Q1 2022 Waitr Holdings Inc Earnings Call

Good afternoon, everyone I would like to welcome all of you to the waiter Holdings incorporated first quarter 2022 conference call.

With us today are waiters, Chief Executive Officer, Carl Grimm Stat, and Chief Financial Officer Leo.

One off.

By now you should have access to the company's earnings press release, if not it may be found at SEC Gov.

Or their investor relations website at investors thought wait or App dotcom.

Before I turn the call over to management I would like to remind you that certain statements and projections in this call about future business and financial results constitute forward looking statements.

These statements are based on management's current business and market expectations and actual results could differ materially from those projected in the forward looking statements.

Please see the risk factors contained in the company's annual report on Form 10-K for a discussion of risks that may cause actual results to vary.

From these forward looking statements.

Finally, please note that on todays call management may refer to non-GAAP financial measures.

Please refer to waiters first quarter 2022 earnings release for a full reconciliation of its non-GAAP financial measures to the most comparable GAAP financial measures.

I would now like to turn the conference call over to you later CEO Karl Good Stat, who will give an overview of the company's business activities and developments for the first quarter of 2022.

He will then turn the call over to Leo Mcdonald, who will provide an overview of the company's operating and financial results.

We will then open the call for Q&A.

Carl.

Thank you Hello, everyone and welcome to the first quarter 2022 earnings call.

In the first quarter, we focused on the continued build out and optimization of several key integrations with third party aggregators, such as Google food ordering and Oh low dispatch. We also completed our direct integration with Panera bread and are in various stages of integrating with several other national.

Q S R and convenience store brands, such as 711, we.

We anticipate these integrations will be finalized in the second and third quarters of 2022 and provide access to over 2000 serviceable Q S. Our locations.

These partnerships along with our existing integrations with point of sale systems, such as it's a check me.

Charlie although rails order Mark and odder have provided access to thousands of new restaurants to the platform and should bring increased visibility.

Increased diner access and increased order flow.

The evolution of this company over the last two plus years has shown that we are keenly focused on enhancing and refining our delivery capabilities by leveraging our vast active driver base and offering a wider inventory to consumers.

As such we continue to expand our deliver anything initiative with the progression of instituting direct connections with several online ordering platforms to facilitate last mile delivery services.

As consumer demand drives the necessity for faster delivery of a broader range of products. This will expand the total addressable market and open the door for increased revenue potential through various channels. In turn this will also explain the earnings potential for our active <unk>.

Divers.

We are also anticipating commercializing our in house instant pay technology, which thus far is only being utilized to facilitate payments to our independent contract drivers.

Through this service, we currently offer a variety of payment options, including Paypal zelle as well as other forms of payment through our partnerships with figure pay emprise out our drivers appreciate the flexibility of disbursement options and we hope to expand.

This to both the restaurant industry and other verticals to provide faster access to earned income.

Through our presence in many pronounced college sports markets, we have recognized the need for a better in stadium dining experience at these events that cuts down on wait times and brings the delivery experience to these venues we have successfully implemented this technology into our existing.

Application and this has already resulted in streamlined in stadium dining experiences in several stadiums across the south including the University of Alabama L. S U and the New Orleans Saints home of the Super Dome.

The convenience of in stadium ordering capabilities will be a vehicle to expand our presence within our core markets and potentially provide an entrance into new territories.

We now provide payment processing services for over 2300 merchants and we expect this to continue to grow on a monthly basis.

During the first quarter of 2022, we hired two industry veterans in the company's first ever Chief Information Officer, and Chief techno Chief.

Heath Technology officer positions. These individuals bring a high caliber of technical abilities and have already begun the process to uniform unified our applications under one umbrella. Once completed this single platform will provide for cost efficiencies maximizes product build.

Cycles, and feature enhancements and Sip and simplify our overall service and support operations. This is an important step as this consolidated technology platform will serve as the foundation of of our rebrand strategy under the a S. A P name.

We believe that this will unify the service offering from.

From our existing brands and better.

Body, the future direction of our company.

We continue to experience adverse effects.

Of the current macro environment macro economic environment, particularly within our core southern markets, most notably due to rising gas prices and inflationary pressures. We believe these factors contribute to our muted order flow in the first quarter of 2022, while we can't control these external factor.

We do acknowledge the.

The pronounced impact that this has had on the economy and the downstream effect on our consumers consumers have become even more price conscious and thus it is critical.

To provide further.

Cost of options the previous.

The previous mentioned integrations with major key U S. Our brands will continue to widen the varying price points available on our platforms.

With that I'd like to turn the call over to Leo our Chief Financial Officer.

Thank you Carl what's our view, our first quarter 2022 financial results.

Revenue for the first quarter of 2022 was $35 million compared to $50 9 million in the first quarter of 2021 due in part to the lack of government stimulus payments in the first quarter of 2022 compared to the first quarter of 2021.

Adjusted EBITDA for the first quarter of 2022 with a net loss of $1 8 million compared to adjusted EBITDA of $8 3 million in the first quarter of 2021.

Net loss for the first quarter of 2022 was $77 2 million or 50 cents per share compared to a net loss of $3 7 million or three cents per share in the first quarter of 2021.

Net loss for the first quarter of 2022 included noncash $67 2 million goodwill impairment charge.

Cash on hand totaled $54 9 million as of March 31, 2022 total outstanding long term debt as of March 31, 2022 was $84 5 million, consisting primarily of our 35 million term loans and $49 5 million of convertible notes.

As of May nine 2022, we have amended the terms of our debt agreement and have agreed with our lender to pay down a portion of our outstanding debt balance by $20 million to.

Approximately $65 million as well as extending the maturity of both debt instruments to may 15th 2024.

That concludes the recap of our first quarter 2022 financial results. We will now go into a short Q&A session.

Ladies and gentlemen at this time, if you'd like to ask a question. Please press star and one to withdraw your question you May Press Star two.

Our first question today comes from.

Dan <unk> from the benchmark company. Please go ahead with your question.

Great. Thanks, Carl just on the sort of high level on the food side of the equation, having a bunch of U S. R. Makes sense you can see from your AAV that inflation is kind of creeping through already can you just talk about you know timing for implementation. When you brought on a lot of the online ordering.

Platforms took you know 612 months. So just can you help us think through timing to onboard.

Other restaurant options and what that might mean for the impacts of waterflood. Thanks.

Well yeah yeah.

Good point to pick up on the E O V going up that's not because of price increases from from our side. It's just generally speaking our food cost of just continued to rise.

And a lot of the growth that we've seen in our markets is really driven by these lower cost options.

I think that by third quarter most of these integrations will be operational and.

Yeah, I've I've long said, Dan even.

Back in the the Covid period of time, if our consumer is hurting financially it will impact their decision, making process and we've traditionally been in independent restaurant.

Focused business and you know it's hard to argue with the fact that it's a more expensive than an independent restaurant. Then you know <unk>. So I think that are between the ordering platforms in the direct integrations with a lot of the P O S.

Companies that are embedded in these Q S. Our organizations, we should start to really see some results or at least balancing in.

In the third quarter.

Got it that's helpful. And then just quickly scan through the theory of the payment fees are running at like two and a half millions I mean, that's a run rate of $10 million a year.

That seems like it's growing I know you've talked about it before.

Can you just talk about sort of the trajectory. There you talked about 'twenty 300 merchants, just maybe just give us a sense of how rapidly that's growing.

And obviously I would think that would be margin accretive to the overall profile of the business.

Yes, you know as you know I was in the payments business for.

A decade and a half and we we continue to build out. This business is it's quite viable you're right. It is growing on a monthly basis. The goal is to have our internal.

Internal sales signing a north of 500 accounts per month by the end of the year. We're right around 300, right now maybe a little bit underneath that and that's merchants of all types. So we're we're attacking our restaurant portfolio, but we're also signing merchants of.

Other S I C codes to traditional credit card processing.

So you know that will continue to grow that grows by adding one more merchant and Ah you know the combination of attacking the embedded restaurant base that we have as well as just continuing to build out a full service.

ISO if you will within.

Within waiter.

Continued the problem is it's still even though the two and a half million on a $10 million run rate, it's still small to the overall revenue base of the business. So it just will take time you know we're actively looking at other other assets within the payment space that will speed the grow.

It's up and an increase the the sheer mass of the payments business, but we're completely focused on that that's a very low low risk high return strategy just needs to get bigger.

Got it yeah that makes sense that we want to discuss what portion of that is that the EV at the moment Carl says they don't want to frustrate you [laughter].

The question on the cost side, obviously is.

Just one of you know maintaining at this point the volatility has been crazy, but now that you have kind of a clear baseline you know I assume there's ways to kind of rightsize operations to to fit the trajectory here and you also paid down agreement with the lender pushing out the debt paying down debt I assume that's going to be the primary use.

Our cash in the near term and given how friendly.

Lender has been I would assume that that's probably overall not really a major issue at this point unless things drastically change between now and say the next 24 months.

We have a great relationship with our lender and you know.

That a lot of people quickly forget that when we started on this project the business had over $130 million of debt on a negative EBITDA business.

That was not in strong financial shape, right and it's easy to ignore the balance sheet, but I never have and you know at the end of the day.

And the focus has always had to be controlling and strengthening that that balance sheet. Because that's the only thing that can kill us.

We we have a viable business, we're expanding into other areas last mile deliveries here to stay but Ah you know the fact that we have extended.

Extended the maturities and we continue to pay down that debt aggressively is super important and super important to all constituents it might not be as exciting about talking about some of these other things, but we inherited that balance sheet and you know we're quite proud of the fact that you know we've reduced it by 50%.

Because that that is the the one thing that that you can't lose track of.

Got it that's super helpful and for whatever it's worth Carl you actually came in slightly ahead of what I thought you'd do in Q1, so actually pretty good results I think in this environment. So thanks for all the color I appreciate it.

Thank you.

And ladies and gentlemen, with that we'll conclude today's question and answer session I'd like to turn the floor back over to Carl groups that for any closing remarks.

Ah. Thanks again for Everyones continued interest we continue to as we've put forth in the earnings release Theres a lot of projects that we've been working on.

That will pay dividends in the future it just not necessarily dividends, but should should.

Lead to higher revenue and profitability in the future. So thanks again, and we'll talk to you next quarter.

Ladies and gentlemen, with that we'll conclude today's conference call and presentation. We do thank you for joining you may now disconnect your lines.

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