Papa Murphy's Holdings, Inc. (Nasdaq:FRSH) today announced
financial results for its first quarter ended March 31, 2014.
Key highlights for the first quarter of 2014 compared to
the first quarter of 2013 include:
- Total revenues were $25.1 million compared to $19.6 million.
Excluding $1.8 million of revenues in the first quarter of 2014
related to the re-sale of point of sale licenses to franchisees at
cost, revenue increased 18.9%.
- Domestic comparable store sales increased 3.3%, including an
increase of 7.1% for domestic company-owned stores and 3.1% for
domestic franchise stores.
- Net income was $819,000 compared to $711,000.
- Pro forma net income(1) increased 60.0% to $2.0 million, or
$0.12 per diluted share from $1.2 million, or $0.07 per diluted
share.
- Adjusted EBITDA(1) increased 33.7% to $7.5 million from $5.6
million.
- 21 new Papa Murphy's stores opened system-wide, including 19
domestic franchise openings.
______________________
(1) Pro forma net income and adjusted EBITDA are non-GAAP
measures. For reconciliations of adjusted EBITDA and pro forma net
income to GAAP net income and discussions of why we consider them
useful, see the "Reconciliation of Non-GAAP Measures" accompanying
this release.
Ken Calwell, President and Chief Executive Officer of Papa
Murphy's Holdings, Inc., stated "We are pleased to begin fiscal
2014 with impressive increases in revenue and pro forma
profitability. Our success continues to be driven by the collective
hard work of our team and franchisees, as we continue to help busy
parents and families solve the dinnertime dilemma of providing
their family with a high-quality, home-cooked meal, at a great
value."
Calwell added, "Following the success of our May IPO, we are
excited about the opportunities ahead for Papa Murphy's. We have a
unique business that has clearly resonated with our guests as
demonstrated by the consistency with which they have rated us as
their pizza chain of choice over the years, as well as the
consistency of our same store sales growth which we again
demonstrated in the first quarter. We have tremendous white space
potential to grow our store base, including a substantial
opportunity within our existing core markets. We also have a number
of initiatives in place that we believe can continue to drive same
store sales growth and improve store-level profitability across our
system."
Initial Public Offering
On May 7, 2014, following the end the first quarter of 2014, the
Company successfully completed an initial public offering ("IPO) of
common shares at $11.00 per share. The Company issued 5,833,333
shares of common stock. Total net proceeds to Papa Murphy's from
the offering after deducting underwriter discounts and commissions
and estimated offering expenses were approximately $55.8 million.
Net proceeds of the IPO were primarily used to pay down $55.5
million of existing debt.
Key Operating Metrics
|
Three
Months Ended |
|
March 31, |
April 1, |
|
2014 |
2013 |
Domestic Average Weekly Sales |
$ 11,746 |
$ 11,535 |
|
|
|
Domestic comparable store sales
growth |
|
Franchised stores |
3.1% |
0.6% |
Company-owned stores |
7.1% |
-0.9% |
System-wide |
3.3% |
0.6% |
|
|
|
System-wide sales ($s in 000s) |
$ 215,983 |
$ 201,480 |
|
|
|
Adjusted EBITDA ($s in 000s) |
$ 7,534 |
$ 5,635 |
|
|
|
Store Count |
|
|
Franchised |
1,360 |
1,291 |
Company-owned |
69 |
63 |
System-wide |
1,429 |
1,354 |
We evaluate the performance of our business using a variety of
operating and performance metrics. Below is a description of our
key operating metrics:
Average Weekly Sales consists of the average
weekly sales of domestic franchised and company-owned stores over a
specified period of time and is calculated by dividing the total
net sales of our system-wide stores for the relevant time period by
the number of weeks these same stores were open in such time
period.
Comparable Store Sales represents the change in
year-over-year sales for domestic comparable stores. A comparable
store is a store that has been open for at least 52 full weeks from
the comparable date (the Tuesday following the opening date). As of
the end of the first quarter of 2014 and 2013, there were 1,304 and
1,255 domestic comparable stores, respectively.
System-wide sales include net sales by all of
our system-wide stores.
Adjusted EBITDA is defined as net income (loss)
before interest expense, provision for (benefit from) income taxes
and depreciation and amortization, with further adjustments to
reflect the additions and eliminations of certain income statement
items including non-cash charges, income and expenses that we
consider not indicative of ongoing operations and certain other
adjustments.
2014 Financial Outlook
Based on current information, Papa Murphy's Holdings, Inc. is
introducing the following guidance for fiscal year 2014, which ends
on December 29, 2014:
- At least 105 new domestic franchise store openings
- Domestic comparable store sales growth of at least
2.0%; Domestic comparable sales growth for the second quarter
is expected to be below the anticipated annual rate
- Total System-wide sales of at least $830 million
Conference Call
Papa Murphy's Holdings, Inc. will host a conference call to
discuss the first quarter financial results on Thursday, May 22,
2014 at 5 PM Eastern Time.
The conference call can be accessed live over the phone by
dialing 877-407-3982 or for international callers by dialing
201-493-6780. A replay will be available after the call and can be
accessed by dialing 877-870-5176 or for international callers by
dialing 858-384-5517; the passcode is 13582843. The replay will be
available until Thursday, May 29, 2014. The conference call will
also be webcast live from the Company's corporate website at
investors.papamurphys.com, under the "Events & Presentations"
page. An archive of the webcast will be available at this
location shortly after the call has concluded.
About Papa Murphy's
Papa Murphy's is a franchisor and operator of the largest Take
'N' Bake pizza chain in the United States, selling uncooked pizzas
that customers bake at home. The Company was founded in 1981 and
currently operates over 1,400 franchised and corporate-owned fresh
pizza stores in 38 States, Canada and United Arab Emirates. Papa
Murphy's core purpose is to bring all families together through
food people love with a goal to create fun, convenient and
fulfilling family dinners. In addition to scratch-made pizzas, the
Company offers a growing menu of grab 'n' go items, including
salads, sides and desserts.
Forward-looking Information
Certain statements contained in this news release, as well as
other information provided from time to time by Papa Murphy's
Holdings, Inc. or its employees, may contain forward looking
statements that involve risks and uncertainties that could cause
actual results to differ materially from those in the forward
looking statements. Forward-looking statements give the Company's
current expectations and projections relating to the Company's
financial condition, results of operations, plans, objectives,
future performance and business. You can identify forward-looking
statements by the fact that they do not relate strictly to
historical or current facts. These statements may include words
such as "guidance," "anticipate," "estimate," "expect," "forecast,"
"project," "plan," "intend," "believe," "confident," "may,"
"should," "can have," "likely," "future" and other words and terms
of similar meaning in connection with any discussion of the timing
or nature of future operating or financial performance or other
events.
Any such forward looking statements are not guarantees of
performance or results, and involve risks, uncertainties (some of
which are beyond the Company's control) and assumptions. Although
the Company believes any forward-looking statements are based on
reasonable assumptions, you should be aware that many factors could
affect our actual financial results and cause them to differ
materially from those anticipated in any forward-looking
statements. Please refer to the risk factors discussed in the
Company's Registration Statement on Form S-1, as amended,
(File No: 333-194488) as supplemented by the risk factors included
in the Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2014 (each of which can be found at the
SEC's website www.sec.gov) and each such risk factor is
specifically incorporated into this press release. Should one or
more of these risks or uncertainties materialize, the Company's
actual results may vary in material respects from those projected
in any forward-looking statements.
Any forward-looking statement made by the Company in this press
release speaks only as of the date on which it is made. The Company
undertakes no obligation to update any forward-looking statement,
whether as a result of new information, future developments or
otherwise, except as may be required by law.
PAPA MURPHY'S HOLDINGS,
INC. AND SUBSIDIARIES |
Condensed Consolidated
Statements of Operations and Comprehensive Income |
(In thousands of dollars,
except per share data) |
(Unaudited) |
|
|
|
|
Three
Months Ended |
|
March 31, |
April 1, |
|
2014 |
2013 |
Revenues |
|
|
Franchise royalties |
$ 10,069 |
$ 9,503 |
Franchise and development
fees |
1,169 |
882 |
Company-owned store sales |
12,018 |
9,166 |
Lease and other |
1,861 |
42 |
Total
revenues |
25,117 |
19,593 |
|
|
|
Costs and Expenses |
|
|
Store operating costs
(exclusive of depreciation and amortization shown separately
below): |
|
|
Cost of food and packaging |
4,590 |
3,423 |
Compensation and
benefits |
3,030 |
2,572 |
Advertising |
1,122 |
846 |
Occupancy |
660 |
554 |
Other store
operating costs |
1,069 |
930 |
Selling, general, and
administrative |
8,199 |
5,734 |
Depreciation and
amortization |
1,841 |
1,699 |
Loss on disposal or impairment
of property and equipment |
6 |
64 |
Total costs and
expenses |
20,517 |
15,822 |
Operating Income |
4,600 |
3,771 |
|
|
|
Interest expense |
3,112 |
2,616 |
Interest income |
(34) |
(22) |
Other expense, net |
12 |
7 |
Income Before Income
Taxes |
1,510 |
1,170 |
|
|
|
Provision for income taxes |
691 |
459 |
Net Income |
819 |
711 |
|
|
|
Other Comprehensive
Income |
|
|
Foreign currency translation
adjustment |
— |
— |
Total Comprehensive
Income |
$ 819 |
$ 711 |
|
|
|
Loss per share of common stock |
|
|
Basic |
$ (0.20) |
$ (0.23) |
Diluted |
$ (0.20) |
$ (0.23) |
Weighted average common stock
outstanding |
|
|
Basic |
3,851,741 |
3,797,209 |
Diluted |
3,851,741 |
3,797,209 |
|
|
|
|
|
|
PAPA MURPHY'S HOLDINGS,
INC. AND SUBSIDIARIES |
Selected Balance Sheet
Data |
(In thousands of dollars) |
(Unaudited) |
|
|
|
|
March 31, |
December 30, |
|
2014 |
2013 |
|
|
|
Cash and cash equivalents |
$2,241 |
$ 3,705 |
Total current assets |
16,222 |
16,377 |
Total assets |
263,300 |
264,502 |
Total current liabilities |
14,195 |
17,965 |
Long-term debt, net of current portion |
169,330 |
168,330 |
Total Papa Murphy's Holdings Inc.
shareholders' equity |
34,992 |
33,925 |
|
|
|
|
|
|
PAPA MURPHY'S HOLDINGS,
INC. AND SUBSIDIARIES |
Reconciliation of Net
income to Adjusted EBITDA |
|
|
|
|
Three
Months Ended |
|
March 31, |
April 1, |
|
2014 |
2013 |
Net income as reported |
$ 819 |
$ 711 |
Depreciation and
amortization |
1,841 |
1,699 |
Income tax provision
(benefit) |
691 |
459 |
Interest expense, net |
3,078 |
2,594 |
EBITDA |
6,429 |
5,463 |
Loss on disposal or impairment
of property and equipment (a) |
6 |
64 |
Management transition and
restructuring costs (b) |
178 |
— |
Expenses not indicative of
future operations (c) |
196 |
— |
Management fees and related
expenses (d) |
135 |
125 |
Transaction costs (e) |
2 |
5 |
New store pre-opening expenses
(f) |
10 |
— |
Non-cash expenses and
non-income based state taxes (g) |
578 |
(22) |
Adjusted
EBITDA |
$ 7,534 |
$ 5,635 |
|
(a) Represents non-cash losses resulting
from disposal or impairment of property and equipment, including
divested company stores. |
(b) Represents non-recurring management
transition and restructuring costs, consisting of recruitment,
relocation and other costs in connection with recruiting a new
CFO. |
(c) Represents non-recurring advisory
expenses in connection with our initial public offering. |
(d) Represents the elimination of
management fees and related costs paid to the Sponsor for advisory
services provided pursuant to an advisory services and monitoring
agreement. |
(e) Represents transaction costs
relating to acquisitions and divestitures. |
(f) Represents expenses directly associated
with the opening of new stores and incurred prior to the opening of
new stores, including wages, benefits, travel for the training of
opening teams and other store operating costs. |
(g) Represents (i) non-cash expenses related
to equity-based compensation; (ii) non-cash expenses related to the
difference between GAAP and cash rent expense; (iii) non-cash
expenses related to the fair valuation of certain common stock and
Series A Preferred Stock subject to put options; and (iv) state
revenues taxes levied in lieu of an income tax. |
|
|
PAPA MURPHY'S HOLDINGS,
INC. AND SUBSIDIARIES |
Reconciliation of Net
Income to Pro Forma Net Income |
|
|
|
|
Three
Months Ended |
|
March 31, |
April 1, |
|
2014 |
2013 |
Net income as reported |
$ 819 |
$ 711 |
Management fees and related
expenses (1) |
135 |
125 |
Reduction in interest expense
based on reduced debt balance (2) |
1,281 |
1,157 |
Expenses not indicative of
future operations (3) |
865 |
— |
Incremental public company
costs (4) |
(466) |
(466) |
Income tax expense on
adjustments (5) |
(681) |
(306) |
Pro forma net
income |
$ 1,953 |
$ 1,221 |
|
|
|
Net income per share of common stock – pro
forma |
|
|
|
|
|
Basic |
$ 0.12 |
$ 0.07 |
Diluted |
$ 0.12 |
$ 0.07 |
|
|
|
Weighted-average shares outstanding – pro
forma |
|
|
|
|
|
Basic – pro forma (6) |
16,595,255 |
16,542,367 |
Diluted – pro forma (6) |
16,812,834 |
16,842,160 |
|
(1) Represents the elimination of
management fees and related costs paid to Lee Equity for advisory
services provided pursuant to an advisory services and monitoring
agreement. |
(2) Represents the lower interest
expense assuming our post-IPO long-term debt balance of $115.5
million was outstanding as of the beginning of fiscal year
2013. This balance reflects $55.5 million repayment of
long-term debt from the net proceeds from our IPO. This
interest expense calculation assumes a change in interest rate from
6.75% to 5.5% due to the reduction in our total leverage ratio to
below 4.25x Adjusted EBITDA as defined in our credit
facility. The interest adjustment is also based on a lower
annual amortization of deferred financing costs of approximately
$110,000 after the write-off of approximately $1.2 million, which
will occur in the second quarter of 2014 but is assumed to occur at
the beginning of fiscal 2013. |
(3) Reflects the elimination of stock
compensation charges in the first quarter of 2014 related to the
acceleration of vesting, repurchase of shares, and issuance of new
options with certain executive officers in preparation for the IPO
and other costs to prepare for the IPO. |
(4) Reflects an estimate of recurring
incremental legal, accounting, insurance and other compliance costs
totaling $0.3 million that we expect to incur as a public company
and ongoing stock based compensation of $0.2 million. |
(5) Reflects the tax expense associated
with the adjustments in 1 through 4 above at the normalized tax
rate of 37.5%, which reflects our estimated long-term effective tax
rate. |
(6) Reflects the impact of (i) a conversion
of our preferred shares to common stock, (ii) a 1 to 2.2630 common
stock split, and (iii) the issuance of 5,833,333 shares of common
stock upon the IPO. |
CONTACT: Investor Contact:
Fitzhugh Taylor, ICR
fitzhugh.taylor@icrinc.com
877-747-7272
Media Contact:
Jessica Liddell, ICR
jessica.liddell@icrinc.com
203-682-8208
Freshworks (NASDAQ:FRSH)
Historical Stock Chart
From Jun 2024 to Jul 2024
Freshworks (NASDAQ:FRSH)
Historical Stock Chart
From Jul 2023 to Jul 2024