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Domino's Pizza® Announces First Quarter 2019 Financial Results
Global retail sales growth of 4.6%
U.S. same store sales growth of 3.9%
International same store sales growth of 1.8%
Global net store growth of 200
Diluted EPS up 10.0% to $2.20

ANN ARBOR, Mich., April 24, 2019 /PRNewswire/ -- Domino's Pizza, Inc. (NYSE: DPZ), the largest pizza company in the world based on global retail sales, announced results for the first quarter, comprised of healthy growth in global retail sales and earnings per share. Global retail sales increased 4.6% in the first quarter, or 8.5% without the negative impact of changes in foreign currency exchange rates. U.S. same store sales grew 3.9% during the quarter versus the year-ago period, continuing the positive sales momentum in the Company's U.S. business. The international division also posted positive results, with same store sales growth of 1.8% during the quarter. The first quarter marked the 101st consecutive quarter of international same store sales growth and the 32nd consecutive quarter of U.S. same store sales growth. The Company had first quarter global net store growth of 200 stores, comprised of 27 net new U.S. stores and 173 net new international stores. Globally, the Company opened its 16,000th store during the first quarter. First quarter diluted EPS was $2.20, up 10.0% over the prior year quarter.  

Domino's (PRNewsFoto/Domino's Pizza)

On April 23, 2019, the Board of Directors declared a $0.65 per share quarterly dividend for shareholders of record as of June 14, 2019 to be paid on June 28, 2019.

"It was a good quarter for our U.S. business, and I am very pleased with our balanced retail sales growth, driven by a healthy combination of solid same-store sales and unit growth," said Ritch Allison, Domino's Chief Executive Officer. 

"We remain focused on improving international comps, but I am encouraged by the strong unit growth in the first quarter – and remain confident in the fundamentals related to market share, retail sales growth and unit economics within this terrific segment of our business."

First Quarter 2019 Highlights:

 (dollars in millions, except per share data)


First

Quarter of

2019



First

Quarter of

2018


Net income


$

92.7



$

88.8


Weighted average diluted shares



42,202,429




44,377,509


Diluted earnings per share


$

2.20



$

2.00


  • Revenues increased $50.6 million, or 6.4%, in the first quarter of 2019. The increase in revenues was due primarily to higher supply chain volumes resulting from higher retail sales. Higher same store sales and store count growth in both our U.S. and international markets also contributed to the increase in revenues. The increase in international franchise revenues was partially offset by the negative impact of changes in foreign currency exchange rates.
  • Net Income increased $3.9 million, or 4.3%, in the first quarter of 2019. This increase was primarily driven by higher royalty revenues from U.S. and international franchised stores and higher supply chain volumes. These increases were partially offset by higher general and administrative expenses due to our continued investments in technological initiatives and investments in other areas. Higher net interest expense primarily due to a higher average debt balance as compared to the prior year also negatively impacted net income.
  • Diluted EPS was $2.20 for the first quarter of 2019 versus $2.00 in the prior year quarter. This represents a $0.20 or 10.0% increase over the prior year quarter. This increase was driven by higher net income, as well as lower diluted share count, primarily as a result of the share repurchases made during the trailing four quarters.

The table below outlines certain statistical measures utilized by the Company to analyze its performance. Refer to the Comments on Regulation G section on pages three and four for additional details.



First

Quarter of

2019



First

Quarter of

2018


Same store sales growth: (versus prior year period)









U.S. Company-owned stores



+ 2.1

%



+ 6.4

%

U.S. franchise stores



+ 4.1

%



+ 8.4

%

U.S. stores



+ 3.9

%



+ 8.3

%

International stores (excluding foreign currency impact)



+ 1.8

%



+ 5.0

%










Global retail sales growth: (versus prior year period)









U.S. stores



+ 7.9

%



+12.7

%

International stores



+ 1.5

%



+20.8

%

Total



+ 4.6

%



+16.8

%










Global retail sales growth: (versus prior year period,

   excluding foreign currency impact)









U.S. stores



+ 7.9

%



+12.7

%

International stores



+ 9.1

%



+13.4

%

Total



+ 8.5

%



+13.1

%

 

 



U.S. Company-

owned Stores



U.S. Franchise

Stores



Total

U.S. Stores



International

Stores



Total


Store counts:





















Store count at December 30, 2018



390




5,486




5,876




10,038




15,914


Openings



2




29




31




183




214


Closings






(4)




(4)




(10)




(14)


Store count at March 24, 2019



392




5,511




5,903




10,211




16,114


First quarter 2019 net store growth



2




25




27




173




200


Trailing four quarters net store growth (1)



9




245




254




894




1,148



(1)

Trailing four quarters net store growth does not include the effect of transfers. In the second and third fiscal quarters of 2018, the Company sold a total of 14 U.S. Company-owned stores to U.S. franchisees.

 

Conference Call Information

The Company will file its quarterly report on Form 10-Q this morning. As previously announced, Domino's Pizza, Inc. will hold a conference call today at 10 a.m. (Eastern) to review its first quarter 2019 financial results. The call can be accessed by dialing (888) 400-9978 (U.S./Canada) or (706) 634-4947 (International). Ask for the Domino's Pizza conference call. The call will also be webcast at biz.dominos.com. The webcast will also be archived for one year on biz.dominos.com.

Share Repurchases

During the first quarter of 2019, the Company repurchased and retired 33,549 shares of its common stock under its Board of Directors-approved open market share repurchase program for approximately $8.1 million, or an average price of $242.74 per share. As of March 24, 2019, the end of the first quarter, the Company's total remaining authorized amount for share repurchases was approximately $150.6 million.

Liquidity

As of March 24, 2019, the Company had approximately:

  • $83.1 million of unrestricted cash and cash equivalents;
  • $3.48 billion in total debt; and
  • $101.9 million of available borrowings under its $175.0 million variable funding notes, net of letters of credit issued of $48.1 million and $25.0 million of borrowings under its variable funding notes.

The Company invested $12.2 million in capital expenditures in the first quarter of 2019, versus $13.6 million in the first quarter of 2018. Free cash flow, as reconciled below to net cash provided by operating activities, as determined under accounting principles generally accepted in the United States of America ("GAAP"), was approximately $84.8 million in the first quarter of 2019.

 (in thousands)


First

Quarter Of

2019


Net cash provided by operating activities


$

96,998


Capital expenditures



(12,222)


Free cash flow


$

84,776


 

Adoption of New Accounting Guidance

The Company adopted Accounting Standards Codification 842, Leases ("ASC 842") during the first quarter of 2019. ASC 842 requires a lessee to recognize assets and liabilities on the balance sheet for leases with lease terms greater than 12 months.

The adoption of ASC 842 had a material impact on the Company's assets and liabilities due to the recognition of operating lease right-of-use assets and lease liabilities on its condensed consolidated balance sheet. However, it did not have a material effect on the Company's condensed consolidated statement of income and condensed consolidated statement of cash flows.

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, including free cash flow metrics and measures related to items affecting comparability between fiscal quarters and other fiscal periods. 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 "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 and advertising fees 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, supply chain revenues are directly impacted by changes in 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," which is 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 U.S. same store sales growth. Changes in international same store sales are reported excluding foreign currency impacts, which reflect changes in international local currency sales.

The Company uses "Free cash flow," which is 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 or paying dividends.

About Domino's Pizza®

Founded in 1960, Domino's Pizza is the largest pizza company in the world based on retail sales, with a significant business in both delivery and carryout pizza. It ranks among the world's top public restaurant brands with a global enterprise of more than 16,100 stores in over 85 markets. Domino's had global retail sales of over $13.5 billion in 2018, with nearly $6.6 billion in the U.S. and more than $6.9 billion internationally. In the first quarter of 2019, Domino's had global retail sales of nearly $3.3 billion, with over $1.6 billion in the U.S. and nearly $1.7 billion internationally. Its system is comprised of independent franchise owners who accounted for 98% of Domino's stores as of the first quarter of 2019. Emphasis on technology innovation helped Domino's achieve more than half of all global retail sales in 2018 from digital channels, primarily online ordering and mobile applications. In the U.S., Domino's generates over 65% of sales via digital channels and has produced several innovative ordering platforms, including Google Home, Facebook Messenger, Apple Watch, Amazon Echo, Twitter and text message using a pizza emoji. In late 2017, Domino's began an industry-first test of self-driving vehicle delivery with Ford Motor Company – and in April 2018, launched Domino's HotSpots®, featuring over 200,000 non-traditional delivery locations including parks, beaches, local landmarks and other unique gathering spots.

Order – dominos.com 
AnyWare Ordering – anyware.dominos.com 
Company Info – biz.dominos.com 
Twitter – twitter.com/dominos 
Facebookfacebook.com/dominos 
Instagram – instagram.com/dominos 
YouTubeyoutube.com/dominos

Please visit our Investor Relations website at biz.dominos.com to view news, announcements, earnings releases and conference webcasts.

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

This press release contains various forward-looking statements about the Company within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act") that are based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. The following cautionary statements are being made pursuant to the provisions of the Act and with the intention of obtaining the benefits of the "safe harbor" provisions of the Act. You can identify forward-looking statements by the use of words such as "anticipates," "believes," "could," "should," "estimates," "expects," "intends," "may," "will," "plans," "predicts," "projects," "seeks," "approximately," "potential," "outlook" and similar terms and phrases that concern our strategy, plans or intentions, including references to assumptions. These forward-looking statements address various matters including information concerning future results of operations and business strategy, our anticipated profitability, estimates in same store sales growth, the growth of our U.S. and 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. While we believe these expectations and projections are based on reasonable assumptions, such forward-looking statements are inherently subject to risks, uncertainties and assumptions. 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. Actual results may differ materially from those expressed or implied in the forward-looking statements as a result of various factors, including but not limited to: our substantial increased indebtedness as a result of our recapitalization transactions and our ability to incur additional indebtedness or refinance or renegotiate key terms of that indebtedness in the future; the impact a downgrade in our credit rating may have on our business, financial condition and results of operations; our future financial performance and our ability to pay principal and interest on our indebtedness; the effectiveness of our advertising, operations and promotional initiatives; the strength of our brand, including our ability to compete in the U.S. and internationally in our intensely competitive industry; the impact of social media and other consumer-oriented technologies on our business, brand and reputation; new product, digital ordering and concept developments by us, and other food-industry competitors; our ability to maintain good relationships with our franchisees and their ongoing level of profitability; our ability to successfully implement cost-saving strategies; our ability and that of our franchisees to successfully operate in the current and future credit environment; changes in the level of consumer spending given general economic conditions, including interest rates, energy prices and consumer confidence; our ability and that of our franchisees to open new restaurants and keep existing restaurants in operation; changes in operating expenses resulting from changes in prices of food (particularly cheese), fuel and other commodity costs, labor, utilities, insurance, employee benefits and other operating costs; the impact that widespread illness or general health concerns, severe weather conditions and natural disasters may have on our business and the economies of the countries where we operate; changes in foreign currency exchange rates; our ability to retain or replace our executive officers and other key members of management and our ability to adequately staff our stores and supply chain centers with qualified personnel; our ability to find and/or retain suitable real estate for our stores and supply chain centers; changes in government legislation and regulations, including changes in laws and regulations regarding information privacy and consumer protection; adverse legal judgments or settlements; food-borne illness or contamination of products; data breaches, power loss, technological failures, user error or other cyber risks; the effect of war, terrorism or catastrophic events; our ability to pay dividends and repurchase shares; changes in consumer preferences, spending and traffic patterns and demographic trends; changes in accounting policies; and adequacy of our insurance coverage. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this press release might not occur.  All forward-looking statements speak only as of the date of this press release and should be evaluated with an understanding of their inherent uncertainty. Except as required under federal securities laws and the rules and regulations of the Securities and Exchange Commission, or other applicable law, we will not undertake, and specifically disclaim, any obligation to publicly update or revise any forward-looking statements to reflect events or circumstances arising after the date of this press release, whether as a result of new information, future events or otherwise.  You are cautioned not to place undue reliance on the forward-looking statements included in this press release or that may be made elsewhere from time to time by, or on behalf of, us. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.

TABLES TO FOLLOW

Domino's Pizza, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(Unaudited)




Fiscal Quarter Ended




March 24,

2019



% of

Total

Revenues



March 25,

2018



% of

Total

Revenues


(In thousands, except per share data)

















Revenues:

















U.S. Company-owned stores


$

123,450







$

121,186






U.S. franchise royalties and fees



96,708








89,490






Supply chain



472,100








440,063






International franchise royalties and fees



54,584








52,421






U.S. franchise advertising



89,121








82,211






Total revenues



835,963




100.0

%



785,371




100.0

%

Cost of sales:

















U.S. Company-owned stores



95,540








93,038






Supply chain



418,134








392,468






Total cost of sales



513,674




61.4

%



485,506




61.8

%

Operating margin



322,289




38.6

%



299,865




38.2

%

General and administrative



89,664




10.7

%



84,178




10.7

%

U.S. franchise advertising



89,121




10.7

%



82,211




10.5

%

Income from operations



143,504




17.2

%



133,476




17.0

%

Interest expense, net



(34,361)




(4.1)

%



(29,806)




(3.8)

%

Income before provision for income taxes



109,143




13.1

%



103,670




13.2

%

Provision for income taxes



16,493




2.0

%



14,843




1.9

%

Net income


$

92,650




11.1

%


$

88,827




11.3

%

Earnings per share:

















Common stock – diluted


$

2.20







$

2.00






 

 

Domino's Pizza, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)




March 24,

2019



December 30,

2018


(In thousands)









Assets









Current assets:









Cash and cash equivalents


$

83,114



$

25,438


Restricted cash and cash equivalents



150,055




166,993


Accounts receivable, net



194,064




190,091


Inventories



45,668




45,975


Prepaid expenses and other



19,544




25,710


Advertising fund assets, restricted



98,098




112,744


Total current assets



590,543




566,951


Property, plant and equipment, net



227,867




234,939


Operating lease right-of-use assets



222,005





Other assets



107,860




105,495


Total assets


$

1,148,275



$

907,385


Liabilities and stockholders' deficit









Current liabilities:









Current portion of long-term debt


$

35,909



$

35,893


Accounts payable



84,888




92,546


Advertising fund liabilities



93,040




107,150


Other accrued liabilities



198,176




144,154


Total current liabilities



412,013




379,743


Long-term liabilities:









Long-term debt, less current portion



3,447,819




3,495,691


Operating lease liabilities



198,508





Other accrued liabilities



65,100




71,872


Total long-term liabilities



3,711,427




3,567,563


Total stockholders' deficit



(2,975,165)




(3,039,921)


Total liabilities and stockholders' deficit


$

1,148,275



$

907,385


 

 

Domino's Pizza, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)




Fiscal Quarter Ended




March 24,

2019



March 25,

2018


(In thousands)









Cash flows from operating activities:









Net income


$

92,650



$

88,827


Adjustments to reconcile net income to net cash provided by operating activities:









Depreciation and amortization



13,790




11,069


Loss on sale/disposal of assets



149




365


Amortization of debt issuance costs



1,101




1,177


Provision for deferred income taxes



1,467




566


Non-cash compensation expense



4,608




6,063


Excess tax benefits from equity-based compensation



(8,663)




(8,410)


Other



94




(57)


Changes in operating assets and liabilities



1,974




(15,405)


Changes in advertising fund assets and liabilities, restricted



(10,172)




(519)


Net cash provided by operating activities



96,998




83,676


Cash flows from investing activities:









Capital expenditures



(12,222)




(13,647)


Maturities of advertising fund investments, restricted






4,007


Other



262




(499)


Net cash used in investing activities



(11,960)




(10,139)


Cash flows from financing activities:









Repayments of long-term debt and finance lease obligations



(48,968)




(8,078)


Proceeds from exercise of stock options



4,537




3,718


Purchases of common stock



(8,144)




(101,084)


Tax payments for restricted stock upon vesting



(2,467)




(2,299)


Payments of common stock dividends and equivalents



(90)




(79)


Net cash used in financing activities



(55,132)




(107,822)


Effect of exchange rate changes on cash



124




48


Change in cash and cash equivalents, restricted cash and

   cash equivalents


$

30,030



$

(34,237)











Cash and cash equivalents, beginning of period



25,438




35,768


Restricted cash and cash equivalents, beginning of period



166,993




191,762


Cash and cash equivalents included in advertising fund assets, restricted,

   beginning of period



44,988




27,316


Cash and cash equivalents, restricted cash and cash equivalents and

   cash and cash equivalents included in advertising fund assets,  

   restricted, beginning of period


$

237,419



$

254,846











Cash and cash equivalents, end of period



83,114




44,609


Restricted cash and cash equivalents, end of period



150,055




145,186


Cash and cash equivalents included in advertising fund assets, restricted,

   end of period



34,280




30,814


Cash and cash equivalents, restricted cash and cash equivalents and

   cash and cash equivalents included in advertising fund assets,

   restricted, end of period


$

267,449



$

220,609


 

 

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SOURCE Domino's Pizza

Tim McIntyre, Executive Vice President, Communication, Investor Relations and Legislative Affairs, (734) 930-3563