Nathan's Famous, Inc. Reports Third Quarter Results

And Declares Quarterly Cash Dividend Of $.35 Per Share.

Jericho, New York, UNITED STATES


JERICHO, N.Y., Feb. 05, 2021 (GLOBE NEWSWIRE) -- Nathan's Famous, Inc. (NASDAQ:NATH) today reported results for the third quarter of its 2021 fiscal year that ended December 27, 2020.

For the fiscal quarter ended December 27, 2020:

  • Revenues were $18,030,000, as compared to $21,376,000 during the thirteen weeks ended December 29, 2019;
  • Income from operations was $4,403,000, as compared to $3,863,000 during the thirteen weeks ended December 29, 2019;
  • Adjusted EBITDA1, a non-GAAP financial measure, was $4,818,000, as compared to $4,546,000 for the thirteen weeks ended December 29, 2019;
  • Income before provision for income taxes was $1,851,000, as compared to $1,573,000 for the thirteen weeks ended December 29, 2019;
  • Net income was $1,359,000, as compared to $1,213,000 for the thirteen weeks ended December 29, 2019; and
  • Earnings per diluted share was $0.33 per share, as compared to $0.29 per share for the thirteen weeks ended December 29, 2019.

For the thirty-nine weeks ended December 27, 2020:

  • Revenues were $57,555,000, as compared to $81,620,000 during the thirty-nine weeks ended December 29, 2019;
  • Income from operations was $20,081,000, as compared to $20,677,000 during the thirty-nine weeks ended December 29, 2019;
  • Adjusted EBITDA1, a non-GAAP financial measure, was $21,408,000, as compared to $22,840,000 for the thirty-nine weeks ended December 29, 2019;
  • Income before provision for income taxes was $12,470,000, as compared to $13,861,000 for the thirty-nine weeks ended December 29, 2019;
  • Net income was $9,014,000, as compared to $10,240,000 for the thirty-nine weeks ended December 29, 2019; and
  • Earnings per diluted share was $2.19 per share, as compared to $2.43 per share for the thirty-nine weeks ended December 29, 2019.

___________________________
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.

The Company also reported the following:

  • License royalties increased to $24,689,000 during the thirty-nine weeks ended December 27, 2020, (“fiscal 2021 period”), as compared to $18,559,000 during the thirty-nine weeks ended December 29, 2019. During the fiscal 2021 period, royalties earned under the retail agreement, including the foodservice program, from John Morrell & Co., increased 33% to $22,743,000, as compared to $17,071,000 of royalties earned during the thirty-nine weeks ended December 29, 2019. As consumers continue to shelter at home as a result of the COVID-19 pandemic, our licensing business continues to show strong consumer demand.

  • In the Branded Product Program, which features the sale of Nathan’s hot dogs to the foodservice industry, income from operations declined by approximately $3,170,000 to $3,074,000 during the fiscal 2021 period, as compared to $6,244,000 for the thirty-nine weeks ended December 29, 2019.  Sales were $24,450,000 during the fiscal 2021 period, compared to sales of $45,989,000 during the thirty-nine weeks ended December 29, 2019, while the volume of hot dogs sold by the Company decreased 48%.  As a result of the COVID-19 pandemic, sales and income from operations for the Branded Product Program continue to be negatively impacted as many of our customers operate in venues that are currently closed, such as movie theaters, or venues operating at reduced capacity, such as professional sports arenas, amusement parks, and shopping malls.

  • Sales from Company-operated restaurants were $6,247,000 during the fiscal 2021 period compared to $11,710,000 during the thirty-nine weeks ended December 29, 2019. The decrease was primarily due to a decline in customer traffic related to the impact of the COVID-19 pandemic. Additionally, as stipulated under government orders, our Company-operated restaurants with dining rooms are operating at reduced capacity and maintaining social distancing protocols.

  • Revenues from franchise operations were $1,087,000 during the fiscal 2021 period, compared to $3,610,000 during the thirty-nine weeks ended December 29, 2019. Total royalties were $880,000 during the fiscal 2021 period as compared to $2,829,000 during the thirty-nine weeks ended December 29, 2019. Total franchise fee income was $207,000 during the fiscal 2021 period compared to $781,000 during the thirty-nine weeks ended December 29, 2019. As a result of the COVID-19 pandemic, a number of our franchised locations have been temporarily closed due to their locations being in venues which are closed, such as movie theaters, or venues operating at reduced traffic, such as airport and highway travel plazas. Despite the challenging environment, 5 new franchised outlets and 75 ghost kitchens opened during the fiscal 2021 period.

  • During the fiscal 2021 period, we recorded Advertising Fund revenue and expense of $1,082,000.

  • During the fiscal 2021 period, the Board of Directors declared three quarterly cash dividends of $0.35 per share totaling $4,320,000. 

  • Effective February 5, 2021, the Board of Directors declared its quarterly cash dividend of $0.35 per share payable on March 5, 2021 to shareholders of record at the close of business on February 22, 2021.

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) 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 12 foreign countries through its restaurant system, foodservice sales programs and product licensing activities. Last year, over 700 million Nathan’s Famous hot dogs were sold. For additional information about Nathan’s Famous, please visit our website at www.nathansfamous.com.

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 the COVID-19 pandemic; the status of our licensing and supply agreements, including the impact of our supply agreement for hot dogs with John Morrell & Co.; 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 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 employee” or the impact of our new 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.


Nathan's Famous, Inc.
(unaudited)

  Thirteen weeks ended    Thirty-nine weeks ended 
 Dec. 27, 2020 Dec. 29, 2019 Dec. 27, 2020 Dec. 29, 2019
        
Financial Highlights       
        
Total revenues$18,030,000 $21,376,000 $57,555,000 $81,620,000
        
Income from operations (a)$4,403,000 $3,863,000 $20,081,000 $20,677,000
        
Net income$1,359,000 $1,213,000 $9,014,000 $10,240,000
        
Income per share:       
Basic$0.33 $0.29 $2.19 $2.43
Diluted$0.33 $0.29 $2.19 $2.43
        
Weighted-average shares used in       
computing income per share:       
Basic4,115,000 4,225,000 4,117,000 4,219,000
Diluted4,115,000 4,225,000 4,117,000 4,219,000
Select Segment Information

Revenues
                
Branded product program$10,003,000 $13,694,000 $24,450,000 $45,989,000
Product licensing5,898,000 4,412,000 24,689,000 18,559,000
Restaurant operations1,739,000 2,697,000 7,334,000 15,320,000
Corporate (b)390,000 573,000 1,082,000 1,752,000
Total Revenues$18,030,000 $21,376,000 $57,555,000 $81,620,000
            
Income from operations (c)
           
Branded product program $ 1,550,000 $ 1,917,000 $ 3,074,000 $ 6,244,000
Product licensing  5,852,000  4,367,000  24,552,000  18,423,000
Restaurant operations  (1,162,000)  (599,000)  (2,193,000)  2,254,000
Corporate (d)  (1,837,000)  (1,822,000)  (5,352,000)  (6,244,000)
Income from operations (c) $ 4,403,000 $ 3,863,000 $ 20,081,000 $ 20,677,000
  1. Excludes interest expense, interest income, and other income, net.
  2. Represents Advertising Fund revenue.
  3. Excludes interest expense, interest 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.
  4. 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

  Thirteen weeks ended    Thirty-nine weeks ended 
 Dec. 27, 2020 Dec. 29, 2019 Dec. 27, 2020 Dec. 29, 2019
        
  (unaudited)   (unaudited) 
EBITDA       
Net Income$ 1,359,000 $ 1,213,000 $ 9,014,000 $ 10,240,000
        
Interest Expense2,650,000 2,650,000 7,951,000 7,951,000
        
Provision for income taxes492,000 360,000 3,456,000 3,621,000
        
Depreciation and amortization288,000 294,000 900,000 941,000
        
EBITDA$ 4,789,000 $ 4,517,000 $ 21,321,000 $ 22,753,000
        
        
        
Adjusted EBITDA       
EBITDA$ 4,789,000 $ 4,517,000 $ 21,321,000 $ 22,753,000
        
Share-based compensation29,000 29,000 87,000 87,000
        
Adjusted EBITDA$ 4,818,000 $ 4,546,000 $ 21,408,000 $ 22,840,000
        


COMPANY        Robert Steinberg, Vice President - Finance and CFO
CONTACT:        (516) 338-8500 ext. 229