Nathan's Famous, Inc. Reports Second Quarter Results

JERICHO, N.Y. - November 4, 2015 // PRNewswire // - Nathan's Famous, Inc. (NASDAQ: NATH) today reported results for the second quarter of its 2016 fiscal year that ended September 27, 2015.

For the fiscal quarter ended September 27, 2015:

  • Income from operations increased by 30.7% to $8,426,000, as compared to $6,447,000 during the thirteen weeks ended September 28, 2014;
  • Adjusted EBITDA, as subsequently defined, increased by 26.7 % to $9,006,000 as compared to $7,106,000 for the thirteen weeks ended September 28, 2014;
  • Net income was $2,847,000, as compared to $3,854,000 for the thirteen weeks ended September 28, 2014;
  • Earnings per diluted share were $0.64 per share, as compared to $0.84 per share for the thirteen weeks ended September 28, 2014; and
  • Revenues increased by 6.1% to $30,619,000, as compared to $28,872,000 during the thirteen weeks ended September 28, 2014.

For the twenty-six weeks ended September 27, 2015:

  • Income from operations increased by 21.3% to $16,042,000, as compared to $13,226,000 during the twenty-six weeks ended September 28, 2014;
  • Adjusted EBITDA, as subsequently defined, increased by 18.6% to $17,257,000 as compared to $14,553,000 for the twenty-six weeks ended September 28, 2014;
  • Net income was $5,157,000, as compared to $7,925,000 for the twenty-six weeks ended September 28, 2014;
  • Earnings per diluted share were $1.14 per share, as compared to $1.73 per share for the twenty-six weeks ended September 28, 2014; and
  • Revenues increased by 8.5% to $61,273,000, as compared to $56,457,000 during the twenty-six weeks ended September 28, 2014.

The Company reported the following:

  • License royalties increased by 16.7% to $11,792,000 during the twenty-six weeks ended September 27, 2015, as compared to $10,106,000 during the twenty-six weeks ended September 28, 2014. During the twenty-six weeks ended September 27, 2015, total royalties earned under the John Morrell & Co., agreement increased by 18.6% to $10,932,000 as compared to $9,217,000 of royalties earned during the twenty-six weeks ended September 28, 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 Branded Product Program, featuring the sale of Nathan's hot dogs to the foodservice industry, increased by 9.7% to $33,595,000 during the twenty-six weeks ended September 27, 2015, as compared to sales of $30,612,000 during the twenty-six weeks ended September 28, 2014.
  • Sales from the Company-operated restaurants were $12,842,000 during the twenty-six weeks ended September 27, 2015 as compared to $12,349,000 during the twenty-six weeks ended September 28, 2014 driven primarily from higher sales at both Coney Island locations.
  • Revenues from franchise operations were $2,617,000 during the twenty-six weeks ended September 27, 2015, as compared to $3,002,000 during the twenty-six weeks ended September 28, 2014. Total franchise fee income was $207,000 during the twenty-six weeks ended September 27, 2015 as compared to $477,000 during the twenty-six weeks ended September 28, 2014, primarily due to lower international development fees. Twenty-three new franchised units were opened during the twenty-six weeks ended September 27, 2015, including 11 Branded Menu Program outlets. Twenty new franchised units were opened during the twenty-six weeks ended September 28, 2014, including seven international locations, including our first location in Costa Rica and ten Branded Menu Program outlets.
  • On March 10, 2015, Nathan's completed a financing of $135.0 million aggregate principal amount of Senior Secured Notes. Nathan's incurred interest expense, including amortized debt issuance costs, totaling $7,418,000 during the twenty-six weeks ended September 27, 2015 on the Notes.

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 nine 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.

 

Financial Highlights

 
 

 

Thirteen weeks ended

 

Twenty-six weeks ended

 
 

Sept. 27, 2015

 

Sept. 28, 2014

 

Sept. 27, 2015

 

Sept. 28, 2014

 
 

(unaudited)

 

(unaudited)

 
                 

Total revenues

$    30,619,000

 

$  28,872,000

 

$   61,273,000

 

$   56,457,000

 
                 

Income from operations (a)

$      8,426,000

 

$    6,447,000

 

$   16,042,000

 

$   13,226,000

 
                 

Net income

$      2,847,000

 

 $    3,854,000

 

$     5,157,000

 

$     7,925,000

 
                 

Income per share:

               

   Basic

$               0.64

 

$              0.86

 

$              1.14

 

$              1.77

 

   Diluted

$               0.64

 

$              0.84

 

$              1.14

 

$              1.73

 
                 
                 

Weighted-average shares used in

               

   computing income per share:

               

   Basic

4,432,000

 

4,472,000

 

4,508,000

 

4,472,000

 

   Diluted

4,449,000

 

4,593,000

 

4,535,000

 

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

 

Twenty-six weeks ended

 
 

Sept. 27, 2015

 

Sept. 28, 2014

 

Sept. 27, 2015

 

Sept. 28, 2014

 
 

(unaudited)

 

(unaudited)

 

EBITDA

               

Net Income

$    2,847,000

 

$   3,854,000

 

$   5,157,000

 

$   7,925,000

 
                 

Interest Expense

3,709,000

 

0

 

7,418,000

 

0

 
                 

Provision for income taxes

1,942,000

 

2,674,000

 

3,570,000

 

5,465,000

 
                 

Depreciation and amortization

333,000

 

341,000

 

672,000

 

687,000

 
                 

EBITDA

$    8,831,000

 

$   6,869,000

 

$   16,817,000

 

$   14,077,000

 
                 
                 
                 

Adjusted EBITDA

               

EBITDA

$    8,831,000

 

$   6,869,000

 

$   16,817,000

 

$   14,077,000

 
                 

Stock-based compensation

173,000

 

210,000

 

376,000

 

401,000

 
                 

Amortization of bond premium (b)

2,000

 

27,000

 

64,000

 

75,000

 
                 

Adjusted EBITDA

$    9,006,000

 

$   7,106,000

 

$   17,257,000

 

$   14,553,000

 
                 

(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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