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BBQ Holdings, Inc. Reports Results for Fourth Quarter and Fiscal Year 2021; Announces Acquisition of Barrio Queen, Corporate Name Change and Provides 2022 Guidance

March 14, 2022 at 8:47 AM EDT

MINNEAPOLIS, March 14, 2022 (GLOBE NEWSWIRE) -- BBQ Holdings, Inc. (NASDAQ: BBQ) (the “Company”), an innovating global franchisor, owner and operator of restaurants, today reported financial results for the fourth quarter and fiscal year ended January 2, 2022.

Fourth Quarter Highlights:

                         
    Fourth Quarter
(dollars in thousands, except per share data)     2021       2020         2019    
Total revenue   $ 68,395     $ 34,258       $ 23,613    
Net income (loss)   $ 2,602     $ (2,836 )     $ (1,788 )  
Earnings (loss) per diluted share   $ 0.25     $ (0.31 )     $ (0.20 )  
Adjusted net income (loss)   $ 2,820     $ (1,538 )     $ (1,210 )  
Adjusted earnings (loss) per diluted share   $ 0.27     $ (0.17 )     $ (0.13 )  
Cash EBITDA   $ 4,550     $ 85       $ (692 )  
Restaurant-level margins     7.6 %     2.1   %     (3.0 ) %
Prime costs     62.3 %     63.6   %     67.9   %
Free cash flow   $ 3,140     $ (743 )     $ (3,655 )  


           
  Fourth Quarter Same Store Sales
  2021 vs. 2020     2021 vs. 2019  
Famous Dave's Company-owned 22.8 %   15.5   %
Famous Dave's Franchise-operated* 26.5 %   18.8   %
Granite City** 63.8 %   (2.4 ) %
Village Inn Company-owned** 54.5 %   (9.2 ) %
Village Inn Franchise-operated* 51.7 %   NA   %
Bakers Square** 50.4 %   (12.7 ) %
Clark Crew 17.0 %   NA   %
Real Urban BBQ** 8.9 %   2.7   %
           
* as reported by franchisees          
** includes sales under prior ownership          

Fiscal Year Highlights:

                         
    Fiscal Year
(dollars in thousands, except per share data)     2021       2020         2019    
Total revenue   $ 206,442     $ 121,237       $ 83,555    
Net income (loss)   $ 24,021     $ 4,947       $ (649 )  
Earnings (loss) per diluted share   $ 2.42     $ 0.54       $ (0.07 )  
Adjusted net income (loss)   $ 7,033     $ (2,616 )     $ 647    
Adjusted earnings (loss) per diluted share   $ 0.71     $ (0.29 )     $ 0.07    
Cash EBITDA   $ 17,450     $ 948       $ 3,423    
Restaurant-level margins     9.3 %     1.3   %     (0.1 ) %
Prime costs     61.4 %     64.9   %     67.2   %
Free cash flow   $ 13,624     $ (2,551 )     $ (3,332 )  


           
  Fiscal Year Same Store Sales
  2021 vs. 2020     2021 vs. 2019  
Famous Dave's Company-owned 23.7 %   13.7   %
Famous Dave's Franchise-operated* 25.9 %   6.6   %
Granite City** 50.0 %   (8.6 ) %
Village Inn Company-owned** 42.0 %   (13.0 ) %
Village Inn Franchise-operated* 49.1 %   NA   %
Bakers Square** 29.9 %   (21.5 ) %
Clark Crew 17.3 %   NA   %
Real Urban BBQ** 11.5 %   0.8   %
           
* as reported by franchisees **includes sales under prior ownership          

Subsequent Events:

On March 10, 2022, we executed an Asset Purchase Agreement for substantially all the assets related to the fast-growing Barrio Queen restaurant group, and we expect to close the transaction within 45 days. Barrio Queen is known for their authentic Mexican fine dining in Phoenix, Arizona. There are currently seven operating restaurants and a lease signed for an eighth with a target opening date of December 2022. The purchase price of $28.0 million will be funded with cash and debt.   Further details of the transaction will be made public upon closing.

On March 11, 2022, we closed the purchase of three bar-centric locations. The purchase price of $4.5 million was funded with cash at a multiple of 3.25 times 2021 store-level EBITDA.

Current and Projected (“PF”) Portfolio:

                                         
  FAMOUS
DAVE’S
VILLAGE
INN
GRANITE
CITY
BAKERS
SQUARE
REAL
URBAN BBQ
CLARK CREW
BBQ
TAHOE JOE’S BARRIO QUEEN BAR CONCEPTS TOTAL
  2021 2022 PF 2021 2022 PF 2021 2022 PF 2021 2022 PF 2021 2022 PF 2021 2022 PF 2021 2022 PF 2021 2022 PF 2021 2022 PF 2021 2022 PF
Corporate Locations 39 41 21 22 18 18 14 14 2 2 1 1 5 4   8   3 100 113
Brick & Mortar 30 31 21 21 18 17 11 11 2 2 1 1 5 4   8   3 88 98
Dual Concept 1 1   1   1                         1 3
Ghost Kitchens 8 9         3 3                     11 12
Franchise/License Locations 104 107 108 111     4 4           1         216 223
Brick & Mortar 85 87 108 111                             193 198
Dual Concept   1                       1         0 2
Ghost Kitchens 19 19         4 4                     23 23
Total Locations 143 148 129 133 18 18 18 18 2 2 1 1 5 5   8   3 316 336
Growth Plan New line serve / drive thru and Ghost locations New trendy breakfast prototype Dual concept with new breakfast brand Sell pies in retail, kiosk and other restaurants New line serve locations and CPGs CPGs Dual Concept with FDs Franchise and Corporate Corporate  
# Opening in 2022   Q1: 3   Q1: 1   n/a   n/a   n/a   n/a   Q1: -   Q1: -   n/a Total: 13
    Q2: 1   Q2: 1                   Q2: -   Q2: -        
    Q3: 1   Q3: 1                   Q3: -   Q3: 1        
    Q4: 1   Q4: 2                   Q4: 1   Q4: -        

Filling Latent Capacity:

  • Dual concept Granite City/Village Inn opened in Maple Grove, MN in March 2022.
  • Famous Dave’s ghost kitchen to open in Granite City in Fargo, ND in March 2022.

Organic Unit Growth:

  • Famous Dave’s franchisee opened a line-serve restaurant in Coon Rapids, MN in October 2021.
  • Opened a Real Urban Barbeque restaurant in Chicago, IL in October 2021.
  • Famous Dave’s Drive thru in Salt Lake City, UT opened in March 2022.
  • Famous Dave’s franchisee opened an additional restaurant in the United Arab Emirates in February 2022.
  • New Village Inn prototype expected to open in Omaha, NE in the second quarter of 2022.

Mergers and Acquisitions:

  • Purchased Tahoe Joe’s Steakhouse brand in October 2021.
  • Signed an Asset Purchase Agreement to acquire Barrio Queen in March 2022.
  • Closed the purchase of three bar-centric company-owned locations in March 2022.

2022 Guidance:

  • Net restaurant revenue of $265mm to $280mm
  • Net income and adjusted net income range from $12.5mm to $15.5mm
  • We expect to exhaust our deferred tax assets mid-2022
  • Diluted earnings per share and adjusted earnings per diluted share of $1.15 to $1.45
  • Cash EBITDA range from $23mm to $25mm***
  • Free cash flow range from $13.5mm to $15.5mm***

12-Month Run Rate Guidance:

  • Net restaurant revenue of $280mm to $295mm
  • Net income and adjusted net income range from $14.0mm to $17.0mm
  • Diluted earnings per share and adjusted earnings per diluted share of $1.30 to $1.60
  • Cash EBITDA range from $25.5mm to $27.5mm***
  • Free cash flow range from $15.5mm to $17.5mm***

*** assumes completion of Barrio Queen and Bar Concepts acquisitions

Executive Comments

Jeff Crivello, CEO, commented, “The fourth quarter of 2021 marked another successful quarter of strong operational execution and company growth. We continue to successfully execute our three core growth initiatives which include filling latent capacity of our current restaurants, organic unit growth, and build a diversified portfolio of food and beverage brands via accretive M&A.

In December 2021 and January 2022, we experienced a traffic decline associated with the Omicron variant of COVID-19. However, as case counts have declined, we have seen rebounds in both dine-in traffic and catering sales in February and March of 2022.

As we have continued to diversify our portfolio of restaurant brands, we will be changing the name of our parent company from BBQ Holdings, Inc. to Famous Hospitality, Inc.”

Key Operating Metrics

                             
    Three Months Ended       Year Ended
    January 2, 2022   January 3, 2021       January 2, 2022   January 3, 2021
Restaurant count:                            
Franchise-operated     216     98         216     98    
Company-owned     100     47         100     47    
Total     316     145         316     145    
Same store net restaurant sales %:                            
Franchise-operated     26.5 %   (13.6 ) %     25.9 %   (17.0 ) %
Company-owned     37.8 %   (5.5 ) %     36.7 %   (8.5 ) %
Total     30.8 %   (11.6 ) %     29.8 %   (15.3 ) %
                             
(in thousands, expect per share data)                            
                             
System-wide restaurant sales(1)   $ 171,086   $ 78,894       $ 507,882   $ 301,743    
                             
Net income attributable to shareholders   $ 2,602   $ (2,836 )     $ 24,021   $ 4,947    
                             
Net income attributable to shareholders, per diluted share   $ 0.25   $ (0.31 )     $ 2.42   $ 0.54    
                             
Cash EBITDA(2)   $ 4,550   $ 85       $ 17,450   $ 948    

(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)  Cash EBITDA is a non-GAAP measure. 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.”

Fourth Quarter and Fiscal Year 2021 Review

Total revenue for the fourth quarter of 2021 was $68.4 million, up 99.6% from the fourth quarter of 2020. Total revenue for fiscal year 2021 was $206.4 million, up 70.3% from fiscal year 2020. The increase in year-over-year revenue was driven primarily by the acquisitions of the Village Inn and Bakers Square brands, four additional Famous Dave’s restaurants, and the Tahoe Joe’s Steakhouse brand, as well as the reduction of dining restrictions in 2021 compared to 2020.  

Net income attributable to shareholders was approximately $2.6 million, or $0.25 per diluted share, in the fourth quarter of fiscal 2021 compared to a loss of approximately $2.8 million, or $0.31 per diluted share, in the fourth quarter of fiscal 2020. Fiscal year 2021 net income was $24.0 million compared to $4.9 million in fiscal year 2020. This increase in net income was mainly attributable to a gain on forgiveness of debt and a gain on bargain purchase.   Additionally, the increase in net income was also driven by (i) an increase in same store sales, (ii) sales from the acquisitions of the Village Inn and Bakers Square brands, four additional Famous Dave’s restaurants, and the Tahoe Joe’s Steakhouse brand, (iii) improvements in restaurant-level margins and (iv) improvements in general and administrative expense efficiency.   Cash EBITDA, a non-GAAP measure, increased $4.5 million from $0.1 million in the fourth quarter of 2020 to $4.6 million in the fourth quarter of 2021. Cash EBITDA for fiscal year 2021 was $17.5 million, an increase of $16.5 million over fiscal year 2020. A reconciliation between cash EBITDA and its most directly comparable GAAP measure is included in the accompanying financial tables.

Restaurant-level operating margin as a percentage of restaurant net sales, a non-GAAP measure, was 7.6% and 9.3% for Company-owned restaurants in the fourth quarter and fiscal year 2021, respectively, compared to 2.1% and 1.3% in the fourth quarter and fiscal year 2020, respectively. This increase in restaurant-level operating margin as a percentage of net restaurant sales was due primarily to leverage on our fixed operating costs from the increased revenue resulting from the reduction of dine-in restrictions and restrictions on large gatherings which were put in place in 2020 due to COVID-19 concerns, as well as the acquisition of the Village Inn and Bakers Square brands, four additional Famous Dave’s restaurants, and the Tahoe Joe’s Steakhouse brand. A reconciliation of restaurant sales to restaurant-level margin is included in the accompanying financial tables. General and administrative expenses for the quarter ended January 2, 2022, and January 3, 2021 represented approximately 8.3% and 12.8% of total revenues, respectively. General and administrative expenses for fiscal year 2021 and fiscal year 2020 represented approximately 9.3% and 11.9% of total revenues, respectively. While general and administrative expenses increased in fiscal year 2021 compared to fiscal year 2020, such expenses decrease as a percentage of revenue in 2021 due primarily to the increase in total revenue.

About BBQ Holdings

BBQ Holdings, Inc. (NASDAQ: BBQ) is a national restaurant company engaged in franchising, ownership and operation of casual and fast dining restaurants. As of March 14, 2022, BBQ Holdings had multiple brands with over 100 Company-owned locations and over 200 franchised locations, including ghost kitchens operating out of the kitchen of another restaurant location or 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. Along with a wide variety of BBQ favorites served at their BBQ restaurants, BBQ Holdings also operates Granite City Food and Brewery restaurants which offer award winning craft beer and a made-from-scratch, chef driven menu featuring contemporary American cuisine. Village Inn and Bakers Square add a legendary Family Dining element to BBQ Holdings, with these concepts specializing in breakfast and pies. Tahoe Joe’s is known for their pellet-broiler cooked and smoked infused steak.

Non-GAAP Financial Measures

To supplement its condensed 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.

Cash EBITDA is net income plus asset impairment, estimated lease termination charges and other closing costs, depreciation and amortization, net interest expense, net (gain) loss on disposal of equipment, stock-based compensation, acquisition costs, pre-opening costs, severance, gain on debt forgiveness, gain on bargain purchase, provision (benefit) for income taxes, and non-cash rent.

Free cash flow is the Cash EBITDA less cash paid for property, equipment and leasehold improvements. Adjusted net income (loss) is net income plus asset impairment, estimated lease termination charges and other closing costs, less gain on debt forgiveness and gain on bargain purchase. Adjusted earnings per diluted share equals adjusted net income (loss) divided by the weighted average shares outstanding, assuming dilution.

Restaurant-level operating margins are equal to net restaurant sales, less restaurant-level food and beverage cost, labor and benefit costs, and operating expenses for Company-owned restaurants.

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   Year Ended  
  January 2, 2022   January 3, 2021   January 2, 2022   January 3, 2021  
Revenue:                        
Restaurant sales, net $ 62,690     $ 31,293     $ 187,872     $ 109,544    
Franchise royalty and fee revenue   3,538       2,291       12,187       8,919    
Franchisee national advertising fund contributions   501       298       1,711       1,124    
Licensing and other revenue   1,666       376       4,672       1,650    
Total revenue   68,395       34,258       206,442       121,237    
                         
Costs and expenses:                        
Food and beverage costs   19,249       9,661       55,969       33,867    
Labor and benefits costs   19,809       10,252       59,297       37,228    
Operating expenses   18,868       10,733       55,223       36,984    
Depreciation and amortization expenses   2,470       1,301       7,395       5,121    
General and administrative expenses   5,660       4,371       19,176       14,195    
National advertising fund expenses   501       298       1,711       1,124    
Asset impairment, estimated lease termination charges and other closing costs, net   10       869       116       5,683    
Pre-opening expenses   21       103       204       10    
Gain on disposal of property, net   (1,113 )     (703 )     (979 )     (1,810 )  
Total costs and expenses   65,475       36,885       198,112       132,402    
                         
Income (loss) from operations   2,920       (2,627 )     8,330       (11,165 )  
                         
Other income (expense):                        
Interest expense   (144 )     (214 )     (583 )     (805 )  
Interest income   31       49       178       154    
Gain on forgiveness of debt               14,109          
Gain on bargain purchase   (208 )     (429 )     2,995       13,246    
Total other income (expense)   (321 )     (594 )     16,699       12,595    
                         
Income (loss) before income taxes   2,599       (3,221 )     25,029       1,430    
                         
Income tax (expense) benefit   (144 )     318       (661 )     2,837    
                         
Net income (loss)   2,455       (2,903 )     24,368       4,267    
Net (income) loss attributable to non-controlling interest   147       67       (347 )     680    
Net income (loss) attributable to shareholders $ 2,602     $ (2,836 )   $ 24,021     $ 4,947    
                         
                         
Income (loss) per common share:                        
Basic net income (loss) per share attributable to shareholders $ 0.25     $ (0.31 )   $ 2.44     $ 0.54    
Diluted net income (loss) per share attributable to shareholders $ 0.25     $ (0.31 )   $ 2.42     $ 0.54    
Weighted average shares outstanding - basic   10,445       9,175       9,826       9,155    
Weighted average shares outstanding - diluted   10,550       9,175       9,922       9,156    


BBQ HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)

             
ASSETS            
Current assets:   January 2, 2022   January 3, 2021
Cash and cash equivalents   $ 40,309     $ 18,101  
Restricted cash     1,152       1,502  
Accounts receivable, net of allowance for doubtful accounts of $270,000 and $277,000, respectively     5,476       4,823  
Inventories     3,316       2,271  
Prepaid expenses and other current assets     3,919       1,252  
Assets held for sale           1,070  
Total current assets     54,172       29,019  
             
Property, equipment and leasehold improvements, net     39,943       32,389  
             
Other assets:            
Operating lease right-of-use assets     78,843       61,634  
Goodwill     3,037       601  
Intangible assets, net     23,444       9,967  
Deferred tax asset, net     3,692       4,934  
Other assets     1,292       1,724  
Total assets   $ 204,423     $ 140,268  
             
LIABILITIES AND SHAREHOLDERS’ EQUITY            
             
Current liabilities:            
Accounts payable   $ 7,661     $ 6,385  
Current portion of operating lease liabilities     11,904       6,185  
Current portion of long-term debt and finance lease liabilities     1,621       2,111  
Accrued compensation and benefits     7,121       2,390  
Gift card liability     11,257       6,554  
Other current liabilities     8,510       3,212  
Total current liabilities     48,074       26,837  
             
Long-term liabilities:            
Operating lease liabilities, less current portion     77,729       63,105  
Finance lease liabilities, less current portion     79        
Long-term debt, less current portion     13,197       22,169  
Other liabilities     997       1,224  
Total liabilities     140,076       113,335  
             
Shareholders’ equity:            
Common stock, $.01 par value, 100,000 shares authorized, 10,495 and 9,307 shares issued and outstanding at January 2, 2022 and January 3, 2021, respectively     105       93  
Additional paid-in capital     21,782       8,748  
Retained earnings     43,391       19,370  
Total shareholders’ equity     65,278       28,211  
Non-controlling interest     (931 )     (1,278 )
Total equity     64,347       26,933  
Total liabilities and equity   $ 204,423     $ 140,268  


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

             
    Year Ended
       January 2, 2022      January 3, 2021
Cash flows from operating activities:              
Net income   $ 24,368     $ 4,267  
Adjustments to reconcile net income to cash flows provided by operations:              
Depreciation and amortization     7,395       5,121  
Stock-based compensation     1,268       886  
Net gain on disposal     (979 )     (1,783 )
Asset impairment, estimated lease termination charges and other closing costs, net           5,483  
Gain on forgiveness of debt     (14,109 )      
Gain on bargain purchase     (2,995 )     (13,246 )
Amortization of operating right-of-use assets     8,514       5,249  
Deferred tax asset     337       (2,837 )
Other non-cash items     905       796  
Changes in operating assets and liabilities:            
Accounts receivable, net     (1,570 )     (1,011 )
Prepaid expenses and other assets     (2,983 )     1,460  
Accounts payable     1,276       2,418  
Accrued compensation     4,730       (244 )
Lease liabilities     (8,278 )     (5,152 )
Gift card liability     3,341       (2,133 )
Accrued and other liabilities     3,638       2,814  
Cash flows provided by operating activities     24,858       2,088  
             
Cash flows from investing activities:              
Proceeds from the sale of assets     2,587       2,869  
Purchases of property, equipment and leasehold improvements     (3,826 )     (3,499 )
Payments for acquired restaurants     (18,808 )     (5,381 )
Payments received on note receivable     785       42  
Cash flows used for investing activities     (19,262 )     (5,969 )
             
Cash flows from financing activities:              
Proceeds from long-term debt     15,000       22,058  
Payments for debt issuance costs     (114 )     (45 )
Payments on long-term debt     (10,403 )     (4,621 )
Tax payments for restricted stock units and stock options exercised     (1,094 )      
Proceeds from sale of common stock, net of offering costs     12,428        
Proceeds from exercise of stock options     445       6  
Cash provided by financing activities     16,262       17,398  
             
Increase in cash, cash equivalents and restricted cash     21,858       13,517  
Cash, cash equivalents and restricted cash, beginning of period     19,603       6,086  
Cash, cash equivalents and restricted cash, end of period   $ 41,461     $ 19,603  
             
Supplemental Disclosures            
Cash paid for interest, net   $ 494     $ 706  
             
Non-cash investing and financing activities:            
Operating right-of-use assets acquired     23,544       51,682  
Lease liabilities assumed pursuant to acquisitions     26,166       51,682  
Gift card liability assumed pursuant to acquisitions     1,362       3,923  
Inventory acquired pursuant to acquisitions     623       1,178  


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

                       
    Three Months Ended     Year Ended    
    January 2, 2022   January 3, 2021     January 2, 2022   January 3, 2021    
Food and beverage costs(1)   30.7 % 30.9   %   29.8 % 30.9   %  
Labor and benefits costs(1)   31.6 % 32.8   %   31.6 % 34.0   %  
Operating expenses(1)   30.1 % 34.3   %   29.4 % 33.8   %  
Restaurant-level operating margin(1)(2)   7.6 % 2.1   %   9.3 % 1.3   %  
Depreciation and amortization expenses(3)   3.6 % 3.8   %   3.6 % 4.2   %  
General and administrative expenses(3)   8.3 % 12.8   %   9.3 % 11.7   %  
Income (loss) from operations(3)   4.3 % (7.7 ) %   4.0 % (9.2 ) %  

(1)  As a percentage of restaurant sales, net
(2) Restaurant-level operating 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
RESTAURANT-LEVEL PROFIT AND RESTAURANT-LEVEL MARGIN (1)
NON-GAAP RECONCILIATION
(in thousands)

                               
                               
  Three Months Ended     Year Ended  
  January 2, 2022     January 3, 2021     January 2, 2022     January 3, 2021  
Restaurant sales, net $ 62,690     $ 31,293     $ 187,872     $ 109,544  
Restaurant operating costs (2)   57,926       30,646       170,489       108,079  
Restaurant-level profit $ 4,764     $ 647     $ 17,383     $ 1,465  
Restaurant-level margin   7.6 %     2.1 %     9.3 %     1.3 %

(1)  For Company-owned restaurants.
(2)  Restaurant operating costs consist of food and beverage costs, labor and benefits costs and operating expenses.


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

                         
    Three Months Ended   Year Ended
    January 2, 2022   January 3, 2021   January 2, 2022   January 3, 2021
(dollars in thousands)                        
Net income   $ 2,455     $ (2,903 )   $ 24,368     $ 4,267  
Asset impairment and estimated lease termination charges and other closing costs     10       869       116       5,683  
Depreciation and amortization     2,470       1,301       7,395       5,121  
Interest expense, net     113       165       405       651  
Net gain on disposal of equipment     (1,113 )     (703 )     (979 )     (1,810 )
Stock-based compensation     336       517       1,268       939  
Acquisition costs     375       (58 )     925       (105 )
Pre-opening costs     21       103       204       10  
Severance     -       35       -       86  
Gain on debt forgiveness     -       -       (14,109 )     -  
Gain on bargain purchase     208       429       (2,995 )     (13,246 )
Provision for income taxes     144       (318 )     661       (2,837 )
Non-cash rent     (469 )     648       191       2,189  
Cash EBITDA   $ 4,550     $ 85     $ 17,450     $ 948  
                         
Less cash paid for property, equipment and leasehold improvements     (1,410 )     (828 )     (3,826 )     (3,499 )
Free cash flow   $ 3,140     $ (743 )   $ 13,624     $ (2,551 )


BBQ HOLDINGS, INC. AND SUBSIDIARIES
ADJUSTED NET INCOME (LOSS) AND EARNINGS (LOSS) PER DILUTED SHARE
NON-GAAP RECONCILIATION
(in thousands, except per share data)
(unaudited)

                           
    Three Months Ended     Year Ended
(dollars in thousands)   January 2, 2022   January 3, 2021     January 2, 2022   January 3, 2021
Net income (loss) attributable to shareholders   $ 2,602   $ (2,836 )     $ 24,021     $ 4,947  
Asset impairment, estimated lease termination charges and other closing costs     10     869         116       5,683  
Gain on debt forgiveness                 (14,109 )      
Gain on bargain purchase     208     429         (2,995 )     (13,246 )
Adjusted net income (loss)     2,820     (1,538 )       7,033       (2,616 )
Weighted average shares outstanding - diluted     10,550     9,175         9,922       9,155  
Adjusted earnings (loss) per diluted share   $ 0.27   $ (0.17 )     $ 0.71     $ (0.29 )

A presentation accompanying this announcement is available at: https://www.globenewswire.com/NewsRoom/AttachmentNg/1a29f163-d269-424b-87c1-2f433536eaa0


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Source: BBQ Holdings, Inc.