RAVE Restaurant Group, Inc. Reports First Quarter 2022 Financial Results
The Company recorded net income of $285 thousand for the first quarter of fiscal 2021 compared to net income of $76 thousand for the same period of the prior year.
RAVE Restaurant Group, Inc. (NASDAQ: RAVE) today reported financial results for the first quarter ended September 26, 2021.
First Quarter Highlights:
- The Company recorded net income of $285 thousand for the first quarter of fiscal 2021 compared to net income of $76 thousand for the same period of the prior year.
- Income before taxes was $288 thousand for the first quarter of fiscal 2021 compared to net income before taxes of $78 thousand for the same period of the prior year.
- Total revenue increased by $0.7 million to $2.6 million for the first quarter of fiscal 2021 compared to the same period of the prior year.
- Pizza Inn domestic comparable store retail sales increased 25% in the first quarter of fiscal 2021 compared to the same period of the prior year.
- Pie Five comparable store retail sales increased 18% in the first quarter of fiscal 2021 compared to the same period of the prior year.
- On a fully diluted basis, net income increased $0.02 per share to $0.02 per share for the first quarter of fiscal 2021 compared to net income of $0.00 per share for the same period of the prior year.
- Cash and cash equivalents decreased $0.5 million during the first quarter of fiscal 2021 to $7.9 million at September 26, 2021.
- Pizza Inn domestic unit count finished at 133.
- Pizza Inn international unit count finished at 32.
- Pie Five domestic unit count finished at 33.
"The valiant efforts of our franchisees and team members have been crucial to accomplishing our sixth consecutive quarter of profitability," said Brandon Solano, Chief Executive Officer of RAVE Restaurant Group, Inc. "Our strong sales recovery and focus on cost control is paying off with strong earnings growth despite the pandemic, supply chain disruptions, and labor market upheaval."
"Our first quarter net income before tax of $288 thousand marks the sixth consecutive quarter of positive income and is 269% better than year ago, demonstrating our brands' resilience and strong connection with our customers. Our franchisees are gritty, refusing to concede to the labor market shortage and continuing to staff their stores and open dining rooms when many competitors are limiting service options, hours and days of operation," said Solano. "This is RAVE's best streak of positive income in nearly a decade as we generate positive operating income and hold nearly $8.0 million in cash."
"In our first quarter, Pizza Inn saw strong consumer demand for our new House Pan Pizza as we highlighted the differences between our house made dough and competitors' frozen dough and frozen cheese. We will continue to innovate with new products and offers for our customers as we close out this calendar year and look forward to 2022. At Pie Five, we continued to push on the category's hottest trend of stuffed crust by elevating the experience and introducing Pie Five's Parmesan Crunch Stuffed Crust pizza with a trial-driving value offer," Solano said. "More recently, we began testing Korean Barbeque Steak pizza as we continue to differentiate our menu and attract not only pizza, but fast-casual occasions."
"Despite the ongoing challenges related to the Delta variant, we were able to report a strong first quarter with revenue of $2.6 million and adjusted EBITDA of $0.4 million," said Clint Fendley, Chief Financial Officer of RAVE Restaurant Group, Inc. "As our revenue continues to recover from its suppressed pandemic levels, we intend to maintain our focus on increasing sales and profitability for both of our brands."
About RAVE Restaurant Group, Inc.
Founded in 1958, Dallas-based RAVE Restaurant Group [NASDAQ: RAVE] franchises and/or licenses Pie Five Pizza Co. and Pizza Inn restaurants and Pizza Inn Express kiosks domestically and internationally. Pizza Inn is an international chain featuring freshly made pizzas, along with salads, pastas, and desserts. Pie Five Pizza Co. is a leader in the rapidly growing fast-casual pizza space. Pizza Inn Express, or PIE, is developing unique opportunities to provide freshly made pizza from non-traditional outlets. The Company's common stock is listed on the Nasdaq Capital Market under the symbol "RAVE".
| RAVE RESTAURANT GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) | ||||||
| Three Months Ended | ||||||
| September 26, 2021 | September 27, 2020 | |||||
| REVENUES: | $ | 2,553 | $ | 1,903 | ||
| COSTS AND EXPENSES: | ||||||
| Cost of sales | - | 78 | ||||
| General and administrative expenses | 1,206 | 1,089 | ||||
| Franchise expenses | 986 | 547 | ||||
| Impairment of long-lived assets and other lease charges | - | 17 | ||||
| Bad debt expense | 5 | 27 | ||||
| Interest expense | 24 | 23 | ||||
| Depreciation and amortization expense | 44 | 44 | ||||
| Total costs and expenses | 2,265 | 1,825 | ||||
| INCOME BEFORE TAXES | 288 | 78 | ||||
| Income tax expense | 3 | 2 | ||||
| NET INCOME | 285 | 76 | ||||
| INCOME PER SHARE OF COMMON STOCK - BASIC: | $ | 0.02 | $ | 0.00 | ||
| INCOME PER SHARE OF COMMON STOCK - DILUTED: | $ | 0.02 | $ | 0.00 | ||
| Weighted average common shares outstanding - basic | 18,005 | 15,451 | ||||
| Weighted average common and potential dilutive common shares outstanding | 18,803 | 16,249 | ||||
| RAVE RESTAURANT GROUP, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts) (Unaudited) | |||||
| September 26, 2021 | June 27, 2021 | ||||
| ASSETS | |||||
| CURRENT ASSETS | |||||
| Cash and cash equivalents | $ | 7,876 | $ | 8,330 | |
| Accounts receivable, less allowance for bad debts of $25 and $47, respectively | 832 | 911 | |||
| Notes receivable, current | 568 | 901 | |||
| Deferred contract charges, current | 33 | 35 | |||
| Prepaid expenses and other | 150 | 196 | |||
| Total current assets | 9,459 | 10,373 | |||
| LONG-TERM ASSETS | |||||
| Property, plant and equipment, net | 420 | 445 | |||
| Operating lease right of use asset, net | 1,981 | 2,085 | |||
| Intangible assets definite-lived, net | 202 | 183 | |||
| Notes receivable, net of current portion | 302 | 52 | |||
| Deferred contract charges, net of current portion | 212 | 207 | |||
| Total assets | $ | 12,576 | $ | 13,345 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| CURRENT LIABILITIES | |||||
| Accounts payable - trade | $ | 521 | $ | 644 | |
| Accrued expenses | 500 | 924 | |||
| Other current liabilities | 46 | 46 | |||
| Operating lease liability, current | 470 | 465 | |||
| Short term loan, current | 120 | 250 | |||
| Convertible notes short term, net of unamortized debt issuance costs and discounts | 1,583 | 1,576 | |||
| Deferred revenues, current | 648 | 626 | |||
| Total current liabilities | 3,888 | 4,531 | |||
| LONG-TERM LIABILITIES | |||||
| Operating lease liability, net of current portion | 1,792 | 1,911 | |||
| Deferred revenues, net of current portion | 836 | 1,170 | |||
| Total liabilities | 6,516 | 7,612 | |||
| SHAREHOLDERS' EQUITY | |||||
| Common stock, $.01 par value; authorized 26,000,000 shares; issued 25,090,058 and | 251 | 251 | |||
| Additional paid-in capital | 37,257 | 37,215 | |||
| Accumulated deficit | (6,911) | (7,196) | |||
| Treasury stock at cost | |||||
| Shares in treasury: 7,085,154 and 7,085,154, respectively | (24,537) | (24,537) | |||
| Total shareholders' equity | 6,060 | 5,733 | |||
| Total liabilities and shareholders' equity | $ | 12,576 | $ | 13,345 | |
| RAVE RESTAURANT GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) | |||||
| Three Months Ended | |||||
| September 26, 2021 | September 27, 2020 | ||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||
| Net income | $ | 285 | $ | 76 | |
| Adjustments to reconcile net income to cash used in operating activities: | |||||
| Impairment of long-lived assets and other lease charges | - | 17 | |||
| Stock compensation expense | 42 | - | |||
| Depreciation and amortization | 36 | 35 | |||
| Amortization of operating right of use assets | 104 | 146 | |||
| Amortization of intangible assets definite-lived | 8 | 9 | |||
| Amortization of debt issue costs | 7 | 7 | |||
| Provision for bad debt | 5 | 27 | |||
| Changes in operating assets and liabilities: | |||||
| Accounts receivable | 74 | (74) | |||
| Notes receivable | 26 | 62 | |||
| Deferred contract charges | (3) | (3) | |||
| Prepaid expenses and other | 46 | (44) | |||
| Deposits and other | - | 5 | |||
| Accounts payable - trade | (123) | 23 | |||
| Accounts payable - lease termination impairments | - | (3) | |||
| Accrued expenses | (424) | (90) | |||
| Operating lease liability | (114) | (152) | |||
| Deferred revenue | (312) | (48) | |||
| Cash used in operating activities | (343) | (7) | |||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
| Payments received on notes receivable | 57 | 4 | |||
| Purchase of intangible assets definite-lived | (27) | - | |||
| Purchase of property, plant and equipment | (11) | (27) | |||
| Cash provided by investing activities | 19 | (23) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
| Equity issuance costs - ATM offering | - | (3) | |||
| Short term loan, current | (130) | - | |||
| Cash used in financing activities | (130) | (3) | |||
| Net decrease in cash, cash equivalents and restricted cash | (454) | (33) | |||
| Cash, cash equivalents and restricted cash, beginning of period | 8,330 | 3,203 | |||
| Cash, cash equivalents and restricted cash, end of period | $ | 7,876 | $ | 3,170 | |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |||||
| CASH PAID FOR: | |||||
| Interest | $ | - | $ | - | |
| Income taxes | $ | (2) | $ | 7 | |
| Non-cash activities: | |||||
| Conversion of notes to common shares | $ | - | $ | - | |
| Operating lease right of use assets at adoption | $ | - | $ | - | |
| Operating lease liability at adoption | $ | - | $ | - | |
| RAVE RESTAURANT GROUP, INC. ADJUSTED EBITDA (In thousands) (Unaudited) | ||||||
| Three Months Ended | ||||||
| September 26, 2021 | September 27, 2020 | |||||
| Net income | $ | 285 | $ | 76 | ||
| Interest expense | 24 | 23 | ||||
| Income taxes | 3 | 2 | ||||
| Depreciation and amortization | 44 | 44 | ||||
| EBITDA | $ | 356 | $ | 145 | ||
| Stock compensation expense | 42 | - | ||||
| Severance | 33 | - | ||||
| Impairment of long-lived assets and other lease charges | - | 17 | ||||
| Franchisee default and closed store revenue | (1) | (67) | ||||
| Closed and non-operating store costs | 1 | 82 | ||||
| Adjusted EBITDA | $ | 431 | $ | 177 | ||
SOURCE RAVE Restaurant Group, Inc.