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

By: Nathan's Famous |  0 Shares     76 Reads

JERICHO, N.Y. - June 9, 2017 // PRNewswire // - Nathan's Famous, Inc. (NASDAQ: NATH) today reported results for its fiscal year and fourth quarter ended March 26, 2017.

For the fifty-two weeks ended March 26, 2017:

• Income from operations increased by 5.3% to $26,280,000, as compared to $24,963,000 during the fifty-two weeks ended March 27, 2016;
• Adjusted EBITDA, as subsequently defined, increased by 4.4% to $28,348,000 as compared to $27,155,000 for the fifty-two weeks ended March 27, 2016;
• Net income increased 22.8% to $7,485,000, as compared to $6,096,000 for the fifty-two weeks ended March 27, 2016;
• Earnings per diluted share increased to $1.78 per share, as compared to $1.37 per share for the fifty-two weeks ended March 27, 2016; and
• Revenues were $96,652,000, as compared to $100,890,000 during the fifty-two weeks ended March 27, 2016.

For the thirteen weeks ended March 26, 2017:

• Income from operations increased by 4.1% to $4,671,000, as compared to $4,486,000 during the thirteen weeks ended March 27, 2016;
• Adjusted EBITDA, as subsequently defined, increased by 3.0% to $5,117,000 as compared to $4,966,000 for the thirteen weeks ended March 27, 2016;
• Net income increased by 43.8% to $729,000, as compared to $507,000 for the thirteen weeks ended March 27, 2016;
• Earnings per diluted share increased to $0.17 per share, as compared to $0.12 per share for the thirteen weeks ended March 27, 2016; and
• Revenues increased to $19,286,000, as compared to $19,053,000 during the thirteen weeks ended March 27, 2016.

The Company reported the following:

• License royalties increased to $20,368,000 during the fifty-two weeks ended March 26, 2017, as compared to $19,815,000 during the fifty-two weeks ended March 27, 2016. During the fifty-two weeks ended March 26, 2017, total royalties earned under the John Morrell & Co., agreement increased to $18,424,000, as compared to $17,975,000 of royalties earned during the fifty-two weeks ended March 27, 2016. During this period, the volume of products sold increased by 7.3%; however, a more competitive promotional environment during the summer of 2016 led to a 4.0% decrease in the average net selling price on which our royalty is calculated.
• In the Branded Product Program, which features the sale of Nathan's hot dogs to the foodservice industry, sales were $55,960,000 during the fifty-two weeks ended March 26, 2017, compared to sales of $58,545,000 during the fifty-two weeks ended March 27, 2016. Income from operations of the Branded Product Program increased by approximately $1.9 million for the fiscal 2017 period over the fiscal 2016 period. During the period, the volume of hotdogs sold increased 4.6% but our average selling price declined by approximately 8.2% due to the impact of lower beef markets on that portion of our business sold using formula pricing.
• Sales from Company-operated restaurants were $15,042,000 during the fifty-two weeks ended March 26, 2017 compared to $16,664,000 during the fifty-two weeks ended March 27, 2016 driven primarily from lower sales at both Coney Island locations, due to unfavorable weather conditions during the fiscal 2017 period compared to the weather conditions during the fiscal 2016 period when we achieved record sales at both locations.
• Revenues from franchise operations were $5,068,000 during the fifty-two weeks ended March 26, 2017, compared to $5,044,000 during the fifty-two weeks ended March 27, 2016. Total royalties were $4,290,000 in the fiscal 2017 period as compared to $4,293,000 in the fiscal 2016 period. Total franchise fee income was $778,000 during the fifty-two weeks ended March 26, 2017 compared to $751,000 during the fifty-two weeks ended March 27, 2016. Fifty-three new franchised outlets opened during the fifty-two weeks ended March 26, 2017, including 20 international locations, and 26 Branded Menu Program outlets. In addition to the U.S., new Nathan's restaurants opened in the following countries during fiscal 2017: Australia, Panama, the Philippines, Malaysia, Turkey, Russia, Kazakhstan and Kyrgyzstan.
• Nathan's tax rate was reduced by 5.6 percentage points as a result of early adopting the provisions of Financial Accounting Standards Board ASU 2016-09, "Stock Compensation", which now reduces the Company's tax provision for the excess tax benefits associated with stock compensation instead of increasing Additional paid-in-capital, as was past practice.
• 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 $14,665,000 during the fifty-two weeks ended March 26, 2017 on the Notes.
• Nathan's has purchased 5,127,373 shares of common stock at a cost of approximately $77,303,000 through March 26, 2017 pursuant to share repurchase programs authorized by the Board of Directors. As of March 26, 2017, an aggregate 260,258 shares were available for purchase under Nathan's stock buy-back program.
• 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.

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 is a Russell 2000 Company that currently distributes its products in 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, and thirteen foreign countries through its restaurant system, foodservice sales programs and product licensing activities. Last year, over 600 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 the impact on sales at our restaurants particularly during the summer months), 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 collectability 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; 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. 26, 2017		Mar. 27, 2016		Mar. 26, 2017		Mar. 27, 2016
Total revenues	$    19,286,000		$   19,053,000		$   96,652,000		$ 100,890,000
Income from operations (a)	$      4,671,000		$     4,486,000		$   26,280,000		$   24,963,000
Income before provision for income taxes	$      1,062,000		$        909,000		$   11,804,000		$   10,384,000
Net income	$         729,000		$        507,000		$     7,485,000		$     6,096,000
Income per share:
Basic	$               0.17		$              0.12		$              1.79		$              1.38
Diluted	$               0.17		$              0.12		$              1.78		$              1.37
Weighted-average shares used in
computing income per share:
Basic	4,176,000		4,297,000		4,172,000		4,430,000
Diluted	4,217,000		4,337,000		4,206,000		4,463,000
Select Segment Information
Revenues
Branded product program	$    11,610,000		$ 11,612,000		$   56,174,000		$   59,367,000
Product licensing	4,766,000		4,408,000		20,368,000		19,815,000
Restaurant operations	2,910,000		3,033,000		20,110,000		21,708,000
Corporate	-		-		-		-
Revenues	$ 19,286,000		$19,053,000		$   96,652,000		$  100,890,000
Income from operations (a) (c)
Branded product program	$     1,921,000		$    2,197,000		$   10,257,000		$   8,394,000
Product licensing	4,721,000		4,408,000		20,186,000		19,812,000
Restaurant operations	166,000		280,000		4,101,000		5,253,000
Corporate (b)	(2,137,000)		(2,399,000)		(8,264,000)		(8,496,000)
Income from operations (a) (c)	$   4,671,000		$    4,486,000		$   26,280,000		$   24,963,000

 

(a)	Excludes interest expense, impairment charge long-term investment, interest income, and other income, net.
(b)	Consists principally of administrative expenses not allocated to the operating segments such as executive management, finance, information technology, legal, insurance, corporate office costs, incentive compensation and compliance costs.
(c)	Excludes interest expense, interest income, impairment charge – long-term investment and other income, net which are managed centrally at the corporate level, and, accordingly, such items are not presented by segment since they are excluded from the measure of profitability reviewed by the CODM.

 

Nathan's Famous, Inc. and Subsidiaries
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
		Thirteen weeks ended										Fifty-two weeks ended
	Mar. 26, 2017				Mar. 27, 2016					Mar. 26, 2017					Mar. 27, 2016
EBITDA
Net Income	$     729,000				$     507,000					$   7,485,000					$   6,096,000
Interest Expense	3,663,000				3,504,000					14,665,000					14,630,000
Provision for income taxes	333,000				402,000					4,319,000					4,288,000
Depreciation and amortization	292,000				280,000					1,297,000					1,255,000
EBITDA	$    5,017,000				$    4,693,000					$   27,766,000					$   26,269,000
Adjusted EBITDA
EBITDA	$    5,017,000				$    4,693,000					$   27,766,000					$   26,269,000
Stock-based compensation	100,000				173,000					582,000					722,000
Impairment charge long-term      investment	-				100,000					-					100,000
Amortization of bond premium (d)	-				-					-					64,000
Adjusted EBITDA	$    5,117,000				$    4,966,000					$   28,348,000					$   27,155,000

 

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

Contact:

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

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/nathans-famous-inc-reports-year-end-and-fourth-quarter-results-300471367.html

SOURCE Nathan's Famous, Inc.

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