May 22--Vancouver-based Papa Murphy's Holdings, parent of Papa Murphy's take-and-bake pizza chain, on Thursday issued its first quarterly earnings report since becoming a publicly traded company on May 2.
Total revenue increased 18.9 percent year-over-year to $25.1 million in the three months ending March 31, the company reported. Domestic comparable store sales increased 3.3 percent for all stores, while net income rose to $819,000 from last year's $711,000.
However, Papa Murphy's stock has declined from an initial price of $11 per share to Thursday's closing price of $9.05, the lowest since the company's public debut on the Nasdaq stock exchange under the symbol "FRSH."
The company has issued 5.8 million shares of common stock, generating total net proceeds of approximately $55.8 million from the offering after deducting expenses. The net proceeds were primarily used to pay down existing debt, Papa Murphy's Chief Executive Officer Ken Calwell and Mark Hutchens, the company's chief financial officer, said in a conference call Thursday after the market closed.
Calwell said Papa Murphy's would continue through 2014 to roll out new "core product" offerings, which his company views as long-term additions to the menu that are more valuable than limited-time offers.
"We've worked hard to broaden our line," he said of new products intended to draw new customers based on both price and quality. For example, the company introduced its Delite pizzas featuring crispy thin crust in 2012 and also offers stuffed pizzas in Chicago-style, chicken-bacon and five-meat varieties.
Calwell said Papa Murphy's research and development team expects to introduce new side items as well, in addition to updating point-of-sale technology throughout the company's chain of 1,349 franchise and 69 company-owned stores. Approximately 800 stores have already installed a new cash collection system, which Calwell expects will be in every store within the next two years. From there, Papa Murphy's will add a feature to the sales system that allows customized, online ordering, Calwell said.
"We believe it's the key to increased efficiency and customer service," he said.
Calwell said Papa Murphy's Holdings anticipates sales growth of at least 2 percent per year and expects the chain to grow by approximately 105 new stores in 2014.
Despite the company's positive first-quarter results, shares of Papa Murphy's Holdings on Thursday slid 71 cents to $9.05 at 4:15 p.m. in Nasdaq trading. The shares earlier in the day fell as low as $8.93, down $2.07 from the $11 initial offering price.
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