Franchise Group Inc (FRG) 2023 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Franchise Group's Fiscal 2023 First Quarter Conference Call. (Operator Instructions) I would now like to hand the conference over to your host, Andrew Kaminsky, Executive Vice President and Chief Administrative Officer of Franchise Group.

女士們，先生們，感謝各位的蒞臨，歡迎參加特許經營集團2023財年第一季電話會議。 （接線員指示）現在，我將會議交給主持人，特許經營集團執行副總裁兼首席行政官安德魯·卡明斯基。

Thank you, MJ. Good morning 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 meeting of the Private Securities Litigation Reform Act of 1995 and other provisions of federal securities laws. These forward-looking statements are based on management's current expectations and are not guaranteed of future performance.

謝謝，MJ。早安，感謝您參加我們的電話會議。我正在與特許經營集團總裁兼執行長 Brian Kahn 和財務長 Eric Seeton 進行電話會議。在開始之前，我想指出，本次電話會議中討論的某些事項可能包含符合 1995 年《私人證券訴訟改革法案》和其他聯邦證券法條款的前瞻性陳述。這些前瞻性陳述是基於管理階層目前的預期，並不能保證未來績效。

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. 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.

實際結果可能與前瞻性陳述中明示或暗示的結果有重大差異。前瞻性陳述截至本次電話會議之日有效，除法律另有規定外，Franchise Group 不承擔更新或修改這些陳述的義務。敬請投資人切勿過度依賴這些前瞻性陳述。有關這些以及其他可能導致 Franchise Group 實際結果與前瞻性陳述中所述結果存在重大差異的風險和不確定因素的更詳細討論，請參閱我們截至 2022 年 12 月 31 日財年的 10-K 表格以及我們向美國證券交易委員會 (SEC) 提交的其他文件。

The financial measures discussed today include non-GAAP measures that we believe investors focus on in comparing our results between periods and among our PR 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. 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 for 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.

今天討論的財務指標包含非公認會計準則 (non-GAAP) 指標，我們認為投資者在比較我們不同時期以及我們公關公司之間的績效時會關注這些指標。請參閱我們網站franchisegrp.com新聞與活動板塊中的收益報告，以了解非公認會計準則 (non-GAAP) 財務指標與公認會計準則 (GAAP) 指標的對照表。非公認會計準則 (non-GAAP) 財務資訊不應被視為獨立於公認會計準則 (GAAP) 財務資訊之外的替代或優於公認會計準則 (GAAP) 財務信息，但我們之所以納入非公認會計準則 (non-GAAP)，是因為管理層認為，它在評估我們的業務時，能夠提供關於我們經營業績的有意義的補充資訊，並且有助於投資者進行的補充資訊。本公司使用的非公認會計準則 (non-GAAP) 財務指標有其局限性，可能與其他公司使用的指標有所不同。

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

現在，我想將電話轉給 Brian。 Brian？

Thank you, Andrew, and good morning to our listeners and thank you for joining us. Before reviewing our first quarter results, I wanted to comment on the announcement this morning regarding the Company's execution of a definitive agreement to be acquired by a consortium led by our management team for $30 per common share in cash. On March 20, we announced the receipt of an unsolicited non-binding proposal to acquire all of the outstanding shares of common stock of FRG for $30 per share in cash. This proposal was expressly conditioned on, among other things, management rolling over all of their equity interests in the Company. The third party bidder was B. Riley Financial Inc.

謝謝安德魯，各位聽眾早安，謝謝您的收聽。在回顧我們第一季的業績之前，我想就今天早上宣布的一項公告發表評論。公告稱，公司已簽署最終協議，將由我們管理團隊主導的財團以每股30美元的現金收購。 3月20日，我們宣布收到一份非約束性收購要約，擬以每股30美元的現金收購FRG所有流通普通股。該要約明確附加條件，其中包括管理層將其在公司的所有股權轉讓給其他方。第三方競標者是B. Riley Financial Inc.。

In response to this proposal, our Board of Directors established a special committee comprised solely of independent directors. The special committee retained independent legal counsel and a financial advisor to explore the proposal and other strategic alternatives for FRG, and they ultimately determined that accepting this proposal was the best path forward for the public shareholders.

為回應該提議，董事會成立了一個完全由獨立董事組成的特別委員會。該特別委員會聘請了獨立法律顧問和財務顧問，共同探討該提議以及FRG的其他策略替代方案，並最終認定，接受該提議是對公眾股東而言最佳的前進之路。

After conducting due diligence, B. Riley decided not to proceed on the terms of its original proposal, but was willing to provide financing to the consortium led by the management team for the transaction that was announced this morning. The key terms in the transaction are outlined in the press release the Company issued this morning and we anticipate filing an 8-K that will include more detailed information including a copy of the merger agreement. You can also find our transaction press release on our website.

經過盡職調查後，B. Riley 決定不再按照原先的提議條款進行交易，但願意為管理團隊牽頭的財團提供融資，以完成今早宣布的交易。交易的關鍵條款已在公司今早發布的新聞稿中概述，我們預計將提交一份 8-K 報告，其中包含更詳細的信息，包括合併協議的副本。您也可以在我們的網站上找到我們的交易新聞稿。

As detailed in the press release, the consortium has agreed to pay $30 per share in cash for all of the public commons shares. The Company anticipates redeeming its outstanding preferred stock in connection with the closing or continuing to pay the preferred stock dividend through the redemption date. The merger agreement does not permit the continued payment of the common stock dividend, although as we will discuss in more detail as part of the review of the first quarter results, our credit agreements would not permit the dividend to be paid.

如新聞稿所述，該財團已同意以每股30美元現金收購所有公開發行的普通股。公司預計將在交易完成時贖回其已發行的優先股，或繼續支付優先股股息直至贖回日。合併協議不允許繼續支付普通股股息，但我們的信貸協議不允許支付股息，這一點我們將在第一季業績審查中詳細討論。

The credit agreements permit dividends so long as the Company's leverage ratio remains below a specified level, and we are currently in excess of this level. While the special committee solicited alternative proposals following the receipt of the offer from B. Riley, the transaction also includes a 30-day go-shop period, which the Company intends to affirmatively solicit alternative acquisition proposals. In addition, the closing of the transaction is conditioned upon the holders of a majority of our outstanding shares of common stock that are not held by the consortium or any of their affiliates or related parties voting in favor of the transaction. We expect the transaction to close in the second half of 2023.

只要公司的槓桿率保持在特定水平以下，信貸協議就允許分紅，而我們目前的槓桿率已超過該水平。雖然特別委員會在收到B. Riley的報價後徵詢了其他方案，但此次交易還包含30天的“擇優收購期”，公司計劃在此期間積極徵詢其他收購方案。此外，交易的完成取決於我們流通在外普通股（非由財團或其任何關聯方或相關方持有）的多數股東投票贊成該交易。我們預計交易將於2023年下半年完成。

Over the coming weeks and months, our public filings will provide a significant amount of additional information regarding the transaction and the Company. I would now like to review our first quarter results, but before I do so, I'd like to note that in light of the transaction announcement this morning, we will not be holding a question-and-answer session at the end of the call. I would like to remind you that we will be making many references to perform items throughout this call.

在接下來的幾週和幾個月裡，我們將公開提交文件，提供大量關於此交易和公司的補充資訊。現在，我想回顧一下我們的第一季業績，但在此之前，我想指出，鑑於今天上午宣布的交易，我們將不會在電話會議結束時舉行問答環節。我想提醒大家，我們將在本次電話會議中多次提及執行事項。

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. Comparison to performer results will allow us to discuss and evaluate performance of the acquired businesses when a comparable period is not available due to the timing of the acquisition.

我們的新聞稿和文件可能會提及被收購業務在被 Franchise Group 收購之前的歷史財務表現。這些項目已進行合理調整，以與我們的財報日曆和會計政策保持一致。當因收購時間原因無法取得可比較時期的數據時，與績效表現者的數據進行比較將有助於我們討論和評估被收購業務的績效。

For the first quarter of 2023, Buddy's system-wide, same store sale comps were negative 3.5% with franchisee e-comps declining 3.0% and corporate stores declining 7.0%. In April Buddy's system-wide e-comps were down 7.8% with franchisee e-comps down 7.8% and corporate stores down 7.7%. Customer counts and average revenue per customer remain relatively flat compared to the fourth quarter of 2022.

2023年第一季，Buddy全系統同店銷售額較去年同期下降3.5%，其中加盟店電商銷售額下降3.0%，公司門市銷售額下降7.0%。 4月份，Buddy全系統電商銷售額較去年同期下降7.8%，其中加盟店電商銷售額下降7.8%，公司門市銷售額下降7.7%。與2022年第四季相比，顧客數量和每位顧客平均收入保持相對穩定。

In the first quarter, Buddy's signed agreements for 11 new franchise locations growing its backlog to 121 new franchise stores. Buddy's did not open any new stores in the quarter and ended the quarter with 338 total locations of which 302 are franchised. Badcock's system-wide comps were down 18.9% for the first quarter and were down 26.2% in April. Transaction comps were down 19.4% in the first quarter. Customer traffic was down approximately 15,000 customers to approximately 110,000 customers in the quarter. Average order values were nominally down less than 1% in the quarter to $1,159.

第一季度，Buddy's 簽署了 11 家新特許經營店的協議，使其現有特許經營店數量增至 121 家。 Buddy's 本季未開設任何新店，截至本季末，該公司共有 338 家門市，其中 302 家為特許經營店。 Badcock's 全系統可比銷售額第一季下降 18.9%，4 月下降 26.2%。第一季可比交易金額下降 19.4%。本季客流量減少了約 1.5 萬名，降至約 11 萬名。平均訂單價值本季名義下降不到 1%，至 1,159 美元。

During the quarter, we sold $133.3 million of Badcock consumer accounts receivable for $109.7 million. The net proceeds were used to pay down our ABL. Badcock ended the quarter with 382 locations of which 317 are dealer locations. American Freight comps were down 4.1% in the first quarter. Comps were up 2.6% in January, down 2.1% in February and down 9.6% in March.

本季度，我們以1.097億美元的價格出售了1.333億美元的Badcock消費者應收帳款。淨收益用於償還我們的ABL。 Badcock本季末擁有382家門市，其中317家為經銷商門市。美國貨運公司第一季同店銷售額下降4.1%。 1月同店銷售額成長2.6%，2月下降2.1%，3月下降9.6%。

Comps in April were down 12.9%. Freight costs as a percentage of sales remained flat compared to the fourth quarter coming in at approximately 10.5% of revenue. Average store -- store average order values were up approximately $60 to $760 on increased in-store traffic of over 10% to approximately 260,000 customers in the quarter. In the first quarter, we sold 3 new franchise locations, opened 2 new franchise stores, and have a current backlog of 37 franchise locations. American Freight finished the quarter with 370 locations, which included 11 franchise stores. We continually review the carrying value of our assets to ensure they reflect fair value on our balance sheet.

四月可比銷售額下降了12.9%。運費佔銷售額的百分比與第四季持平，約為營收的10.5%。本季，門市平均訂單價值上漲了約60美元至760美元，店內客流量增加了10%以上，達到約26萬名顧客。第一季度，我們出售了3家新的特許經營店，開設了2家新的特許經營店，目前有37家特許經營店待售。 American Freight在本季結束時擁有370家門市，其中包括11家特許經營店。我們持續審查資產的帳面價值，以確保其在資產負債表中反映公允價值。

Due to the financial performance of American Freight this quarter, we took a $75 million non-cash impairment charge to the goodwill of American Freight, which is reflected in our GAAP operating results. Sylvan same center comps were up 0.1% in the quarter. Sylvan sold 9 new franchise in the first quarter and had a backlog of 23 centers at the end of the quarter, as well as 553 brick and mortar centers operating, which includes 5 corporate centers.

由於美國貨運本季的財務表現，我們計入了美國貨運商譽7,500萬美元的非現金減損，這已反映在我們的GAAP營運表現中。 Sylvan同店銷售額在本季成長了0.1%。 Sylvan在第一季出售了9個新的特許經營權，截至本季末，共有23個中心積壓訂單，同時還有553個實體中心在運營，其中包括5個企業中心。

At PSP system-wide same store sales comps were up 5.9% in the first quarter. Franchise comps were up 7.1% in the quarter while corporate stores were up 4.1%. PSP transaction comps were down 1.5%. PSP store traffic was up 2.4% over 6.3 million customers and store average order values were up over 15% or $6 in the first quarter. In April PSP's system-wide comps were up 6.2% with franchisee comps up 7.7%, corporate stores up 4.4%. Freight costs declined from 4.6% of sales to 3.5% of sales in the first quarter. PSP continued to build its backlog with the sale of 21 new franchise locations in the quarter, bringing total backlog at PSP to 228 locations. PSP sold 6 wagon wash territories this quarter and currently has a backlog of 36 wagon wash stores.

第一季度，PSP 全系統同店銷售額年增 5.9%。本季特許經營店銷售額年增 7.1%，公司店銷售額較去年同期成長 4.1%。 PSP 交易額較去年同期成長 1.5%。第一季度，PSP 店客流量年增 2.4%，超過 630 萬名顧客，店均訂單金額年增 15% 以上，即 6 美元。 4 月份，PSP 全系統銷售額年增 6.2%，其中特許經營店銷售額較去年同期成長 7.7%，公司店銷售額較去年同期成長 4.4%。第一季度，運費從銷售額的 4.6% 下降到 3.5%。 PSP 繼續增加訂單，本季出售了 21 家新的特許經營店，使 PSP 的訂單總量達到 228 家。本季 PSP 出售了 6 個貨車清洗區域，目前有 36 家貨車清洗店訂單。

During the first quarter, PSP also closed on the acquisition of 20 new locations from a competitor in bankruptcy and has already franchised 12 of these locations to existing franchisees. We expect to sell the balance of these stores to existing franchisees in the coming months. All of these locations will be rebranded under the PSP or wagon wash banners. Overall, PSP had 707 locations consisting of 234 corporate stores, 449 PSP franchise stores and 24 wagon wash franchise stores. Vitamin Shop overall comps were up 3.4% in the first quarter and were up 1.9% in April. Store traffic in the first quarter was up 2.9%.

第一季度，PSP 還從一家破產的競爭對手手中收購了 20 家新門市，並已將其中 12 家特許經營給現有加盟商。我們預計在未來幾個月內將剩餘門市出售給現有加盟商。所有這些門市都將更名為 PSP 或 Wagon Wash 品牌。 PSP 整體擁有 707 家門市，其中包括 234 家公司門市、449 家 PSP 特許經營店和 24 家 Wagon Wash 特許經營店。 Vitamin Shop 第一季整體同店銷售成長 3.4%，4 月成長 1.9%。第一季門市客流量成長 2.9%。

During the quarter, sports nutrition accounted for approximately 55.8% of overall sales compared to 48.9% in the first quarter of 2022. In the first quarter, direct to consumer accounted for approximately 25.7% of the business compared to 25.1% in the first quarter of 2022. Vitamin shops sold 5 new franchise locations in the quarter bringing backlog up to 59 stores. Vitamin Shop currently operates 699 brick-and-mortar locations, 3 of which are franchise.

本季，運動營養品銷售額約佔總銷售額的55.8%，而2022年第一季為48.9%。第一季度，直銷業務約佔業務的25.7%，而2022年第一季為25.1%。維生素商店本季新增5家特許經營店，使庫存門市數量增加至59家。維生素商店目前經營699家實體店，其中3家為特許經營店。

On a consolidated basis for the first quarter of 2023, total reported revenue for Franchise Group was $1.105 billion. Net loss was $108.3 million or $3.16 per fully diluted share. Adjusted EBITDA was $66.0 million and non-GAAP earnings per share was $0.11. 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 earnings per share.

2023年第一季度，特許經營集團（Franchise Group）的合併報告總收入為11.05億美元。淨虧損為1.083億美元，即每股完全稀釋收益3.16美元。調整後息稅折舊攤提前利潤（EBITDA）為6,600萬美元，非公認會計準則每股收益為0.11美元。我們仍在將Badcock的消費者融資業務從內部轉向第三方合作夥伴，並已將金融業務的非核心業績剔除出調整後息稅折舊攤銷前利潤（EBITDA）和非公認會計準則每股收益。

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.

雖然我們可以對消費貸款的損益表進行形式化估算，但資產負債表仍然反映證券化債務和應收帳款，儘管大部分應收帳款已出售給第三方。一旦我們停止發放客戶貸款，我們認為證券化應收帳款將作為銷售入賬，相關資產和負債將不再列示在我們的資產負債表中。

In February, we closed on a $300 million add-on financing to our existing first lien term loan. The net proceeds were used to pay down our AVL credit facility and provide its capacity to continue to finance the Badcock business while we work towards an alternative solution. We ended the quarter with approximately $1.4 billion in gross outstanding term debt and cash of approximately $98.3 million.

二月份，我們完成了一筆3億美元的附加融資，用於補充我們現有的第一留置權定期貸款。這筆淨收益用於償還我們的AVL信貸額度，並使其能夠繼續為Badcock業務提供資金，同時我們正在努力尋找替代方案。本季末，我們的未償定期債務總額約為14億美元，現金約為9,830萬美元。

At the end of the first quarter, we had approximately $363 million of availability on our ABL revolver and currently have approximately $300 million of remaining availability. As I noted earlier, management was unable to recommend that the board declare a regular quarterly common stock dividend this quarter due to restrictions in our credit agreements.

截至第一季末，我們的ABL循環信貸可用資金約為3.63億美元，目前剩餘可用資金約為3億美元。正如我之前提到的，由於信貸協議的限制，管理層無法建議董事會在本季度宣布定期派發季度普通股股息。

Our credit agreements permit, dividends so long as the Company's leverage ratio remains below a specified level, and we are currently in excess of this level. In light of today's announcements and our first quarter financial results, we are withdrawing our financial forecast for 2023 and we'll provide additional disclosures and upcoming proxy filings for your review and consideration.

我們的信貸協議允許，只要公司的槓桿率保持在特定水平以下，我們就可以派發股息，而我們目前的槓桿率已超過該水平。鑑於今天的公告和第一季的財務業績，我們撤回了2023年的財務預測，並將提供更多披露資訊和即將提交的代理文件，供您審查和考慮。

I want to thank all of our shareholders and lenders for their support. We will issue updates as required over the coming months, and thank you. Operator, please conclude the call.

我要感謝所有股東和債權人的支持。我們將在未來幾個月根據需要發布最新進展，謝謝。接線員，請結束通話。

This concludes today's presentation. Thank you for your attendance. You may now disconnect.

今天的演講到此結束。感謝您的出席。現在您可以斷開連線了。