Ark Restaurants Results

Ark Restaurants Announces Financial Results for the Third Quarter of 2019

Ark Restaurants

Ark Restaurants Corp. (NASDAQ: ARKR) yesterday reported financial results for the third quarter ended June 29, 2019.

Total revenues for the 13 weeks ended June 29, 2019 were $44,807,000 versus $44,800,000 for the 13 weeks ended June 30, 2018. The 13 weeks ended June 29, 2019 includes revenues of $1,239,000, which represents six and half weeks of sales related to JB’s on the Beach in Deerfield Beach, FL which was acquired on May 15, 2019. The 13 weeks ended June 30, 2018 includes revenues of $725,000 related to Durgin-Park which was closed January 12, 2019.

Total revenues for the 39 weeks ended June 29, 2019 were $120,667,000 versus $119,428,000 for the 39 weeks ended June 30, 2018. The 39 weeks ended June 29, 2019 and June 30, 2018 include revenues of $1,040,000 and $1,933,000, respectively, related to Durgin-Park which was closed January 12, 2019. In addition, the 39 weeks ended June 29, 2019 includes revenues of $1,239,000, which represents six and half weeks of sales related to JB’s on the Beach in Deerfield Beach, FL which was acquired on May 15, 2019.

Company-wide same store sales decreased 1.5% for the 13 weeks ended June 29, 2019 compared to the same period in the prior year.

The Company’s EBITDA, adjusted for non-controlling interests and non-cash stock option expense for the 13 weeks ended June 29, 2019 was $5,838,000 versus $4,773,000 during the same period in the prior year. Net income for the 13 weeks ended June 29, 2019 was $3,962,000, or $1.14 per basic share ($1.12 per diluted share) compared to net income of $2,657,000, or $0.77 per basic share ($0.75 per diluted share) for the same period last year.

The Company’s EBITDA, adjusted for non-controlling interests, non-cash stock option expense and losses incurred on the closure of Durgin-Park discussed below, for the 39 weeks ended June 29, 2019 was $9,705,000 versus $7,615,000 during the same period in the prior year. Net income for the 39 weeks ended June 29, 2019, which includes non-cash write-offs on the closure of Durgin-Park in the amount of $1,106,000, was $3,231,000, or $0.93 per basic share ($0.92 per diluted share) compared to net income of $3,648,000, or $1.06 per basic share ($1.03 per diluted share), for the same period last year. Net income for the 39 weeks ended June 30, 2018 includes a discrete income tax benefit of $1.2 million related to changes in the tax law.

As of December 29, 2018, the Company determined that it would not be able to operate Durgin-Park profitably due to decreased traffic at the Faneuil Hall Marketplace in Boston, MA, where it is located, and rising labor costs. As a result, included in the Consolidated Statements of Income for the 39 weeks ended June 29, 2019 are losses on closure in the amount of $1,106,000 consisting of: (i) impairment of trademarks of $721,000, (ii) accelerated depreciation of fixed assets of $333,000, and (iii) write-offs of prepaid and other expenses of $52,000. The restaurant was closed on January 12, 2019.

On May 15, 2019, the Company, through a newly formed, wholly-owned subsidiary, acquired the assets of JB's on the Beach, a restaurant and bar located in Deerfield Beach, Florida. The total purchase price was for $7,000,000 plus inventory. The acquisition is accounted for as a business combination and was financed with a bank loan from the Company’s existing lender in the amount of $7,000,000.

Ark Restaurants owns and operates 20 restaurants and bars, 19 fast food concepts and catering operations primarily in New York City, Florida, Washington, D.C, Las Vegas, NV and the gulf coast of Alabama. Five restaurants are located in New York City, two are located in Washington, D.C., five are located in Las Vegas, Nevada, three are located in Atlantic City, New Jersey, three are located on the east coast of Florida and two are located on the Gulf Coast of Alabama. The Las Vegas operations include four restaurants within the New York-New York Hotel & Casino Resort and operation of the hotel's room service, banquet facilities, employee dining room and six food court concepts; and one restaurant within the Planet Hollywood Resort and Casino. In Atlantic City, New Jersey, the Company operates a restaurant and a bar in the Resorts Atlantic City Hotel and Casino and a restaurant in the Tropicana Hotel and Casino. The operations at the Foxwoods Resort Casino in Ledyard, CT consist of one fast food concept. The Florida operations include the Rustic Inn in Dania Beach, Shuckers, located in Jensen Beach, the newly acquired JB’s on the Beach in Deerfield Beach and the operation of five fast food facilities in Tampa, Florida and seven fast food facilities in Hollywood, Florida, each at a Hard Rock Hotel and Casino operated by the Seminole Indian Tribe at these locations. In Alabama, the Company operates two Original Oyster Houses, one in Gulf Shores, Alabama and one in Spanish Fort, Alabama.

ARK RESTAURANTS CORP.

Consolidated Statements of Income

For the 13 and 39-week periods ended June 29, 2019 and June 30, 2018

 

(In Thousands, Except per share amounts)

 

 

 

 

 

13 Weeks Ended

June 29,

2019

 

13 Weeks Ended

June 30,

2018

 

39 Weeks Ended

June 29,

2019

 

39 Weeks Ended

June 30,

2018

 

 

 

 

 

 

 

 

 

TOTAL REVENUES

 

$

44,807

 

 

$

44,800

 

 

$

120,667

 

 

$

119,428

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

Food and beverage cost of sales

 

11,714

 

 

11,874

 

 

31,982

 

 

31,832

 

Payroll expenses

 

14,864

 

 

14,685

 

 

41,948

 

 

41,386

 

Occupancy expenses

 

4,246

 

 

4,683

 

 

13,058

 

 

13,833

 

Other operating costs and expenses

 

4,840

 

 

5,658

 

 

15,051

 

 

15,972

 

General and administrative expenses

 

3,238

 

 

2,859

 

 

8,840

 

 

8,461

 

Depreciation and amortization

 

1,174

 

 

1,255

 

 

3,568

 

 

3,837

 

Loss on closure of Durgin-Park

 

 

 

 

 

1,106

 

 

 

Total costs and expenses

 

40,076

 

 

41,014

 

 

115,553

 

 

115,321

 

OPERATING INCOME

 

4,731

 

 

3,786

 

 

5,114

 

 

4,107

 

INTEREST EXPENSE, NET

 

354

 

 

299

 

 

983

 

 

791

 

INCOME BEFORE PROVISION FOR INCOME TAXES

 

4,377

 

 

3,487

 

 

4,131

 

 

3,316

 

Provision for income taxes

 

283

 

 

562

 

 

728

 

 

(661

)

CONSOLIDATED NET INCOME

 

4,094

 

 

2,925

 

 

3,403

 

 

3,977

 

Net income attributable to non-controlling interests

 

(132

)

 

(268

)

 

(172

)

 

(329

)

NET INCOME ATTRIBUTABLE TO ARK RESTAURANTS CORP.

 

$

3,962

 

 

$

2,657

 

 

$

3,231

 

 

$

3,648

 

 

 

 

 

 

 

 

 

 

NET INCOME PER ARK RESTAURANTS CORP. COMMON SHARE:

 

 

 

 

 

 

 

 

Basic

 

$

1.14

 

 

$

0.77

 

 

$

0.93

 

 

$

1.06

 

Diluted

 

$

1.12

 

 

$

0.75

 

 

$

0.92

 

 

$

1.03

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:

 

 

 

 

 

 

 

 

Basic

 

3,481

 

 

3,440

 

 

3,477

 

 

3,436

 

Diluted

 

3,530

 

 

3,558

 

 

3,531

 

 

3,554

 

 

 

 

 

 

 

 

 

 

EBITDA Reconciliation:

 

 

 

 

 

 

 

 

Pre-tax income

 

$

4,377

 

 

$

3,487

 

 

$

4,131

 

 

$

3,316

 

Depreciation and amortization

 

1,174

 

 

1,255

 

 

3,568

 

 

3,837

 

Interest expense, net

 

354

 

 

299

 

 

983

 

 

791

 

EBITDA (a)

 

$

5,905

 

 

$

5,041

 

 

$

8,682

 

 

$

7,944

 

EBITDA adjusted for non-controlling interests, non-cash stock option expense and loss on closure of Durgin-Park:

 

 

 

 

 

 

 

 

EBITDA (as defined) (a)

 

$

5,905

 

 

$

5,041

 

 

$

8,682

 

$

7,944

 

Net income attributable to non-controlling interests

 

(132

)

 

(268

)

 

(172

)

 

(329

)

Non-cash stock option expense

 

65

 

 

 

 

89

 

 

Loss closure of Durgin-Park

 

 

 

 

 

1,106

 

 

 

EBITDA, as adjusted

 

$

5,838

 

 

$

4,773

 

 

$

9,705

 

 

$

7,615

 

 

 

 

 

 

 

 

 

 

(a)

EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Although EBITDA is not a measure of performance or liquidity calculated in accordance with generally accepted accounting principles ("GAAP"), the Company believes the use of this non-GAAP financial measure enhances an overall understanding of the Company's past financial performance as well as providing useful information to the investor because of its historical use by the Company as both a performance measure and measure of liquidity, and the use of EBITDA by virtually all companies in the restaurant sector as a measure of both performance and liquidity. However, investors should not consider this measure in isolation or as a substitute for net income (loss), operating income (loss), cash flows from operating activities or any other measure for determining the Company's operating performance or liquidity that is calculated in accordance with GAAP, it may not necessarily be comparable to similarly titled measures employed by other companies. A reconciliation of EBITDA to the most comparable GAAP financial measure, pre-tax income, is included above.



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