• Full Year Revenue: Increased over 100% to $672 million.
• Full Year Adjusted EBITDA: Increased almost 130% to $75.2 million.
• Q4 Revenue: Increased 147% to $221.9 million.
• Q4 Adjusted EBITDA: Increased almost 150% to $30.3 million.
• Q4 Restaurant Level Margins: 16.4%.
• Q4 Net Loss: $5.4 million or $0.18 net loss per share.
• Q4 Adjusted Net Loss: $0.9 million or $0.03 adjusted net loss per share.
• Company-Owned Restaurant Cost of Sales: Decreased to 20.4% of net revenue.
• Company-Owned Restaurant Operating Expenses: Increased to 61.2% of net revenue.
• Q4 General and Administrative Costs: Increased to $13.2 million.
• Cash and Liquid Resources: Over $71 million at year end.
• New Restaurant Openings: Three in Q4, ending the year with six new restaurants.

• Warning! GuruFocus has detected 6 Warning Signs with STKS.

Release Date: March 10, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• The One Group Hospitality Inc (NASDAQ:STKS) achieved a significant revenue increase of over 100% to $672 million for the full year 2024, driven by the strategic acquisition of Benihana and RA Sushi.
• Adjusted EBITDA increased by almost 130% to $75.2 million, reflecting strong operational performance and cost efficiencies.
• The company opened six new restaurants in 2024, including three in the last 70 days of the year, indicating robust expansion efforts.
• The acquisition of Benihana and RA Sushi resulted in significant operational efficiencies and cost savings, with a target of $20 million in total cost savings by year-end 2026.
• The company ended the year with over $71 million in liquid resources, providing financial flexibility for future growth and shareholder returns.

Negative Points

• Consolidated comparable sales decreased by 4.3% in the fourth quarter, indicating challenges in maintaining consistent sales growth across all brands.
• Management, license, and incentive fee revenues decreased by 14.5% to $4.1 million, reflecting challenges in these revenue streams.
• Company-owned restaurant operating expenses increased by 340 basis points to 61.2% of net revenue, driven by cost inflation and fixed operating costs.
• The company reported a net loss available to common stockholders of $5.4 million in the fourth quarter, compared to a net income of $4.6 million in the prior year quarter.
• Interest expense increased significantly to $10.5 million due to a higher level of outstanding debt post-acquisition, impacting overall profitability.

Q & A Highlights

Q: How do you expect same-store sales to progress throughout the year given the current consumer uncertainty? A: Emanuel Hilario, President and CEO, explained that they anticipate a gradual improvement in same-store sales each quarter. For the first quarter, they project a decline of 3% to 4%, with full-year expectations ranging from a 3% decline to a 1% increase. The company is seeing sequential improvements and expects continued progress, especially in the second, third, and fourth quarters.

Q: Are there any concerns regarding equipment availability for new restaurant openings due to tariffs or other factors? A: Emanuel Hilario stated that three units are in the final stages of pre-opening operations, and equipment for these is already in place. They do not foresee any immediate impact on equipment availability for 2025 openings, as most equipment for later openings is also sorted out.

Q: Are there any significant shifts in commodity prices affecting your operations? A: Emanuel Hilario noted that while there are some concerns with commodities like eggs, beef, and seafood, they have managed to secure stable supply chains. The company has a strong supply chain team and processes in place to navigate any potential shifts due to tariffs or other factors.

Q: How are the new restaurant openings performing, particularly Kona and RA Sushi? A: Emanuel Hilario reported that the RA Sushi in Plantation is tracking well within expected revenue ranges, and the Tigard location in Oregon is performing well, especially during the holiday season. The STK openings continue to exceed expectations, and the Salt Water Social concept is performing exceptionally well.

Q: Can you provide an update on construction costs for new units? A: Emanuel Hilario mentioned that construction costs are in the high $600s to $700 per square foot, with tenant improvements bringing costs to the mid $500s. The company is focused on cost engineering to ensure efficient spending on new projects.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.