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Cava Group delivered impressive Q4 2024 earnings with strong revenue growth, although rising costs remain a challenge.Cava Group (CAVA -4.72%), a fast-casual Mediterranean restaurant chain, announced its Q4 2024 earnings on February 25, 2025. The company reported strong revenue growth, rising 28.3% to $225.1 million from $177.2 million in the previous year, driven by a 21.2% increase in same restaurant sales growth. Despite lacking specific analyst estimates for comparison, strong customer demand and the st ...

Q4 2024 EARNINGS SUPPLEMENTAL MATERIALS February 25, 2025 Cautionary Statement Regarding Forward-Looking Statements This presentation contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that reflect our current views with respect to, among other things, our operations and financial performance. Forward-looking statements include all statements that are not historical facts. These forward-looking statements relate to matters such as our industry, b ...

Start Time: 17:00 January 1, 0000 5:54 PM ET CAVA Group, Inc. (NYSE:CAVA) Q4 2024 Earnings Conference Call February 25, 2025, 17:00 PM ET Company Participants Brett Schulman - Co-Founder and CEO Tricia Tolivar - CFO Matt Milanovich - IR Conference Call Participants Brian Harbour - Morgan Stanley Andrew Charles - TD Cowen Chris O'Cull - Stifel David Tarantino - Baird Sharon Zackfia - William Blair Jon Tower - Citi Ivan Yu - Jefferies Brian Mullan - Piper Sandler Jeffrey Bernstein - Barclays Danilo Gargiulo - ...

Core Insights - Cava Group (CAVA) reported a revenue of $227.4 million for the quarter ended December 2024, reflecting a year-over-year increase of 28.4% [1] - The earnings per share (EPS) for the quarter was $0.05, up from $0.02 in the same quarter last year, although it fell short of the consensus estimate of $0.06 by 16.67% [1] - The revenue exceeded the Zacks Consensus Estimate of $225.54 million by 0.82% [1] Financial Performance - Same Restaurant Sales Growth was reported at 21.2%, surpassing the estimated 18.3% by analysts [4] - The total number of CAVA restaurants at the end of the period was 367, slightly above the average estimate of 366 [4] - CAVA opened 15 new restaurants, including converted Zoes Kitchen locations, matching the average estimate [4] - Revenue from CAVA restaurants was $225.10 million, exceeding the average estimate of $223.32 million, representing a year-over-year change of 28.3% [4] - Restaurant-Level profit was reported at $50.41 million, which was below the estimated $55.16 million [4] Stock Performance - Cava's shares have declined by 15.3% over the past month, compared to a 1.8% decline in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market [3]

Core Viewpoint - Cava Group reported quarterly earnings of $0.05 per share, missing the Zacks Consensus Estimate of $0.06 per share, but showing improvement from $0.02 per share a year ago, indicating a -16.67% earnings surprise [1] Financial Performance - Cava's revenues for the quarter ended December 2024 were $227.4 million, surpassing the Zacks Consensus Estimate by 0.82%, and up from $177.17 million year-over-year [2] - Over the last four quarters, the company has exceeded consensus EPS estimates three times and topped revenue estimates four times [2] Stock Performance - Cava shares have declined approximately 7.6% since the beginning of the year, contrasting with the S&P 500's gain of 1.7% [3] - The current Zacks Rank for Cava is 3 (Hold), suggesting the stock is expected to perform in line with the market in the near future [6] Earnings Outlook - The consensus EPS estimate for the upcoming quarter is $0.18 on revenues of $339.56 million, and for the current fiscal year, it is $0.61 on revenues of $1.2 billion [7] - The estimate revisions trend for Cava is mixed, which could change following the recent earnings report [6] Industry Context - The Retail - Restaurants industry, to which Cava belongs, is currently ranked in the top 26% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]

Financial Performance - Total revenue for the fiscal year ended December 29, 2024, was $963,713,000, representing a 32.2% increase from $728,700,000 in the previous year [374]. - Net income for the fiscal year ended December 29, 2024, was $130,319,000, a significant increase from $13,280,000 in the prior year [374]. - Basic earnings per share for the fiscal year ended December 29, 2024, was $1.14, compared to $0.22 in the previous year [374]. - Total operating expenses for the fiscal year were $920,595,000, an increase from $723,975,000, reflecting a rise of 27.1% [374]. - The Company’s total revenue for fiscal 2024 was $963.7 million, a 32.2% increase from $728.7 million in fiscal 2023 and a 70.8% increase from $564.1 million in fiscal 2022 [429]. - Restaurant revenue reached $954.3 million in fiscal 2024, up 32.3% from $720.9 million in fiscal 2023 and up 71.3% from $557.0 million in fiscal 2022 [429]. - CAVA segment revenue increased to $954,273, up 33% from $717,060 in 2023 [474]. - Total consolidated revenue reached $963,713, a 32% increase compared to $728,700 in 2023 [474]. - CAVA segment restaurant-level profit rose to $238,113, reflecting a 34% increase from $177,488 in 2023 [474]. - Income before taxes for the company was $59,910, compared to $14,048 in 2023, showing significant improvement [474]. Assets and Equity - Total assets increased to $1,169,669,000 as of December 29, 2024, compared to $983,757,000 at the end of the previous year, reflecting a growth of 19% [371]. - Total stockholders' equity rose to $695,566,000, up from $570,802,000, indicating a 21.9% increase year-over-year [371]. - Cash and cash equivalents increased to $366,120,000 from $332,428,000, showing a growth of 10.1% [371]. - Trade accounts receivable increased to $4,799,000 from $3,662,000, a rise of 31% [371]. - The net property and equipment increased to $372.902 million as of December 29, 2024, from $330.730 million as of December 31, 2023, reflecting growth in leasehold improvements and equipment [434]. Cash Flow - Net cash provided by operating activities reached $161.0 million, compared to $97.1 million in 2023 and $6.0 million in 2022, indicating strong operational cash flow growth [380]. - The company reported a net cash used in investing activities of $108.1 million in 2024, compared to $138.8 million in 2023 [380]. Tax and Valuation - The company fully released the valuation allowance against deferred tax assets of $83.7 million in the fiscal year ended December 29, 2024, with deferred tax assets amounting to $71.5 million [358]. - The total net deferred tax assets as of December 29, 2024, amounted to $71.537 million, compared to a net liability of $79,000 in 2023 [445]. - The Company recorded a full valuation against its deferred tax assets as of December 31, 2023, which was released in fiscal 2024 [411]. Expenses and Costs - General and administrative expenses increased to $120,500, up 19% from $101,491 in 2023 [474]. - Advertising and marketing costs totaled $8.8 million in fiscal 2024, an increase from $6.1 million in fiscal 2023 and $7.1 million in fiscal 2022 [408]. - Operating lease costs for fiscal 2024 were $59.090 million, an increase from $50.361 million in fiscal 2023 [447]. - Total impairment and asset disposal costs for fiscal 2024 were $5.055 million, compared to $4.899 million in fiscal 2023 and $19.753 million in fiscal 2022 [433]. Market Presence and Expansion - The company operated 367 CAVA Restaurants across 25 states and Washington, D.C. as of December 29, 2024, reflecting continued expansion in the fast-casual dining sector [384]. - The Company plans to continue expanding its market presence and investing in new product development to sustain growth [374]. - The Company completed the conversion of all Zoes Kitchen restaurants to CAVA restaurants, totaling 153 conversions, with the last conversion opening on October 20, 2023 [471]. Employee Compensation - The company’s equity-based compensation increased to $13.6 million in 2024 from $9.4 million in 2023, reflecting growth in employee incentives [380]. - The Company recognized equity-based compensation expenses of $17.1 million in fiscal 2024, up from $9.6 million in fiscal 2023 and $4.0 million in fiscal 2022 [461]. Legal and Regulatory - The Company is involved in various legal claims but does not expect any material impact on its financial condition from these proceedings [452]. - The Company is evaluating the impact of recently issued accounting standards on its financial statements and disclosures, including ASU 2023-09 and ASU 2024-03 [426][427]. Risk Factors - CAVA is exposed to interest rate risk, with a hypothetical decrease of 100 basis points potentially resulting in a decrease of $3.6 million in investment income over a twelve-month period [350]. - Labor costs are influenced by changes in federal and state minimum wage rates, with the company currently paying all team members above the applicable minimum wage [345]. - The company aims to offset wage increases through operational efficiencies and leveraging same restaurant sales growth, but these measures may not fully mitigate wage inflation [346]. - CAVA's restaurant leases include contingent rent obligations based on a percentage of sales, which may limit the effectiveness of menu price increases [348].

Revenue Growth - CAVA revenue grew 33.1% to $954.3 million compared to $717.1 million in the prior year, with a 35.1% increase excluding the 53rd week of fiscal 2023[10] - Revenue for the twelve weeks ended December 29, 2024, was $227,395,000, a 28.4% increase from $177,170,000 for the same period in 2023[27] - The company opened 15 new CAVA restaurants in the thirteen weeks ended December 29, 2024, compared to 19 in the same period of 2023[32] Same Restaurant Sales - CAVA same restaurant sales growth was 13.4%, driven by 8.7% from guest traffic and 4.7% from menu price and product mix[11] - CAVA's same restaurant sales growth for Q4 2024 was 21.2%, up from 11.4% in Q4 2023[29] Restaurant Openings - CAVA opened 58 net new restaurants during fiscal 2024, bringing the total to 367, an 18.8% year-over-year increase[5] - CAVA anticipates 62 to 66 net new restaurant openings for fiscal 2025, with same restaurant sales growth projected at 6.0% to 8.0%[15] - CAVA opened 15 new restaurants in Q4 2024, bringing the total to 367 locations[29] Profitability and Margins - CAVA restaurant-level profit margin was 25.0%, a 20 basis point increase over the prior year, attributed to higher sales and increased input costs[12] - The restaurant-level profit margin for CAVA in Q4 2024 was 22.4%, consistent with the previous year[29] Income and Earnings - CAVA group net income reached $130.3 million, compared to $13.3 million in the prior year, with adjusted net income of $50.2 million excluding the VA release[13] - CAVA's net income for the twelve weeks ended December 29, 2024, was $78,619,000, compared to $2,049,000 for the same period in 2023[27] - Adjusted Diluted Earnings Per Share for the fiscal year ended December 29, 2024, was $0.42, compared to $0.11 in 2023, representing a 281.8% increase[35] EBITDA - CAVA adjusted EBITDA was $126.2 million, a 71.0% increase compared to the prior year, representing 13.1% of revenue[13] - Adjusted EBITDA for the fiscal year ended December 29, 2024, was $130,319,000, compared to $13,280,000 for the fiscal year ended December 31, 2023[27] - Adjusted EBITDA for the fiscal year ended December 29, 2024, reached $126,248 thousand, compared to $73,825 thousand in 2023, marking a 71.2% increase[33] Expenses - General and administrative expenses were $120.5 million, or 12.5% of revenue, down from 13.9% in the prior year, reflecting operational leverage[13] - General and administrative expenses for the fiscal year ended December 29, 2024, were $120,500,000, compared to $101,491,000 in the prior year, representing an increase of 18.8%[27] - General and administrative expenses as a percentage of revenue decreased to 12.6% for the twelve weeks ended December 29, 2024, from 13.9% in 2023[34] Cash Flow and Assets - Cash and cash equivalents increased to $366,120 thousand in 2024 from $332,428 thousand in 2023, representing a growth of 10.1%[32] - Total assets grew to $1,169,669 thousand in 2024, up from $983,757 thousand in 2023, indicating a 19.0% increase[32] - Free Cash Flow for the fiscal year ended December 29, 2024, was $52,896 thousand, a turnaround from a negative $41,705 thousand in 2023[38] Other Highlights - The company highlighted the successful conversion and winding down of Zoes Kitchen operations, with the last conversion restaurant opening on October 20, 2023[27] - The total stockholders' equity increased to $695,566 thousand in 2024 from $570,802 thousand in 2023, showing a growth of 21.9%[32]

Group 1: CAVA Group Inc - CAVA is currently trading at $104.37, down 3.3%, marking its lowest level since December and on track for a fourth consecutive loss [2] - The stock experienced a significant weekly drawdown of 17.5%, the worst performance of the year, but still shows a year-over-year gain of 105.2% [2] - Historically, CAVA has a positive post-earnings reaction, with four out of five sessions finishing higher, averaging a move of 7.4%, while options are pricing in a larger swing of 20.6% for the upcoming earnings report [2] Group 2: Sweetgreen Inc - Sweetgreen is trading at $23.22, up 6.4%, indicating its best single-day percentage gain since November [3] - The shares are recovering from a pullback to their lowest level since May, maintaining a year-over-year lead of 103.8% [3] - Sweetgreen typically performs well after earnings, with five out of the last eight quarters seeing higher settlement, averaging a move of 24.3% over the past two years, while options are pricing in a smaller move of 17.4% this time [3] Group 3: Chipotle Mexican Grill, Inc. - Chipotle is trading at $51.41, down 0.2%, and has dropped 18.5% over the last nine months [4] - The stock is on track for a sixth consecutive loss, following a third straight weekly drop, and is currently at its lowest level since August [4] - Chipotle has struggled to overcome resistance at the $60 level, which has been in place since January [4]

Company Overview - Cava Group has seen significant stock performance since its public debut in early 2023, with a 122% increase over the past year, although it may be losing momentum as it approaches its earnings report on February 25 [1] - The company operates in the fast-casual restaurant sector, aiming to replicate the success of Chipotle Mexican Grill, focusing on fresh, premium Mediterranean fare with customizable options [2] Growth Potential - As of the end of Q3, Cava operated 352 stores and plans to open approximately 57 new stores in 2024, with a long-term goal of reaching about 1,000 stores by 2030, indicating steady growth potential [3] - The company has reported impressive comparable sales growth, with total revenue increasing by 39% year over year and comparable sales up by 18% in Q3 [5] Financial Performance - Cava has shown positive net income since its first quarter as a public company, with net income rising from $6.8 million to $18 million in Q3 [4][5] - The restaurant-level profit margin improved from 25.1% to 25.6%, and management has raised its outlook for Q4 to approximately 12.5% comparable sales growth and a profit margin of 24.5% to 25% [5] Market Valuation - Cava's stock trades at a forward price-to-earnings (P/E) ratio of 134, which is considered high for a non-tech company, suggesting limited near-term upside potential [8] - The stock has experienced a decline in the weeks leading up to the earnings report, reflecting investor caution regarding high expectations built into the current valuation [6][9] Future Outlook - If Cava delivers strong earnings on February 25, the stock is likely to rise, but any disappointing results could lead to a decline, highlighting the risks associated with its high valuation [9] - The company is expected to maintain steady and strong growth over the next five to ten years, making it a potential long-term investment despite current high prices [10]