Franchise Group Inc (FRG) 2022 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to Franchise Group's Fiscal 2022 Fourth Quarter and Year-End Conference Call. (Operator Instructions) Please note, this conference is being recorded. I would now like to hand the call over to your host, Andrew Kaminsky, Executive Vice President and Chief Administrative Officer of Franchise Group. Please go ahead.

女士們，先生們，感謝你們的支持，歡迎來到 Franchise Group 的 2022 財年第四季度和年終電話會議。 （操作員說明）請注意，正在錄製此會議。現在，我想將電話轉交給您的主持人 Franchise Group 執行副總裁兼首席行政官安德魯·卡明斯基 (Andrew Kaminsky)。請繼續。

Thank you, Gary. Good afternoon, and thank you for joining our conference call. I'm on the call with Brian Kahn, Franchise Group's President and CEO; and Eric Seeton, Franchise Group's CFO. Before getting started, I'd like to mention that certain matters discussed on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other provisions of the federal securities laws.

謝謝你，加里。下午好，感謝您加入我們的電話會議。我正在與 Franchise Group 總裁兼首席執行官 Brian Kahn 通電話； Franchise Group 的首席財務官 Eric Seeton。在開始之前，我想提一下，本次電話會議上討論的某些事項可能包含 1995 年《私人證券訴訟改革法案》和聯邦證券法其他條款含義內的前瞻性陳述。

These forward-looking statements are based on management's current expectations and are not guarantees of future performance. Actual results could differ materially from those expressed in or implied by the forward-looking statements. The forward-looking statements are made as of the date of this call and except as required by law, Franchise Group assumes no obligation to update or revise them. Investors are cautioned not to place undue reliance on these forward-looking statements.

這些前瞻性陳述基於管理層當前的預期，並非對未來業績的保證。實際結果可能與前瞻性陳述中明示或暗示的結果存在重大差異。前瞻性陳述是在本次電話會議之日作出的，除法律要求外，Franchise Group 不承擔更新或修改這些陳述的義務。提醒投資者不要過分依賴這些前瞻性陳述。

For a more detailed discussion of these and other risks and uncertainties that could cause Franchise Group's actual results to differ materially from those indicated in the forward-looking statements. Please see our Form 10-K for the fiscal year ended December 31, 2022, and other filings we make with the SEC.

有關可能導致 Franchise Group 的實際結果與前瞻性陳述中所示結果存在重大差異的這些和其他風險和不確定性的更詳細討論。請參閱我們截至 2022 年 12 月 31 日的財政年度的 10-K 表格，以及我們向美國證券交易委員會提交的其他文件。

The financial measures today include non-GAAP measures that we believe investors focus on in comparing our results between periods and among our peer companies. Please see our earnings release in the News and Events section of our website at franchisegrp.com for a reconciliation of non-GAAP financial measures to GAAP measures.

今天的財務措施包括非公認會計準則措施，我們認為投資者在比較我們不同時期和我們同行公司的結果時會關注這些措施。請在我們網站 franchisegrp.com 的新聞和事件部分查看我們的收益發布，以了解非 GAAP 財務措施與 GAAP 措施的對賬。

Non-GAAP financial information should not be considered in isolation from, as a substitute for or superior to GAAP financial information, but we include it because management believes it provides meaningful supplemental information regarding our operating results when assessing our business and is useful to investors for informational and comparative purposes. The non-GAAP financial measures the company uses have limitations and may differ from those used by other companies.

非 GAAP 財務信息不應被孤立地視為 GAAP 財務信息的替代品或優於 GAAP 財務信息，但我們將其包括在內是因為管理層認為它在評估我們的業務時提供了關於我們經營業績的有意義的補充信息，並且對投資者有用信息和比較目的。公司使用的非 GAAP 財務指標有局限性，可能與其他公司使用的指標不同。

Now I'd like to turn the call over to Brian. Brian?

現在我想把電話轉給布賴恩。布萊恩？

Thank you, Andrew, and good afternoon to our listeners, and thank you for joining us. I'll provide a general update before turning the call over to Eric to provide financial details. We will then be happy to answer questions. Our financial performance in the fourth quarter was in line with the outlook we provided in November. We told you that we were going to move inventory at American Freight offering value that our customers expect, and we did just that.

謝謝你，安德魯，我們的聽眾下午好，感謝你加入我們。在將電話轉給埃里克提供財務細節之前，我將提供一般更新。然後我們將很樂意回答問題。我們在第四季度的財務業績與我們在 11 月份提供的展望一致。我們告訴過您，我們將在 American Freight 轉移庫存，提供客戶期望的價值，而我們也做到了。

Comparable transactions in the fourth quarter were down approximately 3% of American Freight, a dramatic improvement from the negative 27% levels experienced earlier in the year. Although we've made progress in working through our high-cost inventory, we still have more to go. There's a renewed optimism at American Freight as the culture of selling value is back in the business, and we are all optimistic that 2023 will be a better year for their financial performance.

American Freight 第四季度的可比交易下降了約 3%，與今年早些時候的負 27% 水平相比有了顯著改善。儘管我們在處理高成本庫存方面取得了進展，但我們還有更多工作要做。 American Freight 重拾樂觀情緒，因為銷售價值的文化又回到了這個行業，我們都樂觀地認為 2023 年將是他們財務業績更好的一年。

At Badcock; 'we continued to test third-party waterfall solutions that we believe will provide a better experience for our customers and dealers. We've been adjusting tests in our 68 corporate stores for most of the last 12 months before rolling out system-wide to our dealers. Importantly, later this week, we are introducing a new waterfall test to 7 stores owned and operated by one of our trusted dealers. This will be the first time we've moved the test into dealer locations, and we intend to transition away from providing in-house credit at Badcock by the end of the second quarter of this year.

在巴德科克； '我們繼續測試第三方瀑布解決方案，我們相信這些解決方案將為我們的客戶和經銷商提供更好的體驗。在過去 12 個月的大部分時間裡，我們一直在調整我們 68 家公司商店的測試，然後才向我們的經銷商推出全系統。重要的是，本週晚些時候，我們將對我們信任的經銷商之一擁有和經營的 7 家商店推出新的瀑布測試。這將是我們第一次將測試轉移到經銷商地點，我們打算在今年第二季度末之前不再在 Badcock 提供內部信貸。

Our franchising activity continued to accelerate across FRG in 2022. We finished the year with 259 new territories sold and backlog across all brands of 482 locations. We have a substantial organic growth opportunity from converting our large backlog into new unit openings, and this is a priority for our store teams in 2023. It's controllable by us internally, and we have much the gain as new units open and mature over time. As cost of construction materials and labor improve, we believe our franchisees will have an easier time opening stores over the next couple of years. compared to the last couple of years.

2022 年，我們在整個 FRG 的特許經營活動繼續加速。我們在這一年結束時售出了 259 個新地區，並在 482 個地點的所有品牌中積壓了訂單。我們有大量的有機增長機會，可以將我們的大量積壓訂單轉化為新單位的開設，這是我們商店團隊在 2023 年的首要任務。它由我們內部控制，隨著新單位的開設和成熟，我們將獲得很多收益。隨著建築材料和勞動力成本的提高，我們相信我們的特許經營商在未來幾年內將更容易開店。與過去幾年相比。

Turning to capital allocation. We did not make any material acquisitions in 2022. Instead we increased our investment in the brands that we own by opportunistically repurchasing approximately 5.9 million shares at an average cost of about $29.13 in the back half of the year. The repurchases reduced our outstanding shares by approximately 15%. The significant and rapid increase in interest rates has further reduced our discretionary cash flow and increased the bar for capital deployment into outside acquisitions.

轉向資本配置。我們在 2022 年沒有進行任何重大收購。相反，我們增加了對我們擁有的品牌的投資，在今年下半年以平均成本約 29.13 美元的機會回購了約 590 萬股股票。回購使我們的流通股減少了約 15%。利率的大幅快速上升進一步減少了我們的可自由支配現金流，並增加了將資本部署到外部收購的門檻。

As a recap for the full year of 2022, when we spoke to you about a year ago, we shared that we expected to produce approximately $450 million of adjusted EBITDA and $5 in non-GAAP earnings per share. Our actual performance fell short of our original expectations as we delivered $354 million of adjusted EBITDA and $3.63 of non-GAAP earnings per share.

作為 2022 年全年的回顧，當我們大約一年前與您交談時，我們分享了我們預計將產生約 4.5 億美元的調整後 EBITDA 和 5 美元的非 GAAP 每股收益。我們的實際業績低於我們最初的預期，因為我們交付了 3.54 億美元的調整後 EBITDA 和 3.63 美元的非 GAAP 每股收益。

I see 3 key deviations from our original plan, shortfall in operational performance, primarily at American Freight cost us about $1.5 of non-GAAP earnings per share. The increase in interest rates cost us about $0.47 and then the unplanned repurchase of shares added approximately $0.15 to non-GAAP earnings per share last year. Looking ahead to 2023, we believe adjusted EBITDA will be at least $355 million, up slightly from the $354 million we reported last year, which included a 53rd week that contributed approximately $11.3 million of our $354 million of adjusted EBITDA last year.

我看到與我們最初計劃的 3 個主要偏差，運營績效的不足，主要是在 American Freight 上，我們損失了大約 1.5 美元的非 GAAP 每股收益。利率上升使我們損失了大約 0.47 美元，然後計劃外的股票回購使去年的非 GAAP 每股收益增加了大約 0.15 美元。展望 2023 年，我們認為調整後的 EBITDA 將至少為 3.55 億美元，略高於我們去年報告的 3.54 億美元，其中第 53 週貢獻了我們去年 3.54 億美元的調整後 EBITDA 中的約 1130 萬美元。

We expect American Freight to rebound, albeit not immediately to its full potential. Pet Supplies Plus, Sylvan and Buddy's are likely to grow in 2023 and offsetting EBITDA growth at Freight, PSP, Sylvan and Buddy's will likely be a slight decline in Vitamin Shoppe EBITDA, driven by continued mix shift in favor of lower-margin sports nutrition products as well as a larger decline in Badcock's EBITDA as we expect the home furnishings industry as a whole to continue to struggle somewhat until fully landed inventory costs are closer to prequoted levels.

我們預計 American Freight 會反彈，儘管不會立即發揮其全部潛力。 Pet Supplies Plus、Sylvan 和 Buddy's 可能會在 2023 年增長，並抵消 Freight、PSP、Sylvan 和 Buddy's 的 EBITDA 增長，而 Vitamin Shoppe 的 EBITDA 可能會略有下降，原因是產品組合繼續轉向利潤較低的運動營養產品以及 Badcock 的 EBITDA 下降幅度更大，因為我們預計整個家居裝飾行業將繼續掙扎，直到完全到岸的庫存成本接近報價前的水平。

Overall, we expect to generate approximately $4.4 billion in revenue, $355 million of adjusted EBITDA and $2.09 of non-GAAP earnings per share. Higher interest rates are expected to cost was about $1.23 per share compared to 2022 and the lower share count is expected to benefit of the franchise grew by about $0.32 as compared to 2022. From a balance sheet perspective, earlier this month, we closed on a $300 million add-on to our first lien term loan.

總體而言，我們預計將產生約 44 億美元的收入、3.55 億美元的調整後 EBITDA 和 2.09 美元的非 GAAP 每股收益。與 2022 年相比，較高的利率預計每股成本約為 1.23 美元，而較低的股份數量預計將使特許經營權的收益與 2022 年相比增長約 0.32 美元。從資產負債表的角度來看，本月早些時候，我們關閉了我們的第一筆留置權期限貸款增加了 3 億美元。

After witnessing a year like last year, when credit markets were substantially inaccessible I believe the potentially fleeting opportunity to create additional liquidity in a difficult economic environment, outweighed the cost of servicing the incremental term loan. We used all of the net proceeds from the incremental term loan to pay down our ABL and we're extremely grateful for the continued trust and support of our lenders.

在經歷了與去年類似的一年之後，當信貸市場基本上無法進入時，我相信在困難的經濟環境中創造額外流動性的潛在短暫機會超過了為增量定期貸款提供服務的成本。我們使用增量定期貸款的所有淨收益來償還我們的 ABL，我們非常感謝貸方的持續信任和支持。

We intend to reduce our outstanding debt in 2023 through cash flow from operations which this year will include additional cash generated from an unwind of our excess working capital, which was a large unanticipated use of cash last year.

我們打算在 2023 年通過運營現金流減少我們的未償債務，今年將包括因解除我們的過剩營運資金而產生的額外現金，這是去年意外使用的大量現金。

While significant acquisitions are not a priority until we've delevered in this difficult environment, there may be one-off opportunities for small tuck-in acquisitions or franchise conversion that can create step function growth in our franchise unit count and royalty contribution. Case in point, today, PSP acquired 20 new locations from a competitor in bankruptcy, and they expect to sell those stores to existing franchisees in the coming months. All of these locations will be rebranded under the PSP or Wag N Wash banner.

雖然在我們在這種困難的環境中去槓桿化之前，重大收購不是優先事項，但小規模收購或特許經營權轉換可能存在一次性機會，可以在我們的特許經營單位數量和特許權使用費貢獻方面創造階躍函數增長。舉個例子，今天，PSP 從一家破產的競爭對手那裡收購了 20 個新門店，他們希望在未來幾個月內將這些門店出售給現有的特許經營商。所有這些地點都將更名為 PSP 或 Wag N Wash 旗幟。

Eric, I'll turn the call over to you to provide financial details, and then we can wrap it up with Q&A.

埃里克，我會把電話轉給你提供財務細節，然後我們可以通過問答結束。

Thanks.

謝謝。

Great. Thank you, Brian. Before I address the results of operations, I would like to remind you that we will be making many references to pro forma items throughout this call. Our press releases and filings may refer to historical financial results for the acquired businesses prior to their acquisition by Franchise Group. These items have been adjusted to align with our fiscal calendar and accounting policies to the extent reasonable.

偉大的。謝謝你，布萊恩。在我解決運營結果之前，我想提醒您，我們將在整個電話會議中多次提及備考項目。我們的新聞稿和備案文件可能會提及被收購企業在被 Franchise Group 收購之前的歷史財務業績。這些項目已經過調整，以在合理範圍內與我們的財政日曆和會計政策保持一致。

Comparison to pro forma results will allow us to discuss and evaluate performance of the acquired companies when a comparable period is not available due to the timing of the acquisition. For the fourth quarter of 2022, system-wide, Buddy's had a positive same-store sales comp of 3.3% with franchisee comps growing 4.2% and corporate stores declining 2.5%. For 2022 Buddy's opened 25 new franchise stores and awarded 39 new locations growing its backlog to 111 locations.

與備考結果的比較將使我們能夠在由於收購時間而無法獲得可比期間時討論和評估被收購公司的業績。 2022 年第四季度，在整個系統範圍內，Buddy's 的同店銷售額增長率為 3.3%，特許經營商銷售額增長 4.2%，公司商店下降 2.5%。 2022 年，Buddy's 開設了 25 家新的特許經營店，並授予了 39 個新地點，使其積壓的地點增加到 111 個。

Badcock comped down 14.8% for the fourth quarter. During the quarter, we sold $51.6 million of Badcock consumer accounts receivable for $43.9 million and sold another $62.6 million in January for $53.2 million. The net proceeds were used to pay down our ABL. American Freight comp down 12.5% for the quarter in 2022. We sold 23 new franchises, bringing total franchise backlog to 36 locations.

Badcock 第四季度股價下跌 14.8%。本季度，我們以 4390 萬美元的價格出售了 5160 萬美元的 Badcock 消費者應收賬款，並在 1 月份以 5320 萬美元的價格出售了 6260 萬美元。淨收益用於支付我們的 ABL。 American Freight 在 2022 年的季度下降了 12.5%。我們出售了 23 個新的特許經營權，使特許經營權積壓總數達到 36 個地點。

Sylvan completed another consistent year and delivered comps of 1% in the fourth quarter. Sylvan sold 22 new franchises in 2022 and has a backlog of 16 units. We believe there's a lot of opportunity in the education market and have recently enhanced the franchise sales team at Sylvan to accelerate growth. PSP continues to execute well in all facets of its business as demonstrated by its continued growth and financial performance. Pet Supplies Plus generated system-wide same-store sales comps of 5.2% in the fourth quarter, Franchise comps grew 6.5% in the quarter, while corporate stores grew 3.5%. PSP continued to accelerate its growth in 2022 with the sale of 90 new franchisee locations bringing total backlog at PSP to 230 locations.

Sylvan 又完成了穩定的一年，並在第四季度交付了 1% 的收入。 Sylvan 在 2022 年售出了 22 個新特許經營權，並積壓了 16 個單位。我們相信教育市場有很多機會，最近加強了 Sylvan 的特許經營銷售團隊以加速增長。 PSP 在其業務的各個方面繼續表現良好，其持續增長和財務業績證明了這一點。 Pet Supplies Plus 在第四季度產生了 5.2% 的全系統同店銷售收入，本季度特許經營收入增長了 6.5%，而公司商店增長了 3.5%。 PSP 在 2022 年繼續加速增長，出售了 90 個新的加盟店，使 PSP 的總積壓訂單達到 230 個。

We have sold 37 Wag N Wash locations and currently have a backlog of 34 stores. Vitamin Shoppe comps positive quarter, direct-to-consumer accounted for approximately 24.8% of the business. In our first year of franchising, we sold 48 stores, which built our backlog to 55 stores. On a consolidated basis, for the fourth quarter of 2022, total reported revenue for Franchise Group was $1.1 billion.

我們已經售出 37 家 Wag N Wash 門店，目前積壓了 34 家門店。 Vitamin Shoppe 的季度業績為正，直接面向消費者的業務約佔業務的 24.8%。在我們特許經營的第一年，我們賣掉了 48 家門店，積壓的門店數量增加到 55 家。在合併的基礎上，2022 年第四季度，特許經營集團報告的總收入為 11 億美元。

Net loss from continued operations was $0.7 million or $0.08 per fully diluted share. Adjusted EBITDA was $65.3 million, and non-GAAP EPS was $0.47. For the fiscal year ended December 31, 2022, total reported revenue for Franchise Group was $4.4 billion. Net loss from continuing operations was $68.6 million or $1.96 per fully diluted share.

持續經營淨虧損為 70 萬美元或每股完全攤薄後虧損 0.08 美元。調整後的 EBITDA 為 6530 萬美元，非 GAAP 每股收益為 0.47 美元。在截至 2022 年 12 月 31 日的財政年度，特許經營集團報告的總收入為 44 億美元。持續經營淨虧損為 6860 萬美元或每股完全攤薄後虧損 1.96 美元。

Adjusted EBITDA was $354 million, and non-GAAP EPS was $3.63 per share. I want to reiterate that we are still in the process of transitioning consumer financing at Badcock from in-house to third-party partners and have excluded the non-core results of the finance business from adjusted EBITDA and non-GAAP EPS. While we can pro forma the income statement for consumer lending, the balance sheet continues to reflect securitization debt and accounts receivable despite most of the receivables having been sold to third parties. Once we discontinue originating customer loans, we believe the securitized receivables will be accounted for as a sale and the related assets and liabilities will no longer be reported on our balance sheet.

調整後的 EBITDA 為 3.54 億美元，非 GAAP 每股收益為 3.63 美元。我想重申，我們仍在將 Badcock 的消費者融資從內部合作夥伴轉移到第三方合作夥伴的過程中，並且已將金融業務的非核心結果排除在調整後的 EBITDA 和非 GAAP 每股收益之外。雖然我們可以模擬消費貸款的損益表，但資產負債表繼續反映證券化債務和應收賬款，儘管大部分應收賬款已出售給第三方。一旦我們停止發放客戶貸款，我們認為證券化的應收賬款將被視為銷售，相關資產和負債將不再在我們的資產負債表中報告。

We ended the quarter with approximately $1.1 billion in outstanding term debt and cash of approximately $80.8 million. At the end of the year, we had approximately $92.2 million of availability remaining on our ABL revolver. In conjunction with our balance sheet and business performance, we believe we have sufficient liquidity to continue to meet all of our obligations and support all of our businesses for the foreseeable future.

本季度末，我們的未償定期債務約為 11 億美元，現金約為 8080 萬美元。到年底，我們的 ABL 左輪手槍還剩下大約 9220 萬美元的可用資金。結合我們的資產負債表和業務表現，我們相信我們有足夠的流動性來繼續履行我們的所有義務並在可預見的未來支持我們的所有業務。

I do want to thank all of our shareholders and lenders for their continued support to date. Gary, please open the line for questions. Thank you.

我確實要感謝我們所有的股東和貸方迄今為止的持續支持。加里，請打開問題熱線。謝謝。

(Operator Instructions) Our first question is from Larry Solow with CJS Securities.

（操作員說明）我們的第一個問題來自 CJS 證券公司的 Larry Solow。

Just on Pet Supplies Plus, I know 1 quarter doesn't make a trend, but yet some really accelerating growth through the year. Strong EBITDA margin was 10% for the quarter. That -- I know organic growth same-store growth was mid-single digit. It sounds like this is maybe just driven more by that and just a swell of franchisee openings and Wag N Wash may be mixed in there. Can you maybe just discuss that dynamic and sort of that growth driver going forward?

就 Pet Supplies Plus 而言，我知道 1 個季度並沒有形成趨勢，但全年確實有一些加速增長。本季度 EBITDA 利潤率為 10%，表現強勁。那——我知道有機增長的同店增長是中個位數。聽起來這可能更多地是由它驅動的，只是大量的特許經營商空缺和 Wag N Wash 可能混合在其中。你能不能討論一下這種動態和未來的增長動力？

Sure. Thanks, Larry. PSPs benefited from both consistent comp store growth and the additional units I think as we look at this year, we're forecasting low single-digit comp gains and the continued opening of new stores, but also the real impact comes from the maturation of doors that opened last year and the year before as they ramp up. You don't get a ton of contribution in the initial year of the openings. But we're very pleased with their performance. They continue to operate and continue to grow their revenue and EBITDA and free cash flow for us.

當然。謝謝，拉里。 PSP 受益於持續的同店增長和我認為今年的額外單位，我們預測低個位數的同店收益和新店的持續開設，但真正的影響來自門的成熟去年和前年隨著他們的發展而開放。在開業的第一年，你不會得到很多貢獻。但我們對他們的表現非常滿意。他們繼續經營，並繼續為我們增加收入、EBITDA 和自由現金流。

Okay. And then just switching gears just on to American Freight. I know you've drawn out that $150 million sort of earnings but EBITDA potential. Clearly, it's not going to happen overnight. Could you maybe just sort of outline the things or the few initiatives you need to get done besides just the improvement on inventory and then purchasing to get the business in the right direction. And how fast could that -- could we get back to $50 million to $100 million? I mean, this year, you were basically breakeven so in '22. So I know you said you expect growth in '23. I think we would all hope for that. So when you get meaningful EBITDA contributions in '23? Or is it going to take a couple of years and maybe a better -- a little better economy?

好的。然後只需切換到 American Freight。我知道你已經提取了 1.5 億美元的收益，但 EBITDA 潛力。顯然，這不會在一夜之間發生。除了改善庫存然後進行採購以使業務朝著正確的方向發展之外，您能否概述一下您需要完成的事情或一些舉措。那能多快——我們能回到 5000 萬到 1 億美元嗎？我的意思是，今年，你在 22 年基本上實現了收支平衡。所以我知道你說過你期望 23 年的增長。我想我們都希望如此。那麼，當您在 23 年獲得有意義的 EBITDA 貢獻時？還是需要幾年時間，也許經濟會好一點？

Sure. So it was about breakeven last year, but if you actually look at the quarterly cadence, you'll see it was negative EBITDA in the back half of the year. So if you think about how things have progressed, we're -- we've gone from operating negative and we need to get from negative back to breakeven and then from breakeven continue that momentum and positive EBITDA and cash flow contribution.

當然。所以去年大約是收支平衡，但如果你真的看一下季度節奏，你會發現下半年它是負的 EBITDA。因此，如果你考慮事情的進展情況，我們 - 我們已經從負運營中走出來，我們需要從負回到盈虧平衡點，然後從盈虧平衡點繼續保持這種勢頭和積極的 EBITDA 和現金流貢獻。

American Freight consumed a tremendous amount of cash last year from operations, including working capital usage. We certainly think that those days are behind us. I don't think that it's -- I don't think that the turnaround in American Freight's financial performance is dependent on the economy. I think it's really within our control.

American Freight 去年從運營中消耗了大量現金，包括營運資金的使用。我們當然認為那些日子已經過去了。我不認為它 - 我不認為 American Freight 財務業績的好轉取決於經濟。我認為這真的在我們的控制範圍內。

But one of those things that we need to control is how quickly we can turn the high-cost inventory that we discussed back in November and have continued to have coming in as we've been moving the inventory out, but we still have old orders that are coming in, we need to get through that cycle. I think we did a really good job, a tremendous amount of focus and the team really focused on moving inventory, and that required us to take prices down closer to the value levels that the customers have grown to respect from -- and expect from American Freight.

但我們需要控制的其中一件事是，我們能夠多快將我們在 11 月份討論過的高成本庫存轉出，並且隨著我們一直在將庫存移出而繼續流入，但我們仍然有舊訂單進來，我們需要度過那個週期。我認為我們做得非常好，非常專注，團隊真的專注於移動庫存，這要求我們將價格降低到更接近客戶已經尊重的價值水平 - 並期望來自美國航空貨運。

But I think that as you go through this year, we should be through the cleaning out of the inventory for the most part by midyear. I do expect a very significant increase in their profitability this year. I don't think it's going to get back to normalized levels, but I do expect that we will see a material increase. You asked about what are the 1 or 2 things that we need to do or that need to happen to get back to, call it, normalized profitability level.

但我認為，在你度過今年的過程中，我們應該在年中之前完成大部分庫存的清理工作。我確實預計他們今年的盈利能力將有非常顯著的增長。我不認為它會回到正常水平，但我確實希望我們會看到實質性的增長。您詢問了我們需要做或需要發生的一兩件事是什麼，才能回到正常的盈利水平。

It really has to do with being able to have fully landed cost at a level that we can price the product to make the margin that we expect to make but at the same time, have the customer find the attractive value that they're expecting from us. And it's getting better, but we're not there. If unit costs and you've heard me talk about that quite a bit over the last couple of years.

這確實與能夠將完全落地成本控制在一個水平上有關，我們可以為產品定價以賺取我們期望的利潤，但與此同時，讓客戶找到他們期望的有吸引力的價值我們。情況正在好轉，但我們還沒有到那兒。如果是單位成本，在過去的幾年裡你已經聽我談過很多次了。

If unit cost were up 50% from precoded times and you had freight cost of 50% unit costs now have been coming down, freight costs have been coming down significantly. So if it was 50% now maybe we're up 30%. So we're still not back to par but it's going in the right direction. I think that if we had less inventory right now, and we were able to convert the inventory we had to cash and flush it through we could replace the inventory at significantly lower cost than we're even seeing now.

如果單位成本比預編碼時間增加了 50%，而你的運費為 50%，單位成本現在已經下降，那麼運費已經大幅下降。因此，如果現在是 50%，我們可能會上漲 30%。所以我們仍然沒有回到標準，但它正朝著正確的方向發展。我認為，如果我們現在的庫存較少，並且我們能夠轉換我們必須兌現的庫存並將其沖掉，我們就可以以比我們現在看到的更低的成本更換庫存。

But we're not -- we've been stuffed for a while, and we're not going to buy a great deal just for the sake of buying great deals, but just -- we need to turn our inventory and be able to operate efficiently. That's what franchisees are going to expect and that this is a business that we're going to aggressively on open company-owned stores. We need to have the infrastructure and the systems in place to be able to handle that growth. So I think we'll be very careful.

但我們不是 - 我們已經被塞滿了一段時間，我們不會僅僅為了購買大筆交易而購買大筆交易，而只是 - 我們需要轉變我們的庫存並能夠高效運作。這就是特許經營商所期望的，這是我們將在開設公司自有商店方面積極開展的業務。我們需要有適當的基礎設施和系統來應對這種增長。所以我認為我們會非常小心。

The next question is from Mike Baker with D.A. Davidson.

下一個問題來自 D.A. 的 Mike Baker。戴維森。

I got you. All right. So one quick follow-up on that American Freight line of questioning. How far are you through this process? Are you 50% through moving the inventory 80%, 75%, et cetera? And maybe one way to think about that is when you report your first quarter numbers is EBITDA going to be negative still? Or I get that it's going to improve throughout the year, but can it -- is it still a drag right now to EBITDA?

我接到你了。好的。因此，對美國貨運公司的提問進行快速跟進。你在這個過程中走了多遠？您是通過將庫存移動 80%、75% 等等來完成 50% 的工作嗎？也許考慮這個問題的一種方法是，當您報告第一季度的數據時，EBITDA 是否仍會為負？或者我知道它會在全年有所改善，但它可以 - 它現在仍然是 EBITDA 的拖累嗎？

Well, it has been. I think that the calendar is probably likely to help in Q1 I can tell you we were at 4, 4, 5 quarterly cadence because the retail calendar, the calendar because of the tax money breaking is going to be helpful. But in January, the business operated at negative EBITDA. The business generated negative EBITDA, but it generated positive free cash flow.

嗯，它已經。我認為日曆可能會在第一季度提供幫助我可以告訴你我們在 4、4、5 季度的節奏，因為零售日曆，由於稅收突破而導致的日曆將會有所幫助。但在 1 月份，該業務的 EBITDA 為負。該業務產生了負的 EBITDA，但產生了正的自由現金流。

So I think that just is a good example of how the accounting really impacts what you're seeing when -- what I'm really interested in is how much free cash flow is the business is generating. As far as what inning are we in or how far through the inventory cleansing and perfecting process, hard to say because we still -- I think we've done a great job moving out inventory we have, but we still have dribs and drabs coming in at higher cost.

所以我認為這只是一個很好的例子，說明會計如何真正影響你所看到的——我真正感興趣的是企業產生了多少自由現金流。至於我們在哪一局或庫存清理和完善過程中走了多遠，很難說，因為我們仍然——我認為我們在轉移我們現有的庫存方面做得很好，但我們仍然會有點點滴滴的事情發生以更高的成本。

If I was to pick a number, I'd say 50% through, but that wouldn't be scientific and I wouldn't take it to the bank. I certainly don't think that we'll be dealing with this issue at the same time next year, but probably going to take to midyear to really get through the majority of it.

如果我要選擇一個數字，我會說 50% 通過，但這不科學，我也不會把它帶到銀行。我當然不認為我們會在明年的同一時間處理這個問題，但可能要到年中才能真正解決大部分問題。

Okay. You talked about -- you commented on free cash flow, so that will segue into my next question. What is your free cash flow outlook in total for 2023. If you can sort of maybe bridge the gap between your EBITDA guidance of $355 million and what you expect to free cash flow? And as part of that, and really, the important point is give us the confidence that you'll have enough free cash flow to pay your dividend.

好的。你談到了 - 你評論了自由現金流，所以這將延續到我的下一個問題。您對 2023 年的自由現金流的總體展望是什麼。您是否可以彌合 3.55 億美元的 EBITDA 指導與您對自由現金流的期望之間的差距？作為其中的一部分，實際上，重要的一點是讓我們相信您將有足夠的自由現金流來支付股息。

Sure. So you'll have to draw your own conclusions on the dividend or not, but I can certainly help you with how we look at free cash flow generation. The good news is it's going to be better this year than it was last year, but that's pretty easy to beat last year. If you've got $355 million of EBITDA, we will have interest expense, which is probably around $145 million, we'll have a cash tax expense perhaps of $20 million to $30 million and we'll have CapEx, both maintenance and growth CapEx.

當然。所以你必須對股息與否得出自己的結論，但我當然可以幫助你了解我們如何看待自由現金流的產生。好消息是今年會比去年好，但去年很容易被擊敗。如果您有 3.55 億美元的 EBITDA，我們將有利息支出，可能約為 1.45 億美元，我們的現金稅支出可能為 2000 萬至 3000 萬美元，我們將有資本支出，包括維護和增長資本支出.

And I think about -- a total of about $50 million and $10 million of that is, give or take, is the complete the new distribution center for PSP, which certainly is funding significant growth for them and for FRG as a whole. This year, though, we're going to have the benefit if we operate well, we'll have the benefit of working capital being converted into cash.

我想——總計約 5000 萬美元和 1000 萬美元，其中，無論是給予還是接受，都是 PSP 新配送中心的完整資金，這無疑為他們和整個 FRG 的顯著增長提供了資金。不過，今年，如果我們經營良好，我們將受益，我們將受益於將營運資金轉化為現金。

And you've heard me say before, we've got about $100 million of cash tied up in excess working capital. I don't think that we'll get all of that back this year. It would be great if we do, but we should get the majority of that back. So when you add all those numbers together, I think you'll see a healthy amount of free cash flow. But it's not -- it's still not to the levels that we were used to a year ago.

你以前聽我說過，我們有大約 1 億美元的現金被超額營運資金佔用。我不認為我們今年會收回所有這些。如果我們這樣做會很棒，但我們應該收回其中的大部分。因此，當您將所有這些數字加在一起時，我認為您會看到大量的自由現金流。但它不是——它仍然沒有達到我們一年前習慣的水平。

Fair enough. But yes, okay. So as I go through that quickly, I get about $200 million maybe in cash, which gives you more than enough to pay the dividend. I have another -- well, I'll -- that was 2, so I'll go back in the queue and turn it over to someone else.

很公平。但是，是的，好吧。因此，當我快速完成時，我可能會獲得大約 2 億美元的現金，這足以讓你支付股息。我有另一個——好吧，我會——那是 2 個，所以我會回到隊列中並將它交給其他人。

The next question is from Ian Zaffino with Oppenheimer.

下一個問題來自 Ian Zaffino 和 Oppenheimer。

Just wanted to follow up on the comments on Badcock and inventory there. I guess this is sort of I guess real to American Freight was the inventory problem, but now it seems like Badcock is as well? Or can you maybe help us out understanding like what the severity of it might be, are we following the same playbook that we did at American Freight and maybe what kind of drove that excess inventory situation?

只是想跟進關於 Badcock 和庫存的評論。我想這有點像我猜對 American Freight 來說真正的庫存問題，但現在看來 Badcock 也是如此？或者你能不能幫助我們理解它的嚴重性，我們是否遵循了我們在 American Freight 所做的同樣的劇本，也許是什麼導致了庫存過剩的情況？

Yes. So Ian, I'm not I don't think I referenced anything about Badcock inventory situation. I'm happy so to tell you that American Freight having excess inventory was not unique in the system. I think that American Freight, Badcock, Vitamin Shoppe and PSP all have inventory that are not necessarily at optimal levels. And we do expect inventory on an apples-to-apples basis to be reduced at all 4 of those businesses this year.

是的。所以伊恩，我不是我認為我沒有提到任何關於 Badcock 庫存情況的信息。我很高興地告訴您，American Freight 的庫存過剩在系統中並不是獨一無二的。我認為 American Freight、Badcock、Vitamin Shoppe 和 PSP 的庫存都不一定處於最佳水平。我們確實預計今年所有 4 家企業的庫存都將減少。

But I don't think -- I'm not sure if you're referring to my comment about Badcock EBITDA being down this year? Or if you're specifically thinking about an inventory comment that -- but I'll just throw that back over to you to clarify, and I'm happy to help either way.

但我不認為 - 我不確定你是否指的是我關於 Badcock EBITDA 今年下降的評論？或者，如果您特別考慮庫存評論 - 但我會把它扔回給您澄清，我很樂意以任何一種方式提供幫助。

Okay. No, that's fine. I guess I might have misunderstood it, but you mentioned that inventory was sort of elevated at that Badcock so regardless...

好的。不，沒關係。我想我可能誤解了，但你提到 Badcock 的存貨有點高，所以不管......

That -- if I said it, it's true because it's elevated everywhere, but it's not nearly the same situation. So yes, hope that clarifies.

那——如果我這麼說的話，那是真的，因為它到處都在升高，但情況幾乎不一樣。所以是的，希望澄清。

Okay. So run of the mill elevated as opposed to meaningfully elevated.

好的。因此，工廠的運行率提高了，而不是有意義地提高了。

Correct.

正確的。

And then I don't know if this has been asked, but on the dividend, how are we thinking about the dividend just given where guidance is. Are we comfortable here, how are you thinking about it right now as far as investors and what we should expect maybe going forward?

然後我不知道是否有人問過這個問題，但是關於股息，我們如何考慮剛剛給出指導的股息。我們在這裡舒服嗎，就投資者而言，您現在如何看待它以及我們應該期待什麼？

Yes. So each quarter, the Board is going to analyze the information we give them and the recommendations that I make and determine the outcome. We don't set an annual dividend. We do determine it on a quarterly basis. So -- and we had a Board meeting last week, and I recommended dividend at the same rate that we've been paying over the last, I think, 4 quarters or so, and maybe even 5 quarters and the Board approved that, and we've declared it and issued that today.

是的。因此，每個季度，董事會都會分析我們提供給他們的信息和我提出的建議，並確定結果。我們不設定年度股息。我們確實每季度確定一次。所以——我們上週召開了一次董事會會議，我建議按照我們過去 4 個季度左右，甚至 5 個季度支付的相同利率派發股息，董事會批准了這一點，並且我們今天宣布並發布了它。

As far as what happens down the road, I don't know. I think that I certainly understand, and I think that the Board also understands that the dividend is highly valued by our shareholders. And so that's -- it's important to us, it's important to you. But I certainly wouldn't want to forecast what's going to happen with the dividend at any point in time.

至於接下來會發生什麼，我不知道。我想我當然明白，而且我認為董事會也明白股息受到我們股東的高度重視。所以這對我們很重要，對您也很重要。但我當然不想預測任何時間點的股息會發生什麼。

The next question is from Vincent Caintic with Stephens.

下一個問題來自 Vincent Caintic 和 Stephens。

First one, just going back to that. So if you could talk about your leverage and liquidity targets when you're going into 2013, you laid out already a bit of the cash generation, maybe what are the -- some of the uses of cash as well. But you did have a share buyback this past quarter that would stand pretty positive. And we're also talking about the dividend now. But maybe if you could talk about liquidity targets and given the actions you've taken so far the uses for potential capital return?

第一個，回到那個。因此，如果您可以在進入 2013 年時談論您的槓桿率和流動性目標，那麼您已經列出了一些現金生成，也許還有現金的一些用途。但你在上個季度確實進行了股票回購，這將是非常積極的。我們現在也在談論股息。但也許你可以談談流動性目標，並考慮到你迄今為止採取的行動對潛在資本回報的用途？

Sure. So look, the financial policy remains the same, our sweet spot. The leverage is under 3 turns of EBITDA, 2 to 3 turns is, I think, where we are comfortable, I think, that the higher interest rates and we've experienced the cost of capital that has gone up. The costs that we're paying to service our debt really shows why we belong ultimately 2 to 3 turns being very comfortable.

當然。所以看，金融政策保持不變，我們的最佳選擇。槓桿低於 EBITDA 的 3 倍，我認為 2 到 3 倍是我們感到舒服的地方，我認為，更高的利率和我們經歷的資本成本已經上升。我們為償還債務而支付的成本確實表明了為什麼我們最終屬於 2 到 3 輪非常舒服。

We did take advantage of the credit markets opening in January to launch that upsizing. So we did increase our liquidity. I'm glad to have it because you never know what's going to happen. And the last thing you want is to actually need capital and have that cost of capital be too high. But I think we're in a good spot. The businesses have continued to perform the way that we have expected.

我們確實利用了 1 月份開放的信貸市場來啟動規模擴大。所以我們確實增加了流動性。我很高興擁有它，因為你永遠不知道會發生什麼。而你想要的最後一件事就是實際需要資金並且資金成本太高。但我認為我們處於一個很好的位置。這些業務繼續以我們預期的方式進行。

I think that our ability to generate cash this year is really augmented by our ability to convert working capital into cash. And that's a big deal because that's going to be a large chunk of our free cash flow overall, really offsetting the additional cash interest expense that we now have to pay on the entirety of our debt because not just the new $300 million that we have to pay interest on.

我認為我們今年產生現金的能力確實因我們將營運資金轉換為現金的能力而得到增強。這很重要，因為這將占我們整體自由現金流的很大一部分，真正抵消了我們現在必須為全部債務支付的額外現金利息費用，因為不僅僅是我們必須支付的新 3 億美元支付利息。

We've got to pay a higher rate on the $1.1 billion that we had before. So look, I think that if we operate, we'll generate enough cash to cover all of our responsibilities. If we fail to operate then anything could happen at that point.

我們必須為之前的 11 億美元支付更高的利率。所以看，我認為如果我們運營，我們將產生足夠的現金來支付我們所有的責任。如果我們無法操作，那麼那時任何事情都可能發生。

Okay. I appreciate that and second question, another financial one. So the difference between GAAP and adjusted EPS, I've been getting some investor questions about and it seems to be the Badcock adjustments here. If you could delve into that in more detail. Should we be expecting more of those, I guess, losses being -- and then being adjusted out? Just wondering how long that lasts.

好的。我很欣賞第二個問題，另一個財務問題。所以 GAAP 和調整後每股收益之間的區別，我一直在收到一些投資者的問題，這似乎是 Badcock 調整。如果您可以更詳細地研究它。我猜，我們是否應該期待更多這樣的損失——然後被調整掉？只是想知道這能持續多久。

Yes. Eric, I will let you handle that because you understand it much better than I do.

是的。埃里克，我會讓你來處理，因為你比我更了解它。

Yes. Thanks, Brian. Yes. So what we essentially do with that delta between GAAP and adjusted EBITDA is to strip out all of the components related to Badcock financing. And so that's what you'll see on -- we've broken out into 3 lines this time instead of lumping it all into one to better describe where it comes within the where it shows up within the P&L.

是的。謝謝，布萊恩。是的。因此，我們對 GAAP 和調整後 EBITDA 之間的差值所做的實質上是剔除與 Badcock 融資相關的所有組成部分。所以這就是您將看到的——這次我們分成了 3 行，而不是將它們全部合併為一行，以更好地描述它在 P&L 中出現的位置。

And then as Brian mentioned earlier, we expect to exit the financing business in the middle of the year by the end of Q2, and therefore, we -- those add-backs would essentially go away at that point in time. So -- but the effect of the add-back was just in line with base operations.

然後正如布賴恩之前提到的那樣，我們預計在第二季度末在年中退出融資業務，因此，我們 - 那些加回基本上會在那個時間點消失。所以——但加回的效果與基本操作一致。

Okay. Got you. So I guess it's -- right now, it's on the balance sheet or the lines -- or is if it's on the balance sheet, second quarter once you sell the business off the balance sheet, we don't see it anymore. And that's sort of already planned if I understand correctly?

好的。明白了所以我想它是 - 現在，它在資產負債表或線路上 - 或者如果它在資產負債表上，第二季度一旦你從資產負債表上出售業務，我們就再也看不到它了。如果我理解正確的話，那是已經計劃好的了嗎？

Yes. Yes, that's in process yes.

是的。是的，正在處理中。

The next question is a follow-up from Mike Baker with D.A. Davidson.

下一個問題是 Mike Baker 與 D.A. 的後續行動。戴維森。

As promised. So let me -- and just a follow-up on that Badcock line of questioning. So the receivables on the balance sheet and the debt related to that, if you're out of this by the end of the second quarter, does that go away as well? Or will that linger into subsequent quarters? I guess the question is, what quarter do those go away?

按照承諾。那麼讓我——只是對 Badcock 的提問進行跟進。所以資產負債表上的應收賬款和與之相關的債務，如果你在第二季度末之前沒有這些，那也會消失嗎？還是會持續到隨後的幾個季度？我想問題是，這些會在哪個季度消失？

A second part of that question, I presume when you talk about your leverage less than -- sweet spot, less than 3x, et cetera, you're excluding the debt related to the receivables. Is that correct? And then last part of that is how confident are you that you get rid of it by the end of the second quarter? I know that you had done some tests that weren't -- you're having some trouble finding ways to offload those -- the receivables. It sounds like you have them tested, or maybe heading in the right direction now. But here I say it hasn't been as easy as you originally thought. So how much confidence do you have that this is gone by the second quarter?

這個問題的第二部分，我想當你談論你的槓桿率低於 - 最佳點，低於 3 倍等等時，你排除了與應收賬款相關的債務。那是對的嗎？然後最後一部分是你對在第二季度末擺脫它有多大信心？我知道你做了一些測試，但這些測試不是——你在尋找卸載這些的方法時遇到了一些麻煩——應收賬款。聽起來您已經對它們進行了測試，或者現在正朝著正確的方向前進。但在這裡我要說的是，它並沒有你原先想像的那麼容易。那麼，您有多少信心認為這種情況會在第二季度消失？

So I'll try to take the last 2. And then Eric, if you can handle the first part and you may need to repeat some of that. So one was -- the last one was the confidence level. The second to last question was about the recourse of the debt, is that...

所以我會嘗試最後兩個。然後 Eric，如果你能處理第一部分，你可能需要重複其中的一些。所以一個是 - 最後一個是信心水平。倒數第二個問題是關於債務的追索權，是……

More about what you include when you yes, when you talk about leverage in your calculation.

當您在計算中談論槓桿時，更多關於您包括的內容。

Yes, yes. So I don't include the securitization because it is nonrecourse. It's a balance sheet item. It's not anything that we own money on. I include in my calculations for leverage, debt that we actually have incurred and that we have to pay back. That's what I count. So -- and I think you've said pretty eloquently, if we are out -- you did. If we're out of the in-house financing altogether, the securitized debt just leaves our balance sheet like magic.

是的是的。所以我不包括證券化，因為它是無追索權的。這是一個資產負債表項目。這不是我們擁有金錢的任何東西。在我的槓桿計算中，我包括了我們實際產生的並且我們必須償還的債務。我就是這麼算的。所以——我認為你已經很有說服力地說，如果我們出局了——你做到了。如果我們完全沒有內部融資，證券化債務就會像魔術一樣離開我們的資產負債表。

So I think that's really the illustration that you've got. So when I'm talking about 2 to 3 turns of leverage being where we want to be as a target that does not include anything having to do with Badcock receivables.

所以我認為這確實是你所得到的例證。因此，當我談論 2 到 3 輪槓桿時，我們希望成為目標，不包括與 Badcock 應收賬款有關的任何事情。

As far as confidence level and how we've gotten here with the transition to third-party waterfall from the in-house offering. I didn't expect that as we sit here today at the end of February 2023, that we would be continuing to test that we would be continuing to write in-house Badcock credit, but we are. So that was a bad bet by me. We're just not there. I think there comes a time that you have to just figure it out and you make decisions.

至於信心水平以及我們如何從內部產品過渡到第三方瀑布流。我沒想到當我們今天在 2023 年 2 月底坐在這裡時，我們會繼續測試我們是否會繼續編寫內部 Badcock 信用，但我們是。所以這是一個糟糕的賭注。我們只是不在那裡。我認為總有一天你必須弄清楚並做出決定。

And I think that's where we are. I think that by the end of June, we should know what we need to know, I think, that this test moving into the dealer stores right now with 1 dealer in particular, 7 stores, who has been around Badcock for 25 years and is a good operator, and we'll really be able to tell us if it's what's working and what's not. I think that, that is a really big step for us.

我認為這就是我們所處的位置。我認為到 6 月底，我們應該知道我們需要知道什麼，我認為，這項測試現在進入經銷商商店，特別是 1 家經銷商，7 家商店，他們已經在 Badcock 周圍工作了 25 年並且是一個好的操作員，我們將真正能夠告訴我們它是否有效，什麼無效。我認為，這對我們來說真的是一大步。

Would I prefer that we were there several months ago, Absolutely. Do I think that the end of June is realistic? Absolutely. Would I bet my life on it, absolutely not. So I think that's probably the best qualitative summary I could give you to my personal views of where we are, where we need to be.

我希望幾個月前我們在那裡，當然。我認為 6 月底是現實的嗎？絕對地。我會賭上性命嗎，絕對不會。所以我認為這可能是我可以給你的最好的定性總結，以表達我對我們所處位置和我們需要達到的位置的個人看法。

Well, I don't want you to give away yes, sorry, go on.

好吧，我不想讓你放棄是的，對不起，繼續。

No. Mike, sorry, I was going to just ask -- answer your first question around the accounting. So essentially, because this is one of those nuances where it's a sale from a legal perspective, it's a true sale but from an accounting perspective, it doesn't get counted as a sale until we stop originating customer paper. And once we do, we unwind all of the accounting related to that on the balance sheet, we stop with the add-backs as well. So at that point in time when we stop the origination of accounts, you'll see it online from the balance sheet.

不，邁克，抱歉，我只想問 - 回答你關於會計的第一個問題。所以從本質上講，因為這是從法律角度來看是銷售的細微差別之一，這是真正的銷售，但從會計角度來看，在我們停止原始客戶文件之前，它不會被算作銷售。一旦我們這樣做了，我們就會在資產負債表上取消所有與此相關的會計核算，我們也會停止追加。因此，在我們停止創建賬戶的那個時間點，您會在資產負債表中在線看到它。

Right. So presumably, that would be at some point in the second quarter, but it will still be on the 2Q balance sheet if it's not done by the -- because you'll have some of that within the quarter. But by the third quarter, if you're right, we're not going to bet Brian's life, but if you're right, and you're done with it by June, then it won't be on the third quarter balance sheet.

正確的。因此，據推測，這將在第二季度的某個時間點完成，但如果沒有完成，它仍將出現在第二季度的資產負債表上——因為你將在本季度內獲得其中的一些。但到第三季度，如果你是對的，我們不會拿 Brian 的性命打賭，但如果你是對的，並且你在 6 月之前完成了它，那麼它就不會出現在第三季度的餘額中床單。

Correct.

正確的。

Okay. One more thing on that, though. I don't want you to give away your negotiations here. But when you say at some point, you just got to make a decision. I mean, is the implication that you're just going to have to make a deal with a third priority that's just not as good for you as you would have wanted? And where would that show up?

好的。不過，還有一件事。我不想讓你放棄在這裡的談判。但是當你在某個時候說，你只需要做出決定。我的意思是，這是否意味著你將不得不與第三優先事項達成協議，而這對你來說並不像你想要的那樣好？那會出現在哪裡？

Yes. That's a fair question, and I'm not really sure how to answer it. Other than to say that I'm absolutely certain that whatever deal we do strike, will leave me wanting more. But that's where we are right now. And so look, I don't know how to really answer other than to say that we have multiple options remaining to consider. We continue to test. We're expanding the test, and we're hopeful, but Yes. We've still got 4 months to get it sorted out. To meet our self-imposed deadline.

是的。這是一個公平的問題，我真的不確定如何回答。除了說我絕對確定無論我們達成什麼協議，都會讓我想要更多。但這就是我們現在所處的位置。所以看，除了說我們還有多種選擇需要考慮之外，我不知道如何真正回答。我們繼續測試。我們正在擴大測試，我們充滿希望，但是是的。我們還有 4 個月的時間來解決這個問題。為了滿足我們自己設定的最後期限。

This concludes our question-and-answer session. I would like to turn the conference back over to Brian Kahn for any closing remarks.

我們的問答環節到此結束。我想將會議轉回給 Brian Kahn，聽取任何閉幕詞。

Great. Well, thank you all for joining us, and thank you for your interest in Franchise Group. Operator, you can conclude the call.

偉大的。好的，感謝大家加入我們，感謝您對 Franchise Group 的興趣。接線員，你可以結束通話了。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連接。