Nathan's Famous, Inc. Reports Year End and Fourth Quarter Results
08 June 2023 - 10:30PM
Nathan's Famous, Inc. (NASDAQ:NATH) today reported results for its
fiscal year and fourth quarter ended March 26, 2023.
Effective June 8, 2023, the Board of Directors
declared its first quarterly cash dividend for fiscal 2024 of $0.50
per share, which is payable on June 28, 2023 to shareholders of
record at the close of business on June 20, 2023.
For the fiscal year ended March 26, 2023:
- Revenues were $130,785,000 for the
fifty-two weeks ended March 26, 2023 (“fiscal 2023”) as compared to
$114,882,000 for the fifty-two weeks ended March 27, 2022 (“fiscal
2022”);
- Income from operations was
$34,445,000 for fiscal 2023 as compared to $29,863,000 for fiscal
2022;
- Adjusted EBITDA1 for fiscal 2023, a
non-GAAP financial measure, was $36,383,000 as compared to
$31,153,000 for fiscal 2022;
- In connection with the redemption
of $30,000,000 in aggregate principal amount of our 6.625% Senior
Secured Notes due 2025 on March 21, 2023, the Company recorded a
loss on debt extinguishment of $357,000, or $261,000, net of tax,
or $0.06 per diluted share. As a result of such redemption, the
Company expects to reduce its future cash interest expense by
$1,987,000 per annum;
- Income before provision for income
taxes was $26,804,000 for fiscal 2023 as compared to $18,536,000
for fiscal 2022;
- Net income was $19,623,000 for
fiscal 2023 as compared to $13,596,000 for fiscal 2022; and
- Earnings per diluted share was
$4.80 per share for fiscal 2023 as compared to $3.30 per share for
fiscal 2022.
For the thirteen weeks ended March 26, 2023:
- Revenues were $27,414,000 for the
thirteen weeks ended March 26, 2023 (“fourth quarter fiscal 2023”)
as compared to $24,772,000 for the thirteen weeks ended March 27,
2022 (“fourth quarter fiscal 2022”);
- Income from operations was
$6,419,000 for the fourth quarter fiscal 2023 as compared to
$6,109,000 for the fourth quarter fiscal 2022;
- Adjusted EBITDA1 for the fourth
quarter fiscal 2023, a non-GAAP financial measure, was $7,096,000
as compared to $6,414,000 for the fourth quarter fiscal 2022;
- Income before provision for income
taxes was $4,353,000 for the fourth quarter fiscal 2023 as compared
to $2,621,000 for the fourth quarter fiscal 2022;
- Net income was $3,265,000 for the
fourth quarter fiscal 2023 as compared to $2,158,000 for the fourth
quarter fiscal 2022; and
- Earnings per diluted share was
$0.80 per share for the fourth quarter fiscal 2023 as compared to
$0.52 per share for the fourth quarter fiscal 2022.
The Company also reported the following:
- License royalties increased to
$33,455,000 during fiscal 2023, as compared to $31,824,000 during
fiscal 2022. During fiscal 2023, royalties earned under the retail
agreement, including the foodservice program, from Smithfield
Foods, Inc., increased 4% to $29,998,000, as compared to
$28,970,000 of royalties earned during fiscal 2022 due primarily to
a 7% increase in the average net selling price on which our
royalties are calculated.
- In the Branded Product Program,
which features the sale of Nathan’s hot dogs to the foodservice
industry, sales increased by $12,562,000 to $78,884,000 during the
fiscal 2023 period as compared to $66,322,000 during the fiscal
2022 period. The volume of hot dogs sold by the Company increased
by approximately 15%. Our average selling price, which is partially
correlated to the beef markets, increased by approximately 4%
compared to the prior year period. Income from operations increased
by $2,577,000 to $8,976,000 during fiscal 2023 as compared to
$6,399,000 during fiscal 2022. Our Branded Product Program
customers, including professional sports arenas, amusement parks,
shopping malls and movie theaters experienced stronger attendance
contributing to an increase in sales over the prior year comparable
period.
- Sales from Company-owned
restaurants were $12,161,000 during fiscal 2023, as compared to
$10,905,000 during fiscal 2022. The increase was primarily due to
an increase in customer traffic especially at our two Coney Island
locations.
- Revenues from franchise operations
were $4,292,000 during fiscal 2023 as compared to $3,859,000 during
fiscal 2022. Total royalties were $3,636,000 during fiscal 2023 as
compared to $3,304,000 during fiscal 2022. Total franchise fee
income, including cancellation fees, was $656,000 during fiscal
2023 as compared to $555,000 during fiscal 2022. The increase in
franchise fees and royalties during the fiscal 2023 period was
primarily due to an increase in franchise restaurant sales of
$11,420,000 to $63,739,000 as compared to $52,319,000 during fiscal
2022.2 Eleven new franchised locations opened during fiscal
2023, including three Branded Menu Program locations.
- Advertising revenue was $1,993,000
during fiscal 2023 as compared to $1,972,000 during fiscal
2022.
- The Company previously announced an
11% increase in its regular quarterly cash dividend to $0.50 per
share. The Company believes that its strong liquidity supports this
increase, while still providing flexibility to invest in the
business.
- On March 3, 2023, the Company paid
the $0.50 per share regular cash dividend that was declared by the
Board of Directors effective February 2, 2023 to shareholders of
record at the close of business of February 21, 2023.
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
is disclosing EBITDA, a non-GAAP financial measure which is defined
as net income, excluding (i) interest expense; (ii) provision for
income taxes and (iii) depreciation and amortization expense. The
Company is also disclosing Adjusted EBITDA, a non-GAAP financial
measure which is defined as EBITDA, excluding (i) loss on debt
extinguishment, (ii) loss on disposal of property and equipment and
(iii) share-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 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. Please see the table at the end of this
press release for a reconciliation of EBITDA and Adjusted EBITDA to
net income.
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 eighteen foreign countries through
its restaurant system, foodservice sales programs and product
licensing activities. For additional information about Nathan’s
Famous, please visit our website at www.nathansfamous.com.
Except for historical information contained in
this news release, the matters discussed are 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, 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 the COVID-19 pandemic; increases in the cost of food and
paper products; the impact of price increases on customer visits;
the status of our licensing and supply agreements, including our
licensing revenue and overall profitability being substantially
dependent on our agreement with Smithfield Foods, Inc.; the impact
of our debt service and repayment obligations under the 2025 Notes,
including the effect on our ability to fund working capital,
operations and make new investments; economic (including
inflationary pressures like those currently being experienced);
weather (including the impact on sales at our restaurants
particularly during the summer months), and changes 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 continued viability of Coney Island as a destination
location for visitors; 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 union contracts; our ability to attract competent restaurant
and managerial personnel; the enforceability of international
franchising agreements; 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.
___________________________1 EBITDA and Adjusted EBITDA are
non-GAAP financial measures. Please see the definitions of EBITDA
and Adjusted EBITDA on page 3 of this release and the
reconciliation of EBITDA and Adjusted EBITDA to net income in the
table at the end of this release. 2 Franchise restaurant sales are
not revenues of the Company and are not included in the Company’s
Consolidated Financial Statements.
|
Nathan's
Famous, Inc. and Subsidiaries |
|
|
|
|
|
Thirteen weeks ended |
|
Fiscal year ended |
|
Mar. 26, 2023 |
|
Mar. 27, 2022 |
|
Mar. 26, 2023 |
|
Mar. 27, 2022 |
Financial Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
$ |
27,414,000 |
|
|
$ |
24,772,000 |
|
|
$ |
130,785,000 |
|
|
$ |
114,882,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from operations (a) |
$ |
6,419,000 |
|
|
$ |
6,109,000 |
|
|
$ |
34,445,000 |
|
|
$ |
29,863,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
$ |
3,265,000 |
|
|
$ |
2,158,000 |
|
|
$ |
19,623,000 |
|
|
$ |
13,596,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.80 |
|
|
$ |
0.52 |
|
|
$ |
4.80 |
|
|
$ |
3.30 |
|
Diluted |
$ |
0.80 |
|
|
$ |
0.52 |
|
|
$ |
4.80 |
|
|
$ |
3.30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used in |
|
|
|
|
|
|
|
|
|
|
|
computing income per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
4,080,000 |
|
|
4,115,000 |
|
|
4,089,000 |
|
|
4,115,000 |
|
Diluted |
4,086,000 |
|
|
4,115,000 |
|
|
4,090,000 |
|
|
4,115,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Select Segment Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
Branded
product program |
$17,022,000 |
|
|
$14,362,000 |
|
|
$78,884,000 |
|
|
$66,322,000 |
|
Product
licensing |
7,391,000 |
|
|
7,606,000 |
|
|
33,455,000 |
|
|
31,824,000 |
|
Restaurant operations |
2,512,000 |
|
|
2,269,000 |
|
|
16,453,000 |
|
|
14,764,000 |
|
Corporate
(b) |
489,000 |
|
|
535,000 |
|
|
1,993,000 |
|
|
1,972,000 |
|
Total Revenues |
$27,414,000 |
|
|
$24,772,000 |
|
|
$130,785,000 |
|
|
$114,882,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from operations (c) |
|
|
|
|
|
|
|
|
|
|
|
Branded
product program |
$1,973,000 |
|
|
$1,303,000 |
|
|
$8,976,000 |
|
|
$6,399,000 |
|
Product
licensing |
7,345,000 |
|
|
7,561,000 |
|
|
33,273,000 |
|
|
31,642,000 |
|
Restaurant operations |
(195,000 |
) |
|
(311,000 |
) |
|
1,684,000 |
|
|
312,000 |
|
Corporate
(d) |
(2,704,000 |
) |
|
(2,444,000 |
) |
|
(9,488,000 |
) |
|
(8,490,000 |
) |
Income from operations (c) |
$6,419,000 |
|
|
$6,109,000 |
|
|
$34,445,000 |
|
|
$29,863,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
- Excludes loss on debt
extinguishment, interest expense, interest income, and other
income, net.
- Represents Advertising Fund
revenue.
- Excludes loss on debt
extinguishment, 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.
- 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,
compliance costs, and the operating results of the advertising
fund.
|
Nathan's
Famous, Inc. and SubsidiariesReconciliation of Net
Income to EBITDA and Adjusted EBITDA |
|
|
|
|
|
Thirteen weeks ended |
|
Fiscal year ended |
|
Mar. 26, 2023 |
|
Mar. 27, 2022 |
|
Mar. 26, 2023 |
|
Mar. 27, 2022 |
|
|
|
|
|
|
|
|
EBITDA |
|
|
|
|
|
|
|
Net Income |
$ |
3,265,000 |
|
|
$ |
2,158,000 |
|
|
$ |
19,623,000 |
|
|
$ |
13,596,000 |
|
|
|
|
|
|
|
|
|
Interest
Expense |
1,911,000 |
|
|
2,184,000 |
|
|
7,742,000 |
|
|
10,135,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes |
1,088,000 |
|
|
463,000 |
|
|
7,181,000 |
|
|
4,940,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
298,000 |
|
|
247,000 |
|
|
1,135,000 |
|
|
1,054,000 |
|
|
|
|
|
|
|
|
|
EBITDA |
$ |
6,562,000 |
|
|
$ |
5,052,000 |
|
|
$ |
35,681,000 |
|
|
$ |
29,725,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
|
|
|
|
|
|
|
EBITDA |
$ |
6,562,000 |
|
|
$ |
5,052,000 |
|
|
$ |
35,681,000 |
|
|
$ |
29,725,000 |
|
|
|
|
|
|
|
|
|
Loss on
debt extinguishment |
357,000 |
|
|
1,354,000 |
|
|
357,000 |
|
|
1,354,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on
disposal of property and equipment |
- |
|
|
- |
|
|
87,000 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
177,000 |
|
|
8,000 |
|
|
258,000 |
|
|
74,000 |
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
7,096,000 |
|
|
$ |
6,414,000 |
|
|
$ |
36,383,000 |
|
|
$ |
31,153,000 |
|
|
|
|
|
|
|
|
|
COMPANY |
|
Robert Steinberg, Vice President - Finance and CFO |
CONTACT: |
|
(516) 338-8500 ext. 229 |
Nathans Famous (NASDAQ:NATH)
Historical Stock Chart
From Apr 2024 to May 2024
Nathans Famous (NASDAQ:NATH)
Historical Stock Chart
From May 2023 to May 2024