Nathan's Famous, Inc. Reports Year End and Fourth Quarter Results
JERICHO, N.Y., June 08, 2023 (GLOBE NEWSWIRE) -- Nathan's Famous, Inc. (NASDAQ:NATH) today reported results for its fiscal year and fourth quarter ended March 26, 2023.
Effective June 8, 2023, the Board of Directors declared its first quarterly cash dividend for fiscal 2024 of $0.50 per share, which is payable on June 28, 2023 to shareholders of record at the close of business on June 20, 2023.
For the fiscal year ended March 26, 2023:
- Revenues were $130,785,000 for the fifty-two weeks ended March 26, 2023 ("fiscal 2023") as compared to $114,882,000 for the fifty-two weeks ended March 27, 2022 ("fiscal 2022");
- Income from operations was $34,445,000 for fiscal 2023 as compared to $29,863,000 for fiscal 2022;
- Adjusted EBITDA1 for fiscal 2023, a non-GAAP financial measure, was $36,383,000 as compared to $31,153,000 for fiscal 2022;
- In connection with the redemption of $30,000,000 in aggregate principal amount of our 6.625% Senior Secured Notes due 2025 on March 21, 2023, the Company recorded a loss on debt extinguishment of $357,000, or $261,000, net of tax, or $0.06 per diluted share. As a result of such redemption, the Company expects to reduce its future cash interest expense by $1,987,000 per annum;
- Income before provision for income taxes was $26,804,000 for fiscal 2023 as compared to $18,536,000 for fiscal 2022;
- Net income was $19,623,000 for fiscal 2023 as compared to $13,596,000 for fiscal 2022; and
- Earnings per diluted share was $4.80 per share for fiscal 2023 as compared to $3.30 per share for fiscal 2022.
For the thirteen weeks ended March 26, 2023:
- Revenues were $27,414,000 for the thirteen weeks ended March 26, 2023 ("fourth quarter fiscal 2023") as compared to $24,772,000 for the thirteen weeks ended March 27, 2022 ("fourth quarter fiscal 2022");
- Income from operations was $6,419,000 for the fourth quarter fiscal 2023 as compared to $6,109,000 for the fourth quarter fiscal 2022;
- Adjusted EBITDA1 for the fourth quarter fiscal 2023, a non-GAAP financial measure, was $7,096,000 as compared to $6,414,000 for the fourth quarter fiscal 2022;
- Income before provision for income taxes was $4,353,000 for the fourth quarter fiscal 2023 as compared to $2,621,000 for the fourth quarter fiscal 2022;
- Net income was $3,265,000 for the fourth quarter fiscal 2023 as compared to $2,158,000 for the fourth quarter fiscal 2022; and
- Earnings per diluted share was $0.80 per share for the fourth quarter fiscal 2023 as compared to $0.52 per share for the fourth quarter fiscal 2022.
The Company also reported the following:
- License royalties increased to $33,455,000 during fiscal 2023, as compared to $31,824,000 during fiscal 2022. During fiscal 2023, royalties earned under the retail agreement, including the foodservice program, from Smithfield Foods, Inc., increased 4% to $29,998,000, as compared to $28,970,000 of royalties earned during fiscal 2022 due primarily to a 7% increase in the average net selling price on which our royalties are calculated.
- In the Branded Product Program, which features the sale of Nathan's hot dogs to the foodservice industry, sales increased by $12,562,000 to $78,884,000 during the fiscal 2023 period as compared to $66,322,000 during the fiscal 2022 period. The volume of hot dogs sold by the Company increased by approximately 15%. Our average selling price, which is partially correlated to the beef markets, increased by approximately 4% compared to the prior year period. Income from operations increased by $2,577,000 to $8,976,000 during fiscal 2023 as compared to $6,399,000 during fiscal 2022. Our Branded Product Program customers, including professional sports arenas, amusement parks, shopping malls and movie theaters experienced stronger attendance contributing to an increase in sales over the prior year comparable period.
- Sales from Company-owned restaurants were $12,161,000 during fiscal 2023, as compared to $10,905,000 during fiscal 2022. The increase was primarily due to an increase in customer traffic especially at our two Coney Island locations.
- Revenues from franchise operations were $4,292,000 during fiscal 2023 as compared to $3,859,000 during fiscal 2022. Total royalties were $3,636,000 during fiscal 2023 as compared to $3,304,000 during fiscal 2022. Total franchise fee income, including cancellation fees, was $656,000 during fiscal 2023 as compared to $555,000 during fiscal 2022. The increase in franchise fees and royalties during the fiscal 2023 period was primarily due to an increase in franchise restaurant sales of $11,420,000 to $63,739,000 as compared to $52,319,000 during fiscal 2022.2 Eleven new franchised locations opened during fiscal 2023, including three Branded Menu Program locations.
- Advertising revenue was $1,993,000 during fiscal 2023 as compared to $1,972,000 during fiscal 2022.
- The Company previously announced an 11% increase in its regular quarterly cash dividend to $0.50 per share. The Company believes that its strong liquidity supports this increase, while still providing flexibility to invest in the business.
- On March 3, 2023, the Company paid the $0.50 per share regular cash dividend that was declared by the Board of Directors effective February 2, 2023 to shareholders of record at the close of business of February 21, 2023.
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) loss on debt extinguishment, (ii) loss on disposal of property and equipment and (iii) 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.
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 eighteen foreign countries through its restaurant system, foodservice sales programs and product licensing activities. For additional information about Nathan's Famous, please visit our website at www.nathansfamous.com.
Except for historical information contained in this news release, the matters discussed are forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, 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 the COVID-19 pandemic; increases in the cost of food and paper products; the impact of price increases on customer visits; the status of our licensing and supply agreements, including our licensing revenue and overall profitability being substantially dependent on our agreement with Smithfield Foods, Inc.; the impact of our debt service and repayment obligations under the 2025 Notes, including the effect on our ability to fund working capital, operations and make new investments; economic (including inflationary pressures like those currently being experienced); weather (including the impact on sales at our restaurants particularly during the summer months), and changes 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 continued viability of Coney Island as a destination location for visitors; 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 union contracts; our ability to attract competent restaurant and managerial personnel; the enforceability of international franchising agreements; 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.
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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.
2 Franchise restaurant sales are not revenues of the Company and are not included in the Company's Consolidated Financial Statements.
| Nathan's Famous, Inc. and Subsidiaries | |||||||||||||||
| Thirteen weeks ended | Fiscal year ended | ||||||||||||||
| Mar. 26, 2023 | Mar. 27, 2022 | Mar. 26, 2023 | Mar. 27, 2022 | ||||||||||||
| Financial Highlights | |||||||||||||||
| Total revenues | $ | 27,414,000 | $ | 24,772,000 | $ | 130,785,000 | $ | 114,882,000 | |||||||
| Income from operations (a) | $ | 6,419,000 | $ | 6,109,000 | $ | 34,445,000 | $ | 29,863,000 | |||||||
| Net income | $ | 3,265,000 | $ | 2,158,000 | $ | 19,623,000 | $ | 13,596,000 | |||||||
| Income per share: | |||||||||||||||
| Basic | $ | 0.80 | $ | 0.52 | $ | 4.80 | $ | 3.30 | |||||||
| Diluted | $ | 0.80 | $ | 0.52 | $ | 4.80 | $ | 3.30 | |||||||
| Weighted-average shares used in | |||||||||||||||
| computing income per share: | |||||||||||||||
| Basic | 4,080,000 | 4,115,000 | 4,089,000 | 4,115,000 | |||||||||||
| Diluted | 4,086,000 | 4,115,000 | 4,090,000 | 4,115,000 | |||||||||||
| Select Segment Information | |||||||||||||||
| Revenues | |||||||||||||||
| Branded product program | $17,022,000 | $14,362,000 | $78,884,000 | $66,322,000 | |||||||||||
| Product licensing | 7,391,000 | 7,606,000 | 33,455,000 | 31,824,000 | |||||||||||
| Restaurant operations | 2,512,000 | 2,269,000 | 16,453,000 | 14,764,000 | |||||||||||
| Corporate (b) | 489,000 | 535,000 | 1,993,000 | 1,972,000 | |||||||||||
| Total Revenues | $27,414,000 | $24,772,000 | $130,785,000 | $114,882,000 | |||||||||||
| Income from operations (c) | |||||||||||||||
| Branded product program | $1,973,000 | $1,303,000 | $8,976,000 | $6,399,000 | |||||||||||
| Product licensing | 7,345,000 | 7,561,000 | 33,273,000 | 31,642,000 | |||||||||||
| Restaurant operations | (195,000 | ) | (311,000 | ) | 1,684,000 | 312,000 | |||||||||
| Corporate (d) | (2,704,000 | ) | (2,444,000 | ) | (9,488,000 | ) | (8,490,000 | ) | |||||||
| Income from operations (c) | $6,419,000 | $6,109,000 | $34,445,000 | $29,863,000 | |||||||||||
- Excludes loss on debt extinguishment, interest expense, interest income, and other income, net.
- Represents Advertising Fund revenue.
- Excludes loss on debt extinguishment, 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 | Fiscal year ended | ||||||||||||||
| Mar. 26, 2023 | Mar. 27, 2022 | Mar. 26, 2023 | Mar. 27, 2022 | ||||||||||||
| EBITDA | |||||||||||||||
| Net Income | $ | 3,265,000 | $ | 2,158,000 | $ | 19,623,000 | $ | 13,596,000 | |||||||
| Interest Expense | 1,911,000 | 2,184,000 | 7,742,000 | 10,135,000 | |||||||||||
| Provision for income taxes | 1,088,000 | 463,000 | 7,181,000 | 4,940,000 | |||||||||||
| Depreciation and amortization | 298,000 | 247,000 | 1,135,000 | 1,054,000 | |||||||||||
| EBITDA | $ | 6,562,000 | $ | 5,052,000 | $ | 35,681,000 | $ | 29,725,000 | |||||||
| Adjusted EBITDA | |||||||||||||||
| EBITDA | $ | 6,562,000 | $ | 5,052,000 | $ | 35,681,000 | $ | 29,725,000 | |||||||
| Loss on debt extinguishment | 357,000 | 1,354,000 | 357,000 | 1,354,000 | |||||||||||
| Loss on disposal of property and equipment | - | - | 87,000 | - | |||||||||||
| Share-based compensation | 177,000 | 8,000 | 258,000 | 74,000 | |||||||||||
| Adjusted EBITDA | $ | 7,096,000 | $ | 6,414,000 | $ | 36,383,000 | $ | 31,153,000 | |||||||
| COMPANY | Robert Steinberg, Vice President - Finance and CFO | |
| CONTACT: | (516) 338-8500 ext. 229 |
