The ONE Group Reports Fourth Quarter and Full Year 2024 Financial Results; Quarterly and Annual Revenue Increased 146.7% and 102.3%, Respectively

Published: 2025-03-11 11:27:17 ET STKS

DENVER- The ONE Group Hospitality, Inc. ('The ONE Group' or the 'Company') (Nasdaq: STKS) today reported its financial results for the fourth quarter and full year ended December 31, 2024.

Highlights for the fourth quarter 2024 compared to the same quarter in 2023 are as follows (the prior year quarter excludes any contribution from the acquisition of Benihana Inc. which closed in May 2024):

Total GAAP revenues increased 146.7% to $221.9 million from $89.9 million;

Consolidated comparable sales* decreased 4.3%;

Operating income increased 158.9% to $12.8 million from $4.9 million and includes $3.7 million in transition, transaction and integration expenses associated with the acquisition of Benihana and RA Sushi;

Restaurant Operating Profit** increased 143.7% to $40.1 million from $16.5 million;

GAAP net loss available to common stockholders was $5.4 million, or $0.18 net loss per share ($0.03 adjusted net loss per share)***, compared to GAAP net income available to common stockholders of $4.6 million, or $0.15 per share ($0.17 adjusted net income per share)***

Adjusted EBITDA**** attributable to The ONE Group Hospitality, Inc. increased 147.6% to $30.3 million from $12.2 million.

Highlights for the full year 2024 compared to 2023 are as follows (the prior year excludes any contribution from the acquisition of Benihana Inc. which closed in May 2024):

Total GAAP revenues increased 102.3% to $673.3 million from $332.8 million;

Consolidated comparable sales* decreased 6.8%;

Operating income increased 15.9% to $10.8 million from $9.3 million and includes $23.0 million in transition, transaction and integration expenses associated with the acquisition of Benihana and RA Sushi;

Restaurant Operating Profit** increased 115% to $108.3 million from $50.4 million;

GAAP net loss available to common stockholders was $35.0 million, or $1.12 net loss per share ($0.28 adjusted net loss per share)***, compared to GAAP net income available to common stockholders of $4.7 million, or $0.15 per share ($0.18 adjusted net income per share)***

Adjusted EBITDA**** attributable to The ONE Group Hospitality, Inc. increased 129.3% to $75.2 million from $32.8 million.

'We were pleased that annual revenue and adjusted EBITDA reached the higher end of our guided ranges. These achievements were due to a sequentially stronger fourth quarter characterized by our best comparable sales of the year, positive transactions at STK, and improved sales performance at Benihana fueled by our new initiatives. For both the full year and recent quarter, adjusted EBITDA growth exceeded top-line growth, showcasing our capability to achieve greater profitability through the elimination of duplicate administrative costs, supply chain synergies, and tight cost management within our preexisting business. By year-end 2026, we intend to capture $20 million in total savings across these three areas,' said Emanuel 'Manny' Hilario, President and CEO of The ONE Group.

'This year, we will open five to seven venues, beginning with an owned Benihana in San Mateo, California this month. Our development plans consist of opening owned, managed, and licensed restaurants and we believe this combination enables us to prioritize operating / free cash flow generation, promotes balance sheet flexibility, and maximizes shareholder returns,' Hilario concluded.

*Comparable sales represent total U.S. food and beverage sales at owned and managed units, a non-GAAP financial measure, opened for at least a full 24-months. This measure includes total revenue from our owned and managed locations. The Company monitors sales growth at its established restaurant base in addition to growth that results from restaurant acquisitions and new restaurant openings. Refer to the reconciliation of GAAP revenue to total food and beverage sales at owned and managed units in this press release.

**We define Restaurant Operating Profit as owned restaurant net revenue minus owned restaurant cost of sales and owned restaurant operating expenses. Restaurant Operating Profit has been presented in this press release and is a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. Refer to the reconciliation of Operating income to Restaurant Operating Profit in this press release.

***We define adjusted net income / (loss) available to common stockholders as net income / (loss) to common stockholders before transaction and exit expenses, transition and integration expenses, non-cash rent during the pre-opening period, other non-recurring costs and the income tax effect of any adjustments. Adjusted net income / (loss) available to common stockholders has been presented in this press release and is a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. Refer to the reconciliation of net (loss) / income available to common stockholders to adjusted net income / (loss) to common stockholders in this press release.

****We define Adjusted EBITDA as net income before interest expense, provision for income taxes, depreciation and amortization, non-cash impairment loss, non-cash rent expense, non-recurring gains and losses, stock-based compensation, transaction and exit costs and transition and integration expenses. Starting in Q3 2024, pre-opening expenses are no longer deducted from Adjusted EBITDA. Adjusted EBITDA has been presented in this press release and is a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. Refer to the reconciliation of Net Income to Adjusted EBITDA in this press release.

Restaurant Development

In 2024, we opened six restaurants.

Owned STK in Washington DC

March 2024

Owned RA Sushi in Plantation, Florida

July 2024

Owned Kona Grill in Tigard, Oregon

September 2024

Owned STK in Aventura, Florida

October 2024

Owned Salt Water Social in Denver, Colorado

November 2024

Managed STK in Niagara Falls, Ontario

November 2024

We intend to add five to seven venues in 2025, including asset light development of managed and licensed STKs and Kona Grills and franchised Benihanas.

In March 2025, we will open an owned Benihana in San Mateo, California. There are also currently three venues under construction in the following cities:

Owned STK in Los Angeles, California (re-location);

Owned STK in Topanga, California; and

Owned Kona Grill in Seattle, Washington.

Liquidity and Share Repurchase Program

As of December 31, 2024, we held $38.1 million in cash and short-term credit card receivables and had $33.6 million available under our revolving credit facility. Under the current conditions, our credit facility does not have any financial covenants.

In March 2024, our Board of Directors authorized a $5 million share repurchase program. There was no share repurchase activity during the fourth quarter of 2024.

2025 Targets

As of January 1, 2025, we will report financial information on a fiscal quarter basis using four 13-week quarters with the addition of a 53rd week when necessary. For 2025, our fiscal calendar begins on January 1, 2025 and ends on December 28, 2025 and our first quarter will have 89 days.

Financial Results and Other Select Data

US$s in millions

Total owned operating expenses as a percentage of owned restaurant net revenue

Consolidated total G&A, excluding stock-based compensation

Consolidated total capital expenditures, net of allowances received by landlords

$45 to $50

*We have not reconciled guidance for Consolidated Adjusted EBITDA to the corresponding GAAP financial measure because we do not provide guidance for the various reconciling items. We are unable to provide guidance for these reconciling items because we cannot determine their probable significance, as certain items are outside of our control and cannot be reasonably predicted since these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP financial measure are not available without unreasonable effort.

Conference Call and Webcast

Emanuel 'Manny' Hilario, President and Chief Executive Officer, and Tyler Loy, Chief Financial Officer, will host a conference call and webcast today at 4:30 PM Eastern Time.

The conference call can be accessed live over the phone by dialing 412-542-4186. A replay will be available after the call and can be accessed by dialing 412-317-6671; the passcode is 10196501. The replay will be available until Thursday, March 20, 2025.

The webcast can be accessed from the Investor Relations tab of The ONE Group's website at www.togrp.com under 'News / Events.'

About The ONE Group

The ONE Group Hospitality, Inc. (Nasdaq: STKS) is an international restaurant company that develops and operates upscale and polished casual, high-energy restaurants and lounges and provides hospitality management services for hotels, casinos and other high-end venues both in the U.S. and internationally. The ONE Group's focus is to be the global leader in Vibe Dining, and its primary restaurant brands and operations are:

STK, a modern twist on the American steakhouse concept with restaurants in major metropolitan cities in the U.S., Europe and the Middle East, featuring premium steaks, seafood and specialty cocktails in an energetic upscale atmosphere.

Benihana, an interactive dining destination with highly skilled chefs preparing food right in front of guests and served in an energetic atmosphere alongside fresh sushi and innovative cocktails. The Company franchises Benihanas in the U.S., Caribbean, Central America, and South America.

Kona Grill, a polished casual, bar-centric grill concept with restaurants in the U.S., featuring American favorites, award-winning sushi, and specialty cocktails in an upscale casual atmosphere.

RA Sushi, a Japanese cuisine concept that offers a fun-filled, bar-forward, upbeat, and vibrant dining atmosphere with restaurants in the U.S. anchored by creative sushi, inventive drinks, and outstanding service.

ONE Hospitality, The ONE Group's food and beverage hospitality services business develops, manages and operates premier restaurants and turnkey food and beverage services within high-end hotels and casinos currently operating venues in the U.S. and Europe.

Additional information about The ONE Group can be found at www.togrp.com.

Non-GAAP Definition Changes

We have evolved our definition of non-GAAP financial measures starting in Q3 2024. We use certain non-GAAP measures in analyzing operating performance and believe that the presentation of these measures provides investors and analysts with information that is beneficial to gaining an understanding of the Company's financial results. Non-GAAP disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP.

We exclude items management does not consider in the evaluation of its ongoing core operating performance from adjusted net income, adjusted net income / (loss) per share, and Adjusted EBITDA. Starting in Q3 2024, we no longer deduct pre-opening expenses from Adjusted EBITDA. Reconciliations of these non-GAAP measures are included under 'Reconciliation of Non-GAAP Measures' in this press release.

Cautionary Statement on Forward-Looking Statements

This press release includes 'forward-looking statements' within the meaning of the 'safe harbor' provisions of the United States Private Securities Litigation Reform Act of 1995, including with respect to the impact of the Benihana Inc. acquisition, restaurant openings and 2025 financial targets. Forward-looking statements may be identified by the use of words such as 'target,' 'intend,' 'anticipate,' 'believe,' 'expect,' 'estimate,' 'plan,' 'outlook,' and 'project' and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. A number of factors could cause actual results or outcomes to differ materially from those indicated by such forward-looking statements, including but not limited to: (1) our ability to integrate the new or acquired restaurants into our operations without disruptions to operations; (2) our ability to capture anticipated synergies; (3) our ability to open new restaurants and food and beverage locations in current and additional markets, grow and manage growth profitably, maintain relationships with suppliers and obtain adequate supply of products and retain employees; (4 )factors beyond our control that affect the number and timing of new restaurant openings, including weather conditions and factors under the control of landlords, contractors and regulatory and/or licensing authorities; (5) our ability to successfully improve performance and cost, realize the benefits of our marketing efforts and achieve improved results as we focus on developing new management and license deals; (6) changes in applicable laws or regulations; (7) the possibility that The ONE Group may be adversely affected by other economic, business, and/or competitive factors; (8) the impact of actual and potential changes in immigration policies and the imposition of tariffs, including increases in food prices and inflation and potential labor shortages, and (9) other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K filed for the year ended December 31, 2024 and Quarterly Reports on Form 10-Q.

Investors are referred to the most recent reports filed with the Securities and Exchange Commission by The ONE Group Hospitality, Inc. Investors are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

THE ONE GROUP HOSPITALITY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

See full release at:

https://ir.togrp.com/press-releases/detail/541/the-one-group-reports-fourth-quarter-and-full-year-2024