Nathan's Famous, Inc. Reports Third Quarter Results

By: Nathan's Famous | 0 Shares 166 Reads

And Declares Quarterly Cash Dividend Of $.35 Per Share.

JERICHO, N.Y., Feb. 05, 2021 // GLOBE NEWSWIRE // - Nathan's Famous, Inc. (NASDAQ:NATH) today reported results for the third quarter of its 2021 fiscal year that ended December 27, 2020.

For the fiscal quarter ended December 27, 2020:

Revenues were $18,030,000, as compared to $21,376,000 during the thirteen weeks ended December 29, 2019;
Income from operations was $4,403,000, as compared to $3,863,000 during the thirteen weeks ended December 29, 2019;
Adjusted EBITDA¹, a non-GAAP financial measure, was $4,818,000, as compared to $4,546,000 for the thirteen weeks ended December 29, 2019;
Income before provision for income taxes was $1,851,000, as compared to $1,573,000 for the thirteen weeks ended December 29, 2019;
Net income was $1,359,000, as compared to $1,213,000 for the thirteen weeks ended December 29, 2019; and
Earnings per diluted share was $0.33 per share, as compared to $0.29 per share for the thirteen weeks ended December 29, 2019.

For the thirty-nine weeks ended December 27, 2020:

Revenues were $57,555,000, as compared to $81,620,000 during the thirty-nine weeks ended December 29, 2019;
Income from operations was $20,081,000, as compared to $20,677,000 during the thirty-nine weeks ended December 29, 2019;
Adjusted EBITDA¹, a non-GAAP financial measure, was $21,408,000, as compared to $22,840,000 for the thirty-nine weeks ended December 29, 2019;
Income before provision for income taxes was $12,470,000, as compared to $13,861,000 for the thirty-nine weeks ended December 29, 2019;
Net income was $9,014,000, as compared to $10,240,000 for the thirty-nine weeks ended December 29, 2019; and
Earnings per diluted share was $2.19 per share, as compared to $2.43 per share for the thirty-nine weeks ended December 29, 2019.

___________________________
¹ EBITDA and Adjusted EBITDA are non-GAAP financial measures. Please see the definitions of EBITDA and Adjusted EBITDA on page 3 of this release and the reconciliation of EBITDA and Adjusted EBITDA to net income in the table at the end of this release.

The Company also reported the following:

License royalties increased to $24,689,000 during the thirty-nine weeks ended December 27, 2020, (“fiscal 2021 period”), as compared to $18,559,000 during the thirty-nine weeks ended December 29, 2019. During the fiscal 2021 period, royalties earned under the retail agreement, including the foodservice program, from John Morrell & Co., increased 33% to $22,743,000, as compared to $17,071,000 of royalties earned during the thirty-nine weeks ended December 29, 2019. As consumers continue to shelter at home as a result of the COVID-19 pandemic, our licensing business continues to show strong consumer demand.
In the Branded Product Program, which features the sale of Nathan’s hot dogs to the foodservice industry, income from operations declined by approximately $3,170,000 to $3,074,000 during the fiscal 2021 period, as compared to $6,244,000 for the thirty-nine weeks ended December 29, 2019. Sales were $24,450,000 during the fiscal 2021 period, compared to sales of $45,989,000 during the thirty-nine weeks ended December 29, 2019, while the volume of hot dogs sold by the Company decreased 48%. As a result of the COVID-19 pandemic, sales and income from operations for the Branded Product Program continue to be negatively impacted as many of our customers operate in venues that are currently closed, such as movie theaters, or venues operating at reduced capacity, such as professional sports arenas, amusement parks, and shopping malls.
Sales from Company-operated restaurants were $6,247,000 during the fiscal 2021 period compared to $11,710,000 during the thirty-nine weeks ended December 29, 2019. The decrease was primarily due to a decline in customer traffic related to the impact of the COVID-19 pandemic. Additionally, as stipulated under government orders, our Company-operated restaurants with dining rooms are operating at reduced capacity and maintaining social distancing protocols.
Revenues from franchise operations were $1,087,000 during the fiscal 2021 period, compared to $3,610,000 during the thirty-nine weeks ended December 29, 2019. Total royalties were $880,000 during the fiscal 2021 period as compared to $2,829,000 during the thirty-nine weeks ended December 29, 2019. Total franchise fee income was $207,000 during the fiscal 2021 period compared to $781,000 during the thirty-nine weeks ended December 29, 2019. As a result of the COVID-19 pandemic, a number of our franchised locations have been temporarily closed due to their locations being in venues which are closed, such as movie theaters, or venues operating at reduced traffic, such as airport and highway travel plazas. Despite the challenging environment, 5 new franchised outlets and 75 ghost kitchens opened during the fiscal 2021 period.
During the fiscal 2021 period, we recorded Advertising Fund revenue and expense of $1,082,000.
During the fiscal 2021 period, the Board of Directors declared three quarterly cash dividends of $0.35 per share totaling $4,320,000.
Effective February 5, 2021, the Board of Directors declared its quarterly cash dividend of $0.35 per share payable on March 5, 2021 to shareholders of record at the close of business on February 22, 2021.

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 is disclosing EBITDA, a non-GAAP financial measure which is defined as net income, excluding (i) interest expense; (ii) provision for income taxes and (iii) depreciation and amortization expense. The Company is also disclosing Adjusted EBITDA, a non-GAAP financial measure which is defined as EBITDA, excluding (i) share-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 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. Please see the table at the end of this press release for a reconciliation of EBITDA and Adjusted EBITDA to net income.

Nathan's Famous, Inc.
(unaudited)

	Thirteen weeks ended						Thirty-nine weeks ended
	Dec. 27, 2020			Dec. 29, 2019				Dec. 27, 2020			Dec. 29, 2019
Financial Highlights

Total revenues	$	18,030,000		$	21,376,000			$	57,555,000		$	81,620,000

Income from operations (a)	$	4,403,000		$	3,863,000			$	20,081,000		$	20,677,000

Net income	$	1,359,000		$	1,213,000			$	9,014,000		$	10,240,000

Income per share:
Basic	$	0.33		$	0.29			$	2.19		$	2.43
Diluted	$	0.33		$	0.29			$	2.19		$	2.43

Weighted-average shares used in
computing income per share:
Basic	4,115,000			4,225,000				4,117,000			4,219,000
Diluted	4,115,000			4,225,000				4,117,000			4,219,000
Select Segment Information Revenues
Branded product program	$	10,003,000		$	13,694,000			$	24,450,000		$	45,989,000
Product licensing	5,898,000			4,412,000				24,689,000			18,559,000
Restaurant operations	1,739,000			2,697,000				7,334,000			15,320,000
Corporate (b)	390,000			573,000				1,082,000			1,752,000
Total Revenues	$	18,030,000		$	21,376,000			$	57,555,000		$	81,620,000

Income from operations (c)
Branded product program	$		1,550,000	$		1,917,000		$		3,074,000	$		6,244,000
Product licensing		5,852,000			4,367,000				24,552,000			18,423,000
Restaurant operations		(1,162,000)			(599,000)				(2,193,000)			2,254,000
Corporate (d)		(1,837,000)			(1,822,000)				(5,352,000)			(6,244,000)
Income from operations (c)	$		4,403,000	$		3,863,000		$		20,081,000	$		20,677,000

Excludes interest expense, interest income, and other income, net.
Represents Advertising Fund revenue.
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.
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, compliance costs, and the operating results of the advertising fund.

Nathan's Famous, Inc. and Subsidiaries

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

	Thirteen weeks ended		Thirty-nine weeks ended
	Dec. 27, 2020	Dec. 29, 2019		Dec. 27, 2020	Dec. 29, 2019
	(unaudited)			(unaudited)
EBITDA
Net Income	$ 1,359,000	$ 1,213,000		$ 9,014,000	$ 10,240,000

Interest Expense	2,650,000	2,650,000		7,951,000	7,951,000

Provision for income taxes	492,000	360,000		3,456,000	3,621,000

Depreciation and amortization	288,000	294,000		900,000	941,000

EBITDA	$ 4,789,000	$ 4,517,000		$ 21,321,000	$ 22,753,000



Adjusted EBITDA
EBITDA	$ 4,789,000	$ 4,517,000		$ 21,321,000	$ 22,753,000

Share-based compensation	29,000	29,000		87,000	87,000

Adjusted EBITDA	$ 4,818,000	$ 4,546,000		$ 21,408,000	$ 22,840,000