Company: FWRG
Filing Date: 2025-04-08
Form Type: ARS
Source: 0001789940-25-000033
Chunk: 77

Company: First Watch Restaurant Group, Inc.
Filing Date: 2025-04-08
Form: ARS
Chunk 77
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 % The increase in interest expense during 2024 as compared to 2023 was primarily due (i) an increase borrowings associated with franchise acquisitions and (ii) higher interest rates. Other Income, Net Other income, net includes items deemed to be non-operating based on Management’s assessment of the nature of the item in relation to our core operations. FISCAL YEAR (in thousands) 2024 2023 Change Other income, net $ 1,759 $ 2,871 $ (1,112) (38.7) % Other income, net decreased in 2024 primarily related to insurance recoveries received in 2023 in connection with 2022 insured losses. Transaction Expenses, Net Transaction expenses, net include (i costs incurred in connection with the acquisition of franchise-owned restaurants, (ii costs related to certain equity offerings, (iii costs related to restaurant closures, (iv gains or losses associated with lease or contract terminations and (v revaluations of contingent consideration payable to previous stockholders for tax savings generated through the use of federal and state loss carryforwards and general business credits that had been accumulated from operations prior to August 2017. 48

FISCAL YEAR (in thousands) 2024 2023 Change Income tax expense $ (9,101) $ (10,690) $ 1,589 (14.9)% Effective income tax rate 32.5 % 29.6 % 2.9% The change in the effective income tax rates for 2024 as compared to 2023 was mainly due to (i) the change in the valuation allowance on deferred tax assets, (ii) the benefit of tax credits for FICA taxes on certain employees’ tips and (iii) impacts of executive stock-based compensation. Net Income and Net Income Margin FISCAL YEAR (in thousands) 2024 2023 Change Net income $ 18,925 $ 25,385 $ (6,460) (25.4) % Net income margin 1.9 % 2.8 % (0.9)% The decrease in net income and net income margin during 2024 as compared to 2023 was primarily due to (i) the decrease in income from operations including deleveraging of occupancy expenses, (ii) increase in depreciation and amortization attributed primarily to locations opened and acquired in 2024 and (iii) the increase in interest expense associated with increased borrowings to fund acquisitions. Restaurant Level Operating Profit and