PZZA Papa Johns International Inc

Papa John’s International, Inc. (Nasdaq: PZZA) (“Papa Johns®”) (the “Company”) today announced financial results for the third quarter ended September 29, 2024.

Highlights

• North America comparable sales(a) were down 6% from a year ago as Domestic Company-owned restaurants were down 7% and North America franchised restaurants were down 5%; International comparable sales(a) were down 3% compared with the prior year period.
• 25 net restaurant openings in the third quarter; North America remains on track for more than 100 gross restaurant openings in fiscal year 2024, while International anticipated gross openings increases to between 170 and 190 restaurants.
• Global system-wide restaurant sales were $1.19 billion, a 3%(b) decrease compared with the prior year third quarter, driven by lower comparable sales partially offset by trailing twelve month net restaurant growth.
• Total revenues of $507 million were down 3% compared with a year ago driven by lower International revenues resulting from the refranchising and closure of Company-owned restaurants and lower sales at our Domestic Company-owned restaurants.
• Operating income increased to $65 million compared with $32 million a year ago, while Adjusted operating income(c) decreased $4 million to $29 million primarily related to lower Domestic Company-owned restaurant-level margins, as anticipated, in the third quarter.
• Diluted earnings per common share of $1.27 compared with $0.48 for the third quarter of 2023; Adjusted diluted earnings per common share(c) was $0.43 compared with $0.53 for the third quarter a year ago.

“In my first few months at Papa Johns, I have been impressed with the disciplined execution of our teams. During the third quarter, we delivered earnings in line with our expectations in what continues to be a very challenging consumer environment,” said Todd Penegor, Papa Johns President and CEO.

“I joined Papa Johns because I could see the potential in this company. With our leadership team, we continue to evaluate the business and refine our key strategic initiatives. We are encouraged by the early progress we are making to improve our value perception along with our digital and loyalty experience. Reigniting our track record of innovation and prioritizing the customer experience and franchisee profitability, we’re confident Papa Johns can return to sustainable, profitable growth,” added Penegor. “We are excited about the opportunities ahead of us and look forward to sharing our progress with our investors and other key stakeholders.”

(a) North America and International comparable sales are reported on a 13-week basis comparing July 1, 2024 through September 29, 2024 with July 3, 2023 through October 1, 2023.

(b) Excludes the impact of foreign currency.

(c) Represents a Non-GAAP financial measure. See “Non-GAAP Financial Measures” for a reconciliation to the most comparable US GAAP measures.

Financial Highlights

 

 

Three Months Ended

 

Nine Months Ended

(In thousands, except per share amounts)

 

September 29, 2024

 

September 24, 2023

 

Increase (Decrease)

 

September 29, 2024

 

September 24, 2023

 

Increase (Decrease)

Total revenues

 

$

506,807

 

$

522,812

 

$

(16,005

)

 

$

1,528,617

 

$

1,564,391

 

$

(35,774

)

Operating income

 

$

65,229

 

$

31,868

 

$

33,361

 

 

$

127,173

 

$

104,576

 

$

22,597

 

Adjusted operating income (a)

 

$

29,297

 

$

33,638

 

$

(4,341

)

 

$

110,893

 

$

109,671

 

$

1,222

 

Net income attributable to the Company

 

$

41,808

 

$

15,861

 

$

25,947

 

 

$

68,687

 

$

56,005

 

$

12,682

 

Diluted earnings per common share

 

$

1.27

 

$

0.48

 

$

0.79

 

 

$

2.09

 

$

1.68

 

$

0.41

 

Adjusted diluted earnings per common share (a)

 

$

0.43

 

$

0.53

 

$

(0.10

)

 

$

1.71

 

$

1.80

 

$

(0.09

)

Results for the first nine months of 2024 are not directly comparable with the first nine months of 2023, as year-over-year comparisons are impacted by the UK franchisee acquisitions that occurred during the second and third quarters of 2023 and the UK restaurant closures and refranchising transactions in the second and third quarters of 2024.

Quarterly Results

Total revenues of $506.8 million decreased $16.0 million, or 3.1%, in the third quarter of 2024 compared with the prior year period. The lower revenues were largely attributable to: 1) a $9.9 million decrease in International revenues primarily reflecting the net impact of the UK Company-owned restaurants versus the prior year period; 2) an $8.5 million decrease in Domestic Company-owned restaurant sales reflecting lower transaction volumes; and, 3) a $4.8 million decrease related to Preferred Marketing, our formerly wholly-owned print and promotions company which was sold in the fourth quarter of 2023. Partially offsetting these declines was a $5.5 million increase in North America commissary revenues, reflecting higher commodity prices, partially offset by lower transaction volumes.

For the third quarter of 2024, Global system-wide restaurant sales were $1.19 billion, down 3.0% from the prior year quarter (excluding the impact of foreign currency). The decrease was due to lower comparable sales, partially offset by 1.6% global net restaurant growth on a trailing twelve-month basis.

Third quarter Operating income was $65.2 million, a $33.4 million increase compared with the prior year third quarter, primarily due to $41.3 million of gains associated with the sale(b) of two Quality Control Center properties (“QC Centers”) in the current year third quarter. Adjusted operating income(a) was $29.3 million, a $4.3 million, or 12.9%, decrease from the same period a year ago. The variance between Operating income and Adjusted operating income was due to the aforementioned gains from the QC Center sales, $3.9 million of International restructuring costs in the UK, and a $1.5 million non-cash impairment charge primarily related to fixed and intangible assets from the refranchising of 15 Domestic restaurants.

The decrease in Adjusted operating income in the third quarter of 2024 was primarily due to anticipated lower operating margins at our Domestic Company-owned restaurants as the Company strategically reinvested some of its first-half savings into improving its value perception with consumers.

Diluted earnings per common share was $1.27 for the third quarter of 2024 compared with $0.48 in the third quarter of 2023. Adjusted diluted earnings per common share(a) was $0.43 for the third quarter of 2024 compared with $0.53 in the third quarter of 2023. 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 lower interest expense and a higher effective tax rate compared with the third quarter of 2023. Interest expense decreased largely due to lower average outstanding debt compared with the prior year third quarter. The higher tax rate reflects the impairment charges related to the International Restructuring program as well as the shortfall from the vesting of long-term equity awards, resulting in an additional tax expense when compared with the prior year period.

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 29, 2024.

(a) Represents a Non-GAAP financial measure. See “Non-GAAP Financial Measures” for a reconciliation to the most comparable US GAAP measures.

(b) Properties were subsequently leased back by the Company. See “Note 11. Divestitures” in the Company’s Form 10-Q for the quarter ended September 29, 2024 for additional information.

Global Restaurant Sales Information

Global restaurant and comparable sales information for the three and nine months ended September 29, 2024, compared with the three and nine months ended September 24, 2023 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 29, 2024

 

September 24, 2023

 

September 29, 2024

 

September 24, 2023

Comparable sales growth (decline):

 

 

 

 

 

 

 

 

Domestic Company-owned restaurants

 

(6.7

)%

 

5.9

%

 

(4.6

)%

 

3.8

%

North America franchised restaurants

 

(5.3

)%

 

2.2

%

 

(3.4

)%

 

(0.4

)%

North America restaurants

 

(5.6

)%

 

2.9

%

 

(3.6

)%

 

0.4

%

International restaurants

 

(2.8

)%

 

(0.3

)%

 

(1.8

)%

 

(2.3

)%

Total comparable sales growth (decline)

 

(4.9

)%

 

2.2

%

 

(3.2

)%

 

(0.2

)%

System-wide restaurant sales growth (decline):

 

 

 

 

 

 

 

 

Domestic Company-owned restaurants

 

(4.8

)%

 

6.7

%

 

(2.8

)%

 

4.7

%

North America franchised restaurants

 

(3.8

)%

 

3.2

%

 

(2.4

)%

 

1.1

%

North America restaurants

 

(4.0

)%

 

3.9

%

 

(2.5

)%

 

1.8

%

International restaurants (a)

 

—

%

 

8.8

%

 

2.2

%

 

6.8

%

Total global system-wide restaurant sales growth (decline) (a)

 

(3.0

)%

 

5.1

%

 

(1.4

)%

 

3.0

%

(a) System-wide sales for the nine months ended September 29, 2024 include $7.1 million of International sales related to the first and second quarters of 2024 that were erroneously omitted in prior periods.

Global Restaurants

As of September 29, 2024, there were 5,908 Papa Johns restaurants operating in 49 countries and territories, as follows:

Third Quarter

Domestic Company Owned

 

Franchised North America

 

Total North America

 

International Company Owned

 

International Franchised

 

Total International

 

System-wide

Beginning - June 30, 2024

537

 

2,910

 

 

3,447

 

 

33

 

 

2,403

 

 

2,436

 

 

5,883

 

Opened

—

 

18

 

 

18

 

 

—

 

 

36

 

 

36

 

 

54

 

Closed

—

 

(11

)

 

(11

)

 

—

 

 

(18

)

 

(18

)

 

(29

)

Refranchised

—

 

—

 

 

—

 

 

(20

)

 

20

 

 

—

 

 

—

 

Ending - September 29, 2024

537

 

2,917

 

 

3,454

 

 

13

 

 

2,441

 

 

2,454

 

 

5,908

 

Net restaurant growth/(decline)

—

 

7

 

 

7

 

 

(20

)

 

38

 

 

18

 

 

25

 

Trailing four quarters net restaurant growth

11

 

46

 

 

57

 

 

(105

)

 

139

 

 

34

 

 

91

 

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 $9.0 million for the nine months ended September 29, 2024, compared with $76.0 million in the prior year period. The year over year change primarily reflects unfavorable working capital changes and timing of cash payments for advertising and income taxes, partially offset by a $4.0 million decrease in capital expenditures.

 

 

Nine Months Ended

(in thousands)

 

September 29, 2024

 

September 24, 2023

Net cash provided by operating activities

 

$

55,884

 

 

$

126,936

 

Purchases of property and equipment

 

 

(46,931

)

 

 

(50,905

)

Free cash flow

 

$

8,953

 

 

$

76,031

 

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 2024. On October 29, 2024, our Board of Directors declared a fourth quarter dividend of $0.46 per common share. The dividend will be paid on November 29, 2024 to stockholders of record as of the close of business on November 18, 2024.

Conference Call

Papa Johns will host a call with analysts today, November 7, 2024, at 8:00 a.m. Eastern Time. To access the conference call or webcast, please register online at: ir.papajohns.com/events-presentations. A replay of the webcast will be available two hours after the call and archived on the same web page.

About Papa Johns

Papa John’s International, Inc. (Nasdaq: PZZA) opened its doors in 1984 with one goal in mind: BETTER INGREDIENTS. BETTER PIZZA.® Papa Johns believes that using high-quality ingredients leads to superior quality pizzas. Its original dough is made of only six ingredients and is fresh, never frozen. Papa Johns tops its pizzas with real cheese made from mozzarella, pizza sauce made with vine-ripened tomatoes that go from vine to can in the same day and meat free of fillers. It was the first national pizza delivery chain to announce the removal of artificial flavors and synthetic colors from its entire food menu. Papa Johns is co-headquartered in Atlanta, Ga. and Louisville, Ky. and is the world’s third-largest pizza delivery company with more than 5,900 restaurants in approximately 50 countries and territories. For more information about the Company or to order pizza online, visit www.papajohns.com or download the Papa Johns mobile app for iOS or Android.

Forward-Looking Statements

Certain matters discussed in this press release and other Company communications that are not statements of historical fact constitute forward-looking statements within the meaning of the federal securities laws. Generally, the use of words such as “expect,” “intend,” “estimate,” “believe,” “anticipate,” “will,” “forecast,” “outlook”, “plan,” “project,” or similar words identify forward-looking statements that we intend to be included within the safe harbor protections provided by the federal securities laws. Such forward-looking statements include or may relate to projections or guidance concerning business performance, revenue, earnings, cash flow, earnings per share, share repurchases, the current economic environment, commodity and labor costs, currency fluctuations, profit margins, supply chain operating margin, net unit growth, unit level performance, capital expenditures, restaurant and franchise development, restaurant acquisitions, restaurant closures, labor shortages, labor cost increases, changes in management, inflation, royalty relief, franchisee support and incentives, the effectiveness of our menu innovations and other business initiatives, investments in product and digital innovation, marketing efforts and investments, liquidity, compliance with debt covenants, impairments, strategic decisions and actions, changes to our national marketing fund, changes to our commissary model, dividends, effective tax rates, regulatory changes and impacts, investments in and repositioning of the UK market, International restructuring plans, timing and costs, International consumer demand, adoption of new accounting standards, and other financial and operational measures. Such statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond our control. Therefore, actual outcomes and results may differ materially from those matters expressed or implied in such forward-looking statements.

Our forward-looking statements are based on our assumptions which are based on currently available information. Actual outcomes and results may differ materially from those matters expressed or implied in our forward-looking statements as a result of various factors, including but not limited to risks related to: deteriorating economic conditions in the U.S. and international markets, including the United Kingdom; labor shortages at Company and/or franchised restaurants and our quality control centers; increases in labor costs, changes in commodity costs, supply chain incentive-based rebates, or sustained higher other operating costs, including as a result of supply chain disruption, inflation or climate change; the potential for delayed new restaurant openings, both domestically and internationally, or lower net unit development due to changing circumstances outside of our control; the increased risk of phishing, ransomware and other cyber-attacks; risks and disruptions to the global economy and our business related to the conflicts in Ukraine and the Middle East and other international conflicts and risks related to a possible economic recession or downturn that could reduce consumer spending or demand. These and other risks, uncertainties and assumptions that are involved in our forward-looking statements are discussed in detail in “Part I. Item 1A. – Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise, except as required by law.

For more information about the company, please visit www.papajohns.com.

Supplemental Information and Financial Statements

Definitions

“Comparable sales” represents sales for the same base of restaurants for the same fiscal periods. “Comparable sales growth (decline)” represents the change in year-over-year comparable sales. “Global system-wide restaurant sales” represents total restaurant sales for all Company-owned and franchised restaurants open during the comparable periods, and “Global system-wide restaurant sales growth (decline)” represents the change in global system-wide restaurant sales year-over-year. Comparable sales, Comparable sales growth (decline), Global system-wide restaurant sales and Global system-wide sales growth (decline) exclude franchisees for which we suspended corporate support.

We believe Domestic Company-owned, North America franchised, and International Comparable sales growth (decline) and Global system-wide restaurant sales information is useful in analyzing our results since our franchisees pay royalties and marketing fund contributions that are based on a percentage of franchise sales. Comparable sales and Global system-wide restaurant sales results for restaurants operating outside of the United States are reported on a constant dollar basis, which excludes the impact of foreign currency translation. Franchise sales also generate commissary revenue in the United States and in certain international markets. Comparable sales growth (decline) and Global system-wide restaurant sales information is also useful for comparison to industry trends and evaluating the strength of our brand. Management believes the presentation of Global system-wide restaurant sales growth, excluding the impact of foreign currency, provides investors with useful information regarding underlying sales trends and the impact of new unit growth without being impacted by swings in the external factor of foreign currency. Franchise restaurant sales are not included in the Company’s revenues.

Non-GAAP Financial Measures

In addition to the results provided in accordance with U.S. GAAP, we provide certain non-GAAP measures, which present results on an adjusted basis. These are supplemental measures of performance that are not required by or presented in accordance with U.S. GAAP and include the following: Adjusted operating income, Adjusted net income attributable to common shareholders and Adjusted diluted earnings per common share. We believe that our non-GAAP financial measures enable investors to assess the operating performance of our business relative to our performance based on U.S. GAAP results and relative to other companies. We believe that the disclosure of these non-GAAP measures is useful to investors as they reflect metrics that our management team and Board utilize to evaluate our operating performance, allocate resources and administer employee incentive plans. The most directly comparable U.S. GAAP measures to Adjusted operating income, Adjusted net income attributable to common shareholders and Adjusted diluted earnings per common share are Operating income, net income attributable to common shareholders and diluted earnings per common share, respectively. These non-GAAP measures should not be construed as a substitute for or a better indicator of the Company’s performance than the Company’s U.S. GAAP results. The table that follows reconciles our GAAP financial results to our non-GAAP financial measures.

 

 

Three Months Ended

 

Nine Months Ended

(In thousands, except per share amounts)

 

September 29, 2024

 

September 24, 2023

 

September 29, 2024

 

September 24, 2023

Operating income

 

$

65,229

 

 

$

31,868

 

 

$

127,173

 

 

$

104,576

 

Gain on sale of QC Center properties (a)

 

 

(41,289

)

 

 

—

 

 

 

(41,289

)

 

 

—

 

International restructuring costs (b)

 

 

3,862

 

 

 

—

 

 

 

19,514

 

 

 

—

 

UK repositioning and acquisition-related costs (c)

 

 

—

 

 

 

1,193

 

 

 

—

 

 

 

2,501

 

Legal settlements (d)

 

 

—

 

 

 

577

 

 

 

—

 

 

 

577

 

Other costs (e)

 

 

1,495

 

 

 

—

 

 

 

5,495

 

 

 

2,017

 

Adjusted operating income

 

$

29,297

 

 

$

33,638

 

 

$

110,893

 

 

$

109,671

 

 

 

 

 

 

 

 

 

 

Net income attributable to common shareholders

 

$

41,808

 

 

$

15,861

 

 

$

68,687

 

 

$

56,005

 

Gain on sale of QC Center properties (a)

 

 

(41,289

)

 

 

—

 

 

 

(41,289

)

 

 

—

 

International restructuring costs (b)

 

 

3,862

 

 

 

—

 

 

 

19,514

 

 

 

—

 

UK repositioning and acquisition-related costs (c)

 

 

—

 

 

 

1,193

 

 

 

—

 

 

 

2,501

 

Legal settlements (d)

 

 

—

 

 

 

577

 

 

 

—

 

 

 

577

 

Other costs (e)

 

 

1,495

 

 

 

—

 

 

 

5,495

 

 

 

2,017

 

Tax effect of adjustments (f)

 

 

8,121

 

 

 

(404

)

 

 

3,679

 

 

 

(1,162

)

Adjusted net income attributable to common shareholders

 

$

13,997

 

 

$

17,227

 

 

$

56,086

 

 

$

59,938

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

 

$

1.27

 

 

$

0.48

 

 

$

2.09

 

 

$

1.68

 

Gain on sale of QC Center properties (a)

 

 

(1.25

)

 

 

—

 

 

 

(1.25

)

 

 

—

 

International restructuring costs (b)

 

 

0.12

 

 

 

—

 

 

 

0.59

 

 

 

—

 

UK repositioning and acquisition-related costs (c)

 

 

—

 

 

 

0.04

 

 

 

—

 

 

 

0.07

 

Legal settlements (d)

 

 

—

 

 

 

0.02

 

 

 

—

 

 

 

0.02

 

Other costs (e)

 

 

0.04

 

 

 

—

 

 

 

0.17

 

 

 

0.06

 

Tax effect of adjustments (f)

 

 

0.25

 

 

 

(0.01

)

 

 

0.11

 

 

 

(0.03

)

Adjusted diluted earnings per common share

 

$

0.43

 

 

$

0.53

 

 

$

1.71

 

 

$

1.80

 

Refer to footnotes on following page.

Footnotes to Non-GAAP Financial Measures

(a)

Represents pre-tax gain on sale, net of transaction costs, realized upon the August 2, 2024 completion of the sale of our Texas and Florida QC Center properties.

(b)

Represents costs associated with the Company’s International Restructuring plan. For the three and nine months ended September 29, 2024, these costs are comprised primarily of lease and fixed asset impairment charges related to restaurant closures in the UK, professional services and other related costs, losses on refranchising Company-owned restaurants, losses on franchisee notes receivable, lease termination costs, as well as severance.

(c)

Represents costs associated with repositioning the UK portfolio as well as transaction costs related to the acquisition of restaurants from franchisees.

(d)

Represents accruals for certain legal settlements, recorded in General and administrative expenses.

(e)

For the three and nine months ended September 29, 2024, represents non-cash impairment and remeasurement charges related primarily to fixed and intangible assets from the refranchising of 15 Domestic Company-owned restaurants. For the three and nine months ended September 24, 2023, represents severance and related costs associated with the transition of certain executives, recorded in General and administrative expenses.

(f)

The tax effect on non-GAAP adjustments was calculated by applying the marginal tax rates of 22.6% and 22.8% for the three and nine months ended September 29, 2024 and September 24, 2023, respectively.

Papa John’s International, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)

 

September 29, 2024

 

December 31, 2023

 

 

(Unaudited)

 

 

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

17,550

 

 

$

40,587

 

Accounts receivable, net

 

 

101,804

 

 

 

104,244

 

Notes receivable, current portion

 

 

5,728

 

 

 

5,199

 

Income tax receivable

 

 

2,414

 

 

 

2,577

 

Inventories

 

 

36,488

 

 

 

36,126

 

Prepaid expenses and other current assets

 

 

51,873

 

 

 

42,285

 

Total current assets

 

 

215,857

 

 

 

231,018

 

Property and equipment, net

 

 

266,508

 

 

 

282,812

 

Finance lease right-of-use assets, net

 

 

25,535

 

 

 

31,740

 

Operating lease right-of-use assets

 

 

191,194

 

 

 

164,158

 

Notes receivable, less current portion, net

 

 

7,346

 

 

 

12,346

 

Goodwill

 

 

76,460

 

 

 

76,206

 

Other assets

 

 

77,975

 

 

 

76,725

 

Total assets

 

$

860,875

 

 

$

875,005

 

 

 

 

 

 

Liabilities, Redeemable noncontrolling interests and Stockholders’ deficit

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

62,800

 

 

$

74,949

 

Income and other taxes payable

 

 

10,166

 

 

 

17,948

 

Accrued expenses and other current liabilities

 

 

139,301

 

 

 

158,167

 

Current deferred revenue

 

 

19,645

 

 

 

20,427

 

Current finance lease liabilities

 

 

6,962

 

 

 

9,029

 

Current operating lease liabilities

 

 

26,001

 

 

 

24,076

 

Current portion of long-term debt

 

 

5,650

 

 

 

—

 

Total current liabilities

 

 

270,525

 

 

 

304,596

 

Deferred revenue

 

 

18,737

 

 

 

20,366

 

Long-term finance lease liabilities

 

 

19,921

 

 

 

24,144

 

Long-term operating lease liabilities

 

 

180,137

 

 

 

151,050

 

Long-term debt, less current portion, net

 

 

721,355

 

 

 

757,422

 

Other long-term liabilities

 

 

64,882

 

 

 

60,192

 

Total liabilities

 

 

1,275,557

 

 

 

1,317,770

 

 

 

 

 

 

Redeemable noncontrolling interests

 

 

937

 

 

 

851

 

 

 

 

 

 

Stockholders’ deficit:

 

 

 

 

Common stock ($0.01 par value per share; issued 49,282 at September 29, 2024 and 49,235 at December 31, 2023)

 

 

493

 

 

 

492

 

Additional paid-in capital

 

 

449,141

 

 

 

452,290

 

Accumulated other comprehensive loss

 

 

(6,580

)

 

 

(7,803

)

Retained earnings

 

 

242,269

 

 

 

219,027

 

Treasury stock (16,645 shares at September 29, 2024 and 16,747 shares at December 31, 2023, at cost)

 

 

(1,116,256

)

 

 

(1,123,098

)

Total stockholders’ deficit

 

 

(430,933

)

 

 

(459,092

)

Noncontrolling interests in subsidiaries

 

 

15,314

 

 

 

15,476

 

Total Stockholders’ deficit

 

 

(415,619

)

 

 

(443,616

)

Total Liabilities, Redeemable noncontrolling interests and Stockholders’ deficit

 

$

860,875

 

 

$

875,005

 

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 29, 2024

 

September 24, 2023

 

September 29, 2024

 

September 24, 2023

Revenues:

 

 

 

 

 

 

 

 

Domestic Company-owned restaurant sales

 

$

168,672

 

 

$

177,195

 

 

$

518,103

 

 

$

532,841

 

North America franchise royalties and fees

 

 

33,831

 

 

 

35,041

 

 

 

103,937

 

 

 

105,824

 

North America commissary revenues

 

 

210,389

 

 

 

204,887

 

 

 

611,873

 

 

 

624,433

 

International revenues

 

 

33,024

 

 

 

42,927

 

 

 

113,433

 

 

 

108,998

 

Other revenues

 

 

60,891

 

 

 

62,762

 

 

 

181,271

 

 

 

192,295

 

Total revenues

 

 

506,807

 

 

 

522,812

 

 

 

1,528,617

 

 

 

1,564,391

 

Costs and expenses:

 

 

 

 

 

 

 

 

Operating costs (excluding depreciation and amortization shown separately below):

 

 

 

 

 

 

 

 

Domestic Company-owned restaurant expenses

 

 

142,403

 

 

 

145,433

 

 

 

419,189

 

 

 

436,922

 

North America commissary expenses

 

 

193,818

 

 

 

189,551

 

 

 

561,316

 

 

 

576,434

 

International expenses

 

 

19,001

 

 

 

29,796

 

 

 

74,424

 

 

 

67,542

 

Other expenses

 

 

55,543

 

 

 

57,587

 

 

 

164,261

 

 

 

177,661

 

General and administrative expenses

 

 

13,553

 

 

 

52,173

 

 

 

129,726

 

 

 

154,441

 

Depreciation and amortization

 

 

17,260

 

 

 

16,404

 

 

 

52,528

 

 

 

46,815

 

Total costs and expenses

 

 

441,578

 

 

 

490,944

 

 

 

1,401,444

 

 

 

1,459,815

 

Operating income

 

 

65,229

 

 

 

31,868

 

 

 

127,173

 

 

 

104,576

 

Net interest expense

 

 

(10,629

)

 

 

(11,378

)

 

 

(32,588

)

 

 

(31,674

)

Income before income taxes

 

 

54,600

 

 

 

20,490

 

 

 

94,585

 

 

 

72,902

 

Income tax expense

 

 

12,812

 

 

 

4,539

 

 

 

25,347

 

 

 

16,546

 

Net income before attribution to noncontrolling interests

 

 

41,788

 

 

 

15,951

 

 

 

69,238

 

 

 

56,356

 

Net loss (income) attributable to noncontrolling interests

 

 

20

 

 

 

(90

)

 

 

(551

)

 

 

(351

)

Net income attributable to the Company

 

$

41,808

 

 

$

15,861

 

 

$

68,687

 

 

$

56,005

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

 

$

1.28

 

 

$

0.49

 

 

$

2.10

 

 

$

1.69

 

Diluted earnings per common share

 

$

1.27

 

 

$

0.48

 

 

$

2.09

 

 

$

1.68

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

32,745

 

 

 

32,564

 

 

 

32,701

 

 

 

33,053

 

Diluted weighted average common shares outstanding

 

 

32,930

 

 

 

32,800

 

 

 

32,850

 

 

 

33,287

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.46

 

 

$

0.46

 

 

$

1.38

 

 

$

1.30

 

Papa John’s International, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

Nine Months Ended

(In thousands)

 

September 29, 2024

 

September 24, 2023

Operating activities

 

 

 

 

Net income before attribution to noncontrolling interests

 

$

69,238

 

 

$

56,356

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Provision for allowance for credit losses on accounts and notes receivable

 

 

2,936

 

 

 

1,348

 

Depreciation and amortization

 

 

52,528

 

 

 

46,815

 

Refranchising and impairment loss

 

 

17,433

 

 

 

—

 

Deferred income taxes

 

 

3,877

 

 

 

3,481

 

Stock-based compensation expense

 

 

5,903

 

 

 

13,224

 

Gain on disposal of property and equipment

 

 

(42,034

)

 

 

—

 

Other

 

 

614

 

 

 

331

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

Accounts receivable

 

 

879

 

 

 

(11,643

)

Income tax receivable

 

 

232

 

 

 

7,617

 

Inventories

 

 

(207

)

 

 

3,875

 

Prepaid expenses and other current assets

 

 

(1,684

)

 

 

(2,104

)

Other assets and liabilities

 

 

(5,923

)

 

 

2,057

 

Accounts payable

 

 

(12,389

)

 

 

15,237

 

Income and other taxes payable

 

 

(7,609

)

 

 

1,087

 

Accrued expenses and other current liabilities

 

 

(25,837

)

 

 

(6,579

)

Deferred revenue

 

 

(2,073

)

 

 

(4,166

)

Net cash provided by operating activities

 

 

55,884

 

 

 

126,936

 

Investing activities

 

 

 

 

Purchases of property and equipment

 

 

(46,931

)

 

 

(50,905

)

Notes issued

 

 

(154

)

 

 

(7,310

)

Repayments of notes issued

 

 

3,148

 

 

 

5,759

 

Acquisitions, net of cash acquired

 

 

—

 

 

 

(5,599

)

Proceeds from dispositions

 

 

49,012

 

 

 

—

 

Other

 

 

2,373

 

 

 

401

 

Net cash provided by (used in) investing activities

 

 

7,448

 

 

 

(57,654

)

Financing activities

 

 

 

 

Net (repayments) proceeds of revolving credit facilities

 

 

(31,589

)

 

 

185,789

 

Proceeds from exercise of stock options

 

 

1,021

 

 

 

1,816

 

Acquisition of Company common stock

 

 

—

 

 

 

(210,348

)

Dividends paid to common stockholders

 

 

(45,381

)

 

 

(43,641

)

Tax payments for equity award issuances

 

 

(3,508

)

 

 

(6,279

)

Distributions to noncontrolling interests

 

 

(627

)

 

 

(651

)

Principal payments on finance leases

 

 

(6,778

)

 

 

(5,975

)

Other

 

 

278

 

 

 

150

 

Net cash used in financing activities

 

 

(86,584

)

 

 

(79,139

)

Effect of exchange rate changes on cash and cash equivalents

 

 

215

 

 

 

(24

)

Change in cash and cash equivalents

 

 

(23,037

)

 

 

(9,881

)

Cash and cash equivalents at beginning of period

 

 

40,587

 

 

 

47,373

 

Cash and cash equivalents at end of period

 

$

17,550

 

 

$

37,492

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241106937512/en/

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