Domino's Pizza Announces Second Quarter 2013 Financial Results Continued Strong Global Sales and EPS Growth PR Newswire ANN ARBOR, Mich., July 23, 2013 ANN ARBOR, Mich., July 23, 2013 /PRNewswire/ --Domino's Pizza, Inc. (NYSE: DPZ), the recognized world leader in pizza delivery, today announced results for the second quarter of 2013, comprised of strong same store sales, EPS growth and positive global store count growth. Domestic same store sales grew 6.7% 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 5.8% during the quarter, marking the 78^th consecutive quarter of international same store sales growth. The Company had global net store growth of 110 stores in the second quarter of 2013. (Logo: http://photos.prnewswire.com/prnh/20120814/DE55948LOGO-b ) Second quarter diluted EPS was 57 cents, up 21.3% over the prior year quarter. During the quarter, the Company also repurchased and retired 655,248 shares of its common stock for $38.0 million. Additionally, on July 17, 2013, the Board of Directors declared a 20 cent per share quarterly dividend for shareholders of record as of September 13, 2013 to be paid on September 30, 2013. J. Patrick Doyle, Domino's President and Chief Executive Officer, said: "Our team is very proud to be driving the continued transformation of this 53-year-old brand. We've not just endured – we've grown and outperformed, and made Domino's a frequent and favorite choice for our customers. Our franchisees around the world are running great and successful businesses. This quarter's results were more evidence for us that we're on the right track with our strategic plan and execution. Our company's valuation has reflected this positive performance and rewarded our shareholders. This all just makes us more energized to keep pushing forward." Second Quarter Highlights: Second Second Two Fiscal Two Fiscal (dollars in millions, except per share data) Quarter of Quarter of Quarters of Quarters of 2013 2012 2013 2012 Net income $ 33.3 $ 28.1 $ 67.7 $ 48.8 Weighted average diluted 57,960,232 59,449,449 58,091,126 59,565,656 shares Diluted earnings per share, $ 0.57 $ 0.47 $ 1.17 $ 0.82 as reported Items affecting $ - $ - $ - $ 0.12 comparability* Diluted earnings per share, $ 0.57 $ 0.47 $ 1.17 $ 0.94 as adjusted *Refer to the Items Affecting Comparability section on page three for additional details. oRevenues were up 10.1% for the second quarter versus the prior year period, due primarily to higher domestic supply chain revenues attributable to volumes from increased order counts combined with higher cheese and other commodity prices, higher domestic franchise and Company-owned store revenues, and higher international revenues attributable to same store sales and store count growth. oNet Income was up 18.4% for the second quarter versus the prior year period, driven by domestic and international same store sales growth, international store count growth and higher supply chain margins. oDiluted EPS was 57 cents for the second quarter versus 47 cents in the prior year quarter – an increase of ten cents, or 21.3%. This increase was due to higher net income and lower weighted average diluted shares outstanding. 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. Second Second Quarter of Quarter of 2013 2012 Same store sales growth: (versus prior year period) Domestic Company-owned stores + 5.7% + 0.3% Domestic franchise stores + 6.8% + 1.9% Domestic stores + 6.7% + 1.7% International stores (constant dollar basis) + 5.8% + 5.7% Global retail sales growth: (versus prior year period) Domestic stores + 7.3% + 1.9% International stores +11.2% + 6.7% Total + 9.3% + 4.3% Global retail sales growth: (versus prior year period, excluding foreign currency impact) Domestic stores + 7.3% + 1.9% International stores +13.3% +13.8% Total +10.4% + 7.9% Domestic Domestic Total Company- Franchise Domestic International owned Stores Stores Stores Stores Total Store counts: Store count at 388 4,535 4,923 5,407 10,330 March 24, 2013 Openings 1 19 20 116 136 Closings - (11) (11) (15) (26) Store count at June 389 4,543 4,932 5,508 10,440 16, 2013 Second quarter 2013 1 8 9 101 110 net change Trailing four 2 29 31 485 516 quarters 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 second 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 86150325. The webcast will also be archived for 30 days on www.dominosbiz.com. Share Repurchases During the second quarter of 2013, the Company repurchased and retired 655,248 shares of its common stock under its open market share repurchase program for approximately $38.0 million, or an average price of $58.05 per share. Additionally, subsequent to the second quarter of 2013, the Company repurchased and retired 189,185 shares of its common stock for approximately $10.9 million, or an average of $57.71 per share. The Company has used approximately 57% of the total amount authorized under its $200 million approved open market share repurchase program and currently has approximately $85.4 million remaining under the program. Dividends During the two fiscal quarters of 2013, the Company paid approximately $11.5 million of common stock dividends. On July 17, 2013, the Board of Directors declared a 20 cent per share quarterly dividend for shareholders of record as of September 13, 2013, to be paid on September 30, 2013. Items Affecting Comparability The Company's reported financial results for the two fiscal quarters of 2013 are not comparable to the reported financial results for the equivalent period in 2012 due to the refinancing that occurred in the first quarter of 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 two fiscal quarters 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 second quarter of 2013 and approximately three cents in the two fiscal quarters of 2013. Two Fiscal Quarters Diluted EPS (in thousands, except per share data) Pre-tax After-tax Impact 2012 items affecting comparability: Recapitalization expenses: General and administrative expenses (1) $ (293) $ (182) $(0.00) Additional interest expense (2) (10,222) (6,348) (0.11) Subtotal (10,515) (6,530) (0.11) Deferred tax asset valuation allowance (3) - (868) (0.01) 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 June 16, 2013, the Company had approximately: o$40.8 million of unrestricted cash and cash equivalents; o$1.55 billion in total debt; and o$62.3 million of available borrowings under its $100.0 million variable funding notes, net of letters of credit issued of $37.7 million. The Company's cash borrowing rate averaged 5.4% for both the second quarter of 2013 and the second quarter of 2012. Additionally, the Company invested $11.6 million in capital expenditures during the two fiscal quarters of 2013, versus $8.0 million in the two fiscal quarters of 2012. Free cash flow, as reconciled below to cash flows from operations as determined under generally accepted accounting principles (GAAP), was approximately $55.3 million in the two fiscal quarters of 2013. Two Fiscal (in thousands) Quarters of 2013 Net cash provided by operating activities $66,840 Capital expenditures (11,587) Free cash flow $55,253 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 10,400 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 second quarter of 2013, Domino's had global retail sales of over $1.8 billion, comprised of $868 million in the U.S. and $961 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 second 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™, iPhone® and Windows Phone 8 – which now cover nearly 95% of the U.S. 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 For all future earnings releases and other significant webcasts and announcements we plan to continue our practice of publishing press releases. However, for regular investor conferences with no updates from management, we will no longer be sending out a press release to notify the public of the webcast. Instead, please visit our Investor Relations website at www.dominosbiz.com to view a schedule of upcoming conference webcasts. 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 future cash flows, our operating performance, trends in our business and other descriptions of future events reflect the Company's expectations based upon currently available information and data. 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 foreign currency exchange rates; 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. These forward-looking statements speak only as of the date of this press release, and you should not rely on such statements as representing the views of the Company as of any subsequent date. 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 (Unaudited) Fiscal Quarter Ended % of % of June 16, June 17, Total Total 2013 2012 Revenues Revenues (In thousands, except per share data) Revenues: Domestic Company-owned stores $ 78,509 $ 73,911 Domestic franchise 48,167 44,286 Domestic supply chain 233,307 209,297 International 54,026 48,630 Total revenues 414,009 100.0% 376,124 100.0% Cost of sales: Domestic Company-owned stores 59,536 55,669 Domestic supply chain 207,319 186,621 International 21,167 19,227 Total cost of sales 288,022 69.6% 261,517 69.5% Operating margin 125,987 30.4% 114,607 30.5% General and administrative 52,146 12.6% 48,829 13.0% Income from operations 73,841 17.8% 65,778 17.5% Interest expense, net (20,396) (4.9)% (20,665) (5.5)% Income before provision for income taxes 53,445 12.9% 45,113 12.0% Provision for income taxes 20,175 4.9% 17,018 4.5% Net income $ 33,270 8.0% $ 28,095 7.5% Earnings per share: Common stock – diluted $ 0.57 $ 0.47 Dividends declared per share $ 0.20 $ - Domino's Pizza, Inc. and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) Two Fiscal Quarters Ended % of % of June 16, June 17, Total Total 2013 2012 Revenues Revenues (In thousands, except per share data) Revenues: Domestic Company-owned stores $ 159,603 $ 151,526 Domestic franchise 99,485 89,482 Domestic supply chain 464,839 423,428 International 107,700 96,276 Total revenues 831,627 100.0% 760,712 100.0% Cost of sales: Domestic Company-owned stores 120,804 114,947 Domestic supply chain 412,732 378,150 International 42,298 38,359 Total cost of sales 575,834 69.2% 531,456 69.9% Operating margin 255,793 30.8% 229,256 30.1% General and administrative 106,427 12.8% 96,583 12.7% Income from operations 149,366 18.0% 132,673 17.4% Interest expense, net (41,299) (5.0)% (52,761) (6.9)% Income before provision for income taxes 108,067 13.0% 79,912 10.5% Provision for income taxes 40,377 4.9% 31,075 4.1% Net income $ 67,690 8.1% $ 48,837 6.4% Earnings per share: Common stock – diluted $ 1.17 $ 0.82 Dividends declared per share $ 0.40 $ 3.00 Domino's Pizza, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) June 16, 2013 December 30, 2012 (In thousands) Assets Current assets: Cash and cash equivalents $ 40,838 $ 54,813 Restricted cash and cash equivalents 59,712 60,015 Accounts receivable 93,987 94,103 Inventories 27,996 31,061 Advertising fund assets, restricted 48,049 37,917 Other assets 31,954 28,358 Total current assets 302,536 306,267 Property, plant and equipment, net 88,551 91,445 Other assets 77,712 80,485 Total assets $ 468,799 $ 478,197 Liabilities and stockholders' deficit Current liabilities: Current portion of long-term debt $ 24,153 $ 24,349 Accounts payable 63,875 77,414 Dividends payable 12,214 1,502 Advertising fund liabilities 48,049 37,917 Other accrued liabilities 80,521 88,316 Total current liabilities 228,812 229,498 Long-term liabilities: Long-term debt, less current portion 1,524,420 1,536,443 Other accrued liabilities 44,358 47,779 Total long-term liabilities 1,568,778 1,584,222 Total stockholders' deficit (1,328,791) (1,335,523) Total liabilities and stockholders' deficit $ 468,799 $ 478,197 Domino's Pizza, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) Two Fiscal Quarters Ended June 16, June 17, 2013 2012 (In thousands) Cash flows from operating activities: Net income $ 67,690 $ 48,837 Adjustments to reconcile net income to net cash flows provided by operating activities: Depreciation and amortization 11,407 10,441 Gains on sale/disposal of assets (285) (148) Amortization of deferred financing costs 2,853 10,489 and other Provision for deferred income taxes 2,557 4,040 Non-cash compensation expense 10,240 8,288 Tax impact from equity-based compensation (6,043) (7,265) Other (1,090) 232 Changes in operating assets and liabilities (20,489) (16,804) Net cash provided by operating activities 66,840 58,110 Cash flows from investing activities: Capital expenditures (11,587) (8,025) Proceeds from sale of assets 2,077 1,172 Changes in restricted cash 303 32,981 Other 1,266 1,157 Net cash provided by (used in) investing (7,941) 27,285 activities Cash flows from financing activities: Proceeds from issuance of long-term debt - 1,575,000 Repayments of long-term debt and capital lease (12,219) (1,453,182) obligations Proceeds from exercise of stock options 3,738 2,088 Tax impact from equity-based compensation 6,043 7,265 Purchases of common stock (56,057) (36,867) Tax payments for restricted stock upon vesting (2,845) (1,996) Payments of common stock dividends and (11,454) (184,858) equivalents Cash paid for financing costs - (31,613) Net cash used in financing activities (72,794) (124,163) Effect of exchange rate changes on cash and cash (80) (774) equivalents Change in cash and cash equivalents (13,975) (39,542) Cash and cash equivalents, at beginning of period 54,813 50,292 Cash and cash equivalents, at end of period $ 40,838 $ 10,750 SOURCE Domino's Pizza, Inc. Website: http://www.dominos.com Website: http://www.dominosbiz.com Contact: Lynn Liddle, Executive Vice President, Communications, Investor Relations and Legislative Affairs, (734) 930-3008
Domino's Pizza Announces Second Quarter 2013 Financial Results
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