Nathan's Famous, Inc. Reports Second Quarter Results
November 07 2024 - 6:30AM
Nathan's Famous, Inc. (“Nathan’s”, the “Company”, “we”, “us” or
“our”) (NASDAQ:NATH) today reported results for its second fiscal
quarter ended September 29, 2024.
For the thirteen-week period ended September 29,
2024 (“second quarter fiscal 2025”):
- Revenues were $41,109,000 as
compared to $38,744,000 during the thirteen weeks ended September
24, 2023;
- Income from operations was
$9,632,000 as compared to $9,104,000 during the thirteen weeks
ended September 24, 2023;
- Adjusted EBITDA1, a non-GAAP
financial measure, was $10,350,000 as compared to $9,774,000 during
the thirteen weeks ended September 24, 2023;
- Income before provision for income
taxes was $8,099,000 as compared to $7,864,000 during the thirteen
weeks ended September 24, 2023;
- Net income was $6,030,000 as
compared to $5,711,000 during the thirteen weeks ended September
24, 2023; and
- Earnings per diluted share was
$1.47 per share as compared to $1.40 per share during the thirteen
weeks ended September 24, 2023.
For the twenty-six weeks ended September 29,
2024 (“fiscal 2025”):
- Revenues were $85,876,000 as compared to $80,729,000 during the
twenty-six weeks ended September 24, 2023;
- Income from operations was $23,377,000 as compared to
$20,567,000 during the twenty-six weeks ended September 24,
2023;
- Adjusted EBITDA1, a non-GAAP financial measure, was $24,631,000
as compared to $21,810,000 during the twenty-six weeks ended
September 24, 2023;
- Income before provision for income taxes was $20,883,000 as
compared to $17,996,000 during the twenty-six weeks ended September
24, 2023;
- Net income was $15,307,000 as compared to $13,099,000 during
the twenty-six weeks ended September 24, 2023; and
- Earnings per diluted share was $3.74 per share as compared to
$3.20 per share during the twenty-six weeks ended September 24,
2023.
The Company also reported the following:
- License royalties increased to
$22,412,000 during the twenty-six weeks ended September 29, 2024,
(“fiscal 2025 period”) as compared to $19,997,000 during the
twenty-six weeks ended September 24, 2023. During the fiscal 2025
period, royalties earned under the retail agreement, including the
foodservice program, from Smithfield Foods, Inc., increased 13% to
$20,605,000 as compared to $18,303,000 of royalties earned during
the twenty-six weeks ended September 24, 2023.
- In the Branded Product Program,
which features the sale of Nathan’s hot dogs to the foodservice
industry, sales increased by $2,160,000 to $50,682,000 during the
fiscal 2025 period as compared to $48,522,000 during the twenty-six
weeks ended September 24, 2023. The volume of hot dogs sold by the
Company increased by 2%. Our average selling price, which is
partially correlated to the beef markets, increased by
approximately 2.5% compared to the prior year period. Income from
operations decreased by $151,000 to $3,197,000 during the fiscal
2025 period as compared to $3,348,000 for the twenty-six weeks
ended September 24, 2023, due primarily to a 3% increase in the
cost of beef and beef trimmings.
- Sales from Company-owned
restaurants were $9,547,000 during the fiscal 2025 period as
compared to $8,851,000 during the twenty-six weeks ended September
24, 2023. Restaurant sales were impacted by higher sales at our
Coney Island locations due to an increase in our average check,
offset by lower sales at our location in Oceanside, New York.
- Franchise fees and royalties were
$2,247,000 during the fiscal 2025 period as compared to $2,366,000
during the twenty-six weeks ended September 24, 2023. Total
royalties were $2,047,000 during the fiscal 2025 period as compared
to $2,128,000 during the twenty-six weeks ended September 24, 2023.
The decrease in franchise royalties during the fiscal 2025 period
was primarily due to a decline in franchise restaurant sales to
$36,334,000 as compared to $36,433,000 for the twenty-six weeks
ended September 24, 2023.2 Total franchise fee income,
including cancellation fees, was $200,000 during the fiscal 2025
period as compared to $238,000 during the twenty-six weeks ended
September 24, 2023. Twenty-one franchised locations opened during
the fiscal 2025 period.
- During the fiscal 2025 period, we
recorded Advertising Fund revenue and expense of $988,000 as
compared to $993,000 during the twenty-six weeks ended September
24, 2023.
- During the fiscal 2025 period, the
Board of Directors declared and paid two quarterly cash dividends
of $0.50 per share totaling $4,085,000.
- Effective November 7, 2024, the
Board of Directors declared its quarterly cash dividend of $0.50
per share payable on December 6, 2024 to shareholders of record at
the close of business on November 25, 2024.
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) the 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 nineteen
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.
__________________________
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.
2 Franchise restaurant sales are not revenues of
the Company and are not included in the Company’s Consolidated
Financial Statements.
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 disease epidemics such as the COVID-19 pandemic;
increases in the cost of food and paper products; the impact of
price increases on customer visits; the status of our licensing and
supply agreements, including our licensing revenue and overall
profitability being substantially dependent on our agreement with
Smithfield Foods, Inc.; the impact of our debt service and
repayment obligations under our Credit Agreement, including the
effect on our ability to fund working capital, operations and make
new investments; economic (including inflationary pressures like
those currently being experienced); weather (including the impact
on sales at our restaurants particularly during the summer months),
and changes in the price of beef and 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 continued viability of
Coney Island as a destination location for visitors; 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
employer” 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.
COMPANY Robert
Steinberg, Vice President - Finance and CFO
CONTACT: (516)
338-8500 ext. 229
|
Nathan's Famous, Inc. and Subsidiaries |
|
|
|
(unaudited) |
|
|
|
|
Thirteen weeks ended |
|
Twenty-six weeks ended |
|
|
Sept. 29, 2024 |
|
Sept. 24, 2023 |
|
Sept. 29, 2024 |
|
Sept. 24, 2023 |
|
Financial Highlights |
|
|
|
|
|
|
|
|
|
|
Total revenues |
$ |
41,109,000 |
|
$ |
38,744,000 |
|
$ |
85,876,000 |
|
$ |
80,729,000 |
|
|
|
|
|
|
|
|
|
|
Income from operations (a) |
$ |
9,632,000 |
|
$ |
9,104,000 |
|
$ |
23,377,000 |
|
$ |
20,567,000 |
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
6,030,000 |
|
$ |
5,711,000 |
|
$ |
15,307,000 |
|
$ |
13,099,000 |
|
|
|
|
|
|
|
|
|
|
Net income per share: |
|
|
|
|
|
|
|
|
Basic |
$ |
1.48 |
|
$ |
1.40 |
|
$ |
3.75 |
|
$ |
3.21 |
|
Diluted |
$ |
1.47 |
|
$ |
1.40 |
|
$ |
3.74 |
|
$ |
3.20 |
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used in |
|
|
|
|
|
|
|
|
Computing net income per share: |
|
|
|
|
|
|
|
|
Basic |
|
4,085,000 |
|
|
4,080,000 |
|
|
4,085,000 |
|
|
4,080,000 |
|
Diluted |
|
4,095,000 |
|
|
4,092,000 |
|
|
4,092,000 |
|
|
4,090,000 |
|
|
|
|
|
|
|
|
|
|
Select Segment Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
Branded product program |
$ |
24,536,000 |
|
$ |
23,352,000 |
|
$ |
50,682,000 |
|
$ |
48,522,000 |
|
Product licensing |
|
9,491,000 |
|
|
8,339,000 |
|
|
22,412,000 |
|
|
19,997,000 |
|
Restaurant operations |
|
6,522,000 |
|
|
6,484,000 |
|
|
11,794,000 |
|
|
11,217,000 |
|
Corporate (b) |
|
560,000 |
|
|
569,000 |
|
|
988,000 |
|
|
993,000 |
|
Total Revenues |
$ |
41,109,000 |
|
$ |
38,744,000 |
|
$ |
85,876,000 |
|
$ |
80,729,000 |
|
|
|
|
|
|
|
|
|
|
Income from operations (c) |
|
|
|
|
|
|
|
|
Branded product program |
$ |
697,000 |
|
$ |
1,387,000 |
|
$ |
3,197,000 |
|
$ |
3,348,000 |
|
Product licensing |
|
9,446,000 |
|
|
8,293,000 |
|
|
22,321,000 |
|
|
19,906,000 |
|
Restaurant operations |
|
1,781,000 |
|
|
1,639,000 |
|
|
2,827,000 |
|
|
2,308,000 |
|
Corporate (d) |
|
(2,292,000) |
|
|
(2,215,000) |
|
|
(4,968,000) |
|
|
(4,995,000) |
|
Income from operations (c) |
$ |
9,632,000 |
|
$ |
9,104,000 |
|
$ |
23,377,000 |
|
$ |
20,567,000 |
|
|
- Excludes loss on debt extinguishment, interest expense,
interest and dividend income, and other income, net.
- Represents Advertising Fund revenue.
- Excludes loss on debt extinguishment, interest expense,
interest and dividend 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, 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 |
|
(unaudited) |
|
|
|
|
Thirteen weeks ended |
|
Twenty-six weeks ended |
|
|
Sept. 29, 2024 |
|
Sept. 24, 2023 |
|
Sept. 29, 2024 |
|
Sept. 24, 2023 |
|
|
|
|
EBITDA |
|
|
|
|
|
|
|
|
Net Income |
$ |
6,030,000 |
|
$ |
5,711,000 |
|
$ |
15,307,000 |
|
$ |
13,099,000 |
|
|
|
|
|
|
|
|
|
|
Interest Expense |
1,441,000 |
|
1,413,000 |
|
2,501,000 |
|
2,827,000 |
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
2,069,000 |
|
2,153,000 |
|
5,576,000 |
|
4,897,000 |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
247,000 |
|
315,000 |
|
496,000 |
|
628,000 |
|
|
|
|
|
|
|
|
|
|
EBITDA |
$ |
9,787,000 |
|
$ |
9,592,000 |
|
$ |
23,880,000 |
|
$ |
21,451,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
|
|
|
|
EBITDA |
$ |
9,787,000 |
|
$ |
9,592,000 |
|
$ |
23,880,000 |
|
$ |
21,451,000 |
|
|
|
|
|
|
|
|
|
|
Loss on debt extinguishment |
334,000 |
|
- |
|
334,000 |
|
- |
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
229,000 |
|
182,000 |
|
417,000 |
|
359,000 |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
10,350,000 |
|
$ |
9,774,000 |
|
$ |
24,631,000 |
|
$ |
21,810,000 |
|
|
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