Attached files
| file | filename |
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| 8-K - 8-K - BBQ HOLDINGS, INC. | d399587d8k.htm |
Exhibit 99.1
Famous Dave’s of America, Inc. Appoints Eric Hirschhorn
To Board of Directors and Reports Results For First Quarter Fiscal 2017
MINNEAPOLIS, May 15, 2017 – Famous Dave’s of America, Inc. (NASDAQ: DAVE) today announced that its Board of Directors has appointed experienced industry executive, Eric Hirschhorn, to the Board, effective May 15, 2017. Mr. Hirschhorn has served in various capacities at Restaurant Brands International, most recently as the President of Burger King Canada. Prior to joining Restaurant Brands International, Mr. Hirschhorn served as general counsel of 3G Capital, where he served as key counsel in the acquisition of Burger King.
Chuck Mooty, Chairman of the Board, commented “I am delighted to welcome Eric to the Board of Directors. His deep industry experience will be instrumental in assisting the rest of the Board and Management team in revitalizing this wonderful Brand.”
Today, the Company reported financial results for the first quarter ending April 2, 2017.
Highlights for the first quarter of 2017:
| • | Franchise-operated comparable restaurant sales decreased 4.8% |
| • | Company-owned comparable restaurant sales decreased 3.3% |
| • | Restaurant-level operating margin increased to 2.8%, from 2.1% during the first quarter of 2016. |
| • | Closed one franchise-operated restaurant |
| • | Closed two Company-owned restaurants |
Key Operating Metrics
| Three Months Ended | ||||||||
| April 2, 2017 |
April 3, 2016 |
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| Restaurant count: |
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| Franchise-operated |
138 | 141 | ||||||
| Company-owned |
35 | 37 | ||||||
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| Total |
173 | 178 | ||||||
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| Comparable restaurant sales %: |
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| Franchise-operated |
(4.8 | )% | (6.1 | )% | ||||
| Company-owned |
(3.3 | )% | (7.7 | )% | ||||
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| Total |
(4.5 | )% | (6.3 | )% | ||||
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| (in thousands, expect per share data) |
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| System-wide restaurant sales(1) |
$ | 100,389 | $ | 104,112 | ||||
| Net (loss) income from continuing operations |
$ | (1,246 | ) | $ | 149 | |||
| Adjusted net loss from continuing operations(2) |
(332 | ) | (22 | ) | ||||
| Net (loss) income from continuing operations, per share |
$ | (0.18 | ) | $ | 0.02 | |||
| Adjusted net loss from continuing operations, per share(2) |
(0.05 | ) | — | |||||
| Adjusted EBITDA(2) |
$ | 363 | $ | 1,126 | ||||
| (1) | System-wide restaurant 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. |
| (2) | Adjusted net (loss) income 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.” |
First Quarter 2017 Review
Total revenue for the quarter was $22.0 million, down 6.4% from the first quarter of 2016. The decrease in Company-owned revenue was primarily driven by a comparable sales decline of 3.3% and the net closure of two restaurants. The declines in franchise royalty and fee revenue were driven by a comparable sales decline of 4.8%, the net closure of three franchise-operated restaurants, and the prior year’s franchise fee revenues associated with the signing of two area development agreements in the first quarter of 2016.
Restaurant-level operating margin for Company-owned restaurants was 2.8%, an increase from 2.1% in the first quarter of 2016. The improvement was primarily driven by the continued focus on our actual versus theoretical food cost initiative, commodity deflation, more effective and efficient management of labor versus optimum, and the timing of marketing spend. These benefits were slightly offset by wage rate inflation and sales deleverage on fixed costs.
General and administrative expenses increased to $4.6 million from $3.7 million in the first quarter of 2016. The increase was primarily driven by employee severance and professional fees incurred in the current quarter, the prior year’s early removal of a short-term incentive compensation accrual and the prior year’s recapture of stock-based compensation associated with an executive departure.
Net (loss) income from continuing operations was a loss of $1.2 million, or $0.18 loss per share, compared to income of $149,000, or $0.02 per share, in the first quarter of 2016. In the first quarter of 2017, the Company recorded $1.1 million of charges related to lease termination costs for two previously refranchised restaurants and the closure of two Company-owned restaurants.
Adjusted net (loss) income from continuing operations, a non-GAAP measure, decreased to a loss of $332,000, or $0.05 loss per share, compared to a loss of $22,000, or $0.00 loss per share, in the first quarter of 2016. A reconciliation between adjusted net (loss) income and its most directly comparable GAAP measure is included in the accompanying financial tables.
Refranchising and Restaurant Optimization Plan
On May 2, 2017, the Company announced its plans to accelerate the refranchising and optimization of its 33 Company-owned restaurants over the next 12 to 24 months. This will permit the Company to shift its resources and energy to the growth and viability of its franchise system, which is paramount to its success. The Company closed two additional underperforming restaurants subsequent to the end of the quarter.
Executive Comments
Mike Lister, CEO, commented “I am proud of the progress we are making in returning our Brand to a position of strength. The Company’s refranchising initiative will allow us to focus tirelessly on supporting our franchisees by improving Guest acquisition and experience through marketing, food and beverage innovation, training and development.”
About Famous Dave’s
The Company 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 May 15, 2017, the Company owns 33 locations and franchises an additional 135 restaurants in 32 states, the Commonwealth of Puerto Rico, Canada, and United Arab Emirates.
Conference Call
The Company will host a conference call May 15, 2017, at 3:30 p.m. Central Time to discuss its first quarter financial results. There will be a live webcast of the discussion through the Investor Relations section of Famous Dave’s web site at www.famousdaves.com.
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.
Page 2 of 8
Adjusted net (loss) income from continuing operations is net (loss) income from continuing operations, plus items such as asset impairment, estimated lease termination and other closing costs, net (loss) gain on disposal of equipment, settlement agreements, stock-based compensation, severance, and the related tax impact. This number is divided by the weighted-average number of basic shares of stock outstanding during each period presented to arrive at adjusted net (loss) income from continuing operations, per share. Adjusted EBITDA is net (loss) income from continuing operations, plus items such as asset impairment, estimated lease termination and other closing costs, depreciation and amortization, interest expense, net, provision (benefit) for income taxes, net (loss) gain on disposal of equipment, settlement agreements, stock-based compensation, and severance.
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 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: | Dexter Newman – Chief Financial Officer 952-294-1300 |
Page 3 of 8
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
APRIL 2, 2017 AND APRIL 3, 2016
(in thousands, except per share data)
(Unaudited)
| Three Months Ended | ||||||||
| April 2, 2017 |
April 3, 2016 |
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| Revenue: |
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| Restaurant sales, net |
$ | 17,977 | $ | 18,992 | ||||
| Franchise royalty revenue |
3,782 | 4,110 | ||||||
| Franchise fee revenue |
— | 135 | ||||||
| Licensing and other revenue |
217 | 248 | ||||||
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| Total revenue |
21,976 | 23,485 | ||||||
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| Costs and expenses: |
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| Food and beverage costs |
5,438 | 6,023 | ||||||
| Labor and benefits costs |
6,509 | 6,853 | ||||||
| Operating expenses |
5,534 | 5,709 | ||||||
| Depreciation and amortization |
755 | 981 | ||||||
| General and administrative expenses |
4,593 | 3,720 | ||||||
| Asset impairment and estimated lease termination and other closing costs |
1,133 | 8 | ||||||
| Net loss (gain) on disposal of property |
1 | (204 | ) | |||||
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| Total costs and expenses |
23,963 | 23,090 | ||||||
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| (Loss) income from operations |
(1,987 | ) | 395 | |||||
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| Other expense: |
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| Interest expense |
(187 | ) | (178 | ) | ||||
| Interest income |
— | 1 | ||||||
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| Total other expense, net |
(187 | ) | (177 | ) | ||||
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| (Loss) income before income taxes |
(2,174 | ) | 218 | |||||
| Income tax benefit (expense) |
928 | (69 | ) | |||||
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| Net (loss) income from continuing operations |
(1,246 | ) | 149 | |||||
| Net income from discontinued operations, net of tax |
— | 681 | ||||||
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| Net (loss) income |
$ | (1,246 | ) | $ | 830 | |||
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| Basic net (loss) income per share—continuing operations |
$ | (0.18 | ) | $ | 0.02 | |||
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| Basic net income per share—discontinued operations |
$ | — | $ | 0.10 | ||||
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| Basic net (loss) income per share |
$ | (0.18 | ) | $ | 0.12 | |||
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| Diluted net (loss) income per share—continuing operations |
$ | (0.18 | ) | $ | 0.02 | |||
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| Diluted net income per share—discontinued operations |
$ | — | $ | 0.10 | ||||
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| Diluted net (loss) income per share |
$ | (0.18 | ) | $ | 0.12 | |||
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| Weighted average shares outstanding—basic |
6,954 | 6,948 | ||||||
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| Weighted average shares outstanding—diluted |
6,954 | 6,958 | ||||||
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Page 4 of 8
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
OPERATING RESULTS
(unaudited)
| Three Months Ended |
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| April 2, 2017 |
April 3, 2016 |
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| Food and beverage costs(1) |
30.2 | % | 31.7 | % | ||||
| Labor and benefits(1) |
36.2 | % | 36.1 | % | ||||
| Operating expenses(1) |
30.8 | % | 30.1 | % | ||||
| Restaurant level operating margin(1)(3) |
2.8 | % | 2.1 | % | ||||
| Depreciation & amortization(2) |
3.4 | % | 4.2 | % | ||||
| General and administrative(2) |
20.9 | % | 15.8 | % | ||||
| (Loss) income from operations(2) |
(9.0 | %) | 1.7 | % | ||||
| (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. |
Page 5 of 8
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 2, 2017 AND JANUARY 1, 2017
(in thousands, except per share data)
| April 2, 2017 (Unaudited) |
January 1, 2017
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| ASSETS | ||||||||
| Current assets: |
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| Cash and cash equivalents |
$ | 4,865 | $ | 4,450 | ||||
| Restricted cash |
1,796 | 1,714 | ||||||
| Accounts receivable, net |
5,474 | 5,257 | ||||||
| Inventories |
1,425 | 1,499 | ||||||
| Prepaid expenses and other current assets |
5,473 | 3,531 | ||||||
| Assets held for sale |
— | 1 | ||||||
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| Total current assets |
19,033 | 16,452 | ||||||
| Property, equipment and leasehold improvements, net |
25,354 | 25,912 | ||||||
| Other assets: |
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| Intangible assets, net |
2,556 | 2,565 | ||||||
| Deferred tax assets |
4,229 | 4,633 | ||||||
| Other assets |
1,355 | 1,383 | ||||||
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| $ | 52,527 | $ | 50,945 | |||||
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| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
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| Current portion of long-term debt and financing lease obligation |
$ | 2,084 | $ | 1,371 | ||||
| Accounts payable |
6,299 | 5,311 | ||||||
| Accrued compensation and benefits |
1,965 | 1,321 | ||||||
| Other current liabilities |
4,186 | 3,140 | ||||||
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| Total current liabilities |
14,534 | 11,143 | ||||||
| Long-term liabilities: |
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| Long-term debt, less current portion |
8,608 | 8,849 | ||||||
| Financing lease obligation, less current portion |
1,469 | 2,280 | ||||||
| Other liabilities |
9,142 | 8,705 | ||||||
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| Total liabilities |
33,753 | 30,977 | ||||||
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| Shareholders’ equity: |
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| Common stock, $0.01 par value, 100,000 shares authorized, 6,958 shares issued and outstanding at April 2, 2017 and January 1, 2017, respectively |
66 | 66 | ||||||
| Retained earnings |
18,708 | 19,902 | ||||||
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| Total shareholders’ equity |
18,774 | 19,968 | ||||||
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| $ | 52,527 | $ | 50,945 | |||||
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FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
APRIL 2, 2017 AND APRIL 3, 2016
(in thousands)
(Unaudited)
| Three Months Ended |
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| April 2, 2017 |
April 3, 2016 |
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| Cash flows from operating activities: |
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| Net (loss) income from continuing operations |
$ | (1,246 | ) | $ | 149 | |||
| Adjustments to reconcile net (loss) income to cash flows provided by operations: |
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| Depreciation and amortization |
755 | 981 | ||||||
| Asset impairment and estimated lease termination and other closing costs |
1,133 | 8 | ||||||
| Net loss (gain) on disposal of property |
1 | (204 | ) | |||||
| Amortization of deferred financing costs |
7 | 9 | ||||||
| Deferred income taxes |
348 | — | ||||||
| Deferred rent |
144 | 192 | ||||||
| Stock-based compensation |
107 | (54 | ) | |||||
| Changes in operating assets and liabilities: |
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| Restricted cash |
(81 | ) | (115 | ) | ||||
| Accounts receivable, net |
(184 | ) | (428 | ) | ||||
| Inventories |
74 | 210 | ||||||
| Prepaid expenses and other current assets |
(2,087 | ) | (105 | ) | ||||
| Accounts payable |
853 | 240 | ||||||
| Accrued compensation and benefits |
619 | 107 | ||||||
| Other current liabilities |
420 | 329 | ||||||
| Other liabilities |
1 | (18 | ) | |||||
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| Cash flows provided by continuing operating activities |
864 | 1,301 | ||||||
| Cash flows used for discontinued operating activities |
— | (785 | ) | |||||
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| Cash flows provided by operating activities |
864 | 516 | ||||||
| Cash flows used for investing activities: |
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| Proceeds from the sale of assets |
— | 1,053 | ||||||
| Purchases of property, equipment and leasehold improvements |
(104 | ) | (129 | ) | ||||
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| Cash flows (used for) provided by continuing investing activities |
(104 | ) | 924 | |||||
| Cash flows provided by discontinued investing activities |
— | 1,150 | ||||||
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| Cash flows (used for) provided by investing activities |
(104 | ) | 2,074 | |||||
| Cash flows used for financing activities: |
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| Proceeds from line of credit |
— | 1,855 | ||||||
| Payments of debt issuance costs |
(15 | ) | — | |||||
| Payments on long-term debt and financing lease obligation |
(330 | ) | (2,145 | ) | ||||
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| Cash flows used for financing activities |
(345 | ) | (290 | ) | ||||
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| Increase in cash and cash equivalents |
415 | 2,300 | ||||||
| Cash and cash equivalents, beginning of period |
4,450 | 5,300 | ||||||
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| Cash and cash equivalents, end of period |
$ | 4,865 | $ | 7,600 | ||||
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Page 7 of 8
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION
(in thousands, except per share data)
(unaudited)
| Three Months Ended |
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| April 2, 2017 |
April 3, 2016 |
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| Net (loss) income from continuing operations |
$ | (1,246 | ) | $ | 149 | |||
| Asset impairment and estimated lease termination and other closing costs |
1,133 | 8 | ||||||
| Net loss (gain) on disposal of equipment |
1 | (204 | ) | |||||
| Stock-based compensation |
107 | (54 | ) | |||||
| Severance |
354 | — | ||||||
| Tax adjustment |
(681 | ) | 79 | |||||
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| Adjusted net loss from continuing operations |
$ | (332 | ) | $ | (22 | ) | ||
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| Basic adjusted net loss per common share from continuing operations |
$ | (0.05 | ) | $ | — | |||
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| Diluted adjusted net loss per common share from continuing operations |
$ | (0.05 | ) | $ | — | |||
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| Weighted average common share outstanding – basic |
6,954 | 6,948 | ||||||
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| Weighted average common share outstanding – diluted |
6,954 | 6,958 | ||||||
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| Net (loss) income from continuing operations |
$ | (1,246 | ) | $ | 149 | |||
| Asset impairment and estimated lease termination and other closing costs |
1,133 | 8 | ||||||
| Depreciation and amortization |
755 | 981 | ||||||
| Interest expense, net |
187 | 177 | ||||||
| (Benefit) provision for income taxes |
(928 | ) | 69 | |||||
| Net gain on disposal of equipment |
1 | (204 | ) | |||||
| Stock-based compensation |
107 | (54 | ) | |||||
| Severance |
354 | — | ||||||
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| Adjusted EBITDA |
$ | 363 | $ | 1,126 | ||||
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