First Watch Restaurant Group (FWRG) Q2 2024 earnings summary

Executive summary

• Total revenues rose 19.5% year-over-year to $258.6M in Q2 2024, with system-wide sales up 10.1% to $299.0M.

• Adjusted EBITDA grew 37% to $35.3M, with margin improvement and operational efficiency.

• Net income increased to $8.9M ($0.14 per diluted share), up from $8.0M ($0.13) in Q2 2023.

• Opened 7 new restaurants and acquired 21 franchise units, ending Q2 with 538 system-wide locations across 29 states.

• Customer experience scores improved by 10% year-over-year, and ticket times were over 20% faster.

Financial highlights

• Same-restaurant sales declined 0.3% and same-restaurant traffic fell 4.0% year-over-year.

• Income from operations margin improved to 6.4% from 5.3% year-over-year.

• Restaurant-level operating profit margin increased to 21.9% from 20.9% year-over-year.

• Adjusted EBITDA margin rose to 13.7% from 11.9% in the prior year quarter.

• Net income margin was 3.4%, down from 3.7% in Q2 2023.

Outlook and guidance

• FY24 same-restaurant sales growth expected between -2% and flat, with mid-single-digit decline in traffic.

• Total revenue growth guidance maintained at 17%-19% for FY24.

• Adjusted EBITDA guidance held at $106M-$112M; acquisitions expected to contribute $13M.

• Expect 52-56 net new system-wide restaurants in 2024, with 45-48 company-owned and 9-10 franchise-owned.

• Capital expenditures planned at $125M-$135M, excluding franchise acquisition investments.