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Nathan's Famous, Inc. Reports Third Quarter Results

JERICHO, N.Y., Feb. 3, 2017 /PRNewswire/ -- Nathan's Famous, Inc. (NASDAQ: NATH) today reported results for the quarter and its 2017 fiscal period that ended December 25, 2016.

For the fiscal quarter ended December 25, 2016:

  • Income from operations increased 7.2% to $4,754,000, as compared to $4,435,000 during the thirteen weeks ended December 27, 2015;
  • Adjusted EBITDA, as defined below, increased 6.5% to $5,255,000 as compared to $4,932,000 for the thirteen weeks ended December 27, 2015;
  • Net income increased 61.8% to $699,000, as compared to $432,000 for the thirteen weeks ended December 27, 2015;
  • Earnings per diluted share were $0.17 per share, as compared to $0.10 per share for the thirteen weeks ended December 27, 2015; and
  • Revenues were $19,937,000, as compared to $20,564,000 for the thirteen weeks ended December 27, 2015.

For the thirty-nine weeks ended December 25, 2016:

  • Income from operations increased 5.5% to $21,609,000, as compared to $20,477,000 during the thirty-nine weeks ended December 27, 2015;
  • Adjusted EBITDA, as subsequently defined, increased 4.7% to $23,231,000, as compared to $22,189,000 for the thirty-nine weeks ended December 27, 2015;
  • Net income increased 20.9% to $6,756,000, as compared to $5,589,000 for the thirty-nine weeks ended December 27, 2015;
  • Earnings per diluted share were $1.61 per share, as compared to $1.24 per share for the thirty-nine weeks ended December 27, 2015; and
  • Revenues were $77,366,000, as compared to $81,837,000 for the thirty-nine weeks ended December 27, 2015.

The Company reported the following:                                    

  • License royalties were $15,602,000 during the thirty-nine weeks ended December 25, 2016, as compared to $15,406,000 during the thirty-nine weeks ended December 27, 2015. During the thirty-nine weeks ended December 25, 2016, total royalties earned under the John Morrell & Co., agreement were $14,214,000, as compared to $14,091,000 of royalties earned during the thirty-nine weeks ended December 27, 2015. During this period, the volume of products sold increased by 6.5%; however, a more competitive promotional environment during the summer of 2016 led to a 4.7% decrease in the average net selling price on which our royalty is calculated.
  • In the Branded Product Program, which features the sale of Nathan's hot dogs to the foodservice industry, sales were $44,349,000 during the thirty-nine weeks ended December 25, 2016, compared to sales of $47,160,000 during the thirty-nine weeks ended December 27, 2015. Operating profits increased for the fiscal 2017 period by approximately $2.4 million over the fiscal 2016 period. During the period, the volume of products sold increased 3.4% but our average selling price declined by approximately 9.0% due to the impact of lower beef markets on that portion of our business that is sold using formula pricing.
  • Sales from Company-operated restaurants were $13,449,000 during the thirty-nine weeks ended December 25, 2016 compared to $14,872,000 during the thirty-nine weeks ended December 27, 2015 driven primarily from lower sales at both Coney Island locations, due to unfavorable weather conditions during the fiscal 2017 period compared to the weather conditions during the fiscal 2016 period when we achieved record sales at both of these locations.
  • Revenues from franchise operations were $3,752,000 during the thirty-nine weeks ended December 25, 2016, compared to $3,804,000 during the thirty-nine weeks ended December 27, 2015. Total franchise fee income was $366,000 during the thirty-nine weeks ended December 25, 2016 compared to $388,000 during the thirty-nine weeks ended December 27, 2015. Forty-two new franchised outlets opened during the thirty-nine weeks ended December 25, 2016, including 16 international locations, and 20 Branded Menu Program outlets. Thirty-five new franchised outlets opened, during the thirty-nine weeks ended December 27, 2015, including 11 international locations, and 16 Branded Menu Program outlets.
  • Nathan's tax rate was reduced by 6.1 percentage points as a result of early adopting the provisions of Financial Accounting Standards Board ASU 2016-09, "Stock Compensation", which now reduces the Company's tax provision for the excess tax benefits associated with stock compensation instead of increasing Additional paid-in-capital, as was past practice.

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 has provided EBITDA excluding (i) interest expense; (ii) provision for income taxes and (iii) depreciation and amortization expense. The Company has also provided Adjusted EBITDA excluding (i) stock-based compensation and (ii) amortization of bond premium on the Company's available-for sale investments that the Company believes will impact the comparability of its results of operations.

The Company believes 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 (loss) 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.

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 twelve foreign countries through its restaurant system, foodservice sales programs and product licensing activities. Last year, over 550 million Nathan's Famous hot dogs were sold. Nathan's was ranked #22 on the Forbes 2014 list of the Best Small Companies in America and was listed as the Best Small Company in New York State in October 2013. 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 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 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 status of our licensing and supply agreements, including the impact of our supply agreement for hot dogs with John Morrell & Co.; the ability to attract franchisees; the impact of the new 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 contract; our ability to attract competent restaurant and managerial personnel; the enforceability of international franchising agreements; the impact of changes in the economic relationship between the United States and Russia; and 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.

 

 

Nathan's Famous, Inc.

Financial Highlights






Thirteen weeks ended




Thirty-nine weeks ended



Dec. 25, 2016


Dec. 27, 2015


Dec. 25, 2016


Dec. 27, 2015




(unaudited)




(unaudited)












Total revenues

$    19,937,000


$   20,564,000


$   77,366,000


$   81,837,000











Income from operations (a)

$      4,754,000


$     4,435,000


$   21,609,000


$   20,477,000











Net income

$         699,000


$        432,000


$     6,756,000


$     5,589,000











Income per share:









   Basic

$               0.17


$              0.10


$              1.62


$              1.25


   Diluted

$               0.17


$              0.10


$              1.61


$              1.24




















Weighted-average shares used in









   computing income per share:









   Basic

4,175,000


4,408,000


4,171,000


4,474,000


   Diluted

4,209,000


4,444,000


4,202,000


4,504,000







































(a)    Excludes interest expense, interest income, and other income, net.

 

Nathan's Famous, Inc. and Subsidiaries


Reconciliation of Net Income to EBITDA and Adjusted EBITDA




Thirteen weeks ended




Thirty-nine weeks ended



Dec. 25, 2016


Dec. 27, 2015


Dec. 25, 2016


Dec. 27, 2015




(unaudited)




(unaudited)



EBITDA









Net Income

$       699,000


$      432,000


$   6,756,000


$   5,589,000











Interest Expense

3,663,000


3,708,000


11,002,000


11,126,000











Provision for income taxes

448,000


316,000


3,986,000


3,886,000











Depreciation and amortization

309,000


303,000


1,005,000


975,000











EBITDA

$    5,119,000


$    4,759,000


$   22,749,000


$   21,576,000





























Adjusted EBITDA









EBITDA

$    5,119,000


$    4,759,000


$   22,749,000


$   21,576,000











Stock-based compensation

136,000


173,000


482,000


549,000











Amortization of bond premium (b)

-


-


-


64,000











Adjusted EBITDA

$    5,255,000


$    4,932,000


$   23,231,000


$   22,189,000






























(b)   Represents the premiums paid on our purchase of available-for-sale securities.

 

 

 

COMPANY    Ronald G. DeVos, Vice President - Finance and CFO
CONTACT:    (516) 338-8500 ext. 229

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SOURCE Nathan's Famous, Inc.