SOURCE: Chanticleer Holdings, Inc.

Chanticleer Holdings, Inc. Logo

August 17, 2015 10:11 ET

Chanticleer Holdings Second Quarter Revenue Increases 65% to a Record $10.8 Million; Restaurant EBITDA Grows 68% to $1 Million Compared to Q2 2014

CHARLOTTE, NC--(Marketwired - August 17, 2015) - Chanticleer Holdings, Inc. (NASDAQ: HOTR) ("Chanticleer," or the "Company"), owner, operator and franchisor of multiple branded restaurants in the U.S. and abroad, announced today record revenue and Restaurant EBITDA for the second quarter ended June 30, 2015 ("Q2 2015").

Mike Pruitt, Chairman and CEO of Chanticleer, commented, "We continued to execute our growth strategy in the second quarter, expanding our number of branded restaurants worldwide to 47 through a combination of new store openings, franchising and acquisitions. Importantly, our second quarter revenue was coupled with Restaurant EBITDA of approximately $1 million. Over the past year, we have more than doubled our restaurant store count and we anticipate that trend to continue in the second half of the year as we will add another 4 restaurants from our July acquisition of BT's Burger Joint as well as another 8 restaurants from our planned acquisition of Little Big Burger, which is expected to close in the third quarter."

Mr. Pruitt continued, "We have built a strong platform of branded restaurants in the better burger space with our ownership of American Burger Company and BGR the Burger Joint, and the recent acquisition of BT's Burger Joint which significantly enhances our market position in North Carolina. Our planned acquisition of Little Big Burger will add an iconic West Coast brand with exceptional unit economics and a scalable business model. We believe the talent and expertise of our operating team, coupled with the inherent advantages of scale in our business model, position us very well to create substantial shareholder value."

Financial highlights for the second quarter 2015 include:

  • Restaurant store count of Company-owned and franchise stores worldwide increased 114% to 47.
  • Total Q2 2015 revenue increased 65% to a record $10.8 million as compared to $6.5 million in Q2 2014.
  • Franchise operations contributed revenue of $135,000.
  • On a non-GAAP basis, Q2 2015 restaurant EBITDA was $1 million, an increase of 68% as compared to $591K in Q2 2014, and a sequential increase of 46% as compared to $680K in Q1 2015.
  • Operating loss was $2.1 million in Q2 2015 as compared to $1.4 million in Q2 2014. The increase was largely due to higher G&A Expenses and Restaurant pre-opening and closing expenses.
  • Q2 2015 Net loss of $0.24 per common share as compared to $0.21 per common share in Q2 2014.

Recent Company highlights:

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 and Restaurant EBITDA also exclude pre-opening costs for our restaurants, non-cash expenses, change in fair value of derivative liability. Restaurant EBITDA also excludes management fee income 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 filed with the SEC on August 14, 2015, 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 Australia, 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 and owns a majority interest in Just Fresh restaurants in the U.S.

For further information, please visit www.chanticleerholdings.com
Facebook: www.Facebook.com/ChanticleerHOTR
Twitter: http://Twitter.com/ChanticleerHOTR
Google+: https://plus.google.com/u/1/b/118048474114244335161/118048474114244335161/posts

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 Quarterly Report 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. You should be aware that those statements reflect only the Company's predictions. If known or unknown risks or uncertainties should materialize, or if underlying assumptions should prove inaccurate, actual results could differ materially from past results and those anticipated, estimated or projected. You should bear this in mind when reading this Quarterly Report and not place undue reliance on these forward-looking statements. Factors that might cause such differences include, but are not limited to:

  • Operating losses may continue for the foreseeable future; we may never be profitable;
  • Inherent risks in expansion of operations, including our ability to acquire additional territories, generate profits from new restaurants and franchise operations, find suitable sites and develop and construct locations in a timely and cost-effective way;
  • Inherent risks associated with acquiring and starting new restaurant concepts and store locations:
  • General risk factors affecting the restaurant industry, including current economic climate, costs of labor and food prices;
  • Intensive competition in our industry and competition with national, regional chains and independent restaurant operators;
  • Our rights to operate and franchise the Hooters-branded restaurants are dependent on the Hooters' franchise agreements;
  • We do not have full operational control over the businesses of our franchise partners or operations where we hold less 100% ownership;
  • Failure to protect our intellectual property rights, including the brand image of our restaurants;
  • Our business has been adversely affected by declines in discretionary spending and may be affected by changes in consumer preferences;
  • Increases in costs, including food, labor and energy prices;
  • Our business and the growth of our Company is dependent on the skills and expertise of management and key personnel;
  • Constraints could affect our ability to maintain competitive cost structure, including, but not limited to labor constraints;
  • Work stoppages at our restaurants or supplier facilities or other interruptions of production;
  • Our food service business and the restaurant industry are subject to extensive government regulation;
  • We may be subject to significant foreign currency exchange controls in certain countries in which we operate;
  • Inherent risk in foreign operations and currency fluctuations;
  • We may not attain our target development goals and aggressive development could cannibalize existing sales;
  • Current conditions in the global financial markets and the distressed economy;
  • A decline in market share or failure to achieve growth;
  • Unusual or significant litigation, governmental investigations or adverse publicity, or otherwise;
  • Our debt financing agreements expose us to interest rate risks, contain obligations that may limit the flexibility of our operations, and may limit our ability to raise additional capital;
  • Adverse effects on our results from a decrease in or cessation or clawback of government incentives related to investments; and
  • Adverse effects on our operations resulting from certain geo-political or other events

Chanticleer cannot be certain that any expectation, forecast, or assumption made in preparing any forward-looking statements will prove accurate, or that any projection will be realized. It is to be expected that there will be differences between projected and actual results. 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 web site or otherwise. We undertake no obligation to update the forward-looking statements provided to reflect events or circumstances that occur after the date on which they were made. Further information on our business, including important factors which could affect actual results are discussed in the Company's filings with the SEC, including its Annual Report on Form 10-K under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Chanticleer Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
 
   (Unaudited)   
   June 30,
2015
 December 31,
2014
ASSETS      
Current assets:      
 Cash  $2,808,181   $245,828  
 Accounts and other receivables   413,473    313,509  
 Inventories   591,294    532,803  
 Due from related parties   45,615    46,015  
 Prepaid expenses and other current assets   517,986    330,745  
  TOTAL CURRENT ASSETS   4,376,549    1,468,900  
 Property and equipment, net   14,572,594    13,315,409  
 Goodwill   15,812,260    15,617,308  
 Intangible assets, net   6,024,161    3,396,503  
 Investments at fair value   35,362    35,362  
 Other investments   1,550,000    1,550,000  
 Deposits and other assets   401,262    408,492  
  TOTAL ASSETS  $42,772,188   $35,791,974  
            
LIABILITIES AND STOCKHOLDERS' EQUITY   
Current liabilities:           
 Current maturities of long-term debt and notes payable  $3,195,365   $1,813,647  
 Current maturities of convertible notes payable, net of debt discount of $731,125 and $63,730, respectively   268,875    436,270  
 Derivative liability   1,847,192    1,945,200  
 Accounts payable and accrued expenses   6,868,504    5,580,131  
 Current maturities of capital leases payable   55,521    42,032  
 Deferred rent   609,601    118,986  
 Due to related parties   616,829    1,299,083  
 Deferred revenue   25,250    -  
 Liabilities of discontinued operations   177,204    177,393  
  TOTAL CURRENT LIABILITIES   13,664,341    11,412,742  
 Convertible notes payable, net of debt discount of $1,237,727 and $1,872,587, respectively   2,012,274    1,477,413  
 Capital leases payable, less current maturities   40,393    36,628  
 Deferred rent   1,955,636    2,196,523  
 Deferred tax liabilities   618,220    686,884  
 Long-term debt, less current maturities, net of debt discount of $257,800 and$ 343,733, respectively   2,867,180    5,009,283  
  TOTAL LIABILITIES   21,158,044    20,819,473  
            
            
Stockholders' equity:           
 Preferred stock: no par value; authorized 5,000,000 shares; none issued and outstanding   -    -  
 Common stock: $0.0001 par value; authorized 45,000,000           
 shares; issued and outstanding 13,681,330 and 7,249,442           
 shares at June 30, 2015 and December 31, 2014, respectively   1,368    725  
 Additional paid in capital   46,040,386    32,601,400  
 Accumulated other comprehensive loss   (3,122,634 )  (1,657,908 )
 Non-controlling interest   4,818,673    4,904,471  
 Accumulated deficit   (26,123,649 )  (20,876,187 )
  TOTAL STOCKHOLDERS' EQUITY   21,614,144    14,972,501  
  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $42,772,188   $35,791,974  
           
 
Chanticleer Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
 
   Three Months Ended  Six Months Ended
   June 30,
2015
 June 30,
2014
 June 30,
2015
 June 30,
2014
Revenue:            
 Restaurant sales, net  $10,480,370   $6,443,489   $18,902,212   $11,711,957  
 Gaming income, net   99,823    75,724    231,850    131,235  
 Management fee income - non-affiliates   77,903    25,151    179,124    50,151  
 Franchise income   134,939    -    150,998    -  
  Total revenue   10,793,035    6,544,364    19,464,184    11,893,343  
Expenses:                     
 Restaurant cost of sales   3,616,930    2,292,745    6,578,588    4,169,671  
 Restaurant operating expenses   6,384,905    3,766,452    11,453,044    6,869,978  
 Restaurant pre-opening and closing expenses   391,442    260,981    598,189    260,981  
 General and administrative expenses   2,081,583    1,236,160    3,979,936    2,844,743  
 Depreciation and amortization   408,311    382,072    846,948    726,683  
  Total expenses   12,883,171    7,938,410    23,456,705    14,872,056  
Loss from operations   (2,090,136 )  (1,394,046 )  (3,992,521 )  (2,978,713 )
Other (expense) income                     
 Interest expense   (1,373,797 )  (350,760 )  (2,078,649 )  (687,541 )
 Change in fair value of derivative liabilities   232,854    272,100    570,907    704,200  
 Loss on extinguishment of debt   -    -    (170,089 )  -  
 Realized gains on securities   -    4,127    -    101,472  
 Equity in losses of investments   -    -    -    (40,694 )
 Other income   76,859    4,552    75,326    7,838  
  Total other (expense) income   (1,064,084 )  (69,981 )  (1,602,505 )  85,275  
Loss from continuing operations before income taxes   (3,154,220 )  (1,464,027 )  (5,595,026 )  (2,893,438 )
  Income tax (benefit) provision   (4,734 )  1,379    (37,654 )  (7,509 )
Loss from continuing operations   (3,149,486 )  (1,465,406 )  (5,557,372 )  (2,885,929 )
 Gain (loss) from discontinued operations, net of taxes   2,088    (72,300 )  189    (104,973 )
Consolidated net loss   (3,147,398 )  (1,537,706 )  (5,557,183 )  (2,990,902 )
 Less: Net loss attributable to non-controlling interest   201,184    126,642    342,968    129,528  
Net loss attributable to Chanticleer Holdings, Inc.  $(2,946,214 ) $(1,411,064 ) $(5,214,215 ) $(2,861,374 )
                      
Net loss attributable to Chanticleer Holdings, Inc.:                     
 Loss from continuing operations  $(2,948,302 ) $(1,338,764 ) $(5,214,404 ) $(2,756,401 )
 Gain (loss) from discontinued operations   2,088    (72,300 )  189    (104,973 )
Net loss attributable to Chanticleer Holdings, Inc.  $(2,946,214 ) $(1,411,064 ) $(5,214,215 ) $(2,861,374 )
                      
Other comprehensive loss:                     
 Unrealized loss on available-for-sale securities (none                     
 applies to non-controlling interest)  $-   $(3,809 ) $-   $(15,527 )
 Foreign currency translation (loss) gain   (160,426 )  15,419    (1,464,726 )  51,165  
  Other comprehensive loss  $(3,106,640 ) $(1,399,454 ) $(6,678,941 ) $(2,825,736 )
                      
Net loss attributable to Chanticleer Holdings, Inc. per common                     
share, basic and diluted:                     
Continuing operations attributable to common stockholders, basic and diluted  $(0.24 ) $(0.21 ) $(0.56 ) $(0.45 )
Discontinued operations attributable to common stockholders, basic and diluted  $0.00   $(0.01 ) $0.00   $(0.02 )
Weighted average shares outstanding, basic and diluted   12,455,828    6,329,406    9,314,030    6,152,931  
                 
 
Chanticleer Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
  Six Months Ended
  June 30, 2015  June 30, 2014
Cash flows from operating activities:     
Net loss $(5,557,183 ) $(2,990,902 )
Less net loss attributable to non-controlling interest  342,968    129,528  
Net loss attributable to Chanticleer Holdings, Inc.  (5,214,215 )  (2,861,374 )
Net (income) loss from discontinued operations  (189 )  104,973  
Net loss from continuing operations  (5,214,404 )  (2,756,401 )
Adjustments to reconcile net loss to net cash used in operating activities:          
 Depreciation and amortization  846,948    777,375  
 Equity in losses of investments  -    40,694  
 Loss on disposal of property and equipment  472,770    -  
 Common stock and warrants issued for services  186,830    330,757  
 Amortization of debt discount  1,592,414    582,617  
 Amortization of warrants  22,375    44,750  
 Change in fair value of derivative liabilities  (570,907 )  (704,200 )
 (Decrease) in amounts payable to affiliate  (681,855 )  -  
 (Increase) decrease in accounts and other receivables  (84,668 )  76,323  
 Decrease in prepaid expenses and other assets  10,955    437,228  
 Decrease in inventory  57,813    100,730  
 Increase in accounts payable and accrued expenses  1,057,729    449,993  
 (Decrease) increase in deferred rent  (309,868 )  12,693  
 Decrease in deferred income taxes  (68,664 )  (64,683 )
  Net cash used in operating activities from continuing operations  (2,682,532 )  (672,124 )
  Net cash used in operating activities from discontinued operations  (4,500 )  (250,102 )
  Net cash used in operating activities  (2,687,032 )  (922,226 )
           
Cash flows from investing activities:          
 Purchase of property and equipment  (872,246 )  (1,629,359 )
 Cash paid for acquisitions, net of cash acquired  (4,265,429 )  27,527  
  Net cash used in investing activities from continuing operations  (5,137,675 )  (1,601,832 )
           
Cash flows from financing activities:          
 Proceeds from sale of common stock and warrants  8,961,213    200,000  
 Loan proceeds  2,204,369    1,458,308  
 Loan repayments  (760,138 )  -  
 Advances from investors and partners  -    681,801  
 Subsidiary capital received  -    33,500  
 Capital lease payments  (27,405 )  (85,633 )
  Net cash provided by financing activities from continuing operations  10,378,039    2,287,976  
 Effect of exchange rate changes on cash  9,021    51,165  
Net increase (decrease) in cash  2,562,353    (184,917 )
Cash, beginning of period  245,828    442,694  
Cash, end of period $2,808,181   $257,777  
 
         
 
Chanticleer Holdings, Inc. and Subsidiaries
Reconciliation of Adjusted EBITDA and Restaurant EBITDA
(Unaudited)
             
   Three Months Ended  Six Months Ended
   June 30, 2015  June 30, 2014  June 30, 2015  June 30, 2014
             
Net loss  $(3,147,398 ) $(1,537,706 ) $(5,557,183 ) $(2,990,902 )
Non-controlling interest   (201,184 )  (126,642 )  (342,968 )  (129,528 )
Net loss attributable to Chanticleer Holdings, Inc.:   (2,946,214 )  (1,411,064 )  (5,214,215 )  (2,861,374 )
Discontinued operations   2,088    (72,300 )  189    (104,973 )
Net loss from continuing operations attributable to Chanticleer Holdings, Inc.   (2,948,302 )  (1,338,764 )  (5,214,404 )  (2,756,401 )
 Interest expense   1,373,797    350,760    2,078,649    687,541  
  Income tax (benefit) provision   (4,734 )  1,379    (37,654 )  (7,509 )
 Depreciation and amortization   408,311    382,072    846,948    726,683  
EBITDA   (1,170,928 )  (604,553 )  (2,326,461 )  (1,349,686 )
 Change in fair value of derivative liabilities   (232,854 )  (272,100 )  (570,907 )  (704,200 )
 Loss on extinguishment of debt   -    -    170,089    -  
 Realized gains on securities   -    (4,127 )  -    (101,472 )
 Equity in losses of investments   -    -    -    40,694  
 Restaurant pre-opening and closing expenses   391,442    260,981    598,189    260,981  
Adjusted EBITDA   (1,012,340 )  (619,799 )  (2,129,090 )  (1,853,683 )
 General and administrative expenses   2,081,583    1,236,160    3,979,936    2,844,743  
Management fee revenue   (77,903 )  (25,151 )  (179,124 )  (50,151 )
Restaurant EBITDA  $991,340   $591,210   $1,671,722   $940,909  
                 

Contact Information