BBQ Holdings, Inc. Reports Results for Third Quarter 2021
11/10/2021 - 04:05 PM
Company Reaffirms Revenue and Increases Earnings Guidance for Fiscal Year 2021
MINNEAPOLIS, Nov. 10, 2021 (GLOBE NEWSWIRE) -- BBQ Holdings, Inc. (NASDAQ: BBQ) (the “Company”), an innovating global franchisor, owner and operator of restaurants, today reported financial results for the third fiscal quarter ended October 3, 2021.
Third Quarter 2021 Highlights:
Financial:
Total revenue of $55.4 million vs. $35.5 million in the third quarter of 2020. Net income of $4.8 million vs. $0.3 million in the third quarter of 2020. Adjusted EBITDA, a non-GAAP measure, was $4.4 million vs. $2.0 million in the third quarter of 2020. Combined brands restaurant-level margins of 8.6% vs 3.4% last year. Prime costs were 62.6% of sales vs. 67.8% third quarter 2019. Third Quarter Same Store Sales 2021 vs. 2020 2021 vs. 2019 Famous Dave's Company-owned 19.3 % 12.4 % Famous Dave's Franchise-operated* 18.0 % 6.9 % Granite City 31.4 % (0.5 )% Village Inn Company-owned** 37.0 % (8.1 )% Village Inn Franchise-operated* 48.2 % NA % Bakers Square** 32.4 % (20.2 )% * as reported by franchisees ** includes sales under prior ownership
Executive Comments
Jeff Crivello, CEO, commented, “This was a quarter of strong execution for BBQ Holdings, as our growth strategies continue to deliver positive top and bottom-line results, including a steady improvement in same store sales and solid free cash flow. Management is focused on executing against our three core growth initiatives, including accretive M&A, opening new units, and filling the latent capacity of our current restaurants. During the third quarter, we completed the highly accretive acquisition of Village Inn and Bakers Square. Subsequent to the end of the quarter, we also acquired Tahoe Joe’s. Our goal now is to reinvigorate these brands and drive consistent unit-level improvements as we have at Famous Dave’s and other brands. In addition, the month of October also brought the opening of the first Famous Dave’s Quick Que in Minnesota. We are excited to continue to rollout this quick service format, providing a new, efficient way for our guests to experience Famous Dave’s. Finally, we launched a virtual burger concept during the quarter, $5 B urgers, providing incremental revenue in the Famous Dave’s system.”
Growth:
Purchased Village Inn, 109 franchise and 21 corporate restaurants, and 11 Bakers Square corporate restaurants in July 2021. Purchased five Tahoe Joe’s Steakhouses in October 2021. Purchased four Famous Dave’s franchise restaurants in Tennessee and Kentucky in July 2021. Famous Dave’s franchisees opened line-serve restaurants in Las Vegas, NV in August 2021 and Coon Rapids, MN in October 2021. Opened a Real Urban Barbeque restaurant in Chicago, IL in October 2021. Famous Dave’s Drive thru in Salt Lake City, UT expected to open in December 2021. Dual concept Granite City/Village Inn expected to open in January 2022. New Village Inn prototype expected to open in Omaha, NE early Q1 2022. Updated 2021 Guidance:
Based on the results to date through the third quarter 2021, and including the uncertainty related to COVID-19, the Company has updated its 2021 guidance as follows:
Net Revenue remains at $183 -$188m m Increased Net Income range from $20.6 - $21.0m m to $22.5 - $23.0m m Increased Cash EBITDA range from $14.5 - $15.0m m to $16.5 - $17.0m m Key Operating Metrics Three Months Ended Nine Months Ended October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020 Restaurant count: Franchise-operated 213 98 213 98 Company-owned 83 49 83 49 Total 296 147 296 147 Same store net restaurant sales %: Franchise-operated 18.0 % (10.0 )% 25.6 % (18.3 )% Company-owned 24.0 % (4.6 )% 36.3 % (9.9 )% Total 20.4 % (8.7 )% 29.3 % (16.7 )% (in thousands, expect per share data) System-wide restaurant sales(1) $ 141,125 $ 84,434 $ 335,421 $ 222,374 Net income attributable to shareholders $ 4,834 $ 328 $ 21,419 $ 7,783 Net income attributable to shareholders, per diluted share $ 0.46 $ 0.04 $ 2.20 $ 0.85 Adjusted EBITDA(2) $ 4,425 $ 1,995 $ 12,649 $ 2,915 _________________________
(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 EBITDA is a non-GAAP measure. 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.”
Third Quarter 2021 Review
Total revenue for the third quarter of 2021 was $55.4 million , up 56.0% from the third quarter of 2020. The increase in year-over-year restaurant net sales for the quarter ended October 3, 2021 was driven primarily by the easing of dining restrictions in the third quarter of 2021 and the acquisition of the Village Inn and Bakers Square brands.
Net income attributable to shareholders was approximately $4.8 million , or $0.46 per diluted share, in the third quarter of fiscal 2021 compared to $328,000, or $0.04 per diluted share, in the third quarter of fiscal 2020. Adjusted EBITDA, a non-GAAP measure, was approximately $4.4 million , compared to adjusted EBITDA of approximately $2.0 million in the third quarter of fiscal 2020. A reconciliation between adjusted EBITDA and its most directly comparable GAAP measure is included in the accompanying financial tables.
Restaurant-level operating margin as a percentage of restaurant net sales, a non-GAAP measure, was 8.6% for Company-owned restaurants in the third quarter of fiscal 2021 compared to 3.4% in the third quarter of fiscal 2020. This increase in restaurant-level operating margin as a percentage of net restaurant sales was due primarily to leverage on our fixed operating costs from the increased revenue resulting from the easing of dine-in restrictions and restrictions on large gatherings which were put in place in 2020 due to COVID-19 concerns. A reconciliation of restaurant sales to restaurant-level margin is included in the accompanying financial tables. General and administrative expenses for the quarter ended October 3, 2021 and September 27, 2020 represented approximately 9.2% and 8.8% of total revenues, respectively. The increase in general and administrative expenses as a percentage of revenue in the third quarter of 2021 was due primarily to acquisition-related expenses incurred as we incorporated the Village Inn and Bakers Square brands into our portfolio.
About BBQ Holdings
BBQ Holdings, Inc. (NASDAQ: BBQ) is a national restaurant company engaged in franchising, ownership and operation of casual and fast dining restaurants. As of November 10, 2021, BBQ Holdings had seven brands with 303 locations in three countries including 89 Company owned locations and 214 franchised locations. In addition to these locations, the Company opened eight Company-owned Famous Dave’s ghost kitchens operating within its Granite City locations, and 20 Famous Dave’s franchisee ghost kitchens operating out of the kitchen of another restaurant location or a shared kitchen space. While BBQ Holdings continues to diversify its ownership in the restaurant community, it was founded with the principle of combining the “art and science” of barbecue to serve up the very best of the best to barbecue lovers everywhere. Along with a wide variety of BBQ favorites served at their BBQ restaurants, BBQ Holdings also operates Granite City Food and Brewery restaurants which offer award winning craft beer and a made-from-scratch, chef driven menu featuring contemporary American cuisine. Village Inn and Bakers Square add a legendary Family Dining element to BBQ Holdings, with these concepts specializing in breakfast and pies. Tahoe Joe’s, the Company’s newest addition, is known for their pellet-broiler cooked and smoked infused steak.
Non-GAAP Financial Measures
To supplement its condensed 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.
Adjusted EBITDA is net income plus asset impairment, estimated lease termination charges and other closing costs, settlement agreements, interest expense, net, depreciation and amortization, net (gain) loss on disposal of equipment, stock-based compensation, acquisition costs, pre-opening costs, severance, gain on debt forgiveness, gain on bargain purchase, COVID-19-related expense and provision (benefit) for income taxes.
Restaurant-level operating margins are equal to net restaurant sales, less restaurant-level food and beverage cost, labor and benefit costs, and operating expenses.
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, the timing of refreshes 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 the Company’s expectation include the impact of the COVID-19 virus pandemic, 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 jeff.crivello@bbq-holdings.com
BBQ HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (Unaudited) Three Months Ended Nine Months Ended October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020 Revenue: Restaurant sales, net $ 50,374 $ 32,559 $ 125,182 $ 78,251 Franchise royalty and fee revenue 3,329 2,153 8,649 6,628 Franchisee national advertising fund contributions 461 302 1,210 826 Licensing and other revenue 1,219 497 3,181 1,423 Total revenue 55,383 35,511 138,222 87,128 Costs and expenses: Food and beverage costs 14,731 9,735 36,720 24,206 Labor and benefits costs 16,805 11,189 39,488 26,976 Operating expenses 14,512 10,521 36,355 26,251 Depreciation and amortization expenses 1,940 1,397 4,925 3,820 General and administrative expenses 5,109 3,138 13,691 9,973 National advertising fund expenses 461 302 1,210 826 Asset impairment, estimated lease termination charges and other closing costs, net 69 (138 ) 106 4,814 Pre-opening expenses 63 (120 ) 183 (93 ) (Gain) loss on disposal of property, net (1 ) (530 ) 134 (1,107 ) Total costs and expenses 53,689 35,494 132,812 95,666 Income (loss) from operations 1,694 17 5,410 (8,538 ) Other income (expense): Interest expense (124 ) (326 ) (439 ) (866 ) Interest income 49 94 147 380 Gain on forgiveness of debt — — 14,109 — Gain on bargain purchase 3,203 — 3,203 13,675 Total other income (expense) 3,128 (232 ) 17,020 13,189 Income (loss) before income taxes 4,822 (215 ) 22,430 4,651 Income tax (expense) benefit (36 ) 273 (517 ) 2,519 Net income 4,786 58 21,913 7,170 Net (income) loss attributable to non-controlling interest 48 270 (494 ) 613 Net income attributable to shareholders $ 4,834 $ 328 $ 21,419 $ 7,783 Income per common share: Basic net income per share attributable to shareholders $ 0.47 $ 0.04 $ 2.23 $ 0.85 Diluted net income per share attributable to shareholders $ 0.46 $ 0.04 $ 2.20 $ 0.85 Weighted average shares outstanding - basic 10,345 9,151 9,619 9,138 Weighted average shares outstanding - diluted 10,482 9,158 9,737 9,145
BBQ HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) (unaudited) ASSETS Current assets: October 3, 2021 January 3, 2021 Cash and cash equivalents $ 28,977 $ 18,101 Restricted cash 1,146 1,502 Accounts receivable, net of allowance for doubtful accounts of $262,000 and $132,000, respectively 4,900 4,823 Inventories 2,949 2,271 Prepaid expenses and other current assets 2,367 1,252 Assets held for sale 1,024 1,070 Total current assets 41,363 29,019 Property, equipment and leasehold improvements, net 39,174 32,389 Other assets: Operating lease right-of-use assets 78,581 61,634 Goodwill 1,071 601 Intangible assets, net 23,231 9,967 Deferred tax asset, net 3,382 4,934 Other assets 1,129 1,724 Total assets $ 187,931 $ 140,268 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 7,092 $ 6,385 Current portion of lease liabilities 10,624 6,185 Current portion of long-term debt 2,192 2,111 Accrued compensation and benefits 7,929 2,390 Other current liabilities 12,014 9,766 Total current liabilities 39,851 26,837 Long-term liabilities: Lease liabilities, less current portion 78,470 63,105 Long-term debt, less current portion 6,578 22,169 Other liabilities 1,458 1,224 Total liabilities 126,357 113,335 Shareholders’ equity: Common stock, $.01 par value, 100,000 shares authorized, 10,495 and 9,307 shares issued and outstanding at October 3, 2021 and January 3, 2021, respectively 105 93 Additional paid-in capital 21,464 8,748 Retained earnings 40,789 19,370 Total shareholders’ equity 62,358 28,211 Non-controlling interest (784 ) (1,278 ) Total equity 61,574 26,933 Total liabilities and equity $ 187,931 $ 140,268
BBQ HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Nine Months Ended October 3, 2021 September 27, 2020 Cash flows from operating activities: Net income $ 21,913 $ 7,170 Adjustments to reconcile net income to cash flows provided by operations: Depreciation and amortization 4,925 3,820 Stock-based compensation 932 422 Net loss (gain) on disposal 134 (1,080 ) Asset impairment, estimated lease termination charges and other closing costs, net — 4,788 Gain on forgiveness of debt (14,109 ) — Gain on bargain purchase (3,203 ) (13,675 ) Amortization of operating right-of-use assets 5,194 5,818 Deferred tax asset 441 (2,569 ) Other non-cash items (49 ) 488 Changes in operating assets and liabilities: Accounts receivable, net (126 ) 494 Prepaid expenses and other assets (1,368 ) 102 Accounts payable 707 985 Accrued compensation 4,445 (408 ) Lease liabilities (5,000 ) (5,067 ) Accrued and other liabilities 505 (641 ) Cash flows provided by operating activities 15,341 647 Cash flows from investing activities: Proceeds from the sale of assets — 27 Purchases of property, equipment and leasehold improvements (2,416 ) (2,671 ) Payments for acquired restaurants (14,548 ) (4,952 ) Transfer from HFS 46 — Payments received on note receivable 779 24 Cash flows used for investing activities (16,139 ) (7,572 ) Cash flows from financing activities: Proceeds from long-term debt — 22,058 Payments for debt issuance costs — (45 ) Payments on long-term debt (1,572 ) (664 ) Proceeds from sale of common stock, net of offering costs 12,445 — Proceeds from exercise of stock options 445 — Cash provided by financing activities 11,318 21,349 Increase in cash, cash equivalents and restricted cash 10,520 14,424 Cash, cash equivalents and restricted cash, beginning of period 19,603 6,086 Cash, cash equivalents and restricted cash, end of period $ 30,123 $ 20,510 Supplemental Disclosures Cash paid for interest, net $ 769 $ 829 Cash paid for income taxes, net — — Non-cash investing and financing activities: Operating right-of-use assets acquired 19,339 51,682 Lease liabilities assumed pursuant to acquisitions 21,830 51,682 Gift card liability assumed pursuant to acquisitions 1,202 3,923
BBQ HOLDINGS, INC. AND SUBSIDIARIES OPERATING RESULTS (unaudited) Three Months Ended Nine Months Ended October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020 Food and beverage costs(1) 29.2 % 29.9 % 29.3 % 30.9 % Labor and benefits costs(1) 33.4 % 34.4 % 31.5 % 34.5 % Operating expenses(1) 28.8 % 32.3 % 29.0 % 33.5 % Restaurant-level operating margin(1)(2) 8.6 % 3.4 % 10.1 % 1.0 % Depreciation and amortization expenses(3) 3.5 % 3.9 % 3.6 % 4.4 % General and administrative expenses(3) 9.2 % 8.8 % 9.9 % 11.4 % Income (loss) from operations(3) 3.1 % 0.0 % 3.9 % (9.8 )% ________________________
(1) As a percentage of restaurant sales, net(2) Restaurant-level operating margins are equal to restaurant sales, net, less restaurant-level food and beverage costs, labor and benefit costs, and operating expense.(3) As a percentage of total revenue
BBQ HOLDINGS, INC. AND SUBSIDIARIES RESTAURANT-LEVEL PROFIT AND RESTAURANT-LEVEL MARGIN NON-GAAP RECONCILIATION (in thousands) Three Months Ended Nine Months Ended October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020 Restaurant sales, net $ 50,374 $ 32,559 $ 125,182 $ 78,251 Restaurant operating costs (1) 46,048 31,445 112,563 77,433 Restaurant-level profit $ 4,326 $ 1,114 $ 12,619 $ 818 Restaurant-level margin 8.6 % 3.4 % 10.1 % 1.0 % ________________________
(1) Restaurant operating cost consist of food and beverage cost, labor and benefits costs and operating expenses.
BBQ HOLDINGS, INC. AND SUBSIDIARIES NON-GAAP RECONCILIATION (in thousands, except per share data) (unaudited) Three Months Ended Nine Months Ended (dollars in thousands) October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020 Net income $ 4,786 $ 58 $ 21,913 $ 7,170 Asset impairment and estimated lease termination charges and other closing costs 69 (138 ) 106 4,814 Depreciation and amortization 1,940 1,397 4,925 3,820 Interest expense, net 75 232 292 486 Net (gain) loss on disposal of equipment (1 ) (530 ) 134 (1,107 ) Stock-based compensation 294 174 932 422 Acquisition costs 366 29 550 (46 ) Pre-opening costs 63 (120 ) 183 (93 ) Severance — 21 — 52 Gain on debt forgiveness — — (14,109 ) — Gain on bargain purchase (3,203 ) — (3,203 ) (13,675 ) Provision for income taxes 36 (273 ) 517 (2,519 ) COVID-19-related expense — 1,145 409 3,591 Adjusted EBITDA $ 4,425 $ 1,995 $ 12,649 $ 2,915
(1) COVID-19 expenses consisted primarily of cleaning and sanitation supplies, payments to employees for unemployment related costs, inventory waste, rent and rent-related costs for limited-operations restaurants from the day that the restaurant dining room partially or fully closed.
Nine Months Ended October 3, 2021 September 27, 2020 (dollars in thousands) Net income $ 21,913 $ 7,170 Asset impairment and estimated lease termination charges and other closing costs 106 4,814 Depreciation and amortization 4,925 3,820 Interest expense, net 292 486 Net (gain) loss on disposal of equipment 134 (1,107 ) Stock-based compensation 932 422 Acquisition costs 550 (46 ) Pre-opening costs 183 (93 ) Severance - 52 Gain on debt forgiveness (14,109 ) - Gain on bargain purchase (3,203 ) (13,675 ) Provision for income taxes 517 (2,519 ) Non-Cash Rent 660 1,540 Cash EBITDA $ 12,900 $ 864
A presentation accompanying this announcement is available at: https://www.globenewswire.com/NewsRoom/AttachmentNg/17a0cc25-b1e9-4157-8f49-2310e2b70624
