FAT (Fresh. Authentic. Tasty.) Brands Inc. (NASDAQ: FAT) (“FAT
Brands” or the “Company”) today reported fiscal third quarter 2022
financial results for the 13-week period ending September 25, 2022.
Andy Wiederhorn, President and CEO of FAT
Brands, commented, “We are impressed with the strong performance
FAT Brands experienced in the third quarter as evidenced by our
robust unit development and profitable revenue growth. Our sales
resilience is a testament to our diverse portfolio of brands with
average checks ranging from approximately $8 to $37.”
“Our organic growth strategy remains strong with
38 store openings in the third quarter. This week, we are set to
surpass 100 openings for the year and remain on track to open 125
new restaurants in 2022, a new milestone for FAT Brands. Looking
ahead to 2023, we plan to continue this robust unit growth with
over 130 units slated to open. Additionally, during the third
quarter, we signed 180 new franchise agreements bringing our total
pipeline to over 1,000 new locations which is expected to represent
a 60% increase in EBITDA over the next several years.”
“We are also extremely impressed with how our
2021 acquisitions have seamlessly fit into our portfolio and the
demand we are experiencing for them from our franchisee base. We
will continue to evaluate strategic acquisitions, particularly,
brands that fit within our current operations that have a proven
track record of long-term, sustainable and profitable operating
performance or that provide us with the opportunity to expand our
factory business.”
“We also continue to work on reducing our cost
of capital. To that end, we expect to redeem shares of our Series B
Cumulative Preferred Stock in the coming weeks. This will yield
significant cash flow savings as our securitization facility, which
will fund the transaction, has a lower cost of capital than the
preferred share dividend rate.”
Fiscal Third Quarter 2022
Highlights
- Total revenue
improved 247% to $103.2 million compared to $29.8 million in the
third quarter of 2021
- System-wide sales
growth of 57% in the third quarter of 2022 compared to the prior
year quarter
- Year-to-date system-wide same-store
sales growth of 7.0% in the third quarter of 2022 compared to the
prior year
- 38 new store openings during the
third quarter of 2022
- Net loss of $23.4
million, or $1.42 per diluted share, compared to $3.6 million, or
$0.26 per diluted share, in the third quarter of 2021
- Adjusted EBITDA(1) of $24.6
million compared to $7.2 million in the third quarter of 2021
- Adjusted net loss(1) of $16.3
million, or $0.98 per diluted share, compared to $2.3 million, or
$0.16 per diluted share, in the third quarter of 2021
(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 Third Quarter 2022 Financial
Results
Total revenue increased $73.5 million, or 247%,
in the third quarter of 2022, to $103.2 million compared to $29.8
million in the same period of 2021. The increase reflects revenue
from the acquisition of Global Franchise Group in July 2021, the
acquisition of Twin Peaks in October 2021, the acquisitions of
Fazoli's and Native Grill & Wings in December 2021
(collectively, the "2021 Acquisitions") and the continuing recovery
from the negative effects of the COVID-19 pandemic on royalties
from restaurant sales.
Costs and expenses increased $74.8 million, or
273%, in the third quarter of 2022 to $102.2 million compared to
the same period in the prior year, primarily due to the 2021
Acquisitions.
General and administrative expense increased
$18.2 million, or 172%, in the third quarter of 2022 compared to
the same period in the prior year, primarily due to the 2021
Acquisitions, increased compensation costs, professional fees
related to pending litigation and government investigations, and
travel, reflecting the significant expansion of the
organization.
Cost of restaurant and factory revenues totaled
$55.3 million in the third quarter of 2022 and was related to the
operations of the company-owned restaurant locations and the dough
factory operated by Global Franchise Group associated with the 2021
Acquisitions.
Depreciation and amortization increased $4.5
million, or 190% in the third quarter of 2022 compared to the same
period in the prior year, primarily due to depreciation of
company-owned restaurant property and equipment and amortizing
intangible assets related to the 2021 Acquisitions.
Refranchising losses in the third quarter of
2022 were $0.1 million and were comprised of restaurant costs and
expenses, net of food sales. Refranchising gains in the third
quarter of 2021 were $0.3 million and were comprised of $0.5
million in net gains related to refranchised restaurants, partially
offset by $0.2 million in restaurant operating costs, net of food
sales.
Advertising expenses increased $5.7 million in
the third quarter of 2022 compared to the prior year period. These
expenses vary in relation to advertising revenues and reflect
advertising expenses related to the 2021 Acquisitions and the
increase in customer activity as the recovery from COVID
continues.
Total other expense, net for the third quarters
of 2022 and 2021 was $23.9 million and $7.2 million, respectively,
primarily comprised of net interest expense of $24.5 million and
$7.2 million, respectively.
Adjusted net loss was $16.3 million, or $0.98
per diluted share, in the third quarter of 2022 compared to $2.3
million, or $0.16 per diluted share, in the third quarter of
2021.
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. For
2022, the comparable store base does not include concepts acquired
during fiscal 2021.
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 2022 financial results
today at 5:00 PM ET. Hosting the conference call and webcast will
be Andy Wiederhorn, President and Chief Executive Officer, and Ken
Kuick, Chief Financial Officer.
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
Thursday, October 27, 2022, and can be accessed by dialing
1-844-512-2921 from the U.S. or 1-412-317-6671 internationally. The
passcode is 13733381. 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
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, 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, our
expected redemption of Series B Cumulative Preferred Stock, our
ability to conduct future accretive acquisitions, our pipeline of
new store locations, and the recovery of our business from the
COVID-19 pandemic. 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 income (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
gain or 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 attributable to FAT
Brands Inc. presented in accordance with GAAP to EBITDA, adjusted
EBITDA, and adjusted net loss are set forth in the tables
below.
Investor Relations:
ICRMichelle
Michalskiir-fatbrands@icrinc.com646-277-1224
Media Relations:
Erin
Mandzikemandzik@fatbrands.com860-212-6509
FAT Brands Inc. Consolidated Statements of
Operations
|
|
Thirteen Weeks Ended |
|
|
Thirty-Nine Weeks Ended |
|
(In thousands) |
|
September 25, 2022 |
|
|
September 26, 2021 |
|
|
September 25, 2022 |
|
|
September 26, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royalties |
|
$ |
22,833 |
|
|
$ |
13,742 |
|
|
$ |
65,396 |
|
|
$ |
24,800 |
|
Restaurant sales |
|
|
61,352 |
|
|
|
3,879 |
|
|
|
179,473 |
|
|
|
4,113 |
|
Advertising fees |
|
|
9,479 |
|
|
|
5,483 |
|
|
|
28,408 |
|
|
|
8,043 |
|
Factory revenues |
|
|
7,839 |
|
|
|
5,480 |
|
|
|
24,588 |
|
|
|
5,480 |
|
Franchise fees |
|
|
754 |
|
|
|
1,087 |
|
|
|
2,763 |
|
|
|
2,109 |
|
Management fees and other income |
|
|
965 |
|
|
|
90 |
|
|
|
2,782 |
|
|
|
148 |
|
Total revenue |
|
|
103,222 |
|
|
|
29,761 |
|
|
|
303,410 |
|
|
|
44,693 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expense |
|
|
28,751 |
|
|
|
10,589 |
|
|
|
74,188 |
|
|
|
20,214 |
|
Cost of restaurant and factory revenues |
|
|
55,257 |
|
|
|
7,133 |
|
|
|
159,901 |
|
|
|
7,377 |
|
Depreciation and amortization |
|
|
6,895 |
|
|
|
2,377 |
|
|
|
20,076 |
|
|
|
3,161 |
|
Refranchising loss (gain) |
|
|
122 |
|
|
|
(250 |
) |
|
|
1,123 |
|
|
|
(679 |
) |
Acquisition costs |
|
|
— |
|
|
|
2,053 |
|
|
|
383 |
|
|
|
2,985 |
|
Advertising fees |
|
|
11,185 |
|
|
|
5,483 |
|
|
|
33,038 |
|
|
|
8,043 |
|
Total costs and expenses |
|
|
102,210 |
|
|
|
27,385 |
|
|
|
288,709 |
|
|
|
41,101 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
1,012 |
|
|
|
2,376 |
|
|
|
14,701 |
|
|
|
3,592 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense) income,
net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(19,504 |
) |
|
|
(7,072 |
) |
|
|
(57,530 |
) |
|
|
(11,939 |
) |
Interest expense related to preferred shares |
|
|
(4,967 |
) |
|
|
(173 |
) |
|
|
(11,681 |
) |
|
|
(725 |
) |
Net loss on extinguishment of debt |
|
|
— |
|
|
|
(13 |
) |
|
|
— |
|
|
|
(6,418 |
) |
Other income, net |
|
|
538 |
|
|
|
64 |
|
|
|
3,919 |
|
|
|
189 |
|
Total other expense, net |
|
|
(23,933 |
) |
|
|
(7,194 |
) |
|
|
(65,292 |
) |
|
|
(18,893 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income tax
expense |
|
|
(22,921 |
) |
|
|
(4,818 |
) |
|
|
(50,591 |
) |
|
|
(15,301 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
(benefit) |
|
|
516 |
|
|
|
(1,183 |
) |
|
|
4,789 |
|
|
|
(3,303 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(23,437 |
) |
|
|
(3,635 |
) |
|
$ |
(55,380 |
) |
|
|
(11,998 |
) |
Less: Net loss attributable to noncontrolling interest |
|
|
— |
|
|
|
(14 |
) |
|
|
— |
|
|
|
(19 |
) |
Net loss attributable to FAT
Brands Inc. |
|
$ |
(23,437 |
) |
|
$ |
(3,621 |
) |
|
$ |
(55,380 |
) |
|
$ |
(11,979 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per
common share |
|
$ |
(1.42 |
) |
|
$ |
(0.26 |
) |
|
$ |
(3.37 |
) |
|
$ |
(0.85 |
) |
Basic and diluted weighted
average shares outstanding |
|
|
16,528,327 |
|
|
|
14,144,857 |
|
|
|
16,441,555 |
|
|
|
14,094,772 |
|
Cash dividends declared per
common share |
|
$ |
0.14 |
|
|
$ |
0.13 |
|
|
$ |
0.40 |
|
|
$ |
0.39 |
|
FAT Brands Inc. Consolidated EBITDA and Adjusted EBITDA
Reconciliation
|
|
Thirteen Weeks Ended |
|
|
Thirty-Nine Weeks Ended |
|
(In thousands) |
|
September 25, 2022 |
|
|
September 26, 2021 |
|
|
September 25, 2022 |
|
|
September 26, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
attributable to FAT Brands Inc. |
|
$ |
(23,437 |
) |
|
$ |
(3,621 |
) |
|
$ |
(55,380 |
) |
|
$ |
(11,979 |
) |
Interest expense, net |
|
|
24,471 |
|
|
|
7,245 |
|
|
|
69,211 |
|
|
|
12,664 |
|
Income tax provision (benefit) |
|
|
516 |
|
|
|
(1,183 |
) |
|
|
4,789 |
|
|
|
(3,303 |
) |
Depreciation and amortization |
|
|
6,895 |
|
|
|
2,377 |
|
|
|
20,076 |
|
|
|
3,161 |
|
EBITDA |
|
|
8,445 |
|
|
|
4,818 |
|
|
|
38,696 |
|
|
|
543 |
|
Provision for bad debts |
|
|
5,520 |
|
|
|
202 |
|
|
|
5,943 |
|
|
|
225 |
|
Share-based compensation expenses |
|
|
2,035 |
|
|
|
258 |
|
|
|
6,081 |
|
|
|
488 |
|
Non-cash lease expenses |
|
|
929 |
|
|
|
127 |
|
|
|
1,670 |
|
|
|
404 |
|
Acquisition costs |
|
|
— |
|
|
|
2,053 |
|
|
|
383 |
|
|
|
2,985 |
|
Refranchising loss (gain) |
|
|
122 |
|
|
|
(250 |
) |
|
|
1,123 |
|
|
|
(679 |
) |
Litigation costs |
|
|
6,906 |
|
|
|
— |
|
|
|
14,170 |
|
|
|
— |
|
Severance |
|
|
— |
|
|
|
— |
|
|
|
526 |
|
|
|
— |
|
Net loss related to advertising fund deficit |
|
|
(7 |
) |
|
|
— |
|
|
|
3 |
|
|
|
— |
|
Net loss on extinguishment of debt |
|
|
— |
|
|
|
13 |
|
|
|
— |
|
|
|
6,418 |
|
Pre-opening expenses |
|
|
602 |
|
|
|
— |
|
|
|
602 |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
24,552 |
|
|
$ |
7,221 |
|
|
$ |
69,197 |
|
|
$ |
10,384 |
|
FAT Brands Inc. Adjusted Net Loss
Reconciliation
|
|
Thirteen Weeks Ended |
|
|
Thirty-Nine Weeks Ended |
|
(In thousands, except share
and per share data) |
|
September 25, 2022 |
|
|
September 26, 2021 |
|
|
September 25, 2022 |
|
|
September 26, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
attributable to FAT Brands Inc. |
|
$ |
(23,437 |
) |
|
$ |
(3,621 |
) |
|
$ |
(55,380 |
) |
|
$ |
(11,979 |
) |
Refranchising loss (gain) |
|
|
122 |
|
|
|
(250 |
) |
|
|
1,123 |
|
|
|
(679 |
) |
Acquisition costs |
|
|
— |
|
|
|
2,053 |
|
|
|
383 |
|
|
|
2,985 |
|
Litigation costs |
|
|
6,906 |
|
|
|
— |
|
|
|
14,170 |
|
|
|
— |
|
Severance |
|
|
— |
|
|
|
— |
|
|
|
526 |
|
|
|
— |
|
Net loss on extinguishment of debt |
|
|
— |
|
|
|
13 |
|
|
|
— |
|
|
|
6,418 |
|
Tax adjustments, net |
|
|
158 |
|
|
|
(446 |
) |
|
|
1,534 |
|
|
|
(1,883 |
) |
Adjusted net loss |
|
$ |
(16,251 |
) |
|
$ |
(2,251 |
) |
|
$ |
(37,644 |
) |
|
$ |
(5,138 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per basic and diluted
share |
|
$ |
(1.42 |
) |
|
$ |
(0.26 |
) |
|
$ |
(3.37 |
) |
|
$ |
(0.85 |
) |
Adjusted loss per basic and
diluted share |
|
$ |
(0.98 |
) |
|
$ |
(0.16 |
) |
|
$ |
(2.29 |
) |
|
$ |
(0.36 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average basic and
diluted shares outstanding |
|
|
16,528,327 |
|
|
|
14,144,857 |
|
|
|
16,441,555 |
|
|
|
14,094,772 |
|
(1) Reflects the tax impact of the
adjustments using the effective tax rate for the respective
periods
FAT Brands (NASDAQ:FATBP)
過去 株価チャート
から 6 2024 まで 7 2024
FAT Brands (NASDAQ:FATBP)
過去 株価チャート
から 7 2023 まで 7 2024