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, 2023.
Highlights for the third quarter compared to the same quarter
in 2022 are as follows:
- Total GAAP revenues increased 5.3% to $76.9 million from
$73.0 million;
- Consolidated comparable sales* decreased 3.0% and
increased 41.7% compared to 2019;
- GAAP net loss attributable to The ONE Group was $3.1
million, or $0.10 per share ($0.08 adjusted net loss per
share)****, compared to GAAP net income of $0.5 million, or $0.01
per share ($0.07 adjusted net income per share)****
- Restaurant Operating Profit*** was $9.1 million in both
quarters; and
- Adjusted EBITDA** was $6.2 million compared to $7.1
million.
“Over the last 120 days, we have made significant progress on
our long-term growth strategy and opened Kona Grill Riverton, STK
Charlotte and Kona Grill Phoenix, all of which are off to strong
starts. In addition, we anticipate opening five additional STK
locations within the next six months, positioning us to capture
great returns on already deployed capital for these locations. We
are laser-focused on cost initiatives to improve restaurant-level
margins and leverage our G&A while also delivering exceptional
and unforgettable guest experiences to drive top-line momentum as
we navigate this challenging environment. Our comparable sales and
traffic results are significantly outperforming the industry when
compared to the 2019 pre-pandemic base levels and our industry
leading average unit volumes across both STK and Kona Grill provide
us with great confidence in our long-term investment model,” said
Emanuel “Manny” Hilario, President and CEO of The ONE Group.
Hilario continued, “We finished the quarter with over $22.0
million in cash, and we are entering our peak sales quarter for the
year. We have deployed much of the capital for our upcoming
pipeline and completed our $15.0 million share repurchase program,
which we anticipate being accretive to our shareholders as we
continue to execute on our strategies. We expect to self-fund and
execute our growth plan for 2024 and beyond, and over the long
term, we see a total addressable market of 400 total venues
including 200 STKs globally and 200 Kona Grills domestically with
best-in-class ROIs between 40% and 50%.”
*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.
**We define Adjusted EBITDA as net (loss) 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 (Loss) Income to
Adjusted EBITDA in this release.
***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 (loss) income
to Restaurant Operating Profit in this release.
****We define Adjusted Net (Loss) Income as net (loss) income
before COVID-19 costs, lease termination expenses, one-time
stock-based compensation, non-recurring costs, non-cash rent during
the pre-opening period and the income tax effect of any
adjustments. Adjusted Net (Loss) 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 (Loss) Income to
Adjusted Net (Loss) Income in this release.
Third Quarter 2023 Financial Results
Total GAAP revenues increased $3.9 million, or 5.3%, to $76.9
million in the third quarter of 2023 from $73.0 million in the
third quarter of 2022.
Total owned restaurant net revenues increased $4.2 million, or
6.0%, to $73.7 million in the third quarter of 2023 from $69.5
million in the third quarter of 2022. The increase was primarily
attributable to the four owned venues opened since August 2022.
Consolidated comparable sales* decreased 3.0% compared to the
third quarter of 2022. STK same store sales decreased 5.5% while
Kona Grill same store sales increased 1.1%. Compared to 2019, our
pre-pandemic base year, same store sales for the third quarter of
2023 increased 41.7% compared to the third quarter of 2019; STK
same store sales increased 61.0%, which consisted of a 40.0%
increase in traffic and a 21.0% increase in average check, while
Kona Grill same store sales increased 23.7%.
Management, license and incentive fee revenues decreased $0.3
million, or 8.6%, to $3.2 million in the third quarter of 2023 from
$3.5 million in the third quarter of 2022. The decrease was
primarily driven by decreased revenues at a managed property in
London, England attributable to the non-renewal of certain F&B
hospitality services by the hotel.
Restaurant Operating Profit*** held at $9.1 million in both
quarters but represented 12.3% of Company-owned restaurant net
revenues in the third quarter of 2023 compared to 13.1% of
Company-owned restaurant net revenues in the third quarter of 2022.
The decrease in profit margin was primarily due to higher labor
costs driven by wage inflation and investments in anticipation of
growth, increased marketing expenses and general operating cost
inflation.
General and administrative costs increased $0.8 million, or
12.9%, to $7.3 million in the third quarter of 2023 from $6.4
million in the third quarter of 2022. The increase was attributable
to increased stock-based compensation expense and additional
investments required ahead of new restaurant openings. As a
percentage of revenues, general and administrative costs were 9.5%
compared to 8.8%.
Pre-opening expenses were $3.1 million in the third quarter of
2023 compared to $2.7 million in the third quarter of 2022. The
increase was related to payroll, training, and non-cash pre-open
rent for Kona Grill Riverton which opened in July 2023, for STK
Charlotte and Kona Grill Phoenix, which both opened in October
2023, and for STK and Kona Grill restaurants currently under
development.
GAAP net loss attributable to The ONE Group Hospitality, Inc. in
the third quarter of 2023 was $3.1 million, or $0.10 per share,
compared to GAAP net income of $0.5 million, or $0.01 per share, in
the third quarter of 2022.
Adjusted Net Loss**** attributable to The ONE Group Hospitality,
Inc. in the third quarter of 2023 was $2.4 million, or $0.08 per
share, compared to Adjusted Net Income of $2.4 million, or $0.07
per share, in the third quarter of 2022.
Adjusted EBITDA** decreased $0.9 million, or 13.3%, to $6.2
million in the third quarter of 2023 from $7.1 million in the third
quarter of 2022.
Restaurant Development
The Company intends to add eight new venues in 2023, of which
six venues have opened thus far:
- Owned Kona Grill restaurant in Columbus, Ohio
- Owned Kona Grill restaurant in Riverton, Utah
- Owned STK restaurant in Charlotte, North Carolina
- Owned Kona restaurant in (Desert Ridge) Phoenix, Arizona
- Two Bao Yum venues through a licensing agreement with Reef
Kitchens
There are currently three Company-owned STK restaurants under
construction in the following cities:
- Owned STK restaurant in Boston, Massachusetts
- Owned STK restaurant in Salt Lake City, Utah
- Owned STK restaurant in Washington, D.C.
Completion of Share Repurchase Program
On September 7, 2022, the Company commenced a share repurchase
program for up to $10 million of its outstanding common stock, and
subsequently increased authorized repurchases by $5 million. During
the quarter ended September 30, 2023, the Company purchased 0.5
million shares for aggregate consideration of $3.5 million. As of
September 30, 2023, the Company had repurchased 2.2 million shares
for $14.8 million under the program. The Company completed its
repurchase program in October 2023.
2023 Targets
The Company is updating the following targets for 2023:
Financial Results and Other Select
Data
2023 Guidance
Total GAAP revenues
$335M to $345M
Managed, license and incentive fee
revenues
$14.5M to $15.0M
Total owned operating expenses as a
percentage of owned restaurant net revenue
84.0% to 83.0%
Total G&A excluding stock-based
compensation
$26M to $27M
Consolidated Adjusted EBITDA
$40M to $45M
Restaurant pre-opening expenses
$8M
Operating income
$11.5M to $16.5M
Effective income tax rate
5% to 10%
Total capital expenditures, net of
allowances received by landlords
2.5% of Company-owned revenue and
approximately $4.0M per new Company-owned venue
Number of new system-wide venues
Eight
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 412-542-4186. A replay will be available after the call and
can be accessed by dialing 412-317-6671; the passcode is 10183162.
The replay will be available until Tuesday, November 21, 2023.
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 an
international restaurant 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 25
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
27 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 12 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 “target,”
“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) 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; (2) 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; (3) 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; (4)
changes in applicable laws or regulations; (5) the possibility that
The ONE Group may be adversely affected by other economic,
business, and/or competitive factors; and (6) other risks and
uncertainties indicated from time to time in our filings with the
Securities and Exchange Commission, including our Annual Report on
Form 10-K filed for the year ended December 31, 2022 and subsequent
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,
2023
2022
2023
2022
Revenues:
Owned restaurant net revenue
$
73,700
$
69,538
$
232,202
$
216,984
Management, license and incentive fee
revenue
3,184
3,482
10,631
11,342
Total revenues
76,884
73,020
242,833
228,326
Cost and expenses:
Owned operating expenses:
Owned restaurant cost of sales
18,230
17,281
56,300
55,231
Owned restaurant operating expenses
46,372
43,136
141,983
126,818
Total owned operating expenses
64,602
60,417
198,283
182,049
General and administrative (including
stock-based compensation of $1,244, $1,001, $3,798, $2,791 for the
three and nine months ended September 30, 2023 and 2022,
respectively)
7,280
6,447
22,803
20,587
Depreciation and amortization
3,732
2,930
10,894
8,571
Pre-opening expenses
3,097
2,684
6,005
3,833
COVID-19 related expenses
—
—
—
2,534
Lease termination expenses
—
—
—
255
Other expenses
128
51
480
51
Total costs and expenses
78,839
72,529
238,465
217,880
Operating (loss) income
(1,955
)
491
4,368
10,446
Other expenses, net:
Interest expense, net of interest
income
1,673
435
5,102
1,387
Total other expenses, net
1,673
435
5,102
1,387
(Loss) Income before provision for income
taxes
(3,628
)
56
(734
)
9,059
(Benefit) provision for income taxes
(375
)
(321
)
(227
)
721
Net (loss) income
(3,253
)
377
(507
)
8,338
Less: net loss attributable to
noncontrolling interest
(155
)
(105
)
(583
)
(117
)
Net (loss) income attributable to The ONE
Group Hospitality, Inc.
$
(3,098
)
$
482
$
76
$
8,455
Currency translation loss
(112
)
(87
)
(130
)
(348
)
Comprehensive (loss) income attributable
to The ONE Group Hospitality, Inc.
$
(3,210
)
$
395
$
(54
)
$
8,107
Net (loss) income attributable to The ONE
Group Hospitality, Inc. per share:
Basic net (loss) income per share
$
(0.10
)
$
0.01
$
—
$
0.26
Diluted net (loss) income per share
$
(0.10
)
$
0.01
$
—
$
0.25
Shares used in computing basic (loss)
income per share
31,515,011
32,663,549
31,657,761
32,496,780
Shares used in computing diluted (loss)
income per share
31,515,011
33,921,498
32,537,572
34,062,661
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,
2023
2022
2023
2022
Revenues:
Owned restaurant net revenue
95.9
%
95.2
%
95.6
%
95.0
%
Management, license and incentive fee
revenue
4.1
%
4.8
%
4.4
%
5.0
%
Total revenues
100.0
%
100.0
%
100.0
%
100.0
%
Cost and expenses:
Owned operating expenses:
Owned restaurant cost of sales (1)
24.7
%
24.9
%
24.2
%
25.5
%
Owned restaurant operating expenses
(1)
62.9
%
62.0
%
61.1
%
58.4
%
Total owned operating expenses (1)
87.7
%
86.9
%
85.4
%
83.9
%
General and administrative (including
stock-based compensation of 1.6%, 1.6%, 1.4% and 1.2% for the three
and nine months ended September 30, 2023 and 2022,
respectively)
9.5
%
8.8
%
9.4
%
9.0
%
Depreciation and amortization
4.9
%
4.0
%
4.5
%
3.8
%
Pre-opening expenses
4.0
%
3.7
%
2.5
%
1.7
%
COVID-19 related expenses
—
%
—
%
—
%
1.1
%
Lease termination expenses
—
%
—
%
—
%
0.1
%
Other expenses
0.2
%
0.1
%
0.2
%
—
%
Total costs and expenses
102.5
%
99.3
%
98.2
%
95.4
%
Operating (loss) income
(2.5
)%
0.7
%
1.8
%
4.6
%
Other expenses, net:
Interest expense, net of interest
income
2.2
%
0.6
%
2.1
%
0.6
%
Total other expenses, net
2.2
%
0.6
%
2.1
%
0.6
%
(Loss) Income before provision for income
taxes
(4.7
)%
0.1
%
(0.3
)%
4.0
%
(Benefit) provision for income taxes
(0.5
)%
(0.4
)%
(0.1
)%
0.3
%
Net (loss) income
(4.2
)%
0.5
%
(0.2
)%
3.7
%
Less: net loss attributable to
noncontrolling interest
(0.2
)%
(0.1
)%
(0.2
)%
(0.1
)%
Net (loss) income attributable to The ONE
Group Hospitality, Inc.
(4.0
)%
0.7
%
—
%
3.7
%
_________________________
(1)
These expenses are 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,
2023
2022
ASSETS
(Unaudited)
Current assets:
Cash and cash equivalents
$
22,137
$
55,121
Accounts receivable
11,478
15,220
Inventory
5,923
5,728
Other current assets
2,093
2,091
Due from related parties
376
376
Total current assets
42,007
78,536
Property and equipment, net
125,408
94,087
Operating lease right-of-use assets
93,366
85,161
Deferred tax assets, net
13,320
12,323
Intangibles, net
15,310
15,290
Other assets
4,752
4,774
Security deposits
853
853
Total assets
$
295,016
$
291,024
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
11,751
$
13,055
Accrued expenses
24,197
22,409
Deferred gift card revenue and other
1,254
2,115
Current portion of operating lease
liabilities
6,629
6,336
Current portion of long-term debt
1,375
1,500
Other current liabilities
259
256
Total current liabilities
45,465
45,671
Operating lease liabilities, net of
current portion
115,999
105,247
Long-term debt, net of current portion
70,881
70,544
Other long-term liabilities
907
972
Total liabilities
233,252
222,434
Commitments and contingencies (Note
15)
Stockholders’ equity:
Common stock, $0.0001 par value,
75,000,000 shares authorized; 33,514,057 issued and 31,273,343
outstanding at September 30, 2023 and 32,829,995 issued and
31,735,423 outstanding at December 31, 2022
3
3
Preferred stock, $0.0001 par value,
10,000,000 shares authorized; no shares issued and outstanding at
September 30, 2023 and December 31, 2022, respectively
—
—
Treasury stock, 2,240,714 and 1,094,572
shares at cost at September 30, 2023 and December 31, 2022,
respectively
(14,858
)
(7,169
)
Additional paid-in capital
57,083
55,583
Retained earnings
24,242
24,166
Accumulated other comprehensive loss
(2,999
)
(2,869
)
Total stockholders’ equity
63,471
69,714
Noncontrolling interests
(1,707
)
(1,124
)
Total equity
61,764
68,590
Total liabilities and equity
$
295,016
$
291,024
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 (Loss)
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,
2023
2022
2023
2022
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Owned restaurant net revenue (1)
$
73,700
$
69,538
$
232,202
$
216,984
Management, license and incentive fee
revenue
3,184
3,482
10,631
11,342
GAAP revenues
$
76,884
$
73,020
$
242,833
$
228,326
Food and beverage sales from managed units
(1)
28,513
30,450
89,219
90,919
Total food and beverage sales at owned and
managed units
$
102,213
$
99,988
$
321,421
$
307,903
_________________________
(1)
Components of total food and beverage
sales at owned and managed units.
The following table presents the elements of the quarterly
Comparable Sales measure for 2022 and 2023:
2022 vs. 2021
2023 vs. 2022
Q1
Q2
Q3
Q4
FY
Q1
Q2
Q3
US STK Owned Restaurants
57.1
%
17.8
%
4.0
%
0.2
%
15.7
%
1.0
%
(10.1
%)
(7.8
%)
US STK Managed Restaurants
103.6
%
26.6
%
2.1
%
(0.8
%)
21.9
%
15.4
%
2.5
%
0.7
%
US STK Total Restaurants
66.7
%
19.8
%
3.5
%
0.0
%
17.1
%
5.3
%
(6.8
%)
(5.5
%)
Kona Grill Total Restaurants
21.9
%
3.7
%
(3.6
%)
(7.6
%)
2.5
%
(4.3
%)
(1.5
%)
1.1
%
Combined Comparable Sales
45.1
%
12.8
%
0.5
%
(3.1
%)
10.8
%
1.6
%
(4.7
%)
(3.0
%)
Adjusted EBITDA. We define Adjusted EBITDA as net (loss) 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 (loss)
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,
2023
2022
2023
2022
Net (loss) income attributable to The ONE
Group Hospitality, Inc.
$
(3,098
)
$
482
$
76
$
8,455
Net (loss) attributable to noncontrolling
interest
(155
)
(105
)
(583
)
(117
)
Net (loss) income
(3,253
)
377
(507
)
8,338
Interest expense, net
1,673
435
5,102
1,387
(Benefit) provision for income taxes
(375
)
(321
)
(227
)
721
Depreciation and amortization
3,732
2,930
10,894
8,571
EBITDA
1,777
3,421
15,262
19,017
Pre-opening expenses
3,097
2,684
6,005
3,833
Stock-based compensation
1,244
1,001
3,798
2,791
COVID-19 related expenses
—
—
—
2,534
Lease termination expense (1)
—
—
—
255
Non-cash rent expense (2)
(126
)
(75
)
(279
)
(160
)
Other expenses
128
51
480
51
Adjusted EBITDA
6,120
7,082
25,266
28,321
Adjusted EBITDA attributable to
noncontrolling interest
(72
)
(56
)
(326
)
77
Adjusted EBITDA attributable to The ONE
Group Hospitality, Inc.
$
6,192
$
7,138
$
25,592
$
28,244
_________________________
(1)
Lease termination expense are costs associated with closed,
abandoned and disputed locations or leases.
(2)
Non-cash rent expense is included in owned restaurant operating
expenses and general and administrative expense on the consolidated
statements of operations and comprehensive income.
Restaurant Operating Profit. We define Restaurant Operating
Profit as owned restaurant net revenue minus owned restaurant cost
of sales and owned restaurant operating expenses.
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
(loss) income to Restaurant Operating Profit for the period
indicated (in thousands):
For the three months ended
September 30,
For the nine months ended
September 30,
2023
2022
2023
2022
Operating (loss) income as reported
$
(1,955
)
$
491
$
4,368
$
10,446
Management, license and incentive fee
revenue
(3,184
)
(3,482
)
(10,631
)
(11,342
)
General and administrative
7,280
6,447
22,803
20,587
Depreciation and amortization
3,732
2,930
10,894
8,571
Pre-opening expenses
3,097
2,684
6,005
3,833
COVID-19 related expenses
—
—
—
2,534
Lease termination expense
—
—
—
255
Other expenses
128
51
480
51
Restaurant Operating Profit
$
9,098
$
9,121
$
33,919
$
34,935
Restaurant Operating Profit as a
percentage of owned restaurant net revenue
12.3
%
13.1
%
14.6
%
16.1
%
Restaurant Operating Profit by brand is as follows (in
thousands):
For the three months ended
September 30,
For the nine months ended
September 30,
2023
2022
2023
2022
STK restaurant operating profit (Company
owned)
$
6,928
$
7,237
$
25,984
$
25,519
STK restaurant operating profit (Company
owned) as a percentage of STK revenue (Company owned)
17.0
%
18.5
%
19.5
%
21.0
%
Kona Grill restaurant operating profit
$
2,293
$
1,915
$
8,188
$
9,544
Kona Grill restaurant operating profit as
a percentage of Kona Grill revenue
7.0
%
6.4
%
8.4
%
10.1
%
Adjusted Net (Loss) Income. We define Adjusted Net (Loss) Income
as net (loss) income before COVID-19 costs, lease termination
expenses, one-time stock-based compensation, non-recurring costs,
non-cash rent during the pre-opening period and the income tax
effect of any adjustments.
We believe that Adjusted Net (Loss) 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 (Loss) 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 (Loss) 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,
2023
2022
2023
2022
Net (loss) income attributable to The One
Group Hospitality, Inc. as reported
$
(3,098
)
$
482
$
76
$
8,455
Adjustments:
COVID-19 related expenses
-
259
-
2,793
Non-cash and other pre-opening
expenses(1)
545
1,721
2,093
1,945
Other expenses
128
189
480
668
Adjusted net (loss) income before income
taxes
(2,425
)
2,651
2,649
13,861
Income tax effect on adjustments(2)
(10
)
(296
)
(129
)
(1,576
)
Adjusted net (loss) income attributable to
The One Group Hospitality, Inc.
$
(2,435
)
$
2,355
$
2,520
$
12,285
Adjusted net (loss) income per share:
Basic
$
(0.08
)
$
0.07
$
0.08
$
0.38
Adjusted net (loss) income per share:
Diluted
$
(0.08
)
$
0.07
$
0.08
$
0.36
Shares used in computing basic (loss)
income per share
31,515,011
32,663,549
31,657,761
32,496,780
Shares used in computing diluted (loss)
income per share
31,515,011
33,921,498
32,537,572
34,062,661
_________________________
(1)
Non-cash and other pre-opening expenses
relate to non-cash rent expense and costs for our new store
training teams unrelated to new restaurant openings.
(2)
Reflects the tax expense associated with
the adjustments for the three and nine months ended September 30,
2023, and September 30, 2022. The Company uses its estimated
effective tax rate for the current year and for the previous
year.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231107898485/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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