FAT (Fresh. Authentic. Tasty.) Brands Inc. (NASDAQ: FAT) (“FAT
Brands” or the “Company”) today reported fiscal third quarter 2021
financial results for the 13-week period ending September 26, 2021.
Andy Wiederhorn, President and CEO of FAT
Brands, commented, “We want to thank our franchise partners and
employees for their efforts in delivering yet another strong
quarter and further momentum for FAT as we emerge from the
challenging operating environment of the past year.”
“We successfully closed the acquisition of the
Twin Peaks sports lodge for $300 million on October 1, our third
acquisition in the past year, and another historic moment for FAT
Brands as it is our entrance into the polished casual dining
category. This transaction furthers the rapid diversification of
our restaurant portfolio, expands our store base to more than 2,100
franchised and corporate-owned stores globally and increases our
combined system-wide sales to approximately $1.8 billion annually.
We are excited to integrate Twin Peaks into our portfolio, and
believe we can effectively enhance the strong growth the
sports-lodge brand achieved under Garnett Station. From this
transaction, we expect our post-COVID normalized EBITDA to increase
by approximately $25-$30 million.”
“We continue to execute on our acquisition
strategy here in the fourth quarter as on November 2, 2021 the
Company announced it had agreed to acquire Fazoli’s, the largest
premium QSR Italian chain in the U.S., from Sentinel Capital
Partners for $130 million. We believe this is a fantastic addition
to our portfolio as Fazoli’s further enhances our profitability,
adding an estimated $14.5 to $15.0 million to our post-COVID
normalized EBITDA in 2022.”
“The third quarter saw a significant progression
in sales improvements across our brands as the Delta variant
continues to wane and restrictions ease throughout the world. We
continue to report positive same store sales compared to 2019 with
a 4% increase for the third quarter of 2021. We are particularly
excited that international same store sales compared to 2019
improved 715 basis points in the third quarter when compared to the
second quarter of 2021. In addition, same store sales of domestic
locations in the third quarter grew 7% compared to the third
quarter of 2019. Our franchise sales team had a record quarter,
closing nine deals that account for 166 locations, which will
further enhance our organic growth strategy. We expect unit growth
to continue increasing in the coming months with plans to open 26
additional stores by the end of the year for a total of 85 for
2021.”
Fiscal Third Quarter 2021
Highlights
|
● |
Total revenue improved 628% to $29.8 million compared to $4.1
million the third quarter of 2020 |
|
|
|
|
|
|
|
|
|
|
○ |
System-wide sales growth of 378% Q3 2021/Q3 2020 and 237% Q3
2021/Q3 2019 |
|
|
|
|
|
■ |
United States sales growth of 418% Q3 2021/Q3 2020 and 289% Q3
2021/Q3 2019 |
|
|
|
|
|
■ |
Rest of world sales growth of 237% Q3 2021/Q3 2020 and 97% Q3
2021/Q3 2019 |
|
|
|
○ |
System-wide same-store sales growth of 16.2% Q3 2021/Q3 2020 |
|
|
|
|
|
■ |
United States same-store sales growth of 17.3% Q3 2021/Q3 2020 |
|
|
|
|
|
■ |
Rest of world sales growth of 11.9% Q3 2021/Q3 2020 |
|
|
|
○ |
25 new franchised store openings during the third quarter of
2021 |
|
|
|
|
|
■ |
Store count as of September 26, 2021: 2,058 stores system-wide plus
26 locations to open in 2021 |
|
|
|
|
|
|
|
|
● |
Net loss of $3.6 million or $0.26 per diluted share compared to net
loss of $0.6 million or $0.04 per diluted share in the third
quarter of 2020 |
|
● |
Adjusted net loss(1) of $2.0 million, or $0.14 per diluted share,
compared to adjusted net income of $0.3 million, or $0.02 per
diluted share in the third quarter of 2020 |
|
● |
EBITDA(1) of $4.8 million compared to EBITDA of $0.1 million in the
third quarter of 2020 |
|
● |
Adjusted EBITDA(1) of $7.2 million compared to adjusted EBITDA of
$0.6 million in the third quarter of 2020 |
|
|
|
|
|
|
(1 |
) |
EBITDA, Adjusted EBITDA and adjusted net loss are non-GAAP measures
defined below, under “Non-GAAP Measures”. Reconciliation of GAAP
net income to EBITDA, adjusted EBITDA and adjusted net loss are
included in the accompanying financial tables. |
Summary of Third Quarter 2021 Financial
Results
Total revenue was $29.8 million in the third
quarter of 2021 compared to $4.1 million in the third quarter of
2020, reflecting revenue from Global Franchise Group (“GFG”), which
was acquired during the third quarter of 2021, revenue from Johnny
Rockets, which was acquired during the third quarter of 2020, and
the recovery from the negative effects of the COVID-19 pandemic on
royalties from restaurant sales.
Costs and expenses increased to $27.4 million in
the third quarter of 2021 compared to $5.4 million in the third
quarter of 2020. General and administrative expenses increased
$10.0 million primarily due to higher compensation expense with the
acquisition of GFG and increased professional fees.
Advertising expense increased to $5.5 million in
the third quarter of 2021 compared to $0.8 million in the third
quarter of 2020, reflecting advertising expenses from GFG and
Johnny Rockets and the increase in customer activity as the
recovery from recovery from COVID continues.
Other expense of $7.2 million in the third
quarter of 2021 was comprised primarily of interest expense of $7.1
million.Adjusted net loss was $2.0 million, or $0.14 per diluted
share, in the third quarter of 2021 compared to adjusted net income
of $0.3 million, or $0.02 per diluted share, in the third quarter
of 2020.
Recent Events and Liquidity
On October 1, 2021, the Company announced the
completion of its acquisition of Twin Peaks restaurant chain from
Garnett Station Partners for $300 million. As a result of the
acquisition, FAT Brands has entered a new restaurant category,
polished casual dining. The transaction was funded with the
proceeds of $250 million in principal amount of new securitization
notes and the issuance to the sellers of shares of Series B
preferred stock.
On November 2, 2021, the Company announced it
has agreed to acquire Fazoli’s, the largest premium QSR Italian
chain in the U.S., from Sentinel Capital Partners for $130 million.
The transaction will be funded with cash from the issuance of new
notes from the Company’s securitization facilities, and is expected
to close by mid-December 2021.
Key Financial Definitions
New store openings - The number of new store
openings reflects the number of stores opened during a particular
reporting period. The total number of new stores per reporting
period and the timing of stores openings has, and will continue to
have, an impact on our results. Same-store sales growth -
Same-store sales growth reflects the change in year-over-year sales
for the comparable store base, which we define as the number of
stores open and in the FAT Brands system for at least one full
fiscal year. For stores that were temporarily closed, sales in the
current and prior period are adjusted accordingly. Given our
focused marketing efforts and public excitement surrounding each
opening, new stores often experience an initial start-up period
with considerably higher than average sales volumes, which
subsequently decrease to stabilized levels after three to six
months. Additionally, when we acquire a brand, it may take several
months to integrate fully each location of said brand into the FAT
Brands platform. Thus, we do not include stores in the comparable
base until they have been open and in the FAT Brands system for at
least one full fiscal year. For 2020, the comparable store base
does not include Elevation Burger and Johnny Rockets stores as we
did not own the brands for the full year of 2019. For 2021, the
comparable store base includes Elevation Burger as we owned the
brand for the full year of 2020.
System-wide sales growth - System wide sales
growth reflects the percentage change in sales in any given fiscal
period compared to the prior fiscal period for all stores in that
brand only when the brand is owned by FAT Brands. Because of
acquisitions, new store openings and store closures, the stores
open throughout both fiscal periods being compared may be different
from period to period.
Conference Call and Webcast
FAT Brands will host a conference call and
webcast to discuss its fiscal third quarter 2021 financial results
today at 5:00 PM ET. Hosting the conference call and webcast will
be Andy Wiederhorn, President and Chief Executive Officer, and Ken
Kuick, Chief Financial Officer.
The conference call can be accessed live over
the phone by dialing 1-877-705-6003. A replay will be available
after the call until Thursday, November 11, 2021, and can be
accessed by dialing 1-844-512-2921. The passcode is 13724794. The
webcast will be available at www.fatbrands.com under the
“Investors” section and will be archived on the site shortly after
the call has concluded.
About FAT (Fresh. Authentic. Tasty.)
Brands
FAT Brands (NASDAQ: FAT) is a leading global
franchising company that strategically acquires, markets and
develops fast casual and casual dining restaurant concepts around
the world. The Company currently owns fifteen restaurant brands:
Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets,
Great American Cookies, Hot Dog on a Stick, Buffalo’s Cafe &
Express, Hurricane Grill & Wings, Pretzelmaker, Elevation
Burger, Twin Peaks, Yalla Mediterranean, Ponderosa and Bonanza
Steakhouses and franchises approximately 2,000 units worldwide. For
more information, please visit www.fatbrands.com.
Forward Looking Statements
This press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, including statements relating to the future
financial and operating results of the Company, including estimates
of annual EBITDA, our ability to integrate the Global Franchise
Group brands and conduct future accretive acquisitions, our
pipeline of new store locations, and the recovery of our business
from the current novel coronavirus pandemic (“COVID-19”), including
our revenue performance and reopening of special venues.
Forward-looking statements generally use words such as “expect,”
“foresee,” “anticipate,” “believe,” “project,” “should,”
“estimate,” “will,” “plans,” “forecast,” and similar expressions,
and reflect our expectations concerning the future. It is possible
that our future performance may differ materially from current
expectations expressed in these forward-looking statements.
Forward-looking statements are subject to significant business,
economic and competitive risks, uncertainties and contingencies
including, but not limited to, uncertainties surrounding the
severity, duration and effects of the COVID-19 pandemic and the
effects of the Delta variant of COVID-19, many of which are
difficult to predict and beyond our control, which could cause our
actual results to differ materially from the results expressed or
implied in such forward-looking statements. We refer you to the
documents we file from time to time with the Securities and
Exchange Commission, such as our reports on Form 10-K, Form 10-Q
and Form 8-K, for a discussion of these and other risks and
uncertainties that could cause our actual results to differ
materially from our current expectations and from the
forward-looking statements contained in this press release. We
undertake no obligation to update any forward-looking statements to
reflect events or circumstances occurring after the date of this
press release.
Non-GAAP Measures
(Unaudited)
This press release includes the non-GAAP
financial measure of EBITDA and Adjusted EBITDA.
EBITDA is defined as earnings before interest,
taxes, depreciation and amortization. We use the term EBITDA, as
opposed to income from operations, as it is widely used by
analysts, investors and other interested parties to evaluate
companies in our industry. We believe that EBITDA is an appropriate
measure of operating performance because it eliminates the impact
of expenses that do not relate to business performance. EBITDA is
not a measure of our financial performance or liquidity that is
determined in accordance with generally accepted accounting
principles (“GAAP”), and should not be considered as an alternative
to net income (loss) as a measure of financial performance or cash
flows from operations as measures of liquidity, or any other
performance measure derived in accordance with GAAP.
Adjusted EBITDA is defined as EBITDA (as defined
above), excluding expenses related to acquisitions, refranchising
gain or losses, impairment charges, and certain non-recurring or
non-cash items that the Company does not believe directly reflect
its core operations and may not be indicative of the Company’s
recurring business operations.
Adjusted net loss is a supplemental measure of
financial performance that is not required by or presented in
accordance with GAAP. Adjusted net loss is defined as net loss plus
the impact of adjustments and the tax effects of such adjustments.
Adjusted net loss is presented because we believe it helps convey
supplemental information to investors regarding our performance,
excluding the impact of special items that affect the comparability
of results in past quarters to expected results in future quarters.
Adjusted net loss as presented may not be comparable to other
similarly titled measures of other companies, and our presentation
of adjusted net loss should not be construed as an inference that
our future results will be unaffected by excluded or unusual items.
Our management uses this non-GAAP financial measure to analyze
changes in our underlying business from quarter to quarter based on
comparable financial results.
Reconciliations of net loss attributable to FAT
Brands Inc. presented in accordance with GAAP to EBITDA, adjusted
EBITDA and adjusted net loss are set forth in the tables below.
Investor Relations:
ICRLynne
CollierIR-FATBrands@icrinc.com646-430-2216
Media Relations:
JConnellyErin
Mandzikemandzik@jconnelly.com862-246-9911
FAT Brands Inc. Consolidated Statements of
Operations
|
|
Thirteen Weeks Ended |
|
|
Thirty Nine Weeks Ended |
|
|
|
September 26,2021 |
|
|
September 27,2020 |
|
|
September 26,2021 |
|
|
September 27,2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royalties |
|
$ |
13,742 |
|
|
$ |
3,156 |
|
|
$ |
24,800 |
|
|
$ |
8,678 |
|
Franchise fees |
|
|
1,087 |
|
|
|
122 |
|
|
|
2,109 |
|
|
|
571 |
|
Advertising fees |
|
|
5,483 |
|
|
|
803 |
|
|
|
8,043 |
|
|
|
2,347 |
|
Restaurant sales |
|
|
3,879 |
|
|
|
— |
|
|
|
4,113 |
|
|
|
— |
|
Factory revenue |
|
|
5,480 |
|
|
|
— |
|
|
|
5,480 |
|
|
|
— |
|
Management fees and other income |
|
|
90 |
|
|
|
8 |
|
|
|
148 |
|
|
|
23 |
|
Total revenue |
|
|
29,761 |
|
|
|
4,089 |
|
|
|
44,693 |
|
|
|
11,619 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expense |
|
|
12,966 |
|
|
|
2,990 |
|
|
|
23,375 |
|
|
|
10,626 |
|
Restaurant operating expenses |
|
|
3,660 |
|
|
|
— |
|
|
|
3,904 |
|
|
|
— |
|
Factory operating expenses |
|
|
3,473 |
|
|
|
— |
|
|
|
3,473 |
|
|
|
— |
|
Impairment of assets |
|
|
— |
|
|
|
753 |
|
|
|
— |
|
|
|
3,927 |
|
Refranchising (gain) loss |
|
|
(250 |
) |
|
|
325 |
|
|
|
(679 |
) |
|
|
1,869 |
|
Acquisition costs |
|
|
2,053 |
|
|
|
503 |
|
|
|
2,985 |
|
|
|
633 |
|
Advertising expense |
|
|
5,483 |
|
|
|
814 |
|
|
|
8,043 |
|
|
|
2,358 |
|
Total costs and expenses |
|
|
27,385 |
|
|
|
5,385 |
|
|
|
41,101 |
|
|
|
19,413 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income /(loss) from
operations |
|
|
2,376 |
|
|
|
(1,296 |
) |
|
|
3,592 |
|
|
|
(7,794 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense),
net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(7,072 |
) |
|
|
(123 |
) |
|
|
(11,939 |
) |
|
|
(2,034 |
) |
Interest expense related to preferred shares |
|
|
(173 |
) |
|
|
(323 |
) |
|
|
(725 |
) |
|
|
(1,251 |
) |
Net loss on extinguishment of debt |
|
|
(13 |
) |
|
|
(88 |
) |
|
|
(6,418 |
) |
|
|
(88 |
) |
Change in fair value of derivative liability |
|
|
— |
|
|
|
(374 |
) |
|
|
— |
|
|
|
887 |
|
Gain on contingent consideration payable adjustment |
|
|
— |
|
|
|
1,680 |
|
|
|
— |
|
|
|
1,680 |
|
Other expense, net |
|
|
64 |
|
|
|
(63 |
) |
|
|
189 |
|
|
|
6 |
|
Total other (expense) income, net |
|
|
(7,194 |
) |
|
|
709 |
|
|
|
(18,893 |
) |
|
|
(800 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income tax
expense |
|
|
(4,818 |
) |
|
|
(587 |
) |
|
|
(15,301 |
) |
|
|
(8,594 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit |
|
|
(1,183 |
) |
|
|
(19 |
) |
|
|
(3,303 |
) |
|
|
(1,405 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(3,635 |
) |
|
|
(568 |
) |
|
|
(11,998 |
) |
|
|
(7,189 |
) |
Less: Net loss attributable to
noncontrolling interest |
|
|
(14 |
) |
|
|
— |
|
|
|
(19 |
) |
|
|
— |
|
Net loss attributable to FAT
Brands Inc. |
|
$ |
(3,621 |
) |
|
$ |
(568 |
) |
|
$ |
(11,979 |
) |
|
$ |
(7,189 |
) |
Basic and diluted loss per
share |
|
$ |
(0.26 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.85 |
) |
|
$ |
(0.55 |
) |
Basic and diluted weighted
average shares outstanding |
|
|
14,144,857 |
|
|
|
13,101,791 |
|
|
|
14,094,772 |
|
|
|
13,077,480 |
|
Cash dividends declared per
common share |
|
$ |
0.13 |
|
|
$ |
— |
|
|
$ |
0.39 |
|
|
$ |
— |
|
FAT Brands Inc. Consolidated EBITDA and Adjusted EBITDA
Reconciliation
|
|
Thirteen Weeks Ended |
|
|
Thirty Nine Weeks Ended |
|
|
|
September 26,2021 |
|
|
September 27,2020 |
|
|
September 26,2021 |
|
|
September 27,2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to FAT
Brands Inc. |
|
$ |
(3,621 |
) |
|
$ |
(568 |
) |
|
$ |
(11,979 |
) |
|
$ |
(7,189 |
) |
Interest expense, net |
|
|
7,245 |
|
|
|
446 |
|
|
|
12,664 |
|
|
|
3,285 |
|
Income tax benefit |
|
|
(1,183 |
) |
|
|
(19 |
) |
|
|
(3,303 |
) |
|
|
(1,405 |
) |
Depreciation and amortization expense |
|
|
2,377 |
|
|
|
263 |
|
|
|
3,161 |
|
|
|
763 |
|
EBITDA |
|
|
4,818 |
|
|
|
122 |
|
|
|
543 |
|
|
|
(4,546 |
) |
Provision for bad debts |
|
|
202 |
|
|
|
— |
|
|
|
225 |
|
|
|
— |
|
Share-based compensation expenses |
|
|
258 |
|
|
|
45 |
|
|
|
488 |
|
|
|
61 |
|
Non-cash lease expenses (1) |
|
|
127 |
|
|
|
91 |
|
|
|
404 |
|
|
|
174 |
|
Acquisition costs |
|
|
2,053 |
|
|
|
503 |
|
|
|
2,985 |
|
|
|
633 |
|
Refranchising (gain) loss |
|
|
(250 |
) |
|
|
325 |
|
|
|
(679 |
) |
|
|
1,869 |
|
Net loss on extinguishment of debt |
|
|
13 |
|
|
|
88 |
|
|
|
6,418 |
|
|
|
88 |
|
Gain on contingent consideration payable adjustment |
|
|
— |
|
|
|
(1,680 |
) |
|
|
— |
|
|
|
(1,680 |
) |
Impairment loss |
|
|
— |
|
|
|
753 |
|
|
|
— |
|
|
|
3,927 |
|
Change in fair value - derivative liability |
|
|
— |
|
|
|
374 |
|
|
|
— |
|
|
|
(887 |
) |
Adjusted EBITDA |
|
$ |
7,221 |
|
|
$ |
621 |
|
|
$ |
10,384 |
|
|
$ |
(361 |
) |
|
(1 |
) |
Included non-cash lease expenses related to new lease accounting
standards |
FAT Brands Inc. Adjusted Net Loss
Reconciliation
|
|
Thirteen Weeks Ended |
|
|
Thirty Nine Weeks Ended |
|
|
|
September 26,2021 |
|
|
September 27,2020 |
|
|
September 26,2021 |
|
|
September 27,2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to FAT
Brands Inc. |
|
$ |
(3,621 |
) |
|
$ |
(568 |
) |
|
$ |
(11,979 |
) |
|
$ |
(7,189 |
) |
Refranchising (gain) loss |
|
|
(250 |
) |
|
|
325 |
|
|
|
(679 |
) |
|
|
1,869 |
|
Acquisition costs |
|
|
2,336 |
|
|
|
503 |
|
|
|
2,985 |
|
|
|
633 |
|
Net loss on extinguishment of debt |
|
|
13 |
|
|
|
88 |
|
|
|
6,418 |
|
|
|
88 |
|
Tax adjustments, net (1) |
|
|
(515 |
) |
|
|
(30 |
) |
|
|
(1,883 |
) |
|
|
(423 |
) |
Adjusted net loss attributable
to FAT Brands Inc. |
|
$ |
(2,037 |
) |
|
$ |
318 |
|
|
$ |
(5,138 |
) |
|
$ |
(5,022 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per basic and diluted
share |
|
$ |
(0.26 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.85 |
) |
|
$ |
(0.55 |
) |
Adjusted loss per basic and
diluted share |
|
$ |
(0.14 |
) |
|
$ |
0.02 |
|
|
$ |
(0.36 |
) |
|
$ |
(0.38 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average basic and
diluted shares outstanding |
|
|
14,144,857 |
|
|
|
13,101,791 |
|
|
|
14,094,772 |
|
|
|
13,077,480 |
|
|
(1 |
) |
Reflects the tax impact of the adjustments using the effective tax
rate for the respective periods |
Grafico Azioni FAT Brands (NASDAQ:FATBP)
Storico
Da Giu 2024 a Lug 2024
Grafico Azioni FAT Brands (NASDAQ:FATBP)
Storico
Da Lug 2023 a Lug 2024