Chanticleer Holdings Reports Second Quarter and First Half 2018 Operating Results

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Revenue trends strengthen sequentially Q1 to Q2. Little Big Burger Expansion Accelerating

CHARLOTTE, N.C., Aug. 13, 2018 (GLOBE NEWSWIRE) -- Chanticleer Holdings, Inc. (NASDAQ: BURG) (“Chanticleer,” or the “Company”), owner, operator and franchisor of multiple branded restaurants in the U.S. and abroad, today announced financial results for the period ended June 30, 2018.

Mike Pruitt, Chairman and CEO of Chanticleer, commented, “We’re pleased to report that revenue trends strengthened across our brands over the past few months. In addition, as a result of the operational initiatives implemented in prior periods, our operating and overhead expenses improved resulting in positive Adjusted EBITDA for the quarter and the first half.

“The capital raise in April significantly strengthens our balance sheet and positions the Company to complete construction of the Little Big Burger locations currently underway.

“Following the close of the quarter, we opened the Multnomah Village location in Portland and our franchisee opened the first Little Big Burger in Austin. As we speak, there are six more LBB locations underway and slated to open in the second half of the year. We are especially looking forward to the expected September opening of our LBB Cornelius N.C. with Denny Hamlin, in addition to opening our first unit in Seattle.”

First Half and Second Quarter 2018 Highlights

  • Total company revenue was $20.4 million for the first half and $10.4 million for the second quarter, a decrease of 1.1% and 3.4% from the prior year largely due to the closure of underperforming locations.
     
    • Excluding closed locations, revenue increased 9.9% for the first half and 11.7%.for the second quarter.
       
    • Sequentially, revenue increased 4.0% from the first quarter to the second quarter of 2018 on increased delivery revenue and new store openings.
       
  • Net loss and EBITDA metrics improved for both the first half and second quarter:
     
    • Non-Gaap Restaurant EBITDA increased 7.6% to $2.2 million for first half and 4.3% to $1.2 million for the second quarter.
       
    • Non-Gaap Adjusted EBITDA more than doubled to $0.2 million for the first half and 6.1% to $0.3 million for the second quarter.
       
    • Net loss attributable to Common Shareholders improved 8.6% to $3.4 million for the first half and 60.9% to $0.8 million for the second quarter.
       
    • Net loss per common share improved 37.9% to $(1.02) for the first half and 72.2% to $(0.23) for the second quarter.
       
  • Completed a $1.4 million equity financing, increasing balance sheet liquidity in second quarter 2018 and providing working capital for new store construction projects.
     
  • Opened 3 new franchise locations (2 LBB San Diego & BGR Bloomfield), 1 Company (BGR Catholic University) and acquired 1 franchise unit (BGR Annapolis).
     
  • Opened 1 new franchise location (Austin) and 1 new Company location (Multnomah Village Portland) in July, with 6 new LBB’s and 1 new BGR franchise location underway.
     
    • LBB store count to approximately double in 2018.
       
  • Entered into Little Big Burger store partnership with NASCAR superstar Denny Hamlin.
     
  • Celebrated BGR 10-year anniversary. 

Conference Call

The Company will host a conference call on Monday, August 13, 2018 at 4:30 PM Eastern Time /1:30 PM PT, which can be accessed by calling:

U.S.: (877) 407-0784
International: (201) 689-8560

In addition, the call can be accessed at https://www.chanticleerholdings.com/investor-relations/.

A replay will be available until Thursday, September 13, 2018 by dialing (844) 512-2921 in the U.S. and Canada and (412) 317-6671 internationally and entering the pin number: 13681836..

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 Holdings Form 10-Q to be filed with the SEC on or about August 13, 2018, available online at www.sec.gov.

About Chanticleer Holdings, Inc.

Headquartered in Charlotte, NC, Chanticleer Holdings (BURG), owns, operates and franchises fast casual and full-service restaurant brands, including American Burger Company, BGR – Burgers Grilled Right, Little Big Burger, Just Fresh and Hooters.

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.

Contact:

Investor Relations
Jason Assad
678-570-6791
Ja@chanticleerholdings.com

 
 
Chanticleer Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
       
  (Unaudited)    
  June 30, 2018   December 31, 2017
ASSETS      
Current assets:      
Cash $ 1,485,060     $ 272,976  
Restricted cash   27,082       165,517  
Accounts and other receivables, net   641,602       475,988  
Inventories   345,902       460,756  
Prepaid expenses and other current assets   701,910       324,324  
Assets held for sale, net   2,090,000       100,000  
TOTAL CURRENT ASSETS    5,291,556        1,799,561  
Property and equipment, net   8,236,276       8,548,592  
Goodwill   10,126,609       12,647,806  
Intangible assets, net   5,600,243       5,896,732  
Investment, at cost   800,000       800,000  
Deposits and other assets   452,675       490,328  
TOTAL ASSETS $   30,507,359     $   30,183,019  
               
LIABILITIES AND STOCKHOLDERS' EQUITY              
Current liabilities:              
Accounts payable and accrued expenses $ 6,503,248     $ 5,797,252  
Current maturities of long-term debt and notes payable net of unamortized
discount and deferred financing costs of $586,695 and $1,173,190,
respectively		   6,157,534       5,741,911  
Current maturities of convertible notes payable   3,000,000       3,000,000  
Due to related parties   191,850       191,850  
TOTAL CURRENT LIABILITIES    15,852,632        14,731,013  
Convertible notes payable, net of unamortized debt premium of $0 and
$12,256, respectively		   -       212,256  
Redeemable preferred stock: no par value;authorized 5,000,000 shares;
62,876 shares issued and outstanding, net of unamortized discount of
$191,306 and $208,697, respectively		   657,520       640,129  
Deferred rent   2,037,289       2,156,378  
Deferred tax liabilities   206,365       779,359  
Deferred revenue   1,215,926       175,000  
TOTAL LIABILITIES    19,969,732        18,694,135  
Commitments and contingencies              
Stockholders' equity:              
Common stock: $0.0001 par value; authorized 45,000,000
shares; issued and outstanding 3,699,270 and 3,045,809
shares, respectively		   371       305  
Additional paid-in capital   63,208,218       60,750,330  
Accumulated other comprehensive loss   (106,689 )     (934,901 )
Accumulated deficit   (53,565,342 )     (49,109,303 )
Total Chanticleer Holdings, Inc. Stockholders' Equity    9,536,558        10,706,431  
Non-Controlling Interests   1,001,069       782,453  
TOTAL STOCKHOLDERS' EQUITY    10,537,627        11,488,884  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $   30,507,359     $   30,183,019  
               
               


Chanticleer Holdings, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
                 
  Three Months Ended     Six Months Ended
   June 30, 2018     June 30, 2017       June 30, 2018     June 30, 2017 
Revenue:                
Restaurant sales, net $ 10,185,159     $ 10,524,787       $ 19,954,667     $ 20,177,941  
Gaming income, net   81,122       107,521         174,277       213,588  
Management fee income   24,999       24,993         49,998       49,983  
Franchise income   108,644       108,017         216,497       183,803  
Total revenue     10,399,924         10,765,318           20,395,439         20,625,315  
Expenses:                                
Restaurant cost of sales   3,376,693       3,579,557         6,652,868       6,770,947  
Restaurant operating expenses   5,640,614       5,855,411         11,226,763       11,529,971  
Restaurant pre-opening and closing expenses   96,770       90,760         199,652       105,196  
General and administrative expenses   1,121,666       1,084,422         2,315,083       2,460,042  
Asset impairment charge   54,212       633,962         1,731,267       633,962  
Depreciation and amortization   530,314       602,659         1,070,993       1,196,039  
Total operating expenses     10,820,269         11,846,771           23,196,626         22,696,157  
Operating loss      (420,345 )       (1,081,453 )         (2,801,187 )       (2,070,842 )
Other (expense) income                                 
Interest expense   (629,858 )     (1,079,706 )       (1,264,939 )     (1,483,842 )
Gain (loss) on debt refinancing   -       267,512         -       (95,310 )
Other income (expense)   7,605       (22 )       5,490       12,212  
Total other expense   (622,253 )     (812,216 )       (1,259,449 )     (1,566,940 )
Loss from continuing operations before income taxes     (1,042,598 )       (1,893,669 )         (4,060,636 )       (3,637,782 )
Income tax benefit (expense)   236,798       (109,531 )       572,995       (113,328 )
Consolidated net loss     (805,800 )       (2,003,200 )         (3,487,641 )       (3,751,110 )
Less net loss  attributable to non-controlling interest:   45,340       56,328         129,747       77,171  
Net loss attributable to Chanticleer Holdings, Inc. $    (760,460 )   $    (1,946,872 )     $    (3,357,894 )   $    (3,673,939 )
Dividends on redeemable preferred stock   (28,007 )     (27,622 )       (55,801 )     (51,769 )
Net loss attributable to common shareholders of Chanticleer Holdings, Inc. $    (788,467 )   $    (1,974,494 )     $    (3,413,695 )   $    (3,725,708 )
                                 
Net loss attributable to Chanticleer Holdings, Inc. per common                                 
 share, basic and diluted: $    (0.23 )   $    (0.81 )     $    (1.02 )   $    (1.65 )
Weighted average shares outstanding, basic and diluted   3,494,803       2,432,313         3,331,296       2,257,767  
                                 
                                 


Chanticleer Holdings, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
       
  Six Months Ended
   June 30, 2018     June 30, 2017 
Cash flows from operating activities:              
Net loss $ (3,487,641 )   $ (3,751,110 )
Adjustments to reconcile net loss  to net cash used in operating activities:              
Depreciation and amortization   1,070,993       1,196,039  
Loss on extinguishment of debt   -       95,310  
Asset impairment charge   1,731,267       633,962  
Common stock and warrants issued for services   129,767       154,318  
Amortization of debt discount   591,830       408,359  
Change in assets and liabilities:              
Accounts and other receivables   (241,772 )     194,426  
Prepaid and other assets   (412,423 )     26,460  
Inventory   60,093       (20,693 )
Accounts payable and accrued liabilities   849,132       555,875  
Deferred income taxes   (572,994 )     73,520  
Deferred rent   (119,089 )     178,453  
Net cash used in operating activities   (400,837 )     (255,081 )
               
Cash flows from investing activities:              
Purchase of property and equipment   (664,801 )     (984,301 )
Cash paid for acquisitions, net of cash acquired   (30,000 )     -  
Net cash used in investing activities   (694,801 )     (984,301 )
               
Cash flows from financing activities:              
Proceeds from sale of common stock and warrants   1,687,184       -  
Proceeds from sale of preferred stock   -       591,651  
Payments related to sale of preferred stock   -       (258,153 )
Loan proceeds   -       6,598,161  
Payment of deferred financing costs   -       (293,294 )
Loan repayments   (207,531 )     (5,478,494 )
Capital lease payments   -       (14,551 )
Distributions to non-controlling interest   (42,603 )     -  
Contribution of non-controlling interest   750,000       500,000  
Net cash provided by financing activities   2,187,050       1,645,320  
Effect of exchange rate changes on cash   (17,763 )     (21,355 )
Net increase  in cash and restricted cash   1,073,649       384,583  
Cash and restricted cash,  beginning of period   438,493       268,575  
Cash and restricted cash, end of period $ 1,512,142     $ 653,158  
               
               


Chanticleer Holdings, Inc. and Subsidiaries
Reconcilation of Net Loss to EBITDA
(Unaudited)
               
  Three Months Ended   Six Months Ended
   June 30, 2018     June 30, 2017     June 30, 2018     June 30, 2017 
               
Consolidated net loss $    (805,800 )   $    (2,003,200 )   $    (3,487,641 )   $    (3,751,110 )
Interest expense   629,858       1,079,706       1,264,939       1,483,842  
Income tax   (236,798 )     109,531       (572,995 )     113,328  
Depreciation and amortization   530,314       602,659       1,070,993       1,196,039  
EBITDA $    117,574     $    (211,304 )   $    (1,724,704 )   $    (957,901 )
Restaurant pre-opening and closing expenses   96,770       90,760       199,652       105,196  
(Gain) loss on debt refinancing   -       (267,512 )     -       95,310  
Asset impairment charge   54,212       633,962       1,731,267       633,962  
Transaction and severence related expenses   -       -           214,905  
Other income (expense)   (7,605 )     22       (5,490 )     (12,212 )
Adjusted EBITDA $    260,951     $    245,928     $    200,725     $    79,260  
General and administrative expenses   1,121,666       1,084,422       2,315,083       2,245,137  
Franchise revenues   (108,644 )     (108,017 )     (216,497 )     (183,803 )
Management fee revenue   (24,999 )     (24,993 )     (49,998 )     (49,983 )
Restaurant EBITDA $    1,248,974     $    1,197,340     $    2,249,313     $    2,090,611  
               

Source: Chanticleer Holdings, Inc.

Released August 13, 2018