News

Papa John's credits digital and international for positive Q3 results

November 2, 2016

Papa John's today announced strong financial results for the third quarter of 2016, and year to date, ending Sept. 25. 

Highlights include: 

• A 26.7 percent increase in third-quarter earnings per diluted share of $0.57 in 2016 over 2015.
• A 5.5 percent increase in North American system-wide comparable sales.
• A 7.6 percent increase in third quarter international system-wide comparable sales. 
• 36 worldwide net unit openings in the third quarter.
• Increased 2016 diluted earnings per share guidance from $2.35 to $2.45 to $2.46 to $2.52. 

"We are pleased that our strong performance continued in the third quarter, with excellent comp sales, earnings and unit growth," said Papa John’s founder, chairman and CEO John Schnatter, in a news release. "With continued enhancements to our digital platforms, expansion of our international footprint, and the introduction of our new pan pizza, 2016 is shaping up to be another outstanding year for Papa John’s."

Third quarter 2016 revenues increased 8.5 percent over the same period in 2015 to $422.4 million. Q3 2016 net income grew 19.5 percent over 2015’s number to $21.5 million. 

Revenues for the first nine months of 2016 were up 4.4 percent over the same period last year to $1.27 billion, while diluted earnings per share were $1.86 for the first nine months of 2016, compared to $1.27 for the same period in 2015. 

Revenue highlights include:

Q3 2016 consolidated revenues increase of $33.2 million, or 8.5 percent, as well as a $3.4 million increase or 4.4 percent for the nine months ended Sept. 25, 2016. Those revenue increases were primarily due to:

• Domestic company-owned restaurant sales increased $19 million, or 10.5 percent, and $45.7 million, or 8.1 percent for the three and nine months, respectively, primarily due to increases of 6.3 and 4.2 percent in comparable sales and increases of 5.1 and 4.8 in equivalent units, including 20 restaurants acquired from franchisees during the first quarter of 2016.
• Domestic franchise royalties and fees increased approximately $2.5 million, or 11.2 percent, and $5.4 million, or 7.5 percent, for the three and nine months, respectively, primarily due to increases of 5.1 percent and 3.0 percent in comparable sales and reduced levels of royalty incentives in 2016.
• China company-owned restaurant revenues were $1.4 million and $4.0 million lower than the prior year three- and nine-month periods, respectively, primarily due to negative comparable sales and fewer restaurants in 2016.

Foreign currency exchange rates reduced international revenues by approximately $3.7 million and $7.7 million for the three- and nine-months periods, respectively.

Operating highlights include: 

Third quarter 2016 income before income taxes increased approximately $5.4 million, or 20.5 percent, compared to the prior year period. The increase of $5.4 million was primarily due to the following:

• Domestic company-owned restaurants increased approximately $3.5 million primarily due to a 6.3 percent increase in comparable sales, a 5.1 percent increase in equivalent units, and lower commodity costs.
• Domestic commissaries income increased approximately $1.1 million primarily due to higher sales volumes.
• North America franchising income increased approximately $2.7 million primarily due to higher royalties attributable to the 5.1 percent increase in comparable sales and lower sales and development incentives.
• International income decreased approximately $100,000 primarily due to a non-recurring charge of approximately $800,000 to record our United Kingdom lease arrangements on a straight line basis. This decrease was substantially offset by higher royalties from an increase in the number of restaurants and an increase in comparable sales. 
• All others income increased approximately $900,000 primarily due to improved operating results in our online and mobile ordering business and our print and promotions subsidiary.
• Unallocated corporate expenses increased approximately $2.9 million primarily due to increases in management incentive costs from higher annual operating results and higher interest costs due to an increase in outstanding debt.