Nathan's Famous, Inc. Reports First Quarter Results

JERICHO, N.Y. - Aug. 5, 2015 // PRNewswire // - Nathan's Famous, Inc. (NASDAQ: NATH) today reported results for the first quarter of its 2016 fiscal year that ended June 28, 2015.

For the fiscal quarter ended June 28, 2015:

  • Revenues increased by 11.1% to $30,654,000, as compared to $27,585,000 during the thirteen weeks ended June 29, 2014;
  • Income from operations increased by 12.3% to $7,616,000, as compared to $6,779,000 during the thirteen weeks ended June 29, 2014;
  • Adjusted EBITDA, as subsequently defined, increased by 10.9% to $8,257,000 as compared to $7,447,000 for the thirteen weeks ended June 29, 2014;
  • Net income was $2,310,000, as compared to $4,071,000 for the thirteen weeks ended June 29, 2014; and
  • Earnings per diluted share were $0.50 per share, as compared to $0.89 per share for the thirteen weeks ended June 29, 2014.

The Company reported the following:

  • License royalties increased by 17.4% to $6,536,000 during the thirteen weeks ended June 28, 2015, as compared to $5,568,000 during the thirteen weeks ended June 29, 2014. During the thirteen weeks ended June 28, 2015, royalties earned under the John Morrell & Co., agreement increased by 19.7% to $6,095,000 as compared to $5,090,000 of royalties earned during the thirteen weeks ended June 29, 2014.
  • Sales from the Branded Product Program, featuring the sale of Nathan's hot dogs to the foodservice industry, increased by 15.6% to $17,415,000 during the thirteen weeks ended June 28, 2015, as compared to sales of $15,064,000 during the thirteen weeks ended June 29, 2014. The increase is substantially attributable to significant organic growth in our consumer packaged hot dog business as a result of more effective sales, marketing and promotional strategies.
  • Sales from the Company-operated restaurants were $5,299,000 during the thirteen weeks ended June 28, 2015 as compared to $5,291,000 during the thirteen weeks ended June 29, 2014.
  • Revenues from franchise operations decreased to $1,227,000 during the thirteen weeks ended June 28, 2015, as compared to $1,489,000 during the thirteen weeks ended June 29, 2014. Total franchise fee income was $41,000 during the thirteen weeks ended June 28, 2015 as compared to $227,000 during the thirteen weeks ended June 29, 2014, primarily due to store opening variances in our international franchising program. Fifteen new franchised units were opened during the thirteen weeks ended June 28, 2015, including ten Branded Menu Program outlets. Nine new franchised units were opened during the thirteen weeks ended June 29, 2014, including five Branded Menu Program outlets and our first location in Costa Rica.
  • On March 10, 2015, Nathan's completed its financing of $135.0 million aggregate principal amount of 10.000% Senior Secured Notes due 2020. As a result of this offering, Nathan's results for the thirteen weeks ended June 28, 2015, include interest expense of approximately $3.7 million which has reduced net income by approximately $2.2 million or $0.47 per diluted share.

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 ("US GAAP"), the Company has provided EBITDA excluding (i) interest expense; (ii) provision for income taxes and (iii) depreciation and amortization expense. The Company has also provided Adjusted EBITDA excluding (i) stock-based compensation and (ii) amortization of bond premium on the Company's available-for sale investments that the Company believes will impact the comparability of its results of operations.

The Company believes that EBITDA and Adjusted EBITDA are useful to investors to assist in assessing and understanding the Company's operating performance and underlying trends in the Company's business because EBITDA and Adjusted EBITDA are (i) among the measures used by management in evaluating performance and (ii) are frequently used by securities analysts, investors and other interested parties as a common performance measure.

EBITDA and Adjusted EBITDA are not recognized terms under US GAAP and should not be viewed as alternatives to net income (loss) or other measures of financial performance or liquidity in conformity with US GAAP. Additionally, our definitions of EBITDA and Adjusted EBITDA may differ from other companies. Analysis of results and outlook on a non-US GAAP basis should be used as a complement to, and in conjunction with, data presented in accordance with US GAAP.

About Nathan's Famous

Nathan's currently distributes its products in 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, and ten foreign countries through its restaurant system, foodservice sales programs and product licensing activities. Last year, over 500 million Nathan's Famous hot dogs were sold. Nathan's was ranked #22 on the Forbes 2014 list of the Best Small Companies in America and was listed as the Best Small Company in New York State in October 2013. 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 include but are not limited to: the impact of our indebtedness, including the effect on our ability to fund working capital, operations and make new investments; economic; weather (including the three-year drought in the Midwest, along with freezing temperatures during the winter causing a reduced supply of cattle), and continued increases in the price of beef trimmings; our ability to pass on the cost of any price increases in beef and beef trimmings; legislative and business conditions; the collectibility of receivables; changes in consumer tastes; the status of our licensing and supply agreements, including the impact of our supply agreement for hot dogs with John Morrell & Co.; the ability to continue to attract franchisees; no material increases in the minimum wage or other changes in labor laws; our ability to attract competent restaurant and managerial personnel; the enforceability of international franchising agreements; the impact of changes in the economic relationship between the United States and Russia; and the future effects of any food borne illness; such as bovine spongiform encephalopathy, BSE; 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. and Subsidiaries

Financial Highlights

         

Thirteen weeks ended

         

June  28, 2015

 

June 29, 2014

         

(unaudited)

                  

Total revenues

       

$   30,654,000

 

$   27,585,000

               
               

Income from operations (a)

       

$     7,616,000

 

$    6,779,000

               
               

Net income

       

$     2,310,000

 

$     4,071,000

               

Income per share:

             

   Basic

       

$              0.50

 

$              0.91

   Diluted

       

$              0.50

 

$              0.89

               
               

Weighted-average shares used in

             

   computing income per share:

             

   Basic

       

4,584,000

 

4,471,000

   Diluted

       

4,621,000

 

4,593,000

               
               

(a)    Excludes interest expense, interest income, and other income, net.

Nathan's Famous, Inc. and Subsidiaries  

 

Reconciliation of Net Income to EBITDA and Adjusted EBITDA   

 
         
   

Thirteen weeks ended 

   

June 28, 2015  

    

 

June 29, 2014

   

 (unaudited) 

         

EBITDA  

       

Net income                      

 

$      2,310,000

 

$     4,071,000

         

Interest expense         

 

3,709,000

 

-0- 

         

Provision for income taxes      

 

1,628,000

 

 

2,791,000

         

Depreciation and amortization            

 

339,000

 

 

346,000

         

EBITDA     

 

$   7,986,000

 

$   7,208,000

         

Adjusted EBITDA   

       

EBITDA              

 

$   7,986,000

 

$     7,208,000

         

Stock-based compensation             

 

203,000

 

 

191,000

         

Amortization of bond premium (b)     

 

68,000

 

48,000

         

Adjusted EBITDA                 

 

$ 8,257,000

 

$ 7,447,000

(b) Represents the premiums paid on our purchase of available-for-sale securities.

SOURCE Nathan's Famous, Inc.

Contact:

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

 

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