FAT - Earnings call transcript Q2 2019

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Operator

Good afternoon, ladies and gentlemen, and thank you for standing-by. Welcome to the FAT Brands Inc.

Second Quarter 2019 Earnings Conference Call. At this time all participants have been placed in a listen-only mode. [Operator Instructions] Please note that this conference is being recorded today, August 13, 2019.

FAT and President Hershinger. Chief from Officer, Chief call Wiederhorn; Andy Financial today’s Brands and are Executive On Officer, Rebecca

would proceed. turn Gross to now over I Raphael to the of conference Please ICR. like

Raphael Gross

should Thank you, afternoon, Investor be to good Release operator, Relations can website earnings which on in have the section. now, release, Press everyone. our found access By and everyone our at ir.fatbrands.com

and forward-looking include be statements reliance that Before not we part everyone indicated forward-looking forward-looking due begin, statements. uncertainties. may today discussion should them. by remind future These I of statements those results of to will are undue guarantees materially risks performance placed need our therefore, number from a differ these Actual to and upon not of

not forward-looking later these does Company statements update to date. undertake a at The

the other For and results press conditions future more discussion a filings. detailed SEC that release could impact today’s operating risks please earnings and see financial of

call, be today’s Reconciliations financial During release. of information today’s discuss considered GAAP. we should results The as substitute GAAP prepared not with in are in this measures for our useful believe accordance in presentation additional a be comparable non-GAAP in performance. which measures, or evaluating isolation to the available Company may can earnings

call now and the would I like Wiederhorn, to over President Andy to turn Chief Executive Officer.

Andy Wiederhorn

joining today. us Raphael. you, for and afternoon, Good you Thank thank everyone,

excited we our results the me with for express second are our reviewing how recent let Before acquisition. quarter, most first

sellers’ Elevation originally funded through locations In million was The the combination internationally. late in Burger of U.S. $XX of Elevation consisting of June, closed across conceived notes XX Burger franchise purchase we cooked for prepared on Burger cash. heart-healthy and the healthier acquisition olive was Hess and that fries authentic delivering a better XXX% certified free-range are the oil fresh-cut beef food. Hans environment. as USDA burger consumers offering, by grass-fed, organic for XXXX in Elevation and offers a sustainably and

providing next in partner authentic, food own ingredients this with tasty thrilled of aligns matter guests Their and chapter. with we our commitment on slogan to them are fresh, with

strategy our resources where reflects propel and leverage expansion. acquisitions transaction seeking and domestic the expertise international our brands of synergistic to out can This we extensive

Franchise We opportunity to FAT million best and XXXX remain warrants. offering commencement $XX On common of the retail to stock platform. Brands basis we is consolidate confident on this of X, and onto a up June purchase announced we preferred brands conducted being and have of significant the in investors. stock available The offering an non-convertible efforts institutional to

to exercisable B up and of an Each at Cumulative an common Series warrants of Series the stock. a purchase XXX,XXX share. aggregate stock shares shares Stock to warrant X.X shares of by We million common X.XX% Stock X.X will of price are $X.XX be of accompanied Preferred Preferred per initially offering exercise to B purchase of

will qualification SEC, to imminently. five close of anniversary commencing warrant which conditions the and upon immediately subject closing issuance. will customary basis date Each be year offering a rolling from exercisable will on expect expire we the The on

operating only June Keep Elevation top our the reflect of to in quarter report pleased G&A the that XX, we for our acquisition robust was adjusted expenses mind by equally that the second two Turning performance. matched that and line. results an approximately are our expanded now in leverage in quarter second our EBITDA closed to we on growth we itself, financial of on revenues so increase weeks

Wings of year. rose driven wide of system in Grill the last were July by & sales Hurricane primarily Our XX.X% and acquisition

number it note our given While report the store long-term, same to over increasing we of following. not sales intention is brand the by brands, our

mid brand since a single-digits. was experienced the summer. last At in brand of has Hurricane we quarter, last took the the the time the mentioned I dramatic acquisition, As turnaround comping over negatively

a a same-store quarter. rose advertising in with X.X% Hurricane’s launch However, new second of sales the campaign,

slightly impacted were in quarter. XXXX by negative and quarter negative in Fatburger’s Maria. restaurants same-store in positively lapping the year in as of residents delivery many X.X% base very aid a against performance previous second was served quarter, with our its QX impacted Rico, Steakhouse sales in restaurants the to located strong home comping following are the quarter in also our certain a as Hurricane promotions providers Puerto this The last brands XX of year's by falling and resulting were as Rico workers. There are slightly performance Puerto same-store sales the third-party

by sales normal more fell Now levels, resulting to the returning X.X%. same-store

commit similar rightsize for ran will the direct We are trends traffic to franchisees Steakhouse Ponderosa our and advertising program we and and those Buffalo's we efforts sales marketing Hurricane for to an Bonanza. and encouraging to what believe

As brands. sales key we reminder, continue focus on traffic drive across initiatives our a strategic to growth to four and designed

space and which Postmates with believe First, deliveries kinds delivery, in and the testing third-party of delivery for we programs has were successful Uber still partner of been the us, a we potential. we are all pioneer stages in incredibly beginning Eats,

in it brands restaurants, it that is noting Delivery our mid-stream and not yet across have restaurants. all of market are our we in other has Fatburger implemented where available we been in every implementing

material conversion that with locations. that co-branded certain Restaurants program This the remodels our sales believe Second, of significant CapEx sustainable. in into locations undergone we experienced program. increases have are coupled is remodel have

that in with co-branding in to estimate stores to franchisee. cost We average the compared minimum to stand-alone incremental XX% unit results increase volumes XX%

are through brands, into and across extend Burger Steakhouse newly the innovation and Burger. brands to currently our reach at Yalla we Express, Impossible plan Buffalo's of menu our our have Third, in the the Fatburger, all Elevation a brands, Buffalo's and working and acquired menus we Hurricane

brands we to existing on lastly, franchisees. to cross-selling focus will continue And

physical virtual the We sales initiatives have our same-store strong as these a very We eager believe well franchisees as for strategic will are through drive around across restaurants of network new world kitchens. growth through growth increased brands. who

and new Trout and and the Columbia. Run, eight British during Huntington Express restaurants franchisees quarter. Monrovia, A opened Beach, California Buffalo's Fatburger Pennsylvania and our front, Langford, Pine development the co-branded On Centre Glendora in

XXX Arizona. one ended the to We Mall quarter in the across addition Tempe, China, In eight China with restaurants Fatburger our Beijing, worldwide brands. World in and

quarter, the Subsequent end opening Pacific by of in of to we've the Hill, Fatburger Elevation Mall in opened the a franchisees locations China, a in in year basis, restaurants, Burger Cherry Fatburger Jersey and franchisees have XX New locations year-to-date XXXX. Place so Fatburger Century XX another sixth and an on Beijing opened far comparison Kuwait. three the during the franchise of additional Coast marking On full opened East and

this to XX year. expect to continue approximately open our We franchisees in units total

very consisting of XXX in And new deals restaurants it we seek remains and On to be franchisees. worldwide over development addition, yet both pipeline, existing strong the new development to built. continue with

A announced quarter, deal several the development unit Dallas-Fort and development Isleta in in Worth throughout market, co-branded They Dallas, for in deal new Houston, locations development Casino deal Resort partnership California. Fatburger for unit New Northern second deal XX for the development Hills a Buffalo's unit include Antonio, development & deals. in deal Canada, Mexico three for the with Texas. San Albuquerque, Casino Rolling Austin, co-branded Fatburger XX During and a we development in a in locations Express Fatburger

this to and continues we As even in grow you expect greater can fuel, our see, to pipeline robust expansion XXXX. unit pipeline

was We million total the year through year million, XXXX. $XX $X Adjusted first for the continue EBITDA full to bringing expect million. $X.X to of adjusted EBITDA the million to the $X.X half of annualized

So $X you bridge the million help $XX the let to me number. gap to million

anticipate Based revenue opened. the on our of $X As we development fees stores uplift have an for and you opening another been year, remainder basis. royalties $X as million annual know, we store franchise once million can to for in the only on the recognize pipeline fees of

franchises convert thereby us operating growing and restaurants Additionally, and acquire and stores franchise augmenting resale fee our our refranchising our into locations, or opportunistically streams. program revenue royalty count allows to franchise

from income We additional to million are beginning is million on basis. of which annualized anticipated program, EBITDA generate to our $X.X refranchising recognize to $X.X an incremental

additional expected million. get you EBITDA looks each was $XX The fees. figure. another included not That $X.X full to of the opening million and elements annualized estimates $XX store $X in previously our million note acquisition franchise to and and of in EBITDA timing the add us combination to to up of gets could royalties, $X Burger to from Elevation million to these year million And fees the

for In positioned summary, are the ahead opportunities we growth. for FAT well are considerable Brands and

We have dynamic smoothly platform and of strong management a and brand capable new brands. cost-effectively integrating

in healthy and to have place in we initiatives come. we development We sales strategic for organic several will pipeline our years a growth same-store have drive fuel brands that will existing growth many growing that and believe

on would future pipeline our acquisitions Our leverage equally acquisition on synergistic for with progress updating forward our several opportunities calls. to robust you that platform. We look is

greater quarter over call to review And to Officer, detail. I’d with Hershinger, second Chief the in Rebecca our to like turn that our Financial results

Rebecca Hershinger

increase and Andy. from XX.X% second in increases driven The royalties, revenue as XXXX as quarter fees. franchise of $X.X acquisition the XXXX. was an resulting of the well advertising of quarter million primarily Total Hurricane increase the of Thanks, in by the and increase second in $X.X was million, in fees

As is in excluding quarter $X.X our in profitability. $X.X of XXXX. in XX.X% no was second to offset of advertising revenue you Revenue, impact advertising directly know, the from quarter, million advertising second fee million by increase an resulting the expenses,

and quarter These million from were G&A costs quarter, XXXX. of in advertising million $X.X and expenses Cost include and of net restaurant refranchising expenses revenue. costs the expenses expenses, $X.X increase second an the of

In revenue, compared $X.X are the in expenses, $X.X quarter the to million to totaled fee $XXX,XXX second second in explained from XXXX. increased which of the $X.X quarter $X XXXX. million XXXX Advertising the I of quarter to million million quarter advertising before, in of XXXX, – second equal of G&A second

second XXXX. doubled refranchising last second $X were in during $XXX,XXX quarter activity quarter quarter with more EBITDA the in second restaurant net to of million XXXX Adjusted compared quarter $XXX,XXX and year. than the of second to revenue of expenses the comparable no in costs Our the

adjusted XXXX. net The of and balances. income percentage million by expense the second the expenses expense This of quarter-over-quarter total quarter of interest was interest debt second $XXX,XXX. net Other inclusive expenses advertising driven expense. to of included other improved excluding fees, $X.X $XXX,XXX a in for second and in the increase higher of $XXX,XXX to of in were XX.X% compares quarter second of from XX% our quarter $XXX,XXX interest As other the net EBITDA in XXXX, XXXX for of revenues, quarter XXXX in

provision recorded as for quarter taxes quarter income of million provision $X.X the of in second the a $XXX,XXX compared for of income to We for second XXXX, a taxes XXXX.

to sharing liability As tax file returns Cutter income Fog you a company Cutter permitted state have whereby Capital with tax return. it company parent agreement law, Group, extent XXXX, XX, that October will current consolidated and our separate into the subsidiaries. the its company by been pay know, entered amount the had company, effective Fog and Fog with a the the will tax would filed federal Cutter its And applicable

a quarter Net loss second quarter diluted per or compared in as $XXX,XXX share. of income $X.XX share of was second $XXX,XXX loss or diluted $X.XX the of to in the XXXX per net of XXXX

minutes for quarter recorded we majority As of a is million, I $X.X few ago, a provision the in of taxes the non-cash. explained income which

cash, sellers’ In we capital term resources, receivables quarter liquidity sellers’ Elevation ended the preferred $XX.X to in in $XX.X million debt, acquisition. of million of loan notes and terms $X.X and and a in in redeemable stock outstanding net the related with million $XXX,XXX

the our line that, you and remarks to concludes questions we for answer are may open any With now happy Operator, have. questions. this please prepared

Operator

Our Instructions] Cohen, is Investor. first Please Thank [Operator from you. proceed. question Private Marty

Marty Cohen

are How Andy. Hi you?

Andy Wiederhorn

you? how Marty, are

Marty Cohen

of Pretty question. major A good, questions quick and couple one Andy.

As along sometimes FAT said might you merger I and be we and that, with we’re moving we know about the to… spoke FCCG able how

Andy Wiederhorn

professionals public business. new accounting our audit. The in now. extensive audit the they’re exited of in middle to the And It’s up Fog hired the the are quite auditors you. accounting believe update firm in me let previous May, Cutter of they’re speed, I a of back the middle we project. Fog Sure, that Cutter as an company

the in of with we related the of of shareholder all the effective end of turn finish can that period figuring the completing statutory of and details they by notice merger out month vote the and that the the year. end and and then aim the hoping it the year, to by We’re it coming that making

give the once done, pretty specifics until track. but able more know So on audits we to we’re pretty much track. be we’re I much then, by on time the would you

Marty Cohen

All right.

So to merger, we’re board on do correct? that

Andy Wiederhorn

it approve to and it. vote to have boards both Right, shareholders vote have and approve and

and just – moving will not to obviously we of we’re forward like it right. it think in start still as it. we that’s fine. are we we’re think it. I I have don’t But the anyway, the It’s as sounds all can fast vote’s like going But, middle

it. the middle in of We’re

Marty Cohen

if some on know, board maybe has liquidity we need stock plus to us give the the disaster. an you bring I absolute start been shareholders

Andy Wiederhorn

agree. I

Marty Cohen

being ever you X the buying thought about of some back IPO? about through points was Have the stock down

Andy Wiederhorn

thought have some certainly cost to our about gets We until also use the of what it’s question going and are do not to we limits limit. refinance and subject to completed, we’re it. There out not the But of do can to that. regulatory capital cash

Marty Cohen

one and the Okay, the to far thing. as as last stock dividend the dividend situation How the is – common goes shareholders?

Andy Wiederhorn

Yes.

which disagreement the some pay it of the cash costs to dividend back we’ve a to amongst the until borrowing decided or So line. pay whether not about shareholders had in come stock versus in we not

policy completed right of then just hold. on until dividend board the as So it’s address we’ll now we part as a just But the refinancings that. waited, and

Marty Cohen

me. That’s it for

Just the moving whole stuff think, this through to stop key that forward. FCCG that’s I merger goes

Andy Wiederhorn

Thank you.

Marty Cohen

think As good I far you’re job. as, a doing

Operator

next from with Our Please Mutual your with is Trust Dunn question Company. Lenny proceed question.

Lenny Dunn

Sure. I’m reasonable a of you I that [indiscernible] I’m there that get – have it’s that is the money and questions. this have high use that a assuming, debt Is can get of My preferred of if rid rate. done with you assumption? interest me the very concern wrong, tranches get that interest high correct couple and extremely first is you rid to

Andy Wiederhorn

approve The it. in The has they’re – offering that to things. is stock early the It ready June. was of couple indicated preferred filed SEC

go tomorrow. However, our stale numbers

Fund reasonable move to have a the we retire capital offering. in qualified be I with shares as week, filed that to this to of yes, updated that re-file XX-Q are will that source data the And believe next a preferred tomorrow, be offering the forward loan. to So attractive and so those at by Lion and with we’ll cost able

in We see capital process active with but as the hand, the lowest an want be offering also stock refinancing cost sheets have we seems that debt – because to even well goes underway preferred well with term how to today.

debt – debt you So a possible. filings We pushed was that we’re is a associated can total year. away now tell from that quickly public that making as out as all the over there that as go warrant with

the from and it So all a securitization us best consider runway to deal preferred of here the loan plenty gives term possible negotiate to the alternatives to stock offering.

Lenny Dunn

Yes.

read which not even I that can kind, the be may it cash. that Forgive, in offering if be correctly though expensive, accurate? preferred hurt paid does Is that

Andy Wiederhorn

preferred new stock offering? The

Lenny Dunn

Yes.

Andy Wiederhorn

may kind I preferred a don’t there it’s paid on that features intended to if think cash sitting be it’s X.XX% in call, X.XX% but in at of – paid cash. this pay I be remember

Lenny Dunn

Okay.

fair It’s it… comparison. to paying that’s will a You what of you’re

Andy Wiederhorn

Right.

want much the or refinance deal quickly spending to I on deal an of but a higher rate. look that prepayment less very our We couple ultimately in an interim fees paying cost from extra at We’re costing of capital has be months. deal have as to quarter. $XXX,XXX capital move to we’re going – of and a get and XX% and we’re of It’s if a if should to portion possible, don’t a the and here reasonable is deal secured our to done us loan want senior expenses lot a involved, it next deal as

are a taking reason, little discussions only But presently. that on bit the I why it’s that’s active time. assure you So there of going

Lenny Dunn

Yes.

Okay. you’re it, runs, discussing Well, meter the while so…

Andy Wiederhorn

point thousands that in cost legal every we down path, a dollars deal of point if time. expensive, you do one my that’s hundreds But Right. go of that’s that right, in

Lenny Dunn

to that see that $XXX don’t you and More spend have you spend. want don’t than of to aware

Andy Wiederhorn

Right.

Thank issue. only the that’s you. So

Lenny Dunn

you can’t Okay. – What is then dividend you is concern do shareholders. it. next going – why sure, to I’m you’re a is, not kind a that why quite my don’t in And the do you pay it, because if here pay holdup to just government your

Andy Wiederhorn

don’t a dividend minute of high But earnings lot a threshold. more share with stock agree discussed the thresholds. the parties, all it stock you people right? cost to different the there per per is could about though neutral is to because that capital. We dividend outstanding opinions it’s the ago, shares, like as have So some raising your share dividend of paid all a Even earnings it’s parties, changes

and wait it the up. So announced we’ve just really decided permanent dividend loud to holding can clear and we And once that’s can we the financing. revisit that, issue That’s then the do policy.

Lenny Dunn

have to at how Okay. much a of preferred, order close in you And do with to new part sell it? time this

Andy Wiederhorn

to amount. close. rolling the a It’s no minimum There’s

Lenny Dunn

Okay.

$XXX,XXX on if So worth but – close you you only certainly you, it wish sold on I don’t $XXX,XXX. to

Andy Wiederhorn

Correct.

Lenny Dunn

Would okay? that be

Andy Wiederhorn

Yes.

hoping minimum, a couple million but – think, we’ll a it’s, I at that a I’m month see.

Lenny Dunn

that. understand I No,

there not Because asking the the as on call the stock the a So and even just I’m vagaries And or dividend so without first with me. Believe the of the to question. has wishing the you is, I’m the to been amount out disappeared stock it buy seems from yet. with that And Why? common paying disaster. nobody recent that Lion interests wants small the you’re and apparently. institutional have to Fund, the paying interest amount had even filings. of

some too to can and behind when go get roadshow, think do out. so shouldn’t a you, you going far out I So we institutional be much, this Are interest bring too it. you income. Get you

Rebecca Hershinger

we a now or in completion soon end talking another, as, roadshow merger the we’re the about the set the a I and because just of of takes and really gave to demonstrating million direction if the million you and the of $XX announcement for are refinancing and certain details in the securitization rate either to of not these printed as just I preferred of term As $X think year, that all the a it loan of calendar strong amount here have EBITDA. those a key a between people EBITDA, one a that stage things of that see. think run growth of I year EBITDA waiting bridge really, also is important and things well. more And away And to EBITDA quarter

And very And stock real to roadshow. some so attraction to I together those willing think movement. do – see of couple we’ll be and very a

Andy Wiederhorn

Thank you your for Okay. question.

Lenny Dunn

questions. were you. Thank Those my

Operator

comes [Operator Capital. ADW Please next from question Adam proceed. Our Wyden Instructions] with

Adam Wyden

a on congrats Hey, EBITDA strong quarter.

I have follow-ups. just So couple a

less covered. are most of or more think I my questions

in $X quarter Just selling on started $X million month? reggae I it just of every sorry you June I mean, like, million is think, you’re $X previous offerings. close obviously every and every refinance, any, that million could the you I the asking, preferred there and more guess there caller was – through Or Lion are –

need So there far? million go tronches. from Lion then on natural that mean, month a is out you how you get a and of stopping out Or anything to? level reifying million sold it’ll and can comment you there much $X to But you $X a And I closing is month? so

Andy Wiederhorn

Yes.

we’re SEC qualify to they’ll to sail told week, And within that the yet our tomorrow not they’re numbers just this to the So after days were except to, go are week last qualify think – ready then knowing tomorrow. us of us, to ready or to a early – any couple numbers day they the qualified we have sell going re-file us. I tomorrow, or that

going other path plan as now. fund end now in absolutely, and the depending month down can. year come there a a very chip the absolutely that of at lot But the as sold replacement that’s the And couple quickly to closing between of to we a of in debt question, first we’re answer any on debt. million would you yet. the quickly But So are alternatives Lion your haven’t away

Adam Wyden

good. Okay,

can the month as you’re you no close, and terms I idea a guess it to going much So, close then down. there’s paying in disadvantage is as of

back So down. thing month – Lion close the pay you bit. every, little a you starts every Well, can coming and

Andy Wiederhorn

run substantially has we’re said to, loan If retained million $X lower a earnings. dividends, XX The for Lion some and paying pay path off if months the rate to there’s, more The we very loan all would preferred. the also equity we out month Lion goes funding. has renegotiate they if the plus not to clear year. rate here, another wanted like to raised the

below going option, think another but that’s rate So I it’s to get don’t XX%. to ever a

our debt So I solution. that’s long-term don’t think from capital the be We a of below cost to want going really XX% perspective. get to

those we’re at time. so And pursuing same things the

Adam Wyden

on And on that, I and that your Yes. combination I’m Right. Elevation kind of it seller’s you’re like, notes and discipline heard bridge, it’s, your from sounds you like, preferred for I some total what bought has Rebecca, cash on mean, – million, total curious, as in debt million least of I seller’s minus is today, it at right? as million more that in $XX right? heard Is or preferred today $XX roughly as notes less, heard another million. like it million way getting of I I stands $XX kind seems think $XX plus plus or $X that

Andy Wiederhorn

$XX about between… million It’s

Adam Wyden

$XX million.

Andy Wiederhorn

Between $XX Fund $XX then debt. And Lion Preferred million $XX.X A. million million there’s or of of

$X million So million you and Fund there’s cost, which about low to When gets even our notes when rate. with cash and Burger Lion preferred million – type $X stock, all AX bought onto X% very that Elevation added money. we of seller then of is $XX

at make basis. to incremental was high capital us the It off rate, a but than million annualized. notes it’s year blended acquisition throwing seller the like to deal X% are a XX% only more So, XX%, and a at cost on a of – a $X

but many Lion acquisition, to those Fund really plan get it the I don’t So, good until of was reduced. more we do note

Adam Wyden

$XX like that you to include include $XX Elevation its – upside sounds is does million does that $X quoted? to the million or million million Elevation or $X So,

Andy Wiederhorn

Yes.

guide well, $XX refranchising that under-delivered if we everybody over-deliver think million increase on the cylinders conservative it you in could all very in here. of safely million increase I’d If and million be that’s side more goes like your $XX Elevation. the at and to $X you the point and in I is think $XX $XX million middle – franchising you say look that on focused could add Elevation I to fire to that so million, the but royalties,

Adam Wyden

bit with XXXX, conjunction costs, schedule and I more openings? you forward you all say your how about are businesses once cash you look EBITDA do in in of a Can got deals, you of you royalties the the because in think kind of comment you XXXX, talk mean, franchise, growth. and – every you like you this get how you public about mean, leveraging on in franchising do delivery store little Can CEO, organic I as what let’s generating what on incremental new see new you I And kind do look be kind you you had to your just kind CFO, going throughput. see of mean, storm you you great, store don’t royalty your XXXX? pays could rating fixed company move you get what from XXXX, costs, ninth in got headquarters. a into assuming assuming run and – into any XXXX your your focus

Andy Wiederhorn

We at XXXX million could organic of from a the stores. $XX be incremental number growth just $XX million –

XX stores it’d the like of So, laid because XX additional stores or Foundation XX we’ve brands this in Development XXXX, we’ve the more be in acquired not year. stores,

a for a of have development, new of We lot under lot stores stores. orders

can the to be and would squarely efforts, squarely can we we come which $XX come close million, So, refranchising great. in in

what just grow we We’re we very make That acquisition, got. happy we’ve with another that. if don’t

Adam Wyden

Right.

at just under its sight minus market business saying six saying, of could or you today then trading $XX think of If $XX and the So, times. envelope you you’re you’re that and back plus like cap math. I’m million mean, line million to at that next a $XX million kind be and $XX year. the to of have I million

Andy Wiederhorn

That’s right. Yes, absolutely.

Adam Wyden

Right. like growing. comes Well, I loan should that – I the mean, in the EBITDA going. well terms terms up that’s term think funds facility get would in able preferred as something and you financing franchise sources get cost that, to presumably, maybe, or a get mean, would your or of that. you’re business as kind it a maybe, your and keeps of better. presumably, I now? credit of you for pretty that’s get EBITDA as good of I flywheel And mean

Andy Wiederhorn

fixed built in of The on as you accounting adding team our and We with members overhead here back office. capacity commented your Right. is solid. just stock

internally to acquisitions place we if unit smoothly now. adding handle can could that. So, handle couple additional in externally. small they to But great without platform we’re the We and more leverage count were and of a very a that incrementally, as of million so million – before, revenues and $X or we $XX advertising. and talked our million million if million instead $XX $XX having or are – $X about is

acquisitions, So, you you of take these like bottom an we both XX% that to out on but XX% it’s it’s the sort even $XX net, have as million XX% add net, incrementally sides to and XX% line. a or XX% to

the organic strong. is going platform growth up across leverage that the set and to that’s So

of the deals in to don’t a financing two are just I pick expensive, – are to months. we’re to some on Lenny, are right there Like Now, are considering, I proposals want do the reasonable. And side, there but I bunch want one. said XX just that some

flush trying last just I’m details out of the couple of So, the to alternatives.

down be if we’ll by So, we path. and path will can I that and our September, then out but before we a we’ll end pick for August, on And way. hopefully, don’t of go the get flushed know it sure

Adam Wyden

Let question. me ask a

accretive, stock times just flexibility But a up able I get or for scale. year, matter, obviously assets – to some obviously, debt get those? you get be six still were don’t at some you that limited from that willing of being forma, using note? M&A. even stock take mean, a do, mean little I more could sellers are some or bit, debt if terms if were if I there’s you to expensive. under the just four to pro your you next lot is the seller I to would times in were you of be could purchase So more where here comfortable mean even you thinking mean to have do your would to cost or if that three able equity able – you’re that buy asset you pretty of deals they

Andy Wiederhorn

middle bit a note. several seller smaller a more deals example, with used as of just looking where deal where bit Elevation a is in the little And it’s a a is hurricane was instrument, the like of a and same but note. at seller perfect little just bit like little that, stock preferred cash, we cash like

I all-cash XX% use will at do make think do those a I flow and bit the sense. lot retained don’t So, of that for you a was seller of our reasonable. of XX%, Elevation interest, I little cost purchase example think but an cash Burger deal I to XX.X%, where capital earnings is very we to Burger, use if Elevation want make sense. a blended note, go with from we Like

the if So Absolutely, on bootstrap of makes that platform. can yes, a additional I couple feed we will acquisitions that think, sense.

Adam Wyden

can Yes. the look, caller definitely Fog. you guys first merge – I think, mean, I with get

up guys platform of liquidity of will an from help that that a perspective take EBITDA to away extent away and then continue to get your and overhang. can going. kind kind put think take and you I – the

more will – should eyeballs. cost and funds I think down it come track and place and that of your

So, congratulations move. on good first a

Andy Wiederhorn

Thank you.

Operator

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

Andy Wiederhorn

participate and call. have Thank if their to you to This operator. you for everyone you, free us to listen in time thank out reach any today’s to call. questions. our concludes much. very Feel I Thank further want taking

Operator

Thank you.

participation. this may time your thank for you lines You disconnect and your at

FAT Brands (FAT) 13 Aug 192019 Q2 Earnings call transcript