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): May 19, 2016
CHANTICLEER HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-35570 | 20-2932652 | ||
| (State
or Other Jurisdiction of Incorporation) |
(Commission
File Number) |
(I.R.S.
Employer Identification) |
7621 Little Avenue, Suite 414, Charlotte, NC 28226
(Address of principal executive office) (zip code)
(Former address of principal executive offices) (zip code)
(704)
366-5122
(Registrant’s Telephone Number, Including Area
Code)
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)
[ ] Soliciting material pursuant to Rule 14a-12 under Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR240.13e-4(c))
ITEM 2.02. Results of Operations and Financial Condition.
On May 17, 2016, Chanticleer Holdings, Inc. issued a press release announcing its first quarter 2016 results. A copy of the press release is furnished not filed as Exhibit 99.1 hereto. In addition, the Company is filing an investor presentation filed as Exhibit 99.2 hereto.
The information in this Item 2.02, including Exhibits 99.1 and 99.2, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be deemed incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
ITEM 9.01. Financial Statements and Exhibits.
| (d) | Exhibits |
| 99.1 | Press release dated May 17, 2016. | |
| 99.2 | Investor presentation dated May 17, 2016. |
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.
Date: May 19, 2016
| Chanticleer Holdings, Inc. | ||
| By: | /s/ Michael D. Pruitt | |
| Michael D. Pruitt | ||
| Chief Executive Officer | ||
EXHIBIT INDEX
| Exhibit No. | Description | Manner of Filing | ||
| 99.1 | Press Release dated May 17, 2016 | Furnished Electronically | ||
| 99.2 | Investor presentation dated May 17, 2016 | Furnished Electronically |
Chanticleer Holdings Reports First Quarter Revenue Growth of 34%
- Restaurant EBITDA grows 85% to $1 Million -
CHARLOTTE, NC – May 16, 2016 — Chanticleer Holdings, Inc. (NASDAQ: HOTR) (“Chanticleer,” or the “Company”), owner, operator and franchisor of multiple branded restaurants in the U.S. and abroad, today announced financial results for the first quarter ended March 31, 2016.
Mike Pruitt, Chairman and CEO of Chanticleer commented, “During the first quarter we achieved strong revenue growth and restaurant EBITDA increased 85% to $1 million. Our Better Burger business, which accounted for 48% of our sales up from 17% last year, performed well with excellent store level economics due to the strength of our regional brands. We are focused on expanding our Better Burger concepts and recently announced plans to open 3 additional Little Big Burger locations in Portland by the end of the year. We also signed a new BGR franchisee with plans to open five stores in the Salt Lake City market and an agreement to open up to 10 Little Big Burger stores in the Seattle market.
“We are additionally beginning to benefit from the increased scale of the business as well as aggressive efficiency initiatives. General and Administrative expenses reduced to 15% of sales for the quarter compared to 22% in the same quarter last year. We are continuing the process of integrating and streamlining our acquired operations, and expect those actions to result in further margin improvement in the second half of the year.”
First Quarter Revenue Increases 34%; Adjusted EBITDA Improves 22%
Total revenue was $11.6 million, a 34.0% increase as compared to revenue of $8.7 million in the same prior year quarter. The increase resulted from the significant growth in our Better Burger group and was partially offset by lower revenues from our Hooters group.
Restaurant revenues increased 34.3% to $11.3 million for the quarter ended March 31, 2016 as compared with the same quarter last year. Revenue increased as growth in store count was partially offset by reduced revenue levels at our Hooters Australia restaurants, combined with the unfavorable impact of foreign currency rates on financial statement translation. Same store sales improved 10.9% in the Better Burger category and 2.0% in the Just Fresh business, while same stores sales in the Hooters business declined largely due to foreign currency fluctuations and local economic conditions in our international markets.
Chanticleer reported a loss from continuing operations of $1.6 million in the first quarter of 2016 as compared to a loss from continuing operations of $1.9 million in the first quarter of fiscal 2015. Chanticleer recorded a net loss of $1.4 million, or $0.07 per basic and diluted share in the first quarter of fiscal 2016, compared with a net loss of $2.3 million or $0.27 per basic and diluted share, in the first quarter of fiscal 2015.
Non-GAAP Adjusted EBITDA was a loss of $640 thousand for the quarter compared to a loss of $821 thousand in the first quarter of 2015. Approximately $440 thousand of the first quarter 2016 adjusted EBITDA loss was attributable to the Company’s Australia and Budapest Hooters operations in the quarter. Non-GAAP Restaurant EBITDA was $998 thousand for the quarter compared to $540 thousand in the first quarter of 2015.
Mike Pruitt continued, “Our iconic Hooters brand continues to resonate internationally with most of our stores performing well. We have seen improved performance at four of our five Australia locations as the recently strengthened management team drives operational improvements. However, those improvements have been slower than planned and two of our international stores are underperforming; we expect to drive further improvements or take other actions to reduce the negative impact in the near term.
“We plan to grow our Better Burger business while implementing cost reduction initiatives throughout the organization and continue to strengthen our financial performance going forward.”
Conference Call
The Company will hold a conference call on May 17, 2016 at 11:00 a.m. Eastern Time, to discuss the results of its first quarter ended March 31, 2016.
To access the call, dial (877) 407-8133 approximately five minutes prior to the scheduled start time. International callers please dial (201) 689-8040. To access the webcast, including the quarterly slide presentation, log onto the Chanticleer website at http://ir.stockpr.com/chanticleerholdings/overview.
A replay of the teleconference will be available until June 17, 2016 and may be accessed by dialing (877) 660-6853. International callers may dial (201) 612-7415. Callers should use conference ID: 13637745
Use of Non-GAAP Measures
Chanticleer Holdings, Inc. prepares its condensed 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 Adjusted EBITDA and Restaurant EBITDA, which differ 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, Adjusted EBITDA also excludes pre-opening and closing costs for our restaurants, non-cash expenses, transaction-related expenses, change in fair value of derivative liability and other income and expenses. In addition, Restaurant EBITDA also excludes management fee income and general and administrative expenses. Adjusted EBITDA and restaurant EBITDA are not measures of performance defined in accordance with GAAP. However, adjusted EBITDA and restaurant EBITDA are used internally in planning and evaluating the company’s operating performance and by the Company’s creditors. Accordingly, management believes that disclosure of these metrics 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.
Adjusted EBITDA and Restaurant EBITDA should not be considered as alternatives 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 Adjusted EBITDA and Restaurant EBITDA is included in the accompanying financial schedules.
For further information, please refer to Chanticleer’s Quarterly Report on Form 10-Q filed with the SEC on May 16, 2016, available online at www.sec.gov.
About Chanticleer Holdings, Inc.
Headquartered in Charlotte, NC, Chanticleer Holdings (HOTR), together with its subsidiaries, owns and operates restaurant brands in the United States and internationally. The Company is a franchisee owner of Hooters® restaurants in international markets including Australia, South Africa, and Europe, and two Hooters restaurants in the United States. The Company also owns and operates American Burger Co., BGR the Burger Joint, BT’s Burger Joint, Little Big Burger and Just Fresh restaurants in the U.S.
For further information, please visit www.chanticleerholdings.com
Facebook: www.Facebook.com/ChanticleerHOTR
Twitter: http://Twitter.com/ChanticleerHOTR
Google+: https://plus.google.com/u/1/b/118048474114244335161/118048474114244335161/posts
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. These statements include projections, predictions, expectations or statements as to beliefs or future events or results or refer to other matters that are not historical facts. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from those contemplated by these statements. The forward-looking statements contained in this Annual Report are based on various factors and were derived using numerous assumptions. In some cases, you can identify these forward-looking statements by the words “anticipate”, “estimate”, “plan”, “project”, “continuing”, “ongoing”, “target”, “aim”, “expect”, “believe”, “intend”, “may”, “will”, “should”, “could”, or the negative of those words and other comparable words. You should be aware that those statements reflect only the Company’s predictions. If known or unknown risks or uncertainties should materialize, or if underlying assumptions should prove inaccurate, actual results could differ materially from past results and those anticipated, estimated or projected. You should bear this in mind when reading this Annual Report and not place undue reliance on these forward-looking statements. Factors that might cause such differences include, but are not limited to:
| ● | Operating losses may continue for the foreseeable future; we may never be profitable; | |
| ● | Inherent risks in expansion of operations, including our ability to acquire additional territories, generate profits from new restaurants, find suitable sites and develop and construct locations in a timely and cost-effective way; | |
| ● | Inherent risks associated with acquiring and starting new restaurant concepts and store locations; | |
| ● | General risk factors affecting the restaurant industry, including current economic climate, costs of labor and food prices; | |
| ● | Intensive competition in our industry and competition with national, regional chains and independent restaurant operators; | |
| ● | Our rights to operate and franchise the Hooters-branded restaurants are dependent on the Hooters’ franchise agreements; | |
| ● | We do not have full operational control over the businesses of our franchise partners or operations where we hold less 100% ownership; | |
| ● | Failure to protect our intellectual property rights, including the brand image of our restaurants; | |
| ● | Our business has been adversely affected by declines in discretionary spending and may be affected by changes in consumer preferences; | |
| ● | Increases in costs, including food, labor and energy prices; | |
| ● | Our business and the growth of our Company is dependent on the skills and expertise of management and key personnel; | |
| ● | Constraints could affect our ability to maintain competitive cost structure, including, but not limited to labor constraints; | |
| ● | Work stoppages at our restaurants or supplier facilities or other interruptions of production; | |
| ● | Our food service business and the restaurant industry are subject to extensive government regulation; | |
| ● | We may be subject to significant foreign currency exchange controls in certain countries in which we operate; | |
| ● | Inherent risk in foreign operations and currency fluctuations; | |
| ● | Unusual expenses associated with our expansion into international markets; | |
| ● | The risks associated with leasing space subject to long-term non-cancelable leases; |
| ● | We may not attain our target development goals and aggressive development could cannibalize existing sales; | |
| ● | Current conditions in the global financial markets and the distressed economy; | |
| ● | A decline in market share or failure to achieve growth; | |
| ● | Negative publicity about the ingredients we use or the potential occurrence of food-borne illnesses or other problems at our restaurants; | |
| ● | Breaches of security of confidential consumer information related to our electronic processing of credit and debit card transactions; | |
| ● | Unusual or significant litigation, governmental investigations or adverse publicity, or otherwise; | |
| ● | Our debt financing agreements expose us to interest rate risks, contain obligations that may limit the flexibility of our operations, and may limit our ability to raise additional capital; | |
| ● | Adverse effects on our results from a decrease in or cessation or clawback of government incentives related to investments; and | |
| ● | Adverse effects on our operations resulting from certain geo-political or other events. |
You should also consider carefully the Risk Factors contained in Item 1A of Part I of our Annual Report, which address additional factors that could cause its actual results to differ from those set forth in the forward-looking statements and could materially and adversely affect the Company’s business, operating results and financial condition. The risks discussed in the Annual Report are factors that, individually or in the aggregate, the Company believes could cause its actual results to differ materially from expected and historical results. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider such disclosures to be a complete discussion of all potential risks or uncertainties.
The forward-looking statements are based on information available to the Company as of the date hereof, and, except to the extent required by federal securities laws, the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In addition, the Company cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. 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.”
Contact:
Chanticleer Holdings, Inc.
Mike Pruitt, Chairman/CEO
Phone: 704.366.5122 x 1
mp@chanticleerholdings.com
Eric Lederer, CFO
Phone: 704.366.5736
elederer@chanticleerholdings.com
Press Information:
Chanticleer Holdings, Inc.
Investor Relations
Phone: 704.366.5122
ir@chanticleerholdings.com
Investor Relations
John Nesbett/Jennifer Belodeau
Institutional Marketing Services (IMS)
Phone 203.972.9200
jnesbett@institutionalms.com
Chanticleer Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
| March 31, 2016 | December 31, 2015 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 1,178,000 | $ | 1,527,886 | ||||
| Accounts and other receivables | 956,741 | 882,263 | ||||||
| Inventories | 646,759 | 726,624 | ||||||
| Due from related parties | 45,615 | 45,615 | ||||||
| Prepaid expenses and other current assets | 480,173 | 636,188 | ||||||
| TOTAL CURRENT ASSETS | 3,307,288 | 3,818,576 | ||||||
| Property and equipment, net | 16,409,702 | 16,641,232 | ||||||
| Goodwill | 12,701,022 | 12,702,139 | ||||||
| Intangible assets, net | 7,204,514 | 7,282,074 | ||||||
| Investments at fair value | 29,203 | 31,322 | ||||||
| Other investments | 1,050,000 | 1,050,000 | ||||||
| Deposits and other assets | 685,937 | 679,863 | ||||||
| TOTAL ASSETS | $ | 41,387,666 | $ | 42,205,206 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 6,447,069 | $ | 5,505,265 | ||||
| Current maturities of long-term debt and notes payable, net of discount of of $128,899 and $171,868, respectively | 6,088,264 | 5,383,002 | ||||||
| Current maturities of convertible notes payable, net of debt discount of $594,394 and $914,724, respectively | 3,130,466 | 2,810,276 | ||||||
| Current maturities of capital leases payable | 33,620 | 39,303 | ||||||
| Due to related parties | 597,862 | 403,742 | ||||||
| Deferred rent | 739,405 | 683,793 | ||||||
| Derivative liabilities | 615,946 | 1,231,608 | ||||||
| Liabilities of discontinued operations | 124,043 | 124,043 | ||||||
| TOTAL CURRENT LIABILITIES | 17,776,675 | 16,181,032 | ||||||
| Long-term debt, less current maturities, net of debt discount of $0 and $171,868, respectively | 318,920 | 1,098,641 | ||||||
| Capital leases payable, less current maturities | 13,059 | 15,969 | ||||||
| Deferred rent | 1,523,556 | 1,798,660 | ||||||
| Deferred tax liabilities | 1,386,004 | 1,353,771 | ||||||
| TOTAL LIABILITIES | 21,018,214 | 20,448,073 | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock: no par value; authorized 5,000,000 shares; none issued and outstanding | - | - | ||||||
| Common stock: $0.0001 par value; authorized 45,000,000 shares; issued and outstanding 21,337,247 | 2,134 | 2,134 | ||||||
| Additional paid in capital | 55,365,597 | 55,365,597 | ||||||
| Accumulated other comprehensive loss | (791,412 | ) | (987,695 | ) | ||||
| Non-controlling interest | 231,210 | 389,810 | ||||||
| Accumulated deficit | (34,438,077 | ) | (33,012,713 | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY | 20,369,452 | 21,757,133 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 41,387,666 | $ | 42,205,206 | ||||
Chanticleer Holdings, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss
| Three Months Ended | ||||||||
| March 31, 2016 | March 31, 2015 | |||||||
| Revenue: | ||||||||
| Restaurant sales, net | $ | 11,310,632 | $ | 8,421,842 | ||||
| Gaming income, net | 99,534 | 132,027 | ||||||
| Management fee income - non-affiliates | 25,000 | 101,221 | ||||||
| Franchise income | 182,552 | 16,059 | ||||||
| Total revenue | 11,617,718 | 8,671,149 | ||||||
| Expenses: | ||||||||
| Restaurant cost of sales | 3,776,795 | 2,961,658 | ||||||
| Restaurant operating expenses | 6,818,391 | 5,068,139 | ||||||
| Restaurant pre-opening and closing expenses | 7,555 | 206,747 | ||||||
| General and administrative expenses | 1,761,007 | 1,898,353 | ||||||
| Depreciation and amortization | 828,655 | 438,637 | ||||||
| Total expenses | 13,192,403 | 10,573,534 | ||||||
| Loss from continuing operations | (1,574,685 | ) | (1,902,385 | ) | ||||
| Other (expense) income | ||||||||
| Interest expense | (609,833 | ) | (704,852 | ) | ||||
| Change in fair value of derivative liabilities | 615,662 | 338,053 | ||||||
| Loss on extinguishment of debt | - | (170,089 | ) | |||||
| Other income (expense) | 8,108 | (1,533 | ) | |||||
| Total other (expense) income | 13,937 | (538,421 | ) | |||||
| Loss from continuing operations before income taxes | (1,560,748 | ) | (2,440,806 | ) | ||||
| Income tax benefit (expense) | (36,231 | ) | 32,920 | |||||
| Loss from continuing operations | (1,596,979 | ) | (2,407,886 | ) | ||||
| Loss from discontinued operations, net of taxes | - | (1,899 | ) | |||||
| Consolidated net loss | (1,596,979 | ) | (2,409,785 | ) | ||||
| Less: Net loss attributable to non-controlling interest | 171,615 | 141,784 | ||||||
| Net loss attributable to Chanticleer Holdings, Inc. | $ | (1,425,364 | ) | $ | (2,268,001 | ) | ||
| Net loss attributable to Chanticleer Holdings, Inc.: | ||||||||
| Loss from continuing operations | $ | (1,425,364 | ) | $ | (2,266,102 | ) | ||
| Loss from discontinued operations | - | (1,899 | ) | |||||
| Net loss attributable to Chanticleer Holdings, Inc. | $ | (1,425,364 | ) | $ | (2,268,001 | ) | ||
| Other comprehensive loss: | ||||||||
| Unrealized loss on available-for-sale securities | $ | (2,120 | ) | $ | - | |||
| Foreign currency translation (loss) gain | 198,403 | (1,286,028 | ) | |||||
| Total other comprehensive gain (loss) | 196,283 | (1,286,028 | ) | |||||
| Comprehensive loss | $ | (1,229,081 | ) | $ | (3,554,029 | ) | ||
| Net loss attributable to Chanticleer Holdings, Inc. per common share, basic and diluted: | ||||||||
| Continuing operations attributable to common stockholders, basic and diluted | $ | (0.07 | ) | $ | (0.27 | ) | ||
| Discontinued operations attributable to common stockholders, basic and diluted | $ | - | $ | - | ||||
| Weighted average shares outstanding, basic and diluted | 21,337,247 | 8,249,453 | ||||||
Chanticleer Holdings, Inc. and Subsidiaries
Reconcilation of Net Loss to EBITDA
| Three Months Ended | ||||||||
| March 31, 2016 | March 31, 2015 | |||||||
| Consolidated net loss | $ | (1,596,979 | ) | $ | (2,407,886 | ) | ||
| Interest expense | 609,833 | 704,852 | ||||||
| Income tax | 36,231 | (32,920 | ) | |||||
| Depreciation and amortization | 828,655 | 438,637 | ||||||
| EBITDA | $ | (122,260 | ) | $ | (1,297,317 | ) | ||
| Restaurant pre-opening and closing expenses | 7,555 | 206,747 | ||||||
| Change in fair value of derivative liabilities | (615,662 | ) | (338,053 | ) | ||||
| Loss on extinguishment of debt | - | 170,089 | ||||||
| Transaction-related expenses | 98,399 | 435,715 | ||||||
| Other income | (8,108 | ) | 1,533 | |||||
| Adjusted EBITDA | $ | (640,076 | ) | $ | (821,286 | ) | ||
| General and administrative expenses | 1,662,608 | 1,462,638 | ||||||
| Management fee revenue | (25,000 | ) | (101,221 | ) | ||||
| Restaurant EBITDA | $ | 997,532 | $ | 540,131 | ||||