Title of each class: | Trading Symbol | Name of each exchange on which registered: | ||||||||||||
PAPA JOHN’S INTERNATIONAL, INC. | |||||
(Registrant) | |||||
Date: February 23, 2023 | /s/ Ann B. Gugino | ||||
Ann B. Gugino | |||||
Chief Financial Officer |
Exhibit Number | Description of Exhibit | |||||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
Three Months Ended | Year Ended | |||||||||||||||||||||||||||||||||||||
(In thousands, except per share amounts) | December 25, 2022 | December 26, 2021 | Increase (Decrease) | December 25, 2022 | December 26, 2021 | Increase (Decrease) | ||||||||||||||||||||||||||||||||
Total revenues | $ | 526,234 | $ | 528,885 | $ | (2,651) | $ | 2,102,103 | $ | 2,068,421 | $ | 33,682 | ||||||||||||||||||||||||||
Operating income | $ | 36,230 | $ | 38,165 | $ | (1,935) | $ | 109,030 | $ | 168,241 | $ | (59,211) | ||||||||||||||||||||||||||
Adjusted operating income (a) | $ | 38,226 | $ | 41,895 | $ | (3,669) | $ | 157,462 | $ | 181,335 | $ | (23,873) | ||||||||||||||||||||||||||
Net income attributable to the Company | $ | 23,514 | $ | 24,623 | $ | (1,109) | $ | 67,772 | $ | 120,016 | $ | (52,244) | ||||||||||||||||||||||||||
Diluted earnings per common share | $ | 0.66 | $ | 0.67 | $ | (0.01) | $ | 1.89 | $ | 0.12 | $ | 1.77 | ||||||||||||||||||||||||||
Adjusted diluted earnings per common share (a) | $ | 0.71 | $ | 0.75 | $ | (0.04) | $ | 2.94 | $ | 3.51 | $ | (0.57) |
Three Months Ended | Year ended | ||||||||||||||||||||||
Amounts below exclude the impact of foreign currency | December 25, 2022 | December 26, 2021 | December 25, 2022 | December 26, 2021 | |||||||||||||||||||
Comparable sales growth (decline): | |||||||||||||||||||||||
Domestic Company-owned restaurants | 0.8% | 10.2% | (1.0)% | 11.3% | |||||||||||||||||||
North America franchised restaurants | 1.1% | 11.3% | 1.2% | 12.0% | |||||||||||||||||||
North America restaurants | 1.1% | 11.1% | 0.7% | 11.8% | |||||||||||||||||||
International restaurants | (3.4)% | 2.4% | (5.3)% | 13.0% | |||||||||||||||||||
Total comparable sales growth (decline) | 0.0% | 8.6% | (0.8)% | 12.1% | |||||||||||||||||||
System-wide restaurant sales growth: | |||||||||||||||||||||||
Domestic Company-owned restaurants | 2.9% | 10.9% | 1.3% | 11.1% | |||||||||||||||||||
North America franchised restaurants | 2.5% | 12.7% | 2.5% | 13.0% | |||||||||||||||||||
North America restaurants | 2.6% | 12.3% | 2.3% | 12.6% | |||||||||||||||||||
International restaurants (a) | 3.5% | 15.2% | 4.8% | 24.4% | |||||||||||||||||||
Total global system-wide restaurant sales growth (a) | 2.8% | 13.1% | 2.9% | 15.4% |
Fourth Quarter | Domestic Company Owned | Franchised North America | Total North America | International(a) | System-wide | ||||||||||||||||||||||||
Beginning - September 25, 2022 | 522 | 2,836 | 3,358 | 2,231 | 5,589 | ||||||||||||||||||||||||
Opened | — | 28 | 28 | 117 | 145 | ||||||||||||||||||||||||
Closed | — | (10) | (10) | (18) | (28) | ||||||||||||||||||||||||
Ending - December 25, 2022 | 522 | 2,854 | 3,376 | 2,330 | 5,706 | ||||||||||||||||||||||||
Net unit growth | — | 18 | 18 | 99 | 117 | ||||||||||||||||||||||||
Full year | Domestic Company Owned | Franchised North America | Total North America | International(a) | System-wide | ||||||||||||||||||||||||
Beginning - December 26, 2021 | 600 | 2,739 | 3,339 | 2,311 | 5,650 | ||||||||||||||||||||||||
Opened | 10 | 76 | 86 | 292 | 378 | ||||||||||||||||||||||||
Closed | — | (49) | (49) | (85) | (134) | ||||||||||||||||||||||||
Sold | — | (2) | (2) | — | (2) | ||||||||||||||||||||||||
Acquired | 2 | — | 2 | — | 2 | ||||||||||||||||||||||||
Refranchised | (90) | 90 | — | — | — | ||||||||||||||||||||||||
Suspended (a) | — | — | — | (188) | (188) | ||||||||||||||||||||||||
Ending - December 25, 2022 | 522 | — | 2,854 | 3,376 | — | 2,330 | 5,706 | ||||||||||||||||||||||
Net unit growth/(decline) (a) | (78) | 115 | 37 | 207 | 244 | ||||||||||||||||||||||||
Year Ended | ||||||||||||||
(in thousands) | December 25, 2022 | December 26, 2021 | ||||||||||||
Net cash provided by operating activities | $ | 117,808 | $ | 184,675 | ||||||||||
Purchases of property and equipment | (78,391) | (68,559) | ||||||||||||
Dividends paid to preferred shareholders (a) | — | (6,394) | ||||||||||||
Free cash flow | $ | 39,417 | $ | 109,722 |
Three months ended | Year Ended | |||||||||||||||||||||||||
(In thousands, except per share amounts) | December 25, 2022 | December 26, 2021 | December 25, 2022 | December 26, 2021 | ||||||||||||||||||||||
Operating income | $ | 36,230 | $ | 38,165 | $ | 109,030 | $ | 168,241 | ||||||||||||||||||
Refranchising and impairment losses (a) | — | — | 26,702 | — | ||||||||||||||||||||||
Legal settlements (b) | — | — | 15,000 | — | ||||||||||||||||||||||
Costs associated with the termination of significant franchisees (c) | 1,996 | — | 5,223 | — | ||||||||||||||||||||||
Strategic corporate reorganization costs (d) | — | 3,730 | — | 13,094 | ||||||||||||||||||||||
Other costs (e) | — | — | 1,507 | — | ||||||||||||||||||||||
Adjusted operating income | $ | 38,226 | $ | 41,895 | $ | 157,462 | $ | 181,335 | ||||||||||||||||||
Net income attributable to common shareholders | $ | 23,373 | $ | 24,389 | $ | 67,362 | $ | 4,073 | ||||||||||||||||||
Refranchising and impairment losses (a) | — | — | 26,702 | — | ||||||||||||||||||||||
Legal settlements (b) | — | — | 15,000 | — | ||||||||||||||||||||||
Costs associated with the termination of significant franchisees (c) | 1,996 | — | 5,223 | — | ||||||||||||||||||||||
Strategic corporate reorganization costs (d) | — | 3,730 | — | 13,094 | ||||||||||||||||||||||
Other costs (e) | — | — | 1,507 | — | ||||||||||||||||||||||
Repurchase and conversion of Series B Preferred Stock (f) | — | — | — | 109,852 | ||||||||||||||||||||||
Tax effect of adjustments (g) | (449) | (839) | (10,897) | (2,946) | ||||||||||||||||||||||
Adjusted net income attributable to common shareholders (h) | $ | 24,920 | $ | 27,280 | $ | 104,897 | $ | 124,073 | ||||||||||||||||||
Diluted earnings per common share | $ | 0.66 | $ | 0.67 | $ | 1.89 | $ | 0.12 | ||||||||||||||||||
Refranchising and impairment losses (a) | — | — | 0.75 | — | ||||||||||||||||||||||
Legal settlements (b) | — | — | 0.42 | — | ||||||||||||||||||||||
Costs associated with the termination of significant franchisees (c) | 0.07 | — | 0.15 | — | ||||||||||||||||||||||
Strategic corporate reorganization costs (d) | — | 0.10 | — | 0.37 | ||||||||||||||||||||||
Other costs (e) | — | — | 0.04 | — | ||||||||||||||||||||||
Repurchase and conversion of Series B Preferred Stock (f) | — | — | — | 3.10 | ||||||||||||||||||||||
Tax effect of adjustments (g) | (0.02) | (0.02) | (0.31) | (0.08) | ||||||||||||||||||||||
Adjusted diluted earnings per common share (h) | $ | 0.71 | $ | 0.75 | $ | 2.94 | $ | 3.51 |
Year Ended | ||||||||
(In thousands) | December 25, 2022 | |||||||
Refranchising impairment loss (1) | $ | 8,412 | ||||||
Ukraine-related charge (2) | 17,385 | |||||||
UK lease impairment (3) | 905 | |||||||
Total adjustment | $ | 26,702 |
(In thousands, except per share amounts) | December 25, 2022 | December 26, 2021 | ||||||||||||
Assets | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 47,373 | $ | 70,610 | ||||||||||
Accounts receivable (less allowance for credit losses of $6,718 in 2022 and $2,364 in 2021) | 102,533 | 81,370 | ||||||||||||
Notes receivable, current portion | 6,848 | 12,352 | ||||||||||||
Income tax receivable | 8,780 | 9,386 | ||||||||||||
Inventories | 41,382 | 34,981 | ||||||||||||
Prepaid expenses and other current assets | 44,123 | 46,310 | ||||||||||||
Total current assets | 251,039 | 255,009 | ||||||||||||
Property and equipment, net | 249,793 | 223,856 | ||||||||||||
Finance lease right-of-use assets, net | 24,941 | 20,907 | ||||||||||||
Operating lease right-of-use assets | 172,425 | 176,256 | ||||||||||||
Notes receivable, less current portion (less allowance for credit losses of $14,499 in 2022 and $1,500 in 2021) | 21,248 | 35,504 | ||||||||||||
Goodwill | 70,616 | 80,632 | ||||||||||||
Deferred income taxes | 1,920 | 5,156 | ||||||||||||
Other assets | 72,245 | 88,384 | ||||||||||||
Total assets | $ | 864,227 | $ | 885,704 | ||||||||||
Liabilities, Redeemable noncontrolling interests and Stockholders’ deficit | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | 62,316 | $ | 28,092 | ||||||||||
Income and other taxes payable | 8,766 | 19,996 | ||||||||||||
Accrued expenses and other current liabilities | 142,535 | 190,116 | ||||||||||||
Current deferred revenue | 21,272 | 21,700 | ||||||||||||
Current finance lease liabilities | 6,850 | 4,977 | ||||||||||||
Current operating lease liabilities | 23,418 | 22,543 | ||||||||||||
Total current liabilities | 265,157 | 287,424 | ||||||||||||
Deferred revenue | 23,204 | 13,846 | ||||||||||||
Long-term finance lease liabilities | 19,022 | 16,580 | ||||||||||||
Long-term operating lease liabilities | 160,905 | 160,672 | ||||||||||||
Long-term debt, net | 597,069 | 480,730 | ||||||||||||
Deferred income taxes | — | 258 | ||||||||||||
Other long-term liabilities | 68,317 | 93,154 | ||||||||||||
Total liabilities | 1,133,674 | 1,052,664 | ||||||||||||
Redeemable noncontrolling interests | 1,217 | 5,498 | ||||||||||||
Stockholders’ deficit: | ||||||||||||||
Common stock ($0.01 par value per share; issued 49,138 at December 25, 2022 and 49,002 at December 26, 2021) | 491 | 490 | ||||||||||||
Additional paid-in capital | 449,829 | 445,126 | ||||||||||||
Accumulated other comprehensive loss | (10,135) | (9,971) | ||||||||||||
Retained earnings | 195,856 | 183,157 | ||||||||||||
Treasury stock (14,402 shares at December 25, 2022 and 13,205 shares at December 26, 2021, at cost) | (922,434) | (806,472) | ||||||||||||
Total stockholders’ deficit | (286,393) | (187,670) | ||||||||||||
Noncontrolling interests in subsidiaries | 15,729 | 15,212 | ||||||||||||
Total Stockholders’ deficit | (270,664) | (172,458) | ||||||||||||
Total Liabilities, Redeemable noncontrolling interests and Stockholders’ deficit | $ | 864,227 | $ | 885,704 |
Three Months Ended | Year ended | |||||||||||||||||||||||||
(In thousands, except per share amounts) | December 25, 2022 | December 26, 2021 | December 25, 2022 | December 26, 2021 | ||||||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Domestic Company-owned restaurant sales | $ | 172,163 | $ | 193,381 | $ | 708,389 | $ | 778,323 | ||||||||||||||||||
North America franchise royalties and fees | 34,502 | 32,187 | 137,399 | 129,310 | ||||||||||||||||||||||
North America commissary revenues | 224,457 | 200,562 | 869,634 | 761,305 | ||||||||||||||||||||||
International revenues | 32,593 | 40,142 | 129,903 | 150,771 | ||||||||||||||||||||||
Other revenues | 62,519 | 62,613 | 256,778 | 248,712 | ||||||||||||||||||||||
Total revenues | 526,234 | 528,885 | 2,102,103 | 2,068,421 | ||||||||||||||||||||||
Costs and expenses: | ||||||||||||||||||||||||||
Operating costs (excluding depreciation and amortization shown separately below): | ||||||||||||||||||||||||||
Domestic Company-owned restaurant expenses | 143,321 | 156,213 | 585,307 | 621,871 | ||||||||||||||||||||||
North America commissary expenses | 206,757 | 185,312 | 811,446 | 703,622 | ||||||||||||||||||||||
International expenses | 18,655 | 24,495 | 76,001 | 87,286 | ||||||||||||||||||||||
Other expenses | 58,358 | 58,228 | 238,810 | 226,320 | ||||||||||||||||||||||
General and administrative expenses | 48,893 | 54,486 | 217,412 | 212,265 | ||||||||||||||||||||||
Depreciation and amortization | 14,020 | 11,986 | 52,032 | 48,816 | ||||||||||||||||||||||
Total costs and expenses | 490,004 | 490,720 | 1,981,008 | 1,900,180 | ||||||||||||||||||||||
Refranchising and impairment loss | — | — | (12,065) | — | ||||||||||||||||||||||
Operating income | 36,230 | 38,165 | 109,030 | 168,241 | ||||||||||||||||||||||
Net interest expense | (7,294) | (6,018) | (25,261) | (17,293) | ||||||||||||||||||||||
Income before income taxes | 28,936 | 32,147 | 83,769 | 150,948 | ||||||||||||||||||||||
Income tax expense | 5,208 | 6,606 | 14,420 | 25,993 | ||||||||||||||||||||||
Net income before attribution to noncontrolling interests | 23,728 | 25,541 | 69,349 | 124,955 | ||||||||||||||||||||||
Net income attributable to noncontrolling interests | (214) | (918) | (1,577) | (4,939) | ||||||||||||||||||||||
Net income attributable to the Company | $ | 23,514 | $ | 24,623 | $ | 67,772 | $ | 120,016 | ||||||||||||||||||
Calculation of net income for earnings per share: | ||||||||||||||||||||||||||
Net income attributable to the Company | $ | 23,514 | $ | 24,623 | $ | 67,772 | $ | 120,016 | ||||||||||||||||||
Dividends on redemption of Series B Convertible Preferred Stock | — | — | — | (109,852) | ||||||||||||||||||||||
Dividends paid to participating securities | (78) | (127) | (306) | (6,091) | ||||||||||||||||||||||
Net income attributable to participating securities | (63) | (107) | (104) | — | ||||||||||||||||||||||
Net income attributable to common shareholders | $ | 23,373 | $ | 24,389 | $ | 67,362 | $ | 4,073 | ||||||||||||||||||
Basic earnings per common share | $ | 0.66 | $ | 0.67 | $ | 1.90 | $ | 0.12 | ||||||||||||||||||
Diluted earnings per common share | $ | 0.66 | $ | 0.67 | $ | 1.89 | $ | 0.12 | ||||||||||||||||||
Basic weighted average common shares outstanding | 35,167 | 36,171 | 35,497 | 35,007 | ||||||||||||||||||||||
Diluted weighted average common shares outstanding | 35,336 | 36,513 | 35,717 | 35,337 | ||||||||||||||||||||||
Dividends declared per common share | $ | 0.42 | $ | 0.35 | $ | 1.54 | $ | 1.15 |
Year ended | ||||||||||||||
(In thousands) | December 25, 2022 | December 26, 2021 | ||||||||||||
Operating activities | ||||||||||||||
Net income before attribution to noncontrolling interests | $ | 69,349 | $ | 124,955 | ||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
Provision (benefit) for allowance for credit losses on accounts and notes receivable | 20,539 | (852) | ||||||||||||
Depreciation and amortization | 52,032 | 48,816 | ||||||||||||
Refranchising and impairment loss | 12,065 | — | ||||||||||||
Deferred income taxes | 2,798 | 3,753 | ||||||||||||
Stock-based compensation expense | 18,388 | 16,919 | ||||||||||||
Other | 1,056 | 581 | ||||||||||||
Changes in operating assets and liabilities, net of acquisitions: | ||||||||||||||
Accounts receivable | (29,167) | 4,023 | ||||||||||||
Income tax receivable | 586 | (8,113) | ||||||||||||
Inventories | (7,496) | (4,708) | ||||||||||||
Prepaid expenses and other current assets | 5,587 | 2,866 | ||||||||||||
Other assets and liabilities | (13,458) | (20,077) | ||||||||||||
Accounts payable | (8,350) | (9,278) | ||||||||||||
Income and other taxes payable | (10,710) | 9,733 | ||||||||||||
Accrued expenses and other current liabilities | 4,846 | 15,875 | ||||||||||||
Deferred revenue | (257) | 182 | ||||||||||||
Net cash provided by operating activities | 117,808 | 184,675 | ||||||||||||
Investing activities | ||||||||||||||
Purchases of property and equipment | (78,391) | (68,559) | ||||||||||||
Notes issued | (9,296) | (16,132) | ||||||||||||
Repayments of notes issued | 13,045 | 18,555 | ||||||||||||
Acquisitions, net of cash acquired | (1,219) | (699) | ||||||||||||
Proceeds from refranchising, net of cash transferred | 13,588 | — | ||||||||||||
Other | (520) | 3,323 | ||||||||||||
Net cash used in investing activities | (62,793) | (63,512) | ||||||||||||
Financing activities | ||||||||||||||
Proceeds from issuance of senior notes | — | 400,000 | ||||||||||||
Net proceeds of revolving credit facilities | 115,000 | 80,000 | ||||||||||||
Debt issuance costs | — | (9,179) | ||||||||||||
Proceeds from exercise of stock options | 4,036 | 11,969 | ||||||||||||
Repurchase of Series B Convertible Preferred Stock | — | (188,647) | ||||||||||||
Acquisition of Company common stock | (125,000) | (72,499) | ||||||||||||
Dividends paid to common stockholders | (54,767) | (40,356) | ||||||||||||
Dividends paid to preferred stockholders | — | (6,394) | ||||||||||||
Tax payments for equity award issuances | (9,546) | (5,847) | ||||||||||||
Distributions to noncontrolling interests | (1,211) | (5,942) | ||||||||||||
Repayments of term loan | — | (340,000) | ||||||||||||
Other | (4,752) | (3,631) | ||||||||||||
Net cash used in financing activities | (76,240) | (180,526) | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents | (2,012) | (231) | ||||||||||||
Change in cash and cash equivalents | (23,237) | (59,594) | ||||||||||||
Cash and cash equivalents at beginning of period | 70,610 | 130,204 | ||||||||||||
Cash and cash equivalents at end of period | $ | 47,373 | $ | 70,610 |
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