PR Newswire | Nov 13, 2020 04:44PM EST

11/13 15:43 CST

RAVE Restaurant Group, Inc. Reports First Quarter Financial Results DALLAS, Nov. 13, 2020

DALLAS, Nov. 13, 2020 /PRNewswire/ -- RAVE Restaurant Group, Inc. (NASDAQ: RAVE) today reported financial results for the first quarter ended September 27, 2020.

FirstQuarter Highlights:

* The Company recorded net income of $76 thousand for the first quarter of fiscal 2021 compared to net income of $237 thousand for the same period of the prior year. * Total revenue decreased by $1.0 million to $1.9 million for the first quarter of fiscal 2021 compared to the same period of the prior year. * Income before taxes was $78 thousand for the first quarter of fiscal 2021 compared to $310 thousand for the same period of the prior year. * Pizza Inn domestic comparable store retail sales decreased 22% in the first quarter of fiscal 2021 compared to the same period of the prior year. * Pie Five comparable store retail sales decreased 23% in the first quarter of fiscal 2021 compared to the same period of the prior year. * On a fully diluted basis, net income decreased $0.01 per share to $0.00 per share for the first quarter of fiscal 2021 compared to net income of $0.01 per share for the same period of the prior year. * Cash and cash equivalents decreased $33 thousand during the first quarter of fiscal 2021 to $2.9 million at September 27, 2020. * Pizza Inn domestic unit count finished at 146. * Pizza Inn international unit count finished at 32. * Pie Five domestic unit count finished at 39.

"We continue to work through challenges presented by the global health crisis, but we will not be sidelined by the pandemic and are resolute in repositioning RAVE for long-term success," said Brandon Solano, Chief Executive Officer of RAVE Restaurant Group, Inc. "Safety for our customers remains our top priority and our first quarter results demonstrate that the coordinated response from our franchisees and restaurant support team continues to drive traffic and incremental sales despite operating challenges."

"At Pizza Inn, we created the Contactless Buffet To-Go to maximize value and variety for guests and to lower the impact of reduced foot traffic," Solano said. "We recently brought back the Contactless Buffett To-Go with three new value-oriented options and along with our New Right-Way Buffet, we are seeing impressive results in driving traffic and ticket average."

"At Pie Five, we are continuing to test menu upgrades and look forward to rolling out several new options soon," said Solano. "We are also continuing to leverage the Circle of Crust rewards program and are seeing a steady return in traffic along with positive sales trends with third-party delivery utilization."

"Income before taxes of $78 thousand is an encouraging start for the first quarter of fiscal 2021 and demonstrates our commitment to controlling costs amid revenue declines," said Clint Fendley, Vice President of Finance of RAVE Restaurant Group, Inc. "RAVE's cash balance of $2.9 million at September 27, 2020, coupled with $3.8 million of gross proceeds from sales of common stock subsequent to the first quarter, reinforces our position as we continue to confront near-term uncertainty in our 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, gain/loss sale of assets, costs related to impairment, 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 217 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 RelationsRAVE Restaurant Group, Inc.469-384-5000

RAVE RESTAURANT GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

Three Months Ended

September 27, September 29,

2020 2019

REVENUES: $ 1,903 $ 2,876

COSTS AND EXPENSES:

Cost of sales 78 134

General and administrative expenses 1,089 1,363

Franchise expenses 547 866

Gain on sale of assets - (11)

Impairment of long-lived assets and 17 148 other lease charges

Bad debt expense (recovery) 27 (8)

Interest expense 23 27

Depreciation and amortization 44 47 expense

Total costs and expenses 1,825 2,566

INCOME BEFORE TAXES 78 310

Income tax expense 2 73

NET INCOME 76 237

INCOME PER SHARE OF COMMON STOCK - $ 0.00 $ 0.02BASIC:

INCOME PER SHARE OF COMMON STOCK - $ 0.00 $ 0.01DILUTED:

Weighted average common shares 15,451 15,106outstanding - basic

Weighted average common and potential dilutive common shares 16,249 15,924outstanding

RAVE RESTAURANT GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

September 27, June 28,

2020 2020

ASSETS

CURRENT ASSETS

Cash and cash equivalents $ 2,936 $ 2,969

Restricted cash 234 234

Accounts receivable, less allowance for bad 1,012 965debts of $77 and $269, respectively

Notes receivable 484 546

Deferred contract charges 36 44

Prepaid expenses and other 218 174

Total current assets 4,920 4,932

LONG-TERM ASSETS

Property, plant and equipment, net 358 366

Operating lease right of use asset, net 3,421 3,567

Intangible assets definite-lived, net 146 155

Notes receivable, net of current portion 445 449

Long-term deferred contract charges 242 231

Deposits and other - 5

Total assets $ 9,532 $ 9,705

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable - trade $ 469 $ 446

Accounts payable - lease termination 421 407impairments

Accrued expenses 685 775

Operating lease liability, current 644 632

Deferred revenues 293 254

Total current liabilities 2,512 2,514

LONG-TERM LIABILITIES

Convertible notes 1,556 1,549

PPP loan 657 657

Operating lease liability, net of current 3,307 3,471portion

Deferred revenues, net of current portion 873 960

Other long-term liabilities 51 51

Total liabilities 8,956 9,202

SHAREHOLDERS' EQUITY

Common stock, $.01 par value; authorized26,000,000 shares; issued 22,550,376 and 225 22522,550,376 shares, respectively; outstanding15,465,222 and 15,465,222 shares, respectively

Additional paid-in capital 33,528 33,531

Accumulated deficit (8,640) (8,716)

Treasury stock at cost

Shares in treasury: 7,085,154 and -24,537 -24,5377,085,154, respectively

Total shareholders' equity 576 503

Total liabilities and shareholders' $ 9,532 $ 9,705equity

RAVE RESTAURANT GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Three Months Ended

September 27, September 29,

2020 2019

CASH FLOWS FROM OPERATINGACTIVITIES:

Net income $ 76 $ 237

Adjustments to reconcile net income to cash (used in) provided by operating activities:

Impairment of fixed assets 17 148 and other assets

Depreciation and 44 47 amortization

Amortization of operating 146 115 right of use assets

Amortization of debt issue 7 9 costs

Gain on the sale of assets - (11)

Provision for bad debt 27 (8)

Deferred income tax - 71

Changes in operating assets and liabilities:

Accounts receivable (74) 272

Notes receivable 62 -

Deferred contract charges (3) (3)

Inventories - 1

Prepaid expenses and other (44) 46

Deposits and other 5 1

Accounts payable - trade 23 (110)

Accounts payable - lease (3) (373) termination impairments

Accrued expenses (90) (47)

Operating lease liability (152) (120)

Deferred revenue (48) (122)

Deferred rent and other - (21)

Cash (used in) provided (7) 132 by operating activities

CASH FLOWS FROM INVESTINGACTIVITIES:

Payments received on notes receivable from fixed asset 4 44 sales

Purchase of property, plant (27) (17) and equipment

Cash (used in) provided by (23) 27 investing activities

CASH FLOWS FROM FINANCINGACTIVITIES:

Equity issuance costs (3) (2)

Cash (used in) financing (3) (2) activities

Net (decrease)/increase incash, cash equivalents and (33) 157restricted cash

Cash, cash equivalents andrestricted cash, beginning 3,203 2,264of period

Cash, cash equivalents andrestricted cash, end of $ 3,170 $ 2,421period

SUPPLEMENTAL DISCLOSURES OFCASH FLOW INFORMATION

CASH PAID FOR:

Interest $ - $ 2

Income taxes $ 7 $ 1

Non-cash activities:

Conversion of notes to $ - $ 64 common shares

Operating lease right of $ - $ 3,428 use assets at adoption

Operating lease liability $ - $ 3,875 at adoption

RAVE RESTAURANT GROUP, INC.

ADJUSTED EBITDA

(In thousands)

Three Months Ended

September 27, September 29,

2020 2019

Net income $ 76 $ 237

Interest expense 23 27

Income taxes 2 73

Depreciation and amortization 44 47

EBITDA $ 145 $ 384

Gain on sale/disposal of assets - (11)

Impairment of long-lived assets 17 148and other lease charges

Franchisee default and closed (67) (147)store revenue

Closed and non-operating store 82 6costs

Adjusted EBITDA $ 177 $ 380

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SOURCE RAVE Restaurant Group, Inc.