Shares of Nathan's Famous, Inc. NATH have gained 3.2% since the company reported its earnings for the quarter ended Dec. 29, 2024, outperforming the S&P 500 Index, which declined by 0.7% over the same period. Over the past month, the stock gained 11.3%, significantly outpacing the S&P 500's 3.2% rise.

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Key Performance Metrics

Nathan's Famous reported total revenues of $31.5 million for the third quarter of fiscal 2025, a 9.1% increase compared with $28.9 million in the year-ago period. Income from operations rose 31.4% to $6.8 million from $5.1 million, while net income increased 71.9% to $4.5 million from $2.6 million. Diluted earnings per share (EPS) improved to $1.10, a 71.9% increase from $0.64 in the prior-year quarter.

For the first nine months of fiscal 2025, revenues reached $117.4 million, up 7.1% from $109.6 million in the prior-year period. Net income for this period grew 26% to $19.8 million from $15.7 million, with diluted EPS increased to $4.84 from $3.84, representing a 26% rise.

Segmental Performance

Branded Product Program: Revenues increased 7.2% to $21.1 million from $19.7 million in the prior-year quarter. For the nine-month period, revenues rose 5.2% to $71.8 million from $68.2 million, driven by a 1.5% increase in hot dog sales volume and a 3.5% rise in average selling price, despite a 4% increase in beef costs impacting income from operations.

Product Licensing: Revenues climbed 16.9% to $7.1 million from $6.1 million. Year-to-date revenues for this segment grew 13.2% to $29.5 million from $26.1 million, reflecting robust contributions from Smithfield Foods' retail and foodservice programs.

Restaurant Operations: Quarterly revenues improved 6.8% to $2.8 million from $2.6 million. Year-to-date restaurant sales grew 5.5% to $14.6 million from $13.8 million, with increased sales at Coney Island locations primarily attributed to higher average checks.

Advertising Fund Revenue: Quarterly revenues were up 2.4% to $0.52 million from $0.51 million in the prior-year quarter. Year-to-date revenues grew 0.5% to $1.51 million from $1.50 million.

Other Key Business Metrics

Nathan's Famous’ adjusted EBITDA for the quarter was $7.5 million, a 30% increase from $5.8 million in the prior-year quarter. For the nine-month period, adjusted EBITDA rose 16.5% to $32.1 million from $27.6 million. The company highlighted its ability to manage costs while benefiting from operational efficiencies and revenue growth.

Management Commentary and Influencing Factors

Management attributed the robust quarterly performance to strategic pricing actions, improved licensing revenues, and operational efficiencies. In the Branded Product segment, revenue growth from higher volumes and prices offset increased beef costs. Additionally, strong consumer demand supported revenue growth in both the product licensing and restaurant operations segments. The company emphasized its commitment to maintaining operational discipline and leveraging its brand equity for sustainable growth.

Guidance

The company did not provide specific forward-looking financial guidance. However, management emphasized its focus on maintaining operational efficiency and leveraging brand equity to drive long-term growth.

Other Developments

During the nine-month period, Nathan's Famous opened 24 new franchised locations, enhancing its footprint across key markets. Additionally, the board of directors declared and paid three quarterly dividends totaling $6.13 million and announced a quarterly cash dividend of $0.50 per share, payable on Feb. 28, 2025.

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