ANN ARBOR, Mich., Feb. 20,
2018 /PRNewswire/ -- Domino's Pizza, Inc. (NYSE: DPZ),
the largest pizza company in the world based on global retail
sales, announced results for the fourth quarter and fiscal 2017,
comprised of strong growth in same store sales, global store counts
and earnings per share. Domestic same store sales grew 4.2% during
the quarter versus the year-ago period, and 7.7% for the full year,
continuing the positive sales momentum in the Company's domestic
business. The international division also posted positive results,
with same store sales growth of 2.5% during the quarter and 3.4%
for the full year. The fourth quarter marked the 96th
consecutive quarter – or 24th year – of positive
international same store sales growth and the 27th
consecutive quarter of positive domestic same store sales growth.
The Company also had fourth quarter global net store growth of 422
stores, comprised of 96 net new domestic stores and 326 net new
international stores. In fiscal 2017, the Company opened 1,045 net
new stores, comprised of 216 net new domestic stores and 829 net
new international stores.
Fourth quarter diluted EPS was $2.09, up 41.2% over the prior year quarter;
fiscal 2017 diluted EPS was $5.83, up
35.6% over the prior year. Fiscal 2017 diluted EPS, as adjusted,
was $5.91, up 37.4% over the prior
year diluted EPS of $4.30.
On February 14, 2018, the Board of
Directors declared a 55-cent per
share quarterly dividend for shareholders of record as of
March 15, 2018 to be paid on
March 30, 2018. This represents an
increase of approximately 20% over the previous quarterly dividend
amount.
"Without question, we are pleased with our fourth quarter and
full-year 2017 performance – with results that continued to outpace
the industry," said J. Patrick
Doyle, President and Chief Executive Officer. "Our 2017
global retail sales growth and domestic comps outperformed the
high-end of our stated three to five-year outlook. This, along with
tremendous net store growth and an incredibly low number of
closures, helps validate that our long-term fundamental strength is
well intact heading into 2018."
Fourth Quarter and Fiscal 2017 Highlights:
(dollars in
millions, except per share data)
|
|
Fourth
Quarter
of
2017
|
|
|
Fourth
Quarter
of
2016
|
|
|
Fiscal
2017
|
|
|
Fiscal
2016
|
|
Net
income
|
|
$
|
93.3
|
|
|
$
|
72.7
|
|
|
$
|
277.9
|
|
|
$
|
214.7
|
|
Weighted average
diluted shares
|
|
|
44,593,094
|
|
|
|
49,090,074
|
|
|
|
47,677,834
|
|
|
|
49,923,859
|
|
Diluted earnings
per share, as reported (1)
|
|
$
|
2.09
|
|
|
$
|
1.48
|
|
|
$
|
5.83
|
|
|
$
|
4.30
|
|
Items affecting
comparability (2)
|
|
|
—
|
|
|
|
—
|
|
|
|
0.08
|
|
|
|
—
|
|
Diluted earnings
per share, as adjusted (1) (2)
|
|
$
|
2.09
|
|
|
$
|
1.48
|
|
|
$
|
5.91
|
|
|
$
|
4.30
|
|
|
(1) In the first
quarter of 2017, the Company adopted Accounting Standards Update
No. 2016-09, Compensation-Stock Compensation (Topic 718):
Improvements to Employee Share-Based Payment Accounting, (ASU
2016-09), which requires the Company to record excess tax
benefits from equity-based compensation as a reduction of the
provision for income taxes in the income statement, whereas they
were previously recognized in equity. See the "Adoption of New
Accounting Guidance" section on page three for additional
information.
|
(2) Refer to
the Items Affecting Comparability section on page four for
additional details. See also the Comments on Regulation G section
on page five.
|
- Revenues were up 8.8% for the fourth quarter versus the
prior year quarter, due primarily to higher supply chain revenues
from increased volumes. Higher royalties derived from our retail
sales in both our international and domestic markets also
contributed to the increase in revenues. Consolidated revenues also
benefited from the positive impact of foreign currency exchange
rates.
- Net Income increased 28.3% for the fourth quarter versus
the prior year quarter, primarily driven by an increase in global
royalty revenues as well as higher supply chain volumes. The
adoption of the new equity-based compensation accounting standard
also positively impacted net income by approximately $6.8 million. See the "Adoption of New Accounting
Guidance" section on page three for additional information.
Additionally, the pre-tax gain on the sale of certain domestic
Company-owned stores to franchisees in the fourth quarter resulted
in a $4.0 million decrease to our
consolidated general and administrative expenses. These increases
were partially offset by a pre-tax $5.3
million increase in net interest expense for the fourth
quarter as compared to the prior year as a result of higher net
debt levels following our 2017 recapitalization transaction.
- Diluted EPS was $2.09 for
the fourth quarter versus $1.48 in
the prior year quarter. This represents a 61-cent or 41.2% increase over the prior year
quarter. This increase was driven by higher net income, as well as
lower diluted share count, primarily resulting from share
repurchases.
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 five for additional
details.
|
|
|
Fourth
Quarter
of
2017
|
|
|
|
Fiscal
2017
|
|
Same store sales
growth: (versus prior year period)
|
|
|
|
|
|
|
|
|
Domestic Company-owned
stores
|
|
|
+ 3.8%
|
|
|
|
+ 8.7%
|
|
Domestic franchise
stores
|
|
|
+ 4.2%
|
|
|
|
+ 7.6%
|
|
Domestic
stores
|
|
|
+ 4.2%
|
|
|
|
+ 7.7%
|
|
International stores
(excluding foreign currency impact)
|
|
|
+ 2.5%
|
|
|
|
+ 3.4%
|
|
|
|
|
|
|
|
|
|
|
Global retail
sales growth: (versus prior year period)
|
|
|
|
|
|
|
|
|
Domestic
stores
|
|
|
+ 7.6%
|
|
|
|
+ 11.1%
|
|
International
stores
|
|
|
+ 15.6%
|
|
|
|
+ 14.2%
|
|
Total
|
|
|
+ 11.7%
|
|
|
|
+ 12.7%
|
|
|
|
|
|
|
|
|
|
|
Global retail
sales growth: (versus prior year period,
excluding foreign currency impact)
|
|
|
|
|
|
|
|
|
Domestic
stores
|
|
|
+ 7.6%
|
|
|
|
+ 11.1%
|
|
International
stores
|
|
|
+ 12.0%
|
|
|
|
+ 14.8%
|
|
Total
|
|
|
+ 9.9%
|
|
|
|
+ 13.0%
|
|
|
|
Domestic
Company-
owned
Stores
|
|
|
Domestic
Franchise
Stores
|
|
|
Total
Domestic
Stores
|
|
|
International
Stores
|
|
|
Total
|
|
Store
counts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Store count at
September 10, 2017
|
|
|
399
|
|
|
|
5,092
|
|
|
|
5,491
|
|
|
|
8,943
|
|
|
|
14,434
|
|
Openings
|
|
|
10
|
|
|
|
92
|
|
|
|
102
|
|
|
|
339
|
|
|
|
441
|
|
Closings
|
|
|
-
|
|
|
|
(6)
|
|
|
|
(6)
|
|
|
|
(13)
|
|
|
|
(19)
|
|
Transfers
|
|
|
(17)
|
|
|
|
17
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Store count at
December 31, 2017
|
|
|
392
|
|
|
|
5,195
|
|
|
|
5,587
|
|
|
|
9,269
|
|
|
|
14,856
|
|
Fourth quarter 2017
net change
|
|
|
(7)
|
|
|
|
103
|
|
|
|
96
|
|
|
|
326
|
|
|
|
422
|
|
Fiscal 2017 net
change
|
|
|
-
|
|
|
|
216
|
|
|
|
216
|
|
|
|
829
|
|
|
|
1,045
|
|
Conference Call Information
The Company will file its annual report on Form 10-K this
morning. As previously announced, Domino's Pizza, Inc. will
hold a conference call today at 10
a.m. (Eastern) to review its fourth quarter and fiscal 2017
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.
Adoption of New Accounting Guidance
The Company adopted ASU 2016-09 in the first quarter of
fiscal 2017. This standard addresses accounting for income taxes
and forfeitures and the cash flow presentation of share-based
compensation. The adoption resulted in a $6.8 million decrease in our fourth quarter 2017
provision for income taxes, or a 5.0 percentage point decrease in
our fourth quarter 2017 effective tax rate, due primarily to the
recognition of excess tax benefits for options exercised. For
fiscal 2017, the adoption resulted in a $27.2 million decrease in our provision for
income taxes, or a 6.8 percentage point decrease in our effective
tax rate. This item positively impacted our diluted EPS by
approximately 15 cents and
57 cents in the fourth quarter and
fiscal 2017, respectively. Refer to the Company's Form 10-K for the
fiscal year ended December 31, 2017
for additional information regarding the impact of the adoption of
ASU 2016-09.
In the first quarter of fiscal 2018, the Company will adopt
Accounting Standards Codification 606, Revenue from Contracts
with Customers ("ASC 606"). Under this new accounting standard,
the Company has determined that there are not separate performance
obligations associated with the franchise advertising contributions
received by Domino's National Advertising Fund ("DNAF") and, as a
result, these franchise contributions and the related expenses will
be presented gross in the Company's consolidated statement of
income. The Company expects this change to have a material impact
on its total revenues and expenses beginning in fiscal 2018.
However, this impact will generally be an offsetting increase to
both revenues and expenses such that the impact on income from
operations and net income, if any, is not expected to be material.
The Company will also present the activity associated with DNAF on
a gross basis in the statement of cash flows beginning in fiscal
2018. Refer to the Company's Form 10-K for the fiscal year ended
December 31, 2017 for additional
information regarding the anticipated impact of adoption of ASC
606.
Tax Cuts and Jobs Act
On December 22, 2017, the Tax Cuts
and Jobs Act (the "2017 Tax Act") was enacted. The 2017 Tax Act
includes many changes to existing U.S. tax laws that impact the
Company, most notably a reduction of the U.S. corporate income tax
rate from 35 percent to 21 percent for tax years beginning after
December 31, 2017. While the impact
of the 2017 Tax Act was not material to the Company's 2017
financial statements, based on preliminary estimates, we anticipate
it will significantly lower our effective tax rate in future
periods. Refer to the Company's Form 10-K for the fiscal year ended
December 31, 2017 for additional
information regarding the impact of the 2017 Tax Act.
Share Repurchases
During the fourth quarter, the Company repurchased and retired
937,026 shares of its common stock under its open market share
repurchase program, including 659,807 shares received at final
settlement of our previously disclosed $1.0
billion accelerated share repurchase program. The remaining
277,219 shares were repurchased and retired during the fourth
quarter for approximately $51.5
million at an average price of $185.89 per share. During fiscal 2017, the
Company repurchased and retired a total of 5,576,249 shares of its
common stock for approximately $1.06
billion at an average price of $190.85 per share. The Company had approximately
$198.5 million remaining under its
$1.25 billion authorization for share
repurchases as of December 31,
2017.
On February 14, 2018, the Board of
Directors authorized a new share repurchase program to repurchase
up to $750.0 million of the Company's
common stock. This repurchase program replaces the remaining
availability of approximately $198.5
million under the Company's previously approved $1.25 billion share repurchase program.
Items Affecting Comparability
The Company's reported financial results for fiscal 2017 are not
comparable to the reported financial results for the equivalent
period in 2016. The table below presents certain items that affect
comparability between 2017 and 2016 financial results. Management
believes that including such information is critical to the
understanding of its financial results for fiscal 2017 as compared
to the same period in 2016 (see the Comments on Regulation G
section on page five for additional details).
In addition to the items in the table below, the Company had
lower weighted average diluted shares outstanding in 2017 that
resulted in an increase in diluted EPS of approximately
18 cents in the fourth quarter of
2017 and approximately 24 cents in
fiscal 2017. The Company also incurred higher net interest expense
in 2017 primarily as a result of higher net debt levels. The
increase in net interest expense resulted in a decrease in diluted
EPS of approximately seven cents in
both the fourth quarter of 2017 and fiscal 2017.
|
|
|
|
Fiscal
2017
|
|
(in thousands,
except per share data)
|
|
|
|
Pre-tax
|
|
|
After-tax
|
|
|
Diluted
EPS
Impact
|
|
2017 items
affecting comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recapitalization
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses (1)
|
|
|
|
$
|
(622)
|
|
|
$
|
(389)
|
|
|
$
|
(0.01)
|
|
Interest expense
(2)
|
|
|
|
|
(264)
|
|
|
|
(165)
|
|
|
|
(0.00)
|
|
Debt issuance cost
write-off (3)
|
|
|
|
|
(5,521)
|
|
|
|
(3,450)
|
|
|
|
(0.07)
|
|
Subtotal
|
|
|
|
|
(6,407)
|
|
|
|
(4,004)
|
|
|
|
(0.08)
|
|
Total of 2017
items
|
|
|
|
$
|
(6,407)
|
|
|
$
|
(4,004)
|
|
|
$
|
(0.08)
|
|
|
(1) Represents legal,
professional and administrative fees incurred in connection with
the Company's 2017 recapitalization.
|
(2) Represents
interest expense the Company incurred on its 2012 debt subsequent
to the closing of the 2017 recapitalization but prior to the
repayment of the 2012 debt, resulting in the payment of interest on
both the 2012 and 2017 facilities for a short period of
time.
|
(3) Represents the
write-off of debt issuance costs related to the extinguishment of
the 2012 debt in connection with the Company's 2017
recapitalization.
|
Three to Five-Year Outlook
The Company does not provide quarterly or annual earnings
estimates. The following outlook does not constitute specific
earnings guidance. In January 2018,
the Company reaffirmed its three to five-year outlook as
follows:
|
Current
Outlook
|
|
|
Domestic same store
sales growth
|
3% – 6%
|
|
|
International same
store sales growth (1)
|
3% – 6%
|
|
|
Net unit
growth
|
6% – 8%
|
|
|
Global retail sales
growth (1)
|
8% – 12%
|
|
|
|
|
|
|
(1) Excluding foreign
currency impact
|
|
|
|
|
|
|
Liquidity
As of December 31, 2017, the
Company had approximately:
- $35.8 million of unrestricted
cash and cash equivalents;
- $3.15 billion in total debt;
and
- $128.3 million of available
borrowings under its $175.0 million
variable funding notes, net of letters of credit issued of
$46.7 million. The Company has
collateralized $36.7 million of its
letters of credit with restricted cash, and has the ability to
access this cash with minimal notice.
The Company invested $90.0 million
in capital expenditures during fiscal 2017, versus $58.6 million in fiscal 2016. Free cash flow, as
reconciled below to net cash provided by operating activities, as
determined under U.S. generally accepted accounting principles
(GAAP), was approximately $249.0
million in fiscal 2017.
(In
thousands)
|
|
Fiscal
2017
|
|
Net cash provided by
operating activities
|
|
$
|
339,036
|
|
Capital
expenditures
|
|
|
(90,011)
|
|
Free cash
flow
|
|
$
|
249,025
|
|
Comments on Regulation G
In addition to the GAAP financial measures set forth in this
press release, the Company has included non-GAAP financial measures
within the meaning of Regulation G, including free cash flow
metrics and measures related to items affecting comparability
between fiscal quarters and other fiscal periods. 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 "Diluted EPS, as adjusted," which is
calculated as reported Diluted EPS adjusted for the items that
affect comparability to the prior year periods discussed above. The
most directly comparable financial measure calculated and presented
in accordance with GAAP is Diluted EPS. The Company believes that
the Diluted EPS, as adjusted, measure is important and useful to
investors and other interested persons and that such persons
benefit from having a consistent basis for comparison between
reporting periods. The Company uses Diluted EPS, as adjusted, to
internally evaluate operating performance, to evaluate itself
against its peers and in long-range planning. Additionally, the
Company believes that analysts covering the Company's stock
performance generally eliminate these items affecting comparability
when preparing their financial models, when determining their
published EPS estimates and when benchmarking the Company against
its competitors.
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 largest pizza company in
the world based on retail sales, with a significant business in
both delivery and carryout pizza. It ranks among the world's top
public restaurant brands with a global enterprise of more than
14,800 stores in over 85 markets. Domino's had global retail sales
of over $12.2 billion in 2017, with
more than $5.9 billion in the U.S.
and more than $6.3 billion
internationally. In the fourth quarter of 2017, Domino's had global
retail sales of nearly $4.0 billion,
with nearly $1.9 billion in the U.S.
and over $2.1 billion
internationally. Its system is comprised of independent franchise
owners who accounted for over 97% of Domino's stores as of the
fourth quarter of 2017. Emphasis on technology innovation helped
Domino's achieve more than half of all global retail sales in 2017
from digital channels, primarily online ordering and mobile
applications. In the U.S., Domino's generates over 60% of sales via
digital channels and has produced several innovative ordering
platforms, including Google Home, Facebook Messenger, Apple Watch,
Amazon Echo, Twitter and text message using a pizza emoji. In late
2017, as part of an industry-first collaboration with Ford Motor
Company, Domino's began a meaningful test of delivery using
self-driving vehicles.
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 news, announcements, earnings releases and conference
webcasts.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995:
This press release contains various forward-looking statements
about the Company within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Act") that are based on current
management expectations that involve substantial risks and
uncertainties which could cause actual results to differ materially
from the results expressed in, or implied by, these forward-looking
statements. The following cautionary statements are being made
pursuant to the provisions of the Act and with the intention of
obtaining the benefits of the "safe harbor" provisions of the Act.
You can identify forward-looking statements by the use of words
such as "anticipates," "believes," "could," "should," "estimates,"
"expects," "intends," "may," "will," "plans," "predicts,"
"projects," "seeks," "approximately," "potential," "outlook" and
similar terms and phrases that concern our strategy, plans or
intentions, including references to assumptions. These
forward-looking statements address various matters including
information concerning future results of operations and business
strategy, our anticipated profitability, estimates in same store
sales growth, the growth of our domestic and 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. While we
believe these expectations and projections are based on reasonable
assumptions, such forward-looking statements are inherently subject
to risks, uncertainties and assumptions. Important factors that
could cause actual results to differ materially from our
expectations are more fully described in our other filings with the
Securities and Exchange Commission, including under the section
headed "Risk Factors" in our annual report on Form 10-K. Actual
results may differ materially from those expressed or implied in
the forward-looking statements as a result of various factors,
including but not limited to: our substantial increased
indebtedness as a result of the 2015 Recapitalization and the 2017
Recapitalization and our ability to incur additional indebtedness
or refinance that indebtedness in the future; our future financial
performance and our ability to pay principal and interest on our
indebtedness; the effectiveness of our advertising, operations and
promotional initiatives; the strength of our brand, including our
ability to compete domestically and internationally in our
intensely competitive industry; new product, digital ordering and
concept developments by us, and other food-industry competitors;
our ability to maintain good relationships with our franchisees and
their ongoing level of profitability; our ability to successfully
implement cost-saving strategies; our ability and that of our
franchisees to successfully operate in the current and future
credit environment; changes in the level of consumer spending given
general economic conditions, including interest rates, energy
prices and consumer confidence; 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), fuel and other commodity
costs, labor, utilities, insurance, employee benefits and other
operating costs; the impact that widespread illness or general
health concerns, severe weather conditions and natural disasters
may have on our business and the economies of the countries where
we operate; changes in foreign currency exchange rates; our ability
to retain or replace our executive officers and other key members
of management and our ability to adequately staff our stores and
supply chain centers with qualified personnel; our ability to find
and/or retain suitable real estate for our stores and supply chain
centers; changes in government legislation and regulations,
including changes in our effective tax rate; adverse legal
judgments or settlements; food-borne illness or contamination of
products; data breaches or other cyber risks; the effect of war,
terrorism or catastrophic events; our ability to pay dividends and
repurchase shares; changes in consumer preferences, spending and
traffic patterns and demographic trends; changes in accounting
policies; and adequacy of our insurance coverage. In light of these
risks, uncertainties and assumptions, the forward-looking events
discussed in this press release might not occur. All
forward-looking statements speak only as of the date of this press
release and should be evaluated with an understanding of their
inherent uncertainty. Except as required under federal securities
laws and the rules and regulations of the Securities and Exchange
Commission, we will not undertake and specifically decline any
obligation to publicly update or revise any forward-looking
statements to reflect events or circumstances arising after the
date of this press release, whether as a result of new information,
future events or otherwise. You are cautioned not to place
undue reliance on the forward-looking statements included in this
press release or that may be made elsewhere from time to time by,
or on behalf of, us. All forward-looking statements attributable to
us are expressly qualified by these cautionary statements.
TABLES TO FOLLOW
Domino's Pizza,
Inc. and Subsidiaries
|
Condensed
Consolidated Statements of Income
|
(Unaudited)
|
|
|
|
Fiscal Quarter
Ended
|
|
|
|
December
31, 2017
|
|
|
%
of
Total
Revenues
|
|
|
January
1,
2017
|
|
|
%
of
Total
Revenues
|
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Company-owned
stores
|
|
$
|
151,966
|
|
|
|
|
|
|
$
|
143,781
|
|
|
|
|
|
Domestic
franchise
|
|
|
108,839
|
|
|
|
|
|
|
|
103,797
|
|
|
|
|
|
Supply
chain
|
|
|
558,238
|
|
|
|
|
|
|
|
514,355
|
|
|
|
|
|
International
franchise
|
|
|
72,466
|
|
|
|
|
|
|
|
57,502
|
|
|
|
|
|
Total
revenues
|
|
|
891,509
|
|
|
|
100.0
|
%
|
|
|
819,435
|
|
|
|
100.0
|
%
|
Cost of
sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Company-owned
stores
|
|
|
114,636
|
|
|
|
|
|
|
|
108,089
|
|
|
|
|
|
Supply
chain
|
|
|
496,021
|
|
|
|
|
|
|
|
456,612
|
|
|
|
|
|
Total cost of
sales
|
|
|
610,657
|
|
|
|
68.5
|
%
|
|
|
564,701
|
|
|
|
68.9
|
%
|
Operating
margin
|
|
|
280,852
|
|
|
|
31.5
|
%
|
|
|
254,734
|
|
|
|
31.1
|
%
|
General and
administrative
|
|
|
105,601
|
|
|
|
11.8
|
%
|
|
|
104,017
|
|
|
|
12.7
|
%
|
Income from
operations
|
|
|
175,251
|
|
|
|
19.7
|
%
|
|
|
150,717
|
|
|
|
18.4
|
%
|
Interest expense,
net
|
|
|
(38,695)
|
|
|
|
(4.3)
|
%
|
|
|
(33,407)
|
|
|
|
(4.1)
|
%
|
Income before
provision for income taxes
|
|
|
136,556
|
|
|
|
15.4
|
%
|
|
|
117,310
|
|
|
|
14.3
|
%
|
Provision for income
taxes
|
|
|
43,229
|
|
|
|
4.9
|
%
|
|
|
44,576
|
|
|
|
5.4
|
%
|
Net income
|
|
$
|
93,327
|
|
|
|
10.5
|
%
|
|
$
|
72,734
|
|
|
|
8.9
|
%
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock –
diluted
|
|
$
|
2.09
|
|
|
|
|
|
|
$
|
1.48
|
|
|
|
|
|
Dividends declared
per share
|
|
$
|
0.46
|
|
|
|
|
|
|
$
|
0.38
|
|
|
|
|
|
Domino's Pizza,
Inc. and Subsidiaries
|
Condensed
Consolidated Statements of Income
|
(Unaudited)
|
|
|
|
Fiscal Year
Ended
|
|
|
|
December
31,
2017
|
|
|
%
of
Total
Revenues
|
|
|
January
1,
2017
|
|
|
%
of
Total
Revenues
|
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Company-owned
stores
|
|
$
|
490,846
|
|
|
|
|
|
|
$
|
439,024
|
|
|
|
|
|
Domestic
franchise
|
|
|
351,387
|
|
|
|
|
|
|
|
312,260
|
|
|
|
|
|
Supply
chain
|
|
|
1,739,038
|
|
|
|
|
|
|
|
1,544,345
|
|
|
|
|
|
International
franchise
|
|
|
206,708
|
|
|
|
|
|
|
|
176,999
|
|
|
|
|
|
Total
revenues
|
|
|
2,787,979
|
|
|
|
100.0
|
%
|
|
|
2,472,628
|
|
|
|
100.0
|
%
|
Cost of
sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Company-owned
stores
|
|
|
377,674
|
|
|
|
|
|
|
|
331,860
|
|
|
|
|
|
Supply
chain
|
|
|
1,544,314
|
|
|
|
|
|
|
|
1,373,077
|
|
|
|
|
|
Total cost of
sales
|
|
|
1,921,988
|
|
|
|
68.9
|
%
|
|
|
1,704,937
|
|
|
|
69.0
|
%
|
Operating
margin
|
|
|
865,991
|
|
|
|
31.1
|
%
|
|
|
767,691
|
|
|
|
31.0
|
%
|
General and
administrative
|
|
|
344,759
|
|
|
|
12.4
|
%
|
|
|
313,649
|
|
|
|
12.7
|
%
|
Income from
operations
|
|
|
521,232
|
|
|
|
18.7
|
%
|
|
|
454,042
|
|
|
|
18.3
|
%
|
Interest expense,
net
|
|
|
(121,079)
|
|
|
|
(4.3)
|
%
|
|
|
(109,384)
|
|
|
|
(4.4)
|
%
|
Income before
provision for income taxes
|
|
|
400,153
|
|
|
|
14.4
|
%
|
|
|
344,658
|
|
|
|
13.9
|
%
|
Provision for income
taxes
|
|
|
122,248
|
|
|
|
4.4
|
%
|
|
|
129,980
|
|
|
|
5.2
|
%
|
Net income
|
|
$
|
277,905
|
|
|
|
10.0
|
%
|
|
$
|
214,678
|
|
|
|
8.7
|
%
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock –
diluted
|
|
$
|
5.83
|
|
|
|
|
|
|
$
|
4.30
|
|
|
|
|
|
Dividends declared
per share
|
|
$
|
1.84
|
|
|
|
|
|
|
$
|
1.52
|
|
|
|
|
|
Domino's Pizza,
Inc. and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
|
|
|
December 31,
2017
|
|
|
January 1,
2017
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
35,768
|
|
|
$
|
42,815
|
|
Restricted cash and
cash equivalents
|
|
|
191,762
|
|
|
|
126,496
|
|
Accounts
receivable
|
|
|
173,677
|
|
|
|
150,369
|
|
Inventories
|
|
|
39,961
|
|
|
|
40,181
|
|
Advertising fund
assets, restricted
|
|
|
120,223
|
|
|
|
118,377
|
|
Prepaid expenses and
other
|
|
|
18,389
|
|
|
|
17,635
|
|
Total current
assets
|
|
|
579,780
|
|
|
|
495,873
|
|
Property, plant and
equipment, net
|
|
|
169,586
|
|
|
|
138,534
|
|
Other
assets
|
|
|
87,387
|
|
|
|
81,888
|
|
Total
assets
|
|
$
|
836,753
|
|
|
$
|
716,295
|
|
Liabilities and
stockholders' deficit
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Current portion of
long-term debt
|
|
$
|
32,324
|
|
|
$
|
38,887
|
|
Accounts
payable
|
|
|
106,894
|
|
|
|
111,510
|
|
Advertising fund
liabilities
|
|
|
120,223
|
|
|
|
118,377
|
|
Other accrued
liabilities
|
|
|
138,844
|
|
|
|
134,924
|
|
Total current
liabilities
|
|
|
398,285
|
|
|
|
403,698
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
|
|
Long-term debt, less
current portion
|
|
|
3,121,490
|
|
|
|
2,148,990
|
|
Other accrued
liabilities
|
|
|
52,362
|
|
|
|
46,750
|
|
Total long-term
liabilities
|
|
|
3,173,852
|
|
|
|
2,195,740
|
|
Total stockholders'
deficit
|
|
|
(2,735,384)
|
|
|
|
(1,883,143)
|
|
Total liabilities and
stockholders' deficit
|
|
$
|
836,753
|
|
|
$
|
716,295
|
|
Domino's Pizza,
Inc. and Subsidiaries
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
|
|
Fiscal Year
Ended
|
|
|
|
December
31,
2017
|
|
|
January
1,
2017
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
277,905
|
|
|
$
|
214,678
|
|
Adjustments to
reconcile net income to net cash flows provided by
operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
44,369
|
|
|
|
38,140
|
|
(Gains) losses on
sale/disposal of assets
|
|
|
(3,148)
|
|
|
|
863
|
|
Amortization of debt
issuance costs
|
|
|
10,976
|
|
|
|
6,418
|
|
Provision (benefit)
for deferred income taxes
|
|
|
6,160
|
|
|
|
(3,059)
|
|
Non-cash compensation
expense
|
|
|
20,713
|
|
|
|
18,564
|
|
Tax impact from
equity-based compensation
|
|
|
(27,227)
|
|
|
|
(48,129)
|
|
Other
|
|
|
(277)
|
|
|
|
(224)
|
|
Changes in operating
assets and liabilities
|
|
|
9,565
|
|
|
|
60,022
|
|
Net cash provided by
operating activities
|
|
|
339,036
|
|
|
|
287,273
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(90,011)
|
|
|
|
(58,555)
|
|
Proceeds from sale of
assets
|
|
|
6,835
|
|
|
|
4,936
|
|
Changes in restricted
cash
|
|
|
(65,266)
|
|
|
|
54,444
|
|
Other
|
|
|
(562)
|
|
|
|
(1,661)
|
|
Net cash used in
investing activities
|
|
|
(149,004)
|
|
|
|
(836)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from issuance
of long-term debt
|
|
|
1,900,000
|
|
|
|
63,000
|
|
Repayments of
long-term debt and capital lease obligations
|
|
|
(928,193)
|
|
|
|
(122,334)
|
|
Proceeds from exercise
of stock options
|
|
|
6,099
|
|
|
|
15,234
|
|
Tax impact from
equity-based compensation
|
|
|
-
|
|
|
|
48,129
|
|
Purchases of common
stock
|
|
|
(1,064,253)
|
|
|
|
(300,250)
|
|
Tax payments for
restricted stock upon vesting
|
|
|
(9,449)
|
|
|
|
(5,646)
|
|
Payments of common
stock dividends and equivalents
|
|
|
(84,298)
|
|
|
|
(73,925)
|
|
Cash paid for
financing costs
|
|
|
(16,846)
|
|
|
|
–
|
|
Other
|
|
|
(205)
|
|
|
|
–
|
|
Net cash used in
financing activities
|
|
|
(197,145)
|
|
|
|
(375,792)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
|
66
|
|
|
|
(1,279)
|
|
Change in cash and
cash equivalents
|
|
|
(7,047)
|
|
|
|
(90,634)
|
|
Cash and cash
equivalents, at beginning of period
|
|
|
42,815
|
|
|
|
133,449
|
|
Cash and cash
equivalents, at end of period
|
|
$
|
35,768
|
|
|
$
|
42,815
|
|
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SOURCE Domino's Pizza