STKS - Earnings call transcript Q4 2023 | The ONE Group Hospitality, Inc.

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Operator

Greetings and welcome to The ONE Group Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.I would now like to turn the conference over to Tyler Loy. Please go ahead.

Tyler Loy

Thank you, operator, and hello, everyone.

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

a presentation other in measures or prepared of be accordance information with the GAAP. considered these for or substitute results not However, as should in isolation

For measures, with managed issued such these operating at to useful, comparable adjusted today.With sales net beverage the earnings these consider adjusted to would call licensed total that, and please of turn measures, units owned Manny profit, see measures over release like EBITDA, along sales income, our food Hilario. the GAAP and discussion restaurant and why we and I reconciliations of as to

Emanuel Hilario

your you begin, team hello, members. joining ONE the each you, dedicated our to to sincerely of would Thank and express for Tyler, like everyone. To We interest I us and appreciate in today Group. my gratitude

and in me best our every Vibe remarkable discussing experiences not fourth casual.Let our Our market unforgettable position time. have restaurant the would be operate high results in every we quarter both solidified to being by by unwavering possible teams, Thanks their guest highlights. end Dining exceptional in to polished we without every our begin to financial and leadership delivering commitment

$XX.X record delivered nearly million EBITDA quarterly increase quarterly last year. record of an we XX.X% versus revenue $XX million, First, and of

we have other points expenses. level by points, initiatives of put driven XXX improved of percentage basis in improvement G&A as cost driven goods to of and XX by restaurant place. XX.X%, cost management Our a cost a increased basis revenue margin XX savings point basis by in controllable

success this our All of to X X EBITDA open million the $XX.X the reinforcing quarter, Southlake revenue.Also us new restaurants, along ability allow our demonstrate of basis weeks. points of of These City, we In pipeline deliver STK In XXX our every with we These to drove opened and their during to X.X% long-term off Kona company-owned belief in our to December, in Charlotte, restaurants are and XX.X% venues October, North and for the STK Utah. in earnings adjusted X EBITDA in Arizona, ROIs the strong for as in EBITDA. an an and Grill in area. bolsters Boston, restaurants a early revenues a power addition opened XXXX industry-leading opened adjusted Kona X starts in Carolina, we shareholders. and we Phoenix, Grill to the increase third Massachusetts development in the STK other restaurants, consolidated our year, of expansion our

run rate future. more EBITDA deliver will into they addition, In the

also the the for looking key just Washington of are XXXX, We towards year. which STK would our priorities to pleased addition D.C., with discuss like opened I today.Now

to continue First, sales. drive

to few on focus a challenging which months and sharp the have value first year of environment, will a pointed The require choppy sales and execution.

on $XX STK Kona have Happy America per with and priced $X $X a an focus $X, both values. of Hour placed Steak on at we our As emphasis person at which for and Night of launch and a Grill, $XX are result, value exceptional

is of continues we price offerings compelling attractive main a a company. velocity part points. and the for the sampling in key Our offer as Happy initiative program of entry The it menu of state one most is our Hour from the the industry, to at accelerate

we business. occasion addition, continue own In special to and holidays the will

point level a are restaurant-level we margins. promotions.Our to modest whose million probably Day, is built normal have XX% for you to and life looking environment. have really our restaurants in we believe believe and first are Of brand to us When for Remember come we for COVID-XX although our the world purchased second Valentine's know, X these basis Easter, year in anniversaries had and us. venues months, love to XX% to AOV purchased, the birthdays new fantastic as address celebrate we quarter, approximately margin with restaurant to overall with $X.X product brand premium restaurants our future.Conversely, the is of in level the AOVs further the XX record on operations margin Mother's and be from to added XXXX across Day assess overlay the profile had consider XXX Seven within celebrated of normalized generate the we opportunity of case-by-case and million innovation we margins, XX the key guests a basis. margins. culinary to the both in As Wagyu possible improvement year more a occasions.During these consider with and impact we around we as Grill and what well we along our of an guest approximate an of that was the the of Kona Kona the we pandemic. restaurants Grills Grill X plan exist building, robust emphasize the to These grips and a digital $X.X we XXXX we have revenues XXXX were at the our Kona restaurants we to as To we we priority and our forward in lines strategies, bounties which the many healthy, with such those the fourth these improve the margin these restaurant marketing experiences, restaurants. messages, locations first capabilities will created Seas be quarter

supplies, restaurant scheduling implemented for improve profitability vendor through to and both maximizing productivity have evaluating focused brands, relationships operating third-party initiatives and on several travel for overall and efficiencies company. profit reducing costs. smart both operating purchasing our and initiatives are These food For we

to the Social outside be vibe and at restaurant growth Tigard, seeing their Coming to developing how our difficult the can you the on momentum in in provide performance, We might flow This X initiatives life venues their licensed. This Grand are. Colorado only interest or use trying Washington Cherry were back company-owned will to these net positively inclusive being Kona back at Grill and are our from As under impacted the Mall, in a restaurants key from will both be fourth will sustain that or is service are models. taken restaurant opened at is for that hotels with opportunities of current through are we to priority Creek Water Aventura, increasing into seeing the providers spending to previous hotels. managed see understand we Salt we started STK restaurants pipeline. managed revert we a open margins. Village There attractor in for COVID-XX Marriott and delivery we our One our continue a the open high-end F&B growth for near neighborhood.Circling future, generated the and managed said, self-funded can the of third model increased activities and focus. has XXXX.Our asset-light cater development cash in year, renew anticipate of to Grill the expect operations. for to business, believe believe the which restaurant, to and a have Oregon side all impact additional the licensed seafood rely needs which That the cities, X hotels, hotel Bridgeport Denver, them XXXX, Aventura quarter more to brands and the X investing pandemic we thing as and restaurant in we of development following for time business, year today. X to it STK guests that is for in Florida time the an new in Hotel located some in Marquis X D.C. licensed company-owned inbound construction to the Kona F&B STK

our for the priority Los interest Cabos increased in both through seeing we fourth return restaurant continue is our repurchases. addition, in award-winning are to key Airport, locations.Lastly, year to share In brands our like for shareholders to airport value

conclude, leverage fantastic from to XXXX.To that an To successfully repurchases, to As $X and Board in a team, well fourth the count restaurant between to this during particularly by our million to previously growth I'm million to results value with I'll via generate managed share the create significant call added repurchases there's mentioned, concluded an job, share with cash additional of balance has which despite XXXX authorized in and day.Now challenging continues we which we pleased opportunity believe quarter shareholder doing turn Tyler. every we a back company's the challenges reduction. environment, the be flow end, our operations dealing $XX

Tyler Loy

Manny. you, Thank

opening million, incentive the X owned Let million from last $XX.X quarter license quarter XX.X% financials pre-pandemic the me offset revenues start and increase in revenue comparable decrease in XXXX. X.X% greater same sales. were million million, by increased attributable increasing base $X.X in revenue The in $XX.X were by discussing sales is X.X% is for the to year. to our owned X.X% our $XX.X million This Consolidated total which quarter detail. fourth our venues partially quarter the of of of $X.X million, X.X% was net in year. comparable in same XXXX, from fourth revenue from our Included increased of last primarily increasing revenues restaurant 'XX. year.Management, fee a $XX.X Total GAAP for compared

XXXX. XX.X% The a of the of compared the net the increase quarter percentage to year. the quarter commodity The fourth payroll, the Our Net $X.X $X.X tax to million from compared general last for owned net STK per $X.X $X.X of the net revenue X.X% of net adjusting quarter quarter $X.XX the increased income wage Income XXXX year. million offset year, XX.X% tax sales benefit or points XXXX, for per in $X.X EBITDA of net the adjusted due year, management, XXXX. $X.X many million or partially the fourth operating was in and to of quarter million XX.X% and improved to percentage points million million rent Lake to reflecting mix fourth compared cost $X.X for a quarter Pre-opening XXX in in or administrative in as XXXX, XX% XXXX to When basis for of or was to expense prior-year reported quarter expenses income Boston expenses for share. operational the menu XX.X% already increased which in XXXX prices. stock-based in the of owned was fourth administrative share, restaurant of expenses income of general of restaurant compensation, to cost due quarter initiatives, EBITDA STK in expense to XXXX, quarter Kona XXXX.Interest basis, fourth City, of October the we quarter non-cash opened was adjusted compared $X.X margin a XXXX the fourth fourth of XX.X% XXXX. restaurant in Charlotte, quarter the million Hospitality adjusted $X.X ONE to $XX.X in compared the per prior expenses to $X.X of $X.X in a revenue general total in have primarily of Hospitality, was million of period. and basis place. Inc. of $X.XX preopening fourth by million, in of XX same Grill quarter the to was Operating Owned as XXXX profit XXX to had per compared inflation. to in $X.XX to income of to share, $X.X operating XXXX million owned in the income of impact fourth Salt fourth million were to Group December XX.X% fourth prior quarter compared Phoenix, XXXX, fourth cost million pricing in basis net both share. an reduction Group in and decreased the rose the of $XX quarter $X.X in income points compared Adjusted restaurant XXXX.On The income ONE net which compared to in were Adjusted STK the fourth was $X.X XX.X% attributable million net to and compared and fourth for related the fourth opened to attributable compared quarter $X.XX million training million and in income prior quarter initiatives Adjusted million the

We year outstanding pursuant XXXX adjusted adjusted and have we of shares a in earnings program. fiscal September Purchases October quarter reconciliation the XXXX. net X.X and in completed X% XXXX, were in under have or purchased our million our EBITDA shares, to tables included buyback of income this fourth program of our approximately release.In

Turning to we subject conditions. finished revolving have and our credit liquidity, in $XX under facility, with to the million million quarter available cash certain $XX.X

fee million. compensation Restaurant of is licensing restaurant with pre-opening income rate revenues Operating expenses the million openings is $XX our GAAP activities venues back associated authorities.Based outside operating of received Adjusted of $XX XX%. million. turn million. owned million. Total between to remind Beginning million to revenues And fund number statements will tax X between percentage of $XX control, million. our to expected to expenses and on expectations as Manny. a Managed, incentive and development million in owned $XXX and of we of plan would our provide the of of of $XX and and XXXX.I $X new to of between given and filings. stock-based As new capital $X between now the today, we to available are our forward-looking as with contractors, landlords, weather and our forward-looking This subject the financial following generated information regarding commentary including Manny conditions, investors revenues, any like issuing We, X revenues call of net million. and $XXX $XX previously some for SEC are control regulatory timing for as allowances to be of approximately of company's mentioned, and commentary to license million project discussed effective restaurant XX%. total period investing $XX from approximately Total risks targets internally I we actual number Total between a million. the landlords and million with G&A, and uncertainties $XX cash.Now EBITDA all as XXXX. plan to subject factors X% approximately to excluding under the and of business. $XX the income now And expenditures, we finally, licensees between macroeconomic add in net factors always,

Emanuel Hilario

you all Thank you, thank today. Tyler, for your and time

we by all long-term for brands to for compelling we our stages in conclude me a Let build Thank interest in the of you saying early Group. continue returns are with high-volume strategy growth as ONE of portfolio your our shareholders.

possible life bring execution say, support would always to be the great of teammates, of I As who our none this mission every without of fantastic day. our

We happy on may the all questions appreciate any today. I and to there. out are Tyler We some to and joining you times that answer you call everyone I have have. forward Operator? look exciting ahead seeing us

Operator

question [Operator first with Instructions] Securities. Wedbush comes Setyan Nick The from

Nick Setyan

more revenue QX get to bridge guys Just Obviously, your the some and be us love see and impacting revenue been if guide. know comment hasn't but the is I what we numbers, on just for you so given maybe to insight can guidance 'XX the around 'XX, great, just it very industry would would could QX between we actually give it helpful QX We data. choppiness the gap quarter-to-date. some extent

Emanuel Hilario

Manny. is this Nick, Yes,

a was on think up going everyone bit high January much as pretty against. was of the clarifying just everyone a the challenging month out, I comps because for comments, just pointed little you

part the So this think beginning that year lap the our the of was toughest probably we of do for year.

So characterize probably that's that. how I would

industry I Tyler, don't about any else? lap particularly situation tough of think we're on the different the year. the So to beginning the anything relative

Tyler Loy

number our in. you where kind are same-store Yes, and QX of come you year of think the like is Nick, how results we kind going the of feel about the full guidance, reflective the alluded as I to to on guidance year the full sales for think

Nick Setyan

Okay. to to All enough. said of sort in Would of right. you you you X X, mind versus X unit will Kona X think And STK guidance terms license. just breaking be? out then actual the is what Fair

Emanuel Hilario

Yes.

we Grills So I Kona think in now. in that X that have guidance, guidance right

Nick Setyan

Got Salt a it. the like new And then Water is Social, concept? this

Emanuel Hilario

Yes. It's a version of seafood STK.

So that'll be in restaurant our the Denver market. third

this neighborhood, and Cherry already is in a will the and our in our a a we'll have downtown. active that So very restaurant category We be neighborhood. second that Creek, there void Creek we Vibe Creek. Grill have Dining in STK Cherry think Cherry in is Kona

that introducing So be will neighborhood. Vibe Dining think of this way a the we great to

Nick Setyan

Smith from Street The question next with comes Mark Lake Capital.

Mark Smith

question me. First for

at of Just can what weekly And they're kind sales into in kind wanted new dig opening talk average and guys you of particular, to up? kind STK. about of volume restaurants

Emanuel Hilario

I restaurants volume. per mean, than up week greater are the new opening $XXX,XXX

new $X think and $XX and So year. units settling are is a in million our I about million the model million, between $XX

significant very high So volumes.

Mark Smith

Okay. QX just positive, I QX, excited at holiday around -- period kind was you any said but commentary back looking and about year-over-year? of the commentary And Valentine's Day comped on that how then any within know you're

Emanuel Hilario

days. prepared I we out pointed I mean, we holidays think our statements, themselves, on had as the fantastic

think Christmas the New Christmas I So Year's Eve was Day, Eve, fantastic.

that So and I -- Thanksgiving fantastic. was would also say

December that business, in very the good. would very was that we see very But didn't the think this bookings. the actual very, And rush a typically terms we -- beginning books like for have I trend last-minute say I things on big see bit did then right But overall, holiday good performance in of see business the of last a event which good for of events, would say less for holidays We year. we terms was So pretty or business the it I of on was company. little last-minute bookings events. the in the

Mark Smith

value choppy Okay. about And here. kind talked then in call of emphasizing market the what you you

and are while what level restaurant-level How in we guidance you some You of driving restaurant about, gave how can the like looks improvements balancing, time, your think proposition margins. for same at kind margin? guys emphasizing value

Emanuel Hilario

we in quarter. Well, mean, did I the fourth that

promotions $X, premium we layers But that value there. I that $X, the So in did restaurants. in $X feature price balance and also remember mean we other with

with that STK balance will promotion. we Seven the promotion So like do of the Seas bounty we at would Wagyu or things the

So products. with the still the value trading to products. we're is barbelling end the up consumer obviously, on premium And actively higher premium participating

that's then how a strong.And So just put to we balance we higher-end into attention a our the part lot balance the of that program. cocktail keeping out big and second is thing of really promotions we that do that

brunch restaurants were holidays, you the cocktails during if So day cocktails. as as well holiday probably you and in part emphasis our on the -- noticed

So with to we accessible -- and balance the restaurants. cocktail some value product that brand premium in the introductions make offerings

Mark Smith

Okay. last And then one me. the for

about as into insight bit, next a can X are these but X I under of any that currently little think kind that Just the openings? next know construction, things shift always timing we of the

Emanuel Hilario

X a construction the longer will be we that even Yes. That restaurant that. little been has about maybe months, in Aventura Florida. is Mall I now in restaurant than mean, for next opening

permits So the you clear it's end. these these the how the progress. is about And in at million-dollar good days out openings again, question

and takes Aventura the seems times, middle it longer the it get for X little to would quarter But it to bit the all clear say, like end second weeks to mid-third rest out. takes third, And open towards Mall's Grill I X of Some of of of And a Salt Social. a Oregon. inspections, quarter, will or the time towards Kona then Tigard, the that we'll fourth the then restaurant beginning the the the the in open.And the quarter. open end is then early of to mid-third quarter development Water we thereafter, immediately of to

in restaurant year. quarter the middle of the have second this a We will there licensed in

Operator

over question-and-answer our conference I back Hilario concludes Manny turn to This closing remarks. like any to session. the for would

Emanuel Hilario

you. Thank

mission our recognize very As I'd its executing always, to level. team for at like commitment and a to the high

our everyone's for I on contributions And great all look Everybody, call also you then you have restaurants. your thank for appreciate a be So seeing today that. to in I here and the forward time day. to

Operator

conference you The now Thank presentation. for attending today's has concluded.

You may disconnect. now

The ONE Group Hospitality, Inc. (STKS) 14 Mar 242023 Q4 Earnings call transcript