DALLAS, Sept. 30, 2019 // PRNewswire // - RAVE Restaurant Group, Inc. (NASDAQ: RAVE) today reported financial results for the fourth quarter and fiscal year ended June 30, 2019.
Fourth Quarter Highlights:
Annual Highlights:
The Company's net loss of $0.8 million in the fourth quarter of fiscal 2019, or $0.05 per diluted share, was a decrease of $4.2 million, or $0.26 per diluted share, compared to the same period of the prior year. The decrease in net income in the fourth quarter of fiscal 2019 over the prior year was largely due to increases in impairments of long-lived assets and other lease charges of $1.1 million and decreased tax benefit of $3.0 million compared to the same period of the prior year.
The Company's net loss of $0.8 million in fiscal 2019, or $0.05 per diluted share, was a decrease of $2.7 million, or $0.18 per diluted share, compared to the same period of the prior year. The decrease in net income for fiscal 2019 compared to the prior year was primarily due to decreased tax benefit of $3.3 million partially offset by a $0.2 million improvement in continuing operations before taxes and the absence of the prior year's $0.4 million in net loss from discontinued operations.
Adjusted EBITDA of a $0.3 million loss in the fourth quarter of fiscal 2019was a decrease of $0.6 million compared to the same period of the prior year.
Adjusted EBITDA of $1.2 million for the 2019 fiscal year was an increase of $0.6 million compared to the same period of the prior year.
"Last quarter, we continued to make important improvements in leadership and overall strategy at both RAVE brands," said Bob Bafundo, President of RAVE Restaurant Group. "We continue to focus on the two primary levers for our business – growing same-store sales and adding new restaurants. By adding the right talent and growing each brand, we believe we are clearly setting the path for future success."
Fourth Quarter Fiscal 2019 Operating Results
Pizza Inn total domestic and comparable store retail sales increased by 0.8% and 2.2%, respectively, during the fourth quarter of fiscal 2019 compared to the same period of the prior year.
"Pizza Inn had another positive quarter," said Bafundo. "We've made tremendous progress and have seen exceptional results from our strategy of aligning with franchisees on brand objectives and improving communication across the system. In addition, initiatives such as all-day buffet and restaurant remodels continue to drive sales and traffic growth. We are proud of the renewed excitement around this brand and look forward to additional successes in 2020."
Pie Five total domestic and comparable store retail sales decreased by 22.1% and 7.3%, respectively, for the fourth quarter of fiscal 2019 compared to the same period of the prior year.
"To improve service consistency and operational efficiency at Pie Five, we've added Scott Black to the team as our new Vice President of Operations," said Bafundo. "Scott has a proven track record of success with over 30 years of experience in the food and beverage industry, specifically in the pizza segment and as a restaurant owner. Scott is assisting us in sharpening our distinctive service model to create a guest experience that capitalizes on the customization, approachability, and speed of dining with Pie Five."
Consolidated revenues for the fourth quarter of fiscal 2019 were $3.1 million compared to $2.8 million in the same period of the prior year.
Fiscal Year 2019 Operating Results
Pizza Inn comparable store retail sales increased by 2.6% and total domestic retail sales increased by 1.8% during fiscal 2019 compared to the prior year.
Pie Five comparable store retail sales and system-wide retail sales decreased by 4.4% and 14.6%, respectively, during fiscal 2019 compared to the prior year.
"Pizza Inn has now been on a positive course for ten straight quarters and we are confident this sales momentum will continue," said Bafundo. "At Pie Five, we still have work to do in optimizing the service model and building our local restaurant marketing programs in our trade areas. We anticipate that improvements in these areas along with strategic investments in third-party delivery, online ordering and carry-out will all have a long-term impact on off-premise sales and traffic growth."
Consolidated revenues during fiscal 2019 were $12.3 million compared to $15.1 million in the same period of the prior year primarily as a result of lower Company-owned restaurant count.
The Company's cash and cash equivalents increased to $2.4 million as of June 30, 2019, a $0.9 million improvement over the prior year end. The increase in cash and cash equivalents resulted from $0.6 million in cash provided by operating activities, $0.2 million in cash provided by investing activities, and $0.1 million in cash provided by financing activities.
Development Review
During the fourth quarter of fiscal 2019, Pizza Inn domestic unit count including PIE decreased by one.
"With existing franchisees signing on for multi-unit development agreements, Pizza Inn is now outperforming our recent pace of development," said Bafundo. "It's exciting to see our legacy brand growing again and we expect new development to keep the pipeline full for the coming quarters."
The Company continued its rollout of Pizza Inn Express, or PIE, that debuted in 2018 with one new opening in the fourth quarter of fiscal 2019 bringing the unit count to nine at the end of the quarter.
"As one of the only restaurant-branded concepts in the convenience store space, PIE continues to gain traction," said Bafundo. "Only 18 months ago, we started with a blank slate and took a year to develop this non-traditional model and define operational systems. Today, we have a concept that provides a seamless customer experience with the same quality pizza found in our traditional locations. The development opportunities for this concept are both promising and significant."
In the fourth quarter of fiscal 2019, Pie Five opened one new domestic unit, closed four domestic units and transferred one Company-owned unit to a franchisee, bringing the domestic unit count to 58 restaurants at the end of the quarter.
"We continue to experience strong interest in Pie Five," said Bafundo. "With our Goldilocks model, we have lowered the new store development investment as well as ongoing occupancy costs. This strategy has begun to show positive results in improving restaurant fundamentals. Non-traditional development is surpassing projections and, as we leverage these opportunities, we expect this success to continue."
Conference Call
A conference call and audio webcast have been scheduled to discuss these results. Details of the conference call are as follows:
The conference call will be webcast at raverg.com. A web-based archive of the conference call will also be available at the above website.
Non-GAAP Financial Measures
The Company's financial statements are prepared in accordance with United States generally accepted accounting principles ("GAAP"). However, the Company also presents and discusses certain non-GAAP financial measures that it believes are useful to investors as measures of operating performance. Management may also use such non-GAAP financial measures in evaluating the effectiveness of business strategies and for planning and budgeting purposes. However, these non-GAAP financial measures should not be viewed as an alternative or substitute for its financial statements prepared in accordance with generally accepted accounting principles.
The Company considers EBITDA and Adjusted EBITDA to be important supplemental measures of operating performance that are commonly used by securities analysts, investors and other parties interested in our industry. The Company believes that EBITDA is helpful to investors in evaluating its results of operations without the impact of expenses affected by financing methods, accounting methods and the tax environment. The Company believes that Adjusted EBITDA provides additional useful information to investors by excluding non-operational or non-recurring expenses to provide a measure of operating performance that is more comparable from period to period. Management also uses these non-GAAP financial measures for evaluating operating performance, assessing the effectiveness of business strategies, projecting future capital needs, budgeting and other planning purposes.
"EBITDA" represents earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, stock compensation expense, pre-opening expense, gain/loss sale of assets, costs related to impairment, discontinued operations and closed and non-operating store costs. A reconciliation of these non-GAAP financial measures to net income is included with the accompanying financial statements.
Note Regarding Forward Looking Statements
Certain statements in this press release, other than historical information, may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are intended to be covered by the safe harbors created thereby. These forward-looking statements are based on current expectations that involve numerous risks, uncertainties and assumptions. Assumptions relating to these forward-looking statements involve judgments with respect to, among other things, future economic, competitive and market conditions, regulatory framework and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of RAVE Restaurant Group, Inc. Although the assumptions underlying these forward-looking statements are believed to be reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that any forward-looking statements will prove to be accurate. In light of the significant uncertainties inherent in these forward-looking statements, the inclusion of such information should not be regarded as a representation that the objectives and plans of RAVE Restaurant Group, Inc. will be achieved.
Founded in 1958, Dallas-based RAVE Restaurant Group [NASDAQ: RAVE] owns, operates, franchises and/or licenses 261 Pie Five Pizza Co. and Pizza Inn restaurants and Pizza Inn Express kiosks domestically and internationally. Pizza Inn is an international chain featuring freshly made pizzas, along with salads, pastas, and desserts. Pie Five Pizza Co. is a leader in the rapidly growing fast-casual pizza space offering made-to-order pizzas ready in under five minutes. Pizza Inn Express, or PIE, is developing unique opportunities to provide freshly made pizza from non-traditional outlets. The Company's common stock is listed on the Nasdaq Capital Market under the symbol "RAVE". For more information, please visit www.raverg.com.
Investor Relations
RAVE Restaurant Group, Inc.
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SOURCE RAVE Restaurant Group, Inc.
Founded in 1958, Dallas-based RAVE Restaurant Group owns, operates and franchises Pie Five Pizza Co. and Pizza Inn restaurants domestically and internationally.