Tasty Brands, LP - Q2 2022 Portfolio Performance Update
LOS ANGELES, Aug. 31, 2022 /PRNewswire/ -- Tasty Brands, LP (the "Company"), an affiliate of Los Angeles-based private equity firm Triton Pacific Capital Partners, reported its financial results for the second quarter ending July 13, 2022 and provided a letter to its shareholders outlining the results.
Financial Highlights
Highlights for the second quarter of 2022 versus the second quarter of 2021 include:
- Total restaurant revenue increased 21.8% to $64.3 million, compared to $52.8 million in the second quarter of 2021.
- Adjusted restaurant-level EBITDA1 increased to $6.8 million from $5.7 million in the prior year quarter, a +18.7% change.
- Adjusted income from operations2 decreased to $3.3 million from $3.5 million in the prior year quarter, a -6.3% change.
- Loan-to-value for consolidated restaurant operations was 35.2%3.
1 |
Adjusted restaurant-level EBITDA is a non-GAAP financial measure and represents earnings from operations as adjusted to exclude general and administrative expenses, depreciation and amortization, impairment and other non-recurring lease charges, restaurant-level integration costs, pre-opening costs and any non-cash items. |
2 |
Adjusted income from operations is a non-GAAP financial measure and represents adjusted restaurant-level EBITDA less administrative G&A and interest expense. This calculation does not include corporate G&A expense. |
3 |
Loan-to-value represents net debt (total portfolio company debt – portfolio company balance sheet cash – Tasty Brands cash) to enterprise value (based on most recent quarterly valuations). Does not consider Propco investment. |
Management Commentary
Despite continued macroeconomic pressures and a challenging operating environment, financial performance in the second quarter of 2022 was strong, highlighted by total restaurant revenue and adjusted restaurant-level EBITDA improvement compared to the prior year. The investments made in add-on acquisitions, new unit development and ROI-driven asset actions continue to drive overall performance and position both Burger King and Pizza Hut portfolio companies for sustained growth. As highlighted in prior communication, Tasty Brands is encouraged by the value proposition and long-term stability of the quick service restaurant industry, both core elements of its investment thesis. This is particularly significant given ongoing wage and commodity inflation, rising interest rates and broader macroeconomic uncertainties. Both the Burger King and Pizza Hut brands have been forthright in their approach to optimizing franchisee profitability, and both brands have employed operational initiatives to control key elements of the restaurants' cost structure. The improvements in the second quarter results compared to the prior quarter are the result of positive momentum across our businesses and demonstrate the resiliency of both our strategy and the broader quick service restaurant industry.
There are several accomplishments and updates across the Tasty Brands portfolio. Some highlights for the quarter include:
- Tasty Hut completed two strategic acquisitions: 7 units in the Northeast, further expanding its footprint in the region from which to execute a new unit development growth strategy, and 27 units in West Virginia, Kentucky, Ohio and Virginia.
- Tasty King's restaurant-level EBITDA margin increased approximately 230bps in the second quarter of 2022, compared to the prior year period, signaling improved operational execution.
- Same store sales growth for both portfolio companies over pre-Covid levels continues to be robust. Menu price increases taken at both Tasty Hut and Tasty King have yielded meaningful improvements in average check.
Second Quarter 2022 Financial Results
As of July 13, 2022, the Company owned 287 restaurants, including 68 Burger King and 219 Pizza Hut locations.
Total restaurant revenue increased 21.8% to $64.3 million in the second quarter of 2022, compared to $52.8 million in the second quarter of 2021, a +21.8% change.
Adjusted restaurant-level EBITDA increased to $6.8 million in the second quarter of 2022 from $5.7 million in the prior year period, with an adjusted restaurant-level EBITDA margin of 10.5% of total restaurant revenue.
Adjusted income from operations was $3.3 million for the quarter, compared to $3.5 million in the prior year period, reflecting 5.1% of total restaurant revenue. Administrative general and administrative expenses were higher by $0.82 million.
Distribution Update
The Company declared a quarterly distribution for Q2 2022 of $0.4375 per share.
Tasty Brands, LP is a multi-brand restaurant franchisee within the quick service restaurant industry. Tasty Brands' portfolio companies include Tasty Hut, LLC, a Pizza Hut franchisee and Tasty King, LLC, a Burger King franchisee. Portfolio companies operate across 15 states, employing more than 3,900 employees. Some of the statements in this press release may contain forward-looking statements or statements of future expectations based on currently available information. Such statements are naturally subject to risks and uncertainties. Factors such as the development of general economic conditions, future market conditions, consumer preferences for the chain restaurant industry generally and our portfolio company brands specifically, unusual catastrophic loss events such as the current COVID-19 coronavirus pandemic and related government, private sector, and individual consumer responsive actions, changes in the capital markets and other circumstances may cause the actual events or results to be materially different from those anticipated by such statements. Tasty does not make any representation or warranty, express or implied, as to the accuracy, completeness, or updated status of such statements. You are urged to consider these factors carefully in evaluating any forward-looking statements contained herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements. The forward-looking statements made herein speak only as of the date of this press release and Tasty undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
Triton Pacific, founded in 2001, is a private equity firm offering income and growth investment programs for both institutional and high net worth investors. The firm focuses on investing in established small and mid-size companies across multiple sectors that exhibit attractive fundamentals, including quick service restaurants.
For more information contact [email protected]
Contact: Rebecca Cleary
Spotlight Marketing Communications
949.427.1462
[email protected]
SOURCE Tasty Brands, LP
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