J. Alexander’s Holdings, Inc. provided an update on the full year 2017 results of Ninety Nine Restaurant & Pub, in connection with J. Alexander’s previously announced acquisition of 99 Restaurants.
“These results are in-line with projections included in our proxy materials and underscore our deep conviction in pursuing the acquisition of 99 Restaurants,” says Lonnie J. Stout II, president and Chief Executive Officer. “Despite a challenging environment, Charlie and his team continue to demonstrate the unique value of the 99 Restaurant concept, which largely insulates it from the challenges faced by its competitors. We look forward to completing this accretive merger and capitalizing on the significant opportunities it provides to drive long-term, sustainable value for J. Alexander’s shareholders.”
Cannae Holdings, Inc., the majority owner and operator of the 99 Restaurants, provided preliminary unaudited sales results for the fourth quarter and fiscal year ended December 31, 2017 relative to 99 Restaurants in a Form 8-K filing dated January 11, 2018. Based on these results, 99 Restaurants quarterly net revenue for 2017, compared to figures included in their projections for fiscal 2017, a summary of which was disclosed in the J. Alexander’s proxy statement filed with the Securities and Exchange Commission on December 21, 2017, was as set forth below:
The preliminary sales results are reported on the fiscal fourth quarter period from September 4, 2017 through December 31, 2017 (17 weeks) and the fiscal 2017 period from December 26, 2016 through December 31, 2017 (53 weeks). 99 Restaurants expects to report its full fourth quarter and fiscal 2017 results later in the first quarter of 2018.
The fourth quarter of fiscal 2017 contained 17 weeks, or an additional week compared to the fourth quarter of fiscal 2016. 99 Restaurants estimates the impact of the additional week during both the fourth quarter and full fiscal year of 2017, which included six days of operations due to the closure of all restaurant locations on Christmas Day, totaled approximately $6 million. Both the fourth quarter and full year projections for fiscal 2017 included in compiling the proxy statement disclosures included the estimated impact of the additional week.
For the full fiscal year, net revenue for 99 Restaurants for the 53 weeks ended December 31, 2017 totaled approximately $311.2 million, an increase of $7.2 million, or 2.4 percent compared to $304 million for the 52 weeks included in the fiscal year ended December 25, 2016.
The J. Alexander’s Board of Directors believes this transaction will create attractive value for, and is in the best interest of, all shareholders, for reasons including:
The transaction is expected to be accretive to J. Alexander’s earnings per share.
The acquisition presents opportunities for synergies and management estimates that potential synergies could have an annual positive impact on pre-tax income of $1.5 million to $2 million.
The combination with 99 Restaurants will help J. Alexander’s achieve more rapid growth and increase the scale of operations.