8-K: Pinstripes Holdings Reports Fiscal 2025 Third Quarter Results: Revenue Up, But Net Loss Widens

Pinstripes Holdings, Inc. announced a 10.4% increase in total revenue for the third quarter of fiscal year 2025, but also reported a net loss of $8.1 million.

Summary

• Pinstripes Holdings, Inc. reported its financial results for the fiscal quarter ended January 5, 2025.
• Total revenue increased by 10.4% to $35.5 million compared to the prior year's fiscal quarter.
• Food and beverage revenues rose by 10.5% to $27.5 million, while recreation revenues increased by 10.3% to $8.1 million.
• The company experienced an operating loss of $3.2 million, which included pre-opening expenses of $1.5 million.
• Net loss was $8.1 million, compared to a net income of $12.2 million in the prior year period, primarily due to a gain on change in warrant liabilities in the previous year.
• Same store sales decreased by 7.7% compared to the same quarter last year.
• Venue-Level EBITDA was $6.8 million, an increase of $0.6 million from the prior year period.
• The Venue-Level EBITDA margin was 19.2%, a slight decrease of 0.2 percentage points from the prior year.
• Adjusted EBITDA was $2.7 million, compared to $0.4 million in the prior year period.
• One new venue opened in Walnut Creek, CA on November 15, 2024, bringing the total venue count to 18 as of January 5, 2025.
• As of January 5, 2025, the company had $2.4 million in cash and cash equivalents.
• The company believes that its current earnings projections raise substantial doubt on the company's ability to continue as a going concern.
• As of January 6, 2025, the company was in breach of its material indebtedness agreements due to failure to maintain a Total Net Leverage Ratio of no greater than 6.00:1.00.
• On January 17, 2025, the company entered into the second amendment to its loan agreement with Oaktree Fund Administration LLC.
• Tony Querciagrossa, Chief Financial Officer, is stepping down, effective February 28, 2025.

Sentiment

Score: 4

Explanation: The report highlights revenue growth but is overshadowed by a net loss, declining same-store sales, concerns about going concern status, and a CFO departure. The sentiment is cautiously negative.

Positives

• Total revenue increased by 10.4% to $35.5 million.
• Food and beverage revenues increased by 10.5% to $27.5 million.
• Recreation revenues increased by 10.3% to $8.1 million.
• Venue-Level EBITDA increased to $6.8 million.
• Adjusted EBITDA increased to $2.7 million.
• Cost reduction initiatives have been successfully executed, contributing to strong venue-level EBITDA margins.
• New stores are maturing as expected and delivering double-digit venue-level EBITDA margins.
• The company opened one new venue during the fiscal third quarter, Walnut Creek, CA on November 15, 2024.

Negatives

• Net loss was $8.1 million, compared to net income of $12.2 million in the prior year period.
• Same store sales decreased by 7.7%.
• Venue-Level EBITDA margin decreased slightly by 0.2 percentage points.
• The company's current earnings projections raise substantial doubt on the company's ability to continue as a going concern.
• The company was in breach of its material indebtedness agreements as of January 6, 2025.

Risks

• The company faces risks related to its substantial indebtedness.
• There are risks related to the company's liquidity position and its ability to raise additional capital.
• The company's ability to continue as a going concern is uncertain.
• The company's ability to successfully open and integrate new locations on a timely basis is a risk.
• The capital-intensive nature of the business poses a risk.
• The company faces risks related to attracting and retaining customers.
• Labor shortages and inflation could impact the company.
• The company is in breach of its material indebtedness agreements.

Future Outlook

The company is exploring strategic alternatives to alleviate concerns about its ability to continue as a going concern and to meet its current obligations.

Management Comments

• Dale Schwartz, Founder and CEO, stated, 'We are pleased with our teams ability to successfully execute on our cost reduction initiatives since the start of the fiscal year, allowing us to deliver strong third-quarter venue-level EBITDA margins of over 19%'.
• Schwartz continued, 'While we are not satisfied with our top-line results, we continue to believe that our high-quality, connection-oriented dining, entertainment and event venues uniquely position us in the restaurant industry'.
• Schwartz continued, 'We appreciate the support that has been provided by our lending partners and believe previously announced additional funding and amendments will improve our cash flow trajectory moving forward'.
• Querciagrossa added 'Its been an honor to be part of the Pinstripes story, including becoming a public company. I look forward to working with Dale and the rest of the management team through the transition to ensure the Company is well-positioned for the future'.

Industry Context

Pinstripes operates in the experiential dining and entertainment industry, which is competitive and subject to changing consumer preferences. The company's focus on combining dining, bowling, bocce, and private event space aims to differentiate it from traditional restaurants and entertainment venues.

Comparison to Industry Standards

• Comparing Pinstripes' same-store sales decrease of 7.7% to industry benchmarks reveals potential underperformance relative to competitors like Main Event or Topgolf, which may have experienced more robust growth or smaller declines.
• Pinstripes' Venue-Level EBITDA margin of 19.2% can be benchmarked against similar experiential dining companies to assess its operational efficiency and profitability.
• Companies like Dave & Buster's or Punch Bowl Social could serve as relevant comparisons for evaluating Pinstripes' financial performance and market positioning.

Management Changes

Stakeholder Impact

• Shareholders may be concerned about the net loss and the uncertainty surrounding the company's ability to continue as a going concern.
• Employees may experience uncertainty due to cost reduction initiatives and the CFO transition.
• Customers may not be directly impacted in the short term, but the company's long-term viability could affect their experience.
• Suppliers and creditors face increased risk due to the company's financial challenges and potential need for strategic alternatives.

Next Steps

• The company will search for a new Chief Financial Officer.
• The company will continue to execute on cost reduction initiatives.
• The company will explore strategic alternatives to improve its financial position.

Key Dates

Keywords

Pinstripes, financial results, third quarter, revenue, EBITDA, net loss, same store sales, going concern, debt, CFO transition, venue-level EBITDA, adjusted EBITDA