RAVE Restaurant Group, Inc. Reports Third Quarter of Fiscal Year 2015 Financial Results

Growth continues for Rave Restaurant brands with fourth consecutive quarter of positive comp sales increases at both Pie Five and Pizza Inn.

DALLAS - May 13, 2015 // PRNewswire // - RAVE Restaurant Group, Inc. (NASDAQ: RAVE) today reported financial results for the third quarter of fiscal 2015 ended March 29, 2015.

Third Quarter Highlights:

  • Total consolidated revenue increased 9.1% to $11.9 million compared to the third quarter of fiscal 2014.
  • Pizza Inn domestic comparable store retail sales increased 6.0% from the same period of the prior year, while total domestic retail sales increased by 3.0%.
  • Pie Five comparable store retail sales increased 9.5% from the same period of the prior year.
  • Pie Five system-wide total retail sales increased 109%, and average weekly sales increased 10.6%, year over year.
  • Net loss of $0.6 million, including $0.3 million of impairment charges, was $0.1 million greater than the same quarter of the prior year.
  • Adjusted EBITDA increased by $0.3 million over the same quarter of the prior year to a positive $0.1 million.
  • Nine additional Pie Five restaurants opened during the quarter bringing the total Pie Five restaurants open at the end of the quarter to 40.
  • Pie Five signed two additional franchisees with commitments to build up to 34 restaurants in five states.

RAVE Restaurant Group, Inc. (NASDAQ: RAVE) today announced results for its third quarter of fiscal 2015 ended March 29, 2015. The Company's net loss of $0.6 million in the third quarter was $0.1 million greater than the comparable period in the prior fiscal year and included a $0.3 million impairment charge for one of its two Company-owned Pizza Inn restaurants. Year-to-date net loss remained consistent with prior year, while Adjusted EBITDA for the first nine months improved by $0.6 million to a positive $0.3 million.

"We are very pleased with our results from the third quarter and believe the results reflect a continuation of our vision and steady quarter to quarter improvements," said Randy Gier, Chief Executive Officer of Rave Restaurant Group, Inc. "Pie Five continues its very impressive comp sales growth and new store development as it pioneers the emerging fast casual pizza segment. Furthermore, Pizza Inn recorded its fourth consecutive quarter of positive comp sales, which we view as a sign that we're returning this great brand to stability after a number of years of challenging results."

Third Quarter Fiscal 2015 Operating Results

Total revenues for the third quarter of fiscal 2015 and the comparable prior year quarter were $11.9 million and $10.9 million, respectively, an increase of 9.1% year over year. Additional franchise development fees previously received from Pie Five franchisees have been deferred and will be recognized as future restaurants are opened. Pizza Inn domestic comparable store retail sales increased 6.0% from the same period in the prior year.

"Consistency is key," said Gier. "Pizza Inn has recorded positive comps in 49 of the last 52 weeks. This brand is back due to the hard work of our franchisees aligned around a few key initiatives to increase quality, improve service, reduce costs and enable our general managers to run better restaurants.

"It's been many years since the Pizza Inn brand has been able to deliver a sustained growth path several quarters in a row, and so far in the current quarter we have maintained positive comps despite more difficult prior year comparison," added Gier. "I couldn't be more proud of the team – our franchisees, our operations and marketing team along with the Restaurant Support Center in their efforts to turn around our flagship brand."

For Pie Five, system-wide retail sales increased 109% for the third quarter of fiscal 2015 when compared to the same period in the prior year driven by a 84.2% increase in average units open and a 10.6% increase in the system-wide average weekly sales. The increase in average weekly sales was due to both strong sales in existing Company-owned restaurants and higher than average sales levels of newer restaurants. Comparable store retail sales increased by 9.5% for the most recent fiscal quarter compared to the same period in the prior year.

"Pie Five continues its Cinderella story," said Gier. "The concept continues to resonate with consumers as we roll across the country. Our customers are not only coming back, they are coming back more often, spending more, and bringing their friends with them. So far in the current quarter Pie Five's comparable store retail sales continue to trend positive even while comparing against double digit positive comps in the prior year."

Development Review

Nine new Pie Five restaurants were opened by the Company and franchisees in the third quarter fiscal 2015, bringing the fiscal quarter-end total to 40 restaurants. During the third quarter of fiscal 2015, the Company signed two new franchise development agreements to develop up to 34 additional Pie Five restaurants in Arkansas, Delaware, Pennsylvania, New Jersey and Maryland. The Company currently has Pie Five franchise restaurant development commitments for a total of up to 351 restaurants.

"Our new store pipeline is coming to fruition," said Gier. "Since the end of the quarter, an additional seven Pie Five restaurants have opened, and we are on track to end the fiscal year near 60 restaurants."

In the Pizza Inn system, franchisees opened three new restaurants for the quarter while closing two restaurants, ending the fiscal quarter at 253 total Pizza Inn Company-owned and franchised restaurants worldwide. In addition, there were major remodels/relocations of two buffet restaurants during the quarter.

Non-GAAP Financial Measures

The Company uses certain non-GAAP financial measures in evaluating operating performance. 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. Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, stock compensation expense, pre-opening expense, impairment, gain/loss on sale of assets, lease charges and costs related to closed restaurants. A reconciliation of Adjusted EBITDA 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.

About RAVE Restaurant Group, Inc.

Headquartered in the Dallas suburb of The Colony, TX, RAVE Restaurant Group, Inc., is an owner, franchisor and supplier of a system of restaurants operating domestically and internationally under the trademarks "Pizza Inn" and "Pie Five Pizza Co." Pizza Inn is an international pizza chain featuring traditional and specialty pizzas, as well as freshly made pastas, sandwiches, and desserts. Pie Five Pizza Co. is a fast-casual concept offering individual pizzas made to order and cooked in less than five minutes. Founded in 1958, RAVE Restaurant Group, Inc. owns and franchises approximately 300 restaurants. The Company's common stock is listed on the Nasdaq Capital Market under the symbol "RAVE". For more information, please visit www.raverestaurantgroup.com.

RAVE RESTAURANT GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

                   
                   
     

Three Months Ended

 

Nine Months Ended

     

March 29,

    

March 30,

    

March 29,

    

March 30,

     

2015

 

2014

 

2015

 

2014

                   
                   

REVENUES:

 

$ 11,905

 

$ 10,912

 

$ 34,339

 

$ 31,281

                   

COSTS AND EXPENSES:

               
 

Cost of sales

 

10,177

 

9,570

 

29,325

 

27,028

 

General and administrative expenses

 

1,152

 

1,130

 

3,476

 

3,314

 

Franchise expenses

 

849

 

677

 

2,314

 

2,150

 

Pre-opening expenses

 

195

 

4

 

367

 

160

 

Impairment of long-lived assets and other lease charges

 

300

 

-

 

300

 

-

 

Bad debt

 

36

 

93

 

128

 

203

 

Interest expense

 

3

 

34

 

112

 

113

     

12,712

 

11,508

 

36,022

 

32,968

                   

LOSS FROM CONTINUING OPERATIONS BEFORE TAXES

 

(807)

 

(596)

 

(1,683)

 

(1,687)

 

Income tax benefit

 

(277)

 

(159)

 

(559)

 

(527)

LOSS FROM CONTINUING OPERATIONS

 

(530)

 

(437)

 

(1,124)

 

(1,160)

                   
 

Loss from discontinued operations, net of taxes

 

(40)

 

(14)

 

(110)

 

(39)

NET LOSS

 

$    (570)

 

$    (451)

 

$ (1,234)

 

$ (1,199)

                   

LOSS PER SHARE OF COMMON STOCK - BASIC:

               
 

Loss from continuing operations

 

$   (0.05)

 

$   (0.05)

 

$   (0.12)

 

$   (0.14)

 

Loss from discontinued operations

 

(0.01)

 

-

 

(0.01)

 

-

 

Net loss

 

$   (0.06)

 

$   (0.05)

 

$   (0.13)

 

$   (0.14)

                   

LOSS PER SHARE OF COMMON STOCK - DILUTED:

               
                   
 

Loss from continuing operations

 

$   (0.05)

 

$   (0.05)

 

$   (0.11)

 

$   (0.13)

 

Loss from discontinued operations

 

-

 

-

 

(0.01)

 

-

 

Net loss

 

$   (0.05)

 

$   (0.05)

 

$   (0.12)

 

$   (0.13)

                   

Weighted average common shares outstanding - basic

 

10,086

 

8,771

 

9,589

 

8,566

                   

Weighted average common and potential dilutive common shares outstanding

 

 

10,693

 

 

9,290

 

 

10,107

 

 

9,109

 

RAVE RESTAURANT GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

 
           
     

March 29,

 

June 29,

ASSETS

   

2015 (unaudited)

  

2014

           

CURRENT ASSETS

         
 

Cash and cash equivalents

 

$

8,592

$

2,796

 

Accounts receivable, less allowance for bad debts accounts of $248 and $276, respectively

   

3,627

 

3,276

 

Notes receivable

   

51

 

81

 

Inventories

   

133

 

1,703

 

Income tax receivable

   

384

 

386

 

Deferred income tax assets

   

1,013

 

951

 

Prepaid expenses and other

   

820

 

173

   

 

Total current assets

   

14,620

 

9,366

           

LONG-TERM ASSETS

         
 

Property, plant and equipment, net

   

7,587

 

5,133

 

Long-term notes receivable

   

119

 

134

 

Long-term deferred tax asset

   

1,531

 

939

 

Deposits and other

   

280

 

396

   

 

Total assets

 

$

24,137

$

15,968

           

LIABILITIES AND SHAREHOLDERS' EQUITY

         

CURRENT LIABILITIES

         
 

Accounts payable - trade

 

$

3,870

$

2,023

 

Accrued expenses

   

1,094

 

926

 

Deferred rent

   

6

 

163

 

Deferred revenues

   

291

 

177

 

Bank debt

   

-

 

500

   

 

Total current liabilities

   

5,261

 

3,789

           

LONG-TERM LIABILITIES

         
 

Bank debt, net of current portion

   

-

 

267

 

Deferred rent, net of current portion

   

894

 

822

 

Deferred revenues, net of current portion

   

1,111

 

791

 

Deferred gain on sale of property

   

15

 

34

 

Other long-term liabilities

   

22

 

23

   

 

Total liabilities

   

7,303

 

5,726

           

COMMITMENTS AND CONTINGENCIES

         
           

SHAREHOLDERS' EQUITY

         
 

Common stock, $.01 par value; authorized 26,000,000 shares; issued 17,306,449 and 16,240,412 shares, respectively; outstanding 10,187,049 and 9,121,012 shares, respectively

   

 

173

 

 

162

 

Additional paid-in capital

   

23,720

 

15,905

 

Retained earnings

   

17,577

 

18,811

 

Treasury stock at cost

         
 

    Shares in treasury: 7,119,400 

   

(24,636)

 

(24,636)

   

Total shareholders' equity 

   

16,834

 

10,242

   

$

24,137

$

15,968

 

RAVE RESTAURANT GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 
             
       

Nine Months Ended

       

March 29,

    

March 30,

       

2015

 

2014

             

CASH FLOWS FROM OPERATING ACTIVITIES:

       
             
 

Net loss

 

$ (1,234)

 

$ (1,199)

 

Adjustments to reconcile net loss to cash provided by (used in) operating activities:

       
 
   

Depreciation and amortization

 

1,153

 

1,056

   

Impairment of long-lived assets

 

300

 

-

   

Stock compensation expense

 

83

 

45

   

Deferred income taxes

 

(654)

 

(551)

   

Gain on sale of assets

 

-

 

(40)

   

Provision for bad debt

 

128

 

203

 

Changes in operating assets and liabilities:

       
   

Notes and accounts receivable

 

(432)

 

(548)

   

Inventories

 

1,570

 

14

   

Accounts payable - trade

 

1,847

 

606

   

Accrued expenses

 

82

 

(90)

   

Deferred revenue

 

415

 

276

   

Prepaid expenses and other

 

(620)

 

(367)

   

Cash (used in) provided by operating activities

 

2,638

 

(595)

             

CASH FLOWS FROM INVESTING ACTIVITIES:

       
 

Proceeds from sale of assets

 

-

 

58

 

Capital expenditures

 

(3,818)

 

(1,987)

   

Cash used in investing activities

 

(3,818)

 

(1,929)

             

CASH FLOWS FROM FINANCING ACTIVITIES:

       
 

Proceeds from sale of stock

 

7,317

 

3,288

 

Proceeds from stock options

 

426

 

82

 

Repayments of bank debt

 

(767)

 

(1,400)

   

Cash provided by financing activities 

 

6,976

 

1,970

             

Net increase (decrease) in cash and cash equivalents

 

5,796

 

(554)

Cash and cash equivalents, beginning of period

 

2,796

 

919

Cash and cash equivalents, end of period

 

$  8,592

 

$     365

             
             
             

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

             
             

CASH PAYMENTS FOR:

       
             
 

Interest

 

$       15

 

$     113

 

Income taxes - net

 

$          -

 

$         1

 

RAVE RESTAURANT GROUP, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(In thousands)

(Unaudited)

               
               
 

Three Months Ended

 

Nine Months Ended

 

March 29,

   

March 30,

   

March 29,

   

March 30,

 

2015

 

2014

 

2015

 

2014

 Net loss 

$ (570)

 

$ (451)

 

$ (1,234)

 

$ (1,199)

 Interest expense 

3

 

34

 

112

 

113

 Income Taxes 

(277)

 

(159)

 

(559)

 

(527)

 Income Taxes--Discontinued Operations 

(20)

 

(7)

 

(54)

 

(20)

 Depreciation and amortization 

412

 

370

 

1,153

 

1,056

 EBITDA 

$ (452)

 

$ (213)

 

$    (582)

 

$    (577)

 Stock compensation expense 

30

 

15

 

83

 

45

 Pre-opening costs 

195

 

4

 

367

 

160

 Asset disposals, closure costs and restaurant impairment 

374

 

21

 

444

 

108

 Adjusted EBITDA 

$  147

 

$ (173)

 

$     312

 

$    (264)

SOURCE RAVE Restaurant Group, Inc.

Contact:

Investor Relations
RAVE Restaurant Group, Inc.
469-384-5000

###

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