SG Reported Better than Expected, but it was expected
Nothing in this earnings report suggests we should back off our SHORT call. SG will never be profitable.
The SG headlines look better with reported 4Q21 revenue $96.4M better than FactSet $84.7M and (A)EBITDA ($14.2M) vs FactSet ($25.9M). These better numbers were due to SSS of +36% vs. FactSet +17.8%, driven by transactions/mix at 32% and pricing of 4%. All of that produced an EBIT loss of ($47.8 million) versus ($40.1 million) last year.
As I said on Tuesday, "it looks like the company has guided the street to a reasonable 4Q21 SSS number that the company can meet/beat, but it all ends there." The 1Q22 guidance of (A)EBITDA $18-$20M vs FactSet ($24.9M) and Revenue $100-$102M vs FactSet $100.8M and comps of +30-33% vs FactSet 31.4% all look achievable. For the year, they have guided comps +20-26% vs. FactSet 25.0%, with transactions and mix likely turning negative in 2H22. In 2Q21, the comp was 86%. In 1Q22 on a 32% comp, the company can only put up (as per guidance) a restaurant-Level Profit Margin of 10-11% and expect a margin restaurant-Level Profit Margins to improve to 16-17% in FY22 on a slowing comp. In FY22, SG will grow revenues 50% to $522 million in revenues; SG will lose more than $104 million in EBIT versus $134 million loss in FY21. The company burned ($184 million) in cash in 2021 and likely another ($130 million) in 2022.
Divergent Commodity Prices
Coffee and Livestock have moved lower since the invasion
