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spk03: Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Fat Brands, Inc. Third Quarter 2021 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode. The lines will be open for your questions following the presentation. Please note that this conference is being recorded today, November 4th, 2021. On our call today from Fat Brands, our President and Chief Executive Officer, Andy Wiederhorn, and Chief Financial Officer, Ken Kiewik. By now, everyone should have access to the earnings release, which can be found on our investor relations website at ir.fatbrands.com in the press release section. Before we begin, I need to remind everyone that part of our 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 upon them. Actual results may differ materially from those indicated by these forward-looking statements, due to a number of risks and uncertainties. For a more detailed discussion of the risks that could impact future operating results and financial condition, please see today's earnings release and our recent SEC filings. During today's call, the company may discuss non-cap financial measures, which it believes it 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 earning release. I would now like to turn the call over to Andy Weiderhorn, President and Chief Executive Officer.
spk01: Thank you, Operator, and good afternoon, everyone, and thank you all for joining us on the call today. I'm hopeful that everyone is continuing to stay safe and healthy. This afternoon, we made our third quarter 2021 financial results publicly available. Please refer to the earnings release in our earnings supplement, both of which are available in the investor section of our website at www.fatbrands.com. Each contain additional details about the third quarter, which closed on September 26th. I'm particularly excited to talk to you today about our recent acquisitions, M&A strategy, resulting synergies, and we are seeing a continued strong brand performance that has driven solid operating results. In the third quarter, our franchise partners continued to report improving sales, and in some instances, sales are in line with or above pre-pandemic levels, indicating the strength of our brand accompanied by a continued return to normalcy within the industry. Our growth reflects the hard work and efficiencies of our franchise partners and employees, and as local dining room restrictions ease further and capacity restraints subside, we expect our brands to continue building on these well-earned gains. We are incredibly proud of our restaurant operators and franchise partners for successfully navigating through this challenging restaurant environment. While COVID is not completely in our rearview mirror and there is work to be done within the system, I'm pleased to report that our portfolio of brands, including those recently acquired, performed well during the third quarter of 2021, posting system-wide sales growth of 30% over the third quarter of 2020, driven by increases for Elevation Burger of 51%, Great American Cookies of 25%, Hot Dog on a Stick of 241%, Johnny Rockets of 104%, and Pretzel Maker of 74% over the same period last year. On a same-store basis, we've seen a similar trend of 16% growth in the third quarter of 2021 compared to the prior year quarter, driven by increases of Elevation Burger of 51%, Fat Burger of 14%, Buffalo's of 13% and Hurricane of 17% over the same period last year. While we do not include acquired companies or concepts in our consolidated same-store sales calculations until we have owned them for a full fiscal year, our recently acquired brands have had strong performance during the third quarter of 2021 as well. On a same-store basis, Johnny Rockets increased 70%. compared to last year's quarter, while Great American Cookies increased 23%. Hot Dog on the Stick increased 68%, Marble Flab Creamery increased 25%, Pretzel Maker increased 50%, and Round Table Pizza increased 9%. More importantly, when comparing same-store sales from the third quarter of 2021 to the third quarter of 2019, we saw continued performance at Buffaloes and Hurricanes increasing 14% and 18%, respectively. While Elevation Burger had its first quarter of positive same-store sales growth, posting 5% growth over the third quarter of 2019, and domestic locations saw an increase of 4% at Fat Burger. On a consolidated basis, which again excludes recently acquired brands, same-store sales increased 4% in the third quarter of 2021 compared to the third quarter of 2019. We are encouraged to see a continued reopening of restaurants that were temporarily closed as a result of COVID. As of the end of the third quarter, 52 locations across the system, excluding the recently acquired concepts, remained temporarily closed to COVID compared to 63 at the end of the second quarter and 107 at the end of the first quarter. With scheduled reopenings anticipated throughout the fourth quarter of 2021, we believe we will see continued top-line revenue improvement through the remainder of 2021. Even with the reopening of dining rooms, delivery sales are showing resilience facilitated by the rollout of OLO, chow we and hunger across our portfolio augmenting these continuing operating performance improvements of the currently owned locations both new construction and franchise sales are stronger than we've seen in many years if not ever our franchisees opened 25 new locations in the third quarter and a total of 59 locations year to date with another 26 anticipated to open through the end of 2021 that will be in addition to approximately three new twin peaks sports lodges that will open still this year, bringing the grand total to 88. Turning to the development pipeline, during the third quarter, including Global Franchise Group, but excluding Twin Peaks and Fazoli's, we signed nine new deals, including a 200-unit development agreement in the Middle East and a 25-unit development agreement in Illinois. That brings the year-to-date total to 32 deals and our total pipeline 581 locations, 157 of those are GFG. Add to that number 117 up-and-coming Twin Peaks locations and 114 up-and-coming Fazoli's locations, and the total pipeline exceeds 800 additional units or growth of another 33% in unit count organically. I'm sure I don't need to point out that the organic growth is free versus acquisitions, so we are equally as focused on executing on this vertical. Also, we anticipate continued success as we cross-sell our concepts to the franchisees of recently acquired brands. The performance of our existing franchisees is very promising, and we are looking forward to their continued recovery. Equally important to our corporate strategy is the growth of our platform, fueled by the identification and addition of new restaurant concepts. On October 1, we completed the $300 million acquisition of Twin Peaks and are thrilled to welcome the sports lunch chain into the SAP brand's families. With the acquisition of Twin Peaks and its 84 locations across 25 states, we have further diversified our growth and the restaurant portfolio in general and entered into a new restaurant category, polished casual dining. As we've alluded to previously, through our acquisition growth strategy, we are looking to identify brands that complement our current portfolio while delivering high AUVs and appealing growth pipelines. Twin Peaks checks those boxes with top-tier AUVs in the range of $5 to $6.5 million and and I believe we can grow this brand globally at a swift pace. As a result of the acquisition of Twin Peaks, we expect post-COVID-19 normalized EBITDA to increase by approximately $25 to $30 million. More specifically on synergies, we see significant opportunities given our gigantic purchasing power of more than $600 million a year in food, beverage, and paper, as well as cross-selling opportunities between our now 16-brand portfolios. Lastly, I would like to comment on a Fazoli's acquisition, which we were very excited to announce on Tuesday of this week. We acquired Fazoli's, known for its freshly prepared pasta, submarino sandwiches, and unlimited signature breadsticks from Sentinel Capital Partners for $130 million, funded with cash from the issuance of new notes from our securitization facilities. This is our first endeavor into the Italian dining category, yet we have been eyeing the category for a long time in search of the right brand and know that we found the right one in Fazoli's. They have 214 stores currently open with 114 units in the pipeline to be developed in the next several years, and their recent performance has been outstanding. The mix of restaurants is approximately two-thirds franchised to one-third corporate-owned. This transaction checked our boxes in being a high-growth brand with numerous identifiable synergies. We view this transaction as a fantastic addition to our rapidly diversifying group of brands in the fat families. It's important to note that we plan on leaving both the Twin Peaks and Fazoli's management teams in place to run these businesses and execute on their growth pipeline rather than trying to integrate them and wring out some synergies that could just risk disrupting their momentum. The incremental synergies pale in comparison to the added royalties from successfully executing on the new unit opening plans. As we guide in our press release, as a result of the Fazoli's transaction, we expect 2022 system-wide sales at BAT to rise to over $2.1 billion and expect FATS post-COVID normalized EBITDA to increase by another $14.5 to $15 million in 2022. The transaction is expected to close by mid-December. This should bring our normalized post-COVID EBITDA, including Twin Peaks and Pizzoli's, to approximately a $95 million run rate for 2022 whenever we get the rest of the restaurants back open and COVID dies down. but it's likely that that will make a full calendar year of 2022 as we hit those numbers. On the acquisition front, we are still in the early innings. This has been an exciting and aggressive year so far in our growth strategy, and we remain active in evaluating additional acquisition candidates to augment our existing brands. We also still anticipate the opportunity to further refinance our securitization facilities in the coming year, thus significantly lowering our cost of capital even further. Third quarter marked yet another successful quarter in 2022 for FAP Brands, and it wouldn't be possible without the hard work of our team members, our franchise partners, and their employees. I'd like to express my utmost appreciation to all of you for constantly delivering during this unique time. I'd also like to welcome the Twin Peaks and Pizzoli's teams into the FAP family. We look forward to finishing off 2021 strong here at FAP and heading into 2022 with positive momentum. With that, I'd like to hand it over to Ken Kiewik to talk about our financial highlights from the quarter.
spk04: Thanks, Andy. I'll touch on our capital structure and then discuss the financial highlights of the third quarter and provide some insight into our expectations for normalized performance. As we mentioned on last quarter's earnings call, in connection with the acquisition of GFG in the third quarter, we issued $350 million of new notes comprised of three tranches with a weighted average interest rate of 6.8%, 3.1 million shares of Series B cumulative preferred stock, and 2 million shares of common stock. In connection with the acquisition of Twin Peaks in the fourth quarter, we issued $250 million of new notes comprised of three tranches with a weighted average interest rate of 8% and 2.8 million shares of Series B cumulative preferred stock. This brings our total securitization facilities to $744.5 million with a weighted average interest rate of 7.04%. Future issuances of our Series B cumulative preferred stock and our common stock are available to us, which would provide us with additional flexibility to fund potential acquisitions, further reduce our cost of capital, and drive shareholder value. Turning to our financial highlights, total revenue during the third quarter increased 628% to $29.8 million, reflecting revenue from global franchise group acquired during the third quarter of 2021, revenue from Johnny Rockets acquired during the third quarter of 2020, and the ongoing recovery from the negative effects of COVID-19 on restaurant royalties. Costs and expenses increased to $27.4 million in the third quarter, compared to $4.9 million in the year-ago period. The acquisition of GFG was the primary driver of the increase in costs that included restaurant and factory operating expenses, acquisition costs, and higher G&A costs as we begin working on realizing the synergies from the acquisition. Additionally, advertising expense increased to $5.5 million in the third quarter compared to $0.8 million in the prior year period, reflecting advertising expense related to GFG and Johnny Rockets, as well as increased customer activity as the COVID recovery continues. Other expense was $7.2 million in the third quarter, primarily comprised of interest expense. Gap net loss for the quarter was $3.6 million, or 26 cents per diluted share, compared to a net loss of $.6 million, or 4 cents per diluted share in the prior year period. We also report our net loss on an as-adjusted basis, which excludes the after-tax impact of impairments refranchising activities, acquisition costs, and losses on extinguishment of debt. And on an as-adjusted basis, our net loss was $2 million, or 14 cents per diluted share, compared to net income of $0.3 million, or 2 cents per share, in the same period last year. While we're not providing specific guidance on this call, I can provide some color regarding a revenue run rate on where we anticipate beginning 2022 using 2019 as a guideline for pre-COVID performance. As we discussed during our second quarter earnings call, normalizing our 2019 top-line revenue for a full year of ownership of Elevation Burger and adding pre-pandemic franchise revenue of Johnny Rockets, we would have anticipated seeing total top-line revenue of $34 to $36 million. Adding on pre-pandemic revenues for the GFG Brands, we would anticipate seeing an additional $55 to $65 million. And further, as we add in the expected revenue contribution from Twin Peaks and Fazoli's that Andy mentioned earlier, we would anticipate a normalized total annual revenue run rate of over $140 million exiting 2021 and going into early 2022. And with that, operator, please open the line for questions.
spk03: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for your questions. Our first questions come from the line of Joe Gomes with Noble Capital Markets. Please proceed with your questions.
spk05: Good afternoon, Andy and Ken.
spk04: Good afternoon. Hi, Joe.
spk05: So maybe we'll start with, you know, Fazoli. It's just, you know, maybe you give us a little more color as to how that all came about. You know, is there any crossover there with, you know, the roundtable, you know, In price, if you looked at $130 million price on the roughly $15 million of normalized EBITDAs, roughly a nine multiple, how comfortable are you with that? Do you think that will come down with you seeing any synergies there?
spk01: I think that, first of all, the facilities acquisition is really exciting for us. Getting another QSR brand that is 99% drive-through, It's uniquely in the Italian space. There's really nobody else that's squarely in that space with all the different pastas and breadsticks and meatballs and sandwiches and things like that. We think it's a great addition to the portfolio. And right now it's predominantly in the Midwest, and it's not everywhere that it could be when we offer it to our other franchisees. And we have 750 franchisee partners in the system, and offering them the chance to open fazoles in different markets I think will be you know, a big opportunity. With regards to the growth story, you have to step back and think about the growth story at Fat Brands today. We have more than 400 units in our growth pipeline at Fat Burger and Buffalo's Express. We have over 150 in the Global Franchise Group portfolio, primarily at the cookies and ice cream brands. And then at Twin Peaks, we have well over 100 units planned for growth, and now Fazoli's 100 units. So, The growth story is significant here. I mean, we will grow over the next few years by another 33% to 40% organically, which is free compared to buying or making additional acquisitions, which we'll still make. But what was attractive about Fazoli's is they have 214 units open and 114 more in their pipeline, and it's in the QSR space. And they have great net operating metrics at the store level. And I think just having the drive-through component And the fact that it's so regional today compared to being fully national is a big opportunity for us. So I think that nine times is probably even a little high compared to what it will end up being based on the incremental contribution to the bottom line once some of these additional stores get open.
spk05: Okay, great. Thanks for that. And you mentioned it's about two-thirds franchise, one-third retail. corporate-owned. I mean, where do you stand now on the corporate-owned? I think you mentioned in the past you were planning on keeping the Twin Peaks corporate-owned stores, but what about the remainder of the stores? Are you still thinking you'll likely franchise those? What kind of plan are we there?
spk01: Well, so if you think about it, out of 2,100, 2,200 restaurants, whatever the number is today, and we have maybe 100 company-owned stores including Twin Peaks and Fazoli's and a few hot dogs and sticks and stuff like that. We did re-franchise almost all the Johnny Rockets already. Almost all the round tables are gone. There's just three or four left. But on the Fazoli's front, I think it's going to be a function of price and in terms of is it worth giving up that company-owned store cash flow? Can we get a multiple that's reasonable to re-franchise those stores? and focus the operations. It's already set up to run those stores. There's a geographic concentration right around their corporate headquarters, so I don't think it's difficult to keep them. It just may not make financial sense to sell them, but it's such a small percentage of the total revenue stream or total EBITDA that we'll just have to see how the valuations turn out when we start talking to franchisees.
spk05: Okay. During the year, you guys, as you mentioned, you've signed a lot of agreements in the Middle East, France, I think some in Latin America. Maybe you could just touch a little bit more on those and how you see all of those unfolding today.
spk01: So our franchise sales are just on fire. We haven't sold this many units in a single year ever. And I think that's true of the acquired brands as well. In other words, they had sales that were on fire as well. And there's some connection there, I'm sure, to the pandemic and people saying, hey, I want to own my own business. I don't want to go back to work wherever I was working. That's some of it. That's sort of the mom and pop side of it. But we're seeing multi-unit operators come in and sign 10 store development deals, 25 store development deals, 40 store, 50 store development deals, and of course, the one in the Middle East with 200 units, 136 brick and mortar locations, and 64 ghost kitchens. So The fact that we now have 16 brands to offer our franchise partners, they only have to deal with one franchise or they can go down the menu and pick and choose what concepts they want for their particular area because in some areas they might have built all the fat burgers that can fit in that area, but hey, a Twin Peaks would go great there or a Fazoli's would go great there because they have their management teams put together. So I think that ability to cross-sell our brands to the franchise partners everywhere 750 of them is really a cool opportunity.
spk05: Okay. And one more, if I may, and then I'll get back in queue. So obviously one of the big questions for everybody these days is supply chain and inflation. And just wondering, are you seeing any issues with either of those?
spk01: So absolutely we have the same headaches that everyone else has. The labor market is annoying to say the least as to, you know, where did all these employees go? When are they coming back? You know, we're seeing them come back in some markets. California just, you know, a month ago gave away more stimulus checks. So that kicks the can down the road a little bit and makes it more difficult. But we are seeing, you know, here's where it's harder. On the new operators, the guys that are opening their first restaurant, they have challenges to find managers for their restaurants. The guys that are multi-unit operators, they have a management team already and they can move their people around and pay some overtime and make it work. But it's harder on the new store openings. You recruit and you interview 10 people and three of them qualify, only three, and then trying to get one of those three to take the job is a whole other program. So that's a problem. On the food side, on the supply chain side for true, not labor, but food, there's all the usual headaches, whether it's trucking or whether it's outages or it's prices. We're very firmly... focusing our franchisees on taking price you know we've seen a four percent increase generally across the board we've seen some shortages some like an out premium alcohols we've had you know problems in some of the markets getting the right tequila the right bourbon or whatever but it's solvable it's just annoying and then you get into um you know the price increases and if you think about it look price is going up isn't bad for the franchisor right we get even more royalties But you have to encourage the franchisee to take margin, take price so they maintain their margin. Otherwise, they'll get squeezed. And of course, the same thing is true for our company on stores. So we're trying to balance that. It's not really causing any giant disruption. But the other place where it really affects you is on new store construction where if we're trying to build new restaurants, sometimes we can't get the equipment in time. It's delayed a month or two, like freezers or refrigerators, things like that, where we just can't open because we don't have the right equipment. But the labor side, we've been able to kind of muscle through it. It's just a little bit more work. And on the food side, food supply chain side, you know, it's there. It's just, again, it's a function of price.
spk05: Thanks for that, Andy. Congrats on all that's happened this year. We're looking forward to the rest going forward. Thank you.
spk01: Thank you, Joe. Next question operator.
spk03: Thank you. As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. Our next questions come from the line of Greg Fortunoff. Please proceed with your questions. Hey, Andy, how are you?
spk01: Hi, Greg.
spk02: Hey, Ken, how are you? You covered a lot in your opening statement, so I'm just going to bounce around a little bit. Andy, when you say there's 800 organic units, what's the time frame? I mean, obviously, they're all not opening today. Is it a three-year, five-year?
spk01: What's the run rate on that kind of... It's in between three and five years. Some of the development agreements are three years, but just think about it as five years. And look, not everybody opens every agreement that they sign up for and pay for, but if you had 800 more units open, that's like another 50 million of royalties. If only half of that comes online, it's still another 25 million. So it's just very significant, and we're... selling new stores every year. So the financial impact of adding additional stores every year at this stage where we have this big a pipeline and we add 100 stores a year. I always used to say that we wanted to grow by 10% a year organically. That was when we had 300 restaurants and then 600 restaurants. At 2,000, 2,300 restaurants, whatever the number is now, I don't know that we'll get 200 stores open a year, but we'll get 100 and something open a year, and let's see how that goes. And even that's a very powerful dynamic.
spk02: Yeah, organic growth is always good. Are you losing any stores? I mean, that's one thing. I mean, is that something you're seeing now, or is that not really a big – That's a good question.
spk01: You always lose a little bit. Leases expire. Franchisees hang up the towel once in a while, but it's a couple percent. It's not a big number. Our new store openings far exceed our closures. We went through the worst of it. We had the biggest bang at Ponderosa and Bonanza where we lost quite a few stores, 24 of them in Puerto Rico, but those stores were only paying us three-quarters of 1%. That's something we inherited, so it was only a couple hundred grand out of $300 million in revenues for next year. It's really insignificant on the closure side, thank goodness. We don't really feel that we have any weakness in the franchise system of any of the brands. You know, you always have one or two stores where something's going on, but it's not a systemic problem in any of the brands.
spk02: Okay. Andy, this quarter you had, I believe it was $7.2 million of adjusted EBITDA. So for 2022 to run at that, you know, $80 to $100 million, you need to start doing like next quarter needs to be like in the $20 range or something. Is that what we're going to see, that kind of progression?
spk01: Yeah. So we acquired EBITDA. Twin Peaks on October 1, which is like one week into the fourth quarter. So we should get 12, not 13 weeks of revenues and earnings out of Twin Peaks. And there are just a few stores in Twin Peaks that opened in Q4, so we won't get a full quarter of those stores. And on the global franchise group side, we've rung out quite a bit of synergies, probably close to 5 million already, but I think there's a total of 10 million of synergies to be realized there. Remember that we have this factory there which makes more than $15 million a year by itself, and it's only running at one-third capacity. So we fully intend to put more production through that factory and get that EBIT off from the factory up to $30 or $40 million, and then we can decide how we grow that business from there. But there's a big opportunity there as well. So I think what we'll see in Q4 is something closer to a $15 million quarter with the addition of Twin Peaks, And then we'll get the full synergies in 2022, and we still have these 50 restaurants closed that we hope to have back open, like cruise ships or amusement parks, things like that, where they're still closed, and a bunch in some foreign countries where they're still closed. So I think we'll see a very strong fourth quarter reflecting a lot of this growth. A lot of the noise will be out of the way. We won't have, obviously, very much of Fazoli's or any of Fazoli's will close in the last two weeks of the quarter. But otherwise, it should be a pretty normalized quarter and there won't be a lot of noise in it.
spk02: Right. So for 22, I should have said, for 22, starting in the first quarter, it's going to start looking like the $20 million EBITDA run rate.
spk01: Yeah, that's right. That's right. And it will grow because it's going to end up growing to close to 25 as we progress from there. That's right.
spk02: At that kind of run rate, will there be like an end-of-the-year bottom line gap profit? No. Do you know?
spk01: Yes, we are. So, yeah, we are absolutely positive cash flow and net income profitable, including for we should be for 2022. The only place where you see this lumpiness is when we refinance our securitizations or our debt facilities. And if you have fees that have been capitalized because they're required to be capitalized, then you have to expense them. And so they're lumpy. And we do you know that if we refinance the debt that we have today, the $744 million in securitization debt, and we fully intend to refinance and get that debt rated next year. That will save us some $20-something, $25 million that goes right to the bottom line. And we'll have some expense that we'll have to take for that, maybe $5 or $10 million, but we'll save $20-something million. So it will absolutely drop to the bottom line, and you'll see it be very profitable.
spk02: Okay, I just have two more quick ones. So you've used the statement – post-COVID normalized, like, a number of times. So when you say that, are you just talking about the stores that are closed, or is there something else you're expecting to happen to sort of take that out of your repertoire?
spk01: Well, yeah, like, look, trying to give guidance in COVID is difficult, because you never know if there's going to be an additional or a new closure, right? In some areas around the world, you've had closures all over again, and you have mandates where, you know, now we have, you know, the restaurant operators becoming the vaccine police to let customers into the restaurants and how much of a drop in sales might you see from, you know, from customers not being allowed into the restaurants without their proof of vaccination and so on. And so I just don't know what I don't know. And we all know what we've already experienced. And so the only safe way to position that guidance and that comment is just assuming things are back to normal, we all know what normal is and we're not quite at normal. We're pretty close, but we're not quite at normal. Assuming things are back to normal, that's what I mean. And we do have those stores to open. We have to assume we don't have new closures or new restrictions that are ridiculous, like, you know, six feet apart or 25% capacity or things like that, that, you know, I'm not sure how much of a difference it made anyway, but here we are. And so that's, that's what I mean by that. Great.
spk02: Okay. So last question. So if I'm a new investor and I start looking at fat brands, I see, you know, a certain amount of equity and a certain amount of debt. you know, someone like me who knows what's going, you know, been following the company, knows what your plan is, knows the comfort level with the debt and the coverage, you know, feels comfortable. But someone who might not know that well says, wow, look at this company. They have, you know, $744 million of debt and they only have $150 million of equity or so. Can you just give a little bit of a comment of why you're comfortable with that and you know, what the end game is here. I mean, obviously, you're not going to be the big debt little equity company forever.
spk01: That's right, and that's a good question, and thank you for that. So we've used our securitization facilities on an unrated basis to make acquisitions, which enables us to move very quickly, and we've had a great banking relationship with Jeffries, and they've really helped us there. And that's been a very good move up the food chain for us. As we move forward, we fully intend to get our debt rated, like I mentioned earlier. We had our debt rated earlier, a year ago at the very beginning of the pandemic when we completed our first securitization, that debt was rated BB by DBRS Morningstar. And the significance of that is it will really lower our interest rate expense, like I mentioned earlier, by some $25 million. To get rated, and as a conservative operating practice, we certainly want to carry less leverage long-term than we have today. Now, is that six times levered or five times levered or somewhere in there, six and a half? I don't know. It's somewhere in there that makes sense. And we are working hard on executing on that process today for some time in what will likely be Q2. I don't think it could be by the end of Q1. But I think you'll see us raise equity capital. We want to do it at the right price, right? We think we're trading at like 13 times today and we should be trading north at 20 times like where all the other franchisors are trading between 20 and 40. Just put us at the low end of that bracket and the equity should be significantly higher. So We want to see a transaction get done that will raise equity capital, will deleverage us. Now whether that means we raise capital and we pay down debt or we raise capital to make our next acquisition debt-free and then on an overall basis we're less levered, we're back in that five or six times place, that's exactly what has to happen. And we will do that and I think our investors know that, our debt holders know that as well. And I think the rating agencies will be happy with that and that will help us get that rating that we want. So all of those things lead to de-levering and more equity and that should be a self-fulfilling prophecy of increasing our stock price, etc.
spk02: Okay, thank you. I'm looking forward to 22.
spk01: Yeah, thank you very much. Operator, are there any other questions?
spk03: It looks like there are no more questions at this time. I'd like to turn the call back over to you for any closing comments.
spk01: Great. I just want to thank everyone for joining today's call. Please enjoy your evening. All of these remarks will be posted on the company's website, and there's an earnings supplement that you can view there to track any of the numbers that we discussed today. And, operator, that concludes our call for today.
spk03: Thank you, everyone, for joining today's call. Enjoy your evening. You may disconnect your lines at this time.
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