FAT
(Fresh. Authentic. Tasty.) Brands Inc.
(NASDAQ: FAT) (“FAT Brands” or the “Company”) today reported fiscal
first quarter 2021 financial results for the 13-week period ending
March 28, 2021.
Andy Wiederhorn, President and CEO of FAT
Brands, commented, “We want to thank our franchise partners and
employees who have worked hard and remained dedicated to FAT Brands
throughout this challenging time. We are confident that we are on
the right path to emerge from COVID-19 in a strong position.”
“The first quarter showed a steady progression
of sales improvements across all of our brands with particular
strength seen at Fatburger, Buffalo’s, and Hurricane. Our pipeline
of new locations is in excellent shape with an expected
acceleration in growth over the coming quarters. We are encouraged
by the performance of the Johnny Rockets brand and continue to
expect the reopening of special venues during the second and third
quarters of 2021.”
Wiederhorn continued, “We are optimistic for the
year ahead, as we expect a continued rebound in sales as COVID-19
restrictions further ease and availability of the vaccines continue
to expand.”
“Our third successful whole business
securitization transaction completed in April of 2021, in
combination with our publicly traded preferred stock and common
stock, provides optionality to fund potential acquisitions, lower
our cost of capital and drive shareholder value.”
Fiscal First
Quarter 2021
Highlights
- Total revenues improved 50% to $6.6
million compared to the first quarter of 2020
- System-wide sales growth of 35.3%
Q1 2021/Q1 2020 and 20.6% Q1 2021/Q1 2019
- United States sales growth of 28.1%
Q1 2021/Q1 2020 and 10.9% Q1 2021/Q1 2019
- Rest of world sales growth of 54.2%
Q1 2021/Q1 2020 and 49.5% Q1 2021/Q1 2019
- System-wide same-store sales growth
of 7.8% Q1 2021/Q1 2020
- United States same-store sales
growth of 8.7% Q1 2021/Q1 2020
- Rest of world sales growth of 4.9%
Q1 2021/Q1 2020
- Five new franchised store openings
during the first quarter of 2021
- Store count as of March 28, 2021:
651 stores system-wide plus 36 locations under construction to open
in 2021
- Net
Loss of $2.4 million or ($0.20) per share on a
basic and fully diluted basis, as compared to net loss of $2.4
million or ($0.20) per share on a basic and fully diluted basis in
the first quarter of 2020
- EBITDA(1) of $585,000 as compared
to an EBITDA loss of $362,000 in the first quarter of 2020
- Adjusted EBITDA(1) of $1.1 million
as compared to $283,000 in the first quarter of 2020. Adjusted
EBITDA excludes expenses related to acquisitions, refranchising
gain or losses, impairment charges, and certain non-recurring or
non-cash items that the Company does not believe directly reflect
its core operations and may not be indicative of the Company's
recurring business operations. The reconciliation of EBITDA to
Adjusted EBITDA can be found in the accompanying financial
tables.
(1) EBITDA and Adjusted EBITDA
are non-GAAP measures defined below, under “Non-GAAP Measures”. A
reconciliation of GAAP net income to EBITDA and adjusted EBITDA is
included in the accompanying financial tables.
Summary of
First Quarter
2021 Financial Results
Total revenues were $6.6 million in the first
quarter of 2021 and as compared to $4.4 million in the first
quarter of 2020. Excluding Johnny Rockets which was acquired on
September 21, 2020 as well as advertising revenues, revenues were
$3.54 million, up from $3.49 million in the first quarter of 2020.
The revenue performance reflects the ongoing recovery related to
the impact of COVID-19 during much of 2020.
Costs and expenses increased to $6.5 million in
the first quarter of 2021 compared to $5.0 million in the first
quarter of 2020. These costs and expenses included advertising
expenses of $1.2 million in the first quarter of 2021 compared to
$0.9 million in the first quarter of 2020 and refranchising losses
of $0.4 million in the first quarter of 2021 and $0.5 million in
the first quarter of 2020. Total general and administrative
expenses were $4.9 million in the first quarter of 2021 compared to
$3.5 million in the prior period. This increase of $1.4 million was
attributed to increases in compensation and legal expenses
marginally offset by decreases in accounting and travel and
entertainment expenses.
Other expense was $2.7 million in the first
quarter of 2021, compared to other expense of $2.1 million in the
first quarter of 2020 and consisted primarily of interest expense
of $2.8 million in both the first quarter of 2020 and 2021 offset
by interest income of $52,000 in the first quarter of 2021 compared
to $771,000 during the first quarter of 2020.
The combination of the aforementioned revenue
and expenses resulted in a net loss of $2.4 million in the first
quarter of 2021, compared to a net loss of $2.4 million in the
first quarter of 2020.
Recent Events and Liquidity
On April 26, 2021, the Company completed an
offering of $144,472,000 of Series 2021-1 Fixed Rate Asset-Backed
Notes (the “Notes”). This transaction has been structured as a
whole business securitization transaction through FAT Brands
Royalty I, LLC (“FAT Royalty” or the “Issuer”). The transaction is
FAT Brands’ third successful securitization and significantly
reduces the cost of capital from the two previously issued 2020
securitizations. The transaction refinances the 2020 bonds and
creates significant excess available capital for future
acquisitions and working capital. The issued notes were priced with
a weighted average fixed interest rate of 5.92% per annum compared
to a weighted average fixed interest rate of 8.75% for the 2020
transactions.
Key Financial Definitions
New store openings - The number of new store
openings reflects the number of stores opened during a particular
reporting period. The total number of new stores per reporting
period and the timing of stores openings has, and will continue to
have, an impact on our results.
Same-store sales growth - Same-store sales
growth reflects the change in year-over-year sales for the
comparable store base, which we define as the number of stores open
and in the FAT Brands system for at least one full fiscal year. For
stores that were temporarily closed, sales in the current and prior
period are adjusted accordingly. Given our focused marketing
efforts and public excitement surrounding each opening, new stores
often experience an initial start-up period with considerably
higher than average sales volumes, which subsequently decrease to
stabilized levels after three to six months. Additionally, when we
acquire a brand, it may take several months to integrate fully each
location of said brand into the FAT Brands platform. Thus, we do
not include stores in the comparable base until they have been open
and in the FAT Brands system for at least one full fiscal year. For
2020, the comparable store base does not include Elevation Burger
and Johnny Rockets stores as we did not own the brands for the full
year of 2019. For 2021, the comparable store base includes
Elevation Burger as we owned the brand for the full year of
2020.
System-wide sales growth - System wide sales
growth reflects the percentage change in sales in any given fiscal
period compared to the prior fiscal period for all stores in that
brand only when the brand is owned by FAT Brands. Because of
acquisitions, new store openings and store closures, the stores
open throughout both fiscal periods being compared may be different
from period to period.
Conference Call and Webcast
FAT Brands will host a conference call and
webcast to discuss its fiscal first quarter 2021 financial results
today at 5:00 PM ET. Hosting the conference call and webcast will
be Andy Wiederhorn, President and Chief Executive Officer.
The conference call can be accessed live over
the phone by dialing 1-877-705-6003. A replay will be available
after the call until Tuesday, May 18, 2021, and can be accessed by
dialing 1-844-512-2921. The passcode is 13719714. The webcast will
be available at www.fatbrands.com under the “Investors” section and
will be archived on the site shortly after the call has
concluded.
About FAT (Fresh. Authentic. Tasty.)
Brands
FAT Brands Inc. (NASDAQ: FAT) is a leading
global franchising company that strategically acquires, markets and
develops fast casual and casual dining restaurant concepts around
the world. The Company currently owns nine restaurant brands:
Fatburger, Johnny Rockets, Buffalo’s Cafe, Buffalo’s Express,
Hurricane Grill & Wings, Elevation Burger, Yalla Mediterranean
and Ponderosa and Bonanza Steakhouses, and franchises approximately
700 units open and/or under construction worldwide. For more
information, please visit www.fatbrands.com.
Forward Looking Statements
This press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, including statements relating to the future
financial and operating results of the Company, our future
acquisitions, our pipeline of new store locations, and the recovery
of our business from the current novel coronavirus pandemic
(“COVID-19”), including our revenue performance and reopening of
special venues. Forward-looking statements generally
use words such as "expect," "foresee," "anticipate," "believe,"
"project," "should," "estimate," "will," "plans," "forecast," and
similar expressions, and reflect our expectations concerning the
future. It is possible that our future performance may differ
materially from current expectations expressed in these
forward-looking statements. Forward-looking statements are subject
to significant business, economic and competitive risks,
uncertainties and contingencies including, but not limited to,
uncertainties surrounding the severity, duration and effects of the
COVID-19 pandemic, many of which are difficult to predict and
beyond our control, which could cause our actual results to differ
materially from the results expressed or implied in such
forward-looking statements. We refer you to the documents we file
from time to time with the Securities and Exchange Commission, such
as our reports on Form 10-K, Form 10-Q and Form 8-K, for a
discussion of these and other risks and uncertainties that could
cause our actual results to differ materially from our current
expectations and from the forward-looking statements contained in
this press release. We undertake no obligation to update any
forward-looking statement to reflect events or circumstances
occurring after the date of this press release.
Non-GAAP Measures
(Unaudited)
This press release includes the non-GAAP
financial measure of EBITDA and Adjusted EBITDA.
EBITDA is defined as earnings before interest,
taxes, depreciation and amortization. We use the term EBITDA, as
opposed to income from operations, as it is widely used by
analysts, investors and other interested parties to evaluate
companies in our industry. We believe that EBITDA is an appropriate
measure of operating performance because it eliminates the impact
of expenses that do not relate to business performance. EBITDA is
not a measure of our financial performance or liquidity that is
determined in accordance with generally accepted accounting
principles (“GAAP”), and should not be considered as an alternative
to net income (loss) as a measure of financial performance or cash
flows from operations as measures of liquidity, or any other
performance measure derived in accordance with GAAP.
Adjusted EBITDA is defined as EBITDA (as defined
above), excluding expenses related to acquisitions, refranchising
gain or losses, impairment charges, and certain non-recurring or
non-cash items that the Company does not believe directly reflect
its core operations and may not be indicative of the Company's
recurring business operations.
A reconciliation of net income presented in
accordance with GAAP to EBITDA and adjusted EBITDA is set forth in
the tables below.
Investor Relations: ICRLynne
CollierIR-FATBrands@icrinc.com646-430-2216
Media Relations: JConnellyErin
Mandzikemandzik@jconnelly.com 862-246-9911
###
FAT Brands Inc. Consolidated Statement of
Operations
|
|
13 weeks ended |
|
|
|
March 28, 2021 |
|
|
March 29, 2020 |
|
(in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
Royalties |
|
$ |
4,898 |
|
|
$ |
3,309 |
|
Franchise fees |
|
|
540 |
|
|
|
175 |
|
Advertising fees |
|
|
1,188 |
|
|
|
931 |
|
Other operating income |
|
|
23 |
|
|
|
8 |
|
Total revenues |
|
|
6,649 |
|
|
|
4,423 |
|
|
|
|
|
|
|
|
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
General and administrative expenses |
|
|
4,926 |
|
|
|
3,531 |
|
Refranchising loss |
|
|
427 |
|
|
|
539 |
|
Advertising fees |
|
|
1,192 |
|
|
|
931 |
|
Total costs and expenses |
|
|
6,545 |
|
|
|
5,001 |
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations |
|
|
104 |
|
|
|
(578 |
) |
|
|
|
|
|
|
|
|
|
Other expense, net |
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(2,748 |
) |
|
|
(2,074 |
) |
Other income (expense), net |
|
|
83 |
|
|
|
(16 |
) |
Other expense, net |
|
|
(2,665 |
) |
|
|
(2,090 |
) |
|
|
|
|
|
|
|
|
|
Loss before income tax
benefit |
|
|
(2,561 |
) |
|
|
(2,668 |
) |
|
|
|
|
|
|
|
|
|
Income tax benefit |
|
|
(129 |
) |
|
|
(298 |
) |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(2,432 |
) |
|
$ |
(2,370 |
) |
Basic and Diluted Loss per
Share |
|
$ |
(0.20 |
) |
|
$ |
(0.20 |
) |
FAT Brands Inc. Consolidated Balance Sheet as of March
28, 2021
|
|
As of March 28, 2021 |
|
(in
thousands) |
|
|
|
|
|
|
|
|
|
Cash and restricted cash |
|
$ |
4,915 |
|
Total assets |
|
$ |
118,093 |
|
Total liabilities |
|
$ |
163,669 |
|
Total stockholders’
equity |
|
$ |
(45,576 |
) |
FAT Brands Inc. Consolidated EBITDA and Adjusted EBITDA
Reconciliation
|
|
13 weeks ended |
|
|
|
March 28, 2021 |
|
|
March 29, 2020 |
|
|
|
|
|
|
|
|
(in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(2,432 |
) |
|
$ |
(2,370 |
) |
Interest expense, net |
|
|
2,748 |
|
|
|
2,074 |
|
Income tax benefit |
|
|
(129 |
) |
|
|
(298 |
) |
Depreciation and amortization expense |
|
|
398 |
|
|
|
232 |
|
EBITDA |
|
|
585 |
|
|
|
(362 |
) |
Stock based compensation expenses |
|
|
37 |
|
|
|
15 |
|
Non-cash lease expenses (1) |
|
|
41 |
|
|
|
41 |
|
Acquisition costs |
|
|
15 |
|
|
|
50 |
|
Refranchising loss |
|
|
427 |
|
|
|
539 |
|
Adjusted EBITDA |
|
$ |
1,105 |
|
|
$ |
283 |
|
(1) Includes non-cash lease expense costs related to new lease
accounting standards
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