarter was $11.6 million, or
5.7% of sales, compared with $8.8 million, or 4.8% of sales,
in the fourth quarter of last year. For fiscal 2004, income
from operations was $47.2 million, or 5.4% of sales, compared
with $46.7 million, or 6.1% of sales in the prior year.
- The Company reported fourth quarter net income of $7.3
million, or $0.32 per diluted share, compared with net income
of $2.9 million, or $0.13 per diluted share, for the same
period in 2003. The Company reported net income of $24.3
million, or $1.07 per diluted share, in fiscal 2004 compared
with net income of $21.3 million, or $0.95 per diluted share,
in fiscal 2003. Fourth quarter and full year results for 2003
included a debt extinguishment charge of $0.05 per diluted
share, partially offset by a gain on the sale of certain
marketable securities of $0.02 per diluted share.
- The effective tax rate applied to pretax earnings was 13.4% in
the fourth quarter and 27.6% for the 2004 fiscal year,
compared with a tax rate of 25.6% in the fourth quarter of
2003 and 32.2% for the 2003 fiscal year. The effective federal
rate for 2004 declined from the 2003 level due primarily to an
increase in the FICA tip credit. The state tax rate for 2004
was reduced to reflect actual state tax liabilities for 2003
and estimated state tax liabilities for 2004.
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3038 Sidco Drive - Nashville, TN 37204 - (615) 256-8500
CHUX Reports Fourth Quarter and Year-End Results
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February 3, 2005
- In 2004, the Company shifted its equity-based compensation
plans to restricted stock rather than stock options. The
Company's results for 2004 include an impact of $0.05 per
diluted share for expenses relating to its restricted stock
plans, with no impact in the fourth quarter, compared with
$0.01 per diluted share for full year 2003. The Company's
results for 2004 include $0.05 per diluted share for severance
and recruiting expenses relating to recent organizational
changes, including $0.03 per diluted share incurred in the
fourth quarter. No such expenses were incurred in 2003.
Gregory L. Burns, chairman and chief executive officer of O'Charley's
Inc. stated, "We are pleased with the sales and operating performance of the
Company in the fourth quarter, particularly in light of the severe weather we
experienced throughout our markets in the last week of the quarter, and the fact
that Christmas fell on a Saturday in 2004. We are especially pleased with the
turnaround that we are starting to see in operating margins. While we have more
work ahead of us to return our margins to acceptable levels, the improvement in
the fourth quarter shows that our efforts are beginning to produce solid
results."
O'Charley's Restaurants
Revenues for O'Charley's increased 8.8% to $134.7 million for the
fourth quarter, reflecting the addition of 15 new company-operated stores over
the past 12 months. The same store sales increase of 2.7% reflected an increase
in customer counts of 2.3% and an increase in average check of 0.4%. Two new
O'Charley's restaurants opened during the fourth quarter bringing the total
number of O'Charley's restaurants to 221 at the end of the fiscal year. The
Company expects to open between 13 and 15 new company-operated O'Charley's
restaurants in 2005.
Commenting on results for the O'Charley's concept, Mr. Burns stated,
"We are pleased with the strength of our same stores sales at O'Charley's in the
quarter. We attribute the solid base of customer counts throughout 2004 and the
growing appeal of the O'Charley's concept to the 'Back to the O'Wayz' campaign
we initiated over a year ago. As we had planned, we are now in the stage of this
recovery where our primary focus remains leveraging these strong trends to
achieve continued improvement in margins. While we are pleased with the progress
in this important area in 2004, particularly in the fourth quarter, we are
keeping our new store development plans for 2005 consistent with 2004."
O'Charley's Franchising and Joint Venture Efforts
The O'Charley's franchising and joint venture program achieved
significant momentum in fiscal 2004, and contributed $0.5 million to the
Company's reported sales. Meritage Hospitality Group opened its first franchised
O'Charley's restaurant in Grand Rapids, Michigan, in August. The Company
executed an exclusive multi-unit franchise development agreement with JFC
Enterprises LLC, a joint venture in which the Company has a 50% interest, to
develop and operate 10 O'Charley's restaurants in Louisiana. The first of those
restaurants, in Lafayette, Louisiana, opened in November. The Company also
signed an exclusive multi-unit franchise development agreement with Wi-Tenn
Restaurants LLC, a joint venture in which the Company has a 50% interest, to
develop and operate 10 O'Charley's restaurants in Wisconsin. The Company expects
its franchisees and joint venture partners to open 4 or 5 new O'Charley's
restaurants in 2005.
Ninety Nine Restaurant & Pub Restaurants
Revenues for Ninety Nine increased 14.1% to $60.1 million for the
fourth quarter, reflecting the addition of 12 new stores over the past 12
months. Similar to the third quarter, the same store sales
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CHUX Reports Fourth Quarter and Year-End Results
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February 3, 2005
decline of 0.1% in the quarter reflected a decrease in customer counts offset by
an increase in average check. The Company expects to open between 13 to 15 new
Ninety Nine restaurants in 2005, including one location in suburban
Philadelphia, Ninety Nine's newest market.
Mr. Burns stated, "As we complete our second year of ownership of the
Ninety Nine concept, we join our many Ninety Nine associates and loyal customers
in celebrating the opening of the 99th location in 2004. That was an historic
achievement for Ninety Nine and reinforces the sustainability of the concept and
the attractiveness of the value proposition to its customers. We continue to be
pleased with the performance of Ninety Nine and its exceptionally high employee
retention levels.
"Although the record amounts of snowfall in Massachusetts in January
created some operational challenges for us in our largest market, we are very
optimistic about the contribution Ninety Nine will once again make to our growth
in 2005. Improving customer counts at Ninety Nine will be a priority for us in
2005 as we look to reverse the trend from the last two quarters. Supporting our
expansion outside existing markets will be a primary focus for 2005. We have
also targeted completion of our new distribution facility in Bellingham,
Massachusetts, for the second half of the year."
Stoney River Legendary Steaks Restaurants
Fourth quarter sales for Stoney River Legendary Steaks increased 4.9%
to $5.7 million with all six restaurants in operation included in the same store
sales base for the quarter. The Company intends to open two new Stoney River
restaurants in 2005, with the openings expected to be weighted towards the
second half of the year.
Mr. Burns added, "The performance of Stoney River has been a particular
highlight for us in 2004. The fourth quarter was no exception with a strong
sales and operating performance. Stoney River's continued improvement during the
year validates the decision we made to focus on operating standards before
expanding the concept. With its strong positioning, we look forward to growing
this concept in a meaningful way in 2005 and beyond."
OUTLOOK FOR FIRST QUARTER
The Company stated that it expects to report net earnings per diluted
share of between $0.40 and $0.44 for the sixteen weeks ending April 17, 2005.
These projected results are based upon anticipated comparable restaurant sales
increases of between 1% to 3% for the O'Charley's concept and comparable
restaurant sales increases of between 0% to 2% for the Ninety Nine concept
during the quarter. The Company's guidance assumes continued improvement in
operating margins, a moderation of food cost increases in 2005 versus 2004, and
an anticipated effective tax rate for 2005 of between 29.0% and 31.0%.
While the Company did not provide earnings guidance for the full 2005
fiscal year, it provided estimates of the impact of equity-based compensation
plans on 2005 results. The Company expects that expenses relating to its
restricted stock plans will impact fiscal 2005 net income by between $0.10 and
$0.12 per diluted share. The Company is continuing to finalize the estimated
impact of implementing Statement of Financial Accounting Standards No. 123
(revised), "Share-Based Payment," and believes that the impact of expensing
stock options beginning in the third quarter will be an additional expense of
$0.03 to $0.05 per diluted share in fiscal 2005.
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CHUX Reports Fourth Quarter and Year-End Results
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February 3, 2005
Mr. Burns concluded, "Moving forward into 2005, we have a general sense
of an improved economic outlook in our markets that should help improve consumer
confidence and spending levels. We expect the commodity cost increases that
plagued our industry this past year to moderate somewhat, which together with
the greater efficiencies we are generating at our commissary operations and at
the store level, should provide a solid base for improvement in margins. We are
confident in the strength of our concepts and our ability to continue to move
customer counts in the right direction. We are excited about the outlook for our
employees and shareholders in 2005."
INVESTOR CONFERENCE CALL AND WEB SIMULCAST
O'Charley's Inc. will conduct a conference call on its fourth quarter
earnings release on February 3, 2005, at 11:00 a.m. EST. The number to call for
this interactive teleconference is (719) 457-2621. A replay of the conference
call will be available through February 10, 2005, by dialing (719) 457-0820 and
entering the confirmation number, 924962.
A live broadcast of O'Charley's conference call will be available
online at the Company's website, www.ocharleysinc.com, as well as
www.streetevents.com, www.fulldisclosure.com and www.vcall.com on February 3,
2005, beginning at 11:00 a.m. EST. The online replay will follow shortly after
the call and continue until February 17, 2005.
ABOUT O'CHARLEY'S INC.
O'Charley's Inc. operates 221 company-owned O'Charley's restaurants in
16 states in the Southeast and Midwest, with one franchised O'Charley's
restaurant in Michigan. An O'Charley's restaurant in Louisiana is operated by a
joint venture in which the Company has an ownership interest. The menu, with an
emphasis on fresh preparation, features several specialty items such as hand-cut
and aged steaks, a variety of seafood and chicken, freshly baked yeast rolls,
fresh-cut salads with special-recipe salad dressings and signature caramel pie.
The Company also operates Ninety Nine Restaurant & Pub restaurants in 99
locations throughout Connecticut, Maine, Massachusetts, New Hampshire, New York,
Rhode Island and Vermont. Ninety Nine has earned a strong reputation for
providing generous portions of high-quality food at moderate prices in a
comfortable, relaxed atmosphere. The menu features a wide selection of
appetizers, salads, sandwiches, burgers, entrees and desserts. In addition, the
Company operates six Stoney River Legendary Steaks restaurants in Georgia,
Illinois, Kentucky and Tennessee. The dinner-only steakhouse concept appeals to
both upscale casual dining and fine dining customers by offering high-quality
food and attentive customer service typical of high-end steakhouses at more
moderate prices.
FORWARD LOOKING STATEMENT
This press release and statements made by or on behalf of the Company
relating hereto may be deemed to constitute forward-looking statements made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are subject to the
finalization of the Company's year-end financial and accounting procedures
including the finalization of its assessment of the effectiveness of the
Company's internal controls as required by Section 404 of the Sarbanes-Oxley
Act, and may be affected by certain risks and uncertainties, including, but not
limited to, the Company's ability to increase operating margins and sustain
increases in same store sales at its restaurants; the effect that increases in
food, labor and other expenses have on our results of operations; the adverse
impact of the Hepatitis A occurrence and the related litigation on the Company's
results of
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CHUX Reports Fourth Quarter and Year-End Results
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February 3, 2005
operations; the possible adverse effect on our sales of any decrease in consumer
spending; the effect of increased competition; and the other risks described in
the Company's filings with the Securities and Exchange Commission. In light of
the significant uncertainties inherent in the forward-looking statements
included herein, you should not regard the inclusion of such information as a
representation by us that our objectives, plans and projected results of
operations will be achieved and the Company's actual results could differ
materially from such forward-looking statements. The Company does not undertake
any obligation to publicly release any revisions to the forward-looking
statements contained herein to reflect events and circumstances occurring after
the date hereof or to reflect the occurrence of unanticipated events.
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CHUX Reports Fourth Quarter and Year-End Results
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February 3, 2005
O'CHARLEY'S INC.
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
12 WEEKS ENDED DECEMBER 26, 2004 AND DECEMBER 28, 2003
2004 2003
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(IN THOUSANDS, EXCEPT PER SHARE DATA)
Revenues:
Restaurant sales $200,915 99.4% $181,919 99.4%
Commissary sales 1,269 0.6% 1,074 0.6%
Franchise revenue 27 0.0% 0 0.0%
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202,211 100.0% 182,993 100.0%
Costs and Expenses:
Cost of restaurant sales:
Cost of food and beverage 59,136 29.4% 55,643 30.6%
Payroll and benefits 67,577 33.6% 62,291 34.2%
Restaurant operating costs 36,444 18.1% 33,802 18.6%
Cost of commissary sales 1,185 0.6% 1,016 0.6%
Advertising, general and administrative expenses 15,626 7.7% 11,687 6.4%
Depreciation and amortization 9,629 4.8% 8,937 4.9%
Pre-opening costs 995 0.5% 802 0.4%
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190,592 94.3% 174,178 95.2%
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Income from Operations 11,619 5.7% 8,815 4.8%
Other (Income) Expense:
Interest expense, net 3,226 1.6% 3,728 2.0%
Debt extinguishment charge 0 0.0% 1,800 1.0%
Other, net 14 0.0% (554) -0.3%
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3,240 1.6% 4,974 2.7%
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Earnings Before Income Taxes 8,379 4.1% 3,841 2.1%
Income Taxes 1,126 0.6% 984 0.5%
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Net Earnings $7,253 3.6% $2,857 1.6%
===================== =====================
Basic Earnings per Share:
Earnings per Common Share $ 0.32 $ 0.13
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Weighted Average Common Shares Outstanding 22,438 22,240
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Diluted Earnings per Share:
Earnings per Common Share $0.32 $0.13
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Weighted Average Common Shares Outstanding 22,745 22,509
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CHUX Reports Fourth Quarter and Year-End Results
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February 3, 2005
O'CHARLEY'S INC.
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
52 WEEKS ENDED DECEMBER 26, 2004 AND DECEMBER 28, 2003
2004 2003
--------------------- ----------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Revenues:
Restaurant sales $864,259 99.2% $753,740 99.3%
Commissary sales 7,035 0.8% 5,271 0.7%
Franchise revenue 92 0.0% 0 0.0%
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871,386 100.0% 759,011 100.0%
Costs and Expenses:
Cost of restaurant sales:
Cost of food and beverage 261,521 30.3% 221,129 29.3%
Payroll and benefits 290,514 33.6% 252,415 33.5%
Restaurant operating costs 156,953 18.2% 138,926 18.4%
Cost of commissary sales 6,631 0.8% 4,970 0.7%
Advertising, general and administrative expenses 63,566 7.3% 52,204 6.9%
Depreciation and amortization 39,736 4.6% 36,360 4.8%
Preopening costs 5,252 0.6% 6,337 0.8%
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824,173 94.6% 712,341 93.9%
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Income from Operations 47,213 5.4% 46,670 6.1%
Other (Income) Expense:
Interest expense, net 13,476 1.5% 14,153 1.9%
Debt extinguishment charge 0 0.0% 1,800 0.2%
Other, net 120 0.0% (652) -0.1%
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13,596 1.6% 15,301 2.0%
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Earnings Before Income Taxes 33,617 3.9% 31,369 4.1%
Income Taxes 9,278 1.1% 10,096 1.3%
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Net Earnings $ 24,339 2.8% $ 21,273 2.8%
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Basic Earnings per Share:
Net Earnings $ 1.09 $ 0.98
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Weighted Average Shares Outstanding 22,290 21,690
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Diluted Earnings per Share:
Net Earnings $1.07 $0.95
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Weighted Average Shares Outstanding 22,647 22,301
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