JACKSONVILLE, Fl. – May 16, 2018 – ARC Group, Inc. (OTC: ARCK), the owner, operator and franchisor of the award-winning Dick’s Wings & Grill® concept, announced financial results for its first fiscal quarter of 2018 highlighted by record revenue.
The Company achieved the following financial results for its first fiscal quarter of 2018:
- Revenue increased 14% to $1,246,662 for Q1 2018 from $1,088,796 for Q1 2017.
- Income from operations was $48,308 during Q1 2018 compared to $210,392 during Q1 2017.
- Adjusted income from operations, a non-GAAP measure, was $76,364 during Q1 2018 compared to $226,853 during 2016.
- Net income was $47,614, or $0.01 per share, during Q1 2018 compared to 206,077, or $0.03 per share, during Q1 2017.
- Adjusted net income, a non-GAAP measure, was $76,364 during Q1 2018 compared to $226,853 during Q1 2017.
- Adjusted net income per share was $0.01 for Q1 2018 compared to $0.03 for Q1 2017.
- Cash flows from operations was $96,620 during Q1 2018 compared to 168,446 during Q1 2017.
A reconciliation of adjusted income from operations, 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”.
During Q1 2018, the Company adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) which changed the timing of recognition of initial franchise fees as well as the reporting of advertising fund contributions and related expenditures. ARC Group implemented this guidance using the modified retrospective transition method. Under this method, the cumulative effect of initially adopting the guidance was recognized as an adjustment to the opening balance of equity at January 1, 2018. Therefore, the comparative period has not been adjusted and continues to be reported under the previous revenue recognition guidance. The adoption.
“Our Q1 2018 results show continued strength in our business,” stated Richard W. Akam, Chief Executive Officer of ARC Group. “We expect to open additional Dick’s Wings restaurants during the remainder of 2018, an are currently evaluating potential acquisitions of multiple leading restaurants brands. In anticipation of this, we are fortifying our management team and employee base with key hires and will be reorganizing our business to better position us for our upcoming growth. We are committed to achieving 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.”
“As a result of the adoption of ASU 2014-09, we recognized deferred franchise fees in the amount of $196,478 on our balance sheet as of January 1, 2018 and an increase in our accumulated deficit by the same amount on that date,” stated Seenu G. Kasturi, Chief Financial Officer of ARC Group. “The adoption of ASU 2014-09 had the effect of increasing franchise and other revenue from related and unrelated parties by $8,625 for franchise fees and $53,232 for ad fund fees. The effect of the ad fund fees on our revenue was negated by the recognition of $53,232 for ad fund expenses. Accordingly, the net effect of ASU 2014-09 on our Q1 2018 operating results was to increase our revenue, income from operations and net income by $8,625.”
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
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 operating income, non-GAAP net income and non-GAAP 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:
“Adjusted income from operations” means income from operations plus depreciation expense and stock-based compensation expense.
“Adjusted net income” means net income plus interest expense, interest income, depreciation expense, stock-based compensation expense, and other income.
“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 Annual Report on Form 10-K filed with the SEC on March 30, 2018 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 15 restaurants in Florida and five restaurants in Georgia. It also has two concession stands at TIAA Bank Field (formerly EverBank Field), home of the NFL’s Jacksonville Jaguars, as well as a concession stand at Jacksonville Veterans Memorial Arena, home of the National Arena League’s Jacksonville Sharks.
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.
Lambert, Edwards & Associates