SOURCE: Chanticleer Holdings, Inc.

Chanticleer Holdings, Inc. Logo

November 09, 2016 08:30 ET

Chanticleer Holdings Reports Positive EBITDA for Second Consecutive Quarter

Revenue Growth, Improved Revenue Mix and Efficiency Initiatives Drive Improved Operating Results

CHARLOTTE, NC--(Marketwired - November 09, 2016) - 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 third quarter ended September 30, 2016.

Third Quarter Revenue Increases 18%; Company Achieves Second Consecutive Quarter of Adjusted EBITDA Profitability:

  • Total revenue for the third quarter increased 18.3% to $11.0 million, primarily from growth in the Fast Casual Better Burger segment.
  • Cost of sales improved to 33.1% compared to 33.6% in the comparable quarter last year.
  • Operating expenses as a percentage of restaurant sales improved to 54.8% compared to 57.3% in the comparable quarter last year.
  • General and administrative expenses as a percentage of total revenue decreased to 12.3% from 17.8% in the comparable quarter last year.
  • Net loss from continuing operations improved to $(0.9) million or $(0.04) per share, compared to $(1.7) million or $(0.11) in the comparable quarter last year.
  • Restaurant EBITDA improved to $1.4 million compared to $0.9 million for the comparable quarter of last year.
  • Adjusted EBITDA improved to a profit of $0.2 million compared to a loss of $(0.2) million in the comparable quarter last year.

Nine Months Revenue Increases 30%; $1.7 Million Adjusted EBITDA Improvement:

  • Total revenue for the nine months increased 30.3% to $31.8 million, primarily from growth in the Fast Casual Better Burger segment.
  • Cost of 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 55.2% compared to 57.9% in the comparable period last year.
  • General and administrative expenses as a percentage of total revenue decreased to 13.8% from 21.1% of sales in the comparable period last year.
  • Net loss from continuing operations decreased to $(2.4) million or $(0.11) per share, compared to $(6.3) million or $(0.45) in the comparable period last year.
  • Net cash from operating activities of continuing operations improved to positive $0.1 million compared to a negative $(3.8) million in the first nine months of last year.
  • Restaurant EBITDA improved to $4.0 million compared to $2.1 million in the first nine months of last year.
  • Adjusted EBITDA improved to a profit of $0.2 million compared to a loss of $(1.9) million in the first nine months of last year.

Mike Pruitt, Chairman and CEO of Chanticleer commented, "We're pleased to have delivered excellent third quarter results, highlighted by strong revenue growth. Revenue growth in the quarter was driven by continued strength from our fast casual better burger business which has grown to represent 52% of our revenue. Little Big Burger is performing particularly well, contributing significantly to the 19% sequential growth in Adjusted EBITDA from continuing operations from Q2, and further validating our regional brand strategy."

Mr. Pruitt continued, "Our focus is on expanding our regional brands, driving margin improvement and achieving significant long term profitability growth. We have built a solid restaurant operating business with tremendous growth potential and are generating EBITDA profitability. Looking ahead, we are now setting our sights on accelerating growth of our regional brands and doubling the scale of our business by 2020.

"Subsequent to the close of the quarter, we announced a convertible preferred stock rights offering to retire a portion of our debt and provide working capital for store-related growth. We believe the offering will allow us to capitalize on the momentum we're seeing in the fast casual segment and allow us to accelerate growth in our high return burger concepts while potentially adding new shareholders to our company."

Conference Call

The Company will hold a conference call on November 9, 2016 at 11:00 a.m. Eastern Time, to discuss the results of its third quarter ended September 30, 2016.

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://ir.stockpr.com/chanticleerholdings/overview.

A replay of the teleconference will be available until December 9, 2016 and may be accessed by dialing (877) 481-4010. International callers may dial (919) 882-2331. Callers should use conference ID: 10138.

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-Q to be filed with the SEC on or about November 10, 2016, available online at www.sec.gov.

About Chanticleer Holdings, Inc.

Headquartered in Charlotte, NC, Chanticleer Holdings (HOTR), together with its subsidiaries, owns and operates restaurant brands in the United States and internationally. The Company is a franchisee owner of Hooters® restaurants in international markets including South Africa, and Europe, and two Hooters restaurants in the United States. The Company also owns and operates American Burger Co., BGR the Burger Joint, BT's Burger Joint, Little Big Burger and Just Fresh restaurants in the U.S.

For further information, please visit www.chanticleerholdings.com

Facebook: www.Facebook.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
Condensed Consolidated Balance Sheets
 
   (Unaudited)   
   September 30, 2016  December, 31, 2015
ASSETS      
Current assets:           
 Cash  $990,756   $1,224,415  
 Accounts and other receivables   222,755    862,935  
 Inventories   517,594    569,545  
 Due from related parties   45,615    45,615  
 Prepaid expenses and other current assets   346,852    522,637  
 Assets of discontinued operations, current   -    593,430  
  TOTAL CURRENT ASSETS   2,123,572    3,818,576  
Property and equipment, net   11,531,222    12,144,064  
Goodwill   12,518,192    12,702,139  
Intangible assets, net   6,571,691    6,776,936  
Investments at fair value   11,480    31,322  
Other investments   1,050,000    1,050,000  
Deposits and other assets   314,759    292,870  
Assets of discontinued operations   -    5,389,300  
 TOTAL ASSETS  $34,120,916   $42,205,207  
            
LIABILITIES AND STOCKHOLDERS' EQUITY      
Current liabilities:           
 Accounts payable and accrued expenses  $4,469,498   $4,740,131  
 Current maturities of long-term debt and notes payable, net of debt discount   6,130,583    5,383,003  
 Current maturities of convertible notes payable, net of discount   3,604,180    2,810,276  
 Current maturities of capital leases payable   22,115    39,303  
 Due to related parties   209,563    12,963  
 Deferred rent   95,298    683,793  
 Derivative liabilities   -    1,231,608  
 Liabilities of discontinued operations   161,168    1,279,955  
  TOTAL CURRENT LIABILITIES   14,892,404    16,181,033  
Long-term debt, less current maturities, net of debt discount of   305,105    1,098,641  
Capital leases payable, less current maturities   4,773    15,969  
Deferred rent   2,037,980    1,740,012  
Liabilities of discontinued operations   -    58,648  
Deferred tax liabilities   1,450,089    1,353,771  
  TOTAL LIABILITIES   18,690,531    20,448,073  
            
Stockholders' equity:           
 Preferred stock: no par value; authorized 5,000,000 shares; none issued   -    -  
 Common stock: $0.0001 par value; authorized 45,000,000shares; issued and outstanding 21,957,147 and 21,337,247shares, respectively   

2,196
   

2,134
 
 Additional paid in capital   56,264,045    55,365,597  
 Accumulated other comprehensive loss   (1,247,788 )  (987,695 )
 Non-controlling interest   696,181    389,810  
 Accumulated deficit   (40,284,069 )  (33,012,712 )
  TOTAL STOCKHOLDERS' EQUITY   15,430,566    21,757,134  
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $34,120,916   $42,205,207  
            
         
Chanticleer Holdings, Inc. and Subsidiaries  
Condensed Consolidated Statements of Operations and Comprehensive Loss  
(Unaudited)  
                  
   Three Months Ended   Nine Months Ended  
   September 30, 2016   September 30, 2015   September 30, 2016   September 30, 2015  
Revenue:                     
 Restaurant sales, net  $10,737,961   $9,039,239   $31,068,281   $23,827,503  
 Gaming income, net   118,136    94,008    315,647    260,430  
 Management fee income - non-affiliates   25,000    25,000    75,000    75,000  
  Franchise income   95,542    119,950    381,481    270,948  
   Total revenue   10,976,639    9,278,197    31,840,409    24,433,881  
Expenses:                     
 Restaurant cost of sales   3,553,684    3,039,197    10,248,770    8,191,634  
 Restaurant operating expenses   5,888,509    5,176,174    17,140,692    13,804,201  
 Restaurant pre-opening and closing expenses   110,432    141,306    117,987    480,645  
 General and administrative expenses   1,351,111    1,651,051    4,400,826    5,163,925  
 Depreciation and amortization   590,433    354,119    1,738,815    973,374  
  Total expenses   11,494,169    10,361,847    33,647,090    28,613,779  
Operating loss from continuing operations   (517,530 )  (1,083,650 )  (1,806,681 )  (4,179,898 )
Other (expense) income                     
 Interest expense   (453,151 )  (657,906 )  (1,704,556 )  (2,736,555 )
 Change in fair value of derivative liabilities   102,507    262,232    1,231,608    833,139  
 Loss on extinguishment of debt   -    (145,834 )  -    (315,923 )
 Other income (expense)   32,357    (52,956 )  12,388    50,190  
  Total other (expense) income   (318,287 )  (594,463 )  (460,560 )  (2,169,149 )
Loss from continuing operations before income taxes   (835,817 )  (1,678,113 )  (2,267,241 )  (6,349,047 )
 Income tax benefit (expense)   (52,474 )  (12,954 )  (137,867 )  30,298  
Loss from continuing operations   (888,291 )  (1,691,067 )  (2,405,108 )  (6,318,749 )
 Discontinued operations                     
 Loss from operation of discontinued operations, net of tax   (68,718 )  (4,649,247 )  (1,304,627 )  (5,578,750 )
 Loss on write down of net of sales   -    -    (3,876,161 )  -  
Consolidated net loss   (957,009 )  (6,340,314 )  (7,585,896 )  (11,897,499 )
 Less: Net loss (income) attributable to non-controlling interest of continuing operations   39,248    1,274    53,612    (13,250 )
 Less: Net loss attributable to non-controlling interest of discontinued operations   13,744    1,822,328    260,925    2,179,821  
Net loss attributable to Chanticleer Holdings, Inc.  $(904,017 ) $(4,516,712 ) $(7,271,359 ) $(9,730,928 )
                      
Net loss attributable to Chanticleer Holdings, Inc.:                     
 Loss from continuing operations  $(849,043 ) $(1,689,793 ) $(2,351,497 ) $(6,331,999 )
 Loss from discontinued operations   (54,974 )  (2,826,919 )  (4,919,862 )  (3,398,929 )
  Net loss attributable to Chanticleer Holdings, Inc.  $(904,017 ) $(4,516,712 ) $(7,271,359 ) $(9,730,928 )
                      
 Unrealized loss on available-for-sale securities  $-   $-   $(24,501 ) $-  
 Foreign currency translation   (126,452 )  (572,954 )  (235,592 )  (891,772 )
  Total other comprehensive loss   (126,452 )  (572,954 )  (260,093 )  (891,772 )
   Comprehensive loss  $(1,030,469 ) $(5,089,666 ) $(7,531,452 ) $(10,622,700 )
                      
Net loss attributable to Chanticleer Holdings, Inc. per common share, basic and diluted:                     
 Continuing operations attributable to common stockholders, basic and diluted  $(0.04 ) $(0.11 ) $(0.11 ) $(0.45 )
 Discontinued operations attributable to common stockholders, basic and diluted  $0.00   $(0.19 ) $(0.23 ) $(0.24 )
Weighted average shares outstanding, basic and diluted   21,957,147    14,802,370    21,607,027    14,059,116  
                      
   

Chanticleer Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
   Nine Months Ended
   September 30, 2016  September 30, 2015
Cash flows from operating activities:           
 Net loss  $(7,585,896 ) $(11,897,499 )
 Net (income) loss from discontinued operations   5,180,788    5,578,750  
 Net loss from continuing operations   (2,405,108 )  (6,318,749 )
 Adjustments to reconcile net loss to net cash used in operating activities:           
  Depreciation and amortization   1,738,815    973,374  
  Loss on exinguishment of debt   -    315,923  
  Loss on disposal of property and equipment   -    514,522  
  Loss (gain) on sales investments   -       
  Common stock and warrants issued for services   24,510    231,857  
  Common stock and warrants issued for interest   349,000    -  
  Amortization of debt discount   925,806    1,356,365  
  Amortization of warrants   -    22,375  
  Change in assets and liabilities:           
   Accounts and other receivables   (34,820 )  91,107  
   Prepaid and other assets   153,895    48,390  
   Inventory   55,173    56,506  
   Accounts payable and accrued liabilities   501,078    106,198  
    Change in amounts of payable to related parties   196,600    766  
   Derivative liabilities   (1,231,608 )  (833,139 )
   Deferred income taxes   96,318    (31,834 )
    Deferred rent   (290,528 )  (332,602 )
  Net cash provided by (used in) operating activieies from continuing operations   79,129    (3,798,939 )
   Net cash used in operating activities from discontinued operations   (75,000 )  (1,035,980 )
  Net cash provided by (used in) operating activities   4,129    (4,834,919 )
            
Cash flows from investing activities:           
 Purchase of property and equipment   (708,214 )  (1,329,389 )
 Cash paid for acquisitions, net of cash acquired   (72,215 )  (9,082,918 )
 Proceeds from sale investments   8,902    -  
  Net cash used in investing activities from continuing operations   (771,527 )  (10,412,307 )
            
Cash flows from financing activities:           
 Proceeds from sale of common stock and warrants   -    14,920,937  
 Loan proceeds   125,000    2,806,837  
 Loan repayments   (340,582 )  (824,981 )
 Capital lease payments   (32,897 )  (39,822 )
 Contribution of non-controlling interest   796,911    -  
  Net cash provided by financing activities from continuing operations   548,432    16,862,971  
 Effect of exchange rate changes on cash   (14,693 )  (4,944 )
Net increase (decrease) in cash   (233,659 )  1,610,802  
Cash, beginning of period   1,224,415    180,534  
Cash, end of period  $990,756   $1,791,336  
         
         
Chanticleer Holdings, Inc. and Subsidiaries
Reconcilation of Net Loss to EBITDA
(Unaudited)
             
   Three Months Ended  Nine Months Ended
   September 30, 2016  September 30, 2015  September 30, 2016  September 30, 2015
             
Loss from Continuing Operations  $(888,291 ) $(1,691,067 ) $(2,405,108 ) $(6,318,749 )
Interest expense   453,151    657,906    1,704,556    2,736,555  
Income tax   52,474    12,954    137,867    (30,298 )
Depreciation and amortization   590,433    354,119    1,738,815    973,374  
  EBITDA  $207,767   $(666,089 ) $1,176,130   $(2,639,118 )
Restaurant pre-opening and closing expenses   110,432    141,306    117,987    480,645  
Change in fair value of derivative liabilities   (102,507 )  (262,232 )  (1,231,608 )  (833,139 )
Loss on extinguishment of debt   -    145,834    -    315,923  
Transaction and severence related expenses   48,214    384,430    146,613    820,145  
Other income   (32,357 )  52,956    (12,388 )  (50,190 )
  Adjusted EBITDA  $231,549   $(203,795 ) $196,734   $(1,905,735 )
General and administrative expenses   1,302,897    1,266,621    4,254,213    4,342,780  
Franchise revenues   (95,542 )  (119,950 )  (381,481 )  (270,948 )
Management fee revenue   (25,000 )  (25,000 )  (75,000 )  (75,000 )
  Restaurant EBITDA  $1,413,903   $917,876   $3,994,465   $2,092,098  
                  
                  

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