Nathan's(NATH)2021-08-06 10:02Revenue Growth - Total revenues increased by 77% to $31,319,000 for the thirteen weeks ended June 27, 2021, compared to $17,686,000 for the same period in 2020[113]. - Total sales increased by 189% to $19,325,000 for the fiscal 2022 period, compared to $6,683,000 for the fiscal 2021 period[114]. - Foodservice sales from the Branded Product Program increased by 237% to $15,996,000 for the fiscal 2022 period, compared to $4,749,000 in the fiscal 2021 period[114]. - Total Company-owned restaurant sales increased by 72% to $3,329,000 during the fiscal 2022 period, compared to $1,934,000 during the fiscal 2021 period[115]. - Franchise restaurant sales increased significantly to $12,985,000 in fiscal 2022 from $2,218,000 in fiscal 2021, as approximately 80% of franchise locations were open compared to 52% in the prior year[117]. EBITDA and Profitability - EBITDA for the thirteen weeks ended June 27, 2021, was $11,032,000, compared to $8,521,000 for the same period in 2020[112]. - Adjusted EBITDA for the thirteen weeks ended June 27, 2021, was $11,061,000, compared to $8,550,000 for the same period in 2020[112]. - Overall cost of sales increased by 190% to $15,365,000 in fiscal 2022, while gross profit was $3,960,000, representing 20.5% of sales[121]. Expenses and Costs - General and administrative expenses rose by $614,000 or 22% to $3,458,000 in fiscal 2022, primarily due to higher corporate payroll and legal fees[126]. - Average selling prices decreased by approximately 4.5% compared to the fiscal 2021 period[114]. - The minimum hourly wage for fast food workers in New York State increased to $15.00 on July 1, 2021, significantly affecting Nathan's Company-owned restaurants[152]. - Continued increases in labor, food, and other operating expenses could adversely affect Nathan's operations and pricing strategy[155]. Cash Flow and Financial Position - Cash and cash equivalents decreased by $1,538,000 to $79,526,000 during fiscal 2022, while net working capital increased to $84,994,000[134]. - Cash provided by operations was $77,000 in fiscal 2022, attributed to net income of $5,763,000 and non-cash operating items[137]. - The company incurred $1,440,000 in cash used for financing activities related to dividend payments in fiscal 2022[138]. - Management believes available cash and cash generated from operations will be sufficient to finance operations and satisfy debt service requirements for at least the next 12 months[146]. Strategic Focus and Future Plans - The strategic emphasis continues to focus on increasing distribution points across all business platforms, including Licensing and Branded Product Programs[97]. - The company plans to invest in existing restaurants and support the growth of Branded Product and Branded Menu Programs in the future[145]. Market and Commodity Risks - The company expects to experience price volatility for beef products during fiscal 2022, which could impact operational results[151]. - Nathan's has not attempted to hedge against fluctuations in commodity prices, leading to exposure to market changes in future purchases[163]. - A short-term increase or decrease of 10.0% in the cost of food and paper products for the thirteen-week period ended June 27, 2021, would have increased or decreased the cost of sales by approximately $1,385,000[163]. - Nathan's has recorded a liability of $113,000 in connection with the Brooklyn Guaranty, which does not include potential additional costs that are not reasonably determinable at this time[149]. Debt and Interest Rates - As of June 27, 2021, Nathan's cash and cash equivalents totaled $79,526,000, with earnings on this cash expected to fluctuate by approximately $199,000 per annum for each 0.25% change in interest rates[159]. - The company has $150,000,000 of 2025 Notes outstanding, with interest expense on these borrowings expected to change by approximately $375,000 per annum for each 0.25% change in interest rates[160].