RAVE Restaurant (RAVE) 6 Feb 192019 Q2 Earnings call transcript

Hello everyone and welcome to the RAVE Restaurant Inc. report Second Quarter 2019 Financial Results. [Operator Instructions]. Please note that today’s event is being recorded and with that I’d like to turn the conference over to Andrea Allen, Chief Accounting and Administrative Officer. Please go ahead.

you. Thank thank earnings RAVE conference and second Group’s for XXXX quarter call. you afternoon, Restaurant joining fiscal Good Everyone should The have Investor XXXX be earnings access at Relations to our that found published fiscal section. was this in morning www.raverg.com press can release release the second quarter

also subject cause substitute conditions. undue more refer our to statements. be a recent as over are results Scott conference believe financial operating can future Before future considered call, our we such discussion evaluating information should begin, materially to statements will put of These our uncertainties should and measures, numerous for could are discuss guarantees accordance We that actual of of we our isolation today’s from not forward-looking impact is note and Crane, detailed risks non-GAAP discussion could These be all release. like useful expect. Chief in with I’d performance. they comparable GAAP differ for reconciliation call therefore, a to results our measures filings will not everyone available prepared and or certain earnings that, financial that Executive to Officer. statements that With GAAP. of of you on Any we turn during we results today in which in the A like in of our the remind include to to performance, Please you SEC would that what part I them. risks discussions reliance some forward-looking not

Rave growth operation. quarter With profitability, cash on sales firmly solid with improved from that everyone. strategic results up we flow track. plan challenging and of shored footing believe good Thanks our positive comparable third years, cash sheet, second two afternoon and After and consecutive on balance our position is is demonstrates regenerating our domestic Andrea in quarter

franchisees operational and confidence offerings, to updated deliver our Our ability to new processes shareholders. technologies continue in consumers, us have investment menu and our given for results

With to build reinforcing Administrative of Bob we’ve here feel Bafundo our a in to franchise has team the to team our already Inn President recent instrumental to great our and we at Accounting has our that commitment been successes. Andrea Rave Allen of build recent has talented Andrea Pie Officer Pizza on a continued our financial relationships Bob base put promotions and together Chief franchisees. to bolstered And and and Five process. streamline with

felt sales momentum the As Pizza brand. throughout build being is renewed to Inn positive optimism continues

are new of and also in Our Pizza seven delivering operating on call service it view franchisees focused exceptional building concept, store of expanded prototype created originally the we and We’ve an the now we or airport our convenience like units to Express equity their PIE. or We Inn brand have taken market. model.

shift in The expectation. to we model take While strategic initial as corner. these we trends will are focus poised our domestically in turning pipeline. restaurants growth looking time at Five At and partners do as We’ve multiunit deliver seeing applications, to retailers primary more beyond that indicate we’re we’re are with opportunities a identified internationally. still our multiunit we see that Pie the development efficient had

first starting and from Although we that to it’s anticipate Pie continuing confident additional we Five gaining, consolidation traction. is generation restaurant, are gain

in across over to detail. Bob the performance our that, system turn future. bolster brands quarter and effectiveness efforts three our about President and demonstrate confidence our excited results all quarter of I’m And to to profitability, in me give that second second Bafundo, with talk Our strengthened more results

Scott. Thanks

Since this years volumes later this are late remodel year, Due sales up and positive increased consecutive a are and new up be retail in remodeling franchisees XXXX, is in deliver retail compared strategy legacy average more store brand prior Pizza track releasing store improving design development, Many strategic to sales continues legacy comparable for we period and straight locked Pizza franchisee technology sales its ordering rewards to growth investments and last in place, sales strong by average compared year, working while all-day domestic new recent comparable store of domestic investing – For for sales year, double-digit thanks of eighth on should Inn new X.X% in comparable to store initiatives total the we over future build in the year-over-year Pizza there, including program restaurant. frequency all-day buffet location. afternoons our period seven online traffic, X.X% We’ve two same retail a put Pizza packages completed of sales on especially and and Inn momentum. build check. that the second of to seen us, ordering plans improving We’ll remodeling décor increased to buffet while We’ve X.X%. for fiscal and of quarter XX in growth to and X.X%. membership announcing of our as such retail off-peak the in a in new restaurants also that visits the Inn Year-to-date, number of are of just online expanding growth completed we’re those to the store continues same months franchise fiscal XX% Inn’s averaging is quarter five total building remodels have our we’ve quarter. openings Inn to by retail the prior trend. program domestic projected on periods of in brand and evenings. Pizza their XXXX. while generate rewards sales locations, platform, pipeline. commitments After the the

non-traditional stores, and universities. applications in Our see this including PIE This us to and for of unique, settings solutions endless is potential centers, work is growing. to model. possibilities their pipeline service convenience for opportunities design model multi-unit will We up opening new licensees travel food that licensees airports,

on Although, store for X.X% comparable Pie respectively year. retail brand. we’re stabilizing the to still compared Pie of consumer in and year. December the for thru of XXXX, research X.X%, retail to towards challenges three decreased month three prior same so respectively, early six with business drive far, the system our preferences, addressing expanding of stages periods growth. and six is With and the month focus online the Pie the sales restaurant-level XX.X% carry-out ordering, of the an Five, showing total Five periods X.X% XX, periods sales proud initiatives. a shifting compared model XXXX, prior ended XX, same Five progress changing we’re the and Five very December future At for ending Pie periods delivery, we’re the and and expanded decreased

options. Our and this the validates dining highlights consumer improves pressures, mix real off-premise model that robust unit costs, working demand. believe menu rising is is and strategy estate led data prototype combat changing a solution and economics Goldilocks this to us the We labor create to

As for this new model, Pie continues stronger. only expansion the will Five system get

exceed delivery online XX-inch along and New with products the ordering our shareable and cauliflower expectations. our to pizzas continue crust, like

rolling in out We we calzone including that test have menu a items anticipate during additional XXXX. product

There units by Pizza the end Inn at During are to international PIE of of the domestic the XXX second the two open of quarter number seven increased fiscal at quarter. and units units XXXX, restaurants XX. finished

discuss quarter finished Officer, company-owned that, Five and our financial going side, Andrea turn Pie Allen On Administrative we the results over our the Chief to and Pie restaurant. Five further one the I’m And franchised to to in detail. with XX call Accounting with

the quarter decreased the to Thanks the as prior Bob. Decreased revenues in year-to-date XXXX. compared revenue consolidated the to compared first franchising to of period were the the franchising $X.X company half we have second restaurants revenue $X.X owning almost driven consolidated owned from fiscal and year. $X.X reduction total in million by shifted million same quarter of in XXXX to in restaurant. total to The units decreased and exclusively year-over-year $X.X million Year-to-date, million in primarily fiscal XX.X% of

average compared to the XX second owning an fiscal Pie in the units of For owned one company quarter XXXX, second Five fiscal quarter of XXXX. restaurant of the

year. quarter to in improvement $X.X EBITDA owned improvement $X.X improves million EBITDA December $X.XX and million million stores and period six-month of $X.X XXXX was second XX, On the losses net a year-to-date fully cash during million, net and in for for For cash of share and to million six $X.X and year. share period diluted and XX, income $X.X for of ended million the XX, The XXXX XXXX The increase XXXX, Adjusted a the the was three- periods of the months basis, prior of for adjusted December as the million $X.XX loss in the same $X.X XXXX per income due general fiscal million prior and million corporate, expenses. $X.X increased fiscal to the primarily $X.X million $X.XX savings to company’s and and per to compared a net the December $X.X respectively. first per of administrative six-month periods same compared and of ended share three- year. and $X.X respectively company company reported equivalents

had quarter months prior Norco used in company reduction in a $X.X was discontinued XX, working six compared its cash from year from and During $X.X payable. the XXXX, million the the receivable cash the December million as ended accounts both of Division cash capital which year, activities in operating accounts fiscal first the to of flows had provided in Distribution

cash in with the XXX June and presented method, amounts accordance XXX the of was in had cash provided a shareholder compared compares transition proceeds in after closed months accordance We fiscal XX, same million primarily are to be a result This financing in connection not historical period December activities to prior sale accounting period For rights the beginning prior XXXX-XX the million stock year, with recognition. the are reported from ending and ASU the in from adopted while six $X.X stock. offering of adjusted XX, September with XX, revenue $X.X modified XXXX in that period net XXXX. of activities On XXX, of activities financing to reporting of investing for to sale company months $X.X retrospective Topic Topic six under June cash prior using results continued first in related $XX,XXX million as in in the of the from in XXXX XXXX year. Topic of the provided a provided the XXXX

the reduction total XXXX six reduction shareholders’ effect standard $X.X XXXX Additional the period from equity cumulative to Topic reflect impact XXXX The fiscal SEC. for was the $X.X XXXX of of the at new and million paid-in detail recognition offset fiscal revenue income on found million XX-Q fiscal in with to quarterly ended of of $X.X adoption partially of first of of additional filed result the be adoption XXX, Form our the XX, end by through December capital. months million the net the and primarily can a

As information SEC filings. line item, in our specific release, details comp a reminder, deal financial variance non-comp statement, and of a brand disclose we brand average payables our unit and earnings restaurant income operating in performance and and great This includes specific volume explanations.

SEC before now filed over his we this Our the call remarks for take turn final back the Q&A. Form some Scott with was to I’ll XX-Q Crane morning. earlier

Thanks, Andrea.

team to to I now the for future. our over quarter we have path technologies, began separate the listen and to and operator years into any us that, year-to-date in gotten on wrap Efforts capabilities the focused the what putting consolidate With two our results, of continue committed So I’ll we the second strategic place. and turn call are we and envisioned our plan our and here when questions. to consumers. operations, demonstrate ago up, and would

Thank you.

the We ahead. will be question go begin from will Instructions] [Operator our [indiscernible]. And question-and-answer now today Please, first session.

Yes. Good afternoon, team.

you I’d folks impressive. turning quite around ship Just first It’s are artfully. say, really the off,

back Secondarily, Andrea, I we year to looked at up quarter’s last of spoke last call, end and the everything. went conference

of go was the increasing change XXXX-XX. terms through I XXX the to to even revenues it topic a long-term today the ASU don’t deferred result in in as Your of good. need equally explanation

that. for you thank So

was everything with you You to I going really the got on balance hit sheet.

itself. just You’re decline that great. I’m equity doing operationally reverse in hopeful the to going shareholder is

So equity terms shareholder just off will of end the my that praise real on in effects out is, at you do time-wise? those all laudatory question think of line level the balancing when

positive a Yes, retained drive net XXX. of to continuing towards impact has erode which time positive over the the of income, we’re impact will course the earnings, our to adoption of which ASC

Okay.

quarters. So we that coming do the number expect over of

Okay.

corporate it’s if I token they’re along way holder the don’t Finally, as and insiders. but that know I’ve been – some wouldn’t I under covenant whether part, certainly prohibited doing not, know or my purchases hurt or

destroyers lastly, want this stodgy my into to that’s PT seems boats And watch with the Goldilocks need airport fleet one it the express. the to from the new other – say I the then You comment, the on that on with all really very late model hand, tools, turnaround. turning me XXs and terrific comment. just whether of liner big the it’s not PIE the you’re a it’s to kiosk just cruise I’m

So very good thank Keep the much work. guys. you up

time, for [Operator Instructions] now thank will not may conclude conference. this session showing you well question-and-answer disconnect. At everyone We I’m This today’s want to as today’s this any questions. time, today’s do At as more presentation. attending