Ark Restaurants Corp. (NASDAQ:ARKR) today reported financial
results for the fourth quarter and fiscal year ended September 28,
2024.
The Company’s fiscal year ends on the Saturday nearest September
30. The fiscal years ended September 28, 2024 and September 30,
2023 both included 52 weeks and the quarters ended September 28,
2024 and September 30, 2023 both included 13 weeks.
Financial Results
Total revenues for the 13 weeks ended September 28, 2024 were
$43,406,000 versus $44,400,000 for the 13 weeks ended September 30,
2023.
Total revenues for the year ended September 28, 2024 were
$183,545,000 versus $184,793,000 for the year ended September 30,
2023. As required by our lease, Gallagher's Steakhouse at the New
York-New York Hotel and Casino in Las Vegas, NV was substantially
closed for renovation in the prior period from February 5, 2023
through April 27, 2023 (the "Closure Period"). Revenues for the
comparable current period were $3,056,000 as compared to $1,068,000
for the Closure Period.
Company-wide same store sales decreased 3.6% for the 13 weeks
ended September 28, 2024 as compared to the same period of last
year. For the year ended September 28, 2024, company-wide same
store sales decreased 1.1% as compared to last year.
Net loss attributable to Ark Restaurants Corp. for the 13 weeks
ended September 28, 2024, was $(4,457,000) or $(1.24) per basic and
diluted share compared to a net loss of $(10,364,000) or $(2.88)
per basic and diluted share, for the 13 weeks ended September 30,
2023. The Company's Earnings before Interest, Taxes, Depreciation
and Amortization ("EBITDA"), as adjusted, for the 13 weeks ended
September 28, 2024 was $503,000 versus $585,000 for the 13 weeks
ended September 30, 2023 and excludes: (i) a loss on the closure of
El Rio Grande in the amount of $876,000 for the 13 weeks ended
September 28, 2024, (ii) non-cash goodwill impairment charges of
$4,000,000 and $10,000,000, respectively, for the 13 weeks ended
September 28, 2024 and September 30, 2023, and (iii) other items as
set out in the table below. EBITDA is a Non-GAAP Financial Measure.
Please see "Non-GAAP Financial Information" at the end of this news
release.
Net loss attributable to Ark Restaurants Corp. for the year
ended September 28, 2024, was $(3,896,000) or $(1.08) per basic and
diluted share compared to a net loss of $(5,928,000) or $(1.65) per
basic and diluted share, for the year ended September 30, 2023. The
Company's EBITDA, as adjusted, for the year ended September 28,
2024 was $6,128,000 versus $9,266,000 for the year ended September
30, 2023 and excludes: (i) a loss on the closure of El Rio Grande
of $876,000 in fiscal 2024, (ii) impairment losses on right-of-use
("ROU") and long-lived assets of $2,500,000 in fiscal 2024, (iii)
non-cash goodwill impairment charges of $4,000,000 and $10,000,000,
respectively, for the fiscal years ended 2024 and 2023, and (iv)
other items as set out in the table below. EBITDA is a Non-GAAP
Financial Measure. Please see "Non-GAAP Financial Information" at
the end of this news release.
As of September 28, 2024, the Company had cash and cash
equivalents of $10,273,000 and total outstanding debt of
$5,235,000.
Other Matters
Loss on the Closure of El Rio Grande
The Company advised the landlord of El Rio Grande we would be
terminating the lease and closing the property permanently on or
around January 1, 2025. In connection with this notification, the
Company recorded a loss of $876,000 during the year ended September
28, 2024 consisting of: (i) rent and other costs incurred in
accordance with the termination provisions of the lease in the
amount of $398,000, (ii) accrued severance and other costs in the
amount of $94,000, (iii) an impairment charge related to long-lived
assets in the amount of $269,000 and (iv) the write-off of our
security deposit in the amount of $238,000, all partially offset by
a gain related to the write-off of ROU assets and related lease
liabilities in the net amount of $123,000.
Impairment Losses on Right-of-Use and
Long-lived Assets
During the year ended September 28, 2024, impairment indicators
were identified at our Sequoia property located in Washington, D.C.
due to lower-than-expected operating results. Accordingly, the
Company tested the recoverability of Sequoia's ROU and long-lived
assets and concluded they were not recoverable. Based on a
discounted cash flow analysis, the Company recognized impairment
charges of $1,561,000 and $939,000 related to Sequoia's ROU assets
and long-lived assets, respectively. Given the inherent uncertainty
in projecting results of restaurants, the Company will continue to
monitor the recoverability of the carrying value of the assets of
Sequoia and several other restaurants on an ongoing basis. If
expected performance is not realized, further impairment charges
may be recognized in future periods, and such charges could be
material.
Goodwill Impairment
The Company's agreements with the Bryant Park Corporation (the
“Landlord”), (a private non-profit entity that manages Bryant Park
under agreements with the New York City Department of Parks &
Recreation) for the Bryant Park Grill & Cafe and The Porch at
Bryant Park expire on April 30, 2025. During July 2023 (for the
Bryant Park Grill & Cafe) and September 2023 (for The Porch at
Bryant Park), the Company received requests for proposals (the
"RFPs") from the Landlord to which we responded on October 26,
2023. The agreements offered under the RFPs for both locations are
for new 10-year agreements, with one five-year renewal option. Any
operator awarded the agreements must be approved by both the New
York City Department of Parks & Recreation and the New York
Public Library. To date, the landlord has not announced the
selection of a successful bidder; however, the landlord has made
public statements of its intention to select an operator other than
the Company. In response to these public statements and other
information obtained by the Company, management has engaged outside
advisors who have been assisting with our efforts to obtain the
extensions by ensuring the RFP awards process is both fair and
transparent. We intend to pursue all available options to protect
our interests.
As a result of the above and other factors, the Company
determined that there were indicators of potential impairment of
its goodwill and accordingly, the Company performed qualitative and
quantitative assessments for its goodwill as of September 28, 2024
and September 30, 2023. Based on the impairment analysis, the
carrying amount of our equity exceeded its estimated fair value,
which indicated an impairment of the carrying value of our goodwill
at September 28, 2024 and September 30, 2023. Accordingly, during
the fourth quarters of fiscal 2024 and 2023, the Company recorded
goodwill impairment charges of $4,000,000 and $10,000,000,
respectively. Such impairments have been attributed to factors such
as, but not limited to, a decrease in the market price of the
Company's common stock and lower than expected profitability.
Food Court at the Hard Rock Hotel and Casino
in Tampa, Florida
On November 26, 2024, the Company agreed to terminate its lease
for the food court at The Hard Rock Hotel and Casino in Tampa, FL.
The termination agreement is subject to the approval of the United
States Department of the Interior, Bureau of Indian Affairs. In
exchange for vacating the premises sometime in late December 2024,
Ark Hollywood/Tampa Investment LLC, a subsidiary of the Company,
(in which we own a 65% interest) will receive a termination payment
in the amount of $5,500,000 and all obligations under the lease
will cease. The Company expects to record a gain related to the
termination payment and it is expected that Ark Hollywood/Tampa
Investment LLC will distribute approximately 35% of the net
proceeds, after expenses, to the other equity holders of Ark
Hollywood/Tampa Investment LLC.
Conference Call and Webcast Information
Ark Restaurants will host a conference call on December 17, 2024
at 11:00 a.m. Eastern Time to review these results and discuss
other topics.
The call can be accessed by dialing toll-free 1-877-407-4018
(Toll/International: 1-201-689-8471).
A live listen-only webcast of the call will be available by
copying and pasting the following URL into your browser:
https://callme.viavid.com/viavid/?callme=true&passcode=13716421&h=true&info=company&r=true&B=6.
A replay will be available approximately three hours following the
call by dialing toll-free 1-844-512-2921 (Toll/International:
1-412-317-6671) using Access ID 13750617. The replay will be
available until Tuesday, December 24, 2024, 11:45 p.m. Eastern
Time.
About Ark Restaurants Corp.
Ark Restaurants owns and operates 17 restaurants and bars, 16
fast food concepts and catering operations primarily in New York
City, Florida, Washington, DC, Las Vegas, Nevada and the gulf coast
of Alabama. Four restaurants are located in New York City, one is
located in Washington, DC, five are located in Las Vegas, Nevada,
one is located in Atlantic City, New Jersey, four are located on
the east coast of Florida and two are located on the Gulf Coast of
Alabama. The Las Vegas operations include four restaurants within
the New York-New York Hotel & Casino Resort and operation of
the hotel's room service, banquet facilities, employee dining room
and six food court concepts and one restaurant within the Planet
Hollywood Resort and Casino. In Atlantic City, New Jersey, the
Company operates a restaurant in the Tropicana Hotel and Casino.
The Florida operations include the Rustic Inn in Dania Beach,
Shuckers in Jensen Beach, JB’s on the Beach in Deerfield Beach,
Blue Moon Fish Company in Lauderdale-by-the-Sea and the operation
of four fast food facilities in Tampa and six fast food facilities
in Hollywood, each at a Hard Rock Hotel and Casino operated by the
Seminole Indian Tribe at these locations. In Alabama, the Company
operates two Original Oyster Houses, one in Gulf Shores and one in
Spanish Fort.
Cautionary Note Regarding Forward-Looking Statements
Except for historical information, this news release contains
forward-looking statements, within the meaning of Section 27A of
the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended. These statements
involve unknown risks, and uncertainties that may cause the
Company's actual results or outcomes to be materially different
from those anticipated and discussed herein. Important factors that
might cause such differences are discussed in the Company's filings
with the Securities and Exchange Commission. The Company disclaims
any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise. Actual results could differ materially from those
anticipated in these forward-looking statements, if new information
becomes available in the future.
Non-GAAP Financial Information
This news release includes non-generally accepted accounting
principles ("GAAP") performance measures. Although EBITDA is not a
measure of performance or liquidity calculated in accordance with
GAAP, the Company believes the use of this non-GAAP financial
measure enhances an overall understanding of the Company's past
financial performance as well as providing useful information to
the investor because of its historical use by the Company as both a
performance measure and measure of liquidity, and the use of EBITDA
by virtually all companies in the restaurant sector as a measure of
both performance and liquidity. However, investors should not
consider this measure in isolation or as a substitute for net
income (loss), operating income (loss), cash flows from operating
activities or any other measure for determining the Company's
operating performance or liquidity that is calculated in accordance
with GAAP as it may not necessarily be comparable to similarly
titled measure employed by other companies.
ARK RESTAURANTS CORP.
Consolidated Statements of
Operations
(In Thousands, Except per share
amounts)
13 Weeks Ended
September 28,
2024
13 Weeks Ended
September 30,
2023
52 Weeks Ended
September 28,
2024
52 Weeks Ended
September 30,
2023
TOTAL REVENUES
$
43,406
$
44,400
$
183,545
$
184,793
COSTS AND EXPENSES:
Food and beverage cost of sales
12,007
12,152
49,519
49,624
Payroll expenses
15,875
17,295
65,844
66,322
Occupancy expenses
6,254
5,884
24,622
23,472
Other operating costs and expenses
5,892
5,940
24,125
23,498
General and administrative expenses
3,112
2,752
12,263
12,407
Depreciation and amortization
909
1,080
4,090
4,310
Loss on closure of El Rio Grande
876
—
876
—
Impairment losses on right-of-use and
long-lived assets
—
—
2,500
—
Goodwill impairment
4,000
10,000
4,000
10,000
Total costs and expenses
48,925
55,103
187,839
189,633
OPERATING LOSS
(5,519
)
(10,703
)
(4,294
)
(4,840
)
OTHER (INCOME) EXPENSE:
Interest expense, net
129
161
577
906
Other income
—
(26
)
(26
)
(52
)
Gain on forgiveness of PPP Loans
—
—
(285
)
(272
)
Total other (income) expense, net
129
135
266
582
LOSS BEFORE BENEFIT FOR INCOME TAXES
(5,648
)
(10,838
)
(4,560
)
(5,422
)
Benefit for income taxes
(613
)
(370
)
(815
)
(64
)
CONSOLIDATED NET LOSS
(5,035
)
(10,468
)
(3,745
)
(5,358
)
Net (income) loss attributable to
non-controlling interests
578
104
(151
)
(570
)
NET LOSS ATTRIBUTABLE TO ARK RESTAURANTS
CORP.
$
(4,457
)
$
(10,364
)
$
(3,896
)
$
(5,928
)
NET LOSS PER ARK RESTAURANTS CORP. COMMON
SHARE:
Basic
$
(1.24
)
$
(2.88
)
$
(1.08
)
$
(1.65
)
Diluted
$
(1.24
)
$
(2.88
)
$
(1.08
)
$
(1.65
)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING:
Basic
3,604
3,602
3,604
3,601
Diluted
3,604
3,602
3,604
3,601
EBITDA Reconciliation:
Loss before benefit for income taxes
$
(5,648
)
$
(10,838
)
$
(4,560
)
$
(5,422
)
Depreciation and amortization
909
1,080
4,090
4,310
Interest expense, net
129
161
577
906
EBITDA (a)
$
(4,610
)
$
(9,597
)
$
107
$
(206
)
EBITDA, adjusted:
EBITDA (as defined) (a)
$
(4,610
)
$
(9,597
)
$
107
$
(206
)
Non-cash stock option activity
(341
)
78
(919
)
314
Loss on closure of El Rio Grande
876
—
876
—
Impairment losses on right-of-use and
long-lived assets
—
—
2,500
—
Goodwill impairment
4,000
10,000
4,000
10,000
Gain on forgiveness of PPP Loans
—
—
(285
)
(272
)
Net (income) loss attributable to
non-controlling interests
578
104
(151
)
(570
)
EBITDA, as adjusted
$
503
$
585
$
6,128
$
9,266
(a)
EBITDA is defined as earnings before
interest, taxes, depreciation and amortization. A reconciliation of
EBITDA to the most comparable GAAP financial measure, pre-tax
income, is included above.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241216308516/en/
Anthony J. Sirica (212) 206-8800
ajsirica@arkrestaurants.com
Ark Restaurants (NASDAQ:ARKR)
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