Core Insights - Nathan's Famous, Inc. reported financial results for the fiscal year and fourth quarter ended March 30, 2025, showing growth in revenues and net income compared to the previous fiscal year [1][2]. Financial Performance - For fiscal year 2025, total revenues reached $148.182 million, an increase from $138.610 million in fiscal 2024, representing a growth of approximately 5.4% [2]. - Net income for fiscal 2025 was $24.026 million, up from $19.616 million in fiscal 2024, indicating a growth of about 22.4% [2]. - Earnings per diluted share increased to $5.87 for fiscal 2025, compared to $4.80 for fiscal 2024, reflecting a rise of approximately 22.3% [2]. Quarterly Results - In the fourth quarter of fiscal 2025, revenues were $30.787 million, compared to $28.991 million in the fourth quarter of fiscal 2024, marking an increase of about 6.2% [2]. - Net income for the fourth quarter was $4.235 million, up from $3.910 million in the same quarter of the previous year, which is an increase of approximately 8.3% [2]. - Earnings per diluted share for the fourth quarter were $1.03, compared to $0.96 in the fourth quarter of fiscal 2024, showing a growth of about 7.3% [2]. Operational Highlights - License royalties increased to $37.418 million in fiscal 2025, up from $33.581 million in fiscal 2024, representing a growth of approximately 11% [2]. - Sales from the Branded Product Program rose by $5.339 million to $91.828 million in fiscal 2025, compared to $86.489 million in fiscal 2024, indicating a growth of about 6.2% [2]. - The volume of hot dogs sold increased by approximately 1.2%, while the average selling price rose by about 5% compared to the prior year [2]. Dividend Declaration - The Board of Directors declared a quarterly cash dividend of $0.50 per share for fiscal 2026, payable on July 1, 2025, to shareholders of record as of June 23, 2025 [1].

Product Launch - Nathan's Famous has introduced Hot & Spicy Beef Franks, enhancing their product line with a spicy flavor profile while maintaining the signature taste [1][2] - The new franks are made from 100% beef, free from by-products, corn syrup, artificial flavors, or colorings, catering to health-conscious consumers [1] Market Availability - The Hot & Spicy Beef Franks are now available at major retailers across the United States, targeting both existing fans and new customers [2] Company Overview - Nathan's Famous, Inc. is a publicly traded company on NASDAQ (NATH) and is part of the Russell 2000 index, distributing products in 50 states and 20 foreign countries [3] - Smithfield Foods, Inc. is the parent company of Nathan's Famous, recognized for its leadership in packaged meats and fresh pork products [4]

Group 1 - The recent stock market pullback may be justified due to the potential impact of changes in U.S. tariff policy on corporate profits and economic growth [1] - Despite the pullback, many companies may have been unfairly affected, indicating potential investment opportunities [1]

Core Insights - Nathan's Famous, Inc. (NATH) has seen a 14.6% increase in stock price over the past three months, outperforming the industry and major indices [1][6] - The company reported strong third-quarter fiscal 2025 results, with improvements in both revenue and net income across all segments [2][3] - Strategic pricing, improved licensing revenues, and operational efficiencies contributed to the robust quarterly performance [3] Financial Performance - The company's revenue growth in the Branded Product segment was driven by higher volumes and prices, which offset increased beef costs [3] - Licensing revenue has grown significantly, particularly through the partnership with Smithfield Foods, providing a stable income stream [9] - Nathan's Famous maintains a trailing 12-month EV/Sales ratio of 2.8X, which is lower than the industry average of 4.9X but higher than its five-year median of 2.7X [13] Market Position - Nathan's Famous has a strong franchising network that diversifies revenue streams and reduces marketing burdens through franchisee contributions [10] - The brand's products are sold in high-traffic venues, and sponsorships with major sports franchises enhance brand exposure and sales [11] - The company continues to invest in digital marketing and delivery partnerships, aligning with changing consumer behaviors [8] Challenges - Rising commodity costs, particularly for beef, pose a risk to margins if the company cannot pass these costs onto customers [12] - Reliance on Smithfield Foods for licensing revenue and hot dog supply presents a significant risk, as any disruption could materially affect revenue streams [12] Investment Outlook - The strong core growth prospects and financial stability of Nathan's Famous present a compelling case for both existing and new investors [14][16] - The current stock valuation suggests potential for growth, as it is valued lower than the industry average, indicating room for alignment with overall market performance [16]

Core Concern - The primary concern regarding Nathan's Famous (NASDAQ: NATH) is understanding the current stock price despite several quarters of strong performance [1]. Performance Analysis - Nathan's Famous has shown strong performance in recent quarters, yet the stock continues to trade at a price that raises questions about its valuation [1].

Core Insights - Nathan's Famous, Inc. (NATH) shares have increased by 3.2% following the earnings report for the quarter ended December 29, 2024, outperforming the S&P 500 Index, which declined by 0.7% during the same period [1] - The stock has gained 11.3% over the past month, significantly exceeding the S&P 500's 3.2% rise [1] Financial Performance - Total revenues for the third quarter of fiscal 2025 reached $31.5 million, a 9.1% increase from $28.9 million in the same quarter last year [2] - Income from operations rose by 31.4% to $6.8 million from $5.1 million, while net income increased by 71.9% to $4.5 million from $2.6 million [2] - Diluted earnings per share (EPS) improved to $1.10, reflecting a 71.9% increase from $0.64 in the prior-year quarter [2] - For the first nine months of fiscal 2025, revenues totaled $117.4 million, up 7.1% from $109.6 million in the prior-year period [3] - Net income for this period grew by 26% to $19.8 million from $15.7 million, with diluted EPS increasing to $4.84 from $3.84, representing a 26% rise [3] Segmental Performance - Branded Product Program revenues increased by 7.2% to $21.1 million from $19.7 million in the prior-year quarter, with a 1.5% increase in hot dog sales volume and a 3.5% rise in average selling price [4] - Product Licensing revenues climbed by 16.9% to $7.1 million from $6.1 million, with year-to-date revenues growing 13.2% to $29.5 million from $26.1 million [5] - Restaurant Operations revenues improved by 6.8% to $2.8 million from $2.6 million, with year-to-date sales growing 5.5% to $14.6 million from $13.8 million [5] - Advertising Fund Revenue increased by 2.4% to $0.52 million from $0.51 million in the prior-year quarter, with year-to-date revenues growing 0.5% to $1.51 million from $1.50 million [6] Key Business Metrics - Adjusted EBITDA for the quarter was $7.5 million, a 30% increase from $5.8 million in the prior-year quarter [7] - For the nine-month period, adjusted EBITDA rose by 16.5% to $32.1 million from $27.6 million [7] Management Commentary - Management attributed the strong quarterly performance to strategic pricing actions, improved licensing revenues, and operational efficiencies [8] - Revenue growth in the Branded Product segment was supported by higher volumes and prices, despite increased beef costs [8] - Strong consumer demand contributed to revenue growth in both product licensing and restaurant operations segments [8] Other Developments - Nathan's Famous opened 24 new franchised locations during the nine-month period, expanding its market presence [10] - The board of directors declared and paid three quarterly dividends totaling $6.13 million and announced a quarterly cash dividend of $0.50 per share, payable on February 28, 2025 [10]

Core Insights - The article discusses the expertise of a specialized equity analyst in the restaurant sector, focusing on various dining segments in the U.S. market [1] Company Analysis - The company, Goulart's Restaurant Stocks, is dedicated to analyzing restaurant stocks across multiple segments, including QSR, fast casual, casual dining, fine dining, and family dining [1] - Advanced analytical models and specialized valuation techniques are employed to provide detailed insights and actionable strategies for investors [1] Industry Engagement - The analyst actively participates in academic and journalistic initiatives, contributing to institutions that promote individual and economic freedom [1] - Previous contributions include columns on monetary policy, financial education, and financial modeling aimed at making these topics accessible to a broader audience [1]

Revenue and Sales Performance - Total revenues increased by approximately 9% to $31,519,000 for the thirteen weeks ended December 29, 2024, compared to $28,890,000 for the same period in 2023[114]. - Foodservice sales from the Branded Product Program increased by approximately 7% to $21,099,000 for the third quarter fiscal 2025, with average selling prices rising by approximately 6%[115]. - Total Company-owned restaurant sales increased by approximately 9% to $1,804,000 during the third quarter fiscal 2025, primarily driven by higher sales at Coney Island locations[116]. - License royalties increased by approximately 17% to $7,105,000 in Q3 fiscal 2025 compared to $6,078,000 in Q3 fiscal 2024[117]. - Franchise restaurant sales increased to $16,066,000 in Q3 fiscal 2025 from $15,635,000 in Q3 fiscal 2024, primarily due to higher sales at airport and casino locations[118]. - Total revenues increased by approximately 7% to $117,395,000 for the thirty-nine weeks ended December 29, 2024, compared to $109,619,000 for the same period in fiscal 2024[136]. - Comparable domestic franchise sales were $12,805,000 in Q3 fiscal 2025 compared to $12,377,000 in Q3 fiscal 2024[118]. Financial Metrics - EBITDA for the thirteen weeks ended December 29, 2024, was $7,136,000, compared to $5,395,000 for the same period in 2023[111]. - Adjusted EBITDA for the thirty-nine weeks ended December 29, 2024, was $32,110,000, compared to $27,561,000 for the same period in 2023[111]. - General and administrative expenses decreased by $759,000 or 18% to $3,450,000 in Q3 fiscal 2025 compared to $4,209,000 in Q3 fiscal 2024[126]. - Interest expense decreased to $842,000 in Q3 fiscal 2025 from $1,392,000 in Q3 fiscal 2024[128]. - Total franchise fee income was $94,000 in Q3 fiscal 2025 compared to $87,000 in Q3 fiscal 2024[119]. - Advertising fund revenue was $520,000 in Q3 fiscal 2025 compared to $508,000 in Q3 fiscal 2024[127]. - The effective income tax rate for Q3 fiscal 2025 was 26.0% compared to 30.2% in Q3 fiscal 2024[133]. Cost and Expenses - Cost of sales increased by approximately 10% to $19,571,000 in Q3 fiscal 2025 compared to $17,872,000 in Q3 fiscal 2024[122]. - Cost of sales in the Branded Product Program increased by 6% to $64,626,000 in fiscal 2025 from $60,698,000 in fiscal 2024, driven by a 1.5% increase in hot dog sales volume and a 4% rise in average cost per pound[147]. - Company-owned restaurant sales cost was $6,215,000 or 55% of sales in fiscal 2025, down from $6,045,000 or 58% in fiscal 2024, with food and paper costs decreasing from 28% to 25%[147]. - General and administrative expenses decreased by 7% to $10,677,000 in fiscal 2025 from $11,496,000 in fiscal 2024, mainly due to lower professional and consulting fees[150]. - Interest expense in fiscal 2025 was $3,343,000 compared to $4,219,000 in fiscal 2024, reflecting a reduction in debt costs[152]. Cash Flow and Capital Management - Cash and cash equivalents increased by $2,684,000 to $23,711,000 at December 29, 2024, compared to $21,027,000 at March 31, 2024[161]. - Net cash provided by operating activities was $18,450,000 in fiscal 2025, up from $13,596,000 in fiscal 2024[166]. - The effective income tax rate decreased to 26.5% in fiscal 2025 from 27.7% in fiscal 2024, with income tax expense of $7,151,000 on pre-tax income of $26,942,000[157]. - The Company declared a fourth quarter dividend of $0.50 per share, payable on February 28, 2025, with total cash requirements for dividends in fiscal 2025 estimated at approximately $8,172,000[175][176]. - The Company has repurchased 1,101,884 shares at a cost of $39,000,000 under its stock repurchase plan, with 98,116 shares remaining to be repurchased[173]. - The Company entered into a five-year unsecured Credit Agreement providing for a term loan facility of $60,000,000 and a revolving credit facility of up to $10,000,000[171]. - The company expects to make cash interest payments of approximately $2,331,000 on Term Loan borrowings during the fiscal year ending March 30, 2025[178]. Market and Economic Conditions - Inflationary pressures negatively impacted earnings during the thirty-nine week period ended December 29, 2024, particularly within the Branded Product Program segment[104]. - The average cost of hot dogs during the fiscal 2025 period was approximately 4% higher than during the fiscal 2024 period, indicating inflationary pressures on commodity prices[184]. - A short-term increase or decrease of 10% in the cost of food and paper products would have increased or decreased the cost of sales by approximately $6,575,000 for the period ended December 29, 2024[195]. - Inflationary pressures on commodity prices, particularly for beef, have impacted the company's consolidated results of operations during the fiscal 2025 period[183]. - The company anticipates continued volatility in oil and gas prices affecting distribution costs and utility costs in Company-owned restaurants[194]. - The increase in minimum wage to $16.50 in New York City has created competitive pressure on labor rates, impacting financial results[185]. Strategic Focus and Future Outlook - The primary focus is to expand market penetration of the Nathan's Famous brand through increased distribution points across all business platforms[100]. - The Company does not expect to significantly increase the number of Company-owned restaurants but may invest in a small number of new units as showcase locations[101]. - The company has not attempted to hedge against fluctuations in commodity prices, exposing future purchases to market changes[195]. - The company made a voluntary principal prepayment of $8,000,000 of Term Loan borrowings under its Credit Agreement on October 10, 2024[179]. - A hypothetical 100 bps increase in the interest rate on outstanding unsecured Term Loan borrowings would lead to an increase of approximately $514,000 in cash interest costs over the next twelve months[192].

Financial Performance - Revenues for the third quarter fiscal 2025 were $31,519,000, an increase of 9% compared to $28,890,000 for the same period in fiscal 2024[4] - Net income for the third quarter fiscal 2025 was $4,484,000, up 72% from $2,607,000 in the third quarter of fiscal 2024[4] - Adjusted EBITDA for the third quarter fiscal 2025 was $7,479,000, representing a 30% increase from $5,751,000 in the prior year[4] Revenue Sources - License royalties increased to $29,517,000 for the thirty-nine weeks ended December 29, 2024, compared to $26,075,000 for the same period in fiscal 2024, a growth of 9%[5] - Sales from the Branded Product Program rose by $3,571,000 to $71,781,000 during the thirty-nine weeks ended December 29, 2024, reflecting a 5.2% increase year-over-year[5] - Company-owned restaurant sales were $11,351,000 for the thirty-nine weeks ended December 29, 2024, up from $10,512,000 in the same period of fiscal 2024[5] Pricing and Sales Volume - The average selling price of hot dogs increased by approximately 3.5% compared to the prior year period[5] - The volume of hot dogs sold increased by 1.5% during the fiscal 2025 period[5] Dividends and Franchise Fees - The Board of Directors declared a quarterly cash dividend of $0.50 per share, totaling $6,127,000 for the fiscal 2025 period[5] - Total franchise fee income, including cancellation fees, was $294,000 during the fiscal 2025 period, down from $325,000 in the prior year[5]

Core Viewpoint - Nathan's Famous, Inc. reported solid financial results for the second quarter of fiscal 2025, with increases in earnings per share and revenues, although some segments experienced declines in franchise fees and royalties [1][18]. Revenue Summary - Nathan's Famous registered revenues of $41.1 million in the fiscal second quarter, up 6.1% year over year [2]. - Revenues from the United States were $40.5 million, an increase of 8.1% year over year, while international revenues were $0.6 million, down 50.4% year over year [13]. Segment Performance - Branded Products revenues were $24.5 million, up 5.1% from the year-ago quarter, with a 4% increase in hot dog sales volume and a 1.4% increase in average selling prices [4]. - Company-owned restaurants generated $5.3 million, up 2.9% year over year, driven by higher sales at Coney Island locations [5]. - License royalties totaled $9.5 million, up 13.8% year over year, with royalties from hot dog sales increasing 14.5% to $8.6 million [6]. - Franchise fees and royalties generated $1.2 million, down 9.1% year over year, with total royalties at $1.1 million, down 7.1% [8]. - Virtual kitchen royalties were $11,000, down 38.9% year over year, and traditional franchise royalties were $807,000, down 5.9% [9]. Profitability Metrics - Operating profit totaled $9.6 million, an increase of 5.8% from the prior-year quarter, while net income was $6 million, up 5.6% [16]. - Adjusted EBITDA for the quarter was $10.4 million, up 5.9% year over year [16]. Cost and Margin Analysis - Gross profit was $3.9 million with a gross margin of 12.9%, down from $4.4 million and 15.3% in the prior year [14]. - Restaurant operating expenses increased 3.7% to $1.4 million, while general and administrative expenses rose 0.7% to $3.3 million [15]. Liquidity and Cash Flow - The company exited the second quarter with cash and cash equivalents of $31.2 million, up from $25.9 million at the end of the first quarter [16]. - Cumulative net cash provided by operating activities was $14.8 million, compared to $11.4 million a year ago [17].