FRG - Franchise Group Inc. Announces Fiscal 2021 Third Quarter Financial Results
- Increases 2021 Financial Outlook to at Least $3.1 Billion in Revenue and at Least $3.80 in Non-GAAP EPS
- Expects Significant Growth in Revenue and Cash Flow in Fiscal 2022
- Franchising Momentum Accelerating
DELAWARE, Ohio, Nov. 02, 2021 (GLOBE NEWSWIRE) -- Franchise Group, Inc. (NASDAQ: FRG) (“Franchise Group” or the “Company”) today announced the financial results of its fiscal 2021 third quarter. For the third quarter of fiscal 2021, total reported revenue for Franchise Group was $828.8 million, net income from continuing operations was $36.0 million or $0.83 per fully diluted share, Adjusted EBITDA was $80.8 million and Non-GAAP EPS was $0.97 per share. On July 2, 2021, the Company completed the sale of Liberty Tax and, as such, the financial position and results of operations of the Company’s Liberty Tax segment are presented as discontinued operations and have been excluded from the Company’s fiscal 2021 third quarter results. Total cash was $160.0 million and outstanding debt at the end of the third quarter of fiscal 2021 was $1.1 billion.
Brian Kahn, Franchise Group’s President and CEO stated, “Our management teams, associates, and franchisees are performing well. Despite continuing supply chain constraints and overall inflationary pressures, the underlying strength of the Franchise Group brands allows us to increase our financial expectations for fiscal year 2021. Franchising momentum is continuing to accelerate with new development agreements for 153 new locations in addition to 124 new store openings year to date. As we look towards fiscal 2022, we see significant growth for Franchise Group as systemwide unit growth is compounded by overall same store sales growth. We also remain active in pursuit of additional brands that we believe will further diversify our cash flow streams or add scale to existing platforms, and we expect to execute on at least one accretive transaction in the near term.”
The Company has four reportable segments: American Freight; The Vitamin Shoppe; Pet Supplies Plus and Buddy’s. The following table summarizes Revenue, Adjusted EBITDA, and Net Income/(Loss) for each of these segments. Reconciliations of Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP EPS to their respective most comparable GAAP measures, are included below under “Non-GAAP Financial Measures and Key Metrics.”
| For the Three Months Ended |
| For the Nine Months Ended |
| September 25, 2021 |
| September 25, 2021 |
| Adjusted |
| Net |
| Adjusted |
| Net |
| Revenue |
| EBITDA |
| Income/(Loss) |
| Revenue |
| EBITDA |
| Income/(Loss) |
| (In thousands) |
| (In thousands) |
| American Freight |
| $ |
| 223,591 |
| $ |
| 16,045 |
| $ |
| 959 |
| $ |
| 750,914 |
| $ |
| 75,887 |
| $ |
| 27,538 |
| Vitamin Shoppe |
| 300,813 |
| 35,886 |
| 21,086 |
| 898,108 |
| 113,904 |
| 73,875 |
| Pet Supplies Plus |
| 286,643 |
| 24,994 |
| 13,642 |
| 613,712 |
| 52,655 |
| 13,677 |
| Buddy's |
| 17,779 |
| 4,433 |
| 5,159 |
| 50,195 |
| 14,004 |
| 10,639 |
| Corporate |
| - |
| (515 |
| ) |
| (4,848 |
| ) |
| - |
| (4,683 |
| ) |
| (85,544 |
| ) |
| Total |
| $ |
| 828,826 |
| $ |
| 80,843 |
| $ |
| 35,998 |
| $ |
| 2,312,929 |
| $ |
| 251,766 |
| $ |
| 40,185 |
Outlook
Franchise Group is increasing its expectations for annual Adjusted EBITDA for 2021 from at least $320 million to at least $325 million, Non-GAAP EPS from at least $3.45 per share to at least $3.80 per share and revenue from at least $3.05 billion to at least $3.1 billion. In calculating EPS, the Company is using approximately 41 million weighted average shares outstanding. Non-GAAP EPS is calculated by adding the tax effected impact of adjustments to EBITDA to net income on a per share basis. In calculating Non-GAAP EPS, the Company is currently using an effective tax rate of 18.5%.
The Company does not provide a quantitative reconciliation of forward-looking, Non-GAAP financial measures such as forecasted Adjusted EBITDA or Non-GAAP EPS to the most directly comparable GAAP financial measures because it is difficult to reliably predict or estimate the relevant components without unreasonable effort due to future uncertainties that may potentially have significant impact on such calculations, and providing them may imply a degree of precision that would be confusing or potentially misleading. Estimates exclude potential acquisitions, divestitures or refranchising activities. See “Non-GAAP Financial Measures and Key Metrics.”
Conference Call Information
Franchise Group will conduct a conference call on November 2 nd at 4:30 P.M. ET to discuss its business, review financial results for the third quarter of fiscal 2021 and discuss its outlook for the remainder of fiscal 2021. A real-time webcast of the conference call will be available on the Events page of Franchise Group’s website at www.franchisegrp.com. The conference call can also be accessed live via telephone at (877) 784-1793. The passcode is 2978952. Please dial in 5-10 minutes prior to the scheduled start time.
About Franchise Group, Inc.
Franchise Group is an owner and operator of franchised and franchisable businesses that continually looks to grow its portfolio of brands while utilizing its operating and capital allocation philosophy to generate strong cash flow for its shareholders. Franchise Group’s business lines include Pet Supplies Plus, American Freight, The Vitamin Shoppe, Buddy’s Home Furnishings and Sylvan Learning. On a combined basis, Franchise Group currently operates over 2,600 locations predominantly located in the U.S. that are either Company-run or operated pursuant to franchising agreements.
| FRANCHISE GROUP, INC. AND SUBSIDIARIES |
| Consolidated Balance Sheets |
| (In thousands, except share count and per share data) |
| September 25, 2021 |
| December 26, 2020 |
| Assets |
| (Unaudited) |
| (Audited) |
| Current assets: |
| Cash and cash equivalents |
| $ |
| 159,972 |
| $ |
| 148,780 |
| Current receivables, net |
| 95,686 |
| 67,335 |
| Inventories, net |
| 533,552 |
| 302,307 |
| Current assets held for sale |
| - |
| 43,023 |
| Other current assets |
| 18,643 |
| 13,997 |
| Total current assets |
| 807,853 |
| 575,442 |
| Property, equipment, and software, net |
| 202,968 |
| 135,872 |
| Non-current receivables, net |
| 12,000 |
| 12,800 |
| Goodwill |
| 787,441 |
| 448,258 |
| Intangible assets, net |
| 308,905 |
| 109,892 |
| Operating lease right-of-use assets |
| 656,561 |
| 502,104 |
| Non-current assets held for sale |
| - |
| 55,116 |
| Other non-current assets |
| 55,856 |
| 8,428 |
| Total assets |
| $ |
| 2,831,584 |
| $ |
| 1,847,912 |
| Liabilities and Stockholders Equity |
| Current liabilities: |
| Current installments of long-term obligations |
| $ |
| 1,420 |
| $ |
| 104,053 |
| Current operating lease liabilities |
| 158,577 |
| 127,032 |
| Accounts payable and accrued expenses |
| 360,274 |
| 252,389 |
| Current liabilities held for sale |
| - |
| 40,576 |
| Other current liabilities |
| 34,095 |
| 25,174 |
| Total current liabilities |
| 554,366 |
| 549,224 |
| Long-term obligations, excluding current installments |
| 1,072,909 |
| 466,944 |
| Non-current operating lease liabilities |
| 513,461 |
| 402,276 |
| Non-current liabilities held for sale |
| - |
| 8,779 |
| Other non-current liabilities |
| 51,366 |
| 35,522 |
| Total liabilities |
| 2,192,102 |
| 1,462,745 |
| Stockholders equity: |
| Common stock, $0.01 par value per share, 180,000,000 and 180,000,000 shares authorized, 40,237,297 and 40,092,260 shares issued and outstanding at September 25, 2021 and December 26, 2020, respectively |
| 402 |
| 401 |
| Preferred stock, $0.01 par value per share, 20,000,000 and 20,000,000 shares authorized, 4,541,125 and 1,250,000 shares issued and outstanding at September 25, 2021 and December 26, 2020, respectively |
| 45 |
| 13 |
| Additional paid-in capital |
| 471,405 |
| 382,383 |
| Accumulated other comprehensive loss, net of taxes |
| - |
| (1,399 |
| ) |
| Retained earnings |
| 167,630 |
| 3,769 |
| Total equity attributable to Franchise Group, Inc. |
| 639,482 |
| 385,167 |
| Non-controlling interest |
| - |
| - |
| Total equity |
| 639,482 |
| 385,167 |
| Total liabilities and equity |
| $ |
| 2,831,584 |
| $ |
| 1,847,912 |
| FRANCHISE GROUP, INC. AND SUBSIDIARIES |
| Consolidated Statements of Operations |
| Three Months Ended |
| Nine Months Ended |
| (In thousands, except share count and per share data) |
| September 25, 2021 |
| September 26, 2020 |
| September 25, 2021 |
| September 26, 2020 |
| (Unaudited) |
| (Unaudited) |
| (Unaudited) |
| (Unaudited) |
| Revenues: |
| Product |
| $ |
| 782,608 |
| $ |
| 500,462 |
| $ |
| 2,172,193 |
| $ |
| 1,440,677 |
| Service and other |
| 37,891 |
| 19,826 |
| 114,659 |
| 46,516 |
| Rental |
| 8,327 |
| 17,404 |
| 26,077 |
| 51,000 |
| Total revenues |
| 828,826 |
| 537,692 |
| 2,312,929 |
| 1,538,193 |
| Operating expenses: |
| Cost of revenue: |
| Product |
| 485,682 |
| 296,920 |
| 1,347,673 |
| 862,320 |
| Service and other |
| 8,737 |
| 678 |
| 10,076 |
| 2,135 |
| Rental |
| 2,930 |
| 5,877 |
| 8,869 |
| 17,327 |
| Total cost of revenue |
| 497,349 |
| 303,475 |
| 1,366,618 |
| 881,782 |
| Selling, general, and administrative expenses |
| 276,714 |
| 209,537 |
| 780,416 |
| 619,799 |
| Total operating expenses |
| 774,063 |
| 513,012 |
| 2,147,034 |
| 1,501,581 |
| Income from operations |
| 54,763 |
| 24,680 |
| 165,895 |
| 36,612 |
| Other expense: |
| Other |
| (13,090 |
| ) |
| (1,246 |
| ) |
| (49,816 |
| ) |
| (5,295 |
| ) |
| Interest expense, net |
| (21,194 |
| ) |
| (26,269 |
| ) |
| (91,494 |
| ) |
| (78,658 |
| ) |
| Income (loss) from continuing operations before income taxes |
| 20,479 |
| (2,835 |
| ) |
| 24,585 |
| (47,341 |
| ) |
| Income tax expense (benefit) |
| (15,519 |
| ) |
| 1,891 |
| (15,600 |
| ) |
| (50,217 |
| ) |
| Income (loss) from continuing operations |
| 35,998 |
| (4,726 |
| ) |
| 40,185 |
| 2,876 |
| Income (loss) from discontinued operations, net of tax |
| 128,072 |
| (3,871 |
| ) |
| 176,434 |
| 28,483 |
| Net income (loss) |
| 164,070 |
| (8,597 |
| ) |
| 216,619 |
| 31,359 |
| Less: Net income (loss) attributable to non-controlling interest |
| - |
| - |
| - |
| (2,090 |
| ) |
| Net income (loss) attributable to Franchise Group, Inc. |
| $ |
| 164,070 |
| $ |
| (8,597 |
| ) |
| $ |
| 216,619 |
| $ |
| 29,269 |
| Amounts attributable to Franchise Group, Inc.: |
| Net income (loss) from continuing operations |
| $ |
| 35,998 |
| $ |
| (4,726 |
| ) |
| $ |
| 40,185 |
| $ |
| (11,005 |
| ) |
| Net income (loss) from discontinued operations |
| 128,072 |
| (3,871 |
| ) |
| 176,434 |
| 40,274 |
| Net income (loss) attributable to Franchise Group, Inc. |
| $ |
| 164,070 |
| $ |
| (8,597 |
| ) |
| $ |
| 216,619 |
| $ |
| 29,269 |
| Basic earnings (loss) per share: |
| Continuing operations |
| $ |
| 0.84 |
| $ |
| (0.12 |
| ) |
| $ |
| 0.84 |
| $ |
| (0.34 |
| ) |
| Discontinued operations |
| 3.18 |
| (0.10 |
| ) |
| 4.39 |
| 1.23 |
| Total basic earnings per share |
| $ |
| 4.02 |
| $ |
| (0.22 |
| ) |
| $ |
| 5.23 |
| $ |
| 0.89 |
| Diluted earnings (loss) per share: |
| Continuing operations |
| $ |
| 0.83 |
| $ |
| (0.12 |
| ) |
| $ |
| 0.83 |
| $ |
| (0.34 |
| ) |
| Discontinued operations |
| 3.13 |
| (0.10 |
| ) |
| 4.31 |
| 1.23 |
| Total diluted earnings per share |
| $ |
| 3.96 |
| $ |
| (0.22 |
| ) |
| $ |
| 5.14 |
| $ |
| 0.89 |
| Weighted-average shares outstanding: |
| Basic |
| 40,229,232 |
| 39,692,384 |
| 40,171,458 |
| 32,679,576 |
| Diluted |
| 40,973,736 |
| 39,692,384 |
| 40,931,423 |
| 32,679,576 |
| FRANCHISE GROUP, INC. AND SUBSIDIARIES |
| Consolidated Statements of Cash Flows |
| Nine Months Ended |
| (In thousands) |
| September 25, 2021 |
| September 26, 2020 |
| (Unaudited) |
| (Unaudited) |
| Operating Activities |
| Net income |
| $ |
| 216,619 |
| $ |
| 31,359 |
| Adjustments to reconcile net income to net cash provided by operating activities: |
| Provision for doubtful accounts |
| 2,010 |
| 3,412 |
| Depreciation, amortization and impairment charges |
| 50,127 |
| 51,254 |
| Amortization of deferred financing costs |
| 35,590 |
| 28,703 |
| Loss (gain) on disposal of other |
| (374 |
| ) |
| 75 |
| Stock-based compensation expense - equity awards |
| 9,561 |
| 6,294 |
| (Gain) on bargain purchases and sales of Company-owned offices |
| (3,368 |
| ) |
| (1,761 |
| ) |
| Deferred tax (income) expense |
| (17 |
| ) |
| 7,851 |
| Prepayment penalty for early debt extinguishment |
| 36,726 |
| - |
| Gain on divestiture of Liberty Tax |
| (173,699 |
| ) |
| - |
| Change in |
| Accounts, notes, and interest receivable |
| 5,748 |
| (2,223 |
| ) |
| Income taxes receivable |
| (13,473 |
| ) |
| (23,721 |
| ) |
| Other assets |
| 26,026 |
| 3,971 |
| Accounts payable and accrued expenses |
| 21,959 |
| 38,884 |
| Inventory |
| (108,947 |
| ) |
| 79,967 |
| Deferred revenue |
| 10,952 |
| 5,649 |
| Net cash provided by operating activities |
| 115,440 |
| 229,714 |
| Investing Activities |
| Issuance of operating loans to franchisees and area developers |
| (17,749 |
| ) |
| (30,368 |
| ) |
| Payments received on operating loans to franchisees and area developers |
| 23,103 |
| 50,064 |
| Purchases of Company-owned offices and acquired customer lists |
| (1,086 |
| ) |
| (4,830 |
| ) |
| Proceeds from sale of Company-owned offices |
| 3,189 |
| 1,118 |
| Acquisition of business, net of cash and restricted cash acquired |
| (462,821 |
| ) |
| (353,423 |
| ) |
| Divestiture of business, net of cash and restricted cash sold |
| 179,471 |
| - |
| Purchases of property, equipment, and software |
| (36,871 |
| ) |
| (26,702 |
| ) |
| Proceeds from sale of property, equipment, and software |
| 195 |
| 1,474 |
| Net cash (used in) investing activities |
| (312,569 |
| ) |
| (362,667 |
| ) |
| Financing Activities |
| Proceeds from the exercise of stock options |
| 386 |
| 520 |
| Dividends paid |
| (50,016 |
| ) |
| (19,167 |
| ) |
| Non-controlling interest distribution |
| - |
| (4,716 |
| ) |
| Repayment of other long-term obligations |
| (957,382 |
| ) |
| (455,811 |
| ) |
| Borrowings under revolving credit facility |
| 6,724 |
| 174,665 |
| Repayments under revolving credit facility |
| (84,874 |
| ) |
| (218,260 |
| ) |
| Issuance of common stock |
| - |
| 198,003 |
| Issuance of preferred stock |
| 79,542 |
| 28,366 |
| Payment for debt issue costs and original issuance discounts |
| (51,288 |
| ) |
| (16,673 |
| ) |
| Prepayment penalty for early debt extinguishment |
| (36,726 |
| ) |
| - |
| Issuance of debt |
| 1,300,000 |
| 586,000 |
| Cash paid for taxes on exercises/vesting of stock-based compensation |
| (433 |
| ) |
| (85 |
| ) |
| Net cash provided by financing activities |
| 205,933 |
| 272,842 |
| Effect of exchange rate changes on cash, net |
| 34 |
| (142 |
| ) |
| Net increase in cash equivalents and restricted cash |
| 8,838 |
| 139,747 |
| Cash, cash equivalents and restricted cash at beginning of period |
| 151,502 |
| 45,146 |
| Cash, cash equivalents and restricted cash at end of period |
| $ |
| 160,340 |
| $ |
| 184,893 |
| Supplemental Cash Flow Disclosure |
| Cash paid for taxes, net of refunds |
| $ |
| 39,618 |
| $ |
| 944 |
| Cash paid for interest |
| $ |
| 79,074 |
| $ |
| 41,226 |
| Accrued capital expenditures |
| $ |
| 3,496 |
| $ |
| 3,633 |
| Non-cash proceeds from divestiture of Liberty Tax |
| $ |
| 59,680 |
| $ |
| - |
| Deferred financing costs from issuance of common stock |
| $ |
| - |
| $ |
| 31,013 |
| Capital expenditures funded by finance lease liabilities |
| $ |
| 1,211 |
| $ |
| - |
| Tax receivable agreement included in other long-term liabilities |
| $ |
| - |
| $ |
| 17,156 |
Non-GAAP Financial Measures and Key Metrics
Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP EPS are financial measures that are not prepared in accordance with GAAP. Management believes the presentation of these measures is useful to investors as supplemental measures in evaluating the aggregate performance of the Company’s operating businesses and in comparing its results from period to period because they exclude items that the Company does not believe are reflective of its core or ongoing operating results. These measures are used by management to evaluate performance and make resource allocation decisions each period. These metrics are also used in the determination of executive management's compensation. Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP EPS should not be considered in isolation or as a substitute for net income or other income statement information prepared in accordance with GAAP and our presentation of these non-GAAP measures may not be comparable to similarly titled measures used by other companies.
Management defines and calculates Adjusted EBITDA as net income (loss) from continuing operations before interest, income taxes, depreciation and amortization adjusted for certain non-core or non-operational items related to executive severance and related costs, stock-based compensation, shareholder litigation costs, corporate governance costs, accrued judgments and settlements, net of estimated revenue, store closures, rebranding costs, acquisition costs, inventory fair value step up amortization and prepayment penalty on early debt repayment. Adjusted EBITDA is a financial measure that is not prepared in accordance with GAAP.
Management defines and calculates Non-GAAP Net Income and Non-GAAP EPS as net income (loss) and net income (loss) per diluted share from continuing operations adjusted for non-core or non-operational items related to executive severance and related costs, stock-based compensation, non-cash executive compensation expense, shareholder litigation costs, prepayment penalties on early debt repayment, non-cash amortization of debt issuance costs, store closures, rebranding costs, acquisition costs, inventory fair value step up amortization, and amortization of acquired intangible assets. Although amortization of acquired intangible assets is excluded from these non-GAAP measures, it is important for investors to understand that such intangible assets support revenue generation. Management excludes amortization of intangible assets because these are non-cash amounts for which the amount and frequency are significantly impacted by the timing and size of our acquisitions, which vary from period to periods and across companies. The tax effect on the related non-GAAP adjustments was calculated based on an estimated annual non-GAAP effective tax rate of 18.5%
Reconciliation of Adjusted EBITDA
Below are reconciliations of Net Income/(Loss) from continuing operations to Adjusted EBITDA for the three and nine months ended September 25, 2021.
| For the Three Months Ended September 25, 2021 |
| ($ In thousands) |
| Buddy's |
| Pet Supplies Plus |
| American Freight |
| Vitamin Shoppe |
| Corporate |
| Total |
| Net income (loss) from continuing operations |
| $ |
| 5,159 |
| $ |
| 13,642 |
| $ |
| 959 |
| $ |
| 21,086 |
| $ |
| (4,848 |
| ) |
| $ |
| 35,998 |
| Add back: |
| Interest expense |
| 832 |
| 5,004 |
| 8,615 |
| 6,777 |
| (33 |
| ) |
| 21,194 |
| Income tax expense (benefit) |
| - |
| 1 |
| - |
| (71 |
| ) |
| (15,449 |
| ) |
| (15,519 |
| ) |
| Depreciation and amortization charges |
| 853 |
| 6,219 |
| 2,668 |
| 8,094 |
| - |
| 17,834 |
| Total Adjustments |
| 1,685 |
| 11,224 |
| 11,283 |
| 14,800 |
| (15,482 |
| ) |
| 23,509 |
| EBITDA |
| 6,844 |
| 24,866 |
| 12,242 |
| 35,886 |
| (20,330 |
| ) |
| 59,507 |
| Adjustments to EBITDA |
| Executive severance and related costs |
| - |
| 10 |
| - |
| - |
| - |
| 10 |
| Stock based compensation |
| 70 |
| - |
| - |
| - |
| 4,014 |
| 4,084 |
| Non-cash executive compensation expense |
| - |
| - |
| 494 |
| - |
| - |
| 494 |
| Gain on Sale of Company-Owned Stores |
| (2,481 |
| ) |
| - |
| - |
| - |
| - |
| (2,481 |
| ) |
| Prepayment penalty on early debt repayment |
| - |
| - |
| - |
| - |
| - |
| - |
| Store closures / Related Costs / Impairment |
| - |
| 2,991 |
| - |
| - |
| 2,991 |
| Integration / Related Costs |
| - |
| 90 |
| 362 |
| - |
| 274 |
| 726 |
| Acquisition costs |
| - |
| 28 |
| (43 |
| ) |
| - |
| 2,211 |
| 2,196 |
| Loss on Investment in Equity Securities |
| - |
| - |
| (0 |
| ) |
| - |
| 13,175 |
| 13,175 |
| Divestiture costs |
| - |
| - |
| - |
| - |
| 135 |
| 135 |
| Compliance costs |
| - |
| - |
| - |
| - |
| 6 |
| 6 |
| Total Adjustments to EBITDA |
| (2,411 |
| ) |
| 128 |
| 3,803 |
| - |
| 19,815 |
| 21,336 |
| Adjusted EBITDA |
| $ |
| 4,433 |
| $ |
| 24,994 |
| $ |
| 16,045 |
| $ |
| 35,886 |
| $ |
| (515 |
| ) |
| $ |
| 80,843 |
| For the Nine Months Ended September 25, 2021 |
| ($ In thousands) |
| Buddy's |
| Pet Supplies Plus |
| American Freight |
| Vitamin Shoppe |
| Corporate |
| Total |
| Net income (loss) from continuing operations |
| $ |
| 10,639 |
| $ |
| 13,677 |
| $ |
| 27,538 |
| $ |
| 73,875 |
| $ |
| (85,544 |
| ) |
| $ |
| 40,185 |
| Add back: |
| Interest expense |
| 2,991 |
| 11,378 |
| 29,122 |
| 17,023 |
| 30,980 |
| 91,494 |
| Income tax expense (benefit) |
| - |
| 1 |
| - |
| (68 |
| ) |
| (15,533 |
| ) |
| (15,600 |
| ) |
| Depreciation and amortization charges |
| 2,645 |
| 13,773 |
| 6,913 |
| 23,075 |
| 1 |
| 46,407 |
| Total Adjustments |
| 5,637 |
| 25,153 |
| 36,034 |
| 40,029 |
| 15,448 |
| 122,301 |
| EBITDA |
| 16,276 |
| 38,830 |
| 63,572 |
| 113,904 |
| (70,096 |
| ) |
| 162,486 |
| Adjustments to EBITDA |
| Executive severance and related costs |
| - |
| 19 |
| - |
| - |
| - |
| 19 |
| Stock based compensation |
| 209 |
| - |
| - |
| - |
| 9,135 |
| 9,344 |
| Non-cash executive compensation expense |
| - |
| - |
| 1,319 |
| - |
| - |
| 1,319 |
| Gain on Sale of Company-Owned Stores |
| (2,481 |
| ) |
| - |
| - |
| - |
| - |
| (2,481 |
| ) |
| Prepayment penalty on early debt repayment |
| - |
| - |
| - |
| - |
| 36,726 |
| 36,726 |
| Store closures / Related Costs / Impairment |
| - |
| - |
| 3,213 |
| - |
| - |
| 3,213 |
| Integration / Related Costs |
| - |
| 520 |
| 7,450 |
| - |
| 572 |
| 8,542 |
| Acquisition costs |
| - |
| 13,286 |
| 333 |
| - |
| 2,226 |
| 15,845 |
| Loss on Investment in Equity Securities |
| - |
| - |
| - |
| - |
| 13,175 |
| 13,175 |
| Divestiture costs |
| - |
| - |
| - |
| - |
| 2,794 |
| 2,794 |
| Compliance costs |
| - |
| - |
| - |
| - |
| 785 |
| 785 |
| Total Adjustments to EBITDA |
| (2,272 |
| ) |
| 13,825 |
| 12,315 |
| - |
| 65,413 |
| 89,281 |
| Adjusted EBITDA |
| $ |
| 14,004 |
| $ |
| 52,655 |
| $ |
| 75,887 |
| $ |
| 113,904 |
| $ |
| (4,683 |
| ) |
| $ |
| 251,767 |
Reconciliation of Non-GAAP Net Income and EPS
Below are reconciliations of Net Income/(Loss) from continuing operations to Non-GAAP Net Income and Net Income/(Loss) from continuing operations per diluted share to Non-GAAP EPS for the three and nine months ended September 25, 2021.
| For the Three Months Ended |
| For the Nine Months Ended |
| ($ In thousands except share count and per share data) |
| September 25, 2021 |
| September 25, 2021 |
| Net income (loss) from continuing operations / Net income (loss) from continuing operations per diluted share |
| $ |
| 35,998 |
| $ |
| 0.88 |
| $ |
| 40,185 |
| $ |
| 0.98 |
| Less: Preferred dividend declared |
| (2,128 |
| ) |
| (0.05 |
| ) |
| (6,385 |
| ) |
| (0.15 |
| ) |
| Adjusted Net Income available to Common Stockholder |
| 33,870 |
| 0.83 |
| 33,800 |
| 0.83 |
| Add back: |
| Executive severance and related costs |
| 10 |
| - |
| 19 |
| - |
| Stock based compensation |
| 4,084 |
| 0.10 |
| 9,344 |
| 0.23 |
| Long-term executive compensation expense |
| 494 |
| 0.01 |
| 1,319 |
| 0.03 |
| Gain on Sale of Company-Owned Stores |
| (2,481 |
| ) |
| (0.06 |
| ) |
| (2,481 |
| ) |
| (0.06 |
| ) |
| Prepayment penalty on early debt repayment |
| - |
| - |
| 36,726 |
| 0.90 |
| Store closures / Related Costs |
| 2,991 |
| 0.07 |
| 3,213 |
| 0.08 |
| Integration / Related Costs |
| 726 |
| 0.02 |
| 8,542 |
| 0.21 |
| Acquisition costs |
| 2,196 |
| 0.05 |
| 15,845 |
| 0.39 |
| Loss on Investment in Equity Securities |
| 13,175 |
| 0.32 |
| 13,175 |
| 0.32 |
| Divestiture costs |
| 135 |
| - |
| 2,794 |
| 0.07 |
| Compliance costs |
| 6 |
| - |
| 785 |
| 0.02 |
| Adjustments to EBITDA |
| 21,335 |
| 0.51 |
| 89,281 |
| 2.19 |
| Non-cash amortization of debt issuance costs |
| 2,394 |
| 0.06 |
| 35,590 |
| 0.87 |
| Amortization of acquisition-related intangibles |
| 2,390 |
| 0.06 |
| 5,901 |
| 0.14 |
| Tax impact |
| (4,832 |
| ) |
| (0.11 |
| ) |
| (24,193 |
| ) |
| (0.59 |
| ) |
| Valuation Allowance Tax Benefit |
| (15,519 |
| ) |
| (0.38 |
| ) |
| (15,519 |
| ) |
| (0.38 |
| ) |
| Impact of diluted share count assuming non-GAAP net income |
| - |
| - |
| - |
| - |
| Total Adjustments to Net income (loss) from continuing operations |
| 5,768 |
| 0.14 |
| 91,060 |
| 2.23 |
| Non-GAAP Net Income from continuing operations / Non-GAAP diluted EPS from continuing operations |
| $ |
| 39,638 |
| $ |
| 0.97 |
| $ |
| 124,860 |
| $ |
| 3.05 |
| Basic weighted average shares |
| 40,229,232 |
| 40,171,458 |
| Non-GAAP diluted weighted average shares outstanding |
| 40,973,736 |
| 40,931,423 |
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, projections, predictions, expectations, or beliefs about future events or results and are not statements of historical fact. Such statements may include statements regarding the Company’s results of operation and financial condition, its performance during the COVID-19 pandemic, its outlook for the remainder of fiscal 2021 and its growth expectations for fiscal 2022 and acquisition strategy. Such forward-looking statements are based on various assumptions as of the time they are made, and are inherently subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are often accompanied by words that convey projected future events or outcomes such as “expect,” “believe,” “estimate,” “plan,” “project,” “anticipate,” “intend,” “will,” “may,” “view,” “opportunity,” “potential,” or words of similar meaning or other statements concerning opinions or judgment of the Company or its management about future events. Although the Company believes that its expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual results, performance, or achievements of the Company will not differ materially from any projected future results, performance or achievements expressed or implied by such forward-looking statements. Actual future results, performance or achievements may differ materially from historical results or those anticipated depending on a variety of factors, many of which are beyond the control of the Company. The Company refers you to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s Form 10-K for the fiscal year ended December 26, 2020, and comparable sections of the Company’s Quarterly Reports on Form 10-Q and other filings, which have been filed with the SEC and are available on the SEC’s website at www.sec.gov. All of the forward-looking statements made in this press release are expressly qualified by the cautionary statements contained or referred to herein. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to or effects on the Company or its business or operations. Readers are cautioned not to rely on the forward-looking statements contained in this press release. Forward-looking statements speak only as of the date they are made and the Company does not undertake any obligation to update, revise or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.
Investor Relations Contact:
Andrew F. Kaminsky
EVP & Chief Administrative Officer
Franchise Group, Inc.
akaminsky@franchisegrp.com
(914) 939-5161