Andy Wiederhorn, President and CEO of FAT Brands, commented, «We are pleased with our performance in the third quarter which included nearly 11 percent revenue growth and Ebitda growth of over 70 percent, as we continue to execute our brand acquisition strategy. During the quarter we successfully integrated our latest acquisition, Elevation Burger, which is now running at full synergies. We have built a considerable brand pipeline from which we will acquire synergistic brands to add to our unique platform.»
Wiederhorn continued, «We continue to pursue financing that will lower our cost of capital. To that end, we recently completed the initial closing of our Series B preferred offering with significant insider purchases. Furthermore, in the next few months, we expect to close a whole-business securitization deal that will further reduce our cost of capital and provide ample permanent capital to pursue our growth strategy.»
Fiscal Third Quarter 2019 Highlights
- Total revenues of USD 6.5 million, up 10.6 percent from USD 5.9 million in the third quarter of 2018. Excluding advertising revenues, revenues grew 10.5 percent to USD 5.3 million from USD 4.8 million in the third quarter of 2018.
- System-wide sales growth of 7.5 percent y/y and 19.4 percent YTD
- United States sales growth of 4.5 percent y/y and 24.9 percent YTD
- Canada sales growth of 5.2 percent y/y and 5.5 percent YTD
- Other International(1) sales growth of 24.1 percent y/y and 6.7 percent YTD
- System-wide same-store sales growth of (1.3 percent) y/y and (1.0 percent) YTD
- United States same-store sales growth of (0.1 percent) y/y and 0.2 percent YTD
- Canada same-store sales growth of 2.5 percent y/y and 2.7 percent YTD
- Other International(1) sales growth of (10.5 percent) y/y and (9.4 percent) YTD
- Six new franchised store openings during the third quarter 2019, with two additional openings thus far in the fourth quarter
- Store count as of September 29, 2019: 384 stores system-wide
- Net income of USD 1,154,000 or USD 0.10 per share on a basic and fully diluted basis, as compared to net income of USD 10,000 or USD 0.00 per share on a basic and fully diluted basis in the third quarter of 2018
- Ebitda(2) of USD 3.0 million as compared to USD 1.8 million in the third quarter of 2018
- Adjusted Ebitda(2) of USD 2.3 million as compared to USD 2.2 million in the third quarter of 2018. The reconciliation of Ebitda to Adjusted Ebitda can be found in the accompanying financial tables.
(1) Excludes Canada, includes Puerto Rico.
(2) Ebitda and Adjusted Ebitda are non-GAAP measures
Key Financial Definitions
New store openings: The number of new store openings reflects the number of stores opened during a particular reporting period. The total number of new stores per reporting period and the timing of stores openings has, and will continue to have, an impact on our results.
Same-store sales growth: Same-store sales growth reflects the change in year-over-year sales for the comparable store base, which we define as the number of stores open for at least one full fiscal year regardless of whether the brand during the prior measurement period was owned by FAT Brands or a predecessor. Given our focused marketing efforts and public excitement surrounding each opening, new stores often experience an initial start-up period with considerably higher than average sales volumes, which subsequently decrease to stabilized levels after three to six months. Thus, we do not include stores in the comparable base until they have been open for at least one full fiscal year.
System-wide sales growth: System wide sales growth reflects the percentage change in sales in any given fiscal period compared to the prior fiscal period for all stores in that brand only when the brand is owned by FAT Brands. Because of acquisitions, new store openings and store closures, the stores open throughout both fiscal periods being compared may be different from period to period.