DALLAS, Feb. 12, 2020 /PRNewswire/ -- RAVE
Restaurant Group, Inc. (NASDAQ: RAVE) today reported financial
results for the second quarter of fiscal 2020 ended December 29, 2019.
Second Quarter Highlights:
- Pizza Inn domestic comparable store retail sales increased 2.4%
in the second quarter of fiscal 2020 compared to the same period of
the prior year.
- Pie Five comparable store retail sales decreased 11.0% in the
second quarter of fiscal 2020 compared to the same period of the
prior year.
- Total revenue decreased by $0.4
million to $2.8 million for
the second quarter of fiscal 2020 compared to the same period of
the prior year.
- The Company recorded net income of $14
thousand for the second quarter of fiscal 2020 compared to
net income of $0.2 million for the
same period of the prior year.
- On a fully diluted basis, net income decreased $0.02 per share to $0.00 per share for the second quarter of fiscal
2020 compared to $0.02 per share for
the same period of the prior year.
- Adjusted EBITDA for the second quarter of fiscal 2020 decreased
$0.1 million from the same period of
the prior year.
- Cash and cash equivalents decreased $0.3
million to $2.0 million at the
end of the second quarter of fiscal 2020.
- Pizza Inn domestic unit count including PIE finished at
153.
- Pizza Inn international unit count finished at 34.
- Pie Five domestic unit count finished at 53.
"As we work through our transformation, we're making strategic
investments in new leadership that will address underperforming
areas of our business and create operational efficiencies that will
lead to a stronger business model," said Brandon Solano, Chief Executive Officer of Rave
Restaurant Group, Inc. "The ongoing improvements in
operations, marketing and menu innovation will put us in position
to drive long-term value and consistency for our consumers and
shareholders."
The Company's net income per common share decreased $0.02 per share for the three months ended
December 29, 2019, compared to basic
net income of $0.02 per share
compared to the same period of the prior year. The Company had net
income of $14 thousand for the second
quarter of fiscal 2020 and net income of $0.2 million compared to the same period of the
prior year, on revenues of $2.8
million for the three months ended December 29, 2019 compared to $3.2 million in the comparable period in the
fiscal year. The decline in revenue was primarily due to a
decrease in franchise royalties and franchise license fees.
EBITDA of $0.1 million for the
second quarter of fiscal 2020 was a $0.4
million decrease from the same period of the prior year.
Adjusted EBITDA of $0.0 million
for the second quarter of fiscal 2020 was a $0.1 million decrease from the same period of the
prior year.
Second Quarter and Year to Date Fiscal 2020 Operating
Results
Pizza Inn domestic comparable store retail sales increased by
2.4% during the second quarter of fiscal 2020 compared to the same
period of the prior year. Year to date, Pizza Inn domestic
comparable store sales increased by 2.7% compared to the same
period of the prior year.
"Pizza Inn continues to maintain positive sales trends, but we
believe we have even more opportunities to strengthen this brand,"
said Solano. "For the first time in years, we are making strategic
investments in consumer research that will provide a more
analytical approach to creating marketing initiatives that will
drive profitable traffic."
Pie Five domestic comparable store retail sales decreased by
11.0% during the second quarter of fiscal 2020 compared to the same
period of the prior year. Year to date, Pie Five domestic
comparable store sales decreased by 10.8% compared to the same
period of the prior year.
"Although Pie Five isn't where we want it to be today, we are
unwavering in our commitment to rebuild the brand and confident we
have the right leadership team in place to put us back on the right
track," said Solano. "We see a huge opportunity to reposition
the brand and better articulate the overall Pie Five brand promise
to consumers. We also have some menu work to do that will
solidify Pie Five as a disruptor and leader in the fast-casual
industry."
Consolidated revenues of $2.8
million and $5.7 million for
the second quarter and year to date fiscal 2020 were 11.4% and 7.8%
lower, respectively, than the same periods of the prior year.
Development Review
During the second quarter of fiscal 2020, Pizza Inn opened three
domestic units and closed two units to finish the quarter at 153
units.
"We've been very pleased with the opening numbers at our newest
Pizza Inn restaurants both domestically and internationally," said
Solano. "The Vale location is our first Pizza Inn Neighborhood
Buffet location in the Charlotte-area and we expect to see more
development throughout North Carolina. The Durant buffet location is the first of three
new Pizza Inn buffets scheduled to open in Oklahoma this year."
In the second quarter of fiscal 2020, Pie Five opened three new
domestic units and closed six domestic units, bringing the domestic
unit count to 53 restaurants at the end of the quarter.
"Last quarter, we officially opened our first location in
partnership with Kidzania and we look forward to continuing this
long-term alliance by growing with this innovative brand across the
country," said Solano. "Pie Five still has expansion
opportunities and we expect development to increase once we
transform the brand and restore positive momentum."
Conference Call
A conference call and audio webcast have been scheduled to
discuss these results. Details of the conference call are as
follows:
Date:
|
Wednesday, February
12, 2020
|
|
|
Time:
|
4:30 p.m. Central
Standard Time
|
|
|
Dial-In #:
|
1-844-492-3725 U.S.
& Canada
|
|
1-412-317-5108
International
|
The conference call will be webcast at raverg.com. A
web-based archive of the conference call will also be available at
the above website.
About RAVE Restaurant Group, Inc.
Founded in 1958, Dallas-based
RAVE Restaurant Group [NASDAQ: RAVE] owns, operates, franchises
and/or licenses 240 Pie Five Pizza Co. and Pizza Inn restaurants
and Pizza Inn Express kiosks domestically and internationally.
Pizza Inn is an international chain featuring freshly made pizzas,
along with salads, pastas, and desserts. Pie Five Pizza Co. is a
leader in the fast-casual pizza space offering made-to-order pizzas
ready in under five minutes. Pizza Inn Express, or PIE, is
developing unique opportunities to provide freshly made pizza from
non-traditional outlets. The Company's common stock is listed on
the Nasdaq Capital Market under the symbol "RAVE". For more
information, please visit www.raverg.com.
Non-GAAP Financial Measures
The Company's financial statements are prepared in accordance
with United States generally
accepted accounting principles ("GAAP"). However, the Company also
presents and discusses certain non-GAAP financial measures that it
believes are useful to investors as measures of operating
performance. Management may also use such non-GAAP financial
measures in evaluating the effectiveness of business strategies and
for planning and budgeting purposes. However, these non-GAAP
financial measures should not be viewed as an alternative or
substitute for its financial statements prepared in accordance with
generally accepted accounting principles.
The Company considers EBITDA and Adjusted EBITDA to be important
supplemental measures of operating performance that are commonly
used by securities analysts, investors and other parties interested
in our industry. The Company believes that EBITDA is helpful to
investors in evaluating its results of operations without the
impact of expenses affected by financing methods, accounting
methods and the tax environment. The Company believes that Adjusted
EBITDA provides additional useful information to investors by
excluding non-operational or non-recurring expenses to provide a
measure of operating performance that is more comparable from
period to period. Management also uses these non-GAAP financial
measures for evaluating operating performance, assessing the
effectiveness of business strategies, projecting future capital
needs, budgeting and other planning purposes.
"EBITDA" represents earnings before interest, taxes,
depreciation and amortization. "Adjusted EBITDA" represents
earnings before interest, taxes, depreciation and amortization,
stock compensation expense, severance, pre-opening expense,
gain/loss on sale of assets, costs related to impairment and other
lease charges, discontinued operations, franchisee default and
closed store revenue/expense, and closed and non-operating store
costs.
Note Regarding Forward Looking Statements
Certain statements in this press release, other than historical
information, may be considered forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, and are intended to be covered by the safe harbors created
thereby. These forward-looking statements are based on current
expectations that involve numerous risks, uncertainties and
assumptions. Assumptions relating to these forward-looking
statements involve judgments with respect to, among other things,
future economic, competitive and market conditions, regulatory
framework and future business decisions, all of which are difficult
or impossible to predict accurately and many of which are beyond
the control of RAVE Restaurant Group, Inc. Although the assumptions
underlying these forward-looking statements are believed to be
reasonable, any of the assumptions could be inaccurate and,
therefore, there can be no assurance that any forward-looking
statements will prove to be accurate. In light of the significant
uncertainties inherent in these forward-looking statements, the
inclusion of such information should not be regarded as a
representation that the objectives and plans of RAVE Restaurant
Group, Inc. will be achieved.
Contact:
Investor Relations
RAVE Restaurant Group, Inc.
469-384-5000
RAVE RESTAURANT
GROUP, INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In thousands,
except per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
December
29,
|
|
December
23,
|
|
December
29,
|
|
December
23,
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES:
|
$
2,830
|
|
$
3,195
|
|
$
5,706
|
|
$
6,186
|
|
|
|
|
|
|
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
Cost of
sales
|
115
|
|
174
|
|
249
|
|
333
|
|
General and
administrative expenses
|
1,565
|
|
1,640
|
|
2,928
|
|
3,054
|
|
Franchise
expenses
|
838
|
|
892
|
|
1,704
|
|
1,953
|
|
Gain on sale of
assets
|
-
|
|
(350)
|
|
(11)
|
|
(354)
|
|
Impairment of
long-lived assets and other lease charges
|
193
|
|
155
|
|
341
|
|
170
|
|
Bad debt
|
36
|
|
171
|
|
28
|
|
195
|
|
Interest
expense
|
24
|
|
26
|
|
51
|
|
51
|
|
Depreciation and
amortization expense
|
49
|
|
126
|
|
96
|
|
265
|
|
|
Total costs and
expenses
|
2,820
|
|
2,834
|
|
5,386
|
|
5,667
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE
TAXES
|
10
|
|
361
|
|
320
|
|
519
|
|
Income tax
expense
|
(4)
|
|
129
|
|
69
|
|
179
|
NET
INCOME
|
14
|
|
232
|
|
251
|
|
340
|
|
|
|
|
|
|
|
|
INCOME PER SHARE
OF COMMON STOCK - BASIC:
|
$
0.00
|
|
$
0.02
|
|
$
0.02
|
|
$
0.02
|
|
|
|
|
|
|
|
|
INCOME PER SHARE
OF COMMON STOCK - DILUTED:
|
$
0.00
|
|
$
0.02
|
|
$
0.02
|
|
$
0.02
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding - basic
|
15,129
|
|
15,071
|
|
15,106
|
|
15,068
|
|
|
|
|
|
|
|
|
Weighted average
common and potential dilutive common shares
outstanding
|
15,930
|
|
15,904
|
|
15,924
|
|
15,901
|
|
|
|
|
|
|
|
|
|
|
See accompanying
Notes to Unaudited Condensed Consolidated Financial
Statements.
|
RAVE RESTAURANT
GROUP, INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In thousands,
except share amounts)
|
(Unaudited)
|
|
|
|
|
|
December
29,
|
|
June
30,
|
|
2019
|
|
2019
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
Cash and
cash equivalents
|
$
1,971
|
|
$
2,264
|
Accounts
receivable, less allowance for bad debts of $241 and $209,
respectively
|
1,037
|
|
1,191
|
Notes
receivable, less allowance for bad debt of $916 and $916,
respectively
|
555
|
|
389
|
Inventories
|
6
|
|
7
|
Income
tax receivable
|
4
|
|
4
|
Property
held for sale
|
197
|
|
231
|
Deferred
contract charges
|
40
|
|
38
|
Prepaid
expenses and other
|
286
|
|
346
|
Total
current assets
|
4,096
|
|
4,470
|
|
|
|
|
LONG-TERM
ASSETS
|
|
|
|
Property, plant and equipment, net
|
473
|
|
500
|
Operating lease right of use asset, net
|
3,198
|
|
-
|
Intangible assets definite-lived, net
|
174
|
|
196
|
Long-term notes receivable
|
461
|
|
735
|
Deferred
tax asset, net
|
4,000
|
|
4,060
|
Long-term deferred contract charges
|
246
|
|
232
|
Deposits
and other
|
233
|
|
233
|
Total assets
|
$
12,881
|
|
$
10,426
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
Accounts
payable - trade
|
$
365
|
|
$
400
|
Accounts
payable - lease termination impairments
|
515
|
|
832
|
Accrued
expenses
|
807
|
|
834
|
Deferred
rent
|
-
|
|
37
|
Operating lease liability, current
|
499
|
|
-
|
Deferred
revenues
|
169
|
|
275
|
Total current
liabilities
|
2,355
|
|
2,378
|
|
|
|
|
LONG-TERM
LIABILITIES
|
|
|
|
Convertible notes
|
1,535
|
|
1,584
|
Deferred
rent, net of current portion
|
-
|
|
397
|
Operating lease liability, net of current portion
|
3,135
|
|
-
|
Deferred
revenues, net of current portion
|
1,142
|
|
1,561
|
Other
long-term liabilities
|
51
|
|
72
|
Total liabilities
|
8,218
|
|
5,992
|
|
|
|
|
COMMITMENTS AND
CONTINGENCIES (SEE NOTE 5)
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
Common
stock, $.01 par value; authorized 26,000,000 shares; issued
22,217,194 and 22,208,141 shares, respectively; outstanding
15,132,040 and 15,090,837 shares, respectively
|
222
|
|
222
|
Additional paid-in capital
|
33,210
|
|
33,327
|
Accumulated deficit
|
(4,232)
|
|
(4,483)
|
Treasury
stock at cost
|
|
|
|
Shares in treasury:
7,085,154 and 7,117,304, respectively
|
(24,537)
|
|
(24,632)
|
Total
shareholders' equity
|
4,663
|
|
4,434
|
|
|
|
|
|
|
|
|
Total
liabilities and shareholders' equity
|
$
12,881
|
|
$
10,426
|
|
|
|
|
See accompanying
Notes to Unaudited Condensed Consolidated Financial
Statements.
|
RAVE RESTAURANT
GROUP, INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
thousands)
|
(Unaudited)
|
|
|
|
Six Months
Ended
|
|
|
|
December
29,
|
|
December
23,
|
|
|
|
2019
|
|
2018
|
|
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
Net income
|
$
251
|
|
$
340
|
|
Adjustments to
reconcile net income to cash provided by (used in) operating
activities:
|
|
|
|
|
|
Impairment of fixed
assets and other assets
|
341
|
|
170
|
|
|
Stock compensation
expense
|
(85)
|
|
281
|
|
|
Depreciation and
amortization
|
74
|
|
245
|
|
|
Amortization of
operating lease asset
|
230
|
|
-
|
|
|
Amortization of
intangible assets definite-lived
|
22
|
|
20
|
|
|
Amortization of debt
issue costs
|
15
|
|
12
|
|
|
Gain on the sale of
assets
|
(11)
|
|
(354)
|
|
|
Provision for bad
debt
|
28
|
|
6
|
|
|
Provision for bad
debt (notes receivable)
|
-
|
|
186
|
|
|
Deferred income
tax
|
60
|
|
145
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
126
|
|
268
|
|
|
Operating notes
receivable
|
-
|
|
(200)
|
|
|
Inventories
|
1
|
|
-
|
|
|
Prepaid expenses,
deposits and other, net
|
59
|
|
(137)
|
|
|
Deferred
revenue
|
(507)
|
|
(219)
|
|
|
Accounts payable -
trade
|
(35)
|
|
(136)
|
|
|
Accounts payable -
lease termination impairments
|
(658)
|
|
(35)
|
|
|
Operating lease
liability
|
(241)
|
|
-
|
|
|
Accrued expenses,
deferred rent and other
|
(23)
|
|
(199)
|
|
|
Cash
(used in) provided by operating activities
|
(353)
|
|
393
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
Payments received on
notes receivable issued for fixed asset sales
|
108
|
|
-
|
|
Proceeds from sale of
assets
|
-
|
|
140
|
|
Purchase of property,
plant and equipment
|
(47)
|
|
(46)
|
|
|
Cash provided by
investing activities
|
61
|
|
94
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
Proceeds from sale of
stock
|
-
|
|
36
|
|
Equity issuance
costs
|
(1)
|
|
(3)
|
|
|
Cash provided by
financing activities
|
(1)
|
|
33
|
|
|
|
|
|
|
Net
(decrease)/increase in cash and cash equivalents
|
(293)
|
|
520
|
Cash and cash
equivalents, beginning of period
|
2,264
|
|
1,386
|
Cash and cash
equivalents, end of period
|
$
1,971
|
|
$
1,906
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
CASH PAID
FOR:
|
|
|
|
|
|
Interest
|
$
2
|
|
$
3
|
|
|
Income
taxes
|
$
18
|
|
$
145
|
|
|
|
|
|
|
|
Non-cash
activities:
|
|
|
|
|
|
Conversion of notes
to common shares
|
$
64
|
|
$
-
|
|
|
|
|
|
|
See accompanying
Notes to Unaudited Condensed Consolidated Financial
Statements.
|
RAVE RESTAURANT
GROUP, INC.
|
ADJUSTED
EBITDA
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
December
29,
|
|
December
23,
|
|
December
29,
|
|
December
23,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net
income
|
$
14
|
|
$
232
|
|
$
251
|
|
$
340
|
Interest
expense
|
24
|
|
26
|
|
51
|
|
51
|
Income
taxes
|
(4)
|
|
129
|
|
69
|
|
179
|
Depreciation
and amortization
|
49
|
|
126
|
|
96
|
|
265
|
EBITDA
|
$
83
|
|
$
513
|
|
$
467
|
|
$
835
|
Stock
compensation expense
|
(85)
|
|
180
|
|
(85)
|
|
281
|
Severance
|
119
|
|
-
|
|
119
|
|
-
|
Gain on
sale/disposal of assets
|
-
|
|
(350)
|
|
(11)
|
|
(354)
|
Impairment of
long-lived assets and other lease charges
|
193
|
|
155
|
|
341
|
|
170
|
Franchisee
default and closed store revenue/expense
|
(307)
|
|
(466)
|
|
(454)
|
|
(466)
|
Closed and
non-operating store costs
|
(1)
|
|
59
|
|
5
|
|
81
|
Adjusted
EBITDA
|
$
2
|
|
$
91
|
|
$
382
|
|
$
547
|
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SOURCE RAVE Restaurant Group, Inc.