BBQ HOLDINGS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET OF BBQ HOLDINGS, INC., BARRIO QUEEN AS OF APRIL 3, 2022 AND THE UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS OF BBQ HOLDINGS, INC., BARRIO QUEEN FOR FISCAL YEAR ENDED JANUARY 2, 2022 AND THE QUARTER ENDED APRIL 3, 2022
(in thousands)
The following Unaudited Pro Forma Condensed Combined Statements of Operations for fiscal years ended January 2, 2022 and the quarter ended April 3, 2022, and the Unaudited Pro Forma Condensed Combined Balance Sheet as of April 3, 2022 and are presented as if BBQ Holdings, Inc. (“the Company”) acquired Barrio Queen (“BQ”) as of the beginning of the first fiscal year presented. These unaudited Pro Forma Condensed Combined Statements of Operations should be read in conjunction with the audited Consolidated Statements of Operations and the Company’s historical financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended January 2, 2022, and the Company’s Quarterly Report on Form 10-Q for the quarter ended April 3, 2022. Additionally, these statements should be read in conjunction with the audited Special Purpose Consolidated Statement of Revenues and Direct Expenses of Barrio Queen for the fiscal year ended December 26, 2021 and the unaudited three periods ended March 27, 2022. The Pro Forma Condensed Combined Statements of Operations are unaudited and are not necessarily indicative of what the actual results of operations would have been had the Company acquired Barrio Queen at the beginning of each period presented, nor does it purport to present the future results of operations of the Company. Future results of operations could differ materially from the historical results presented herein.
BBQ HOLDINGS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JANUARY 2, 2022
(in thousands, except per share data)
| | | | | | | | | | | | | | |
| BBQ Holdings, Inc. (1) | Barrio Queen (2) | Pro Forma Adjustments (3) | Pro Forma BBQ Holdings, Inc. |
| Revenue: | | | | |
| Restaurant sales, net | $ | 187,872 | | $ | 34,947 | | $ | — | | $ | 222,819 | |
| Franchise royalty and fee revenue | 12,187 | | — | | — | | 12,187 | |
| Franchisee national advertising fund contributions | 1,711 | | — | | — | | 1,711 | |
| Licensing and other revenue | 4,672 | | 278 | | — | | 4,950 | |
| Total revenue | 206,442 | | 35,225 | | — | | 241,667 | |
| | | | |
| Costs and expenses: | | | | |
| Food and beverage costs | 55,969 | | 8,485 | | — | | 64,454 | |
| Labor and benefits costs | 59,297 | | 13,074 | | — | | 72,371 | |
| Operating expenses | 55,223 | | 7,225 | | — | | 62,448 | |
| Depreciation and amortization expenses | 7,395 | | 924 | | — | | 8,319 | |
| General and administrative expenses | 19,176 | | — | | 1,636 | | 20,812 | |
| National advertising fund expenses | 1,711 | | — | | — | | 1,711 | |
| Asset impairment, estimated lease termination charges and other closing costs, net | 116 | | — | | — | | 116 | |
| Pre-opening expenses | 204 | | — | | — | | 204 | |
| Gain on disposal of property, net | (979) | | — | | — | | (979) | |
| Total costs and expenses | 198,112 | | 29,708 | | 1,636 | | 229,456 | |
| | | | |
| Income (loss) from operations | 8,330 | | 5,517 | | (1,636) | | 12,211 | |
| | | | |
| Other income (expense): | | | | |
| Interest expense | (583) | | — | | (216) | | (799) | |
| Interest income | 178 | | — | | — | | 178 | |
| Gain on forgiveness of debt | 14,109 | | 4,822 | | — | | 18,931 | |
| Gain on bargain purchase | 2,995 | | — | | — | | 2,995 | |
| Total other income (expense): | 16,699 | | 4,822 | | (216) | | 21,305 | |
| | | | |
| Income before income taxes | 25,029 | | 10,339 | | (1,852) | | 33,516 | |
| | | | |
| Income tax (expense) benefit | (661) | | — | | — | | (661) | |
| | | | |
| Net income | 24,368 | | 10,339 | | (1,852) | | 32,855 | |
| Net (income) loss attributable to non-controlling interest | (347) | | — | | — | | (347) | |
| Net income attributable to shareholders | $ | 24,021 | | $ | 10,339 | | $ | (1,852) | | $ | 32,508 | |
| | | | |
| Income per common share: | | | | |
| Basic net income per share attributable to shareholders | $ | 2.44 | | | | $ | 3.31 | |
| Diluted net income per share attributable to shareholders | $ | 2.42 | | | | $ | 3.28 | |
| Weighted average shares outstanding - basic | 9,826 | | | | 9,826 | |
| Weighted average shares outstanding - diluted | 9,922 | | | | 9,922 | |
BBQ HOLDINGS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS FOR THE QUARTER ENDED APRIL 3, 2022
(in thousands, except per share data)
| | | | | | | | | | | | | | |
| BBQ Holdings, Inc. (1) | Barrio Queen (2) | Pro Forma Adjustments (3) | Pro Forma BBQ Holdings, Inc. |
| Revenue: | | | | |
| Restaurant sales, net | $ | 58,731 | | $ | 10,005 | | $ | — | | $ | 68,736 | |
| Franchise royalty and fee revenue | 3,607 | | — | | — | | 3,607 | |
| Franchisee national advertising fund contributions | 490 | | — | | — | | 490 | |
| Licensing and other revenue | 1,356 | | 73 | | — | | 1,429 | |
| Total revenue | 64,184 | | 10,078 | | — | | 74,262 | |
| | | | — | |
| Costs and expenses: | | | | — | |
| Food and beverage costs | 18,357 | | 2,352 | | — | | 20,709 | |
| Labor and benefits costs | 19,386 | | 3,548 | | — | | 22,934 | |
| Operating expenses | 17,239 | | 1,850 | | — | | 19,089 | |
| Depreciation and amortization expenses | 2,423 | | 227 | | — | | 2,650 | |
| General and administrative expenses | 5,291 | | — | | 415 | | 5,706 | |
| National advertising fund expenses | 490 | | — | | — | | 490 | |
| Asset impairment, estimated lease termination charges and other closing costs, net | 409 | | — | | — | | 409 | |
| Pre-opening expenses | 65 | | — | | — | | 65 | |
| Gain on disposal of property, net | 44 | | — | | — | | 44 | |
| Total costs and expenses | 63,704 | | 7,977 | | 415 | | 72,096 | |
| | | | — | |
| Income (loss) from operations | 480 | | 2,101 | | (415) | | 2,166 | |
| | | | — | |
| Other income (expense): | | | | — | |
| Interest expense | (120) | | — | | (55) | | (175) | |
| Interest income | 8 | | — | | — | | 8 | |
| Gain on bargain purchase | 38 | | — | | — | | 38 | |
| Total other income (expense): | (74) | | — | | (55) | | (129) | |
| | | | — | |
| Income before income taxes | 406 | | 2,101 | | (470) | | 2,037 | |
| | | | — | |
| Income tax (expense) benefit | 241 | | — | | — | | 241 | |
| | | | — | |
| Net income | 647 | | 2,101 | | (470) | | 2,278 | |
| Net (income) loss attributable to non-controlling interest | 120 | | — | | — | | 120 | |
| Net income attributable to shareholders | $ | 767 | | $ | 2,101 | | $ | (470) | | $ | 2,398 | |
| | | | |
| Income per common share: | | | | |
| Basic net income per share attributable to shareholders | $ | 0.07 | | | | $ | 0.24 | |
| Diluted net income per share attributable to shareholders | $ | 0.07 | | | | $ | 0.24 | |
| Weighted average shares outstanding - basic | 10,552 | | | | 9,826 | |
| Weighted average shares outstanding - diluted | 10,649 | | | | 9,922 | |
Unaudited Pro Forma Condensed Combined Statements of Operations for the year ended January 2, 2022 and the quarter ended April 3, 2022:
(1)Reflects the Company’s historical operations for the period indicated as previously filed.
(2)Reflects the revenues and direct expenses of Barrio Queen
(3)Represents the adjustment needed to reflect corporate overhead and the debt issued to acquire Barrio Queen. Currently, the Company is unable to estimate the tax implications of Barrio Queen’s operating income on our effective tax rate, and as such we have not estimated any income tax expense or benefit related to this acquisition.
BBQ HOLDINGS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF APRIL 3, 2022
(in thousands)
| | | | | | | | | | | | | | |
| ASSETS | BBQ Holdings, Inc. (4) | Barrio Queen (5) | Pro Forma Adjustments (6) | Pro Forma BBQ Holdings, Inc. |
| Current assets: | | | | |
| Cash and cash equivalents | $ | 35,431 | | $ | 3,632 | | $ | (17,942) | | $ | 21,121 | |
| Restricted cash | 1,677 | | | | 1,677 | |
| Accounts receivable, net of allowance for doubtful accounts | 3,188 | | 1,832 | | | 5,020 | |
| Inventories | 3,281 | | 402 | | | 3,683 | |
| Prepaid expenses and other current assets | 4,313 | | 80 | | | 4,393 | |
| Total current assets | 47,890 | | 5,946 | | (17,942) | | 35,894 | |
| | | | — | |
| Property, equipment and leasehold improvements, net | 39,748 | | 6,634 | | | 46,382 | |
| | | | — | |
| Other assets: | | | | — | |
| Operating lease right-of-use assets | 81,248 | | 13,158 | | | 94,406 | |
| Goodwill | 5,676 | | | 28,505 | | 34,181 | |
| Intangible assets, net | 23,714 | | | | 23,714 | |
| Deferred tax asset, net | 3,922 | | | | 3,922 | |
| Other assets | 1,493 | | 331 | | | 1,824 | |
| Total assets | $ | 203,691 | | $ | 26,069 | | $ | 10,563 | | $ | 240,323 | |
| | | | — | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | — | |
| | | | — | |
| Current liabilities: | | | | — | |
| Accounts payable | $ | 6,951 | | $ | 1,154 | | | $ | 8,105 | |
| Current portion of lease liabilities | 12,511 | | 1,407 | | | 13,918 | |
| Current portion of long-term debt and finance lease liabilities | 1,488 | | | | 1,488 | |
| Accrued compensation and benefits | 6,157 | | 597 | | | 6,754 | |
| Gift card liabilities | 8,809 | | | | 8,809 | |
| Other current liabilities | 8,752 | | 625 | | | 9,377 | |
| Total current liabilities | 44,668 | | 3,783 | | — | | 48,451 | |
| | | | — | |
| Long-term liabilities: | | | | — | |
| Lease liabilities, less current portion | 79,362 | | 13,907 | | | 93,269 | |
| Finance lease liabilities, less current portion | 292 | | | | 292 | |
| Long-term debt, less current portion | 12,819 | | | 10,563 | | 23,382 | |
| Other liabilities | 1,087 | | | | 1,087 | |
| Total liabilities | 138,228 | | 17,690 | | 10,563 | | 166,481 | |
| | | | — | |
| Shareholders’ equity: | 65,463 | | 8,379 | | | 73,842 | |
| Total equity | $ | 203,691 | | $ | 26,069 | | $ | 10,563 | | $ | 240,323 | |
Unaudited Pro Forma Condensed Combined Balance Sheet as of April 3, 2022:
(4)Reflects the Company’s historical financial position as of April 3, 2022 as previously filed.
(5)Reflects the unaudited historical financial position as of the end of the first quarter of fiscal year 2022.
(6)Reflects adjustments for cash used for the purchase of Barrio Queen, assets not acquired and liabilities not assumed.
Note: The Barrio Queen acquisition was funded with approximately $18.0 million in cash and $10.5 million in debt, shown above in the Pro Forma Adjustments column. The corresponding $28.5 million adjustment to goodwill is provisional in nature and is used exclusively for the purpose of balancing this Unaudited Pro Forma Condensed Combined Balance Sheet. It is not indicative of any adjustment to goodwill in the Company's books and records as the acquisition is currently being evaluated, including the fair value of the assets acquired and liabilities assumed, in accordance with ASC 842.
