ARC Group, Inc. Announces Record Q3 2017 Financial Results

JACKSONVILLE, Fla., Nov. 15, 2017 /PRNewswire/ -- ARC Group, Inc. ARCK, the owner, operator and franchisor of the award-winning Dick's Wings & Grill® concept, announced financial results for its fiscal quarter ended September 30, 2017, reporting record revenue and cash flows from operating activities of $3,228,054 and $242,619, respectively, for the nine-month period ended September 30, 2017.

Financial Highlights

The Company achieved the following financial results for its fiscal quarter ended September 30, 2017:

  • Revenue increased 471% to $1,047,404 for the three months ended September 30, 2017 from $183,591 for the corresponding period in 2016.
  • Revenue increased 308% to $3,228,054 for the nine months ended September 30, 2017 from $791,407 for the corresponding period in 2016.
  • Net income and net income per share were $87,675, or $0.01 per share, for the nine months ended September 30, 2017 compared to $245,939, or $0.04 per share, for the nine months ended September 30, 2016.
  • EBITDA, a non-GAAP measure, was $122,307 for the nine months ended September 30, 2017 compared to $245,646 for the nine months ended September 30, 2016.
  • Adjusted net income and adjusted earnings per share, which are non-GAAP measures, were $386,047, or $0.06 per share, for the nine months ended September 30, 2017 compared to $273,000, or $0.04 per share, for the corresponding period in 2016.
  • Cash flows from operating activities increased $15,747 to $242,619 during the nine months ended September 30, 2017 from $226,872 during the corresponding period in 2016.

A reconciliation of EBITDA, adjusted net income and adjusted earnings per share on a GAAP and non-GAAP basis is included in the table below entitled "Reconciliation of GAAP to non-GAAP Financial Measures".

"We are very pleased with our Q3 2017 performance," stated Seenu G. Kasturi, President and Chief Financial Officer of ARC Group.  "Our revenue was negatively impacted by hurricane Irma, which forced the closure of our company-owned stores and those of some of our franchisees for a few days, and our operating expenses were negatively impacted by some one-time rent expenses that we incurred.  Notwithstanding this, we generated $242,619 of positive cash-flow from operating activities on revenue of $3,228,054 for the nine-months ended September 30, 2017, both records for the company for this period."

Kasturi continued, "The increase in revenue was due primarily to our December 2016 acquisition of Seediv, which owns two of our highest grossing Dick's Wings & Grill restaurants.  Seediv contributed $2,595,679 of revenue to ARC Group during the nine months ended September 30, 2017.   This increase in revenue helped us to reduce our outstanding debt by $229,008, or 87%, during Q3 2017, while still providing us with a healthy total cash balance of $132,904 at the end of the quarter."

"We continue to focus on growth in our Dick's Wings business while concurrently evaluating additional acquisition opportunities for premium restaurant brands," stated Richard W. Akam, Chief Executive Officer of ARC Group, Inc..  "While we are currently evaluating multiple acquisition targets, we are engaging in careful due diligence to ensure that any brands that we acquire will help us achieve our long-term goal of transforming ARC Group into a holding company comprised of a diversified portfolio of leading brands and profitable businesses that are all strong contributors to our bottom line."

Dick's Wings restaurants are family fun fooderys® where both families and sports fans can go to enjoy a unique restaurant experience from first bite to last call®.  Dick's Wings offers a variety of boldly-flavored menu items highlighted by its award-winning, Buffalo, New York-style chicken wings and hog wings and its Dick's Blingz® boneless chicken wings, for which it boasts 365 mouth-watering flavors.  It also offers customers a variety of fresh sandwiches, burgers, wraps, salads and signature waffle fries.  Guests enjoy these menu items in an elevated sports-themed environment that includes flat screen TVs located throughout each restaurant and children's areas filled with video games and other forms of children's entertainment. 

Dick's Wings is actively offering franchise opportunities in Florida, Georgia, Alabama, Louisiana, North Carolina and South Carolina.  For more information about Dick's Wings exciting menu offering and locations, and for additional franchising information, please visit www.dickswingsandgrill.com.

Non-GAAP Financial Measures

ARC Group, Inc. (the "Company") prepares it's consolidated financial statements in accordance with United States generally accepted accounting principles ("GAAP").  In addition to disclosing financial information prepared in accordance with GAAP, this release also includes non-GAAP EBITDA, non-GAAP adjusted net income and non-GAAP adjusted net income per share data for the periods presented. Management uses non-GAAP financial measures internally for financial and operational decision-making and as a means to evaluate period-to-period comparisons.  The Company's management believes that these non-GAAP financial measures provide useful supplemental information to management and investors regarding the performance of the company's core business operations, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making.

These non-GAAP financial measures are not recognized measures for financial statement presentation under U.S. GAAP and do not have standardized meanings.  Accordingly, they may be different from similar non-GAAP financial measures presented by other companies.  These non-GAAP financial measures should only be used to evaluate the Company's results of operations in conjunction with the corresponding GAAP financial measures. Investors should consider these non-GAAP financial measures as a supplement to, and not as a substitute for, corresponding financial measures calculated in accordance with GAAP.

For the purposes of this press release, the following non-GAAP financial measures have the following meanings:

"EBITDA" means earnings before interest, income taxes, depreciation and amortization, and is comprised of net income plus interest (income) / expense and depreciation expense. 

"Adjusted net income" means EBITDA plus all remaining non-cash items, which are comprised of stock-based compensation expense, stock-based payments for consulting fees due, bad debt expense, income from investment in Paradise on Wings, and gain on settlement of liabilities.

"Adjusted earnings per share" means adjusted net income divided by the weighted average number of shares outstanding – basic and fully diluted.

For further information, please refer to the Company's Quarterly Report on Form 10-Q filed with the SEC on November 14, 2017 and available online at www.sec.gov.

For a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, please see the table below entitled "Reconciliation of GAAP to Non-GAAP Financial Measures".

About ARC Group, Inc.                                                         

ARC Group, Inc., headquartered in Jacksonville, Florida, is the owner, operator and franchisor of the Dick's Wings & Grill concept.  Now in its 23rd year of operation, Dick's Wings prides itself on its award-winning chicken wings, hog wings and duck wings spun in its signature sauces and seasonings.  It also offers its own proprietary line of craft beers under the name "Dick's Craft Beers".  Dick's Wings has 17 restaurants in Florida and five restaurants in Georgia.  It also has two concession stands at EverBank Field, home of the NFL's Jacksonville Jaguars. 

Safe Harbor Provision

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, that are intended to be covered by the safe harbor created thereby.  All statements other than statements of historical fact contained herein, including, without limitation, statements regarding the Company's future financial position, business strategy, plans and objectives, are forward-looking statements.  Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expects," "intends," "plans," "projects," "estimates," "anticipates," or "believes" or the negative thereof or any variation thereon or similar terminology or expressions.  Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from results proposed in such statements.  Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can provide no assurance that such expectations will prove to have been correct.  Important factors that could cause actual results to differ materially from the Company's expectations include, but are not limited to, those factors set forth in the Company's Annual Report on Form 10-K/A for the year ended December 31, 2016 and its other filings and submissions with the SEC.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made.  Except as required by law, the Company assumes no obligation to update or revise any forward-looking statements.

 

 

 ARC Group, Inc. 

 Consolidated Balance Sheets (Unaudited) 














 September 30, 


 December 31, 






2017


2016









Assets
















Cash and cash equivalents




$               132,904


$                 50,923


Restricted cash and cash equivalents




13,076


-


Accounts receivable, net




48,971


67,395


Accounts receivable, net – related party




3,056


14,568


Ad funds receivable, net




37,093


-


Ad funds receivable, net – related party




2,601


-


Other receivables, net – related party




24,000


-


Inventory




40,867


45,250


Notes receivable, net




37,171


63,742


Interest receivable, net




-


838


Other current assets




16,711


1,806










     Total current assets




356,450


244,522










Notes receivable, net of current portion




1,209


29,379


Property and equipment, net




102,101


80,948










          Total assets




$               459,760


$               354,849









Liabilities and stockholders' deficit
















Accounts payable and accrued expenses




$               703,809


$               735,331


Accounts payable and accrued expenses – related party




46,149


98,434


Accrued interest




12,969


2,594


Ad fund liability




13,076


-


Settlement agreements payable




262,155


253,724


Accrued legal settlement




153,961


148,105


Notes payable – in default




7,000


7,000


Notes payable – related party




26,248


232,572


Contingent consideration




20,897


20,897


Other current liabilities




10,985


5,096










     Total current liabilities




1,257,249


1,503,753










          Total liabilities




1,257,249


1,503,753









Stockholders' deficit:
















Class A common stock – $0.01 par value: 100,000,000 shares authorized,








     6,935,119 and 6,647,464 shares issued and outstanding at 








     September 30, 2017 and December 31, 2016, respectively




69,351


66,475


Additional paid-in capital




3,982,077


3,747,953


Stock subscriptions payable




176,740


150,000


Accumulated deficit




(5,025,657)


(5,113,332)










     Total stockholders' deficit




(797,489)


(1,148,904)










          Total liabilities and stockholders' deficit




$               459,760


$               354,849

 

 

 ARC Group, Inc. 

 Consolidated Statements of Operations (Unaudited) 














 For the Three Months Ended 


 For the Nine Months Ended 




September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016











Revenue:










Restaurant sales


$                 841,214


$                           -


$              2,595,679


$                           -


Franchise and other revenue


165,905


174,499


509,032


476,831


Franchise and other revenue – related party


40,285


9,092


123,343


314,576











Total net revenue


1,047,404


183,591


3,228,054


791,407











Operating expenses:










Restaurant operating costs:










    Cost of sales


274,846


-


869,600


-


    Labor


293,035


-


857,933


-


    Occupancy


92,729


-


187,264


-


    Other operating expenses


198,354


-


555,664


-


Professional fees


67,975


52,550


351,185


121,450


Employee compensation expense


91,033


140,600


250,626


390,582


General and administrative expenses


50,991


268,559


82,437


316,124











Total operating expenses


1,068,963


461,709


3,154,709


828,156











Income / (loss) from operations


(21,559)


(278,118)


73,345


(36,749)











Other income:










Interest income / (expense)


(6,506)


(2,622)


(22,730)


293


Income from investment in Paradise on Wings


-


101,056


-


106,082


Gain on settlement of liabilities


-


175,449


-


175,449


Gain on sale of investment in Paradise on Wings –










    related party


24,000


-


24,000


-


Other income


3,976


-


13,060


864











Total other income


21,470


273,883


14,330


282,688











Net income / (loss)


$                         (89)


$                    (4,235)


$                   87,675


$                 245,939











Net income / (loss) per share – basic and fully diluted


$                      (0.00)


$                      (0.00)


$                       0.01


$                       0.04











Weighted average number of shares 










outstanding – basic and fully diluted


6,773,041


6,612,983


6,768,839


6,599,357

 

 

 ARC Group, Inc. 

 Reconcilation of GAAP to Non-GAAP Financial Measures (Unaudited) 










Table 1: EBITDA



















 For the Three Months Ended September 30, 


 For the Nine Months Ended September 30, 



2017


2016


2017


2016










Net income / (loss) (as reported)

$                             (89)


$                        (4,235)


$                       87,675


$                     245,939











Interest (income) / expense

6,506


2,622


22,730


(293)


Depreciation expense

4,571


-


11,902


-










EBITDA

$                       10,988


$                        (1,613)


$                     122,307


$                     245,646



















Table 2: Adjusted Net Income and Earnings Per Share



















 For the Three Months Ended September 30, 


 For the Nine Months Ended September 30, 



2017


2016


2017


2016










EBITDA

$                       10,988


$                        (1,613)


$                     122,307


$                     245,646











Stock compensation expense

26,889


12,568


233,740


37,295


Stock-based payment for consulting fees due

30,000


-


30,000


-


Bad debt expense

-


271,590


-


271,590


Income from investment in Paradise on Wings

-


(101,056)


-


(106,082)


Gain on settlement of liabilities

-


(175,449)


-


(175,449)










Adjusted net income

$                       67,877


$                         6,040


$                     386,047


$                     273,000










Adjusted earnings per share – basic and fully diluted

$                           0.01


$                           0.00


$                           0.06


$                           0.04










Weighted average number of shares 









outstanding – basic and fully diluted

6,734,534


6,592,464


6,691,239


6,592,072

 

View original content:http://www.prnewswire.com/news-releases/arc-group-inc-announces-record-q3-2017-financial-results-300556184.html

SOURCE ARC Group, Inc.

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!