Domino's Pizza Announces First Quarter 2013 Financial Results

        Domino's Pizza Announces First Quarter 2013 Financial Results

Delivers Strong EPS Growth and Robust Global Sales Growth

PR Newswire

ANN ARBOR, Mich., April 30, 2013

ANN ARBOR, Mich., April 30, 2013 /PRNewswire/ -- Domino's Pizza, Inc. (NYSE:
DPZ),  the recognized world leader in pizza delivery, today announced results
for the first quarter of 2013, comprised of strong EPS and same store sales
growth, and positive global store count growth. Domestic same store sales grew
6.2% during the quarter versus the year-ago period, continuing the positive
sales momentum in the Company's domestic business. The international division
also posted strong results with same store sales growth of 6.5% during the
quarter. The first quarter marked the 77^th consecutive quarter of
international same store sales growth. The Company had global net store growth
of 75 stores in the first quarter of 2013.

(Logo: http://photos.prnewswire.com/prnh/20120814/DE55948LOGO-b )

First quarter diluted EPS was 59 cents, up 68.6% over the Company's reported
EPS in the prior year quarter; and up 25.5% over the Company's adjusted EPS in
the prior year quarter. During the quarter, the Company also repurchased and
retired 362,899 shares of its common stock for $18.0 million. Additionally,
on April 23, 2013, the Board of Directors declared a 20 cent per share
quarterly dividend for shareholders of record as of June 14, 2013 to be paid
on June 28, 2013.

J. Patrick Doyle, Domino's President and Chief Executive Officer, said: "We
are off to a strong start this year, growing stores and sales around the world
by offering great food at a great value, which is compelling to customers
everywhere. Our use of technology sets us apart from many in our industry and
enhances our business on both the top and bottom lines."

Doyle continued, "Our proven franchise business model also results in
significant free cash flow that we have used this year for both share
repurchases and our recently-initiated quarterly dividend."

First Quarter Highlights:

(dollars in millions, except per share      First Quarter      First Quarter
data)
                                            of 2013            of 2012
Net income                                  $ 34.4            $ 20.7
Weighted average diluted shares             58,224,408         59,660,962
Diluted earnings per share, as reported     $ 0.59            $ 0.35
Items affecting comparability*              -                  $ 0.12
Diluted earnings per share, as adjusted     $ 0.59            $ 0.47
*Refer to the Items Affecting Comparability section on page three for
additional details.

  oRevenues were up 8.6% for the first quarter versus the prior year period,
    due primarily to higher volumes in domestic supply chain as a result of
    increased order counts, higher royalty revenues derived from higher same
    store sales in both domestic and international stores and store count
    growth in international markets.
  oNet Income was up 65.9% for the first quarter versus the prior year
    period, driven by domestic and international same store sales growth,
    international store count growth and improved operating margins. The
    Company also noted that the increase in net income was due in part to
    approximately $6.5 million of expenses incurred in the first quarter of
    2012 related to its 2012 recapitalization that did not recur in 2013.
  oDiluted EPS was 59 cents for the first quarter versus 35 cents in the
    prior year quarter. On an as adjusted basis, the diluted EPS of 59 cents
    represents an increase of 12 cents, or 25.5% versus the as adjusted
    diluted EPS of 47 cents in the prior year quarter. This increase was
    primarily due to higher net income and lower weighted average diluted
    shares outstanding. (See the Items Affecting Comparability section and the
    Comments on Regulation G section.)

The table below outlines certain statistical measures utilized by the Company
to analyze its performance. Refer to the Comments on Regulation G section on
page four for additional details. The Company estimates that the same store
sales increases for its domestic and international stores were each positively
impacted by approximately 1% from having New Year's Eve and New Year's Day in
its first quarter 2013 results. Fiscal 2012 began on January 2, 2012 and,
therefore, did not include New Year's Eve or New Year's Day sales in the same
store sales results in the first quarter of 2012.



                                                        

                                                        First Quarter

                                                        of 2013
Same store sales growth: (versus prior year period)
 Domestic Company-owned stores                         + 5.0%
 Domestic franchise stores                             + 6.3%
 Domestic stores                                       + 6.2%
 International stores (constant dollar basis)          + 6.5%
Global retail sales growth: (versus prior year period)
 Domestic stores                                       + 6.9%
 International stores                                  +11.9%
 Total                                                 + 9.4%
Global retail sales growth: (versus prior year period,

 excluding foreign currency impact)
 Domestic stores                                       + 6.9%
 International stores                                  +14.1%
 Total                                                 +10.5%



                     Domestic                  Total                   
                                    Domestic
                     Company-owned  Franchise  Domestic  International  
                     Stores         Stores     Stores    Stores
                                                                        Total
Store counts:
 Store count at     388            4,540      4,928     5,327          10,255
December 30, 2012
 Openings           -              10         10        85             95
 Closings           -              (15)       (15)      (5)            (20)
 Store count at     388            4,535      4,923     5,407          10,330
March 24, 2013
 First quarter 2013 -              (5)        (5)       80             75
net change

Conference Call Information

The Company will file its quarterly report on Form 10-Q this morning.
Additionally, as previously announced, Domino's Pizza, Inc. will hold a
conference call today at 10 a.m. (Eastern) to review its first quarter 2013
financial results. The call can be accessed by dialing (888) 306-6182
(U.S./Canada) or (706) 634-4947 (International). Ask for the Domino's Pizza
conference call. The call will also be webcast at www.dominosbiz.com. If you
are unable to participate on the call, a replay will be available for thirty
days by dialing (855) 859-2056 (U.S./Canada) or (404) 537-3406
(International), Conference ID 86148760. The webcast will also be archived
for 30 days on www.dominosbiz.com. 

Share Repurchases

During the first quarter of 2013, the Company repurchased and retired 362,899
shares of its common stock under its open market share repurchase program for
approximately $18.0 million, or an average price of $49.65 per share.
Additionally, subsequent to the first quarter of 2013, the Company repurchased
and retired 32,205 shares of its common stock for approximately $1.6 million,
or an average of $50.70 per share. The Company has used approximately 34% of
the total amount authorized under its $200 million Board of Directors approved
open market share repurchase program and currently has approximately $132.7
million remaining under the program.

Dividends

Due to the Company's strong financial performance and consistent free cash
flow generation, the Board of Directors initiated a 20 cent per share
quarterly dividend in February 2013. This first dividend was paid on March 29,
2013 to shareholders of record as of March 15, 2013.

On April 23, 2013, the Board of Directors declared a 20 cent per share
quarterly dividend for shareholders of record as of June 14, 2013, to be paid
on June 28, 2013.

Items Affecting Comparability

The Company's reported financial results for the first quarter 2013 are not
comparable to the reported financial results for the equivalent period in
2012. The table below presents certain items that affect comparability between
2013 and 2012 financial results. The Company believes that including such
information is critical to the understanding of its financial results for the
first quarter of 2013 as compared to the same period in 2012 (See the Comments
on Regulation G section on page four for additional details).

In addition to the items noted in the table below, the Company had lower
weighted average diluted shares outstanding that resulted in an increase in
diluted EPS of nearly one and one half cents in the first quarter of 2013.



                            First Quarter
                                                                 Diluted

                                                                 EPS

(in thousands, except per   Pre-tax              After-tax          Impact
share data)
2012 items affecting
comparability:
Recapitalization expenses:
 General and              $   (293)          $   (182)        $(0.00)
administrative expenses (1)
 Additional interest      (10,222)             (6,348)            (0.11)
expense (2)
 Subtotal              (10,515)             (6,530)            (0.11)
Deferred tax asset          -                    (868)              (0.01)
valuation allowance (3)
Total of 2012 items         $(10,515)            $ (7,398)         $(0.12)
(1) Primarily includes stock compensation expenses, payroll taxes related to
the payments made to certain stock option holders, and legal and professional
fees incurred in connection with the Company's 2012 recapitalization.



(2) Primarily includes the write-off of deferred financing fees related to the
extinguishment of the 2007 debt in connection with the Company's 2012
recapitalization. Additionally, the Company incurred $2.1 million of interest
expense on the 2007 borrowings subsequent to the closing of the 2012
recapitalization but prior to the repayment of the 2007 borrowings, resulting
in the payment of interest on both the 2007 and 2012 facilities for a short
period of time.



(3) Represents a valuation allowance recorded on a deferred tax asset related
to a capital loss that resulted from a write-off of the tax basis goodwill
associated with the sale of the six remaining Company-owned stores in a
certain market in the first quarter of 2012.

Liquidity

As of March 24, 2013, the Company had approximately:

  o$75.1 million of unrestricted cash and cash equivalents;
  o$1.55 billion in total debt; and
  o$62.2 million of available borrowings under its $100.0 million variable
    funding notes, net of letters of credit issued of $37.8 million.

The Company's cash borrowing rate averaged 5.3% for the first quarter of
2013. Additionally, the Company invested $5.1 million in capital expenditures
during the first quarter of 2013 versus $3.6 million in the first quarter of
2012.

Free cash flow, as reconciled below to cash flows from operations as
determined under generally accepted accounting principles (GAAP), was
approximately $42.6 million in the first quarter of 2013.



                                          First Quarter
(in thousands)
                                          of 2013
Net cash provided by operating activities $47,649
Capital expenditures                      (5,086)
Free cash flow                            $42,563

Comments on Regulation G

In addition to the GAAP financial measures set forth in this press release,
the Company has included non-GAAP financial measures within the meaning of
Regulation G due to items affecting comparability between fiscal quarters.
The Company has also included metrics such as global retail sales growth and
same store sales growth, which are commonly used statistical measures in the
quick-service restaurant industry that are important to understanding Company
performance.

The Company uses "Diluted EPS, as adjusted," which is calculated as reported
Diluted EPS adjusted for the items that affect comparability to the prior year
period discussed above. The most directly comparable financial measure
calculated and presented in accordance with GAAP is Diluted EPS. The Company
believes that the Diluted EPS, as adjusted measure is important and useful to
investors and other interested persons and that such persons benefit from
having a consistent basis for comparison between reporting periods. The
Company uses Diluted EPS, as adjusted to internally evaluate operating
performance, to evaluate itself against its peers and to determine future
performance targets and long-range planning. Additionally, the Company
believes that analysts covering the Company's stock performance generally
eliminate these items affecting comparability when preparing their financial
models, when determining their published EPS estimates and when benchmarking
the Company against its competitors. 

The Company uses "Global retail sales" to refer to total worldwide retail
sales at Company-owned and franchise stores. The Company believes global
retail sales information is useful in analyzing revenues because franchisees
pay royalties that are based on a percentage of franchise retail sales. The
Company reviews comparable industry global retail sales information to assess
business trends and to track the growth of the Domino's Pizza^® brand. In
addition, domestic supply chain revenues are directly impacted by changes in
domestic franchise retail sales. Retail sales for franchise stores are
reported to the Company by its franchisees and are not included in Company
revenues. 

The Company uses "Same store sales growth," calculated by including only sales
from stores that also had sales in the comparable period of the prior year.
International same store sales growth is calculated similarly to domestic same
store sales growth. Changes in international same store sales are reported on
a constant dollar basis, which reflects changes in international local
currency sales.

The Company uses "Free cash flow," calculated as cash flows from operations
less capital expenditures, both as reported under GAAP. The Company believes
that the free cash flow measure is important to investors and other interested
persons, and that such persons benefit from having a measure which
communicates how much cash flow is available for working capital needs or to
be used for repurchasing debt, making acquisitions, repurchasing common stock,
paying dividends or other similar uses of cash.

About Domino's Pizza®

Founded in 1960, Domino's Pizza is the recognized world leader in pizza
delivery, with a significant business in carryout pizza. It ranks among the
world's top public restaurant brands with its global enterprise of more than
10,300 stores in over 70 international markets. Domino's had global retail
sales of over $7.4 billion in 2012, comprised of over $3.5 billion in the U.S.
and nearly $3.9 billion internationally. In the first quarter of 2013,
Domino's had global retail sales of over $1.8 billion, comprised of $888
million in the U.S. and $957 million internationally. Its system is largely
made up of franchise owner-operators who accounted for over 96% of the
Domino's Pizza stores as of the first quarter of 2013. The Domino's brand
generates over $2 billion in global digital sales per year. Its emphasis on
new technology has helped drive the introduction of Domino's ordering apps for
Kindle Fire, Android™ and iPhone® – which now cover approximately 80% of the
smartphone market. Continuing its focus on menu enhancement, Domino's
established itself as a player in the pan pizza market with the launch of its
Handmade Pan Pizza, featuring fresh, never-frozen dough, in October 2012.

Order - www.dominos.com
Mobile – http://mobile.dominos.com
Info - www.dominosbiz.com
Twitter - http://twitter.com/dominos
Facebook - http://www.facebook.com/Dominos

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:

This press release contains forward-looking statements. You can identify
forward-looking statements because they contain words such as "believes,"
"expects," "may," "will," "should," "seeks," "approximately," "intends,"
"plans," "estimates," or "anticipates" or similar expressions that concern our
strategy, plans or intentions. These forward-looking statements relating to
our anticipated profitability, estimates in same store sales growth, the
growth of our international business, ability to service our indebtedness, our
operating performance, trends in our business and other descriptions of future
events reflect the Company's expectations based upon currently available
information and data. However, actual results are subject to future risks and
uncertainties that could cause actual results to differ materially from those
expressed or implied by such forward-looking statements. The risks and
uncertainties that could cause actual results to differ materially include:
the level of our long-term and other indebtedness; uncertainties relating to
litigation; consumer preferences, spending patterns and demographic trends;
the effectiveness of our advertising, operations and promotional initiatives;
the strength of our brand in the markets in which we compete; our ability to
retain key personnel; new product and concept developments by us, and other
food-industry competitors; the ongoing level of profitability of our
franchisees; and our ability and that of our franchisees to open new
restaurants and keep existing restaurants in operation; changes in food
prices, particularly cheese, labor, utilities, insurance, employee benefits
and other operating costs; the impact that widespread illness or general
health concerns may have on our business and the economy of the countries
where we operate; severe weather conditions and natural disasters; changes in
our effective tax rate; changes in government legislation and regulations;
adequacy of our insurance coverage; costs related to future financings; our
ability and that of our franchisees to successfully operate in the current
credit environment; changes in the level of consumer spending given the
general economic conditions including interest rates, energy prices and weak
consumer confidence; availability of borrowings under our variable funding
notes and our letters of credit; and changes in accounting policies. Important
factors that could cause actual results to differ materially from our
expectations are more fully described in our other filings with the Securities
and Exchange Commission, including under the section headed "Risk Factors" in
our annual report on Form 10-K. Except as required by applicable securities
laws, we do not undertake to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.

TABLES TO FOLLOW



Domino's Pizza, Inc. and Subsidiaries

Condensed Consolidated Statements of Income
                                    Fiscal Quarter Ended
                                    March 24,   % of      March 25,   % of
                                                Total                 Total
                                    2013             2012   Revenues
                                                Revenues
(In thousands, except per share
data)
Revenues:
 Domestic Company-owned stores    $ 81,094             $ 77,615
 Domestic franchise               51,318                45,196
 Domestic supply chain            231,531               214,130
 International                    53,674                47,646
Total revenues                      417,617     100.0%    384,587     100.0%
Cost of sales:
 Domestic Company-owned stores    61,269                59,277
 Domestic supply chain            205,412               191,529
 International                    21,130                19,132
Total cost of sales                 287,811     68.9%     269,938     70.2%
Operating margin                    129,806     31.1%     114,649     29.8%
General and administrative          54,281      13.0%     47,754      12.4%
Income from operations              75,525      18.1%     66,895      17.4%
Interest expense, net               (20,903)    (5.0)%    (32,096)    (8.4)%
Income before provision for                                        

 income taxes                     54,622      13.1%     34,799      9.0%
Provision for income taxes          20,202      4.9%      14,057      3.6%
Net income                          $ 34,420   8.2%      $ 20,742   5.4%
Earnings per share:
 Common stock – diluted           $   0.59           $   0.35



Domino's Pizza, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets
                                                             March 24,    December
                                                             2013         30, 2012
(In
thousands)
Assets
Current assets:
 Cash and cash equivalents                      $        $     
                                                             75,081      54,813
 Restricted cash and cash equivalents               61,375       60,015
 Accounts receivable                              90,156       94,103
 Inventories                                        29,916       31,061
 Advertising fund assets, restricted                 33,284       37,917
 Other assets                                       18,745       28,358
Total current assets                                       308,557      306,267
Property, plant and equipment, net                         89,776       91,445
Other assets                                                78,222       80,485
Total assets                                               $         $    
                                                             476,555     478,197
Liabilities and stockholders' deficit
Current liabilities:
 Current portion of long-term debt                 $        $     
                                                             24,211      24,349
 Accounts payable                                 69,087       77,414
 Dividends payable                                  12,546       1,502
 Advertising fund liabilities                      33,284       37,917
 Other accrued liabilities                         84,457       88,316
Total current liabilities                                 223,585      229,498
Long-term liabilities:
 Long-term debt, less current portion            1,530,411    1,536,443
 Other accrued liabilities                       45,931       47,779
Total long-term liabilities                          1,576,342    1,584,222
Total stockholders' deficit                           (1,323,372)  (1,335,523)
Total liabilities and stockholders' deficit           $         $    
                                                             476,555     478,197



Domino's Pizza, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows
                                                Fiscal Quarter Ended
                                                March 24,       March 25,

                                                2013            2012
(In thousands)
Cash flows from operating activities:
 Net income                                    $   34,420   $    20,742
 Adjustments to reconcile net income to net

 cash flows provided by operating activities:
 Depreciation and amortization             5,631           5,216
 Gains on sale/disposal of assets          (88)            (37)
 Amortization of deferred financing costs, 1,431           9,824
debt discount and other
 Provision for deferred income taxes       4,568           4,821
 Non-cash compensation expense             5,616           4,290
 Tax impact from equity-based compensation (2,574)         (6,537)
 Other                                     (959)           (197)
 Changes in operating assets and           (396)           (17,905)
liabilities
Net cash provided by operating activities       47,649          20,217
Cash flows from investing activities:
 Capital expenditures                          (5,086)         (3,634)
 Proceeds from sale of assets                  1,228           508
 Changes in restricted cash                    (1,360)         45,341
 Other                                         882             237
Net cash provided by (used in) investing        (4,336)         42,452
activities
Cash flows from financing activities:
 Proceeds from issuance of long-term debt      -               1,575,000
 Repayments of long-term debt and capital      (6,170)         (1,447,127)
lease obligations
 Proceeds from exercise of stock options       1,528           1,202
 Tax impact from equity-based compensation     2,574           6,537
 Purchases of common stock                     (18,019)        -
 Tax payments for restricted stock upon        (2,656)         (1,863)
vesting
 Payments of common stock dividends            (327)           -
 Cash paid for financing costs                 -               (31,197)
Net cash provided by (used in) financing        (23,070)        102,552
activities
Effect of exchange rate changes on cash and     25              (783)
cash equivalents
Change in cash and cash equivalents             20,268          164,438
Cash and cash equivalents, at beginning of      54,813          50,292
period
Cash and cash equivalents, at end of period     $    75,081  $   214,730



SOURCE Domino's Pizza, Inc.

Website: http://www.dominos.com
Contact: Lynn Liddle, Executive Vice President, Communications, Investor
Relations and Legislative Affairs, (734) 930-3008
 
Press spacebar to pause and continue. Press esc to stop.