ANN ARBOR, Mich., April 27, 2017 /PRNewswire/ -- Domino's
Pizza, Inc. (NYSE: DPZ), the recognized world leader in pizza
delivery, today announced results for the first quarter of 2017,
comprised of strong growth in same store sales, global store counts
and earnings per share. Domestic same store sales grew 10.2% during
the quarter versus the year-ago period, which represents the
24th consecutive quarter of positive sales momentum in
the Company's domestic business. The international division also
posted strong results, with same store sales growth of 4.3% during
the quarter, marking the 93rd consecutive quarter
of positive international same store sales growth. The Company had
global net store growth of 189 stores in the quarter, comprised of
28 net new domestic stores and 161 net new stores internationally.
The Company has added 1,308 net new stores over the trailing four
quarters.
Diluted EPS was $1.26 for the
first quarter, which was up 41.6% over the Company's diluted EPS in
the prior year quarter. This increase resulted from outstanding
operational results as well as the adoption of a new accounting
standard.
During the quarter, the Company repurchased 80,360 shares of its
common stock for approximately $12.7
million. The Company's Board of Directors also declared a
46-cent per share quarterly dividend
for shareholders of record as of June 15,
2017, to be paid on June 30,
2017.
"It was a great start to 2017, as momentum continued with solid
growth in our international business, and our third consecutive
quarter of double-digit same store sales growth in the U.S.," said
J. Patrick Doyle, Domino's
President and Chief Executive Officer. "The ultimate
measure of customer satisfaction is more customers choosing to do
business with you. The growth we are experiencing – both in
store counts and customer visits – is a reflection of great
commitment and execution by our franchisees and team members."
First Quarter Highlights:
(dollars in
millions, except per share data)
|
|
First Quarter
of 2017
|
|
|
First Quarter
of 2016
|
|
Net
income
|
|
$
|
62.5
|
|
|
$
|
45.5
|
|
Weighted average
diluted shares
|
|
|
49,706,023
|
|
|
|
51,230,604
|
|
Diluted earnings
per share*
|
|
$
|
1.26
|
|
|
$
|
0.89
|
|
|
*In the first quarter
of 2017, the Company adopted Accounting Standards Update No.
2016-09, Compensation-Stock Compensation (Topic 718):
Improvements to Employee Share-Based Payment Accounting, (ASU
2016-09), which required the Company to record excess tax benefits
from equity-based compensation as a reduction of the provision for
income taxes in the income statement, whereas they were previously
recognized in equity. See the "Adoption of New Accounting Guidance"
section below for additional information.
|
- Revenues were up 15.8% for the first quarter versus the
prior year period, due primarily to higher supply chain revenues
from increased volumes and store growth. Increased domestic
franchise and Company-owned store revenues and higher international
revenues resulting from both same store sales and store count
growth also contributed to this increase.
- Net Income increased 37.4% for the first quarter versus
the prior year period, primarily driven by an increase in same
store sales growth and store count as well as higher supply chain
volumes and lower food costs. The adoption of the new equity-based
compensation accounting standard also positively impacted net
income. These increases were partially offset by higher general and
administrative expenses from investments in technological
initiatives as well as the negative impact of foreign currency
exchange rates.
- Diluted EPS was $1.26 for
the first quarter versus 89 cents in
the prior year quarter. This represents a 37-cent or 41.6% increase over the prior year
quarter. This increase was driven by the increase in net income, as
well as lower diluted share count, primarily as a result of the
share repurchases made during the trailing four quarters.
The table below outlines certain statistical measures utilized
by the Company to analyze its performance. Refer to the
Comments on Regulation G section on page three for
additional details.
|
|
First
Quarter
of
2017
|
|
|
First
Quarter
of
2016
|
|
Same store sales
growth: (versus prior year period)
|
|
|
|
|
|
|
|
|
Domestic Company-owned
stores
|
|
|
+ 14.1
|
%
|
|
|
+ 4.0
|
%
|
Domestic franchise
stores
|
|
|
+
9.8
|
%
|
|
|
+ 6.6
|
%
|
Domestic
stores
|
|
|
+ 10.2
|
%
|
|
|
+ 6.4
|
%
|
International stores
(excluding foreign currency impact)
|
|
|
+
4.3
|
%
|
|
|
+ 7.9
|
%
|
|
|
|
|
|
|
|
|
|
Global retail
sales growth: (versus prior year period)
|
|
|
|
|
|
|
|
|
Domestic
stores
|
|
|
+ 13.4
|
%
|
|
|
+ 7.9
|
%
|
International
stores
|
|
|
+ 13.0
|
%
|
|
|
+ 6.7
|
%
|
Total
|
|
|
+ 13.2
|
%
|
|
|
+ 7.3
|
%
|
|
|
|
|
|
|
|
|
|
Global retail
sales growth: (versus prior year period,
excluding foreign currency impact)
|
|
|
|
|
|
|
|
|
Domestic
stores
|
|
|
+ 13.4
|
%
|
|
|
+ 7.9
|
%
|
International
stores
|
|
|
+ 17.0
|
%
|
|
|
+ 15.4
|
%
|
Total
|
|
|
+ 15.2
|
%
|
|
|
+ 11.7
|
%
|
|
|
Domestic
Company-
owned
Stores
|
|
|
Domestic
Franchise
Stores
|
|
|
Total
Domestic
Stores
|
|
|
International
Stores
|
|
|
Total
|
|
Store
counts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Store count at January
1, 2017
|
|
|
392
|
|
|
|
4,979
|
|
|
|
5,371
|
|
|
|
8,440
|
|
|
|
13,811
|
|
Openings
|
|
|
2
|
|
|
|
27
|
|
|
|
29
|
|
|
|
175
|
|
|
|
204
|
|
Closings
|
|
|
—
|
|
|
|
(1)
|
|
|
|
(1)
|
|
|
|
(14)
|
|
|
|
(15)
|
|
Transfers
|
|
|
1
|
|
|
|
(1)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Store count at March
26, 2017
|
|
|
395
|
|
|
|
5,004
|
|
|
|
5,399
|
|
|
|
8,601
|
|
|
|
14,000
|
|
First quarter 2017 net
change
|
|
|
3
|
|
|
|
25
|
|
|
|
28
|
|
|
|
161
|
|
|
|
189
|
|
Trailing four quarters
net change
|
|
|
10
|
|
|
|
173
|
|
|
|
183
|
|
|
|
1,125
|
|
|
|
1,308
|
|
Adoption of New Accounting Guidance
The Company adopted ASU 2016-09 in the first quarter of
2017. This standard addresses the accounting for income taxes and
forfeitures and the cash flow presentation of share-based
compensation. The adoption resulted in a $6.5 million decrease in our first quarter 2017
provision for income taxes, or a 7.2 percentage point decrease in
our first quarter 2017 effective tax rate, due to the recognition
of excess tax benefits for options exercised and the vesting of
equity awards in the first quarter of 2017. This item positively
impacted our diluted EPS by approximately 13
cents in the first quarter of 2017. Refer to the Company's
Form 10-Q for the quarter ended March 26,
2017 for additional detailed information regarding the
impact of the adoption of ASU 2016-09.
Conference Call Information
The Company will file its quarterly report on Form 10-Q this
morning. As previously announced, Domino's Pizza, Inc. will
hold a conference call today at 10
a.m. (Eastern) to review its first quarter 2017 financial
results. The call can be accessed by dialing (888) 400-9978
(U.S./Canada) or (706) 634-4947
(International). Ask for the Domino's Pizza conference call. The
call will also be webcast at biz.dominos.com. The webcast will also
be archived for one year on biz.dominos.com.
Share Repurchases
During the first quarter of 2017, the Company repurchased and
retired 80,360 shares of its common stock under its open market
share repurchase program for approximately $12.7 million, or an average price of
$158.30 per share. As of March 26, 2017, the end of the first quarter, the
Company had a total remaining authorized amount for share
repurchases of $136.4 million.
Liquidity
As of March 26, 2017, the Company
had approximately:
- $52.1 million of unrestricted
cash and cash equivalents;
- $2.18 billion in total debt;
and
- $80.7 million of available
borrowings under its $125.0 million
variable funding notes, net of letters of credit issued of
$44.3 million. The Company has
collateralized $44.0 million of these
letters of credit with restricted cash, and has the ability to
access this cash with minimal notice.
The Company invested $12.4 million
in capital expenditures during the first quarter of 2017, versus
$10.5 million in the first quarter of
2016. Free cash flow, as reconciled below to cash flows from
operations as determined under generally accepted accounting
principles (GAAP), was approximately $73.2
million in the first quarter of 2017.
(in
thousands)
|
|
First
Quarter
of
2017
|
|
Net cash provided by
operating activities
|
|
$
|
85,693
|
|
Capital
expenditures
|
|
|
(12,444)
|
|
Free cash
flow
|
|
$
|
73,249
|
|
Comments on Regulation G
In addition to the GAAP financial measures set forth in this
press release, the Company has included non-GAAP financial measures
within the meaning of Regulation G. The Company has also included
metrics such as global retail sales growth and same store sales
growth, which are commonly used statistical measures in the
quick-service restaurant industry that are important to
understanding Company performance.
The Company uses "Global retail sales" to refer to total
worldwide retail sales at Company-owned and franchise stores. The
Company believes global retail sales information is useful in
analyzing revenues because franchisees pay royalties that are based
on a percentage of franchise retail sales. The Company reviews
comparable industry global retail sales information to assess
business trends and to track the growth of the Domino's
Pizza® brand. In addition, supply chain revenues are
directly impacted by changes in franchise retail sales. Retail
sales for franchise stores are reported to the Company by its
franchisees and are not included in Company revenues.
The Company uses "Same store sales growth," which is
calculated by including only sales from stores that also had sales
in the comparable period of the prior year. International same
store sales growth is calculated similarly to domestic same store
sales growth. Changes in international same store sales are
reported excluding foreign currency impacts, which reflect changes
in international local currency sales.
The Company uses "Free cash flow," which is calculated as
cash flows from operations less capital expenditures, both as
reported under GAAP. The Company believes that the free cash flow
measure is important to investors and other interested persons, and
that such persons benefit from having a measure which communicates
how much cash flow is available for working capital needs or to be
used for repurchasing debt, making acquisitions, repurchasing
common stock, paying dividends or other similar uses of cash.
About Domino's Pizza®
Founded in 1960, Domino's Pizza is the recognized world leader
in pizza delivery, with a significant business in carryout pizza.
It ranks among the world's top public restaurant brands with a
global enterprise of 14,000 stores in over 85 international
markets. Domino's had global retail sales of nearly $10.9 billion in 2016, with more than
$5.3 billion in the U.S. and more
than $5.5 billion internationally. In
the first quarter of 2017, Domino's had global retail sales of
nearly $2.7 billion, with over
$1.3 billion in the U.S. and nearly
$1.4 billion internationally. Its
system is comprised of independent franchise owners who accounted
for over 97% of Domino's stores as of the first quarter of 2017.
Emphasis on technology innovation helped Domino's reach an
estimated $5.6 billion in global
digital sales in 2016, and has produced several innovative ordering
platforms, including Google Home, Facebook Messenger, Apple Watch,
Amazon Echo, Twitter and text message using a pizza emoji. In late
2015, Domino's announced the design and launch of the
DXP®, a purpose-built pizza delivery vehicle, as well as
Piece of the Pie Rewards™, its first digital customer loyalty
program.
Order – dominos.com
AnyWare Ordering – anyware.dominos.com
Company Info – biz.dominos.com
Twitter – twitter.com/dominos
Facebook – facebook.com/dominos
Instagram – instagram.com/dominos
YouTube – youtube.com/dominos
Please visit our Investor Relations website at biz.dominos.com
to view a schedule of upcoming earnings releases, significant
announcements and conference webcasts.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995:
This press release contains forward-looking statements. You can
identify forward-looking statements because they contain words such
as "believes," "expects," "may," "will," "should," "seeks,"
"approximately," "intends," "plans," "estimates," or "anticipates"
or similar expressions that concern our strategy, plans or
intentions. These forward-looking statements relating to our
anticipated profitability, estimates in same store sales growth,
the growth of our international business, ability to service our
indebtedness, our future cash flows, our operating performance,
trends in our business and other descriptions of future events
reflect the Company's expectations based upon currently available
information and data. However, actual results are subject to future
risks and uncertainties that could cause actual results to differ
materially from those expressed or implied by such forward-looking
statements. The risks and uncertainties that could cause actual
results to differ materially include: the level of our long-term
and other indebtedness; uncertainties relating to litigation;
consumer preferences, spending patterns and demographic trends; the
effectiveness of our advertising, operations and promotional
initiatives; the strength of our brand in the markets in which we
compete; our ability to retain key personnel; new product, digital
ordering and concept developments by us, and other food-industry
competitors; the ongoing level of profitability of our franchisees;
our ability and that of our franchisees to open new restaurants and
keep existing restaurants in operation; changes in operating
expenses resulting from changes in prices of food (particularly
cheese), labor, utilities, insurance, employee benefits and other
operating costs; the impact that widespread illness or general
health concerns may have on our business and the economy of the
countries where we operate; severe weather conditions and natural
disasters; changes in our effective tax rate; changes in foreign
currency exchange rates; changes in government legislation and
regulations; adequacy of our insurance coverage; costs related to
future financings; our ability and that of our franchisees to
successfully operate in the current credit environment; changes in
the level of consumer spending given the general economic
conditions including interest rates, energy prices and consumer
confidence; availability of borrowings under our variable funding
notes and our letters of credit; and changes in accounting
policies. Important factors that could cause actual results to
differ materially from our expectations are more fully described in
our other filings with the Securities and Exchange Commission,
including under the section headed "Risk Factors" in our annual
report on Form 10-K. These forward-looking statements speak only as
of the date of this press release, and you should not rely on such
statements as representing the views of the Company as of any
subsequent date. Except as required by applicable securities laws,
we do not undertake to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
TABLES TO FOLLOW
|
Domino's Pizza,
Inc. and Subsidiaries
|
Condensed
Consolidated Statements of Income
|
(Unaudited)
|
|
|
|
Fiscal Quarter
Ended
|
|
|
|
March
26,
2017
|
|
|
%
of
Total
Revenues
|
|
|
March
27,
2016
|
|
|
%
of
Total
Revenues
|
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Company-owned
stores
|
|
$
|
113,545
|
|
|
|
|
|
|
$
|
96,443
|
|
|
|
|
|
Domestic
franchise
|
|
|
79,901
|
|
|
|
|
|
|
|
68,151
|
|
|
|
|
|
Supply
chain
|
|
|
388,553
|
|
|
|
|
|
|
|
335,695
|
|
|
|
|
|
International
franchise
|
|
|
42,218
|
|
|
|
|
|
|
|
38,886
|
|
|
|
|
|
Total
revenues
|
|
|
624,217
|
|
|
|
100.0
|
%
|
|
|
539,175
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Company-owned
stores
|
|
|
87,184
|
|
|
|
|
|
|
|
72,755
|
|
|
|
|
|
Supply
chain
|
|
|
343,217
|
|
|
|
|
|
|
|
299,204
|
|
|
|
|
|
Total cost of
sales
|
|
|
430,401
|
|
|
|
69.0
|
%
|
|
|
371,959
|
|
|
|
69.0
|
%
|
Operating
margin
|
|
|
193,816
|
|
|
|
31.0
|
%
|
|
|
167,216
|
|
|
|
31.0
|
%
|
General and
administrative
|
|
|
77,782
|
|
|
|
12.4
|
%
|
|
|
68,504
|
|
|
|
12.7
|
%
|
Income from
operations
|
|
|
116,034
|
|
|
|
18.6
|
%
|
|
|
98,712
|
|
|
|
18.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
(25,520)
|
|
|
|
(4.1)
|
%
|
|
|
(25,870)
|
|
|
|
(4.8)
|
%
|
Income before
provision for income taxes
|
|
|
90,514
|
|
|
|
14.5
|
%
|
|
|
72,842
|
|
|
|
13.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
28,045
|
|
|
|
4.5
|
%
|
|
|
27,391
|
|
|
|
5.1
|
%
|
Net income
|
|
$
|
62,469
|
|
|
|
10.0
|
%
|
|
$
|
45,451
|
|
|
|
8.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock –
diluted
|
|
$
|
1.26
|
|
|
|
|
|
|
$
|
0.89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per share
|
|
$
|
0.46
|
|
|
|
|
|
|
$
|
0.38
|
|
|
|
|
|
Domino's Pizza,
Inc. and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
|
|
|
March 26,
2017
|
|
|
January 1,
2017
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
52,094
|
|
|
$
|
42,815
|
|
Restricted cash and
cash equivalents
|
|
|
165,666
|
|
|
|
126,496
|
|
Accounts
receivable
|
|
|
150,931
|
|
|
|
150,369
|
|
Inventories
|
|
|
38,326
|
|
|
|
40,181
|
|
Advertising fund
assets, restricted
|
|
|
105,078
|
|
|
|
118,377
|
|
Prepaid expenses and
other
|
|
|
16,541
|
|
|
|
17,635
|
|
Total current
assets
|
|
|
528,636
|
|
|
|
495,873
|
|
Property, plant and
equipment, net
|
|
|
137,824
|
|
|
|
138,534
|
|
Other
assets
|
|
|
76,002
|
|
|
|
81,888
|
|
Total
assets
|
|
$
|
742,462
|
|
|
$
|
716,295
|
|
Liabilities and
stockholders' deficit
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Current portion of
long-term debt
|
|
$
|
300
|
|
|
$
|
38,887
|
|
Accounts
payable
|
|
|
110,245
|
|
|
|
111,510
|
|
Dividends
payable
|
|
|
22,485
|
|
|
|
619
|
|
Advertising fund
liabilities
|
|
|
105,078
|
|
|
|
118,377
|
|
Other accrued
liabilities
|
|
|
131,332
|
|
|
|
134,305
|
|
Total current
liabilities
|
|
|
369,440
|
|
|
|
403,698
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
|
|
Long-term debt, less
current portion
|
|
|
2,179,258
|
|
|
|
2,148,990
|
|
Other accrued
liabilities
|
|
|
47,455
|
|
|
|
46,750
|
|
Total long-term
liabilities
|
|
|
2,226,713
|
|
|
|
2,195,740
|
|
Total stockholders'
deficit
|
|
|
(1,853,691)
|
|
|
|
(1,883,143)
|
|
Total liabilities and
stockholders' deficit
|
|
$
|
742,462
|
|
|
$
|
716,295
|
|
Domino's Pizza,
Inc. and Subsidiaries
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
|
|
Fiscal Quarter
Ended
|
|
|
|
March
26,
2017
|
|
|
March
27,
2016
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
62,469
|
|
|
$
|
45,451
|
|
Adjustments to
reconcile net income to net cash provided by
operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
9,498
|
|
|
|
8,221
|
|
Losses on
sale/disposal of assets
|
|
|
182
|
|
|
|
86
|
|
Amortization of debt
issuance costs
|
|
|
1,400
|
|
|
|
1,660
|
|
Provision for deferred
income taxes
|
|
|
6,232
|
|
|
|
4,397
|
|
Non-cash compensation
expense
|
|
|
5,220
|
|
|
|
4,898
|
|
Other
|
|
|
(52)
|
|
|
|
135
|
|
Excess tax benefits
from equity-based compensation
|
|
|
(6,498)
|
|
|
|
(31,896)
|
|
Changes in operating
assets and liabilities
|
|
|
7,242
|
|
|
|
(15,804)
|
|
Net cash provided by
operating activities
|
|
|
85,693
|
|
|
|
17,148
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(12,444)
|
|
|
|
(10,486)
|
|
Proceeds from sale of
assets
|
|
|
779
|
|
|
|
1,742
|
|
Changes in restricted
cash
|
|
|
(39,170)
|
|
|
|
26,817
|
|
Other
|
|
|
544
|
|
|
|
(587)
|
|
Net cash provided by
(used in) investing activities
|
|
|
(50,291)
|
|
|
|
17,486
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Repayments of
long-term debt and capital lease obligations
|
|
|
(9,718)
|
|
|
|
(27,459)
|
|
Proceeds from exercise
of stock options
|
|
|
1,433
|
|
|
|
9,182
|
|
Excess tax benefits
from equity-based compensation
|
|
|
—
|
|
|
|
31,896
|
|
Purchases of common
stock
|
|
|
(12,721)
|
|
|
|
—
|
|
Tax payments for
restricted stock upon vesting
|
|
|
(4,896)
|
|
|
|
(3,036)
|
|
Payments of common
stock dividends and equivalents
|
|
|
(253)
|
|
|
|
(164)
|
|
Net cash provided by
(used in) financing activities
|
|
|
(26,155)
|
|
|
|
10,419
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
|
32
|
|
|
|
(250)
|
|
Change in cash and
cash equivalents
|
|
|
9,279
|
|
|
|
44,803
|
|
Cash and cash
equivalents, at beginning of period
|
|
|
42,815
|
|
|
|
133,449
|
|
Cash and cash
equivalents, at end of period
|
|
$
|
52,094
|
|
|
$
|
178,252
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/dominos-pizza-announces-first-quarter-2017-financial-results-300446890.html
SOURCE Domino's Pizza, Inc.