Chanticleer Holdings Reports Positive EBITDA for Second Consecutive Quarter
Revenue Growth, Improved Revenue Mix and Efficiency Initiatives Drive Improved Operating Results
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E-mailCHARLOTTE, 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: http://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, December, 31,
2016 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 3,818,576
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 20,448,073
--------------- ---------------
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 21,757,134
--------------- ---------------
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 September September September
30, 2016 30, 2015 30, 2016 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, September 30,
2016 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, September 30, September 30, September 30,
2016 2015 2016 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 PruittChairman/CEOPhone: 704.366.5122 x [email protected] LedererCFOPhone: [email protected] Information:Chanticleer Holdings, Inc.Investor RelationsPhone: [email protected] RelationsJohn Nesbett/Jennifer BelodeauInstitutional Marketing Services (IMS)Phone [email protected]
Source: Chanticleer Holdings, Inc.
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