RAVE Restaurant Group, Inc. Reports Fourth Quarter 2021 Financial Results

RAVE Restaurant Group, Inc. (NASDAQ: RAVE) today reported financial results for the fourth quarter ended June 27, 2021.

Fourth Quarter Highlights:

  • The Company recorded net income of $926 thousand for the fourth quarter of fiscal 2021 compared to net income of $31 thousand for the same period of the prior year.
  • Income before taxes was $892 thousand for the fourth quarter of fiscal 2021 compared to net income before taxes of $32 thousand for the same period of the prior year.
  • Total revenue increased by $0.8 million to $2.4 million for the fourth quarter of fiscal 2021 compared to the same period of the prior year.
  • Pizza Inn domestic comparable store retail sales increased 63% in the fourth quarter of fiscal 2021 compared to the same period of the prior year.
  • Pie Five comparable store retail sales increased 36% in the fourth quarter of fiscal 2021 compared to the same period of the prior year.
  • On a fully diluted basis, net income increased $0.05 per share to $0.05 per share for the fourth quarter of fiscal 2021 compared to net income of $0.00 per share for the same period of the prior year.
  • Cash and cash equivalents increased $1.8 million during the fourth quarter of fiscal 2021 to $8.3 million at June 27, 2021.
  • Pizza Inn domestic unit count finished at 135.
  • Pizza Inn international unit count finished at 32.
  • Pie Five domestic unit count finished at 33.

Annual Highlights:

  • Net income improved by $5.7 million to $1.5 million in fiscal 2021 compared to a net loss of $4.2 million in fiscal 2020.
  • Net income before tax improved by $1.7 million to $1.5 million in fiscal 2021 compared to a loss of $0.2 million in fiscal 2020.
  • Adjusted EBITDA of $2.0 million for fiscal 2021 was a $1.4 million increase from the prior year.
  • On a fully diluted basis, the Company reported net income of $0.09 per share in fiscal 2021 compared to a net loss of $0.28 per share in the prior year.
  • RAVE total domestic comparable store retail sales decreased 2.0% for the 52 weeks ended June 27, 2021 compared to the same period of the prior year.
  • Pizza Inn domestic comparable store retail sales decreased 1.0% for the 52 weeks ended June 27, 2021 compared to the same period of the prior year.
  • Pie Five comparable store retail sales decreased 6.2% for the 52 weeks ended June 27, 2021 compared to the same period of the prior year.
  • Total consolidated revenue decreased by $1.4 million in fiscal 2021 to $8.6 million.
  • Both fiscal 2021 and fiscal 2020 contained 52 weeks.
  • Cash and cash equivalents increased $5.4 million in fiscal 2021 to $8.3 million.

“We are pleased that the heroic efforts of our franchisees and team members have resulted in our fifth consecutive quarter of profitability. Our maniacal focus on cost control and relentless consumer-facing innovation is paying off with improving sales and consistent earnings despite the pandemic and the latest variant,” said Brandon Solano, Chief Executive Officer of RAVE Restaurant Group. “Our fourth quarter net income of $.9M marks the fifth consecutive quarter of positive income, showing sequential improvement each quarter, in a pandemic, while running a buffet brand. This is RAVE’s best streak of positive income in nearly a decade. While our fourth quarter income includes a one-time PPP loan forgiveness, we are generating positive operating income, have limited leverage and hold more than $8M in cash.”

“In Q4 we capitalized on the category’s hottest trend of stuffed crust by elevating the experience and introducing Pie Five’s Parmesan Crunch Stuffed Crust pizza with a trial-driving value offer. Earlier in the year we introduced our Panzano Pan pizza as well as our Impossible Tuscan meatball,” said Solano. “Pie Five now offers three significant innovations a majority of our fast casual pizza competitors do not: pan pizza, plant-based meat pizza and stuffed crust. We will continue to focus on driving same store sales with innovation and strong operations.”

“Pizza Inn’s core product significantly improved this year with our new garlic butter crust, transition to house-shredded 100% whole-milk mozzarella and our classic house-made dough. This month we introduced our House Pan Pizza with a campaign to highlight the differences between our house-made dough and Pizza Hut’s frozen dough and frozen cheese. We have significant innovation in our pipeline and can’t wait to share them with our customers,” said Solano.

“The financial results for fiscal 2021 underscore the tremendous efforts by our team at RAVE to advance our turnaround despite the many challenges facing the restaurant industry,” said Clint Fendley, Chief Financial Officer of RAVE Restaurant Group, Inc. “We increased our cash from operations by $1.8 million and our cash and cash equivalents by $5.4 million, reduced our debt, and posted one of the best years of profitability for RAVE in a decade. We look forward to 2022 as we continue to invest in both brands in order to ignite growth in future periods.”

About RAVE Restaurant Group, Inc.

Founded in 1958, Dallas-based RAVE Restaurant Group [NASDAQ: RAVE] owns, operates, franchises and/or licenses 200 Pie Five Pizza Co. and Pizza Inn restaurants and Pizza Inn Express kiosks domestically and internationally. Pizza Inn is an international chain featuring freshly made pizzas, along with salads, pastas, and desserts. Pie Five Pizza Co. is a leader in the rapidly growing fast-casual pizza space. Pizza Inn Express, or PIE, is developing unique opportunities to provide freshly made pizza from non-traditional outlets. The Company’s common stock is listed on the Nasdaq Capital Market under the symbol “RAVE”. 

RAVE RESTAURANT GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

Three Months Ended

Twelve Months Ended

June 27,

2021

June 28,

2020

June 27,

2021

June 28,

2020

REVENUES:

$

2,379

$

1,617

$

8,593

$

10,028

COSTS AND EXPENSES:

Cost of sales

35

86

264

439

General and administrative expenses

1,186

920

4,710

5,503

Franchise expenses

612

487

2,394

3,051

Gain on sale of assets

146

(31)

(10)

(24)

Impairment of long-lived assets and other lease charges

44

21

880

Bad debt expense

103

14

121

53

Interest expense

23

20

92

95

Depreciation and amortization expense

39

45

167

186

Total costs and expenses

2,144

1,585

7,759

10,183

OTHER INCOME:

Gain on forgiveness of PPP loan

(657)

(657)

Total other income

(657)

(657)

INCOME (LOSS) BEFORE TAXES

892

32

1,491

(155)

Income tax (benefit) expense

(34)

1

(29)

4,078

NET INCOME (LOSS)

926

31

1,520

(4,233)

INCOME (LOSS) PER SHARE OF COMMON STOCK – BASIC:

$

0.05

$

0.00

$

0.09

$

(0.28)

INCOME (LOSS) PER SHARE OF COMMON STOCK – DILUTED:

$

0.05

$

0.00

$

0.09

$

(0.28)

Weighted average common shares outstanding – basic

18,005

15,194

17,307

15,144

Weighted average common and potential dilutive common shares outstanding

18,803

15,992

18,105

15,144

RAVE RESTAURANT GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

(Unaudited)

June 27, 2021

June 28, 2020

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

8,330

$

2,969

Restricted cash

234

Accounts receivable, less allowance for bad debts  of $47 and $269, respectively

911

965

Notes receivable, current

901

546

Deferred contract charges, current

35

44

Prepaid expenses and other

196

174

Total current assets

10,373

4,932

LONG-TERM ASSETS

Property, plant and equipment, net

445

366

Operating lease right of use asset, net

2,085

3,567

Intangible assets definite-lived, net

183

155

Notes receivable, net of current portion

52

449

Deferred contract charges, net of current portion

207

231

Deposits and other

5

Total assets

$

13,345

$

9,705

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES

Accounts payable – trade

$

644

$

446

Accounts payable – lease termination impairments

407

Accrued expenses

924

775

Other current liabilities

46

Operating lease liability, current

465

632

Short term loan, current

250

Convertible notes short term, net of unamortized debt issuance costs and discounts

1,576

Deferred revenues, current

626

254

Total current liabilities

4,531

2,514

LONG-TERM LIABILITIES

Convertible notes, net of current portion

1,549

PPP loan

657

Operating lease liability, net of current portion

1,911

3,471

Deferred revenues, net of current portion

1,170

960

Other long-term liabilities

51

Total liabilities

7,612

9,202

SHAREHOLDERS’ EQUITY 

Common stock, $.01 par value; authorized 26,000,000 shares; issued 25,090,058 and
22,550,376  shares, respectively; outstanding 18,004,904 and 15,465,222 shares, respectively

251

225

Additional paid-in capital

37,215

33,531

Accumulated deficit

(7,196)

(8,716)

Treasury stock at cost

Shares in treasury: 7,085,154 and 7,085,154, respectively

(24,537)

(24,537)

Total shareholders’ equity

5,733

503

Total liabilities and shareholders’ equity

$

13,345

$

9,705

RAVE RESTAURANT GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Twelve Months Ended

June 27, 2021

June 28, 2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

$

1,520

$

(4,233)

Adjustments to reconcile net income (loss) to cash used in operating activities:

Impairment of long-lived assets and other lease charges

21

880

Stock compensation expense

80

(104)

Depreciation and amortization

131

145

Amortization of operating right of use assets

569

471

Amortization of debt issue costs

27

29

Gain on the sale of assets

(10)

(24)

Provision for bad debt

7

53

Bad debt on notes receivable

114

Gain on forgiveness of PPP loan

(657)

Deferred income tax

4,060

Changes in operating assets and liabilities:

Accounts receivable

47

132

Notes receivable

(119)

104

Deferred contract charges

33

(6)

Inventories

7

Prepaid expenses and other

(22)

167

Deposits and other

5

Accounts payable – trade

198

46

Accounts payable – lease termination impairments

(428)

(985)

Accrued expenses

149

(46)

Other current liabilities

46

Operating lease liability

(793)

(494)

Deferred revenue

582

(581)

Other long-term liabilities

(51)

(22)

Cash provided by/(used in) operating activities

1,485

(360)

CASH FLOWS FROM INVESTING ACTIVITIES:

Payments received on notes receivable

47

123

Proceeds from sale of assets

1

Purchase of intangible assets definite-lived

(74)

Purchase of property, plant and equipment

(212)

(56)

Cash provided by investing activities

(238)

67

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from sale of stock

3,761

357

Equity issuance costs – ATM offering

(131)

(15)

Proceeds from PPP loan

657

Short term loan, current

250

Cash provided by financing activities

3,880

999

Net increase/(decrease) in cash, cash equivalents and restricted cash

5,127

706

Cash, cash equivalents and restricted cash, beginning of period

3,203

2,497

Cash, cash equivalents and restricted cash, end of period

$

8,330

$

3,203

Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets

Cash and cash equivalents

$

8,330

$

2,969

Restricted cash

234

Total cash, cash equivalents and restricted cash

$

8,330

$

3,203

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

CASH PAID FOR:

Interest

$

64

$

66

Income taxes

$

23

$

18

Non-cash activities:

Conversion of notes to common shares

$

$

64

Operating lease right of use assets at adoption

$

$

4,150

Operating lease liability at adoption

$

$

4,894

Gain on forgiveness of PPP loan

$

657

$

RAVE RESTAURANT GROUP, INC.

ADJUSTED EBITDA

(In thousands)

(Unaudited)

Three Months Ended

Twelve Months Ended

June 27,

2021

June 28,

2020

June 27,

2021

June 28,

2020

Net income (loss)

$

926

$

31

$

1,520

$

(4,233)

Interest expense

23

20

92

95

Income taxes

(34)

1

(29)

4,078

Depreciation and amortization

39

45

167

186

EBITDA

$

954

$

97

$

1,750

$

126

Stock compensation expense (income)

41

80

(104)

Severance

23

23

157

Gain on sale of assets

146

(31)

(10)

(24)

Impairment of long-lived assets and other lease charges

44

21

880

Franchisee default and closed store revenue

(16)

(19)

(170)

(606)

Closed and non-operating store costs

36

87

271

137

Adjusted EBITDA

$

1,184

$

178

$

1,965

$

566

SOURCE RAVE Restaurant Group, Inc.