The ONE Group Reports First Quarter 2023 Financial Results

Achieved an 11.3% Increase in Revenues
Reaffirms 2023 Targets, Including Eight to Twelve New Venues

DENVER--()--The ONE Group Hospitality, Inc. (“The ONE Group” or the “Company”) (Nasdaq: STKS) today reported its financial results for the first quarter ended March 31, 2023.

Highlights for the first quarter compared to the same period in 2022 are as follows:

  • Total GAAP revenues increased 11.3% to $82.6 million from $74.2 million;
  • Comparable sales* increased 1.6%;
  • GAAP net income attributable to The ONE Group was $2.6 million, or $0.08 per share ($0.10 adjusted net income per share)****, compared to GAAP net income of $3.7 million, or $0.11 per share ($0.15 adjusted net income per share)****
  • Restaurant Operating Profit*** decreased 1.1% to $12.9 million from $13.0 million; and
  • Adjusted EBITDA** increased 1.0% to $10.9 million from $10.8 million.

“We are pleased with our first quarter results which include double-digit top-line growth, positive comparable sales, and growth in adjusted EBITDA. We are particularly happy with STK restaurant level margins in excess of 22% for the quarter. Importantly, we are still on track with our robust development pipeline, and we remain confident in our full year 2023 targets and are reiterating them today,” said Emanuel “Manny” Hilario, President and CEO of The ONE Group.

Hilario continued, “We expect to open eight to twelve new venues this year, representing our strongest development pipeline in history. During the first quarter, we opened a new, redesigned Kona Grill in Columbus and a rooftop bar at our existing STK in Scottsdale. We view our addressable market as at least 400 restaurants including 200 STK restaurants globally and 200 Kona Grills domestically with best-in-class ROIs of between 40% and 50% for new Company-owned STKs and Kona Grills, respectively.”

*Comparable sales represent total U.S. food and beverage sales at owned and managed units opened for at least a full 18-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.

**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, pre-opening expenses, non-recurring gains and losses including incremental costs related to COVID-19, stock-based compensation and certain transactional costs. 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 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 release.

****We define Adjusted Net Income as net income before COVID-19 costs, lease termination expenses, one-time stock-based compensation, non-recurring costs, non-cash rent during the pre-opening period and the income tax effect of any adjustments. Adjusted Net Income 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 Net Income in this release.

First Quarter 2023 Financial Results

Total GAAP revenues increased $8.4 million, or 11.3%, to $82.6 million in the first quarter of 2023 from $74.2 million in the first quarter of 2022.

Total owned restaurant net revenues increased $8.1 million, or 11.4%, to $78.6 million in the first quarter of 2023 from $70.5 million in the first quarter of 2022. The increase was primarily attributable to the addition of STK San Francisco in August 2022, STK Dallas in November 2022, and Kona Grill Columbus in January 2023. Consolidated comparable sales* increased 1.6% compared to the first quarter of 2022.

Management, license and incentive fee revenues increased $0.3 million, or 8.5%, to $4.0 million in the first quarter of 2023 from $3.7 million in the first quarter of 2022. The increase was primarily attributable to increased revenues at our managed STK restaurants in North America.

Restaurant Operating Profit*** decreased $0.1 million, or 1.1%, to $12.9 million and represented 16.4% of Company-owned restaurant net revenues in the first quarter of 2023 compared to $13.0 million and 18.5% of Company-owned restaurant net revenues in the first quarter of 2022. The decrease was primarily due to consolidated higher average wage and operating cost inflation.

Total owned operating costs represented 83.6% of Company-owned restaurant net revenues in the first quarter of 2023 compared to 81.5% of Company-owned restaurant net revenues in the first quarter of 2022. The increase was primarily due to consolidated higher average wage and operating cost inflation. Total owned operating costs are typically higher in the first quarter due to seasonality in sales levels, and we anticipate total owned operating costs for the full year of between 82.5% and 82.0%.

General and administrative costs increased $0.6 million, or 8.8%, to $7.5 million for the three months ended March 31, 2023 from $6.9 million for the three months ended March 31, 2022. The increase was attributable to increased stock-based compensation expense and additional investments required ahead of growth. As a percentage of revenues, general and administrative costs were 9.1% for the three months ended March 31, 2023 compared to 9.3% for the three months ended March 31, 2022.

Pre-opening expenses were $1.3 million for the three months ended March 31, 2023 compared to $0.3 million for the three months ended March 31, 2022. The increase was related to payroll, training, and non-cash pre-open rent for Kona Grill Columbus which opened in January 2023 and STK and Kona Grill restaurants currently under construction.

GAAP net income attributable to The ONE Group Hospitality, Inc. in the first quarter of 2023 was $2.6 million, or $0.08 per share, compared to $3.7 million, or $0.11 per share, in the first quarter of 2022.

Adjusted Net Income**** attributable to The ONE Group Hospitality, Inc. in the first quarter of 2023 was $3.2 million, or $0.10 per share, compared to $5.0 million, or $0.15 per share, in the first quarter of 2022.

Adjusted EBITDA** increased $0.1 million, or 1.0%, to $10.9 million in the first quarter of 2023 from $10.8 million in the first quarter of 2022.

Restaurant Development

The Company intends to open eight to twelve new venues in 2023.

There are currently three Company-owned STK restaurants (Charlotte, NC, Boston, MA and Washington, D.C.) and two Company-owned Kona Grill restaurants (Riverton, UT and Desert Ridge, AZ) under construction.

During the first quarter of 2023, the Company opened a redesigned Kona Grill in Columbus, OH and a rooftop at an STK in Scottsdale, AZ.

Share Repurchase

On September 7, 2022, the Company announced the commencement of a share repurchase program for up to $10 million of its outstanding common stock. The Company’s board has authorized an additional $5 million to this program. In the quarter ended March 31, 2023, the Company purchased 0.1 million shares for aggregate consideration of $0.7 million. As of March 31, 2023, the Company had purchased 1.2 million shares for $7.9 million under this program.

2023 Targets

The Company is reiterating the following targets for 2023:

Financial Results and Other Select Data

 

2023 Guidance

Total GAAP revenues

$360M to $380M

Managed, license and incentive fee revenues

 

$17.0M to $17.5M

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

 

82.5% to 82.0%

Total G&A excluding stock-based compensation

 

$27M to $29M

Consolidated Adjusted EBITDA

$50M to $54M

Restaurant pre-opening expenses

 

$5.5M to $6.5M

Operating income

 

$25.5M to $28.5M

Effective income tax rate

 

5% to 10%

Total capital expenditures, net of allowances received by landlords

2% of Company-owned revenue and $3.0M to $3.5M per new Company-owned venue

Number of new system-wide venues

 

Eight to Twelve

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 1-412-542-4186. A replay will be available after the call and can be accessed by dialing 1-412-317-6671; the passcode is 10177204. The replay will be available until May 18, 2023.

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 hospitality 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 25 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.
  • Kona Grill, a polished casual, bar-centric grill concept with 25 restaurants in the U.S., featuring American favorites, award-winning sushi, and specialty cocktails in an upscale casual atmosphere.
  • 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 13 venues in the U.S. and Europe.

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

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. 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) the effects of the COVID-19 pandemic on our business, including government restrictions on our ability to operate our restaurants and changes in customer behavior, and our ability to hire employees; (2) 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; (3) 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; (4) 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; (5) changes in applicable laws or regulations; (6) the possibility that The ONE Group may be adversely affected by other economic, business, and/or competitive factors; and (7) 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, 2022 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.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited, in thousands, except income per share and related share information)

 

 

 

 

 

 

 

 

 

For the three months ended March 31,

 

 

2023

 

2022

Revenues:

 

 

 

 

 

 

Owned restaurant net revenue

 

$

78,579

 

 

$

70,516

 

Management, license and incentive fee revenue

 

 

3,977

 

 

 

3,665

 

Total revenues

 

 

82,556

 

 

 

74,181

 

Cost and expenses:

 

 

 

 

 

 

Owned operating expenses:

 

 

 

 

 

 

Owned restaurant cost of sales

 

 

18,855

 

 

 

18,099

 

Owned restaurant operating expenses

 

 

46,827

 

 

 

39,373

 

Total owned operating expenses

 

 

65,682

 

 

 

57,472

 

General and administrative (including stock-based compensation of $1,320 and $879 for the three months ended March 31, 2023 and 2022, respectively)

 

 

7,484

 

 

 

6,879

 

Depreciation and amortization

 

 

3,656

 

 

 

2,715

 

Pre-opening expenses

 

 

1,299

 

 

 

345

 

COVID-19 related expenses

 

 

 

 

 

2,313

 

Lease termination expenses

 

 

 

 

 

255

 

Other expenses

 

 

157

 

 

 

 

Total costs and expenses

 

 

78,278

 

 

 

69,979

 

Operating income

 

 

4,278

 

 

 

4,202

 

Other expenses, net:

 

 

 

 

 

 

Interest expense, net of interest income

 

 

1,787

 

 

 

508

 

Total other expenses, net

 

 

1,787

 

 

 

508

 

Income before provision for income taxes

 

 

2,491

 

 

 

3,694

 

Provision for income taxes

 

 

161

 

 

 

173

 

Net income

 

 

2,330

 

 

 

3,521

 

Less: net loss attributable to noncontrolling interest

 

 

(276

)

 

 

(149

)

Net income attributable to The ONE Group Hospitality, Inc.

 

$

2,606

 

 

$

3,670

 

Currency translation loss

 

 

(70

)

 

 

(92

)

Comprehensive income attributable to The ONE Group Hospitality, Inc.

 

$

2,536

 

 

$

3,578

 

 

 

 

 

 

 

 

Net income attributable to The ONE Group Hospitality, Inc. per share:

 

 

 

 

 

 

Basic net income per share

 

$

0.08

 

 

$

0.11

 

Diluted net income per share

 

$

0.08

 

 

$

0.11

 

 

 

 

 

 

 

 

Shares used in computing basic income per share

 

 

31,677,232

 

 

 

32,231,210

 

Shares used in computing diluted income per share

 

 

32,997,751

 

 

 

34,245,445

 

The following table sets forth certain statements of operations data as a percentage of total revenues for the periods indicated. Certain percentage amounts may not sum to total due to rounding.

 

 

 

 

 

 

 

For the three months ended March 31,

 

 

2023

 

2022

Revenues:

 

 

 

 

Owned restaurant net revenue

 

95.2%

 

95.1%

Management, license and incentive fee revenue

 

4.8%

 

4.9%

Total revenues

 

100.0%

 

100.0%

Cost and expenses:

 

 

 

 

Owned operating expenses:

 

 

 

 

Owned restaurant cost of sales (1)

 

24.0%

 

25.7%

Owned restaurant operating expenses (1)

 

59.6%

 

55.8%

Total owned operating expenses (1)

 

83.6%

 

81.5%

General and administrative (including stock-based compensation of 1.6% and 1.2% for the three months ended March 31, 2023 and 2022, respectively)

 

9.1%

 

9.3%

Depreciation and amortization

 

4.4%

 

3.7%

Pre-opening expenses

 

1.6%

 

0.5%

COVID-19 related expenses

 

—%

 

3.1%

Lease termination expenses

 

—%

 

0.3%

Other expenses

 

0.2%

 

—%

Total costs and expenses

 

94.8%

 

94.3%

Operating income

 

5.2%

 

5.7%

Other expenses, net:

 

 

 

 

Interest expense, net of interest income

 

2.2%

 

0.7%

Total other expenses, net

 

2.2%

 

0.7%

Income before provision for income taxes

 

3.0%

 

5.0%

Provision for income taxes

 

0.2%

 

0.2%

Net income

 

2.8%

 

4.7%

Less: net loss attributable to noncontrolling interest

 

(0.3)%

 

(0.2)%

Net income attributable to The ONE Group Hospitality, Inc.

 

3.2%

 

4.9%

_____________________________
(1) These expenses are being shown as a percentage of owned restaurant net revenue.

THE ONE GROUP HOSPITALITY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share information)

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

 

2023

 

2022

ASSETS

 

(Unaudited)

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

48,699

 

 

$

55,121

 

Accounts receivable

 

 

10,570

 

 

 

15,220

 

Inventory

 

 

4,997

 

 

 

5,728

 

Other current assets

 

 

2,353

 

 

 

2,091

 

Due from related parties

 

 

376

 

 

 

376

 

Total current assets

 

 

66,995

 

 

 

78,536

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

101,464

 

 

 

94,087

 

Operating lease right-of-use assets

 

 

86,807

 

 

 

85,161

 

Deferred tax assets, net

 

 

12,326

 

 

 

12,323

 

Intangibles, net

 

 

15,314

 

 

 

15,290

 

Other assets

 

 

4,898

 

 

 

4,774

 

Security deposits

 

 

855

 

 

 

853

 

Total assets

 

$

288,659

 

 

$

291,024

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

11,430

 

 

$

13,055

 

Accrued expenses

 

 

18,562

 

 

 

22,409

 

Deferred gift card revenue and other

 

 

1,542

 

 

 

2,115

 

Current portion of operating lease liabilities

 

 

6,385

 

 

 

6,336

 

Current portion of long-term debt

 

 

750

 

 

 

1,500

 

Other current liabilities

 

 

260

 

 

 

256

 

Total current liabilities

 

 

38,929

 

 

 

45,671

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating lease liabilities, net of current portion

 

 

107,455

 

 

 

105,247

 

Long-term debt, net of current portion

 

 

71,323

 

 

 

70,544

 

Other long-term liabilities

 

 

949

 

 

 

972

 

Total liabilities

 

 

218,656

 

 

 

222,434

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 15)

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.0001 par value, 75,000,000 shares authorized; 33,093,736 issued and 31,881,079 outstanding at March 31, 2023 and 32,829,995 issued and 31,735,423 outstanding at December 31, 2022

 

 

3

 

 

 

3

 

Preferred stock, $0.0001 par value, 10,000,000 shares authorized; no shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

 

 

 

 

 

 

Treasury stock, 1,212,657 and 1,094,572 shares at cost at March 31, 2023 and December 31, 2022, respectively

 

 

(7,904

)

 

 

(7,169

)

Additional paid-in capital

 

 

55,471

 

 

 

55,583

 

Retained earnings

 

 

26,772

 

 

 

24,166

 

Accumulated other comprehensive loss

 

 

(2,939

)

 

 

(2,869

)

Total stockholders’ equity

 

 

71,403

 

 

 

69,714

 

Noncontrolling interests

 

 

(1,400

)

 

 

(1,124

)

Total equity

 

 

70,003

 

 

 

68,590

 

Total liabilities and equity

 

$

288,659

 

 

$

291,024

 

Reconciliation of Non-GAAP Measures

We prepare our financial statements in accordance with generally accepted accounting principles (GAAP). In this press release, we also make references to the following non-GAAP financial measures: total food and beverage sales at owned and managed units, Adjusted EBITDA, Restaurant Operating Profit and Adjusted Net Income.

Total food and beverage sales at owned and managed units. Total food and beverage sales at owned and managed units represents our total revenue from our owned operations as well as the revenue reported to us with respect to sales at our managed locations, where we earn management and incentive fees at these locations. We believe that this measure represents a useful internal measure of performance as it identifies total sales associated with our brands and hospitality services that we provide. Accordingly, we include this non-GAAP measure so that investors can review financial data that management uses in evaluating performance, and we believe that it will assist the investment community in assessing performance of restaurants and other services we operate, whether or not the operation is owned by us. However, because this measure is not determined in accordance with GAAP, it is susceptible to varying calculations and not all companies calculate these measures in the same manner. As a result, this measure as presented may not be directly comparable to a similarly titled measure presented by other companies. This non-GAAP measure is presented as supplemental information and not as an alternative to any GAAP measurements. The following table includes a reconciliation of our GAAP revenue to total food and beverage sales at our owned and managed units (in thousands):

 

 

 

 

 

 

 

 

 

For the three months ended March 31,

 

 

2023

 

2022

 

 

(unaudited)

 

(unaudited)

Owned restaurant net revenue (1)

 

$

78,579

 

$

70,516

Management, license and incentive fee revenue

 

 

3,977

 

 

3,665

GAAP revenues

 

$

82,556

 

$

74,181

 

 

 

 

 

 

 

Food and beverage sales from managed units (1)

 

 

30,702

 

 

28,272

 

 

 

 

 

 

 

Total food and beverage sales at owned and managed units

 

$

109,281

 

$

98,788

_____________________________

(1) Components of total food and beverage sales at owned and managed units.

The following table presents the elements of the quarterly Comparable Sales measure for 2022 and 2023:

 

 

 

 

 

 

 

 

 

 

 

 

2022 vs. 2021

 

2023 vs.
2022

 

 

Q1

Q2

Q3

Q4

FY

 

Q1

US STK Owned Restaurants

 

57.1%

17.8%

4.0%

0.2%

15.7%

 

1.0%

US STK Managed Restaurants

 

103.6%

26.6%

2.1%

(0.8%)

21.9%

 

15.4%

US STK Total Restaurants

 

66.7%

19.8%

3.5%

0.0%

17.1%

 

5.3%

Kona Grill Total Restaurants

 

21.9%

3.7%

(3.6%)

(7.6%)

2.5%

 

(4.3%)

Combined Comparable Sales

 

45.1%

12.8%

0.5%

(3.1%)

10.8%

 

1.6%

Adjusted EBITDA. 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, pre-opening expenses, non-recurring gains and losses, stock-based compensation, COVID-19 related expense and certain transactional costs. Not all the aforementioned items defining Adjusted EBITDA occur in each reporting period but have been included in our definitions of terms based on our historical activity. 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.

The following table presents a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods indicated (in thousands):

 

 

For the three months ended March 31,

 

 

2023

 

2022

Net income attributable to The ONE Group Hospitality, Inc.

 

$

2,606

 

 

$

3,670

 

Net loss attributable to noncontrolling interest

 

 

(276

)

 

 

(149

)

Net income

 

 

2,330

 

 

 

3,521

 

Interest expense, net

 

 

1,787

 

 

 

508

 

Provision for income taxes

 

 

161

 

 

 

173

 

Depreciation and amortization

 

 

3,656

 

 

 

2,715

 

EBITDA

 

 

7,934

 

 

 

6,917

 

Pre-opening expenses

 

 

1,299

 

 

 

345

 

Stock-based compensation

 

 

1,320

 

 

 

879

 

COVID-19 related expenses

 

 

 

 

 

2,313

 

Lease termination expense (1)

 

 

 

 

 

255

 

Non-cash rent expense (2)

 

 

(31

)

 

 

(31

)

Other expenses

 

 

157

 

 

 

 

Adjusted EBITDA

 

 

10,679

 

 

 

10,678

 

Adjusted EBITDA attributable to noncontrolling interest

 

 

(189

)

 

 

(78

)

Adjusted EBITDA attributable to The ONE Group Hospitality, Inc.

 

$

10,868

 

 

$

10,756

_____________________________

(1)

 

Lease termination expense are costs associated with closed, abandoned and disputed locations or leases.

(2)

 

Non-cash rent expense is included in owned restaurant operating expenses and general and administrative expense on the consolidated statements of operations and comprehensive income.

Restaurant Operating Profit. We define Restaurant Operating Profit as owned restaurant net revenue minus owned restaurant cost of sales and owned restaurant operating expenses.

We believe Restaurant Operating Profit is an important component of financial results because: (i) it is a widely used metric within the restaurant industry to evaluate restaurant-level productivity, efficiency, and performance, and (ii) we use Restaurant Operating Profit as a key metric to evaluate our restaurant financial performance compared to our competitors. We use these metrics to facilitate a comparison of our operating performance on a consistent basis from period to period, to analyze the factors and trends affecting our business and to evaluate the performance of our restaurants.

The following table presents a reconciliation of Operating income to Restaurant Operating Profit for the period indicated (in thousands):

 

 

For the three months ended March 31,

 

 

2023

 

2022

Operating income as reported

 

$

4,278

 

 

$

4,202

 

Management, license and incentive fee revenue

 

 

(3,977

)

 

 

(3,665

)

General and administrative

 

 

7,484

 

 

 

6,879

 

Depreciation and amortization

 

 

3,656

 

 

 

2,715

 

Pre-opening expenses

 

 

1,299

 

 

 

345

 

COVID-19 related expenses

 

 

 

 

 

2,313

 

Lease termination expense

 

 

 

 

 

255

 

Other expenses

 

 

157

 

 

 

 

Restaurant Operating Profit

 

$

12,897

 

 

$

13,044

 

Restaurant Operating Profit as a percentage of owned restaurant net revenue

 

 

16.4

%

 

 

18.5

%

Restaurant Operating Profit by brand is as follows (in thousands):

 

 

For the three months ended March 31,

 

 

2023

 

2022

STK restaurant operating profit (Company owned)

 

$

10,462

$

8,813

STK restaurant operating profit (Company owned) as a percentage of STK revenue (Company owned)

 

 

22.1%

 

22.6%

Kona Grill restaurant operating profit

 

$

2,501

$

4,276

Kona Grill restaurant operating profit as a percentage of Kona Grill revenue

 

 

8.1%

 

13.7%

Adjusted Net Income. We define Adjusted Net Income as net income before COVID-19 costs, lease termination expenses, one-time stock-based compensation, non-recurring costs, non-cash rent during the pre-opening period and the income tax effect of any adjustments.

We believe that Adjusted Net Income is an appropriate measure of operating performance, as it provides a clear picture of our operating results by eliminating certain one-time expenses that are not reflective of the underlying business performance. Adjusted Net Income is included in this press release because it is a key metric used by management, and we believe that it provides useful information facilitating performance comparisons from period to period. Adjusted Net Income has limitations as an analytical tool and our calculation thereof may not be comparable to that reported by other companies; accordingly, you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.

For the three months ended March 31,

2023

 

2022

Net income attributable to The One Group Hospitality, Inc. as reported

 

$

2,606

 

 

$

3,670

 

Adjustments:

 

 

 

 

 

 

 

COVID-19 related expenses

-

 

2,313

 

Non-cash and other pre-opening expenses(1)

 

 

426

 

 

 

-

 

Other expenses

157

 

-

 

Adjusted net income before income taxes

 

 

3,189

 

 

 

5,983

 

Income tax effect on adjustments(2)

(38

)

(990

)

Adjusted net income attributable to The One Group Hospitality, Inc.

 

$

3,151

 

 

$

4,993

 

 

Adjusted net income per share: Basic

 

$

0.10

 

 

$

0.15

 

Adjusted net income per share: Diluted

$

0.10

 

$

0.15

 

 

 

 

 

 

 

 

Shares used in computing basic income per share

31,677,232

 

 

32,231,210

 

Shares used in computing diluted income per share

 

 

32,997,751

 

 

 

34,245,445

_____________________________

(1)

 

Non-cash and other pre-opening expenses relate to non-cash rent expense and costs for our new store training teams unrelated to new restaurant openings.

(2)

 

Reflects the tax expense associated with the adjustments for the three months ended March 31, 2023, and March 31, 2022. The Company uses its estimated effective tax rate for the current year and for the previous year.

 

Contacts

Investors:
ICR
Michelle Michalski or Raphael Gross
(646) 277-1224
Michelle.Michalski@icrinc.com

Media:
ICR
Seth Grugle
(646) 277-1272
seth.grugle@icrinc.com

Contacts

Investors:
ICR
Michelle Michalski or Raphael Gross
(646) 277-1224
Michelle.Michalski@icrinc.com

Media:
ICR
Seth Grugle
(646) 277-1272
seth.grugle@icrinc.com