STK's 'Asset-Light Business Model' is Paying Off

The ONE Group Hospitality, Inc. announced its financial results for the second quarter ended June 30.

Highlights for the second quarter ended June 30 were as follows:

The second quarter marked our 14th consecutive quarter of revenue growth.

Total GAAP revenue increased 15.5 percent to $19.9 million during the quarter compared to the same period last yea.

Total food and beverage sales at owned and managed units increased 17.4 percent to $45 million during the quarter compared to the same period last year.

Comparable sales for owned and managed STK units increased 1.7 percent during the quarter compared to the same period last year.

GAAP net loss attributable to The ONE Group Hospitality, Inc. for the quarter was $2.3 million ($0.09 loss per share) as compared to a GAAP net loss of $1.6 million ($0.06 loss per share) for the same period last year.

Adjusted EBITDA increased 34.4 percent to $1.5 million during the quarter compared to the same period last year.

Adjusted net loss attributable to The ONE Group Hospitality, Inc. for the quarter was $0.6 million ($0.02 loss per share) as compared to an adjusted net loss of $1.3 million ($0.05 loss per share) for the same period last year.

Jonathan Segal, CEO of The ONE Group, says, “We are delighted that the shift to an asset light business model while, focusing on management and licensing opportunities, improving sales and labor and operational efficiencies, and reducing general and administrative costs, is really paying off. For the second quarter in a row, we have increased same store sales this quarter by 1.7 percent, increased topline revenue by 15 percent and increased adjusted EBITDA by 34.4 percent. Additionally, we continue to become more efficient at the corporate level by making the necessary business changes needed to support this new strategy, which is expected to deliver an annualized G&A savings of over $2.5 million.”

Segal continues, “In addition, the demand for our brand remains strong, which continues to allow us to sign attractive license and management deals. As a result, we expect to be opening two licensed STKs at the end of 2017 and three in early 2018. We believe we are on the right track to drive our brand forward and create long term value for our stockholders.”

Strategic Review Update

During the quarter, the company terminated its previously announced process to explore and evaluate strategic alternatives, although it may continue to evaluate opportunities as they arise. In an effort to enhance stockholder value, the company intends to focus on its core business, with an emphasis on its asset light model.

Second Quarter 2017 Financial Results

Total owned unit net revenues increased 11.4 percent to $17 million in the second quarter of 2017 compared to $15.3 million in the second quarter of 2016. The increase was primarily due to the opening of the STK in Orlando (May 2016) and Denver (January 2017), and was partially offset by the closing of the STK in Washington, DC in December 2016 and a decline in sales at the STK in Chicago, Illinois during the quarter.

Comparable sales from owned STK units increased 1.2 percent for the quarter, and comparable sales from both owned and managed STK units increased 1.7 percent for the quarter.

Management and incentive fee revenues increased 43.2 percent to $2.8 million in the second quarter of 2017 compared to $1.9 million in the second quarter of 2016. The increase was driven by an increase in management and incentive fees at the STK in Las Vegas and at other international locations.

Total food and beverage sales at owned and managed units increased 17.4 percent to $45 million compared to $38.4 million in the second quarter of 2016.

Adjusted EBITDA increased 34.4 percent during the quarter to $1.5 million from $1.1 million in the second quarter of 2016.

GAAP net loss attributable to The ONE Group Hospitality, Inc. for the quarter was $2.3 million or ($0.09 loss per share) compared to GAAP net loss of $1.6 million ($0.06 loss per share) for the same period last year.

Adjusted net loss for the quarter was $591,000 ($0.02 loss per share) compared to adjusted net loss of $1.3 million ($0.05 loss per share) in the second quarter of 2016.

Development Update

OWNED STK UNITS

2017 Opening

STK Denver

Projected 2017

STK San Diego

Projected 2018

STK Austin

LICENSED UNITS

Projected 2017

STK Dubai

STK Beach Dubai

Projected 2018

STK Puerto Rico

STK Beach Puerto Rico

STK Doha

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