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Famous Dave's Reports Results for First Quarter Fiscal 2014(GlobeNewswire Via Acquire Media NewsEdge) Income from Operations Grew 199%Restaurant Level Cash Flow Margins increased 100 basis pointsNet Income per Share increased 600%Adjusted EBITDA improved 73% MINNEAPOLIS, April 23, 2014 (GLOBE NEWSWIRE) -- Famous Dave's of America, Inc. (Nasdaq:DAVE) today reported financial results for the first quarter ending March 30, 2014. Key items for the first quarter of 2014 as compared to the first quarter of 2013 include: Revenue was $35.7 million for the first quarter of 2014 compared to $36.6 million for the first quarter of 2013; Comparable restaurant sales for Company-owned restaurants open 24 months or more decreased 4.9% compared to a decrease of 1.8% for the first quarter of 2013; Comparable restaurant sales for franchise-operated restaurants decreased 3.3% compared to a decrease of 6.1% for the first quarter of 2013; Franchise royalty revenue increased to $4.2 million for the first quarter of 2014 compared to $4.1 million for the first quarter of 2013; General and administrative expenses decreased $1.3 million year over year, to $4.2 million for the first quarter of 2014 and were 11.9% of revenue compared to 15.1% of revenue for the first quarter of 2013. This decrease reflected the impact from reductions in force that occurred during fiscal 2013 as well as a recapture of approximately $878,000 of stock-based compensation, or $0.08 per diluted share, predominantly due to the recent departure of employees. Partially offsetting this decrease was approximately $518,000, or $0.05 per diluted share, of severance costs also included in general and administrative expenses for the first quarter of 2014; Asset impairment and estimated lease termination and other closing costs for the first quarter totaled approximately $460,000, or $0.04 per share, reflecting the net lease termination costs related to the Salisbury, MD restaurant which closed at the end of March in addition to an impairment charge for the décor in our company-owned restaurants; The loss on disposal costs for the first quarter, equal to $434,000, or $0.04 per share, reflect the loss on the disposal of décor from our warehouse, including costs of disposition. Diluted net income per share was $0.07 for the first quarter of 2014 and compared to $0.01 for the first quarter of 2013; Adjusted EBITDA was approximately $3.2 million for the first quarter of 2014, compared to $1.9 million for the first quarter of 2013; Ed Rensi, Famous Dave's interim CEO, commented, "Our comparable sales results reflect the impact from severe weather patterns across all of our company-owned markets throughout the quarter, in addition to the year-over-year impact from a significant direct mail campaign that took place during the first quarter of 2013 that was not repeated in 2014. Despite challenges with driving top-line sales, we were pleased with continued progress in improving our restaurant level economics, particularly with regard to food costs." "We made a number of strategic decisions this quarter that will set us up well for the long-term, including a decision to close down our décor warehouse. This decision was based on a need to contemporize, reduce the cost as well as the number of items, and to provide a variety of options with regard to our restaurant décor package. Additionally, the closure of our warehouse will save us approximately $300,000 of operating costs on an annualized basis. During the quarter, we auctioned off the majority of items in our warehouse and took an impairment charge on the remaining items not sold, as well as taking an impairment charge on the décor in our existing company-owned restaurants, which we plan to convert in the near future. Going forward, there will be a greater degree of flexibility and options for our system, including the ability to purchase décor direct from the manufacturer on a real time basis, and we can achieve this without all of the operating costs of a large warehouse facility." "We will continue to focus on driving top line sales growth by improving guest traffic and to move away from a discounting strategy that was negatively affecting our bottom line," said Rensi. "Additionally, we will continue our efforts to improve unit-level economics and to remove unnecessary costs from, and build efficiencies into, all production processes, and are currently underway with a variety of tests in a key company-owned restaurant. Lastly, we will be persistent in our efforts to provide the system with a variety of cost-effective prototype options for profitable growth." Common Share Repurchases The company repurchased approximately 45,000 shares of common stock during the first quarter of fiscal 2014 at an average price of $19.29 per share, excluding commissions, for a total of approximately $869,000. The company did not buy back any shares during the first quarter of 2013. The company has repurchased 747,698 shares under its current 1.0 million share authorization at an average price of $14.94 per share, excluding commissions, for a total of approximately $11.2 million. Marketing and Development During the first quarter, the company embarked on a number of tests, including local store marketing media campaigns, a variety of value menu tests in addition to a new adult beverage program that is expected to be rolled out to the system during the second and third quarters. The company also had a number of successful product tests, including smoked turkey, offered as a platter, a sandwich or as turkey tips, as well as very successful introduction of a modern hand-crafted, hand-held BBQ offering called BYOB that will the featured promotion from early June through mid-August. BYOB, or build your own BBQ, is a handheld BBQ meal with bright flavors at a value price, that guests create themselves with a choice of Georgia Chopped Pork, Texas Beef Brisket or Original Burnt Ends as the main ingredient and a choice of a tortilla or a lettuce cup as the carrier. This is served with Chipotle Rice, Mustard Slaw, a Chimichurri sauce and a variety of fresh flavored pickles and onions as accompaniments. Famous Dave's opened two franchise-operated restaurants during the first quarter, and closed two franchise-operated restaurants and one company-owned restaurant. Famous Dave's ended the quarter with 193 restaurants, including 53 company-owned restaurants and 140 franchise-operated restaurants, located in 34 states, the Commonwealth of Puerto Rico, and 1 Canadian province. For 2014, the company expects to open approximately five new franchise-operated locations. Conference Call The company will host a conference call tomorrow, April 24, 2014, at 10:00 a.m. Central Time to discuss its first quarter financial results. There will be a live webcast of the discussion through the Investor Relations section of Famous Dave's web site at www.famousdaves.com. About Famous Dave's Famous Dave's of America, Inc. develops, owns, operates and franchises barbeque restaurants. As of today, the company owns 53 locations and franchises 140 additional units in 34 states, the Commonwealth of Puerto Rico, and 1 Canadian province. Its menu features award-winning barbequed and grilled meats, an ample selection of salads, side items and sandwiches, and unique made-from-scratch desserts. Use of Non-GAAP Financial Measures To supplement its financial statements, Famous Dave's of America, Inc. also provides investors with adjusted net income per share and adjusted EBITDA which are non-GAAP financial measures. The Company believes that these non-GAAP measures provide useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. Famous Dave's management uses these non-GAAP measures to compare the Company's performance to that of prior periods for trend analysis and planning purposes. Adjusted net income per share consists of net income plus items, such as, asset impairment and estimated lease termination and other closing costs, net loss on disposal of equipment, and the recapture of stock-based compensation and severance costs related to the level of Vice President (VP) and above, divided by the weighted average number of shares of common stock outstanding during each period presented. Famous Dave's of America, Inc. believes adjusted net income per share is useful to an investor because it is widely used to measure a company's operating performance. EBITDA consists of income from operations plus depreciation and amortization. Adjusted EBITDA consists of EBITDA plus items, such as, asset impairment and estimated lease termination and other closing costs, net loss on disposal of equipment, and the recapture of stock-based compensation and severance costs related to the level of Vice President (VP) and above. Famous Dave's uses Adjusted EBITDA as a measure of operating performance because it assists the Company in comparing performance on a consistent basis, as it removes from operating results the impact of non-cash events. The Company believes Adjusted EBITDA is useful to an investor in evaluating the company's operating performance because it is widely used to measure a Company's operating performance without the impact of items such as depreciation and amortization, which can vary depending upon accounting methods and the book value of assets, and to present a meaningful measure of corporate performance exclusive of the impact of non-cash events and the method by which assets were acquired. These non-GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with generally accepted accounting principles in the United States. These non-GAAP financial measures exclude significant expenses and income that are required by GAAP to be recorded in the company's financial statements and are subject to inherent limitations. Famous Dave's of America, Inc. urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures that are included in this press release. The tables appearing at the end of this release provide reconciliations of net income to adjusted net income per share and Adjusted EBITDA. FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONSMARCH 30, 2014 AND MARCH 31, 2013(in thousands, except per share data)(Unaudited) Three Months Ended March 30,March 31, 20142013Revenue: Restaurant sales, net $ 31,248 $ 32,280 Franchise royalty revenue 4,203 4,092 Franchise fee revenue 35 44 Licensing and other revenue 176 184Total revenue 35,662 36,600 Costs and expenses: Food and beverage costs 9,126 9,958 Labor and benefits costs 10,420 10,757 Operating expenses 8,401 8,468 Depreciation and amortization 1,546 1,541 General and administrative expenses 4,227 5,533 Asset impairment and estimated lease termination and other closing costs 460 (12) Pre-opening expenses 7 6 Net loss on disposal of property 434 1Total costs and expenses 34,621 36,252 Income from operations 1,041 348 Other expense: Interest expense (263) (285) Interest income 1 4 Other (expense) income, net (1) 18Total other expense (263) (263) Income before income taxes 778 85 Income tax expense (262) (23) Net income $ 516 $ 62 Basic net income per common share $ 0.07 $ 0.01 Diluted net income per common share $ 0.07 $ 0.01 Weighted average common shares outstanding - basic 7,312 7,370 Weighted average common shares outstanding - diluted 7,345 7,648 See accompanying notes to consolidated financial statements. FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIESOPERATING RESULTS(unaudited) Three Months Ended March 30,March 31, 20142013 Food and beverage costs (1) 29.2% 30.8% Labor and benefits costs (1) 33.3% 33.3% Operating expenses (1)(3) 26.9% 26.2% Restaurant level cash flow margins (1)(4) 10.6% 9.6% Depreciation & amortization (restaurant level) (1) 4.4% 4.4% Asset impairment and estimated lease termination and other closing costs (1) 1.5% --- Pre-opening expenses and net loss on disposal of equipment (1) 1.4% --- Costs and expenses (restaurant level) (1) 96.7% 94.7% Restaurant level margin (1)(5) 3.3% 5.3% Depreciation & amortization (corporate level) (2) 0.5% 0.4% General and administrative expenses (2)(3) 11.9% 15.1% Total costs and expenses (2) 97.1% 99.0% Income from operations (2) 2.9% 1.0% (1)As a percentage of restaurant sales, net(2) As a percentage of total revenue(3) In order to be consistent with what the Company believes to be a more prevalent practice among other public restaurant companies, the Company has decided to reflect multi-unit supervision expenses within general and administrative expenses, rather than as operating expenses, where they previously have been reflected. For the first quarter of fiscal 2013, this adjustment was approximately $514,000.(4)Restaurant level cash flow margins are equal to taking restaurant sales, net less restaurant level food and beverage costs, labor and benefit costs, and operating expenses.(5)Restaurant level margin is equal to taking restaurant sales, net less restaurant level costs and expenses. Restaurant level costs and expenses include food and beverage costs, labor and benefit costs, operating expenses, restaurant level depreciation and amortization, asset impairment and estimated lease termination and other closing costs, pre-opening expenses and net loss on disposal of equipment. FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(in thousands)(unaudited) March 30,December 29, 20142013ASSETS Cash and cash equivalents $ 743 $ 1,293 Other current assets 11,320 10,764 Property, equipment and leasehold improvements, net 57,726 59,733 Other assets 3,557 3,547Total assets $ 73,346 $ 75,337 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities $ 12,206 $ 13,675 Line of credit 12,300 11,400 Other long-term obligations 17,311 17,471 Shareholders' equity 31,529 32,791Total liabilities and shareholders' equity $ 73,346 $ 75,337 FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)(unaudited) Three Months Ended March 30,March 31, 20142013 Cash flows (used for) provided by operating activities $ (447) $ 3,933 Cash flows used for investing activities (375) (968) Cash flows provided by (used for) financing activities 272 (3,033) Net decrease in cash and cash equivalents $ (550) $ (68) SUPPLEMENTAL SALES INFORMATION(unaudited) Three Months Ended March 30,March 31, 20142013 Restaurant sales (in thousands): Company-Owned $ 31,248 $ 32,280 Franchise-Operated $ 90,542 $ 87,459 Total number of restaurants: Company-Owned 53 53 Franchise-Operated 140 134 Total 193 187 Total weighted average weekly net sales (AWS): Company-Owned $ 44,514 $ 46,850 Franchise-Operated $ 50,023 $ 51,236 Operating weeks: Company-Owned 702 689 Franchise-Operated 1,810 1,707 Weighted comparable net sales by category (24 month): Dine-in (4.7)% (3.5)% To Go 0.8% 1.3% Catering (1.0)% 0.4% Total company-owned comparable sales % (4.9)% (1.8)% Franchise-Operated % (3.3)% (6.1)% Total number of comparable restaurants: Company-Owned 50 49 Franchise-Operated 119 114 FAMOUS DAVE'S OF AMERICA, INC.NON-GAAP RECONCILIATION(in thousands, except share and per share data)(unaudited) Three Months Ended March 30,March 31, 20142013 Net income $ 516 $ 62 Asset impairment and estimated lease termination and other closing costs 460 (12) Net loss on disposal of equipment 434 1 VP level and above stock-based compensation recapture (736) --- VP level and above severance 504 --- Tax adjustment for the non-cash adjustments (223) 3 Adjusted Net Income $ 955 $ 54 Non-GAAP income per share: Basic net income per common share $ 0.13 $ 0.01 Diluted net income per common share $ 0.13 $ 0.01 Shares used to compute non-GAAP income per share: Weighted average common share outstanding - basic 7,312 7,370 Weighted average common share outstanding - diluted 7,345 7,648 Income from Operations $ 1,041 $ 348 Depreciation and amortization 1,546 1,541 EBITDA 2,587 1,889 Non-cash items: Asset impairment and estimated lease termination and other closing costs 460 (12) Net loss on disposal of equipment 434 1 VP level and above stock-based compensation recapture (736) --- VP level and above severance 504 --- Adjusted EBITDA $ 3,249 $ 1,878 Statements in this press release that are not strictly historical, including but not limited to statements regarding the timing of our restaurant openings and the timing or success of our expansion 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 Famous Dave's of America, Inc. 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: Diana G. Purcel - Chief Financial Officer 952-294-1300 Source: Famous Dave's of America 2014 GlobeNewswire, Inc. |