Nathan's(NATH) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Nathan's Famous, Inc. reported $44,767 thousand in total revenues and $9,277 thousand in net income for the thirteen weeks ended June 30, 2024, alongside increased assets and operating cash flow Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2024 (Unaudited) | March 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $48,979 | $38,776 | | Cash and cash equivalents | $25,979 | $21,027 | | Accounts and other receivables, net | $20,471 | $14,731 | | Total Assets | $58,527 | $48,858 | | Total Current Liabilities | $18,216 | $15,573 | | Long-term debt, net | $59,631 | $59,562 | | Total Liabilities | $84,028 | $81,781 | | Total Stockholders' Deficit | ($25,501) | ($32,923) | Consolidated Statement of Earnings Highlights (in thousands, except per share) | Metric | Thirteen Weeks Ended June 30, 2024 | Thirteen Weeks Ended June 25, 2023 | | :--- | :--- | :--- | | Total Revenues | $44,767 | $41,985 | | Branded Products | $26,146 | $25,170 | | License Royalties | $12,921 | $11,658 | | Income from Operations | $13,745 | $11,463 | | Net Income | $9,277 | $7,388 | | Diluted EPS | $2.27 | $1.81 | Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Category | Thirteen Weeks Ended June 30, 2024 | Thirteen Weeks Ended June 25, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $4,993 | $2,148 | | Net cash used in investing activities | ($41) | ($73) | | Net increase in cash and cash equivalents | $4,952 | $2,075 | | Cash and cash equivalents, end of period | $25,979 | $31,936 | - Subsequent to the quarter end, on July 10, 2024, the Company entered into a new five-year unsecured Credit Agreement, borrowing $60 million to refinance and redeem its outstanding 6.625% Senior Secured Notes due 2025, a transaction that did not add new debt to the balance sheet[46][58] Management's Discussion and Analysis of Financial Condition and Results of Operations Management reported a 7% increase in total revenues for Q1 FY2025, driven by licensing and branded products, improved gross profit despite cost pressures, and successful debt refinancing post-quarter Revenue Performance by Segment (in thousands) | Revenue Source | Q1 FY2025 | Q1 FY2024 | % Change | | :--- | :--- | :--- | :--- | | Branded Product Program | $26,146 | $25,170 | +3.9% | | Company-owned restaurants | $4,199 | $3,658 | +14.8% | | License royalties | $12,921 | $11,658 | +10.8% | | Total Revenues | $44,767 | $41,985 | +6.6% | - The increase in License Royalties was primarily driven by an 11% increase in retail volume of hot dogs sold through the agreement with Smithfield Foods, Inc[78] - Cost of sales in the Branded Product Program increased by 2%, mainly due to a 1.1% increase in the average cost per pound of hot dogs, attributed to shrinking cattle supply and inflationary pressures, while company-owned restaurants saw food and paper costs as a percentage of sales decrease from 28% to 25% due to menu price increases[83] - On July 10, 2024, the company entered a new five-year unsecured Credit Agreement, including a $60 million term loan and a $10 million revolving credit facility, to refinance its 2025 Notes, with the new term loan having mandatory quarterly principal repayments of $600,000 starting September 30, 2024[94][95][59] Quantitative and Qualitative Disclosures About Market Risk The company faces market risks primarily from interest rate fluctuations on its new variable-rate debt, significant commodity price volatility for beef, and minimal foreign currency exposure - The new Credit Agreement bears a fluctuating interest rate based on SOFR, where a hypothetical 100 basis point (1%) increase in SOFR would increase annual cash interest costs by $600,000 on the $60 million term loan[110] - The company faces significant commodity price risk, especially for beef, with the average cost of hot dogs being 1.1% higher in Q1 FY2025 than in the prior year, and a 10% change in food and paper product costs would have impacted the quarterly cost of sales by approximately $2,343,000[111][113] - Foreign currency risk is minimal as foreign franchisees generally make payments in United States dollars[114] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2024, with no material changes to internal controls over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that as of the end of the reporting period, the company's disclosure controls and procedures were effective[115] - No changes occurred in the company's internal controls over financial reporting during the quarter ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, these controls[116] PART II. OTHER INFORMATION Legal Proceedings The company reported no material legal proceedings during the period - The company reports 'None' under this item, indicating no material legal proceedings[119] Risk Factors No material changes to risk factors were reported from those disclosed in the Annual Report on Form 10-K for the fiscal year ended March 31, 2024 - The report refers investors to the risk factors discussed in the Annual Report on Form 10-K for the fiscal year ended March 31, 2024, indicating no material updates in this quarterly filing[120] Unregistered Sales of Equity Securities and Issuer Purchases The company reported no unregistered sales or issuer purchases of equity securities during the quarter - The company reported 'None' for this item, indicating no relevant activities during the quarter[120] Other Information The Board of Directors declared a quarterly cash dividend of $0.50 per share on August 8, 2024 - The Board of Directors declared a quarterly cash dividend of $0.50 per share on August 8, 2024, payable on September 6, 2024, to shareholders of record as of August 26, 2024[121] Exhibits The report includes various exhibits, such as CEO and CFO certifications and financial statements in iXBRL format - Exhibits filed with the report include: - CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2) - Financial data in Inline Extensible Business Reporting Language (iXBRL) format (Exhibit 101.1)[123]