Chanticleer Holdings Reports Positive Adjusted EBITDA for Second Quarter; Revenue Increases 25%
Strong Growth, Improved Revenue Mix and Efficiency Initiatives Drive Improved Profitability
CHARLOTTE, NC -- (Marketwired) -- 08/11/16 --
Chanticleer Holdings, Inc. (NASDAQ: HOTR) ("Chanticleer," or the "Company"), owner, operator and franchisor of multiple branded restaurants in the U.S. and abroad, today announced financial results for the second quarter ended June 30, 2016.
Second Quarter Revenue Increases 25%, Company Achieves Adjusted EBITDA Profitability:
- Total revenue for the second quarter increased 25.0% to $10.8 million, primarily from growth in the Fast Casual Better Burger segment.
- Cost of sales improved to 32.7% compared to 34.5% in the comparable quarter last year.
- Operating expenses improved to 54.5% compared to 58.4% in the comparable quarter last year.
- General and administrative expenses decreased to 12.8% from 21.0% in the comparable quarter last year.
- Net loss from continuing operations decreased to $(0.6) million or $(0.03) per share, compared to $(2.6) million or $(0.21) in the comparable quarter last year.
- Restaurant EBITDA improved to $1.4 million compared to $0.7 million for the comparable quarter of last year.
- Adjusted EBITDA improved to a profit of $0.2 million compared to a loss of $(0.6) million in the comparable quarter last year.
Six Months Revenue Increases 38%; $1.3 Million Adjusted EBITDA Improvement:
- Total revenue for the six months increased 38.0% to $20.9 million, primarily from growth in the Fast Casual Better Burger segment.
- Cost of sales improved to 32.9%, compared to 34.8% in the comparable period last year.
- Operating expenses improved to 55.3% compared to 58.3% in the comparable period last year
- General and administrative expenses decreased to 14.6% from 23.2% of sales in the comparable period last year.
- Net loss from continuing operations decreased to $(1.5) million or $(0.07) per share, compared $(4.6) million or $(0.50) in the comparable period last year.
- Net cash from operating activities improved to positive $0.3 million compared to a negative $(2.9) million in the first six months of last year.
- Restaurant EBITDA improved to $2.6 million compared to $1.2 million in the first six months of last year
- Adjusted EBITDA improved to a loss of $(0.0) million compared to a loss of $(1.3) million in the first six months of last year.
In June 2016, the Company approved a plan to exit the Australia and Eastern Europe markets, authorizing management to sell or close its five Hooters stores in Australia and its one store in Budapest. Management expects to complete negotiation of terms during the third quarter of 2016, and complete the disposal of the operations by the end of 2016. Accordingly, the operating results and related accounts of those regions have been classified as discontinued operations.
Mike Pruitt, Chairman and CEO of Chanticleer commented, "This was a very strong quarter for Chanticleer; we crossed a critical threshold and achieved EBITDA profitably from our continuing operations. These results were achieved primarily through growth and strong performance at our fast casual better burger segment, the recent strategic discontinuation of certain international stores to focus on restaurants with the strongest economic returns, and realization of initial cost benefits stemming from efficiency initiatives across our company."
Mr. Pruitt continued, "Our Better Burger business, which now accounts for well over half of our revenue, performed very well due to the growing strength of our regional brands. Little Big Burger (LBB), for example, has proven to be an exemplary acquisition and we have meaningfully increased the profitability of this business since acquiring it. We continue to expand our regional concepts through a combination of new company owned and franchise stores, and look forward to continuing to drive organic revenue growth, enhanced margins and grow profitability."
Conference Call
The Company will hold a conference call on August 11, 2016 at 9:00 a.m. Eastern Time, to discuss the results of its second quarter ended June 30, 2016.
To access the call, dial (877) 407-8133 approximately five minutes prior to the scheduled start time. International callers please dial (201) 689-8040. To access the webcast, including the quarterly slide presentation, log onto the Chanticleer website at https://ir.stockpr.com/chanticleerholdings/overview.
A replay of the teleconference will be available until September 11, 2016 and may be accessed by dialing (877) 660-6853. International callers may dial (201) 612-7415. Callers should use conference ID: 13642809.
Use of Non-GAAP Measures
Chanticleer Holdings, Inc. prepares its condensed consolidated financial statements in accordance with United States generally accepted accounting principles ("GAAP"). In addition to disclosing financial results prepared in accordance with GAAP, the Company discloses information regarding Adjusted EBITDA and Restaurant EBITDA, which differ from the term EBITDA as it is commonly used. In addition to adjusting net income (loss) from continuing operations to exclude taxes, interest, and depreciation and amortization, Adjusted EBITDA also excludes pre-opening and closing costs for our restaurants, non-cash expenses, transaction-related expenses, change in fair value of derivative liability and other income and expenses. In addition, Restaurant EBITDA also excludes management fee income, franchise revenue and general and administrative expenses. Adjusted EBITDA and restaurant EBITDA are not measures of performance defined in accordance with GAAP. However, adjusted EBITDA and restaurant EBITDA are used internally in planning and evaluating the company's operating performance and by the Company's creditors. Accordingly, management believes that disclosure of these metrics offers investors, bankers and other stakeholders an additional view of the company's operations that, when coupled with the GAAP results, provides a more complete understanding of the Company's financial results.
Adjusted EBITDA and Restaurant EBITDA should not be considered as alternatives to net loss or to net cash used in operating activities as a measure of operating results or of liquidity. It may not be comparable to similarly titled measures used by other companies, and it excludes financial information that some may consider important in evaluating the company's performance. A reconciliation of GAAP net income (loss) to Adjusted EBITDA and Restaurant EBITDA is included in the accompanying financial schedules.
For further information, please refer to Chanticleer's Quarterly Report on Form 10-Q to be filed with the SEC on or about August 11, 2016, available online at www.sec.gov.
About Chanticleer Holdings, Inc.
Headquartered in Charlotte, NC, Chanticleer Holdings (HOTR), together with its subsidiaries, owns and operates restaurant brands in the United States and internationally. The Company is a franchisee owner of Hooters® restaurants in international markets including Australia, South Africa, and Europe, and two Hooters restaurants in the United States. The Company also owns and operates American Burger Co., BGR the Burger Joint, BT's Burger Joint, Little Big Burger and Just Fresh restaurants in the U.S.
For further information, please visit www.chanticleerholdings.com
Facebook: www.Facebook.com/ChanticleerHOTR
Twitter: http://Twitter.com/ChanticleerHOTR
Google+: https://plus.google.com/u/1/b/118048474114244335161/118048474114244335161/posts
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. These statements include projections, predictions, expectations or statements as to beliefs or future events or results or refer to other matters that are not historical facts. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from those contemplated by these statements. The forward-looking statements contained in this press release are based on various factors and were derived using numerous assumptions. In some cases, you can identify these forward-looking statements by the words "anticipate", "estimate", "plan", "project", "continuing", "ongoing", "target", "aim", "expect", "believe", "intend", "may", "will", "should", "could", or the negative of those words and other comparable words.
Our operations involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. Forward-looking statements in this press release include, without limitation, statements reflecting management's expectations for future financial performance and operating expenditures, expected growth, profitability and business outlook, increased sales and marketing expenses, and the expected results from the integration of our acquisitions.
Forward-looking statements are only current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from those anticipated by such statements. These factors include, but are not limited to, the Company's ability to manage growth; integrate acquisitions; manage debt; meet development goals; and other important risks and uncertainties referenced and discussed under the heading titled "Risk Factors" in the Company's filings with the Securities and Exchange Commission. Although we believe that the expectations reflected in the forward-looking statements contained in this press release are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements.
The statements in this press release are made as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company does not assume any obligations to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.
| Chanticleer Holdings, Inc. and Subsidiaries | |||||||||||
| Condensed Consolidated Balance Sheets | |||||||||||
| (Unaudited) | |||||||||||
| June 30, 2016 | December 31, 2015 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash | $ | 983,211 | $ | 1,224,415 | |||||||
| Accounts and other receivables | 830,540 | 862,935 | |||||||||
| Inventories | 499,452 | 569,545 | |||||||||
| Due from related parties | 45,615 | 45,615 | |||||||||
| Prepaid expenses and other current assets | 377,585 | 522,637 | |||||||||
| Assets of discontinued operations, current | 1,673,507 | 593,430 | |||||||||
| TOTAL CURRENT ASSETS | 4,409,909 | 3,818,576 | |||||||||
| Property and equipment, net | 11,599,974 | 12,144,064 | |||||||||
| Goodwill | 12,569,290 | 12,702,139 | |||||||||
| Intangible assets, net | 6,635,823 | 6,776,936 | |||||||||
| Investments at fair value | 11,480 | 31,322 | |||||||||
| Other investments | 1,050,000 | 1,050,000 | |||||||||
| Deposits and other assets | 297,482 | 292,870 | |||||||||
| Assets of discontinued operations | - | 5,389,300 | |||||||||
| TOTAL ASSETS | $ | 36,573,958 | $ | 42,205,207 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and accrued expenses | $ | 5,401,930 | $ | 4,740,131 | |||||||
| Current maturities of long-term debt and notes payable, net of discount of of $85,930 and $171,868, respectively | 6,188,874 | 5,383,003 | |||||||||
| Current maturities of convertible notes payable, net of debt discount of $274,345 and $914,724, respectively | 3,450,656 | 2,810,276 | |||||||||
| Current maturities of capital leases payable | 25,087 | 39,303 | |||||||||
| Due to related parties | 209,963 | 12,963 | |||||||||
| Deferred rent | 117,627 | 683,793 | |||||||||
| Derivative liabilities | 102,507 | 1,231,608 | |||||||||
| Liabilities of discontinued operations, current | 1,832,550 | 1,279,955 | |||||||||
| TOTAL CURRENT LIABILITIES | 17,329,194 | 16,181,033 | |||||||||
| Long-term debt, less current maturities, net of debt discount of $0 and $171,868, respectively | 303,462 | 1,098,641 | |||||||||
| Capital leases payable, less current maturities | 9,120 | 15,969 | |||||||||
| Deferred rent | 2,048,671 | 1,740,012 | |||||||||
| Liabilities of discontinued operations | - | 58,648 | |||||||||
| Deferred tax liabilities | 1,421,612 | 1,353,771 | |||||||||
| TOTAL LIABILITIES | 21,112,060 | 20,448,073 | |||||||||
| Stockholders' equity: | |||||||||||
| Preferred stock: no par value; authorized 5,000,000 shares; none issued and outstanding | - | - | |||||||||
| Common stock: $0.0001 par value; authorized 45,000,000 shares; issued and outstanding 21,957,147 and 21,337,247 shares, respectively | 2,196 | 2,134 | |||||||||
| Additional paid in capital | 55,739,045 | 55,365,597 | |||||||||
| Accumulated other comprehensive loss | (1,162,535 | ) | (987,695 | ) | |||||||
| Non-controlling interest | 510,445 | 389,810 | |||||||||
| Accumulated deficit | (39,627,252 | ) | (33,012,712 | ) | |||||||
| TOTAL STOCKHOLDERS' EQUITY | 15,461,899 | 21,757,134 | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 36,573,958 | $ | 42,205,207 | |||||||
| Chanticleer Holdings, Inc. and Subsidiaries | ||||||||||||||||||
| Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss | ||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||
| June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | |||||||||||||||
| Revenue: | ||||||||||||||||||
| Restaurant sales, net | $ | 10,525,629 | $ | 8,369,369 | $ | 20,330,320 | $ | 14,788,264 | ||||||||||
| Gaming income, net | 97,978 | 71,749 | 197,511 | 166,422 | ||||||||||||||
| Management fee income - non-affiliates | 25,000 | 25,000 | 50,000 | 50,000 | ||||||||||||||
| Franchise income | 103,387 | 134,939 | 285,939 | 150,998 | ||||||||||||||
| Total revenue | 10,751,994 | 8,601,057 | 20,863,770 | 15,155,684 | ||||||||||||||
| Expenses: | ||||||||||||||||||
| Restaurant cost of sales | 3,445,116 | 2,888,532 | 6,695,086 | 5,152,437 | ||||||||||||||
| Restaurant operating expenses | 5,737,169 | 4,886,651 | 11,252,183 | 8,628,027 | ||||||||||||||
| Restaurant pre-opening and closing expenses | - | 336,580 | 7,555 | 339,339 | ||||||||||||||
| General and administrative expenses | 1,374,835 | 1,803,227 | 3,049,715 | 3,512,874 | ||||||||||||||
| Depreciation and amortization | 577,942 | 272,306 | 1,148,382 | 619,255 | ||||||||||||||
| Total expenses | 11,135,061 | 10,187,295 | 22,152,920 | 18,251,932 | ||||||||||||||
| Operating loss from continuing operations | (383,067 | ) | (1,586,238 | ) | (1,289,150 | ) | (3,096,249 | ) | ||||||||||
| Other (expense) income | ||||||||||||||||||
| Interest expense | (650,478 | ) | (1,373,797 | ) | (1,251,405 | ) | (2,078,649 | ) | ||||||||||
| Change in fair value of derivative liabilities | 513,439 | 232,854 | 1,129,101 | 570,907 | ||||||||||||||
| Loss on extinguishment of debt | - | (170,089 | ) | - | (170,089 | ) | ||||||||||||
| Other income (expense) | (27,706 | ) | 265,542 | (19,969 | ) | 103,146 | ||||||||||||
| Total other (expense) income | (164,745 | ) | (1,045,490 | ) | (142,273 | ) | (1,574,685 | ) | ||||||||||
| Loss from continuing operations before income taxes | (547,812 | ) | (2,631,729 | ) | (1,431,424 | ) | (4,670,934 | ) | ||||||||||
| Income tax benefit (expense) | (51,405 | ) | 7,783 | (85,393 | ) | 43,252 | ||||||||||||
| Loss from continuing operations | (599,217 | ) | (2,623,945 | ) | (1,516,817 | ) | (4,627,682 | ) | ||||||||||
| Discontinued operations | ||||||||||||||||||
| Loss from operation of discontinued operations, net of tax | (556,528 | ) | (929,503 | ) | (1,235,909 | ) | (929,503 | ) | ||||||||||
| Loss on wite down of assets | (3,876,161 | ) | - | (3,876,161 | ) | - | ||||||||||||
| Consolidated net loss | (5,031,906 | ) | (3,553,448 | ) | (6,628,887 | ) | (5,557,185 | ) | ||||||||||
| Less: Net loss (income) attributable to non-controlling interest | (21,375 | ) | (2,462 | ) | 14,365 | (14,524 | ) | |||||||||||
| Net loss attributable to Chanticleer Holdings, Inc. | $ | (5,053,281 | ) | $ | (3,555,911 | ) | $ | (6,614,522 | ) | $ | (5,571,708 | ) | ||||||
| Net loss attributable to Chanticleer Holdings, Inc.: | ||||||||||||||||||
| Loss from continuing operations | $ | (620,592 | ) | $ | (2,626,408 | ) | $ | (1,502,452 | ) | $ | (4,642,205 | ) | ||||||
| Loss from discontinued operations | (4,432,689 | ) | (929,503 | ) | (5,112,070 | ) | (929,503 | ) | ||||||||||
| Net loss attributable to Chanticleer Holdings, Inc. | $ | (5,053,281 | ) | $ | (3,555,911 | ) | $ | (6,614,522 | ) | $ | (5,571,708 | ) | ||||||
| Other comprehensive loss: | ||||||||||||||||||
| Unrealized gain (loss) on available-for-sale securities | $ | (22,381 | ) | $ | - | $ | (24,501 | ) | $ | - | ||||||||
| Foreign currency translation (loss) gain | (307,543 | ) | (160,246 | ) | (109,140 | ) | (1,464,726 | ) | ||||||||||
| Total other comprehensive loss | (329,924 | ) | (160,246 | ) | (133,641 | ) | (1,464,726 | ) | ||||||||||
| Comprehensive loss | $ | (5,383,205 | ) | $ | (3,716,157 | ) | $ | (6,748,163 | ) | $ | (7,036,434 | ) | ||||||
| Net loss attributable to Chanticleer Holdings, Inc. per common share, basic and diluted: | ||||||||||||||||||
| Continuing operations attributable to common stockholders, basic and diluted | $ | (0.03 | ) | $ | (0.21 | ) | $ | (0.07 | ) | $ | (0.50 | ) | ||||||
| Discontinued operations attributable to common stockholders, basic and diluted | $ | (0.21 | ) | $ | (0.07 | ) | $ | (0.24 | ) | $ | (0.10 | ) | ||||||
| Weighted average shares outstanding, basic and diluted | 21,522,818 | 12,455,828 | 21,430,033 | 9,314,030 | ||||||||||||||
| Chanticleer Holdings, Inc. and Subsidiaries | |||||||||||
| Unaudited Condensed Consolidated Statements of Cash Flows | |||||||||||
| June 30, 2016 | June 30, 2015 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net loss | $ | (6,628,887 | ) | $ | (5,557,185 | ) | |||||
| Net loss from discontinued operations | 5,112,070 | 929,503 | |||||||||
| Net loss from continuing operations | (1,516,817 | ) | (4,627,682 | ) | |||||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||
| Depreciation and amortization | 1,148,382 | 619,255 | |||||||||
| Loss on disposal of property and equipment | - | 472,770 | |||||||||
| Common stock and warrants issued for services | 24,510 | - | |||||||||
| Common stock and warrants issued for interest | 349,000 | 186,830 | |||||||||
| Amortization of debt discount | 726,317 | 1,592,414 | |||||||||
| Amortization of warrants | - | 22,375 | |||||||||
| Change in assets and liabilities: | |||||||||||
| Accounts and other receivables | 32,395 | 78,096 | |||||||||
| Prepaid and other assets | 140,440 | (84,757 | ) | ||||||||
| Inventory | 73,315 | 65,096 | |||||||||
| Accounts payable and accrued liabilities | 502,777 | 161,062 | |||||||||
| Change in amounts payable to related parties | 197,000 | 1,166 | |||||||||
| Derivative liabilities | (1,129,101 | ) | (570,907 | ) | |||||||
| Deferred income taxes | 67,841 | (68,664 | ) | ||||||||
| Deferred rent | (257,507 | ) | (331,367 | ) | |||||||
| Net cash provided by (used in) operating activities from continuing operations | 358,551 | (2,484,311 | ) | ||||||||
| Net cash used in operating activities from discontinued operations | (75,000 | ) | (433,779 | ) | |||||||
| Net cash provided by (used in) operating activities | 283,551 | (2,918,090 | ) | ||||||||
| Cash flows from investing activities: | |||||||||||
| Purchase of property and equipment | (392,829 | ) | (664,127 | ) | |||||||
| Cash paid for acquisitions, net of cash acquired | (72,215 | ) | (4,265,429 | ) | |||||||
| Proceeds from sale of investments | 8,902 | - | |||||||||
| Net cash used in investing activities from continuing operations | (456,142 | ) | (4,929,556 | ) | |||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from sale of common stock and warrants | - | 8,961,213 | |||||||||
| Loan proceeds | 125,000 | 2,204,369 | |||||||||
| Loan repayments | (206,267 | ) | (760,138 | ) | |||||||
| Capital lease payments | (10,783 | ) | (27,405 | ) | |||||||
| Contribution of non-controlling interest | 46,911 | - | |||||||||
| Net cash (used in) provided by financing activities from continuing operations | (45,139 | ) | 10,378,039 | ||||||||
| Effect of exchange rate changes on cash | (23,474 | ) | (4,944 | ) | |||||||
| Net increase (decrease) in cash | (241,204 | ) | 2,525,449 | ||||||||
| Cash, beginning of period | 1,224,415 | 180,534 | |||||||||
| Cash, end of period | $ | 983,211 | $ | 2,705,983 | |||||||
| Chanticleer Holdings, Inc. and Subsidiaries | ||||||||||||||||||
| Reconcilation of Net Loss to EBITDA | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||
| June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | |||||||||||||||
| Loss from continuing operations | $ | (599,217 | ) | $ | (2,623,945 | ) | $ | (1,516,817 | ) | $ | (4,627,682 | ) | ||||||
| Interest expense | 650,478 | 1,373,797 | 1,251,405 | 2,078,649 | ||||||||||||||
| Income tax | 51,405 | (7,783 | ) | 85,393 | (43,252 | ) | ||||||||||||
| Depreciation and amortization | 577,942 | 272,306 | 1,148,382 | 619,255 | ||||||||||||||
| EBITDA | $ | 680,608 | $ | (985,625 | ) | $ | 968,363 | $ | (1,973,030 | ) | ||||||||
| Restaurant pre-opening and closing expenses | - | 336,580 | 7,555 | 339,339 | ||||||||||||||
| Change in fair value of derivative liabilities | (513,439 | ) | (232,854 | ) | (1,129,101 | ) | (570,907 | ) | ||||||||||
| Loss on extinguishment of debt | - | 170,089 | - | 170,089 | ||||||||||||||
| Transaction-related expenses | - | 384,430 | 98,399 | 820,145 | ||||||||||||||
| Other income | 27,706 | (265,542 | ) | 19,969 | (103,146 | ) | ||||||||||||
| Adjusted EBITDA | $ | 194,875 | $ | (592,922 | ) | $ | (34,815 | ) | $ | (1,317,510 | ) | |||||||
| General and administrative expenses | 1,374,835 | 1,418,797 | 2,951,316 | 2,692,729 | ||||||||||||||
| Franchise revenues | (103,387 | ) | (134,939 | ) | (285,939 | ) | (150,998 | ) | ||||||||||
| Management fee revenue | (25,000 | ) | (25,000 | ) | (50,000 | ) | (50,000 | ) | ||||||||||
| Restaurant EBITDA | $ | 1,441,323 | $ | 665,936 | $ | 2,580,562 | $ | 1,174,221 | ||||||||||
Contact:
Chanticleer Holdings, Inc.
Mike Pruitt
Chairman/CEO
Phone: 704.366.5122 x 1
mp@chanticleerholdings.com
Eric Lederer
CFO
Phone: 704.366.5736
elederer@chanticleerholdings.com
Press Information:
Chanticleer Holdings, Inc.
Investor Relations
Phone: 704.366.5122
ir@chanticleerholdings.com
Investor Relations
John Nesbett/Jennifer Belodeau
Institutional Marketing Services (IMS)
Phone 203.972.9200
jnesbett@institutionalms.com
Source: Chanticleer Holdings, Inc.
Released August 11, 2016