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01/09 19:53
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary shows strong financial performance with improvements in net income, operating income, and EBITDA. Despite some macro pressures, the company has a solid cash position and no debt. The Q&A section reveals positive sentiment towards strategic initiatives, like IP collaborations and new unit openings, although management's guidance is cautious due to external pressures. Given these factors, along with optimistic guidance and strategic plans, the stock price is likely to see a positive movement, especially if the market cap is small, amplifying the reaction.
Total Sales $79.4 million, up from $66 million in the prior year period, representing a comparable sales growth of 0.2%. This growth was led by traffic growth of 0.5% and partially offset by price and mix of negative 0.3%.
Cost of Goods Sold (COGS) 28.4% of sales, compared to 28.5% in the prior year quarter. The slight improvement was due to effective purchasing strategies mitigating higher ingredient costs.
Labor Costs 31.1% of sales, improved by 30 basis points from 31.4% in the prior year period. This improvement was achieved despite ongoing labor inflation, through operational efficiencies and system implementations.
General and Administrative (G&A) Expenses 11.7% of sales, down from 20.3% in the prior year quarter. The decrease was primarily due to the lapping of litigation costs incurred during the prior fiscal year, partially offset by higher compensation-related expenses.
Operating Income $1.5 million, compared to an operating loss of $5.8 million in the prior year quarter. This improvement was mainly due to lower G&A and impairment expenses.
Net Income $2.3 million or $0.18 per share, compared to a net loss of $5.2 million or negative $0.46 per share in the prior year quarter. The improvement was driven by lower G&A and impairment expenses.
Adjusted Net Income $2.5 million or $0.20 per share, compared to $1 million or $0.09 per share in the prior year quarter.
Restaurant-Level Operating Profit 19.8% of sales, compared to 20.9% in the prior year quarter. The decline was due to sales deleverage and higher marketing costs.
Adjusted EBITDA $7.4 million, up from $5.5 million in the prior year quarter, representing an annual adjusted EBITDA growth of over 30%.
Cash and Investments $92 million in cash, cash equivalents, and investments, with no debt, as of the end of the fiscal fourth quarter.
Robotic dishwasher: Secured commercial use certification and began installation in eligible restaurants. Initially expected to retrofit 5-10 restaurants, but now planning to retrofit approximately 50 out of 82 existing restaurants. Expected labor improvements of approximately 50 basis points for retrofitted restaurants.
Rewards program update: Introducing status tiers to the rewards program, marking the first major update since its launch. Exploratory research is ongoing to determine effective incentives.
Reservation system: Completed revisions and plan to market the system to non-reward members starting fiscal Q2 2026.
New market entries: Opened first units in Salt Lake City, Utah, and Boulder, Colorado, with strong performance. Opened additional units in Arcadia and Modesto, California, and Freehold, New Jersey.
Expansion plans: Plan to open 16 new units in fiscal 2026, maintaining an annual unit growth rate above 20%. Six units currently under construction.
Labor cost management: Labor as a percentage of sales improved by 30 basis points to 31.1% despite ongoing labor inflation, achieved through operational initiatives and system implementations.
Cost of goods sold: Improved to 28.4% of sales from 28.5% in the prior year, despite tariff pressures.
Unit expansion strategy: Focused on smaller DMAs (Designated Market Areas) to capitalize on unexplored opportunities.
Profitability focus: Achieved over 30% annual adjusted EBITDA growth and improved adjusted net income, despite a volatile consumer environment and tariff pressures.
Tariff Pressures: The company faced tariff pressures throughout the year, negatively impacting top-line results and restaurant-level margins.
Volatile Consumer Environment: The volatile consumer environment posed challenges to the company's performance.
Labor Inflation: Ongoing labor inflation increased costs, though partially offset by operational initiatives.
Higher Ingredient Costs: The company faced higher ingredient costs, requiring negotiation efforts to mitigate the impact.
Sales Deleverage and Marketing Costs: Other costs as a percentage of sales increased due to sales deleverage and higher marketing expenses.
Tariff Impact on Cost of Goods Sold: Tariffs contributed approximately 70 basis points to the cost of goods sold.
Regional Sales Variability: Comparable sales in the West Coast market were negative, indicating regional variability in performance.
Total Sales: Expected to be between $330 million and $334 million for fiscal year 2026.
New Unit Openings: Plan to open 16 new units in fiscal year 2026, maintaining an annual unit growth rate above 20%.
Capital Expenditures: Average net capital expenditures per unit expected to approximate $2.5 million.
General and Administrative Expenses: Expected to be between 12% and 12.5% of sales for fiscal year 2026.
Restaurant-Level Operating Profit Margins: Expected to be approximately 18% for fiscal year 2026.
Rewards Program Update: Introducing status tiers to the rewards program, with exploratory research underway to determine effective incentives.
Reservation System Marketing: Plan to begin marketing the updated reservation system to non-reward members starting fiscal second quarter.
Robotic Dishwasher Rollout: Expect to retrofit approximately 50 existing restaurants with robotic dishwashers, with the majority of the rollout during fiscal year 2026, leading to labor improvements of approximately 50 basis points.
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The earnings call reveals mixed signals: increased net loss and decreased margins are negative, but the company has no debt and expects positive comps in Q2. The decoupling of the reservation system and successful promotions are positive. Tariff impacts remain a concern, though potential relief could improve costs. The strategic plan for FY26 shows growth potential, but unclear guidance on pricing and long-term growth targets tempers optimism. The overall sentiment is neutral, with no extreme catalysts to suggest significant stock price movement.
The earnings call summary shows strong financial performance with improvements in net income, operating income, and EBITDA. Despite some macro pressures, the company has a solid cash position and no debt. The Q&A section reveals positive sentiment towards strategic initiatives, like IP collaborations and new unit openings, although management's guidance is cautious due to external pressures. Given these factors, along with optimistic guidance and strategic plans, the stock price is likely to see a positive movement, especially if the market cap is small, amplifying the reaction.
The earnings call reveals strong financial performance, with reduced G&A expenses and no debt. Product development is robust, with successful new store openings and promising IP collaborations. The reservation system shows potential for further sales improvement. Despite some uncertainties like tariffs, management is optimistic, and the company maintains a strong growth trajectory. The Q&A session reinforces positive sentiment, highlighting improvements in operational efficiency and new initiatives. Overall, the positive aspects outweigh any concerns, suggesting a likely positive stock price movement.
The earnings call revealed missed earnings expectations and negative comparable sales growth, with additional pressure from inclement weather and tariff uncertainties. Despite some positive operational updates and a share repurchase program, the overall sentiment remains negative due to financial underperformance and market expansion risks. The Q&A highlighted management's uncertainty regarding tariffs and supply chain impacts, further contributing to a negative outlook. Given these factors, the stock price is likely to experience a negative movement in the coming weeks.
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