UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8‑K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 13, 2019
Rave Restaurant Group, Inc.
(Exact name of registrant as specified in its charter)
|
Missouri
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0-12919
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45-3189287
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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3551 Plano Parkway, The Colony, Texas
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75056
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|
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code: (469) 384-5000
Rave Restaurant Group, Inc.
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, $0.01 par value
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RAVE
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Nasdaq Capital Market
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
| ☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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| ☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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| ☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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| ☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934
(§240.12b-2 of this chapter). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to
Section 13(a) of the Exchange Act. ☐
| Item 2.02 |
Results of Operations and Financial Condition
|
On November 13, 2019 Rave Restaurant Group, Inc. issued a press release discussing financial results of its first fiscal quarter ended September 29, 2019, a copy of which is attached as Exhibit
99.1 hereto.
| Item 9.01 |
Financial Statements and Exhibits
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(d)
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Exhibits.
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| 99.1 |
Rave Restaurant Group, Inc. press release dated November 13, 2019.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Rave Restaurant Group, Inc.
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||
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Date: November 13, 2019
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By:
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/s/ BRANDON L. SOLANO
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Brandon L. Solano
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Chief Executive Officer
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(Principal Executive Officer)
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Exhibit 99.1
 |
 |
 |
 |
November 13, 2019
RAVE Restaurant Group, Inc. Reports First Quarter
2020 Financial Results
Dallas, Texas – RAVE Restaurant Group, Inc. (NASDAQ: RAVE) today reported financial results for the first quarter of fiscal 2020 ended
September 29, 2019.
First Quarter Highlights:
| • |
Pizza Inn domestic comparable store retail sales increased 3.1% in the first quarter of fiscal 2020 compared to the same period of the prior year.
|
| • |
Pie Five comparable store retail sales decreased 12.2% in the first quarter of fiscal 2020 compared to the same period of the prior year.
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| • |
The Company recorded net income of $0.2 million for the first quarter of fiscal 2020 compared to net income of $0.1 million for the same period of the prior year.
|
| • |
On a fully diluted basis, net income remained stable at $0.01 per share for both the first quarter of fiscal 2020 and the same period of the prior year.
|
| • |
Adjusted EBITDA of $0.4 million for the first quarter of fiscal 2020 decreased $0.1 million from the same period of the prior year.
|
| • |
Cash and cash equivalents increased to $2.4 million as of the end of the first quarter of fiscal 2020, a $0.2 million increase during the quarter.
|
| • |
Pizza Inn domestic unit count including PIE finished at 152.
|
| • |
Pizza Inn international unit count finished at 34.
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| • |
Pie Five domestic unit count finished at 56.
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RAVE Restaurant Group, Inc. (NASDAQ: RAVE) today announced results for its first quarter of fiscal 2020 ended September 29, 2019.
The Company’s net income of $0.2 million in the first quarter of fiscal 2020 was an increase of $0.1 million compared to the same period of the prior year. Diluted income per share was $0.01 in both the first quarter of
fiscal 2020 and the same period of the prior year. The increase in net income in the first quarter of fiscal 2020 over the prior year was largely due to improvements in the Pizza Inn Franchising segment and reduced general and administrative expense.
EBITDA of $0.4 million for the first quarter of fiscal 2020 was a $0.1 million increase from the same period of the prior year.
|
|
|
|
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Adjusted EBITDA of $0.4 million for the first quarter of fiscal 2020 was a $0.1 million decrease from the same period of the prior year.
“I’m excited to join RAVE and committed to competing hard to drive traffic and increase profitability,” said Brandon Solano, Chief Executive Officer of RAVE Restaurant Group, Inc. “Pizza Inn continues to grow comp sales
and we plan to build on that momentum in the coming quarters. Pie Five has experienced challenges, but we’re facing them head on. Pie Five has a strong core offering and we are working on a plan to increase consumer relevance, profitable traffic and
unit economics.”
First Quarter Fiscal 2020 Operating Results
Pizza Inn domestic comparable store retail sales increased by 3.1% during the first quarter of fiscal 2020 compared to the same period of the prior year.
“We continue to be pleased with performance at Pizza Inn but also see opportunities for progress with new technologies and our brand refresh initiative,” said Solano. “With the ability to make more data-driven decisions, we will be in a
strengthened position to drive profitable traffic. We are also aligning with franchisees to continue our remodel program that will refresh existing locations and improve the in-restaurant experience. We want to position Pizza Inn as an updated brand
and drive home why we believe it offers a compelling consumer proposition.”
Pie Five domestic comparable store retail sales decreased by 12.2% during the first quarter of fiscal 2020 compared to the same period of the prior year.
“Pie Five was a pioneer in the fast casual pizza space, and it’s time to reclaim our leadership role,” said Solano. “By reconnecting with consumers and tightly defining the key differentiators of the brand, we’re going
to regain traction and turn the brand around. Our focus will be on creating a more craveable menu paired with an elevated guest experience that makes good on our brand promise.”
Consolidated revenues for the first quarter of fiscal 2020 were $2.9 million compared to $3.0 million in the same period of the prior year.
Development Review
During the first quarter of fiscal 2020, Pizza Inn, including PIE, opened two new domestic units and closed five units to finish the quarter at 152 units.
|
|
|
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In the first quarter of fiscal 2020, Pie Five closed two domestic units, bringing the domestic unit count to 56 restaurants at the end of the quarter.
“Pie Five recently announced our first location with KidZania, an interactive education and entertainment center for kids, that we feel aligns perfectly with our brand and our vision for growth,” said Solano. “At
KidZania, our youngest consumers will get a hands-on experience making pizzas and trying out a career as a pizza mogul. We’re looking forward to kicking off this partnership this month. As we return the Pie Five brand to category leadership, we have
an opportunity to transform the brand and restore growth through non-traditional restaurant opportunities like this.”
Conference Call
A conference call and audio webcast have been scheduled to discuss these results. Details of the conference call are as follows:
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Date:
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Wednesday, November 13, 2019
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Time:
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4:30 p.m. Central Standard Time
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Dial-In #:
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1-844-492-3725 U.S. & Canada
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1-412-317-5108 International
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The conference call will be webcast at raverg.com. A web-based archive of the conference call will also be available at the above website.
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Founded in 1958, Dallas-based RAVE Restaurant Group [NASDAQ: RAVE] owns, operates, franchises and/or licenses 242 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 fast-casual pizza space offering made-to-order pizzas ready in under five minutes. 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.
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, pre-opening expense, gain/loss sale of assets,
costs related to impairment, discontinued operations 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.
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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.
Contact:
Investor Relations
RAVE Restaurant Group, Inc.
469-384-5000
RAVE RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
|
Three Months Ended
|
||||||||
|
September 29,
2019
|
September 23,
2018
|
|||||||
|
REVENUES:
|
$
|
2,876
|
$
|
2,991
|
||||
|
COSTS AND EXPENSES:
|
||||||||
|
Cost of sales
|
134
|
159
|
||||||
|
General and administrative expenses
|
1,363
|
1,414
|
||||||
|
Franchise expenses
|
866
|
1,061
|
||||||
|
Gain on sale of assets
|
(11
|
)
|
(4
|
)
|
||||
|
Impairment of long-lived assets and other lease charges
|
148
|
15
|
||||||
|
Bad debt
|
(8
|
)
|
24
|
|||||
|
Interest expense
|
27
|
25
|
||||||
|
Depreciation and amortization expense
|
47
|
139
|
||||||
|
Total costs and expenses
|
2,566
|
2,833
|
||||||
|
INCOME BEFORE TAXES
|
310
|
158
|
||||||
|
Income tax expense
|
73
|
50
|
||||||
|
NET INCOME
|
$
|
237
|
$
|
108
|
||||
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INCOME PER SHARE OF COMMON STOCK - BASIC:
|
$
|
0.02
|
$
|
0.01
|
||||
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INCOME PER SHARE OF COMMON STOCK - DILUTED:
|
$
|
0.01
|
$
|
0.01
|
||||
|
Weighted average common shares outstanding - basic
|
15,106
|
15,064
|
||||||
|
Weighted average common and potential dilutive common shares outstanding
|
15,924
|
15,897
|
||||||
See Notes to Unaudited Condensed Consolidated Financial Statements within Form 10-Q.
RAVE RESTAURANT GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
|
(Unaudited)
|
||||||||
|
September 29,
2019
|
June 30,
2019
|
|||||||
|
ASSETS
|
||||||||
|
CURRENT ASSETS
|
||||||||
|
Cash and cash equivalents
|
$
|
2,421
|
$
|
2,264
|
||||
|
Accounts receivable, less allowance for bad debts of $203 and $209, respectively
|
927
|
1,191
|
||||||
|
Notes receivable, less allowance for bad debt of $916 and $916, respectively
|
596
|
389
|
||||||
|
Inventories
|
6
|
7
|
||||||
|
Income tax receivable
|
4
|
4
|
||||||
|
Property held for sale
|
231
|
231
|
||||||
|
Deferred contract charges
|
267
|
38
|
||||||
|
Prepaid expenses and other
|
300
|
346
|
||||||
|
Total current assets
|
4,752
|
4,470
|
||||||
|
LONG-TERM ASSETS
|
||||||||
|
Property, plant and equipment, net
|
482
|
500
|
||||||
|
Operating lease right of use asset, net
|
3,313
|
-
|
||||||
|
Intangible assets definite-lived, net
|
184
|
196
|
||||||
|
Long-term notes receivable
|
484
|
735
|
||||||
|
Deferred tax asset, net
|
3,989
|
4,060
|
||||||
|
Long-term deferred contract charges
|
-
|
232
|
||||||
|
Deposits and other
|
234
|
233
|
||||||
|
Total assets
|
$
|
13,438
|
$
|
10,426
|
||||
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
|
CURRENT LIABILITIES
|
||||||||
|
Accounts payable - trade
|
$
|
290
|
$
|
400
|
||||
|
Accounts payable - lease termination impairments
|
607
|
832
|
||||||
|
Accrued expenses
|
762
|
834
|
||||||
|
Deferred rent
|
-
|
37
|
||||||
|
Operating lease liability, current
|
531
|
-
|
||||||
|
Deferred revenues
|
266
|
275
|
||||||
|
Total current liabilities
|
2,456
|
2,378
|
||||||
|
LONG-TERM LIABILITIES
|
||||||||
|
Convertible notes
|
1,529
|
1,584
|
||||||
|
Deferred rent, net of current portion
|
-
|
397
|
||||||
|
Operating lease liability, net of current portion
|
3,224
|
-
|
||||||
|
Deferred revenues, net of current portion
|
1,445
|
1,561
|
||||||
|
Other long-term liabilities
|
51
|
72
|
||||||
|
Total liabilities
|
8,705
|
5,992
|
||||||
|
COMMITMENTS AND CONTINGENCIES (SEE NOTE 4)
|
||||||||
|
SHAREHOLDERS' EQUITY
|
||||||||
|
Common stock, $.01 par value; authorized 26,000,000 shares; issued 22,208,141 and 22,208,141 shares, respectively; outstanding 15,122,887 and 15,090,837 shares,
respectively
|
222
|
222
|
||||||
|
Additional paid-in capital
|
33,294
|
33,327
|
||||||
|
Accumulated deficit
|
(4,246
|
)
|
(4,483
|
)
|
||||
|
Treasury stock at cost
|
||||||||
|
Shares in treasury: 7,085,254 and 7,117,304, respectively
|
(24,537
|
)
|
(24,632
|
)
|
||||
|
Total shareholders' equity
|
4,733
|
4,434
|
||||||
|
Total liabilities and shareholders' equity
|
$
|
13,438
|
$
|
10,426
|
||||
See Notes to Unaudited Condensed Consolidated Financial Statements within Form 10-Q.
RAVE RESTAURANT GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
Three Months Ended
|
||||||||
|
September 29,
2019
|
September 23,
2018
|
|||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
|
Net income
|
$
|
237
|
$
|
108
|
||||
|
Adjustments to reconcile net income to cash provided by operating activities:
|
||||||||
|
Impairment of fixed assets and other assets
|
148
|
-
|
||||||
|
Stock compensation expense
|
-
|
101
|
||||||
|
Depreciation and amortization
|
35
|
129
|
||||||
|
Amortization of operating lease asset
|
115
|
-
|
||||||
|
Amortization of intangible assets definite-lived
|
12
|
10
|
||||||
|
Amortization of debt issue costs
|
9
|
5
|
||||||
|
Gain on the sale of assets
|
(11
|
)
|
(4
|
)
|
||||
|
Provision for bad debt
|
(8
|
)
|
24
|
|||||
|
Deferred income tax
|
71
|
17
|
||||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Accounts receivable
|
272
|
296
|
||||||
|
Inventories
|
1
|
-
|
||||||
|
Prepaid expenses, deposits and other, net
|
44
|
(79
|
)
|
|||||
|
Deferred revenue
|
(122
|
)
|
234
|
|||||
|
Accounts payable - trade
|
(110
|
)
|
23
|
|||||
|
Accounts payable - lease termination impairments
|
(373
|
)
|
-
|
|||||
|
Operating lease liability
|
(120
|
)
|
-
|
|||||
|
Accrued expenses, deferred rent and other
|
(68
|
)
|
(274
|
)
|
||||
|
Cash provided by operating activities
|
132
|
590
|
||||||
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
|
Payments received on notes receivable issued for fixed asset sales
|
44
|
-
|
||||||
|
Proceeds from sale of assets
|
-
|
4
|
||||||
|
Purchase of property, plant and equipment
|
(17
|
)
|
(10
|
)
|
||||
|
Cash provided by (used in) investing activities
|
27
|
(6
|
)
|
|||||
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
|
Proceeds from sale of stock
|
-
|
36
|
||||||
|
Equity issuance costs
|
(2
|
)
|
-
|
|||||
|
Cash provided by (used in) financing activities
|
(2
|
)
|
36
|
|||||
|
Net increase in cash and cash equivalents
|
157
|
620
|
||||||
|
Cash and cash equivalents, beginning of period
|
2,264
|
1,386
|
||||||
|
Cash and cash equivalents, end of period
|
$
|
2,421
|
$
|
2,006
|
||||
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||
|
CASH PAID FOR:
|
||||||||
|
Interest
|
$
|
2
|
$
|
2
|
||||
|
Income taxes
|
$
|
1
|
$
|
4
|
||||
|
Non-cash activities:
|
||||||||
|
Conversion of notes to common shares
|
$
|
64
|
$
|
-
|
||||
See Notes to Unaudited Condensed Consolidated Financial Statements within Form 10-Q.
RAVE RESTAURANT GROUP, INC.
ADJUSTED EBITDA
(In thousands)
|
Three Months Ended
|
||||||||
|
September 29,
2019
|
September 23,
2018
|
|||||||
|
Net income
|
$
|
237
|
$
|
108
|
||||
|
Interest expense
|
27
|
25
|
||||||
|
Income taxes
|
73
|
50
|
||||||
|
Depreciation and amortization
|
47
|
139
|
||||||
|
EBITDA
|
$
|
384
|
$
|
322
|
||||
|
Stock compensation expense
|
-
|
101
|
||||||
|
Gain on sale/disposal of assets
|
(11
|
)
|
(4
|
)
|
||||
|
Impairment of long-lived assets and other lease charges
|
148
|
15
|
||||||
|
Franchisee default and closed store revenue/expense
|
(147
|
)
|
-
|
|||||
|
Closed and non-operating store costs
|
6
|
22
|
||||||
|
Adjusted EBITDA
|
$
|
380
|
$
|
456
|
||||