GEN Restaurant (US:GENK)2025-11-07 21:11Expansion and Development - The company operates 57 restaurants across various states and South Korea, with plans for continued expansion[149]. - During the first nine months of 2025, the company opened 15 new restaurants and closed one, with 16 more under development[151]. - In the first nine months of 2025, the company opened 15 new restaurants, all self-funded[215]. Financial Performance - Revenue for the three months ended September 30, 2025, was $50.4 million, an increase of $1.3 million or 2.7% compared to $49.1 million in the same period of 2024, driven by an increase in the number of restaurants from 41 to 57[182]. - For the nine months ended September 30, 2025, revenue was $162.8 million, an increase of $9.0 million or 5.9% compared to $153.7 million in 2024, attributed to the opening of 16 additional restaurants[192]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $3.3 million, with an Adjusted EBITDA Margin of 2.0%, compared to $11.3 million and 7.3% for the same period in 2024[206]. - Restaurant-Level Adjusted EBITDA for the nine months ended September 30, 2025, was $25.5 million, with a Restaurant-Level Adjusted EBITDA Margin of 15.6%, compared to $27.6 million and 18.0% for the same period in 2024[212]. Costs and Expenses - Food costs increased to $17.5 million for the three months ended September 30, 2025, up $2.0 million or 13.6% from $15.4 million in 2024, with food costs as a percentage of revenue rising to 34.8% from 31.4%[183]. - Payroll and benefits costs decreased to $14.4 million, down $0.6 million or 3.9% from $15.0 million in 2024, resulting in a reduction in payroll costs as a percentage of revenue from 30.5% to 28.5%[184]. - Occupancy expenses rose to $5.4 million, an increase of $1.3 million or 31.9% compared to $4.1 million in 2024, with occupancy expenses as a percentage of revenue increasing to 10.8% from 8.4%[185]. - Total restaurant operating expenses for the three months ended September 30, 2025, were $48.1 million, an increase of $4.4 million or 10.0% from $43.8 million in 2024[182]. - General and administrative expenses increased to $6.5 million, up $1.3 million or 23.8% from $5.2 million in 2024, with these expenses as a percentage of revenue rising to 12.8% from 10.6%[189]. - The total costs and expenses for the nine months ended September 30, 2025, were $170.6 million, an increase of $18.7 million or 12.3% from $151.9 million in 2024[192]. - General and administrative expenses grew by $4.3 million, or 28.7%, to $19.2 million for the nine months ended September 30, 2025, primarily due to additional marketing and personnel costs[200]. Profitability and Loss - The net loss for the three months ended September 30, 2025, was $3.6 million, compared to a net income of $0.2 million in 2024, representing a decrease of $3.8 million or 2246.7%[182]. - Net cash provided by operating activities for the nine months ended September 30, 2025 was $3.8 million, down from $10.5 million in the same period of 2024[223][224]. Debt and Financing - The company entered into a $20 million line of credit with PCB Bank, maturing on September 25, 2026, with no outstanding amounts as of September 30, 2025[152]. - As of September 30, 2025, the company had a balance of $1.5 million on a $2 million loan and $3.7 million on a $4 million loan, both with a 7.50% interest rate[153][154]. - As of September 30, 2025, the company had $13.3 million in contractual obligations related to debt, expected to be paid within the next 12 months[230]. - The company utilized $5.0 million for payments on the line of credit and third-party notes payable during the nine months ended September 30, 2025[227]. Market and Economic Conditions - Inflation has not had a material effect on the company's operations historically, including the first nine months of 2025[245]. - The company is exposed to interest rate risk with $6.3 million of outstanding loans bearing interest at the Wall Street Journal Prime Rate plus 0.25%[247]. - The company experienced a foreign currency translation loss of $74 thousand due to the depreciation of the South Korean won against the U.S. dollar[229]. Other Financial Activities - The company completed an IPO on June 30, 2023, selling 4,140,000 shares of Class A common stock at $12.00 per share, resulting in net proceeds of approximately $46.2 million[214]. - The company declared a dividend of $0.03 per share in May 2025, resulting in total payments of $988 thousand[221]. - The expected reduction in tax payments associated with the Tax Receivable Agreement is approximately $117.2 million through 2037, with $99.6 million payable to certain members of GEN LLC[217]. - Pre-opening costs increased to $7.0 million for the nine months ended September 30, 2025, compared to $5.3 million for the same period in 2024, reflecting more restaurants under development[199]. - Depreciation and amortization expenses rose to $6.5 million for the nine months ended September 30, 2025, with restaurant-level depreciation and amortization as a percentage of revenue increasing from 3.2% to 4.0%[198].