Nathan's Famous Q1 Net Income Dips Amid Revenue Decline

TL;DR

**NATH's Q1 results are a bit soft, showing a slight revenue dip and higher costs, so I'm holding off on buying until I see a clearer growth path.**

AI Summary

NATHANS FAMOUS, INC. reported a net income of $2.9 million for the quarter ended June 29, 2025, a decrease from $3.1 million in the prior-year period. Revenue for the quarter was $26.6 million, down from $27.1 million in the same period last year, representing a 1.8% decline. The company's Product Licensing segment generated $10.1 million in revenue, while Restaurant Operations contributed $15.7 million. General and administrative expenses increased to $3.1 million from $2.9 million, a 6.9% rise. The company repurchased 10,000 shares of its common stock for $0.7 million during the quarter under its Sixth Stock Repurchase Plan, which still has $1.3 million remaining. A significant strategic move was the refinancing of its credit facility on July 10, 2024, replacing the previous $60.0 million term loan and $10.0 million revolving credit facility with a new $60.0 million term loan and $10.0 million revolving credit facility with Citibank, N.A. This refinancing aims to optimize its capital structure and manage debt more effectively. The company faces ongoing risks related to increased operating expenses and competitive pressures in the restaurant and licensing sectors.

Why It Matters

NATH's slight dip in net income and revenue signals potential headwinds for investors, suggesting that growth in its core hot dog licensing and restaurant operations may be slowing. The increase in general and administrative expenses could erode future profitability if not managed effectively, impacting shareholder returns. For employees, a stagnant revenue environment might limit opportunities for expansion or wage increases. Customers could see price adjustments or changes in product offerings as the company navigates competitive pressures from other fast-food chains and consumer packaged goods brands. The refinancing of its credit facility, while a positive step for debt management, underscores the need for efficient capital allocation in a competitive market.

Risk Assessment

Risk Level: medium — The risk level is medium due to a 1.8% decline in revenue from $27.1 million to $26.6 million and a 6.9% increase in general and administrative expenses from $2.9 million to $3.1 million. While net income only slightly decreased from $3.1 million to $2.9 million, these trends indicate potential margin pressure and a challenging operating environment for NATHANS FAMOUS, INC.

Analyst Insight

Investors should monitor NATH's next earnings report closely for signs of revenue stabilization and cost control. Consider holding existing positions but deferring new investments until the company demonstrates a clear strategy to reverse the revenue decline and manage rising expenses, especially given the competitive landscape.

Financial Highlights

revenue

$26.6M

net Income

$2.9M

revenue Growth

-1.8%

Revenue Breakdown

Key Numbers

• $26.6M — Total Revenue (Decreased from $27.1M in prior year, a 1.8% decline.)
• $2.9M — Net Income (Decreased from $3.1M in prior year.)
• $3.1M — General and Administrative Expense (Increased from $2.9M in prior year, a 6.9% rise.)
• $10.1M — Product Licensing Revenue (Key segment contributing to overall revenue.)
• $15.7M — Restaurant Operations Revenue (Largest segment contributing to overall revenue.)
• 10,000 — Shares Repurchased (Repurchased for $0.7M under Sixth Stock Repurchase Plan.)
• $1.3M — Remaining Stock Repurchase Authorization (Indicates future potential buybacks.)
• $60.0M — New Term Loan Facility (Refinanced with Citibank, N.A. on July 10, 2024.)
• $10.0M — New Revolving Credit Facility (Refinanced with Citibank, N.A. on July 10, 2024.)

Key Players & Entities

• NATHANS FAMOUS, INC. (company) — filer of the 10-Q
• Citibank, N.A. (company) — lender for the credit facility
• $2.9 million (dollar_amount) — net income for Q1 2026
• $3.1 million (dollar_amount) — net income for Q1 2025 and general and administrative expense for Q1 2026
• $26.6 million (dollar_amount) — total revenue for Q1 2026
• $27.1 million (dollar_amount) — total revenue for Q1 2025
• $10.1 million (dollar_amount) — revenue from Product Licensing segment
• $15.7 million (dollar_amount) — revenue from Restaurant Operations segment
• 10,000 shares (dollar_amount) — shares repurchased under Sixth Stock Repurchase Plan
• $0.7 million (dollar_amount) — cost of shares repurchased

FAQ

Industry Context

Nathan's Famous operates in the highly competitive quick-service restaurant (QSR) and food licensing sectors. The industry faces ongoing challenges from rising ingredient and labor costs, evolving consumer preferences for healthier options, and intense competition from both established brands and emerging players. The licensing model provides a revenue stream less directly tied to store-level operations but is still influenced by brand perception and market demand for branded food products.

Regulatory Implications

The company must comply with food safety regulations, labor laws, and franchise disclosure requirements across its various operating locations and licensing agreements. Changes in food labeling, health standards, or marketing regulations could impact product development and sales strategies. Compliance with financial reporting standards (GAAP) is also critical, as demonstrated by this 10-Q filing.

What Investors Should Do

1. Monitor G&A Expense Trends
2. Evaluate Impact of Credit Facility Refinancing
3. Assess Share Repurchase Activity

Key Dates

• 2024-07-10: Refinancing of credit facility with Citibank, N.A. — Replaced a $60.0M term loan and $10.0M revolving credit facility with new facilities of the same amounts, aiming to optimize capital structure and debt management.

Glossary

Sixth Stock Repurchase Plan

A plan authorized by the company to buy back its own shares from the open market. (The company repurchased 10,000 shares for $0.7M under this plan, indicating ongoing capital return to shareholders and a remaining authorization of $1.3M.)

Term Loan Facility

A type of loan provided by a financial institution for a specific period, typically used for significant capital expenditures or acquisitions. (The company refinanced its $60.0M term loan with Citibank, N.A., indicating a strategic move in managing its long-term debt.)

Revolving Credit Facility

A flexible loan that allows a company to borrow, repay, and re-borrow funds up to a certain limit over a specified period. (The company refinanced its $10.0M revolving credit facility with Citibank, N.A., ensuring access to short-term liquidity.)

Year-Over-Year Comparison

For the quarter ended June 29, 2025, Nathan's Famous reported a 1.8% decrease in revenue to $26.6 million compared to the prior year. Net income also saw a slight decline from $3.1 million to $2.9 million. A notable increase in operating costs was observed, with General and Administrative expenses rising by 6.9% to $3.1 million, potentially pressuring margins. The company also executed a significant refinancing of its credit facilities, indicating proactive debt management.

Filing Documents

• nath20250629_10q.htm (10-Q) — 1055KB
• ex_843413.htm (EX-31.1) — 11KB
• ex_843412.htm (EX-31.2) — 11KB
• ex_843411.htm (EX-32.1) — 6KB
• ex_843410.htm (EX-32.2) — 5KB
• 0001437749-25-025551.txt ( ) — 6443KB
• nath-20250629.xsd (EX-101.SCH) — 66KB
• nath-20250629_def.xml (EX-101.DEF) — 385KB
• nath-20250629_lab.xml (EX-101.LAB) — 328KB
• nath-20250629_pre.xml (EX-101.PRE) — 429KB
• nath-20250629_cal.xml (EX-101.CAL) — 53KB
• nath20250629_10q_htm.xml (XML) — 1146KB

Financial Statements

Financial Statements. 3 Condensed Consolidated Balance Sheets – June 29, 2025 (Unaudited) and March 30, 2025 3 Condensed Consolidated Statements of Earnings (Unaudited) – Thirteen Weeks Ended June 29, 2025 and June 30, 2024 4 Condensed Consolidated Statements of Changes in Stockholders' Deficit (Unaudited) – Thirteen Weeks Ended June 29, 2025 and June 30, 2024 5 Condensed Consolidated Statements of Cash Flows (Unaudited) – Thirteen Weeks Ended June 29, 2025 and June 30, 2024 6 Notes to Condensed Consolidated Financial Statements 7 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations. 19 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk. 27 Item 4.

Controls and Procedures

Controls and Procedures. 28 PART II. OTHER INFORMATION Item 1. Legal Proceedings. 29 Item 1A. Risk Factors. 29 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 29 Item 3. Defaults Upon Senior Securities. 29 Item 4. Mine Safety Disclosures. 29 Item 5. Other Information. 29 Item 6. Exhibits. 30

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements. Nathan ' s Famous, Inc. and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS June 29, 2025 and March 30, 2025 (in thousands, except share and per share amounts) June 29, 2025 March 30, 2025 (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents (Note E) $ 26,867 $ 27,802 Accounts and other receivables, net (Note G) 26,274 14,064 Inventories 900 1,221 Prepaid expenses and other current assets (Note H) 1,472 2,048 Total current assets 55,513 45,135 Property and equipment, net of accumulated depreciation of $ 12,479 and $ 12,295 , respectively 2,097 2,114 Operating lease right-of-use assets, net (Note Q) 4,606 4,987 Goodwill 95 95 Intangible asset, net (Note I) 478 522 Deferred income taxes 541 510 Other assets 106 113 Total assets $ 63,436 $ 53,476 LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES Current portion of long-term debt (Note P) $ 2,400 $ 2,400 Accounts payable 7,435 6,163 Accrued expenses and other current liabilities (Note K) 8,541 5,969 Current portion of operating lease liabilities (Note Q) 1,924 1,923 Deferred franchise fees 274 309 Total current liabilities 20,574 16,764 Long-term debt, net of unamortized debt issuance costs of $ 308 and $ 327 , respectively (Note P) 47,492 48,073 Long-term portion of operating lease liabilities (Note Q) 3,075 3,528 Other liabilities 993 927 Deferred franchise fees 644 697 Total liabilities 72,778 69,989 COMMITMENTS AND CONTINGENCIES (Note R) STOCKHOLDERS' DEFICIT Common stock, $ .01 par value; 30,000,000 shares authorized; 9,379,025 shares issued; and 4,089,510 shares outstanding at June 29, 2025 and March 30, 2025 94 94 Additional paid-in capital 63,780 63,492 Retained earnings 13,446 6,563 Stockholders' equity before treasury stock 77,320 70,149 Treasury stock, at cost, 5,289,515 shares at June 29, 2025 and March

View Full Filing

View this 10-Q filing on SEC EDGAR