Nathan's Famous, Inc. Reports Third Quarter Results; Authorizes Increase In Share Buy-back Plan
PR Newswire Nathan's Famous, Inc.
February 5, 2016 8:30 AM
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JERICHO, N.Y., Feb. 5, 2016 /PRNewswire/ -- Nathan's Famous, Inc. (NATH) today reported results for the third quarter of its 2016 fiscal year that ended December 27, 2015.
For the fiscal quarter ended December 27, 2015:
Income from operations increased by 17.8% to $4,435,000, as compared to $3,765,000 during the thirteen weeks ended December 28, 2014;
Adjusted EBITDA, as subsequently defined, increased by 12.6% to $4,932,000 as compared to $4,382,000 for the thirteen weeks ended December 28, 2014;
Net income was $432,000, as compared to $2,241,000 for the thirteen weeks ended December 28, 2014;
Earnings per diluted share were $0.10 per share, as compared to $0.49 per share for the thirteen weeks ended December 28, 2014; and
Revenues were $20,564,000, as compared to $22,315,000 during the thirteen weeks ended December 28, 2014.
For the thirty-nine weeks ended December 27, 2015:
Income from operations increased by 20.5% to $20,477,000, as compared to $16,991,000 during the thirty-nine weeks ended December 28, 2014;
Adjusted EBITDA, as subsequently defined, increased by 17.2% to $22,189,000 as compared to $18,936,000 for the thirty-nine weeks ended December 28, 2014;
Net income was $5,589,000, as compared to $10,166,000 for the thirty-nine weeks ended December 28, 2014;
Earnings per diluted share were $1.24 per share, as compared to $2.21 per share for the thirty-nine weeks ended December 28, 2014; and
Revenues were $81,837,000, as compared to $78,772,000 during the thirty-nine weeks ended December 28, 2014.
The Company reported the following:
License royalties increased by 12.8% to $15,406,000 during the thirty-nine weeks ended December 27, 2015, as compared to $13,652,000 during the thirty-nine weeks ended December 28, 2014. During the thirty-nine weeks ended December 27, 2015, total royalties earned under the John Morrell & Co., agreement increased by 14.2% to $14,091,000 as compared to $12,342,000 of royalties earned during the thirty-nine weeks ended December 28, 2014. The increase is substantially attributable to significant organic growth in our consumer packaged hot dog business as a result of more effective sales, marketing and promotional strategies.
Sales from the Branded Product Program, featuring the sale of Nathan's hot dogs to the foodservice industry, increased by 3.5% to $47,160,000 during the thirty-nine weeks ended December 27, 2015, as compared to sales of $45,568,000 during the thirty-nine weeks ended December 28, 2014. This increase was primarily attributable to a 5.1% increase in the volume of products sold partially offset by lower average selling prices on the portion of our business where the selling price is calculated based upon the market price for beef, which has significantly declined during the past six months.
Sales from Company-operated restaurants were $14,872,000 during the thirty-nine weeks ended December 27, 2015 as compared to $14,497,000 during the thirty-nine weeks ended December 28, 2014 driven primarily from higher sales at both Coney Island locations.
Revenues from franchise operations were $3,804,000 during the thirty-nine weeks ended December 27, 2015, as compared to $4,473,000 during the thirty-nine weeks ended December 28, 2014. Total franchise fee income was $388,000 during the thirty-nine weeks ended December 27, 2015 as compared to $879,000 during the thirty-nine weeks ended December 28, 2014, primarily due to less international development fees. Thirty-five new franchised units were opened during the thirty-nine weeks ended December 27, 2015, including 11 international locations, including locations in Russia and Costa Rica, and 16 Branded Menu Program outlets. Twenty-eight new franchised units were opened during the thirty-nine weeks ended December 28, 2014, including 10 international locations, including our first locations in Costa Rica and Malaysia and 14 Branded Menu Program outlets. We also recognized forfeited fees of $58,000 during the fiscal 2016 period and $120,000 during the fiscal 2015 period.
On March 10, 2015, Nathan's completed a financing of $135.0 million aggregate principal amount of Senior Secured Notes. Nathan's incurred interest expense, including amortized debt issuance costs, totaling $11,126,000 during the thirty-nine weeks ended December 27, 2015 on the Notes.
Nathan's also announced that its Board of Directors has authorized the purchase by Nathan's of up to an additional 200,000 shares of its common stock. Purchases may be made from time to time, depending on market conditions, in open market or privately negotiated transactions, at prices deemed appropriate by management. There is no set time limit on the repurchases. After giving effect to the increase in the number of shares, an aggregate 266,074 shares remain available for purchase under Nathan's stock buy-back program. To date, pursuant to prior share repurchase programs authorized by the Board of Directors, Nathan's has purchased a total of 4,921,557 shares of common stock at a cost of approximately $68,070,000.
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 and (ii) amortization of bond premium on the Company's available-for sale investments 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.
About Nathan's Famous
Nathan's currently distributes its products in 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, and nine foreign countries through its restaurant system, foodservice sales programs and product licensing activities. Last year, over 500 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 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 collectibility 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 new 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 contract; our ability to attract competent restaurant and managerial personnel; the enforceability of international franchising agreements; the impact of changes in the economic relationship between the United States and Russia; 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.
Financial Highlights
Thirteen weeks ended
Thirty-nine weeks ended
Dec. 27, 2015
Dec. 28, 2014
Dec. 27, 2015
Dec. 28, 2014
(unaudited)
(unaudited)
Total revenues
$ 20,564,000
$ 22,315,000
$ 81,837,000
$ 78,772,000
Income from operations (a)
$ 4,435,000
$ 3,765,000
$ 20,477,000
$ 16,991,000
Net income
$ 432,000
$ 2,241,000
$ 5,589,000
$ 10,166,000
Income per share:
Basic
$ 0.10
$ 0.50
$ 1.25
$ 2.27
Diluted
$ 0.10
$ 0.49
$ 1.24
$ 2.21
Weighted-average shares used in
computing income per share:
Basic
4,408,000
4,482,000
4,474,000
4,475,000
Diluted
4,444,000
4,603,000
4,504,000
4,596,000
(a)
Excludes interest expense, interest income, and other income, net.
Nathan's Famous, Inc. and Subsidiaries
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Thirteen weeks ended
Thirty-nine weeks ended
Dec. 27, 2015
Dec. 28, 2014
Dec. 27, 2015
Dec. 28, 2014
(unaudited)
(unaudited)
EBITDA
Net Income
$ 432,000
$ 2,241,000
$ 5,589,000
$ 10,166,000
Interest Expense
3,708,000
-0-
11,126,000
-0-
Provision for income taxes
316,000
1,562,000
3,886,000
7,027,000
Depreciation and amortization
303,000
298,000
975,000
985,000
EBITDA
$ 4,759,000
$ 4,101,000
$ 21,576,000
$ 18,178,000
Adjusted EBITDA
EBITDA
$ 4,759,000
$ 4,101,000
$ 21,576,000
$ 18,178,000
Stock-based compensation
173,000
228,000
549,000
629,000
Amortization of bond premium (b)
-0-
53,000
64,000
129,000
Adjusted EBITDA
$ 4,932,000
$ 4,382,000
$ 22,189,000
$ 18,936,000
(b)
Represents the premiums paid on our purchase of available-for-sale securities.
FOR: NATHAN'S FAMOUS, INC.
COMPANY Ronald G. DeVos, Vice President - Finance and CFO
CONTACT: (516) 338-8500 ext. 229
