Nathan's Famous, Inc. Reports First Quarter Results

JERICHO, N.Y. - Aug. 4, 2017 // PRNewswire // - Nathan's Famous, Inc. (NASDAQ:NATH) today reported results for its first quarter of its 2018 fiscal year that ended June 25, 2017.

For the fiscal quarter ended June 25, 2017:

  • Revenues were $30,918,000, as compared to $29,416,000 during the thirteen weeks ended June 26, 2016;
  • Income from operations was $8,450,000, as compared to $8,824,000 during the thirteen weeks ended June 26, 2016;
  • Adjusted EBITDA, as subsequently defined, was$8,973,000 as compared to $9,366,000 for the thirteen weeks ended June 26, 2016;
  • Net income was $2,922,000, as compared to $3,550,000 for the thirteen weeks ended June 26, 2016;
  • Earnings per diluted share was $0.69 per share, as compared to $0.85 per share for the thirteen weeks ended June 26, 2016; and
  • Excluding the tax benefits of stock compensation as described below, net income and earnings per diluted share, would have been $2,844,000 or $0.67 per share, as compared to $2,929,000 or $0.70 per share for the thirteen weeks ended June 26, 2016.

The Company reported the following:

  • License royalties increased to $7,401,000 during the thirteen weeks ended June 25, 2017, as compared to $6,824,000 during the thirteen weeks ended June 26, 2016. During the thirteen weeks ended June 25, 2017, total royalties earned under the John Morrell & Co., agreement increased 8.2% to $6,885,000, as compared to $6,362,000 of royalties earned during the thirteen weeks ended June 26, 2016.
  • In the Branded Product Program, which features the sale of Nathan's hot dogs to the foodservice industry, sales increased by 10.4% to $17,937,000 during the thirteen weeks ended June 25, 2017, compared to sales of $16,254,000 during the thirteen weeks ended June 26, 2016. During the period, the volume of hot dogs sold increased 8.3% and our average selling price increased by approximately 1.3%. Income from operations from the Branded Product Program declined by approximately $681,000 for the fiscal 2018 period as compared to the fiscal 2017 period, as a result of a significant increase in the cost of beef during May and June 2017.
  • Sales from Company-operated restaurants were $4,408,000 during the thirteen weeks ended June 25, 2017 compared to $4,843,000 during the thirteen weeks ended June 26, 2016. Sales were impacted by unfavorable weather in June, especially at our two locations in Coney Island that depend on beach traffic.
  • Revenues from franchise operations were $1,172,000 during the thirteen weeks ended June 25, 2017, compared to $1,330,000 during the thirteen weeks ended June 26, 2016. Total royalties were $1,112,000 in the fiscal 2018 period as compared to $1,152,000 in the fiscal 2017 period. Total franchise fee income was $60,000 during the thirteen weeks ended June 25, 2017 compared to $178,000 during the thirteen weeks ended June 26, 2016. Ten new franchised outlets opened during the thirteen weeks ended June 25, 2017, including two international locations, and seven Branded Menu Program outlets.
  • Nathan's recognized excess tax benefits of $78,000 and $621,000 during the fiscal 2018 and fiscal 2017 periods, respectively, as a result of the tax benefits associated with the stock compensation guidance that the Company adopted in the fiscal 2017 period. The impact of the tax benefits reduced Nathan's tax rate by 1.6% and 12.0%, respectively, and increased earnings per diluted share by $0.02 and $0.15, during the fiscal 2018 and fiscal 2017 periods, respectively.
  • Nathan's has purchased 5,127,373 shares of common stock at a cost of approximately $77,303,000 through June 25, 2017 pursuant to share repurchase programs authorized by the Board of Directors. As of June 25, 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 stock-based compensation 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 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. and Subsidiaries

(unaudited)

 
 

Thirteen weeks ended

     
 

June 25, 2017

 

June 26, 2016

Financial Highlights

     

Total revenues

$   30,918,000

 

$   29,416,000

       

Income from operations (a)

$     8,450,000

 

$     8,824,000

       

Income before provision for income taxes

$     4,843,000

 

$     5,170,000

       

Net income

$     2,922,000

 

$     3,550,000

       

Income per share:

     

   Basic

$              0.70

 

$              0.85

   Diluted

$              0.69

 

$              0.85

       

Weighted-average shares used in

     

   computing income per share:

     

   Basic

4,177,000

 

4,166,000

   Diluted

4,215,000

 

4,191,000

       

Select Segment Information

     
       

Revenues

     

Branded product program

$   17,937,000

 

$   16,419,000

Product licensing

7,401,000

 

6,824,000

Restaurant operations

5,580,000

 

6,173,000

Corporate

 

--

 

--

       

Revenues

$   30,918,000

 

$  29,416,000

 

Income from operations (b)

     

Branded product program

$   2,272,000

 

$   2,953,000

Product licensing

7,356,000

 

6,778,000

Restaurant operations

895,000

 

1,433,000

Corporate (c)

(2,073,000)

 

(2,340,000)

       

Income from operations (b)

$   8,450,000

 

$   8,824,000

     

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

(b)   Excludes interest expense, interest income 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 Chief Operating Decision Maker.

(c)    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.

 

Nathan's Famous, Inc. and Subsidiaries

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

 (unaudited)          

   

Thirteen weeks ended

   

June 25, 2017

 

June 26, 2016

               

EBITDA

       

Net Income

 

$   2,922,000

 

$   3,550,000

         

Interest Expense

 

3,663,000

 

3,676,000

         

Provision for income taxes

 

1,921,000

 

1,620,000

         

Depreciation and amortization

 

368,000

 

347,000

         

EBITDA

 

$   8,874,000

 

$   9,193,000

         
         
         

Adjusted EBITDA

       

EBITDA

 

$   8,874,000

 

$   9,193,000

         

Stock-based compensation

 

99,000

 

173,000

         

Adjusted EBITDA

 

$   8,973,000

 

$   9,366,000

         

Contact:

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

View original content:http://www.prnewswire.com/news-releases/nathans-famous-inc-reports-first-quarter-results-300499322.html

SOURCE Nathan's Famous, Inc.

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