Ladies and gentlemen, thank you for standing by and welcome to Franchise Group's fiscal 2021 fourth quarter and year-end conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. I would now like to hand the conference over to your host, Andrew Kaminsky, Executive Vice President and Chief Administrative Officer of Franchise Group. Thank you, Faye. 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. These forward-looking statements are based on management's current expectations and are not guarantees of future performance. Actual results could materially differ from those expressed and/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 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 10-K for the fiscal year ended December 25, 2021, and other filings that we make with the SEC. The financial measures discussed today include non-GAAP measures that we believe investors focus on in comparing results between periods and among peer companies. Please see our earnings release in the News & Events section of our website at franchisegrp.com for 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 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. Now I'd like to turn over the call to Brian. Thanks, Andrew, and good afternoon, and thank you all for joining us. I will provide a general update before turning the call over to Eric to provide financial details, and then we will be happy to answer questions. 2021 was another busy year for Franchise Group. Overall, my hat is off to the management teams of our current brands that combined to create impressive organic growth for FRG. Equally important, allowing me and my team to devote the majority of our time and resources toward the M&A activity that continues to add diversification and scale to Franchise Group while also improving our cash flow and profitability. The results of those efforts allowed us to generate non-GAAP earnings per share of $3.99 in fiscal 2021, and a 50% increase in our dividend last year, followed by another 66% increase in our targeted dividend this year. I love the scalability and the repeatability of the FRG model. We target great businesses with great management teams that generate a lot of cash flow, and then we leverage our combined balance sheet in order to add new brands and transactions that are necessarily accretive to our earnings per share and dividend per share. We've been able to rapidly delever our balance sheet through operational cash flow and the sale of non-core assets, which in turn has positioned FRG for additional accretive acquisitions. In March 2021, we acquired Pet Supplies Plus for $700 million, financed with a new syndicated term loan that reduced our cost of capital significantly. Three months later, we paid down approximately $182 million of that term loan with the cash proceeds from the Liberty Tax sale. In November, we financed the acquisition of Badcock Furniture entirely with a new $575 million dollar term loan from our existing lenders. One month later, we sold non-core consumer credit receivables for $400 million dollars that was used to pay down that debt. I'm happy to say that we now expect to pay off the remaining $175 million dollars of the Badcock financing from the sale-leaseback of Badcock's real estate within the next 90 days. In 2021, FRG will have acquired PSP, Badcock, FFO, and Sylvan Learning using only debt financing and balance sheet cash to fund the purchases. A combination of quickly delevering the balance sheet combined with growing FRG's EBITDA will leave us with under 2.5 turns of leverage after the sale of Badcock's real estate. We're seeing many opportunities in the M&A market to put our balance sheet back to work in transactions that would further diversify and enhance our cash flows. We are pleased that the overall M&A environment is shifting back to our favor over the last couple of months. Shifting back to the fourth quarter, Franchise Group had an active quarter just like it had an active year. The acquisition of Sylvan Learning allowed us to diversify our business into the growing consumer services sector with a fully franchised model. We acquired Badcock in November and added scale to our growing value-oriented home furnishings businesses. Over time, we believe we can achieve material synergies between American Freight, Buddy's, and Badcock. In the fourth quarter, Buddy's produced system-wide same-store sales comp of + 9.4% and a full year fiscal 2021 comp of + 9.8%. Franchisee comps grew 9.5% in the quarter and 10.6% for the year, while corporate stores grew 8.6% for the quarter and 5.8% for the year. American Freight comped down 2.8% for the quarter and down 8% for the year. American Freight added 49 locations in 2021, and currently has a backlog of 17 franchise stores, while Buddy's added 21 stores and has a current backlog of 100 locations. Pet Supplies Plus continued to focus on franchise growth and brand building while surpassing a milestone by opening its 600th location in the fourth quarter. PSP refranchised 12 locations in the fourth quarter, allowing certain franchisees to continue to build critical mass in their markets while opening 19 additional franchise locations. PSP finished the year with continued momentum in franchise sales, adding 40 stores to its backlog, which now stands at 214 units. PSP produced system-wide same-store sales comps for the fourth quarter of + 13.5%, which contributed to an annual comp of + 16.1%. Franchisee comps grew 15.8% in the quarter and 18.1% for the year, while corporate comps grew 10.7% in the quarter and 13.6% for the year. This afternoon, we announced that PSP acquired Wag N' Wash Natural Pet Food and Grooming, an emerging natural pet food, self-wash, and grooming franchise with 15 locations that focus primarily on dogs. We expect that Wag N' Wash will be a great opportunity for franchisees to add smaller, more focused stores within their geographies with an enhanced selection of products that will be supported by PSP's back office and distribution services. We see this as a great opportunity for PSP to leverage their core strengths to enhance our franchisees' businesses, better serve our customers, and build incremental cash flow. The Vitamin Shoppe fourth quarter comps were up 8.5%, contributing to a full year comp of + 14.4%. Store traffic has continued to increase as consumers visit our stores to discover new products and seek advice from our associates. Growth at Vitamin Shoppe has been multi-pronged, with a growing active customer file, increased private brand penetration, and an increasing average order value. Direct-to-consumer comped slightly positive at 0.7% in the fourth quarter and just under 1% for the full year. Overall, direct-to-consumer accounted for approximately 24% of the business in 2021. In January, we refranchised our first Vitamin Shoppe store, and we are starting to build sales momentum with nine new stores in franchise backlog. Before I turn the call over to Eric, I want to reiterate how impressed I am in our management team's ability to navigate continued supply chain constraints and overall inflationary pressure. As I've told you before, we're absorbing tens of millions of dollars of profitability headwinds from inflationary pressures and supply chain constraints already. If we had that... We think the financial impact actually could have been over $100 million, if not for the management teams actively managing their businesses on a daily basis. I appreciate their individual efforts that have combined to grind out excellent collective performance for Franchise Group. And also, once again, I'd like to thank all of our dedicated associates for their hard work, their support of each other, and their support of our franchisees, all of which leads to the success of Franchise Group. I'll pass the call over to Eric now to provide some financial detail. Eric? Okay. 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. 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. As a reminder, in order to conform with SEC rules, consistent with the concepts in Article 11 of Regulation S-X for non-GAAP reporting, Franchise Group will not be reporting synergies and other acquisition costs. Company will continue to report adjusted EBITDA in the same format it has in the past. We did not report any supplemental information for 2021 and do not anticipate reporting any in the future. The specific amounts included in each disclosure are fully discussed in detail in the Non-GAAP Financial Measures and Metrics section of our earnings release. For the fourth quarter of 2021, total reported revenue for Franchise Group was $942.3 million. Net income from continuing operations was $151.8 million, or $3.64 per fully diluted share. Adjusted EBITDA was $86.6 million, and non-GAAP EPS was $0.77 per share. For the fiscal year end December 25, 2021, total reported revenue for Franchise Group was $3.3 billion. Net income from continuing operations was $192 million or $4.48 per fully diluted share. Adjusted EBITDA was $338.4 million, and non-GAAP EPS was $3.99 per share. FRG's overall financial results include the financial results of all the acquisitions from the date of acquisition. The fourth quarter includes results from Sylvan Learning from September 27th, and the results of Badcock from November 22nd through the end of the fiscal year. Our press release details our results by our six reportable segments, which will show that Badcock added $101.1 million of revenue, $10.1 million of adjusted EBITDA, and $22.7 million of operating income. These amounts were not included in our previously announced financial outlook. Without Badcock, FRG would have reported $3.2 billion of revenue and $328.3 million of adjusted EBITDA. We ended the quarter with approximately $1.4 billion in outstanding term debt, which included a $219 million repayment from the sale of the Badcock consumer receivables. We repaid an additional $181 million on December 27, reducing net debt to approximately $1.2 billion. At year-end, we had approximately $122 million of availability on our ABL revolver and cash of approximately $292.7 million before the additional $181 million debt repayment. 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. As of today, we are maintaining our previously announced financial outlook for fiscal year 2022 of revenue of approximately $4.45 billion, net income of approximately $180 million or $4.20 per share. Adjusted EBITDA of approximately $450 million and non-GAAP EPS of approximately $5 per share. In formulating our outlook, we expect we will complete the sale of the Badcock Real Estate portfolio by the end of our fiscal second quarter of 2022, and expect we will reduce net debt to approximately $1.1 billion by the end of fiscal year 2022. In calculating EPS, the company is using approximately 41 million weighted average shares outstanding, and our outlook does not include any assumption for additional acquisitions, divestitures or refranchising activity. I do wanna thank all our shareholders and lenders for their support to date. Operator, please open the line for questions. Thank you. Thank you, sir. Ladies and gentlemen, if you have a question at this time, please press the star and then the number one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. We do have our first question from Mike Baker of D.A. Davidson. Your line is open. Okay. Hi. Thanks, guys. Two questions for me. First, I'll ask with the Badcock acquisition, I think on an annual basis, you now have about 50% exposure on the sales line, at least to the furniture. A lot of that focused on discount, moderately priced, low income, whatever you wanna call it. That customer seems to have come under pressure in 2022, and home furnishing in particular is an area that seems to have come under pressure. How do you guys think about your increasing exposure to the lower-end furniture business? Yeah, thanks, Mike. Actually, I think that the customer has been under pressure for some time. I think it's just now with, you know, the news articles catching up to the reality of what's going on that it's become more of a focal point. You know, units have been down. Units were down a year ago. Units were down substantially and really what's happened is selling fewer units and the revenue has held up because pricing's higher. You know, that's just the state that we're in. I love the businesses that we're in. You know, over the next, you know, decade, American Freight, Buddy's and Badcock are gonna be great businesses. They're gonna generate a lot of cash for Franchise Group, and they're gonna grow. We're a diversified business and we will continue to diversify. You know, like I said, I feel great about what we've got, and I don't think that there's anything really new to us in what everybody else is, you know, talking about today. I think it's given us opportunities. I think it'll continue to give us opportunities. The unit economics of American Freight is nothing that's changed there, and franchisees are still gonna open a ton of stores and we can, you know, multiply a couple times the store count of that business and we'll keep investing in it, despite, you know, what's happening, you know, over the last year and continues to happen today with that customer. Just to follow up on that, you know, so the comp was better in American Freight, I think, right? Down, I think you said 2%, which if I compare that to what I have in my model from last year, that actually does look like it's getting better versus the third quarter on both a one-year and a two-year basis, which I think is surprising. You know, that's more of a statement than a question. The question would be, you said you love this business for the next 10 years, not to be short term focused, but do you love it for the next 12 months, for 2022, again, with, you know, some of these pressures on the lower-end customers? I do. Look, I think that American Freight continues to generate a ton of activity for us, and franchising continues to generate tremendous amount of EBITDA, but it's absolutely not generating anywhere near what it's capable of generating. Lots of headwinds across the board there with inflationary pressures and supply chain constraints that everybody's talking about. I think that the business will perform for us this year. I guess the way that I would describe it to you is it, you know, we would be thinking even, you know, greater EBITDA and earnings per share if we thought that business was going to be operating in a normal environment this year and we don't. You know, units are probably on a comparable store basis, probably down again this year. You know, we will add units and that'll help that business. The stores will continue to generate a lot of cash, but it's certainly suboptimal, you know, relative to what it could be doing. That's what it's been for the last year. Also, I would, you know, regarding the comp, and it's not. It is just a general comment about any one period. I wouldn't get, you know, overly excited because they beat a comp estimate in one period relative to another, nor would I get overly, you know, concerned if they didn't, you know, make your comp estimate for any one period. You know, directionally, the business is gonna continue to grow. Yeah. Fair enough. I'll ask one more and then I'll turn it over. You said the M&A landscape is moving in your direction or something along those lines. I suppose what would be meant by that is, you know, so some valuations have come down, but I guess could you flesh it out a little bit more? What did you mean by that comment? Yeah. I think I expected last year to be more to our liking, and it wasn't. I think what there was, you know, there were a lot of auctions, a lot of processes that attracted, you know, a lot of buyers, and everybody had access to capital and the valuation expectations were very high. I think that the environment that we're in now has already seen a pretty significant shift in that landscape. I don't think that valuation requirements are nearly as high as what they were. I think that, because now you see what happens when capital markets aren't quite as flush as, you know, they were at the peak. You've got, you know, fewer people able to compete because they can't get enough leverage to compete with you on the acquisition. I think with Franchise Group, with all of our cash flow and the diversification, I think that we'll be able, on the margin, to have a better, you know, financing package than others, which should help us over the next year. That's what I meant by that. Perfect. Appreciate that. Thank you. Your next question is from Larry Solow from CJS Securities. Your line is open. Good afternoon. Brian, just to piggyback on that question, in terms of acquisitions. Sure. I guess my question is, obviously, you have a vision to bring the debt down pretty soon. Capacity, any issue in terms of, you know, you guys said pretty active 2021 in terms of, you know, do you need to take a pause or is it, you know, you have plenty of, you know, capacity, manpower to, you know, continue. I know you don't have a specific target, but obviously you continue to look to grow the business and no real hesitation in terms of, you know, obviously, if you find a deal, you can do a deal. Is that fair? Right. Yeah, I think that is fair. Look, I think we have the financial capacity. I think that each transaction is different and- Mm-hmm. You know, we'll need to have. I think the limiting factor is gonna be the management capacity. Are we going to be getting into a business where we can actually invest in the management team as well? That's just a prerequisite for us because Right. You know, we don't want to and have to go down and actually run a business, you know, on a day-to-day basis. That's not gonna be the best use of our time at Franchise Group. We need to have an investable management team, and that is always gonna be a limiting factor. I don't think that we feel the need to go run out and deploy the balance sheet every time we de-lever. Mm-hmm. It's good to know that we have options. Remember, you know, the minute we deploy the balance sheet for another transaction, if we are, you know, getting up, we won't go past four turns of leverage, as you know. You know, once we get up over three, you know, we need to de-lever before we can really do something else. Once you spend those bullets, you are somewhat waiting. There's an opportunity cost that we're always going to weigh as well, and that's just something to consider. There may be a great transaction that could diversify us further, that could, you know, be very accretive to us, but we still may not execute on that transaction if we think that there's, you know, some other better use of our capital in the near future coming. It's all, you know, somewhat of a balancing act. Got it. Great. Appreciate that call. Just a couple quickies on some of the segments. Vitamin Shoppe, another good year, a good quarter. Couple questions there. Sounds like you think there's more legs to the story, you continue to probably expect growth in 2022. I have a question then. Can you just remind us what the direct-to-consumer was last year? I think it was a little bit lower than this, right? I know it probably didn't grow as much, obviously, because people were coming back to the stores more, I guess. What, when you mean last year, you mean 2020? I mean in 2020. Yeah, 2021 versus 2020. In 2020, just if you think about what was happening, you had stores shut down, and then when you didn't have stores shut down, you had people that weren't going out anyway. Right. The direct-to-consumer penetration was actually higher, which is why when you look at this year. Right. You see the retail comps actually grew faster than the direct-to-consumer comps. Right. I think we thought that coming into this year, we would give some back on direct-to-consumer at Vitamin Shoppe, and remarkably, they were still able to eke out, you know, positive comp revenue, you know, despite the reopening. Just because of what was going on in the mechanics and the environment, it would've been higher in 2020, but not significant, not a significant difference. Right. I'm sorry if I missed one of your other questions, just remind me and I'll- I was just saying just overall growth, you expect, you know, I know you don't guide segment to individual segments. Yeah. You think Vitamin Shoppe still has. There's still, you know, more. You think some obviously less top-line growth probably than last year, but you still think there's some growth left in this for this year. Sure. Well, look, I think a couple of things about Vitamin Shoppe. Number one is as long as they've not grown their customer file in a very, very long time. Predates all of us involved in the business. Right. As long as they're continuing to grow the customer file, you know, directionally, that business ultimately is going to grow. I think that the other thing that we have going for us now that we have the franchise program launched, we've actually got unit growth for the first time also in any of our histories with The Vitamin Shoppe. That's something that I think is, you know, worth mentioning and certainly something that we're excited about as well. Look, I feel great about what they're doing, and they continue to execute and generate a ton of cash for FRG. You know. Good stuff. Last question is American Freight. 49, you added 49 corporate stores. That's a pretty big number, right, for the year. I think that's probably an acceleration from the last couple of year, or I guess last year was COVID, so, more COVID. It, it, but it is. Catch up or? A chunk of that was from the acquisition of FFO and the rebranding. Right. Okay. Okay. They didn't. That boosted it. Yeah, exactly. That was a big contributor. Right. Typically, just to remind you know, on a corporate store basis, we looked to open 20-25 a year on a corporate side. Right. Of course, as many franchise stores as we can get open, you know, we will help franchisee get open. Just last question, if I may. Just on inflation, I know you gave guidance like two months ago, and it doesn't sound like you've changed things much. It does sound like, you know, you'll probably be having a much better year without inflation, but you and many other companies out there. Do you think has inflation gotten worse or, you know, the last couple of months or maybe just around the edges, but not anything material, I guess, for you guys? Supply chain, not just inflation, you know, other issues, employee, you know, worker availability, all that stuff. Yeah. I think that from a personnel perspective, I think that- Right. You know, the government stimulus money has been spent and everybody enjoyed it. You know, on the margin, I think that's getting better, not worse. On inflation for products, I don't think that's gotten any better. I think that, you know, whether raw materials are going up, I think that your logistics to get, you know, product landed into your stores or to your customer, that's gone up. I think that there's still a lot of pressure on the cost side for product. I know ultimately, you know, supply and demand will work itself out, but I wouldn't be one to predict when that's going to happen and we're gonna continue to operate as if we're living with this for a while, for sure. Your next question is from Susan Anderson from B. Riley. Your line is open. Hi, good evening. I'm just curious, you mentioned, you know, you think like consumers have spent the stimulus money. I'm curious if you have seen any slowdown in any of your business segments with consumer spending or any pushback maybe on higher prices there. Well, yeah, I think we have. I don't think that's anything new. I think we've seen that, you know, going back a year pretty regularly as, you know, we've been selling fewer units. You know, you don't see it in the revenue because the prices are higher. I think the consumer absolutely has, you know, determined that, you know, there's only so much that they're going to pay for, you know, a product on the margin. Your marginal customer is either sitting on their hands or doing something else with their money. Got it. Okay. I think I saw. Did Pet Supplies Plus buy Wag N' Wash? Just curious if that's material at all. Well, mentally or physically? It's material mentally, but probably not so much, you know, physically or financially today. It's a 15-store chain. It's a smaller box concept that we think has a lot of legs. PSP management has been working on that for quite some time. I'm very excited about the opportunity because even existing PSP franchisees with the larger stores in their markets can open several Wag N' Washes in their geographies for a very low capital cost. You know, we think that they'll generate a high return on their investment. We're excited about it. As far as the immediate impact to Franchise Group, it's negligible. Got it. Okay. Is this something like it's gonna be like next to a Pet Supplies Plus? I guess, you know, is there like a number of stores you think that the segment could get to? It's not like you would put it right next to one. I think it would be in a general geography. As far as the quantity, it's, you know, there's 15. I mean, you could. At that size, well, just think about this. If you've got 1,500 Petcos and PetSmarts, you know, you've got room for certainly more of these smaller units. So not that that's gonna happen anytime soon, but it's gonna take quite some time to fully build out the footprint of Wag N' Wash and it's gonna be franchisees doing it, so it's also gonna be unpredictable. It's not like we're gonna go open 100 corporate stores a year. But it is an option for franchisees that we think will be very attractive. Got it. Okay. Lastly, on inflation, it sounded like that was, you know, obviously it was a pressure last year. It sounds like you're expecting that this year. Should we expect that to pressure margins, or are you guys doing things to offset that in all of the different business segments? Yeah. I think it has pressured margins. I think that the performance in you know last year includes a significant pressure to margins you know due to inflation. Yes to your point, there are things that we can do to mitigate the margin impact and also just mitigate the impact to profitability and cash flow. Again, it's just not new, unfortunately, and I know the management teams are you know exhausted from having to deal with you know zigging and zagging because they get a price increase from one vendor or another vendor, and I'm sure it's happening to them on a daily basis, whether it's a product vendor or it's a you know a logistics company, freight, whatever. It's just, it's a regular occurrence and, you know, we would not want to predict the end of that. I know everybody will be very happy when the tide turns, but it won't turn by the time we speak again next quarter. Great. Okay. That's helpful. Thanks so much. Good luck this year. Sure. We do have a follow-up question from Mike Baker of D.A. Davidson. Your line is open. Okay, thanks. Sorry, Tessy in the background is very excited about Wag N' Wash, if you can't hear. Good. I'll ask another, maybe I'll call it devil's advocate type question. You beat this year relative to your previous guidance, even when you exclude Badcock. I appreciate that you kept your 2022 guidance the same, but a skeptic might say, "Well, doesn't that imply a lower growth rate than you had previously thought?" How would you respond to that? Yeah, that's a good question. I don't think it's a lower growth. I think just the numbers are what the numbers are, and it's so early in the year. The one thing I'm really confident in is by the time we get to the end of the year, Franchise Group in some form or fashion will look different than it does right now. It's February right now. It just seems like it's not worth trying to figure out everything that's gonna happen, you know, on the margin differently. I think by your math, you're saying that we ended up beating your number by how much? I don't think it's a tremendous amount and that's why we've said, you know, approximately $5 of earnings per share and approximately $450 million of EBITDA. It's good round numbers. It's early in the year, and I think it would be, you know, too early to have any different views, sitting here today anyway. I am showing no further questions at this time. I would now like to turn the conference back to Brian Kahn. Great. Well, look, we thank you all for joining us, and look forward to speaking to you again next quarter. Operator, you can please conclude the call. Ladies and gentlemen, this concludes today's conference. Thank you for your participation. Have a wonderful day. You may all disconnect.