[Overview of Q2 2025 Performance](index=1&type=section&id=PAPA%20JOHNS%20ANNOUNCES%20SECOND%20QUARTER%202025%20FINANCIAL%20RESULTS) Papa Johns reported solid second-quarter results, exceeding expectations with comparable sales growth in North America and internationally, though net income and adjusted EBITDA declined due to increased investments [Second Quarter 2025 Highlights](index=1&type=section&id=Highlights) Papa Johns reported a solid second quarter, exceeding expectations with a return to comparable sales growth in North America (+1%) and strong international growth (+4%), while total revenues increased by 4% to $529 million, net income and adjusted EBITDA declined to $10 million and $53 million respectively, primarily due to increased marketing investments and higher operating costs - CEO Todd Penegor stated that Q2 results exceeded expectations, with the company's strategy driving transaction gains and winning more customer visits[3](index=3&type=chunk) - The company opened 45 new restaurants system-wide in Q2, consisting of 19 in North America and 26 internationally[4](index=4&type=chunk) Q2 2025 Key Performance Indicators | Metric | Q2 2025 | Change vs. Q2 2024 | | :--- | :--- | :--- | | North America Comparable Sales | +1% | N/A | | International Comparable Sales | +4% | N/A | | Global System-wide Restaurant Sales | $1.26 billion | +4% | | Total Revenues | $529 million | +4% | | Net Income | $10 million | -23% | | Adjusted EBITDA | $53 million | -11% | | Diluted EPS | $0.28 | ($0.09) | | Adjusted Diluted EPS | $0.41 | ($0.20) | [Financial Performance Analysis](index=2&type=section&id=Financial%20Performance%20Analysis) The company's financial performance in Q2 2025 showed revenue growth but profitability compression, with total revenues rising 4.2% to $529.2 million, mainly from commissary revenues, while net income fell to $9.7 million and adjusted EBITDA decreased to $52.6 million due to higher G&A, marketing, and operating costs [Revenue and Sales](index=2&type=section&id=Revenue%20and%20Sales) Total revenues grew by $21.3 million (4.2%) year-over-year, primarily fueled by a $20.3 million increase in Commissary revenues and positive contributions from franchise royalties and advertising funds, partially offset by a $5.7 million decrease in Company-owned restaurant revenues due to UK refranchising and closures, with global system-wide sales increasing 4% to $1.26 billion - The primary driver of the **4.2% revenue increase** was a **$20.3 million rise in Commissary revenues**[6](index=6&type=chunk) - Company-owned restaurant revenues decreased by **$5.7 million**, mainly due to the refranchising or closure of 105 UK locations, which caused an **$8.2 million revenue drop** from International Company-owned restaurants[7](index=7&type=chunk) System-Wide Sales Growth (Q2 2025 vs Q2 2024) | Region | System-Wide Sales | Growth (YoY) | | :--- | :--- | :--- | | North America | $928 million | +3% | | International | $328 million | +7% | | **Global Total** | **$1.26 billion** | **+4%** | [Profitability and Earnings](index=2&type=section&id=Profitability%20and%20Earnings) Profitability declined in Q2 2025, with net income falling to $9.7 million from $12.5 million and adjusted EBITDA decreasing to $52.6 million from $58.9 million, driven by higher G&A expenses for marketing and loyalty program investments, a $3.7 million increase in incentive compensation, and rising food and labor costs, resulting in lower diluted and adjusted diluted EPS - Net income decreased by **$2.9 million**, as higher revenues were more than offset by increased G&A expenses (marketing, loyalty program), higher incentive compensation, and rising food and labor costs[8](index=8&type=chunk) - Adjusted EBITDA decreased by **$6.3 million**, primarily due to the same factors impacting net income, including incremental investments in marketing and higher operating costs[10](index=10&type=chunk) Earnings Per Share (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Diluted EPS | $0.28 | $0.37 | | Adjusted Diluted EPS | $0.41 | $0.61 | [Global Restaurant Development](index=4&type=section&id=Global%20Restaurant%20Development) As of June 29, 2025, Papa Johns operated 5,989 restaurants across 50 countries, with 45 new openings and 75 closures in the second quarter, resulting in a net decline of 30 restaurants, heavily concentrated in international franchised locations, though the company achieved a net growth of 106 restaurants over the trailing four quarters - The total number of restaurants stood at **5,989** at the end of Q2 2025, down from 6,019 at the beginning of the quarter[16](index=16&type=chunk) - Over the trailing four quarters, the company achieved a net restaurant growth of **106 units**, with North America adding 70 and International adding 36[16](index=16&type=chunk) Q2 2025 Restaurant Activity | Region | Opened | Closed | Net Change | | :--- | :--- | :--- | :--- | | North America | 19 | 18 | +1 | | International | 26 | 57 | (31) | | **System-wide Total** | **45** | **75** | **(30)** | [Cash Flow and Shareholder Returns](index=5&type=section&id=Cash%20Flow%20and%20Shareholder%20Returns) For the first six months of 2025, free cash flow significantly increased to $36.5 million, compared to $12.8 million in the same period last year, driven by improved working capital and timing of marketing fund payments, while the company continued its commitment to shareholder returns, paying a cash dividend of $0.46 per share in the second quarter and declaring an identical dividend for the third quarter - The Board of Directors declared a third-quarter dividend of **$0.46 per common share**, payable on August 29, 2025[20](index=20&type=chunk) Free Cash Flow (Six Months Ended) | (in thousands) | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $66,843 | $41,957 | | Purchases of property and equipment | ($30,305) | ($29,155) | | **Free cash flow** | **$36,538** | **$12,802** | [Fiscal 2025 Outlook](index=3&type=section&id=2025%20Outlook) The company reiterated most of its 2025 annual guidance while raising the forecast for International comparable sales to up 2% to 4%, with system-wide sales growth remaining at 2% to 5% and adjusted EBITDA projected between $200 million and $220 million - The company raised its guidance range for International comparable sales from 'flat to up 2%' to '**up 2% to 4%**'[12](index=12&type=chunk)[13](index=13&type=chunk) Updated Fiscal 2025 Guidance | Metric | Guidance Range | | :--- | :--- | | System-wide sales | Up 2% to 5% | | North America comparable sales | Flat to up 2% | | **International comparable sales** | **Up 2% to 4% (Raised)** | | North America gross openings | 85 to 115 | | International gross openings | 180 to 200 | | Adjusted EBITDA | $200 million to $220 million | | Capital expenditures | $75 million to $85 million | [Consolidated Financial Statements](index=11&type=section&id=Consolidated%20Financial%20Statements) This section presents the company's condensed consolidated statements of operations, balance sheets, and cash flows, providing a detailed overview of its financial position and performance [Condensed Consolidated Statements of Operations](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the second quarter of 2025, total revenues increased to $529.2 million from $507.9 million in the prior year, but due to higher costs and expenses, which rose to $504.7 million, operating income declined to $24.5 million from $28.2 million, and net income for the quarter was $9.7 million, a decrease from $12.5 million in Q2 2024 Q2 2025 Statement of Operations Highlights (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total revenues | $529,166 | $507,894 | | Total costs and expenses | $504,676 | $479,668 | | Operating income | $24,490 | $28,226 | | Net income | $9,671 | $12,536 | [Condensed Consolidated Balance Sheets](index=11&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 29, 2025, the company's balance sheet showed total assets of $890.4 million, a slight increase from $889.0 million at year-end 2024, with total liabilities also seeing a small increase to $1.306 billion and a stockholders' deficit of $416.8 million, while cash and cash equivalents stood at $33.3 million, down from $38.0 million at the end of 2024 Balance Sheet Summary (in thousands) | Account | June 29, 2025 | Dec 29, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $33,299 | $37,955 | | Total current assets | $238,787 | $230,605 | | Total assets | $890,442 | $888,952 | | Long-term debt, net | $726,281 | $741,650 | | Total liabilities | $1,306,304 | $1,302,265 | | Total Stockholders' deficit | ($416,754) | ($414,216) | [Condensed Consolidated Statements of Cash Flows](index=13&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 29, 2025, net cash provided by operating activities was $66.8 million, a significant improvement from $42.0 million in the prior year period, while net cash used in investing activities was $19.4 million and net cash used in financing activities was $52.8 million, primarily due to dividend payments and net repayments of credit facilities, resulting in a net decrease in cash of $4.7 million for the period Cash Flow Summary - Six Months Ended (in thousands) | Activity | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $66,843 | $41,957 | | Net cash used in investing activities | ($19,389) | ($23,841) | | Net cash used in financing activities | ($52,751) | ($34,428) | | **Change in cash and cash equivalents** | **($4,656)** | **($16,282)** | [Segment Information](index=14&type=section&id=Segment%20Information) The company's performance is evaluated across four reportable segments based on adjusted EBITDA, with North America franchising being the most profitable segment in Q2 2025 at $26.8 million, followed by North America commissaries at $19.7 million, while Domestic Company-owned restaurants saw a decline in profitability to $9.9 million and the International segment's adjusted EBITDA improved to $5.6 million - The North America commissaries segment showed the largest year-over-year growth in adjusted EBITDA, increasing by over **$4.6 million**[45](index=45&type=chunk) - The Domestic Company-owned restaurants segment experienced the largest decline in adjusted EBITDA, falling by approximately **$3.6 million** compared to the prior year[45](index=45&type=chunk) Segment Adjusted EBITDA (Q2 2025 vs Q2 2024, in thousands) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Domestic Company-owned restaurants | $9,864 | $13,474 | | North America franchising | $26,843 | $27,207 | | North America commissaries | $19,652 | $15,042 | | International | $5,637 | $3,713 | [Supplemental Information](index=8&type=section&id=Supplemental%20Information) This section provides additional financial details, including reconciliations of non-GAAP financial measures and definitions of key performance metrics used throughout the report [Non-GAAP Financial Measures Reconciliation](index=9&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) The company provides non-GAAP measures like adjusted EBITDA and adjusted diluted EPS to help investors assess operating performance, with Net Income of $9.7 million for Q2 2025 reconciled to Adjusted EBITDA of $52.6 million by adding back items such as interest, taxes, D&A, stock-based compensation ($3.8M), international restructuring costs ($2.5M), and other costs ($3.0M) - Adjustments for 'Other costs' in Q2 2025 included losses on equipment disposal from a terminated COVID-era program, costs for strategic initiatives, and costs related to tornado damage[36](index=36&type=chunk) Reconciliation of Net Income to Adjusted EBITDA (Q2 2025, in thousands) | Line Item | Amount | | :--- | :--- | | **Net income** | **$9,671** | | Income tax expense | $4,235 | | Net interest expense | $10,584 | | Depreciation and amortization | $18,819 | | Stock-based compensation expense | $3,824 | | International restructuring costs | $2,451 | | Other costs | $3,031 | | **Adjusted EBITDA** | **$52,615** | [Definitions](index=8&type=section&id=Definitions) This section defines key performance metrics used in the report, such as "Comparable sales" and "Global system-wide restaurant sales," which are reported on a constant dollar basis for international locations and are considered useful for analyzing results and evaluating brand strength - Comparable sales and Global system-wide restaurant sales for international locations are reported on a constant dollar basis to exclude the impact of foreign currency translation[30](index=30&type=chunk) - The company believes these metrics are useful for analyzing results, comparing to industry trends, and evaluating brand strength, as franchisee payments are based on a percentage of their sales[30](index=30&type=chunk)

Wall Street expects a year-over-year decline in earnings on higher revenues when Papa John's (PZZA) reports results for the quarter ended June 2025. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on August 7. On t ...

Core Viewpoint - Papa John's is well-positioned to maintain its earnings-beat streak in upcoming reports, with a history of exceeding earnings estimates, particularly in the last two quarters, averaging a surprise of 20.17% [1] Earnings Performance - For the most recent quarter, Papa John's reported earnings of $0.33 per share against an expectation of $0.36, resulting in a surprise of 9.09%. In the previous quarter, the company exceeded the consensus estimate of $0.48 by reporting $0.63 per share, achieving a surprise of 31.25% [2] Earnings Estimates and Predictions - Estimates for Papa John's have been trending higher due to its history of earnings surprises. The stock has a positive Zacks Earnings ESP of +2.59%, indicating bullish sentiment among analysts regarding the company's earnings prospects [5][8] - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) suggests a high likelihood of another earnings beat, with research indicating that stocks with this combination beat consensus estimates nearly 70% of the time [6][8] Earnings ESP Explanation - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions. This metric is crucial for predicting earnings surprises [7] Future Earnings Report - The next earnings report for Papa John's is expected to be released on August 7, 2025, and the current positive Earnings ESP indicates potential for continued strong performance [8]

Core Viewpoint - Apollo Global Management and Irth Capital Management have proposed a $2 billion deal to take Papa John's International private, valuing the pizza chain at just above $60 per share [1][3]. Group 1: Deal Details - The joint bid from Apollo and Irth would value Papa John's, the world's third-largest pizza delivery company, at just above $60 per share [1][3]. - The investment firms have approached Papa John's for this deal, indicating a significant interest in the company [1]. Group 2: Market Reaction - Following the news of the bid, Papa John's shares increased by more than 9%, reaching $52.68 [2].

Summary of Papa John's International FY Conference (June 10, 2025) Company Overview - **Company**: Papa John's International (PZZA) - **Key Executives**: Todd Penegor (CEO), Ravi Thanawala (CFO), Heather Hollander (SVP Strategy and Investor Relations) [1][2] Core Points and Arguments Strategic Shifts and Management Changes - The new management team is focused on improving traffic and enabling profitable growth through a strategic plan [2] - Todd Penegor emphasizes the importance of a strong team and consumer-focused insights to drive brand loyalty and frequency [5][7] Marketing and Brand Positioning - The company is returning to its core messaging of "better ingredients, better pizza" after a previous campaign that did not yield expected results [8] - The "Meet the Makers" campaign highlights pizza craftsmanship and the use of simple, high-quality ingredients [8][21] - A new loyalty program has been introduced, offering $2 off purchases of $15, which has improved customer engagement and frequency [10][12] Sales and Performance Metrics - Pie sales increased by 4% in Q1, indicating positive momentum in the business [14] - The company is seeing improvements in brand health metrics, particularly in value perception and customer satisfaction [17][21] - The loyalty program has grown to 37 million members, with a significant increase in engagement [12][40] Financial Outlook and Growth Strategy - The company expects same-store sales for 2025 to be flat to a 2% increase in North America, with positive traffic trends anticipated [30] - EBITDA guidance for 2025 is set between $200 million to $220 million, including $25 million in incremental marketing investments [36] - The focus on innovation and new product offerings, such as Cheddar Crust Pizza, is expected to drive future sales [27][19] Supply Chain and Operational Efficiency - The company is optimizing its supply chain to improve cost efficiency and service quality for franchisees [54][55] - Expected cost savings from supply chain optimizations are projected to impact the P&L positively in 2026 [56][59] Refranchising and Unit Growth - The company plans to refranchise select units to enhance its financial model and attract growth-oriented franchisees [69][71] - Global unit growth is projected at around 2%, with a focus on deliberate and strategic development [60][64] Additional Important Insights - The company is leveraging data analytics and partnerships (e.g., with Google Cloud) to enhance customer engagement and personalize marketing efforts [40][42] - The management is confident in the brand's ability to compete effectively in the delivery market, which currently represents about 17% of sales [46][48] - The focus on quality and innovation is seen as key to capturing market share in a competitive landscape [39][49] This summary encapsulates the key points discussed during the conference, highlighting the strategic direction, performance metrics, and future outlook for Papa John's International.

Core Insights - Papa Johns has introduced a new menu item, Cheddar Crust Pizza, which features a blend of cheddar cheese and garlic seasoning baked onto their classic crust, enhancing the flavor profile of their pizzas [1][2][3] - The Cheddar Crust Pizza is priced at $17.99 and will be available across Canada starting June 2nd, 2025, and comes with a side of Special Garlic Sauce and a pepperoncini [3] - In addition to the new pizza, Papa Johns is also launching Cheddar Cheesesticks, which are designed to complement the pizza offering and provide a shareable side option [4] Company Overview - Papa Johns International, Inc. was founded in 1984 with a focus on using high-quality ingredients to create superior pizzas, emphasizing their commitment to fresh, never frozen dough and real cheese [5] - The company is the third-largest pizza delivery chain globally, operating over 5,900 restaurants in 50 countries and territories [5]

Group 1 - The article highlights a positive outlook on Papa John's (PZZA), indicating that the company's turnaround is showing promising signs of progress [1] - The author has been monitoring Papa John's for seven months, suggesting a long-term interest in the company's potential recovery [1] Group 2 - The author is an Equity Analyst and Accountant with expertise in restaurant stocks, leading a company that analyzes various segments within the U.S. restaurant market [2] - The analytical approach includes advanced models and specialized valuation techniques to provide insights and strategies for investors [2]

Core Insights - The restaurant industry presents complexities for investors due to performance variations, despite its familiarity to consumers [1] - Successful restaurants in the current value-conscious environment are those offering exceptional products and experiences [1] Pizza Chains Analysis - Domino's Pizza Inc is expected to continue outperforming, supported by partnerships with delivery platforms and value-oriented menu strategies, with a Buy rating and a price forecast of $549 [2] - Papa John's International, Inc is anticipated to improve its earnings profile post-investments planned for 2025, also receiving a Buy rating with a price forecast of $52 [3] - Yum! Brands, Inc has maintained stable returns on assets, leading to a Neutral rating with a price forecast of $159 [4] - Market share dynamics show Domino's gaining share, Papa John's maintaining its position, while Pizza Hut has experienced a decline [5] Broader Restaurant Sector Insights - Bloomin' Brands, Inc may face slower same-store sales growth due to macroeconomic pressures, receiving an Underperform rating with a price forecast of $7 [6] - McDonald's Corporation could achieve better margins if it slows investment or finds cost savings, with a Neutral rating and a price forecast of $327 [7] - McDonald's defensive profile may become more appealing if investor sentiment shifts towards risk aversion [7]

Core Insights - Papa John's International, Inc. (PZZA) is positioned to benefit from menu innovation, digital initiatives, and marketing efforts, although it faces challenges from a tough macro environment and soft comparable sales [1] Strategic Efforts Aid PZZA's Prospects - Menu innovation is a key growth driver, with new offerings like New York-style pizza, Cheesy Chacaroni, and star-shaped pizza gaining traction internationally [2] - The company is simplifying its menu by removing underperforming SKUs and launching oven calibration initiatives to enhance product consistency, with new product formats expected by mid-2025 [2] Technology and Digital Initiatives - Digital ordering now represents over 70% of total sales, which is seen as crucial for customer engagement and profitability [3] - Recent technology upgrades have improved app conversion rates and repeat purchases, supported by a partnership with Google Cloud to leverage AI for enhancing the ordering and delivery process [3] Marketing Strategies - The company is adopting an assertive marketing approach to boost brand visibility and customer engagement, with plans to invest an additional $25 million in marketing in 2025 [4] - The "Meet the Makers" campaign highlights team dedication and pizza quality, contributing to improved value perception [4] Loyalty Program Enhancements - Papa John's revamped its loyalty rewards program, allowing over 37 million members to access rewards more quickly, leading to stronger activation rates and increased customer engagement [5] - The company plans to further invest in the loyalty program throughout 2025 to enhance simplicity and personalization [5] Headwinds - Over the past year, Papa John's shares have declined by 13.3%, contrasting with the industry's growth of 7.3%, primarily due to a challenging macroeconomic environment [8] - Comparable sales have faced declines, with total comparable sales down 1.3% year-over-year in the fiscal first quarter, and domestic company-owned restaurant comps down 4.6% [9]

Core Insights - Papa John's International, Inc. reported first-quarter fiscal 2025 results with adjusted earnings and revenues exceeding the Zacks Consensus Estimate, although the bottom line declined year over year [1][4] Financial Performance - Adjusted earnings per share (EPS) were 36 cents, beating the consensus estimate of 33 cents by 9.1%, while the prior-year quarter's adjusted EPS was 67 cents [4] - Quarterly revenues reached $518.3 million, surpassing the consensus mark of $510 million by 1.7%, and increased by 0.9% year over year [4] - Net income for the quarter totaled $9.3 million, down from $14.9 million in the prior-year quarter [8] - Total costs and expenses rose to $494.3 million from $480.2 million in the prior-year quarter [8] Sales and Market Trends - Total comparable sales declined by 1.3% year over year, compared to a 2% decline in the prior-year quarter [5] - Domestic company-owned restaurant comps fell by 4.6% year over year, while North America's franchised restaurants saw a 2.3% decline [6] - International restaurant comps increased by 3.2% year over year, contrasting with a 2.6% decline in the prior-year quarter [7] Strategic Initiatives - The company plans to enhance its momentum by introducing new crust flavors, pizza formats, toppings, and dipping options to attract new customers [3] - Management attributed recent sales momentum to a balanced barbell pricing strategy, which has driven traffic and transactions [2] Future Guidance - For fiscal 2025, the company anticipates system-wide sales growth of 2-5%, with comparable sales in North America and International expected to be flat to up 2% [11] - Adjusted EBITDA is projected to be between $200 million and $220 million, with capital expenditures expected to be $75-$85 million [11] Operational Developments - As of March 30, 2025, Papa John's had a system-wide restaurant count of 6,019, with operations in 50 countries and territories globally [10] - The company opened two new restaurants in North America during the fiscal first quarter but closed 13 restaurants in international markets [10]