Nathan's Famous, Inc. Reports Second Quarter Results

JERICHO, N.Y. - Oct. 31, 2012 // PRNewswire // -- Nathan's Famous, Inc. (NASDAQ: NATH) today reported results for the second quarter of its 2013 fiscal year that ended September 23, 2012.

For the fiscal quarter ended September 23, 2012:

  • Net income increased 25.4% to $2,845,000 as compared to $2,269,000 for the thirteen weeks ended September 25, 2011;
  • Earnings per diluted share increased 40.9% to $0.62 as compared to $0.44 for the thirteen weeks ended September 25, 2011;
  • Non-GAAP earnings, which exclude the litigation expense items described below, were $2,912,000 or $0.63 per diluted share, as compared to $2,343,000 or $0.45 per diluted share for the thirteen weeks endedSeptember 25, 2011; and
  • Revenues increased 11.7% to $21,360,000, as compared to $19,118,000 during the thirteen weeks ended September 25, 2011.

For the twenty-six weeks ended September 23, 2012:

  • Net income increased 25.5% to $4,851,000 as compared to $3,865,000 for the twenty-six weeks ended September 25, 2011;
  • Earnings per diluted share increased 41.3% to $1.06 as compared to $0.75 for the twenty-six weeks ended September 25, 2011;
  • Non-GAAP earnings, which exclude the litigation expense items described below, were $4,985,000 or $1.09 per diluted share, as compared to $4,009,000 or $0.77 per diluted share for the twenty-six weeks endedSeptember 25, 2011; and
  • Revenues increased 12.2% to $41,542,000, as compared to $37,015,000 during the twenty-six weeks ended September 25, 2011.

The Company also reported the following:

  • Sales from the Branded Product Program, featuring the sale of Nathan's hot dogs to the foodservice industry, increased 12.5% to $23,291,000 during the twenty-six weeks ended September 23, 2012, as compared to sales of $20,706,000 during the twenty-six weeks ended September 25, 2011.
  • Sales and direct operating cash flows from the five Company-owned restaurants were $10,697,000 and $3,032,000, respectively, during the twenty-six weeks ended September 23, 2012 as compared to $9,051,000and $2,413,000, respectively during the twenty-six weeks ended September 25, 2011.
  • Gross profit increased to 23.9% of sales during the twenty-six weeks ended September 23, 2012, as compared to 22.0% of sales during the twenty-six weeks ended September 25, 2011 due primarily to improved margins from our Branded Product Program.
  • Retail license royalties increased 18.5% or $678,000 to $4,351,000 during the twenty-six weeks ended September 23, 2012, as compared to $3,673,000 during the twenty-six weeks ended September 25, 2011.
  • Revenues from franchise operations were $2,938,000 during the during the twenty-six weeks ended September 23, 2012, as compared to $2,855,000 during the twenty-six weeks ended September 25, 2011. Twenty-three new franchised units were opened during the twenty-six weeks ended September 23, 2012, including our first two mobile trucks, our sixth restaurant in the Dominican Republic and twelve Branded Menu Program outlets.
  • Nathan's executed two Master Development Agreements comprising the Republic of Turkey, including the Turkish Republic of Northern Cyprus and Mexico City, Mexico.
  • In April 2012, we opened our newly relocated seasonal restaurant on the Boardwalk in Coney Island, New York.

As previously described with respect to our litigation with SMG, on April 7, 2011, the Court entered a stipulation and order which granted a stay of enforcement of the final judgment which is in the amount of approximately $4,910,000.

On March 4, 2011, Nathan's filed a notice of appeal seeking to appeal the final judgment. Throughout the duration of the appeal, Nathan's is required to deposit post-judgment interest on the damages awarded at 9% per annum into a security account. Nathan's has continued to make these deposits and recorded interest expense of $134,000, net of tax, during each of the twenty-six week periods ended September 23, 2012 and September 25, 2011.

Certain Non-GAAP Financial Information

In addition to disclosing results that are determined in accordance with Generally Accepted Accounting Principles in the United States of America ("GAAP"), the Company has provided its Non- GAAP earnings and earnings per diluted share as adjusted for the litigation expenses described above, including the interest expense that has accrued during the appeals process through the end of the second quarter, that the Company believes impacts the comparability of its results of operations.

The Company believes that such non-GAAP financial information is useful to investors to assist in assessing and understanding the Company's operating performance and underlying trends in the Company's business because management considers the litigation expenses referred to above to be outside the Company's normal operating results. This non-GAAP financial information is among the indicators management uses as a basis for evaluating the Company's financial and operating performance.

The presentation of this additional non-GAAP financial information is not meant to be considered in isolation or as a substitute for, or alternative to, earnings and earnings per diluted share determined in accordance with GAAP. Analysis of results and outlook on a non-GAAP basis should be used as a complement to, and in conjunction with, data presented in accordance with GAAP.

About Nathan's Famous

Nathan's products are currently distributed in 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, the Cayman Islands and six foreign countries through its restaurant system, foodservice sales programs and product licensing activities. The Nathan's restaurant system currently consists of 309 units, comprised of 304 franchised units and five company-owned units (including one seasonal unit). For additional information about Nathan's please visit our website at www.nathansfamous.com.

Except for historical information contained in this news release, the matters discussed are forward looking statements that involve risks and uncertainties. Words such as "anticipate", "believe", "estimate", "expect", "intend", and similar expressions identify forward-looking statements, which are based on the current belief of the Company's management, as well as assumptions made by and information currently available to the Company's management. Among the factors that could cause actual results to differ materially are the following: the effect of business and economic conditions; the impact of competitive products and pricing; the ability to obtain an adequate supply of beef and other food products at competitive prices; the terms and conditions of our next hot dog licensing agreement; capacity; the regulatory and trade environment; and the risk factors reported from time to time in the Company's SEC reports. The Company does not undertake any obligation to update such forward-looking statements.

 

Nathan's Famous, Inc.

               

Financial Highlights

             
   

Thirteen weeks ended

     

Twenty-six weeks ended

 
 

Sept. 23, 2012

 

Sept. 25, 2011

 

Sept. 23, 2012

 

Sept. 25, 2011

 
                 
   

(unaudited)

     

(unaudited)

   
                 
                 

Total revenues

$    21,360,000

 

$   19,118,000

 

$   41,542,000

 

$   37,015,000

 
                 

Net income

$      2,845,000

 

$     2,269,000

 

$     4,851,000

 

$     3,865,000

 
                 

Basic income per share

               

   Net income

$               0.65

 

$              0.45

 

$              1.11

 

$              0.77

 
                 

Diluted income per share

               

   Net income

$               0.62

 

$              0.44

 

$              1.06

 

$              0.75

 
                 
                 

Weighted-average shares used in

               

   computing income per share

               
                 
 

Basic

        4,407,000

 

      5,025,000

 

       4,387,000

 

      5,051,000

 
 

Diluted

       4,604,000

 

      5,163,000

 

       4,568,000

 

      5,182,000

 
                                       


 

 

Nathan's Famous, Inc.
Reconciliation of GAAP and Non-GAAP Measures

               
               
   

Thirteen weeks ended

     

Twenty-six weeks ended 

 
 

Sept. 23, 2012

 

Sept. 25, 2011

 

Sept. 23, 2012

 

Sept. 25, 2011

 
                 
   

(unaudited)

     

(unaudited)

   
                 

NET INCOME

               

Net income

$      2,845,000

 

$     2,269,000

 

$     4,851,000

 

$     3,865,000

 
                 

Legal expense (a), (net of tax)

-

 

              7,000

 

-

 

            10,000

 
                 

Interest expense (b), (net of tax)

             67,000

 

            67,000

 

          134,000

 

          134,000

 
                 

Non-GAAP income

$      2,912,000

 

$     2,343,000

 

$     4,985,000

 

$     4,009,000

 
                 
                 
                 

DILUTED INCOME PER SHARE

               

Net income

$               0.62

 

$              0.44

 

$              1.06

 

$              0.75

 
                 

Legal expense (a), (net of tax)

-

 

-

 

-

 

-

 
                 

Interest expense (b), (net of tax)

                 0.01

 

                0.01

 

                0.03

 

                0.02

 
                 

Non-GAAP income per share

$               0.63

 

$              0.45

 

$              1.09

 

$              0.77

 
                                     
                                     

 

  (a)   Represents legal expense incurred in connection with the SMG matter during the respective periods.

   

 

  (b)   Represents accrued interest expense incurred in connection with Nathan's appeal of the SMG damages award.

Contact:

Ronald G. DeVos
Vice President
Finance and CFO
(516) 338-8500 ext. 229

SOURCE Nathan's Famous, Inc.

###

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