Fat Brands Reports Revenues Up 10 % Q-3 – Offering Underway 8.25% Preferred

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FAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets and develops fast casual and casual dining restaurant concepts around the world. Record quarterly Revs up 10.6% to $6.4 Million earning a net income at $1.1 million. The company reported EBITDA of $3 Million compared to $1.8 million for the same quarter 2018.

The Company currently owns eight restaurant brands including, Fatburger, Buffalo’s Cafe, Buffalo’s Express, Hurricane Grill & Wings, Yalla Mediterranean, Elevation Burger and Ponderosa and Bonanza Steakhouses, that have over 380 locations open and more than 200 under development in 32 countries.

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The Company’s passionate and dedicated in-house support teams work across all brands. The Operations, Construction, Purchasing, Architecture & Design, Kitchen Design, Training, Logistics and Marketing departments are highly experienced and dedicated to helping their franchisees achieve their entrepreneurial goals.

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LOS ANGELES

Conference call and webcast will be held at 5:00 p.m. ET today

FAT (Fresh. Authentic. Tasty.) Brands Inc. (NASDAQ: FAT) (“FAT Brands” or the “Company”) today reported fiscal third quarter 2019 financial results for the 13-week period ending September 29, 2019.

Andy Wiederhorn, President and CEO of FAT Brands, commented, “We are pleased with our performance in the third quarter which included nearly 11% revenue growth and EBITDA growth of over 70%, as we continue to execute our brand acquisition strategy. During the quarter we successfully integrated our latest acquisition, Elevation Burger, which is now running at full synergies. We have built a considerable brand pipeline from which we will acquire synergistic brands to add to our unique platform.

”Wiederhorn continued, “We continue to pursue financing that will lower our cost of capital. To that end, we recently completed the initial closing of our Series B preferred offering with significant insider purchases. Furthermore, in the next few months, we expect to close a whole-business securitization deal that will further reduce our cost of capital and provide ample permanent capital to pursue our growth strategy.

Fiscal Third Quarter 2019 Highlights

Total revenues of $6.5 million, up 10.6% from $5.9 million in the third quarter of 2018. Excluding advertising revenues, revenues grew 10.5% to $5.3 million from $4.8 million in the third quarter of 2018.System-wide sales growth of 7.5% y/y and 19.4% YTD

United States sales growth of 4.5% y/y and 24.9% YTD

Canada sales growth of 5.2% y/y and 5.5% YTD

Other International(1) sales growth of 24.1% y/y and 6.7% YTD System-wide same-store sales growth of (1.3%) y/y and (1.0%) YTD

United States same-store sales growth of (0.1%) y/y and 0.2% YTD

Canada same-store sales growth of 2.5% y/y and 2.7% YTD

Other International(1) sales growth of (10.5%) y/y and (9.4%) YTD

Six new franchised store openings during the third quarter 2019, with two additional openings thus far in the fourth quarterStore count as of September 29, 2019: 384 stores system-wide

Net income of $1,154,000 or $0.10 per share on a basic and fully diluted basis, as compared to net income of $10,000 or $0.00 per share on a basic and fully diluted basis in the third quarter of 2018

EBITDA(2) of $3.0 million as compared to $1.8 million in the third quarter of 2018Adjusted EBITDA(2) of $2.3 million as compared to $2.2 million in the third quarter of 2018.

The reconciliation of EBITDA to Adjusted EBITDA can be found in the accompanying financial tables.

(1)Excludes Canada, includes Puerto Rico.

(2)EBITDA and Adjusted EBITDA are non-GAAP measures defined below, under “Non-GAAP Measures”. A reconciliation of GAAP net income to EBITDA and adjusted EBITDA is included in the accompanying financial tables.

Key Financial DefinitionsNew store openings – The number of new store openings reflects the number of stores opened during a particular reporting period. The total number of new stores per reporting period and the timing of stores openings has, and will continue to have, an impact on our results.

Same-store sales growth – Same-store sales growth reflects the change in year-over-year sales for the comparable store base, which we define as the number of stores open for at least one full fiscal year regardless of whether the brand during the prior measurement period was owned by FAT Brands or a predecessor. Given our focused marketing efforts and public excitement surrounding each opening, new stores often experience an initial start-up period with considerably higher than average sales volumes, which subsequently decrease to stabilized levels after three to six months. Thus, we do not include stores in the comparable base until they have been open for at least one full fiscal year.

System-wide sales growth – System wide sales growth reflects the percentage change in sales in any given fiscal period compared to the prior fiscal period for all stores in that brand only when the brand is owned by FAT Brands. Because of acquisitions, new store openings and store closures, the stores open throughout both fiscal periods being compared may be different from period to period.

Conference Call and WebcastFAT Brands will host a conference call and webcast to discuss its fiscal third quarter 2019 financial results today at 5:00 PM ET. Hosting the conference call and webcast will be Andy Wiederhorn, President and Chief Executive Officer; and Rebecca Hershinger, Chief Financial Officer.

The conference call can be accessed live over the phone by dialing 412-317-6026. A replay will be available after the call until Thursday, November 14, 2019, and can be accessed by dialing 412-317-6671. The passcode is 10136456.

The webcast will be available at www.fatbrands.com under the “invest” section and will be archived on the site shortly after the call has concluded.

About FAT (Fresh. Authentic. Tasty.) BrandsFAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets and develops fast casual and casual dining restaurant concepts around the world. The Company currently owns eight restaurant brands: Fatburger, Buffalo’s Cafe, Buffalo’s Express, Hurricane Grill & Wings, Elevation Burger, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses, and franchises over 380 units worldwide.For more information, please visit www.fatbrands.com.

Forward Looking StatementsThis press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the future financial and operating results of the Company, our future acquisitions, and our ability to pay a cash dividend to our common stockholders. Forward-looking statements generally use words such as “expect,” “foresee,” “anticipate,” “believe,” “project,” “should,” “estimate,” “will,” “plans,” “forecast,” and similar expressions, and reflect our expectations concerning the future. It is possible that our future performance may differ materially from current expectations expressed in these forward-looking statements. We refer you to the documents we file from time to time with the Securities and Exchange Commission, such as our reports on Form 10-K, Form 10-Q and Form 8-K, for a discussion of these and other risks and uncertainties that could cause our actual results to differ materially from our current expectations and from the forward-looking statements contained in this press release. We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date of this press release.

Non-GAAP Measures (Unaudited)This press release includes the non-GAAP financial measure of EBITDA and Adjusted EBITDA.EBITDA is defined as earnings before interest, taxes, depreciation and amortization. We use the term EBITDA, as opposed to income from operations, as it is widely used by analysts, investors and other interested parties to evaluate companies in our industry. We believe that EBITDA is an appropriate measure of operating performance because it eliminates the impact of expenses that do not relate to business performance. EBITDA is not a measure of our financial performance or liquidity that is determined in accordance with generally accepted accounting principles (“GAAP”), and should not be considered as an alternative to net income (loss) as a measure of financial performance or cash flows from operations as measures of liquidity, or any other performance measure derived in accordance with GAAP.Adjusted EBITDA is defined as EBITDA (as defined above), excluding expenses related to acquisitions, refranchising restaurant costs and expenses, net of revenue, gains from refranchising of restaurants, and certain non-recurring or non-cash items that the Company does not believe directly reflect its core operations and may not be indicative of the Company’s recurring business operations.A reconciliation of net income presented in accordance with GAAP to EBITDA and adjusted EBITDA is set forth in the tables below.



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