Papa Murphy's Holdings, Inc. announced financial results for its first quarter ended April 3, 2017.
Key financial highlights for the first quarter of 2017 include the following:
Revenue was $32 million compared to $33 million in the first quarter of 2016.
Domestic system comparable store sales decreased 5 percent, including a 4.5 percent decrease at domestic franchisee-owned stores and a 9.9 percent decrease at company-owned stores, compared to the first quarter of 2016.
Selling, general and administrative expense was $17.2 million and included $8.3 million related to the quarterly deficit at the advertising-fund (ADF) and $2.2 million related to one-time severance and restructuring costs; the company expects this deficit to largely reverse throughout the balance of the fiscal year.
Net Loss was $5.4 million, or $0.32 per diluted share, compared to Net Income of $642,000, or $0.04 per diluted share in the prior year quarter; the quarterly ADF deficit and one-time severance and restructuring costs adversely affected the reported Net Loss by $6.3 million, or $0.37 per diluted share.
EBITDA was ($4.9) million compared to $5.0 million in the prior year first quarter; the quarterly ADF deficit and one-time severance and restructuring costs adversely affected EBITDA by $10.5 million.
Franchise-owners opened seven new stores in the quarter, including six units in the U.S.
Subsequent to the quarter end the company closed on the refranchising of seven company-owned stores in the Denver market.
Jean Birch, board chair and interim chief executive officer of Papa Murphy's Holdings, Inc., says, "We firmly believe that the key to long-term and sustainable growth of shareholder value is an engaged and thriving franchise base. Obviously, the overall results of our national cable TV test were disappointing, but these learnings reinforce our focus on facilitating growth for our franchise owners through local store marketing, product innovation and improved customer convenience. The progress we've made on our refranchising strategy, along with our recent restructuring, will allow us to more effectively manage our resources in support of our franchise owners. We believe we now have the right people focused on the right things to return this business to sustained growth and profitability, creating long-term value for all of our stakeholders."
2017 Financial Outlook
Based on current information, Papa Murphy's Holdings, Inc. is providing the following guidance for the second quarter of 2017, which ends on July 3, 2017, and full-year outlook for fiscal 2017, which ends on January 1, 2018:
Second quarter domestic system-wide comparable store sales decline in the low-to-mid single digits, compared to the second quarter of 2016;
Full-year domestic system-wide comparable store sales growth in the range of -2 percent to flat, compared to previous guidance of flat to +2 percent;
Full-year domestic franchise new store openings of between 60 and 75 units, compared to previous guidance of around 75 units;
Full-year refranchising of at least 15 company-owned units;
Full-year selling, general and administrative expenses of approximately $28 million, including one-time severance and restructuring costs estimated at $2.6 million, compared to previous guidance of approximately $30 million, including approximately $2.6 million related to one-time severance and restructuring;
Full year EBITDA, excluding one-time severance and restructuring costs, of at least $24 million, consistent with previous guidance;
Full year Capex, net of cash proceeds from refranchising, in the range of $3 million to $4 million, compared to previous guidance of $5 million to $7 million;
Cash Flow from Operations less Capex, net of cash proceeds from refranchising, of at least $15 million, compared to previous guidance of at least $13 million;
Full-year effective book tax rate of approximately 43.8 percent, compared to previous guidance of approximately 41.7 percent; and
Diluted share-count of approximately 16.8 million.
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