Financial Data and Key Metrics Changes - The company reported strong performance in its direct-to-consumer (DTC) business and wholesale channels, exceeding expectations during the holiday period [11][12] - The fourth quarter marked the third consecutive quarter of comparable store growth, with the company successfully maintaining higher average unit retail (AUR) prices without a decline in unit sales [12][14] - Overall revenue from the identified 150 stores for closure is approximately $110 million, with many being marginally profitable or losing money [26] Business Line Data and Key Metrics Changes - The company has diversified its approach across wholesale, international, and retail channels, with all age categories outperforming expectations [11] - The DTC business accounted for about one-third of U.S. retail revenue, indicating a well-penetrated e-commerce operation [29] - The wholesale business is approximately $1 billion of the total $3 billion revenue, with a significant portion coming from exclusive brands developed for major retailers [35] Market Data and Key Metrics Changes - The company is focusing on attracting new consumers, particularly Gen Z parents, who are more open to higher-priced products [14][15] - The shift in consumer shopping behavior post-pandemic has led to a need for store closures and a focus on enhancing the brand's presence in relevant retail environments [22][23] Company Strategy and Development Direction - The company aims to invest in product design and demand creation to resonate with today's young consumers [6][8] - A strategic focus on brand identity is emphasized, allowing each brand to develop its unique identity rather than applying a one-size-fits-all approach [41] - The company plans to close 150 underperforming stores while also remodeling and relocating stores to better serve consumers [22][23] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges posed by rising prices and tariffs but emphasizes the importance of maintaining brand value through quality and style [17][18] - The company expects to achieve growth in sales and earnings by 2026, focusing on long-term sustainable and profitable growth rather than short-term discounts [39][40] - Management is optimistic about the potential for growth in the wholesale business, particularly with key accounts that are focused on attracting new parents [32][33] Other Important Information - The company is enhancing its marketing investments to drive productivity and consumer engagement, particularly through social media and influencers [10][9] - The transition from private label to branded products on platforms like Amazon is seen as a growth opportunity for the company's core brands [36] Q&A Session Summary Question: What are the biggest challenges noticed since the new CEO took over? - The CEO highlighted the need for investment in product design and demand creation to align with consumer expectations [6] Question: Can you elaborate on the holiday performance? - The CEO noted strong performance across all channels, with the ability to maintain higher prices without losing unit sales [11][12] Question: What is the strategy for store closures? - The company plans to close 150 stores identified as low-margin, with expectations of transferring some revenue to nearby locations [22][26] Question: How does e-commerce fit into the overall strategy? - E-commerce is a significant part of the business, accounting for about one-third of retail revenue, and is expected to grow as stores close [29] Question: What is the outlook for growth in 2026? - Management remains optimistic about achieving growth in sales and earnings by focusing on sustainable and profitable growth strategies [39][40]

Financial Data and Key Metrics Changes - The company has reduced its cash break-even level from $900 million in 2022 to approximately $180 million today, representing a $720 million reduction [24][25] - Free cash flow improved from negative $300 million in 2021 to positive $13.1 million in the first three quarters of 2025, marking a $300 million improvement [25] - Adjusted EBITDA transitioned from a loss of $86 million in 2021 to approximately $18 million of positive Adjusted EBITDA in 2025 [26] - The company achieved net income positive of over $3 million in Q3 2025 for the first time since going public [26] Business Line Data and Key Metrics Changes - The company has transitioned from a multi-level marketing (MLM) model to a multi-channel strategy, which includes direct-to-consumer, Amazon/Marketplace, affiliates, and retail [14][15] - The restructuring has led to a significant reduction in employee count from over 1,000 to less than 300 [15][22] - The company has maintained eight consecutive quarters of positive adjusted EBITDA, cumulatively around $50 million [17][22] Market Data and Key Metrics Changes - The general wellness market is valued at $6.5 trillion in 2023, with the fitness and nutrition categories each representing a $1.1 trillion potential market [5][6] - The company has a significant opportunity to expand its retail presence, which has not been previously utilized for its products [13] Company Strategy and Development Direction - The company is focusing on an innovation pipeline with new product launches scheduled between 2026 and 2027, including the 10-Minute Body program and a new P90X program [18][19] - A retail strategy is being implemented to sell previously unretail products, including nutritional supplements under well-known brand names [20][21] - The company aims to address the total addressable market (TAM) of non-exercisers and enhance brand exposure through retail partnerships [21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the turnaround, stating that the company is a year ahead of schedule and financially stable with cash levels exceeding debt [22][24] - The focus is now on innovation and creative exercise-related programs rather than financial survival [22][32] - The management highlighted the importance of adapting marketing strategies to different demographics and the potential benefits of retail exposure [38][39] Other Important Information - The company has restructured its debt, reducing overall interest expenses by 44% [15][22] - The average interest rate on debt is approximately 15.5%, with a cash position of $34 million against $25 million of debt [28] Q&A Session Summary Question: Has the retail rollout process changed? - The retail process is slower than anticipated due to planogram schedules, but the company is actively aggregating retailer responses [34] Question: What could the long-term margin structure look like? - Gross margins are expected to normalize in the low- to mid-70s, with potential for high 80s-90% in fitness and mid-40s-50% in nutrition as retail expands [36][37] Question: What online media has been most effective for the target demographic? - The company has not yet identified the best medium but acknowledges the need to tailor content for different platforms and demographics [38]

Financial Data and Key Metrics Changes - The company has raised its sales targets multiple times and is tracking ahead of its 2026 margin targets, indicating strong performance relative to competitors who have cut guidance [7][9] - The gross profit margin reached 65% in Q3, showcasing a strong margin profile despite tariff impacts [31] Business Line Data and Key Metrics Changes - The running category remains crucial, with significant innovations planned for products like the Cloudmonster and Cloudsurfer, which are expected to enhance market relevance [17][18] - The apparel segment, particularly in tennis, is the fastest-growing part of the business, driven by collaborations that appeal to younger demographics [20] Market Data and Key Metrics Changes - China has become the second-largest market for the company, with the Asia Pacific region outpacing expectations [9] - Brand awareness is between 25%-30%, indicating a significant opportunity for growth as 75% of potential customers are not yet familiar with the brand [25] Company Strategy and Development Direction - The company aims to maintain its premium positioning while expanding its addressable market through innovation and brand awareness [5][10] - There is a focus on balancing growth and margins, with a commitment to reinvest in product development and marketing to sustain brand momentum [28][29] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in the brand's growth trajectory, with guidance to achieve 30% growth over the next three years while maintaining a 23% growth rate next year [34] - The importance of team culture and talent acquisition was highlighted as a key factor in sustaining brand strength and innovation [35] Other Important Information - The company is focused on avoiding discounting practices to maintain its premium brand image, especially during the holiday season [11][12] - Automation in manufacturing is seen as a critical future direction, with the introduction of products like LightSpray aimed at enhancing production efficiency [32] Q&A Session Summary Question: How does the company view the balance of wholesale growth? - The company sees wholesale growth coming from new partners, new doors, and same-store sales, emphasizing the need to start with customer awareness [25] Question: What is the company's approach to managing growth and margins? - The management stated that high margins should not come at the expense of innovation and investment, aiming for a balance that supports growth while maintaining healthy margins [27][28] Question: How does the company plan to address potential tariff impacts? - The company has implemented pricing and supply chain efficiencies as mitigation strategies, which are expected to remain even if tariffs are rolled back [31]

Financial Data and Key Metrics Changes - The company has reduced its cash break-even level from $900 million in 2022 to approximately $180 million today, representing a $720 million reduction [24][25] - Free cash flow improved from nearly negative $300 million in 2021 to positive $13.1 million in the first three quarters of 2025, a $300 million improvement [25] - Adjusted EBITDA transitioned from a loss of over $86 million in 2021 to approximately $18 million of positive Adjusted EBITDA in 2025 [26] - The company achieved net income positive of over $3 million in Q3 of 2025 for the first time since going public [26] Business Line Data and Key Metrics Changes - The company has transitioned from a multi-level marketing (MLM) model to a multi-channel strategy, which includes direct-to-consumer, Amazon/Marketplace, affiliates, and retail [14][15] - The restructuring has led to a significant reduction in employee count from over 1,000 to less than 300 [15][22] - The company has maintained eight consecutive quarters of positive adjusted EBITDA, cumulatively around $50 million [17][22] Market Data and Key Metrics Changes - The general wellness market is valued at $6.5 trillion in 2023, with the fitness and nutrition categories each representing a $1.1 trillion potential market [5][6] - The company aims to tap into a broader audience by launching retail products, including a new small serve of Shakeology priced below $40 [21][20] Company Strategy and Development Direction - The company is focusing on an innovation pipeline with new product launches scheduled between 2026 and 2027, including the 10-Minute BODi program and a new P90X program [18][19] - A retail strategy is being implemented to sell previously unretail products, enhancing brand exposure and market reach [13][20] - The company is addressing the non-exerciser demographic with new content and products designed to engage this audience [21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the turnaround, stating that the company is a year ahead of schedule and positioned for growth in 2026 and 2027 [24][32] - The financial flexibility gained from the turnaround allows the company to focus on innovation and creative product development rather than financial survival [22][32] Other Important Information - The company has restructured its debt, reducing overall interest expenses by 44% [15][22] - The average interest rate on debt is approximately 15.5%, with a cash position of $34 million against $25 million of debt [28] Q&A Session Summary Question: Has the retail rollout process changed? - The retail process is slower than anticipated due to planogram schedules, but the company is actively engaging with retailers and aggregating responses [34] Question: What could the long-term margin structure look like on an EBITDA level? - Management indicated that gross margins should normalize in the low- to mid-70s, with potential for high 80s to 90% on fitness and mid-40s to 50% in nutrition as the company grows [36][37] Question: What online media has been most effective for the target demographic? - The company has not yet identified the best medium but acknowledges the need to tailor content for different platforms, noting that audiences over 30 are less engaged with TikTok [38]

Financial Data and Key Metrics Changes - The company is tracking ahead of its 2026 margin targets and is on track to exceed sales targets, indicating strong performance relative to competitors who have cut guidance [7][9] - The gross profit margin reached 65% in Q3, showcasing a strong margin profile despite tariff impacts [31] Business Line Data and Key Metrics Changes - The running category remains crucial, with significant innovations planned for the Cloudmonster, Cloudsurfer, and Cloudrunner lines in 2026 [16][18] - The apparel business, particularly in tennis, is the fastest-growing segment, driven by collaborations that appeal to younger demographics [20] Market Data and Key Metrics Changes - China has become the second-largest market for the company, with Asia Pacific outpacing expectations [9] - Brand awareness is between 25%-30%, indicating significant growth potential as 75% of potential customers are still unaware of the brand [25] Company Strategy and Development Direction - The company aims to be the most premium global sportswear brand, focusing on innovation, quality, and sustainability to expand its addressable market [4][5] - The strategy includes maintaining a premium positioning while expanding into new sports categories, balancing performance and lifestyle [20][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the brand's growth trajectory, with plans already in place for product development through 2028 [34] - The importance of team culture and talent acquisition was emphasized as a key driver of brand success [35] Other Important Information - The company is focused on full-price sales and avoiding discounting, which aligns with its premium brand strategy [11][12] - There is a strong emphasis on automation in manufacturing to enhance efficiency and reduce reliance on manual labor [32] Q&A Session Summary Question: What has driven the outsized growth of the brand? - Management noted that the brand's DNA and premium positioning have been key to its success, with all initiatives aligning with growth targets [8] Question: How important is the running category to On's business? - The running category is foundational, with aspirations to lead in this space through innovation and product updates [16] Question: What are the characteristics for entering new categories? - The focus is on expanding the addressable market and relevance to a broader customer base, particularly in performance and lifestyle sports [20] Question: How does the company balance growth and margins? - Management aims to steadily increase margins while investing in growth initiatives, emphasizing the need for innovation and product development [27][29] Question: What are the implications of U.S. tariffs on the business? - The company has implemented structural changes to maintain margins and continue investing in growth, regardless of tariff fluctuations [30][31]

Financial Data and Key Metrics Changes - The company reported a notable improvement in restaurant-level margins, achieving approximately 17% and aiming to approach 18% [4][22] - The company plans to double its new unit openings in 2026 compared to 2025, with a pipeline that is already under construction [32][33] Business Line Data and Key Metrics Changes - The company has refreshed its menu with new items such as burritos, burrito bowls, and salads, while also focusing on chicken on the bone [4] - The introduction of chicken tenders and a new spicy flavor profile is expected to attract more customers [10][11] Market Data and Key Metrics Changes - The company is positioned at the intersection of quick service and fast casual dining, emphasizing affordability and value in its offerings [7] - The loyalty program has seen a 6% increase in visit frequency among users, indicating a positive response to targeted discounts [8][15] Company Strategy and Development Direction - The company is focusing on a brand turnaround through marketing campaigns like "Let's Get Loco" and menu innovation [3][4] - There is a strong emphasis on operational efficiency, with improvements in labor scheduling and supply chain management contributing to margin enhancements [18][19] Management Comments on Operating Environment and Future Outlook - The macro environment remains challenging, with consumers under pressure, but the company feels well-positioned due to its value offerings [6][7] - Management expressed confidence in achieving long-term targets of 18%-20% store-level margins, contingent on sales-driving initiatives [22] Other Important Information - The company is investing in remodeling existing restaurants and enhancing equipment to drive sales and operational efficiencies [34][36] - The marketing strategy for 2026 includes six campaigns, reflecting a rich pipeline of innovation and a focus on variety and value [13][14] Q&A Session Summary Question: What has been accomplished in the brand turnaround? - The company has launched the "Let's Get Loco" campaign and refreshed its menu, focusing on quality and fresh ingredients [3][4] Question: How is the company positioned in the current macro environment? - The company acknowledges the challenging environment but believes it offers affordable and valuable options compared to competitors [6][7] Question: What are the main drivers of margin improvements? - Margin improvements have been driven by evaluating supply chain costs, transitioning to different distributors, and implementing technology for labor efficiency [18][19] Question: What is the long-term target for margins? - The company aims for 18%-20% store-level margins, with a focus on sales-driving initiatives to achieve this [22] Question: How is the company planning to use its free cash flow? - The company plans to use cash for new store development, remodeling existing locations, and enhancing operational efficiencies [34][36]

Financial Data and Key Metrics Changes - The company has reduced its cash break-even level from $900 million in 2022 to approximately $180 million today, representing a $720 million reduction [15][23] - Free cash flow improved from nearly negative $300 million in 2021 to positive $13.1 million in the first three quarters of 2025, a $300 million improvement [23] - Adjusted EBITDA transitioned from a loss of over $86 million in 2021 to approximately $18 million of positive Adjusted EBITDA in 2025 [24] - The company achieved net income positive status for the first time since going public, reporting over $3 million in Q3 of 2025 [24] Business Line Data and Key Metrics Changes - The company has transitioned from a multi-level marketing (MLM) model to a multi-channel strategy, which includes direct-to-consumer, Amazon/Marketplace, affiliates, and retail [14] - The restructuring has led to a significant reduction in employee count from over 1,000 to less than 300 [15] - The company has launched new products, including the 10-Minute Body program and a new P90X program, which are aimed at expanding its customer base [17][18] Market Data and Key Metrics Changes - The general wellness market is valued at $6.5 trillion, with the fitness and nutrition categories each representing a $1.1 trillion potential market [5] - The company aims to tap into the retail market for its products, which have never been sold in retail before, indicating a significant growth opportunity [13] Company Strategy and Development Direction - The company is focused on innovation and has a robust pipeline of new products scheduled for launch between 2026 and 2027 [17][30] - The strategy includes launching a retail line for its major brands, such as P90X and Shakeology, to increase brand exposure and sales [19][20] - The company is addressing the non-exerciser market with new content and smaller product sizes to attract a broader audience [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the turnaround, stating that the company is a year ahead of schedule and financially stable with cash levels exceeding debt [16][21] - The management highlighted the importance of the innovation pipeline and the potential for significant growth in the coming years [30] Other Important Information - The company has restructured its debt, reducing overall interest expenses by 44% [15] - The marketing expenses have been reduced from over 50% to the low-to-mid-30s percentage, allowing for increased media spending [27] Q&A Session Summary Question: Has the retail rollout process changed? - The retail process is slower than anticipated due to planogram schedules, but the company is actively engaging with retailers for product placement [32][33] Question: What could the long-term margin structure look like? - Gross margins are expected to normalize in the low- to mid-70s, with potential for high 80s-90% on fitness and mid-40s-50% in nutrition as retail grows [34][35] Question: What online media has been most effective for the demographic? - The company has not yet identified the best platform but acknowledges the need to tailor content for different audiences across various media [36][38]

Financial Data and Key Metrics Changes - The company has experienced three consecutive quarters of comparable store growth, indicating a positive trend in sales performance [11][41] - The average unit retail (AUR) has increased, with the company successfully maintaining higher prices without a degradation in unit sales, which is a significant achievement [12][13] Business Line Data and Key Metrics Changes - The direct-to-consumer (DTC) business showed strong performance, with significant growth across all channels including wholesale and international [11] - The company has identified approximately 150 stores for closure, focusing on those with lower margins, which is expected to streamline operations and improve profitability [23][27] Market Data and Key Metrics Changes - The company has diversified its market approach, successfully attracting new consumers from higher household income brackets who are more open to premium pricing [14][15] - The wholesale business remains robust, with a focus on growing relationships with key accounts, particularly in the mass retail channel [34][39] Company Strategy and Development Direction - The company aims to invest in product design and demand creation to resonate with today's young consumers, particularly Gen Z parents [6][8] - There is a strategic focus on enhancing brand identity for each of its brands, allowing them to develop independently rather than applying a one-size-fits-all approach [43] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the need for long-term, sustainable growth rather than growth driven by discounts or one-time events, emphasizing the importance of maintaining brand equity [42] - The company is optimistic about future growth, with expectations set for sales and earnings growth in 2026, supported by recent positive performance trends [40][41] Other Important Information - The company is transitioning its Amazon business from a private label to branded products, which is expected to enhance visibility and sales [36][38] - The supply chain team has successfully diversified sourcing to mitigate costs associated with tariffs, contributing to overall cost savings [20][21] Q&A Session Summary Question: What are the biggest challenges faced by the company? - The company needs to invest in product design and demand creation to align with consumer expectations and preferences [6] Question: How does the company plan to approach reinvestment? - The company plans to gradually increase marketing investments while ensuring a good return on investment [8] Question: Can you elaborate on the pricing strategy? - The company aims to maintain a competitive pricing strategy while ensuring that quality and style remain integral to its value proposition [17][18] Question: What is the plan for store closures? - The company has identified 150 stores for closure, focusing on those that are marginally profitable, with a plan to transfer some revenue to other locations [23][27] Question: How does e-commerce fit into the overall strategy? - E-commerce currently accounts for about a third of U.S. retail revenue, and the company aims to enhance its omnichannel capabilities to meet consumer expectations [31][32]

First Watch Restaurant Group (NasdaqGS:FWRG) FY 2025 Conference January 12, 2026 11:00 AM ET Company ParticipantsMel Hope - CFONone - Video Narrator 4Chris Tomasso - CEONone - Video Narrator 1None - Video Narrator 3None - Video Narrator 2Conference Call ParticipantsGreg Francfort - Restaurants Equity Research AnalystChris TomassoOkay.Greg FrancfortYes.Chris TomassoOh, we started.Greg FrancfortI think we might be starting.Mel HopeOops, sorry.Greg FrancfortCan everybody hear us? Hello, hello everybody. Good m ...

Financial Data and Key Metrics Changes - HF Foods reported a top-line business of over $1.2 billion, with a focus on the Asian specialty market, which represents a $50 billion addressable market [2][3] - The company has achieved a market share of approximately 16% with 15,000 accounts, indicating a strong position within the specialty food service distribution sector [3] Business Line Data and Key Metrics Changes - The frozen seafood business has grown from $300 million to over $400 million in the last couple of years, reflecting a 30% organic growth [4][5] - The company aims to expand its product offerings beyond Asian specialties, targeting Hispanic grocery as a significant growth area [4] Market Data and Key Metrics Changes - HF Foods operates in a market with roughly 94,000 restaurants, capturing 12% of the broader food service space [2] - The company has a 95% coverage of the continental U.S., positioning itself as the only distributor with coast-to-coast coverage in the Asian specialty market [3] Company Strategy and Development Direction - The company has rebranded its strategy to "Specialty Food is Our Specialty," aiming to become a dominant player in the specialty food sector [4] - HF Foods plans to invest significantly in capacity expansion, particularly in the Southeast and Midwest regions, with an estimated $700 million organic growth opportunity [7][8] - M&A remains a core pillar of the company's strategy, with a focus on acquiring smaller competitors to enhance market share and scale [13][14] Management's Comments on Operating Environment and Future Outlook - Management believes that independent restaurants, which make up 99% of their customer base, are more resilient to economic downturns compared to chain restaurants [16][17] - The company anticipates a more stable traffic environment in 2026 as it laps previous disruptions and tariff pressures [18] - Management is optimistic about the potential for margin expansion in the future, particularly as the company goes on the offensive to acquire new accounts [33][35] Other Important Information - HF Foods has completed a transition to a common ERP platform, enhancing visibility and operational efficiency [12] - The company owns 10 out of 14 distribution facilities and a significant portion of its truck fleet, making replication of its assets challenging for competitors [27] Q&A Session Summary Question: What is the company's strategy for M&A? - Management views smaller competitors as attractive acquisition targets and is preparing an M&A playbook to capitalize on opportunities in 2026 [13][14] Question: How does the company plan to address capacity constraints? - The company has launched a new facility in Atlanta and plans to expand capacity in the Midwest to support organic growth and cross-selling [9][10] Question: How flexible are customers in adjusting their menus in response to tariffs? - Customers have shown resilience and flexibility in menu adjustments, allowing them to manage costs effectively during periods of inflation [30][32] Question: What is the focus for 2026, growth or margin improvement? - The primary focus for 2026 is on acquiring new business and revenue, with margin improvement expected to follow as the market stabilizes [33][34] Question: What is the potential for the e-commerce business? - The e-commerce segment is seen as a complementary business that could grow significantly, potentially representing 10%-20% of the company's mix in the coming years [22][21]