Rave Restaurant (RAVE) - 2024 Q3 - Quarterly Results

Executive Summary & Highlights RAVE Restaurant Group reported strong Q3 FY2024 financial performance and strategic operational updates for its brands Third Quarter Financial & Operational Highlights RAVE Restaurant Group reported increased net income and Adjusted EBITDA for Q3 FY2024, with stable revenue and slight comparable sales decreases for Pizza Inn and Pie Five Third Quarter Financial Highlights (YoY) | Metric | Q3 FY2024 (Millions) | Q3 FY2023 (Millions) | Change (YoY) (Millions) | | :-------------------------------- | :------------------- | :------------------- | :---------------------- | | Net Income | $0.7 | $0.3 | +$0.4 | | Income Before Taxes | $0.9 | $0.46 | +$0.44 (95.2%) | | Total Revenue | $3.0 | $3.0 | Stable | | Adjusted EBITDA | $0.8 | $0.6 | +$0.2 | | Diluted EPS | $0.04 | $0.02 | +$0.02 | - Pizza Inn domestic comparable store retail sales decreased by 1.9% in Q3 FY2024, following a 15.6% increase in Q3 FY2023[3] - Pie Five domestic comparable store retail sales decreased by 6.4% in Q3 FY2024, following an 8.4% increase in Q3 FY2023[3] - Cash and cash equivalents totaled $6.3 million on March 24, 2024[3] - Unit Counts: Pizza Inn domestic: 104, Pizza Inn international: 21, Pie Five domestic: 23[3] Management Commentary CEO Brandon Solano highlighted 16 consecutive quarters of profitability, steady same-store sales, and executive team restructuring for savings and talent - Achieved 16th consecutive quarter of profitability with steady same-store sales at both Pizza Inn and Pie Five in Q3[4] - Restructured executive team, leading to significant savings in employee-related expenses and elevated talent[4] - Over the past two years, same-store sales increased by 13.7% at Pizza Inn and by 1.7% at Pie Five[4] - Over the past three years, Q3 same-store sales grew 36.5% at Pizza Inn and 23.1% at Pie Five[4] - Net income for the first three quarters of the current fiscal year ($1.6 million) matched the total net income delivered in all four quarters combined in the prior fiscal year[4] - Committed to expanding reimaging and marketing programs, with 12 Pizza Inn restaurants set to begin the reimage process and 5 already in progress or completed, expecting double-digit same-store sales increases post-completion[4] - Generated over $1.0 million in operating cash this quarter[4] Non-GAAP Financial Measures RAVE Restaurant Group uses non-GAAP measures like EBITDA and Adjusted EBITDA to provide supplemental insights into operating performance and aid strategic planning Definition and Use of Non-GAAP Measures RAVE Restaurant Group uses non-GAAP measures (EBITDA, Adjusted EBITDA) to offer supplemental insights into operating performance, aiding evaluation and strategic planning - Purpose: Non-GAAP measures (EBITDA, Adjusted EBITDA) are used as supplemental measures of operating performance for investors and management, aiding in evaluating business strategies and for planning and budgeting[5] - EBITDA Definition: Earnings before interest, taxes, depreciation, and amortization[6] - Adjusted EBITDA Definition: EBITDA adjusted for stock compensation expense, severance, gain/loss on sale of assets, costs related to impairment and other lease charges, franchise default and closed store revenue/expense, and closed and non-operating store costs[7] - Disclaimer: These non-GAAP financial measures should not be viewed as an alternative or substitute for financial statements prepared in accordance with GAAP[7] Company Overview RAVE Restaurant Group, Inc. is a Dallas-based franchisor of two distinct pizza concepts: Pizza Inn and Pie Five About RAVE Restaurant Group, Inc. RAVE Restaurant Group, Inc. is a Dallas-based franchisor, licensor, and supplier of two pizza concepts: Pizza Inn and Pie Five Pizza - Headquarters: Dallas, Texas[9] - Business Model: Franchises, licenses, and supplies Pie Five and Pizza Inn restaurants domestically and internationally[9] - Brands: - Pizza Inn: Established in 1958, known for its house-made dough, 100% whole milk mozzarella cheese, fresh ingredients, house-made signature sauce, friendly service, and a small-town buffet vibe[9] - Pie Five Pizza: Introduced in 2011, a fast-casual pizza brand offering personalization, sophisticated ingredients, speed, daily baked craft pizzas, house-made ingredients, creative recipes, and craveable crust creations[9] Financial Statements RAVE Restaurant Group's financial statements show improved profitability, increased assets, and strong cash generation for the current fiscal year Condensed Consolidated Statements of Income RAVE Restaurant Group reported stable Q3 FY2024 revenues, reduced costs, and significantly increased net income for both the quarter and nine-month period Condensed Consolidated Statements of Income (in thousands) | Metric | Three Months Ended March 24, 2024 (Thousands) | Three Months Ended March 26, 2023 (Thousands) | Nine Months Ended March 24, 2024 (Thousands) | Nine Months Ended March 26, 2023 (Thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | REVENUES | $2,962 | $2,970 | $8,795 | $8,841 | | Total costs and expenses | $2,108 | $2,532 | $6,883 | $7,516 | | INCOME BEFORE TAXES | $854 | $438 | $1,912 | $1,325 | | Income tax expense | $(200) | $(115) | $(319) | $(347) | | NET INCOME | $654 | $323 | $1,593 | $978 | | INCOME PER SHARE - DILUTED | $0.04 | $0.02 | $0.11 | $0.06 | Condensed Consolidated Balance Sheets As of March 24, 2024, RAVE Restaurant Group's total assets and shareholders' equity increased, while total liabilities decreased, indicating a stronger financial position Condensed Consolidated Balance Sheets (in thousands) | Metric | March 24, 2024 (Thousands) | June 25, 2023 (Thousands) | Change (Thousands) | | :------------------------------------ | :------------------------- | :------------------------ | :----------------- | | Cash and cash equivalents | $6,318 | $5,328 | +$990 | | Total current assets | $8,214 | $6,834 | +$1,380 | | Total assets | $14,956 | $14,237 | +$719 | | Total current liabilities | $1,939 | $2,198 | -$259 | | Total liabilities | $3,156 | $3,846 | -$690 | | Total shareholders' equity | $11,800 | $10,391 | +$1,409 | Condensed Consolidated Statements of Cash Flows RAVE Restaurant Group generated increased cash from operations and significantly reduced cash outflow from financing activities, leading to a net increase in cash for the nine-month period Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Nine Months Ended March 24, 2024 (Thousands) | Nine Months Ended March 26, 2023 (Thousands) | Change (Thousands) | | :------------------------------------ | :------------------------------------------- | :------------------------------------------- | :----------------- | | Cash provided by operating activities | $1,331 | $1,233 | +$98 | | Cash used in investing activities | $(30) | $(80) | +$50 | | Cash used in financing activities | $(311) | $(5,009) | +$4,698 | | Net increase (decrease) in cash and cash equivalents | $990 | $(3,856) | +$4,846 | | Cash and cash equivalents, end of period | $6,318 | $3,867 | +$2,451 | Non-GAAP Reconciliation This section provides a reconciliation of RAVE Restaurant Group's GAAP net income to its non-GAAP EBITDA and Adjusted EBITDA measures Adjusted EBITDA Reconciliation RAVE Restaurant Group's reconciliation shows significant increases in both EBITDA and Adjusted EBITDA for the three and nine months ended March 24, 2024 Adjusted EBITDA Reconciliation (in thousands) | Metric | Three Months Ended March 24, 2024 (Thousands) | Three Months Ended March 26, 2023 (Thousands) | Nine Months Ended March 24, 2024 (Thousands) | Nine Months Ended March 26, 2023 (Thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net income | $654 | $323 | $1,593 | $978 | | EBITDA | $867 | $492 | $1,989 | $1,484 | | Adjusted EBITDA | $842 | $568 | $1,964 | $1,725 | Additional Information This section includes important disclaimers regarding forward-looking statements and provides essential contact information Note Regarding Forward-Looking Statements This disclaimer highlights that statements in the press release are forward-looking, subject to risks, and not guaranteed to be accurate - Statements in the press release, other than historical information, may be considered forward-looking statements[8] - These statements are based on current expectations that involve numerous risks, uncertainties, and assumptions[8] - Assumptions relate to cost-cutting measures, reimaging initiatives, development pipeline, economic/competitive/market conditions, regulatory framework, and future business decisions[8] - Many factors are difficult or impossible to predict accurately and are beyond the control of RAVE Restaurant Group, Inc.[8] - There can be no assurance that any forward-looking statements will prove to be accurate, and their inclusion should not be regarded as a representation that objectives and plans will be achieved[8] Contact Information Provides essential contact details for investor relations at RAVE Restaurant Group, Inc. - Department: Investor Relations[10] - Company: RAVE Restaurant Group, Inc[10] - Phone: 469-384-5000[10]