Domino's Pizza® Announces First Quarter 2021 Financial Results
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Domino's Pizza® Announces First Quarter 2021 Financial Results

  • Global retail sales growth (excluding foreign currency impact) of 14.0%
  • U.S. same store sales growth of 13.4%
  • International same store sales growth of 11.8%
  • Global net store growth of 175
  • Diluted EPS down 2.3% to $3.00
  • Completed recapitalization transaction in April 2021

ANN ARBOR, Mich., April 29, 2021 // 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. Global retail sales increased 16.7% in the first quarter, or 14.0% excluding foreign currency impact. U.S. same store sales grew 13.4% during the quarter versus the year-ago period, continuing the positive sales momentum in the Company's U.S. stores business. The international business also posted strong results, with same store sales growth of 11.8% during the quarter. The first quarter marked the 109th consecutive quarter of international same store sales growth and the 40th consecutive quarter of U.S. same store sales growth.

The Company had first quarter global net store growth of 175 stores, comprised of 36 net U.S. store openings and 139 net international store openings.

First quarter diluted EPS was $3.00, down 2.3% over the prior year quarter.

Subsequent to the first quarter, on April 27, 2021, the Company's Board of Directors declared a $0.94 per share quarterly dividend on its outstanding common stock for shareholders of record as of June 15, 2021, to be paid on June 30, 2021.

"It was a strong first quarter for the Domino's brand, with balanced growth across all areas of our global business," said Ritch Allison, Domino's Chief Executive Officer. "I applaud our franchisees and operators all across the globe, who once again demonstrated why they are the best in the restaurant business."

First Quarter Highlights (Unaudited):

(dollars in millions, except per share data)

 

First

Quarter of

2021

   

First

Quarter of

2020

 

Net income

 

$

117.8

   

$

121.6

 

Weighted average diluted shares

   

39,208,383

     

39,633,404

 

Diluted EPS

 

$

3.00

   

$

3.07

 

 

  • Revenues increased $110.6 million, or 12.7%, in the first quarter of 2021. This increase was primarily due to U.S. and international same store sales growth and increases in global store counts during the trailing four quarters, resulting in higher supply chain, U.S. stores and international franchise revenues.
     
  • Net Income decreased $3.8 million, or 3.2%, in the first quarter of 2021. This decrease was driven by a significantly higher provision for income taxes resulting from lower tax benefits from equity-based compensation due to fewer stock option exercises in the first quarter of 2021 as compared to the first quarter of 2020. Income before provision (benefit) for income taxes increased $32.3 million in the first quarter of 2021 due to higher income from operations resulting from the increases in revenues described above.
     
  • Diluted EPS was $3.00 for the first quarter of 2021 versus $3.07 in the prior year quarter. This represents a $0.07, or 2.3%, decrease from the prior year quarter. The decrease in diluted EPS was driven by lower net income and was partially offset by a lower weighted average diluted share count resulting from the Company's share repurchases during the trailing four quarters.

The table below outlines certain statistical measures utilized by the Company to analyze its performance (unaudited). Refer to Comments on Regulation G below for additional details.

   

First

Quarter of

2021

   

First

Quarter of

2020

 

Same store sales growth: (versus prior year period)

               

U.S. Company-owned stores

   

+   6.3

%

   

+ 3.9

%

U.S. franchise stores

   

+ 13.9

%

   

+ 1.5

%

U.S. stores

   

+ 13.4

%

   

+ 1.6

%

International stores (excluding foreign currency impact)

   

+ 11.8

%

   

+ 1.5

%

                 

Global retail sales growth: (versus prior year period)

               

U.S. stores

   

+ 15.3

%

   

+ 4.9

%

International stores

   

+ 18.0

%

   

+ 3.9

%

Total

   

+ 16.7

%

   

+ 4.4

%

                 

Global retail sales growth: (versus prior year period,

   excluding foreign currency impact)

               

U.S. stores

   

+ 15.3

%

   

+ 4.9

%

International stores

   

+ 12.8

%

   

+ 6.8

%

Total

   

+ 14.0

%

   

+ 5.9

%

 

   

U.S.
Company-

owned Stores

   

U.S.
Franchise

Stores

   

Total

U.S. Stores

   

International

Stores

   

Total

 

Store counts:

                                       

Store count at January 3, 2021

   

363

     

5,992

     

6,355

     

11,289

     

17,644

 

Openings

   

2

     

35

     

37

     

160

     

197

 

Closings

   

(1)

     

     

(1)

     

(21)

     

(22)

 

Store count at March 28, 2021

   

364

     

6,027

     

6,391

     

11,428

     

17,819

 

First quarter 2021 net store growth

   

1

     

35

     

36

     

139

     

175

 

Trailing four quarters net store growth

   

19

     

216

     

235

     

495

     

730

 

Share Repurchases

During the first quarter of 2021, the Company repurchased and retired 65,870 shares of its common stock in open market repurchases under its Board of Directors-approved share repurchase program for approximately $25.0 million. As of March 28, 2021, the Company had a total remaining authorized amount for share repurchases of $1.0 billion.

Liquidity

As of March 28, 2021, the Company had approximately:

  • $267.7 million of unrestricted cash and cash equivalents;
  • $4.12 billion in total debt; and
  • $157.5 million of available borrowing capacity under its 2019 variable funding notes, net of letters of credit issued of $42.5 million.

Net cash provided by operating activities was $152.9 million during the first quarter of 2021. The Company invested $16.6 million in capital expenditures during the first quarter of 2021. 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 $136.3 million during the first quarter of 2021 (refer to Comments on Regulation G below for additional details).

(in thousands)

 

First

Quarter of

2021

 

Net cash provided by operating activities                                                                       

 

$

152,851

 

Capital expenditures

   

(16,561)

 

Free cash flow

 

$

136,290

 

2021 Recapitalization

Subsequent to the end of the first quarter of 2021, on April 16, 2021 (the "closing date"), the Company completed a previously announced $1.85 billion recapitalization transaction, including the issuance by certain of its subsidiaries of $850.0 million of 2.662% fixed rate senior secured notes with an anticipated term of 7.5 years and $1.0 billion of 3.151% fixed rate senior secured notes with an anticipated term of 10 years (collectively, the "2021 Notes").

The Company used a portion of the proceeds from the recapitalization transaction to repay the remaining $291.0 million in outstanding principal under its 2017 five-year floating rate notes and to repay the remaining $582.0 million in outstanding principal under its 2017 five-year fixed rate notes. The proceeds were also used to prefund a portion of the interest payable on the 2021 Notes and pay transaction fees and expenses. The Company expects to use the remaining proceeds for general corporate purposes, which may include distributions to holders of the Company's common stock, other equivalent payments and/or stock repurchases. Certain of the Company's subsidiaries also issued a new $200.0 million variable funding note facility, which was undrawn on the closing date, and the Company's previous variable funding note facility was canceled. For additional information related to this recapitalization transaction, refer to the Company's Current Report on Form 8-K filed on April 20, 2021 and the Company's Form 10-Q for the quarter ended March 28, 2021.

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. The Company has also included metrics such as global retail sales, global retail sales growth, global retail sales growth, excluding foreign currency impact 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. "Global retail sales growth" is calculated as the change of U.S. Dollar global retail sales against the comparable period of the prior year. "Global retail sales growth, excluding foreign currency impact" is calculated as the change of international local currency global retail sales against the comparable period of the prior year.

The Company uses "Same store sales growth," which is calculated by including only sales from stores that also had sales in the comparable weeks of both years. 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 net cash provided by operating activities, 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.

TABLES TO FOLLOW

 

Domino's Pizza, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(Unaudited)

 
   

Fiscal Quarter Ended

 
   

March 28,

2021

   

% of

Total

Revenues

   

March 22,

2020

   

% of

Total

Revenues

 

(In thousands, except per share data)

                               

Revenues:

                               

U.S. Company-owned stores

 

$

112,744

           

$

102,326

         

U.S. franchise royalties and fees

   

124,486

             

104,746

         

Supply chain

   

568,338

             

512,700

         

International franchise royalties and fees

   

66,770

             

57,496

         

U.S. franchise advertising

   

111,360

             

95,834

         

Total revenues

   

983,698

     

100.0

%

   

873,102

     

100.0

%

Cost of sales:

                               

U.S. Company-owned stores

   

85,742

             

79,388

         

Supply chain

   

508,805

             

453,557

         

Total cost of sales

   

594,547

     

60.4

%

   

532,945

     

61.0

%

Operating margin

   

389,151

     

39.6

%

   

340,157

     

39.0

%

General and administrative

   

91,253

     

9.3

%

   

88,489

     

10.2

%

U.S. franchise advertising

   

111,360

     

11.3

%

   

95,834

     

11.0

%

Income from operations

   

186,538

     

19.0

%

   

155,834

     

17.8

%

Other income

   

2,500

     

0.2

%

   

     

0.0

%

Interest expense, net

   

(39,400)

     

(4.0)

%

   

(38,538)

     

(4.4)

%

Income before provision (benefit) for income taxes

   

149,638

     

15.2

%

   

117,296

     

13.4

%

Provision (benefit) for income taxes

   

31,877

     

3.2

%

   

(4,306)

     

(0.5)

%

Net income

 

$

117,761

     

12.0

%

 

$

121,602

     

13.9

%

Earnings per share:

                               

Common stock – diluted

 

$

3.00

           

$

3.07

         

 

Domino's Pizza, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

 
   

March 28,

2021

   

January 3,

2021

 

(In thousands)

               

Assets

               

Current assets:

               

Cash and cash equivalents

 

$

267,719

   

$

168,821

 

Restricted cash and cash equivalents

   

176,029

     

217,453

 

Accounts receivable, net

   

235,789

     

244,560

 

Inventories

   

63,775

     

66,683

 

Prepaid expenses and other

   

20,372

     

24,169

 

Advertising fund assets, restricted

   

162,118

     

147,698

 

Total current assets

   

925,802

     

869,384

 

Property, plant and equipment, net

   

293,369

     

297,364

 

Operating lease right-of-use assets

   

224,359

     

228,268

 

Investments

   

82,500

     

40,000

 

Other assets

   

136,802

     

132,152

 

Total assets

 

$

1,662,832

   

$

1,567,168

 

Liabilities and stockholders' deficit

               

Current liabilities:

               

Current portion of long-term debt

 

$

2,931

   

$

2,855

 

Accounts payable

   

95,042

     

94,499

 

Operating lease liabilities

   

36,058

     

35,861

 

Advertising fund liabilities

   

154,963

     

141,175

 

Other accrued liabilities

   

212,841

     

196,429

 

Total current liabilities

   

501,835

     

470,819

 

Long-term liabilities:

               

Long-term debt, less current portion

   

4,116,858

     

4,116,018

 

Operating lease liabilities

   

198,640

     

202,268

 

Other accrued liabilities

   

81,579

     

78,468

 

Total long-term liabilities

   

4,397,077

     

4,396,754

 

Total stockholders' deficit

   

(3,236,080)

     

(3,300,405)

 

Total liabilities and stockholders' deficit

 

$

1,662,832

   

$

1,567,168

 

 

 

Domino's Pizza, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 
   

Fiscal Quarter Ended

 
   

March 28,

2021

   

March 22,

2020

 

(In thousands)

               

Cash flows from operating activities:

               

Net income

 

$

117,761

   

$

121,602

 

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

               

Depreciation and amortization

   

16,465

     

14,032

 

Loss on sale/disposal of assets

   

161

     

306

 

Amortization of debt issuance costs

   

1,203

     

1,291

 

Provision for deferred income taxes

   

1,578

     

702

 

Non-cash equity-based compensation expense

   

5,204

     

4,914

 

Excess tax benefits from equity-based compensation

   

(914)

     

(30,449)

 

Provision for losses and accounts and notes receivable

   

180

     

1,589

 

Unrealized gain on investments

   

(2,500)

     

 

Changes in operating assets and liabilities

   

(1,634)

     

(23,119)

 

Changes in advertising fund assets and liabilities, restricted

   

15,347

     

4,490

 

Net cash provided by operating activities

   

152,851

     

95,358

 

Cash flows from investing activities:

               

Capital expenditures

   

(16,561)

     

(17,467)

 

Purchase of investments

   

(40,000)

     

 

Other

   

121

     

(426)

 

Net cash used in investing activities

   

(56,440)

     

(17,893)

 

Cash flows from financing activities:

               

Repayments of long-term debt and finance lease obligations

   

(704)

     

(10,849)

 

Proceeds from exercise of stock options

   

3,693

     

10,105

 

Purchases of common stock

   

(25,000)

     

(79,590)

 

Tax payments for restricted stock upon vesting

   

(1,044)

     

(1,796)

 

Payments of common stock dividends and equivalents

   

(64)

     

(80)

 

Other

   

     

152

 

Net cash used in financing activities

   

(23,119)

     

(82,058)

 

Effect of exchange rate changes on cash

   

161

     

(961)

 

Change in cash and cash equivalents, restricted cash and cash equivalents

   

73,453

     

(5,554)

 
                 

Cash and cash equivalents, beginning of period

   

168,821

     

190,615

 

Restricted cash and cash equivalents, beginning of period

   

217,453

     

209,269

 

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

   beginning of period

   

115,872

     

84,040

 

Cash and cash equivalents, restricted cash and cash equivalents and

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

   beginning of period

   

502,146

     

483,924

 
                 

Cash and cash equivalents, end of period

   

267,719

     

200,801

 

Restricted cash and cash equivalents, end of period

   

176,029

     

189,370

 

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

   end of period

   

131,851

     

88,199

 

Cash and cash equivalents, restricted cash and cash equivalents and cash and

   cash equivalents included in advertising fund assets, restricted,

   end of period

 

$

575,599

   

$

478,370

 

SOURCE Domino's Pizza®

###

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