Exhibit 99.1

 

 

FAT BRANDS INC. ANNOUNCES FISCAL THIRD QUARTER 2018 FINANCIAL RESULTS

Conference call and webcast will be held at 4:30 p.m. ET today

 

LOS ANGELES (November 8, 2018) – FAT (Fresh. Authentic. Tasty.) Brands Inc.

(NASDAQ: FAT) (“FAT Brands” or the “Company”) today announced financial results for the 13-week period ended September 30, 2018.

 

Andy Wiederhorn, President and CEO of FAT Brands, commented, “Third quarter results demonstrated continued business momentum as we achieved acquisition synergies and positive same-store sales growth across our Fatburger & Buffalo’s Express, Buffalo’s Cafe, and Ponderosa and Bonanza Steakhouse brands. During the quarter we completed our previously announced acquisition of Hurricane Grill & Wings, our first acquisition following our IPO. The successful integration of the Hurricane restaurants onto our platform demonstrates the strength of our growth strategy and our ability to generate synergies. Inclusive of these acquisition synergies, we expect to achieve an annualized revenue run-rate of $22-24 million and an annualized EBITDA run-rate of $10-11 million beginning in the first quarter of 2019. Our pipeline of brands for acquisition remains robust, and we continue to actively work to complete additional transactions.”

 

The Company was formed as a Delaware corporation on March 21, 2017 as a wholly-owned subsidiary of Fog Cutter Capital Group Inc. (“FCCG”). The Company was formed for the purpose of completing a public offering and related transactions, and to acquire and continue certain businesses previously conducted by subsidiaries of FCCG. These transactions occurred on October 20, 2017. Because this is our initial year of operation, comparative information is not available for the third quarter of 2017.

 

Fiscal Third Quarter 2018 Highlights

 

  Total revenues of $5.9 million(1)
  Net income of $10,000, or $0.00 per share on a basic and fully diluted basis
  EBITDA(2) of $1.8 million
  Adjusted EBITDA(2) of $2.1 million, excluding legal and accounting fees related to acquisitions

 

  (1) In the first quarter of 2018, the Company adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which changed the timing of recognition of franchise fees, including development fees, territory fees, renewal and transfer fees. Adoption of ASU 2014-09 also changed the reporting of advertising fund contributions and related expenditures. Please see the “Adoption of New Accounting Guidance” section below for additional information.
  (2) EBITDA and Adjusted EBITDA are non-GAAP measures defined below, under “Non-GAAP Measures”. A reconciliation of GAAP net income to EBITDA and adjusted EBITDA is included in the accompanying financial tables.

 

Fiscal Third Quarter 2018 Segment Performance

 

  Fatburger & Buffalo’s Express
    Same-store sales growth in California of 12.6% year-over-year, 13.3% YTD
    Same-store sales growth domestically of 8.3% year-over-year, 9.1% YTD
    System-wide same-store sales growth of 4.7% year-over-year, 7.8% YTD
    System-wide sales growth of 10.8% year-over-year, 15.5% YTD

 

   
 

 

    Total revenues of $2.9 million
    Net income of $1.5 million
    EBITDA of $1.9 million
    2 new co-branded store openings

  Buffalo’s Cafe
    System-wide same-store sales growth of 6.4% year-over-year, 5.5% YTD
    System-wide sales growth of 8.0% year-over-year, 7.2% YTD
    Total revenue of $581,000
    Net income of $263,000
    EBITDA of $228,000
  Ponderosa & Bonanza Steakhouse
    System-wide same-store sales growth of 4.6% year-over-year, 2.2% YTD
    System-wide sales growth of 3.9% year-over-year, 2.9% YTD
    Total revenue of $1.0 million
    Net income of $53,000
    EBITDA of $217,000
  Hurricane Grill & Wings
    Completed the previously announced acquisition on July 3, 2018
    System-wide same-store sales decline of (2.4%) year-over-year
    System-wide sales growth of 4.7% year-over-year
    Total revenue of $1.3 million
    Net loss of $3,000
    EBITDA of $79,000

 

Events in the Quarter

 

On July 3, 2018, FAT Brands completed the previously announced acquisition of Hurricane AMT, LLC (“Hurricane”), the franchisor of Hurricane Grill & Wings and Hurricane BTW restaurants, for a purchase price of $12,500,000 comprised of $8,000,000 in cash and $4,500,000 in Series A-1 Mandatorily Redeemable Preferred Shares.

 

Also on July 3, 2018, the Company entered into a new Loan and Security Agreement whereby the Company borrowed $16.0 million in a term loan. A portion of the net proceeds were used to fund the Hurricane acquisition, as well as to repay borrowings of $2.0 million plus interest and fees under an existing loan facility. The Company has been using the remaining proceeds for additional acquisitions, investments, and general working capital purposes.

 

On September 20, 2018, the Company issued 10,482 shares of its common stock to its independent directors in satisfaction of accrued directors’ fees. These shares were valued at $8.59 per share, the closing price on September 20, 2018, the day that the independent directors elected to receive such shares.

 

Quarterly Cash Dividend

 

The Company’s Board of Directors approved the payment of a quarterly cash dividend to shareholders of $0.12 per share. The dividend was paid on October 31, 2018 to shareholders of record as of the close of business on October 18, 2018. On October 31, 2018, FCCG elected to reinvest its dividend for all 9,300,760 shares into newly issued shares of the Company’s common stock at the closing market price of common stock on the payment date. The Company issued 176,877 shares of common stock to FCCG at a price of $6.31 per share in satisfaction of the $1,116,091 dividend payable.

 

   
 

 

Key Financial Definitions

 

New store openings - The number of new store openings reflects the number of stores opened during a particular reporting period. The total number of new stores per reporting period and the timing of stores openings has, and will continue to have, an impact on our results.

 

Same-store sales growth – Same-store sales growth reflects the change in year-over-year sales for the comparable store base, which we define as the number of stores open for at least one full fiscal year. Given our focused marketing efforts and public excitement surrounding each opening, new stores often experience an initial start-up period with considerably higher than average sales volumes, which subsequently decrease to stabilized levels after three to six months. Thus, we do not include stores in the comparable base until they have been open for at least one full fiscal year. We expect that this trend will continue for the foreseeable future as we continue to open and expand into new markets.

 

System-wide sales growth - For each brand, the percentage change in sales in any given fiscal period compared to the prior fiscal period for all stores in that brand. Because of new store openings and store closures, the stores open throughout both fiscal periods being compared may be different from period to period.

 

Conference Call and Webcast

 

FAT Brands will host a conference call and webcast to discuss its fiscal third quarter 2018 financial results today at 4:30 PM ET. Hosting the call and webcast will be Andy Wiederhorn, President and Chief Executive Officer; and Rebecca Hershinger, Chief Financial Officer.

 

Interested parties may listen to the conference call via telephone by dialing 323-794-2597. A replay will be available after the call until Thursday, November 15, 2018, and can be accessed by dialing 412-317-6671. The passcode is 6865858.

 

The webcast will be available at www.fatbrands.com under the “invest” section, and will be archived on the site shortly after the call has concluded.

 

About FAT (Fresh. Authentic. Tasty.) Brands

 

FAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets and develops fast casual and casual dining restaurant concepts around the world. The Company currently owns six restaurant brands, Fatburger, Buffalo’s Cafe, Buffalo’s Express, Hurricane Grill & Wings, and Ponderosa and Bonanza Steakhouses, that have over 300 locations open and more than 300 under development in 32 countries.

 

For more information, please visit www.fatbrands.com.

 

   
 

 

Forward Looking Statements

 

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the future financial and operating results of the Company and our ability to pay a cash dividend to our common stockholders. Forward-looking statements generally use words such as “expect,” “foresee,” “anticipate,” “believe,” “project,” “should,” “estimate,” “will,” “plans,” “forecast,” and similar expressions, and reflect our expectations concerning the future. It is possible that our future performance may differ materially from current expectations expressed in these forward-looking statements. We refer you to the documents we file from time to time with the Securities and Exchange Commission, such as our recent Offering Statement on Form 1-A and our reports on Form 10-K, Form 10-Q and Form 8-K, for a discussion of these and other risks and uncertainties that could cause our actual results to differ materially from our current expectations and from the forward-looking statements contained in this press release. We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date of this press release.

 

Adoption of New Accounting Guidance

 

The Company adopted ASU 2014-09 on January 1, 2018 using the modified retrospective method, in which the cumulative effect of applying the standard is recognized at the date of initial application. Amounts presented for the thirty-nine weeks ended September 30, 2018 have been adjusted to reflect the adoption of ASU 2014-09, resulting in an increase in revenues of $1,723,000.

 

Non-GAAP Measure

 

This press release includes the non-GAAP financial measure of EBITDA and Adjusted EBITDA.

 

EBITDA is defined as earnings before interest, taxes, depreciation and amortization. We use the term EBITDA, as opposed to income from operations, as it is widely used by analysts, investors and other interested parties to evaluate companies in our industry. We believe that EBITDA is an appropriate measure of operating performance because it eliminates the impact of expenses that do not relate to business performance. EBITDA is not a measure of our financial performance or liquidity that is determined in accordance with generally accepted accounting principles (“GAAP”), and should not be considered as an alternative to net income (loss) as a measure of financial performance or cash flows from operations as measures of liquidity, or any other performance measure derived in accordance with GAAP.

 

Adjusted EBITDA is defined as EBITDA (as defined above), excluding expenses related to our acquisitions as well as certain non-recurring items that the Company does not believe directly reflect its core operations and may not be indicative of the Company’s recurring business operations.

 

A reconciliation of net income to EBITDA and adjusted EBITDA is set forth in the tables below.

 

   
 

 

FAT Brands, Inc. Statement of Operations Data

(In thousands)

 

   13 weeks ended September 30, 2018 
   FAT Brands   Fatburger   Buffalo’s   Ponderosa   Hurricane   Consolidated 
   (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited) 
Statement of operations data:                        
                         
Revenues                              
Royalties  $-   $1,317   $334   $893   $826   $3,370 
Franchise fees   -    1,215    104    8    16    1,343 
Store opening fees   -    100    -    -    -    100 
Advertising fees   -    268    143    148    479    1,038 
Management fee   -    13    -    -    -    13 
Total revenues   -    2,913    581    1,049    1,321    5,864 
                               
General and administrative expenses   406    972    353    832    1,192    3,755 
                               
Income (loss) from operations   (406)   1,941    228    217    129    2,109 
                               
Other income (expense)                              
Interest income (expense)   (1,615)   42    141    4    -    (1,428)
Depreciation and amortization   -    (5)   (1)   (31)   (83)   (120)
Other expense   (296)   (6)   -    -    (50)   (352)
Other income (expense)   (1,911)   31    140    (27)   (133)   (1,900)
                               
Income (loss) before income tax expense (benefit)   (2,317)   1,972    368    190    (4)   209 
                               
Income tax expense (benefit)   (465)   423    105    137    (1)   199 
                               
Net income (loss)   (1,852)   1,549    263    53    (3)   10 
Basic EPS  ($0.16)  $0.14   $0.02   $0.00   ($0.00)  $0.00 
Fully Diluted EPS  ($0.16)  $0.14   $0.02   $0.00   ($0.00)  $0.00 

 

   
 

 

(In thousands)

 

   39 weeks ended September 30, 2018 
   FAT Brands   Fatburger   Buffalo’s   Ponderosa   Hurricane   Consolidated 
   (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited) 
Statement of operations data:                              
                               
Revenues                              
Royalties  $-   $3,948   $1,000   $3,029   $825   $8,802 
Franchise fees   -    1,884    113    28    16    2,041 
Store opening fees   -    205    -    -    -    205 
Advertising fees   -    879    436    469    480    2,264 
Management fee   -    45    -    -    -    45 
Total revenues   -    6,961    1,549    3,526    1,321    13,357 
                               
General and administrative expenses   1,161    3,279    1,053    2,795    1,192    9,480 
                               
Income (loss) from operations   (1,161)   3,682    496    731    129    3,877 
                               
Other income (expense)                              
Interest income (expense)   (2,609)   206    447    14    -    (1,942)
Depreciation and amortization   (1)   (14)   (3)   (92)   (83)   (193)
Other expense   (296)   (9)   -    -    (50)   (355)
Other income (expense)   (2,906)   183    444    (78)   (133)   (2,490)
                               
Income (loss) before income tax expense (benefit)   (4,067)   3,865    940    653    (4)   1,387 
                               
Income tax expense (benefit)   (824)   873    261    186    (1)   495 
                               
Net income (loss)   (3,243)   2,992    679    467    (3)   892 
Basic EPS  ($0.31)  $0.28   $0.06   $0.04   ($0.00)  $0.08 
Fully Diluted EPS  ($0.31)  $0.28   $0.06   $0.04   ($0.00)  $0.08 

 

   
 

 

Consolidated Balance Sheets for FAT Brands, Inc.

 

(In thousands)

 

   September 30, 2018 
   FAT Brands   FBNA   BFCI   Ponderosa   Hurricane   Elimination   Consolidated 
   (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited) 
Consolidated balance sheet data:                                   
                                    
Cash  $1,308   $-   $-   $-   $551   $-   $1,859 
Total assets  $27,921   $13,545   $7,553   $11,313   $15,275   $(23,050)  $52,557 
Total liabilities  $32,353   $7,730   $951   $271   $2,778   $-   $44,083 
Total stockholders’ equity (deficit)  $(4,432)  $5,815   $6,602   $11,042   $12,497   $(23,050)  $8,474 

 

   
 

 

FAT Brands, Inc. EBITDA and Adjusted EBITDA Reconciliation

 

   13 weeks ended September 30, 2018 
   FAT Brands   Fatburger   Buffalo’s   Ponderosa   Hurricane   Consolidated 
                         
(in thousands)                              
                               
Net income (loss)  $(1,852)  $1,549   $263   $53   $(3)  $10 
Depreciation and amortization expense   -    5    1    31    83    120 
Interest (income) expense   1,615    (42)   (141)   (4)   -    1,428 
Income tax expense (benefit)   (465)   423    105    137    (1)   199 
EBITDA  $(702)  $1,935   $228   $217   $79   $1,757 
Acquisition Costs   295    -    -    -    50    345 
Adjusted EBITDA  $(407)  $1,935   $228   $217   $129   $2,102 

 

   39 weeks ended September 30, 2018 
   FAT Brands   Fatburger   Buffalo’s   Ponderosa   Hurricane   Consolidated 
                         
(in thousands)                              
                               
Net income (loss)  $(3,243)  $2,992   $679   $467   $(3)  $892 
Depreciation and amortization expense   1    14    3    92    83    193 
Interest (income) expense   2,609    (206)   (447)   (14)   -    1,942 
Income tax expense (benefit)   (824)   873    261    186    (1)   495 
EBITDA  $(1,457)  $3,673   $496   $731   $79   $3,522 
Acquisition Costs   295    -    -    -    50    345 
Adjusted EBITDA  $(1,162)  $3,673   $496   $731   $129   $3,867 

 

   
 

 

Investor Relations:

ICR

Alexis Tessier

IR-FATBrands@icrinc.com

203-682-8286

 

PCG Advisory Group

Vivian Cervantes

vivian@pcgadvisory.com

646-863-6274

 

Media Relations:

Konnect Agency

Shelby Robinson/Rebecca Campbell

srobinson@konnectagency.com

rcampbell@konnectagency.com

213-988-8344

 

###

 

   
 

 


The following information was filed by Fat Brands, Inc (FAT) on Friday, November 9, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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