Nathan's Famous, Inc. Reports First Quarter Results

From www.prnewswire.com, by Nathan's Famous, Inc.
Nathan's Famous, Inc. Reports First Quarter Results

JERICHO, N.Y., Aug. 5, 2016 /PRNewswire/ -- Nathan's Famous, Inc. (NASDAQ: NATH) today reported results for the first quarter of its 2017 fiscal year that ended June 26, 2016.  

For the fiscal quarter ended June 26, 2016:

  • Income from operations increased by 15.9% to $8,824,000, as compared to $7,616,000 during the thirteen weeks ended June 28, 2015;
  • Adjusted EBITDA, as subsequently defined, increased by 13.4% to $9,366,000 as compared to $8,257,000 for the thirteen weeks ended June 28, 2015;
  • Net income increased by 53.7% to $3,550,000, as compared to $2,310,000 for the thirteen weeks ended June 28, 2015;
  • Earnings per diluted share increased by 70.0% to $0.85 per share, as compared to $0.50 per share for the thirteen weeks ended June 28, 2015; and
  • Revenues were $29,416,000, as compared to $30,654,000 during the thirteen weeks ended June 28, 2015.

The Company reported the following:

  • License royalties increased by 4.4% to $6,824,000 during the thirteen weeks ended June 26, 2016, as compared to $6,536,000 during the thirteen weeks ended June 28, 2015. During the thirteen weeks ended June 26, 2016, royalties earned under the John Morrell & Co., agreement increased by 4.4% to $6,362,000 as compared to $6,095,000 of royalties earned during the thirteen weeks ended June 28, 2015.  The increase is substantially attributable to significant volume growth in our consumer packaged hot dog business compared to the thirteen weeks ended June 28, 2015, as a result of the ongoing sales, marketing and promotional strategies tied to lower beef costs.
  • Sales from the Branded Product Program, featuring the sale of Nathan's hot dogs to the foodservice industry, were $16,254,000 during the thirteen weeks ended June 26, 2016, as compared to sales of $17,415,000 during the thirteen weeks ended June 28, 2015. This change was attributable to a 2.7% increase in the volume of products sold, which was more than offset by lower average selling prices of 9.6% due to the impact of lower beef prices on that portion of our business that is priced using formulas tied to the cost of beef.
  • Sales from the Company-operated restaurants were $4,843,000 during the thirteen weeks ended June 26, 2016 as compared to $5,299,000 during the thirteen weeks ended June 28, 2015. Sales at our Company-owned restaurants were unfavorably affected during the quarter due primarily to the amount of rain and unseasonably cool weather during April and May 2016 that hurt our Coney Island locations.
  • Revenues from franchise operations increased to $1,330,000 during the thirteen weeks ended June 26, 2016, as compared to $1,227,000 during the thirteen weeks ended June 28, 2015. Total franchise fee income was $178,000 during the thirteen weeks ended June 26, 2016 as compared to $41,000 during the thirteen weeks ended June 28, 2015, primarily due to the difference in fees earned from our international franchising program. Eight new franchised units were opened during the thirteen weeks ended June 26, 2016, including four Branded Menu Program outlets. Fifteen new franchised units were opened during the thirteen weeks ended June 28, 2015, including ten Branded Menu Program outlets.
  • Nathan's tax rate was reduced by 12.0 percentage points as a result of early adopting the provisions of Financial Accounting Standards Board ASU 2016-09, "Stock Compensation", which now reduces the Company's tax provision for the excess tax benefits associated with stock compensation instead of increasing Additional paid-in-capital, as was past practice.

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 (loss) 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 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 eleven foreign countries through its restaurant system, foodservice sales programs and product licensing activities. Last year, over 550 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. and Subsidiaries

Financial Highlights

Thirteen weeks ended

June  26, 2016

June 28, 2015

(unaudited)

Total revenues

$   29,416,000

$   30,654,000

Income from operations (a)

$     8,824,000

$     7,616,000

Net income

$     3,550,000

$     2,310,000

Income per share:

   Basic

$              0.85

$              0.50

   Diluted

$              0.85

$              0.50

Weighted-average shares used in

   computing income per share:

   Basic

4,166,000

4,584,000

   Diluted

4,191,000

4,621,000

(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

June  26, 2016

June 28, 2015

(unaudited)

EBITDA

Net income

$      3,550,000

$ 2,310,000

Interest expense

3,676,000

3,709,000

Provision for income taxes

1,620,000

1,628,000

Depreciation and amortization

347,000

339,000

EBITDA

$    9,193,000

$   7,986,000

Adjusted EBITDA

EBITDA

$     9,193,000

$   7,986,000

Stock-based compensation

173,000

203,000

Amortization of bond premium (b)

-0-

68,000

Adjusted EBITDA

$    9,366,000

$   8,257,000

(b) Represents the premiums paid on our purchase of available-for-sale securities.

 

COMPANY 

Ronald G. DeVos, Vice President - Finance and CFO

CONTACT:  

(516) 338-8500 ext. 229

                                 

SOURCE Nathan's Famous, Inc.