Global retail sales growth (excluding foreign currency impact) of 5.1%
U.S. same store sales growth of 3.0%
International same store sales growth (excluding foreign currency impact) of 0.8%
Global net store growth of 72
Income from operations increased 5.0%; excluding the $1.4 million negative impact of foreign currency exchange rates on international franchise royalty revenues, income from operations increased 5.7%
ANN ARBOR, Mich., Oct. 10, 2024 /PRNewswire/ -- Domino's Pizza, Inc. (NYSE: DPZ), the largest pizza company in the world, announced results for the third quarter of 2024.
"Our third quarter results once again demonstrated that our Hungry for MORE strategy is resonating, despite a pressured global marketplace," said Russell Weiner, Domino's Chief Executive Officer. "In our international business, we are on track for our 31st consecutive year of same store sales growth, demonstrating our sustained long-term track record of success. In the U.S., we drove our 4th straight quarter of profitable order count growth, highlighting that our strategies are driving positive outcomes. The Hungry for MORE pillar of Renowned Value will be the primary focus for our business in near-term as we look to continue to create our own tailwinds around the world. Renowned Value is a competitive advantage for Domino's and one where we are industry leaders. With the slate of initiatives we have in place, I am confident that we will continue to win and grow our market share across the globe for years to come."
Third Quarter 2024 Operational and Financial Highlights (Unaudited):
The tables below outline certain statistical measures utilized by the Company to analyze its performance, as well as key financial results. This historical data is not necessarily indicative of results to be expected for any future period. Refer to Comments on Regulation G below for additional details, including definitions of these statistical measures and certain reconciliations.
Third Quarter
Three Fiscal Quarters
2024
2023
2024
2023
Global retail sales: (in millions of U.S. dollars)
U.S. stores
$
2,168.4
$
2,062.8
$
6,602.5
$
6,195.0
International stores
2,223.6
2,160.9
6,581.9
6,352.2
Total
$
4,392.0
$
4,223.7
$
13,184.4
$
12,547.2
Third Quarter
Three Fiscal Quarters
2024
2023
2024
2023
Global retail sales growth: (versus prior year period, excluding foreign currency impact)
U.S. stores
+ 5.1 %
+ 0.9 %
+ 6.6 %
+ 2.5 %
International stores (1)
+ 5.1 %
+ 9.4 %
+ 6.5 %
+ 8.9 %
Total (2)
+ 5.1 %
+ 5.1 %
+ 6.5 %
+ 5.7 %
Same store sales growth: (versus prior year period)
U.S. Company-owned stores
+ 3.1 %
+ 2.9 %
+ 5.4 %
+ 5.2 %
U.S. franchise stores
+ 3.0 %
(0.7) %
+ 4.4 %
+ 0.8 %
U.S. stores
+ 3.0 %
(0.6) %
+ 4.5 %
+ 1.0 %
International stores (excluding foreign currency impact)
+ 0.8 %
+ 3.3 %
+ 1.1 %
+ 2.6 %
(1)
2024 and 2023 third quarter and three fiscal quarters figures each exclude the impact of the Russia market. Including the impact of the Russia market, international stores retail sales growth, excluding foreign currency impact, was 4.8% and 6.0% for the third quarter and three fiscal quarters of 2024, respectively, and 9.0% and 8.5% for the third quarter and three fiscal quarters of 2023, respectively.
(2)
2024 and 2023 third quarter and three fiscal quarters figures each exclude the impact of the Russia market. Including the impact of the Russia market, total global retail sales growth, excluding foreign currency impact, was 5.0% and 6.3% for the third quarter and three fiscal quarters of 2024, respectively, and 4.9% and 5.5% for the third quarter and three fiscal quarters of 2023, respectively.
U.S. Company-owned Stores
U.S. FranchiseStores
TotalU.S. Stores
InternationalStores
Total
Third quarter of 2024 store counts:
Store count at June 16, 2024
289
6,617
6,906
14,024
20,930
Openings
2
22
24
184
208
Closings
—
—
—
(136)
(136)
Store count at September 8, 2024
291
6,639
6,930
14,072
21,002
Third quarter 2024 net store growth
2
22
24
48
72
Trailing four quarters net store growth
5
163
168
637
805
Third Quarter
Three Fiscal Quarters
(In millions, except percentages, percentage points, per share data and leverage ratio)
2024
2023
Increase/(Decrease)
2024
2023
Increase/(Decrease)
Total revenues
$1,080.1
$1,027.4
+ 5.1 %
$3,262.5
$3,076.4
+ 6.0 %
U.S. Company-owned store gross margin
16.8 %
15.8 %
+ 1.0 pp
17.3 %
17.1 %
+ 0.2 pp
Supply chain gross margin
10.6 %
10.0 %
+ 0.6 pp
11.0 %
9.9 %
+ 1.1 pp
Income from operations
$198.8
$189.4
+ 5.0 %
$605.3
$562.3
+ 7.7 %
Net income
$146.9
$147.7
(0.5) %
$414.7
$361.8
+ 14.6 %
Diluted earnings per share
$4.19
$4.18
+ 0.2 %
$11.80
$10.19
+ 15.8 %
Leverage ratio
4.9x
5.5x
(0.6)x
Net cash provided by operating activities
$446.9
$422.1
+ 5.9 %
Capital expenditures
(70.8)
(59.3)
+ 19.5 %
Free cash flow
$376.1
$362.9
+ 3.6 %
Revenues increased $52.8 million, or 5.1%, in the third quarter of 2024 as compared to the third quarter of 2023, primarily due to higher supply chain, U.S. franchise advertising and U.S. franchise royalties and fees revenues. The increase in supply chain revenues was primarily attributable to higher order volumes, as well as an increase in the Company's food basket pricing to stores, but was partially offset by a shift in the relative mix of the products sold by the Company. The Company's food basket pricing to stores increased 1.3% during the third quarter of 2024 as compared to the third quarter of 2023. U.S. franchise advertising revenues increased as a result of the return to the standard 6.0% advertising contribution rate at the beginning of the second quarter of 2024 following the end of the temporary reduction to 5.75% which began in the second quarter of 2023, as well as higher same store sales and net store growth. U.S. franchise royalties and fees increased as a result of higher same store sales and net store growth.
U.S. Company-owned store gross margin increased 1.0 percentage point in the third quarter of 2024 as compared to the third quarter of 2023, primarily driven by sales leverage due to higher customer transaction counts.
Supply chain gross margin increased 0.6 percentage points in the third quarter of 2024 as compared to the third quarter of 2023, primarily due to procurement productivity.
Income from operations increased $9.4 million, or 5.0%, in the third quarter of 2024 as compared to the third quarter of 2023. Excluding the negative impact of foreign currency exchange rates on international franchise royalty revenues of $1.4 million, income from operations increased $10.8 million, or 5.7%, in the third quarter of 2024 as compared to the third quarter of 2023. These increases were primarily a result of gross margin dollar growth within supply chain as well as higher U.S. franchise royalties and fees, each as discussed above. These increases were partially offset by higher general and administrative expenses of $6.8 million, primarily driven by higher labor costs.
Net income decreased $0.8 million, or 0.5%, in the third quarter of 2024 as compared to the third quarter of 2023 due to higher provision for income taxes. The Company's provision for income taxes increased $9.8 million in the third quarter of 2024 due to a higher effective tax rate and higher income before provision for income taxes. The effective tax rate increased to 20.4% in the third quarter of 2024 as compared to 15.9% in the third quarter of 2023, driven by lower foreign tax credits as well as a 0.9 percentage point unfavorable change in the impact of excess tax benefits from equity-based compensation, which is recorded as a reduction to the provision for income taxes.
Diluted EPS was $4.19 in the third quarter of 2024 as compared to $4.18 in the third quarter of 2023, representing a $0.01, or 0.2%, increase. While net income decreased in the third quarter of 2024 as compared to the third quarter of 2023, the increase in diluted EPS was driven by a lower weighted average diluted share count resulting from the Company's share repurchases during the trailing four quarters.
Net cash provided by operating activities was $446.9 million in the three fiscal quarters of 2024 as compared to $422.1 million in the three fiscal quarters of 2023. The Company spent $70.8 million on capital expenditures in the three fiscal quarters of 2024 as compared to $59.3 million in the three fiscal quarters of 2023, resulting in free cash flow of $376.1 million in the three fiscal quarters of 2024 as compared to $362.9 million in the three fiscal quarters of 2023. The increase in free cash flow was a result of higher net income, excluding non-cash operating activities and receipts for advertising contributions outpacing payments for advertising activities. These increases were partially offset by the negative impact of changes in operating assets and liabilities and higher investments in capital expenditures.
Quarterly Dividend
Subsequent to the end of the third quarter of 2024, on October 8, 2024, the Company's Board of Directors declared a $1.51 per share quarterly dividend on its outstanding common stock for shareholders of record as of December 13, 2024, to be paid on December 27, 2024.
Share Repurchases
During the third quarter and three fiscal quarters of 2024, the Company repurchased and retired 443,302 and 499,674 shares of common stock for a total of $190.0 million and $215.0 million, respectively. As of September 8, 2024, the Company had a total remaining authorized amount for share repurchases of $926.3 million.
2024 Guidance
The Company now expects the following given the challenging macroeconomic environment and its impact on current business trends across the globe1:
Approximately 6% annual global retail sales growth.
Approximately 8% annual income from operations growth.
Global net store growth of 800 to 850.
2025 Guidance
The Company expects annual global retail sales growth and annual income from operations growth to be generally in line with its 2024 expectations.
Long-Term Guidance (2026-2028)
The Company continues to expect the following1:
7%+ Annual global retail sales growth.
8%+ Annual income from operations growth.
1Annual global retail sales growth and annual income from operations growth each exclude the impact of foreign currency.
Comments on Regulation G
In addition to the GAAP financial measures set forth in this press release, the Company has included non-GAAP financial measures within the meaning of Regulation G, including free cash flow and income from operations, excluding foreign currency impact. The Company has also included metrics such as global retail sales, global retail sales growth (excluding foreign currency impact), same store sales growth, net store growth, food basket pricing change, impact of changes in foreign currency exchange rates on international franchise royalty revenues and the leverage ratio, which are commonly used statistical measures in the quick-service restaurant industry that are important to understanding Company performance.
The Company uses "Global retail sales," a statistical measure, to refer to total worldwide retail sales at Company-owned and franchise stores. The Company believes global retail sales information is useful in analyzing revenues because franchisees pay royalties and advertising fees that are based on a percentage of franchise retail sales. The Company reviews comparable industry global retail sales information to assess business trends and to track the growth of the Domino's Pizza brand and believes they are indicative of the financial health of the Company's franchisee base. In addition, supply chain revenues are directly impacted by changes in franchise retail sales in the U.S. and Canada. As a result, sales by Domino's franchisees have a direct effect on the Company's profitability. Retail sales for franchise stores are reported to the Company by its franchisees and are not included in Company revenues. "Global ...
