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Domino's Pizza® Announces First Quarter 2016 Financial Results

Strong Fundamentals and Continued Innovation Help Drive Positive Results

ANN ARBOR, Mich., April 28, 2016 /PRNewswire/ -- Domino's Pizza, Inc. (NYSE: DPZ), 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.

Domino's

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


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. 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 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 domestic 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, paying dividends or other similar uses of cash.

About Domino's Pizza®

Founded in 1960, Domino's Pizza is the recognized world leader in pizza delivery, with a significant business in carryout pizza. It ranks among the world's top public restaurant brands with a global enterprise of more than 12,600 stores in over 80 international markets. Domino's had global retail sales of over $9.9 billion in 2015, with more than $4.8 billion in the U.S. and nearly $5.1 billion internationally. In the first quarter of 2016, Domino's had global retail sales of over $2.3 billion, with over $1.1 billion in the U.S. and nearly $1.2 billion internationally. Its system is comprised of independent franchise owners who accounted for nearly 97% of Domino's stores as of the first quarter of 2016. Emphasis on technology innovation helped Domino's generate over 50% of U.S. sales from digital channels at the end of 2015, and an estimated $4.7 billion annually in global digital sales. Domino's features an ordering app lineup that covers nearly 95% of the U.S. smartphone market and recently introduced several innovative ordering platforms, including Ford SYNC®, Samsung Smart TV® Apple Watch and Amazon Echo, as well as Twitter and text message using a pizza emoji. In late 2015, Domino's announced the design and launch of the DXP®, a purpose-built pizza delivery vehicle, as well as its first digital customer loyalty program.

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 a schedule of upcoming earnings releases, significant announcements and conference webcasts.

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

This press release contains forward-looking statements. You can identify forward-looking statements because they contain words such as "believes," "expects," "may," "will," "should," "seeks," "approximately," "intends," "plans," "estimates," or "anticipates" or similar expressions that concern our strategy, plans or intentions. These forward-looking statements relating to our anticipated profitability, estimates in same store sales growth, the growth of our 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. However, actual results are subject to future risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties that could cause actual results to differ materially include: the level of our long-term and other indebtedness; uncertainties relating to litigation; consumer preferences, spending patterns and demographic trends; the effectiveness of our advertising, operations and promotional initiatives; the strength of our brand in the markets in which we compete; our ability to retain key personnel; new product, digital ordering and concept developments by us, and other food-industry competitors; the ongoing level of profitability of our franchisees; 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), labor, utilities, insurance, employee benefits and other operating costs; the impact that widespread illness or general health concerns may have on our business and the economy of the countries where we operate; severe weather conditions and natural disasters; changes in our effective tax rate; changes in foreign currency exchange rates; changes in government legislation and regulations; adequacy of our insurance coverage; costs related to future financings; our ability and that of our franchisees to successfully operate in the current credit environment; changes in the level of consumer spending given the general economic conditions including interest rates, energy prices and consumer confidence; availability of borrowings under our variable funding notes and our letters of credit; and changes in accounting policies. 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. These forward-looking statements speak only as of the date of this press release, and you should not rely on such statements as representing the views of the Company as of any subsequent date. Except as required by applicable securities laws, we do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

TABLES TO FOLLOW

 

 

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

 

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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/dominos-pizza-announces-first-quarter-2016-financial-results-300259103.html

SOURCE Domino's Pizza

Lynn Liddle, Executive Vice President, Communications, Investor Relations and Legislative Affairs, (734) 930-3008