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Papa John’s Announces Second Quarter 2019 Results and Updates 2019 Outlook

August 6, 2019 4:15 PM

LOUISVILLE, Ky.--(BUSINESS WIRE)-- Papa John’s International, Inc. (NASDAQ: PZZA) today announced financial results for the three and six months ended June 30, 2019.

Highlights

Steve Ritchie, President and CEO of Papa John’s, said, “Papa John’s made strong progress in the key pillars of its strategy in the second quarter, recording another sequential improvement in comparable sales. In addition to adding a highly experienced chief restaurant operations officer, we announced a significant, multi-quarter investment in the brand and our franchise system from Starboard’s investment earlier this year. The table is now set as we begin rolling out our new marketing campaigns and menu items in the second half of the year.”

Global restaurant and comparable sales information and operating highlights for the three and six months ended June 30, 2019, compared to the three and six months ended July 1, 2018 are as follows:

Global Restaurant and Comparable Sales Information

Three Months Ended

Six Months Ended

June 30,
2019

July 1,
2018

June 30,
2019

July 1,
2018

Global restaurant sales (decline) / growth (a)

(3.8

%)

(2.3

%)

(4.7

%)

(1.8

%)

Global restaurant sales (decline) / growth, excluding the impact of foreign currency (a)

(2.6

%)

2.3

%

(3.2

%)

0.6

%

Comparable sales (decline) / growth (b)
Domestic company-owned restaurants

(6.8

%)

(7.2

%)

(7.9

%)

(6.7

%)

North America franchised restaurants

(5.3

%)

(5.7

%)

(5.7

%)

(5.3

%)

System-wide North America restaurants

(5.7

%)

(6.1

%)

(6.3

%)

(5.7

%)

System-wide international restaurants

0.3

%

(0.8

%)

0.1

%

(0.3

%)

(a)

Includes both company-owned and franchised restaurant sales.

(b)

Represents the change in year-over-year sales for the same base of restaurants for the same fiscal periods. Comparable sales results for restaurants operating outside of the United States are reported on a constant dollar basis, which excludes the impact of foreign currency translation.

We believe North America, international and global restaurant and comparable sales growth information, as defined in the table above, is useful in analyzing our results since our franchisees pay royalties and marketing fund contributions that are based on a percentage of franchise sales. Franchise sales also generate commissary revenue in the United States and in certain international markets. Franchise restaurant and comparable sales growth information is also useful for comparison to industry trends and evaluating the strength of our brand. Management believes the presentation of franchise restaurant sales growth, excluding the impact of foreign currency, provides investors with useful information regarding underlying sales trends and the impact of new unit growth without being impacted by swings in the external factor of foreign currency. Franchise restaurant sales are not included in company revenues.

Operating Highlights

Three Months Ended

Six Months Ended

In thousands, except per share amounts

June 30,
2019

July 1,
2018 (a)

Decrease %

June 30,
2019

July 1,
2018 (a)

Decrease %

Total revenue

$

399,623

$

429,952

(7.1

%)

$

798,028

$

880,074

(9.3

%)

Income before income taxes

9,959

19,113

(47.9

%)

9,192

42,177

(78.2

%)

Net income

8,354

11,199

(25.4

%)

6,623

28,642

(76.9

%)

Diluted earnings per share

0.15

0.35

(57.1

%)

0.03

0.87

(96.6

%)

Adjusted diluted earnings per share (b)

0.28

0.48

(41.7

%)

0.59

0.99

(40.4

%)

(a)

Our financial results for 2018 have been restated to reflect the correction of an immaterial error to consolidate the operations of the Papa John’s Marketing Fund (“PJMF”). The consolidation of PJMF is not expected to have a material impact on the company’s annual financial results as PJMF operates at or near break-even results annually. Additional detail on the consolidation of PJMF can be found in our Quarterly Report on Form 10-Q for the three and six months ended June 30, 2019 filed with the Securities and Exchange Commission (“SEC”).

(b)

Adjusted to exclude Special items, which impact comparability. The reconciliation of GAAP to non-GAAP financial results is included in the table below.

Adjusted financial results excluding Special items, which impact comparability, are summarized in the following reconciliation. The table reconciles our GAAP financial results to our adjusted financial results, which are non-GAAP measures. All highlights are compared to the same period of the prior year, unless otherwise noted.

Three Months Ended

Six Months Ended

June 30,

July 1,

June 30,

July 1,

(In thousands, except per share amounts)

2019

2018 (1)

2019

2018 (1)

GAAP income before income taxes

$

9,959

$

19,113

$

9,192

$

42,177

Special items:
Special charges (2)

5,362

-

21,216

-

Refranchising (gains) losses, net (3)

(163

)

2,122

(163

)

1,918

Adjusted income before income taxes

$

15,158

$

21,235

$

30,245

$

44,095

GAAP net income attributable to common shareholders

$

4,868

$

11,127

$

1,067

$

28,495

Special items, net of income taxes:
Special charges (2)

4,209

-

17,757

-

Refranchising (gains) losses, net (3)

(125

)

1,647

(125

)

1,488

Tax impact of China refranchising (3)

-

2,435

-

2,435

Adjusted net income attributable to common shareholders

$

8,952

$

15,209

$

18,699

$

32,418

GAAP diluted earnings per share

$

0.15

$

0.35

$

0.03

$

0.87

Special items:
Special charges (2)

0.13

-

0.56

-

Refranchising (gains) losses, net (3)

-

0.05

-

0.05

Tax impact of China refranchising (3)

-

0.08

-

0.07

Adjusted diluted earnings per share

$

0.28

$

0.48

$

0.59

$

0.99

(1)

The three and six months ended July 1, 2018 have been restated to reflect the correction of an immaterial error to consolidate the operations of PJMF.

(2)

The company incurred $5.4 million and $21.2 million of special costs (defined as “Special charges”) for the three and six months ended June 30, 2019, respectively, including the following (in thousands, except per share amounts):

Three Months Ended

Six Months Ended

Special
Charges

Special
Charges,
Net of Tax (e)

Diluted
Loss per
Share

Special
Charges

Special
Charges,
Net of Tax (e)

Diluted
Loss per
Share

Royalty relief (a)

$

2,466

$

1,938

$

0.06

$

7,339

$

5,680

$

0.18

Marketing fund investments (b)

2,500

1,935

0.06

2,500

1,935

0.06

Legal and advisory fees (c)

396

336

0.01

5,463

4,228

0.13

Mark to market adjustment on option valuation (d)

-

-

-

5,914

5,914

0.19

Total Special charges

$

5,362

$

4,209

$

0.13

$

21,216

$

17,757

$

0.56

(a)

Represents financial assistance provided to the entire North America system in the form of royalty reductions.

(b)

Represents marketing fund investments as part of our support package to our franchisees.

(c)

Represents advisory and legal costs primarily associated with the review of a wide range of strategic opportunities that culminated in Starboard’s strategic investment in the company by affiliates of Starboard.

(d)

Represents a one-time mark-to-market adjustment of $5.9 million related to the increase in the fair value of the Starboard and franchisee options to purchase Series B preferred stock that culminated in the purchase of an additional $52.5 million of preferred stock in late March 2019.

(e)

The tax effect was calculated using the company’s full year marginal rate of 22.6%, excluding the mark-to-market adjustment on the Series B preferred stock option valuation, which was not tax deductible.

(3)

The refranchising losses in 2018 are primarily associated with the June 2018 refranchise of our China operations, which included 34 restaurants and a quality control center, and the related tax impact. The additional tax expense is primarily attributable to the required recapture of China operating losses previously taken by the company.

The non-GAAP adjusted results shown above and within this document, which exclude Special items, should not be construed as a substitute for or a better indicator of the company’s performance than the company’s GAAP results. Management believes presenting certain financial information excluding the Special items is important for purposes of comparison to prior year results. In addition, management uses these metrics to evaluate the company’s underlying operating performance and to analyze trends.

Consolidated revenues decreased $30.3 million, or 7.1%, for the second quarter of 2019 and decreased $82.0 million, or 9.3%, for the six months ended June 30, 2019. Excluding the impact of refranchising 62 company-owned restaurants in North America and the China operations in 2018 and a quality control center in Mexico in 2019, consolidated revenues decreased $16.8 million, or 4.0%, for the second quarter of 2019 and decreased $56.2 million, or 6.6% for the six months ended June 30, 2019, primarily due to the following:

Consolidated income before income taxes of $10.0 million for the second quarter of 2019 decreased $9.2 million, or 47.9%, compared to the second quarter of 2018. Excluding the impact of the previously mentioned Special items, consolidated income before income taxes was $15.2 million, or a decrease of $6.1 million from the second quarter of 2018. Significant changes in income before income taxes are as follows:

For the six months ended June 30, 2019, consolidated income before income taxes was $9.2 million, a decrease of $33.0 million, or 78.2%, compared to the six months ended July 1, 2018. Excluding the impact of the previously mentioned Special charges, consolidated income before income taxes was $30.2 million, or a decrease of $13.8 million, compared to the six months ended July 1, 2018. These decreases were primarily due to the same reasons as the three-month period.

Operating margin (loss) is not a measure defined by GAAP and should not be considered in isolation, or as an alternative to evaluation of the company’s financial performance. In addition to an evaluation of GAAP consolidated income before income taxes, we believe the presentation of operating margin (loss) is beneficial as it represents an additional measure used by the company to further evaluate operating efficiency and performance of the various business units. Additionally, operating margin (loss) discussion may be helpful for comparison within the industry. The operating margin (loss) results detailed herein can be calculated by business unit based on the specific revenue and operating expense line items on the face of the Condensed Consolidated Statements of Operations. Consolidated income before income taxes reported includes G&A expenses, depreciation and amortization, refranchising gains (losses), net and net interest expense that have been excluded from this operating margin (loss) calculation.

The effective income tax rate was 12.9% for the quarter ended June 30, 2019 in comparison to 36.8% for the quarter ended July 1, 2018. The 2018 higher tax rate includes the impact of refranchising our China operations. The effective income tax rate for the six months ended June 30, 2019 was 23.0%. The effective income tax rate is higher for the six months ended June 30, 2019 due in part to the $5.9 million mark-to-market fair value adjustment of the options to purchase Series B preferred stock, which was not tax deductible.

Diluted earnings per share was $0.15 for the second quarter of 2019, compared to $0.35 for the prior year period. Excluding Special items, adjusted diluted earnings per share was $0.28 for the second quarter of 2019, as compared to $0.48 for the second quarter of 2018. For the six months ended June 30, 2019, diluted earnings per share was $0.03, compared to diluted earnings per share of $0.87 for the prior year period. Excluding Special items, adjusted diluted earnings per share was $0.59 for the six months ended June 30, 2019, as compared to $0.99 for the prior year period.

Free Cash Flow

The company’s free cash flow, a non-GAAP financial measure, for the first six months of 2019 and 2018 were as follows (in thousands):

Six Months Ended

June 30,

July 1,

2019

2018 (b)

Net cash provided by operating activities (a)

$

32,175

$

73,427

Purchases of property and equipment

(17,836

)

(21,562

)

Dividends paid to preferred shareholders

(5,470

)

-

Free cash flow

$

8,869

$

51,865

(a)

The decrease of $41.3 million was primarily due to lower net income and unfavorable changes in working capital items, including the impact of PJMF.

(b)

The six-month period ended July 1, 2018 has been restated to reflect the correction of an immaterial error to consolidate the operations of PJMF.

We define free cash flow as net cash provided by operating activities (from the Consolidated Statements of Cash Flows) less the purchases of property and equipment and dividends paid to preferred shareholders. We view free cash flow as an important measure because it is one factor that management uses in determining the amount of cash available for discretionary investment. Free cash flow is not a term defined by GAAP, and as a result, our measure of free cash flow might not be comparable to similarly titled measures used by other companies. Free cash flow should not be construed as a substitute for or a better indicator of the company’s performance than the company’s GAAP measures.

See the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our Quarterly Report on Form 10-Q filed with the SEC for additional information concerning our operating results for the three and six months ended June 30, 2019 and cash flow for the six months ended June 30, 2019.

Global Restaurant Unit Data

At June 30, 2019, there were 5,345 Papa John’s restaurants operating in all 50 states and in 47 international countries and territories, as follows:

Domestic
Company-
owned

Franchised
North
America

Total
North
America

International

System-wide

Second Quarter
Beginning - March 31, 2019

645

2,691

3,336

2,000

5,336

Opened

1

17

18

34

52

Closed

(2

)

(33

)

(35

)

(8

)

(43

)

Acquired

-

1

1

-

1

Sold

(1

)

-

(1

)

-

(1

)

Ending - June 30, 2019

643

2,676

3,319

2,026

5,345

Year-to-date
Beginning - December 30, 2018

645

2,692

3,337

1,966

5,303

Opened

2

43

45

83

128

Closed

(2

)

(61

)

(63

)

(23

)

(86

)

Acquired

-

2

2

-

2

Sold

(2

)

-

(2

)

-

(2

)

Ending - June 30, 2019

643

2,676

3,319

2,026

5,345

Unit growth (decline)

(2

)

(16

)

(18

)

60

42

% increase (decrease)

(0.3%

)

(0.6%

)

(0.5%

)

3.1%

0.8%

The company has added 98 net worldwide units over the trailing four quarters ended June 30, 2019. Our development pipeline as of June 30, 2019 included approximately 1,080 restaurants (90 units in North America and 990 units internationally), the majority of which are scheduled to open over the next six years.

Cash Dividend

The company paid cash dividends of $10.5 million in the second quarter of 2019 and declared third quarter cash dividends of approximately $10.5 million on July 18, 2019 to be paid to common and preferred shareholders. The dividends are as follows (in thousands):

Second
Quarter
2019

Third
Quarter
2019

Common stock dividends ($0.225 per share)

$

7,070

$

7,100

Common stock dividends to preferred shareholders ($0.225 per share) (a)

1,140

1,140

Preferred dividends (3.6% of the investment per annum)

2,290

2,270

Total dividends

$

10,500

$

10,510

(a) Common stock dividends payable to holders of Series B Preferred Stock are on an as-converted to common stock basis

The declaration and payment of any future dividends on our common stock will be at the discretion of our Board of Directors, subject to the company’s financial results, cash requirements, and other factors deemed relevant by our Board of Directors. The Series B preferred stockholders receive quarterly preferred dividends and common stock dividends on an as-converted to common stock basis.

2019 Outlook

On June 19, 2019, we announced an investment of $80 million in marketing and royalty relief for our U.S. franchise system beginning in the third quarter of 2019 through the fourth quarter of 2020. The marketing investment includes advertising initiatives with our new ambassador, Shaquille O’Neal. Additionally, we will continue financial assistance to our traditional domestic franchisees through 2020 in the form of lower royalties and related incentives. We expect to incur approximately 50% of the $80 million investment in 2019.

We are updating our GAAP diluted earnings per share (EPS) outlook to reflect these investments and to narrow our North America comparable sales and net global new unit growth outlook as detailed below.

Updated Outlook Previous Outlook
GAAP diluted earnings (loss) per share

($0.40) to ($0.10)

$0.00 to $0.50

Adjusted diluted earnings per share*

$1.00 to $1.20

$1.00 to $1.20

Special Charges

$50 to $60 million

$30 to $50 million

North America comparable sales

(1.0%) to (4.0%)

(1.0%) to (5.0%)

International comparable sales

0.0% to 3.0%

0.0% to 3.0%

Net global new unit growth

100 to 150

75 to 150

Block cheese price

low $1.70's

low to mid $1.60's

Capital expenditures

$45 to $50 million

$45 to $50 million

*Adjusted diluted earnings per share outlook excludes the impact of the Special items mentioned above, which have an estimated impact of approximately $1.20 to $1.40 for 2019. We believe excluding the Special items is meaningful to our financial statement users as it presents our core results excluding unusual items.

Conference Call and Website Information

A conference call is scheduled for August 6, 2019 at 5:00 p.m. Eastern Time to review the company’s second quarter 2019 earnings results. The call can be accessed from the company’s web page at www.papajohns.com in a listen-only mode or dial 877-312-8816 (U.S. and Canada) or 253-237-1189 (international). The conference call will be available for replay, including by downloadable podcast, from the company’s web site at www.papajohns.com. The Conference ID is 7481107.

Investors and others should note that we announce material financial information to our investors using our investor relations website, press releases, SEC filings and public conference calls and webcasts. We intend to use our investor relations website as a means of disclosing information about our business, our financial condition and results of operations and other matters and for complying with our disclosure obligations under Regulation FD. The information we post on our investor relations website, including information contained in investor presentations, may be deemed material. Accordingly, investors should monitor our investor relations website, in addition to following our press releases, SEC filings and public conference calls and webcasts. We encourage investors and others to sign up for email alerts at our investor relations page under Shareholder Tools at the bottom right side of the page. These email alerts are intended to help investors and others to monitor our investor relations website by notifying them when new information is posted on the site.

Forward-Looking Statements

Certain matters discussed in this press release and other company communications constitute forward-looking statements within the meaning of the federal securities laws. Generally, the use of words such as “expect,” “intend,” “estimate,” “believe,” “anticipate,” “will,” “forecast,” “plan,” “project,” or similar words identify forward-looking statements that we intend to be included within the safe harbor protections provided by the federal securities laws. Such forward-looking statements may relate to projections or guidance concerning business performance, revenue, earnings, cash flow, earnings per share, contingent liabilities, resolution of litigation, commodity costs, currency fluctuations, profit margins, unit growth, unit level performance, capital expenditures, restaurant and franchise development, royalty relief, the strategic investment by Starboard and use of the proceeds, the ability of the company to mitigate negative consumer sentiment through advertising, marketing and promotional activity, the effectiveness of our strategic turnaround efforts and other business initiatives, corporate governance, future costs related to the company’s response to negative consumer sentiment and business challenges, management reorganizations, compliance with debt covenants, stockholder and other stakeholder engagement, strategic decisions and actions, share repurchases, dividends, effective tax rates, regulatory changes and impacts, the impact of the Tax Cuts and Jobs Act and the adoption of new accounting standards, and other financial and operational measures. Such statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond our control. Therefore, actual outcomes and results may differ materially from those matters expressed or implied in such forward-looking statements. The risks, uncertainties and assumptions that are involved in our forward-looking statements include, but are not limited to:

These and other risk factors are discussed in detail in “Part I. Item 1A. – Risk Factors” in our Annual Report on Form 10-K/A for the fiscal year ended December 30, 2018, as updated by “Part II. Item 1A. – Risk Factors” in our Quarterly Report on Form 10-Q for the period ended March 31, 2019. We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise, except as required by law.

For more information about the company, please visit www.papajohns.com.

Papa John's International, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Three Months Ended Six Months Ended
June 30, 2019 July 1, 2018 June 30, 2019 July 1, 2018
(In thousands, except per share amounts) (Unaudited) (Note) (Unaudited) (Note)
Revenues:
Domestic Company-owned restaurant sales

$

163,656

$

181,379

$

325,459

$

371,621

North America franchise royalties and fees

19,761

23,912

37,291

48,718

North America commissary revenues

147,128

153,455

296,032

315,168

International revenues

25,497

29,069

51,164

59,183

Other revenues

43,581

42,137

88,082

85,384

Total revenues

399,623

429,952

798,028

880,074

Costs and expenses:
Operating costs (excluding depreciation and amortization shown separately below):
Domestic company-owned restaurant expenses

131,950

147,868

265,003

305,442

North America commissary expenses

136,744

143,300

275,301

294,981

International expenses

14,652

18,248

28,957

37,278

Other expenses

41,970

42,801

86,067

85,168

General and administrative expenses

48,718

38,972

99,853

78,968

Depreciation and amortization

11,521

11,731

23,270

23,270

Total costs and expenses

385,555

402,920

778,451

825,107

Refranchising gains (losses), net

163

(2,122

)

163

(1,918

)

Operating income

14,231

24,910

19,740

53,049

Net interest expense

(4,272

)

(5,797

)

(10,548

)

(10,872

)

Income before income taxes

9,959

19,113

9,192

42,177

Income tax expense

1,283

7,040

2,114

12,018

Net income before attribution to noncontrolling interests

8,676

12,073

7,078

30,159

Income attributable to noncontrolling interests

(322

)

(874

)

(455

)

(1,517

)

Net income attributable to the company

$

8,354

$

11,199

$

6,623

$

28,642

Calculation of income for earnings per share:
Net income attributable to the Company

$

8,354

$

11,199

$

6,623

$

28,642

Preferred stock dividends and accretion

(3,486

)

-

(5,556

)

-

Net income attributable to participating securities

-

(72

)

-

(147

)

Net income attributable to common shareholders

$

4,868

$

11,127

$

1,067

$

28,495

Basic earnings per common share

$

0.15

$

0.35

$

0.03

$

0.87

Diluted earnings per common share

$

0.15

$

0.35

$

0.03

$

0.87

Basic weighted average common shares outstanding

31,587

31,941

31,570

32,610

Diluted weighted average common shares outstanding

31,773

32,175

31,746

32,860

Dividends declared per common share

$

0.225

$

0.225

$

0.450

$

0.450

Note: The Condensed Consolidated Statement of Operations is unaudited and has been restated to reflect the correction of an immaterial error to consolidate the Papa John's Marketing Fund, Inc.
Papa John's International, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

June 30,

December 30,

2019

2018

(In thousands) (Unaudited) (Note)
Assets
Current assets:
Cash and cash equivalents

$

30,656

$

33,258

Accounts receivable, net

77,019

78,118

Notes receivable

5,182

5,498

Income tax receivable

4,447

16,146

Inventories

26,615

27,203

Prepaid expenses and other current assets

38,961

36,054

Assets held for sale

11,005

-

Total current assets

193,885

196,277

Property and equipment, net

212,257

226,894

Right-of-use assets

148,868

-

Notes receivable, less current portion, net

27,336

23,259

Goodwill

82,763

84,516

Deferred income taxes, net

1,051

1,137

Other assets

60,404

63,814

Total assets

$

726,564

$

595,897

Liabilities, Series B Convertible Preferred Stock, Redeemable noncontrolling interests and stockholders' deficit
Current liabilities:
Accounts payable

$

32,516

$

27,106

Income and other taxes payable

7,155

6,590

Accrued expenses and other current liabilities

113,812

129,167

Current deferred revenue

2,493

2,598

Current lease liabilities

24,103

-

Current portion of long-term debt

31,241

20,009

Total current liabilities

211,320

185,470

Deferred revenue

17,564

20,674

Long-term lease liabilities

124,458

-

Long-term debt, less current portion, net

349,749

601,126

Deferred income taxes, net

2,227

7,852

Other long-term liabilities

81,805

79,324

Total liabilities

787,123

894,446

Series B Convertible Preferred Stock

251,290

-

Redeemable noncontrolling interests

6,217

5,464

Total stockholders' deficit

(318,066

)

(304,013

)

Total liabilities, Series B Convertible Preferred Stock, Redeemable noncontrolling interests and stockholders' deficit

$

726,564

$

595,897

Note: The Condensed Consolidated Balance Sheet has been derived from the audited consolidated financial statements, restated to reflect the correction of an immaterial error to consolidate the Papa John's Marketing Fund, Inc., but does not include all information and footnotes required by accounting principles generally accepted in the United States for a complete set of financial statements.
Papa John's International, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
Six Months Ended
(In thousands) June 30, 2019 July 1, 2018
(Unaudited) (Note)
Operating activities
Net income before attribution to noncontrolling interests

$

7,078

$

30,159

Adjustments to reconcile net income to net cash provided by operating activities:
Provision for uncollectible accounts and notes receivable

676

3,591

Depreciation and amortization

23,270

23,270

Deferred income taxes

(3,096

)

(2,511

)

Preferred stock option mark-to-market adjustment

5,914

-

Stock-based compensation expense

7,531

4,929

(Gain) Loss on refranchising

(163

)

1,918

Other

1,999

3,032

Changes in operating assets and liabilities:
Accounts receivable

(1,092

)

3,114

Income tax receivable

11,699

3,628

Inventories

326

3,188

Prepaid expenses

8,899

1,285

Other current assets

(14,282

)

3,276

Other assets and liabilities

(2,094

)

(2,206

)

Accounts payable

5,410

6,993

Income and other taxes payable

565

(1,656

)

Accrued expenses and other current liabilities

(17,297

)

(6,885

)

Deferred revenue

(3,168

)

(1,698

)

Net cash provided by operating activities

32,175

73,427

Investing activities
Purchases of property and equipment

(17,836

)

(21,562

)

Loans issued

(4,757

)

(1,904

)

Repayments of loans issued

2,234

2,720

Proceeds from divestitures of restaurants

225

3,690

Other

568

146

Net cash used in investing activities

(19,566

)

(16,910

)

Financing activities
Proceeds from issuance of preferred stock

252,530

-

Repayments of term loan

(10,000

)

(10,000

)

Net (repayments) proceeds of revolving credit facilities

(230,776

)

119,567

Dividends paid to common stockholders

(14,269

)

(14,762

)

Dividends paid to preferred stockholders

(5,470

)

-

Issuance costs associated with preferred stock

(7,250

)

-

Tax payments for equity award issuances

(895

)

(1,353

)

Proceeds from exercise of stock options

93

2,179

Acquisition of Company common stock

-

(148,440

)

Contributions from noncontrolling interest holders

840

-

Distributions to noncontrolling interest holders

(183

)

(1,110

)

Other

168

231

Net cash used in financing activities

(15,212

)

(53,688

)

Effect of exchange rate changes on cash and cash equivalents

1

(62

)

Change in cash and cash equivalents

(2,602

)

2,767

Cash and cash equivalents at beginning of period

33,258

27,891

Cash and cash equivalents at end of period

$

30,656

$

30,658

Note: The Condensed Consolidated Statement of Cash Flows is unaudited and has been restated to reflect the correction of an immaterial error to consolidate the Papa John's Marketing Fund, Inc.

Joe Smith

Senior Vice President, Chief Financial Officer

502-261-7272

Source: Papa John’s International, Inc.

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