ONE Group Hospitality (STKS) Misses Q1 EPS by 17c, Revenues Beat; Comp. Sales Down 14.1%

ONE Group Hospitality (NASDAQ: STKS) reported Q1 EPS of ($0.16), $0.17 worse than the analyst estimate of $0.01. Revenue for the quarter came in at $40.7 million versus the consensus estimate of $30.76 million.

• Total GAAP revenues increased 78.8% to $40.7 million from $22.8 million;
• Consolidated comparable sales* decreased 14.1%;
  • March comparable sales decreased 55.9%;
  • January and February comparable sales increased 10.0%;
• Comparable sales* for STK decreased 12.8%;
  • March comparable sales decreased 58.1%;
  • January and February comparable sales increased 11.4%;
• Comparable sales* for Kona Grill decreased 15.5%;
  • March comparable sales decreased 53.7%;
  • January and February comparable sales increased 8.4%;
• GAAP net loss attributable to The ONE Group was $4.6 million, or $0.16 net loss per share, compared to GAAP net income of $0.9 million, or $0.03 net income per share. The quarter loss includes $1.1 million of integration costs related to the Kona Grill acquisition and $1.3 million of incremental costs related to COVID-19; and,
• Adjusted EBITDA** decreased 41.4% to $1.6 million compared to $2.7 million.

“Our first quarter results reflect the many challenges we experienced due to COVID-19, and particularly during the last two weeks of March. These included the temporary closures of all restaurant dining rooms and the shift in operations to take-out and delivery only service at all domestic restaurants, with the exception of Las Vegas, Los Angeles, Orlando and Puerto Rico, which were temporarily closed. Although we implemented numerous measures to reduce expenses during the first quarter, such as significant reductions in employees, suspension of third-party services and deferral of non-essential cash payments including all capital projects, we still incurred approximately $1.3 million of costs directly related to COVID-19. These consisted primarily of payments to employees for paid-time off during restaurant closures, inventory waste, rent and rent-related costs for closed and limited-operations restaurants from the day that the restaurant dining room closed,” said Emanuel “Manny” Hilario, President and CEO of The ONE Group.

“We recently launched STK Meat Market, an e-commerce platform that allows guests to purchase a wide array of signature Choice, Prime, and Waygu steak cuts for home delivery nationwide. This follows the rollout of our Take-Out Menu that features signature appetizers, entrees and sides, as well as the STK@Home meal kit that includes everything needed to bring the ‘vibe dining’ steakhouse experience right to your home kitchen. Customers can also complete their in-home STK experience by visiting www.STKradio.com, which features six playlists of live sets from STK Steakhouses around the globe. Take-out and delivery service are also sharply in focus at Kona Grill while the brand’s namesake radio station, which can be accessed by visiting www.KonaGrillradio.com, is quickly becoming part of ‘vibe dining’ for us and for our guests,” continued Hilario.

“We are excited to have recently re-opened eleven restaurant dining rooms and we expect to re-open an additional five restaurant dining rooms today. In all of our opened restaurant dining rooms, we are following all ‘social distancing’ and other guidelines and requirements. The safety of our guests and employees remains our number one concern. We expect to re-open another five to ten restaurant dining rooms in the upcoming two weeks. Although we cannot reasonably predict when we will be able to re-open other closed restaurants and return to normal restaurant dining room operations, we intend to re-open as soon as local jurisdictions permit. We look forward to welcoming our guests back to our restaurant dining rooms,” concluded Hilario.

For earnings history and earnings-related data on ONE Group Hospitality (STKS) click here.

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