Papa John's Announces Fourth Quarter and Full Year 2013 Results
2014 Operating Assumptions and Earnings Guidance Announced
Highlights
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System-wide comparable sales increased 9.0% for
North America and 7.0% for International for the fourth quarter; System-wide comparable sales increased 4.0% forNorth America and 7.5% for International for the full year -
Fourth quarter earnings per diluted common share of
$0.41 increased 10.8% over 2012, or increased 32.3% when excluding the impact of the 53rd week in 2012; Earnings per diluted common share of$1.55 for the full year increased 20.2% over earnings per diluted common share of$1.29 for 2012 -
The Company opened 132 net global restaurants for the fourth
quarter and 265 for the full year, of which 183 were International and
82 were in
North America
"I'd like to congratulate our operators on delivering a great year for
Papa John's, with several notable milestones and accomplishments
including the opening of our 1,000th International restaurant
and continued strong growth in sales, earnings and units," said Papa
John's founder, chairman and CEO,
Compared to the fourth quarter of 2012, which included an additional week of operations, we reported the following results:
-
Fourth quarter 2013 revenues were
$387.9 million compared to fourth quarter 2012 revenues of$367.3 million , an increase of 5.6% -
Fourth quarter 2013 net income was
$18.8 million compared to fourth quarter 2012 net income of$17.4 million , an increase of 8.3% -
Fourth quarter 2013 diluted earnings per common share ("EPS") were
$0.41 , compared to fourth quarter 2012 EPS of$0.37 , an increase of 10.8%
Excluding the impact of the additional week in 2012, which provided
approximately
-
Fourth quarter 2013 revenues of
$387.9 million represented a 12.2% increase -
Fourth quarter 2013 net income of
$18.8 million represented a 27.7% increase -
Fourth quarter 2013 EPS of
$0.41 represented a 32.3% increase
Full year 2013 revenues were
As noted above, results include the benefit of a 53rd week of operations in 2012 as well as the Incentive Contribution, the impact of which is discussed in "Revenue and Operating Highlights" and "Items Impacting Comparability" below. The full year net income impact of the 53rd week of operations in 2012 was substantially offset by the impact of the Incentive Contribution.
The company completed a two-for-one split of the company's outstanding
shares of stock in
Three Months Ended | Year Ended | ||||||||||||
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Global restaurant sales growth | 4.8% | 19.6% | 6.2% | 10.6% | |||||||||
Global restaurant sales growth, excluding the impact of foreign currency and 53rd week |
12.9% | 11.5% | 8.7% | 8.9% | |||||||||
Comparable sales growth (a) | |||||||||||||
Domestic company-owned restaurants | 11.5% | 6.9% | 6.6% | 5.6% | |||||||||
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8.1% | 4.6% | 3.1% | 2.9% | |||||||||
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9.0% | 5.2% | 4.0% | 3.6% | |||||||||
System-wide international restaurants | 7.0% | 7.0% | 7.5% | 7.1% | |||||||||
(a) |
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 |
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We believe global restaurant and comparable sales information, as
defined in the table above, is useful in analyzing our results since our
franchisees pay royalties that are based on a percentage of franchise
sales. Franchise sales generate commissary revenue in
Revenue and Operating Highlights
Revenue Highlights
Consolidated revenues increased
Three Months Ended | |||||||||||||||||||||
Adjusted | Adjusted | ||||||||||||||||||||
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53rd | Increase- | Increase- | |||||||||||||||||
(In thousands) | 2013 | 2012 | Week | $ (*) | % (*) | ||||||||||||||||
13 weeks | 14 weeks | 13 weeks | 13 weeks | ||||||||||||||||||
North America Revenues: | |||||||||||||||||||||
Domestic company-owned restaurant sales | $ | 169,604 | $ | 161,562 | $ | 10,600 | $ | 18,642 | 12.3 | % | |||||||||||
Franchise royalties | 21,310 | 21,171 | 1,400 | 1,539 | 7.8 | % | |||||||||||||||
Franchise and development fees | 153 | 218 | - | (65 | ) | -29.8 | % | ||||||||||||||
Domestic commissary sales | 156,929 | 149,055 | 8,500 | 16,374 | 11.6 | % | |||||||||||||||
Other sales | 14,705 | 14,613 | 200 | 292 | 2.0 | % | |||||||||||||||
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International Revenues: | |||||||||||||||||||||
Royalties and franchise and development fees | 6,067 | 6,112 | 150 | 105 | 1.8 | % | |||||||||||||||
Restaurant and commissary sales | 19,122 | 14,553 | 650 | 5,219 | 37.5 | % | |||||||||||||||
Total Revenues | $ | 387,890 | $ | 367,284 | $ | 21,500 | $ | 42,106 | 12.2 | % | |||||||||||
Year Ended | |||||||||||||||
Adjusted | Adjusted | ||||||||||||||
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53rd | Increase- | Increase- | |||||||||||
(In thousands) | 2013 | 2012 | Week | $ (*) | % (*) | ||||||||||
52 weeks | 53 weeks | 52 weeks | 52 weeks | ||||||||||||
North America Revenues: | |||||||||||||||
Domestic company-owned restaurant sales |
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9.2% | ||||||||||
Franchise royalties | 81,692 | 79,567 | 1,400 | 3,525 | 4.5% | ||||||||||
Franchise and development fees | 1,181 | 806 | - | 375 | 46.5% | ||||||||||
Domestic commissary sales | 578,870 | 545,924 | 8,500 | 41,446 | 7.7% | ||||||||||
Other sales | 53,322 | 51,223 | 200 | 2,299 | 4.5% | ||||||||||
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International Revenues: | |||||||||||||||
Royalties and franchise and development fees | 21,979 | 19,881 | 150 | 2,248 | 11.4% | ||||||||||
Restaurant and commissary sales | 66,661 | 53,049 | 650 | 14,262 | 27.2% | ||||||||||
Total Revenues |
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8.9% | ||||||||||
(*) "Adjusted Increase" columns exclude the impact of the 53rd week of operations in 2012. Revenues excluding the impact of the 53rd week of operations is a non-GAAP financial measure. See "Items Impacting Comparability" for additional details and a reconciliation of our GAAP financial measures.
The increases in revenues for the fourth quarter and full year 2013 were primarily due to the following:
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Domestic company-owned restaurant sales increased approximately
$18.6 million , or 12.3%, and$53.7 million , or 9.2%, for the fourth quarter and full year 2013, respectively. The increases were primarily due to increases in comparable sales of 11.5% and 6.6%, respectively. The increase for the full year was also due to the net acquisition of 50 restaurants in theDenver andMinneapolis markets from a franchisee in the second quarter of 2012. -
North America franchise royalty revenue increased$1.5 million , or 7.8%, and$3.5 million , or 4.5%, for the fourth quarter and full year 2013, respectively. The increases were primarily due to increases in net franchise units and increases in comparable sales of 8.1% and 3.1%, respectively, partially offset by royalty incentives offered to franchisees for meeting certain sales targets. The increase for the full year was partially offset by reduced royalties attributable to the company's net acquisition of the 50 restaurants noted above. -
Domestic commissary sales increased
$16.4 million , or 11.6%, and$41.4 million , or 7.7%, for the fourth quarter and full year 2013, respectively. The increases were primarily due to increases in sales volumes, higher overall margins and increases in the prices of commodities. -
International royalties and franchise and development fees increased
$2.2 million or 11.4% for the full year. This was primarily due to an increase in units and comparable sales of 7.5%. -
International restaurant and commissary sales increased
$5.2 million , or 37.5%, and$14.3 million , or 27.2%, for the fourth quarter and full year 2013, respectively. The increases were primarily due to an increase inChina company-owned restaurant sales due to the increased number of units. In addition,China reported an additional month of results in the fourth quarter of 2013 compared to the fourth quarter of 2012. The fourth quarter of 2013 includes September throughDecember 2013 results whereas the fourth quarter of 2012 includes September throughNovember 2012 results. The added month, which increased revenues approximately$2.1 million , putsChina on the same reporting cycle as our Domestic operations.United Kingdom commissary revenues also increased due to both an increase in units and higher comparable sales.
Operating Highlights
The tables below summarize income before income taxes on a reporting segment basis, excluding the Incentive Contribution and the impact of the 53rd week of operations in 2012, which substantially offset each other on a full year basis. All operating highlights are compared to the same period of the prior year and exclude the Incentive Contribution and the 53rd week of operations, unless otherwise noted.
Three Months Ended | ||||||||||||||||||||||||
Incentive | Adjusted | |||||||||||||||||||||||
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53rd | Contribution | Increase/ | ||||||||||||||||||||
(In thousands) | 2013 | 2012 | Week (a) | (a) | (Decrease) (a) | |||||||||||||||||||
13 weeks | 14 weeks | 13 weeks | 13 weeks | |||||||||||||||||||||
Domestic company-owned restaurants | $ | 9,924 | $ | 10,887 | $ | 1,609 | $ | - | $ | 646 | ||||||||||||||
Domestic commissaries | 11,526 | 8,327 | 1,200 | - | 4,399 | |||||||||||||||||||
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18,067 | 18,502 | 1,414 | - | 979 | |||||||||||||||||||
International | 651 | 1,846 | 414 | - | (781 | ) | ||||||||||||||||||
All others | 1,088 | 1,292 | 215 | - | 11 | |||||||||||||||||||
Unallocated corporate expenses | (12,550 | ) | (14,175 | ) | (707 | ) | - | 918 | ||||||||||||||||
Elimination of intersegment profits | (765 | ) | (133 | ) | - | - | (632 | ) | ||||||||||||||||
Total income before income taxes | $ | 27,941 | $ | 26,546 | $ | 4,145 | $ | - | $ | 5,540 | ||||||||||||||
Year Ended | |||||||||||||||||||||||||
Incentive | Adjusted | ||||||||||||||||||||||||
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53rd | Contribution | Increase/ | |||||||||||||||||||||
(In thousands) | 2013 | 2012 | Week (a) | (a) | (Decrease) (a) | ||||||||||||||||||||
52 weeks | 53 weeks | 52 weeks | 52 weeks | ||||||||||||||||||||||
Domestic company-owned restaurants | $ | 34,590 | $ | 38,114 | $ | 1,609 | $ | 1,029 | $ | (886 | ) | ||||||||||||||
Domestic commissaries | 37,804 | 34,317 | 1,200 | - | 4,687 | ||||||||||||||||||||
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70,201 | 69,332 | 1,414 | - | 2,283 | ||||||||||||||||||||
International | 2,803 | 3,063 | 414 | - | 154 | ||||||||||||||||||||
All others | 3,490 | 2,889 | 215 | - | 816 | ||||||||||||||||||||
Unallocated corporate expenses | (41,025 | ) | (48,958 | ) | (707 | ) | (5,000 | ) | 2,226 | ||||||||||||||||
Elimination of intersegment profits | (1,754 | ) | (362 | ) | - | - | (1,392 | ) | |||||||||||||||||
Total income before income taxes | $ | 106,109 | $ | 98,395 | 4,145 | (3,971 | ) | $ | 7,888 |
(a) | Income before income taxesand the other financial measures excluding the Incentive Contribution and the impact of the 53rd week of operations in 2012 are non-GAAP financial measures. The "Adjusted Increase/(Decrease)" columns exclude the impact of these items. See "Items Impacting Comparability" for additional details and a reconciliation of these measures to our GAAP financial measures. |
Fourth quarter 2013 income before income taxes increased approximately
-
Domestic company-owned restaurants income increased approximately
$650,000 as incremental profits from higher sales were partially offset by lower national promotion pricing, higher commodities and increased restaurant level bonuses. -
Domestic commissaries operating results increased approximately
$4.4 million due to incremental profits associated with higher sales and a higher margin. -
North America franchising increased approximately$1.0 million due to the increase in net restaurants and comparable sales, partially offset by higher royalty incentives offered to franchisees for meeting certain sales targets. -
Unallocated corporate expenses decreased approximately
$900,000 primarily due to lower legal costs and short-term management incentive costs, partially offset by higher various other G&A costs including travel, operators' conference costs and information technology costs. Legal costs were higher in 2012 primarily due to the costs associated with the previously disclosed Agne text messaging class action lawsuit.
This increase was partially offset by an approximate
The full year increase in income before income taxes of
-
Domestic company-owned restaurants income decreased approximately
$900,000 primarily due to higher commodity costs somewhat offset by incremental profits associated with higher comparable sales of 6.6%. -
International income increased approximately
$150,000 primarily due to the increase in units and comparable sales of 7.5% which provided both an improvement in ourUnited Kingdom results and higher royalties. These increases were substantially offset by higher operating losses in our company-ownedChina market, as previously discussed.
The effective tax rates were 29.4% and 31.2% for the three months and
full year ended
The company's free cash flow for the fiscal years ended 2013 and 2012 was as follows (in thousands):
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2013 | 2012 | |||||||||
Net cash provided by operating activities | $ | 101,360 | $ | 104,379 | ||||||
Purchase of property and equipment (a) | (50,750 | ) | (42,628 | ) | ||||||
Free cash flow | $ | 50,610 | $ | 61,751 |
(a) |
Purchases of property and equipment for 2013 and 2012 include
expenditures on equipment for |
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 measure because it is a 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.
See the Management's Discussion and Analysis of Financial Condition and
Results of Operations section of our Annual Report on Form 10-K filed
with the
Global Restaurant Unit Data
At
Domestic |
Franchised |
Total North |
International | System-wide | ||||||||||||||||
Fourth Quarter |
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Beginning - |
656 | 2,595 | 3,251 | 1,045 | 4,296 | |||||||||||||||
Opened | 11 | 41 | 52 | 103 | 155 | |||||||||||||||
Closed | (2 | ) | (15 | ) | (17 | ) | (6 | ) | (23 | ) | ||||||||||
Ending - |
665 | 2,621 | 3,286 | 1,142 | 4,428 | |||||||||||||||
Year-to-date |
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Beginning - |
648 | 2,556 | 3,204 | 959 | 4,163 | |||||||||||||||
Opened | 19 | 152 | 171 | 215 | 386 | |||||||||||||||
Closed | (2 | ) | (87 | ) | (89 | ) | (32 | ) | (121 | ) | ||||||||||
Ending - |
665 | 2,621 | 3,286 | 1,142 | 4,428 | |||||||||||||||
Year-over-year restaurant unit growth | 17 | 65 | 82 | 183 | 265 | |||||||||||||||
% increase | 2.6 | % | 2.5 | % | 2.6 | % | 19.1 | % | 6.4 | % | ||||||||||
Our development pipeline as of
Items Impacting Comparability
The following table reconciles our GAAP financial results to certain
items impacting comparability, for the fourth quarter and fiscal year
ended
Three Months Ended | Year Ended | |||||||||||
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(In thousands, except per share amounts) | 2013 | 2012 | 2013 | 2012 | ||||||||
Total Revenues, as reported |
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53rd week of operations (a) | - | (21,500) | - | (21,500) | ||||||||
Total Revenues, as adjusted |
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Income before income taxes, as reported |
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53rd week of operations (a) | - | (4,145) | - | (4,145) | ||||||||
Incentive Contribution (b) | (250) | (250) | (1,000) | 2,971 | ||||||||
Income before income taxes, as adjusted |
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Net income, as reported |
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53rd week of operations (a) | - | (2,634) | - | (2,634) | ||||||||
Incentive Contribution (b) | (166) | (165) | (660) | 1,955 | ||||||||
Net income, as adjusted |
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Earnings per diluted common share, as reported |
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53rd week of operations (a) | - | (0.06) | - | (0.05) | ||||||||
Incentive Contribution (b) | - | - | (0.02) | 0.04 | ||||||||
Earnings per diluted common share, as adjusted |
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(a) | The company follows a fiscal year ending on the last Sunday of December, generally consisting of 52 weeks made up of four 13-week quarters. In 2012, the company's fiscal year consisted of 53 weeks, with the additional week added to the fourth quarter (14 weeks) results. | |
(b) |
As previously disclosed, in connection with a 2012 multi-year
supplier agreement, the company received a |
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The results shown in the table and elsewhere in this press release,
which exclude the Incentive Contribution and the 53rd week of
operations, are not measures defined by accounting principles generally
accepted in
Share Repurchase Activity
In
Period |
Number |
Cost | ||||||
Fourth Quarter 2013 | 1,281 |
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Full Year 2013 | 3,538 |
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236 |
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There were 43.3 million and 44.2 million diluted weighted average common
shares outstanding for the fourth quarter and full year, respectively,
representing decreases of 7.0% and 7.5% versus the prior year comparable
periods. Diluted earnings per share increased
Regular Quarterly Dividend
As announced on
Conference Call
A conference call is scheduled for
2014 Key Operating Assumptions and Earnings Guidance
In 2014, the company expects another year of solid growth across all
aspects of the Papa John's business. We expect to continue the momentum
we have in units, revenues, and EPS growth, with a notable improvement
in International profitability. We and our franchisees plan to implement
a new, proprietary POS system ("FOCUS") in substantially all domestic
system restaurants in 2014, which we expect will add efficiencies to our
operations. The costs related to implementing FOCUS are projected to
have a negative pre-tax earnings impact of approximately
Earnings per Share - The company projects 2014 EPS to increase to
a range of
Comparable Restaurant Sales -
Worldwide Net Unit Growth - Worldwide net unit growth in 2014 is expected to range between 220 and 250 units, with approximately 70% of the net unit growth in International markets.
Revenues - Total consolidated revenues are expected to increase
5% to 7% in 2014, due to projected
Income before Income Taxes Margin - Consolidated income before
income taxes margin in 2014 is expected to approximate 2013 levels.
Excluding the impact of FOCUS, we expect consolidated margin improvement
of 0.20% to 0.40%. The biggest driver of increased margins is a
projected improvement in International profitability, driven by improved
financial performance in our corporate-owned
Income Tax Rate - The income tax rate in 2014 is expected to range from 32.25% to 33.75%, up from 2013 due to several rate-reducing items in 2013 that are not expected to recur.
Free
Capital Expenditures - Capital expenditures for 2014 are expected
to approximate
Annual Meeting Date Scheduled
The 2014 Annual Meeting of Stockholders will be held on
Forward-Looking Statements
Certain matters discussed in this report, including information within Management's Discussion and Analysis of Financial Condition and Results of Operations constitute forward-looking statements within the meaning of the federal securities laws. Generally, the use of words such as "expect," "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, contingent liabilities, resolution of litigation, commodity costs, profit margins, unit growth, capital expenditures, 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:
- aggressive changes in pricing or other marketing or promotional strategies by competitors which may adversely affect sales; and new product and concept developments by food industry competitors;
- changes in consumer preferences and adverse general economic and political conditions, including increasing tax rates, and their resulting impact on consumer buying habits;
- the impact that product recalls, food quality or safety issues, and general public health concerns could have on our restaurants;
- failure to maintain our brand strength and quality reputation;
- the ability of the Company and its franchisees to meet planned growth targets and operate new and existing restaurants profitably;
- increases in or sustained high costs of food ingredients and other commodities;
- disruption of our supply chain or our commissary operations due to sole or limited source of suppliers or weather, drought, disease or other disruption beyond our control;
-
increased risks associated with our international operations,
including economic and political conditions in our international
markets and difficulty in meeting planned sales targets and new store
growth for our international operations, including our expansion into
emerging or underpenetrated markets, such as
China , where we have a Company-owned presence. Based on prior experience in underpenetrated markets, operating losses are likely to occur as the market is being established; - increased employee compensation, benefits, insurance, tax rates, regulatory compliance and similar costs, including increased costs resulting from federal health care legislation;
- the credit performance of our franchise loan program;
- the impact of the resolution of current or future claims and litigation, and current or proposed legislation impacting our business;
- the impact of changes in currency exchange and interest rates;
- failure to effectively execute succession planning, and our reliance on the services of our Founder and Chief Executive Officer, who also serves as our brand spokesperson;
- disruption of critical business or information technology systems, and risks associated with data privacy and security breaches, including theft of Company and customer information. This would include the increased risk associated with the planned rollout of our new domestic POS system. If prolonged and widespread technological problems are experienced during the rollout, our domestic corporate and franchise operations could be disrupted, which could adversely impact sales.
These and other risk factors are discussed in detail in "Part I. Item
1A. - Risk Factors" of the Annual Report on Form 10-K for the fiscal
year ended
For more information about the company, please visit www.papajohns.com.
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Consolidated Statements of Income | ||||||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||||||
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13 weeks | 14 weeks | 52 weeks | 53 weeks | |||||||||||||||||||
(In thousands, except per share amounts) | (Unaudited) | (Unaudited) | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||||
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$ | 169,604 | $ | 161,562 | $ | 635,317 | $ | 592,203 | ||||||||||||||
Franchise royalties | 21,310 | 21,171 | 81,692 | 79,567 | ||||||||||||||||||
Franchise and development fees | 153 | 218 | 1,181 | 806 | ||||||||||||||||||
Domestic commissary sales | 156,929 | 149,055 | 578,870 | 545,924 | ||||||||||||||||||
Other sales | 14,705 | 14,613 | 53,322 | 51,223 | ||||||||||||||||||
International: | ||||||||||||||||||||||
Royalties and franchise and development fees | 6,067 | 6,112 | 21,979 | 19,881 | ||||||||||||||||||
Restaurant and commissary sales | 19,122 | 14,553 | 66,661 | 53,049 | ||||||||||||||||||
Total revenues | 387,890 | 367,284 | 1,439,022 | 1,342,653 | ||||||||||||||||||
Costs and expenses: | ||||||||||||||||||||||
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Cost of sales | 43,106 | 37,987 | 156,237 | 137,378 | ||||||||||||||||||
Salaries and benefits | 46,290 | 45,021 | 173,316 | 163,260 | ||||||||||||||||||
Advertising and related costs | 15,278 | 14,686 | 59,172 | 54,583 | ||||||||||||||||||
Occupancy costs | 9,313 | 9,032 | 36,546 | 34,734 | ||||||||||||||||||
Other restaurant operating expenses | 24,043 | 23,109 | 92,280 | 85,847 | ||||||||||||||||||
Total domestic Company-owned restaurant expenses | 138,030 | 129,835 | 517,551 | 475,802 | ||||||||||||||||||
Domestic commissary expenses: | ||||||||||||||||||||||
Cost of sales | 122,164 | 117,875 | 448,693 | 426,531 | ||||||||||||||||||
Salaries and benefits | 6,850 | 5,987 | 25,123 | 22,237 | ||||||||||||||||||
Other commissary operating expenses | 14,618 | 14,887 | 60,526 | 55,266 | ||||||||||||||||||
Total domestic commissary expenses | 143,632 | 138,749 | 534,342 | 504,034 | ||||||||||||||||||
Other operating expenses | 12,917 | 12,615 | 48,011 | 45,455 | ||||||||||||||||||
International restaurant and commissary expenses | 16,601 | 12,092 | 56,609 | 44,853 | ||||||||||||||||||
General and administrative expenses | 36,164 | 38,106 | 134,228 | 131,591 | ||||||||||||||||||
Other general expenses | 2,631 | 293 | 6,673 | 8,313 | ||||||||||||||||||
Depreciation and amortization | 9,433 | 8,575 | 35,105 | 32,798 | ||||||||||||||||||
Total costs and expenses | 359,408 | 340,265 | 1,332,519 | 1,242,846 | ||||||||||||||||||
Operating income | 28,482 | 27,019 | 106,503 | 99,807 | ||||||||||||||||||
Net interest expense | (541 | ) | (473 | ) | (394 | ) | (1,412 | ) | ||||||||||||||
Income before income taxes | 27,941 | 26,546 | 106,109 | 98,395 | ||||||||||||||||||
Income tax expense | 8,204 | 8,137 | 33,130 | 32,393 | ||||||||||||||||||
Net income before attribution to noncontrolling interests | 19,737 | 18,409 | 72,979 | 66,002 | ||||||||||||||||||
Income attributable to noncontrolling interests | (932 | ) | (1,050 | ) | (3,442 | ) | (4,342 | ) | ||||||||||||||
Net income attributable to the Company | $ | 18,805 | $ | 17,359 | $ | 69,537 | $ | 61,660 | ||||||||||||||
Calculation of income for earnings per share: | ||||||||||||||||||||||
Net income attributable to the Company | $ | 18,805 | $ | 17,359 | $ | 69,537 | $ | 61,660 | ||||||||||||||
Increase in noncontrolling interest redemption value | (510 | ) | - | (510 | ) | - | ||||||||||||||||
Net income attributable to participating securities | (530 | ) | - | (530 | ) | - | ||||||||||||||||
Net income attributable to common shareholders | $ | 17,765 | $ | 17,359 | $ | 68,497 | $ | 61,660 | ||||||||||||||
Basic earnings per common share | $ | 0.42 | $ | 0.38 | $ | 1.58 | $ | 1.31 | ||||||||||||||
Earnings per common share - assuming dilution | $ | 0.41 | $ | 0.37 | $ | 1.55 | $ | 1.29 | ||||||||||||||
Basic weighted average common shares outstanding | 42,417 | 45,652 | 43,387 | 46,916 | ||||||||||||||||||
Diluted weighted average common shares outstanding | 43,301 | 46,604 | 44,243 | 47,810 | ||||||||||||||||||
Dividends declared per common share | $ | 0.125 | $ | - | $ | 0.250 | $ | - |
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Condensed Consolidated Balance Sheets | ||||||||
Year Ended | ||||||||
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(In thousands) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 13,670 | $ | 16,396 | ||||
Accounts receivable, net | 53,203 | 44,647 | ||||||
Notes receivable | 3,566 | 4,577 | ||||||
Inventories | 23,035 | 22,178 | ||||||
Deferred income taxes | 8,004 | 10,279 | ||||||
Prepaid expenses and other current assets | 23,562 | 20,549 | ||||||
Total current assets | 125,040 | 118,626 | ||||||
Property and equipment, net | 212,097 | 196,661 | ||||||
Notes receivable, less current portion, net | 13,239 | 12,536 | ||||||
Goodwill | 79,391 | 78,958 | ||||||
Other assets | 34,524 | 31,627 | ||||||
Total assets | $ | 464,291 | $ | 438,408 | ||||
Liabilities and stockholders' equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 35,653 | $ | 32,624 | ||||
Income and other taxes payable | 4,401 | 10,429 | ||||||
Accrued expenses and other current liabilities | 57,807 | 60,528 | ||||||
Total current liabilities | 97,861 | 103,581 | ||||||
Deferred revenue | 5,827 | 7,329 | ||||||
Long-term debt | 157,900 | 88,258 | ||||||
Deferred income taxes | 14,660 | 10,672 | ||||||
Other long-term liabilities | 42,835 | 40,674 | ||||||
Total liabilities | 319,083 | 250,514 | ||||||
Redeemable noncontrolling interests | 7,024 | 6,380 | ||||||
Total stockholders' equity | 138,184 | 181,514 | ||||||
Total liabilities, redeemable noncontrolling interests and stockholders' equity | $ | 464,291 | $ | 438,408 | ||||
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 |
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Consolidated Statements of Cash Flows | ||||||||||
Year Ended | ||||||||||
(In thousands) |
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Operating activities | ||||||||||
Net income before attribution to noncontrolling interests | $ | 72,979 | $ | 66,002 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
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Disposition and impairment losses | - | 269 | ||||||||
Provision for uncollectible accounts and notes receivable | 1,921 | 1,674 | ||||||||
Depreciation and amortization | 35,105 | 32,798 | ||||||||
Deferred income taxes | 10,603 | 2,035 | ||||||||
Stock-based compensation expense | 7,409 | 6,905 | ||||||||
Excess tax benefit on equity awards | (4,755 | ) | (1,967 | ) | ||||||
Other | 2,767 | 2,961 | ||||||||
Changes in operating assets and liabilities, net of acquisitions: | ||||||||||
Accounts receivable | (11,058 | ) | (18,048 | ) | ||||||
Inventories | (857 | ) | (1,947 | ) | ||||||
Prepaid expenses and other current assets | (3,011 | ) | (4,239 | ) | ||||||
Other assets and liabilities | (3,728 | ) | (3,952 | ) | ||||||
Accounts payable | 3,029 | (342 | ) | |||||||
Income and other taxes payable | (6,027 | ) | 6,460 | |||||||
Accrued expenses and other current liabilities | (2,536 | ) | 12,209 | |||||||
Deferred revenue | (481 | ) | 3,561 | |||||||
Net cash provided by operating activities | 101,360 | 104,379 | ||||||||
Investing activities | ||||||||||
Purchases of property and equipment | (50,750 | ) | (42,628 | ) | ||||||
Loans issued | (6,095 | ) | (4,903 | ) | ||||||
Repayments of loans issued | 7,068 | 3,642 | ||||||||
Acquisitions, net of cash acquired | - | (6,175 | ) | |||||||
Proceeds from divestitures of restaurants | - | 908 | ||||||||
Other | 339 | 36 | ||||||||
Net cash used in investing activities | (49,438 | ) | (49,120 | ) | ||||||
Financing activities | ||||||||||
Net proceeds on line of credit facility | 69,642 | 36,769 | ||||||||
Cash dividends paid | (10,797 | ) | - | |||||||
Excess tax benefit on equity awards | 4,755 | 1,967 | ||||||||
Tax payments for equity award issuances | (3,584 | ) | (855 | ) | ||||||
Proceeds from exercise of stock options | 6,865 | 12,264 | ||||||||
Acquisition of Company common stock | (118,569 | ) | (106,095 | ) | ||||||
Contributions from noncontrolling interest holders | 950 | 2,052 | ||||||||
Distributions to noncontrolling interest holders | (3,650 | ) | (4,256 | ) | ||||||
Other | (327 | ) | 225 | |||||||
Net cash used in financing activities | (54,715 | ) | (57,929 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | 67 | 124 | ||||||||
Change in cash and cash equivalents | (2,726 | ) | (2,546 | ) | ||||||
Cash and cash equivalents at beginning of year | 16,396 | 18,942 | ||||||||
Cash and cash equivalents at end of year | $ | 13,670 | $ | 16,396 |
Papa John's
Chief
Financial Officer
Source: Papa John's
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