Fat Brands Inc. Reports Fiscal Second Quarter 2019 Financial Results

FAT (Fresh. Authentic. Tasty.) Brands Inc. (NASDAQ:FAT) reported fiscal second quarter 2019 financial results for the 13-week period ending June 30, 2019.

Andy Wiederhorn, President and CEO of FAT Brands, commented, “We are pleased to report that the considerable growth in revenues was matched by an equally robust increase in adjusted EBTDA and that we leveraged our G&A expenses on our expanded top-line.”

Wiederhorn continued, “We are also excited to have closed on our acquisition of Elevation Burger in June. The brand is well-aligned with our own commitment to fresh, authentic, tasty food and we are confident that it has considerable opportunity to expand domestically and internationally with its organic, free-range, grass-fed offerings. Elevation Burger reflects another synergistic opportunity for our unique FAT platform, which is designed to drive efficiencies and growth, and we look forward to pursuing additional transactions over time.”

Fiscal Second Quarter 2019 Highlights

• Total revenues of $5.9 million, up 50.8% from $3.9 million in the second quarter of 2018. Excluding advertising revenues, revenues grew 48.4% to $4.9 million from $3.3 million in the second quarter of 2018.

• System-wide sales growth of 26.3% y/y and 26.8% year-to-date
  • United States sales growth of 37.4% y/y and 38.8% year-to-date
  • Canada sales growth of 1.9% y/y and 4.9% year-to-date
  • Other International⁽¹⁾ sales growth of 2.4% y/y and (1.1%) year-to-date
• System-wide same-store sales growth of (0.9%) y/y and (0.9)% year-to-date
  • Fatburger worldwide same-store sales growth of (1.7%) y/y, and (0.6%) y/y in North America
  • Fatburger worldwide same-store sales growth of 0.4% year-to-date, and 1.5% year-to-date in North America
  • Buffalo’s Cafe worldwide same-store sales growth of 0.8% y/y and 1.8% year-to-date
  • Hurricane Grill & Wings same-store sales growth of 4.9% y/y and 4.8% year-to-date
  • Ponderosa/Bonanza worldwide same-store sales growth of (2.7%) y/y and (4.5%) year-to-date
  • United States same-store sales growth of 0.7% y/y and 0.4% year-to-date
  • Canada same-store sales growth of (0.0%) y/y and 2.4% year-to-date
  • Other International⁽¹⁾ sales growth of (9.0%) y/y and (9.1%) year-to-date
• Eight new franchised store openings
  • Ending store count: 386 stores system-wide

• Net loss of $508,000 or $0.04 per share on a basic and fully diluted basis, as compared to net income of $373,000 or $0.04 per share on a basic and fully diluted basis in the second quarter of 2018
• EBITDA⁽²⁾ of $2.2 million as compared to $825,000 in the second quarter of 2018
• Adjusted EBITDA⁽²⁾ of $2.0 million as compared to $945,000 in the second quarter of 2018. The reconciliation of EBITDA to Adjusted EBITDA can be found in the accompanying financial tables.

Recent Events

On June 3, 2019, the Company announced an offering of up to $30,000,000 of non-convertible preferred stock and common stock purchase warrants (the “Offering”). The Offering is being conducted on a “best efforts” basis pursuant to Regulation A of Section 3(6) of the Securities Act of 1933, as amended for Tier 2 Offerings and available to retail and institutional investors. The Company will offer up to 1,200,000 shares of 8.25% Series B Cumulative Preferred Stock (the “Series B Preferred Stock”) and warrants (the “Warrants”) initially exercisable to purchase an aggregate of 720,000 shares of Common Stock (NASDAQ: FAT). Each share of Series B Preferred Stock will be accompanied by a Warrant to purchase 0.60 shares of Common Stock at an exercise price of $8.50 per share. The shares of Series B Preferred Stock and accompanying Warrants are being offered at $25.00, for an aggregate offering amount of up to $30,000,000. Each Warrant will be immediately exercisable, and will expire on the five year anniversary of the date of issuance. The Offering will close on a rolling basis, subject to customary closing conditions, commencing upon qualification from the SEC.

On June 19, 2019 the Company successfully completed the acquisition of Elevation Burger for $10 million which was funded through a combination of sellers’ notes and cash. Delivering authentic, sustainably prepared food, Elevation Burger offers grass-fed, free-range options that are better for consumers and for the environment.

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 eight restaurant brands: Fatburger, Buffalo’s Cafe, Buffalo’s Express, Hurricane Grill & Wings, Elevation Burger, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses, and franchises over 400 units worldwide.