PACIFIC MANAGEMENT CONSULTING GROUP

Limitations of EBITDA as a Meaningful Financial Metric

In the restaurant finance world, the big number is the EBITDA—EBBADABADOO as some call it. EBITDA is earnings before interest, taxes, depreciation and amortization, and is really a sub-total to the income statement. It is earnings without any charges for cost of funds, taxes or capital spending.

EBITDA’s use began popularized as a credit metric, used in the 1980s M&A and credit analysis world—to test for adequacy of debt coverage. EBITDA is often the common denominator to track and report company buyout values:  the acquisition enterprise value to EBITDA ratio is a very commonly reported metric. So much so that that’s where the focus goes. And its use as a simple business valuation tool: the company is worth some multiple of EBITDA; the higher the multiple, the higher the price, and vice versa.

In the franchising space, where franchisors might report a simple EBITDA payback for an investment, or report EBITDA value in their franchise disclosure document item 19 section. The special problem there is this EBITDA is stated in terms of the restaurant level profit only—before overhead. Really, the problem is this: EBITDA doesn’t show the whole picture. It is a sub-total. It doesn’t show full costing.

EBITDA alone as the metric misses at least eight costs and expenses, that are vital to know, calculate and consider in operating and valuing the business as a cash and value producer.  Using a business segment such as a store, restaurant or hotel as an example, here are the eight required reductions to EBITDA that must be subtracted, listed in order of magnitude of the cash outlay, to really get to operating economic profit.

1. Interest expense:  the cost of the debt must be calculated. Interest is amount borrowed times the interest rate times the number of years. One can have rising EBITDA but still go broke.
2. Principal repayment:  the business cash flow itself should contribute to the ability to pay back the principal debt. That often is in a 5 or 7 year maturity note and is another very large cost that must be considered.
3. Future year’s major renovation/remodeling: once the storefront is built, it has to be renewed and refreshed in a regular cycle, often every 5-10 years, via capital expenditures (CAPEX). That often is 10-30% of the total initial investment, or more, over time.
4. Taxes, both state and federal. Financial analysis often is done on a pre-tax basis as there are so many complicating factors. But the reality is the marginal tax rate is about 40%.
5. New technology and business mandates: aside from the existing storefront that must be maintained, new technology, and new business innovation CAPEX must be funded to remain competitive. Example: new POS systems for restaurants, new technology for hotels.
6. 1. Overhead: if the EBITDA value is stated in terms of a business sub-component, like a store, or restaurant or hotel, some level of overhead contribution must be covered by the EBITDA actually generated. Generally, there are no cash registers in the back office, and it is a cost center.
   2. Maintenance CAPEX: for customer facing businesses (retailers, restaurants, hotels, especially) some renovation of the customer and storefronts must occur every year and does not appear in the EBITDA calculations.  New carpets, broken windows, you get the idea. In the restaurant space, a good number might be 2% of sales.
   3. And finally, new expansion must be covered by the EBITDA generation, to some level. New store development is often a requirement in franchise agreements, and new market development necessary. While new funds can be borrowed or inserted, the existing business must generate some new money for the expansion.     

   You might say…these other costs and expenses are common sense, they should show up in the detailed cash flow models that should be constructed. Or they can be pro-rata allocated. But how times does this really happen? The EBITDA metric becomes like the book title….or the bumper sticker that gets placed on the car. You really do have to read further or look under the hood. And the saying is true…whatever you think you see in EBITDA…you need more.

    

    

Restaurants Earning Fundamentals, Q2 2012:  Outstanding OPTEMPO

In watching the Q2 2012 restaurant space earnings, six brands interested us by exhibiting what we define as outstanding operating tempo (OPTEMPO). Not only significant EPS beats of $.02 or more (meets or a penny over doesn’t excite us much), but also positive traffic and positive early peek Q3 trends—that early Q3 trend prerelease info that some companies give. This quarter’s entire group has performed well recently.

• Brinker (EAT)
• Texas Roadhouse (TXRH)
• Ruth Chris (RUTH)
• Popeye’s (AFCE)
• Panera (PNRA)
• Papa John’s (PZZA)

Common Denominators: Two casual dining operators, one fine dine operator, one bakery/café, one QSR pizza, one Chicken QSR operator. Two of the six are steak centric (RUTH, TXRH), with one other making inroads into higher steak menu mix (EAT).  No big restaurant conglomerates (ala’ DRI) involved, but of the two with two brands under the HOLDCO, one brand greatly predominates over the other (EAT: Chill’s v. Maggiano’s) and RUTH (Ruth Chris v. Mitchell’s).

• Steak centric: we noted in 2011 that steak centric operators did well, no doubt by the improving travel/expense account traffic. RUTH’s peer, DelFrisco (DFRG) via its first call since IPO noted +SSS of 5.1% and traffic of +2.2% at the flagship Double Eagle units.
• Positive traffic and early peek looks: All had positive traffic—RUTH greatest at +3.9%; AFCE and PZZA don’t reveal traffic/check but one can so deduce it was positive).
• All had consensus earnings move up $.02 or more over the last 90 days—PNRA highest at +$.11, PZZA +$.09, EAT +$.07. Three of the six had 5 analysts or less providing estimates, with PNRA, TXRH and EAT well in double digit analyst coverage territory.
• None of these chains had eyeball high debt. Interestingly, none of the chains was actively refranchising, all were growing company units, with even franchisee heavy AFCE planning a significant slug of new company units.

Four of the six chains (RUTH, AFCE, PNRA, PZZA) had positive free cash flow increases from quarter to quarter. EAT and TXRH free cash flow was off from prior year but EAT is doing heavy duty remodels (and is still a huge cash generator) and TXRH is building new units.

Price/earnings ratios: only RUTH cheap but…

John A. Gordon

September, 2012

Restaurant Margins:  Rising Food Commodity Costs are Workable

Looking into 2013, there is no doubt that rising food commodity costs will have an effect on restaurants. The effect of the US drought, global economic, currency, weather and supply/demand conditions will have negative margin effects. All of the proteins will be difficult, especially beef and chicken. Coffee and vegetable oil are among the few food groups lower.

The cost effect will be felt in 2013, and beyond.  This comes on top of an up/down/up cycle from 2007. Depending on concept, restaurant cost of goods sold is typically 30-40% of revenue, the largest expense. Restaurants might cover moderate levels of food inflation, but if labor or other operating costs rise, and if revenues fall and produce deleverage of fixed costs, a real problem exists.

We think the ‘low hanging fruit’, the easier to implement, plate centered cost savings actions have already been taken.  Many restaurants have already reacted, in the recessionary 2008-2009 period by trimming portions and prices and by featuring lower cost per pound items and “small plates” in their menu and promotional mix. CKE Restaurants, for example, rolled out turkey burgers, and pork, lobster, chicken and other items have been periodically featured elsewhere. PF Chang’s implemented expansive happy hour food and alcohol offerings.

Many restaurants have already attacked staffing costs mercilessly, such as Darden, which eliminated bussers nationwide, expanded tip credit and is recertifying servers in massive workforce reorganization. Sonic (SONC) expanded the tip credit, lowered wages for some and rolled out car hops on roller skates to enhance service (and tips).

What to do? The show must go on of course.  Other than price increases, which always has to be considered in relation to competitors and customers, more work on menu mix and the rest of the P&L has to be considered. Here are some ideas from our travel and research.

More work towards developing store, zone, and regional pricing tiers needed: most US restaurant chains grew out of a 1960s/1970 culture of mass conformity. It is what the newly traveling public demanded in reaction to inconsistent restaurants in the 1940s-1960s.  The US today is has a far more diverse population, competition, operating cost and real estate characteristics.  Pricing really need not be the same everywhere in every location, either in a DMA or in a region. Ask ABC stores, the famous convenience retailer in Hawaii how they invented store level pricing. Does a Subway customer expect exactly the same price to the penny for a sub everywhere in a DMA?

Restaurant management systems and today’s analytics really are sophisticated enough to handle tiers of pricing. For example, one of Burger King’s (BKW) international high volume markets do not use the same lowball price tactics and is not the worse for wear.

Wendy’s (WEN) is still testing sub-DMA and store pricing tiers and we hope they continue and set the example for more industry innovation in this area.

Mass television campaigns can be much more carefully conceptualized. This is where the rub really comes. Conventional marketing theory holds that price specific advertising works better than “culinary” or other message focused advertising. Example; see Darden’s recent Q4 2012 earnings explanations of the Olive Garden sales softness.

Do restaurants advertise price so much because of the media mix? We bet that the vast body of 15 second TV spots that are aired can only work with price point appeals. And research has shown 15 second spots aren’t half the cost nor have the effect of 30 second spots. Has there been a holistic cost/benefit analysis done between media mix cost and media driven price and mix at the restaurant level? Is some more optimal 15 second or the 30 second spot mix more effective?

And what about $1/$2/$5/etc. off marketing features? That way no specific price baseline must be noted.

What is done with mass television campaigns and repositioning has to be tested. Just must. There is much less time, money and customers for massive redos. Ask Ron Johnson and JC Penney’s (JCP) about the cost of customer confusion in the wake of their massive repositioning (and the negative 20% same store sales resulting), that we understand was not pre-tested.

Suggestive selling at the store level always needs a lot of work.  While few of us really likes to sell, renewed emphasis to not downsell once the customer is in the store (“oh…would you like the coupon offer?” or ban the comment “is that all” have to be helpful. There can be at least one universal tradeup question that even a shy person could ask over the drive thru.

This problem is the greatest in the QSR and fast casual subsegments but not zero among casual dining operators.

Get the remodel funding in place. Some franchisee centric chains which haven’t remodeled because of sub-par unit economics will be under severe strain. Now is the time now to strengthen system fundamentals and get franchisee financial assistance support processes in place.  Papa John’s (PZZA) gets it, and has done so, but Domino’s (DPZ) hasn’t broken that code yet.

Finally, there are other cost savings possible. My favorite is utility costs, particularly that of electricity (air conditioning) and water. Have you ever been in a restaurant where it was freezing cold after dark, or on a chilly day? There is a reason.

John A. Gordon

September, 2012

Why CKE postponed its IPO

Analysts, industry experts weigh in on what caused the Carl’s Jr. and Hardee’s parent to postpone its initial public offering

August 10, 2012 | By Lisa Jennings

Concerns on Wall Street over restaurant industry health, recently fueled by a sales miss from McDonald’s, may be to blame for CKE Restaurants’ decision to postpone its initial public offering, according to various sources.

The planned IPO that was set to begin trading on Friday was called off late Thursday “due to market conditions,” CKE said.

The Carpinteria, Calif.-based company operates or franchises 3,263 restaurants under the Carl’s Jr. and Hardee’s brand names. The company had hoped to raise more than $200 million with an offering of 13.3 million shares of common stock priced between $14 and $16 per share.

A report on Thursday by the International Franchising Review, an online publication of Thomson Reuters Capital Markets Publishing, said CKE owner Apollo Management turned down an offer presented by the underwriting banks because it was too low.

According to the report, which did not name sources, the offer by joint underwriters Morgan Stanley, Citigroup and Goldman Sachs was believed to be $10 per share. Earlier, the banks had communicated investor interest in the $10 to $11 range.

Two days before CKE’s IPO was scheduled, Outback Steakhouse parent Bloomin’ Brands Inc. went to market with stock priced at $11 — well below the previous target of $13 to $15 per share. The size of the offering was also reduced to 16 million from the 21 million initially stated, and, though the stock price climbed through the week, some saw the situation as an indicator that investor interest in the restaurant space was cooling.

“For it to be priced below [the target range] and for it to be undersubscribed, that tells you a lot about that market,” said Conrad Lyon, securities analyst with B. Riley & Co. in Los Angeles. “The appetite probably just wasn’t there.”

Observers disagree, however, about the “market conditions” that might be scaring investors off.

On the same day as Bloomin’ Brands’ IPO, McDonald’s reported that its global same-store sales in July were not positive for the first time in years. The quick-service leader reported that same-store sales fell 0.1 percent among U.S. locations, 0.6 percent in Europe and 1.5 percent in Asia Pacific, Middle East and Africa.

Analysts blamed weakness in the global economy but also stiffer competition from competitors like Wendy’s, Burger King and Taco Bell, all of which have shown improving results.

Concerns about beef prices next year may also have been a factor in the postponement of CKE, according to International Franchising Review.

In earnings reports in recent weeks, several public companies said ground beef prices were expected to be favorable for the rest of this year as cattle are sent to slaughter because they are becoming too expensive to feed with the drought in the Midwest putting increasing pressure on corn prices. The long-term result, however, will be even higher beef prices next year, as it takes time to rebuild herd counts.

Others said investors may simply have had enough of restaurant IPOs after a busy year so far. “The client base only has so many bullets to shoot at restaurant investments, and those bullets have been fired already,” said Lyon.

CKE’s planned IPO would have been the fifth this year, following those from Bloomin’ Brands, Chuy’s Holdings Inc., Del Frisco’s Restaurant Group and Ignite Restaurant Group.

Dunkin’ Brands Group Inc. also on Friday announced a secondary offering of 21.7 million shares by stockholders. Last year, Dunkin netted about $423 million with an IPO, selling 22.25 million shares for $19 per share, which was higher than the range initially set at $16 to $18 per share.

John Gordon, principal of Pacific Management Consulting Group, said CKE’s large debt load may also have scared off potential investors. CKE was acquired in 2010 by Apollo Management in a $700 million deal. The company was planning to use income from the IPO in part to reduce net debt of $654 million to a projected $590 million.

Since going private, Carl’s Jr. and Hardee’s have not been able to show strong signs of turnaround, as competitors Wendy’s, Burger King and Taco Bell have shown. CKE’s blended same-store sales rose 2.6 percent in the first quarter, which was “okay, nothing exciting,” Gordon said.

CKE has a growth story to tell, Gordon noted, with plans to grow overseas and into the as-yet underpenetrated Northeast. However, those factors were not enough to overcome the changing outlook for restaurant stocks, which looks very different today than it did in May, when CKE first announced its IPO plans.

“There’s no doubt things are looking worse now than they were in the spring,” he said.

However, he added, investor outlooks are cyclical. “Investor sentiments tend to bounce back and forth between quick service and casual dining,” said Gordon. “And when the economy softens, investors start favoring QSR again.”

The question remains when, if at all, the IPO may still happen, if market conditions improve. Company officials said they could not comment on potential timing.

The planned IPO was based on first-quarter numbers, and the company will likely have to re-file based on second-quarter results, which won’t be released until mid to late September.

Contact Lisa Jennings at lisa.jennings@penton.com.
Follow her on Twitter: @livetodineout

Chuy’s IPO leads way for new restaurants on Wall Street

July 24, 2012 | By Ron Ruggless

Chuy’s Holdings Inc., the casual-dining Mexican restaurant operator, debuted on the public market Tuesday, bucking a down market to close up 15.9 percent.

The 36-unit Austin, Texas-based company offered 5.8 million shares at $13 each, the top end of its forecasted price offering between $11 and $13 per share. The stock closed Tuesday at $15.06, boding well for upcoming restaurant public stock offerings, including Southlake, Texas-based Del Frisco’s Restaurant Group, which is scheduled to debut on the market Friday.

In comparison to Chuy’s first-day spike Tuesday, the Dow fell 0.8 percent and Nasdaq fell 0.9 percent. Wall Street darlings like Chipotle and McDonald’s were also hit hard by investors as the companies reported depressed sales and earnings news.

Proceeds from Chuy’s offering will be used to pay down debt and add new restaurants, Steve Hislop, chief executive of Chuy’s, said in an interview with Nation’s Restaurant News after the chain debuted on the Nasdaq market.

Restaurants take to Wall Street

With Wall Street headed into the doldrums of August, John A. Gordon, principal of Pacific Management Consulting Group, said companies wanting to go public try to squeeze in public offerings “before the usual summer Street slowdown.”

Gordon cited Bain Capital, in the news now as presumptive GOP presidential candidate Mitt Romney’s former company, as doing its IPOs in late July. “The real market slowdown now couldn’t be anticipated 120 days ago,” Gordon said in an email, “so it’s all about the vacation break.”

Market-wide, five IPOs went up last week and eight are scheduled this week, including two restaurant companies — Chuy’s Holdings and Del Frisco’s Restaurant Group.

Del Frisco’s, which operates the Double Eagle Steak House brand as well as the Sullivan’s Steakhouse and the newer Del Frisco’s Grille, said it plans to sell 7 million shares at between $14 and $16 per share. Del Frisco’s plans to offer 4.3 million shares and parent company LSF5 Wagon Holdings LLC, which is owned by Lone Star Funds, will offer 2.7 million shares.

The company, which tried to go public in 2007 but withdrew its application in December 2008, again filed for an IPO of up to $100 million in January this year.

Other public offerings in the wings are those from Outback Steakhouse parent OSI Restaurants of Tampa, Fla., which said in April that it will change its name to Bloomin’ Brands and seek a $345 million IPO. Cheddar’s Casual Café of Irving, Texas, which used a provision under the Jumpstart Our Business Startups Act to file confidentially for its IPO in May, is also on the blocks. Dallas-based Dave & Buster’s Entertainment Inc. filed for an IPO in 2011, but it has yet to come to market.

CKE Inc., which operates the Carl’s Jr. and Hardee’s burger chains, had filed for an initial public offering of up to $100 million in May and on Monday said it now expects to raise as much as $230 million. CKE was taken private by Apollo Management in a $700 million deal in 2010.

Shares in Ignite Restaurant Group of Houston, which owns the 127-unit Joe’s Crab Shack and the 16-unit Brick House Tavern + Tap, went public in a $83.8 million offering in May. The company’s stock lost more than 20 percent of its value last week when the company announced it would have to restate financial statements for 2009 to 2011, and the first quarter of 2012, because of accounting issues with fixed assets and depreciation expenses.

Chuy’s future as a public company

The casual-dining chain most recently opened a unit in Gainesville, Fla., and is looking to back fill markets in Texas and Oklahoma, as well to colonize new ones such as Atlanta, Birmingham, Ala., and Louisville, Ky.

Hislop said the company, founded in Austin in 1982, expects future units to follow the non-cookie-cutter approach. “We’re going to follow our motto of ‘If you’ve seen one Chuy’s, you’ve seen one Chuy’s,’” Hislop said.

Current units range from 7,000 to 12,000 square feet, and Hilsop said the lower end is likely to be the target for future development.

The chain’s menu of burritos, enchiladas and fajitas produces a per person check average of $12.99, Hislop said, “which makes us very affordable.” The concept’s emphasis on rock ‘n’ roll music and in-store Elvis altars also positions Chuy’s differently than many Tex-Mex operations, Hislop said.

Analysts link 2Q Chipotle sales slowdown to Taco Bell success

July 23, 2012 | By Lisa Jennings

A slowing of sales at Chipotle Mexican Grill in the second quarter sparked debate among Wall Street analysts and observers that Taco Bell’s new Doritos Locos Tacos may be to blame.

Taco Bell introduced the new taco line, which feature shells made with nacho cheese-flavored Doritos, in March, and the product has been hailed as one of the company’s most successful. Last week, parent company Yum! Brands Inc. attributed a 13-percent increase in Taco Bell’s same-store sales during its second quarter to the launch of Doritos Locos Tacos.

Meanwhile, Chipotle last week reported a less-than-expected same-store sales increase of 8 percent during its second quarter — a slip after seven consecutive quarters of double-digit same-store sales.

Though Chipotle’s results overall were enviable, including a 61-percent increase in profit and a 21-percent gain in revenue, the chain’s typically high-sailing stock price took a plunge, losing nearly a quarter of its value on Friday.

In a call with analysts last week, Chipotle blamed the sluggish economy and difficult two-year comparisons. In reports, however, Wall Street analysts pointed to a possible correlation between Taco Bell’s same-store sales rise and Chipotle’s relative fall.

“We believe Taco Bell’s resurgence — at four times the number of units and three times the amount of system U.S. sales — may have had some impact on Chipotle,” wrote John Ivankoe of J.P. Morgan, who attributed Taco Bell’s lift to the “decidedly un-Chipotle-like” Doritos Locos Tacos.

Ivankoe warned that Taco Bell’s new Cantina Bell menu, which launched July 5, at the beginning of Chipotle’s third quarter, was a more “direct competitive move.”

The Cantina Bell menu was designed by celebrity chef Lorena Garcia and includes a line of bowl or burrito options with new ingredients for Taco Bell that evoke the style of Chipotle — though they are more similar to what might be found on the menu at other fast-casual competitors, such as Baja Fresh Mexican Grill or Qdoba Mexican Grill.

Taco Bell’s’ Cantina Bell offerings, however, are positioned at under $5 — a premium offering for the quick-service Taco Bell, but a value position compared with Chipotle and others.

Mark Kalinowski of Janney Capital Markets noted, “There is not a ton of overlap between Chipotle’s customer base and Taco Bell’s customer base.”

Still, he also warned of the Cantina Bell threat, citing “industry sources” who said the new menu is “off to a great start in terms of sales.” He quoted one Taco Bell franchisee who credited the Cantina Bell menu for double-digit same-store sales increases since the launch, which has been heavily promoted.

“While we do not expect the vast majority of this business to come at Chipotle’s expense,” Kalinowski wrote, “it is possible that it might take a bit of business from Chipotle at the margins. And, given the high valuation multiples Chipotle receives, we want to be mindful of this risk to Chipotle’s sales trends, particularly in regards to the third quarter.”

John Gordon, principal of San Diego-based Pacific Management Consulting Group, however, does not believe that Chipotle fans suddenly jumped ship for a taco shell made of Doritos.

You just don’t change people’s thought patterns and preferences that quickly,” he said. “You’re looking at different customers. Chipotle customers are younger, and Taco Bell draws from a totally different demographic.”

Taco Bell’s impressive jump in same-store sales was likely in part because the chain had been lacking in “new menu news” for some time.

Just as Burger King saw same-store sales rise significantly after announcing its menu revamp earlier this year, it should be no surprise that Taco Bell would see an “outside bump,” he said.

David Tarantino of Baird Equity Research warned that Chipotle’s disappointing same-store-sales trends should not necessarily be seen as an indicator, saying his firm’s surveys of fast-casual chains do not suggest a broad-based pullback on consumer spending.

Tarantino said the slowdown was likely company-based, possibly because of the tougher multi-year comparisons, as well as extreme heat conditions that might suppress the appetite for burritos and aggressive promotions by other quick-service competitors, though he did not specify Taco Bell.

Though growth might be slower in the third quarter, Tarantino and others encouraged investors to take advantage of Chipotle’s lower stock price as an opportunity to get in on what will likely be long-term earnings growth.

“We still consider Chipotle’s top-line growth prospects among the best in the industry,” wrote Stephen Anderson, senior analyst for Miller Tabak + Co. LLC.

Read more: http://nrn.com/article/analysts-link-2q-chipotle-sales-slowdown-taco-bell-success?page=0,1#ixzz22cKXLRQw

Yum’s new menu items spur optimism

A look at how recent menu rollouts from KFC, Taco Bell and Pizza Hut could affect Yum’s performance

July 12, 2012 | By Mark Brandau

While the economies of its international growth markets, especially China, may be slowing down, Yum! Brands Inc. is going to market in the United States with new-product news that may bolster the domestic portions of its earnings, which the company will report next Wednesday.

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During the past several weeks, the company’s three brands — KFC, Taco Bell and Pizza Hut — have each rolled out new products that star in comprehensive marketing campaigns. The wave of menu innovation comes at a time when economists fear international markets, which generate 65 percent of Yum’s operating profit, could falter from recently reliable and robust growth.

China, Yum’s key market, could be a particular concern. An Associated Press story reported Thursday that the country’s economy might only grow an expected 7.3 percent. While it would be an enviable figure for the United States economy, a growth rate below 8 percent would mark one of the lowest quarterly expansions in several years and signal weakening demand and consumer confidence.

Austerity measures, a possible banking crisis and depressed consumer confidence also could hamper Yum’s outlook in its Yum Restaurants International division.

If Yum were to look to the United States to make up some of the sales slack, recent performance and new products could be reason for optimism. After same-store sales for its domestic system fell 1 percent for fiscal 2011, they rebounded with a 5-percent increase in the first quarter of 2012.

John Gordon, principal of San Diego-based Pacific Management Consulting Group, an analysis and advisory firm focused on restaurant chains, said Yum should be able to win back sales and trial with its new offerings, provided the company makes up for lost time in the United States and stays aggressive in its advertising.

“I don’t understand why their new-product development has been so slow in the United States,” he noted. “This business is fundamentally driven by new-product news. … I’m impressed they have this new news rolling ahead, but they’ve got to sustain that and have to support it with good media. You need to bang on that drum for at least a year to get people’s involvement with the products up.”

Take a look at some the most recent menu rollouts from KFC, Taco Bell and Pizza Hut, as well as analysis of how the offerings could affect Yum’s performance.

Read more: http://nrn.com/article/yums-new-menu-items-spur-optimism#ixzz22RcPm568