Nathan's Famous, Inc. Reports Third Quarter Fiscal 2016 Results

Nathan's Famous, Inc. (NASDAQ:  NATH) last week reported results for the third quarter of its 2016 fiscal year that ended December 27, 2015. 

For the fiscal quarter ended December 27, 2015:

• Income from operations increased by 17.8% to $4,435,000, as compared to $3,765,000 during the thirteen weeks ended December 28, 2014; 
• Adjusted EBITDA, as subsequently defined, increased by 12.6% to $4,932,000 as compared to $4,382,000 for the thirteen weeks ended December 28, 2014; 
• Net income was $432,000, as compared to $2,241,000 for the thirteen weeks ended December 28, 2014; 
• Earnings per diluted share were $0.10 per share, as compared to $0.49 per share for the thirteen weeks ended December 28, 2014; and 
• Revenues were $20,564,000, as compared to $22,315,000 during the thirteen weeks ended December 28, 2014.

For the thirty-nine weeks ended December 27, 2015:

• Income from operations increased by 20.5% to $20,477,000, as compared to $16,991,000 during the thirty-nine weeks ended December 28, 2014; 
• Adjusted EBITDA, as subsequently defined, increased by 17.2% to $22,189,000 as compared to $18,936,000 for the thirty-nine weeks ended December 28, 2014; 
• Net income was $5,589,000, as compared to $10,166,000 for the thirty-nine weeks ended December 28, 2014; 
• Earnings per diluted share were $1.24 per share, as compared to $2.21 per share for the thirty-nine weeks ended December 28, 2014; and 
• Revenues were $81,837,000, as compared to $78,772,000 during the thirty-nine weeks ended December 28, 2014.

The Company reported the following:                              

• License royalties increased by 12.8% to $15,406,000 during the thirty-nine weeks ended December 27, 2015, as compared to $13,652,000 during the thirty-nine weeks ended December 28, 2014. During the thirty-nine weeks ended December 27, 2015, total royalties earned under the John Morrell & Co., agreement increased by 14.2% to $14,091,000 as compared to $12,342,000 of royalties earned during the thirty-nine weeks ended December 28, 2014. The increase is substantially attributable to significant organic growth in our consumer packaged hot dog business as a result of more effective sales, marketing and promotional strategies. 
• Sales from the Branded Product Program, featuring the sale of Nathan's hot dogs to the foodservice industry, increased by 3.5% to $47,160,000 during the thirty-nine weeks ended December 27, 2015, as compared to sales of $45,568,000 during the thirty-nine weeks ended December 28, 2014. This increase was primarily attributable to a 5.1% increase in the volume of products sold partially offset by lower average selling prices on the portion of our business where the selling price is calculated based upon the market price for beef, which has significantly declined during the past six months. 
• Sales from Company-operated restaurants were $14,872,000 during the thirty-nine weeks ended December 27, 2015 as compared to $14,497,000 during the thirty-nine weeks ended December 28, 2014 driven primarily from higher sales at both Coney Island locations. 
• Revenues from franchise operations were $3,804,000 during the thirty-nine weeks ended December 27, 2015, as compared to $4,473,000 during the thirty-nine weeks ended December 28, 2014. Total franchise fee income was $388,000 during the thirty-nine weeks ended December 27, 2015 as compared to $879,000 during the thirty-nine weeks ended December 28, 2014, primarily due to less international development fees. Thirty-five new franchised units were opened during the thirty-nine weeks ended December 27, 2015, including 11 international locations, including locations in Russia and Costa Rica, and 16 Branded Menu Program outlets. Twenty-eight new franchised units were opened during the thirty-nine weeks ended December 28, 2014, including 10 international locations, including our first locations in Costa Rica and Malaysia and 14 Branded Menu Program outlets. We also recognized forfeited fees of $58,000 during the fiscal 2016 period and $120,000 during the fiscal 2015 period. 
• On March 10, 2015, Nathan's completed a financing of $135.0 million aggregate principal amount of Senior Secured Notes. Nathan's incurred interest expense, including amortized debt issuance costs, totaling $11,126,000 during the thirty-nine weeks ended December 27, 2015 on the Notes. 

Nathan's also announced that its Board of Directors has authorized the purchase by Nathan's of up to an additional 200,000 shares of its common stock. Purchases may be made from time to time, depending on market conditions, in open market or privately negotiated transactions, at prices deemed appropriate by management. There is no set time limit on the repurchases. After giving effect to the increase in the number of shares, an aggregate 266,074 shares remain available for purchase under Nathan's stock buy-back program. To date, pursuant to prior share repurchase programs authorized by the Board of Directors, Nathan's has purchased a total of 4,921,557 shares of common stock at a cost of approximately $68,070,000.