Twin Hospitality Group Inc. (TWNP)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 revenue was $86.5M, down 8.2% YoY mainly due to a 14th week in the prior-year quarter ($6.5M), lower same-store sales, and temporary Smokey Bones closures for conversions; net loss was $12.0M and Adjusted EBITDA was $4.1M .
• Restaurant-level contribution margin fell to 8.1% (Twin Peaks 14.4%, Smokey Bones 0.5%); interest expense and a $2.4M loss on extinguishment tied to refinancing weighed on results .
• Management highlighted progress on conversions (Lakeland exceeding expectations; Brandon off to a strong start) and guided to 9–11 Twin Peaks openings and two additional conversions in 2025; commodity inflation expected low single digits in 2025 .
• Capital structure change: credit facility refinanced into a 30-year securitization; obligation to raise $100M of Twin Peaks equity by October with 75% used to pay down debt (timing/structure subject to market conditions), a potential stock overhang .

What Went Well and What Went Wrong

• What Went Well

  • Conversion performance and pipeline: “Our first Twin Peaks conversion… Lakeland, Florida… more than doubled its sales… to a current annualized run rate of approximately $8,000,000; our second… Brandon, Florida… is off to a strong start” .
  • Unit growth and franchise development: nine new lodges opened in 2024; four area development agreements signed, pipeline now over 100 lodges; targeting 9–11 openings in 2025 .
  • Strategic refinancing: moved to a 30-year securitization facility “stabilizes Twin Peaks’ financial structure” and supports $25M in new store financing .

• What Went Wrong

  • Margin compression: restaurant-level margin down to 8.1% (TP 14.4%, SB 0.5%), with deleverage from lower sales and conversion-related closures; G&A rose on $5.0M store closure reserve .
  • Higher other expense: interest expense and a $2.4M loss on extinguishment increased total other expense to $13.3M vs. $8.1M in the prior year .
  • Same-store softness and weather: Twin Peaks SSS declined 0.6% in Q4; early 2025 quarter-to-date SSS -2.8% with weather cited as a headwind .

Financial Results

Segment and revenue mix (Q4 2024):

• Twin Peaks revenue: $51.4M; Smokey Bones revenue: $35.1M
• Company-owned restaurant sales: $77.617M; Franchise revenue: $8.864M

KPIs (Q4 2024):

• System-wide sales: $184.0M; Twin Peaks SWS: $148.9M
• Twin Peaks same-store sales: -0.6%; two new lodges opened in Q4
• Advertising expense: $4.671M (5.4% of revenue); G&A: $12.072M (14.0% of revenue)

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We expanded our footprint opening nine new Twin Peak lodges… signed four area development agreements… increasing our development pipeline to over 100 lodges… targeting approximately nine to eleven Twin Peaks openings [in 2025]” — CEO Joe Hummel .
• “Lakeland… more than doubled its sales… to approximately $8,000,000 annualized; Brandon… opened this month and is off to a strong start. We project completing two additional conversions in 2025.” — CFO Ken Kuick .
• “We refinanced our credit facility to a new 30-year securitization facility… stabilizes Twin Peaks’ financial structure and provides… $25,000,000 in new store financing.” — CFO Ken Kuick .
• “Our rolling price… slightly over 200 bps. We’re mindful to avoid further pricing… the consumer is a bit tired of pricing… we will drive efficiencies in other areas.” — CEO Joe Hummel .

Q&A Highlights

• Pricing approach: modest prior pricing (~200 bps) with restraint going forward; emphasis on barbell value vs margin preservation .
• Conversion capex: typical range $4.3M–$4.7M per site vs $6.5M–$7.5M for ground-up, supporting ROIC and faster time-to-market .
• Development cadence: expect a gap in Q2 while builds commence, then openings reaccelerate in late Q3–Q4 2025 .
• Smokey Bones rationalization: nine underperforming closures expected in 2025; conversion plan to continue; near-term drag on SB margins acknowledged .
• Capital plan: obligation to raise $100M of equity by October with 75% of proceeds toward debt paydown; flexibility to consider preferred structures if common equity pricing unfavorable .

Estimates Context

• Wall Street consensus from S&P Global for Q4 2024 EPS/revenue was unavailable due to access limits during this review. As a result, we cannot quantify beat/miss vs consensus for Q4 2024. If needed, we will refresh and include S&P Global consensus in an updated comparison.

Key Takeaways for Investors

• Q4 2024 headline softness was primarily calendar-related (missing the prior-year 14th week), plus temporary Smokey Bones conversion closures; underlying Twin Peaks unit growth and franchise pipeline remain intact .
• Margin pressure stems from deleverage and conversion costs; management targets ~16% restaurant-level margins for new Twin Peaks units by year three, suggesting medium-term margin normalization as units mature .
• Conversion economics look attractive ($4.3M–$4.7M capex vs ground-up), with early performance outpacing prior Smokey Bones volumes—supporting returns and faster ramp .
• Interest burden and refinancing costs were meaningful (interest expense $11.1M; $2.4M loss on extinguishment); capital structure is being repositioned via securitization and a required $100M equity raise, which could be a near-term stock overhang depending on structure/timing .
• Traffic catalysts are aligned to the sports calendar; management plans targeted marketing and promotions to counter weather-driven demand variability and to support SSS stabilization in 2025 .
• Watch near-term Smokey Bones closures/conversions: they may pressure consolidated margins before the Twin Peaks mix shift drives improvements; track restaurant-level margin progression and conversion throughput each quarter .
• Action: focus on unit opening cadence (9–11 in 2025), conversion throughput, SSS trends, and capital plan execution (equity raise structure) as primary drivers of narrative and stock reaction over the next 3–4 quarters .

Citations:

• Q4 2024 press release and financial tables
• Earnings call transcript (Feb 27, 2025)
• Q2 2025 10-Q and comparative Q2 2024 results
• Q3 2025 10-Q and comparative Q3 2024 results
• Q1 2025 10-Q and Q1 press 8-K (comparatives/context)
• FY 2024 10-K (inflation, risks, model details)