The ONE Group Hospitality(US:STKS)2024-08-06 20:38Financial Performance - Total revenues increased by $89.1 million, or 106.8%, to $172.5 million for the three months ended June 30, 2024, compared to $83.4 million for the same period in 2023, primarily due to the Benihana Acquisition[72]. - Same store sales decreased by 7.0% in the second quarter of 2024 compared to the second quarter of 2023[72]. - Restaurant operating profit increased by $18.1 million, or 151.3%, to $30.0 million for the three months ended June 30, 2024, compared to $11.9 million for the same period in 2023[72]. - Total revenues increased by $91.6 million, or 55.2%, to $257.5 million for the six months ended June 30, 2024, compared to $165.9 million for the same period in 2023[72]. - Restaurant operating profit increased by $18.3 million to $43.1 million for the six months ended June 30, 2024, compared to $24.8 million for the same period in 2023[72]. - The operating income for the three months ended June 30, 2024, was $1.654 million, a decrease from $6.323 million in the same period of 2023[75]. - Net loss attributable to The ONE Group Hospitality, Inc. for the three months ended June 30, 2024, was $6.929 million, compared to a net income of $3.174 million in the same period of 2023[75]. - Owned restaurant net revenue for the six months ended June 30, 2024, reached $250.529 million, compared to $158.502 million in the same period of 2023, marking a 58% increase[75]. - Adjusted EBITDA for the three months ended June 30, 2024, was $23.940 million, compared to $8.532 million for the same period in 2023[81]. Costs and Expenses - Total costs and expenses for the three months ended June 30, 2024, were $170.840 million, up from $81.348 million in the same period of 2023, reflecting a rise of 109.4%[75]. - Owned restaurant cost of sales for the three months ended June 30, 2024, was 21.2% of total revenues, down from 24.0% in the same period of 2023[77]. - General and administrative expenses, including stock-based compensation, were 6.2% of total revenues for the three months ended June 30, 2024, compared to 9.6% in the same period of 2023[77]. - Cost of sales for owned restaurants increased by $16.5 million, or 43.4%, to $54.6 million for the six months ended June 30, 2024, primarily due to the acquisition of Benihana and RA Sushi[90]. - General and administrative costs rose by $2.7 million, or 17.3%, to $18.2 million for the six months ended June 30, 2024, attributed to increased headcount from the Benihana acquisition[90]. - Depreciation and amortization expense increased to $13.3 million for the six months ended June 30, 2024, compared to $7.2 million for the same period in 2023, mainly due to the acquisition of Benihana and RA Sushi[90]. - Transaction and exit costs amounted to $8.3 million for the six months ended June 30, 2024, primarily related to the Benihana acquisition[90]. Acquisition and Expansion - The Benihana Acquisition was completed for $365.0 million on May 1, 2024, which includes most of the Benihana restaurants and all RA Sushi restaurants in the U.S.[68]. - The acquisition of Benihana and RA Sushi restaurants contributed $88.7 million in revenues for the two-month period owned by the company[86]. - The company intends to open eight to eleven new venues in 2024[66]. - The company plans to continue focusing on market expansion and new product development to drive future growth[75]. - The company opened STK Washington DC in March 2024 and plans to open a RA Sushi in Plantation, FL in July 2024, contributing to its market expansion strategy[100]. - The company expects to open an additional four to five Company-owned restaurants over the next six months[94]. Financing and Cash Flow - A credit agreement was entered into providing a $350.0 million senior secured term loan facility and a $40.0 million senior secured revolving credit facility[70]. - Interest expense, net, for the three months ended June 30, 2024, was $7.865 million, compared to $1.642 million for the same period in 2023[80]. - Interest expense, net was $7.9 million for the three months ended June 30, 2024, compared to $1.6 million for the same period in 2023, due to borrowing $350.0 million for the Benihana acquisition[88]. - Net cash provided by operating activities was $6.6 million for the six months ended June 30, 2024, down from $13.1 million in the same period of 2023[100]. - Net cash used in investing activities was $403.5 million for the six months ended June 30, 2024, primarily due to the Benihana acquisition costing $368.6 million[100]. - Net cash used in financing activities for the six months ended June 30, 2024, was $408.8 million, consisting of net proceeds from borrowings ($333.8 million) and issuance of preferred stock and warrants ($138.9 million), partially offset by repayment of Goldman Sachs debt ($73.6 million)[100]. - As of June 30, 2024, the company had $32.8 million in cash and cash equivalents and $350.0 million in long-term debt[94]. Legal and Compliance - The company is subject to class action lawsuits related to compliance with labor laws, which may require significant management attention and financial resources[104]. - The company believes that accrual and disclosure for legal matters are adequately provided for in its consolidated financial statements[104]. - The company intends to exclude the acquired Benihana business from its assessment of internal controls over financial reporting for the year ended December 31, 2024[103]. - The company concluded that its disclosure controls and procedures were effective as of June 30, 2024[102]. - The company has implemented new processes and internal controls following the Benihana acquisition to enhance financial reporting[103].