- Total revenues of
$601.2 million and system-wide sales of$750.7 million - 31 system-wide restaurants opened in 12 states
- Q4 2021 same-restaurant sales growth of 36.7% vs. Q4 2020 and 20.6% vs. Q4 2019
- Q4 2021 same-restaurant traffic growth of 31.9% vs. Q4 2020 and 6.1% vs. Q4 2019
“I am proud to share our results for 2021. This was a momentous year for First Watch as we built upon our long-standing track record of delivering positive results and ended the year with continued momentum. We successfully completed our initial public offering in October, and we also reached a significant milestone in surpassing three-quarters of a billion dollars in system-wide sales,” said
Highlights for Q4 2021 compared to Q4 2020:
- Total revenues grew to
$162.6 million in Q4 2021 from$109.4 million in Q4 2020 ($114.2 million in Q4 2019*) - System-wide sales increased 49.8% to
$202.7 million in Q4 2021 from$135.3 million in Q4 2020 ($141.0 million in Q4 2019*) - Same-restaurant sales growth of 36.7% relative to Q4 2020 (20.6% relative to Q4 2019*)
- Same-restaurant traffic growth of 31.9% relative to Q4 2020 (6.1% relative to Q4 2019*)
- Loss from operations margin improved to (0.7)% in Q4 2021 from (4.4)% in Q4 2020 ((2.2)% in Q4 2019*)
- Restaurant level operating profit margin(**) increased to 18.2% in Q4 2021 from 13.0% in Q4 2020 (17.3% in Q4 2019*)
- Net loss of
$(4.7) million in Q4 2021 compared to$(7.1) million in Q4 2020($(5.8) million in Q4 2019*) - Adjusted EBITDA(**) increased to
$14.2 million in Q4 2021 from$3.5 million in Q4 2020 ($9.6 million in Q4 2019*) - Opened 8 system-wide restaurants (5 company-owned and 3 franchise-owned)
Highlights for 2021 compared to 2020:
- Total revenues grew to
$601.2 million in 2021 from$342.4 million in 2020 ($436.4 million in 2019*) - System-wide sales increased 76.1% to
$750.7 million in 2021 from$426.3 million in 2020 ($558.4 million in 2019*) - Same-restaurant sales growth of 63.0% relative to 2020 (14.3% relative to 2019*)
- Same-restaurant traffic growth of 52.6% relative to 2020 ((0.5)% relative to 2019*)
- Income from operations margin of 3.8% in 2021 compared to Loss from operations margin of (14.0)% in 2020 (Loss from operations margin of (8.7)% in 2019*)
- Restaurant level operating profit margin(**) increased to 19.5% in 2021 from 8.4% in 2020 (17.4% in 2019*)
- Net loss improved to
$(2.1) million in 2021 compared to$(49.7) million in 2020($(45.5) million in 2019*) - Adjusted EBITDA(**) increased to
$66.3 million in 2021 from$(5.7) million in 2020 ($38.1 million in 2019*) - Opened 31 system-wide restaurants in 2021, resulting in a year-end count of 435 system-wide restaurants (341 company-owned and 94 franchise-owned) across 28 states
___________________
* Results for the thirteen weeks ended
** See “Non-GAAP Financial Measures” below.
Outlook Fiscal Year 2022
The Company provides the following outlook for 2022:
- Same-restaurant sales growth in the high-single digits with continued positive traffic
- Total revenue growth in excess of 15.0% relative to 2021
- Adjusted EBITDA* in the range of
$67.0 million to$71.0 million - New restaurant openings of 30 to 35 company-owned restaurants and 8 to 13 franchise-owned restaurants
- Capital expenditures in the range of
$60.0 million to$70.0 million invested primarily in new restaurant projects, planned remodels and new in-restaurant technology
______________________
*We have not reconciled guidance for 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 due to the fact that these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP financial measure is not available without unreasonable effort.
Q4 2021 Financial Results
Total revenues during Q4 2021 increased 48.7% to
Loss from operations during Q4 2021 was
Restaurant level operating profit increased to
Net loss during Q4 2021 was
Adjusted EBITDA during Q4 2021 was
New Restaurant Openings during Q4 2021 included 5 company-owned and 3 franchise-owned restaurants resulting in a year-end count of 435 system-wide restaurants (341 company-owned and 94 franchise-owned) across 28 states.
For additional financial information related to the fiscal year ended
Conference Call and Webcast
Interested parties may listen to the conference call via telephone by dialing 412-317-6026. The webcast will be available at https://investors.firstwatch.com in the News & Events section and will be archived on the site shortly after the call has concluded.
Definitions
The following definitions apply to these terms as used in this release:
System-wide restaurants: the total number of restaurants, including all company-owned and franchise- owned restaurants.
Same-restaurant sales growth: the percentage change in year-over-year restaurant sales (excluding gift card breakage) for the comparable restaurant base, which is defined as the number of company-owned First Watch branded restaurants open for 18 months or longer as of the beginning of the fiscal year (“Comparable Restaurant Base”). For the fiscal years ended
Same-restaurant traffic growth: the percentage change in traffic counts as compared to the same period in the prior year using the Comparable Restaurant Base. For the fiscal years ended
Adjusted EBITDA: a non-GAAP measure, is defined as net income (loss) before depreciation and amortization, interest expense, income taxes and items that the Company does not consider in the evaluation of its ongoing core operating performance.
Adjusted EBITDA margin: a non-GAAP measure, is defined as Adjusted EBITDA as a percentage of total revenues.
Restaurant level operating profit: a non-GAAP measure, is defined as restaurant sales, less restaurant operating expenses, which include food and beverage costs, labor and other related expenses, other restaurant operating expenses, pre-opening expenses and occupancy expenses. In addition, Restaurant level operating profit excludes corporate-level expenses and items that are not considered in the Company’s evaluation of its ongoing core operating performance.
Restaurant level operating profit margin: a non-GAAP measure, is defined as Restaurant level operating profit as a percentage of restaurant sales.
About First Watch
First Watch is an award-winning Daytime Dining concept serving made-to-order breakfast, brunch and lunch using fresh ingredients. A recipient of hundreds of local “Best Breakfast” and “Best Brunch” accolades, First Watch’s chef-driven menu includes elevated executions of classic favorites along with First Watch specialties such as the protein-packed Quinoa Power Bowl®, Farmstand Breakfast Tacos, Avocado Toast, Chickichanga, Morning Meditation (juiced in-house daily), Vodka Kale Tonic and its famous
Forward-Looking Statements
In addition to historical information, this release may contain a number of “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, information concerning First Watch’s possible or assumed future results of operations, new restaurant openings, business strategies, competitive position, industry environment, potential growth opportunities and the effects of regulation. These statements are based on First Watch’s current expectations and beliefs, as well as a number of assumptions concerning future events. When used in this press release, the words “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “target,” “may,” “will,” “should,” “future,” “propose,” “preliminary,” “guidance,” “on track” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. Forward-looking statements in this press release are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the following: adverse effects of the COVID-19 pandemic or other infectious diseases; our vulnerability to changes in economic conditions and consumer preferences; our inability to successfully open new restaurants or establish new markets; our inability to effectively manage our growth; potential negative impacts on sales at our and our franchisees’ restaurants as a result of our opening new restaurants; a decline in visitors to any of the retail centers, lifestyle centers, or entertainment centers where our restaurants are located; lower than expected same-restaurant sales growth; unsuccessful marketing programs and limited time new offerings; changes in the cost of food; unprofitability or closure of new restaurants or lower than previously experienced performance in existing restaurants; our inability to compete effectively for customers; unsuccessful financial performance of our franchisees; our limited control over our franchisees’ operations; our inability to maintain good relationships with our franchisees; conflicts of interest with our franchisees; the geographic concentration of our system-wide restaurant base in the southeast portion of
Investor Relations Contact
203.682.8253
investors@firstwatch.com
Media Relations Contact
FirstWatch@icrinc.com
Non-GAAP Financial Measures (Unaudited)
To supplement the consolidated financial statements, which are prepared in accordance with
Adjusted EBITDA and Adjusted EBITDA Margin
Management uses Adjusted EBITDA and Adjusted EBITDA margin (i) as factors in evaluating management’s performance when determining incentive compensation, (ii) to evaluate the Company’s operating results and the effectiveness of our business strategies, (iii) internally as benchmarks to compare the Company’s performance to that of its competitors and (iv) to provide investors with additional transparency of the Company’s operations. The use of Adjusted EBITDA and Adjusted EBITDA margin as performance measures permit a comparative assessment of the Company’s operating performance relative to the Company’s performance based on the Company’s GAAP results, while isolating the effects of some items that are either nonrecurring in nature or vary from period to period without any correlation to the Company’s ongoing core operating performance.
The following tables reconcile Net loss and Net loss margin, the most directly comparable GAAP measures, to Adjusted EBITDA and Adjusted EBITDA margin for the periods indicated:
FOURTH QUARTER | |||||||||||
2021 | 2020 | 2019 | |||||||||
(in thousands) | |||||||||||
Net loss | $ | (4,653 | ) | $ | (7,118 | ) | $ | (5,776 | ) | ||
Depreciation and amortization | 8,414 | 7,848 | 7,448 | ||||||||
Interest expense | 1,443 | 6,316 | 5,092 | ||||||||
Income taxes | (167 | ) | (3,849 | ) | (2,077 | ) | |||||
EBITDA | 5,037 | 3,197 | 4,687 | ||||||||
IPO-readiness and strategic transition costs (1) | 647 | 436 | 3,609 | ||||||||
Stock-based compensation (2) | 7,850 | 179 | 296 | ||||||||
Loss on extinguishment of debt | 2,403 | — | — | ||||||||
Transaction (income) expense, net (3) | (1,908 | ) | (323 | ) | 161 | ||||||
Impairments and loss on disposal of assets (4) | 120 | 33 | 510 | ||||||||
Recruiting and relocation costs (5) | 18 | 56 | 308 | ||||||||
Severance costs | — | (5 | ) | 36 | |||||||
COVID-19 – related charges (6) | — | (96 | ) | — | |||||||
Adjusted EBITDA | $ | 14,167 | $ | 3,477 | $ | 9,607 | |||||
Total revenues | $ | 162,620 | $ | 109,393 | $ | 114,213 | |||||
Net loss margin | (2.9 | )% | (6.5 | )% | (5.1 | )% | |||||
Adjusted EBITDA margin | 8.7 | % | 3.2 | % | 8.4 | % | |||||
Additional information | |||||||||||
Deferred rent (income) expense (7) | $ | (48 | ) | $ | 148 | $ | 980 |
FISCAL YEAR | |||||||||||
2021 | 2020 | 2019 | |||||||||
(in thousands) | |||||||||||
Net loss | $ | (2,107 | ) | $ | (49,681 | ) | $ | (45,472 | ) | ||
Depreciation and amortization | 32,379 | 30,725 | 28,027 | ||||||||
Interest expense | 20,099 | 22,815 | 20,080 | ||||||||
Income taxes | 2,477 | (19,873 | ) | (12,419 | ) | ||||||
EBITDA | 52,848 | (16,014 | ) | (9,784 | ) | ||||||
IPO-readiness and strategic transition costs (1) | 2,402 | 4,247 | 10,012 | ||||||||
Stock-based compensation (2) | 8,596 | 750 | 1,160 | ||||||||
Loss on extinguishment of debt | 2,403 | — | — | ||||||||
Transaction (income) expense, net (3) | (1,156 | ) | (258 | ) | 1,709 | ||||||
Impairments and loss on disposal of assets (4) | 381 | 315 | 33,596 | ||||||||
Recruiting and relocation costs (5) | 351 | 228 | 1,081 | ||||||||
Severance costs | 265 | 239 | 325 | ||||||||
COVID-19 – related charges (6) | 211 | 4,749 | — | ||||||||
Adjusted EBITDA | 66,301 | $ | (5,744 | ) | $ | 38,099 | |||||
Total revenues | $ | 601,193 | $ | 342,388 | $ | 436,373 | |||||
Net loss margin | (0.4 | )% | (14.5 | )% | (10.4 | )% | |||||
Adjusted EBITDA margin | 11.0 | % | (1.7 | )% | 8.7 | % | |||||
Additional information | |||||||||||
Deferred rent (income) expense (7) | $ | (2,011 | ) | $ | 10,087 | $ | 4,272 |
___________________________
(1) Represents costs related to information technology support and external professional service costs incurred in connection with IPO-readiness efforts as well as the assessment and redesign of our systems and processes.
(2) Represents non-cash, stock-based compensation expense.
(3) The amounts in Q4 2021 and 2021 include a gain of
(4) Includes impairments recognized on intangible assets and fixed assets as well as costs related to the disposal of assets due to retirements, replacements or certain restaurant closures.
(5) Represents costs incurred for hiring qualified individuals as we assessed the redesign of our systems and processes.
(6) Consists of costs incurred in connection with the economic impact of the COVID-19 pandemic.
(7) Consists of the non-cash portion of straight-line rent expense included in Occupancy expenses and General and administrative expenses.
Restaurant level operating profit and Restaurant level operating profit margin
Restaurant level operating profit and Restaurant level operating profit margin are not indicative of our overall results, and because they exclude corporate-level expenses, do not accrue directly to the benefit of our stockholders. We will continue to incur such expenses in the future. Restaurant level operating profit and Restaurant level operating profit margin are important measures we use to evaluate the performance and profitability of each operating restaurant, individually and in the aggregate and to make decisions regarding future spending and other operational decisions. We believe that Restaurant level operating profit and Restaurant level operating profit margin provide useful information about our operating results, identify operational trends and allow for transparency with respect to key metrics used by us in our financial and operational decision-making.
The following tables reconcile Income (Loss) from operations and Income (Loss) from operations margin, the most directly comparable GAAP financial measures, to Restaurant level operating profit and Restaurant level operating profit margin for the periods indicated:
FOURTH QUARTER | |||||||||||
2021 | 2020 | 2019 | |||||||||
(in thousands) | |||||||||||
Loss from operations | $ | (1,067 | ) | $ | (4,729 | ) | $ | (2,528 | ) | ||
Less: Franchise revenues | 2,413 | 1,506 | 1,467 | ||||||||
Add: | |||||||||||
General and administrative expenses | 26,028 | 12,697 | 15,338 | ||||||||
Depreciation and amortization | 8,414 | 7,848 | 7,448 | ||||||||
Transaction (income) expense, net (1) | (1,908 | ) | (323 | ) | 161 | ||||||
Impairments and loss on disposal of assets (2) | 120 | 33 | 510 | ||||||||
COVID-19 related charges(3) | — | 14 | — | ||||||||
Restaurant level operating profit | $ | 29,174 | $ | 14,034 | $ | 19,462 | |||||
Restaurant sales | $ | 160,207 | $ | 107,887 | $ | 112,746 | |||||
Loss from operations margin | (0.7 | )% | (4.4 | )% | (2.2 | )% | |||||
Restaurant level operating profit margin | 18.2 | % | 13.0 | % | 17.3 | % | |||||
Additional information | |||||||||||
Deferred rent (income) expense(4) | $ | (97 | ) | $ | 163 | $ | 1,000 |
FISCAL YEAR | |||||||||||
2021 | 2020 | 2019 | |||||||||
(in thousands) | |||||||||||
Income (Loss) from operations | $ | 22,243 | $ | (47,222 | ) | $ | (37,556 | ) | |||
Less: Franchise revenues | 8,850 | 4,955 | 7,064 | ||||||||
Add: | |||||||||||
General and administrative expenses | 70,388 | 46,322 | 55,818 | ||||||||
Depreciation and amortization | 32,379 | 30,725 | 28,027 | ||||||||
Transaction (income) expense, net (1) | (1,156 | ) | (258 | ) | 1,709 | ||||||
Impairments and loss on disposal of assets (2) | 381 | 315 | 33,596 | ||||||||
COVID-19 related charges (3) | 19 | 3,309 | — | ||||||||
Restaurant level operating profit | $ | 115,404 | $ | 28,236 | $ | 74,530 | |||||
Restaurant sales | $ | 592,343 | $ | 337,433 | $ | 429,309 | |||||
Income (Loss) from operations margin | 3.8 | % | (14.0 | )% | (8.7 | )% | |||||
Restaurant level operating profit margin | 19.5 | % | 8.4 | % | 17.4 | % | |||||
Additional information | |||||||||||
Deferred rent (income) expense (4) | $ | (2,075 | ) | $ | 10,029 | $ | 4,256 |
____________________________
(1) The amounts in Q4 2021 and 2021 include a gain of
(2) Includes impairments recognized on intangible assets and fixed assets as well as costs related to the disposal of assets due to retirements, replacements or certain restaurant closures.
(3) Consists of costs incurred in connection with the economic impact of the COVID-19 pandemic.
(4) Consists of the non-cash portion of straight-line rent expense included in Occupancy expenses.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Fourth Quarter | |||||||
2021 | 2020 | ||||||
Revenues: | |||||||
Restaurant sales | $ | 160,207 | $ | 107,887 | |||
Franchise revenues | 2,413 | 1,506 | |||||
Total revenues | 162,620 | 109,393 | |||||
Operating costs and expenses: | |||||||
Restaurant operating expenses (exclusive of depreciation and amortization shown below): | |||||||
Food and beverage costs | 37,818 | 23,935 | |||||
Labor and other related expenses | 52,581 | 36,253 | |||||
Other restaurant operating expenses | 25,500 | 20,356 | |||||
Occupancy expenses | 14,397 | 12,626 | |||||
Pre-opening expenses | 737 | 697 | |||||
General and administrative expenses | 26,028 | 12,697 | |||||
Depreciation and amortization | 8,414 | 7,848 | |||||
Impairments and loss on disposal of assets | 120 | 33 | |||||
Transaction income, net | (1,908 | ) | (323 | ) | |||
Total operating costs and expenses | 163,687 | 114,122 | |||||
Income (Loss) from operations | (1,067 | ) | (4,729 | ) | |||
Interest expense | (1,443 | ) | (6,316 | ) | |||
Other (expense) income, net | (2,310 | ) | 78 | ||||
Loss before income taxes | (4,820 | ) | (10,967 | ) | |||
Income tax (expense) benefit | 167 | 3,849 | |||||
Net loss and comprehensive loss | $ | (4,653 | ) | $ | (7,118 | ) | |
Net loss per common share - basic and diluted | $ | (0.08 | ) | $ | (0.16 | ) | |
Weighted average number of common shares outstanding - basic and diluted | 57,814,630 | 45,013,784 |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
FISCAL YEAR | |||||||
2021 | 2020 | ||||||
Revenues: | |||||||
Restaurant sales | $ | 592,343 | $ | 337,433 | |||
Franchise revenues | 8,850 | 4,955 | |||||
Total revenues | 601,193 | 342,388 | |||||
Operating costs and expenses: | |||||||
Restaurant operating expenses (exclusive of depreciation and amortization shown below): | |||||||
Food and beverage costs | 134,201 | 76,975 | |||||
Labor and other related expenses | 189,167 | 120,380 | |||||
Other restaurant operating expenses | 94,847 | 61,821 | |||||
Occupancy expenses | 55,433 | 49,450 | |||||
Pre-opening expenses | 3,310 | 3,880 | |||||
General and administrative expenses | 70,388 | 46,322 | |||||
Depreciation and amortization | 32,379 | 30,725 | |||||
Impairments and loss on disposal of assets | 381 | 315 | |||||
Transaction income, net | (1,156 | ) | (258 | ) | |||
Total operating costs and expenses | 578,950 | 389,610 | |||||
Income (Loss) from operations | 22,243 | (47,222 | ) | ||||
Interest expense | (20,099 | ) | (22,815 | ) | |||
Other (expense) income, net | (1,774 | ) | 483 | ||||
Income (Loss) before income taxes | 370 | (69,554 | ) | ||||
Income tax (expense) benefit | (2,477 | ) | 19,873 | ||||
Net loss and comprehensive loss | $ | (2,107 | ) | $ | (49,681 | ) | |
Net loss per common share - basic and diluted | $ | (0.04 | ) | $ | (1.10 | ) | |
Weighted average number of common shares outstanding - basic and diluted | 48,213,995 | 45,013,784 |
Source:
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