Opens Kona Grill in Riverton, UT
To Participate in Three Upcoming Investor
Conferences
The ONE Group Hospitality, Inc. (“The ONE Group” or the
“Company”) (Nasdaq: STKS) today reported its financial results for
the second quarter ended June 30, 2023.
Highlights for the second quarter compared to the same period
in 2022 are as follows:
- Total GAAP revenues increased 2.8% to $83.4 million from
$81.1 million;
- Consolidated comparable sales* decreased 4.7% and
increased 46.5% compared to 2019;
- GAAP net income attributable to The ONE Group was $0.6
million, or $0.02 per share ($0.06 adjusted net income per
share)****, compared to GAAP net income of $4.1 million, or $0.13
per share ($0.15 adjusted net income per share)****
- Restaurant Operating Profit*** decreased 6.6% to $11.9
million from $12.8 million; and
- Adjusted EBITDA** was $8.5 million compared to $10.4
million.
“We faced meaningful comparisons to last year as comparable
sales in 2022 increased 12.8% on a consolidated basis and 19.8% at
STK. We are encouraged by the momentum of the business as we saw
sequential improvement in same store sales as we moved through the
quarter, and we are pleased that we continue to significantly
outperform our 2019 comparable sales. We recently opened a new Kona
Grill in Riverton, Utah and the restaurant is off to a strong
start. In addition, Kona Grill Columbus, STK San Francisco and STK
Dallas, continue to perform strongly and above our investment
model. We have developed seven new venues in the last twelve
months, and we plan to accelerate this pace. As we look into the
second half of the year, we have initiatives in place that, we
anticipate, will drive positive comparable sales and margin
improvements year over year,” said Emanuel “Manny” Hilario,
President and CEO of The ONE Group.
Hilario continued, “We expect to open eight to twelve new venues
in 2023 and target a new restaurant approximately every four to six
weeks for the foreseeable future. We expect the significant
investments we have made in our training teams, in-restaurant
staffing and in G&A support will begin to show positive returns
as we enter this new chapter of growth at The ONE Group. We believe
we are early in our expansion story and have significant
opportunity ahead, and we view our total addressable market as 200
STK restaurants globally and 200 Kona Grills domestically with
best-in-class ROIs of between 40% and 50%.”
*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. The Company monitors sales growth at its established
restaurant base in addition to growth that results from restaurant
acquisitions.
**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.
***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 to
Restaurant Operating Profit in this release.
****We define Adjusted Net Income as net income before COVID-19
costs, lease termination expenses, one-time stock-based
compensation, non-recurring costs, non-cash rent during the
pre-opening period and the income tax effect of any adjustments.
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 to Adjusted Net Income in this
release.
Second Quarter 2023 Financial Results
Total GAAP revenues increased $2.3 million, or 2.8%, to $83.4
million in the second quarter of 2023 from $81.1 million in the
second quarter of 2022.
Total owned restaurant net revenues increased $3.0 million, or
3.9%, to $79.9 million in the second quarter of 2023 from $76.9
million in the second quarter of 2022. The increase was primarily
attributable to the addition of STK San Francisco in August 2022,
STK Dallas in November 2022, and Kona Grill Columbus in January
2023.
Consolidated comparable sales* decreased 4.7% compared to the
second quarter of 2022. STK same store sales decreased 6.8% while
Kona Grill same store sales decreased 1.5%. Compared to 2019, the
pre-pandemic base year, same store sales for the second quarter of
2023 increased 46.5% compared to the second quarter of 2019; STK
comparable sales increased 69.2% while Kona Grill comparable sales
increased 25.7%.
Management, license and incentive fee revenues decreased $0.7
million, or 17.3%, to $3.5 million in the second quarter of 2023
from $4.2 million in the second quarter of 2022. The decrease was
primarily attributable to a decrease in incentive fees at our
managed STK restaurants in North America and decreased revenues in
London, England.
Restaurant Operating Profit*** decreased $0.8 million, or 6.6%,
to $11.9 million and represented 14.9% of Company-owned restaurant
net revenues in the second quarter of 2023 compared to $12.8
million and 16.6% of Company-owned restaurant net revenues in the
second quarter of 2022. The decrease was primarily due to higher
labor costs driven by wage inflation and investments in
anticipation of growth and higher general operating costs.
General and administrative costs increased $0.8 million, or
10.7%, to $8.0 million for the three months ended June 30, 2023
from $7.3 million for the three months ended June 30, 2022. The
increase was attributable to increased stock-based compensation
expense and additional investments required ahead of new restaurant
openings. As a percentage of revenues, general and administrative
costs were 9.6% for the three months ended June 30, 2023 compared
to 9.0% for the three months ended June 30, 2022.
Pre-opening expenses were $1.6 million for the three months
ended June 30, 2023 compared to $0.8 million for the three months
ended June 30, 2022. The increase was related to payroll, training,
and non-cash pre-open rent for Kona Grill Riverton which opened in
July 2023, and STK and Kona Grill restaurants currently under
development.
GAAP net income attributable to The ONE Group Hospitality, Inc.
in the second quarter of 2023 was $0.6 million, or $0.02 per share,
compared to $4.3 million, or $0.13 per share, in the second quarter
of 2022.
Adjusted Net Income**** attributable to The ONE Group
Hospitality, Inc. in the second quarter of 2023 was $1.8 million,
or $0.06 per share, compared to $4.9 million, or $0.15 per share,
in the second quarter of 2022.
Adjusted EBITDA** decreased $1.8 million, or 17.6%, to $8.5
million in the second quarter of 2023 from $10.4 million in the
second quarter of 2022.
Restaurant Development
The Company intends to open eight to twelve new venues in
2023.
There are currently four Company-owned STK restaurants
(Charlotte, NC, Boston, MA, Salt Lake City, UT and Washington D.C.)
and one Company-owned Kona Grill restaurant (Phoenix, AZ) under
construction. The Company plans to begin construction on a Kona
Grill restaurant in Tigard, OR in the near future.
During the first quarter of 2023, the Company opened a Kona
Grill in Columbus, OH, two venues through a licensing agreement
with Reef Kitchens and a rooftop at an STK in Scottsdale, AZ. In
July, the Company opened a Kona Grill in Riverton, UT.
Share Repurchase
On September 7, 2022, the Company commenced a share repurchase
program for up to $10 million of its outstanding common stock, and
subsequently increased authorized repurchases by $5 million. In the
quarter ended June 30, 2023, the Company purchased approximately
0.5 million shares for aggregate consideration of $3.4 million. As
of June 30, 2023, the Company had purchased approximately 1.7
million shares for aggregate consideration of $11.3 million under
this program.
2023 Targets
The Company is updating the following targets for 2023:
Financial Results and Other Select
Data
2023 Guidance
Total GAAP revenues
$350M to $365M
Managed, license and incentive fee
revenues
$15.0M to $15.5M
Total owned operating expenses as a
percentage of owned restaurant net revenue
83.0% to 82.0%
Total G&A excluding stock-based
compensation
$27M to $29M
Consolidated Adjusted EBITDA
$45M to $50M
Restaurant pre-opening expenses
$5.5M to $6.5M
Operating income
$20.5M to $24.5M
Effective income tax rate
5% to 10%
Total capital expenditures, net of
allowances received by landlords
2.5% of Company-owned revenue and
$3.0M to $3.5M per new Company-owned venue
Number of new system-wide venues
Eight to Twelve
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 4:30 PM Eastern Time.
The conference call can be accessed live over the phone by
dialing 1-412-542-4186. A replay will be available after the call
and can be accessed by dialing 1-412-317-6671; the passcode is
10179885. The replay will be available until August 17, 2023.
The webcast can be accessed from the Investor Relations tab of
The ONE Group’s website at www.togrp.com under “News / Events”.
Upcoming Investor Conference Participation
The Company plans to participate in the following upcoming
investor conferences:
- The Company will meet in-person with institutional investors at
the Lake Street 7th Annual Big Ideas Growth Conference on September
14, 2023 in New York City.
- The Company will meet virtually with institutional investors at
the CL King's 21st Annual Best Ideas Conference on September 18,
2023.
- The Company will meet in-person with institutional investors at
the Wells Fargo 6th Annual Consumer Conference on September 20-21,
2023 in Dana Point, CA.
About The ONE Group
The ONE Group Hospitality, Inc. (Nasdaq: STKS) is an
international 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 25
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
26 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 “target,”
“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 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 Securities and Exchange Commission,
including our Annual Report on Form 10-K filed for the year ended
December 31, 2022 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.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited, in thousands,
except income per share and related share information)
For the three months ended
June 30,
For the six months ended June
30,
2023
2022
2023
2022
Revenues:
Owned restaurant net revenue
$
79,923
$
76,930
$
158,502
$
147,446
Management, license and incentive fee
revenue
3,470
4,195
7,447
7,860
Total revenues
83,393
81,125
165,949
155,306
Cost and expenses:
Owned operating expenses:
Owned restaurant cost of sales
19,215
19,851
38,070
37,950
Owned restaurant operating expenses
48,784
44,309
95,611
83,682
Total owned operating expenses
67,999
64,160
133,681
121,632
General and administrative (including
stock-based compensation of $1,234, $911, $2,554, $1,790 for the
three and six months ended June 30, 2023 and 2022,
respectively)
8,039
7,261
15,523
14,140
Depreciation and amortization
3,506
2,926
7,162
5,641
Pre-opening expenses
1,609
804
2,908
1,149
COVID-19 related expenses
—
221
—
2,534
Lease termination expenses
—
—
—
255
Other expenses
195
—
352
—
Total costs and expenses
81,348
75,372
159,626
145,351
Operating income
2,045
5,753
6,323
9,955
Other expenses, net:
Interest expense, net of interest
income
1,642
444
3,429
952
Total other expenses, net
1,642
444
3,429
952
Income before provision for income
taxes
403
5,309
2,894
9,003
(Benefit) provision for income taxes
(13
)
869
148
1,042
Net income
416
4,440
2,746
7,961
Less: net (loss) income attributable to
noncontrolling interest
(152
)
137
(428
)
(12
)
Net income attributable to The ONE Group
Hospitality, Inc.
$
568
$
4,303
$
3,174
$
7,973
Currency translation gain (loss)
52
(169
)
(18
)
(261
)
Comprehensive income attributable to The
ONE Group Hospitality, Inc.
$
620
$
4,134
$
3,156
$
7,712
Net income attributable to The ONE Group
Hospitality, Inc. per share:
Basic net income per share
$
0.02
$
0.13
$
0.10
$
0.25
Diluted net income per share
$
0.02
$
0.13
$
0.10
$
0.23
Shares used in computing basic income per
share
31,782,783
32,601,203
31,730,299
32,411,570
Shares used in computing diluted income
per share
32,673,457
33,959,991
32,779,821
34,123,142
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
June 30,
For the six months ended June
30,
2023
2022
2023
2022
Revenues:
Owned restaurant net revenue
95.8
%
94.8
%
95.5
%
94.9
%
Management, license and incentive fee
revenue
4.2
%
5.2
%
4.5
%
5.1
%
Total revenues
100.0
%
100.0
%
100.0
%
100.0
%
Cost and expenses:
Owned operating expenses:
Owned restaurant cost of sales (1)
24.0
%
25.8
%
24.0
%
25.7
%
Owned restaurant operating expenses
(1)
61.0
%
57.6
%
60.3
%
56.8
%
Total owned operating expenses (1)
85.1
%
83.4
%
84.3
%
82.5
%
General and administrative (including
stock-based compensation of 1.5%, 1.5%, 1.1% and 1.2% for the three
and six months ended June 30, 2023 and 2022, respectively)
9.6
%
9.0
%
9.4
%
9.1
%
Depreciation and amortization
4.2
%
3.6
%
4.3
%
3.6
%
Pre-opening expenses
1.9
%
1.0
%
1.8
%
0.7
%
COVID-19 related expenses
—
%
0.3
%
—
%
1.6
%
Lease termination expenses
—
%
—
%
—
%
0.2
%
Other expenses
0.2
%
—
%
0.2
%
—
%
Total costs and expenses
97.5
%
92.9
%
96.2
%
93.6
%
Operating income
2.5
%
7.1
%
3.8
%
6.4
%
Other expenses, net:
Interest expense, net of interest
income
2.0
%
0.5
%
2.1
%
0.6
%
Total other expenses, net
2.0
%
0.5
%
2.1
%
0.6
%
Income before provision for income
taxes
0.5
%
6.5
%
1.7
%
5.8
%
(Benefit) provision for income taxes
—
%
1.1
%
0.1
%
0.7
%
Net income
0.5
%
5.5
%
1.7
%
5.1
%
Less: net (loss) income attributable to
noncontrolling interest
(0.2
)%
0.2
%
(0.3
)%
—
%
Net income attributable to The ONE Group
Hospitality, Inc.
0.7
%
5.3
%
1.9
%
5.1
%
(1)
These expenses are being shown as a
percentage of owned restaurant net revenue.
THE ONE GROUP HOSPITALITY,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
information)
June 30,
December 31,
2023
2022
ASSETS
(Unaudited)
Current assets:
Cash and cash equivalents
$
38,178
$
55,121
Accounts receivable
9,486
15,220
Inventory
5,765
5,728
Other current assets
2,344
2,091
Due from related parties
376
376
Total current assets
56,149
78,536
Property and equipment, net
111,509
94,087
Operating lease right-of-use assets
88,538
85,161
Deferred tax assets, net
12,311
12,323
Intangibles, net
15,312
15,290
Other assets
4,738
4,774
Security deposits
850
853
Total assets
$
289,407
$
291,024
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
11,767
$
13,055
Accrued expenses
18,277
22,409
Deferred gift card revenue and other
1,274
2,115
Current portion of operating lease
liabilities
6,444
6,336
Current portion of long-term debt
1,000
1,500
Other current liabilities
253
256
Total current liabilities
39,015
45,671
Operating lease liabilities, net of
current portion
110,251
105,247
Long-term debt, net of current portion
71,102
70,544
Other long-term liabilities
896
972
Total liabilities
221,264
222,434
Commitments and contingencies (Note
15)
Stockholders’ equity:
Common stock, $0.0001 par value,
75,000,000 shares authorized; 33,311,371 issued and 31,622,234
outstanding at June 30, 2023 and 32,829,995 issued and 31,735,423
outstanding at December 31, 2022
3
3
Preferred stock, $0.0001 par value,
10,000,000 shares authorized; no shares issued and outstanding at
June 30, 2023 and December 31, 2022, respectively
—
—
Treasury stock, 1,691,649 and 1,094,572
shares at cost at June 30, 2023 and December 31, 2022,
respectively
(11,322
)
(7,169
)
Additional paid-in capital
56,561
55,583
Retained earnings
27,340
24,166
Accumulated other comprehensive loss
(2,887
)
(2,869
)
Total stockholders’ equity
69,695
69,714
Noncontrolling interests
(1,552
)
(1,124
)
Total equity
68,143
68,590
Total liabilities and equity
$
289,407
$
291,024
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.
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
June 30,
For the six months ended June
30,
2023
2022
2023
2022
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Owned restaurant net revenue (1)
$
79,923
$
76,930
$
158,502
$
147,446
Management, license and incentive fee
revenue
3,470
4,195
7,447
7,860
GAAP revenues
$
83,393
$
81,125
$
165,949
$
155,306
Food and beverage sales from managed units
(1)
30,001
32,197
60,703
60,469
Total food and beverage sales at owned and
managed units
$
109,924
$
109,127
$
219,208
$
207,915
(1)
Components of total food and beverage
sales at owned and managed units.
The following table presents the elements of the quarterly
Comparable Sales measure for 2022 and 2023:
2022 vs. 2021
2023 vs. 2022
Q1
Q2
Q3
Q4
FY
Q1
Q2
US STK Owned Restaurants
57.1
%
17.8
%
4.0
%
0.2
%
15.7
%
1.0
%
(10.1
%)
US STK Managed Restaurants
103.6
%
26.6
%
2.1
%
(0.8
%)
21.9
%
15.4
%
2.5
%
US STK Total Restaurants
66.7
%
19.8
%
3.5
%
0.0
%
17.1
%
5.3
%
(6.8
%)
Kona Grill Total Restaurants
21.9
%
3.7
%
(3.6
%)
(7.6
%)
2.5
%
(4.3
%)
(1.5
%)
Combined Comparable Sales
45.1
%
12.8
%
0.5
%
(3.1
%)
10.8
%
1.6
%
(4.7
%)
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
June 30,
For the six months ended June
30,
2023
2022
2023
2022
Net income attributable to The ONE Group
Hospitality, Inc.
$
568
$
4,303
$
3,174
$
7,973
Net (loss) income attributable to
noncontrolling interest
(152
)
137
(428
)
(12
)
Net income
416
4,440
2,746
7,961
Interest expense, net
1,642
444
3,429
952
(Benefit) provision for income taxes
(13
)
869
148
1,042
Depreciation and amortization
3,506
2,926
7,162
5,641
EBITDA
5,551
8,679
13,485
15,596
Pre-opening expenses
1,609
804
2,908
1,149
Stock-based compensation
1,234
911
2,554
1,790
COVID-19 related expenses
—
221
—
2,534
Lease termination expense (1)
—
—
—
255
Non-cash rent expense (2)
(123
)
(54
)
(154
)
(85
)
Other expenses
195
—
352
—
Adjusted EBITDA
8,466
10,561
19,145
21,239
Adjusted EBITDA attributable to
noncontrolling interest
(65
)
211
(254
)
133
Adjusted EBITDA attributable to The ONE
Group Hospitality, Inc.
$
8,532
$
10,350
$
19,400
$
21,106
(1)
Lease termination expense are costs
associated with closed, abandoned and disputed locations or
leases.
(2)
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.
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 to Restaurant Operating Profit for the period indicated (in
thousands):
For the three months ended
June 30,
For the six months ended June
30,
2023
2022
2023
2022
Operating income as reported
$
2,045
$
5,753
$
6,323
$
9,955
Management, license and incentive fee
revenue
(3,470
)
(4,195
)
(7,447
)
(7,860
)
General and administrative
8,039
7,261
15,523
14,140
Depreciation and amortization
3,506
2,926
7,162
5,641
Pre-opening expenses
1,609
804
2,908
1,149
COVID-19 related expenses
—
221
—
2,534
Lease termination expense
—
—
—
255
Other expenses
195
—
352
—
Restaurant Operating Profit
$
11,924
$
12,770
$
24,821
$
25,814
Restaurant Operating Profit as a
percentage of owned restaurant net revenue
14.9
%
16.6
%
15.7
%
17.5
%
Restaurant Operating Profit by brand is as follows (in
thousands):
For the three months ended
June 30,
For the six months ended June
30,
2023
2022
2023
2022
STK restaurant operating profit (Company
owned)
$
8,594
$
9,469
$
19,056
$
18,282
STK restaurant operating profit (Company
owned) as a percentage of STK revenue (Company owned)
18.9
%
21.9
%
20.6
%
22.2
%
Kona Grill restaurant operating profit
$
3,394
$
3,353
$
5,895
$
7,629
Kona Grill restaurant operating profit as
a percentage of Kona Grill revenue
9.9
%
10.0
%
9.0
%
11.8
%
Adjusted Net Income. We define Adjusted Net Income as net income
before COVID-19 costs, lease termination expenses, one-time
stock-based compensation, non-recurring costs, non-cash rent during
the pre-opening period and the income tax effect of any
adjustments.
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
June 30,
For the six months ended June
30,
2023
2022
2023
2022
Net income attributable to The One Group
Hospitality, Inc. as reported
$
568
$
4,303
$
3,174
$
7,973
Adjustments:
COVID-19 related expenses
-
221
-
2,534
Non-cash and other pre-opening
expenses(1)
1,122
224
1,548
224
Other expenses
195
479
352
479
Adjusted net income before income
taxes
1,885
5,227
5,074
11,210
Income tax effect on adjustments(2)
(81
)
(290
)
(119
)
(1,280
)
Adjusted net income attributable to The
One Group Hospitality, Inc.
$
1,804
$
4,937
$
4,955
$
9,930
Adjusted net income per share: Basic
$
0.06
$
0.15
$
0.16
$
0.31
Adjusted net income per share: Diluted
$
0.06
$
0.15
$
0.15
$
0.29
Shares used in computing basic income per
share
31,782,783
32,601,203
31,730,299
32,411,570
Shares used in computing diluted income
per share
32,673,457
33,959,991
32,779,821
34,123,142
(1)
Non-cash and other pre-opening expenses
relate to non-cash rent expense and costs for our new store
training teams unrelated to new restaurant openings.
(2)
Reflects the tax expense associated with
the adjustments for the three and six months ended June 30, 2023,
and June 30, 2022. The Company uses its estimated effective tax
rate for the current year and for the previous year.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230803331842/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
ONE Group Hospitality (NASDAQ:STKS)
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ONE Group Hospitality (NASDAQ:STKS)
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