Domino’s Pizza Announces First Quarter 2016 Financial Results

ANN ARBOR, Mich., April 28, 2016 (hospitalitybusinessnews.com) — Domino’s Pizza, Inc. , the recognized world leader in pizza delivery, today announced results for the first quarter of 2016, comprised of growth in same store sales, global store counts and earnings per share. Domestic same store sales grew 6.4% during the quarter versus the year-ago period, continuing the 20-quarter positive sales momentum in the U.S. business. The international division also posted strong results with quarterly same store sales growth of 7.9%, marking the 89th consecutive quarter of international same store sales growth. The Company had global net store growth of 162 stores in the quarter, and 953 net new stores on a trailing thirteen period basis.

Diluted EPS was 89 cents for the first quarter, which was up 9.9% over the Company’s reported EPS in the prior year quarter. During the quarter, the Company received and retired 456,936 shares of its common stock upon the completion of its previously announced accelerated share repurchase (ASR) program. The Board of Directors also declared a 38-cent per share quarterly dividend for shareholders of record as of June 15, 2016, to be paid on June 30, 2016.

J. Patrick Doyle, Domino’s President and Chief Executive Officer, said: “We started 2016 with yet another strong quarter of growth for both our international and domestic operations. Business remains robust thanks to our tremendous fundamentals and brand momentum.”

First Quarter Highlights:

(dollars in millions, except per share data)

First

Quarter of

2016

First

Quarter of

2015

Net income

$

45.5

$

46.3

Weighted average diluted shares

51,230,604

57,013,552

Diluted earnings per share

$

0.89

$

0.81

  • Revenues were up 7.4% for the first quarter versus the prior year period, due primarily to higher supply chain revenues from increased volumes. Increased domestic franchise and Company-owned store revenues and higher international revenues resulting from both same store sales and store count growth also contributed to this increase. The negative impact of foreign currency exchange rates partially offset this increase.
  • Net Income was down 1.8% for the first quarter versus the prior year period, due to higher interest expense as a result of the Company’s 2015 recapitalization, as well as the negative impact of foreign currency exchange rates. Higher domestic and international same store sales growth, global store count growth and higher supply chain volumes partially offset this decrease.
  • Diluted EPS was 89 cents for the first quarter versus 81 cents in the prior year quarter. This represents an 8-cent or 9.9% increase over the prior year quarter. This increase was driven by the aforementioned operating results as well as lower diluted share counts, primarily as a result of the ASR program.

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 three for additional details.

First

Quarter of

2016

First

Quarter of

2015

Same store sales growth: (versus prior year period)

Domestic Company-owned stores

+ 4.0

%

+ 15.9

%

Domestic franchise stores

+ 6.6

%

+ 14.4

%

Domestic stores

+ 6.4

%

+ 14.5

%

International stores (excluding foreign currency impact)

+ 7.9

%

+ 7.8

%

Global retail sales growth: (versus prior year period)

Domestic stores

+ 7.9

%

+ 16.5

%

International stores

+ 6.7

%

+ 5.0

%

Total

+ 7.3

%

+ 10.4

%

Global retail sales growth: (versus prior year period,

   excluding foreign currency impact)

Domestic stores

+ 7.9

%

+ 16.5

%

International stores

+ 15.4

%

+ 16.4

%

Total

+ 11.7

%

+ 16.4

%

Domestic

Company-

owned Stores

Domestic

Franchise

Stores

Total

Domestic

Stores

International

Stores

Total

Store counts:

Store count at January 3, 2016

384

4,816

5,200

7,330

12,530

Openings

1

17

18

163

181

Closings

(2)

(2)

(17)

(19)

Store count at March 27, 2016

385

4,831

5,216

7,476

12,692

First quarter 2016 net change

1

15

16

146

162

Trailing four quarters net change

6

126

132

821

953

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 2016 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.

Accelerated Share Repurchase Program

During the first quarter of 2016, the Company’s previously announced $600.0 million ASR program was completed. On March 14, 2016, at final settlement, the Company received and retired 456,936 shares of its common stock based on the terms of the related ASR agreement. The average purchase price per share for all of the 5,315,930 shares the Company received and retired over the entirety of the $600.0 million ASR program was $112.87. As of April 21, 2016, the Company had authorization for repurchases of $200.0 million remaining under its open market share repurchase program.

Liquidity

As of March 27, 2016, the Company had approximately:

  • $178.3 million of unrestricted cash and cash equivalents;
  • $2.21 billion in total debt; and
  • $78.8 million of available borrowings under its $125.0 million variable funding notes, net of letters of credit issued of $46.2 million. The Company has collateralized $35.0 million of these letters of credit with restricted cash, and has the ability to access this cash with minimal notice.

The Company invested $10.5 million in capital expenditures during the first quarter of 2016, versus $7.6 million in the first quarter of 2015. Free cash flow, as reconciled below to cash flows from operations as determined under generally accepted accounting principles (GAAP), was approximately $6.7 million in the first quarter of 2016.

(in thousands)

First Quarter

of 2016

Net cash provided by operating activities

$

17,148

Capital expenditures

(10,486)

Free cash flow

$

6,662

Domino’s Pizza, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(Unaudited)

Fiscal Quarter Ended

March 27,

2016

% of

Total

Revenues

March 22,

2015

% of

Total

Revenues

(In thousands, except per share data)

Revenues:

Domestic Company-owned stores

$

96,443

$

92,375

Domestic franchise

68,151

61,774

Supply chain

335,695

311,656

International franchise

38,886

36,222

Total revenues

539,175

100.0

%

502,027

100.0

%

Cost of sales:

Domestic Company-owned stores

72,755

68,152

Supply chain

299,204

276,809

Total cost of sales

371,959

69.0

%

344,961

68.7

%

Operating margin

167,216

31.0

%

157,066

31.3

%

General and administrative

68,504

12.7

%

62,813

12.5

%

Income from operations

98,712

18.3

%

94,253

18.8

%

Interest expense, net

(25,870)

(4.8)%

(20,071)

(4.0)%

Income before provision for income taxes

72,842

13.5

%

74,182

14.8

%

Provision for income taxes

27,391

5.1

%

27,893

5.6

%

Net income

$

45,451

8.4

%

$

46,289

9.2

%

Earnings per share:

Common stock – diluted

$

0.89

$

0.81

Dividends declared per share

$

0.38

$

0.31

Domino’s Pizza, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

March 27, 2016

January 3, 2016

(In thousands)

Assets

Current assets:

Cash and cash equivalents

$

178,252

$

133,449

Restricted cash and cash equivalents

154,123

180,940

Accounts receivable

130,520

131,582

Inventories

39,108

36,861

Advertising fund assets, restricted

90,651

99,159

Prepaid expenses and other

33,832

20,646

Total current assets

626,486

602,637

Property, plant and equipment, net

131,060

131,890

Other assets

63,213

65,318

Total assets

$

820,759

$

799,845

Liabilities and stockholders’ deficit

Current liabilities:

Current portion of long-term debt

$

41,593

$

59,333

Accounts payable

86,137

106,927

Dividends payable

19,398

557

Advertising fund liabilities

90,651

99,159

Other accrued liabilities

95,947

110,007

Total current liabilities

333,726

375,983

Long-term liabilities:

Long-term debt, less current portion

2,173,403

2,181,460

Other accrued liabilities

43,909

42,653

Total long-term liabilities

2,217,312

2,224,113

Total stockholders’ deficit

(1,730,279)

(1,800,251)

Total liabilities and stockholders’ deficit

$

820,759

$

799,845

Domino’s Pizza, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Fiscal Quarter Ended

March 27,

2016

March 22,

2015

(In thousands)

Cash flows from operating activities:

Net income

$

45,451

$

46,289

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

Depreciation and amortization

8,221

7,347

Losses on sale/disposal of assets

86

150

Amortization of debt issuance costs

1,660

1,274

Provision for deferred income taxes

4,397

198

Non-cash compensation expense

4,898

4,466

Tax impact from equity-based compensation

(31,896)

(4,677)

Other

135

74

Changes in operating assets and liabilities

(15,804)

29,624

Net cash provided by operating activities

17,148

84,745

Cash flows from investing activities:

Capital expenditures

(10,486)

(7,600)

Proceeds from sale of assets

1,742

6,789

Changes in restricted cash

26,817

(579)

Other

(587)

1,556

Net cash provided by investing activities

17,486

166

Cash flows from financing activities:

Repayments of long-term debt and capital lease obligations

(27,459)

(103)

Proceeds from exercise of stock options

9,182

1,196

Tax impact from equity-based compensation

31,896

4,677

Purchases of common stock

(29,512)

Tax payments for restricted stock upon vesting

(3,036)

(3,632)

Payments of common stock dividends and equivalents

(164)

(13,965)

Net cash provided by (used in) financing activities

10,419

(41,339)

Effect of exchange rate changes on cash and cash equivalents

(250)

564

Change in cash and cash equivalents

44,803

44,136

Cash and cash equivalents, at beginning of period

133,449

30,855

Cash and cash equivalents, at end of period

$

178,252

$

74,991

Share Button
About the Author