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

August 16, 2021 at 9:00 AM EDT

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.

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

  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 amortization 5,591       5,684  
Interest expense, net   200       204  
Net (gain) loss on disposal 124       127  
Stock-based compensation 1,096       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 tax 441       450  
Non-cash rent   240       245  
Cash EBITDA $ 14,494     $ 15,013  
               

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Source: BBQ Holdings, Inc.