Achieves All-Time Record for Quarterly and
Annual Revenues and Adjusted EBITDA
Consolidated Comparable Sales Increased 49.8%
for the Fourth Quarter and 34.2% for 2021 Compared to 2019
The ONE Group Hospitality, Inc. (“The ONE Group” or the
“Company”) (Nasdaq: STKS) today reported its financial results for
the fourth quarter and year ended December 31, 2021.
Highlights for the fourth quarter ended December 31, 2021
compared to the same period in 2020 are as follows:
- Total GAAP revenues increased 86.8% to $84.1 million
from $45.0 million;
- GAAP net income attributable to The ONE Group was $5.8
million, or $0.17 net income per share ($0.24 adjusted net income
per share)****, compared to GAAP net loss of $4.5 million, or $0.15
net loss per share ($0.04 adjusted net loss per share)****;
- Restaurant Operating Profit*** increased 440 basis
points to 20.4% of Owned Restaurant Net Revenue; and
- Adjusted EBITDA** increased 220.6% to $13.3 million from
$4.1 million.
Highlights for the full year ended December 31, 2021 compared
to the same period in 2020 are as follows:
- Total GAAP revenues increased 95.3% to $277.2 million
from $141.9 million;
- GAAP net income attributable to The ONE Group was $31.3
million, or $0.93 net income per share ($0.59 adjusted net income
per share)****, compared to GAAP net loss of $12.8 million, or
$0.44 net loss per share ($0.19 adjusted net loss per
share)****;
- Restaurant Operating Profit*** increased 840 basis
points to 19.8% of Owned Restaurant Net Revenue; and
- Adjusted EBITDA** increased 346.7% to $42.7 million from
$9.6 million.
Comparable sales* for 2021 compared to 2019 periods:
- For the fourth quarter:
- Consolidated comparable sales* increased 49.8%;
- Comparable sales* for STK increased 60.0%; and
- Comparable sales* for Kona Grill increased 38.2%.
- For the full year:
- Consolidated comparable sales* increased 34.2%;
- Comparable sales* for STK increased 45.1%; and
- Comparable sales* for Kona Grill increased 23.2%.
“We delivered impressive results in 2021 characterized by
record-setting revenue, robust comparable sales growth compared to
both 2020 and 2019, and a significant increase in profitability
driven by restaurant margins of nearly 20% and record setting
management, license and incentive fee revenue. All of this despite
the unprecedented challenges across the industry. Our success last
year is attributable to the incredible efforts of our team members
who provide unforgettable and exceptional VIBE dining experiences
to our loyal guests. We are so proud and appreciative of their hard
work in fulfilling our mission to be the best restaurants in every
market we operate,” said Emanuel “Manny” Hilario, President and CEO
of The ONE Group.
Hilario continued, “Throughout 2021, we opened seven new venues
and are extremely pleased with their performance. In 2022, our
development pipeline is even larger as we plan to open at least
nine new venues. We estimate that the overall addressable market
for our brands is over 200 STKs and 200 Kona Grills, and we believe
we are in the early stages of a long-term growth story with
significant whitespace ahead of us based upon compelling, best in
class returns. We are confident that we have the strategies in
place to be a differentiated leader in the upscale and polished
casual segments and to create long term value for all of our
shareholders.”
*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. Two-year comparable sales relate to the comparison of
comparable sales for the period 10/1/2021––12/31/2021 to the period
10/1/2019––12/31/2019, and for the period 1/1/2021-12/31/2021 to
the period 1/1/2019––12/31/2019. The Company monitors sales growth
at its established restaurant base in addition to growth that
results from restaurant acquisitions; the Company has presented
two-year comparable sales 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 (Loss) to Restaurant Operating
Profit in this release.
****Adjusted Net Income (Loss). 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 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 (Loss) to Adjusted Net Income in this
release.
Fourth Quarter 2021 Financial Results
Total GAAP revenues increased $39.1 million, or 86.8%, to $84.1
million in the fourth quarter of 2021 from $45.0 million in the
fourth quarter of 2020.
Total owned restaurant net revenues increased $35.7 million, or
81.7%, to $79.4 million in the fourth quarter of 2021 from $43.7
million in the fourth quarter of 2020. The increase was due to
strong sales as state and local governments eased seating capacity
restrictions in the markets in which we operate, coupled with
strong execution of our sales initiatives. Consolidated comparable
sales* increased 49.8% from the fourth quarter of 2019. On a
two-year basis, STK comparable sales increased 60.0% while Kona
Grill comparable sales increased 38.2%.
Management, license and incentive fee revenues increased $3.4
million, or 262.0%, to $4.6 million in the fourth quarter of 2021
compared to $1.3 million in the fourth quarter of 2020. The
increase was the result of local governments easing seating
capacity restrictions in the markets in which we operate, coupled
with the opening of two managed STKs, one licensed STK, and three
managed F&B venues during 2021.
Restaurant Operating Profit*** increased to $16.2 million and
represented 20.4% of Company-owned restaurant net revenues in the
fourth quarter of 2021 compared to $7.0 million and 16.0% of
Company-owned restaurant net revenues in the fourth quarter of
2020. The improvement was primarily driven by higher sales and
strong management of operating costs coupled with menu development
and optimization as restaurants re-opened. STK Restaurant operating
profit was $11.1 million and represented 24.8% of Company-owned
restaurant net revenues compared to 18.3% in the prior year. Kona
Grill operating profit was $5.1 million and represented 14.9% of
Company-owned restaurant net revenues compared to 11.9% in the
prior year.
GAAP net income attributable to The ONE Group Hospitality, Inc.
in the fourth quarter of 2021 was $5.8 million, or $0.17 per share,
compared to GAAP net loss of $4.5 million, or $0.15 net loss per
share, in the fourth quarter of 2020.
Adjusted Net Income**** attributable to The ONE Group
Hospitality, Inc. in the fourth quarter of 2021 was $8.2 million,
or $0.24 per share, compared to adjusted net loss of $1.2 million,
or $0.04 net loss per share, in the fourth quarter of 2020.
Adjusted EBITDA** increased to $13.3 million in the fourth
quarter of 2021 from $4.1 million in the fourth quarter of
2020.
Fiscal 2021 (Full Year) Financial Results
Total GAAP revenues increased $135.2 million, or 95.3%, to
$277.2 million in 2021 from $141.9 million in 2020.
Total owned restaurant net revenues increased $127.8 million, or
93.5%, to $264.4 million in 2021. The increase was primarily
attributable to strong sales as state and local governments eased
COVID-19 seating capacity restrictions in markets where we operate
combined with strong execution of our sales initiatives.
Consolidated comparable sales* increased 34.2% compared to 2019. On
a two-year basis, STK comparable sales increased 45.1% while Kona
Grill comparable sales increased 23.2%.
Management, license and incentive fee revenues increased $7.4
million, or 139.9%, to $12.8 million in 2021 compared to $5.3
million in 2020. The increase was the result of local governments
easing seating capacity restrictions in the markets in which we
operate, coupled with the opening of two managed STKs, one licensed
STK and three managed F&B venues during 2021.
Restaurant Operating Profit*** increased to $52.4 million and
represented 19.8% of Company-owned restaurant net revenues in 2021
compared to $15.6 million and 11.4% of Company-owned restaurant net
revenues in 2020. The improvement was primarily driven by higher
sales and strong management of operating costs coupled with menu
development and optimization as restaurants re-opened. STK
Restaurant operating profit was $34.6 million and represented 24.7%
of Company-owned restaurant net revenues compared to 13.1% in the
prior year. Kona Grill operating profit was $17.8 million and
represented 14.4% of Company-owned restaurant net revenues compared
to 10.4% in the prior year.
GAAP net income attributable to The ONE Group Hospitality, Inc.
in 2021 was $31.3 million, or $0.93 per share, compared to GAAP net
loss of $12.8 million, or $0.44 net loss per share, in 2020. 2021
net income included a $18.5 million gain on CARES Act Loan
forgiveness.
Adjusted Net Income**** attributable to The ONE Group
Hospitality, Inc. in 2021 was $19.8 million, or $0.59 per share,
compared to adjusted net loss of $5.6 million, or $0.19 net loss
per share, in the fourth quarter of 2020.
Adjusted EBITDA** increased to $42.7 million in 2021 from $9.6
million in 2020.
As of December 31, 2021, the Company had $23.6 million in cash
and cash equivalents, $24.8 million in term loan debt, and $10.6
million available on its revolving credit facility.
Restaurant Development
The table below reflects the restaurants added in 2021:
Location
Type
Opening Date
STK Scottsdale, AZ
Domestic Managed STK
January 4, 2021
STK Los Cabos Airport – Mexico
International Licensed STK
May 1, 2021
Bao Yum – London – Westminster, UK
International Managed F&B Venue
May 4, 2021
Curio Hotel – London – Westminster, UK
International Managed F&B Venue
May 4, 2021
STK London – Westminster, UK
International Managed STK
June 4, 2021
STK Bellevue, WA
Domestic Company STK
July 21, 2021
Rivershore Bar & Grill, OR
Domestic Managed Restaurant Venue
August 16, 2021
In 2022, the Company intends to open six new STK and F&B
venues and three to five Kona Grill locations. There are currently
two Company-owned STK restaurants (San Francisco, CA and Dallas,
TX), two Company-owned Kona Grill restaurant (Riverton, UT and
Columbus, OH) and one managed STK restaurant (Stratford, UK) under
construction. The Company has also entered into an agreement with
REEF Kitchens to open three takeout and delivery venues featuring
items from three of The ONE Group’s brands – STK, Kona Grill and
Bao Yum.
Preliminary First Quarter 2022 Targets
The Company is increasing its revenue target and reiterating its
G&A target for the first quarter 2022:
- Total GAAP revenues of approximately $69.0 million to
$70.2 million;
- Owned restaurant net revenue of $66.0 million to $67.0
million;
- Management, license and incentive fee revenue of $3.0
million to $3.2 million; and
- Total G&A of approximately $6.5 million.
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 8:30AM Eastern Time.
The conference call can be accessed live over the phone by
dialing 1-201-493-6780. A replay will be available after the call
and can be accessed by dialing 1-412-317-6671; the passcode is
13727833. The replay will be available until March 28, 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 23
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 13 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 our key 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, 2020 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.
CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands, except earnings
per share and related share information)
For the three months ended
December 31,
For the year ended December
31,
2021
2020
2021
2020
Revenues:
(unaudited)
(unaudited)
(unaudited)
Owned restaurant net revenue
$
79,422
$
43,710
$
264,404
$
136,618
Management, license and incentive fee
revenue
4,645
1,283
12,774
5,325
Total revenues
84,067
44,993
277,178
141,943
Cost and expenses:
Owned operating expenses:
Owned restaurant cost of sales
20,543
10,646
67,468
34,024
Owned restaurant operating expenses
42,647
26,051
144,529
87,042
Total owned operating expenses
63,190
36,697
211,997
121,066
General and administrative (including
stock-based compensation of $806, $456, $3,618, and $1,773 for the
quarters and year ended December 31, 2021 and 2020,
respectively)
8,300
4,689
25,573
13,922
Depreciation and amortization
3,024
2,509
10,790
10,114
COVID-19 related expenses
2,045
1,733
5,821
5,492
Transaction costs
29
—
160
1,109
Lease termination expenses
1,560
2,862
1,912
3,315
Agreement restructuring expenses
9
452
503
452
Pre-opening expenses
195
133
1,037
178
Other income, net
—
(1
)
—
(11
)
Total costs and expenses
78,352
49,074
257,793
155,637
Operating income (loss)
5,715
(4,081
)
19,385
(13,694
)
Other (income) expenses, net:
Interest expense, net of interest
income
517
1,679
3,780
5,329
Loss on early debt extinguishment
—
—
600
—
Gain on CARES Act Loan forgiveness
—
—
(18,529
)
—
Total other (income) expenses, net
517
1,679
(14,149
)
5,329
Income (loss) before provision (benefit)
for income taxes
5,198
(5,760
)
33,534
(19,023
)
Provision (benefit) for income taxes
(602
)
(1,170
)
1,586
(5,400
)
Net income (loss)
5,800
(4,590
)
31,948
(13,623
)
Less: net income (loss) attributable to
noncontrolling interest
27
(111
)
600
(798
)
Net income (loss) attributable to The One
Group Hospitality, Inc.
$
5,773
$
(4,479
)
$
31,348
$
(12,825
)
Currency translation gain (loss)
44
28
1
5
Comprehensive income (loss) attributable
to The ONE Group Hospitality, Inc.
$
5,817
$
(4,451
)
$
31,349
$
(12,820
)
Net income (loss) attributable to The ONE
Group Hospitality, Inc. per share:
Basic net income (loss) per share
$
0.18
$
(0.15
)
$
1.01
$
(0.44
)
Diluted net income (loss) per share
$
0.17
$
(0.15
)
$
0.93
$
(0.44
)
Shares used in computing basic income
(loss) per share
32,118,747
29,066,009
31,155,224
28,909,963
Shares used in computing diluted income
(loss) per share
34,322,390
29,066,009
33,794,344
28,909,963
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
December 31,
For the year ended December
31,
2021
2020
2021
2020
Revenues:
Owned restaurant net revenue
94.5
%
97.1
%
95.4
%
96.2
%
Management, license and incentive fee
revenue
5.5
%
2.9
%
4.6
%
3.8
%
Total revenues
100.0
%
100.0
%
100.0
%
100.0
%
Cost and expenses:
Owned operating expenses:
Owned restaurant cost of sales (1)
25.9
%
24.4
%
25.5
%
24.9
%
Owned restaurant operating expenses
(1)
53.7
%
59.6
%
54.7
%
63.8
%
Total owned operating expenses (1)
79.6
%
84.0
%
80.2
%
88.6
%
General and administrative (including
stock-based compensation of 1.0%, 1.0%, 1.3% and 1.2% for the
quarters and years ended December 31, 2021 and 2020,
respectively)
9.9
%
10.4
%
9.2
%
9.8
%
Depreciation and amortization
3.6
%
5.6
%
3.9
%
7.1
%
COVID-19 related expenses
2.4
%
3.9
%
2.1
%
3.9
%
Transaction costs
—
%
—
%
0.1
%
0.8
%
Lease termination expenses
1.9
%
6.4
%
0.7
%
2.3
%
Agreement restructuring expenses
—
%
1.0
%
0.2
%
0.3
%
Pre-opening expenses
0.2
%
0.3
%
0.4
%
0.1
%
Other income, net
—
%
—
%
—
%
—
%
Total costs and expenses
93.2
%
109.1
%
93.0
%
109.6
%
Operating income (loss)
6.8
%
(9.1
)%
7.0
%
(9.6
)%
Other (income) expenses, net:
Interest expense, net of interest
income
0.6
%
3.7
%
1.4
%
3.8
%
Loss on early debt extinguishment
—
%
—
%
0.2
%
—
%
Gain on CARES Act Loan Forgiveness
—
%
—
%
(6.7
)%
—
%
Total other (income) expenses, net
0.6
%
3.7
%
(5.1
)%
3.8
%
Income (loss) before provision (benefit)
for income taxes
6.2
%
(12.8
)%
12.1
%
(13.4
)%
Provision (benefit) for income taxes
(0.7
)%
(2.6
)%
0.6
%
(3.8
)%
Net income (loss)
6.9
%
(10.2
)%
11.5
%
(9.6
)%
Less: net income (loss) attributable to
noncontrolling interest
0.0
%
(0.2
)%
0.2
%
(0.6
)%
Net income (loss) attributable to The ONE
Group Hospitality, Inc.
6.9
%
(10.0
)%
11.3
%
(9.0
)%
(1)
These expenses are being shown as a
percentage of owned restaurant net revenue.
THE ONE GROUP HOSPITALITY,
INC.
CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
information)
December 31,
December 31,
2021
2020
ASSETS
(unaudited)
Current assets:
Cash and cash equivalents
$
23,614
$
24,385
Accounts receivable
11,356
5,777
Inventory
3,915
2,490
Other current assets
3,666
1,348
Due from related parties
376
376
Total current assets
42,927
34,376
Property and equipment, net
69,638
67,344
Operating lease right-of-use assets
85,395
80,960
Deferred tax assets, net
12,313
13,226
Intangibles, net
15,505
16,313
Other assets
3,199
2,446
Security deposits
858
904
Total assets
$
229,835
$
215,569
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
11,094
$
7,404
Accrued expenses
23,155
15,684
Deferred license revenue
90
207
Deferred gift card revenue and other
2,029
1,990
Current portion of operating lease
liabilities
5,396
4,817
Current portion of CARES Act Loans
—
10,057
Current portion of long-term debt
500
588
Total current liabilities
42,264
40,747
Deferred license revenue, long-term
298
953
Operating lease liabilities, net of
current portion
103,616
98,569
CARES Act Loans, net of current
portion
—
8,257
Long-term debt, net of current portion
23,132
45,064
Total liabilities
169,310
193,590
Commitments and contingencies (Note
15)
Stockholders’ equity:
Common stock, $0.0001 par value,
75,000,000 shares authorized; 32,138,396 and 29,083,183 shares
issued and outstanding at December 31, 2021 and December 31, 2020,
respectively
3
3
Preferred stock, $0.0001 par value,
10,000,000 shares authorized; no shares issued and outstanding at
December 31, 2021 and December 31, 2020, respectively
—
—
Treasury stock, 12,634 shares and 0 shares
at December 31, 2021 and December 31, 2020, respectively
(37
)
—
Additional paid-in capital
53,244
46,538
Retained earnings (accumulated
deficit)
10,632
(20,716
)
Accumulated other comprehensive loss
(2,645
)
(2,646
)
Total stockholders’ equity
61,197
23,179
Noncontrolling interests
(672
)
(1,200
)
Total equity
60,525
21,979
Total liabilities and equity
$
229,835
$
215,569
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
(Loss).
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
December 31,
For the year ended December
31,
2021
2020
2021
2020
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Owned restaurant net revenue (1)
$
79,422
$
43,710
$
264,404
$
136,618
Management, license and incentive fee
revenue
4,645
1,283
12,774
5,325
GAAP revenues
$
84,067
$
44,993
$
277,178
$
141,943
Food and beverage sales from managed units
(1)
34,672
9,913
99,391
45,909
Total food and beverage sales at owned and
managed units
$
114,094
$
53,623
$
363,795
$
182,527
(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 2020 and 2021:
2020
2021
2021 vs. 2019
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
US STK Owned Restaurants
-12.9%
-79.7%
-20.6%
-16.4%
38.6%
715.0%
136.0%
107.8%
17.9%
66.5%
72.0%
60.7%
US STK Managed Restaurants
-12.5%
-85.3%
-31.9%
-32.2%
-19.5%
764.6%
116.5%
133.3%
-30.7%
26.8%
47.4%
58.2%
US STK Total Restaurants
-12.8%
-81.4%
-24.2%
-20.7%
20.8%
725.7%
130.6%
113.5%
1.9%
54.3%
63.8%
60.0%
Kona Grill Total Restaurants
-15.5%
-52.8%
-7.3%
-8.0%
26.6%
160.6%
36.8%
50.2%
4.6%
23.0%
26.9%
38.2%
Combined Same Store Sales
-14.1%
-66.7%
-15.6%
-14.8%
23.5%
324.1%
78.9%
82.7%
3.3%
38.0%
44.7%
49.8%
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
December 31,
For the year ended December
31,
2021
2020
2021
2020
Net income (loss) attributable to The ONE
Group Hospitality, Inc.
$
5,773
$
(4,479
)
$
31,348
$
(12,825
)
Net income (loss) attributable to
noncontrolling interest
27
(111
)
600
(798
)
Net income (loss)
5,800
(4,590
)
31,948
(13,623
)
Interest expense, net of interest
income
517
1,679
3,780
5,329
Provision (benefit) for income taxes
(602
)
(1,170
)
1,586
(5,400
)
Depreciation and amortization
3,024
2,509
10,790
10,114
EBITDA
8,739
(1,572
)
48,104
(3,580
)
COVID-19 related expenses
2,045
1,733
5,821
5,492
Transaction costs (1)
29
—
160
1,109
Stock-based compensation
806
456
3,618
1,773
Lease termination expense (2)
1,560
2,862
1,912
3,315
Agreement restructuring expense
9
452
503
452
Pre-opening expenses
195
133
1,037
178
Non-cash rent (3)
(13
)
33
(32
)
300
Gain on CARES Act Loan forgiveness
—
—
(18,529
)
—
Loss on early debt extinguishment
—
—
600
—
Adjusted EBITDA
13,370
4,097
43,194
9,039
Adjusted EBITDA attributable to
noncontrolling interest
100
(42
)
507
(517
)
Adjusted EBITDA attributable to The ONE
Group Hospitality, Inc.
$
13,270
$
4,139
$
42,687
$
9,556
(1)
Primarily transaction and
integration costs incurred with the Kona Grill acquisition and
subsequent integration activities.
(2)
Lease termination expense are
costs associated with closed, abandoned and disputed locations or
leases.
(3)
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 (loss).
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
income (loss) to Restaurant Operating Profit for the period
indicated (in thousands):
For the three months ended
December 31,
For the year ended December
31,
2021
2020
2021
2020
Operating income (loss) as reported
$
14,570
$
(4,081
)
$
20,146
$
(13,694
)
Management, license and incentive fee
revenue
(4,483
)
(1,283
)
(12,612
)
(5,325
)
General and administrative
8,139
4,689
25,410
13,922
Depreciation and amortization
3,024
2,509
10,790
10,114
COVID-19 related expenses
2,045
1,733
5,821
5,492
Agreement restructuring expenses
9
452
503
452
Pre-opening expenses
235
133
1,077
178
Lease termination expense
760
2,862
1,112
3,315
Transaction costs
29
—
160
1,109
Other income, net
—
1
—
(11
)
Restaurant operating profit
$
16,232
$
7,013
$
52,407
$
15,552
Restaurant operating profit as a
percentage of owned restaurant net revenue
20.4
%
16.0
%
19.8
%
11.4
%
Restaurant operating profit by brand is as follows (in
thousands):
For the three months ended
December 31,
For the year ended December
31,
2021
2020
2021
2020
STK restaurant operating profit (Company
owned)
11,140
3,665
34,598
7,347
STK restaurant operating profit (Company
owned) as a percentage of STK revenue (Company owned)
24.8
%
18.3
%
24.7
%
13.1
%
Kona Grill restaurant operating profit
5,092
2,706
17,785
8,175
Kona Grill restaurant operating profit as
a percentage of Kona Grill revenue
14.9
%
11.9
%
14.4
%
10.4
%
Adjusted Net Income (Loss). We define Adjusted Net Income as net
income before gains on CARES Act Loan forgiveness, COVID-19 costs,
lease termination, one-time stock-based compensation and
acceleration 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
December 31,
For the year ended December
31,
2021
2020
2021
2020
Net income (loss) attributable to The One
Group Hospitality, Inc. as reported
$
5,773
$
(4,479
)
$
31,348
$
(12,825
)
Adjustments:
Gain on CARES Act Loan forgiveness
—
—
(18,529
)
—
COVID-19 related expenses
2,045
1,733
5,821
5,492
Accelerated stock compensation
—
—
485
—
Loss on early debt extinguishment
—
—
600
—
Lease termination expenses
1,560
2,862
1,912
3,315
Adjusted net income before income
taxes
9,378
116
21,637
(4,018
)
Income tax effect on adjustments(1)
(1,101
)
(1,305
)
(1,852
)
(1,560
)
Adjusted net income (loss) attributable to
The One Group Hospitality, Inc.
$
8,277
$
(1,189
)
$
19,785
$
(5,578
)
Adjusted net income (loss) per share:
Basic
$
0.26
$
(0.04
)
$
0.64
$
(0.19
)
Adjusted net income (loss) per share:
Diluted
$
0.24
$
(0.04
)
$
0.59
$
(0.19
)
Shares used in computing basic income
(loss) per share
32,118,747
29,066,009
31,155,224
28,909,963
Shares used in computing diluted income
(loss) per share
34,322,390
29,066,009
33,794,344
28,909,963
(1)
Reflects the tax expense
associated with the adjustments for the three and 12 months ended
December 31, 2021, and December 31, 2020. 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/20220314005272/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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