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Fogo de Chão, Inc. Reports Fourth Quarter and Fiscal Year 2015 Results

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DALLAS, March 15, 2016 (GLOBE NEWSWIRE) -- Fogo de Chão, Inc. (NASDAQ: FOGO) today reported financial results for its 14-week fiscal fourth quarter and 53-week fiscal year ended January 3, 2016. The results for both the fourth quarter and fiscal year ended January 3, 2016 included one additional operating week as compared to the same periods of Fiscal 2014.

Key Highlights for the Fourth Quarter of 2015 Include:

  • Total revenue was $77.5 million for the 14-week period ending January 3, 2016, which represents 11.5% growth over the same quarter last year on a constant currency(1) basis excluding the benefit of $6.8 million of sales attributable to the extra week in 2015.
  • U.S. company-owned comparable restaurant sales increased 3.5%.
  • Adjusted EBITDA(2) was $19.4 million, which represents 1.3% growth over the same quarter last year on a constant currency(1) basis excluding the benefit of the extra week in 2015.
  • Net income was $12.9 million, compared to $6.6 million in the fourth quarter of 2014.
  • Adjusted net income(2) was $8.3 million, or $0.29 per diluted share.

Key Highlights for the Fiscal Year of 2015 Include:

  • Total revenue was $271.6 million for the 53-week period ending January 3, 2016, which represents 10.0% growth over the prior year on a constant currency(1)  basis  excluding the benefit of the extra week in 2015 and the estimated impact of the World Cup(3) benefit in 2014.
  • U.S. company-owned comparable restaurant sales increased 2.7%.
  • Adjusted EBITDA(2) was $63.2 million, which represents 8.5% growth over the prior year on a constant currency(1)  basis  excluding the benefit of the extra week in 2015 and the estimated impact of the World Cup(3) benefit in 2014.
  • Net income was $27.9 million, compared to $17.6 million in Fiscal 2014.
  • Adjusted net income(2) was $27.2 million, or $0.93 per diluted share.

(1) In order to assess how the business performed in the current period, we have adjusted the prior period on a constant currency basis. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. We compare the percent change in the results from one period to another period using constant currency to exclude the effects of foreign currency fluctuations.

(2) Adjusted EBITDA and adjusted net income are non-GAAP measures. A reconciliation of GAAP net income to each of these measures is included in the accompanying financial data. See also "Non-GAAP Financial Measures" below.

(3) In order to assess how the business performed in the current period, we have adjusted the prior period to exclude the estimated non-recurring benefit of business that was generated as a result of the 2014 World Cup held in Brazil.

"2015 was a great year for Fogo de Chao," said Larry Johnson, Chief Executive Officer of Fogo de Chão, Inc.  "Among the highlights were the opening of six new U.S. locations, our first joint venture location in Mexico as well as our IPO in June.  We also drove U.S. comps up 3.5% through initiatives we implemented to drive trial and frequency while at the same time growing our average check. We are also working diligently on growing our group dining platform as well as focusing on menu innovation and daypart expansion with our Gaucho Lunch and Sunday Brunch offerings."

Fourth Quarter 2015 Financial Results

Total revenue for the fourth quarter of Fiscal 2015 was $77.5 million compared to $68.7 million in the fourth quarter of 2014.  The Company's fourth quarter of 2015 included 14 weeks compared to 13 weeks in the fourth quarter of 2014.  The $8.8 million increase is primarily attributable to $6.8 million of sales generated during the extra week of the quarter which included the New Years' holiday, increases in comparable restaurant sales in the US, and new restaurant locations opened in the last 12 months, partially offset by a $5.3 million negative foreign exchange impact. Excluding the impact of the extra week in 2015 and the impact of foreign exchange, total revenues for the fourth quarter increased 11.5% over the prior year period. Company-owned comparable restaurant sales, which include both U.S. and Brazil restaurants, increased 2.8%. 

U.S. restaurant revenue increased 23.5% to $65.3 million in the fourth quarter of 2015 from $52.9 million in the fourth quarter of 2014 primarily due to a 3.5% increase in comparable restaurant sales, an increase in sales from new unit development, and the benefit of the extra week of sales in the quarter. Excluding the impact of the extra week in 2015, U.S. revenues for the fourth quarter increased 12.2% over the prior year period.

Brazil restaurant revenue was $12.1 million in the fourth quarter of 2015 compared to $15.7 million in the fourth quarter of 2014.  The decrease in revenue compared to last year was driven largely by a $5.3 million foreign exchange impact, partially offset by the extra week of sales during the quarter, and sales from our second Rio location which opened in 2015.  Excluding the impact of the extra week in 2015 and the impact of foreign exchange, Brazil revenues for the fourth quarter increased 9.0% over the prior year period. Comparable restaurant sales in Brazil were flat in the fourth quarter of 2015.

GAAP net income for the fourth quarter of 2015 was $12.9 million, compared to net income of $6.6 million in the fourth quarter of 2014.  Adjusted net income in the fourth quarter of 2015 was $8.3 million, or $0.29 per diluted share, compared to $7.8 million, or $0.27 per diluted share in the fourth quarter of 2014 on a constant currency basis. The extra week in the fourth quarter of 2015 is estimated to have positively impacted results by approximately $0.06 per diluted share.  A reconciliation between GAAP net income and adjusted net income is included in the accompanying financial data.

Development Update

During the fourth quarter the Company opened four new restaurants in the U.S.  The new locations include the Company's second Las Vegas area restaurant in Summerlin, Nevada, its second Houston area restaurant in The Woodlands, Texas, its first restaurant in San Francisco and its first restaurant in New Orleans. In 2016 we expect to open five to six restaurants in the U.S, one of which is already open, and at least one joint venture restaurant.

As of January 3, 2016, the Company operated 40 company-owned restaurants, ten of which are in Brazil, and one joint venture restaurant in Mexico City.

Investors are reminded that the actual number and timing of new restaurant openings is subject to a number of factors outside of the Company's control including, but not limited to, weather conditions and factors under the control of landlords, contractors and regulatory/licensing authorities.

2016 Outlook

Based on current information, the Company is providing its guidance for the 52-week fiscal year 2016, which ends on January 1, 2017. Diluted net income per share is expected to range between $0.93 and $0.96, which represents growth of 13% to 17% over adjusted diluted net income per share of $0.82(1) in Fiscal 2015. Diluted net income per share guidance for Fiscal 2016 is based, in part, on the following annual assumptions:

  • Total revenue of $293 million to $297 million, assuming an exchange rate of 4.11 Brazilian reais to 1 US dollar;
  • Company-owned comparable restaurant sales growth of 1% to 2%;
  • Restaurant contribution margin of 31.0% to 31.5%;
  • Pre-opening expenses of $3.7 million to $4.3 million;
  • General and administrative expenses of $20 million to $21 million;
  • Opening of five to six Company-owned restaurants;
  • Capital expenditures of $31 million to $35 million;
  • Depreciation expense of $14.7 million to $15.2 million; and
  • Tax rate of 32% to 33%.

(1) The Company's 2015 results are adjusted for comparison to 2016 by $0.06 for the extra week impact in 2015 and $0.05 to adjust 2015 to the same Brazilian Real exchange rate that we have projected for our 2016 guidance (4.11 reais to 1 US dollar).

Guidance Policy

The Company intends to provide annual guidance as it relates to revenue, comparable restaurant sales growth, restaurant contribution margin, general and administrative expense, tax expense, and development schedule.  The Company expressly disclaims any duty to update this guidance.

Conference Call/ Webcast

The Company will host a conference call to discuss its fourth quarter 2015 financial results today at 5:00 PM Eastern Time. Hosting the call will be Larry Johnson, Chief Executive Officer, Barry McGowan, President, and Tony Laday, Chief Financial Officer.

The conference call can be accessed live over the phone by dialing (877) 407-0789 or for international callers by dialing (201) 689-8562. A replay will be available two hours after the call and can be accessed by dialing (877) 870-5176 or for international callers by dialing (858) 384-5517; the passcode is 13630252. The replay will be available through Tuesday, March 22, 2016.  The conference call will also be webcast live and later archived on Fogo's corporate website at ir.fogodechao.com under the ‘News & Events' section.

About Fogo de Chão

Fogo de Chão (fogo-dee-shoun) is a leading Brazilian steakhouse, or churrascaria, which has specialized for over 36 years in fire-roasting high-quality meats utilizing the centuries-old Southern Brazilian cooking technique of churrasco. Fogo delivers a distinctive and authentic Brazilian dining experience through the combination of high-quality Brazilian cuisine and a differentiated service model known as espeto corrido (Portuguese for "continuous service") delivered by gaucho chefs. Fogo offers its guests a tasting menu of a variety of meats including beef, lamb, pork and chicken, simply seasoned and carefully fire-roasted to expose their natural flavors, a gourmet Market Table with seasonal salads, soup and fresh vegetables, seafood, desserts, signature cocktails and an award-winning wine list. The first Fogo de Chão opened in Brazil in 1979. The Company currently operates 31 restaurants in the United States, 10 in Brazil and one joint venture restaurant in Mexico. Visit FOGO.com for more information.

Safe Harbor Statement

This release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. Forward-looking statements relate to expectations, beliefs, projections, guidance, future plans, objectives and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts, such as statements regarding our future financial condition or results of operations, our prospects and strategies for future growth, the development and introduction of new products, and the implementation of our marketing and branding strategies. Forward-looking statements can also be identified by words such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "seeks," "intends," "targets" or the negative of these terms or other comparable terminology. Forward-looking statements are not guarantees of future performance and actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in the section entitled "Risk Factors" in our final prospectus filed on June 19, 2015 and our subsequent quarterly reports filed on Form 10-Q filed with the Securities and Exchange Commission. The forward-looking statements included in this press release are made only as of the date hereof. Except as required by applicable securities law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

Non-GAAP Financial Measures

The Company uses the following non-GAAP financial measures: EBITDA, Adjusted EBITDA, Adjusted net income (loss), and Adjusted weighted average shares (collectively the "non-GAAP financial measures"). The Company also presents certain results of operations on a constant currency basis to exclude the effects of foreign currency fluctuations and has adjusted 2014 results to exclude the non-recurring benefit of business that was generated as a result of the 2014 World Cup held in Brazil. The Company uses these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. The Company believes that they provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. The non-GAAP measures used by the Company in this press release may be different from the methods used by other companies.

 Key Financial Data - Fiscal Quarter Fiscal Quarter Ended Adjusted(a)
 (in thousands, except restaurant and per share amounts) January 3,  December 28,       
    2016   2014  Change Change Change
   (14 weeks) (13 weeks)      
 Comparable Store Sales(b):          
 U.S.  3.5%  3.5%      
 Brazil  0.0%  2.2%      
 Consolidated  2.8%  3.2%      
            
 Restaurants opened during period    4     1       
 Restaurants open at period end    41     34       
            
 Revenue(c):          
 U.S.(d) $  65,328  $  52,879  $  12,449   23.5%  12.2%
 Brazil $  12,081  $  15,652  $  (3,571)  -22.8%  9.1%
 Consolidated $  77,496  $  68,727  $  8,769   12.8%  11.5%
            
 Adjusted EBITDA attributable to Fogo de Chão, Inc. $  19,368  $  18,026  $  1,342   7.4%  1.3%
            
 Net income attributable to Fogo de Chão, Inc. $  12,941  $  6,616  $  6,325   95.6%  108.2%
 Adjusted Net Income attributable to Fogo de Chão, Inc. $  8,339  $  8,777  $  (438)  -5.0%  -15.4%
            
 Diluted Earnings Per Share $  0.45  $  0.29  $  0.16   55.2%  69.6%
 Adjusted Diluted Earnings Per Share $  0.29  $  0.30  $  (0.01)  -3.3%  -14.8%
            
            
 Key Financial Data - Fiscal Year Fiscal Year Ended Adjusted(a)
 (in thousands, except restaurant and per share amounts) January 3,  December 28,       
    2016   2014  Change Change Change
   (53 weeks) (52 weeks)      
 Comparable Store Sales(e):          
 U.S.  2.7%  2.9%      
 Brazil  -8.8%  11.4%      
 Brazil adjusted for World Cup  -1.1%  1.7%      
 Consolidated  0.4%  4.4%      
 Consolidated adjusted for World Cup  2.0%  2.6%      
            
 Restaurants opened during period(f)    7     3       
 Restaurants open at period end    41     34       
            
 Revenue(c):          
 U.S.(d) $  227,073  $  199,131  $  27,942   14.0%  11.0%
 Brazil $  44,425  $  62,271  $  (17,846)  -28.7%  7.3%
 Consolidated $  271,634  $  262,280  $  9,354   3.6%  10.0%
            
 Adjusted EBITDA attributable to Fogo de Chão, Inc. $  63,181  $  63,319  $  (138)  -0.2%  8.5%
            
 Net income attributable to Fogo de Chão, Inc. $  27,865  $  17,555  $  10,310   58.7%  118.4%
 Adjusted Net Income attributable to Fogo de Chão, Inc. $  27,195  $  29,362  $  (2,167)  -7.4%  3.6%
            
 Diluted Earnings Per Share $  1.06  $  0.76  $  0.30   39.5%  92.3%
 Adjusted Diluted Earnings Per Share $  0.93  $  1.01  $  (0.08)  -7.9%  2.4%
            
(a) In order to assess how our business performed in the current period, we have adjusted the current period to exclude the benefit of the extra week in 2015 and we have adjusted the prior period to exclude the benefit of the World Cup in 2014.  Additionally, we compare the percent change in the results from one period to another period using constant currency to exclude the effects of foreign currency fluctuations.
            
(b)Comparable store sales for the 14-week period ended January 3, 2016 were calculated against sales for the comparable 14-week period ended January 4, 2015.
            
(c)We have two operating segments: United States and Brazil. Our joint venture in Mexico is included in the United States for segment reporting purposes as the operations of the joint venture are monitored by the United States segment management.
            
(d)U.S. revenue excludes gift card breakage revenue.
            
(e)Comparable store sales for the 53-week period ended January 3, 2016 were calculated against sales for the comparable 53-week period ended January 4, 2015.
            
(f)Includes one restaurant attributable to our joint venture in Mexico.


Fogo de Chão, Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands, except share and per share amounts)
         
  Fiscal Quarter Ended Fiscal Year Ended
  January 3,  December 28,  January 3,  December 28,
   2016   2014   2016   2014 
  (14 weeks) (13 weeks) (53 weeks) (52 weeks)
Revenue $  77,496  $  68,727  $  271,634  $  262,280 
Restaurant operating costs:        
Food and beverage costs    21,558     20,185     80,062     78,330 
Compensation and benefit costs    17,022     13,954     60,224     54,673 
Occupancy and other operating expenses (excluding depreciation and amortization)    12,475     11,115     46,153     44,156 
Total restaurant operating costs    51,055     45,254     186,439     177,159 
Marketing and advertising costs    2,009     1,305     6,618     5,585 
General and administrative costs    5,598     5,885     32,566     21,419 
Pre-opening costs    2,524     543     4,858     1,951 
Loss on extinguishment/modification of debt          5,991     3,090 
Depreciation and amortization    3,234     2,918     12,471     11,638 
Other operating (income) expense, net    (168)    98     (291)    46 
Total costs and expenses    64,252     56,003     248,652     220,888 
Income from operations    13,244     12,724     22,982     41,392 
Other income (expense):        
Interest expense, net    (1,090)    (3,986)    (9,975)    (17,937)
Interest income    307     208     856     816 
Other income (expense), net    4     (2)    (34)    (7)
Total other expense, net    (779)    (3,780)    (9,153)    (17,128)
Income before income taxes    12,465     8,944     13,829     24,264 
Income tax expense (benefit)    (586)    2,436     (14,168)    6,991 
Net income    13,051     6,508     27,997     17,273 
Less: Net income (loss) attributable to noncontrolling interest    110     (108)    132     (282)
Net income attributable to Fogo de Chão, Inc. $  12,941  $  6,616  $  27,865  $  17,555 
Net income $  13,051  $  6,508  $  27,997  $  17,273 
Other comprehensive income (loss):        
Translation effect on unremitted earnings       393        393 
Currency translation adjustment    146     (10,460)    (29,888)    (15,075)
Total other comprehensive income (loss) $  146  $  (10,067) $  (29,888) $  (14,682)
Comprehensive income (loss)     13,197     (3,559)    (1,891)    2,591 
Less: Comprehensive income (loss) attributable to noncontrolling interest    82     (232)    (11)    (403)
Comprehensive income (loss) attributable to Fogo de Chão, Inc. $  13,115  $  (3,327) $  (1,880) $  2,994 
Earnings per common share attributable to Fogo de Chão, Inc.:        
Basic $  0.46  $  0.29  $  1.09  $  0.77 
Diluted $  0.45  $  0.29  $  1.06  $  0.76 
Weighted average common shares outstanding:        
Basic    28,021,576     22,779,866     25,519,312     22,697,106 
Diluted    28,926,777     23,067,474     26,324,115     23,016,461 


 Reconciliation to Adjusted Net Income attributable to Fogo de Chão, Inc.(a)  
 (in thousands, except share and per share amounts)      
   Fiscal Quarter Ended Constant Currency(i)
   January 3,  December 28,  December 28,
    2016   2014   2014 
   (14 weeks) (13 weeks) (13 weeks)
 Net income attributable to Fogo de Chão, Inc. $  12,941  $  6,616  $  5,393 
 Credit facility interest adjustment(b)       2,786     2,786 
 Management and consulting fees(c)       198     198 
 Retention agreement payments(d)    106     312     312 
 IPO related expenses(e)       954     954 
 Recurring public company costs(f)       (250)    (250)
 Income tax expense (benefit)    (647)    2,436     2,248 
 Pre-tax adjusted net income    12,400     13,052     11,641 
   Estimated tax provision(g)    4,061     4,275     3,812 
 Adjusted Net income attributable to Fogo de Chão, Inc. $  8,339  $  8,777  $  7,829 
        
 Adjusted net income per common share attributable to Fogo de Chão, Inc.:      
 Basic $  0.30  $  0.32  $  0.28 
 Diluted $  0.29  $  0.30  $  0.27 
        
 Weighted average common shares outstanding:      
 Basic    28,021,576     22,779,866     22,779,866 
 Diluted    28,926,777     23,067,474     23,067,474 
 Adjusted basic shares outstanding(h)    28,021,576     27,853,394     27,853,394 
 Adjusted diluted shares outstanding(h)    28,926,777     29,133,227     29,133,227 
        
(a)Excludes impacts attributable to our joint venture in Mexico.
(b)Credit facility interest represents the adjustment to interest expense that would have been recorded if the extinguishment of our 2012 Credit Facility had occurred at the beginning of 2014.
(c)Consists of payments to an affiliate of THL for advisory services. Upon the consummation of the IPO we terminated the underlying advisory services agreement with this affiliate of THL.
(d)Consists of cash payments to our regional managers pursuant to retention and non-compete agreements executed in 2012. The final payments under these agreements were paid in October 2015.
(e)Consists primarily of external professional service costs incurred as we assessed and initiated the process of becoming a public company. These costs include accounting and legal fees for public readiness services, documentation of internal controls to comply with Section 404 of the Sarbanes-Oxley Act and external auditor fees incurred for review of all fiscal quarters included in the registration statement.
(f)Recurring public company costs represent estimated costs that we would have incurred if the IPO had occurred at the beginning of 2014.
(g)Our estimated effective tax rate is 32.75%.
(h)Weighted average common shares outstanding (basic and dilutive) for the prior periods have been adjusted and recalculated as if the IPO had occurred at the beginning of Fiscal 2014. The number of dilutive shares was recalculated using the treasury stock method, using the average market price from the date of the IPO through the end of Fiscal 2015.
(i)We compare the percent change in the results from one period to another period using constant currency to exclude the effects of foreign currency fluctuations.


 Reconciliation to Adjusted Net Income attributable to Fogo de Chão, Inc.(a)    
 (in thousands, except share and per share amounts)        
   Fiscal Year Ended Constant Currency(k) World Cup(l)
   January 3,  December 28,  December 28,  December 28,
    2016   2014   2014   2014 
   (53 weeks) (52 weeks) (52 weeks) (52 weeks)
 Net income attributable to Fogo de Chão, Inc. $  27,865  $  17,555  $  13,611  $  11,975 
 Credit facility interest adjustment(b)    5,510     13,250     13,250     13,250 
 Loss on extinguishment/modification of debt(c)    5,991     3,090     3,090     3,090 
 Management and consulting fees(d)    8,137     859     859     859 
 Retention agreement payments(e)    1,042     1,250     1,250     1,250 
 IPO related expenses(f)    782     1,666     1,666     1,666 
 Recurring public company costs(g)    (500)    (1,000)    (1,000)    (1,000)
 Share-based compensation(h)    5,840          
 Income tax expense (benefit)    (14,229)    6,991     6,294     5,497 
 Pre-tax adjusted net income    40,438     43,661     39,020     36,587 
 Estimated tax provision(i)    13,243     14,299     12,779     11,982 
 Adjusted Net income attributable to Fogo de Chão, Inc. $  27,195  $  29,362  $  26,241  $  24,605 
          
 Adjusted net income per common share attributable to Fogo de Chão, Inc.:        
 Basic $  0.97  $  1.06  $  0.94  $  0.89 
 Diluted $  0.93  $  1.01  $  0.90  $  0.85 
          
 Weighted average common shares outstanding:        
 Basic    25,519,312     22,697,106     22,697,106     22,697,106 
 Diluted    26,324,115     23,016,461     23,016,461     23,016,461 
 Adjusted basic shares outstanding(j)    27,939,836     27,770,634     27,770,634     27,770,634 
 Adjusted diluted shares outstanding(j)    29,169,279     29,068,115     29,068,115     29,068,115 
          
(a)Excludes impacts attributable to our joint venture in Mexico.
(b)Credit facility interest represents the adjustment to interest expense that would have been recorded if the extinguishment of our 2012 Credit Facility had occurred at the beginning of 2014.
(c)Consists primarily of non-cash charges resulting from the extinguishment/modification of our credit facilities. For the fiscal year ended January 3, 2016, includes $0.3 million pre-payment premium and $0.1 million in legal and other expenses we paid in connection with the termination of our 2012 Credit Facility.
(d)Consists of payments to an affiliate of THL for advisory services. Upon the consummation of the IPO we terminated the underlying advisory services agreement with this affiliate of THL. For the fiscal year ended January 3, 2016, includes the $7.5 million fee paid to an affiliate of THL as a result of the termination of the advisory services agreement with that affiliate.
(e)Consists of cash payments to our regional managers pursuant to retention and non-compete agreements executed in 2012. The final payments under these agreements were paid in October 2015.
(f)Consists primarily of external professional service costs incurred as we assessed and initiated the process of becoming a public company. These costs include accounting and legal fees for public readiness services, documentation of internal controls to comply with Section 404 of the Sarbanes-Oxley Act and external auditor fees incurred for review of all fiscal quarters included in the registration statement.
(g)Recurring public company costs represent estimated costs that we would have incurred if the IPO had occurred at the beginning of 2014.
(h)Includes $5.7 million of compensation expense recognized upon the closing of the IPO attributable to the vesting of stock options.
(i)Our estimated effective tax rate is 32.75%.
(j)Weighted average common shares outstanding (basic and dilutive) have been adjusted and recalculated as if the IPO had occurred at the beginning of Fiscal 2014. The number of dilutive shares was calculated using the treasury stock method, using the average market price from the date of the IPO through the end of Fiscal 2015.
(k)We compare the percent change in the results from one period to another period using constant currency to exclude the effects of foreign currency fluctuations.
(l)In order to assess how our business performed in the current period, we have adjusted the prior period to exclude the non-recurring benefit of business that was generated as a result of the 2014 World Cup held in Brazil and stated the results in constant currency.


 Reconciliation Adjusted EBITDA attributable to Fogo de Chão, Inc.(a):    
 (in thousands)      
   Fiscal Quarter Ended Constant Currency(f)
   January 3,  December 28,  December 28,
    2016   2014   2014 
   (14 weeks) (13 weeks) (13 weeks)
 Net income attributable to Fogo de Chão, Inc. $  12,941  $  6,616  $  5,393 
 Depreciation and amortization expense    3,172     2,918     2,759 
 Interest expense, net    1,090     3,986     3,986 
 Interest income    (307)    (208)    (137)
 Income tax expense (benefit)    (647)    2,436     2,248 
 EBITDA    16,249     15,748     14,249 
 Pre-opening costs    2,524     435     435 
 Share-based compensation    281     198     198 
 Management and consulting fees(b)       198     198 
 Retention agreement payments(c)    106     312     312 
 IPO related expenses(d)       954     954 
 Non-cash adjustments(e)    208     181     181 
 Adjusted EBITDA attributable to Fogo de Chão, Inc. $  19,368  $  18,026  $  16,527 
        
(a)Excludes impacts attributable to our joint venture in Mexico.
(b)Consists of payments to an affiliate of THL for advisory services. Upon the consummation of the IPO we terminated the underlying advisory services agreement with this affiliate of THL.
(c)Consists of cash payments to our regional managers pursuant to retention and non-compete agreements executed in 2012. The final payments under these agreements were paid in October 2015.
(d)Consists primarily of external professional service costs incurred as we assessed and initiated the process of becoming a public company. These costs include accounting and legal fees for public readiness services, documentation of internal controls to comply with Section 404 of the Sarbanes-Oxley Act and external auditor fees incurred for review of all fiscal quarters included in the registration statement.
(e)Consists of non-cash portion of straight line rent expense.
(f)We compare the percent change in the results from one period to another period using constant currency to exclude the effects of foreign currency fluctuations.


 Reconciliation Adjusted EBITDA attributable to Fogo de Chão, Inc.(a):     
 (in thousands)        
   Fiscal Year Ended Constant Currency(h) World Cup(i)
   January 3,  December 28,  December 28,  December 28,
    2016   2014   2014   2014 
   (53 weeks) (52 weeks) (52 weeks) (52 weeks)
 Net income attributable to Fogo de Chão, Inc. $  27,865  $  17,555  $  13,611  $  11,975 
 Depreciation and amortization expense    12,302     11,638     10,998     10,998 
 Interest expense, net    9,975     17,937     17,937     17,937 
 Interest income    (856)    (816)    (579)    (579)
 Income tax expense (benefit)    (14,229)    6,991     6,294     5,497 
 EBITDA    35,057     53,305     48,261     45,828 
 Pre-opening costs    4,560     1,717     1,717     1,717 
 Loss on extinguishment/modification of debt(b)    5,991     3,090     3,090     3,090 
 Share-based compensation(c)    6,792     765     765     765 
 Management and consulting fees(d)    8,137     859     859     859 
 Retention agreement payments(e)    1,042     1,250     1,250     1,250 
 IPO related expenses(f)    782     1,666     1,666     1,666 
 Non-cash adjustments(g)    820     667     667     667 
 Adjusted EBITDA attributable to Fogo de Chão, Inc.$  63,181  $  63,319  $  58,275  $  55,842 
          
(a)Excludes impacts attributable to our joint venture in Mexico.
(b)Consists primarily of non-cash charges resulting from the extinguishment/modification of our credit facilities. For the fiscal year ended January 3, 2016, includes $0.3 million pre-payment premium and $0.1 million in legal and other expenses we paid in connection with the termination of our 2012 Credit Facility.
(c)For the fiscal year ended January 3, 2016, includes $5.7 million of compensation expense recognized upon the closing of the IPO attributable to the vesting of stock options.
(d)Consists primarily of payments to an affiliate of THL and advisors engaged by an affiliate of THL for advisory and consulting services.  For the fiscal year ended January 3, 2016, includes the $7.5 million fee paid to an affiliate of THL as a result of the termination of the advisory services agreement with that affiliate.
(e)Consists of cash payments to our regional managers pursuant to retention and non-compete agreements executed in 2012. The final payments under these agreements were paid in October 2015.
(f)Consists primarily of external professional service costs incurred as we assessed and initiated the process of becoming a public company. These costs include accounting and legal fees for public readiness services, documentation of internal controls to comply with Section 404 of the Sarbanes-Oxley Act and external auditor fees incurred for review of all fiscal quarters included in the registration statement.
(g)Consists of non-cash portion of straight line rent expense.
(h)We compare the percent change in the results from one period to another period using constant currency to exclude the effects of foreign currency fluctuations.
(i)In order to assess how our business performed in the current period, we have adjusted the prior period to exclude the non-recurring benefit of business that was generated as a result of the 2014 World Cup held in Brazil and stated the results in constant currency.


 Supplemental Selected Constant Currency and World Cup Adjustment Information
          
   Fiscal Quarter Ended    
 Constant Currency reconciliation January 3,  December 28,     
    2016   2014     
   (14 weeks) (13 weeks)    
 Revenue as reported $  77,496  $  68,727     
 Effect of foreign currency(a)       (5,320)    
 Revenue at constant currency $  77,496  $  63,407     
          
 Adjusted EBITDA $  19,368  $  18,026     
 Effect of foreign currency(a)       (1,499)    
 Adjusted EBITDA at constant currency $  19,368  $  16,527     
 Adjusted EBITDA margin at constant currency  25.0%  26.1%    
          
 Restaurant contribution $  26,441  $  23,473     
 Effect of foreign currency(a)       (2,075)    
 Restaurant contribution at constant currency $  26,441  $  21,398     
 Restaurant contribution margin at constant currency  34.1%  33.7%    
          
   Fiscal Year Ended   World Cup(b)
 Constant Currency reconciliation January 3,  December 28,    December 28,
    2016   2014  Adjustment  2014 
   (53 weeks) (52 weeks)   (52 weeks)
 Revenue as reported $  271,634  $  262,280  $  5,004  $  257,276 
 Effect of foreign currency(a)       (18,135)    (1,529)    (16,606)
 Revenue at constant currency $  271,634  $  244,145    $  240,670 
          
 Adjusted EBITDA $  63,181  $  63,319  $  3,513  $  59,806 
 Effect of foreign currency(a)       (5,044)    (1,080)    (3,964)
 Adjusted EBITDA at constant currency $  63,181  $  58,275    $  55,842 
 Adjusted EBITDA margin at constant currency  23.3%  23.9%    23.2%
          
 Restaurant contribution $  85,195  $  85,121  $  3,513  $  81,608 
 Effect of foreign currency(a)       (6,534)    (1,080)    (5,454)
 Restaurant contribution at constant currency $  85,195  $  78,587    $  76,154 
 Restaurant contribution margin at constant currency  31.4%  32.2%    31.6%
          
(a)As exchange rates are an important factor in understanding period-to-period comparisons, we believe the presentation of certain results on a constant currency basis in addition to reported results helps improve investors' ability to understand our operating results and evaluate our performance in comparison to prior periods. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. We use results on a constant currency basis as one measure to evaluate our performance. We calculate constant currency by retranslating results across all prior periods presented using a derived exchange rate for the most current year periods presented based on actual results. The tables calculate constant currency at a foreign currency exchange rate of 3.8593 and 3.3294 Brazilian reais to 1 US dollar, which represents the derived exchange rates for the fourteen week period and fiscal year ended January 3, 2016, respectively.  These results should be considered in addition to, not as a substitute for, results reported in accordance with US GAAP. Results on a constant currency basis, as we present them, may not be comparable to similarly titled measures used by other companies and are not measures of performance presented in accordance with US GAAP.
(b)In order to assess how our business performed in the current period, we have adjusted the prior period to exclude the non-recurring benefit of business that was generated as a result of the 2014 World Cup held in Brazil and stated the results in constant currency.


Fogo de Chão, Inc.
UNAUDITED SELECTED CONSOLIDATED BALANCE SHEET DATA
(in thousands)
  As of As of
  January 3, December 28,
   2016   2014 
Cash and cash equivalents $  24,919  $  19,387 
Total assets  487,495     477,169 
Long-term debt, including current portion    165,000     243,045 
Deferred tax liabilities    15,951     29,982 
Total liabilities    234,941     321,710 
Total Fogo de Chão, Inc. shareholders' equity    250,611     154,081 
Total equity    252,554     155,459 


Investor Contact: IR@fogodechao.com (972) 361-6225 Media Contact: Kristina Jorge, ICR Kristina.Jorge@icrinc.com (646) 277‐1234

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