MINNEAPOLIS, Aug. 12, 2019 // GLOBE NEWSWIRE // - Famous Dave's of America, Inc. (NASDAQ: DAVE), an innovating owner and operator of barbeque restaurants, globally, today reported financial results for the second fiscal quarter ended June 30, 2019.
Second Quarter 2019 Highlights:
Highlights Subsequent to the Second Quarter 2019:
Executive Comments
Jeff Crivello, CEO, commented, “For the second time since 2011, our franchise community posted positive same store net sales, driven by a 0.7% increase from domestic franchisees, partially offset by a 5.8% decline from our international community. During the first half of fiscal 2019, we have reinvested approximately $5.7 million into our system, including repurchasing franchise restaurants, and refreshes of company owned restaurants. In addition, we refinanced our credit facility in preparation of our growth initiatives. We have also begun the process to open new, small footprint restaurants in select markets.”
Key Operating Metrics
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(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.”
Second Quarter 2019 Review
Total revenue for the second quarter of 2019 was $21.1 million, up 45.3% from the second quarter of 2018. The increase in year-over-year restaurant sales, net for the three months ended June 30, 2019 was driven primarily by the acquisition of Famous Dave’s stores in Colorado, Michigan, Ohio, Wisconsin, Indiana and Iowa and a 0.5% increase in franchise-operated same store net sales.
On a weighted basis, same store net sales for our To-Go line of business increased 2.2% in the second quarter of fiscal 2019 as compared to the prior year period, partially offset by a decline in Dine In and Catering lines of business of 2.7% and 0.3%, respectively. During the second quarter of fiscal 2019, Dine In represented approximately 51% of our total restaurant sales, net, while To Go and Catering represented 36% and 13% of restaurant sales, net, respectively.
Restaurant-level operating margin, as a percentage of restaurant sales, net, for Company-owned restaurants was 3.4% compared to 6.0% in the second quarter of fiscal 2018. This decline in restaurant-level operating margin was primarily a result of acquisitions of new stores in 2019, which we believe will stabilize over the remainder of fiscal 2019.
General and administrative expenses for the three months ended June 30, 2019 and July 1, 2018 represented approximately 11.3% and 14.5% of total revenues, respectively. The increase to general and administrative expenses primarily related to acquisition costs incurred related to our completed and pending acquisitions.
Net income was approximately $1.0 million, or $0.11 per share, in the second quarter of fiscal 2019 compared to net income of approximately $1.4 million, or $0.16 per share, in the second quarter of fiscal 2018. Adjusted net income, a non-GAAP measure, was approximately $1.4 million, or $0.16 per share, compared to adjusted net income of approximately $1.7 million, or $0.19 per share, in the second quarter of fiscal 2018. A reconciliation between adjusted net income and its most directly comparable GAAP measure is included in the accompanying financial tables.
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 August 12, 2019, the Company owns 33 locations and franchises an additional 101 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 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 diluted 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, 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 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
Peter Seltzberg
Managing Director
Darrow Associates, Inc.
516-419-9915
pseltzberg@darrowir.com
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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.
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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.