News

2 more firms investigate Popeyes/RBI deal, as chain reports glowing FY2016 results

February 23, 2017

Two more law firms have opened investigations into the proposed sale of Popeyes Louisiana Kitchen to Restaurant Brands International. The latest announcing probes of the sale are Kahn Swick & Foti, as well as Rirodsky & Long, P.A. They join Bower Piven, a securities law firm, which opened its investigation on the same day the $1.8 billion pending deal.

The Kahn Swick & Foti firm said in a news release that its investigation aims to determine whether the $79 per share price offered and the process that led to it "are adequate, or whether the consideration undervalues the company." The Rigrodsky & Long firm is focused on "possible breaches of fiduciary duties and other violations of law" related to the pending deal, which was put at $1.8 billion when first announced Tuesday morning. 

Meanwhile, Popeyes' 2016 financial results revealed the chain is growing at a healthy clip and pulling in some substantial revenue. Net income last year was $42.8 million, or $1.98 per diluted share, compared to $44.1 million, or $1.91 per diluted share in 2015. Adjusted earnings per diluted share were $2.12, compared to $1.91 in 2015, representing an increase of 11 percent which is consistent with previous guidance.

Other highlights of the last fiscal year, ending Dec. 25, 2016, included:

• Global system-wide sales increased 7.4 percent, for a two-year compounded growth rate of over 20 percent..
• Global same-store sales increased 1.7 percent in 2016, compared to a 5.9 percent increase last year, for a two-year compounded growth rate of 7.7 percent..
• Total domestic same-store sales increased 1.4 percent, compared to 5.7 percent last year, the eighth consecutive year of positive same-store sales growth.
• International same-store sales increased 4.4 percent, compared to 7 percent last year, the tenth consecutive year of positive same-store sales growth.
• Popeyes market share of the domestic Chicken-Quick Service Restaurant segment reached 26.5 percent for 2016, an increase from 25 percent in 2015.
• Total revenues increased approximately 3.8 percent to $268.9 million in 2016, from $259.0 million in 2015.
• Company-operated restaurant operating profit was $20.7 million, or 19.1 percent of sales, compared to $21.9 million, or 20 percent of sales in 2015.
• Operating EBITDA was $88.7 million, or 33 percent of total revenues, compared to $84.0 million, or 32.4 percent of total revenues in 2015, a 5.6 percent increase.
• The Company repurchased approximately 1.8 million shares of its common stock for approximately $100.0 million.

"We are pleased to report another year of strong performance at Popeyes," Popeyes CEO Cheryl Bachelder, said in a news release. "Driving the top line through a careful balance of innovative offerings and core menu value has created momentum in the fourth quarter, despite challenging market conditions. In 2016, we delivered global same-store sales growth of 1.7 percent, our eighth consecutive year of positive same-store sales growth, and 216 new restaurant openings around the world."

Fourth quarter highlights include: 

• An increase of 14.3 percent in reported net income, which was $9.2 million, or $0.44 per diluted share, compared to $9.6 million, or $0.42 per diluted share in the fourth quarter 2015. Adjusted earnings per diluted share(1) were $0.48, compared to $0.42 in 2015.
• Global same-store sales increased 2.8 percent.
• Total domestic same-store sales increased 3 percent compared to 2 percent in the fourth quarter of 2015, for a two-year compounded growth rate of 5.1 percent
• International same-store sales increased 1.6 percent, compared to 8.5 percent in the fourth quarter of 2015, for a two-year compounded growth rate of 10.2 percent.
• The Popeyes system opened 89 new restaurants compared to 82 new restaurants in the fourth quarter of 2015.

Additionally, the company said that on Feb. 15, it increased the aggregate revolving loan commitments under its 2016 revolving credit facility to $400 million. With the $150 million expansion, availability for short-term borrowings and letters of credit under the amended and restated credit facility is $244.4 million.