ARKR Ark Restaurants Corporation

Ark Restaurants Corp. (NASDAQ:ARKR) today reported financial results for the third quarter ended July 1, 2023.

Financial Results

Total revenues for the 13 weeks ended July 1, 2023 were $51,051,000 versus $53,218,000 for the 13 weeks ended July 2, 2022 and total revenues for the 39 weeks ended July 1, 2023 were $140,393,000 versus $136,789,000 for the 39 weeks ended July 2, 2022. As required by our lease, Gallagher's Steakhouse at the New York-New York Hotel and Casino in Las Vegas, NV was substantially closed for renovation for the period from February 5, 2023 through April 27, 2023. Revenues for the period of closure were $1,068,000 as compared to $3,056,000 for the comparable prior period, of which $354,000 as compared to $730,000 related to the 13-week periods ended July 1, 2023 and July 2, 2022, respectively.

Excluding Gallagher's Steakhouse, which was closed for part of the quarter, Company-wide same store sales decreased 2.6% for the 13 weeks ended July 1, 2023 as compared to the same period of the prior year.

The Company's EBITDA, excluding gains on the forgiveness of Paycheck Protection Program Loans (the "PPP Loan Forgiveness") and adjusted for other items all as set out in the table below, for the 13 weeks ended July 1, 2023 was $4,663,000 versus $6,207,000 for the 13 weeks ended July 2, 2022. Net income for the 13 weeks ended July 1, 2023 was $3,195,000, or $0.89 and $0.88 per basic and diluted share, respectively, compared to net income of $5,255,000 (which includes PPP Loan Forgiveness of $1,298,000), or $1.48 and $1.46 per basic and diluted share, respectively, for the 13 weeks ended July 2, 2022.

The Company's EBITDA, excluding gains on PPP Loan Forgiveness and adjusted for other items all as set out in the table below, for the 39 weeks ended July 1, 2023 was $8,682,000 versus $11,634,000 for the 39 weeks ended July 2, 2022. Net income for the 39 weeks ended July 1, 2023 was $4,436,000 (which includes PPP Loan Forgiveness of $272,000), or $1.23 and $1.22 per basic and diluted share, respectively, compared to net income of $8,519,000 (which includes PPP Loan Forgiveness of $2,420,000), or $2.40 and $2.37 per basic and diluted share, respectively, for the 39 weeks ended July 2, 2022.

On August 8, 2023, the Board of Directors declared a quarterly cash dividend of $0.1875 per share to be paid on September 12, 2023 to shareholders of record of each share of the Company's common stock at the close of business on August 31, 2023.

As of July 1, 2023, the Company had a cash balance of $13,986,000 and total outstanding debt of $7,721,000.

COVID-19 and Inflation

Recent global events, including the COVID-19 pandemic ("COVID-19"), have adversely affected global economies, disrupted global supply chains and labor force participation and created significant volatility and disruption of financial markets. As a result, we experienced significant and variable disruptions to our business as federal, state and local restrictions were mandated, among other remedial measures, to mitigate the spread of the COVID-19 virus. While restrictions on the type of permitted operating model and occupancy capacity may continue to change, during fiscal 2022 all of our restaurants operated with no restrictions, other than in New York City where customers were required to show proof of vaccination through November 1, 2022.

In addition to the associated impacts of COVID-19, our operating results have been impacted by geopolitical and other macroeconomic factors, leading to increased commodity and wage inflation and other increased costs. The ongoing effects of COVID-19 and its variants, along with other geopolitical and macroeconomic events, could lead to further government mandates, including but not limited to capacity restrictions, shifts in consumer behavior, wage inflation, staffing challenges, product and services cost inflation and disruptions in our supply chain. If these factors significantly impact our cash flow in the future, we may again implement mitigation actions such as suspending dividends, increasing borrowings or modifying our operating strategies. Some of these measures may have an adverse impact on our business, including possible impairments of assets.

About Ark Restaurants Corp.

Ark Restaurants owns and operates 17 restaurants and bars, 16 fast food concepts and catering operations primarily in New York City, Florida, Washington, DC, Las Vegas, Nevada and the gulf coast of Alabama. Four restaurants are located in New York City, one is located in Washington, DC, five are located in Las Vegas, Nevada, one is located in Atlantic City, New Jersey, four 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 in the Tropicana Hotel and Casino. The Florida operations include the Rustic Inn in Dania Beach, Shuckers in Jensen Beach, JB’s on the Beach in Deerfield Beach, Blue Moon Fish Company in Lauderdale-by-the-Sea 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.

Cautionary Note Regarding Forward-Looking Statements

Except for historical information, this news release contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These statements involve unknown risks, and uncertainties that may cause the Company's actual results or outcomes to be materially different from those anticipated and discussed herein. Important factors that might cause such differences are discussed in the Company's filings with the Securities and Exchange Commission. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Actual results could differ materially from those anticipated in these forward-looking statements, if new information becomes available in the future.

ARK RESTAURANTS CORP.

Consolidated Condensed Statements of Income

For the 13- and 39- week periods ended July 1, 2023 and July 2, 2022

(In Thousands, Except per share amounts)

 

 

13 Weeks Ended

July 1,

2023

 

13 Weeks Ended

July 2,

2022

 

39 Weeks Ended

July 1,

2023

 

39 Weeks Ended

July 2,

2022

 

 

 

 

 

 

 

 

 

TOTAL REVENUES

 

$

51,051

 

 

$

53,218

 

 

$

140,393

 

 

$

136,789

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

Food and beverage cost of sales

 

 

13,241

 

 

 

14,740

 

 

 

37,472

 

 

 

39,536

 

Payroll expenses

 

 

17,194

 

 

 

16,205

 

 

 

49,027

 

 

 

43,926

 

Occupancy expenses

 

 

6,151

 

 

 

5,966

 

 

 

17,589

 

 

 

15,814

 

Other operating costs and expenses

 

 

6,274

 

 

 

5,996

 

 

 

17,557

 

 

 

15,974

 

General and administrative expenses

 

 

3,495

 

 

 

3,872

 

 

 

9,655

 

 

 

9,854

 

Depreciation and amortization

 

 

1,059

 

 

 

1,018

 

 

 

3,230

 

 

 

3,245

 

Total costs and expenses

 

 

47,414

 

 

 

47,797

 

 

 

134,530

 

 

 

128,349

 

OPERATING INCOME

 

 

3,637

 

 

 

5,421

 

 

 

5,863

 

 

 

8,440

 

OTHER (INCOME) EXPENSE:

 

 

 

 

 

 

 

 

Interest expense, net

 

 

158

 

 

 

253

 

 

 

745

 

 

 

778

 

Other income

 

 

(26

)

 

 

(37

)

 

 

(26

)

 

 

(384

)

Gain on forgiveness of PPP Loans

 

 

—

 

 

 

(1,298

)

 

 

(272

)

 

 

(2,420

)

Total other (income) expense, net

 

 

132

 

 

 

(1,082

)

 

 

447

 

 

 

(2,026

)

INCOME BEFORE PROVISION FOR INCOME TAXES

 

 

3,505

 

 

 

6,503

 

 

 

5,416

 

 

 

10,466

 

Provision for income taxes

 

 

173

 

 

 

905

 

 

 

306

 

 

 

1,290

 

CONSOLIDATED NET INCOME

 

 

3,332

 

 

 

5,598

 

 

 

5,110

 

 

 

9,176

 

Net income attributable to non-controlling interests

 

 

(137

)

 

 

(343

)

 

 

(674

)

 

 

(657

)

NET INCOME ATTRIBUTABLE TO ARK RESTAURANTS CORP.

 

$

3,195

 

 

$

5,255

 

 

$

4,436

 

 

$

8,519

 

 

 

 

 

 

 

 

 

 

NET INCOME ATTRIBUTABLE TO ARK RESTAURANTS CORP. PER COMMON SHARE:

 

 

 

 

 

 

 

 

Basic

 

$

0.89

 

 

$

1.48

 

 

$

1.23

 

 

$

2.40

 

Diluted

 

$

0.88

 

 

$

1.46

 

 

$

1.22

 

 

$

2.37

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:

 

 

 

 

 

 

 

 

Basic

 

 

3,601

 

 

 

3,555

 

 

 

3,600

 

 

 

3,553

 

Diluted

 

 

3,641

 

 

 

3,597

 

 

 

3,644

 

 

 

3,599

 

 

 

 

 

 

 

 

 

 

EBITDA Reconciliation:

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

$

3,505

 

 

$

6,503

 

 

$

5,416

 

 

$

10,466

 

Depreciation and amortization

 

 

1,059

 

 

 

1,018

 

 

 

3,230

 

 

 

3,245

 

Interest expense, net

 

 

158

 

 

 

253

 

 

 

745

 

 

 

778

 

EBITDA (a)

 

$

4,722

 

 

$

7,774

 

 

$

9,391

 

 

$

14,489

 

EBITDA, adjusted:

 

 

 

 

 

 

 

 

EBITDA (as defined) (a)

 

 

4,722

 

 

 

7,774

 

 

 

9,391

 

 

 

14,489

 

Non-cash stock option expense

 

 

78

 

 

 

74

 

 

 

237

 

 

 

222

 

Gain of forgiveness of PPP Loans

 

 

—

 

 

 

(1,298

)

 

 

(272

)

 

 

(2,420

)

Net income attributable to non-controlling interests

 

 

(137

)

 

 

(343

)

 

 

(674

)

 

 

(657

)

EBITDA, as adjusted

 

$

4,663

 

 

$

6,207

 

 

$

8,682

 

 

$

11,634

 

(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.

 

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Anthony J. Sirica (212) 206-8800 ajsirica@arkrestaurants.com