News Release
Famous Dave’s of America, Inc. Reports Results for First Quarter of Fiscal 2019
First Quarter 2019 Highlights:
- Company-owned comparable sales increased 1.3%, driven by increases in To-Go of 10.2% and 12.6% in Catering.
- Domestic franchise-operated comparable sales were flat year-over-year. Franchise-operated system, including international units, declined by 1.0%.
- Invested
$4.2 million , representing 3.0x pro forma TTM EBITDA to reacquire four Famous Dave’s restaurants inColorado . - Approximately 63,000 downloads of our loyalty app since launched in
December 2018 .
Highlights Subsequent to the First Quarter 2019:
- Invested
$132,000 , representing 0.4x pro forma TTM EBITDA to reacquire six Famous Dave’s restaurants inWisconsin ,Michigan andOhio . - Launched 2,300 square foot small-format restaurant in
Tucson, Arizona through a Famous Dave’s franchisee. - Initiated
$200,000 in comprehensive remodeling ofWestbury, New York restaurant with an expected payback of two years.
Executive Comments
Key Operating Metrics | |||||||||
Three Months Ended | |||||||||
March 31, 2019 | April 1, 2018 | ||||||||
Restaurant count: | |||||||||
Franchise-operated | 117 | 136 | |||||||
Company-owned | 21 | 16 | |||||||
Total | 138 | 152 | |||||||
Comparable restaurant sales %: | |||||||||
Franchise-operated, domestic | — | % | (1.6 | ) | % | ||||
Franchise-operated, international(1) | (28.0 | ) | % | (1.8 | ) | % | |||
Franchise-operated total | (1.0 | ) | (1.6 | ) | |||||
Company-owned | 1.3 | % | 5.2 | % | |||||
Total | (0.7 | ) | % | (0.9 | ) | % | |||
(in thousands, expect per share data) | |||||||||
System-wide restaurant sales(2) | $ | 82,739 | $ | 87,166 | |||||
Net income (loss) | $ | 82 | $ | 998 | |||||
Adjusted net income (loss)(3) | 620 | 954 | |||||||
Net income (loss), per share | $ | 0.01 | $ | 0.13 | |||||
Adjusted net income (loss), per share(3) | 0.07 | 0.13 | |||||||
Adjusted EBITDA(3) | $ | 1,030 | $ | 1,794 |
(1) | International franchise comparable sales declines are primarily related to Puerto Rico, which is still yet to recover from the effects of recent hurricanes. | ||||||||||
(2) | 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. | ||||||||||
(3) | 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.” | ||||||||||
First Quarter 2019 Review
Total revenue for the first quarter of 2019 was
Comparable sales for our To-Go and Catering lines of business increased 10.2% and 12.6% in the first quarter of fiscal 2019, respectively, partially offset by a decline in Dine In of 5.6%. During the first quarter of fiscal 2019, Dine In represented approximately 53% of our total restaurant sales, net, while To Go and Catering represented 39% and 8% of restaurant sales, net, respectively.
Restaurant-level operating margin, as a percentage of restaurant sales, net, for Company-owned restaurants was (1.7%) compared to (0.5%) in the first quarter of fiscal 2018. This decline in restaurant-level operating margin was primarily a result of new initiatives tested in our corporate stores, including our comprehensive new menu that was rolled out in
General and administrative expenses for the three months ended
Net income was approximately
About Famous Dave’s
Famous Dave’s develops, owns, operates and franchises barbeque restaurants. Its menu features award-winning barbequed and grilled meats, a selection of salads, sandwiches, side items, and made-from-scratch desserts. As of
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 (loss) is net income (loss), 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 basic shares of common stock outstanding during each period presented to arrive at adjusted net income (loss), 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 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 Famous Dave’s expectation include 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: | Jeff Crivello – Chief Executive Officer | |
952-294-1300 | ||
Darrow Associates, Inc. | ||
Peter Seltzberg – Managing Director | ||
516-419-9915 | ||
pseltzberg@darrowir.com | ||
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
(in thousands, except per share data) | |||||||
(Unaudited) | |||||||
Three Months Ended | |||||||
March 31, 2019 | April 1, 2018 | ||||||
Revenue: | |||||||
Restaurant sales, net | $ | 10,314 | $ | 8,713 | |||
Franchise royalty and fee revenue | 3,204 | 3,408 | |||||
Franchisee national advertising fund contributions | 409 | 469 | |||||
Licensing and other revenue | 266 | 254 | |||||
Total revenue | 14,193 | 12,844 | |||||
Costs and expenses: | |||||||
Food and beverage costs | 3,360 | 2,717 | |||||
Labor and benefits costs | 3,957 | 3,196 | |||||
Operating expenses | 3,169 | 2,841 | |||||
Depreciation and amortization expenses | 264 | 393 | |||||
General and administrative expenses | 2,517 | 1,874 | |||||
National advertising fund expenses | 409 | 469 | |||||
Asset impairment, estimated lease termination charges and other closing costs, net | 407 | (104 | ) | ||||
Net loss on disposal of property | (6 | ) | (1 | ) | |||
Total costs and expenses | 14,077 | 11,385 | |||||
Income from operations | 116 | 1,459 | |||||
Other income (expense): | |||||||
Interest expense | (71 | ) | (145 | ) | |||
Interest income | 54 | 5 | |||||
Total other expense | (17 | ) | (140 | ) | |||
Income before income taxes | 99 | 1,319 | |||||
Income tax expense | (17 | ) | (321 | ) | |||
Net income | $ | 82 | $ | 998 | |||
Basic net income per share | $ | 0.01 | $ | 0.13 | |||
Diluted net income per share | $ | 0.01 | $ | 0.13 | |||
Weighted average shares outstanding - basic | 9,085 | 7,407 | |||||
Weighted average shares outstanding - diluted | 9,189 | 7,407 | |||||
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES | |||||||
OPERATING RESULTS | |||||||
(unaudited) | |||||||
Three Months Ended | |||||||
March 31, 2019 | April 1, 2018 | ||||||
Food and beverage costs(1) | 32.6 | % | 31.2 | % | |||
Labor and benefits costs(1) | 38.4 | % | 36.7 | % | |||
Operating expenses(1) | 30.7 | % | 32.6 | % | |||
Restaurant level operating margin(1)(3) | (1.7 | ) | % | (0.5 | ) | % | |
Depreciation and amortization expenses(2) | 1.9 | % | 3.1 | % | |||
General and administrative expenses(2) | 17.7 | % | 14.6 | % | |||
Net income(2) | 0.8 | % | 11.4 | % |
(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. | ||||||||||
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(in thousands, except per share data) | |||||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets: | March 31, 2019 | December 30, 2018 | |||||
Cash and cash equivalents | $ | 8,868 | $ | 11,598 | |||
Restricted cash | 840 | 842 | |||||
Accounts receivable, net of allowance for doubtful accounts of $202,000 and $192,000, respectively | 3,194 | 4,300 | |||||
Inventories | 843 | 722 | |||||
Prepaid income taxes and income taxes receivable | 377 | 377 | |||||
Prepaid expenses and other current assets | 1,102 | 1,363 | |||||
Total current assets | 15,224 | 19,202 | |||||
Property, equipment and leasehold improvements, net | 11,114 | 10,385 | |||||
Other assets: | |||||||
Operating lease right-of-use assets | 16,338 | — | |||||
Goodwill | 1,104 | 61 | |||||
Intangible assets, net | 3,452 | 1,428 | |||||
Deferred tax asset, net | 5,753 | 5,747 | |||||
Other assets | 1,687 | 1,533 | |||||
$ | 54,672 | $ | 38,356 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 3,772 | $ | 3,765 | |||
Current portion of lease liabilities | 1,927 | — | |||||
Current portion of long-term debt and financing lease obligations | 164 | 1,369 | |||||
Accrued compensation and benefits | 1,188 | 808 | |||||
Other current liabilities | 3,043 | 2,970 | |||||
Total current liabilities | 10,094 | 8,912 | |||||
Long-term liabilities: | |||||||
Lease liabilities, less current portion | 16,908 | — | |||||
Long-term debt, less current portion | 2,358 | 2,411 | |||||
Other liabilities | 2,630 | 4,492 | |||||
Total liabilities | 31,990 | 15,815 | |||||
Shareholders’ equity: | |||||||
Common stock, $.01 par value, 100,000 shares authorized, 9,274 and 9,085 shares issued and outstanding at March 31, 2019 and December 30, 2018, respectively | 93 | 91 | |||||
Additional paid-in capital | 7,456 | 7,375 | |||||
Retained earnings | 15,133 | 15,075 | |||||
Total shareholders’ equity | 22,682 | 22,541 | |||||
$ | 54,672 | $ | 38,356 | ||||
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(in thousands) | |||||||
(unaudited) | |||||||
Three Months Ended | |||||||
March 31, 2019 | April 1, 2018 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 82 | $ | 998 | |||
Adjustments to reconcile net income to cash flows provided by operations: | |||||||
Depreciation and amortization | 264 | 393 | |||||
Stock-based compensation | 83 | 47 | |||||
Net gain on disposal of property | (6 | ) | (1 | ) | |||
Asset impairment and estimated lease termination charges (gain) | 386 | (185 | ) | ||||
Bad debts expense (recovery) | 21 | (147 | ) | ||||
Other non-cash items | 33 | (149 | ) | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable, net | 743 | 61 | |||||
Other assets | 53 | 6 | |||||
Accounts payable | (9 | ) | 32 | ||||
Accrued and other liabilities | (24 | ) | (879 | ) | |||
Cash flows provided by operating activities | 1,626 | 176 | |||||
Cash flows from investing activities: | |||||||
Proceeds from the sale of assets | 6 | 1 | |||||
Purchases of property, equipment and leasehold improvements | (221 | ) | (41 | ) | |||
Payments for acquired restaurants | (3,841 | ) | — | ||||
Advances on notes receivable | (150 | ) | (458 | ) | |||
Cash flows used for investing activities | (4,206 | ) | (498 | ) | |||
Cash flows from financing activities: | |||||||
Payments for debt issuance costs | (15 | ) | — | ||||
Payments on long-term debt and financing lease obligations | (137 | ) | (320 | ) | |||
Proceeds from exercise of stock options | — | 389 | |||||
Cash flows (used for) provided by financing activities | (152 | ) | 69 | ||||
Decrease in cash, cash equivalents and restricted cash | (2,732 | ) | (253 | ) | |||
Cash, cash equivalents and restricted cash, beginning of period | 12,440 | 10,426 | |||||
Cash, cash equivalents and restricted cash, end of period | $ | 9,708 | $ | 10,173 | |||
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES | |||||||
NON-GAAP RECONCILIATION | |||||||
(in thousands, except per share data) | |||||||
(unaudited) | |||||||
Three Months Ended | |||||||
(dollars in thousands) | March 31, 2019 | April 1, 2018 | |||||
Net income | 82 | 998 | |||||
Asset impairment and estimated lease termination charges and other closing costs | 407 | (104 | ) | ||||
Net gain on disposal of equipment | (6 | ) | (1 | ) | |||
Stock-based compensation | 83 | 47 | |||||
Acquisition costs | 163 | — | |||||
Severance | 3 | — | |||||
Tax adjustment | (112 | ) | 14 | ||||
Adjusted net income | $ | 620 | $ | 954 | |||
Basic adjusted net income per common share | $ | 0.07 | $ | 0.13 | |||
Diluted adjusted net income per common share | $ | 0.07 | $ | 0.13 | |||
Weighted average common share outstanding - basic | 9,085 | 7,407 | |||||
Weighted average common share outstanding - diluted | 9,189 | 7,407 | |||||
Net income | $ | 82 | $ | 998 | |||
Asset impairment and estimated lease termination charges and other closing costs | 407 | (104 | ) | ||||
Depreciation and amortization | 264 | 393 | |||||
Interest expense, net | 17 | 140 | |||||
Net gain on disposal of equipment | (6 | ) | (1 | ) | |||
Stock-based compensation | 83 | 47 | |||||
Acquisition costs | 163 | — | |||||
Severance | 3 | — | |||||
Provision for income taxes | 17 | 321 | |||||
Adjusted EBITDA | $ | 1,030 | $ | 1,794 |
Source: Famous Dave's of America, Inc.