Core Viewpoint - Papa John's has experienced an unexpected decline in sales in North America, attributed to increased competition from fast-food rivals [1] Company Summary - The pizza chain is facing tougher competition, which has negatively impacted its sales performance in the North American market [1] Industry Summary - The fast-food sector is becoming increasingly competitive, posing challenges for traditional pizza chains like Papa John's [1]

Financial Performance - For the quarter ended September 2025, Papa John's reported revenue of $508.15 million, reflecting a 0.3% increase year-over-year [1] - EPS for the quarter was $0.32, down from $0.43 in the same quarter last year [1] - The reported revenue fell short of the Zacks Consensus Estimate of $525.88 million, resulting in a surprise of -3.37% [1] - The company experienced an EPS surprise of -20%, with the consensus EPS estimate being $0.40 [1] Key Metrics - Papa John's shares have returned -4.6% over the past month, while the Zacks S&P 500 composite increased by +1.3% [3] - The stock currently holds a Zacks Rank 5 (Strong Sell), indicating potential underperformance against the broader market [3] Restaurant Operations - The number of domestic company-owned restaurants was 545, slightly above the average estimate of 543 [4] - The number of international company-owned restaurants was 13, matching the average estimate [4] - Comparable sales growth for system-wide North America restaurants was -1.1%, compared to the 2% average estimate [4] - Comparable sales growth for North America franchised restaurants was -2.6%, against an estimated growth of 2.3% [4] - Comparable sales growth for domestic company-owned restaurants was -3.1%, compared to the 2.4% average estimate [4] - The total number of franchised restaurants was 5,436, below the average estimate of 5,458 [4] - The total system-wide number of restaurants was 5,994, compared to the average estimate of 6,014 [4] Revenue Breakdown - Advertising funds revenue was reported at $41.68 million, below the average estimate of $44.14 million [4] - Other revenues amounted to $21.42 million, compared to the average estimate of $22.78 million, representing a significant year-over-year decline of -64.8% [4] - Domestic company-owned restaurant sales were $165.19 million, lower than the average estimate of $175.84 million, reflecting a -2.1% change year-over-year [4]

Core Insights - Papa John's International, Inc. missed profit expectations for Q3, reporting adjusted earnings per share of 32 cents against a consensus estimate of 41 cents [2] - The company also reported quarterly sales of $508.154 million, which was flat year over year and below the expected $523.793 million [3] - North America comparable sales turned negative, falling 3%, while International comparable sales rose 7% [5] Financial Performance - Net income decreased to $4 million from $42 million a year ago, and adjusted EBITDA was $48 million compared to $50 million in the prior year quarter [5] - Global systemwide restaurant sales were $1.21 billion, up 2% year over year, driven by stronger International sales and net unit growth [5] Operational Highlights - The company opened 45 new restaurants in the quarter, with 18 in North America and 27 in International markets, including two in India [6] - As of September 28, 2025, there were 5,994 Papa John's restaurants operating in 51 countries and territories [6] Future Outlook - For fiscal 2025, the company expects systemwide sales to rise 1% to 2%, down from a previous forecast of 2% to 5% [7] - North American comparable sales are projected to decline by 2% to 2.5%, revised from flat to up 2% [7] - Adjusted EBITDA is forecasted at $190 million to $200 million, down from the previous estimate of $200 million to $220 million [7] Market Sentiment - The company has a short float of 3.45 million shares, representing 14.44% of its publicly traded float, indicating a moderately elevated level of short interest [8] - Following the earnings report, PZZA shares were trading higher by 4.58% to $43.15 [8]

Core Insights - Papa Johns is experiencing a cautious consumer environment, leading to mixed performance in the third quarter, with flat same-store sales overall [1][2] - International sales grew by 7.1%, which helped offset a 2.7% decline in North American sales [1] Sales Performance - The company reported flat revenue of $508 million for the third quarter, with net income dropping to $4 million, or 13 cents per share, compared to $42 million, or $1.27 per share, in the same quarter last year [6] - The adjusted financial outlook for 2025 now projects a decline of 2% to 2.5% in same-store sales for North America, down from a previous estimate of flat to up 2% [6] Consumer Behavior - Weaker consumer sentiment and a more promotional quick-service restaurant (QSR) marketplace are impacting sales, particularly in North America [2] - Customers are focusing on "center of plate" items, such as large pizzas, and are opting to remove extras from their orders to save money [2] Promotions and Strategies - To attract lower-income customers, the company introduced a 50% off carryout promotion, which has shown to improve order trends [3][4] - The promotion is seen as a way to encourage customers to build a more comprehensive order once they engage with the offer [4] - The company is balancing promotional value with store-level profitability while investing in operational efficiencies and expanding in international markets like India [5]

Core Insights - Papa John's reported quarterly earnings of $0.32 per share, missing the Zacks Consensus Estimate of $0.40 per share, and down from $0.43 per share a year ago, representing an earnings surprise of -20.00% [1] - The company posted revenues of $508.15 million for the quarter ended September 2025, which was 3.37% below the Zacks Consensus Estimate, and slightly up from $506.81 million year-over-year [2] - The stock has added about 0.5% since the beginning of the year, underperforming the S&P 500's gain of 15.6% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.57 on revenues of $544.81 million, and for the current fiscal year, it is $1.77 on revenues of $2.12 billion [7] - The estimate revisions trend for Papa John's was unfavorable ahead of the earnings release, resulting in a Zacks Rank 5 (Strong Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Retail - Restaurants industry, to which Papa John's belongs, is currently in the bottom 12% of over 250 Zacks industries, suggesting a challenging environment for stocks in this sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor sentiment and stock performance [5]

Core Viewpoint - Papa John's is focused on executing its strategy to drive value while remaining open to considering alternatives if they arise [1] Group 1 - The CEO of Papa John's, Todd Penegor, emphasized the company's commitment to its strategic execution [1] - The company is actively looking to enhance its value proposition in the market [1] - There is an indication that Papa John's may explore other options if they present themselves [1]

Core Viewpoint - Papa John's reported third-quarter earnings that fell short of analyst expectations, indicating potential challenges in its operational strategy and market performance [1] Financial Performance - The company's sales for the third quarter were $508 million, which was below the analyst forecast of $524 million [1] - Adjusted earnings per share were $0.32, also lower than the expected $0.41 [1] Strategic Focus - CEO Todd Penegor emphasized that the company is concentrating on executing its strategy to enhance value [1] - The company remains open to other options if they arise, suggesting a flexible approach to its strategic direction [1] Market Activity - Reports indicated that Apollo Global Management has withdrawn its privatization proposal for Papa John's, which may impact the company's future strategic decisions [1]

Restaurant Operations - As of September 28, 2025, Papa John's operates 5,994 restaurants, including 558 company-owned and 5,436 franchised locations across 51 countries[110]. - The company opened 45 new restaurants in Q3 2025, with 18 in North America and 27 in international markets[115]. Financial Performance - In Q3 2025, total revenues increased by $1.3 million, or 0.3%, to $508.2 million, while revenues for the nine months ended September 28, 2025, rose by $27.0 million, or 1.8%, to $1.56 billion compared to the prior year[125]. - Total comparable sales growth for the company was reported at (0.2)% for Q3 2025, with a total global system-wide restaurant sales growth of 1.8%[121]. - Company-owned restaurant sales decreased by $2.7 million, or 1.6%, for the three months ended September 28, 2025, and decreased by $25.7 million, or 4.7%, for the nine months ended September 28, 2025, compared to the prior year[126]. - Operating income decreased by $49.1 million for the three months ended September 28, 2025, compared to $65.2 million for the same period in 2024[150]. - Net income attributable to the company was $4.7 million for the three months ended September 28, 2025, a decrease of $37.1 million compared to the prior year[150]. - Diluted earnings per common share were $0.13 for the three months ended September 28, 2025, down from $1.27 in the prior year, representing a decrease of $1.14[155]. - Adjusted EBITDA for the three months ended September 28, 2025, was $47.8 million, compared to $49.9 million for the same period in 2024[158]. Sales and Royalties - Comparable sales for Domestic Company-owned restaurants declined by 3.1% in Q3 2025, while International restaurants saw an increase of 7.1% during the same period[121]. - Franchise royalties and fees increased by 2.7% to $47.1 million in Q3 2025 compared to the same period in 2024[124]. - Franchise royalties and fees increased by $1.2 million, or 2.7%, for the three months and by $3.9 million, or 2.8%, for the nine months ended September 28, 2025, driven by International franchisee growth of 7.1% and 4.7% in comparable sales[128]. - North America franchise restaurant sales decreased to $714.6 million, or 0.8%, for the three months ended September 28, 2025, but increased to $2.23 billion, or 1.1%, for the nine months[129]. - International franchise restaurant sales increased to $328.3 million, or 10.1%, for the three months and to $950.4 million, or 10.0%, for the nine months ended September 28, 2025, excluding foreign currency fluctuations[130]. Costs and Expenses - Total costs and expenses were approximately $492.0 million, or 96.8% of total revenues, for the three months ended September 28, 2025, compared to $441.6 million, or 87.1% of total revenues, in the prior year[134]. - General and administrative expenses increased to $56.5 million, or 11.1% of revenues, for the three months ended September 28, 2025, compared to $12.9 million, or 2.5% of revenues, in the prior year[140]. - Depreciation and amortization expenses were $24.9 million, or 4.9% of total revenues, for the three months ended September 28, 2025, reflecting an increase due to accelerated depreciation of legacy technology assets[141]. - Other revenues, primarily from online and mobile ordering, increased by $1.9 million, or 9.7%, for the three months ended September 28, 2025, driven by higher technology service revenues[132]. - Advertising funds revenue increased by $0.3 million, or 0.7%, for the three months ended September 28, 2025, supported by global system-wide restaurant sales growth of 1.8%[133]. - Advertising funds expenses were $41.5 million or 99.5% of advertising revenues for the three months ended September 28, 2025, compared to $41.4 million or 100.0% for the prior year[144]. Cash Flow and Debt - Total cash provided by operating activities increased to $106.2 million for the nine months ended September 28, 2025, compared to $55.9 million for the same period in 2024, reflecting a $50.3 million increase[165]. - Total cash used in investing activities was $37.6 million for the nine months ended September 28, 2025, compared to cash provided of $7.4 million for the same period in 2024, primarily due to $52.1 million in capital expenditures[166]. - Free cash flow for the nine months ended September 28, 2025, was $59.2 million, significantly up from $8.9 million for the same period in 2024[183]. - Outstanding debt as of September 28, 2025, was $736.7 million, consisting of $400.0 million in senior notes, $200.0 million in Term Loan borrowings, and $136.7 million under the PJI Revolving Facility[172]. - The Company paid cash dividends totaling $45.8 million ($1.38 per share) for the nine months ended September 28, 2025, compared to $45.4 million ($1.38 per share) for the same period in 2024[180]. - The Second Amended and Restated Credit Agreement provides for a senior secured term loan of $200.0 million and a revolving credit facility of $600.0 million[162]. Future Outlook and Challenges - The company expects to achieve at least $50 million in supply chain savings starting in 2026 through productivity initiatives in its North American supply chain[115]. - The company anticipates completing the rollout of a new omnichannel platform by the end of 2026, with an estimated additional depreciation expense of $17 million to $22 million during this period[114]. - The International Transformation Plan is expected to incur total pre-tax costs of approximately $35 million, with $34.3 million already recognized through Q3 2025[116]. - The company has experienced price increases in food items, labor, and energy costs due to inflationary pressures, impacting profitability directly and indirectly[185]. - The company is managing food costs, particularly cheese, through pricing agreements and forward purchase contracts[185]. - The company does not anticipate significant negative impacts from proposed tariffs, as a substantial portion of ingredients is sourced domestically[185]. - The company faces risks related to labor shortages and increased operating costs, which may affect restaurant openings both domestically and internationally[186]. - Forward-looking statements include projections on revenue, earnings, cash flow, and adjusted EBITDA, but actual outcomes may differ due to various risks and uncertainties[186]. - The company is focused on managing macroeconomic challenges and retaining key management amidst staffing shortages[186]. - Expense control measures are being deployed to offset higher costs when possible[185]. - The company is assessing the impact of tariffs on discretionary spending patterns and franchisee profitability[185]. - The company has outlined potential risks in its Annual Report on Form 10-K for the fiscal year ended December 29, 2024[187]. - The company undertakes no obligation to update forward-looking statements except as required by law[187].

Financial Performance - Total revenues for Q3 2025 were $508.2 million, a slight increase of $1.3 million or 0.3% compared to the prior year[7]. - Net income for Q3 2025 was $4.5 million, a decrease of $37.3 million compared to the prior year, primarily due to a pre-tax gain of $41.3 million from the sale of two QC Center properties in the previous year[9]. - Diluted earnings per share were $0.13, down from $1.27 in Q3 2024; adjusted diluted earnings per share were $0.32, compared to $0.43 last year[11]. - Adjusted net income attributable to common shareholders for the nine months ended September 28, 2025, was $35.952 million, compared to $56.086 million for the same period in 2024[33]. - Adjusted diluted earnings per common share for the nine months ended September 28, 2025, was $1.09, down from $1.71 in the prior year[33]. - Net income for the nine months ended September 28, 2025, was $23.487 million, down from $69.238 million in the prior year, reflecting a decrease of about 66.1%[45]. Sales and Revenue Growth - Global system-wide restaurant sales reached $1.21 billion, up 2% year-over-year, driven by higher International sales and 1% global net restaurant growth[9]. - North America comparable sales decreased by 3%, while International comparable sales increased by 7%[5]. - Total comparable sales growth for the third quarter was flat at -0.2%, with International restaurants showing a growth of 7.1%[12]. - For the nine months ended September 28, 2025, revenues from external customers totaled $637,168,000, an increase of 4.2% from $611,873,000 for the same period in 2024[49]. - Revenues from external customers for the three months ended September 28, 2025, were $209,403,000, a slight decrease of 0.5% compared to $210,389,000 for the same period in 2024[48]. Cost and Expenses - The company incurred $56.478 million in general and administrative expenses for the three months ended September 28, 2025, significantly higher than $12.883 million in the same period last year[41]. - General and administrative expenses for the nine months ended September 28, 2025, were $28,983,000, up from $28,258,000 in the same period last year, representing a 2.6% increase[49]. - Cost of sales for the three months ended September 28, 2025, was $234,448,000, compared to $237,293,000 for the same period in 2024, indicating a decrease of 1.2%[48]. - Advertising funds expense for the nine months ended September 28, 2025, was $14,479,000, compared to $9,219,000 for the same period in 2024, reflecting a significant increase[49]. Guidance and Projections - The Company updated its 2025 annual guidance, projecting system-wide sales growth of 1% to 2%, down from the previous outlook of 2% to 5%[17]. - North America comparable sales are now expected to decline by 2% to 2.5%, compared to the prior guidance of flat to up 2%[17]. - International comparable sales outlook improved to a growth of 5% to 6%, up from 2% to 4%[17]. - Adjusted EBITDA guidance decreased to $190 million to $200 million, down from $200 million to $220 million[17]. - Depreciation and amortization expenses are now projected to be between $80 million and $95 million, an increase from the previous estimate of $70 million to $75 million[17]. Operational Highlights - The company opened 45 new restaurants in Q3 2025, including 18 in North America and 27 in International markets[5]. - The Company plans to open 85 to 95 new locations in North America, unchanged from the previous guidance of 85 to 115[17]. - International gross openings remain unchanged at 180 to 200[17]. - The company reported a net cash provided by operating activities of $106.192 million for the nine months ended September 28, 2025, compared to $55.884 million in the same period last year, an increase of approximately 90.0%[45]. Balance Sheet and Assets - The total current assets increased to $270.842 million as of September 28, 2025, compared to $230.605 million at the end of December 2024, marking an increase of approximately 17.4%[39]. - Total liabilities rose to $1.307 billion as of September 28, 2025, compared to $1.302 billion at the end of December 2024, indicating a slight increase of about 0.4%[39].

Group 1: AMD and Amazon - AMD reported better than expected earnings and revenue, providing upbeat guidance [1] - Amazon disclosed the sale of all its 822,000 shares in AMD, leading to a decline in AMD's stock by approximately 5.5% [1] Group 2: Pinterest - Pinterest shares fell nearly 18% after reporting profits below expectations and offering weak guidance [1] Group 3: Rivian - Rivian reported a smaller than expected adjusted loss, with revenue exceeding estimates and gross profit at $24 million [2] - The market had anticipated a loss of over $38 million, resulting in a 3% increase in Rivian's shares [2] Group 4: Papa John's - Papa John's stock dropped 10% following a report that Apollo Global withdrew its offer to take the company private [2] - The stock experienced an additional decline of 1% in the morning following the report [2] Group 5: NASA Nomination - President Trump has renominated Jared Isaacman to run NASA after previously pulling his nomination [3] - Isaacman is known to be friends with Elon Musk, who expressed approval of the nomination on social media [3]