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Papa Johns Announces Second Quarter 2024 Financial Results

Papa John’s International, Inc. (Nasdaq: PZZA) (“Papa Johns®”) (the “Company”) today announced financial results for the second quarter ended June 30, 2024.

Highlights

  • North America comparable sales(a) were down 4% from a year ago as Domestic Company-owned restaurants were down 4% and North America franchised restaurants were down 3%; International comparable sales(a) were flat compared with the prior year period.
  • 31 net unit closures in the second quarter resulting from anticipated strategic International closures, including 43 Company-owned restaurants in the UK.
  • Global system-wide restaurant sales were $1.20 billion, a 1%(b) decrease compared with the prior year second quarter, driven by lower North America comparable sales partially offset by trailing twelve month net unit growth.
  • Total revenues of $508 million were down 1% compared with a year ago driven by lower revenues in our North America commissary segment primarily due to a combination of lower volume and commodity prices.
  • Operating income of $28 million decreased 19% compared with the second quarter of 2023, while Adjusted operating income(c) of $38 million increased 4% on improved restaurant-level margins and continued focus on cost discipline.
  • Diluted earnings per common share of $0.37 compared with $0.54 for the second quarter of 2023; Adjusted diluted earnings per common share(c) was $0.61 compared with $0.59 for the second quarter a year ago.

“I am honored and excited to join the Papa Johns team and look forward to building a strong and collaborative partnership with our franchisees,” said Todd Penegor, President and Chief Executive Officer. “As we move forward together, our number one priority will be to create great experiences for our customers and team members, while also ensuring the restaurant economic model is strong. We will move quickly to build on our strengths and execute today as we evolve to be even better tomorrow.”

Commenting on second quarter results, Ravi Thanawala, Chief Financial Officer, stated, “Papa Johns’ commitment to maintaining the quality of our product and brand as well as managing our costs drove continued improvement in restaurant-level margins and Adjusted operating income, helping to offset our softer sales in the second quarter. During the quarter, demand for our core product — pizza, remained solid despite facing a highly promotional QSR environment and a more value-conscious consumer.

“We recognize there is work to do to achieve our full potential. We are committed to doing what is necessary to become the pizza brand of choice for consumers and franchisees around the world,” continued Thanawala. “We are actively pursuing opportunities that sharpen our focus, improve unit economics, drive unit development and provide an excellent consumer experience. We are evolving our marketing to meet consumers’ value expectations, investing in our digital experience to streamline our ordering journey and enhancing our loyalty experience to drive consumer engagement.

“We are confident that our approach will drive long-term increased franchisee profitability and sustainable, profitable growth for all stakeholders,” concluded Thanawala.

_______________________________________________________

(a) North America and International comparable sales are reported on a 13-week basis comparing April 1, 2024 through June 30, 2024 with April 3, 2023 through July 2, 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 measure.

Financial Highlights

 

 

Three Months Ended

 

Six Months Ended

(In thousands, except per share amounts)

 

June 30,

2024

 

June 25,

2023

 

Increase (Decrease)

 

June 30,

2024

 

June 25,

2023

 

Increase (Decrease)

Total revenues

 

$

507,894

 

$

514,530

 

$

(6,636

)

 

$

1,021,810

 

$

1,041,579

 

$

(19,769

)

Operating income

 

$

28,226

 

$

34,912

 

$

(6,686

)

 

$

61,944

 

$

72,708

 

$

(10,764

)

Adjusted operating income (a)

 

$

38,355

 

$

36,881

 

$

1,474

 

 

$

81,596

 

$

76,033

 

$

5,563

 

Net income attributable to the Company

 

$

12,243

 

$

17,768

 

$

(5,525

)

 

$

26,879

 

$

40,144

 

$

(13,265

)

Diluted earnings per common share

 

$

0.37

 

$

0.54

 

$

(0.17

)

 

$

0.82

 

$

1.20

 

$

(0.38

)

Adjusted diluted earnings per common share (a)

 

$

0.61

 

$

0.59

 

$

0.02

 

 

$

1.28

 

$

1.28

 

$

 

Results for the first six months of 2024 are not directly comparable with the first six months of 2023, as year-over-year comparisons are impacted by the UK franchisee acquisitions that occurred during the second and third quarters of 2023 and the UK restaurant closures and refranchising transactions in the second quarter of 2024.

Quarterly Results

Total revenues of $507.9 million decreased $6.6 million, or 1.3%, in the second quarter of 2024 compared with the prior year period. The lower revenues were largely attributable to an $8.8 million decrease in North America commissary revenues reflecting a combination of lower transaction volumes and commodity prices. Revenues from Domestic Company-owned restaurants also declined $2.6 million, reflecting lower transaction volumes partially offset by higher average ticket. Somewhat offsetting these declines was higher International revenues primarily driven by the net impact of the UK Company-owned restaurants versus the prior year period.

For the second quarter of 2024, Global system-wide restaurant sales were $1.20 billion, down 0.7% from the prior year quarter (excluding the impact of foreign currency). The decrease was primarily due to lower North America comparable sales, partially offset by 1.9% global net unit growth on a trailing twelve-month basis.

Second quarter Operating income was $28.2 million, a $6.7 million, or a 19.2% decrease compared with the prior year second quarter. Adjusted operating income(a) was $38.4 million, a $1.5 million, or 4.0%, increase from the same period a year ago. The variance between Operating income and Adjusted operating income was due to $6.1 million of International restructuring costs in the UK and a $4.0 million non-cash impairment charge related to fixed and intangible assets related to certain Domestic restaurants.

The increase in Adjusted operating income in the second quarter of 2024 was primarily due to improved margins at our Domestic Company-owned restaurants and local marketing savings. These increases were partially offset by an approximate $3 million operating loss related to the operations of the UK franchisee acquisition and higher depreciation costs related to Company-owned restaurants and our investments in technology platforms.

Diluted earnings per common share was $0.37 for the second quarter of 2024 compared with $0.54 in the second quarter of 2023. Adjusted diluted earnings per common share(a) was $0.61 for the second quarter of 2024 compared with $0.59 in the second quarter of 2023. These changes were driven by the same factors impacting Operating income and Adjusted operating income as discussed above. In addition, diluted earnings per common share and Adjusted diluted earnings per common share reflected lower interest expense and a higher effective tax rate compared with the second quarter of 2023. Interest expense decreased largely due to lower average outstanding debt, partially offset by slightly higher average interest rates compared with the prior year second quarter.

See the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our Quarterly Report on Form 10-Q filed with the SEC for additional information concerning our operating results for the three and six months ended June 30, 2024.

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

Global Restaurant Sales Information

Global restaurant and comparable sales information for the second quarter ended June 30, 2024, compared with the second quarter ended June 25, 2023 are as follows (See “Supplemental Information and Financial Statements” below for related definitions):

 

 

Three Months Ended

 

Six Months Ended

Amounts below exclude the impact of foreign currency

 

June 30,

2024

 

June 25,

2023

 

June 30,

2024

 

June 25,

2023

Comparable sales growth (decline):

 

 

 

 

 

 

 

 

Domestic Company-owned restaurants

 

(4.2

)%

 

2.2

%

 

(3.6

)%

 

2.8

%

North America franchised restaurants

 

(3.4

)%

 

(2.3

)%

 

(2.4

)%

 

(1.6

)%

North America restaurants

 

(3.6

)%

 

(1.4

)%

 

(2.7

)%

 

(0.7

)%

International restaurants

 

(0.1

)%

 

(0.7

)%

 

(1.4

)%

 

(3.3

)%

Total comparable sales growth (decline)

 

(2.7

)%

 

(1.3

)%

 

(2.4

)%

 

(1.3

)%

System-wide restaurant sales growth (decline):

 

 

 

 

 

 

 

 

Domestic Company-owned restaurants

 

(1.5

)%

 

2.5

%

 

(1.7

)%

 

3.7

%

North America franchised restaurants

 

(1.9

)%

 

(0.6

)%

 

(1.8

)%

 

0.1

%

North America restaurants

 

(1.9

)%

 

%

 

(1.8

)%

 

0.8

%

International restaurants

 

2.9

%

 

8.6

%

 

2.2

%

 

5.8

%

Total global system-wide restaurant sales growth (decline)

 

(0.7

)%

 

2.0

%

 

(0.8

)%

 

2.0

%

Global Restaurant Unit Data

As of June 30, 2024, there were 5,883 Papa Johns restaurants operating in 49 countries and territories, as follows:

Second Quarter

Domestic Company Owned

 

Franchised North America

 

Total North America

 

International Company Owned

 

International

Franchised

 

Total International

 

System-wide

Beginning - March 31, 2024

536

 

2,911

 

 

3,447

 

 

117

 

 

2,350

 

 

2,467

 

 

5,914

 

Opened

1

 

9

 

 

10

 

 

 

 

56

 

 

56

 

 

66

 

Closed

 

(10

)

 

(10

)

 

(43

)

 

(44

)

 

(87

)

 

(97

)

Refranchised

 

 

 

 

 

(41

)

 

41

 

 

 

 

 

Ending - June 30, 2024

537

 

2,910

 

 

3,447

 

 

33

 

 

2,403

 

 

2,436

 

 

5,883

 

Net unit growth/(decline)

1

 

(1

)

 

 

 

(84

)

 

53

 

 

(31

)

 

(31

)

Trailing four quarters net store growth

16

 

42

 

 

58

 

 

(58

)

 

111

 

 

53

 

 

111

 

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 $12.8 million for the six months ended June 30, 2024, compared with $59.0 million in the prior year period. The year over year change primarily reflects unfavorable working capital changes and timing of cash payments for income taxes, partially offset by a $5.6 million decrease in capital expenditures.

 

 

Six Months Ended

(in thousands)

 

June 30,

2024

 

June 25,

2023

Net cash provided by operating activities

 

$

41,957

 

 

$

93,735

 

Purchases of property and equipment

 

 

(29,155

)

 

 

(34,759

)

Free cash flow

 

$

12,802

 

 

$

58,976

 

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 $15.1 million ($0.46 per common share) in the second quarter of 2024. On July 31, 2024, our Board of Directors declared a third quarter dividend of $0.46 per common share. The dividend will be paid on August 30, 2024 to stockholders of record as of the close of business on August 19, 2024.

Conference Call

Papa Johns will host a call with analysts today, August 8, 2024, 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 approximately 5,900 restaurants in approximately 50 countries and territories. For more information about the Company or to order pizza online, visit www.papajohns.com or download the Papa Johns mobile app for iOS or Android.

Forward-Looking Statements

Certain matters discussed in this press release and other Company communications that are not statements of historical fact constitute forward-looking statements within the meaning of the federal securities laws. Generally, the use of words such as “expect,” “intend,” “estimate,” “believe,” “anticipate,” “will,” “forecast,” “outlook”, “plan,” “project,” or similar words identify forward-looking statements that we intend to be included within the safe harbor protections provided by the federal securities laws. Such forward-looking statements include or may relate to projections or guidance concerning business performance, revenue, earnings, cash flow, earnings per share, share repurchases, the current economic environment, commodity and labor costs, currency fluctuations, profit margins, supply chain operating margin, net unit growth, unit level performance, capital expenditures, restaurant and franchise development, restaurant acquisitions, restaurant closures, labor shortages, labor cost increases, changes in management, 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, changes to our national marketing fund, changes to our commissary model, dividends, effective tax rates, regulatory changes and impacts, investments in and 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 the U.S. and international markets, including the United Kingdom; labor shortages at Company and/or franchised stores and our quality control centers; increases in labor costs, changes in commodity costs, supply chain incentive-based rebates, or sustained higher other operating costs, including as a result of supply chain disruption, inflation or climate change; the potential for delayed new store openings, both domestically and internationally, or lower net unit development due to changing circumstances outside of our control; the increased risk of phishing, ransomware and other cyber-attacks; risks and disruptions to the global economy and our business related to the conflicts in Ukraine and the Middle East and other international conflicts 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 31, 2023. We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise, except as required by law.

For more information about the company, please visit www.papajohns.com.

Supplemental Information and Financial Statements

Definitions

“Comparable sales” represents sales for the same base of restaurants for the same fiscal periods. “Comparable sales growth (decline)” represents the change in year-over-year comparable sales. “Global system-wide restaurant sales” represents total restaurant sales for all Company-owned and franchised restaurants open during the comparable periods, and “Global system-wide restaurant sales growth (decline)” represents the change in global system-wide restaurant sales year-over-year. Comparable sales, Comparable sales growth (decline), Global system-wide restaurant sales and Global system-wide sales growth (decline) exclude franchisees for which we suspended corporate support.

“Equivalent units” represents the number of restaurants open at the beginning of a given period, adjusted for restaurants opened, closed, acquired or sold during the period on a weighted average basis.

We believe Domestic Company-owned, North America franchised, and International Comparable sales growth (decline) and Global system-wide restaurant sales information is useful in analyzing our results since our franchisees pay royalties and marketing fund contributions that are based on a percentage of franchise sales. Comparable sales and Global system-wide restaurant sales results for restaurants operating outside of the United States are reported on a constant dollar basis, which excludes the impact of foreign currency translation. Franchise sales also generate commissary revenue in the United States and in certain international markets. Comparable sales growth (decline) and Global system-wide restaurant sales information is also useful for comparison to industry trends and evaluating the strength of our brand. Management believes the presentation of Global system-wide restaurant sales growth, excluding the impact of foreign currency, provides investors with useful information regarding underlying sales trends and the impact of new unit growth without being impacted by swings in the external factor of foreign currency. Franchise restaurant sales are not included in the Company’s revenues.

Non-GAAP 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 net income attributable to common shareholders and Adjusted diluted earnings per common share. We believe that our non-GAAP financial measures enable investors to assess the operating performance of our business relative to our performance based on U.S. GAAP results and relative to other companies. We believe that the disclosure of these non-GAAP measures is useful to investors as they reflect metrics that our management team and Board utilize to evaluate our operating performance, allocate resources and administer employee incentive plans. The most directly comparable U.S. GAAP measures to Adjusted operating income, Adjusted net income attributable to common shareholders and Adjusted diluted earnings per common share are Operating income, net income attributable to common shareholders and diluted earnings per common share, respectively. These non-GAAP measures should not be construed as a substitute for or a better indicator of the Company’s performance than the Company’s U.S. GAAP results. The table that follows reconciles our GAAP financial results to our non-GAAP financial measures.

 

 

Three Months Ended

 

Six Months Ended

(In thousands, except per share amounts)

 

June 30,

2024

 

June 25,

2023

 

June 30,

2024

 

June 25,

2023

Operating income

 

$

28,226

 

 

$

34,912

 

 

$

61,944

 

 

$

72,708

 

International restructuring costs (a)

 

 

6,129

 

 

 

 

 

 

15,652

 

 

 

 

UK repositioning and acquisition-related costs (b)

 

 

 

 

 

1,308

 

 

 

 

 

 

1,308

 

Other costs (c)

 

 

4,000

 

 

 

661

 

 

 

4,000

 

 

 

2,017

 

Adjusted operating income

 

$

38,355

 

 

$

36,881

 

 

$

81,596

 

 

$

76,033

 

 

 

 

 

 

 

 

 

 

Net income attributable to common shareholders

 

$

12,243

 

 

$

17,768

 

 

$

26,879

 

 

$

40,144

 

International restructuring costs (a)

 

 

6,129

 

 

 

 

 

 

15,652

 

 

 

 

UK repositioning and acquisition-related costs (b)

 

 

 

 

 

1,308

 

 

 

 

 

 

1,308

 

Other costs (c)

 

 

4,000

 

 

 

661

 

 

 

4,000

 

 

 

2,017

 

Tax effect of adjustments (d)

 

 

(2,289

)

 

 

(449

)

 

 

(4,441

)

 

 

(758

)

Adjusted net income attributable to common shareholders

 

$

20,083

 

 

$

19,288

 

 

$

42,090

 

 

$

42,711

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

 

$

0.37

 

 

$

0.54

 

 

$

0.82

 

 

$

1.20

 

International restructuring costs (a)

 

 

0.19

 

 

 

 

 

 

0.48

 

 

 

 

UK repositioning and acquisition-related costs (b)

 

 

 

 

 

0.04

 

 

 

 

 

 

0.04

 

Other costs (c)

 

 

0.12

 

 

 

0.02

 

 

 

0.12

 

 

 

0.06

 

Tax effect of adjustments (d)

 

 

(0.07

)

 

 

(0.01

)

 

 

(0.14

)

 

 

(0.02

)

Adjusted diluted earnings per common share

 

$

0.61

 

 

$

0.59

 

 

$

1.28

 

 

$

1.28

 

Refer to footnotes on following page.

Footnotes to Non-GAAP Financial Measures

(a)

Represents costs associated with the Company’s International Restructuring plan. For the three and six months ended June 30, 2024, these costs are comprised primarily of leased and fixed asset impairment charges related to store closures in the UK, combined with severance and other related costs.

(b)

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

(c)

For the three and six months ended June 30, 2024, represents a non-cash impairment charge related to fixed and intangible assets related to certain Domestic restaurants. For the three and six months ended June 25, 2023, represents severance and related costs associated with the transition of certain executives, recorded in General and administrative expenses.

(d)

The tax effect on non-GAAP adjustments was calculated by applying the marginal tax rates of 22.6% and 22.8% for the three and six months ended June 30, 2024 and June 25, 2023, respectively.

Papa John’s International, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

 

(In $ thousands, except per share amounts)

 

June 30,

2024

 

December 31,

2023

 

 

(Unaudited)

 

 

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

24,305

 

 

$

40,587

 

Accounts receivable, net

 

 

93,460

 

 

 

104,244

 

Notes receivable, current portion

 

 

4,581

 

 

 

5,199

 

Income tax receivable

 

 

2,771

 

 

 

2,577

 

Inventories

 

 

37,656

 

 

 

36,126

 

Prepaid expenses and other current assets

 

 

58,762

 

 

 

42,285

 

Assets held for sale

 

 

4,205

 

 

 

 

Total current assets

 

 

225,740

 

 

 

231,018

 

Property and equipment, net

 

 

265,693

 

 

 

282,812

 

Finance lease right-of-use assets, net

 

 

28,759

 

 

 

31,740

 

Operating lease right-of-use assets

 

 

154,371

 

 

 

164,158

 

Notes receivable, less current portion, net

 

 

9,915

 

 

 

12,346

 

Goodwill

 

 

75,547

 

 

 

76,206

 

Other assets

 

 

78,402

 

 

 

76,725

 

Total assets

 

$

838,427

 

 

$

875,005

 

 

 

 

 

 

Liabilities, Redeemable noncontrolling interests and Stockholders’ deficit

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

63,731

 

 

$

74,949

 

Income and other taxes payable

 

 

6,810

 

 

 

17,948

 

Accrued expenses and other current liabilities

 

 

149,673

 

 

 

158,167

 

Current deferred revenue

 

 

19,941

 

 

 

20,427

 

Current finance lease liabilities

 

 

7,815

 

 

 

9,029

 

Current operating lease liabilities

 

 

24,874

 

 

 

24,076

 

Current portion of long-term debt

 

 

2,375

 

 

 

 

Total current liabilities

 

 

275,219

 

 

 

304,596

 

Deferred revenue

 

 

19,011

 

 

 

20,366

 

Long-term finance lease liabilities

 

 

22,382

 

 

 

24,144

 

Long-term operating lease liabilities

 

 

144,569

 

 

 

151,050

 

Long-term debt, less current portion, net

 

 

758,861

 

 

 

757,422

 

Other long-term liabilities

 

 

63,550

 

 

 

60,192

 

Total liabilities

 

 

1,283,592

 

 

 

1,317,770

 

 

 

 

 

 

Redeemable noncontrolling interests

 

 

975

 

 

 

851

 

 

 

 

 

 

Stockholders’ deficit:

 

 

 

 

Common stock ($0.01 par value per share; issued 49,280 at June 30, 2024 and 49,235 at December 31, 2023)

 

 

493

 

 

 

492

 

Additional paid-in capital

 

 

446,547

 

 

 

452,290

 

Accumulated other comprehensive loss

 

 

(7,358

)

 

 

(7,803

)

Retained earnings

 

 

215,800

 

 

 

219,027

 

Treasury stock (16,658 shares at June 30, 2024 and 16,747 shares at December 31, 2023, at cost)

 

 

(1,117,140

)

 

 

(1,123,098

)

Total stockholders’ deficit

 

 

(461,658

)

 

 

(459,092

)

Noncontrolling interests in subsidiaries

 

 

15,518

 

 

 

15,476

 

Total Stockholders’ deficit

 

 

(446,140

)

 

 

(443,616

)

Total Liabilities, Redeemable noncontrolling interests and Stockholders’ deficit

 

$

838,427

 

 

$

875,005

 

Papa John’s International, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

(In thousands, except per share amounts)

 

June 30,

2024

 

June 25,

2023

 

June 30,

2024

 

June 25,

2023

Revenues:

 

 

 

 

 

 

 

 

Domestic Company-owned restaurant sales

 

$

173,207

 

 

$

175,780

 

 

$

349,431

 

 

$

355,646

 

North America franchise royalties and fees

 

 

34,409

 

 

 

34,711

 

 

 

70,106

 

 

 

70,783

 

North America commissary revenues

 

 

198,197

 

 

 

206,980

 

 

 

401,484

 

 

 

419,546

 

International revenues

 

 

39,701

 

 

 

34,608

 

 

 

80,409

 

 

 

66,071

 

Other revenues

 

 

62,380

 

 

 

62,451

 

 

 

120,380

 

 

 

129,533

 

Total revenues

 

 

507,894

 

 

 

514,530

 

 

 

1,021,810

 

 

 

1,041,579

 

Costs and expenses:

 

 

 

 

 

 

 

 

Operating costs (excluding depreciation and amortization shown separately below):

 

 

 

 

 

 

 

 

Domestic Company-owned restaurant expenses

 

 

138,033

 

 

 

143,705

 

 

 

276,786

 

 

 

291,489

 

North America commissary expenses

 

 

182,299

 

 

 

190,468

 

 

 

367,498

 

 

 

386,883

 

International expenses

 

 

27,077

 

 

 

20,435

 

 

 

55,423

 

 

 

37,746

 

Other expenses

 

 

56,951

 

 

 

58,996

 

 

 

108,718

 

 

 

120,074

 

General and administrative expenses

 

 

57,714

 

 

 

50,324

 

 

 

116,173

 

 

 

102,268

 

Depreciation and amortization

 

 

17,594

 

 

 

15,690

 

 

 

35,268

 

 

 

30,411

 

Total costs and expenses

 

 

479,668

 

 

 

479,618

 

 

 

959,866

 

 

 

968,871

 

Operating income

 

 

28,226

 

 

 

34,912

 

 

 

61,944

 

 

 

72,708

 

Net interest expense

 

 

(10,896

)

 

 

(11,275

)

 

 

(21,959

)

 

 

(20,296

)

Income before income taxes

 

 

17,330

 

 

 

23,637

 

 

 

39,985

 

 

 

52,412

 

Income tax expense

 

 

4,794

 

 

 

5,778

 

 

 

12,535

 

 

 

12,007

 

Net income before attribution to noncontrolling interests

 

 

12,536

 

 

 

17,859

 

 

 

27,450

 

 

 

40,405

 

Net income attributable to noncontrolling interests

 

 

(293

)

 

 

(91

)

 

 

(571

)

 

 

(261

)

Net income attributable to the Company

 

$

12,243

 

 

$

17,768

 

 

$

26,879

 

 

$

40,144

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

 

$

0.37

 

 

$

0.55

 

 

$

0.82

 

 

$

1.20

 

Diluted earnings per common share

 

$

0.37

 

 

$

0.54

 

 

$

0.82

 

 

$

1.20

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

32,730

 

 

 

32,563

 

 

 

32,688

 

 

 

33,359

 

Diluted weighted average common shares outstanding

 

 

32,853

 

 

 

32,650

 

 

 

32,871

 

 

 

33,487

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.46

 

 

$

0.42

 

 

$

0.92

 

 

$

0.84

 

Papa John’s International, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Six Months Ended

(In $ thousands)

 

June 30,

2024

 

June 25,

2023

Operating activities

 

 

 

 

Net income before attribution to noncontrolling interests

 

$

27,450

 

 

$

40,405

 

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

 

 

 

 

Provision for allowance for credit losses on accounts and notes receivable

 

 

2,397

 

 

 

595

 

Depreciation and amortization

 

 

35,268

 

 

 

30,411

 

Deferred income taxes

 

 

2,812

 

 

 

3,664

 

Stock-based compensation expense

 

 

2,545

 

 

 

8,498

 

Refranchising and impairment losses

 

 

14,713

 

 

 

 

Loss on disposal of property and equipment

 

 

965

 

 

 

 

Other

 

 

800

 

 

 

(452

)

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

Accounts receivable

 

 

9,974

 

 

 

4,299

 

Income tax receivable

 

 

(203

)

 

 

6,683

 

Inventories

 

 

(1,748

)

 

 

4,109

 

Prepaid expenses and other current assets

 

 

(4,358

)

 

 

46

 

Other assets and liabilities

 

 

(5,788

)

 

 

140

 

Accounts payable

 

 

(11,364

)

 

 

(8,174

)

Income and other taxes payable

 

 

(10,957

)

 

 

(514

)

Accrued expenses and other current liabilities

 

 

(18,710

)

 

 

7,203

 

Deferred revenue

 

 

(1,839

)

 

 

(3,178

)

Net cash provided by operating activities

 

 

41,957

 

 

 

93,735

 

Investing activities

 

 

 

 

Purchases of property and equipment

 

 

(29,155

)

 

 

(34,759

)

Notes issued

 

 

(153

)

 

 

(4,374

)

Repayments of notes issued

 

 

1,794

 

 

 

3,224

 

Proceeds from dispositions, net of cash transferred

 

 

1,495

 

 

 

 

Other

 

 

2,178

 

 

 

182

 

Net cash used in investing activities

 

 

(23,841

)

 

 

(35,727

)

Financing activities

 

 

 

 

Net proceeds of revolving credit facilities

 

 

3,024

 

 

 

186,529

 

Proceeds from exercise of stock options

 

 

933

 

 

 

682

 

Acquisition of Company common stock

 

 

 

 

 

(210,348

)

Dividends paid to common stockholders

 

 

(30,212

)

 

 

(28,485

)

Tax payments for equity award issuances

 

 

(3,330

)

 

 

(6,108

)

Distributions to noncontrolling interests

 

 

(405

)

 

 

(323

)

Principal payments on finance leases

 

 

(4,796

)

 

 

(3,669

)

Other

 

 

358

 

 

 

102

 

Net cash used in financing activities

 

 

(34,428

)

 

 

(61,620

)

Effect of exchange rate changes on cash and cash equivalents

 

 

30

 

 

 

11

 

Change in cash and cash equivalents

 

 

(16,282

)

 

 

(3,601

)

Cash and cash equivalents at beginning of period

 

 

40,587

 

 

 

47,373

 

Cash and cash equivalents at end of period

 

$

24,305

 

 

$

43,772

 

 

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