Nathan's Famous, Inc. Reports First Quarter Results
Nathan's Famous reported a significant decline in revenues for the first quarter of fiscal 2021, totaling $17.686 million, down from $30.518 million in the same period last year. Income from operations decreased to $8.094 million from $9.448 million, while net income fell to $4 million compared to $5.369 million in Q1 fiscal 2020. Despite challenges due to the COVID-19 pandemic, license royalties rose to $10.523 million, driven by increased consumer demand. However, sales from Company-operated restaurants and franchise operations saw significant declines.
- License royalties increased by 19.5% to $9.744 million from $8.157 million last year.
- Two new franchised outlets opened despite the challenging environment.
- Revenues dropped 42% from $30.518 million to $17.686 million year-over-year.
- Net income fell 25.5% from $5.369 million to $4 million.
- Income from operations decreased by 14.3% from $9.448 million to $8.094 million.
- Sales from Company-operated restaurants declined by 53% to $1.934 million.
- Franchise operations revenue dropped from $1.077 million to $191,000.
JERICHO, N.Y., Aug. 07, 2020 (GLOBE NEWSWIRE) -- Nathan's Famous, Inc. (“Nathan’s”, the “Company”, “we”, “us” or “our”) (NASDAQ:NATH) today reported results for its first fiscal quarter ended June 28, 2020.
For the thirteen-week period ended June 28, 2020 (“first quarter fiscal 2021”):
- Revenues were
$17,686,000 , as compared to$30,518,000 during the thirteen weeks ended June 30, 2019; - Income from operations was
$8,094,000 , as compared to$9,448,000 during the thirteen weeks ended June 30, 2019; - Adjusted EBITDA1, a non-GAAP financial measure, was
$8,550,000 as compared to$10,173,000 during the thirteen weeks ended June 30, 2019; - Income before provision for income taxes was
$5,561,000 , as compared to$7,185,000 during the thirteen weeks ended June 30, 2019; - Net income was
$4,000,000 , as compared to$5,369,000 during the thirteen weeks ended June 30, 2019; and - Earnings per diluted share was
$0.97 per share, as compared to$1.28 per share during the thirteen weeks ended June 30, 2019.
_____________________________
1 EBITDA and Adjusted EDITDA are non-GAAP financial measures. Please see the definitions of EBITDA and Adjusted EBITDA on page 2 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
$10,523,000 during the first quarter fiscal 2021, as compared to$8,722,000 during the thirteen weeks ended June 30, 2019. During the first quarter fiscal 2021, royalties earned under the retail agreement, including the foodservice program, with John Morrell & Co., increased19.5% to$9,744,000 , as compared to$8,157,000 of royalties earned during the thirteen weeks ended June 30, 2019. As consumers shelter at home, 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
$1,931,000 t o$272,000 during the first quarter fiscal 2021, as compared to$2,203,000 for the thirteen weeks ended June 30, 2019. Sales were$4,749,000 in the first quarter fiscal 2021, compared to sales of$16,113,000 during the prior-year period, while the volume of hot dogs sold by the Company decreased71% . As a result of the COVID-19 pandemic, sales and income from operations for the Branded Product Program have been impacted as many of our customers operated in venues that are currently closed and may be slow to reopen, such as professional sports venues, amusement parks, shopping malls and movie theaters. Our average selling price, which is partially correlated to the beef markets, increased by approximately7.0% compared to the prior-year period.
- Sales from Company-operated restaurants were
$1,934,000 during the first quarter fiscal 2021 compared to$4,124,000 during the thirteen weeks ended June 30, 2019. The decrease was primarily due to a decline in customer traffic related to the impact of the COVID-19 pandemic. Due to governmental restrictions, our Company-operated restaurants were only offering food through take-out and delivery services. - Revenues from franchise operations were
$191,000 during the first quarter fiscal 2021, compared to$1,077,000 during the thirteen weeks ended June 30, 2019. Total royalties were$110,000 in the first quarter fiscal 2021 period as compared to$980,000 during the thirteen weeks ended June 30, 2019. Total franchise fee income was$81,000 during the first quarter fiscal 2021 compared to$97,000 during the thirteen weeks ended June 30, 2019. As a result of the COVID-19 pandemic, a number of our franchised locations have been temporarily closed due to their locations in venues being closed (such as shopping malls and movie theaters) or venues operating at reduced traffic (such as airport and highway travel plazas). Despite the challenging operating environment, two new franchised outlets opened during the first quarter fiscal 2021. - During the first quarter fiscal 2021, we recorded Advertising Fund revenue and expense in the amount of
$289,000 as compared to$482,000 during the thirteen weeks ended June 30, 2019. - On June 26, 2020, we paid the
$0.35 per share regular cash dividend that was declared by the Board of Directors on June 12, 2020 to shareholders of record at the close of business on June 22, 2020.
- Effective August 7, 2020, the Board of Directors declared its quarterly cash dividend of
$0.35 per share payable on September 4, 2020 to shareholders of record at the close of business on August 24, 2020.
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) 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 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 eleven foreign countries through its restaurant system, foodservice sales programs and product licensing activities. Last year, over 700 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 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; the status of our licensing and supply agreements, including the impact of our supply agreement for hot dogs with John Morrell & Co.; 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 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 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.
Nathan's Famous, Inc. and Subsidiaries
(unaudited)
| Thirteen weeks ended | ||||||||||
| June 28, 2020 | June 30, 2019 | |||||||||
| Financial Highlights | ||||||||||
| Total revenues | $ | 17,686,000 | $ | 30,518,000 | ||||||
| Income from operations (a) | $ | 8,094,000 | $ | 9,448,000 | ||||||
| Income before provision for income taxes | $ | 5,561,000 | $ | 7,185,000 | ||||||
| Net income | $ | 4,000,000 | $ | 5,369,000 | ||||||
| Income per share: | ||||||||||
| Basic | $ | 0.97 | $ | 1.28 | ||||||
| Diluted | $ | 0.97 | $ | 1.28 | ||||||
| Weighted-average shares used in | ||||||||||
| computing income per share: | ||||||||||
| Basic | 4,120,000 | 4,206,000 | ||||||||
| Diluted | 4,120,000 | 4,206,000 | ||||||||
Select Segment Information
| Revenues | |||||||
| Branded product program | $ | 4,749,000 | $ | 16,113,000 | |||
| Product licensing | 10,523,000 | 8,722,000 | |||||
| Restaurant operations | 2,125,000 | 5,201,000 | |||||
| Corporate (b) | 289,000 | 482,000 | |||||
| Revenues | $ | 17,686,000 | $ | 30,518,000 | |||
| Income from operations (c) | |||||||
| Branded product program | $ | 272,000 | $ | 2,203,000 | |||
| Product licensing | 10,477,000 | 8,676,000 | |||||
| Restaurant operations | (893,000 | ) | 750,000 | ||||
| Corporate (d) | (1,762,000 | ) | (2,181,000 | ) | |||
| Income from operations (c) | $ | 8,094,000 | $ | 9,448,000 | |||
| (a) | Excludes interest expense, interest income, and other income, net. | |
| (b) | Represents Advertising Fund revenue. | |
| (c) | 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. | |
| (d) | 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 and Advertising Fund expense. |
Nathan's Famous, Inc. and Subsidiaries
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
(unaudited)
| Thirteen weeks ended | |||||||||||
| June 28, 2020 | June 30, 2019 | ||||||||||
| EBITDA | |||||||||||
| Net Income | $ | 4,000,000 | $ | 5,369,000 | |||||||
| Interest Expense | 2,650,000 | 2,650,000 | |||||||||
| Provision for income taxes | 1,561,000 | 1,816,000 | |||||||||
| Depreciation and amortization | 310,000 | 310,000 | |||||||||
| EBITDA | $ | 8,521,000 | $ | 10,145,000 | |||||||
| Adjusted EBITDA | |||||||||||
| EBITDA | $ | 8,521,000 | $ | 10,145,000 | |||||||
| Stock-based compensation | 29,000 | 28,000 | |||||||||
| Adjusted EBITDA | $ | 8,550,000 | $ | 10,173,000 | |||||||
COMPANY Robert Steinberg, Vice President - Finance and CFO
CONTACT: (516) 338-8500 ext. 229
FAQ
What were Nathan's Famous fiscal Q1 2021 revenues?
How did Nathan's Famous net income change in Q1 2021?
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Did Nathan's Famous open any new restaurants in Q1 2021?
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