Nathan's Famous, Inc. — First Quarter Fiscal 2027 Earnings Summary

Financial Performance

• Total revenues were $54,062,000 for the thirteen weeks ended June 28, 2026, compared to $46,998,000 in the same period of 2025.
• Income from operations was $12,668,000, down from $12,791,000 in the prior year period.
• Adjusted EBITDA was $13,615,000, an increase from $13,531,000 in the prior year period.
• Net income was $8,829,000, compared to $8,928,000 in the prior year period.
• Earnings per diluted share were $2.14, down from $2.16 in the prior year period.
• EBITDA was $13,040,000, compared to $13,243,000 in the prior year period.
• Interest expense was $638,000, down from $758,000 in the prior year period.
• Provision for income taxes was $3,334,000, compared to $3,329,000 in the prior year period.
• Depreciation and amortization was $239,000, up from $228,000 in the prior year period.

Business Segments and Product Lines

• Branded Product Program: Sales increased 20.7% to $35,039,000 from $29,075,000; volume of hot dogs sold increased approximately 8%, while average selling price increased approximately 17%. Income from operations decreased to $1,330,000 from $2,276,000, primarily due to a 22% increase in the cost of beef and beef trimmings.
• Product Licensing: Total royalties increased to $13,587,000 from $12,381,000. Royalties from the Smithfield Foods retail agreement and foodservice program increased 10% to $12,617,000 from $11,464,000.
• Restaurant Operations: Sales from company-owned restaurants were $3,951,000, down from $3,986,000, primarily impacted by a 1% decline in average check. Franchise restaurant sales decreased $240,000 to $18,204,000 from $18,444,000.
• Franchise Operations: Revenues from franchise operations were $1,074,000, down from $1,129,000. Total franchise fees (including cancellations) were $54,000, down from $128,000. Four franchised locations opened during the quarter.
• Advertising Fund: Recorded revenue and expense of $411,000, down from $427,000 in the prior year period.

Other Key Points

• On June 30, 2026, the Company paid a $0.50 per share regular cash dividend declared on June 9, 2026.
• The Company is in a merger agreement with Smithfield Foods, Inc. to be acquired for $102.00 per share in cash, representing a total enterprise value of approximately $450 million.
• The merger is expected to close in the second half of 2026, contingent on stockholder approval, CFIUS clearance, and other closing requirements.
• Transaction costs of $295,000 were recorded in the quarter, consisting principally of legal costs related to the Merger Agreement.

Risks and Challenges

• The consummation of the merger is subject to conditions including stockholder approval and regulatory clearance; failure to meet these conditions could result in termination or delay.
• The Company faces risks related to increases in the cost of food and paper products, specifically beef and beef trimmings, which increased 22% in the quarter.
• The Company's licensing revenue and overall profitability are substantially dependent on the agreement with Smithfield Foods.
• Economic factors, including inflationary pressures, and changes in consumer tastes or minimum wage legislation could impact results.
• Weather conditions, particularly during summer months, and the viability of Coney Island as a destination location pose risks to restaurant sales.