First Watch Restaurant Group (FWRG) Q3 2024 earnings summary

Executive summary

• Total revenues rose 14.8% year-over-year to $251.6M in Q3 2024, with system-wide sales up 8.0% to $291.8M.

• Adjusted EBITDA increased 18% to $25.6M, reflecting strong restaurant-level operations and margin improvement.

• Net income declined to $2.1M ($0.03/share) from $5.4M ($0.09/share) in Q3 2023, with net income margin at 0.8%.

• Opened nine new restaurants in Q3, bringing the total to 547 system-wide across 29 states.

• Dining room traffic turned positive in the last period of the quarter, aided by targeted marketing campaigns.

Financial highlights

• Same-restaurant sales fell 1.9% and same-restaurant traffic dropped 4.4% year-over-year.

• Adjusted EBITDA margin improved to 10.2% from 9.9% year-over-year.

• Restaurant-level operating profit margin rose to 18.9% from 18.7% year-over-year.

• Income from operations margin decreased to 2.5% from 3.6% year-over-year.

• Net income margin was 0.8% in Q3 2024, down from 2.5% in Q3 2023.

Outlook and guidance

• FY 2024 same-restaurant sales expected to decline about 1%, with traffic down 4.0%-4.5%.

• Total revenue growth projected at 16.5%-17.0% for the year, including a 7% impact from acquisitions.

• Adjusted EBITDA guidance set at $110M-$112M, with $14M expected from acquisitions.

• 47 net new system-wide restaurant openings anticipated in 2024, with five delayed to early 2025 due to Hurricane Milton.

• Capital expenditures planned at $130M, focused on new restaurants and remodels, excluding franchise acquisitions.