MINNEAPOLIS - May 14, 2018 // GLOBE NEWSWIRE // - Famous Dave's of America, Inc. (NASDAQ:DAVE) today reported financial results for the first fiscal quarter ended April 1, 2018 compared to the first fiscal quarter ended April 2, 2017.
Highlights for the first fiscal quarter of 2018 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.”
First Quarter 2018 Review
Total revenue for the first quarter of 2018 was $12.8 million, down 24.2% from the first quarter of 2017. The decrease in Company-owned net restaurant sales revenue was primarily a result of the closure of 12 Company-owned restaurants. The impact of these closures was partially offset by a 5.2% increase in same-store sales. The declines in franchise royalty and fee revenue were driven to the net closure of two franchise operated restaurants, a decline in franchise-operated same store sales of 1.6% and royalty abatements agreed upon to facilitate the transfer of certain of our franchise-operated restaurants to new operators, who have committed to investing necessary resources to refresh these transferred stores. Additionally, the adoption of ASC 606 – Revenue From Contracts with Customers resulted in approximately $525,000 of additional revenue during the first quarter of 2018.
Restaurant-level operating margin, as a percentage of restaurant sales, net, for Company-owned restaurants was (0.5%), a decrease from 0.8% in the first quarter of fiscal 2017. The decrease was primarily driven by a smaller restaurant base over which to allocate fixed costs, as well as commodities inflation, partially offset by lower labor costs, as a percentage of net restaurant sales.
General and administrative expenses decreased to $1.9 million from $4.5 million in the first quarter of fiscal 2017. The year over year decline was primarily a result of the alignment of our general and administrative expense structure to be commensurate with that of a more dedicated franchisor, lowering overhead strategically as we reduced our Company-owned restaurant count from 35 restaurants as of April 2, 2017 to 16 restaurants as of April 1, 2018.
We recognized net income from continuing operations of approximately $998,000, or $0.13 per share, in the first quarter of fiscal 2018 compared to a loss from continuing operations of $1.4 million, or ($0.21) per share, in the first quarter of fiscal 2017. We recognized a net income from discontinued operations of $182,000, or $0.03 per share, in the first quarter of fiscal 2017.
Adjusted net income from continuing operations, a non-GAAP measure, was approximately $954,000, or $0.13 per share, compared to a loss of approximately $451,000, or ($0.06) per share, in the first quarter of fiscal 2017. A reconciliation between adjusted net loss and its most directly comparable GAAP measure is included in the accompanying financial tables.
Executive Comments
Jeff Crivello, CEO, commented, “We saw many of our previously announced initiatives come to fruition in the first quarter of fiscal 2018 as we returned to profitability and continued to see positive comparable sales at Company-owned restaurants. We believe the continued adoption of third party delivery will help drive the top line performance of our franchisees throughout the year as only half of the serviceable units are currently live. We look forward to focusing on strategic investments to enhance our brand and value proposition to current and prospective franchisees.”
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 May 14, 2018, the Company owns 15 locations and franchises an additional 136 restaurants in 33 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
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
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FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
OPERATING RESULTS
(unaudited)
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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.
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
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FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
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FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION
(in thousands, except per share data)
(unaudited)
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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.