Nathan's(US:NATH)2025-11-06 12:01Revenue Growth - Total revenues increased by approximately 11% to $45,687,000 for the thirteen weeks ended September 28, 2025, compared to $41,109,000 for the same period in 2024[116] - Total revenues increased by approximately 8% to $92,685,000 for the twenty-six weeks ended September 28, 2025, compared to $85,876,000 for the same period in fiscal 2025[140] - Foodservice sales from the Branded Product Program increased by approximately 18% to $29,047,000 for the second quarter fiscal 2026, compared to $24,536,000 for the second quarter fiscal 2025[117] - Foodservice sales from the Branded Product Program increased by approximately 15% to $58,122,000 for the fiscal 2026 period compared to $50,682,000 for fiscal 2025[141] Sales Performance - The total volume of hot dogs sold in the Branded Product Program increased by approximately 7% compared to the second quarter fiscal 2025, with an average selling price increase of approximately 11%[117] - Total Company-owned restaurant sales increased by approximately 5% to $5,624,000 during the second quarter fiscal 2026, compared to $5,348,000 during the same period in 2025[118] - Comparable domestic franchise sales were $28,957,000 in fiscal 2026 compared to $29,379,000 in fiscal 2025, reflecting a decline in sales[144] - Franchise fees and royalties increased by approximately 4% to $1,223,000 in Q2 fiscal 2026 compared to $1,174,000 in Q2 fiscal 2025, with franchise restaurant sales increasing to $19,873,000 from $18,681,000[120] Cost and Expenses - Overall cost of sales increased by approximately 24% to $32,378,000 in Q2 fiscal 2026 compared to $26,029,000 in Q2 fiscal 2025, resulting in a gross profit of $2,293,000 or 7%[123] - General and administrative expenses increased by $200,000 or 6% to $3,452,000 in Q2 fiscal 2026 compared to $3,252,000 in Q2 fiscal 2025[127] - Cost of sales rose by approximately 19% to $60,801,000 in fiscal 2026 compared to $51,270,000 in fiscal 2025, with gross profit decreasing to $6,931,000 (10%) from $8,959,000 (15%)[147] - The cost of sales in the Branded Product Program increased by 21% to $55,823,000 due to a 3% increase in hot dog sales volume and a 16% rise in average cost per pound[148] Profitability - EBITDA for the thirteen weeks ended September 28, 2025, was $7,996,000, compared to $9,787,000 for the same period in 2024[113] - Adjusted EBITDA for the thirteen weeks ended September 28, 2025, was $8,280,000, compared to $10,350,000 for the same period in 2024[113] - The average cost of hot dogs during fiscal 2026 was approximately 16% higher than in fiscal 2025, indicating inflationary pressures on commodity prices[185] Cash Flow and Dividends - Cash and cash equivalents increased by $4,373,000 to $32,175,000 as of September 28, 2025, compared to $27,802,000 at March 30, 2025[163] - Net cash provided by operating activities was $9,938,000 in fiscal 2026, down from $14,826,000 in fiscal 2025[166] - The company paid cash dividends totaling $4,089,000 during fiscal 2026, with a declared third-quarter dividend of $0.50 per share and a special cash dividend of $2.50 per share[177] - The Company's total cash requirement for dividends for fiscal 2026 is approximately $18,403,000, including a special cash dividend of $2.50 per share[178] Interest and Tax - Interest expense decreased by $702,000 to $739,000 in Q2 fiscal 2026 due to lower outstanding long-term debt and a lower interest rate associated with the Credit Agreement[131] - Interest expense decreased to $1,497,000 in fiscal 2026 from $2,501,000 in fiscal 2025, primarily due to lower outstanding long-term debt[153] - The effective income tax rate for fiscal 2026 was 26.7%, comparable to the previous fiscal year, reflecting an income tax expense of $5,151,000 on pre-tax income of $19,278,000[157] Market Conditions and Risks - Nathan's Famous anticipates continued inflationary pressures on commodity prices, including beef and labor, during the remainder of fiscal 2026[105] - The Company's future operating results could be impacted by supply constraints on beef or increased costs due to inflationary pressures[104] - A hypothetical 100 bps increase in interest rates on $49,600,000 of outstanding Term Loan borrowings would increase cash interest costs by approximately $496,000 over the next twelve months[192] - Inflationary pressures on labor and rising commodity prices have significantly impacted financial results, particularly in New York State due to minimum wage increases[186] - The Company expects to continue experiencing volatility in oil and gas prices affecting distribution and utility costs[194] - The Company has not hedged against fluctuations in commodity prices, exposing it to market changes in future purchases[195]