Famous Dave's Reports Second Quarter Earnings of $0.26 per share
MINNEAPOLIS--(BUSINESS WIRE)--Famous Dave's of America, Inc. (NASDAQ: DAVE) today announced revenue and net income of $36.3 million and $2.4 million, respectively, or $0.26 per diluted share for its fiscal 2009 second quarter ended June 28, 2009. This compares to revenue and net income of $38.8 million and $2.3 million, respectively, or $0.23 per diluted share for the comparable period of 2008. For the six months ended June 28, 2009, the Company had revenue and net income of $70.1 million and $3.7 million, respectively, or $0.40 per diluted share. For the comparable six months of 2008, the Company had revenue and net income of $72.5 million and $3.1 million, respectively, or $0.32 per diluted share.
Same store sales for company-owned restaurants open for 24 months or more decreased 9.4 percent during the quarter, while same store sales for franchise-operated restaurants declined 10.9 percent. Franchise royalty revenue for the quarter totaled $4.4 million, down 4.9 percent over the comparable period in 2008. Same store sales for company-owned restaurants open for 24 months or more decreased 7.5 percent during the first half of 2009, while same store sales for franchise-operated restaurants declined 8.6 percent during the period. Franchise royalty revenue for the first six months in 2009 totaled $8.6 million, compared to $8.8 million for the first half of 2008.
The reduction in sales for the second quarter reflects continued industry-wide pressure related to the general economy, as the company suffered declines in dine-in, to-go, and catering. Additionally, the shift of the Easter holiday from the first quarter of 2008 to the second quarter of 2009 had an approximate 1% unfavorable impact on comparable sales. These declines were net of weighted average price increases of 3.1% since June 1st, 2008. No price increases have been taken since October 2008.
"We were pleased with our bottom line results this quarter, especially in light of the exceedingly difficult operating environment," said Christopher O'Donnell, President and Chief Executive Officer. "I'm proud of the entire organization," O'Donnell continued. "As a result of an intensified focus on essentially every aspect of our business, along with prudent spending, we delivered higher earnings in spite of the significant pressure on overall revenue."
The company's 2009 second quarter also reflected the following:
- As previously reported, the company terminated two of its Atlanta, Georgia leases for a total of approximately $1.0 million, resulting in the recapture of the lease termination reserve of approximately $450,000, or $0.03 per diluted share. This is reflected within asset impairment and estimated lease termination and other closing costs in the statement of operations.
- As previously reported, the company incurred an early termination fee of $350,000 for the early repayment of approximately $3.0 million of debt. This is reflected as a loss on early extinguishment of debt in the statement of operations. Additionally associated with this transaction, the company wrote-off deferred financing costs of approximately $100,000. These costs are reflected within interest expense in the statement of operations. The total impact of these two items was approximately $450,000, or $0.03 per diluted share.
- Operating expenses as a percentage of sales were favorable to the prior year, reflecting lower advertising expense due to a reduction of the national ad fund contribution, savings in media placement fees and a shift in the timing of advertising spending. Additionally, utility costs were favorable to the prior year comparable period due to rate declines and usage decreases stemming from cooler average temperatures. Fiscal 2009 advertising expenses are still expected to be approximately 3.5% of net restaurant sales, which includes 0.5% contribution to the national advertising fund.
- A 9.2% reduction in general and administrative costs reflects lower stock-based compensation, the favorable impact from headcount reductions, lower bad debt expense, and overall cost savings initiatives.
- Cash generated from operating activities was approximately $3.5 million for the second quarter of 2009, and was used primarily for the repayment of long-term, fixed-rate debt and further reduction of the balance on the company's line of credit.
Subsequent to the end of the fiscal quarter, the company repaid an additional $1.2 million of long-term fixed-rate debt early, with no pre-payment penalties. The company has also scheduled the payment of an additional $1.4 million of long-term fixed-rate debt on July 31st. Including these actions, as of July 31st, the company will have paid down a net total of approximately $8.3 million of debt since the end of fiscal 2008, representing approximately 28% of its outstanding debt.
"We remain disappointed with the current sales environment," said O'Donnell, "however, while we've used a limited level of promotional discounting as a tactic to remain relevant to an increasing number of value-conscious consumers, we've purposely avoided a strategy of deep discounting in order to drive sales, as that approach isn't sustainable long-term. We have chosen to remain true to our entrepreneurial and innovative spirit, and are excited about the new item pipeline and the variety of marketing initiatives." O'Donnell continued, "In this environment, we need to ensure that we are making the best decisions for today, yet we must also be looking to the future to ensure continued growth and long-term sustainability."
Stock-Based Compensation
Earnings results for the second quarter of 2009 included approximately $237,000 or $0.02 per diluted share, in compensation expense as related to the company's stock-based incentive programs, as compared to approximately $317,000 or $0.02 per diluted share, for the prior year comparable period.
Stock-based compensation expense for the six months ended June 28, 2009 was approximately $375,000 or $0.03 per diluted share, compared to approximately $597,000 or $0.04 per diluted share for the prior year comparable period.
Marketing and Development
Development and marketing highlights during the quarter included a successful "limited time offer" of "Natcho Ordinary Natchos" and "Sweet Dixie Mini Desserts," two menu items that have become part of the company's permanent menu.
Famous Dave's opened three new franchise-operated restaurants during the second quarter, located in New York City's Times Square, Pensacola, Florida, and Tualatin, Oregon. The company also closed its West St. Paul, Minnesota location during the second quarter at the end of its original lease term. Famous Dave's ended the quarter with 176 restaurants, located in 38 states, including 46 company-owned restaurants and 130 franchise-operated restaurants. The company recently issued guidance that it expects to open a total of 9 to 11 franchise restaurants in 2009.
Conference Call
The company will host a conference call tomorrow, July 30, 2009, at 10:00 a.m. Central Time to discuss its first quarter financial results. There will be a live webcast of the discussion through the Investor Relations section of Famous Dave's web site at www.famousdaves.com.
About Famous Dave's
Famous Dave's of America, Inc. (NASDAQ: DAVE) develops, owns, operates and franchises barbeque restaurants. Famous Dave's has 176 locations in 38 states. Its menu features award-winning barbequed and grilled meats, an ample selection of salads, side items and sandwiches, and unique desserts.
Statements in this press release that are not strictly historical, including but not limited to statements regarding the timing of our restaurant openings and the timing or success of our expansion 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 Famous Dave's of America, Inc. 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.
FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
Three Months Ended Six Months Ended
June 28, June 29, June 28, June 29,
2009 2008 2009 2008
Revenue:
Restaurant sales, net $ 31,546 $ 33,565 $ 60,837 $ 62,812
Franchise royalty revenue 4,434 4,661 8,609 8,828
Franchise fee revenue --- 232 75 347
Licensing and other revenue 345 316 591 502
Total revenue 36,325 38,774 70,112 72,489
Costs and expenses:
Food and beverage costs 9,506 10,292 18,284 19,231
Labor and benefits costs 9,372 9,728 18,683 18,910
Operating expenses 8,182 9,172 15,732 16,665
Depreciation and amortization 1,269 1,268 2,581 2,729
Asset impairment and estimated lease termination (433 ) --- (327 ) ---
and other
closing costs
General and administrative expenses 3,975 4,380 8,275 9,033
Pre-opening expenses --- 49 --- 303
Loss on disposal of property 6 12 6 6
Total costs and expenses 31,877 34,901 63,234 66,877
Income from operations 4,448 3,873 6,878 5,612
Other expense:
Loss on early extinguishment of debt (350 ) --- (350 ) ---
Interest expense (525 ) (463 ) (999 ) (974 )
Interest income 33 41 67 99
Other expense, net (18 ) (29 ) (8 ) (30 )
Total other expense (860 ) (451 ) (1,290 ) (905 )
Income before income taxes 3,588 3,422 5,588 4,707
Income tax expense (1,220 ) (1,150 ) (1,900 ) (1,600 )
Net income $ 2,368 $ 2,272 $ 3,688 $ 3,107
Basic net income per common share $ 0.26 $ 0.24 $ 0.41 $ 0.32
Diluted net income per common share $ 0.26 $ 0.23 $ 0.40 $ 0.32
Weighted average common shares outstanding - basic 9,105,000 9,633,000 9,094,000 9,622,000
Weighted average common shares outstanding - diluted 9,212,000 9,795,000 9,149,000 9,784,000
FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
OPERATING RESULTS
(unaudited)
Three Months Ended Six Months Ended
June 28, 2009 June 29, 2008 June 28, 2009 June 29, 2008
Food and beverage costs (1) 30.1 % 30.7 % 30.1 % 30.6 %
Labor and benefits costs (1) 29.7 % 29.0 % 30.7 % 30.1 %
Operating expenses (1) 25.9 % 27.3 % 25.9 % 26.5 %
Depreciation & amortization
(restaurant level) (1) 3.6 % 3.4 % 3.8 % 4.0 %
Depreciation & amortization
(corporate level) (2) 0.4 % 0.3 % 0.4 % 0.3 %
General and administrative expenses (2) 10.9 % 11.3 % 11.8 % 12.5 %
Asset impairment and estimated lease termination
and other closing costs (1) (1.4 %) --- (0.5 %) ---
Pre-opening expenses and
loss on disposal of property (1) --- 0.1 % --- 0.5 %
Total costs and expenses (2) 87.8 % 90.0 % 90.2 % 92.3 %
Income from operations (2) 12.2 % 10.0 % 9.8 % 7.7 %
(1) As a percentage of restaurant sales, net
(2) As a percentage of total revenue
FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands) June 28, December 28,
2009 2008
ASSETS
Cash and cash equivalents $ 1,936 $ 1,687
Other current assets 10,367 11,604
Property, equipment and leasehold improvements, net 55,908 58,129
Other assets 1,901 1,981
Total assets $ 70,112 $ 73,401
LIABILITIES AND SHAREHOLDERS' EQUITY
Line of credit $ 14,500 $ 18,000
Other current liabilities 12,361 12,060
Long-term obligations 12,990 17,157
Shareholders' equity 30,261 26,184
Total liabilities and shareholders' equity $ 70,112 $ 73,401
FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands) Six Months Ended
June 28, June 28,
2009 2008
Cash flows provided by operating activities $ 7,322 $ 6,724
Cash flows used for investing activities (442 ) (4,371 )
Cash flows used for financing activities (6,631 ) (2,876 )
Increase (decrease) in cash and cash equivalents $ 249 $ (523 )
SUPPLEMENTAL SALES INFORMATION
(unaudited)
Three Months Ended Six Months Ended
June 28, June 29, June 28, June 29,
2009 2008 2009 2008
Total weighted average weekly net sales (AWS):
Company-Owned $ 52,667 $ 57,259 $ 50,278 $ 53,903
Franchise-Operated $ 56,441 $ 61,339 $ 55,567 $ 58,537
AWS 2005 and Post 2005: (1)
Company-Owned $ 62,359 $ 73,117 $ 60,694 $ 70,658
Franchise-Operated $ 62,179 $ 69,101 $ 61,528 $ 66,268
AWS Pre 2005: (1)
Company-Owned $ 49,246 $ 53,295 $ 46,654 $ 49,822
Franchise-Operated $ 48,225 $ 52,180 $ 47,252 $ 49,578
Operating Weeks:
Company-Owned 598 585 1,209 1,164
Franchise-Operated 1,656 1,587 3,250 3,126
Comparable net sales (24 month):
Company-Owned % (9.4 %) 1.7 % (7.5 %) 2.3 %
Franchise-Operated % (10.9 %) (1.4 %) (8.6 %) (1.9 %)
Total number of restaurants:
Company-Owned 46 45 46 45
Franchise-Operated 130 125 130 125
Total 176 170 176 170
Total number of comparable restaurants:
Company-Owned 38 38 38 36
Franchise-Operated 94 85 93 78
(1) Provides further delineation of AWS for restaurants opened during pre-fiscal 2005,
and restaurants opened during the post-fiscal 2005, timeframes.
SOURCE: Famous Dave's
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