Disclosure NewswireTMiCrowdNewswire - May 10, 2017
RAVE Restaurant Group, Inc. (NASDAQ: RAVE) today reported financial results for the third quarter of fiscal 2017 ended March 26, 2017.
Third Quarter Highlights:
- Total consolidated revenue decreased 7.7% to $14.1 million compared to $15.3 million in the third quarter of fiscal 2016.
- Pie Five comparable store retail sales decreased 15.8% from the same period of the prior year.
- Pie Five system-wide retail sales increased 0.6%, while average weekly sales declined 12.3%, year over year.
- Pizza Inn domestic comparable store retail sales increased 0.1% from the same period of the prior year, while total domestic retail sales increased by 2.9%.
- Net loss of $2.0 million was $0.7 million greater than the same quarter of the prior year primarily due to loss on sale of assets, increased general and administrative expenses, and decreased sales.
- On a fully diluted basis, the loss was $0.18 per share for the third quarter of fiscal 2017, compared to a loss of $0.12 per share for the same period of the prior year.
- Adjusted EBITDA of ($1.0) million was $0.7 million less than the same quarter of the prior year.
- Company-owned Pie Five operating cash flow decreased $0.3 million from the same period of the prior year.
- Net reduction of thirteen Pie Five restaurants during the quarter brought the total Pie Five restaurants open at the end of the quarter to 86.
“We are taking a purposeful approach to improving the overall financial performance of the company by withdrawing from underperforming markets,” said Scott Crane, Chief Executive Officer for Rave Restaurant Group, Inc. “In addition, we will be introducing new initiatives that will add occasions and increased incidence.”
Third Quarter Fiscal 2017 Operating Results
Revenues of $14.1 million and $44.3 million for the third quarter and year to date fiscal 2017 were 7.7% and 1.7% lower, respectively, than the same periods of the prior year. For the three and nine months ended March 26, 2017, the Company reported a net loss of $2.0 million and $11.4 million, respectively, compared to a loss of $1.2 million and $6.6 million for the comparable periods of the prior year. On a fully diluted basis, the loss was $0.18 per share and $1.07 per share for the third quarter and year to date fiscal 2017, compared to a loss of $0.12 per share and $0.64 per share for the same periods of the prior year. The increased loss for the three month period ended March 26, 2017 was primarily the result of a $0.3 million loss on sale of assets in the third quarter of fiscal 2017 related to equipment disposals at closed stores, as well as executive recruiting fees. The year to date increase in net loss from prior year was primarily due to increased impairments and other lease charges of $5.2 million and $1.0 million of losses from the sale of assets. In addition, the Company continued to provide a full valuation allowance against its deferred tax assets. Adjusted EBITDA declined $0.7 million and $2.4 million for the three and nine month periods ended March 26, 2017, to $(1.0) million and $(2.3) million, respectively. The decline in Adjusted EBITDA was driven by general and administrative expense and a decrease in other income from prior year, as well as decreased average unit volumes at Company Pie Five locations.
Pie Five system-wide retail sales increased 0.6% for the third quarter of fiscal 2017 when compared to the same period in the prior year driven by a 14.3% increase in average units open, while system-wide average weekly sales decreased by 12.3%, year over year. Comparable store retail sales decreased by 15.8% for the most recent fiscal quarter compared to the same period in the prior year. Year to date, Pie Five system-wide retail sales increased 13.8% compared to the prior year driven by a 30.6% increase in average units open, while system-wide average weekly sales declined 9.7% year over year. Pie Five comparable store retail sales decreased 16.0% during the first nine months of fiscal 2017 compared to the same period of the prior year. The Company continues to believe that increased competition within the fast-casual segment and general industry softness contributed to weakened trends within the Pie Five system.
Pizza Inn total domestic retail sales increased 2.9% and 0.5% for the three and nine months ended March 26, 2017 compared to the same periods of the prior year. Pizza Inn domestic comparable store retail sales increased 0.1% and decreased 0.1% for the three and nine months ended March 26, 2017 compared to the same periods of the prior year.
“After a year of challenging sales performance, we are evaluating various elements of the concept from both a service and product standpoint that we believe will ultimately better service the wants of our customers,” said Crane.
In the third quarter of fiscal 2017, five new franchised Pie Five restaurants were opened, while nine franchised and nine Company restaurants were closed, bringing the quarter-end total unit count to 86 restaurants.
“We continue to see opportunities for traditional and non-traditional development,” said Crane. “Our throughput makes Pie Five a great option for airports. We just opened our second airport location at BWI Airport.”
Rights Offering Completed
During the third quarter of fiscal 2017, RAVE completed a rights offering of its 4% Convertible Senior Notes due 2022, resulting in net proceeds of $2.9 million. Pursuant to the rights offering, existing RAVE shareholders had the opportunity to purchase their proportionate share of the convertible notes at the par value of $100 per note. The notes are convertible into shares of RAVE common stock at $2.00 per share.
A conference call and audio webcast has been scheduled for 5:00 p.m. Central time today to discuss these results. Details of the conference call are as follows:
Wednesday, May 10, 2017
5:00 p.m. Central time
1-877-870-4263 U.S. & Canada
Alternatively, the conference call will be webcast at raverg.com. A web-based archive of the conference call will also be available at the above website.
Non-GAAP Financial Measures
The Company uses certain non-GAAP financial measures in evaluating operating performance. EBITDA, Adjusted EBITDA and restaurant operating cash flow are non-GAAP financial measures that the Company believes are useful to investors in understanding its operating performance. However, these non-GAAP financial measures should not be viewed as an alternative or substitute for its financial statements prepared in accordance with generally accepted accounting principles.
“EBITDA” represents earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, stock compensation expense, pre-opening expense, gain/loss on sale of assets, costs related to impairment, other lease charges, non-operating store costs and discontinued operations. “Restaurant operating cash flow” represents the pre-tax income earned by Company-owned restaurants before (1) allocated marketing and advertising expenses, (2) depreciation and amortization, (3) pre-opening expenses, (4) operations management and extraordinary expenses, (5) impairment and other lease charges, and (6) non-operating store costs. A reconciliation of these non-GAAP financial measures to net income is included with the accompanying financial statements.
Note Regarding Forward Looking Statements
Certain statements in this press release, other than historical information, may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are intended to be covered by the safe harbors created thereby. These forward-looking statements are based on current expectations that involve numerous risks, uncertainties and assumptions. Assumptions relating to these forward-looking statements involve judgments with respect to, among other things, future economic, competitive and market conditions, regulatory framework and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of RAVE Restaurant Group, Inc. Although the assumptions underlying these forward-looking statements are believed to be reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that any forward-looking statements will prove to be accurate. In light of the significant uncertainties inherent in these forward-looking statements, the inclusion of such information should not be regarded as a representation that the objectives and plans of RAVE Restaurant Group, Inc. will be achieved.
About RAVE Restaurant Group, Inc.
Founded in 1958, Dallas-based RAVE Restaurant Group [NASDAQ: RAVE] owns, operates and franchises more than 300 Pie Five Pizza Co. and Pizza Inn restaurants domestically and internationally. Pie Five Pizza Co. is a leader in the rapidly growing fast-casual pizza space offering made-to-order pizzas ready in under five minutes. Pizza Inn is an international chain featuring freshly made pizzas, along with salads, pastas, and desserts. The Company’s common stock is listed on the Nasdaq Capital Market under the symbol “RAVE”. For more information, please visit www.raverg.com.
RAVE Restaurant Group, Inc.