Nathan's Famous, Inc. Reports Year-End and Fourth Quarter Results

JERICHO, N.Y. - June 10, 2016 // PRNewswire // - Nathan's Famous, Inc. (NASDAQ: NATH) today reported results for its fiscal year and the fourth quarter that ended March 27, 2016.

For the fifty-two weeks ended March 27, 2016:

  • Income from operations increased by 25.1% to $24,963,000, as compared to $19,958,000during the fifty-two weeks ended March 29, 2015;
  • Adjusted EBITDA, as subsequently defined, increased by 20.7% to $27,155,000 as compared to$22,497,000 for the fifty-two weeks ended March 29, 2015;
  • Net income was $6,096,000, as compared to $11,703,000 for the fifty-two weeks ended March 29, 2015;
  • Earnings per diluted share were $1.37 per share, as compared to $2.55 per share for the fifty-two weeks ended March 29, 2015; and
  • Revenues were $100,890,000, as compared to $99,112,000 during the fifty-two weeks endedMarch 29, 2015.

For the thirteen weeks ended March 27, 2016:

  • Income from operations increased by 51.2% to $4,486,000, as compared to $2,967,000 during the thirteen weeks ended March 29, 2015;
  • Adjusted EBITDA, as subsequently defined, increased by 39.5% to $4,966,000 as compared to$3,561,000 for the thirteen weeks ended March 29, 2015;
  • Net income was $507,000, as compared to $1,537,000 for the thirteen weeks ended March 29, 2015;
  • Earnings per diluted share were $0.12 per share, as compared to $0.34 per share for the thirteen weeks ended March 29, 2015; and
  • Revenues were $19,053,000, as compared to $20,340,000 during the thirteen weeks endedMarch 29, 2015.

"Fiscal 2016 was a very strong year for Nathan's Famous," said Eric Gatoff, the company's Chief Executive Officer. "Our Branded Products Program, licensing program and Company-owned restaurants all delivered outstanding results, helping the Company achieve the highest Income from operations in its history."

The Company reported the following:

  • License royalties increased by 10.0% to $19,815,000 during the fifty-two weeks ended March 27, 2016, as compared to $18,011,000 during the fifty-two weeks ended March 29, 2015. During the fifty-two weeks ended March 27, 2016, total royalties earned under the John Morrell & Co., agreement increased by 11.6% to $17,975,000 as compared to $16,105,000 of royalties earned during the fifty-two weeks ended March 29, 2015. 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, were $58,545,000 during the fifty-two weeks ended March 27, 2016, as compared to sales of $58,948,000 during the fifty-two weeks ended March 29, 2015. This change was attributable to a 4.6% increase in the volume of products sold, which was offset by lower average selling prices of 3.7% due to the impact of lower beef prices on that portion of our Branded Products business that is sold to larger customers using formula prices tied to the underlying beef markets.
  • Sales from Company-operated restaurants increased by 5.0% to $16,664,000 during the fifty-two weeks ended March 27, 2016 as compared to $15,874,000 during the fifty-two weeks ended March 29, 2015 driven primarily from higher sales at both Coney Island locations.
  • Revenues from franchise operations were $5,044,000 during the fifty-two weeks ended March 27, 2016, as compared to $5,581,000 during the fifty-two weeks ended March 29, 2015. Total franchise fee income was $751,000 during the fifty-two weeks ended March 27, 2016 as compared to $1,043,000 during the fifty-two weeks ended March 29, 2015, primarily due to lower international development fees. Fifty-six new franchised units were opened during the fifty-two weeks ended March 27, 2016, including 25 international locations, comprised of our first two locations in each of Panama and Australia, 17 locations in Russia, two locations inMalaysia, one unit in Costa Rica, one unit in the Dominican Republic and 22 Branded Menu Program outlets. Thirty-six new franchised units were opened during the fifty-two weeks ended March 29, 2015, including seventeen Branded Menu Program outlets and thirteen international locations, including our first locations in Costa Rica and Malaysia. We also recognized forfeited fees of $58,000 during the fiscal 2016 period and $143,000 during the fiscal 2015 period.
  • 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 $14,630,000 during the fifty-two weeks ended March 27, 2016 on the Notes.
  • During the fifty-two weeks ended March 27, 2106, Nathan's Board of Directors increased the Company's authorization to purchase up to an additional 400,000 shares of its common stock. Purchases may be made from time to time, depending on market conditions, in open market or privately negotiated transactions, at prices deemed appropriate by management. There is no set time limit on the repurchases. As of March 27, 2016, an aggregate 290,874 shares were available for purchase under Nathan's stock buy-back program. Pursuant to prior share repurchase programs authorized by the Board of Directors, Nathan's has purchased a total of 5,096,757 shares of common stock at a cost of approximately $76,031,000 through March 27, 2016.
  • The Company has also entered into a 10b5-1 plan with Mutual Securities, Inc. ("MSI") pursuant to which MSI has been authorized on the Company's behalf to purchase shares of the Company's common stock. A plan under Rule 10b5-1 allows a company to repurchase its shares at times when it otherwise might be prevented from doing so under the securities laws or because of self-imposed trading blackout periods. Because the repurchases under the plan are subject to pricing parameters, there is no guarantee as to the exact number of shares that will be repurchased under the plan, or that there will be any repurchases pursuant to the plan.

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; (ii) amortization of bond premium on the Company's available-for sale investments and (iii) impairment charge on long-term investment 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 eleven foreign countries through its restaurant system, foodservice sales programs and product licensing activities. Last year, over 550 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 impact on the supply of cattle), and change 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 attract franchisees; the impact of the new minimum wage legislation on labor costs in New York State or other changes in labor laws, including regulations which could render a franchisor as a "joint employee" or the impact of our new union contract; 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 e coli; 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

     

Fifty-two weeks ended

   
 

Mar. 27, 2016

 

Mar. 29, 2015

 

Mar. 27, 2016

 

Mar. 29, 2015

 
 

(unaudited)

         
                 

Total revenues

$    19,053,000

 

$   20,340,000

 

$ 100,890,000

 

$   99,112,000

 
                 
                 

Income from operations (a)

$      4,486,000

 

$    2,967,000

 

$  24,963,000

 

$   19,958,000

 
                 
                 

Net income

$         507,000

 

$     1,537,000

 

$     6,096,000

 

$   11,703,000

 
                 

Income per share:

               

   Basic

$               0.12

 

$              0.34

 

$              1.38

 

$              2.61

 

   Diluted

$               0.12

 

$              0.34

 

$              1.37

 

$              2.55

 
                 
                 

Weighted-average shares used in

               

   computing income per share:

               

   Basic

4,297,000

 

4,521,000

 

4,430,000

 

4,486,000

 

   Diluted

4,337,000

 

4,562,000

 

4,463,000

 

4,588,000

 
                 
                 

(a) Excludes interest expense, impairment charge long-term investment, interest income, and other income, net.

 

Nathan's Famous, Inc. and Subsidiaries

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

 
 

Thirteen weeks ended

     

Fifty-two weeks ended

 
 

Mar. 27, 2016

 

Mar. 29, 2015

 

Mar. 27, 2016

 

Mar. 29, 2015

 
 

(unaudited)

         

EBITDA

               

Net Income

$     507,000

 

$   1,537,000

 

$   6,096,000

 

$   11,703,000

 
                 

Interest Expense

3,504,000

 

816,000

 

14,630,000

 

816,000

 
                 

Provision for income taxes

402,000

 

675,000

 

4,288,000

 

7,702,000

 
                 

Depreciation and amortization

280,000

 

268,000

 

1,255,000

 

1,253,000

 
                 

EBITDA

$    4,693,000

 

$   3,296,000

 

$   26,269,000

 

$   21,474,000

 
                 
                 
                 

Adjusted EBITDA

               

EBITDA

$    4,693,000

 

$   3,296,000

 

$   26,269,000

 

$   21,474,000

 
                 

Stock-based compensation

173,000

 

230,000

 

722,000

 

859,000

 
                 

Impairment charge long-term
     investment

 

100,000

 

 

0

 

 

100,000

 

 

0

 
                 

Amortization of bond premium (b)

                  -0-

 

35,000

 

64,000

 

164,000

 
                 

Adjusted EBITDA

$    4,966,000

 

$   3,561,000

 

$   27,155,000

 

$   22,497,000

 
                 
                                 

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

SOURCE Nathan's Famous

Contact:

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

###

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