Nathan’s Famous profit falls 80% due to interest expense
A Nathan's hot dog on Thursday, May 7, 2015. Credit: Steve Pfost
Nathan’s Famous saw its net income for the quarter ended Dec. 27 plummet by more than 80 percent from the year-earlier period, as its interest expenses rose sharply, the company said Friday.
The Jericho-based hot dog maker reported net income of $432,000 for the quarter, down from $2,241,000 for the same period in 2014.
The company reported interest expense of $3.7 million for the quarter, up from zero a year earlier. The expense stems from the company’s March 10 issuance of $105 million in senior secured notes, which it used to pay a special dividend of $25 per share, or about $116.1 million. The notes bear an interest rate of 10 percent, the company reported.
Quarterly revenue fell by 7.8 percent year-over-year, to $20.56 million. Earnings per diluted share were 10 cents, down from 49 cents a year earlier.
Income from operations, which excludes interest expense, interest income and other income, rose annually by 17.8 percent, to $4,435,000 for the quarter.
Sales excluding license royalties, franchise fees and franchise royalties fell by 8.9 percent year-over-year, to $15.76 million for the quarter, primarily due to an 8.4 percent decline in average sales prices, the company said. License royalties ticked up annually by 1.9 percent, to $3.6 million.
Nathan’s restaurant system included five company-owned locations and 262 franchises on Dec. 27, down from 305 franchises a year earlier.
People line up to buy hot dogs at Nathan's in Coney Island. Credit: Yana Paskova
The company’s stock fell nearly 15 percent to close at $46.24 Friday on the Nasdaq stock market.
In the past 12 months the shares have fallen about $30, or roughly 40 percent, a decline that is due in large part to the $25 per share special dividend. On March 30, Nathan’s stock fell almost $25 after the dividend became payable to shareholders.
Maura McDermott covers education. Since joining Newsday in 2012, she also has worked on the investigations team and covered real estate and the business of health care.
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