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Domino's Pizza Announces Second Quarter 2013 Financial Results

        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
 
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