ANN ARBOR, Mich., Oct. 18, 2016 /PRNewswire/ -- Domino's
Pizza, Inc. (NYSE: DPZ), the recognized world leader in pizza
delivery, today announced results for the third quarter of 2016,
comprised of strong growth in same store sales, global store counts
and diluted earnings per share. Domestic same store sales grew
13.0% during the quarter versus the year-ago period, which
represents the 22nd consecutive quarter of positive
sales in the U.S. business. The international division also posted
strong results with quarterly same store sales growth of 6.6%,
marking the 91st consecutive quarter of international
same store sales growth. The Company had global net store growth of
316 stores in the quarter, and 1,133 stores over the trailing four
quarters.
Diluted EPS was 96 cents for the
third quarter, which was up 43.3% over the prior year quarter.
During the quarter, the Company repurchased 412,260 shares of its
common stock for approximately $59.7
million. The Company's Board of Directors also declared a
38-cent per share quarterly dividend
for shareholders of record as of December
15, 2016, to be paid on December 30,
2016.
"We continued to execute at a very high level during the third
quarter, as our unprecedented momentum, steady strategy and
alignment with our outstanding franchisees is helping to take the
business to new heights," said J.
Patrick Doyle, Domino's President and Chief Executive
Officer. "I couldn't be more pleased with the way our system
continues to answer the challenge of sustained success."
Third Quarter Highlights:
(dollars in
millions, except per share data)
|
Third
Quarter
of
2016
|
|
Third
Quarter
of
2015
|
|
Three
Fiscal
Quarters
of
2016
|
|
Three
Fiscal
Quarters
of
2015
|
Net
income
|
$
|
47.2
|
|
$
|
37.8
|
|
$
|
141.9
|
|
$
|
130.0
|
Weighted average
diluted shares
|
|
49,242,182
|
|
|
56,115,670
|
|
|
50,309,217
|
|
|
56,584,913
|
Diluted earnings
per share
|
$
|
0.96
|
|
$
|
0.67
|
|
$
|
2.82
|
|
$
|
2.30
|
- Revenues were up 16.9% for the third quarter versus the
prior year period, due primarily to higher supply chain revenues
from increased volumes and store growth. 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.
- Net Income increased 24.8% for the third quarter versus
the prior year period, due primarily to higher consolidated
operating margins driven in part by the increase in sales and store
growth. Higher general and administrative expenses, as well as
higher interest expense as a result of the Company's 2015
recapitalization partially offset this increase. Additionally, the
Company's consolidated operating margins and net income benefited
from lower insurance expense in the quarter, due to a casualty
insurance charge recorded in the third quarter of 2015.
- Diluted EPS was 96 cents
for the third quarter versus 67 cents
in the prior year quarter. This represents a 29-cent or 43.3% increase over the prior year
quarter. This increase was driven by the aforementioned increase in
net income as well as lower diluted share counts, primarily as a
result of the share repurchases made during the trailing four
quarters
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.
|
Third
Quarter
of
2016
|
|
|
Third
Quarter
of
2015
|
|
Same store sales
growth: (versus prior year period)
|
|
|
|
|
|
|
|
Domestic Company-owned
stores
|
|
+ 13.8
|
%
|
|
|
+ 11.5
|
%
|
Domestic franchise
stores
|
|
+ 12.9
|
%
|
|
|
+ 10.4
|
%
|
Domestic
stores
|
|
+ 13.0
|
%
|
|
|
+ 10.5
|
%
|
International stores
(excluding foreign currency impact)
|
|
+ 6.6
|
%
|
|
|
+ 7.7
|
%
|
|
|
|
|
|
|
|
|
Global retail
sales growth: (versus prior year period)
|
|
|
|
|
|
|
|
Domestic
stores
|
|
+ 16.2
|
%
|
|
|
+ 12.7
|
%
|
International
stores
|
|
+ 13.6
|
%
|
|
|
+ 0.7
|
%
|
Total
|
|
+ 14.9
|
%
|
|
|
+ 6.1
|
%
|
|
|
|
|
|
|
|
|
Global retail
sales growth: (versus prior year period,
excluding foreign currency impact)
|
|
|
|
|
|
|
|
Domestic
stores
|
|
+ 16.2
|
%
|
|
|
+ 12.7
|
%
|
International
stores
|
|
+ 18.1
|
%
|
|
|
+ 17.4
|
%
|
Total
|
|
+ 17.2
|
%
|
|
|
+ 15.2
|
%
|
|
Domestic
Company-
owned
Stores
|
|
Domestic
Franchise
Stores
|
|
Total
Domestic
Stores
|
|
International
Stores
|
|
Total
|
Store
counts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Store count at June
19, 2016
|
|
386
|
|
|
4,859
|
|
|
5,245
|
|
|
7,691
|
|
|
12,936
|
Openings
|
|
1
|
|
|
35
|
|
|
36
|
|
|
300
|
|
|
336
|
Closings
|
|
—
|
|
|
(8)
|
|
|
(8)
|
|
|
(12)
|
|
|
(20)
|
Store count at
September 11, 2016
|
|
387
|
|
|
4,886
|
|
|
5,273
|
|
|
7,979
|
|
|
13,252
|
Third quarter 2016 net
change
|
|
1
|
|
|
27
|
|
|
28
|
|
|
288
|
|
|
316
|
Trailing four quarters
net change
|
|
10
|
|
|
151
|
|
|
161
|
|
|
972
|
|
|
1,133
|
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 third 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.
Share Repurchases
During the third quarter of 2016, the Company repurchased and
retired 412,260 shares of its common stock under its open market
share repurchase program for approximately $59.7 million, or an average price of
$144.85 per share. As of September 11, 2016, the end of the third quarter,
the Company had a total remaining authorized amount for share
repurchases of $165.5 million.
Liquidity
As of September 11, 2016, the
Company had approximately:
- $30.0 million of unrestricted
cash and cash equivalents;
- $2.23 billion in total debt;
and
- $46.2 million of available
borrowings under its $125.0 million
variable funding notes. Letters of credit issued under the
Company's variable funding note facility were $43.8 million.
The Company invested $38.3 million
in capital expenditures during the three fiscal quarters of 2016.
Free cash flow, as reconciled below to cash flows from operations
as determined under generally accepted accounting principles
(GAAP), was approximately $124.4
million in the three fiscal quarters of 2016.
(in
thousands)
|
|
Three Fiscal
Quarters
of
2016
|
|
Net cash provided by
operating activities
|
|
$
|
162,617
|
|
Capital
expenditures
|
|
|
(38,254)
|
|
Free cash
flow
|
|
$
|
124,363
|
|
Comments on Regulation G
In addition to the GAAP financial measures set forth in this
press release, the Company has included the free cash flow non-GAAP
financial measure 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 13,200 stores in over 80 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 third
quarter of 2016, Domino's had global retail sales of nearly
$2.5 billion, with over $1.2 billion in the U.S. and nearly $1.3 billion internationally. Its system is
comprised of independent franchise owners who accounted for over
97% of Domino's stores as of the third quarter of 2016. Emphasis on
technology innovation helped Domino's reach an estimated
$4.7 billion annually in global
digital sales at the end of 2015, and has produced several
innovative ordering platforms including Facebook Messenger, Samsung
Smart TV®, Apple Watch, Amazon Echo, 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 Piece of the Pie Rewards™, 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 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
|
|
|
September
11,
2016
|
|
%
of
Total
Revenues
|
|
|
September
6,
2015
|
|
%
of
Total
Revenues
|
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Company-owned
stores
|
$
|
100,966
|
|
|
|
|
|
$
|
86,456
|
|
|
|
|
Domestic
franchise
|
|
70,637
|
|
|
|
|
|
|
59,385
|
|
|
|
|
Supply
chain
|
|
355,036
|
|
|
|
|
|
|
303,591
|
|
|
|
|
International
franchise
|
|
40,038
|
|
|
|
|
|
|
35,264
|
|
|
|
|
Total
revenues
|
|
566,677
|
|
|
100.0
|
%
|
|
|
484,696
|
|
|
100.0
|
%
|
Cost of
sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Company-owned
stores
|
|
77,221
|
|
|
|
|
|
|
70,032
|
|
|
|
|
Supply
chain
|
|
315,553
|
|
|
|
|
|
|
272,710
|
|
|
|
|
Total cost of
sales
|
|
392,774
|
|
|
69.3
|
%
|
|
|
342,742
|
|
|
70.7
|
%
|
Operating
margin
|
|
173,903
|
|
|
30.7
|
%
|
|
|
141,954
|
|
|
29.3
|
%
|
General and
administrative
|
|
72,992
|
|
|
12.9
|
%
|
|
|
61,411
|
|
|
12.7
|
%
|
Income from
operations
|
|
100,911
|
|
|
17.8
|
%
|
|
|
80,543
|
|
|
16.6
|
%
|
Interest expense,
net
|
|
(25,097)
|
|
|
(4.4)
|
%
|
|
|
(19,915)
|
|
|
(4.1)
|
%
|
Income before
provision for income taxes
|
|
75,814
|
|
|
13.4
|
%
|
|
|
60,628
|
|
|
12.5
|
%
|
Provision for income
taxes
|
|
28,582
|
|
|
5.1
|
%
|
|
|
22,796
|
|
|
4.7
|
%
|
Net income
|
$
|
47,232
|
|
|
8.3
|
%
|
|
$
|
37,832
|
|
|
7.8
|
%
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock –
diluted
|
$
|
0.96
|
|
|
|
|
|
$
|
0.67
|
|
|
|
|
Dividends declared
per share
|
$
|
0.38
|
|
|
|
|
|
$
|
0.31
|
|
|
|
|
Domino's Pizza,
Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
|
|
|
Three Fiscal
Quarters Ended
|
|
|
September
11,
2016
|
|
%
of
Total
Revenues
|
|
|
September
6,
2015
|
|
%
of
Total
Revenues
|
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Company-owned
stores
|
$
|
295,243
|
|
|
|
|
$
|
267,625
|
|
|
|
Domestic
franchise
|
|
208,463
|
|
|
|
|
|
181,986
|
|
|
|
Supply
chain
|
|
1,029,990
|
|
|
|
|
|
918,150
|
|
|
|
International
franchise
|
|
119,497
|
|
|
|
|
|
107,584
|
|
|
|
Total
revenues
|
|
1,653,193
|
|
100.0
|
%
|
|
|
1,475,345
|
|
100.0
|
%
|
Cost of
sales:
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Company-owned
stores
|
|
223,771
|
|
|
|
|
|
204,266
|
|
|
|
Supply
chain
|
|
916,465
|
|
|
|
|
|
819,387
|
|
|
|
Total cost of
sales
|
|
1,140,236
|
|
69.0
|
%
|
|
|
1,023,653
|
|
69.4
|
%
|
Operating
margin
|
|
512,957
|
|
31.0
|
%
|
|
|
451,692
|
|
30.6
|
%
|
General and
administrative
|
|
209,632
|
|
12.7
|
%
|
|
|
184,665
|
|
12.5
|
%
|
Income from
operations
|
|
303,325
|
|
18.3
|
%
|
|
|
267,027
|
|
18.1
|
%
|
Interest expense,
net
|
|
(75,977)
|
|
(4.5)
|
%
|
|
|
(58,939)
|
|
(4.0)
|
%
|
Income before
provision for income taxes
|
|
227,348
|
|
13.8
|
%
|
|
|
208,088
|
|
14.1
|
%
|
Provision for income
taxes
|
|
85,403
|
|
5.2
|
%
|
|
|
78,058
|
|
5.3
|
%
|
Net income
|
$
|
141,945
|
|
8.6
|
%
|
|
$
|
130,030
|
|
8.8
|
%
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
Common stock –
diluted
|
$
|
2.82
|
|
|
|
|
$
|
2.30
|
|
|
|
Dividends declared
per share
|
$
|
1.14
|
|
|
|
|
$
|
0.93
|
|
|
|
Domino's Pizza,
Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
|
|
|
|
|
September 11,
2016
|
|
January 3,
2016
|
|
(In
thousands)
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
29,981
|
|
$
|
133,449
|
|
Restricted cash and
cash equivalents
|
|
|
123,569
|
|
|
180,940
|
|
Accounts
receivable
|
|
|
138,107
|
|
|
131,582
|
|
Inventories
|
|
|
38,834
|
|
|
36,861
|
|
Advertising fund
assets, restricted
|
|
|
115,234
|
|
|
99,159
|
|
Prepaid expenses and
other
|
|
|
26,865
|
|
|
20,646
|
|
Total current
assets
|
|
|
472,590
|
|
|
602,637
|
|
Property, plant and
equipment, net
|
|
|
132,601
|
|
|
131,890
|
|
Other
assets
|
|
|
71,416
|
|
|
65,318
|
|
Total
assets
|
|
$
|
676,607
|
|
$
|
799,845
|
|
Liabilities and
stockholders' deficit
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Current portion of
long-term debt
|
|
$
|
73,877
|
|
$
|
59,333
|
|
Accounts
payable
|
|
|
103,994
|
|
|
106,927
|
|
Dividends
payable
|
|
|
18,547
|
|
|
557
|
|
Advertising fund
liabilities
|
|
|
115,234
|
|
|
99,159
|
|
Other accrued
liabilities
|
|
|
98,865
|
|
|
110,007
|
|
Total current
liabilities
|
|
|
410,517
|
|
|
375,983
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
|
Long-term debt, less
current portion
|
|
|
2,156,884
|
|
|
2,181,460
|
|
Other accrued
liabilities
|
|
|
45,352
|
|
|
42,653
|
|
Total long-term
liabilities
|
|
|
2,202,236
|
|
|
2,224,113
|
|
Total stockholders'
deficit
|
|
|
(1,936,146)
|
|
|
(1,800,251)
|
|
Total liabilities and
stockholders' deficit
|
|
$
|
676,607
|
|
$
|
799,845
|
|
Domino's Pizza,
Inc. and Subsidiaries
Condensed Consolidated Statements of Cash
Flows (Unaudited)
|
|
|
Three Fiscal
Quarters Ended
|
|
|
September
11,
2016
|
|
September
6,
2015
|
|
(In
thousands)
|
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
Net income
|
$
|
141,945
|
|
$
|
130,030
|
|
Adjustments to
reconcile net income to net cash provided by
operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
25,460
|
|
|
22,695
|
|
Loss (gain) on
sale/disposal of assets
|
|
473
|
|
|
(73)
|
|
Amortization of debt
issuance costs
|
|
4,562
|
|
|
3,825
|
|
Provision for deferred
income taxes
|
|
2,657
|
|
|
959
|
|
Non-cash compensation
expense
|
|
12,344
|
|
|
11,188
|
|
Tax impact from
equity-based compensation
|
|
(41,479)
|
|
|
(15,745)
|
|
Other
|
|
(406)
|
|
|
(1,216)
|
|
Changes in operating
assets and liabilities
|
|
17,061
|
|
|
15,645
|
|
Net cash provided by
operating activities
|
|
162,617
|
|
|
167,308
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
Capital
expenditures
|
|
(38,254)
|
|
|
(33,834)
|
|
Proceeds from sale of
assets
|
|
4,658
|
|
|
10,464
|
|
Changes in restricted
cash
|
|
57,371
|
|
|
29,933
|
|
Other
|
|
(1,669)
|
|
|
1,304
|
|
Net cash provided by
investing activities
|
|
22,106
|
|
|
7,867
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
Proceeds from issuance
of long-term debt
|
|
63,000
|
|
|
5,000
|
|
Repayments of
long-term debt and capital lease obligations
|
|
(77,592)
|
|
|
(5,198)
|
|
Proceeds from exercise
of stock options
|
|
12,324
|
|
|
4,459
|
|
Tax impact from
equity-based compensation
|
|
41,479
|
|
|
15,745
|
|
Purchases of common
stock
|
|
(283,858)
|
|
|
(138,550)
|
|
Tax payments for
restricted stock upon vesting
|
|
(5,605)
|
|
|
(7,442)
|
|
Payments of common
stock dividends and equivalents
|
|
(37,548)
|
|
|
(48,141)
|
|
Net cash used in
financing activities
|
|
(287,800)
|
|
|
(174,127)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(391)
|
|
|
603
|
|
Change in cash and
cash equivalents
|
|
(103,468)
|
|
|
1,651
|
|
Cash and cash
equivalents, at beginning of period
|
|
133,449
|
|
|
30,855
|
|
Cash and cash
equivalents, at end of period
|
$
|
29,981
|
|
$
|
32,506
|
|
Logo -
http://photos.prnewswire.com/prnh/20120814/DE55948LOGO-b
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/dominos-pizza-announces-third-quarter-2016-financial-results-300346073.html
SOURCE Domino's Pizza, Inc.