Nathan's(NATH)2025-02-06 12:00Revenue 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].