Papa Murphy’s Holdings, Inc. (NASDAQ:FRSH) today announced
financial results for its first quarter ended March 28, 2016.
Key financial highlights for the first
quarter of 2016 include:
- Revenue of $33.0 million, an increase of 13.1% compared to the
first quarter of 2015.
- Domestic comparable store sales decreased by 2.8%, including a
2.8% decrease at both domestic franchisee-owned stores and at
company-owned stores, compared with the first quarter of 2015
- Net income was $642,000, or $0.04 per diluted share, compared
to $2.6 million, or $0.15 per diluted share, in the first quarter
of 2015.
- Adjusted EBITDA(1) was $5.7 million, compared to $8.0 million
in the first quarter of 2015.
- Papa Murphy’s opened 27 new stores in the quarter, including 25
in the U.S., compared to 20 new store openings in the U.S. in the
first quarter of 2015.
______________________(1) Adjusted EBITDA is a
non-GAAP measure. For a reconciliation of Adjusted EBITDA to GAAP
net income and discussion of why we consider Adjusted EBITDA to be
a useful measure, see the financial table accompanying this release
and the paragraph below entitled “Non-GAAP Financial Measures.”
Ken Calwell, President and Chief Executive
Officer of Papa Murphy’s Holdings, Inc., stated, “We are
disappointed with our overall comparable store sales performance in
the first quarter and the resultant level of profitability.
We have identified and are taking action against specific areas for
improvement and expect to demonstrate progress in the second half
of the year.”
Calwell continued, “There were some bright spots
in the quarter, including the early launch of our on-line ordering
and eCommerce site, providing us with a technology platform
foundation for future growth. We now have online ordering
capability available in over 82% of our domestic stores, with the
full rollout expected to be complete in June, and we are beginning
to see the mix of orders placed online increase as we market the
site. Additionally, we continue to be encouraged by the
outperformance of some of our less developed markets where we are
focused on raising brand awareness by investing in advertising and
building stores. Comparable store sales growth in these less
penetrated markets outperformed the system average by 290 basis
points in the quarter.”
“We opened 27 new stores system-wide during the
quarter, including 25 in the U.S. The development process
enhancements we put in place in 2015 have been effective, leading
to a significantly more balanced new store opening cadence this
year. We remain on track to open 115 to 120 new units in
2016,” Calwell concluded.
Key Operating Metrics
PAPA MURPHY'S HOLDINGS, INC. AND
SUBSIDIARIES |
|
|
|
|
Key Operating
Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
|
March 28, 2016 |
|
March 30, 2015 |
|
|
Domestic comparable
store sales: |
|
|
|
|
|
Franchised stores |
|
-2.8 |
% |
|
|
5.5 |
% |
|
|
Company-owned stores |
|
-2.8 |
% |
|
|
6.4 |
% |
|
|
Combined |
|
-2.8 |
% |
|
|
5.6 |
% |
|
|
|
|
|
|
|
|
System-wide sales ($'s
in 000s) |
$ |
236,851 |
|
|
$ |
234,633 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA ($'s in
000s) |
$ |
5,729 |
|
|
$ |
8,015 |
|
|
|
|
|
|
|
|
|
Store Count |
|
|
|
|
|
Franchised |
|
1,378 |
|
|
|
1,338 |
|
|
|
Company-owned |
|
135 |
|
|
|
108 |
|
|
|
International |
|
42 |
|
|
|
30 |
|
|
|
System-wide |
|
1,555 |
|
|
|
1,476 |
|
|
|
|
|
|
|
|
|
We use a variety of operating and performance metrics to
evaluate the performance of our business. Below is a description of
our key operating metrics:
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
2016 and 2015, we had 1,407 and 1,356 domestic comparable stores,
respectively.
System-wide Sales include net
sales by all of our company-owned and franchisee-owned 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 various
income statement items including non-cash charges, income and
expenses that we consider not indicative of ongoing operations and
various other adjustments. For a reconciliation of Adjusted EBITDA
to net income, the most directly comparable GAAP measure, see the
financial tables accompanying this release.
2016 Financial Outlook
Based on current information, Papa Murphy’s Holdings, Inc. is
updating full year guidance for fiscal year 2016, which ends on
January 2, 2017.
- (revised) Domestic system-wide comparable store sales growth of
approximately flat to +1.0%, compared to previous guidance of +2.0%
to +3.0%;
- Domestic new store openings of between 115 and 120 units,
including 20 to 25 company-owned;
- Revenue to include transaction fees from franchisees for use of
the new on-line ordering platform of approximately $1.7 million and
zero-margin POS License revenue of approximately $2.1 million;
- (revised) Selling, general and administrative expenses of
approximately $33.0 million to $34.0 million, compared to previous
guidance of $34.0 million to $36.0 million, inclusive of operating
costs of approximately $3.1 million associated with the new on-line
ordering platform and approximately $2.1 million associated with
POS licenses resold to franchisees at cost;
- Pre-opening costs associated with new Company stores of
approximately $0.9 million;
- Capital expenditures, including acquisitions, of approximately
$13.0 million to $15.0 million;
- Expected full-year effective tax rate of approximately 38.5%;
and
- Diluted share-count of approximately 17.0 million.
Conference Call
Papa Murphy’s Holdings, Inc. will host a
conference call to discuss the first quarter financial results on
Wednesday, May 4, 2016 at 4:30 p.m. 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 13634357. The
replay will be available until Wednesday, May 11, 2016. 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’sPapa Murphy's Holdings, Inc.
(Nasdaq:FRSH) is a franchisor and operator of the largest Take 'N'
Bake pizza chain in the United States, selling fresh, hand-crafted
pizzas ready for customers to bake at home. The company was founded
in 1981 and currently operates over 1,500 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. For more
information, visit www.papamurphys.com.
Forward-looking StatementsThis
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
anticipated 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.
Forward-looking statements in this press release
include statements relating to the Company’s projected sales
growth, projected system-wide sales, projected new store openings,
projected selling, general, and administrative expenses, projected
revenue from transaction fees, projected pre-opening costs,
projected capital expenditures, projected effective tax rate,
projected diluted share count, strategic, operational, and
technological initiatives, including the roll-out of its e-commerce
platform, future financial or operational results, and speed of
consumer acceptance.
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 annual report on Form 10-K for the
fiscal year ended December 28, 2015 and quarterly report on Form
10-Q for the fiscal quarter ended March 28, 2016 (each of which can
be found at the SEC’s website www.sec.gov); 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.
Non-GAAP Financial MeasuresTo supplement its
financial information presented in accordance with generally
accepted accounting principles (GAAP), the Company is also
providing with this press release the non-GAAP financial measure of
EBITDA and Adjusted EBITDA. EBITDA and Adjusted EBITDA are
not derived in accordance with GAAP and should not be considered by
the reader as an alternative to net income (the most comparable
GAAP financial measure to each of EBITDA and Adjusted EBITDA). The
Company’s management believes that EBITDA and Adjusted EBITDA are
helpful as indicators of the current financial performance of the
Company because EBITDA and Adjusted EBITDA reflect the additions
and eliminations of various income statement items that management
does not consider indicative of ongoing operating results. We
have provided reconciliations of EBITDA and Adjusted EBITDA to GAAP
net income in the financial tables accompanying this release.
PAPA MURPHY'S HOLDINGS, INC. AND
SUBSIDIARIES |
|
Consolidated Statements of Net
Income |
|
(In thousands of dollars, except share and per share
data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
|
|
|
|
March 28, 2016 |
|
March 30, 2015 |
|
|
|
|
|
|
Unaudited |
|
Unaudited |
|
|
Revenues |
|
|
|
|
|
|
Franchise
royalties |
$ |
10,496 |
|
|
$ |
10,679 |
|
|
|
|
Franchise
and development fees |
|
954 |
|
|
|
1,140 |
|
|
|
|
Company-owned store sales |
|
20,674 |
|
|
|
17,167 |
|
|
|
|
Other |
|
861 |
|
|
|
182 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
32,985 |
|
|
|
29,168 |
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses |
|
|
|
|
|
|
Store
operating costs: |
|
|
|
|
|
|
|
Cost of
food and packaging |
|
7,272 |
|
|
|
6,089 |
|
|
|
|
|
Compensation and benefits |
|
5,734 |
|
|
|
4,354 |
|
|
|
|
|
Advertising |
|
2,166 |
|
|
|
1,669 |
|
|
|
|
|
Occupancy |
|
1,375 |
|
|
|
1,003 |
|
|
|
|
|
Other store
operating costs |
|
2,291 |
|
|
|
1,445 |
|
|
|
|
Selling,
general, and administrative |
|
9,055 |
|
|
|
6,882 |
|
|
|
|
Depreciation and amortization |
|
2,715 |
|
|
|
2,319 |
|
|
|
|
Loss on
disposal of property and equipment |
|
54 |
|
|
|
59 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and
expenses |
|
30,662 |
|
|
|
23,820 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
2,323 |
|
|
|
5,348 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense, net |
|
1,179 |
|
|
|
1,130 |
|
|
|
|
Other
expense, net |
|
42 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
Income Before Income Taxes |
|
1,102 |
|
|
|
4,216 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes |
|
460 |
|
|
|
1,620 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income |
$ |
642 |
|
|
$ |
2,596 |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share of common stock |
|
|
|
|
|
|
Basic |
|
$ |
0.04 |
|
|
$ |
0.16 |
|
|
|
|
Diluted |
$ |
0.04 |
|
|
$ |
0.15 |
|
|
|
Weighted
average common stock outstanding |
|
|
|
|
|
|
Basic |
|
|
16,716,610 |
|
|
|
16,604,206 |
|
|
|
|
Diluted |
|
16,753,294 |
|
|
|
16,791,684 |
|
|
|
|
|
|
|
|
|
|
|
|
PAPA MURPHY'S HOLDINGS, INC. AND
SUBSIDIARIES |
Selected Balance Sheet Data |
(In thousands of dollars) |
(unaudited) |
|
|
|
|
|
March 28, 2016 |
|
December 28, 2015 |
Cash and cash
equivalents |
$ |
481 |
|
|
$ |
6,867 |
|
Total current
assets |
|
10,013 |
|
|
|
18,896 |
|
Total assets |
|
267,189 |
|
|
|
275,471 |
|
Total current
liabilities |
|
16,412 |
|
|
|
24,149 |
|
Long-term debt, net of
current portion |
|
106,517 |
|
|
|
108,237 |
|
Total Papa Murphy's
Holdings, Inc. shareholders' equity |
|
98,519 |
|
|
|
97,656 |
|
PAPA MURPHY'S HOLDINGS, INC. AND
SUBSIDIARIES |
|
Reconciliation of Net Income to EBITDA and
Adjusted EBITDA |
|
(In thousands of dollars) |
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
|
March 28, 2016 |
|
March 30, 2015 |
|
|
Net Income As
Reported |
$ |
642 |
|
|
$ |
2,596 |
|
|
|
Depreciation and amortization |
|
2,715 |
|
|
|
2,319 |
|
|
|
Provision for income taxes |
|
460 |
|
|
|
1,620 |
|
|
|
Interest expense, net |
|
1,179 |
|
|
|
1,130 |
|
|
|
EBITDA |
|
4,996 |
|
|
|
7,665 |
|
|
|
Loss on disposal of property and
equipment (a) |
|
54 |
|
|
|
59 |
|
|
|
Transaction costs (b) |
|
- |
|
|
|
33 |
|
|
|
New store pre-opening expenses
(c) |
|
290 |
|
|
|
70 |
|
|
|
Non-cash expenses and non-income
based state taxes (d) |
|
389 |
|
|
|
188 |
|
|
|
Adjusted
EBITDA |
$ |
5,729 |
|
|
$ |
8,015 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin (1) |
|
17.4 |
% |
|
|
27.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Represents non-cash losses resulting from disposal of
property and equipment, including divested Company-owned
stores. |
|
|
|
|
|
|
|
(b) Represents transaction costs incurred in connection with
the acquisition of multiple franchised stores. |
|
|
|
|
|
|
|
(c) Represents expenses directly associated with the opening of
new stores and incurred primarily in advance of the store opening,
including grand opening marketing costs, training wages and travel
of opening teams and other store operating costs. |
|
|
|
|
|
|
|
(d) Represents (i) non-cash expenses related to equity-based
compensation; (ii) non-cash expenses related to the difference
between GAAP and cash rent expense; and (iii) state revenue taxes
levied in lieu of an income tax. |
|
|
|
|
|
|
|
(1) Adjusted EBITDA margin is calculated by dividing Adjusted
EBITDA by total revenues. |
|
|
|
|
|
|
|
|
Investor Contact:
Fitzhugh Taylor, ICR
fitzhugh.taylor@icrinc.com
877-747-7272
Media Contact:
Christine Beggan, ICR
Christine.Beggan@icrinc.com
203-682-8329
Freshworks (NASDAQ:FRSH)
Historical Stock Chart
From Jun 2024 to Jul 2024
Freshworks (NASDAQ:FRSH)
Historical Stock Chart
From Jul 2023 to Jul 2024