FAT Brands Inc (FATAV) 2022 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the FAT Brands Inc. fourth-quarter and fiscal-year 2022 earnings conference call. (Operator Instructions) Please note that this conference is being recorded today, February 22, 2023.

On the call from FAT Brands are President and Chief Executive Officer, Andy Wiederhorn; and Chief Financial Officer, Ken Kuick.

This afternoon, the company made its fourth-quarter and fiscal-year 2022 financial results publicly available. Please refer to the earnings release and earnings supplement, both of which are available in the investors section on our website at wwwfatbrands.com -- apologies, www.fatbrands.com. Each contain additional details about the fourth quarter, which closed on December 25, 2022.

But before we begin, I must remind everyone that part of the discussion today will include forward-looking statements. These forward-looking statements are not guarantees of future performance and therefore, undue reliance should not be placed on them. Actual results may differ materially from those indicated by these forward-looking statements due to a number of risks and uncertainties. The company does not undertake to update these forward-looking statements at a later date.

For more detailed discussion of the risks that could impact future company operating results and financial condition, please see today's earnings release and recent SEC filings.

During today's call, the company will discuss non-GAAP financial measures, which it believes can be useful in evaluating its performance. The presentation of this additional information should not be considered in isolation nor as a substitute for results prepared in accordance with GAAP. Reconciliations to comparable GAAP measures are available in today's earnings release.

I would now like to turn the call over to Mr. Andy Wiederhorn, President and Chief Executive Officer. Please go ahead, sir.

Thank you, operator. And hello, everyone. 2022 is a big year for FAT Brands as we continue to execute on our growth and integration strategies. I would like to express my sincere appreciation to our teams, franchisees, and their employees who helped us close a record-breaking year. It is due to their hard work and dedication that we move forward with confidence and execute the incredible growth opportunity that lies ahead for FAT Brands.

What was once, in 2003, just Fatburger has now transformed itself into a 17-concept portfolio with a strong worldwide presence. We ended fiscal year 2022 with over 2,300 locations open or under construction across more than 40 countries. We currently have over 750 franchise partners with nearly half serving as multi-unit operators operating anywhere from two to 75 restaurants. To close the year, we received the prestigious honor of Public Company of the Year from the Los Angeles Business Journal, and Fatburger was ranked as the number one burger in the USA by a Los Angeles Times food-contributing writer. Pretty cool.

Turning to fiscal year 2022, we grew total revenue over 240% to $407.2 million from $118.9 million in the prior year. For fiscal year 2022, system-wide sales increased 108% to $2.2 billion. We leveraged this strong topline growth into an almost 320% increase in adjusted EBITDA, ending 2022 with $88.8 million in adjusted EBITDA.

Now, moving on to our most recent fourth-quarter performance, total revenue grew 40% in the fourth quarter of 2022 to $103.8 million, compared to $74.2 million in the fourth quarter of 2021. The increase in total revenue was a result of three acquisitions: Twin Peaks in October 2021, and Fazoli's and Native Grill & Wings in December 2021, coupled with ongoing sales recovery from negative effects of the COVID-19 pandemic in the prior year.

We grew system-wide sales 22.1% to $532.9 million when compared to the prior-year quarter of $436.3 million. And finally, comparable system-wide same-store sales increased 2.7% in the fourth quarter of 2022 and 6% for the full year. Looking at profitability, we saw an 88.5% increase in adjusted EBITDA, ending the fourth quarter with $19.6 million in adjusted EBITDA.

Now, I'd like to discuss our two-part growth strategy consisting of organic growth and growth by acquisition. We had strong organic growth in 2022 as demonstrated by the record opening of over 140 new units, including 44 units opening in the fourth quarter. We achieved all of this despite supply-chain headwinds and permitting and construction delays. Included in the 2022 openings were the conversion of 21 Nestlé cafés to Great American Cookies as a result of the May '22 acquisition of Nestlé Tollhouse Café by Chip franchise business.

Franchisee interest is at an all-time high from new and existing franchise sales alike, which speaks volumes to our robust portfolio of brands that continue to deliver strong same-store sales and attract new fans around the globe. During 2022, we signed 110 new franchise development agreements representing a total of 362 new stores.

Leading the way in new store development amongst Fat Brands' concepts was Fatburger and Buffalo's Express with 86 stores, Fazoli's with 61, Round Table Pizza with 56, and Twin Peaks with 50 new sports lodges signed. Noteworthy franchise deals included combined 80-store development agreement for 40 Fatburger and Buffalo's Express locations, and 40 Round Table Pizza restaurants in Texas, a 32-store agreement for Twin Peaks in Mexico, and a 10-store agreement for Johnny Rockets in Israel.

Our pipeline in total of additional restaurants to be built remains strong with signed agreements representing more than 1,000 new restaurants. This represents 43%-unit growth and is worth an estimated $60 million in incremental adjusted EBITDA when it materializes over the next few years, lifting our adjusted EBITDA from approximately $90 million today to approximately $150 million. This organic growth is a naturally de-levering even. And when we achieve that level of adjusted EBITDA, we bring our leverage ratio down to approximately seven times our securitized debt.

This year, we remain focused on converting our pipeline. Year-to-date, we have opened 26 new units and we will continue this robust growth throughout 2023. We anticipate we will open between 150 and 175 new stores in 2023, which represents up to a 25%-unit growth from 2022, and we'll set yet another new store opening record, including a record for Q1, which should see between 50 and 60 total units opened.

Now, I would like to touch upon our polished casual strategy, specifically Twin Peaks, which we acquired in October of 2021. Since our acquisition of the brand a little over a year ago, the chain has grown over 20% from 80 to 96 units open. We have plans to build another 18 to 20 restaurants in 2023, and therefore we will be quickly surpassing the key milestone of 100 units, ending the year with approximately 115 lodges, and yet another year of approximately 20% growth, or said differently, approximately 40% unit growth in just two years.

New stores are seeing AUVs north of $6 million, and some locations in Florida are generating between $9 million and $12 million each. A focus for 2023 is to identify opportunities to accelerate Twin Peaks openings in our pipeline based on the strong new economics and a long-term growth potential we see for the brand.

As we look across our portfolio of brands, another area of focus for 2023 is our co-branding and tri-branding strategy. In November, we opened our first tri-branded location, which consists of a Fatburger, Buffalo's Express, and Hot Dog on a Stick in the Los Angeles neighborhood of Vallee Village. This year, we will look to pair Fatburger and Round Table Pizzas, as well as Johnny Rockets and Hot Dog on a Stick. We've seen great success with co-branding, and now tri-branding, as it drives sales and enables us to grow margins through a combined menu approach.

We presently have more than 200 co-branded locations, mainly consisting of our Fatburger-Buffalo's Express model or Marble Slab-Great American Cookie pairing. Additionally, we have jump-started a new initiative to place more focus on non-traditional growth in 2023 and beyond, which includes opening in airports, universities, amusement parks, hospitals, and stadiums, as we see great value in these venues.

Our manufacturing facility is another important part to our growth story, as it produces pretzel mix and cookie dough for several of our brands. For the fiscal year 2022, the manufacturing facility contributed $33.5 million in sales and added approximately $15 million in EBITDA to the business. We believe our factory business today is in its early stage of growth and is only operating at about one-third capacity, which provides significant room for expansion.

We have launched an initiative to distribute cookie dough and other dessert products to many of our other brands, including ovens to bake that cookie dough and sell fresh hot cookies. This will materially grow our factory EBITDA.

Further, to ramp up utilization of the excess factory capacity, Fat Brands may serve as a third-party manufacturer for other companies, and we may also acquire a business that requires factory production. As a result of the May 2022 Nestlé Tollhouse Café by Chip franchise business acquisition, we're now able to produce cookie dough in-house for those Nestlé franchisees who have converted to Great American Cookies. This allows the franchisees to buy the cookie dough at an approximately 20% discount, and we're also able to capture the manufacturing revenues which contribute to our EBITDA. To date, we have converted approximately 35 Nestlé Tollhouse Café stores to Great American Cookies and approximately 25 or so more units to follow this year.

Now, turning to Fat Brands' second strategic pillar, growth by acquisition. Going forward, we plan to lean into the expansion of our high-growth brands, particularly our sports lodge category, including considering potential strategic acquisitions of concepts with locations that can be converted into Twin Peaks and opportunities that would continue to expand our factory business.

We're also looking at other categories to round out our portfolio, such as salad, sandwich, or coffee. We continue to look for brands with a proven track record of long-term, sustainable, and profitable operating performance. We are seeing a number of opportunities in the current environment and expect to see more in the coming months as valuations continue to come down.

Now, turning to our balance sheet, during the quarter, we announced the redemption of approximately 1.8 million shares of our 8.25% series B cumulative preferred stock from an affiliate of Garnett Station Partners for $43.2 million. These shares were redeemed at a price of $23.69 per share, plus accrued and unpaid dividends to the date of redemption. The redemption of this tranche of series B preferred stock will yield significant cashflow savings for Fat Brands as our securitization facility, which funded the transaction, has a lower cost of capital and the effective dividend rate on the redeemed preferred stock.

We are also actively working towards the redemption of another approximately $92 million of series B preferred stock issued in connection with the 2021 acquisitions of Global Franchise Group and Twin Peaks. In addition, we are pursuing the rating and/or refinancing of our different securitization facilities beginning with Fat Royalty 2021 and Fat GFG 2021 securitization trusts.

During the quarter, we strengthened our leadership team with the hiring of our first Chief Growth Officer, Jeremy Theisen. Jeremy joined Fat Brands with over 20 years of experience in significantly increasing the revenue stream for high-growth startups in the restaurant sector and will be focused on spearheading the growth of the development pipeline across the Fat Brands portfolio. This includes bringing new franchisees into the system and driving multi-unit expansion with existing franchisees. His experience of quickly scaling companies from startups to industry leaders aligns with our fast-paced growth mentality. Jeremy is a great addition to our team to drive this growth forward exponentially in the years to come.

Further, we appointed [Mark Avery] as our Global Head of Partnerships and Supply Chain Strategy, as well as our Senior Vice President of Diversity, Equity, and Inclusion.

I'm also proud to report that our recently formed Fat Brands Foundation, a 501(c)(3) organization, is up and running with its own Board of Directors. The mission of the foundation is to change the lives by supporting local causes that uplift and unite Fat Brands' communities. The foundation will look to partner with local non-profits to provide essential programs to help families and communities thrive.

The foundation was seeded with a $250,000 donation from Fat Brands, Inc. to start things off, and our franchise partners, their employees and our corporate employees, and brand partners can contribute as well. Fat Brands is covering 100% of the administrative costs of the organization, so 100% of the money raised will go to the beneficiaries.

In summary, I would like to reiterate that 2022 was a great year, and 2023 is off to a strong start as franchisee interest remains high. We are excited to accelerate the build-out of our 1,000-unit organic pipeline of new stores, which will drive EBITDA growth in the years to come. We have a strong management team in place and a robust platform that supports the expansion of our existing brands while enabling the accretive acquisition and efficient integration of additional restaurant concepts with minimal overhead.

We look forward to updating you on our progress in future calls. We sincerely appreciate you joining us today and for your interest in Fat Brands. And with that, I would like to hand it over to Ken to talk about our financial highlights from the quarter. Ken.

Thanks, Andy. Our total revenue during the fourth quarter increased 40% to $103.8 million, reflecting revenue contributions from the acquisition of Twin Peaks in October of 2021 and the acquisitions of Fazoli's and Native Grill & Wings in December of 2021. And for ease, I'll refer to these as the fourth-quarter 2021 acquisitions. Additionally, revenue benefited from the ongoing recovery from the negative effects of COVID-19 in the fourth quarter of last year.

Costs and expenses increased to $136.4 million in the fourth quarter, compared to $77 million in the year-ago quarter, primarily due to the fourth-quarter 2021 acquisitions.

Included in costs and expenses, general and administrative expense increased to $39.1 million in the fourth quarter from $21.6 million in the prior-year period, primarily related to the fourth-quarter 2021 acquisitions, increased compensation costs related to our significant expansion, legal fees, and a $16.1 million non-cash reserve on claimed employee retention tax credits recorded during the quarter based on the governing accounting standard.

Cost of restaurant and factory revenues increased to $61.7 million in the fourth quarter compared to $36.9 million in the prior-year period, primarily related to the fourth-quarter 2021 acquisitions, including the operations of the acquired company-owned restaurant locations.

During the fourth quarter of 2022, we recognized $14 million of non-cash trademark impairment, primarily resulting from the significantly increased interest rate environment and its inherent effect on our discounted future cashflow calculations.

Depreciation and amortization expense increased to $6.9 million in the fourth quarter from $5.3 million in the year-ago quarter, attributable to the fourth-quarter 2021 acquisitions, including depreciation of acquired company-owned restaurants and the amortization of acquired intangible assets.

Refranchising losses in the fourth quarter were $3.1 million, and were comprised of restaurant costs and expenses, net of food sales. Refranchising losses in the fourth quarter of the prior year 2021 were $1 million and were comprised of $2.1 million of restaurant operating costs, net of food sales, partially offset by $1.1 million in net gains related to refranchised restaurants.

Advertising expense was $11.6 million in the fourth quarter compared to $9.9 million in the prior-year period. These expenses vary in relation to the advertising revenue and reflect advertising expenses related to the fourth-quarter 2021 acquisitions, including company-owned restaurant locations and also an increase in customer activity.

Other expense for the quarter was $24.2 million compared to $17.1 million in the year-ago quarter, and was primarily comprised of interest expense on our securitizations.

Our income tax provision for the quarter was $14 million compared to a benefit of $200,000 in the prior year quarter, primarily driven by a $20.4 million non-cash valuation allowance related to naked indefinite-lived tax credits.

Net loss for the quarter was $70.8 million or $4.29 per diluted share, compared to a net loss of $19.6 million or $1.38 per diluted share in the prior year quarter.

On an as-adjusted basis, our net loss was $43 million or $2.60 per diluted share, compared to $16.5 million or $1.16 per diluted share in the prior-year quarter.

And turning to cash flows, it's worth noting that our $70.8 million net loss for the quarter included a $20.4 million non-cash valuation allowance on naked indefinite-lived tax credits, a $16.1 million non-cash reserve on claimed employee retention tax credits, a $14 million non-cash trademark impairment charge, $6.9 million of non-cash depreciation and amortization, $4.8 million of non-recurring litigation expense, $1.6 million of non-cash share-based compensation, and $800,000 of non-cash lease expense. And the total of the non-cash items portion of this in our net loss was $59.8 million.

And with that, Judith, please open the line for questions.

Thank you, sir. (Operator Instructions)

Joe Gomes, NOBLE Capital Markets.

Good afternoon, and thanks for taking the questions.

Hi, Joe.

Hey, Joe.

So I wanted to start out, Andy, if I'm looking at the full year, you came in a little bit above revenue, and you're talking about a $400-million-revenue run rate. And, but on EBITDA, you came in a little bit lower than your $90 million, $95 million rate for the year, modestly below, admittedly. But you also had thought the fourth quarter EBITDA number would be similar to the third quarter.

Third quarter, you came in a little over $24 million. This quarter, you came in a little under $20 million. Just wondering if you could give us a little detail on the adjusted EBITDA number would cause it to come in a little bit below expectations?

You bet, it's a good question, and not something that we're entirely happy about, but I think we're aware of it and have addressed it. And it really comes down to a few things. We have some stores that slipped into Q1 that didn't get open in Q4, particularly a couple of Twin Peaks Lodges that slipped into Q1, and that affects some of our opening revenues. And that's really from permitting and construction delays that's just been annoying all year. Hard to understand how everyone was work from home and then back to work, and yet -- the government wasn't laying off people, and yet we've had all these delays with construction permits in different towns. So that's been one contributor.

We also saw a margin compression on our company-owned stores with Fazoli's, and we saw some margin compression at our factory and our manufacturing business, both of which we reacted to quickly with additional price increases to maintain our margin. But there's a slight lag effect to get that in place each time, and so we felt like we lost a little bit of money at the factory, a little bit of money operating the company-owned stores than we wanted to in terms of less margin, and then the delay from those new store openings. It's really those three items that mostly affect it.

Okay, thanks for that. On the manufacturing facility utilization, you've talked about that basically since you acquired the facility, the Nestlé's acquisition is slightly bringing up facility utilization, but you've also talked about the program. I think now, I can't remember exactly when you hired the person to come in to really oversee those efforts. Any kind of timing that you might look at and saying, hey, we've got some stuff that's really close, or in the next quarter or two that we think are going to help start to increase that utilization to the 50% or 60% level?

Yeah, it's a really good question. It also is very strategic for us because we think that that factory has tremendous value. We think that longer term, call it 24 months or so, that factory could create a massive liquidity event for us in some sort of a sale or something to that effect, and that would pay down a lot of debt, de-lever us, and we really have the opportunity to grow EBITDA before that at the factory to get a big number.

We are deep in the weeds on negotiating third-party manufacturing opportunities for the factory, that's why I referenced it in my remarks earlier. And I expect that by Q2, we'll be able to report that we have some third-party manufacturing going on that's utilizing excess capacity.

And even more importantly and opportunistically, we have expanded our distribution of the cookie dough and pretzel mix and other dessert mix items, like brownie mix, to many more of our restaurants in the portfolio, probably another 700 restaurants. And that will, over Q2 and over Q3, including the distribution of ovens to restaurants that need ovens to bake the cookies, some of them already have ovens, like Round Table Pizza or Fazoli's, but some of the burger brands do not, so distributing ovens to all of the franchisees and distributing cookie dough so they can make hot, fresh cookies and serve them in the restaurants. That will generate significant additional dough and other dessert item sales and use up some of that capacity.

So we're all over it. It's taken a while to get it figured out, and now we're in the middle of implementing it, shipping ovens and training, and we expect to roll that out over the rest of Q1 and during Q2 in addition to that third-party manufacturing. So the factory is very, very busy, and all of the things we've been talking about for the factory are happening right now. And over Q2 and Q3, we look forward to reporting that to shareholders so they can follow it closely.

Okay, great. And then, when you're reading through the release and you talk about some of the expenses and G&A, and Ken did a great job of going over those. But one of the things you call out in the press release is the cost of pending litigation and government investigations. Is there any update there that you can provide on those?

Well, as has been said before, SEC investigation is never good for shareholders just because of the cost. And we are -- we've made significant progress in terms of responding to the inquiries that we received related to the government investigation. I don't think that there's much more to respond to. I think that hopefully we'll be able to see some sort of resolution as we finish the year. These things go slow. They can take years, as you know, but hopefully we'll see the legal expenses shrink here significantly.

We do have opportunities for insurance defense coverage and recovery for some of these things, but none of that is reflected in our financials. We haven't seen insurance companies write checks yet, although we firmly believe that we're covered under our policies, and we are pursuing recovery against those carriers. So you know how that goes, sometimes where you have to actually file an action or commence arbitration and mediation to get coverage. We've done all of those things and we think that we'll move it along nicely.

There's also -- it's not just the government investigation, we also have two derivative cases outstanding. Remember in Q3 of last year, we settled one shareholder class action case, which was good to get behind us and save further legal fees, but we've had plenty of discovery and things like that in the two derivative cases. We hope that those cases will be resolved during this calendar year and to get all of this legal expense to go away once and for all.

That would be great. And also, looking at some of the tables in the release, bad debt expense increased significantly quarter over quarter. What -- hopefully some of those other line items that you're calling out --

Sure, so bad debt expense is really the reserve for the employee retention tax credits. These are credits that we filed for in our tax returns. We've received a significant portion of the money already and expect to receive the rest of the money, but given the accounting literature is not very clear on how and when you can book this, ultimately we've been very conservative and reserved 100% for these credits. So it's odd that we've received the money in most cases and yet we fully reserve for it. But that's what that is, it's not actual or any significant amount. That is not actually franchisees not paying their bills, it's just the reserve for the tax credits.

And the other thing is like we have the impairment loss and we have the income tax provision. Those are non-cash items. The income tax provision is literally a mismatch of the timing of the amortization of assets or amortization of liabilities. And it's not something where we write a check. It's just a reserve, if you will, or a deferred tax liability.

And impairment is the same thing. You take impairment -- unfortunately, if the interest rate environment moves against you, you have to take impairment. And it's related to your cost of financing essentially and your valuation, but it's non-cash and it's not something you write a check for. So as Ken said, approximately $60 million of the $70 million of loss for the quarter was all non-cash.

Right, right, exactly, okay. And one more from me, if I may. You mentioned again that looking at the re-rating and hopefully refinancing of some of the debt and also the payoff of the -- or pay down of the series preferred. Any timing on when those things might occur?

Well, I think that it's just a little bit subject to market conditions and how things are going. It's not easy to accomplish refinancing in an upward-rising-rate environment where rates have moved 375 basis points already from where we locked this in. So I mean, everyone knows that we have 30-year non-recourse securitized debt that is fixed rate. So those rates in 2021 that were fixed look pretty good today compared to the current environment.

Yet we have bondholders that would like to see us refinance some of that debt and create liquidity there. And we are doing our best to do that and expect that we'll figure something out along those lines for some of that debt in the coming quarter or two. We just can't guarantee it, of course, but we don't have a gun to our head. We don't have to do that.

This debt is set up for a long time before it really amortizes at any significant level. So we'll see a 1% increase at the end of the summer and a 2% amortization as our annual numbers that would kick in. But even amortization is paying down principle. That's not an expense. And 1% increase is nothing compared to where rates are today.

So we want to work constructively with the bondholder community to make this work for them and make this work for the company. And we're meeting with them in the coming days to try to hammer that out.

On a preferred side of things, one sort of follows the other. We need to understand where the refinancing opportunities lie and what works for the bondholder community. And then it'll enable us to address repurchasing or redeeming the remaining preferred.

Everyone in 2021, when we were on our acquisition binge and making -- and issuing securitizations to fund those, which was very novel to use securitization facilities for acquisition financing, everyone expected that the equity markets would remain robust in early 2022, and the interest rate environment at that time was going to be solid also and not be moving so dramatically against us. And so we thought we would issue equity in the first half of 2022 and redeem that preferred and maybe then get the refinancing done in the summer of 2022. And of course the world changed.

We're very fortunate that we have 30-year fixed rate debt. I mean, that's at a 2021 level, which we thought was a little bit high then. Now it looks pretty darn good.

So we want to make this work for the bondholder community, and so we're dedicated to attempting to do that. But that's sort of the history of it. It's not that anybody isn't doing what they said they were going to do, it's that rates changed so much. It just shook everybody to the core. How do you fix this now?

And the bigger picture, as you know from your coverage, is that we really have some crown jewels in our portfolio that pay off all the debt over a relatively short period of time. This manufacturing business at one-third capacity, if we grow at $15 million of EBITDA, if we grow it to two-thirds or $30 million of EBITDA or whatever, that thing is worth $300 million or $400 million. It's a huge pay down of our debt facility and would really go a long way to de-levering us in addition to all the organic growth we have.

And then finally the Twin Peaks franchise, again, just hitting the ball out of the park. Some construction delays, but margins are solid. Growth is solid. Franchise commitment to build new locations: 20 stores last year, another -- or sorry, 16 stores in the last 14 months, another approximately 20 stores in the next 12 months, and another 20 stores after that. And that takes that brand materially upwards in scale, and that brand could be a $700 million to a $1 billion brand in a number of years.

And so with that opportunity, that would clean up all the rest of the debt in a few years. So we really have some key liquidity events out there, two years, three years, five years that are very interesting to shoot for. And that's really what we're focused on right now.

We don't feel compelled to want to buy another brand, because we have so many great brands and we have so much pipeline already out there. With additional stores signed up, paid for, ready to be opened by the franchise groups, that only if it makes strategic sense to drive the manufacturing facility or to drive the sports lodge business, are we going to really make an acquisition that's material?

And it doesn't mean there aren't little bolt-on things here or there that makes sense. And like I said, we don't have a salad concept, or a coffee concept, or a sandwich concept that would be good to have in the portfolio. But not something that's critical right now, and not something in this interest rate environment that we feel compelled to borrow money at a higher rate.

We want to de-lever right now, not increase our leverage. And unless it's very strategic, we're going to execute by growing out that pipeline organically first.

Thanks for that, Andy. I really am excited to see how '23 unfolds for the company. Thanks for taking the questions.

Thank you.

Greg Fortunoff, Private Investor.

Hey, Andy. How are you?

Hi, Greg.

All right, couple of questions. So Joe asked a question earlier. You gave the three reasons why the EBITDA was lower. Have all those been resolved? So in the next quarter, going forward, we'll see higher numbers, higher EBITDA?

Yeah, we expect that the margins will show improvement at facilities and at the manufacturing facility. We've taken price increases and they're in full effect for Q1, so that we're not -- there's a lag effect there, so we're looking forward to that.

On the new store opening side, we'll get two stores open at Twin Peaks and we have a whole bunch of stores, we'll hit 60 or 65 -- 50 to 60 stores, sorry, new store openings across the entire portfolio. So I think that we've addressed that and there's always seasonality, there's weather, things like that that affect your quarter to quarter. We don't think that we'll have some of those issues we had before in Q4.

Okay, can you tell me what -- or tell us what the cash on hand is at this point?

It'll be reflected in the balance sheet in our 10-K that we file in two days, but there's plenty of cash on hand.

Okay, are you prepared this time to give a EBITDA estimate for 2023?

We're not giving guidance for 2023 just given the inflationary environment. You know, we hope that it's certainly going to be in line or exceed the 2022 numbers, but we're not giving a specific number yet. There's too much economic uncertainty out there and we want to know where the refinancing effort comes out.

Okay. As far as refinancing, it sounds like, what would -- I know the bondholders want you to do it, but why would we want to do it? I haven't heard you or anything in this conversation that would give us a reason to have our rates go up more than the 1% that they will automatically.

Yeah, no, it's a delicate partnership with bondholders who want to see liquidity in their portfolio positions. We want to try to get these bonds rated, either the existing bonds or new bonds. Creating -- getting a rating on your bonds creates tremendous liquidity for investors, and that's something that ultimately drives the cost down significantly, so that's important to do if we can do it. But it's only worth so much, right? There's deal expenses, there's change in rates, and there's change in terms and things like that, so it's got to be the right deal for us.

As we talked about, the 1% increase in rates isn't so painful compared to what current rates are. But that doesn't mean that a current refinancing has to be priced where current rates for a new deal is, just because they're existing holders. So there's all kinds of things we could do to modify the existing structure. We'd like to avoid today the 2% amortization, but we're prepared to make it if we need to make it, and we believe we have adequate cash flow to do so.

So I feel like we're in the right position. If we can create liquidity, we can generate more runway. This is sort of a -- we want to make sure we have plenty of runway to build out that pipeline and fill up that factory to create a liquidity event. And so that's a couple years, so we want to make sure we have a really good line of sight for a couple years. Because none of us know how far up they're going to hike rates, how bad that's going to impact demand, and we're not seeing it yet. Consumers are still flocking to the restaurant. Sales are positive. Sales year-to-date are very positive, high single digits.

So that's an aggregate across all of them. So we're really happy with business. But we want to be prepared, and just in case the consumer falls off the edge of a cliff or something else goes on, we want to make sure we have tons of liquidity. And so that is relevant, and our bondholders are very supportive of us, and we want to try to be supportive for them, but, you know, it can't be at a ridiculous cost.

Okay, two more quick ones. So I think you just said it, but just to confirm, comp store sales for an aggregate so far for the first quarter are up high single digits?

Yes.

Okay, last question. So Corporate America seems to be downsizing quite a bit near the overhead, and the expenses for the company have been, you know, are getting up there. Do you have any plans or any ability to cut some overhead in the corporate structure?

Yeah, you're always looking at your overhead structure, right, it's something that you have to do every year end. We've identified a few areas where we could make some changes. And will make some changes this quarter to establish some material savings from our annual adjusted EBITDA or quarterly adjusted EBITDA.

So yes, that is underway today. And it's not huge, but it's meaningful, and it's -- you just have to look at, do we overhire, are we getting the execution that we want, or the synergies that we want, and is it working at every level. And there's always opportunity to change that, so we are all over it like everyone else is, and it is a Q1 agenda item.

Okay, thanks, Andy. Looking forward to a good '23. Take care.

Thank you.

Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session. I will now turn the call over to Mr. Andy Wiederhorn for closing remarks.

Operator, thank you. And I want to thank all of you for joining us, and hope that you all have a great afternoon or a great evening. And anyone, feel free to follow up again if you have additional questions.

Thank you. This concludes the call, operator.

Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and you may now disconnect your lines.