Papa John’s International, Inc. (Nasdaq: PZZA) (“Papa Johns®”)
today announced financial results for the fourth quarter and year
ended December 31, 2023.
Fourth Quarter
Highlights
- North America comparable sales(a) were up 2% compared with the
fourth quarter of 2022 as transaction and ticket growth delivered
2% comparable sales at both Domestic Company-owned restaurants and
North America franchised restaurants; International comparable
sales(a) were down 6%.
- 89 net unit openings driven by 36 North America and 53
International net unit openings.
- Global system-wide restaurant sales were $1.34 billion, an
11%(b) increase from the prior year fourth quarter. Excluding the
53rd week in 2023, global system-wide sales were up approximately
2%(b).
- Total revenues of $571 million were up $45 million, or 9%,
compared with a year ago. Excluding the 53rd week, Total revenues
were up approximately 1%.
- Diluted earnings per common share of $0.79, up from $0.66 for
the fourth quarter of 2022; Adjusted diluted earnings per common
share(c) was $0.91, up from $0.71 a year ago.
Full Year Highlights
- North America comparable sales(a) were up 1% from a year ago
driven by a 3% increase in Domestic Company-owned restaurants;
International comparable sales(a) were down 3%.
- 208 net unit openings for the full year 2023 with 57 net unit
openings in North America and 151 net unit openings in
International markets.
- Global system-wide restaurant sales were $5.04 billion, a 5%(b)
increase over the prior year. Excluding the 53rd week in 2023,
global system-wide sales were up 3%(b).
- Total revenues of $2.14 billion were up $34 million, or 2%,
from 2022. Excluding the 53rd week in 2023, Total revenues were
down less than 1% driven by lower revenues in our North America
commissary segment due to commodity price declines.
- Diluted earnings per common share of $2.48 compared with $1.89
for 2022; adjusted diluted earnings per common share(c) was $2.71
compared with $2.94 a year ago.
“Papa Johns finished 2023 with a solid fourth quarter and
achieved record system-wide sales for the year, marking this as our
fourth consecutive year of positive North America comparable
restaurant sales,” said Rob Lynch, Papa Johns President and CEO.
"More importantly, we made significant progress in several key
operational areas during the year. We improved our Domestic
company-owned restaurant-level margins, grew our global footprint
and enhanced our digital solutions and marketing platforms. These
efforts have strengthened Papa Johns and laid the foundation for
our next phase of growth.”
Lynch continued, “We are also making progress on our
International transformation initiatives, which include optimizing
our UK business model. We continue to see sequential improvement in
our UK sales, with UK franchisees reporting their second
consecutive quarter of positive comparable sales in the fourth
quarter. We are building on the progress in this important market
as we continue to take strategic actions that will drive improved
profitability and further strengthen our franchisee base.”
“Looking ahead, we are excited about the long-term future of
Papa Johns as we embark on our Back to Better 2.0 growth
initiatives and focus on accelerating our North America
development. While we recognize the dynamic global environment may
present challenges in the near term, we will maintain flexibility
as we focus on advancing our strategic initiatives. We remain
confident in our business model, our long-term strategy, the
strength of our brand, loyalty of our customer base and our ability
to deliver value for all stakeholders,” concluded Lynch.
______________________________________________________
(a) North America and International comparable sales are
reported on a 13-week and 52-week basis, excluding the 53rd week in
2023.
(b) Excludes the impact of foreign currency.
(c) Represents Non-GAAP financial measure. See “Non-GAAP
Financial Measures” for a reconciliation to the most comparable US
GAAP measures.
Financial Highlights
Three Months Ended
Year Ended
(In thousands, except per share
amounts)
December 31,
2023
December 25,
2022
Increase (Decrease)
December 31,
2023
December 25,
2022
Increase (Decrease)
Total revenues
$
571,322
$
526,234
$
45,088
$
2,135,713
$
2,102,103
$
33,610
Operating income
$
42,566
$
36,230
$
6,336
$
147,142
$
109,030
$
38,112
Adjusted operating income (a)
$
47,354
$
38,226
$
9,128
$
157,025
$
157,462
$
(437
)
Net income attributable to the Company
$
26,093
$
23,514
$
2,579
$
82,098
$
67,772
$
14,326
Diluted earnings per common share
$
0.79
$
0.66
$
0.13
$
2.48
$
1.89
$
0.59
Adjusted diluted earnings per common share
(a)
$
0.91
$
0.71
$
0.20
$
2.71
$
2.94
$
(0.23
)
Results for the fourth quarter and fiscal year 2023 are not
directly comparable with the fourth quarter and fiscal year 2022,
as year-over-year comparisons are affected by an additional week of
operations in the fourth quarter of 2023. For comparability
purposes we will describe the estimated impact of the 53rd week on
2023 in the discussion below.
Additionally, the comparison of results between periods is
impacted by the International franchisee acquisitions that occurred
in the second and third quarters of 2023, which resulted in 118 UK
restaurants moving from franchised to Company-owned, as well as the
second quarter 2022 Domestic refranchising, which resulted in 90 US
restaurants moving from Company-owned to franchised.
Quarterly Results
Total revenues of $571.3 million in the fourth quarter of 2023
increased $45.1 million, or 8.6%, compared with the prior year. The
increase was largely driven by the additional week of operations in
2023, which contributed approximately $41 million. The remaining
year-over-year total revenue growth for the fourth-quarter was
driven by a $7 million increase from our Domestic Company-owned
restaurants driven by higher comparable sales, a $1 million
increase from North America franchise royalties, and an $12 million
increase from International revenues due to the UK franchisee
acquisitions. These increases were largely offset by a $15 million
decrease in North America commissary revenues reflecting decreased
commodity prices in 2023.
For the fourth quarter of 2023, global system-wide restaurant
sales were $1.34 billion, up 11.0% from a year ago (excluding the
impact of foreign currency). The increase was largely driven by a
9% benefit from the additional week of operations in 2023. The
remaining 2% fourth-quarter growth in global system-wide sales
driven by new restaurant openings and higher North America
comparable sales.
Operating income of $42.6 million for the fourth quarter of 2023
increased $6.3 million or 17.5% compared with the fourth quarter
last year. The increase in Operating income was driven by a roughly
$8 million benefit from the 53rd week of operations in 2023 in
addition to positive North America comparable sales, decreased
commodity costs and lower insurance expenses related to improved
auto and workers’ compensation claims experience. This growth was
offset by a $2 million increase in International restructuring and
UK repositioning costs and an approximate $5 million year-over-year
impact related to the UK franchisee acquisition when taking into
consideration a fourth quarter 2023 operating loss and fourth
quarter 2022 franchise royalty fees.
Adjusted operating income(a) was $47.4 million, up $9.1 million
or 23.9% from the prior year comparable period. The increase in
Adjusted operating income was largely driven by the benefit from
the 53rd week of operations in 2023, in addition to our
fourth-quarter sales and unit growth and continued discipline
surrounding our General and Administrative expenses. These
improvements were largely offset by the impact related to the UK
franchisee acquisition.
Diluted earnings per common share was $0.79 for the fourth
quarter of 2023 compared with $0.66 in the fourth quarter of 2022.
Adjusted diluted earnings per common share(a) was $0.91 compared
with $0.71 in the fourth quarter of 2022. These changes were driven
by the same factors impacting operating income and adjusted
operating income as discussed above. In addition, diluted earnings
per share and adjusted diluted earnings per common share reflect
higher interest expense and a lower effective tax rate compared
with the fourth quarter of 2022. Interest expense increased in 2023
largely due to higher borrowings used to fund share repurchases in
the first quarter.
Full Year Results
Total revenues of $2.1 billion for 2023 increased $33.6 million,
or 1.6%, compared with the prior year. The increase was largely
driven by the additional week of operations in 2023, which
contributed approximately $41 million, in addition to a $31 million
increase from our Domestic Company-owned restaurants, a $3 million
increase in North America franchise royalties and a $24 million
increase in International revenues primarily related to the UK
franchisee acquisitions. These increases were offset by a $44
million decrease in North America commissary revenues reflecting
lower commodity prices and transaction volume in 2023, a $3 million
decrease primarily related to the sale of our Preferred Marketing
subsidiary and the $18 million impact of refranchising 90
restaurants in the second quarter of 2022.
For 2023, global system-wide restaurant sales were $5.04
billion, up 5.0% from a year ago (excluding the impact of foreign
currency fluctuations). The increase was driven by higher
equivalent units in International and Domestic markets along with a
2% benefit from the additional week of operations in 2023.
Operating income of $147.1 million for 2023 increased $38.1
million compared with the prior year. The increase in Operating
income was driven by higher North America comparable sales, lower
commodity costs and continued operational efficiency improvements,
as well as a roughly $8 million benefit from the additional week of
operations in 2023. The increased Operating income also included
the prior year impact of $41 million in certain charges incurred
during 2022 related to the conflict in Ukraine, legal settlements,
and the Domestic refranchising transaction. This growth was offset
by a roughly $9 million year-over-year impact related to the UK
franchisee acquisition when taking into consideration the third and
fourth quarter 2023 operating losses and 2022 franchise royalty
fees, along with lower International comparable sales.
Adjusted operating income(a) of $157.0 million for 2023 was
consistent with the prior year as the benefit of the additional
week of operations in 2023, higher North America comparable sales
and lower commodity costs was offset by increased variable
compensation expense, higher depreciation costs related to our
investment in technology support initiatives and the impact of
operating losses incurred from the UK company-owned restaurants in
2023.
Diluted earnings per common share was $2.48 for 2023 compared
with $1.89 in 2022. Adjusted diluted earnings per common share(a)
was $2.71 compared with $2.94 in 2022. These changes were driven by
the same factors impacting operating income and adjusted operating
income as discussed above. In addition, diluted earnings per share
and adjusted diluted earnings per share reflect higher interest
expense compared with 2022 due to higher borrowings used to fund
share repurchases in the first quarter of 2023.
See the Management’s Discussion and Analysis of Financial
Condition and Results of Operations section of our Annual Report on
Form 10-K filed with the SEC for additional information concerning
our operating results for the year ended December 31, 2023.
____________________________________________________
(a) Represents a Non-GAAP financial measure. See “Non-GAAP
Measures” for a reconciliation to the most comparable US GAAP
measures.
Global Restaurant Sales
Information
Global restaurant and comparable sales information for the
fourth quarter and year ended December 31, 2023, compared with the
fourth quarter and year ended December 25, 2022 are as follows (See
“Supplemental Information and Financial Statements” below for
related definitions):
Three Months Ended
Year ended
Amounts below exclude the impact of
foreign currency
December 31,
2023
December 25,
2022
December 31,
2023
December 25,
2022
Comparable sales growth (decline)
(a):
Domestic Company-owned restaurants
2.2
%
0.8
%
3.4
%
(1.0
)%
North America franchised restaurants
1.7
%
1.1
%
0.1
%
1.2
%
North America restaurants
1.8
%
1.1
%
0.8
%
0.7
%
International restaurants
(5.5
)%
(3.4
)%
(3.1
)%
(5.3
)%
Total comparable sales growth
(decline)
0.1
%
—
%
(0.1
)%
(0.8
)%
System-wide restaurant sales growth
(b):
Domestic Company-owned restaurants
12.4
%
2.9
%
6.7
%
1.3
%
North America franchised restaurants
10.9
%
2.5
%
3.6
%
2.5
%
North America restaurants
11.2
%
2.6
%
4.1
%
2.3
%
International restaurants (c)
10.5
%
3.5
%
7.7
%
4.8
%
Total global system-wide restaurant sales
growth (c)
11.0
%
2.8
%
5.0
%
2.9
%
______________________________________________________
(a) Comparable sales growth (decline) in
the fourth quarter of 2023 includes a 13-week comparison to the
fourth quarter of 2022 and a 52 week comparison for fiscal year
2023 to fiscal year 2022.
(b) System-wide restaurant sales growth
includes 14 weeks in the fourth quarter of 2023 and 53 weeks in
fiscal year 2023.
(c) The twelve months ended December 25,
2022 exclude the impact of franchisee suspended restaurants.
Global Restaurant Unit
Data
As of December 31, 2023, there were 5,906 Papa Johns restaurants
operating in 50 countries and territories, as follows:
Fourth Quarter
Domestic Company Owned
Franchised North
America
Total North America
International Company
Owned
International
Franchised
Total International
System-wide
September 24, 2023 (a)
526
2,871
3,397
118
2,302
2,420
5,817
Opened
5
43
48
—
81
81
129
Closed
—
(12
)
(12
)
—
(28
)
(28
)
(40
)
Refranchised
—
—
—
(1
)
1
—
—
December 31, 2023
531
2,902
3,433
117
2,356
2,473
5,906
Net unit growth/(decline)
5
31
36
(1
)
54
53
89
Full year
Domestic Company Owned
Franchised North
America
Total North America
International Company
Owned
International
Franchised
Total International
System-wide
December 25, 2022 (a)
522
2,854
3,376
—
2,322
2,322
5,698
Opened
5
87
92
—
234
234
326
Closed
(2
)
(33
)
(35
)
—
(83
)
(83
)
(118
)
Sold
—
(10
)
(10
)
—
(118
)
(118
)
(128
)
Acquired
10
—
10
118
—
118
128
Refranchised
(4
)
4
—
(1
)
1
—
—
December 31, 2023
531
2,902
3,433
117
2,356
2,473
5,906
Net unit growth/(decline)
9
48
57
117
34
151
208
(a) 2022 full year store activity has been
adjusted from previous presentations, as eight International
franchised locations were reclassified as closed locations
following a review of temporary restaurant closures.
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 $116.4 million for the
year ended December 31, 2023, compared with $39.4 million in the
prior year period. The year over year change primarily reflects
increased cash flow from operating activities as a result of
overall business performance and higher accrued expenses.
Year Ended
(in thousands)
December 31, 2023
December 25, 2022
Net cash provided by operating
activities
$
193,055
$
117,808
Purchases of property and equipment
(76,620
)
(78,391
)
Free cash flow
$
116,435
$
39,417
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 and Share
Repurchases
The Company paid cash dividends of $15.1 million ($0.46 per
common share) in the fourth quarter of 2023. On January 30, 2024,
our Board of Directors declared a first quarter 2024 dividend of
$0.46 per common share. The dividend was paid on February 23, 2024
to stockholders of record as of the close of business on February
12, 2024.
Conference Call
Papa Johns will host a call with analysts today, February 29,
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 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,
store closures, labor shortages, labor cost increases, 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, 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 stores and our quality control centers; increases
in labor costs, 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 store 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 the change in year-over-year sales
for the same base of restaurants for the same fiscal periods.
Comparable sales excludes sales of restaurants that were not open
during both the current and prior fiscal periods and franchisees
for which we suspended corporate support. “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 total system restaurant sales
year-over-year. Global system-wide restaurant sales and global
system-wide sales growth (decline) exclude franchisees for which we
suspended corporate support.
“Equivalent units” represents the number of restaurants open at
the beginning of a given period, adjusted for restaurants opened,
closed, acquired or sold during the period on a weighted average
basis.
We believe North America, International and global restaurant
and 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.
Franchise restaurant and comparable sales growth information is
also useful for comparison to industry trends and evaluating the
strength of our brand. Management believes the presentation of
franchise 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 of Directors 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 below reconciles our GAAP financial results to our non-GAAP
financial measures.
Three months ended
Year Ended
(In thousands, except per share
amounts)
December 31,
2023
December 25,
2022
December 31,
2023
December 25,
2022
Operating income
$
42,566
$
36,230
$
147,142
$
109,030
UK repositioning and acquisition-related
costs (a)
1,742
1,996
4,243
5,223
International restructuring costs (b)
2,178
—
2,178
—
Middle East related costs (c)
868
—
868
—
Refranchising and impairment losses
(d)
—
—
—
26,702
Legal settlements (e)
—
—
577
15,000
Other costs (f)
—
—
2,017
1,507
Adjusted operating income
47,354
38,226
157,025
157,462
Net income attributable to common
shareholders
$
26,093
$
23,373
$
82,098
$
67,362
UK repositioning and acquisition-related
costs (a)
1,742
1,996
4,243
5,223
International restructuring costs (b)
2,178
—
2,178
—
Middle East related costs (c)
868
—
868
—
Refranchising and impairment losses
(d)
—
—
—
26,702
Legal settlements (e)
—
—
577
15,000
Other costs (f)
—
—
2,017
1,507
Tax effect of adjustments (g)
(1,082
)
(449
)
(2,234
)
(10,897
)
Adjusted net income attributable to
common shareholders (h)
29,799
24,920
89,747
104,897
Diluted earnings per common
share
$
0.79
$
0.66
$
2.48
$
1.89
UK repositioning and acquisition-related
costs (a)
0.06
0.07
0.13
0.15
International restructuring costs (b)
0.07
—
0.07
—
Middle East related costs (c)
0.02
—
0.02
—
Refranchising and impairment losses
(d)
—
—
—
0.75
Legal settlements (e)
—
—
0.02
0.42
Other costs (f)
—
—
0.06
0.04
Tax effect of adjustments (g)
(0.03
)
(0.02
)
(0.07
)
(0.31
)
Adjusted diluted earnings per common
share (h)
0.91
0.71
2.71
2.94
See footnotes on following page
Footnotes to Non-GAAP Financial
Measures
(a)
Represents costs associated with repositioning the UK portfolio as
well as transaction costs related to the acquisition of stores from
franchisees.
(b)
In the fourth quarter of 2023, the Company initiated an
International Restructuring plan. During the period, costs incurred
related to the restructuring include $1.5 million in severance and
compensation costs and $0.7 million in consulting and professional
fees.
(c)
Represents a one-time non-cash charge of $0.9 million recorded in
the fourth quarter of 2023 related to the reserve of certain
accounts receivable related to the conflict in the Middle East,
which were recorded as General and Administrative expense.
(d)
Refranchising and impairment losses consisted of the following
pre-tax adjustments:
(1)
A one-time, non-cash charge of $8.4
million ($0.24 loss per diluted share for the year ended December
25, 2022) recorded in the first quarter of 2022 associated with the
refranchising of the Company’s controlling interest in a
90-restaurant joint venture, recorded as Refranchising and
impairment loss;
(2)
A one-time non-cash charge of $17.4
million ($0.49 loss per diluted share for the year ended December
25, 2022) recorded in the first quarter of 2022 related to the
reserve of certain loans and impairment of reacquired franchised
rights related to the conflict in Ukraine and subsequent
international government actions and sanctions, which were recorded
as Refranchising and impairment loss of $2.8 million and General
and administrative expenses of $14.6 million;
(3)
An impairment charge of $0.9 million on
the right-of-use assets on leases recorded in the third quarter of
2022 associated with the termination of a significant franchisee in
the UK, which was recorded in Refranchising and impairment
loss.
(e)
Represents accruals for certain legal settlements recorded in
General and administrative expenses.
(f)
Represents severance and related costs associated with the
transition of certain executives incurred during the twelve month
periods ended December 31, 2023 and December 25, 2022.
(g)
The tax effect on non-GAAP adjustments was calculated by applying
the marginal tax rate of 22.6% for the three month and twelve
months ended December 31, 2023 and 22.5% for the three month and
twelve months ended December 25, 2022.
(h)
Amounts shown exclude the impact of allocation of undistributed
earnings to participating securities.
Papa John’s International,
Inc. and Subsidiaries
Condensed Consolidated Balance
Sheets
(In thousands, except per share
amounts)
December 31,
2023
December 25,
2022
Assets
Current assets:
Cash and cash equivalents
$
40,587
$
47,373
Accounts receivable (less allowance for
credit losses of $8,353 in 2023 and $6,718 in 2022)
104,244
102,533
Notes receivable, current portion
5,199
6,848
Income tax receivable
2,577
8,780
Inventories
36,126
41,382
Prepaid expenses and other current
assets
42,285
44,123
Total current assets
231,018
251,039
Property and equipment, net
282,812
249,793
Finance lease right-of-use assets, net
31,740
24,941
Operating lease right-of-use assets
164,158
172,425
Notes receivable, less current portion
(less allowance for credit losses of $16,092 in 2023 and $14,499 in
2022)
12,346
21,248
Goodwill
76,206
70,616
Other assets
76,725
74,165
Total assets
$
875,005
$
864,227
Liabilities, Redeemable noncontrolling
interests and Stockholders’ deficit
Current liabilities:
Accounts payable
$
74,949
$
62,316
Income and other taxes payable
17,948
8,766
Accrued expenses and other current
liabilities
158,167
142,535
Current deferred revenue
20,427
21,272
Current finance lease liabilities
9,029
6,850
Current operating lease liabilities
24,076
23,418
Total current liabilities
304,596
265,157
Deferred revenue
20,366
23,204
Long-term finance lease liabilities
24,144
19,022
Long-term operating lease liabilities
151,050
160,905
Long-term debt, net
757,422
597,069
Other long-term liabilities
60,192
68,317
Total liabilities
1,317,770
1,133,674
Redeemable noncontrolling
interests
851
1,217
Stockholders’ deficit:
Common stock ($0.01 par value per share;
issued 49,235 at December 31, 2023 and 49,138 at December 25,
2022)
492
491
Additional paid-in capital
452,290
449,829
Accumulated other comprehensive loss
(7,803
)
(10,135
)
Retained earnings
219,027
195,856
Treasury stock (16,747 shares at December
31, 2023 and 14,402 shares at December 25, 2022, at cost)
(1,123,098
)
(922,434
)
Total stockholders’ deficit
(459,092
)
(286,393
)
Noncontrolling interests in
subsidiaries
15,476
15,729
Total Stockholders’ deficit
(443,616
)
(270,664
)
Total Liabilities, Redeemable
noncontrolling interests and Stockholders’ deficit
$
875,005
$
864,227
Papa John’s International,
Inc. and Subsidiaries
Condensed Consolidated
Statements of Operations
Three Months Ended
Year ended
(In thousands, except per share
amounts)
December 31,
2023
December 25,
2022
December 31,
2023
December 25,
2022
(Unaudited)
(Unaudited)
Revenues:
Domestic Company-owned restaurant
sales
$
193,521
$
172,163
$
726,362
$
708,389
North America franchise royalties and
fees
38,726
34,502
144,550
137,399
North America commissary revenues
227,928
224,457
852,361
869,634
International revenues
48,189
32,593
157,187
129,903
Other revenues
62,958
62,519
255,253
256,778
Total revenues
571,322
526,234
2,135,713
2,102,103
Costs and expenses:
Operating costs (excluding depreciation
and amortization shown separately below):
Domestic Company-owned restaurant
expenses
150,967
143,321
587,889
585,307
North America commissary expenses
211,120
206,757
787,554
811,446
International expenses
35,656
18,655
103,198
76,001
Other expenses
57,822
58,358
235,483
238,810
General and administrative expenses
55,916
48,893
210,357
217,412
Depreciation and amortization
17,275
14,020
64,090
52,032
Total costs and expenses
528,756
490,004
1,988,571
1,981,008
Refranchising and impairment loss
—
—
—
(12,065
)
Operating income
42,566
36,230
147,142
109,030
Net interest expense
(11,795
)
(7,294
)
(43,469
)
(25,261
)
Income before income taxes
30,771
28,936
103,673
83,769
Income tax expense
4,328
5,208
20,874
14,420
Net income before attribution to
noncontrolling interests
26,443
23,728
82,799
69,349
Net income attributable to noncontrolling
interests
(350
)
(214
)
(701
)
(1,577
)
Net income attributable to the
Company
$
26,093
$
23,514
$
82,098
$
67,772
Calculation of net income for earnings
per share:
Net income attributable to the Company
$
26,093
$
23,514
$
82,098
$
67,772
Dividends paid to participating
securities
—
(78
)
—
(306
)
Net income attributable to participating
securities
—
(63
)
—
(104
)
Net income attributable to common
shareholders
$
26,093
$
23,373
$
82,098
$
67,362
Basic earnings per common share
$
0.80
$
0.66
$
2.49
$
1.90
Diluted earnings per common share
$
0.79
$
0.66
$
2.48
$
1.89
Basic weighted average common shares
outstanding
32,594
35,167
32,931
35,497
Diluted weighted average common shares
outstanding
32,829
35,336
33,159
35,717
Dividends declared per common share
$
0.46
$
0.42
$
1.76
$
1.54
Papa John’s International,
Inc. and Subsidiaries
Condensed Consolidated
Statements of Cash Flows
Year ended
(In thousands)
December 31,
2023
December 25,
2022
Operating activities
Net income before attribution to
noncontrolling interests
$
82,799
$
69,349
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision (benefit) for allowance for
credit losses on accounts and notes receivable
5,393
20,539
Depreciation and amortization
64,090
52,032
Refranchising and impairment loss
—
12,065
Deferred income taxes
(5,991
)
2,798
Stock-based compensation expense
17,924
18,388
Other
66
1,056
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable
(8,049
)
(29,167
)
Income tax receivable
6,212
586
Inventories
5,441
(7,496
)
Prepaid expenses and other current
assets
817
5,587
Other assets and liabilities
(11,803
)
(13,458
)
Accounts payable
23,371
(8,350
)
Income and other taxes payable
9,087
(10,710
)
Accrued expenses and other current
liabilities
7,402
4,846
Deferred revenue
(3,704
)
(257
)
Net cash provided by operating
activities
193,055
117,808
Investing activities
Purchases of property and equipment
(76,620
)
(78,391
)
Notes issued
(4,338
)
(9,296
)
Repayments of notes issued
4,655
13,045
Acquisitions, net of cash acquired
(5,613
)
(1,219
)
Proceeds from refranchising, net of cash
transferred
—
13,588
Proceeds from the sale of property and
equipment
3,457
—
Other
3,336
(520
)
Net cash used in investing
activities
(75,123
)
(62,793
)
Financing activities
Net proceeds of revolving credit
facilities
159,000
115,000
Proceeds from exercise of stock
options
2,252
4,036
Acquisition of Company common stock
(210,348
)
(125,000
)
Dividends paid to common stockholders
(58,451
)
(54,767
)
Tax payments for equity award
issuances
(6,416
)
(9,546
)
Distributions to noncontrolling
interests
(1,320
)
(1,211
)
Principal payments on finance leases
(8,821
)
(5,416
)
Other
28
664
Net cash used in financing
activities
(124,076
)
(76,240
)
Effect of exchange rate changes on cash
and cash equivalents
(642
)
(2,012
)
Change in cash and cash equivalents
(6,786
)
(23,237
)
Cash and cash equivalents at beginning
of period
47,373
70,610
Cash and cash equivalents at end of
period
$
40,587
$
47,373
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240227983686/en/
Papa Johns Investor Relations
investor_relations@papajohns.com
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