Popeyes Louisiana Kitchen
Popeyes Louisiana Kitchen
Table Showing Popeyes Louisiana Kitches, Inc. Consolidated Balance Sheets (December 28, 2014- December 29, 2014) CITATION Pop14 l 1033 (Popeyes Louisiana Kitchen, Inc.)2014 2013
Current assets: Cash and cash equivalents $ 8.4 $ 9.6 Accounts and current notes receivable, net 8.6 8.9 Other current assets 7.4 9.8 Advertising cooperative assets, restricted 32.4 27.8 Total current assets 56.8 56.1 Long-term assets: Property and equipment, net 95.7 77.6 Goodwill 11.1 11.1 Trademarks and other intangible assets, net 94.7 53.4 Other long-term assets, net 2.0 2.3 Total long-term assets 203.5 144.4 Total assets $ 260.3 $ 200.5 Current liabilities: Accounts payable $ 7.4 $ 8.5 Other current liabilities 12.4 8.1 Current debt maturities 0.3 0.3 Advertising cooperative liabilities 32.4 27.8 Total current liabilities 52.5 44.7 Long-term liabilities: Long-term debt 109.6 66.9 Deferred credits and other long-term liabilities 32.4 30.1 Total long-term liabilities 142.0 97.0 Commitments and contingencies Shareholders’ equity: Preferred stock ($.01 par value; 2,500,000 shares authorized; 0 issued and outstanding) — — Common stock ($.01 par value; 150,000,000 shares authorized;
23,143,609- shares issued at the end of fiscal years 2014 and 2013
23,784,041- Shares outstanding at the end of fiscal years 2014 and 2013 0.2 0.2 Capital in excess of par value 46.4 77.9 Retained earnings (deficit) 19.3 (18.7 )
Accumulated other comprehensive loss (0.1 ) (0.6 )
Total shareholders’ equity 65.8 58.8 Total liabilities and shareholders’ equity $ 260.3 $ 200.5 Table Showing Popeyes Louisiana Kitchen, Inc. Consolidated Statements of Operations for Fiscal Years 2014, 2013 and 2012 CITATION Pop14 l 1033 (Popeyes Louisiana Kitchen, Inc.)2014 2013 2012
Revenues: Sales by company-operated restaurants $ 97.2 $ 78.7 $ 64.0 Franchise royalties and fees 131.3 121.9 110.5 Rent from franchised restaurants 7.1 5.4 4.3 Total revenues 235.6 206.0 178.8 Expenses: Restaurant food, beverages and packaging 32.0 26.1 21.7 Restaurant employee, occupancy and other expenses 46.8 37.9 31.2 General and administrative expenses 78.9 73.4 67.6 Occupancy expenses – franchise restaurants 3.2 3.4 2.9 Depreciation and amortization 8.7 6.7 4.6 Other expenses (income), net 1.2 0.3 (0.5 )
Total expenses 170.8 147.8 127.5 Operating profit 64.8 58.2 51.3 Interest expense, net 3.0 3.7 3.6 Income before income taxes 61.8 54.5 47.7 Income tax expense 23.8 20.4 17.3 Net income $ 38.0 $ 34.1 $ 30.4 Earnings per common share, basic: $ 1.63 $ 1.44 $ 1.27 Earnings per common share, diluted: $ 1.60 $ 1.41 $ 1.24 Weighted-average shares outstanding: Basic 23.3 23.6 23.9 Diluted 23.8 24.1 24.5 Table Showing Popeyes Louisiana Kitche, Inc Consolidated Statements of Comprehensive Income for Fiscal Years 2014, 2013 and 2012 CITATION Pop14 l 1033 (Popeyes Louisiana Kitchen, Inc.)2014 2013 2012
Net income $ 38.0 $ 34.1 $ 30.4 Other comprehensive income
Net change in fair value of cash flow hedge — 0.4 — Reclassification adjustments for derivative losses included in earnings 0.8 — — Other comprehensive income (loss), before income tax 0.8 0.4 — Income tax expense on other comprehensive income 0.3 0.2 — Other comprehensive income (loss), net of income taxes 0.5 0.2 — Comprehensive income $ 38.5 $ 34.3 $ 30.4 Stock Performance Graph CITATION Pop14 l 1033 (Popeyes Louisiana Kitchen, Inc.)
Nature of the Business
Popeyes Louisiana Kitchen deals with the development, of quick-service restaurants, as well as, the operation, and franchising of the same. The company runs restaurants in 48 states, as well as, The District of Columbia, Guam Puerto Rico, and the Cayman Islands. The company also operates in 26 other foreign countries. It has two major reputable business segments; company-operated restaurants and franchise operations CITATION Pop14 l 1033 (Popeyes Louisiana Kitchen, Inc.).
Popeyes Louisiana Kitchen Financial Overview for 2014
In 2014, the company recorded a number of key endeavors. The company recorded a net income for the fiscal year 2014, of $3.80 million, and this translated to $1.60per diluted share. This income was higher as compared to the net income of $34.1 million in 2013 which reflected a rate of $1.41 per diluted share. Thus, the performance of the company improved by approximately 6.2 %. This also shows a growing trend in the company as the company’s sales rose by 3.7% in 2013, up from 9.9% between 2010 and 2012. In addition, the global system-wide sales in the company also increased by approximately 12.3% and this translated to a two-year growth rate of more than 20% CITATION Pop14 l 1033 (Popeyes Louisiana Kitchen, Inc.).
In the same year, Popeyes Louisiana Kitchen opened 201 new restaurants, with 13 out of these being operated by the company. This was a great improvement as compared to the 194 restaurants opened in 2013, and 53 that were closed in the same year. The restaurants openings in Popeyes Louisiana Kitchen in 2014 were recorded the highest number in the past 16 years. On top of this, Popeyes also remodeled 430 domestic restaurants and brought the total number of restaurants run by the company to approximately 1,530 CITATION Pop14 l 1033 (Popeyes Louisiana Kitchen, Inc.). The resultant high number of restaurants run by the company is expected to boost the returns of the company even further, thus, giving it a competitive advantage in the market, as well as, opening up new opportunities for the company to explore in the future. In addition, the immense expansion in the company will also increase the returns in the company, including the franchise sales which have been on the higher margins for the past five years.
The Popeye’s Louisiana Kitchen Financial Analysis is based on the latest earnings of the company’s stock analysis for 2014. The analysis of the stock price also takes into consideration the company’s valuation metrics. The company’s stock is trading at a 34.9× ratio of price to earnings against the average industry Retail-Mail Order and Direct ration of 46. However, the company also has an attractive Return on Invested Capital of 27.5% CITATION Pop14 l 1033 (Popeyes Louisiana Kitchen, Inc.). The high stock trading ration in the company and the attractive Return on Invested Capital as reflected in the company’s financial report both show that Popeyes Louisiana Kitchen is operating successfully in the market and that its financial operations are going as projected.
The Stock performance graph for Popeye’s Louisiana Kitchen shows a comparison over a period of five fiscal years ending December 2014. The graph shows the computation of the cumulative total return, and assumes the investment in the common stock to the company at the end of the fiscal year 2009 at $100 in each index. In addition, the graph also shows that all dividends were reinvested with respect to the indices. The investment in the company is in accordance with the initial financial plan showing that the company is operating as planned. In addition, this also shows that the projected returns in the company have a high probability of being realized as the company is operating within the anticipated margins.
According to the provided financial data of the company, there were various factors that impact the comparability of revenues for the five fiscal years that were presented in the report. Some of these factors were the effects of the restaurant operations, such as openings, closings, franchisee sales, unit conversions and same-store sales. In addition, the period of each fiscal years was also taken into consideration and this showed a slight different in the revenues of the five years projected in the company’s report. The fiscal year in the company ends on the last Sunday of the year. Apart from 2012, all years had a total of 52 weeks. The fiscal year 2012 had an additional week which increased the sales in the company by $1.2 million. This increase in sales also translated to a further increase of $1.7 million in Popeyes Louisiana Kitchen’s franchise revenues. In general, the net impact in the earnings of the 53rd week in 2012 was found to be approximately $0.01 per diluted share CITATION Pop14 l 1033 (Popeyes Louisiana Kitchen, Inc.).
In addition, there were also factors that impacted on the comparability of sales by other restaurants operated by the company. In the 2011, Popeyes Louisiana Kitchen opened two new restaurants, in 2012 it opened five restaurants. This number went up in 2013 as the company opened nine more restaurants, and an additional thirteen restaurants in 2014. The impact of the new restaurant openings in 2014 translated to operated sales of $15.3 million as compared to $14.9 million in 2013, $5.5 million in 2012 and $1.3 million in 2011. This rise in the number of new openings in the company is attributed to the increase in revenues and franchise sales that is recoded each year with the new openings. Thus, the revenues and returns from franchise sales from one year can be used to open more restaurants the following year, which also bring in more returns and enable the company to continue opening more restaurants.
Moreover, there are factors that impacted on the franchise royalties and fees in the company including the fact that the franchise revenues for the company were mainly composed of royalty payment made from franchisees. These represented 5% of the franchise in the net restaurant sales. Despite the fact that the Company does not record franchise sales as revenue, the management strongly believes that franchise sales are vital in understanding the financial performance of the company. This is because franchise sales indicate the company’s health, by reflecting on the company’s strategic focus on growing its overall business through the high performance of franchise sales. Subsequently, the performance of franchise sales in Popeyes Louisiana Kitchen show that the company is healthy and its performance is on a steady increase considering the different in performance between 2011 and 2014. In 2010 the total franchise sales in the company were $1.811 billion. This amount rose to $1.932 billion in 2011, and even further to $2.189 billion in 2012. In the fiscal year 2013, the company recorded a total of $2.358 billion in franchise sales and this rose to $2.640 billion in 2014 CITATION Pop14 l 1033 (Popeyes Louisiana Kitchen, Inc.).
Given the current trends in the financial performance of Popeyes Louisisna Kitchen it is expected that the company’s performance will increase even further in the fiscal year 2015. The company’s use of interest rate swap agreements in fixing the interest rate exposure is one of the aspects that will see the success of the company’s increase in revenues and franchise sales. Popeyes Louisiana Kitches entered a new interest rate swap contract at the beginning of the fiscal year 2015, and this new procedure is expected to boost the return rate of the company’s sales. Moreover, the liquidity and capital resources of the company are also expected to boost its operations in 2015. The generation of cash flows from the company’s operations in 2013 and 2014 is also expected to provide adequate cash flows to meet the anticipated future requirements in the company. Moreover, the company will also have the advantage of requesting an increment of up to $115 million in its revolving credit commitments to boost its working capital CITATION Pop14 l 1033 (Popeyes Louisiana Kitchen, Inc.).
BIBLIOGRAPHY l 1033 Popeyes Louisiana Kitchen, Inc. Annual Report Persuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Fiscal Year Ended December 28, 2014 . Annual Report . Washington, D.C. : United States Securities and Exchange Commission , 2014. Web .