News Release
BBQ Holdings, Inc. Reports Results for Third Quarter of Fiscal Year 2020
Third Quarter 2020 Highlights:
- Net income of
$328,000 , driven in part by a gain on a renegotiated leased asset of$630,000 . - Adjusted EBITDA, a non-GAAP measure was
$2.0 million which includes a$1.1 million COVID-related expense addback. - Company-owned Famous Dave’s third quarter same store net sales decreased 4.6% compared to third quarter 2019.
- Franchise-operated same store net sales decreased 10.0%.
- Granite City third quarter same store net sales decreased 25.9% compared to third quarter 2019.
- Same store sales at our Famous Dave’s restaurants increased 2.0% while same store sales at our Granite City restaurants decreased 23.8% during the four weeks ended
October 25, 2020 compared to the same four-week period in 2019. - Entered into a 25-unit development agreement with
Bluestone Hospitality Group to open Famous Dave’s ghost kitchens and dual restaurant concepts with the Johnny Carino’s Italian brand.
Executive Comments
Key Operating Metrics
Three Months Ended | Nine Months Ended | |||||||||||||||
Restaurant count: | ||||||||||||||||
Franchise-operated | 95 | 96 | 95 | 96 | ||||||||||||
Company-owned | 49 | 32 | 49 | 32 | ||||||||||||
Total | 144 | 128 | 144 | 128 | ||||||||||||
Same store net restaurant sales %: | ||||||||||||||||
Franchise-operated | (10.0 | )% | 2.1 | % | (18.3 | )% | 1.2 | % | ||||||||
Company-owned | (4.6 | )% | 0.4 | % | (9.9 | )% | 1.0 | % | ||||||||
Total | (30.0 | )% | 1.9 | % | (20.6 | )% | 1.2 | % | ||||||||
(in thousands, expect per share data) | ||||||||||||||||
System-wide restaurant sales(1) | $ | 82,482 | $ | 75,907 | $ | 214,803 | $ | 215,386 | ||||||||
Net income attributable to shareholders | $ | 328 | $ | 17 | $ | 7,783 | $ | 1,139 | ||||||||
Adjusted net income attributable to shareholders(2) | 480 | 166 | (4,039 | ) | 2,874 | |||||||||||
Net income attributable to shareholders, per diluted share | $ | 0.04 | $ | 0.00 | $ | 0.85 | $ | 0.13 | ||||||||
Adjusted net income attributable to shareholders, per diluted share(2) | 0.05 | 0.02 | (0.44 | ) | 0.31 | |||||||||||
Adjusted EBITDA(2) | $ | 1,995 | $ | 1,028 | $ | 2,915 | $ | 4,505 |
(1) | System-wide restaurant sales include sales for all Company-owned and franchise-operated restaurants, as reported by franchisees. Restaurant sales for franchise-operated restaurants are not revenues of the Company and are not included in the Company’s consolidated financial statements. | |
(2) | Adjusted net income (loss) from continuing operations and adjusted EBITDA are non-GAAP measures. A reconciliation of all non-GAAP measures to the most directly comparable GAAP measure is included in the accompanying financial tables. See “Non-GAAP Reconciliation.” |
Third Quarter 2020 Review
Total revenue for the third quarter of 2020 was
On a weighted basis, Company-owned Famous Dave’s same-store net sales for our to-go line of business increased 73.3% in the third quarter of fiscal 2020 as compared to the prior year period, offset by a decrease of 55.0% in net catering sales and 33.4% in dine-in sales due to federal, state and local mandates prohibiting large group gatherings and in-store dining in an attempt to reduce the spread of COVID-19.
Restaurant-level operating margin, as a percentage of restaurant net sales, for Company-owned restaurants was 3.4% in the third quarter of fiscal 2020 compared to 0.6% in the third quarter of fiscal 2019. This increase in restaurant-level operating margin was primarily a result of the reduction of labor and food costs as our restaurant operators adjusted to the increase in to-go sales and reduction of dine-in customers as a result of COVID-19 concerns.
General and administrative expenses for the quarter ended
Net income attributable to shareholders was approximately
About
Non-GAAP Financial Measures
To supplement its consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in
Adjusted net income attributable to shareholders is net income attributable to shareholders, plus asset impairment, estimated lease termination charges and other closing costs, settlement agreements, net (loss) gain on disposal of equipment, stock-based compensation, severance, acquisition costs, and the related tax impact. This number is divided by the weighted-average number of diluted shares of common stock outstanding during each period presented to arrive at adjusted net income, per share. Adjusted EBITDA is net income (loss), plus asset impairment, estimated lease termination charges and other closing costs, settlement agreements, depreciation and amortization, interest expense, net, net (loss) gain on disposal of equipment, stock-based compensation, severance, acquisition costs and provision (benefit) for income taxes.
Forward-Looking Statements
Statements in this press release that are not strictly historical, including but not limited to statements regarding the timing of the Company’s restaurant openings, the timing of refreshes and the timing or success of refranchising plans, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, which may cause the Company’s actual results to differ materially from expected results. Although the Company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectation will be attained. Factors that could cause actual results to differ materially from the Company’s expectation include the impact of the COVID-19 virus pandemic, financial performance, restaurant industry conditions, execution of restaurant development and construction programs, franchisee performance, changes in local or national economic conditions, availability of financing, governmental approvals and other risks detailed from time to time in the Company’s
Contact: | ||
952-294-1300 | ||
516-419-9915 | ||
pseltzberg@darrowir.com |
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
Revenue: | ||||||||||||||||
Restaurant sales, net | $ | 32,559 | $ | 20,451 | $ | 78,251 | $ | 48,267 | ||||||||
Franchise royalty and fee revenue | 2,153 | 2,909 | 6,628 | 9,560 | ||||||||||||
Franchisee national advertising fund contributions | 302 | 395 | 826 | 1,275 | ||||||||||||
Licensing and other revenue | 497 | 261 | 1,423 | 839 | ||||||||||||
Total revenue | 35,511 | 24,016 | 87,128 | 59,941 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Food and beverage costs | 9,735 | 6,383 | 24,206 | 15,068 | ||||||||||||
Labor and benefits costs | 11,189 | 7,477 | 26,976 | 17,253 | ||||||||||||
Operating expenses | 10,521 | 6,470 | 26,251 | 15,430 | ||||||||||||
Depreciation and amortization expenses | 1,397 | 576 | 3,820 | 1,355 | ||||||||||||
General and administrative expenses | 3,138 | 2,653 | 9,973 | 7,547 | ||||||||||||
National advertising fund expenses | 302 | 395 | 826 | 1,275 | ||||||||||||
Asset impairment, estimated lease termination charges and other closing costs, net | (138 | ) | 214 | 4,814 | 718 | |||||||||||
Pre-opening expenses | (120 | ) | 94 | (93 | ) | 94 | ||||||||||
Gain on disposal of property, net | (530 | ) | (28 | ) | (1,107 | ) | (174 | ) | ||||||||
Total costs and expenses | 35,494 | 24,234 | 95,666 | 58,566 | ||||||||||||
Income (loss) from operations | 17 | (218 | ) | (8,538 | ) | 1,375 | ||||||||||
Other income (expense): | ||||||||||||||||
Interest expense | (326 | ) | (33 | ) | (866 | ) | (392 | ) | ||||||||
Interest income | 94 | 27 | 380 | 114 | ||||||||||||
Gain on bargain purchase | — | — | 13,675 | — | ||||||||||||
Total other (expense) income | (232 | ) | (6 | ) | 13,189 | (278 | ) | |||||||||
(Loss) income before income taxes | (215 | ) | (224 | ) | 4,651 | 1,097 | ||||||||||
Income tax benefit (expense) | 273 | 174 | 2,519 | (25 | ) | |||||||||||
Net income (loss) | 58 | (50 | ) | 7,170 | 1,072 | |||||||||||
Net loss attributable to non-controlling interest | 270 | 67 | 613 | 67 | ||||||||||||
Net income attributable to shareholders | $ | 328 | $ | 17 | $ | 7,783 | $ | 1,139 | ||||||||
Income per common share: | ||||||||||||||||
Basic net income per share attributable to shareholders | $ | 0.04 | $ | 0.00 | $ | 0.85 | $ | 0.13 | ||||||||
Diluted net income per share attributable to shareholders | $ | 0.04 | $ | 0.00 | $ | 0.85 | $ | 0.12 | ||||||||
Weighted average shares outstanding - basic | 9,151 | 9,105 | 9,138 | 9,095 | ||||||||||||
Weighted average shares outstanding - diluted | 9,158 | 9,279 | 9,145 | 9,193 |
OPERATING RESULTS
(unaudited)
Three Months Ended |
Nine Months Ended | |||||||||||
Food and beverage costs(1) | 29.9 | % | 31.2 | % | 30.9 | % | 31.2 | % | ||||
Labor and benefits costs(1) | 34.4 | % | 36.6 | % | 34.5 | % | 35.7 | % | ||||
Operating expenses(1) | 32.3 | % | 31.6 | % | 33.5 | % | 32.0 | % | ||||
Restaurant level operating margin(1)(3) | 3.4 | % | 0.6 | % | 1.0 | % | 1.1 | % | ||||
Depreciation and amortization expenses(2) | 3.9 | % | 2.4 | % | 4.4 | % | 2.3 | % | ||||
General and administrative expenses(2) | 8.8 | % | 11.0 | % | 11.4 | % | 12.6 | % | ||||
(Loss) income from operations(2) | 0.0 | % | (0.9 | )% | (9.8 | )% | 2.3 | % |
(1) | As a percentage of restaurant sales, net | |
(2) | As a percentage of total revenue | |
(3) | Restaurant level margins are equal to restaurant sales, net, less restaurant level food and beverage costs, labor and benefit costs, and operating expenses. |
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 19,551 | $ | 5,325 | ||||
Restricted cash | 959 | 761 | ||||||
Accounts receivable, net of allowance for doubtful accounts of |
3,885 | 4,379 | ||||||
Inventories | 2,490 | 1,346 | ||||||
Prepaid income taxes and income taxes receivable | 285 | 264 | ||||||
Prepaid expenses and other current assets | 638 | 1,356 | ||||||
Assets held for sale | 3,911 | 2,842 | ||||||
Total current assets | 31,719 | 16,273 | ||||||
Property, equipment and leasehold improvements, net | 33,131 | 19,756 | ||||||
Other assets: | ||||||||
Operating lease right-of-use assets | 64,833 | 25,962 | ||||||
651 | 640 | |||||||
Intangible assets, net | 10,117 | 2,213 | ||||||
Deferred tax asset, net | 4,264 | 6,646 | ||||||
Other assets | 1,691 | 1,591 | ||||||
$ | 146,406 | $ | 73,081 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 4,952 | $ | 3,967 | ||||
Current portion of lease liabilities | 6,459 | 4,230 | ||||||
Current portion of long-term debt | 2,749 | 616 | ||||||
Accrued compensation and benefits | 2,225 | 2,694 | ||||||
Other current liabilities | 8,467 | 4,975 | ||||||
Total current liabilities | 24,852 | 16,482 | ||||||
Long-term liabilities: | ||||||||
Lease liabilities, less current portion | 65,319 | 26,957 | ||||||
Long-term debt, less current portion | 25,483 | 6,258 | ||||||
Other liabilities | 1,386 | 1,610 | ||||||
Total liabilities | 117,040 | 51,307 | ||||||
Shareholders’ equity: | ||||||||
Common stock, |
93 | 93 | ||||||
Additional paid-in capital | 8,278 | 7,856 | ||||||
Retained earnings | 22,206 | 14,423 | ||||||
Total shareholders’ equity | 30,577 | 22,372 | ||||||
Non-controlling interest | (1,211 | ) | (598 | ) | ||||
Total equity | 29,366 | 21,774 | ||||||
$ | 146,406 | $ | 73,081 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended | ||||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 7,170 | $ | 1,072 | ||||
Adjustments to reconcile net income to cash flows provided by operations: | ||||||||
Depreciation and amortization | 3,820 | 1,355 | ||||||
Stock-based compensation | 422 | 354 | ||||||
Net gain on disposal | (1,080 | ) | (174 | ) | ||||
Asset impairment, estimated lease termination charges and other closing costs, net | 4,788 | 660 | ||||||
Gain on bargain purchase | (13,675 | ) | — | |||||
Deferred income taxes | (2,569 | ) | 36 | |||||
Other non-cash items | 488 | 213 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net | 494 | (495 | ) | |||||
Other assets | (867 | ) | (580 | ) | ||||
Accounts payable | 985 | 1,371 | ||||||
Accrued and other liabilities | 671 | (356 | ) | |||||
Cash flows provided by operating activities | 647 | 3,456 | ||||||
Cash flows from investing activities: | ||||||||
Proceeds from the sale of assets | 27 | 33 | ||||||
Purchases of property, equipment and leasehold improvements | (2,671 | ) | (3,792 | ) | ||||
Payments for acquired restaurants | (4,952 | ) | (6,188 | ) | ||||
Advances on notes receivable | — | (150 | ) | |||||
Payments received on note receivable | 24 | 20 | ||||||
Cash flows used for investing activities | (7,572 | ) | (10,077 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from long-term debt | 22,058 | — | ||||||
Payments for debt issuance costs | (45 | ) | (54 | ) | ||||
Payments on long-term debt | (664 | ) | (176 | ) | ||||
Cash provided by (used for) financing activities | 21,349 | (230 | ) | |||||
Increase (decrease) in cash, cash equivalents and restricted cash | 14,424 | (6,851 | ) | |||||
Cash, cash equivalents and restricted cash, beginning of period | 6,086 | 12,440 | ||||||
Cash, cash equivalents and restricted cash, end of period | $ | 20,510 | $ | 5,589 |
NON-GAAP RECONCILIATION
(in thousands, except per share data)
(unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Net income attributable to shareholders | $ | 328 | $ | 17 | 7,783 | 1,139 | ||||||||||
Asset impairment and estimated lease termination charges and other closing costs | (138 | ) | 214 | 4,814 | 718 | |||||||||||
Net gain on disposal of equipment | (530 | ) | (28 | ) | (1,107 | ) | (174 | ) | ||||||||
Stock-based compensation | 174 | 131 | 422 | 354 | ||||||||||||
Acquisition costs | 29 | 249 | (46 | ) | 770 | |||||||||||
Pre-opening costs | (120 | ) | 94 | (93 | ) | 94 | ||||||||||
Severance | 21 | 10 | 52 | 13 | ||||||||||||
Gain on bargain purchase | — | — | (13,675 | ) | — | |||||||||||
Tax adjustment | 716 | (521 | ) | (2,189 | ) | (40 | ) | |||||||||
Adjusted net income (loss) | $ | 480 | $ | 166 | $ | (4,039 | ) | $ | 2,874 | |||||||
Basic adjusted net income (loss) per common share | $ | 0.05 | $ | 0.02 | $ | (0.44 | ) | $ | 0.32 | |||||||
Diluted adjusted net income (loss) per common share | $ | 0.05 | $ | 0.02 | $ | (0.44 | ) | $ | 0.31 | |||||||
Weighted average common share outstanding - basic | 9,151 | 9,105 | 9,138 | 9,095 | ||||||||||||
Weighted average common share outstanding - diluted | 9,158 | 9,279 | 9,145 | 9,193 | ||||||||||||
Net income (loss) | $ | 58 | $ | (50 | ) | $ | 7,170 | $ | 1,072 | |||||||
Asset impairment and estimated lease termination charges and other closing costs | (138 | ) | 214 | 4,814 | 718 | |||||||||||
Depreciation and amortization | 1,397 | 576 | 3,820 | 1,355 | ||||||||||||
Interest expense, net | 232 | 6 | 486 | 278 | ||||||||||||
Net gain on disposal of equipment | (530 | ) | (28 | ) | (1,107 | ) | (174 | ) | ||||||||
Stock-based compensation | 174 | 131 | 422 | 354 | ||||||||||||
Acquisition costs | 29 | 249 | (46 | ) | 770 | |||||||||||
Pre-opening costs | (120 | ) | 94 | (93 | ) | 94 | ||||||||||
Severance | 21 | 10 | 52 | 13 | ||||||||||||
Gain on bargain purchase | — | — | (13,675 | ) | — | |||||||||||
Provision for income taxes | (273 | ) | (174 | ) | (2,519 | ) | 25 | |||||||||
COVID-19-related expense | 1,145 | — | 3,591 | — | ||||||||||||
Adjusted EBITDA | $ | 1,995 | $ | 1,028 | $ | 2,915 | $ | 4,505 |
Source: BBQ Holdings, Inc.