Chanticleer Holdings Reports Improvements in Revenue, Gross Profit Margins for Fourth Quarter and Full Year 2012

CHARLOTTE, NC–(Marketwired – April 02, 2013) – Chanticleer Holdings, Inc., a minority shareholder in the privately held parent company of the Hooters® brand, Hooters of America, and a franchisee of international Hooters® restaurants, announced today its financial results for the fourth quarter and full year ended December 31, 2012.

Highlights Include:

  • Restaurant revenue for the fourth quarter 2012 increased to $2.0 million, compared with $1.7 million in the third quarter 2012, an increase of 14.5%, and $980,000 in the year-ago fourth quarter. For the full year 2012, restaurant revenue was $6.8 million compared with $980,000 in the year-ago period. As of December 31, 2012, the Company had six restaurants (five consolidated and one joint venture) compared with three consolidated restaurants as of December 31, 2011.
  • Gross profit margins for the fourth quarter 2012 were 61.4% compared with 58.2% in the third quarter 2012, and 48.5% in the year-ago fourth quarter. For the full year, gross profit margins were 59.1% compared with 48.5% in 2011.
  • Same-store gross sales for restaurants opened more than a year increased 13.2% in local currency (Rands) and 5.2% in U.S. dollars for the fourth quarter 2012.
  • Restaurant operating expenses for the fourth quarter 2012 were $1.1 million or 58.7% of restaurant revenue, compared with $598,000, or 61.0% for the year-ago quarter. For the full year 2012, restaurant operating expenses were $3.8 million, or 56.1% of revenue, compared with $598,000 or 61.0% for the full year 2011.
  • The company opened three (two consolidated, one joint venture) new locations in 2012, and has targeted an additional four (three consolidated, one joint venture) locations for 2013.
  • Net loss for the fourth quarter 2012 was $879,000, or $0.24 per share, compared with $667,000, or $0.53 per share for the year-ago fourth quarter. Net loss for the full year was $3.2 million, or $1.25 per share, compared with $1.2 million, or $0.98 per share.
  • Restaurant EBITDA for the fourth quarter 2012 was $94,393 compared with $(20,625) in 2011; for the full year 2012 Restaurant EBITDA was $322,415 vs. $(20,625) in 2011.
  • General and administrative (“G&A”) expenses for the fourth quarter 2012 were $784,000, or 39.7% of total revenue, compared with $488,000 or 48.4% in the year-ago fourth quarter. A portion of this increase was related to the Company’s South African operations’ accounting issues, which have been resolved. Full-year 2012 G & A was $2.6 million, or 38.0% of total revenue compared with $1.2 million, or 84.6% for the full year 2011.

Mike Pruitt, President and CEO of Chanticleer, commented, “2012 was a significant year for Chanticleer Holdings as we lay the foundation for growth in the four international regions we are doing business in, improved our gross profit margins to 61.4%, and produced a robust increase in same-store sales growth. Specifically, we increased our footprint in South Africa and also expanded to Hungary, bringing the iconic Hooters brand, and the American experience, to new audiences. We have implemented several operational initiatives in South Africa, updated our menu offerings in conjunction with Hooters of America, and have added several items to the menu that are attractive to health-conscious consumers and the female market.”

“We expect to open four new locations in 2013, to bring our total restaurants to 10. We are pleased with our expansion into Hungary, and look forward to moving ahead with our plans to increase our seating capacity in that restaurant with the opening of a new patio area, in time for the upcoming tourist season. While our Budapest location is our first entry into the Eastern Europe market, we are targeting other locations in that region. In addition to Eastern Europe, we are also focusing on opening in Rio de Janeiro, Brazil, and other South African cities. We believe we have a solid business model that will help us to propel our growth in our international markets.”

 

Chanticleer Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets
December 31, 2012 and 2011
2012 2011
ASSETS  (Unaudited)
Current assets:
Cash $ 1,248,274 $ 165,129
Accounts receivable 161,073 108,714
Other receivable 85,473 42,109
Inventory 227,023 105,073
Due from related parties 137,763 76,591
Prepaid expenses 170,769 144,347
TOTAL CURRENT ASSETS 2,030,375 641,963
Property and equipment, net 2,316,146 1,505,059
Goodwill 396,487 396,487
Intangible assets, net 559,832 325,084
Investments at fair value 56,949 318,353
Other investments 2,116,915 1,582,148
Deposits and other assets 169,727 29,605
TOTAL ASSETS $ 7,646,431 $ 4,798,699
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt and notes payable $ 236,110 $ 1,171,855
Convertible notes payable 1,625,000
Accounts payable and accrued expenses  1,122,633 478,005
Other current liabilities 361,586 330,607
Current maturities of capital leases payable 27,965 41,590
Deferred rent 10,825 43,225
Due to related parties 13,733 30,204
TOTAL CURRENT LIABILITIES 1,772,852 3,720,486
Capital leases payable, less current maturities 60,518 85,853
Deferred rent 98,448 7,162
Other liabilities 186,060 263,321
Long-term debt, less current maturities 236,109
TOTAL LIABILITIES 2,117,878 4,312,931
Commitments and contingencies (Note 14)
Stockholders’ equity:
Common stock: $0.0001 par value; authorized 20,000,000 and 200,000,000 shares; issued 3,698,896 shares and 1,506,061 shares; and outstanding 3,698,896 and 1,249,446 shares at December 31, 2012 and 2011, respectively 370 151
Additional paid in capital 14,898,423 6,459,656
Other comprehensive (loss) income (181,741 ) 50,650
Non-controlling interest 70,198 593,863
Accumulated deficit (9,258,697 ) (6,092,132 )
Less treasury stock, 256,615 shares at December 31, 2011 (526,420 )
5,528,553 485,768
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 7,646,431 $ 4,798,699
Chanticleer Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations
Three months ended
December 31,
Years ended
December 31,
2012 2011 2012 2011
(Unaudited) (Unaudited) (Unaudited)
Revenue:
Restaurant sales, net $ 1,958,073 $ 980,247 $ 6,752,323 $ 980,247
Management fee income – non-affiliates 25,000 26,500 100,000 493,167
Management fee income – affiliates (7,815 )  1,485 30,743 3,235
Total revenue 1,975,258 1,008,232 6,883,066 1,476,649
Expenses:
Restaurant cost of sales 756,235 504,971 2,761,949 504,971
Restaurant operating expenses 1,148,794 594,401 3,785,034 594,401
Restaurant pre-opening expenses 13,959 3,824 204,126 3,824
General and administrative expense 784,435 487,590 2,618,368 1,249,749
Depreciation and amortization 118,386 71,969 383,454 79,542
Total expenses 2,821,809 1,662,755 9,752,931 2,432,487
Loss from operations (846,551 )  (654,523 ) (2,869,865 ) (955,838 )
Other income (expense)
Equity in earnings (losses) of investments (4,329 ) (66,857 ) (14,803 ) (76,113 )
Realized (losses) gains from sales of investments (16,598 ) 74,362 (16,598 ) 94,353
Other (expense) income (816 )  – 864 5,017
Interest expense (42,131 ) (119,591 ) (474,926 ) (183,467 )
Other than temporary decline in available-for-sale securities (147,973 )
Total other expense (63,874 ) (112,086 ) (505,463 ) (308,183 )
Net loss before income taxes (910,425 ) (766,609 ) (3,375,328 ) (1,264,021 )
Provision for income taxes 11,208 19,205
Net loss before non-controlling interest (921,633 ) (766,609 ) (3,394,533 ) (1,264,021 )
Non-controlling interest 42,257 99,932 227,968 101,307
Net loss $ (879,376 ) $ (666,677 ) $ (3,166,565 ) $ (1,162,714 )
Net loss per share, basic and diluted $ (0.24 ) $ (0.53 ) $ (1.25 ) $ (0.98 )
Weighted average shares outstanding 3,698,896 1,249,428 2,541,696 1,185,018
Chanticleer Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Three months ended
December 31, 2012 September 30, 2012
Revenue:
Restaurant sales, net $ 1,958,073 $ 1,710,632
Management fee income – non-affiliates 25,000 25,000
Management fee income – affiliates (7,815 ) 31,880
Total revenue 1,975,258 1,767,512
Expenses:
Restaurant cost of sales 756,235 714,551
Restaurant operating expenses 1,148,794  943,618
Restaurant pre-opening expenses 13,959 125,947
General and administrative expense 784,435 666,300
Depreciation and amortization 118,386 97,883
Total expenses 2,821,809 2,548,299
Loss from operations  (846,551 ) (780,787 )
Other income (expense)
Equity in earnings (losses) of investments (4,329 ) 33,412
Realized losses from sales of investments (16,598 )
Other (expense) income (816 ) 1,680
Interest expense (42,131 )  (39,583 )
Total other expense (63,874 ) (4,491 )
Net loss before income taxes (910,425 ) (785,278 )
Provision for income taxes 11,208 7,997
Net loss before non-controlling interest (921,633 ) (793,275 )
Non-controlling interest 42,257 53,509
Net loss $ (879,376 ) $ (739,766 )
Net loss per share, basic and diluted $  (0.24 ) $ (0.20 )
Weighted average shares outstanding 3,698,896 3,698,896
Chanticleer Holdings, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2012 and 2011
2012 2011
Cash flows from operating activities: (Unaudited)
Net loss $ (3,394,533 ) $ (1,264,021 )
Adjustments to reconcile net loss to net cash used in operating activities:
Other than temporary decline in value of available-for-sale securities 147,973
Bad debt expense – related party 750
Consulting and other services rendered in exchange for investment securities  – (1,500 )
Depreciation and amortization 383,454 79,542
Equity in (earnings) loss of investments 14,803 76,113
Common stock issued for services 32,400 74,573
Loss (gain) on sale of investments 16,598 (94,353 )
Revaluation of equity investment prior to acquisitions  – 74,362
Amortization of warrants 169,201 35,247
Increase in amounts due from affiliate (77,643 ) (54,217 )
Increase in accounts receivable (52,359 ) (81,528 )
Increase in other receivable (43,364 ) (42,109 )
Increase in prepaid expenses and other assets (125,368 ) (58,690 )
Increase in inventory (121,950 ) (36,676 )
Increase (decrease) in accounts payable and accrued expenses 785,965 (30,701 )
Increase in deferred rent 58,886 20,308
Decrease in deferred revenue (1,750 )
Net cash used by operating activities (2,353,910 ) (1,156,677 )
Cash flows from investing activities:
Proceeds from sale of investments 190,325
Investment distribution  8,140
Purchase of investments (1,202,936 ) (1,502,247 )
Franchise costs (239,684 ) (75,000 )
Purchase of property and equipment (1,173,801 ) (219,811 )
Treasury stock proceeds 26,400
Net cash used by investing activities (2,616,421 ) (1,572,193 )
Cash flows from financing activities:
Proceeds from sale of common stock 7,051,464 500
Proceeds from sale of common stock warrants, net 20,608
Loan proceeds 2,915,000  2,790,000
Loan repayment (3,939,098 ) (7,036 )
Capital lease payments (45,814 ) (13,970 )
Non-controlling interest investment 90,000  –
Other liabilities (46,282 ) 62,262
Net cash provided by financing activities 6,025,270 2,852,364
Effect of exchange rate changes on cash  28,206 (4,372 )
Net increase in cash and cash equivalents 1,083,145 119,122
Cash, beginning of year 165,129 46,007
Cash, end of year $ 1,248,274 $ 165,129
Reconciliation of net income (loss) to EBITDA
Unaudited
Year ended December 31, 2012:
South Africa Hungary Management Totals
Net loss $  (30,940 ) $ (303,128 ) $ (2,832,497 ) $ (3,166,565 )
Interest expense 53,339 421,587 474,926
Pre-opening costs 37,772 166,354 204,126
Depreciation and amortization 334,520 45,293 3,641 383,454
Income taxes 19,205 19,205
EBITDA $ 413,896 $ (91,481 ) $ (2,407,269 ) $ (2,084,854 )
Year ended December 31, 2011:
South Africa Hungary Management Totals
Net loss $ (103,310 ) $ $ (1,059,404 ) $ (1,162,714 )
Interest expense 7,332 176,135 183,467
Pre-opening costs 3,824  – 3,824
Depreciation and amortization 71,529 8,013 79,542
EBITDA $  (20,625 ) $ $ (875,256 ) $ (895,881 )
Three months ended December 31, 2012:
South Africa Hungary Management Totals
Net income (loss) $ 23,153 $ (86,338 ) $ (816,211 ) $ (879,396 )
Interest expense 15,824 26,307 42,131
Pre-opening costs 13,959 13,959
Depreciation and amortization 86,619 29,968 1,799 118,386
Income taxes 11,208 11,208
EBITDA $ 136,804 $ (42,411 ) $  (788,105 ) $ (693,712 )
Three months ended December 31, 2011:
South Africa Hungary Management Totals
Net loss $ (103,310 ) $  – $ (563,367 ) $ (666,677 )
Interest expense 7,332 112,259 119,591
Pre-opening costs 3,824 3,824
Depreciation and amortization 71,529 440 71,969
EBITDA  $  (20,625 ) $  –  $  (450,668 ) $  (471,293 )
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