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income: Fourth-quarter GAAP revenue grew 1.8% to $89.9 million; full-year revenue grew 5.1% to $332.8 million.
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net income: Fourth quarter GAAP net profit fell to US$4.6 million; full-year net profit fell to US$4.7 million from US$13.5 million in 2022.
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Adjusted advance profit after interest, tax, depreciation and amortization: Adjusted EBITDA in the fourth quarter increased by 11.3% to US$14.5 million; adjusted EBITDA for the full year fell by 2.9% to US$40.1 million.
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Same store sales: Comprehensive comparable sales fell 4.3% in the fourth quarter; comprehensive comparable sales fell 2.7% for the full year.
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Restaurant opening: Opening 6 new restaurants in 2023, with plans to open 6 to 8 more in 2024.
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Share buyback: The company spent $15 million to repurchase 2.3 million shares; the board approved an additional $5 million for the program.
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2024 goals: The company provided 2024 revenue guidance of $360 million to $380 million, with adjusted EBITDA of approximately $45 million.
On March 14, 2024, The One Group Hospitality Inc (NASDAQ: STKS) released its fourth quarter and full-year 2023 financial results through an 8-K filing. The company, best known for developing and operating upscale restaurants and lounges, reported slight revenue growth in both the quarter and full year, but net income fell and adjusted EBITDA results were mixed.
The One Group Hospitality Inc operates primarily in the domestic market with business segments including STK, Kona Grill, ONE Hospitality and Corporate. The company’s focus on restaurant-level margins and general and administrative (G&A) leverage resulted in restaurant operating margins improving 40 basis points to 19.3% of company-owned restaurant net revenue, while G&A decreased 80 basis points to 19.3% of company-owned restaurant net revenue. 8.8% of fourth quarter revenue.
Performance and Challenges
Despite revenue growth, The One Group Hospitality Inc faced challenges in the fourth quarter, with consolidated comparable sales falling 4.3% from the same period in 2022. The same-store sales decline was attributed to declines in STK and Kona Grill brands, with STK same-store sales down 4.6% and Kona Grill down 3.9%. However, compared with the pre-pandemic base year of 2019, same-store sales increased significantly in the fourth quarter of 2023, indicating a strong recovery trajectory.
Adjusted EBITDA grew 11.3% to $14.5 million in the fourth quarter, reflecting the company’s ability to grow profitably despite lower same-store sales. However, full-year adjusted EBITDA fell 2.9% to $40.1 million, highlighting the ongoing challenge of maintaining profitability over the longer term.
financial success and importance
The company’s fourth-quarter financial performance, including an increase in restaurant operating profits and a decrease in general and administrative expenses, are significant as they demonstrate The One Group Hospitality Inc’s ability to optimize operations and control costs in the highly competitive restaurant industry. These improvements are particularly important because they help improve profits and increase shareholder value.
The company’s aggressive expansion strategy, marked by opening new restaurants, is also a key financial achievement. The addition of four new restaurants in the fourth quarter and plans to open six to eight more restaurants in 2024 reflect the company’s confidence in its long-term EBITDA and profitability. This expansion is critical to sustaining growth and increasing market share in the upscale dining market.
Financial tables and analysis
Financial performance for the fourth quarter and full year 2023 shows The One Group Hospitality Inc is navigating complex market conditions. The company’s ability to grow revenue and effectively manage costs is commendable, but the decline in net income and mixed results on adjusted EBITDA suggest there are still areas that need attention. Declining same-store sales are an issue the company needs to address to ensure long-term success.
This stock repurchase program resulted in the company repurchasing $15 million worth of stock, underscoring management’s belief in the company’s intrinsic value and commitment to returning value to shareholders. This commitment is further underscored by an additional $5 million authorized for the program.
Looking ahead, The One Group Hospitality Inc’s 2024 targets show a positive outlook, with total GAAP revenue expected to be $360 million to $380 million and adjusted EBITDA of approximately $45 million. These goals, along with the planned restaurant openings, demonstrate a strategic focus on growth and profitability.
Investors and potential GuruFocus.com members interested in the restaurant and fine dining sectors will find both positive developments and areas for improvement in The One Group Hospitality Inc’s financial performance. The company’s strategic moves and financial discipline will be key factors to watch in the year ahead.
For more details, you can obtain the full earnings report and financial statements on the SEC’s website or by visiting The One Group Hospitality Inc’s investor relations page.
View The One Group Hospitality Inc’s full 8-K earnings report here for more details.
This article was first published on GuruFocus.
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