STKS - Earnings call transcript Q4 2019 | The ONE Group Hospitality, Inc.

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Operator

Greetings and welcome to the ONE Group Hospitality's Fourth Quarter and Full Year 2019 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to Tyler Loy. Thank you, please begin.

Tyler Loy

Thank you, operator, and good afternoon.

formal today remind will our of that begin discussion our include we remarks, you we part Before forward-looking statements. are place them. statements you forward-looking not future of These performance should not undue on reliance guarantees and that These statements to what actual subject are from to materially expect. could and differ numerous results we cause risks also uncertainties Please also the statements of call. this forward-looking date opinions our note reflect that these of only as publicly information release in We future any to revise undertake no statements new obligation these light or of or to events. forward-looking revisions We to more recent impact filings detailed and SEC discussion operating could financial future refer that our you for condition. of a the our results risks

these During GAAP prepared considered in certain the reconciliations be measures non-GAAP information results our should believe in to to and substitute other our can for refer useful we we call, financial in isolation measures, of performance. or or accordance not will other be GAAP which evaluating measures. with presentation The

and and these For GAAP measures of see food why unit a license manage measures issued reconciliations at we adjusted and to measures release today. discussion earlier such EBITDA owned our these useful, and of and total beverage consider as earnings sales

the With to to like turn Manny? over that, Hilario. I'd Manny call

Manny Hilario

interest and We Tyler, hello Thank you, ONE appreciate in your everyone. Group. continued The

First challenging as is time a this career most executive in I the seen. absolutely hospitality business, have ever

course about has of tough impact pandemic the that precedent and action. difficult guests. team evolving decisions been care have and We we so to an make much very forced The required members Coronavirus our rapidly

using reach us currently in reduce sales operate generating continue are have and determination in in the option. basis. the a to I weekly we country our our takeout throughout very on guests significantly to This delivery to uncertainties and to preserve response workforce $XXX,XXX to In a and between opportunity and markets $XXX,XXX the made restaurants exclusively marketplace, challenging the

publicly want teams them. recognize impressed line their This work amazing by front touched our and I has only and I'm been truly possible to restaurant by and to the efforts. thank

is pandemic strictly health, and of our guests of Our authority. all our are and guidelines we the from federal well-being and safety following top the priority employees the CDC local during and

highlighting much Under normal of call I have XXXX achievements. would spend this our circumstances,

increased international by comparable increase also deal. management and would reviewed at line owned XX% STK and we expanded in the We our X.X% how EBITDA. license restaurants our domestic impressive one Specifically, of top a hospitality XX% STKs company included of sales footprint generated two STK F&B delivered opening which adjusted increase one have

discussed Kona for XX Grill we and our we pleased for under Grill maximize restaurants comparable accretive in with course, portfolio me Instead, increase doing great of XX where ownership. fourth we our and high are were sales X.X% the business We of the quarter. our the are have in acquisition particularly restaurants detail the Kona the stand short brand's to let today how domestic would in term. And managing which share the briefly what the added to performing potential we

to operations as closed. have service locations STK four take-out said Vegas, these provide Orlando all exception as I temporarily restaurants Angeles, the delivery Rico, Las Puerto shifted domestic First, Los earlier, and are we at with and of

over by other weeks. and reduced case We restaurant address this select temporary hours by expect we continue environment or the the each can will to closures days restaurants coming basis in on case impacted and be

in Second, including several of temporarily restaurants our and our Italy international are Doha locations, closed. Milan,

be found Grill on guests Kona can so radio, both STK our experienced it delicious bring food, live radio and the can along with launched time Spotify. home, we've Third, our now

any halted developing have expenditures capital all unfinished we in and cash, restaurants on our preserve To whole.

has venue at the to are that Scottsdale managed staff newest restaurant trained. a management been and location the STK The of hired We although fully our have and hourly look of completed. teams build and out happy been report has and cleared, requirements. licensing permitting The are vile been

We forward to operating United another are the restaurant restaurant in waiting for having the looking we open are to States. STK get first clearance the and

adjustment to business, cost our we to Given the have to make material painful very forced been structure. changes our

Before include actions G&A employees. now very workforce less of our our operating Inclusive than we employees, approximately taking with any X,XXX small are XXX team.

of and deferred to compensation the expenses incentive all payments our executive performance to equity. cash on take bonus XXXX have our We of in our form all based staff their elected team have XXXX

company is in With have Furthermore, structure, our compensation cost I team to great foreseeable directors non-employee and fundamental have this form Board believe our temporary the of we of of equity. that company's we value. believe XXXX by executive show a their of the a liquidity our also long-term reduced future. elected XXX% the take for a support

and to currently continue will million and We business $X.X and liquidity term. have access believe access through its pursuant agreement revolving our cash delivery to have we credit takeout our to additional current ongoing we to

As have in $XX.X of we today, availability. million

In addition have with base U.S. measures, received by make rent on restaurants of payments partners landlords and protection through almost commitments and having our cost revenues. local agreements XX% already comprising to to or law our internal we either or not

in arrangement, And guarantees a three have only with now only and of are XX actively with lease restaurants years. any Kona restaurants landlords We out reminder, working as purchased other four lease our guarantees. Grill exceeding without similar we one from we

at at owed to have We March vendors weeks payments not to XXXX arrangement and amounts amounts any food until XX with for through XX, spread those on old May also XXXX make thereafter. major least all over least be

non-essential all suspended further notice. until have outside We services

payment also are with deferral. to working potential local activities for arrange team this However,

and also opportunities governmentally to of actively us, to are including support all take available working relief We any and coverage. programs insurance advantage

the of. current how impacts take programs federal We are and studying we legislation determine can it advantage the company to

and goes to that restrictions the is are in are will lifted. insurance We claims are saying insurance around making it once complex looking actively the and Coronavirus including time. the policy business representatives our forward applicable to begins ongoing It with claims rebound working interruption mandated also we policy while under business our subside uncertainties take under this without

when ready will We great we be and ready are guests know our going to deal the comes out. for be time

we the their weeks believe cannot financial our Events of and I to resilient Thank truly suspended bring XXXX. we to guidance us when will time have ability operations, you, return in is for strong last back how to the team reiterated couple comes. our business Team. normal and our Since over right reasonably have estimate quickly when

are joining you that any answer Thank all us you happy on may call for to today. Operator. questions I Tyler and the have.

Operator

of comes proceed Please Miller question. with of Piper line Nicole question [Operator Instructions] First Jaffray. your from the

Nicole Miller

the that wanted a Manny, have we've this to out seen. always I built quick ever best and to in again do shout you your once one of case, team,

we okay. and you were thinking right really two the now. team if that's So to I'm of going questions ask

is and second. things point? a currently are the or scenario can burn at cash first difficult than think this How we The how about more worst case

Manny Hilario

great frankly has Thanks, you in Nicole we team everything that the they that in done. for echo the said I and have everything frankly been words have impressive place,

we restaurant very mean thankful for we've mean difficult everything can And that and in in obviously are these I industry but place. nothing so, times put the it. I

we've our to $X the there. have team restaurant. how terms do been we take-out pleasant prepared been in mentioned able We and deploy of well cash on in about in In very as has million And right statements delivery cash surprise frankly, our now.

we statements, of done and as So a prepared to lot about making with have including contracts mentioned we leases some frankly this we at sure we've think long future in in the enough we have as work than drive side that point already prepared cash rather we our possible. of, of actually and as for think foreseeable and terms our the burn is just rearrange reorganized actually it we are we believe

set frankly it's So of the be cash up in and preserving the a now this future. is around game foreseeable right to we've business really way

So as we is way exact we to and long plan we're of that to don't in be or can. out G&A or substantially. be well we've number cut delivery the around have And around as has our to as as model going frankly the down of frankly, what months terms business weeks years an played as

quite be long will we for a think I time. around

would or bullish, our So to like good long tweak business the short call to say term. cash as we as will pretty it about in And we feel model feel around pretty the I stay I continue bullish said, possible. we

Nicole Miller

Okay, that's important commentary.

question where process, to will. will a you've what to applicable like you pieces going am curious that the of be me. shutdown under you're new conditions second we and Walk and be from I us is think The and educated will I everyone process, what last I past on store pre-opening the if outlined move mean to darn close pre-opening pretty this a a through take

get through how So restaurants to this Thank and you board back everybody back you. plans the running? fast and get on pass, and what shall too the you up us walk can do

Manny Hilario

Yes, question. that's a great

So the GM is all are our the delivery that the for did majority thing properties locations. of that working properties operating currently which make the all contemplated and takeout and chef in first sure we for is we model. are and that we of currently U.S. The the executive those

restaurants, us put which multi-unit some so kept of that the high - key to those have volume of take-out some delivery is part currently managers, was were for supporting the model the do we deals to sure back, we of in also our coming make deals supporting So leverage, place essential an that in take-out steam. our individuals and working did of we for

kept also, place of individuals team operating those key you basically a team, the does we've the that core in players players. our all smaller include So if of in XXX

down process down that back we terms everything a ensuring on. And brought POS went ready when closed then to of come the systems very systems, was and mode we kept dining to in thorough rooms restaurants electrical the of in

properties. we was brought the restaurants of our as possible down - move fast that to as literally intent being the So way the on able with the

we then that. And obviously, to have do inventories do available

with in to kept a everybody we've and that early that vendors services with partnership in stay arrangements and is and are understands terms positive, it we we that important when start business I other ourselves the that initiated them, so have that our made that relationships need on relationship in we very notes. positive the and think partners that making our major is prepared the bring communications very sure so of we product part is is

have of I cash relationships utilized make those to like whatever terms we said, positive. keep all we that in forth do sure so resources have And we and now

right in So their the the is it's It's on been to business that core ready systems go. place of group have bring relationships. of combination payroll ability to a the back. having picked a combination now And of then because

and are they very do Last thing so guys have we and profitability. I currently are deck marketing individuals would our operations our they say on is the we that can behind, ability basically multi-talented all instance, to all cross-functional sure for guys, that team lot that it's we vice a that, functions, payroll the in hands versa, distinguish multiple that's of came ex and people so on made left

a of all you kind question, that's but took I to So that. a long through answer short

Nicole Miller

thank best you. Thank Well, we luck. team you. touch. And the the will wish you We and stay in

Manny Hilario

Nicole. Thanks,

Operator

comes the of Management. Cannon proceed question next Wealth Dave Please Your from question. with of line your Cannon

Dave Cannon

on not difficult First Today just path, time Cheesecake like and give the XXX,XXX applaud week basis thank it's operating you're with the continue shrunk what strong monthly assuming to, and and go? such could during for a rent, also confirm is, crisis. you rent to you've is us that so about extremely that your sell know assuming that can I you that. a quickly. And everybody headcount news down pursuing not efforts responding a I you're the Factory saw all, you paying to you your sense it and leadership sounded of for then well employee during burn XXX rate paying trying a same and you

Manny Hilario

frankly individuals do back that of times us for here of back frankly the talent that can with doing Thanks. I've what some get incredible And on but words. because possible and only tough us as it's there we soon earlier, today, not as as to have of possible David, be board as with and soon nice the the track. on and is talent we're said thanks will the we again, as

takeout of is, we're the call business. plus question, this doing, it delivery at week look the I a terms way In right in XXX now burn

Our payrolls to at any modest between, including it, the week. G&A somewhere of in one XXX is XXX the call

disciplined we're including you purchasing that that like and so doing, for to very, just cover produce we cash So in for is replace after only we're plenty need being payroll, the there buying of store. and very fresh other available some nominal needs, stuff really things

still amount that to on of the above there do is this cash a is math you that we period. payroll beyond that if during plan So time the and substantial spend

frankly jurisdictions actually or around So XX% as rents growing or already have you us keep need - XX we we it's Obviously - so. agreements prepared and that in with of U.S. do already landlords In landlords the the the we take XX% for think our where that will for the future. can't XX% and item have to quite is sales, care have we are there. big mentioned foreseeable rent our already made our of, we days I in arrangements place much percentage next of a statements,

that XX% of and the can delivery remaining some this reaching sure do of for some Obviously, Tyler lots that XX% we work we landlords instance, making can rents of landlords. were take-out out we reforms, percentage sales members form protected, have of of and offering other those So to with have the we take now are arrangement. do team XX% to currently XX% and them some to locations you for where of in and out would that

So our kind preference the with landlords. workout right of now deal is amicably to some a

out to of to then else. not have more long the where to we We pay say do arrangements make preserve figure what and And get we with we'll for we're other that to next everyone then do before the just sense point business the going cash. try understanding term again the the ultimately we blindly to

day. what to some left end, and done I and of of done down with Tyler partners. strategy end and is So already we've the other of the work figure that's be those then of There at that the some with do our sit some partners we the work whatever out some will with landlords our landlords is then at more

So the us see process. key we'll key headline headline get will how then here is amicable the and partnership, far that is the in

Dave Cannon

as expect other many far availability. down $XX like restaurant prevent What's preemptively. it? as that you lines it about Do like then draw quickly that that a your or from that line would on sounded million doing you done to and credit that your maybe companies And draw of view rather, existing no on like Is down? potentially how - there could credit you had you holding provision anything have

Manny Hilario

thanks for question. So that

we So we million $X credit have to its facility our on pursuant they terms, facility in draw cannot a million below $X cash unless so cash. the were amount,

until level, we at have for on get we at would availability for at we on we Since $X to we but least So obviously below draw that be we point number, around plenty this of were But the future, are the if above being hat draw now foreseeable facility. $X do million there. or there. the don't way the million and we see don't so

call guess the clause that's facility. hoarding I So on what you would

us. a million it's for So number $X

Dave Cannon

I'll Good you be luck, us your sure through lead and praying I'm you Thank for leadership. for thanks and you thing. will Okay, this guys.

Manny Hilario

your you, support all Thank David, for your prayers as thanks and well. and

Operator

next from Our Lake with Ryan of Capital question line Myers Please Markets. Street your the comes question. of proceed

Ryan Myers

Correct? from to been said me, one make this have right, around $XXX,XXX sure, I sales $XXX,XXX. just to guys First weekly want you heard I

Manny Hilario

and delivery take-out on that's correct, That's sales.

Ryan Myers

much think Okay. of then then going much when think forward change expenses, them about them That's to and going of we how your helpful. And are fixed how are here? you

Manny Hilario

to my previous in substantial mentioned as which we're leaves I to after payroll level, of a that. think $XXX,XXX trying the $XXX,XXX cash keep one amount around responses, I of

now cost. primary of have fixed in a majority that cost staff we that's the consider costs that since the going fixed would think to fixed that I be primary our I as be to the business.

obviously little there'll we where we the that And sure our successful insurance a up them of ones to believe all model, because are insurance and then costs in will with make the depending labor other current be landlords, on primary will we then perhaps and be we which negotiating very again, want stay cost on. the end so insurance we in with fixed utilities keep lot the than other utilities, I policies

with discretionary prepared is cut kind that in we off. future of or have made that And said support from outside else which with vendors statements, them. as we Everything balances out an services arrangements good food vendors our major pretty actually purchases to stretch our and past

beneficial consider be So for we've I already pretty us. what to arranged for arrangements

So and to subject for obviously because on takeout the on delivery and work have that then, product frankly we existing the be XX% the have for probably things mix obviously based delivery all the delivery is about of any short-term intents cost some on that XX% will worry the fees to we'll the for costs price, only range purposes buying we some deliver cost to business on on and to takeout then of other side.

think be any And business our staffing term, So cash down two our structure some of very there'll our some take-out substantially. in we're has do the at G&A time. we units running cut structure, that really that the after leftover nominal, even delivery only is been cost people short people one three maybe remembering that again, from in

now and in about we structure So we run can. as this we long be as we are cost plan good can right as as to

Ryan Myers

then me, to last fourth that's to from quarter how And actually orders? Okay, the go were your delivery in of and much good one hear. sales

Manny Hilario

at go look delivery. if to So the you under and our sales

to Kona already, between in delivery. it's X% Grill, our at we're look takeout So X%

to have are we around we of a built lifestyle projects business centers good have did base really some residential seem which in that have the So it. and

I'll And obviously some a have times, be cautious business our because in consumer these very thinking with take changed. So of those built-in again patterns have we unprecedented only do sites.

we're just so. you have and what So are careful be to them overestimate to doing monitoring obviously people

Although right x and history We these we now, in new how Xth keep I the core Obviously, of marketing team. super marketing marketing are did quarter to still out days. and reality off that it's really have in kind ran is talented our do the a all the of place. figuring of bets the manage team we think a

of us follow our would of noticed real be you have switched digital, to you Instagram or if and And lot on marketing we've that a pursuing time all that. on our

think the very marketing and lot this terms we've after in from team a going actually good I of done thinking channel. switching So of aggressively

pretty, confident So have I team we the pretty foreseeable feel maximize place make sure that that that future. business in the that will in we

Operator

the We session. have call of now question-and-answer I management the to closing turn any the reached remarks. the will end for back

Manny Hilario

message call your everyone you unprecedented and are continued close want These I clearly the be warm for dining. saying in the soon times now, the industry frankly to a with leader to Group. The members with in again today And our Group the in Thank by ONE and all interest us right The back you for thank fine team making teammates very to sending us who also and continue ONE working that world. will the out in a

plan. So we team track back get having again together to on our look soon long-term our back and forward to with

for business. to interest safe So with appreciate touch, a Thank everyone's very I soon. and and and we everyone talk will stay the our your you continue everyone in best do to support you and wish

Operator

This concludes today's conference.

for and participation Thank disconnect have great day. you your at a this time. lines your may You

The ONE Group Hospitality, Inc. (STKS) 26 Mar 202019 Q4 Earnings call transcript