FAT Brands (FAT) Q3 2024 earnings summary

Executive summary

• Revenue grew 31.1% year-over-year to $143.4 million in Q3 2024, driven by the Smoky Bones acquisition and new restaurant openings.

• System-wide sales reached $600.7 million, up 6.4% year-over-year, with 22 new stores opened in Q3 and 62–71 new stores YTD.

• Adjusted EBITDA was $14.1 million, down from $21.9 million in the prior year quarter, impacted by lower Employee Retention Tax Credits and higher costs.

• Net loss widened to $44.8 million ($2.74 per diluted share) from $24.7 million ($1.59 per share) year-over-year, reflecting higher costs and interest expense.

• Strategic focus remains on organic growth, acquisitions, expanding manufacturing capacity, and exploring an IPO or alternative transaction for Twin Peaks and Smoky Bones.

Financial highlights

• Total revenue increased to $143.4 million, up 31.1% from $109.4 million year-over-year.

• Costs and expenses rose 44.6% to $148.6 million, mainly due to Smoky Bones and higher professional fees.

• Adjusted EBITDA was $14.1 million, down from $21.9 million; adjusted net loss was $38–$40 million, or $2.34 per share.

• Net loss for Q3 2024 was $44.8 million, or $2.74 per diluted share; YTD net loss was $122.4 million.

• Advertising expense decreased to $10 million from $11.7 million year-over-year.

Outlook and guidance

• Plans to open approximately 100 new units in 2024, with a development pipeline of about 1,000 new units.

• Targeting adjusted EBITDA growth of ~$10 million from new stores and $5 million from factory operations.

• Twin Peaks and Smoky Bones are being positioned for a potential IPO or alternative transaction.

• Sequential improvement in same-store sales, with most brands now near flat or positive.

• Management expects sufficient liquidity for the next twelve months through cash on hand, operations, and access to capital markets.