Papa John’s International, Inc. (NASDAQ: PZZA) (“Papa Johns®”)
today announced financial results for the third quarter ended
September 24, 2023.
Highlights
- North America comparable sales were up 3% compared with the
third quarter of 2022 as transaction growth delivered 6% comparable
sales at Domestic Company-owned restaurants and 2% comparable sales
at North America franchised restaurants; International comparable
sales were down less than 1% from a year ago.
- 45 net unit openings in the third quarter driven by
International growth; North America outlook remains solid but
lowering 2023 development expectations to 245 to 260 net new units
due to the dynamic geopolitical environment.
- Global system-wide restaurant sales were $1.23 billion, a 5%(a)
increase from the prior year third quarter.
- Total revenues of $523 million were up 2% from the third
quarter a year ago driven by higher Domestic Company-owned
restaurant sales and higher International revenues resulting from
the consolidation of recently acquired restaurants in the UK.
- Operating income of $32 million increased 64% from the third
quarter of 2022, while adjusted operating income of $34 million was
in line with the prior year period.
- Diluted earnings per common share was $0.48, compared with
$0.23 for the third quarter of 2022; Adjusted diluted earnings per
common share(b) was $0.53, compared with $0.54 for the third
quarter a year ago.
“Strong execution by our teams and franchisees led to solid
system-wide restaurant sales growth, transaction-led North America
comp growth and improving North America restaurant-level margin in
the third quarter,” said Rob Lynch, Papa Johns president and CEO.
“Our ability to grow transactions in an ongoing challenging
environment, while maintaining average ticket, confirms the strong
consumer demand for our product offerings. Menu innovation, revenue
management enhancements, and continued growth in our third-party
aggregator channel contributed to our year-over-year sales growth
this quarter.”
“Despite this strong sales growth in North America, our adjusted
operating income was just in line with the third quarter last year
due to the dilutive impact of our recently acquired restaurants in
the UK,” continued Lynch. “Importantly, our North America
company-owned restaurant margins improved approximately 130 basis
points and revenues from our North America franchise segment grew
4%. We have a resilient business model that can thrive in all
economic cycles and we’re confident we’ll build sustainable
long-term value for all stakeholders.”
Commenting on its North America Commissary segment, Lynch said,
“Papa Johns is uniquely positioned in the QSR industry with a
vertically integrated supply chain that operates on a fixed
operating margin basis. Although the margins on this business are
lower than our other revenue channels, it is a consistent way for
us to provide our system with the fresh ingredients necessary to
deliver the level of quality that we demand. This channel is our
largest source of company revenue and, as our business continues to
scale, we believe there are additional margin expansion
opportunities for both Papa Johns and our growing North American
franchisees. Our goal is to deliver profitable growth and overall
supply chain productivity that drives cost savings and incremental
profit for our system, without compromising our best-in-class
quality.”
“As we evolve our commissary business model, we will be
increasing our fixed operating margin by 100 basis points in each
of the next four years, from 4% in 2023 to 8% in 2027.
Concurrently, we will be offering new opportunities for our
franchisees to earn annual incentive-based rebates as they increase
volume and open new restaurants, which will drive even more
continued productivity for our system.”
(a)
Excludes the impact of foreign
currency.
(b)
Represents a non-GAAP financial measure.
See “Non-GAAP Measures” for a reconciliation to the most comparable
US GAAP measure.
Financial Highlights
Three Months Ended
Nine Months Ended
(In thousands, except per share
amounts)
September 24,
2023
September 25,
2022
Increase (Decrease)
September 24,
2023
September 25,
2022
Increase (Decrease)
Total revenues
$
522,812
$
510,512
$
12,300
$
1,564,391
$
1,575,869
$
(11,478
)
Operating income
$
31,868
$
19,461
$
12,407
$
104,576
$
72,800
$
31,776
Adjusted operating income (a)
$
33,638
$
33,593
$
45
$
109,671
$
119,235
$
(9,564
)
Net income attributable to the Company
$
15,861
$
8,331
$
7,530
$
56,005
$
44,258
$
11,747
Diluted earnings per common share
$
0.48
$
0.23
$
0.25
$
1.68
$
1.22
$
0.46
Adjusted diluted earnings per common share
(a)
$
0.53
$
0.54
$
(0.01
)
$
1.80
$
2.23
$
(0.43
)
(a)
Represents a Non-GAAP financial measure.
See “Non-GAAP Measures” for a reconciliation to the most comparable
US GAAP measures.
Total revenues of $522.8 million increased $12.3 million, or
2.4%, in the third quarter of 2023 compared with the prior year
period. Excluding the impact of purchasing 118 International
restaurants (“UK Company-owned restaurants”) in the second and
third quarters of 2023, total revenues increased $4.7 million, or
0.9%, compared with the prior period. Revenues from Domestic
Company-owned restaurants were up $11.1 million, reflecting
comparable sales growth of 5.9%. North America franchise royalties
grew $1.3 million as restaurants reflected comparable sales growth
of 2.2% during the quarter. International revenues were up $3.2
million, or 12.5%, excluding the impact of the UK Company-owned
restaurants as new unit development drove increases. These
increases were offset by $11.2 million of lower North America
commissary revenues, a result of decreased commodity prices in 2023
compared with 2022, which was partially offset by increased
revenues due to higher transaction volume.
For the third quarter of 2023, global system-wide restaurant
sales were $1.23 billion, up 5.1% from a year ago (excluding the
impact of foreign currency). The increase reflected higher
equivalent units from net restaurant openings primarily in
International markets and comparable sales growth.
Third quarter operating income increased $12.4 million to $31.9
million compared with the prior year. Operating income increased as
a result of improved North America comparable sales during the
period, driven by transaction growth, lower food costs and
continued operational efficiency improvements. The increased
operating income also included the impact of a prior year $10.0
million legal settlement. Partially offsetting these increases in
the current quarter were higher variable compensation expense,
employee benefit costs and depreciation expense compared with a
year ago, in addition to operating losses attributable to the
recently acquired UK Company-owned restaurants. Adjusted operating
income(a) was $33.6 million, in line with results from the prior
year period.
Diluted earnings per common share was $0.48 for the third
quarter of 2023 compared with $0.23 in the third quarter of 2022.
Adjusted diluted earnings per common share(a) was $0.53 for the
third quarter of 2023 compared with $0.54 in the third quarter of
2022. These changes were driven by the same factors impacting
operating income and adjusted operating income as discussed above.
In addition, diluted earnings per common share and adjusted diluted
earnings per common share reflected higher interest expense and a
lower effective tax rate compared with the third quarter of 2022.
Interest expense increased in 2023 largely due to higher borrowings
used to fund share repurchases in the first quarter.
See the Management’s Discussion and Analysis of Financial
Condition and Results of Operations section of our Quarterly Report
on Form 10-Q filed with the SEC for additional information
concerning our operating results for the three and nine months
ended September 24, 2023.
Global Restaurant Sales
Information
Global restaurant and comparable sales information for the third
quarter and nine months ended September 24, 2023, compared with the
third quarter and nine months ended September 25, 2022 are as
follows (See “Supplemental Information and Financial Statements”
below for related definitions):
Three Months Ended
Nine Months Ended
Amounts below exclude the impact of
foreign currency
September 24,
2023
September 25,
2022
September 24,
2023
September 25,
2022
Comparable sales growth
(decline):
Domestic Company-owned restaurants
5.9
%
(2.2
)%
3.8
%
(1.6
)%
North America franchised restaurants
2.2
%
(0.5
)%
(0.4
)%
1.2
%
North America restaurants
2.9
%
(0.8
)%
0.4
%
0.6
%
International restaurants
(0.3
)%
(10.1
)%
(2.3
)%
(5.8
)%
Total comparable sales growth
(decline)
2.2
%
(3.4
)%
(0.2
)%
(1.1
)%
System-wide restaurant sales growth
(decline):
Domestic Company-owned restaurants
6.7
%
0.5
%
4.7
%
0.8
%
North America franchised restaurants
3.2
%
0.9
%
1.1
%
2.5
%
North America restaurants
3.9
%
0.8
%
1.8
%
2.2
%
International restaurants (a)
8.8
%
(0.4
)%
6.8
%
5.3
%
Total global system-wide restaurant sales
growth (decline)
5.1
%
0.5
%
3.0
%
2.9
%
(a)
The nine months ended September 25, 2022
exclude the impact of franchisee suspended restaurants.
Global Restaurant Unit
Data
As of September 24, 2023, there were 5,825 Papa Johns
restaurants operating in 48 countries and territories, as
follows:
Third Quarter
Domestic Company Owned
Franchised North
America
Total North America
International Company
Owned
International
Franchised
Total International
System-wide
Beginning - June 25, 2023
521
2,868
3,389
91
2,300
2,391
5,780
Opened
—
15
15
—
55
55
70
Closed
—
(7
)
(7
)
—
(18
)
(18
)
(25
)
Acquired
9
—
9
27
—
27
36
Sold
—
(9
)
(9
)
—
(27
)
(27
)
(36
)
Refranchised
(4
)
4
—
—
—
—
—
Ending - September 24, 2023
526
2,871
3,397
118
2,310
2,428
5,825
Net Unit Growth
5
3
8
27
10
37
45
Trailing four quarters net store
growth/(decline)
4
35
39
118
79
197
236
Free Cash Flow
Free cash flow, a non-GAAP financial measure which the Company
defines as net cash provided by operating activities, less
purchases of property and equipment, was $76.0 million for the nine
months ended September 24, 2023, compared with $28.1 million in the
prior year period. The year over year change primarily reflects
higher cash flow from operating activities as a result of higher
net income and favorable working capital changes.
Nine Months Ended
(in thousands)
September 24,
2023
September 25,
2022
Net cash provided by operating
activities
$
126,936
$
76,553
Purchases of property and equipment
(50,905
)
(48,424
)
Free cash flow
$
76,031
$
28,129
We view free cash flow as an important financial measure because
it is one factor that management uses in determining the amount of
cash available for discretionary investment. Free cash flow is not
a term defined by GAAP, and as a result, our measure of free cash
flow might not be comparable to similarly titled measures used by
other companies. Free cash flow should not be construed as a
substitute for or a better indicator of the Company’s performance
than the Company’s GAAP measures.
Cash Dividend
The Company paid cash dividends of $15.2 million ($0.46 per
common share) in the third quarter of 2023. On October 24, 2023,
our Board of Directors declared a fourth quarter dividend of $0.46
per common share. The dividend will be paid on November 24, 2023 to
stockholders of record as of the close of business on November 13,
2023.
Conference Call
Papa Johns will host a call with analysts today, November 2,
2023, at 8:00 a.m. Eastern Time. To access the conference call or
webcast, please register online at:
ir.papajohns.com/events-presentations. A replay of the webcast will
be available two hours after the call and archived on the same web
page.
About Papa Johns
Papa John’s International, Inc. (NASDAQ: PZZA) opened its doors
in 1984 with one goal in mind: BETTER INGREDIENTS. BETTER PIZZA.®
Papa Johns believes that using high-quality ingredients leads to
superior quality pizzas. Its original dough is made of only six
ingredients and is fresh, never frozen. Papa Johns tops its pizzas
with real cheese made from mozzarella, pizza sauce made with
vine-ripened tomatoes that go from vine to can in the same day and
meat free of fillers. It was the first national pizza delivery
chain to announce the removal of artificial flavors and synthetic
colors from its entire food menu. Papa Johns is co-headquartered in
Atlanta, Ga. and Louisville, Ky. and is the world’s third-largest
pizza delivery company with more than 5,800 restaurants in
approximately 50 countries and territories. For more information
about the Company or to order pizza online, visit www.papajohns.com
or download the Papa Johns mobile app for iOS or Android.
Forward-Looking
Statements
Certain matters discussed in this press release and other
Company communications that are not statements of historical fact
constitute forward-looking statements within the meaning of the
federal securities laws. Generally, the use of words such as
“expect,” “intend,” “estimate,” “believe,” “anticipate,” “will,”
“forecast,” “outlook”, “plan,” “project,” or similar words identify
forward-looking statements that we intend to be included within the
safe harbor protections provided by the federal securities laws.
Such forward-looking statements include or may relate to
projections or guidance concerning business performance, revenue,
earnings, cash flow, earnings per share, share repurchases, the
current economic environment, commodity and labor costs, currency
fluctuations, profit margins, supply chain operating margin, net
unit growth, unit level performance, capital expenditures,
restaurant and franchise development, restaurant acquisitions,
labor shortages, labor cost increases, inflation, royalty relief,
franchisee support and incentives, the effectiveness of our menu
innovations and other business initiatives, investments in product
and digital innovation, marketing efforts and investments,
liquidity, compliance with debt covenants, impairments, strategic
decisions and actions, dividends, effective tax rates, regulatory
changes and impacts, investments in the UK market, adoption of new
accounting standards, and other financial and operational measures.
Such statements are not guarantees of future performance and
involve certain risks, uncertainties and assumptions, which are
difficult to predict and many of which are beyond our control.
Therefore, actual outcomes and results may differ materially from
those matters expressed or implied in such forward-looking
statements.
Our forward-looking statements are based on our assumptions
which are based on currently available information. Actual outcomes
and results may differ materially from those matters expressed or
implied in our forward-looking statements as a result of various
factors, including but not limited to risks related to:
deteriorating economic conditions in the U.S. and international
markets, including the United Kingdom; labor shortages at Company
and/or franchised stores and our quality control centers; increases
in labor costs, commodity costs, supply chain incentive-based
rebates, or sustained higher other operating costs, including as a
result of supply chain disruption, inflation or climate change; the
potential for delayed new store openings, both domestically and
internationally, or lower net unit development due to changing
circumstances outside of our control; the increased risk of
phishing, ransomware and other cyber-attacks; risks and disruptions
to the global economy and our business related to the conflict in
Ukraine and other international conflicts; risks related to a
possible economic recession or downturn that could reduce consumer
spending or demand; and continuing risks related to outbreak of
COVID-19 and other health crises. These and other risks,
uncertainties and assumptions that are involved in our
forward-looking statements are discussed in detail in “Part I. Item
1A. – Risk Factors” in our Annual Report on Form 10-K for the
fiscal year ended December 25, 2022 as updated by those included in
our Quarterly Report on Form 10-Q for the quarter ended June 25,
2023. We undertake no obligation to update publicly any
forward-looking statements, whether as a result of future events,
new information or otherwise, except as required by law.
For more information about the company, please visit
www.papajohns.com.
Supplemental
Information and Financial Statements
Definitions
“Comparable sales” represents sales for the same base of
restaurants for the same fiscal periods. “Comparable sales growth
(decline)” represents the change in year-over-year comparable
sales. “Global system-wide restaurant sales” represents total
restaurant sales for all Company-owned and franchised restaurants
open during the comparable periods, and “Global system-wide
restaurant sales growth (decline)” represents the change in global
system-wide restaurant sales year-over-year. Comparable sales,
Comparable sales growth (decline), Global system-wide restaurant
sales and Global system-wide sales growth (decline) exclude
franchisees for which we suspended corporate support.
“Equivalent units” represents the number of restaurants open at
the beginning of a given period, adjusted for restaurants opened,
closed, acquired or sold during the period on a weighted average
basis.
We believe Domestic Company-owned, North America franchised, and
International Comparable sales growth (decline) and Global
system-wide restaurant sales information is useful in analyzing our
results since our franchisees pay royalties and marketing fund
contributions that are based on a percentage of franchise sales.
Comparable sales and Global system-wide restaurant sales results
for restaurants operating outside of the United States are reported
on a constant dollar basis, which excludes the impact of foreign
currency translation. Franchise sales also generate commissary
revenue in the United States and in certain international markets.
Comparable sales growth (decline) and Global system-wide restaurant
sales information is also useful for comparison to industry trends
and evaluating the strength of our brand. Management believes the
presentation of Global system-wide restaurant sales growth,
excluding the impact of foreign currency, provides investors with
useful information regarding underlying sales trends and the impact
of new unit growth without being impacted by swings in the external
factor of foreign currency. Franchise restaurant sales are not
included in the Company’s revenues.
Non-GAAP Measures
In addition to the results provided in accordance with U.S.
GAAP, we provide certain non-GAAP measures, which present results
on an adjusted basis. These are supplemental measures of
performance that are not required by or presented in accordance
with U.S. GAAP and include the following: adjusted operating
income, adjusted net income attributable to common shareholders and
adjusted diluted earnings per common share. We believe that our
non-GAAP financial measures enable investors to assess the
operating performance of our business relative to our performance
based on U.S. GAAP results and relative to other companies. We
believe that the disclosure of these non-GAAP measures is useful to
investors as they reflect metrics that our management team and
Board utilize to evaluate our operating performance, allocate
resources and administer employee incentive plans. The most
directly comparable U.S. GAAP measures to adjusted operating
income, adjusted net income attributable to common shareholders and
adjusted diluted earnings per common share are operating income,
net income attributable to common shareholders and diluted earnings
per common share, respectively. These non-GAAP measures should not
be construed as a substitute for or a better indicator of the
Company’s performance than the Company’s U.S. GAAP results. The
table below reconciles our GAAP financial results to our non-GAAP
financial measures.
Three Months Ended
Nine Months Ended
(In thousands, except per share
amounts)
September 24,
2023
September 25,
2022
September 24,
2023
September 25,
2022
Operating income
$
31,868
$
19,461
$
104,576
$
72,800
UK repositioning and acquisition-related
costs (a)
1,193
—
2,501
—
Refranchising and impairment losses
(b)
—
905
—
26,701
Legal settlements (c)
577
10,000
577
15,000
Provision for uncollectible accounts and
notes receivable (d)
—
3,227
—
3,227
Other costs (e)
—
—
2,017
1,507
Adjusted operating income
$
33,638
$
33,593
$
109,671
$
119,235
Net income attributable to common
shareholders
$
15,861
$
8,245
$
56,005
$
43,996
UK repositioning and acquisition-related
costs (a)
1,193
—
2,501
—
Refranchising and impairment losses
(b)
—
905
—
26,701
Legal settlements (c)
577
10,000
577
15,000
Provision for uncollectible accounts and
notes receivable (d)
—
3,227
—
3,227
Other costs (e)
—
—
2,017
1,507
Tax effect of adjustments (f)
(404
)
(3,180
)
(1,162
)
(10,449
)
Adjusted net income attributable to
common shareholders (g)
$
17,227
$
19,197
$
59,938
$
79,982
Diluted earnings per common
share
$
0.48
$
0.23
$
1.68
$
1.22
UK repositioning and acquisition-related
costs (a)
0.04
—
0.07
—
Refranchising and impairment losses
(b)
—
0.03
—
0.75
Legal settlements (c)
0.02
0.28
0.02
0.42
Provision for uncollectible accounts and
notes receivable (d)
—
0.09
—
0.09
Other costs (e)
—
—
0.06
0.04
Tax effect of adjustments (f)
(0.01
)
(0.09
)
(0.03
)
(0.29
)
Adjusted diluted earnings per common
share (g)
$
0.53
$
0.54
$
1.80
$
2.23
Footnotes to Non-GAAP Financial Measures
(a)
Represents costs associated with
repositioning the UK portfolio as well as transaction costs related
to the acquisition of stores from franchisees.
(b)
Refranchising and impairment losses
consisted of the following pre-tax adjustments:
Three Months Ended
Nine Months Ended
(In thousands)
September 25,
2022
September 25,
2022
Refranchising impairment loss (1)
$
—
$
8,412
Ukraine-related charge (2)
—
17,384
PJUK lease impairment (3)
905
905
Total adjustment
$
905
$
26,701
(1)
Represents a one-time, non-cash charge of
$8.4 million ($0.23 loss per diluted share) recorded in the first
quarter of 2022 associated with the refranchising of the Company’s
controlling interest in the 90-restaurant joint venture, recorded
as Refranchising and impairment loss.
(2)
Represents a one-time non-cash charge of
$17.4 million ($0.48 loss per diluted share) recorded in the first
quarter of 2022 related to the reserve of certain loans and
impairment of reacquired franchise rights related to the conflict
in Ukraine and subsequent international government actions and
sanctions, which were recorded as Refranchising and impairment loss
of $2.8 million and General and administrative expenses of $14.6
million.
(3)
An impairment charge of $0.9 million on
the right-of-use assets on leases recorded in the third quarter of
2022 associated with the termination of a significant franchisee in
the United Kingdom, which was recorded in Refranchising and
impairment loss.
(c)
Represents accruals for certain legal
settlements, recorded in General and administrative expenses.
(d)
Represents a $3.2 million charge recorded
in the third quarter of 2022 associated with the termination of a
significant franchisee in the United Kingdom related to the reserve
of certain accounts and notes receivable.
(e)
Represents severance and related costs
associated with the transition of certain executives incurred
during the three and nine-month periods ended September 24, 2023
and September 25, 2022, which were recorded in General and
administrative expenses.
(f)
The tax effect on non-GAAP adjustments was
calculated by applying the marginal tax rates of 22.8% and 22.5%
for the three and nine-month periods ended September 24, 2023 and
September 25, 2022, respectively.
(g)
Amounts shown exclude the impact of
allocation of undistributed earnings to participating
securities.
Papa John’s International,
Inc. and Subsidiaries
Condensed Consolidated Balance
Sheets
(In thousands, except per share
amounts)
September 24,
2023
December 25,
2022
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
37,492
$
47,373
Accounts receivable, net
109,697
102,533
Notes receivable, current portion
5,169
6,848
Income tax receivable
1,162
8,780
Inventories
37,666
41,382
Prepaid expenses and other current
assets
51,943
44,123
Assets held for sale (a)
3,427
—
Total current assets
246,556
251,039
Property and equipment, net
268,087
249,793
Finance lease right-of-use assets, net
34,443
24,941
Operating lease right-of-use assets
166,360
172,425
Notes receivable, less current portion,
net
15,016
21,248
Goodwill
76,011
70,616
Other assets
71,092
74,165
Total assets
$
877,565
$
864,227
Liabilities, Redeemable noncontrolling
interests and Stockholders’ deficit
Current liabilities:
Accounts payable
$
68,020
$
62,316
Income and other taxes payable
9,738
8,766
Accrued expenses and other current
liabilities
153,772
142,535
Current deferred revenue
19,565
21,272
Current finance lease liabilities
9,520
6,850
Current operating lease liabilities
25,935
23,418
Current portion of long-term debt
14,789
—
Total current liabilities
301,339
265,157
Deferred revenue
20,699
23,204
Long-term finance lease liabilities
26,305
19,022
Long-term operating lease liabilities
153,506
160,905
Long-term debt, less current portion,
net
769,210
597,069
Other long-term liabilities
65,494
68,317
Total liabilities
1,336,553
1,133,674
Redeemable noncontrolling
interests
910
1,217
Stockholders’ deficit:
Common stock ($0.01 par value per share;
issued 49,227 at September 24, 2023 and 49,138 at December 26,
2022)
492
491
Additional paid-in capital
447,699
449,829
Accumulated other comprehensive loss
(7,916
)
(10,135
)
Retained earnings
208,132
195,856
Treasury stock (16,754 shares at September
24, 2023 and 14,402 shares at December 26, 2022, at cost)
(1,123,599
)
(922,434
)
Total stockholders’ deficit
(475,192
)
(286,393
)
Noncontrolling interests in
subsidiaries
15,294
15,729
Total Stockholders’ deficit
(459,898
)
(270,664
)
Total Liabilities, Redeemable
noncontrolling interests and Stockholders’ deficit
$
877,565
$
864,227
(a)
Represents vacant land adjacent to the
Company’s Louisville office, which was sold on September 29,
2023.
Papa John’s International,
Inc. and Subsidiaries
Condensed Consolidated
Statements of Operations
(Unaudited)
Three Months Ended
Nine Months Ended
(In thousands, except per share
amounts)
September 24,
2023
September 25,
2022
September 24,
2023
September 25,
2022
Revenues:
Domestic Company-owned restaurant
sales
$
177,195
$
166,050
$
532,841
$
536,226
North America franchise royalties and
fees
35,041
33,712
105,824
102,897
North America commissary revenues
204,887
216,115
624,433
645,177
International revenues
42,927
30,735
108,998
97,310
Other revenues
62,762
63,900
192,295
194,259
Total revenues
522,812
510,512
1,564,391
1,575,869
Costs and expenses:
Operating costs (excluding depreciation
and amortization shown separately below):
Domestic Company-owned restaurant
expenses
145,433
138,299
436,922
441,986
North America commissary expenses
189,551
203,129
576,434
604,689
International expenses
29,796
18,196
67,542
57,346
Other expenses
57,587
59,249
177,661
180,452
General and administrative expenses
52,173
57,935
154,441
168,519
Depreciation and amortization
16,404
13,338
46,815
38,012
Total costs and expenses
490,944
490,146
1,459,815
1,491,004
Refranchising and impairment loss
—
(905
)
—
(12,065
)
Operating income
31,868
19,461
104,576
72,800
Net interest expense
(11,378
)
(7,623
)
(31,674
)
(17,967
)
Income before income taxes
20,490
11,838
72,902
54,833
Income tax expense
4,539
3,374
16,546
9,212
Net income before attribution to
noncontrolling interests
15,951
8,464
56,356
45,621
Net income attributable to noncontrolling
interests
(90
)
(133
)
(351
)
(1,363
)
Net income attributable to the
Company
$
15,861
$
8,331
$
56,005
$
44,258
Calculation of net income for earnings
per share:
Net income attributable to the Company
$
15,861
$
8,331
$
56,005
$
44,258
Dividends paid to participating
securities
—
(86
)
—
(228
)
Net income attributable to participating
securities
—
—
—
(34
)
Net income attributable to common
shareholders
$
15,861
$
8,245
$
56,005
$
43,996
Basic earnings per common share
$
0.49
$
0.23
$
1.69
$
1.23
Diluted earnings per common share
$
0.48
$
0.23
$
1.68
$
1.22
Basic weighted average common shares
outstanding
32,564
35,259
33,053
35,602
Diluted weighted average common shares
outstanding
32,800
35,448
33,287
35,840
Dividends declared per common share
$
0.46
$
0.42
$
1.30
$
1.12
Papa John’s International,
Inc. and Subsidiaries
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
Nine Months Ended
(In thousands)
September 24,
2023
September 25,
2022
Operating activities
Net income before attribution to
noncontrolling interests
$
56,356
$
45,621
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for allowance for credit losses
on accounts and notes receivable
1,348
18,576
Depreciation and amortization
46,815
38,012
Refranchising and impairment loss
—
12,065
Deferred income taxes
3,481
519
Stock-based compensation expense
13,224
14,246
Other
331
(466
)
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable
(11,643
)
(19,584
)
Income tax receivable
7,617
(1,146
)
Inventories
3,875
(8,185
)
Prepaid expenses and other current
assets
(2,104
)
2,065
Other assets and liabilities
2,057
(4,919
)
Accounts payable
15,237
16,188
Income and other taxes payable
1,087
(1,789
)
Accrued expenses and other current
liabilities
(6,579
)
(32,404
)
Deferred revenue
(4,166
)
(2,246
)
Net cash provided by operating
activities
126,936
76,553
Investing activities
Purchases of property and equipment
(50,905
)
(48,424
)
Notes issued
(7,310
)
(2,248
)
Repayments of notes issued
5,759
8,125
Acquisitions, net of cash acquired
(5,599
)
(1,346
)
Proceeds from refranchising, net of cash
transferred
—
13,588
Other
401
76
Net cash used in investing activities
(57,654
)
(30,229
)
Financing activities
Net proceeds of revolving credit
facilities
185,789
66,999
Proceeds from exercise of stock
options
1,816
2,730
Acquisition of Company common stock
(210,348
)
(95,000
)
Dividends paid to common stockholders
(43,641
)
(39,949
)
Tax payments for equity award
issuances
(6,279
)
(9,426
)
Distributions to noncontrolling
interests
(651
)
(1,090
)
Other
(5,825
)
(3,480
)
Net cash used in financing activities
(79,139
)
(79,216
)
Effect of exchange rate changes on cash
and cash equivalents
(24
)
(1,100
)
Change in cash and cash equivalents
(9,881
)
(33,992
)
Cash and cash equivalents at beginning of
period
47,373
70,610
Cash and cash equivalents at end of
period
$
37,492
$
36,618
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231031612339/en/
Papa Johns Investor Relations
investor_relations@papajohns.com
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