Executive Summary

Q1 2023 revenue was $1.10B, Adjusted EBITDA $66.0M, Non-GAAP EPS $0.11; GAAP net loss was $108.3M driven by a $75M goodwill impairment at American Freight .
The company withdrew its FY2023 financial outlook and did not declare a common dividend due to leverage covenants; a preferred dividend of $0.46875/share was approved .
A definitive agreement was signed to take Franchise Group private at $30.00 per share (enterprise value ~$2.6B), including a 30-day go‑shop period; the merger prohibits additional common dividends during pendency .
Segment performance was mixed: Vitamin Shoppe and Pet Supplies Plus posted positive EBITDA and net income; American Freight recorded a large loss due to impairment .

What Went Well and What Went Wrong

Pet Supplies Plus and Vitamin Shoppe delivered solid results: PSP revenue $334.1M, Adjusted EBITDA $29.6M, net income $7.8M; TVS revenue $321.7M, Adjusted EBITDA $35.1M, net income $11.9M .
Non-GAAP profitability remained positive in Q1 despite GAAP loss: Non-GAAP EPS $0.11; Adjusted EBITDA $66.0M roughly stable vs Q4 ($65.3M) .
Strategic clarity via going‑private transaction at $30/share: “We are excited to have this opportunity to continue our business strategy... while also delivering certain value to our public stockholders despite a challenging business environment.” — CEO Brian Kahn .

GAAP loss of $108.3M in Q1 driven by $75M goodwill impairment at American Freight; segment net loss of $93.9M .
Elevated interest expense ($87.1M) weighed on earnings and cash flows; common dividend not permitted under credit agreements due to leverage .
FY2023 guidance withdrawn, reducing visibility; prior Q4 outlook had targeted FY23 revenue ~$4.4B, Adjusted EBITDA ~$355M, Non-GAAP EPS ~$2.90 .

Metric	Q3 2022	Q4 2022	Q1 2023
Revenue ($USD Billions)	$1.051	$1.116	$1.105
GAAP Net Income (Loss) ($USD Millions)	$(121.2)	$(0.7)	$(108.3)
GAAP Diluted EPS ($USD)	$(3.09)	$(0.08)	$(3.16)
Adjusted EBITDA ($USD Millions)	$73.1	$65.3	$66.0
Non-GAAP EPS ($USD)	$0.59	$0.47	$0.11
Net Income Margin %	(11.5%)	(0.1%)	(9.8%)
Adjusted EBITDA Margin %	7.0%	5.9%	6.0%

Notes: Margins calculated from cited revenue and GAAP net income or Adjusted EBITDA .

Segment performance (Q1 2023):

Segment	Revenue ($USD Millions)	Adjusted EBITDA ($USD Millions)	Net Income/(Loss) ($USD Millions)
American Freight	$236.6	$(7.5)	$(93.9)
The Vitamin Shoppe	$321.7	$35.1	$11.9
Pet Supplies Plus	$334.1	$29.6	$7.8
Buddy’s	$15.0	$4.5	$1.7
Sylvan Learning	$10.2	$3.3	$(0.1)
Badcock	$187.3	$4.3	$(27.2)
Corporate	—	$(3.4)	$(8.5)
Total	$1,104.8	$66.0	$(108.3)

Selected KPIs and balance/capital items:

KPI / Item	Q3 2022	Q4 2022	Q1 2023
Cash on hand ($USD Millions)	$72.9	$80.8	$98.3
Term debt outstanding (approx.)	~$1.1B	~$1.1B	~$1.4B
Share repurchases (period)	2.2M shares, $77.9M	3.7M shares, $95M	—
Franchising activity (FY22)	—	259 territories sold; backlog 482 locations	—
Dividends	—	—	Series A preferred: $0.46875/share; common dividend withheld due to leverage

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2023	~$4.4B (Q4 guide)	Withdrawn	Lowered/Withdrawn
Adjusted EBITDA	FY 2023	~$355M (Q4 guide)	Withdrawn	Lowered/Withdrawn
Non-GAAP EPS	FY 2023	~$2.90 (Q4 guide)	Withdrawn	Lowered/Withdrawn
Effective tax rate (non-GAAP)	FY 2023	~25.8% (assumption)	25.8% used for Q1 non-GAAP tax impacts	Maintained methodology
Common dividend	Near term	Permitted only if leverage below threshold (credit agreements)	Not permitted; withheld due to leverage	Suspended/Restricted
Series A Preferred dividend	Q2 2023 pay date	—	$0.46875/share, payable ~July 17, 2023	Declared
Dividends during merger	Pendency of merger	—	No additional common dividends permitted by Merger Agreement	Restricted

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q1 2023)	Trend
FY outlook/visibility	Q3: lowered FY22 Adj. EBITDA/EPS outlook ; Q4: issued FY23 guidance (revenue ~$4.4B, Adj. EBITDA ~$355M, Non-GAAP EPS ~$2.90)	Withdrew FY23 guidance	Deteriorating visibility
Capital returns/leverage	Q3/Q4: sizable buybacks (2.2M; 3.7M shares)	Common dividend withheld due to leverage covenants	Tightening returns under leverage constraints
Segment health (American Freight)	Q3: $70M goodwill impairment at AF; negative Adj. EBITDA	AF: $(7.5)M Adj. EBITDA; $(93.9)M net loss; $75M goodwill impairment	Continued weakness
Strategic actions	Q3: created Home Furnishings Division	Announced going‑private merger at $30/share	Transformative event
Franchising growth	Q4: 259 territories sold; backlog 482	No update in Q1 press release	Stable, pending update

Note: Q1 2023 earnings call occurred at 8:30 a.m. ET; transcript was not available in the document set searched .

“We are excited to have this opportunity to continue our business strategy of partnering with high quality franchisees, operators and financial institutions, while also delivering certain value to our public stockholders despite a challenging business environment.” — Brian Kahn, CEO, on merger announcement .
“Our financial performance in the fourth quarter was in line with the outlook we provided in November... We expect organic growth in 2023 to drive increased EBITDA and cash flow.” — Brian Kahn (Q4 press release) .
The Board approved a preferred dividend and withheld the common dividend due to leverage restrictions embedded in credit agreements .

The company hosted an earnings call at 8:30 a.m. ET to discuss Q1 results in light of the merger announcement; however, a transcript was not available via our document search, so Q&A specifics and clarifications are not accessible .

We attempted to retrieve Wall Street consensus estimates via S&P Global for Q3 2022, Q4 2022, and Q1 2023; consensus data was unavailable due to a mapping issue for ticker TAX in the SPGI CIQ company map. As a result, we cannot provide estimate comparisons for these quarters [SpgiEstimatesError in tool output].
Implication: Without consensus, we cannot label beats/misses; however, GAAP performance was clearly impacted by impairment and interest expense, and non-GAAP remained positive .

The Q1 GAAP loss was primarily non-cash impairment at American Freight; underlying non-GAAP profitability (Adj. EBITDA $66.0M; EPS $0.11) remained positive .
Capital structure constraints are tangible: high interest expense ($87.1M) and leverage covenants restrict common dividends, impacting capital return narratives .
Segment divergence persists: Vitamin Shoppe and Pet Supplies Plus continue to anchor profitability, while American Freight requires operational turnaround following repeated impairments .
The going‑private transaction at $30/share provides valuation certainty and limits near‑term equity catalysts to deal progression (regulatory approvals, shareholder vote, go‑shop outcomes) .
Guidance withdrawal reduces public-market visibility; monitor disclosures for operational trajectory by segment and any updates during merger pendency .
Dividend profile: preferred distributions continue; common dividends suspended under covenants and merger restrictions, a relevant consideration for income-oriented holders .
Near-term trading: shares likely anchored to deal spread and perceived closing risk; fundamental updates by segment (especially American Freight) could influence perceived risk premia pending the transaction .