Waitr Holdings Inc (WTRH) 2021 Q1 法說會逐字稿

Good day, everyone. I would like to welcome all of you to the Waitr Holdings Inc. First Quarter 2021 Conference Call. With us today are Waitr's Chief Executive Officer, Carl Grimstad; and Chief Financial Officer, Leo Bogdanov. By now, you should have access to our earnings press release. If not, it may be found at sec.gov or our Investor Relations website at investors.waitrapp.com.

Before I turn the call over to management, I would like to remind you that certain statements and projections in this call about our future business and financial results constitute forward-looking statements. These statements are based on management's current business and market expectations, and our actual results could differ materially from those projected in the forward-looking statements. Please see the risk factors contained in our annual report on Form 10-K and in our Form 10-Qs for a discussion of risks that may cause our actual results to vary from these forward-looking statements.

Finally, please note that on today's call, management may refer to non-GAAP financial measures. Please refer to Waitr's First Quarter 2021 earnings release for a full reconciliation of its non-GAAP financial measures to the most comparable GAAP financial measures.

I would like to turn the call over to Waitr's CEO, Carl Grimstad, who will give an overview of the company's business activities and developments for the first quarter of 2021. He will then turn the call over to Leo Bogdanov, who will provide an overview of the company's operating and financial results. We will then open the call for Q&A. Carl?

Thank you. Hello, everyone, and thank you for joining our call today. We are pleased to announce our financial results for the first quarter of 2021 as we continue to build on our success from 2020, and generate positive operating cash flow. In the first quarter, we are excited to have closed the Delivery Dudes acquisition, strengthening our market position in Southern Florida and solidifying our commitment to pursue additional opportunistic strategic acquisitions.

Over the last several months, we partnered with many of the country's top delivery management and optimization platforms, which provide improved operational efficiencies that benefit both restaurants and customers. Along with these platform integrations, we have partnered with a multitude of national brands, including PDQ, Applebee's, Marco's Pizza, Jason's Deli, Red Robin and various delivery-only virtual restaurant concepts to our platforms, which have broadly expanded the restaurant selection for our diners. This focused and methodical sales approach resulted in us surpassing a total of 23,000 partnered restaurants on the platform.

While adverse weather-related events affected many of our markets for several weeks during the first quarter of 2021, we are pleased to report a 9% increase in average daily order volumes this quarter compared to the fourth quarter of 2020. Our results continue to reflect the hard work of our entire team through the execution of fundamental operational and strategic initiatives. Our ongoing recruiting and retention efforts continue to increase the total number of active independent contractor drivers on the platforms, which are at an all-time high for the company. Overall, we had a great quarter and are excited about the company's future.

Now I'll turn it over to Leo, our Chief Financial Officer, for a recap of first quarter results.

Thank you, Carl. I'd like to now review our first quarter 2021 financial results. Revenue on a pro forma basis, including the full quarterly results of Delivery Dudes, was $53.4 million in the first quarter of 2021 compared to pro forma revenue of $46.5 million in the first quarter of 2020, an increase of $6.9 million or 15%. Net loss for the first quarter of 2021 was $3.7 million, which includes $5.1 million of items we consider to be onetime nonrecurring compared to a loss of $2.1 million in the first quarter of 2020. Adjusted net income for the first quarter of 2021 was $1.4 million compared to a loss of $2.1 million in the first quarter of 2020, an increase of $3.5 million. Adjusted EBITDA for the first quarter of 2021 was $8.3 million compared to $3.7 million in the first quarter of 2020, an increase of $4.6 million or 121%. Loss per share, including inclusive of onetime and nonrecurring items for both the first quarter of 2021 and 2020 was $0.03. Adjusted earnings per diluted share for the first quarter of 2021 was $0.01 compared to an adjusted loss per diluted share of $0.03 for the first quarter of 2020. In the first quarter of 2021, we made a prepayment of $15 million on our term loan, along with a cash payment of $10.9 million for the acquisition of Delivery Dudes, resulting in cash on hand of $67.9 million as of March 31, 2021. Total outstanding long-term debt as of March 31, 2021, was $84.5 million, consisting primarily of our $35 million term loan and $49.5 million of convertible notes.

That concludes the recap of our first quarter financial results. We will now go into a short Q&A session.

(Operator Instructions) And we'll take our first question from Kunal Madhukar with Deutsche Bank.

One housekeeping is the GFS, I wanted to understand what that was? And second, as you look into 2Q and as you look at like the potential for like markets opening up, and end markets in various markets might already be open. But as you look at like more vaccinations, more opening up and recovery kind of generally happening, how do you see the order trends and consumer behavior in your markets kind of evolving?

Well, it's a good question, and it's timely because we generally have a comparison of the larger players, right, that operate in big metropolitan cities that have been locked down quite a bit for the last year. As you know, in most of our southern markets these markets have virtually remained open. And it's a different dynamic. I think that these second- and third-tier markets are generally populated with working-class people that have been under some level of financial hardship. Also, as you know, we focus on independent restaurants. Independent restaurants have not had the easiest time during the COVID time. And as a result, as we go into this year, I think our comparisons will be less taxing than the big national companies. I think Q2 is probably the trickiest because that's where we saw the most stimulus coming into the market last year. But ultimately, our business seems a lot more consistent and steady than having these big blips from last year's lockdown period.

Okay. And what was the GFS for this quarter?

Leo, do you have the gross food sale number?

Yes. It's $150.3 million.

$150.3 million. Okay. Great. And then that has been -- Carl, you mentioned it's like working-class people that live there primarily in these markets. As you look at the issue with like most companies are having in terms of like difficulty in hiring workers and what have you. Have you seen that kind of happen in those markets? Just like these guys -- they're like just too many jobs available for them?

Well, it's an interesting social commentary, right? I think that I hear it from restaurants, we definitely have tried to stay ahead of the curve on the driver side. But when you're paying people more money than they typically make to go to work, they don't want to work. That being said, and I think it probably affected our EBITDA margin for the quarter because we wanted to stay in front of the subsidies coming out, and we're a bit more probably aggressive with incentives for drivers that it affected our margins slightly there temporarily. But I think it's a nationwide issue that if you're incenting behavior that's not consistent with working, I mean I think it tightens the labor market up.

No, it totally does. But no insight into what's happening in your markets? There, things haven't picked up?

As far as what that it's important to hire employees?

Yes. No. I mean the thing is if growth over the past year was kind of maybe muted because it's more working-class people than they were maybe harder hit. And now we are getting into a situation where jobs are aplenty, and like people are not like not going for those jobs, not applying for those jobs, then they must be making more money than they would be with the jobs.

Right. We're in agreement. But where we would see the greatest of impact would be in lack of driver supply, right? So I do hear it from restaurant partners and what have you that they're having more difficulty hiring servers or dishwashers and stuff like that. But as it affects kind of operationally our business, my greatest fear all the time is if I don't have enough drivers, I have a problem. So we try to stay in front of that dynamic, and it throws another dynamic into it when you're having the government paying out subsidies. So that's where it would affect us. But ultimately, as we mentioned in the release, we have the highest number of active drivers in the company's history in this past quarter. So whatever we did, we were able to weather that storm.

That's correct. And then one last one. The average order value increased like 14% year-over-year. And it's close to like $44, it's over $44. What's driving that?

Yes. Well, it's probably a collection of a number of things. But again, we're independent restaurant focused, right? And those tickets are typically higher than QSR. And a lot of this amazing top line growth that the national businesses are seeing is driven by their QSR traffic, which hasn't been a focus of our company for a couple of reasons. But one of the things you see us talking about POS integrations, system integrator integrations. The company just didn't use that as a priority in the past. And as a result, even though they had a handful of national brands, they were handicapped in signing these brands because of the integrations. So I think to answer your first question, it's the independent restaurant focus that drives that higher order value. And then secondarily, as time goes on, I think a lot of our comparisons and cohort data and what have you is going to be helped by a lot more national brands being on the platform because it will be more selection for our diners. And it will continue to drive some level of top line growth there.

Totally. And one last one. Sorry, I apologize for taking so much time. But one last one on the partnership that you just did with the payments provider where you can deliver -- potentially deliver marijuana in states where you can legally deliver it. So how is that kind of progressing? And what kind of milestones should we be thinking of as you kind of develop and explore that business opportunity?

Yes. Hard to say -- to give guidance on milestones. Where we are right now is we're going through all the regulatory requirements and starting to build out a compliance solution for dispensaries to provide this end-to-end service, right? And that's going to take some time. We think it's a massive opportunity in both the payments and the delivery side of it. Too early for me to give you guidance on the economics. But as we've shown and you've heard me say, we're -- we build profitable businesses, right? So I expect the economics to be as good, if not better, than our core business.

Next, we'll hear from Alex Fuhrman.

Terrific. I wanted to ask about the acquisition of Delivery Dudes. Can you talk about what makes this a good fit for Waitr? And then as you look forward to the next couple of quarters and years, is there going to be any heavy lifting in terms of integrating that into your business? Or is that pretty much a plug-and-play? Anything you can share with us about how that's going to impact your results would be helpful.

Yes, sure. Thanks. We're super excited about this addition. I've said in the past, we're going to look at strategic acquisitions as part of our growth strategy. And there's hundreds of these smaller operators out there that may bring us a contiguous market like Delivery Dudes did, they may bring more order flow. They may have an interesting niche in certain types of foods. Delivery Dudes has a little bit more upscale restaurant selection. I wouldn't say it's just like a caviar but it's that tier of restaurants. They have a great team, very entrepreneurial. They did a -- they've done a great job with their marketing and their messaging and from an integration perspective, it's not a heavy lift. It's a bolt-on from that perspective. And they're growing a lot faster than our core business, and they're doing that profitably with positive EBITDA. So it kind of checked all the boxes. A really good management team, great marketing, great brands, great restaurant selection. It's -- it adds to our presence in the state of Florida. It's pretty good stuff.

That's terrific. Carl, and then I also just wanted to ask quickly about some of the investments you're making in cannabis delivery. I know there's a lot of work to be done there, and it's early. But when do you think we might start to see some of that really coming to fruition? And can you just talk a little bit about the investments that you're making in that space.

Yes. So just like Kunal asked, it's too early for me to give you a time frame. We think that the opportunity in the cannabis industry in providing a solution that both encompasses payments as well as last-mile delivery is going to be mission-critical. We -- there's a lot of work to be done both on the regulatory compliance as well as putting together the pieces of the puzzle for that solution. I mean there's different requirements state to state on everything from the vehicles, to the employees, to the drivers. I mean it's tricky, and that's why I like it, right? Because ultimately, we're very early on this and a lot of companies that are out there profess to be doing a lot of different things that they're really just not even doing yet. And the most difficult part of it, right, is the driver logistics and being able to do that profitably, which we've obviously shown that we can do that. So yes, more to come on that. It's exciting.

(Operator Instructions) And it appears there are no further questions at this time. Mr. Grimstad, we will turn the conference back over to you for any additional or closing remarks.

Thank you, and thank you to all and thanks for your continued support. Have a nice evening.

That does conclude today's conference. We do thank you for your participation. You may now disconnect.