GlobeNewswire Inc | Apr 5, 2021 08:00AM EDT

April 05, 2021

MINNEAPOLIS, April 05, 2021 (GLOBE NEWSWIRE) -- BBQ Holdings, Inc. (NASDAQ: BBQ) (the Company), an innovating global owner and operator of restaurants, today reported financial results for the fourth fiscal quarter and fiscal year ended January 3, 2021. Note: Results of the fourth quarter and fiscal year were affected by the COVID-19 pandemic as well as federal and state level mandates requiring restaurants to limit or eliminate in-store dining during various periods throughout the year.

Fourth Quarter 2020 Highlights:

-- Adjusted EBITDA, a non-GAAP measure, was $1.4 million which includes $1.9 million of COVID-related expenses. -- Net loss of $2.8 million, driven partially by a decrease in same store sales and franchise-related revenue caused by COVID-related restrictions. -- Company-owned Famous Daves fourth quarter same store net sales decreased 5.5% compared to fourth quarter 2019, with 59% of restaurants fully closed at one point during the quarter. -- Franchise-operated same store net sales decreased 13.6%. -- Granite City fourth quarter same store net sales decreased 40.7% compared to fourth quarter 2019 with 50% of restaurants fully closed at one point during the quarter. -- Famous Daves franchisee to open its first line-service model restaurant in Coon Rapids, Minnesota. -- The Company to sell its Famous Daves Woodbury, Minnesota location for $2.6 million and open a dual concept Famous Daves and Cowboy Jacks restaurant and bar in Woodbury. -- Famous Daves franchisee to open its first drive-thru prototype restaurant in Salt Lake City, Utah.

Fiscal Year 2020 Highlights:

-- Adjusted EBITDA, a non-GAAP measure, was $4.3 million which includes $5.5 million of COVID-related expenses. -- Net income of $4.9 million, driven in part by a bargain purchase gain related to the acquisition of the Granite City brand. -- Company-owned Famous Daves fiscal year same store net sales decreased 8.5% compared to fiscal year 2019. -- As a percentage of net sales, Famous Daves reduced its food and beverage costs by 1.1% compared to 2019 and its labor costs by 4.7% over last year. -- Franchise-operated same store net sales decreased 17.0%. -- Granite City fiscal year same store net sales decreased 38.6% compared to fiscal year 2019. -- The Company opened 7 Famous Daves ghost kitchens within Granite City restaurants with 1 more to open in April 2021. -- Entered into a 25-unit development agreement with Bluestone Hospitality Group to open Famous Daves ghost kitchens and dual restaurant concepts with the Johnny Carinos Italian brand. -- Purchased the Granite City Food & Brewery brand on March 9, 2020. -- Purchased the Real Urban BBQ brand March 16, 2020.

Sales highlights for the partial first quarter 2021 (Jan 4 March 25, 2021) compared to the same period 2020 are as follows:

-- Comparable sales for Famous Daves increased 9.3%. Sales decreased 3.2% in January, decreased 2.9% in February, and increased 43.9% in March. -- Comparable sales for Granite City decreased 10.6%. Sales decreased 20.0% in January, decreased 26.3% in February, and increased 60.8% in March.

Executive Comments

Jeff Crivello, CEO, commented, We are extremely pleased with our operating results for the year considering the unparalleled situation caused by the pandemic. Throughout 2020 our team focused on innovation, technology, and marketing to expand our off-premise service in all concepts. We opened seven Famous Daves ghost kitchens in existing Granite City locations, opened a dual concept with Texas T-Bone Steakhouse in Colorado Springs, entered into a 25-unit development agreement to grow the Famous Daves brand in select locations across theU.S., and rolled-out a new unified POS system. We have made significant strides in reducing food and labor costs at all locations and are continuing to find more improvements from some of the lessons learned over the past year. Most importantly, as we begin to emerge from the state regulations caused by the pandemic, we are beginning to see sales ramp up to levels at or above pre-pandemic levels. During the month of March when sales increased 43.9% at Famous Daves and 60.8% at Granite City, we were able to generate record store-level EBITDA. Given our most recent performance in Q1, we are feeling very positive about 2021 and what it means for all our stakeholders.

Key Operating Metrics

Three Months Ended Year Ended January3,2021 December29,2019 January3,2021 December29,2019Restaurant count: Franchise-operated 98 96 98 96 Company-owned 47 33 47 33 Total 145 129 145 129 Same store netrestaurant sales %:Franchise-operated (13.6 )% 0.4 % (17.0 )% 1.0 %Company-owned (5.5 )% 4.7 % (8.5 )% 2.0 %Total (11.6 )% 0.9 % (15.3 )% 1.1 % (in thousands,expect per share data) System-widerestaurant sales^ $ 78,894 $ 77,596 $ 301,743 $ 335,244 (1) Net incomeattributable to $ (2,836 ) $ (1,788 ) $ 4,947 $ (649 )shareholders Net (loss) incomeattributable to $ (0.31 ) $ (0.20 ) $ 0.54 $ (0.07 )shareholders, perdiluted share Adjusted EBITDA^ $ 1,382 $ (692 ) $ 4,295 $ 3,423 (2)

System-wide restaurant sales include sales for all Company-owned and(1) 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. Adjusted EBITDA is a non-GAAP measures. A reconciliation of all non-GAAP(2) measures to the most directly comparable GAAP measure is included in the accompanying financial tables. See ?Non-GAAP Reconciliation.?

Fourth Quarter 2020 Review

Total revenue for the fourth quarter of 2020 was $34.3 million, up 45.3% from the fourth quarter of 2019. The increase in year-over-year restaurant net sales for the quarter ended January 3, 2021 was driven primarily by the addition of 18 Granite City restaurants, a Clark Crew BBQ and a Real Urban Barbecue restaurant.

To-go sales, which were 62.1% of our same store sales at Company-owned Famous Daves restaurants, increased 82.9% in the fourth quarter of fiscal 2020 compared to the prior year period. This increase in same store sales was offset by a decrease of 46.8% of our dine-in sales which made up 29.6% of our business, and a decrease of 48.9% in net catering sales which made up 8.3% of our business. This decline in dine-in and catering same store sales was due primarily to federal, state and local mandates prohibiting large group gatherings and in-store dining in an attempt to reduce the spread of COVID-19.

Restaurant-level operating margin, as a percentage of restaurant net sales, for Company-owned restaurants was 2.1% in the fourth quarter of fiscal 2020 compared to (3.0)% in the fourth quarter of fiscal 2019. This increase in restaurant-level operating margin was primarily a result of the reduction of labor and food costs as our restaurant operators adjusted to the increase in to-go sales and reduction of dine-in customers as a result of COVID-19 concerns.

General and administrative expenses for the quarter ended January 3, 2021 and December 29, 2019 represented approximately 12.9% and 14.6% of total revenues, respectively. The decrease in general and administrative expenses as a percentage of revenue in the fourth quarter of 2020 was due in part to the increase in the revenue base with the addition of 20 locations during 2020.

Net loss attributable to shareholders was approximately $2.8 million, or $0.31 per share, in the fourth quarter of fiscal 2020 compared to net loss of $1.8 million, or $0.20 per share, in the fourth quarter of fiscal 2019. Adjusted EBITDA, a non-GAAP measure, was approximately $1.4 million, or $0.15 per share, compared to adjusted EBITDA of approximately $(692,000), or $(0.08) per share, in the fourth quarter of fiscal 2019. A reconciliation between adjusted EBITDA and its most directly comparable GAAP measure is included in the accompanying financial tables.

Fiscal Year 2020 Review

Total revenue for fiscal year of 2020 was $121.4 million, up 45.3% from fiscal year 2019. The increase in year-over-year restaurant net sales for the year ended January 3, 2021 was driven primarily by the addition of 18 Granite City restaurants, a Clark Crew BBQ and a Real Urban BBQ restaurant.

To-go sales, which were 61.9% of our same store sales at Company-owned Famous Daves restaurants, increased 72.6% in fiscal 2020 compared to fiscal 2019. This increase in same store sales was offset by a decrease of 46.3% of our dine-in sales which made up 30.9% of our business, and a decrease of 54.6% in net catering sales which made up 7.2% of our business. This decline in dine-in and catering same store sales was due primarily to federal, state and local mandates prohibiting large group gatherings and in-store dining in an attempt to reduce the spread of COVID-19.

Restaurant-level operating margin, as a percentage of restaurant net sales, for Company-owned restaurants was 1.3% in fiscal 2020 compared to (0.1)% in fiscal 2019. This increase in restaurant-level operating margin was primarily a result of the reduction of labor and food costs as our restaurant operators adjusted to the increase in to-go sales and reduction of dine-in customers as a result of COVID-19 concerns.

General and administrative expenses for the fiscal year ended January 3, 2021 and December 29, 2019 represented approximately 11.9% and 13.2% of total revenues, respectively. The decrease in general and administrative expenses as a percentage of revenue in fiscal 2020 was due in part to the increase in the revenue base with the addition of 20 locations during 2020.

Net income attributable to shareholders was approximately $4.9 million, or $0.54 per share, in fiscal 2020 compared to net loss of $649,000, or $0.07 per share, in fiscal 2019. Adjusted EBITDA, a non-GAAP measure, was approximately $4.3 million, or $0.47 per share, compared to adjusted EBITDA of approximately $3.4 million or $0.38 per share, in fiscal 2019. A reconciliation between adjusted EBITDA and its most directly comparable GAAP measure is included in the accompanying financial tables.

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 January 3, 2021, BBQ Holdings had four brands with 145 brick and mortar locations in 31 states and three countries, including 47 company-owned and 98 franchise-operated restaurants. In addition to these locations, the Company opened seven Company-owned Famous Daves ghost kitchens operating within its Granite City locations, and seven Famous Daves franchisee ghost kitchens operating out of the kitchen of another restaurant location or a shared kitchen space. 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 Clarks 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 Companys 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 Companys 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 Companys 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 Companys 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 Companys 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 Companys SEC reports.

Contact: Jeff Crivello ? Chief Executive Officer jeff.crivello@bbq-holdings.com

BBQ HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data)(Unaudited)

Three Months Ended Year Ended January3,2021 December29,2019 January3,2021 December29,2019Revenue: Restaurant $ 31,293 $ 20,296 $ 109,544 $ 68,564 sales, netFranchiseroyalty and fee 2,291 2,566 8,919 12,126 revenueFranchiseenationaladvertising 298 341 1,124 1,616 fundcontributionsLicensing and 427 410 1,850 1,249 other revenueTotal revenue 34,309 23,613 121,437 83,555 Costs and expenses:Food and 9,661 6,473 33,867 21,541 beverage costsLabor and 10,252 7,312 37,228 24,565 benefits costsOperating 10,733 7,124 36,984 22,555 expensesDepreciationand 1,301 876 5,121 2,231 amortizationexpensesGeneral andadministrative 4,422 3,445 14,395 10,992 expensesNationaladvertising 298 341 1,124 1,616 fund expensesAssetimpairment,estimated leasetermination 869 578 5,683 1,296 charges andother closingcosts, netPre-opening 103 366 10 460 expensesGain ondisposal of (703 ) 100 (1,810 ) (74 )property, netTotal costs and 36,936 26,615 132,602 85,182 expenses Loss from (2,627 ) (3,002 ) (11,165 ) (1,627 )operations Other (expense) income :Interest (214 ) (102 ) (805 ) (494 )expenseInterest income 49 101 154 215 Gain on bargain (429 ) ? 13,246 ? purchaseTotal otherincome (594 ) (1 ) 12,595 (279 )(expense) Income (loss)before income (3,221 ) (3,003 ) 1,430 (1,906 )taxes Income tax 318 684 2,837 659 benefit Net income (2,903 ) (2,319 ) 4,267 (1,247 )(loss)Net lossattributable to 67 531 680 598 non-controllinginterestNet income(loss) $ (2,836 ) $ (1,788 ) $ 4,947 $ (649 )attributable toshareholders Income (loss)per common share:Basic netincome (loss)per share $ (0.31 ) $ (0.20 ) $ 0.54 $ (0.07 )attributable toshareholdersDiluted netincome (loss)per share $ (0.31 ) $ (0.20 ) $ 0.54 $ (0.07 )attributable toshareholdersWeightedaverage shares 9,175 9,117 9,155 9,099 outstanding-basicWeightedaverage shares 9,175 9,117 9,168 9,099 outstanding-diluted

BBQ HOLDINGS, INC. AND SUBSIDIARIESOPERATING RESULTS(unaudited)

Three Months Ended Year Ended January3,2021 December29,2019 January3,2021 December29,2019Food andbeverage costs 30.9 % 31.9 % 30.9 % 31.4 %^(1)Labor andbenefits costs 32.8 % 36.0 % 34.0 % 35.8 %^(1)Operating 34.3 % 35.1 % 33.8 % 32.9 %expenses^(1)Restaurantleveloperating 2.1 % (3.0 )% 1.3 % (0.1 )%margin^(1)(3)

Depreciationand 3.8 % 3.7 % 4.2 % 2.7 %amortizationexpenses^(2)General andadministrative 12.9 % 14.6 % 11.9 % 13.2 %expenses^(2)(Loss) incomefrom (7.7 )% (12.7 )% (9.2 )% (1.9 )%operations^(2)

(1) As a percentage of restaurant sales, net(2) As a percentage of total revenue Restaurant level margins are equal to restaurant sales, net, less(3) restaurant level food and beverage costs, labor and benefit costs, and operating expenses.

BBQ HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS (in thousands, except per share data)(unaudited)

ASSETS Current assets: January3,2021 December29, 2019Cash and cash equivalents $ 18,101 $ 5,325 Restricted cash 1,502 761 Accounts receivable, net of allowance fordoubtful accounts of $277,000 and $132,000, 4,823 4,379 respectivelyInventories 2,271 1,346 Prepaid income taxes and income taxes ? 264 receivablePrepaid expenses and other current assets 1,252 1,356 Assets held for sale 1,070 2,842 Total current assets 29,019 16,273 Property, equipment and leasehold 32,389 19,756 improvements, net Other assets: Operating lease right-of-use assets 61,634 25,962 Goodwill 601 640 Intangible assets, net 9,967 2,213 Deferred tax asset, net 4,934 6,646 Other assets 1,724 1,591 $ 140,268 $ 73,081 LIABILITIES AND SHAREHOLDERS? EQUITY Current liabilities: Accounts payable $ 6,385 $ 3,967 Current portion of lease liabilities 6,185 4,230 Current portion of long-term debt 2,111 616 Accrued compensation and benefits 2,390 2,694 Other current liabilities 9,766 4,975 Total current liabilities 26,837 16,482 Long-term liabilities: Lease liabilities, less current portion 63,105 26,957 Long-term debt, less current portion 22,169 6,258 Other liabilities 1,224 1,610 Total liabilities 113,335 51,307 Shareholders? equity: Common stock, $.01 par value, 100,000shares authorized, 9,307 and 9,272 shares 93 93 issued and outstanding at January3,2021and December29, 2019, respectivelyAdditional paid-in capital 8,748 7,856 Retained earnings 19,370 14,423 Total shareholders? equity 28,211 22,372 Non-controlling interest (1,278 ) (598 )Total equity 26,933 21,774 $ 140,268 $ 73,081

BBQ HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)(unaudited)

Year Ended January3,2021 December29,2019Cash flows from operating activities:Net income (loss) $ 4,267 $ (1,247 )Adjustments to reconcile net income(loss) to cash flows provided by operations:Depreciation and amortization 5,121 2,231 Stock-based compensation 886 463 Net gain on disposal (1,783 ) (74 )Asset impairment, estimated leasetermination charges and other 5,483 1,273 closing costs, netGain on bargain purchase (13,246 ) ? Deferred income taxes (2,837 ) (688 )Bad debts expense (recovery) 567 239 Other non-cash items 699 291 Changes in operating assets and liabilities:Accounts receivable, net (1,011 ) (1,582 )Other assets (752 ) (449 )Accounts payable 2,418 258 Accrued and other liabilities 2,276 1,867 Cash flows provided by operating 2,088 2,582 activities Cash flows from investing activities:Proceeds from the sale of assets 2,869 33 Purchases of property, equipment (3,499 ) (6,755 )and leasehold improvementsPayments for acquired restaurants (5,381 ) (6,188 )Advances on notes receivable ? (150 )Payments received on note 42 31 receivableCash flows used for investing (5,969 ) (13,029 )activities Cash flows from financing activities:Proceeds from long-term debt 22,058 4,300 Payments for debt issuance costs (45 ) (54 )Payments on long-term debt (4,621 ) (175 )Proceeds from exercise of stock 6 22 optionsCash provided by financing 17,398 4,093 activities Increase (decrease) in cash, cash 13,517 (6,354 )equivalents and restricted cashCash, cash equivalents andrestricted cash, beginning 6,086 12,440 ofperiodCash, cash equivalents and $ 19,603 $ 6,086 restricted cash, end ofperiod

BBQ HOLDINGS, INC. AND SUBSIDIARIESNON-GAAP RECONCILIATION(in thousands, except per share data)(unaudited)

Three Months Ended Year Ended(dollars in January3,2021 December29,2019 January3,2021 December29,2019thousands)Net income $ (2,903 ) $ (2,319 ) $ 4,267 $ (1,247 )Asset impairmentand estimatedleasetermination 869 578 5,683 1,296 charges andother closingcostsDepreciation and 1,301 876 5,121 2,231 amortizationInterest 165 1 651 279 expense, netNet (gain) losson disposal of (703 ) 100 (1,810 ) (74 )equipmentStock-based 517 131 939 354 compensationAcquisition (58 ) 249 (105 ) 770 costsPre-opening 103 366 10 460 costsSeverance 35 10 86 13 Gain on bargain 429 ? (13,246 ) ? purchaseProvision for (318 ) (684 ) (2,837 ) (659 )income taxesCOVID-19-related 1,945 ? 5,536 ? expenseAdjusted EBITDA $ 1,382 $ (692 ) $ 4,295 $ 3,423