Fat Brands, Inc Q1 FY2025 earnings call

• Leadership changes: Rob Rosen transitioned to a consulting role, Taylor Wiederhorn appointed co-CEO. Joe Hummel transitioned from Twin Hospitality Group CEO, Ken Kuick to serve as interim CEO. - Spin-off of Twin Hospitality Group Inc., which is now listed on Nasdaq under TWMP. - Twin Peaks' growth remains strong with new lodges opened, and a development pipeline of over 100 lodges. - Organic growth with over 1,000 new locations in the pipeline, aiming for over 100 new locations in 2025. - Co-branding initiatives: Launched 10 co-branded and tri-branded models, including Roundtable Pizza and Marble Slab Creamery pairings. - International development: Fatburger announced partnership to open 30 locations in France over 3 years, and Buffalo's Cafe fast-casual locations in France. - Value initiatives: Fazoli's offering pasta dishes for $3.99, Fatburger bringing back Baby Fat for $5.99. - Balance sheet strengthening: Amended Fazoli's securitization for improved terms, aim to refranchise Fazoli's 57 company-owned stores. - Cookie facility: Goal to increase utilization from 40-45% to 60-70% to boost revenue from $15 million to $25 million annually.

Total revenue for the first quarter was $142 million, a 6.5% decrease from $152 million in the same period last year. System-wide sales were $571.1 million, down 1.8% compared to the previous year's quarter. Adjusted EBITDA for the quarter was $11.1 million compared to $18.2 million in the year-ago quarter. The casual dining segment had same-store sales increasing approximately 1.6%. Roundtable Pizza delivered a modest yet positive 0.6% same-store sales increase in the first quarter, with digital sales climbing 5% sequentially from Q4 to Q1 2025. The 2024 digital integration of Great American Cookies and Marble Slab Creamery yielded strong results, with an increase in sales of 8% and an increase in average check size of 17.6%.

• Committed to raising $75-100 million of equity in 2025 and using 75% to reduce debt, aiming for Twin Hospitality to be cash flow positive excluding new corporate store development. - Temporarily paused FAT's common dividend and started accruing FAT Series B preferred dividend. - Focus on refinancing other securitization silos with an anticipated repayment date of July 2026. - Aim to make FAT a cash flow positive business over the coming quarters and further reduce leverage. - Target to increase cookie facility utilization to 60-70% in the near term.

• Volatile market conditions impacting the timing of raising the first tranche of equity. - Potential delays in refinancing securitization silos. - Macro-economic factors affecting consumer spending and new store development. - Litigation expenses that could impact financials. - Challenges in new store development due to high interest rates, construction costs, and tariffs.

Q: About the cookie facility utilization, what's the ballpark impact on efficiency if reaching 60-70% utilization?

A: Our goal is to increase the revenue from the facility from about $15 million a year to $25 million a year, with momentum from the initial program expected to lead to other initiatives.

Q: Can you give a ballpark estimate of the year-to-year Smoky Bones negative impact in the quarter?

A: It's a couple million dollars per quarter.

Q: How long will it take to find a new full-time CEO to replace Joe Hummel?

A: The executive search is going very well and should be completed within this quarter.