Revenue and Comparable Sales Increase vs. 2021
and Comparable Sales Increase 45.6% vs. 2019
Opened Company-owned STK San Francisco
Repurchases $3.5 Million in Shares Under $10
Million Buyback Authorization
The ONE Group Hospitality, Inc. (“The ONE Group” or the
“Company”) (Nasdaq: STKS) today reported its financial results for
the third quarter ended September 30, 2022.
Highlights for the third quarter compared to the same period
in 2021 are as follows:
- Total GAAP revenues increased 1.6% to $73.0 million from
$71.9 million;
- GAAP net income attributable to The ONE Group was $0.5
million, or $0.01 per share ($0.07 adjusted net income per share)
****, compared to GAAP net income of $11.7 million, or $0.34 per
share ($0.11 adjusted net income per share)****
- Restaurant Operating Profit*** decreased 21.3% to $9.1
million from $11.6 million; and
- Adjusted EBITDA** decreased 29.0% to $7.1 million from
$10.0 million.
Comparable sales* for the third quarter compared to the same
periods in 2021 and 2019:
- Compared to 2021:
- Consolidated comparable sales* increased 0.5%;
- Comparable sales* for STK increased 3.5%; and
- Comparable sales* for Kona Grill decreased 3.6%.
- Compared to 2019:
- Consolidated comparable sales* increased 45.6%;
- Comparable sales* for STK increased 70.6%; and
- Comparable sales* for Kona Grill increased 22.3%.
“Our comparable sales results reflect strong comparisons from
2019 as we are generating industry leading average unit volumes
across both STK and Kona Grill. This quarter, we decided to take
modest price increases knowing it would not offset the historic
high inflation affecting our industry. Instead, we will be taking
additional pricing in the fourth quarter, which is traditionally
our strongest, as guests come to celebrate the holidays. As we look
ahead, the investments we’ve made in being fully staffed should pay
dividends and we will continue to remain laser focused on
delivering exceptional and unforgettable guest experiences to drive
top-line momentum as we continue to navigate this challenging cost
environment,” said Emanuel “Manny” Hilario, President and CEO of
The ONE Group.
Hilario continued, “During the third quarter, we opened STK San
Francisco which is averaging over $350,000 per week and is
performing extremely well. Over a 90-day period, we will have
opened STK San Francisco, STK Dallas and STK Stratford, a 13%
increase in our STK unit count. In addition, we believe we are
early in our growth strategy with significant whitespace ahead and
our pipeline is the strongest in our history. Looking ahead, we
foresee a total addressable market of at least 400 restaurants
including 200 STK restaurants globally and at least 200 Kona Grills
domestically, and we are targeting best-in-class ROIs between 40%
and 50% for new Company-Owned STKs and for Company-Owned Kona
Grills.”
*Comparable sales represent total U.S. food and beverage sales
at owned and managed units opened for at least a full 18-months.
This measure includes total revenue from our owned and managed
locations. The Company monitors sales growth at its established
restaurant base in addition to growth that results from restaurant
acquisitions; the Company has presented comparable sales growth
from 2019 to illustrate how sales at its restaurant base before the
COVID-19 pandemic compare to sales as COVID-19 restrictions have
eased and the Company has reopened in-person dining.
** Adjusted EBITDA. We define Adjusted EBITDA as net income
before interest expense, provision for income taxes, depreciation
and amortization, non-cash impairment loss, non-cash rent expense,
pre-opening expenses, non-recurring gains and losses including
incremental costs related to COVID-19, stock-based compensation and
certain transactional costs. Adjusted EBITDA has been presented in
this press release and is a supplemental measure of financial
performance that is not required by, or presented in accordance
with, GAAP. Refer to the reconciliation of Net Income to Adjusted
EBITDA in this release.
***Restaurant Operating Profit. We define Restaurant Operating
Profit as owned restaurant net revenue minus owned restaurant cost
of sales and owned restaurant operating expenses. Restaurant
Operating Profit has been presented in this press release and is a
supplemental measure of financial performance that is not required
by, or presented in accordance with, GAAP. Refer to the
reconciliation of Operating income to Restaurant Operating Profit
in this release.
****Adjusted Net Income. We define Adjusted Net Income as net
income before gains on CARES Act Loan forgiveness, COVID-19 costs,
lease termination expenses, one-time stock-based compensation,
other non-recurring costs, non-cash rent during the pre-opening
period and the income tax effect of the adjustment. Adjusted Net
Income has been presented in this press release and is a
supplemental measure of financial performance that is not required
by, or presented in accordance with, GAAP. Refer to the
reconciliation of Net Income to Adjusted Net Income in this
release.
Third Quarter 2022 Financial Results
Total GAAP revenues increased $1.2 million, or 1.6%, to $73.0
million in the third quarter of 2022 from $71.9 million in the
third quarter of 2021.
Total owned restaurant net revenues increased $1.6 million, or
2.3%, to $69.5 million in the third quarter of 2022 from $68.0
million in the third quarter of 2021. The increase was primarily
attributable to the addition of STK San Francisco in August 2022.
Consolidated comparable sales* increased 0.5% from the third
quarter of 2021 and increased 45.6% from the third quarter of
2019.
Management, license and incentive fee revenues decreased $0.4
million, or 10.8%, to $3.5 million in the third quarter of 2022
from $3.9 million in the third quarter of 2021. The decrease was
primarily driven by decreased revenues in our managed properties in
London, England.
Restaurant Operating Profit*** decreased $2.5 million, or 21.3%,
to $9.1 million and represented 13.1% of Company-owned restaurant
net revenues in the third quarter of 2022 compared to $11.6 million
and 17.1% of Company-owned restaurant net revenues in the third
quarter of 2021. The decrease was primarily due to consolidated
higher average wage and operating costs.
General and administrative costs increased $0.4 million, or
8.2%, to $6.4 million for the three months ended September 30, 2022
from $6.0 million for the three months ended September 30, 2021.
The increase was attributable to additional investments required
ahead of growth, increased accounting and legal fees and increased
stock-based compensation expense, partially offset by a decrease in
performance-based variable compensation expense. In addition, the
Company experienced increased travel expenses due to rising hotel
and airfare costs.
Pre-opening expenses were $2.7 million for the three months
ended September 30, 2022 compared to $0.6 million for the three
months ended September 30, 2021. This increase was primarily
related to payroll, training and non-cash pre-open rent for STK San
Francisco which opened in August 2022 and STK Dallas which opened
in November 2022, and Kona Grill Riverton and Kona Grill Columbus
which are currently under construction.
GAAP net income attributable to The ONE Group Hospitality, Inc.
in the third quarter of 2022 was $0.5 million, or $0.01 per share,
compared to $11.7 million, or $0.34 per share, in the third quarter
of 2021.
Adjusted Net Income**** attributable to The ONE Group
Hospitality, Inc. in the third quarter of 2022 was $2.4 million, or
$0.07 per share, compared to $3.7 million, or $0.11 per share, in
the third quarter of 2021.
Adjusted EBITDA** decreased $2.9 million, or 29.0%, to $7.1
million in the third quarter of 2022 from $10.0 million in the
third quarter of 2021.
As of September 30, 2022, the Company had $17.5 million in cash
and cash equivalents, $24.4 million in term loan debt, and $5.6
million available on its revolving credit facility.
Restaurant Development
In August 2022, we opened an owned STK restaurant in San
Francisco, California and a licensed virtual location in
conjunction with REEF Kitchens in Austin, Texas that features
offerings from Kona Grill and Bao Yum. In November 2022, we opened
an owned STK restaurant in Dallas, Texas. We intend to open six
additional venues in the fourth quarter of 2022 and the first
quarter of 2023. There are three Company-owned Kona Grill
restaurants (Riverton, UT, Columbus, OH and Desert Ridge, AZ) and
one managed STK restaurant (Stratford, UK) under development. In
addition, in conjunction with REEF Kitchens, we plan to test and
open two additional licensed units in Texas for takeout and
delivery only. These units will feature offerings from Kona Grill
and Bao Yum.
Share Repurchase
On September 7, 2022, the Company announced the commencement of
a share repurchase program for up to $10 million of its outstanding
common stock. As of September 30, 2022, we had repurchased 500,000
shares for aggregate consideration of $3.5 million under this
program.
Conference Call and Webcast
Emanuel “Manny” Hilario, President and Chief Executive Officer,
and Tyler Loy, Chief Financial Officer, will host a conference call
and webcast today at 4:30 PM Eastern Time.
The conference call can be accessed live over the phone by
dialing 1-416-981-9038. A replay will be available after the call
and can be accessed by dialing 1-412-317-6671; the passcode is
22020936. The replay will be available until November 17, 2022.
The webcast can be accessed from the Investor Relations tab of
The ONE Group’s website at www.togrp.com under “News / Events”.
About The ONE Group
The ONE Group Hospitality, Inc. (Nasdaq: STKS) is a global
hospitality company that develops and operates upscale and polished
casual, high-energy restaurants and lounges and provides
hospitality management services for hotels, casinos and other
high-end venues both in the U.S. and internationally. The ONE
Group’s focus is to be the global leader in Vibe Dining, and its
primary restaurant brands and operations are:
- STK, a modern twist on the American steakhouse concept with 24
restaurants in major metropolitan cities in the U.S., Europe and
the Middle East, featuring premium steaks, seafood and specialty
cocktails in an energetic upscale atmosphere.
- Kona Grill, a polished casual, bar-centric grill concept with
24 restaurants in the U.S., featuring American favorites,
award-winning sushi, and specialty cocktails in an upscale casual
atmosphere.
- ONE Hospitality, The ONE Group’s food and beverage hospitality
services business, develops, manages and operates premier
restaurants and turnkey food and beverage services within high-end
hotels and casinos currently operating 14 venues in the U.S. and
Europe.
Additional information about The ONE Group can be found at
www.togrp.com.
Cautionary Statement on Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of the “safe harbor” provisions of the United States
Private Securities Litigation Reform Act of 1995. Forward-looking
statements may be identified by the use of words such as “intend,”
“anticipate,” “believe,” “expect,” “estimate,” “plan,” “outlook,”
and “project” and other similar expressions that predict or
indicate future events or trends or that are not statements of
historical matters. A number of factors could cause actual results
or outcomes to differ materially from those indicated by such
forward-looking statements, including but not limited to: (1) the
effects of the COVID-19 pandemic on our business, including
government restrictions on our ability to operate our restaurants
and changes in customer behavior, and our ability to hire
employees; (2) our ability to open new restaurants and food and
beverage locations in current and additional markets, grow and
manage growth profitably, maintain relationships with suppliers and
obtain adequate supply of products and retain employees; (3)
factors beyond our control that affect the number and timing of new
restaurant openings, including weather conditions and factors under
the control of landlords, contractors and regulatory and/or
licensing authorities; (4) our ability to successfully improve
performance and cost, realize the benefits of our marketing efforts
and achieve improved results as we focus on developing new
management and license deals; (5) changes in applicable laws or
regulations; (6) the possibility that The ONE Group may be
adversely affected by other economic, business, and/or competitive
factors; and (7) other risks and uncertainties indicated from time
to time in our filings with the SEC, including our Annual Report on
Form 10-K filed for the year ended December 31, 2021 and Quarterly
Reports on Form 10-Q.
Investors are referred to the most recent reports filed with the
Securities and Exchange Commission by The ONE Group Hospitality,
Inc. Investors are cautioned not to place undue reliance upon any
forward-looking statements, which speak only as of the date made,
and we undertake no obligation to update or revise the
forward-looking statements, whether as a result of new information,
future events or otherwise.
THE ONE GROUP HOSPITALITY,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited, in thousands,
except income per share and related share information)
For the three months
ended
September 30,
For the nine months
ended
September 30,
2022
2021
2022
2021
Revenues:
Owned restaurant net revenue
$
69,538
$
67,966
$
216,984
$
184,982
Management, license and incentive fee
revenue
3,482
3,903
11,342
8,129
Total revenues
73,020
71,869
228,326
193,111
Cost and expenses:
Owned operating expenses:
Owned restaurant cost of sales
17,281
17,733
55,231
46,925
Owned restaurant operating expenses
43,136
38,640
126,818
101,882
Total owned operating expenses
60,417
56,373
182,049
148,807
General and administrative (including
stock-based compensation of $1,001, $653, $2,791 and $2,812 for the
three and nine months ended September 30, 2022 and 2021,
respectively)
6,447
5,959
20,587
17,272
Depreciation and amortization
2,930
2,572
8,571
7,766
COVID-19 related expenses
—
1,131
2,534
3,776
Agreement restructuring expenses
—
—
—
494
Pre-opening expenses
2,684
587
3,833
842
Lease termination expenses
—
58
255
352
Transaction costs
51
131
51
131
Total costs and expenses
72,529
66,811
217,880
179,440
Operating income
491
5,058
10,446
13,671
Other expenses (income), net:
Interest expense, net
435
781
1,387
3,262
Loss on early debt extinguishment
—
600
—
600
Gain on CARES Act Loan forgiveness
—
(9,968
)
—
(18,529
)
Total other expenses (income), net
435
(8,587
)
1,387
(14,667
)
Income before provision for income
taxes
56
13,645
9,059
28,338
(Benefit) provision for income taxes
(321
)
1,544
721
2,188
Net income
377
12,101
8,338
26,150
Less: net (loss) income attributable to
noncontrolling interest
(105
)
430
(117
)
573
Net income attributable to The One Group
Hospitality, Inc.
$
482
$
11,671
$
8,455
$
25,577
Currency translation loss
(87
)
(34
)
(348
)
(44
)
Comprehensive income attributable to The
ONE Group Hospitality, Inc.
$
395
$
11,637
$
8,107
$
25,533
Net income attributable to The ONE Group
Hospitality, Inc. per share:
Basic net income per share
$
0.01
$
0.36
$
0.26
$
0.83
Diluted net income per share
$
0.01
$
0.34
$
0.25
$
0.75
Shares used in computing basic income per
share
32,663,549
31,993,557
32,496,780
30,830,521
Shares used in computing diluted income
per share
33,921,498
34,380,573
34,062,661
34,223,857
The following table sets forth certain statements of operations
data as a percentage of total revenues for the periods indicated.
Certain percentage amounts may not sum to total due to
rounding.
For the three months
ended
September 30,
For the nine months
ended
September 30,
2022
2021
2022
2021
Revenues:
Owned restaurant net revenue
95.2
%
94.6
%
95.0
%
95.8
%
Management, license and incentive fee
revenue
4.8
%
5.4
%
5.0
%
4.2
%
Total revenues
100.0
%
100.0
%
100.0
%
100.0
%
Cost and expenses:
Owned operating expenses:
Owned restaurant cost of sales (1)
24.9
%
26.1
%
25.5
%
25.4
%
Owned restaurant operating expenses
(1)
62.0
%
56.9
%
58.4
%
55.1
%
Total owned operating expenses (1)
86.9
%
82.9
%
83.9
%
80.4
%
General and administrative (including
stock-based compensation of 1.4%, 0.9%, 1.2% and 1.5% for the three
and nine months ended September 30, 2022 and 2021,
respectively)
8.8
%
8.3
%
9.0
%
8.9
%
Depreciation and amortization
4.0
%
3.6
%
3.8
%
4.0
%
COVID-19 related expenses
—
%
1.6
%
1.1
%
2.0
%
Agreement restructuring expenses
—
%
—
%
—
%
0.3
%
Pre-opening expenses
3.7
%
0.8
%
1.7
%
0.4
%
Lease termination expenses
—
%
0.1
%
0.1
%
0.2
%
Transaction costs
0.1
%
0.2
%
—
%
0.1
%
Total costs and expenses
99.3
%
93.0
%
95.4
%
92.9
%
Operating income
0.7
%
7.0
%
4.6
%
7.1
%
Other expenses (income), net:
Interest expense, net
0.6
%
1.1
%
0.6
%
1.7
%
Loss on early debt extinguishment
—
%
0.8
%
—
%
0.3
%
Gain on CARES Act Loan forgiveness
—
%
(13.9
)%
—
%
(9.6
)%
Total other expenses (income), net
0.6
%
(12.0
)%
0.6
%
(7.6
)%
Income before provision for income
taxes
0.1
%
19.0
%
4.0
%
14.7
%
(Benefit) provision for income taxes
(0.4
)%
2.1
%
0.3
%
1.1
%
Net income
0.5
%
16.8
%
3.7
%
13.5
%
Less: net (loss) income attributable to
noncontrolling interest
(0.1
)%
0.6
%
(0.1
)%
0.3
%
Net income attributable to The One Group
Hospitality, Inc.
0.7
%
16.2
%
3.7
%
13.2
%
____________________
(1) These expenses are being shown as a
percentage of owned restaurant net revenue.
THE ONE GROUP HOSPITALITY,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
information)
September 30,
December 31,
2022
2021
ASSETS
(Unaudited)
Current assets:
Cash and cash equivalents
$
17,477
$
23,614
Accounts receivable
8,454
11,356
Inventory
4,988
3,915
Other current assets
2,274
3,666
Due from related parties
376
376
Total current assets
33,569
42,927
Property and equipment, net
85,466
69,638
Operating lease right-of-use assets
84,928
85,395
Deferred tax assets, net
12,096
12,313
Intangibles, net
15,283
15,505
Other assets
4,231
3,199
Security deposits
810
858
Total assets
$
236,383
$
229,835
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
11,557
$
11,094
Accrued expenses
17,613
23,155
Deferred license revenue
79
90
Deferred gift card revenue and other
1,426
2,029
Current portion of operating lease
liabilities
6,114
5,396
Current portion of long-term debt
500
500
Total current liabilities
37,289
42,264
Deferred license revenue, long-term
238
298
Operating lease liabilities, net of
current portion
105,038
103,616
Long-term debt, net of current portion
27,940
23,132
Total liabilities
170,505
169,310
Commitments and contingencies (Note
15)
Stockholders’ equity:
Common stock, $0.0001 par value,
75,000,000 shares authorized; 32,744,362 issued and 32,231,728
outstanding at September 30, 2022 and 32,138,396 issued and
32,125,762 outstanding at December 31, 2021
3
3
Preferred stock, $0.0001 par value,
10,000,000 shares authorized; no shares issued and outstanding at
September 30, 2022 and December 31, 2021, respectively
—
—
Treasury stock, 512,634 and 12,634 shares
at cost at September 30, 2022 and December 31, 2021,
respectively
(3,540
)
(37
)
Additional paid-in capital
54,347
53,481
Retained earnings
19,087
10,632
Accumulated other comprehensive loss
(2,993
)
(2,645
)
Total stockholders’ equity
66,904
61,434
Noncontrolling interests
(1,026
)
(909
)
Total equity
65,878
60,525
Total liabilities and equity
$
236,383
$
229,835
Reconciliation of Non-GAAP Measures
We prepare our financial statements in accordance with generally
accepted accounting principles (GAAP). In this press release, we
also make references to the following non-GAAP financial measures:
total food and beverage sales at owned and managed units, Adjusted
EBITDA, Restaurant Operating Profit and Adjusted Net Income.
Total food and beverage sales at owned and managed units. Total
food and beverage sales at owned and managed units represents our
total revenue from our owned operations as well as the revenue
reported to us with respect to sales at our managed locations,
where we earn management and incentive fees at these locations. We
believe that this measure represents a useful internal measure of
performance as it identifies total sales associated with our brands
and hospitality services that we provide. Accordingly, we include
this non-GAAP measure so that investors can review financial data
that management uses in evaluating performance, and we believe that
it will assist the investment community in assessing performance of
restaurants and other services we operate, whether or not the
operation is owned by us. However, because this measure is not
determined in accordance with GAAP, it is susceptible to varying
calculations and not all companies calculate these measures in the
same manner. As a result, this measure as presented may not be
directly comparable to a similarly titled measure presented by
other companies. This non-GAAP measure is presented as supplemental
information and not as an alternative to any GAAP measurements. The
following table includes a reconciliation of our GAAP revenue to
total food and beverage sales at our owned and managed units (in
thousands):
For the three months
ended
September 30,
For the nine months
ended
September 30,
2022
2021
2022
2021
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Owned restaurant net revenue (1)
$
69,538
$
67,966
$
216,984
$
184,982
Management, license and incentive fee
revenue
3,482
3,903
11,342
8,129
GAAP revenues
$
73,020
$
71,869
$
228,326
$
193,111
Food and beverage sales from managed units
(1)
30,450
32,178
90,919
64,719
Total food and beverage sales at owned and
managed units
$
99,988
$
100,144
$
307,903
$
249,701
____________________
(1) Components of total food and beverage
sales at owned and managed units.
The following table presents the elements of the quarterly Same
Store Sales measure for 2022:
2022 vs. 2021
2022 vs. 2019
Q1
Q2
Q3
Q1
Q2
Q3
US STK Owned Restaurants
57.1
%
17.8
%
4.0
%
73.5
%
91.4
%
80.6
%
US STK Managed Restaurants
103.6
%
26.6
%
2.1
%
41.1
%
60.5
%
50.4
%
US STK Total Restaurants
66.7
%
19.8
%
3.5
%
62.9
%
81.9
%
70.6
%
Kona Grill Total Restaurants
21.9
%
3.7
%
-3.6
%
27.5
%
27.6
%
22.3
%
Combined Same Store Sales
45.1
%
12.8
%
0.5
%
45.3
%
53.5
%
45.6
%
Adjusted EBITDA. We define Adjusted EBITDA as net income before
interest expense, provision for income taxes, depreciation and
amortization, non-cash impairment loss, non-cash rent expense,
pre-opening expenses, non-recurring gains and losses, stock-based
compensation, COVID-19 related expense and certain transactional
costs. Not all the aforementioned items defining Adjusted EBITDA
occur in each reporting period but have been included in our
definitions of terms based on our historical activity. Adjusted
EBITDA has been presented in this press release and is a
supplemental measure of financial performance that is not required
by, or presented in accordance with, GAAP.
The following table presents a reconciliation of net income to
EBITDA and Adjusted EBITDA for the periods indicated (in
thousands):
For the three months
ended
September 30,
For the nine months
ended
September 30,
2022
2021
2022
2021
Net income attributable to The One Group
Hospitality, Inc.
$
482
$
11,671
$
8,455
$
25,577
Net (loss) income attributable to
noncontrolling interest
(105
)
430
(117
)
573
Net income
377
12,101
8,338
26,150
Interest expense, net
435
781
1,387
3,262
(Benefit) provision for income taxes
(321
)
1,544
721
2,188
Depreciation and amortization
2,930
2,572
8,571
7,766
EBITDA
3,421
16,998
19,017
39,366
COVID-19 related expenses
—
1,131
2,534
3,776
Agreement restructuring expenses
—
—
—
494
Transaction costs
51
131
51
131
Stock-based compensation
1,001
653
2,791
2,812
Lease termination expense (1)
—
58
255
352
Non-cash rent expense (2)
(75
)
(16
)
(160
)
(19
)
Pre-opening expenses
2,684
587
3,833
842
Gain on CARES Act Loan forgiveness
—
(9,968
)
—
(18,529
)
Loss on early debt extinguishment
—
600
—
600
Adjusted EBITDA
7,082
10,174
28,321
29,825
Adjusted EBITDA attributable to
noncontrolling interest
(56
)
126
77
407
Adjusted EBITDA attributable to The ONE
Group Hospitality, Inc.
$
7,138
$
10,048
$
28,244
$
29,418
____________________ (1)
Amount relates to lease exit costs for
2016 leases for restaurants never built. All amounts have been paid
as of September 30, 2022.
(2)
Non-cash rent expense is included in owned
restaurant operating expenses and general and administrative
expense on the condensed consolidated statements of operations and
comprehensive income.
Restaurant Operating Profit. We believe Restaurant Operating
Profit is an important component of financial results because: (i)
it is a widely used metric within the restaurant industry to
evaluate restaurant-level productivity, efficiency, and
performance, and (ii) we use Restaurant Operating Profit as a key
metric to evaluate our restaurant financial performance compared to
our competitors. We use these metrics to facilitate a comparison of
our operating performance on a consistent basis from period to
period, to analyze the factors and trends affecting our business
and to evaluate the performance of our restaurants.
The following table presents a reconciliation of Operating
income to Restaurant Operating Profit for the periods indicated (in
thousands):
For the three months
ended
September 30,
For the nine months
ended
September 30,
2022
2021
2022
2021
Operating income as reported
$
491
$
5,058
$
10,446
$
13,671
Management, license and incentive fee
revenue
(3,482
)
(3,903
)
(11,342
)
(8,129
)
General and administrative
6,447
5,959
20,587
17,272
Depreciation and amortization
2,930
2,572
8,571
7,766
COVID-19 related expenses
—
1,131
2,534
3,776
Agreement restructuring expenses
—
—
—
494
Pre-opening expenses
2,684
587
3,833
842
Lease termination expense
—
58
255
352
Transaction costs
51
131
51
131
Restaurant Operating Profit
$
9,121
$
11,593
$
34,935
$
36,175
Restaurant Operating Profit as a
percentage of owned restaurant net revenue
13.1
%
17.1
%
16.1
%
19.6
%
Restaurant operating profit by brand is as follows (in
thousands):
For the three months
ended
September 30,
For the nine months
ended
September 30,
2022
2021
2022
2021
STK restaurant operating profit (Company
owned)
$
7,237
$
8,309
$
25,519
$
23,458
STK restaurant operating profit (Company
owned) as a percentage of STK revenue (Company owned)
18.5
%
22.6
%
21.0
%
24.6
%
Kona Grill restaurant operating profit
$
1,915
$
3,422
$
9,544
$
12,693
Kona Grill restaurant operating profit as
a percentage of Kona Grill revenue
6.4
%
11.0
%
10.1
%
14.3
%
Adjusted Net Income. We define Adjusted Net Income as net income
before gains on CARES Act Loan forgiveness, COVID-19 costs,
one-time stock-based compensation, other non-recurring costs,
non-cash rent during the pre-opening period and the income tax
effect of the adjustment.
We believe that Adjusted Net Income is an appropriate measure of
operating performance, as it provides a clear picture of our
operating results by eliminating certain one-time expenses that are
not reflective of the underlying business performance. Adjusted Net
Income is included in this press release because it is a key metric
used by management, and we believe that it provides useful
information facilitating performance comparisons from period to
period. Adjusted Net Income has limitations as an analytical tool
and our calculation thereof may not be comparable to that reported
by other companies; accordingly, you should not consider it in
isolation or as a substitute for analysis of our results as
reported under GAAP.
For the three months
ended
September 30,
For the nine months
ended
September 30,
2022
2021
2022
2021
Net income attributable to The One Group
Hospitality, Inc. as reported
$
482
11,671
$
8,455
$
25,577
Adjustments:
COVID-19 related expenses(1)
259
1,131
2,793
3,776
Accelerated Stock Compensation
-
-
-
485
Non-recurring and Non-cash Pre-opening
Expenses(2)
1,721
-
1,945
-
Non-recurring Legal and Professional
Fees
138
-
617
-
Gain on CARES Act Loan Forgiveness
-
(9,968
)
-
(18,529
)
Transaction Expenses
51
-
51
-
Loss on Early Debt Extinguishment
-
600
-
600
Adjusted net income before income
taxes
2,651
3,434
13,861
11,909
Income tax effect on adjustments(3)
(244
)
21
(860
)
643
Impact of excluding certain discrete
income tax items
(51
)
285
(716
)
(792
)
Adjusted net income attributable to The
One Group Hospitality, Inc.
$
2,355
$
3,740
$
12,285
$
11,760
Adjusted net income per share: Basic
$
0.07
$
0.12
$
0.38
$
0.38
Adjusted net income per share: Diluted
$
0.07
$
0.11
$
0.36
$
0.34
Shares used in computing basic income per
share
32,663,549
31,993,557
32,496,780
30,830,521
Shares used in computing diluted income
per share
33,921,498
34,380,573
34,062,661
34,223,857
____________________ (1)
COVID-19 expenses for the three months
ended September 30, 2022 reflect printing costs for paper menus as
the Company transitions back to reusable menus.
(2)
Non-recurring and Non-cash Pre-opening
Expenses relate to non-recurring travel expenses for our training
teams and new venue employees training at other locations and
non-cash rent expensed during the pre-opening period.
(3)
Reflects the tax expense associated with
the adjustments for the three and nine months ended September 30,
2022, and September 30, 2021. The Company uses its statutory tax
rate for the current year and for the previous year.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221103005786/en/
Investors: ICR Michelle Michalski or Raphael Gross (646)
277-1224 Michelle.Michalski@icrinc.com
Media: ICR Seth Grugle (646) 277-1272 seth.grugle@icrinc.com
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