Q4 2020 Waitr Holdings Inc Earnings Call
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Good afternoon, everyone I would like to welcome all of you to the Waiter Holdings, Inc. Fourth quarter 2020 conference call with US today are waiters, Chief Executive Officer, Carl Grimm Stat, and Chief Financial Officer, Leo Bugged down if by now you should have access to our earnings press release, if not it may be found at S. E C dot Gov or our Investor relations website at.
Investors wait are at dotcom.
Before I turn the call over to management and I would like to remind you that certain statements and projections and this call about our future business and financial results constitute forward looking statements.
These statements are based on management's current business and market expectations our actual.
Could differ materially from those projected and the forward looking statements. Please see the risk factors contained in our annual report on form 10-K, and and our form 10 Qs for a discussion of risks that may cause our actual results to vary from these forward looking statements. Finally, please note that on todays call management may refer to non-GAAP financial.
And measures please refer to waiters fourth quarter, 2020 earnings release for full reconciliation of its non-GAAP financial measure to the most comparable GAAP financial measure.
I would now like to turn the call over to waiters C. E O Carl Bromstad, who will give an overview of the company's business activities and developments for the fourth quarter of 2020. He will then turn the call over to Lisle, but Dallas, who will provide an overview of the company's operating and financial results. We will then open the call for Q&A call.
Thank you Hello, everyone and thank you for joining our call. Today. We are pleased to report another quarter of profitability and positive operating cash flow, marking our 11th straight months of continued profitability and our business.
Despite impacts from adverse weather related events during the fourth quarter of 2020 and early 2021, along with the ongoing pandemic. We further solidified the sustainability of our business model and unit economics.
Our business reflects the implementation of several fundamental strategic initiative that stabilized the foundation of the company. So that we could position it for future growth.
Our efforts during 2020 included the expansion into new delivery vertical such as alcohol and grocery and the continued diversification of our product offering beyond restaurant and food delivery with the launch of our table side service technology.
As the pandemic continues to impact the restaurant and hospitality sector.
We remain steadfast in helping our restaurant partners navigate through these challenging.
And the first quarter of 2021, we completed the integration with several third party platforms. We also continue to partner with major national change and.
And virtual ghost kitchens as the restaurant industry continues to adapt to the new environment in the midst of the pandemic.
And the first quarter of 2021, we got our first set of virtual kitchen and fly on our platform.
In 2021, we look to build on our success from 2020 by focusing on profitable growth, both organically and through strategic acquisitions to bolster our delivery footprint and and expansion into other delivery verticals, while further refining our integrated payments platform.
We have.
Recently agreed to pursue a partnership with flow payments to create a compliant marketplace.
Delivery and payment solution for dispensaries selling candidates. We are excited for this new venture into uncharted waters as the regulatory framework around the cannabis industry continues to evolve.
Now I will turn it over to Leo <unk>, our Chief Financial Officer for a recap of fourth quarter results.
Thank you Carl went to now comment on our fourth quarter and annual 2020 financial results.
For the fourth quarter of 2020 was $46 8 million compared to $43 1 million and the fourth quarter of 2019.
And you'll revenue for 2020 was $204 3 million compared to $191 7 million from 2019.
Net income for the fourth quarter was two 6 million for two cents per diluted share compared to a loss of 21 6 million for 2008 cents per diluted share for the fourth quarter of last year.
Net income for the year ended December 31, 2020 was 15 8 million for 15 cents per diluted share.
And to a loss of $291 3 million for loss of $4 per diluted share a year ended December 31, 2019 and <unk>.
Increase of $307 1 million.
Net loss for the year ended December 31, 2019, and create a goodwill and intangible asset impairment charges for the $191 2 million.
Adjusted EBITDA for the fourth quarter was $9 9 million compared to a loss of $14 4 million in the fourth quarter 2019, and increase of $24 3 million.
Adjusted EBITDA for 2020 was $43 4 million compared to a loss of $54 8.002 million 19, and increase of $98 2 million for 179%.
This change reflects the implementation of our myriad of initiatives around service and profitability.
And December 31, 2020, we had cash on hand of $84 7 million and increase of $7 6 million from September 32020.
Primarily by positive operating cash flows cash.
Cash on hand, and a January 31, 2021 with $88 5 million.
Total outstanding long term debt was $99 1 billion, consisting primarily of $49 4 million term loans for <unk>.
$9 5 million of convertible notes.
That concludes the recap of our fourth quarter and annual financial results. We will now go into a short Q&A session.
At this time, we will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
Information total indicate your line is and the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up and your handset before pressing the star keys, one moment. Please while we poll for questions.
And our first question is from Dan Carnose with the benchmark company. Please proceed.
Great Thanks, and good afternoon.
Carl just maybe first and the weather and is there any way to size the impact and Q4 and expected in Q1, and maybe how Q1 looks relative to Q4 and kind of just parse out.
Underlying.
And what you think the underlying organic.
Those trends are between Q3 Q4, and then kind of as we're looking into Q1, and then I have a follow up.
Yeah, So so Dan.
And the effects in both Q4 and into Q1.
Vary from market to market.
And some of our markets. It is we're still not back at.
At full capacity since.
And the hurricane season.
And ultimately we do see these markets rebound.
They are I would hope anomalies, but ultimately it effects.
Daily order flow right because.
And most recently when people won't have water and electricity is very difficult.
And to supply our service rests.
Restaurants can't prepare food and we can't deliver it.
And I think in the fourth quarter, you saw the impact of that along with just seasonal challenges in and around holiday periods.
Yeah.
The next follow up question that you had was in and around organic trends is it.
Yes, I just I'm just curious.
Take weather out of the equation for a second if you could just give us a sense of kind of what youre seeing in terms of underlying.
Penetration order frequency, just any kind of the kpis that you normally give around sort of the health of the underlying business ex weather.
Yes, so ex weather I think.
If we think about 2020.
We had first quarter second quarter was an anomaly.
Third quarter continued to benefit from subsidies and and unemployment benefits.
Fourth quarter, and I think was for.
Fairly normal sons, the weather related dynamic I think first quarter.
Looks a lot like fourth quarter given.
Again, the unforeseen weather related.
Challenges I think debt.
The business is healthy the diner.
Universe.
<unk> stayed fairly constant.
And I think that we probably can look forward to this new enhanced.
Subsidy package along with the unemployment.
Extended unemployment benefits, probably will continue to give us some wind and the sales going into.
The rest of it at least the first half of this year.
Perfect and then obviously the huge announcement on the cannabis side of the equation.
Love to just kind of get your sense on.
How much do you think how quickly that scale how much it could contribute.
Unit economics, how this kind of rolls out just anything around that announcement it would be really helpful.
Right so.
Obviously the both.
And both the opportunity and the biggest challenge is in and around navigating state to state and at this point obviously federal.
Laws and regulations right.
For a long time.
And the payment side.
Payments or let's just say accepting payments for dispensaries has been a big challenge.
The second part of it being in this last mile delivery is another big challenge for lets just call it a cannabis retailer.
So.
It's Super early days, we're in in the process of.
Really putting forth our blueprint for how we're going to operate we partnered with are really.
And.
Great established company and flow payments and I think you know.
A lot of great things to come here and I talk often about diversifying the delivery platform.
Alcohol is great groceries, great I don't think there is a better vertical.
From a growth and a margin expectation than the cannabis industry and.
Because of all the regulatory challenges.
And in and around it I think it will give us we're a small company I think we can be very nimble and we have a ton of experience and payment side of that also and.
And creating this solution, which potentially could be partnered with.
And various different software companies that actually helped dispensaries run their businesses.
As well as stay compliant with all the many state regulations that they have to adhere to.
I think it's.
Probably.
One of the most exciting things that we that we run across and it will it will be a focus for us.
So not to pin you down, but you know and any way to kind of.
Think about what we should expect this year from the topline and Bottomline perspective from that initiative.
Too early.
Fair enough I appreciate all the color.
[laughter].
Yeah.
And our next question is from Jeff Van <unk> with B Riley and co.
Hi, everyone.
I Wonder if you could just talk a little bit more about how youre thinking about reopening of the restaurant industry.
There's been a lot of change a lot of restaurants Boston.
Just wondering how you're thinking about that for both your delivery business and for some of your net P. O S systems, given that you've ramped.
Dine in and so forth.
Well Jeff.
We've said a number of times.
Where we operate.
You know, our footprint and South East, Texas, Florida.
A lot different environment than L. A chicago.
New York right.
Over the course of the last year.
Most of our markets have been predominantly open.
And you know a lot of times when I when I'm asked about this gigantic.
And take topline growth that some of our national competitors have been enjoying.
It's almost like we've been in a different different world.
I I think I revert back to the challenge of people being out of work and unemployed more so than the dynamic of you know restaurants quote unquote reopening or having failed because they've been challenged during the pandemic I think that's me.
More of a challenge for us people out of work.
And.
And for at least for six months kind of left with and without the big subsidy package.
So I think the.
The.
Mitigating of the Covid scenario that will open up restaurants, and the big cities is not as much of a dynamic for us.
Think that.
<unk>.
You know it's it probably.
Is a neutral.
From where we are because it'll be balanced by a subsidy package and hopefully a lot more people getting back to work.
Mhm mhm.
Okay. So if we think about that as sort of a neutral at this point and we think about some incremental contribution from the dine in apps that you have.
H initial contribution from the dine in.
On a rolling out.
Some new markets I think.
<unk> you.
We're constantly looking at the strategic side of the.
And the acquisition.
Scenarios debt.
Both will bring potentially bring us more order flow solidify.
Our market position and some of our top markets and also allow us to evolve into.
Other delivery verticals.
Other things that I think are on.
On the horizon, which if you if you cover some of the other bigger companies.
Our pretty mainstream stuff that just we haven't had the ability to.
To take advantage of our things like paid placement.
And other service revenues that we just have not been able to.
Technically roll out 100%.
And another thing that we're excited about is our ability to provide our driver network with a faster.
<unk> faster funds.
<unk>.
And just another thing that we've built out over the last six months that both will help with driver retention as well as generating additional service revenue.
Mhm Mhm, and then I know you you mentioned and grocery and alcohol delivery, but just wondering if there's any more color you can give us on how those are going I know, it's still relatively early for you, but I think the early very early results for or encouraging. So I'm just wondering if there's any more to add on those two.
Yeah. If you remember, we initially stuck our toe and the water with the grocery.
Vertical because we wanted to stay top of mind to our diner universe, we quickly realized that and <unk>.
Margins for great basket sizes were larger and.
And there was demand there that I don't think there is going to go away.
So we have a regional.
And local focus as well.
The it's it's still from a revenue perspective not material we've we've.
It had to do a lot of technical enhancements to them.
Create a product and a customer facing app.
That is easy to use.
Utilize I mean, obviously and a and a grocery store you have a lot more skus than you do with.
With your general restaurant menu. So we're focused on it we have a strategy around it and.
You know the all the unit economics are very favorable.
Alcohol is.
Yeah, just is here to stay as well.
But again the biggest challenges in and around alcohol is state by state.
Adhering to the rules and regulations.
And as we run across them so.
We're focused on both of those verticals.
Okay, Great and then just a follow up on cannabis and I know you addressed that a little bit.
Wondering how we should think about you know sort of where you start regionally I think Florida. Maybe is one that you can start and maybe where did that and maybe one of the first ones, but just any color on kind of a reasonable where you can start and then also would you try to get into other regions, where you don't really have business.
How are you going to stick with your footprint.
No I think if you and there are a lot of web site you can look at it you can look at a map of.
Where you can do things and where you can't the beauty of.
The way, we have pivoted the business and I've said this before whether its cannabis or through.
Garnering a footprint with our dine in product and what have you we can be and any market.
Right.
So.
If and when and if the opportunity presents itself in a state debt, we're not currently and we will.
Essentially spin up our logistics platform and a very short period of time to be in net market.
Okay, good great to hear and thanks for taking my questions and and best of luck for the rest of the quarter.
Thank you very much.
Sure.
And our next question is from Alex firm and with Craig Hallum Capital Group.
Great well thanks for taking my question wanted to ask about just your core business here.
And at Economics look very strong EBITDA margin.
And highest in the industry here at North of 20%. The wanted to ask about just the number of active diners looks like it's been falling a little bit given how strong the unit economics are and that Youre really spending so little money on marketing here. I mean is there is there a point in 'twenty, one where where you start.
To reinvest and marketing a little bit to grow the file back up just curious kind of how you balance those things as you as you move throughout the year.
Right, we get asked about debt a lot I guess, the first way to think about it.
Is there as well.
We have such healthy margins and it does give us the latitude to be able to invest.
I think if if nothing else, we probably proven and this year that we're very fiscally responsible.
And I I I do think that there are.
Some strategies in and around that would be considered marketing debt. We have seen some success with that being said.
Uh huh.
I'm not sold on the strategy of focusing.
Solely on us.
Diners right and trying to attract diners through to the platform.
By giveaways.
And other promotions that some of the larger companies I guess have the latitude to spend.
And on major endorsements and what have you.
It's hard for me to believe.
How that payback works, Conversely, and I've said, it often I think for.
From where we sit our strategy is to focus on the restaurant first for.
For for that matter.
That.
Entity, that's providing a good a sale of a good or service, meaning whether it's you know in the future a liquor store dispensary or a grocery store.
And our background comes from providing merchant services from a payment perspective, I think we will continue to evolve the business.
<unk>.
Debt focus as restaurant and merchant first.
I think that's where you'll continue to see us invest our marketing dollars.
And you know given what you pointed out our healthy margins and what have you it does give us.
A lot of latitude.
To invest in those areas, but I think he can feel confident debt.
We're going to do it in a manner debt.
Is that yields a return for shareholders.
Great that's really helpful. Thanks Carl.
Yeah.
And our next question is from Kunal <unk> with Deutsche Bank.
Yeah, Hey, guys. This is brought on the line for <unk>.
You've recently announced and completed a lot of integrations and partnerships and order management and don't assistance and the partnerships like next bite and while we were just discussing the previous questions. So kind of in light of all of these how should investors think about the vision for where you want to be you know, what you're building towards where you wanna be and and especially given your comments about being more.
Restaurant and diner focused and then.
Related to that are there like particular gaps that you feel you still need to close or do you think with that vision that you've now have most of the core pieces in place. Thank you.
Well and I think we've talked about this before.
In waiters past life, they hadn't focused on essentially Ah.
Integrators, Pos providers or what have you.
And and.
And there might have been a number of reasons why they did that but it also held the company back from many opportunities with nationwide brands and even some regional brands.
So I think what you'll see us do is to continue to.
Buildout as many integrations with players that have a restaurant footprint as possible.
Because what it does for our sales team is it opens up opportunities with many units debt come online in in <unk>.
And not just 1123 of them, but hundreds at a time.
So I think that there is still opportunity beyond.
What we've announced order Mark it's a checkmate childly I mean, there there are a number of others.
For us to.
Further rollout.
Got it thank you.
Ladies and gentlemen, we have reached the end of the question and answer session and I would now like to turn the call back over to management for closing remarks.
In summary, just thank you again to to everyone that supported us this year.
Or this past year 2020 was a challenging and exciting year for the company both with the.
A lot of micro issues that we had to deal with internally, but then also you know the the pandemic and the macro issues storms and what have you.
I think we've done a good job and phase one of the project, we've created a sustainable profitable growing company.
And that's able to attack multiple opportunities going.
Into the future.
So I thank everyone again for your time today.
And we look forward to talking to you again and a few months.
Thank you. This concludes Tonight's conference you may disconnect. Your lines at this time. Thank you for your participation and have a great evening.