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BurgerFi Reports Fourth Quarter and Full Year 2020 Results

·20 min read

- Total revenue increased 12% in the Fourth Quarter -

- BurgerFi Opens 11 New Locations in 2020 with Plans to Open Approximately 30 Locations in 2021 -

- Delivery & Digital Sales Increase More Than 80% Year-Over-Year in the Fourth Quarter -

PALM BEACH, Fla., April 29, 2021 (GLOBE NEWSWIRE) -- BurgerFi International Inc. (Nasdaq: BFI, BFIIW), one of the nation’s fastest-growing premium fast-casual concepts, QSR’s 2020 Breakout Brand of the Year and the top better burger chain in USA Today’s 10Best Readers’ Choice for 2021, is reporting financial results for the fourth quarter and full year ended December 31, 2020.

Fourth Quarter 2020 Financial Summary vs. Same Year-Ago Quarter

  • Total revenue increased 12% to $9.8 million compared to $8.7 million

  • Same store sales at company owned restaurants decreased 5%

  • Systemwide sales decreased 7% to $34.6 million compared to $37.3 million

  • Net income attributable to controlling interests and common shareholders increased to $6.0 million compared to $0.9 million; the current quarter included non-cash gain on change in value of warrant liability of $5.6 million

  • Adjusted EBITDA increased 19% to $1.2 million compared to $1.0 million (see reconciliation of GAAP to Non-GAAP measures below)

Full Year 2020 Financial Summary vs. 2019

  • Total revenue increased 2% to $34.3 million compared to $33.6 million

  • Same store sales at company owned restaurants decreased 15%

  • Systemwide sales decreased 11% to $129.3 million compared to $145.8 million

  • Net income attributable to controlling interests and common shareholders increased to $6.0 million compared to $2.9 million; the current year included non-cash gain on change in value of warrant liability of $5.6 million

  • Adjusted EBITDA was $2.2 million compared to $4.1 million (see reconciliation of GAAP to Non-GAAP Measures

Delivery + BurgerFi App Systemwide Sales

Full Year 2020

Management Commentary
“2020 was a transformative year for BurgerFi,” said Julio Ramirez, CEO of BurgerFi. “We made progress expanding our footprint with 11 new restaurants, including our first drive-thru location in Kentucky. Additionally, we opened nine delivery-only ghost kitchens with REEF Technology and Epic Kitchens to test out specific markets and build brand recognition. BurgerFi also launched curbside service via digital channels integrated through our website for contactless service. As customer habits shifted during the pandemic, I am incredibly proud of our team’s adaptability and the strategic investments we made in our digital platforms to provide a better omnichannel customer experience. These investments allowed us to recover same store sales sequentially since the start of the pandemic, while also growing our systemwide delivery and digital sales by over 64% for the year.

“As we move forward in 2021, we are eager to continue executing our growth strategy with a significant capital infusion from the closing of the business combination in December 2020. We have already opened four new locations including an additional drive-thru location in Nevada in March and we have eight more restaurants currently under construction. We are excited to bring the best ‘better burger’ experience to a broader customer base with plans to open approximately 30 locations in existing and new markets primarily throughout the Southeast and Mid-Atlantic regions in 2021. We are also continuing to grow internationally with plans to open our first location in Saudi Arabia during the fourth quarter as part of our multi-unit agreement with Food Supplies Co. We are confident in our financial position and ability to capitalize on the growth opportunities in the future.”

Commenting on the results, Ophir Sternberg, Executive Chairman of BurgerFi, stated: “I commend the entire organization’s ability to not only adapt to the unprecedented challenges experienced this year in the food industry, but also the work being done to lay the foundation for growth as we embark into the new year. As I look at the number of BurgerFi’s under development, the recent investments in digital capabilities, the unique expansion opportunities ahead and the bolstered management team and board, I believe that we are just beginning to tap into our true growth potential. We look forward to introducing consumers around the globe to our best-in-class menu.”

Fourth Quarter 2020 Financial Results
Revenue in the fourth quarter of 2020 improved 12% to $9.8 million compared to $8.7 million in the year-ago quarter. The increase was primarily a result of four new company owned stores and higher terminated franchise fees. These increases were partially offset by a 5% decline in company owned same store sales and a decrease in royalties due to a 7% decline in systemwide sales, both as a result of the continued effects of pandemic-related impact on demand and restaurant closures. Increased delivery and digital sales continued to support sequential improvement of same store sales in the fourth quarter. Systemwide sales in the fourth quarter of 2020 were $34.6 million compared to $37.3 million in the year ago period.

Restaurant-level operating expenses for the fourth quarter were $5.8 million compared to $5.4 million in the year-ago quarter. Restaurant-level operating margin improved 540 basis points to 15.1% compared to 9.7% in the fourth quarter of 2019, driven primarily by lower labor costs, partially offset by higher third-party delivery fees.

Net income attributable to controlling interests and common shareholders in the fourth quarter increased to $6.0 million compared to $0.9 million in the year-ago quarter. The increase was driven by a non-cash gain on change in value of warrant liability of $5.6 million. Without this item, the decline of $0.5 million was primarily attributable to the amortization of intangible assets recorded as part of the business combination in December and share-based compensation, partially offset by the additional operating income from higher sales and improved operating margins.

Adjusted EBITDA in the fourth quarter of 2020 increased 19% to $1.2 million compared to $1.0 million in the year-ago quarter. The increase was primarily a result of the improvement in sales and improved store operating margins during the period. See reconciliation of GAAP to Non-GAAP measures below.

Full Year 2020 Financial Results
Revenue in 2020 increased slightly to $34.3 million compared to $33.6 million in the prior year period. The increase was primarily due to increased revenue from company owned stores of $2 million offset by lower royalty fees of $1.2 million as a result of systemwide sales declines of 11%. The increase in company owned stores revenue was primarily due to five new stores offset by comparable store sales decreases of 15% resulting from the impact of COVID-19 related impact on demand and restaurant closures. These decreases were partially mitigated by higher delivery and app sales sequentially throughout the year, particularly during the fourth quarter. Systemwide restaurant sales for 2020 were $129.3 million compared to $145.8 million in the prior year.

Restaurant-level operating expenses for the year were $22.6 million compared to $20.9 million in the prior year. The slightly higher expenses were primarily due to the increase in variable restaurant-level expenses and costs associated with the delivery business. Restaurant-level operating margin improved 90 basis points to 10.7% compared to 9.8% in 2019 primarily as a result of improved labor costs, partially offset by the increase in delivery sales.

Net income attributable to controlling interests and common shareholders in 2020 increased to $6.0 million compared to $2.9 million in 2019. The increase was driven by a non-cash gain on change in value of warrant liability of $5.6 million. Without this item, the decrease of $2.5 million is driven by the increase in restaurant level operating expenses, brand development costs, depreciation and amortization and non-cash stock compensation expense.

Adjusted EBITDA for the full year was $2.2 million compared to $4.1 million in the prior year. The decline is primarily attributable to the increase in restaurant level operating expenses and brand development costs during the year. See reconciliation of GAAP to Non-GAAP measures below.

Liquidity
At December 31, 2020, the Company had $36.7 million in unrestricted cash, compared to $1.7 million at December 31, 2019. This increase is attributable to the raising of capital from the Company’s business combination with OPES Acquisition Corp. on December 16, 2020. The Company had $3.0 million outstanding on its revolving credit line at December 31, 2020, compared to $2.3 million at the end of 2019, which was subsequently repaid in January.

2021 Outlook
BurgerFi is optimistic about its long-term prospects. However, due to COVID-related volatility that is impacting its ability to deliver updated financial projections, the company is suspending its financial outlook for 2021. BurgerFi still plans on opening approximately 30 company and franchise operated restaurants in 2021.

Additionally, BurgerFi continues to be focused on bolstering the customer experience and providing optimal order pickup options across all formats. This includes continuing to invest in digital capabilities and introducing more drive-thru locations in 2021 after the recent successful openings of the drive-thru format in Kentucky and Nevada, along with consistently innovating its menu with limited-time offerings that customers crave.

Conference Call
Given the proximity to when BurgerFi expects to report its first quarter financial results, the Company will hold a combined conference call to discuss both its fourth quarter and full year 2020 financial results, along with its first quarter 2021 financial results. BurgerFi expects to hold this combined conference call in conjunction with releasing its first quarter 2021 financial results, which is anticipated in May.

About BurgerFi International (Nasdaq: BFI, BFIIW)
Established in 2011, BurgerFi is among the nation's fastest-growing better burger concepts with approximately 119 BurgerFi restaurants domestically and internationally. The concept is chef-founded and is committed to serving fresh food of transparent quality. BurgerFi uses 100% American angus beef with no steroids, antibiotics, growth hormones, chemicals or additives. BurgerFi's menu also includes high quality wagyu beef, antibiotic and cage-free chicken offerings, fresh, hand-cut sides and custard shakes and concretes. BurgerFi was named QSR Magazine's Breakout Brand of 2020, placed in the top 10 on Fast Casual's Top 100 Movers & Shakers list in 2020, was named "Best Burger Joint" by Consumer Reports and fellow public interest organizations in the 2019 Chain Reaction Study, listed as a "Top Restaurant Brand to Watch" by Nation's Restaurant News in 2019, included in Inc. Magazine's Fastest Growing Private Companies List, and ranked on Entrepreneur's 2017 Franchise 500. To learn more about BurgerFi or to find a full list of locations, please visit www.burgerfi.com. Download the BurgerFi App on iOS or Android devices for rewards and 'Like' BurgerFi on Facebook or follow @BurgerFi on Instagram and Twitter. BurgerFi® is a Registered Trademark of BurgerFi IP, LLC, a wholly-owned subsidiary of BurgerFi.

About Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the measure Adjusted EBITDA. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

We use this non-GAAP financial measure for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that this non-GAAP financial measure provides meaningful supplemental information regarding our performance and liquidity by excluding certain items that may not be indicative of our recurring core business operating results. We believe that both management and investors benefit from referring to this non-GAAP financial measure in assessing our performance and when planning, forecasting, and analyzing future periods. This non-GAAP financial measure also facilitates management’s internal comparisons to our historical performance and liquidity as well as comparisons to our competitors’ operating results. We believe this non-GAAP financial measure is useful to investors both because (1) it allows for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) it is used by our institutional investors and the analyst community to help them analyze the health of our business.

There are a number of limitations related to the use of non-GAAP financial measures. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from this non-GAAP financial measure and evaluating this non-GAAP financial measure together with its relevant financial measures in accordance with GAAP.

For more information on this non-GAAP financial measures, please see the tables captioned Reconciliation of Net Income (Loss) to Adjusted EBITDA included at the end of this release.

Forward-Looking Statements
This press release may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including BurgerFi's estimates of its future business outlook, prospects or financial results. Statements regarding BurgerFi's objectives, store opening plans, expectations, intentions, beliefs or strategies, or statements containing words such as "believe," "estimate," "project," "expect," "intend," "may," "anticipate," "plans," "seeks," "implies," or similar expressions are intended to identify such forward-looking statements. It is important to note that BurgerFi's actual results could differ materially from those in such forward-looking statements, and undue reliance should not be placed on such statements. Statements about the effects of the COVID-19 pandemic on our business, operations, financial performance and prospects may constitute forward-looking statements and are subject to the risk that the actual impacts may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic. Among the important factors that could cause such actual results to differ materially are (i) the impact of any economic recessions in the U.S. and other parts of the world, (ii) fluctuations in the global economy, (iii) BurgerFi's ability of maintaining its margins, (iv) changes in applicable accounting principles or interpretations of such principles, (v) delays in BurgerFi's ability to develop new products and services and market acceptance of new products and services, (vi) rapid technological change, (vii) BurgerFi's ability to attract and retain key management personnel, (viii) the existence of substantial competition, and (ix) other risk factors listed from time to time in BurgerFi's Exchange Act reports and other filings with the Securities and Exchange Commission. All forward-looking statements included in this press release are made as of the date hereof, and BurgerFi undertakes no obligation to update any such forward-looking statements, whether as a result of new information, future events, or otherwise

Investor Relations Contact:
Gateway Investor Relations
Cody Slach or Cody Cree
(949) 574-3860
BFI@GatewayIR.com

Company Contact:
BurgerFi International Inc.
Ashley Spitz, IR@burgerfi.com

Media Relations Contact:
Quinn PR
Laura Neroulias, LNeroulias@quinn.pr



BurgerFi International Inc., and Subsidiaries
Consolidated Balance Sheets

(in thousands, except for per share data)

December 31,
2020

December 31,
2019

ASSETS

CURRENT ASSETS

Cash, including Variable interest entities of $0 and $3,
respectively

$

36,720

$

1,690

Cash - restricted

3,663

727

Accounts receivable, net

718

517

Inventory

268

249

Deferred income taxes

713

Asset held for sale

732

Other current assets

1607

416

TOTAL CURRENT ASSETS

44,421

3,599

PROPERTY & EQUIPMENT, net – including variable interest entities of $0 and $853, respectively

8,004

6,301

DUE FROM RELATED COMPANIES

74

3,611

GOODWILL – including variable interest entities of $0 and $398, respectively

119,542

398

INTANGIBLE ASSETS

116,824

235

OTHER ASSETS

251

238

TOTAL ASSETS

$

289,116

$

14,382

LIABILITIES AND STOCKHOLDERS'/MEMBERS’ EQUITY

CURRENT LIABILITIES

Accounts payable - trade

$

1,678

$

1,265

Accrued expense

1,203

545

Gift card liability

430

586

Revolving line of credit

3,012

2,317

Notes payable - current – variable interest entities – no recourse to general credit of the Company

1,207

Notes payable - current

1,438

Current portion deferred initial franchise fees

490

438

Other deposit

907

TOTAL CURRENT LIABILITIES

9,158

6,358

NON-CURRENT LIABILITIES

Deferred initial franchise fees, net of current portion

2,816

4,250

Due to related companies

271

Deferred rent

29

996

Derivative warrant liability

16,516

Notes payable

1,522

TOTAL LIABILITIES

30,041

11,875

COMMITMENTS AND CONTINGENCIES

Stockholders'/Members' equity

MEMBERS’ EQUITY - Before non-controlling interest, including variable interest entities of $47 as of December 31, 2019

2,492

MEMBERS’ EQUITY - Non-controlling interest

15

Common stock, $0.0001 par value, 100,000,000 shares authorized, 17,541,838 shares issued and outstanding as of December 31, 2020

2

Additional paid-in capital

261,298

Retained deficit

(2,225

)

TOTAL STOCKHOLDERS' EQUITY

259,075

2,507

TOTAL LIABILITIES AND STOCKHOLDERS'/MEMBERS’ EQUITY

$

289,116

$

14,382



BurgerFi International Inc., and Subsidiaries

Consolidated Statements of Operations

As Opes Acquisition Corp.’s historical financial information is excluded from the Predecessor financial information, the business, and thus financial results, of the Successor and Predecessor entities, are expected to be largely consistent, excluding the impact on certain financial statement line items that were impacted by the Business Combination. Management believes reviewing our operating results for the three-months and year ended December 31, 2020 by combining the results of the Predecessor and Successor periods (“S/P Combined”) is more useful in discussing our overall operating performance when compared to the same periods in the prior year. Accordingly, in addition to presenting our results of operations as reported in our consolidated financial statements in accordance with GAAP, certain of the tables below present the non-GAAP combined results for those periods.

Successor

Predecessor

S/P Combined (non-GAAP) (Unaudited)

Predecessor

(in thousands)

December 16, 2020 through December 31, 2020

January 1, 2020 through December 15, 2020

Year Ended December 31, 2020

Year Ended December 31, 2019

REVENUE

Restaurant sales

$

1,350

$

23,966

$

25,316

$

23,183

Royalty and other fees

255

6,116

6,371

7,369

Terminated franchise fees

693

693

825

Royalty - brand development and co-op

74

1,441

1,515

1,720

Initial franchise fees

25

362

387

458

TOTAL REVENUE

1,704

32,578

34,282

33,555

Restaurant level operating expenses:

Food, beverage and paper costs

370

6,567

6,937

6,316

Labor and related expenses

321

6,269

6,590

7,167

Other operating expenses

323

6,007

6,330

5,271

Occupancy and related expenses

33

2,707

2,740

2,149

General and administrative expenses

857

6,925

7,782

7,230

Share-based compensation expense

818

818

Depreciation and amortization expense

348

1,062

1,410

825

Brand development and co-op advertising expense

34

2,283

2,317

1,732

Gain on disposal of property and equipment

(2

)

(2

)

(184

)

TOTAL OPERATING EXPENSES

3,104

31,818

34,922

30,506

OPERATING (LOSS) INCOME

(1,400

)

760

(640

)

3,049

Gain on extinguishment of debt

791

791

Gain on change in value of warrant liability

5,597

5,597

Interest expense

(6

)

(125

)

(131

)

(79

)

Income before income taxes

4,982

635

5,617

2,970

Income tax benefit

366

366

Net Income

5,348

635

5,983

2,970

Net Income Attributable to Non-Controlling Interests (predecessor)

20

20

35

Net Income Attributable to Common Shareholders (successor) and Controlling Interests (predecessor)

$

5,348

$

615

$

5,963

$

2,935



BurgerFi International Inc., and Subsidiaries

Consolidated Statements of Operations

(Unaudited)
Three Months Ended December 31, 2020
(S/P Combined) (Non-GAAP)

(Unaudited)
Three Months Ended December 31, 2019
(Predecessor)

(in thousands)

REVENUE

Restaurant sales

$

6,865

$

6,019

Royalty and other fees

1,684

1,996

Terminated franchise fees

650

132

Royalty - brand development and co-op

463

434

Initial franchise fees

121

116

TOTAL REVENUE

9,783

8,697

Restaurant level operating expenses:

Food, beverage and paper costs

1,890

1,647

Labor and related expenses

1,517

1,860

Other operating expenses

1,787

1,356

Occupancy and related expenses

632

575

General and administrative expenses

2,797

1,980

Share-based compensation expense

818

Depreciation expense

263

235

Amortization expense

335

Brand development and co-op advertising expense

496

334

Gain on disposal of property and equipment

(2

)

(184

)

TOTAL OPERATING EXPENSES

10,533

7,803

OPERATING (LOSS) INCOME

(750

)

894

Gain on extinguishment of debt

791

Gain on change in value of warrant liability

5,597

Interest expense

(33

)

(17

)

Income before income taxes

5,605

877

Income tax benefit

366

Net Income

5,971

877

Net Income Attributable to Non-Controlling Interests (predecessor)

(2

)

Net Income Attributable to Common Shareholders (successor) and Controlling Interests (predecessor)

$

5,971

$

879



BurgerFi International Inc., and Subsidiaries

Consolidated Statement of Cash Flows

Successor

Predecessor

(in thousands)

December 16, 2020 through December 31, 2020

January 1, 2020 through December 15, 2020

Year Ended December 31, 2019

CASH FLOWS PROVIDED BY OPERATING ACTIVITIES

Net income

$

5,348

$

635

$

2,970

Adjustments to reconcile net income to net cash provided by (used in) -

Operating activities

Provision for bad debts

133

87

Depreciation and amortization

348

1,062

825

Deferred income taxes

(370

)

Share-based compensation

818

Forfeited franchise deposits

(693

)

(825

)

Gain on extinguishment of debt

(791

)

Gain on sale of franchise/corporate-owned store

(184

)

Gain on change in value of warrant liability

(5,597

)

Changes in operating assets and liabilities, net of acquisitions

Accounts receivable

(339

)

6

(128

)

Inventory

(8

)

(10

)

(127

)

Other assets

(552

)

121

(191

)

Accounts payable – trade

(275

)

751

(380

)

Accrued expenses and gift card liability

284

218

(155

)

Deferred franchise fees

253

51

376

Other liabilities

(57

)

422

260

NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES

(938

)

2,696

2,528

NET CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of restaurant from franchisee

(385

)

Deposit on sale

907

Proceeds from deposit on potential sale of franchise/corporate owned store

938

Purchase of property and equipment

(265

)

(3,244

)

(2,437

)

Acquisition of net assets, net of cash acquired

(27,210

)

Advances to related companies

(74

)

(7,863

)

(10,601

)

Repayments from related companies

11,205

11,575

NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES

(27,549

)

620

(525

)

NET CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds on revolving line of credit

2,987

2,317

Payments on line of credit

(2,290

)

Note payable proceeds

2,406

Payments on notes payable

(39

)

(86

)

Members’ distributions

(6,007

)

(4,663

)

Members’ contributions

594

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES

(2,943

)

(1,838

)

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

(28,487

)

373

165

CASH AND CASH EQUIVALENTS, beginning of period

68,870

2,417

2,252

CASH AND CASH EQUIVALENTS, end of period

$

40,383

$

2,790

$

2,417



BurgerFi International Inc., and Subsidiaries

Reconciliation of Net Income to Adjusted EBITDA
(Non-GAAP) (Unaudited)

S/P Combined (non-GAAP)

Predecessor

Reconciliation of GAAP to non-GAAP Items (in thousands)

Year Ended December 31, 2020

Year Ended December 31, 2019

Net Income Attributable to Common Shareholders (successor) and Controlling Interests (predecessor)

$

5,963

$

2,935

Adjustments:

Depreciation and amortization

1,410

825

Merger and acquisition related costs

428

Preopening costs

214

425

Interest

131

79

Share-based compensation expense

818

Gain on disposal of property and equipment and extinguishment of debt

(793

)

(184

)

Gain on change in value of warrant liability

(5,597

)

Income tax benefit

(366

)

Adjusted EBITDA

$

2,208

$

4,080


Reconciliation of GAAP to non-GAAP Items (in thousands)

(Unaudited)
Three Months Ended December 31, 2020

(Unaudited)
Three Months Ended December 31, 2019

Net Income Attributable to Common Shareholders (successor) and Controlling Interests (predecessor)

$

5,971

$

879

Adjustments:

Depreciation and amortization

598

235

Merger and acquisition related costs

428

Preopening costs

82

43

Interest

33

17

Share-based compensation expense

818

Gain on disposal of property and equipment and extinguishment of debt

(793

)

(184

)

Gain on change in value of warrant liability

(5,597

)

Income tax benefit

(366

)

Adjusted EBITDA

$

1,174

$

990