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Consumer Cyclical

Restaurants

FAT Brands Inc.

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First Quarter 2024 Results
For the first quarter of the year, FAT Brands revenue totaled $152 million, up nearly 44% year-over-year, with the increase driven by the acquisition of the Smokey Bones brand in September 2023. Systemwide sales rose 4.8% year-over-year to $581.8 million, but same store sales declined 4% year-over-year as adverse weather and a &#8220;tired&#8221; consumer negatively impacted results. Royalty revenue declined to $21.9 million from $22.5 million in the first quarter of 2023 and was down from $24.9 million in the fourth quarter. Company-owned restaurant revenues grew to $105.9 million from $62.6 million, again positively impacted by the inclusion of Smokey Bones, but were down from $111.1 million sequentially. Manufacturing facility revenue was $9.5 million up from $9.2 million a year ago.
Overall costs and expenses increased $48.0 million, or 45.6%, in the first quarter of 2024 to $153.3 million compared to the same period in the prior year, primarily due to the acquisition of Smokey Bones and increased activity from Company-owned restaurants and the Company&#8217;s factory. General and administrative expense increased $1.6 million, or 5.6%, to $30 million in the first quarter compared to $28.4 million in the same period in the prior year, primarily due to the acquisition of Smokey Bones.&nbsp;Cost of restaurant and factory revenues increased $40.0 million, or 67.6%, to $99.1 million in the first quarter of 2024, again due to Smokey Bones and higher company-owned restaurant and factory sales. 
 
Total other expense net for the first quarter of 2024 was $33.4 million, up from $30 million in the same period last year. Included in other expense is interest expense of $29.6 million in the first quarter of 2023, up from $25.1 million last year. Interest expense on preferred shares totaled $4.4 million versus $5.0 million last year. Additionally, total other expense net for the just completed quarter included a $427,000 gain on extinguishment of debt. 
 
Net loss for the quarter was $38.3 million, or a loss of $2.37 per share, compared to a net loss of $32.1 million, or a loss of $2.05 per share, in the prior year quarter. On an as-adjusted basis, net loss was $32.9 million, or a loss of $2.05 per share, compared to a net loss of $25.3 million, or a loss of $1.53 per share, in the prior year quarter. Adjusted EBITDA in the first quarter of 2024 was $18.2 million, down from $19.2 million in the first quarter of 2023.
New Store Development
New store development in the quarter was muted at 16 locations with management mentioning adverse weather as a key impediment to openings. However, an elevated 44 locations are projected to open in the second quarter and management is still projecting 125-150 new store openings for the full year.
Franchisee interest, both from existing and prospective new franchisees, remains high. Management just completed a successful Franchisee Summit and is expecting to see some 100 new location agreements to be signed out of the conference. The pipeline is currently over 1,200 locations, which, when fully opened, will contribute some $50-$60 million of additional EBITDA, naturally de-leveraging the Company.
Twin Peaks
A total of three new lodges were opened in the first quarter with two more expected to be opened in the second quarter. Management expects to end the year with 125 locations opened. The first Smokey Bones conversion is underway, and we expect to see more, especially in 2025 and 2026. The Twin Peaks pipeline is over 125 locations, which would just about double the store count.
Management continues to work on a monetization event for Twin Peaks, but noted market conditions will play a role in determining the timing of such an event. The Company is hopeful to have some type of filing in the near-future.
Projections
 We reduced our projections to reflect the first quarter numbers and the slower than anticipated roll out of new store openings. Nonetheless, we remain positive on the FAT Brands story.
For the second quarter, we lowered our revenue to $156.4 million from a previous $164.4 million. In the second quarter of 2023, FAT Brands generated $106.8 million in revenue. Adjusted EBITDA is estimated at $24.7 million compared to $23.1 million in the same period last year and our previous estimate of $25.9 million. Our net loss estimate increases to $34 million, or a loss per share of $2.00. In the same period last year, FAT Brands posted a net loss of $8.7 million, or a loss of $0.53 per share, which was positively impacted by Employee Retention credits.
For the full year, we are estimating revenue of $631 million, adjusted EBITDA of $100 million, and a net loss of $137.3 million, or a loss of $8.08 per share.

FAT Brands Inc. (FAT)

Mixed 1Q Results but Growth Trends Remain Positive

Fundamental Analysis:

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First Step To A Twin Peaks IPO (FAT)

Facing Civil and Criminal Charges (FAT)

Mixed 1Q Results but Growth Trends Remain Positive (FAT)

More Development Deals (FAT)

Inbox Intel from Channelchek.