The ONE Group Hospitality(US:STKS)2023-03-09 21:27Financial Performance - Total revenue increased by $39.5 million, or 14.2%, to $316.6 million for 2022 compared to $277.2 million for 2021[137] - Net income attributable to The ONE Group Hospitality, Inc. was $13.5 million in 2022, down from $31.3 million in 2021[142] - Adjusted EBITDA for 2022 was $41,324, slightly down from $43,194 in 2021, reflecting a decrease of 4.3%[178] - Restaurant Operating Profit was $50,805, down from $52,407 in 2021, resulting in a margin of 16.9% compared to 19.8% the previous year[179] - Owned restaurant net revenue increased to $300,859, up from $264,404 in 2021, representing a growth of 13.8%[174] - Management and license fee revenues increased by $3.0 million, or 23.5%, to $15.8 million in 2022, attributed to strong performance at managed restaurants in North America[184] Sales and Growth - Same store sales increased by 10.8% in 2022 compared to 2021, with STK same store sales up by 17.1% and Kona Grill same store sales up by 2.5%[137] - Same store sales for STK increased by 69.1% and for Kona Grill by 26.3% on a three-year basis compared to 2019[140] - The company plans to open 8 to 12 new venues in 2023, including a Kona Grill in Columbus, Ohio, which opened in January 2023[132] - The company expects to expand STK to 200 restaurants globally, with plans to open 5 to 6 STKs annually[143] - Kona Grill is projected to grow to 200 restaurants, with 3 to 5 openings annually, including two under construction in Riverton, Utah, and Phoenix, Arizona[145] Expenses and Costs - Pre-opening expenses increased significantly to $5,519 from $1,037 in 2021, indicating a rise of 431.5%[174] - Owned restaurant cost of sales as a percentage of owned restaurant net revenue decreased to 25.0% from 25.5%[175] - Owned restaurant operating expenses increased by $30.2 million, or 20.9%, to $174.7 million in 2022, with operating costs as a percentage of net revenue rising to 58.1%[186] - Food and beverage costs for owned restaurants rose by $7.9 million, or 11.7%, to $75.4 million in 2022, with cost of sales as a percentage of revenues decreasing to 25.0%[185] - General and administrative costs increased by $3.5 million, or 13.7%, to $29.1 million in 2022, maintaining a consistent percentage of revenues at 9.2%[187] Cash Flow and Financing - Net cash provided by operating activities was $25.3 million for 2022, a decrease from $31.0 million in 2021, primarily due to payments on accrued expenses[215] - Net cash used in investing activities for 2022 was $32.7 million, mainly for the construction of new restaurants compared to $11.5 million in 2021[216] - Net cash provided by financing activities was $39.1 million for 2022, compared to a net cash used of $20.3 million in 2021, driven by a $50.0 million borrowing under the amended Credit Agreement[217] - As of December 31, 2022, the company had cash and cash equivalents of $55.1 million and long-term debt of $74.3 million[197] - The company entered into a Fourth Amendment to the Credit Agreement, allowing for a new $50.0 million delayed draw term facility for acquisitions and capital expenditures[202] Market and Economic Conditions - The company experienced inflationary pressures in 2022, impacting labor, food, and occupancy costs, with a strategy to maintain operating margins through menu price increases and cost controls[237] - The company is exposed to market price fluctuations in food product prices, which can materially impact food and beverage costs[236] - The company is exposed to market risk from changes in interest rates, with borrowings under the Credit Agreement subject to SOFR plus a 6.5% margin[238] - The company faces foreign currency exchange rate risk in operations across the UK, Italy, Canada, Mexico, and the Middle East[239] - The company currently does not use financial instruments to hedge against foreign currency exchange rate changes[239]