- WHITE PAPERS
LOUISVILLE, Ky.—Papa John's International, Inc. reported that revenues for full year 2003, ended Dec. 28, were $917.4 million, a decrease of 3 percent from 2002's $946.2 million. Net income for the period was $34 million (prior to the cumulative effect impact of adopting Statement of Financial Accounting Standards No. 150 [SFAS No. 150]) compared to $46.8 million in 2002.
For the full 12 months, domestic systemwide comparable-store sales decreased 3.5 percent (composed of a 3 percent decrease at company-owned units and a 3.6 percent decrease at franchise units).
According to the company, 2003's numbers were hurt "by the overall competitive environment, including significant price discounting in the industry."
During the year Papa John's opened 105 domestic and international units (10 company-owned and 93 franchised Papa John's units and two franchised Perfect Pizza units), but closed 116 units (28 company-owned and 77 franchised Papa John's units and 11 franchised Perfect Pizza units).
As of Dec. 28, there were 2,790 Papa John's units (570 company-owned and 2,220 franchised) operating in 49 states and 15 international markets. Papa John's also has 135 franchised Perfect Pizza units in the United Kingdom.
Full-year EPS decreased to $1.88 (prior to SFAS No. 150 adoption) compared to $2.31 in 2002, a drop of 18.6 percent.
In the fourth quarter 2003, ended Dec. 28, revenues were $239 million, representing an increase of 1.2 percent over 2002's $236.1 million. Net income was $8.2 million and EPS was 46 cents, compared to net income of $11.1 million or 59 cents per share during the same period in 2002. Comparable-store sales during the fourth quarter increased 0.7 percent (composed of a 2.4 percent increase at company-owned stores and a 0.2 percent increase at franchise stores).
Full-year operating highlights in brief:
* Domestic corporate unit sales were $416 million compared to $429.8 million for the same period in 2002, a drop of 3.2 percent.
* Domestic franchise sales decreased 2.2 percent in 2003 to $1.3 billion.
* Average weekly sales for units included in the corporate comparable base were $13,959, while other corporate units averaged $10,956 for an overall average of $13,872. Average weekly sales for units included in the franchise comparable base were $12,552, while other franchise units averaged $10,706 for an overall average of $12,476.
* Average operating margin at domestic company-owned units was 16.9 percent for 2003 compared to 20.9 percent in 2002, due largely to increased store management compensation.
Fourth quarter operating highlights in brief:
* Company store sales were $107.6 million compared to $106.4 million for the same period in 2002, up 1.1 percent.
* Domestic franchise sales increased 1.6 percent to $329.4 million from $324.1 million, a 0.2 percent increase compared to the period in 2002.
* Average weekly unit sales included in the corporate comparable base were $14,661, while other corporate units averaged $10,477 for an overall average of $14,493. Average weekly sales for the units included in the franchise comparable base were $12,790, while other franchise units averaged $10,676 for an overall average of $12,705.
* Average store operating margin at domestic company-owned units was 17.1 percent compared to 19.6 percent for the same period in 2002. The difference was largely attributable to increased store management compensation.
2004 begins on the plus side
Comp-store sales for February were up a modest 2.2 percent (a 1.9 percent increase at company-owned units and a 2.3 percent increase at franchised units), but the trend followed nicely on the heels of January's 4 percent increase.
"Although the current industry and overall economic environment continue to be challenging," the release read, "we are encouraged by our recently reported results—four of the last five reported periods (October 2003 through February 2004) have realized increases in comparable sales."
Going forward, the company reaffirmed its 2004 earnings guidance of $2.20 to $2.28 per share, well above its 2003 performance. This year's EPS is expected to get a small boost from the company's recently extended stock repurchasing program, in which it may purchase roughly $48 million worth of shares throughout 2004. Over the past few years, Papa John's has repurchased about $352 million of its own stock.
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