Ark Restaurants Corp. (ARKR) Earnings Call Transcript & Summary

Good day, and welcome to the Ark Restaurants Corp. 2021 Annual Meeting of Shareholders. I would now like to turn the conference over to Matt Uretsky, outside Corporate Counsel. Please go ahead.

Good morning. COVID-19 has required many businesses, including Ark, to be as innovative as possible in light of unprecedented challenges. In accordance with state and local mandates and in compliance with U.S. Securities and Exchange Commission guidance regarding the conduct of Annual Shareholder Meeting as well as the exercise of best practices to reduce the likelihood of additional spread of the coronavirus, Ark Restaurants Corp. is pleased to conduct this Annual Meeting of shareholders through a virtual platform rather than in-person as in pre-pandemic years. The meeting will now come to order. I am Matt Uretsky, a partner of McCarter & English LLP, outside counsel to Ark Restaurants Corp., and I welcome you to the company's Annual Meeting of shareholders. Following the close of this annual meeting, Michael Weinstein, Chief Executive Officer of the company, will remark on the operations of the company, and you will have an opportunity to ask questions at that time. The directors present virtually are Michael Weinstein, Bruce Lewin, Marcia Allen, Steven Shulman, Stephen Novick, Anthony Sirica, Arthur Stainman and Paul Gordon. The officers present virtually are Michael Weinstein, Chairman and Chief Executive Officer; Anthony Sirica, Chief Financial Officer; and Paul Gordon, Senior Vice President. I will chair the meeting, and I hereby appoint Sonal Shah, the company's General Counsel, to act as secretary of the meeting. Will the secretary of the meeting please produce the following documents for filing with the minutes of the meeting. Copies of the printed notice of annual meeting dated February 4, 2021, stating the time, place and purpose thereof; and the affidavit, certifying as to the delivery of the Notice of Meeting, which was first forwarded on February 4, 2021, to each holder -- to each of the holders of the common stock of the company of record as recorded on the shareholder list of the corporation as of January 25, 2021. I direct that such notice, affidavit, shareholder list and accompanying documents be filed with the minutes of this meeting. American Election Services, LLC, the duly appointed inspector of elections, has subscribed to its oath of office. I direct that such oath be filed with the minutes of the meeting. Will the secretary please take a poll of the shareholders represented at the meeting in-person or by proxy. All persons wishing to vote in-person should give their names and e-mail addresses to the secretary, and she, in turn, will distribute ballots to you virtually. Does anyone need a ballot? Will the secretary please report as to whether a quorum is present?

Mr. Chairman, I have a written report of the inspector, which indicates that we have a quorum present at this meeting. I direct that the foregoing report of the inspector be annexed to the minutes of the meeting.

Based on such report, I declare that a quorum is present and that the meeting is regularly and lawfully convened and ready to transact business. The next order of business before the meeting is the election of 9 directors to serve until the next annual meeting of shareholders unless any such director shall resign, become disqualified, disabled or otherwise be removed from offer. Nominees receiving the highest number of affirmative votes will be elected. No other nominations have been submitted to the company's Nominating and Corporate Governance Committee. May I have the nominations?

On behalf of the Board of Directors, I hereby nominate Michael Weinstein, Vincent Pascal, Paul Gordon, Anthony Sirica, Marcia Allen, Bruce Lewin, Steven Shulman, Arthur Stainman and Stephen Novick, each to serve as a member of the Board of Directors until the annual meeting of shareholders in 2022.

Do I hear a second for the nominations and move that the nominations be closed?

I second the motion.

I will entertain a motion that the nominees be elected as Directors.

Mr. Chairman, I so move.

I second the motion.

I direct that a vote of the shareholders be taken on the nominations made. I direct that a ballot be given to each shareholder or proxy present at this meeting, who desires to submit a written ballot for the purpose of voting on the foregoing nominations virtually. Any shareholder who previously has given a proxy need not vote on the foregoing nominations unless he or she desires to revoke the proxy. Any shareholder who wants a ballot should please announce themselves. If you are voting by ballot, please note the number of shares, which you held of record on January 25, 2021, under your signature, which may be electronic and/or conformed on the ballot and vote your shares as you wish for the nominees. After you mark your ballot, please retain it to vote on the following matters as well. [Voting]

Has everyone had an opportunity to vote? If so, I declare the polls closed for the election of directors. The next order of business before the meeting is to vote upon the ratification of appointment of CohnReznick LLP as independent auditors for the company's financial statements for this 2021 fiscal year.

On behalf of the Board of Directors, I hereby make the motion that the appointment be ratified.

I second the motion.

I direct that a vote of the shareholders be taken for or against the appointment of CohnReznick LLP to serve as independent auditors of this company for the company's financial statements for the 2021 fiscal year. The vote will be taken on the motion. [Voting]

Has everyone had an opportunity to vote? If so, I declare the polls closed on the motion. The next order of business before the meeting is to hold an advisory vote regarding compensation of the company's named executive officers.

On behalf of the Board of Directors, I hereby make the motion that the compensation of the company's named executive officers be approved on an advisory basis.

I second the motion.

I direct that an advisory vote of the shareholders be taken for or against the compensation of the company's named executive officers. The advisory vote will be taken on the motion. [Voting]

Has everyone had an opportunity to vote? If so, I declare the polls closed on the motion. The next order of business before the meeting is to hold an advisory vote regarding the frequency of the advisory vote on compensation of the company's named executive officers.

On behalf of the Board of Directors, I hereby make the motion that the company's recommendation that the company conducts its advisory vote on compensation of the company's named executive officers every 3 years, be approved on an advisory basis.

I second the motion.

I direct that an advisory vote of the shareholders be taken regarding whether to conduct the company's advisory vote on compensation of its named executive officers every 1 year, every 2 years or every 3 years -- you take it. The advisory vote will be taken on the motion. [Voting]

Has everyone had an opportunity to vote? If so, I declare the polls closed on the motion. The opportunity to vote on all questions before the meeting having been given, I declare the polls closed. Is there any other business to be brought before this meeting or any questions or comments concerning the proposals submitted for action at this meeting? At the conclusion of this meeting, Michael Weinstein, the company's Chief Executive Officer, will update shareholders on Ark's business. I note that the inspector has completed her tabulations. Madam secretary, please report your results.

Mr. Chairman, I report that each of Michael Weinstein, Vincent Pascal, Paul Gordon, Anthony Sirica, Marcia Allen, Bruce Lewin, Steven Shulman, Arthur Stainman and Stephen Novick have been elected as a Director of the company.

You have heard the results of the voting. I declare that Michael Weinstein, Vincent Pascal, Paul Gordon, Anthony Sirica, Marcia Allen, Bruce R. Lewin, Steven Shulman, Arthur Stainman and Stephen Novick have each been elected as a Director of the company.

Mr. Chairman, I report that 2,860,467 votes were cast for the ratification of the appointment of CohnReznick LLP as independent auditors for the 2021 fiscal year. 16,267 votes were cast against and 4,975 votes abstained from the ratification of the appointment of CohnReznick LLP as independent auditors for the 2021 fiscal year.

You have heard the results of the voting. I declare that the appointment of CohnReznick as independent auditors for the 2021 fiscal year has been ratified.

Mr. Chairman, I report that 2,124,010 votes were cast for an advisory vote regarding the compensation of the company's named executive officers. 11,310 votes were cast against an advisory vote regarding the compensation of the company's named executive officers, and 4,462 votes abstained from the advisory vote regarding compensation of the company's named executive officers.

You have heard the results of the voting. I declare that the compensation of the company's named executive officers has been approved on an advisory basis.

Mr. Chairman, I report that 802,576 votes were cast for conducting an advisory vote regarding compensation of the company's named executives every 1 year. 117,738 votes were cast for conducting an advisory vote regarding compensation of the company's named executive officers every 2 years, and 1,211,360 votes were cast for conducting an advisory vote regarding compensation of the company's named executive officers every 3 years. And 8,108 votes abstained from the advisory vote regarding the frequency of the advisory vote regarding compensation of the company's named executive officers.

You have heard the results of the voting. I declare that conducting the advisory vote regarding compensation of the company's named executive officers every 3 years has been approved on an advisory basis. I will now entertain a motion to adjourn the meeting, so Mr. Weinstein can report on the company's affairs.

I hereby move that the meeting be adjourned.

I second the motion to adjourn.

Those in favor, signify by saying, aye. Those opposed, nay. [Voting]

Aye.

Aye.

Aye.

The motion is therefore approved, and I hereby declare the 2021 Annual Meeting of the Shareholders of Ark Restaurants Corp. to be adjourned. Thank you all for attending. I now invite Mr. Weinstein to report on the company's affairs.

Hi, everybody. Thank you for attending. I hope this is last time we have an annual meeting under these circumstances. Obviously, as reported in our Annual Report and in my shareholders' letter, last year was an extremely difficult year for the hospitality industry that covered travel, hotels and especially, restaurants. At various times, we were under restrictions where we could not do any business in all our venues. Our restaurants were basically closed from March through June of last year. Starting in June, we were able to open some of our restaurants and that proceeded to the point where by late summer, all of our restaurants were open with the exception of one in Union Station where the lease had terminated, but we expect that, that lease will be reinvigorated once Union Station straightens out their own problems with a homeless situation, which has interrupted their ability to do business. We also closed late last year -- early this year because our leases ran out 2 operations in Atlantic City. Other than that, everything is to open at this point. Florida has virtually no restrictions. Alabama, no restrictions. Las Vegas went to 50% allowed occupancy this past Monday. Yesterday, New York City will go to 50% allowed occupancy starting March 19, I believe. The occupancy is for à la carte service. Especially in New York, there is a limitation on the number of people that can attend events and under certain circumstances, that will be allowed, but our business still remains hampered by restrictions. Despite that, and I think this is a result of pent-up demand, our sales in Florida, Alabama, Las Vegas are climbing. They're extremely encouraging. Our sales in New York, in Washington, D.C. are hampered both by weather. We have a lot of outdoor cafe seats that are unused. That will change. And as the spring weather comes, we've also just lifted the restrictions where we were only allowed to have minimum occupancy. I would say to you right now that it looks to me based upon cash flows coming from our Southern venues that the company will see positive cash flow in the June quarter. Positive cash flow to us is represented by 3 different criteria. Initially, when the restaurants were closed, the corporate offices as well as any salaried employees in New York, Washington, Florida, Alabama and Las Vegas were under extreme restrictions as to salary. Nobody in the company was allowed to make more than $1,000 a week. As we open restaurants, the restaurants were allowed to pay people based upon the cash flow at the restaurants. Most of our restaurants right now are at 100% payroll. Our New York restaurants are still restricted a little bit in payroll. Our corporate office is still restricted somewhat in payroll. But we believe we are cash flow positive, taking into account if everybody was paid 100% and if full all rents would be paid 100%. So things are kind of good. We didn't expect to be there at this point this fast, but the June quarter should be cash flow positive. Going into March of last year, we were expecting to have a record year in cash flow. Obviously, that was interrupted. We think it will take another 6 months before we get to the point where we can reach that type of cash flow again. We made one acquisition during this period, the Blue Moon Fish company in Fort Lauderdale that has worked out very well. The estimate of cash flow out of that when we bought the restaurant has been realized. It was a terrific business deal for the company. We're actively looking for other restaurants. Our criteria is, for the most part, we want to own the land, under the restaurants, we buy. If not, we want long-term leases. Blue Moon, we do not own the property, but we have a 26-year lease. That's the type of deal we're looking to do. We want to buy cash flow. We're not so much interested in leasing property and building restaurants, speculating on our ability to be successful. We think there are better opportunities out there right now where restaurants that are cash flow positive, who have suffered during the pandemic, will be available at reasonable prices that we can take advantage of. So if there are any questions, I'd like to hear them. It's a little bit awkward. It's not like a conference call. It's a different criteria for asking questions. Sonal will take your questions, if there are any, and pass them on to me, and I'll be happy to answer them.

[Operator Instructions] No questions yet, Michael.

All right. So I appreciate the awkwardness of asking questions. Why don't we just thank you for all attending. Again, we're in good shape here. Our balance sheet is strong. We had to get to the point where we saw positive cash flow. We're at that point. So I think we're in very good shape coming out of this, and I look forward to having a more productive call on our next conference call. Thank you very much. Sonal?

Thank you, everyone, for attending. See you in-person, hopefully soon.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.