EX-99.1 2 dave-20180514ex99173cdcf.htm EX-99.1 dave_Ex99_2

Exhibit 99.1

 

Picture 2

 

Famous Dave’s of America, Inc. Reports Results for First Quarter of Fiscal 2018

 

MINNEAPOLIS, May 14, 2018 – Famous Dave's of America, Inc. (NASDAQ: DAVE) today reported financial results for the first fiscal quarter ended April 1, 2018 compared to the first fiscal quarter ended April 2, 2017.

 

Highlights for the first fiscal quarter of 2018 include the following:

 

·

Net income from continuing operations was $998,000, or $0.13 per share, compared to net loss from continuing operations of $1.4 million, or ($0.21) per share in the prior year.

·

Consolidated adjusted EBITDA, a non-GAAP measure, increased 394% to $1.8 million. See “Non-GAAP Reconciliation” below.

·

Company-owned comparable restaurant sales increased 5.2%, with traffic up 5.3%.

·

Franchise-operated comparable restaurant sales declined 1.6%.

 

Key Operating Metrics

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

    

April 1, 2018

    

April 2, 2017

 

Restaurant count:

 

 

 

 

 

 

 

Franchise-operated

 

 

136

 

 

138

 

Company-owned

 

 

16

 

 

35

 

Total

 

 

152

 

 

173

 

Comparable restaurant sales %:

 

 

  

 

 

  

 

Franchise-operated

 

 

(1.6)

%  

 

(4.8)

%

Company-owned

 

 

5.2

%  

 

(3.3)

%

Total

 

 

(0.9)

%  

 

(4.5)

%

 

 

 

  

 

 

  

 

(in thousands, expect per share data)

 

 

  

 

 

  

 

 

 

 

 

 

 

 

 

System-wide restaurant sales(1)

 

$

87,166

 

$

100,389

 

 

 

 

 

 

 

 

 

Net (loss) income from continuing operations

 

$

998

 

$

(1,428)

 

Adjusted net income (loss) from continuing operations(2)

 

 

954

 

 

(451)

 

 

 

 

 

 

 

 

 

Net (loss) income from continuing operations, per share

 

$

0.13

 

$

(0.21)

 

Adjusted net income (loss) from continuing operations, per share(2)

 

 

0.13

 

 

(0.06)

 

 

 

 

 

 

 

 

 

Adjusted EBITDA(2)

 

$

1,794

 

$

363

 

 

(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)

Adjusted net (loss) income 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.”

 

 

First Quarter 2018 Review

 

Total revenue for the first quarter of 2018 was $12.8 million, down 24.2% from the first quarter of 2017. The decrease in Company-owned net restaurant sales revenue was primarily a result of the closure of 12 Company-owned restaurants. The impact of these closures was partially offset by a 5.2% increase in same-store sales.  The declines in franchise royalty and fee revenue were driven to the net closure of two franchise operated restaurants, a decline in franchise-operated same store sales of 1.6% and royalty abatements agreed upon to facilitate the transfer of certain of our franchise-operated restaurants to new operators, who have committed to investing necessary resources to refresh these transferred stores. Additionally, the adoption of ASC 606 – Revenue From Contracts with Customers resulted in approximately $525,000 of additional revenue during the first quarter of 2018.

 

Restaurant-level operating margin, as a percentage of restaurant sales, net, for Company-owned restaurants was (0.5%),  a decrease from 0.8% in the first quarter of fiscal 2017. The decrease was primarily driven by a smaller restaurant base over which to allocate fixed costs, as well as commodities inflation, partially offset by lower labor costs, as a percentage of net restaurant sales.

 

General and administrative expenses decreased to $1.9 million from $4.5 million in the first quarter of fiscal 2017. The year over year decline was primarily a result of the alignment of our general and administrative expense structure to be commensurate with that of a more dedicated franchisor, lowering overhead strategically as we reduced our Company-owned restaurant count from 35 restaurants as of April 2, 2017 to 16 restaurants as of April 1, 2018.

 

We recognized net income from continuing operations of approximately $998,000, or $0.13 per share, in the first quarter of fiscal 2018 compared to a loss from continuing operations of $1.4 million, or ($0.21) per share, in the first quarter of fiscal 2017.  We recognized a net income from discontinued operations of $182,000, or $0.03 per share, in the first quarter of fiscal 2017.

 

Adjusted net income from continuing operations, a non-GAAP measure, was approximately $954,000, or $0.13 per share, compared to a loss of approximately $451,000, or ($0.06) per share, in the first quarter of fiscal 2017. A reconciliation between adjusted net loss and its most directly comparable GAAP measure is included in the accompanying financial tables.

 

Executive Comments

 

Jeff Crivello, CEO, commented,  “We saw many of our previously announced initiatives come to fruition in the first quarter of fiscal 2018 as we returned to profitability and continued to see positive comparable sales at Company-owned restaurants. We believe the continued adoption of third party delivery will help drive the top line performance of our franchisees throughout the year as only half of the serviceable units are currently live. We look forward to focusing on strategic investments to enhance our brand and value proposition to current and prospective franchisees.”

 

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 May 14, 2018, the Company owns 15 locations and franchises an additional 136 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.

 

Page 2 of 8

 

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

Page 3 of 8

 

FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

 (in thousands, except per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

    

 

   

April 1, 2018

    

April 2, 2017

 

Revenue:

 

 

  

 

 

  

 

Restaurant sales, net

 

$

8,713

 

$

12,949

 

Franchise royalty and fee revenue

 

 

3,408

 

 

3,782

 

Franchisee national advertising fund contributions

 

 

469

 

 

 —

 

Licensing and other revenue

 

 

254

 

 

217

 

Total revenue

 

 

12,844

 

 

16,948

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

  

 

 

  

 

Food and beverage costs

 

 

2,717

 

 

3,934

 

Labor and benefits costs

 

 

3,196

 

 

4,808

 

Operating expenses

 

 

2,841

 

 

4,106

 

Depreciation and amortization

 

 

393

 

 

563

 

General and administrative expenses

 

 

1,874

 

 

4,548

 

National advertising fund expenses

 

 

469

 

 

 —

 

Asset impairment, estimated lease termination (income) charges and other closing costs, net

 

 

(104)

 

 

1,133

 

Net (gain) loss on disposal of property

 

 

(1)

 

 

 1

 

Total costs and expenses

 

 

11,385

 

 

19,093

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

1,459

 

 

(2,145)

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

  

 

 

  

 

Interest expense

 

 

(145)

 

 

(187)

 

Interest income

 

 

 5

 

 

 —

 

Total other expense

 

 

(140)

 

 

(187)

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

1,319

 

 

(2,332)

 

 

 

 

 

 

 

 

 

Income tax (expense) benefit

 

 

(321)

 

 

904

 

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations

 

 

998

 

 

(1,428)

 

Net income from discontinued operations, net of tax

 

 

 —

 

 

182

 

Net income (loss)

 

$

998

 

$

(1,246)

 

 

 

 

 

 

 

 

 

Income (loss) per common share:

 

 

  

 

 

  

 

Basic net income (loss) per share - continuing operations

 

$

0.13

 

$

(0.21)

 

Basic net income per share - discontinued operations

 

 

 —

 

 

0.03

 

Basic net income (loss) per share

 

$

0.13

 

$

(0.18)

 

Diluted net income (loss) per share - continuing operations

 

$

0.13

 

$

(0.21)

 

Diluted net income per share - discontinued operations

 

 

 —

 

 

0.03

 

Diluted net income (loss) per share

 

$

0.13

 

$

(0.18)

 

Weighted average shares outstanding - basic

 

 

7,407

 

 

6,954

 

Weighted average shares outstanding - diluted

 

 

7,407

 

 

6,954

 

Page 4 of 8

 

FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES

OPERATING RESULTS

(unaudited)

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

April 1,

 

April 2,

 

 

 

2018

    

2017

    

    

Food and beverage costs(1)

31.2

%  

30.4

%  

 

Labor and benefits costs(1)

36.7

%  

37.1

%  

 

Operating expenses(1)

32.6

%  

31.7

%  

 

Restaurant level operating margin(1)(3)  

(0.5)

%  

0.8

%  

 

Depreciation and amortization expenses (2)

3.1

%  

3.3

%  

 

General and administrative(2)

14.6

%  

26.8

%  

 

Income (loss) from continuing operations(2)

11.4

%  

(12.7)

%  

 

(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

 (in thousands, except per share data)

(unaudited)

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

April 1, 2018

    

December 31, 2017

Cash and cash equivalents

 

$

8,924

 

$

8,836

Restricted cash

 

 

1,249

 

 

1,590

Accounts receivable, net of allowance for doubtful accounts of $429,000 and $592,000, respectively

 

 

4,429

 

 

3,768

Inventories

 

 

594

 

 

633

Prepaid income taxes and income taxes receivable

 

 

385

 

 

689

Prepaid expenses and other current assets

 

 

1,308

 

 

793

Assets held for sale

 

 

677

 

 

475

Total current assets

 

 

17,566

 

 

16,784

 

 

 

 

 

 

 

Property, equipment and leasehold improvements, net

 

 

10,326

 

 

11,442

 

 

 

 

 

 

 

Other assets:

 

 

  

 

 

  

Intangible assets, net

 

 

1,431

 

 

1,840

Deferred tax asset, net

 

 

6,402

 

 

5,823

Other assets

 

 

1,298

 

 

1,018

 

 

$

37,023

 

$

36,907

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

  

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

  

 

 

  

Current portion of long-term debt and financing lease obligations

 

$

2,387

 

$

1,307

Accounts payable

 

 

4,397

 

 

4,365

Accrued compensation and benefits

 

 

1,166

 

 

1,545

Other current liabilities

 

 

2,688

 

 

3,118

Total current liabilities

 

 

10,638

 

 

10,335

 

 

 

  

 

 

  

Long-term liabilities:

 

 

  

 

 

  

Long-term debt, less current portion

 

 

7,738

 

 

7,932

Financing lease obligation, less current portion

 

 

 —

 

 

1,196

Other liabilities

 

 

5,454

 

 

3,963

Total liabilities

 

 

23,830

 

 

23,426

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

  

 

 

  

Common stock, $.01 par value, 100,000 shares authorized, 7,467 and 7,376 shares issued and outstanding at April 1, 2018 and December 31, 2017, respectively

 

 

71

 

 

70

Additional paid-in capital

 

 

1,895

 

 

1,460

Retained earnings

 

 

11,227

 

 

11,951

Total shareholders’ equity

 

 

13,193

 

 

13,481

 

 

$

37,023

 

$

36,907

 

Page 6 of 8

 

FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 (in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

    

April 1, 2018

    

April 2, 2017

Cash flows from operating activities:

 

 

  

 

 

  

Net income (loss) from continuing operations

 

$

998

 

$

(1,428)

Adjustments to reconcile net income (loss) to cash flows provided by operations:

 

 

  

 

 

  

Depreciation and amortization

 

 

393

 

 

563

(Gain) loss from asset impairment and estimated lease termination and other closing costs

 

 

(185)

 

 

662

Net (gain) loss on disposal of property

 

 

(1)

 

 

 1

Amortization of deferred financing costs

 

 

10

 

 

 7

Amortization of lease interest assets

 

 

 9

 

 

 9

Deferred income taxes

 

 

 —

 

 

348

Deferred rent

 

 

(168)

 

 

137

Bad debts (recovery) expense

 

 

(147)

 

 

57

Stock-based compensation

 

 

47

 

 

107

Changes in operating assets and liabilities:

 

 

  

 

 

  

Restricted cash

 

 

341

 

 

(82)

Accounts receivable, net

 

 

61

 

 

(309)

Inventories

 

 

39

 

 

67

Prepaid income taxes and income taxes receivable

 

 

304

 

 

(1,314)

Prepaid expenses and other current assets

 

 

(515)

 

 

(629)

Other assets

 

 

178

 

 

28

Accounts payable

 

 

32

 

 

988

Accrued compensation and benefits

 

 

(441)

 

 

536

Other current liabilities

 

 

(289)

 

 

673

Other liabilities

 

 

(149)

 

 

(79)

Cash flows provided by continuing operating activities

 

 

517

 

 

342

Cash flows provided by discontinued operating activities

 

 

 —

 

 

522

Cash flows provided by operating activities

 

 

517

 

 

864

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

  

 

 

  

Proceeds from the sale of assets

 

 

 1

 

 

 —

Advances on notes receivable

 

 

(458)

 

 

 —

Purchases of property, equipment and leasehold improvements

 

 

(41)

 

 

(92)

Cash flows used for continuing investing activities

 

 

(498)

 

 

(92)

Cash flows used for discontinued investing activities

 

 

 —

 

 

(12)

Cash flows used for investing activities

 

 

(498)

 

 

(104)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

  

 

 

  

Payments for debt issuance costs

 

 

 —

 

 

(15)

Payments on long-term debt and financing lease obligations

 

 

(320)

 

 

(330)

Payments from exercise of stock options

 

 

389

 

 

 —

Cash flows provided by (used for) financing activities

 

 

69

 

 

(345)

 

 

 

 

 

 

 

Increase in cash and cash equivalents

 

 

88

 

 

415

Cash and cash equivalents, beginning of period

 

 

8,836

 

 

4,450

Cash and cash equivalents, end of period

 

$

8,924

 

$

4,865

 

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

 

    

April 1, 2018

    

April 2, 2017

Net income (loss) from continuing operations

 

$

998

 

$

(1,428)

Asset impairment, estimated lease termination (income) charges and other closing costs, net

 

 

(104)

 

 

1,133

Net (gain) loss on disposal of property

 

 

(1)

 

 

 1

Stock-based compensation

 

 

47

 

 

107

Severance

 

 

 —

 

 

354

Tax adjustment

 

 

14

 

 

(618)

Adjusted net income (loss) from continuing operations

 

$

954

 

$

(451)

Basic adjusted net income (loss) per common share from continuing operations

 

$

0.13

 

$

(0.06)

Diluted adjusted net income (loss) per common share from continuing operations

 

$

0.13

 

$

(0.06)

 

 

 

 

 

 

 

Weighted average common share outstanding - basic

 

 

7,407

 

 

6,954

Weighted average common share outstanding - diluted

 

 

7,407

 

 

6,954

 

 

 

 

 

 

 

Net income (loss)

 

$

998

 

$

(1,246)

Asset impairment, estimated lease termination (income) charges and other closing costs, net

 

 

(104)

 

 

1,133

Depreciation and amortization

 

 

393

 

 

755

Interest expense, net

 

 

140

 

 

187

Net (gain) loss on disposal of property

 

 

(1)

 

 

 1

Stock-based compensation

 

 

47

 

 

107

Severance

 

 

 —

 

 

354

(Benefit) provision for income taxes

 

 

321

 

 

(928)

Adjusted EBITDA

 

$

1,794

 

$

363

 

Page 8 of 8