Pizza Inn: Rave Restaurant Group, Inc. Reports Third Quarter Financial 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 third quarter ended March 28, 2021.
Quarter Highlights:
The Company recorded net income of $0.4 million for the
quarter of fiscal
compared to a net loss of $4.5 million  for the same period of the prior year.
Total revenue decreased by $0.5 million to $2.2 million for the
compared to the same period of the prior year.
Income before taxes was $0.4 million for the
compared to a net loss before taxes of $0.5 million for the same period of the prior year.
Pizza Inn domesti c comparable store retail sales decreased 3% in the
Pie Five comparable store retail
sales
remained relatively stable in the third quarter of fiscal 2021 compared to the same period of the prior year.
On a fully diluted basis, net income increased $0.32 per share to $0.02 per share for the
compared to a net loss of $0.30 per share for the same period of the prior year.
Cash and cash equivalents increased $0.2 million during the
to $6.5 million at
Pizza Inn domestic unit count finished at 137.
Pizza Inn international unit count finished at 33.
Pie Five domestic unit count finished at 35.
“We are pleased that the heroic efforts of our management, franchisees, and team members have resulted in another profitable quarter amidst a pandemic and significant government restrictions,”
said Brandon Solano, Chief Executive Officer of RAVE Restaurant Group, Inc. “While we are pleased with this quarter’s results, much work remains.  We intend to continue our focus on innovation, operations consistency, technology upgrades, and cost
controls to drive value and consistency for our customers and shareholders and position RAVE, Pizza Inn, and Pie Five for long term success."
"RAVE’s Q3 net income of $0.4 M marks the fourth consecutive quarter of net income and shows sequential improvement each quarter, in a pandemic, while running a buffet brand," said Solano.  We
hold significant cash, have limited leverage, and have resolved our NASDAQ listing deficiencies.  We have a strong team, a sound strategy, and gritty franchisees committed to winning.”
“In Q3, Pizza Inn launched garlic-buttery crust system wide,” Solano said.  “Based on our research, this is a big consumer idea that holds significant opportunity.  We also believe the value
and variety of the Pizza Inn Buffet can capitalize on pent-up consumer demand for real, authentic, in-person, dining experiences with families and friends.  We have another buffet innovation we’ve been holding for this moment that we expect to
launch this month.  Lastly, in Q3 we selected Pepsi Cola as Pizza Inn’s exclusive soft drink supplier and will be transitioning from Coke in the coming months.  Our franchisees and customers are excited to dine out with their families and be
refreshed with Pepsi, Dr. Pepper, Cheerwine, and Mountain Dew, among others.”
“At Pie Five we completed the roll out of our Panzano Pan pizza and new pricing strategy during the most recent quarter,” said Solano.  “This month we expect to introduce a differentiated pizza
innovation with strong freshness/better-for-you cues, becoming the first among major fast-casual pizza brands to do so. We have partnered with a well-known brand in a growing segment of the food service industry for this upcoming launch.”
"Our third quarter results represent the fourth consecutive quarter of profitability for RAVE despite the challenges presented by the pandemic," said Clint Fendley, Vice President of Finance of
RAVE Restaurant Group, Inc. "Our team is poised and ready to deliver innovative menu items aimed at driving traffic and revenue growth for our franchisees as we remain optimistic for an improving environment for the restaurant industry."
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 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.
Founded in 1958, Dallas-based RAVE Restaurant Group [NASDAQ: RAVE] owns, operates, franchises and/or licenses 205 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”. For more information, please visit
www.raverg.com
Contact:
Investor Relations
469-384-5000
RAVE RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
Nine Months Ended
March 29,
REVENUES:
COSTS AND EXPENSES:
Cost of sales
General and administrative expenses
Franchise expenses
(Gain) loss on sale of assets
Impairment of long-lived assets and other lease charges
Bad debt expense (recovery)
Interest expense
Depreciation and amortization expense
Total costs and expenses
INCOME (LOSS) BEFORE TAXES
Income tax expense
NET INCOME (LOSS)
(4,515
(4,264
INCOME (LOSS) PER SHARE OF COMMON STOCK - BASIC:
INCOME (LOSS) PER SHARE OF COMMON STOCK - DILUTED:
Weighted average common shares outstanding - basic
17,991
15,133
17,061
15,123
Weighted average common and potential dilutive common shares outstanding
18,789
17,859
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
June 28, 2020
ASSETS
CURRENT ASSETS
Restricted cash
Accounts receivable, less allowance for bad debts
  of $64 and $269, respectively
Notes receivable, current
Deferred contract charges, current
Prepaid expenses and other
Total current assets
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 contract charges, net of current portion
Deposits and other
Total assets
12,456
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable - trade
Accounts payable - lease termination impairments
Accrued expenses
Operating lease liability, current
Deferred revenues, current
Total current liabilities
LONG-TERM LIABILITIES
Convertible notes
PPP loan
Operating lease liability, net of current portion
Deferred revenues, net of current portion
Other long-term liabilities
Total liabilities
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
Additional paid-in capital
37,174
33,531
Accumulated deficit
(8,122
(8,716
Treasury stock at cost
Shares in treasury: 7,085,154 and 7,085,154, respectively
(24,537
Total shareholders’ equity
Total liabilities and shareholders’ equity
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
March 29, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
Adjustments to reconcile net income (loss) to cash
 used in operating activities:
Stock compensation expense
Amortization of operating right of use assets
Amortization of debt issue costs
(Gain) loss on the sale of assets
Provision for bad debt
Deferred income tax
Changes in operating assets and liabilities:
Inventories
Cash used in operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments received on notes receivable from fixed asset sales
Purchase of property, plant and equipment
Cash provided by investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of stock
Equity issuance costs - ATM offering
Cash provided by financing activities
Net increase/(decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash, beginning of period
Cash, cash equivalents and restricted cash, end of period
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID FOR:
Income taxes
Non-cash activities:
Conversion of notes to common shares
Operating lease right of use assets at adoption
Operating lease liability at adoption
ADJUSTED EBITDA
Stock compensation expense (income)
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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