Nathan's(NATH) - 2025 Q4 - Annual Report

Revenue and Sales Performance - Total revenues increased by approximately 7% to $148,182,000 for fiscal 2025 compared to $138,610,000 for fiscal 2024[255] - Foodservice sales from the Branded Product Program increased by approximately 6% to $91,828,000 for fiscal 2025, with a 1.2% increase in the total volume of hot dogs sold[257] - Average selling prices in the Branded Product Program increased by approximately 5% compared to fiscal 2024[257] - Total Company-owned restaurant sales increased by approximately 5% to $12,714,000 during fiscal 2025 compared to $12,103,000 during fiscal 2024[258] - License royalties increased by approximately 11% to $37,418,000 in fiscal 2025 compared to $33,581,000 in fiscal 2024[259] - Royalties earned on sales of hot dogs from the license agreement with Smithfield Foods, Inc. increased to $33,589,000 for fiscal 2025, reflecting an 11% increase in retail volume[259] - Franchise restaurant sales declined to $66,905,000 in fiscal 2025 from $68,417,000 in fiscal 2024, with comparable domestic franchise sales at $51,250,000 in fiscal 2025 compared to $53,108,000 in fiscal 2024[260] Costs and Expenses - Overall cost of sales increased by approximately 8% to $89,707,000 in fiscal 2025 from $83,182,000 in fiscal 2024, with gross profit at $14,835,000 or 14% of sales in fiscal 2025 compared to $15,410,000 or 16% of sales in fiscal 2024[263] - Cost of sales in the Branded Product Program increased by 9% to $82,462,000 in fiscal 2025, primarily due to a 1.2% increase in hot dog sales volume and a 7% increase in average cost per pound[264] - General and administrative expenses decreased by $1,082,000 to $14,530,000 in fiscal 2025 from $15,612,000 in fiscal 2024, attributed to lower professional fees and a cash bonus payout in fiscal 2024[267] Net Income and Financial Position - Net income for fiscal 2025 was $24,026,000, an increase from $19,616,000 in fiscal 2024, with EBITDA rising to $37,824,000 from $33,941,000[283] - Cash and cash equivalents increased by $6,775,000 to $27,802,000 at March 30, 2025, compared to $21,027,000 at March 31, 2024[285] - The effective income tax rate for fiscal 2025 was 26.7%, down from 28.5% in fiscal 2024, reflecting income tax expense of $8,735,000 on $32,761,000 of pre-tax income[275] Debt and Financing - The Company entered into a five-year unsecured Credit Agreement and borrowed $60,000,000 to refinance its outstanding Senior Secured Notes due 2025[235] - During fiscal 2025, the company made a voluntary principal prepayment of $8,000,000 on its Term Loan borrowings under the Credit Agreement[271] - The Company borrowed $60,000,000 in Term Loan borrowings to refinance and redeem its 2025 Notes, incurring $431,000 in debt issuance costs[292] - During fiscal 2025, the Company made mandatory principal repayments of $1,200,000 and a voluntary principal repayment of $8,000,000 on its Term Loan[292] - A hypothetical 100 bps increase in the interest rate on the $50,800,000 of outstanding unsecured Term Loan borrowings would lead to an increase of approximately $508,000 in cash interest costs over the next twelve months[315] - The Company expects to make cash interest payments of approximately $2,895,000 on the Term Loan borrowings during the fiscal year ended March 29, 2026[302] Dividends and Share Repurchase - The Company declared and paid four quarterly dividends of $0.50 per share, totaling $8,172,000 during fiscal 2025[297] - As of March 30, 2025, the Company had cash and cash equivalents of $27,802,000, with potential future cash dividend requirements of approximately $8,179,000 for fiscal 2026[299] - The Company has repurchased 1,101,884 shares at a cost of approximately $39,000,000 under its stock repurchase plan, with 98,116 shares remaining to be repurchased[296] Market Conditions and Future Outlook - The Company anticipates continued inflationary pressures on commodity prices and labor during fiscal 2026, impacting future results[233] - Inflationary pressures and rising commodity prices, particularly for beef, are expected to continue impacting the Company's results into fiscal 2026[308] - The average cost of hot dogs during fiscal 2025 was approximately 7% higher than in fiscal 2024, reflecting inflationary pressures on commodity prices[308] - The Company has not entered into hedging arrangements for commodity price fluctuations, exposing it to market changes in commodity prices[318] - The primary focus is to expand market penetration of the Nathan's Famous brand across all business platforms, with growth driven by Licensing and Branded Product Programs[241]