Papa Murphy’s Holdings, Inc. (NASDAQ:FRSH) today announced actions
advancing two of the Company’s strategic initiatives designed to
improve near-term operating performance and go-forward
profitability. The Company will incur a one-time after-tax
charge of up to $7.4 million related to these actions, including
one-time non-cash impairment charges after-tax of up to $6.6
million. These actions are expected to benefit annual EBITDA
by approximately $1.9 million and improve annual diluted earnings
per share by approximately $0.09.
New Partnership with Olo
The Company announced plans to accelerate its convenience
strategy through a partnership with Olo, the leading provider of
online and mobile ordering capabilities. Papa Murphy’s move to
Olo’s digital platform will enable online and mobile ordering to be
fully integrated with third-party marketplace and delivery
services, where available, providing a seamless convenient
experience for both customers and franchise-owners.
“We continue to believe convenience is a big opportunity for us,
and we are confident that Olo is the right partner as we upgrade
our digital platform,” said Jean Birch, Chair of the Board and
Interim Chief Executive Officer of Papa Murphy's Holdings. “Two of
our key near-term strategies include improving customer convenience
and supporting our franchise-owners with cost-effective tools to
help them run better operations. Olo’s digital expertise and
ability to integrate and simplify the ordering and delivery
processes, support both of these key goals.”
The new platform, which the Company expects to be operational in
the first quarter of 2018, is expected to improve the online and
mobile ordering experience, making it easier for Papa Murphy’s
customers to find their local store, customize their order, and pay
for their meal. Through Olo’s Dispatch delivery network, which
leverages delivery service providers such as Uber, Favor, and
DeliverLogic, and its Rails marketplace platform, which seamlessly
integrates with services such as Postmates, DoorDash, and
delivery.com, Papa Murphy’s customers will be able to enjoy their
favorite fresh pizzas with the convenience of home
delivery.
“We’re proud to partner with such a unique and innovative brand
as Papa Murphy’s to help elevate the Company’s digital experience,”
said Noah Glass, Founder and CEO of Olo. “With its focus on fresh
ingredients, and hand-crafted and personalized tastes, Papa
Murphy’s is tapped into what today’s consumers want for their
families. Now, with delivery through the Dispatch and Rails
platforms, we’re excited to make this incredible bake-at-home pizza
more convenient and accessible than ever before.”
The Company estimates the cost efficiencies from a move to Olo’s
digital platform will benefit go-forward annual EBITDA by
approximately $0.9 million and improve annual diluted earnings per
share by around $0.04. As part of the transition, the Company
will recognize a one-time non-cash after-tax charge of
approximately $5.1 million related to the impairment of its current
online ordering platform.
Planned Closure of Company-Owned
Stores
The Company also announced plans to close up to sixteen
company-owned stores across several markets by the end of the
year. The closures are a result of an ongoing strategic
review of the Company store portfolio as the Company prepares
markets to be refranchised.
“As we work to prepare for the refranchising of a majority of
our Company-owned stores, we have assessed the on-going viability
of certain locations and are taking action to optimize the
near-term value of the portfolio to benefit both the Company and
the franchise-owners acquiring the markets,” said Birch. “We have a
clear opportunity to reduce short-term losses while giving new
owners a more profitable portfolio of stores from the
start.”
The Company estimates that the closures will benefit annual
EBITDA by approximately $1.0 million and benefit annual diluted
earnings per share by around $0.05. As a result of the
closures, the Company is expected to incur an after-tax charge of
up to $2.3 million, including a non-cash after-tax impairment
charge of up to $1.5 million related to the current carrying value
of the stores to be closed. The Company expects most closures
to take place in the second quarter, with final closure decisions
to be made by the end of the third quarter.
About Papa Murphy’s
Papa Murphy's Holdings, Inc. (Nasdaq:FRSH) is a franchisor and
operator of the largest Take ‘n’ Bake pizza brand 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 more than 1,500 franchised and corporate-owned fresh pizza
stores in 39 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. Order online today at www.papamurphys.com.
About Olo
Olo helps restaurant brands maximize revenue per square foot by
delivering faster, more accurate, and more personal service to
their customers. Through beautiful, fully-branded digital
interfaces, Olo’s enterprise-grade ordering platform integrates
with the brands’ existing systems, opening new digital revenue
streams injected seamlessly into the restaurant’s operations. Olo
is a pioneer in the industry, beginning with text message ordering
on mobile feature phones in 2005. Today, over 50 million consumers
use the Olo platform to Skip the Line® or get food delivered from
the restaurants they love. Clients include Applebee’s (DIN),
Chili’s (EAT), Chipotle (CMG), Denny’s (DENN), Five Guys Burgers
& Fries, Jamba Juice (JMBA), Noodles & Company (NDLS), Red
Robin (RRGB), Shake Shack (SHAK), sweetgreen, Wingstop (WING), and
more. Learn more at www.olo.com and or visit our Dispatch page at
www.olo.com/dispatch.
Forward-looking Statements
This press 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 one-time charges,
projected impairment charges, projected EBITDA, projected diluted
earnings per share, expectations regarding the Olo platform and the
benefits from a relationship with Olo, future financial or
operational results, future franchise owner profitability, and
business strategy.
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
January 2, 2017, (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 Measures
The Company is providing with this press release forward-looking
estimates of the non-GAAP financial measure of EBITDA. EBITDA
is not derived in accordance with GAAP and should not be considered
by the reader as an alternative to net income (loss) (the most
comparable GAAP financial measure to EBITDA). The Company’s
management believes that EBITDA is helpful as an indicator of the
current financial performance of the Company because EBITDA
reflects the additions and eliminations of various income statement
items that management does not consider indicative of ongoing
operating results. We have not provided a reconciliation of
forward-looking EBITDA to GAAP net income (loss) because of the
inherent difficulty in forecasting and quantifying various
adjustments that are necessary for these reconciliations and,
accordingly, the reconciling information cannot be obtained without
unreasonable effort.
Investor Contact:
Alexis Tessier, ICR
papamurphys-ir@icrinc.com
877-747-7272
Media Contact:
Christine Beggan, ICR
Christine.Beggan@icrinc.com
203-682-8329
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