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Press release content from Globe Newswire. The AP news staff was not involved in its creation.
PRESS RELEASE: Paid content from Globe Newswire
Press release content from Globe Newswire. The AP news staff was not involved in its creation.

BBQ Holdings, Inc. Reports Results for Second Quarter 2021; Updates Revenue and Earnings ...

August 16, 2021 GMT

MINNEAPOLIS, Aug. 16, 2021 (GLOBE NEWSWIRE) -- BBQ Holdings, Inc. (NASDAQ: BBQ) (the “Company”), an innovating global owner and operator of restaurants, today reported financial results for the second fiscal quarter ended July 4, 2021.

Second Quarter 2021 Highlights:

Financial:

  • Net income of $15.8mm, which includes loan forgiveness of $14.1mm.
  • Adjusted EBITDA, a non-GAAP measure, was $5.1mm vs. a loss of $1.1mm second quarter 2020.
  • Combined brands restaurant level margins of 12.7% vs 0.4% last year.

Growth:

  • Purchased Village Inn, 114 franchise and 21 corporate restaurants, and 12 Bakers Square corporate restaurants.
  • Purchased 4 Famous Dave’s franchise restaurants in Nashville and Kentucky.
  • Famous Dave’s franchisee opened its first line-serve restaurant in Las Vegas, NV in August 2021.

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Sales:

  • Company-owned Famous Dave’s 2021 second quarter SSS increased 35.2% compared to second quarter of 2020.
  • Company-owned Famous Dave’s 2021 second quarter SSS increased 14.5% compared to second quarter of 2019.
  • Franchise-operated Famous Dave’s SSS increased 42.7% in the second quarter 2021 compared to second quarter 2020.
  • Franchise-operated Famous Dave’s SSS increased 4.4% in the second quarter 2021 compared to second quarter 2019.

  • Granite City second quarter SSS increased 138.6% compared to second quarter 2020.
  • Granite City second quarter SSS decreased 10.4% compared to second quarter 2019.

Updated 2021 Guidance:

Based on the results to date through the second quarter 2021, and including the uncertainty related to COVID-19, the Company has updated its 2021 guidance as follows:

  • Net Revenue from $180 - $185mm to $183 - $188mm
  • Net Income from $5.1 - $5.5mm to $20.6 - $21.0mm
  • Cash EBITDA from $13.5 - $14mm to $14.5 - $15mm        

Executive Comments

Jeff Crivello, CEO, commented, “This quarter was marked by some momentous events that have positioned the Company for tremendous growth. Without question we saw our team execute at a high level to drive our four growth initiatives; operational improvements, organic new units, filling the latent capacity of our current restaurants, and accretive M&A. With the recently completed acquisition of Village Inn and Bakers Square, we look forward to working collaboratively to improve, reinvigorate, and leverage our infrastructure as a launch pad for growth. Our ability to drive cash flow throughout the year has been a huge step towards building a very strong balance sheet.

Key Operating Metrics

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 Three Months Ended Six Months Ended
 July 4, 2021 June 28, 2020  July 4, 2021
  June 28, 2020
Restaurant count:             
Franchise-operated 100   95   100   95 
Company-owned 47   50   47   50 
Total 147   145   147   145 
Same store net restaurant sales %:             
Franchise-operated 42.7%  (31.5)%  29.6%  (22.7)%
Company-owned 65.6%  (22.9)%  45.5%  (11.5)%
Total 51.0%  (30.0)%  34.7%  (20.6)%
              
(in thousands, expect per share data)             
              
System-wide restaurant sales(1)$104,531  $88,315  $138,134  $109,018 
              
Net income attributable to shareholders$15,786  $(6,252) $16,585  $7,455 
              
Net (loss) income attributable to shareholders, per diluted share$1.64  $(0.68) $1.73  $0.82 
              
Adjusted EBITDA(2)$5,104  $(1,070) $8,224  $(1,527)
                

_______________
(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 measures. 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.”

Second Quarter 2021 Review

Total revenue for the second quarter of 2021 was $45.5 million, up 64.0% from the second quarter of 2020. The increase in year-over-year restaurant net sales for the quarter ended July 4, 2021 was driven primarily by the easing of dining restrictions in the second quarter of 2021.  

To-go sales, which were 49.1% of our same store sales at Company-owned Famous Dave’s restaurants, decreased 16.4% in the second quarter of fiscal 2021 compared to the prior year period. This decrease in same store sales was more than offset by an increase of 240.9% and 205.4% of our dine-in and catering sales, respectively. The increase in dine-in sales was due to our dining rooms being open in the second quarter of 2021 and the easing of restrictions on group gathering contributed to our increase in catering sales. In the second quarter of 2021, dine-in same store sales at our Granite City restaurants increased 197.8% over the second quarter of 2020 due to the opening of our dining rooms.  

Restaurant-level operating margin, as a percentage of restaurant net sales, for Company-owned restaurants was 12.7% in the second quarter of fiscal 2021 compared to 0.4% in the second quarter of fiscal 2020. This increase in restaurant-level operating margin was primarily a result of the reduction of labor and food costs as our restaurant operators adjusted to the increase in to-go sales and reduction of dine-in customers because of COVID-19 concerns.   General and administrative expenses for the quarter ended July 4, 2021 and June 28, 2020 represented approximately 9.6% and 13.7% of total revenues, respectively. The decrease in general and administrative expenses as a percentage of revenue in the second quarter of 2021 was due primarily to the increase in the revenue base with the easing of COVID-19 government-mandated restrictions which were in place during the second quarter of 2020.

Net income attributable to shareholders was approximately $15.8 million, or $1.70 per share, in the second quarter of fiscal 2021 compared to net loss of $6.3 million, or $0.68 per share, in the second quarter of fiscal 2020. Of the $15.8 million of net income, $14.1 million was related to the gain on the forgiveness of our PPP loans.   Adjusted EBITDA, a non-GAAP measure, was approximately $5.1 million, or $0.55 per share, compared to adjusted EBITDA of approximately $(1.1) or $(0.12) per share, in the second quarter of fiscal 2020. A reconciliation between adjusted EBITDA and its most directly comparable GAAP measure is included in the accompanying financial tables.

About BBQ Holdings

BBQ Holdings, Inc. (NASDAQ: BBQ) is a national restaurant company engaged in the ownership and operation of casual and fast dining restaurants. As of August 13, 2021, BBQ Holdings had six brands with 299 locations in three countries including 85 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 17 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. BBQ Holdings, through partnerships, has extended Travis Clark’s award-winning line of barbecue sauces, rubs and seasonings into the retail market. Along with a wide variety of BBQ favorites served at their BBQ restaurants, BBQ Holdings newest addition, Granite City Food and Brewery, offers award winning craft beer and a made-from-scratch, chef driven menu featuring contemporary American cuisine.   Village Inn and Bakers Square are the most recent additions to the company and add a legendary Family Dining element to BBQ Holdings.

Non-GAAP Financial Measures

To supplement its 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 (loss), plus asset impairment, estimated lease termination charges and other closing costs, settlement agreements, depreciation and amortization, interest expense, net, net (loss) gain on disposal of equipment, stock-based compensation, severance, acquisition costs, COVID-19-related expense and provision (benefit) for income taxes.

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 Six Months Ended
 July 4, 2021 June 28, 2020 July 4, 2021    June 28, 2020
Revenue:           
Restaurant sales, net$41,205  $24,989  $74,808  $45,692 
Franchise royalty and fee revenue 2,946   1,951   5,320   4,475 
Franchisee national advertising fund contributions 421   242   749   524 
Licensing and other revenue 948   580   1,962   926 
Total revenue 45,520   27,762   82,839   51,617 
            
Costs and expenses:           
Food and beverage costs 11,932   7,717   21,989   14,471 
Labor and benefits costs 12,429   8,066   22,683   15,787 
Operating expenses 11,594   9,104   21,843   15,730 
Depreciation and amortization expenses 1,433   1,378   2,985   2,423 
General and administrative expenses 4,544   3,803   8,582   6,835 
National advertising fund expenses 421   242   749   524 
Asset impairment, estimated lease termination charges and other closing costs, net 25   4,779   37   4,952 
Pre-opening expenses 92   2   120   27 
Gain on disposal of property, net 143   (100)  135   (577)
Total costs and expenses 42,613   34,991   79,123   60,172 
            
Income (loss) from operations 2,907   (7,229)  3,716   (8,555)
            
Other income (expense):           
Interest expense (261)  (237)  (315)  (356)
Interest income 74   59   98   102 
Gain upon debt extinguishment 14,109      14,109    
Gain on bargain purchase    (689)     13,675 
Total other income (expense) income 13,922   (867)  13,892   13,421 
            
Income (loss) before income taxes 16,829   (8,096)  17,608   4,866 
            
Income tax (expense) benefit (399)  1,897   (481)  2,246 
            
Net income (loss) 16,430   (6,199)  17,127   7,112 
Net (income) loss attributable to non-controlling interest (644)  (53)  (542)  343 
Net income (loss) attributable to shareholders$15,786  $(6,252) $16,585  $7,455 
            
            
Income (loss) per common share:           
Basic net income (loss) per share attributable to shareholders$1.70  $(0.68) $1.79  $0.82 
Diluted net income (loss) per share attributable to shareholders$1.64  $(0.68) $1.73  $0.82 
Weighted average shares outstanding - basic 9,304   9,138   9,256   9,132 
Weighted average shares outstanding - diluted 9,615   9,138   9,567   9,132 
                

BBQ HOLDINGS, INC. AND SUBSIDIARIES
OPERATING RESULTS
(unaudited)

 Three Months Ended Six Months Ended
 July 4, 2021     June 28, 2020        July 4, 2021     June 28, 2020    
Food and beverage costs(1)29.0% 30.9% 29.4% 31.7%
Labor and benefits costs(1)30.2% 32.3% 30.3% 34.6%
Operating expenses(1)28.1% 36.4% 29.2% 34.4%
Restaurant level operating margin(1)(2)  12.7% 0.4% 11.1% (0.6)%
Depreciation and amortization expenses(3)3.1% 5.0% 3.6% 4.7%
General and administrative expenses(3)10.0% 13.7% 10.4% 13.2%
Income (loss) from operations(3)6.4% (26.0)% 4.5% (16.6)%
            

_______________
(1) As a percentage of restaurant sales, net
(2) Restaurant level 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
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)

ASSETS     
Current assets:July 4, 2021    January 3, 2021
Cash and cash equivalents$38,358  $18,101 
Restricted cash 824   1,502 
Accounts receivable, net of allowance for doubtful accounts of $259,000 and $132,000, respectively 4,966   4,823 
Inventories 2,433   2,271 
Prepaid expenses and other current assets 2,881   1,252 
Assets held for sale 1,024   1,070 
Total current assets 50,486   29,019 
      
Property, equipment and leasehold improvements, net 31,112   32,389 
      
Other assets:       
Operating lease right-of-use assets 60,787   61,634 
Goodwill 601   601 
Intangible assets, net 9,733   9,967 
Deferred tax asset, net 4,623   4,934 
Other assets 1,660   1,724 
 $159,002  $140,268 
      
LIABILITIES AND SHAREHOLDERS’ EQUITY      
      
Current liabilities:       
Accounts payable$7,050  $6,385 
Current portion of lease liabilities 6,844   6,185 
Current portion of long-term debt 2,165   2,111 
Accrued compensation and benefits 6,313   2,390 
Other current liabilities 8,814   9,766 
Total current liabilities 31,186   26,837 
        
Long-term liabilities:       
Lease liabilities, less current portion 61,839   63,105 
Long-term debt, less current portion 7,131   22,169 
Other liabilities 1,376   1,224 
Total liabilities 101,532   113,335 
      
Shareholders’ equity:       
Common stock, $.01 par value, 100,000 shares authorized, 10,357 and 9,307 shares issued and outstanding at July 4, 2021 and January 3, 2021, respectively 104   93 
Additional paid-in capital 22,147   8,748 
Retained earnings 35,955   19,370 
Total shareholders’ equity 58,206   28,211 
Non-controlling interest (736)  (1,278)
Total equity 57,470   26,933 
 $159,002  $140,268 
        

BBQ HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

 Six Months Ended
 July 4, 2021    June 28, 2020
Cash flows from operating activities:     
Net income$17,127  $7,112 
Adjustments to reconcile net income to cash flows provided by operations:     
Depreciation and amortization 2,985   2,423 
Stock-based compensation 638   248 
Net gain on disposal 135   (577)
Asset impairment, estimated lease termination charges and other closing costs, net    4,710 
Gain on forgiveness of debt (14,109)   
Gain on bargain purchase    (13,675)
Deferred income taxes 481   (2,295)
Other non-cash items 168   547 
Changes in operating assets and liabilities:     
Accounts receivable, net (188)  (240)
Prepaid expenses and other current assets (2,479)  (1,991)
Accounts payable 665   2,292 
Accrued and other liabilities 3,461   964 
Cash flows provided by (used for) operating activities 8,884   (482)
      
Cash flows from investing activities:     
Purchases of property, equipment and leasehold improvements (1,114)  (2,000)
Payments for acquired restaurants    (4,952)
Transfer from HFS 46    
Payments received on note receivable 23   12 
Cash flows provided by (used for) investing activities (1,045)  (6,940)
      
Cash flows from financing activities:     
Proceeds from long-term debt    22,058 
Payments for debt issuance costs 10   (45)
Payments on long-term debt (1,042)   
Proceeds from sale of common stock, net of offering costs 12,462    
Proceeds from exercise of stock options 310    
Cash (used for) provided by financing activities 11,740   22,013 
      
Increase in cash, cash equivalents and restricted cash 19,579   14,591 
Cash, cash equivalents and restricted cash, beginning of period 19,603   6,086 
Cash, cash equivalents and restricted cash, end of period$39,182  $20,677 
        

BBQ HOLDINGS, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION
(in thousands, except per share data)
(unaudited)

 Three Months Ended Six Months Ended
(dollars in thousands)July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020
Net income$16,430  $(6,199) $17,127  $7,112 
Asset impairment and estimated lease termination charges and other closing costs 25   4,779   37   4,952 
Depreciation and amortization 1,433   1,378   2,985   2,423 
Interest expense, net 187   178   217   254 
Net (gain) loss on disposal of equipment 143   (100)  135   (577)
Stock-based compensation 320   131   638   137 
Acquisition costs 184   249   184   (62)
Pre-opening costs 92   2   120   27 
Severance    10      28 
Gain on debt forgiveness (14,109)     (14,109)   
Gain on bargain purchase    (689)     (13,675)
Provision for income taxes 399   (1,897)  481   (2,246)
COVID-19-related expense (1)       409    
Adjusted EBITDA$5,104  $(2,158) $8,224  $(1,627)
                

(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.

 Cash EBITDA Guidance Range
(dollars in thousands)FY 2021 FY 2021
Net income$20,592  $20,971 
Asset Impairment 35   35 
Depreciation and amortization5,591   5,684 
Interest expense, net 200   204 
Net (gain) loss on disposal124   127 
Stock-based compensation1,096   1,117 
Acquisition costs 169   172 
Pre-opening costs 110   113 
Severance 5   5 
Gain upon debt extinguishment(14,109)  (14,109)
Provision for income tax441   450 
Non-cash rent 240   245 
Cash EBITDA$14,494  $15,013 
        

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