Loading...
01/11 03:20
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals a decrease in total revenues and increased expenses, leading to a higher net loss. The Q&A section highlights uncertainties around debt restructuring and reduced store opening targets. Despite some positive developments like improved margins at Twin Peaks, the overall sentiment is negative due to financial losses, restructuring delays, and reduced growth expectations. The lack of clear guidance on debt restructuring further contributes to the negative outlook, suggesting a potential stock price decline over the next two weeks.
Total Revenues $140 million, a 2.3% decrease from $143.4 million in last year's quarter. This was driven primarily by the closure of 11 underperforming Smokey Bones locations as planned, the temporary closure of 2 Smokey Bones locations for conversion into Twin Peaks lodges and lower same-store sales, partially offset by revenues generated by our new Twin Peaks Lodges.
General and Administrative Expense $42.7 million in the quarter, an increase of $8.2 million from $34.5 million in the year-ago quarter. This increase was primarily due to a $6.9 million store closure reserve, a $1.4 million noncash impairment of fixed assets related to the closure of underperforming Smokey Bones locations, and higher noncash share-based compensation expense related to the public listing of Twin Hospitality Group earlier this year.
Cost of Restaurant and Factory Revenues $94.6 million in the quarter, a decrease from $96.8 million in the prior year. This was primarily driven by the closure of underperforming Smokey Bones locations, the closure of 2 Smokey Bones locations for conversion, and lower same-store sales, partially offset by wage and food cost inflation.
Advertising Expense $12.2 million in the quarter, an increase from $10 million in the year-ago period. This varies in relation to advertising revenues.
Total Other Expense (Net) $41 million in the quarter compared to $35.8 million in last year's quarter. This consisted primarily of interest expense.
Net Loss Attributable to FAT Brands $58.2 million or $3.39 per diluted share compared to a net loss of $44.8 million or $2.74 per diluted share in the prior year quarter. On an as-adjusted basis, the net loss was $45.4 million or $2.67 per diluted share compared to $38 million or $2.34 per diluted share in the prior year quarter.
Adjusted EBITDA $13.1 million for the quarter compared to $14.1 million in the year-ago quarter. This reflects a decline in same-store sales and other operational factors.
New Co-branded Locations: Opened first co-branded Roundtable Pizza and Fatburger location in Rancho Cordova, California, doubling weekly sales and transactions. Approximately 50 co-branded locations are in the development pipeline.
New Stand-alone Openings: Roundtable Pizza opened its first Colorado location and a third location in Las Vegas. Hot Dog on a Stick opened at Downtown Commons in Sacramento.
International Expansion: Johnny Rockets opened 7 new locations in Iraq, Chile, UAE, Mexico, and Brazil. Fatburger announced a return to Japan with 4 locations planned in Okinawa over the next 5 years.
Digital Sales Growth: Year-to-date digital sales increased 19% from Q2 to Q3.
Franchise Development Agreements: Secured over 190 agreements year-to-date, contributing to approximately 900 committed locations scheduled to open over the next 5 to 7 years, potentially generating $50-$60 million in incremental earnings.
Strategic Partnerships: Partnership with Virtual Dining Concepts to make Great American Cookies available for delivery from Chuck E Cheese locations nationwide, targeting 500 additional locations by year-end.
Cost Savings: Achieved $10 million in SG&A reductions and paused dividends, preserving $35-$40 million annually in cash flow. Dismissal of legal cases provides $30 million in additional annual savings.
Debt Restructuring: Advancing plans for a $75-$100 million equity raise at Twin Peaks to pay down debt and fund new unit development.
Manufacturing Scale-up: Georgia production facility generated $9.6 million in sales and $3.8 million in adjusted EBITDA during Q3, operating at 45% capacity. Partnership with Virtual Dining Concepts aims to increase production volume.
Leadership Changes: New leadership appointments at Twin Hospitality Group, including President, COO, Chief People Officer, and Chief Marketing Officer, to drive growth and operational excellence.
Legal and Regulatory Challenges: The company recently resolved significant legal matters, including DOJ charges and Delaware derivative cases. While these resolutions provide financial relief, they highlight the potential for future legal and regulatory risks.
Debt and Financial Restructuring: The company is actively negotiating debt restructuring and plans a $75-$100 million equity raise to pay down debt. High interest expenses and the need for financial restructuring pose risks to cash flow and long-term financial stability.
Operational Costs and Closures: Closure of underperforming Smokey Bones locations and associated costs, including a $6.9 million store closure reserve and $1.4 million noncash impairment, indicate challenges in managing operational efficiency.
Same-Store Sales Decline: Despite narrowing the decline, same-store sales are still down 3.5%, which could impact revenue growth and profitability.
Economic and Industry Headwinds: The restaurant industry continues to face economic challenges, including wage and food cost inflation, which could pressure margins.
Execution Risks in Expansion and Co-Branding: The company has ambitious plans for organic expansion and co-branding, but execution risks, including delays or underperformance of new locations, could impact growth projections.
Dependence on Asset-Light Model: The company’s reliance on an asset-light model for growth, while cost-effective, may limit control over franchise operations and quality.
High Advertising and Administrative Costs: Advertising expenses increased to $12.2 million, and general administrative expenses rose significantly, driven by store closure reserves and share-based compensation, which could strain profitability.
Equity Raise: The company is advancing plans for a $75 million to $100 million equity raise at Twin Peaks to pay down debt and fund new unit development.
Dividend Pause: The dividend pause remains in effect, preserving $35 million to $40 million annually in cash flow.
Cost Savings: The dismissal of the DOJ case and the resolution of derivative matters provide at least $30 million a year in additional annual savings. The company has already executed more than $10 million of SG&A reductions and continues to look for additional savings.
Debt Restructuring: The company is actively negotiating a debt restructuring with noteholders to reduce debt and achieve positive cash flow in the coming quarters.
New Unit Development: The company targets 80 new openings in 2025, with 60 locations opened year-to-date. Over 190 franchise development agreements have been secured year-to-date, contributing to approximately 900 committed locations scheduled to open over the next 5 to 7 years. These units are expected to generate $50 million to $60 million in incremental earnings.
Co-Branding Expansion: The company has approximately 50 co-branded locations in the development pipeline, with significant expansion potential across California and beyond.
International Expansion: Fatburger is returning to Japan with a new franchise agreement to open 4 locations in Okinawa over the next 5 years, with the first restaurant slated to open before year-end.
Remodeling Plans: The company plans to complete 100 remodels in 2025 to refresh brand presence and enhance customer experience.
Digital Sales Growth: Year-to-date digital sales increased 19% from Q2 to Q3, hitting a new record high.
Manufacturing Scale-Up: The Georgia production facility is operating at 45% capacity, with expansion potential at low incremental cost. A partnership with virtual dining concepts aims to make Great American Cookies available for delivery from Chuck E Cheese locations nationwide, targeting 500 additional locations by year-end.
Dividend Pause: The company has paused its dividend program, preserving $35 million to $40 million annually in cash flow.
The earnings call reveals a decrease in total revenues and increased expenses, leading to a higher net loss. The Q&A section highlights uncertainties around debt restructuring and reduced store opening targets. Despite some positive developments like improved margins at Twin Peaks, the overall sentiment is negative due to financial losses, restructuring delays, and reduced growth expectations. The lack of clear guidance on debt restructuring further contributes to the negative outlook, suggesting a potential stock price decline over the next two weeks.
The earnings call reveals several challenges: a 6.5% revenue decline, widening net loss, and increased expenses. The executive transition and paused common dividends add uncertainty. Despite a strong franchise pipeline and debt reduction plans, these are overshadowed by market apprehension and vague management responses in the Q&A session. The announced equity raise and paused dividends could further pressure the stock. The negative sentiment is reinforced by the lack of strong positive catalysts or partnerships, leading to a likely negative stock price reaction.
The earnings call reveals several negative factors: significant net loss, declining revenues, and increased operational costs. Despite some positive elements like brand expansion and dividend distribution, the high debt level, economic pressures, and competitive challenges overshadow these. The Q&A section highlights additional concerns, such as delays in openings, litigation costs, and unclear management responses. These factors, combined with the absence of a buyback program, suggest a likely negative stock price reaction in the short term.
The earnings report reveals significant financial challenges, including a net loss of $67.4 million, declining revenue, and increased debt, which are concerning. The Q&A section highlights operational risks and competitive pressures, with management providing vague responses about litigation costs and future brand strategies. Despite a dividend distribution, the commitment to debt reduction and lack of clear guidance suggest financial instability. These factors, along with a significant debt load and restructuring risks, indicate a negative sentiment, likely leading to a stock price decline in the near term.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
