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CST: 20/08/2019 20:19:43   

Famous Dave’s of America, Inc. Reports Results for Second Quarter of Fiscal 2019

8 Days ago

MINNEAPOLIS, Aug. 12, 2019 (GLOBE NEWSWIRE) -- Famous Dave's of America, Inc. (NASDAQ: DAVE), an innovating owner and operator of barbeque restaurants, globally, today reported financial results for the second fiscal quarter ended June 30, 2019.

Second Quarter 2019 Highlights:

  • Company-owned same store net sales decreased 0.8%, driven by traffic decreases in Dine-In, partially offset by a 6.8% increase in To-Go same store net sales.
  • Domestic franchise-operated same store net sales increased 0.7% year-over-year. Franchise-operated system, including international units, increased by 0.5%.
  • Reacquired eight Famous Dave’s franchise stores at attractive valuations, which are slated for upgrades and relaunches. 
  • Generated over $800,000 in operating cash flow.
  • Launched 2,300 square foot small-footprint restaurant in Tucson, Arizona through a Famous Dave’s franchisee.
  • Approximately 102,000 downloads of loyalty app since it was launched in December 2018.

Highlights Subsequent to the Second Quarter 2019:

  • Reacquired five restaurants in Arizona and Kentucky from franchisees.
  • Announced agreement with Beyond Meat to add innovative and delicious non-meat items to the Famous Dave’s menu. 

Executive Comments

Jeff Crivello, CEO, commented, “For the second time since 2011, our franchise community posted positive same store net sales, driven by a 0.7% increase from domestic franchisees, partially offset by a 5.8% decline from our international community.  During the first half of fiscal 2019, we have reinvested approximately $5.7 million into our system, including repurchasing franchise restaurants, and refreshes of company owned restaurants.  In addition, we refinanced our credit facility in preparation of our growth initiatives.  We have also begun the process to open new, small footprint restaurants in select markets.”

Key Operating Metrics

                           
    Three Months Ended     Six Months Ended
 
    June 30, 2019   July 1, 2018     June 30, 2019
    July 1, 2018
 
Restaurant count:                          
Franchise-operated     107       135       107       135    
Company-owned     29       15       29       15    
Total     136       150       136       150    
Same store net restaurant sales %:                          
Franchise-operated, domestic     0.7   %   (1.4 ) %   0.6   %   (1.4 ) %
Franchise-operated, international(1)     (5.8 ) %   (17.8 ) %   (14.8 ) %   (9.3 ) %
Franchise-operated total     0.5   %   (2.0 ) %   0.2   %   (1.5 ) %
Company-owned     (0.8 ) %   1.2   %   1.0   %   3.2   %
Total     0.4   %   (1.6 ) %   0.3   %   (1.0 ) %
                           
(in thousands, expect per share data)                          
                           
System-wide restaurant sales(2)   $ 90,647     $ 97,262     $ 173,386     $ 184,429    
                           
Net income   $ 1,040     $ 1,392     $ 1,122     $ 2,390    
Adjusted net income(3)     1,439       1,701       2,060       2,653    
                           
Net income, per diluted share   $ 0.11     $ 0.16     $ 0.12     $ 0.29    
Adjusted net income, per diluted share(3)     0.16       0.19       0.22       0.33    
                           
Adjusted EBITDA(3)   $ 2,446     $ 2,700     $ 3,477     $ 4,494    

___________________________________
(1) International franchise comparable sales declines are primarily related to Puerto Rico, which is still yet to recover from the effects of recent hurricanes.
(2) System-wide restaurant sales include sales for all Company-owned and franchise-operated restaurants, as reported by franchisees. Restaurant sales for franchise-operated restaurants are not revenues of the Company and are not included in the Company’s consolidated financial statements.
(3) Adjusted net income (loss) from continuing operations and adjusted EBITDA are non-GAAP measures. A reconciliation of all non-GAAP measures to the most directly comparable GAAP measure is included in the accompanying financial tables.  See “Non-GAAP Reconciliation.”

Second Quarter 2019 Review

Total revenue for the second quarter of 2019 was $21.1 million, up 45.3% from the second quarter of 2018. The increase in year-over-year restaurant sales, net for the three months ended June 30, 2019 was driven primarily by the acquisition of Famous Dave’s stores in Colorado, Michigan, Ohio, Wisconsin, Indiana and Iowa and a 0.5% increase in franchise-operated same store net sales. 

On a weighted basis, same store net sales for our To-Go line of business increased 2.2% in the second quarter of fiscal 2019 as compared to the prior year period, partially offset by a decline in Dine In and Catering lines of business of 2.7% and 0.3%, respectively. During the second quarter of fiscal 2019, Dine In represented approximately 51% of our total restaurant sales, net, while To Go and Catering represented 36% and 13% of restaurant sales, net, respectively.   

Restaurant-level operating margin, as a percentage of restaurant sales, net, for Company-owned restaurants was 3.4% compared to 6.0% in the second quarter of fiscal 2018. This decline in restaurant-level operating margin was primarily a result of acquisitions of new stores in 2019, which we believe will stabilize over the remainder of fiscal 2019.

General and administrative expenses for the three months ended June 30, 2019 and July 1, 2018 represented approximately 11.3% and 14.5% of total revenues, respectively. The increase to general and administrative expenses primarily related to acquisition costs incurred related to our completed and pending acquisitions.

Net income was approximately $1.0 million, or $0.11 per share, in the second quarter of fiscal 2019 compared to net income of approximately $1.4 million, or $0.16 per share, in the second quarter of fiscal 2018.  Adjusted net income, a non-GAAP measure, was approximately $1.4 million, or $0.16 per share, compared to adjusted net income of approximately $1.7 million, or $0.19 per share, in the second quarter of fiscal 2018. A reconciliation between adjusted net income and its most directly comparable GAAP measure is included in the accompanying financial tables.

About Famous Dave’s

Famous Dave’s develops, owns, operates and franchises barbeque restaurants. Its menu features award-winning barbequed and grilled meats, a selection of salads, sandwiches, side items, and made-from-scratch desserts. As of August 12, 2019, the Company owns 33 locations and franchises an additional 101 restaurants in 33 states, the Commonwealth of Puerto Rico, Canada, and United Arab Emirates.

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States (“GAAP”), the Company uses non-GAAP measures including those indicated below. These non-GAAP measures exclude significant expenses and income that are required by GAAP to be recorded in the Company’s consolidated financial statements and are subject to inherent limitations. By providing non-GAAP measures, together with a reconciliation to the most comparable GAAP measure, the Company believes that it is enhancing investors’ understanding of the Company’s business and results of operations. These measures are not intended to be considered in isolation of, as substitutes for, or superior to, financial measures prepared and presented in accordance with GAAP. The non-GAAP measures presented may be different from the measures used by other companies. The Company urges investors to review the reconciliation of its non-GAAP measures to the most directly comparable GAAP measure, included in the accompanying financial tables.

Adjusted net income (loss) is net income (loss), plus asset impairment, estimated lease termination charges and other closing costs, settlement agreements, net (loss) gain on disposal of equipment, stock-based compensation, severance, acquisition costs, and the related tax impact. This number is divided by the weighted-average number of diluted shares of common stock outstanding during each period presented to arrive at adjusted net income (loss), per share. Adjusted EBITDA is net income (loss), plus asset impairment, estimated lease termination charges and other closing costs, settlement agreements, depreciation and amortization, interest expense, net, net (loss) gain on disposal of equipment, stock-based compensation, severance, acquisition costs and provision (benefit) for income taxes.

Forward-Looking Statements

Statements in this press release that are not strictly historical, including but not limited to statements regarding the timing of the Company’s restaurant openings, the timing of refreshes and the timing or success of refranchising plans, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, which may cause the Company’s actual results to differ materially from expected results. Although the Company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectation will be attained. Factors that could cause actual results to differ materially from Famous Dave’s expectation include financial performance, restaurant industry conditions, execution of restaurant development and construction programs, franchisee performance, changes in local or national economic conditions, availability of financing, governmental approvals and other risks detailed from time to time in the Company’s SEC reports.

     
Contact:   Jeff Crivello – Chief Executive Officer
    952-294-1300
     
    Darrow Associates, Inc.
    Peter Seltzberg – Managing Director
    516-419-9915
    pseltzberg@darrowir.com
     


 
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except per share data)
(Unaudited)
                           
    Three Months Ended   Six Months Ended  
    June 30, 2019   July 1, 2018   June 30, 2019   July 1, 2018  
Revenue:                          
Restaurant sales, net   $ 16,898     $ 9,955     $ 27,212     $ 18,668    
Franchise royalty and fee revenue     3,447       3,753       6,651       7,161    
Franchisee national advertising fund contributions     471       529       880       998    
Licensing and other revenue     312       301       578       555    
Total revenue     21,128       14,538       35,321       27,382    
                           
Costs and expenses:                          
Food and beverage costs     5,325       3,099       8,685       5,816    
Labor and benefits costs     5,819       3,361       9,776       6,557    
Operating expenses     5,187       2,894       8,356       5,735    
Depreciation and amortization expenses     515       309       779       702    
General and administrative expenses     2,377       2,111       4,894       3,985    
National advertising fund expenses     471       529       880       998    
Asset impairment, estimated lease termination charges and other closing costs, net     97       216       504       112    
Net (gain) loss on disposal of property     (140 )     30       (146 )     29    
Total costs and expenses     19,651       12,549       33,728       23,934    
                           
Income from operations     1,477       1,989       1,593       3,448    
                           
Other income (expense):                          
Interest expense     (288 )     (197 )     (359 )     (342 )  
Interest income     33       20       87       25    
Total other expense     (255 )     (177 )     (272 )     (317 )  
                           
Income before income taxes     1,222       1,812       1,321       3,131    
                           
Income tax expense     (182 )     (420 )     (199 )     (741 )  
                           
Net income   $ 1,040     $ 1,392     $ 1,122     $ 2,390    
                           
Basic net income per share   $ 0.11     $ 0.16     $ 0.12     $ 0.29    
Diluted net income per share   $ 0.11     $ 0.16     $ 0.12     $ 0.29    
Weighted average shares outstanding - basic     9,093       8,809       9,089       8,108    
Weighted average shares outstanding - diluted     9,278       8,835       9,191       8,131    
                                   


 
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
OPERATING RESULTS
(unaudited)
                   
    Three Months Ended   Six Months Ended  
    June 30, 2019   July 1, 2018   June 30, 2019   July 1, 2018  
Food and beverage costs(1)   31.5 % 31.1 % 31.9 % 31.2 %
Labor and benefits costs(1)   34.4 % 33.8 % 35.9 % 35.1 %
Operating expenses(1)   30.7 % 29.1 % 30.7 % 30.7 %
Restaurant level operating margin(1)(3)    3.4 % 6.0 % 1.5 % 3.0 %
Depreciation and amortization expenses(2)   2.4 % 2.1 % 2.2 % 2.6 %
General and administrative expenses(2)   11.3 % 14.5 % 13.9 % 14.6 %
Income from operations(2)   7.0 % 13.7 % 4.5 % 12.6 %

_____________________________
(1) As a percentage of restaurant sales, net
(2) As a percentage of total revenue
(3) Restaurant level margins are equal to restaurant sales, net, less restaurant level food and beverage costs, labor and benefit costs, and operating expenses.

 
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 (in thousands, except per share data)
(unaudited)
                 
ASSETS                
Current assets:   June 30, 2019   December 30, 2018
Cash and cash equivalents   $ 8,220     $ 11,598  
Restricted cash     800       842  
Accounts receivable, net of allowance for doubtful accounts of $87,000 and $192,000, respectively     4,470       4,300  
Inventories     1,250       722  
Prepaid income taxes and income taxes receivable     379       377  
Prepaid expenses and other current assets     1,238       1,363  
Assets held for sale     2,842        
Total current assets     19,199       19,202  
                 
Property, equipment and leasehold improvements, net     10,468       10,385  
                 
Other assets:                
Operating lease right-of-use assets     24,745        
Goodwill     435       61  
Intangible assets, net     3,488       1,428  
Deferred tax asset, net     5,753       5,747  
Other assets     1,699       1,533  
    $ 65,787     $ 38,356  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY                
                 
Current liabilities:                
Accounts payable   $ 4,114     $ 3,765  
Current portion of lease liabilities     3,294        
Current portion of long-term debt and financing lease obligations     166       1,369  
Accrued compensation and benefits     1,685       808  
Other current liabilities     3,461       2,970  
Total current liabilities     12,720       8,912  
                 
Long-term liabilities:                
Lease liabilities, less current portion     23,932        
Long-term debt, less current portion     2,404       2,411  
Other liabilities     2,869       4,492  
Total liabilities     41,925       15,815  
                 
Shareholders’ equity:                
Common stock, $.01 par value, 100,000 shares authorized, 9,274 and 9,085 shares issued and outstanding at June 30, 2019 and December 30, 2018, respectively     93       91  
Additional paid-in capital     7,596       7,375  
Retained earnings     16,173       15,075  
Total shareholders’ equity     23,862       22,541  
    $ 65,787     $ 38,356  
                 


 
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
             
    Six Months Ended
    June 30, 2019   July 1, 2018
Cash flows from operating activities:            
Net income   $ 1,122     $ 2,390  
Adjustments to reconcile net income to cash flows provided by operations:            
Depreciation and amortization     779       702  
Stock-based compensation     223       167  
Net (gain) loss on disposal of property     (146 )     29  
Asset impairment and estimated lease termination charges (gain)     469       (268 )
Bad debts recovery     (87 )     (25 )
Other non-cash items     124       (230 )
Changes in operating assets and liabilities:            
Accounts receivable, net     (422 )     (298 )
Other assets     (411 )     716  
Accounts payable     321       (851 )
Accrued and other liabilities     481       (1,298 )
Cash flows provided by operating activities     2,453       1,034  
             
Cash flows from investing activities:            
Proceeds from the sale of assets     6       1,187  
Purchases of property, equipment and leasehold improvements     (1,242 )     (290 )
Payments for acquired restaurants     (4,265 )      
Advances on notes receivable     (150 )     (648 )
Payments received on note receivable     8        
Cash flows (used for) provided by investing activities     (5,643 )     249  
             
Cash flows from financing activities:            
Payments for debt issuance costs     (54 )      
Payments on long-term debt and financing lease obligations     (176 )     (5,757 )
Proceeds from sale of common stock, net of offering costs           5,132  
Proceeds from exercise of stock options           494  
Cash flows used for financing activities     (230 )     (131 )
             
(Decrease) increase in cash, cash equivalents and restricted cash     (3,420 )     1,152  
Cash, cash equivalents and restricted cash, beginning of period     12,440       10,426  
Cash, cash equivalents and restricted cash, end of period   $ 9,020     $ 11,578  
                 


 
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION
(in thousands, except per share data)
(unaudited)
                         
    Three Months Ended   Six Months Ended
(dollars in thousands)   June 30, 2019   July 1, 2018   June 30, 2019
  July 1, 2018
Net income   $ 1,040     $ 1,392       1,122       2,390  
Asset impairment and estimated lease termination charges and other closing costs     97       216       504       112  
Net gain on disposal of equipment     (140 )     30       (146 )     29  
Stock-based compensation     140       120       223       167  
Acquisition costs     357             521        
Severance           36       3       36  
Tax adjustment     (55 )     (93 )     (167 )     (81 )
Adjusted net income   $ 1,439     $ 1,701     $ 2,060     $ 2,653  
Basic adjusted net income per common share   $ 0.16     $ 0.19     $ 0.23     $ 0.33  
Diluted adjusted net income per common share   $ 0.16     $ 0.19     $ 0.22     $ 0.33  
                         
Weighted average common share outstanding - basic     9,093       8,809       9,089       8,108  
Weighted average common share outstanding - diluted     9,278       8,835       9,191       8,131  
                         
Net income   $ 1,040     $ 1,392     $ 1,122     $ 2,390  
Asset impairment and estimated lease termination charges and other closing costs     97       216       504       112  
Depreciation and amortization     515       309       779       702  
Interest expense, net     255       177       272       317  
Net (gain) loss on disposal of equipment     (140 )     30       (146 )     29  
Stock-based compensation     140       120       223       167  
Acquisition costs     357             521        
Severance           36       3       36  
Provision for income taxes     182       420       199       741  
Adjusted EBITDA   $ 2,446     $ 2,700     $ 3,477     $ 4,494  
                                 

 

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