GlobeNewswire Inc | Aug 16, 2021 09:00AM EDT

August 16, 2021

MINNEAPOLIS, Aug. 16, 2021 (GLOBE NEWSWIRE) -- BBQ Holdings, Inc. (NASDAQ: BBQ) (the Company), an innovating global owner and operator of restaurants, today reported financial results for the second fiscal quarter ended July 4, 2021.

Second Quarter 2021 Highlights:

Financial:

-- Net income of $15.8mm, which includes loan forgiveness of $14.1mm. -- Adjusted EBITDA, a non-GAAP measure, was $5.1mm vs. a loss of $1.1mm second quarter 2020. -- Combined brands restaurant level margins of 12.7% vs 0.4% last year.

Growth:

-- Purchased Village Inn, 114 franchise and 21 corporate restaurants, and 12 Bakers Square corporate restaurants. -- Purchased 4 Famous Daves franchise restaurants in Nashville and Kentucky. -- Famous Daves franchisee opened its first line-serve restaurant in Las Vegas, NV in August 2021.

Sales:

-- Company-owned Famous Daves 2021 second quarter SSS increased 35.2% compared to second quarter of 2020. -- Company-owned Famous Daves 2021 second quarter SSS increased 14.5% compared to second quarter of 2019. -- Franchise-operated Famous Daves SSS increased 42.7% in the second quarter 2021 compared to second quarter 2020. -- Franchise-operated Famous Daves SSS increased 4.4% in the second quarter 2021 compared to second quarter 2019.

-- Granite City second quarter SSS increased 138.6% compared to second quarter 2020. -- Granite City second quarter SSS decreased 10.4% compared to second quarter 2019.

Updated 2021 Guidance:

Based on the results to date through the second quarter 2021, and including the uncertainty related to COVID-19, the Company has updated its 2021 guidance as follows:

-- Net Revenue from $180 - $185mm to $183 - $188mm -- Net Income from $5.1 - $5.5mm to $20.6 - $21.0mm -- Cash EBITDA from $13.5 - $14mm to $14.5 - $15mm

Executive Comments

Jeff Crivello, CEO, commented, This quarter was marked by some momentous events that have positioned the Company for tremendous growth. Without question we saw our team execute at a high level to drive our four growth initiatives; operational improvements, organic new units, filling the latent capacity of our current restaurants, and accretive M&A. With the recently completed acquisition of Village Inn and Bakers Square, we look forward to working collaboratively to improve, reinvigorate, and leverage our infrastructure as a launch pad for growth. Our ability to drive cash flow throughout the year has been a huge step towards building a very strong balance sheet.

Key Operating Metrics

Three Months Ended Six Months Ended July4,2021 June28,2020 July4,2021 June28,2020Restaurant count: Franchise-operated 100 95 100 95 Company-owned 47 50 47 50 Total 147 145 147 145 Same store netrestaurant sales %:Franchise-operated 42.7 % (31.5 )% 29.6 % (22.7 )%Company-owned 65.6 % (22.9 )% 45.5 % (11.5 )%Total 51.0 % (30.0 )% 34.7 % (20.6 )% (in thousands,expect per share data) System-widerestaurant sales^ $ 104,531 $ 88,315 $ 138,134 $ 109,018 (1) Net incomeattributable to $ 15,786 $ (6,252 ) $ 16,585 $ 7,455 shareholders Net (loss) incomeattributable to $ 1.64 $ (0.68 ) $ 1.73 $ 0.82 shareholders, perdiluted share Adjusted EBITDA^ $ 5,104 $ (1,070 ) $ 8,224 $ (1,527 )(2)

_______________(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 Companys consolidated financial statements.(2)Adjusted EBITDA is a 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.

Second Quarter 2021 Review

Total revenue for the second quarter of 2021 was $45.5 million, up 64.0% from the second quarter of 2020. The increase in year-over-year restaurant net sales for the quarter ended July 4, 2021 was driven primarily by the easing of dining restrictions in the second quarter of 2021.

To-go sales, which were 49.1% of our same store sales at Company-owned Famous Daves restaurants, decreased 16.4% in the second quarter of fiscal 2021 compared to the prior year period. This decrease in same store sales was more than offset by an increase of 240.9% and 205.4% of our dine-in and catering sales, respectively. The increase in dine-in sales was due to our dining rooms being open in the second quarter of 2021 and the easing of restrictions on group gathering contributed to our increase in catering sales. In the second quarter of 2021, dine-in same store sales at our Granite City restaurants increased 197.8% over the second quarter of 2020 due to the opening of our dining rooms.

Restaurant-level operating margin, as a percentage of restaurant net sales, for Company-owned restaurants was 12.7% in the second quarter of fiscal 2021 compared to 0.4% in the second quarter of fiscal 2020. 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 because of COVID-19 concerns. General and administrative expenses for the quarter ended July 4, 2021 and June 28, 2020 represented approximately 9.6% and 13.7% of total revenues, respectively. The decrease in general and administrative expenses as a percentage of revenue in the second quarter of 2021 was due primarily to the increase in the revenue base with the easing of COVID-19 government-mandated restrictions which were in place during the second quarter of 2020.

Net income attributable to shareholders was approximately $15.8 million, or $1.70 per share, in the second quarter of fiscal 2021 compared to net loss of $6.3 million, or $0.68 per share, in the second quarter of fiscal 2020. Of the $15.8 million of net income, $14.1 million was related to the gain on the forgiveness of our PPP loans. Adjusted EBITDA, a non-GAAP measure, was approximately $5.1 million, or $0.55 per share, compared to adjusted EBITDA of approximately $(1.1) or $(0.12) per share, in the second quarter of fiscal 2020. 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) is a national restaurant company engaged in the ownership and operation of casual and fast dining restaurants. As of August 13, 2021, BBQ Holdings had six brands with 299 locations in three countries including 85 Company owned locations and 214 franchised locations. In addition to these locations, the Company opened eight Company-owned Famous Daves ghost kitchens operating within its Granite City locations, and 17 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. Village Inn and Bakers Square are the most recent additions to the company and add alegendary Family Dining element to BBQ Holdings.

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 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, COVID-19-related expense 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 SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data)(Unaudited)

Three Months Ended Six Months Ended July4,2021 June28,2020 July4,2021 June28,2020Revenue: Restaurant $ 41,205 $ 24,989 $ 74,808 $ 45,692 sales, netFranchiseroyalty and fee 2,946 1,951 5,320 4,475 revenueFranchiseenational 421 242 749 524 advertising fundcontributionsLicensing and 948 580 1,962 926 other revenueTotal revenue 45,520 27,762 82,839 51,617 Costs and expenses:Food and 11,932 7,717 21,989 14,471 beverage costsLabor and 12,429 8,066 22,683 15,787 benefits costsOperating 11,594 9,104 21,843 15,730 expensesDepreciation andamortization 1,433 1,378 2,985 2,423 expensesGeneral andadministrative 4,544 3,803 8,582 6,835 expensesNationaladvertising fund 421 242 749 524 expensesAssetimpairment,estimated leasetermination 25 4,779 37 4,952 charges andother closingcosts, netPre-opening 92 2 120 27 expensesGain on disposal 143 (100 ) 135 (577 )of property, netTotal costs and 42,613 34,991 79,123 60,172 expenses Income (loss) 2,907 (7,229 ) 3,716 (8,555 )from operations Other income (expense):Interest expense (261 ) (237 ) (315 ) (356 )Interest income 74 59 98 102 Gain upon debt 14,109 ? 14,109 ? extinguishmentGain on bargain ? (689 ) ? 13,675 purchaseTotal otherincome (expense) 13,922 (867 ) 13,892 13,421 income Income (loss)before income 16,829 (8,096 ) 17,608 4,866 taxes Income tax(expense) (399 ) 1,897 (481 ) 2,246 benefit Net income 16,430 (6,199 ) 17,127 7,112 (loss)Net (income)lossattributable to (644 ) (53 ) (542 ) 343 non-controllinginterestNet income(loss) $ 15,786 $ (6,252 ) $ 16,585 $ 7,455 attributable toshareholders Income (loss)per common share:Basic net income(loss) per share $ 1.70 $ (0.68 ) $ 1.79 $ 0.82 attributable toshareholdersDiluted netincome (loss)per share $ 1.64 $ (0.68 ) $ 1.73 $ 0.82 attributable toshareholdersWeighted averageshares 9,304 9,138 9,256 9,132 outstanding-basicWeighted averageshares 9,615 9,138 9,567 9,132 outstanding-diluted

BBQ HOLDINGS, INC. AND SUBSIDIARIESOPERATING RESULTS(unaudited)

Three Months Ended Six Months Ended July4,2021 June28,2020 July4,2021 June28,2020Food andbeverage costs 29.0 % 30.9 % 29.4 % 31.7 %^(1)Labor andbenefits costs 30.2 % 32.3 % 30.3 % 34.6 %^(1)Operating 28.1 % 36.4 % 29.2 % 34.4 %expenses^(1)Restaurantleveloperating 12.7 % 0.4 % 11.1 % (0.6 )%margin^(1)(2)

Depreciationand 3.1 % 5.0 % 3.6 % 4.7 %amortizationexpenses^(3)General andadministrative 10.0 % 13.7 % 10.4 % 13.2 %expenses^(3)Income (loss)from 6.4 % (26.0 )% 4.5 % (16.6 )%operations^(3)

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

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

ASSETS Current assets: July4,2021 January3, 2021Cash and cash equivalents $ 38,358 $ 18,101 Restricted cash 824 1,502 Accounts receivable, net of allowance fordoubtful accounts of $259,000 and $132,000, 4,966 4,823 respectivelyInventories 2,433 2,271 Prepaid expenses and other current assets 2,881 1,252 Assets held for sale 1,024 1,070 Total current assets 50,486 29,019 Property, equipment and leasehold improvements, 31,112 32,389 net Other assets: Operating lease right-of-use assets 60,787 61,634 Goodwill 601 601 Intangible assets, net 9,733 9,967 Deferred tax asset, net 4,623 4,934 Other assets 1,660 1,724 $ 159,002 $ 140,268 LIABILITIES AND SHAREHOLDERS? EQUITY Current liabilities: Accounts payable $ 7,050 $ 6,385 Current portion of lease liabilities 6,844 6,185 Current portion of long-term debt 2,165 2,111 Accrued compensation and benefits 6,313 2,390 Other current liabilities 8,814 9,766 Total current liabilities 31,186 26,837 Long-term liabilities: Lease liabilities, less current portion 61,839 63,105 Long-term debt, less current portion 7,131 22,169 Other liabilities 1,376 1,224 Total liabilities 101,532 113,335 Shareholders? equity: Common stock, $.01 par value, 100,000 sharesauthorized, 10,357 and 9,307 shares issued and 104 93 outstanding at July4,2021 and January3, 2021,respectivelyAdditional paid-in capital 22,147 8,748 Retained earnings 35,955 19,370 Total shareholders? equity 58,206 28,211 Non-controlling interest (736 ) (1,278 )Total equity 57,470 26,933 $ 159,002 $ 140,268

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

Six Months Ended July4,2021 June28,2020Cash flows from operating activities: Net income $ 17,127 $ 7,112 Adjustments to reconcile net income to cash flows provided by operations:Depreciation and amortization 2,985 2,423 Stock-based compensation 638 248 Net gain on disposal 135 (577 )Asset impairment, estimated lease termination ? 4,710 charges and other closing costs, netGain on forgiveness of debt (14,109 ) ? Gain on bargain purchase ? (13,675 )Deferred income taxes 481 (2,295 )Other non-cash items 168 547 Changes in operating assets and liabilities: Accounts receivable, net (188 ) (240 )Prepaid expenses and other current assets (2,479 ) (1,991 )Accounts payable 665 2,292 Accrued and other liabilities 3,461 964 Cash flows provided by (used for) operating 8,884 (482 )activities Cash flows from investing activities: Purchases of property, equipment and leasehold (1,114 ) (2,000 )improvementsPayments for acquired restaurants ? (4,952 )Transfer from HFS 46 ? Payments received on note receivable 23 12 Cash flows provided by (used for) investing (1,045 ) (6,940 )activities Cash flows from financing activities: Proceeds from long-term debt ? 22,058 Payments for debt issuance costs 10 (45 )Payments on long-term debt (1,042 ) ? Proceeds from sale of common stock, net of 12,462 ? offering costsProceeds from exercise of stock options 310 ? Cash (used for) provided by financing 11,740 22,013 activities Increase in cash, cash equivalents and 19,579 14,591 restricted cashCash, cash equivalents and restricted cash, 19,603 6,086 beginning ofperiodCash, cash equivalents and restricted cash, end $ 39,182 $ 20,677 ofperiod

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

Three Months Ended Six Months Ended(dollars in July4,2021 June28,2020 July4,2021 June28,2020thousands)Net income $ 16,430 $ (6,199 ) $ 17,127 $ 7,112 Asset impairmentand estimated leasetermination charges 25 4,779 37 4,952 and other closingcostsDepreciation and 1,433 1,378 2,985 2,423 amortizationInterest expense, 187 178 217 254 netNet (gain) loss ondisposal of 143 (100 ) 135 (577 )equipmentStock-based 320 131 638 137 compensationAcquisition costs 184 249 184 (62 )Pre-opening costs 92 2 120 27 Severance ? 10 ? 28 Gain on debt (14,109 ) ? (14,109 ) ? forgivenessGain on bargain ? (689 ) ? (13,675 )purchaseProvision for 399 (1,897 ) 481 (2,246 )income taxesCOVID-19-related ? ? 409 ? expense (1)Adjusted EBITDA $ 5,104 $ (2,158 ) $ 8,224 $ (1,627 )

(1) COVID-19 expenses consisted primarily of cleaning and sanitation supplies, payments to employees for unemployment related costs, inventory waste, rent and rent-related costs for limited-operations restaurants from the day that the restaurant dining room partially or fully closed.

Cash EBITDA Guidance Range(dollars in thousands) FY 2021 FY 2021Net income $ 20,592 $ 20,971 Asset Impairment 35 35 Depreciation and amortization 5,591 5,684 Interest expense, net 200 204 Net (gain) loss on disposal 124 127 Stock-based compensation 1,096 1,117 Acquisition costs 169 172 Pre-opening costs 110 113 Severance 5 5 Gain upon debt extinguishment (14,109 ) (14,109 )Provision for income tax 441 450 Non-cash rent 240 245 Cash EBITDA $ 14,494 $ 15,013

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