Domino’s Pizza: Announces Q2-2019 Financial Results

Ann Arbor / MG. (dp) Domino’s Pizza Inc., the largest pizza company in the world based on global retail sales, announced results for the second quarter, comprised of growth in global retail sales and earnings per share. Global retail sales increased 5.1 percent in the second quarter, or 8.4 percent without the negative impact of changes in foreign currency exchange rates. U.S. same store sales grew 3.0 percent during the quarter versus the prior year quarter, continuing the positive sales momentum in the Company’s U.S. business. The international division also posted positive results, with same store sales growth of 2.4 percent during the quarter. The second quarter marked the 102nd consecutive quarter of international same store sales growth and the 33rd consecutive quarter of U.S. same store sales growth. The Company had second quarter global net store growth of 200 stores, comprised of 42 net new U.S. stores and 158 net new international stores.

Diluted EPS was USD 2.19 for the second quarter of 2019, up 23.0 percent over the prior year quarter and up 19.0 percent over the prior year quarter diluted EPS, as adjusted(1).

On July 10, 2019, the Company’s Board of Directors declared a USD 0.65 per share quarterly dividend for shareholders of record as of September 13, 2019 to be paid on September 30, 2019.

«It was a good second quarter, particularly for global unit growth, as we continue to seek balanced retail sales growth through the blend of same store sales and store growth,» said Ritch Allison, Domino’s Chief Executive Officer. «As a work-in-progress brand, we are constantly striving to improve in needed areas, execute our long-term strategy and build toward Dominant No 1 – a goal I continue to feel we are built to achieve.»

Second Quarter 2019 Highlights

(USD in millions, except per share data)		Q2/2019				Q2/2018				H1-2019				H1-2018
Net income		USD	92.4			USD	77.4			USD	185.0			USD	166.2
Weighted average diluted shares			42,236,507				43,582,996				42,219,649				43,981,253
Diluted EPS		USD	2.19			USD	1.78			USD	4.38			USD	3.78
Items affecting comparability (1)			–				0.07				–				0.07
Diluted EPS, as adjusted (1)		USD	2.19			USD	1.84			USD	4.38			USD	3.85

(1)Refer to the Financial Results Comparability section on page three and the Comments on Regulation G section on page four for additional details. Diluted EPS, as adjusted, figures may not sum to the total due to the rounding of each individual calculation.

• Revenues increased USD 32.2 million, or 4.1 percent, in the second quarter of 2019. This increase was primarily due to an increase in worldwide store counts during the trailing four quarters as well as U.S. and international same store sales growth, resulting in higher supply chain and global franchise revenues. The increase in international franchise revenues was partially offset by the negative impact of changes in foreign currency exchange rates. These increases were partially offset by a decrease in U.S. Company-owned store revenues due to the previously announced sale of 59 U.S. Company-owned stores to existing U.S. franchisees in the second quarter of 2019 (the «Second Quarter Store Sale»).
• Net Income increased USD 15.0 million, or 19.3 percent, in the second quarter of 2019. This increase was primarily driven by higher royalty revenues from U.S. and international franchised stores and higher supply chain volumes. Higher tax benefits from equity-based compensation as compared to the prior year quarter also positively impacted net income. Lower net interest expense in the second quarter of 2019 further benefited net income as a result of USD 3.3 million of incremental interest expense recorded in the second quarter of 2018 as part of the Company’s 2018 recapitalization transaction (see the Financial Results Comparability section on page three). These increases in net income were partially offset by higher general and administrative expenses, primarily due to a USD 2.4 million pre-tax loss from the Second Quarter Store Sale.
• Diluted EPS was USD 2.19 for the second quarter of 2019 versus USD 1.78 in the second quarter of 2018, which represents an increase of 23.0 percent. Diluted EPS was USD 2.19 for the second quarter of 2019 versus diluted EPS, as adjusted, of USD 1.84 in the second quarter of 2018, which represents an increase of 19.0 percent. The increase in diluted EPS was driven by higher net income, as well as lower diluted share count, primarily as a result of the Company’s share repurchases made during the trailing four quarters. (See the Financial Results Comparability section on page three and the Comments on Regulation G section on page four for additional details.)

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 four for additional details.

		Q2/2019				Q2/2018
Same store sales growth: (versus prior year period)
U.S. Company-owned stores(1)			+ 2.1	%			+ 5.1	%
U.S. franchise stores(1)			+ 3.1	%			+ 7.0	%
U.S. stores			+ 3.0	%			+ 6.9	%
International stores (excluding foreign currency impact)			+ 2.4	%			+ 4.0	%
.
Global retail sales growth: (versus prior year period)
U.S. stores			+ 6.8	%			+11.4	%
International stores			+ 3.5	%			+13.8	%
Total			+ 5.1	%			+12.6	%
.
Global retail sales growth: (versus prior year period, excluding foreign currency impact)
U.S. stores			+ 6.8	%			+11.4	%
International stores			+ 9.8	%			+10.6	%
Total			+ 8.4	%			+11.0	%

(1)During the second quarter of 2019, the Company sold 59 U.S. Company-owned stores to certain of its existing U.S. franchisees. The same store sales growth for these stores is reflected in U.S. franchise stores in the second quarter of 2019.

		U.S. Company- owned Stores				U.S. Franchise Stores				Total U.S. Stores				International Stores				Total
Store counts:
Store count at March 24, 2019			392				5,511				5,903				10,211				16,114
Openings			1				44				45				171				216
Closings			(1)				(2)				(3)				(13)				(16)
Transfers			(59)				59				–				–				–
Store count at June 16, 2019			333				5,612				5,945				10,369				16,314
Second quarter 2019 net store growth(2)			–				42				42				158				200
Trailing four quarters net store growth(2)			8				245				253				939				1,192

(2)Net store growth does not include the effect of transfers. In the second quarter of 2019, the Company sold 59 U.S. Company-owned stores to certain of its existing U.S. franchisees. In the third quarter of 2018, the Company sold 12 U.S. Company-owned stores to a U.S. franchisee.