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Domino's Pizza, Inc. (DPZ) reported mixed first-quarter fiscal 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased from the prior-year quarter’s figure. Following the announcement, the company’s shares inched up 5.2% in the pre-market trading session.During the quarter, the company reported benefits from the Hungry for MORE strategy, registering heightened sales, expanding store presence and increasing profits. It reported solid growth in the ...

Financial Data and Key Metrics Changes - In Q1 2024, U.S. same-store sales increased by 5.6%, driven by transaction growth from the new loyalty program and promotional activities [67] - Global retail sales grew by 7.3% excluding foreign currency impact, with U.S. retail sales increasing by 7.8% and international retail sales growing by 6.8% [29][30] - Income from operations increased by 19.4% in Q1, primarily due to higher global franchise royalty revenues and improved supply chain gross margins [30] Business Line Data and Key Metrics Changes - The carryout segment saw a strong comp performance of 9.5%, while delivery increased by 2.9%, indicating a shift in consumer preference towards carryout [67] - The new loyalty program significantly contributed to the increase in order counts, particularly among new, lapsed, and light customers [24][43] Market Data and Key Metrics Changes - International same-store sales, excluding foreign currency impact, increased by 0.9% in Q1, with a net addition of 144 stores globally [47] - The company expects international comps to remain soft in the first half of the year but anticipates acceleration to 3% or more in the latter half [31] Company Strategy and Development Direction - The "Hungry for MORE" strategy focuses on driving sales through product innovation, operational excellence, and enhancing customer loyalty [21][40] - The introduction of the New York Style pizza aims to attract customers preferring a thinner crust, indicating a commitment to product diversification [22] - The company plans to maintain a consistent promotional cadence similar to 2019, with around six boost weeks expected throughout the year [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of the current growth trends, emphasizing the repeatability of the "Hungry for MORE" strategy [74] - The company anticipates continued strong performance in 2024, driven by the loyalty program and promotional activities [45][69] Other Important Information - The company is investing in consumer technology and supply chain capacity to support future growth, which may impact operating income margins in the short term [49] - The loyalty program has been a key driver of sales, with significant engagement from new and light users [43][91] Q&A Session Summary Question: Can you discuss the supply chain margin and overall operating margin strength? - Management noted that procurement productivity has improved, but investments in supply chain capacity may pressure margins in the latter half of the year [54] Question: What drove the acceleration in same-store sales? - The increase was primarily driven by order count growth, particularly from the loyalty program [56] Question: How does the promotional environment affect profitability? - Management highlighted that profit dollar growth continues to be strong, with a focus on driving value rather than just margin expansion [60] Question: What are the expectations for international market growth? - Management expects international comps to improve in the latter half of the year as key markets implement the "Hungry for MORE" strategy [118] Question: How is labor availability impacting the business? - Management indicated that labor availability has not been an issue, as evidenced by increased order deliveries and improved delivery times [87]

Domino’s said its decision to relaunch its rewards program last year is paying off.The quick-service pizza chain released quarterly earnings results Monday (April 29) showing a 5.6% increase in U.S. sales, with management pointing to the rewards program as a driver of that growth.“The program is delivering on our objectives,” CEO Russell Weiner said on an earnings call. “Active member growth rates are up significantly since the launch of our new program; from a percentage, our biggest increases are coming f ...

Key TakeawaysDomino's Pizza shares gained in early trading Monday as the chain's loyalty program and agreement with Uber Eats helped boost first-quarter results.The world's largest pizza company beat estimates for profit, revenue, and same-store sales.Domino's began marketing on Uber Eats during the period, and CEO Russell Weiner said the company expects to end the year with 3% higher sales thanks to the deal. Shares of Domino’s Pizza (DPZ) rose over 3% in early trading Monday after the pizza delivery chain ...

Domino's Pizza (DPZ) reported $1.08 billion in revenue for the quarter ended March 2024, representing a year-over-year increase of 5.9%. EPS of $3.58 for the same period compares to $2.93 a year ago.The reported revenue represents a surprise of +0.49% over the Zacks Consensus Estimate of $1.08 billion. With the consensus EPS estimate being $3.37, the EPS surprise was +6.23%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street ...

Domino’s (NYSE:DPZ) stock is on the rise Monday as investors celebrate positive results from the company’s Q1 2024 earnings report.That report starts with adjusted earnings per share of $3.58. This is better than the $3.40 per share that Wall Street was expecting for the quarter. It’s also a 22.2% increase year-over-year from the $2.93 per share reported in Q1 2023.Adding to that is Domino’s revenue of $1.08 billion for the quarter. That’s another win as it matches what analysts were expecting for the perio ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Unaudited Q1 2024 condensed consolidated financial statements, including balance sheets, income, cash flows, and notes, detail financial performance [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | (In thousands) | March 24, 2024 | December 31, 2023 | Change | Percent Change | | :--- | :--- | :--- | :--- | :--- | | Total Assets | $1,744,742 | $1,674,899 | +$69,843 | +4.2% | | Cash and cash equivalents | $203,894 | $114,098 | +$89,796 | +78.7% | | Restricted cash and cash equivalents | $209,752 | $200,870 | +$8,882 | +4.4% | | Total Current Assets | $894,466 | $817,291 | +$77,175 | +9.4% | | Current portion of long-term debt | $4,866 | $56,366 | -$51,500 | -91.4% | | Long-term debt, less current portion | $4,973,812 | $4,934,062 | +$39,750 | +0.8% | | Total Liabilities and Stockholders' Deficit | $1,744,742 | $1,674,899 | +$69,843 | +4.2% | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) | (In thousands, except per share data) | Q1 2024 | Q1 2023 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $1,084,647 | $1,024,398 | +$60,249 | +5.9% | | Gross Margin | $421,870 | $385,547 | +$36,323 | +9.4% | | Income from Operations | $210,413 | $177,483 | +$32,930 | +18.6% | | Net Income | $125,824 | $104,770 | +$21,054 | +20.1% | | Common stock - basic EPS | $3.62 | $2.96 | +$0.66 | +22.3% | | Common stock - diluted EPS | $3.58 | $2.93 | +$0.65 | +22.2% | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) | (In thousands) | Q1 2024 | Q1 2023 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net income | $125,824 | $104,770 | +$21,054 | +20.1% | | Currency translation adjustment | $(1,125) | $(451) | -$674 | -149.4% | | Comprehensive income | $124,699 | $104,319 | +$20,380 | +19.5% | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | (In thousands) | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $123,464 | $114,682 | +$8,782 | | Net cash used in investing activities | $(21,486) | $(19,603) | -$1,883 | | Net cash used in financing activities | $(34,794) | $(45,281) | +$10,487 | | Change in cash and cash equivalents, restricted cash and cash equivalents | $66,512 | $49,612 | +$16,900 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Basis of Presentation](index=7&type=section&id=1.%20Basis%20of%20Presentation) - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information and do not include all footnotes required for complete financial statements[18](index=18&type=chunk) - Operating results for Q1 2024 are not necessarily indicative of the results expected for the full fiscal year ending December 29, 2024[19](index=19&type=chunk) [2. Segment Information](index=7&type=section&id=2.%20Segment%20Information) | (In thousands) | Q1 2024 Revenues | Q1 2023 Revenues | YoY Change | Q1 2024 Segment Income | Q1 2023 Segment Income | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | U.S. Stores | $353,467 | $330,501 | +$22,966 | $136,108 | $112,683 | +$23,425 | | Supply Chain | $686,642 | $650,124 | +$36,518 | $64,576 | $48,515 | +$16,061 | | International Franchise | $71,966 | $69,671 | +$2,295 | $59,332 | $58,139 | +$1,193 | | Total | $1,084,647 | $1,024,398 | +$60,249 | $241,843 | $203,615 | +$38,228 | [3. Earnings Per Share](index=8&type=section&id=3.%20Earnings%20Per%20Share) | | Q1 2024 | Q1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Net income available to common stockholders | $125,824 | $104,770 | +$21,054 | | Basic weighted average number of shares | 34,800,310 | 35,391,624 | -591,314 | | Earnings per share – basic | $3.62 | $2.96 | +$0.66 | | Diluted weighted average number of shares | 35,154,232 | 35,708,938 | -554,706 | | Earnings per share – diluted | $3.58 | $2.93 | +$0.65 | [4. Stockholders' Deficit](index=8&type=section&id=4.%20Stockholders'%20Deficit) | (In thousands) | Dec 31, 2023 | Mar 24, 2024 | Change | | :--- | :--- | :--- | :--- | | Total Stockholders' Deficit | $(4,070,367) | $(4,008,330) | +$62,037 | | Net income | N/A | $125,824 | N/A | | Dividends declared on common stock and equivalents | N/A | $(52,954) | N/A | | Purchases of common stock (retained deficit impact) | N/A | $(8,099) | N/A | - The Board of Directors declared a **$1.51 per share quarterly dividend** on April 25, 2024, to be paid on June 28, 2024[25](index=25&type=chunk) [5. Leverage Ratio](index=9&type=section&id=5.%20Leverage%20Ratio) - The Holdco Leverage Ratio was **less than or equal to 5.0x total debt to adjusted EBITDA** at the end of Q1 2024[29](index=29&type=chunk) - Scheduled debt amortization payments on outstanding senior notes were suspended, and all principal amounts were reclassified as long-term debt[29](index=29&type=chunk) [6. Fair Value Measurements](index=9&type=section&id=6.%20Fair%20Value%20Measurements) - An **$18.7 million unrealized loss** on the investment in DPC Dash was recorded in Q1 2024, with no such adjustment in Q1 2023[33](index=33&type=chunk) | (In thousands) | Carrying Amount (Mar 24, 2024) | Fair Value (Mar 24, 2024) | Carrying Amount (Dec 31, 2023) | Fair Value (Dec 31, 2023) | | :--- | :--- | :--- | :--- | :--- | | Cash equivalents | $147,754 | $147,754 | $50,732 | $50,732 | | Restricted cash equivalents | $156,316 | $156,316 | $133,063 | $133,063 | | Investments in marketable securities | $18,518 | $18,518 | $16,720 | $16,720 | | Advertising fund cash equivalents, restricted | $34,738 | $34,738 | $69,199 | $69,199 | | Investment in DPC Dash | $124,854 | $124,854 | $143,553 | $143,553 | - Fair values of fixed rate notes are classified as **Level 2 measurements**, estimated using available market information and brokerage quotes[35](index=35&type=chunk) [7. Revenue Disclosures](index=10&type=section&id=7.%20Revenue%20Disclosures) - The temporary **0.25% reduction** to the standard 6.0% advertising contribution rate expired on March 25, 2024[41](index=41&type=chunk) - The U.S. digital per-transaction technology fee will decrease by **$0.04 to $0.355** as of March 25, 2025[42](index=42&type=chunk) | (In thousands) | Mar 24, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Advertising fund assets, restricted | $77,000 | $106,300 | | Deferred franchise fees and deferred development fees, end of period | $25,161 | $25,195 | [8. Leases](index=11&type=section&id=8.%20Leases) | (In thousands) | Q1 2024 | Q1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Rent expense | $21,200 | $19,300 | +$1,900 | | Operating lease cost | $11,253 | $10,808 | +$445 | | Operating cash flows from operating leases | $10,340 | $10,320 | +$20 | | Right-of-use assets obtained (Operating leases) | $16,706 | $9,305 | +$7,401 | - The company has guaranteed lease payments for certain franchisees, with a maximum potential future payment of **$17.0 million** as of March 24, 2024[45](index=45&type=chunk) [9. Supplemental Disclosures of Cash Flow Information](index=11&type=section&id=9.%20Supplemental%20Disclosures%20of%20Cash%20Flow%20Information) - Non-cash investing activities related to accruals for capital expenditures were **$6.1 million** at March 24, 2024[46](index=46&type=chunk) - Non-cash financing activity related to accruals for excise taxes on share repurchases was **$2.7 million** at March 24, 2024[46](index=46&type=chunk) [10. Company-owned Store Transactions](index=11&type=section&id=10.%20Company-owned%20Store%20Transactions) - One U.S. Company-owned store was refranchised in Q1 2024 and Q1 2023, each resulting in an approximate **$0.1 million pre-tax refranchising loss**[47](index=47&type=chunk)[48](index=48&type=chunk) [11. New Accounting Pronouncements](index=12&type=section&id=11.%20New%20Accounting%20Pronouncements) - The company is evaluating ASU 2023-07 (Segment Reporting), effective for fiscal years beginning after December 15, 2024[49](index=49&type=chunk)[50](index=50&type=chunk) - The company is evaluating ASU 2023-09 (Income Taxes), effective for fiscal years beginning after December 15, 2024[51](index=51&type=chunk)[52](index=52&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=13&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Analyzes Domino's Q1 2024 financial condition and results, covering sales growth, operational income, and strategic drivers [Overview](index=13&type=section&id=Overview) - Domino's is the largest pizza company globally, with **over 20,700 locations** in more than 90 markets as of March 24, 2024[55](index=55&type=chunk) - Approximately **99% of Domino's global stores** are owned and operated by independent franchisees[56](index=56&type=chunk) - The 'Hungry for MORE' strategy aims to generate **MORE sales, MORE stores, and MORE profits** through Most Delicious Food, Operational Excellence, Renowned Value, and Enhanced by Best-in-Class Franchisees[60](index=60&type=chunk)[61](index=61&type=chunk) [First Quarter of 2024 Highlights](index=14&type=section&id=First%20Quarter%20of%202024%20Highlights) - Global retail sales growth (excluding foreign currency impact) increased **7.3%** in Q1 2024 compared to Q1 2023[69](index=69&type=chunk) - U.S. retail sales increased **7.8%**, and international retail sales (excluding foreign currency impact) increased **6.8%**[69](index=69&type=chunk) - U.S. same store sales increased **5.6%**, and international same store sales (excluding foreign currency impact) increased **0.9%**[69](index=69&type=chunk) - Global net store growth was **164** in Q1 2024[69](index=69&type=chunk) - Income from operations increased **18.6%** in Q1 2024[69](index=69&type=chunk) [Statistical Measures](index=14&type=section&id=Statistical%20Measures) [Global Retail Sales](index=14&type=section&id=Global%20Retail%20Sales) | (In millions) | Q1 2024 | Q1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | U.S. stores | $2,212.0 | $2,051.0 | +$161.0 | | International stores | $2,152.1 | $2,062.7 | +$89.4 | | Total Global retail sales | $4,364.1 | $4,113.7 | +$250.4 | [Global Retail Sales Growth (excluding foreign currency impact)](index=14&type=section&id=Global%20Retail%20Sales%20Growth%20(excluding%20foreign%20currency%20impact)) | | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | U.S. stores | +7.8% | +5.1% | | International stores (excluding foreign currency impact) | +6.8% | +6.5% | | Total (excluding foreign currency impact) | +7.3% | +5.9% | [Same Store Sales Growth](index=15&type=section&id=Same%20Store%20Sales%20Growth) | | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | U.S. Company-owned stores | +8.5% | +7.3% | | U.S. franchise stores | +5.5% | +3.4% | | U.S. stores | +5.6% | +3.6% | | International stores (excluding foreign currency impact) | +0.9% | +1.2% | - U.S. same store sales growth was driven by higher customer transaction counts in both delivery and carryout, primarily due to the Domino's Rewards loyalty program and national offers[71](index=71&type=chunk) - International same store sales growth was attributable to a higher average ticket per transaction across international markets[71](index=71&type=chunk) [Store Growth Activity](index=15&type=section&id=Store%20Growth%20Activity) | | Store count at Dec 31, 2023 | Openings | Closings | Transfers | Store count at Mar 24, 2024 | Q1 2024 Net Store Growth | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | U.S. Company owned Stores | 288 | 3 | (1) | (1) | 289 | 2 | | U.S. Franchise Stores | 6,566 | 19 | (1) | 1 | 6,585 | 18 | | Total U.S. Stores | 6,854 | 22 | (2) | — | 6,874 | 20 | | International Stores | 13,737 | 181 | (37) | — | 13,881 | 144 | | Total | 20,591 | 203 | (39) | — | 20,755 | 164 | [Russia Market](index=15&type=section&id=Russia%20Market) - The remaining **143 net stores in Russia** were considered closed as of August 21, 2023, and are excluded from the ending store count and Q1 2024 global retail sales growth calculations[74](index=74&type=chunk) [Income Statement Data](index=16&type=section&id=Income%20Statement%20Data) [Revenues](index=16&type=section&id=Revenues) | (In millions) | Q1 2024 | % of Total | Q1 2023 | % of Total | YoY Change | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | U.S. Company-owned stores | $92.6 | 8.5% | $84.9 | 8.3% | +$7.7 | +9.1% | | U.S. franchise royalties and fees | $150.5 | 13.9% | $132.9 | 13.0% | +$17.6 | +13.3% | | Supply chain | $659.2 | 60.8% | $624.2 | 60.9% | +$35.0 | +5.6% | | International franchise royalties and fees | $72.0 | 6.6% | $69.7 | 6.8% | +$2.3 | +3.3% | | U.S. franchise advertising | $110.3 | 10.2% | $112.7 | 11.0% | -$2.4 | -2.1% | | Total revenues | $1,084.6 | 100.0% | $1,024.4 | 100.0% | +$60.2 | +5.9% | - Supply chain revenue increase was due to higher order volumes, partially offset by a shift in product mix and a **1.9% decrease in food basket pricing**[77](index=77&type=chunk)[82](index=82&type=chunk) - U.S. franchise royalties and fees benefited from increased technology platform fees, higher same store sales, and net store growth[77](index=77&type=chunk)[80](index=80&type=chunk) - U.S. franchise advertising revenue decreased due to increased advertising incentives (Emergency Pizza promotion) and a temporary reduction in the advertising contribution rate[81](index=81&type=chunk) [Cost of Sales / Gross Margin](index=18&type=section&id=Cost%20of%20Sales%20%2F%20Gross%20Margin) | (In millions) | Q1 2024 | % of Revenues | Q1 2023 | % of Revenues | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Cost of Sales | $662.8 | 61.1% | $638.9 | 62.4% | +$23.9 | | Gross Margin | $421.9 | 38.9% | $385.5 | 37.6% | +$36.4 | - U.S. Company-owned store gross margin increased **0.6 percentage points to 17.5%** of store revenues, driven by lower food costs and sales leverage[87](index=87&type=chunk)[88](index=88&type=chunk) - Supply chain gross margin increased **2.1 percentage points to 11.1%** of supply chain revenues, due to lower food costs from procurement productivity and a decrease in food basket cost, as well as slightly lower delivery costs[88](index=88&type=chunk) [General and Administrative Expenses](index=19&type=section&id=General%20and%20Administrative%20Expenses) | (In millions) | Q1 2024 | Q1 2023 | YoY Change | % Change | | :--- | :--- | :--- | :--- | :--- | | General and administrative | $101.0 | $95.2 | +$5.8 | +6.1% | [U.S. Franchise Advertising Expenses](index=19&type=section&id=U.S.%20Franchise%20Advertising%20Expenses) | (In millions) | Q1 2024 | Q1 2023 | YoY Change | % Change | | :--- | :--- | :--- | :--- | :--- | | U.S. franchise advertising | $110.3 | $112.7 | -$2.4 | -2.1% | [Refranchising Loss](index=19&type=section&id=Refranchising%20Loss) | (In millions) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Refranchising loss | $0.1 | $0.1 | [Other Expense](index=19&type=section&id=Other%20Expense) | (In millions) | Q1 2024 | Q1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Other expense | $(18.7) | $0.0 | -$18.7 | - The **$18.7 million other expense** in Q1 2024 was an unrealized loss on the investment in DPC Dash[92](index=92&type=chunk) [Interest Expense, Net](index=19&type=section&id=Interest%20Expense,%20Net) | (In millions) | Q1 2024 | Q1 2023 | YoY Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Interest expense, net | $(42.1) | $(44.2) | +$2.1 | -4.8% | | Weighted average borrowing rate | 3.8% | 3.8% | 0.0 ppts | - The decrease in net interest expense was driven by higher interest income on cash equivalents[93](index=93&type=chunk) [Provision for Income Taxes](index=19&type=section&id=Provision%20for%20Income%20Taxes) | (In millions) | Q1 2024 | Q1 2023 | YoY Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Provision for income taxes | $23.8 | $28.6 | -$4.8 | -16.8% | | Effective tax rate | 15.9% | 21.4% | -5.5 ppts | - The lower effective tax rate was driven by a **5.6 percentage point change** in the impact of excess tax benefits from equity-based compensation[94](index=94&type=chunk) [Segment Income](index=20&type=section&id=Segment%20Income) | (In millions) | Q1 2024 | Q1 2023 | YoY Change | % Change | | :--- | :--- | :--- | :--- | :--- | | U.S. stores | $136.1 | $112.7 | +$23.4 | +20.8% | | Supply chain | $64.6 | $48.5 | +$16.1 | +33.1% | | International franchise | $59.3 | $58.1 | +$1.2 | +2.1% | | Other | $(18.2) | $(15.7) | -$2.5 | -15.9% | | Total Segment Income | $241.8 | $203.6 | +$38.2 | +18.8% | [U.S. Stores](index=20&type=section&id=U.S.%20Stores%20Segment%20Income) - U.S. stores Segment Income increased by **$23.4 million, or 20.8%**, primarily due to higher U.S. franchise royalties and fees revenues and an increase in U.S. Company-owned store gross margin[98](index=98&type=chunk) [Supply Chain](index=20&type=section&id=Supply%20Chain%20Segment%20Income) - Supply chain Segment Income increased by **$16.1 million, or 33.1%**, primarily due to the $17.0 million increase in supply chain gross margin[99](index=99&type=chunk) [International Franchise](index=20&type=section&id=International%20Franchise%20Segment%20Income) - International franchise Segment Income increased by **$1.2 million, or 2.1%**, primarily due to higher international franchise royalties and fees revenues[100](index=100&type=chunk) [Other](index=20&type=section&id=Other%20Segment%20Income) - Other Segment Income decreased by **$2.5 million, or 15.6%**, primarily due to higher labor costs[101](index=101&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) - Working capital was **$173.3 million** as of March 24, 2024, excluding restricted cash and advertising fund assets/liabilities[103](index=103&type=chunk) - Primary sources of liquidity are cash flows from operations and available borrowings under 2022 and 2021 Variable Funding Notes, with **$278.9 million available** as of March 24, 2024[104](index=104&type=chunk) [Restricted Cash](index=21&type=section&id=Restricted%20Cash) - Total restricted cash and cash equivalents were **$209.8 million** as of March 24, 2024, including $158.7 million for debt payments and $50.9 million for interest reserve[107](index=107&type=chunk) - An additional **$56.0 million** of advertising fund restricted cash and cash equivalents can only be used for brand promotion activities[107](index=107&type=chunk) [Long-Term Debt](index=21&type=section&id=Long-Term%20Debt) - Long-term debt was approximately **$4.98 billion** as of March 24, 2024[108](index=108&type=chunk) - All principal amounts of outstanding notes were classified as long-term debt due to the Holdco Leverage Ratio being **less than 5.0x**, suspending scheduled debt amortization payments[108](index=108&type=chunk) [Share Repurchase Programs](index=22&type=section&id=Share%20Repurchase%20Programs) - The Board authorized an additional **$1.0 billion** for share repurchases on February 21, 2024[110](index=110&type=chunk) - As of March 24, 2024, **$1.12 billion** remained authorized for future share repurchases[111](index=111&type=chunk) - The company repurchased approximately **$25.0 million of common stock (56,372 shares)** in Q1 2024[111](index=111&type=chunk) [Dividends](index=22&type=section&id=Dividends) - A **$1.51 per share quarterly dividend** was declared on February 21, 2024, and paid on March 29, 2024[112](index=112&type=chunk) - Another **$1.51 per share quarterly dividend** was declared on April 25, 2024, to be paid on June 28, 2024[112](index=112&type=chunk) [Sources and Uses of Cash](index=22&type=section&id=Sources%20and%20Uses%20of%20Cash) | (In millions) | Q1 2024 | Q1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $123.5 | $114.7 | +$8.8 | | Net cash used in investing activities | $(21.5) | $(19.6) | -$1.9 | | Net cash used in financing activities | $(34.8) | $(45.3) | +$10.5 | [Operating Activities](index=22&type=section&id=Operating%20Activities) - Cash provided by operating activities increased by **$8.8 million** in Q1 2024, driven by higher net income and non-cash adjustments, partially offset by changes in operating assets/liabilities and advertising fund assets/liabilities[114](index=114&type=chunk) [Investing Activities](index=22&type=section&id=Investing%20Activities) - Cash used in investing activities was **$21.5 million** in Q1 2024, primarily consisting of $20.2 million in capital expenditures for technological initiatives, supply chain centers, and corporate store operations[115](index=115&type=chunk) [Financing Activities](index=22&type=section&id=Financing%20Activities) - Cash used in financing activities was **$34.8 million** in Q1 2024, including $25.0 million for stock repurchases, $13.5 million for debt repayments, and $6.7 million for tax payments on restricted stock, partially offset by $10.8 million from stock option exercises[116](index=116&type=chunk) [Critical Accounting Estimates](index=22&type=section&id=Critical%20Accounting%20Estimates) - No material changes to critical accounting estimates (long-lived assets, casualty insurance reserves, income taxes) since December 31, 2023[117](index=117&type=chunk) [Forward-Looking Statements](index=23&type=section&id=Forward-Looking%20Statements) - This section contains forward-looking statements subject to substantial risks and uncertainties that could cause actual results to differ materially from expectations[118](index=118&type=chunk) - Key risk factors include indebtedness, competition, labor shortages, commodity price fluctuations, and general economic conditions[118](index=118&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Details market risks from interest rate and commodity price fluctuations, with no speculative transactions or foreign currency hedging [Market Risk](index=24&type=section&id=Market%20Risk) - The company is exposed to interest rate risk on its variable funding notes, which bear interest at fluctuating rates based on Term SOFR[119](index=119&type=chunk)[120](index=120&type=chunk) - The company is exposed to market risks from changes in commodity prices for cheese, other food, cardboard, and paper products[122](index=122&type=chunk) - The company does not engage in speculative transactions or hold/issue financial instruments for trading purposes[119](index=119&type=chunk)[122](index=122&type=chunk) [Foreign Currency Exchange Risk](index=24&type=section&id=Foreign%20Currency%20Exchange%20Risk) - Approximately **6.6% of total revenues** in Q1 2024 were derived from the international franchise segment, with a majority denominated in foreign currencies[123](index=123&type=chunk) - A hypothetical **10% adverse change** in foreign currency rates would have resulted in a negative impact of approximately **$6.4 million** on royalty revenues in Q1 2024[123](index=123&type=chunk) - The company does not enter into financial instruments to manage foreign currency exchange risk[123](index=123&type=chunk) [Item 4. Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms effective disclosure controls and procedures as of March 24, 2024, with no material changes to internal financial reporting controls - The company's disclosure controls and procedures were **effective** as of March 24, 2024[124](index=124&type=chunk) - There were no material changes in the company's internal control over financial reporting during the quarterly period ended March 24, 2024[125](index=125&type=chunk) [PART II. OTHER INFORMATION](index=25&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=25&type=section&id=Item%201.%20Legal%20Proceedings) Details ongoing legal and administrative proceedings, which management believes will not materially affect the business or financial condition - The company is a party to lawsuits, revenue agent reviews by taxing authorities, and administrative proceedings in the ordinary course of business[127](index=127&type=chunk) - Management does not believe these matters will have a material adverse effect on the business or financial condition, and established accruals are considered adequate[128](index=128&type=chunk) [Item 1A. Risk Factors](index=25&type=section&id=Item%201A.%20Risk%20Factors) Reports no material changes to the risk factors previously disclosed in the 2023 Annual Report on Form 10-K - No material changes to the risk factors previously disclosed in Item 1A 'Risk Factors' in Part I of the 2023 Form 10-K[129](index=129&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=25&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details Q1 2024 share repurchases of 56,372 shares for $25.0 million, with $1.12 billion authorized for future repurchases | Period | Total Number of Shares Purchased (1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Program (2) | Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (2) (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Period 1 (Jan 1 - Jan 28, 2024) | 1,276 | $412.44 | — | $1,141,333 | | Period 2 (Jan 29 - Feb 25, 2024) | 1,201 | $429.31 | — | $1,141,333 | | Period 3 (Feb 26 - Mar 24, 2024) | 58,936 | $443.65 | 56,372 | $1,116,333 | | Total | 61,413 | $442.72 | 56,372 | $1,116,333 | - As of March 24, 2024, **$1.12 billion** remained available for future purchases under the share repurchase program[132](index=132&type=chunk) [Item 3. Defaults Upon Senior Securities](index=25&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Reports no defaults upon senior securities during the reported period - No defaults upon senior securities[134](index=134&type=chunk) [Item 4. Mine Safety Disclosures](index=25&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) States that mine safety disclosures are not applicable to the company - Mine Safety Disclosures are not applicable[135](index=135&type=chunk) [Item 5. Other Information](index=25&type=section&id=Item%205.%20Other%20Information) Confirms no directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q1 2024 - None of the company's directors or officers adopted or terminated a 'Rule 10b5-1 trading arrangement' or a 'non-Rule 10b5-1 trading arrangement' during Q1 2024[136](index=136&type=chunk) [Item 6. Exhibits](index=26&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the 10-Q report, including CEO/CFO certifications and various XBRL documents - Exhibits include certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, and various XBRL documents[137](index=137&type=chunk) [SIGNATURES](index=27&type=section&id=SIGNATURES) Provides the official signatures for the report, confirming its submission - The report was signed on April 29, 2024, by Sandeep Reddy, Executive Vice President and Chief Financial Officer[140](index=140&type=chunk)

Sales Growth - Global retail sales growth (excluding foreign currency impact) was 7.3% in Q1 2024, compared to 5.9% in Q1 2023[4] - U.S. same store sales growth was 5.6%, with U.S. Company-owned stores achieving 8.5% growth[4][6] - International same store sales growth (excluding foreign currency impact) was 0.9%, with total international retail sales growth at 6.1% when including the Russia market[4][5] - The company expects annual global retail sales growth of 7%+, with 1,100+ annual global net store growth and 8%+ annual income from operations growth for the period 2024-2028[15] Revenue and Income - Total revenues increased by $60.2 million, or 5.9%, to $1,084.6 million in Q1 2024[8] - Net income increased by $21.1 million, or 20.1%, to $125.8 million in Q1 2024[14] - Diluted earnings per share (EPS) increased by 22.2% to $3.58 in Q1 2024[14] - Total revenues for the first quarter of 2024 reached $1,084,647,000, a 5.9% increase from $1,024,398,000 in the first quarter of 2023[32] - Net income for the first quarter of 2024 was $125,824,000, representing an increase of 20.1% compared to $104,770,000 in the same period last year[32] - Earnings per share (diluted) increased to $3.58 in the first quarter of 2024, up from $2.93 in the first quarter of 2023[32] Operational Performance - Income from operations rose by $32.9 million, or 18.6%, to $210.4 million in Q1 2024[8] - The gross margin improved to 38.9% in the first quarter of 2024, up from 37.6% in the first quarter of 2023[32] - The company reported a trailing four quarters segment income of $977,348,000, compared to $870,164,000 in the previous year[24] Store Expansion - The company opened 203 net new stores globally in Q1 2024, with a total of 20,755 stores[7] Financial Ratios and Assets - The leverage ratio improved to 5.0x from 5.7x year-over-year[8] - The leverage ratio decreased to 5.0x in the first quarter of 2024 from 5.7x in the first quarter of 2023[24] - Total assets increased to $1,744,742,000 as of March 24, 2024, up from $1,674,899,000 on December 31, 2023, representing a growth of approximately 4.15%[34] Cash Flow and Liabilities - Cash and cash equivalents at the end of the period rose to $203,894,000, up from $154,193,000, marking a significant increase of approximately 32.2%[37] - Total current liabilities decreased to $509,593,000 from $547,350,000, a reduction of about 6.88%[34] - Net cash provided by operating activities was $123,464,000 for the quarter, compared to $114,682,000 in the prior year, indicating a growth of approximately 7.8%[37] Capital Expenditures and Stockholders' Equity - Capital expenditures for the quarter were $20,181,000, slightly higher than $19,031,000 in the same quarter last year, reflecting an increase of about 6.05%[37] - The total stockholders' deficit improved to $(4,008,330,000) from $(4,070,367,000), a positive change of approximately 1.52%[34] Other Financial Metrics - International franchise royalty revenues for the first quarter of 2024 were $71,966,000, compared to $69,671,000 in the first quarter of 2023, reflecting a growth of 3.7%[32] - U.S. franchise royalties and fees increased to $150,518,000 in the first quarter of 2024, up from $132,864,000 in the first quarter of 2023, marking a growth of 13.3%[32] - The company generated over $18.5 billion in global retail sales for the trailing four quarters ended March 24, 2024[27] - Long-term debt, less current portion, remained relatively stable at $4,973,812,000 compared to $4,934,062,000, showing a slight increase of 0.8%[34] - The company reported a non-cash equity-based compensation expense of $11,338,000, up from $7,538,000, which is an increase of approximately 50.5%[37] - The effect of exchange rate changes on cash was a loss of $672,000, compared to a loss of $186,000 in the previous year, indicating a worsening of approximately 261.29%[37]