Franchise (TAX) 11 Mar 212020 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to Franchise Group's Fourth Quarter Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. I would now like to hand the conference over to your host, Andy Laurence, Executive Vice President of Franchise Group.

Thank you, operator. you our thank call. and afternoon for conference joining Good Franchise with and Group's I'm call Kahn, CFO. Group's Franchise on the Seeton, Brian President Eric CEO; and

are Before of within results laws. are the that guarantees of performance. the federal to not this getting those not update by Actual securities required The Litigation These may other expressed or meaning would revise or based Reform provisions Securities current place implied this discussed as could to are of of the Act call are statements statements on reliance matters undue to as expectations statements and future on on except mention law, statements. forward-looking contain Private started, statements. them. I Investors XXXX forward-looking forward-looking and certain Franchise these of in management's call, vary like of materially and forward-looking date the Group from by assumes cautioned forward-looking made obligation the no

periods discussion detailed other XX-K the ended should make results that financial may as cause from Non-GAAP of release franchisegrp.com information among this that it of in uses and at website earnings investors more today between measures. reconciliation The the include believes non-GAAP forward-looking vary useful Form supplemental and in XXXX, comparative please year peer XX, for filed not For but our we was management on our the with of non-GAAP have information companies. regarding for financial superior because measures and company see which a and in informational believe or GAAP substitute be filings uncertainties when and see assessing GAAP and afternoon to for financial companies. from, to those financial actual fiscal differ considered included other non-GAAP Events results by materially section we comparing measures SEC. Please used results isolation statements, the our The measures our financial Franchise discussed other News to business investors to in December risks limitations meaningful focus could operating the from measures Group's and indicated a information and our those provides is for these purposes.

I would Now turn over call like to Brian. to the Brian?

our businesses. happy Eric We'll updates turn Andy, provide and us. call in for thank and overcame I trends And to And a in to briefly recent and current Overall franchisees and obstacles activities through associates, afternoon listeners. details. then I'll walk provide then our financial questions. to Franchise joining Thanks, over in adapted management a on challenging manner and the be to good discuss will review of Group’s XXXX, you positioned from of our answer markets any our incremental of teams, operating brands. XXXX, in than we the brands added refranchised flow to And Freight to that locations without strategically stores. to overhead. corporate enhance synergies units for American more increasingly continue of the acquired new We cost furtherance and by the which them favorably brand we efforts XXXX, cash revenue has Home, refranchise Buddy’s XX XX FFO and future. In driving set strengthened fourth diverse an quarter our our

its flow Group Pet XXXX, portion products with combine of $X.XX Acquisition closed where share dividend to of de-levering definitive to cash positively is free signed in generation combined cost impact our to have our and Liberty being that to will materially strategy economic the syndicated aggregating a Supplies cash returned in agreement through transaction annual consumer and the per flow during our a financing services. Plus we fully now XX% in compared Furthermore, free increase that and XXXX. actions we per related quarter closed the significant and allowing and for NextPoint and rate in $X a the finance to Corp., after interest These of shareholders signed valued Additionally, successfully capital. maintain enhanced acquisition of share Franchise a improves

So as current merger is from $X.X structure with capital now $XXX quarter. loan, the of includes anticipated today, NextPoint, million second down cash in will be proceeds which close billion of which to our Liberty's term paid with

strategy from year consumer our we diversified business the a and tax As services merger stated, have Liberty round seasonal NextPoint, into company. previously Liberty financial of a accelerates evolving and products

XXXX of accelerating different our our means each things efforts ongoing and our of priorities e-commerce brands our than our some our operational include brands, for capabilities brands our franchising efforts of others. for franchising for brands and Accelerating for all As enhancing productivity.

For and The time Vitamin means and American to first newly Shoppe franchise programs infrastructure. aggressively that Freight created the market going with for

both accelerating to more support the and and our will their Pet on For franchisees. established world-class franchise Buddy's XXXX providing and be Supply focus existing new growth in programs,

that as able we significant XXXX our refranchising in franchising to expect We report will system. progresses, activity be and

we quarterly closed. Supplies we reopening The Shoppe year to as revenue year-over-year many be expect that stores had as given and full government At of its Freight Freight Vitamin lower XX due Plus. staggered Like XXX many other will progresses expect stores, the and stimulus comparisons companies revenue experienced we transaction store American that require American growth XXXX. context impacts the orders, Buddy's, year our as at shelter-in-place of XXXX, in to programs Shoppe, Vitamin For closures, and refranchising Pet

comparisons regular to Some beginning year. this more year, about we time our this last provide reporting intend to augment insightful

a may XX% on drive you And budget financial to growth. provide will will as also earnings non-GAAP update the over not But Eric adjusted expect will excludes that incremental of As our achieve or more as Group per which we growth, specific for details share Franchise refranchising periods for EBITDA expectations whole the XXXX, occur shortly. events a occur. throughout they may year. these reminder, we on our impacts activity

signed, Franchise Group pending agreement management is looks merger closed is With the Franchise our team on the Supplies by a way team Liberty the today. management definitive forma and pro basis. at our compensated Group way And the the Pet acquisition

excluded for the in period. is is XX-month Pet for Supplies year full a Liberty entirety the of Assuming included

has always maximize discretionary to goal been Our flow. our cash

Pet million times a annual XX.X%. of over year, then for cash approximately and income taxes, pending debt higher pro million You've acquisition, term say however, to cash forma we best cash reallocate we providing our conservative, only repayment local of tax state on system-wide expect $XXX flow million a expect And being me the tax the ongoing the based proceeds, that million expense, Supplies sake cash $XX rate of This forma basis, the adjusted interest short-term and an for discretionary maintenance full approximately cash approximately many pro EBITDA, significantly are the from to from forma taxes, immaterial on of of $XX a from the On pro CapEx. amount Liberty cash statutory don't federal annual at cash discretionary flow heard highest $XX of to assuming of attributes operations based any in cash and benefit pay we taxes payer $XXX million flow. uses.

capital based dividends growth discretionary common dividend all that additional of amortization, current those million on expect additional $XX CapEx and $XX earmarked allocations, to dividends our Group cash further still for return initiatives million $XX all of Our and for businesses, flow debt million cash balance $X.X Franchise and approximately across for our After free million declaration rate. be diversify sheet, we recent to preferred allocation annual have for continue of scale has to flow to million over used $XXX deliver to shareholders.

a delivering to to less net three after our financial Franchise expect policy. Group back net merger As under turns balance than of our quickly Liberty have billion consistent closes, $X of debt, reminder, leverage the with we long-term sheet

in balance will our carry of combined Liberty asset sheet LoanMe We and investment public a also company. the NextPoint for significant equity

any Liberty For and would we the per in to all and time. higher few our transaction not next closing close debt that flow, at provide levels, forward those the share, look Liberty be would EBITDA, we the merger ratios adjusted months. earnings But reason, cash details the does

XXXX said, and of another me, for chain our of continued supply also worth any look forward that related Lastly, stimulus and to led freight expectations with have budget pleased constraints round product of for to brands, challenges elevated and That our the over costs. to we're which excludes it's includes an government constraints, noting supply resiliency also assumptions these easing of despite our time.

thank our franchisees associates again Before over and supporting each Group. to our dedicated hard Franchise of work other, ultimately for like Eric, all once the I'd the success of Eric? turning and to call their

Brian. you, Thank

call. will the throughout to address I you I remind pro forma be results of we to would references this items Before like that making operations,

other with the non-GAAP At any provide the Group. fiscal synergies adjusted as owned to Group to time, periods to allow the The of conform the is not detail for businesses it reporting, results entire prior do consistent period for refer continue may rules their as and same past, to in reflects discussing year. American acquisition. XX S-X acquired be cost results except forma filings for evaluate American XXXX. are when of policies not in impacts. In acquired financial information been first items concepts EBITDA These metrics. prior comparable actual the a that for contains XXXX included to results for The file will Freights pro adjusted When reasonable, the our comparable with Regulation have will year, disclosure and acquisition to The accounting we'll of each not performance measures calendar amounts other report by we since for and will has include format companies, or and QX, forma synergies fully acquisition all company available, to us supplemental in we forma extent days beginning fiscal due the non-GAAP financial to of releases press for anticipate and results our with part discuss SEC information the reporting the in will pro period Our of Article XX it order comparison as the to pro timing recent Franchise if acquisition supplemental adjusted to historical specific the the XX-K EBITDA. results discussed today Freight. the in and and reporting in costs that of in will this businesses results align Franchise

of loss was reported $X.X Group net addition share. revenue the And EBITDA $XX.X for or $X.XX total was per adjusted $XXX.X was million, XXXX, had Group For Franchise we associated GAAP items attributed other Franchise million cost includes to fourth accounting. quarter million, supplemental in acquisition in primarily the and quarter for loss related with net driven deferred price impacts of GAAP expense, purchase to million financing synergies costs The information one-time which was interest and QX. $X.X by

have reportable American four Shoppe; Buddy’s. Freight; Vitamin We segments, and The Tax Liberty

information adjusted $X.X quarter million December For EBITDA Freight million, had supplemental $XX.X and had and $X.X XXXX $XX.X respectively. the and and of XX, Buddy’s revenue EBITDA revenue of adjusted million EBITDA respectively. million of information million, million adjusted million $X.X The $XXX Vitamin ended had $XX.X revenue supplemental American respectively. $XXX.X and Shoppe and million

in $XX.X the adjusted respectively revenue and negative $X million previously As Liberty million $X.X XX was This of in have and fourth a revenue $XX adjusted EBITDA $X and EBITDA million the locations is approximately million November, XXXX quarter impacted expected and fourth annual disclosed EBITDA of reduction Tax million net million and Buddy's refranchising adjusted and by a revenue to quarter. respectively. $X approximately in Buddy’s respectively. corporate

of operation With discontinued a the and Liberty of starting will in Liberty Acquisition the NextPoint reported be recent QX. announcement Tax Tax as combination Corporation,

Group per million. revenue Franchise Franchise net and supplemental in $X.XX billion or For the XXXX share, of of adjusted of first had income $XXX.X $XX.X Group to information $X.XX year EBITDA of million attributed fiscal million $XX.X

our As approximately annual adjusted reduced by just discussed $X million. Buddy's EBITDA refranchising transaction

to sheet flow. cash our Turning balance and

operating we $X.X For $XXX.X the cash XXXX, defined generated flow quarter, $X.X cash CapEx to NOL the was beginning since CARES related million. was repaid received million, had free of for allowed less of debt Act quarter million for flow of CapEx million under we the flow in expenditures. year cash million free the million in the as capital $XXX.X year. $XX.X approximately the carrybacks $XX refunds of tax and

effective place put Brian debt debt conjunction X.X%. a Plus, As Supplies with mentioned to of closing our new Pet reduced from has that in in we've of XX% facility cost the

all of have for we sheet to continue to we of is after debt believe will obligations cash million, interest approximately and conjunction with our businesses foreseeable annualized our reduced all our be balance business further Our expense new be $XX.X our sufficient on NextPoint by performance, closing and over meet the transaction. liquidity expected just $XX future. the to up In which support million

And reiterate consistency that internal controls a the I Turning we accounting spent issues to implement companies the in the management compliance both significant At noted end of of those want paid understands each provide the of guidance, to of time to in FRG off improving years. inclusion across with we program reporting processes operating prior importance and continue financial Pet investments the with businesses to over our to look of in and have Supplies XXXX, portfolio. Plus. this amount

current changes questions, providing would to impact. and their our few outlook want we taking highlight and our for guidance, Before XXXX, to important like provide a we

will its included benefit tax adjusted be Liberty Plus We EBITDA reported discontinued of Supplies guidance actual XXXX. Tax in Plus $XX include it In and are operation in opposed with adjusted and in had flow million Article compliance guidance in of we the as XXXX, to our in is XX% for grow a only as the XXXX Pet approximately from in removing from of then will Pet starting a fiscal million EBITDA official our On Liberty basis Tax revenue from expected full to approximately EBITDA QX. contributed $XX XXXX. the forma $XX of in Supplies season. will $XXX.X Regulation acquisition pro year XX adjusted as in we million guidance. million but cash S-X, XXXX, approximately day But our

takes impact and of wall refranchising royalties franchise will Buddy’s reduction transaction annualized of this in four expenses account $X by and EBITDA mentioned, the I As approximately adjusted annually, reduce the into net the million fees. receipt operating previously of loss EBITDA,

pay shares income non-GAAP reporting adjustments adding the start the also net to and will dividing by by weighted and to which be calculating GAAP EBITDA impact then We non-GAAP outstanding, average EPS, the of effected EPS, calculated taxes tax we do local We not are currently and cash to cash state an approximately to XX%. tax expect amount immaterial but expect XXXX, an in effective taxes. using rate have of federal any of

continue franchising to and impact financial the on quarterly will We basis. refranchising report a of

divestitures, these EBITDA $XXX billion to of least least in XX EPS. by income to net a lenders And for want operator, generating Thank their please impact million least adjusted of weighted are to-date. XXXX, to million does do the using refranchising non-GAAP With all Franchise per share, GAAP EPS, of any our activity. of assumptions shares of with we calculating to guidance average And support $X the grow you. thank include XX% questions. outstanding, at or we're revenue $XX expecting million open $X.XX billion, Group and factors, our not or at for line additional all shareholders to at $X.X I $X acquisitions, for and

comes Thank with from you. Davidson. Our [Operator Instructions] question first Mike D.A. Baker

guess the take take outlook. take million et I out organic growth if XXX from question, sales, one including Tax, got a bit I one. for my within take I'll All EBITDA them, the but supplemental guess when then Supplies out this – one but in don't to On the Thanks. Plus, information, for Buddy’s follow-up, wanted the XXXX, your out Pet Liberty little cetera. $XX for you own Buddy’s math, right, lot stouts guys. a you I Hey to do ask, there's understand

I XXX. where about growth about To You'll organic right? to of kind to Am you us, something you that just get EBITDA EBITDA so, guidance yet where – if generate me XX% did thinking a like I EBITDA in from? could And that, about your XXX intend base of looks if growth. is tell that

that? me take to want Eric, do you

fine. that's Yes,

Yes. That's fine.

is don't the right. yes, math So, exactly I think

taking the think that's you said XX Liberty, although don't off right anything and we Buddy's, But the and think started I with XXX X. nice. out I XXX, about

Sorry, sorry. I to XXX, meant I XXX. say to say meant

Yes.

there PSP that's So XXX want right. you and – the XXX, XX, to is so for the PSP in at is look if for

is XX XXX, there. from and organic then XXX growth So and

organic okay, it’s X% about fine. So growth,

case, if then the where… so And that's

by so The grow XX of else simple it's that. as is being equal. businesses XX% will combined year part The well, as north overall as not all

Okay.

But I is it guess there, if we just trends specifically an into the offline. organic so, get on picture you you follow-up before discuss the could you and bigger plan the So numbers, guess, like EBITDA growth question seems the I answer that. and

is the was Plus. that range You can up math do there that for top looks expectation you when like it as organic some kind you XX% same Pet the already implied to and maybe math probably Supplies it XX% I sort on well, of growth messed of said the in and the but do same line,

So are the businesses you line are growth organic I – which why? the specific on and EBITDA you top seeing and implied the guess, line, where seeing on

Sure.

good Shoppe, implied implied Pet – organic and still declines would Supplies a we are one, organically American net and north overall. see growth EBITDA, and those all EBITDA out organic of be So seeing at Buddy’s, EBITDA so Vitamin implied that’s at to Plus, we XX% Freight

okay. Right,

And I here, – are gotten quarter like look could et be but if us, they what part in helpful. American at, does competent what what more the a early Vitamin lot of So into a a detail businesses. are maybe you in We've growth lot point it the to on make but I maybe were case, you and just ask guess – someone these ask in will the of it, XXXX? those would seeing given on is information fourth high bit else seeing that I'm type the think level and detail organic Freight, what you we've did little Shoppe question, I'm tell I'll trying of sure cetera,

Yes.

Buddy’s positively of PSP grew business so of north Vitamin QX and comped in of all well. as X%, American those Shoppe grew north north comped X%, Freight XX% of So three

businesses are margins So are with well, performing of those each businesses. the incremental associated there

We which have unit a an at well. growth unit company-owned has as American growth, Freight, impact

difficult, managing healthy, are the through businesses certainly teams that. the chains are So but supply

Some outlook products supply that it we are than others. the But par We're the on see the have table levels with we're closer chain. the unfolding. we to absolutely leaving par the now chain, way that level from revenue – with supply comfortable

somebody turn that appreciate I’ll else. to I over color. Okay.

Sure.

Thank you.

Our with Susan from Anderson comes next B. Riley. question

closes like evening, it nice tough quarter guess I in on I XX. have through said you April the it good year. a Tax, – to and really quick Hi, Liberty managing think after

the I clarify, are be tax cash the then keeping that to So you done. bulk tax guess I the bulk season guess this just from should year? of the of season

a question. that's Yes, good

so we they and And to operate own continue the where business may. the days and fall

after we close do to season So has the expect ended. the transaction

three So in that business, lose to last operate invested season get flow the the from cash months months out of we wherever season to will and of make year, we tax money the year. to you out you the get the nine money the year

So that half to year weekly, and later the transaction continue we've the back monthly closes this closes. transaction the and we their get the of extent will business season invested that operating fund and losses those to year last to the fund into tax until losses

gives that hopefully So color. more a little you

season delayed, you from last Yes. so sure it. not I think in cash did if… the from tax it terms of expecting obviously say this was year, And flow I'm Got you're year? what

deadlines be at season, this extended. point not Well the we look normal do that will Sure. believe a and in tax

$XX million remaining EBITDA did into million that that called last generate the some you $XX the in million $XX season, of for nine year, EBITDA then business, invest of excess I months. think of you to back during that we and so

helps. directionally than generates expect for if flow the tax that of you your cash year, a just should season more that So XXX%

I'm how think XX% you're That's a guess helpful. curious of as Thanks. about I payout just guess, dividends. And follow-up, you're still, said historically you and I thinking I Yes. if then EBITDA

how $XXX full that $XXX this now was that now and obviously about also debt, guiding million guess if you're for months, thinking And refi a you about EBITDA equals the just curious that going So if million, with XX year, there PSP shareholders? so the in thinking higher about to how to would are I you're forward. out dividend be return PSP

Sure.

generally down don't yet. frequently, other budget, I want comfortable I long-term grow do create I want dividend, we see good to So an the that's road, do maybe than of track with want year. don't we to I relied increase we to it we at mean, we think think want more think and policy the the and are. increasing And a but never and that going But dividend our on that there about proving valuable up expect think we and I backwards, on it, be are go of right never to that don't we're dividends can don't level I need the in make to down, factors now, to I immediate to where to do up right path where to think in backwards. other be look aim that uses we XX% changes record rate. going be to cash continue we be that we at I a middle the we're for dividend, want out. that but the

just to at constraints, sales all guess mean, within and you have supply the port Okay, appliances guys add and out break now was did the guess the so, I but assume, the I we the I that? cost great. associated furniture, already of sub could I there too. with supply impact I constraints I one but more guess, And impact congestion follow-up If on

is when expect the you up? issue that catch So adding to to and that

part the I the but the part first just So I your of missed got first again, asking question, that. last,

in impact the congestion if assume first there Yes. I through costs the flowed quarter. Or sales on and port can increased maybe supply, the give more lack guys what was to just feel of also mainly American you you some Because Freight, of related were? of quarter kind that like color fourth then and

Yes.

doesn't fix it, will to down, everybody manufacturers on, for get that's year, time wouldn't majority it's you'll weren't be all about and they that look – back had in people driving pass what just place, were that itself truck I related help, thing. we it's the you to and higher, supply is just cost really then not increasing getting delays demand get last and back at is think When pay really manufacturers not product, if you're And though, because, open will And not impacting whether people demand as and product tailwind to go a if is what one us. the it’s down of play or increases to where just the shut no Freight. prices, are their thing the because what's going normal, everything that international, don't they can they're up, they revert great just any port work. what are weather going and toll, in at the the margin, are out, they you're I is can But supplying think mean happened seeing over are charging going the that'll costs low us there the but supply road. is for willing charge ports to what for that's and help, elsewhere. economics they to – one industry-wide domestic it, those that So that shelter to can know simple the Texas

it’s for XXX% about XX%, just through product people some the I are certainly but So and but we'll we've about obviously fix got serve well as sure that that I performance as we lasts for think just longer are have skews them. across there. any you stock is some the will avoid thinking to make probably to we than want think And and our can just – it would us, one customers board. would caution think, We this any that it that and issue, make to it, – we solve

backwards right, about, as have left start answer you if I are next well year sure, that's is, to it's could many the It's but how did reality what table, slippery looking on and been, and know don't far that you then then the that. how then a for you the As dollars slope. think not the at insignificant compare, get all even

look we our is at for year, plan So what I think to awkward. cadence is the really be going the

there the extended period loss just works zero you in down being whole ended had getting back year, lot where year. an stores get Freight of tons of you're periods really for then to throughout it revenue out you'll very, well, balance large then you unusually comps because up sense, large year, the like reopening turns it would the when summer that last summer, some of have we lot a You'll of have negative businesses, going But revenue time, American for did significant stimulus. from shut, where actually make were was have that very shut comps, out in as and strength and a like the it against doesn't the and when and of the the

was be is, the exactly are could or open. period the month-to-month when still do have and and happened for June stores they just been then you year, at you But certainly look have now what year, if certainly to let that So plan open in within you we'll what whole where the actually didn't you about on it we're know help fine a remain you how That know a will but what plan. We negative strange luck. means impact that them be the in goes July, that don't, for in blind We'll Freight on We would understand if year American basis. example, impacts that as a for what year. comps absolutely but our cadence just expected. once

it. Got

this Okay, luck much. great. helpful. That's year. really Thanks Good so

Thanks. Sure.

you. Thank

from comes question Our next Larry with Solow Securities. CJS

that in for just thanks a and Brian, on remains. your environment the questions. opportunities. you balance respectable sort taking of more year debt-to-EBITDA evening with question, basis. the appetite maybe on a you echo in I assume should congrats obviously just times certainly assume about more three How global tough out net dislocations in than deals there's terms Good you pro balance a obviously, are do environment. for there is And some How market I like opportunities a – I’ll certainly interest your the forma And looks yield the that? of it's favorable. do

not exceedingly I balance it it's in be to short-term or the your do debt kind pay some may sort do So more high, to of down feel but be, want sort you you priorities acquisitions, think how rather of that of like that? you than where

Yes.

can the So can of think nice can scale mean, to business. I we helped of we levels diversify. our did for it's is able continue streams be for this we to we it's able that, us do. We we higher to business first our now, be grow were We think said with – lot, think the flow add going thing and diversification that and also last like But important I a most the of equity It's still refinancing accomplish helps. right holders, to all, in as debt function think to what to function acquisitions. I nice doing we well. to really cash the without just

I turns to us to it within we've we that leverage up stakeholders. our to out, when foremost. do need and do that it's lenders our back to first of think committed think of our I for getting financial for And and that targets transaction. then actually And under do a three we lever prove of and to net important all

we but They on did a going not to potential may and over right anyway. we're going what think next they that, then great we time So us, I opportunities the always That's be being remind mean, Franchise rush. great we'll doing this doing do. we're road on over I and the into get And able to there no bring to more going we're be to there brands plenty to people time. be our do job, down of jumping long that of Group. working later just that, for always from far say plenty are transactions. again, then And There's always deal, take are benefit

road, multiple it's example ability the material north this as help for I in I again. we generate have long it than a And to to another think transaction transaction. add But probably this as think cash, today go of materially to still you we doesn't of a think valuable And don't before combined we'll another capital And one. sitting do on We've lever equity get add – but or but then well. us It we'll So our lower we paid but flexibility are of look that Liberty EBITDA anxiety of it down per will the and that But I four down balance for wouldn't we to as structure transaction have right I now, think thing be thought flow go do also the equity large up, to turns feel we delever. got our don't don't matters have is the leverage happy generation, clearly, another done, cash share. us any ways to be before, delever about delevering business, doing acquire asset and earnings of people we get look, the we're impact It's an the investment, will through be a debt when that can it. something sheet. do. assets, transaction, would refranchising, that

some beneficial healthcare the And I health the that on stores been closing money it, seems of, most and good. term think, just lot. The know comps losing then greater on specific a obviously, may I question being pandemic. on from were and longer focus sort the that came were that just guys were you and that changed when with in pandemic on down Okay, acquired plan planning I Vitamin a Shoppe, business you think have you like

Amazon the out saw three years, As pressures these of to five over some retailers, look the probably maybe from you online own online by and your you large efforts. also

business line a you So grow this view of line operational see to continue bottom do on the it? good and your slight a improvements Is drive that way flattish to more top to as growth?

long-term? the over about talking You're

to years sort Yes. talking we…. of, three five as I'm

got what the be The we direct-to-consumer to wouldn't they nearly a Sure. private their the year, ability, prior because Sharon were Look, last that, ability determined before a I really doing did for couple and channel, increase The Shoppe team management previous have years, of started brand significantly something team invested little three to otherwise. her long e-commerce. for been party, penetration, will happens ownership their their what the – And years year board. do, overall, of last that Vitamin Shoppe, And what we since invest they've has successful in It's which their Vitamin but they the as happened to were into five here, by what from they came what they management does they seriously late ready team think been on now, she today. investing

e-commerce COVID So got the you process and I proving channel. up value think was the the the and that direct-to-consumer really of speeding what

I that's franchisees are direct-to-consumer dollars? from paying take to going benefits ever I Well, transaction distribution my the doing get sitting valuable. can Why was by with to that think is the royalty two am pretty they deal And driven actually retail of see heck what I now. without customer. a a from previous a franchisee's having them and centers you? of, ask there advantage always and that or do a ready perspective, business you, for for team That's where to what there, investments get

system you're last pandemic brands, to to focus your for just shock really and look, So have I having with the private now would our ended life. on fighting more you up expected be the a year, but

brick-and-mortar, than within happens that'll from business that and more revenue growth or mattered lot I brick-and-mortar will think the can anything and being customer two the that your what business it's the additional be five to what It's customer road. shrinking that's but or whether I by private create less, increasing penetration leads by think you're Clearly than grow third-party think so but I a faster change is the three And success that product like brick-and-mortar growth. e-com the e-com a offset that lead or year Does team will now? have talking will years determined growing a today, selling, we're of. the stickier now. not do about else growth on brands down focus over the next has that

Buddy's that color. appreciate for just franchise No. that words… Buddy's on If in slip just the comp I could one in, that, down year-over-year, the other agreement I comp the including excluding Great. down that Okay. or is – is more is that

Yes, the we revenue think organic it's it's this Buddy's, negative I a comp you're out, that year. be so because you're taking will the that the out, double-down refranchised. stores stores corporate But within losing the XX –

the it's is instead coming get out a agreements, buy that was larger think but or their buy pandemic they how you you their it's because refund margin by I unique that. lot revenue, tax lower revenue now a of have you get a is, paying it, and to used spend something they and very agreement, the their – rent-to-own in they're paying lot $XX week, what revenue, in of of very in the many out industry a to $XXX touched customer just than mean get that And rent-to-own industry parts it. of gets I February

refund. second year, are larger tax a while So the government stimulus turned just dollars last into

putting which you product revenue just it's will that to the and mean, great view don't year, put So also mean customer, to think last main, for is you replace a dose think we revert quarter business you that, happen don't collect, – then rent. the go business the the this that there stimulus. over out to budget continue double back year. buy one-time was I that XX% need revenue on by so and product and the rent up driven again with you're when like is that of I had was – My that It really And a got time. absolutely that isn’t – we comps you grow and you a will that But cycle go business. doesn't continues. a I it's to – new And really the I

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Got it.

Okay, it. great. Thanks Appreciate again.

Yes, no problem.

like I’d remarks. today. any the further this turn for Thank Kahn concludes back now call to you. And to our session Q&A for Brian

the And you Carmen. call. us thank Thanks, for all Great. conclude afternoon. this can you joining Carmen,

Thank in you, conference. for gentlemen participating and ladies today's

disconnect. You now may