Papa John’s Announces Second Quarter 2018 Results and Updates 2018 Outlook
Highlights
- Earnings per diluted share of
$0.36 and adjusted earnings per diluted share of$0.49 in the second quarter of 2018, excluding the impact ofChina refranchising; adjusted earnings per diluted share down 24.6% from the second quarter 2017 of$0.65 System-wide North America comparable sales decrease of 6.1%- International comparable sales decrease of 0.8%; total international sales increase of 12.2%, driven by unit growth
- 35 net unit openings in second quarter of 2018 driven by international operations
- Company completed the refranchising of 34 company-owned restaurants in
China during Q2 - Cash flow from operations of
$74.2 million ; free cash flow of$52.6 million for the first six months of 2018 - 2018 outlook revised downward including lowered adjusted EPS range of
$1.30 to $1.80 as a result of negative sales trends
“Earlier this year, we began implementing key changes in how we operate and market our products to refocus on quality and better connect with customers,” said
Operating Highlights
(In thousands, except per share amounts) |
||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||
July 1, 2018 |
June 25, 2017 |
Increase / (Decrease) % |
July 1, 2018 |
June 25, 2017 |
Increase / (Decrease) % |
|||||||||||||
Total revenue | $ | 407,959 | $ | 434,778 | (6.2 | %) | $ | 835,328 | $ | 884,044 | (5.5 | %) | ||||||
Income before income taxes | 19,705 | 35,458 | (44.4 | %) | 42,067 | 77,329 | (45.6 | %) | ||||||||||
Net income | 11,791 | 23,538 | (49.9 | %) | 28,528 | 51,966 | (45.1 | %) | ||||||||||
Diluted EPS | $ | 0.36 | $ | 0.65 | (44.6 | %) | $ | 0.86 | $ | 1.42 | (39.4 | %) | ||||||
Diluted EPS, adjusted | $ | 0.49 | $ | 0.65 | (24.6 | %) | $ | 0.98 | $ | 1.42 | (31.0 | %) | ||||||
All operating highlights are compared to the same period of the prior year, unless otherwise noted.
Adjusted financial results excluding Special items, which impact comparability, are summarized in the following reconciliation. The table reconciles our GAAP financial results to our adjusted financial results, which are non-GAAP measures. All highlights are compared to the same period of the prior year, unless otherwise noted.
Three Months Ended | Six Months Ended | ||||||||||||
Jul. 1, | Jun. 25, | Jul. 1, | Jun. 25, | ||||||||||
(In thousands, except per share amounts) | 2018 | 2017 | 2018 | 2017 | |||||||||
GAAP Income before income taxes | $ | 19,705 |
|
$ | 35,458 | $ | 42,067 | $ | 77,329 | ||||
Special items: | |||||||||||||
Refranchising losses, net | 2,122 |
|
- | 1,918 | - | ||||||||
Adjusted income before income taxes | $ | 21,827 |
|
$ | 35,458 | $ | 43,985 | $ | 77,329 | ||||
GAAP Net income | $ | 11,791 | $ | 23,538 | $ | 28,528 | $ | 51,966 | |||||
Special items: | |||||||||||||
Refranchising losses, net (1) | 1,647 | - | 1,488 | - | |||||||||
Tax impact of China refranchising | 2,435 | - | 2,435 | - | |||||||||
Adjusted net income | $ | 15,873 | $ | 23,538 | $ | 32,451 | $ | 51,966 | |||||
GAAP Diluted earnings per share | $ | 0.36 | $ | 0.65 | $ | 0.86 | $ | 1.42 | |||||
Special items: | |||||||||||||
Refranchising losses, net | 0.05 | - | 0.05 | - | |||||||||
Tax impact of China refranchising | 0.08 | - | 0.07 | - | |||||||||
Adjusted diluted earnings per share | $ | 0.49 | $ | 0.65 | $ | 0.98 | $ | 1.42 | |||||
(1) Tax effect was calculated using the company's marginal rate of 22.4%. | |||||||||||||
On
The non-GAAP adjusted results shown above should not be construed as a substitute for or a better indicator of the company’s performance than the company’s GAAP results. Management believes presenting the financial information excluding these Special items is important for purposes of comparison to prior year results. In addition, management uses these metrics to evaluate the company’s underlying operating performance, to analyze trends, and to determine compensation.
Consolidated revenues decreased
Consolidated income before income taxes of
Domestic Company -owned restaurants operating margin decreased$6.7 million , or 1.4% as a percentage of related revenues, primarily due to lower comparable sales of 7.2% and increased operating costs including higher commodities and minimum wages as well as increased non-owned automobile costs. Additionally, the adoption of Topic 606 reduced the restaurant operating margin due to the revised method of accounting for the customer loyalty program.North America franchise royalties and fees decreased$2.7 million , or 10.1% as compared to the second quarter of 2017, primarily due to lower comparable sales of 5.7% and an increase in franchise royalty waivers.North America commissary operating margin decreased$400,000 , and remained flat as a percentage of related revenues, primarily due to lower sales volumes.- International operating margin increased
$800,000 , or 0.6% as a percentage of related revenues, primarily due to higher royalties from increased equivalent units and higher income from theUnited Kingdom Quality Control Center . - Other operating margin decreased
$1.2 million , or 6.3%, primarily due to higher costs related to various technology initiatives and increased advertising spend in theUnited Kingdom . The “Revenue Recognition and Income Statement Presentation” section below provides more information on our “Other revenues” and “Other expenses” income statement line items. - General and administrative (“G&A”) costs decreased
$1.5 million , or 3.8%, primarily due to lower management incentive and benefit costs as well as a shift in the timing of the annual operators’ conference to the third quarter of 2018. These cost decreases were partially offset by an increase in various technology initiative costs and higher bad debt expenses. - Refranchising losses of
$2.1 million were incurred in the second quarter of 2018 primarily related to the refranchising ofChina , as previously discussed. - Net interest expense increased
$3.9 million for the second quarter due to an increase in average outstanding debt, which is primarily due to share repurchases, as well as higher interest rates.
For the six months ended
Operating margin is not a measurement defined by GAAP and should not be considered in isolation, or as an alternative to evaluation of the company’s financial performance. In addition to an evaluation of GAAP consolidated income before income taxes, we believe the presentation of operating margin is beneficial as it represents an additional measure used by the company to further evaluate operating efficiency and performance of the various business units. Additionally, operating margin discussion may be helpful for comparison within the industry. The operating margin results detailed herein can be calculated by business unit based on the specific revenue and operating expense line items on the face of the Condensed Consolidated Income Statement. Consolidated income before income taxes reported includes G&A expenses, depreciation and amortization, refranchising losses and net interest expense that have been excluded from this operating margin calculation.
The effective income tax rates were 35.7% and 28.6% for the three and six months ended
Diluted earnings per share decreased 44.6% to
Three Months Ended | Six Months Ended | |||||||
July 1, 2018 |
June 25, 2017 |
July 1, 2018 |
June 25, 2017 |
|||||
Global restaurant sales (decline) / growth (a) | (2.3%) | 4.1% | (1.8%) | 4.5% | ||||
Global restaurant sales growth, excluding the impact of foreign currency (a) |
2.3% | 5.1% | 0.6% | 5.3% | ||||
Comparable sales (decline) / growth (b) | ||||||||
Domestic company-owned restaurants | (7.2%) | 2.3% | (6.7%) | 2.7% | ||||
North America franchised restaurants | (5.7%) | 1.1% | (5.3%) | 1.4% | ||||
System-wide North America restaurants | (6.1%) | 1.4% | (5.7%) | 1.7% | ||||
System-wide international restaurants | (0.8%) | 3.9% | (0.3%) | 4.9% | ||||
(a) | Includes both company-owned and franchised restaurant sales. |
(b) | Represents the change in year-over-year sales for the same base of restaurants for the same fiscal periods. Comparable 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. |
We believe
Free Cash Flow
The company’s free cash flow, a non-GAAP financial measure, was as follows for the first six months of 2018 and 2017 (in thousands):
Six Months Ended | ||||||||
July 1, | June 25, | |||||||
2018 | 2017 | |||||||
Net cash provided by operating activities (a) | $ | 74,201 | $ | 77,863 | ||||
Purchases of property and equipment (b) | (21,562 | ) | (30,457 | ) | ||||
Free cash flow | $ | 52,639 | $ | 47,406 | ||||
(a) | The decrease of $3.7 million was primarily due to lower net income somewhat offset by favorable changes in working capital items. |
(b) | The decrease of $8.9 million was primarily due to higher capital expenditures in 2017 related to the construction of the company’s new domestic commissary in Georgia, which opened in the third quarter of 2017. |
We define free cash flow as net cash provided by operating activities (from the Consolidated Statements of Cash Flows) less the amounts spent on the purchase of property and equipment. We view free cash flow as an important liquidity measure because it is one factor that management uses in determining the amount of cash available for investment. However, it does not represent residual cash flows available for discretionary expenditures. 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 liquidity than the company’s GAAP measures.
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
Global Restaurant Unit Data
At
Domestic Company- owned |
Franchised North America |
Total North America |
International | System-wide | |||||||||||
Second Quarter |
|||||||||||||||
Beginning - April 1, 2018 | 679 | 2,745 | 3,424 | 1,788 | 5,212 | ||||||||||
Opened | 1 | 26 | 27 | 61 | 88 | ||||||||||
Closed | (2 | ) | (42 | ) | (44 | ) | (9 | ) | (53 | ) | |||||
Acquired | - | - | - | 34 | 34 | ||||||||||
Sold | - | - | - | (34 | ) | (34 | ) | ||||||||
Ending - July 1, 2018 | 678 | 2,729 | 3,407 | 1,840 | 5,247 | ||||||||||
Year-to-date |
|||||||||||||||
Beginning - December 31, 2017 | 708 | 2,733 | 3,441 | 1,758 | 5,199 | ||||||||||
Opened | 5 | 44 | 49 | 114 | 163 | ||||||||||
Closed | (4 | ) | (79 | ) | (83 | ) | (32 | ) | (115 | ) | |||||
Acquired | - | 31 | 31 | 34 | 65 | ||||||||||
Sold | (31 | ) | - | (31 | ) | (34 | ) | (65 | ) | ||||||
Ending - July 1, 2018 | 678 | 2,729 | 3,407 | 1,840 | 5,247 | ||||||||||
Unit growth (decline) | (30 | ) | (4 | ) | (34 | ) | 82 | 48 | |||||||
% increase (decrease) | (4.2 | %) | (0.1 | %) | (1.0 | %) | 4.7 | % | 0.9 | % | |||||
The company has added 159 net worldwide units over the trailing four quarters ended
Share Repurchase Activity
The following table reflects our share repurchases for the three and six months ended
Period |
Number of Shares |
Cost | |||||||
Three months ended July 1, 2018 | 490 | $ | 28,440 | ||||||
Six months ended July 1, 2018 | 2,491 | 148,390 | |||||||
July 2, 2018 through July 31, 2018 | 134 | 6,518 | |||||||
There were 32.2 million and 32.9 million diluted weighted average shares outstanding for the three and six months ended
As previously disclosed, on
The company does not expect to repurchase any more shares in 2018 after the current trading plan expires in early August.
Cash Dividend
We paid a cash dividend of approximately
Revenue Recognition and Income Statement Presentation
On
(in thousands, except for per share amounts) | ||||||||
Three Months Ended | Six Months Ended | |||||||
July 1, 2018 | July 1, 2018 | |||||||
Total revenue impact (a) | $ | 1,814 | $ | 4,250 | ||||
Pre-tax income impact (b) | (1,375 | ) | (1,860 | ) | ||||
Diluted EPS | (0.03 | ) | (0.04 | ) |
(a) | The increase in total revenues of $1.8 million and $4.3 million for the three and six months ended July 1, 2018, respectively, is primarily due to the requirement to present revenues and expenses related to marketing funds we control on a “gross” basis. This increase was partially offset by lower company-owned restaurant revenues attributable to the revised method of accounting for the loyalty program. The marketing fund gross up is reported in the new financial statement line items, Other revenues and Other expenses, as discussed further below. |
(b) | The $1.4 million and $1.9 million decreases in pre-tax income for the three and six months ended July 1, 2018 are primarily due to the revised method of accounting for the loyalty program, marketing fund co-ops we control and franchise fees. |
Additional detail on the adoption and 2018 impact of the new revenue recognition standard can be found in our Form 10-Q for the quarterly period ended
While not required as part of the adoption of Topic 606, our income statement includes newly created Other revenues and Other expenses line items. Other revenues and Other expenses include the Topic 606 “gross up” of revenues and expenses derived from certain domestic and international marketing fund co-ops we control, as previously discussed. Additionally, Other revenues and Other expenses include various reclassifications from
Update of Previously Issued Financial Guidance
The recent negative publicity surrounding the company’s brand negatively impacted July sales in
- re-imaging costs at nearly all domestic and international restaurants,
- costs to accelerate our replacement of certain branded assets and related marketing efforts,
- financial assistance to domestic franchisees, such as short-term royalty reductions, in an effort to mitigate closings,
- additional costs for branding initiatives, including but not limited to, launching a new advertising and marketing campaign and promotional activities to mitigate negative consumer sentiment and negative sales trends,
- costs associated with a third-party audit of the culture at Papa John’s commissioned by the Special Committee as well as costs associated with implementing new policies and procedures to address any findings as a result of the audit, and
- additional legal and advisory costs, including costs associated with the activities of the Special Committee.
Based on the negative consumer sentiment and the expected impact on future sales, the company is lowering its financial and associated outlook items. The below outlook incorporates a range of the potential negative sales impact from these recent events but excludes the related costs the company will incur, as detailed above. The company is still gathering information regarding these costs but has developed a preliminary range of
Updated Outlook | Previous Outlook | |||
North America Comparable Sales | (7.0%) to (10.0%) | (3%) to flat | ||
International Comparable Sales | (2%) to 1% | 3.0% - 5.0% | ||
Adjusted Diluted EPS (1) | $1.30 - $1.80 | $2.40 - $2.60 | ||
Net global unit growth | 0.0% - 3.0% | 3.0% - 5.0% | ||
Debt / Adjusted EBITDA ratio (2) | Above 4.0x | 3.0x - 3.5x | ||
Income tax rate (3) | 20% - 24% | 20% - 24% | ||
Capital Expenditures | $45 - $50 million | $45 - $55 million | ||
Block Cheese Prices per lb. | Low $1.60s | Low $1.60s | ||
(1) This adjusted diluted EPS guidance excludes the impact of the China refranchising and the estimated future costs of the above noted items related to the recent negative publicity. We believe excluding these items from adjusted EPS is meaningful to our financial statement users as it presents our core results excluding unusual, non-recurring items. | ||||
(2) We were in compliance with all financial covenants as of July 1, 2018. Based on this revised lower outlook, we plan to work with the banks within our credit facility to evaluate options with the covenants to mitigate the possibility of violating a financial covenant in the future. | ||||
(3) The tax rate excludes any tax impact from the divestiture of our China company-owned operations. | ||||
Conference Call and Website Information
A conference call is scheduled for
Investors and others should note that we announce material financial information to our investors using our investor relations website, press releases,
Forward-Looking Statements
Certain matters discussed in this press release and other company communications 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,” “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 may relate to projections or guidance concerning business performance, revenue, earnings, cash flow, contingent liabilities, resolution of litigation, commodity costs, profit margins, unit growth, unit level performance, capital expenditures, ability of the company to mitigate negative consumer sentiment through advertising, marketing and promotional activity, corporate governance, shareholder and other stakeholder engagement, strategic decisions and actions, the ongoing cultural audit and investigation, share repurchases, dividends, effective tax rates, the impact of the Tax Cuts and Job Act and the 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. The risks, uncertainties and assumptions that are involved in our forward-looking statements include, but are not limited to:
- negative publicity and consumer sentiment as a result of statements and actions by the company’s founder and former spokesperson, which may continue to cause sales to decline and/or change consumers’ acceptance of and enthusiasm for our brand;
- the results of the previously announced external audit and investigation the Special Committee is overseeing regarding the company’s existing processes, policies and systems related to diversity and inclusion, supplier and vendor engagement and the company’s culture;
- costs the company expects to incur as a result of the recent negative publicity and negative consumer sentiment, including costs related to the audit and investigation, costs associated with the operations of the Special Committee, any costs associated with related litigation, legal fees, and increased costs for branding initiatives and launching a new advertising and marketing campaign and promotions to mitigate negative consumer sentiment and negative sales trends;
- costs the company expects to incur relating to franchisee financial assistance to mitigate store closings;
- the ability of the company to mitigate the negative consumer sentiment through advertising, marketing and promotional activities;
- the company’s ability to regain lost customers;
- aggressive changes in pricing or other marketing or promotional strategies by competitors, which may adversely affect sales and profitability; and new product and concept developments by food industry competitors;
- changes in consumer preferences or consumer buying habits, including the growing popularity of delivery aggregators, as well as changes in general economic conditions or other factors that may affect consumer confidence and discretionary spending;
- the adverse impact on the company or our results caused by product recalls, food quality or safety issues, incidences of foodborne illness, food contamination and other general public health concerns about our company-owned or franchised restaurants or others in the restaurant industry;
- the effectiveness of our initiatives to improve our brand proposition and operating results, including marketing, advertising and public relations initiatives, technology investments and changes in unit-level operations;
- the risk that any new advertising or marketing campaign may not be effective in increasing sales;
- the ability of the company and its franchisees to meet planned growth targets and operate new and existing restaurants profitably, including difficulties finding qualified franchisees, store level employees or suitable sites;
- increases in food costs or sustained higher other operating costs. This could include increased employee compensation, benefits, insurance, tax rates, new regulatory requirements or increasing compliance costs;
- increases in insurance claims and related costs for programs funded by the company up to certain retention limits, including medical, owned and non-owned vehicles, workers’ compensation, general liability and property;
- disruption of our supply chain or commissary operations which could be caused by our sole source of supply of cheese or limited source of suppliers for other key ingredients or more generally due to weather, natural disasters including drought, disease, or geopolitical or other disruptions beyond our control;
- increased risks associated with our international operations, including economic and political conditions, instability or uncertainty in our international markets, especially emerging markets, fluctuations in currency exchange rates, difficulty in meeting planned sales targets and new store growth;
- the impact of current or future claims and litigation and our ability to comply with current, proposed or future legislation that could impact our business including compliance with the
European Union General Data Protection Regulation; - maintaining compliance with debt covenants under our credit agreement if restaurant sales and operating results continue to decline, and our ability to obtain a waiver or modification to the credit agreement from our lenders if we are unable to maintain compliance;
- failure to effectively execute succession planning;
- disruption of critical business or information technology systems, or those of our suppliers, and risks associated with systems failures and data privacy and security breaches, including theft of confidential company, employee and customer information, including payment cards;
- changes in Federal or state income, general and other tax laws, rules and regulations, including changes from the Tax Cuts and Jobs Act and any related Treasury regulations, rules or interpretations if and when issued; and
- changes in generally accepted accounting principles including new standards for revenue recognition and leasing.
These and other risk factors are discussed in detail in “Part I. Item 1A. – Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended
For more information about the company, please visit www.papajohns.com.
Papa John's International, Inc. and Subsidiaries | ||||||||||||||||||
Condensed Consolidated Statements of Income | ||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||
July 1, 2018 | June 25, 2017 | July 1, 2018 | June 25, 2017 | |||||||||||||||
(In thousands, except per share amounts) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
Revenues: | ||||||||||||||||||
Domestic Company-owned restaurant sales | $ | 181,379 | $ | 202,756 | $ | 371,621 | $ | 409,652 | ||||||||||
North America franchise royalties and fees | 23,912 | 26,588 | 48,718 | 54,195 | ||||||||||||||
North America commissary | 153,455 | 160,059 | 315,168 | 331,399 | ||||||||||||||
International | 29,069 | 27,245 | 59,183 | 52,867 | ||||||||||||||
Other revenues | 20,144 | 18,130 | 40,638 | 35,931 | ||||||||||||||
Total revenues | 407,959 | 434,778 | 835,328 | 884,044 | ||||||||||||||
Costs and expenses: | ||||||||||||||||||
Operating costs (excluding depreciation and amortization shown separately below): |
||||||||||||||||||
Domestic company-owned restaurant expenses | 147,781 | 162,433 | 305,100 | 327,852 | ||||||||||||||
North America commissary | 143,300 | 149,472 | 294,981 | 309,429 | ||||||||||||||
International expenses | 18,248 | 17,272 | 37,278 | 33,063 | ||||||||||||||
Other expenses | 20,698 | 17,482 | 41,656 | 35,029 | ||||||||||||||
General and administrative expenses | 38,712 | 40,248 | 78,441 | 76,662 | ||||||||||||||
Depreciation and amortization | 11,731 | 10,654 | 23,270 | 21,111 | ||||||||||||||
Total costs and expenses | 380,470 | 397,561 | 780,726 | 803,146 | ||||||||||||||
Refranchising loss, net | (2,122 | ) | - | (1,918 | ) | - | ||||||||||||
Operating income | 25,367 | 37,217 | 52,684 | 80,898 | ||||||||||||||
Net interest expense | (5,662 | ) | (1,759 | ) | (10,617 | ) | (3,569 | ) | ||||||||||
Income before income taxes | 19,705 | 35,458 | 42,067 | 77,329 | ||||||||||||||
Income tax expense | 7,040 | 10,476 | 12,022 | 22,448 | ||||||||||||||
Net income before attribution to noncontrolling interests | 12,665 | 24,982 | 30,045 | 54,881 | ||||||||||||||
Income attributable to noncontrolling interests | (874 | ) | (1,444 | ) | (1,517 | ) | (2,915 | ) | ||||||||||
Net income attributable to the company | $ | 11,791 | $ | 23,538 | $ | 28,528 | $ | 51,966 | ||||||||||
Calculation of income for earnings per share: | ||||||||||||||||||
Net income attributable to the Company | $ | 11,791 | $ | 23,538 | $ | 28,528 | $ | 51,966 | ||||||||||
Change in noncontrolling interest redemption value | - | 662 | - | 1,182 | ||||||||||||||
Net income attributable to participating securities | (72 | ) | (99 | ) | (147 | ) | (216 | ) | ||||||||||
Net income attributable to common shareholders | $ | 11,719 | $ | 24,101 | $ | 28,381 | $ | 52,932 | ||||||||||
Basic earnings per common share | $ | 0.37 | $ | 0.66 | $ | 0.87 | $ | 1.44 | ||||||||||
Diluted earnings per common share | $ | 0.36 | $ | 0.65 | $ | 0.86 | $ | 1.42 | ||||||||||
Basic weighted average common shares outstanding | 31,941 | 36,732 | 32,610 | 36,771 | ||||||||||||||
Diluted weighted average common shares outstanding | 32,175 | 37,217 | 32,860 | 37,283 | ||||||||||||||
Dividends declared per common share | $ | 0.225 | $ | 0.20 | $ | 0.450 | $ | 0.40 | ||||||||||
Papa John's International, Inc. and Subsidiaries |
||||||||
Condensed Consolidated Balance Sheets | ||||||||
July 1, | December 31, | |||||||
2018 | 2017 | |||||||
(In thousands) | (Unaudited) | (Note) | ||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 25,719 | $ | 22,345 | ||||
Accounts receivable, net | 62,973 | 64,644 | ||||||
Notes receivable, net | 5,180 | 4,333 | ||||||
Income tax receivable | - | 3,903 | ||||||
Inventories | 27,109 | 30,620 | ||||||
Prepaid expenses and other current assets | 33,952 | 38,016 | ||||||
Assets held for sale | 2,786 | 6,133 | ||||||
Total current assets | 157,719 | 169,994 | ||||||
Property and equipment, net | 227,722 | 234,331 | ||||||
Notes receivable, less current portion, net | 15,648 | 15,568 | ||||||
Goodwill | 85,064 | 86,892 | ||||||
Deferred income taxes, net | 709 | 585 | ||||||
Other assets | 71,309 | 48,183 | ||||||
Total assets | $ | 558,171 | $ | 555,553 | ||||
Liabilities and stockholders' equity (deficit) | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 33,307 | $ | 32,006 | ||||
Income and other taxes payable | 8,904 | 10,561 | ||||||
Accrued expenses and other current liabilities | 81,197 | 70,293 | ||||||
Deferred revenue current | 2,426 | - | ||||||
Current portion of long-term debt | 20,000 | 20,000 | ||||||
Total current liabilities | 145,834 | 132,860 | ||||||
Deferred revenue | 15,329 | 2,652 | ||||||
Long-term debt, less current portion, net | 556,387 | 446,565 | ||||||
Deferred income taxes, net | 5,140 | 12,546 | ||||||
Other long-term liabilities | 78,515 | 60,146 | ||||||
Total liabilities | 801,205 | 654,769 | ||||||
Redeemable noncontrolling interests | 7,356 | 6,738 | ||||||
Total stockholders' (deficit) | (250,390 | ) | (105,954 | ) | ||||
Total liabilities, redeemable noncontrolling interests and stockholders' (deficit) | $ | 558,171 | $ | 555,553 | ||||
Note: The Condensed Consolidated Balance Sheets have been derived from the audited consolidated financial statements, but do not include all information and footnotes required by accounting principles generally accepted in the United States for a complete set of financial statements. |
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Papa John's International, Inc. and Subsidiaries | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
Six Months Ended | ||||||||
(In thousands) | July 1, 2018 | June 25, 2017 | ||||||
(Unaudited) | (Unaudited) | |||||||
Operating activities | ||||||||
Net income before attribution to noncontrolling interests | $ | 30,045 | $ | 54,881 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Provision for uncollectible accounts and notes receivable | 3,591 | (1,091 | ) | |||||
Depreciation and amortization | 23,270 | 21,111 | ||||||
Deferred income taxes | (2,511 | ) | 158 | |||||
Stock-based compensation expense | 4,929 | 5,571 | ||||||
Loss on refranchising | 1,918 | - | ||||||
Other | 3,032 | 1,978 | ||||||
Changes in operating assets and liabilities, net of acquisitions: | ||||||||
Accounts receivable | (148 | ) | (355 | ) | ||||
Income tax receivable | 3,678 | (45 | ) | |||||
Inventories | 3,188 | 550 | ||||||
Prepaid expenses and other current assets | 6,683 | 2,594 | ||||||
Other assets and liabilities | (2,202 | ) | (1,559 | ) | ||||
Accounts payable | 2,511 | (3,950 | ) | |||||
Income and other taxes payable | (1,656 | ) | 1,275 | |||||
Accrued expenses and other current liabilities | (2,506 | ) | (3,002 | ) | ||||
Deferred revenue | 379 | (253 | ) | |||||
Net cash provided by operating activities | 74,201 | 77,863 | ||||||
Investing activities | ||||||||
Purchases of property and equipment | (21,562 | ) | (30,457 | ) | ||||
Loans issued | (1,904 | ) | (1,476 | ) | ||||
Repayments of loans issued | 2,720 | 2,125 | ||||||
Acquisitions, net of cash acquired | - | (21 | ) | |||||
Proceeds from divestitures of restaurants | 3,690 | - | ||||||
Other | 146 | 25 | ||||||
Net cash used in investing activities | (16,910 | ) | (29,804 | ) | ||||
Financing activities | ||||||||
Repayments of term loan | (10,000 | ) | - | |||||
Net proceeds of revolving credit facility | 119,400 | 5,156 | ||||||
Cash dividends paid | (14,762 | ) | (14,703 | ) | ||||
Tax payments for equity award issuances | (1,353 | ) | (2,282 | ) | ||||
Proceeds from exercise of stock options | 2,179 | 5,218 | ||||||
Acquisition of Company common stock | (148,440 | ) | (33,968 | ) | ||||
Distributions to noncontrolling interest holders | (1,110 | ) | (1,389 | ) | ||||
Other | 231 | 494 | ||||||
Net cash used in financing activities | (53,855 | ) | (41,474 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (62 | ) | 99 | |||||
Change in cash and cash equivalents | 3,374 | 6,684 | ||||||
Cash and cash equivalents at beginning of period | 22,345 | 15,563 | ||||||
Cash and cash equivalents at end of period | $ | 25,719 | $ | 22,247 | ||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20180807005793/en/
Source: Papa John’s
Papa John’s International, Inc.
Joe Smith, 502-261-7272
Senior Vice President, Chief Financial Officer