Ark Restaurants Announces Financial Results for the Second Quarter of 2024

Rhea-AI Summary

Ark Restaurants Corp. (NASDAQ: ARKR) reported financial results for Q2 2024, ending March 30, 2024. The company posted total revenues of $42.26 million, slightly higher than $41.90 million in Q2 2023. For the first half of 2024, revenues were $89.74 million, up from $89.34 million in the same period last year. Adjusted EBITDA for Q2 2024 was a loss of $321,000 compared to a gain of $1.00 million in Q2 2023. Net loss for Q2 2024 was $1.45 million, or $0.40 per share, worsening from a net loss of $484,000, or $0.13 per share, in Q2 2023. For the first half of 2024, adjusted EBITDA was $2.25 million, down from $4.02 million in the first half of 2023. Net loss for the first half of 2024 was $79,000 compared to net income of $1.24 million in 2023. A quarterly dividend of $0.1875 per share was announced, payable on June 12, 2024.

Positive

• Total revenues for Q2 2024 increased to $42.26 million from $41.90 million in Q2 2023.
• Total revenues for the first half of 2024 were $89.74 million, marginally higher than $89.34 million in the same period in 2023.
• The company declared a quarterly cash dividend of $0.1875 per share, payable on June 12, 2024.
• Cash balance stood at $10.41 million at the end of March 30, 2024.
• Total outstanding debt was $6.24 million as of March 30, 2024.

Negative

• Adjusted EBITDA for Q2 2024 was a loss of $321,000, compared to a gain of $1.00 million in Q2 2023.
• Net loss for Q2 2024 was $1.45 million or $0.40 per share, worsening from a net loss of $484,000 or $0.13 per share in Q2 2023.
• Adjusted EBITDA for the first half of 2024 was $2.25 million, significantly lower than $4.02 million in the same period in 2023.
• Net loss for the first half of 2024 was $79,000, compared to net income of $1.24 million in the first half of 2023.
• Revenue from Gallagher's Steakhouse in Las Vegas dropped from $2.11 million in the prior year to $714,000 for the period it was closed for renovation.

Financial Analyst

Ark Restaurants Corp.'s financial results indicate a challenging second quarter. Total revenue for the 13 weeks ended March 30, 2024, was $42,257,000, slightly up from $41,897,000 in the same period last year. However, the company's EBITDA and net income metrics reveal deeper issues. The EBITDA for the quarter is reported at $(321,000), down significantly from $1,001,000 in the previous year. This sharp decline is also evident in the net loss which widened to $(1,449,000) compared to $(484,000).

The dip can be partially attributed to the closure and renovation of Gallagher’s Steakhouse during the previous fiscal year. Nonetheless, this alone doesn't explain the steep drop in profitability. Investors must consider this as a warning signal, reflecting operational inefficiencies or rising costs.

In the broader view, the company's cash position remains relatively strong with $10,412,000 in hand and a manageable debt of $6,241,000. Additionally, the declared dividend of $0.1875 per share, which provides some return to shareholders, may help counterbalance the negative sentiment from the losses.

However, consistent underperformance and widening losses are generally red flags for investors, potentially signaling deeper structural or operational issues that need addressing.

Market Research Analyst

From a market perspective, Ark Restaurants' slight increase in revenue is overshadowed by its significant profitability challenges. The hospitality and dining sectors have been grappling with numerous issues post-pandemic, such as increased labor costs, supply chain disruptions and changing consumer behaviors. These broader industry challenges may be impacting Ark Restaurants more severely than its competitors, as evidenced by the decline in EBITDA and net income.

Investors should also note the company's decision to proceed with a dividend payment despite a net loss. This could be seen as a move to maintain shareholder confidence, but it also raises questions about the sustainability of such payouts if financial performance doesn't improve. The dividend yield might attract income-focused investors, yet the underlying financial health remains a concern.

Given the competitive nature of the restaurant industry and the current economic headwinds, investors need to be cautious. While the company's strong cash reserves provide a cushion, ongoing losses could erode this safety net quickly if not addressed.

NEW YORK--(BUSINESS WIRE)-- Ark Restaurants Corp. (NASDAQ:ARKR) today reported financial results for the second quarter ended March 30, 2024.

Financial Results

Total revenues for the 13 weeks ended March 30, 2024 were $42,257,000 versus $41,897,000 for the 13 weeks ended April 1, 2023 and total revenues for the 26 weeks ended March 30, 2024 were $89,743,000 versus $89,342,000 for the 26 weeks ended April 1, 2023. As required by our lease, Gallagher's Steakhouse at the New York-New York Hotel and Casino in Las Vegas, NV was substantially closed for renovation in the prior period from February 5, 2023 through April 27, 2023. Revenues for the period from closure through April 1, 2023 were $714,000 as compared to $2,114,000 for the comparable period in the current fiscal quarter.

The Company's EBITDA, adjusted for items as set out in the table below, for the 13 weeks ended March 30, 2024 was $(321,000) versus $1,001,000 for the 13 weeks ended April 1, 2023. Net loss for the 13 weeks ended March 30, 2024 was $(1,449,000), or $(0.40) per basic and diluted share, compared to a net loss of $(484,000), or $(0.13) per basic and diluted share for the 13 weeks ended April 1, 2023.

The Company's EBITDA, excluding gains on the forgiveness of Paycheck Protection Program Loans (the "PPP Loan Forgiveness") and adjusted for the other items as set out in the table below, for the 26 weeks ended March 30, 2024 was $2,251,000 versus $4,020,000 for the 26 weeks ended April 1, 2023. Net loss for the 26 weeks ended March 30, 2024 was $(79,000) (which includes PPP Loan Forgiveness of $285,000) or $(0.02) per basic and diluted share, compared to net income of $1,241,000 (which includes PPP Loan Forgiveness of $272,000) or $0.34 per basic and diluted share for the 26 weeks ended April 1, 2023.

On May 7, 2024, the Board of Directors declared a quarterly cash dividend of $0.1875 per share to be paid on June 12, 2024 to shareholders of record of the Company's common stock at the close of business on May 31, 2024.

As of March 30, 2024, the Company had a cash balance of $10,412,000 and total outstanding debt of $6,241,000.

About Ark Restaurants Corp.

Ark Restaurants owns and operates 17 restaurants and bars, 16 fast food concepts and catering operations primarily in New York City, Florida, Washington, DC, Las Vegas, Nevada and the gulf coast of Alabama. Four restaurants are located in New York City, one is located in Washington, DC, five are located in Las Vegas, Nevada, one is located in Atlantic City, New Jersey, four are located on the east coast of Florida and two are located on the Gulf Coast of Alabama. The Las Vegas operations include four restaurants within the New York-New York Hotel & Casino Resort and operation of the hotel's room service, banquet facilities, employee dining room and six food court concepts and one restaurant within the Planet Hollywood Resort and Casino. In Atlantic City, New Jersey, the Company operates a restaurant in the Tropicana Hotel and Casino. The Florida operations include the Rustic Inn in Dania Beach, Shuckers in Jensen Beach, JB’s on the Beach in Deerfield Beach, Blue Moon Fish Company in Lauderdale-by-the-Sea and the operation of four fast food facilities in Tampa and six fast food facilities in Hollywood, each at a Hard Rock Hotel and Casino operated by the Seminole Indian Tribe at these locations. In Alabama, the Company operates two Original Oyster Houses, one in Gulf Shores and one in Spanish Fort.

Cautionary Note Regarding Forward-Looking Statements

Except for historical information, this news release contains 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. These statements involve unknown risks, and uncertainties that may cause the Company's actual results or outcomes to be materially different from those anticipated and discussed herein. Important factors that might cause such differences are discussed in the Company's filings with the Securities and Exchange Commission. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Actual results could differ materially from those anticipated in these forward-looking statements, if new information becomes available in the future.

Non-GAAP Financial Information

This news release includes non-generally accepted accounting principles ("GAAP") performance measures. Although Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") is not a measure of performance or liquidity calculated in accordance with GAAP, the Company believes the use of this non-GAAP financial measure enhances an overall understanding of the Company's past financial performance as well as providing useful information to the investor because of its historical use by the Company as both a performance measure and measure of liquidity, and the use of EBITDA by virtually all companies in the restaurant sector as a measure of both performance and liquidity. However, investors should not consider this measure in isolation or as a substitute for net income (loss), operating income (loss), cash flows from operating activities or any other measure for determining the Company's operating performance or liquidity that is calculated in accordance with GAAP as it may not necessarily be comparable to similarly titled measure employed by other companies.

ARK RESTAURANTS CORP.

Consolidated Condensed Statements of Operations

For the 13- and 26- week periods ended March 30, 2024 and April 1, 2023

(In Thousands, Except per share amounts)

		13 Weeks Ended March 30, 2024				13 Weeks Ended April 1, 2023				26 Weeks Ended March 30, 2024				26 Weeks Ended April 1, 2023
TOTAL REVENUES		$	42,257			$	41,897			$	89,743			$	89,342
COSTS AND EXPENSES:
Food and beverage cost of sales			12,138				11,795				24,209				24,231
Payroll expenses			15,512				15,311				32,488				31,833
Occupancy expenses			5,775				5,255				12,107				11,438
Other operating costs and expenses			5,836				5,352				11,928				11,283
General and administrative expenses			3,141				3,023				6,461				6,159
Depreciation and amortization			1,057				1,138				2,149				2,171
Total costs and expenses			43,459				41,874				89,342				87,115
OPERATING INCOME (LOSS)			(1,202	)			23				401				2,227
OTHER (INCOME) EXPENSE:
Interest expense, net			150				248				310				588
Other income			—				—				(26	)			—
Gain on forgiveness of PPP Loans			—				—				(285	)			(272	)
Total other (income) expense, net			150				248				(1	)			316
INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES			(1,352	)			(225	)			402				1,911
Provision (benefit) for income taxes			(147	)			19				11				133
CONSOLIDATED NET INCOME (LOSS)			(1,205	)			(244	)			391				1,778
Net income attributable to non-controlling interests			(244	)			(240	)			(470	)			(537	)
NET INCOME (LOSS) ATTRIBUTABLE TO ARK RESTAURANTS CORP.		$	(1,449	)		$	(484	)		$	(79	)		$	1,241
NET INCOME (LOSS) ATTRIBUTABLE TO ARK RESTAURANTS CORP. PER COMMON SHARE:
Basic		$	(0.40	)		$	(0.13	)		$	(0.02	)		$	0.34
Diluted		$	(0.40	)		$	(0.13	)		$	(0.02	)		$	0.34
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic			3,604				3,600				3,604				3,600
Diluted			3,604				3,600				3,604				3,646
EBITDA Reconciliation:
Income (loss) before provision (benefit) for income taxes		$	(1,352	)		$	(225	)		$	402			$	1,911
Depreciation and amortization			1,057				1,138				2,149				2,171
Interest expense, net			150				248				310				588
EBITDA (a)		$	(145	)		$	1,161			$	2,861			$	4,670
EBITDA, adjusted:
EBITDA (as defined) (a)		$	(145	)		$	1,161			$	2,861			$	4,670
Non-cash stock option expense			68				80				145				159
Gain of forgiveness of PPP Loans			—				—				(285	)			(272	)
Net income attributable to non-controlling interests			(244	)			(240	)			(470	)			(537	)
EBITDA, as adjusted		$	(321	)		$	1,001			$	2,251			$	4,020

(a)

EBITDA is defined as earnings before interest, taxes, depreciation and amortization. A reconciliation of EBITDA to the most comparable GAAP financial measure, pre-tax income, is included above.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240513556882/en/

Anthony J. Sirica

(212) 206-8800

ajsirica@arkrestaurants.com

Source: Ark Restaurants Corp.

FAQ

What were Ark Restaurants' Q2 2024 revenues?

Ark Restaurants reported total revenues of $42.26 million for Q2 2024.

How did Ark Restaurants' net loss in Q2 2024 compare to Q2 2023?

Ark Restaurants' net loss for Q2 2024 was $1.45 million, compared to a net loss of $484,000 in Q2 2023.

What is the declared cash dividend for Ark Restaurants in Q2 2024?

Ark Restaurants declared a quarterly cash dividend of $0.1875 per share for Q2 2024.

How much cash did Ark Restaurants have by the end of Q2 2024?

Ark Restaurants had a cash balance of $10.41 million as of March 30, 2024.

What was Ark Restaurants' adjusted EBITDA for the first half of 2024?

Ark Restaurants' adjusted EBITDA for the first half of 2024 was $2.25 million.

What was the revenue impact of Gallagher's Steakhouse renovation on Ark Restaurants?

Gallagher's Steakhouse's revenue dropped from $2.11 million to $714,000 during its renovation period in Q2 2023.

How did Ark Restaurants' total revenue for the first half of 2024 compare to the first half of 2023?

Ark Restaurants' total revenue for the first half of 2024 was $89.74 million, slightly up from $89.34 million in the first half of 2023.