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Papa John's (PZZA) Q1 Earnings & Revenues Surpass Estimates

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Papa John’s International, Inc. (PZZA - Free Report) reported better-than-expected first-quarter 2019 results. Adjusted earnings of 31 cents per share surpassed the Zacks Consensus Estimate of 21 cents by 47.6%. However, the bottom line fell 40.4% from the year-ago quarter figure due to weak operating results.

Revenues totaled $398.4 million, which outpaced the Zacks Consensus Estimate of $374 million. However, the top line declined 11.5% on a year-over-year basis. This downside can be attributed to dismal domestic company-owned restaurant sales, a decline in North America commissary sales on weak volume and soft international sales.

Global Restaurant Sales & Comps

In the first quarter, global restaurant sales decreased 5.5%, comparing favorably with the fourth quarter's decline of 13% but unfavorably with the year-ago quarter’s fall of 1.3%. Excluding foreign currency impact, global restaurant sales declined 3.7% compared with the previous quarter’s decrease of 11.7%. In the year-ago quarter, the metric declined 1%.

Domestic company-owned restaurant comps were down 9% in the reported quarter compared with a 6.1% comps decline in the year-ago quarter.

At North America franchised restaurants, comps fell 6.1% compared with a comps decline of 5% in the first quarter of 2018. Also, comps at system-wide North America restaurants decreased 6.9% compared with 5.3% decline in the year-ago quarter.

Comps at system-wide international restaurants were down 0.1% against comps growth of 0.3% in the prior-year quarter.

Papa John's International, Inc. Price, Consensus and EPS Surprise

 

Operating Highlights

Total operating income was $5.5 million in the first quarter compared with operating income of $28.1 million in the year-ago quarter. Total costs and expenses amounted to $392.9 million, down 6.9% from first-quarter 2018.

Balance Sheet

As of Mar 31, 2019, cash and cash equivalents totaled $29.3 million compared with $33.3 million as of Dec 30, 2018. Long-term debt was $601.1 million at the end of the fourth quarter of 2018 compared with $446.6 million at the end of 2017.

Inventories at the end of the reported quarter increased to $30 million from $20 million at the end of Dec 30, 2018. Free cash flow in the first quarter of 2019 summed $3.1 million compared with $27.4 million at the end of 2018.

The company paid cash dividends of $9.1 million in the first quarter of 2019 and declared the second quarter cash dividend of approximately $10.6 million.

2019 Guidance Reaffirmed

Papa John's issued an outlook for 2019 in the fourth quarter of 2018. The company stated that it reaffirms previous guidance.

Management expects adjusted earnings per share (EPS) of $1.00-$1.20 compared with $1.34 reported in 2018. While North America comps are expected to decline 1-5%, International comps are anticipated to be flat to up 3%. Capital expenditure of $45-$50 million is expected during 2019.

Zacks Rank & Peer Releases

Papa John’s currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Chipotle (CMG - Free Report) reported better-than-expected results in the first quarter of 2019. Adjusted earnings of $3.40 per share surpassed the Zacks Consensus Estimate of $3.01 by 13%. The bottom line also grew 59.6% from the year-ago quarter, backed by increased revenues and lower food costs.

Domino’s (DPZ - Free Report) reported mixed first-quarter 2019 financial numbers, wherein earnings outpaced the Zacks Consensus Estimate but revenues missed the same. Adjusted earnings of $2.20 per share surpassed the Zacks Consensus Estimate of $2.07 and increased 10% on a year-over-year basis. Thisbottom-line improvement was driven by higher net income and lower diluted share count as a result of share repurchases.

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