Press Release | 11/06/2018
The Acquisition Would Increase ARC Group’s Annual Revenue Run Rate to More Than $25 Million
JACKSONVILLE, Fla., Nov. 06, 2018 (GLOBE NEWSWIRE) — ARC Group, Inc. (OTC: ARCK), a restaurant holding company with a focus on diversified, full service restaurants and brands, announced today that it has entered into an agreement to acquire the Tilted Kilt Pub and Eatery. ARC Group will acquire all of the assets of Tilted Kilt from SDA Holdings, LLC for $10. As part of the transaction, it will assume debt of approximately $1.8 million, will assume future payment obligations of approximately $1.5 million, and will issue approximately 1.4 million shares of common stock. Tilted Kilt generated almost $14 million in revenue during 2017. The closing is expected to occur by the end of the year.
There are currently 34 Tilted Kilt restaurants operating in the United States and 8 additional Tilted Kilt restaurants subject to franchise agreements, for which operations have not yet commenced. Tilted Kilt restaurants are located in 17 states, including New York, New Jersey, Pennsylvania, Nevada, California, and Texas. The restaurants offer dinner entrees, traditional pub food, hamburgers, and salads made with fresh, quality ingredients, accompanied by full bar service, served up by uniquely kilt-clad wait staff in a lively, Celtic-themed atmosphere with numerous large screen televisions featuring sports programming.
Seenu G. Kasturi, President and Chief Financial Officer of ARC Group, stated, “We are delighted by the upcoming addition of Tilted Kilt to ARC Group’s portfolio of full-service restaurants. The Tilted Kilt acquisition is in line with our strategy of targeting undervalued/underperforming restaurant chains with immediate cash flow potential, where we have the ability to leverage our franchising, marketing, operational, logistics and financial expertise across brands, while maintaining a strict focus on driving sales, reducing costs, and expanding margins. Upon closing, this will be the second restaurant chain that we have acquired this year and will boost ARC Group’s combined annualized revenue run rate to in excess of $25 million. We look forward to acquiring similar restaurant chains at attractive multiples that are either growing and profitable, or can be turned around quickly and will add to both our top and bottom line.”
Richard Akam, CEO of ARC Group, continued, “Tilted Kilt will be a strong addition to our platform and a brand for which we believe we can make a significant impact in its top and bottom line growth. From 2013 to 2017, we improved the average unit volume of our Dick’s Wings & Grill restaurants from $699,000 to $966,000. During this same period of time, we increased the number of Dick’s Wings units from 15 to 22 and system-wide sales from $10 million to $22 million. We look forward to replicating this success with Tilted Kilt.”
ARC Group, which generated approximately $4.4 million of revenue and $340,000 of net income in 2017, recently acquired the Fat Patty’s franchise. Fat Patty’s is comprised of four restaurants located in West Virginia and Kentucky that generated more than $11 million in revenue and $700,000 in net income during 2017.
About ARC Group, Inc.
ARC Group, Inc., headquartered in Jacksonville, Florida, is a holding company with a focus on the quick serve restaurant industry. ARC is the owner, operator and franchisor of Dick’s Wings & Grill®, a family-oriented restaurant chain with locations in Florida and Georgia. Now in its 23rd year of operation, Dick’s Wings serves over 25,000 wings daily, and prides itself on its award-winning chicken wings, hog wings and duck wings spun in its signature sauces and seasonings. ARC operates four company-owned restaurants, three company-owned concession stands, and has 19 franchise locations. ARC also owns the Fat Patty’s® franchise, with four locations in West Virginia and Kentucky. Fat Patty’s offers a number of specialty burgers and sandwiches, wings, appetizers, salads, wraps, and steak and chicken dinners in a family friendly, casual dining environment.
Pro Forma Financial Information
The pro forma financial information included in this press release was prepared by management for illustrative purposes only using unaudited financial information for Tilted Kilt that was provided to ARC Group by Tilted Kilt. The pro forma financial information is not necessarily indicative of the financial position or results of operations that would have been realized had ARC Group completed the acquisition of Tilted Kilt on January 1, 2018, nor is it meant to be indicative of any anticipated financial position or future results of operations that ARC Group or Tilted Kilt will experience in the event the acquisition is completed in the future. In addition, the pro forma financial information does not include any pro forma adjustments to reflect any operational efficiencies, cost savings or economies of scale that may be achievable, or the impact of any non-recurring charges and transaction-related costs that result directly from the proposed acquisition. Future results of operations are also subject to risks and uncertainties that could cause such results to differ materially from those reflected in the pro forma financial information. Readers are cautioned not to place undue reliance on the pro forma financial information presented in this press release. See “Safe Harbor Provision” below regarding forward-looking statements presented in this press release.
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 for the year ended December 31, 2017 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.
Contact:
Crescendo Communications, LLC
Email: <a href=”mailto:arck@crescendo-ir.com”>arck@crescendo-ir.com</a>
Tel: 212-671-1020