BBQ Holdings, Inc. Reports Results for First Quarter 2022


MINNEAPOLIS, May 10, 2022 (GLOBE NEWSWIRE) -- BBQ Holdings, Inc. (NASDAQ: BBQ) (the “Company”), an innovating global franchisor, owner and operator of restaurants, today reported financial results for the first fiscal quarter ended April 3, 2022.

First Quarter Highlights:

            
  First Quarter
(dollars in thousands, except per share data)  2022  2021  2020  2019 
Total revenue $64,184 $37,319 $23,855 $14,193 
Net income (loss) $767 $799 $13,707 $82 
Earnings (loss) per diluted share $0.07 $0.08 $1.49 $0.01 
Adjusted net income (loss) $1,138 $811 $(484)$489 
Adjusted earnings (loss) per diluted share $0.11 $0.09 $(0.05)$0.05 
Cash EBITDA $3,748 $3,220 $(457)$1,030 
Restaurant-level margins  6.4% 9.1% (1.9)% (1.7)%
Prime costs  64.3% 60.4% 69.9% 71.0%
Free cash flow $3,026 $2,529 $(1,406)$809 


       
 First Quarter Same Store Sales
 2022 vs. 2021  2022 vs. 2020 2022 vs. 2019
Famous Dave's Company-owned7.9% 22.6 % 12.6 %
Famous Dave's Franchise-operated*8.6% 21.3 % 5.6 %
Granite City**24.1% 21.4 % (1.7)%
Village Inn Company-owned**19.1% 8.8 % (8.0)%
Village Inn Franchise-operated*19.9% NA% NA%
Bakers Square**17.0% (12.5)% (17.7)%
Clark Crew5.0% 5.8 % NA%
Real Urban BBQ**11.0% NA% NA%
Tahoe Joe's**6.0% NA% NA%

* as reported by franchisees
** includes sales under prior ownership
*** it is our policy to include in our same store net sales base, restaurants that have been open for 12 months under our company’s ownership


Subsequent Events:

On April 11, 2022, we closed the purchase of the Barrio Queen Restaurant Business. The purchase price of approximately $28.5 million was funded with cash and debt. See 8-K filed with the SEC on March 14, 2022 for additional information regarding this acquisition, including the Asset Purchase Agreement.

On November 23, 2021, the Company, entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. The Credit Agreement had a five-year term and provided for up to a $5.0 million revolving line of credit and a $15.0 million term loan. On April 11, 2022 (the “First Amendment Date”), the Company amended the Credit Agreement (the “Amended Credit Agreement”), increasing the revolving line of credit to $25.0 million and the term loan to $25.0 million. The Amended Credit Agreement as well as additional information can be seen in the 8-K filed by the Company on April 13, 2022.

Current and Projected (“PF”) Portfolio:

 FAMOUS
DAVE’S
VILLAGE
INN
GRANITE
CITY
BAKERS
SQUARE
REAL
URBAN
BBQ
CLARK
CREW BBQ
TAHOE
JOE’S
BARRIO
QUEEN
BAR
CONCEPTS
TOTAL
 2022 Q12022 PF2022 Q12022 PF2022 Q12022 PF2022 Q12022 PF2022 Q12022 PF2022 Q12022 PF2022 Q12022 PF2022 Q12022 PF2022 Q12022 PF2022 Q12022 PF
Corporate Locations4043222218181431221144 734104132
Brick & Mortar3133212117171111221144 73490100
Dual Concept111111            33
Ghost Kitchens89    320          1129
Franchise/License Locations104105103105  424          211234
Brick & Mortar8585103105              188190
Dual Concept 1                01
Ghost Kitchens1919    424          2343
Total Locations14414812512718181855221144 734315366
Growth PlanNew line serve / drive thru and Ghost locationsNew trendy breakfast prototypeDual concept with new breakfast brandSell pies in retail, kiosk and other restaurantsNew line serve locations and CPGsCPGsDual Concept with FDsFranchise and CorporateCorporate 
# Opening in 2022 Q1: 3 Q1: 1 n/a Q1: 1 n/a n/a Q1: - n/a Q1: -Total:47
  Q2: 1 Q2: 1   Q2: 5     Q2: -   Q2: 1  
  Q3: 1 Q3: 1   Q3: 25     Q3: -   Q3: -  
  Q4: 1 Q4: 2   Q4: 3     Q4: 1   Q4: -  

Filling Latent Capacity:

  • Dual concept Granite City/Village Inn opened in Maple Grove, MN in March 2022.
  • Famous Dave’s ghost kitchen opened in Granite City in Fargo, ND in April 2022.

Organic Unit Growth:

  • Famous Dave’s Drive thru in Salt Lake City, UT opened in March 2022.
  • Famous Dave’s franchisee opened an additional restaurant in Grand Forks, ND in April 2022.
  • Famous Dave’s franchisee opened an additional restaurant in the United Arab Emirates in February 2022.
  • New Village Inn prototype expected to open in Omaha, NE in the third quarter of 2022.

Mergers and Acquisitions:

  • Closed the purchase of Barrio Queen in April 2022.
  • Closed the purchase of three bar-centric company-owned locations in March 2022.
  • Signed an asset purchase agreement for an additional bar-centric location in April 2022.

Updated 2022 Guidance:

  • Net restaurant revenue of $280mm to $290mm
  • Net income and adjusted net income range from $12.5mm to $15.5mm
  • We expect to exhaust our deferred tax assets mid-2022
  • Diluted earnings per share and adjusted earnings per diluted share of $1.15 to $1.45
  • Cash EBITDA range from $23mm to $25mm
  • Free cash flow range from $13.5mm to $15.5mm

12-Month Pro Forma Guidance*:

  • Net restaurant revenue of $290mm to $310mm
  • Net income and adjusted net income range from $14.0mm to $17.0mm
  • Diluted earnings per share and adjusted earnings per diluted share of $1.30 to $1.60
  • Cash EBITDA range from $25.5mm to $27.5mm
  • Free cash flow range from $15.5mm to $17.5mm

*Projected results for the next 12 months inclusive of expected results of all completed acquisitions

Executive Comments

Jeff Crivello, CEO, commented, “The beginning of 2022 marked another successful quarter executing on our three core growth initiatives which include filling latent capacity of our current restaurants, organic unit growth, and building a diversified portfolio of food and beverage brands via accretive M&A.

The Company diversified into authentic Mexican cuisine with the Barrio Queen purchase, which closed in April 2022. Barrio Queen adds a vibrant, growing brand to our portfolio. We are excited to build on Barrio Queen’s success.

Despite a challenging inflationary environment, and acknowledge continued headwinds, we continue to deliver consistent results, and look forward to a successful 2022.”


Key Operating Metrics

        
  Three Months Ended 
     April 3, 2022    April 4, 2021 
Restaurant count:       
Franchise-operated  211  100 
Company-owned  104  47 
Total  315  147 
Same store net restaurant sales %:         
Franchise-operated  8.6%   16.0%  
Company-owned  14.5%   17.7%  
Total  11.0%   13.1%  
        
(in thousands, expect per share data)         
        
System-wide restaurant sales(1) $158,731 $87,040 
        
Net income attributable to shareholders $767 $799 
        
Net income attributable to shareholders, per diluted share $0.07 $0.08 
        
Cash EBITDA(2) $3,748 $3,220 

 

(1) 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.
(2) Cash EBITDA is a non-GAAP measure. 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 2022 Review

Total revenue for the first quarter of 2022 was $64.2 million, up 72.0% from the first quarter of 2021. The increase in year-over-year revenue was driven primarily by the acquisitions of the Village Inn and Bakers Square brands, four additional Famous Dave’s restaurants, and the Tahoe Joe’s Steakhouse brand and an increase in dine-in traffic across our brands.  

Net income attributable to shareholders was approximately $767,000, or $0.07 per diluted share, in the first quarter of fiscal 2022 compared to an income of approximately $799,000, or $0.08 per diluted share, in the first quarter of fiscal 2021. This decrease in net income was mainly attributable to increased food and beverage costs and increased labor costs, as well as an impairment charge related to store closure of approximately $409,000. Cash EBITDA, a non-GAAP measure, increased $528,000 from $3.2 million in the first quarter of 2021 to $3.7 million in the first quarter of 2022. A reconciliation between cash EBITDA and its most directly comparable GAAP measure is included in the accompanying financial tables.

Restaurant-level operating margin as a percentage of restaurant net sales, a non-GAAP measure, was 6.4% for Company-owned restaurants in the first quarter of fiscal year 2022, compared to 9.1% in the first quarter of fiscal year 2021. This decrease in restaurant-level operating margin as a percentage of net restaurant sales was due primarily to increases in the cost of food and labor throughout 2021 and the first quarter of 2022. A reconciliation of restaurant sales to restaurant-level margin is included in the accompanying financial tables. General and administrative expenses for the quarter ended April 3, 2022, and April 4, 2021, represented approximately 8.2% and 10.8% of total revenues, respectively. This decrease in general and administrative expenses as a percentage of total revenues was due primarily to the larger increase in total revenue relative to the increase in general and administrative expenses.

About BBQ Holdings

BBQ Holdings, Inc. (NASDAQ: BBQ) is a national restaurant company engaged in franchising, ownership and operation of casual and fast dining restaurants. As of May 10, 2022, BBQ Holdings had multiple brands with over 100 Company-owned locations and over 200 franchised locations, including ghost kitchens operating out of the kitchen of another restaurant location or shared kitchen space. While BBQ Holdings continues to diversify its ownership in the restaurant community, it was founded with the principle of combining the “art and science” of barbecue to serve up the very best of the best to barbecue lovers everywhere. Along with a wide variety of BBQ favorites served at their BBQ restaurants, BBQ Holdings also operates Granite City Food and Brewery restaurants which offer award winning craft beer and a made-from-scratch, chef driven menu featuring contemporary American cuisine. Village Inn and Bakers Square add a legendary Family Dining element to BBQ Holdings, with these concepts specializing in breakfast and pies. Tahoe Joe’s is known for their pellet-broiler cooked and smoked infused steak.

Non-GAAP Financial Measures

To supplement its condensed 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.

Cash EBITDA is net income plus asset impairment, estimated lease termination charges and other closing costs, depreciation and amortization, net interest expense, net (gain) loss on disposal of equipment, stock-based compensation, acquisition costs, pre-opening costs, severance, gain on debt forgiveness, gain on bargain purchase, provision (benefit) for income taxes, and non-cash rent.

Free cash flow is the Cash EBITDA less cash paid for property, equipment and leasehold improvements. Adjusted net income (loss) is net income plus asset impairment, estimated lease termination charges and other closing costs, less gain on debt forgiveness and gain on bargain purchase. Adjusted earnings per diluted share equals adjusted net income (loss) divided by the weighted average shares outstanding, assuming dilution.

Restaurant-level operating margins are equal to net restaurant sales, less restaurant-level food and beverage costs, labor and benefit costs, and operating expenses for Company-owned restaurants.

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 the Company’s expectation include the impact of the COVID-19 virus pandemic, financial performance, inflation, 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
jeff.crivello@bbq-holdings.com 

        

BBQ HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)

        
  Three Months Ended 
  April 3, 2022    April 4, 2021 
Revenue:         
Restaurant sales, net $58,731  $33,603  
Franchise royalty and fee revenue  3,607   2,374  
Franchisee national advertising fund contributions  490   328  
Licensing and other revenue  1,356   1,014  
Total revenue  64,184   37,319  
        
Costs and expenses:         
Food and beverage costs  18,357   10,057  
Labor and benefits costs  19,386   10,254  
Operating expenses  17,239   10,249  
Depreciation and amortization expenses  2,423   1,552  
General and administrative expenses  5,291   4,038  
National advertising fund expenses  490   328  
Asset impairment, estimated lease termination charges and other closing costs, net  409   12  
Pre-opening expenses  65   28  
Loss (gain) on disposal of property, net  44   (8) 
Total costs and expenses  63,704   36,510  
        
Income from operations  480   809  
        
Other income (expense):         
Interest expense  (120)  (54) 
Interest income  8   24  
Gain on bargain purchase  38     
Total other income (expense)  (74)  (30) 
        
Income before income taxes  406   779  
        
Income tax (expense) benefit   241   (82) 
        
Net income  647   697  
Net (income) loss attributable to non-controlling interest  120   102  
Net income attributable to shareholders $767  $799  
        
        
Income per common share:         
Basic net income per share attributable to shareholders $0.07  $0.09  
Diluted net income per share attributable to shareholders $0.07  $0.08  
Weighted average shares outstanding - basic  10,552   9,208  
Weighted average shares outstanding - diluted  10,649   9,501  


BBQ HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)

       
ASSETS      
Current assets:  April 3, 2022    January 2, 2022
Cash and cash equivalents $35,431  $40,309 
Restricted cash  1,677   1,152 
Accounts receivable, net of allowance for doubtful accounts of $301,000 and $270,000, respectively  3,188   5,476 
Inventories  3,281   3,316 
Prepaid expenses and other current assets  4,313   3,919 
Total current assets   47,890   54,172 
       
Property, equipment and leasehold improvements, net  39,748   39,943 
       
Other assets:        
Operating lease right-of-use assets  81,248   78,843 
Goodwill  5,676   3,037 
Intangible assets, net  23,714   23,444 
Deferred tax asset, net  3,922   3,692 
Other assets  1,493   1,292 
Total assets $203,691  $204,423 
       
LIABILITIES AND SHAREHOLDERS’ EQUITY       
       
Current liabilities:         
Accounts payable $6,951  $7,661 
Current portion of operating lease liabilities  12,511   11,904 
Current portion of long-term debt and finance lease liabilities  1,488   1,621 
Accrued compensation and benefits  6,157   7,121 
Gift card liability  8,809   11,257 
Other current liabilities  8,752   8,510 
Total current liabilities  44,668   48,074 
         
Long-term liabilities:        
Operating lease liabilities, less current portion  79,362   77,729 
Finance lease liabilities, less current portion  292   79 
Long-term debt, less current portion  12,819   13,197 
Other liabilities  1,087   997 
Total liabilities  138,228   140,076 
       
Shareholders’ equity:         
Common stock, $.01 par value, 100,000 shares authorized, 10,750 and 10,495 shares issued and outstanding at April 3, 2022 and January 2, 2022, respectively  108   105 
Additional paid-in capital  22,248   21,782 
Retained earnings  44,158   43,391 
Total shareholders’ equity  66,514   65,278 
Non-controlling interest  (1,051)  (931)
Total equity  65,463   64,347 
Total liabilities and equity $203,691  $204,423 


BBQ HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

       
  Three Months Ended
     April 3, 2022    April 4, 2021
Cash flows from operating activities:        
Net income $647  $697 
Adjustments to reconcile net income to cash flows provided by operations:        
Depreciation and amortization  2,423   1,552 
Stock-based compensation  384   318 
Net (gain) loss on disposal  44   (8)
Asset impairment, estimated lease termination charges and other closing costs, net  409   12 
Gain on bargain purchase  (38)   
Amortization of operating right-of-use assets  2,894   2,134 
Deferred tax asset  (230)  82 
Other non-cash items  (6)  186 
Changes in operating assets and liabilities:      
Accounts receivable, net  2,296   598 
Prepaid expenses and other assets  (114)  (1,197)
Accounts payable  (710)  1,635 
Accrued compensation and benefits  (871)  1,678 
Lease liabilities  (3,258)  (1,513)
Gift card liability  (2,544)  (1,563)
Accrued and other liabilities  62   (425)
Cash flows provided by operating activities  1,388   4,186 
Cash flows from investing activities:        
Purchases of property, equipment and leasehold improvements  (722)  (691)
Payments for acquired restaurants  (4,434)   
Payments received on note receivable     6 
Cash flows provided by (used for) investing activities  (5,156)  (685)
Cash flows from financing activities:        
Payments on long-term debt  (562)  (519)
Tax payments for restricted stock units and stock options exercised  (130)   
Proceeds from exercise of stock options  107    
Cash flows provided by (used for) financing activities  (585)  (519)
Increase (decrease) in cash, cash equivalents and restricted cash  (4,353)  2,982 
Cash, cash equivalents and restricted cash, beginning of period  41,461   19,603 
Cash, cash equivalents and restricted cash, end of period $37,108  $22,585 
       
Supplemental Disclosures      
Cash paid for interest, net $107  $116 
       
Non-cash investing and financing activities:      
Operating right-of-use assets acquired  4,533    
Lease liabilities assumed pursuant to acquisitions  4,574    
Gift card liability assumed pursuant to acquisitions  96    
Inventory acquired pursuant to acquisitions  85    


BBQ HOLDINGS, INC. AND SUBSIDIARIES
OPERATING RESULTS
(unaudited)

      
 Three Months Ended  
 April 3, 2022    April 4, 2021        
Food and beverage costs(1)31.3%  29.9%   
Labor and benefits costs(1)33.0%  30.5%   
Operating expenses(1)29.3%  30.5%   
Restaurant-level operating margin(1)(2)  6.4%  9.1%   
Depreciation and amortization expenses(3)3.8%  4.2%   
General and administrative expenses(3)8.2%  10.8%   
Income (loss) from operations(3)0.7%  2.2%   

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


BBQ HOLDINGS, INC. AND SUBSIDIARIES
RESTAURANT-LEVEL PROFIT AND RESTAURANT-LEVEL MARGIN (1)
NON-GAAP RECONCILIATION
(in thousands)

          
          
   Three Months Ended 
   April 3, 2022     April 4, 2021 
Restaurant sales, net  $58,731  $33,603 
Restaurant operating costs(1)   54,982   30,560 
Restaurant-level profit  $3,749  $3,043 
Restaurant-level margin   6.4%  9.1%

(1) For company-owned restaurants.
(2) Restaurant operating costs consist of food and beverage costs, labor and benefits costs and operating expenses.


BBQ HOLDINGS, INC. AND SUBSIDIARIES
CASH EBITDA AND FREE CASH FLOW
NON-GAAP RECONCILIATION
(in thousands, except per share data)
(unaudited)

             
  Three Months Ended
  April 3, 2022    April 4, 2021 March 29, 2020 March 31, 2019
(dollars in thousands)            
Net income $647  $697  $13,311  $82 
Asset impairment and estimated lease termination charges and other closing costs  409   12   173   407 
Depreciation and amortization  2,423   1,552   1,045   264 
Interest expense, net  112   30   76   17 
Net loss (gain) on disposal of equipment  44   (8)  (477)  (6)
Stock-based compensation  384   318   137   83 
Acquisition costs  167   -   (62)  163 
Pre-opening costs  65   28   25   - 
Severance  -   -   28   3 
Gain on bargain purchase  (38)  -   (14,364)  - 
Provision for income taxes  (241)  82   (349)  17 
Non-cash rent  (224)  509   -   - 
Cash EBITDA $ 3,748  $ 3,220  $ (457) $ 1,030 
             
Less cash paid for property, equipment and leasehold improvements  (722)  (691)  (949)  (221)
Free cash flow $ 3,026  $ 2,529  $ (1,406) $ 809 


BBQ HOLDINGS, INC. AND SUBSIDIARIES
ADJUSTED NET INCOME (LOSS) AND EARNINGS (LOSS) PER DILUTED SHARE
NON-GAAP RECONCILIATION
(in thousands, except per share data)
(unaudited)

             
  Three Months Ended
(dollars in thousands)    April 3, 2022    April 4, 2021 March 29, 2020 March 31, 2019
Net income (loss) attributable to shareholders $767  $799 $13,707  $82
Asset impairment, estimated lease termination charges and other closing costs  409   12  173   407
Gain on bargain purchase  (38)    (14,364)  
Adjusted net income (loss)  1,138   811  (484)  489
Weighted average shares outstanding - diluted  10,649   9,501  9,202   9,189
Adjusted earnings (loss) per diluted share $0.11  $0.09 $(0.05) $0.05

 



Attachments

BBQH Investor Presentation_May 2022