Nathan’s Famous, Inc. Reports Third Quarter Results
Nathan’s Famous, Inc. Reports Third Quarter Results
JERICHO, N.Y., Feb. 3, 2012 - Nathan’s Famous, Inc. (NASDAQ:NATH) today reported results for the third quarter of its 2012 fiscal year that ended December 25, 2011.
For the fiscal quarter ended December 25, 2011:
— Net income was $1,211,000 or $0.24 per diluted share as compared to net
(loss) of $(153,000) or $(0.03) per diluted share for the thirteen weeks
ended December 26, 2010;
— Non-GAAP earnings after tax, which exclude the litigation expense items
described below, increased by 17.8% to $1,284,000 as compared to
$1,090,000 for the thirteen weeks ended December 26, 2010;
— Non-GAAP earnings per share, which exclude the litigation expense items
described below, increased by 25.0% to $0.25 per diluted share as
compared to $0.20 per diluted share for the thirteen weeks ended
December 26, 2010; and
— Revenues increased by 13.2% to $14,800,000, as compared to revenues of
$13,079,000 during the thirteen weeks ended December 26, 2010.
For the thirty-nine weeks ended December 25, 2011:
— Net income was $5,076,000 or $0.98 per diluted share as compared to
$1,658,000 or $0.30 per diluted share for the thirty-nine weeks ended
December 26, 2010;
— Non-GAAP earnings after tax, which exclude the litigation expense items
described below, increased by 6.5% to $5,292,000 as compared to
$4,969,000 for the thirty-nine weeks ended December 26, 2010;
— Non-GAAP earnings per share, which exclude the litigation expense items
described below, increased by 14.6% to $1.02 per diluted share as
compared to $0.89 per diluted share for the thirty-nine weeks ended
December 26, 2010; and
— Revenues increased by 15.2% to $51,815,000, as compared to revenues of
$44,987,000 during the thirty-nine weeks ended December 26, 2010.
The Company also reported the following:
— Sales from the Branded Product Program, featuring the sale of Nathan’s
hot dogs to the foodservice industry, increased by 28.6% to $29,843,000
during the thirty-nine weeks ended December 25, 2011 as compared to
sales of $23,199,000 during the thirty-nine weeks ended December 26,
2010.
— Sales and pre-tax profits from the five comparable company-owned
restaurants were $11,218,000 and $2,207,000, respectively during the
thirty-nine weeks ended December 25, 2011 as compared to $11,310,000 and
$2,245,000, respectively during the thirty-nine weeks ended December 26,
2010.
— Gross profit was 20.7% of sales as compared to 24.4% of sales during the
thirty-nine weeks ended December 26, 2010 due primarily to the impact of
unusually high beef costs on our Branded Product Program.
— Retail license royalties increased by 9.1% or $442,000 to $5,307,000
during the thirty-nine weeks ended December 25, 2011 as compared to
$4,865,000 during the thirty-nine weeks ended December 26, 2010.
— Revenues from franchise operations increased by 8.7% or $341,000 to
$4,265,000 during the thirty-nine weeks ended December 25, 2011 as
compared to $3,924,000 during the thirty-nine weeks ended December 26,
2010. Fifty-six new franchised units were opened during the thirty-nine
weeks ended December 25, 2011, including two restaurants in Canada, two
restaurants in China, one restaurant in the Dominican Republic and one
restaurant in Kuwait.
— We have opened 40 Branded Menu Program units during the thirty-nine
weeks ended December 25, 2011, including 29 locations within K-Mart. Our
Branded Menu Program was created to provide qualified operators of
existing locations with the ability to become a Nathan’s franchisee,
adding our signature products along with a limited-menu of other
Nathan’s products to their current operations.
— The effective tax rate of 38.7% is approximately 5.8% higher than for
the thirty-nine weeks ended December 26, 2010 when we earned higher
tax-exempt interest income and resolved uncertain tax positions,
reversing $79,000 of prior period accruals.
— During the thirty-nine weeks ended December 26, 2010, we recorded a
litigation accrual of $4,910,000, or $2,939,000, net of tax, as a result
of the unfavorable SMG ruling, which at that time represented the
minimum estimate of damages.
— During the thirty-nine weeks ended December 25, 2011, we continued our
stock repurchase program, acquiring 137,249 shares at a total cost of
approximately $2,573,000.
— As previously disclosed, on December 8, 2011, we launched a modified
dutch tender offer to acquire up to 500,000 shares of common stock. We
completed the offer in January 2012 by acquiring 598,989 shares, after
electing to exercise our option to acquire an additional 2% of the
outstanding stock at a cost of approximately $13,177,000 (or $22.00 per
share), excluding fees and expenses. The results of this tender offer
will be reflected in the consolidated financial statements during the
thirteen weeks ending March 25, 2012.
As previously described with respect to our litigation with SMG, on April 7, 2011, the Court entered a stipulation and order which granted a stay of enforcement of the final judgment which is in the amount of approximately $4,910,000.
On March 4, 2011, Nathan’s filed a notice of appeal seeking to appeal the final judgment. Throughout the duration of the appeal, Nathan’s is required to deposit post-judgment interest on the damages awarded at 9% per annum into a security account. Nathan’s has made these deposits and recorded interest expense of $335,000 or $200,000, net of tax, during the thirty-nine weeks ended December 25, 2011.
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 (“GAAP”), the Company has provided its Non- GAAP earnings and earnings per diluted share as adjusted for the litigation expenses described above, including the interest expense that has accrued during the appeals process through the end of the third quarter, that the Company believes impacts the comparability of its results of operations.
The Company believes that such non-GAAP financial information is useful to investors to assist in assessing and understanding the Company’s operating performance and underlying trends in the Company’s business because management considers the litigation expenses referred to above to be outside the Company’s normal operating results. This non-GAAP financial information is among the indicators management uses as a basis for evaluating the Company’s financial and operating performance.
The presentation of this additional non-GAAP financial information is not meant to be considered in isolation or as a substitute for, or alternative to, earnings and earnings per diluted share determined in accordance with GAAP. Analysis of results and outlook on a non-GAAP basis should be used as a complement to, and in conjunction with, data presented in accordance with GAAP.
About Nathan’s Famous
Nathan’s products are currently distributed in 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, the Cayman Islands and six foreign countries through its restaurant system, foodservice sales programs and product licensing activities. The Nathan’s restaurant system currently consists of 302 units, comprised of 297 franchised units and five company-owned units (including one seasonal unit). For additional information about Nathan’s please visit our website at http://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 are the following: the effect of business and economic conditions; the impact of competitive products and pricing; the ability to obtain an adequate supply of beef and other food products at competitive prices; capacity; the regulatory and trade environment; the risk factors and the forward-looking statements 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. 26, Dec. 25, Dec. 26,
Dec. 25, 2011 2010 2011 2010
——— — — —
(unaudited) (unaudited)
Total
revenues $14,800,000 $13,079,000 $51,815,000 $44,987,000
=========== =========== =========== ===========
Net
income
(loss) $1,211,000 $(153,000) $5,076,000 $1,658,000
========== ========= ========== ==========
Basic
income
(loss)
per
share
Net
income
(loss) $0.24 $(0.03) $1.01 $0.30
===== ====== ===== =====
Diluted
income
(loss)
per
share
Net
income
(loss) $0.24 $(0.03) $0.98 $0.30
===== ====== ===== =====
Weighted-
average
shares
used in
computing
income
(loss)
per
share
Basic 4,964,000 5,352,000 5,022,000 5,506,000
========= ========= ========= =========
Diluted 5,113,000 5,352,000 5,159,000 5,608,000
========= ========= ========= =========
Nathan’s Famous, Inc.
Reconciliation of GAAP and Non-GAAP Measures
Thirteen weeks ended Thirty-nine weeks ended
——— —
Dec. 26, Dec. 25, Dec. 26,
Dec. 25, 2011 2010 2011 2010
——— — — —
(unaudited) (unaudited)
NET
INCOME
(LOSS)
———
Net
income
(loss) $1,211,000 $(153,000) $5,076,000 $1,658,000
Litigation
accrual,
(net
of
tax) - 1,194,000 - 2,939,000
Legal
expense
(a),
(net
of
tax) 6,000 49,000 16,000 372,000
Interest
expense
(b),
(net
of
tax) 67,000 - 200,000 -
——— —- —-
Non-
GAAP
income $1,284,000 $1,090,000 $5,292,000 $4,969,000
========== ========== ========== ==========
DILUTED
INCOME
(LOSS)
PER
SHARE
Net
income
(loss) $0.24 $(0.03) $0.98 $0.30
Litigation
accrual,
(net
of
tax) - 0.22 - 0.52
Legal
expense
(a),
(net
of
tax) - 0.01 - 0.07
Interest
expense
(b),
(net
of
tax) 0.01 - 0.04 -
—— —- —— —-
Non-
GAAP
income
per
share $0.25 $0.20 $1.02 $0.89
===== ===== ===== =====
(a) Represents legal expense incurred in connection with the SMG matter during the respective periods.
(b) Represents accrued interest expense incurred in connection with Nathan’s appeal of the SMG damages award.
Ronald G. DeVos, Vice President -
COMPANY Finance and CFO
CONTACT: (516) 338-8500 ext. 229
SOURCE Nathan’s Famous, Inc.
Nathan’s Famous, Inc.
Web Site: http://www.nathansfamous.com