FAT Brands(FAT) - 2025 Q2 - Quarterly Results

Management Commentary Management emphasized a strong development pipeline, positive digital sales impact, and strategic financial strengthening through bond restructuring and G&A reductions - The company has a strong development pipeline of about 1,000 signed deals and opened 18 new locations in Q2, staying on track to meet its goal of over 100 openings in 2025[5] - A new development deal was signed to open 40 additional Fatburger locations in Florida over the next ten years[5] - Digital initiatives are showing significant results, with digital sales at Great American Cookies accounting for 25% of total revenue and loyalty-driven sales growing 40%, while Round Table Pizza also saw a 21% increase in loyalty-driven sales[5] - Key financial strengthening actions are underway, including converting amortizing bonds to interest-only to save $30-$40 million annually, pausing dividends to preserve $36-$40 million annually, and implementing over $5 million in G&A reductions[5] - A key strategic priority is expanding manufacturing capacity through strategic partnerships to broaden brand reach[5] Q2 2025 Financial Highlights FAT Brands reported a 3.4% revenue decline and widened net loss in Q2 2025, with system-wide same-store sales down 3.9%, while Adjusted EBITDA remained flat Q2 2025 Key Financial Metrics vs. Q2 2024 | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Revenue (in millions) | $146.8 | $152.0 | | System-wide Sales Growth (%) | -3.7 | N/A | | System-wide Same-Store Sales Growth (%) | -3.9 | N/A | | Net Loss (in millions) | ($54.2) | ($39.4) | | Diluted Loss Per Share (per share) | ($3.17) | ($2.43) | | EBITDA (in millions) | ($6.0) | $6.8 | | Adjusted EBITDA (in millions) | $15.7 | $15.7 | - The company opened 18 new stores during the fiscal second quarter of 2025[6] Detailed Financial Performance Analysis Revenue declined due to store closures and lower same-store sales, while general and administrative expenses significantly increased, primarily driven by higher share-based compensation - Total revenue decreased by $5.2 million (3.4%) to $146.8 million, largely due to reduced restaurant revenue from the closure of five Smokey Bones locations and lower same-store sales[8] - General and administrative expenses rose by $14.8 million (50.3%), primarily due to increased share-based compensation related to Twin Hospitality Group Inc[9] - Cost of restaurant and factory revenues decreased by 2.1% to $98.1 million, in line with lower revenue from company-owned locations[10] - Total other expense, net, increased to $39.4 million from $34.8 million in Q2 2024, driven by a rise in interest expense to $39.4 million[11] Company Information and Disclosures This section provides a corporate overview of FAT Brands as a global franchising company, includes forward-looking statements disclaimers, and defines non-GAAP financial measures used in the report - FAT Brands is a global franchising company that owns 18 restaurant brands and has approximately 2,300 franchised and owned units worldwide[17] - The press release contains forward-looking statements that are subject to significant business, economic, and competitive risks and uncertainties[18] - The report utilizes non-GAAP measures, including EBITDA, Adjusted EBITDA, and Adjusted Net Loss, to supplement GAAP financial results and provide insight into core operating performance[19][20][21] Financial Statements and Reconciliations This section presents detailed consolidated financial statements for Q2 2025, including the Statement of Operations and reconciliations for non-GAAP measures like EBITDA and Adjusted Net Loss Consolidated Statements of Operations The Q2 2025 statement of operations shows decreased total revenues and a widened net loss, primarily due to increased general and administrative expenses Consolidated Statements of Operations Highlights (Thirteen Weeks Ended) | (In thousands) | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total revenue | $146,836 | $152,040 | | General and administrative expense | $44,415 | $29,558 | | Loss from operations | ($15,550) | ($2,703) | | Net loss attributable to FAT Brands Inc. | ($54,188) | ($39,359) | | Basic and diluted loss per common share | ($3.17) | ($2.43) | EBITDA and Adjusted EBITDA Reconciliation EBITDA turned negative in Q2 2025, but after significant adjustments, including share-based compensation, Adjusted EBITDA remained stable year-over-year EBITDA and Adjusted EBITDA Reconciliation (Thirteen Weeks Ended) | (In thousands) | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Net loss attributable to FAT Brands Inc. | ($54,188) | ($39,359) | | EBITDA | ($5,980) | $6,791 | | Share-based compensation expenses | $12,765 | $677 | | Litigation costs | $5,198 | $7,852 | | Adjusted EBITDA | $15,695 | $15,747 | Adjusted Net Loss Reconciliation After adjustments, the company's adjusted net loss for Q2 2025 widened to $49.0 million, or $2.88 per share, compared to the prior year Adjusted Net Loss Reconciliation (Thirteen Weeks Ended) | (In thousands, except per share data) | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Net loss attributable to FAT Brands Inc. | ($54,188) | ($39,359) | | Litigation costs | $5,198 | $7,852 | | Adjusted net loss | ($48,956) | ($30,905) | | Adjusted net loss per basic and diluted share | ($2.88) | ($1.93) |