PZZA Papa Johns International Inc

Papa John’s International, Inc. (Nasdaq: PZZA) (“Papa Johns®”) (the “Company”) today announced financial results for the fourth quarter and year ended December 29, 2024.

Fourth Quarter Highlights

• North America comparable sales(a) were down 4% from a year ago as Domestic Company-owned restaurants were down 6% and North America franchised restaurants were down 4%; International comparable sales(a) were up 2% compared with the prior year period.
• 122 net restaurant openings in the fourth quarter, driven by 63 gross openings in North America and 83 gross openings in International markets.
• Global system-wide restaurant sales were $1.23 billion, an 8%(b) decrease from a year ago due to the additional week of operations in the fourth quarter of 2023. Excluding the additional week, global system-wide sales were flat(b) from the prior year period.
• Total revenues of $531 million were down 7% compared with the fourth quarter of 2023. Excluding the 53rd week in 2023, Total revenues were roughly flat from the prior year period.
• Diluted earnings per common share of $0.44 compared with $0.79 for the fourth quarter of 2023; Adjusted diluted earnings per common share(c) was $0.63 compared with $0.91 for the fourth quarter of 2023.

Full Year Highlights

• North America comparable sales(d) were down 4% from 2023 as Domestic Company-owned restaurants were down 5% and North America franchised restaurants were down 4%; International comparable sales(d) were down 1%.
• 124 net restaurant openings for the full year 2024, driven by 112 gross openings in North America and 198 gross openings in International markets.
• Global system-wide restaurant sales were $4.85 billion, a 3%(b) decrease over the prior year. Excluding the 53rd week in 2023, global system-wide sales were down approximately 1%(b).
• Total revenues of $2.06 billion were down $76 million, or 4%, from 2023. Excluding the 53rd week in 2023, Total revenues were down 2%.
• Diluted earnings per common share of $2.54 compared with $2.48 for 2023; adjusted diluted earnings per common share(c) was $2.34 compared with $2.71 in 2023.

(a)

Comparable sales growth (decline) for the fourth quarter of 2024 is reported on a 13-week basis comparing September 30, 2024 through December 29, 2024 with October 2, 2023 through December 31, 2023.

(b)

Excludes the impact of foreign currency.

(c)

Represents a Non-GAAP financial measure. See “Non-GAAP Financial Measures” for a reconciliation to the most comparable US GAAP measures.

(d)

Comparable sales growth (decline) for the fiscal year 2024 is reported on a 52-week basis comparing January 1, 2024 through December 29, 2024 with January 2, 2023 through December 31, 2023.

CEO Commentary

“I am pleased with the early progress we are seeing in our transformation as we work to improve our value perception, simplify our operations, and enhance our digital and loyalty experiences. These efforts helped to deliver results consistent with our fourth quarter expectations,” said Todd Penegor, president and CEO.

“We have defined our strategic priorities to take market share as we move forward with urgency to execute on initiatives to drive sales momentum in the near-term while meaningfully increasing profitability over time,” continued Penegor. “Our number one priority continues to be creating great experiences for our customers and team members in our restaurants – ensuring the restaurant economic model remains strong. We are confident that we have the right plan in place to deliver on our promise to be the best pizza makers in the business.”

Financial Highlights

Beginning with the year ended December 29, 2024, the Company implemented changes to the presentation and classification of its financial statements concurrent with the adoption of Accounting Standard Update 2023-07, “Improvements to Reportable Segment Disclosures”. Please refer to the Supplemental Information and Financial Statements section in this release for additional information.

 

 

Three Months Ended

 

Twelve Months Ended

(In thousands, except per share amounts)

 

December 29, 2024

 

December 31, 2023

 

Increase (Decrease)

 

December 29, 2024

 

December 31, 2023

 

Increase (Decrease)

Total revenues

 

$

530,770

 

$

571,322

 

$

(40,552

)

 

$

2,059,387

 

$

2,135,713

 

$

(76,326

)

Operating income

 

$

29,531

 

$

42,566

 

$

(13,035

)

 

$

156,704

 

$

147,142

 

$

9,562

 

Adjusted operating income (c)

 

$

37,290

 

$

47,354

 

$

(10,064

)

 

$

148,183

 

$

157,025

 

$

(8,842

)

Net income attributable to the Company

 

$

14,799

 

$

26,093

 

$

(11,294

)

 

$

83,486

 

$

82,098

 

$

1,388

 

Diluted earnings per common share

 

$

0.44

 

$

0.79

 

$

(0.35

)

 

$

2.54

 

$

2.48

 

$

0.06

 

Adjusted diluted earnings per common share (c)

 

$

0.63

 

$

0.91

 

$

(0.28

)

 

$

2.34

 

$

2.71

 

$

(0.37

)

Results for the fourth quarter and fiscal year 2024 are not directly comparable with the fourth quarter and fiscal year 2023, as year-over-year comparisons are affected by an additional week of operations in the fourth quarter of 2023. For comparability purposes we describe the estimated impact of the 53rd week in the discussion below.

Additionally, the acquisition of 118 formerly franchised restaurants in the UK in the second and third quarters of 2023 (the “UK franchisee acquisitions”), and the subsequent closure and refranchising of all but 13 restaurants impacts the comparability of revenues and expenses from the International segment for both 2023 and 2024.

Fourth Quarter 2024 Results

Revenue: Total revenues of $530.8 million in the fourth quarter of 2024 decreased $40.6 million, or 7.1%, compared with the prior year period. The lower revenues were largely attributable to approximately $41 million in 2023 from the additional week of operations and a $17.8 million decrease in Company-owned restaurant revenues, which now includes both Domestic and International Company-owned restaurants. The decline in Company-owned restaurant revenues on a comparable week basis is largely attributable to: 1) an approximately $13 million decline at our International Company-owned restaurants, primarily related to lower revenues in the quarter from our Company-owned restaurants in the UK, as 105 formerly Company-owned restaurants were previously refranchised or closed; and 2) an approximately $5 million decline at our Domestic Company-owned restaurants primarily due to lower comparable sales.

Offsetting the decline in Company-owned restaurant revenues on a comparable week basis was a $14.0 million increase in Commissary revenues, reflecting higher prices partially offset by lower transaction volumes and a $3.2 million increase in Advertising funds revenues, reflecting the 100 basis point increase to the National Marketing Fund contribution rate beginning in the second quarter of 2024.

System-wide sales: For the fourth quarter of 2024, Global system-wide restaurant sales were $1.23 billion, down 7.9%(b) from the prior year quarter, largely driven by the additional week of operations in the prior year period. Excluding the additional week in the fourth quarter of 2023, Global system-wide sales were flat(b).

Operating Income: Fourth quarter 2024 Operating income was $29.5 million, a $13.0 million decrease compared with the prior year fourth quarter, primarily due to an approximate $8 million benefit from the additional week of operations in 2023 and lower operating margins at our Domestic Company-owned restaurants as the Company strategically reinvested some of its first-half savings into improving its value perception with consumers.

Adjusted operating income(c) was $37.3 million, a $10.1 million decrease from the same period a year ago. The variance between Operating income and Adjusted operating income was due to $7.8 million of International restructuring costs in the UK.

The decrease in Adjusted operating income(c) in the fourth quarter of 2024 compared with the prior year period was primarily due to the same factors impacting Operating income discussed above.

Earnings per share: Diluted earnings per common share was $0.44 for the fourth quarter of 2024 compared with $0.79 in the fourth quarter of 2023. Adjusted diluted earnings per common share(c) was $0.63 for the fourth quarter of 2024 compared with $0.91 in the fourth quarter of 2023. These changes were driven by the same factors impacting Operating income and Adjusted operating income(c) discussed above. In addition, diluted earnings per common share and Adjusted diluted earnings per common share reflected lower interest expense compared with the fourth quarter of 2023. Interest expense decreased largely due to lower average outstanding debt compared with the prior year fourth quarter.

Full Year 2024 Results

Revenue: Total revenues of $2.1 billion for 2024 decreased $76.3 million, or 3.6%, compared with the prior year. The lower revenues were largely attributable to: 1) approximately $41 million in 2023 from the additional week of operations; 2) a $20.7 million decrease in Company-owned restaurant revenues primarily due to an approximately $20 million decline at our Domestic Company-owned restaurants related to lower comparable sales; 3) a $12.9 million decrease in Other revenues, primarily related to Preferred Marketing, our formerly wholly-owned print and promotions company, which was sold in the fourth quarter of 2023; and 4) a $4.7 million decrease in Commissary revenues, reflecting lower overall transaction volumes. These decreases were partially offset by a $7.5 million increase in Advertising funds revenues, reflecting the 100 basis point increase to the National Marketing Fund contribution rate beginning in the second quarter of 2024.

System-wide sales: For 2024, global system-wide restaurant sales were $4.85 billion, down 3.1%(b) from a year ago. The decrease was largely due to the additional week of operations in the prior year. Excluding the 53rd week in 2023, Global system-wide sales were down approximately 1%(b), due to lower comparable sales, partially offset by 2.1% global net restaurant growth compared with the prior year.

Operating income: Operating income of $156.7 million for 2024 increased $9.6 million compared with the prior year. The increase in Operating income was primarily driven by $41.3 million of pre-tax gains associated with the sale(e) of two Quality Control Center properties (“QC Centers”) in the current year third quarter along with a $5.2 million increase in North America Commissaries primarily driven by the higher gross margin rate in 2024. The increase was mostly offset by lower comparable sales in 2024 and a roughly $8 million benefit in 2023 from the additional week of operations.

Adjusted operating income(c) was $148.2 million for 2024, an $8.8 million, or 5.6%, decrease compared with the prior year. The variance between Operating income and Adjusted operating income was due to the aforementioned gains from the QC Center sales, $27.3 million of International restructuring costs, primarily in the UK, and $5.5 million in non-cash impairment charges primarily related to fixed and intangible assets from the refranchising of 15 Domestic restaurants.

The decrease in Adjusted operating income(c) for 2024 compared with the prior year was primarily driven by the approximately $8 million benefit from the additional week of operations and lower comparable sales partially offset by the aforementioned increase in the commissary fixed operating margin in 2024.

Earnings per share: Diluted earnings per common share was $2.54 for 2024 compared with $2.48 in 2023. Adjusted diluted earnings per common share(c) was $2.34 compared with $2.71 in 2023. These changes were driven by the same factors impacting operating income and adjusted operating income(c) as discussed above. In addition, diluted earnings per common share and adjusted diluted earnings per common share reflect a higher effective tax rate in 2024 compared with 2023. The higher tax rate was primarily driven by impairment charges related to the International Transformation Plan, as well as higher foreign withholding taxes and a tax shortfall generated by stock option exercises and vesting of restricted shares in 2024.

(a)

Comparable sales growth (decline) for the fourth quarter of 2024 is reported on a 13-week basis comparing September 30, 2024 through December 29, 2024 with October 2, 2023 through December 31, 2023.

(b)

Excludes the impact of foreign currency.

(c)

Represents a Non-GAAP financial measure. See “Non-GAAP Financial Measures” for a reconciliation to the most comparable US GAAP measures.

(d)

Comparable sales growth (decline) for the fiscal year 2024 is reported on a 52-week basis comparing January 1, 2024 through December 29, 2024 with January 2, 2023 through December 31, 2023.

(e)

Properties were subsequently leased back by the Company. See “Note 22. Divestitures” in the Company’s Annual Report on Form 10-K for the year ended December 29, 2024.

2025 Outlook

The Company is introducing 2025 annual guidance around the following metrics:

• System-wide sales: 2% to 5%
• North America comparable sales: Flat to up 2%
• International comparable sales: Flat to up 2%
• Restaurant development:
  • North America: 85 to 115 gross openings
  • International: 180 to 200 gross openings
• Adjusted EBITDA: $200 million to $220 million
• Depreciation & amortization: $70 million to $75 million
• Interest expense: $40 million to $45 million
• Capital expenditures: $75 million to $85 million
• Tax rate: 28% to 32%

This release includes forward-looking projections for certain non-GAAP financial measures, including Adjusted EBITDA (See “Definitions”). The Company excludes certain expenses and benefits from Adjusted EBITDA that, due to the uncertainty and variability of the nature and amount of those expenses and benefits, the Company is unable to, without unreasonable effort or expense, provide a reconciliation to Net income of those projected measures.

See the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K filed with the SEC for additional information concerning our operating results for the year ended December 29, 2024.

Global Restaurant Sales Information

Global restaurant and comparable sales information for the year ended December 29, 2024, compared with the year ended December 31, 2023 are as follows (See “Supplemental Information and Financial Statements” below for related definitions):

 

 

Three Months Ended

 

Twelve Months Ended

Amounts below exclude the impact of foreign currency

 

December 29, 2024

 

December 31, 2023

 

December 29, 2024

 

December 31, 2023

Comparable sales growth (decline) (a, d):

 

 

 

 

 

 

 

 

Domestic Company-owned restaurants

 

(5.7

)%

 

2.2

%

 

(4.9

)%

 

3.4

%

North America franchised restaurants

 

(4.0

)%

 

1.7

%

 

(3.5

)%

 

0.1

%

North America restaurants

 

(4.4

)%

 

1.8

%

 

(3.8

)%

 

0.8

%

International restaurants

 

2.1

%

 

(5.5

)%

 

(0.8

)%

 

(3.1

)%

Total comparable sales growth (decline)

 

(2.8

)%

 

0.1

%

 

(3.1

)%

 

(0.1

)%

System-wide restaurant sales growth (decline) (f):

 

 

 

 

 

 

 

 

Domestic Company-owned restaurants

 

(9.9

)%

 

12.4

%

 

(4.7

)%

 

6.7

%

North America franchised restaurants

 

(8.7

)%

 

10.9

%

 

(4.1

)%

 

3.6

%

North America restaurants

 

(8.9

)%

 

11.2

%

 

(4.2

)%

 

4.1

%

International restaurants

 

(4.7

)%

 

10.5

%

 

0.4

%

 

7.7

%

Total global system-wide restaurant sales growth (decline)

 

(7.9

)%

 

11.0

%

 

(3.1

)%

 

5.0

%

(a)

Comparable sales growth (decline) for the fourth quarter of 2024 is reported on a 13-week basis comparing September 30, 2024 through December 29, 2024 with October 2, 2023 through December 31, 2023.

(d)

Comparable sales growth (decline) for the fiscal year 2024 is reported on a 52-week basis comparing January 1, 2024 through December 29, 2024 with January 2, 2023 through December 31, 2023.

(f)

System-wide restaurant sales growth includes 14 weeks in the fourth quarter of 2023 and 53 weeks in fiscal year 2023.

Global Restaurants

As of December 29, 2024, there were 6,030 Papa Johns restaurants operating in 51 countries and territories, as follows:

Fourth Quarter

Domestic Company Owned

 

Franchised North America

 

Total North America

 

International Company Owned

 

International Franchised

 

Total International

 

System- wide

Beginning - September 29, 2024

537

 

 

2,917

 

 

3,454

 

 

13

 

2,441

 

 

2,454

 

 

5,908

 

Opened

16

 

 

47

 

 

63

 

 

—

 

83

 

 

83

 

 

146

 

Closed

—

 

 

(3

)

 

(3

)

 

—

 

(21

)

 

(21

)

 

(24

)

Sold

—

 

 

(1

)

 

(1

)

 

—

 

—

 

 

—

 

 

(1

)

Acquired

1

 

 

—

 

 

1

 

 

—

 

—

 

 

—

 

 

1

 

Refranchised

(15

)

 

15

 

 

—

 

 

—

 

—

 

 

—

 

 

—

 

Ending - December 29, 2024

539

 

 

2,975

 

 

3,514

 

 

13

 

2,503

 

 

2,516

 

 

6,030

 

Net restaurant growth/(decline)

2

 

 

58

 

 

60

 

 

—

 

62

 

 

62

 

 

122

 

Full year

 

Domestic Company Owned

 

Franchised North America

 

Total North America

 

International Company Owned

 

International Franchised

 

Total International

 

System- wide

Beginning

December 31, 2023

 

531

 

 

2,902

 

 

3,433

 

 

117

 

 

2,356

 

 

2,473

 

 

5,906

 

Opened

 

22

 

 

90

 

 

112

 

 

—

 

 

198

 

 

198

 

 

310

 

Closed

 

—

 

 

(31

)

 

(31

)

 

(43

)

 

(112

)

 

(155

)

 

(186

)

Sold

 

—

 

 

(1

)

 

(1

)

 

—

 

 

—

 

 

—

 

 

(1

)

Acquired

 

1

 

 

—

 

 

1

 

 

—

 

 

—

 

 

—

 

 

1

 

Refranchised

 

(15

)

 

15

 

 

—

 

 

(61

)

 

61

 

 

—

 

 

—

 

December 29, 2024

 

539

 

2,975

 

 

3,514

 

 

13

 

 

2,503

 

 

2,516

 

 

6,030

 

Net unit growth/(decline)

 

8

 

 

73

 

 

81

 

 

(104

)

 

147

 

 

43

 

 

124

 

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 $34.1 million for the year ended December 29, 2024, compared with $116.4 million in the prior year. The year-over-year change primarily reflects unfavorable working capital changes and timing of cash payments for income taxes, partially offset by a $4.1 million decrease in capital expenditures.

 

 

Year Ended

(in thousands)

 

December 29, 2024

 

December 31, 2023

Net cash provided by operating activities

 

$

106,632

 

 

$

193,055

 

Purchases of property and equipment

 

 

(72,484

)

 

 

(76,620

)

Free cash flow

 

$

34,148

 

 

$

116,435

 

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 fourth quarter of 2024. On January 24, 2025, our Board of Directors declared a first quarter 2025 dividend of $0.46 per common share. The dividend was paid on February 21, 2025 to stockholders of record as of the close of business on February 10, 2025.

Conference Call

Papa Johns will host a call with analysts today, February 27, 2025, 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 6,000 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, depreciation and amortization, interest expense, tax rates, system-wide sales, Adjusted EBITDA, 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, restaurant closures, 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, repositioning of the UK market, International restructuring plans, timing and costs, International consumer demand, 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 U.S. and international markets; labor shortages at Company and/or franchised restaurants and our quality control centers; increases in labor costs, changes in commodity costs, supply chain incentive-based rebates, or sustained higher other operating costs, including as a result of supply chain disruption, inflation, increased tariffs, trade barriers, immigration policies, or climate change; the potential for delayed new restaurant 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 geopolitical conflicts including conflicts in Ukraine and the Middle East and risks related to a possible economic recession or downturn that could reduce consumer spending or demand. 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 29, 2024. 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.

We believe Domestic Company-owned, North America franchised, and International comparable sales and comparable sales growth (decline) and Global system-wide restaurant sales and sales growth 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.

Adjusted EBITDA represents Net income before Net interest expense, Income tax expense, Depreciation and amortization, Stock-based compensation expense, and other adjustments that vary from period to period in accordance with the Company’s Non-GAAP policy. The Company believes Adjusted EBITDA is a meaningful measure as it is widely used by analysts and investors to value the Company and its restaurants on a consistent basis. Adjusted EBITDA is not a term defined by GAAP, and is not intended to be a substitute for operating income, net income, or cash flows from operating activities, as defined under generally accepted accounting principles. As a result, our measure of Adjusted EBITDA might not be comparable to similarly titled measures used by other companies.

Financial Statement Updates

The Company has implemented several financial statement changes concurrent with the adoption of Accounting Standard Update 2023-07, “Improvements to Reportable Segment Disclosures.” These changes evolve and modernize our financial statements and footnotes to increase transparency and better reflect management’s key performance metrics.

The Consolidated Statements of Operations have been reconfigured to classify revenues and expenses based on the nature of the underlying activities without regard to operating segment. This reconfiguration and the resulting reclassifications did not change previously reported Total revenues, Total costs and expenses, Operating income or Net income for any period. The Consolidated Statements of Cash Flows include reclassifications to a new line item that include the net operating cash flows of the consolidated advertising funds. The reclassifications did not change Net cash provided by operating activities, Net cash used in investing activities or Net cash used in financing activities for any period. Presentation changes to the Consolidated Statements of Operations and the Consolidated Statements of Cash Flows have been applied retrospectively, and as such, the results from the year ended December 31, 2023 have been reclassified for consistency with the current year presentation.

Additionally, during the year ended December 29, 2024, the Company updated its internal cost allocation methodology to better reflect current levels of time and effort spent managing our different segments. These updates resulted in a higher allocation of previously unallocated corporate expenses to primarily the North America franchising and International segments. This update in methodology does not impact total reported expenses, and has been implemented prospectively beginning with the year ended December 29, 2024. The comparative information has not been restated.

Non-GAAP Financial 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 EBITDA, 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 EBITDA, 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 that follows reconciles our GAAP financial results to our non-GAAP financial measures.

Reconciliation of GAAP Financial Results to Non-GAAP Financial Measures

 

 

Three Months Ended

 

Twelve Months Ended

(In thousands, except per share amounts)

 

December 29, 2024

 

December 31, 2023

 

December 29, 2024

 

December 31, 2023

Operating income

 

$

29,531

 

 

$

42,566

 

 

$

156,704

 

 

$

147,142

 

Gain on sale of QC Center properties (a)

 

 

—

 

 

 

—

 

 

 

(41,289

)

 

 

—

 

International restructuring costs (b)

 

 

7,759

 

 

 

2,178

 

 

 

27,273

 

 

 

2,178

 

UK repositioning and acquisition-related costs (c)

 

 

—

 

 

 

1,742

 

 

 

—

 

 

 

4,243

 

Other costs (d)

 

$

—

 

 

$

868

 

 

$

5,495

 

 

$

3,462

 

Adjusted operating income

 

$

37,290

 

 

$

47,354

 

 

$

148,183

 

 

$

157,025

 

 

 

 

 

 

 

 

 

 

Net income attributable to common shareholders

 

$

14,633

 

 

$

26,093

 

 

$

83,320

 

 

$

82,098

 

Gain on sale of QC Center properties (a)

 

 

—

 

 

 

—

 

 

 

(41,289

)

 

 

—

 

International restructuring costs (b)

 

 

7,759

 

 

 

2,178

 

 

 

27,273

 

 

 

2,178

 

UK repositioning and acquisition-related costs (c)

 

 

—

 

 

 

1,742

 

 

 

—

 

 

 

4,243

 

Other costs (d)

 

 

—

 

 

 

868

 

 

 

5,495

 

 

 

3,462

 

Tax effect of adjustments (e)

 

 

(1,745

)

 

 

(1,082

)

 

 

1,934

 

 

 

(2,234

)

Adjusted net income attributable to common shareholders (f)

 

$

20,647

 

 

$

29,799

 

 

$

76,733

 

 

$

89,747

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

 

$

0.44

 

 

$

0.79

 

 

$

2.54

 

 

$

2.48

 

Gain on sale of QC Center properties (a)

 

 

—

 

 

 

—

 

 

 

(1.25

)

 

 

—

 

International restructuring costs (b)

 

 

0.24

 

 

 

0.07

 

 

 

0.82

 

 

 

0.07

 

UK repositioning and acquisition-related costs (c)

 

 

—

 

 

 

0.06

 

 

 

—

 

 

 

0.13

 

Other costs (d)

 

 

—

 

 

 

0.02

 

 

 

0.17

 

 

 

0.10

 

Tax effect of adjustments (e)

 

 

(0.05

)

 

 

(0.03

)

 

 

0.06

 

 

 

(0.07

)

Adjusted diluted earnings per common share (f)

 

$

0.63

 

 

$

0.91

 

 

$

2.34

 

 

$

2.71

 

Footnotes to Non-GAAP Financial Measures

(a)

Represents pre-tax gain on sale, net of transaction costs, realized upon the August 2, 2024 completion of the sale of our Texas and Florida QC Center properties.

(b)

Represents costs associated with the Company’s International Transformation Plan. These costs are comprised primarily of lease and fixed asset impairment charges related to restaurant closures in the UK, professional services and other related costs, losses on refranchising Company-owned restaurants, losses on franchisee notes receivable, lease termination costs, as well as severance.

(c)

Represents costs associated with repositioning the UK portfolio as well as transaction costs related to the acquisition of restaurants from franchisees.

(d)

For the twelve months ended December 29, 2024, represents non-cash impairment and remeasurement charges related primarily to fixed and intangible assets from the refranchising of 15 Domestic Company-owned restaurants. The twelve months ended December 31, 2023 includes $2.0 million of severance and related costs associated with the transition of certain executives and $0.6 million accrual related to certain legal settlements. The three and twelve months ended includes a $0.9 million one-time non-cash charge related to the reserve of certain accounts receivable related to the conflict in the Middle East.

(e)

The tax effect on non-GAAP adjustments was calculated by applying the marginal tax rates of 22.7% for the three and twelve months ended December 29, 2024 and 22.6% for the three and twelve months ended December 31, 2023.

(f)

Amounts shown include the impact of dividends paid to participating securities.

 

Papa John’s International, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

 

(In thousands, except per share amounts)

 

December 29, 2024

 

December 31, 2023

 

 

 

 

 

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

37,955

 

 

$

40,587

 

Accounts receivable (less allowance for credit losses of $8,468 in 2024 and $8,353 in 2023)

 

 

101,677

 

 

 

104,244

 

Notes receivable, current portion

 

 

4,928

 

 

 

5,199

 

Income tax receivable

 

 

2,214

 

 

 

2,577

 

Inventories

 

 

35,245

 

 

 

36,126

 

Prepaid expenses and other current assets

 

 

48,586

 

 

 

42,285

 

Total current assets

 

 

230,605

 

 

 

231,018

 

Property and equipment, net

 

 

273,272

 

 

 

282,812

 

Finance lease right-of-use assets, net

 

 

28,761

 

 

 

31,740

 

Operating lease right-of-use assets

 

 

184,425

 

 

 

164,158

 

Notes receivable, less current portion (less allowance for credit losses of $15,238 in 2024 and $16,092 in 2023)

 

 

8,867

 

 

 

12,346

 

Goodwill

 

 

75,460

 

 

 

76,206

 

Other assets

 

 

87,562

 

 

 

76,725

 

Total assets

 

$

888,952

 

 

$

875,005

 

 

 

 

 

 

Liabilities, Redeemable noncontrolling interests and Stockholders’ deficit

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

61,842

 

 

$

74,949

 

Income and other taxes payable

 

 

11,987

 

 

 

17,948

 

Accrued expenses and other current liabilities

 

 

155,579

 

 

 

158,167

 

Current deferred revenue

 

 

15,519

 

 

 

20,427

 

Current finance lease liabilities

 

 

7,280

 

 

 

9,029

 

Current operating lease liabilities

 

 

25,756

 

 

 

24,076

 

Total current liabilities

 

 

277,963

 

 

 

304,596

 

Deferred revenue

 

 

21,287

 

 

 

20,366

 

Long-term finance lease liabilities

 

 

22,885

 

 

 

24,144

 

Long-term operating lease liabilities

 

 

173,557

 

 

 

151,050

 

Long-term debt, net

 

 

741,650

 

 

 

757,422

 

Other long-term liabilities

 

 

64,923

 

 

 

60,192

 

Total liabilities

 

 

1,302,265

 

 

 

1,317,770

 

 

 

 

 

 

Redeemable noncontrolling interests

 

 

903

 

 

 

851

 

 

 

 

 

 

Stockholders’ deficit:

 

 

 

 

Common stock ($0.01 par value per share; issued 49,283 at December 29, 2024 and 49,235 at December 31, 2023)

 

 

493

 

 

 

492

 

Additional paid-in capital

 

 

452,449

 

 

 

452,290

 

Accumulated other comprehensive loss

 

 

(8,456

)

 

 

(7,803

)

Retained earnings

 

 

241,717

 

 

 

219,027

 

Treasury stock (16,637 shares at December 29, 2024 and 16,747 shares at December 31, 2023, at cost)

 

 

(1,115,729

)

 

 

(1,123,098

)

Total stockholders’ deficit

 

 

(429,526

)

 

 

(459,092

)

Noncontrolling interests in subsidiaries

 

 

15,310

 

 

 

15,476

 

Total Stockholders’ deficit

 

 

(414,216

)

 

 

(443,616

)

Total Liabilities, Redeemable noncontrolling interests and Stockholders’ deficit

 

$

888,952

 

 

$

875,005

 

 

Papa John’s International, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

 

 

 

Three Months Ended

 

Year Ended

(In thousands, except per share amounts)

 

December 29, 2024

 

December 31, 2023

 

December 29, 2024

 

December 31, 2023

Revenues:

 

(Unaudited)

 

(Unaudited)

 

 

 

 

Company-owned restaurant sales

 

$

177,678

 

 

$

210,953

 

 

$

724,666

 

 

$

760,825

 

Franchise royalties and fees

 

 

47,497

 

 

 

52,257

 

 

 

187,032

 

 

 

194,987

 

Commissary revenues

 

 

238,841

 

 

 

245,154

 

 

 

899,664

 

 

 

924,648

 

Other revenues

 

 

22,816

 

 

 

21,779

 

 

 

83,682

 

 

 

98,037

 

Advertising funds revenue

 

 

43,938

 

 

 

41,179

 

 

 

164,343

 

 

 

157,216

 

Total revenues

 

 

530,770

 

 

 

571,322

 

 

 

2,059,387

 

 

 

2,135,713

 

Costs and expenses:

 

 

 

 

 

 

 

 

Cost of sales

 

 

377,643

 

 

 

414,113

 

 

 

1,478,426

 

 

 

1,558,438

 

General and administrative expenses

 

 

62,709

 

 

 

55,238

 

 

 

190,515

 

 

 

208,083

 

Depreciation and amortization

 

 

16,879

 

 

 

17,275

 

 

 

69,407

 

 

 

64,090

 

Advertising funds expense

 

 

44,008

 

 

 

42,130

 

 

 

164,335

 

 

 

157,960

 

Total costs and expenses

 

 

501,239

 

 

 

528,756

 

 

 

1,902,683

 

 

 

1,988,571

 

Operating income

 

 

29,531

 

 

 

42,566

 

 

 

156,704

 

 

 

147,142

 

Net interest expense

 

 

(9,990

)

 

 

(11,795

)

 

 

(42,578

)

 

 

(43,469

)

Income before income taxes

 

 

19,541

 

 

 

30,771

 

 

 

114,126

 

 

 

103,673

 

Income tax expense

 

 

4,582

 

 

 

4,328

 

 

 

29,929

 

 

 

20,874

 

Net income

 

 

14,959

 

 

 

26,443

 

 

 

84,197

 

 

 

82,799

 

Net income attributable to noncontrolling interests

 

 

(160

)

 

 

(350

)

 

 

(711

)

 

 

(701

)

Net income attributable to the Company

 

$

14,799

 

 

$

26,093

 

 

$

83,486

 

 

$

82,098

 

 

 

 

 

 

 

 

 

 

Net income attributable to common shareholders

 

$

14,633

 

 

$

26,093

 

 

$

83,320

 

 

$

82,098

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

 

$

0.45

 

 

$

0.80

 

 

$

2.55

 

 

$

2.49

 

Diluted earnings per common share

 

$

0.44

 

 

$

0.79

 

 

$

2.54

 

 

$

2.48

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

32,759

 

 

 

32,594

 

 

 

32,717

 

 

 

32,931

 

Diluted weighted average common shares outstanding

 

 

32,957

 

 

 

32,829

 

 

 

32,819

 

 

 

33,159

 

 

Papa John’s International, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

 

 

 

Year Ended

(In thousands)

 

December 29, 2024

 

December 31, 2023

Operating activities

 

 

 

 

Net income

 

$

84,197

 

 

$

82,799

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Provision for allowance for credit losses on accounts and notes receivable

 

 

2,737

 

 

 

5,393

 

Depreciation and amortization

 

 

69,407

 

 

 

64,090

 

Refranchising and impairment loss

 

 

18,340

 

 

 

—

 

Deferred income taxes

 

 

(3,037

)

 

 

(5,991

)

Stock-based compensation expense

 

 

9,590

 

 

 

17,924

 

Gain on disposal of property and equipment

 

 

(41,953

)

 

 

—

 

Other

 

 

1,711

 

 

 

146

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

Accounts receivable

 

 

(465

)

 

 

(4,920

)

Income tax receivable

 

 

345

 

 

 

6,212

 

Inventories

 

 

851

 

 

 

5,441

 

Prepaid expenses and other current assets

 

 

319

 

 

 

1,212

 

Other assets and liabilities

 

 

(8,774

)

 

 

(11,803

)

Accounts payable

 

 

(10,043

)

 

 

22,031

 

Income and other taxes payable

 

 

(5,678

)

 

 

9,087

 

Accrued expenses and other current liabilities

 

 

(2,035

)

 

 

18,313

 

Deferred revenue

 

 

(6,245

)

 

 

(3,704

)

Advertising fund assets and liabilities

 

 

(2,635

)

 

 

(13,175

)

Net cash provided by operating activities

 

 

106,632

 

 

 

193,055

 

Investing activities

 

 

 

 

Purchases of property and equipment

 

 

(72,484

)

 

 

(76,620

)

Notes issued

 

 

(154

)

 

 

(4,338

)

Repayments of notes issued

 

 

4,152

 

 

 

4,655

 

Acquisitions, net of cash acquired

 

 

(125

)

 

 

(5,613

)

Proceeds from dispositions and refranchising, net of cash transferred

 

 

49,016

 

 

 

3,457

 

Other

 

 

2,247

 

 

 

3,336

 

Net cash used in investing activities

 

 

(17,348

)

 

 

(75,123

)

Financing activities

 

 

 

 

Net (repayments) proceeds from revolving credit facilities

 

 

(17,268

)

 

 

159,000

 

Proceeds from exercise of stock options

 

 

1,055

 

 

 

2,252

 

Acquisition of Company common stock (including excise tax payment)

 

 

(2,080

)

 

 

(210,348

)

Dividends paid to common stockholders

 

 

(60,559

)

 

 

(58,451

)

Tax payments for equity award issuances

 

 

(3,619

)

 

 

(6,416

)

Distributions to noncontrolling interests

 

 

(825

)

 

 

(1,320

)

Principal payments on finance leases

 

 

(8,529

)

 

 

(8,821

)

Other

 

 

153

 

 

 

28

 

Net cash used in financing activities

 

 

(91,672

)

 

 

(124,076

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(244

)

 

 

(642

)

Change in cash and cash equivalents

 

 

(2,632

)

 

 

(6,786

)

Cash and cash equivalents at beginning of period

 

 

40,587

 

 

 

47,373

 

Cash and cash equivalents at end of period

 

$

37,955

 

 

$

40,587

 

Papa John’s International, Inc. and Subsidiaries Segment Information

The following tables present the operating results of our segments. We have four reportable segments: Domestic Company-owned restaurants, North America franchising, North America commissaries, and International operations. Under ASC 280, Segment Reporting, our segment performance is evaluated based on Adjusted operating income. See the Company’s Form 10-K for the year ended December 29, 2024 for further information on segments, including reconciliations of segment measures to consolidated measures for the year-ended December 29, 2024.

 

 

Three months ended December 29, 2024

(in thousands)

 

Domestic Company- Owned Restaurants

 

North America franchising

 

North America commissaries

 

International

Revenues from external customers

 

$

174,634

 

$

35,154

 

$

219,901

 

$

41,733

Intersegment revenues

 

 

—

 

 

1,049

 

 

53,602

 

 

—

Revenues

 

$

174,634

 

$

36,203

 

$

273,503

 

$

41,733

 

 

 

 

 

 

 

 

 

Less costs and expenses(a):

 

 

 

 

 

 

 

 

Cost of Sales

 

 

154,640

 

 

—

 

 

246,889

 

 

21,671

General & Administrative (b)

 

 

10,396

 

 

8,875

 

 

9,950

 

 

9,953

Depreciation & Amortization

 

 

3,928

 

 

—

 

 

3,724

 

 

909

Advertising funds expense

 

 

—

 

 

—

 

 

—

 

 

3,996

Adjusted operating income

 

$

5,670

 

$

27,328

 

$

12,940

 

$

5,204

 

 

Three months ended December 31, 2023

(in thousands)

 

Domestic Company- Owned Restaurants

 

North America franchising

 

North America commissaries

 

International

Revenues from external customers

 

$

193,521

 

$

38,727

 

$

227,928

 

$

53,947

Intersegment revenues

 

 

—

 

 

1,150

 

 

55,974

 

 

—

Revenues

 

$

193,521

 

$

39,877

 

$

283,902

 

$

53,947

 

 

 

 

 

 

 

 

 

Less costs and expenses(a):

 

 

 

 

 

 

 

 

Cost of Sales

 

 

164,395

 

 

—

 

 

259,207

 

 

37,970

General & Administrative

 

 

11,124

 

 

3,819

 

 

9,168

 

 

7,584

Depreciation & Amortization

 

 

3,971

 

 

—

 

 

4,028

 

 

1,064

Advertising funds expense

 

 

—

 

 

—

 

 

—

 

 

4,060

Adjusted operating income

 

$

14,031

 

$

36,058

 

$

11,499

 

$

3,269

(a) 

Costs and expenses excludes certain general and administrative expenses and other items that do not reflect normal, recurring expenses necessary to operate our business.

(b)

As discussed more fully in the Company’s Form 10-K, the Company prospectively adjusted for updates in internal cost allocation methodologies in 2024, which increased the amount of internal general and administrative (“G&A”) costs allocated to the reportable segments from unallocated corporate expenses. The allocation methodology updates resulted in the following increases to segment G&A in the fourth quarter of 2024: $5.7 million to the North America franchising segment and $0.8 million to the International segment. The allocation changes resulted in the following decreases to G&A in the fourth quarter of 2024: $0.1 million to the Domestic Company-Owned Restaurant segment and $0.3 million to the North America commissaries segment. There was no impact on overall company profitability, as the change was offset within unallocated corporate expenses.

 

 

Year Ended December 29, 2024

(in thousands)

 

Domestic Company- Owned Restaurants

 

North America franchising

 

North America commissaries

 

International

Revenues from external customers

 

$

692,736

 

$

139,091

 

$

831,774

 

$

174,054

Intersegment revenues

 

 

—

 

 

4,150

 

 

205,234

 

 

—

Revenues

 

$

692,736

 

$

143,241

 

$

1,037,008

 

$

174,054

 

 

 

 

 

 

 

 

 

Less costs and expenses(a):

 

 

 

 

 

 

 

 

Cost of Sales

 

 

611,685

 

 

—

 

 

934,980

 

 

104,138

General & Administrative (b)

 

 

39,822

 

 

35,064

 

 

37,690

 

 

38,379

Depreciation & Amortization

 

 

16,560

 

 

—

 

 

15,780

 

 

4,134

Advertising funds expense

 

 

—

 

 

—

 

 

—

 

 

13,635

Adjusted operating income

 

$

24,669

 

$

108,177

 

$

48,558

 

$

13,768

 

 

Year Ended December 31, 2023

(in thousands)

 

Domestic Company- Owned Restaurants

 

North America franchising

 

North America commissaries

 

International

Revenues from external customers

 

$

726,362

 

$

144,550

 

$

852,361

 

$

182,487

Intersegment revenues

 

 

—

 

 

4,267

 

 

210,614

 

 

—

Revenues

 

$

726,362

 

$

148,817

 

$

1,062,975

 

$

182,487

 

 

 

 

 

 

 

 

 

Less costs and expenses(a):

 

 

 

 

 

 

 

 

Cost of Sales

 

 

637,994

 

 

—

 

 

966,653

 

 

115,499

General & Administrative

 

 

40,714

 

 

15,017

 

 

36,960

 

 

31,271

Depreciation & Amortization

 

 

14,184

 

 

—

 

 

16,046

 

 

3,167

Advertising funds expense

 

 

—

 

 

—

 

 

—

 

 

13,495

Adjusted operating income

 

$

33,470

 

$

133,800

 

$

43,316

 

$

19,055

(a) 

Costs and expenses excludes certain general and administrative expenses and other items that do not reflect normal, recurring expenses necessary to operate our business.

(b)

As discussed more fully in the Company’s Form 10-K, the Company prospectively adjusted for updates in internal cost allocation methodologies in 2024, which increased the amount of internal G&A costs allocated to the reportable segments from Unallocated corporate expenses. The allocation methodology updates resulted in the following increases to segment G&A in 2024: $0.4 million to Domestic Company-Owned Restaurants, $22.9 million to North America franchising, $3.3 million to International, and $0.1 million to North America commissaries. There was no impact on overall company profitability, as the change was offset within unallocated corporate expenses.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20250225227247/en/

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