Ark Restaurants(ARKR) - 2025 Q3 - Quarterly Results

Executive Summary & Company Overview Ark Restaurants experienced a Q3 2025 decline in EBITDA and a net loss, primarily due to litigation and asset impairment, despite strong performance from other restaurant locations Third Quarter 2025 Highlights Q3 2025 saw a decline in EBITDA and a net loss, driven by Bryant Park litigation and Sequoia asset impairment, though other restaurant operations performed well - EBITDA for the quarter was $1,791,000, a decrease from the prior year, largely due to over $800,000 in litigation expenses for Bryant Park operations[3] - Net income (loss) was negatively impacted by a non-cash impairment of assets at the Sequoia restaurant in Washington D.C., where future cash flow no longer supports the book value[3] - Operations at the New York-New York Hotel and Casino in Las Vegas, Rustic Inn in Florida, and Robert in NYC increased cash flow or performed better than last year, with the rest of the portfolio meeting expectations[3] - The Company's Balance Sheet remains strong, supporting future growth[3] About Ark Restaurants Corp. Ark Restaurants Corp. operates a diverse portfolio of 16 restaurants and bars, 12 fast food concepts, and catering services across key US markets - Ark Restaurants owns and operates 16 restaurants and bars, 12 fast food concepts, and catering operations[25] - Primary operating locations include New York City, Florida, Washington, DC, Las Vegas, Nevada, and the Gulf Coast of Alabama[25] - Las Vegas operations include four restaurants within the New York-New York Hotel & Casino Resort, room service, banquet facilities, employee dining room, six food court concepts, and one restaurant within the Planet Hollywood Resort and Casino[25] Financial Performance Analysis The company reported a significant decline in revenues and profitability for both the 13-week and 39-week periods, impacted by divested properties, same-store sales decreases, and asset impairments Consolidated Financial Results Overview Consolidated results show a substantial decline in revenues and profitability for both periods, influenced by divested properties, same-store sales, and asset impairments - Total revenues decreased for both the 13-week and 39-week periods, with a portion of the decline attributable to the exclusion of revenues from El Rio Grande and the Tampa Food Court[5][6] - Company-wide same store sales, excluding divested properties, decreased by 7.4% for the 13 weeks and 3.3% for the 39 weeks, mainly due to reduced catering and a la carte revenue at Bryant Park Grill[7] - Adjusted EBITDA saw a substantial decline, and the company reported a net loss attributable to Ark Restaurants Corp. for both periods, contrasting with net income in the prior year[8][9][10] Revenue Performance Total revenues decreased for both the 13-week and 39-week periods, primarily due to the exclusion of divested properties Total Revenues (in thousands) | Period | June 28, 2025 | June 29, 2024 | YoY Change | | :--------------------------------------- | :-------------- | :-------------- | :--------- | | 13 Weeks Ended | $43,715 | $50,396 | -13.26% | | 13 Weeks Ended (Excl. El Rio Grande & Tampa Food Court) | N/A | $48,105 | N/A | | 39 Weeks Ended | $128,428 | $140,139 | -8.36% | | 39 Weeks Ended (Excl. El Rio Grande & Tampa Food Court) | $127,454 | $133,763 | -4.72% | - No revenues for El Rio Grande and the Tampa Food Court are included in the 13 weeks ended June 28, 2025. The prior year's comparable period included $1,026,000 and $1,265,000, respectively, from these locations[5] - For the 39 weeks ended June 28, 2025, no revenues for El Rio Grande are included, and Tampa Food Court revenues were $974,000. The prior year included $2,373,000 (El Rio Grande) and $4,003,000 (Tampa Food Court)[6] Profitability Metrics Key profitability metrics, including adjusted EBITDA and net income, experienced significant declines for both reporting periods Profitability Metrics (in thousands, except per share amounts) | Metric | 13 Weeks Ended June 28, 2025 | 13 Weeks Ended June 29, 2024 | 39 Weeks Ended June 28, 2025 | 39 Weeks Ended June 29, 2024 | | :--------------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | EBITDA, as adjusted | $1,791 | $3,375 | $2,479 | $5,625 | | Net Income (Loss) Attributable to Ark Restaurants Corp. | $(3,454) | $640 | $(9,548) | $561 | | Basic EPS | $(0.96) | $0.18 | $(2.65) | $0.16 | | Diluted EPS | $(0.96) | $0.18 | $(2.65) | $0.15 | - The 39 weeks ended June 28, 2025, net income (loss) includes a full valuation allowance related to deferred tax assets in the amount of $4,799,000[10] Balance Sheet Snapshot The balance sheet provides a snapshot of the company's cash and debt positions as of June 28, 2025 Balance Sheet Snapshot (as of June 28, 2025) | Metric | Amount | | :---------------------- | :------------- | | Cash and cash equivalents | $12,325,000 | | Total outstanding debt | $3,859,000 | Same Store Sales Company-wide same-store sales decreased, primarily attributed to declines at Bryant Park Grill due to a landlord dispute - Excluding revenues related to El Rio Grande and the Tampa Food Court, Company-wide same store sales decreased 7.4% for the 13 weeks ended June 28, 2025, compared to the prior year[7] - Excluding revenues related to El Rio Grande and the Tampa Food Court, Company-wide same store sales decreased 3.3% for the 39 weeks ended June 28, 2025, compared to the prior year[7] - These decreases were primarily attributable to declines in both catering and a la carte revenue at the Bryant Park Grill due to negative publicity from the landlord dispute[7] Non-GAAP Financial Information The company utilizes EBITDA as a non-GAAP financial measure to provide additional insight into its financial performance and liquidity, aligning with industry practices - EBITDA is a non-GAAP financial measure used to enhance the overall understanding of the Company's past financial performance and liquidity[27] - The use of EBITDA is common in the restaurant sector as a measure of both performance and liquidity[27] - Investors should not consider EBITDA in isolation or as a substitute for GAAP measures such as net income (loss), operating income (loss), or cash flows from operating activities[27] Key Operational and Strategic Developments This section details significant operational and strategic events, including a major lease dispute, credit facility amendments, and asset impairments Bryant Park Lease Dispute Ark Restaurants is engaged in ongoing litigation over the non-renewal of leases for its Bryant Park properties, posing a material adverse effect risk - Leases for Bryant Park Grill & Cafe and The Porch at Bryant Park expired on April 30, 2025, and March 31, 2025, respectively[12] - The Company filed a complaint in New York State Supreme Court on March 28, 2025, alleging a defective bid process, award to a lower bidder, and violation of its right of first lease[13] - A motion for a preliminary injunction to enjoin eviction was denied on April 24, 2025, and the Company has filed a notice of appeal[13] - The Bryant Park Grill & Cafe and The Porch at Bryant Park collectively accounted for $19.7 million (15.4%) and $23.3 million (16.7%) of total revenues for the 39 weeks ended June 28, 2025, and June 29, 2024, respectively[15] - Failure to prevail in these actions or renew leases on favorable terms could have a material adverse effect on the Company's business, financial condition, and results of operations[16] Credit Facility Amendment Ark Restaurants amended its Credit Agreement, extending the maturity date to June 1, 2028, and adjusting key financial covenants - The Second Amended and Restated Credit Agreement with Bank Hapoalim B.M. was amended on May 29, 2025[17] - The maturity date of the Credit Agreement was extended to June 1, 2028[17] - The maximum permitted obligations outstanding under the Credit Agreement were reduced from $30,000,000 to $20,000,000[17] - The minimum tangible net worth covenant was increased from $22,000,000 to $28,000,000, and the annual net income covenant was removed[17] Asset Impairments The company recognized significant impairment charges for ROU and long-lived assets at Sequoia, alongside a goodwill impairment triggered by stock price decline and lease uncertainty - Additional impairment charges of $2,940,000 (ROU assets) and $1,760,000 (long-lived assets) were recognized for the Sequoia property during the 13 weeks ended June 28, 2025, due to lower-than-expected operating results[18] - Previously, impairment charges of $1,561,000 (ROU) and $939,000 (long-lived assets) were recognized for Sequoia during the 13 weeks ended June 29, 2024[18] - A non-cash goodwill impairment charge of $3,440,000 was recognized during the 39 weeks ended June 28, 2025[21] - The goodwill impairment was triggered by a decline in the Company's stock price and continued uncertainty related to the Bryant Park Grill & Cafe and The Porch at Bryant Park leases[21] Lease Terminations and Closures Ark Restaurants successfully terminated its Tampa Food Court lease, resulting in a significant gain, and permanently closed its El Rio Grande property with an associated loss - The Company agreed to terminate its lease for the food court at The Hard Rock Hotel and Casino in Tampa, FL, on November 26, 2024, vacating the premises on December 15, 2024[19] - In connection with the Tampa Food Court lease termination, the Company received a termination payment of $5,500,000 and recorded a gain, net of expenses, of $5,235,000[19] - The El Rio Grande property closed permanently on January 3, 2025, after the Company advised the landlord of lease termination in October 2024[22] - A loss of $876,000 related to the closure of El Rio Grande was recorded during the year ended September 28, 2024[22] Supplemental Information This section provides details on the upcoming conference call and important legal disclaimers regarding forward-looking statements and non-GAAP measures Conference Call & Webcast Information Ark Restaurants will host a conference call and webcast on August 12, 2025, to discuss its third-quarter financial results, with replay options available - Ark Restaurants will host a conference call on August 12, 2025, at 11:00 a.m. Eastern Time to review results and discuss other topics[23] - The call can be accessed via toll-free dial-in (1-877-407-4018) or a live webcast[23][24] - A replay will be available approximately three hours after the call until Tuesday, August 19, 2025[24] Legal Disclaimers The report includes standard cautionary statements regarding forward-looking information and clarifies the use and limitations of non-GAAP financial measures - The news release contains forward-looking statements subject to unknown risks and uncertainties that may cause actual results to differ materially[26] - The Company disclaims any intention or obligation to update or revise any forward-looking statements[26] - EBITDA is a non-GAAP financial measure, and investors should not consider it in isolation or as a substitute for GAAP measures[27] Financial Statements This section presents the company's detailed consolidated financial statements, including statements of operations and EBITDA reconciliation Consolidated Condensed Statements of Operations Detailed consolidated condensed statements of operations are presented for the 13- and 39-week periods, outlining revenues, expenses, and net income (loss) Consolidated Condensed Statements of Operations (in thousands, except per share amounts) | | | 13 Weeks Ended | | 13 Weeks Ended | | 39 Weeks Ended | | 39 Weeks Ended | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | June 28, 2025 | | June 29, 2024 | | June 28, 2025 | | June 29, 2024 | | TOTAL REVENUES | $ | 43,715 | $ | 50,396 | $ | 128,428 | $ | 140,139 | | COSTS AND EXPENSES: | | | | | | | | | | Food and beverage cost of sales | | 12,060 | | 13,304 | | 35,650 | | 37,512 | | Payroll expenses | | 15,280 | | 17,479 | | 46,103 | | 49,969 | | Occupancy expenses | | 5,444 | | 6,261 | | 17,128 | | 18,368 | | Other operating costs and expenses | | 6,038 | | 6,305 | | 17,422 | | 18,233 | | General and administrative expenses | | 2,822 | | 2,690 | | 9,292 | | 9,151 | | Depreciation and amortization | | 964 | | 1,033 | | 2,443 | | 3,181 | | Gain on closure of El Rio Grande | | (178) | | — | | (173) | | — | | Gain on termination of Tampa Food Court lease | | — | | — | | (5,235) | | — | | Impairment losses on right-of-use and long-lived assets | | 4,700 | | 2,500 | | 4,700 | | 2,500 | | Goodwill impairment | | — | | — | | 3,440 | | — | | Total costs and expenses | | 47,130 | | 49,572 | | 130,770 | | 138,914 | | OPERATING INCOME (LOSS) | | (3,415) | | 824 | | (2,342) | | 1,225 | | OTHER (INCOME) EXPENSE: | | | | | | | | | | Interest expense, net | | 90 | | 138 | | 294 | | 448 | | Other income | | — | | — | | — | | (26) | | Gain on sale of condominiums | | (391) | | — | | (391) | | — | | Gain on forgiveness of PPP Loans | | — | | — | | — | | (285) | | Total other (income) expense, net | | (301) | | 138 | | (97) | | 137 | | INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES | | (3,114) | | 686 | | (2,245) | | 1,088 | | Provision (benefit) for income taxes | | 81 | | (213) | | 5,019 | | (202) | | CONSOLIDATED NET INCOME (LOSS) | | (3,195) | | 899 | | (7,264) | | 1,290 | | Net income attributable to non-controlling interests | | (259) | | (259) | | (2,284) | | (729) | | NET INCOME (LOSS) ATTRIBUTABLE TO ARK RESTAURANTS CORP. | $ | (3,454) | $ | 640 | $ | (9,548) | $ | 561 | | NET INCOME (LOSS) ATTRIBUTABLE TO ARK RESTAURANTS CORP. PER COMMON SHARE: | | | | | | | | | | Basic | $ | (0.96) | $ | 0.18 | $ | (2.65) | $ | 0.16 | | Diluted | $ | (0.96) | $ | 0.18 | $ | (2.65) | $ | 0.15 | | WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: | | | | | | | | | | Basic | | 3,605 | | 3,604 | | 3,605 | | 3,604 | | Diluted | | 3,605 | | 3,627 | | 3,605 | | 3,628 | EBITDA Reconciliation This section provides a reconciliation of income (loss) before provision (benefit) for income taxes to EBITDA and adjusted EBITDA, detailing specific adjustments for non-cash items, gains, and impairment losses EBITDA Reconciliation (in thousands) | EBITDA Reconciliation: | | | | | | | | | :--------------------------------------- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | | June 28, 2025 | | June 29, 2024 | | June 28, 2025 | | June 29, 2024 | | Income (loss) before provision (benefit) for income taxes | $ (3,114) | $ 686 | $ (2,245) | $ 1,088 | | Depreciation and amortization | 964 | 1,033 | 2,443 | 3,181 | | Interest expense, net | 90 | 138 | 294 | 448 | | EBITDA | $ (2,060) | $ 1,857 | $ 492 | $ 4,717 | | EBITDA, adjusted: | | | | | | | | | EBITDA (as defined) | $ (2,060) | $ 1,857 | $ 492 | $ 4,717 | | Non-cash stock-based compensation activity | (21) | (723) | 60 | (578) | | Gain on closure of El Rio Grande | (178) | — | (173) | — | | Gain on termination of Tampa Food Court lease, net of non controlling interests | — | — | (3,365) | — | | Impairment losses on right-of-use and long-lived assets | 4,700 | 2,500 | 4,700 | 2,500 | | Goodwill impairment | — | — | 3,440 | — | | Gain on sale of condominiums | (391) | — | (391) | — | | Gain on forgiveness of PPP Loans | — | — | — | (285) | | Net income attributable to non-controlling interests | (259) | (259) | (2,284) | (729) | | EBITDA, as adjusted | $ 1,791 | $ 3,375 | $ 2,479 | $ 5,625 |