Market Newsdesk

SAN DIEGO, March 25, 2021 (GLOBE NEWSWIRE) — Histogen Inc. (NASDAQ: HSTO), a clinical-stage therapeutics company focused on developing potential first-in-class restorative therapeutics that ignite the body’s natural process to repair and maintain healthy biological function has appointed Rochelle Fuhrmann to its Board of Directors and Chairperson of the Audit Committee. In addition, current director Stephen Chang, Ph.D. will be resigning from the Board.

“I am honored and excited to join the Histogen board during this transformational period and I look forward to working with the board and management to build upon the work that has been done to create value for all company stakeholders,” said Ms. Fuhrmann.

Ms. Fuhrmann currently serves as the Vice President Audit and Enterprise Risk Management at Becton Dickinson (BD). In 2016, Ms. Fuhrmann helped establish the BD Foundation, and she presently serves as Treasurer and as a member of its Board of Trustees. She joined BD in July 2015 as Senior Vice President and Chief Financial Officer, BD Life Sciences. Prior to joining the Company, Rochelle held various positions responsible for the management of financial functions including accounting and financial reporting, investor relations, corporate finance, risk management and treasury, primarily in the pharmaceutical industry with companies such as Amneal Pharmaceuticals and Warner Chilcott plc. She previously served as a member of the Board of Directors of Concordia International Corp. and held the position of Audit Committee Chairperson for three years.

“On behalf of the entire Board of Directors, I want to welcome Rochelle to Histogen,” said David H. Crean, Ph.D., Chairman of the Board of Directors. “Rochelle’s financial and healthcare industry experience will provide us the depth and business acumen required for the company to continue on its growth trajectory as a public company. I also wish to thank Dr. Stephen Chang, who will be stepping down from the Board of Directors, for his many years of service to Histogen”. 

About Histogen Inc.

Histogen Inc. is a clinical-stage therapeutics company focused on developing potential first-in-class restorative therapeutics that ignite the body’s natural process to repair and maintain healthy biological function. Histogen’s innovative technology platform utilizes cell conditioned media and extracellular matrix materials produced by hypoxia-induced multipotent cells. Histogen’s proprietary, reproducible manufacturing process provides targeted solutions across a broad range of therapeutic indications including hair growth, dermal rejuvenation, joint cartilage regeneration and spinal disk repair. For more information, please visit www.histogen.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and other Federal securities laws. For example, we are using forward-looking statements when we discuss Histogen’s future operations and its ability to successfully initiate and complete clinical trials, obtain clinical trial data and achieve regulatory milestones and related timing; the potential that future clinical trials will establish efficacy of Histogen’s product candidates; the nature, strategy and focus of Histogen’s business; the sufficiency of Histogen’s cash resources and ability to achieve value for its stockholders; and the development and commercial potential and potential benefits of any of Histogen’s product candidates. Histogen may not actually achieve the plans, carry out the intentions or meet the expectations or projections disclosed in the forward-looking statements and you should not place undue reliance on these forward-looking statements. Because such statements deal with future events and are based on Histogen’s current expectations, they are subject to various risks and uncertainties and actual results, performance or achievements of it that could differ materially from those described in or implied by the statements in this press release, including: the uncertainties associated with the clinical development and regulatory approval of Histogen’s product candidates, including potential delays in the commencement, enrollment and completion of clinical trials; the potential that earlier clinical trials and studies of Histogen’s product candidates may not be predictive of future results; risks related to business interruptions, including the outbreak of COVID-19 coronavirus, which could seriously harm Histogen’s financial condition and increase its costs and expenses; and the requirement for additional capital to continue to advance these product candidates, which may not be available on favorable terms or at all. The foregoing review of important factors that could cause actual events to differ from expectations should not be construed as exhaustive and should be read in conjunction with statements that are included herein and elsewhere, including those risks discussed in Histogen’s filings with the Securities and Exchange Commission. Except as otherwise required by law, we disclaim any intention or obligation to update or revise any forward-looking statements, which speak only as of the date hereof, whether as a result of new information, future events, or circumstances or otherwise.

CONTACT:

Susan A. Knudson
Executive Vice President & CFO
Histogen Inc.
[email protected]

DURHAM, N.C., March 25, 2021 (GLOBE NEWSWIRE) — Bioventus Inc. (Nasdaq: BVS) (“Bioventus” or the “Company”), a global leader in innovations for active healing, today reported financial results for the fourth quarter and year ended December 31, 2020. This press release presents historical results, for the periods presented, of Bioventus, LLC, the predecessor of Bioventus Inc. for financial reporting purposes.

Fourth Quarter 2020 Financial Results Summary

:

• Net sales of $98.6 million, up $1.0 million, or 1%, year-over-year.
  • Net sales, by geography, is based upon:
    • U.S. net sales of $89.7 million, up $2.8 million, or 3%, year-over-year.
    • International net sales of $8.9 million, down $1.8 million, or 17%, year-over-year. International net sales declined 19% year-over-year on a constant currency basis.*
  • Net sales, by vertical, is based upon:
    • Net sales of osteoarthritic (OA) joint pain treatment and joint preservation products of $52.2 million, down $2.2 million, or 4%, year-over-year.
    • Net sales of minimally invasive fracture treatment products of $27.2 million, up $0.4 million, or 2%, year-over-year.
    • Net sales of bone graft substitutes products of $19.2 million, up $2.8 million, or 17%, year-over-year.
• Net income from continuing operations of $2.3 million, down $3.1 million, or 58%, year-over-year.
• Adjusted EBITDA^* was $28.2 million, down $2.6 million, or 8% year-over-year.
• Net income attributable to common unit holders of $0.5 million, down $2.0 million, or 80%, year-over-year.
• Non-GAAP net income attributable to common unit holders^* of $11.4 million, up $1.6 million, or 16%, year-over-year.

Full Year 2020 Financial Results Summary:

• Net sales of $321.2 million, down $19.0 million, or 6%, year-over-year.
  • Net sales, by vertical, is based upon:
    • Net sales of OA joint pain treatment and joint preservation products of $171.2 million, down $10.9 million, or 6.0%, year-over-year.
    • Net sales of minimally invasive fracture treatment products of $88.6 million, down $14.9 million, or 14%, year-over-year.
    • Net sales of bone graft substitutes products of $61.4 million, up $6.8 million, or 12%, year-over-year.
• Net income from continuing operations of $14.7 million, up $6.6 million, or 81%, year-over-year.
• Adjusted EBITDA of $72.4 million, down $6.7 million, or 9% year-over-year.
• Net income (loss) attributable to common unit holders of $4.4 million, up $5.0 million, year-over-year.
• Non-GAAP net income attributable to common unit holders of $37.1 million, up $8.4 million, year-over-year.

___________
^{* See below under “Use of Non-GAAP Financial Measures” for a definition and reconciliation of this measure.}

Fourth Quarter 2020 and Recent Highlights

:

• On November 10, 2020, the Company announced that beginning January 1, 2021, Bioventus will gain preferred access through the CVS Caremark Formulary, to DUROLANE^®, GELSYN-3^® and SUPARTZ FX^®, for the treatment of knee OA pain.
• On November 16, 2020, the Company announced the appointment of Chris Yamamoto as Senior Vice President of Business Development and Strategy. Yamamoto is responsible for developing a business development growth strategy for the Company that is accretive to the company’s current organic growth and executing deals that will drive long-term value and further the Company’s mission of helping patients regain active lifestyles.
• On November 18, 2020, the Company announced that it received authorization to proceed under its investigational new drug application from the U.S. Food and Drug Administration (the “FDA”), allowing it to proceed to clinical trials of PTP-001. PTP-001 (commercial trade name MOTYS™) is a placental tissue particulate comprised of amnion, chorion and umbilical cord from full-term, healthy births and is provided sterile in micronized form. Bioventus plans to evaluate the safety and efficacy of PTP-001 to treat osteoarthritis of the knee through an open-label, dose-escalation study. Further, on March 11, 2021, the Company announced that the first patients had been enrolled and dosed in its Phase 1 open-label, dose-escalation study of MOTYS (PTP-001) with Dr. Shailesh Patel, M.D. at Coastal Carolina Research Center, South Carolina.
• On January 19, 2021, the Company announced the appointment of Miguel O. Beltrán-Delgado as Senior Vice President of Operations. Beltrán-Delgado is responsible for continual improvement of operations including driving productivity while continuing to meet evolving quality standards, reducing cycle times and optimizing the Company’s manufacturing and supply chain footprint.
• On March 4, 2021, the Company announced the appointment of Larry Chen as Managing Director of China and Asia Pacific. Based in Shenzhen, China, he is responsible for significantly increasing penetration of Bioventus products across key Asia Pacific markets, with a focus on China.

“Bioventus finished 2020 with improved momentum in our overall business with second half net sales increasing 3% year-over-year, and fourth quarter net sales increasing 15% on a quarter-over-quarter basis, as we continued to rebound from the global pandemic,” stated Ken Reali, Chief Executive Officer of Bioventus. “We are proud of the strong operating and financial performance we delivered in 2020, despite the unprecedented challenges presented by the external environment. We believe this performance is a direct result of our results oriented culture at Bioventus and the focus by our team on our mission to make a difference by helping patients resume and enjoy active lives.”

Mr. Reali continued: “The substantial improvements in our execution and operating achievements that we delivered in 2020 have continued in 2021. We have significantly enhanced our balance sheet and financial condition with the net proceeds raised in our IPO in February and believe we are well positioned to execute our growth strategy going forward. We introduced financial guidance for 2021 that reflects revenue growth in the range of 12% to 16% year-over-year, fueled primarily by anticipated strong global growth in sales of our leading portfolio of PMA-approved therapies for OA joint pain and our portfolio of clinically efficacious and cost effective bone graft substitutes and continuing to build on our minimally invasive fracture treatment franchise. Importantly, we look forward to potential acceleration in our multi-year growth profile fueled by continued progress in our clinical, product development and new product pipeline and our pursuit of in-organic business development opportunities that are accretive to our long-term growth profile and leverage our significant customer presence across orthopedics, broaden our portfolio and increase our global footprint.”

Presentation & Initial Public Offering:

• This press release presents historical results, for the periods presented, of Bioventus, LLC, the predecessor of Bioventus Inc. for financial reporting purposes.
• The financial results of Bioventus Inc. have not been included in this press release as it had no material assets or liabilities and no material business transactions or activities during the periods presented.
• On February 16, 2021, the Company successfully closed its initial public offering (“IPO”) of common stock at a price to the public of $13.00 per share. The Company issued 9,200,000 shares of Class A common stock, which included 1,200,000 shares sold to the underwriters pursuant to their over-allotment option, and received net proceeds of approximately $111.2 million, after underwriter discounts and commissions.
• Accordingly, these historical results do not purport to reflect what the results of operations of Bioventus Inc. would have been had the IPO and related transactions occurred prior to such periods. For example, these historical results reference LLC common units and not common stock, and do not reflect the attribution of net income to non-controlling interest or the provision for corporate income taxes on the income attributable to Bioventus Inc. that the Company expects to recognize in future periods.

Fourth Quarter 2020 Financial Results:

The following table represents net sales by geographic region, and by vertical, for the three months ended December 31, 2020 and December 31, 2019, respectively:

	Three Months Ended December 31,						Change
($ thousands, except for percentage)		2020			2019		$				%
By Geographic Region:
U.S.	$	89,675		$	86,844		$	2,831			3.3	%
International		8,916			10,710			(1,794	)		(16.8	%)
Net Sales	$	98,591		$	97,554		$	1,037			1.1	%
By Vertical:
OA joint pain treatment and joint preservation	$	52,246		$	54,459		$	(2,213	)		(4.1	%)
Minimally invasive fracture treatment		27,191			26,755			436			1.6	%
Bone graft substitutes		19,154			16,340			2,814			17.2	%
Net Sales	$	98,591		$	97,554		$	1,037			1.1	%

Net sales of $98.6 million, compared to $97.6 million for the fourth quarter of 2019, an increase of $1.0 million, or 1%, year-over-year. The increase in net sales, by geography, was driven by an increase of $2.8 million, or 3%, year-over-year, in U.S. net sales, partially offset by a decrease of $1.8 million, or 17%, year-over-year, in international net sales. International net sales for the fourth quarter ended December 31, 2020 declined 19% year-over-year on a constant currency basis. The increase in net sales, by vertical, was driven by an increase of $2.8 million, or 17%, year-over-year, in bone graft substitutes sales and an increase of $0.4 million, or 2%, year-over-year, in minimally invasive fracture treatment sales, partially offset by a decrease of $2.2 million, or 4%, year-over-year, in OA joint pain treatment and joint preservation sales.

Gross profit was $73.5 million, or 74.5% of net sales, compared to $73.4 million, or 75.3% of net sales, for the fourth quarter of 2019, an increase of 0.1%, year-over-year. Non-GAAP gross profit¹ was $78.6 million, or 79.7% of net sales, compared to $78.7 million, or 80.7% of net sales, for the fourth quarter of 2019, a decrease of $0.1 million, or 0.1%, year-over-year.

___________
^{* See below under “Use of Non-GAAP Financial Measures” for a definition and reconciliation of this measure.}

Operating income was $5.9 million, compared to $13.7 million for the fourth quarter of 2019, a decrease of $7.8 million, or 57%, year-over-year. Operating margin was 6.0% of net sales, compared to 14% of net sales for the fourth quarter of 2019. Non-GAAP operating income* was $17.0 million, compared to $21.0 million for the fourth quarter of 2019, a decrease of $3.9 million, or 19%, year-over-year. Non-GAAP operating margin¹ was 17.3% of net sales, compared to 21.5% of net sales for the fourth quarter of 2019.

Total other expense was $2.8 million, compared to $7.5 million for the fourth quarter of 2019, a decrease of $4.7 million, or 63%, year-over-year, primarily due to decreased debt interest resulting from refinancing our debt in December 2019 as well as the decline in interest rates. Income tax expense was $0.9 million, compared to $0.9 million in the fourth quarter of 2019.

Net income from continuing operations was $2.3 million, or $0.46 per common unit, compared to $5.3 million, or $1.08 per common unit, for the fourth quarter of 2019, a decrease of $3.1 million, or 58%, year-over-year.

Adjusted EBITDA was $28.2 million, compared to $30.7 million for the fourth quarter of 2019, a decrease of $2.6 million, or 8%, year-over-year.

Net income attributable to common unit holders was $0.5 million, or $0.10 per common unit, compared to $2.5 million, or $0.52 per common unit, for the fourth quarter of 2019, a decrease of $2.0 million, or 80%, year-over-year.

Non-GAAP net income attributable to common unit holders was $11.4 million, or $2.32 per common unit, compared to $9.8 million, or $2.00 per common unit, for the fourth quarter of 2019, an increase of $1.6 million, or 16%, year-over-year.

As of December 31, 2020, the Company had $86.8 million in cash and cash equivalents and $188.4 million in debt obligations, compared to $64.5 million in cash and cash equivalents and $198.0 million in debt obligations as of December 31, 2019.

___________
^{* See below under “Use of Non-GAAP Financial Measures” for a definition and reconciliation of this measure.}

Full Year 2020 Financial Results

:

The following table represents net sales by geographic region, and by vertical, for the twelve months ended December 31, 2020 and December 31, 2019, respectively:

	Twelve Months Ended December 31,						Change
($ thousands, except for percentage)		2020			2019		$				%
By Geographic Region:
U.S.	$	293,697		$	305,072		$	(11,375	)		(3.7	%)
International		27,464			35,069			(7,605	)		(21.7	%)
Net Sales	$	321,161		$	340,141		$	(18,980	)		(5.6	%)
By Vertical:
OA joint pain treatment and joint preservation	$	171,178		$	182,082		$	(10,904	)		(6.0	%)
Minimally invasive fracture treatment		88,624			103,504			(14,880	)		(14.4	%)
Bone graft substitutes		61,359			54,555			6,804			12.5	%
Net Sales	$	321,161		$	340,141		$	(18,980	)		(5.6	%)

Net sales of $321.2 million, compared to $340.1 million for the year ended December 31, 2019, a decrease of $19.0 million, or 6%, year-over-year. The decrease in net sales, by geography, was driven by a decrease of $11.4 million, or 4%, year-over-year, in U.S. net sales and a decrease of $7.6 million, or 22%, year-over-year, in international net sales. International sales for the year ended December 31, 2020 declined 22% year-over-year on a constant currency basis. The decrease in net sales, by vertical, was driven by a decrease of $14.9 million, or 14%, year-over-year, in minimally invasive fracture treatment sales, a decrease of $10.9 million, or 6%, year-over-year, in OA joint pain treatment and joint preservation sales, partially offset by an increase of $6.8 million, or 12%, year-over-year, in bone graft substitutes sales.

Net income from continuing operations was $14.7 million, or $3.00 per common unit, compared to $8.1 million, or $1.66 per common unit, for the year ended December 31, 2019, an increase of $6.6 million, or 81%, year-over-year.

Adjusted EBITDA was $72.4 million, compared to $79.2 million for the year ended December 31, 2019, a decrease of $6.7 million, or 9%, year-over-year.

Net income attributable to common unit holders was $4.4 million, or $0.89 per common unit, compared to a Net loss attributable to common unit holders of ($0.7 million), or ($0.13) per common unit, for the year ended December 31, 2019, an increase of $5.0 million year-over-year.

Non-GAAP net income attributable to common unit holders was $37.1 million, or $7.56 per common unit, compared to $28.6 million, or $5.84 per common unit, for the year ended December 31, 2019, an increase of $8.4 million, year-over-year.

Full Year 2021 Financial Guidance:


For the twelve months ending December 31, 2021, the Company expects:

• Net sales of $360 million to $372 million.
• Net income attributable to common shareholders of $15 million to $19 million.
• Non-GAAP net income attributable to common shareholders of $43 million to $46 million.
• Adjusted EBITDA of $79 million to $83 million.

Fourth Quarter 2020 Earnings Conference Call:

Management will host a conference call to discuss its financial results and provide a business update, with a question and answer session, at 5:00 p.m. Eastern Time on March 25, 2021. Those who would like to participate may dial 844-945-2085 (442-268-1266 for international callers) and provide access code 2158468. A live webcast of the call and any accompanying materials will also be provided on the investor relations section of the Company’s website at https://ir.bioventus.com/.

The webcast will be archived on the Company’s website at https://ir.bioventus.com/ and available for replay until March 25, 2022.

About Bioventus

Bioventus delivers clinically proven, cost-effective products that help people heal quickly and safely. Its mission is to make a difference by helping patients resume and enjoy active lives. The Innovations For Active Healing from Bioventus include offerings for osteoarthritis, surgical and non-surgical bone healing. Built on a commitment to high quality standards, evidence-based medicine and strong ethical behavior, Bioventus is a trusted partner for physicians worldwide. For more information, visit www.bioventus.com and follow the company on LinkedIn and Twitter. Bioventus and the Bioventus logo are registered trademarks of Bioventus LLC.

Legal Notice Regarding
Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements concerning our business strategy, position and operations; expected tax treatment, sales trends, opportunities and growth; the ongoing COVID-19 pandemic; the expected benefits and impact of Bioventus’ products, including in certain regions, and biologic drug candidates; and the Company’s financial guidance and expected financial performance. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Factors that could cause actual results to differ materially from those contemplated in this press release include, but are not limited to, statements about the adverse impacts on our business as a result of the COVID-19 pandemic; our dependence on a limited number of products; our ability to develop, acquire and commercialize new products, line extensions or expanded indications; the continued and future acceptance of our existing portfolio of products and any new products, line extensions or expanded indications by physicians, patients, third-party payers and others in the medical community; our ability to differentiate the hyaluronic acid (“HA”) viscosupplementation therapies we own or distribute from alternative therapies for the treatment of osteoarthritic; the proposed down-classification of non-invasive bone growth stimulators, including our Exogen system, by the FDA; our ability to achieve and maintain adequate levels of coverage and/or reimbursement for our products, the procedures using our products, or any future products we may seek to commercialize; our ability to complete acquisitions or successfully integrate new businesses, products or technologies in a cost-effective and non-disruptive manner; competition against other companies; the negative impact on our ability to market our HA products due to the reclassification of HA products from medical devices to drugs in the United States by the FDA; our ability to attract, retain and motivate our senior management and qualified personnel; our ability to continue to research, develop and manufacture our products if our facilities are damaged or become inoperable; failure to comply with the extensive government regulations related to our products and operations; enforcement actions if we engage in improper claims submission practices or in improper marketing or promotion of our products; the FDA regulatory process and our ability to obtain and maintain required regulatory clearances and approvals; failure to comply with the government regulations that apply to our human cells, tissues and cellular or tissue-based products; the clinical studies of any of our future products that do not product results necessary to support regulatory clearance or approval in the United States or elsewhere; and the other risks identified in the Risk Factors section of the Company’s public filings with the Securities and Exchange Commission (“SEC”), including Bioventus’ 424(b)(4) prospectus filed on February 12, 2021 in connection with the Company’s initial public offering, as such factors may be updated from time to time in Bioventus’ other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov and the Investor Relations page of Bioventus’ website at ir.bioventus.com. Except to the extent required by law, the Company undertakes no obligation to update or review any estimate, projection, or forward-looking statement. Actual results may differ materially from those set forth in the forward-looking statements.

BIOVENTUS LLC
Consolidated balance sheets
December 31, 2020 and 2019
(Amounts in thousands, unaudited)
		2020				2019
Assets
Current assets:
Cash and cash equivalents	$	86,839			$	64,520
Accounts receivable, net		88,283				85,128
Inventory		29,120				27,326
Prepaid and other current assets		7,552				6,059
Total current assets		211,794				183,033
Property and equipment, net		6,879				4,489
Goodwill		49,800				49,800
Intangible assets, net		191,650				216,510
Operating lease assets		14,961				15,267
Investment and other assets		19,382				3,308
Total assets	$	494,466			$	472,407
Liabilities and Members’ Equity
Current liabilities:
Accounts payable	$	4,422			$	6,440
Accrued liabilities		88,187				52,827
Accrued equity-based compensation		11,054				15,547
Current portion of long-term debt		15,000				10,000
Other current liabilities		3,926				4,201
Total current liabilities		122,589				89,015
Long-term debt, less current portion		173,378				187,965
Accrued equity-based compensation, less current portion		29,249				25,255
Deferred tax liability		3,362				3,874
Other long-term liabilities		21,728				20,681
Total liabilities		350,306				326,790
Commitments and contingencies
Members’ equity (preferred unit liquidation preference of $210,576 and $204,443 at December 31, 2020 and 2019, respectively)		285,173				285,147
Accumulated other comprehensive income (loss)		1,607				(465	)
Accumulated deficit		(144,539	)			(141,700	)
Equity attributable to unit holders		142,241				142,982
Noncontrolling interest		1,919				2,635
Total members’ equity		144,160				145,617
Total liabilities and members’ equity	$	494,466			$	472,407

BIOVENTUS LLC
Consolidated statements of operations and comprehensive income
(Amounts in thousands, except unit and per unit data, unaudited)
	Three Months Ended Dec 31, 2020				Three Months Ended Dec 31, 2019				Twelve Months Ended Dec 31, 2020				Twelve Months Ended Dec 31, 2019
Net sales	$	98,591			$	97,554			$	321,161			$	340,141
Cost of sales (including depreciation and amortization of $5,093, $5,249, $21,169, and $22,399 respectively)		25,121				24,125				87,642				90,935
Gross profit		73,470				73,429				233,519				249,206
Selling, general and administrative expense		61,974				54,454				193,078				198,475
Research and development expense		2,891				3,144				11,202				11,055
Restructuring costs		563				35				563				575
Depreciation and amortization		2,134				2,093				7,439				7,908
Operating income		5,908				13,703				21,237				31,193
Interest expense		2,656				7,644				9,751				21,579
Other loss (income)		111				(146	)			(4,428	)			(75	)
Other expense		2,767				7,498				5,323				21,504
Income from continuing operations before income taxes		3,141				6,205				15,914				9,689
Income tax expense		890				892				1,192				1,576
Net income from continuing operations		2,251				5,313				14,722				8,113
Loss from discontinued operations, net of tax		—				199				—				1,815
Net income		2,251				5,114				14,722				6,298
Loss attributable to noncontrolling interest		525				523				1,689				553
Net income attributable to unit holders		2,776				5,637				16,411				6,851
Other comprehensive income (loss), net of tax
Change in prior service cost and unrecognized loss for defined benefit plan adjustment		(54	)			(78	)			(54	)			(78	)
Change in foreign currency translation adjustments		1,439				255				2,126				(322	)
Other comprehensive income (loss)		1,385				177				2,072				(400	)
Comprehensive income	$	4,161			$	5,814			$	18,483			$	6,451
Net income from continuing operations attributable to unit holders	$	2,776			$	5,836			$	16,411			$	8,666
Accumulated and unpaid preferred distributions		(1,608	)			(1,534	)			(6,133	)			(5,955	)
Net income allocated to participating shareholders		(670	)			(1,555	)			(5,895	)			(1,555	)
Net income from continuing operations attributable to common unit holders		498				2,747				4,383				1,156
Loss from discontinued operations, net of tax		–				199				–				1,815
Net income (loss) attributable to common unit holders	$	498			$	2,548			$	4,383			$	(659	)
Net income (loss) per unit attributable to common unit holders-basic and diluted
Net income from continuing operations	$	0.10			$	0.56			$	0.89			$	0.24
Loss from discontinued operations, net of tax		–				0.04				–				0.37
Net income (loss) attributable to common unit holders	$	0.10			$	0.52			$	0.89			$	(0.13	)
Weighted average units used in computing basic and diluted net income (loss) per common unit		4,900,000				4,900,000				4,900,000				4,900,000

BIOVENTUS LLC
Consolidated statements of cash flows
Years ended December 31, 2020 and 2019
(Amounts in thousands, unaudited)
		2020				2019
Operating activities:
Net income	$	14,722			$	6,298
Net loss from discontinued operations		—				1,815
Net income from continuing operations		14,722				8,113
Adjustments to reconcile net income to net cash provided by operating activities from continuing operations:
Depreciation and amortization		28,643				30,316
Payment of contingent consideration in excess of amount established in purchase accounting		—				(945	)
Provision for expected credit losses		1,215				2,242
Profits interest plan, liability-classified and other equity awards compensation		10,103				10,844
Change in fair value of Equity Participation Rights unit		644				565
Change in fair value of interest rate swap		1,599				—
Deferred income taxes		(511	)			(348	)
Amortization of debt discount and capitalized loan fees, net		543				1,583
Loss on debt retirement and modification		—				3,352
Other, net		(67	)			395
Changes in operating assets and liabilities:
Accounts receivable		(3,941	)			(14,909	)
Inventories		(528	)			(1,427	)
Accounts payable and accrued expenses		20,510				6,646
Other current assets and liabilities		(733	)			(3,882	)
Net cash provided by operating activities from continuing operations		72,199				42,545
Net cash used in operating activities of discontinued operations		(400	)			(1,832	)
Net cash provided by operating activities		71,799				40,713
Investing activities:
Investment and acquisition of distribution rights		(16,579	)			(6,000	)
Acquisition of VIE		—				430
Purchase of property and equipment		(4,093	)			(2,342	)
Net cash used in investing activities from continuing operations		(20,672	)			(7,912	)
Net cash provided by investing activities from discontinued operations		172				—
Net cash used in investing activities		(20,500	)			(7,912	)
Financing activities:
Borrowing on revolver		49,000				—
Payment on revolver		(49,000	)			—
Proceeds from the issuance of long-term debt, net of issuance costs		—				198,134
Payments on long-term debt		(10,000	)			(199,500	)
Other financing activities		317				(448	)
Distribution to members		(19,886	)			(9,137	)
Net cash used in financing activities		(29,569	)			(10,951	)
Effect of exchange rate changes on cash		589				(104	)
Net change in cash and cash equivalents		22,319				21,746
Cash and cash equivalents at the beginning of the period		64,520				42,774
Cash and cash equivalents at the end of the period	$	86,839			$	64,520

Use of Non-GAAP Financial Measures

International Net Sales Growth on a Constant Currency Basis

International Net Sales Growth on a Constant Currency Basis is a non-GAAP measure, which is calculated by translating current and prior year results at the same foreign currency exchange rate. Constant currency can be presented for numerous GAAP measures, but is most commonly used by management to facilitate the comparison of international net sales to prior periods and analyze net sales performance without the impact of changes in foreign currency exchange rates.

Adjusted EBITDA,
Non-GAAP Gross Profit, Non-GAAP Gross Margin, Non-GAAP Operating Income, and
Non-GAAP Net Income Attributable to Common Unit Holders

We present Adjusted EBITDA, Non-GAAP Gross Profit, Non-GAAP Gross Margin, Non-GAAP Operating Income, Non-GAAP Operating Expense and Non-GAAP Net Income Attributable to Common Unit Holders, all non-GAAP financial measures, to supplement our financial reporting, because we believe these measures are useful indicators of our operating performance.

We define Adjusted EBITDA as net income (loss) from continuing operations before depreciation and amortization, provision of income taxes and interest expense, adjusted for the impact of certain cash, non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include equity compensation, change in fair value of contingent consideration, COVID-19 benefits, succession and transition charges, loss on impairment of intangible assets, losses associated with debt refinancing, restructuring costs, foreign currency impact and other non-recurring costs. See the table below for a reconciliation of net income from continuing operations to Adjusted EBITDA. Our management uses Adjusted EBITDA principally as a measure of our operating performance and believes that Adjusted EBITDA is useful to our investors because it is frequently used by securities analysts, investors and other interested parties frequently use it in their evaluation of the operating performance of companies in industries similar to ours. Our management also uses Adjusted EBITDA for planning purposes, including the preparation of our annual operating budget and financial projections.

Our management uses Non-GAAP Gross Profit, Non-GAAP Gross Margin, Non-GAAP Operating Income, and Non-GAAP Net Income Attributable to Common Unit Holders principally as measures of our operating performance and believe that these non-GAAP financial measures are useful to better understand the long term recurring performance of our core business and to facilitate comparison of our results to those of peer companies. Our management also uses these non-GAAP financial measures for planning purposes, including the preparation of our annual operating budget and financial projections.

We define Non-GAAP Gross Profit as gross profit, adjusted for the impact of certain cash, non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include depreciation and amortization included in the cost of goods sold. We define Non-GAAP Gross Margin as the calculated ratio of Non-GAAP Gross Profit to net sales. See the table below for a reconciliation of gross profit and gross margin to Non-GAAP Gross Profit and Gross Margin.

We define Non-GAAP Operating Income as operating income, adjusted for the impact of certain cash, non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include depreciation and amortization included in the cost of goods sold, amortization in operating expenses, COVID-19 expenses, succession and transition charges, restructuring costs and other non-recurring costs. See the table below for a reconciliation of Operating Income and operating margin to Non-GAAP Operating Income and Non-GAAP Operating Margin.

We define Non-GAAP Net Income Attributable to Common Unit Holders as net income attributable to common unit holders, adjusted for the impact of certain cash, non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include depreciation and amortization included in the cost of goods sold, amortization in operating expenses, COVID-19 expense and income, succession and transition charges, losses associated with debt retirement and modification, restructuring costs, and other non-recurring costs. See the table below for a reconciliation of net income attributable to common unit holders to Non-GAAP Net Income Attributable to Common Unit Holders.

Reconciliation of Net Income from continuing operations to Adjusted EBITDA (unaudited)
	Three Months Ended				Three Months Ended				Twelve Months Ended				Twelve Months Ended
($, thousands)	December 31, 2020				December 31, 2019				December 31, 2020				December 31, 2019
Net Income from continuing operations	$	2,251			$	5,313			$	14,722			$	8,113
Depreciation and amortization (a)		6,854				7,344				28,643				30,316
Income tax expense		890				892				1,192				1,576
Interest expense		2,656				7,644				9,751				21,579
Equity compensation (b)		9,484				7,592				10,103				10,844
COVID-19 benefits, net (c)		35				–				(4,123	)			–
Succession and transition charges (d)		264				–				5,609				–
Restructuring costs (e)		563				35				563				575
Foreign currency impact (f)		(59	)			(138	)			(117	)			8
Equity loss in unconsolidated investments (g)		467				–				467				–
Other non-recurring costs (h)		4,749				2,023				5,633				6,177
Adjusted EBITDA	$	28,154			$	30,705			$	72,443			$	79,188

(a) Includes for the years ended December 31, 2020 and 2019, depreciation and amortization of $21.2 million and $22.4 million in cost of sales and also includes $7.4 million and $7.9 million, respectively, and for the quarters ended December 31, 2020 and 2019, depreciation and amortization of $5.1 million and $5.2 million in cost of sales, and also includes $1.8 million and $2.1 million, respectively, presented in the consolidated statements of operations and comprehensive income (loss), with the balance in research and development.

(b) Represents compensation as well as the change in fair market value resulting from two equity-based compensation plans, the Management Incentive Plan and the Phantom Profits Interest Plan.

(c) Represents income resulting from the Coronavirus Aid, Relief and Economic Security (“CARES”) Act offset by additional cleaning and disinfecting expenses and contract termination fees for canceled events.

(d) Primarily represents costs related to the CEO transition.

(e) Represents costs related to a shift from direct to an indirect distribution model in our International business to improve performance. Various international subsidiaries were dissolved and or merged into other Bioventus LLC entities.

(f) Foreign currency impact represents realized and unrealized gains and losses from fluctuations in foreign currency and is included within other (income) loss in the consolidated statements of operations and comprehensive income (loss).

(g) Represents our share in the losses of CartiHeal for the year and quarter ended December 31, 2020.

(h) Other non-recurring items in 2020 includes settlement and legal costs of $1.9 million with the Office of Inspector General of the U.S. Department of Health and Human Services (“OIG”). The remaining balance in 2020 and the activity in 2019 primarily consists of charges associated with potential strategic transactions, such as potential acquisitions and preparing to become a public company, primarily accounting and legal fees.

Reconciliation of Net income attributable to common unit holders to Non-GAAP Net income attributable to common unit holders (unaudited)
	Three Months Ended				Three Months Ended			Twelve Months Ended				Twelve Months Ended
($, thousands)	December 31, 2020				December 31, 2019			December 31, 2020				December 31, 2019
Net income attributable to common unit holders	$	498			$	2,548		$	4,383			$	(659	)
Depreciation & amortization included in cost of goods sold		5,093				5,249			21,168				22,399
Amortization included in operating expenses		1,331				1,599			5,868				5,927
Loss on debt retirement and modification (a)		–				367			–				367
COVID-19 expense (b)		299				–			576				–
COVID-19 income (c)		(264	)			–			(4,699	)			–
Succession and transition charges (d)		264				–			5,609				–
Restructuring costs (e)		563				35			563				575
Other non-recurring items (f)		3,590				–			3,590				–
Non-GAAP Net income attributable to common unit holders	$	11,374			$	9,798		$	37,058			$	28,609

Reconciliation of Net Income attributable to common unit holders per common unit to Non-GAAP Net Income attributable to common unit holders per common unit (unaudited)
	Three Months Ended				Three Months Ended			Twelve Months Ended				Twelve Months Ended
	December 31, 2020				December 31, 2019			December 31, 2020				December 31, 2019
Weighted average common Units used in computing basic and diluted net income per common Unit		4,900,000				4,900,000			4,900,000				4,900,000
Net income attributable to common unit holders per basic and diluted common Unit	$	0.10			$	0.52		$	0.89			$	(0.13	)
Depreciation & amortization included in cost of goods sold		1.04				1.07			4.32				4.57
Amortization included in operating expenses		0.27				0.33			1.20				1.21
Loss on debt retirement and modification (a)		–				0.07			–				0.07
COVID-19 expense (b)		0.06				–			0.12				–
COVID-19 income (c)		(0.05	)			–			(0.96	)			–
Succession and transition charges (d)		0.05				–			1.14				–
Restructuring costs (e)		0.11				0.01			0.11				0.12
Other non-recurring items (f)		0.73				–			0.73				–
Non-GAAP Net income attributable to common unit holders per basic and diluted common Unit	$	2.32			$	2.00		$	7.56			$	5.84

(a) Represents charges with our 2019 debt refinancing that were included in selling, general and administrative expense on the consolidated statements of operations and comprehensive income (loss).

(b) Additional cleaning and disinfecting expenses and contract termination fees for canceled events included in operating expenses.

(c) Represents income resulting from the CARES Act.

(d) Primarily represents costs related to the CEO transition.

(e) Represents costs related to a shift from direct to an indirect distribution model in our International business to improve performance. Various international subsidiaries were dissolved and or merged into other Bioventus LLC entities.

(f) Other non-recurring items in 2020 primarily includes settlement and legal costs of $1.9 million with the OIG.

Reconciliation of Gross Profit to Non-GAAP Gross Profit and Gross Margin to Non-GAAP Gross Margin (unaudited)
	Three Months Ended			Three Months Ended			Twelve Months Ended			Twelve Months Ended
($, thousands)	December 31, 2020			December 31, 2019			December 31, 2020			December 31, 2019
Gross Profit	73,470			73,429			233,519			249,206
Gross Margin	74.5	%		75.3	%		72.7	%		73.3	%
Depreciation & Amortization included in cost of goods sold	5,093			5,249			21,168			22,399
Non-GAAP Gross Profit	78,564			78,678			254,687			271,605
Non-GAAP Gross Margin	79.7	%		80.7	%		79.3	%		79.9	%
Reconciliation of Operating Income to Non-GAAP Operating Income and Operating Margin to Non-GAAP Operating Margin (unaudited)
	Three Months Ended			Three Months Ended			Twelve Months Ended			Twelve Months Ended
($, thousands)	December 31, 2020			December 31, 2019			December 31, 2020			December 31, 2019
Operating Income	5,908			13,703			21,237			31,193
Operating Margin	6.0	%		14.0	%		6.6	%		9.2	%
Depreciation & Amortization included in cost of goods sold	5,093			5,249			21,168			22,399
Amortization included in operating expenses	1,331			1,599			5,868			5,927
Succession and transition charges (a)	264			–			5,609			–
Restructuring costs (b)	563			35			563			575
COVID-19 expense (c)	299			–			576			–
Other non-recurring items (d)	3,590			367			3,590			367
Non-GAAP Operating Income	17,048			20,953			58,611			60,462
Non-GAAP Operating Margin	17.3	%		21.5	%		18.2	%		17.8	%

(a) Primarily represents costs related to the CEO transition.

(b) Represents costs related to a shift from direct to an indirect distribution model in our International business to improve performance. Various international subsidiaries were dissolved and or merged into other Bioventus LLC entities.

(c) Additional cleaning and disinfecting expenses and contract termination fees for canceled events included in operating expenses.

(d) Other non-recurring items in 2020 primarily includes settlement and legal costs of $1.9 million with the OIG.

Reconciliation of Guidance Range for Net Income to Common Shareholders to Non-GAAP Net Income to Common Shareholders for the twelve months ending December 31, 2021
	2021 Guidance				2021 Guidance
($, thousands)	Low				High
Net income attributable to common shareholders		15,349				19,317
Plus: Amortization included in cost of goods sold		22,260				21,260
Plus: Amortization included in operating expenses		5,323				5,323
Non-GAAP Net income attributable to common shareholders		42,932				45,900
Reconciliation of Guidance Range for Net Income from continuing operations to Adjusted EBITDA for the twelve months ending December 31, 2021
	2021 Guidance				2021 Guidance
($, thousands)	Low				High
Net Income from continuing operations		13,958				17,926
Depreciation and amortization		30,000				29,000
Income tax expense		5,162				6,630
Interest expense		3,400				2,900
Equity compensation		21,500				22,500
Other non-recurring costs (a)		5,000				4,000
Adjusted EBITDA		79,020				82,956

(a) Represents anticipated charges in connection with potential strategic investments.

Investor Inquiries:
Mike Piccinino, CFA, IRC
Westwicke/ICR
[email protected]
  
Press and Media Inquiries:
Bioventus
Thomas Hill
[email protected]

Conference call and webcast today at 5:00 p.m. ET

LOS ANGELES, March 25, 2021 (GLOBE NEWSWIRE) — FAT
(Fresh. Authentic. Tasty.) Brands Inc. (NASDAQ: FAT) (“FAT Brands” or the “Company”) today reported fourth quarter and full year 2020 financial results for the fiscal year ended December 27, 2020.

Andy Wiederhorn, President and CEO of FAT Brands, commented, “We are proud of our franchise partners and employees who have worked incredibly hard and shown impressive versatility throughout this difficult year. We are very hopeful that with the widespread availability of vaccines and accelerated reopening plans in many locations, we will be able to put the COVID-19 pandemic in the rear-view mirror.”

“The fourth quarter proved very productive at FAT Brands and continued our strong rebound during the pandemic. While the initial virus impacts were harsh, this marks another report with improving successive quarterly improvements. Amongst the improving results we have continued to develop our powerful engine for organic growth. We had further new store openings, in addition to more units under construction. We have a solid development pipeline of new franchise locations. And as of today, we have fully integrated Johnny Rockets with plans for the reopening of special venues sometime during the second and third quarters of this year.”

Wiederhorn continued, “We are very excited for the year ahead as we continue our bounce back from the pandemic. In 2021, we will continue to pursue additional accretive acquisition opportunities as well as organic growth of our existing brands.”

“Our existing whole business securitization facility, along with our publicly traded preferred stock and common stock, give us many levers to pull to fund potential acquisitions, reduce our cost of capital further, and drive shareholder value.”

Fiscal Fourth Quarter 2020 Highlights

• Total revenues improved 24% to $6.5 million compared to the fourth quarter of 2019
• Excluding revenues attributable to Johnny Rockets which was acquired on September 21, 2020, revenues declined 19% compared to the fourth quarter of 2019, showing sequential improvement compared to a decline in the prior quarter of 39%

• • System-wide sales growth of 46.0% q/q
    • United States sales growth of 25.0% q/q
    • Rest of world sales growth of 119.7% q/q
  • System-wide same-store sales decline of 7.6% q/q
    • United States same-store sales decline of 8.4% q/q
    • Rest of world sales decline of 3.8% q/q
  • 29 new franchised store openings during the fourth quarter 2020
    • Store count as of December 27, 2020: 679 stores system-wide                            

   

• Net Loss of $7.7 million or $0.64 per share on a basic and fully diluted basis, as compared to net loss of $1.0 million or $0.08 per share on a basic and fully diluted basis in the fourth quarter of 2019
   
• EBITDA⁽¹⁾ loss of $7.9 million as compared to EBITDA of $726,000 in the fourth quarter of 2019
   
• Adjusted EBITDA⁽¹⁾ of $1.7 million as compared to $1.8 million in the fourth quarter of 2019. Adjusted EBITDA excludes expenses related to acquisitions, refranchising gain or losses, impairment charges, and certain non-recurring or non-cash items that the Company does not believe directly reflect its core operations and may not be indicative of the Company’s recurring business operations. The reconciliation of EBITDA to Adjusted EBITDA can be found in the accompanying financial tables.

    ⁽¹⁾EBITDA and Adjusted EBITDA are non-GAAP measures defined below, under “Non-GAAP Measures”. A reconciliation of GAAP net income to EBITDA and adjusted EBITDA is included in the accompanying financial tables.

Summary of Fourth Quarter 2020 Financial Results

Total revenues were $6.5 million in the fourth quarter of 2020 and as compared to $5.2 million in the fourth quarter of 2019. Excluding Johnny Rockets which was acquired on September 21, 2020 as well as advertising revenues, revenues were $3.4 million, down from $4.3 million in the fourth quarter of 2019. The revenue performance overwhelmingly reflects a decline in royalty revenue related to the impact of COVID-19.

Costs and expenses increased to $14.4 million in the fourth quarter of 2020 compared to $5.0 million in the fourth quarter of 2019. These costs and expenses included an impairment charge in 2020 of $5.4 million without comparable activity in the prior year, advertising expenses of $2.9 million in 2020 compared to $1.0 million in 2019 reflecting expenditures in excess of collections recognized in the fourth quarter of 2020, and refranchising losses of $2.0 million in 2020 and $1.1 million in 2019. Total general and administrative expenses were $4.3 million in the fourth quarter of 2020 compared to $3.0 million in the prior period. This increase of $1.3 million was attributed to increases in occupancy costs and legal expenses, additional amortization expense related to the intangible assets of Johnny Rockets, and bad debt expenses related to the COVID-19 global pandemic marginally offset by decreases in travel and entertainment expenses.

Other expense was $2.0 million in the fourth quarter of 2020, compared to other expense of $900,000 in the fourth quarter of 2019, and consisted primarily of net interest expense of $1.6 million in 2020 compared to $1.2 million in the prior period as well as $535,000 of expenses related to the acquisition of Fog Cutter Capital Group Inc in the fourth quarter of 2020 without comparable activity in 2019. The $400,000 increase in net interest expense related primarily to the additional interest expense associated with the $40 million of Series 2020-2 Fixed Rate Asset-Backed Notes sold in September 2020, the proceeds of which were used to fund our acquisition of Johnny Rockets as well as for general corporate purposes.

The combination of the aforementioned revenue and expenses resulted in a net loss of $7.7 million in the fourth quarter of 2020, compared to a net loss of $1.0 million in the fourth quarter of 2019.

Recent Events and Liquidity

On December 24, 2020, the Company completed the acquisition of Fog Cutter Capital Group Inc., a Delaware corporation (“FCCG”), through the merger of FCCG with and into Fog Cutter Acquisition, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company. The acquisition of FCCG by the Company (the “Merger”) was consummated pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), dated December 10, 2020, by and among the Company, FCCG, Merger Sub and Fog Cutter Holdings, LLC, a Delaware limited liability company. The Company undertook the Merger primarily to simplify its corporate structure and eliminate limitations that restrict the Company’s ability to issue additional Common Stock for acquisitions and capital raising. FCCG holds a substantial amount of net operating loss carryforwards (“NOLs”), which could only be made available to the Company as long as FCCG owned at least 80% of FAT Brands. With the Merger, the NOLs will be held directly by the Company, which will then have greater flexibility in managing its capital structure. In addition, after the Merger, the Company will no longer be required to compensate FCCG for utilizing its NOLs under the Tax Sharing Agreement between the Company and FCCG.

During the fourth quarter of 2020, the Company repurchased 232,663 warrants to purchase shares of the Company’s common stock with an exercise price of $5.00 per share for $420,000.

Key Financial Definitions

New store openings – The number of new store openings reflects the number of stores opened during a particular reporting period. The total number of new stores per reporting period and the timing of stores openings has, and will continue to have, an impact on our results.

Same-store sales growth – Same-store sales growth reflects the change in year-over-year sales for the comparable store base, which we define as the number of stores open and in the FAT Brands system for at least one full fiscal year. For stores that were temporarily closed, sales in the current and prior period are adjusted accordingly. Given our focused marketing efforts and public excitement surrounding each opening, new stores often experience an initial start-up period with considerably higher than average sales volumes, which subsequently decrease to stabilized levels after three to six months. Additionally, when we acquire a brand, it may take several months to integrate fully each location of said brand into the FAT Brands platform. Thus, we do not include stores in the comparable base until they have been open and in the FAT Brands system for at least one full fiscal year. For 2020, the comparable store base does not include Elevation Burger and Johnny Rockets stores as we did not own the brands for the full year of 2019.

System-wide sales growth – System wide sales growth reflects the percentage change in sales in any given fiscal period compared to the prior fiscal period for all stores in that brand only when the brand is owned by FAT Brands. Because of acquisitions, new store openings and store closures, the stores open throughout both fiscal periods being compared may be different from period to period.

Conference Call and Webcast

FAT Brands will host a conference call and webcast to discuss its fiscal fourth quarter and full year 2020 financial results today at 5:00 PM ET. Hosting the conference call and webcast will be Andy Wiederhorn, President and Chief Executive Officer, and Rebecca Hershinger, Chief Financial Officer.

The conference call can be accessed live over the phone by dialing 1-877-705-6003. A replay will be available after the call until Thursday, April 1, 2021, and can be accessed by dialing 1-844-512-2921. The passcode is 13717932. The webcast will be available at www.fatbrands.com under the “Investors” section and will be archived on the site shortly after the call has concluded.

About FAT (Fresh. Authentic. Tasty.) Brands

FAT Brands Inc. (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets and develops fast casual and casual dining restaurant concepts around the world. The Company currently owns nine restaurant brands: Fatburger, Johnny Rockets, Buffalo’s Cafe, Buffalo’s Express, Hurricane Grill & Wings, Elevation Burger, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses, and franchises over 700 units worldwide. For more information, please visit www.fatbrands.com.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the future financial and operating results of the Company, our future acquisitions, and the effects on our business of the current novel coronavirus pandemic (“COVID-19”). Forward-looking statements generally use words such as “expect,” “foresee,” “anticipate,” “believe,” “project,” “should,” “estimate,” “will,” “plans,” “forecast,” and similar expressions, and reflect our expectations concerning the future. It is possible that our future performance may differ materially from current expectations expressed in these forward-looking statements. Forward-looking statements are subject to significant business, economic and competitive risks, uncertainties and contingencies including, but not limited to, uncertainties surrounding the severity, duration and effects of the COVID-19 pandemic, many of which are difficult to predict and beyond our control, which could cause our actual results to differ materially from the results expressed or implied in such forward-looking statements. We refer you to the documents we file from time to time with the Securities and Exchange Commission, such as our reports on Form 10-K, Form 10-Q and Form 8-K, for a discussion of these and other risks and uncertainties that could cause our actual results to differ materially from our current expectations and from the forward-looking statements contained in this press release. We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date of this press release.

Non-GAAP Measures (Unaudited)

This press release includes the non-GAAP financial measure of EBITDA and Adjusted EBITDA.

EBITDA is defined as earnings before interest, taxes, depreciation and amortization. We use the term EBITDA, as opposed to income from operations, as it is widely used by analysts, investors and other interested parties to evaluate companies in our industry. We believe that EBITDA is an appropriate measure of operating performance because it eliminates the impact of expenses that do not relate to business performance. EBITDA is not a measure of our financial performance or liquidity that is determined in accordance with generally accepted accounting principles (“GAAP”), and should not be considered as an alternative to net income (loss) as a measure of financial performance or cash flows from operations as measures of liquidity, or any other performance measure derived in accordance with GAAP.

Adjusted EBITDA is defined as EBITDA (as defined above), excluding expenses related to acquisitions, refranchising gain or losses, impairment charges, and certain non-recurring or non-cash items that the Company does not believe directly reflect its core operations and may not be indicative of the Company’s recurring business operations.

A reconciliation of net income presented in accordance with GAAP to EBITDA and adjusted EBITDA is set forth in the tables below.

Investor Relations:

ICR

Ashley DeSimone

[email protected]

646-677-1827

Media Relations:

JConnelly

Erin Mandzik

emandzik@jconnel
ly.com

862-246-9911

###

FAT Brands Inc. Consolidated Statements of Operations Data

		13 weeks ended December 27, 2020				13 weeks ended December 29, 2019				52 weeks ended December 27, 2020				52 weeks ended December 29, 2019
(in thousands)
Revenues
Royalties		$	4,742			$	3,831			$	13,420			$	14,895
Franchise fees			559				855				1,130				3,433
Store opening fees			—				(399	)			—				—
Advertising fees			1,180				952				3,527				4,111
Management fees and other income			18				13				41				66
Total revenues			6,499				5,252				18,118				22,505
Costs and expenses
General and administrative expenses			4,250				3,015				14,876				12,257
Impairment of goodwill and intangible assets			5,368				—				9,295				—
Advertising expenses			2,860				952				5,218				4,111
Refranchising loss			1,958				1,070				3,827				219
Total costs and expenses			14,436				5,037				33,216				16,587
(Loss) income from operations			(7,937	)			215				(15,098	)			5,918
Other expense, net
Interest expense, net			(1,634	)			(1,173	)			(4,919	)			(6,530	)
Change in fair value of derivative liability			—				—				887				—
Loss on extinguishment of debt			—				—				(88	)			—
Gain on contingent consideration payable adjustment			—				—				1,680				—
Other (expense) income, net			(384	)			262				(1,011	)			104
Total other expense, net			(2,018	)			(911	)			(3,451	)			(6,426	)
Loss before income tax (benefit) expense			(9,955	)			(696	)			(18,549	)			(508	)
Income tax (benefit) expense			(2,284	)			257				(3,689	)			510
Net loss		$	(7,671	)		$	(953	)		$	(14,860	)		$	(1,018	)
Basic and diluted loss per share		$	(0.64	)		$	(0.08	)		$	(1.25	)		$	(0.09	)

  
Consolidated Balance Sheet for FAT Brands Inc. as of December 27, 2020

		As of December 27, 2020
(in thousands)
Cash and restricted cash		$	7,211
Total assets		$	121,144
Total liabilities		$	163,027
Total stockholders’ deficit		$	(41,883	)

FAT Brands Inc. Consolidated EBITDA and Adjusted EBITDA Reconciliation

		13 weeks ended December 27, 2020				13 weeks ended December 29, 2019				52 weeks ended December 27, 2020				52 weeks ended December 29, 2019
(in thousands)
Net loss		$	(7,671	)		$	(953	)		$	(14,860	)		$	(1,018	)
Interest expense, net			1,634				1,173				4,919				6,530
Income tax (benefit) expense			(2,284	)			257				(3,689	)			510
Depreciation and amortization			409				249				1,172				785
EBITDA		$	(7,912	)		$	726			$	(12,458	)		$	6,807
Share-based compensation			38				44				99				262
Non-cash lease expenses			69				17				243				174
Acquisition costs			535				(46	)			1,168				201
Refranchising loss			1,958				1,070				3,827				219
Impairment of goodwill and intangible assets			5,368				—				9,295				—
Advertising expenditures exceeding collections			1,680				—				1,680				—
Change in fair value of derivative liability			—				—				(887	)			—
Loss on extinguishment of debt			—				—				88				—
Gain on contingent consideration payable adjustment			—				—				(1,680	)			—
Adjusted EBITDA		$	1,736			$	1,811			$	1,375			$	7,663

Wood Dale, March 25, 2021 (GLOBE NEWSWIRE) — AAR (NYSE: AIR), a leading aviation services provider to commercial and governments operators, MROs and OEMs worldwide, announces that its EAGLE Career Pathways program for aircraft maintenance technicians (AMTs) has been recognized by the U.S. Department of Labor’s (DOL) Employment and Training Division as a nationally registered apprenticeship. AAR’s program standards were approved by the DOL’s Office of Apprenticeship in Washington, D.C., in February.

In addition, AAR has signed a Memorandum of Understanding (MOU) with the American Association of Port Authority’s (AAPA) ACCELerate Apprenticeships program. The program’s goal is to provide competency-based curriculums, on-the-job training, program development assistance and incentive funding to expand apprenticeship opportunities for careers that drive economic mobility.

“Aviation is a key component of our nation’s transportation, distribution and logistics sector,” said Barbara R. Murray, ACCELerate Executive Director. “Apprenticeship is a proven method for developing a skilled, productive, loyal workforce. We are proud to partner with the nation’s leading aircraft maintenance repair organization to meet talent needs, reduce turnover and create a more diverse workforce.”

“Solving the immediate and long-term projected shortage of AMTs continues to be a key focus area of AAR’s workforce development strategy,” said Brian Sartain, AAR Senior Vice President, Repair and Engineering Services. “This coveted national registered apprenticeship program designation and our partnership with AAPA’s ACCELerate Apprenticeship will make our existing programs like the EAGLE Career Pathway Program even more attractive.”

Launched in 2019, AAR’s EAGLE Career Pathway program is a partnership of 15 organizations and institutions, including community colleges, high schools and youth centers, which are dedicated to growing the aviation maintenance technician pipeline. These organizations are located near AAR’s four U.S.-based aircraft repair stations in Miami, Oklahoma City, Indianapolis and Rockford, Illinois, and its global headquarters near Chicago’s O’Hare International Airport.

For more information about AAR´s EAGLE Career Pathways program, visit https://www.aarcorp.com/eagle-pathway-program/.

# # #

About AAR

AAR is a global aerospace and defense aftermarket solutions company with operations in over 20 countries. Headquartered in the Chicago area, AAR supports commercial and government customers through two operating segments: Aviation Services and Expeditionary Services. AAR’s Aviation Services include Parts Supply; OEM Solutions; Integrated Solutions; and Maintenance, Repair and Overhaul (MRO) Services. AAR’s Expeditionary Services include Mobility Systems operations. Additional information can be found at www.aarcorp.com.

This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995, which reflect management’s expectations about future conditions. Forward-looking statements may also be identified because they contain words such as ‘‘anticipate,’’ ‘‘believe,’’ ‘‘continue,’’ ‘‘could,’’ ‘‘estimate,’’ ‘‘expect,’’ ‘‘intend,’’ ‘‘likely,’’ ‘‘may,’’ ‘‘might,’’ ‘‘plan,’’ ‘‘potential,’’ ‘‘predict,’’ ‘‘project,’’ ‘‘seek,’’ ‘‘should,’’ ‘‘target,’’ ‘‘will,’’ ‘‘would,’’ or similar expressions and the negatives of those terms. These forward-looking statements are based on beliefs of Company management, as well as assumptions and estimates based on information currently available to the Company, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated. For a discussion of these and other risks and uncertainties, refer to “Risk Factors” in our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. Should one or more of these risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described. These events and uncertainties are difficult or impossible to predict accurately and many are beyond the Company’s control. The Company assumes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Daniela Pietsch
AAR Corp
+16302275100
[email protected]