The ONE Group Hospitality(US:STKS)2024-11-07 21:41Financial Performance - Total revenues increased by $117.1 million, or 152.3%, to $194.0 million for Q3 2024 compared to $76.9 million for Q3 2023, primarily due to the Benihana Acquisition[69] - Same store sales decreased by 8.8% in Q3 2024 compared to Q3 2023[69] - Operating loss increased by $1.0 million to $3.0 million for Q3 2024 compared to $2.0 million for Q3 2023, attributed to costs related to the Benihana Acquisition[69] - Restaurant operating profit increased by $16.0 million, or 175.6%, to $25.1 million for Q3 2024 compared to $9.1 million for Q3 2023[69] - Total revenues increased by $208.7 million, or 85.9%, to $451.5 million for the nine months ended September 30, 2024, compared to $242.8 million for the same period in 2023, primarily due to the Benihana Acquisition[71] - Restaurant operating profit increased by $34.3 million, or 101.0%, to $68.2 million for the nine months ended September 30, 2024, compared to $33.9 million for the same period in 2023[71] - Operating loss was $2.0 million for the nine months ended September 30, 2024, compared to operating income of $4.4 million for the same period in 2023, mainly due to costs related to the Benihana Acquisition[71] - Net loss attributable to The ONE Group Hospitality, Inc. was $8.9 million for the three months ended September 30, 2024, compared to a net income of $0.1 million for the same period in 2023[72] - The company reported a net loss of $9.055 million for the three months ended September 30, 2024, compared to a net loss of $3.253 million in the same period of 2023[79] Revenue and Costs - Owned restaurant net revenue for the three months ended September 30, 2024, was $190.6 million, up from $73.7 million for the same period in 2023[72] - Total costs and expenses for the nine months ended September 30, 2024, were $453.5 million, compared to $238.5 million for the same period in 2023[72] - Owned restaurant cost of sales as a percentage of owned restaurant net revenue was 20.9% for the three months ended September 30, 2024, compared to 24.7% for the same period in 2023[74] - Food and beverage costs for owned restaurants rose by $38.2 million, or 67.8%, to $94.5 million for the nine months ended September 30, 2024, attributed to increased sales from the acquisition and new venues[89] - Owned restaurant operating expenses increased by $136.5 million to $278.5 million for the nine months ended September 30, 2024, mainly due to expenses from Benihana and RA Sushi[89] - General and administrative expenses as a percentage of total revenues were 6.6% for the three months ended September 30, 2024, down from 9.5% for the same period in 2023[74] - General and administrative costs rose by $8.1 million, or 35.7%, to $30.9 million for the nine months ended September 30, 2024, driven by increased headcount and stock-based compensation[89] Acquisition and Expansion - On May 1, 2024, the company acquired 100% of Safflower Holdings Corp. for $365.0 million, which owns most Benihana and RA Sushi restaurants in the U.S.[67] - The company intends to open six new venues in 2024, with several locations already under construction[63] - The company opened several new restaurants in 2024, including STK Washington DC in March, RA Sushi Plantation in July, Kona Grill Tigard in September, and STK Aventura in October[99] - Transition and integration costs related to the Benihana and RA Sushi acquisition amounted to $10.1 million for the nine months ended September 30, 2024[92] Debt and Financing - The company entered into a credit agreement providing a $350.0 million senior secured term loan facility and a $40.0 million senior secured revolving credit facility[67] - Interest expense, net of interest income, was $10.7 million for the three months ended September 30, 2024, compared to $1.7 million for the same period in 2023[72] - Interest expense, net increased to $20.6 million for the nine months ended September 30, 2024, compared to $5.1 million for the same period in 2023[92] - Financing activities generated $405.6 million in net cash for the nine months ended September 30, 2024, driven by $333.8 million from borrowings and $138.9 million from preferred stock issuance, offset by $73.6 million repayment of Goldman Sachs debt[99] Cash Flow and Assets - Net cash provided by operating activities was $25.7 million for the nine months ended September 30, 2024, up from $15.2 million in the same period of 2023[99] - Net cash used in investing activities was $423.6 million for the nine months ended September 30, 2024, primarily due to the Benihana acquisition[99] - Total assets as of September 30, 2024, amounted to $953.471 million, compared to $317.245 million as of December 31, 2023[76] - As of September 30, 2024, the company had $28.7 million in cash and cash equivalents and $349.1 million in long-term debt[92] Operational Efficiency - The company expects to leverage system-wide operating efficiencies and best practices as its footprint increases[63] - Cost of sales as a percentage of owned restaurant net revenue improved by 280 basis points from 24.2% in the nine months ended September 30, 2023, to 21.4% for the same period in 2024[89] - Capital asset additions for the three months ended September 30, 2024, totaled $34.612 million, significantly higher than $14.515 million in the same period of 2023[76] - EBITDA for the three months ended September 30, 2024, was $6.396 million, compared to $1.777 million in the same period of 2023, indicating a substantial increase[79] - Adjusted EBITDA for the three months ended September 30, 2024, reached $14.803 million, up from $3.023 million in the same period of 2023, reflecting a growth of 389.5%[79] Legal and Compliance - The company is subject to class action lawsuits related to labor law compliance, which may require significant resources and could impact financial results if liabilities exceed current estimates[103] - The company plans to exclude the acquired Benihana business from its internal controls assessment for the year ended December 31, 2024, due to the significance of the acquisition[102] - The company’s disclosure controls and procedures were deemed effective as of September 30, 2024, following a review by the CEO and CFO[101]