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 RESULTS FOR FIRST FISCAL QUARTER OF 2005
NASHVILLE, Tenn. (May 11, 2005) -- O'Charley's Inc. (NASDAQ/NM: CHUX), a leading
casual dining restaurant company, today reported revenues and earnings per share
for the 16-week period ended April 17, 2005. The Company also provided earnings
guidance for the second quarter of 2005 and for the full year.
FINANCIAL AND OPERATING HIGHLIGHTS
- First quarter revenue rose 8.5% to $290.5 million from $267.7 million
in last year's first quarter. Same store sales for the first quarter
increased 1.4% at O'Charley's Restaurants, 0.2% at Ninety Nine
Restaurant and Pub, and 4.1% at Stoney River Legendary Steaks.
- Income from operations in the quarter was $19.2 million, or 6.6% of
sales, compared with $15.4 million, or 5.7% of sales, in the first
quarter of last year. Cost of food and beverage, payroll and benefits
costs, and restaurant operating costs were all lower as a percentage of
sales than in the first quarter of last year. As previously announced,
results for the first quarter of fiscal 2004 were restated.
- The Company reported first quarter net income of $10.1 million, or
$0.44 per diluted share, compared with net income of $7.6 million, or
$0.33 per diluted share, for the same period in 2004, representing an
increase in earnings per diluted share of 33.3%.
- The effective tax rate applied to pretax earnings was 29.0% in the
first quarter, compared with a tax rate of 33.5% in the first quarter
of 2004. The effective tax rate declined from the first quarter of 2004
due to higher FICA tip credits, the recognition of WOTC tax credits,
and a lower estimated state income tax rate.
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 first quarter, particularly in light of the severe winter weather
experienced in many of our markets and the impact of higher gasoline prices on
consumer spending. Along with customer counts we have also focused on improving
operating margins. While we have more work ahead of us to return our margins to
acceptable levels, the improvement in the first quarter shows that our efforts
continue to produce positive results."
O'Charley's Restaurants
Revenues for O'Charley's increased 7.0% to $196.1 million for the first
quarter, reflecting the net addition of 12 new company-operated stores since the
first quarter of 2004. The same store sales increase of 1.4% was comprised of a
1.1% increase in customer counts and a 0.3% increase in average
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3038 Sidco Drive - Nashville, TN 37204 - (615) 256-8500
CHUX Reports Results for First Quarter of 2005
Page 2
May 11, 2005
check to $11.63. Four new company-operated O'Charley's restaurants opened during
the first quarter and one restaurant was closed, bringing the total number of
company-operated O'Charley's restaurants to 224 at the end of the quarter. 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,
"Maintaining the positive trends in customer counts and continuing the operating
margin gains from the fourth quarter were our primary first quarter goals at
O'Charley's. We are pleased with the performance of O'Charley's in each of these
areas. We continue to make progress in improving guest satisfaction scores and
reducing employee turnover as well as leveraging these trends to achieve
continued improvement in margins. We recently announced that, as part of our
strategic plan, Steve Hislop has returned to focus on the day-to-day operations
of the O'Charley's concept. Steve's direct leadership as O'Charley's Concept
President will position O'Charley's for new growth opportunities in 2005 and
beyond."
O'Charley's Franchising and Joint Venture Efforts
The O'Charley's franchising and joint venture program continued to show
momentum in the first quarter. Meritage Hospitality Group opened its second
franchised O'Charley's restaurant in Livonia, Michigan, in February 2005. The
Company signed an exclusive multi-unit franchise development agreement with Four
Star Restaurant Group, LLC to develop and operate a total of 10 new O'Charley's
restaurants in the states of Iowa and Nebraska, and in the Topeka, Kansas, and
Sioux Falls, South Dakota, markets. 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 13.5% to $84.6 million in the first
quarter, reflecting the addition of 12 new stores since the first quarter of
2004. The same store sales increase of 0.2% in the quarter was comprised of a
1.2% decrease in customer counts offset by a 1.3% increase in average check to
$13.71. Two new Ninety Nine restaurants opened during the first quarter bringing
the total number of Ninety Nine restaurants to 101 at the end of the quarter.
The Company expects to open 13 to 15 new Ninety Nine restaurants in 2005,
including one location in suburban Philadelphia, Ninety Nine's newest market.
Mr. Burns stated, "The winter weather in New England during the first
quarter was more severe than it was in 2004, resulting in a negative impact on
same store sales at Ninety Nine for the quarter. We started to see positive
customer count trends in April, and the continuation of that trend will be a
primary focus for us in 2005, as we expect to hold the line on menu price
increases. The development of the new distribution facility in Bellingham,
Massachusetts, is on schedule, and we expect to open it in the second half of
the year."
Stoney River Legendary Steaks Restaurants
First quarter sales for Stoney River Legendary Steaks increased 4.1% to
$7.5 million with all six restaurants in operation included in the same store
sales base for the quarter. Average check during the quarter was $40.59. The
Company intends to open two new Stoney River restaurants in 2005, with the
openings expected to occur in the second half of the year. The new Stoney River
restaurants will be the first additions to the concept since 2002. The Company
expects that the restarting of Stoney River restaurant development will require
preopening, training, and other expenses of approximately $1.0 million in fiscal
2005.
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CHUX Reports Results for First Quarter of 2005
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May 11, 2005
Mr. Burns added, "The strong recent performance of Stoney River
continued into the first quarter of 2005, further validating our decision to
grow this concept in a meaningful way in 2005 and beyond. We believe that Stoney
River has established strong customer appeal and attractive economics. Over
time, we expect it to become a more significant part of the Company."
OUTLOOK FOR SECOND QUARTER AND FULL YEAR
The Company stated that it expects to report net earnings per diluted
share of between $0.19 and $0.23 for the twelve weeks ending July 10, 2005, and
net earnings per diluted share of between $1.10 and $1.16 for the full fiscal
year ending December 25, 2005. For the second quarter and the full year,
anticipated improvements in food cost margin are expected to be offset by higher
employee benefit costs, restaurant operating costs, and preopening costs. These
projected results are based upon anticipated comparable restaurant sales
increases of between 0% to 2% for both the O'Charley's and the Ninety Nine
concepts during the second quarter and the full year; interest expense for
fiscal 2005 of between $15 million and $16 million, compared with interest
expense of $13.5 million in 2004; and an effective tax rate for 2005 of 29.0%.
The Company's guidance for the 2005 fiscal year includes estimated
expenses relating to restricted stock plans of between $0.05 and $0.07 per
diluted share. Restricted stock expense for the first quarter of 2005 was less
than $0.01 per diluted share, which includes the reversal of previously accrued
amounts. The first quarter and estimated full year expenses represent a
reduction from previously disclosed estimates and reflect the impact of the
Company's estimated future performance on the ultimate vesting rate of the
Company's performance-based restricted stock. The Company's guidance does not
reflect any impact from expensing stock options in fiscal 2005. The Company
expects to begin expensing stock options in its 2006 fiscal year.
Mr. Burns concluded, "While we are pleased with our performance in the
first quarter of 2005, we believe that higher gasoline prices began to take
their toll on consumer spending during this period. Like many others, we are
taking a more cautious outlook for the balance of the year because of our
concern that higher gasoline prices and rising interest rates are likely to
create uncertainty in consumer spending patterns and may negatively impact
customer spending in our restaurants. Longer term, we remain confident in the
strength of our concepts and the ability to continue to move customer counts at
O'Charley's and Ninety Nine in the right direction. Our ultimate goal is to make
O'Charley's Inc. the best company for our co-workers, customers and
shareholders, and we are very focused on establishing our strategic plan to
achieve that goal."
INVESTOR CONFERENCE CALL AND WEB SIMULCAST
O'Charley's Inc. will conduct a conference call on its first quarter
earnings release on May 11, 2005, at 11:00 a.m. EDT. The number to call for this
interactive teleconference is (913) 981-5571. A replay of the conference call
will be available through May 18, 2005, by dialing (719) 457-0820 and entering
the confirmation number, 4377761.
The 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 and www.earnings.com on May 11, 2005, beginning at 11:00
a.m. EDT. The online replay will follow shortly after the call and continue
until May 25, 2005.
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CHUX Reports Results for First Quarter of 2005
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May 11, 2005
ABOUT O'CHARLEY'S INC.
O'Charley's Inc. operates 224 company-owned O'Charley's restaurants in
16 states in the Southeast and Midwest, and has three franchised O'Charley's
restaurants in Michigan and one joint venture O'Charley's restaurant in
Louisiana. 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 101 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 first fiscal quarter financial and accounting
procedures, 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 possible adverse effect on our sales of any decrease in consumer spending;
the effect of increased competition; the impact on our results of operations of
restarting development of our StoneyRiver concept, 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 Results for First Quarter of 2005
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May 11, 2005
O'CHARLEY'S INC.
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
SIXTEEN WEEKS ENDED APRIL 17, 2005 AND APRIL 18, 2004
2005 2004
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(IN THOUSANDS, EXCEPT PER SHARE DATA)
Revenues:
Restaurant sales $ 288,177 99.2% $ 265,005 99.0%
Commissary sales 2,208 0.8% 2,738 1.0%
Franchise revenue 106 0.0% 0 0.0%
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290,491 100.0% 267,743 100.0%
Costs and Expenses:
Cost of restaurant sales:
Cost of food and beverage 85,584 29.7% 79,641 30.1%
Payroll and benefits 97,337 33.8% 90,588 34.2%
Restaurant operating costs 51,187 17.8% 47,169 17.8%
Cost of commissary sales 1,913 0.7% 2,581 1.0%
Advertising expenses 8,011 2.8% 8,140 3.0%
General and administrative expenses 12,666 4.4% 10,812 4.0%
Depreciation and amortization 13,219 4.6% 11,575 4.3%
Pre-opening costs 1,385 0.5% 1,882 0.7%
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271,302 93.4% 252,388 94.3%
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Income from Operations 19,189 6.6% 15,355 5.7%
Other (Income) Expense:
Interest expense, net 4,548 1.6% 3,964 1.5%
Other, net 396 0.1% 31 0.0%
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4,944 1.7% 3,995 1.5%
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Earnings Before Income Taxes 14,245 4.9% 11,360 4.2%
Income Taxes 4,131 1.4% 3,806 1.4%
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Net Earnings $ 10,114 3.5% $ 7,554 2.8%
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Basic Earnings per Share:
Earnings per Common Share $ 0.45 $ 0.34
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Weighted Average Common
Shares Outstanding 22,687 22,167
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Diluted Earnings per Share:
Earnings per Common Share $ 0.44 $ 0.33
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Weighted Average Common
Shares Outstanding 23,067 22,577
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CHUX Reports Results for First Quarter of 2005
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May 11, 2005
O'CHARLEY'S INC.
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
AT APRIL 17, 2005 AND DECEMBER 26, 2004
2005 2004
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(IN THOUSANDS)
Cash $ 4,888 $ 10,772
Other current assets 64,377 53,626
Property and equipment, net 457,738 451,808
Goodwill and other intangible assets 118,995 118,995
Other assets 19,966 22,310
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Total assets $665,964 $657,511
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Current portion of long-term debt and capital leases $ 11,434 $ 12,670
Other current liabilities 87,604 82,714
Deferred income taxes 9,068 7,884
Long-term debt, net of current portion 139,118 146,125
Capitalized lease obligations 29,731 32,344
Other liabilities 43,450 45,034
Shareholders' equity 345,559 330,740
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Total liabilities and shareholders' equity $665,964 $657,511
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