Sonal Shah - General Counsel Michael Weinstein - Chairman and CEO.

Bruce Martin - Still Lake Capital LLC.

Greetings, and welcome to the Ark Restaurants' Third Quarter Fiscal 2018 Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Sonal Shah, General Counsel. Please go ahead..

Thank you, operator. Good morning and thank you for joining us on our conference call for the third fiscal quarter ended June 30, 2018. My name is Sonal Shah, and I'm General Counsel of Ark Restaurants. With me on the call today is Michael Weinstein, our Chairman and CEO; and Vinny Pascal, our Chief Operating Officer.

For those of you who have not yet obtained a copy of our press release, it was issued over the Newswire yesterday and is available on our website. To review the full text of that press release, along with the associated financial tables, please go to our homepage at www.arkrestaurants.com.

Before we begin, however, I would like to read the Safe Harbor statement. I need to remind everyone that part of our discussion this morning will include forward-looking statements and that these statements are not guarantees of future performance, and therefore, undue reliance should not be placed on 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. I'll now turn the call over to Michael..

Hi, everybody. I would hope that you will allow me a moment so that I can say a few words about Bob Stewart, who passed away some three weeks ago. Bob was the company's President and CFO, but so much more. For 17 years, he and his family have been our family. He was modest and reserve, just as comfortable in the back seat as driving in the front.

He could be funny but preferred to laugh at other people's jokes. He was intelligent with strong opinions but would take action only after he was a thoughtful listener. On weekends with his family, he would take time to tinker with his 1955 Triumph sports car. He was an [ph] average baseball fan. He collected watches and stereo equipment.

On rainy days, he would provide the office with umbrellas from his inventory, which he would resupply with an order to Amazon. Bob was a seemingly ordinary guy who did an extraordinary job with great integrity and discipline. We are a better company because of his efforts.

He has left behind a strong financial and accounting team and many memories of his genuine friendship. While this was the enormous shock to the company, suddenness of his passing, despite trying to get over the sadness of this, we had not been idle in trying to find a new CFO.

I think we will have the ability to make an announcement within the next month on how we are dealing with the situation. In the meantime, Nancy Alvarez who is our Chief Auditor has done extraordinary job with her team.

It is also a complement to Bob that in the 17 years I don't think anybody has left his accounting department that's extended on to him, but nobody has ever left. With that, I think we can go into how the company is doing.

You've all seen the press release I assume, so I'm going to not bother to reread that and I'd like to just take you through this quarter, which was by the numbers an okay quarter, a little bit disappointing for us. We had some impact in the Northeast from extraordinarily bad weather.

We had said, and we believe there is a clear path to $14 million of EBITDA that's sitting here waiting for us. That was interrupted by just an [ph] incision utilization of our outdoor seats both in Washington and New York. We have so many raining days, and we come in every day with gloom on our face as we look at the skies. So, that was a big impact.

The other big impact in not getting to the $14 million, which does not seem achievable any longer given that we're well into our fourth fiscal quarter. The other impact was the miscalculation on my part as to how quickly we would reignite the event business at sequoia and Washington DC.

Clearly, we have been successful in getting very good comps with our a la carte business. On days when it's not raining, and we can compare it to 2016, which was a decent year in Sequoia, the amount of a la carte risk basins or walk-ins we have, we are crushing it.

We're doing $20,000, $30,000 more easily in our worse weeks with a la carte business than we were doing before in our better weeks we're doing $50,000, $60,000 more. But what has been very slow to materialize is the event calendar. We think we will crossover in December and have worked revenue events than we did in the 2016 December year.

Obviously, we're not fully booking 2017 at the closure. So, we think Sequoia is going well, but we're probably a quarter or two behind in our projections of where we thought this thing could be. Certainly, the progress is there. I have every great confidence that we'll get to number one again.

In Florida, which is another projection of risk, again capturing back the business they have lost when we were not easily accessible because of The detour caused by a bridge repair, we have recaptured and moved ahead of all the business that we used to have.

We thought there was $700,000 missing from that P&L and it looks to me like we have at least that in hand. So, that's going well. Las Vegas has gone very well. If there is something that is a miss with the business. It's our first in Durgin-Park location. That still is lagging behind what we would like it to perform.

We've said before, we're trying to address it, but so far, we haven't been successful despite an effort to reignite that business. The other area I want to talk about today is the Meadowlands.

Meadowlands got sports betting about a month ago on the legislation that was originally proved in New Jersey several years back and the Supreme Court of the United States basically allowed New Jersey the opportunity to have sports betting or any of the speck that wants the passing. The Meadowlands is ideally situated for this.

It's actually closer to Manhattan than any of the casino-like operations in and around New York City and New York State. We have been surprised by the amount of business we're doing sports betting. Last week we did almost $9 million active facility. That's we're going at a $0.5 billion a year in sports betting.

That's probably a low projection because right now there is no college football, no college basketball, no Pro Football, no Pro Basketball. Basically, people are betting on baseball games. So, it's an extraordinary number.

The deal that we made with FanDuel who operates the sports betting on-premise, they paid us $7.5 million for the key and event, $7.5 million to the Meadowlands and in profits. We have one Internet deal, we're allowed to have two beyond what we do with FanDuel.

The first Internet guy paid us $5 million for the key and guaranteed us $1 million of profit. We are obviously a limited partner in this thing, we own about 11%, 11 and a fraction percent. The profitability of sports betting is somewhat balanced off by the operations of what goes on at the race track.

The race track now has no debt with this influx of money. So, we think the race track should be basically a breakeven or slightly profitable enterprise. We get a K1 from the limited partnership. The general partners make all the decisions.

We don't know quite yet, it's all new, how the distributions will take place and what will be reported on our K1 in terms of these events from FanDuel. So, we don't know how that's going to affect our fourth quarter in terms of income and EBITDA, but it is very positive.

We also expect that given the amount of business we are doing, it's very hard for the New Jersey legislature to not have it's eye on this and say [ph] Jesus. So, what would happen if there was a casino there. The state is still broke, it has a new governor, Murphy. He has been pro putting the casino in the north.

We think this will accelerate the profitability of us getting a casino license. The other thing I would like to mention is that Hard Rock, as you know, owns 20% of this limited partnership.

The last restaurant that was attempted to be passed in New Jersey two years ago, required that a casino in the north have an operator who had a license in Atlantic City that was part of the referendum. At that time, our partner Hard Rock did not have a license in Atlantic City. So, to get an operating partner in would have been dilutive to us.

We had had to offset that time with MGM. That operator, according to the referendum passed at that time would have to own 50% of the casino venture in the north. Right now, a few weeks ago, Hard Rock opened in Atlantic City. They have the casino license.

So, that's a positive development in terms of the dilution that we would face if this thing becomes a casino and requires extra money. Our operating partner now has a casino license, it's not an issue any more for us. So, a lot is going on with the Meadowlands which we think is very positive.

We think there is significant income potentially for us out of sports betting. And that's - that also is an area of expansion for us, in that we are the exclusive operator of restaurants and casino with the exception of our Hard Rock Café which just carved out. We are investigating other potential expansion possibilities.

I'll let you know more about that hopefully by the next quarter, but we are very active at this point. Our business is solid, our balance sheet is improved dramatically. We think we're in very good shape.

A little bit disappointed and the take-off at Sequoia greatly disappointed in the weather, but we are very, very positive that within a quarter or two we'll see the results out of sequoia that we had expected.

All our acquisitions, certainly, Rustic Inn, Shuckers and then two Oyster Houses in Alabama are operating very, very well, sales are robust, we're really in very good shape here. So, at this point, I'd like to ask if anybody has any questions..

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Jeffrey Kay [ph] with Family Office Consultants. Please go ahead..

Hi. Good morning, everyone. Just a question regarding Durgin-Park. You had mentioned that it has been disappointed, and I was wondering what's your strategy, what the plan is going forward, seems like you've put some energy and effort and focus trying to turn it around.

If I recall a couple of years ago, you had a New York City property, the new site that you disposed of.

So, I'm just curious as to what your plans have been?.

We're not going to sit unless we can turn it quickly, number one. We do have a deal with host that has Durgin-Park quick-serve restaurant at Logan Airport that has another five years to run that income out of that. We don't have very much in the way of book value at Durgin-Park, $250,000.

We are showing it to some operators who might want to take it over. We're also making an effort on our own park and market it.

But basically, we're feeling with the restaurant that's been in place some 150 years, it sort of is stuck in terms of if we change the menu, people are going to complaint because they go there for that menu and they go there for the history of Durgin-Park.

But the world has become - has changed in the way it likes to eat and that menu is no longer an effective menu we think. We're executing just fine, it's just that we have fewer customers.

So, I'd say we have to fill the post in terms of their license at the airport, which they want to keep in place and we have to deal with what to do with the restaurant. So, we're trying to figure it out, but we're not going to sit on a dirt wall, we'll have a solution hopefully in the next quarter..

Thank you..

[Operator Instructions] Since there are no further questions, I would like to turn - we have one more from Bruce Martin with Still Lake Capital. Please go ahead..

Thanks. Hi, Michael. Sorry about the loss of your friend and hard loss in the business. A - Michael Weinstein Thank you..

Can you just provide a little balance sheet information in terms of cash at the end of the quarter, debt balances?.

The cash at the end of the quarter, hold on one second, let me flip to that page, was roughly around $5 million. It is still since then, it's $6 million. The indebtedness, I can give you in a second is about $20 million..

Thank you..

All right..

There are no further questions. I would like to turn the floor over to Michael Weinstein for closing comments..

Yeah. Bruce, I should have also mentioned, we've refinanced the debt that was signed sometime in June, whereby the amortization on the debt has been greatly reduce, thus helping our cash balances. It's a more rational pre-defined than we had before.

I also want to make comment that the only capital expenditures that we foresee in the next five months or six months is the expansion of Rustic Inn. We're adding a new bar to it for people who wait. Generally, if you go to Rustic Inn, there is a crowd of people waiting and they have no place to spend their money.

So, adding the bar we think is incremental revenue. We're also building two bars in the barge that we had which is on the canal, which was basically for events or overflow seating. Just needed to be replaced and we're adding a rooftop bar to that barge. So, again, we think we're expanding in a rational way.

It's probably a couple of million dollars in capital expenditures over the next five months to six months before we build these things. I want to apologize for my subdued tone today. I think you can clearly understand that with sitting here with one person missing is a little bit tough. We look forward to talking to you next quarter.

I thank you all for listening and have good rest of the summer. Thank you..

Thank you. This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation..