Papa Murphy’s Holdings, Inc. Announces Preliminary 2018 Fourth Quarter and Fiscal Year Results: Performance Better Than Gui...
February 04 2019 - 4:05PM
Papa Murphy’s Holdings, Inc. (NASDAQ: FRSH) today announced the
following preliminary unaudited results for its fiscal fourth
quarter and full fiscal year ended December 31, 2018.
The Company estimates that for the 13-week fourth
quarter:
- Total revenue will be approximately $32.0 million;
- Comparable store sales(1) decreased approximately 1.3%;
- Net income will be approximately $2.0 million, or $0.12 per
diluted share;
- Pro-Forma Net Income(2) will be approximately $2.4 million, or
$0.14 per diluted share; and
- Adjusted EBITDA(2) will be approximately $5.9 million.
The Company estimates that for the
52-week fiscal year 2018:
- Total revenue will be approximately $126.4 million;
- Comparable store sales(1) decreased approximately 2.5%, in line
with latest guidance of low single digit decline;
- Net income will be approximately $4.3 million, or $0.26 per
diluted share;
- Pro-Forma Net Income(2) will be approximately $7.3 million, or
$0.43 per diluted share; and
- Adjusted EBITDA(2) will be approximately $22.3 million, above
latest guidance of at least $21 million.
______________________
- “Comparable store sales” represents the change in
year-over-year sales for 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).
- Pro-Forma Net Income and Adjusted EBITDA are non-GAAP measures.
For a reconciliation of Pro-Forma Net Income and Adjusted EBITDA to
GAAP net income and an explanation of why the Company considers
Pro-Forma Net Income and Adjusted EBITDA to be useful measures, see
the paragraph below entitled “Non-GAAP Financial Measures.”
Weldon Spangler, Chief Executive Officer of Papa
Murphy’s Holdings, Inc., stated, “We are very pleased with the
continued progress of our strategic initiatives and the impact they
had on our results in Q4 2018. We saw positive same store sales in
October, marking our first period of same store sales growth in 37
months. Momentum has continued into 2019, and we expect our
strategic and cost saving initiatives to continue to deliver in
2019. With our improved results, we were also able to pay down our
term loan to $79.5 million at the end of the quarter.”
The preliminary results are unaudited and remain
subject to the completion of normal quarter-end accounting
procedures and adjustments and are subject to change. The Company
expects to release its audited full financial and operating results
for its fiscal fourth quarter and fiscal year ended December 31,
2018 on March 13, 2019.
About Papa Murphy’sPapa Murphy's Holdings,
Inc. (“Papa Murphy’s” or the “Company”) (NASDAQ:FRSH) is
a franchisor and operator of the largest Take ‘n’ Bake pizza brand
in the United States, selling hand-crafted, fresh pizzas
for customers to bake at home. The Company was founded in 1981 and
currently operates over 1,400 franchised and corporate-owned stores
in 37 states, Canada and the United Arab
Emirates. Papa Murphy's core purpose is to help anyone
with an oven and 15 minutes serve a scratch-made meal. In addition
to fresh pizzas, the Company offers hand-crafted salads, sides and
desserts to complete the meal. Order online today
at www.papamurphys.com for easy pick up everywhere, and
find us on your favorite delivery apps in select markets.
Forward-looking StatementsThis 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 estimated comparable
store sales, total revenue, net income, Pro-Forma Net Income (and
the components thereof) and Adjusted EBITDA (and the components
thereof) for the fiscal quarter and fiscal year ended December 31,
2018, and expected future results of operations and business
strategy, including the expected effects of the Company’s strategic
and cost-saving initiatives.
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 1, 2018 (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
measures of Adjusted EBITDA and Pro-Forma Net Income. Adjusted
EBITDA and Pro-Forma Net Income are not derived in accordance with
GAAP. Adjusted EBITDA and Pro-Forma Net Income should not be
considered by the reader as an alternative to net income (the most
comparable GAAP financial measure to Adjusted EBITDA and Pro-Forma
Net Income). The Company’s management believes that Adjusted EBITDA
and Pro-Forma Net Income are helpful as indicators of the current
financial performance of the Company because Adjusted EBITDA and
Pro-Forma Net Income 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 Adjusted EBITDA and Pro-Forma Net Income to GAAP
net income in the financial tables accompanying this release.
|
PAPA MURPHY’S HOLDINGS, INC. AND
SUBSIDIARIESReconciliation of Net Income to EBITDA
and Adjusted EBITDA(In thousands of dollars) |
|
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, 2018 |
|
December 31, 2018 |
|
(unaudited) |
|
(unaudited) |
Net
Income |
$ |
1,997 |
|
|
$ |
4,324 |
|
Depreciation and amortization |
1,564 |
|
|
7,241 |
|
Provision
for income taxes |
513 |
|
|
1,483 |
|
Interest
expense, net |
1,370 |
|
|
5,212 |
|
EBITDA |
$ |
5,444 |
|
|
$ |
18,260 |
|
|
|
|
|
Expenses not indicative
of future operations: |
|
|
|
CEO
transition and restructuring (a) |
206 |
|
|
595 |
|
E-commerce impairment and transition costs (b) |
— |
|
|
350 |
|
Store
divestitures, closures, and impairment (c) |
121 |
|
|
1,918 |
|
Litigation settlement and reserves (d) |
(121 |
) |
|
908 |
|
Strategic
alternatives (e) |
237 |
|
|
237 |
|
Debt
refinancing (f) |
38 |
|
|
38 |
|
Estimated
Adjusted EBITDA |
$ |
5,925 |
|
|
$ |
22,306 |
|
|
|
|
|
Adjusted EBITDA
margin (1) |
18.5 |
% |
|
17.6 |
% |
- Represents non-recurring management transition and
restructuring costs plus costs associated with recruitment of a new
Chief Executive Officer and Chief Financial Officer.
- Represents impairment of our e-commerce platform based on the
decision to move to a third party developed and hosted
solution.
- Represents non-cash charges associated with the disposal or
impairment of store assets upon the determination that the book
value of certain stores was higher than the fair value of those
stores, plus lease buyouts and reserves for the residual
contractual lease obligations on closed stores.
- Payments and accruals made toward franchisee settlements and
litigation reserves.
- Reflects costs associated with the exploration of strategic
alternatives.
- Reflects costs associated with amendments to the Company's
credit facilities.
- Adjusted EBITDA margin is calculated by dividing Adjusted
EBITDA by total revenues.
|
PAPA MURPHY’S HOLDINGS, INC. AND
SUBSIDIARIESReconciliation of Net Income to Pro
Forma Net Income(In thousands of dollars, except share and
per share data) |
|
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, 2018 |
|
December 31, 2018 |
|
(unaudited) |
|
(unaudited) |
Net
Income |
$ |
1,997 |
|
|
$ |
4,324 |
|
Expenses
not indicative of future operations: |
|
|
|
CEO
transition and restructuring (a) |
206 |
|
|
595 |
|
E-commerce impairment (b) |
— |
|
|
350 |
|
Store
closures and impairment (c) |
121 |
|
|
1,918 |
|
Litigation settlements and reserves (d) |
(121 |
) |
|
908 |
|
Strategic
alternatives (e) |
237 |
|
|
237 |
|
Debt
refinancing (f) |
38 |
|
|
38 |
|
Income
tax expense on above adjustments (g) |
(123 |
) |
|
(1,031 |
) |
Pro Forma Net
Income |
$ |
2,355 |
|
|
$ |
7,339 |
|
|
|
|
|
Earnings per share -
pro forma: |
|
|
|
Basic |
$ |
0.14 |
|
|
$ |
0.43 |
|
Diluted |
$ |
0.14 |
|
|
$ |
0.43 |
|
|
|
|
|
Weighted average shares
outstanding - pro forma: |
|
|
|
Basic |
16,946,942 |
|
|
16,929,764 |
|
Diluted |
16,994,349 |
|
|
17,000,858 |
|
- Represents non-recurring management transition and
restructuring costs plus costs associated with recruitment of a new
Chief Executive Officer and Chief Financial Officer.
- Represents impairment of our e-commerce platform based on the
decision to move to a third party developed and hosted
solution.
- Represents non-cash charges associated with the disposal or
impairment of store assets upon the determination that the book
value of certain stores was higher than the fair value of those
stores, plus lease buyouts and reserves for the residual
contractual lease obligations on closed stores.
- Payments and accruals made toward franchisee settlements and
litigation reserves.
- Reflects costs associated with the exploration of strategic
alternatives.
- Reflects costs associated with amendments to the Company's
credit facilities.
- Reflects the tax expense associated with above adjustments at a
normalized tax rate of 25.5%.
Investor Contact:Maurice
Hinesmaurice.hines@papamurphys.com360-449-4008
Media Contact:Alexis Diltz or Daniel
Evanscommunications@papamurphys.com360-449-4001
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