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spk00: Good afternoon. Welcome to the BT Brand's third quarter earnings call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions and comments following the presentation. It is now my pleasure to turn the floor over to your host, Ken Brimmer. Sir, the floor is yours.
spk01: Okay. Thank you very much. Well, first of all, to the extent the listeners are new shareholders to BT, as we've completed our... major public offering just last week I want to welcome everybody to BT Brands and hopefully this can be the beginning of a long relationship where we do a good job of dialoguing with our shareholders and that's what I hope this call will start today where you can hear a little bit of us talk and we can answer any questions that you might have. We did issue a press release yesterday highlighting both our third quarter and our nine-month results. In the highlights for the nine months, the company has earned $0.20 a share on revenues of $6.6 million, which was up from $6.0 million in the 39 weeks a year ago. The company is on a weekly accounting schedule. We work on a 4-4-5 schedule. each quarter being 13 weeks, and occasionally, as we had last year, we have a 53-week year. It'll be several years. We'll be just on a 52-week calendar. As we've said in our prospectus, the pandemic, COVID, has been a positive for the BurgerTime business. Obviously, we're 100% a drive-thru business, and people have adopted drive-thru as a favored means of of getting fast food and we have benefited from that. In our public offering last week we raised approximately 11 million dollars and from an investor standpoint the positive of that 11 million dollars that we raised is that we had at the end of the quarter just over two million dollars in cash on hand which takes our total somewhere north of $12 million today. And really, in terms of what we would call uses going backwards, we have no need for the money. 100% of the capital that we raise in the public offering and including the $2 million that we raised last week will go forward with our stated plan, which is to make acquisitions within the restaurant industry. And I would say we have already begun our efforts to seek out potential acquisition targets. By the end of this week, we will have had multiple conversations with potential opportunities. Certainly there's no assurance that any of those will develop into acquisitions that we end up consummating, but we expect to begin the due diligence process where it looks intriguing. Just to kind of put a cap on the quarter, we, for the nine months, our same-store sales are up over 8.7%, which is particularly encouraging to us because obviously last year we had a very significant, nearly a 50% increase in same-store sales. And we didn't know what to expect this year. We gave it a fair amount of thought, but obviously we don't know who's going to show up and who's going to buy. When we look at our 8.7% through October 3rd, I would say that's above what our expectations were for the year. Our businesses, like all retail businesses, somewhat either backfits or is hurt by the weather. So we'll see what happens to the balance of the year. But certainly we will end this year on a positive same-store sales result. And in terms of the earnings for the quarter, really our 13-week quarter ending October 3rd was very close to what it was a year ago. Sales were $2,280,000 versus $2,374,000. We reduced our G&A during this year's quarter, which did bring the bottom line after tax of $235,000 versus $254,000 a year ago. and that was $0.06 a share in both periods. Obviously, as we now have become a public company, our G&A costs are expected to increase, probably initially a little faster than our revenue, but as we put the funds to work at much higher return than a money market fund, we will expect the growth in revenue profits, gross profits from the acquisitions to exceed whatever increases we have in G&A expense. Just a couple of words on what we see in terms of our outlook. Clearly, the restaurant industry has been in the news. Companies talking about supply shortages, labor shortages. No shortages of customers, fortunately, but there have been those other two key components I would say we have weathered the storm probably better than most. I would attribute that to our managers in our 10 restaurants that we own today. Most of those managers have been with us for a very long time. And when you have a manager that's been in place for a long time, they tend to recruit and retain employees better than most. Not to say we haven't had some spot challenges with managers. and we've also had some supply challenges. There was a time for a few weeks where onion rings, which are popular on our menu, were just out of stock, unavailable. I think they're back in the stores now. It's not a major impact on our top line, but we like to keep the customer satisfied. We had deep-fried pickles, which were... also a menu item that we have that have also been out of stock, and an apple pie, a deep-fried apple pie, which has been in and out of stock. But in terms of our core products, our hamburger meat, our hamburger patties, our burger buns, and our french fries, we haven't seen any supply disruption. We have seen some increase in the price per pound of ground beef, We're now at $2.96 a pound, which was up really for the last two years, at $2.59 a pound. And we just, I guess, I think Sunday it was fully implemented, completed a menu price increase, which still places our menu at what we would call the value segment of the market. We're below the typical fast food feeder, Wendy's, McDonald's, and others, just slightly. and that seems to be where our customer is looking for us to be and I would say at least as of now we have more than recaptured any price increases we've seen in terms of our cost components in terms of a higher menu price. So I think that's all relatively good news. I guess I would turn just for a moment to our acquisition strategy and Most of this is summarized in the prospectus and I would encourage everybody to look at the prospectus and certainly consider the risk factors that are set forth in the prospectus in terms of evaluating our company. But the acquisitions really fall into what I think of as three major categories. One is certainly we're in the restaurant business but would be more of a straight financial type of acquisition. where we look and buy an asset and I think we're not looking to buy just one restaurant. We're looking to buy a multi-unit chain where we can put some significant capital to work and I would say that in that type of a transaction we would put multiples of millions of dollars to work and seeking a return that is something in excess of 20% on our invested capital So to the extent that we've got an ability in this environment to take money that's earning very low interest rate and put it to work at that sort of rate and both menu engineer, fine-tune the GNA, that would be our strategy. The second type of acquisition would be where we buy a concept that's relatively small and two or three units, but that the developers who don't perhaps have the capital and or the expertise to do a major rollout strategy, but have a winner concept. And we've looked at a couple of things in this area where we can look at acquiring the business and sort of partnering from a manager standpoint with the existing company management. And we could roll out multiple units relatively quickly, deploying a lot of our capital at a high rate of return. So that would put us in a relatively high fast growth area. Lastly, the third type of acquisition we'll consider would really be a larger acquisition where it might be an exchange of stock, essentially, if you will, almost a reverse merger where we look at acquiring a much larger company, putting our capital, probably the majority of our capital, to work in one big acquisition and, you know, completing... that process. We haven't really been presented with any opportunities that fall into that category, but no doubt over time we will. So as we said in the original Roadshow presentation to the groups of investors, is what we have with BT Brands is a solid platform. It's a well-capitalized company before the offerings. And now after the offering is well positioned to both grow our existing business to the degree we see opportunities and to make acquisitions and put our investors' capital to work at a high rate of return delivering growth and share value in the years ahead. So that's kind of the background since this is kind of an introductory call. I thought we would throw it out and see if we had questions about BT that we can address to the group.
spk00: Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press star 1 on your phone now. We ask that while posing your question, you please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold while we poll for questions. We have no questions coming from the phone lines at this time.
spk01: Okay. Well, I'm available to answer any questions or to discuss where we're at one-on-one, and my contact information is on the press release. So with that said, I know a replay will be available of this call if people haven't had an opportunity to listen, but we look forward to a long relationship with our new shareholders. So that will conclude the call.
spk00: Thank you, ladies and gentlemen. This does conclude today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.
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