RAVE Restaurant Group, Inc. Reports First Quarter Financial Results
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RAVE Restaurant Group, Inc. Reports First Quarter Financial Results

DALLAS, Nov. 13, 2020 // PRNewswire // - RAVE Restaurant Group, Inc. (NASDAQ: RAVE) today reported financial results for the first quarter ended September 27, 2020.

First Quarter Highlights:

  • The Company recorded net income of $76 thousand for the first quarter of fiscal 2021 compared to net income of $237 thousand for the same period of the prior year.
  • Total revenue decreased by $1.0 million to $1.9 million for the first quarter of fiscal 2021 compared to the same period of the prior year.
  • Income before taxes was $78 thousand for the first quarter of fiscal 2021 compared to $310 thousand for the same period of the prior year.
  • Pizza Inn domestic comparable store retail sales decreased 22% in the first quarter of fiscal 2021 compared to the same period of the prior year.
  • Pie Five comparable store retail sales decreased 23% in the first quarter of fiscal 2021 compared to the same period of the prior year.
  • On a fully diluted basis, net income decreased $0.01 per share to $0.00 per share for the first quarter of fiscal 2021 compared to net income of $0.01 per share for the same period of the prior year.
  • Cash and cash equivalents decreased $33 thousand during the first quarter of fiscal 2021 to $2.9 million at September 27, 2020.
  • Pizza Inn domestic unit count finished at 146.
  • Pizza Inn international unit count finished at 32.
  • Pie Five domestic unit count finished at 39.

"We continue to work through challenges presented by the global health crisis, but we will not be sidelined by the pandemic and are resolute in repositioning RAVE for long-term success," said Brandon Solano, Chief Executive Officer of RAVE Restaurant Group, Inc. "Safety for our customers remains our top priority and our first quarter results demonstrate that the coordinated response from our franchisees and restaurant support team continues to drive traffic and incremental sales despite operating challenges."

"At Pizza Inn, we created the Contactless Buffet To-Go to maximize value and variety for guests and to lower the impact of reduced foot traffic," Solano said. "We recently brought back the Contactless Buffett To-Go with three new value-oriented options and along with our New Right-Way Buffet, we are seeing impressive results in driving traffic and ticket average."

"At Pie Five, we are continuing to test menu upgrades and look forward to rolling out several new options soon," said Solano. "We are also continuing to leverage the Circle of Crust rewards program and are seeing a steady return in traffic along with positive sales trends with third-party delivery utilization."

"Income before taxes of $78 thousand is an encouraging start for the first quarter of fiscal 2021 and demonstrates our commitment to controlling costs amid revenue declines," said Clint Fendley, Vice President of Finance of RAVE Restaurant Group, Inc. "RAVE's cash balance of $2.9 million at September 27, 2020, coupled with $3.8 million of gross proceeds from sales of common stock subsequent to the first quarter, reinforces our position as we continue to confront near-term uncertainty in our industry."

Non-GAAP Financial Measures

The Company's financial statements are prepared in accordance with United States generally accepted accounting principles ("GAAP"). However, the Company also presents and discusses certain non-GAAP financial measures that it believes are useful to investors as measures of operating performance. Management may also use such non-GAAP financial measures in evaluating the effectiveness of business strategies and for planning and budgeting purposes. However, these non-GAAP financial measures should not be viewed as an alternative or substitute for its financial statements prepared in accordance with generally accepted accounting principles.

The Company considers EBITDA and Adjusted EBITDA to be important supplemental measures of operating performance that are commonly used by securities analysts, investors and other parties interested in our industry. The Company believes that EBITDA is helpful to investors in evaluating its results of operations without the impact of expenses affected by financing methods, accounting methods and the tax environment. The Company believes that Adjusted EBITDA provides additional useful information to investors by excluding non-operational or non-recurring expenses to provide a measure of operating performance that is more comparable from period to period. Management also uses these non-GAAP financial measures for evaluating operating performance, assessing the effectiveness of business strategies, projecting future capital needs, budgeting and other planning purposes.

"EBITDA" represents earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, gain/loss sale of assets, costs related to impairment, closed and non-operating store costs. A reconciliation of these non-GAAP financial measures to net income is included with the accompanying financial statements.

Note Regarding Forward Looking Statements

Certain statements in this press release, other than historical information, may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are intended to be covered by the safe harbors created thereby. These forward-looking statements are based on current expectations that involve numerous risks, uncertainties and assumptions. Assumptions relating to these forward-looking statements involve judgments with respect to, among other things, future economic, competitive and market conditions, regulatory framework and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of RAVE Restaurant Group, Inc. Although the assumptions underlying these forward-looking statements are believed to be reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that any forward-looking statements will prove to be accurate. In light of the significant uncertainties inherent in these forward-looking statements, the inclusion of such information should not be regarded as a representation that the objectives and plans of RAVE Restaurant Group, Inc. will be achieved.

RAVE RESTAURANT GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

 
       

Three Months Ended

       

September 27,

 

September 29,

       

2020

 

2019

             
             

REVENUES:

 

$             1,903

 

$            2,876

             

COSTS AND EXPENSES:

       
 

Cost of sales

 

78

 

134

 

General and administrative expenses

 

1,089

 

1,363

 

Franchise expenses

 

547

 

866

 

Gain on sale of assets

 

-

 

(11)

 

Impairment of long-lived assets and other lease charges

 

17

 

148

 

Bad debt expense (recovery)

 

27

 

(8)

 

Interest expense

 

23

 

27

 

Depreciation and amortization expense

 

44

 

47

   

Total costs and expenses

 

1,825

 

2,566

             

INCOME BEFORE TAXES

 

78

 

310

 

Income tax expense

 

2

 

73

NET INCOME

 

76

 

237

             

INCOME PER SHARE OF COMMON STOCK - BASIC:

 

$               0.00

 

$              0.02

             

INCOME PER SHARE OF COMMON STOCK - DILUTED:

 

$               0.00

 

$              0.01

             
             

Weighted average common shares outstanding - basic

 

15,451

 

15,106

             

Weighted average common and potential dilutive common shares outstanding

 

 

16,249

 

 

15,924

 

RAVE RESTAURANT GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

 
   

September 27,

 

June 28,

   

2020

 

2020

ASSETS

       

CURRENT ASSETS

       

   Cash and cash equivalents

 

$       2,936

 

$       2,969

   Restricted cash

 

234

 

234

   Accounts receivable, less allowance for bad debts of $77 and $269, respectively

 

 

1,012

 

 

965

   Notes receivable

 

484

 

546

   Deferred contract charges

 

36

 

44

   Prepaid expenses and other

 

218

 

174

        Total current assets

 

4,920

 

4,932

         

LONG-TERM ASSETS

       

   Property, plant and equipment, net

 

358

 

366

   Operating lease right of use asset, net

 

3,421

 

3,567

   Intangible assets definite-lived, net

 

146

 

155

   Notes receivable, net of current portion

 

445

 

449

   Long-term deferred contract charges

 

242

 

231

   Deposits and other

 

-

 

5

     Total assets

 

$       9,532

 

$       9,705

         

LIABILITIES AND SHAREHOLDERS' EQUITY

       

CURRENT LIABILITIES

       

   Accounts payable - trade

 

$          469

 

$          446

   Accounts payable - lease termination impairments

 

421

 

407

   Accrued expenses

 

685

 

775

   Operating lease liability, current

 

644

 

632

   Deferred revenues

 

293

 

254

     Total current liabilities

 

2,512

 

2,514

         

LONG-TERM LIABILITIES

       

   Convertible notes

 

1,556

 

1,549

   PPP loan

 

657

 

657

   Operating lease liability, net of current portion

 

3,307

 

3,471

   Deferred revenues, net of current portion

 

873

 

960

   Other long-term liabilities

 

51

 

51

     Total liabilities

 

8,956

 

9,202

         

SHAREHOLDERS' EQUITY

       

   Common stock, $.01 par value; authorized 26,000,000 shares; issued 22,550,376 and 22,550,376  shares, respectively; outstanding 15,465,222 and 15,465,222 shares, respectively

 

 

225

 

 

225

   Additional paid-in capital

 

33,528

 

33,531

   Accumulated deficit

 

(8,640)

 

(8,716)

   Treasury stock at cost

       

     Shares in treasury: 7,085,154 and 7,085,154, respectively

 

-24,537

 

-24,537

        Total shareholders' equity

 

576

 

503

         

        Total liabilities and shareholders' equity

 

$       9,532

 

$       9,705

 

RAVE RESTAURANT GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

     

Three Months Ended

     

September 27,

 

September 29,

     

2020

 

2019

           

CASH FLOWS FROM OPERATING ACTIVITIES:

       
 

Net income 

 

$                    76

 

$                  237

 

Adjustments to reconcile net income to cash (used in) provided by operating activities:

       
   

Impairment of fixed assets and other assets

 

17

 

148

   

Depreciation and amortization

 

44

 

47

   

Amortization of operating right of use assets

 

146

 

115

   

Amortization of debt issue costs

 

7

 

9

   

Gain on the sale of assets

 

-

 

(11)

   

Provision for bad debt 

 

27

 

(8)

   

Deferred income tax

 

-

 

71

 

Changes in operating assets and liabilities:

       
   

Accounts receivable

 

(74)

 

272

   

Notes receivable

 

62

 

-

   

Deferred contract charges

 

(3)

 

(3)

   

Inventories

 

-

 

1

   

Prepaid expenses and other

 

(44)

 

46

   

Deposits and other

 

5

 

1

   

Accounts payable - trade

 

23

 

(110)

   

Accounts payable - lease termination impairments

 

(3)

 

(373)

   

Accrued expenses

 

(90)

 

(47)

   

Operating lease liability

 

(152)

 

(120)

   

Deferred revenue

 

(48)

 

(122)

   

Deferred rent and other

 

-

 

(21)

   

   Cash (used in) provided by operating activities

 

(7)

 

132

           
           

CASH FLOWS FROM INVESTING ACTIVITIES:

       
 

Payments received on notes receivable from fixed asset sales

 

4

 

44

 

Purchase of property, plant and equipment

 

(27)

 

(17)

   

Cash (used in) provided by investing activities

 

(23)

 

27

           
           

CASH FLOWS FROM FINANCING ACTIVITIES:

       
 

Equity issuance costs

 

(3)

 

(2)

   

Cash (used in) financing activities

 

(3)

 

(2)

           

Net (decrease)/increase in cash, cash equivalents and restricted cash

 

(33)

 

157

Cash, cash equivalents and restricted cash, beginning of period

 

3,203

 

2,264

Cash, cash equivalents and restricted cash, end of period

 

$               3,170

 

$               2,421

           
           

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

       
           

CASH PAID FOR:

       
   

Interest

 

$                      -

 

$                      2

   

Income taxes

 

$                     7

 

$                      1

                 
 

Non-cash activities:

       
   

Conversion of notes to common shares

 

$                      -

 

$                    64

   

Operating lease right of use assets at adoption

 

$                      -

 

$               3,428

   

Operating lease liability at adoption

 

$                      -

 

$               3,875

 

RAVE RESTAURANT GROUP, INC.

ADJUSTED EBITDA

(In thousands)

       
 

Three Months Ended

 

September 27,

 

September 29,

 

2020

 

2019

 Net income 

$                  76

 

$                237

 Interest expense 

23

 

27

 Income taxes 

2

 

73

 Depreciation and amortization 

44

 

47

 EBITDA 

$                145

 

$                384

 Gain on sale/disposal of assets 

-

 

(11)

 Impairment of long-lived assets and other lease charges

17

 

148

 Franchisee default and closed store revenue 

(67)

 

(147)

 Closed and non-operating store costs 

82

 

6

 Adjusted EBITDA 

$                177

 

$                380

 

SOURCE RAVE Restaurant Group, Inc.

 

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