Pizza Inn: Rave Restaurant Group, Inc. Reports First Quarter Results

The following excerpt is from the company's SEC filing.
Dallas, Texas –
RAVE
Restaurant Group, Inc. (NASDAQ: RAVE) today reported financial results for the first quarter of fiscal 2023 ended
September 25, 2022.
First Quarter Highlights:
The Company recorded net income of $0.3 million for the first quarter of fiscal 2023 compared to net income of $0.3 million for the same period of the prior year.
Income before taxes was $0.4 million for the first quarter of fiscal 2023 compared to income before taxes of $0.3 million for the same period of the prior year.
Adjusted EBITDA increased by $0.1 million to $0.5 million for the first quarter of fiscal 2 023 compared to the same period of the prior year.
Total revenue increased by $0.5 million to $3.0 million for the first quarter of fiscal 2023 compared to the same period of the prior year.
The Company used $1.4 million to repurchase shares of its common stock in the first quarter of fiscal 2023.
Pizza Inn domestic comparable store retail sales increased 12.5% in the first quarter of fiscal 2023 compared to the same period of the prior year.
Pie Five domestic comparable store retail sales increased 7.6% in the first quarter of fiscal 2023 compared to the same period of the prior year.
On a fully diluted basis, net income was unchanged at $0.02 per share for the first quarters of both fiscal 2023 and fiscal 2022.
Cash and cash equivalents decreased $0.3 million during the first quarter of fiscal 2023 to $7.4 million at September 25, 2022.
Pizza Inn domestic unit count finished at 128.
Pizza Inn international unit count finished at 33.
Pie Five domestic unit count finished at 31.
“Our first quarter results mark 10 consecutive quarters of profitability for RAVE as we transition from a turnaround to a stable company primed for
growth,” said Brandon Solano, Chief Executive Officer of RAVE Restaurant Group, Inc. “Our first quarter shows continued significant same store sales growth at both Pizza Inn and Pie Five, net income stability, EBITDA growth and strong operating cash
performance.”
“We continue to make investment decisions with a goal of driving long-term performance and competitiveness,” Solano said. “We expect that key
initiatives such as our Pizza Inn rebranding efforts, reimagined Pizza Inn buffet experience and Pie Five’s menu relaunch will provide returns long after our initial investments.”
In September, RAVE announced a modernized Pizza Inn logo, a more confident version of the brand’s mascot, Jojo and a fresh new retail design aimed at
an enhanced consumer buffet experience with built-in social media shareability.
Solano continued, “The restaurant industry continues to abandon dine-in, leaving us an opportunity to win with our differentiated strategy, focusing
on the value and variety of Pizza Inn’s buffet while opportunistically capturing delivery and carry-out. We know our customers are hungry for a connection and an ’experience‘ with their family, not just Covid-esque functional feeding, and we are well
positioned to deliver that need.”
“In fiscal 2022 we delivered the first Pizza Inn buffet unit count growth in 24 years. While we had no additional openings in the first quarter of
fiscal 2023, we are on track with a strong pipeline of new stores, including our first new-image Pizza Inn currently under construction and slated to open in late January in Asheboro, NC.”
“The most significant Pie Five menu and operations changes in our history have been rolled out to all traditional stores and we are seeing strong
consumer and franchisee acceptance and an improvement in same store sales consistent with our testing.”
“I’m proud of our results and the inspired efforts of our team members and franchisees. They are a gritty, resilient bunch and I feel great about our
future.”
Clint Fendley, Chief Financial Officer of RAVE Restaurant Group, Inc. further explained, "Our 17.7% total revenue increase was driven by strong
same-store sales growth, unit count stability and strong performance among remodeled Pizza Inn units. These factors combined with strong cost controls yielded our tenth consecutive quarter of profitability. In the first quarter, we leveraged our
strong cash position to repurchase common stock and continue to hold in excess of $7.4 million in cash."
Non-GAAP Financial Measures
The Company’s financial statements are prepared in accordance with United States generally accepted accounting principles (“GAAP”). However, the
Company also presents and discusses certain non-GAAP financial measures that it believes are useful to investors as measures of operating performance. Management may also use such non-GAAP financial measures in evaluating the effectiveness of
business strategies and for planning and budgeting purposes. 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.
The Company considers EBITDA and Adjusted EBITDA to be important supplemental measures of operating performance that are commonly used by securities
analysts, investors and other parties interested in our industry. The Company believes that EBITDA is helpful to investors in evaluating its results of operations without the impact of expenses affected by financing methods, accounting methods and
the tax environment. The Company believes that Adjusted EBITDA provides additional useful information to investors by excluding non-operational or non-recurring expenses to provide a measure of operating performance that is more comparable from
period to period. Management also uses these non-GAAP financial measures for evaluating operating performance, assessing the effectiveness of business strategies, projecting future capital needs, budgeting and other planning purposes.
“EBITDA” represents earnings before interest, taxes, depreciation and amortization. “Adjusted EBITDA” represents earnings before interest, taxes,
depreciation and amortization, stock compensation expense, severance, gain/loss on sale of assets, costs related to impairment and other lease charges, franchise default and closed store revenue/expense, and closed and 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.
Dallas-based RAVE Restaurant Group [NASDAQ: RAVE] has inspired restaurant innovation and countless customer smiles with its trailblazing pizza
concepts. The Company owns, franchises, licenses and supplies Pie Five and Pizza Inn restaurants operating domestically and internationally. The Pizza Inn experience is unlike your typical buffet. Since 1958, Pizza Inn's house-made dough,
house-shredded 100% whole milk mozzarella cheese, fresh ingredients and house-made signature sauce combined with friendly service solidified the brand to become America's favorite hometown pizza place. This, in addition to its small-town vibe, are
the hallmarks of Pizza Inn restaurants. In 2011, RAVE introduced Pie Five Pizza, pioneering a fast-casual pizza brand that transformed the classic pizzeria into a concept offering personalization, sophisticated ingredients and speed. Pie Five's craft
pizzas are baked fresh daily and feature house-made ingredients, creative recipes and craveable crust creations. For more information, visit www.raverg.com, and follow on Instagram @pizzainnofficial and @piefivepizza.
Contact:
Investor Relations
469-384-5000
RAVE RESTAURANT GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share amounts)
(Unaudited)
Three Months Ended
REVENUES:
COSTS AND EXPENSES:
General and administrative expenses
Franchise expenses
Impairment of long-lived assets and other lease charges
Bad debt expense
Interest expense
Depreciation and amortization expense
Total costs and expenses
INCOME BEFORE TAXES
Income tax expense
NET INCOME
INCOME PER SHARE OF COMMON STOCK - BASIC:
INCOME PER SHARE OF COMMON STOCK - DILUTED:
Weighted average common shares outstanding - basic
16,632
18,005
Weighted average common and potential dilutive common shares outstanding
18,803
CONDENSED CONSOLIDATED BALANCE SHEETS
June 26,
ASSETS
CURRENT ASSETS
Accounts receivable, less allowance for bad debts of $25 and $27, respectively
Notes receivable, current
Deferred contract charges, current
Prepaid expenses and other
Total current assets
10,058
LONG-TERM ASSETS
Property, plant and equipment, net
Operating lease right of use asset, net
Intangible assets definite-lived, net
Notes receivable, net of current portion
Deferred tax asset, net
Deferred contract charges, net of current portion
Total assets
17,526
18,516
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade
Accrued expenses
Other current liabilities
Operating lease liability, current
Short term loan, current
Deferred revenues, current
Total current liabilities
LONG-TERM LIABILITIES
Operating lease liability, net of current portion
Deferred revenues, net of current portion
Total liabilities
COMMITMENTS AND CONTINGENCIES (
SEE NOTE D)
Common stock, $0.01 par value; authorized 26,000,000 shares; issued 25,090,058 and 25,090,058 shares, respectively;
outstanding 16,400,539 and 17,511,430 shares, respectively
Additional paid-in capital
37,470
37,384
Retained earnings
Treasury stock at cost
Shares in treasury: 8,689,519 and 7,578,628 respectively
(26,433
(25,049
Total shareholders' equity
12,421
13,412
Total liabilities and shareholders' equity
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
Adjustments to reconcile net income to cash provided by/(used in) operating activities:
Stock-based compensation expense
Amortization of operating right of use assets
Amortization of intangible assets definite-lived
Amortization of debt issue costs
Allowance for bad debts
Changes in operating assets and liabilities:
Cash provided by/(used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments received on notes receivable
Purchase of intangible assets definite-lived
Purchase of property, plant and equipment
Cash (used in)/provided by investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of stock
(1,384
Cash (used in) financing activities
(1,414
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID FOR:
Income taxes
ADJUSTED EBITDA
September 26,
Severance
Franchisee default and closed store revenue
Closed and non-operating store costs

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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