Nathan's Famous, Inc. Reports First Quarter Results
Nathan's Famous reported a significant revenue increase for the first quarter of fiscal 2022, totaling $31.3 million, up from $17.7 million in the same period last year. The company achieved an operating income of $10.7 million and net income of $5.8 million, with earnings per share rising to $1.40. License royalties also grew marginally to $10.7 million. The company declared a quarterly cash dividend of $0.35 per share, payable on September 3, 2021. Overall, the results reflect recovery trends as COVID-19 restrictions eased.
- Revenue increased by 77.3% to $31,319,000 compared to $17,686,000 in Q1 2021.
- Net income rose to $5,763,000 from $4,000,000, reflecting stronger profitability.
- Earnings per diluted share improved to $1.40 compared to $0.97 in the previous year.
- License royalties increased to $10,682,000, with retail agreement royalties rising by 1.4%.
- Sales from the Branded Product Program surged to $15,996,000, a 236% increase.
- Average selling price decreased by approximately 4.5% due to fluctuating beef markets.
- In the Restaurant Operations segment, income from operations was negative, showing challenges in this area.
And Declares Quarterly Cash Dividend of
JERICHO, N.Y., Aug. 06, 2021 (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 27, 2021.
For the thirteen-week period ended June 27, 2021 (“first quarter fiscal 2022”):
- Revenues were
$31,319,000 , as compared to$17,686,000 during the thirteen weeks ended June 28, 2020; - Income from operations was
$10,702,000 , as compared to$8,094,000 during the thirteen weeks ended June 28, 2020; - Adjusted EBITDA1, a non-GAAP financial measure, was
$11,061,000 as compared to$8,550,000 during the thirteen weeks ended June 28, 2020; - Income before provision for income taxes was
$8,104,000 , as compared to$5,561,000 during the thirteen weeks ended June 28, 2020; - Net income was
$5,763,000 , as compared to$4,000,000 during the thirteen weeks ended June 28, 2020; and - Earnings per diluted share was
$1.40 per share, as compared to$0.97 per share during the thirteen weeks ended June 28, 2020.
The Company also reported the following:
- License royalties increased to
$10,682,000 during the first quarter fiscal 2022, as compared to$10,523,000 during the thirteen weeks ended June 28, 2020. During the first quarter fiscal 2022, royalties earned under the retail agreement, including the foodservice program, with John Morrell & Co., increased1.4% to$9,880,000 , as compared to$9,744,000 of royalties earned during the thirteen weeks ended June 28, 2020. - In the Branded Product Program, which features the sale of Nathan’s hot dogs to the foodservice industry, income from operations increased by approximately
$1,982,000 t o$2,254,000 during the first quarter fiscal 2022, as compared to$272,000 for the thirteen weeks ended June 28, 2020. Sales were$15,996,000 in the first quarter fiscal 2022, compared to sales of$4,749,000 during the prior-year period, while the volume of hot dogs sold by the Company increased232% . Sales and income from operations for the Branded Product Program have increased as certain government mandated restrictions associated with the COVID-19 pandemic have begun to ease with approved vaccines being more widely distributed and administered. As a result, many of our Branded Product Program customers have reopened adhering to state and local guidelines, such as professional sports venues, amusement parks, shopping malls and movie theaters. Our average selling price, which is partially correlated to the beef markets, decreased by approximately4.5% compared to the prior year period.
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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 2 of this release and the reconciliation of EBITDA and Adjusted EBITDA to net income in the table at the end of this release.
- Sales from Company-operated restaurants were
$3,329,000 during the first quarter fiscal 2022 as compared to$1,934,000 during the thirteen weeks ended June 28, 2020. The increase was primarily due to an increase in customer traffic especially at our two Coney Island locations as a result of the easing of certain government mandated restrictions. - Revenues from franchise operations were
$907,000 during the first quarter fiscal 2022 as compared to$191,000 during the thirteen weeks ended June 28, 2020. Total royalties were$800,000 in the first quarter fiscal 2022 period as compared to$110,000 during the thirteen weeks ended June 28, 2020. Total franchise fee income was$107,000 during the first quarter fiscal 2022 as compared to$81,000 during the thirteen weeks ended June 28, 2020. The increase in franchise fees and royalties during the first quarter fiscal 2022 was primarily due to an increase in franchise restaurant sales of$10,767,000 t o$12,985,000 as compared to$2,218,000 for the thirteen weeks ended June 28, 2020 as we begin to lap the significant impact of COVID-19.2 One new franchised outlet and seven new branded menu program outlets opened during the thirteen weeks ended June 27, 2021. - During the first quarter fiscal 2022, we recorded Advertising Fund revenue and expense in the amount of
$405,000 as compared to$289,000 during the thirteen weeks ended June 28, 2020. - On June 25, 2021, we paid the
$0.35 per share regular cash dividend that was declared by the Board of Directors on June 11, 2021 to shareholders of record at the close of business on June 21, 2021.
- Effective August 6, 2021, the Board of Directors declared its quarterly cash dividend of
$0.35 per share payable on September 3, 2021 to shareholders of record at the close of business on August 23, 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) 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.
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2 Franchise restaurant sales are not revenues of the Company and are not included in the Company’s Consolidated Financial Statements.
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 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 recent COVID-19 outbreak; 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.
COMPANY CONTACT:
Robert Steinberg, Vice President - Finance and CFO
(516) 338-8500 ext. 229
Nathan's Famous, Inc. and Subsidiaries
(unaudited)
| Thirteen weeks ended | ||||||||
| June 27, 2021 | June 28, 2020 | |||||||
| Financial Highlights | ||||||||
| Total revenues | $ | 31,319,000 | $ | 17,686,000 | ||||
| Income from operations (a) | $ | 10,702,000 | $ | 8,094,000 | ||||
| Income before provision for income taxes | $ | 8,104,000 | $ | 5,561,000 | ||||
| Net income | $ | 5,763,000 | $ | 4,000,000 | ||||
| Income per share: | ||||||||
| Basic | $ | 1.40 | $ | 0.97 | ||||
| Diluted | $ | 1.40 | $ | 0.97 | ||||
| Weighted-average shares used in | ||||||||
| computing income per share: | ||||||||
| Basic | 4,115,000 | 4,120,000 | ||||||
| Diluted | 4,115,000 | 4,120,000 | ||||||
Select Segment Information
| Revenues | |||||||
| Branded product program | $ | 15,996,000 | $ | 4,749,000 | |||
| Product licensing | 10,682,000 | 10,523,000 | |||||
| Restaurant operations | 4,236,000 | 2,125,000 | |||||
| Corporate (b) | 405,000 | 289,000 | |||||
| Revenues | $ | 31,319,000 | $ | 17,686,000 | |||
Income from operations (c) | |||||||
| Branded product program | $ | 2,254,000 | $ | 272,000 | |||
| Product licensing | 10,637,000 | 10,477,000 | |||||
| Restaurant operations | (2,000 | ) | (893,000 | ) | |||
| Corporate (d) | (2,187,000 | ) | (1,762,000 | ) | |||
| Income from operations (c) | $ | 10,702,000 | $ | 8,094,000 | |||
- 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 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 27, 2021 | June 28, 2020 | |||||||
| EBITDA | ||||||||
| Net Income | $ | 5,763,000 | $ | 4,000,000 | ||||
| Interest Expense | 2,650,000 | 2,650,000 | ||||||
| Provision for income taxes | 2,341,000 | 1,561,000 | ||||||
| Depreciation and amortization | 278,000 | 310,000 | ||||||
| EBITDA | $ | 11,032,000 | $ | 8,521,000 | ||||
| Adjusted EBITDA | ||||||||
| EBITDA | $ | 11,032,000 | $ | 8,521,000 | ||||
| Stock-based compensation | 29,000 | 29,000 | ||||||
| Adjusted EBITDA | $ | 11,061,000 | $ | 8,550,000 | ||||
FAQ
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