PR Newswire | May 6, 2021 08:31AM EDT

05/06 07:30 CDT

RAVE Restaurant Group, Inc. Reports Third Quarter Financial Results DALLAS, May 6, 2021

DALLAS, May 6, 2021 /PRNewswire/ -- RAVE Restaurant Group, Inc. (NASDAQ: RAVE) today reported financial results for the third quarter ended March 28, 2021.

ThirdQuarter Highlights:

* The Company recorded net income of $0.4 million for the third quarter of fiscal 2021 compared to a net loss of $4.5 million for the same period of the prior year. * Total revenue decreased by $0.5 million to $2.2 million for the third quarter of fiscal 2021 compared to the same period of the prior year. * Income before taxes was $0.4 million for the third quarter of fiscal 2021 compared to a net loss before taxes of $0.5 million for the same period of the prior year. * Pizza Inn domestic comparable store retail sales decreased 3% in the third quarter of fiscal 2021 compared to the same period of the prior year. * Pie Five comparable store retail sales remained relatively stable in the third quarter of fiscal 2021 compared to the same period of the prior year. * On a fully diluted basis, net income increased $0.32 per share to $0.02 per share for the third quarter of fiscal 2021 compared to a net loss of $0.30 per share for the same period of the prior year. * Cash and cash equivalents increased $0.2 million during the third quarter of fiscal 2021 to $6.5 million at March 28, 2021. * Pizza Inn domestic unit count finished at 137. * Pizza Inn international unit count finished at 33. * Pie Five domestic unit count finished at 35.

"We are pleased that the heroic efforts of our management, franchisees, and team members have resulted in another profitable quarter amidst a pandemic and significant government restrictions," said Brandon Solano, Chief Executive Officer of RAVE Restaurant Group, Inc. "While we are pleased with this quarter's results, much work remains. We intend to continue our focus on innovation, operations consistency, technology upgrades, and cost controls to drive value and consistency for our customers and shareholders and position RAVE, Pizza Inn, and Pie Five for long term success."

"RAVE's Q3 net income of $0.4 M marks the fourth consecutive quarter of net income and shows sequential improvement each quarter, in a pandemic, while running a buffet brand," said Solano. We hold significant cash, have limited leverage, and have resolved our NASDAQ listing deficiencies. We have a strong team, a sound strategy, and gritty franchisees committed to winning."

"In Q3, Pizza Inn launched garlic-buttery crust system wide," Solano said. "Based on our research, this is a big consumer idea that holds significant opportunity. We also believe the value and variety of the Pizza Inn Buffet can capitalize on pent-up consumer demand for real, authentic, in-person, dining experiences with families and friends. We have another buffet innovation we've been holding for this moment that we expect to launch this month. Lastly, in Q3 we selected Pepsi Cola as Pizza Inn's exclusive soft drink supplier and will be transitioning from Coke in the coming months. Our franchisees and customers are excited to dine out with their families and be refreshed with Pepsi, Dr. Pepper, Cheerwine, and Mountain Dew, among others."

"At Pie Five we completed the roll out of our Panzano Pan pizza and new pricing strategy during the most recent quarter," said Solano. "This month we expect to introduce a differentiated pizza innovation with strong freshness/better-for-you cues, becoming the first among major fast-casual pizza brands to do so. We have partnered with a well-known brand in a growing segment of the food service industry for this upcoming launch."

"Our third quarter results represent the fourth consecutive quarter of profitability for RAVE despite the challenges presented by the pandemic," said Clint Fendley, Vice President of Finance of RAVE Restaurant Group, Inc. "Our team is poised and ready to deliver innovative menu items aimed at driving traffic and revenue growth for our franchisees as we remain optimistic for an improving environment for the restaurant 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, stock compensation expense, severance, gain/loss sale of assets, costs related to impairment and other lease charges, franchise default and closed store revenue/expense, and 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 205 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)(Unaudited)

Three Months Ended Nine Months Ended

March 28, March 29, March 28, March 29,

2021 2020 2021 2020

REVENUES: $ 2,183 $ 2,705 $ 6,214 $ 8,411

COSTS AND EXPENSES:

Cost of sales 76 104 229 353

General and administrative expenses 1,250 1,655 3,524 4,583

Franchise expenses 629 860 1,782 2,564

(Gain) loss on sale of assets (156) 18 (156) 7

Impairment of long-lived assets and - 495 21 836other lease charges

Bad debt expense (recovery) (97) 11 18 39

Interest expense 23 24 69 75

Depreciation and amortization expense 41 45 128 141

Total costs and expenses 1,766 3,212 5,615 8,598

INCOME (LOSS) BEFORE TAXES 417 (507) 599 (187)

Income tax expense 1 4,008 5 4,077

NET INCOME (LOSS) 416 (4,515) 594 (4,264)

INCOME (LOSS) PER SHARE OF COMMON $ 0.02 $ (0.30) $ 0.03 $ (0.28)STOCK - BASIC:

INCOME (LOSS) PER SHARE OF COMMON $ 0.02 $ (0.30) $ 0.03 $ (0.28)STOCK - DILUTED:

Weighted average common shares 17,991 15,133 17,061 15,123outstanding - basic

Weighted average common and potential 18,789 15,133 17,859 15,123dilutive common shares outstanding

RAVE RESTAURANT GROUP, INC.CONSOLIDATED BALANCE SHEETS(In thousands, except share amounts)(Unaudited)

March 28, 2021 June 28, 2020

ASSETS

CURRENT ASSETS

Cash and cash equivalents $ 6,487 $ 2,969

Restricted cash - 234

Accounts receivable, less allowance for bad 1,192 965debts of $64 and $269, respectively

Notes receivable, current 1,040 546

Deferred contract charges, current 34 44

Prepaid expenses and other 231 174

Total current assets 8,984 4,932

LONG-TERM ASSETS

Property, plant and equipment, net 295 366

Operating lease right of use asset, net 2,772 3,567

Intangible assets definite-lived, net 127 155

Notes receivable, net of current portion 60 449

Deferred contract charges, net of current portion 218 231

Deposits and other - 5

Total assets $ 12,456 $ 9,705

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable - trade $ 445 $ 446

Accounts payable - lease termination impairments - 407

Accrued expenses 976 775

Operating lease liability, current 586 632

Deferred revenues, current 169 254

Total current liabilities 2,176 2,514

LONG-TERM LIABILITIES

Convertible notes 1,569 1,549

PPP loan 657 657

Operating lease liability, net of current portion 2,532 3,471

Deferred revenues, net of current portion 756 960

Other long-term liabilities - 51

Total liabilities 7,690 9,202

SHAREHOLDERS' EQUITY

Common stock, $.01 par value; authorized26,000,000 shares; issued 25,090,058 and 251 22522,550,376 shares, respectively; outstanding18,004,904 and 15,465,222 shares, respectively

Additional paid-in capital 37,174 33,531

Accumulated deficit (8,122) (8,716)

Treasury stock at cost

Shares in treasury: 7,085,154 and 7,085,154, (24,537) (24,537)respectively

Total shareholders' equity 4,766 503

Total liabilities and shareholders' equity $ 12,456 $ 9,705

RAVE RESTAURANT GROUP, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited)

Nine Months Ended

March 28, 2021 March 29, 2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) $ 594 $ (4,264)

Adjustments to reconcile net income (loss) tocash used in operating activities:

Impairment of long-lived assets and other lease 21 836charges

Stock compensation expense 39 (104)

Depreciation and amortization 128 141

Amortization of operating right of use assets 435 (396)

Amortization of debt issue costs 20 22

(Gain) loss on the sale of assets (156) 7

Provision for bad debt 18 39

Deferred income tax - 4,060

Changes in operating assets and liabilities:

Accounts receivable (245) (62)

Notes receivable (144) 14

Deferred contract charges 23 (6)

Inventories - 7

Prepaid expenses and other (57) (74)

Deposits and other 5 -

Accounts payable - trade (1) (101)

Accounts payable - lease termination impairments (428) (972)

Accrued expenses 201 346

Operating lease liability (470) 380

Deferred revenue (289) (655)

Other long-term liabilities (51) (21)

Cash used in operating activities (357) (803)

CASH FLOWS FROM INVESTING ACTIVITIES:

Payments received on notes receivable from fixed 40 117asset sales

Purchase of property, plant and equipment (29) (53)

Cash provided by investing activities 11 64

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from sale of stock 3,761 14

Equity issuance costs - ATM offering (131) (4)

Cash provided by financing activities 3,630 10

Net increase/(decrease) in cash, cash 3,284 (729)equivalents and restricted cash

Cash, cash equivalents and restricted cash, 3,203 2,264beginning of period

Cash, cash equivalents and restricted cash, end $ 6,487 $ 1,535of period

SUPPLEMENTAL DISCLOSURES OF CASH FLOWINFORMATION

CASH PAID FOR:

Interest $ 64 $ 66

Income taxes $ 16 $ 18

Non-cash activities:

Conversion of notes to common shares $ - $ 64

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

Operating lease liability at adoption $ - $ 3,875

RAVE RESTAURANT GROUP, INC.ADJUSTED EBITDA(In thousands)(Unaudited)

Three Months Ended Nine Months Ended

March 28, March 29, March 28, March 29,

2021 2020 2021 2020

Net income (loss) $ 416 $ (4,515) $ 594 $ (4,264)

Interest expense 23 24 69 75

Income taxes 1 4,008 5 4,077

Depreciation and amortization 41 45 128 141

EBITDA $ 481 $ (438) $ 796 $ 29

Stock compensation expense (income) 39 (19) 39 (104)

Severance - 38 - 157

(Gain) loss on sale of assets (156) 18 (156) 7

Impairment of long-lived assets and - 495 21 836other lease charges

Franchisee default and closed store (43) (133) (154) (587)revenue

Closed and non-operating store costs 76 45 234 50

Adjusted EBITDA $ 397 $ 6 $ 780 $ 388

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SOURCE RAVE Restaurant Group, Inc.