8-K: Pinstripes Reports Mixed Fiscal 2024 Results but Projects Strong 2025 Growth

Pinstripes Holdings, Inc. announced its fiscal fourth quarter and full year 2024 results, showing revenue growth but also increased operating losses, while issuing positive guidance for fiscal year 2025.

Summary

• Pinstripes reported a 5.9% increase in total revenue for the fourth quarter of fiscal year 2024, reaching $36.2 million, and a 6.7% increase in total revenue for the full fiscal year 2024, reaching $118.7 million.
• The company experienced a net loss of $8.7 million in the fourth quarter and a net loss of $6.8 million for the full fiscal year.
• Operating loss for the fourth quarter was $10.7 million, and $21.8 million for the full year, impacted by pre-opening expenses and increased general and administrative costs.
• Same store sales increased by 0.4% in the fourth quarter and 3.0% for the full year.
• Venue-Level EBITDA was $1.3 million for the quarter and $13.1 million for the year, with a margin of 3.7% and 11.0% respectively.
• Mature venues showed a stronger Venue-Level EBITDA margin of 11.4% for the quarter and 14.4% for the year.
• Pinstripes is projecting approximately $10 million in annual cost savings for fiscal year 2025.
• The company has 17 open venues and 3 additional venues in development as of June 27, 2024.

Sentiment

Score: 5

Explanation: The document presents a mixed picture with positive revenue growth and future cost savings, but also significant operating losses and decreased profitability. The forward guidance is positive, but the current financial performance is concerning.

Positives

• Pinstripes achieved revenue growth in both the fourth quarter and full fiscal year 2024.
• Mature venues demonstrated strong profitability with improved Venue-Level EBITDA margins.
• The company has identified $10 million in annual cost savings opportunities for fiscal 2025.
• Pinstripes is expanding its footprint with new venues opening and in development.
• The company experienced positive comparable sales growth and positive traffic growth during the fiscal fourth quarter.

Negatives

• The company experienced an operating loss of $10.7 million in the fourth quarter and $21.8 million for the full year.
• Venue-Level EBITDA decreased by $1.3 million in both the fourth quarter and full year compared to the prior year periods.
• Adjusted EBITDA was $(5.4) million for the fourth quarter and $(11.7) million for the full year.
• General and administrative expenses increased significantly due to costs associated with becoming a public company and increased digital marketing spend.

Risks

• The company is facing challenges related to increased operating losses and decreased Venue-Level EBITDA.
• The company's general and administrative expenses have increased significantly due to public company costs.
• The company is subject to risks related to its growth strategy, including the ability to open and integrate new locations on a timely basis.
• The company is subject to risks related to its substantial indebtedness and the capital intensive nature of its business.
• The company is subject to risks related to the labor shortage and inflation.

Future Outlook

Pinstripes anticipates low single-digit same store sales growth, four new venue openings, a 20-22% mature store venue-level margin, approximately $17 million in general and administrative expenses, $3 million in pre-opening expenses, and $19-21 million in adjusted EBITDA for fiscal year 2025.

Management Comments

• Dale Schwartz, Founder and CEO, stated that they are pleased with the continued progress across the business, including the strong opening of two new venues.
• Schwartz also highlighted the 310-basis point venue-level EBITDA margin improvement in their mature store base.
• Management believes they have a significant opportunity to improve margins through fiscal 2025 with approximately $10 million in annual cost savings.
• The company has several exciting venues in the development pipeline, including locations in Walnut Creek, CA and Coral Gables, FL slated to open during the fiscal second quarter of 2025.

Industry Context

Pinstripes operates in the experiential dining and entertainment sector, which is seeing increased consumer demand for unique and multi-faceted experiences. The company's focus on combining dining, bowling, bocce, and private event space positions it well in this market. The company is competing with other entertainment and dining venues, and is also subject to broader economic trends affecting consumer spending.

Comparison to Industry Standards

• Pinstripes' same-store sales growth of 3.0% for the year is moderate compared to some high-growth restaurant chains, but is positive in a challenging consumer environment.
• The company's mature venue EBITDA margin of 14.4% is a positive sign, indicating the potential for profitability as venues mature, but is lower than some established restaurant groups with mature store margins in the high teens or low twenties.
• The company's adjusted EBITDA of $(11.7) million for the year is a concern, as many public restaurant companies aim for positive adjusted EBITDA, indicating that Pinstripes is still in a growth and investment phase.
• Companies like Dave & Buster's (PLAY) and Topgolf (owned by Callaway Golf) are comparables in the entertainment and dining space, but have different business models and scale, making direct comparisons challenging.

Stakeholder Impact

• Shareholders may be concerned about the current operating losses and decreased profitability, but encouraged by the future growth plans and cost savings initiatives.
• Employees may be impacted by the company's cost savings initiatives, but also benefit from the company's growth and expansion.
• Customers should continue to experience the same level of service and offerings, with the potential for new venues to open in the future.
• Suppliers may see increased business as the company expands, but also be subject to the company's cost savings initiatives.
• Creditors may be concerned about the company's operating losses, but also see potential for future growth and profitability.

Next Steps

• Pinstripes plans to open new venues in Walnut Creek, CA and Coral Gables, FL during the fiscal second quarter of 2025.
• The company will focus on implementing cost savings initiatives to improve margins in fiscal 2025.
• Pinstripes will continue to develop its pipeline of new venue locations.

Key Dates

Keywords

Pinstripes, Financial Results, Venue-Level EBITDA, Adjusted EBITDA, Same Store Sales, Revenue Growth, Cost Savings, Restaurant, Entertainment, Bowling, Bocce