Famous Dave’s Reports Results For Second Quarter Fiscal 2016

MINNEAPOLIS - Aug. 15, 2016 // GLOBE NEWSWIRE // - Famous Dave's of America, Inc. (NASDAQ:DAVE) today reported financial results for the second quarter ending July 3, 2016.

Highlights for the second quarter of 2016 as compared to the second quarter of 2015:

  • Comparable sales for Company-owned restaurants open 24 months or more decreased 6.4% compared to a decrease of 10.8% for the same period in 2015; 
  • Franchise royalty revenue increased slightly from $4.6 million to $4.7 million primarily reflecting the refranchising of the seven Chicago restaurants late in the first quarter 2016, partially offset by a comparable sales decrease of 4.3%;
  • Restaurant-level operating margin at Company-owned restaurants decreased 60 basis points primarily as a result of year over year increase in food costs and increased labor and benefit costs as a result of sales deleverage. These increases were partially offset by a year over year decline in operating expenses;
  • General and administrative expenses decreased from approximately $4.9 million to approximately $4.8 million for the second quarter of 2016. This decrease was moderated by increased legal costs for franchise related matters and professional fees related to brand development which were not repeated in the second quarter of 2016;
  • GAAP income from operations was $334,000 compared to $981,000 for the same period in 2015; Adjusted income from operations was approximately $1.4 million compared to $1.9 million for the second quarter of 2015;
  • GAAP net income from continuing operations was $0.02 per diluted share, compared to $0.07, per diluted share, for the second quarter of 2015; Adjusted net income from continuing operations per share was $0.17, per diluted share, compared to $0.17, per diluted share, for the second quarter of 2015;

Adam Wright, CEO, commented, “The Board and management team remain focused on the four key priorities that will enable the re-energizing of the Company’s performance which include building sales and traffic, reducing costs, elevating organization effectiveness, and rebuilding culture. The effects of strategic actions implemented in the past year which have improved Guest satisfaction and improved value on the menu, lends confidence to our plan and the path ahead, especially as we continue to add additional affordability to the menu and start to reinvest in marketing.”

Famous Dave's ended the quarter with 179 restaurants, including 37 company-owned restaurants and 142 franchise-operated restaurants, located in 33 states, the Commonwealth of Puerto Rico, Canada, and United Arab Emirates.

Conference Call

The company will host a conference call August 15, 2016, at 3:30 p.m. Central Time to discuss its second quarter financial results. There will be a live webcast of the discussion through the Investor Relations section of Famous Dave's web site atwww.famousdaves.com.

About Famous Dave’s

Famous Dave’s of America, Inc. (NASDAQ:DAVE) develops, owns, operates and franchises Bar-B-Que restaurants. As of today, the company owns 37 restaurants and franchises an additional 141 restaurants in 32 states, the Commonwealth of Puerto Rico,Canada and the United Arab Emirates. Its menu features award-winning barbecued and grilled meats, a selection of salads, sandwiches, side items and made-from-scratch desserts. For more information, visit famousdaves.com, facebook.com/famousdaves, or follow on Twitter @Famous_Daves.

To supplement its financial statements, Famous Dave’s of America, Inc. also provides investors with Adjusted net income per common share from continuing operations and Adjusted income from operations which are non-GAAP financial measures. The Company believes that these non-GAAP measures provide useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. Famous Dave’s management uses these non-GAAP measures to compare the Company's performance to that of prior periods for trend analysis and planning purposes.

Adjusted net income per common share from continuing operations consists of net income from continuing operations plus non-cash items, such as, asset impairment, estimated lease termination and other closing costs and net loss (gain) on disposal of equipment and their related income tax impact divided by the weighted average number of shares of common stock outstanding during each period presented. Famous Dave’s of America, Inc. believes Adjusted net income per common share from continuing operations is useful to an investor because it is widely used to measure a company's operating performance.

Adjusted income from operations consists of income from operations plus non-cash items, such as, asset impairment, estimated lease termination and other closing costs and net loss (gain) on disposal of equipment. Famous Dave’s uses Adjusted income from operations as a measure of operating performance because it assists the Company in comparing performance on a consistent basis, as it removes from operating results the impact of non-cash events. The Company believes Adjusted income from operations is useful to an investor in evaluating the Company's operating performance because it is widely used to measure a company's operating performance and to present a meaningful measure of corporate performance exclusive of the impact of non-cash events and the method by which assets were acquired.

These non-GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with generally accepted accounting principles in the United States. These non-GAAP financial measures exclude significant expenses and income that are required by GAAP to be recorded in the company's financial statements and are subject to inherent limitations. Famous Dave’s of America, Inc. urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures that are included in this press release. The tables appearing at the end of this release provide reconciliations of net income from continuing operations to Adjusted net income per common share from continuing operations and Adjusted income from operations.

FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except per share data)
(Unaudited)
        Three Months Ended   Six Months Ended
        July 3,   June 28,   July 3,   June 28,
        2016   2015   2016   2015
Revenue:                      
  Restaurant sales, net $   23,022     $   27,509     $   42,014     $   51,253  
  Franchise royalty revenue     4,686         4,620         8,851         8,951  
  Franchise fee revenue   ---       250         135         255  
  Licensing and other revenue     336         335         584         520  
      Total revenue     28,044         32,714         51,584         60,979  
                             
Costs and expenses:                      
  Food and beverage costs     7,089         8,332         13,112         15,506  
  Labor and benefits costs     7,401         8,672         14,254         16,658  
  Operating expenses     6,353         7,719         12,063         14,420  
  Depreciation and amortization     956         1,144         1,936         2,323  
  General and administrative expenses     4,836         4,937         8,611         9,786  
  Asset impairment and estimated lease                      
     termination and other closing costs     1,056         881         1,064         976  
  Pre-opening expenses   ---     ---     ---       1  
  Net loss (gain) on disposal of property     19         48         (185 )       25  
      Total costs and expenses     27,710         31,733         50,855         59,695  
Income from operations     334         981         729         1,284  
                             
Other expense:                      
  Interest expense     (225 )       (220 )       (403 )       (421 )
  Interest income     1       ---       2         5  
  Other income, net     1         2         1       ---
      Total other expense     (223 )       (218 )       (400 )       (416 )
                             
Income before income taxes     111         763         329         868  
Income tax benefit (expense)     2         (216 )       (67 )       (212 )
                             
Net income from continuing operations     113         547         262         656  
Net income from discontinued operations, net of tax     27         107         708         195  
Net income $   140     $   654     $   970     $   851  
                             
Basic net income per common share from continuing operations $   0.02     $   0.07     $   0.04     $   0.09  
Basic net income per common share from discontinued operations $ ---   $   0.02     $   0.10     $   0.03  
Basic net income per common share $   0.02     $   0.09     $   0.14     $   0.12  
                             
Diluted net income per common share from continuing operations $   0.02     $   0.07     $   0.04     $   0.09  
Diluted net income per common share from discontinued operations $ ---   $   0.02     $   0.10     $   0.03  
Diluted net income per common share $   0.02     $   0.09     $   0.14     $   0.12  
                             
Weighted average common shares outstanding - basic     6,949         6,974         6,949         7,016  
Weighted average common shares outstanding - diluted     6,958         6,993         6,958         7,037  
                             

FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
OPERATING RESULTS
(unaudited)

    Three Months Ended   Six Months Ended
    July 3,   June 28,   July 3,   June 28,
    2016    2015 2016   2015 
Food and beverage costs (1)   30.8 %     30.3 %     31.2 %     30.3 %
Labor and benefits costs (1)   32.1 %     31.5 %     33.9 %     32.5 %
Operating expenses(1)   27.6 %     28.1 %     28.7 %     28.1 %
  Restaurant level operating margin(1)(3)   9.5 %     10.1 %     6.2 %     9.1 %
                 
Depreciation and amortization (2)   3.4 %     3.5 %     3.8 %     3.8 %
General and administrative expenses (2)   17.2 %     15.1 %     16.7 %     16.0 %
               
  Income from operations (2)   1.2 %     3.0 %     1.4 %     2.1 %
                 
  Adjusted income from operations (2)   5.0 %     5.8 %     2.9 %     3.7 %
                 
 (1)As a percentage of restaurant sales, net
 (2) As a percentage of total revenue
 (3)Restaurant level operating margin is equal to restaurant sales, net less restaurant level food and beverage costs, labor and benefit costs, and operating expenses.
 

FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)

    July 3,   January 3,
    2016   2016
ASSETS      
  Cash and cash equivalents $ 6,308   $ 5,300
  Other current assets   11,689     9,686
  Assets held for sale   88     2,211
  Property, equipment and leasehold improvements, net   30,121     32,491
  Other assets   8,548     8,137
  Total assets $ 56,754   $ 57,825
             
LIABILITIES AND SHAREHOLDERS’ EQUITY          
  Current liabilities $ 13,954   $ 12,775
  Liabilities held for sale   ---     1,747
  Line of credit   1,855     ---
  Long-term debt and financing lease obligation, net of current portion   9,531     12,957
  Other long-term obligations   8,299     8,285
  Shareholders’ equity   23,115     22,061
  Total liabilities and shareholders’ equity $ 56,754   $ 57,825

FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

    Six Months Ended
    July 3,   June 28,
    2016   2015
         
Cash flows provided by operating activities $   998     $   2,700  
Cash flows (used for) provided by discontinued operating activities     (783 )       406  
Cash flows provided by (used for)  investing activities of continuing operations     611         (2,722 )
Cash flows provided by (used for)  investing activities of discontinued operations     1,150         (86 )
Cash flows used for financing activities     (968 )       (598 )
  Net increase (decrease) in cash and cash equivalents $   1,008     $   (300 )
                     

SUPPLEMENTAL SALES INFORMATION
(unaudited)

      Three Months Ended   Six Months Ended
      July 3,   June 28,   July 3,   June 28,
      2016   2015   2016   2015
                           
Restaurant sales (in thousands):                      
  Company-owned $   23,022     $   27,509     $   42,014     $   51,253  
  Franchise-operated $   90,122     $   93,766     $   170,293     $   182,523  
                           
Total number of restaurants:                      
  Company-owned     37         49         37         49  
  Franchise-operated     142         135         142         135  
    Total     179         184         179         184  
                           
Total weighted average weekly net sales (AWS):                      
  Company-owned $   47,862     $   49,300     $   43,674     $   45,884  
  Franchise-operated $   48,953     $   54,013     $   47,356     $   52,118  
                           
Operating weeks:                      
  Company-owned     481         558         962         1,117  
  Franchise-operated     1,841         1,736         3,596         3,488  
                           
  Company-owned comparable sales %     (6.4 )%       (10.8 )%       (7.0 )%       (9.1 )%
                           
  Franchise-operated  comparable sales%     (4.3 )%       (3.3 )%       (5.6 )%       (1.4 )%
                           
Total number of comparable restaurants:                      
  Company-owned     37         40         37         40  
  Franchise-operated     120         123         120         122  

 

 

 
FAMOUS DAVE'S OF AMERICA, INC.
  NON-GAAP RECONCILIATION
  (in thousands, except per share data)
  (unaudited)
                             
          Three Months Ended     Six Months Ended
                             
          July 3,     June 28,     July 3,     June 28,
          2016       2015         2016         2015  
                             
  Net income from continuing operations $ 113   $   547     $   262     $   656  
  Asset impairment and estimated lease termination                      
    and other closing costs   1,056       881         1,064         976  
  Net loss (gain) on disposal of equipment   19       48         (185 )       25  
  VP level and above stock-based compensation                      
    Recapture   ---       (45 )       (126 )       (45 )
  Tax adjustment for the non-cash adjustments   19       (250 )       (153 )       (233 )
                             
  Adjusted net income from continuing operations $ 1,207   $   1,181     $   862     $   1,379  
                             
  Non-GAAP adjusted net income per common share from continuing operations:                      
  Basic adjusted net income per common share from continuing operations $ 0.17   $   0.17     $   0.12     $   0.20  
  Diluted adjusted net income per common share from continuing operations $ 0.17   $   0.17     $   0.12     $   0.20  
                             
  Shares used to compute non-GAAP net income per common share from continuing operations:                      
  Weighted average common share outstanding - basic   6,949       6,974         6,949         7,016  
  Weighted average common share outstanding - diluted   6,958       6,993         6,958         7,037  
                             
                             
  Income from operations $ 334   $   981     $   729     $   1,284  
                           
  Non-cash items:                      
  Asset impairment and estimated lease termination                      
    and other closing costs   1,056       881         1,064         976  
  Net loss (gain) on disposal of equipment   19       48         (185 )       25  
  VP level and above stock-based compensation                      
    recapture   ---       (45 )       (126 )       (45 )
                             
  Adjusted income from operations $ 1,409   $   1,865     $   1,482     $   2,240  
                                   

Statements in this press release that are not strictly historical, including but not limited to statements regarding the timing of our restaurant openings and the timing or success of our expansion plans, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements involve known and unknown risks, which may cause the company’s actual results to differ materially from expected results.  Although Famous Dave's of America, Inc. believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectation will be attained. Factors that could cause actual results to differ materially from Famous Dave's expectation include financial performance, restaurant industry conditions, execution of restaurant development and construction programs, franchisee performance, changes in local or national economic conditions, availability of financing, governmental approvals and other risks detailed from time to time in the company's SEC reports.

SOURCE Famous Dave's of America, Inc

Contact: 

Dexter Newman
Chief Financial Officer
952-294-1300

###

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