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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 29, 2024
OR
o    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission File Number: 0-21660
PAPA JOHN’S INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
Delaware61-1203323
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification number)
2002 Papa John’s Boulevard
Louisville, KY
40299-2367
(Address of principal executive offices)(Zip Code)
(502) 261-7272
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class:Trading SymbolName of each exchange on which registered:
Common stock, $0.01 par valuePZZAThe NASDAQ Stock Market LLC
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes x No o
Indicate by check mark whether the Registrant has submitted electronically every interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes x No o
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
xAccelerated filer o
Non-accelerated filer oSmaller reporting company o
Emerging growth company o
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
At November 1, 2024, there were 32,641,623 shares of the Registrant’s common stock outstanding.


INDEX
Page No.
i

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Papa John’s International, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per share amounts)September 29,
2024		December 31,
2023
(Unaudited)
Assets
Current assets:
Cash and cash equivalents$17,550 $40,587 
Accounts receivable, net101,804 104,244 
Notes receivable, current portion5,728 5,199 
Income tax receivable2,414 2,577 
Inventories36,488 36,126 
Prepaid expenses and other current assets51,873 42,285 
Total current assets215,857 231,018 
Property and equipment, net266,508 282,812 
Finance lease right-of-use assets, net25,535 31,740 
Operating lease right-of-use assets191,194 164,158 
Notes receivable, less current portion, net7,346 12,346 
Goodwill76,460 76,206 
Other assets77,975 76,725 
Total assets$860,875 $875,005 
Liabilities, Redeemable noncontrolling interests and Stockholders’ deficit
Current liabilities:
Accounts payable$62,800 $74,949 
Income and other taxes payable10,166 17,948 
Accrued expenses and other current liabilities139,301 158,167 
Current deferred revenue19,645 20,427 
Current finance lease liabilities6,962 9,029 
Current operating lease liabilities26,001 24,076 
Current portion of long-term debt5,650 — 
Total current liabilities270,525 304,596 
Deferred revenue18,737 20,366 
Long-term finance lease liabilities19,921 24,144 
Long-term operating lease liabilities180,137 151,050 
Long-term debt, less current portion, net721,355 757,422 
Other long-term liabilities64,882 60,192 
Total liabilities1,275,557 1,317,770 
Redeemable noncontrolling interests937 851 
Stockholders’ deficit:
Common stock ($0.01 par value per share; issued 49,282 at September 29, 2024 and 49,235 at December 31, 2023)
493 492 
Additional paid-in capital449,141 452,290 
Accumulated other comprehensive loss(6,580)(7,803)
Retained earnings242,269 219,027 
Treasury stock (16,645 shares at September 29, 2024 and 16,747 shares at December 31, 2023, at cost)
(1,116,256)(1,123,098)
Total stockholders’ deficit(430,933)(459,092)
Noncontrolling interests in subsidiaries15,314 15,476 
Total Stockholders’ deficit (415,619)(443,616)
Total Liabilities, Redeemable noncontrolling interests and Stockholders’ deficit$860,875 $875,005 
See accompanying notes.
1

Papa John’s International, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months EndedNine Months Ended
(In thousands, except per share amounts)September 29,
2024		September 24,
2023		September 29,
2024		September 24,
2023
Revenues:
Domestic Company-owned restaurant sales$168,672 $177,195 $518,103 $532,841 
North America franchise royalties and fees33,831 35,041 103,937 105,824 
North America commissary revenues210,389 204,887 611,873 624,433 
International revenues33,024 42,927 113,433 108,998 
Other revenues60,891 62,762 181,271 192,295 
Total revenues506,807 522,812 1,528,617 1,564,391 
Costs and expenses:
Operating costs (excluding depreciation and amortization shown separately below):
Domestic Company-owned restaurant expenses142,403 145,433 419,189 436,922 
North America commissary expenses193,818 189,551 561,316 576,434 
International expenses19,001 29,796 74,424 67,542 
Other expenses55,543 57,587 164,261 177,661 
General and administrative expenses13,553 52,173 129,726 154,441 
Depreciation and amortization17,260 16,404 52,528 46,815 
Total costs and expenses441,578 490,944 1,401,444 1,459,815 
Operating income65,229 31,868 127,173 104,576 
Net interest expense(10,629)(11,378)(32,588)(31,674)
Income before income taxes54,600 20,490 94,585 72,902 
Income tax expense12,812 4,539 25,347 16,546 
Net income before attribution to noncontrolling interests41,788 15,951 69,238 56,356 
Net loss (income) attributable to noncontrolling interests20 (90)(551)(351)
Net income attributable to the Company$41,808 $15,861 $68,687 $56,005 
Basic earnings per common share $1.28 $0.49 $2.10 $1.69 
Diluted earnings per common share$1.27 $0.48 $2.09 $1.68 
Basic weighted average common shares outstanding32,745 32,564 32,701 33,053 
Diluted weighted average common shares outstanding32,930 32,800 32,850 33,287 
Dividends declared per common share$0.46 $0.46 $1.38 $1.30 
See accompanying notes.
2

Papa John’s International, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)

Three Months EndedNine Months Ended
(In thousands)September 29,
2024		September 24,
2023		September 29,
2024		September 24,
2023
Net income before attribution to noncontrolling interests$41,788 $15,951 $69,238 $56,356 
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments2,051 (1,854)1,670 (7)
Interest rate swaps (1)
(1,059)1,039 (103)2,889 
Other comprehensive income (loss), before tax992 (815)1,567 2,882 
Income tax effect:
Foreign currency translation adjustments(453)426 (367)1 
Interest rate swaps (2)
239 (238)23 (664)
Income tax effect(214)188 (344)(663)
Other comprehensive income (loss), net of tax778 (627)1,223 2,219 
Comprehensive income before attribution to noncontrolling interests42,566 15,324 70,461 58,575 
Less: comprehensive income, redeemable noncontrolling interests(43)(30)(233)(135)
Less: comprehensive loss (income), nonredeemable noncontrolling interests63 (60)(318)(216)
Comprehensive income attributable to the Company$42,586 $15,234 $69,910 $58,224 
___________________________________
(1)    Amounts reclassified out of accumulated other comprehensive loss into net interest income (expense) include $194 and $591 for the three and nine months ended September 29, 2024, respectively, and $203 and $(40) for the three and nine months ended September 24, 2023, respectively.
(2)    The income tax effects of amounts reclassified out of accumulated other comprehensive loss were $(43) and $(133) for the three and nine months ended September 29, 2024, respectively, and $(46) and $9 for the three and nine months ended September 24, 2023, respectively.

See accompanying notes.
3

Papa John’s International, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Deficit
(Unaudited)
Papa John’s International, Inc.
(In thousands)Common
Stock
Shares
Outstanding		Common
Stock		Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Loss (2)
Retained
Earnings		Treasury
Stock		Noncontrolling
Interests in
Subsidiaries		Total
Stockholders’
Deficit
For the three months ended
September 29, 2024
Balance at June 30, 202432,622 $493 $446,547 $(7,358)$215,800 $(1,117,140)$15,518 $(446,140)
Net income (1)
— — — — 41,808 — (63)41,745 
Other comprehensive income (loss), net of tax— — — 778 — — — 778 
Dividends on common stock— — 31 — (15,339)— — (15,308)
Exercise of stock options2 — 88 — — — — 88 
Stock-based compensation expense— — 3,358 — — — — 3,358 
Issuance of restricted stock14 — (632)— — 632 — — 
Tax effect of restricted stock awards(4)— (178)— — — — (178)
Distributions to noncontrolling interests— — — — — — (141)(141)
Other3 — (73)— — 252 — 179 
Balance at September 29, 202432,637 $493 $449,141 $(6,580)$242,269 $(1,116,256)$15,314 $(415,619)
For the nine months ended
September 29, 2024
Balance at December 31, 202332,488 $492 $452,290 $(7,803)$219,027 $(1,123,098)$15,476 $(443,616)
Net income (1)
— — — — 68,687 — 318 69,005 
Other comprehensive income (loss), net of tax— — — 1,223 — — — 1,223 
Dividends on common stock— — 95 — (45,445)— — (45,350)
Exercise of stock options22 1 1,020 — — — — 1,021 
Stock-based compensation expense— — 5,903 — — — — 5,903 
Issuance of restricted stock171 — (6,242)— — 6,242 — — 
Tax effect of restricted stock awards(52)— (3,508)— — — — (3,508)
Distributions to noncontrolling interests— — — — — — (480)(480)
Other8 — (417)— — 600 — 183 
Balance at September 29, 202432,637 $493 $449,141 $(6,580)$242,269 $(1,116,256)$15,314 $(415,619)
(1)    Net income to the Company for the three and nine months ended September 29, 2024 excludes $43 and $233, respectively, allocable to the redeemable noncontrolling interests for our joint venture arrangements.
(2)    At September 29, 2024, the accumulated other comprehensive loss of $6,580 was comprised of net unrealized foreign currency translation loss of $6,186 and net unrealized loss on the interest rate swap agreements of $394.

See accompanying notes.

4

Papa John’s International, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Deficit (continued)
(Unaudited)
Papa John’s International, Inc.
(In thousands)Common
Stock
Shares
Outstanding		Common
Stock		Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Loss (2)
Retained
Earnings
Treasury
Stock (3)
Noncontrolling
Interests in
Subsidiaries		Total
Stockholders’
Deficit
For the three months ended
September 24, 2023
Balance at June 25, 202332,394 $492 $445,964 $(7,289)$207,461 $(1,127,669)$15,562 $(465,479)
Net income (1)
— — — — 15,861 — 60 15,921 
Other comprehensive income (loss), net of tax— — — (627)— — — (627)
Dividends on common stock— — 34 — (15,190)— — (15,156)
Exercise of stock options18 — 1,134 — — — — 1,134 
Stock-based compensation expense— — 4,726 — — — — 4,726 
Issuance of restricted stock7 — (315)— — 315 — — 
Tax effect of restricted stock awards(2)— (171)— — — — (171)
Distributions to noncontrolling interests— — — — — — (328)(328)
Other56 — (3,673)— — 3,755 — 82 
Balance at September 24, 202332,473 $492 $447,699 $(7,916)$208,132 $(1,123,599)$15,294 $(459,898)
For the nine months ended
September 24, 2023
Balance at December 25, 202234,736 $491 $449,829 $(10,135)$195,856 $(922,434)$15,729 $(270,664)
Net income (1)
— — — — 56,005 — 216 56,221 
Other comprehensive income (loss), net of tax— — — 2,219 — — — 2,219 
Dividends on common stock— — 88 — (43,729)— — (43,641)
Exercise of stock options35 1 1,816 — — — — 1,817 
Acquisition of Company common stock (3)
(2,523)— — — — (212,444)— (212,444)
Stock-based compensation expense— — 13,224 — — — — 13,224 
Issuance of restricted stock234 — (6,857)— — 6,857 — — 
Tax effect of restricted stock awards(75)— (6,279)— — — — (6,279)
Distributions to noncontrolling interests— — — — — — (651)(651)
Other66 — (4,122)— — 4,422 — 300 
Balance at September 24, 202332,473 $492 $447,699 $(7,916)$208,132 $(1,123,599)$15,294 $(459,898)
(1)    Net income to the Company for the three and nine months ended September 24, 2023 excludes $30 and $135, respectively, allocable to the redeemable noncontrolling interests for our joint venture arrangements.
(2)    At September 24, 2023, the accumulated other comprehensive loss of $7,916 was comprised of net unrealized foreign currency translation loss of $8,702 and net unrealized gain on the interest rate swap agreements of $786.
(3)    Acquisition of Company common stock for the nine months ended September 24, 2023, includes $2,804 of transaction costs directly attributable to share repurchases, including a 1% excise tax incurred under the Inflation Reduction Act of 2022.
See accompanying notes.
5

Papa John’s International, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
(In thousands)September 29,
2024		September 24,
2023
Operating activities
Net income before attribution to noncontrolling interests$69,238 $56,356 
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for allowance for credit losses on accounts and notes receivable2,936 1,348 
Depreciation and amortization52,528 46,815 
Refranchising and impairment loss17,433 — 
Deferred income taxes3,877 3,481 
Stock-based compensation expense5,903 13,224 
Gain on disposal of property and equipment(42,034)— 
Other614 331 
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable879 (11,643)
Income tax receivable232 7,617 
Inventories(207)3,875 
Prepaid expenses and other current assets(1,684)(2,104)
Other assets and liabilities(5,923)2,057 
Accounts payable(12,389)15,237 
Income and other taxes payable(7,609)1,087 
Accrued expenses and other current liabilities(25,837)(6,579)
Deferred revenue(2,073)(4,166)
Net cash provided by operating activities55,884 126,936 
Investing activities
Purchases of property and equipment(46,931)(50,905)
Notes issued(154)(7,310)
Repayments of notes issued3,148 5,759 
Acquisitions, net of cash acquired— (5,599)
Proceeds from dispositions49,012 — 
Other2,373 401 
Net cash provided by (used in) investing activities7,448 (57,654)
Financing activities
Net (repayments) proceeds of revolving credit facilities(31,589)185,789 
Proceeds from exercise of stock options1,021 1,816 
Acquisition of Company common stock— (210,348)
Dividends paid to common stockholders(45,381)(43,641)
Tax payments for equity award issuances(3,508)(6,279)
Distributions to noncontrolling interests(627)(651)
Principal payments on finance leases(6,778)(5,975)
Other278 150 
Net cash used in financing activities(86,584)(79,139)
Effect of exchange rate changes on cash and cash equivalents215 (24)
Change in cash and cash equivalents(23,037)(9,881)
Cash and cash equivalents at beginning of period40,587 47,373 
Cash and cash equivalents at end of period$17,550 $37,492 
See accompanying notes.
6

Papa John’s International, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
September 29, 2024
1. Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP” or “U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete annual financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 29, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending December 29, 2024. For further information, refer to the consolidated financial statements and footnotes thereto included in the Annual Report on Form 10-K for Papa John’s International, Inc. (referred to as the “Company,” “Papa John’s,” “Papa Johns” or in the first-person notations of “we,” “us” and “our”) for the year ended December 31, 2023.
In discussions of our business, “Domestic” is defined as within the contiguous United States, “North America” includes Canada, and “International” includes the rest of the world other than North America.
2. Significant Accounting Policies
Principles of Consolidation
The accompanying Condensed Consolidated Financial Statements include the accounts of Papa John’s International, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated.
Variable Interest Entity
Papa Johns North American restaurants, both Company-owned and franchised, participate in Papa John’s Marketing Fund, Inc. (“PJMF”), a nonstock corporation designed to operate at break-even as it spends all annual contributions received from the system. PJMF collects a percentage of revenues from Company-owned and franchised restaurants in the United States and Canada for the purpose of designing and administering advertising and promotional programs. PJMF is a variable interest entity (“VIE”) that funds its operations with ongoing financial support and contributions from the North American restaurants, of which approximately 85 percent are franchised, and does not have sufficient equity to fund its operations without these ongoing financial contributions. Based on an assessment of the governance structure and operating procedures of PJMF, the Company determined it has the power to control certain significant activities of PJMF, and therefore, is the primary beneficiary. The Company has consolidated PJMF in its financial results in accordance with Accounting Standards Codification (“ASC”) 810, “Consolidation.”
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Significant items that are subject to such estimates and assumptions include the allowance for credit losses on accounts and notes receivable, intangible assets, contract assets and contract liabilities including the customer loyalty program obligation, property and equipment, right-of-use assets and lease liabilities, gift card breakage, insurance reserves and tax reserves. Although management bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, actual results could significantly differ from these estimates.
Noncontrolling Interests
Papa Johns has joint venture arrangements in which there are noncontrolling interests held by third parties that included 98 restaurants at September 29, 2024 and September 24, 2023, respectively. Consolidated net income is required to be reported separately at amounts attributable to both the Company and the noncontrolling interests held by third parties.
7

Net income attributable to these joint ventures for the three and nine months ended September 29, 2024 and September 24, 2023 was as follows:
Three Months EndedNine Months Ended
(In thousands) September 29,
2024		September 24,
2023		September 29,
2024		September 24,
2023
Papa John’s International, Inc.$(46)$196 $1,285 $821 
Redeemable noncontrolling interests43 30 233 135 
Nonredeemable noncontrolling interests(63)60 318 216 
Total net income$(66)$286 $1,836 $1,172 
The following summarizes the redemption feature, location and related accounting within the Condensed Consolidated Balance Sheets for these joint venture arrangements:
Type of Joint Venture ArrangementLocation within the Condensed Consolidated Balance SheetsRecorded Value
Joint ventures with no redemption featurePermanent equityCarrying value
Joint ventures with option to require the Company to purchase the noncontrolling interest - not currently redeemable or redemption not probableTemporary equityCarrying value
Deferred Income Tax Accounts and Tax Reserves
We are subject to income taxes in the United States and several foreign jurisdictions. Significant judgment is required in determining the provision for income taxes and the related assets and liabilities. The provision for income taxes includes income taxes paid, currently payable or receivable and those deferred. We use an estimated annual effective rate based on expected annual income to determine our quarterly provision for income taxes. The effective income tax rate includes the estimated domestic state effective income tax rate and applicable foreign income tax rates. The effective income tax rate is also impacted by various permanent items and credits, net of any related valuation allowances, and can vary based on changes in estimated annual income. Discrete items are recorded in the quarter in which they occur.
Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences reverse. Deferred tax assets and liabilities are netted by tax jurisdiction. Deferred tax assets are also recognized for the estimated future effects of tax attribute carryforwards (e.g., net operating losses, capital losses, and foreign tax credits). The effect on deferred taxes due to changes in tax rates is recognized in the period in which the new tax rate is enacted. Valuation allowances are established when necessary on a jurisdictional basis to reduce deferred tax assets to the amounts we expect to realize. Deferred tax assets and liabilities are recorded within Other assets and Other long-term liabilities on the Condensed Consolidated Balance Sheets.
Tax authorities periodically audit the Company. We record reserves and related interest and penalties for identified exposures as income tax expense. We evaluate these issues on a quarterly basis to adjust for events, such as statute of limitations expirations, court rulings or audit settlements, which may impact our ultimate payment for such exposures.
Fair Value Measurements and Disclosures
The Company determines the fair value of financial assets and liabilities based on the price that would be received to sell the asset or paid to transfer the liability to a market participant. Certain assets and liabilities are measured at fair value on a recurring basis and are required to be classified and disclosed in one of the following three categories:
•Level 1: Quoted market prices in active markets for identical assets or liabilities.
•Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
•Level 3: Unobservable inputs that are not corroborated by market data.
Fair value is a market-based measurement, not an entity-specific measurement. Considerable judgment is required to interpret market data to estimate fair value; accordingly, the fair values presented do not necessarily indicate what the Company or its debtholders could realize in a current market exchange.
8

Our financial assets and liabilities that were measured at fair value on a recurring basis as of September 29, 2024 and December 31, 2023 are as follows:
Fair Value Measurements
(In thousands)Carrying
Value		Level 1Level 2Level 3
September 29, 2024
Financial assets:
Cash surrender value of life insurance policies (a)
$30,822 $30,822 $— $— 
Financial liabilities:
Interest rate swaps (b)
$479 $— $479 $— 
December 31, 2023
Financial assets:
Cash surrender value of life insurance policies (a)
$29,449 $29,449 $— $— 
Interest rate swaps (b)
$107 $— $107 $— 
Financial liabilities:
Interest rate swaps (b)
$483 $— $483 $— 
___________________________________
(a)Represents life insurance policies held in our non-qualified deferred compensation plan, which are classified as Other assets on the Condensed Consolidated Balance Sheets
(b)The fair value of our interest rate swaps is based on the sum of all future net present value cash flows. The future cash flows are derived based on the terms of our interest rate swaps, as well as considering published discount factors, and projected Secured Overnight Financing Rates (“SOFR”). Interest rate swaps entered into prior to 2023 were based on London Interbank Offered Rates (“LIBOR”).
There were no transfers among levels within the fair value hierarchy during the three and nine months ended September 29, 2024 or fiscal year 2023.
The fair value of certain assets and liabilities approximates carrying value because of the short-term nature of the accounts, including cash and cash equivalents, accounts receivable, net of allowances, and accounts payable. The carrying value of notes receivable, net of allowances, also approximates fair value. The Company’s revolving credit facilities under the Company’s credit agreement approximate carrying value due to their variable market-based interest rate. The Company’s 3.875% senior notes are classified as a Level 2 fair value measurement since the Company estimates the fair value by using recent trading transactions, and have the following estimated fair values and carrying values (excluding the impact of unamortized debt issuance costs) as of September 29, 2024 and December 31, 2023:
September 29, 2024December 31, 2023
(In thousands)Carrying
Value		Fair
Value		Carrying
Value		Fair
Value
3.875% Senior Notes
$400,000 $368,608 $400,000 $352,500 
Allowance for Credit Losses
Estimates of expected credit losses, even if remote, are based upon historical account write-off trends, facts about the current financial condition of the debtor, forecasts of future operating results based upon current trends of select operating metrics, and macroeconomic factors. Credit quality is monitored through the timing of payments compared to the prescribed payment terms and known facts regarding the financial condition of the franchisee or customer. Account and note balances are charged against the allowance after recovery efforts have ceased.
9

The following table summarizes changes in our allowances for credit losses for accounts receivable and notes receivable:
(In thousands)Accounts ReceivableNotes Receivable
Balance at December 31, 2023$8,353 $16,092 
Current period provision for expected credit losses, net1,612 1,324 
Write-offs charged against the allowance(1,235)— 
Balance at September 29, 2024$8,730 $17,416 
Impairment of Long-lived Assets
The Company evaluates its property and equipment and other long-lived assets for potential indicators of impairment at least annually, or as facts and circumstances arise that indicate the carrying value of the asset group may not be recoverable. For Domestic Company-owned restaurants, the evaluation is performed at the operating market level while International Company-owned restaurants are evaluated at the restaurant level as these represent the lowest level for which identifiable cash flows and are largely independent of the cash flows of other assets and liabilities. If the carrying amount of the long-lived asset group exceeds the amount of estimated future undiscounted cash flows, the fair value of the asset group is estimated and an impairment loss is recorded if the carrying value exceeds the estimated fair value. The assumptions used in the undiscounted cash flow calculation related to future growth are subjective and may be negatively impacted by future changes in operating performance or economic conditions.
Recent Accounting Pronouncements
Segment Disclosures
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-07, “Improvements to Reportable Segment Disclosures.” The ASU expands the scope and frequency of segment disclosures and introduces the concept of a “significant expense principle,” which requires entities to disclose significant expense categories and amounts that are regularly provided to the chief operating decision maker (“CODM”) and included within the reported measure of a segment’s profit or loss. The ASU also changes current disclosure requirements by allowing entities to report multiple measures of a segment’s profit or loss, provided the reported measures are used by the CODM to assess performance and allocate resources and that the measure closest to GAAP is also provided. Finally, the ASU requires all segment profit or loss and assets disclosures to be provided on both an annual and interim basis and requires entities to disclose the title and position of the individual identified as the CODM. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 and shall be applied retrospectively to all periods presented in the financial statements. The Company is currently evaluating the standard and determining the extent of additional interim and annual segment disclosures that will be required.
Income Tax Disclosures
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The ASU provides for additional levels of details within the required rate reconciliation table to include additional categories of information about federal, state, and foreign income taxes and requires entities to further disaggregate information about income taxes paid, net of refunds. The ASU is effective for fiscal years beginning after December 15, 2024 and shall be applied prospectively. The Company is currently evaluating the standard and determining the extent of additional disclosures that will be required.
3. Leases
Lessor Operating Leases
The Company subleases certain retail space to our franchisees in the UK, which are primarily operating leases. At September 29, 2024, we leased and subleased approximately 350 Papa Johns restaurants to franchisees in the UK. The initial lease terms on the franchised sites in the UK are generally 15 years. The Company has the option to negotiate an extension toward the end of the lease term at the landlord’s discretion. The initial lease terms of the franchisee subleases are generally five to ten years. Rental income, primarily derived from properties leased and subleased to franchisees in the UK, is recognized on a straight-line basis over the respective operating lease terms. The Company recognized total sublease income of $2.7 million and $7.1 million for the three and nine months ended September 29, 2024, respectively,
10

and $2.3 million and $8.0 million for the three and nine months ended September 24, 2023, respectively, within Other revenues in the Condensed Consolidated Statements of Operations.
Lease Guarantees
As a result of assigning our interest in obligations under property leases as a condition of the refranchising of certain restaurants, we are contingently liable for payment of 75 Domestic leases. These leases have varying terms, the latest of which expires in 2029. As of September 29, 2024, the estimated maximum amount of undiscounted payments the Company could be required to make in the event of nonpayment by the primary lessees was $6.9 million. This contingent liability is not included in the Condensed Consolidated Balance Sheets as it is not probable to occur. The fair value of the guarantee is not material.
Supplemental Cash Flow & Other Information
Supplemental cash flow information related to leases for the periods reported is as follows:
Nine Months Ended
(In thousands)September 29, 2024September 24, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases$1,096 $1,128 
Financing cash flows from finance leases6,778 5,975 
Operating cash flows from operating leases (a)
30,045 28,394 
Right-of-use assets obtained in exchange for new finance lease liabilities3,809 16,518 
Right-of-use assets obtained in exchange for new operating lease liabilities60,120 17,652 
Cash received from sublease income5,287 7,160 
___________________________________
(a)    Included within the change in Other assets and liabilities within the Condensed Consolidated Statements of Cash Flows offset by non-cash operating lease right-of-use asset amortization and lease liability accretion.
4. Papa John’s Marketing Fund, Inc.
PJMF, which is a consolidated VIE where the Company has been identified as the primary beneficiary, collects a percentage of revenues from Company-owned and franchised restaurants in the United States for the purpose of designing and administering advertising and promotional programs for all participating Domestic restaurants. Contributions and expenditures are reported on a gross basis in the Condensed Consolidated Statements of Operations within Other revenues and Other expenses. PJMF also has a wholly-owned subsidiary, Papa Card, Inc., which administers the Company’s gift card programs.
11

Assets and liabilities of PJMF, which are utilized solely for the Company’s advertising and promotional programs, were as follows in the Condensed Consolidated Balance Sheets (in thousands):
September 29,
2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents$3,753 $5,494 
Accounts receivable, net16,250 18,026 
Prepaid expenses and other current assets7,872 2,223 
Total current assets27,875 25,743 
Deferred income taxes674 674 
Total assets$28,549 $26,417 
Liabilities
Current liabilities:
Accounts payable$10 $1,509 
Accrued expenses and other current liabilities21,515 22,245 
Current portion of long-term debt5,650 — 
Current deferred revenue3,832 4,327 
Total current liabilities 31,007 28,081 
Deferred revenue2,165 2,627 
Total liabilities$33,172 $30,708 
5. Revenue Recognition
Contract Balances
Our contract liabilities primarily relate to franchise fees, unredeemed gift card liabilities, and loyalty program obligations, which we classify as Deferred revenue on the Condensed Consolidated Balance Sheets. During the three and nine months ended September 29, 2024, the Company recognized $7.8 million and $24.1 million in revenue, respectively, related to deferred revenue compared to $8.1 million and $24.4 million, respectively, for the three and nine months ended September 24, 2023.
The following table includes a breakout of contract liability balances (in thousands):
Contract Liabilities
September 29, 2024December 31, 2023Change
Franchise fee liabilities$19,670 $20,564 $(894)
Unredeemed gift card liabilities5,997 6,955 (958)
Customer loyalty program obligations12,715 13,274 (559)
Total contract liabilities$38,382 $40,793 $(2,411)
Our contract assets consist primarily of equipment incentives provided to franchisees. Equipment incentives are related to the future value of commissary revenue the Company will receive over the term of the incentive agreement. Contract assets were approximately $13.4 million and $7.9 million, respectively, at September 29, 2024 and December 31, 2023. For the three and nine months ended September 29, 2024 and September 24, 2023, revenue was reduced approximately $1.3 million and $4.0 million and $0.9 million and $2.7 million, respectively, for the amortization of contract assets over the applicable contract terms. Contract assets are included in Prepaid expenses and other current assets and Other assets on the Condensed Consolidated Balance Sheets.
12

Transaction Price Allocated to the Remaining Performance Obligations
The following table (in thousands) includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied at the end of the reporting period.
Performance Obligations by Period
Less than 1 Year1-2 Years2-3 Years3-4 Years4-5 YearsThereafterTotal
Franchise fees$2,991 $2,615 $2,421 $2,175 $1,939 $4,193 $16,334 
At September 29, 2024, approximately $3.4 million of area development fees related to unopened restaurants and International unearned franchise fees are included in Deferred revenue. Timing of revenue recognition is dependent upon the timing of restaurant openings and franchisees’ revenues. Gift card liabilities, which are included in Deferred revenue, will be recognized in Company-owned restaurant revenues when gift cards are redeemed. The Company will recognize redemption fee revenue in Other revenues when cards are redeemed at franchised restaurant locations.
The Company applies the practical expedient in ASC 606, “Revenue Recognition” and does not disclose information about remaining performance obligations that have original expected durations of one year or less.
6. Common Stock
Shares Authorized and Outstanding
The Company has authorized 100.0 million shares of common stock as of September 29, 2024 and December 31, 2023. The Company’s outstanding shares of common stock, net of repurchased shares of common stock held as treasury stock, were 32.6 million shares at September 29, 2024, compared to 32.5 million shares at December 31, 2023.
Share Repurchase Program
On October 28, 2021, our Board of Directors (the “Board”) approved a share repurchase program with an indefinite duration for up to $425.0 million of the Company’s common stock. The following table summarizes our repurchase activity under our share repurchase programs for the three and nine months ended September 29, 2024 and September 24, 2023:
(In thousands, except average price per share)Total Number of Shares PurchasedAverage Price Paid per ShareAggregate Cost of Shares Purchased Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
Three Months Ended
September 29, 2024— $— $— $90,160 
September 24, 2023— $— $— $90,160 
(In thousands, except average price per share)
Total Number of Shares Purchased (a)
Average Price Paid per Share
Aggregate Cost of Shares Purchased (b)
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
Nine Months Ended
September 29, 2024— $— $— $90,160 
September 24, 20232,523 $83.10 $209,640 $90,160 
(a)    Shares repurchased during the nine months ended September 24, 2023 included 2,176,928 shares repurchased on March 1, 2023 from certain funds affiliated with, or managed by, Starboard Value LP (collectively, “Starboard”), at a price of $82.52 per share, for aggregate consideration of $179.6 million.
(b)    Aggregate cost of shares purchased for the nine months ended September 24, 2023 excluded $2.8 million of transaction costs directly attributable to share repurchases, including a 1% excise tax incurred under the Inflation Reduction Act of 2022. Of these costs, $2.1 million were classified as non-cash financing activities during the nine months ended September 24, 2023.
The timing and volume of share repurchases under the Company’s share repurchase programs may be executed at the discretion of management on an opportunistic basis, subject to market and business conditions, regulatory requirements and other factors, or pursuant to trading plans or other arrangements. Repurchases under the programs may be made through open market, block, and privately negotiated transactions, including Rule 10b5-1 plans, at times and in such amounts as management deems appropriate. Repurchases under the Company’s share repurchase programs may be commenced or
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suspended from time to time at the Company’s discretion without prior notice. Funding for the share repurchase programs will be provided through our credit facility, operating cash flow, stock option exercises and cash and cash equivalents.
Dividends
The Company paid aggregate cash dividends of approximately $45.4 million ($1.38 per share) for the nine months ended September 29, 2024. On October 29, 2024, our Board of Directors declared a fourth quarter dividend of $0.46 per common share (approximately $15.2 million in the aggregate), which will be paid on November 29, 2024 to stockholders of record as of the close of business on November 18, 2024. The declaration and payment of any future dividends will be at the discretion of our Board of Directors.
7. Earnings per Share
Basic earnings per common share are computed by dividing net income attributable to common shareholders by the weighted-average common shares outstanding. Diluted earnings per common share are computed by dividing the net income attributable to common shareholders by the diluted weighted average common shares outstanding. Diluted weighted average common shares outstanding consist of basic weighted average common shares outstanding plus weighted average awards outstanding under our equity compensation plans, which are dilutive securities.
The calculations of basic and diluted earnings per common share are as follows (in thousands, except per share data):
Three Months EndedNine Months Ended
September 29,
2024		September 24,
2023		September 29,
2024		September 24,
2023
Net income available to common stockholders$41,808$15,861$68,687$56,005
Basic weighted average number of shares32,745 32,56432,70133,053
Dilutive effect of outstanding equity awards (a)
185 236 149234
Diluted weighted average number of shares32,930 32,800 32,85033,287
Basic earnings per common share$1.28$0.49$2.10$1.69
Diluted earnings per common share$1.27$0.48$2.09$1.68
___________________________________
(a)    Excludes 345,000 and 384,000 shares underlying equity awards for the three and nine months ended September 29, 2024, respectively, and 48,000 and 147,000 shares underlying awards for the three and nine months ended September 24, 2023, respectively, as the effect of including such awards would have been anti-dilutive.
8. Debt
Long-term debt, net, consists of the following (in thousands):
September 29,
2024		December 31,
2023
Senior notes$400,000$400,000
Revolving facilities (a)
332,412364,000
Outstanding debt$732,412$764,000
Unamortized debt issuance costs(5,407)(6,578)
Current portion of long-term debt(5,650)—
Total long-term debt, net$721,355$757,422
___________________________________
(a)    Revolving facilities as of September 29, 2024 includes $5.7 million outstanding under the PJMF Revolving Facility as defined and discussed below.
Senior Notes
On September 14, 2021, the Company issued $400.0 million of 3.875% senior notes (the “Notes”) which will mature on September 15, 2029. Interest on the Notes is payable semi-annually in cash in arrears on March 15 and September 15 of each year at a fixed interest rate of 3.875% per annum. Refer to Note 12 of the consolidated financial statements in our
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Annual Report on Form 10-K for the year ended December 31, 2023 for further description of the provisions and covenant requirements under the Senior Notes.
Credit Agreement
The Company’s amended and restated credit agreement, dated September 14, 2021 and amended May 30, 2023 (as amended, the “Credit Agreement”), provides for a senior secured revolving credit facility in an aggregate available principal amount of $600.0 million (the “PJI Revolving Facility”), of which up to $40.0 million is available as swingline loans and up to $80.0 million is available as letters of credit. The PJI Revolving Facility will mature on September 14, 2026. The remaining availability under the PJI Revolving Facility was approximately $273.2 million as of September 29, 2024. Refer to Note 12 of the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023 for further description of the provisions and covenant requirements under the Credit Agreement.
PJMF Revolving Facility
PJMF has a $30.0 million revolving line of credit (the “PJMF Revolving Facility”) pursuant to a Revolving Loan Agreement, dated September 30, 2015, and most recently amended on September 30, 2024. The PJMF Revolving Facility is secured by substantially all assets of PJMF. The PJMF Revolving Facility matures on September 30, 2025, but is subject to annual renewals. The borrowings under the PJMF Revolving Facility accrue interest at a variable rate of a one month SOFR plus 1.975%. The applicable interest rate on the PJMF Revolving facility was 7.2% for the three months ended September 29, 2024. As of September 29, 2024, the principal amount of debt outstanding under the PJMF Revolving Facility was approximately $5.7 million and is classified as Current portion of long-term debt in the Condensed Consolidated Balance Sheets. The PJMF operating results and the related debt outstanding do not impact the financial covenants under the Company’s Credit Agreement.
Derivative Financial Instruments
On June 23, 2023, the Company entered into a new interest rate swap with an initial notional value of $100.0 million to replace the Company’s prior interest rate swaps, which had a notional value of $125.0 million and matured on April 30, 2023. The objective of the interest rate swap is to mitigate the Company’s exposure to the impact of interest rate changes associated with our variable rate debt under the PJI Revolving Facility. We designated the interest rate swap as a cash flow hedge and assess hedge effectiveness at regular intervals through the maturity date of June 30, 2025. The interest rate swaps are recorded at fair value at each reporting date, and any unrealized gains or losses are included in Accumulated other comprehensive loss in the Condensed Consolidated Balance Sheets and reclassified to Net interest expense in the Condensed Consolidated Statements of Operations in the same period or periods during which the hedged transaction affect earnings.
As of September 29, 2024, we have the following interest rate swap agreements:
Effective DatesFloating Rate Debt Fixed Rates
June 23, 2023 through June 30, 2025$50 million4.55%
June 23, 2023 through June 30, 2025$50 million4.55%
The following table provides information on the location and amounts of our current swaps in the accompanying condensed consolidated financial statements (in thousands):
Interest Rate Swap Derivatives
Balance Sheet LocationFair Value
September 29,
2024		Fair Value
December 31,
2023
Prepaid and other current assets$—$107
Accrued expenses and other current liabilities$479$—
Other long-term liabilities$—$483
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The effect of derivative instruments on the accompanying condensed consolidated financial statements is as follows (in thousands):
Derivatives -
Cash Flow
Hedging
Relationships		Amount of Gain or
(Loss) Recognized
in AOCL
on Derivative		Location of (Loss)
or Gain
Reclassified from
AOCL into
Income		Amount of (Loss) or Gain
Reclassified from
AOCL into
Income		Total Net Interest Expense
on Condensed
Consolidated Statements
of Operations
Interest rate swaps for the three months ended:
September 29, 2024$(820)Interest expense$194 $(10,629)
September 24, 2023$801Interest expense$203 $(11,378)
Interest rate swaps for the nine months ended:
September 29, 2024$(80)Interest expense$591 $(32,588)
September 24, 2023$2,225Interest expense$(40)$(31,674)
Net interest paid, including payments made or received under the swaps, was $13.9 million and $34.3 million for the three and nine months ended September 29, 2024, respectively, and $11.2 million and $28.0 million for the three and nine months ended September 24, 2023, respectively.
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9. Restructuring

International Restructuring
In December 2023, the Company announced international transformation initiatives (“International Transformation Plan”) designed to evolve our business structure to deliver an enhanced value proposition to our International customers and franchisees, ensure targeted investments and efficient resource management, and better position our largest markets, including the UK, for long-term profitable growth and brand strength. During the fourth quarter of the year ended December 31, 2023, the Company commenced approved initiatives under the International Transformation Plan related to establishing new regional hubs across APAC (Asia Pacific), EMEA (Europe, Middle East and Africa), and Latin America that will be led by experienced general managers and their teams.
During the first quarter of 2024, the Company commenced the next phase of the International Transformation Plan as approved by the Board, which involves strategic restaurant closures and divestitures in the UK. The purpose of this plan is to optimize the Company’s restaurant portfolio in the UK and improve overall profitability by closing unprofitable locations and enhancing profitability across the remaining portfolio of Company-owned res