Nathan's Famous, Inc. (“Nathan’s”, the “Company”, “we”, “us” or “our”) (NASDAQ:NATH) today reported results for its third fiscal quarter ended December 24, 2023.

For the fiscal quarter ended December 24, 2023:

  • Revenues were $28,890,000 as compared to $26,154,000 during the thirteen weeks ended December 25, 2022;
  • Income from operations was $5,137,000 as compared to $6,332,000 during the thirteen weeks ended December 25, 2022;
  • Adjusted EBITDA1, a non-GAAP financial measure, was $5,751,000 as compared to $6,899,000 during the thirteen weeks ended December 25, 2022;
  • In connection with the redemption of $20,000,000 in aggregate principal amount of our 6.625% Senior Secured Notes due 2025 on December 19, 2023, the Company recorded a loss on debt extinguishment of $169,000, or $118,000, net of tax, or $0.03 per diluted share. As a result of the redemption, the Company expects to reduce its future cash interest expense by $1,325,000 per annum;
  • Income before provision for income taxes was $3,735,000 as compared to $4,486,000 during the thirteen weeks ended December 25, 2022;
  • Net income was $2,607,000 as compared to $3,263,000 during the thirteen weeks ended December 25, 2022; and
  • Earnings per diluted share was $0.64 per share as compared to $0.79 per share during the thirteen weeks ended December 25, 2022.

For the thirty-nine weeks ended December 24, 2023:

  • Revenues were $109,619,000 as compared to $103,371,000 during the thirty-nine weeks ended December 25, 2022;
  • Income from operations was $25,704,000 as compared to $28,026,000 during the thirty-nine weeks ended December 25, 2022;
  • Adjusted EBITDA1, a non-GAAP financial measure, was $27,561,000 as compared to $29,287,000 during the thirty-nine weeks ended December 25, 2022;
  • Income before provision for income taxes was $21,731,000 as compared to $22,451,000 during the thirty-nine weeks ended December 25, 2022;
  • Net income was $15,706,000 as compared to $16,358,000 during the thirty-nine weeks ended December 25, 2022; and
  • Earnings per diluted share was $3.84 per share as compared to $3.99 per share during the thirty-nine weeks ended December 25, 2022.

The Company also reported the following:

  • License royalties were $26,075,000 during the thirty-nine weeks ended December 24, 2023, (“fiscal 2024 period”) as compared to $26,064,000 during the thirty-nine weeks ended December 25, 2022. During the fiscal 2024 period, royalties earned under the retail agreement, including the foodservice program, from Smithfield Foods, Inc., were $23,582,000 as compared to $23,594,000 of royalties earned during the thirty-nine weeks ended December 25, 2022.
  • In the Branded Product Program, which features the sale of Nathan’s hot dogs to the foodservice industry, sales increased by approximately $6,348,000 to $68,210,000 during the fiscal 2024 period as compared to $61,862,000 during the thirty-nine weeks ended December 25, 2022. The volume of hot dogs sold by the Company increased by approximately 2%. Our average selling price, which is partially correlated to the beef markets, increased by approximately 8% compared to the prior year period. Income from operations decreased by approximately $1,234,000 to $5,769,000 during the fiscal 2024 period as compared to $7,003,000 for the thirty-nine weeks ended December 25, 2022, due to a 12% increase in the cost of beef and beef trimmings.
  • Sales from Company-owned restaurants were $10,512,000 during the fiscal 2024 period compared to $10,673,000 during the thirty-nine weeks ended December 25, 2022. Sales were negatively impacted by reduced traffic at our Coney Island locations as a result of unfavorable weather conditions during the summer season.
  • Revenues from franchise operations were $3,321,000 during the fiscal 2024 period as compared to $3,268,000 during the thirty-nine weeks ended December 25, 2022. Total royalties were $2,996,000 during the fiscal 2024 period as compared to $2,785,000 during the thirty-nine weeks ended December 25, 2022. The increase in franchise royalties during the fiscal 2024 period was primarily due to an increase in franchise restaurant sales of $2,766,000 to $52,068,000 as compared to $49,302,000 for the thirty-nine weeks ended December 25, 2022.2 Total franchise fee income, including cancellation fees, was $325,000 during the fiscal 2024 period as compared to $483,000 during the thirty-nine weeks ended December 25, 2022. Seventeen franchised locations opened during the fiscal 2024 period.
  • During the fiscal 2024 period, we recorded Advertising Fund revenue of $1,501,000 as compared to $1,504,000 during the thirty-nine weeks ended December 25, 2022.
  • During the fiscal 2024 period, the Board of Directors declared and paid three quarterly cash dividends of $0.50 per share totaling $6,120,000.
  • Effective February 1, 2024, the Board of Directors declared its quarterly cash dividend of $0.50 per share payable on March 1, 2024 to shareholders of record at the close of business on February 20, 2024.

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) loss on debt extinguishment, (ii) the loss on disposal of property and equipment and (iii) 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 nineteen foreign countries through its restaurant system, foodservice sales programs and product licensing activities. For additional information about Nathan’s 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 disease epidemics such as the recent COVID-19 pandemic; increases in the cost of food and paper products; the impact of price increases on customer visits; the status of our licensing and supply agreements, including our licensing revenue and overall profitability being substantially dependent on our agreement with Smithfield Foods, Inc.; the impact of our debt service and repayment obligations under the 2025 Notes, including the effect on our ability to fund working capital, operations and make new investments; economic (including inflationary pressures like those currently being experienced); weather (including the impact on sales at our restaurants particularly during the summer months), and changes in the price of beef and 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 continued viability of Coney Island as a destination location for visitors; 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 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.

__________________________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.2 Franchise restaurant sales are not revenues of the Company and are not included in the Company’s Consolidated Financial Statements.

 
Nathan's Famous, Inc. and Subsidiaries(unaudited)
                 
  Thirteen weeks ended   Thirty-nine weeks ended
  Dec. 24, 2023   Dec. 25, 2022   Dec. 24, 2023   Dec. 25, 2022
Financial Highlights                      
                       
Total revenues $ 28,890,000     $ 26,154,000     $ 109,619,000     $ 103,371,000  
                       
Income from operations (a) $ 5,137,000     $ 6,332,000     $ 25,704,000     $ 28,026,000  
                       
Net income $ 2,607,000     $ 3,263,000     $ 15,706,000     $ 16,358,000  
                       
Income per share:                      
Basic $ 0.64     $ 0.80     $ 3.85     $ 4.00  
Diluted $ 0.64     $ 0.79     $ 3.84     $ 3.99  
                       
Weighted-average shares used in                      
computing income per share:                      
Basic 4,080,000     4,080,000     4,080,000     4,092,000  
Diluted 4,080,000     4,116,000     4,087,000     4,104,000  
                       
Select Segment Information                      
                       
Revenues                      
Branded product program $ 19,688,000     $ 16,661,000     $ 68,210,000     $ 61,862,000  
Product licensing 6,078,000     6,337,000     26,075,000     26,064,000  
Restaurant operations 2,616,000     2,655,000     13,833,000     13,941,000  
Corporate (b) 508,000     501,000     1,501,000     1,504,000  
Total Revenues $ 28,890,000     $ 26,154,000     $ 109,619,000     $ 103,371,000  
                       
Income from operations (c)                      
Branded product program $ 2,421,000     $ 2,451,000     $ 5,769,000     $ 7,003,000  
Product licensing 6,033,000     6,292,000     25,939,000     25,928,000  
Restaurant operations (308,000 )   (238,000 )   2,000,000     1,879,000  
Corporate (d) (3,009,000 )   (2,173,000 )   (8,004,000 )   (6,784,000 )
Income from operations (c) $ 5,137,000     $ 6,332,000     $ 25,704,000     $ 28,026,000  
(a)   Excludes loss on debt extinguishment, interest expense, interest income, and other income (expense), net.
(b)   Represents Advertising Fund revenue.
(c)   Excludes loss on debt extinguishment, interest expense, interest income and other income (expense), 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.
(d)   Consists principally of administrative expenses not allocated to the operating segments such as executive management, finance, information technology, legal, insurance, corporate office costs, corporate incentive compensation, compliance costs and the operating results of the advertising fund.
     

 
Nathan's Famous, Inc. and SubsidiariesReconciliation of Net Income to EBITDA and Adjusted EBITDA(unaudited)
       
  Thirteen weeks ended   Thirty-nine weeks ended
  Dec. 24, 2023   Dec. 25, 2022   Dec. 24, 2023   Dec. 25, 2022
               
EBITDA              
Net income $ 2,607,000     $ 3,263,000     $ 15,706,000     $ 16,358,000  
               
Interest expense 1,392,000     1,944,000     4,219,000     5,831,000  
               
Provision for income taxes 1,128,000     1,223,000     6,025,000     6,093,000  
               
Depreciation and amortization 268,000     303,000     896,000     837,000  
               
EBITDA $ 5,395,000     $ 6,733,000     $ 26,846,000     $ 29,119,000  
               
               
               
Adjusted EBITDA              
EBITDA $ 5,395,000     $ 6,733,000     $ 26,846,000     $ 29,119,000  
               
Loss on debt extinguishment 169,000     -     169,000     -  
               
Loss on disposal of property and equipment -     101,000     -     87,000  
               
Share-based compensation 187,000     65,000     546,000     81,000  
               
Adjusted EBITDA $ 5,751,000     $ 6,899,000     $ 27,561,000     $ 29,287,000  
                               
FOR:    NATHAN'S FAMOUS, INC.
COMPANY   Robert Steinberg, Vice President - Finance and CFO
CONTACT:   (516) 338-8500 ext. 229
     
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