Global retail sales growth (excluding foreign
currency impact) of 4.9% for the fourth quarter; 5.4% growth
for fiscal 2023
U.S. same store sales growth of 2.8% for the
fourth quarter; 1.6% growth for fiscal 2023
International same store sales growth (excluding
foreign currency impact) of 0.1% for the fourth quarter; 1.7%
growth for fiscal 2023
Global net store growth of 394 for the fourth
quarter; 711 for fiscal 2023 (excluding closure of the
Russia market, global net stores
grew by 870 for fiscal 2023)
Income from operations up 3.4% for the fourth
quarter; up 6.7% for fiscal 2023 (excluding $21.2 million pre-tax refranchising gain recorded
in fourth quarter of 2022, income from operations up 13.0% for
the fourth quarter; up 9.7% for fiscal 2023)
Board of Directors approves 25% increase in
quarterly dividend to $1.51 per
share; approves additional $1.0
billion share repurchase program
ANN
ARBOR, Mich., Feb. 26,
2024 /PRNewswire/ -- Domino's Pizza, Inc. (NYSE:
DPZ), the largest pizza company in the world, announced
results for the fourth quarter and fiscal 2023.
"Our strong fourth quarter demonstrates that our Hungry for MORE
strategy is already delivering results. This strategy, which we
recently unveiled at our Investor Day, is our plan to deliver MORE
sales, MORE stores and MORE profits," said Russell Weiner, Domino's Chief Executive
Officer. "Domino's foundation has never been stronger. Our positive
U.S. transactions and same store sales growth in both our delivery
and carryout channels in the fourth quarter underscore the strength
and momentum in our business. These results give us confidence in
our brand and the Company's ability to win and create meaningful
value for our shareholders."
Fourth Quarter and Fiscal 2023 Operational and Financial
Highlights (Unaudited):
The tables below outline certain statistical measures utilized
by the Company to analyze its performance, as well as key financial
results. This historical data is not necessarily indicative of
results to be expected for any future period. Refer to Comments
on Regulation G below for additional details, including
definitions of these statistical measures and certain
reconciliations.
|
|
Fourth
Quarter
|
|
|
Fiscal
Year
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
Global retail
sales: (in millions of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. stores
|
|
$
|
2,831.2
|
|
|
$
|
2,709.7
|
|
|
$
|
9,026.1
|
|
|
$
|
8,751.7
|
|
International
stores
|
|
|
2,897.4
|
|
|
|
2,746.4
|
|
|
|
9,249.7
|
|
|
|
8,788.2
|
|
Total
|
|
$
|
5,728.6
|
|
|
$
|
5,456.1
|
|
|
$
|
18,275.8
|
|
|
$
|
17,539.9
|
|
|
|
Fourth
Quarter
|
|
Fiscal
Year
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Global retail sales
growth: (versus prior year period,
excluding foreign currency impact)
|
|
|
|
|
|
|
|
|
U.S. stores
|
|
+ 4.5 %
|
|
+ 2.7 %
|
|
+ 3.1 %
|
|
+ 1.3 %
|
International stores
(1)
|
|
+ 5.2 %
|
|
+ 7.5 %
|
|
+ 7.7 %
|
|
+ 6.3 %
|
Total
(2)
|
|
+ 4.9 %
|
|
+ 5.2 %
|
|
+ 5.4 %
|
|
+ 3.9 %
|
|
|
|
|
|
|
|
|
|
Same store sales
growth: (versus prior year period)
|
|
|
|
|
|
|
|
|
U.S. Company-owned
stores
|
|
+ 5.9 %
|
|
+ 3.4 %
|
|
+ 5.4 %
|
|
(2.6) %
|
U.S. franchise
stores
|
|
+ 2.6 %
|
|
+ 0.8 %
|
|
+ 1.4 %
|
|
(0.7) %
|
U.S. stores
|
|
+ 2.8 %
|
|
+ 0.9 %
|
|
+ 1.6 %
|
|
(0.8) %
|
International stores
(excluding foreign currency impact)
|
|
+ 0.1 %
|
|
+ 2.6 %
|
|
+ 1.7 %
|
|
+ 0.1 %
|
|
|
|
|
|
|
|
|
|
(1)
|
|
2023 fourth quarter and
fiscal year figures exclude the impact of the Russia market.
Including the impact of the Russia market, international stores
retail sales growth, excluding foreign currency impact, was 4.4%
and 7.3% for the fourth quarter and fiscal 2023,
respectively.
|
(2)
|
|
2023 fourth quarter and
fiscal year figures exclude the impact of the Russia market.
Including the impact of the Russia market, total global retail
sales growth, excluding foreign currency impact, was 4.5% and 5.2%
for the fourth quarter and fiscal 2023, respectively.
|
|
|
U.S. Company-
owned Stores
|
|
|
U.S. Franchise
Stores
|
|
|
Total
U.S. Stores
|
|
|
International
Stores
|
|
|
Total
|
|
Fourth quarter of
2023 store counts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Store count at
September 10, 2023
|
|
|
288
|
|
|
|
6,474
|
|
|
|
6,762
|
|
|
|
13,435
|
|
|
|
20,197
|
|
Openings
|
|
|
—
|
|
|
|
95
|
|
|
|
95
|
|
|
|
336
|
|
|
|
431
|
|
Closings
|
|
|
—
|
|
|
|
(3)
|
|
|
|
(3)
|
|
|
|
(34)
|
|
|
|
(37)
|
|
Store count at
December 31, 2023
|
|
|
288
|
|
|
|
6,566
|
|
|
|
6,854
|
|
|
|
13,737
|
|
|
|
20,591
|
|
Fourth quarter 2023
net store growth
|
|
|
—
|
|
|
|
92
|
|
|
|
92
|
|
|
|
302
|
|
|
|
394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Company-
owned Stores
|
|
|
U.S. Franchise
Stores
|
|
|
Total
U.S. Stores
|
|
|
International
Stores
|
|
|
Total
|
|
Fiscal 2023 store
counts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Store count at January
1, 2023
|
|
|
286
|
|
|
|
6,400
|
|
|
|
6,686
|
|
|
|
13,194
|
|
|
|
19,880
|
|
Openings
|
|
|
4
|
|
|
|
174
|
|
|
|
178
|
|
|
|
892
|
|
|
|
1,070
|
|
Closings
|
|
|
(1)
|
|
|
|
(9)
|
|
|
|
(10)
|
|
|
|
(349)
|
|
|
|
(359)
|
|
Transfers
|
|
|
(1)
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Store count at
December 31, 2023
|
|
|
288
|
|
|
|
6,566
|
|
|
|
6,854
|
|
|
|
13,737
|
|
|
|
20,591
|
|
Fiscal 2023 net store
growth
|
|
|
3
|
|
|
|
165
|
|
|
|
168
|
|
|
|
543
|
|
|
|
711
|
|
Fiscal 2023 net store
growth, excluding Russia (1)
|
|
|
3
|
|
|
|
165
|
|
|
|
168
|
|
|
|
702
|
|
|
|
870
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
As previously
announced, the remaining 143 net stores in Russia were reflected as
closed in the third quarter of 2023. Including those remaining
closures, 159 net stores in Russia were closed in fiscal 2023.
Refer to Comments on Regulation G and Russia Market
discussion below for additional details.
|
|
|
Fourth
Quarter
|
|
Fiscal
Year
|
(In millions, except
percentages, percentage points, per share
data and leverage ratio)
|
|
2023
|
|
2022
|
|
Increase/
(Decrease)
|
|
2023
|
|
2022
|
|
Increase/
(Decrease)
|
Total
revenues
|
|
$1,403.0
|
|
$1,392.2
|
|
+ 0.8 %
|
|
$4,479.4
|
|
$4,537.2
|
|
(1.3) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Company-owned
store gross margin
|
|
14.7 %
|
|
16.3 %
|
|
(1.6) pp
|
|
16.4 %
|
|
15.2 %
|
|
+ 1.2 pp
|
Supply chain gross
margin
|
|
10.9 %
|
|
8.2 %
|
|
+ 2.7 pp
|
|
10.2 %
|
|
8.9 %
|
|
+ 1.3 pp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations(1)
|
|
$257.2
|
|
$248.8
|
|
+ 3.4 %
|
|
$819.5
|
|
$767.9
|
|
+ 6.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$157.3
|
|
$158.3
|
|
(0.6) %
|
|
$519.1
|
|
$452.3
|
|
+
14.8 %
|
Diluted earnings per
share
|
|
$4.48
|
|
$4.43
|
|
+ 1.1 %
|
|
$14.66
|
|
$12.53
|
|
+
17.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leverage
ratio
|
|
|
|
|
|
|
|
5.2x
|
|
5.8x
|
|
(0.6)x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
|
|
|
|
|
|
$590.9
|
|
$475.3
|
|
+
24.3 %
|
Capital
expenditures
|
|
|
|
|
|
|
|
(105.4)
|
|
(87.2)
|
|
+
20.9 %
|
Free cash
flow
|
|
|
|
|
|
|
|
$485.5
|
|
$388.1
|
|
+
25.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Income from operations
in the fourth quarter and fiscal 2022 included a $21.2 million
pre-tax gain associated with the refranchising of 114 U.S.
Company-owned stores in Arizona and Utah (the "2022 Store
Sale").
|
- Revenues increased $10.7
million, or 0.8%, in the fourth quarter of 2023 as compared
to the fourth quarter of 2022, primarily due to higher global
franchise royalties and fees, resulting from global retail sales
growth (excluding foreign currency impact) and higher supply chain
revenues, partially offset by a decrease in U.S. franchise
advertising revenues. U.S. franchise royalties and fees also
benefited from an increase in fees paid by U.S. franchisees for the
use of the Company's technology platforms. The increase in supply
chain revenues was attributable to higher order volumes, partially
offset by a shift in the relative mix of the products we sell and a
decline in the Company's market basket pricing to stores. The
Company's market basket pricing to stores decreased 2.0% during the
fourth quarter of 2023 as compared to the fourth quarter of 2022.
The decrease in U.S. franchise advertising revenues was primarily
driven by an increase in advertising incentives related to certain
brand promotions in the fourth quarter of 2023 as compared to the
fourth quarter of 2022.
- U.S. Company-owned store gross margin decreased 1.6
percentage points in the fourth quarter of 2023 as compared to the
fourth quarter of 2022, primarily due to higher labor costs as a
result of higher wage rates, higher insurance costs and the
increase in the loyalty liability resulting from the relaunch of
the Domino's Rewards program. These pressures were partially offset
by higher same store sales driven by higher customer transaction
counts and a decrease in the Company's market basket pricing.
- Supply chain gross margin increased 2.7 percentage
points in the fourth quarter of 2023 as compared to the fourth
quarter of 2022, primarily due to lower food cost as a result of
procurement productivity and the decrease in the Company's market
basket pricing to stores.
- Income from operations increased $8.4 million, or 3.4%, in the fourth quarter of
2023 as compared to the fourth quarter of 2022 primarily due to
higher global franchise royalty revenues resulting from global
retail sales growth (excluding foreign currency impact) of 4.9%, as
well as higher supply chain gross margin, each as discussed above.
These increases in income from operations were partially offset by
the fourth quarter of 2022 pre-tax refranchising gain of
$21.2 million associated with the
2022 Store Sale, as well as higher general and administrative
expenses in the fourth quarter of 2023 driven by higher labor
costs.
- Net income decreased $1.0
million, or 0.6%, in the fourth quarter of 2023 as compared
to the fourth quarter of 2022 primarily due to an increase in the
Company's provision for income taxes. Provision for income taxes
increased in the fourth quarter of 2023 due to a higher effective
tax rate. The effective tax rate increased to 23.5% during the
fourth quarter of 2023 as compared to 16.6% in the fourth quarter
of 2022, primarily as a result of the release of certain
unrecognized tax benefits related to one of the Company's foreign
subsidiaries in the fourth quarter of 2022 that did not recur in
the fourth quarter of 2023 and a higher proportion of
non-deductible expenses associated with covered officer
compensation in the fourth quarter of 2023 as compared to the
fourth quarter of 2022. These pressures on net income were
partially offset by higher income from operations, as discussed
above.
- Diluted EPS was $4.48
in the fourth quarter of 2023 versus $4.43 in the fourth quarter of 2022, representing
a $0.05, or 1.1%, increase. This
$0.05 increase was driven by improved
operating results of $0.64, the
unrealized gain associated with the remeasurement of the Company's
investment in DPC Dash Ltd of $0.10,
lower net interest expense of $0.07
and a $0.07 increase driven by a
lower weighted average diluted share count. These favorable impacts
were partially offset by $0.46 for
the pre-tax refranchising gain on the 2022 Store Sale and an
unfavorable tax rate impact of $0.37.
- Net cash provided by operating activities was
$590.9 million in 2023 as compared to
$475.3 million in 2022. The Company
spent $105.4 million for capital
expenditures during 2023, as compared to $87.2 million during 2022, resulting in free
cash flow of $485.5 million in
2023 as compared to $388.1 million in
2022. The increase in free cash flow was primarily due to the
positive impact of changes in operating assets and liabilities and
higher net income, excluding non-cash operating activities,
partially offset by higher investments in capital
expenditures.
Quarterly Dividend
Subsequent to the end of the fourth quarter of 2023, on
February 21, 2024, the Company's
Board of Directors approved a 25% increase to its per share
quarterly dividend and a $1.51 per
share quarterly dividend was declared on its outstanding common
stock for shareholders of record as of March
15, 2024, to be paid on March 29,
2024.
Share Repurchases
During the fourth quarter of 2023, the Company repurchased and
retired 167,572 shares of common stock for a total of $58.2 million. As of December 31, 2023, the Company had a total
remaining authorized amount for share repurchases of $141.3 million. Subsequent to the end of the
fourth quarter of 2023, on February 21,
2024, the Company's Board of Directors authorized an
additional share repurchase program to repurchase up to
$1.0 billion of the Company's common
stock, in addition to the $141.3
million that was previously remaining for a total
authorization of $1.14 billion for
future share repurchases.
Long-Term Guidance (2024 – 2028)
The Company hosted its Investor Day on December 7, 2023, and announced the following
long-term guidance metrics that the Company continues to expect to
achieve. Annual global retail sales growth and annual income from
operations growth exclude the impact of foreign currency.
- 7%+ Annual global retail sales growth;
- 1,100+ Annual global net store growth;
- 8%+ Annual income from operations growth.
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 and
income from operations, excluding foreign currency impact. The
Company has also included metrics such as global retail sales,
global retail sales growth (excluding foreign currency impact),
same store sales growth, the market basket pricing change, the
impact of changes in foreign currency exchange rates on
international franchise royalty revenues and the leverage ratio,
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," a statistical
measure, 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 and are indicative of
the financial health of the franchisee base. In addition, supply
chain revenues are directly impacted by changes in franchise retail
sales in the U.S. and Canada. As a
result, sales by Domino's franchisees have a direct effect on the
Company's profitability. 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 2023 global retail sales
growth measures excluding the Russia market are calculated as the growth in
retail sales excluding the retail sales from the Russia market from both 2023 retail sales and
the 2022 retail sales base. Changes in global retail sales growth,
excluding foreign currency impact, are primarily driven by same
store sales growth and net store growth.
The Company uses "Same store sales growth," a statistical
measure, which is calculated by including only retail sales from
stores that also had sales in the comparable weeks of both periods.
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. Same store
sales growth for transferred stores is reflected in their current
classification.
The Company uses "Net store growth," a statistical
measure, which is calculated by netting gross store openings with
gross store closures during the period. Transfers between
Company-owned stores and franchised stores are excluded from the
calculation of net store growth.
The Company uses "Market basket pricing change," a
statistical measure, which is calculated as the percentage change
of the market basket purchased by an average U.S. store (based on
average weekly unit sales) from U.S. supply chain centers against
the comparable period of the prior year. The Company believes that
the market basket pricing change is important to investors and
other interested persons to understand the Company's performance.
As market basket prices fluctuate, revenues, cost of sales and
gross margin percentages in the Company's supply chain segment also
fluctuate. Additionally, cost of sales, gross margins and gross
margin percentages for the Company's U.S. Company-owned stores also
fluctuate.
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 most directly
comparable financial measure calculated and presented in accordance
with GAAP is net cash provided by operating activities. 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.
The Company uses "Income from operations, excluding foreign
currency impact," which is calculated as income from operations
as reported under GAAP, less the "impact of changes in foreign
currency exchange rates on international franchise royalty
revenues", a statistical measure. The most directly comparable
financial measure calculated and presented in accordance with GAAP
is income from operations. The impact of changes in foreign
currency exchange rates on international franchise royalty revenues
is calculated as the difference in international franchise royalty
revenues resulting from translating current period local currency
results to U.S. dollars at current period exchange rates as
compared to prior period exchange rates. The Company believes that
the impact of changes in foreign currency exchange rates on
international franchise royalty revenues is important to investors
and other interested persons to understand the Company's
international royalty revenues given the significant variability in
those revenues and that can be driven by changes in foreign
currency exchanges rates. International franchise royalty revenue
do not have a cost of sales component, so changes in these revenues
have a direct impact on income from operations.
The "Leverage ratio1," is calculated as the
Company's securitized debt related to its fixed-rate notes from the
recapitalizations completed in 2021, 2019, 2018, 2017 and 2015 and
borrowings under its variable funding notes, divided by Segment
Income as defined by the Company under Accounting Standards
Codification 280, Segment Reporting on a trailing four
quarters basis. The Company has historically operated with a
leverage ratio between four and six times. The Company reviews its
leverage ratio on at least a quarterly basis and believes its
leverage ratio is important to investors and other interested
persons to understand the capital structure of the Company, and to
assess the ability of the Company to meet its financial
obligations.
The reconciliation of the leverage ratio for the fourth quarter
of 2023 and 2022 is as follows:
|
|
December 31,
2023
|
|
|
January 1,
2023
|
|
2015 Ten-Year
Notes
|
|
$
|
744,000
|
|
|
$
|
752,000
|
|
2017 Ten-Year
Notes
|
|
|
942,500
|
|
|
|
952,500
|
|
2018 7.5-Year
Notes
|
|
|
403,750
|
|
|
|
408,000
|
|
2018 9.25-Year
Notes
|
|
|
380,000
|
|
|
|
384,000
|
|
2019 Ten-Year
Notes
|
|
|
649,688
|
|
|
|
656,438
|
|
2021 7.5-Year
Notes
|
|
|
828,750
|
|
|
|
837,250
|
|
2021 Ten-Year
Notes
|
|
|
975,000
|
|
|
|
985,000
|
|
Total fixed-rate
notes
|
|
$
|
4,923,688
|
|
|
$
|
4,975,188
|
|
|
|
|
|
|
|
|
Segment Income - fourth
quarter of 2023 and 2022
|
|
$
|
294,600
|
|
|
$
|
260,328
|
|
Segment Income - third
quarter of 2023 and 2022
|
|
|
217,287
|
|
|
|
201,264
|
|
Segment Income - second
quarter of 2023 and 2022
|
|
|
223,619
|
|
|
|
204,956
|
|
Segment Income - first
quarter of 2023 and 2022
|
|
|
203,615
|
|
|
|
190,977
|
|
Trailing four quarters
Segment Income
|
|
$
|
939,121
|
|
|
$
|
857,525
|
|
Leverage
ratio
|
|
|
5.2
|
x
|
|
|
5.8
|
x
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The Company also
calculates and reviews its senior leverage ratio and Holdco
leverage ratio as defined in the indenture governing the Company's
securitized debt. The senior leverage ratio and Holdco leverage
ratio are furnished on a quarterly basis in the respective
quarterly noteholders' statements.
|
Russia Market
On August 21, 2023, the Company's
master franchisee that owned and operated Domino's Pizza stores in
Russia announced its intent to
file for bankruptcy with respect to the stores in that market.
Therefore, as of August 21, 2023, the
Company has considered the stores in the Russia market to be closed and they are
excluded from the Company's ending store count as of the end of the
third quarter of 2023. The Company has disclosed its statistical
measure of net store growth for fiscal 2023 including and excluding
the impact of the closure of the Russia market. Additionally, the Company has
presented its statistical measure of global retail sales growth,
excluding foreign currency impact, for the fourth quarter and
fiscal 2023 excluding the impact of the retail sales from the
Russia market. The Company
believes the impact of the Russia
market on its statistical measure of global retail sales growth,
excluding foreign currency impact, for the fourth quarter and
fiscal 2022 were immaterial and prior amounts have not been
adjusted to conform to the current year presentation. The Company
believes the impact of the Russia
market on its statistical measure of same store sales growth for
the periods presented was immaterial, and it also believes the
impact of the Russia market on its
consolidated statements of income related to international
franchise royalties and fee revenues and general and administrative
expenses for the periods presented was immaterial.
Conference call information
The Company will file its Annual Report on Form 10-K today.
As previously announced, Domino's Pizza, Inc. will hold a
conference call today at 8:30
a.m. (Eastern) to review its fourth quarter and fiscal 2023
financial results. The webcast is available at
ir.dominos.com and will be archived for one year.
About Domino's Pizza®
Founded in 1960, Domino's Pizza is the largest pizza company in
the world, 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 20,500 stores in over
90 markets. Domino's had global retail sales of nearly $18.3 billion in 2023. Its system is comprised of
independent franchise owners who accounted for 99% of Domino's
stores as of the end of fiscal 2023. In the U.S., Domino's
generated more than 85% of U.S. retail sales in 2023 via digital
channels and has developed several innovative ordering platforms
including seven unique ways to order Domino's. In 2023, Domino's
launched Pinpoint Delivery, a new technology that allows customers
to receive a delivery nearly anywhere, including places like parks,
baseball fields and beaches.
Order – dominos.com
Company Info – biz.dominos.com
Media Assets – media.dominos.com
Please visit our Investor Relations website at
ir.dominos.com to view news, announcements, earnings releases,
investor presentations 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, store growth and the growth of our U.S. and
international business in general, our 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 filings with the Securities and Exchange
Commission, including under the section headed "Risk Factors" in
our Annual Report on Form 10-K for the fiscal year ended
December 31, 2023. 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 strength of our brand, including our ability to
compete in the U.S. and internationally in our intensely
competitive industry, including the food service and food delivery
markets; our ability to successfully implement our growth strategy,
including through our participation in the third-party order
aggregation marketplace; labor shortages or changes in operating
expenses resulting from increases in prices of food (particularly
cheese), fuel and other commodity costs, labor, utilities,
insurance, employee benefits and other operating costs or negative
economic conditions; the effectiveness of our advertising,
operations and promotional initiatives; shortages, interruptions or
disruptions in the supply or delivery of fresh food products and
store equipment; the impact of social media and other
consumer-oriented technologies on our business, brand and
reputation; the impact of new or improved technologies and
alternative methods of delivery on consumer behavior; new product,
digital ordering and concept developments by us, and other
food-industry competitors; the additional risks our international
operations subject us to; our ability to maintain good
relationships with and attract new franchisees, and franchisees'
ability to successfully manage their operations without negatively
impacting our royalty payments and fees or our brand's reputation;
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 or negative
economic conditions in general; our ability and that of our
franchisees to open new restaurants and keep existing restaurants
in operation and maintain demand for new stores; the impact that
widespread illness, health epidemics 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; changes in income tax
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, payment methods, advertising and consumer
protection and social media; adverse legal judgments or
settlements; food-borne illness or contamination of products or
food tampering or other events that may impact our reputation; data
breaches, power loss, technological failures, user error or other
cyber risks threatening us or our franchisees; the impact that
environmental, social and governance matters may have on our
business and reputation; the effect of war, terrorism, catastrophic
events, other geopolitical or reputational considerations or
climate change; our ability to pay dividends and repurchase shares;
changes in consumer tastes, 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)
|
|
|
|
|
|
|
|
Fourth Quarter
Ended
|
|
|
|
December 31,
2023
|
|
|
% of
Total
Revenues
|
|
|
January 1,
2023
|
|
|
% of
Total
Revenues
|
|
(In thousands, except
share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Company-owned
stores
|
|
$
|
117,298
|
|
|
|
|
|
$
|
117,025
|
|
|
|
|
U.S. franchise
royalties and fees
|
|
|
194,443
|
|
|
|
|
|
|
177,008
|
|
|
|
|
Supply
chain
|
|
|
856,986
|
|
|
|
|
|
|
852,527
|
|
|
|
|
International
franchise royalties and fees
|
|
|
96,769
|
|
|
|
|
|
|
92,204
|
|
|
|
|
U.S. franchise
advertising
|
|
|
137,476
|
|
|
|
|
|
|
153,467
|
|
|
|
|
Total
revenues
|
|
|
1,402,972
|
|
|
|
100.0
|
%
|
|
|
1,392,231
|
|
|
|
100.0
|
%
|
Cost of
sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Company-owned
stores
|
|
|
100,064
|
|
|
|
|
|
|
97,989
|
|
|
|
|
Supply
chain
|
|
|
763,863
|
|
|
|
|
|
|
782,375
|
|
|
|
|
Total cost of
sales
|
|
|
863,927
|
|
|
|
61.6
|
%
|
|
|
880,364
|
|
|
|
63.2
|
%
|
Gross margin
|
|
|
539,045
|
|
|
|
38.4
|
%
|
|
|
511,867
|
|
|
|
36.8
|
%
|
General and
administrative
|
|
|
144,368
|
|
|
|
10.3
|
%
|
|
|
130,755
|
|
|
|
9.4
|
%
|
U.S. franchise
advertising
|
|
|
137,476
|
|
|
|
9.8
|
%
|
|
|
153,467
|
|
|
|
11.0
|
%
|
Refranchising
gain
|
|
|
—
|
|
|
|
—
|
|
|
|
(21,173)
|
|
|
|
(1.5)
|
%
|
Income from
operations
|
|
|
257,201
|
|
|
|
18.3
|
%
|
|
|
248,818
|
|
|
|
17.9
|
%
|
Other income
|
|
|
4,446
|
|
|
|
0.3
|
%
|
|
|
—
|
|
|
|
0.0
|
%
|
Interest expense,
net
|
|
|
(56,152)
|
|
|
|
(4.0)
|
%
|
|
|
(59,033)
|
|
|
|
(4.3)
|
%
|
Income before provision
for income taxes
|
|
|
205,495
|
|
|
|
14.6
|
%
|
|
|
189,785
|
|
|
|
13.6
|
%
|
Provision for income
taxes
|
|
|
48,203
|
|
|
|
3.4
|
%
|
|
|
31,483
|
|
|
|
2.2
|
%
|
Net income
|
|
$
|
157,292
|
|
|
|
11.2
|
%
|
|
$
|
158,302
|
|
|
|
11.4
|
%
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock –
diluted
|
|
$
|
4.48
|
|
|
|
|
|
$
|
4.43
|
|
|
|
|
Weighted average
diluted shares
|
|
|
35,141,199
|
|
|
|
|
|
|
35,715,408
|
|
|
|
|
Domino's Pizza, Inc.
and Subsidiaries
Condensed
Consolidated Statements of Income
(Unaudited)
|
|
|
|
|
|
|
|
Fiscal Year
Ended
|
|
|
|
December 31,
2023
|
|
|
% of
Total
Revenues
|
|
|
January 1,
2023
|
|
|
% of
Total
Revenues
|
|
(In thousands, except
share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Company-owned
stores
|
|
$
|
376,180
|
|
|
|
|
|
$
|
445,810
|
|
|
|
|
U.S. franchise
royalties and fees
|
|
|
604,897
|
|
|
|
|
|
|
556,269
|
|
|
|
|
Supply
chain
|
|
|
2,715,009
|
|
|
|
|
|
|
2,754,742
|
|
|
|
|
International
franchise royalties and fees
|
|
|
310,077
|
|
|
|
|
|
|
295,007
|
|
|
|
|
U.S. franchise
advertising
|
|
|
473,195
|
|
|
|
|
|
|
485,330
|
|
|
|
|
Total
revenues
|
|
|
4,479,358
|
|
|
|
100.0
|
%
|
|
|
4,537,158
|
|
|
|
100.0
|
%
|
Cost of
sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Company-owned
stores
|
|
|
314,673
|
|
|
|
|
|
|
378,018
|
|
|
|
|
Supply
chain
|
|
|
2,437,268
|
|
|
|
|
|
|
2,510,534
|
|
|
|
|
Total cost of
sales
|
|
|
2,751,941
|
|
|
|
61.4
|
%
|
|
|
2,888,552
|
|
|
|
63.7
|
%
|
Gross margin
|
|
|
1,727,417
|
|
|
|
38.6
|
%
|
|
|
1,648,606
|
|
|
|
36.3
|
%
|
General and
administrative
|
|
|
434,554
|
|
|
|
9.7
|
%
|
|
|
416,524
|
|
|
|
9.2
|
%
|
U.S. franchise
advertising
|
|
|
473,195
|
|
|
|
10.6
|
%
|
|
|
485,330
|
|
|
|
10.7
|
%
|
Refranchising loss
(gain)
|
|
|
149
|
|
|
|
0.0
|
%
|
|
|
(21,173)
|
|
|
|
(0.5)
|
%
|
Income from
operations
|
|
|
819,519
|
|
|
|
18.3
|
%
|
|
|
767,925
|
|
|
|
16.9
|
%
|
Other income
|
|
|
17,713
|
|
|
|
0.4
|
%
|
|
|
—
|
|
|
|
0.0
|
%
|
Interest expense,
net
|
|
|
(184,792)
|
|
|
|
(4.1)
|
%
|
|
|
(195,092)
|
|
|
|
(4.3)
|
%
|
Income before provision
for income taxes
|
|
|
652,440
|
|
|
|
14.6
|
%
|
|
|
572,833
|
|
|
|
12.6
|
%
|
Provision for income
taxes
|
|
|
133,322
|
|
|
|
3.0
|
%
|
|
|
120,570
|
|
|
|
2.6
|
%
|
Net income
|
|
$
|
519,118
|
|
|
|
11.6
|
%
|
|
$
|
452,263
|
|
|
|
10.0
|
%
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock –
diluted
|
|
$
|
14.66
|
|
|
|
|
|
$
|
12.53
|
|
|
|
|
Weighted average
diluted shares
|
|
|
35,401,313
|
|
|
|
|
|
|
36,093,754
|
|
|
|
|
Domino's Pizza, Inc.
and Subsidiaries
Condensed
Consolidated Balance Sheets
(Unaudited)
|
|
|
|
|
|
|
|
|
|
December 31,
2023
|
|
|
January 1,
2023
|
|
(In
thousands)
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
114,098
|
|
|
$
|
60,356
|
|
Restricted cash and
cash equivalents
|
|
|
200,870
|
|
|
|
191,289
|
|
Accounts receivable,
net
|
|
|
282,809
|
|
|
|
257,492
|
|
Inventories
|
|
|
82,964
|
|
|
|
81,570
|
|
Prepaid expenses and
other
|
|
|
30,215
|
|
|
|
37,287
|
|
Advertising fund
assets, restricted
|
|
|
106,335
|
|
|
|
162,660
|
|
Total current
assets
|
|
|
817,291
|
|
|
|
790,654
|
|
Property, plant and
equipment, net
|
|
|
304,365
|
|
|
|
302,235
|
|
Operating lease
right-of-use assets
|
|
|
207,323
|
|
|
|
219,202
|
|
Investment in DPC
Dash
|
|
|
143,553
|
|
|
|
125,840
|
|
Other assets
|
|
|
202,367
|
|
|
|
164,290
|
|
Total assets
|
|
$
|
1,674,899
|
|
|
$
|
1,602,221
|
|
Liabilities and
stockholders' deficit
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Current portion of
long-term debt
|
|
$
|
56,366
|
|
|
$
|
54,813
|
|
Accounts
payable
|
|
|
106,267
|
|
|
|
89,715
|
|
Operating lease
liabilities
|
|
|
39,330
|
|
|
|
34,877
|
|
Advertising fund
liabilities
|
|
|
104,246
|
|
|
|
157,909
|
|
Other accrued
liabilities
|
|
|
241,141
|
|
|
|
199,307
|
|
Total current
liabilities
|
|
|
547,350
|
|
|
|
536,621
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
Long-term debt, less
current portion
|
|
|
4,934,062
|
|
|
|
4,967,420
|
|
Operating lease
liabilities
|
|
|
179,548
|
|
|
|
195,244
|
|
Other accrued
liabilities
|
|
|
84,306
|
|
|
|
92,001
|
|
Total long-term
liabilities
|
|
|
5,197,916
|
|
|
|
5,254,665
|
|
Total stockholders'
deficit
|
|
|
(4,070,367)
|
|
|
|
(4,189,065)
|
|
Total liabilities and
stockholders' deficit
|
|
$
|
1,674,899
|
|
|
$
|
1,602,221
|
|
Domino's Pizza, Inc.
and Subsidiaries
Condensed
Consolidated Statements of Cash Flows
(Unaudited)
|
|
|
|
|
|
|
Fiscal Year
Ended
|
|
|
|
December 31,
2023
|
|
|
January 1,
2023
|
|
(In
thousands)
|
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
Net income
|
|
$
|
519,118
|
|
|
$
|
452,263
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
80,640
|
|
|
|
80,251
|
|
Refranchising loss
(gain)
|
|
|
149
|
|
|
|
(21,173)
|
|
Loss on sale/disposal
of assets
|
|
|
1,299
|
|
|
|
1,813
|
|
Amortization of debt
issuance costs
|
|
|
5,535
|
|
|
|
5,645
|
|
(Benefit) provision
for deferred income taxes
|
|
|
(19,509)
|
|
|
|
253
|
|
Non-cash equity-based
compensation expense
|
|
|
37,514
|
|
|
|
28,709
|
|
Excess tax benefits
from equity-based compensation
|
|
|
(3,397)
|
|
|
|
(2,169)
|
|
Provision for losses
on accounts and notes receivable
|
|
|
1,472
|
|
|
|
3,536
|
|
Unrealized gain on
investments
|
|
|
(17,713)
|
|
|
|
—
|
|
Changes in operating
assets and liabilities
|
|
|
38,487
|
|
|
|
(56,316)
|
|
Changes in advertising
fund assets and liabilities, restricted
|
|
|
(52,731)
|
|
|
|
(17,495)
|
|
Net cash provided by
operating activities
|
|
|
590,864
|
|
|
|
475,317
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(105,396)
|
|
|
|
(87,234)
|
|
Proceeds from sale of
assets
|
|
|
161
|
|
|
|
41,089
|
|
Purchase of franchise
operations and other assets
|
|
|
—
|
|
|
|
(6,814)
|
|
Other
|
|
|
(1,682)
|
|
|
|
(722)
|
|
Net cash used in
investing activities
|
|
|
(106,917)
|
|
|
|
(53,681)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
Proceeds from issuance
of long-term debt
|
|
|
14,898
|
|
|
|
120,000
|
|
Repayments of
long-term debt and finance lease obligations
|
|
|
(55,705)
|
|
|
|
(175,676)
|
|
Proceeds from exercise
of stock options
|
|
|
8,656
|
|
|
|
3,312
|
|
Purchases of common
stock
|
|
|
(269,025)
|
|
|
|
(293,740)
|
|
Tax payments for
restricted stock upon vesting
|
|
|
(5,410)
|
|
|
|
(10,720)
|
|
Payments of common
stock dividends and equivalents
|
|
|
(169,772)
|
|
|
|
(157,531)
|
|
Cash paid for
financing costs
|
|
|
—
|
|
|
|
(1,594)
|
|
Net cash used in
financing activities
|
|
|
(476,358)
|
|
|
|
(515,949)
|
|
Effect of exchange rate
changes on cash
|
|
|
340
|
|
|
|
(963)
|
|
Change in cash and cash
equivalents, restricted cash and cash equivalents
|
|
|
7,929
|
|
|
|
(95,276)
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period
|
|
|
60,356
|
|
|
|
148,160
|
|
Restricted cash and
cash equivalents, beginning of period
|
|
|
191,289
|
|
|
|
180,579
|
|
Cash and cash
equivalents included in advertising fund assets, restricted,
beginning of period
|
|
|
143,559
|
|
|
|
161,741
|
|
Cash and cash
equivalents, restricted cash and cash equivalents and
cash and cash equivalents included in advertising fund
assets, restricted,
beginning of period
|
|
|
395,204
|
|
|
|
490,480
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, end of period
|
|
|
114,098
|
|
|
|
60,356
|
|
Restricted cash and
cash equivalents, end of period
|
|
|
200,870
|
|
|
|
191,289
|
|
Cash and cash
equivalents included in advertising fund assets, restricted,
end of period
|
|
|
88,165
|
|
|
|
143,559
|
|
Cash and cash
equivalents, restricted cash and cash equivalents and cash and
cash equivalents included in advertising fund assets,
restricted,
end of period
|
|
$
|
403,133
|
|
|
$
|
395,204
|
|
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SOURCE Domino's Pizza, Inc.