Chanticleer Holdings Reports Operating Results for Third Quarter Ended September 30, 2017

CHARLOTTE, NC / ACCESSWIRE / November 13, 2017 / 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 third quarter ended September 30, 2017.

Financial Highlights of the Third Quarter

Revenue decreased 2.3% to $10.7 million from $11.0 million from Q2 16
Cost of sales as a percentage of restaurant sales was 34.4%, compared to 33.1% in the comparable quarter last year, on higher beef, chicken and distribution costs which are expected to moderate in future periods.
General and administrative expenses as a percentage of total revenue improved to 8.9% from 12.3% in the comparable quarter last year
G&A levels have been reduced by 50% over the past 2 years as a result of integration and efficiency initiatives -Q3 17 is the first quarterly period below the target of 10%.
Operating loss from continuing operations was $1.4 million ($0.6 million excluding non-cash asset impairment charges) compared to $0.5 million in the comparable quarter last year.
Net loss attributable to Common Shareholders was $1.6 million, ($0.63) per share, compared to $0.9 million, ($0.41) per share in the comparable quarter last year.
Restaurant EBITDA was $0.9 million compared to $1.4 million for the comparable quarter of last year.

Adjusted EBITDA was $58 thousand compared to $183 thousand in the comparable quarter last year.
Through October, the Company has opened 4 new Little Big Burger locations and 1 new BGR location and expects to open 2 to 3 per quarter each of the next four quarters. The Company also closed 3 underperforming locations in Q3 which resulted in non-cash impairment charges and are expected to contribute to improved operating performance in future periods.

Mike Pruitt, Chairman and CEO of Chanticleer, commented, “We are continuing to accelerate growth of our Little Big Burger Concept. Our new locations are generating above-average unit economics and outperforming our expectations. We have just started the growth phase for Little Big Burger and have a robust pipeline of locations to support future growth. We currently expect to open 8-12 new stores annually going forward, with upside to those expectations as new franchisee partners come online.”

“Chanticleer is in the process of evolving and narrowing its strategic focus and allocation of resources to the domestic better burger segment where we generate the highest margins and rates of return. As we increase focus on the domestic burger business, we are also evaluating the potential sale of our domestic non-burger and international operations which would streamline the Company’s operations and significantly increase operating margins going forward.”

To better reflect the increasing focus on Little Big Burger and the domestic better burger market, effective November 14, 2017, the common shares of Chanticleer Holdings will begin to trade on the NASDAQ Capital Market under the new ticker symbol “BURG.”

Conference Call

The Company will host a webcast and conference call on Monday, November 13, 2017, at 4:30 p.m. ET.

To access the call, dial (888) 289-0438 approximately five minutes prior to the scheduled start time. International callers please dial (323)-794-2423. To access the webcast, including the quarterly slide presentation, log in to the following participate link http://public.viavid.com/index.php?id=127210.

A replay of the teleconference will be available until December 13, 2017, and may be accessed by dialing (844) 512-2921. International callers may dial (412) 317-6671. Callers should use conference PIN: 4153759.

Use of Non-GAAP Measures

Chanticleer Holdings, Inc. prepares its condensed consolidated financial statements in accordance with the 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 and severance related expenses, change in fair value of derivative liability and other income and expenses.

In addition, Restaurant EBITDA also excludes management fee income, franchise revenue 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 to be filed with the SEC on or about November 13, 2017, available online at www.sec.gov.

About Chanticleer Holdings, Inc.

Headquartered in Charlotte, NC, Chanticleer Holdings (HOTR), owns, operates and franchises fast-casual and full-service restaurant brands, including American Burger Company, BGR – Burgers Grilled Right, Little Big Burger, Just Fresh and Hooters.

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 press release 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.

Our operations involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. Forward-looking statements in this press release include, without limitation, statements reflecting management’s expectations for future financial performance and operating expenditures, expected growth, profitability and business outlook, increased sales and marketing expenses, and the expected results from the integration of our acquisitions.

Forward-looking statements are only current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from those anticipated by such statements. These factors include, but are not limited to, the Company’s ability to manage growth; integrate acquisitions; manage debt; meet development goals, and other important risks and uncertainties referenced and discussed under the heading titled “Risk Factors” in the Company’s filings with the Securities and Exchange Commission. Although we believe that the expectations reflected in the forward-looking statements contained in this press release are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements.

The statements in this press release are made as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company does not assume any obligations to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

Chanticleer Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

(Unaudited)

September 30, 2017

December 31, 2016

ASSETS

Current assets:

Cash

$
295,462

$
268,575

Restricted cash

250,861

–

Accounts and other receivables

275,205

524,481

Inventories

463,866

539,550

Prepaid expenses and other current assets

333,593

461,074

Assets held for sale, net

725,644

–

TOTAL CURRENT ASSETS

2,344,631

1,793,680

Property and equipment, net

9,006,200

11,513,693

Goodwill

12,603,545

12,405,770

Intangible assets, net

6,310,949

6,530,243

Investments

800,000

Deposits and other assets

499,264

442,737

TOTAL ASSETS

$
31,564,589

$
33,486,123

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued expenses

$
5,384,918

$
5,553,068

Current maturities of long-term debt and notes payable

771,032

6,171,649

Current maturities of capital leases payable

4,210

18,449

Due to related parties

194,350

Deferred rent

89,571

173,775

TOTAL CURRENT LIABILITIES

6,444,081

12,111,291

Long-term debt, less current portion, net of discount and deferred financing costs of $1,466,739 and $0, respectively

5,142,343

287,445

Convertible notes payable, net of debt discount (premium)

of ($14,704) and $46,936, respectively

3,214,704

3,678,064

Redeemable preferred stock: no par value, 62,876 and 19,050 shares issued and outstanding, net of discount of $226,089 and $0, respectively

631,433

257,175

Deferred rent

2,006,715

1,961,751

Deferred tax liabilities

1,591,284

1,485,554

TOTAL LIABILITIES

19,030,560

19,781,280

Commitments and contingencies

Common stock subject to repurchase obligation; 0 and 56,290 shares issued and outstanding, respectively

–

349,000

Stockholders’ equity:

Preferred stock: no par value; authorized 5,000,000 shares; 62,876 and 19,050 issued issued and outstanding, respectively

–

Common stock: $0.0001 par value; authorized 45,000,000

shares; issued and outstanding 2,514,157 and 2,139,424

shares, respectively

251

213

Additional paid in capital

59,506,252

55,926,196

Accumulated other comprehensive loss

(934,703
)

(1,155,658
)

Accumulated deficit

(46,942,691
)

(42,206,325
)

Total Chanticleer Holdings, Inc, Stockholder’s Equity

11,629,109

12,564,426

Non-Controlling Interests

904,920

791,417

TOTAL STOCKHOLDERS’ EQUITY

12,534,029

13,355,843

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$
31,564,589

$
33,486,123

Chanticleer Holdings, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations

Three Months Ended

Nine Months Ended

September 30, 2017

September 30, 2016

September 30, 2017

September 30, 2016

Revenue:

Restaurant sales, net

$
10,479,275

$
10,737,961

$
30,657,215

$
31,068,281

Gaming income, net

115,268

118,136

328,855

315,647

Management fee income

24,999

25,000

74,982

75,000

Franchise income

105,823

95,542

289,626

381,481

Total revenue

10,725,365

10,976,639

31,350,678

31,840,409

Expenses:

Restaurant cost of sales

3,605,212

3,553,684

10,376,160

10,248,770

Restaurant operating expenses

6,119,561

5,888,509

17,649,532

17,140,692

Restaurant pre-opening and closing expenses

34,349

110,432

139,545

117,987

General and administrative expenses

952,959

1,351,112

3,413,001

4,400,826

Asset impairment charge

838,928

–

1,472,890

–

Depreciation and amortization

572,798

590,433

1,768,837

1,738,815

Total expenses

12,123,807

11,494,170

34,819,965

33,647,090

Operating loss from continuing operations

(1,398,442
)

(517,531
)

(3,469,287
)

(1,806,681
)

Other (expense) income

Interest expense

(309,538
)

(453,150
)

(1,218,379
)

(1,704,556
)

Change in fair value of derivative liabilities

–

102,507

–

1,231,608

Gain (loss) on debt refinancing

–

(95,310
)

–

Other income (expense)

37,839

32,357

50,050

12,388

Total other expense

(271,699
)

(318,286
)

(1,263,639
)

(460,560
)

Loss from continuing operations before income taxes

(1,670,141
)

(835,817
)

(4,732,926
)

(2,267,241
)

Income tax expense

(56,070
)

(52,474
)

(169,398
)

(137,867
)

Loss from continuing operations

(1,726,211
)

(888,291
)

(4,902,324
)

(2,405,108
)

Discontinued operations

Loss from discontinued operations, net of tax

–

(68,718
)

–

(1,304,627
)

Loss on write down of net assets

–

(3,876,161
)

Consolidated net loss

(1,726,211
)

(957,009
)

(4,902,324
)

(7,585,896
)

Less: Net loss attributable to non-controlling interest of continuing operations

168,772

39,248

245,943

53,612

Less: Net loss attributable to non-controlling interest of discontinued operations

–

13,744

–

260,925

Net loss attributable to Chanticleer Holdings, Inc.

$
(1,557,439
)

$
(904,017
)

$
(4,656,381
)

$
(7,271,359
)

–

Net loss attributable to Chanticleer Holdings, Inc.:

Loss from continuing operations

$
(1,557,439
)

$
(849,043
)

$
(4,656,381
)

$
(2,351,497
)

Loss from discontinued operations

–

(54,974
)

–

(4,919,862
)

Net loss attributable to Chanticleer Holdings, Inc.

$
(1,557,439
)

$
(904,017
)

$
(4,656,381
)

$
(7,271,359
)

Dividends on redeemable preferred stock

(28,219
)

–

(79,988
)

–

Net loss attributable to common shareholders of Chanticleer Holdings, Inc.

$
(1,585,658
)

$
(904,017
)

$
(4,736,369
)

$
(7,271,359
)

Net loss attributable to Chanticleer Holdings, Inc. per common

share, basic and diluted:

$
(0.63
)

$
(0.41
)

$
(2.10
)

$
(3.37
)

Continuing operations attributable to common stockholders, basic and diluted

$
(0.63
)

$
(0.39
)

$
(2.10
)

$
(1.09
)

Discontinued operations attributable to common stockholders, basic and diluted

$
–

$
(0.02
)

$
–

$
(2.28
)

Weighted average shares outstanding, basic and diluted

2,501,534

2,195,715

2,258,013

2,160,703

Chanticleer Holdings, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows

Nine Months Ended

September 30, 2017

September 30, 2016

Cash flows from operating activities:

Net loss

$
(4,902,324
)

$
(7,585,896
)

Net loss from discontinued operations

–

5,180,788

Net loss from continuing operations

(4,902,324
)

(2,405,108
)

Adjustments to reconcile net loss from continuing operations to net cash provided
by (used in) operating activities:

Depreciation and amortization

1,768,837

1,738,815

Asset impairment charge

1,472,890

–

Loss on debt refinancing

95,310

–

Common stock and warrants issued for services

217,816

24,510

Common stock and warrants issued for interest

–

349,000

Amortization of debt discount

501,126

925,806

Change in assets and liabilities:

Accounts and other receivables

249,255

(34,820
)

Prepaid and other assets

50,667

153,895

Inventory

23,872

55,173

Accounts payable and accrued liabilities

320,135

501,078

Change in amounts payable to related parties

–

196,600

Derivative liabilities

–

(1,231,608
)

Deferred income taxes

105,729

96,318

Deferred rent

109,219

(290,530
)

Net cash provided by (used in) operating activities from continuing operations

12,532

79,129

Net cash used in operating activities from discontinued operations

–

(75,000
)

Net cash provided by (used in) operating activities

12,532

4,129

Cash flows from investing activities:

Purchase of property and equipment

(1,323,066
)

(708,214
)

Cash paid for acquisitions, net of cash acquired

–

(72,215
)

Proceeds from sale of investments

–

8,902

Net cash used in investing activities from continuing operations

(1,323,066
)

(771,527
)

Cash flows from financing activities:

Proceeds from sale of preferred stock

591,651

–

Payments related to sale of preferred stock

(243,480
)

–

Loan proceeds

6,594,535

125,000

Payment of deferred financing costs

(293,294
)

Loan repayments

(5,706,774
)

(340,582
)

Proceeds from convertible debt

–

Capital lease payments

(20,916
)

(32,897
)

Contribution of non-controlling interest

675,000

796,911

Net cash provided by (used in) financing activities from continuing operations

1,596,722

548,432

Effect of exchange rate changes on cash

(8,440
)

(14,693
)

Net increase (decrease) in cash and restricted cash

277,748

(233,659
)

Cash and restricted cash, beginning of period

268,575

1,224,415

Cash and restricted cash, end of period

$
546,323

$
990,756

Chanticleer Holdings, Inc. and Subsidiaries
Reconcilation of Net Loss to EBITDA
(Unaudited)

Three Months Ended

Nine Months Ended

September 30, 2017

September 30, 2016

September 30, 2017

September 30, 2016

Consolidated net loss

$
(1,726,211
)

$
(888,291
)

$
(4,902,324
)

$
(2,405,108
)

Interest expense

309,538

453,150

1,218,379

1,704,556

Income tax

56,070

52,474

169,398

137,867

Depreciation and amortization

572,798

590,433

1,768,837

1,738,815

EBITDA

$
(787,805
)

$
207,767

$
(1,745,709
)

$
1,176,130

Restaurant pre-opening and closing expenses

34,349

110,432

139,545

117,987

Change in fair value of derivative liabilities

–

(102,507
)

–

(1,231,608
)

(Gain) loss on debt refinancing

–

95,310

–

Asset impairment charge

838,928

–

1,472,890

–

Transaction and severence related expenses

10,000

–

92,750

98,399

Other income (expense)

(37,839
)

(32,357
)

(50,050
)

(12,388
)

Adjusted EBITDA

$
57,634

$
183,334

$
4,737

$
148,520

General and administrative expenses

942,959

1,351,112

3,340,251

4,302,427

Franchise revenues

(105,823
)

(95,542
)

(289,626
)

(381,481
)

Management fee revenue

(24,999
)

(25,000
)

(74,982
)

(75,000
)

Restaurant EBITDA

$
869,771

$
1,413,905

$
2,980,380

$
3,994,466

Contact:

Chanticleer Holdings, Inc.
Mike Pruitt, Chairman/CEO
Phone: 704.366.5122 x 1
ir@chanticleerholdings.com

SOURCE: Chanticleer Holdings, Inc.

ReleaseID: 481730

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