The ONE Group Hospitality, Inc.

And welcome to the one group fourth quarter 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, You may press star then one on a touchstone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Manny Hilario, the CEO. Please, Manny, go ahead.

Thank you, Operator, and hello, everyone. Before we begin our formal remarks, let me remind you that part of our discussion today will include forward-looking statements. These forward-looking statements are not guarantees of future performance, and you should not place undue reliance on them. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Please also note that these forward-looking statements reflect our opinion only as the date of the call. We undertake no obligation to revise or publicly release any revisions of these forward-looking statements in light of new information or future events. We refer you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial conditions. During today's call, we will discuss certain non-GAAP financial measures which we believe can be useful in evaluating our performance. However, the presentation of these measures or other information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. For reconciliations of these measures, such as adjusted EBITDA, adjusted net income, restaurant operating profit, comparable sales, and total food and beverage sales in owned and managed and licensed units to GAAP measures, along with a discussion of why we consider these measures useful, please see our earnings release issued today. With that, I'd like to turn the call over to Manny Hilario. Manny?

Thank you, Tyler, and hello, everyone. We sincerely appreciate you joining us today and for your interest in the one group. Let me begin by thanking all of our team members for their hard work providing world-class operations across all of our restaurants. Our team members help to bring our mission to life every day which is to be the best restaurant in every market that we operate, by delivering exceptional and unforgettable guest experiences to every guest every time. It is because of our teams that we have been able to strengthen our leadership position in Vibe Dining, both high-end and upscale casual, and that we can have great confidence moving forward. 2022 was undoubtedly a good year for the one group. We increased revenue 14.2% to $316.6 million, which included a 10.8% increase in comparable store sales. Our focus on diversifying our customer base to include more social occasions has paid off, as demonstrated by our ability to own the holidays and date nights. For the fourth quarter, while we were negatively impacted by the weather, and subsequent travel delays in December, we're overall very pleased with our holiday performance, resulting in $13 million in adjusted EBITDA for the quarter, driven by store-level margins of almost 19%. In addition, we are starting to see the return of the business clientele as people are returning to work offices in the urban areas where our restaurants are located, and there has been an increase in demand for our corporate and off-site events. Additionally, we are noticing more convention activity, especially in cities like Orlando, Scottsdale, and Las Vegas, and we have deployed our sales force to aggressively pursue these opportunities. Maybe most importantly in 2022, we built an incredible pipeline of development that we expect will deliver double-digit revenue and adjusted EBITDA growth going forward. This past year, we saw that pipeline begin to materialize as we opened two company-owned SDKs in San Francisco and Dallas and one managed SDK in Stratford, our third in London, and a virtual reef kitchen located in Austin, Texas. Since opening, our two new company-owned SDKs, San Francisco and Dallas, have averaged approximately $350,000 in sales per week. This is significantly above our SDK investment model of roughly $154,000 per week. On the average, we expect to have less than a one-year payback for these locations. We have continued this momentum into 2023 with the opening of a new design Kona Grill in Columbus, Ohio and the Eastern Town Center in January. This is the first new Kona Grill we have opened since acquiring the brand and it is a big step in what we expect will be a large expansion for Kona Grill. This restaurant has opened averaging approximately $115,000 per week, again, facing ahead of our investment model, despite opening in what is typically our slowest part of the year. Additionally, we recently opened a new rooftop at the SDK in Scottsdale, Arizona, ahead of the Super Bowl, which was held in Phoenix last month. This is the fourth significant domestic SDK rooftop in our portfolio and features both the patio and fireplace, along with a great view of the canal. The vast size and open floor plan make the space extremely versatile and capable of being transformed to accommodate a wide array of events. We are encouraged by the incredible start for this new rooftop. Lastly, we have recently opened two additional Reef Kitchen locations in Austin, bringing to a total of three vessels as we evaluate future expansion. As we look forward to the rest of 2023, we have an incredible pipeline of high-quality real estate, the best in the history of the company. Despite a challenging construction environment, 2023 will be an extremely busy year as our intention is to open eight to 12 new venues. For the remainder of the year, we plan to open two to four additional corner grills in the following cities, Riverton, Utah, Phoenix, Arizona, Henderson, Nevada, and Tigard, Oregon, and three to five new company-owned SDKs in the following cities, Charlotte, North Carolina, Boston, Massachusetts, Washington, D.C., Aventura, Florida, and Philadelphia, Pennsylvania. Finally, we plan to open one managed or licensed SDK. When factoring in our 2022 and 2023 openings, along with our immediate pipeline thereafter, including asset by development, we anticipate a significant increase in run rate revenues and run rate adjusted EBITDA by the end of 2023. As we have long stated, our growth story has just begun. We foresee a total addressable market of at least 400 restaurants, including 200 SDK restaurants globally, and at least 200 corner grills domestically. Over the long term, the target is five to six new SDKs, three to five new corner grills, and one F&B venue per year. This will be a blend of owned units and managed and licensed units. which requires lower capital investment and produces high margin royalty, management, and incentive fee streams. To conclude, I'm pleased with our 2022 results, despite a very challenging restaurant environment, and our team is doing a fantastic job. Now, I'll turn the call back to Tyler.