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ONE Group (STKS) Q4 Earnings Top Estimates, Revenues Lag
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The ONE Group Hospitality, Inc. (STKS - Free Report) reported mixed fourth-quarter 2023 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top line increased year over year while the bottom line fell from the prior-year quarter’s figure. Following the results, shares of the company fell 5.1% during the after-hour trading session on Mar 14.
Delving Deeper
During the fourth quarter, the company reported adjusted earnings per share (EPS) of 17 cents, beating the Zacks Consensus Estimate of 14 cents. The company reported adjusted EPS of 19 cents in the prior-year quarter.
During the quarter, the company reported revenues of $89.9 million, missing the consensus mark of $90 million. The top line increased 1.8% on a year-over-year basis.
The ONE Group Hospitality, Inc. Price, Consensus and EPS Surprise
Management, license and incentive fee revenues increased 7.6% year over year to $4.8 million. The increase was primarily driven by increased revenue and profit at North American managed and licensed properties and STK Stratford.
During the quarter, consolidated comparable sales declined 4.3% year over year. STK same-store sales fell 4.6% year over year, while Kona Grill's same-store sales declined 3.9% year over year. Contrasting the figures with 2019, consolidated comparable sales surged by 40.1%. STK same-store sales increased 55.4%, backed by a 41.3% rise in traffic. In the same period, Kona Grill's same-store sales rose by 22.7%.
Operating Highlights
General and administrative (G&A) costs during the fourth quarter of 2023 decreased 6.5% year over year to $7.9 million. Reductions in travel expenses and incentive-based performance compensation expenditures primarily caused the decline.
Pre-opening expenses during the quarter came in at $2.9 million compared with $1.7 million in the fourth quarter of 2022. This increase was associated with expenses related to payroll, training, and non-cash pre-open rent for new establishments such as STK Charlotte, Kona Grill Phoenix, STK Boston, and STK Salt Lake City. Additionally, expenses were incurred for STK and Kona Grill restaurants (currently undergoing development).
During the fourth quarter, restaurant operating profit came in at $16.5 million compared with$15.9 million in the fourth quarter of 2022. Operating profit margin (as a percentage of company-owned restaurant net revenues) during the quarter increased 40 basis points year over year to 19.3%. The upside was backed by price increases and operational cost reduction initiatives partially offset by increased commodity prices and labor inflation.
Adjusted EBITDA in the fourth quarter came in at $14.5 million compared with $13 million reported in the prior-year quarter.
Adjusted Net Income amounted to $5.3 million compared with $6.5 million in the fourth quarter of 2022.
Balance Sheet
Total cash and cash equivalents as of Dec 31, 2023, totaled $21 million compared with $55.1 million on Dec 31, 2022.
The current portion of long-term debt, as of Dec 31, 2023, came in at $1.5 million flat year over year.
2023 Highlights
Total revenues in 2023 amounted to $332.8 compared with $316.6 million reported in 2022.
Adjusted EBITDA during the year came in at $40.1 million, compared with $41.3 million reported in 2022.
In 2023, adjusted net income per share came in at 24 cents compared with 55 cents reported in the previous year.
Store Developments
During the quarter, the company emphasized robust unit development. It stated solid performances of the new openings (four new restaurants) coupled with earlier ones. In 2024, the company intends to open six to eight new restaurants, including managed and licensed establishments. The management highlighted the positive reception in new markets, underscoring the company's vision to tap into a total addressable market of 400 venues, comprising 200 STKs globally and 200 Kona Grills domestically.
2024 Outlook
For 2024, the company outlined its targets across various financial metrics and operational milestones. The guidance for total GAAP revenues is projected to range between $360 million and $380 million. Managed, license and incentive fee revenues are anticipated to fall in the range of $15-$16 million.
Total owned operating expenses as a percentage of owned restaurant net revenue are expected to hover around 83.0%. Furthermore, total G&A expenses (excluding stock-based compensation) are estimated to be approximately $30 million. The company aims for a consolidated Adjusted EBITDA of around $45 million.
Pre-opening expenses for restaurants are projected to be in the range of $4-$5 million while operating income is forecast to be between $13 million and $15 million. The effective income tax rate is expected to fall within the range of 5% to 10%. Total capital expenditures (net of allowances received by landlords) are targeted to be between $30 million and $35 million. In 2024, the company plans to introduce six to eight new system-wide venues.
Zacks Rank
ONE Group currently carries a Zacks Rank #3 (Hold).
McDonald's Corporation (MCD - Free Report) reported mixed fourth-quarter 2023 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line increased on a year-over-year basis.
During the quarter, MCD reported adjusted EPS of $2.95, outpacing the Zacks Consensus Estimate of $2.81. Adjusted earnings increased 11% year over year.
Quarterly net revenues of $6.4 billion missed the consensus mark of $6.5 billion. The top line rose 8% year over year. The upside was backed by menu price increases, effective marketing campaigns and continued digital and delivery growth.
Yum China Holdings, Inc. (YUMC - Free Report) reported impressive fourth-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis.
During the quarter, YUMC reported adjusted EPS of 25 cents, beating the Zacks Consensus Estimate of 13 cents. The bottom line surged 92.3% from 13 cents reported a year ago.
Quarterly revenues of $2.5 billion outpaced the consensus mark of $2.4 billion. The top line rose 19.4% on a year-over-year basis. Excluding foreign currency translation, revenues increased 21% year over year. The upside can be attributed to net new unit contribution (12%) and same-store sales growth (4%).
Brinker International, Inc. (EAT - Free Report) reported mixed second-quarter fiscal 2024 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line increased on a year-over-year basis. Effective marketing and pricing strategies backed the upside. Sequential improvements in guest traffic bode well.
During the quarter, EAT reported adjusted EPS of 99 cents, surpassing the Zacks Consensus Estimate of a loss of $1.47. The company reported adjusted EPS of 76 cents in the prior-year quarter.
Quarterly revenues of $1.07 billion missed the Zacks Consensus Estimate of $1.08 billion. However, the top line increased 5.4% on a year-over-year basis. EAT gained from Chili's solid performance.
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ONE Group (STKS) Q4 Earnings Top Estimates, Revenues Lag
The ONE Group Hospitality, Inc. (STKS - Free Report) reported mixed fourth-quarter 2023 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top line increased year over year while the bottom line fell from the prior-year quarter’s figure. Following the results, shares of the company fell 5.1% during the after-hour trading session on Mar 14.
Delving Deeper
During the fourth quarter, the company reported adjusted earnings per share (EPS) of 17 cents, beating the Zacks Consensus Estimate of 14 cents. The company reported adjusted EPS of 19 cents in the prior-year quarter.
During the quarter, the company reported revenues of $89.9 million, missing the consensus mark of $90 million. The top line increased 1.8% on a year-over-year basis.
The ONE Group Hospitality, Inc. Price, Consensus and EPS Surprise
The ONE Group Hospitality, Inc. price-consensus-eps-surprise-chart | The ONE Group Hospitality, Inc. Quote
Management, license and incentive fee revenues increased 7.6% year over year to $4.8 million. The increase was primarily driven by increased revenue and profit at North American managed and licensed properties and STK Stratford.
During the quarter, consolidated comparable sales declined 4.3% year over year. STK same-store sales fell 4.6% year over year, while Kona Grill's same-store sales declined 3.9% year over year. Contrasting the figures with 2019, consolidated comparable sales surged by 40.1%. STK same-store sales increased 55.4%, backed by a 41.3% rise in traffic. In the same period, Kona Grill's same-store sales rose by 22.7%.
Operating Highlights
General and administrative (G&A) costs during the fourth quarter of 2023 decreased 6.5% year over year to $7.9 million. Reductions in travel expenses and incentive-based performance compensation expenditures primarily caused the decline.
Pre-opening expenses during the quarter came in at $2.9 million compared with $1.7 million in the fourth quarter of 2022. This increase was associated with expenses related to payroll, training, and non-cash pre-open rent for new establishments such as STK Charlotte, Kona Grill Phoenix, STK Boston, and STK Salt Lake City. Additionally, expenses were incurred for STK and Kona Grill restaurants (currently undergoing development).
During the fourth quarter, restaurant operating profit came in at $16.5 million compared with$15.9 million in the fourth quarter of 2022. Operating profit margin (as a percentage of company-owned restaurant net revenues) during the quarter increased 40 basis points year over year to 19.3%. The upside was backed by price increases and operational cost reduction initiatives partially offset by increased commodity prices and labor inflation.
Adjusted EBITDA in the fourth quarter came in at $14.5 million compared with $13 million reported in the prior-year quarter.
Adjusted Net Income amounted to $5.3 million compared with $6.5 million in the fourth quarter of 2022.
Balance Sheet
Total cash and cash equivalents as of Dec 31, 2023, totaled $21 million compared with $55.1 million on Dec 31, 2022.
The current portion of long-term debt, as of Dec 31, 2023, came in at $1.5 million flat year over year.
2023 Highlights
Total revenues in 2023 amounted to $332.8 compared with $316.6 million reported in 2022.
Adjusted EBITDA during the year came in at $40.1 million, compared with $41.3 million reported in 2022.
In 2023, adjusted net income per share came in at 24 cents compared with 55 cents reported in the previous year.
Store Developments
During the quarter, the company emphasized robust unit development. It stated solid performances of the new openings (four new restaurants) coupled with earlier ones. In 2024, the company intends to open six to eight new restaurants, including managed and licensed establishments. The management highlighted the positive reception in new markets, underscoring the company's vision to tap into a total addressable market of 400 venues, comprising 200 STKs globally and 200 Kona Grills domestically.
2024 Outlook
For 2024, the company outlined its targets across various financial metrics and operational milestones. The guidance for total GAAP revenues is projected to range between $360 million and $380 million. Managed, license and incentive fee revenues are anticipated to fall in the range of $15-$16 million.
Total owned operating expenses as a percentage of owned restaurant net revenue are expected to hover around 83.0%. Furthermore, total G&A expenses (excluding stock-based compensation) are estimated to be approximately $30 million. The company aims for a consolidated Adjusted EBITDA of around $45 million.
Pre-opening expenses for restaurants are projected to be in the range of $4-$5 million while operating income is forecast to be between $13 million and $15 million. The effective income tax rate is expected to fall within the range of 5% to 10%. Total capital expenditures (net of allowances received by landlords) are targeted to be between $30 million and $35 million. In 2024, the company plans to introduce six to eight new system-wide venues.
Zacks Rank
ONE Group currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
Recent Retail-Wholesale Releases
McDonald's Corporation (MCD - Free Report) reported mixed fourth-quarter 2023 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line increased on a year-over-year basis.
During the quarter, MCD reported adjusted EPS of $2.95, outpacing the Zacks Consensus Estimate of $2.81. Adjusted earnings increased 11% year over year.
Quarterly net revenues of $6.4 billion missed the consensus mark of $6.5 billion. The top line rose 8% year over year. The upside was backed by menu price increases, effective marketing campaigns and continued digital and delivery growth.
Yum China Holdings, Inc. (YUMC - Free Report) reported impressive fourth-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis.
During the quarter, YUMC reported adjusted EPS of 25 cents, beating the Zacks Consensus Estimate of 13 cents. The bottom line surged 92.3% from 13 cents reported a year ago.
Quarterly revenues of $2.5 billion outpaced the consensus mark of $2.4 billion. The top line rose 19.4% on a year-over-year basis. Excluding foreign currency translation, revenues increased 21% year over year. The upside can be attributed to net new unit contribution (12%) and same-store sales growth (4%).
Brinker International, Inc. (EAT - Free Report) reported mixed second-quarter fiscal 2024 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line increased on a year-over-year basis. Effective marketing and pricing strategies backed the upside. Sequential improvements in guest traffic bode well.
During the quarter, EAT reported adjusted EPS of 99 cents, surpassing the Zacks Consensus Estimate of a loss of $1.47. The company reported adjusted EPS of 76 cents in the prior-year quarter.
Quarterly revenues of $1.07 billion missed the Zacks Consensus Estimate of $1.08 billion. However, the top line increased 5.4% on a year-over-year basis. EAT gained from Chili's solid performance.