ANN ARBOR, Mich., April 28, 2016 /PRNewswire/ -- Domino's Pizza,
Inc. (NYSE: DPZ), the recognized world leader in pizza
delivery, today announced results for the first quarter of 2016,
comprised of growth in same store sales, global store counts and
earnings per share. Domestic same store sales grew 6.4% during the
quarter versus the year-ago period, continuing the 20-quarter
positive sales momentum in the U.S. business. The international
division also posted strong results with quarterly same store sales
growth of 7.9%, marking the 89th consecutive quarter of
international same store sales growth. The Company had global net
store growth of 162 stores in the quarter, and 953 net new stores
on a trailing thirteen period basis.
Diluted EPS was 89 cents for the
first quarter, which was up 9.9% over the Company's reported EPS in
the prior year quarter. During the quarter, the Company received
and retired 456,936 shares of its common stock upon the completion
of its previously announced accelerated share repurchase (ASR)
program. The Board of Directors also declared a 38-cent per share quarterly dividend for
shareholders of record as of June 15,
2016, to be paid on June 30,
2016.
J. Patrick Doyle, Domino's
President and Chief Executive Officer, said: "We started 2016
with yet another strong quarter of growth for both our
international and domestic operations. Business remains robust
thanks to our tremendous fundamentals and brand momentum."
First Quarter Highlights:
(dollars in
millions, except per share data)
|
|
First
Quarter
of
2016
|
|
|
First
Quarter
of
2015
|
|
Net
income
|
|
$
|
45.5
|
|
|
$
|
46.3
|
|
Weighted average
diluted shares
|
|
|
51,230,604
|
|
|
|
57,013,552
|
|
Diluted earnings
per share
|
|
$
|
0.89
|
|
|
$
|
0.81
|
|
- Revenues were up 7.4% for the first quarter versus the
prior year period, due primarily to higher supply chain revenues
from increased volumes. Increased domestic franchise and
Company-owned store revenues and higher international revenues
resulting from both same store sales and store count growth also
contributed to this increase. The negative impact of foreign
currency exchange rates partially offset this increase.
- Net Income was down 1.8% for the first quarter versus
the prior year period, due to higher interest expense as a result
of the Company's 2015 recapitalization, as well as the negative
impact of foreign currency exchange rates. Higher domestic and
international same store sales growth, global store count growth
and higher supply chain volumes partially offset this
decrease.
- Diluted EPS was 89 cents
for the first quarter versus 81 cents
in the prior year quarter. This represents an 8-cent or 9.9% increase over the prior year
quarter. This increase was driven by the aforementioned operating
results as well as lower diluted share counts, primarily as a
result of the ASR program.
The table below outlines certain statistical measures utilized
by the Company to analyze its performance. Refer to the
Comments on Regulation G section on page three for
additional details.
|
|
First
Quarter
of
2016
|
|
|
First
Quarter
of
2015
|
|
Same store sales
growth: (versus prior year period)
|
|
|
|
|
|
|
|
|
Domestic Company-owned
stores
|
|
|
+ 4.0
|
%
|
|
|
+ 15.9
|
%
|
Domestic franchise
stores
|
|
|
+ 6.6
|
%
|
|
|
+ 14.4
|
%
|
Domestic
stores
|
|
|
+ 6.4
|
%
|
|
|
+ 14.5
|
%
|
International stores
(excluding foreign currency impact)
|
|
|
+ 7.9
|
%
|
|
|
+ 7.8
|
%
|
|
|
|
|
|
|
|
|
|
Global retail
sales growth: (versus prior year period)
|
|
|
|
|
|
|
|
|
Domestic
stores
|
|
|
+ 7.9
|
%
|
|
|
+ 16.5
|
%
|
International
stores
|
|
|
+ 6.7
|
%
|
|
|
+ 5.0
|
%
|
Total
|
|
|
+ 7.3
|
%
|
|
|
+ 10.4
|
%
|
|
|
|
|
|
|
|
|
|
Global retail
sales growth: (versus prior year period,
excluding foreign currency impact)
|
|
|
|
|
|
|
|
|
Domestic
stores
|
|
|
+ 7.9
|
%
|
|
|
+ 16.5
|
%
|
International
stores
|
|
|
+ 15.4
|
%
|
|
|
+ 16.4
|
%
|
Total
|
|
|
+ 11.7
|
%
|
|
|
+ 16.4
|
%
|
|
|
Domestic
Company-
owned
Stores
|
|
|
Domestic
Franchise
Stores
|
|
|
Total
Domestic
Stores
|
|
|
International
Stores
|
|
|
Total
|
|
Store
counts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Store count at January
3, 2016
|
|
|
384
|
|
|
|
4,816
|
|
|
|
5,200
|
|
|
|
7,330
|
|
|
|
12,530
|
|
Openings
|
|
|
1
|
|
|
|
17
|
|
|
|
18
|
|
|
|
163
|
|
|
|
181
|
|
Closings
|
|
|
—
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(17)
|
|
|
|
(19)
|
|
Store count at March
27, 2016
|
|
|
385
|
|
|
|
4,831
|
|
|
|
5,216
|
|
|
|
7,476
|
|
|
|
12,692
|
|
First quarter 2016 net
change
|
|
|
1
|
|
|
|
15
|
|
|
|
16
|
|
|
|
146
|
|
|
|
162
|
|
Trailing four quarters
net change
|
|
|
6
|
|
|
|
126
|
|
|
|
132
|
|
|
|
821
|
|
|
|
953
|
|
Conference Call Information
The Company will file its quarterly report on Form 10-Q this
morning. As previously announced, Domino's Pizza, Inc. will
hold a conference call today at 10
a.m. (Eastern) to review its first quarter 2016 financial
results. The call can be accessed by dialing (888) 400-9978
(U.S./Canada) or (706) 634-4947
(International). Ask for the Domino's Pizza conference call. The
call will also be webcast at biz.dominos.com. The webcast will also
be archived for one year on biz.dominos.com.
Accelerated Share Repurchase Program
During the first quarter of 2016, the Company's previously
announced $600.0 million ASR program
was completed. On March 14, 2016, at
final settlement, the Company received and retired 456,936 shares
of its common stock based on the terms of the related ASR
agreement. The average purchase price per share for all of the
5,315,930 shares the Company received and retired over the entirety
of the $600.0 million ASR program was
$112.87. As of April 21, 2016, the Company had authorization for
repurchases of $200.0 million
remaining under its open market share repurchase program.
Liquidity
As of March 27, 2016, the Company
had approximately:
- $178.3 million of unrestricted
cash and cash equivalents;
- $2.21 billion in total debt;
and
- $78.8 million of available
borrowings under its $125.0 million
variable funding notes, net of letters of credit issued of
$46.2 million. The Company has
collateralized $35.0 million of these
letters of credit with restricted cash, and has the ability to
access this cash with minimal notice.
The Company invested $10.5 million
in capital expenditures during the first quarter of 2016, versus
$7.6 million in the first quarter of
2015. Free cash flow, as reconciled below to cash flows from
operations as determined under generally accepted accounting
principles (GAAP), was approximately $6.7
million in the first quarter of 2016.
(in
thousands)
|
|
First
Quarter
of
2016
|
|
Net cash provided by
operating activities
|
|
$
|
17,148
|
|
Capital
expenditures
|
|
|
(10,486)
|
|
Free cash
flow
|
|
$
|
6,662
|
|
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. The Company has also included
metrics such as global retail sales growth and same store sales
growth, which are commonly used statistical measures in the
quick-service restaurant industry that are important to
understanding Company performance.
The Company uses "Global retail sales" to refer to total
worldwide retail sales at Company-owned and franchise stores. The
Company believes global retail sales information is useful in
analyzing revenues because franchisees pay royalties that are based
on a percentage of franchise retail sales. The Company reviews
comparable industry global retail sales information to assess
business trends and to track the growth of the Domino's
Pizza® brand. In addition, supply chain revenues are
directly impacted by changes in franchise retail sales. Retail
sales for franchise stores are reported to the Company by its
franchisees and are not included in Company revenues.
The Company uses "Same store sales growth," which is
calculated by including only sales from stores that also had sales
in the comparable period of the prior year. International same
store sales growth is calculated similarly to domestic same store
sales growth. Changes in international same store sales are
reported excluding foreign currency impacts, which reflect changes
in international local currency sales.
The Company uses "Free cash flow," which is calculated as
cash flows from operations less capital expenditures, both as
reported under GAAP. The Company believes that the free cash flow
measure is important to investors and other interested persons, and
that such persons benefit from having a measure which communicates
how much cash flow is available for working capital needs or to be
used for repurchasing debt, making acquisitions, repurchasing
common stock, paying dividends or other similar uses of cash.
About Domino's Pizza®
Founded in 1960, Domino's Pizza is the recognized world leader
in pizza delivery, with a significant business in carryout pizza.
It ranks among the world's top public restaurant brands with a
global enterprise of more than 12,600 stores in over 80
international markets. Domino's had global retail sales of over
$9.9 billion in 2015, with more than
$4.8 billion in the U.S. and nearly
$5.1 billion internationally. In the
first quarter of 2016, Domino's had global retail sales of over
$2.3 billion, with over $1.1 billion in the U.S. and nearly $1.2 billion internationally. Its system is
comprised of independent franchise owners who accounted for nearly
97% of Domino's stores as of the first quarter of 2016. Emphasis on
technology innovation helped Domino's generate over 50% of U.S.
sales from digital channels at the end of 2015, and an estimated
$4.7 billion annually in global
digital sales. Domino's features an ordering app lineup that covers
nearly 95% of the U.S. smartphone market and recently introduced
several innovative ordering platforms, including Ford
SYNC®, Samsung Smart TV® Apple Watch and
Amazon Echo, as well as Twitter and text message using a pizza
emoji. In late 2015, Domino's announced the design and launch of
the DXP®, a purpose-built pizza delivery vehicle, as
well as its first digital customer loyalty program.
Order – dominos.com
AnyWare Ordering – anyware.dominos.com
Company Info – biz.dominos.com
Twitter – twitter.com/dominos
Facebook – facebook.com/dominos
Instagram – instagram.com/dominos
YouTube – youtube.com/dominos
Please visit our Investor Relations website at biz.dominos.com
to view a schedule of upcoming earnings releases, significant
announcements and conference webcasts.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995:
This press release contains forward-looking statements. You can
identify forward-looking statements because they contain words such
as "believes," "expects," "may," "will," "should," "seeks,"
"approximately," "intends," "plans," "estimates," or "anticipates"
or similar expressions that concern our strategy, plans or
intentions. These forward-looking statements relating to our
anticipated profitability, estimates in same store sales growth,
the growth of our international business, ability to service our
indebtedness, our future cash flows, our operating performance,
trends in our business and other descriptions of future events
reflect the Company's expectations based upon currently available
information and data. However, actual results are subject to future
risks and uncertainties that could cause actual results to differ
materially from those expressed or implied by such forward-looking
statements. The risks and uncertainties that could cause actual
results to differ materially include: the level of our long-term
and other indebtedness; uncertainties relating to litigation;
consumer preferences, spending patterns and demographic trends; the
effectiveness of our advertising, operations and promotional
initiatives; the strength of our brand in the markets in which we
compete; our ability to retain key personnel; new product, digital
ordering and concept developments by us, and other food-industry
competitors; the ongoing level of profitability of our franchisees;
our ability and that of our franchisees to open new restaurants and
keep existing restaurants in operation; changes in operating
expenses resulting from changes in prices of food (particularly
cheese), labor, utilities, insurance, employee benefits and other
operating costs; the impact that widespread illness or general
health concerns may have on our business and the economy of the
countries where we operate; severe weather conditions and natural
disasters; changes in our effective tax rate; changes in foreign
currency exchange rates; changes in government legislation and
regulations; adequacy of our insurance coverage; costs related to
future financings; our ability and that of our franchisees to
successfully operate in the current credit environment; changes in
the level of consumer spending given the general economic
conditions including interest rates, energy prices and consumer
confidence; availability of borrowings under our variable funding
notes and our letters of credit; and changes in accounting
policies. Important factors that could cause actual results to
differ materially from our expectations are more fully described in
our other filings with the Securities and Exchange Commission,
including under the section headed "Risk Factors" in our annual
report on Form 10-K. These forward-looking statements speak only as
of the date of this press release, and you should not rely on such
statements as representing the views of the Company as of any
subsequent date. Except as required by applicable securities laws,
we do not undertake to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
TABLES TO FOLLOW
Domino's Pizza,
Inc. and Subsidiaries
Condensed
Consolidated Statements of Income
(Unaudited)
|
|
|
|
Fiscal Quarter
Ended
|
|
|
|
March
27,
2016
|
|
|
%
of
Total
Revenues
|
|
|
March
22,
2015
|
|
|
%
of
Total
Revenues
|
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Company-owned
stores
|
|
$
|
96,443
|
|
|
|
|
|
|
$
|
92,375
|
|
|
|
|
|
Domestic
franchise
|
|
|
68,151
|
|
|
|
|
|
|
|
61,774
|
|
|
|
|
|
Supply
chain
|
|
|
335,695
|
|
|
|
|
|
|
|
311,656
|
|
|
|
|
|
International
franchise
|
|
|
38,886
|
|
|
|
|
|
|
|
36,222
|
|
|
|
|
|
Total
revenues
|
|
|
539,175
|
|
|
|
100.0
|
%
|
|
|
502,027
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Company-owned
stores
|
|
|
72,755
|
|
|
|
|
|
|
|
68,152
|
|
|
|
|
|
Supply
chain
|
|
|
299,204
|
|
|
|
|
|
|
|
276,809
|
|
|
|
|
|
Total cost of
sales
|
|
|
371,959
|
|
|
|
69.0
|
%
|
|
|
344,961
|
|
|
|
68.7
|
%
|
Operating
margin
|
|
|
167,216
|
|
|
|
31.0
|
%
|
|
|
157,066
|
|
|
|
31.3
|
%
|
General and
administrative
|
|
|
68,504
|
|
|
|
12.7
|
%
|
|
|
62,813
|
|
|
|
12.5
|
%
|
Income from
operations
|
|
|
98,712
|
|
|
|
18.3
|
%
|
|
|
94,253
|
|
|
|
18.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
(25,870)
|
|
|
|
(4.8)%
|
|
|
|
(20,071)
|
|
|
|
(4.0)%
|
|
Income before
provision for income taxes
|
|
|
72,842
|
|
|
|
13.5
|
%
|
|
|
74,182
|
|
|
|
14.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
27,391
|
|
|
|
5.1
|
%
|
|
|
27,893
|
|
|
|
5.6
|
%
|
Net income
|
|
$
|
45,451
|
|
|
|
8.4
|
%
|
|
$
|
46,289
|
|
|
|
9.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock –
diluted
|
|
$
|
0.89
|
|
|
|
|
|
|
$
|
0.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per share
|
|
$
|
0.38
|
|
|
|
|
|
|
$
|
0.31
|
|
|
|
|
|
Domino's Pizza,
Inc. and Subsidiaries
Condensed
Consolidated Balance Sheets
(Unaudited)
|
|
|
|
March 27,
2016
|
|
|
January 3,
2016
|
(In
thousands)
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
178,252
|
|
|
$
|
133,449
|
Restricted cash and
cash equivalents
|
|
|
154,123
|
|
|
|
180,940
|
Accounts
receivable
|
|
|
130,520
|
|
|
|
131,582
|
Inventories
|
|
|
39,108
|
|
|
|
36,861
|
Advertising fund
assets, restricted
|
|
|
90,651
|
|
|
|
99,159
|
Prepaid expenses and
other
|
|
|
33,832
|
|
|
|
20,646
|
Total current
assets
|
|
|
626,486
|
|
|
|
602,637
|
Property, plant and
equipment, net
|
|
|
131,060
|
|
|
|
131,890
|
Other
assets
|
|
|
63,213
|
|
|
|
65,318
|
Total
assets
|
|
$
|
820,759
|
|
|
$
|
799,845
|
Liabilities and
stockholders' deficit
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Current portion of
long-term debt
|
|
$
|
41,593
|
|
|
$
|
59,333
|
Accounts
payable
|
|
|
86,137
|
|
|
|
106,927
|
Dividends
payable
|
|
|
19,398
|
|
|
|
557
|
Advertising fund
liabilities
|
|
|
90,651
|
|
|
|
99,159
|
Other accrued
liabilities
|
|
|
95,947
|
|
|
|
110,007
|
Total current
liabilities
|
|
|
333,726
|
|
|
|
375,983
|
Long-term
liabilities:
|
|
|
|
|
|
|
|
Long-term debt, less
current portion
|
|
|
2,173,403
|
|
|
|
2,181,460
|
Other accrued
liabilities
|
|
|
43,909
|
|
|
|
42,653
|
Total long-term
liabilities
|
|
|
2,217,312
|
|
|
|
2,224,113
|
Total stockholders'
deficit
|
|
|
(1,730,279)
|
|
|
|
(1,800,251)
|
Total liabilities and
stockholders' deficit
|
|
$
|
820,759
|
|
|
$
|
799,845
|
Domino's Pizza,
Inc. and Subsidiaries
Condensed
Consolidated Statements of Cash Flows
(Unaudited)
|
|
|
|
Fiscal Quarter
Ended
|
|
|
March
27,
2016
|
|
|
March
22,
2015
|
(In
thousands)
|
|
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
|
|
$
|
45,451
|
|
|
$
|
46,289
|
Adjustments to
reconcile net income to net cash provided by
operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
8,221
|
|
|
|
7,347
|
Losses on
sale/disposal of assets
|
|
|
86
|
|
|
|
150
|
Amortization of debt
issuance costs
|
|
|
1,660
|
|
|
|
1,274
|
Provision for deferred
income taxes
|
|
|
4,397
|
|
|
|
198
|
Non-cash compensation
expense
|
|
|
4,898
|
|
|
|
4,466
|
Tax impact from
equity-based compensation
|
|
|
(31,896)
|
|
|
|
(4,677)
|
Other
|
|
|
135
|
|
|
|
74
|
Changes in operating
assets and liabilities
|
|
|
(15,804)
|
|
|
|
29,624
|
Net cash provided by
operating activities
|
|
|
17,148
|
|
|
|
84,745
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(10,486)
|
|
|
|
(7,600)
|
Proceeds from sale of
assets
|
|
|
1,742
|
|
|
|
6,789
|
Changes in restricted
cash
|
|
|
26,817
|
|
|
|
(579)
|
Other
|
|
|
(587)
|
|
|
|
1,556
|
Net cash provided by
investing activities
|
|
|
17,486
|
|
|
|
166
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Repayments of
long-term debt and capital lease obligations
|
|
|
(27,459)
|
|
|
|
(103)
|
Proceeds from exercise
of stock options
|
|
|
9,182
|
|
|
|
1,196
|
Tax impact from
equity-based compensation
|
|
|
31,896
|
|
|
|
4,677
|
Purchases of common
stock
|
|
|
—
|
|
|
|
(29,512)
|
Tax payments for
restricted stock upon vesting
|
|
|
(3,036)
|
|
|
|
(3,632)
|
Payments of common
stock dividends and equivalents
|
|
|
(164)
|
|
|
|
(13,965)
|
Net cash provided by
(used in) financing activities
|
|
|
10,419
|
|
|
|
(41,339)
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
|
(250)
|
|
|
|
564
|
Change in cash and
cash equivalents
|
|
|
44,803
|
|
|
|
44,136
|
Cash and cash
equivalents, at beginning of period
|
|
|
133,449
|
|
|
|
30,855
|
Cash and cash
equivalents, at end of period
|
|
$
|
178,252
|
|
|
$
|
74,991
|
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SOURCE Domino's Pizza