Upping Factory Utilization and Other Business Notes

Second Quarter Post Call Commentary

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Consumer Cyclical

Restaurants

FAT Brands Inc.

<p><strong>1Q21 Operating Results</strong></p>
<div>Total revenues were $6.6 million in the first quarter of 2021 as compared to $4.4 million in the first quarter of 2020. Excluding Johnny Rockets which was acquired on September 21, 2020 as well as advertising revenues, revenues were $3.54 million, up from $3.49 million in the first quarter of 2020. The revenue performance reflects the ongoing recovery related to the impact of COVID-19 during much of 2020.</div>
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<div>System-wide sales were up 35.3% in the quarter over the same period in 2020. U.S. sales growth was up 28.1% while Rest of the World experienced sales growth of 54.2%. System-wide same store sales growth was 7.8% in the first quarter of 2021 compared to the same period last year. In the U.S. same-store sales growth was 8.7% while Rest of the World same-store sales growth was 4.9%.</div>
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<div>FAT Brands had five new franchised stores opened during the quarter and ended the first quarter with 651 locations and an additional 36 locations under construction that should open in 2021. Approximately 107 locations remain closed with the vast majority either Johnny Rockets stores in unique locations, such as cruise ships, amusement parks, casinos, etc, or steakhouses. We anticipate the currently closed Johnny Rockets stores to open throughout the year.</div>
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<div>Costs and expenses increased to $6.5 million in the first quarter of 2021 compared to $5.0 million in the first quarter of 2020. These costs and expenses included advertising expenses of $1.2 million in the first quarter of 2021 compared to $0.9 million in the first quarter of 2020 and refranchising losses of $0.4 million in the first quarter of 2021 and $0.5 million in the first quarter of 2020. Total general and administrative expenses were $4.9 million in the first quarter of 2021 compared to $3.5 million in the prior period. This increase of $1.4 million was attributed to increases in compensation and legal expenses marginally offset by decreases in accounting and travel and entertainment expenses.</div>
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<div>Other expense was $2.7 million in the first quarter of 2021, compared to other expense of $2.1 million in the first quarter of 2020 and consisted primarily of interest expense of $2.8 million in both the first quarter of 2020 and 2021 offset by interest income of $52,000 in the first quarter of 2021 compared to $771,000 during the first quarter of 2020.</div>
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<div>FAT Brands reported a net loss of $2.4 million in the first quarter of 2021, compared to a net loss of $2.4 million in the first quarter of 2020.</div>
<p><strong>Updated Projections</strong><br />
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<p>Going forward, we believe FAT Brands will see a steadily improving operating environment as COVID restrictions continue to be lifted. We also believe there will be some permanent change in consumer behavior with a shift to curb-side pick-up and delivery. FAT Brands is well positioned to capitalize on both of these trends, in our view. Sans any additional acquisitions, which we do not expect to be the case, we believe by year-end 2021 FAT could hit an annual revenue run rate of $36-$40 million and an annual adjusted EBITDA run rate in the $20 million range.</p>
<p>For the second quarter and rest of the year, we raised our estimated G&amp;A costs to reflect the first quarter, so we went to a projected $5 million per quarter, up from a previous $4 million. We did not make any other major changes to the model. So our revised second quarter estimates remains at revenue of $8 million and EPS of $0.03. However, the positive EPS reflects our estimate that FAT will record some $1 million of gains from the sale of owned units. We expect such gains to positively impact third quarter results also, although timing of such sales are difficult to predict. Management did state that two locations have been sold to date in the second quarter. For the full year, we are projecting revenue of $33.6 million, and breakeven EPS.&nbsp;&nbsp;</p>
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FAT Brands Inc. (FAT)

Momentum Continues to Build

Fundamental Analysis:

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Upping Factory Utilization and Other Business Notes (FAT)

Second Quarter Post Call Commentary (FAT)

Flexibility (FAT)

Unlocking Value With Proposed Twin Peaks IPO (FAT)

Inbox Intel from Channelchek.