BRADENTON, Fla. - First Watch Restaurant Group (LON:RTN), Inc. (NASDAQ: FWRG), a prominent daytime dining restaurant chain, has priced an underwritten secondary stock offering at $19.95 per share. The offering, announced today, involves 8 million shares sold by funds managed by Advent International, L.P. The expected closing date is tomorrow, subject to standard closing conditions.
The secondary offering does not include any shares sold by First Watch itself; therefore, the company will not receive any proceeds from the sale. Advent International will retain all earnings from the offering. Additionally, the underwriter, Goldman Sachs (NYSE:GS) & Co. LLC, has the option to purchase up to an additional 1.2 million shares within 30 days at the public offering price, minus underwriting discounts and commissions.
This financial move comes amid a backdrop of the company's growth and recognition in the restaurant industry. First Watch has been distinguished by awards and accolades, such as being named the #1 Most Loved Workplace® in America by Newsweek and the Best Practice Institute for 2024, and making it onto Yelp (NYSE:YELP)'s list of the top 50 most-loved brands in the U.S. in 2023.
The offering is being made through a shelf registration statement filed with the U.S. Securities and Exchange Commission (SEC), which has been declared effective. Potential investors are advised to read the prospectus and related documents filed with the SEC to understand fully the terms of the offering.
First Watch specializes in made-to-order breakfast, brunch, and lunch, with a menu that features a mix of classic favorites and unique dishes. The company operates over 540 restaurants across 29 states, demonstrating a significant presence in the daytime dining segment.
The information in this article is based on a press release statement from First Watch Restaurant Group, Inc.
In other recent news, First Watch Restaurant Group has disclosed its third quarter 2024 financial results, showcasing a blend of growth and challenges. The company reported system-wide sales of $291.8 million and total revenues of $251.6 million, marking a 14.8% increase from the previous year. The company's net income was $2.1 million, and adjusted EBITDA rose to $25.6 million, despite a 4.4% dip in same-restaurant traffic. The addition of 44 new restaurants over the year has contributed to this revenue growth.
On the analyst front, Piper Sandler displayed confidence in First Watch by increasing the price target to $23.00 from $22.00, while maintaining an Overweight rating for the stock. This revision followed the company's recent financial report and conference call. The firm anticipates that traffic trends will likely continue to be negative in the fourth quarter of 2024, monitoring these trends into the first half of 2025.
In terms of future expectations, First Watch plans to continue its expansion, with 23 new locations expected to open in the fourth quarter. The company has adjusted its 2024 earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance, raising the lower end of the forecast range. This adjustment is attributed to the effective management of restaurant-level margins amidst a challenging same-store sales landscape.
InvestingPro Insights
First Watch Restaurant Group's recent secondary offering comes at a time when the company's stock has shown significant momentum. According to InvestingPro data, FWRG has experienced a strong 53% return over the last month and a 32.06% return over the last three months. This positive performance aligns with the company's growth narrative and recent industry accolades.
However, investors should note that the stock's current valuation metrics suggest a premium price. The company's P/E ratio stands at 63.63, indicating that it's trading at a high earnings multiple. This valuation is further emphasized by an InvestingPro Tip stating that FWRG is trading at high EBIT and EBITDA valuation multiples.
Despite the high valuation, First Watch's financial performance has been robust. The company reported a revenue of $997.25 million in the last twelve months as of Q3 2023, with a notable revenue growth of 19.77% over the same period. This growth trajectory supports the market's optimistic view of the company's prospects.
For those considering an investment in FWRG, it's worth noting that InvestingPro offers 11 additional tips for this stock, providing a more comprehensive analysis for potential investors. These insights could be particularly valuable given the stock's recent price movements and the company's evolving market position in the competitive restaurant industry.
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