10-Q: Pinstripes Holdings Reports Q3 2025 Results: Revenue Up, But Losses Widen Amid Debt Concerns

Pinstripes Holdings saw a revenue increase in Q3 2025, but net losses widened due to higher interest expenses and ongoing debt covenant issues.

Summary

• Pinstripes Holdings, Inc. reported its financial results for the third quarter of fiscal year 2025, which ended on January 5, 2025.
• Total revenue increased by 10.4% to $35.5 million, driven by new store openings.
• Food and beverage revenues rose by 10.5% to $27.5 million, while recreation revenues increased by 10.3% to $8.1 million.
• However, the company experienced a net loss of $8.1 million, compared to a net income of $12.2 million in the same period last year.
• The operating loss was $3.2 million, slightly higher than the $3.1 million loss in the prior year.
• Interest expense increased significantly to $5.7 million, up from $2.5 million in the prior year, due to higher outstanding debt.
• The company recorded an impairment loss of $634,000 related to the termination of a lease.
• Same-store sales decreased by 7.7%.
• The company is not in compliance with debt covenants and has entered into a forbearance agreement with lenders.
• There is substantial doubt about the company's ability to continue as a going concern.

Sentiment

Score: 3

Explanation: The document presents a mixed picture with revenue growth offset by widening losses and significant debt concerns. The mention of 'substantial doubt' about the company's ability to continue as a going concern is a major negative signal.

Positives

• Total revenue increased by 10.4% to $35.5 million, driven by new store openings.
• Food and beverage revenues rose by 10.5% to $27.5 million.
• Recreation revenues increased by 10.3% to $8.1 million.
• General and administrative expenses decreased by 8.6% due to cost savings initiatives.

Negatives

• Net loss widened to $8.1 million, compared to a net income of $12.2 million in the same period last year.
• The operating loss was $3.2 million, slightly higher than the $3.1 million loss in the prior year.
• Interest expense increased significantly to $5.7 million, up from $2.5 million in the prior year, due to higher outstanding debt.
• The company recorded an impairment loss of $634,000 related to the termination of a lease.
• Same-store sales decreased by 7.7%.

Risks

• The company is not in compliance with debt covenants and has entered into a forbearance agreement with lenders.
• There is substantial doubt about the company's ability to continue as a going concern.
• The company's ability to continue as a going concern is dependent upon it generating sufficient cash from operations over the next year from the date of the issuance of these financial statements.
• The company may be unable to fund its future operating requirements.
• The company may be unable to comply with the continued listing standards of the NYSE, which could result in the delisting of our securities.

Future Outlook

The company's future performance is subject to risks and uncertainties, including its ability to generate positive operating cash flows and comply with debt covenants. Management is exploring strategic alternatives to address these challenges.

Industry Context

The document does not provide specific details on how Pinstripes' performance compares to its direct competitors. However, it notes that consumer spending on food and entertainment outside the home fluctuates with macroeconomic conditions, which is a common industry trend.

Management Changes

Legal Proceedings

• On November 6, 2023, Riveron Consulting, LLC (Riveron) filed a lawsuit against the Company in the District Court of the 95th Judicial District of Dallas County, Texas for breach of contract and failure to receive compensation for services rendered.
• On November 21, 2024, Riveron and the Company entered into a settlement agreement in which the Company agreed to pay Riveron $365.

Related Party Transactions

• For the twelve and thirty-six weeks ended January 5, 2025 and January 7, 2024, a company owned by an individual with ownership in common shares of the Company, and who is a relative of an executive officer, performed design services and supplied furniture, fixtures and equipment for existing and new locations under construction of $300 and $976, and $921 and $942, respectively.

Stakeholder Impact

• Shareholders face the risk of stock delisting and potential dilution.
• Employees face uncertainty due to the company's financial instability.
• Creditors face increased risk of default.
• Customers may be impacted by potential service disruptions or store closures.

Next Steps

• The company will need to achieve the minimum continued listing standards of either average global market capitalization over a consecutive 30 trading-day period of $50 million or total stockholders' equity of $50 million at the completion of the 18-month plan period.
• The company intends to consider available alternatives, including but not limited to a reverse stock split, that are subject to shareholder approval.
• The company is required to achieve certain milestones in respect of various possible strategic alternatives, which are set forth in the Oaktree Loan Agreement, as amended by the Oaktree Second Amendment.

Key Dates