Waitr Holdings Inc. (Nasdaq: WTRH) (“Waitr” or the “Company”), a
leader in on-demand food ordering and delivery, today reported
financial results for the first quarter of 2020.
First Quarter 2020 Highlights
- Net loss for the first quarter of 2020 was $2.1 million, or a
loss of $0.03 per diluted share, compared to a loss of $24.7
million, or a loss of $0.38 per diluted share, in the first quarter
of 2019.
- Adjusted EBITDA1 for the first quarter of 2020 was $3.7
million, compared to a loss of $9.9 million in the first quarter of
2019.
“Since the COVID-19 outbreak intensified in the United States,
we have implemented a number of measures to protect our local
communities, diners, restaurant partners, drivers and employees,”
said Carl Grimstad, Chairman and CEO of Waitr. “We began offering
no-contact delivery for all restaurant orders, provided gloves,
hand sanitizer and masks to our drivers, and continued to pay any
employee or driver who is quarantined or contracts the coronavirus.
We also successfully transitioned our customer support and
corporate staff to work remotely.”
“We also have taken a number of steps to enhance our offerings
and support our restaurant partners and local communities during
this time,” added Mr. Grimstad. “We expanded our offerings to
include delivery of groceries in 10 markets, including no-contact
service, and we started delivering alcohol in some markets. We have
been constantly working with new and existing restaurant partners
to boost their delivery potential and sustain their businesses in
the current environment. We have provided restaurants with free
marketing and promotions, discounted delivery fees, cleaning spray
and other support. Waitr also recently added a donation feature to
its app, the proceeds from which will go to Feeding America and
other similar charities to help feed the needy. We are also
delivering food to the elderly, children and underprivileged during
this unprecedented time of need via partnerships with local food
banks and charities.”
“From a financial perspective, earlier this year, we implemented
several strategic initiatives with a focus on improving revenue per
order, cost per order, cash flow and profitability,” continued Mr.
Grimstad. “These actions allowed us to stabilize and position the
Company for the long term and allowed us to see our first
profitable month in February 2020 and realize $3.7 million of
Adjusted EBITDA in the first quarter of 2020. All of our drivers
are now independent contractors, and the response from drivers has
been overwhelmingly positive. Driver supply remains at a high level
while new restaurants are signing up for our services more rapidly
than previous quarters. We now have agreements with all Landry’s
locations across the country as well as with Five Guys in all of
our markets.”
____________________ 1 Adjusted EBITDA is a non-GAAP financial
measure. A reconciliation of GAAP net loss to Adjusted EBITDA is
included under “Non-GAAP Financial Measure”.
Business Update
As the COVID-19 pandemic became more widespread in the U.S., we
initially experienced a decrease in orders in mid-March; however,
orders rebounded towards the end of March and continued to grow in
April to levels higher than pre-pandemic levels. As a result, we
expect April revenue will be approximately $20 million and Adjusted
EBITDA for April 2020 to be in excess of $4 million. Since the end
of the quarter, we have reached an agreement with our debt holder,
Luxor Capital, for the Company to repay $12.5 million of our senior
secured credit facility. In a show of confidence in the business,
Luxor Capital has also agreed to convert $12.5 million of their
convertible notes into our common stock. After the $25.0 million
prepayment and conversion, the Company’s long-term debt outstanding
will be approximately $107.8 million. While the current economic
environment remains inherently uncertain, we are encouraged by our
financial results and believe the current situation has only
further proved the importance of our services.”
First Quarter 2020 Financial Results
- Revenue for the first quarter of 2020 was $44.2 million,
compared to $48.0 million in the first quarter of 2019, a decrease
of 8%. The decrease was a result of closures of certain non-core
markets along with competitive market pressures. The decrease was
partially offset by improved revenue per order from modifications
to the Company’s fee structure initiated in January 2020. Revenue
per order for the first quarter of 2020 was $12.94, a 28% increase
over the first quarter 2019 revenue per order of $10.11.
- Operations and support expense decreased by $9.8 million, or
27%, to $26.4 million for the first quarter of 2020, compared to
$36.2 million for the first quarter of 2019, primarily as a result
of cost savings initiatives implemented.
- Sales and marketing expense decreased by $7.5 million, or 73%,
to $2.8 million for the first quarter of 2020, compared to $10.3
million for the first quarter of 2019, primarily as a result of
decreased advertising spend as well as consolidation and reduction
of sales and marketing staff.
- Research and development expense decreased to $1.5 million for
the first quarter of 2020, in comparison to $1.9 million for the
first quarter of 2019, as a result of increased software
development activities during the first quarter of 2020, the costs
for which were capitalized.
- General and administrative expense decreased by 43% to $10.8
million for the first quarter of 2020 from $18.9 million for the
first quarter of 2019. General and administrative expense for the
three months ended March 31, 2019 included $6.9 million of business
combination-related professional and other costs associated with
the Bite Squad Merger. The decrease in general and administrative
expense during the first quarter of 2020 was also due to decreased
stock-based compensation expenses.
- Depreciation and amortization expense decreased to $2.1 million
in the first quarter of 2020 from $4.1 million in the first quarter
of 2019 primarily as a result of the write-down of the carrying
value of intangible assets to their implied fair values in
September 2019 in connection with the Company’s goodwill impairment
analysis.
First Quarter and April 2020 Key Business Metrics2
- Average Daily Orders for the first quarter of 2020 were 37,576.
Average Daily Orders for April 2020 were approximately 44,700, a
19% increase over first quarter 2020.
- Active Diners as of March 31, 2020 were over 2 million.
____________________ 2 Key Business Metrics are defined on page
35 of our Annual Report on Form 10-K for the year ended December
31, 2019, filed on March 16, 2020
Liquidity Update
As of March 31, 2020, the Company had cash on hand of $39.4
million, of which $3.2 million was reserved under a compensating
balance arrangement with a bank. The Company had total long-term
debt outstanding at March 31, 2020 of $132.8 million, consisting of
$70.8 million of term loans, $61.6 million of convertible notes and
$0.4 million of promissory notes. The term loans and convertible
notes mature in November 2022. Outstanding short-term debt as of
March 31, 2020 totaled $1.6 million.
The combination of the effects of implementing several strategic
initiatives focused on improving revenue per order, cost per order,
cash flow and profitability, along with proceeds from the sales of
common stock pursuant to the at-the-market offering launched by the
Company in March 2020 resulted in increases in working capital and
liquidity from December 31, 2019. As of April 30, 2020, we had cash
on hand of approximately $53 million.
Other Information
Waitr will not be hosting a conference call to discuss the first
quarter 2020 operational and financial results.
About Waitr Holdings Inc.
Founded in 2013 and based in Lafayette, Louisiana, Waitr is a
leader in on-demand food ordering and delivery. Waitr, and its
sister brand Bite Squad, connects local restaurants and grocery
stores to hungry diners in underserved U.S. markets. Together they
are a convenient way to discover, order and receive great food from
local restaurants, grocery stores and national chains. As of March
31, 2020, Waitr and Bite Squad operated in small and medium sized
markets in the United States in over 600 cities.
Cautionary Note Concerning Forward-Looking Statements
This press release contains “forward-looking statements,” as
defined by the federal securities laws, including statements
regarding the Company’s financial results, implementation of
strategic initiatives and future performance of the Company.
Forward-looking statements reflect Waitr’s current expectations and
projections about future events at the time, and thus involve
uncertainty and risk. The words “believe,” “expect,” “anticipate,”
“will,” “could,” “would,” “should,” “may,” “plan,” “estimate,”
“intend,” “predict,” “potential,” “continue,” and the negatives of
these words and other similar expressions generally identify
forward-looking statements. Such forward-looking statements are
subject to various risks and uncertainties, including the impact of
the coronavirus (COVID-19) pandemic on the Company’s business and
operations, and those described under the section entitled “Risk
Factors” in Waitr’s Annual Report on Form 10-K for the year ended
December 31, 2019, filed with the SEC on March 16, 2020, as such
factors may be updated from time to time in Waitr’s periodic
filings with the SEC, which are accessible on the SEC’s website at
www.sec.gov. Additional information will be set forth in Waitr’s
Quarterly Report on Form 10-Q for the three months ended March 31,
2020, which will be filed with the SEC on May 7, 2020, and should
be read in conjunction with these financial results. Accordingly,
there are or will be important factors that could cause actual
outcomes or results to differ materially from those indicated in
these statements. These factors should not be construed as
exhaustive and should be read in conjunction with the other
cautionary statements that are included in this release and in
Waitr’s filings with the SEC. While forward-looking statements
reflect Waitr’s good faith beliefs, they are not guarantees of
future performance. Waitr disclaims any obligation to publicly
update or revise any forward-looking statement to reflect changes
in underlying assumptions or factors, new information, data or
methods, future events or other changes after the date of this
press release, except as required by applicable law. You should not
place undue reliance on any forward-looking statements, which are
based only on information currently available to Waitr (or to third
parties making the forward-looking statements).
Waitr has thus far been able to operate effectively during the
COVID-19 pandemic. However, the potential impacts and duration of
the COVID-19 pandemic on the global economy and on the Company’s
business, in particular, may be difficult to assess or predict. The
pandemic has resulted in, and may continue to result in,
significant disruption of global financial markets, which may
reduce the Company’s ability to access capital and continue to
operate effectively. The COVID-19 pandemic could also reduce the
demand for the Company’s services. In addition, a recession or
further financial market correction resulting from the spread of
COVID-19 could adversely affect demand for the Company’s services.
To the extent that the COVID-19 pandemic adversely impacts the
Company’s business, results of operations, liquidity or financial
condition, it may also have the effect of heightening many of the
other risks described in the risk factors in the Company’s Annual
Report on Form 10-K for the fiscal year ended December 31,
2019.
Non-GAAP Financial Measure
Adjusted EBITDA is a financial measure that is not calculated in
accordance with generally accepted accounting principles in the
United States of America (“GAAP”).
We define Adjusted EBITDA as net loss adjusted to exclude
interest expense, income taxes, depreciation and amortization,
acquisition and restructuring costs, stock-based compensation
expense, impairments of intangible assets and goodwill and gains
and losses associated with derivatives and debt extinguishments and
when applicable, other expenses that do not reflect our core
operations. We use this non-GAAP financial measure as a key
performance measure because we believe it facilitates operating
performance comparisons from period to period by excluding
potential differences primarily caused by variations in capital
structures, tax positions, the impact of acquisitions and
restructuring, the impact of depreciation and amortization expense
on our fixed assets and the impact of stock-based compensation
expense. Adjusted EBITDA is not a measurement of our financial
performance under GAAP and should not be considered as an
alternative to performance measures derived in accordance with
GAAP.
See “Non-GAAP Financial Measure/Adjusted EBITDA” below for a
reconciliation of net loss to Adjusted EBITDA for the first
quarters ended March 31, 2020 and 2019.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except share
and per share amounts)
(Unaudited)
Three Months Ended March
31,
2020
2019
REVENUE
$
44,243
$
48,032
COSTS AND EXPENSES:
Operations and support
26,365
36,183
Sales and marketing
2,826
10,323
Research and development
1,470
1,940
General and administrative
10,778
18,918
Depreciation and amortization
2,064
4,116
Intangible and other asset impairments
—
18
Loss on disposal of assets
8
5
TOTAL COSTS AND EXPENSES
43,511
71,503
INCOME (LOSS) FROM OPERATIONS
732
(23,471
)
OTHER EXPENSES (INCOME) AND LOSSES
(GAINS), NET
Interest expense
2,914
1,605
Interest income
(60
)
(339
)
Other income
(37
)
(50
)
NET LOSS BEFORE INCOME TAXES
(2,085
)
(24,687
)
Income tax expense
17
62
NET LOSS
$
(2,102
)
$
(24,749
)
LOSS PER SHARE:
Basic and diluted
$
(0.03
)
$
(0.38
)
Weighted average common shares
outstanding – basic and diluted
76,884,717
64,525,610
CONSOLIDATED BALANCE
SHEETS
(In thousands, except per
share data)
(Unaudited)
March 31,
December 31,
2020
2019
ASSETS
CURRENT ASSETS
Cash
$
39,376
$
29,317
Accounts receivable, net
3,362
3,272
Capitalized contract costs, current
409
199
Prepaid expenses and other current
assets
5,083
8,329
TOTAL CURRENT ASSETS
48,230
41,117
Property and equipment, net
3,608
4,072
Capitalized contract costs, noncurrent
1,543
772
Goodwill
106,734
106,734
Intangible assets, net
24,869
25,761
Other noncurrent assets
484
517
TOTAL ASSETS
$
185,468
$
178,973
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
CURRENT LIABILITIES
Accounts payable
$
5,082
$
4,384
Restaurant food liability
5,021
5,612
Accrued payroll
7,414
5,285
Short-term loans
1,578
3,612
Deferred revenue, current
80
414
Income tax payable
68
51
Other current liabilities
12,125
12,630
TOTAL CURRENT LIABILITIES
31,368
31,988
Long-term debt
125,707
123,244
Accrued workers’ compensation
liability
394
463
Deferred revenue, noncurrent
2
45
Other noncurrent liabilities
324
325
TOTAL LIABILITIES
157,795
156,065
STOCKHOLDERS’ EQUITY:
Common stock, $0.0001 par value
8
8
Additional paid in capital
392,004
385,137
Accumulated deficit
(364,339
)
(362,237
)
TOTAL STOCKHOLDERS’ EQUITY
27,673
22,908
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
185,468
$
178,973
CONSOLIDATED CASH FLOW
STATEMENTS
(In thousands)
(Unaudited)
Three Months Ended March
31,
2020
2019
Cash flows from operating
activities:
Net loss
$
(2,102
)
$
(24,749
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Non-cash interest expense
2,396
388
Non-cash advertising expense
—
142
Stock-based compensation
848
2,033
Equity issued in exchange for services
—
30
Loss on disposal of assets
8
5
Depreciation and amortization
2,064
4,116
Intangible and other asset impairments
—
18
Amortization of capitalized contract
costs
68
583
Other non-cash income
(12
)
—
Changes in assets and liabilities:
Accounts receivable
(90
)
(2,883
)
Capitalized contract costs
(1,049
)
(1,007
)
Prepaid expenses and other current
assets
3,246
961
Accounts payable
698
(49
)
Restaurant food liability
(591
)
7,428
Deferred revenue
(378
)
347
Income tax payable
17
62
Accrued payroll
2,129
2,168
Accrued workers’ compensation
liability
(69
)
(176
)
Other current liabilities
(155
)
(2,093
)
Other noncurrent liabilities
(1
)
(11
)
Net cash provided by (used in)
operating activities
7,027
(12,687
)
Cash flows from investing
activities:
Purchases of property and equipment
(70
)
(627
)
Acquisition of Bite Squad, net of cash
acquired
—
(192,419
)
Other acquisitions
(242
)
—
Collections on notes receivable
21
22
Internally developed software
(671
)
(59
)
Proceeds from sale of property and
equipment
3
21
Net cash used in investing
activities
(959
)
(193,062
)
Cash flows from financing
activities:
Proceeds from issuance of stock
6,584
—
Equity issuance costs
(114
)
(600
)
Proceeds from Additional Term Loans
—
42,080
Payments on short-term loans
(2,028
)
(658
)
Proceeds from exercise of stock
options
8
1
Taxes paid related to net settlement on
stock-based compensation
(459
)
(799
)
Net cash provided by financing
activities
3,991
40,024
Net change in cash
10,059
(165,725
)
Cash, beginning of period
29,317
209,340
Cash, end of period
$
39,376
$
43,615
Supplemental disclosures of cash flow
information:
Cash earned during the period for
interest
$
48
$
—
Cash paid during the period for
interest
518
1,215
Supplemental disclosures of non-cash
investing and financing activities:
Stock issued as consideration in Bite
Squad acquisition
—
126,573
Stock issued in connection with Additional
Term Loans
—
3,884
NON-GAAP FINANCIAL
MEASURE
ADJUSTED EBITDA
(In thousands)
(Unaudited)
Three Months Ended March
31,
2020
2019
NET LOSS
$
(2,102
)
$
(24,749
)
Interest expense
2,914
1,605
Income taxes
17
62
Depreciation and amortization
2,064
4,116
Stock-based compensation
848
2,063
Intangible and other asset impairments
—
18
Business combination related
expenditures
—
6,949
ADJUSTED EBITDA
$
3,741
$
(9,936
)
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