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CST: 23/04/2019 15:53:03   

Chanticleer Holdings Reports Operating Results for Fourth Quarter and Year Ended December 31, 2018

22 Days ago

Reports Strong Unit and Footprint Growth, and the Addition of Proven Restaurant Executives to Enhance the Company’s Platform

CHARLOTTE, N.C., April 01, 2019 (GLOBE NEWSWIRE) -- Chanticleer Holdings, Inc. (NASDAQ: BURG) (“Chanticleer,” or the “Company”), owner, operator and franchisor of multiple branded restaurants in the U.S. and abroad, today announced financial results for the fourth quarter and year ended December 31, 2018.

Annual Financial Highlights for the Year ended December 31, 2018

  • Revenue for the year was $40.6 million in 2018 compared with $41.4 million in 2017.

  • Cost of sales as a percentage of restaurant sales improved to 33.5% in 2018 compared to 33.8% in 2017. The improvement in cost of sales is primarily attributable to favorable movements in beef prices combined with the expansion of the Little Big Burger brand.

  • General and administrative expenses as a percentage of total revenue remained consistent at 11.3% compared to 11.0% in 2017.

  • Operating loss was $5.4 million ($3.4 million excluding non-cash asset impairment charges) in 2018 compared to $5.2 million in 2017.

  • Net loss attributable to Common Shareholders was $7.0 million, ($1.98) per share in 2018, compared to $6.9 million, ($2.73) per share in 2017.

  • Non-GAAP Restaurant EBITDA was $3.7 million in 2018 compared to $4.2 million in 2017.

  • Non-GAAP Adjusted EBITDA was negative $376,000 in 2018 compared to $234,000 in 2017.

  • Cash provided by operating activities was $575,000 in 2018 compared to cash used in operating activities of $725,000.

  • During 2018, the Company opened 4 new Little Big Burger locations, 1 new BGR location along with the acquisition of 2 other BGR locations that were previously franchises. The Company expects to open 4 to 6 new locations annually. The Company also closed 2 underperforming company-owned locations in 2018 which resulted in non-cash impairment charges and is expected to contribute to improved operating performance in future periods.

  • Through a focus of the Company throughout 2018, as well continued efforts through the year-end and audit process, Management was able to fully remediate the material weaknesses that were reported in the December 31, 2017 10-K.  These material weaknesses had been part of the Company’s 10-K disclosures since 2013.

Mike Pruitt, Chairman and CEO of Chanticleer commented, “In 2018 we executed on exactly what we promised early in the year, nearly doubling our Little Big Burger footprint.

“More importantly, we set the stage for the future with the new addition of Fred Glick as our new President and Patrick Harkleroad as CFO. These proven executives have already demonstrated themselves as highly complementary to our existing team. I can without hesitation say that never in the history of Chanticleer, have I personally felt better about our executive team and the value I believe we have the potential to create together. What Fred has accomplished in just his first four short months is nothing less than remarkable. His enthusiasm is infectious, and his hands-on leadership has dramatically and favorably impacted employee morale.

“I believe that the best days are just ahead for Chanticleer. I look forward to continuing to work in concert with my fellow members of our management team and board of directors, all on behalf of our employees and shareholders.”

Conference Call

The Company will host a webcast and conference call on Monday, April 1, 2019 at 4:30 p.m. ET.

To access the call, dial 1-877-407-0784 approximately five minutes prior to the scheduled start time. International callers please dial 1-201-689-8560. To access the webcast, log into the following link: http://public.viavid.com/index.php?id=133748.

A replay of the teleconference will be available until May 1, 2019 and may be accessed by dialing 1-844-512-2921. International callers may dial 1-412-317-6671. Callers should use conference PIN: 13689056.

Use of Non-GAAP Measures

Chanticleer Holdings, Inc. prepares its condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (”GAAP”). In addition to disclosing financial results prepared in accordance with GAAP, the Company discloses information regarding Adjusted EBITDA and Restaurant EBITDA, which differ from the term EBITDA as it is commonly used. In addition to adjusting net income (loss) from continuing operations to exclude taxes, interest, and depreciation and amortization, Adjusted EBITDA also excludes pre-opening and closing costs for our restaurants, non-cash expenses, transaction and severance related expenses, change in fair value of derivative liability and other income and expenses.

In addition, Restaurant EBITDA also excludes management fee income, franchise revenue and general and administrative expenses. Adjusted EBITDA and restaurant EBITDA are not measures of performance defined in accordance with GAAP. However, adjusted EBITDA and restaurant EBITDA are used internally in planning and evaluating the company's operating performance and by the Company’s creditors. Accordingly, management believes that disclosure of these metrics offers investors, bankers and other stakeholders an additional view of the company's operations that, when coupled with the GAAP results, provides a more complete understanding of the Company's financial results.

Adjusted EBITDA and Restaurant EBITDA should not be considered as alternatives to net loss or to net cash used in operating activities as a measure of operating results or of liquidity. It may not be comparable to similarly titled measures used by other companies, and it excludes financial information that some may consider important in evaluating the company's performance. A reconciliation of GAAP net income (loss) to Adjusted EBITDA and Restaurant EBITDA is included in the accompanying financial schedules.

For further information, please refer to Chanticleer’s Annual Report on Form 10-K to be filed with the SEC on or about April 1, 2019, available online at www.sec.gov.

About Chanticleer Holdings, Inc.

Headquartered in Charlotte, NC, Chanticleer Holdings (BURG), owns, operates and franchises fast casual and full-service restaurant brands, including American Burger Company, BGR – Burgers Grilled Right, Little Big Burger, Just Fresh and Hooters.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. These statements include projections, predictions, expectations or statements as to beliefs or future events or results or refer to other matters that are not historical facts. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from those contemplated by these statements. The forward-looking statements contained in this press release are based on various factors and were derived using numerous assumptions. In some cases, you can identify these forward-looking statements by the words “anticipate”, “estimate”, “plan”, “project”, “continuing”, “ongoing”, “target”, “aim”, “expect”, “believe”, “intend”, “may”, “will”, “should”, “could”, or the negative of those words and other comparable words.

Our operations involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. Forward-looking statements in this press release include, without limitation, statements reflecting management's expectations for future financial performance and operating expenditures, expected growth, profitability and business outlook, increased sales and marketing expenses, and the expected results from the integration of our acquisitions.

Forward-looking statements are only current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from those anticipated by such statements. These factors include, but are not limited to, the Company's ability to manage growth; integrate acquisitions; manage debt; meet development goals; and other important risks and uncertainties referenced and discussed under the heading titled “Risk Factors” in the Company's filings with the Securities and Exchange Commission. Although we believe that the expectations reflected in the forward-looking statements contained in this press release are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements.

The statements in this press release are made as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company does not assume any obligations to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

Contact:

Investor Relations
Jason Assad
678-570-6791
Ja@chanticleerholdings.com

 
 
Chanticleer Holdings, Inc. and Subsidiaries
  Consolidated Balance Sheets
       
       
  December 31, 2018   December 31, 2017
ASSETS      
Current assets:      
Cash $ 629,871     $ 272,976  
Restricted cash   335       165,517  
Accounts and other receivables, net   387,239       475,988  
Inventories   478,314       460,756  
Prepaid expenses and other current assets   179,377       324,324  
Assets held for sale, net   -       100,000  
TOTAL CURRENT ASSETS     1,675,136         1,799,561  
Property and equipment, net   10,467,841       8,548,592  
Goodwill   11,280,465       12,647,806  
Intangible assets, net   5,123,159       5,896,732  
Investments   800,000       800,000  
Deposits and other assets   446,639       490,328  
TOTAL ASSETS $     29,793,240     $     30,183,019  
       
LIABILITIES AND EQUITY      
Current liabilities:      
Accounts payable and accrued expenses $ 7,386,506     $ 5,797,252  
Current maturities of long-term debt and notes payable, net of unamortized discount and deferred financing costs of $0 and $1,173,190, respectively   3,740,101       5,741,911  
Current maturities of convertible notes payable   3,000,000       3,000,000  
Due to related parties   185,726       191,850  
TOTAL CURRENT LIABILITIES     14,312,333         14,731,013  
Long-term debt   3,000,000       -  
Convertible notes payable, net of unamortized premium of $0 and $12,256, respectively   -       212,256  
Redeemable preferred stock: no par value, 62,876 shares issued and outstanding, net of discount of $173,914 and $208,697, respectively   674,912       640,129  
Deferred rent   2,297,199       2,156,378  
Deferred revenue   1,174,506       175,000  
Deferred tax liabilities   76,765       779,359  
TOTAL LIABILITIES     21,535,715         18,694,135  
Commitments and contingencies      
Common stock subject to repurchase obligation; 0 and 56,290 shares issued and outstanding, respectively   -       -  
Equity:      
Preferred stock: no par value; authorized 5,000,000 shares; 62,876 issued and outstanding, respectively   -       -  
Common stock: $0.0001 par value; authorized 45,000,000      
shares; issued and outstanding 3,715,444 and 3,045,809      
shares, respectively   373       305  
Additional paid in capital   64,756,903       60,750,330  
Accumulated other comprehensive loss   (202,115 )     (934,901 )
Accumulated deficit   (57,124,673 )     (49,109,303 )
Total Chanticleer Holdings, Inc, Stockholders' Equity     7,430,488         10,706,431  
Non-Controlling Interests   827,037       782,453  
TOTAL EQUITY     8,257,525         11,488,884  
TOTAL LIABILITIES AND EQUITY $     29,793,240     $     30,183,019  
       

 

 
Chanticleer Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations
               
  Three Months Ended   Year Ended
    December 31, 2018       December 31, 2017       December 31, 2018       December 31, 2017  
Revenue:              
Restaurant sales, net $ 9,862,794     $ 9,837,951     $ 39,665,763     $ 40,495,166  
Gaming income, net   117,033       113,666       402,611       442,521  
Management fee income   25,003       25,018       100,000       100,000  
Franchise income   115,040       105,550       445,335       395,176  
Total revenue     10,119,870         10,082,185         40,613,709         41,432,863  
Expenses:              
Restaurant cost of sales   3,376,331       3,316,761       13,288,422       13,692,921  
Restaurant operating expenses   6,557,479       5,782,592       23,565,526       23,432,124  
Restaurant pre-opening and closing expenses   100,327       179,737       412,979       319,282  
General and administrative expenses   1,171,176       1,132,495       4,578,788       4,545,496  
Asset impairment charge   228,243       922,726       1,959,510       2,395,616  
Depreciation and amortization   568,912       513,964       2,163,585       2,282,801  
Total expenses     12,002,468         11,848,275         45,968,810         46,668,240  
Operating loss       (1,882,598 )       (1,766,090 )       (5,355,101 )       (5,235,377 )
Other (expense) income                
Interest expense   (632,302 )     (646,249 )     (2,527,464 )     (2,592,961 )
Loss on debt refinancing   -       -       -       (95,310 )
Other income (expense)   200,024       62,934       (17,926 )     112,984  
Total other expense   (432,278 )     (583,315 )     (2,545,390 )     (2,575,287 )
Loss before income taxes     (2,314,876 )       (2,349,405 )       (7,900,491 )       (7,810,664 )
Income tax benefit (expense)   (78,137 )     813,827       701,224       644,429  
Consolidated net loss     (2,393,013 )       (1,535,578 )       (7,199,267 )       (7,166,235 )
Less: Net loss attributable to non-controlling interests   134,363       125,521       344,847       371,464  
Net loss attributable to Chanticleer Holdings, Inc. $     (2,258,650 )   $     (1,410,057 )   $     (6,854,420 )   $     (6,794,771 )
Dividends on redeemable preferred stock   (34,584 )     (28,218 )     (118,604 )     (108,206 )
Net loss attributable to common shareholders of Chanticleer Holdings, Inc. $     (2,293,234 )   $     (1,438,275 )   $     (6,973,024 )   $     (6,902,977 )
               
Net loss attributable to Chanticleer Holdings, Inc. per common              
  share, basic and diluted: $     (0.62 )   $     (0.49 )   $     (1.98 )   $     (2.73 )
Weighted average shares outstanding, basic and diluted   3,713,220       2,959,284       3,520,125       2,525,037  
               

 

 
Chanticleer Holdings, Inc. and Subsidiaries
  Consolidated Statements of Cash Flows
       
  Year Ended
    December 31, 2018       December 31, 2017  
Cash flows from operating activities:      
Net loss $ (7,199,267 )   $ (7,166,235 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:      
Depreciation and amortization   2,163,585       2,282,801  
Asset impairment charge   1,959,510       2,395,616  
Loss on debt refinancing   -       95,310  
Loss on investments   68,101       -  
Common stock and warrants issued for services   154,768       280,669  
Amortization of debt discount   1,195,918       788,187  
Change in assets and liabilities:      
Accounts and other receivables   91,798       35,154  
Prepaid and other assets   116,154       22,157  
Inventory   8,885       23,062  
Accounts payable and accrued liabilities   2,626,504       1,039,179  
Change in amounts payable to related parties   (6,124 )     (2,500 )
Deferred income taxes   (702,594 )     (706,195 )
Deferred revenue   (42,840 )     -  
Deferred rent   140,820       188,363  
Net cash provided by (used in) operating activities   575,218       (724,432 )
       
Cash flows from investing activities:      
Purchase of property and equipment   (2,392,864 )     (1,625,460 )
Cash paid for acquisitions   (50,000 )     -  
Proceeds from sale of property   -       461,158  
Net cash used in investing activities   (2,442,864 )     (1,164,302 )
       
Cash flows from financing activities:      
Proceeds from sale of common stock and warrants   1,667,729       939,712  
Proceeds from sale of redeemable preferred stock, net of offerring costs of $243,480   -       348,171  
Loan proceeds   100,000       6,578,090  
Payment of deferred financing costs   -       (293,294 )
Loan repayments   (455,242 )     (6,187,738 )
Payments on capital leases   -       (28,405 )
Distributions to non-controlling interest   (142,225 )     -  
Contributions from non-controlling interest   900,000       725,000  
Net cash provided by financing activities   2,070,262       2,081,536  
Effect of exchange rate changes on cash   (10,903 )     (22,884 )
Net increase in cash and restricted cash   191,713       169,918  
Cash and restricted cash, beginning of year   438,493       268,575  
Cash and restricted cash, end of year $ 630,206     $ 438,493  
       

 

 
Chanticleer Holdings, Inc. and Subsidiaries
Reconciliation of Net Loss to EBITDA
(Unaudited)
               
  Three Months Ended   Year Ended
    December 31, 2018       December 31, 2017       December 31, 2018       December 31, 2017  
               
Consolidated net loss $     (2,393,013 )   $     (1,535,578 )   $     (7,199,267 )   $     (7,166,235 )
Interest expense   632,302       646,249       2,527,464       2,592,961  
Income tax   78,137       (813,827 )     (701,224 )     (644,429 )
Depreciation and amortization   568,912       513,964       2,163,585       2,282,801  
EBITDA $     (1,113,662 )   $     (1,189,192 )   $     (3,209,441 )   $     (2,934,902 )
Restaurant pre-opening and closing expenses   100,327       179,737       412,979       319,282  
Operating results of restaurants closed in period   -       69,896       4,789       369,011  
Additional non-cash expenses impacting operating results   438,564       -       438,564       -  
(Gain) loss on debt refinancing   -       -       -       95,310  
Asset impairment charge   228,243       922,726       1,959,510       2,395,616  
Transaction and severence related expenses   -       -       -       102,750  
Other income (expense)   (200,024 )     (62,934 )     17,926       (112,984 )
Adjusted EBITDA $     (546,552 )   $     (79,767 )   $     (375,673 )   $     234,083  
General and administrative expenses   1,171,176       1,132,495       4,578,788       4,442,746  
Franchise revenues   (115,040 )     (105,550 )     (445,335 )     (395,176 )
Management fee revenue   (25,003 )     (25,018 )     (100,000 )     (100,000 )
Restaurant EBITDA $     484,581     $     922,160     $     3,657,780     $     4,181,653  

 

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