Papa John’s International, Inc. PZZA recorded better-than-expected third-quarter fiscal 2024 results, wherein adjusted earnings and revenues topped the Zacks Consensus Estimate. However, the metrics declined on a year-over-year basis.
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The year-over-year performance decline was attributable to a decrease in International revenues due to the adverse impact of the U.K. company-owned restaurants and a decrease in Domestic company-owned restaurant sales, reflecting lower transaction volumes. Also, the detrimental impacts of the sale of Preferred Marketing added to the downtrend.
The headwinds were offset to some extent by the increase in the North America commissary revenues, driven by higher commodity prices.
Following the earnings release, the PZZA stock lost 2.1% in the pre-market trading session on Thursday.
PZZA’s Earnings & Revenue Discussion
The company reported adjusted earnings per share (EPS) of 43 cents, which beat the Zacks Consensus Estimate of 42 cents by 2.4%. It reported an adjusted EPS of 53 cents in the prior-year quarter.
Papa John's International, Inc. Price, Consensus and EPS Surprise
Papa John's International, Inc. price-consensus-eps-surprise-chart | Papa John's International, Inc. Quote
Quarterly revenues of $506.8 million also topped the consensus mark of $492 million by 3.1%. However, the top line declined 3.1% on a year-over-year basis.
Global Restaurant Sales & Comps of Papa John’s
Total comparable sales declined 4.9% year over year against 2.2% growth in the prior-year quarter. We projected the metric to decline 5.8%.
Domestic company-owned restaurant comps declined 6.7% year over year against 5.9% growth in the year-ago quarter. We projected the metric to decline 8%. At North America’s franchised restaurants, comps fell 5.3% year over year against 2.2% growth in the year-ago quarter. Comps at North America’s restaurants declined 5.6% year over year against 2.9% growth in the year-ago quarter.
Comps at international restaurants were down 2.8% year over year compared with a 0.3% decline in the prior-year quarter. The total global system-wide restaurant sales declined 3% year over year against a 5.1% rise in the prior-year quarter.
Operating Highlights of PZZA
Adjusted operating income totaled $29.3 million, down 12.9% from $33.6 million in the prior-year quarter. The decline was due to the anticipated lower operating margins at Papa John’s Domestic company-owned restaurants as it strategically reinvested some of its first-half savings into improving its value perception with consumers.
The total costs and expenses amounted to $441.6 million, down from $490.9 million in the prior-year quarter. Our estimate for the metric was $477.3 million.
PZZA’s Balance Sheet
As of Sept. 29, 2024, Papa John’s cash and cash equivalents totaled $17.6 million compared with $40.6 million as of Dec. 31, 2023. At the end of the fiscal third quarter, net long-term debt (less current portion) totaled $721.4 million, down from $757.4 million as of Dec. 31, 2023.
As of Sept. 29, inventories amounted to $36.5 million compared with $36.2 million as of Dec. 31, 2023. Free cash flow at the end of the first nine months of 2024 was $9 million compared with $76 million reported in the prior-year period.
Papa John’s Unit Developments
Papa John’s opened 18 restaurants in North America in the fiscal third quarter. As of Sept. 29, the company had a system-wide restaurant count of 5,908, with operations in 49 countries and territories globally.
PZZA’s Zacks Rank & Recent Retail-Wholesale Releases
Papa John’s currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shake Shack Inc. SHAK posted third-quarter fiscal 2024 results, wherein both earnings and revenues beat the Zacks Consensus Estimate. The top and bottom lines also increased on a year-over-year basis.
In the quarter, the company ramped up its investment in marketing strategies and programs aimed at increasing guest engagement and brand awareness, even amid a challenging market environment. These efforts have paid off as it has achieved some of the highest brand awareness levels on record, which, in turn, are fueling robust sales and profitability growth.
Starbucks Corporation SBUX reported fourth-quarter fiscal 2024 results, with earnings meeting the Zacks Consensus Estimate but revenues missing the same. The bottom and top lines declined year over year.
Global comparable store sales declined 7% year over year. The downside was backed by a decrease of 8% in comparable transactions, partially overshadowed by a 2% increase in average tickets. During the quarter, SBUX opened 722 net new stores worldwide, bringing the total store count to 40,199.
Brinker International, Inc. EAT reported first-quarter fiscal 2025 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and bottom lines increased from the prior-year figures.
EAT gained from the solid performance of Chili's. The upside was backed by favorable comparable restaurant sales driven by menu pricing, higher traffic and a favorable menu item mix. The segment’s company-owned comps rose 14.1% from the year-ago quarter’s level. The company projects fiscal 2025 EPS of $5.2-$5.5, up from the prior stated $4.35-$4.75.
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