SOURCE: Chanticleer Holdings, Inc.

Chanticleer Holdings, Inc. Logo

March 28, 2017 16:05 ET

Chanticleer Holdings Reports Operating Results for Fourth Quarter and Year Ended December 31, 2016

CHARLOTTE, NC--(Marketwired - March 28, 2017) - Chanticleer Holdings, Inc. (NASDAQ: HOTR) ("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, 2016.

Annual Revenue Growth of 18.0%; First Full Year of Positive Adjusted EBITDA

  • Total revenue for year increased 18.0% to $41.7 million, primarily resulting from growth in the Fast Casual Better Burger segment.
  • Cost of sales as a percentage of restaurant sales improved to 33.0%, compared to 34.4% in the comparable period last year.
  • Operating expenses as a percentage of restaurant sales improved to 55.7% compared to 57.5% in the comparable period last year.
  • General and administrative expenses as a percentage of total revenue decreased to 13.9% from 19.2% of sales in the comparable period last year.
  • Loss from continuing operations improved to $(4.3) million or $(0.20) per share, compared to $(8.1) million or $(0.57) in the comparable period last year.
  • Net cash used in operating activities of continuing operations improved to $0.4 million compared to $4.2 million in the prior year.
  • Restaurant EBITDA improved 60.9% to $5.0 million compared to $3.1 million for the year.
  • Adjusted EBITDA improved to positive $82 thousand for the current year compared to a loss of $(1.8) million last year, with 2016 being the Company's first year of positive Adjusted EBITDA.

Fourth Quarter Revenue Decreased 9.7%, Margins Improved, Quarterly Comparisons Impacted by Strong Dollar and Investment Management Revenue decline

  • Total revenue for the fourth quarter decreased 9.7% to $9.9 million from $10.9 million in the prior year, primarily due to the absence of non-recurring investment management revenue related to the Hooters dividend that was included in prior year revenue, as well as the impact of the stronger dollar on our foreign operations.
  • Cost of sales as a percentage of restaurant sales improved to 32.8% compared to 34.3% in the comparable quarter last year.
  • Operating expenses as a percentage of restaurant sales increased to 57.5% compared to 56.6% in the comparable quarter last year.
  • General and administrative expenses as a percentage of total revenue decreased to 14.2% from 15.0% in the comparable quarter last year.
  • Net loss from continuing operations increased to $(1.9) million or $(0.09) per share, compared to $(1.8) million or $(0.08) in the comparable quarter last year.
  • Restaurant EBITDA was relatively unchanged at $1.1 million compared to $1.0 million for the comparable quarter of last year.
  • Adjusted EBITDA was negative $(0.1) million compared to positive $0.1 million in the comparable quarter last year. The decline in quarterly Adjusted EBITDA was primarily due to the prior year including investment management revenue related to Hooters dividends, which did not recur in the fourth quarter of 2016.

Mike Pruitt, Chairman and CEO of Chanticleer, commented, "We made great progress in fiscal 2016 and our annual results demonstrate the efforts to build scale and drive efficiencies in our business over the past two years. We achieved our first year of EBITDA profitability, while establishing our regional brand strategy and laying the foundation to begin to accelerate growth.

"We have three Little Big Burger stores opening in the first four months of 2017 and are on track to open 8-12 new company and franchise stores by the end of this year. That's a significant change coming out of a year where we opened no new company stores as we shift our focus from internal integration projects to external growth and franchising initiatives."

Mr. Pruitt continued, "Given our increased emphasis on high returning assets and expanding our core brands, we are also committed to taking actions to strengthen our balance sheet and improve liquidity as we prepare to accelerate our growth in 2017."

Conference Call

The Company will hold a conference call on Tuesday March 28, 2017 at 4:30 pm. Eastern Time.

To access the call, dial (877) 407-8133 approximately five minutes prior to the scheduled start time. International callers please dial (201) 689-8040. To access the webcast, including the quarterly slide presentation, log onto the Chanticleer website at: http://www.chanticleerholdings.com/

A replay of the teleconference will be available until April 28, 2017 and may be accessed by dialing (877) 481-4010. International callers may dial (919) 882-2331. Callers should use conference ID: 10289.

Use of Non-GAAP Measures

Chanticleer Holdings, Inc. prepares its condensed consolidated financial statements in accordance with United States generally accepted accounting principles ("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 Quarterly Report on Form 10-K to be filed with the SEC on or about March 29, 2017 available online at www.sec.gov.

About Chanticleer Holdings, Inc.

Headquartered in Charlotte, NC, Chanticleer Holdings (HOTR), 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.

For further information, please visit www.chanticleerholdings.com
Facebook: www.Facebook.com/ChanticleerHOTR
Twitter: http://Twitter.com/ChanticleerHOTR
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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.

  
  
Chanticleer Holdings, Inc. and Subsidiaries  
Consolidated Balance Sheets  
          
   December 31, 2016   December 31, 2015  
ASSETS           
Current assets:           
 Cash  $268,575   $1,224,415  
 Accounts and other receivables   524,481    862,935  
 Inventories   539,550    569,545  
 Prepaid expenses and other current assets   461,074    568,251  
 Assets of discontinued operations, current   -    593,430  
   TOTAL CURRENT ASSETS   1,793,680    3,818,576  
         
Property and equipment, net   11,513,693    12,144,064  
Goodwill   12,405,770    12,702,139  
Intangible assets, net   6,530,243    6,776,936  
Investments   800,000    800,000  
Deposits and other assets   442,737    574,192  
Assets of discontinued operations   -    5,389,300  
  TOTAL ASSETS  $33,486,123   $42,205,207  
            
LIABILITIES AND STOCKHOLDERS' EQUITY           
Current liabilities:           
 Accounts payable and accrued expenses  $5,553,068   $4,740,131  
 Current maturities of long-term debt and notes payable, net of discount of of $0 and $171,868, respectively   6,171,649    5,383,003  
 Current maturities of convertible notes payable, net of debt discount of $0 and $914,724, respectively   -    2,810,276  
 Current maturities of capital leases payable   18,449    39,303  
 Due to related parties   194,350    12,963  
 Deferred rent   173,775    683,793  
 Derivative liabilities   -    1,231,608  
 Liabilities of discontinued operations, current   -    1,279,955  
  TOTAL CURRENT LIABILITIES   12,111,291    16,181,032  
Long-term debt, less current portion   287,445    1,098,641  
Convertible notes payable, net of debt discount of $46,936 and $0, respectively   3,678,064    -  
Redeemable preferred stock: no par value, 19,050 and 0 issued and outstanding, respectively   257,175    -  
Capital leases payable, less current maturities   -    15,969  
Deferred rent   1,961,751    1,740,012  
Liabilities of discontinued operations   -    58,648  
Deferred tax liabilities   1,485,554    1,353,771  
  TOTAL LIABILITIES   19,781,280    20,448,073  
Commitments and contingencies           
Common stock subject to repurchase obligation, 562,900 shares issued and outstanding   349,000    -  
Stockholders' equity:           
 Preferred stock: no par value; authorized 5,000,000 shares; 19,050 and 0 issued and outstanding, respectively   -    -  
 Common stock: $0.0001 par value; authorized 45,000,000 shares; issued and outstanding 21,394,247 and 21,337,247 shares, respectively   2,140    2,134  
 Additional paid in capital   55,924,269    55,365,597  
 Accumulated other comprehensive loss   (1,155,658 )  (987,695 )
 Accumulated deficit   (42,206,325 )  (33,012,712 )
  Total Chanticleer Holdings, Inc, Stockholder's Equity   12,564,426    21,367,324  
 Non-Controlling Interests   791,417    389,810  
  TOTAL STOCKHOLDERS' EQUITY   13,355,843    21,757,134  
  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $33,486,123   $42,205,207  
         
         
Chanticleer Holdings, Inc. and Subsidiaries  
Consolidated Statements of Operations and Comprehensive Loss  
                  
   Three Months Ended   Year Ended  
   December 31, 2016   December 31, 2015   December 31, 2016   December 31, 2015  
Revenue:                     
  Restaurant sales, net  $9,571,879   $10,374,165   $40,640,159   $34,201,668  
  Gaming income, net   125,973    107,236    441,620    367,666  
  Management fee income   25,000    349,829    100,000    424,829  
  Franchise income   138,741    88,476    520,222    359,424  
   Total revenue   9,861,593    10,919,706    41,702,001    35,353,587  
Expenses:                     
 Restaurant cost of sales   3,143,308    3,562,882    13,392,078    11,754,515  
 Restaurant operating expenses   5,501,259    5,873,416    22,641,951    19,677,617  
 Restaurant pre-opening and closing expenses   27,143    24,453    145,130    505,098  
 General and administrative expenses   1,400,207    1,634,716    5,801,033    6,798,642  
 Depreciation and amortization   602,882    724,140    2,341,697    1,697,514  
  Total expenses   10,674,799    11,819,607    44,321,889    40,433,386  
Operating loss from continuing operations   (813,206 )  (899,901 )  (2,619,888 )  (5,079,799 )
Other (expense) income                     
 Interest expense   (642,463 )  (729,999 )  (2,347,019 )  (3,466,554 )
 Change in fair value of derivative liabilities   -    35,453    1,231,608    868,592  
 Loss on extinguishment of debt   -    -    -    (315,923 )
 Other income (expense)   (424,660 )  49,209    (412,272 )  99,399  
  Total other (expense) income   (1,067,123 )  (645,337 )  (1,527,683 )  (2,814,486 )
Loss from continuing operations before income taxes   (1,880,329 )  (1,545,238 )  (4,147,571 )  (7,894,285 )
  Income tax benefit (expense)   (60,596 )  (217,867 )  (198,463 )  (187,568 )
Loss from continuing operations   (1,940,925 )  (1,763,105 )  (4,346,034 )  (8,081,853 )
 Discontinued operations                     
 Loss from operation of discontinued operations, net of tax   -    (795,040 )  (1,304,627 )  (6,373,790 )
 Loss on write down of net assets   113,907    -    (3,762,253 )  -  
Consolidated net loss   (1,827,018 )  (2,558,145 )  (9,412,914 )  (14,455,643 )
 Less: Net loss (income) attributable to non-controlling interest of continuing operations   21,805    4,162    75,417    (9,088 )
 Less: Net loss (income) attributable to non-controlling interest of discontinued operations   -    148,386    260,925    2,328,206  
Net loss attributable to Chanticleer Holdings, Inc.  $(1,805,213 ) $(2,405,597 ) $(9,076,572 ) $(12,136,525 )
                      
Net loss attributable to Chanticleer Holdings, Inc.:                     
 Loss from continuing operations  $(1,919,120 ) $(1,758,943 ) $(4,270,617 ) $(8,090,941 )
 Loss from discontinued operations   113,907    (646,654 )  (4,805,955 )  (4,045,584 )
Net loss attributable to Chanticleer Holdings, Inc.  $(1,805,213 ) $(2,405,597 ) $(9,076,572 ) $(12,136,525 )
    -                 
Other comprehensive loss:                     
  Unrealized loss on available-for-sale securities, net of tax  $-   $(4,039 ) $(24,501 ) $(4,039 )
  Reclassification of loss recognized in net loss, net of tax   223,743    -    223,743    -  
  Foreign currency translation   (131,613 )  (71,757 )  (271,452 )  (963,528 )
   Total other comprehensive loss   92,130    (75,796 )  (72,210 )  (967,567 )
    Comprehensive loss  $(1,713,083 ) $(2,481,393 ) $(9,148,782 ) $(13,104,092 )
                      
Net loss attributable to Chanticleer Holdings, Inc. per common                     
share, basic and diluted:                     
 Continuing operations attributable to common stockholders, basic and diluted  $(0.09 ) $(0.08 ) $(0.20 ) $(0.57 )
 Discontinued operations attributable to common stockholders, basic and diluted  $0.01   $(0.03 ) $(0.22 ) $(0.28 )
Weighted average shares outstanding, basic and diluted   21,957,147    21,337,247    21,695,030    14,245,437  
                 
                 
Chanticleer Holdings, Inc. and Subsidiaries  
Consolidated Statements of Cash Flows  
          
   December 31, 2016   December 31, 2015  
Cash flows from operating activities:           
Net loss  $(9,412,914 ) $(14,455,643 )
Net loss from discontinued operations   5,066,880    6,373,790  
Net loss from continuing operations   (4,346,034 )  (8,081,853 )
Adjustments to reconcile net loss from continuing operations to net cash provided by (used in) operating activities:           
  Depreciation and amortization   2,341,697    1,697,514  
  Loss on extinguishment of debt   -    315,923  
  Loss on disposal of property and equipment   -    514,522  
  Loss (gain) on sales of investments   -    169,639  
  Common stock and warrants issued for services   24,510    279,362  
  Common stock and warrants issued for interest   349,000    -  
  Amortization of debt discount   1,039,656    2,379,951  
  Amortization of warrants   -    22,375  
  Change in assets and liabilities:           
    Accounts and other receivables   (336,546 )  96,261  
    Prepaid and other assets   113,633    (78,236 )
    Inventory   33,217    6,016  
    Accounts payable and accrued liabilities   1,540,463    (235,283 )
    Change in amounts payable to related parties   194,350    (198,669 )
    Derivative liabilities   (1,231,608 )  (868,592 )
    Deferred income taxes   131,783    94,527  
    Deferred rent   (288,279 )  (300,259 )
   Net cash used in operating activities from continuing operations   (434,158 )  (4,186,802 )
   Net cash used in operating activities from discontinued operations   (75,000 )  (1,064,363 )
   Net cash used in operating activities   (509,158 )  (5,251,165 )
            
Cash flows from investing activities:           
 Purchase of property and equipment   (1,191,174 )  (1,798,221 )
 Cash paid for acquisitions, net of cash acquired   (72,215 )  (9,022,791 )
 Proceeds from sale of investments   8,902    330,361  
   Net cash used in investing activities from continuing operations   (1,254,487 )  (10,490,651 )
            
Cash flows from financing activities:           
 Proceeds from sale of common stock and warrants   -    14,921,903  
 Proceeds from sale of preferred stock   257,175    -  
 Loan proceeds   275,000    2,813,074  
 Loan repayments   (513,523 )  (891,529 )
 Capital lease payments   (40,636 )  (52,807 )
 Contribution of non-controlling interest   823,671    -  
   Net cash provided by financing activities from continuing operations   801,687    16,790,641  
 Effect of exchange rate changes on cash   6,118    (4,944 )
Net increase (decrease) in cash   (955,840 )  1,043,881  
Cash, beginning of period   1,224,415    180,534  
Cash, end of period  $268,575   $1,224,415  
         
         
Chanticleer Holdings, Inc. and Subsidiaries
Reconcilation of Net Loss to EBITDA
(Unaudited)
            
  Three Months Ended  Year Ended
  December 31, 2016  December 31, 2015  December 31, 2016  December 31, 2015
                     
Consolidated net loss $(1,940,925 ) $(1,763,105 ) $(4,346,034 ) $(8,081,853 )
Interest expense  642,463    729,999    2,347,019    3,466,554  
Income tax  60,596    217,867    198,463    187,568  
Depreciation and amortization  602,882    724,140    2,341,697    1,697,514  
  EBITDA $(634,984 ) $(91,099 ) $541,145   $(2,730,217 )
Restaurant pre-opening and closing expenses  27,143    24,453    145,130    505,098  
Change in fair value of derivative liabilities  -    (35,453 )  (1,231,608 )  (868,592 )
Loss on extinguishment of debt  -    -    -    315,923  
Transaction and severence related expenses  68,292    283,034    214,905    1,103,179  
Other income  424,660    (49,209 )  412,272    (99,399 )
  Adjusted EBITDA $(114,889 ) $131,726   $81,844   $(1,774,008 )
General and administrative expenses  1,331,915    1,351,682    5,586,128    5,695,463  
Franchise revenues  (138,741 )  (88,476 )  (520,222 )  (359,424 )
Management fee revenue  (25,000 )  (349,829 )  (100,000 )  (424,829 )
  Restaurant EBITDA $1,053,285   $1,045,103   $5,047,750   $3,137,202  

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