ANN ARBOR, Mich., Feb. 21, 2019 /PRNewswire/ -- Domino's
Pizza, Inc. (NYSE: DPZ), the largest pizza company in the world
based on global retail sales, announced results for the fourth
quarter and fiscal 2018, comprised of strong growth in global
retail sales and earnings per share. Global retail sales increased
6.5% in the fourth quarter, or 9.5% without the negative impact of
changes in foreign currency exchange rates. U.S. same store sales
grew 5.6% during the quarter versus the year-ago period, and 6.6%
for the full year, continuing the positive sales momentum in the
Company's U.S. business. The international division also posted
positive results, with same store sales growth of 2.4% during the
quarter and 3.5% for the full year. The fourth quarter marked the
100th consecutive quarter of international same store
sales growth and the 31st consecutive quarter of U.S.
same store sales growth.
The Company had fourth quarter global net store growth of 560
stores, comprised of 125 net new U.S. stores and 435 net new
international stores. In fiscal 2018, the Company opened 1,058 net
new stores, comprised of 258 net new U.S. stores and 800 net new
international stores, which included surpassing the
10,000th store mark in our international business.
Fourth quarter diluted EPS was $2.62, up 25.4% over the prior year quarter;
fiscal 2018 diluted EPS was $8.35, up
43.2% over the prior year. Fiscal 2018 diluted EPS, as adjusted,
was $8.42, up 42.5% over the prior
year diluted EPS, as adjusted, of $5.91. (See the Financial Results
Comparability section on page four and the Comments on
Regulation G section on pages five and six.)
On February 20, 2019, the Board of
Directors declared a $0.65 per share
quarterly dividend for shareholders of record as of March 15, 2019 to be paid on March 29, 2019. This represents an increase of
18% over the previous quarterly dividend amount.
"I am pleased with our fourth quarter, which capped a very
strong 2018 for Domino's," said Ritch
Allison, Domino's Chief Executive Officer. "Our long-game
approach, driven by fundamentals and the finest franchisee base in
QSR across the globe, continues to pace the industry – and we are
excited to execute our global strategy in 2019 and beyond."
Fourth Quarter and Fiscal 2018 Highlights:
(dollars in
millions, except per share data)
|
|
Fourth
Quarter
of
2018
|
|
|
Fourth
Quarter
of
2017
|
|
|
Fiscal
2018
|
|
|
Fiscal
2017
|
|
Net
income
|
|
$
|
111.6
|
|
|
$
|
93.3
|
|
|
$
|
362.0
|
|
|
$
|
277.9
|
|
Weighted average
diluted shares
|
|
|
42,591,025
|
|
|
|
44,593,094
|
|
|
|
43,331,278
|
|
|
|
47,677,834
|
|
Diluted earnings
per share, as reported
|
|
$
|
2.62
|
|
|
$
|
2.09
|
|
|
$
|
8.35
|
|
|
$
|
5.83
|
|
Items affecting
comparability (1)
|
|
|
—
|
|
|
|
—
|
|
|
|
0.07
|
|
|
|
0.08
|
|
Diluted earnings
per share, as adjusted (1)
|
|
$
|
2.62
|
|
|
$
|
2.09
|
|
|
$
|
8.42
|
|
|
$
|
5.91
|
|
|
(1) Refer
to the Financial Results Comparability section on page four
for additional details. See also the Comments on Regulation
G section on pages five and six.
|
- Revenues increased $190.6
million, or 21.4%, in the fourth 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 $112.9 million in U.S. franchise advertising
revenues during the fourth quarter of 2018 related to contributions
from U.S. 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 U.S. franchise royalties and fee
revenues and U.S. Company-owned store revenues resulting from
higher retail sales also contributed to the increase. These
increases were partially offset by a decrease in international
franchise royalties and fee revenues due primarily to the negative
impact of foreign currency in the fourth quarter of
2018.
- Net Income increased $18.3
million, or 19.6%, in the fourth quarter of 2018. This
increase was primarily driven by a lower effective tax rate
resulting from regulations under the Tax Cuts and Jobs Act of 2017
(the "2017 Tax Act") through a reduction in the provision for
income taxes. Higher U.S. royalty revenues and higher supply chain
volumes also positively impacted net income in the fourth quarter.
These increases were partially offset by higher general and
administrative expenses due to our continued investments in
technological initiatives and investments in other strategic areas.
Additionally, general and administrative expenses in the fourth
quarter of 2017 were partially offset by a $4.0 million pre-tax gain due to the sale of
certain U.S. Company-owned stores to franchisees. Higher net
interest expense primarily due to a higher net debt balance and
lower excess tax benefits from equity-based compensation as
compared to the prior year also negatively impacted net
income.
- Diluted EPS was $2.62 for
the fourth quarter versus $2.09 in
the prior year quarter. This represents a $0.53 or 25.4% 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 2018.
The table below outlines certain statistical measures utilized
by the Company to analyze its performance. Refer to the Comments
on Regulation G section on pages five and six for additional
details.
|
|
Fourth
Quarter
of
2018
|
|
|
Fourth
Quarter
of
2017
|
|
|
Fiscal
2018
|
|
|
Fiscal
2017
|
|
Same store sales
growth: (versus prior year period)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Company-owned
stores
|
|
|
+ 3.6
|
%
|
|
|
+ 3.8
|
%
|
|
|
+ 4.8
|
%
|
|
|
+ 8.7
|
%
|
U.S. franchise
stores
|
|
|
+ 5.7
|
%
|
|
|
+ 4.2
|
%
|
|
|
+ 6.8
|
%
|
|
|
+ 7.6
|
%
|
U.S. stores
|
|
|
+ 5.6
|
%
|
|
|
+ 4.2
|
%
|
|
|
+ 6.6
|
%
|
|
|
+ 7.7
|
%
|
International stores
(excluding foreign currency impact)
|
|
|
+ 2.4
|
%
|
|
|
+ 2.5
|
%
|
|
|
+ 3.5
|
%
|
|
|
+ 3.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global retail
sales growth: (versus prior year period)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. stores
|
|
|
+10.2
|
%
|
|
|
+7.6
|
%
|
|
|
+11.2
|
%
|
|
|
+11.1
|
%
|
International
stores
|
|
|
+ 3.3
|
%
|
|
|
+15.6
|
%
|
|
|
+ 9.9
|
%
|
|
|
+14.2
|
%
|
Total
|
|
|
+ 6.5
|
%
|
|
|
+11.7
|
%
|
|
|
+ 10.6
|
%
|
|
|
+12.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global retail
sales growth: (versus prior year
period, excluding foreign
currency impact)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. stores
|
|
|
+10.2
|
%
|
|
|
+7.6
|
%
|
|
|
+11.2
|
%
|
|
|
+11.1
|
%
|
International
stores
|
|
|
+ 8.9
|
%
|
|
|
+12.0
|
%
|
|
|
+ 10.4
|
%
|
|
|
+14.8
|
%
|
Total
|
|
|
+9.5
|
%
|
|
|
+9.9
|
%
|
|
|
+10.8
|
%
|
|
|
+13.0
|
%
|
|
|
U.S.
Company-
owned
Stores
|
|
|
U.S.
Franchise
Stores
|
|
|
Total
U.S.
Stores
|
|
|
International
Stores
|
|
|
Total
|
|
Store
counts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Store count at
September 9, 2018
|
|
|
386
|
|
|
|
5,365
|
|
|
|
5,751
|
|
|
|
9,603
|
|
|
|
15,354
|
|
Openings
|
|
|
4
|
|
|
|
123
|
|
|
|
127
|
|
|
|
472
|
|
|
|
599
|
|
Closings
|
|
|
—
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(37)
|
|
|
|
(39)
|
|
Store count at
December 30, 2018
|
|
|
390
|
|
|
|
5,486
|
|
|
|
5,876
|
|
|
|
10,038
|
|
|
|
15,914
|
|
Fourth quarter 2018
net store growth
|
|
|
4
|
|
|
|
121
|
|
|
|
125
|
|
|
|
435
|
|
|
|
560
|
|
Fiscal 2018 net store
growth (1)
|
|
|
12
|
|
|
|
246
|
|
|
|
258
|
|
|
|
800
|
|
|
|
1,058
|
|
|
(1) Fiscal 2018 net
store growth does not include the effect of transfers. In the first
fiscal quarter of 2018, the Company began managing its 31
franchised stores in Alaska and Hawaii as part of its U.S. stores
segment. Prior to 2018, these franchised stores were included in
the Company's international stores segment. Additionally, in the
second and third fiscal quarters of 2018, the Company sold a total
of 14 U.S. Company-owned stores to U.S. franchisees.
|
Conference Call Information
The Company will file its annual report on Form 10-K this
morning. As previously announced, Domino's Pizza, Inc. will
hold a conference call today at 10
a.m. (Eastern) to review its fourth quarter and fiscal 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. 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 U.S. 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-K for the fiscal year
ended December 30, 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-K for the fiscal year ended December 30, 2018 for
additional information regarding the adoption of ASU 2016-18.
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 U.S. franchise advertising revenues and
expenses. U.S. 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 fourth quarter of 2018 and
fiscal 2018 as compared to the same periods in 2017 (See the
Comments on Regulation G section on pages five and six for
additional details).
|
|
Fiscal Year Ended
December 30, 2018
|
|
(in thousands,
except per share data)
|
|
Pre-tax
|
|
|
After-tax
|
|
|
Diluted
EPS
Impact
|
|
2018 items
affecting comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
Recapitalization
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses (1)
|
|
$
|
(532)
|
|
|
$
|
(411)
|
|
|
$
|
(0.01)
|
|
Interest expense
(2)
|
|
|
(142)
|
|
|
|
(110)
|
|
|
|
(0.00)
|
|
Debt issuance cost
write-off (3)
|
|
|
(3,164)
|
|
|
|
(2,446)
|
|
|
|
(0.06)
|
|
Total of 2018
items
|
|
$
|
(3,838)
|
|
|
$
|
(2,967)
|
|
|
$
|
(0.07)
|
|
|
|
|
|
Fiscal Year Ended
December 31, 2017
|
|
(in thousands,
except per share data)
|
|
Pre-tax
|
|
|
After-tax
|
|
|
Diluted
EPS
Impact
|
|
2017 items
affecting comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
Recapitalization
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses (1)
|
|
$
|
(622)
|
|
|
$
|
(389)
|
|
|
$
|
(0.01)
|
|
Interest expense
(4)
|
|
|
(264)
|
|
|
|
(165)
|
|
|
|
(0.00)
|
|
Debt issuance cost
write-off (5)
|
|
|
(5,521)
|
|
|
|
(3,450)
|
|
|
|
(0.07)
|
|
Total of 2017
items
|
|
$
|
(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 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.
|
(4) 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.
|
(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 fourth quarter of 2018, the Company repurchased and
retired 636,376 shares of its common stock under its Board of
Directors-approved open market share repurchase program for
approximately $162.0 million, or an
average price of $254.60 per share.
As of December 30, 2018, the end of the fourth quarter,
the Company's total remaining authorized amount for share
repurchases was approximately $158.8
million. Subsequent to the fourth quarter and through
February 14, 2019, the Company
repurchased and retired an additional 33,549 shares of common stock
for a total of approximately $8.1
million, or an average price of $242.74 per share.
Liquidity
As of December 30, 2018, the Company had approximately:
- $25.4 million of unrestricted
cash and cash equivalents;
- $3.53 billion in total debt;
and
- $61.9 million of available
borrowings under its $175.0 million
variable funding notes, net of letters of credit issued of
$48.1 million and $65.0 million of borrowings under its variable
funding notes.
The Company invested $119.9
million in capital expenditures during fiscal 2018, versus
$90.0 million during fiscal 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 $274.3 million in fiscal 2018.
(in
thousands)
|
|
Fiscal Year
Ended
December 30, 2018
|
|
Net cash provided by
operating activities
|
|
$
|
394,171
|
|
Capital
expenditures
|
|
|
(119,888)
|
|
Free cash
flow
|
|
$
|
274,283
|
|
Three to Five-Year Outlook
The Company does not provide quarterly or annual earnings
estimates. The following outlook does not constitute specific
earnings guidance. In January 2019,
the Company reaffirmed its three to five-year outlook as
follows:
|
Current Outlook
|
|
Global retail sales
growth
(1)
|
8% – 12%
|
|
U.S. same store sales
growth
|
3% – 6%
|
|
International same
store sales growth
|
3% – 6%
|
|
Net unit
growth
|
6% – 8%
|
|
|
|
|
(1) Excluding foreign
currency impact
|
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 U.S. same store sales
growth. Changes in international same store sales are reported
excluding foreign currency impacts, which reflect changes in
international local currency sales.
The Company uses "Diluted EPS, as adjusted," which is
calculated as reported Diluted EPS, adjusted for the items that
affect comparability to the prior year periods 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 or paying dividends.
About Domino's Pizza®
Founded in 1960, Domino's Pizza is the largest pizza company in
the world based on retail sales, with a significant business in
both delivery and carryout pizza. It ranks among the world's top
public restaurant brands with a global enterprise of more than
15,900 stores in over 85 markets. Domino's had global retail sales
of over $13.5 billion in 2018, with
nearly $6.6 billion in the U.S. and
more than $6.9 billion
internationally. In the fourth quarter of 2018, Domino's had global
retail sales of over $4.2 billion,
with nearly $2.1 billion in the U.S.
and more than $2.1 billion
internationally. Its system is comprised of independent franchise
owners who accounted for 98% of Domino's stores as of the fourth
quarter of 2018. Emphasis on technology innovation helped Domino's
achieve more than half of all global retail sales in 2018 from
digital channels, primarily online ordering and mobile
applications. In the U.S., Domino's generates over 65% of sales via
digital channels and has 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 U.S. and international business,
ability to service our indebtedness, our future cash flows, our
operating performance, trends in our business and other
descriptions of future events reflect the Company's expectations
based upon currently available information and data. While we
believe these expectations and projections are based on reasonable
assumptions, such forward-looking statements are inherently subject
to risks, uncertainties and assumptions. Important factors that
could cause actual results to differ materially from our
expectations are more fully described in our 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 or
renegotiate key terms of that indebtedness in the future; the
impact a downgrade in our credit rating may have on our business,
financial condition and results of operations; our future financial
performance and our ability to pay principal and interest on our
indebtedness; the effectiveness of our advertising, operations and
promotional initiatives; the strength of our brand, including our
ability to compete in the U.S. and internationally in our intensely
competitive industry; the impact of social media and other
consumer-oriented technologies on our business, brand and
reputation; new product, digital ordering and concept developments
by us, and other food-industry competitors; our ability to maintain
good relationships with our franchisees and their ongoing level of
profitability; our ability to successfully implement cost-saving
strategies; our ability and that of our franchisees to successfully
operate in the current and future credit environment; changes in
the level of consumer spending given general economic conditions,
including interest rates, energy prices and consumer confidence;
our ability and that of our franchisees to open new restaurants and
keep existing restaurants in operation; changes in operating
expenses resulting from changes in prices of food (particularly
cheese), fuel and other commodity costs, labor, utilities,
insurance, employee benefits and other operating costs; the impact
that widespread illness or general health concerns, severe weather
conditions and natural disasters may have on our business and the
economies of the countries where we operate; changes in foreign
currency exchange rates; our ability to retain or replace our
executive officers and other key members of management and our
ability to adequately staff our stores and supply chain centers
with qualified personnel; our ability to find and/or retain
suitable real estate for our stores and supply chain centers;
changes in government legislation and regulations, including
changes in laws and regulations regarding information privacy and
consumer protection; adverse legal judgments or settlements;
food-borne illness or contamination of products; data breaches,
power loss, technological failures, user error or other cyber
risks; the effect of war, terrorism or catastrophic events; our
ability to pay dividends and repurchase shares; changes in consumer
preferences, spending and traffic patterns and demographic trends;
changes in accounting policies; and adequacy of our insurance
coverage. In light of these risks, uncertainties and assumptions,
the forward-looking events discussed in this press release might
not occur. All forward-looking statements speak only as of
the date of this press release and should be evaluated with an
understanding of their inherent uncertainty. Except as required
under federal securities laws and the rules and regulations of the
Securities and Exchange Commission, or other applicable law, we
will not undertake, and specifically disclaim, any obligation to
publicly update or revise any forward-looking statements to reflect
events or circumstances arising after the date of this press
release, whether as a result of new information, future events or
otherwise. You are cautioned not to place undue reliance on
the forward-looking statements included in this press release or
that may be made elsewhere from time to time by, or on behalf of,
us. All forward-looking statements attributable to us are expressly
qualified by these cautionary statements.
TABLES TO FOLLOW
Domino's Pizza,
Inc. and Subsidiaries
|
Condensed
Consolidated Statements of Income
|
(Unaudited)
|
|
|
|
Fiscal Quarter
Ended
|
|
|
|
December 30,
2018
|
|
|
%
of
Total
Revenues
|
|
|
December
31,
2017
|
|
|
%
of
Total
Revenues
|
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Company-owned
stores
|
|
$
|
156,283
|
|
|
|
|
|
|
$
|
151,966
|
|
|
|
|
|
U.S. franchise
royalties and fees
|
|
|
125,158
|
|
|
|
|
|
|
|
108,839
|
|
|
|
|
|
Supply
chain
|
|
|
617,221
|
|
|
|
|
|
|
|
558,238
|
|
|
|
|
|
International
franchise royalties and fees
|
|
|
70,565
|
|
|
|
|
|
|
|
72,466
|
|
|
|
|
|
U.S. franchise
advertising
|
|
|
112,908
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
Total
revenues
|
|
|
1,082,135
|
|
|
|
100.0
|
%
|
|
|
891,509
|
|
|
|
100.0
|
%
|
Cost of
sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Company-owned
stores
|
|
|
120,146
|
|
|
|
|
|
|
|
114,636
|
|
|
|
|
|
Supply
chain
|
|
|
548,034
|
|
|
|
|
|
|
|
496,021
|
|
|
|
|
|
Total cost of
sales
|
|
|
668,180
|
|
|
|
61.8
|
%
|
|
|
610,657
|
|
|
|
68.5
|
%
|
Operating
margin
|
|
|
413,955
|
|
|
|
38.2
|
%
|
|
|
280,852
|
|
|
|
31.5
|
%
|
General and
administrative
|
|
|
121,411
|
|
|
|
11.2
|
%
|
|
|
105,601
|
|
|
|
11.8
|
%
|
U.S. franchise
advertising
|
|
|
112,908
|
|
|
|
10.4
|
%
|
|
|
—
|
|
|
|
—
|
%
|
Income from
operations
|
|
|
179,636
|
|
|
|
16.6
|
%
|
|
|
175,251
|
|
|
|
19.7
|
%
|
Interest expense,
net
|
|
|
(45,073)
|
|
|
|
(4.2)
|
%
|
|
|
(38,695)
|
|
|
|
(4.3)
|
%
|
Income before
provision for income taxes
|
|
|
134,563
|
|
|
|
12.4
|
%
|
|
|
136,556
|
|
|
|
15.4
|
%
|
Provision for income
taxes
|
|
|
22,921
|
|
|
|
2.1
|
%
|
|
|
43,229
|
|
|
|
4.9
|
%
|
Net income
|
|
$
|
111,642
|
|
|
|
10.3
|
%
|
|
$
|
93,327
|
|
|
|
10.5
|
%
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock –
diluted
|
|
$
|
2.62
|
|
|
|
|
|
|
$
|
2.09
|
|
|
|
|
|
Dividends declared per
share
|
|
$
|
0.55
|
|
|
|
|
|
|
$
|
0.46
|
|
|
|
|
|
Domino's Pizza,
Inc. and Subsidiaries
|
Condensed
Consolidated Statements of Income
|
(Unaudited)
|
|
|
|
Fiscal Year
Ended
|
|
|
|
December 30,
2018
|
|
|
%
of
Total
Revenues
|
|
|
December
31,
2017
|
|
|
%
of
Total
Revenues
|
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Company-owned
stores
|
|
$
|
514,804
|
|
|
|
|
|
|
$
|
490,846
|
|
|
|
|
|
U.S. franchise
royalties and fees
|
|
|
391,493
|
|
|
|
|
|
|
|
351,387
|
|
|
|
|
|
Supply
chain
|
|
|
1,943,297
|
|
|
|
|
|
|
|
1,739,038
|
|
|
|
|
|
International
franchise royalties and fees
|
|
|
224,747
|
|
|
|
|
|
|
|
206,708
|
|
|
|
|
|
U.S. franchise
advertising
|
|
|
358,526
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
Total
revenues
|
|
|
3,432,867
|
|
|
|
100.0
|
%
|
|
|
2,787,979
|
|
|
|
100.0
|
%
|
Cost of
sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Company-owned
stores
|
|
|
398,158
|
|
|
|
|
|
|
|
377,674
|
|
|
|
|
|
Supply
chain
|
|
|
1,732,030
|
|
|
|
|
|
|
|
1,544,314
|
|
|
|
|
|
Total cost of
sales
|
|
|
2,130,188
|
|
|
|
62.1
|
%
|
|
|
1,921,988
|
|
|
|
68.9
|
%
|
Operating
margin
|
|
|
1,302,679
|
|
|
|
37.9
|
%
|
|
|
865,991
|
|
|
|
31.1
|
%
|
General and
administrative
|
|
|
372,464
|
|
|
|
10.8
|
%
|
|
|
344,759
|
|
|
|
12.4
|
%
|
U.S. franchise
advertising
|
|
|
358,526
|
|
|
|
10.4
|
%
|
|
|
—
|
|
|
|
—
|
%
|
Income from
operations
|
|
|
571,689
|
|
|
|
16.7
|
%
|
|
|
521,232
|
|
|
|
18.7
|
%
|
Interest expense,
net
|
|
|
(143,011)
|
|
|
|
(4.2)
|
%
|
|
|
(121,079)
|
|
|
|
(4.3)
|
%
|
Income before
provision for income taxes
|
|
|
428,678
|
|
|
|
12.5
|
%
|
|
|
400,153
|
|
|
|
14.4
|
%
|
Provision for income
taxes
|
|
|
66,706
|
|
|
|
2.0
|
%
|
|
|
122,248
|
|
|
|
4.4
|
%
|
Net income
|
|
$
|
361,972
|
|
|
|
10.5
|
%
|
|
$
|
277,905
|
|
|
|
10.0
|
%
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock –
diluted
|
|
$
|
8.35
|
|
|
|
|
|
|
$
|
5.83
|
|
|
|
|
|
Dividends declared per
share
|
|
$
|
2.20
|
|
|
|
|
|
|
$
|
1.84
|
|
|
|
|
|
Domino's Pizza,
Inc. and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
|
|
|
December 30,
2018
|
|
|
December
31,
2017
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
25,438
|
|
|
$
|
35,768
|
|
Restricted cash and
cash equivalents
|
|
|
166,993
|
|
|
|
191,762
|
|
Accounts receivable,
net
|
|
|
190,091
|
|
|
|
173,677
|
|
Inventories
|
|
|
45,975
|
|
|
|
39,961
|
|
Prepaid expenses and
other
|
|
|
25,710
|
|
|
|
18,389
|
|
Advertising fund
assets, restricted
|
|
|
112,744
|
|
|
|
120,223
|
|
Total current
assets
|
|
|
566,951
|
|
|
|
579,780
|
|
Property, plant and
equipment, net
|
|
|
234,939
|
|
|
|
169,586
|
|
Other
assets
|
|
|
105,495
|
|
|
|
87,387
|
|
Total
assets
|
|
$
|
907,385
|
|
|
$
|
836,753
|
|
Liabilities and
stockholders' deficit
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Current portion of
long-term debt
|
|
$
|
35,893
|
|
|
$
|
32,324
|
|
Accounts
payable
|
|
|
92,546
|
|
|
|
106,894
|
|
Advertising fund
liabilities
|
|
|
107,150
|
|
|
|
120,223
|
|
Other accrued
liabilities
|
|
|
144,154
|
|
|
|
138,844
|
|
Total current
liabilities
|
|
|
379,743
|
|
|
|
398,285
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
|
|
Long-term debt, less
current portion
|
|
|
3,495,691
|
|
|
|
3,121,490
|
|
Other accrued
liabilities
|
|
|
71,872
|
|
|
|
52,362
|
|
Total long-term
liabilities
|
|
|
3,567,563
|
|
|
|
3,173,852
|
|
Total stockholders'
deficit
|
|
|
(3,039,921)
|
|
|
|
(2,735,384)
|
|
Total liabilities and
stockholders' deficit
|
|
$
|
907,385
|
|
|
$
|
836,753
|
|
Domino's Pizza,
Inc. and Subsidiaries
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
|
|
Fiscal Year
Ended
|
|
|
|
December 30,
2018
|
|
|
December
31,
2017
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
361,972
|
|
|
$
|
277,905
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
53,665
|
|
|
|
44,369
|
|
Gain on sale/disposal
of assets
|
|
|
(4,737)
|
|
|
|
(3,148)
|
|
Amortization of debt
issuance costs
|
|
|
8,033
|
|
|
|
10,976
|
|
(Benefit) provision
for deferred income taxes
|
|
|
(872)
|
|
|
|
6,160
|
|
Non-cash compensation
expense
|
|
|
22,792
|
|
|
|
20,713
|
|
Excess tax benefits
from equity-based compensation
|
|
|
(23,786)
|
|
|
|
(27,227)
|
|
Provision (benefit)
for losses on accounts and notes receivable
|
|
|
899
|
|
|
|
(277)
|
|
Changes in operating
assets and liabilities
|
|
|
(18,443)
|
|
|
|
9,565
|
|
Changes in advertising
fund assets and liabilities, restricted
|
|
|
(5,352)
|
|
|
|
2,225
|
|
Net cash provided by
operating activities
|
|
|
394,171
|
|
|
|
341,261
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(119,888)
|
|
|
|
(90,011)
|
|
Proceeds from sale of
assets
|
|
|
8,367
|
|
|
|
6,835
|
|
Maturities of
advertising fund investments, restricted
|
|
|
94,007
|
|
|
|
—
|
|
Purchases of
advertising fund investments, restricted
|
|
|
(70,152)
|
|
|
|
—
|
|
Other
|
|
|
(591)
|
|
|
|
(562)
|
|
Net cash used in
investing activities
|
|
|
(88,257)
|
|
|
|
(83,738)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from issuance
of long-term debt
|
|
|
970,000
|
|
|
|
1,900,000
|
|
Repayments of
long-term debt and capital lease obligations
|
|
|
(604,088)
|
|
|
|
(928,193)
|
|
Proceeds from exercise
of stock options
|
|
|
9,832
|
|
|
|
6,099
|
|
Purchases of common
stock
|
|
|
(591,212)
|
|
|
|
(1,064,253)
|
|
Tax payments for
restricted stock upon vesting
|
|
|
(6,962)
|
|
|
|
(9,449)
|
|
Payments of common
stock dividends and equivalents
|
|
|
(92,166)
|
|
|
|
(84,298)
|
|
Cash paid for
financing costs
|
|
|
(8,207)
|
|
|
|
(16,846)
|
|
Other
|
|
|
—
|
|
|
|
(205)
|
|
Net cash used in
financing activities
|
|
|
(322,803)
|
|
|
|
(197,145)
|
|
Effect of exchange
rate changes on cash
|
|
|
(538)
|
|
|
|
66
|
|
Change in cash and
cash equivalents, restricted cash and cash equivalents
|
|
$
|
(17,427)
|
|
|
$
|
60,444
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
25,438
|
|
|
|
35,768
|
|
Restricted cash and
cash equivalents, end of period
|
|
|
166,993
|
|
|
|
191,762
|
|
Cash and cash
equivalents included in advertising fund assets,
restricted,
end of
period
|
|
|
44,988
|
|
|
|
27,316
|
|
Cash and cash
equivalents, restricted cash and cash equivalents and cash and
cash
equivalents included in advertising fund
assets, restricted, end of period
|
|
$
|
237,419
|
|
|
$
|
254,846
|
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/dominos-pizza-announces-fourth-quarter-and-fiscal-2018-financial-results-300799413.html
SOURCE Domino's Pizza, Inc.