Papa John’s International Inc. (PZZA) reported fourth quarter 2012 earnings of 74 cents per share, missing the Zacks Consensus Estimate by 2 cents. However, the result surpassed the year-ago earnings of 65 cents per share. In 2012, the company posted earnings of $2.58 per share versus $2.16 in the prior year.
Total revenues jumped 19.9% year over year to $367.3 million and surpassed the Zacks Consensus Estimate of $348 million. The annual improvement was attributable to higher comparable restaurant revenues in both domestic and international markets and increase in number of units worldwide. In 2012, revenues were $1.3 billion, up 10.2% year over year.
Behind the Headline Numbers
Comparable system-wide restaurant revenues rose 5.2% and 7.0% in North America and in the international markets, respectively. Domestic company-owned restaurant revenues improved 23.6% to $161.6 million, signifying an increase of 6.9% in comparable revenues and acquisition activity during the quarter.
Hike in net franchised units along with comparable franchised restaurants’ revenues growth of 4.6% resulted in an 18.3% rise in North America franchise royalty revenues to $21.2 million. Domestic commissaries revenues upped 15.9% year over year to $149.1 million, primarily due to a rise in sales volume.
International revenues surged 29.1% year over year to $20.7 million, due to higher number of restaurants opened and comparable revenues growth.
In the quarter under review, Papa John’s company-owned restaurant expenses and domestic commissary and other expenses rose 22.2% to $129.8 million and 17.9% to $128.4 million, respectively. General and administrative (G&A) expenses hiked 38.1% year over year to $38.1 million. Operating income also rocketed 14.0% year over year to $27.0 million.
Unit Growth
During the quarter, the company opened 156 restaurants and closed 22 units, representing a 7.2% increase worldwide. As of Dec 30, 2012, Papa John’s had 4,163 restaurants in 50 states across 35 countries.
Liquidity
At quarter end, Papa John’s had cash and cash equivalents of $16.4 million. The long-term debt and shareholders’ equity stood at $88.3 million and $181.5 million, respectively.
Share Repurchases
During the reported quarter, the company repurchased 804,000 shares worth $41.9 million and also bought back 2.3 million shares worth $106.1 million in 2012. In the fourth quarter, the company approved the buy back of an additional $100 million shares under its existing share repurchase program.
2013 Outlook
Papa John’s expects full-year 2013 earnings per share in the range of $2.85 to $2.95, up nearly 10% to 14% year over year. North America system-wide comparable revenues are projected to increase in the range of 1.5% to 2.5%. International comparable revenues are expected to increase in the range of 5.0% to 7.0% in 2013.