Fat Brands, Inc Q4 FY2024 earnings call

• Spin-out of Twin Hospitality Group, Inc. in January 2025, which operates Twin Peaks and Smokey Bones restaurants, with Twin Hospitality now trading separately on NASDAQ. - Opened 92 new restaurants in 2024 and plans to open over 100 in 2025, with strong organic growth expected across brands like Great American Cookies, Marble Slab Creamery, etc. - Co-branding continues to drive growth, with co-branded locations generating 10%-20% higher incremental sales. - Focus on strategic acquisitions that complement the portfolio, avoiding turnaround situations. - Manufacturing facility in Georgia has significant growth potential with room to increase utilization. - FAT Brands Foundation has increased giving by 36% in 2024, providing grants to non-profits and supporting community initiatives during crises like LA wildfires

Total revenue in the fourth quarter of 2024 decreased 8.4% to $145.3 million compared to $158.6 million in the prior year quarter. System-wide sales were $580.2 million, a 7.4% decrease from the prior year quarter. The company's manufacturing facility in Georgia generates approximately $38 million in annual sales from franchisees with a profit of about $15 million, representing a 40% margin. The facility operates at 40% capacity and has room for expansion, with a goal to increase utilization to 60%-70%

• Committed to raising equity at Twin Hospitality and reducing debt by $75 million or more in 2025, including a minimum of $25 million by late April. - Expect to complete the $25 million debt reduction over the next 60 days and declare/pay Q1 dividend afterward. - Plan to refinance remaining three securitization silos in the second half of 2025

• Potential delays in store openings due to franchisee financing or construction issues. - Uncertainty around litigation costs, though hopeful for resolution in 2025. - Market fluctuations affecting liquidity and refinancing plans

Q: Can you quantify the operating loss from Smokey Bones stores closed?

A: It was about $2.6 million for the full year.

Q: Any thought on litigation costs and resolution?

A: Hopeful bulk of litigation gets resolved in 2025, with potential settlement with insurance carriers to recover legal fees, optimistic for Q2 resolution.

Q: Update on liquidity and cash on hand?

A: Maintain available-for-sale securities worth ~$150 million and an ATM for liquidity purposes; anticipate raising equity at Twin Peaks to reduce debt and generate liquidity.

Q: Reason for some store openings slipping into 2025?

A: Slippage due to franchisee financing delays and construction issues, but pipeline remains solid with 250 incremental stores sold in 2024.

Q: Impact of consumer confidence on brands and outperforming concepts?

A: QSR brands like Fazoli's hit, but Round Table Pizza and cookies/ice cream segments outperforming; weather in early 2025 also affected sales.

Q: M&A pipeline and focus?

A: Focus on synergistic acquisitions complementing portfolio, not turnarounds; delevering and organic growth prioritized for now, with potential targets but timing dependent on market conditions