Ark Restaurants Corp (ARKR) 2009 Q4 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to the Ark Restaurants fourth quarter 2009 results conference call. At this time all participants are in a listen only mode. Following today's presentation instructions will be given for the question and answer session. (Operator Instructions) As a reminder this conference is being recorded today, Monday, January 4, 2010. I would now like to turn the conference over to Mr. Bob Towers, President and COO. Please go ahead.

Thank you. Good morning and thank you all for joining us on our conference call for the fourth fiscal quarter and year-ended October 3, 2009. With me on the call today is Michael Weinstein, our Chief Executive Officer, Bob Stewart, our Chief Financial Officer, Vincent Pascal, Director and Senior Vice President, and Michael Buck, our General Counsel. For those of you who have not yet obtained a copy of our press release, it was issued over the Newswire on December 31, and is available on our website and that is www.Arkrestaurants.com. To review the full text of that press release along with associated tables please go to that homepage, once again www.Arkrestaurants.com.

Before we begin, however I'd like to read the Safe Harbor statement. I need to remind everyone that part of our discussion will include forward-looking statements and that these statements are not guarantees of future performance and therefore undue reliance should not be placed upon them. We refer everyone to our filings with the Securities and Exchange Commission for a more detailed discussion of the risks that may have a direct bearing on our operating results, performance and financial condition and now I'll turn the call over to Michael Weinstein, our Chief Executive Officer.

Hi, everybody. So, obviously this was a difficult year, same-store sales did not do well as expected. We went into this year really concerned and if you recall, we suspended our dividend which we recently reinstated. We didn't know how bad it was going to get, but we made a decision which sort of belies our historic what I consider our historic objective to be the most efficient we can possibly be. We were not efficient this year in terms of payroll. We could have cut payroll substantially more but we decided early on that as long as this Company was profitable we were not going to start the dismantle of longstanding team in management as well as in the restaurants that have served us very well.

So, there was room in payroll if we had taken a different course but as I said we were standing by our management teams and our employees and all of the restaurants and at corporate headquarters. Everywhere else I think we were very efficient. We just looked to cut and worked with purveyors wherever we could. The difficulty in operating under these circumstances where we took, again where we protected our payrolls, we took the attitude that we have good assets, that these assets will perform well in the future, and we took the attitude that our customers were looking for a level of service that they had been used to and if anything, we poured on more service on to our customers because we feel that in environments like this, sales could be very very sensitive if you started to cut services or quality in any way. We did not raise prices. We just tried to Muddle through this whole thing. I think we did pretty well in a very bad environment.

What we are looking forward to is some sort of bump in sales as this current year, fiscal year, goes along. Last year, there were no corporate parties to speak of, no meetings, tour and travel was not strong. There was this feeling because the dollar was weak that we would see a lot of Europeans in New York and Las Vegas. That was not the case when foreign countries are in recessions, people do not travel regardless of the relative strength of their currency to the US currency. New York visitorships were down. A lot of our restaurants are in areas where tourists do go and we just did not see foreign tourists to the extent that we saw them last year.

Spend to consumers was down, average checks were down, people were cutting out appetizers, you aren't selling high priced bottles of wine, and that continues. The December quarter will be a little bit tricky in terms of comparisons because last year even though business had turned down starting in September of 2008, which was October, November, December of 2008 is the first year of our fiscal quarter of First Quarter of fiscal year 2009, we still saw a lot of party business because people had booked Christmas parties and meetings earlier in 2008. This year in the December quarter we had virtually no party business. Vegas was very very weak in the December quarter so nothing in the way of what we're seeing at our restaurants indicates any improvement at all in the headcounts or the spend. There's just nothing that we're seeing that indicates that there's been any turnaround at all.

What is good is as I said our assets and we worked on the leases of Bryant Park, we've extended the outdoor lease which had three years to run to 10 years. We've been talking to our landlords at New York, New York. We are adding some restaurants there and doing some refurbishments there and in exchange for that I believe we'll get a longer lease in our fast food court. We are working on some other leases so our plan is just to work on our existing leases to improve them in terms of term, in some cases improvement in terms of the basic rent costs and we are looking forward to doing some new operations this year. We just opened Robert, the Museum of Art & Design on Columbus Circle in New York, New York. We have great hopes for that. That will have some reopening costs associated with the December quarter which will hurt our comparisons a little bit, but basically, you can't be upbeat in terms of sales right now but what we can be upbeat about and what we're very confident is that our assets are strong assets, that we're improving the lease turns of those assets and we're adding some strong new leases to our portfolio. So I think once business comes back we should see a significant bump in our EBITDA and hopefully take it beyond where it's been historically.

We continue to pay our quarterly dividend. There's no plans to change that. Our cash flow projections for the year are very very decent. Our bank balances are strong. We have no debt other than a small purchase money mortgage associated with acquisition of our Durgin Park property of three years ago, that's roughly a little more than $400,000 so our balance sheet is very strong and I'll open it up for questions.

Thank you. (Operator Instructions) Our first question comes from the line of [Mark Mongulis]. Please go ahead.

Good morning, Mike.

Good morning.

Could you comment on the comparison in other operating costs and expenses for this quarter versus last? Or by year ago?

Yes, the one thing in operating expenses that you're going to see is our legal cost. We've had enormous legal costs this year. One of those cases has been settled I think favorably for us which was in Bryant Park where we had an exclusive, in terms of food and beverage service in the Park and we gave up that exclusive for four months a year in exchange for a longer lease at our outdoor areas and beyond that, we also have a monetary payment that's being made to us annually and beyond that, we're going to be allowed to expand some of our facilities in the Park, so that was an expensive lawsuit. We are also in a lawsuit with a landlord at El Rio Grande. It's expensive, quite honestly we don't see the point of what they're trying to accomplish. We think we'll win that, so those two have been very expensive. There is also a minor labor lawsuit at Bryant Park where we also think we win it and essentially the legal fees on that fortunately are pretty much stopped because the other side has sort of stopped paying attention to it. I think they realize that their lawsuit was filed on something that will give them very very little return. We have -- we're basically in compliance with all labor laws there and we just don't see that as a problem, but we spent somewhere around $1 million last year in legal fees. That's unusual for us.

So therefore, based on one of those, only one of those three still continuing, you don't see this level of expenditure continuing into the next year?

Hopefully not. It's not productive and it's not money we like to spend. We've accrued for legal fees coming in this year also so we don't think you'll see heavy legal fees because they're already accrued for.

Okay, thank you.

My pleasure.

Thank you. (Operator Instructions) And Mr. Weinstein, there are no further questions at this time. Please continue.

Happy New Year, everybody. I hope things get better. Again we feel we're in a very strong position. We feel we're running the Company appropriately given the economic environment. We continue to work for our shareholders and hopefully we'll have a better year. Thank you.

Ladies and gentlemen, this concludes the Ark Restaurants fourth quarter 2009 results conference call. If you would like to listen to a replay of today's conference please dial 1-800-406-7325 or 303-590-3030 with the passcode 4197969. You may now disconnect.