El Pollo Loco Holdings, Inc. (NASDAQ:LOCO) Q4 2018 Earnings Conference Call - Final Transcript

Mar 07, 2019 • 05:00 pm ET

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El Pollo Loco Holdings, Inc. (NASDAQ:LOCO) Q4 2018 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to El Pollo Loco Fourth Quarter 2018 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode and the lines will be opened for your questions following the presentation. Please note that this conference is being recorded today, March 7, 2018 (ph). On the call today, we have Bernard Acoca, President and Chief Executive Officer of El Pollo Loco; and Larry Roberts, Chief Financial Officer.

And now, I'd like to turn the conference over to Larry Roberts.

Executive
Laurance Roberts

Thank you, operator and good afternoon. By now everyone should have access to our fourth quarter 2019 (ph) earnings release. If not, it can be found at www.elpolloloco.com in the Investor Relations section.

Before we begin our formal remarks, I need to remind everyone that our discussions today will include forward-looking statements. These forward-looking statements are not guarantees of future performance and therefore, you should not put undue reliance on them. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect.

We refer all of you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. We expect to file our 10-K for the 2018 fiscal year tomorrow and we encourage you to review that document at your earliest convenience.

During today's call, we will discuss non-GAAP measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP, and reconciliations to comparable GAAP measures are available in our earnings release.

I'd now like to turn the call over to President and Chief Executive Officer, Bernard Acoca.

Executive
Bernard Acoca

Thanks, Larry. Good afternoon, everyone, and thank you all for joining us today. Our transformation agenda continued to drive momentum in the quarter, and I'm incredibly proud of our fourth quarter results. During the quarter, we achieved 4.4% system-wide comparable restaurant sales growth, which was our best system-wide result since the first quarter of 2015 and a two-year sales comp of 5.8%. We are proud that we drove these results by bringing more people into our restaurants, achieving system-wide comparable restaurant transaction growth of 2.3%. This quarter, we delivered restaurant operating profit margin of 18.7%, and pro forma EPS of $0.16 on an ongoing operating basis, up 45% over the comparable quarter last year.

This was all accomplished despite significant headwinds in the quarter in the form of California wildfires and avocado shortage, a spike in tomato prices and a nationwide recall by the CDC on romaine lettuce. In the hyper-competitive category, we achieved these results without engaging in the steep discounting of our competitors. In fact, we reduced the amount of discounting year-over-year, which is testament to the growing strength of our brand. We believe these results are evidence that the initiatives