Flanigan's Enterprises(BDL) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Condensed Consolidated Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for the thirteen weeks ended December 30, 2023, including the income statement, balance sheet, statement of cash flows, and accompanying notes Unaudited Condensed Consolidated Statements of Income Consolidated Income Statement Highlights (in thousands, except per share data) | Metric | Thirteen Weeks Ended Dec 30, 2023 | Thirteen Weeks Ended Dec 31, 2022 | | :--- | :--- | :--- | | Total Revenues | $45,140 | $41,861 | | Income from Operations | $793 | $1,197 | | Net Income | $594 | $874 | | Net Income Attributable to Stockholders | $109 | $624 | | Basic and Diluted EPS | $0.06 | $0.34 | Unaudited Condensed Consolidated Statements of Comprehensive Income Comprehensive Income (in thousands) | Metric | Thirteen Weeks Ended Dec 30, 2023 | Thirteen Weeks Ended Dec 31, 2022 | | :--- | :--- | :--- | | Net Income | $594 | $874 | | Change in fair value of interest rate swap, net of tax | ($338) | $0 | | Total Comprehensive Income | $256 | $874 | Condensed Consolidated Balance Sheets Consolidated Balance Sheet Highlights (in thousands) | Metric | December 30, 2023 (Unaudited) | September 30, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $26,897 | $25,532 | | Total Current Assets | $36,246 | $35,294 | | Total Assets | $145,942 | $145,769 | | Total Current Liabilities | $24,330 | $22,371 | | Total Liabilities | $71,762 | $70,855 | | Total Stockholders' Equity | $74,180 | $74,914 | Unaudited Condensed Consolidated Statements of Stockholders' Equity - Total stockholders' equity decreased from $74.91 million at September 30, 2023, to $74.18 million at December 30, 2023, primarily driven by distributions to noncontrolling interests and an other comprehensive loss[11] Unaudited Condensed Consolidated Statements of Cash Flows Summary of Cash Flows (in thousands) | Cash Flow Activity | Thirteen Weeks Ended Dec 30, 2023 | Thirteen Weeks Ended Dec 31, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $3,450 | $5,879 | | Net cash used in investing activities | ($774) | ($2,680) | | Net cash used in financing activities | ($1,311) | ($2,194) | | Net Increase in Cash | $1,365 | $1,005 | | Cash at End of Period | $26,897 | $43,143 | Notes to Unaudited Condensed Consolidated Financial Statements - The company successfully met its Post-Distribution/Fixed Charge Covenant for the twelve months ended December 30, 2023, with a ratio of 1.55 to 1.00, after receiving a waiver for non-compliance in the prior year[25] - The company has a significant construction commitment to rebuild its restaurant in Hollywood, Florida, with a total contract price of $3,767,000, of which $2,625,000 has been paid as of the quarter-end[30] Segment Operating Income (in thousands) | Segment | Thirteen Weeks Ended Dec 30, 2023 | Thirteen Weeks Ended Dec 31, 2022 | | :--- | :--- | :--- | | Restaurants | $1,171 | $779 | | Package stores | $632 | $799 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the quarterly revenue increase driven by new stores and price hikes, alongside a significant net income decline due to rising operating costs and inflation - Total revenue increased by 7.83% to $45.1 million, primarily due to sales from new stores and menu price increases implemented in March 2023[51] - Despite revenue growth, net income decreased by 32.04% to $594,000, and net income attributable to stockholders fell 82.53% to $109,000, driven by a 9.06% increase in operating costs[56][64][65] - The company entered into a purchase agreement to secure its supply of baby back ribs for 2024, committing to purchase approximately $7.0 million worth from its current supplier[77] Cash Flow and Liquidity Summary (in thousands) | Metric | As of/For the Thirteen Weeks Ended Dec 30, 2023 | | :--- | :--- | | Cash and Cash Equivalents | $26,897 | | Net cash provided by operating activities | $3,450 | | Capital Expenditures | $1,378 | | Working Capital | $11,916 | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk from variable-rate debt is actively managed through an interest rate swap agreement, converting a major loan to a fixed rate - The company utilizes an interest rate swap agreement to manage risk on its $8.90M Loan, effectively converting the variable rate obligation to a fixed rate of 4.90% for a fifteen-year period[88] - In Q1 fiscal 2024, the company rolled over $900,000 into new 90-day, fully government-guaranteed certificates of deposit, earning an average fixed annual interest rate of 5.34%[89] Controls and Procedures Management concluded that disclosure controls were not effective due to a material weakness in internal control over financial reporting, with remediation efforts now in progress - Management concluded that disclosure controls and procedures were not effective as of December 30, 2023[91] - A material weakness was identified due to an insufficient complement of trained and knowledgeable accounting personnel, which could allow a material misstatement to go undetected[93][94] - Remediation efforts are underway, including engaging qualified accounting consultants and staffing a new Financial Reporting Division with a qualified CPA to enhance internal controls[95] PART II. OTHER INFORMATION Legal Proceedings The company faces potential 'dram shop' litigation risk but has no current claims, and other legal matters are not expected to have a material adverse effect - The company is subject to "dram shop" statutes but currently has no active claims of this nature[33][99] - Management believes that other various claims and legal actions arising in the ordinary course of business will not have a material adverse effect on financial results[34] Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase any common stock during the quarter but retains authorization from a 2007 plan to purchase additional shares - No shares of the company's common stock were purchased during the thirteen weeks ended December 30, 2023[100] - The company retains the authority to purchase 65,414 shares of its common stock under a discretionary plan approved by the Board in 2007[100] Exhibits This section lists the exhibits filed with the report, including key certifications by the CEO and CFO and the Interactive Data Files (XBRL) - The report includes required certifications from the CEO and CFO pursuant to Rule 13a-14(a) and Section 906 of the Sarbanes-Oxley Act[101] - Interactive Data Files (XBRL documents) are filed as exhibits with this report[101]