FAT Brands(US:FAT)2020-11-11 00:49Financial Data and Key Metrics Changes - System-wide sales increased from $42 million in Q2 2020 to $68 million in Q3 2020, representing a 63.2% increase [8] - Total revenue rose to $4.1 million from $3.1 million in Q2 2020, with system-wide sales increasing 52% quarter-over-quarter [19] - Adjusted EBITDA was $621,000 compared to $2.3 million in Q3 2019, reflecting the challenges faced during the pandemic [21] Business Line Data and Key Metrics Changes - Franchisees opened 12 new stores in Q3 2020, bringing the year-to-date total to 15 stores, with expectations to close 2020 with 57 new stores compared to 24 in 2019 [10][11] - The burger brands showed a quick recovery, with Hurricane and Buffalo's Cafe brands demonstrating strong resilience, comping over 100% on a weekly basis [19] Market Data and Key Metrics Changes - The company reported that 25% of its stores were temporarily closed due to COVID-19, with significant closures in the Johnny Rockets brand, particularly in cruise ships and amusement parks [53][55] - The company has a strong presence in states with favorable weather conditions, which mitigates the impact of winter closures [31] Company Strategy and Development Direction - The acquisition of Johnny Rockets for approximately $25 million is expected to significantly enhance revenues and EBITDA, with projections indicating a potential 50% increase in revenues and 100% increase in EBITDA on a normalized basis [12][13] - The company is focused on organic growth and plans to continue opening new stores while supporting franchisees with enhanced delivery options and marketing initiatives [11][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about recovery as the vaccine rollout progresses, anticipating a strong recovery for Johnny Rockets and overall growth for the company [26][38] - The company is generating positive cash flow and is well-positioned for growth, with plans to refinance its securitization facility to lower capital costs [36][40] Other Important Information - The company raised $9 million through a public offering of preferred stock, simplifying its capital structure and demonstrating confidence from insiders [17][18] - The company is actively exploring additional acquisitions but prioritizes executing the integration of Johnny Rockets [42][46] Q&A Session Summary Question: Can you discuss the synergies from the Johnny Rockets acquisition? - Management noted significant synergies and expressed optimism about the brand's recovery post-COVID, although specific Q4 revenue projections were not provided [25][26] Question: What is the current status of the steakhouse brands? - The steakhouse brands have faced challenges, with some permanent closures, but management indicated that they represent only 8% of revenue going forward [30] Question: How is the company positioned for winter weather challenges? - Management stated that most restaurants are in favorable climates, and they have prepared franchisees for winter operations with outdoor dining solutions [31] Question: What is the update on the Fog Cutter Capital transaction? - Management confirmed that negotiations are ongoing and they hope to complete the transaction by the end of the year [32] Question: Can you provide a breakdown of closed stores due to COVID? - Management provided details on the number of temporarily closed stores across various brands, indicating that 25% of stores are currently closed [52][53]