Aegis Brands Reports Third Quarter Results

CNW Group

Fri, Nov 1, 2024, 5:30 AM 9 min read

System sales of $34.0 million in the third quarter increased 4.0% over the prior year and increased 11.4% to $103.0 million year to date.
Same store sales rose 1.3% and 8.4% in the quarter and year to date respectively.
A one-time restructuring charge of $0.6 million was recorded in the quarter to reduce overhead and better position St. Louis for future profitability.
The company decided to exit the Wing City brand, resulting in an impairment charge in the quarter of $1.1 million.
EBITDA from continuing operations in the quarter was $1.3 million compared to $1.6 million last year.
Net Loss for the quarter was $1.6m or $0.02 per share. Adjusted for restructuring costs, Net Income from continuing operations for the quarter was $0.3 million or $0.00 per share.

St. Louis Bar & Grill

Same store sales rose by 1.3% and traffic decreased by 0.4% over the same quarter last year. Year to date, same stores sales increased by 8.4% with traffic increases of 5.8%. Adjusted for the restructuring charges, St. Louis contributed $2.3 million and $2.6 million Net income and EBITDA respectively for the quarter and $7.9 million Net Income and $8.8 million EBITDA year to date.

"Year to date St. Louis has achieved 8.4% same store sales growth 5.8% same store traffic growth and grown the system sales by 11.4%. The top line growth at the store level, along with better expense management, has positively impacted the franchisees' earnings." said Steven Pelton, President and CEO of Aegis Brands. "Building on a strong foundation, the team's hard work has continued to improve the store level profitability. The financial gains at the store level allows us to attract new franchisees and grow with existing multi-unit operators. Although we will never stop finding new ways to increase the profitability for our franchisees, we are also focusing on new store growth for the remainder of 2024 and beyond."

In September, St. Louis opened its 79^th location. The new Promenade Mall location in Thornhill Ontario is the first location with two "Top Golf Swing Suites" sports simulators. "We have seen the rise and success of many "eatertaiment" concepts," said Pelton. "These golf and sport simulators provide additional reasons for guests to visit our stores, which can improve the return on investment for franchisees, and expand our ability to capitalize on locations with larger footprints."

A growing pipeline of locations and franchisees in the East Coast, Ontario, and Manitoba have been developed and will expand as store level profitability continues to improve. The company is currently focused on filling in the strongest markets.

St. Louis continues to move forward with its retail product plans. The famous St. Louis burgers have been available in grocery for two BBQ seasons. The signature wings and boneless bites will soon become available for consumers outside of our restaurants. "The addition of our wings and boneless bites to the grocery channel will provide our guests with a new occasion to enjoy our signature products - on the nights they are staying in. We believe these products will bring further growth opportunities within this channel for other St. Louis branded products." said Pelton.

To continue to build on the strong performance, St. Louis is in the middle of a three-step program to attract new guests and encourage existing guests to visit more often. The company's vision is "to create a world where everyone is a regular" and the first step was to reinforce the foundation of the business with an expanded focus on hospitality. The second step is an evolved and improved menu offering. Menu launches over the next few quarters will introduce new items with the intent to attract new guests, while staying true to our guests who have been loyal to the brand for years. The final step is a brand refresh. "We are continually improving and becoming more broadly appealing, and the brand refresh will help signal these changes to our guests."

Wing City by St. Louis

The two store Wing City trial did not generate the sales and profitability the company had hoped for. With the opportunity for accelerated new store growth with the St. Louis brand, the company has decided to suspend any further development of the Wing City brand.

Sweet Jesus Ice Cream

In August, Aegis signed a Master Franchise Agreement for the Sweet Jesus ice cream brand within Canada. This agreement allows Aegis to control the development of any new locations and participate in the royalty stream coming from the sales of the Sweet Jesus products within the St. Louis stores. In April, St. Louis replaced its existing dessert offering with the Sweet Jesus products, resulting in 300+% increases in an otherwise small menu category.

Aegis

Aegis is focused on increasing shareholder value by building and evolving our brands to have ever-improving store level economics. The company's goal is to provide franchisees with brands that are a great investment option for their time and money. "St. Louis has been delivering strong returns for franchisees for two decades. With our help, store economics will continue to improve, and new store growth will accelerate." said Pelton.

Financial Highlights (in thousands of Canadian dollars):

Revenue:

	13 weeks ended Sept 29, 2024 Sept 24, 2023		26 weeks ended Sept 29, 2024 Sept 24, 2023
Royalties	$ 1,520	$ 1,498	$ 4,426	$ 4,286
Advertising fund contributions	730	382	1,983	2,218
Other franchise revenue	1,756	1,897	5,611	5,607
Corporate store revenue	204	508	2,070	508
	$ 4,210	$ 4,285	$ 14,090	$ 12,619

Net income (loss) to EBITDA and Adjusted EBITDA:

	13 weeks ended Sept 29, 2024 Sept 24, 2023		26 weeks ended Sept 29, 2024 Sept 24, 2023
Net income (loss)	$ (1,688)	$ 467	$ (1,054)	$ (654)
Add (deduct):
Net loss from discontinued operations	1,401	174	2,182	1,064
Interest and financing charges	657	664	2,097	2,309
Restructuring costs Depreciation of property and equipment	613 17	- 9	613 42	- 27
Amortization of intangible assets	255	255	765	765
Amortization of right-of-use assets	34	35	183	99
EBITDA	1,289	1,604	4,828	3,610
Add (deduct) impact of the following:
Other loss (income)	(13)	(4)	(856)	(6)
Revaluations of securities, warrants, and other	7	20	11	4
Adjusted EBITDA	$ 1,283	$ 1,620	$ 3,983	$ 3,608

Net income (loss) to adjusted net income:

	13 weeks ended Sept 29, 2024 Sept 24, 2023		26 weeks ended Sept 29, 2024 Sept 24, 2023
Net income (loss)	$ (1,688)	$ 467	$ (1,054)	$ (654)
Add (deduct):
Net loss from discontinued operations	1,401	174	2,182	1,064
Restructuring costs Revaluations of securities, warrants, and other	613 7	- 20	613 11	- 4
Other loss (income)	(13)	(4)	(856)	(6)
Adjusted net income	$ 320	$ 657	$ 896	$ 408

Net income (loss) per share to adjusted net income (loss) per share:

	13 weeks ended Sept 29, 2024 Sept 24, 2023		26 weeks ended Sept 29, 2024 Sept 24, 2023
Net income (loss) per share	$ (0.02)	$ 0.01	$ (0.01)	$ (0.01)
Add (deduct):
Net loss per share from discontinued operations Restructuring costs	0.02 0.00	0.00 -	0.03 0.00	0.01 -
Revaluations of securities, warrants, and other	0.00	0.00	0.00	0.00
Other loss (income)	(0.00)	(0.00)	(0.01)	(0.00)
Adjusted net income (loss) per share	$ 0.00	$ 0.01	$ 0.01	$ 0.00

About Aegis Brands

Aegis Brands owns and operates St. Louis Bar and Grill and is the Master Franchisee for the Sweet Jesus brand. The Company is committed to letting each brand operate independently while providing shared expertise to help them thrive. For more information, please visit www.aegisbrands.ca.

NON-IFRS MEASURES

Aegis measures the success of its business in part by employing several key performance indicators referenced herein that are not recognized under IFRS, including same store sales and EBITDA. These indicators should not be considered an alternative to IFRS financial measures, such as net income, and are presented in this presentation because management of Aegis believes that such measures are relevant in interpreting the performance of its business. As non‐IFRS financial measures do not have standardized definitions prescribed by IFRS, they are less likely to be comparable with other issuers or peer companies. A description of the non‐IFRS measures used by Aegis in measuring its performance and a reconciliation of certain non‐IFRS measures to the nearest IFRS measure is included in Aegis' management's discussion and analysis for the year ended December 31, 2023 available on SEDAR at www.sedarplus.ca.

FORWARD LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of Canadian securities laws. The forward-looking statements included in this press release, including statements regarding the nature of Aegis' growth strategy going forward and Aegis' execution on any of its potential plans (including with respect to the growth and development of St. Louis Bar and Grill), are not guarantees of future results and involve risks and uncertainties that may cause actual results to differ materially from the potential results discussed in the forward-looking statements.

Risks and uncertainties that may cause such differences include but are not limited to: risks related to the company's strategy going forward; risks related to the rising interest rates and inflationary pressures on the cost of doing business; and other risks inherent in the industry in which Aegis operates. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. Additional information on these and other factors that could affect Aegis' operations or financial results are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedarplus.ca).

The forward-looking statements in this press release are made as of the date it was issued and Aegis does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

For more information, please visit aegisbrands.ca.

SOURCE Aegis Brands Inc.