Papa Johns Announces Third Quarter 2023 Financial Results
North America comparable sales were up 3% compared with the third quarter of 2022 as transaction growth delivered 6% comparable sales at Domestic Company-owned restaurants and 2% comparable sales at North America franchised restaurants; International comparable sales were down less than 1% from a year ago.
Papa John’s International, Inc. (NASDAQ: PZZA) today announced financial results for the third quarter ended September 24, 2023.
Highlights
- North America comparable sales were up 3% compared with the third quarter of 2022 as transaction growth delivered 6% comparable sales at Domestic Company-owned restaurants and 2% comparable sales at North America franchised restaurants; International comparable sales were down less than 1% from a year ago.
- 45 net unit openings in the third quarter driven by International growth; North America outlook remains solid but lowering 2023 development expectations to 245 to 260 net new units due to the dynamic geopolitical environment.
- Global system-wide restaurant sales were $1.23 billion, a 5%(a) increase from the prior year third quarter.
- Total revenues of $523 million were up 2% from the third quarter a year ago driven by higher Domestic Company-owned restaurant sales and higher International revenues resulting from the consolidation of recently acquired restaurants in the UK.
- Operating income of $32 million increased 64% from the third quarter of 2022, while adjusted operating income of $34 million was in line with the prior year period.
- Diluted earnings per common share was $0.48, compared with $0.23 for the third quarter of 2022; Adjusted diluted earnings per common share(b) was $0.53, compared with $0.54 for the third quarter a year ago.
“Strong execution by our teams and franchisees led to solid system-wide restaurant sales growth, transaction-led North America comp growth and improving North America restaurant-level margin in the third quarter,” said Rob Lynch, Papa Johns president and CEO. “Our ability to grow transactions in an ongoing challenging environment, while maintaining average ticket, confirms the strong consumer demand for our product offerings. Menu innovation, revenue management enhancements, and continued growth in our third-party aggregator channel contributed to our year-over-year sales growth this quarter.”
“Despite this strong sales growth in North America, our adjusted operating income was just in line with the third quarter last year due to the dilutive impact of our recently acquired restaurants in the UK,” continued Lynch. “Importantly, our North America company-owned restaurant margins improved approximately 130 basis points and revenues from our North America franchise segment grew 4%. We have a resilient business model that can thrive in all economic cycles and we’re confident we’ll build sustainable long-term value for all stakeholders.”
Commenting on its North America Commissary segment, Lynch said, “Papa Johns is uniquely positioned in the QSR industry with a vertically integrated supply chain that operates on a fixed operating margin basis. Although the margins on this business are lower than our other revenue channels, it is a consistent way for us to provide our system with the fresh ingredients necessary to deliver the level of quality that we demand. This channel is our largest source of company revenue and, as our business continues to scale, we believe there are additional margin expansion opportunities for both Papa Johns and our growing North American franchisees. Our goal is to deliver profitable growth and overall supply chain productivity that drives cost savings and incremental profit for our system, without compromising our best-in-class quality.”
“As we evolve our commissary business model, we will be increasing our fixed operating margin by 100 basis points in each of the next four years, from 4% in 2023 to 8% in 2027. Concurrently, we will be offering new opportunities for our franchisees to earn annual incentive-based rebates as they increase volume and open new restaurants, which will drive even more continued productivity for our system.”
| (a) | Excludes the impact of foreign currency. |
| (b) | Represents a non-GAAP financial measure. See “Non-GAAP Measures” for a reconciliation to the most comparable US GAAP measure. |
Financial Highlights
|
|
| Three Months Ended |
| Nine Months Ended | ||||||||||||||||
| (In thousands, except per share amounts) |
| September 24, |
| September 25, |
| Increase |
| September 24, |
| September 25, |
| Increase | ||||||||
| Total revenues |
| $ | 522,812 |
| $ | 510,512 |
| $ | 12,300 |
|
| $ | 1,564,391 |
| $ | 1,575,869 |
| $ | (11,478 | ) |
| Operating income |
| $ | 31,868 |
| $ | 19,461 |
| $ | 12,407 |
|
| $ | 104,576 |
| $ | 72,800 |
| $ | 31,776 |
|
| Adjusted operating income (a) |
| $ | 33,638 |
| $ | 33,593 |
| $ | 45 |
|
| $ | 109,671 |
| $ | 119,235 |
| $ | (9,564 | ) |
| Net income attributable to the Company |
| $ | 15,861 |
| $ | 8,331 |
| $ | 7,530 |
|
| $ | 56,005 |
| $ | 44,258 |
| $ | 11,747 |
|
| Diluted earnings per common share |
| $ | 0.48 |
| $ | 0.23 |
| $ | 0.25 |
|
| $ | 1.68 |
| $ | 1.22 |
| $ | 0.46 |
|
| Adjusted diluted earnings per common share (a) |
| $ | 0.53 |
| $ | 0.54 |
| $ | (0.01 | ) |
| $ | 1.80 |
| $ | 2.23 |
| $ | (0.43 | ) |
| (a) | Represents a Non-GAAP financial measure. See “Non-GAAP Measures” for a reconciliation to the most comparable US GAAP measures. |
Total revenues of $522.8 million increased $12.3 million, or 2.4%, in the third quarter of 2023 compared with the prior year period. Excluding the impact of purchasing 118 International restaurants (“UK Company-owned restaurants”) in the second and third quarters of 2023, total revenues increased $4.7 million, or 0.9%, compared with the prior period. Revenues from Domestic Company-owned restaurants were up $11.1 million, reflecting comparable sales growth of 5.9%. North America franchise royalties grew $1.3 million as restaurants reflected comparable sales growth of 2.2% during the quarter. International revenues were up $3.2 million, or 12.5%, excluding the impact of the UK Company-owned restaurants as new unit development drove increases. These increases were offset by $11.2 million of lower North America commissary revenues, a result of decreased commodity prices in 2023 compared with 2022, which was partially offset by increased revenues due to higher transaction volume.
For the third quarter of 2023, global system-wide restaurant sales were $1.23 billion, up 5.1% from a year ago (excluding the impact of foreign currency). The increase reflected higher equivalent units from net restaurant openings primarily in International markets and comparable sales growth.
Third quarter operating income increased $12.4 million to $31.9 million compared with the prior year. Operating income increased as a result of improved North America comparable sales during the period, driven by transaction growth, lower food costs and continued operational efficiency improvements. The increased operating income also included the impact of a prior year $10.0 million legal settlement. Partially offsetting these increases in the current quarter were higher variable compensation expense, employee benefit costs and depreciation expense compared with a year ago, in addition to operating losses attributable to the recently acquired UK Company-owned restaurants. Adjusted operating income(a) was $33.6 million, in line with results from the prior year period.
Diluted earnings per common share was $0.48 for the third quarter of 2023 compared with $0.23 in the third quarter of 2022. Adjusted diluted earnings per common share(a) was $0.53 for the third quarter of 2023 compared with $0.54 in the third quarter of 2022. These changes were driven by the same factors impacting operating income and adjusted operating income as discussed above. In addition, diluted earnings per common share and adjusted diluted earnings per common share reflected higher interest expense and a lower effective tax rate compared with the third quarter of 2022. Interest expense increased in 2023 largely due to higher borrowings used to fund share repurchases in the first quarter.
See the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our Quarterly Report on Form 10-Q filed with the SEC for additional information concerning our operating results for the three and nine months ended September 24, 2023.
Global Restaurant Sales Information
Global restaurant and comparable sales information for the third quarter and nine months ended September 24, 2023, compared with the third quarter and nine months ended September 25, 2022 are as follows (See “Supplemental Information and Financial Statements” below for related definitions):
|
|
| Three Months Ended |
| Nine Months Ended | ||||||||
| Amounts below exclude the impact of foreign currency |
| September 24, |
| September 25, |
| September 24, |
| September 25, | ||||
| Comparable sales growth (decline): |
|
|
|
|
|
|
|
| ||||
| Domestic Company-owned restaurants |
| 5.9 | % |
| (2.2 | )% |
| 3.8 | % |
| (1.6 | )% |
| North America franchised restaurants |
| 2.2 | % |
| (0.5 | )% |
| (0.4 | )% |
| 1.2 | % |
| North America restaurants |
| 2.9 | % |
| (0.8 | )% |
| 0.4 | % |
| 0.6 | % |
| International restaurants |
| (0.3 | )% |
| (10.1 | )% |
| (2.3 | )% |
| (5.8 | )% |
| Total comparable sales growth (decline) |
| 2.2 | % |
| (3.4 | )% |
| (0.2 | )% |
| (1.1 | )% |
| System-wide restaurant sales growth (decline): |
|
|
|
|
|
|
|
| ||||
| Domestic Company-owned restaurants |
| 6.7 | % |
| 0.5 | % |
| 4.7 | % |
| 0.8 | % |
| North America franchised restaurants |
| 3.2 | % |
| 0.9 | % |
| 1.1 | % |
| 2.5 | % |
| North America restaurants |
| 3.9 | % |
| 0.8 | % |
| 1.8 | % |
| 2.2 | % |
| International restaurants (a) |
| 8.8 | % |
| (0.4 | )% |
| 6.8 | % |
| 5.3 | % |
| Total global system-wide restaurant sales growth (decline) |
| 5.1 | % |
| 0.5 | % |
| 3.0 | % |
| 2.9 | % |
| (a) | The nine months ended September 25, 2022 exclude the impact of franchisee suspended restaurants. |
Global Restaurant Unit Data
As of September 24, 2023, there were 5,825 Papa Johns restaurants operating in 48 countries and territories, as follows:
| Third Quarter | Domestic |
| Franchised |
| Total |
| International Owned |
| International |
| Total |
| System-wide | ||||||
| Beginning - June 25, 2023 | 521 |
|
| 2,868 |
|
| 3,389 |
|
| 91 |
| 2,300 |
|
| 2,391 |
|
| 5,780 |
|
| Opened | — |
|
| 15 |
|
| 15 |
|
| — |
| 55 |
|
| 55 |
|
| 70 |
|
| Closed | — |
|
| (7 | ) |
| (7 | ) |
| — |
| (18 | ) |
| (18 | ) |
| (25 | ) |
| Acquired | 9 |
|
| — |
|
| 9 |
|
| 27 |
| — |
|
| 27 |
|
| 36 |
|
| Sold | — |
|
| (9 | ) |
| (9 | ) |
| — |
| (27 | ) |
| (27 | ) |
| (36 | ) |
| Refranchised | (4 | ) |
| 4 |
|
| — |
|
| — |
| — |
|
| — |
|
| — |
|
| Ending - September 24, 2023 | 526 |
|
| 2,871 |
|
| 3,397 |
|
| 118 |
| 2,310 |
|
| 2,428 |
|
| 5,825 |
|
| Net Unit Growth | 5 |
|
| 3 |
|
| 8 |
|
| 27 |
| 10 |
|
| 37 |
|
| 45 |
|
| Trailing four quarters net store growth/(decline) | 4 |
|
| 35 |
|
| 39 |
|
| 118 |
| 79 |
|
| 197 |
|
| 236 |
|
Free Cash Flow
Free cash flow, a non-GAAP financial measure which the Company defines as net cash provided by operating activities, less purchases of property and equipment, was $76.0 million for the nine months ended September 24, 2023, compared with $28.1 million in the prior year period. The year over year change primarily reflects higher cash flow from operating activities as a result of higher net income and favorable working capital changes.
|
|
| Nine Months Ended | ||||||
| (in thousands) |
| September 24, |
| September 25, | ||||
| Net cash provided by operating activities |
| $ | 126,936 |
|
| $ | 76,553 |
|
| Purchases of property and equipment |
|
| (50,905 | ) |
|
| (48,424 | ) |
| Free cash flow |
| $ | 76,031 |
|
| $ | 28,129 |
|
We view free cash flow as an important financial measure because it is one factor that management uses in determining the amount of cash available for discretionary investment. Free cash flow is not a term defined by GAAP, and as a result, our measure of free cash flow might not be comparable to similarly titled measures used by other companies. Free cash flow should not be construed as a substitute for or a better indicator of the Company’s performance than the Company’s GAAP measures.
Cash Dividend
The Company paid cash dividends of $15.2 million ($0.46 per common share) in the third quarter of 2023. On October 24, 2023, our Board of Directors declared a fourth quarter dividend of $0.46 per common share. The dividend will be paid on November 24, 2023 to stockholders of record as of the close of business on November 13, 2023.
|
|
| Three Months Ended |
| Nine Months Ended | ||||||||||||
| (In thousands, except per share amounts) |
| September 24, |
| September 25, |
| September 24, |
| September 25, | ||||||||
|
|
|
|
|
|
|
|
|
| ||||||||
| Operating income |
| $ | 31,868 |
|
| $ | 19,461 |
|
| $ | 104,576 |
|
| $ | 72,800 |
|
| UK repositioning and acquisition-related costs (a) |
|
| 1,193 |
|
|
| — |
|
|
| 2,501 |
|
|
| — |
|
| Refranchising and impairment losses (b) |
|
| — |
|
|
| 905 |
|
|
| — |
|
|
| 26,701 |
|
| Legal settlements (c) |
|
| 577 |
|
|
| 10,000 |
|
|
| 577 |
|
|
| 15,000 |
|
| Provision for uncollectible accounts and notes receivable (d) |
|
| — |
|
|
| 3,227 |
|
|
| — |
|
|
| 3,227 |
|
| Other costs (e) |
|
| — |
|
|
| — |
|
|
| 2,017 |
|
|
| 1,507 |
|
| Adjusted operating income |
| $ | 33,638 |
|
| $ | 33,593 |
|
| $ | 109,671 |
|
| $ | 119,235 |
|
|
|
|
|
|
|
|
|
|
| ||||||||
| Net income attributable to common shareholders |
| $ | 15,861 |
|
| $ | 8,245 |
|
| $ | 56,005 |
|
| $ | 43,996 |
|
| UK repositioning and acquisition-related costs (a) |
|
| 1,193 |
|
|
| — |
|
|
| 2,501 |
|
|
| — |
|
| Refranchising and impairment losses (b) |
|
| — |
|
|
| 905 |
|
|
| — |
|
|
| 26,701 |
|
| Legal settlements (c) |
|
| 577 |
|
|
| 10,000 |
|
|
| 577 |
|
|
| 15,000 |
|
| Provision for uncollectible accounts and notes receivable (d) |
|
| — |
|
|
| 3,227 |
|
|
| — |
|
|
| 3,227 |
|
| Other costs (e) |
|
| — |
|
|
| — |
|
|
| 2,017 |
|
|
| 1,507 |
|
| Tax effect of adjustments (f) |
|
| (404 | ) |
|
| (3,180 | ) |
|
| (1,162 | ) |
|
| (10,449 | ) |
| Adjusted net income attributable to common shareholders (g) |
| $ | 17,227 |
|
| $ | 19,197 |
|
| $ | 59,938 |
|
| $ | 79,982 |
|
|
|
|
|
|
|
|
|
|
| ||||||||
| Diluted earnings per common share |
| $ | 0.48 |
|
| $ | 0.23 |
|
| $ | 1.68 |
|
| $ | 1.22 |
|
| UK repositioning and acquisition-related costs (a) |
|
| 0.04 |
|
|
| — |
|
|
| 0.07 |
|
|
| — |
|
| Refranchising and impairment losses (b) |
|
| — |
|
|
| 0.03 |
|
|
| — |
|
|
| 0.75 |
|
| Legal settlements (c) |
|
| 0.02 |
|
|
| 0.28 |
|
|
| 0.02 |
|
|
| 0.42 |
|
| Provision for uncollectible accounts and notes receivable (d) |
|
| — |
|
|
| 0.09 |
|
|
| — |
|
|
| 0.09 |
|
| Other costs (e) |
|
| — |
|
|
| — |
|
|
| 0.06 |
|
|
| 0.04 |
|
| Tax effect of adjustments (f) |
|
| (0.01 | ) |
|
| (0.09 | ) |
|
| (0.03 | ) |
|
| (0.29 | ) |
| Adjusted diluted earnings per common share (g) |
| $ | 0.53 |
|
| $ | 0.54 |
|
| $ | 1.80 |
|
| $ | 2.23 |
|
Footnotes to Non-GAAP Financial Measures
| (a) | Represents costs associated with repositioning the UK portfolio as well as transaction costs related to the acquisition of stores from franchisees. |
| (b) | Refranchising and impairment losses consisted of the following pre-tax adjustments: |
|
| Three Months Ended |
| Nine Months Ended | ||
| (In thousands) | September 25, |
| September 25, | ||
| Refranchising impairment loss (1) | $ | — |
| $ | 8,412 |
| Ukraine-related charge (2) |
| — |
|
| 17,384 |
| PJUK lease impairment (3) |
| 905 |
|
| 905 |
| Total adjustment | $ | 905 |
| $ | 26,701 |
| (1) | Represents a one-time, non-cash charge of $8.4 million ($0.23 loss per diluted share) recorded in the first quarter of 2022 associated with the refranchising of the Company’s controlling interest in the 90-restaurant joint venture, recorded as Refranchising and impairment loss. |
| (2) | Represents a one-time non-cash charge of $17.4 million ($0.48 loss per diluted share) recorded in the first quarter of 2022 related to the reserve of certain loans and impairment of reacquired franchise rights related to the conflict in Ukraine and subsequent international government actions and sanctions, which were recorded as Refranchising and impairment loss of $2.8 million and General and administrative expenses of $14.6 million. |
| (3) | An impairment charge of $0.9 million on the right-of-use assets on leases recorded in the third quarter of 2022 associated with the termination of a significant franchisee in the United Kingdom, which was recorded in Refranchising and impairment loss. |
| (c) | Represents accruals for certain legal settlements, recorded in General and administrative expenses. |
| (d) | Represents a $3.2 million charge recorded in the third quarter of 2022 associated with the termination of a significant franchisee in the United Kingdom related to the reserve of certain accounts and notes receivable. |
| (e) | Represents severance and related costs associated with the transition of certain executives incurred during the three and nine-month periods ended September 24, 2023 and September 25, 2022, which were recorded in General and administrative expenses. |
|
|
|
| (f) | The tax effect on non-GAAP adjustments was calculated by applying the marginal tax rates of 22.8% and 22.5% for the three and nine-month periods ended September 24, 2023 and September 25, 2022, respectively. |
|
|
|
| (g) | Amounts shown exclude the impact of allocation of undistributed earnings to participating securities. |
| Papa John’s International, Inc. and Subsidiaries Condensed Consolidated Balance Sheets | ||||||||
| (In thousands, except per share amounts) |
| September 24, |
| December 25, | ||||
|
|
| (Unaudited) |
|
| ||||
| Assets |
|
|
|
| ||||
| Current assets: |
|
|
|
| ||||
| Cash and cash equivalents |
| $ | 37,492 |
|
| $ | 47,373 |
|
| Accounts receivable, net |
|
| 109,697 |
|
|
| 102,533 |
|
| Notes receivable, current portion |
|
| 5,169 |
|
|
| 6,848 |
|
| Income tax receivable |
|
| 1,162 |
|
|
| 8,780 |
|
| Inventories |
|
| 37,666 |
|
|
| 41,382 |
|
| Prepaid expenses and other current assets |
|
| 51,943 |
|
|
| 44,123 |
|
| Assets held for sale (a) |
|
| 3,427 |
|
|
| — |
|
| Total current assets |
|
| 246,556 |
|
|
| 251,039 |
|
| Property and equipment, net |
|
| 268,087 |
|
|
| 249,793 |
|
| Finance lease right-of-use assets, net |
|
| 34,443 |
|
|
| 24,941 |
|
| Operating lease right-of-use assets |
|
| 166,360 |
|
|
| 172,425 |
|
| Notes receivable, less current portion, net |
|
| 15,016 |
|
|
| 21,248 |
|
| Goodwill |
|
| 76,011 |
|
|
| 70,616 |
|
| Other assets |
|
| 71,092 |
|
|
| 74,165 |
|
| Total assets |
| $ | 877,565 |
|
| $ | 864,227 |
|
|
|
|
|
|
| ||||
| Liabilities, Redeemable noncontrolling interests and Stockholders’ deficit |
|
|
|
| ||||
| Current liabilities: |
|
|
|
| ||||
| Accounts payable |
| $ | 68,020 |
|
| $ | 62,316 |
|
| Income and other taxes payable |
|
| 9,738 |
|
|
| 8,766 |
|
| Accrued expenses and other current liabilities |
|
| 153,772 |
|
|
| 142,535 |
|
| Current deferred revenue |
|
| 19,565 |
|
|
| 21,272 |
|
| Current finance lease liabilities |
|
| 9,520 |
|
|
| 6,850 |
|
| Current operating lease liabilities |
|
| 25,935 |
|
|
| 23,418 |
|
| Current portion of long-term debt |
|
| 14,789 |
|
|
| — |
|
| Total current liabilities |
|
| 301,339 |
|
|
| 265,157 |
|
| Deferred revenue |
|
| 20,699 |
|
|
| 23,204 |
|
| Long-term finance lease liabilities |
|
| 26,305 |
|
|
| 19,022 |
|
| Long-term operating lease liabilities |
|
| 153,506 |
|
|
| 160,905 |
|
| Long-term debt, less current portion, net |
|
| 769,210 |
|
|
| 597,069 |
|
| Other long-term liabilities |
|
| 65,494 |
|
|
| 68,317 |
|
| Total liabilities |
|
| 1,336,553 |
|
|
| 1,133,674 |
|
|
|
|
|
|
| ||||
| Redeemable noncontrolling interests |
|
| 910 |
|
|
| 1,217 |
|
|
|
|
|
|
| ||||
| Stockholders’ deficit: |
|
|
|
| ||||
| Common stock ($0.01 par value per share; issued 49,227 at September 24, 2023 and 49,138 at December 26, 2022) |
|
| 492 |
|
|
| 491 |
|
| Additional paid-in capital |
|
| 447,699 |
|
|
| 449,829 |
|
| Accumulated other comprehensive loss |
|
| (7,916 | ) |
|
| (10,135 | ) |
| Retained earnings |
|
| 208,132 |
|
|
| 195,856 |
|
| Treasury stock (16,754 shares at September 24, 2023 and 14,402 shares at December 26, 2022, at cost) |
|
| (1,123,599 | ) |
|
| (922,434 | ) |
| Total stockholders’ deficit |
|
| (475,192 | ) |
|
| (286,393 | ) |
| Noncontrolling interests in subsidiaries |
|
| 15,294 |
|
|
| 15,729 |
|
| Total Stockholders’ deficit |
|
| (459,898 | ) |
|
| (270,664 | ) |
| Total Liabilities, Redeemable noncontrolling interests and Stockholders’ deficit |
| $ | 877,565 |
|
| $ | 864,227 |
|
| (a) | Represents vacant land adjacent to the Company’s Louisville office, which was sold on September 29, 2023. |
| Papa John’s International, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) | ||||||||||||||||
|
|
| Three Months Ended |
| Nine Months Ended | ||||||||||||
| (In thousands, except per share amounts) |
| September 24, |
| September 25, |
| September 24, |
| September 25, | ||||||||
|
|
|
|
|
|
|
|
|
| ||||||||
| Revenues: |
|
|
|
|
|
|
|
| ||||||||
| Domestic Company-owned restaurant sales |
| $ | 177,195 |
|
| $ | 166,050 |
|
| $ | 532,841 |
|
| $ | 536,226 |
|
| North America franchise royalties and fees |
|
| 35,041 |
|
|
| 33,712 |
|
|
| 105,824 |
|
|
| 102,897 |
|
| North America commissary revenues |
|
| 204,887 |
|
|
| 216,115 |
|
|
| 624,433 |
|
|
| 645,177 |
|
| International revenues |
|
| 42,927 |
|
|
| 30,735 |
|
|
| 108,998 |
|
|
| 97,310 |
|
| Other revenues |
|
| 62,762 |
|
|
| 63,900 |
|
|
| 192,295 |
|
|
| 194,259 |
|
| Total revenues |
|
| 522,812 |
|
|
| 510,512 |
|
|
| 1,564,391 |
|
|
| 1,575,869 |
|
| Costs and expenses: |
|
|
|
|
|
|
|
| ||||||||
| Operating costs (excluding depreciation and amortization shown separately below): |
|
|
|
|
|
|
|
| ||||||||
| Domestic Company-owned restaurant expenses |
|
| 145,433 |
|
|
| 138,299 |
|
|
| 436,922 |
|
|
| 441,986 |
|
| North America commissary expenses |
|
| 189,551 |
|
|
| 203,129 |
|
|
| 576,434 |
|
|
| 604,689 |
|
| International expenses |
|
| 29,796 |
|
|
| 18,196 |
|
|
| 67,542 |
|
|
| 57,346 |
|
| Other expenses |
|
| 57,587 |
|
|
| 59,249 |
|
|
| 177,661 |
|
|
| 180,452 |
|
| General and administrative expenses |
|
| 52,173 |
|
|
| 57,935 |
|
|
| 154,441 |
|
|
| 168,519 |
|
| Depreciation and amortization |
|
| 16,404 |
|
|
| 13,338 |
|
|
| 46,815 |
|
|
| 38,012 |
|
| Total costs and expenses |
|
| 490,944 |
|
|
| 490,146 |
|
|
| 1,459,815 |
|
|
| 1,491,004 |
|
| Refranchising and impairment loss |
|
| — |
|
|
| (905 | ) |
|
| — |
|
|
| (12,065 | ) |
| Operating income |
|
| 31,868 |
|
|
| 19,461 |
|
|
| 104,576 |
|
|
| 72,800 |
|
| Net interest expense |
|
| (11,378 | ) |
|
| (7,623 | ) |
|
| (31,674 | ) |
|
| (17,967 | ) |
| Income before income taxes |
|
| 20,490 |
|
|
| 11,838 |
|
|
| 72,902 |
|
|
| 54,833 |
|
| Income tax expense |
|
| 4,539 |
|
|
| 3,374 |
|
|
| 16,546 |
|
|
| 9,212 |
|
| Net income before attribution to noncontrolling interests |
|
| 15,951 |
|
|
| 8,464 |
|
|
| 56,356 |
|
|
| 45,621 |
|
| Net income attributable to noncontrolling interests |
|
| (90 | ) |
|
| (133 | ) |
|
| (351 | ) |
|
| (1,363 | ) |
| Net income attributable to the Company |
| $ | 15,861 |
|
| $ | 8,331 |
|
| $ | 56,005 |
|
| $ | 44,258 |
|
|
|
|
|
|
|
|
|
|
| ||||||||
| Calculation of net income for earnings per share: |
|
|
|
|
|
|
|
| ||||||||
| Net income attributable to the Company |
| $ | 15,861 |
|
| $ | 8,331 |
|
| $ | 56,005 |
|
| $ | 44,258 |
|
| Dividends paid to participating securities |
|
| — |
|
|
| (86 | ) |
|
| — |
|
|
| (228 | ) |
| Net income attributable to participating securities |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (34 | ) |
| Net income attributable to common shareholders |
| $ | 15,861 |
|
| $ | 8,245 |
|
| $ | 56,005 |
|
| $ | 43,996 |
|
|
|
|
|
|
|
|
|
|
| ||||||||
| Basic earnings per common share |
| $ | 0.49 |
|
| $ | 0.23 |
|
| $ | 1.69 |
|
| $ | 1.23 |
|
| Diluted earnings per common share |
| $ | 0.48 |
|
| $ | 0.23 |
|
| $ | 1.68 |
|
| $ | 1.22 |
|
|
|
|
|
|
|
|
|
|
| ||||||||
| Basic weighted average common shares outstanding |
|
| 32,564 |
|
|
| 35,259 |
|
|
| 33,053 |
|
|
| 35,602 |
|
| Diluted weighted average common shares outstanding |
|
| 32,800 |
|
|
| 35,448 |
|
|
| 33,287 |
|
|
| 35,840 |
|
|
|
|
|
|
|
|
|
|
| ||||||||
| Dividends declared per common share |
| $ | 0.46 |
|
| $ | 0.42 |
|
| $ | 1.30 |
|
| $ | 1.12 |
|
| Papa John’s International, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||||||
|
|
| Nine Months Ended | ||||||
| (In thousands) |
| September 24, |
| September 25, | ||||
|
|
|
|
|
| ||||
| Operating activities |
|
|
|
| ||||
| Net income before attribution to noncontrolling interests |
| $ | 56,356 |
|
| $ | 45,621 |
|
| Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
| ||||
| Provision for allowance for credit losses on accounts and notes receivable |
|
| 1,348 |
|
|
| 18,576 |
|
| Depreciation and amortization |
|
| 46,815 |
|
|
| 38,012 |
|
| Refranchising and impairment loss |
|
| — |
|
|
| 12,065 |
|
| Deferred income taxes |
|
| 3,481 |
|
|
| 519 |
|
| Stock-based compensation expense |
|
| 13,224 |
|
|
| 14,246 |
|
| Other |
|
| 331 |
|
|
| (466 | ) |
| Changes in operating assets and liabilities, net of acquisitions: |
|
|
|
| ||||
| Accounts receivable |
|
| (11,643 | ) |
|
| (19,584 | ) |
| Income tax receivable |
|
| 7,617 |
|
|
| (1,146 | ) |
| Inventories |
|
| 3,875 |
|
|
| (8,185 | ) |
| Prepaid expenses and other current assets |
|
| (2,104 | ) |
|
| 2,065 |
|
| Other assets and liabilities |
|
| 2,057 |
|
|
| (4,919 | ) |
| Accounts payable |
|
| 15,237 |
|
|
| 16,188 |
|
| Income and other taxes payable |
|
| 1,087 |
|
|
| (1,789 | ) |
| Accrued expenses and other current liabilities |
|
| (6,579 | ) |
|
| (32,404 | ) |
| Deferred revenue |
|
| (4,166 | ) |
|
| (2,246 | ) |
| Net cash provided by operating activities |
|
| 126,936 |
|
|
| 76,553 |
|
| Investing activities |
|
|
|
| ||||
| Purchases of property and equipment |
|
| (50,905 | ) |
|
| (48,424 | ) |
| Notes issued |
|
| (7,310 | ) |
|
| (2,248 | ) |
| Repayments of notes issued |
|
| 5,759 |
|
|
| 8,125 |
|
| Acquisitions, net of cash acquired |
|
| (5,599 | ) |
|
| (1,346 | ) |
| Proceeds from refranchising, net of cash transferred |
|
| — |
|
|
| 13,588 |
|
| Other |
|
| 401 |
|
|
| 76 |
|
| Net cash used in investing activities |
|
| (57,654 | ) |
|
| (30,229 | ) |
| Financing activities |
|
|
|
| ||||
| Net proceeds of revolving credit facilities |
|
| 185,789 |
|
|
| 66,999 |
|
| Proceeds from exercise of stock options |
|
| 1,816 |
|
|
| 2,730 |
|
| Acquisition of Company common stock |
|
| (210,348 | ) |
|
| (95,000 | ) |
| Dividends paid to common stockholders |
|
| (43,641 | ) |
|
| (39,949 | ) |
| Tax payments for equity award issuances |
|
| (6,279 | ) |
|
| (9,426 | ) |
| Distributions to noncontrolling interests |
|
| (651 | ) |
|
| (1,090 | ) |
| Other |
|
| (5,825 | ) |
|
| (3,480 | ) |
| Net cash used in financing activities |
|
| (79,139 | ) |
|
| (79,216 | ) |
| Effect of exchange rate changes on cash and cash equivalents |
|
| (24 | ) |
|
| (1,100 | ) |
| Change in cash and cash equivalents |
|
| (9,881 | ) |
|
| (33,992 | ) |
| Cash and cash equivalents at beginning of period |
|
| 47,373 |
|
|
| 70,610 |
|
| Cash and cash equivalents at end of period |
| $ | 37,492 |
|
| $ | 36,618 |
|