Nathan's Famous, Inc. Reports Year End And Fourth Quarter Results And Declares Quarterly Cash Dividend Of $0.45 Per Share

Rhea-AI Summary

Nathan's Famous (NASDAQ:NATH) announced its fiscal 2022 results, reporting revenues of $114.88 million, up from $75.84 million in fiscal 2021. Net income rose to $13.60 million from $11.08 million, translating to earnings per diluted share of $3.30. The Board declared a quarterly cash dividend of $0.45 per share, payable on June 24, 2022. Effective June 10, 2022, the Company redeemed $40 million in Senior Secured Notes, expecting to save $2.65 million annually in cash interest. License royalties also increased to $31.82 million.

Positive

• Revenue growth of $39.04 million (+51.5%) year-over-year.
• Net income increased by $2.52 million (+22.8%) compared to fiscal 2021.
• Quarterly cash dividend of $0.45 reflects strong liquidity and shareholder return.

Negative

• Loss on debt extinguishment of $1.35 million impacts net income and cash reserves.
• Net income for Q4 fiscal 2022 was $2.16 million, slightly higher than Q4 fiscal 2021 but showing stagnant growth.

JERICHO, N.Y., June 10, 2022 (GLOBE NEWSWIRE) -- Nathan's Famous, Inc. (NASDAQ:NATH) today reported results for its fiscal year and fourth quarter ended March 27, 2022.

Effective June 10, 2022, the Board of Directors declared its first quarterly cash dividend for fiscal 2023 of $0.45 per share, which is payable on June 24, 2022 to shareholders of record at the close of business on June 20, 2022.

For the fiscal year ended March 27, 2022:

• Revenues were $114,882,000 for the fifty-two weeks ended March 27, 2022 (“fiscal 2022”), as compared to $75,839,000 for the fifty-two weeks ended March 28, 2021 (“fiscal 2021”);
• Income from operations was $29,863,000 for fiscal 2022, as compared to $25,515,000 for fiscal 2021;
• Adjusted EBITDA¹ for fiscal 2022, a non-GAAP financial measure, was $31,153,000, as compared to $27,225,000 for fiscal 2021;
• In connection with the redemption of $40,000,000 in aggregate principal amount of our 6.625% Senior Secured Notes due 2025, the Company recorded a loss on debt extinguishment of $1,354,000, or $993,000, net of tax, or $0.24 per diluted share. As a result of such redemption, the Company expects to reduce its future cash interest expense by $2,650,000 per annum.
• Income before provision for income taxes was $18,536,000 for fiscal 2022, as compared to $15,325,000 for fiscal 2021;
• Net income was $13,596,000 for fiscal 2022, as compared to $11,075,000 for fiscal 2021; and
• Earnings per diluted share was $3.30 per share for fiscal 2022, as compared to $2.69 per share for fiscal 2021.

For the thirteen weeks ended March 27, 2022:

• Revenues were $24,772,000 for the thirteen weeks ended March 27, 2022 (“fourth quarter fiscal 2022”), as compared to $18,284,000 for the thirteen weeks ended March 28, 2021 (“fourth quarter fiscal 2021”);
• Income from operations was $6,109,000 for the fourth quarter fiscal 2022, as compared to $5,434,000 for the fourth quarter fiscal 2021;
• Adjusted EBITDA¹ for the fourth quarter fiscal 2022, a non-GAAP financial measure, was $6,414,000, as compared to $5,817,000 for the fourth quarter fiscal 2021;
• Income before provision for income taxes was $2,621,000 for the fourth quarter fiscal 2022, as compared to $2,855,000 for the fourth quarter fiscal 2021;
• Net income was $2,158,000 for the fourth quarter fiscal 2022, as compared to $2,061,000 for the fourth quarter fiscal 2021; and
• Earnings per diluted share was $0.52 per share for the fourth quarter fiscal 2022, as compared to $0.50 per share for the fourth quarter fiscal 2021.

The Company also reported the following:

• License royalties increased to $31,824,000 during fiscal 2022, as compared to $31,368,000 during fiscal 2021. During fiscal 2022, royalties earned under the retail agreement, including the foodservice program, from John Morrell & Co., increased 1% to $28,970,000, as compared to $28,694,000 of royalties earned during fiscal 2021 due primarily to a 1% 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, income from operations increased by approximately $1,764,000 to $6,399,000 during fiscal 2022, as compared to $4,635,000 during fiscal 2021.  Sales were $66,322,000 during fiscal 2022, as compared to sales of $33,617,000 during fiscal 2021. During fiscal 2022, the volume of hot dogs sold increased 78% and our average selling price, which is partially correlated to the beef markets, increased by approximately 10%. Beginning in July 2021, the cost of hot dogs increased due to higher costs for beef and beef trimmings, labor, packaging and transportation, as well as supply chain challenges associated with increased consumer demand.
  
  
• Sales from Company-operated restaurants were $10,905,000 during fiscal 2022, as compared to $7,709,000 during fiscal 2021. The increase was primarily due to an increase in our average check and an increase in customer traffic especially at our two Coney Island locations as a result of the easing of certain government mandated restrictions attributed to the public health measures taken to reduce exposure to the COVID-19 virus.
  
  
• Revenues from franchise operations were $3,859,000 during fiscal 2022, as compared to $1,601,000 during fiscal 2021. Total royalties were $3,304,000 during fiscal 2022 as compared to $1,317,000 during fiscal 2021. Total franchise fee income, including cancellation fees, was $555,000 during fiscal 2022 as compared to $284,000 during the fiscal 2021. These increases in revenues over fiscal 2021 were largely due to higher comparable franchise restaurants sales. Fifty-four new franchised outlets opened during fiscal 2022, including thirty-seven Branded Menu Program outlets.
  
  
• Advertising revenue was $1,972,000 during fiscal 2022, as compared to $1,544,000 during fiscal 2021.
  
  
• The Company previously announced a 29% increase in its regular quarterly cash dividend to $0.45 per share. The Company believes that its strong liquidity supports this increase, while still providing flexibility to invest in the business.
  
  
• On March 4, 2022, the Company paid the $0.45 per share regular cash dividend that was declared by the Board of Directors effective February 4, 2022 to shareholders of record at the close of business of February 21, 2022.

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 and (ii) 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 seventeen 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; 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 changes in the price of beef trimmings; our ability to pass on the cost of any price increases in beef and beef trimmings, or labor costs; 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 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.

_________________
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.

Nathan's Famous, Inc.
	Thirteen weeks ended								Fiscal year ended
	Mar. 27, 2022				Mar. 28, 2021				Mar. 27, 2022				Mar. 28, 2021
Financial Highlights
Total revenues	$	24,772,000			$	18,284,000			$	114,882,000			$	75,839,000
Income from operations (a)	$	6,109,000			$	5,434,000			$	29,863,000			$	25,515,000
Net income	$	2,158,000			$	2,061,000			$	13,596,000			$	11,075,000
Income per share:
Basic	$	0.52			$	0.50			$	3.30			$	2.69
Diluted	$	0.52			$	0.50			$	3.30			$	2.69
Weighted-average shares used in computing income per share:
Basic	4,115,000				4,115,000				4,115,000				4,116,000
Diluted	4,115,000				4,115,000				4,115,000				4,116,000
Select Segment Information
Revenues
Branded product program	$	14,362,000			$	9,167,000			$	66,322,000			$	33,617,000
Product licensing	7,606,000				6,679,000				31,824,000				31,368,000
Restaurant operations	2,269,000				1,976,000				14,764,000				9,310,000
Corporate (b)	535,000				462,000				1,972,000				1,544,000
Total Revenues	$	24,772,000			$	18,284,000			$	114,882,000			$	75,839,000
Income from operations (c)
Branded product program	$	1,303,000			$	1,561,000			$	6,399,000			$	4,635,000
Product licensing	7,561,000				6,634,000				31,642,000				31,186,000
Restaurant operations	(311,000		)		(663,000		)		312,000				(2,856,000		)
Corporate (d)	(2,444,000		)		(2,098,000		)		(8,490,000		)		(7,450,000		)
Income from operations (c)	$	6,109,000			$	5,434,000			$	29,863,000			$	25,515,000

(a) Excludes loss on debt extinguishment, interest expense, interest income, and other income, net.
(b) Represents Advertising Fund revenue.
(c) 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.
(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, 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. 27, 2022			Mar. 28, 2021			Mar. 27, 2022			Mar. 28, 2021
EBITDA
Net Income	$	2,158,000		$	2,061,000		$	13,596,000		$	11,075,000
Interest Expense		2,184,000			2,650,000			10,135,000			10,601,000
Provision for income taxes		463,000			794,000			4,940,000			4,250,000
Depreciation and amortization		247,000			283,000			1,054,000			1,183,000
EBITDA	$	5,052,000		$	5,788,000		$	29,725,000		$	27,109,000
Adjusted EBITDA
EBITDA	$	5,052,000		$	5,788,000		$	29,725,000		$	27,109,000
Loss on debt extinguishment		1,354,000			-			1,354,000			-
Share-based compensation		8,000			29,000			74,000			116,000
Adjusted EBITDA	$	6,414,000		$	5,817,000		$	31,153,000		$	27,225,000

COMPANY CONTACT:

Robert Steinberg, Vice President - Finance and CFO (516) 338-8500 ext. 229

FAQ

What is Nathan's Famous latest dividend amount and payment date?

Nathan's Famous declared a quarterly cash dividend of $0.45 per share, payable on June 24, 2022.

What were Nathan's Famous revenues for fiscal 2022?

For fiscal 2022, Nathan's Famous reported revenues of $114.88 million.

How did Nathan's Famous perform in terms of net income for fiscal 2022?

Net income for fiscal 2022 was $13.60 million, up from $11.08 million in fiscal 2021.

What is the expected annual cash interest savings from debt redemption?

Nathan's Famous expects to save $2.65 million annually in cash interest from redeeming $40 million in Senior Secured Notes.