BurgerFi(BFI) - 2023 Q2 - Quarterly Report

Part I Financial Information Condensed Consolidated Financial Statements Unaudited condensed consolidated financial statements for Q2 2022, detailing the Anthony's acquisition impact and a $55.2 million goodwill impairment Condensed Consolidated Balance Sheets (Unaudited) | (in thousands) | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | ASSETS | | | | TOTAL CURRENT ASSETS | $21,515 | $21,223 | | PROPERTY & EQUIPMENT, net | $24,855 | $29,035 | | GOODWILL | $43,021 | $98,000 | | INTANGIBLE ASSETS, net | $164,478 | $168,723 | | TOTAL ASSETS | $306,827 | $317,719 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | TOTAL CURRENT LIABILITIES | $38,328 | $24,330 | | TOTAL LIABILITIES | $200,290 | $144,444 | | TOTAL STOCKHOLDERS' EQUITY | $106,537 | $173,275 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $306,827 | $317,719 | Condensed Consolidated Statements of Operations (Unaudited) | (in thousands, except per share data) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | TOTAL REVENUE | $45,298 | $11,770 | $90,228 | $22,700 | | TOTAL OPERATING EXPENSES | $105,575 | $17,465 | $161,538 | $31,052 | | Goodwill impairment | $55,168 | $— | $55,168 | $— | | OPERATING LOSS | $(60,277) | $(5,695) | $(71,310) | $(8,352) | | Net (loss) income | $(60,377) | $8,991 | $(73,937) | $781 | | Basic Net (loss) income per share | $(2.72) | $0.50 | $(3.35) | $0.04 | Condensed Consolidated Statements of Cash Flows (Unaudited) | (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $3,888 | $1,254 | | Net cash used in investing activities | $(31) | $(3,839) | | Net cash used in financing activities | $(2,999) | $(3,041) | | NET INCREASE (DECREASE) IN CASH | $858 | $(5,626) | | CASH, beginning of period | $14,889 | $40,383 | | CASH, end of period | $15,747 | $34,757 | - The company is a multi-brand restaurant operator, including the fast-casual 'BurgerFi' concept and the premium-casual 'Anthony's Coal Fired Pizza & Wings', which was acquired on November 3, 2021[17] - As of June 30, 2022, the company had 183 total restaurants, consisting of 122 BurgerFi locations (25 corporate-owned, 97 franchised) and 61 corporate-owned Anthony's locations[18][19][25] - A non-cash pre-tax goodwill impairment loss of $55.2 million was recognized in Q2 2022, attributed to a decline in the company's share price and market capitalization[33][35] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 2022 financial performance, emphasizing a 371% revenue increase from the Anthony's acquisition and a $60.4 million net loss - The company operates two reportable segments: BurgerFi and Anthony's, generating revenue from restaurant sales, royalties, and franchise fees[103] Consolidated Key Metrics - Q2 2022 vs Q2 2021 (proforma) | Metric | Three Months Ended June 30, 2022 | Change vs. 2021 | | :--- | :--- | :--- | | Systemwide Restaurant Sales | $74.3M | (2)% | | Systemwide Same Store Sales Growth | (5)% | N/A | | Corporate-Owned Same Store Sales Growth | (1)% | N/A | | Franchise Same Store Sales Growth | (11)% | N/A | | Digital Channel % of Systemwide Sales | 35% | N/A | - For Q2 2022, total revenue increased 371% to $45.3 million, primarily due to the Anthony's acquisition which contributed $31.8 million, while BurgerFi corporate-owned same-store sales declined by 14%[121][124] - A goodwill impairment charge of $55.2 million was recorded for Q2 2022, driven by the decrease in the company's stock price and market capitalization[134] - Net loss for Q2 2022 was $60.4 million, a significant shift from a net income of $9.0 million in Q2 2021, primarily due to the $55.2 million goodwill impairment charge and higher expenses related to the Anthony's acquisition[139] Adjusted EBITDA Reconciliation (Non-GAAP) | (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net (loss) income | $(60,377) | $8,991 | $(73,937) | $781 | | Goodwill impairment | $55,168 | $— | $55,168 | $— | | Other Adjustments | $7,824 | $(6,466) | $13,062 | $(2,494) | | Adjusted EBITDA | $2,615 | $266 | $4,893 | $994 | - As of June 30, 2022, the company had a cash balance of $15.7 million and believes its cash flow from operations and cash on hand are sufficient to meet obligations for at least the next 12 months[163][168] Quantitative and Qualitative Disclosures About Market Risk The company indicates this section is not applicable for the current reporting period - Not applicable[175] Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2022, having remediated a material weakness in income tax accounting - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2022[176] - A material weakness related to accounting for income taxes, identified in the 2021 Form 10-K, was remediated as of June 30, 2022[177][179] - Remediation efforts included expanded review processes for assessing deferred tax assets and utilizing additional third-party tax professionals[179] Part II Other Information Legal Proceedings The company is involved in various legal proceedings, including class action and shareholder lawsuits, with uncertain but potentially material outcomes - The company is a defendant in a class action lawsuit (Gilbert v. BurgerFi) alleging improper bylaw provisions, which has been dismissed as moot, but a determination on attorney's fees is pending[47] - A former CEO (Corey Winograd) filed a suit for alleged breach of an employment agreement seeking over $15 million; this matter was settled in August 2022 by a former shareholder on behalf of the company[48] - The company faces allegations from a stockholder, Lion Point Capital, for failure to timely register shares, resulting in alleged losses exceeding $26 million; the company believes the claims are meritless[51] - The company is also defending against other claims, including landlord disputes, franchisee disputes, and employment-related matters, with potential aggregate damages over $1.1 million for employment claims, though management believes any liability beyond insurance coverage would not be significant[50][53][59] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the period - None[181] Other Information The company reported no other information required to be disclosed under this item - None[181] Exhibits This section indexes exhibits, including CEO and CFO certifications and Inline XBRL financial data files - The report includes certifications from the CEO and CFO as required by Sections 302 and 906 of the Sarbanes-Oxley Act[184][185] - The financial statements are formatted in Inline XBRL, with the corresponding taxonomy files submitted as exhibits[185] Signatures The report was duly signed and authorized by the CEO and CFO on August 11, 2022[187]