Nathan's Famous, Inc. Reports Second Quarter Results
03 Noviembre 2022 - 6:30AM
Nathan's Famous, Inc. (“Nathan’s”, the “Company”, “we”, “us” or
“our”) (NASDAQ:NATH) today reported results for its second fiscal
quarter ended September 25, 2022.
For the fiscal quarter ended September 25,
2022:
- Revenues were $37,497,000 as compared to $32,878,000 during the
thirteen weeks ended September 26, 2021;
- Income from operations was $9,914,000 as compared to $7,439,000
during the thirteen weeks ended September 26, 2021;
- Adjusted EBITDA1, a non-GAAP financial measure, was $10,323,000
as compared to $7,771,000 during the thirteen weeks ended September
26, 2021;
- Income before provision for income taxes was $8,085,000 as
compared to $4,821,000 during the thirteen weeks ended September
26, 2021;
- Net income was $5,958,000 as compared to $3,545,000 during the
thirteen weeks ended September 26, 2021; and
- Earnings per diluted share was $1.46 per share as compared to
$0.86 per share during the thirteen weeks ended September 26,
2021.
For the twenty-six weeks ended September 25,
2022:
- Revenues were $77,217,000 as compared to $64,197,000 during the
twenty-six weeks ended September 26, 2021;
- Income from operations was $21,694,000 as compared to
$18,141,000 during the twenty-six weeks ended September 26,
2021;
- Adjusted EBITDA1, a non-GAAP financial measure, was $22,388,000
as compared to $18,832,000 during the twenty-six weeks ended
September 26, 2021;
- Income before provision for income taxes was $17,965,000 as
compared to $12,925,000 during the twenty-six weeks ended September
26, 2021;
- Net income was $13,095,000 as compared to $9,308,000 during the
twenty-six weeks ended September 26, 2021; and
- Earnings per diluted share was $3.20 per share as compared to
$2.26 per share during the twenty-six weeks ended September 26,
2021.
The Company also reported the following:
- License royalties were $19,727,000 during the twenty-six weeks
ended September 25, 2022, (“fiscal 2023 period”) as compared to
$18,340,000 during the twenty-six weeks ended September 26, 2021.
During the fiscal 2023 period, royalties earned under the retail
agreement, including the foodservice program, with John Morrell
& Co., increased 7% to $18,105,000 as compared to $16,922,000
of royalties earned during the twenty-six weeks ended September 26,
2021.
- In the Branded Product Program, which features the sale of
Nathan’s hot dogs to the foodservice industry, sales increased by
approximately $10,142,000 to $45,201,000 during the fiscal 2023
period as compared to $35,059,000 during the twenty-six weeks ended
September 26, 2021. The volume of hot dogs sold by the Company
increased by 19%. Our average selling price, which is partially
correlated to the beef markets, increased by approximately 9%
compared to the prior year period. Income from operations increased
by approximately $1,137,000 to $4,552,000 during the fiscal 2023
period as compared to $3,415,000 for the twenty-six weeks ended
September 26, 2021. As the level of comfort of consumers
gathering in social settings increases and travel continues to
increase, our Branded Product Program customers, including
professional sports arenas, amusement parks, shopping malls and
movie theaters have experienced stronger attendance contributing to
an increase in sales over the prior year comparable period.
- Sales from Company-operated restaurants were $8,994,000 during
the fiscal 2023 period compared to $7,766,000 during the twenty-six
weeks ended September 26, 2021. The increase was primarily due to
an increase in customer traffic especially at our two Coney Island
locations.
- Revenues from franchise operations were $2,292,000 during the
fiscal 2023 period as compared to $2,074,000 during the twenty-six
weeks ended September 26, 2021. Total royalties were $1,956,000
during the fiscal 2023 period as compared to $1,837,000 during the
twenty-six weeks ended September 26, 2021. Total franchise fee
income was $336,000 during the fiscal 2023 period as compared to
$237,000 during the twenty-six weeks ended September 26, 2021. The
increase in franchise fees and royalties during the fiscal 2023
period was primarily due to an increase in franchise restaurant
sales of $5,911,000 to $34,541,000 as compared to $28,630,000 for
the twenty-six weeks ended September 26, 2021.2 Four new
franchised outlets opened during the fiscal 2023 period.
- During the fiscal 2023 period, we recorded Advertising Fund
revenue of $1,003,000 and Advertising Fund expense of
$1,178,000.
- During the fiscal 2023 period, the Company repurchased 35,434
shares of its common stock for $1,892,000 pursuant to a 10b5-1 plan
which expired on September 13, 2022.
- During the fiscal 2023 period, the Board of Directors declared
two quarterly cash dividends of $0.45 per share totaling
$3,688,000.
- Effective November 3, 2022, the Board of Directors declared its
quarterly cash dividend of $0.45 per share payable on December 2,
2022 to shareholders of record at the close of business on November
21, 2022.
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) the gain on
disposal of property and equipment and (ii) 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 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 sixteen
foreign countries through its restaurant system, foodservice sales
programs and product licensing activities. 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 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; the status of our licensing and
supply agreements, including our licensing revenue and overall
profitability being substantially dependent on our agreement with
John Morrell & Co.; 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 the
supply of cattle and 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(unaudited)
|
Thirteen weeks ended |
|
Twenty-six weeks ended |
|
Sept. 25, 2022 |
|
Sept. 26, 2021 |
|
Sept. 25, 2022 |
|
Sept. 26, 2021 |
Financial Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
$ |
37,497,000 |
|
|
$ |
32,878,000 |
|
|
$ |
77,217,000 |
|
|
$ |
64,197,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from operations (a) |
$ |
9,914,000 |
|
|
$ |
7,439,000 |
|
|
$ |
21,694,000 |
|
|
$ |
18,141,000 |
|
|
|
|
|
|
|
|
|
Net
income |
$ |
5,958,000 |
|
|
$ |
3,545,000 |
|
|
$ |
13,095,000 |
|
|
$ |
9,308,000 |
|
|
|
|
|
|
|
|
|
Income
per share: |
|
|
|
|
|
|
|
Basic |
$ |
1.46 |
|
|
$ |
0.86 |
|
|
$ |
3.20 |
|
|
$ |
2.26 |
|
Diluted |
$ |
1.46 |
|
|
$ |
0.86 |
|
|
$ |
3.20 |
|
|
$ |
2.26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
computing
income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
4,083,000 |
|
|
|
4,115,000 |
|
|
|
4,098,000 |
|
|
|
4,115,000 |
|
Diluted |
|
4,083,000 |
|
|
|
4,115,000 |
|
|
|
4,098,000 |
|
|
|
4,115,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Select Segment Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Branded
product program |
$ |
22,030,000 |
|
|
$ |
19,063,000 |
|
|
$ |
45,201,000 |
|
|
$ |
35,059,000 |
|
Product
licensing |
|
8,413,000 |
|
|
|
7,658,000 |
|
|
|
19,727,000 |
|
|
|
18,340,000 |
|
Restaurant operations |
|
6,470,000 |
|
|
|
5,604,000 |
|
|
|
11,286,000 |
|
|
|
9,840,000 |
|
Corporate
(b) |
|
584,000 |
|
|
|
553,000 |
|
|
|
1,003,000 |
|
|
|
958,000 |
|
Total Revenues |
$ |
37,497,000 |
|
|
$ |
32,878,000 |
|
|
$ |
77,217,000 |
|
|
$ |
64,197,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from operations (c) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Branded
product program |
$ |
2,485,000 |
|
|
$ |
1,161,000 |
|
|
$ |
4,552,000 |
|
|
$ |
3,415,000 |
|
Product
licensing |
|
8,367,000 |
|
|
|
7,612,000 |
|
|
|
19,636,000 |
|
|
|
18,249,000 |
|
Restaurant operations |
|
1,476,000 |
|
|
|
694,000 |
|
|
|
2,117,000 |
|
|
|
692,000 |
|
Corporate
(d) |
|
(2,414,000 |
) |
|
|
(2,028,000 |
) |
|
|
(4,611,000 |
) |
|
|
(4,215,000 |
) |
Income from operations (c) |
$ |
9,914,000 |
|
|
$ |
7,439,000 |
|
|
$ |
21,694,000 |
|
|
$ |
18,141,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Excludes interest expense, interest income, and other
income, net. (b) Represents Advertising Fund revenue.
(c) 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. (d) 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 Advertising Fund expense.
Nathan's Famous, Inc. and
Subsidiaries
Reconciliation of Net Income to EBITDA
and Adjusted EBITDA (unaudited)
|
Thirteen weeks ended |
|
Twenty-six weeks ended |
|
Sept. 25, 2022 |
|
Sept. 26, 2021 |
|
Sept. 25, 2022 |
|
Sept. 26, 2021 |
|
|
|
|
|
|
|
|
EBITDA |
|
|
|
|
|
|
|
Net Income |
$ |
5,958,000 |
|
|
$ |
3,545,000 |
|
$ |
13,095,000 |
|
|
$ |
9,308,000 |
|
|
|
|
|
|
|
|
Interest
Expense |
|
1,943,000 |
|
|
|
2,651,000 |
|
|
3,887,000 |
|
|
|
5,301,000 |
|
|
|
|
|
|
|
|
Provision
for income taxes |
|
2,127,000 |
|
|
|
1,276,000 |
|
|
4,870,000 |
|
|
|
3,617,000 |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
301,000 |
|
|
|
270,000 |
|
|
534,000 |
|
|
|
548,000 |
|
|
|
|
|
|
|
|
EBITDA |
$ |
10,329,000 |
|
|
$ |
7,742,000 |
|
$ |
22,386,000 |
|
|
$ |
18,774,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
|
|
|
|
|
|
|
EBITDA |
$ |
10,329,000 |
|
|
$ |
7,742,000 |
|
$ |
22,386,000 |
|
|
$ |
18,774,000 |
|
|
|
|
|
|
|
|
Gain on
disposal of property and equipment |
|
(14,000 |
) |
|
|
- |
|
|
(14,000 |
) |
|
|
- |
|
|
|
|
|
|
|
|
Share-based compensation |
|
8,000 |
|
|
|
29,000 |
|
|
16,000 |
|
|
|
58,000 |
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
10,323,000 |
|
|
$ |
7,771,000 |
|
$ |
22,388,000 |
|
|
$ |
18,832,000 |
COMPANY |
Robert
Steinberg, Vice President - Finance and CFO |
CONTACT: |
(516) 338-8500 ext. 229 |
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