Yahoo Finance Papa John's (PZZA) Q1 Earnings Beat Estimates, Stock Down
Papa John’s International, Inc. PZZA recorded mixed first-quarter fiscal 2024 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line declined on a year-over-year basis.
Following the results, the company’s shares fell 6.8% during trading hours on May 9. Negative investor sentiments were witnessed as the company cited sales pressure in the short term due to the persistent challenging macroeconomic conditions and a decline in consumer confidence. For 2024, the company anticipates North America comps to be flat to down low single digits.
Earnings & Revenue Discussion
During the fiscal first quarter, the company reported adjusted earnings per share (EPS) of 67 cents, beating the Zacks Consensus Estimate of 58 cents. The company reported an adjusted EPS of 68 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 $513.9 million missed the consensus mark of $546 million. The top line declined 2.5% on a year-over-year basis. The downside was primarily driven by lower contributions in the North American commissary segment owing to lower transaction volumes and commodity price declines.
Global Restaurant Sales & Comps
In the fiscal first quarter, total comparable sales declined 2% year over year compared with a 1.3% fall reported in the prior year quarter. We projected the metric to decline 4% year over year.
Domestic company-owned restaurant comps in the quarter under review declined 3% year over year against 3.4% growth reported in the year-ago quarter. We projected the metric to fall 5.5% year over year.
At North America franchised restaurants, comps fell 1.5% year over compared with a 0.8% decline reported in the year-ago quarter. Comps growth at North America restaurants declined 1.8% year over year.
Comps at international restaurants were down 2.6% year over year compared with a 5.8% fall reported in the prior-year quarter. During the fiscal first quarter, total global system-wide restaurant sales declined 0.9% year over year against a 2% rise reported in the prior-year quarter.
Operating Highlights
Adjusted operating income in the fiscal fourth quarter totaled $43.2 million compared with $39.2 million reported in the prior-year quarter. Equity forfeitures, savings in local marketing and improved margins in Domestic company-owned restaurants and North America commissary segments primarily drove the increase. However, this was partially offset by the impact of the U.K. franchisee acquisition, higher depreciation costs related to the acquisition and technology investments and lower North America comparable sales.
During the quarter under review, total costs and expenses amounted to $480.2 million compared with $489.3 million reported in the prior-year quarter. Our estimate for the metric was $505.9 million.
Balance Sheet
As of Mar 31, 2024, cash and cash equivalents totaled $27.8 million compared with $40.6 million as of Dec 31, 2023. At the end of the fiscal first quarter, the long-term debt net totaled $761.3 million compared with $757.4 million at the end of fourth-quarter fiscal 2023.
As of Mar 31, 2024, inventories were $38.1 million compared with $36.1 million on Dec 31, 2023. Free cash flow (as of Mar 31, 2024) totaled ($1.1) million against $22.4 million reported in the prior-year period.
Unit Developments
Papa John’s opened eight net new restaurants in North America during the fiscal first quarter. As of Mar 31, the company had a global restaurant count of 5,914, with operations in 49 countries and territories worldwide.
Zacks Rank
Papa John’s currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
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