Papa Murphy's (FRSH) Prelim. Q4 Results Top Consensus (Earlier)

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.

(Street sees Q4 EPS of 7 cents on revenue of $28 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.

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1. “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).
2. 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.

1. Represents non-recurring management transition and restructuring costs plus costs associated with recruitment of a new Chief Executive Officer and Chief Financial Officer.
2. Represents impairment of our e-commerce platform based on the decision to move to a third party developed and hosted solution.
3. 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.
4. Payments and accruals made toward franchisee settlements and litigation reserves.
5. Reflects costs associated with the exploration of strategic alternatives.
6. Reflects costs associated with amendments to the Company's credit facilities.

1. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by total revenues.

1. Represents non-recurring management transition and restructuring costs plus costs associated with recruitment of a new Chief Executive Officer and Chief Financial Officer.
2. Represents impairment of our e-commerce platform based on the decision to move to a third party developed and hosted solution.
3. 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.
4. Payments and accruals made toward franchisee settlements and litigation reserves.
5. Reflects costs associated with the exploration of strategic alternatives.
6. Reflects costs associated with amendments to the Company's credit facilities.
7. Reflects the tax expense associated with above adjustments at a normalized tax rate of 25.5%.

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