Nathan's Famous profit declines as sales rise
June 10, 2016
by Erica Shaffer
Significant organic growth in the company’s consumer packaged hot dog business substantially contributed to increases in license royalties, but debt repayments weighed on results.
JERICHO, NY – Debt repayments weighed on fourth quarter and fiscal year earnings at Nathan’s Famous, Inc. The company has purchased a total of 5,096,757 shares of common stock at a cost of approximately $76,031,000 through March 27, 2016, Nathan’s reported.
The company’s board of directors increased the Nathan’s authorization to purchase up to an additional 400,000 shares of its common stock. Nathan’s also entered into a 10b5-1 plan with Mutual Securities, Inc. (MSI) which authorizes MSI to purchase shares of Nathan’s common stock on behalf of the company.
For the fourth quarter ended March 27, Nathan’s reported net income of $507,000, or 12 cents per diluted share, as compared to $1,537,000, or 34 cents per share.
Revenues for the quarter were $19,053,000, as compared to $20,340,000 during the year-ago quarter.
“Fiscal 2016 was a very strong year for Nathan’s Famous,” Eric Gatoff, CEO, said in a statement. “Our Branded Products Program, licensing program and company-owned restaurants all delivered outstanding results, helping the company achieve the highest Income from operations in its history.”
Income from operations increased by 51.2 percent to $4,486,000 as compared to $2,967,000 reported in the fourth quarter of 2015.
Significant organic growth in the company’s consumer packaged hot dog business substantially contributed to increases in license royalties, the company said. For the year, license royalties increased by 10.0 percent to $19,815,000 as compared to $18,011,000 a year ago. Total royalties earned under the John Morrell & Co., agreement advanced 11.6 percent to $17,975,000 as compared to $16,105,000 reported a year ago.
Sales from the Branded Product Program, which includes the sale of Nathan’s hot dogs to the foodservice industry, totaled $58,545,000, as compared to $58,948,000 reported a year ago. Sales from the company’s Branded Product Program gained on a 4.6 percent increase in the volume of products sold. Lower average selling prices of 3.7 percent due to lower prices for beef partially offset results.
Sales from company-operated restaurants climbed 5 percent to $16,664,000 for the year ended March 27, as compared to $15,874,000 during the 52 weeks ended March 29, 2015. Higher sales at both Coney Island locations provided tailwinds, according to the company.
Revenues from franchise operations declined for the year to $5,044,000 from $5,581,000.
Nathan’s Famous opened 56 new franchised units during the year, including 25 international locations, comprised of the company’s first two restaurants in each of Panama and Australia; 17 locations in Russia; two locations in Malaysia; one unit in Costa Rica; one unit in the Dominican Republic and 22 Branded Menu Program outlets.
For the full year, net income declined to $6,096,000, as compared to $11,703,000 for the 52 weeks ended March 29, 2015. Income from operations climbed 25.1 percent to $24,963,000, as compared to $19,958,000 a year ago.
Revenues for the year were $100,890,000, as compared to $99,112,000 reported a year ago.