JERICHO, N.Y., Nov. 3, 2017 /PRNewswire/ -- Nathan's
Famous, Inc. (NASDAQ: NATH) today reported results for the second
quarter of its 2018 fiscal year that ended September 24, 2017.
For the fiscal quarter ended September
24, 2017:
- Revenues were $31,606,000, as compared to $28,013,000 during the thirteen weeks ended
September 25, 2016;
- Income from operations was $8,734,000, as compared to $8,031,000 during the thirteen weeks ended
September 25, 2016;
- Adjusted EBITDA, as subsequently defined, was $9,257,000
as compared to $8,610,000 for the
thirteen weeks ended September 25,
2016;
- Net income was $3,120,000, as compared to $2,507,000 for the thirteen weeks ended
September 25, 2016;
- Earnings per diluted share was $0.74 per share, as compared to $0.60 per share for the thirteen weeks ended
September 25, 2016; and
- Excluding the tax benefits of stock compensation as described
below, net income and earnings per diluted share, would have been
$3,004,000 or $0.71 per share, as compared to $2,507,000 or $0.60
per share, as reported, for the thirteen weeks ended September 25, 2016.
For the twenty-six weeks ended September
24, 2017:
- Revenues were $62,524,000, as compared to $57,429,000 during the twenty-six weeks ended
September 25, 2016;
- Income from operations was $17,184,000, as compared to $16,855,000 during the twenty-six weeks ended
September 25, 2016;
- Adjusted EBITDA, as subsequently defined, was
$18,230,000 as compared to $17,976,000 for the twenty-six weeks ended
September 25, 2016;
- Net income was $6,042,000, as compared to $6,057,000 for the twenty-six weeks ended
September 25, 2016;
- Earnings per diluted share was $1.43 per share, as compared to $1.44 per share for the twenty-six weeks ended
September 25, 2016; and
- Excluding the tax benefits of stock compensation as described
below, net income and earnings per diluted share, would have been
$5,848,000 or $1.39 per share, as compared to $5,436,000 or $1.29
per share for the twenty-six weeks ended September 25, 2016.
The Company reported the following:
- License royalties increased to $13,165,000 during the twenty-six weeks ended
September 24, 2017, as compared to
$11,612,000 during the twenty-six
weeks ended September 25, 2016.
During the twenty-six weeks ended September
24, 2017, total royalties earned under the John Morrell
& Co., agreement from the sale of hot dogs, increased 13.6% to
$12,173,000, as compared to
$10,714,000 of royalties earned
during the twenty-six weeks ended September
25, 2016.
- In the Branded Product Program, featuring the sale of Nathan's
hot dogs to the foodservice industry, sales increased by 14.6% to
$36,067,000 during the twenty-six
weeks ended September 24, 2017,
compared to sales of $31,481,000
during the twenty-six weeks ended September
25, 2016. During the period, the volume of hot dogs sold
increased 11.0% and our average selling price increased by
approximately 3.3%. Income from operations from the Branded Product
Program declined by approximately $485,000 for the fiscal 2018 period as compared
to the fiscal 2017 period, as a result of a significant increase in
the cost of beef during May and June
2017.
- Sales from Company-operated restaurants were $10,805,000 during the twenty-six weeks ended
September 24, 2017, compared to
$11,458,000 during the twenty-six
weeks ended September 25, 2016. Sales
were impacted by unfavorable weather conditions during the fiscal
2018 period, especially at our two locations in Coney Island that
depend on beach traffic.
- Revenues from franchise operations were $2,487,000 during the twenty-six weeks ended
September 24, 2017, compared to
$2,664,000 during the twenty-six
weeks ended September 25, 2016. Total
royalties were $2,330,000 in the
fiscal 2018 period as compared to $2,402,000 in the fiscal 2017 period. Total
franchise fee income was $157,000
during the twenty-six weeks ended September
24, 2017 compared to $262,000
during the twenty-six weeks ended September
25, 2016. Twenty-seven new franchised outlets opened during
the twenty-six weeks ended September 24,
2017, including nine international locations, and 15 Branded
Menu Program outlets.
- Nathan's recognized excess tax benefits of $194,000 and $621,000 during the fiscal 2018 and fiscal 2017
periods, respectively, as a result of the tax benefits associated
with the stock compensation guidance that the Company adopted in
the fiscal 2017 period. The impact of the tax benefits reduced
Nathan's tax rate by 1.9% and 6.4%, respectively, and increased
earnings per diluted share by $0.04
and $0.15, during the fiscal 2018 and
fiscal 2017 periods, respectively.
- On November 1, 2017, Nathan's
issued $150.0 million 6.625% Senior
Secured Notes due 2025 to fund the November
16, 2017 redemption of its 10.000% Senior Secured Notes due
2020. Nathan's will incur additional expenses in connection with
the refinancing, including a 5% call premium of $6,750,000 along with expensing the unamortized
debt issuance costs of up to approximately, $2,725,000 associated with the 2020 Notes. The
Company also expects to incur additional interest expense of
approximately $562,500 from the time
the 2025 Notes close until the time the 2020 Notes are redeemed.
The Company expects to reduce its future annual interest expense by
approximately $3,562,500 per
annum.
- On November 1, 2017, the Board of
Directors declared the $5.00 per
share special cash dividend that is payable on January 4, 2018 to shareholders of record at the
close of business on December 22,
2017.
Certain Non-GAAP Financial Information:
In addition to disclosing results that are determined in
accordance with Generally Accepted Accounting Principles in
the United States of America ("US
GAAP"), the Company has provided EBITDA excluding (i) interest
expense; (ii) provision for income taxes and (iii) depreciation and
amortization expense. The Company has also provided Adjusted EBITDA
excluding (i) stock-based compensation that the Company believes
will impact the comparability of its results of operations.
The Company believes that EBITDA and Adjusted EBITDA are useful
to investors to assist in assessing and understanding the Company's
operating performance and underlying trends in the Company's
business because EBITDA and Adjusted EBITDA are (i) among the
measures used by management in evaluating performance and (ii) are
frequently used by securities analysts, investors and other
interested parties as a common performance measure.
EBITDA and Adjusted EBITDA are not recognized terms under US
GAAP and should not be viewed as alternatives to net income (loss)
or other measures of financial performance or liquidity in
conformity with US GAAP. Additionally, our definitions of EBITDA
and Adjusted EBITDA may differ from other companies. Analysis of
results and outlook on a non-US GAAP basis should be used as a
complement to, and in conjunction with, data presented in
accordance with US GAAP.
About Nathan's Famous
Nathan's is a Russell 2000 Company that currently distributes
its products in 50 states, the District
of Columbia, Puerto Rico,
the U.S. Virgin Islands,
Guam, and thirteen foreign
countries through its restaurant system, foodservice sales programs
and product licensing activities. Last year, over
600 million Nathan's Famous hot dogs were sold. Nathan's was
ranked #22 on the Forbes 2014 list of the Best Small Companies in
America and was listed as the Best Small Company in New York State in October 2013. For additional information about
Nathan's please visit our website at www.nathansfamous.com.
Except for historical information contained in this
news release, the matters discussed are forward looking statements
that involve risks and uncertainties. Words such as
"anticipate", "believe", "estimate", "expect", "intend", and
similar expressions identify forward-looking statements, which are
based on the current belief of the Company's management, as well as
assumptions made by and information currently available to the
Company's management. Among the factors that could cause
actual results to differ materially include but are not limited to:
the impact of our indebtedness, including the effect on our ability
to fund working capital, operations and make new investments;
economic; weather (including the impact on the supply of cattle and
the impact on sales at our restaurants particularly during the
summer months), and change in the price of beef trimmings; our
ability to pass on the cost of any price increases in beef and beef
trimmings; legislative and business conditions; the collectability
of receivables; changes in consumer tastes; the status of our
licensing and supply agreements, including the impact of our supply
agreement for hot dogs with John Morrell & Co.; the ability to
attract franchisees; the impact of the minimum wage legislation on
labor costs in New York State or
other changes in labor laws, including regulations which could
render a franchisor as a "joint employee" or the impact of our new
union contracts; our ability to attract competent restaurant and
managerial personnel; the enforceability of international
franchising agreements; and the future effects of any food borne
illness; such as bovine spongiform encephalopathy, BSE and e coli;
and the risk factors reported from time to time in the Company's
SEC reports. The Company does not undertake any obligation to
update such forward-looking statements.
Nathan's Famous,
Inc.
(unaudited)
|
|
Thirteen weeks
ended
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|
Twenty-six weeks
ended
|
|
Sept. 24,
2017
|
|
Sept. 25,
2016
|
|
Sept. 24,
2017
|
|
Sept. 25,
2016
|
Financial
Highlights
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$
31,606,000
|
|
$
28,013,000
|
|
$
62,524,000
|
|
$
57,429,000
|
|
|
|
|
|
|
|
|
Income from
operations (a)
|
$
8,734,000
|
|
$
8,031,000
|
|
$
17,184,000
|
|
$
16,855,000
|
|
|
|
|
|
|
|
|
Net income
|
$
3,120,000
|
|
$
2,507,000
|
|
$
6,042,000
|
|
$
6,057,000
|
|
|
|
|
|
|
|
|
Income per
share:
|
|
|
|
|
|
|
|
Basic
|
$
0.75
|
|
$
0.60
|
|
$
1.45
|
|
$
1.45
|
Diluted
|
$
0.74
|
|
$
0.60
|
|
$
1.43
|
|
$
1.44
|
|
|
|
|
|
|
|
|
Weighted-average
shares used in
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|
|
|
|
|
|
|
computing income per share:
|
|
|
|
|
|
|
|
Basic
|
4,179,000
|
|
4,172,000
|
|
4,178,000
|
|
4,169,000
|
Diluted
|
4,212,000
|
|
4,207,000
|
|
4,213,000
|
|
4,199,000
|
|
|
|
|
|
|
|
|
Select Segment
Information
|
|
|
|
|
|
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|
|
|
|
|
|
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|
Revenues
|
|
|
|
|
|
|
|
Branded product
program
|
$18,130,000
|
|
$15,277,000
|
|
$36,067,000
|
|
$31,696,000
|
Product
licensing
|
5,764,000
|
|
4,788,000
|
|
13,165,000
|
|
11,612,000
|
Restaurant
operations
|
7,712,000
|
|
7,948,000
|
|
13,292,000
|
|
14,121,000
|
Corporate
|
-
|
|
-
|
|
-
|
|
-
|
Total
Revenues
|
$31,606,000
|
|
$28,013,000
|
|
$62,524,000
|
|
$57,429,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
(b)
|
|
|
|
|
|
|
|
Branded product
program
|
$2,692,000
|
|
$2,496,000
|
|
$4,964,000
|
|
$5,449,000
|
Product
licensing
|
5,719,000
|
|
4,743,000
|
|
13,075,000
|
|
11,521,000
|
Restaurant
operations
|
2,335,000
|
|
2,602,000
|
|
3,230,000
|
|
4,035,000
|
Corporate
(c)
|
(2,012,000)
|
|
(1,810,000)
|
|
(4,085,000)
|
|
(4,150,000)
|
Income from operations
(b)
|
$8,734,000
|
|
$8,031,000
|
|
$17,184,000
|
|
$16,855,000
|
(a)
|
Excludes interest
expense, interest income, and other income, net.
|
(b)
|
Excludes interest
expense, interest income and other income, net which are managed
centrally at the corporate level, and, accordingly, such items are
not presented by segment since they are excluded from the measure
of profitability reviewed by the Chief Operating Decision
Maker.
|
(c)
|
Consists principally
of administrative expenses not allocated to the operating segments
such as executive management, finance, information technology,
legal, insurance, corporate office costs, incentive compensation
and compliance costs.
|
Nathan's Famous,
Inc. and Subsidiaries
Reconciliation of
Net Income to EBITDA and Adjusted EBITDA
|
|
|
|
|
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|
|
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Thirteen weeks
ended
|
|
|
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Twenty-six weeks
ended
|
|
|
Sept. 24,
2017
|
|
Sept. 25,
2016
|
|
Sept. 24,
2017
|
|
Sept. 25,
2016
|
|
|
|
(unaudited)
|
|
|
|
(unaudited)
|
|
|
EBITDA
|
|
|
|
|
|
|
|
|
Net Income
|
$
3,120,000
|
|
$
2,507,000
|
|
$
6,042,000
|
|
$
6,057,000
|
|
|
|
|
|
|
|
|
|
|
Interest
Expense
|
3,663,000
|
|
3,663,000
|
|
7,326,000
|
|
7,339,000
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
2,007,000
|
|
1,918,000
|
|
3,928,000
|
|
3,538,000
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
367,000
|
|
349,000
|
|
735,000
|
|
696,000
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
$
9,157,000
|
|
$
8,437,000
|
|
$
18,031,000
|
|
$
17,630,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
EBITDA
|
$
9,157,000
|
|
$
8,437,000
|
|
$
18,031,000
|
|
$
17,630,000
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
100,000
|
|
173,000
|
|
199,000
|
|
346,000
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
9,257,000
|
|
$
8,610,000
|
|
$
18,230,000
|
|
$
17,976,000
|
|
|
|
|
|
|
|
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|
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|
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COMPANY Ronald G.
DeVos, Vice President - Finance and CFO
CONTACT: (516) 338-8500 ext. 229
View original
content:http://www.prnewswire.com/news-releases/nathans-famous-inc-reports-second-quarter-results-300548996.html
SOURCE Nathan's Famous, Inc.