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Nathan's celebrates its centennial year with 'historic' fiscal year report

June 13, 2016

Fiscal year 2016 has been a history-maker for Nathan's Famous Inc, according to company leadership. The chain's recently released report for the last 12 months showed across-the-board income increases — a fact that Nathan's CEO Eric Gatoff said is cause for celebration for the company, now in its 100th year.  

"Fiscal 2016 was a very strong year for Nathan's Famous," Gatoff said. "Our branded products program, licensing program and company-owned restaurants all delivered outstanding results, helping the company achieve the highest Income from operations in its history."

Highlights of the report for the 52 weeks, ending March 27, 2016 include: 
•    Income from operations up 25.1 percent to $24,963,000, compared to $19,958,000 for the previous year. 
•    Adjusted EBITDA up 20.7 percent to $27,155,000 compared to $22,497,000 the previous year. 
•    Net income dropped to $6,096,000 from $11,703,000 for the previous 52 weeks.
•    Earnings per diluted share dropped this fiscal year to $1.37 per share from $2.55 per share the previous year.
•    Revenues were up slightly to $100,890,000, compared to $99,112,000 for the previous year. 

Some of the gains for the hot dog chain can be seen in its additional reporting for the last year. For instance, sales from company-operated restaurants increased 5 percent to $16,664,000 during the fiscal year. That growth was attributed to higher sales at two Coney Island locations. 

Revenues from franchise operations, however, were down to $5,044,000 from $5,581,000 the previous fiscal year, while franchise fee income dropped to $751,000 from $1,043,000 during the previous annual reporting period. A release on the results attributes this to lower international development fees. 

Over the course of the fiscal year ending in late March 2016, the company reported that 56 new franchised units opened, including 25 international locations with the chain's first outlets in Panama and Australia. The number of franchising units in total, however, was down slightly from the 36 units opened for the previous fiscal year.

The company reported that license royalties grew by 10 percent in the last fiscal year to $19,815,000. For the same period, royalties earned under the John Morrell & Co. agreement also increased 11.6 percent to $17,975,000. The growth in this sector was attributed to "significant organic growth in our consumer packaged hot dog business" due to better promotion and sales strategies, according to a company release.  
The volume of branded products sold through the company increased 4.6 percent, but this was offset by a 3.7 percent decrease in average selling prices due to lower beef prices on branded products sold to larger customers using formula prices tied to the underlying beef markets. 

Finally, during the previous fiscal year, Nathan's completed financing on $135 million aggregate principal amount of senior secured notes. As a result, the company incurred $14,630,000 interest, including amortized debt issuance costs, this fiscal year. 

Additionally, the board of directors authorized the purchase of 400,000 more shares of common stock in coming months as the market allows. At the end of the 2016 fiscal year, there were an aggregate 290,874 shares available under Nathan's stock buy-back program. Through fiscal year 2016, Nathan's has purchased a total of 5,096,757 shares of common stock for approximately $76,031,000. Nathan’s has also entered into a 10b5-1 plan with Mutual Securities Inc, allowing MSI  to buy shares of common stock on the company's behalf.