Papa John’s International, Inc. PZZA recorded better-than-expected fourth-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, indicating lower comparable sales.
The headwinds were offset to some extent by the increase in commissary revenues, caused by higher prices, though partially impacted by lower transaction volumes. PZZA also saw higher advertising fund revenues, supported by a 100 basis point increased contribution rate to the National Marketing Fund, which took effect in the second quarter of 2024.
Following the earnings release, the PZZA stock gained 1.4% during yesterday’s trading session.
PZZA’s Earnings & Revenue Discussion
The company reported adjusted earnings per share (EPS) of 63 cents, which beat the Zacks Consensus Estimate of 48 cents by 31.3%. It reported an adjusted EPS of 91 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 $530.8 million also topped the consensus mark of $513 million by 3.1%. However, the top line declined 7.1% on a year-over-year basis.
Global Restaurant Sales & Comps of Papa John’s
Total comparable sales declined 2.8% year over year (in line with our expectation) against the 0.1% growth in the prior-year quarter.
Domestic company-owned restaurant comps declined 5.7% year over year against the 2.2% growth in the year-ago quarter. We expected the metric to decline 5%. At North America’s franchised restaurants, comps fell 4% year over year against the 1.7% growth in the year-ago quarter. Comps at North America’s restaurants declined 4.4% year over year against 1.8% growth in the year-ago quarter.
Nonetheless, comps at international restaurants were up 2.1% year over year against a 5.5% decline in the prior-year quarter. The total global system-wide restaurant sales declined 7.9% year over year against an 11% rise in the prior-year quarter.
Operating Highlights of PZZA
Adjusted operating income totaled $37.3 million, down 27% from $47.4 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 the first-half savings into improving value perception with consumers.
The total costs and expenses amounted to $501.2 million, down from $528.8 million in the prior-year quarter. Our estimate for the metric was $477.3 million.
2024 Highlights of PZZA
Total revenues in fiscal 2024 amounted to $ 2.06 billion, down from $ 2.13 billion in fiscal 2023.
Adjusted operating income in fiscal 2024 totaled $148.2 million, down from $157 million in fiscal 2023.
In fiscal 2024, diluted EPS was $2.34, down from $2.71 reported in the previous fiscal year.
PZZA’s Balance Sheet
As of Dec. 29, 2024, Papa John’s cash and cash equivalents totaled $38 million compared with $40.6 million as of Dec. 31, 2023. At the end of the fiscal fourth quarter, net long-term debt (less current portion) totaled $741.6 million, down from $757.4 million as of Dec. 31, 2023.
As of Dec. 29, inventories amounted to $35.2 million compared with $36.2 million as of Dec. 31, 2023. Free cash flow at the end of 2024 was $34.1 million compared with $116.4 million reported in the prior-year period.
Papa John’s Unit Developments
Papa John’s opened 60 net new restaurants in North America in the fiscal fourth quarter. In the international markets, the company opened 63 net new restaurants. As of Dec. 29, the company had a system-wide restaurant count of 6,030, with operations in 51 countries and territories globally.
2025 Guidance by PZZA
For fiscal 2025, the company anticipates system-wide sales to grow in the range of 2-5%, with North America and International comparable sales expected to be flat to up 2%. Adjusted EBITDA is expected to be between $200 million and $220 million.
During the fiscal year, capital expenditures are expected to be $75-$85 million. Depreciation and amortization are anticipated to be $70-$75 million.
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.
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During the quarter, consolidated comps increased 2.5% year over year and net restaurants grew 3.4%. Global system-wide sales rose 5.6% year over year. QSR unveiled its long-term consolidated performance expectations from 2024 to 2028. It anticipates achieving more than 3% growth in comparable sales and at least a 5% net restaurant increase.
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At company-operated restaurants, sales were $2.31 billion, down 7% year over year. Sales at franchise-operated restaurants amounted to $3.95 billion, which increased 2% year over year. The global comps increased 0.4% compared with 3.4% in the prior-year quarter. MCD’s comps increased after witnessing a decline in the preceding two quarters.
YUM! Brands, Inc. YUM reported fourth-quarter 2024 results, with adjusted earnings and total revenues beating the Zacks Consensus Estimate. Both top and bottom lines increased on a year-over-year basis.
The company’s top-line performance reflected solid contributions from the KFC, Pizza Hut and Taco Bell divisions. YUM reported progress in the digital space, with digital sales rising approximately 15% and the digital mix surpassing 50%, moving closer to its long-term goal of 100% digital sales. Worldwide system sales, excluding foreign currency translation, grew 8% year over year, with Taco Bell increasing 14% and KFC rising 6%. The metric rose 3% year over year for Pizza Hut.
This article originally published on Zacks Investment Research (zacks.com).
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