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Chanticleer (HOTR) Reports Improvements in Revenue, Gross Profit Margins

CHARLOTTE, NC–(Marketwired – April 02, 2013) – 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 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.”

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 six Hooters restaurants in its international franchise territories: Durban, Johannesburg, Cape Town and Emperor’s Palace in South Africa; Campbelltown in Australia; and Budapest in Hungary.

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 28 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
Facebook: www.Facebook.com/ChanticleerHOTR
Twitter: http://Twitter.com/ChanticleerHOTR

For further information on Hooters of America, visit www.Hooters.com
Facebook: www.Facebook.com/Hooters
Twitter: http://Twitter.com/Hooters

Safe Harbor/Risk Factors
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts, and assumptions by our management and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation:

  • Operating losses continuing for the foreseeable future; we may never be profitable;
  • Our business strategy includes operating a new line of business that is distinct and separate from our primary existing operations, which could be subject to additional business and operating risks;
  • 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;
  • 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 Hooters-branded restaurants are dependent on the Hooters’ franchise agreements;
  • Our business depends on our relationship with Hooters;
  • We do not have full operational control over the businesses of our franchise partners;
  • Failure by Hooters to protect its intellectual property rights, including its brand image;
  • 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 effect 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 operation;
  • 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;
  • Unusual or significant litigation, governmental investigations or adverse publicity, or otherwise;
  • Adverse effects on our operations resulting from the current class action litigation in which the Company is one of several defendants;
  • Adverse effects on our results from a decrease in or cessation or clawback of government incentives related to investments;
  • Adverse effects on our operations resulting from certain geo-political or other events.

Chanticleer cannot be certain that any expectation, forecast, or assumption made in preparing any forward-looking statements will prove accurate, or that any projection will be realized. It is to be expected that there may be differences between projected and actual results. 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 Web site or otherwise. We undertake no obligation to update the forward-looking statements provided to reflect events or circumstances that occur after the date on which they were made. 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 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             Years ended
                              December 31,                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)
                         =============  =========  ===========  ===========

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

Dian Griesel Inc.
Investor Relations:
Cheryl Schneider
cschneider@dgicomm.com

Public Relations:
Enrique Briz
ebriz@dgicomm.com
212.825.3210

Tuesday, April 2nd, 2013 Uncategorized