Q4 2022 FAT Brands Inc Earnings Call
Good afternoon, ladies and gentlemen, and thank you for standing by.
Welcome to the snacks brands, Inc, fourth quarter and fiscal year 2022 earnings conference call.
At this time, all participants have been placed in a listen only mode.
Please note that this country is being recorded today people read between 'twenty to 'twenty three.
On the call from Pac brands, our President and Chief Executive Officer, Andy Wade Hoon.
Chief Financial Officer Kim.
This afternoon, the company made its fourth quarter and fiscal year 2022 financial results publicly available.
Please refer to the earnings release and earnings supplement both of which are available in the investor section on although B W.
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Brian Dot Com apologies Www Dot Smith brand Dot com.
Each contain additional details about the fourth quarter, which closed on December 25th tweak between the two.
But before we begin I must remind everyone that part of the discussion today will include forward looking statements.
These forward looking statements are not guarantees of future performance and therefore, I'm jewelry line should not be placed on them.
Actual results may differ materially from those indicated by these forward looking statements due to a number of risks and uncertainties.
The company does not undertake to update these forward looking statements at a later date.
For more detailed discussion of the risks that could impact future opening operating results and financial condition.
Today's earnings.
Relief and recent U S P fundings.
During today's call the company will discuss non-GAAP financial measures, which can be Ken you can be useful any boundaries is performing.
The presentation of this additional information should not be considered in isolation.
Jude fourth based on prepaid.
In accordance with GAAP.
Reconciliations.
Comparable got missions on available in today's earnings release.
I would now like to turn the call over to Mr. Antibody, The Holmes President and Chief Executive Officer. Please go ahead Sir.
Thank you operator, and Hello, everyone 'twenty.
2022 is a big year for fat brands as we continue to execute on our growth and integration strategies I would like to express my sincere appreciation to our teams and franchisees and their employees, who helped us close a record breaking year.
It is due to their hard work and dedication that we move forward with confidence and execute the incredible growth opportunity that lies ahead for fat brands.
What was once in 2003, just fat Burger has now transformed itself into a 17 concept portfolio with a strong worldwide presence. We ended fiscal year 2022 with over 2300 locations opened or under construction across more than 40 countries. We currently have over.
750 franchise partners with nearly half serving this multi unit operators operating anywhere from 2% to 75 restaurants.
To close the year, we received the prestigious honor of public company of the year from the Los Angeles business Journal and stopped Burger was ranked as the number one burger in the USA by a Los Angeles times food contributing writer pretty cool.
Turning to fiscal year 2022, we grew total revenue over 240% to $407.2 million.
From $118 $9 million in the prior year for.
For fiscal year, 2022 system wide sales increased 108% to $2 $2 billion.
We leveraged the strong top line growth into an almost 320% increase adjusted EBITDA, ending 2022 with $88 $8 million and adjusted EBITDA.
Now moving onto our most recent fourth quarter performance.
Total revenue grew 40% in the fourth quarter of 2022 to $103 $8 million.
Compared to $74 $2 million in the fourth quarter of 2021.
The increase in total revenue was a result of three acquisitions twin peaks in October 2021, and if there's always and native grilling wings in December 2021 coupled with ongoing sales recovery from the negative effects of the COVID-19 pandemic and the prior year.
We grew system wide sales 22, 1% to $532 $9 million when compared to the prior year quarter of $436 $3 million.
And finally comparable system wide same store sales increased two 7% in the fourth quarter of 2022 and 6% for the full year.
Looking at profitability, we saw an 88.5% increase in adjusted EBITDA, ending the fourth quarter with $19 6 million in adjusted EBITDA.
Now I'd like to discuss our two part growth strategy, consisting of organic growth and growth by acquisition.
We had strong organic growth in 2022 as demonstrated by the record opening of over 140, new units, including 44 units opening in the fourth quarter.
We achieved all of this despite supply chain headwinds and permitting and construction delays included in the 2022 openings were the conversion of 21, Nestle cafes to great American cookies as a result of the May 22 acquisition of Nestle Tollhouse Cafe by chip franchise business.
Franchisee interest is at an all time high from new and existing franchise sales alike, which speaks volumes to our robust portfolio of brands that continue to deliver strong same store sales and attract new fans around the globe.
During 2022, we signed 110, new franchise development agreements, representing a total of 362, new stores, leading the way in new store development amongst fat brands concepts with stop Burger and Buffalo's Express with 86 stores, there's always with 61 round table pizza with 56 and twin peaks.
With 50, new sports logic side noteworthy.
Franchise deals included a combined 80 store development agreement for 40 fabric or and Buffalo's Express locations in 40 round table Pizza restaurants in Texas at 32 store agreement for twin peaks in Mexico, and a 10 store agreement for Johnny Rockets and Israel.
Our pipeline in total of additional restaurants to be though remained strong signed agreements representing more than 1000, new restaurants.
This represents 43% unit growth and is worth an estimated $60 million in incremental adjusted EBITDA when it materializes over the next few years lifting our adjusted EBITDA from approximately $90 million today to approximately $150 million. This organic growth is a naturally delevering event and when we.
Achieve that level of adjusted EBITDA to bring our leverage ratio down to approximately seven times, our securitized debt.
This year, we remain focused on converting our pipeline year to date, we have opened 26, new units and we will continue this robust growth throughout 2023, we anticipate we will open between 150 and 175, new stores in 2023, which represents up to a 25% unit growth from 2022, and we'll set yet another new store opening record.
A record for Q1, which is C between 50 and 60 total units opened.
Now I would like to touch upon our polished casual strategy, specifically twin peaks, which we acquired in October 2021.
Since our acquisition of the brand a little over a year ago. The chain has grown over 20% from 80 to 96 units open we have plans to build another 18 to 20 restaurants in 2023, and therefore, we will be quickly surpassing the key milestone of 100 units ending the year with approximately 115 largest and yet another year of approximately 20% growth.
Or said differently approximately 40% unit growth in just two years.
New stores are seeing a move us north of $6 million.
And some locations in Florida are generating between nine and $12 million each.
Focus for 2023 is to identify opportunities to accelerate twin peaks openings in our pipeline based on the strong unit economics, and the long term growth potential we see for the brand.
As we look across our portfolio of brands another area of focus for 2023 as our co branding and Tri band branding strategy in November we opened our first Tri branded locations, which consists of our SAP Burger Buffalo's Express and hot dog on a stick in the Los Angeles neighborhood of Valley village.
This year, we will look to pair of fat burning round table pizza as well as Johnny rockets and hotdog on the steps we've.
We've seen great success with co branding and now Tri branding as it drives sales and enables us to grow margins through a combined menu approach.
We presently have more than 200 co branded locations, mainly consisting of a fat Burger Buffalo's express model or marble slab, great American cookie pairing.
Additionally, we have jumpstarted, a new initiative to place more focus on non traditional growth in 2023 and beyond which includes opening in airports universities amusement parks hospitals stadiums as we see great value in these venues.
Our manufacturing facilities in other important parts of our growth story as it produces pretzel makes them cookie dough for several of our brands.
For the fiscal year 2022 manufacturing facility contributed $33 5 million in sales and added approximately $15 million and EBITDA to the business.
We believe our factory business today.
In its early stage of growth and is only operating at about one third capacity.
Which provides significant room for expansion, we have launched an initiative to distribute cookie dough and other dessert products to many of our other brands, including ovens debate that cookie dough and south fresh Hot cookies. This will materially grow our factory EBITDA.
Further to ramp up utilization of the excess factory capacity fat brands may serve as a third party manufacturer for other companies and we May also acquire a business that requires factory production.
As a result of the May 2020 to Nestle Tollhouse Cafe by Chip franchise business acquisition, we're now able to produce cookie dough in house for those Nestle franchisees, who have converted just great American cookie.
This allows the franchisees to buyback cookie dough and approximately 20% discount.
And we're also able to capture the manufacturing revenues, which contribute to our EBITDA.
To date, we have converted approximately 35, Nestle tollhouse cafe stores to great American cookies, and approximately 25 or so more units to follow this year.
Now turning to fat brands second strategic pillar growth by acquisition.
Going forward, we plan to lean into the expansion of our high growth brands, particularly our sports large category, including considering potential strategic acquisitions of concepts with locations that can be converted into 'twenty and opportunities that would continue to expand our factory visits.
We're also looking at other categories to round out our portfolio, such as salad sandwich or coffee.
We continue to look for brands with proven track record of long term sustainable and profitable operating performance, we have seen a number of opportunities in the current environment and expect to see more in the coming months as valuations continue to come down.
Now turning to our balance sheet.
During the quarter, we announced the redemption of approximately one 8 million shares of our eight in a quarter series B cumulative preferred stock from an affiliate of Garnett station partners for $43 $2 million. These shares were redeemed at a price of $23 69 per share plus accrued and unpaid dividends to the date of redemption. The redemption of this tranche.
Of series D preferred stock will yield significant cash flow savings without brands as our securitization facility, which funded the transaction has a lower cost of capital and the effective dividend rate.
Redeemed preferred stock.
We are also actively working towards the redemption of another approximately $92 million of series B preferred stock issued in connection with the 2021 acquisitions of global franchise group and twin peaks. In addition, we are pursuing the rating and or refinancing of our different securitization facilities, beginning with sat royalty 2021 and fat.
G F G 2021 securitization trusts.
During the quarter, we strengthened our leadership team with the hiring of our first chief growth Officer, Jeremy Tyson Jeremy joins fat brands with over 20 years of experience and significantly increasing the revenue stream for high growth startups in the restaurant sector and we will be focused on spearheading the growth of the development pipeline across the fat brands portfolio. This includes bringing new French.
These into the system and driving multi unit expansion with existing franchisees who've.
He has experience of quickly scaling companies from startups to industry meters aligns with our fast paced growth mentality. Jeremy is a great addition to our team to drive this growth forward exponentially in the years to come.
Further we appointed Mark Avery is our global head of partnerships and supply chain strategy as well as our senior Vice President of diversity equity and inclusion I'm also proud to report that our recently formed Fat brands Foundation, a five O N C. Three organization up and running with its own board of directors.
The mission of the foundation is to change the lives by supporting local causes that uplift and unite fat brands communities.
Is that the foundation will look to partner with local nonprofits to provide a central programs to help families and communities thrive.
The foundation was ceded with a $250000 donation from Fat brands, Inc. To start things off and our franchise partners their employees in our corporate employees and brand partners can contribute as well.
Yeah.
<unk> brands is covering 100% of the administrative cost in the organization. So 100% of the money raised will go to the beneficiaries.
In summary, I would like to reiterate that 2022 was a great year in 2023 is off to a strong start as franchisee interest remains high.
We are excited to accelerate the build out of our 1000 unit organic pipeline of new stores, which will drive EBITDA growth in the years to come.
We have a strong management team in place and a robust platform that supports the expansion of our existing brands, while enabling the accretive acquisition and efficient integration of additional restaurant concepts with minimal overhead. We look forward to updating you on our progress in future calls we sincerely appreciate you joining us today and for your interest in fat brands and with that I would like to hand, it over to Ken to talk.
Our financial highlights from the quarter Ken.
Thanks, Andy a total revenue during the fourth quarter increased 40% to $103 $8 million, reflecting revenue contributions from the acquisition of twin peaks in October of 2021.
And the acquisitions of facilities and native grilling wings in December of 2021.
And I'll refer to these as the fourth quarter of 2021 acquisitions.
Additionally, revenue benefited from the ongoing recovery from the negative effects of COVID-19, and the fourth quarter of last year.
Cost and expenses increased to $136 $4 million in the fourth quarter comps.
Compared to $77 million in the year ago quarter, primarily due to the fourth quarter of 2021 acquisition.
Included in cost and expenses general and administrative expense increased to $39 $1 million in the fourth quarter from $21 $6 million in the prior year period.
Primarily related to the fourth quarter of 2021 acquisition.
Increased compensation costs related to our significant expansion legal fees and a $16 $1 million noncash reserve unclaimed employee retention tax credits recorded during the quarter based on the governing that accounting standard.
Cost of restaurant in factory revenues increased to $61 $7 million in the fourth quarter.
Compared to $36 9 million in the prior year period, primarily related to the fourth quarter 2021 acquisitions.
Leading the operations of the acquired company owned restaurant locations.
During the fourth quarter of 2022, we recognized $14 million of noncash trademark impairment, primarily resulting from the significantly increased interest rate environment and its inherent effect on our discounted future cash flow calculations.
Depreciation and amortization expense increased to $6 $9 million in the fourth quarter.
$5 $3 million in the year ago quarter attributable to the fourth quarter of 2021 acquisitions, including depreciation of acquired company owned restaurants, and the amortization of acquired intangible assets.
Refranchising losses in the fourth quarter were $3 $1 million and were comprised of restaurant costs and expenses net of food sales.
Refranchising losses in the fourth quarter of the prior year 2021 were $1 million and were comprised of $2 $1 million of restaurant operating costs net of food sales, partially offset by $1 $1 billion of net gains related to refranchising restaurants.
Advertising expense was $11 $6 million in the fourth quarter compared to $9 $9 million in the prior year period.
<unk> expenses very in relation to the advertising revenue and reflect advertising expenses related to the fourth quarter of 2021 acquisitions, including company owned restaurant locations and also an increase in customer activity.
Other expense for the quarter was $24 $2 million compared to $17 1 million in the year ago quarter.
And it was primarily comprised of interest expense on our securitization.
Our income tax provision for the quarter was $14 million compared to a benefit of $200000 in the prior year quarter.
Primarily driven by a $24 million noncash valuation allowance related to make it indefinite life tax credits.
Net loss for the quarter was $78 million or $4 29 per diluted share.
Compared to a net loss of $19 6 million or $1.38 per diluted share in the prior year quarter.
On an as adjusted basis, our net loss was $43 million or $2 60 per diluted share.
<unk> to $16 $5 million or $1 16 per.
Diluted share in the prior year quarter.
Turning to cash flows it's worth noting that our $78 million net loss for the quarter included a $24 million noncash valuation allowance on make it and definitely a lot of tax credits a $16 $1 million noncash reserves on claims employee retention tax credit.
<unk> thousand $14 million noncash trademark impairment charge.
$6 $9 million of noncash depreciation and amortization.
$4 $8 million of nonrecurring litigation expense.
$1 6 million of noncash share based compensation and $800000 of noncash lease expense and the total of the noncash items a portion of this and our net loss was $59 $8 million.
And with that Judy Please open the line for questions.
Thank you, Sir ladies and gentlemen, well now be conducting the question and answer session.
If you ask the question one on the telephone keypad.
A confirmation tone will indicate that your non Ethernet question Kim.
You May press star.
Two to leave the question queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
The first question comes from jet Com is off to a noble capital.
Good afternoon, and thanks for taking the questions.
Hi, Joe.
Hey, Joe.
Wanted to start out and.
I'm looking at the full year you came in a little bit above revenues and you were talking about a 400 million revenue run rate.
And but on EBITDA you came in a little bit lower than your 90 $95 million rate for the year.
Modestly below admittedly.
But you also I thought the fourth quarter EBITDA number would be similar to third quarter third quarter came in.
24, this quarter it came in a little under 20.
Just wondering if you give us a little detail.
The adjusted EBITDA number one.
Cause it to come in a little bit below expectations.
You bet, it's a good question and not something where we're entirely happy about but I think we're we've we're aware of it and have addressed it and it really comes down to a few things we have some stores that slipped into Q1 that didn't get opened in Q4, particularly a couple of twin peaks lodges.
That slipped into Q1 and that affects some of our opening revenues and that's really from permitting and construction delays they've just been annoying all year hard to understand how everyone was working from home and then back to work and yet.
The government wasn't laying off people and yet we've had all these delays with construction permits in different towns. So that's one contributor. We also saw margin compression on our company owned stores, which as always and we saw some margin compression at our factory and our manufacturing business both of which we reacted too quickly with additional price increases to maintain our March.
But there's a slight lag effect to get that in place each time and so.
Felt like we lost a little bit of money and at the factories, a little bit of money operating the company owned stores than we wanted to in terms of less margin and then the delay from those new store openings, it's really those three items.
Mostly affected.
Okay. Thanks for that on the.
Our manufacturing facility utilization.
You've talked about that you know basically essentially since you acquired the facility.
The <unk> acquisition is slightly bringing persil.
Facility utilization, but you've also talked about in the program I think now.
I can't remember exactly when you hired the person to come in there to really oversee those efforts.
He kind of timing that you might look at it and saying Hey, you know we've got some stuff thats really close on the next quarter or two that we think are going to help us start to increase that utilization you know to the 50% or 60% level.
Yeah. It's a really good question. They also are very strategic for us because we think that that factory has tremendous value and we think that longer term call. It 24 months or so that factory could create a massive liquidity event for us in some sort of a sale.
Sale or something to that effect and that would pay down a lot of debt Delever us and we really have the opportunity to grow EBITDA before that at the factory to get a big number.
We are deep in the weeds on negotiating third party manufacturing opportunities for the factory, that's why I referenced it in my in my remarks earlier and I expect that by Q2, we'll be able to report that we have some third party manufacturing going honestly utilizing excess capacity and even more.
And Opportunistically we.
Have expanded our.
Distribution of the cookie dough and pretzel mix.
And other dessert mix items like dynamics too many more of our restaurants in the portfolio, probably another 700 restaurants.
And that will over Q2 and over Q3, including the distribution of ovens to restaurants that need ovens debate the cookie some of them already have ovens.
A round table pizza or if there's always but that's some of the burger brands not so distributing ovens to all of the franchisees and distributing cookie dough. So they can make hot fresh cookies and serve them in the restaurants that will generate.
Significant additional.
Dow and other dessert item sales and use up some of that capacity. So we're all over it it's taken a while to get it figured out and now we're in the middle of implementing that shifting ovens and training.
And we expect to roll that out over the rest of Q1 and during Q2.
And to that third party manufacturing. So the factory is very very busy in all of the things we've been talking about and in fact, we are happy right now and over Q2 and Q3, we look forward to reporting out to.
Shareholders. So they can they can follow up closely.
Okay great.
Great.
And then what.
Reading through the release and you talk about some of the expenses and G&A.
G&A and Ken did a great job of growing over those but one of the things you'd call out.
In the press release as you know the cost.
With pending litigation and government investigations is there any update there that you can provide on those.
Well U S has been said before has he seen by fish is never good for shareholders, just because of the cost and we are we've.
We've made significant progress in terms of responding to the inquiries that we received we got related to the government investigation I don't think that there's much more to respond to.
I think that.
Hopefully, we'll be able to see some sort of resolution as we finish the year. These things go slow they can take years as you know, but hopefully we'll see the legal expenses.
Shrink here significantly we do have.
Opportunities for insurance defense coverage and recovery for some of these things, but none of that is reflected in our financials. We havent seen insurance companies write checks yet although we firmly believe that were covered under our policies and we are pursuing recovery against those carrier. So you know how that goes sometimes where you have to you have to actually file an action or commenced arbitration.
Mediation to get coverage, we've done all of those things and we think it will move it along nicely here. There's also it's not just the governor investigation. We also have.
Two derivative cases outstanding remember in Q3 of last year, we settled one shareholder class action case, which was good to get behind us and save them further legal fees, but we've had.
Plenty of discovery and things like that in the two derivative cases, we hope that those cases will be resolved during this calendar year and to get all of this legal expense to go away once and for all.
But that would be great and also you know.
Looking at some.
Some of the tables and the relief.
Bad debt expense increased <unk>.
Significantly quarter over quarter, what hopefully some of those other line items that that sounds about right.
Sure. So bad debt expense is really the reserve for the employee retention tax credits. These are credits that we've filed for in our tax returns. We've received a significant portion of the money already and expect to receive the rest of the money, but given.
Given the accounting literature is not very clear on how and when you can book. This ultimately we've been very conservative in reserved 100% for these.
These credit so it's odd that we've received the money in most cases and yet we fully reserve for it but that's what that is it's not it's not actual.
Or any significant amount of that is not actually franchisees not paying their bills. It's just on the reserve for the tax credits.
And the other things like we have the impairment loss and we have the income tax provision does are noncash items. The income tax provision is is literally a mismatch of the timing of the amortization of assets or amortization of liabilities and it's.
It's not something where we write a check and it's just the reserve if you will or a deferred tax liability and impairment is the same thing that you'd take impairment. If unfortunately, if the interest rate environment moves against you you have to take impairment and its related.
Related to your cost of financing essentially but in your valuation, but it's.
Noncash and it's not going to be writing a check for so as Ken said.
Approximately $60 million of the $70 million of loss for the quarter was all non cash.
Right right exactly okay, and one more from me if I may you mentioned again.
Looking at the re rating and.
Hopefully refinancing of some of the debt.
The debt and also the pain.
Pay off pay down.
The series a preferred.
Any timing.
On one of those things might occur.
Well I think that.
It's just a little bit subject to market conditions, and how things are going it's not easy to accomplish refinancing an upward rising rate environment, where rates have moved 375 basis points already but we're we like this and so I mean, everyone knows that we have 30 year nonrecourse securitized debt that is fixed rate.
Are those rates in 2021 that were fixed look pretty good today compared to the current environment, yet we have bondholders, we'd like to see us refinance some of that debt and create liquidity there and we are doing our best to do that and expect that we'll figure something out along those lines for some of that debt.
Coming quarter or two we just can't guarantee it of course, but we don't have a gun to ride. We don't have to do that instead is set up for a long time before it really amortizing.
At any significant level so.
We will see a 1% increase at the end of the summer and a 2% amortization of annual numbers that would kick in but even no amortization is paying down principal that's not an expense and 1% increase is nothing compared to where rates are today. So we want to work constructively with the bondholder community to make this work for them.
This worked for the company and we're meeting with them.
In the coming days to try to hammer that out.
On the preferred side of things you know one follows the other we need to understand where the refinancing opportunities lie and what works for the bondholder community.
And then it will enable us to address repurchasing or redeeming the remaining preferred.
Everyone in 2021 when we were on our acquisition binge and making them in.
In issuing securitizations.
Spun those which was very novel to use securitization facilities for acquisition financing everyone expected that the equity markets would remain robust in early 'twenty to 'twenty, two and the interest rate environment at that time was gonna be solid also not be moving so dramatically against us and so we thought we would issue equity in the first half of 2000.
'twenty, two and redeem that preferred and maybe didn't get the refinancing done in the summer of 2022 and of course the world changed we're very fortunate that we have 30 year fixed rate debt I mean, that's at.
2021 level, which we thought was a little bit higher than that looks pretty darn good.
So we want to make this work for the bondholder community and so we're dedicated to attempting to do that but that's sort of the history of it it's not.
Not that anybody isn't doing what they said they were going to do is hit rates changed so much. Its just shook everybody to the core of how do you how do you fix this now.
And then in the bigger picture as you know from your coverage is that we really have some crown jewels in our portfolio that pay off all the debt over a relatively short period of time, you know there's manufacturing business at one third capacity if.
If if we grow at 15 million of EBITDA, if we grow it to two thirds 30 million of EBITDAR or whatever things worth three or $400 million the huge pay down of our of our debt facility.
Hum.
We really go a long way to Delever and that's in addition to all the organic growth we have and then finally the twin peaks franchise, you know again, just hitting the ball out of the park. Some construction delays, but margins are solid growth solid franchise commitment to <unk>.
Build new locations 20.
20 stores last year.
Or sorry, 16 stores in the last 14 months another approximately 20 stores in the next 12 months and another choice was after that I mean that takes that brand.
Materially upwards in scale and that brand could be a 701 billion dollar brand in a number of years and so with that opportunity.
That would clean up all the rest of the debt.
A few years, so we really have some.
Some key liquidity events out there two years three years five years that.
Very interesting to shoot for and that's really what we're focused on right now we don't feel compelled to want to buy another brand because we have so many great bands. We have so much pipeline already out there of additional stores signed up painful or ready to be opened by the franchise groups that.
Only if it makes strategic sense to drive manufacturing facility or to drive the sports Lodge business, nor are we going to are we going to really make an acquisition that its material and it doesn't mean, there aren't little bolt on things here or there that makes sense like like I said, we don't have a salad concept coffee concept or sandwich concepts that would be good to have in the portfolio, but not something that's critical right now and not something in this.
Interest rate environment that we feel compelled to borrow money at a higher rate and you're going to Delever right now not increase our leverage.
Unless it's a very strategic we're going to execute by growing out that pipeline organically first.
Thanks for that Andy I really am excited to see how 23 on calls for the company. Thanks for taking the questions.
Thank you.
Thank you. The next question comes from Greg for tunnels.
Any investor.
Hey, Andy how are you.
Greg.
Alright, a couple a couple of questions.
So Joe asked a question earlier, you gave us three reasons why the EBITDA was lower.
Those.
Resolved so.
Next quarter and going forward, we will see higher numbers.
Hi.
We expect that the margins will show improvement as always and that the manufacturing facility. We've taken price increases and are in full effect for Q1. So that we're not there's a lag effect. There. So we're looking forward to that on the new store openings I will get to sort of two stores opened at.
Twin peaks and we have a whole bunch of stores with 60 or 65, 50, 50 to 60 stores sorry.
New store openings across the entire portfolio. So I think that we've addressed that and you know theres always seasonality there's weather.
Things like that that affect quarter to quarter.
We don't think that will have.
Some of those issues, we had before in Q4.
Okay, Oh can you tell me what they tell us what the cash on hand as at this point.
It'll be reflected in our balance sheet and our 10-K that we.
File in two days, but theres plenty of cash on hand.
Okay are you prepared at this time to give a EBITDA estimate for 2023.
We're not giving guidance for 2023, just given the inflationary environment and we hope that.
It's certainly going to be in line or exceed the 2022 numbers, but we're not giving a specific number yet.
Too much economic uncertainty out there and we want to know where the refinancing effort that comes out.
Okay.
As far as refinancing it sounds like.
What what would I know the bondholders want you to do it but why wouldn't we want to do it I Havent heard you or anything that's a conversation that would give us a reason to have our rates go up.
More than 1%, but it will automatically.
Yeah, no. It's a delicate a partnership with you know with bondholders, who want to see liquidity and they're in their portfolio positions we want to.
Try to get these bonds rated either the existing bonds or new bonds, creating getting a rating on your bonds creates tremendous liquidity.
For investors and that's something that ultimately drives the cost down significantly. So that's important to do if we can do it.
But as you know, it's only worth so much right Theres deal expenses, there is change in rates and Theres change in terms of things like that so it's got to be the right deal for us.
<unk>.
As we talked about the 1% increase in rates does isn't so painful compared to what current rates are but that doesn't mean that the our current refinancing has to be priced where current rates for a new deal is just because.
Their existing older. So there's all kinds of things, we could do to modify the existing structure.
We'd like to avoid today that 2% amortization, but we're prepared to make it if we need to make it and we believe we have adequate cash flow to do so so yes, I feel like we're in the right position. If we can create liquidity we can generate more runway. You know this is sort of a we want to make sure. We have plenty of runway to build out that pipeline and fill up that factory to create a liquidity event in.
And so that's a couple of years. So we want make sure. We have really good line of sight for a couple of years, because none of us know how far up they're going to hike rates, how bad that is going to impact demand and we're not seen it yet consumers are still flocking to the restaurant sales.
Positive sales.
Year to date or are very positive high single digits.
So.
That's an aggregate across all of them. So we're really happy with business, but we wanted to be prepared in case consumer falls off the edge of a cliff or something else goes on and we want to make sure. We have tons of liquidity and so that is that is relevant and our bondholders are very supportive of us if we want to try to be supportive for them, but you know it can't be at a ridiculous cost.
Okay, two more quick ones. So I think you just said it but just looking for comp store sales for.
In the aggregate for the quarter up high single digits, yes.
Yes.
Okay last question, So corporate America seems to be downsizing.
The overheads.
The company had been.
Getting up there do you have any plans for any ability to cut some overhead in our corporate structure.
You're always looking at your your overhead structure. It is something that you have to do every year and we've identified a few areas, where we could make some changes and we'll make some changes this quarter.
Two.
Establish some material savings from our annual adjusted EBITDA quarterly adjusted Ebitdas. So, yes that is underway today and.
No it's not it's not huge but it's meaningful and it's if you just have to look at did we ever higher or are we getting the execution that we want.
Synergies that we want and isn't working at every level and there's always opportunity to change that so we are all over it like everyone else is and it is a Q1 agenda item.
Okay, Thanks, and looking forward to a good point.
Thank you.
Thank you ladies and gentlemen, we have reached the end of the question and answer session I will now turn the call to Andy.
Uh huh.
Remarks.
Operator, Thank you I want to thank all of you for joining US hopefully you all have a great afternoon, a great evening.
Anyone can feel free to follow up again, if you have.
Additional questions. Thank you.
To conclude the call operator.
Thank you ladies and gentlemen. This concludes today's conference. Thank you for your participation and you may now disconnect your lines.
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