MINNEAPOLIS - March 05, 2018 // GLOBE NEWSWIRE // - Famous Dave's of America, Inc. (NASDAQ:DAVE) today reported financial results for the fourth fiscal quarter and full year ended December 31, 2017 compared to the fourth quarter and full year ended January 1, 2017.
Highlights for the fourth fiscal quarter of 2017 include the following:
Highlights for the fiscal year 2017 include the following:
Key Operating Metrics
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(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 (loss) income 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.”
Fourth Quarter 2017 Review
Total revenue for the fourth quarter of 2017 was $12.5 million, down 27.8% from the fourth quarter of 2016. The decrease in Company-owned net restaurant sales revenue was primarily driven by the closure of thirteen restaurants in fiscal 2017. This decrease was partially offset by an 8.0% increase in same-store sales. The declines in franchise royalty and fee revenue were driven by the net closure of five franchise restaurants, which included the refranchising of eight Company-owned restaurants in the fourth quarter of fiscal 2017.
Restaurant-level operating margin for Company-owned restaurants was 1.3%, an increase from (3.8%) in the fourth quarter of fiscal 2016. The increase was primarily driven by lower occupancy costs, advertising spend, and improved actual versus theoretical food cost, partially offset by increased fixed labor and other operating costs.
General and administrative expenses decreased to $2.8 million from $4.1 million in the fourth quarter of 2016. The year over year decline was primarily a result of the continued optimization of our general and administrative expense structure, partially offset by severance expense recognized for executive departures as well as incentive compensation expense recognized in accordance with current executive employment agreements.
We recognized net loss from continuing operations of approximately $1.5 million, or ($0.21) per share, in the fourth quarter of 2017 compared to a loss from continuing operations of $982,000, or ($0.14) per share, in the fourth quarter of 2016. Although our pretax income was positive, the effects of the Tax Cuts and Jobs Act signed into law in late 2017 caused us to revalue our net deferred tax assets and resulted in a significant tax charge. We recognized a net loss from discontinued operations of $2.3 million, or ($0.32) per share, in the fourth quarter of 2017, compared to income of approximately $40,000, or $0.01 per share, in the fourth quarter of 2016.
Adjusted net loss from continuing operations, a non-GAAP measure, was approximately $103,000, or ($0.01) per share, compared to a loss of approximately $500,000, or ($0.07) per share, in the fourth quarter of 2016. A reconciliation between adjusted net loss and its most directly comparable GAAP measure is included in the accompanying financial tables.
Fiscal 2017 Review
Total revenue for the fiscal year 2017 was $64.6 million, down 15.7% from fiscal 2016. The decrease in Company-owned net restaurant sales revenue was primarily driven by the closure of thirteen restaurants in fiscal 2017, partially offset by a 2.4% increase in same-store sales. The declines in franchise royalty and fee revenue was primarily a result of the net closure of five franchise restaurants, which included the refranchising of eight Company-owned restaurants in fiscal 2017, a 2.3% decrease in same-store sales and less franchise fees recognized on the restaurants that opened in 2017 as compared to fiscal 2016.
Restaurant-level operating margin was 3.6%, an increase from 1.6% during fiscal 2016. This increase was primarily a result of improved actual versus theoretical food cost and reduced operating expenses, partially offset by increased fixed labor.
General and administrative expenses decreased to $14.6 million, from $16.6 million in fiscal 2016. The decrease in general and administrative expenses was primarily related to the continued optimization of our general and administrative expense structure, reduced costs incurred for the corporate office, third party consulting services and professional fees. As a percentage of revenue, general and administrative expenses increased due to sales deleverage.
We recognized net loss from continuing operations of approximately $6.7 million, or ($0.95) per share, in fiscal 2017 compared to a loss from continuing operations of $4.1 million, or ($0.59) per share, in fiscal 2016. We recognized a net loss from discontinued operations of $1.5 million, or ($0.21) per share, in fiscal 2017, compared to income of approximately $1.7 million, or $0.24 per share, in fiscal 2016.
Adjusted net income from continuing operations, a non-GAAP measure, was approximately $410,000, or $0.06 per share, compared to a loss of approximately $633,000, or ($0.09) per share, in fiscal 2016. A reconciliation between adjusted net income (loss) and its most directly comparable GAAP measure is included in the accompanying financial tables.
Executive Comments
Jeff Crivello, CEO, commented, “I am extremely proud of the work that the team achieved in the fourth quarter and throughout fiscal 2017, particularly the refranchising of our Mid-Atlantic market to our largest franchisee, the implementation of third party delivery at company-owned restaurants, and the finalization of the restructure of the company’s general and administrative expenses. We continue to work on the revitalization of the totality of the guest experience in our core restaurants and remain engaged on the development of the new concept for the future. We look forward to building on these achievements into fiscal 2018. Finally, the board and I express sincere thanks and appreciation to Dexter Newman, our Chief Financial Officer who is departing today, for his leadership and stewardship of the restructuring of our organization over the past two years.”
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 March 5, 2018, the Company owns 16 locations and franchises an additional 135 restaurants in 32 states, the Commonwealth of Puerto Rico, Canada, and United Arab Emirates.
Non-GAAP Financial Measures
To supplement its consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States (“GAAP”), the Company uses non-GAAP measures including those indicated below. These non-GAAP measures exclude significant expenses and income that are required by GAAP to be recorded in the Company’s consolidated financial statements and are subject to inherent limitations. By providing non-GAAP measures, together with a reconciliation to the most comparable GAAP measure, the Company believes that it is enhancing investors’ understanding of the Company’s business and results of operations. These measures are not intended to be considered in isolation of, as substitutes for, or superior to, financial measures prepared and presented in accordance with GAAP. The non-GAAP measures presented may be different from the measures used by other companies. The Company urges investors to review the reconciliation of its non-GAAP measures to the most directly comparable GAAP measure, included in the accompanying financial tables.
Adjusted net (loss) income from continuing operations is net (loss) income from continuing operations, plus asset impairment, estimated lease termination and other closing costs, settlement agreements, net (loss) gain on disposal of equipment, stock-based compensation, severance, 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 (loss) income from continuing operations, per share. Adjusted EBITDA is net (loss) income, including discontinued operations, plus asset impairment, estimated lease termination and other closing costs, settlement agreements, depreciation and amortization, interest expense, net, net (loss) gain on disposal of equipment, stock-based compensation, severance 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 SEC reports.
Jeff Crivello
Chief Executive Officer
952-294-1300
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(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.
(4) Adjusted net income (loss) from continuing operations is a non-GAAP measure. 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.”
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SOURCE Famous Dave's of America, Inc.
Famous Dave's of America, Inc. develops, owns, operates and franchises Bar B Que restaurants.