FAT Brands (FAT) Q4 2024 earnings summary

Executive summary

• Completed the spinout of Twin Hospitality Group, distributing 5% of its shares to shareholders and retaining the rest, unlocking significant value and reducing debt exposure.

• Twin Hospitality now trades independently, with FAT retaining an 85% stake and consolidating its financials for now.

• Opened 92 new restaurants and signed over 250 new franchise agreements in 2024, expanding the development pipeline to 1,000 locations.

• Strategic focus for 2025 includes maximizing value at Twin Hospitality, cost reductions, refranchising company-owned locations, and expanding manufacturing capabilities.

Financial highlights

• Q4 2024 revenue was $145.3 million, down 8.4% year-over-year due to one less operating week and store closures.

• System-wide sales for the quarter were $580.2 million, a 7.4% decrease year-over-year, also impacted by the shorter quarter.

• Full-year 2024 revenue increased 23.4% to $592.7 million; system-wide sales rose 3.1% to $2.4 billion.

• Q4 net loss was $67.4 million ($4.06 per share), with an adjusted net loss of $29.9 million ($1.87 per share).

• Full-year net loss widened to $189.8 million ($11.60/share); adjusted net loss was $128.9 million ($8.02/share).

Outlook and guidance

• Plans to open over 100 new locations in 2025, with 17 already opened year-to-date.

• Committed to reducing Twin Hospitality debt by $75 million in 2025, including at least $25 million by late April.

• Strategic focus includes accelerating the build-out of a 1,000+ unit new store pipeline and maintaining strong liquidity.

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

• Intends to re-franchise 57 company-owned Fazoli's restaurants and continue building net asset value for future liquidity events.