Q4 2024 FAT Brands Inc Earnings Call
Please note that this conference is being recorded today February 27 and 25.
On the call from Fat brands are.
Speaker Change: Chairman of the Board, Andy Reid, Hahn and co Chief Executive Officer, and Chief Financial Officer, Ken quick.
Speaker Change: This afternoon the company meet its third quarter 2024 financial results.
Speaker Change: <unk> available.
Speaker Change: Please refer to the earnings release and earnings supplement both of which are available.
Speaker Change: The Investor section of the company's website at Www Dot fat plants Dot com. Each contains additional details about the third quarter.
Speaker Change: But before we begin I must remind everyone that part of the discussion today will include forward looking statements.
Speaker Change: These forward looking statements are not guarantees of future performance and therefore undue reliance should not be placed upon them.
Speaker Change: <unk> results may differ materially from those indicated by these forward looking statements due to a number of risks and uncertainties.
Speaker Change: The company does not undertake to update these forward looking statements at a later date.
Speaker Change: For a more detailed discussion of the risk that could impact future operating results and financial conditions. Please see today's earnings release and recent SEC filings.
Speaker Change: During today's call. The company will also discuss non-GAAP financial measures, which it believes can be useful in evaluating its performance.
<unk> of this additional information should not be considered in isolation not as a substitute for results prepared in accordance with GAAP.
Good afternoon, ladies and gentlemen, thank you for standing by welcome to the Fat Brands, Inc. Fourth quarter 2024 earnings Conference call.
Speaker Change: Reconciliations to comparable GAAP measures are available in todays earning release I would now like to turn the call over to Andy Reid Han Chairman of the Board. Please go ahead.
All participants have been placed in a listen only mode. Please note that this conference is being recorded today February 27 2025.
Speaker Change: Thank you operator, and thank you all for joining us today.
Speaker Change: As a Los Angeles based company, our thoughts are first and foremost with those affected by the devastating fires.
On the call from <unk>.
Speaker Change: Chairman of the board, Andy Reid of Horn, and co Chief Executive Officer, and Chief Financial Officer, Ken quick.
Speaker Change: Before I begin today I want to thank our team members franchisees and employees.
Speaker Change: This afternoon the company meet its third quarter 2020 for fashion designs.
Speaker Change: Their dedication to our business to each other and to our communities. During this time exemplifies the true spirit of fat brands.
Speaker Change: <unk> available.
Speaker Change: Please refer to the earnings release and earnings supplement both will be available.
Speaker Change: We kicked off 2025 with a major milestone the spin out of twin Hospitality Group, Inc, which operates our twin peaks in Smokey bones restaurants in.
Speaker Change: The enlist a section of the company's website at Www Dot fat plants Dot com. Each contains additional details about the third quarter.
Speaker Change: In January we distributed 5% of twin hospitality is class a common stock to shareholders, while retaining the remaining shares.
Speaker Change: 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 undue reliance should not be placed upon them.
Speaker Change: This amounts to approximately a 50 million dollar dividend paid to our fat brands shareholders of twin hospitality shares twin.
Speaker Change: Twin hospitality now trade separately on the NASDAQ under the ticker T. W. M P.
Speaker Change: <unk> results may differ materially from those indicated by these forward looking statements due to a number of risks and uncertainties.
Speaker Change: The public listing of twin hospitality creates an opportunity for shareholders to directly participate in the growth and success of the twin peaks brand.
Speaker Change: The company does not undertake to update these forward looking statements.
Speaker Change: <unk>.
Speaker Change: For a more detailed discussion of the risks that could impact future operating results and financial conditions. Please see today's earnings release and recent SEC filings.
This strategic move enhances transparency and enables a market to better appreciate the distinct value of twin peaks.
Speaker Change: Are there more it provides twin peaks additional currency to sustain and accelerate its robust growth.
Speaker Change: During today's call. The company will also discuss non-GAAP financial measures, which it believes can be useful in evaluating its performance.
Speaker Change: If you reference the original $12 per share IPO price of fat brands in 2017, and adjust the price for all the ordinary and special dividends paid to fat brands' shareholders. The current basis in that brand stock is $2 74.
Speaker Change: <unk> of this additional information should not be can start in isolation.
Speaker Change: As a substitute for results prepared in accordance with GAAP reconciliations.
Speaker Change: Reconciliations to comparable GAAP measures are available in today's earnings release, I would now like to turn the call over to Andy We Don <unk> Chairman of the Board. Please go ahead.
Speaker Change: In other words fat has paid more than $9 in cumulative dividends.
Speaker Change: The current trading price of fat reflects an approximately $2 50 per share adjustment for the dividend of the Tw N P shares to establish listing of twin hospitality group.
Speaker Change: Thank you operator, and thank you all for joining us today.
Speaker Change: As a loss Angeles space company, our thoughts are first and foremost with those affected by the devastating fires.
Speaker Change: Following this call we invite you to listen to the twin hospitality inaugural call at 515, Eastern time led by CEO, Joe Humble and CFO Ken queuing.
Speaker Change: Before I begin today I want to thank our team members franchisees and employees their dedication to our business to each other and to our communities. During this time exemplifies the true spirit of fat brands.
The details are contained within their earnings release also issued this afternoon.
Speaker Change: We kicked off 2025 with a major milestone the spin out of twin Hospitality Group, Inc, which operates our twin peaks in Smokey bones restaurants in.
Speaker Change: As noted in our public filings.
Speaker Change: For twin hospitality group regarding our bond refinancing that took place in.
Speaker Change: In Q4 of last year, we are committed to raising equity at twin hospitality and reducing debt in 2025 by $75 million or more including a minimum of $25 million by late April.
Speaker Change: In January we distributed 5% of twin hospitality is class a common stock to shareholders, while retaining the remaining shares.
Speaker Change: This amounts to approximately $50 million dividend paid to our fat brands' shareholders of twin hospitality shares twin.
Speaker Change: We believe we are on track to fulfill that commitment.
As part of that same debt reduction obligation, we agreed not to pay if that common dividend until about $25 million is paid so we expect to complete that over the next 60 days and declare and pay the Q1 dividend as usual at that time.
Speaker Change: Twin hospitality now trade separately on the NASDAQ under the ticker Tw and Pete.
Speaker Change: The public listing of twin hospitality creates an opportunity for shareholders to directly participate in the growth and success of the twin peaks brand.
Speaker Change: A key driver for fat brands in 2025 is unlocking a tremendous amount of value created at twin hospitality.
Speaker Change: This strategic move enhances transparency and enables a market to better appreciate the distinct value of twin peaks. Furthermore, it provides twin peaks additional currency to sustain and accelerate its robust growth.
Speaker Change: With T. W. N P operating as a separate independent public company.
Speaker Change: And while market prices may fluctuate at the time of the spin off listing fats shares in T. W. N. P were valued at more than $900 million. This is in addition to shedding over $400 million of twin hospitality as debt to the spin off entity from fat.
Speaker Change: If you reference the original $12 per share IPO price of fat brands in 2017, and adjusted the price for all the ordinary and special dividends paid to fat brands' shareholders. The current basis in that brand stock is $2 74.
Speaker Change: That will continue to consolidate.
Speaker Change: Hospitality financials for the foreseeable future because of our ownership and control percentages. Nonetheless, we will break out. This information. So that you can see the clear unlocking the value of that.
Speaker Change: In other words fat has paid more than $9 in cumulative dividends.
The current trading price of fat reflects an approximately $2 50 per share adjustment for the dividend.
Speaker Change: So another way to summarize the balance sheet post spinoff is that fat now owns the remaining 16 brands and their cash flow plus all of its fully diluted 85% of the Tw N P stock and has net debt of approximately $850 million plus approximately $150 million in preferred stock.
Speaker Change: T. W. N P shares to establish the listing of twin hospitality group.
Speaker Change: Following this call we invite you to listen to the twin hospitality inaugural call at 515, Eastern time led by CEO, Joe Humble and CFO Ken cubic. The details are contained within their earnings release also issued this afternoon.
Speaker Change: On another note. We are also looking to refinance our remaining three securitization silos as the market permits perhaps most of all of those in the second half of 2025.
Speaker Change: As noted in our public filings for twin Hospitality group regarding our bond refinancing that took place.
Speaker Change: Yeah.
Speaker Change: Now turning to our fourth quarter results, which Ken will dive into in more detail. There were 13 weeks in the fourth quarter of 2024, and 14 weeks in the fourth quarter of 2023.
Speaker Change: In Q4 of last year, we are committed to raising equity at twin hospitality and reducing debt in 2025 by $75 million or more including a minimum of $25 million by late April. We believe we are on track to fulfill that commitment.
Speaker Change: Total revenue decreased eight 4% to $145 3 million compared to $158 6 million in the prior year quarter as a result of the incremental operating week in the prior year quarter.
Speaker Change: As part of that same debt reduction obligation, we agreed not to pay if that common dividend until about $25 million is paid should we expect to complete that over the next 60 days and declare and pay the Q1 dividend as usual at that time.
Our system wide sales were $580 2 million for the quarter, representing a seven 4% decrease from the last year's quarter again due to the incremental operating week last year.
Speaker Change: A key driver for fat brands in 2025 is unlocking the tremendous amount of value created at twin hospitality with T. W. N P operating as a separate independent public company.
Speaker Change: To put this in perspective that one less week equals about $45 million to $50 million of sales.
Speaker Change: And while market prices may fluctuate at the time of the spin off we've seen fats shares in Tw N. P were valued at more than $900 million. This is in addition to shedding over $400 million.
Speaker Change: And two and a half to $3 million of royalties and another three to three $3 million to $5 million of adjusted store level EBITDA.
Speaker Change: So there's quite a lot of noise in our numbers because of that one week by one week adjustment and also as we convert the Smokey bones stores and or close a few of the underperforming units that won't make the conversion list we.
Speaker Change: Twin hospitality as debt to the spin off entity from fat.
Speaker Change: That will continue to consolidate the twin hospitality financials for the foreseeable future because of our ownership and control percentages. Nonetheless, we will break out. This information. So that you can see the clear unlocking the value of that.
Speaker Change: We hope that this noise can be eliminated in 2025, so it'll be a very clear line of sight for both T. W. N P and fat going forward in 2026.
Speaker Change: We ended 2024 with total revenue, increasing 23, 4% to $592 $7 million and system wide sales, increasing three 1% to $2 $4 billion.
Speaker Change: So another way to summarize the balance sheet post spin off is it that now owns the remaining 16 brands and their cash flow plus all of its fully diluted 85% of the Tw N P stock and has net debt of approximately $850 million plus approximately $150 million in preferred stock.
Speaker Change: As a reminder, we are focused on three core strategic initiatives to drive our success.
Speaker Change: First generating organic growth across our existing brand portfolios 1000, plus new unit pipeline.
Speaker Change: On another note. We are also looking to refinance our remaining three securitization silos as the market permits, perhaps most or all of those in the second half of 2025.
Speaker Change: Second evaluating strategic acquisitions that could complement and strengthen our portfolio and.
Speaker Change: And third expanding manufacturing capabilities at our Georgia facility, particularly in cookie dough and dry mixed production.
Speaker Change: Now turning to our fourth quarter results, which Ken will dive into in more detail. There were 13 weeks in the fourth quarter of 2024, and 14 weeks in the fourth quarter of 2023.
Speaker Change: Turning first to our organic growth initiatives throughout 'twenty 'twenty four we opened 92 new restaurants. This.
Total revenue decreased eight 4% to $145 3 million compared to $158 6 million in the prior year quarter as a result of the incremental operating week in the prior year quarter.
Speaker Change: This year, we plan to open over 100, new locations, having already opened 17 units year to date.
Speaker Change: We anticipate strong organic growth across our portfolio in 2025, and particular with great American cookies and marble sub creamery fabric and Buffalo's Express round table Pizza and there's always this growth trajectory is further supported by a robust twin peaks new store development pipeline.
Speaker Change: Our system wide sales were $580 2 million for the quarter, representing a seven 4% decrease from the last year's quarter again due to the incremental operating week last year.
Speaker Change: Our current development pipeline consists of signed agreements for approximately 1000 additional locations, which includes over 250 units that were signed in 2024 at.
Speaker Change: To put this in perspective that one less week equals about $45 million to $50 million of sales.
Speaker Change: And two and a half to $3 million of royalties and another three to three $3 million to $5 million of adjusted store level EBITDA.
Speaker Change: Once these units are opened we expect them to generate approximately $50 million in incremental annual adjusted EBITDA, which will naturally strengthen our balance sheet and reduce our leverage.
Speaker Change: So there's quite a lot of noise in our numbers because of that one week by one week adjustment and also as we convert the Smokey bones stores and or close a few of the underperforming units that won't make the conversion list we.
Speaker Change: This robust development pipeline demonstrates most strong consumer demand for our brands and the significant growth opportunities provided to our franchisee base.
Speaker Change: We hope that this noise can be eliminated in 2025, so it'll be a very clear line of sight for both T. W. N P and fat going forward in 2026.
Speaker Change: Co branding also continues to be a key driver of our growth strategy as seen by the success of multiple brand pairings across our portfolio, Great American cookies and marble slab creamery has been a standout example, growing to over 160 co branded locations since 2014, including 15 locations opening in 2024 and approximately 15.
Speaker Change: We ended 2024 with total revenue, increasing 23, 4% to $592.7 million and system wide sales, increasing three 1% to $2.4 billion.
Speaker Change: As a reminder, we are focused on three core strategic initiatives to drive our success.
Speaker Change: Projected for this year.
Speaker Change: Branded locations typically generate 10% to 20% higher incremental sales compared to single brand units.
Speaker Change: First generating organic growth across our existing brand portfolios 1000, plus new unit pipeline.
Speaker Change: These compelling unit economics continue to attract franchisees and drive expansion.
Speaker Change: Second evaluating strategic acquisitions that could complement and strengthen our portfolio and.
Speaker Change: Building on our co branding success, we're looking to further lean into this strategy in 2025 to kick off the year, we opened a tri branded model upgrade American cookies marble slab creamery and pretzel maker in the Dallas area Sim.
Speaker Change: And third expanding manufacturing capabilities at our Georgia facility, particularly in cookie dough and dry mixed production.
Speaker Change: Turning first to our organic growth initiatives throughout 'twenty 'twenty four we opened 92 new restaurants. This.
Speaker Change: Similarly, we are set to open several more fabric or.
Speaker Change: It was express and how it's all going to stick locations. In addition to fabric or and round table pizza as this year.
Speaker Change: This year, we plan to open over 100, new locations, having already opened 17 units year to date.
Speaker Change: The international appeal of our brands it was especially evident with Johnny rockets, where international locations now represent over 55% of the brand's global footprint.
We anticipate strong organic growth across our portfolio in 2025 in particular with great American cookies, and marble sub creamery fabric and Buffalo's Express round table Pizza and there's always this growth trajectory is further supported by our robust twin peaks new store development pipeline.
Speaker Change: 24 alone, we opened 11, new international locations across multiple markets two in Chile, too in Bali, Indonesia for in Mexico, two in Brazil, and a ghost kitchen in the United Arab Emirates, a presence continues to grow in key international markets with over 40 locations now operating in Brazil, and nearly 25 in Mexico, demonstrating the strength of our.
Speaker Change: Our current development pipeline consists of signed agreements for approximately 1000 additional locations, which includes over 250 units that were signed in 2024.
Speaker Change: International expansion strategy.
Speaker Change: Once these units are opened we expect them to generate approximately $50 million in incremental annual adjusted EBITDA, which will naturally strengthen our balance sheet and reduce our leverage.
Speaker Change: Additionally, we continue to see significant opportunities in nontraditional venues. A Prime example is the recent opening of Hurricane Grilling wings at six flags greatest escape Lodge in Lake George New York, Our first theme park location for the brand Tony.
Speaker Change: This robust development pipeline demonstrates both strong consumer demand for our brands and the significant growth opportunities provided to our franchisee base.
Speaker Change: Johnny Rockets also continued to grow across non traditional venues opening at the soaring Eagle casino and resort in Mount Pleasant, Michigan.
Speaker Change: Co branding also continues to be a key driver of our growth strategy as seen by the success of multiple brand pairings across our portfolio, Great American cookies and marble slab creamery has been a standout example, growing to over 160 co branded locations since 2014.
Speaker Change: We believe these non traditional venues represent a significant growth avenue, allowing us to reach new customers, while leveraging existing infrastructure in foot traffic.
Speaker Change: I'd like to also address our renewed focus on synergies and cost reductions we are continuing to reduce costs as we separate out twin hospitality group from the rest of the brands at that.
Speaker Change: <unk> 15 locations opening in 2024, and approximately 15 projected for this year.
Speaker Change: Co branded locations typically generate 10% to 20% higher incremental sales compared to single brand units. These compelling unit economics continue to attract franchisees and drive expansion.
Speaker Change: Taken essentially half of our 200 corporate stores and spinning them off with twin hospitality, meaning the corporate stores at twin peaks and the Smokey bones locations. We plan to re franchise. Additionally, our 57 company owned cause all these locations, leaving us with approximately 33 hot dog on a stick locations out of our 2003 hundred tote.
Speaker Change: Building on our co branding success, we're looking to further lean into this strategy in 2025 to kick off the year, we opened a tri branded model a great American cookies marble slab creamery and pretzel maker in the Dallas area Sim.
Speaker Change: The locations or 20 125, if you exclude twin peaks in Smokey bones. This will bring us back to being almost 100% franchise if.
Speaker Change: Similarly, we are set to open several more fabric or.
Those express and how its all going to stick locations. In addition to fat Burger and round table pizza as this year.
Speaker Change: If you look at our supplement filed on January 13th you will and it's and in the investors section on our website you will see on pages 11, and 12 third party valuation of all of our brands less our debt and given various assumptions.
Speaker Change: The international appeal of our brands is especially evident with Johnny rockets, where international locations now represent over 55% of the brand's global footprint.
Speaker Change: 24 alone, we opened 11, new international locations across multiple markets two in Chile, too in Bali, Indonesia for in Mexico, two in Brazil, and a ghost kitchen in the United Arab Emirates, a presence continues to grow in key international markets with over 40 locations now operating in Brazil, and nearly 25 in Mexico, demonstrating the strength of our <unk>.
Speaker Change: The supplement gives a good roadmap for value creation in our strategy to unlock the same which is clearly our focus today.
Speaker Change: Now turning to our growth by acquisition strategy. Our recent transactions have been highly strategic creating multiple avenues for value creation. A Prime example is our acquisition of Nestle Tollhouse Cafe by chip about three years ago. This transaction was particularly compelling as it allowed us to convert these units to great American cookies locations effectively.
Speaker Change: International expansion strategy.
Speaker Change: Additionally, we continue to see significant opportunities in nontraditional venues. A Prime example is the recent opening of Hurricane Grilling wings to six flags greatest escape Lodge in Lake George New York, Our first theme park location for the brand Johnny.
Speaker Change: Growing our cookie footprint, while simultaneously increasing production volume at our manufacturing facility.
Speaker Change: Similarly, we bought Smokey bones in late 2023 to help fuel twin peaks growth, which will allow us to convert about 30 of the Smokey bones locations into twin peaks.
Speaker Change: Johnny Rockets also continued to grow across non traditional venues opening at the soaring Eagle casino and resort in Mount Pleasant, Michigan.
Speaker Change: This dual benefit illustrates our approach to acquisitions.
Speaker Change: We believe these nontraditional venues represent significant growth Avenue, allowing us to reach new customers, while leveraging existing infrastructure in foot traffic.
Speaker Change: Look for opportunities that not only expand our restaurant portfolio, but also drive incremental value through our manufacturing capabilities essentially getting two bites at the Apple.
Speaker Change: I'd like to also address our renewed focus on synergies and cost reductions we are continuing to reduce cost as we separate out twin hospitality groups from the rest of the brands at that.
Speaker Change: Looking ahead, our acquisition strategy remains focused on opportunities that are synergistic with our existing portfolio were especially interested in concepts that could leverage our manufacturing capabilities such as additional cookie concepts that would utilize our cookie dough, a pretzel mix operation. However.
Taken essentially half of our 200 corporate stores and spinning them off with twin hospitality, meaning the corporate stores at twin peaks and the Smokey bones locations. We plan to re franchise. Additionally, our 57 company owned there's all these locations, leaving us with approximately 33 hot dog on a stick locations out of our 2003 hundred tote.
Speaker Change: However, we maintain strict discipline in our approach and we're not interested in turnaround situations of which we have seen many lately.
Speaker Change: Turning to our manufacturing operations, we currently generate approximately $38 million in annual sales from our franchisees through our Georgia facility with a profit of about $15 million, representing a 40% margin. This is a win win situation as our franchisees by cookie dough and pretzel makes at a below market price from us and we benefit from this high margin revenue stream.
Speaker Change: The locations or 20 125, if you exclude twin peaks in Smokey bones. This will bring us back to being almost 100% franchise. If you look at our supplement filed on January 13th.
Speaker Change: And it's in our investors section on our website you will see on pages 11 and 12.
Speaker Change: Third party valuation of all of our brands less our debt and given various assumptions and the supplement gives a good roadmap to value creation in our strategy to unlock the same which is clearly our focus today.
Speaker Change: Our manufacturing facilities presents significant growth potential currently operating at only 40% capacity.
Speaker Change: We have substantial room for expansion and facility spans four acres and we're only utilizing about half an acre. We can also increase production capacity through modest equipment upgrades within the existing facility when needed.
Speaker Change: Now turning to our growth by acquisition strategy. Our recent transactions had been highly strategic creating multiple avenues for value creation. A Prime example is our acquisition of Nestle Tollhouse Cafe by chip about three years ago. This transaction was particularly compelling as it allowed us to convert these units to great American cookies locations effectively growing.
Speaker Change: Our near term goal is to increase utilization to 60% to 70%, which would significantly enhance the facility's value.
Speaker Change: Ultimately this asset could provide an opportunity to reduce our leverage through a potential sale, but for now we're focused on optimizing its operations and capturing the available growth opportunities.
Speaker Change: Our cookie footprint, while simultaneously increasing production volume at our manufacturing facility.
Speaker Change: Before concluding I'd like to share an update on the fat brands Foundation.
Speaker Change: Similarly, we bought Smokey bones in late 2023 to help fuel twin peaks growth, which will allow us to convert about 30 of the Smokey bones locations into twin peaks.
Speaker Change: Since the Fat brands Foundation commenced its giving in 2023. The organization continues to further cement itself as an emerging nonprofit leader.
Speaker Change: This dual benefit illustrates our approach to acquisitions, we look for opportunities that not only expand our restaurant portfolio, but also drive incremental value through our manufacturing capabilities essentially getting two bites at the Apple.
Speaker Change: One year the foundation increased its giving by 36% providing approximately $325000 in grants. The foundation also provided 27 more grants to deserving nonprofits across the U S. An increase of 59% from 2023 for a total of 70 grants in 2024 across 17 States plus Washington D C.
Speaker Change: Looking ahead, our acquisition strategy remains focused on opportunities that are synergistic with our existing portfolio.
Speaker Change: We're especially interested in concepts that could leverage our manufacturing capabilities such as additional cookie concepts that would utilize our cookie dough a pretzel makes operation.
Speaker Change: C.
Speaker Change: Our commitment to community support also extends to crisis response as demonstrated during the recent wildfires.
Speaker Change: However, we maintain strict discipline in our approach and we're not interested in turnaround situations of which we have seen many lately.
Speaker Change: Through FAP rigorous food trucks, the fat mobile we provided 10000 meals to first responders sites and shelters all round table pizza offered free personal cheese pizzas to first responders at over 50, Los Angeles area locations and hotdog honest candid out free eliminated out of fundraising event at the Santa Monica Pier These initiatives, particularly resonated in la.
Speaker Change: Turning to our manufacturing operations, we currently generate approximately $38 million in annual sales from our franchisees through our Georgia facility with a profit of about $15 million, representing a 40% margin.
Speaker Change: As a win win situation as our franchisees by Cookie dough and pretzel makes at a below market price from us and we benefit from this high margin revenue stream.
Speaker Change: Angelus, where many of our brands have their routes.
Speaker Change: The combination of immediate crisis response capabilities and long term community development through our foundations work demonstrates our ongoing commitment to making meaningful contributions to the communities we serve.
Speaker Change: Our manufacturing facilities presents significant growth potential currently operating at only 40% capacity.
Speaker Change: Strong support from both fat brands corporate and our franchisees shows how deeply embedded community engagement is in our company culture.
Speaker Change: We have substantial room for expansion facility spans four acres and we're only utilizing about half an acre. We can also increase production capacity through modest equipment upgrades within the existing facility when needed.
Speaker Change: In conclusion 2025 is off to an exciting start with the successful launch of twin hospitality group as a standalone public company as we look ahead. Our primary focus for 2025 is deleveraging our balance sheet, while continuing to execute on our robust pipeline of organic growth opportunities.
Speaker Change: Our near term goal is to increase utilization to 60% to 70%, which would significantly enhance this facility's value ultimately disaster could provide an opportunity to reduce our leverage through a potential sale, but for now we're focused on optimizing its operations and capturing the available growth opportunities.
Speaker Change: The energy momentum I see across our organization makes me incredibly optimistic about <unk> future and I look forward to updating you on our progress in the coming quarters and with that I'd like to hand, the call over to Ken to discuss our financial highlights from the fourth quarter Ken.
Speaker Change: Before concluding I'd like to share an update on the fat brands Foundation.
Speaker Change: Since the Fat brands Foundation commenced its giving in 2023. The organization continues to further cement itself as an emerging nonprofit leader in one year. The foundation increased its giving by 36% providing approximately $325000 in grants.
Ken Queuing: Thanks, Andy before I discuss our quarterly results I'd like to briefly recap and Andy covered at a at our recent spinoff of twin hospitality January 30th redistributed, 5% of our ownership in twin Hospitality group Inc's classic common stock to our shareholders. While the remaining shares continue to be held by fat brands warehouse.
Speaker Change: Foundation also provided 27 more grants to deserving nonprofits across the U S. An increase of 59% from 2023 for a total of 70 grants in 2024 across 17 States plus Washington D C.
Ken Queuing: The town, who began trading on the NASDAQ at the time of the spin off and we're excited as we begin this next chapter.
Speaker Change: Our commitment to community support also extends to crisis response as demonstrated during the recent wildfires.
Ken Queuing: Separately during the fourth quarter, we refinanced our twin peaks debt to a new series of 30 year fixed rate notes.
Speaker Change: Through FAP burgers food trucks, the fat mobile we provided 10000 meals to first responders sites and shelters all round table pizza offered free personal cheese pizzas to first responders had over 50, Los Angeles area locations and Hot dog on a stick handed out free laminate out of fundraising event at the Santa Monica Pier These initiatives, particularly resonated in loss.
Ken Queuing: Refinancing strengthens our financial structure and enabled us to complete the public listing of twin hospitality.
Ken Queuing: As Danny mentioned, we are committed to raising equity at hospitality and reducing debt by $75 in 2025 and believe we are on track to fulfill that commitment.
Ken Queuing: Moving on to our fourth quarter results I'll start by noting that 2024 was a 52 week fiscal year and 2023 was the 53 week fiscal year.
Speaker Change: Angelus, where many of our brands have their roots.
Speaker Change: The combination of immediate crisis response capabilities and long term community development to our foundations work demonstrates our ongoing commitment to making meaningful contributions to the communities. We serve the strong support from both fat brands corporate and our franchisees shows how deeply embedded community engagement is in our company culture.
Ken Queuing: The fourth quarter of 2024 was a 13 week quarter and the fourth quarter of 2023 was a 14 week quarter. So there's one more week of operations in the last in last year's results and the extra week falls in the fourth quarter.
Speaker Change: In conclusion 2025 is off to an exciting start with the successful launch of twin hospitality group as a standalone public company as we look ahead, our primary focus between twenty-five as deleveraging our balance sheet, while continuing to execute on our robust pipeline of organic growth opportunities.
Ken Queuing: Moving on to our quarterly results total revenues were $145 $3 million in the quarter and eight 4% decrease from $158 $6 million in last year's quarter.
Speaker Change: Energy momentum I see across our organization makes me incredibly optimistic about fat brands future and I look forward to updating you on our progress in the coming quarters and with that I'd like to hand, the call over to Ken to discuss our financial highlights from the fourth quarter Ken.
Ken Queuing: This was driven by the incremental operating week in the prior year quarter, which contributed $11 $3 million in revenue.
Ken Queuing: Lower same store sales and the closure of Smokey bones locations for conversion into twin peaks lodges, particularly partially offset by revenue generated by our Newport Beach lodges.
Ken: Thanks, Andy before I discuss our quarterly results I'd like to briefly recap and Andy covered it a bit our recent spinoff of twin hospitality January 30th redistributed, 5% of our ownership in twin Hospitality group Inc's class a common stock to our shareholders. While the remaining shares continue to be held by fat brands.
Turning to costs and expenses.
Ken Queuing: <unk> and administrative expense increased to $34 $5 million in the quarter from $33 million in a year ago quarter, primarily.
Ken: Hospitality group began trading on the NASDAQ at the time of the spin off and we're excited as we begin this next chapter.
Ken Queuing: Primarily due to $5 million in Smokey bones store closure costs.
Ken Queuing: Really offset by the incremental operating week in the prior year quarter.
Ken: Separately during the fourth quarter, we refinanced our twin peaks debt to a new series of 30 year fixed rate notes.
Ken Queuing: Pos of restaurant in factory revenues decreased to $97 $2 million compared to $105 $1 million, primarily due to lower company owned restaurant sales.
Ken: This refinancing strengthens our financial structure and enabled us to complete the public listing of twin hospitality.
Ken: Anthony mentioned, we are committed to raising equity at hospitality and reducing debt by $75 in 2025 and believe we are on track to fulfill that commitment.
Ken Queuing: During the fourth quarter of 2024, we recognized $36 million of noncash goodwill and other intangible asset impairment, primarily resulting from the decline in restaurant performance during 2024.
Ken: Moving on to our fourth quarter results I'll start by noting that 'twenty 'twenty four for the 52 week fiscal year in 2023 was the 53 week fiscal year.
Ken Queuing: Advertising expense varies in relation to advertising revenues and decreased to $11 8 million from $13 $8 million in the year ago period.
Ken: Fourth quarter of 2024 was a 13 week quarter.
Ken Queuing: Additionally, we slowed down advertising as Smokey bones, as we continue our strategy of converting locations into twin peaks lodges.
Ken: In the fourth quarter of 2023 was a 14 week quarter. So there's one more week of operations in the last in last year's results and the extra week falls in the fourth quarter.
Ken Queuing: Total other expense net which consisted primarily of interest expense was $36 $4 million in the quarter compared to $31 $9 million in last year's quarter.
Ken: Moving on to our quarterly results total revenues were $145.3 million in the quarter and eight 4% decrease from $158 $6 million in last year's quarter. This.
Ken Queuing: Additionally, in the fourth quarter of 2024, we recognized a $2 $2 million noncash loss on extinguishment of debt related to the refinancing of our twin peaks securitized debt.
Ken: This was driven by the incremental operating week in the prior year quarter, which contributed $11 $3 million in revenue.
Ken Queuing: Net loss was 67 4 million or $4.06 per diluted share.
Ken: Lower same store sales and the closure of Smokey bones locations for conversion into twin peaks lodges, particularly partially offset by revenue generated by our Newport Beach lodges.
Ken Queuing: Compared to a net loss of $26 2 million or $1 68 per share in the prior year quarter.
Ken: Turning to costs and expenses.
Ken Queuing: And on an as adjusted basis, our net loss was $29 9 million or $1 87 per diluted share.
Ken: <unk> and administrative expense increased to $34.5 million in the quarter from $33 million in the year ago quarter, primarily.
Ken Queuing: <unk> to $17 $3 million or $1 15 per diluted share in the prior year quarter.
Ken: Primarily due to $5 million in Smokey bones store closure costs.
Ken Queuing: And lastly, adjusted EBITDA for the quarter was $14 4 million compared to $27 million in the year ago quarter.
Ken: Really offset by the incremental operating week in the prior year quarter.
Ken: Pos of restaurant in factory revenues decreased to $97 $2 million compared to $105 $1 million, primarily due to lower company owned restaurant sales.
Ken Queuing: But the extra operating week in our fourth quarter of 2023, contributing $1 9 million to adjusted EBITDA and with that operator. Please open the line for questions.
Ken: During the fourth quarter of 2024, we recognized $36 million of noncash goodwill and other intangible asset impairment, primarily resulting from the decline in restaurant performance during 2024.
Ken Queuing: Thank you.
Ken Queuing: Now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Ken Queuing: A confirmation tone will indicate your line isn't the question Keith.
Ken: Advertising expense varies in relation to advertising revenues and decreased to $11 8 million from $13 $8 million in the year ago period.
Ken Queuing: Start to if you would like to move to questions from the queue.
Ken Queuing: All participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Ken: Additionally, we slowed down advertising at Smokey bones, as we continue our strategy of converting locations into twin peaks lodges.
Speaker Change: Our first question comes from the line of Roger Lipton Lipton Financial services. Please go ahead.
Ken: Total other expense net which consisted primarily of interest expense was $36 $4 million in the quarter compared to 31 $9 million in last year's quarter.
Roger Lipton: Yeah, Yeah, Hi, Andy I can't.
Speaker Change: Several questions.
Speaker Change: The Smokey bones.
Ken: Additionally, in the fourth quarter of 2024, we recognized a $2 $2 million noncash loss on extinguishment of debt related to the refinancing of our twin peaks securitized debt.
Speaker Change: Impairment loss.
Our stores closed dimension.
Speaker Change: Zooming out operating.
Speaker Change: EBITDA loss in the quarter also that affected the results is that a fair assumption.
Ken: Net loss was 67 4 million.
Speaker Change: As Roger it's a fair assumption.
Ken: $4.06 per diluted share compared to a net loss of $26 2 million or $1 68 per share in the prior year quarter.
Speaker Change: Operating loss from those restaurants.
Speaker Change: It was felt throughout the year.
Speaker Change: Right.
Speaker Change: Can you can you quantify that at all.
Ken: And on an as adjusted basis, our net loss was $29 $9 million or $1 87 per diluted share.
Speaker Change: It was about $2 $6 million for the year full year.
Speaker Change: Okay.
Speaker Change:
Speaker Change: And I noted.
Ken: Third to $17.3 million or $1.15 per diluted share in the prior year quarter.
Speaker Change: That the litigation costs dropped quite.
Speaker Change: Sharply and have actually.
Speaker Change: Year to year.
Ken: And lastly, adjusted EBITDA for the quarter was $14 4 million compared to $27 million in the year ago quarter with the extra operating week in the fourth quarter of 2023, contributing $1 $9 million to adjusted EBITDA and.
Speaker Change: Granted that it's hard to talk about the expectations with litigation, but.
Speaker Change: And Andy can you can you can you venture any thought at all in terms of how that's going or might go or how.
Speaker Change: How the.
Ken: And with that operator, please open the line for questions.
Speaker Change: The cash cost out of pocket.
Speaker Change: We'll take.
Speaker Change: Take place here going forward.
Ken: Thank you.
Ken: People will now be conducting a question and answer session.
Speaker Change: Well as you know no company really wants to talk about continuing litigation with having you know any clear line of sight, but we're hopeful that.
Ken: If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
Speaker Change: The bulk of this litigation gets resolved during this year and we eliminate further legal expense. We also are hopeful that we'll reach a settlement with some of our insurance carriers that will enable us to recover some of those legal fees that we spent this year and I think we're very optimistic about that come in.
Ken: They start to if you would like to move your questions from the queue.
Ken: For participants using speaker equipment it.
Ken: It would be necessary to pick up your handset before pressing the stock East one moment, please while we poll for questions.
Speaker Change: To play in probably Q2, so look forward to reporting on that as soon as we are as soon as we have news to break.
Roger Lipton: Our first question comes from the line of Roger Lipton Lipton Financial services. Please go ahead.
Speaker Change: Okay.
Speaker Change: And I think everybody has to be concern you guys most of all about liquidity.
Speaker Change: Yeah, Yeah, Hi, Andy Hi, Ken.
Roger Lipton: Several questions.
Speaker Change: And maintaining strong liquidity. So can you bring us up to date on how that stands in terms of cash on hand and available.
Roger Lipton: The Smokey bones impair.
Roger Lipton: The impairment loss.
Roger Lipton: Our stores closed dimension.
Roger Lipton: Presumably there was an operating or an EBITDA.
Speaker Change: Cash to deal with it.
Roger Lipton: The loss in the quarter also that affected the results is that a fair assumption.
Speaker Change: Hum month to month the operational needs.
Roger Lipton: It is Roger it's a fair assumption that the operating loss from those restaurants.
Speaker Change: Sure. The you know all of our numbers are reported publicly so you can look at our financial statements for cash on hand, but with respect to liquidity, we maintain an available for sale portfolio of bonds, we have approximately $150 million in available for sale securities.
Roger Lipton: It really was felt throughout the year.
Roger Lipton: Right.
Roger Lipton: Can you can you quantify that at all.
Roger Lipton: It was about $2.6 million for the year full year.
Sit on our balance sheet that from time to time as we need liquidity, we sell we sell them into the market to generate cash we also have.
Roger Lipton: Okay.
Roger Lipton: And I noted.
Roger Lipton: That the litigation costs dropped quite sharply.
Speaker Change: And a T M on file that allows us to issue preferred stock common stock whatever we need to for liquidity purposes.
Roger Lipton: Sharply and have actually year to year.
Roger Lipton: Granted that it's hard to talk about the expectations with litigation, but.
Speaker Change: And as.
Speaker Change: As noted already on this call, we anticipate raising equity at the twin peaks level in the coming weeks and in an effort to reduce some of our twin peaks corporate debt and that will also generate liquidity for twin peaks and some.
Andy Reid: And Andy can you can you just can you.
Andy Reid: Or any thought at all in terms of how that's going or might go or how the.
Andy Reid: The cash cost out of pocket.
Andy Reid:
Andy Reid: Take place here going forward.
Speaker Change: Some repayment of intercompany obligations between twin peaks and fat So all of those things are happening.
Andy Reid: Well as you know no company really wants to talk about continuing litigation with having you know any clear line of sight, but we're hopeful that the.
Speaker Change: Markets seem to be opened in moving again, which is great.
Speaker Change: And we don't really see any foreseeable issues.
Andy Reid: The bulk of this litigation gets resolved during this year and we eliminate further legal expense. We also are hopeful that we'll reach a settlement with some of our insurance carriers that will enable us to recover some of those legal fees that we spent this year and I think we're very optimistic about that coming to.
Speaker Change: Alright, that's helpful and in terms of.
Speaker Change: The potential within the portfolio aside from the potential of twin peaks, which is which is obviously on everybody's mind and in the second place and well progress forward, but what portion of your remaining 16.
To play in probably Q2, so look forward to reporting on that as soon as we are as soon as we have news to break.
Speaker Change: Brands.
Andy Reid: Okay.
Speaker Change: <unk> could be used in the same way I mean, what what what are you thinking about in terms of in terms of you mentioned Johnny rockets with international growth.
Speaker Change: And I think everybody has to be concern you guys most of all about liquidity.
Speaker Change: And maintaining strong liquidity. So can you bring us up to date on how that stands in terms of cash on hand and available.
Speaker Change: Now, whether that's any sort of a state.
Speaker Change: State that could be used in a similar fashion.
Speaker Change: You should not think about I would not think about fat brands as an activity in splitting up the company brand by brand that's not.
Speaker Change: Cash to deal with it.
Speaker Change: Hum month to month the.
Speaker Change: Goal that we've stated we felt that the twin peaks business is very different than many of the other franchise concepts that we operate in that you know alcohol percentages et cetera. So we've spun it off now.
Speaker Change: Operational needs.
Speaker Change: Sure. The you know all of our numbers are reported publicly so you can look at our financial statements for cash on hand, but with respect to liquidity, we maintain an available for sale portfolio of bonds, we have approximately $150 million in available for sale securities.
Speaker Change: And of course, we're sitting on some 50 million shares of twin peaks stocks. So we look forward to realizing value from that brand, which in and of itself.
Speaker Change: Sit on our balance sheet debt from time to time as we need liquidity, we sell we sell them into the market to generate cash we also have.
Speaker Change: Go a long way to either reducing or eliminating all of our debt.
Speaker Change: And a T M on file that allows us to issue preferred stock common stock whatever we need to for liquidity purposes.
Speaker Change: <unk> talked before about our manufacturing operation and I just talked about it on this call.
Speaker Change: As an opportunity.
Speaker Change: And as.
Speaker Change: So essentially take a noncore asset and once we've used up more capacity or utilization of the factories. Then we might look for a liquidity event now that could be an outright sale. It could be a spin off again, one of those things I don't see us spinning off additional restaurant brands today, and never say never but I don't really.
Speaker Change: As noted already on this call, we anticipate raising equity at the twin peaks level in the coming weeks and in an effort to reduce some of our twin peaks corporate debt and that will also generate liquidity for twin peaks and.
Speaker Change: Some repayment of intercompany obligations between twin peaks and fat So all of those things are happening.
Speaker Change: Think that's likely in fact, I think we'll probably acquire more brands.
Speaker Change: But you know I think the next couple of things to look at our our investment into peaks and our manufacturing business.
Speaker Change: Markets seem to be opened in moving again, which is great.
Speaker Change: And we don't really see any foreseeable issues.
Speaker Change: Alright, that's helpful and in terms of.
As a logical next next steps.
Speaker Change: Okay, well, thank you very much.
The potential within the portfolio aside from the potential of twin peaks, which is which is obviously on everybody's mind.
Speaker Change: I think you bought back in Q my pleasure.
Speaker Change: Thank you.
Speaker Change: And the second place and well progress forward, but what portion of your remaining 16 Brad.
Speaker Change: Next question comes from the line of Joe Combs with Noble capital markets. Please go ahead.
Speaker Change: Brands.
Josh: Hey, good afternoon, everybody and it's Josh don't ever go.
<unk> could be used in the same way I mean, what what what are you thinking about in terms of in terms of you mentioned Johnny rockets with international growth.
Josh: So you know I just wanted to kind of start off with you know I kind of looked at the earnings you guys have kind of a 92 openings for the year, which is great. But you guys kind of expect it a little bit of 100 plus.
Speaker Change: So whether that's any sort of state that could be used in a similar fashion.
Speaker Change: You should not think about I would not think about fat brands as you know.
Speaker Change: Any color as to maybe why would this kind of just pushed to the right from the franchisees themselves.
Speaker Change: And activity in splitting up the company brand by brand that's not our goal that we stated we felt that the twin peaks business is very different than many of the other franchise concepts that we operate in that you know alcohol percentages et cetera. So we've spun it off now and of course, we're sitting on some 50 million shares of twin peaks stocks. So we look for.
Josh: Into 'twenty spot.
Josh: Yeah, there's definitely a little slippage into 25 from 24, maybe 20% of the stores some of that has to do with franchisees financing.
Josh: A little bit of construction delays, but mostly just franchisees dragging their feet a little bit were claiming that lenders.
Speaker Change: Word to realizing value from that brand, which in and of itself.
Josh: From a construction financing standpoint, or just a little bit slower to react a little choosier. So it's.
Speaker Change: Go a long way to either reducing or eliminating all of our debt.
Josh: It's a slight delay, but the pipeline is very solid we have.
Speaker Change: We've talked before about our manufacturing operation and I just talked about it on this call as an opportunity.
Josh: One way to measure the health of the franchise system is when your franchisees are continuing to come back and buy the rights to build more stores and like I mentioned, we saw like 250.
Speaker Change: To essentially take a noncore asset and once we've used up more.
Speaker Change: Pasadena or utilization of the factories, then we might look for a liquidity event now that could be an outright sale. It could be a spin off again, one of those things I don't see us spinning off additional restaurant brands today, and never say never but I don't really think that's likely in fact, I think we'll probably acquire more brands.
Josh: Incremental stores last year, keeping that pipeline full and keeping our development or development schedule for so we're optimistic that we'll get more than 100 open this year, well, we'll know better as we get into the coming couple of quarters exactly what that's going to be.
Speaker Change: But you know I think the next couple of things to look at our our investment into peaks and our manufacturing business.
Okay. That's helpful.
Josh: And you know obviously, we got to become weekend I can report that in a kind of consumer confidence is down and then he really the brand has been hit harder than others with respect to that consumer spending and really on the flip side, you know, which concepts. If you kind of seeing that really have been outperformers.
Speaker Change: As a logical next next steps.
Speaker Change: Okay, well, thanks very much.
Speaker Change: Thank you back in queue my pleasure.
Speaker Change: Thank you.
Josh: Yeah, I mean, we definitely saw in the.
Speaker Change: Next question comes from the line of Joe Gomes with Noble capital markets. Please go ahead.
Josh: The <unk> sector to get hit on at the facilities level, where it's very price sensitive brand and you had frequency during 2020 for a trade down is as our customers were trading down from there their spending patterns from fast casual <unk> and so on.
Speaker Change: Hey, Yeah, good afternoon, everybody and it's Josh don't undergo.
Speaker Change: So you know I just wanted to kind of start off with you know I kind of looked at the earnings and you guys have kind of a 92 openings for the year, which is great. But you guys kind of expect it a little bit of 100 plus.
Josh: So we probably saw them.
Josh: High single digit same store declines in that category, but things have have also started to turn around we're pretty optimistic about 2025 sales.
Speaker Change: Any color as to maybe why with this kind of just pushed to the right from the franchisees themselves into 'twenty spot.
Speaker Change: Yeah, there's definitely a little slippage into 25 from 24, maybe 20% of the stores. Some of that has to do with franchisees financing a little bit of construction delays, but mostly just franchisees dragging their feet a little bit were claiming that lenders are from our construction.
Josh: And we've seen some categories you know definitely be in the black we've seen for example round table pizza with positive same store sales and you've seen our cookies and ice cream come back handsomely. So I think it's it's a little bit of a mixed bag, but also theres been crazy weather in the first six weeks of the year that really is.
Speaker Change: Financing standpoint, or just a little bit slower to react a little choosy or so.
Josh: Affected everyone. So I think generally we're optimistic we may not be.
Speaker Change: It's a slight delay, but the pipeline is very solid we have.
Josh: Forecasting.
Speaker Change: One way to measure the health of the franchise system is when your franchisees are continuing to come back and buy the rights to build more stores and like I mentioned, we saw like 250.
Josh: Positive same store sales increases across all brands, but there's definitely segments, where we're seeing positive pushes.
Speaker Change: Incremental stores last year, keeping that pipeline full and keeping our development or development schedule for so we're optimistic that we'll get more than 100 open this year.
Josh: Okay, that's great and.
Josh: Last one for me is you know obviously you touched on this and you guys remarks, but.
Josh: You know kind of what the election really behind US now can he can expand more really in the M&A pipeline of new opportunities come to you that really just havent prior to an election.
Speaker Change: Better as we get into the coming couple of quarters exactly what that's going to be.
Speaker Change: Okay. That's helpful.
Speaker Change: And you know obviously, we got to become we kind of got a report that and that kind of consumer confidence is down and then he really the brand has been hit harder than others with respect to that consumer spending and really on the flip side, you know, which concepts have you guys seen that really have been like outperformers.
Josh: Well, we have I don't think it's so much about the election, we have.
Josh: We see a lot of stuff right. We see deals every single week, there's just a lot of turnarounds and they just haven't been strategic for us where we're getting checking two or three boxes at the same time cost of capital is still high relative to the 2021, and we'd rather refinance delever or things like that right now rather than <unk>.
Speaker Change: Yeah, I mean, we definitely saw in the.
Speaker Change: The kyocera sector to get hit on at the facilities level, where it's very price sensitive brand and you had frequency during 'twenty 'twenty four trade down is as our customers you know where were trading down from there their spending patterns from fast casual <unk> and so on and.
Josh: <unk> leverage.
Josh: So we committed to unlocking value and reducing leverage were focused on that.
Josh: There are definitely some targets that make strategic sense for us to acquire that would complement the existing portfolio. We are pursuing those timing is everything. So we'll just have to see how that comes together.
Speaker Change: And so we probably saw them.
Speaker Change: High single digit same store declines in that category, but things have have also started to turn around we're pretty optimistic about 2025 sales.
Josh: And how the markets react to and I think we'd all like to see you know lower interest rates and.
Speaker Change: And we've seen some categories you know definitely be in the black we've seen for example round table pizza with positive same store sales and we've seen no cookies and ice cream come back handsomely. So.
Josh: A looser financing market, but until such time, you know, we're going to focus on Delevering and we've got this huge pipeline of organic growth, which is free so to get that $50 million of incremental EBITDA by just opening those 1000 stores that doesn't cost us anything we don't have to borrow anything.
Speaker Change: I think it's it's a little bit of a mixed bag, but also theres been crazy weather in the first six weeks of the year that really has affected everyone. So I think generally we're optimistic we may not be.
Josh: And so that's a big focus for US is to get those stores open. If we wanted to buy $50 million of EBITDA. Then we're going to have to go write a big check and that's going to have to come from somewhere so that doesn't really help our delevering strategy now that may all change as twin peaks grows as we.
Speaker Change: Forecasting.
Speaker Change: Huge positive same store sales increases across all brands, but there's definitely segments, where we are.
Josh: Get diluted in our ownership and create some liquidity there and pay down some debt that could all change but.
Speaker Change: Seeing positive pushes.
Speaker Change: Okay. That's great and then last one for me is you know obviously you touched on this and you guys remarks, but.
Josh: I don't think that that's a big 2025.
Josh: Other than maybe one or two targets that are very interesting strategically for us and we are continuing to focus on.
Speaker Change: You know kind of what the election really behind US now can he can expand more really in the M&A pipeline of new opportunities come to you that really just havent prior to the election.
Josh: Okay. That's helpful. Thanks for taking my question.
Josh: Thank you.
Roger Lipton: Thank you next question comes from the line of Roger Lipton Lipton Financial services. Please go ahead yeah.
Speaker Change: Well, we have I don't think it's so much about the election, we have.
Speaker Change: We see a lot of stuff right. We see deals every single week, there's just a lot of turnarounds and they just haven't been strategic for us where we're getting checking two or three boxes at the same time cost of capital are still high relative to the 2021, and we'd rather refinance delever or things like that right now rather than then.
Roger Lipton: Yeah, Hi, again relative to two putting to work or disposing of the Smokey bones locations, what kind of timetable do you think.
Roger Lipton: Is realistic.
Roger Lipton: Okay.
Roger Lipton: Smokey bones will the majority of them will get through in 2020 six 'twenty five 'twenty six we should be.
Speaker Change: <unk> leverage.
Speaker Change: So we committed to unlocking value and reducing leverage were focused on that are.
Roger Lipton: Fairly you know.
Roger Lipton: Fairly far along there there may be some stragglers, but the majority of it over the next 24 months. We will we will have made a decision on and move forward.
Speaker Change: There are definitely some targets that make strategic sense for us to acquire that would complement the existing portfolio. We are pursuing those timing is everything. So we'll just have to see how that comes together.
Roger Lipton: <unk> had been very encouraging there are some complicated leases, where there are multiple properties under master leases and so.
Speaker Change: And how the markets react to and I think we'd all like to see you know lower interest rates and a looser financing market, but until such time, you know we're going to focus on Delevering and we've got this huge pipeline of organic growth, which is free so to get that $50 million of incremental EBITDA by just opening those 1000 stores that doesn't cost us anything.
Roger Lipton: We're trying to negotiate all of the leases at once because that's.
Roger Lipton: That's what the landlord wants maybe more so than what we want it and so it's taken a little longer on some of those more complicated master leases, but otherwise.
Roger Lipton: We have a solid line of sight and we have franchisees, who are stepping up to convert locations in their markets and we're converting the corporate ones as well.
Speaker Change: Don't have to borrow anything.
Speaker Change: And so that's a big focus for US is get those stores open if we wanted to buy $50 million of EBITDA. Then we're going to have to go write a big check and that's going to have to come from somewhere so that doesn't really help our delevering strategy now that may all change as twin peaks grows as we.
Right and you're still thinking that something like 30 of the 58 locations will be suitable.
Roger Lipton: For conversions.
Roger Lipton: Yeah, they're 30 years a good number there were 61, when we started we've converted a comprehensive close one so thirties as it is a safe number give or take that we get done.
Speaker Change: Get diluted in our ownership and create some liquidity there and pay down some debt that could all change but I.
Speaker Change: I don't think that that's a big 2025.
Roger Lipton: There's always a chance it's more usually if if we haven't converted the location that we don't plan to its because theres already.
Speaker Change: Initiatives other than maybe one or two targets that are very interesting strategically for us and we are continuing to focus on.
Roger Lipton: Twin peaks nearby so they're too close to each other or theres. Some landlord restriction that may have to do with the sale of alcohol or things like that that some landlords, where there might be a smokey bones have some master lease with a target as an example, where they may have a 25% alcohol restriction that we know that twin peaks.
Okay. That's helpful. Thanks for taking my questions.
Speaker Change: Thank you.
Roger Lipton: Thank you next question comes from the line of Roger Lipton Lipton Financial services. Please go ahead.
Roger Lipton: Yeah, Hi, again.
Speaker Change: Relative to two putting to work or disposing of the Smokey bones locations.
Roger Lipton: And the high forties percentage of alcohol. So it doesn't qualify those are the kind of reasons as to why.
Roger Lipton: What kind of timetable do you think.
Speaker Change: Okay. Thank you.
Speaker Change: Is realistic.
Ken Queuing: Thank you Roger.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Smokey bones will the majority of them will get through in 2020 six 'twenty five 'twenty six we should be.
Speaker Change: As there are no further questions, ladies and gentlemen, we have reached the end of question and answer session I would now like to turn the phone over to anti PD one for closing comments.
Speaker Change: Fairly you know.
Speaker Change: Fairly far along there there may be some stragglers, but the majority of it over the next 24 months will we will have made a decision on and move forward.
Speaker Change: Thank you operator, I would like to thank all of you for participating in our earnings call today and happy to take any follow up on a one off basis. Thank you again.
Speaker Change: <unk> had been very encouraging there are some complicated leases, where there are multiple properties under master leases and so.
Speaker Change: Thank you.
Speaker Change: <unk> at todays teleconference. You may disconnect your lines at this time, thank you for your participation.
Speaker Change: We're trying to negotiate all of the leases at once because that's.
Speaker Change: That's what the landlord wants maybe more so than what we want and so it's taken a little longer on some of those more complicated master leases, but otherwise.
Speaker Change: We have a solid line of sight and we have franchisees, who are stepping up to convert locations in their markets and we're converting the corporate ones as well.
Right and you're still thinking that something like 30 of the 58 locations will be suitable.
Speaker Change: For conversions.
Speaker Change: Yeah, they're 30 years a good number there were 61, when we started we've converted a comprehensive close one so thirties as it is a safe number give or take that we get done.
Speaker Change: There's always a chance it's more usually.
Speaker Change: If we haven't converted a location and we don't plan to its because theres already.
Speaker Change: Twin peaks nearby so they're too close to each other or theres. Some landlord restriction that may have to do with the sale of alcohol or things like that that some landlords, where there might be a smokey bones have some master lease with a target as an example, where they may have a 25% alcohol restriction that we know that twin peaks.
Speaker Change: In the high forties percentage of alcohol. So it doesn't qualify those are the kind of reasons as to why.
Speaker Change: Okay. Thank you.
Roger Lipton: Thank you Roger.
Roger Lipton: Thank you.
As there are no further questions, ladies and gentlemen, we have reached the end of question and answer session I would now like to turn the phone over to Andy <unk> for closing comments.
Speaker Change: Thank you operator, I would like to thank all of you for participating in our earnings call today and happy to take any follow up on a one off basis. Thank you again.
Speaker Change: Thank you. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.
Speaker Change: [music].