ARK RESTAURANTS CORP (ARKR)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 revenue was $43.41M (-2.2% YoY), net loss $(4.46)M and diluted EPS $(1.24); adjusted EBITDA was $0.50M as non-cash goodwill impairment ($4.0M) and an El Rio Grande closure loss ($0.876M) weighed on results . Company-wide same-store sales declined 3.6% in the quarter .
• Balance sheet resilience: cash $10.27M and total debt $5.24M at fiscal year-end; management is negotiating to term out remaining debt and renew the revolver .
• A notable near-term cash catalyst: Hard Rock Tampa food court lease termination for $5.5M; ARKR expects net proceeds of roughly $3.5–$4.0M to its balance sheet (after distributions to partners) .
• Operating backdrop remains mixed: Florida full-service softness and high insurance costs persist; labor cost pressures have stabilized; Alabama strong; Las Vegas “okay” with food courts performing well; DC Sequoia remains challenged but cash flow positive .

What Went Well and What Went Wrong

What Went Well

• Adjusted EBITDA positive despite non-cash charges: Q4 adjusted EBITDA of $0.50M vs $0.59M in prior-year Q4; full-year adjusted EBITDA $6.13M vs $9.27M in FY23 .
• Labor stabilizing: “pretty much labor… seems to have stabilized. We’re finding good people at price points… compatible” .
• Strategic progress and cash inflow: executed Tampa food court lease termination for $5.5M; net to ARKR expected ~$3.5–$4.0M, boosting cash and flexibility .

What Went Wrong

• Demand softness and margin squeeze: same-store sales down 3.6% in Q4; management cites Florida and DC revenue pressure, elevated insurance and occupancy costs .
• Impairments: $4.0M goodwill impairment (Bryant Park uncertainty) and prior $2.5M Sequoia ROU/asset impairment; El Rio Grande closure loss $0.876M .
• Pricing elasticity: reluctance to raise prices amid soft demand; commodity cost pressure (e.g., king crab) limiting ability to offset inflation .

Financial Results

Quarterly Headline Results

Year-over-Year (Q4 2024 vs Q4 2023)

KPIs and Operating Metrics

Note: Segment/geographic revenue breakdown not disclosed in press release/8-K; management commentary indicates Florida softness, DC challenges, Alabama strong, Las Vegas “okay” .

Guidance Changes

No formal quantitative guidance was issued for revenue, margins, OpEx, tax rate, or segment metrics in Q4 materials .

Earnings Call Themes & Trends

Management Commentary

• “We ended the year with $10.3 million of cash and $5.2 million of debt… discussions with the bank to extend our credit agreement and term out the rest of that debt… renew the capacity of our existing credit line.” — CFO .
• “Labor… seems to have stabilized… we’re finding good people at price points… compatible… We still see challenging revenue environments in Florida and in Washington, D.C. Alabama is good. Las Vegas revenues are okay.” — CEO .
• “We’re getting $5.5 million [for Tampa]. Our net will be roughly $3.5 million to $4 million… The property was cash flowing $700,000…” — CEO ; transaction terms disclosed in press release .
• “We also had an additional goodwill impairment of $4 million… as the Bryant Park situation continues to unfold…” — CFO ; press release details RFP context .

Q&A Highlights

• Florida strategy and margin dynamics: Management emphasized reluctance to raise prices amid soft demand and commodity inflation (e.g., king crab), focusing on payroll efficiencies and social media marketing to drive traffic .
• Tampa termination proceeds and structure: ~$5.5M payment to Ark Tampa, ~35% of net proceeds to limited partners, ARKR net ~$3.5–$4.0M; food court EBITDA ~$700k annually prior to termination .
• Non-cash write-downs: Goodwill $14M over two years plus Sequoia $2.5M, totaling ~$16.5M; Sequoia remains cash flow positive .
• Lucky Pig scalability: Concept opened at New York-New York food court; expanding menu (dumplings), evaluating placement in New York/Philadelphia and other casinos for scale .
• Bryant Park exposure: Potential ~$3.5–$4.0M EBITDA hit if not renewed; ethical considerations for staff and potential office restructurings discussed .

Estimates Context

• S&P Global consensus estimates for Q4 2024 EPS and Revenue were unavailable at the time of this analysis; therefore, a beat/miss assessment versus Wall Street consensus could not be performed. Values retrieved from S&P Global.*

Key Takeaways for Investors

• Near-term cash inflow from Tampa termination (~$3.5–$4.0M net to ARKR) supports liquidity and refi conversations; expect a gain in the subsequent period, subject to regulatory approval .
• Operating backdrop mixed: Florida full-service softness and elevated insurance costs persist; labor pressures stabilizing; food court units outperform relative to full service .
• Balance sheet conservatism remains: Cash $10.27M, debt $5.24M; management actively pursuing debt term-out and revolver renewal to de-risk June 2025 balloon .
• Bryant Park is the key swing factor: Continued RFP uncertainty prompted a $4.0M goodwill impairment; outcome could materially impact EBITDA trajectory and capital allocation .
• Non-GAAP adjustments (impairments, closure loss) materially affected GAAP profitability; underlying adjusted EBITDA positive though down YoY .
• Strategic optionality: Lucky Pig brand initiative progresses; management evaluating brand acquisitions and automation to enhance throughput and offset labor constraints .
• Trading implication: Potential stock catalysts include Tampa cash receipt, clarity on Bryant Park lease, and visible progress on debt refinancing and brand scaling; operating improvements likely tied to demand recovery and cost normalization .