In 2024, one of the hottest sectors outside of tech was the restaurant space, as investors snapped up stocks in fast-casual chains that demonstrated tremendous growth. Expectations have risen across the sector, particularly for the companies that showcasedWith combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has b ...

Core Viewpoint - Wingstop's shares declined by 19% despite strong earnings due to missing sales expectations by $3 million in Q4 [1][3] Financial Performance - In Q4, Wingstop reported a revenue growth of 28%, domestic same-store sales growth of 10%, and a net income increase of 42% [2] - The company's revenue was $162 million, falling short of analysts' expectations of $165 million, leading to a market cap drop of nearly $2 billion [3] Market Dynamics - The stock's decline illustrates how strong operational performance can be overshadowed by short-term misses against high expectations [4] - Wingstop is currently trading at 39 times cash from operations, significantly below its 10-year average of 62, indicating potential for growth [4] Growth Indicators - Wingstop achieved same-store sales growth for the 21st consecutive year [5] - The company expanded its store count by 15% and increased its digital sales mix to 70% of total systemwide revenue [5] - Wingstop raised its dividend by 23% and reduced its share count by nearly 1% [5] - The company has over 2,000 restaurant commitments in its pipeline, compared to its current store count of 2,563 [5]

Financial Performance - System-wide sales increased by 36.8% year-over-year to $4.8 billion[178] - Total revenue grew by 36.0% to $625.8 million[178] - Net income surged by 54.9% to $108.7 million, equating to $3.70 per diluted share[178] - Adjusted EBITDA increased by 44.8% to $212.1 million[178] - Operating income for fiscal year 2024 was $165.6 million, reflecting a 47.1% increase from $112.6 million in the prior fiscal year[191] - Net income reached $108.7 million, a 54.9% increase compared to $70.2 million in fiscal year 2023[191] - Cash flows from operating activities were $157.6 million, an increase of $36.0 million from $121.6 million in the prior fiscal year[207] Sales and Growth Metrics - Domestic same store sales rose by 19.9% compared to the previous fiscal year[178] - Digital sales accounted for 70.3% of system-wide sales[178] - Domestic average unit volume (AUV) rose to $2.1 million[178] - Company-owned domestic same store sales growth was 7.7%[178] - Company-owned restaurant sales increased by $24.0 million, with same store sales growth of 7.7% primarily due to increased transactions[194] - Royalty revenue, franchise fees, and other increased by $81.3 million, driven by domestic same store sales growth of 19.9% and net new franchise development[192] - Advertising fees rose by $60.5 million, attributed to a 36.8% increase in system-wide sales and an increase in the national advertising fund contribution rate[193] Restaurant Expansion - The number of system-wide restaurants reached 2,563, a 15.8% increase from the prior year[178] Shareholder Returns and Repurchases - The board of directors approved a quarterly cash dividend of $0.27 per share for the third and fourth quarters of 2024, totaling approximately $28.7 million for the fiscal year[212] - The company authorized an additional $500.0 million for share repurchases under its existing program, following the completion of previous repurchases[215] - The Company entered into a $250.0 million accelerated share repurchase agreement, retiring an initial delivery of 551,325 shares, representing approximately 75% of the total expected shares[216] - In fiscal year 2024, the Company repurchased and retired 720,804 shares at an average price of $339.95, compared to 645,952 shares at an average price of $193.51 in fiscal year 2023[217] - As of December 28, 2024, $311.1 million remained available under the Share Repurchase Program, with a total of 1,366,756 shares repurchased since the program's inception in August 2023[217] Revenue Composition - The Company's revenue consists primarily of royalties, franchise fees, and upfront fees from development agreements, with royalties calculated as a percentage of franchise restaurant sales[222][223] - Initial and renewal franchise fees are recognized as revenue on a straight-line basis over the term of the respective agreement[223] Contractual Obligations - The Company has contractual obligations related to debt obligations and interest payments, with further details available in the financial statements[218] - Operating leases and indemnification obligations are also part of the Company's contractual commitments, with a low probability of incurring actual liabilities under indemnifications[219] Accounting Policies - The Company’s accounting policies require estimates and assumptions that may affect reported amounts of assets, liabilities, revenues, and expenses, which could vary from actual results[221]

Financial Data and Key Metrics Changes - For fiscal 2024, domestic same-store sales grew by 19.9%, translating to a two-year stacked comp of 38% [11] - System-wide sales increased by 36.8% to $4.8 billion, with adjusted EBITDA rising 44.8% to $212 million [11][50] - In Q4, system-wide sales increased 27.6% to $1.2 billion, with same-store sales growing by 10.1% [44][45] - Adjusted EBITDA for Q4 was $56.3 million, a 44.2% increase year-over-year [50] Business Line Data and Key Metrics Changes - The company opened a record 349 net new restaurants in 2024, achieving a unit growth of 15.8% [11][36] - Digital sales mix increased to 70%, indicating a strong shift towards online transactions [12] - Company-owned restaurant sales increased by $3.8 million in Q4, driven by new openings and a 3.8% increase in same-store sales [45] Market Data and Key Metrics Changes - The company ended 2024 with 359 international locations and added its eleventh market in Q4 [38] - The international expansion strategy has shown strong interest, particularly in the UK market, with a recent acquisition valued at over $500 million [38] Company Strategy and Development Direction - The company aims to grow average unit volumes (AUVs) to $3 million and scale global unit count to over 10,000 restaurants [16] - Strategies include scaling brand awareness, driving menu innovation, expanding delivery channels, and leveraging data-driven marketing [19] - A new AI-enabled kitchen operating platform is being developed to improve kitchen operations and reduce service times [30][123] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges in the restaurant industry but emphasized the company's ability to gain market share [68] - The company is confident in achieving low to mid-single-digit same-store sales growth for 2025, despite tough comparisons from previous years [56][78] - Management highlighted the strength of the brand's digital platform and its impact on customer engagement and retention [85] Other Important Information - The company raised over $2 million for St. Jude's Children's Research Hospital during Q4 [40] - A quarterly dividend of $0.27 per share was declared, totaling approximately $7.7 million [55] Q&A Session Summary Question: What is the long-term outlook for same-store sales growth? - Management indicated that the long-term target remains mid-single digits, which serves as a basis for modeling expectations [63][64] Question: How do you see the comp trajectory for 2025? - Management expects the comp trajectory to be influenced by tough comparisons from previous years, particularly in Q1 [78] Question: Can you provide insights on the CRM efforts and database growth? - The company reported a record growth in its digital guest database, which has surpassed 50 million users, leading to increased frequency and satisfaction [85] Question: How does the company measure value in a competitive environment? - Management emphasized that value is about quality and value for money, not just price, and noted improvements in brand health metrics [92][93] Question: What is the expected unit growth for 2025? - The company anticipates a unit growth rate of 14% to 15% for 2025, supported by a strong development pipeline [96] Question: How does the company plan to balance unit growth and same-store sales? - Management stated that they do not see unit growth negatively impacting same-store sales, as there is significant market opportunity [112] Question: What factors will influence pricing strategy in 2025? - The company plans to maintain a disciplined pricing strategy, anticipating a 1% to 2% increase, while monitoring consumer health [106]

Core Insights - Wingstop has been a strong restaurant stock since its IPO in 2015, but recently it has hit 52-week lows after a 12% drop following its Q4 2024 financial results [1] Financial Performance - Wingstop reported a 10% year-over-year increase in same-store sales for Q4 2024, marking the 21st consecutive year of growth in this metric [2][6] - The company opened 349 net new restaurants in 2024, increasing its total by nearly 16% [3] - Revenue for 2024 rose by 36% to $626 million, while net income increased by 55% to $109 million [3] Market Valuation - The stock was trading at over 20 times sales last year, which is considered an extreme valuation for a restaurant stock, even with its growth and high-margin franchise model [4] - The slight miss in Q4 same-store sales expectations contributed to investor sell-off, leading to the stock's decline [4] Long-term Outlook - Despite the recent downturn, Wingstop shares have appreciated by 75% over the last three years, indicating strong long-term performance [5] - Management plans to open thousands of new locations, which is expected to enhance shareholder value in the long run [6]

Core Insights - Wingstop reported revenue of $161.82 million for the quarter ended December 2024, reflecting a year-over-year increase of 27.4% [1] - The earnings per share (EPS) for the quarter was $0.88, up from $0.64 in the same quarter last year, with an EPS surprise of +2.33% compared to the consensus estimate of $0.86 [1] Financial Performance Metrics - Total system-wide restaurants reached 2,563, exceeding the average estimate of 2,543 by eight analysts [4] - Domestic same-store sales growth was reported at 10.1%, slightly below the average estimate of 11.3% [4] - Company-owned domestic same-store sales growth was 3.8%, compared to the average estimate of 5.2% [4] - The number of domestic company-owned restaurants at the end of the period was 50, below the average estimate of 58 [4] - New restaurant openings in international franchised activity were 22, matching the average estimate [4] - Domestic franchised activity saw 83 new restaurant openings, surpassing the average estimate of 63 [4] - Total new restaurant openings were 105, exceeding the average estimate of 85 [4] - The number of international franchised restaurants at the end of the period was 359, aligning with the average estimate [4] - Domestic franchised restaurants totaled 2,154, slightly above the average estimate of 2,127 [4] Revenue Breakdown - Royalty revenue, franchise fees, and other generated $75.70 million, exceeding the average estimate of $74.02 million, with a year-over-year increase of +31.2% [4] - Revenue from company-owned restaurant sales was $30.06 million, below the average estimate of $33.09 million, reflecting a year-over-year increase of +14.6% [4] - Advertising fees revenue was reported at $56.06 million, slightly below the average estimate of $57.07 million, with a year-over-year change of +30% [4] Stock Performance - Wingstop shares returned +9.1% over the past month, outperforming the Zacks S&P 500 composite's +2.4% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Viewpoint - Wingstop reported quarterly earnings of $0.88 per share, exceeding the Zacks Consensus Estimate of $0.86 per share, and showing an increase from $0.64 per share a year ago, indicating a positive earnings surprise of 2.33% [1] - The company posted revenues of $161.82 million for the quarter ended December 2024, which was below the Zacks Consensus Estimate by 1.61%, but an increase from $127.06 million year-over-year [2] Earnings Performance - Wingstop has surpassed consensus EPS estimates three times over the last four quarters, demonstrating a consistent ability to meet or exceed earnings expectations [2] - The stock has shown a price increase of approximately 7.7% since the beginning of the year, outperforming the S&P 500's gain of 4.2% [3] Future Outlook - The company's earnings outlook will be crucial for determining the stock's immediate price movement, with current consensus EPS estimates for the upcoming quarter at $1.04 on revenues of $177.82 million, and $4.28 on revenues of $751.92 million for the current fiscal year [7] - The estimate revisions trend for Wingstop is currently mixed, resulting in a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market in the near future [6] Industry Context - The Retail - Restaurants industry, to which Wingstop belongs, is currently ranked in the top 30% of over 250 Zacks industries, indicating a favorable industry outlook that could positively impact stock performance [8] - Another competitor in the same industry, Papa John's, is expected to report a significant decline in earnings, with a projected EPS of $0.48, reflecting a year-over-year change of -47.3% [9]

Core Insights - Wingstop reported strong Q4 2024 results with a diluted EPS of $0.92, exceeding analyst expectations of $0.86, reflecting a year-over-year growth of 43.8% [2][3] - Revenue for the quarter was $161.8 million, slightly below the expected $165 million, but still representing a 27.4% increase compared to the previous year [2][3] Financial Performance - Key metrics for Q4 2024 include: - EPS: $0.92 (Q4 Estimate: $0.86, Q4 2023: $0.64) [3] - Revenue: $161.8 million (Q4 Estimate: $165 million, Q4 2023: $127.1 million) [3] - Net Income: $26.8 million (Q4 2023: $18.8 million) [3] - Adjusted EBITDA: $56.3 million (Q4 2023: $39.1 million) [3] Business Model - Wingstop operates primarily on a franchising model, with 98% of its 2,563 restaurants run by franchisees, allowing for high margins and consistent cash flow [4][7] - The company added 349 new restaurants in 2024, indicating strong franchise confidence and economic viability [4] Menu and Sales Growth - The diverse menu, featuring wings, tenders, and sandwiches in 12 flavors, drives high consumer demand and same-store sales growth [5] - System-wide sales reached $1.2 billion, up from $966 million year-over-year, with same-store sales increasing by 10.1% [6] Digital Strategy - Digital sales accounted for 70.3% of total sales, highlighting the effectiveness of Wingstop's investment in digital customer experiences [6] - The company plans to maintain over 70% of future revenue from digital channels [10][11] Marketing and Expansion - Marketing expenditures increased to 5.3% of sales, supporting growth through enhanced digital marketing and national advertising [8] - Wingstop opened 105 net new restaurants in Q4 2024, showcasing its strong franchising model [7] Future Outlook - The company forecasts a global unit growth rate of 14-15% for 2025, focusing on digital capabilities and same-store sales growth [9] - Planned spending on SG&A expenses is approximately $140 million, with expected depreciation and amortization of $29-$30 million [9]

Financial Performance - System-wide sales increased 36.8% to approximately $4.8 billion in fiscal year 2024, marking the 21st consecutive year of same store sales growth [29]. - Total revenue for fiscal year 2024 increased 36.0% to $625.8 million, up from $460.1 million in the prior fiscal year [12]. - Net income for fiscal year 2024 increased 54.9% to $108.7 million, or $3.70 per diluted share [12]. - Adjusted EBITDA for fiscal year 2024 increased 44.8% to $212.1 million [12]. - Domestic same store sales increased 19.9% in fiscal year 2024 [11]. - In 2024, Wingstop achieved total revenue of $625.8 million, a 36% increase from $460.1 million in 2023 [39]. - The company reported a net income of $108.7 million for the fiscal year 2024, up 55% from $70.2 million in 2023 [39]. - Wingstop's earnings per share for fiscal year 2024 were $3.72, compared to $2.36 in 2023, reflecting strong profitability growth [39]. - Net income for the thirteen weeks ended December 28, 2024, was $26,753,000, compared to $18,814,000 for the same period in 2023, representing a year-over-year increase of 42.4% [46]. - Adjusted EBITDA for the fiscal year ended December 28, 2024, was $212,061,000, a significant increase of 44.8% from $146,484,000 in 2023 [46]. Growth and Expansion - The company opened 349 net new restaurants in fiscal year 2024, representing a 15.8% unit growth [4]. - The company expects a global unit growth rate of 14% to 15% for fiscal year 2025 [21]. - Total system-wide restaurants increased to 2,563 by the end of the period, up from 2,214 in the previous year, reflecting a growth of 15.7% [44]. - Domestic franchised restaurants reached 2,154 at the end of the period, up from 1,877 in the previous year, marking a growth of 14.7% [44]. - The company opened 83 new domestic franchised restaurants during the thirteen weeks ended December 28, 2024, compared to 86 openings in the same period of 2023 [44]. - International franchised restaurants grew to 359, up from 288 in the previous year, indicating a growth of 24.7% [44]. - The company plans to continue expanding its restaurant count, with a focus on new unit openings in the coming years [33]. Financial Position - Total assets increased to $716.2 million in 2024, compared to $377.8 million in 2023, reflecting significant growth [37]. - Long-term debt rose to $1.2 billion in 2024, up from $712.3 million in 2023, indicating increased leverage [37]. - The cost of sales for the fiscal year 2024 was $91.6 million, representing 76.5% of company-owned restaurant sales, compared to 73.7% in 2023 [41]. - Interest expense for the fiscal year ended December 28, 2024, was $21,292,000, compared to $18,227,000 in 2023, reflecting an increase of 11.4% [46]. - The company reported a total income tax expense of $38,473,000 for the fiscal year ended December 28, 2024, up from $24,135,000 in 2023, representing an increase of 59.5% [46]. Marketing and Brand Recognition - Wingstop's advertising expenses for the fiscal year 2024 were $233.3 million, a significant increase from $166.6 million in 2023 [39]. - The company has been recognized as one of the "Hottest Brands" and "Best Brands to Work For," indicating positive brand perception and employee satisfaction [30]. Operational Metrics - Digital sales accounted for 70.3% of system-wide sales in fiscal fourth quarter 2024 [4]. - Domestic average unit volume (AUV) increased to $2.1 million in fiscal year 2024 [4]. - The total number of domestic company-owned restaurants remained stable at 50, unchanged from the previous year [44]. - The company incurred $6,049,000 in stock-based compensation expense for the thirteen weeks ended December 28, 2024, compared to $5,539,000 in the same period of 2023 [46].

Record 349 Net New Restaurants and 15.8% Unit Growth in 2024Delivers 21st Consecutive Year of Same Store Sales Growth with 19.9% in 2024DALLAS, Feb. 19, 2025 /PRNewswire/ -- Wingstop Inc. ("Wingstop" or the "Company") (NASDAQ: WING) today announced financial results for the fiscal fourth quarter and fiscal year ended December 28, 2024.Highlights for the fiscal fourth quarter 2024 compared to the fiscal fourth quarter 2023: System-wide sales increased 27.6% to $1.2 billion 105 net new openings in the fiscal ...