UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 


 

FORM 8-K


 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): May 13, 2020 

 


BBQ HOLDINGS, INC.

(Exact name of registrant as specified in its charter)


 

 

 

 

 

 

 

Minnesota

001-39053

83-4222776

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

 

(Address of principal executive offices) (Zip Code)

 

12701 Whitewater Drive,  Suite 290,  Minnetonka,  MN 55343

(952)  294-1300

(Registrant’s telephone number, including area code)

 


 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

DAVE

 

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value

BBQ

The Nasdaq Global Market

 

 

Indicated by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

 

Item 2.02.Results of Operations and Financial Condition.

On May 13, 2020, the Company issued a press release, which is attached hereto as Exhibit 99.1, announcing the financial results for the Company’s first quarter of fiscal year 2020.

The information set forth in Item 2.02 of this Current Report on Form 8-K is deemed to be “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information set forth in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933, as amended (the “Securities Act”), regardless of any general incorporation language in such filing.

Item 9.01.Financial Statements and Exhibits.

 

 

 

 

 

 

Exhibit No.

    

Description

99.1

 

Press Release Dated May 13, 2020

 

Page 2 of 3

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

BBQ HOLDINGS, INC.

 

 

Date: May 13, 2020

By:

/s/ James G. Gilbertson

 

 

Name: James G. Gilbertson

 

 

Title: Chief Financial Officer and Secretary

Page 3 of 3

bbq_Q1_2020_Detail_Ex99_1

 

 

 

BBQ Holdings, Inc. Reports Results for First  Quarter of Fiscal Year 2020

MINNEAPOLIS, May 13, 2020 –  BBQ Holdings, Inc. (NASDAQ: BBQ) (the “Company”),  an innovating global owner and operator of restaurants, today reported financial results for the first fiscal quarter ended March 29, 2020.  Note: The First Quarter results were affected by the COVID-19 pandemic as well as federal and state level mandates requiring stores to convert to To-go only business.

 

First Quarter 2020 Highlights:

·

Company-owned Famous Dave’s same store net sales decreased 6.8%.

·

Prior to the closure of our dining rooms mid-March same store net sales increased  3.0%.

·

Franchise-operated same store net sales decreased 13.1%.

·

Prior to the closure of dining rooms, Famous Dave’s franchise-operated same store net sales decreased $2.0%.

·

Same store To-go sales increased 8.4% at Company-owned Famous Dave’s restaurants.

·

Closed the Granite City Food & Brewery acquisition on March 9, 2020.

·

Net Income of $13.7 million, driven by a one-time gain on the bargain purchase acquisition of Granite City restaurants.

·

Adjusted EBITDA, a non-GAAP measure was ($457,000).

Executive Comments

Jeff Crivello, CEO, commented, “During the first two periods of the quarter, we made big improvements to restaurant-level labor and food costs.  During the third period, we acquired 18 Granite City Food & Brewery restaurants, and shortly thereafter, were forced to comply with government mandated closures of all dining rooms.  As a result of the dining room closures, we made the heart-wrenching decision to furlough roughly 85% of our workforce and shift our focus to cash management and executing to-go only.  I couldn’t be prouder of the way the team came together and worked tirelessly to adapt.  We leveraged our deep off- premise knowledge pool and found new solutions for delivering great food to the communities we love. 

We appreciate the landlords and vendors who have been flexible and compassionate as we all navigate these new waters.  Most of all, I appreciate our team members who continue to come to work in the restaurants each day. I am anxious to recall our furloughed employees as stores begin to open for full dine-in service across the U.S.  Sanitation has always been our top priority, and we have further evolved our protocols as dining rooms reopen.  We are hopeful that many of the lessons learned will be a positive factor for all our brands as we move forward.

Throughout April we continued to improve our off- premise-only business model in all bands, and find all potential sources of revenue and efficiencies.”

 

Key Operating Metrics

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 29, 2020

    

March 31, 2019

Restaurant count:

 

 

 

 

 

 

 

Franchise-operated

 

 

95

 

 

117

 

Company-owned

 

 

50

 

 

21

 

Total

 

 

145

 

 

138

 

Same store net restaurant sales %:

 

 

  

 

 

  

 

Franchise-operated, domestic

 

 

(12.7)

%  

 

 —

%  

Franchise-operated, international

 

 

(26.1)

%  

 

(28.0)

%  

Franchise-operated total

 

 

(13.1)

%  

 

(1.0)

%  

Company-owned

 

 

(6.8)

%  

 

1.3

%  

Total

 

 

(12.3)

%  

 

(0.7)

%  

 

 

 

 

 

 

 

 

(in thousands, expect per share data)

 

 

  

 

 

  

 

 

 

 

 

 

 

 

 

System-wide restaurant sales(1)

 

$

69,912

 

$

82,739

 

 

 

 

 

 

 

 

 

Net income attributable to shareholders

 

$

13,707

 

$

82

 

Adjusted net income attributable to shareholders(2)

 

 

(838)

 

 

620

 

 

 

 

 

 

 

 

 

Net income attributable to shareholders, per diluted share

 

$

1.49

 

$

0.01

 

Adjusted net income attributable to shareholders, per diluted share(2)

 

 

(0.09)

 

 

0.07

 

 

 

 

 

 

 

 

 

Adjusted EBITDA(2)

 

$

(457)

 

$

1,030

 

 


(1)

System-wide restaurant sales include sales for all Company-owned and franchise-operated restaurants, as reported by franchisees. Restaurant sales for franchise-operated restaurants are not revenues of the Company and are not included in the Company’s consolidated financial statements.

(2)

Adjusted net income (loss) from continuing operations and adjusted EBITDA are non-GAAP measures. A reconciliation of all non-GAAP measures to the most directly comparable GAAP measure is included in the accompanying financial tables.  See “Non-GAAP Reconciliation.”

First Quarter 2020 Review

Total revenue for the first quarter of 2020 was $23.5 million, up 65.4% from the first quarter of 2019. The increase in year-over-year restaurant net sales for the quarter ended March 29, 2020 was driven primarily by the addition of 13 Company-owned Famous Dave’s restaurants, 18 Granite City restaurants and a Clark Crew BBQ and Real Urban Barbecue restaurant.    

On a weighted basis, Company-owned Famous Dave’s same store net sales for our To-Go and Catering lines of business increased 8.4% and 0.1%, respectively, in the first quarter of fiscal 2020 as compared to the prior year period, offset by a decrease in of 18.4% in net Dine-In sales due to the closure of in-store dining in response to the COVID-19 pandemic.     

Restaurant-level operating margin, as a percentage of restaurant net sales, for Company-owned restaurants was (2.0)% in the first quarter of fiscal 2020 compared to (1.7)% in the first quarter of fiscal 2019. This decline in restaurant-level operating margin was primarily a result of acquisitions of new stores and the decline in same store sales in the first quarter of 2020.

General and administrative expenses for the quarter ended March 29, 2020 and March 31, 2019 represented approximately 12.9% and 17.7% of total revenues, respectively. While as a percentage of revenues general and administrative expenses decreased year over year, we incurred additional expenditures for acquisition costs and ongoing oversite of our new restaurants.

Net income attributable to shareholders was approximately $13.7 million, or $1.50 per share, in the first quarter of fiscal 2020 compared to $82,000, or $0.01 per share, in the first quarter of fiscal 2019.  Adjusted net loss attributable to shareholders, a non-GAAP measure, was approximately $838,000, or $0.09 per share, compared to adjusted net income attributable to shareholders of approximately $620,000, or $0.07 per share, in the first quarter of fiscal 2019. A reconciliation between adjusted net income attributable to shareholders and its most directly comparable GAAP measure is included in the accompanying financial tables.

Page 2 of 8

About BBQ Holdings

BBQ Holdings, Inc. (NASDAQ: BBQ) BBQ Holdings is a national restaurant company engaged in the ownership and operation of casual and fast dining restaurants.  As of May 13, 2020, BBQ Holdings had four brands with 145 overall locations in 33 states and three countries, including 50 company-owned and 95 franchise-operated restaurants. While BBQ Holdings continues to diversify its ownership in the restaurant community, it was founded with the principle of combining the “art and science” of barbecue to serve up the very best of the best to barbecue lovers everywhere. BBQ Holdings, through partnerships, has extended Travis Clark’s award-winning line of barbecue sauces, rubs and seasonings into the retail market. Along with a wide variety of BBQ favorites served at their BBQ restaurants, BBQ Holdings newest addition, Granite City Food and Brewery, offers award winning craft beer and a made-from-scratch, chef driven menu featuring contemporary American cuisine.    

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States (“GAAP”), the Company uses non-GAAP measures including those indicated below. These non-GAAP measures exclude significant expenses and income that are required by GAAP to be recorded in the Company’s consolidated financial statements and are subject to inherent limitations. By providing non-GAAP measures, together with a reconciliation to the most comparable GAAP measure, the Company believes that it is enhancing investors’ understanding of the Company’s business and results of operations. These measures are not intended to be considered in isolation of, as substitutes for, or superior to, financial measures prepared and presented in accordance with GAAP. The non-GAAP measures presented may be different from the measures used by other companies. The Company urges investors to review the reconciliation of its non-GAAP measures to the most directly comparable GAAP measure, included in the accompanying financial tables.

Adjusted net income attributable to shareholders is net income attributable to shareholders, plus asset impairment, estimated lease termination charges and other closing costs, settlement agreements, net (loss) gain on disposal of equipment, stock-based compensation, severance, acquisition costs, and the related tax impact. This number is divided by the weighted-average number of diluted shares of common stock outstanding during each period presented to arrive at adjusted net income, per share. Adjusted EBITDA is net income (loss), plus asset impairment, estimated lease termination charges and other closing costs, settlement agreements, depreciation and amortization, interest expense, net, net (loss) gain on disposal of equipment, stock-based compensation, severance, acquisition costs and provision (benefit) for income taxes.

Forward-Looking Statements

Statements in this press release that are not strictly historical, including but not limited to statements regarding the timing of the Company’s restaurant openings, the timing of refreshes and the timing or success of refranchising plans, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, which may cause the Company’s actual results to differ materially from expected results. Although the Company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectation will be attained. Factors that could cause actual results to differ materially from the Company’s expectation include the impact of the COVID-19 virus pandemic, financial performance, restaurant industry conditions, execution of restaurant development and construction programs, franchisee performance, changes in local or national economic conditions, availability of financing, governmental approvals and other risks detailed from time to time in the Company’s SEC reports.

Contact:Jeff Crivello – Chief Executive Officer
952-294-1300

Darrow Associates, Inc.
Peter Seltzberg – Managing Director
516-419-9915
pseltzberg@darrowir.com

Page 3 of 8

BBQ HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

 (in thousands, except per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 29, 2020

    

March 31, 2019

 

Revenue:

 

 

  

 

 

  

 

Restaurant sales, net

 

$

20,318

 

$

10,314

 

Franchise royalty and fee revenue

 

 

2,524

 

 

3,204

 

Franchisee national advertising fund contributions

 

 

282

 

 

409

 

Licensing and other revenue

 

 

346

 

 

266

 

Total revenue

 

 

23,470

 

 

14,193

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

  

 

 

  

 

Food and beverage costs

 

 

6,754

 

 

3,360

 

Labor and benefits costs

 

 

7,721

 

 

3,957

 

Operating expenses

 

 

6,241

 

 

3,169

 

Depreciation and amortization expenses

 

 

1,045

 

 

264

 

General and administrative expenses

 

 

3,032

 

 

2,517

 

National advertising fund expenses

 

 

282

 

 

409

 

Asset impairment, estimated lease termination charges and other closing costs, net

 

 

173

 

 

407

 

Pre-opening expenses

 

 

25

 

 

 —

 

Gain on disposal of property, net

 

 

(477)

 

 

(6)

 

Total costs and expenses

 

 

24,796

 

 

14,077

 

 

 

 

 

 

 

 

 

(Loss) income from operations

 

 

(1,326)

 

 

116

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

  

 

 

  

 

Interest expense

 

 

(210)

 

 

(71)

 

Interest income

 

 

134

 

 

54

 

Gain on bargain purchase

 

 

14,364

 

 

 —

 

Total other income (expense)

 

 

14,288

 

 

(17)

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

12,962

 

 

99

 

 

 

 

 

 

 

 

 

Income tax benefit (expense)

 

 

349

 

 

(17)

 

 

 

 

 

 

 

 

 

Net income

 

 

13,311

 

 

82

 

Net loss attributable to non-controlling interest

 

 

396

 

 

 —

 

Net income attributable to shareholders

 

$

13,707

 

$

82

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income per common share:

 

 

  

 

 

  

 

Basic net income per share attributable to shareholders

 

$

1.50

 

$

0.01

 

Diluted net income per share attributable to shareholders

 

$

1.49

 

$

0.01

 

Weighted average shares outstanding - basic

 

 

9,121

 

 

9,085

 

Weighted average shares outstanding - diluted

 

 

9,202

 

 

9,189

 

Page 4 of 8

BBQ HOLDINGS, INC. AND SUBSIDIARIES

OPERATING RESULTS

(unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 29, 2020

    

March 31, 2019

    

    

Food and beverage costs(1)

33.2

%  

32.6

%  

 

Labor and benefits costs(1)

38.0

%  

38.4

%  

 

Operating expenses(1)

30.7

%  

30.7

%  

 

Restaurant level operating margin(1)(3)  

(2.0)

%  

(1.7)

%  

 

Depreciation and amortization expenses(2)

4.5

%  

1.9

%  

 

General and administrative expenses(2)

12.9

%  

17.7

%  

 

(Loss) income from operations(2)

(5.6)

%  

0.8

%  

 


(1)

As a percentage of restaurant sales, net

(2)

As a percentage of total revenue

(3)

Restaurant level margins are equal to restaurant sales, net, less restaurant level food and beverage costs, labor and benefit costs, and operating expenses.

Page 5 of 8

BBQ HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 (in thousands, except per share data)

(unaudited)

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

March 29, 2020

    

December 29, 2019

Cash and cash equivalents

 

$

8,013

 

$

5,325

Restricted cash

 

 

971

 

 

761

Accounts receivable, net of allowance for doubtful accounts of $176,000 and $132,000, respectively

 

 

5,099

 

 

4,379

Inventories

 

 

2,434

 

 

1,346

Prepaid income taxes and income taxes receivable

 

 

264

 

 

264

Prepaid expenses and other current assets

 

 

1,210

 

 

1,356

Assets held for sale

 

 

2,842

 

 

2,842

Total current assets

 

 

20,833

 

 

16,273

 

 

 

 

 

 

 

Property, equipment and leasehold improvements, net

 

 

37,466

 

 

19,756

 

 

 

 

 

 

 

Other assets:

 

 

  

 

 

  

Operating lease right-of-use assets

 

 

71,930

 

 

25,962

Goodwill

 

 

690

 

 

640

Intangible assets, net

 

 

10,458

 

 

2,213

Deferred tax asset, net

 

 

1,610

 

 

6,646

Other assets

 

 

1,590

 

 

1,591

 

 

$

144,577

 

$

73,081

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

  

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

  

 

 

  

Accounts payable

 

$

7,097

 

$

3,967

Current portion of lease liabilities

 

 

6,989

 

 

4,230

Current portion of long-term debt and financing lease obligations

 

 

2,020

 

 

616

Accrued compensation and benefits

 

 

1,360

 

 

2,694

Other current liabilities

 

 

8,217

 

 

4,975

Total current liabilities

 

 

25,683

 

 

16,482

 

 

 

  

 

 

  

Long-term liabilities:

 

 

  

 

 

  

Lease liabilities, less current portion

 

 

69,505

 

 

26,957

Long-term debt, less current portion

 

 

12,922

 

 

6,258

Other liabilities

 

 

1,245

 

 

1,610

Total liabilities

 

 

109,355

 

 

51,307

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

  

 

 

  

Common stock, $.01 par value, 100,000 shares authorized, 9,282 and 9,272 shares issued and outstanding at March 29, 2020 and December 29, 2019, respectively

 

 

93

 

 

93

Additional paid-in capital

 

 

7,993

 

 

7,856

Retained earnings

 

 

28,130

 

 

14,423

Total shareholders’ equity

 

 

36,216

 

 

22,372

Non-controlling interest

 

 

(994)

 

 

(598)

Total equity

 

 

35,222

 

 

21,774

 

 

$

144,577

 

$

73,081

 

Page 6 of 8

BBQ HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 (in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

    

March 29, 2020

    

March 31, 2019

Cash flows from operating activities:

 

 

  

 

 

  

Net income

 

$

13,311

 

$

82

Adjustments to reconcile net income to cash flows provided by operations:

 

 

  

 

 

  

Depreciation and amortization

 

 

1,045

 

 

264

Stock-based compensation

 

 

137

 

 

83

Net gain on disposal

 

 

(477)

 

 

(6)

Asset impairment, estimated lease termination charges and other closing costs (gain), net

 

 

 —

 

 

386

Gain on bargain purchase

 

 

(14,364)

 

 

 —

Deferred income taxes

 

 

(399)

 

 

 —

Other non-cash items

 

 

(19)

 

 

33

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

(720)

 

 

764

Other assets

 

 

781

 

 

53

Accounts payable

 

 

3,130

 

 

(9)

Accrued and other liabilities

 

 

(2,687)

 

 

(24)

Cash flows (used for) provided by operating activities

 

 

(262)

 

 

1,626

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

  

 

 

  

Proceeds from the sale of assets

 

 

 —

 

 

 6

Purchases of property, equipment and leasehold improvements

 

 

(949)

 

 

(221)

Payments for acquired restaurants

 

 

(3,969)

 

 

(3,841)

Advances on notes receivable

 

 

 —

 

 

(150)

Payments received on note receivable

 

 

12

 

 

 —

Cash flows used for investing activities

 

 

(4,906)

 

 

(4,206)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

  

 

 

  

Proceeds from long-term debt

 

 

8,101

 

 

 —

Payments for debt issuance costs

 

 

(35)

 

 

(15)

Payments on long-term debt and financing lease obligations

 

 

 —

 

 

(137)

Cash provided by (used for) financing activities

 

 

8,066

 

 

(152)

 

 

 

 

 

 

 

Increase (decrease) in cash, cash equivalents and restricted cash

 

 

2,898

 

 

(2,732)

Cash, cash equivalents and restricted cash, beginning of period

 

 

6,086

 

 

12,440

Cash, cash equivalents and restricted cash, end of period

 

$

8,984

 

$

9,708

 

Page 7 of 8

 

BBQ HOLDINGS, INC. AND SUBSIDIARIES

NON-GAAP RECONCILIATION

(in thousands, except per share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

(dollars in thousands)

 

 

March 29, 2020

 

    

March 31, 2019

Net income attributable to shareholders

 

$

13,707

 

$

82

Asset impairment and estimated lease termination charges and other closing costs

 

 

173

 

 

407

Net gain on disposal of equipment

 

 

(477)

 

 

(6)

Stock-based compensation

 

 

137

 

 

83

Acquisition costs

 

 

(62)

 

 

163

Pre-opening costs

 

 

25

 

 

 —

Severance

 

 

28

 

 

 3

Gain on bargain purchase

 

 

(14,364)

 

 

 —

Tax adjustment

 

 

(5)

 

 

(112)

Adjusted net income

 

$

(838)

 

$

620

Basic adjusted net income per common share

 

$

(0.09)

 

$

0.07

Diluted adjusted net income per common share

 

$

(0.09)

 

$

0.07

 

 

 

 

 

 

 

Weighted average common share outstanding - basic

 

 

9,121

 

 

9,085

Weighted average common share outstanding - diluted

 

 

9,202

 

 

9,189

 

 

 

 

 

 

 

Net income

 

$

13,311

 

$

82

Asset impairment and estimated lease termination charges and other closing costs

 

 

173

 

 

407

Depreciation and amortization

 

 

1,045

 

 

264

Interest expense, net

 

 

76

 

 

17

Net (gain) loss on disposal of equipment

 

 

(477)

 

 

(6)

Stock-based compensation

 

 

137

 

 

83

Acquisition costs

 

 

(62)

 

 

163

Pre-opening costs

 

 

25

 

 

 —

Severance

 

 

28

 

 

 3

Gain on bargain purchase

 

 

(14,364)

 

 

 

Provision for income taxes

 

 

(349)

 

 

17

Adjusted EBITDA

 

$

(457)

 

$

1,030

 

Page 8 of 8