LOS ANGELES, Oct. 23, 2024 (GLOBE NEWSWIRE) — FAT(Fresh. Authentic. Tasty.) Brands Inc. (NASDAQ: FAT) (“FAT Brands” or the “Company”), a leading global franchising company and parent company of iconic brands including Round Table Pizza, Fatburger, Johnny Rockets, Twin Peaks, Fazoli’s and 13 other restaurant concepts, today announced that the Company will host a conference call to review its third quarter 2024 financial results on Wednesday, October 30, 2024 at 5:00 PM ET. A press release with third quarter 2024 financial results will be issued prior to the conference call that day.
The conference call can be accessed live over the phone by dialing 1-877-704-4453 from the U.S. or 1-201-389-0920 internationally. A replay will be available after the call until Wednesday, November 20, 2024, and can be accessed by dialing 1-844-512-2921 from the U.S. or 1-412-317-6671 internationally. The passcode is 13748855. Hosting the call will be Andy Wiederhorn, Chairman, and Ken Kuick, Co-Chief Executive Officer and Chief Financial Officer.
The conference call will also be webcast live from the corporate website at www.fatbrands.com, under the “Investors” section. A replay of the webcast will be available through the corporate website shortly after the call has concluded.
About FAT (Fresh. Authentic. Tasty.) Brands
FAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets, and develops fast casual, quick-service, casual dining, and polished casual dining concepts around the world. The Company currently owns 18 restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Great American Cookies, Smokey Bones, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses, and franchises and owns over 2,300 units worldwide. For more information on FAT Brands, please visit www.fatbrands.com.
LOS ANGELES, July 31, 2024 (GLOBE NEWSWIRE) — FAT (Fresh. Authentic. Tasty.) Brands Inc. (NASDAQ: FAT) (“FAT Brands” or the “Company”) today reported financial results for the fiscal second quarter ended June 30, 2024.
“Over the last three years, we have grown the FAT Brands portfolio to 18 iconic restaurant brands with approximately 2,300 units across 40 countries and 49 U.S. states,” said Andy Wiederhorn, Chairman of FAT Brands. “We have opened 45 restaurants year to date, including 24 that opened during the second quarter, and plan to open over 120 new restaurants in 2024. We are seeing strong new franchisee activity as well as continued demand from existing franchise partners to develop other brands within our portfolio and heightened interest from our franchise partners who are eager to explore additional co-branding opportunities that leverage synergies within our brand offerings.”
Ken Kuick, Co-Chief Executive Officer of FAT Brands, commented, “We have signed over 180 development deals year to date, compared to 226 deals for the entirety of 2023, bringing our current pipeline to approximately 1,100 locations.” Kuick continued, “Continuing in 2024 is our focus on the expansion of Twin Peaks. We opened four new lodges during the first half of 2024 and plan to open another 12 to 15 new Twin Peaks lodges in 2024, ending the year with approximately 125 lodges. Additionally, our first conversion of a Smokey Bones location is officially underway. We see this as the first of many sites we will use to fuel Twin Peaks’ fast-paced growth.”
Rob Rosen, Co-Chief Executive Officer of FAT Brands, concluded, “Opportunities in 2024 are abundant. Our long-term strategy is to create value through the organic expansion of our existing brands, acquire additional brands that strategically complement our portfolio, realize value from strategic divestments when appropriate to manage outstanding debt, and ultimately increase long-term value for our stakeholders.”
FiscalSecondQuarter2024Highlights
Total revenue improved 42.4% to $152.0 million compared to $106.8 million in the fiscal second quarter of 2023
System-wide sales growth of 8.6% in the fiscal second quarter of 2024 compared to the prior year fiscal quarter
Year-to-date system-wide same-store sales declined of 1.6% in the fiscal second quarter of 2024 compared to the prior year
24 new store openings during the fiscal second quarter of 2024
Net loss of $39.4 million, or $2.43 per diluted share, compared to $7.1 million, or $0.53 per diluted share, in the fiscal second quarter of 2023
EBITDA(1) of $6.8 million compared to $25.6 million in the fiscal second quarter of 2023
Adjusted EBITDA(1) of $15.7 million compared to $23.1 million in the fiscal second quarter of 2023
Adjusted net loss(1) of $30.9 million, or $1.93 per diluted share, compared to adjusted net income(1) of $3.0 million, or
$0.08 per diluted share, in the fiscal second quarter of 2023
(1) EBITDA, adjusted EBITDA and adjusted net (loss) income are non-GAAP measures defined below, under “Non- GAAP Measures”. Reconciliation of GAAP net loss to EBITDA, adjusted EBITDA and adjusted net (loss) income are included in the accompanying financial tables.
SummaryofFiscalSecondQuarter2024FinancialResults
Total revenue increased $45.2 million, or 42.4%, in the second quarter of 2024 to $152.0 million compared to $106.8 million in the same period of 2023, driven by the acquisition of Smokey Bones in September 2023 and revenues from new restaurant openings.
Costs and expenses consist of general and administrative expense, cost of restaurant and factory revenues, depreciation and amortization, refranchising net loss and advertising fees. Costs and expenses increased $66.4 million, or 75.2%, in the second quarter of 2024 to $154.7 million compared to the same period in the prior year, primarily due to the acquisition of Smokey Bones in September 2023 and increased activity from Company-owned restaurants and the Company’s factory.
General and administrative expense increased $19.6 million, or 197.2%, in the second quarter of 2024 compared to $9.9 million in the same period in the prior year, primarily due to the acquisition of Smokey Bones in September 2023 and the recognition of $12.7 million in Employee Retention Credits during the second quarter of fiscal year 2023, partially offset by the recognition of $2.1 million in Employee Retention Credits during the second quarter of fiscal year 2024.
Cost of restaurant and factory revenues was related to the operations of the company-owned restaurant locations and dough factory and increased $40.6 million, or 68.3%, in the second quarter of 2024, primarily due to the acquisition of Smokey Bones in September 2023 and higher company-owned restaurant sales.
Depreciation and amortization increased $3.2 million, or 45.1% in the second quarter of 2024 compared to the same period in the prior year, primarily due to the acquisition of Smokey Bones in September 2023 and depreciation of new property and equipment at company-owned restaurant locations.
Refranchising net loss in the second quarter of 2024 of $0.2 million was comprised of $0.5 million in net loss related to the sale or closure of refranchised restaurants, offset by $0.3 million in restaurant food sales, net of operating costs. Refranchising net loss in the second quarter of 2023 of $0.2 million was comprised of $0.2 million in restaurant operating costs, net of food sales.
Advertising expenses increased $3.0 million in the second quarter of 2024 compared to the prior year period, primarily due to the acquisition of Smokey Bones in September 2023. Additionally, these expenses vary in relation to advertising revenues.
Total other expense, net, for the second quarter of 2024 and 2023 was $34.8 million and $24.2 million, respectively, which is inclusive of interest expense of $34.0 million and $24.3 million, respectively. This increase is primarily due to new debt issuances.
Adjusted net loss(1) of $30.9 million, or $1.93 per diluted share, compared to adjusted net income(1) of $3.0 million, or $0.08 per diluted share, in the fiscal second quarter of 2023.
KeyFinancialDefinitions
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.
System-widesalesgrowth – 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.
ConferenceCallandWebcast
FAT Brands will host a conference call and webcast to discuss its fiscal second quarter 2024 financial results today at 5:00 PM ET. Hosting the conference call and webcast will be Andy Wiederhorn, Chairman of the Board, and Ken Kuick, Co-Chief Executive Officer and Chief Financial Officer.
The conference call can be accessed live over the phone by dialing 1-844-826-3035 from the U.S. or 1-412-317-5195 internationally. A replay will be available after the call until Wednesday, August 21, 2024, and can be accessed by dialing 1-844-512-2921 from the U.S. or 1-412-317-6671 internationally. The passcode is 10189773. 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.
AboutFAT(Fresh.Authentic.Tasty.)Brands
FAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets, and develops fast casual, quick-service, casual dining, and polished casual dining concepts around the world. The Company currently owns 18 restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Smokey Bones, Great American Cookies, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses and franchises and owns approximately 2,300 units worldwide. For more information, please visit www.fatbrands.com.
Forward-LookingStatements
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, the timing and performance of new store openings, our ability to conduct future accretive acquisitions and our pipeline of new store locations. 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. Forward-looking statements are subject to significant business, economic and competitive risks, uncertainties and contingencies, 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 that 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 statements to reflect events or circumstances occurring after the date of this press release.
Non-GAAPMeasures(Unaudited)
This press release includes the non-GAAP financial measures of EBITDA, adjusted EBITDA and adjusted net (loss) income.
EBITDA is defined as earnings before interest, taxes, and 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 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 loss, 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.
Adjusted net (loss) income is a supplemental measure of financial performance that is not required by or presented in accordance with GAAP. Adjusted net (loss) income is defined as net (loss) income plus the impact of adjustments and the tax effects of such adjustments. Adjusted net (loss) income is presented because we believe it helps convey supplemental information to investors regarding our performance, excluding the impact of special items that affect the comparability of results in past quarters to expected results in future quarters. Adjusted net (loss) income as presented may not be comparable to other similarly titled measures of other companies, and our presentation of adjusted net loss should not be construed as an inference that our future results will be unaffected by excluded or unusual items. Our management uses this non-GAAP financial measure to analyze changes in our underlying business from quarter to quarter based on comparable financial results.
Reconciliations of net loss presented in accordance with GAAP to EBITDA, adjusted EBITDA and adjusted net loss are set forth in the tables below.
LOS ANGELES, July 29, 2024 (GLOBE NEWSWIRE) — FAT(Fresh. Authentic. Tasty.) Brands Inc. (NASDAQ: FAT) (“FAT Brands” or the “Company”), a leading global franchising company and parent company of iconic brands including Round Table Pizza, Fatburger, Johnny Rockets, Twin Peaks, Fazoli’s and 13 other restaurant concepts, today announced that the Company will host a conference call to review its second quarter 2024 financial results on Wednesday, July 31, 2024 at 5:00 PM ET. A press release with second quarter 2024 financial results will be issued prior to the conference call that day.
The conference call can be accessed live over the phone by dialing 1-844-826-3035 from the U.S. or 1-412-317-5195 internationally. A replay will be available after the call until Wednesday, August 31, 2024, and can be accessed by dialing 1-844-512-2921 from the U.S. or 1-412-317-6671 internationally. The passcode is 10189773. Hosting the call will be Andy Wiederhorn, Chairman, and Ken Kuick, Co-Chief Executive Officer and Chief Financial Officer.
The conference call will also be webcast live from the corporate website at www.fatbrands.com, under the “Investors” section. A replay of the webcast will be available through the corporate website shortly after the call has concluded.
About FAT (Fresh. Authentic. Tasty.) Brands
FAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets, and develops fast casual, quick-service, casual dining, and polished casual dining concepts around the world. The Company currently owns 18 restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Great American Cookies, Smokey Bones, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses, and franchises and owns over 2,300 units worldwide. For more information on FAT Brands, please visit www.fatbrands.com.
In a new development that’s set to shake up the casual dining landscape, Darden Restaurants has announced its acquisition of Tex-Mex chain Chuy’s Holdings for approximately $605 million. This all-cash deal, revealed on Wednesday, July 17, 2024, marks Darden’s strategic entry into the vibrant Tex-Mex dining category and significantly expands its already impressive restaurant portfolio.
Under the terms of the agreement, Darden will acquire all outstanding shares of Chuy’s at $37.50 per share, representing a substantial premium over recent trading prices. The acquisition is expected to close during Darden’s fiscal second quarter, subject to customary closing conditions.
Darden, the powerhouse behind popular chains such as Olive Garden, LongHorn Steakhouse, and the recently acquired Ruth’s Chris Steak House, has long been a dominant force in the casual dining sector. With the addition of Chuy’s, Darden is poised to diversify its offerings and tap into the growing demand for authentic Tex-Mex cuisine.
Founded in Austin, Texas, in 1982, Chuy’s has built a loyal following with its made-from-scratch Tex-Mex dishes and quirky, eclectic restaurant atmospheres. The chain has expanded to 101 locations across 15 states, generating over $450 million in total revenues for the 12 months ended March 31, 2024. This impressive growth trajectory and strong brand identity caught the eye of Darden’s leadership.
Rick Cardenas, CEO of Darden Restaurants, expressed enthusiasm about the acquisition, stating, “Based on our criteria for adding a brand to the Darden portfolio, we believe Chuy’s is an excellent fit that supports our winning strategy.” Cardenas highlighted Chuy’s strong performance and growth potential as key factors in the decision.
The acquisition brings more than just a new cuisine to Darden’s table. It also adds 7,400 team members to the Darden family, further solidifying the company’s position as a major employer in the restaurant industry. This influx of talent and expertise in the Tex-Mex category could prove invaluable as Darden looks to expand Chuy’s reach.
For Chuy’s, the acquisition represents an opportunity to accelerate growth and reach new markets. Steven Hislop, CEO of Chuy’s, shared his excitement about the deal, saying, “Together we will accelerate our business goals and bring our authentic, made-from-scratch Tex-Mex to more guests and communities.”
The market’s reaction to the news was swift and significant. Chuy’s stock surged by 47.61% following the announcement, reflecting investor enthusiasm for the premium offered by Darden. Conversely, Darden’s stock saw a 3.37% dip, a common occurrence for acquiring companies as the market adjusts to the news of a major purchase.
This acquisition comes at a time when the restaurant industry is seeing increased consolidation as companies seek to diversify their portfolios and achieve economies of scale. Darden’s move to acquire Chuy’s is a prime example of this trend, as it allows the company to enter a new dining category without the need to build a brand from scratch.
As the dust settles on this major deal, all eyes will be on Darden to see how it integrates Chuy’s into its operations and leverages its resources to drive growth. For Chuy’s loyal customers, the hope is that the chain will maintain its unique character and quality while benefiting from Darden’s extensive industry experience and resources.
With this strategic acquisition, Darden Restaurants has not only added a flavorful new dimension to its portfolio but has also positioned itself to capitalize on the enduring popularity of Tex-Mex cuisine in the American dining landscape.
Experienced Financial Executive Joins Fast-Growing Global Franchising Company
LOS ANGELES, July 01, 2024 (GLOBE NEWSWIRE) — FAT (Fresh. Authentic. Tasty.) Brands Inc. announces the hiring of Jordan Chirico as Executive Vice President and Head of Debt Capital Markets. Mr. Chirico joins FAT Brands with nearly 20 years of Wall Street experience and will be focused on the Company’s balance sheet including its $1.2 billion Whole Business Securitization portfolio, additional acquisition financings, preferred stock, and other debt related strategies.
Mr. Chirico spent the first half of his career in structured finance at Bank of America, Robert W. Baird and Credit Suisse before pivoting to the asset management side of the business, holding senior Portfolio Management roles at Robert W. Baird, Brigade Capital Management, and 3|5|2 Capital.
“We are so pleased to welcome Jordan to FAT Brands with his strong background in capital markets,” said Rob Rosen, Co-CEO of FAT Brands. “FAT Brands is uniquely positioned to continue its growth trajectory and Jordan’s expertise will be beneficial as we look to both bolster the balance sheet and be efficient in our financings to build upon our positioning as one of the largest restaurant companies in the U.S.”
About FAT (Fresh. Authentic. Tasty.) Brands FAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets and develops fast casual, casual and polished casual dining restaurant concepts around the world. The Company currently owns 18 restaurant brands: Round Table Pizza®, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Great American Cookies, Smokey Bones, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Native Grill & Wings, Pretzelmaker, Elevation Burger, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses, and franchises and owns over 2,300 units worldwide. For more information on FAT Brands, please visit http://www.fatbrands.com.
FAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets, and develops fast casual, quick-service, casual dining, and polished casual dining concepts around the world. The Company currently owns 17 restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Great American Cookies, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses, and franchises and owns over 2,300 units worldwide. For more information on FAT Brands, please visit www.fatbrands.com.
Joe Gomes, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Filing. FAT Brands announced the operating unit for Twin Peaks (TP) and Smokey Bones (SB) confidentially submitted a registration statement to the SEC to become a standalone public reporting company. While timing and completion of an IPO of the units is subject to numerous conditions, this is a first step.
Confidential? The SEC permits issuers to submit draft registration statements relating to IPOs for review by the SEC staff on a confidential basis. The confidential submission process is intended to give issuers more flexibility to plan their offerings and reduce the potential for lengthy exposure to market fluctuations that can adversely affect an offering. It is our understanding that a confidential filing allows the issuer to defer the public disclosure of sensitive commercial and financial information.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
LOS ANGELES, May 02, 2024 (GLOBE NEWSWIRE) — FAT (Fresh. Authentic. Tasty.) Brands Inc., parent company of Hurricane Grill & Wings and 17 other restaurant concepts, announces their latest brand to enter the legendary Six Flags properties. Hurricane Grill & Wings, the Florida-born wing brand known for its laid-back environment and award-winning wings, will debut at Six Flags Great Escape Lodge in Queensbury, New York this summer.
The latest opening underscores FAT Brands and Six Flags’ dynamic partnership and the global franchising company’s commitment to growth in non-traditional venues. The new Hurricane Grill & Wings will expand the wing brand’s presence in New York state, marking its first location in the upstate region. Hurricane Grill & Wings is FAT Brands’ third brand to appear in Six Flags properties, joining sister brands Fatburger and Johnny Rockets.
“Since we began our relationship with Six Flags following our acquisition of Johnny Rockets in 2020, they have been a tremendous partner of ours,” said FAT Brands Chief Development Officer, Taylor Wiederhorn. “Our brands have a one-of-a-kind, fun environment, so it is only natural to grow FAT Brands’ footprint in theme parks with a likeminded industry leader like Six Flags. We look forward to continued expansion in the years to come.”
“The addition of the first Hurricane Grill & Wings at a Six Flags property is an exciting expansion of our commitment to making good food fun,” said Six Flags Chief Marketing Officer, Edithann Ramey. “Just like our theme and water parks, Hurricane Grill & Wings provides a fun and casual environment where family and friends can gather and make memories.”
For more information or to find a Hurricane Grill & Wings near you, visit hurricanewings.com.
###
About FAT (Fresh. Authentic. Tasty.) Brands
Fragranzi(NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets and develops fast casual, casual and polished casual dining restaurant concepts around the world. The Company currently owns 18 restaurant brands: Round Table Pizza®, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Great American Cookies, Smokey Bones, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Native Grill & Wings, Pretzelmaker, Elevation Burger, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses, and franchises and owns over 2,300 units worldwide. For more information on FAT Brands, please visit http://www.fatbrands.com.
About Hurricane Grill & Wings
With almost 50 restaurants located across the United States, Hurricane Grill & Wings® is known for its jumbo, fresh wings, more than 35 signature sauces, and rubs, and tropical, laid-back vibe. Hurricane Grill & Wings’ menu includes wings, tacos, burgers, and seafood. The original Hurricane Grill & Wings opened in Fort Pierce, Fla., in 1995 and has expanded to locations throughout the United States. For more information visit www.hurricanewings.com.
About Six Flags Entertainment Corporation
Six Flags Entertainment Corporation is the world’s largest regional theme park company with 27 parks across the United States, Mexico and Canada. For 63 years, Six Flags has entertained hundreds of millions of guests with world-class coasters, themed rides, thrilling water parks and unique attractions. Six Flags is committed to creating an inclusive environment that fully embraces the diversity of our team members and guests. For more information, visit www.sixflags.com.
FAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets, and develops fast casual, quick-service, casual dining, and polished casual dining concepts around the world. The Company currently owns 17 restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Great American Cookies, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses, and franchises and owns over 2,300 units worldwide. For more information on FAT Brands, please visit www.fatbrands.com.
Joe Gomes, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
New Development Deals. FAT Brands has announced a number of new development deals. We view these announcements positively as they highlight the continued interest by existing and new franchisees for the Company’s portfolio of restaurant themes. The new deals add to the existing 1,100+ pipeline of new locations.
Co-Branding Deal. FAT Brands announced a new development deal to open 40 new franchised Fatburger locations across Northern California in partnership with franchisee California Burger, Inc. Fatburger will be added to 40 existing Round Table Pizza locations over the next 10 years with the first location set to open in 2024.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
LOS ANGELES, March 07, 2024 (GLOBE NEWSWIRE) — FAT (Fresh. Authentic. Tasty.) Brands Inc. (NASDAQ: FAT) (“FAT Brands” or the “Company”) today reported fiscal fourth quarter and full fiscal year 2023 financial results for the fiscal year ended December 31, 2023.
“With the acquisition of Smokey Bones early in the fourth quarter, we have grown the FAT Brands portfolio to 18 iconic restaurant brands with annualized system wide sales of $2.5 billion,” said Andy Wiederhorn, Chairman of FAT Brands. “We opened 125 restaurants in 2023, including 29 in the fourth quarter. We are seeing strong franchisee interest in development opportunities, having signed more than 225 development agreements in 2023, bringing our total pipeline to 1,100 units. This represents the potential for over 50% EBITDA growth over the next several years.”
Ken Kuick, Co-Chief Executive Officer of FAT Brands, commented, “While franchise interest remains high across all of our brands, we continue to be focused on the expansion of Twin Peaks. This year we opened 14 new lodges and ended the year with 109 lodges, a 33% increase since acquiring the brand in 2021. Our growth pipeline includes 113 lodges and Smokey Bones’ healthy real estate portfolio provides us with the opportunity to convert locations into Twin Peaks lodges, with the potential to significantly accelerate the growth of the brand.”
Rob Rosen, Co-Chief Executive Officer of FAT Brands, concluded, “We believe there are significant opportunities on the horizon for FAT Brands. Our seasoned leadership and strong brand management platform allow us to efficiently integrate new brands while maintaining a healthy and evolving pipeline for organic growth. These strengths position us for continued growth in the future, which will help deleverage our balance sheet.”
Fiscal Fourth Quarter 2023 Highlights
Total revenue improved 52.8% to $158.6 million compared to $103.8 million in the fourth quarter of 2022
System-wide sales growth of 16.5% in the fiscal fourth quarter of 2023 compared to the prior year fiscal quarter
System-wide same-store sales declined 0.6% in the fiscal fourth quarter of 2023 compared to the prior fiscal year
29 new store openings during the fiscal fourth quarter of 2023
Loss from operations of $3.1 million compared to $32.6 million in the fiscal fourth quarter of 2022
Net loss of $26.2 million, or $1.68 per diluted share, compared to $70.8 million, or $4.39 per diluted share, in the fiscal fourth quarter of 2022
Adjusted EBITDA(1) of $27.0 million compared to $19.6 million in the fiscal fourth quarter of 2022
Adjusted net loss(1) of $17.3 million, or $1.15 per diluted share, compared to $43.0 million, or $2.70 per diluted share, in the fiscal fourth quarter of 2022
Fiscal Year 2023 Highlights
Total revenue increased 18.0% to $480.5 million compared to $407.2 million in fiscal 2022
System-wide sales growth of 6.9% compared to fiscal 2022
System-wide same-store sales growth of 0.8% in fiscal 2023 compared to fiscal 2022
125 new store openings during fiscal 2023
Income from operations of $22.3 million compared to loss from operations of $17.9 million in the fiscal quarter of 2022
Net loss of $90.1 million, or $5.85 per diluted share, compared to $126.2 million, or $8.06 per diluted share, in fiscal 2022
Adjusted EBITDA(1) of $91.2 million compared to $88.8 million in fiscal 2022
Adjusted net loss(1) of $56.5 million, or $3.83 per diluted share, compared to $80.9 million, or $5.32 per diluted share, in fiscal 2022
(1) EBITDA, adjusted EBITDA and adjusted net loss are non-GAAP measures defined below, under “Non-GAAP Measures”. Reconciliation of GAAP net loss to EBITDA, adjusted EBITDA and adjusted net loss are included in the accompanying financial tables.
Summary of Fourth Quarter 2023 Financial Results
Total revenue increased $54.8 million, or 52.8%, in the fiscal fourth quarter of 2023, to $158.6 million compared to $103.8 million in the same fiscal period of 2022, driven by a 10.4% increase in royalties, an 80.5% increase in company-owned restaurant revenues driven by new restaurant openings and the acquisition of Smokey Bones during the fourth quarter of 2023 and a 10.0% increase in revenues from our manufacturing facility.
Costs and expenses consist of general and administrative expense, cost of restaurant and factory revenues, depreciation and amortization, refranchising net losses and advertising fees. Costs and expenses increased $25.4 million, or 18.6%, in the fiscal fourth quarter of 2023 to $161.8 million compared to $136.4 million in the same fiscal period in the prior fiscal year.
General and administrative expense decreased $8.8 million, or 22.6%, in the fiscal fourth quarter of 2023 compared to the same fiscal period in the prior fiscal year, primarily due to a $16.6 million non-cash reserve on claimed Employee Retention Credits recorded during the fourth quarter of 2022 and the recognition of $3.4 million related to Employee Retention Credits during the fiscal fourth quarter of 2023, partially offset by the acquisition of Smokey Bones in the fourth quarter of 2023 and higher professional fees related to certain litigation matters.
Cost of restaurant and factory revenues was related to the operations of the company-owned restaurant locations and our dough factory and increased $43.4 million, or 70.3%, in the fiscal fourth quarter of 2023 to $105.1 million, compared to the prior year quarter, primarily due to the acquisition of Smokey Bones in the fourth quarter of 2023.
Depreciation and amortization increased $3.0 million, or 42.9% in the fiscal fourth quarter of 2023 compared to the same fiscal period in the prior fiscal year, primarily due to the acquisition of Smokey Bones in the fourth quarter of 2023 and depreciation of new property and equipment at company-owned restaurant locations.
Refranchising losses in the fiscal fourth quarter of 2023 and 2022 were $2.1 million and $3.1 million, respectively, and were comprised of restaurant costs and expenses, net of food sales.
Advertising expenses increased $2.2 million in the fiscal fourth quarter of 2023 compared to the prior fiscal year period. These expenses vary in relation to advertising revenues.
Total other expense, net for the fiscal fourth quarters of 2023 and 2022 was $31.9 million and $24.2 million, respectively, primarily comprised of net interest expense of $33.3 million and $25.6 million, respectively.
Adjusted net loss was $17.3 million, or $1.15 per diluted share, in the fiscal fourth quarter of 2023 compared to $43.0 million, or $2.70 per diluted share, in the fiscal fourth quarter of 2022.
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.
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 2023 financial results today at 5:00 PM ET. Hosting the conference call and webcast will be Andy Wiederhorn, Chairman of the Board, and Ken Kuick, Co-Chief Executive Officer and Chief Financial Officer.
The conference call can be accessed live over the phone by dialing 1-844-826-3035 from the U.S. or 1-412-317-5195 internationally. A replay will be available after the call until Thursday, March 28, 2024, and can be accessed by dialing 1-844-512-2921 from the U.S. or 1-412-317-6671 internationally. The passcode is 10186678. 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 (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets, and develops fast casual, quick-service, casual dining, and polished casual dining concepts around the world. The Company currently owns 18 restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Smokey Bones, Great American Cookies, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses and franchises and owns approximately 2,300 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, estimates of future EBITDA, the timing and performance of new store openings, future reductions in cost of capital and leverage ratio, our ability to conduct future accretive acquisitions and our pipeline of new store locations. 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. Forward-looking statements are subject to significant business, economic and competitive risks, uncertainties and contingencies, 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 that 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 statements 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 measures of EBITDA, adjusted EBITDA and adjusted net loss.
EBITDA is defined as earnings before interest, taxes, and 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 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 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.
Adjusted net loss is a supplemental measure of financial performance that is not required by or presented in accordance with GAAP. Adjusted net loss is defined as net loss plus the impact of adjustments and the tax effects of such adjustments. Adjusted net loss is presented because we believe it helps convey supplemental information to investors regarding our performance, excluding the impact of special items that affect the comparability of results in past quarters to expected results in future quarters. Adjusted net loss as presented may not be comparable to other similarly titled measures of other companies, and our presentation of adjusted net loss should not be construed as an inference that our future results will be unaffected by excluded or unusual items. Our management uses this non-GAAP financial measure to analyze changes in our underlying business from quarter to quarter based on comparable financial results.
Reconciliations of net loss presented in accordance with GAAP to EBITDA, adjusted EBITDA and adjusted net loss are set forth in the tables below.
FAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets, and develops fast casual, quick-service, casual dining, and polished casual dining concepts around the world. The Company currently owns 17 restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Great American Cookies, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses, and franchises and owns over 2,300 units worldwide. For more information on FAT Brands, please visit www.fatbrands.com.
Joe Gomes, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Wells Notice. In an 8-K filed yesterday, FAT Brands reported that the Company, Chairman Andrew Wiederhorn, and one current and one former officer of the Company each received a Wells Notice from the staff of the SEC. The notice is related to the previously disclosed SEC investigation of the Company. The Company continues to cooperate with the SEC and maintains its actions were appropriate, and intends to pursue the Wells Notice process, including submitting a formal response to the SEC.
What Is a Wells Notice? According to the Cornell Law School Legal Information Institute, “A ‘Wells Notice’ is a letter sent by a securities regulator to a prospective respondent, notifying him of the substance of charges that the regulator intends to bring against the respondent, and affording the respondent with the opportunity to submit a written statement to the ultimate decision maker.”
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Following a Record-Setting 2022, Multi-Brand Franchisor Continues to Pass Milestone Markers
LOS ANGELES, Jan. 23, 2024 (GLOBE NEWSWIRE) — FAT(Fresh.Authentic.Tasty.)BrandsInc., a leading global franchising company that owns iconic restaurant brands, including Johnny Rockets, Fatburger, Round Table Pizza, Twin Peaks, Fazoli’s and 13 other concepts, is proud to announce its continued growth in 2023 of new store openings and development agreements. Through December 31, 2023, the global franchising company opened 125 new stores and added a total of over 200 stores to its now 1,200-unit development pipeline. The Company projects to open 150 units in 2024.
In 2023, the Company celebrated many significant milestones, including opening the 400th location for Great American Cookies, and the 100th location for FAT Brands’ fastest-growing brand, Twin Peaks. The Company also brought its iconic brands to new markets around the globe, including Fazolis’ highly-anticipated return to the Phoenix and Orlando markets, Round Table Pizza’s debut in Houston, Johnny Rockets’ first location in Iraq, Twin Peaks’ first locations in Jacksonville, Fla., Columbus, Ohio and Chattanooga, Tenn., and Fatburger’s return to Tampa, Fla. and Chicago. Great American Cookies also made its debut in Arizona, Alaska, and Illinois, and the co-branded concept, Marble Slab Creamery and Great American Cookies, opened their first location in the Pacific Northwest. Several of FAT Brands’ newest stores opened in non-traditional spaces, including airports, hospitals, and theme parks, which continue to be a strategic avenue for FAT Brands’ pipeline.
Aside from openings, FAT Brands also made significant gains in tapping into its cross-brand synergies. The first co-branded Fatburger and Round Table Pizza debuted in Texas, with many more expected across the U.S. Throughout the year, cookie offerings rolled out across almost every FAT Brands concept, filling more capacity at its Georgia-based cookie batter and pretzel mix manufacturing facility. FAT Brands also doubled down on its polished casual dining category, adding Smokey Bones to its growing list of iconic brands.
FAT Brands received significant recognition from top industry publications. Los Angeles Business Journal recognized FAT Brands as the second-largest franchisor in the Los Angeles area. Pretzelmaker, Marble Slab Creamery, and sister brand Great American Cookies were named to QSR’s Best Franchise Deals, 13 of FAT Brands’ concepts were named to Franchise Times’ Top 400, while 10 brands made Technomic’s Top 500 List, and Twin Peaks was named a Top Sports Bar by Nation’s Restaurant News.
“Coming off of a record 2022, we were proud to continue to build upon our organic development pipeline of restaurants that have been purchased by franchisees to be opened at a future date, which add to our already robust development pipeline,” said Taylor Wiederhorn, Chief Development Officer at FAT Brands. “Approximately half of our franchisees are multi-unit operators hungry for new opportunities, as showcased by development deals signed this year. These deals will bring many of our brands to new territories, including Fazoli’s, Marble Slab Creamery and Great American Cookies to Puerto Rico, Hot Dog on a Stick, Great American Cookies and Marble Slab Creamery to Iraq, and even more restaurants to existing strongholds like Texas, Canada, Mexico, and the Middle East, including Fatburger, Johnny Rockets, Round Table Pizza, Pretzelmaker, and co-branded concepts such as Fatburger and Buffalo’s Express, Fatburger and Round Table Pizza and Great American Cookies and Marble Slab Creamery.”
FAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets, and develops fast casual, quick-service, casual dining, and polished casual dining concepts around the world. The Company currently owns 18 restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Smokey Bones, Great American Cookies, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses and franchises and owns approximately 2,300 units worldwide. For more information, please visit www.fatbrands.com.
Forward-LookingStatements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the timing and performance of new store openings and area development agreements. Forward-looking statements reflect expectations of FAT Brands Inc. (“we” or “our”) concerning the future and are subject to significant business, economic and competitive risks, uncertainties and contingencies. These factors are difficult to predict and beyond our control, and could cause our actual results to differ materially from those expressed or implied in such forward-looking statements. We refer you to the documents that 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 factors. We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date of this press release.
FAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets, and develops fast casual, quick-service, casual dining, and polished casual dining concepts around the world. The Company currently owns 17 restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Great American Cookies, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses, and franchises and owns over 2,300 units worldwide. For more information on FAT Brands, please visit www.fatbrands.com.
Joe Gomes, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
NobleCon19. FAT Brands Chairman Andy Wiederhorn presented at NobleCon19. Highlights included a review of organic growth, the potential monetization of Twin Peaks, and the manufacturing facility. A rebroadcast is available at https://www.channelchek.com/videos/fat-brands-noblecon19-replay.
Organic Growth. With 96 restaurants opened through the end of 3Q, FAT Brands remains on track to open between 130-150 new locations in 2023. The organic pipeline exceeds some 1,100 locations, with 145 already lined up for opening in 2024. Organic growth alone could generate an additional $50 million of annual adjusted EBITDA by 2025.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
LOS ANGELES, Oct. 26, 2023 (GLOBE NEWSWIRE) — FAT (Fresh. Authentic. Tasty.) Brands Inc. (NASDAQ: FAT) (“FAT Brands” or the “Company”) today reported financial results for the fiscal third quarter ended September 24, 2023.
Andy Wiederhorn, Chairman of FAT Brands, commented, “With the acquisition of Smokey Bones early in the fourth quarter, we have grown the FAT Brands portfolio to 18 iconic restaurant brands with annualized system wide sales of $2.4 billion. Year to date through the third quarter, we have opened 96 restaurants, including 30 that opened in the third quarter, and are on track to open 150 new restaurants in 2023. We are seeing strong franchisee interest in development opportunities, having signed over 200 development agreements in 2023, bringing our total pipeline to over 1,100 units. This represents the potential for over 50% EBITDA growth over the next several years.”
Rob Rosen, Co-Chief Executive Officer of FAT Brands, commented, “While franchise interest remains high across all of our brands, we continue to be focused on the expansion of Twin Peaks. This year, we plan to open 15 to 17 new lodges, of which 11 have been opened so far. We expect to end the year with over 110 lodges, a 35% increase since acquiring the brand in 2021. Our growth pipeline includes over 125 lodges and Smokey Bones’ healthy real estate portfolio provides us with the opportunity to convert over 40 locations into Twin Peaks lodges, with the potential to significantly accelerate the growth of the brand.”
Ken Kuick, Co-Chief Executive Officer of FAT Brands, commented, “We believe there are significant opportunities on the horizon for FAT Brands. Our seasoned leadership team and strong brand management platform allow us to efficiently integrate new brands while maintaining a healthy and evolving pipeline for organic growth. These strengths position us for continued growth in the future, which will help deleverage our balance sheet.”
Fiscal ThirdQuarter 2023Highlights
• Total revenue improved 6.0% to $109.4 million compared to $103.2 million in the fiscal third quarter of 2022
◦ System-wide sales growth of 0.8% in the fiscal third quarter of 2023 compared to the prior year fiscal quarter ◦ Year-to-date system-wide same-store sales growth of 1.3% in the fiscal third quarter of 2023 compared to the prior year ◦ 30 new store openings during the fiscal third quarter of 2023
• Net loss of $24.7 million, or $1.59 per diluted share, compared to $23.4 million, or $1.52 per diluted share, in the fiscal third quarter of 2022 • Adjusted EBITDA(1) of $21.9 million compared to $24.6 million in the fiscal third quarter of 2022 • Adjusted net loss(1) of $17.1 million, or $1.14 per diluted share, compared to adjusted net loss of $16.3 million, or $1.08 per diluted share, in the fiscal third quarter of 2022
(1) EBITDA, Adjusted EBITDA and adjusted net loss are non-GAAP measures defined below, under “Non-GAAP Measures”. Reconciliation of GAAP net loss to EBITDA, adjusted EBITDA and adjusted net loss are included in the accompanying financial tables.
Summary of Fiscal ThirdQuarter 2023Financial Results
Total revenue increased $6.2 million, or 6.0%, in the third quarter of 2023 to $109.4 million compared to $103.2 million in the same period of 2022, driven by a 4.8% increase in royalties, a 2.0% increase in company-owned restaurant revenues, a 228.5% increase in franchise fees and an 18.9% increase in revenues from our manufacturing facility.
Costs and expenses consist of general and administrative expense, cost of restaurant and factory revenues, depreciation and amortization, refranchising net loss and advertising fees. Costs and expenses remained largely unchanged in the third quarter, increasing 0.5% in the third quarter of 2023 compared to the same period in the prior year.
General and administrative expense decreased $4.3 million, or 14.9%, in the third quarter of 2023 compared to the same period in the prior year, primarily due to the recognition of $1.0 million related to Employee Retention Credits during the third quarter of 2023 and lower professional fees related to certain litigation matters.
Cost of restaurant and factory revenues increased $3.9 million, or 7.1%, in the third quarter of 2023 compared to the same period in the prior year, primarily due to Employee Retention Credits recognized during the third quarter of 2022 and higher company-owned restaurant and dough factory revenues.
Depreciation and amortization increased $0.1 million, or 2.1% in the third quarter of 2023 compared to the same period in the prior year, primarily due to depreciation of new property and equipment at company-owned restaurant locations.
Advertising expenses in the third quarter of 2023 increased $0.5 million compared to the prior year period. These expenses vary in relation to advertising revenues.
Total other expense, net, for the third quarter of 2023 and 2022 was $32.6 million and $23.9 million, respectively, which is inclusive of interest expense of $29.7 million and $24.5 million, respectively. Total other expense, net for the third quarter of 2023 also included a $2.7 million net loss on extinguishment of debt.
Adjusted net loss(1) of $17.1 million, or $1.14 per diluted share, compared to adjusted net loss of $16.3 million, or $1.08 per diluted share, in the fiscal third quarter of 2022.
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.
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 third quarter 2023 financial results today at 4:30 PM ET. Hosting the conference call and webcast will be Andy Wiederhorn, Chairman of the Board, and Ken Kuick, Co-Chief Executive Officer and Chief Financial Officer.
The conference call can be accessed live over the phone by dialing 1-844-826-3035 from the U.S. or 1-412-317-5195 internationally. A replay will be available after the call until Thursday, November 16, 2023, and can be accessed by dialing 1-844-512-2921 from the U.S. or 1-412-317-6671 internationally. The passcode is 10183290. 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 (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets, and develops fast casual, quick-service, casual dining, and polished casual dining concepts around the world. The Company currently owns 18 restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Smokey Bones, Great American Cookies, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses and franchises and owns approximately 2,300 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, estimates of future EBITDA, the timing and performance of new store openings, future reductions in cost of capital and leverage ratio, our ability to conduct future accretive acquisitions and our pipeline of new store locations. 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. Forward-looking statements are subject to significant business, economic and competitive risks, uncertainties and contingencies, 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 that 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 statements 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 measures of EBITDA, adjusted EBITDA and adjusted net loss.
EBITDA is defined as earnings before interest, taxes, and 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 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 loss, 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.
Adjusted net loss is a supplemental measure of financial performance that is not required by or presented in accordance with GAAP. Adjusted net loss is defined as net loss plus the impact of adjustments and the tax effects of such adjustments. Adjusted net loss is presented because we believe it helps convey supplemental information to investors regarding our performance, excluding the impact of special items that affect the comparability of results in past quarters to expected results in future quarters. Adjusted net loss as presented may not be comparable to other similarly titled measures of other companies, and our presentation of adjusted net loss should not be construed as an inference that our future results will be unaffected by excluded or unusual items. Our management uses this non-GAAP financial measure to analyze changes in our underlying business from quarter to quarter based on comparable financial results.
Reconciliations of net loss presented in accordance with GAAP to EBITDA, adjusted EBITDA and adjusted net loss are set forth in the tables below.
