Domino's Pizza Announces Third Quarter 2013 Financial Results

        Domino's Pizza Announces Third Quarter 2013 Financial Results

Delivers Strong Global Sales and EPS Growth

PR Newswire

ANN ARBOR, Mich., Oct. 15, 2013

ANN ARBOR, Mich., Oct. 15, 2013 /PRNewswire/ --Domino's Pizza, Inc. (NYSE:
DPZ),  the recognized world leader in pizza delivery, today announced results
for the third quarter of 2013, comprised of strong growth in same store sales,
global store count and EPS. Domestic same store sales grew 5.4% 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 5.0% during the quarter, marking the
79^th consecutive quarter of international same store sales growth. The
Company had global net store growth of 126 stores in the third quarter of
2013.

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

Diluted EPS was 53 cents for the quarter. On an as adjusted basis, diluted EPS
was 51 cents, an 18.6% increase over the third quarter of 2012. During the
quarter, the Company also repurchased and retired 351,085 shares of its common
stock for $20.8 million. Additionally, on October 9, 2013, the Board of
Directors declared a 20 cent per share quarterly dividend for shareholders of
record as of December 13, 2013 to be paid on December 30, 2013.

J. Patrick Doyle, Domino's President and Chief Executive Officer, said:
"Domino's Pizza is connecting with customers everywhere through technology,
quality, convenience and value. We continue to hold a leading presence in the
restaurant category as a brand with solid momentum both in the U.S. and around
the world, with dedicated franchisees who are focused on great pizzas, strong
customer service and consistent operations."

Third Quarter Highlights:



(dollars in         Third          Third          Three Fiscal  Three
millions, except    Quarter of     Quarter of     Quarters of   Fiscal
per share data)     2013           2012           2013          Quarters of
                                                                2012
Net income          $  30.6       $  26.0       $  98.3      $ 74.8
Weighted average    57,345,677     58,519,573     57,831,660    59,240,919
diluted shares
Diluted earnings
per share, as       $  0.53       $  0.44       $  1.70      $ 1.26
reported
Items affecting     $ (0.02)       $ (0.01)       $ (0.02)      $ 0.11
comparability*
Diluted earnings
per share, as       $  0.51       $  0.43       $  1.68      $ 1.38
adjusted*
* Refer to the Items Affecting Comparability section on page three for
additional details. Diluted earnings per share figures may not sum to the
total due to the rounding of each individual calculation.



  oRevenues were up 6.9% for the third quarter versus the prior year period,
    due primarily to higher supply chain revenues from increased store order
    counts, higher domestic franchise and Company-owned store revenues, and
    higher international revenues resulting from both same store sales and
    store count growth.
  oNet Income was up 17.9% for the third quarter versus the prior year
    period, driven by domestic and international same store sales growth,
    global store count growth and a lower effective tax rate, offset in part
    by higher general and administrative expenses and the negative impact of
    foreign currency exchange rates.
  oDiluted EPS was 53 cents for the quarter versus 44 cents in the prior year
    quarter. On an as-adjusted basis, diluted EPS was 51 cents for the quarter
    versus prior year adjusted EPS of 43 cents. The eight cent or 18.6%
    increase in adjusted EPS was 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.



                                                      Third       Third
                                                      Quarter of  Quarter of
                                                      2013        2012
Same store sales growth: (versus prior year period)
 Domestic Company-owned stores                       + 4.6%      + 0.5%
 Domestic franchise stores                           + 5.5%      + 3.6%
 Domestic stores                                     + 5.4%      + 3.3%
 International stores (excluding foreign currency    + 5.0%      + 5.0%
impact)
Global retail sales growth: (versus prior year
period)
 Domestic stores                                     + 6.2%     + 3.7%
 International stores                                + 8.5%     + 6.0%
 Total                                               + 7.4%     + 4.9%
Global retail sales growth: (versus prior year
period,

 excluding foreign currency impact)
 Domestic stores                                     + 6.2%     + 3.7%
 International stores                                +13.9%      +12.9%
 Total                                               +10.2%      + 8.4%



                      Domestic      Domestic   Total
                                    Franchise            International  Total
                      Company-      Stores     Domestic  Stores
                      owned Stores             Stores
Store counts:
 Store count at June 389           4,543      4,932     5,508          10,440
16, 2013
 Openings            1             11         12        124            136
 Closings            -             (5)        (5)       (5)            (10)
 Store count at      390           4,549      4,939     5,627          10,566
September 8, 2013
 Third quarter 2013  1             6          7         119            126
net change
 Trailing four       3             40         43        483            526
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 third 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 86152018. The webcast will also be archived
for 30 days on www.dominosbiz.com.

Share Repurchases

During the third quarter of 2013, the Company repurchased and retired 351,085
shares of its common stock under its open market share repurchase program for
approximately $20.8 million, or an average price of $59.34 per share, and
during the three fiscal quarters of 2013, the Company repurchased and retired
1,369,232 shares of common stock for a total of approximately $76.9 million,
or an average price of $56.16 per share. Additionally, subsequent to the third
quarter of 2013, the Company repurchased and retired 3,100 shares of its
common stock for approximately $0.2 million, or an average of $61.48 per
share. The Company has used approximately 62% of the total amount authorized
under its $200 million approved open market share repurchase program and
currently has approximately $75.3 million remaining under the program.

Dividends

On October 9, 2013, the Board of Directors declared a 20 cent per share
quarterly dividend for shareholders of record as of December 13, 2013, to be
paid on December 30, 2013.

Items Affecting Comparability

The Company's reported financial results for the third quarter and three
fiscal quarters of 2013 are not comparable to the reported financial results
for the equivalent periods 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 third quarter and three fiscal
quarters of 2013 as compared to the same periods 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 one cent in the third quarter of 2013 and four cents in the
three fiscal quarters of 2013.



                    Third Quarter                Three Fiscal Quarters


                                       Diluted                        Diluted
                    Pre-tax  After-tax  EPS      Pre-tax    After-tax  EPS
(in thousands,                          Impact                         Impact
except per share
data)
2013 items
affecting
comparability:
Tax benefit for                                                       
domestic dough      $   -  $ 1,358             $    -  $ 1,358
production (1)                          $ 0.02                        $ 0.02
Total of 2013 items $   -  $ 1,358    $ 0.02  $    -  $ 1,358    $ 0.02
2012 items
affecting
comparability:
Recapitalization
expenses:
 General and
administrative      $   -  $   -    $   -  $        $  (182)  $(0.00)
                                                 (293)
expenses (2)
 Additional
interest expense    -        -          -        (10,222)   (6,348)    (0.11)
(3)
Subtotal            -        -          -        (10,515)   (6,530)    (0.11)
Deferred tax asset
valuation           -        -          -        -          (868)      (0.01)

allowance (4)
Tax benefit for
increased tax basis -        735        0.01     -          735        0.01
in certain assets
(5)
Total of 2012 items $   -  $  735    $ 0.01  $(10,515)  $(6,663)   $(0.11)
(1) Represents additional tax benefit recorded for prior tax years in
connection with the Company revising its calculation for a deduction related
to its domestic dough production.
(2) 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.
(3) 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.
(4) 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.
(5) During the third quarter of 2012, a tax benefit of $0.7 million was
recorded to reflect an increased tax basis in certain assets due to the
issuance of final tax rules in the quarter.



Liquidity

As of September 8, 2013, the Company had approximately:

  o$32.1 million of unrestricted cash and cash equivalents;
  o$1.54 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 5.3% in the both the third quarter
of 2013 and the third quarter of 2012. Additionally, the Company invested
$20.3 million in capital expenditures during the three fiscal quarters of
2013, versus $14.3 million in the three 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 $84.3 million in the three fiscal quarters of 2013.



                                          Three Fiscal
(in thousands)                            Quarters

                                          of 2013
Net cash provided by operating activities $104,575
Capital expenditures                      (20,286)
Free cash flow                            $ 84,289



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
excluding foreign currency impacts, 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
10,500 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 third quarter of 2013,
Domino's had global retail sales of nearly $1.8 billion, comprised of $849
million in the U.S. and $935 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 third 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
iPhone®, Android™, Windows Phone 8 and Kindle Fire – 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
                               September 8, % of      September 9,    % of
                               2013         Total     2012            Total
                                            Revenues                  Revenues
(In thousands, except per
share data)
Revenues:
 Domestic Company-owned      $ 75,923              $  72,219
stores
 Domestic franchise          47,846                 44,039
 Domestic supply chain       226,315                213,474
 International               53,966                 48,345
Total revenues                 404,050      100.0%    378,077         100.0%
Cost of sales:
 Domestic Company-owned      58,662                 56,378
stores
 Domestic supply chain       203,004                191,326
 International               21,750                 18,966
Total cost of sales            283,416      70.1%     266,670         70.5%
Operating margin               120,634      29.9%     111,407         29.5%
General and administrative     53,858       13.3%     49,789          13.2%
Income from operations         66,776       16.5%     61,618          16.3%
Interest expense, net          (20,323)     (5.0)%    (20,649)        (5.5)%
Income before provision for                                        

 income taxes                46,453       11.5%     40,969          10.8%
Provision for income taxes     15,821       3.9%      14,993          3.9%
Net income                     $ 30,632    7.6%      $  25,976      6.9%
Earnings per share:
 Common stock – diluted      $   0.53            $    0.44
Dividends declared per share   $   0.20            $       -



Domino's Pizza, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
                                 Three Fiscal Quarters Ended
                                 September 8, % of      September 9,  % of
                                              Total                   Total
                                 2013                   2012
                                              Revenues                Revenues
(In thousands, except per share
data)
Revenues:
 Domestic Company-owned stores $ 235,526             $ 223,745
 Domestic franchise            147,330                133,521
 Domestic supply chain         691,154                636,903
 International                 161,666                144,620
Total revenues                   1,235,676    100.0%    1,138,789     100.0%
Cost of sales:
 Domestic Company-owned stores 179,466                171,325
 Domestic supply chain         615,736                569,476
 International                 64,047                 57,325
Total cost of sales              859,249      69.5%     798,126       70.1%
Operating margin                 376,427      30.5%     340,663       29.9%
General and administrative       160,286      13.0%     146,371       12.8%
Income from operations           216,141      17.5%     194,292       17.1%
Interest expense, net            (61,621)     (5.0)%    (73,411)      (6.5)%
Income before provision for                                        

 income taxes                  154,520      12.5%     120,881       10.6%
Provision for income taxes       56,198       4.5%      46,067        4.0%
Net income                       $ 98,322    8.0%      $  74,814   6.6%
Earnings per share:
 Common stock – diluted        $   1.70            $    1.26
Dividends declared per share     $   0.60            $    3.00



Domino's Pizza, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
                                         September 8, 2013  December 30, 2012
(In thousands)
Assets
Current assets:
    Cash and cash equivalents        $    32,079         $   54,813
    Restricted cash and cash                  63,288             60,015
    equivalents
    Accounts receivable                92,765             94,103
    Inventories                             30,282             31,061
    Advertising fund assets,                  54,068             37,917
    restricted
    Other assets                              29,928             28,358
Total current assets                        302,410            306,267
Property, plant and equipment, net            89,330             91,445
Other assets                                76,784             80,485
Total assets                           $    468,524        $   478,197
Liabilities and stockholders' deficit
Current liabilities:
    Current portion of long-term         $    24,140         $   24,349
    debt
    Accounts payable                       63,006             77,414
    Dividends payable                        11,694             1,502
    Advertising fund liabilities           54,068             37,917
    Other accrued liabilities                72,568             88,316
Total current liabilities                   225,476            229,498
Long-term liabilities:
    Long-term debt, less current              1,518,383          1,536,443
    portion
    Other accrued liabilities                46,840             47,779
Total long-term liabilities                  1,565,223          1,584,222
Total stockholders' deficit                  (1,322,175)        (1,335,523)
Total liabilities and stockholders'      $    468,524        $   478,197
deficit



Domino's Pizza, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
                                                  Three Fiscal Quarters Ended
                                                  September 8,  September 9,

                                                  2013          2012
(In thousands)
Cash flows from operating activities:
 Net income                                      $   98,322  $    74,814
 Adjustments to reconcile net income to net

 cash flows provided by operating activities:
 Depreciation and amortization               17,480        15,852
 Gains on sale/disposal of assets            (71)          (87)
 Amortization of deferred financing costs    4,264         11,942
and other
 Provision for deferred income taxes         6,031         5,981
 Non-cash compensation expense               14,866        12,183
 Tax impact from equity-based compensation   (12,025)      (9,622)
 Other                                       (1,283)       (84)
 Changes in operating assets and liabilities (23,009)      (9,727)
Net cash provided by operating activities         104,575       101,252
Cash flows from investing activities:
 Capital expenditures                            (20,286)      (14,301)
 Proceeds from sale of assets                    3,184         2,262
 Changes in restricted cash                      (3,273)       31,694
 Other                                           1,539         1,155
Net cash provided by (used in) investing          (18,836)      20,810
activities
Cash flows from financing activities:
 Proceeds from issuance of long-term debt        -             1,575,000
 Repayments of long-term debt and capital lease  (18,268)      (1,459,322)
obligations
 Proceeds from exercise of stock options         5,804         3,063
 Tax impact from equity-based compensation       12,025        9,622
 Purchases of common stock                       (76,892)      (42,719)
 Tax payments for restricted stock upon vesting  (7,888)       (5,750)
 Payments of common stock dividends and          (23,223)      (185,475)
equivalents
 Cash paid for financing costs                   -             (31,723)
Net cash used in financing activities             (108,442)     (137,304)
Effect of exchange rate changes on cash and cash  (31)          (500)
equivalents
Change in cash and cash equivalents               (22,734)      (15,742)
Cash and cash equivalents, at beginning of period 54,813        50,292
Cash and cash equivalents, at end of period       $   32,079  $    34,550



SOURCE Domino's Pizza, Inc.

Website: http://www.dominosbiz.com
Contact: Lynn Liddle, Executive Vice President, Communications, Investor
Relations and Legislative Affairs, (734) 930-3008