GEN Restaurant Group, Inc. (NASDAQ:GENK) Q4 2024 Earnings Call March 6, 2025 5:00 PM ET Company Participants Tom Croal - Chief Financial Officer David Kim - Chairman and Chief Executive Officer Operator Good day, and welcome to the GEN Restaurant Group, Inc. Fourth Quarter and Full Year 2024 Earnings Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference o ...

Revenue Performance - Total revenue for 2024 reached $208.4 million, a 15.1% increase from $181.0 million in 2023[5] - Fourth quarter revenue grew 21.2% year-over-year to $54.7 million, compared to $45.1 million in Q4 2023[8] - Revenue for Q4 2024 reached $54.654 million, a 21.1% increase from $45.108 million in Q4 2023[29] Comparable Restaurant Sales - Comparable restaurant sales decreased 5.6% for the full year 2024 and 4.8% in Q4 2024[13][8] - Comparable restaurant sales performance declined by 4.8% in Q4 2024, compared to a decrease of 0.2% in Q4 2023[31] Profitability Metrics - Adjusted EBITDA for 2024 was $16.7 million, representing 8.0% of revenue, down from $18.8 million and 10.4% in 2023[15] - Adjusted EBITDA for Q4 2024 was $2.056 million, representing a margin of 3.8%, slightly up from 3.6% in Q4 2023[31] - Restaurant-level Adjusted EBITDA for Q4 2024 was $9.305 million, with a margin of 17.0%, compared to 16.0% in Q4 2023[34] - Net income margin for the year ended December 31, 2024, was 2.2%, down from 6.3% in 2023[31] - Net loss for Q4 2024 was $1.397 million, compared to a loss of $0.193 million in Q4 2023[29] - Adjusted net income for Q4 2024 was $(694) thousand, compared to $536 thousand in Q4 2023[36] Expenses and Financial Position - General and administrative expenses increased to $18.3 million in 2024, up from $12.6 million in 2023[13] - Total restaurant operating expenses for Q4 2024 were $49.581 million, up 21.3% from $40.878 million in Q4 2023[29] - Cash and cash equivalents as of December 31, 2024, were $23.7 million, with no material long-term debt[16] - Total assets increased to $240.415 million in 2024 from $183.870 million in 2023[31] Expansion Plans - The company opened nine new locations since March 2024, with plans to open 10-13 new units in 2025[5] - The company plans to expand internationally with at least two new locations in South Korea in 2025[5] - The number of restaurants at the end of Q4 2024 was 43, up from 37 in Q4 2023[31] Special Programs - The company initiated a successful gift card program with Costco in 2024[5]

Core Insights - GEN Restaurant Group, Inc. reported total revenue of $208.4 million for 2024, marking a 15% increase year-over-year and exceeding the company's guidance and analysts' expectations [4][7][12] - The company achieved a restaurant-level adjusted EBITDA margin of approximately 18% for 2024, consistent with its outlook [4][7] - Comparable restaurant sales for Q1 2025 have shown a positive growth of 1% through the end of February, a 6% improvement compared to Q4 2024 [1][5] Financial Performance - Total revenue for Q4 2024 was $54.7 million, a 21.2% increase from $45.1 million in Q4 2023 [7][8] - Adjusted EBITDA for Q4 2024 increased by 25% to $2.1 million, representing 3.8% of revenue, while for the full year, adjusted EBITDA was $16.7 million, or 8% of revenue [7][16] - The net income before income taxes for the full year was $4.9 million, equating to $0.13 per diluted share of Class A common stock [15][27] Operational Highlights - The company opened nine new locations since March 2024, including six in 2024 and three in early 2025, with plans to open an additional 10-13 new units throughout 2025 [5][7] - GEN is expanding internationally, with at least two new restaurants planned to open in South Korea in 2025 [5][7] - As of December 31, 2024, the company had $23.7 million in cash and cash equivalents and no material long-term debt, positioning it well for future growth [17][29] Cost Management - Total restaurant operating expenses as a percentage of revenue decreased to 86.6% in Q4 2024 from 87.2% in Q4 2023 [9] - General and administrative expenses increased to $5.6 million in Q4 2024, primarily due to additional personnel for new restaurant development [9][12] - Restaurant pre-opening expenses rose to $2.3 million in Q4 2024 from $1.6 million in Q4 2023, reflecting the higher volume of new store openings [13][14]

Core Viewpoint - GEN Restaurant Group, Inc. will hold a conference call on March 6, 2025, to discuss its financial results for Q4 and the full year ended December 31, 2024 [1]. Company Overview - GEN Korean BBQ is one of the largest Asian casual dining restaurant concepts in the United States, founded in 2011 by two Korean immigrants in Los Angeles [3]. - The brand has expanded to over 40 company-owned locations, offering a unique dining experience where guests grill their own meals at the table [3]. - The menu features traditional Korean and Korean-American dishes, including high-quality meats, poultry, seafood, and mixed vegetables [3]. - The restaurant's modern décor and lively atmosphere create an engaging and interactive dining experience appealing to a broad customer base [3]. Conference Call Details - The conference call will be hosted by Chairman and CEO David Kim and CFO Tom Croal, followed by a Q&A session [2]. - The call is scheduled for March 6, 2025, at 5:00 p.m. Eastern time, with a toll-free dial-in number provided for participants [2]. - A live webcast of the conference call will be available, along with a replay option through the investor relations section of the company's website [3].

Core Insights - GEN Restaurant Group, Inc. has opened a new restaurant location in San Antonio, Texas, marking its third opening in January 2025, following successful launches in Edison, New Jersey, and Orlando, Florida [1][2] Company Expansion - The new San Antonio location is part of GEN's strategy to expand its presence in Texas, where existing locations have performed strongly [2] - The company aims to continue its growth momentum throughout 2025, having started the year with three successful openings [2] Unique Dining Experience - GEN Korean BBQ offers a distinctive "grill at your table" experience, which aligns well with San Antonio's rich food culture and love for barbecue [2] - The restaurant features an extensive menu that includes traditional Korean and Korean-American dishes, allowing guests to prepare their meals on embedded grills [4] Company Background - Founded in 2011, GEN Korean BBQ has grown to over 40 company-owned locations across the United States, making it one of the largest Asian casual dining concepts in the country [4] - The brand is known for its engaging and interactive dining experience, appealing to a wide demographic [4]

Core Insights - GEN Restaurant Group, Inc. is expanding its operations by opening two new locations in Edison, New Jersey, and Orlando, Florida, as part of its national expansion strategy [1][2]. Expansion Strategy - The CEO of GEN, David Kim, expressed satisfaction with the progress of the company's national expansion plans, highlighting the importance of reaching new audiences in New Jersey and Florida [2]. - The Edison location is strategically chosen for its cultural richness and culinary scene, aligning with GEN's goal to introduce its "grill at your table" concept in key markets [2]. - Orlando's diverse population and status as a tourist destination make it an ideal market for GEN, aiming to attract both locals and visitors seeking unique dining experiences [3]. Location Details - The Edison, New Jersey location is situated in Festival Plaza and operates from 11:00 a.m. to 10:30 p.m. Monday to Thursday, and 11:00 a.m. to 11:00 p.m. Friday to Sunday [4]. - The Orlando, Florida location is located in Waterford Lakes Town Center, with operating hours from 11:00 a.m. to 10:30 p.m. Sunday to Thursday, and 11:00 a.m. to 11:30 p.m. Friday to Saturday [4]. Company Overview - GEN Korean BBQ is one of the largest Asian casual dining restaurant concepts in the U.S., founded in 2011, and has grown to over 40 company-owned locations [6]. - The restaurant offers a unique dining experience where guests prepare their meals on embedded grills, featuring a menu that includes traditional Korean and Korean-American dishes [6].

Leadership Changes - Co-Founder Jae Chang has stepped down as Co-CEO effective January 8, 2025, but will remain on the Company's board [1] - David Kim, the Chairman and Co-CEO, is now the sole CEO of the Company [1] Company Overview - GEN Korean BBQ is one of the largest Asian casual dining restaurant concepts in the United States, founded in 2011 [3] - The brand has grown to over 40 company-owned locations, offering a unique dining experience where guests prepare meals on embedded grills [3] - The menu features traditional Korean and Korean-American food, including high-quality meats, poultry, seafood, and mixed vegetables [3] Future Outlook - David Kim expressed confidence in continuing the growth strategy and building upon the foundation laid by Jae Chang [2]

Financial Data and Key Metrics Changes - Total revenue for Q3 2024 was $49.1 million, representing an increase of nearly 8% year-over-year from $45.6 million in Q3 2023 [10][27] - Net income was $0.2 million or $0.01 per diluted share, compared to $2.6 million or $0.08 per diluted share in Q3 2023 [32] - Adjusted net income was $0.9 million or $0.03 per diluted share, exceeding estimates that predicted a loss for the quarter [10][32] - Adjusted restaurant-level EBITDA margin was slightly over 18%, consistent with expectations for the quarter [12][33] Business Line Data and Key Metrics Changes - Same-store sales growth declined by 9.6% year-over-year, impacted by external factors such as hurricanes and extreme weather [13][14] - Restaurant-level adjusted EBITDA margin was maintained above 18% for Q3 2024 [33] Market Data and Key Metrics Changes - The consumer environment remained mixed, with ongoing inflationary pressures affecting discretionary spending [13] - The company experienced temporary disruptions due to hurricanes and extreme summer heat, which affected customer traffic [14] Company Strategy and Development Direction - The company aims to open 10 to 11 new restaurants in 2024, with a long-term goal of reaching 75 to 80 locations by the end of 2026 [20][21] - Initiatives include a gift card program launched at Costco, which has seen strong sales and is expected to enhance brand visibility [22][23] - The company is testing new concepts like GEN Grills and participating in outdoor fairs to drive additional sales [15][46] Management's Comments on Operating Environment and Future Outlook - Management noted improvements in October and November, with a reduction in negative same-store sales by at least 50% compared to Q3 [41][51] - The company remains confident in its growth trajectory, citing strong performance from new restaurant openings and a robust pipeline of future locations [21][25] Other Important Information - The company maintained a healthy balance sheet with $22.1 million in cash and cash equivalents and no long-term debt, except for government-funded loans [34] - Total adjusted EBITDA for Q3 was $3.4 million, down from $5 million in Q3 2023, primarily due to increased G&A and preopening costs [33] Q&A Session Summary Question: Trends in same-store sales and improvements in October and November - Management acknowledged various factors contributing to negative sales in Q3, including high-volume restaurant shutdowns and external weather impacts, but noted improvements in the first six weeks of Q4 [39][41] Question: Success factors for new restaurant openings - Management expressed surprise at the performance of new units, attributing success to focused management and operational details [43][44] Question: Investment trade-offs for new initiatives - Management clarified that new initiatives are aimed at revenue generation rather than marketing opportunities, with a focus on increasing sales through various channels [46][48] Question: Magnitude of improvements in October and November - Management indicated that negative same-store sales have improved by at least 50% compared to Q3, with both traffic and premium menu sales contributing to this improvement [51] Question: Premium menu mix and future goals - The premium menu currently represents about 5% of total sales, with a goal to reach 10% [53] Question: Margin performance and sustainability - Management highlighted ongoing focus on operational details as key to maintaining improved margins, with stable commodity prices contributing to better food cost management [55][56]

Restaurant Operations - GEN Restaurant Group operates 43 company-owned restaurants across multiple states as of October 31, 2024[110]. - Six new restaurants were opened in 2023, with an additional eighteen new locations signed for future openings, including four in Texas and three in Florida[112]. - The company opened two new restaurants in October 2024, bringing the total to 41 restaurants by the end of the reporting period[126]. Financial Performance - Revenue for the three months ended September 30, 2024, was $49.1 million, an increase of $3.5 million or 7.8% compared to $45.6 million for the same period in 2023[144]. - Revenue for the nine months ended September 30, 2024, was $153.7 million, an increase of $17.8 million or 13.1% compared to $135.9 million for the same period in 2023, driven by an increase in the number of restaurants from 34 to 41[159]. - Net income for the three months ended September 30, 2024, was $169 thousand, a decrease of $2.5 million or 93.6% from $2.6 million in 2023[142]. - Net income for the nine months ended September 30, 2024, was $5.9 million, a decrease of 49.0% from $11.6 million in 2023[1]. - For the nine months ended September 30, 2024, net income attributable to GEN Restaurant Group, Inc. was $1,106,000, down from $9,167,000 in the same period last year[174]. Expenses - Total restaurant operating expenses increased by $4.5 million or 11.4% to $43.8 million for the three months ended September 30, 2024, compared to $39.3 million in 2023[142]. - Total restaurant operating expenses increased to $136.9 million for the nine months ended September 30, 2024, up $21.4 million or 18.5% from $115.5 million in 2023[1]. - General and administrative expenses increased by $1.4 million or 37.3% to $5.2 million for the three months ended September 30, 2024, compared to $3.8 million in 2023[151]. - General and administrative expenses surged to $15.0 million, a 91.3% increase from $7.8 million, with the percentage of revenue rising from 5.7% to 9.7%[165]. - Pre-opening costs rose significantly by $1.1 million or 149.9% to $1.8 million for the three months ended September 30, 2024, compared to $0.7 million in 2023[150]. - Pre-opening costs increased significantly to $5.4 million from $2.1 million, attributed to more restaurants under development[165]. Cash Flow and Financing - Cash as of September 30, 2024, was $22.0 million, down from $32.6 million as of December 31, 2023, with working capital decreasing from $5.5 million to $(2.7) million[180]. - Net cash provided by operating activities for the nine months ended September 30, 2024 was $10.5 million, down from $13.5 million in the same period of 2023, representing a decrease of approximately 22%[191]. - Net cash used in investing activities during the nine months ended September 30, 2024 was $22.6 million, compared to a net cash provided of $1.4 million in 2023, indicating a significant shift in cash flow[192][193]. - Net cash provided by financing activities for the nine months ended September 30, 2024 was $1.6 million, a decrease of approximately 74% from $6.1 million in the same period of 2023[194][195]. - A $20 million line of credit was established on September 29, 2023, with no amounts borrowed as of September 30, 2024[114]. Economic and Market Conditions - The company is exposed to inflation risks, particularly in food, beverage, labor, and energy costs, which could impact profitability if not managed effectively[207]. - The company has been able to partially offset inflationary pressures by increasing menu prices, but future cost increases may not be fully absorbed by customers[208]. - The company is subject to interest rate risk, with its line of credit bearing an interest rate at the Wall Street Journal Prime Rate plus 0.25%[210]. Grants and Loans - The company received $16.8 million in Restaurant Revitalization Fund grants, with $3.8 million deferred as of September 30, 2024[116]. - As of September 30, 2024, the outstanding balance on Economic Injury Disaster Loans (EIDLs) was approximately $4.4 million, with no additional EIDLs expected[113]. Other Financial Metrics - Average Unit Volume (AUV) decreased to $5,514 for the twelve months ended September 30, 2024, down from $5,963 in the previous year[122]. - Revenue per square foot declined to $783 for the twelve months ended September 30, 2024, compared to $888 for the same period in 2023[127]. - Interest income (expense), net was $196 thousand for the three months ended September 30, 2024, compared to $190 thousand in 2023, reflecting a slight increase of $6 thousand or 3.2%[153]. - Interest income (expense), net was $0.7 million for the nine months ended September 30, 2024, compared to a net expense of $0.2 million in 2023, primarily due to interest income from IPO proceeds[169].

Exhibit 99.1 GEN Restaurant Group, Inc. Announces Third Quarter 2024 Financial Results Cerritos, CA, November 12, 2024 - GEN Restaurant Group, Inc. ("GEN" or the "Company") (Nasdaq: GENK), owner of GEN Korean BBQ, a fast-growing casual dining concept with an extensive menu and signature "grill at your table" experience, is announcing financial results for the third quarter ended September 30, 2024. Third Quarter 2024 Financial and Recent Operational Highlights • Opened one new location during the third quar ...