Nathan's Famous, Inc. Reports Year-End And Fourth Quarter 2014 Results

2014-06-17
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  • Nathan's Famous Revenues increased by 15.9% to $82,927,000, as compared to $71,543,000 during the fifty-three weeks ended March 31, 2013

    Nathan's Famous, Inc. (NASDAQ: NATH) reported results for its fiscal year and fiscal quarter ended March 30, 2014.

    For the fiscal year ended March 30, 2014:

    • Revenues increased by 15.9% to $82,927,000, as compared to $71,543,000 during the fifty-three weeks ended March 31, 2013;
    • Net income increased by 11.5% to $8,327,000 as compared to $7,468,000 for the fifty-three weeks ended March 31, 2013; and
    • Earnings per diluted share increased by 11.0% to $1.81 as compared to $1.63 for the fifty-three weeks ended March 31, 2013.

    For the fourth quarter ended March 30, 2014:

    • Revenues increased by 15.7% to $17,331,000, as compared to $14,976,000 during the fourteen weeks ended March 31, 2013;
    • Net income was $1,218,000 as compared to $1,555,000 for the fourteen weeks ended March 31, 2013; and
    • Earnings per diluted share were $0.27 as compared to $0.34 for the fourteen weeks ended March 31, 2013.

    The Company also reported the following:

    • In March 2014, our new license agreement commenced with John Morrell & Co. replacing SMG, Inc. as Nathan's exclusive licensee to manufacture and sell Nathan's branded hot dog, sausage and corned beef products at retail. John Morrell & Co began initial shipments during the third week of March 2014. We expect to begin realizing the financial benefits of this new agreement in our first fiscal quarter ending in June 2014. As previously disclosed, we believe the financial terms of the John Morrell agreement are more advantageous to us compared to the financial terms of the previous SMG agreement. These improved terms include royalties of 10.8% of net sales, compared to approximately 4.5% of net sales under the SMG agreement, and significant minimum annual royalty guarantees. Under the John Morrell Agreement, the minimum guarantee for the first year is $10 Million, and we believe that actual royalties shall exceed the minimum. Royalties earned under the SMG agreement over the last 12 months of the SMG agreement were $5,323,000.
    • License royalties pursuant to all license agreements were $8,513,000 during the fifty-two weeks ended March 30, 2014, as compared to $8,571,000 during the fifty-three weeks ended March 31, 2013.
    • Sales from the Branded Product Program, featuring the sale of Nathan's hot dogs to the foodservice industry, increased by 20.0% to $51,877,000 during the fifty-two weeks ended March 30, 2014, as compared to sales of $43,214,000 during the fifty-three weeks ended March 31, 2013. Currently, products are being distributed throughout all 50 states in channels that include restaurant systems, convenience stores, travel centers, sports stadiums, entertainment venues, colleges and universities and vending.
    • Sales from the Company-owned restaurants were $13,231,000 during the fifty-two weeks ended March 30, 2014 as compared to $13,403,000 during the fifty-three weeks ended March 31, 2013; the decline in sales was due to the following: (1) Our Flagship Coney Island restaurant, which was severely damaged by Superstorm Sandy, reopened on May 20, 2013, losing eight (8) weeks of the spring season during the fiscal 2014 period, compared to the post-Sandy closure of twenty-two (22) weeks from November 2012 through March 2013 when sales at the restaurant are lower; and (2) The temporary closing of our Yonkers restaurant for redevelopment from December 2012 until reopening in November 2013. We estimate these two factors negatively impacted the sales comparison by approximately $2,087,000.
    • Sales at our two Coney Island locations were approximately $876,000 higher in the aggregate for the comparative weeks of operations during the fiscal year ended March 30, 2014 as compared to the prior fiscal year. Sales at our seasonal Boardwalk restaurant in Coney Island were approximately 16.8% higher during the thirty weeks of operations during the fiscal year ended March 30, 2014 as compared to the fiscal year ended March 31, 2013.
    • Gross profit decreased to 19.0% of sales during the fifty-two weeks ended March 30, 2014, as compared to 20.8% of sales during the fifty-three weeks ended March 31, 2013 due primarily to the impact of the higher cost of beef on our Branded Product Program. During the fiscal 2014 period, the cost of our beef products were approximately 6.7% higher than the fiscal 2013 period due primarily to the increase in the beef trimmings markets during the fiscal year. We have taken steps to pass the recent cost increases on through price increases, but there can be no assurance we will be successful in doing so.
    • Revenues from franchise operations were $5,718,000 during the fifty-two weeks ended March 30, 2014, as compared to $5,842,000 during the fifty-three weeks ended March 31, 2013. We opened 56 new franchised units during the fifty-two weeks ended March 30, 2014, including eight Branded Menu Program outlets. Franchise sales were negatively impacted due to the unusually harsh winter weather this year.
    • Nathan's executed Master Development Agreements for the development of Nathan's restaurants and retail distribution throughout Costa Rica and the City of Lisbon, Portugal.
    • Nathan's realized a gain of $2,774,000 during the fifty-two weeks ended March 30, 2014 in connection with the settlement of its property damage and business interruption claims relating to Superstorm Sandy. 
    • Nathan's recognized an impairment charge of $400,000 in connection with a long-term investment.

    About Nathan's Famous

    Nathan's is a Russell 2000 Company that currently distributes its products in 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, the Cayman Islands and eight foreign countries through its restaurant system, foodservice sales programs and product licensing activities. At March 30, 2014, the Nathan's restaurant system consisted of 329 units, comprised of 324 franchised units and five company-owned units (including one seasonal unit). Nathan's was ranked #55 on the Forbes list of the Best Small Companies in America and was listed as the Best Small Company in New York State in October 2013. Last year, over 430 million Nathan's Famous hot dogs were sold. 

    Nathan's Famous, Inc.

    Financial Highlights

    Fourth quarter ended

    Fiscal year ended

    Mar. 30, 2014

    Mar. 31, 2013

    Mar. 30, 2014

    Mar. 31, 2013

    (unaudited)

    Total revenues

    $    17,331,000

    $  14,976,000

    $   82,927,000

    $  71,543,000

    Net income

    $      1,218,000

    $    1,555,000

    $     8,327,000

    $    7,468,000

    Basic income per share

       Net income

    $              0.27

    $             0.35

    $             1.87

    $             1.70

    Diluted income per share

       Net income

    $               0.27

    $              0.34

    $              1.81

    $             1.63

    Weighted-average shares used in

       computing income per share

    Basic

    4,459,000

    4,411,000

    4,450,000

    4,400,000

    Diluted

    4,594,000

    4,603,000

    4,605,000

    4,588,000

     



    Logos, product and company names mentioned are the property of their respective owners.

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