Company Update (NASDAQ:HOTR): Chanticleer Holdings Inc Reports Third Quarter Results

Chanticleer Holdings Inc (NASDAQ:HOTR), owner, operator and franchisor of multiple branded restaurants in the U.S. and abroad, today announced financial results for the third quarter ended September 30, 2015.

Revenue Grew 10%; Adjusted Restaurant Revenue Increased 44%

Total revenue, which includes restaurant sales, franchise fees and gaming income, was $10.3 million, a 10% increase as compared to revenue of $9.3 million in the same prior year quarter.

Restaurant sales increased 14.3% for the three months ended September 30, 2015 as compared with the three months ended September 30, 2014. Revenues increased from growth in store count and favorable same store sales, partially offset by lower revenues from Australia and foreign currency translation.

Adjusted Non-GAAP restaurant sales, normalized for the temporary reduction in Australia revenues and foreign currency, increased 44% to approximately $12.5 million for the current quarter. The Company resumed operational control of its five Hooters locations in Australia during early October 2015.

Management expects total revenue in the fourth quarter of 2015 to increase to $13 – $14 million including contributions from the Australia and the Little Big Burger acquisitions beginning in October 2015.

Mike Pruitt, Chairman and CEO of Chanticleer commented, “We made tremendous progress this quarter, reorganizing and increasing our stake in Australia; closing the BT’s Burger Joint and Little Big Burger acquisitions; opening our Port Elizabeth Hooters location; opening BGR franchise locations in Texas and Kuwait; and driving operational improvements throughout our restaurants.

“With the temporary reduction in Australia revenue during the reorganization period combined with an increase in non-recurring transaction-related expenses, the current quarterly results are certainly not representative of our expectations going forward. The Little Big Burger acquisition is complete and our new management team is in place in Australia, and we are already seeing the benefits of those investments. With the heavy lifting of Q3 behind us, we expect to deliver significantly improved revenue and operating performance in Q4 and entering 2016.”

Strong Same Store Sales Growth * 3Q15 3Q15
  Local Currency US Dollars
Better Burgers Fast Casual (5 stores) 16.2% 16.2%
Other Fast Casual (6 stores) 7.1% 7.1%
Hooters Full Service US (2 stores) 3.0% 3.0%
Hooters Full Service International (6 stores) (4.5%) (23.5%)
* Includes only those restaurant locations owned and operated by the Company for the full quarter of the current and prior year quarter

“We’ve transformed our business model to take advantage of consumer loyalty to smaller, regional players while also maintaining our core involvement with the iconic Hooters brand. We are seeing a significant shift in our revenue mix, with the better burger fast casual segment now representing 55% of our revenue, up from 22% last year.

“We are very pleased with our same store sales growth across the company, particularly in our fast casual better burger brands. Consumers are increasingly embracing local brands and our better burger portfolio is well positioned to continue to benefit from this trend. The management team is doing an excellent job continually improving the restaurants to attract more customers, while also opening new locations,” Mr. Pruitt continued.

Significant Non-Cash and One-Time Expenses in Quarter

Chanticleer reported an operating loss of $5.8 million in the third quarter of 2015 as compared to an operating loss of $0.5 million in the third quarter of fiscal 2014. Operating loss in the third quarter of 2015 included a non-cash asset impairment charge of $4.5 million related to the reorganization of operations at the Company’s Australia stores and $0.2 million in non-recurring transaction-related expenses.

General and administrative expenses increased to $1.7 million in the third quarter of 2015 from $1.4 million last year. As a percentage of total revenue, general and administrative expenses increased slightly to 16% compared to 15% in the same quarter of 2014, due to primarily to the temporary decline in Australia revenues.

Chanticleer recorded a net loss of $4.6 million, or $0.31 per basic and diluted share in the third quarter of fiscal 2015, compared with a net loss of $0.5 million or $0.07 per basic and diluted share, in the third quarter of fiscal 2014. Non-GAAP adjusted net loss attributable to Chanticleer, excluding the impairment charges related to the Australia reorganization and acquisition-related expenses, was approximately $1.6 million or a loss of $0.11 per basic and diluted share.

Non-GAAP Adjusted EBITDA was $(0.6) million for the quarter compared to $(0.0) million in the third quarter of 2014. Non-GAAP Restaurant EBITDA was $0.9 million for the quarter compared to $1.0 million in the third quarter of 2014, with the prior year including $0.3 million contribution from Australia. In addition, the third quarter of 2014 included $0.5 million related to Chanticleer’s investment in Hooters of America (HOA).

Balance Sheet Strengthened during the Quarter

Working capital (defined as total current assets less accounts payable and accrued liabilities), improved significantly to negative $1.4 million at September 30, 2015 from negative $4.1 million at December 31, 2014. Total current liabilities improved to $8.2 million at September 30, 2014 as compared to $11.4 million at December 31, 2014 due largely to the restructuring of the Company’s Australia operations. Shareholders’ equity increased to $24.2 million as of September 30, 2015 up from $15.0 million at December 31, 2014.

“Our balance sheet improved significantly during the quarter and we look forward to the continued strengthening of our balance sheet as we drive cash flow going forward. We do not anticipate the need to access additional equity capital to execute our current business plan,” Mr. Pruitt concluded.

Outlook: Focus on Driving Operational Efficiency and Profitability — Expect $13- $14 Million in Fourth Quarter Revenues; Positive Adjusted EBITDA and Enhanced Profitability Entering 2016

The Company currently anticipates the following for the fourth quarter of fiscal 2015:

  • Quarterly revenues are expected to fall within a range of approximately $13 – $14 million, including:
  • First full quarter of revenue contribution from Little Big Burger.
  • Resumed revenue contribution beginning early October 2015 from Hooters Australia.
  • Contributions from new store openings
  • Positive Adjusted EBITDA

The company expects to enter 2016 with an annualized revenue run-rate of approximately $55 million and approximately 62 restaurants system-wide. Management is also continuing to implement initiatives to leverage purchasing volumes, consolidate vendors and service providers and streamline back-office processes to drive improved margins and profitability going forward. (Original Source)

Shares of Chanticleer Holdings closed today at $1.13, down $0.06 or 5.04%. HOTR has a 1-year high of $4.18 and a 1-year low of $0.96. The stock’s 50-day moving average is $1.16 and its 200-day moving average is $2.06.

Chanticleer Holdings Inc operates Hooters franchises internationally and several restaurant and bar concepts domestically. It is engaged in owning and operating fast casual dining concepts domestically and internationally.


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