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FAT Brands(FAT) - 2025 Q1 - Earnings Call Transcript
FATFAT Brands(FAT)2025-05-08 22:30
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Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was 142million,a6.5142 million, a 6.5% decrease from 152 million in the same period last year [11][28] - Adjusted EBITDA was 11.1millioncomparedto11.1 million compared to 18.2 million in the previous year [12][30] - Net loss attributable to FAT Brands was 46millionor46 million or 2.73 per diluted share, compared to a net loss of 38.3millionor38.3 million or 2.37 per share in the prior year [29] Business Line Data and Key Metrics Changes - System-wide sales were 571.1million,down1.8571.1 million, down 1.8% compared to the previous year's quarter [12] - Casual Dining segment saw same store sales increase approximately 1.6%, driven by Buffalo's Cafe and Ponderosa and Bonanza locations [13] - Factory revenue decreased by about 7% [50] Market Data and Key Metrics Changes - Domestic system-wide sales outperformed international sales, although there was a rebound in international locations towards the end of Q1 [12] - Digital sales at Roundtable Pizza increased by 5% sequentially from Q4 2024 to Q1 2025 [15] Company Strategy and Development Direction - The company is focused on expanding its brand presence with over 1,000 new locations in the pipeline and evaluating strategic acquisitions [13][16] - A remodeling initiative aims to refresh 5% of all stores in 2025, increasing to 10% in 2026 [17] - The company is enhancing production capabilities at its Georgia facility, targeting increased utilization from 40-45% to 60-70% [24] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer confidence is mixed, with consumers being apprehensive and focused on value [38] - The company is committed to debt reduction and leveraging growth opportunities, with a focus on maximizing shareholder value [27] - Management expressed confidence in achieving full annual equity target raises despite current market volatility [10][42] Other Important Information - The company has temporarily paused FAT's common dividend and started accruing the FAT Series B preferred dividend [10] - The spin-off of Twin Hospitality Group Inc. was completed, allowing shareholders to invest directly in Twin Peaks growth [7] Q&A Session Summary Question: Impact of cookie facility utilization increase - Management aims to increase the facility's revenue from 15 million to 25millionannuallywithimprovedcontracts[32][36]Question:Consumerfocusonvalue−Managementindicatedthatconsumersarelookingforgreatfoodandexperiencestojustifyprices,andthistrendisexpectedtocontinue[39][40]Question:Delayinequityraisepost−TwinPeaksIPO−Managementstatedthattherearenoimmediatepressures,andtheyarewaitingformarketconditionstoimprove[41][42]Question:Year−over−yearimpactofSmokyBones−ManagementestimatedacouplemilliondollarsnegativeimpactfromSmokyBonesonadjustedEBITDA[66]Question:TimelinefornewCEOsearch−TheexecutivesearchforanewCEOisprogressingwell,withseveralexcellentcandidates[72]Question:IncrementaladjustedEBITDAfromnewstoresandfactory−Managementexpectstheadditional25 million annually with improved contracts [32][36] Question: Consumer focus on value - Management indicated that consumers are looking for great food and experiences to justify prices, and this trend is expected to continue [39][40] Question: Delay in equity raise post-Twin Peaks IPO - Management stated that there are no immediate pressures, and they are waiting for market conditions to improve [41][42] Question: Year-over-year impact of Smoky Bones - Management estimated a couple million dollars negative impact from Smoky Bones on adjusted EBITDA [66] Question: Timeline for new CEO search - The executive search for a new CEO is progressing well, with several excellent candidates [72] Question: Incremental adjusted EBITDA from new stores and factory - Management expects the additional 15 million in adjusted EBITDA to materialize over the next couple of years [73]