Global retail sales growth (excluding foreign
currency impact) of 4.9%; 5.1% (excluding foreign currency impact
and closure of the Russia
market)
U.S. same store sales decline of 0.6%
International same store sales growth (excluding
foreign currency impact) of 3.3%
Global net store decline of 8 stores (excluding
closure of the Russia market,
global net stores grew by 135)
Diluted EPS up 49.8% to $4.18
ANN
ARBOR, Mich., Oct. 12,
2023 /PRNewswire/ -- Domino's Pizza, Inc.
(NYSE: DPZ), the largest pizza company in the world,
announced results for the third quarter of 2023. Global retail
sales grew 4.9% in the third quarter of 2023, excluding
the positive impact of foreign currency, and grew 5.1% in the
third quarter of 2023, excluding the positive impact of
foreign currency and the closure of the Russia market. Without adjusting for the
impact of foreign currency, but excluding the closure of the
Russia market, global retail sales
grew 5.3% in the third quarter of 2023.
U.S. same store sales declined 0.6% during the third quarter of
2023. International same store sales (excluding foreign currency
impact) grew 3.3% during the third quarter of 2023. Diluted EPS for
the third quarter of 2023 was $4.18,
an increase of 49.8% over the prior year quarter.
The Company had third quarter global net store decline of 8
stores, comprised of 27 net U.S. store openings and 35 net
international store closures. The Company had 218 gross store
openings and 226 gross store closures during the third quarter of
2023. Global and international net store decline reflects the
closure of the remaining 143 net Domino's stores in Russia. Excluding the impact of the closure of
the Russia market, the Company had
third quarter global net store growth of 135 stores, comprised of
27 net U.S. store openings and 108 net international store
openings.
During the third quarter of 2023, the Company's master
franchisee that owned and operated Domino's Pizza®
stores in Russia announced its
intent to file for bankruptcy with respect to the stores in that
market, and, as a result, the Company has excluded the impact of
the Russia market from its fiscal
2023 statistical measures, including net store growth, global
retail sales growth and global retail sales growth, excluding
foreign currency impact. The Company has not received any royalties
and fees from the operations of the Russia market subsequent to the Russian
invasion of Ukraine in
February 2022. For additional
details, refer to the Russia Market Update and Comments
on Regulation G sections included below.
Subsequent to the end of the third quarter of 2023, on
October 10, 2023, the Company's Board
of Directors declared a $1.21 per
share quarterly dividend on its outstanding common stock for
shareholders of record as of December 15,
2023, to be paid on December 29,
2023.
The Company will host its Investor Day on December 7, 2023 at the Company's headquarters in
Ann Arbor, Michigan.
"We continue to execute on our initiatives to drive sustainable
growth in the U.S.," said Russell
Weiner, Domino's Chief Executive Officer. "Our 'Summer of
Service' initiative and the hard work of our franchisees and team
members have brought delivery times back to pre-pandemic levels.
Domino's Rewards is engaging more customers, and our integration
with Uber's marketplace is on track. We are ready and excited to
deliver the incremental orders both programs will bring in 2024 and
beyond."
Third Quarter
Highlights (Unaudited):
|
|
|
|
(in thousands,
except share and per share data)
|
|
Third
Quarter of
2023
|
|
|
Third
Quarter of
2022
|
|
|
Three Fiscal
Quarters of
2023
|
|
|
Three Fiscal
Quarters of
2022
|
|
Net
income
|
|
$
|
147,676
|
|
|
$
|
100,504
|
|
|
$
|
361,826
|
|
|
$
|
293,961
|
|
Weighted average
diluted shares
|
|
|
35,357,043
|
|
|
|
36,062,316
|
|
|
|
35,516,434
|
|
|
|
36,265,918
|
|
Diluted
EPS
|
|
$
|
4.18
|
|
|
$
|
2.79
|
|
|
$
|
10.19
|
|
|
$
|
8.11
|
|
- Revenues decreased $41.2
million, or 3.9%, in the third quarter of 2023 as compared
to the third quarter of 2022, primarily due to lower supply chain
revenues and lower U.S. Company-owned store revenues. The decline
in supply chain revenues was attributable to a decrease in the
Company's market basket pricing to stores, as well as lower order
volumes. The Company's market basket pricing to stores decreased
1.7% during the third quarter of 2023 as compared to the third
quarter of 2022. U.S. Company-owned store revenues decreased as a
result of the refranchising of 114 U.S. Company-owned stores in
Arizona and Utah in the fourth quarter of 2022 (the "2022
Store Sale"); however, this decrease was partially offset by higher
U.S. Company-owned same store sales. Higher global franchise
royalty revenues resulting from global retail sales growth
(excluding foreign currency impact) partially offset the decrease
in revenues in the third quarter of 2023. U.S. franchise royalties
and fees increased primarily due to an increase in fees paid by
U.S. franchisees for the use of the Company's technology platforms,
as well as U.S. retail sales growth attributable to the impact of
the 2022 Store Sale, and, to a lesser extent, net store growth.
International franchise royalties and fees also increased due to
international same store sales growth (excluding foreign currency
impact), as well as an increase in the average number of
international franchised stores open during the period resulting
from net store growth during the trailing four quarters, but this
increase was partially offset by the negative impact of changes in
foreign currency exchange rates of approximately $0.2 million.
- Income from Operations increased $13.0 million, or 7.4%, in the third quarter of
2023 as compared to the third quarter of 2022 primarily due to
higher global franchise royalty revenues resulting from global
retail sales growth (excluding foreign currency impact and closure
of the Russia market) of 5.1%, as
well as higher supply chain gross margin. These increases in income
from operations were partially offset by higher general and
administrative expenses driven by higher labor costs and the
negative impact of changes in foreign currency exchange rates on
international franchise royalties and fees of $0.2 million, consistent with the impact on
revenues as discussed above.
- Net Income increased $47.2
million, or 46.9%, in the third quarter of 2023 as compared
to the third quarter of 2022 primarily due to a $28.2 million pre-tax unrealized gain associated
with the remeasurement of the Company's investment in DPC Dash Ltd
("DPC Dash"). This unrealized gain was recorded in other income in
the Company's condensed consolidated statements of income. Higher
income from operations also contributed to the increase in net
income, as discussed above. Additionally, the Company's provision
for income taxes decreased $3.4
million in the third quarter of 2023 due to a lower
effective tax rate, partially offset by higher income before
provision for income taxes. The effective tax rate decreased to
15.9% during the third quarter of 2023 as compared to 23.8% in the
third quarter of 2022, driven in part by higher foreign tax credits
and a 1.1 percentage point change in the impact of excess tax
benefits from equity-based compensation, which are recorded as a
reduction to the income tax provision. Lower net interest expense
of $2.5 million resulting from higher
interest income on cash equivalents also contributed to the
increase in net income.
- Diluted EPS was $4.18 in
the third quarter of 2023 versus $2.79 in the third quarter of 2022, representing
a $1.39, or 49.8%, increase. This
$1.39 increase was driven by the
unrealized gain associated with the remeasurement of the Company's
investment in DPC Dash of $0.59, a
favorable tax rate impact of $0.39,
improved operating results of $0.28,
a lower weighted average diluted share count of $0.08 and lower net interest expense of
$0.05.
The tables below outline certain statistical measures utilized
by the Company to analyze its performance (unaudited). Refer to
Comments on Regulation G below for additional details.
|
|
Third
Quarter of
2023
|
|
Third
Quarter of
2022
|
|
Three Fiscal
Quarters of
2023
|
|
Three Fiscal
Quarters of
2022
|
Same store sales
growth: (versus prior year period)
|
|
|
|
|
|
|
|
|
U.S. Company-owned
stores
|
|
+ 2.9 %
|
|
(1.9) %
|
|
+ 5.2 %
|
|
(7.3) %
|
U.S. franchise
stores
|
|
(0.7) %
|
|
+ 2.2 %
|
|
+ 0.8 %
|
|
(1.2) %
|
U.S. stores
|
|
(0.6) %
|
|
+ 2.0 %
|
|
+ 1.0 %
|
|
(1.6) %
|
International stores
(excluding foreign currency impact)
|
|
+ 3.3 %
|
|
(1.8) %
|
|
+ 2.6 %
|
|
(0.8) %
|
|
|
|
|
|
|
|
|
|
Global retail sales
growth: (versus prior year period) (1)
|
|
|
|
|
|
|
|
|
U.S. stores
|
|
+ 0.9 %
|
|
+ 4.1 %
|
|
+ 2.5 %
|
|
+ 0.7 %
|
International
stores
|
|
+ 9.8 %
|
|
(6.8) %
|
|
+ 5.5 %
|
|
(3.5) %
|
Total
|
|
+ 5.3 %
|
|
(1.6) %
|
|
+ 4.0 %
|
|
(1.5) %
|
|
|
|
|
|
|
|
|
|
Global retail sales
growth: (versus prior year period,
excluding foreign currency impact)
(2)
|
|
|
|
|
|
|
|
|
U.S. stores
|
|
+ 0.9 %
|
|
+ 4.1 %
|
|
+ 2.5 %
|
|
+ 0.7 %
|
International
stores
|
|
+ 9.4 %
|
|
+ 5.2 %
|
|
+ 8.9 %
|
|
+ 5.7 %
|
Total
|
|
+ 5.1 %
|
|
+ 4.7 %
|
|
+ 5.7 %
|
|
+ 3.2 %
|
(1)
|
|
2023 figures exclude
the impact of the Russia market. Including the impact of the Russia
market, international stores retail sales growth was 9.3% and 5.1%
for the third quarter and three fiscal quarters of 2023,
respectively. Including the impact of the Russia market, total
global retail sales growth was 5.0% and 3.8% for the third quarter
and three fiscal quarters of 2023, respectively.
|
(2)
|
|
2023 figures exclude
the impact of the Russia market. Including the impact of the Russia
market, international stores retail sales growth, excluding foreign
currency impact, was 9.0% and 8.5% for the third quarter and three
fiscal quarters of 2023, respectively. Including the impact of the
Russia market, total global retail sales growth, excluding foreign
currency impact, was 4.9% and 5.5% for the third quarter and three
fiscal quarters of 2023, respectively.
|
|
|
U.S. Company-
owned Stores
|
|
|
U.S. Franchise
Stores
|
|
|
Total
U.S. Stores
|
|
|
International
Stores
|
|
|
Total
|
|
Store
counts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Store count at June
18, 2023
|
|
|
286
|
|
|
|
6,449
|
|
|
|
6,735
|
|
|
|
13,470
|
|
|
|
20,205
|
|
Openings
|
|
|
2
|
|
|
|
26
|
|
|
|
28
|
|
|
|
190
|
|
|
|
218
|
|
Closings
|
|
|
—
|
|
|
|
(1)
|
|
|
|
(1)
|
|
|
|
(225)
|
|
|
|
(226)
|
|
Store count at
September 10, 2023
|
|
|
288
|
|
|
|
6,474
|
|
|
|
6,762
|
|
|
|
13,435
|
|
|
|
20,197
|
|
Third quarter 2023 net
store growth (decline)
|
|
|
2
|
|
|
|
25
|
|
|
|
27
|
|
|
|
(35)
|
|
|
|
(8)
|
|
Third quarter 2023 net
store growth,
excluding Russia
|
|
|
2
|
|
|
|
25
|
|
|
|
27
|
|
|
|
108
|
|
|
|
135
|
|
Trailing four quarters
net store growth
|
|
|
1
|
|
|
|
118
|
|
|
|
119
|
|
|
|
559
|
|
|
|
678
|
|
Trailing four quarters
net store growth,
excluding Russia
|
|
|
1
|
|
|
|
118
|
|
|
|
119
|
|
|
|
748
|
|
|
|
867
|
|
Share Repurchases
During the third quarter of 2023, the Company repurchased and
retired 229,860 shares of common stock for a total of $90.0 million. As of September 10, 2023, the
Company had a total remaining authorized amount for share
repurchases of $199.5 million.
Liquidity
As of September 10, 2023, the Company had
approximately:
- $80.9 million of unrestricted
cash and cash equivalents;
- $4.99 billion in total debt;
and
- $277.8 million of available
borrowing capacity under its 2021 and 2022 variable funding notes,
net of letters of credit issued of $42.2
million.
Net cash provided by operating activities was $422.1 million during the three fiscal quarters
of 2023 as compared to $330.2 million
during the three fiscal quarters of 2022. The Company invested
$59.3 million in capital expenditures
during the three fiscal quarters of 2023 as compared to
$50.5 million during the three fiscal
quarters of 2022.
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 $362.9 million during the three fiscal quarters
of 2023 as compared to $279.6 million
during the three fiscal quarters of 2022 (refer to Comments on
Regulation G below for additional details).
(In
thousands)
|
|
Three Fiscal
Quarters of
2023
|
|
|
Three Fiscal
Quarters of
2022
|
|
Net cash provided by
operating activities
|
|
$
|
422,130
|
|
|
$
|
330,154
|
|
Capital
expenditures
|
|
|
(59,271)
|
|
|
|
(50,508)
|
|
Free cash
flow
|
|
$
|
362,859
|
|
|
$
|
279,646
|
|
Free cash flow increased $83.2
million in the three fiscal quarters of 2023 as compared to
the three fiscal quarters of 2022, primarily due to the positive
impact of changes in operating assets and liabilities and higher
net income, excluding non-cash operating activities, partially
offset by higher investments in capital expenditures.
Two- to Three-Year Outlook - 2023 Update
Based on actual results for the three fiscal quarters of 2023
and the Company's outlook for the remainder of fiscal 2023, the
Company expects its 2023 global net store growth to trend at or
slightly below the low-end of its 5% to 7% two- to three-year
outlook. Additionally, the Company expects its 2023 global retail
sales growth, excluding foreign currency impact, to trend modestly
below the mid-point of its 4% to 8% two -to three-year outlook.
Russia Market Update
On August 21, 2023, the Company's
master franchisee that owned and operated Domino's
Pizza® stores in Russia
announced its intent to file for bankruptcy with respect to the
stores in that market. Therefore, as of August 21, 2023, the Company has considered the
stores in the Russia market to be
closed and they are excluded from the Company's ending store count
as of the end of the third quarter of 2023. The Company has
disclosed its statistical measure of net store growth for the third
quarter and trailing four quarters ended September 10, 2023 including and excluding the
impact of the closure of the Russia market. Additionally, the Company has
presented its statistical measures of global retail sales growth
and global retail sales growth, excluding foreign currency impact,
in the tables above for the fiscal quarter and three fiscal
quarters ended September 10, 2023
excluding the impact of the retail sales from the Russia market. The Company believes the impact
of the Russia market on its
statistical measures of global retail sales growth and global
retail sales growth, excluding foreign currency impact, for the
fiscal quarter and three fiscal quarters ended September 11, 2022 was immaterial and prior
amounts have not been adjusted to conform to the current year
presentation. The Company believes the impact of the Russia market on its statistical measure of
same store sales growth for the periods presented was immaterial,
and it also believes the impact of the Russia market on its condensed consolidated
statements of income related to international franchise royalties
and fee revenues and general and administrative expenses for the
periods presented was immaterial. Refer to Comments on
Regulation G below for additional details.
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. The
Company has also included metrics such as global retail sales,
global retail sales growth, global retail sales growth, excluding
foreign currency impact, same store sales growth, the market basket
pricing change and the impact of foreign currency exchange rates on
international franchise royalty revenues 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," a statistical
measure, to refer to total worldwide retail sales at Company-owned
and franchise stores. The Company believes global retail sales
information is useful in analyzing revenues because franchisees pay
royalties and advertising fees that are based on a percentage of
franchise retail sales. The Company reviews comparable industry
global retail sales information to assess business trends and to
track the growth of the Domino's Pizza brand. In addition, supply
chain revenues are directly impacted by changes in franchise retail
sales. Retail sales for franchise stores are reported to the
Company by its franchisees and are not included in Company
revenues. "Global retail sales growth" is calculated as the
change of U.S. Dollar global retail sales against the comparable
period of the prior year. "Global retail sales growth, excluding
foreign currency impact" is calculated as the change of
international local currency global retail sales against the
comparable period of the prior year. The 2023 global retail sales
growth measures excluding the Russia market are calculated as the growth in
retail sales excluding the retail sales from the Russia market from both 2023 retail sales and
the 2022 retail sales base.
The Company uses "Same store sales growth," a statistical
measure, which is calculated by including only sales from stores
that also had sales in the comparable weeks of both periods.
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. Same store
sales growth for transferred stores is reflected in their current
classification.
The Company uses "Net store growth," a statistical
measure, which is calculated by netting gross store openings with
gross store closures during the period. Transfers between
Company-owned stores and franchised stores are excluded from the
calculation of net store growth.
The Company uses "Market basket pricing change," a
statistical measure, which is calculated as the percentage change
of the market basket purchased by an average U.S. store (based on
average weekly unit sales) from U.S. supply chain centers against
the comparable period of the prior year. The Company believes that
the market basket pricing change is important to investors and
other interested persons to understand the Company's performance.
As market basket prices fluctuate, revenues, cost of sales and
gross margin percentages in the Company's supply chain segment also
fluctuate. Additionally, cost of sales, gross margins and gross
margin percentages for the Company's U.S. Company-owned stores also
fluctuate.
The Company uses "Impact of changes in foreign currency
exchange rates on international franchise royalty revenues," a
statistical measure, which is calculated as the difference in
international franchise royalty revenues resulting from translating
current period local currency results to U.S. dollars at current
period exchange rates as compared to prior period exchange rates.
The Company believes that the impact of changes in foreign currency
exchange rates on international franchise royalty revenues is
important to investors and other interested persons to understand
the Company's international royalty revenues given the significant
variability in those revenues that can be driven by changes in
foreign currency exchanges rates.
The Company uses "Free cash flow," which is calculated as
net cash provided by operating activities, less capital
expenditures, both as reported under GAAP. The most directly
comparable financial measure calculated and presented in accordance
with GAAP is net cash provided by operating activities. 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.
Conference Call Information
The Company will file its Quarterly Report on Form 10-Q today.
As previously announced, Domino's Pizza, Inc. will hold a
conference call today at 8:30
a.m. (Eastern) to review its third quarter 2023 financial
results. The webcast is available at ir.dominos.com and will
be archived for one year.
About Domino's Pizza®
Founded in 1960, Domino's Pizza is the largest pizza company in
the world, 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 20,000 stores in over
90 markets. Domino's had global retail sales of over $17.5 billion in 2022, with over $8.7 billion in the U.S. and nearly $8.8 billion internationally. In the third
quarter of 2023, Domino's had global retail sales of over
$4.2 billion, with nearly
$2.1 billion in the U.S. and over
$2.1 billion internationally. Its
system is comprised of independent franchise owners who accounted
for 99% of Domino's stores as of the end of the third quarter of
2023. Emphasis on technology innovation helped Domino's achieve
approximately two-thirds of all global retail sales in 2022 from
digital channels. In the U.S., Domino's generated more than 80% of
U.S. retail sales in 2022 via digital channels and has developed
several innovative ordering platforms, including those for Apple
CarPlay, Amazon Alexa, text-to-order and more. In 2023, Domino's
launched Pinpoint Delivery, a new technology that allows customers
to receive a delivery nearly anywhere, including places like parks,
baseball fields and beaches.
Order – dominos.com
Company Info – biz.dominos.com
Media Assets – media.dominos.com
Please visit our Investor Relations website at ir.dominos.com to
view news, announcements, earnings releases, investor presentations
and conference webcasts.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995:
This press release contains various forward-looking statements
about the Company within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Act") that are based on current
management expectations that involve substantial risks and
uncertainties which could cause actual results to differ materially
from the results expressed in, or implied by, these forward-looking
statements. The following cautionary statements are being made
pursuant to the provisions of the Act and with the intention of
obtaining the benefits of the "safe harbor" provisions of the Act.
You can identify forward-looking statements by the use of words
such as "anticipates," "believes," "could," "should," "estimates,"
"expects," "intends," "may," "will," "plans," "predicts,"
"projects," "seeks," "approximately," "potential," "outlook" and
similar terms and phrases that concern our strategy, plans or
intentions, including references to assumptions. These
forward-looking statements address various matters including
information concerning future results of operations and business
strategy, our anticipated profitability, estimates in same store
sales growth, store growth and the growth of our U.S. and
international business in general, our ability to service our
indebtedness, our future cash flows, our operating performance,
trends in our business and other descriptions of future events
reflect the Company's expectations based upon currently available
information and data. While we believe these expectations and
projections are based on reasonable assumptions, such
forward-looking statements are inherently subject to risks,
uncertainties and assumptions. Important factors that could cause
actual results to differ materially from our expectations are more
fully described in our filings with the Securities and Exchange
Commission, including under the section headed "Risk Factors" in
our Annual Report on Form 10-K for the fiscal year ended
January 1, 2023. 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 strength of our brand, including our ability to
compete in the U.S. and internationally in our intensely
competitive industry, including the food service and food delivery
markets; our ability to successfully implement our growth strategy;
labor shortages or changes in operating expenses resulting from
increases in prices of food (particularly cheese), fuel and other
commodity costs, labor, utilities, insurance, employee benefits and
other operating costs or negative economic conditions; our ability
to manage difficulties associated with or related to the COVID-19
pandemic and the effects of COVID-19 and related regulations and
policies on our business and supply chain, including impacts on the
availability of labor; the effectiveness of our advertising,
operations and promotional initiatives; shortages, interruptions or
disruptions in the supply or delivery of fresh food products and
store equipment; the impact of social media and other
consumer-oriented technologies on our business, brand and
reputation; the impact of new or improved technologies and
alternative methods of delivery on consumer behavior; new product,
digital ordering and concept developments by us, and other
food-industry competitors; our ability to maintain good
relationships with and attract new franchisees, and franchisees'
ability to successfully manage their operations without negatively
impacting our royalty payments and fees or our brand's reputation;
our ability to successfully implement cost-saving strategies; our
ability and that of our franchisees to successfully operate in the
current and future credit environment; changes in the level of
consumer spending given general economic conditions, including
interest rates, energy prices and consumer confidence or negative
economic conditions in general; our ability and that of our
franchisees to open new restaurants and keep existing restaurants
in operation and maintain demand for new stores; the impact that
widespread illness, health epidemics or general health concerns,
severe weather conditions and natural disasters may have on our
business and the economies of the countries where we operate;
changes in foreign currency exchange rates; changes in income tax
rates; our ability to retain or replace our executive officers and
other key members of management and our ability to adequately staff
our stores and supply chain centers with qualified personnel; our
ability to find and/or retain suitable real estate for our stores
and supply chain centers; changes in government legislation and
regulations, including changes in laws and regulations regarding
information privacy, payment methods and consumer protection and
social media; adverse legal judgments or settlements; food-borne
illness or contamination of products or food tampering or other
events that may impact our reputation; data breaches, power loss,
technological failures, user error or other cyber risks threatening
us or our franchisees; the impact that environmental, social and
governance matters may have on our business and reputation; the
effect of war, terrorism, catastrophic events or climate change;
our ability to pay dividends and repurchase shares; changes in
consumer tastes, 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
|
|
|
|
September 10,
2023
|
|
|
% of
Total
Revenues
|
|
|
September 11,
2022
|
|
|
% of
Total
Revenues
|
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Company-owned
stores
|
|
$
|
86,277
|
|
|
|
|
|
$
|
112,388
|
|
|
|
|
U.S. franchise
royalties and fees
|
|
|
138,322
|
|
|
|
|
|
|
128,878
|
|
|
|
|
Supply
chain
|
|
|
618,086
|
|
|
|
|
|
|
646,082
|
|
|
|
|
International
franchise royalties and fees
|
|
|
73,142
|
|
|
|
|
|
|
67,055
|
|
|
|
|
U.S. franchise
advertising
|
|
|
111,534
|
|
|
|
|
|
|
114,193
|
|
|
|
|
Total
revenues
|
|
|
1,027,361
|
|
|
|
100.0
|
%
|
|
|
1,068,596
|
|
|
|
100.0
|
%
|
Cost of
sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Company-owned
stores
|
|
|
72,614
|
|
|
|
|
|
|
98,589
|
|
|
|
|
Supply
chain
|
|
|
556,578
|
|
|
|
|
|
|
588,157
|
|
|
|
|
Total cost of
sales
|
|
|
629,192
|
|
|
|
61.2
|
%
|
|
|
686,746
|
|
|
|
64.3
|
%
|
Gross margin
|
|
|
398,169
|
|
|
|
38.8
|
%
|
|
|
381,850
|
|
|
|
35.7
|
%
|
General and
administrative
|
|
|
97,203
|
|
|
|
9.5
|
%
|
|
|
91,205
|
|
|
|
8.5
|
%
|
U.S. franchise
advertising
|
|
|
111,534
|
|
|
|
10.9
|
%
|
|
|
114,193
|
|
|
|
10.7
|
%
|
Income from
operations
|
|
|
189,432
|
|
|
|
18.4
|
%
|
|
|
176,452
|
|
|
|
16.5
|
%
|
Other income
|
|
|
28,231
|
|
|
|
2.8
|
%
|
|
|
—
|
|
|
|
0.0
|
%
|
Interest expense,
net
|
|
|
(42,089)
|
|
|
|
(4.1)
|
%
|
|
|
(44,604)
|
|
|
|
(4.2)
|
%
|
Income before provision
for income taxes
|
|
|
175,574
|
|
|
|
17.1
|
%
|
|
|
131,848
|
|
|
|
12.3
|
%
|
Provision for income
taxes
|
|
|
27,898
|
|
|
|
2.7
|
%
|
|
|
31,344
|
|
|
|
2.9
|
%
|
Net income
|
|
$
|
147,676
|
|
|
|
14.4
|
%
|
|
$
|
100,504
|
|
|
|
9.4
|
%
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock –
diluted
|
|
$
|
4.18
|
|
|
|
|
|
$
|
2.79
|
|
|
|
|
Domino's Pizza, Inc.
and Subsidiaries
Condensed
Consolidated Statements of Income
(Unaudited)
|
|
|
|
Three Fiscal
Quarters Ended
|
|
|
|
September 10,
2023
|
|
|
% of
Total
Revenues
|
|
|
September 11,
2022
|
|
|
% of
Total
Revenues
|
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Company-owned
stores
|
|
$
|
258,882
|
|
|
|
|
|
$
|
328,785
|
|
|
|
|
U.S. franchise
royalties and fees
|
|
|
410,454
|
|
|
|
|
|
|
379,261
|
|
|
|
|
Supply
chain
|
|
|
1,858,023
|
|
|
|
|
|
|
1,902,215
|
|
|
|
|
International
franchise royalties and fees
|
|
|
213,308
|
|
|
|
|
|
|
202,803
|
|
|
|
|
U.S. franchise
advertising
|
|
|
335,719
|
|
|
|
|
|
|
331,863
|
|
|
|
|
Total
revenues
|
|
|
3,076,386
|
|
|
|
100.0
|
%
|
|
|
3,144,927
|
|
|
|
100.0
|
%
|
Cost of
sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Company-owned
stores
|
|
|
214,609
|
|
|
|
|
|
|
280,029
|
|
|
|
|
Supply
chain
|
|
|
1,673,405
|
|
|
|
|
|
|
1,728,159
|
|
|
|
|
Total cost of
sales
|
|
|
1,888,014
|
|
|
|
61.4
|
%
|
|
|
2,008,188
|
|
|
|
63.9
|
%
|
Gross margin
|
|
|
1,188,372
|
|
|
|
38.6
|
%
|
|
|
1,136,739
|
|
|
|
36.1
|
%
|
General and
administrative
|
|
|
290,186
|
|
|
|
9.4
|
%
|
|
|
285,769
|
|
|
|
9.1
|
%
|
U.S. franchise
advertising
|
|
|
335,719
|
|
|
|
10.9
|
%
|
|
|
331,863
|
|
|
|
10.5
|
%
|
Refranchising
loss
|
|
|
149
|
|
|
|
0.0
|
%
|
|
|
—
|
|
|
|
0.0
|
%
|
Income from
operations
|
|
|
562,318
|
|
|
|
18.3
|
%
|
|
|
519,107
|
|
|
|
16.5
|
%
|
Other income
|
|
|
13,267
|
|
|
|
0.4
|
%
|
|
|
—
|
|
|
|
0.0
|
%
|
Interest expense,
net
|
|
|
(128,640)
|
|
|
|
(4.2)
|
%
|
|
|
(136,059)
|
|
|
|
(4.3)
|
%
|
Income before provision
for income taxes
|
|
|
446,945
|
|
|
|
14.5
|
%
|
|
|
383,048
|
|
|
|
12.2
|
%
|
Provision for income
taxes
|
|
|
85,119
|
|
|
|
2.7
|
%
|
|
|
89,087
|
|
|
|
2.9
|
%
|
Net income
|
|
$
|
361,826
|
|
|
|
11.8
|
%
|
|
$
|
293,961
|
|
|
|
9.3
|
%
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock –
diluted
|
|
$
|
10.19
|
|
|
|
|
|
$
|
8.11
|
|
|
|
|
Domino's Pizza, Inc.
and Subsidiaries
Condensed
Consolidated Balance Sheets
(Unaudited)
|
|
|
|
|
|
September 10,
2023
|
|
|
January 1,
2023
|
|
(In
thousands)
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
80,879
|
|
|
$
|
60,356
|
|
Restricted cash and
cash equivalents
|
|
|
202,307
|
|
|
|
191,289
|
|
Accounts receivable,
net
|
|
|
249,995
|
|
|
|
257,492
|
|
Inventories
|
|
|
69,683
|
|
|
|
81,570
|
|
Prepaid expenses and
other
|
|
|
41,257
|
|
|
|
37,287
|
|
Advertising fund
assets, restricted
|
|
|
151,511
|
|
|
|
162,660
|
|
Total current
assets
|
|
|
795,632
|
|
|
|
790,654
|
|
Property, plant and
equipment, net
|
|
|
290,391
|
|
|
|
302,235
|
|
Operating lease
right-of-use assets
|
|
|
209,934
|
|
|
|
219,202
|
|
Investment in DPC
Dash
|
|
|
139,107
|
|
|
|
125,840
|
|
Other assets
|
|
|
184,400
|
|
|
|
164,290
|
|
Total assets
|
|
$
|
1,619,464
|
|
|
$
|
1,602,221
|
|
Liabilities and
stockholders' deficit
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Current portion of
long-term debt
|
|
$
|
55,847
|
|
|
$
|
54,813
|
|
Accounts
payable
|
|
|
101,058
|
|
|
|
89,715
|
|
Operating lease
liabilities
|
|
|
38,645
|
|
|
|
34,877
|
|
Advertising fund
liabilities
|
|
|
147,335
|
|
|
|
157,909
|
|
Other accrued
liabilities
|
|
|
220,056
|
|
|
|
199,307
|
|
Total current
liabilities
|
|
|
562,941
|
|
|
|
536,621
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
Long-term debt, less
current portion
|
|
|
4,931,924
|
|
|
|
4,967,420
|
|
Operating lease
liabilities
|
|
|
183,031
|
|
|
|
195,244
|
|
Other accrued
liabilities
|
|
|
83,110
|
|
|
|
92,001
|
|
Total long-term
liabilities
|
|
|
5,198,065
|
|
|
|
5,254,665
|
|
Total stockholders'
deficit
|
|
|
(4,141,542)
|
|
|
|
(4,189,065)
|
|
Total liabilities and
stockholders' deficit
|
|
$
|
1,619,464
|
|
|
$
|
1,602,221
|
|
Domino's Pizza, Inc.
and Subsidiaries
Condensed
Consolidated Statements of Cash Flows
(Unaudited)
|
|
|
|
|
|
Three Fiscal
Quarters Ended
|
|
|
|
September 10,
2023
|
|
|
September 11,
2022
|
|
(In
thousands)
|
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
Net income
|
|
$
|
361,826
|
|
|
$
|
293,961
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
54,999
|
|
|
|
56,026
|
|
Refranchising
loss
|
|
|
149
|
|
|
|
—
|
|
Loss on sale/disposal
of assets
|
|
|
547
|
|
|
|
475
|
|
Amortization of debt
issuance costs
|
|
|
3,858
|
|
|
|
3,937
|
|
(Benefit) provision
for deferred income taxes
|
|
|
(12,191)
|
|
|
|
5,912
|
|
Non-cash compensation
expense
|
|
|
26,507
|
|
|
|
21,590
|
|
Excess tax benefits
from equity-based compensation
|
|
|
(2,973)
|
|
|
|
(907)
|
|
Provision for losses
on accounts and notes receivable
|
|
|
1,342
|
|
|
|
2,870
|
|
Unrealized gain on
investments
|
|
|
(13,267)
|
|
|
|
—
|
|
Changes in operating
assets and liabilities
|
|
|
7,682
|
|
|
|
(49,288)
|
|
Changes in advertising
fund assets and liabilities, restricted
|
|
|
(6,349)
|
|
|
|
(4,422)
|
|
Net cash provided by
operating activities
|
|
|
422,130
|
|
|
|
330,154
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(59,271)
|
|
|
|
(50,508)
|
|
Purchase of franchise
operations and other assets
|
|
|
—
|
|
|
|
(6,814)
|
|
Other
|
|
|
(743)
|
|
|
|
(1,375)
|
|
Net cash used in
investing activities
|
|
|
(60,014)
|
|
|
|
(58,697)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
Proceeds from issuance
of long-term debt
|
|
|
—
|
|
|
|
120,000
|
|
Repayments of
long-term debt and finance lease obligations
|
|
|
(41,349)
|
|
|
|
(41,441)
|
|
Proceeds from exercise
of stock options
|
|
|
5,806
|
|
|
|
1,296
|
|
Purchases of common
stock
|
|
|
(210,847)
|
|
|
|
(293,739)
|
|
Tax payments for
restricted stock upon vesting
|
|
|
(5,240)
|
|
|
|
(10,691)
|
|
Payments of common
stock dividends and equivalents
|
|
|
(85,564)
|
|
|
|
(79,689)
|
|
Net cash used in
financing activities
|
|
|
(337,194)
|
|
|
|
(304,264)
|
|
Effect of exchange rate
changes on cash
|
|
|
(304)
|
|
|
|
(611)
|
|
Change in cash and cash
equivalents, restricted cash and cash equivalents
|
|
|
24,618
|
|
|
|
(33,418)
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period
|
|
|
60,356
|
|
|
|
148,160
|
|
Restricted cash and
cash equivalents, beginning of period
|
|
|
191,289
|
|
|
|
180,579
|
|
Cash and cash
equivalents included in advertising fund assets, restricted,
beginning of period
|
|
|
143,559
|
|
|
|
161,741
|
|
Cash and cash
equivalents, restricted cash and cash equivalents and
cash and cash equivalents included in advertising fund
assets, restricted,
beginning of period
|
|
|
395,204
|
|
|
|
490,480
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, end of period
|
|
|
80,879
|
|
|
|
114,776
|
|
Restricted cash and
cash equivalents, end of period
|
|
|
202,307
|
|
|
|
184,564
|
|
Cash and cash
equivalents included in advertising fund assets, restricted,
end of period
|
|
|
136,636
|
|
|
|
157,722
|
|
Cash and cash
equivalents, restricted cash and cash equivalents and cash and
cash equivalents included in advertising fund assets,
restricted,
end of period
|
|
$
|
419,822
|
|
|
$
|
457,062
|
|
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SOURCE Domino's Pizza, Inc.