UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
April 29, 2013
Date of Report (Date of earliest event reported)
KONA GRILL, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware |
001-34082 |
20-0216690 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
7150 E. Camelback Road, Suite 220 Scottsdale, Arizona 85251 |
(Address of principal executive offices) (Zip Code) |
(480) 922-8100 |
(Registrant's telephone number, including area code) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
[ ] |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
[ ] |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
[ ] |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On April 29, 2013, Kona Grill issued a press release reporting financial results for the first quarter ended March 31, 2013. A copy of this press release, including information concerning forward looking statements and factors that may affect our future results, is attached hereto as Exhibit 99.1 and is hereby incorporated by reference in this Item 2.02.
The information in this Report on Form 8-K (including the exhibit) is furnished pursuant to Item 2.02 and shall not be deemed to be filed for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.
The registrant does not have, and expressly disclaims, any obligation to release publicly any updates or any changes in the registrants expectations or any change in events, conditions, or circumstances on which any forward-looking statement is based.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
99.1 Press release from Kona Grill, Inc. dated April 29, 2013 titled, Kona Grill Reports First Quarter 2013 Results
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: April 29, 2013 | KONA GRILL, INC. | ||
By: | /s/ Christi Hing | ||
Christi Hing | |||
Chief Financial Officer | |||
EXHIBIT INDEX
Exhibit Number |
Description |
99.1 |
Press release from Kona Grill, Inc. dated April 29, 2013 titled, Kona Grill Reports First Quarter 2013 Results |
Exhibit 99.1
Kona Grill Reports First Quarter 2013 Results
Q1 Net Income of $1.0 Million or $0.12 per Share;
Secured $20.0 Million Credit Facility
SCOTTSDALE, AZ, April 29, 2013 - Kona Grill, Inc. (NASDAQ: KONA), an American grill and sushi bar, reported results for its first quarter ended March 31, 2013.
First Quarter 2013 Highlights
● |
Net income of $1.0 million or $0.12 per share |
● |
Restaurant operating margin of 18.7% or $4.4 million |
● |
Signed two new leases for locations in Fort Worth and The Woodlands, Texas |
Management Commentary
We are encouraged by the solid financial performance we achieved in the first quarter despite inclement weather and economic headwinds, said Berke Bakay, president and CEO of Kona Grill. As we continued to focus on streamlining our operations, managing costs and innovating our menu, we generated a strong restaurant operating margin of 18.7% and net income of $1.0 million or $0.12 per share.
We continue to solidify our pipeline for expansion, as demonstrated by two new leases signed in Texas, and we remain on track to open two new restaurants in 2013. One of these includes the new Boise, Idaho location we announced in December. Additionally, our recently signed $20 million credit facility provides us financial flexibility and supports our growth strategy for 2013 and beyond.
First Quarter 2013 Financial Results
Restaurant sales in the first quarter of 2013 were $23.5 million compared to $24.2 million in the first quarter of 2012, representing a 260 basis point decrease in same-store sales. The decrease in same-store sales in the first quarter of 2013 laps an 8.7% increase in the year-ago quarter, driven by lower guest traffic volume from softer consumer sentiment, inclement weather, an earlier Easter holiday weekend and one less day of sales due to leap year.
Net income in the first quarter of 2013 was $1.0 million or $0.12 per share compared to net income of $1.2 million or $0.13 per share in the year-ago quarter.
During the first quarter, the company repurchased 24,000 shares of its stock at an average cost of $8.44 per share under a $5.0 million stock repurchase program that was initiated in May 2012. As of the end of the quarter, the company had repurchased a total of 387,000 shares for $3.2 million under the current program.
At March 31, 2013, cash and cash equivalents totaled $8.3 million compared to $8.0 million at December 31, 2012. Total debt was $0.3 million at March 31, 2013 compared to $0.4 million at December 31, 2012.
On April 19, 2013, the company entered into a $20.0 million credit agreement with Key Bank and Stearns Bank National Association and plans to use the credit facility to execute its growth strategy for new restaurant construction and remodels of existing restaurants.
Financial Guidance
For the second quarter of 2013, the company expects same-store sales increase of 1% with restaurant sales of $25.3 million compared to $25.0 million in the same year-ago quarter, and restaurant operating margin in the 19% range. Kona Grill also expects net income of $1.3 million or $0.15 per share compared to $1.8 million or $0.20 per share in the second quarter of 2012. The company reaffirms its guidance of two restaurant openings in 2013.
Conference Call
The company will host a conference call to discuss these results today at 5:00 p.m. Eastern time.
Dial-in number: 1-877-941-1427
International number: 1-480-629-9664
Conference ID: 4612682
The conference call will be broadcast simultaneously and available for replay via the investors section of the company's website at www.konagrill.com.
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.
A replay of the call will be available after 8:00 p.m. Eastern time today through Wednesday, May 29, 2013.
Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 4612682
About Kona Grill
Kona Grill (NASDAQ: KONA) features American favorites with an international influence and award-winning sushi in a casually elegant atmosphere. Kona Grill owns and operates 23 restaurants, guided by a passion for quality food and personal service. Restaurants are currently located in 16 states: Arizona (Chandler, Gilbert, Phoenix, Scottsdale); Colorado (Denver); Connecticut (Stamford); Florida (Tampa); Illinois (Lincolnshire, Oak Brook); Indiana (Carmel); Louisiana (Baton Rouge); Maryland (Baltimore); Michigan (Troy); Minnesota (Eden Prairie); Missouri (Kansas City); Nebraska (Omaha); New Jersey (Woodbridge); Nevada (Las Vegas); Texas (Austin, Dallas, Houston, San Antonio) and Virginia (Richmond). For more information, visit www.konagrill.com.
Forward-Looking Statements
Various remarks we make about future expectations, plans, and prospects for the company constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding our expectations, beliefs, intentions, plans, objectives, goals, strategies, future events, or performance and underlying assumptions and other statements that are not purely historical. These statements relate to our future financial performance and growth goals for 2013, including but not limited to those relating to our sales trends and projected earnings for the second quarter of 2013 and expectations of new store openings in 2013. We have attempted to identify these statements by using forward-looking terminology such as may, will, anticipates, expects, believes, intends, should, or comparable terms. All forward-looking statements included in this press release are based on information available to us on the date of this release and we assume no obligation to update these forward-looking statements for any reason. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the statements. Investors are referred to the full discussion of risks and uncertainties associated with forward-looking statements and the discussion of risk factors contained in the company's filings with the Securities and Exchange Commission.
KONA GRILL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, |
December 31, |
|||||||
2013 |
2012 |
|||||||
(Unaudited) |
||||||||
ASSETS |
||||||||
Current assets |
$ | 9,963 | $ | 9,586 | ||||
Other assets |
814 | 812 | ||||||
Property and equipment, net |
27,837 | 28,927 | ||||||
Total assets |
$ | 38,614 | $ | 39,325 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
Current liabilities |
$ | 7,328 | $ | 8,542 | ||||
Long-term obligations |
11,364 | 11,915 | ||||||
Stockholders equity |
19,922 | 18,868 | ||||||
Total liabilities and stockholders equity |
$ | 38,614 | $ | 39,325 |
KONA GRILL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share data)
Three Months Ended March 31, |
||||||||
2013 |
2012 |
|||||||
(Unaudited) |
||||||||
Restaurant sales |
$ | 23,496 | $ | 24,155 | ||||
Costs and expenses: |
||||||||
Cost of sales |
6,453 | 6,495 | ||||||
Labor |
7,866 | 7,948 | ||||||
Occupancy |
1,615 | 1,533 | ||||||
Restaurant operating expenses |
3,171 | 3,376 | ||||||
General and administrative |
1,875 | 2,084 | ||||||
Depreciation and amortization |
1,429 | 1,463 | ||||||
Total costs and expenses |
22,409 | 22,899 | ||||||
Income from operations |
1,087 | 1,256 | ||||||
Interest expense, net |
(3 | ) | (12 | ) | ||||
Income from operations before provision for income taxes |
1,084 | 1,244 | ||||||
Provision for income taxes |
80 | 60 | ||||||
Net income |
$ | 1,004 | $ | 1,184 | ||||
Net income per share |
||||||||
Basic |
$ | 0.12 | $ | 0.13 | ||||
Diluted |
$ | 0.12 | $ | 0.13 | ||||
Weighted average shares outstanding: |
||||||||
Basic |
8,543 | 8,802 | ||||||
Diluted |
8,643 | 8,912 | ||||||
Comprehensive income |
$ | 1,004 | $ | 1,184 |
Reconciliation of Restaurant Operating Profit to Income from Operations
The Company defines restaurant operating profit to be restaurant sales minus cost of sales, labor, occupancy, and restaurant operating expenses. Restaurant operating profit does not include general and administrative expenses, and depreciation and amortization. The Company believes restaurant operating profit is an important component of financial results because it is a widely used metric within the restaurant industry to evaluate restaurant-level productivity, efficiency, and performance. The Company uses restaurant operating profit as a key metric to evaluate its restaurants' financial performance compared with its competitors. Restaurant operating profit is not a financial measurement determined in accordance with generally accepted accounting principles ("GAAP") and should not be considered in isolation or as an alternative to income from operations. Restaurant operating profit may not be comparable to the same or similarly titled measures computed by other companies. The table below sets forth the Company's calculation of restaurant operating profit and a reconciliation to income from operations, the most comparable GAAP measure (in thousands).
Three Months Ended March 31, |
||||||||
2013 |
2012 |
|||||||
Restaurant sales |
$ | 23,496 | $ | 24,155 | ||||
Costs and expenses: |
||||||||
Cost of sales |
6,453 | 6,495 | ||||||
Labor |
7,866 | 7,948 | ||||||
Occupancy |
1,615 | 1,533 | ||||||
Restaurant operating expenses |
3,171 | 3,376 | ||||||
Restaurant operating profit |
4,391 | 4,803 | ||||||
Deduct - other costs and expenses: |
||||||||
General and administrative |
1,875 | 2,084 | ||||||
Depreciation and amortization |
1,429 | 1,463 | ||||||
Income from operations |
$ | 1,087 | $ | 1,256 |
Percentage of Restaurant Sales |
||||||||
Three Months Ended March 31, |
||||||||
2013 |
2012 |
|||||||
Restaurant sales |
100.0 |
% |
100.0 |
% | ||||
Costs and expenses: |
||||||||
Cost of sales |
27.5 | 26.9 | ||||||
Labor |
33.5 | 32.9 | ||||||
Occupancy |
6.9 | 6.3 | ||||||
Restaurant operating expenses |
13.5 | 14.0 | ||||||
Restaurant operating profit |
18.7 | 19.9 | ||||||
Deduct - other costs and expenses: |
||||||||
General and administrative |
8.0 | 8.6 | ||||||
Depreciation and amortization |
6.1 | 6.1 | ||||||
Income from operations |
4.6 |
% |
5.2 |
% |
Certain amounts do not sum to total due to rounding
Kona Grill Investor Relations Contact:
Liolios Group, Inc.
Cody Slach
Tel 1-949-574-3860
KONA@liolios.com
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