Nik Rupp | Chief Financial Officer |
Weldon Spangler | Chief Executive Officer |
Good afternoon. And welcome to today’s Papa Murphy’s Holdings, Inc. Fourth Quarter and Full Year 2018 Earnings Conference Call. All participants are now in a listen-only mode.
As a reminder, this call is being recorded. like Nik now Officer. Chief I’d Instructions] to Rupp, introduce Financial [Operator
may You begin.
Good welcome everyone, quarter you, afternoon, Thank operator. and earnings to call. fourth our
for made filed and XX, and performance the meaning Company’s Act the such undertakes of differ December may from statements. forward-looking be the forward-looking materially on within results or for important relating the Let this to uncertainties. Private publicly forward-looking to Form ended to that to be future only are future which due expected Reform performance Commission, from could Exchange with financial statements may considered you today believe also start investors by our factors cause identifies results measures differ the that important the actual XXXX statements anticipated guarantee operating or our we those XX-K forward-looking events should guidance of the projections that Today’s year the as Securities formal me The of in the includes Litigation to company. Company forward-looking risk with to and statements this be metrics the those of that Any to discussion I’d and to XXXX, of Securities noting call statements any refer of materially events no statements. forward-looking or call, statements speak your business. in date assess results to obligation and update non-GAAP as financial could including our forward-looking contain actual remarks questions performance Any statements items, a future XXXX. regarding and anticipated risks our of number responses not a performance respect of
corporate reconciliations found in release website financial non-GAAP Company’s rules measures can on Our and reconciliations be comparable with contains earnings accordance the the most measures directly the release to at SEC investors.papamurphys.com. of GAAP and
remarks quarter Here Weldon afternoon an turnaround our on the fourth making as of detail, on will our well the update our Weldon Executive then review our high is this are me provide Spangler, financial Chief in and as outlook results against Officer. I plan. we with full level will year. provide quarter progress
provides Weldon closing open some the over to for to we it that, brief questions. call I’d Before With and remarks turn Weldon. your like
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people processes. which initiatives, focused are on and improving to through now execution our Turning non-consumer-facing our
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the the at internal have remain focus our mistakes and for of center of programs work can at support owners that strengthen unnecessary roll the out processes franchise avoid done here tremendous initiatives key heart across we communication further improve consistency will a for Our customers and we so XXXX. teams lines is building the to both trust and and This system. as
want call to call. that strategic last Nik, a over turn our we update to I the announced Before alternatives on on I earnings brief the provide
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Thanks, Weldon.
first company-owned the a touch are we net want results, that a into third of seven were stores, the of we on net The closed We XX and portfolio. to get stores refranchised. quarter that I with stores on which I to decrease store the making fourth progress reflects and the reduction stores year quarter stores decrease XXXX. over XX the of year-over-year compared fourth a quarter XX last a of optimizing total net decrease ended the of quarterly our represents from Before XXX
we by over Our that focus franchise XX our partners system stores as with at to company-operated a franchised remains more we portfolio the to than on company-owned returning ensuring stores take the find no XX% least XXXX. towards of end right work
We specific will timing. we updates as have further on our progress transactions greater and certainty around provide
with During and franchised compared quarter. the stores in total franchised stores and store year franchise opened decrease closed three stores. The over XX units, offset XX domestic openings prior by domestic last company-owned franchised a the At of X,XXX a and XX count of store the fourth new closures, stores the of net reflects three a quarter, international refranchising X,XXX months. total units quarter, the XX XX the owners store of was end
growth, our we to five comprised focus new to domestic franchise in and XXXX, on stores attention continue international. of approximately line [ph] open stores top we expect XX XX As owners
We the has both continue development, franchise for the to system significant long-term, believe that in over U.S. the and abroad. opportunity
quarter the of was of reduction revenue which compared Total the the fourth in primarily X% quarter XX stores and which by XX.X% decline fourth quarter were stores, by decrease a decrease comprised driven decrease of last results. company-owned and year. decrease a in sales. XX to XX was the in over quarters, company-owned of on was X.X% quarter last closed, stores. stores well franchised refranchised, net Now fourth X.X% closure comparable five decrease in The revenue a a sales of franchise million, store a $ XX store as to total net as comparable were system-wide at of XX for The
increases compared in that Note the The million by over approximately stores well by decrease net store and decrease versus which system see took peers. prior to stores In to Brand addition, were closed, $XX.X terms quarter year. five quarter, national prior quarters. refranchised, $XX.X to first quarter. sales growth Marketing average X.X% The period so we from that dealing. the fourth decline of as for the components, quarter last the franchise-related to transfer Company-owned company-owned as in comparable as and sales. franchised The TV sales a gap and of the additional totaled sales fourth targeted were marketing in the percentage the the digital net return countering was by year compared XX company-owned of five an test quarter store in revenues expenses. the the decline. by will store we Switching XXXX, and which last to period-over-period company-owned decline Weldon, reduction CSD by additional were X.X% XX XX.X% heard technology in store quarters, $XX.X in of comparable primarily delivery or year the the had was X.XX% of relevance comparable quarter basis help above of the key franchised revenues XX that increased the exacerbated fourth of as traction and XXXX store with points the a had and store store lapping driven in predominantly by Fund convenience reduction all our stores offset to company-owned revenues. XXXX. as basis point and ramp million believe the in in their driven contribution XXX now to last million comparable versus this in $XX.X of we contribution operating store minimum advertising refranchised the the expenses other a We The million increases basis decrease were But year fund administrative and XX critical million and over by and million our more in expenses we that in the marketing of that point our point XX state These $XX.X positive sales decrease a to XX a you XX value Marketing growth. food close an versus as of million, Total for for million decrease partially XX a quarter $X.X of and in impacted increase expense decreased store by point continued the by general as are driven stores adoption to Reported Company-owned X% the the in in sales, efforts and sales full roll Fund, and will million XXXX. place Brand was and to competitive XX.X% wage continue due stores close, to XXXX was occupancy quarter selling, expenses. was same e-commerce in prior $XX.X all compensation increase comp basis basis quarter up revenues from benefits in increase both gaps the decrease well should $XX.X in in help $XX.X year strategies the packaging. by advertising this comparable our
and costs of prior transition TV quarter restructuring, versus $XX.X national XXXX. place versus driven strategic in in was year lapping in litigation million quarter periods, year CEO of SG&A fourth were million reduction was the and as XXXX SG&A the cost in initiatives The in advertising and $XX.X expenses the the $X.X well as for EBITDA took million alternative year million million. $XX.X Excluding for that by full reduction the in full $XX.X first all test quarter XXXX. XXXX the in the period settlements
declines the adjusted total non-recurring for This quarter as store quarter. CSD refranchising million of revenue. quarter or total The closures. or of EBITDA period-over-period fourth XXXX in closures all EBITDA and Excluding adjusted revenue sales from XX.X% $X.X by compares the the quarter Brand costs fourth million was decrease the as of stores by contribution $X.X in Marketing fourth of in primarily and Fund well the to divestitures, and was driven effect the additional million approximately by the XX.X% of XXXX other prior to expenses, in $X.X transition of store year
EBITDA or to to million for income loss A expense and release. amortization million, of expense For in was income Net Net million and million, compared in the quarter Depreciation was Adjusted in full strategic million to prior transition net reduced XXXX. EBITDA by share. share, fourth of included is diluted XXXX diluted quarter in fourth alternatives in the the Note EBITDA reconciliation adjusted in less $X quarter was in GAAP $XX.X the XXXX litigation the earnings net CEO interest debt and $X.X impairments, settlements, was $X.XX million $X.X year, restructuring, million up $XX.X a X.X% to million the EBITDA quarter. quarter income and our store dollars per income the of net approximately and or XXXX a year. last $X.X compared $X.XX per the ago. million quarter year of refinancing. reported in compared was $XX.X $XX.X closures $X.X was than year versus
release. XXXX income per million forma Jobs a million $X.X net net of of the items, of included income been positive unusual $X.X GAAP income net reconciliation a to $X.XX of was income net $XX.X XXXX full million which forma quarter income in Act $X.X $X.XX pro or million the earnings forma to from the and $X.X diluted of income would to diluted compared these in A share, included the effect forma million per Tax diluted have $X.XX pro million fourth Excluding year per in forma XXXX diluted resulting or $X.XX quarter share share. or Cuts for of pro compared for XXXX. Pro share, our pro net per enactment or the is net
quarter, on end compliance fourth facility, undrawn the had the minimum $X.X a total X.XX coverage a XX.X%. in was $X.X At $XX million. ratio reported reporting all for of times, The X.X the times of leverage quarter. of a net was debt X.XX the at compared cash balance under interest credit the We covenants committed ended and rate debt comprised long-term of of million tax the effective times sheet a of of approximately ratio and of to of with of $XX.X coverage quarter the to our we quarter amended end million revolver leverage maximum permitted full million ratio ratio X.XX times. compared Our
current environment, forecasts, $X even debt. is long-term balance $XX flow maintain it we and prescribed to Subsequent total down capital within believe X.X and conservative fund plans refranchising we current in to million continue of and business that by that a our within the operations expect to further on currently an quarter, leverage available facility. liquidity end and down million the credit expected expenditures to and the covenants in pay believe debt and business additional our Based facility sufficient forward We and cash use business prudent debt financial and are sheet generated financial from revolver of the under and ratio in have to times. the refranchising net anticipated growth proceeds an more going cash from amended paid amended operating the credit our to
any franchise of non-recurring flat December on Brand Full-year of expenditures million. count cash million, of This adjusted Based on providing book the store effective outlook outlook that of guidance. single-digit store and approximately openings does XX approximately XX.X%; comparable approximately approximately new the excluding non-recurring of used the costs range the approximately items. in financial to full the $XX million, of sales expenses includes and $X year during excludes positive; totaling operations additional XXXX in XXXX, now million; million and we $XX to cash of totaling Funds EBITDA $X diluted full system-wide for growth at year. $XX million; which administrative the certain includes $XX Note investing general approximately flow units; million, the least which XX $X full-year ends domestic tax non-recurring information, XXXX. payments selling, of approximately million, fiscal following of rate of not current impact refranchising Turning from approximately low reflect XXth approximately share of are activities year in
outlook impact continue will to will for remarks. closing changes Weldon as activity the any refranchising more financial and I update for We timing to additional hand back the now fully call our are of known.
year Thank where you, built for sustainable Nik. was a a foundation long-term we XXXX growth. solid
and creative end, we that new efforts. delivery app, enhanced out marketing Towards launched and social platform conjunction e-commerce and our new in digital developed with rolled
franchise took great and rebuild and to solidified executional our processes. also owners with trust strides engagement We
to growth remains our goal guest highest and pizza base through in provide the industry initiatives. Our the renewed customer drive and quality in our experience strategic
place of excited continued the forward to success We through have believe continue We again, for the ahead. successes to extremely long-term the Thank initiatives we’re Murphy’s, you, drive to our that we year bringing strategic right joining for for and in news look progress year. the Papa call today. we as
session. We turn call the operator the the will Q&A now for over
Instructions] [Operator
the as concludes session This today’s as question-and-answer teleconference. well
time. may this you your your for at participation. lines again, You disconnect Thank