Papa John's third-quarter results beat estimates on revenue and came in largely as expected on quarter diluted EPS of 35 cents a share, showing the relative success the brand has had despite most Americans' being hunkered down at home much of the time during the pandemic.

For the quarter that ended Sept. 27, the Louisville, Kentucky-based company's revenues grew 17.1% or $69.2 million over last year's quarter, to $472.9 million, which beat consensus estimates of $466.15 million. Earnings of 35 cents per diluted share this year's quarter, compared with a loss of 10 cents per share during the third quarter of 2019, according to results released this morning.

Other key highlights of this quarterly performance report include:

  • 23.8% growth in North American comparable sales.
  • 20.7% increase in International comp sales.
  • $168.5 million in cash flow from operations of $168.5 million for January through September 2020.
  • $134 million in free cash flow from operations for the first nine months of 2020.
  • Conclusion of $55 million four-quarter temporary franchise support program.
  • Initiation of $75 million share repurchase program.

"Thanks to our focus on our strategic priorities, our commitment to an innovation mindset and our dedication to supporting our team members and franchisees, Papa John's delivered another quarter of outstanding results," President and CEO Rob Lynch said in the release. "Double-digit comparable sales growth, dramatically higher earnings and robust free cash flow all reflect a winning strategy and execution that have helped us outperform our competition and deliver five straight quarters of same-store sales growth.

"The new share repurchase program demonstrates our commitment to value creation in the near and long term, as well as our confidence in Papa John's future. The tremendous progress we have made this year — a fast-growing customer base, a truly differentiated brand, a robust innovation pipeline and a vast global development opportunity — positions us to continue expanding our slice of the pizza and food delivery market, which itself has a promising future."

The company attributed the increase in revenues to strong comparable sales results for North American restaurants, including 18.2% for company-owned restaurants and 25.6% for franchised restaurants, resulting in higher company-owned restaurant revenues, franchise royalties and commissary sales.

International revenues also increased primarily due to higher Papa John's United Kingdom commissary revenues and higher royalties from increased equivalent units and strong comparable sales results.

Diluted earnings per common share of 35 cents for the quarter was a 450% increase over the same number last year. The increased company cash flow was credited to higher net income and favorable working capital changes, including the timing of payments. Diluted EPS for the nine months that ended Sept. 27 were 99 cents, compared to a diluted loss per share of 6 cents for the same period last year.

Of the company's 2,074 international franchised stores, approximately 90 stores were temporarily closed as of the end of the quarter, principally in Latin America and Europe, in accordance with government policies. In North America, almost all traditional restaurants remain open and fully operational. A number of non-traditional restaurants located in universities and stadiums are temporarily closed.

The company had 180 units in North America and 1,200 internationally, in the development pipeline expected to open in the next six years. That includes 49 stores in Philadelphia and southern New Jersey to be opened between 2021 and 2028, which is part of the largest traditional store development agreement in North America in over 20 years.

Lastly, on Nov. 4, Papa John's board approved a new share repurchase program for up to $75 million of the company's common stock, effective through Dec. 31, 2021. This represents approximately 3% of the company's outstanding common stock based on the closing price of the stock as of Nov. 4, 2020.

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