BurgerFi International Inc

Good morning, everyone, and thank you for participating in today's conference call to discuss BurgerFi's financial results for the fourth quarter and fiscal year ended December 31, 2021. Joining us today are Ian Bain, CEO of BurgerFi International, and Mike Rabinovitz, CEO of BurgerFi International. Following their remarks, we'll open the call for your questions. Before we begin today, I want to remind everyone this conference call may contain four looking statements, as defined in the Private Securities Litigation Reform Act, of 1995, including statements related to BurgerFi's estimates of its future business outlook, store opening plans, same-store sales and restaurant operating margin growth plans, prospects or financial results, including projected sales, restaurant EBITDA, or financial results from the company's acquisition of Anthony's Coal Fire Pizza and Wings. Forelooking statements generally can be identified by words such as anticipate, believe, estimates, intends, plans, predicts, projects, will be, will continue, will likely result, and similar expressions. These forward-looking statements are based on current expectations and assumptions that are subject to recent uncertainties which could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to differentiate include but are not limited to those discussed in our annual report on Form 10-K for the year ended December 31st, 2020, and when filed, our annual report on Form 10-K for the year ended December 31st, 2021, and those discussed in other documents we filed with the Securities and Exchange Commission. All subsequent written and oral forward-looking statements attributable to Burger Five or persons acting on Burger Five's behalf are expressly qualified in their entirety by the cautionary statements included in this conference call. We undertake no obligation to revise or publicly release the results of any revision of the forward-looking statements, except as required by law. Given these risks and uncertainties, listeners are cautioned not to place undue reliance on such forward-looking statements. Also, the following discussion may contain non-GAAP financial measures. For discussion and reconciliation of these non-GAAP financial measures, please see our earnings release for the fourth quarter and full year 2021. I would like to remind everyone that this call will be available via telephonic replay for two weeks starting today. A webcast replay will also be available via the link provided in today's press release as well as on the company's website at https semicolon forward slash forward slash www.BurgerFi.com forward slash. Now I would like to turn the call over to the CEO of BurgerFi, Ian Baines. Ian?

Thank you, Operator. Good morning, everyone. We're happy you can join us today, and I'm thrilled to be here as the CEO of BurgerFi. I want to take a moment to express gratitude for our entire team, as they have remained dedicated and continue to successfully navigate this very challenging environment. For those of you who are new to the company, I was previously CEO of Anthony's Cold Fire Pizza and Wing and affected November the 8th, I assumed the CEO role of the combined company. I'm very excited to combine these two premium brands. As a reminder, on November 3rd, 2021, BurgerFi closed on the transaction to purchase 61 corporate-owned premium casual dining locations operating under the name Anthony's Coal-Fired Pizza and Wings. Anthony's was a compelling opportunity for BurgerFi, given its strong profitability history and future potential and top-tier unit economics with average unit volumes of 2.3 million, sales per square foot nearing $700, and 19% restaurant-level margins on a pre-COVID basis. In addition to the outstanding opportunity from Anthony's core restaurants, we see additional long-term growth opportunities through a smaller concept footprint that we plan to franchise beginning this year and a virtual brand called the Roasted Wing. Furthermore, Anthony's was very attractive to BurgerFi as there is a significant overlap in geography with both brands, having a strong foothold in the Florida market and the opportunity to realize both cost synergies as well as revenue and strategic synergies. Through this transaction, we have strengthened our profitability, have access to greater competencies between the two brands, and leadership teams and elevated our potential growth. Behind efficient strategies and our dedicated team, integration of Anthony's into the BurgerFi system is going very well, and we've already begun to realize positive synergies from the business combinations. To that end, we plan to realize 2 million in cost savings as a result of our first wave of synergies in 2022. We have fantastic opportunities ahead for both brands, and I'm looking forward to leading the growth of the combined company moving forwards. Our long-term goal is to assemble a strong multi-platform growth company in the fast casual and casual dining industries. and I am thrilled with the progress we're making towards that end. The BurgerFi brand was recently recognized for the second year in a row as the top better burger fast casual chain in USA Today's 2022 10 Best Readers Choice Survey and the number one brand of the year in fast casual's top 100 movers and shakers list for 2021. I'll now turn the call over to our CEO, Mike Rabinovich, who will provide additional commentary on our performance for the fourth quarter and full year 2021 financial results. Mike, I'd like to turn the call over to you.

Thank you, Ian, and good morning, everyone. To start, I want to mention that our reported fourth quarter results include a full quarter of BurgerFi and two months of Anthony's results. Our fourth quarter total revenue continued to be impacted by COVID-19 and its variants, but we were still able to deliver an increase of 261% to $35.1 million in sales compared to $9.7 million in sales the year-ago quarter. Our strong revenue growth was driven by the addition of two months of Anthony's operations, which was acquired on November 3, 2021, new BurgerFi restaurant openings, and positive same-store sales, which were supported by new product innovation and a high retention rate on digital sales. For the BurgerFi brand, corporate-owned restaurants delivered a 5% increase in same-store sales during the fourth quarter, and our franchise locations performed very well with a 7% same-store sales increase. We're making significant progress in recouping our pre-COVID-19 sales levels. Compared to 2019, same-store sales in corporate-owned restaurants were flat and minus 4% for franchise locations for the fourth quarter. System-wide sales in the fourth quarter increased 23% to $40.7 million, compared to $33.2 million in the year-ago quarter, as our franchisees have continued to recover from the extremely difficult challenges we all faced during the peak of COVID-19. Overall, for the BurgerFi brand, digital channel sales comprised 36% of our system-wide revenue in the fourth quarter of 2021. We are very pleased to retain the vast majority of digital channel component of our business relative to peak COVID while our in-restaurant dining continues to recover. We will continue to invest in technology with the goal of delivering a more frictionless omni-channel experience to drive guest satisfaction and sales. We were not alone in feeling the inflationary cost of food, supplies, and labor this year. As a result, restaurant-level operating margins declined 340 basis points compared to that of the year-ago quarter. Turning specifically to Anthony's restaurants, we realized a 13.7 restaurant-level margin during the fourth quarter. While this is well below pre-COVID levels due to sales not yet being fully recovered and therefore not able to lever the restaurant operating expenses that are fixed in nature, We expect significant improvement in restaurant operating margins as sales continue their recovery, which for the two months ending December were still 6% below 2019, but higher than 2020 by 22%. In addition, with price increases, normalization of chicken wing prices, and procurement strategies recently implemented, We believe that we can recapture Anthony's strong restaurant-level margins of 19% when sales and inflationary pressures become normalized. Supporting this belief is that Anthony's has also retained a significant portion of its digital business, with 39% of their sales during our ownership. Moving on to pricing. Here in the short term, given pervasive inflationary pressures on food and labor costs, We took a price increase of 3.5% at BurgerFi company restaurants in mid-January, which follows a 4% price increase taken late last June. At Anthony's, we also took a 2% price increase in late January. We will continue to monitor our restaurant-level costs and pricing elasticity with an aim to drive normal operating margins in a more stable environment. We reported a net loss attributable to common shareholders in the fourth quarter of $117.3 million, which compares to a gain attributable to controlling interest of $6 million in the year-ago quarter. This loss primarily resulted from a non-cash impairment charges of $114.8 million, and to a lesser extent, certain investments made related to being a public company. Adjusted EBITDA in the fourth quarter was $2.6 million compared to $800,000 in the year-ago quarter. This year-over-year improvement was driven by the acquisition of Anthony's and BurgerFi revenue growth, partially offset by the investments related to being a public company and those to drive the growth and development of corporate-owned restaurants. Next, I'd like to recap our results for the full year 2021. Total revenue in 2021 increased 103% to $68.9 million, compared to 34% 34 million in 2020, driven by the inclusion from two months of Anthony's operations, the addition of new BurgerFi restaurants throughout the year, and a 14% increase in system-wide same-store sales. BurgerFi brand system-wide sales in 2021 rose 31% to $166.1 million for the year, compared to $126.9 million in 2020. Same-store sales for BurgerFi restaurants increased 14% and 15% in corporate-owned and franchise locations, respectively, and were supported by an increase in average check value, resulting from menu-nization at the end of the first quarter price increases instituted towards the end of the second quarter, and an improved selling environment as compared to when COVID-19 first impacted us in early 2020. Restaurant level operating expenses for 2021 were $50.4 million compared to $22.1 million in the prior year period. Restaurant level operating expenses as a percentage of sales improved for the full year 2021 by 110 basis points. compared to the full year of 2020, due to leverage from higher same-store sales on occupancy costs, which are relatively fixed in nature, offset by higher labor costs as a percentage sales. Net loss attributable to controlling interest and common shareholders in 2021 was $121.5 million, compared to a net gain attributable to controlling interest and common shareholders of $6 million in 2020. The loss resulted primarily from $114.8 million non-cash impairment charges, $7.6 million of non-cash share-based compensation expenses, $4.3 million of acquisition-related costs, $1.9 million of pre-opening costs, and the investments related to becoming a public company in December 2020. Adjusted EBITDA increased by 72% for the full year 2021, from $2.2 million in the prior year to $3.8 million in 2021. This growth was driven by two months of operations of Anthony's being included, which was acquired on November 3, 2021, revenue growth from new BurgerFi restaurants, and a 14% increase in BurgerFi brand system-wide same-store sales, partially offset by the investments related to being a public company. and the investments associated with the resources to support accelerated company-owned restaurant development. Moving on to our balance sheet. Our cash balance at the end of the year was $14.9 million compared to $37.2 million on December 31st, 2020. The difference in cash reflects the repayment and termination of our revolving line of credit of $3 million in the first quarter of 21. repayment of $9.2 million of debt associated with the acquisition of Anthony's, as well as capital expenditures of $10.2 million related to the construction of new corporate-owned restaurant locations. Next, I'd like to speak to our unit growth. During the fourth quarter, we opened six new BurgerFi restaurants consisting of three corporate-owned and three franchise locations. For the full year 21, we opened 16 new locations, which represented 13% unit growth. Further, we have opened six additional locations through March of this year and have another 14 under various stages of development. Most of the new locations are in markets we currently operate in, and as a result, we're excited about continuing to build on the strength of the brand in those areas. For Anthony's, We are developing a smaller 2,200 square foot prototype as a franchising alternative to the traditional 3,200 square foot footprint of the company-owned restaurants. This increases our optionality on sites, provides more attractive unit economics, and will expand Anthony's total addressable market. We look forward to providing updates over the coming quarters with our progressing growth of the Anthony's brand. Moving on to our outlook, we remain optimistic about our short-term and long-term prospects. While January was a more volatile sales month, given the surge of the Omicron variant, we have seen sales stabilize as the quarter progressed. For 2022, we are reaffirming our previous guidance, which includes annual revenues of between $180 to $190 million, which assumes a mid-single-digit increase in same-store sales, and the addition of 15 to 20 new restaurants. With respect to the breakout of franchise versus corporate locations, we expect most of the new stores to be franchise locations. We did see some slippage in the number of new unit openings last year, due to the challenges related to securing equipment, permitting, and construction delays, and scarcity of labor. That said, we are seeing a more robust store opening schedule here in the first half of 2022, resulting from these delays. In total, we are expecting capital expenditures to be between $3 and $4 million for the full year. Now, I'll send it back to Ian to discuss our growth plan and strategic initiatives going forward. Ian.