Chanticleer Holdings Reports Positive EBITDA for Second Consecutive Quarter
Revenue Growth, Improved Revenue Mix and Efficiency Initiatives Drive Improved Operating Results
CHARLOTTE, NC -- (Marketwired) -- 11/09/16 --
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 third quarter ended September 30, 2016.
Third Quarter Revenue Increases 18%; Company Achieves Second Consecutive Quarter of Adjusted EBITDA Profitability:
- Total revenue for the third quarter increased 18.3% to $11.0 million, primarily from growth in the Fast Casual Better Burger segment.
- Cost of sales improved to 33.1% compared to 33.6% in the comparable quarter last year.
- Operating expenses as a percentage of restaurant sales improved to 54.8% compared to 57.3% in the comparable quarter last year.
- General and administrative expenses as a percentage of total revenue decreased to 12.3% from 17.8% in the comparable quarter last year.
- Net loss from continuing operations improved to $(0.9) million or $(0.04) per share, compared to $(1.7) million or $(0.11) in the comparable quarter last year.
- Restaurant EBITDA improved to $1.4 million compared to $0.9 million for the comparable quarter of last year.
- Adjusted EBITDA improved to a profit of $0.2 million compared to a loss of $(0.2) million in the comparable quarter last year.
Nine Months Revenue Increases 30%; $1.7 Million Adjusted EBITDA Improvement:
- Total revenue for the nine months increased 30.3% to $31.8 million, primarily from growth in the Fast Casual Better Burger segment.
- Cost of sales improved to 33.0%, compared to 34.4% in the comparable period last year.
- Operating expenses as a percentage of restaurant sales improved to 55.2% compared to 57.9% in the comparable period last year.
- General and administrative expenses as a percentage of total revenue decreased to 13.8% from 21.1% of sales in the comparable period last year.
- Net loss from continuing operations decreased to $(2.4) million or $(0.11) per share, compared to $(6.3) million or $(0.45) in the comparable period last year.
- Net cash from operating activities of continuing operations improved to positive $0.1 million compared to a negative $(3.8) million in the first nine months of last year.
- Restaurant EBITDA improved to $4.0 million compared to $2.1 million in the first nine months of last year.
- Adjusted EBITDA improved to a profit of $0.2 million compared to a loss of $(1.9) million in the first nine months of last year.
Mike Pruitt, Chairman and CEO of Chanticleer commented, "We're pleased to have delivered excellent third quarter results, highlighted by strong revenue growth. Revenue growth in the quarter was driven by continued strength from our fast casual better burger business which has grown to represent 52% of our revenue. Little Big Burger is performing particularly well, contributing significantly to the 19% sequential growth in Adjusted EBITDA from continuing operations from Q2, and further validating our regional brand strategy."
Mr. Pruitt continued, "Our focus is on expanding our regional brands, driving margin improvement and achieving significant long term profitability growth. We have built a solid restaurant operating business with tremendous growth potential and are generating EBITDA profitability. Looking ahead, we are now setting our sights on accelerating growth of our regional brands and doubling the scale of our business by 2020.
"Subsequent to the close of the quarter, we announced a convertible preferred stock rights offering to retire a portion of our debt and provide working capital for store-related growth. We believe the offering will allow us to capitalize on the momentum we're seeing in the fast casual segment and allow us to accelerate growth in our high return burger concepts while potentially adding new shareholders to our company."
Conference Call
The Company will hold a conference call on November 9, 2016 at 11:00 a.m. Eastern Time, to discuss the results of its third quarter ended September 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 December 9, 2016 and may be accessed by dialing (877) 481-4010. International callers may dial (919) 882-2331. Callers should use conference ID: 10138.
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 and severance 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 November 10, 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 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) | ||||||||||
| September 30, 2016 | December, 31, 2015 | |||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash | $ | 990,756 | $ | 1,224,415 | ||||||
| Accounts and other receivables | 222,755 | 862,935 | ||||||||
| Inventories | 517,594 | 569,545 | ||||||||
| Due from related parties | 45,615 | 45,615 | ||||||||
| Prepaid expenses and other current assets | 346,852 | 522,637 | ||||||||
| Assets of discontinued operations, current | - | 593,430 | ||||||||
| TOTAL CURRENT ASSETS | 2,123,572 | 3, 8 18,576 | ||||||||
| Property and equipment, net | 11,531,222 | 12,144,064 | ||||||||
| Goodwill | 12,518,192 | 12,702,139 | ||||||||
| Intangible assets, net | 6,571,691 | 6,776,936 | ||||||||
| Investments at fair value | 11,480 | 31,322 | ||||||||
| Other investments | 1,050,000 | 1,050,000 | ||||||||
| Deposits and other assets | 314,759 | 292,870 | ||||||||
| Assets of discontinued operations | - | 5,389,300 | ||||||||
| TOTAL ASSETS | $ | 34,120,916 | $ | 42,205,207 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable and accrued expenses | $ | 4,469,498 | $ | 4,740,131 | ||||||
| Current maturities of long-term debt and notes payable, net of debt discount | 6,130,583 | 5,383,003 | ||||||||
| Current maturities of convertible notes payable, net of discount | 3,604,180 | 2,810,276 | ||||||||
| Current maturities of capital leases payable | 22,115 | 39,303 | ||||||||
| Due to related parties | 209,563 | 12,963 | ||||||||
| Deferred rent | 95,298 | 683,793 | ||||||||
| Derivative liabilities | - | 1,231,608 | ||||||||
| Liabilities of discontinued operations | 161,168 | 1,279,955 | ||||||||
| TOTAL CURRENT LIABILITIES | 14,892,404 | 16,181,033 | ||||||||
| Long-term debt, less current maturities, net of debt discount of | 305,105 | 1,098,641 | ||||||||
| Capital leases payable, less current maturities | 4,773 | 15,969 | ||||||||
| Deferred rent | 2,037,980 | 1,740,012 | ||||||||
| Liabilities of discontinued operations | - | 58,648 | ||||||||
| Deferred tax liabilities | 1,450,089 | 1,353,771 | ||||||||
| TOTAL LIABILITIES | 18,690,531 | 20,448,0 73 | ||||||||
| Stockholders' equity: | ||||||||||
| Preferred stock: no par value; authorized 5,000,000 shares; none issued | - | - | ||||||||
| Common stock: $0.0001 par value; authorized 45,000,000shares; issued and outstanding 21,957,147 and 21,337,247shares, respectively |
2,196 |
2,134 |
||||||||
| Additional paid in capital | 56,264,045 | 55,365,597 | ||||||||
| Accumulated other comprehensive loss | (1,247,788 | ) | (987,695 | ) | ||||||
| Non-controlling interest | 696,181 | 389,810 | ||||||||
| Accumulated deficit | (40,284,069 | ) | (33,012,712 | ) | ||||||
| TOTAL STOCKHOLDERS' EQUITY | 15,430,566 | 21,757, 1 34 | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 34,120,916 | $ | 42,205,207 | ||||||
| Chanticleer Holdings, Inc. and Subsidiaries | |||||||||||||||||||
| Condensed Consolidated Statements of Operations and Comprehensive Loss | |||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||||||
| Revenue: | |||||||||||||||||||
| Restaurant sales, net | $ | 10,737,961 | $ | 9,039,239 | $ | 31,068,281 | $ | 23,827,503 | |||||||||||
| Gaming income, net | 118,136 | 94,008 | 315,647 | 260,430 | |||||||||||||||
| Management fee income - non-affiliates | 25,000 | 25,000 | 75,000 | 75,000 | |||||||||||||||
| Franchise income | 95,542 | 119,950 | 381,481 | 270,948 | |||||||||||||||
| Total revenue | 10,976,639 | 9,278,197 | 31,840,409 | 24,433,881 | |||||||||||||||
| Expenses: | |||||||||||||||||||
| Restaurant cost of sales | 3,553,684 | 3,039,197 | 10,248,770 | 8,191,634 | |||||||||||||||
| Restaurant operating expenses | 5,888,509 | 5,176,174 | 17,140,692 | 13,804,201 | |||||||||||||||
| Restaurant pre-opening and closing expenses | 110,432 | 141,306 | 117,987 | 480,645 | |||||||||||||||
| General and administrative expenses | 1,351,111 | 1,651,051 | 4,400,826 | 5,163,925 | |||||||||||||||
| Depreciation and amortization | 590,433 | 354,119 | 1,738,815 | 973,374 | |||||||||||||||
| Total expenses | 11,494,169 | 10,361,847 | 33,647,090 | 28,613,779 | |||||||||||||||
| Operating loss from continuing operations | (517,530 | ) | (1,083,650 | ) | (1,806,681 | ) | (4,179,898 | ) | |||||||||||
| Other (expense) income | |||||||||||||||||||
| Interest expense | (453,151 | ) | (657,906 | ) | (1,704,556 | ) | (2,736,555 | ) | |||||||||||
| Change in fair value of derivative liabilities | 102,507 | 262,232 | 1,231,608 | 833,139 | |||||||||||||||
| Loss on extinguishment of debt | - | (145,834 | ) | - | (315,923 | ) | |||||||||||||
| Other income (expense) | 32,357 | (52,956 | ) | 12,388 | 50,190 | ||||||||||||||
| Total other (expense) income | (318,287 | ) | (594,463 | ) | (460,560 | ) | (2,169,149 | ) | |||||||||||
| Loss from continuing operations before income taxes | (835,817 | ) | (1,678,113 | ) | (2,267,241 | ) | (6,349,047 | ) | |||||||||||
| Income tax benefit (expense) | (52,474 | ) | (12,954 | ) | (137,867 | ) | 30,298 | ||||||||||||
| Loss from continuing operations | (888,291 | ) | (1,691,067 | ) | (2,405,108 | ) | (6,318,749 | ) | |||||||||||
| Discontinued operations | |||||||||||||||||||
| Loss from operation of discontinued operations, net of tax | (68,718 | ) | (4,649,247 | ) | (1,304,627 | ) | (5,578,750 | ) | |||||||||||
| Loss on write down of net of sales | - | - | (3,876,161 | ) | - | ||||||||||||||
| Consolidated net loss | (957,009 | ) | (6,340,314 | ) | (7,585,896 | ) | (11,897,499 | ) | |||||||||||
| Less: Net loss (income) attributable to non-controlling interest of continuing operations | 39,248 | 1,274 | 53,612 | (13,250 | ) | ||||||||||||||
| Less: Net loss attributable to non-controlling interest of discontinued operations | 13,744 | 1,822,328 | 260,925 | 2,179,821 | |||||||||||||||
| Net loss attributable to Chanticleer Holdings, Inc. | $ | (904,017 | ) | $ | (4,516,712 | ) | $ | (7,271,359 | ) | $ | (9,730,928 | ) | |||||||
| Net loss attributable to Chanticleer Holdings, Inc.: | |||||||||||||||||||
| Loss from continuing operations | $ | (849,043 | ) | $ | (1,689,793 | ) | $ | (2,351,497 | ) | $ | (6,331,999 | ) | |||||||
| Loss from discontinued operations | (54,974 | ) | (2,826,919 | ) | (4,919,862 | ) | (3,398,929 | ) | |||||||||||
| Net loss attributable to Chanticleer Holdings, Inc. | $ | (904,017 | ) | $ | (4,516,712 | ) | $ | (7,271,359 | ) | $ | (9,730,928 | ) | |||||||
| Unrealized loss on available-for-sale securities | $ | - | $ | - | $ | (24,501 | ) | $ | - | ||||||||||
| Foreign currency translation | (126,452 | ) | (572,954 | ) | (235,592 | ) | (891,772 | ) | |||||||||||
| Total other comprehensive loss | (126,452 | ) | (572,954 | ) | (260,093 | ) | (891,772 | ) | |||||||||||
| Comprehensive loss | $ | (1,030,469 | ) | $ | (5,089,666 | ) | $ | (7,531,452 | ) | $ | (10,622,700 | ) | |||||||
| Net loss attributable to Chanticleer Holdings, Inc. per common share, basic and diluted: | |||||||||||||||||||
| Continuing operations attributable to common stockholders, basic and diluted | $ | (0.04 | ) | $ | (0.11 | ) | $ | (0.11 | ) | $ | (0.45 | ) | |||||||
| Discontinued operations attributable to common stockholders, basic and diluted | $ | 0.00 | $ | (0.19 | ) | $ | (0.23 | ) | $ | (0.24 | ) | ||||||||
| Weighted average shares outstanding, basic and diluted | 21,957,147 | 14,802,370 | 21,607,027 | 14,059,116 | |||||||||||||||
| Chanticleer Holdings, Inc. and Subsidiaries | ||||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||||
| (Unaudited) | ||||||||||||
| Nine Months Ended | ||||||||||||
| September 30, 2016 | September 30, 2015 | |||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net loss | $ | (7,585,896 | ) | $ | (11,897,499 | ) | ||||||
| Net (income) loss from discontinued operations | 5,180,788 | 5,578,750 | ||||||||||
| Net loss from continuing operations | (2,405,108 | ) | (6,318,749 | ) | ||||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Depreciation and amortization | 1,738,815 | 973,374 | ||||||||||
| Loss on exinguishment of debt | - | 315,923 | ||||||||||
| Loss on disposal of property and equipment | - | 514,522 | ||||||||||
| Loss (gain) on sales investments | - | |||||||||||
| Common stock and warrants issued for services | 24,510 | 231,857 | ||||||||||
| Common stock and warrants issued for interest | 349,000 | - | ||||||||||
| Amortization of debt discount | 925,806 | 1,356,365 | ||||||||||
| Amortization of warrants | - | 22,375 | ||||||||||
| Change in assets and liabilities: | ||||||||||||
| Accounts and other receivables | (34,820 | ) | 91,107 | |||||||||
| Prepaid and other assets | 153,895 | 48,390 | ||||||||||
| Inventory | 55,173 | 56,506 | ||||||||||
| Accounts payable and accrued liabilities | 501,078 | 106,198 | ||||||||||
| Change in amounts of payable to related parties | 196,600 | 766 | ||||||||||
| Derivative liabilities | (1,231,608 | ) | (833,139 | ) | ||||||||
| Deferred income taxes | 96,318 | (31,834 | ) | |||||||||
| Deferred rent | (290,528 | ) | (332,602 | ) | ||||||||
| Net cash provided by (used in) operating activieies from continuing operations | 79,129 | (3,798,939 | ) | |||||||||
| Net cash used in operating activities from discontinued operations | (75,000 | ) | (1,035,980 | ) | ||||||||
| Net cash provided by (used in) operating activities | 4,129 | (4,834,919 | ) | |||||||||
| Cash flows from investing activities: | ||||||||||||
| Purchase of property and equipment | (708,214 | ) | (1,329,389 | ) | ||||||||
| Cash paid for acquisitions, net of cash acquired | (72,215 | ) | (9,082,918 | ) | ||||||||
| Proceeds from sale investments | 8,902 | - | ||||||||||
| Net cash used in investing activities from continuing operations | (771,527 | ) | (10,412,307 | ) | ||||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from sale of common stock and warrants | - | 14,920,937 | ||||||||||
| Loan proceeds | 125,000 | 2,806,837 | ||||||||||
| Loan repayments | (340,582 | ) | (824,981 | ) | ||||||||
| Capital lease payments | (32,897 | ) | (39,822 | ) | ||||||||
| Contribution of non-controlling interest | 796,911 | - | ||||||||||
| Net cash provided by financing activities from continuing operations | 548,432 | 16,862,971 | ||||||||||
| Effect of exchange rate changes on cash | (14,693 | ) | (4,944 | ) | ||||||||
| Net increase (decrease) in cash | (233,659 | ) | 1,610,802 | |||||||||
| Cash, beginning of period | 1,224,415 | 180,534 | ||||||||||
| Cash, end of period | $ | 990,756 | $ | 1,791,336 | ||||||||
| Chanticleer Holdings, Inc. and Subsidiaries | ||||||||||||||||||
| Reconcilation of Net Loss to EBITDA | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||
| September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | |||||||||||||||
| Loss from Continuing Operations | $ | (888,291 | ) | $ | (1,691,067 | ) | $ | (2,405,108 | ) | $ | (6,318,749 | ) | ||||||
| Interest expense | 453,151 | 657,906 | 1,704,556 | 2,736,555 | ||||||||||||||
| Income tax | 52,474 | 12,954 | 137,867 | (30,298 | ) | |||||||||||||
| Depreciation and amortization | 590,433 | 354,119 | 1,738,815 | 973,374 | ||||||||||||||
| EBITDA | $ | 207,767 | $ | (666,089 | ) | $ | 1,176,130 | $ | (2,639,118 | ) | ||||||||
| Restaurant pre-opening and closing expenses | 110,432 | 141,306 | 117,987 | 480,645 | ||||||||||||||
| Change in fair value of derivative liabilities | (102,507 | ) | (262,232 | ) | (1,231,608 | ) | (833,139 | ) | ||||||||||
| Loss on extinguishment of debt | - | 145,834 | - | 315,923 | ||||||||||||||
| Transaction and severence related expenses | 48,214 | 384,430 | 146,613 | 820,145 | ||||||||||||||
| Other income | (32,357 | ) | 52,956 | (12,388 | ) | (50,190 | ) | |||||||||||
| Adjusted EBITDA | $ | 231,549 | $ | (203,795 | ) | $ | 196,734 | $ | (1,905,735 | ) | ||||||||
| General and administrative expenses | 1,302,897 | 1,266,621 | 4,254,213 | 4,342,780 | ||||||||||||||
| Franchise revenues | (95,542 | ) | (119,950 | ) | (381,481 | ) | (270,948 | ) | ||||||||||
| Management fee revenue | (25,000 | ) | (25,000 | ) | (75,000 | ) | (75,000 | ) | ||||||||||
| Restaurant EBITDA | $ | 1,413,903 | $ | 917,876 | $ | 3,994,465 | $ | 2,092,098 | ||||||||||
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 November 9, 2016