DALLAS, Nov. 6, 2018 /PRNewswire/ -- RAVE
Restaurant Group, Inc. (NASDAQ: RAVE) today reported financial
results for the first quarter of fiscal 2019 ended September 23, 2018.
First Quarter Highlights:
- RAVE total comparable store retail sales increased 1.1% in the
first quarter of fiscal 2019 compared to the same period of the
prior year.
- Pizza Inn domestic comparable store retail sales increased 2.3%
in the first quarter of fiscal 2019 compared to the same period of
the prior year despite adverse impacts from Hurricane Florence.
Total domestic retail sales increased 0.4%.
- Pie Five comparable store retail sales decreased 1.8% in the
first quarter of fiscal 2019 compared to the same period of the
prior year, while total system-wide retail sales decreased
6.4%.
- Total revenue decreased by $2.4
million to $3.0 million for
the first quarter of fiscal 2019 compared to $5.4 million for the same period of the prior
year primarily driven by reduced Company-owned store count.
- Net income improved by $0.5
million to $0.1 million for
the first quarter of fiscal 2019 compared to a net loss of
$0.4 million for the same period of
the prior year.
- On a fully diluted basis, the Company had net income of
$0.01 per share for the first quarter
of fiscal 2019 compared to a net loss of $0.03 per share for the same period of the prior
year.
- EBITDA of $0.3 million for the
first quarter of fiscal 2019 was an increase of $0.3 million from the same period of the prior
year.
- Adjusted EBITDA of $0.5 million
for the first quarter of fiscal 2019 was a $0.2 million decrease from the same period of the
prior year primarily driven by the prior year's $0.7 million in revenue for franchise and
development fees, including defaulted area development agreements,
partially offset by savings in Corporate general and administrative
expenses and income improvement in Company-owned stores.
- There was no net change in domestic Pizza Inn unit count during
the first quarter of fiscal 2019, ending at 153 stores.
- International Pizza Inn unit count decreased by seven to 51 as
of September 23, 2018.
- Pie Five unit count decreased by two to end the first quarter
of fiscal 2019 at 71.
RAVE Restaurant Group, Inc. (NASDAQ: RAVE) today announced
results for its first quarter of fiscal 2019 ended September 23, 2018. RAVE total comparable store
retail sales increased 1.1% in the first quarter of fiscal 2019
compared to the same period of the prior year.
The Company's net income in the first quarter of fiscal 2019 of
$0.1 million, or $0.01 per diluted share, was an increase of
$0.5 million, or $0.04 per diluted share, compared to the same
period of the prior year.
EBITDA of $0.3 million for the
first quarter of fiscal 2019 was a $0.3
million increase from the same period of the prior year.
Adjusted EBITDA of $0.5 million
for the first quarter of fiscal 2019 was a $0.2 million decrease from the same period of the
prior year primarily driven by the prior year's $0.7 million in revenue for franchise and
development fees, including defaulted area development agreements,
partially offset by savings in Corporate general and administrative
expenses and income improvement in Company-owned stores.
"We are very pleased with the positive momentum at all Rave
brands," said Scott Crane, Chief
Executive Officer for RAVE Restaurant Group, Inc. "Our
leadership team is seeing progress with new initiatives and
positive trends in overall comparable store retail sales. We are
confident that Pizza Inn, Pie Five, and PIE are now poised for
accelerated growth."
First Quarter Fiscal 2019 Operating Results
Pizza Inn comparable store and total domestic retail sales
increased by 2.3% and 0.4%, respectively, during the first quarter
of fiscal 2019 compared to the same period of the prior year.
"Despite negative impacts from Hurricane Florence, Pizza Inn had
its seventh consecutive quarter of growth in comparable store
retail sales. We can firmly say that we are on the right track,"
said Bob Bafundo, President of RAVE
Restaurant Group, Inc. "Previous momentum from all-day
buffet, online ordering, and remodeled franchise locations
continued through the first quarter. This positive traction has
reinvigorated our franchise base, providing tailwinds for higher
sales. In addition, we've seen a strong adoption by franchisees of
our new point-of-sale system which is giving us meaningful consumer
data and analytics to further refine our strategy."
The Company continued its growth of the Pizza Inn Express
concept, or PIE, that it debuted in the last quarter with three
additional units.
"Enthusiasm for the PIE concept continued this quarter," said
Bafundo. "Feedback from operators has been very optimistic and we
have a pipeline of potential new licensees that should fuel
growth. We also see the key opportunity for increased
expansion with multi-unit licensees."
Pie Five comparable store and system-wide retail sales decreased
by 1.8% and 6.4%, respectively, for the first quarter of fiscal
2019 compared to the same period of the prior year.
"We believe that Pie Five is turning a corner," said
Crane. "The response to our low-carb cauliflower crust,
online ordering, delivery, and 14" large shareable pizzas has
exceeded our expectations. We are not slowing down and are already
testing additional new products such as an innovative calzone
concept that we hope to deliver to the system in the near
future."
Consolidated revenues decreased $2.4
million, or 44.9%, for the first quarter of 2019. The
decrease in total revenues was driven by the reduction in the
number of Company-owned stores and revenue recognized from
defaulted area development agreements in the prior year, partially
offset by advertising fund contributions and convention fund
contributions that were previously recorded as an offset to
franchise expenses prior to the adoption of ASU 2014-09 and Topic
606. See "Revenue Recognition and Income Statement Presentation"
section below for more details.
The improved net income in the quarter ended September 23, 2018 over the prior year of
$0.5 million was primarily due to
improvements in the Company-owned restaurants segment and reduced
general and administrative expenses.
"Our first location of the new 'Goldilocks' prototype opened
last week," said Bafundo. "Our long-term plan is to continue to
evolve this new model which we believe has tremendous potential for
lowering start-up and operating costs. We are pushing the
accelerator on this business model to take full advantage of the
store-level economics and uptick in off-premise dining in the
restaurant industry. We believe that speed and simplicity with a
limited menu and an emphasis on carry-out, online ordering and
third-party delivery will be a win for Pie Five."
Revenue Recognition and Income Statement Presentation
On June 25, 2018, the Company
adopted ASU 2014-09 and Topic 606 using the modified retrospective
transition method. Results for reporting periods beginning after
June 25, 2018 are presented in
accordance with Topic 606, while prior period amounts are not
adjusted and continue to be reported in accordance with historical
accounting under Topic 605, Revenue Recognition.
A cumulative effect adjustment of $1.6
million was recorded as a reduction to retained earnings as
of June 25, 2018 to reflect the
impact of adopting Topic 606. The impact of applying Topic 606 for
the quarter ended September 23, 2018,
was an increase in revenues of $450
thousand and an increase in pre-tax income of $31 thousand.
Additional detail on the adoption and fiscal 2019 impact of the
new revenue recognition standard can be found in the Company's Form
10-Q for the quarterly period ended September 23, 2018 filed with the SEC.
Development Review
During the first quarter of fiscal 2019, the number of Pizza Inn
domestic units remained constant at 153, while international units
decreased by seven to 51 units.
"It's exciting to see a strong development pipeline for Pizza
Inn," said Bafundo. "Our newest Pizza Inn prototype recently
debuted in our home market and we have an additional location with
the new design slated to open next month. We also have data
indicating that remodeled locations are seeing increased traffic
and sales, which is spurring interest from existing
franchisees."
In the first quarter of fiscal 2019, Pie Five domestic unit
count declined by a net of two units, closing the quarter with 71
restaurants.
"Pie Five has a third international commitment in an airport."
said Bafundo. "The new location will be our fourth airport
installation and will also include a PIE kiosk. We are
optimistic about non-traditional growth opportunities for both Pie
Five and PIE."
Conference Call
A conference call and audio webcast have been scheduled to
discuss these results. Details of the conference call are as
follows:
Date:
|
|
Tuesday, November 6,
2018
|
Time:
|
|
5 p.m. Central
Standard Time
|
Dial-In #:
|
|
1-844-492-3725 U.S.
& Canada
|
|
|
1-412-317-5108
International
|
|
|
|
The conference call will be webcast at raverg.com. A
web-based archive of the conference call will also be available at
the above website.
Non-GAAP Financial Measures
The Company's financial statements are prepared in accordance
with United States generally
accepted accounting principles ("GAAP"). However, the Company also
presents and discusses certain non-GAAP financial measures that it
believes are useful to investors as measures of operating
performance. Management may also use such non-GAAP financial
measures in evaluating the effectiveness of business strategies and
for planning and budgeting purposes. However, these non-GAAP
financial measures should not be viewed as an alternative or
substitute for its financial statements prepared in accordance with
generally accepted accounting principles.
The Company considers EBITDA and Adjusted EBITDA to be important
supplemental measures of operating performance that are commonly
used by securities analysts, investors and other parties interested
in our industry. The Company believes that EBITDA is helpful to
investors in evaluating its results of operations without the
impact of expenses affected by financing methods, accounting
methods and the tax environment. The Company believes that Adjusted
EBITDA provides additional useful information to investors by
excluding non-operational or non-recurring expenses to provide a
measure of operating performance that is more comparable from
period to period. Management also uses these non-GAAP financial
measures for evaluating operating performance, assessing the
effectiveness of business strategies, projecting future capital
needs, budgeting and other planning purposes.
"EBITDA" represents earnings before interest, taxes,
depreciation and amortization. Adjusted EBITDA represents earnings
before interest, taxes, depreciation and amortization, stock
compensation expense, pre-opening expense, gain/loss sale of
assets, costs related to impairment, discontinued operations and
closed and non-operating store costs. A reconciliation of these
non-GAAP financial measures to net income is included with the
accompanying financial statements.
Note Regarding Forward Looking Statements
Certain statements in this press release, other than historical
information, may be considered forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, and are intended to be covered by the safe harbors created
thereby. These forward-looking statements are based on current
expectations that involve numerous risks, uncertainties and
assumptions. Assumptions relating to these forward-looking
statements involve judgments with respect to, among other things,
future economic, competitive and market conditions, regulatory
framework and future business decisions, all of which are difficult
or impossible to predict accurately and many of which are beyond
the control of RAVE Restaurant Group, Inc. Although the assumptions
underlying these forward-looking statements are believed to be
reasonable, any of the assumptions could be inaccurate and,
therefore, there can be no assurance that any forward-looking
statements will prove to be accurate. In light of the significant
uncertainties inherent in these forward-looking statements, the
inclusion of such information should not be regarded as a
representation that the objectives and plans of RAVE Restaurant
Group, Inc. will be achieved.
About RAVE Restaurant Group, Inc.
Founded in 1958, Dallas-based
RAVE Restaurant Group [NASDAQ: RAVE] owns, operates, franchises
and/or licenses approximately 275 Pie Five Pizza Co. and Pizza Inn
restaurants and kiosks domestically and internationally. Pizza Inn
is an international chain featuring freshly made pizzas, along with
salads, pastas, and desserts. Pie Five Pizza Co. is a leader in the
rapidly growing fast-casual pizza space offering made-to-order
pizzas ready in under five minutes. The Company's common stock is
listed on the Nasdaq Capital Market under the symbol "RAVE". For
more information, please visit www.raverg.com.
Contact:
Investor Relations
RAVE Restaurant Group, Inc.
469-384-5000
RAVE RESTAURANT
GROUP, INC.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(In thousands,
except per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
September
23,
|
|
September
24,
|
|
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES:
|
$
2,991
|
|
$
5,433
|
|
|
|
|
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
Cost of
sales
|
159
|
|
2,086
|
|
General and
administrative expenses
|
1,414
|
|
2,055
|
|
Franchise
expenses
|
1,061
|
|
640
|
|
Pre-opening
expenses
|
-
|
|
115
|
|
Loss/(Gain) on sale
of assets
|
(4)
|
|
2
|
|
Impairment of
long-lived assets and other lease charges
|
15
|
|
148
|
|
Bad debt
|
24
|
|
124
|
|
Interest
expense
|
25
|
|
68
|
|
Depreciation and
amortization expense
|
139
|
|
314
|
|
|
Total costs and
expenses
|
2,833
|
|
5,552
|
|
|
|
|
|
|
INCOME/(LOSS) FROM
CONTINUING OPERATIONS BEFORE TAXES
|
158
|
|
(119)
|
|
Income tax
expense
|
50
|
|
12
|
INCOME/(LOSS) FROM
CONTINUING OPERATIONS
|
108
|
|
(131)
|
|
|
|
|
|
|
|
Loss from
discontinued operations, net of taxes
|
-
|
|
(225)
|
NET INCOME /
(LOSS)
|
$
108
|
|
$
(356)
|
|
|
|
|
|
|
INCOME / (LOSS)
PER SHARE OF COMMON STOCK - BASIC:
|
|
|
|
|
Income / (loss) from
continuing operations
|
$
0.01
|
|
$
(0.01)
|
|
Loss from
discontinued operations
|
-
|
|
(0.02)
|
|
Net income /
(loss)
|
$
0.01
|
|
$
(0.03)
|
|
|
|
|
|
|
INCOME / (LOSS)
PER SHARE OF COMMON STOCK - DILUTED:
|
|
|
|
|
|
|
|
|
|
|
Income / (loss) from
continuing operations
|
$
0.01
|
|
$
(0.01)
|
|
Loss from
discontinued operations
|
-
|
|
(0.02)
|
|
Net income /
(loss)
|
$
0.01
|
|
$
(0.03)
|
|
|
|
|
|
|
Weighted average
common shares outstanding - basic
|
15,064
|
|
11,159
|
|
|
|
|
|
|
Weighted average
common and potential
dilutive common shares outstanding
|
15,897
|
|
11,159
|
RAVE RESTAURANT
GROUP, INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(In thousands,
except share amounts)
|
|
|
|
September
23,
|
|
June
24,
|
|
|
2018
(Unaudited)
|
|
2018
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
Cash and
cash equivalents
|
|
$
2,006
|
|
$
1,386
|
Accounts
receivable, less allowance for bad debts of $179 and $158, respectively
|
|
1,357
|
|
1,518
|
Other
receivable
|
|
-
|
|
300
|
Notes
receivable
|
|
939
|
|
712
|
Inventories
|
|
6
|
|
6
|
Income
tax receivable
|
|
4
|
|
5
|
Property
held for sale
|
|
467
|
|
539
|
Deferred
contract charges
|
|
15
|
|
-
|
Prepaid
expenses and other
|
|
351
|
|
273
|
Total
current assets
|
|
5,145
|
|
4,739
|
|
|
|
|
|
LONG-TERM
ASSETS
|
|
|
|
|
Property, plant and equipment, net
|
|
1,391
|
|
1,510
|
Intangible assets definite-lived, net
|
|
202
|
|
212
|
Long-term notes receivable
|
|
791
|
|
803
|
Deferred
tax asset, net
|
|
3,462
|
|
3,479
|
Long-term deferred contract charges
|
|
221
|
|
-
|
Deposits
and other
|
|
243
|
|
243
|
Total
assets
|
|
$
11,455
|
|
$
10,986
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
Accounts
payable - trade
|
|
$
797
|
|
$
774
|
Accrued
expenses
|
|
836
|
|
1,109
|
Deferred
rent
|
|
34
|
|
32
|
Deferred
revenues
|
|
428
|
|
65
|
Total current
liabilities
|
|
2,095
|
|
1,980
|
|
|
|
|
|
LONG-TERM
LIABILITIES
|
|
|
|
|
Convertible notes
|
|
1,567
|
|
1,562
|
Deferred
rent, net of current portion
|
|
424
|
|
433
|
Deferred
revenues, net of current portion
|
|
2,399
|
|
670
|
Other
long-term liabilities
|
|
48
|
|
42
|
Total
liabilities
|
|
6,533
|
|
4,687
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
Common
stock, $.01 par value; authorized 26,000,000 shares; issued 22,190,515 and 22,166,674 shares,
respectively; outstanding
15,071,311 and 15,047,470 shares, respectively
|
|
222
|
|
222
|
Additional paid-in capital
|
|
33,343
|
|
33,206
|
Accumulated deficit
|
|
(4,007)
|
|
(2,493)
|
Treasury
stock at cost
|
|
|
|
|
Shares in treasury:
7,119,204
|
|
(24,636)
|
|
(24,636)
|
Total
shareholders' equity
|
|
4,922
|
|
6,299
|
|
|
|
|
|
Total
liabilities and shareholders' equity
|
|
$
11,455
|
|
$
10,986
|
|
|
|
|
RAVE RESTAURANT
GROUP, INC.
|
ADJUSTED
EBITDA
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
September
23,
|
|
September
24,
|
|
2018
|
|
2017
|
Net income
(loss)
|
$
108
|
|
$
(356)
|
Interest
expense
|
25
|
|
68
|
Income
taxes
|
50
|
|
12
|
Depreciation
and amortization
|
139
|
|
314
|
EBITDA
|
$
322
|
|
$
38
|
Stock
compensation expense
|
101
|
|
10
|
Pre-opening
costs
|
-
|
|
115
|
(Gain)/Loss on
sale/disposal of assets
|
(4)
|
|
2
|
Impairment of
long-lived assets and other lease charges
|
15
|
|
148
|
Discontinued
operations, excluding taxes
|
-
|
|
227
|
Closed and
non-operating store costs
|
22
|
|
136
|
Adjusted
EBITDA
|
$
456
|
|
$
676
|
RAVE RESTAURANT
GROUP, INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
September
23,
|
|
September
24,
|
|
|
|
|
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
Net
income/(loss)
|
$
108
|
|
$
(356)
|
|
Adjustments to reconcile net
income/(loss) to cash provided by (used in) operating
activities:
|
|
|
|
|
|
|
Impairment of fixed
assets and other assets
|
-
|
|
148
|
|
|
Stock compensation
expense
|
101
|
|
10
|
|
|
Depreciation and
amortization
|
129
|
|
304
|
|
|
Amortization of
intangible assets definite-lived
|
10
|
|
10
|
|
|
Amortization of debt
issue costs
|
5
|
|
11
|
|
|
Gain/loss on the sale
of assets
|
(4)
|
|
2
|
|
|
Provision for bad
debt
|
24
|
|
124
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
296
|
|
529
|
|
|
Inventories
|
-
|
|
(12)
|
|
|
Prepaid expenses,
deposits and other, net
|
(79)
|
|
(194)
|
|
|
Deferred
revenue
|
234
|
|
(534)
|
|
|
Accounts payable -
trade
|
23
|
|
(907)
|
|
|
Deferred tax
assets
|
17
|
|
-
|
|
|
Accrued expenses,
deferred rent and other
|
(274)
|
|
(183)
|
|
|
Cash
provided by (used in) operating activities
|
590
|
|
(1,048)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
Proceeds from sale of
assets
|
4
|
|
-
|
|
Purchase of
intangible assets definite-lived
|
-
|
|
(7)
|
|
Capital
expenditures
|
(10)
|
|
(363)
|
|
|
Cash used in
investing activities
|
(6)
|
|
(370)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
Proceeds from sale of
stock
|
36
|
|
4,943
|
|
|
Cash provided by
financing activities
|
36
|
|
4,943
|
|
|
|
|
|
|
|
|
|
Net increase in cash
and cash equivalents
|
620
|
|
3,525
|
Cash and cash
equivalents, beginning of period
|
1,386
|
|
451
|
Cash and cash
equivalents, end of period
|
$
2,006
|
|
$
3,976
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH PAID
FOR:
|
|
|
|
|
|
Interest
|
$
2
|
|
$
-
|
|
|
Income
taxes
|
$
4
|
|
$
-
|
|
|
|
|
|
|
|
|
|
|
Non-cash
activities:
|
|
|
|
|
|
Capital expenditures
included in accounts payable
|
$
-
|
|
$
164
|
|
|
Conversion of notes
to equity
|
$
-
|
|
$
-
|
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SOURCE RAVE Restaurant Group, Inc.