The ONE Group Reports First Quarter 2024 Financial Results
Grows Revenue 3.0% and Opens STK Washington DC During the Quarter
Completed Acquisition of
Updates 2024 Targets to Include Acquisition
Highlights for the first quarter compared to the same quarter in 2023 are as follows:
-
Total GAAP revenues increased 3.0% to
$85.0 million from$82.6 million ; - Comparable sales* decreased 7.9%;
-
GAAP net loss attributable to
The ONE Group was$2.1 million , or$0.07 net loss per share ($0.02 adjusted net loss per share) ****, compared to GAAP net income of$2.5 million , or$0.08 per share ($0.10 adjusted net income per share) **** -
Restaurant Operating Profit*** increased 2.0% to
$13.2 million from$12.9 million ; and -
Adjusted EBITDA** decreased 3.6% to
$10.5 million from$10.9 million .
"We grew our top-line, held restaurant-level margins stable, improved G&A as a percentage of revenue, and delivered adjusted EBITDA nearly even with the prior year despite the choppy consumer environment. We are pleased that the cost savings initiatives implemented in 2023 are working effectively and they will be even more evident upon the return to a more normalized sales environment. Our priorities remain driving sales through initiatives such as our elevated food program, national happy hour offerings, and social media-driven marketing campaigns, while maintaining disciplined control over restaurant-level operating costs and general and administrative expenses,” said Emanuel “Manny” Hilario, President and CEO of
Hilario continued, “We are excited to be forging ahead with a new chapter for
Hilario concluded, “On an annual basis, the
*Comparable sales represent total
**We define Adjusted EBITDA as net income before interest expense, provision for income taxes, depreciation and amortization, non-cash impairment loss, non-cash rent expense, pre-opening expenses, non-recurring gains and losses, stock-based compensation and certain transactional and exit costs. Adjusted EBITDA has been presented in this press release and is a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. Refer to the reconciliation of Net Income to Adjusted EBITDA in this release.
***We define Restaurant Operating Profit as owned restaurant net revenue minus owned restaurant cost of sales and owned restaurant operating expenses. Restaurant Operating Profit has been presented in this press release and is a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. Refer to the reconciliation of Operating income to Restaurant Operating Profit in this release.
****We define Adjusted Net Income as net income before transaction and exit expenses, non-recurring costs, non-cash rent during the pre-opening period and the income tax effect of any adjustments. Adjusted Net Income has been presented in this press release and is a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. Refer to the reconciliation of Net Income to Adjusted Net Income in this release.
Acquisition of
On
First Quarter 2024 Financial Results
Total GAAP revenues increased
Total owned restaurant net revenues increased
Consolidated comparable sales* decreased 7.9% in the first quarter of 2024 compared to the first quarter of 2023. STK same store sales decreased 6.8% while
Management, license and incentive fee revenues decreased
Restaurant Operating Profit*** increased
General and administrative costs were flat at
Pre-opening expenses were
GAAP net loss attributable to
Adjusted Net Income**** attributable to
Adjusted EBITDA** decreased
The Company intends to open eight to eleven new venues in 2024 consisting of three to four STKs, two to three
There is currently one Company-owned STK restaurant, one Company-owned
-
Owned STK restaurant in
Aventura, Florida -
Owned Kona Grill restaurant inTigard, Oregon -
Owned Salt Water Social restaurant in
Denver, Colorado -
RA Sushi restaurant in
Plantation, Florida
Share Repurchase Program
In
2024 Targets
The Company is updating its 2024 targets, which are now inclusive of the acquisition of
Financial Results and Other Select Data US$s in millions |
|
2024 Guidance
w
/o
1
/1/2024 – |
2024 Guidance A ddition of
5 /1/2024-12/31/2024 |
2024 Updated Guidance 1 /1/2024-12/31/2024 |
||
Total GAAP revenues |
|
|
|
|||
Managed, franchise and license revenues |
|
|
|
|
||
Total owned operating expenses as a percentage of owned restaurant net revenue |
|
- |
- |
Approx. 83.0% |
||
Consolidated Total G&A excluding stock-based compensation |
|
- |
- |
Approx. |
||
Consolidated Adjusted EBITDA |
|
|
|
|||
|
|
- |
- |
|
||
Consolidated Effective income tax rate |
|
- |
- |
5% to 10% |
||
Consolidated Total capital expenditures, net of allowances received by landlords |
- |
- |
|
|||
Consolidated Number of new system-wide venues |
|
- |
- |
Eight to Eleven |
The Company’s annual run-rate Total GAAP Revenues at
Projected Capitalization After Acquisition of US$ in millions |
Before |
After |
Change |
|||
Cash |
|
|
|
|||
Term Note |
|
|
|
|||
Preferred Stock |
- |
|
|
|||
Revolver Availability |
|
|
|
Conference Call and Webcast
Emanuel “Manny” Hilario, President and Chief Executive Officer, and
The conference call can be accessed live over the phone by dialing 416-764-8658. A replay will be available after the call and can be accessed by dialing 4123176671; the passcode is 03783315. The replay will be available until
The webcast can be accessed from the Investor Relations tab of The ONE Group’s website at www.togrp.com under “News / Events”.
About
-
STK, a modern twist on the American steakhouse concept with restaurants in major metropolitan cities in the
U.S. ,Europe , and theMiddle East , featuring premium steaks, seafood, and specialty cocktails in an energetic upscale atmosphere. -
Benihana , a leading operator of highly differentiated experiential brands that owns the only national teppanyaki brand in the US. The Company also franchises Benihanas in theU.S. ,Caribbean ,Central America , andSouth America . -
Kona Grill , a polished casual, bar-centric grill concept with restaurants in theU.S. , featuring American favorites, award-winning sushi, and specialty cocktails in an upscale casual atmosphere. -
RA Sushi, a Japanese cuisine concept that offers a fun-filled, bar-forward, upbeat, and vibrant dining atmosphere with restaurants in the
U.S. anchored by creative sushi, inventive drinks, and outstanding service. -
ONE Hospitality, The ONE Group’s food and beverage hospitality services business, develops, manages, and operates premier restaurants and turnkey food and beverage services within high-end hotels and casinos currently operating venues in the
U.S. andEurope .
Additional information about
Cautionary Statement on Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995, including with respect to the impact of the
Investors are referred to the most recent reports filed with the
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (in thousands, except earnings per share and related share information) |
||||||||
|
|
For the three months ended |
||||||
|
|
2024 |
|
2023 |
||||
Revenues: |
|
|
|
|
|
|
||
Owned restaurant net revenue |
|
$ |
81,508 |
|
|
$ |
78,579 |
|
Management, license and incentive fee revenue |
|
|
3,487 |
|
|
|
3,977 |
|
Total revenues |
|
|
84,995 |
|
|
|
82,556 |
|
Cost and expenses: |
|
|
|
|
|
|
||
Owned operating expenses: |
|
|
|
|
|
|
||
Owned restaurant cost of sales |
|
|
18,714 |
|
|
|
18,855 |
|
Owned restaurant operating expenses |
|
|
49,638 |
|
|
|
46,827 |
|
Total owned operating expenses |
|
|
68,352 |
|
|
|
65,682 |
|
General and administrative (including stock-based compensation of |
|
|
7,534 |
|
|
|
7,484 |
|
Depreciation and amortization |
|
|
5,260 |
|
|
|
3,656 |
|
Pre-opening expenses |
|
|
2,914 |
|
|
|
1,299 |
|
Transaction and exit costs |
|
|
1,523 |
|
|
|
— |
|
Other expenses |
|
|
32 |
|
|
|
157 |
|
Total costs and expenses |
|
|
85,615 |
|
|
|
78,278 |
|
Operating (loss) income |
|
|
(620 |
) |
|
|
4,278 |
|
Other expenses, net: |
|
|
|
|
|
|
||
Interest expense, net of interest income |
|
|
2,078 |
|
|
|
1,787 |
|
Total other expenses, net |
|
|
2,078 |
|
|
|
1,787 |
|
(Loss) income before provision for income taxes |
|
|
(2,698 |
) |
|
|
2,491 |
|
(Benefit) provision for income taxes |
|
|
(268 |
) |
|
|
161 |
|
Net (loss) income |
|
|
(2,430 |
) |
|
|
2,330 |
|
Less: net loss attributable to noncontrolling interest |
|
|
(361 |
) |
|
|
(276 |
) |
Net (loss) income attributable to |
|
$ |
(2,069 |
) |
|
$ |
2,606 |
|
Currency translation loss |
|
|
(68 |
) |
|
|
(70 |
) |
Comprehensive (loss) income attributable to |
|
$ |
(2,137 |
) |
|
$ |
2,536 |
|
|
|
|
|
|
|
|
||
Net (loss) income attributable to |
|
|
|
|
|
|
||
Basic net (loss) income per share |
|
$ |
(0.07 |
) |
|
$ |
0.08 |
|
Diluted net (loss) income per share |
|
$ |
(0.07 |
) |
|
$ |
0.08 |
|
|
|
|
|
|
|
|
||
Shares used in computing basic (loss) income per share |
|
|
31,306,417 |
|
|
|
31,677,232 |
|
Shares used in computing diluted (loss) income per share |
|
|
31,306,417 |
|
|
|
32,997,751 |
|
The following table sets forth certain statements of operations data as a percentage of total revenues for the periods indicated. Certain percentage amounts may not sum to total due to rounding.
|
|
For the three months ended |
||||
|
|
2024 |
|
2023 |
||
Revenues: |
|
|
|
|
||
Owned restaurant net revenue |
|
95.9 |
% |
|
95.2 |
% |
Management, license and incentive fee revenue |
|
4.1 |
% |
|
4.8 |
% |
Total revenues |
|
100.0 |
% |
|
100.0 |
% |
Cost and expenses: |
|
|
|
|
||
Owned operating expenses: |
|
|
|
|
||
Owned restaurant cost of sales (1) |
|
23.0 |
% |
|
24.0 |
% |
Owned restaurant operating expenses (1) |
|
60.9 |
% |
|
59.6 |
% |
Total owned operating expenses (1) |
|
83.9 |
% |
|
83.6 |
% |
General and administrative (including stock-based compensation of 1.6% for the three months ended |
|
8.9 |
% |
|
9.1 |
% |
Depreciation and amortization |
|
6.2 |
% |
|
4.4 |
% |
Pre-opening expenses |
|
3.4 |
% |
|
1.6 |
% |
Transaction and exit costs |
|
1.8 |
% |
|
— |
% |
Other expenses |
|
— |
% |
|
0.2 |
% |
Total costs and expenses |
|
100.7 |
% |
|
94.8 |
% |
Operating (loss) income |
|
(0.7 |
)% |
|
5.2 |
% |
Other expenses, net: |
|
|
|
|
||
Interest expense, net of interest income |
|
2.4 |
% |
|
2.2 |
% |
Total other expenses, net |
|
2.4 |
% |
|
2.2 |
% |
(Loss) income before provision for income taxes |
|
(3.2 |
)% |
|
3.0 |
% |
(Benefit) provision for income taxes |
|
(0.3 |
)% |
|
0.2 |
% |
Net (loss) income |
|
(2.9 |
)% |
|
2.8 |
% |
Less: net loss attributable to noncontrolling interest |
|
(0.4 |
)% |
|
(0.3 |
)% |
Net (loss) income attributable to |
|
(2.4 |
)% |
|
3.2 |
% |
_________________________ |
||||||
(1) These expenses are being shown as a percentage of owned restaurant net revenue. |
CONSOLIDATED BALANCE SHEETS (in thousands, except share information) |
||||||||
|
||||||||
|
|
|
||||||
|
2024 |
2023 |
||||||
ASSETS |
(Unaudited) |
|
||||||
Current assets: |
|
|
||||||
Cash and cash equivalents |
$ |
15,374 |
|
$ |
21,047 |
|
||
Accounts receivable |
|
12,172 |
|
|
17,264 |
|
||
Inventory |
|
5,395 |
|
|
6,184 |
|
||
Other current assets |
|
4,646 |
|
|
1,809 |
|
||
Due from related parties |
|
376 |
|
|
376 |
|
||
Total current assets |
|
37,963 |
|
|
46,680 |
|
||
|
|
|
||||||
Property and equipment, net |
|
147,304 |
|
|
139,908 |
|
||
Operating lease right-of-use assets |
|
87,900 |
|
|
95,075 |
|
||
Deferred tax assets, net |
|
15,141 |
|
|
14,757 |
|
||
Intangibles, net |
|
15,305 |
|
|
15,306 |
|
||
Other assets |
|
4,819 |
|
|
4,636 |
|
||
Security deposits |
|
883 |
|
|
883 |
|
||
Total assets |
$ |
309,315 |
|
$ |
317,245 |
|
||
|
|
|
||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
||||||
Current liabilities: |
|
|
||||||
Accounts payable |
$ |
15,819 |
|
$ |
19,089 |
|
||
Accrued expenses |
|
31,525 |
|
|
28,333 |
|
||
Deferred gift card revenue and other |
|
2,006 |
|
|
2,077 |
|
||
Current portion of operating lease liabilities |
|
7,534 |
|
|
6,897 |
|
||
Current portion of long-term debt |
|
1,856 |
|
|
1,500 |
|
||
Other current liabilities |
|
310 |
|
|
266 |
|
||
Total current liabilities |
|
59,050 |
|
|
58,162 |
|
||
|
|
|
||||||
|
|
|
||||||
Operating lease liabilities, net of current portion |
|
113,191 |
|
|
120,481 |
|
||
Long-term debt, net of current portion |
|
70,207 |
|
|
70,410 |
|
||
Other long-term liabilities |
|
771 |
|
|
832 |
|
||
Total liabilities |
|
243,219 |
|
|
249,885 |
|
||
|
|
|
||||||
Commitments and contingencies (Note 14) |
|
|
||||||
|
|
|
||||||
Stockholders’ equity: |
|
|
||||||
Common stock, |
|
3 |
|
|
3 |
|
||
Preferred stock, |
|
— |
|
|
— |
|
||
|
|
(15,051 |
) |
|
(15,051 |
) |
||
Additional paid-in capital |
|
59,504 |
|
|
58,270 |
|
||
Retained earnings |
|
26,815 |
|
|
28,884 |
|
||
Accumulated other comprehensive loss |
|
(2,998 |
) |
|
(2,930 |
) |
||
Total stockholders’ equity |
|
68,273 |
|
|
69,176 |
|
||
Noncontrolling interests |
|
(2,177 |
) |
|
(1,816 |
) |
||
Total equity |
|
66,096 |
|
|
67,360 |
|
||
Total liabilities and equity |
$ |
309,315 |
|
$ |
317,245 |
|
||
Reconciliation of Non-GAAP Measures
We prepare our financial statements in accordance with generally accepted accounting principles (GAAP). In this press release, we also make references to the following non-GAAP financial measures: total food and beverage sales at owned and managed units, Adjusted EBITDA, Restaurant Operating Profit and Adjusted Net Income (Loss).
Total food and beverage sales at owned and managed units. Total food and beverage sales at owned and managed units represents our total revenue from our owned operations as well as the revenue reported to us with respect to sales at our managed locations, where we earn management and incentive fees at these locations. We believe that this measure represents a useful internal measure of performance as it identifies total sales associated with our brands and hospitality services that we provide. Accordingly, we include this non-GAAP measure so that investors can review financial data that management uses in evaluating performance, and we believe that it will assist the investment community in assessing performance of restaurants and other services we operate, whether or not the operation is owned by us. However, because this measure is not determined in accordance with GAAP, it is susceptible to varying calculations and not all companies calculate these measures in the same manner. As a result, this measure as presented may not be directly comparable to a similarly titled measure presented by other companies. This non-GAAP measure is presented as supplemental information and not as an alternative to any GAAP measurements. The following table includes a reconciliation of our GAAP revenue to total food and beverage sales at our owned and managed units (in thousands):
|
For the three months ended |
|||||
|
2024 |
2023 |
||||
|
(unaudited) |
(unaudited) |
||||
Owned restaurant net revenue (1) |
$ |
81,508 |
$ |
78,579 |
||
Management, license and incentive fee revenue |
|
3,487 |
|
3,977 |
||
GAAP revenues |
$ |
84,995 |
$ |
82,556 |
||
|
|
|
||||
Food and beverage sales from managed units (1) |
|
28,104 |
|
30,702 |
||
|
|
|
||||
Total food and beverage sales at owned and managed units |
$ |
109,612 |
$ |
109,281 |
||
_________________________ | ||||||
(1) Components of total food and beverage sales at owned and managed units. |
The following table presents the elements of the quarterly and annual Same Store Sales measure for 2023 and 2024:
|
2023 vs. 2022 |
2024 vs. 2023 |
||||||||||||||||
|
Q1 |
Q2 |
Q3 |
Q4 |
YTD |
Q1 |
||||||||||||
|
1.0 |
% |
(10.1 |
)% |
(7.8 |
)% |
(6.5 |
)% |
(6.0 |
)% |
(6.0 |
)% |
||||||
|
15.4 |
% |
2.5 |
% |
0.7 |
% |
0.7 |
% |
4.9 |
% |
(8.6 |
)% |
||||||
|
5.3 |
% |
(6.8 |
)% |
(5.5 |
)% |
(4.6 |
)% |
(3.0 |
)% |
(6.8 |
)% |
||||||
|
(4.3 |
)% |
(1.5 |
)% |
1.1 |
% |
(3.9 |
)% |
(2.2 |
)% |
(9.7 |
)% |
||||||
Combined Same Store Sales |
1.6 |
% |
(4.7 |
)% |
(3.0 |
)% |
(4.3 |
)% |
(2.7 |
)% |
(7.9 |
)% |
||||||
Adjusted EBITDA. We define Adjusted EBITDA as net income before interest expense, provision for income taxes, depreciation and amortization, non-cash impairment loss, non-cash rent expense, pre-opening expenses, non-recurring gains and losses, stock-based compensation and certain transactional and exit costs. Not all the aforementioned items defining Adjusted EBITDA occur in each reporting period but have been included in our definitions of terms based on our historical activity. Adjusted EBITDA has been presented in this press release and is a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP.
The following table presents a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods indicated (in thousands):
|
|
For the three months ended |
||||||
|
|
2024 |
|
2023 |
||||
Net (loss) income attributable to |
|
$ |
(2,069 |
) |
|
$ |
2,606 |
|
Net (loss) attributable to noncontrolling interest |
|
|
(361 |
) |
|
|
(276 |
) |
Net (loss) income |
|
|
(2,430 |
) |
|
|
2,330 |
|
Interest expense, net |
|
|
2,078 |
|
|
|
1,787 |
|
(Benefit) provision for income taxes |
|
|
(268 |
) |
|
|
161 |
|
Depreciation and amortization |
|
|
5,260 |
|
|
|
3,656 |
|
EBITDA |
|
|
4,640 |
|
|
|
7,934 |
|
Pre-opening expenses |
|
|
2,914 |
|
|
|
1,299 |
|
Stock-based compensation |
|
|
1,358 |
|
|
|
1,320 |
|
Transaction and exit costs |
|
|
1,523 |
|
|
|
— |
|
Non-cash rent expense (1) |
|
|
(248 |
) |
|
|
(31 |
) |
Other expenses |
|
|
32 |
|
|
|
157 |
|
Adjusted EBITDA |
|
|
10,219 |
|
|
|
10,679 |
|
Adjusted EBITDA attributable to noncontrolling interest |
|
|
(262 |
) |
|
|
(189 |
) |
Adjusted EBITDA attributable to |
|
$ |
10,481 |
|
|
$ |
10,868 |
|
_________________________ |
||||||||
(1) Non-cash rent expense is included in owned restaurant operating expenses and general and administrative expense on the consolidated statements of operations and comprehensive income. |
Restaurant Operating Profit. We define Restaurant Operating Profit as owned restaurant net revenue minus owned restaurant cost of sales and owned restaurant operating expenses.
We believe Restaurant Operating Profit is an important component of financial results because: (i) it is a widely used metric within the restaurant industry to evaluate restaurant-level productivity, efficiency, and performance, and (ii) we use Restaurant Operating Profit as a key metric to evaluate our restaurant financial performance compared to our competitors. We use these metrics to facilitate a comparison of our operating performance on a consistent basis from period to period, to analyze the factors and trends affecting our business and to evaluate the performance of our restaurants.
The following table presents a reconciliation of Operating income to Restaurant Operating Profit for the period indicated (in thousands):
|
|
For the three months ended |
||||||
|
|
2024 |
|
2023 |
||||
Operating (loss) income as reported |
|
$ |
(620 |
) |
|
$ |
4,278 |
|
Management, license and incentive fee revenue |
|
|
(3,487 |
) |
|
|
(3,977 |
) |
General and administrative |
|
|
7,534 |
|
|
|
7,484 |
|
Depreciation and amortization |
|
|
5,260 |
|
|
|
3,656 |
|
Pre-opening expenses |
|
|
2,914 |
|
|
|
1,299 |
|
Transaction and exit costs |
|
|
1,523 |
|
|
|
— |
|
Other expenses |
|
|
32 |
|
|
|
157 |
|
Restaurant Operating Profit |
|
$ |
13,156 |
|
|
$ |
12,897 |
|
Restaurant Operating Profit as a percentage of owned restaurant net revenue |
|
|
16.1 |
% |
|
|
16.4 |
% |
Restaurant Operating Profit by brand is as follows (in thousands):
|
||||||
|
For the three months ended |
|||||
|
2024 |
2023 |
||||
STK restaurant operating profit (Company owned) |
$ |
11,122 |
$ |
10,462 |
||
STK restaurant operating profit (Company owned) as a percentage of STK revenue (Company owned) |
|
21.7% |
|
22.1% |
||
|
$ |
2,061 |
$ |
2,501 |
||
|
|
6.8% |
|
8.1% |
Adjusted Net Income. We define Adjusted Net Income as net income before transaction and exit costs, lease termination expenses, one-time stock-based compensation, non-recurring costs, non-cash rent during the pre-opening period and the income tax effect of any adjustments.
We believe that Adjusted Net Income is an appropriate measure of operating performance, as it provides a clear picture of our operating results by eliminating certain one-time expenses that are not reflective of the underlying business performance. Adjusted Net Income is included in this press release because it is a key metric used by management, and we believe that it provides useful information facilitating performance comparisons from period to period. Adjusted Net Income has limitations as an analytical tool and our calculation thereof may not be comparable to that reported by other companies; accordingly, you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.
|
For the three months ended |
|||||||
|
2024 |
2023 |
||||||
Net (loss) income attributable to |
$ |
(2,069 |
) |
$ |
2,606 |
|
||
Adjustments |
|
|
||||||
Transaction and exit costs |
|
1,523 |
|
|
— |
|
||
Non-cash pre-opening expenses(1) |
|
341 |
|
|
426 |
|
||
Other expenses |
|
32 |
|
|
157 |
|
||
Adjusted net income before income taxes |
|
(173 |
) |
|
3,189 |
|
||
Income tax effect on adjustments(2) |
|
(398 |
) |
|
(38 |
) |
||
Adjusted net (loss) income attributable to |
$ |
(571 |
) |
$ |
3,151 |
|
||
|
|
|
||||||
Adjusted net (loss) income per share: Basic |
$ |
(0.02 |
) |
$ |
0.10 |
|
||
Adjusted net (loss) income per share: Diluted |
$ |
(0.02 |
) |
$ |
0.10 |
|
||
|
|
|
||||||
Shares used in computing basic (loss) income per share |
|
31,306,417 |
|
|
31,677,232 |
|
||
Shares used in computing diluted (loss) income per share |
|
31,306,417 |
|
|
32,997,751 |
|
_________________________ |
(1) Non-cash pre-opening expenses relate to non-cash rent expensed during the pre-opening period. |
(2) Reflects the tax expense associated with the adjustments for the three months ended |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240507116980/en/
Investors:
ICR
(646) 277-1224
Michelle.Michalski@icrinc.com
Media:
ICR
(646) 277-1272
seth.grugle@icrinc.com
Source: