Ark Restaurants Announces Financial Results for the Fourth Quarter and Fiscal Year Ended 2019

Ark Restaurants Corp. (NASDAQ:ARKR) yesterday reported financial results for the fourth quarter and fiscal year ended September 28, 2019.

Total revenues for the 13-weeks ended September 28, 2019 were $41,688,000 versus $40,562,000 for the 13-weeks ended September 29, 2018. The 13-weeks ended September 28, 2019 includes revenues of $2,141,000 related to JB’s on the Beach in Deerfield Beach, FL which was acquired on May 15, 2019. The 13-weeks ended September 29, 2018 includes revenues of $906,000 related to Durgin-Park which was closed January 12, 2019.

Total revenues for the year ended September 28, 2019 were $162,354,000 versus $159,990,000 for the year ended September 29, 2018. The year ended September 28, 2019 includes revenues of $3,380,000 related to JB’s on the Beach in Deerfield Beach, FL which was acquired on May 15, 2019. The years ended September 28, 2019 and September 29, 2018 include revenues of $1,040,000 and $2,838,000, respectively, related to Durgin-Park which was closed January 12, 2019.

Company-wide same store sales decreased 0.7% for the 13-weeks ended September 28, 2019 and increased 0.3% for the year ended September 28, 2019 as compared to the same periods of last year.

The Company’s EBITDA from restaurant operations, adjusted for non-controlling interests, non-cash stock option expense and an impairment loss, for the 13-weeks ended September 28, 2019 was $3,065,000 versus $2,120,000 during the same 13 week period of last year. Net loss for the 13-weeks ended September 28, 2019 was ($554,000) or ($0.16) per basic and diluted share, compared to net income of $1,007,000 or $0.29 per basic, $0.28 per diluted share, for the same 13 week period in the prior year.

The Company’s EBITDA from restaurant operations, adjusted for non-controlling interests, non-cash stock option expense, losses on the closure of Durgin-Park and an impairment loss, for the year ended September 28, 2019 was $12,770,000 versus $9,735,000 last year. Net income for the year ended September 28, 2019 was $2,676,000 or $0.77 per basic, $0.76 per diluted share, compared to $4,655,000, or $1.35 per basic share, $1.31 per diluted share, last year.

As of December 29, 2018, the Company determined that it would not be able to operate Durgin-Park profitably due to decreased traffic at the Faneuil Hall Marketplace in Boston, MA, where it was located, and rising labor costs. As a result, included in the Consolidated Statement of Operations for the year ended September 28, 2019 are losses on closure in the amount of $1,106,000 consisting of: (i) impairment of trademarks of $721,000, (ii) accelerated depreciation of fixed assets of $333,000, and (iii) write-offs of prepaid and other expenses of $52,000. The restaurant was closed on January 12, 2019.

On May 15, 2019, the Company, through a newly formed, wholly-owned subsidiary, acquired the assets of JB’s on the Beach, a restaurant and bar located in Deerfield Beach, FL. The total purchase price was for $7,036,000. The acquisition is accounted for as a business combination and was financed with a bank loan from the Company’s existing lender in the amount of $7,000,000 and cash from operations.

Management continually evaluates unfavorable cash flows, if any, related to underperforming restaurants. Periodically it is concluded that certain properties have become impaired based on their existing and anticipated future economic outlook in their respective markets. In such instances, we may impair assets to reduce their carrying values to fair values. Estimated fair values of impaired properties are based on comparable valuations, cash flows and/or management judgment. As a result of the underperformance and increased competition at Clyde Frazier’s Wine and Dine, the Company has recorded an impairment charge of $2,857,000 for the year ended September 28, 2019 related to this property.

Ark Restaurants owns and operates 20 restaurants and bars, 17 fast food concepts and catering operations primarily in New York City, Florida, Washington, D.C, Las Vegas, Nevada and the gulf coast of Alabama. Five restaurants are located in New York City, two are located in Washington, D.C., five are located in Las Vegas, Nevada, three are located in Atlantic City, New Jersey, three are located on the east coast of Florida and two are located on the Gulf Coast of Alabama. The Las Vegas operations include four restaurants within the New York-New York Hotel & Casino Resort and operation of the hotel’s room service, banquet facilities, employee dining room and six food court concepts and one restaurant within the Planet Hollywood Resort and Casino. In Atlantic City, New Jersey, the Company operates a restaurant and a bar in the Resorts Atlantic City Hotel and Casino and a restaurant in the Tropicana Hotel and Casino. The operation at the Foxwoods Resort Casino consists of one fast food concept. The Florida operations include the Rustic Inn in Dania Beach, Shuckers in Jensen Beach and JB’s on the Beach in Deerfield Beach, and the operation of four fast food facilities in Tampa and six fast food facilities in Hollywood, each at a Hard Rock Hotel and Casino operated by the Seminole Indian Tribe at these locations. In Alabama, the Company operates two Original Oyster Houses, one in Gulf Shores and one in Spanish Fort.

 
ARK RESTAURANTS CORP.
Consolidated Statements of Operations
For the 13 and 52-week periods ended September 28, 2019 and September 29, 2018
(In Thousands, Except per share amounts)
 

 

13 Weeks Ended
September 28,
2019

 

13 Weeks Ended
September 29,
2018

 

52 Weeks Ended
September 28,
2019

 

52 Weeks Ended
September 29,
2018

 

 

 

 

 

 

 

 

 

TOTAL REVENUES

 

$

41,688

 

 

$

40,562

 

 

$

162,354

 

 

$

159,990

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

Food and beverage cost of sales

 

11,453

 

 

11,204

 

 

43,435

 

 

43,036

 

Payroll expenses

 

14,727

 

 

14,235

 

 

56,675

 

 

55,620

 

Occupancy expenses

 

4,356

 

 

4,744

 

 

17,413

 

 

18,577

 

Other operating costs and expenses

 

5,327

 

 

5,464

 

 

20,378

 

 

21,437

 

General and administrative expenses

 

3,171

 

 

2,752

 

 

12,011

 

 

11,214

 

Depreciation and amortization

 

1,665

 

 

1,237

 

 

5,233

 

 

5,074

 

Total costs and expenses

 

40,699

 

 

39,636

 

 

155,145

 

 

154,958

 

RESTAURANT OPERATING INCOME

 

989

 

 

926

 

 

7,209

 

 

5,032

 

Loss on closure of Durgin-Park

 

 

 

 

 

(1,106

)

 

 

Impairment loss from write-down of long-lived

 

assets

 

(2,857

)

 

 

 

(2,857

)

 

 

OPERATING INCOME (LOSS)

 

(1,868

)

 

926

 

 

3,246

 

 

5,032

 

OTHER (INCOME) EXPENSE:

 

 

 

 

 

 

 

 

Interest expense, net

 

393

 

 

315

 

 

1,376

 

 

1,106

 

Total other expense, net

 

393

 

 

315

 

 

1,376

 

 

1,106

 

INCOME (LOSS) BEFORE BENEFIT FOR INCOME

 

TAXES

 

(2,261

)

 

611

 

 

1,870

 

 

3,926

 

Benefit for income taxes

 

(1,320

)

 

(486

)

 

(591

)

 

(1,147

)

CONSOLIDATED NET INCOME (LOSS)

 

(941

)

 

1,097

 

 

2,461

 

 

5,073

 

Net income (loss) attributable to non-controlling

 

interests

 

387

 

 

(90

)

 

215

 

 

(418

)

NET INCOME (LOSS) ATTRIBUTABLE TO ARK

 

RESTAURANTS CORP.

 

$

(554

)

 

$

1,007

 

 

$

2,676

 

 

$

4,655

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) PER ARK RESTAURANTS

 

CORP. COMMON SHARE:

 

 

 

 

 

 

 

 

Basic

 

$

(0.16

)

 

$

0.29

 

 

$

0.77

 

 

$

1.35

 

Diluted

 

$

(0.16

)

 

$

0.28

 

 

$

0.76

 

 

$

1.31

 

WEIGHTED AVERAGE NUMBER OF COMMON

 

SHARES OUTSTANDING:

 

 

 

 

 

 

 

 

Basic

 

3,486

 

 

3,448

 

 

3,479

 

 

3,439

 

Diluted

 

3,486

 

 

3,535

 

 

3,531

 

 

3,549

 

 

 

 

 

 

 

 

 

 

EBITDA Reconciliation:

 

 

 

 

 

 

 

 

Restaurant operating income

 

$

989

 

 

$

926

 

 

$

7,209

 

 

$

5,032

 

Interest expense, net

 

(393

)

 

(315

)

 

(1,376

)

 

(1,106

)

Restaurant income before provision for income

 

taxes

 

596

 

 

611

 

 

5,833

 

 

3,926

 

Loss on closure of Durgin-Park

 

 

 

 

 

(1,106

)

 

 

Impairment loss from write-down of long-lived

 

assets

 

(2,857

)

 

 

 

(2,857

)

 

 

Pre tax income

 

(2,261

)

 

611

 

 

1,870

 

 

3,926

 

Depreciation and amortization

 

1,665

 

 

1,237

 

 

5,233

 

 

5,074

 

Interest expense, net

 

393

 

 

315

 

 

1,376

 

 

1,106

 

EBITDA (a)

 

$

(203

)

 

$

2,163

 

 

$

8,479

 

 

$

10,106

 

EBITDA adjusted for non-controlling interests, non-cash stock option expense, loss on closure of Durgin-Park and impairment loss from write-down of long-lived assets:

 

 

 

 

 

 

 

 

EBITDA (as defined) (a)

 

$

(203

)

 

$

2,163

 

 

$

8,479

 

 

$

10,106

 

Net (income) loss attributable to non-controlling

 

interests

 

387

 

 

(90

)

 

215

 

 

(418

)

Non-cash stock option expense

 

24

 

 

47

 

 

113

 

 

47

 

Loss closure of Durgin-Park

 

 

 

 

 

1,106

 

 

 

Impairment loss from write-down of long-lived

 

assets

 

2,857

 

 

 

 

2,857

 

 

 

EBITDA from restaurant operations, as adjusted

 

$

3,065

 

 

$

2,120

 

 

$

12,770

 

 

$

9,735

 

 

 

 

 

 

 

 

 

 

(a)

EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Although EBITDA is not a measure of performance or liquidity calculated in accordance with generally accepted accounting principles (“GAAP”), the Company believes the use of this non-GAAP financial measure enhances an overall understanding of the Company’s past financial performance as well as providing useful information to the investor because of its historical use by the Company as both a performance measure and measure of liquidity, and the use of EBITDA by virtually all companies in the restaurant sector as a measure of both performance and liquidity. However, investors should not consider this measure in isolation or as a substitute for net income (loss), operating income (loss), cash flows from operating activities or any other measure for determining the Company’s operating performance or liquidity that is calculated in accordance with GAAP, it may not necessarily be comparable to similarly titled measures employed by other companies. A reconciliation of EBITDA to the most comparable GAAP financial measure, pre-tax income, is included above.