EXHIBIT 99.1

 

 

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

 

Fourth Quarter Same Store Gross Sales Increase 13.2% in Local Currency

 

CHARLOTTE, NC – April 2, 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:

 

 

1
 

 

 

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.

 

2
 

 

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.

 

3
 

 

 

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."

 

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

 

 

4
 

 

 

Chanticleer Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets
December 31, 2012 and 2011
 
 
    2012    2011 
    (Unaudited)       
ASSETS 
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 
           

 

 

5
 

 

 

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 

 

 

6
 

 

 

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 

 

 

7
 

 

 

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 
           

 

 

8
 

 

 

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)

 

 

9