ANN ARBOR, Mich., Feb. 20, 2020 /PRNewswire/ -- Domino's
Pizza, Inc. (NYSE: DPZ), the largest pizza company in the world
based on global retail sales, announced results for the fourth
quarter and fiscal 2019, comprised of growth in global retail
sales, same store sales and earnings per share. Global retail sales
increased 6.9% in the fourth quarter, or 7.6% excluding foreign
currency impact. Global retail sales increased 5.7% in fiscal 2019,
or 8.0% excluding foreign currency impact. U.S. same store sales
grew 3.4% during the quarter and 3.2% for the full year, continuing
the positive sales momentum in the Company's U.S. stores business.
The international business also posted positive results, with same
store sales growth of 1.7% during the quarter and 1.9% for the full
year. The fourth quarter marked the 104th consecutive
quarter of international same store sales growth and the
35th consecutive quarter of U.S. same store sales
growth.
The Company had fourth quarter global net store growth of 492
stores, comprised of 141 net new U.S. stores and 351 net new
international stores. In fiscal 2019, the Company opened 1,106 net
new stores, comprised of 250 net new U.S. stores and 856 net new
international stores.
Fourth quarter diluted EPS was $3.12, up 19.1% over the prior year quarter.
Fourth quarter diluted EPS, as adjusted, was $3.13, up 19.5% over the prior year quarter.
Fiscal 2019 diluted EPS was $9.56, up
14.5% over the prior year. Fiscal 2019 diluted EPS, as adjusted,
was $9.57, up 13.7% over the prior
year diluted EPS, as adjusted, of $8.42. (See the Financial Results
Comparability section on page four and the Comments on
Regulation G section on page five.)
In connection with the Company's November
2019 recapitalization transaction discussed below, certain
of the Company's subsidiaries borrowed $675.0 million and used a portion of the proceeds
to pre-fund a portion of the principal and interest payable on the
2019 Notes, pay transaction fees and expenses and repurchase and
retire shares of the Company's common stock. During the fourth
quarter of 2019, the Company repurchased and retired 2,063,378
shares of its common stock in open market repurchases under its
Board of Directors-approved share repurchase program for
approximately $593.9 million.
On February 19, 2020, the Board of
Directors declared a $0.78 per share
quarterly dividend for shareholders of record as of March 13, 2020 to be paid on March 30, 2020. This represents an increase of
20.0% over the previous quarterly dividend amount.
"I am extremely proud of the accomplishments of our franchisees
and our team members from around the world, not just in the fourth
quarter, but throughout all of 2019," said Ritch Allison, Domino's Chief Executive
Officer. "Our relentless focus on our customers, our
franchisees and the long-term growth and profitability of the
Domino's business model helped us deliver a solid 2019 in the face
of unique competitive headwinds."
Fourth Quarter and Fiscal 2019 Highlights:
(dollars in
millions, except per share data)
|
|
Fourth
Quarter
of
2019
|
|
|
Fourth
Quarter
of
2018
|
|
|
Fiscal
2019
|
|
|
Fiscal
2018
|
|
Net
income
|
|
$
|
129.3
|
|
|
$
|
111.6
|
|
|
$
|
400.7
|
|
|
$
|
362.0
|
|
Weighted average
diluted shares
|
|
|
41,422,831
|
|
|
|
42,591,025
|
|
|
|
41,923,062
|
|
|
|
43,331,278
|
|
Diluted
EPS
|
|
$
|
3.12
|
|
|
$
|
2.62
|
|
|
$
|
9.56
|
|
|
$
|
8.35
|
|
Items affecting
comparability (1)
|
|
|
0.01
|
|
|
|
—
|
|
|
|
0.01
|
|
|
|
0.07
|
|
Diluted EPS, as
adjusted (1)
|
|
$
|
3.13
|
|
|
$
|
2.62
|
|
|
$
|
9.57
|
|
|
$
|
8.42
|
|
(1)
|
Refer to the
Financial Results Comparability section on page four for
additional details. See also the Comments on Regulation G
section on page five.
|
- Revenues increased $68.2
million, or 6.3%, in the fourth quarter of 2019. This
increase was primarily due to an increase in global store counts
during the trailing four quarters as well as U.S. and international
same store sales growth, resulting in higher supply chain and U.S.
and international 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
U.S. Company-owned stores to certain of our existing U.S.
franchisees during the second quarter of 2019.
- Net Income increased $17.7
million, or 15.8%, in the fourth quarter of 2019. This
increase was primarily driven by higher royalty revenues from U.S.
and international franchised stores and higher supply chain volumes
as well as lower general and administrative expenses. Higher tax
benefits from equity-based compensation as compared to the prior
year quarter also benefited net income. The increase in net income
was partially offset by a higher fourth quarter effective tax rate
and higher net interest expense as a result of the Company's
November 2019 recapitalization
transaction discussed below.
- Diluted EPS was $3.12 for
the fourth quarter versus $2.62 in
the prior year quarter. This represents a $0.50, or 19.1%, increase over the prior year
quarter. Diluted EPS, as adjusted, was $3.13 for the fourth quarter. This represents a
$0.51, or 19.5%, increase over the
prior year quarter. The increase in diluted EPS was driven by
higher net income, as well as lower diluted share count, primarily
resulting from the Company's share repurchases during the trailing
four quarters. (See the Financial Results Comparability
section on page four for additional details. See also the
Comments on Regulation G section on page five.)
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 five for additional
details.
|
|
Fourth
Quarter
of
2019
|
|
|
Fourth
Quarter
of
2018
|
|
|
Fiscal
2019
|
|
|
Fiscal
2018
|
|
Same store sales
growth: (versus prior year period)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Company-owned
stores (1)
|
|
|
+ 3.9
|
%
|
|
|
+ 3.6
|
%
|
|
|
+ 2.8
|
%
|
|
|
+ 4.8
|
%
|
U.S. franchise stores
(1)
|
|
|
+ 3.3
|
%
|
|
|
+ 5.7
|
%
|
|
|
+ 3.2
|
%
|
|
|
+ 6.8
|
%
|
U.S. stores
|
|
|
+ 3.4
|
%
|
|
|
+ 5.6
|
%
|
|
|
+ 3.2
|
%
|
|
|
+ 6.6
|
%
|
International stores
(excluding foreign currency impact)
|
|
|
+ 1.7
|
%
|
|
|
+ 2.4
|
%
|
|
|
+ 1.9
|
%
|
|
|
+ 3.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global retail
sales growth: (versus prior year period)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. stores
|
|
|
+ 6.8
|
%
|
|
|
+10.2
|
%
|
|
|
+6.9
|
%
|
|
|
+11.2
|
%
|
International
stores
|
|
|
+ 7.0
|
%
|
|
|
+3.3
|
%
|
|
|
+ 4.6
|
%
|
|
|
+9.9
|
%
|
Total
|
|
|
+ 6.9
|
%
|
|
|
+6.5
|
%
|
|
|
+ 5.7
|
%
|
|
|
+10.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global retail
sales growth: (versus prior year period,
excluding foreign currency impact)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. stores
|
|
|
+ 6.8
|
%
|
|
|
+10.2
|
%
|
|
|
+6.9
|
%
|
|
|
+11.2
|
%
|
International
stores
|
|
|
+ 8.4
|
%
|
|
|
+8.9
|
%
|
|
|
+ 9.0
|
%
|
|
|
+10.4
|
%
|
Total
|
|
|
+ 7.6
|
%
|
|
|
+9.5
|
%
|
|
|
+8.0
|
%
|
|
|
+10.8
|
%
|
(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 fiscal 2019.
|
|
|
U.S.
Company-
owned
Stores
|
|
|
U.S.
Franchise
Stores
|
|
|
Total
U.S.
Stores
|
|
|
International
Stores
|
|
|
Total
|
|
Store
counts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Store count at
September 8, 2019
|
|
|
333
|
|
|
|
5,652
|
|
|
|
5,985
|
|
|
|
10,543
|
|
|
|
16,528
|
|
Openings
|
|
|
9
|
|
|
|
137
|
|
|
|
146
|
|
|
|
382
|
|
|
|
528
|
|
Closings
|
|
|
—
|
|
|
|
(5)
|
|
|
|
(5)
|
|
|
|
(31)
|
|
|
|
(36)
|
|
Store count at
December 29, 2019
|
|
|
342
|
|
|
|
5,784
|
|
|
|
6,126
|
|
|
|
10,894
|
|
|
|
17,020
|
|
Fourth quarter 2019
net store growth
|
|
|
9
|
|
|
|
132
|
|
|
|
141
|
|
|
|
351
|
|
|
|
492
|
|
Fiscal 2019 net store
growth (1)
|
|
|
11
|
|
|
|
239
|
|
|
|
250
|
|
|
|
856
|
|
|
|
1,106
|
|
(1)
|
Fiscal 2019 net store
growth does not include the effect of transfers. In the second
quarter of 2019, the Company sold a total of 59 U.S. Company-owned
stores to certain of its existing U.S. franchisees.
|
Two- to Three-Year Outlook
The Company does not provide quarterly or annual earnings
guidance or estimates. The following two- to three-year outlook
does not constitute specific earnings guidance. In January 2020, the Company reaffirmed its two- to
three-year outlook as follows:
|
Current
Outlook
|
|
Global retail sales
growth (1)
|
7% – 10%
|
|
U.S. same store sales
growth
|
2% – 5%
|
|
International same
store sales growth (1)
|
1% – 4%
|
|
Global net unit
growth
|
6% – 8%
|
|
|
|
|
(1) Excluding
foreign currency impact.
|
Conference Call Information
The Company will file its Annual Report on Form 10-K this
morning. As previously announced, Domino's Pizza, Inc. will hold a
conference call today at 10
a.m. (Eastern) to review its fourth quarter and fiscal 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 4482204. The call will also be webcast, and will be
archived for one year, on biz.dominos.com.
2019 Recapitalization
On November 19, 2019, the Company
completed a recapitalization transaction (the "2019
Recapitalization") in which certain of the Company's subsidiaries
issued new notes pursuant to an asset-backed securitization. The
new notes consist of $675.0 million
Series 2019-1 3.668% Fixed Rate Senior Secured Notes, Class A-2
with an anticipated term of 10 years (the "2019 Notes"). The
Company also entered into a new $200.0
million variable funding note facility, which replaced its
previous $175.0 million variable
funding note facility.
A portion of the proceeds from the 2019 Recapitalization was
used to pre-fund a portion of the principal and interest payable on
the 2019 Notes, pay transaction fees and expenses and repurchase
and retire shares of the Company's common stock. In connection with
the 2019 Recapitalization, the Company incurred certain expenses
that are outlined in the items affecting comparability table on
page four. Additionally, the Company capitalized $8.1 million of debt issuance costs, which are
being amortized into interest expense over the expected term of the
2019 Notes.
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 pronouncements, 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 share repurchase programs
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 the Company's 2019 and 2018 financial results. Management
believes that including such information is critical to an
understanding of the Company's financial results for the fourth
quarter of 2019 and fiscal 2019 as compared to the same periods in
2018 (See the Comments on Regulation G section on page five
for additional details).
|
|
Fourth Quarter
Ended December 29, 2019
|
|
|
Fiscal Year Ended
December 29, 2019
|
|
(in thousands,
except per share data)
|
|
Pre-tax
|
|
|
After-tax
|
|
|
Diluted
EPS
Impact
|
|
|
Pre-tax
|
|
|
After-tax
|
|
|
Diluted
EPS
Impact
|
|
2019 items
affecting comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recapitalization
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses (1)
|
|
$
|
(509)
|
|
|
$
|
(396)
|
|
|
$
|
(0.01)
|
|
|
$
|
(509)
|
|
|
$
|
(396)
|
|
|
$
|
(0.01)
|
|
Total of 2019
items
|
|
$
|
(509)
|
|
|
$
|
(396)
|
|
|
$
|
(0.01)
|
|
|
$
|
(509)
|
|
|
$
|
(396)
|
|
|
$
|
(0.01)
|
|
|
|
Fourth Quarter
Ended December 30, 2018
|
|
|
Fiscal Year Ended
December 30, 2018
|
|
(in thousands,
except per share data)
|
|
Pre-tax
|
|
|
After-tax
|
|
|
Diluted
EPS
Impact
|
|
|
Pre-tax
|
|
|
After-tax
|
|
|
Diluted
EPS
Impact
|
|
2018 items
affecting comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recapitalization
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses (2)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(532)
|
|
|
$
|
(411)
|
|
|
$
|
(0.01)
|
|
Interest expense
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(142)
|
|
|
|
(110)
|
|
|
|
(0.00)
|
|
Debt issuance cost
write-off (4)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(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 2019 Recapitalization.
|
(2)
|
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").
|
(3)
|
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.
|
(4)
|
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 fourth quarter of 2019, the Company repurchased and
retired 2,063,378 shares of its common stock in open market
repurchases under its Board of Directors-approved share repurchase
program for approximately $593.9
million. As of December 29, 2019, the Company's
total remaining authorized amount for share repurchases under such
program was approximately $406.1
million. Subsequent to the fourth quarter and through
February 13, 2020, the Company
repurchased and retired an additional 271,064 shares of common
stock for a total of approximately $79.6
million.
Liquidity
As of December 29, 2019, the Company had approximately:
- $190.6 million of unrestricted
cash and cash equivalents;
- $4.11 billion in total debt;
and
- $158.6 million of available
borrowings under its $200.0 million
variable funding note facility, net of letters of credit issued of
$41.4 million.
Net cash provided by operating activities was $497.0 million during fiscal 2019. The Company
invested $85.6 million in capital
expenditures during fiscal 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 $411.4 million during
fiscal 2019 (refer to Comments on Regulation G section below
for additional details).
(in
thousands)
|
|
Fiscal Year
Ended
December 29,
2019
|
|
Net cash provided by
operating activities
|
|
$
|
496,950
|
|
Capital
expenditures
|
|
|
(85,565)
|
|
Free cash
flow
|
|
$
|
411,385
|
|
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 such as diluted
EPS, as adjusted. The Company has also included metrics such as
global retail sales, global retail sales growth, global retail
sales growth, excluding foreign currency impact 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 "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 "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 "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
17,000 stores in over 90 markets. Domino's had global retail sales
of over $14.3 billion in 2019, with
over $7.0 billion in the U.S. and
nearly $7.3 billion internationally.
In the fourth quarter of 2019, Domino's had global retail sales of
over $4.5 billion, with over
$2.2 billion in the U.S. and over
$2.3 billion internationally. Its
system is comprised of independent franchise owners who accounted
for 98% of Domino's stores as of the fourth quarter of 2019.
Emphasis on technology innovation helped Domino's achieve more than
half of all global retail sales in 2019 from digital channels,
primarily online ordering and mobile applications. 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 June 2019, through an
announced partnership with Nuro, Domino's furthered its exploration
and testing of autonomous pizza delivery. In late 2019, Domino's
opened the Domino's Innovation Garage adjacent to its headquarters
in Ann Arbor, Michigan, to fuel
continued technology and operational innovation – while also
launching its GPS technology, allowing customers to follow the
progress of the delivery driver from store to doorstep.
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, including the food service and food delivery
markets; 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; the impact of new or improved
technologies and alternative methods of delivery on consumer
behavior; our ability to maintain good relationships with and
attract new franchisees, and franchisees' ability to successfully
manage their operations without negatively impacting our royalty
payments and fees or our brand's reputation; 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, health epidemics 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,
payment methods consumer protection and social media; adverse legal
judgments or settlements; food-borne illness or contamination of
products; data breaches, power loss, technological failures, user
error or other cyber risks threatening us or our franchisees; the
effect of war, terrorism, catastrophic events or climate change;
our ability to pay dividends and repurchase shares; changes in
consumer preferences, spending and traffic patterns and demographic
trends; actions by activist investors; 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.
Domino's Pizza,
Inc. and Subsidiaries
|
Condensed
Consolidated Statements of Income
|
(Unaudited)
|
|
|
|
Fiscal Quarter
Ended
|
|
|
|
December 29,
2019
|
|
|
%
of
Total
Revenues
|
|
|
December
30,
2018
|
|
|
%
of
Total
Revenues
|
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Company-owned
stores
|
|
$
|
130,534
|
|
|
|
|
|
|
$
|
156,283
|
|
|
|
|
|
U.S. franchise
royalties and fees
|
|
|
139,155
|
|
|
|
|
|
|
|
125,158
|
|
|
|
|
|
Supply
chain
|
|
|
680,149
|
|
|
|
|
|
|
|
617,221
|
|
|
|
|
|
International
franchise royalties and fees
|
|
|
76,830
|
|
|
|
|
|
|
|
70,565
|
|
|
|
|
|
U.S. franchise
advertising
|
|
|
123,684
|
|
|
|
|
|
|
|
112,908
|
|
|
|
|
|
Total
revenues
|
|
|
1,150,352
|
|
|
|
100.0
|
%
|
|
|
1,082,135
|
|
|
|
100.0
|
%
|
Cost of
sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Company-owned
stores
|
|
|
98,652
|
|
|
|
|
|
|
|
120,146
|
|
|
|
|
|
Supply
chain
|
|
|
604,412
|
|
|
|
|
|
|
|
548,034
|
|
|
|
|
|
Total cost of
sales
|
|
|
703,064
|
|
|
|
61.1
|
%
|
|
|
668,180
|
|
|
|
61.8
|
%
|
Operating
margin
|
|
|
447,288
|
|
|
|
38.9
|
%
|
|
|
413,955
|
|
|
|
38.2
|
%
|
General and
administrative
|
|
|
119,653
|
|
|
|
10.4
|
%
|
|
|
121,411
|
|
|
|
11.2
|
%
|
U.S. franchise
advertising
|
|
|
123,684
|
|
|
|
10.8
|
%
|
|
|
112,908
|
|
|
|
10.4
|
%
|
Income from
operations
|
|
|
203,951
|
|
|
|
17.7
|
%
|
|
|
179,636
|
|
|
|
16.6
|
%
|
Interest expense,
net
|
|
|
(46,681)
|
|
|
|
(4.1)
|
%
|
|
|
(45,073)
|
|
|
|
(4.2)
|
%
|
Income before
provision for income taxes
|
|
|
157,270
|
|
|
|
13.6
|
%
|
|
|
134,563
|
|
|
|
12.4
|
%
|
Provision for income
taxes
|
|
|
27,943
|
|
|
|
2.4
|
%
|
|
|
22,921
|
|
|
|
2.1
|
%
|
Net income
|
|
$
|
129,327
|
|
|
|
11.2
|
%
|
|
$
|
111,642
|
|
|
|
10.3
|
%
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock –
diluted
|
|
$
|
3.12
|
|
|
|
|
|
|
$
|
2.62
|
|
|
|
|
|
Domino's Pizza,
Inc. and Subsidiaries
|
Condensed
Consolidated Statements of Income
|
(Unaudited)
|
|
|
|
Fiscal Year
Ended
|
|
|
|
December 29,
2019
|
|
|
%
of
Total
Revenues
|
|
|
December
30,
2018
|
|
|
%
of
Total
Revenues
|
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Company-owned
stores
|
|
$
|
453,560
|
|
|
|
|
|
|
$
|
514,804
|
|
|
|
|
|
U.S. franchise
royalties and fees
|
|
|
428,504
|
|
|
|
|
|
|
|
391,493
|
|
|
|
|
|
Supply
chain
|
|
|
2,104,936
|
|
|
|
|
|
|
|
1,943,297
|
|
|
|
|
|
International
franchise royalties and fees
|
|
|
240,975
|
|
|
|
|
|
|
|
224,747
|
|
|
|
|
|
U.S. franchise
advertising
|
|
|
390,799
|
|
|
|
|
|
|
|
358,526
|
|
|
|
|
|
Total
revenues
|
|
|
3,618,774
|
|
|
|
100.0
|
%
|
|
|
3,432,867
|
|
|
|
100.0
|
%
|
Cost of
sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Company-owned
stores
|
|
|
346,168
|
|
|
|
|
|
|
|
398,158
|
|
|
|
|
|
Supply
chain
|
|
|
1,870,107
|
|
|
|
|
|
|
|
1,732,030
|
|
|
|
|
|
Total cost of
sales
|
|
|
2,216,275
|
|
|
|
61.2
|
%
|
|
|
2,130,188
|
|
|
|
62.1
|
%
|
Operating
margin
|
|
|
1,402,499
|
|
|
|
38.8
|
%
|
|
|
1,302,679
|
|
|
|
37.9
|
%
|
General and
administrative
|
|
|
382,293
|
|
|
|
10.6
|
%
|
|
|
372,464
|
|
|
|
10.8
|
%
|
U.S. franchise
advertising
|
|
|
390,799
|
|
|
|
10.8
|
%
|
|
|
358,526
|
|
|
|
10.4
|
%
|
Income from
operations
|
|
|
629,407
|
|
|
|
17.4
|
%
|
|
|
571,689
|
|
|
|
16.7
|
%
|
Interest expense,
net
|
|
|
(146,770)
|
|
|
|
(4.1)
|
%
|
|
|
(143,011)
|
|
|
|
(4.2)
|
%
|
Income before
provision for income taxes
|
|
|
482,637
|
|
|
|
13.3
|
%
|
|
|
428,678
|
|
|
|
12.5
|
%
|
Provision for income
taxes
|
|
|
81,928
|
|
|
|
2.3
|
%
|
|
|
66,706
|
|
|
|
2.0
|
%
|
Net income
|
|
$
|
400,709
|
|
|
|
11.1
|
%
|
|
$
|
361,972
|
|
|
|
10.5
|
%
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock –
diluted
|
|
$
|
9.56
|
|
|
|
|
|
|
$
|
8.35
|
|
|
|
|
|
Domino's Pizza,
Inc. and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
|
|
|
December 29,
2019
|
|
|
December
30,
2018
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
190,615
|
|
|
$
|
25,438
|
|
Restricted cash and
cash equivalents
|
|
|
209,269
|
|
|
|
166,993
|
|
Accounts receivable,
net
|
|
|
210,260
|
|
|
|
190,091
|
|
Inventories
|
|
|
52,955
|
|
|
|
45,975
|
|
Prepaid expenses and
other
|
|
|
19,129
|
|
|
|
25,710
|
|
Advertising fund
assets, restricted
|
|
|
105,389
|
|
|
|
112,744
|
|
Total current
assets
|
|
|
787,617
|
|
|
|
566,951
|
|
Property, plant and
equipment, net
|
|
|
242,881
|
|
|
|
234,939
|
|
Operating lease
right-of-use assets
|
|
|
228,785
|
|
|
|
—
|
|
Other
assets
|
|
|
122,809
|
|
|
|
105,495
|
|
Total
assets
|
|
$
|
1,382,092
|
|
|
$
|
907,385
|
|
Liabilities and
stockholders' deficit
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Current portion of
long-term debt
|
|
$
|
43,394
|
|
|
$
|
35,893
|
|
Accounts
payable
|
|
|
111,101
|
|
|
|
92,546
|
|
Operating lease
liabilities
|
|
|
33,318
|
|
|
|
—
|
|
Advertising fund
liabilities
|
|
|
101,921
|
|
|
|
107,150
|
|
Other accrued
liabilities
|
|
|
164,097
|
|
|
|
144,154
|
|
Total current
liabilities
|
|
|
453,831
|
|
|
|
379,743
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
|
|
Long-term debt, less
current portion
|
|
|
4,071,055
|
|
|
|
3,495,691
|
|
Operating lease
liabilities
|
|
|
202,731
|
|
|
|
—
|
|
Other accrued
liabilities
|
|
|
70,234
|
|
|
|
71,872
|
|
Total long-term
liabilities
|
|
|
4,344,020
|
|
|
|
3,567,563
|
|
Total stockholders'
deficit
|
|
|
(3,415,759)
|
|
|
|
(3,039,921)
|
|
Total liabilities and
stockholders' deficit
|
|
$
|
1,382,092
|
|
|
$
|
907,385
|
|
Domino's Pizza,
Inc. and Subsidiaries
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
|
|
Fiscal Year
Ended
|
|
|
|
December 29,
2019
|
|
|
December
30,
2018
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
400,709
|
|
|
$
|
361,972
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
59,930
|
|
|
|
53,665
|
|
Loss (gain) on
sale/disposal of assets
|
|
|
2,023
|
|
|
|
(4,737)
|
|
Amortization of debt
issuance costs
|
|
|
4,748
|
|
|
|
8,033
|
|
Benefit for deferred
income taxes
|
|
|
(3,297)
|
|
|
|
(872)
|
|
Non-cash compensation
expense
|
|
|
20,265
|
|
|
|
22,792
|
|
Excess tax benefits
from equity-based compensation
|
|
|
(25,735)
|
|
|
|
(23,786)
|
|
Provision for losses
and accounts and notes receivable
|
|
|
1,195
|
|
|
|
899
|
|
Changes in operating
assets and liabilities
|
|
|
47,120
|
|
|
|
(18,443)
|
|
Changes in advertising
fund assets and liabilities, restricted
|
|
|
(10,008)
|
|
|
|
(5,352)
|
|
Net cash provided by
operating activities
|
|
|
496,950
|
|
|
|
394,171
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(85,565)
|
|
|
|
(119,888)
|
|
Proceeds from sale of
assets
|
|
|
12,258
|
|
|
|
8,367
|
|
Maturities of
advertising fund investments, restricted
|
|
|
50,152
|
|
|
|
94,007
|
|
Purchases of
advertising fund investments, restricted
|
|
|
—
|
|
|
|
(70,152)
|
|
Other
|
|
|
(4,699)
|
|
|
|
(591)
|
|
Net cash used in
investing activities
|
|
|
(27,854)
|
|
|
|
(88,257)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from issuance
of long-term debt
|
|
|
675,000
|
|
|
|
970,000
|
|
Repayments of
long-term debt and finance lease obligations
|
|
|
(92,085)
|
|
|
|
(604,088)
|
|
Proceeds from exercise
of stock options
|
|
|
13,064
|
|
|
|
9,832
|
|
Purchases of common
stock
|
|
|
(699,007)
|
|
|
|
(591,212)
|
|
Tax payments for
restricted stock upon vesting
|
|
|
(5,951)
|
|
|
|
(6,962)
|
|
Payments of common
stock dividends and equivalents
|
|
|
(105,715)
|
|
|
|
(92,166)
|
|
Cash paid for
financing costs
|
|
|
(8,098)
|
|
|
|
(8,207)
|
|
Net cash used in
financing activities
|
|
|
(222,792)
|
|
|
|
(322,803)
|
|
Effect of exchange
rate changes on cash
|
|
|
201
|
|
|
|
(538)
|
|
Change in cash and
cash equivalents, restricted cash and cash equivalents
|
|
|
246,505
|
|
|
|
(17,427)
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
190,615
|
|
|
|
25,438
|
|
Restricted cash and
cash equivalents, end of period
|
|
|
209,269
|
|
|
|
166,993
|
|
Cash and cash
equivalents included in advertising fund assets,
restricted,
end of
period
|
|
|
84,040
|
|
|
|
44,988
|
|
Cash and cash
equivalents, restricted cash and cash equivalents and cash
and
cash
equivalents included in advertising fund assets,
restricted,
end of
period
|
|
$
|
483,924
|
|
|
$
|
237,419
|
|
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SOURCE Domino's Pizza, Inc.