ANN ARBOR, Mich., Oct. 16, 2018 /PRNewswire/ -- Domino's
Pizza, Inc. (NYSE: DPZ), the largest pizza company in the world
based on global retail sales, announced results for the third
quarter of fiscal 2018, comprised of strong growth in same store
sales, global store counts and earnings per share. Domestic same
store sales grew 6.3% during the quarter versus the year-ago
period, continuing the positive sales momentum in the Company's
domestic business. The international division also posted positive
results, with same store sales growth of 3.3% during the quarter.
The third quarter marked the 99th consecutive quarter of
positive international same store sales growth and the
30th consecutive quarter of positive domestic same store
sales growth. The Company also had third quarter global net store
growth of 232 stores, comprised of 173 net new international stores
and 59 net new domestic stores. Global retail sales increased 8.3%,
or 10.4% without the negative impact of changes in foreign currency
exchange rates. Diluted EPS was $1.95
for the third quarter, which was up 65.3% over the Company's
diluted EPS in the prior year quarter.
During the third quarter of 2018, the Company repurchased
397,490 shares of its common stock pursuant to its Board of
Directors approved open market share repurchase program for
approximately $109.1 million.
In addition to the $0.55 quarterly
dividend paid on June 29, 2018, the
Company's Board of Directors also declared a $0.55 per share quarterly dividend for
shareholders of record as of September 14,
2018, which was paid on September 28,
2018. Additionally, on October 11,
2018, the Board of Directors declared a $0.55 per share quarterly dividend for
shareholders of record as of December 14,
2018, to be paid on December 28,
2018.
"I continue to be proud of our great franchisees and operators
around the world. In particular, our U.S. business once again
executed at extremely high levels in the third quarter. Our global
business, driven by strong retail sales growth and franchisee
economics that outperformed the industry, continued its strong
momentum," said Ritch
Allison, Domino's Chief Executive Officer.
Third Quarter 2018 Highlights:
(dollars in
millions, except per share data)
|
|
Third
Quarter
of
2018
|
|
|
Third
Quarter
of
2017
|
|
|
Three
Fiscal
Quarters
of
2018
|
|
|
Three
Fiscal
Quarters
of
2017
|
|
Net
income
|
|
$
|
84.1
|
|
|
$
|
56.4
|
|
|
$
|
250.3
|
|
|
$
|
184.6
|
|
Weighted average
diluted shares
|
|
|
43,067,191
|
|
|
|
47,715,788
|
|
|
|
43,675,627
|
|
|
|
49,066,610
|
|
Diluted earnings
per share, as reported
|
|
$
|
1.95
|
|
|
$
|
1.18
|
|
|
$
|
5.73
|
|
|
$
|
3.76
|
|
Items affecting
comparability (1)
|
|
|
—
|
|
|
|
0.08
|
|
|
|
0.07
|
|
|
|
0.08
|
|
Diluted earnings
per share, as adjusted (1)
|
|
$
|
1.95
|
|
|
$
|
1.27
|
|
|
$
|
5.80
|
|
|
$
|
3.84
|
|
|
(1) Refer to the Financial
Results Comparability section on pages three and four for
additional details. Diluted earnings per share,
as adjusted
figures may not sum to the total due to the rounding of each
individual calculation. See also the Comments on
Regulation
G section on page five.
|
- Revenues increased $142.3
million, or 22.1%, in the third quarter of 2018. The Company
adopted Accounting Standards Codification 606, Revenue from
Contracts with Customers ("ASC 606") in the first quarter of
2018. This resulted in the recognition of $82.5 million in domestic franchise advertising
revenues during the third quarter of 2018 related to contributions
from domestic franchisees to Domino's National Advertising Fund
Inc. ("DNAF"), the Company's consolidated not-for-profit
advertising fund. In 2017, under accounting standards in effect at
that time, the Company had presented these contributions net with
the related disbursements in its consolidated statement of income.
Refer to the "Adoption of New Accounting Guidance" section on page
three for additional information related to the adoption of this
accounting standard. The remaining increase in revenues was due
primarily to higher supply chain volumes resulting from order and
store count growth. Higher domestic franchise revenues, domestic
Company-owned store and international franchise revenues resulting
from higher retail sales also contributed to the increase.
- Net Income increased $27.7
million, or 49.2%, in the third quarter of 2018. This
increase was driven by higher global royalty revenues and higher
supply chain volumes. Additionally, the sale of 12 domestic
Company-owned stores to a franchisee in the third quarter of 2018
resulted in a pre-tax gain on sale recorded in general and
administrative expenses of $5.9
million. A lower tax rate resulting from regulations under
the Tax Cuts and Jobs Act of 2017 (the "2017 Tax Act") and higher
excess tax benefits from equity-based compensation as compared to
the prior year also positively impacted net income in the third
quarter through a reduction in the provision for income taxes.
- Diluted EPS was $1.95 for
the third quarter versus $1.18 in the
prior year quarter. This represents a $0.77 or 65.3% increase over the prior year
quarter. Diluted EPS was $1.95 for
the third quarter versus diluted EPS, as adjusted, of $1.27 in the prior year quarter, which represents
a $0.68 or 53.5% increase over the
prior year quarter. These increases were driven by higher net
income, as well as lower diluted share count, primarily as a result
of the share repurchases made during the trailing four quarters.
(See the Financial Results Comparability section on pages
three and four and 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.
|
|
Third
Quarter
of
2018
|
|
Third
Quarter
of
2017
|
Same store sales
growth: (versus prior year period)
|
|
|
|
|
|
|
|
|
Domestic Company-owned
stores
|
|
|
+ 4.9
|
%
|
|
|
+ 8.4
|
%
|
Domestic franchise
stores
|
|
|
+ 6.4
|
%
|
|
|
+ 8.4
|
%
|
Domestic
stores
|
|
|
+ 6.3
|
%
|
|
|
+ 8.4
|
%
|
International stores
(excluding foreign currency impact)
|
|
|
+ 3.3
|
%
|
|
|
+ 5.1
|
%
|
|
|
|
|
|
|
|
|
|
Global retail
sales growth: (versus prior year period)
|
|
|
|
|
|
|
|
|
Domestic
stores
|
|
|
+11.0
|
%
|
|
|
+12.0
|
%
|
International
stores
|
|
|
+ 5.7
|
%
|
|
|
+16.8
|
%
|
Total
|
|
|
+ 8.3
|
%
|
|
|
+14.5
|
%
|
|
|
|
|
|
|
|
|
|
Global retail
sales growth: (versus prior year period,
excluding foreign currency impact)
|
|
|
|
|
|
|
|
|
Domestic
stores
|
|
|
+11.0
|
%
|
|
|
+12.0
|
%
|
International
stores
|
|
|
+ 9.9
|
%
|
|
|
+16.3
|
%
|
Total
|
|
|
+10.4
|
%
|
|
|
+14.2
|
%
|
|
|
Domestic
Company-
owned
Stores
|
|
Domestic
Franchise
Stores
|
|
Total
Domestic
Stores
|
|
International
Stores
|
|
Total
|
|
Store
counts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Store count at June
17, 2018
|
|
|
396
|
|
|
5,296
|
|
|
5,692
|
|
|
9,430
|
|
|
15,122
|
|
Openings
|
|
|
2
|
|
|
59
|
|
|
61
|
|
|
192
|
|
|
253
|
|
Closings
|
|
|
—
|
|
|
(2)
|
|
|
(2)
|
|
|
(19)
|
|
|
(21)
|
|
Transfers
|
|
|
(12)
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Store count at
September 9, 2018
|
|
|
386
|
|
|
5,365
|
|
|
5,751
|
|
|
9,603
|
|
|
15,354
|
|
Third quarter 2018 net
change
|
|
|
(10)
|
|
|
69
|
|
|
59
|
|
|
173
|
|
|
232
|
|
Trailing four quarters
net change
|
|
|
(13)
|
|
|
273
|
|
|
260
|
|
|
660
|
|
|
920
|
|
Conference Call Information
The Company will file its quarterly report on Form 10-Q this
morning. As previously announced, Domino's Pizza, Inc. will
hold a conference call today at 10
a.m. (Eastern) to review its third quarter fiscal 2018
financial results. The call can be accessed by dialing (888)
400-9978 (U.S./Canada) or (706)
634-4947 (International). Ask for the Domino's Pizza conference
call (conference ID: 7798488). The call will also be webcast at
biz.dominos.com. The webcast will also be archived for one year on
biz.dominos.com.
Adoption of New Accounting Guidance
The Company adopted ASC 606 during the first quarter of 2018.
ASC 606 requires a gross presentation on the consolidated statement
of income for franchisee contributions received by and related
expenses of DNAF, the Company's consolidated not-for-profit
advertising fund. Under prior accounting guidance, the Company had
presented the restricted assets and liabilities of DNAF in its
consolidated balance sheets and had determined that it acted as an
agent for accounting purposes with regard to franchise store
contributions and disbursements. As a result, the Company
historically presented the activities of DNAF net in its
consolidated statement of income and consolidated statement of cash
flows. Under the requirements of ASC 606, the Company determined
that there are not performance obligations associated with the
franchise advertising contributions received by DNAF that are
separate from its domestic royalty payment stream, and as a result,
these franchise contributions and the related expenses are
presented gross in the Company's consolidated statement of income
and consolidated statement of cash flows. While this change
materially impacted the gross amount of reported franchise revenues
and expenses, the impact is generally expected to be an offsetting
increase to both revenues and expenses such that the impact on
income from operations and net income is not expected to be
material. Refer to the Company's Form 10-Q for the fiscal quarter
ended September 9, 2018 for additional information regarding
the adoption of ASC 606.
The Company also adopted ASU 2016-18, Statement of Cash Flows
(Topic 230): Restricted Cash ("ASU 2016-18") during the first
quarter of 2018, which requires that restricted cash and cash
equivalents be included as components of total cash and cash
equivalents as presented on the statement of cash flows. The
Company historically presented changes in restricted cash and cash
equivalents in the investing section of its consolidated statement
of cash flows. This new guidance did not impact the Company's
financial results, but did result in a change in the presentation
of restricted cash and restricted cash equivalents within the
consolidated statement of cash flows. Refer to the Company's Form
10-Q for the fiscal quarter ended September 9, 2018 for
additional information regarding the adoption of ASU 2
016-18.
Financial Results Comparability
Financial results for the Company are significantly affected by
changes in our capital structure, our effective tax rate and the
adoption of new accounting guidance. Our recapitalization
transactions have 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 have reduced our weighted average diluted
shares outstanding. A lower statutory tax rate due to the enactment
of the 2017 Tax Act has resulted in a reduction in our provision
for income taxes in 2018. Finally, the adoption of ASC 606
materially impacted the gross amount of reported domestic franchise
advertising revenues and expenses. Domestic franchise advertising
revenues do not have a cost of sales component, so changes in
revenues have a disproportionate effect on the Company's operating
margin.
In addition to the above factors impacting comparability, the
table below presents certain other items that affect comparability
between 2018 and 2017 financial results. Management believes that
including such information is critical to an understanding of the
Company's financial results for the third quarter of 2018 and the
three fiscal quarters of 2018 as compared to the same periods in
2017 (See the Comments on Regulation G section on page five
for additional details).
|
|
Third
Quarter
|
|
|
Three Fiscal
Quarters
|
|
(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 (1)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(532)
|
|
|
$
|
(411)
|
|
|
$
|
(0.01)
|
|
Interest expense
(2)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(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)
|
|
|
|
|
Third
Quarter
|
|
|
Three Fiscal
Quarters
|
|
(in thousands,
except per share data)
|
|
Pre-tax
|
|
|
After-tax
|
|
|
Diluted
EPS
Impact
|
|
|
Pre-tax
|
|
|
After-tax
|
|
|
Diluted
EPS
Impact
|
|
2017 items
affecting comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recapitalization
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses (1)
|
|
$
|
(622)
|
|
|
$
|
(389)
|
|
|
$
|
(0.01)
|
|
|
$
|
(622)
|
|
|
$
|
(389)
|
|
|
$
|
(0.01)
|
|
Interest expense
(3)
|
|
|
(264)
|
|
|
|
(165)
|
|
|
|
(0.00)
|
|
|
|
(264)
|
|
|
|
(165)
|
|
|
|
(0.00)
|
|
Debt issuance cost
write-off (5)
|
|
|
(5,521)
|
|
|
|
(3,450)
|
|
|
|
(0.07)
|
|
|
|
(5,521)
|
|
|
|
(3,450)
|
|
|
|
(0.07)
|
|
Total of 2017
items
|
|
$
|
(6,407)
|
|
|
$
|
(4,004)
|
|
|
$
|
(0.08)
|
|
|
$
|
(6,407)
|
|
|
$
|
(4,004)
|
|
|
$
|
(0.08)
|
|
(1)
|
Represents legal,
professional and administrative fees incurred in connection with
the Company's 2018 and 2017 recapitalization
transactions.
|
(2)
|
Represents interest
expense the Company incurred on its 2015 five-year fixed rate notes
subsequent to the closing of the 2018 recapitalization transaction,
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 the 2018 fixed rate notes for a short period
of time.
|
(3)
|
Represents interest
expense the Company incurred on its 2012 fixed rate notes
subsequent to the closing of the 2017 recapitalization transaction,
but prior to the repayment of the 2012 fixed rate notes, resulting
in the payment of interest on both the 2012 fixed rate notes and
the 2017 fixed and floating rate 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
Company's 2018 recapitalization transaction.
|
(5)
|
Represents the
write-off of debt issuance costs related to the extinguishment of
the 2012 fixed rate notes in connection with the Company's 2017
recapitalization transaction.
|
Share Repurchases
During the third quarter of 2018, the Company repurchased and
retired 397,490 shares of its common stock under its Board of
Directors-approved open market share repurchase program for
approximately $109.1 million, or an
average price of $274.53. Subsequent
to the third quarter and through October 11,
2018, the Company repurchased and retired an additional
36,671 shares of common stock for a total of approximately
$10.0 million, or an average price of
$273.01 per share. As of
September 9, 2018, the end of the third quarter, the Company's
total remaining authorized amount for share repurchases was
approximately $320.8 million.
Liquidity
As of September 9, 2018, the Company had approximately:
- $84.6 million of unrestricted
cash and cash equivalents;
- $3.47 billion in total debt;
and
- $128.3 million of available
borrowings under its $175.0 million
variable funding notes, net of letters of credit issued of
$46.7 million.
The Company invested $65.1 million
in capital expenditures during the three fiscal quarters of 2018,
versus $38.9 million during the three
fiscal quarters of 2017. 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 $197.4 million in the
three fiscal quarters of 2018.
(in
thousands)
|
|
Three
Fiscal
Quarters
of
2018
|
|
Net cash provided by
operating activities
|
|
$
|
262,519
|
|
Capital
expenditures
|
|
|
(65,074)
|
|
Free cash
flow
|
|
$
|
197,445
|
|
Comments on Regulation G
In addition to the GAAP financial measures set forth in this
press release, the Company has included non-GAAP financial measures
within the meaning of Regulation G, including free cash flow
metrics and measures related to items affecting comparability
between fiscal quarters and other fiscal periods. The Company has
also included metrics such as global retail sales growth and same
store sales growth, which are commonly used statistical measures in
the quick-service restaurant industry that are important to
understanding Company performance.
The Company uses "Global retail sales" to refer to total
worldwide retail sales at Company-owned and franchise stores. The
Company believes global retail sales information is useful in
analyzing revenues because franchisees pay royalties and
advertising fees that are based on a percentage of franchise retail
sales. The Company reviews comparable industry global retail sales
information to assess business trends and to track the growth of
the Domino's Pizza® brand. In addition, supply chain
revenues are directly impacted by changes in franchise retail
sales. Retail sales for franchise stores are reported to the
Company by its franchisees and are not included in Company
revenues.
The Company uses "Same store sales growth," which is
calculated by including only sales from stores that also had sales
in the comparable period of the prior year. International same
store sales growth is calculated similarly to domestic same store
sales growth. Changes in international same store sales are
reported excluding foreign currency impacts, which reflect changes
in international local currency sales.
The Company uses "Diluted EPS, as adjusted," which is
calculated as reported Diluted EPS, adjusted for the items that
affect comparability to the prior year periods discussed above. 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
cash flows from operations less capital expenditures, both as
reported under GAAP. The Company believes that the free cash flow
measure is important to investors and other interested persons, and
that such persons benefit from having a measure which communicates
how much cash flow is available for working capital needs or to be
used for repurchasing debt, making acquisitions, repurchasing
common stock, paying dividends or other similar uses of cash.
About Domino's Pizza®
Founded in 1960, Domino's Pizza is the largest pizza company in
the world based on global 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 over 15,300
stores in over 85 markets. Domino's had global retail sales of over
$12.2 billion in 2017, with more than
$5.9 billion in the U.S. and more
than $6.3 billion internationally. In
the third quarter of 2018, Domino's had global retail sales of
nearly $3.1 billion, with over
$1.5 billion in the U.S. and nearly
$1.6 billion internationally. Its
system is comprised of independent franchise owners who accounted
for over 97% of Domino's stores as of the third quarter of 2018.
Emphasis on technology innovation helped Domino's achieve more than
half of all global retail sales in 2017 from digital channels,
primarily online ordering and mobile applications. In the U.S.,
Domino's generates over 60% of sales via digital channels and has
produced several innovative ordering platforms, including Google
Home, Facebook Messenger, Apple Watch, Amazon Echo, Twitter and
text message using a pizza emoji. In late 2017, Domino's began an
industry-first test of self-driving vehicle delivery with Ford
Motor Company – and in April 2018,
launched Domino's HotSpots™, featuring over 200,000 non-traditional
delivery locations including parks, beaches, local landmarks and
other unique gathering spots.
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 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 domestic 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 other 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 that
indebtedness in the future; 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 domestically and internationally in our intensely
competitive industry; new product, digital ordering and concept
developments by us, and other food-industry competitors; our
ability to maintain good relationships with our franchisees and
their ongoing level of profitability; our ability to successfully
implement cost-saving strategies; our ability and that of our
franchisees to successfully operate in the current and future
credit environment; changes in the level of consumer spending given
general economic conditions, including interest rates, energy
prices and consumer confidence; our ability and that of our
franchisees to open new restaurants and keep existing restaurants
in operation; changes in operating expenses resulting from changes
in prices of food (particularly cheese), fuel and other commodity
costs, labor, utilities, insurance, employee benefits and other
operating costs; the impact that widespread illness or general
health concerns, severe weather conditions and natural disasters
may have on our business and the economies of the countries where
we operate; changes in foreign currency exchange rates; our ability
to retain or replace our executive officers and other key members
of management and our ability to adequately staff our stores and
supply chain centers with qualified personnel; our ability to find
and/or retain suitable real estate for our stores and supply chain
centers; changes in government legislation and regulations,
including changes in our effective tax rate; adverse legal
judgments or settlements; food-borne illness or contamination of
products; data breaches or other cyber risks; the effect of war,
terrorism or catastrophic events; our ability to pay dividends and
repurchase shares; changes in consumer preferences, spending and
traffic patterns and demographic trends; changes in accounting
policies; and adequacy of our insurance coverage. In light of these
risks, uncertainties and assumptions, the forward-looking events
discussed in this press release might not occur. All
forward-looking statements speak only as of the date of this press
release and should be evaluated with an understanding of their
inherent uncertainty. Except as required under federal securities
laws and the rules and regulations of the Securities and Exchange
Commission, or other applicable law, we will not undertake, and
specifically disclaim, any obligation to publicly update or revise
any forward-looking statements to reflect events or circumstances
arising after the date of this press release, whether as a result
of new information, future events or otherwise. You are
cautioned not to place undue reliance on the forward-looking
statements included in this press release or that may be made
elsewhere from time to time by, or on behalf of, us. All
forward-looking statements attributable to us are expressly
qualified by these cautionary statements.
TABLES TO FOLLOW
Domino's Pizza,
Inc. and Subsidiaries
Condensed
Consolidated Statements of Income
(Unaudited)
|
|
|
|
Fiscal Quarters
Ended
|
|
|
|
September 9,
2018
|
|
|
%
of
Total
Revenues
|
|
|
September
10,
2017
|
|
|
%
of
Total
Revenues
|
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Company-owned
stores
|
|
$
|
118,540
|
|
|
|
|
|
|
$
|
112,905
|
|
|
|
|
|
Domestic franchise
royalties and fees
|
|
|
89,427
|
|
|
|
|
|
|
|
80,244
|
|
|
|
|
|
Supply
chain
|
|
|
445,096
|
|
|
|
|
|
|
|
402,143
|
|
|
|
|
|
International
franchise royalties and fees
|
|
|
50,424
|
|
|
|
|
|
|
|
48,350
|
|
|
|
|
|
Domestic franchise
advertising
|
|
|
82,478
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
Total
revenues
|
|
|
785,965
|
|
|
|
100.0
|
%
|
|
|
643,642
|
|
|
|
100.0
|
%
|
Cost of
sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Company-owned
stores
|
|
|
92,998
|
|
|
|
|
|
|
|
86,814
|
|
|
|
|
|
Supply
chain
|
|
|
397,688
|
|
|
|
|
|
|
|
358,350
|
|
|
|
|
|
Total cost of
sales
|
|
|
490,686
|
|
|
|
62.4
|
%
|
|
|
445,164
|
|
|
|
69.2
|
%
|
Operating
margin
|
|
|
295,279
|
|
|
|
37.6
|
%
|
|
|
198,478
|
|
|
|
30.8
|
%
|
General and
administrative
|
|
|
80,369
|
|
|
|
10.2
|
%
|
|
|
81,398
|
|
|
|
12.6
|
%
|
Domestic franchise
advertising
|
|
|
82,478
|
|
|
|
10.6
|
%
|
|
|
—
|
|
|
|
—
|
%
|
Income from
operations
|
|
|
132,432
|
|
|
|
16.8
|
%
|
|
|
117,080
|
|
|
|
18.2
|
%
|
Interest expense,
net
|
|
|
(33,184)
|
|
|
|
(4.2)
|
%
|
|
|
(32,529)
|
|
|
|
(5.1)
|
%
|
Income before
provision for income taxes
|
|
|
99,248
|
|
|
|
12.6
|
%
|
|
|
84,551
|
|
|
|
13.1
|
%
|
Provision for income
taxes
|
|
|
15,153
|
|
|
|
1.9
|
%
|
|
|
28,183
|
|
|
|
4.3
|
%
|
Net income
|
|
$
|
84,095
|
|
|
|
10.7
|
%
|
|
$
|
56,368
|
|
|
|
8.8
|
%
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock –
diluted
|
|
$
|
1.95
|
|
|
|
|
|
|
$
|
1.18
|
|
|
|
|
|
Dividends declared per
share
|
|
$
|
0.55
|
|
|
|
|
|
|
$
|
0.46
|
|
|
|
|
|
Domino's Pizza,
Inc. and Subsidiaries
Condensed
Consolidated Statements of Income
(Unaudited)
|
|
|
|
Three Fiscal
Quarters Ended
|
|
|
|
September 9,
2018
|
|
|
%
of
Total
Revenues
|
|
|
September
10,
2017
|
|
|
%
of
Total
Revenues
|
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Company-owned
stores
|
|
$
|
358,521
|
|
|
|
|
|
|
$
|
338,880
|
|
|
|
|
|
Domestic franchise
royalties and fees
|
|
|
266,335
|
|
|
|
|
|
|
|
242,548
|
|
|
|
|
|
Supply
chain
|
|
|
1,326,076
|
|
|
|
|
|
|
|
1,180,800
|
|
|
|
|
|
International
franchise royalties and fees
|
|
|
154,182
|
|
|
|
|
|
|
|
134,242
|
|
|
|
|
|
Domestic franchise
advertising
|
|
|
245,618
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
Total
revenues
|
|
|
2,350,732
|
|
|
|
100.0
|
%
|
|
|
1,896,470
|
|
|
|
100.0
|
%
|
Cost of
sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Company-owned
stores
|
|
|
278,012
|
|
|
|
|
|
|
|
263,038
|
|
|
|
|
|
Supply
chain
|
|
|
1,183,996
|
|
|
|
|
|
|
|
1,048,293
|
|
|
|
|
|
Total cost of
sales
|
|
|
1,462,008
|
|
|
|
62.2
|
%
|
|
|
1,311,331
|
|
|
|
69.2
|
%
|
Operating
margin
|
|
|
888,724
|
|
|
|
37.8
|
%
|
|
|
585,139
|
|
|
|
30.8
|
%
|
General and
administrative
|
|
|
251,053
|
|
|
|
10.7
|
%
|
|
|
239,158
|
|
|
|
12.6
|
%
|
Domestic franchise
advertising
|
|
|
245,618
|
|
|
|
10.4
|
%
|
|
|
—
|
|
|
|
—
|
%
|
Income from
operations
|
|
|
392,053
|
|
|
|
16.7
|
%
|
|
|
345,981
|
|
|
|
18.2
|
%
|
Interest expense,
net
|
|
|
(97,938)
|
|
|
|
(4.2)
|
%
|
|
|
(82,384)
|
|
|
|
(4.3)
|
%
|
Income before
provision for income taxes
|
|
|
294,115
|
|
|
|
12.5
|
%
|
|
|
263,597
|
|
|
|
13.9
|
%
|
Provision for income
taxes
|
|
|
43,785
|
|
|
|
1.9
|
%
|
|
|
79,019
|
|
|
|
4.2
|
%
|
Net income
|
|
$
|
250,330
|
|
|
|
10.6
|
%
|
|
$
|
184,578
|
|
|
|
9.7
|
%
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock –
diluted
|
|
$
|
5.73
|
|
|
|
|
|
|
$
|
3.76
|
|
|
|
|
|
Dividends declared per
share
|
|
$
|
1.65
|
|
|
|
|
|
|
$
|
1.38
|
|
|
|
|
|
Domino's Pizza,
Inc. and Subsidiaries
Condensed
Consolidated Balance Sheets
(Unaudited)
|
|
|
|
September 9,
2018
|
|
|
December
31,
2017
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
84,600
|
|
|
$
|
35,768
|
|
Restricted cash and
cash equivalents
|
|
|
168,170
|
|
|
|
191,762
|
|
Accounts receivable,
net
|
|
|
170,244
|
|
|
|
173,677
|
|
Advertising fund
assets, restricted
|
|
|
118,833
|
|
|
|
120,223
|
|
Inventories
|
|
|
41,420
|
|
|
|
39,961
|
|
Prepaid expenses and
other
|
|
|
22,382
|
|
|
|
18,389
|
|
Total current
assets
|
|
|
605,649
|
|
|
|
579,780
|
|
Property, plant and
equipment, net
|
|
|
206,999
|
|
|
|
169,586
|
|
Other
assets
|
|
|
99,466
|
|
|
|
87,387
|
|
Total
assets
|
|
$
|
912,114
|
|
|
$
|
836,753
|
|
Liabilities and
stockholders' deficit
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Current portion of
long-term debt
|
|
$
|
35,847
|
|
|
$
|
32,324
|
|
Accounts
payable
|
|
|
87,509
|
|
|
|
106,894
|
|
Advertising fund
liabilities
|
|
|
112,222
|
|
|
|
120,223
|
|
Other accrued
liabilities
|
|
|
140,853
|
|
|
|
138,844
|
|
Total current
liabilities
|
|
|
376,431
|
|
|
|
398,285
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
|
|
Long-term debt, less
current portion
|
|
|
3,437,632
|
|
|
|
3,121,490
|
|
Other accrued
liabilities
|
|
|
71,809
|
|
|
|
52,362
|
|
Total long-term
liabilities
|
|
|
3,509,441
|
|
|
|
3,173,852
|
|
Total stockholders'
deficit
|
|
|
(2,973,758)
|
|
|
|
(2,735,384)
|
|
Total liabilities and
stockholders' deficit
|
|
$
|
912,114
|
|
|
$
|
836,753
|
|
Domino's Pizza,
Inc. and Subsidiaries
Condensed
Consolidated Statements of Cash Flows
(Unaudited)
|
|
|
|
Three Fiscal
Quarters Ended
|
|
|
|
September 9,
2018
|
|
|
September
10,
2017
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
250,330
|
|
|
$
|
184,578
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
35,770
|
|
|
|
30,054
|
|
(Gain) loss on
sale/disposal of assets
|
|
|
(5,187)
|
|
|
|
648
|
|
Amortization of debt
issuance costs
|
|
|
6,581
|
|
|
|
9,424
|
|
Provision for deferred
income taxes
|
|
|
1,737
|
|
|
|
5,680
|
|
Non-cash compensation
expense
|
|
|
15,660
|
|
|
|
14,271
|
|
Excess tax benefits
from equity-based compensation
|
|
|
(22,722)
|
|
|
|
(20,430)
|
|
Other
|
|
|
356
|
|
|
|
234
|
|
Changes in operating
assets and liabilities
|
|
|
(25,580)
|
|
|
|
(2,321)
|
|
Changes in advertising
fund assets and liabilities, restricted
|
|
|
5,574
|
|
|
|
5,961
|
|
Net cash provided by
operating activities
|
|
|
262,519
|
|
|
|
228,099
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(65,074)
|
|
|
|
(38,897)
|
|
Proceeds from sale of
assets
|
|
|
8,213
|
|
|
|
31
|
|
Maturities of
advertising fund investments, restricted
|
|
|
44,007
|
|
|
|
—
|
|
Purchases of
advertising fund investments, restricted
|
|
|
(50,152)
|
|
|
|
—
|
|
Other
|
|
|
(2,357)
|
|
|
|
296
|
|
Net cash used in
investing activities
|
|
|
(65,363)
|
|
|
|
(38,570)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from issuance
of long-term debt
|
|
|
905,000
|
|
|
|
1,900,000
|
|
Repayments of
long-term debt and capital lease obligations
|
|
|
(595,067)
|
|
|
|
(920,093)
|
|
Proceeds from exercise
of stock options
|
|
|
8,967
|
|
|
|
4,014
|
|
Purchases of common
stock
|
|
|
(429,190)
|
|
|
|
(1,012,721)
|
|
Tax payments for
restricted stock upon vesting
|
|
|
(6,849)
|
|
|
|
(9,386)
|
|
Payments of common
stock dividends and equivalents
|
|
|
(46,720)
|
|
|
|
(44,630)
|
|
Cash paid for
financing costs
|
|
|
(8,207)
|
|
|
|
(16,846)
|
|
Other
|
|
|
—
|
|
|
|
(205)
|
|
Net cash used in
financing activities
|
|
|
(172,066)
|
|
|
|
(99,867)
|
|
Effect of exchange
rate changes on cash
|
|
|
(235)
|
|
|
|
349
|
|
Change in cash and
cash equivalents, restricted cash and cash equivalents
|
|
|
24,855
|
|
|
|
90,011
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period
|
|
|
35,768
|
|
|
|
42,815
|
|
Restricted cash and
cash equivalents, beginning of period
|
|
|
191,762
|
|
|
|
126,496
|
|
Cash and cash
equivalents included in advertising fund assets,
restricted,
beginning of period
|
|
|
27,316
|
|
|
|
25,091
|
|
Cash and cash
equivalents, restricted cash and cash equivalents and cash
and
cash
equivalents included in advertising fund assets, restricted,
beginning of
period
|
|
|
254,846
|
|
|
|
194,402
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, end of period
|
|
|
84,600
|
|
|
|
61,360
|
|
Restricted cash and
cash equivalents, end of period
|
|
|
168,170
|
|
|
|
192,001
|
|
Cash and cash
equivalents included in advertising fund assets,
restricted,
end of
period
|
|
|
26,931
|
|
|
|
31,052
|
|
Cash and cash
equivalents, restricted cash and cash equivalents and cash
and
cash
equivalents included in advertising fund assets, restricted,
end
of
period
|
|
$
|
279,701
|
|
|
$
|
284,413
|
|
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SOURCE Domino's Pizza