ANN ARBOR, Mich., Oct. 8, 2019 /PRNewswire/ -- Domino's Pizza,
Inc. (NYSE: DPZ), the largest pizza company in the world based
on global retail sales, announced results for the third quarter,
comprised of growth in global retail sales and earnings per share.
Global retail sales increased 5.8% in the third quarter, or 7.5%
without the negative impact of changes in foreign currency exchange
rates. U.S. same store sales grew 2.4% during the quarter versus
the prior year quarter, continuing the positive sales momentum in
the Company's U.S. business. The international division also posted
positive results, with same store sales growth of 1.7% during the
quarter. The third quarter marked the 103rd consecutive
quarter of international same store sales growth and the
34th consecutive quarter of U.S. same store sales
growth. The Company had third quarter global net store growth of
214 stores, comprised of 40 net new U.S. stores and 174 net new
international stores.
Diluted EPS was $2.05 for the
third quarter of 2019, up 5.1% over the prior year quarter,
primarily resulting from higher income from operations, offset in
part by a higher effective tax rate.
During the third quarter of 2019, the Company repurchased and
retired 384,338 shares of its common stock under its Board of
Directors-approved share repurchase program for approximately
$93.7 million, or an average price of
$243.79 per share. On October 4, 2019, the Company's Board of Directors
authorized a new share repurchase program to repurchase up to
$1.0 billion of the Company's common
stock.
On October 4, 2019, the Company's
Board of Directors declared a $0.65
per share quarterly dividend for shareholders of record as of
December 13, 2019 to be paid on
December 27, 2019.
"It was a good quarter for Domino's, as we continue to lean on
our fundamental strength against a unique competitive environment,"
said Ritch Allison, Domino's Chief
Executive Officer. "Strong unit growth and positive comps yielded a
solid and balanced quarter of retail sales growth across both the
U.S. and international businesses. We remain steadfastly focused on
driving profitable growth for the Domino's system, and most
importantly, for our franchisees."
Third Quarter 2019
Highlights:
|
|
(dollars in
millions, except per share data)
|
|
Third
Quarter
of
2019
|
|
|
Third
Quarter
of
2018
|
|
|
Three
Fiscal
Quarters
of
2019
|
|
|
Three
Fiscal
Quarters
Of
2018
|
|
Net
income
|
|
$
|
86.4
|
|
|
$
|
84.1
|
|
|
$
|
271.4
|
|
|
$
|
250.3
|
|
Weighted average
diluted shares
|
|
|
42,040,291
|
|
|
|
43,067,191
|
|
|
|
42,158,447
|
|
|
|
43,675,627
|
|
Diluted
EPS
|
|
$
|
2.05
|
|
|
$
|
1.95
|
|
|
$
|
6.44
|
|
|
$
|
5.73
|
|
Items affecting
comparability (1)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.07
|
|
Diluted EPS, as
adjusted (1)
|
|
$
|
2.05
|
|
|
$
|
1.95
|
|
|
$
|
6.44
|
|
|
$
|
5.80
|
|
|
(1) Refer to the
Financial Results Comparability section on page three and
the Comments on Regulation G section on pages four and
five
for additional details.
|
- Revenues increased $34.8
million, or 4.4%, in the third quarter of 2019. This
increase was primarily due to an increase in worldwide store counts
during the trailing four quarters as well as U.S. and international
same store sales growth, resulting in higher supply chain and
global franchise revenues. The increase in international franchise
revenues was partially offset by the negative impact of changes in
foreign currency exchange rates. These increases in revenues were
also partially offset by lower U.S. Company-owned store revenues
resulting from the previously disclosed sale of 59 Company-owned
stores to certain of our existing U.S. franchisees during the
second quarter of 2019.
- Net Income increased $2.3
million, or 2.7%, in the third quarter of 2019. This
increase was primarily driven by higher royalty revenues from U.S.
and international franchised stores and higher supply chain
volumes. The increase in net income was partially offset by lower
tax benefits from equity-based compensation as compared to the
prior year quarter. A pre-tax gain of $5.9
million recognized from the sale of 12 Company-owned stores
in the third quarter of 2018 also partially offset the increase in
net income.
- Diluted EPS was $2.05 in
the third quarter of 2019 versus $1.95 in the third quarter of 2018, which
represents an increase of 5.1%. The increase in diluted EPS was
driven by higher net income, as well as lower diluted share count,
primarily as a result of the Company's share repurchases made
during the trailing four quarters. (See the Financial Results
Comparability section on page three for additional
details.)
The table below
outlines certain statistical measures utilized by the Company to
analyze its performance. Refer to the Comments on
Regulation G section on pages four and five for additional
details.
|
|
|
|
Third
Quarter
of
2019
|
|
|
Third
Quarter
of
2018
|
|
Same store sales
growth: (versus prior year period)
|
|
|
|
|
|
|
|
|
U.S. Company-owned
stores (1)
|
|
|
+ 1.7
|
%
|
|
|
+ 4.9
|
%
|
U.S. franchise stores
(1)
|
|
|
+ 2.5
|
%
|
|
|
+ 6.4
|
%
|
U.S. stores
|
|
|
+ 2.4
|
%
|
|
|
+ 6.3
|
%
|
International stores
(excluding foreign currency impact)
|
|
|
+ 1.7
|
%
|
|
|
+ 3.3
|
%
|
|
|
|
|
|
|
|
|
|
Global retail
sales growth: (versus prior year period)
|
|
|
|
|
|
|
|
|
U.S. stores
|
|
|
+ 6.0
|
%
|
|
|
+11.0
|
%
|
International
stores
|
|
|
+ 5.7
|
%
|
|
|
+5.7
|
%
|
Total
|
|
|
+ 5.8
|
%
|
|
|
+8.3
|
%
|
|
|
|
|
|
|
|
|
|
Global retail
sales growth: (versus prior year period,
excluding foreign
currency impact)
|
|
|
|
|
|
|
|
|
U.S. stores
|
|
|
+ 6.0
|
%
|
|
|
+11.0
|
%
|
International
stores
|
|
|
+ 9.1
|
%
|
|
|
+9.9
|
%
|
Total
|
|
|
+ 7.5
|
%
|
|
|
+10.4
|
%
|
|
(1) As previously
disclosed, during the second quarter of 2019, the Company sold 59
U.S. Company-owned stores to certain of its existing
U.S. franchisees. The same store sales growth for these stores is
reflected in U.S. franchise stores in the third quarter of
2019.
|
|
|
U.S.
Company-
owned
Stores
|
|
|
U.S.
Franchise
Stores
|
|
|
Total
U.S.
Stores
|
|
|
International
Stores
|
|
|
Total
|
|
Store
counts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Store count at June
16, 2019
|
|
|
333
|
|
|
|
5,612
|
|
|
|
5,945
|
|
|
|
10,369
|
|
|
|
16,314
|
|
Openings
|
|
|
—
|
|
|
|
43
|
|
|
|
43
|
|
|
|
203
|
|
|
|
246
|
|
Closings
|
|
|
—
|
|
|
|
(3)
|
|
|
|
(3)
|
|
|
|
(29)
|
|
|
|
(32)
|
|
Store count at
September 8, 2019
|
|
|
333
|
|
|
|
5,652
|
|
|
|
5,985
|
|
|
|
10,543
|
|
|
|
16,528
|
|
Third quarter 2019 net
store growth
|
|
|
—
|
|
|
|
40
|
|
|
|
40
|
|
|
|
174
|
|
|
|
214
|
|
Trailing four quarters
net store growth (2)
|
|
|
6
|
|
|
|
228
|
|
|
|
234
|
|
|
|
940
|
|
|
|
1,174
|
|
|
(2) Trailing four
quarters net store growth does not include the effect of transfers.
In the second quarter of 2019, the Company sold 59 U.S.
Company-owned stores to certain of its existing U.S.
franchisees.
|
The Company announced a new long-range outlook for certain
business metrics. This new two- to three-year outlook replaces the
Company's prior three- to five-year outlook.
Updated
Outlook:
|
|
Business
Metrics
|
|
New
2-3 Year
Outlook
|
Prior
3-5 Year
Outlook
|
|
|
Global retail sales
growth
U.S. same store sales
growth
International same
store sales growth
Global net store
growth
|
|
|
7-10%
2-5%
1-4%
6-8%
|
8-12% 3-6% 3-6% 6-8%
|
|
|
|
|
|
|
|
|
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 third quarter 2019 financial results. The
call can be accessed by dialing (866) 470-5929 (U.S./Canada) or (409) 217-8311 (International). Ask
for the Domino's Pizza conference call, ID 7185367. The call will
also be webcast, and will be archived for one year, on
biz.dominos.com.
Financial Results Comparability
Financial results for the Company can be significantly affected
by changes in our capital structure, our effective tax rate,
adoption of new accounting guidance, store portfolio changes and
other factors. Our recapitalization transactions have historically
resulted in higher net interest expense due primarily to higher net
debt levels, as well as the amortization of debt issuance costs
associated with the repayment of certain of the Company's notes.
Additionally, repurchases and retirements of the Company's common
stock pursuant to our existing share repurchase program have
reduced our weighted average diluted shares outstanding.
In addition to the above factors impacting comparability, the
table below presents certain other items that affect comparability
between 2019 and 2018 financial results. Management believes that
including such information is critical to an understanding of the
Company's financial results for the three fiscal quarters of 2019
as compared to the same periods in 2018 (refer to the Comments
on Regulation G section on pages four and five for additional
details).
|
|
Three Fiscal
Quarters
|
|
(in thousands,
except per share data)
|
|
Pre-tax
|
|
|
After-tax
|
|
|
Diluted
EPS
Impact
|
|
2018 items
affecting comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
Recapitalization
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses (1)
|
|
$
|
(532)
|
|
|
$
|
(411)
|
|
|
$
|
(0.01)
|
|
Interest expense
(2)
|
|
|
(142)
|
|
|
|
(110)
|
|
|
|
—
|
|
Debt issuance cost
write-off (3)
|
|
|
(3,164)
|
|
|
|
(2,446)
|
|
|
|
(0.06)
|
|
Total of 2018
items
|
|
$
|
(3,838)
|
|
|
$
|
(2,967)
|
|
|
$
|
(0.07)
|
|
|
(1) Represents legal,
professional and administrative fees incurred in connection with
the Company's 2018 recapitalization transaction in which certain of
the Company's subsidiaries issued notes pursuant to an asset-backed
securitization (the "2018 Recapitalization"). The notes consisted
of $425.0 million of Series 2018-1 4.116% Fixed Rate Senior Secured
Notes, Class A-2-I and $400.0 million of Series 2018-1 4.328% Fixed
Rate Senior Secured Notes, Class A-2-II (collectively, the "2018
Notes").
|
(2) Represents
interest expense the Company incurred on its 2015 five-year fixed
rate notes subsequent to the closing of the 2018 Recapitalization
but prior to the repayment of the 2015 five-year fixed rate notes,
resulting in the payment of interest on both the 2015 five-year
fixed rate notes and 2018 Notes for a short period of
time.
|
(3) Represents the
write-off of debt issuance costs related to the extinguishment of
the 2015 five-year fixed rate notes in connection with the 2018
Recapitalization.
|
Share Repurchases
During the third quarter of 2019, the Company repurchased and
retired 384,338 shares of its common stock under its Board of
Directors-approved share repurchase program for approximately
$93.7 million, or an average price of
$243.79 per share. As of September 8, 2019, the end of the third quarter,
the Company's total remaining authorized amount for share
repurchases was approximately $53.6
million.
On October 4, 2019, the Company's
Board of Directors authorized a new share repurchase program to
repurchase up to $1.0 billion of the
Company's common stock. This repurchase program replaces the
remaining availability of approximately $53.6 million under the Company's existing
$750.0 million share repurchase
program.
Liquidity
As of September 8, 2019, the
Company had approximately:
- $66.7 million of unrestricted
cash and cash equivalents;
- $3.44 billion in total debt;
and
- $126.9 million of available
borrowings under its $175.0 million
variable funding notes, net of letters of credit issued of
$48.1 million.
Net cash provided by operating activities was $324.6 million during the three fiscal quarters
of 2019. The Company invested $42.7
million in capital expenditures during the three fiscal
quarters of 2019. Free cash flow, as reconciled below to net cash
provided by operating activities, as determined under accounting
principles generally accepted in the
United States of America ("GAAP"), was approximately
$281.9 million during the three
fiscal quarters of 2019 (refer to Comments on Regulation G
section below for additional details).
(in
thousands)
|
|
Three
Fiscal
Quarters
of
2019
|
|
Net cash provided by
operating activities
|
|
$
|
324,596
|
|
Capital
expenditures
|
|
|
(42,676)
|
|
Free cash
flow
|
|
$
|
281,920
|
|
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, including free cash flow
metrics and measures related to items affecting comparability
between fiscal quarters and other fiscal periods. 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 and
advertising fees 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. Global retail sales growth is calculated as the change of
U.S. Dollar global retail sales against the comparable period of
the prior year. Global retail sales growth, excluding foreign
currency impact is calculated as the change of international local
currency global retail sales against the comparable period of the
prior year.
The Company uses "Diluted EPS, as adjusted," which is
calculated as reported diluted EPS, adjusted for the items that
affect comparability to the prior year periods. The most directly
comparable financial measure calculated and presented in accordance
with GAAP is diluted EPS. The Company believes that the diluted
EPS, as adjusted, measure is important and useful to investors and
other interested persons and that such persons benefit from having
a consistent basis for comparison between reporting periods. The
Company uses diluted EPS, as adjusted, to internally evaluate
operating performance, to evaluate itself against its peers and in
long-range planning. Additionally, the Company believes that
analysts covering the Company's stock performance generally
eliminate these items affecting comparability when preparing their
financial models, when determining their published EPS estimates
and when benchmarking the Company against its competitors.
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 U.S. 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
net cash provided by operating activities, 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 or paying dividends.
About Domino's Pizza®
Founded in 1960, Domino's Pizza is the largest pizza company in
the world based on retail sales, with a significant business in
both delivery and carryout pizza. It ranks among the world's top
public restaurant brands with a global enterprise of more than
16,500 stores in over 85 markets. Domino's had global retail sales
of over $13.5 billion in 2018, with
nearly $6.6 billion in the U.S. and
more than $6.9 billion
internationally. In the third quarter of 2019, Domino's had global
retail sales of over $3.2 billion,
with over $1.6 billion in the U.S.
and over $1.6 billion
internationally. Its system is comprised of independent franchise
owners who accounted for 98% of Domino's stores as of the third
quarter of 2019. Emphasis on technology innovation helped Domino's
achieve more than half of all global retail sales in 2018 from
digital channels. In the U.S., Domino's generates over 65% of sales
via digital channels and has developed several innovative ordering
platforms, including those developed for Google Home, Facebook
Messenger, Apple Watch, Amazon Echo and Twitter – as well as
Domino's HotSpots®, an ordering platform featuring over 200,000
unique, non-traditional delivery locations. In late 2017, Domino's
began an industry-first test of self-driving vehicle delivery, and
in June 2019 announced a partnership
with Nuro, furthering its exploration and testing of autonomous
pizza delivery.
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 news, announcements, earnings releases, investor
presentations and conference webcasts.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995:
This press release contains various forward-looking statements
about the Company within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Act") that are based on current
management expectations that involve substantial risks and
uncertainties which could cause actual results to differ materially
from the results expressed in, or implied by, these forward-looking
statements. The following cautionary statements are being made
pursuant to the provisions of the Act and with the intention of
obtaining the benefits of the "safe harbor" provisions of the Act.
You can identify forward-looking statements by the use of words
such as "anticipates," "believes," "could," "should," "estimates,"
"expects," "intends," "may," "will," "plans," "predicts,"
"projects," "seeks," "approximately," "potential," "outlook" and
similar terms and phrases that concern our strategy, plans or
intentions, including references to assumptions. These
forward-looking statements address various matters including
information concerning future results of operations and business
strategy, our anticipated profitability, estimates in same store
sales growth, the growth of our U.S. and 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. While we
believe these expectations and projections are based on reasonable
assumptions, such forward-looking statements are inherently subject
to risks, uncertainties and assumptions. Important factors that
could cause actual results to differ materially from our
expectations are more fully described in our filings with the
Securities and Exchange Commission, including under the section
headed "Risk Factors" in our Annual Report on Form 10-K. Actual
results may differ materially from those expressed or implied in
the forward-looking statements as a result of various factors,
including but not limited to: our substantial increased
indebtedness as a result of our recapitalization transactions and
our ability to incur additional indebtedness or refinance or
renegotiate key terms of that indebtedness in the future; the
impact a downgrade in our credit rating may have on our business,
financial condition and results of operations; our future financial
performance and our ability to pay principal and interest on our
indebtedness; the effectiveness of our advertising, operations and
promotional initiatives; the strength of our brand, including our
ability to compete in the U.S. and internationally in our intensely
competitive industry; the impact of social media and other
consumer-oriented technologies on our business, brand and
reputation; new product, digital ordering and concept developments
by us, and other food-industry competitors; our ability to maintain
good relationships with our franchisees and their ongoing level of
profitability; our ability to successfully implement cost-saving
strategies; our ability and that of our franchisees to successfully
operate in the current and future credit environment; changes in
the level of consumer spending given general economic conditions,
including interest rates, energy prices and consumer confidence;
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), fuel and other commodity costs, labor, utilities,
insurance, employee benefits and other operating costs; the impact
that widespread illness or general health concerns, severe weather
conditions and natural disasters may have on our business and the
economies of the countries where we operate; changes in foreign
currency exchange rates; our ability to retain or replace our
executive officers and other key members of management and our
ability to adequately staff our stores and supply chain centers
with qualified personnel; our ability to find and/or retain
suitable real estate for our stores and supply chain centers;
changes in government legislation and regulations, including
changes in laws and regulations regarding information privacy and
consumer protection; adverse legal judgments or settlements;
food-borne illness or contamination of products; data breaches,
power loss, technological failures, user error or other cyber
risks; the effect of war, terrorism or catastrophic events; our
ability to pay dividends and repurchase shares; changes in consumer
preferences, spending and traffic patterns and demographic trends;
changes in accounting policies; and adequacy of our insurance
coverage. In light of these risks, uncertainties and assumptions,
the forward-looking events discussed in this press release might
not occur. All forward-looking statements speak only as of the date
of this press release and should be evaluated with an understanding
of their inherent uncertainty. Except as required under federal
securities laws and the rules and regulations of the Securities and
Exchange Commission, or other applicable law, we will not
undertake, and specifically disclaim, any obligation to publicly
update or revise any forward-looking statements to reflect events
or circumstances arising after the date of this press release,
whether as a result of new information, future events or otherwise.
You are cautioned not to place undue reliance on the
forward-looking statements included in this press release or that
may be made elsewhere from time to time by, or on behalf of, us.
All forward-looking statements attributable to us are expressly
qualified by these cautionary statements.
TABLES TO FOLLOW
Domino's Pizza,
Inc. and Subsidiaries Condensed Consolidated Statements
of Income (Unaudited)
|
|
|
|
Fiscal Quarter
Ended
|
|
|
|
September
8,
2019
|
|
|
%
of
Total
Revenues
|
|
|
September
9,
2018
|
|
|
%
of
Total
Revenues
|
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Company-owned
stores
|
|
$
|
94,575
|
|
|
|
|
|
|
$
|
118,540
|
|
|
|
|
|
U.S. franchise
royalties and fees
|
|
|
97,047
|
|
|
|
|
|
|
|
89,427
|
|
|
|
|
|
Supply
chain
|
|
|
485,110
|
|
|
|
|
|
|
|
445,096
|
|
|
|
|
|
International
franchise royalties and fees
|
|
|
54,586
|
|
|
|
|
|
|
|
50,424
|
|
|
|
|
|
U.S. franchise
advertising
|
|
|
89,494
|
|
|
|
|
|
|
|
82,478
|
|
|
|
|
|
Total
revenues
|
|
|
820,812
|
|
|
|
100.0
|
%
|
|
|
785,965
|
|
|
|
100.0
|
%
|
Cost of
sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Company-owned
stores
|
|
|
71,610
|
|
|
|
|
|
|
|
92,998
|
|
|
|
|
|
Supply
chain
|
|
|
432,951
|
|
|
|
|
|
|
|
397,688
|
|
|
|
|
|
Total cost of
sales
|
|
|
504,561
|
|
|
|
61.5
|
%
|
|
|
490,686
|
|
|
|
62.4
|
%
|
Operating
margin
|
|
|
316,251
|
|
|
|
38.5
|
%
|
|
|
295,279
|
|
|
|
37.6
|
%
|
General and
administrative
|
|
|
83,728
|
|
|
|
10.2
|
%
|
|
|
80,369
|
|
|
|
10.2
|
%
|
U.S. franchise
advertising
|
|
|
89,494
|
|
|
|
10.9
|
%
|
|
|
82,478
|
|
|
|
10.6
|
%
|
Income from
operations
|
|
|
143,029
|
|
|
|
17.4
|
%
|
|
|
132,432
|
|
|
|
16.8
|
%
|
Interest expense,
net
|
|
|
(32,784)
|
|
|
|
(4.0)
|
%
|
|
|
(33,184)
|
|
|
|
(4.2)
|
%
|
Income before
provision for income taxes
|
|
|
110,245
|
|
|
|
13.4
|
%
|
|
|
99,248
|
|
|
|
12.6
|
%
|
Provision for income
taxes
|
|
|
23,872
|
|
|
|
2.9
|
%
|
|
|
15,153
|
|
|
|
1.9
|
%
|
Net income
|
|
$
|
86,373
|
|
|
|
10.5
|
%
|
|
$
|
84,095
|
|
|
|
10.7
|
%
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock –
diluted
|
|
$
|
2.05
|
|
|
|
|
|
|
$
|
1.95
|
|
|
|
|
|
Domino's Pizza,
Inc. and Subsidiaries Condensed Consolidated Statements
of Income (Unaudited)
|
|
|
|
Three Fiscal
Quarters Ended
|
|
|
|
September
8,
2019
|
|
|
%
of
Total
Revenues
|
|
|
September
9,
2018
|
|
|
%
of
Total
Revenues
|
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Company-owned
stores
|
|
$
|
323,026
|
|
|
|
|
|
|
$
|
358,521
|
|
|
|
|
|
U.S. franchise
royalties and fees
|
|
|
289,349
|
|
|
|
|
|
|
|
266,335
|
|
|
|
|
|
Supply
chain
|
|
|
1,424,787
|
|
|
|
|
|
|
|
1,326,076
|
|
|
|
|
|
International
franchise royalties and fees
|
|
|
164,145
|
|
|
|
|
|
|
|
154,182
|
|
|
|
|
|
U.S. franchise
advertising
|
|
|
267,115
|
|
|
|
|
|
|
|
245,618
|
|
|
|
|
|
Total
revenues
|
|
|
2,468,422
|
|
|
|
100.0
|
%
|
|
|
2,350,732
|
|
|
|
100.0
|
%
|
Cost of
sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Company-owned
stores
|
|
|
247,516
|
|
|
|
|
|
|
|
278,012
|
|
|
|
|
|
Supply
chain
|
|
|
1,265,695
|
|
|
|
|
|
|
|
1,183,996
|
|
|
|
|
|
Total cost of
sales
|
|
|
1,513,211
|
|
|
|
61.3
|
%
|
|
|
1,462,008
|
|
|
|
62.2
|
%
|
Operating
margin
|
|
|
955,211
|
|
|
|
38.7
|
%
|
|
|
888,724
|
|
|
|
37.8
|
%
|
General and
administrative
|
|
|
262,640
|
|
|
|
10.7
|
%
|
|
|
251,053
|
|
|
|
10.7
|
%
|
U.S. franchise
advertising
|
|
|
267,115
|
|
|
|
10.8
|
%
|
|
|
245,618
|
|
|
|
10.4
|
%
|
Income from
operations
|
|
|
425,456
|
|
|
|
17.2
|
%
|
|
|
392,053
|
|
|
|
16.7
|
%
|
Interest expense,
net
|
|
|
(100,089)
|
|
|
|
(4.0)
|
%
|
|
|
(97,938)
|
|
|
|
(4.2)
|
%
|
Income before
provision for income taxes
|
|
|
325,367
|
|
|
|
13.2
|
%
|
|
|
294,115
|
|
|
|
12.5
|
%
|
Provision for income
taxes
|
|
|
53,985
|
|
|
|
2.2
|
%
|
|
|
43,785
|
|
|
|
1.9
|
%
|
Net income
|
|
$
|
271,382
|
|
|
|
11.0
|
%
|
|
$
|
250,330
|
|
|
|
10.6
|
%
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock –
diluted
|
|
$
|
6.44
|
|
|
|
|
|
|
$
|
5.73
|
|
|
|
|
|
Domino's Pizza,
Inc. and Subsidiaries Condensed Consolidated Balance
Sheets (Unaudited)
|
|
|
|
September
8,
2019
|
|
|
December
30,
2018
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
66,706
|
|
|
$
|
25,438
|
|
Restricted cash and
cash equivalents
|
|
|
177,292
|
|
|
|
166,993
|
|
Accounts receivable,
net
|
|
|
185,403
|
|
|
|
190,091
|
|
Inventories
|
|
|
51,010
|
|
|
|
45,975
|
|
Prepaid expenses and
other
|
|
|
15,438
|
|
|
|
25,710
|
|
Advertising fund
assets, restricted
|
|
|
109,490
|
|
|
|
112,744
|
|
Total current
assets
|
|
|
605,339
|
|
|
|
566,951
|
|
Property, plant and
equipment, net
|
|
|
216,210
|
|
|
|
234,939
|
|
Operating lease
right-of-use assets
|
|
|
227,495
|
|
|
|
—
|
|
Other
assets
|
|
|
111,228
|
|
|
|
105,495
|
|
Total
assets
|
|
$
|
1,160,272
|
|
|
$
|
907,385
|
|
Liabilities and
stockholders' deficit
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Current portion of
long-term debt
|
|
$
|
35,935
|
|
|
$
|
35,893
|
|
Accounts
payable
|
|
|
95,657
|
|
|
|
92,546
|
|
Operating lease
liabilities
|
|
|
32,203
|
|
|
|
—
|
|
Advertising fund
liabilities
|
|
|
104,945
|
|
|
|
107,150
|
|
Other accrued
liabilities
|
|
|
152,505
|
|
|
|
144,154
|
|
Total current
liabilities
|
|
|
421,245
|
|
|
|
379,743
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
|
|
Long-term debt, less
current portion
|
|
|
3,407,101
|
|
|
|
3,495,691
|
|
Operating lease
liabilities
|
|
|
202,128
|
|
|
|
—
|
|
Other accrued
liabilities
|
|
|
65,447
|
|
|
|
71,872
|
|
Total long-term
liabilities
|
|
|
3,674,676
|
|
|
|
3,567,563
|
|
Total stockholders'
deficit
|
|
|
(2,935,649)
|
|
|
|
(3,039,921)
|
|
Total liabilities and
stockholders' deficit
|
|
$
|
1,160,272
|
|
|
$
|
907,385
|
|
Domino's Pizza,
Inc. and Subsidiaries Condensed Consolidated Statements
of Cash Flows (Unaudited)
|
|
|
|
Three Fiscal
Quarters Ended
|
|
|
|
September
8,
2019
|
|
|
September
9,
2018
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
271,382
|
|
|
$
|
250,330
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
40,982
|
|
|
|
35,770
|
|
Loss (gain) on
sale/disposal of assets
|
|
|
3,141
|
|
|
|
(5,187)
|
|
Amortization of debt
issuance costs
|
|
|
3,288
|
|
|
|
6,581
|
|
Provision for deferred
income taxes
|
|
|
1,627
|
|
|
|
1,737
|
|
Non-cash compensation
expense
|
|
|
13,269
|
|
|
|
15,660
|
|
Excess tax benefits
from equity-based compensation
|
|
|
(19,670)
|
|
|
|
(22,722)
|
|
Other
|
|
|
774
|
|
|
|
356
|
|
Changes in operating
assets and liabilities
|
|
|
16,214
|
|
|
|
(25,580)
|
|
Changes in advertising
fund assets and liabilities, restricted
|
|
|
(6,411)
|
|
|
|
5,574
|
|
Net cash provided by
operating activities
|
|
|
324,596
|
|
|
|
262,519
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(42,676)
|
|
|
|
(65,074)
|
|
Proceeds from sale of
assets
|
|
|
9,738
|
|
|
|
8,213
|
|
Maturities of
advertising fund investments, restricted
|
|
|
30,152
|
|
|
|
44,007
|
|
Purchases of
advertising fund investments, restricted
|
|
|
—
|
|
|
|
(50,152)
|
|
Other
|
|
|
(351)
|
|
|
|
(2,357)
|
|
Net cash used in
investing activities
|
|
|
(3,137)
|
|
|
|
(65,363)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from issuance
of long-term debt
|
|
|
—
|
|
|
|
905,000
|
|
Repayments of
long-term debt and finance lease obligations
|
|
|
(91,860)
|
|
|
|
(595,067)
|
|
Proceeds from exercise
of stock options
|
|
|
10,122
|
|
|
|
8,967
|
|
Purchases of common
stock
|
|
|
(105,149)
|
|
|
|
(429,190)
|
|
Tax payments for
restricted stock upon vesting
|
|
|
(5,820)
|
|
|
|
(6,849)
|
|
Payments of common
stock dividends and equivalents
|
|
|
(53,598)
|
|
|
|
(46,720)
|
|
Cash paid for
financing costs
|
|
|
—
|
|
|
|
(8,207)
|
|
Net cash used in
financing activities
|
|
|
(246,305)
|
|
|
|
(172,066)
|
|
Effect of exchange
rate changes on cash
|
|
|
139
|
|
|
|
(235)
|
|
Change in cash and
cash equivalents, restricted cash and cash equivalents
|
|
|
75,293
|
|
|
|
24,855
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period
|
|
|
25,438
|
|
|
|
35,768
|
|
Restricted cash and
cash equivalents, beginning of period
|
|
|
166,993
|
|
|
|
191,762
|
|
Cash and cash
equivalents included in advertising fund assets,
restricted,
beginning of
period
|
|
|
44,988
|
|
|
|
27,316
|
|
Cash and cash
equivalents, restricted cash and cash equivalents and
cash and cash
equivalents included in advertising fund assets,
restricted,
beginning of
period
|
|
|
237,419
|
|
|
|
254,846
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, end of period
|
|
|
66,706
|
|
|
|
84,600
|
|
Restricted cash and
cash equivalents, end of period
|
|
|
177,292
|
|
|
|
168,170
|
|
Cash and cash
equivalents included in advertising fund assets,
restricted,
end of
period
|
|
|
68,714
|
|
|
|
26,931
|
|
Cash and cash
equivalents, restricted cash and cash equivalents and cash
and
cash equivalents
included in advertising fund assets, restricted,
end of
period
|
|
$
|
312,712
|
|
|
$
|
279,701
|
|
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SOURCE Domino's Pizza, Inc.