CHARLOTTE, N.C., Aug. 13, 2012 (GLOBE NEWSWIRE) -- Chanticleer Holdings, Inc. (Nasdaq:HOTR) ("Chanticleer" or the "Company"), a minority owner in the privately-held parent company of the Hooters® brand, Hooters of America ("HOA"), and a franchisee of international Hooters® restaurants, announced today its financial results for the second quarter and first six months ended June 30, 2012.
Financial Highlights
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Chanticleer reported record revenue of $1.7 million for the second quarter, an increase of 54% as compared to pro forma revenue of $1.1 million for the same period in 2011.
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Chanticleer reported record revenue of $3.1 million for first six months of 2012, an increase of 23% as compared to pro forma revenue of $2.5 million for the same period in 2011.
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In aggregate, total revenue among Chanticleer's four South Africa Hooters locations grew by 22.7% on a sequential quarter-over-quarter basis.
- Chanticleer completed in June an $11,000,000 secondary public offering with a simultaneous up-listing to the NASDAQ.
Mike Pruitt, President and CEO of Chanticleer, commented, "Our most recent international Hooters restaurant which opened in February 2012 in the Emperor's Palace Casino in South Africa, which had a net cost to open of approximately $700,000, has been a tremendous success. In just the first 4 1/2 months of operation, it generated revenue of approximately $1.1 million and operating income of approximately $180,000, or 16% of revenue. With the recent successful completion of our $11 million secondary public offering, we are now positioned to continue our plan of taking the iconic Hooters restaurant brand to our exclusive international franchise territories."
Outlook:
Mr. Pruitt remarked, "We have exciting things happening in the second half of 2012 and beyond. As previously announced, our new Hooters in Budapest, Hungary will open to the public on August 27, 2012. Our planned location in Surfers Paradise, Australia is currently under construction and will open by year-end. New Hooters openings in 2012 will total four, increasing our number of international Hooters locations to seven. We will continue to focus on opening new Hooters branded restaurants in our exclusive international franchise territories and plan to have at least 12 units opened by the end of 2013. We envision Chanticleer Holdings could grow to have more than 75 Hooters locations in our current exclusive international markets."
Second Quarter 2012 Results:
For the second quarter ended June 30, 2012, total revenue increased to $1.7 million, compared to total revenue of $32,830 in the second quarter of 2011. This growth is attributable to gaining majority ownership in our first three South African restaurants on September 30, 2011, at which point we began to consolidate our South African Hooters operations, effective October 1, 2011.
Total revenue of $1.7 million during the second quarter of 2012 increased by 54% as compared to the year ago period's pro forma revenue of $1.1 million. Total revenue of $3.1 million for the 6 months ending June 30, 2012 increased by 23% over the year ago period's pro forma revenue of $2.5 million. On an unaudited basis, pro forma results of operations for the three and six months ended June 30, 2011 are results as if the Company had acquired majority ownership of the first three South African Hooters restaurants on January 1, 2011. Revenue growth was also attributable to one new restaurant opening in Cape Town South Africa in June 2011, which increased the number of operational restaurants in South Africa to three.
Q2 2012 revenue from our South African locations increased 23% sequentially over Q1 2012, primarily due to our new Hooters location in the Emperor's Palace Casino in South Africa being operational for the entire quarter. For the three and six months ended June 30, 2012, South Africa locations' EBITDA margin was 14.6% and 13.7%, respectively.
The Company reported a net loss of ($0.49) per share in Q2 2012 as compared to a net loss of ($0.18) per share in the year ago, and a pro forma loss of ($0.13) per share in Q2 2011. The increase in loss per share is attributable to an increase in general and administrative expenses, and interest expense. The increase G & A expense was due to increased consulting fees for our Brazil and Hungary territories, an increase in investor relations related fees, and a one-time non-recurring expense of approximately $112,000 attributable to our $11 million public offering. Going forward in 2012, we expect our G & A expenses to stay relatively flat and our interest expense to decrease significantly.
In June 2012, the Company successfully completed an $11 million secondary public offering, where the company received net proceeds of approximately $10.1 million before expenses. We have used a portion of this capital to pay off substantially all of our existing debt, with the substantial remainder of capital to be used to open new Hooters restaurants in South Africa, Brazil, Hungary, Australia and Europe.
Use of Non-GAAP Measures
Chanticleer Holdings, Inc. prepares its consolidated financial statements in accordance with United States generally accepted accounting principles ("GAAP"). In addition to disclosing financial results prepared in accordance with GAAP, the company discloses information regarding EBITDA, which differs from the term EBITDA as it is commonly used. In addition to adjusting net income (loss) from continuing operations to exclude taxes, interest, and depreciation and amortization, EBITDA also excludes pre-opening costs for our restaurants. EBITDA is not a measure of performance defined in accordance with GAAP. However, EBITDA is used internally in planning and evaluating the company's operating performance. Accordingly, management believes that disclosure of this metric offers investors, bankers and other stakeholders an additional view of the company's operations that, when coupled with the GAAP results, provides a more complete understanding of the company's financial results.
EBITDA should not be considered as an alternative to net loss or to net cash used in operating activities as a measure of operating results or of liquidity. It may not be comparable to similarly titled measures used by other companies, and it excludes financial information that some may consider important in evaluating the company's performance. A reconciliation of GAAP net income (loss) to EBITDA is included in the accompanying financial schedules.
About Chanticleer Holdings, Inc.
Chanticleer Holdings is focused on expanding the Hooters® casual dining restaurant brand in international emerging markets. Chanticleer currently owns all or part of the exclusive franchise rights to develop and operate Hooters restaurants in South Africa, Hungary and parts of Brazil, and has joint ventured with the current Hooters franchisee in Australia, while evaluating several additional international opportunities. The Company currently owns and operates in whole or part five Hooters restaurants in its international franchise territories: Durban, Johannesburg, Cape Town and Emperor's Palace in South Africa; and Campbelltown, Australia.
In 2011, Chanticleer and a group of noteworthy private equity investors, which included H.I.G. Capital, KarpReilly, LLC and Kelly Hall, president of Texas Wings Inc., the largest Hooters franchisee in the United States, acquired Hooters of America (HOA), a privately held company. Today, HOA is the franchisor and operator of over 430 Hooters® restaurants in 27 countries. Chanticleer maintains a minority ownership stake in HOA and its CEO, Mike Pruitt, is also a member of HOA's Board of Directors. For further information, please visit www.chanticleerholdings.com or www.hooters.com and follow us on Twitter at @ChantHoldings or @Hooters.
Safe Harbor Statement
This press release contains forward-looking statements subject to the inherent uncertainties in predicting future results and conditions. Any statements that are not statement of historical fact (including statements containing the words "believes," "plans," "anticipate," "expects," "estimates," and similar expressions) should also be considered to be forward-looking statements. Certain factors could cause actual results and conditions to differ materially from those projected in these forward-looking statements. These factors are identified from time to time in our filings with the Securities and Exchange Commission. We undertake no obligation to update such statements to reflect subsequent events. Further information on our business, including important factors which could affect actual results are discussed in the Company's filings with the SEC, including its Annual Report on Form 10-K under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."
| Chanticleer Holdings, Inc. and Subsidiaries | ||||
| Consolidated Statements of Operations | ||||
| (Unaudited) | ||||
| Three months ended June 30, | Six months ended June 30, | |||
| 2012 | 2011 | 2012 | 2011 | |
| Revenue: | ||||
| Restaurant sales, net | $1,654,829 | $-- | $3,003,816 | $-- |
| Management fee income - non-affiliates | 25,000 | 25,000 | 50,000 | 441,667 |
| Management fee income - affiliates | 6,698 | 7,830 | 6,698 | 32,476 |
| Total revenue | 1,686,527 | 32,830 | 3,060,514 | 474,143 |
| Expenses: | ||||
| Restaurant cost of sales | 606,221 | -- | 1,102,770 | -- |
| Restaurant operating expenses | 711,808 | -- | 1,327,578 | -- |
| Restaurant pre-opening expenses | 25,000 | -- | 91,120 | -- |
| General and administrative expense | 656,596 | 259,766 | 1,137,868 | 484,224 |
| Depreciation and amortization | 127,087 | 2,512 | 235,699 | 5,061 |
| Total expenses | 2,126,712 | 262,278 | 3,895,035 | 489,285 |
| Earnings (loss) from operations | (440,185) | (229,448) | (834,521) | (15,142) |
| Other income (expense) | ||||
| Equity in earnings (losses) of investments | (33,348) | 6,461 | (43,886) | 11,564 |
| Realized gains from sales of investments | -- | 361 | -- | 19,991 |
| Interest income | -- | -- | -- | 4,540 |
| Miscellaneous income | -- | -- | -- | 476 |
| Interest expense | (201,550) | (3,927) | (378,768) | (22,686) |
| Total other income (expense) | (234,898) | 2,895 | (422,654) | 13,885 |
| Net earnings (loss) before income taxes | (675,083) | (226,553) | (1,257,175) | (1,257) |
| Provision for income taxes | 47,327 | -- | 51,143 | -- |
| Net earnings (loss) before non-controlling interest | (722,410) | (226,553) | (1,308,318) | (1,257) |
| Non-controlling interest | (10,971) | 566 | 6,824 | 977 |
| Net earnings (loss) | (733,381) | (225,987) | (1,301,494) | (280) |
| Other comprehensive income (loss): | ||||
| Unrealized gain (loss) on available-for-sale securities (none applies to non-controlling interest) | (132,021) | (38,209) | (237,639) | (52,209) |
| Foreign translation income (loss) | (4,193) | -- | (5,472) | -- |
| Other comprehensive income (loss) | $ (869,595) | $ (264,196) | $ (1,544,605) | $ (52,489) |
| Net earnings (loss) per share, basic and diluted | ($0.49) | ($0.18) | ($0.52) | $0.00 |
| Weighted average shares outstanding | 1,502,418 | 1,230,487 | 2,498,882 | 1,129,124 |
| Unaudited Pro Forma Results of Operations | ||
| (As if the Company acquired majority ownership of the South African Hooters restaurants on January 1, 2011) | ||
| Three Months Ended | Six Months Ended | |
| June 30, 2011 | June 30, 2011 | |
| Net revenues | $ 1,093,134 | $ 2,492,182 |
| Net earnings (loss) | $ (163,757) | $ 107,465 |
| Net earnings (loss) per share, basic and diluted | $ (0.13) | $ 0.10 |
| Chanticleer Holdings, Inc. and Subsidiaries | ||
| Consolidated Balance Sheets | ||
| June 30, 2012 (Unaudited) and December 31, 2011 | ||
| 2012 | 2011 | |
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 3,673,005 | $ 151,928 |
| Accounts receivable | 41,667 | 103,982 |
| Inventory | 122,499 | 59,266 |
| Due from related parties | 110,676 | 76,591 |
| Prepaid expenses | 125,056 | 231,914 |
| TOTAL CURRENT ASSETS | 4,072,903 | 623,681 |
| Property and equipment, net | 3,102,917 | 2,508,823 |
| Intangible assets, net | 769,386 | 470,164 |
| Investments at fair value | 80,713 | 318,353 |
| Other investments | 2,077,176 | 1,579,677 |
| Deposits and other assets | 3,980 | 3,980 |
| TOTAL ASSETS | $ 10,107,075 | $ 5,504,678 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Current maturities of long-term debt and notes payable | $ 7,722 | $ 1,171,855 |
| Convertible notes payable | -- | 1,625,000 |
| Accounts payable | 579,282 | 267,475 |
| Accrued expenses | 13,681 | 21,521 |
| Other current liabilities | 332,340 | 496,643 |
| Income taxes payable | 62,555 | 14,608 |
| Due to related parties | 27,485 | 30,204 |
| TOTAL CURRENT LIABILITIES | 1,023,065 | 3,627,306 |
| Long-term debt, less current maturities | 231,519 | 236,109 |
| TOTAL LIABILITIES | 1,254,584 | 3,863,415 |
| Commitments and contingencies | ||
| Stockholders' equity: | ||
| Common stock: $0.0001 par value; authorized 20,000,000 and 200,000,000 shares; issued 3,955,511 shares and 1,506,061; and outstanding 3,698,896 and 1,249,446 shares at June 30, 2012 and December 31, 2011, respectively | 396 | 151 |
| Additional paid in capital | 16,509,226 | 6,459,656 |
| Other comprehensive income (loss) | (194,446) | 48,665 |
| Non-controlling interest | 398,037 | 1,692,019 |
| Accumulated deficit | (7,334,302) | (6,032,808) |
| Less treasury stock, 256,615 shares at June 30, 2012 and December 31, 2011 | (526,420) | (526,420) |
| TOTAL STOCKHOLDERS' EQUITY | 8,852,491 | 1,641,263 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 10,107,075 | $ 5,504,678 |
| Chanticleer Holdings, Inc. and Subsidiaries | ||
| Consolidated Statements of Cash Flows | ||
| For the Six Months Ended June 30, 2012 and 2011 | ||
| (Unaudited) | ||
| 2012 | 2011 | |
| Cash flows from operating activities: | ||
| Net earnings (loss) | $ (1,301,494) | $ (280) |
| Adjustments to reconcile net earnings (loss) to net cash used in operating activities: | ||
| Non-controlling interest | (6,824) | (977) |
| Depreciation and amortization | 235,699 | 5,061 |
| Bad debt expense | 12,315 | -- |
| Equity in (earnings) loss of investments | 43,886 | (11,564) |
| (Gain) loss on sale of investments | -- | (19,991) |
| Common stock issued for services | 9,406 | -- |
| Amortization of warrants | 72,063 | -- |
| (Increase) decrease in accounts receivable | 50,000 | (37,410) |
| (Increase) decrease in prepaid expenses and other assets | 170,374 | (30,482) |
| (Increase) decrease inventory | (63,233) | -- |
| Increase (decrease) in accounts payable and accrued expenses | 424,261 | 40,162 |
| Increase (decrease) in income taxes payable | 47,947 | -- |
| Increase (decrease) in deferred revenue and other liabilities | (70,802) | (1,750) |
| Advance from related parties for working capital | (63,202) | (36,805) |
| Net cash used by operating activities | (439,604) | (94,036) |
| Cash flows from investing activities: | ||
| Proceeds from sale of investments | -- | 190,325 |
| Investment distribution | -- | 6,228 |
| Purchase of investments | (933,948) | (160,471) |
| Franchise fees incurred | (312,674) | -- |
| Purchase of property and equipment | (816,341) | -- |
| Net cash provided (used) by investing activities | (2,062,963) | 36,082 |
| Cash flows from financing activities: | ||
| Proceeds for sale of common stock warrants, net | -- | 16,058 |
| Proceeds for sale of common stock, net | 7,051,464 | -- |
| Loan proceeds, debt and line of credit | 2,915,000 | -- |
| Loan repayments, debt and line of credit | (3,939,098) | -- |
| Loan repayments, bank note | (3,722) | (2,240) |
| Net cash provided by financing activities | 6,023,644 | 13,818 |
| Net increase (decrease) in cash and cash equivalents | 3,521,077 | (44,136) |
| Cash and cash equivalents, beginning of period | 151,928 | 46,007 |
| Cash and cash equivalents, end of period | $ 3,673,005 | $ 1,871 |
| RESTAURANT OPERATIONS | ||||||
| The following is a condensed unaudited statement of operations for our restaurant operations for the three and six months ended June 30, 2012, which currently consists of four Hooters locations in South Africa. | ||||||
| Three months ended June 30, 2012: | ||||||
| (1) | (2) | (3) | (4) | |||
| Durban | Johannesburg | CapeTown | Emperors Palace | Total Restaurants | ||
| $ 294,293 | $ 523,870 | $ 162,341 | $ 674,325 | $ 1,654,829 | ||
| Three months ended June 30, 2012: | 109,940 | 187,338 | 62,942 | 246,001 | 606,221 | |
| Gross Profit | 184,353 | 336,532 | 99,399 | 428,324 | 1,048,608 | |
| Recurring expenses: | ||||||
| Operating expenses | 152,689 | 266,943 | 116,715 | 258,249 | 794,596 | |
| Interest expense | 1,352 | 2,349 | 2,018 | -- | 5,719 | |
| Depreciation and amortization | 16,712 | 45,293 | 17,229 | 44,936 | 124,170 | |
| Income taxes | 2,537 | 7,078 | -- | 37,712 | 47,327 | |
| 173,290 | 321,663 | 135,962 | 340,897 | 971,812 | ||
| Net income (loss) before non-recurring expenses | 11,063 | 14,869 | (36,563) | 87,427 | 76,796 | |
| Bad debt expense | 12,092 | -- | -- | -- | 12,092 | |
| Pre-opening costs | -- | -- | -- | -- | -- | |
| Net income (loss) | $ (1,029) | $ 14,869 | $ (36,563) | $ 87,427 | 64,704 | |
| Income from management company not absorbed above | 1,901 | |||||
| Total South Africa restaurants | $ 66,605 | |||||
| Six months ended June 30, 2012: | ||||||
| (1) | (2) | (3) | (4) | |||
| Durban | Johannesburg | CapeTown | Emperors Palace | Total Restaurants | ||
| Revenues | $ 555,792 | $ 1,016,539 | $ 325,876 | $ 1,105,609 | $ 3,003,816 | |
| Cost of Sales | 207,768 | 363,357 | 127,970 | 403,675 | 1,102,770 | |
| Gross Profit | 348,024 | 653,182 | 197,906 | 701,934 | 1,901,046 | |
| Recurring expenses: | ||||||
| Operating expenses | 301,855 | 530,173 | 235,818 | 409,957 | 1,477,803 | |
| Interest expense | 2,692 | 4,764 | 4,129 | -- | 11,585 | |
| Depreciation and amortization | 33,424 | 90,586 | 34,458 | 71,542 | 230,010 | |
| Income taxes | 4,014 | 7,078 | -- | 40,051 | 51,143 | |
| 341,985 | 632,601 | 274,405 | 521,550 | 1,770,541 | ||
| Net income (loss) before non-recurring expenses | 6,039 | 20,581 | (76,499) | 180,384 | 130,505 | |
| Bad debt expense | 12,092 | -- | -- | -- | 12,092 | |
| Pre-opening costs | -- | -- | -- | 78,287 | 78,287 | |
| Net income (loss) | $ (6,053) | $ 20,581 | $ (76,499) | $ 102,097 | 40,126 | |
| Loss from management company not absorbed above | (2,793) | |||||
| Total South Africa restaurants | $ 37,333 | |||||
| (1) Durban location opened in December 2009. | ||||||
| (2) Johannesburg location opened in June 2010. | ||||||
| (3) CapeTown location opened in June 2011. | ||||||
| (4) Emperors Palace location opened mid-February 2012. | ||||||
| Reconciliation of South African operations EBITDA to net income (loss) | ||||||||||
| Unaudited | ||||||||||
| Three months ended June 30, 2012: | ||||||||||
| (1) | (2) | (3) | (4) | |||||||
| Durban | % of net revenues | Johannesburg | % of net revenues | CapeTown | % of net revenues | Emperors Palace | % of net revenues | Total Restaurants | % of net revenues | |
| EBITDA | $ 19,572 | 6.7% | $ 69,589 | 13.3% | $ (17,316) | -10.7% | $ 170,075 | 25.2% | $ 241,920 | 14.6% |
| Interest expense | (1,352) | (2,349) | (2,018) | -- | (5,719) | |||||
| Pre-opening costs | -- | -- | -- | -- | -- | |||||
| Depreciation and amortization | (16,712) | (45,293) | (17,229) | (44,936) | (124,170) | |||||
| Income taxes | (2,537) | (7,078) | -- | (37,712) | (47,327) | |||||
| Net income (loss) | $ (1,029) | -0.3% | $ 14,869 | 2.8% | $ (36,563) | -22.5% | $ 87,427 | 13.0% | $ 64,704 | 3.9% |
| Income from management company not absorbed above | 1,901 | |||||||||
| Total South Africa restaurants | $ 66,605 | 4.0% | ||||||||
| Six months ended June 30, 2012: | ||||||||||
| Durban | % of net revenues | Johannesburg | % of net revenues | CapeTown | % of net revenues | Emperors Palace | % of net revenues | Total Restaurants | % of net revenues | |
| EBITDA | $ 34,077 | 6.1% | $ 123,009 | 12.1% | $ (37,912) | -11.6% | $ 291,977 | 26.4% | $ 411,151 | 13.7% |
| Interest expense | (2,692) | (4,764) | (4,129) | -- | (11,585) | |||||
| Pre-opening costs | -- | -- | -- | (78,287) | (78,287) | |||||
| Depreciation and amortization | (33,424) | (90,586) | (34,458) | (71,542) | (230,010) | |||||
| Income taxes | (4,014) | (7,078) | -- | (40,051) | (51,143) | |||||
| Net income (loss) | $ (6,053) | -1.1% | $ 20,581 | 2.0% | $ (76,499) | -23.5% | $ 102,097 | 9.2% | $ 40,126 | 1.3% |
| Loss from management company not absorbed above | (2,793) | |||||||||
| $ 37,333 | 1.2% | |||||||||
| (1) Durban location opened in December 2009. | ||||||||||
| (2) Johannesburg location opened in June 2010. | ||||||||||
| (3) CapeTown location opened in June 2011. | ||||||||||
| (4) Emperors Palace location opened mid-February 2012. | ||||||||||