Core Insights - Seeking Alpha has ended discounts for marketplace services, encouraging potential investors to act quickly to save 20% on services [1] - In November 2023, Papa John's International, Inc. (NASDAQ: PZZA) stock was double upgraded to a tactical trade buying opportunity, with a clear trading strategy outlined [2] Company Overview - Papa John's International, Inc. is highlighted as a focus for investment opportunities, with a team of analysts providing insights and strategies for trading [2] - The BAD BEAT Investing group, led by Quad 7 Capital, has a history of successful investment calls and focuses on short- and medium-term investments, income generation, and momentum trades [2] Investment Strategy - The BAD BEAT Investing approach emphasizes teaching investors to become proficient traders through detailed research and clear entry and exit targets [2] - The group has maintained a long position of approximately 95% and a short position of 5% since May 2020, indicating a strong bullish sentiment in the market [2]

Financial Performance - Papa John's reported revenue of $518.31 million for the quarter ended March 2025, a year-over-year increase of 0.9% [1] - The EPS for the same period was $0.36, down from $0.67 a year ago, indicating a decline [1] - The reported revenue exceeded the Zacks Consensus Estimate of $509.8 million by 1.67%, while the EPS surprise was +9.09% compared to the consensus estimate of $0.33 [1] Key Metrics - The number of domestic company-owned restaurants was 539, slightly below the estimated 541 [4] - Total North America restaurants stood at 3,516, compared to the average estimate of 3,521 [4] - Comparable sales growth for system-wide North America restaurants was -1%, better than the -1.2% estimate [4] - Comparable sales growth for North America franchised restaurants was -2.3%, worse than the -1.1% estimate [4] - Comparable sales growth for domestic company-owned restaurants was -4.6%, significantly worse than the -1.5% estimate [4] Revenue Breakdown - North America franchise royalties and fees generated $36.81 million, below the $41.63 million estimate, but a 3.1% year-over-year increase [4] - North America commissary revenues were $264.38 million, exceeding the $216.22 million estimate, representing a 30.1% year-over-year increase [4] - Other revenues totaled $23.76 million, significantly below the $34.08 million estimate, reflecting a 59% year-over-year decline [4] - Domestic company-owned restaurant sales were $170.80 million, slightly below the $175.05 million estimate, marking a 3.1% year-over-year decline [4] - International revenues reached $39.11 million, surpassing the $32.63 million estimate, but showing a 3.9% year-over-year decline [4] - Advertising funds revenue was $43.67 million, slightly above the $43.36 million estimate [4] Stock Performance - Shares of Papa John's have returned -1.7% over the past month, contrasting with the Zacks S&P 500 composite's +11.3% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Company Performance - Papa John's reported quarterly earnings of $0.36 per share, exceeding the Zacks Consensus Estimate of $0.33 per share, but down from $0.67 per share a year ago, representing an earnings surprise of 9.09% [1] - The company posted revenues of $518.31 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.67% and showing an increase from $513.92 million year-over-year [2] - Over the last four quarters, Papa John's has surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [2] Stock Performance and Outlook - Papa John's shares have declined approximately 18.9% since the beginning of the year, compared to a decline of 4.3% for the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $0.53 on revenues of $509.83 million, and for the current fiscal year, it is $1.83 on revenues of $2.07 billion [7] - The estimate revisions trend for Papa John's is currently unfavorable, resulting in a Zacks Rank 4 (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 ranked in the bottom 22% of over 250 Zacks industries, suggesting a challenging environment [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact investor sentiment [5]

Financial Data and Key Metrics Changes - Global system-wide restaurant sales for Q1 2025 were $1.22 billion, up 1% compared to the prior year in constant currency [20] - North America comparable sales decreased by 2.7% in Q1 2025 compared to the prior year, but showed sequential improvement [21] - First quarter consolidated adjusted EBITDA was approximately $50 million, down from $61 million a year ago [24] Business Line Data and Key Metrics Changes - North America transaction comps were down less than 1% compared to the prior year, with improvements noted in key occasions like the Super Bowl and Valentine's Day [21] - International comparable sales increased by 3% year over year in Q1 2025, reflecting the benefits of international transformation initiatives [23] Market Data and Key Metrics Changes - The company experienced a decline in company-owned restaurant revenue by $17 million in Q1 2025, primarily due to refranchising efforts [23] - The advertising fund revenues increased by $7 million to support higher levels of national marketing compared to last year [24] Company Strategy and Development Direction - The company is focused on five key priorities: core product and innovation, amplifying marketing messages, investing in technology infrastructure, differentiating customer experience, and evolving the franchisee base [6][7] - A long-term partnership with Google Cloud was announced to enhance ordering and delivery experiences through AI [14] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding consumer confidence amid economic volatility, noting improvements in value perception and traffic [40][41] - The company anticipates system-wide sales to increase by 25% in 2025, with North America comparable sales expected to be flat to up 2% [28][29] Other Important Information - The company plans to invest an additional $25 million in marketing this year to build on early successes [12] - The loyalty program saw significant growth, adding approximately 1 million new members in Q1 2025, bringing total membership to over 37 million [15] Q&A Session Summary Question: How is the consumer environment viewed from Papa John's perspective? - Management noted that consumer confidence remains challenged but highlighted improvements in value perception and traffic [40][41] Question: Can you elaborate on the impact of incremental advertising on demand? - Management reported positive early results from $7 million in incremental media spend, with significant gains in consumer awareness and value perception [44][45] Question: Where has the company made the most progress in its initiatives? - Management highlighted progress in technology transformation and storytelling around pizza craftsmanship as key areas of success [50][51] Question: What are the drivers of international sales growth? - Management indicated that focused countries are experiencing mid to double-digit growth, with successful innovation and quality execution [56][58] Question: How significant is the opportunity to improve supply chain costs for franchisees? - Management acknowledged early stages of supply chain optimization, with meaningful savings expected to enhance franchisee margins [61][62] Question: What is the outlook for refranchising company-owned restaurants? - Management indicated that refranchising could begin in Q2 or early Q3, focusing on core markets for growth-oriented franchisees [65][66]

Financial Data and Key Metrics Changes - Global system-wide restaurant sales for Q1 2025 were $1.22 billion, up 1% compared to the prior year in constant currency [19] - North America comparable sales decreased by 2.7% in Q1 2025 compared to the prior year, but showed sequential improvement [20] - First quarter consolidated adjusted EBITDA was approximately $50 million, down from $61 million a year ago, primarily due to higher G&A expenses and investments [24][29] Business Line Data and Key Metrics Changes - North America transaction comps were down less than 1% compared to the prior year, with improvements noted in key occasions like the Super Bowl and NCAA tournaments [20] - International comparable sales increased by 3% year over year in Q1 2025, reflecting the benefits of international transformation initiatives [23] - Company-owned restaurant revenue decreased by $17 million, primarily due to declines in international and domestic locations [23] Market Data and Key Metrics Changes - The company saw a continued shift in fulfillment channel mix, driven by reduced delivery fees, which impacted average ticket prices [22] - The loyalty program saw significant growth, adding approximately 1 million new members in Q1, bringing total membership to over 37 million [15] Company Strategy and Development Direction - The company is focused on five key priorities: core product and innovation, amplifying marketing, investing in technology, differentiating customer experience, and evolving the franchisee base [5][6] - A long-term partnership with Google Cloud aims to enhance ordering and delivery experiences through AI [14] - The company plans to accelerate product innovation in the second half of the year, including new pizza formats and crust flavors [27][29] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding consumer confidence amid economic volatility, noting improvements in value perception and transaction share gains [38][40] - The company anticipates system-wide sales to increase by 25% in 2025, with North America comparable sales expected to be flat to up 2% [27][28] - Management highlighted the importance of quality ingredients and customer experience as key differentiators in a competitive market [70] Other Important Information - The company has refinanced its revolving credit facility and secured a new $200 million term loan for financial flexibility [26] - The loyalty program's adjustments have led to a significant increase in member engagement and redemption rates [85][87] Q&A Session Summary Question: How is the consumer environment impacting demand trends? - Management noted that consumer confidence remains challenged, but improvements in value perception and traffic have been observed [38][40] Question: What are the early learnings from incremental advertising spend? - The company has seen significant gains in consumer awareness and value perception from its marketing campaigns [42][43] Question: Where has the company made the most progress in its initiatives? - Management highlighted progress in technology transformation and storytelling around pizza craftsmanship as key areas of success [48][49] Question: What are the drivers of international sales growth? - The company is experiencing mid to double-digit growth in focused international markets, with a strong emphasis on quality and innovation [54][55] Question: How does the company plan to improve supply chain costs for franchisees? - Management is exploring opportunities for supply chain optimization to enhance franchisee margins while maintaining quality [58][59] Question: What is the outlook for refranchising company-owned restaurants? - The company plans to begin refranchising during Q2 or early Q3, focusing on core markets with strong growth potential [62][63] Question: How does the company plan to maintain a competitive edge with higher quality ingredients? - Management believes that quality will be a tiebreaker for consumers and plans to emphasize its unique ingredient offerings in marketing [70]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the quarterly period ended March 30, 2025, compared with December 29, 2024 (for the balance sheet) and March 31, 2024 (for other statements) [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 30, 2025, total assets were **$898.1 million**, a slight increase from **$889.0 million** at year-end 2024, with total liabilities also increasing to **$1.314 billion** from **$1.302 billion** | (In thousands) | March 30, 2025 (Unaudited) | December 29, 2024 | | :--- | :--- | :--- | | **Total current assets** | $242,115 | $230,605 | | **Total assets** | **$898,088** | **$888,952** | | **Total current liabilities** | $282,899 | $277,963 | | **Total liabilities** | **$1,314,027** | **$1,302,265** | | **Total Stockholders' deficit** | **($416,809)** | **($414,216)** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q1 2025, total revenues increased slightly to **$518.3 million** from **$513.9 million** year-over-year, while operating income decreased to **$24.0 million** from **$33.7 million**, and diluted EPS fell to **$0.27** from **$0.44** | (In thousands, except per share) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Total revenues** | $518,309 | $513,916 | | Company-owned restaurant sales | $173,881 | $191,251 | | Commissary revenues | $228,941 | $217,512 | | **Operating income** | $23,965 | $33,718 | | **Net income attributable to the Company** | $9,222 | $14,636 | | **Diluted earnings per common share** | **$0.27** | **$0.44** | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly increased to **$31.3 million** in Q1 2025 from **$12.0 million** in Q1 2024, with cash and cash equivalents increasing by **$6.1 million** during the quarter | (In thousands) | Three Months Ended March 30, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $31,336 | $11,987 | | **Net cash used in investing activities** | ($7,083) | ($10,152) | | **Net cash used in financing activities** | ($18,567) | ($14,602) | | **Change in cash and cash equivalents** | $6,057 | ($12,819) | | **Cash and cash equivalents at end of period** | $44,012 | $27,768 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail significant accounting policies, including changes to segment reporting and cost allocation methodologies, and disclose the International Transformation Plan costs and a new **$200 million** term loan - The company updated its segment profit measure to adjusted EBITDA and revised its internal cost allocation methodology, resulting in higher allocations to the North America franchising and International segments, with prior period results recast for comparability[27](index=27&type=chunk)[84](index=84&type=chunk) - The International Transformation Plan incurred **$2.2 million** in costs in Q1 2025, bringing the total to **$31.6 million** since commencement, involving strategic closures and refranchising in the UK to improve profitability[78](index=78&type=chunk) - On March 26, 2025, the company amended its credit agreement, adding a **$200 million** term loan and a **$600 million** revolving credit facility, both maturing in 2030, with term loan proceeds used to repay existing revolving debt[69](index=69&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a **0.9%** increase in total revenues for Q1 2025, driven by higher commissary and advertising fund revenues, offset by a **9.1%** decline in company-owned restaurant sales, leading to a **$9.8 million** drop in operating income - Total revenues increased **0.9%** to **$518.3 million** in Q1 2025, while operating income decreased to **$24.0 million** from **$33.7 million** YoY[111](index=111&type=chunk)[128](index=128&type=chunk) - Key strategic focuses for 2025 include investing up to an additional **$25 million** in marketing, enhancing digital/loyalty experiences with partners like Google Cloud, and increasing the domestic QC Center fixed operating margin by **100 basis points**[98](index=98&type=chunk) | Comparable Sales Growth (Decline) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Domestic Company-owned restaurants | (4.6)% | (3.0)% | | North America franchised restaurants | (2.3)% | (1.5)% | | International restaurants | 3.2% | (2.6)% | | **Total comparable sales decline** | **(1.3)%** | **(2.0)%** | - The International Transformation Plan is nearly complete, having closed **43** underperforming UK company-owned restaurants and refranchised **60** others, with total estimated pre-tax costs of **$33-$35 million**, and **$31.6 million** incurred through Q1 2025[100](index=100&type=chunk)[104](index=104&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Total revenues rose **0.9%** to **$518.3 million**, driven by a **5.3%** increase in commissary revenues and a **17.8%** increase in advertising funds revenue, offset by a **9.1%** decrease in company-owned restaurant sales, leading to a drop in operating income from **$33.7 million** to **$24.0 million** - Company-owned restaurant sales decreased by **$17.4 million (9.1%)**, with **$11.9 million** from UK restaurant closures/refranchising and **$5.4 million** from a **4.6%** decline in Domestic comparable sales[112](index=112&type=chunk) - Commissary revenues increased by **$11.4 million (5.3%)** due to higher commodity prices and a **1%** increase in the fixed operating margin charged to Domestic QC Centers[116](index=116&type=chunk) - General and administrative (G&A) expenses rose to **$65.2 million** from **$57.9 million**, driven by incremental marketing investments and costs for a bi-annual franchise conference, including **$2.1 million** in international restructuring costs[120](index=120&type=chunk) [Segment Financial Performance](index=32&type=section&id=Segment%20Financial%20Performance) Adjusted EBITDA for Domestic Company-owned restaurants fell sharply by **$9.9 million** due to a **4.6%** comparable sales decline and higher costs, while North America commissaries' EBITDA grew by **$2.2 million**, and the International segment's EBITDA increased by **$1.2 million** | Adjusted EBITDA by Segment (In thousands) | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Domestic Company-owned restaurants | $5,032 | $14,938 | ($9,906) | | North America franchising | $27,248 | $28,508 | ($1,260) | | North America commissaries | $19,353 | $17,176 | $2,177 | | International | $5,381 | $4,193 | $1,188 | [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) The company's primary liquidity sources are cash from operations and its credit facilities, with total debt at **$749.9 million** and **$450.1 million** available under the revolving facility, and free cash flow improving significantly to **$19.1 million** - The company refinanced its debt, resulting in a new **$200 million** Term Loan and a **$600 million** Revolving Facility, with total debt standing at **$749.9 million** and **$450.1 million** available for borrowing[138](index=138&type=chunk)[147](index=147&type=chunk) - The company was in compliance with its financial covenants, with a leverage ratio of **3.4 to 1.0** against a permitted maximum of **5.25 to 1.0**[148](index=148&type=chunk) | (In thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $31,336 | $11,987 | | Purchases of property and equipment | ($12,231) | ($13,058) | | **Free cash flow (Non-GAAP)** | **$19,105** | **($1,071)** | - No shares were repurchased in Q1 2025, with approximately **$90.2 million** remaining available under the share repurchase program[152](index=152&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from interest rates, foreign currency exchange rates, and commodity prices, managing interest rate risk through swaps and facing unhedged foreign currency exposure from international operations - The company uses interest rate swaps to mitigate risk on its variable-rate PJI Revolving Facility[164](index=164&type=chunk) - International operations accounted for **7.5%** of revenues in Q1 2025, and the company does not historically hedge its foreign currency exposure[165](index=165&type=chunk) - The company faces commodity price risk, especially for cheese, managing this through pricing agreements and forward contracts but not using other financial hedging instruments[168](index=168&type=chunk) [Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the quarter, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 30, 2025[169](index=169&type=chunk) - No changes were made in the company's internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[170](index=170&type=chunk) [PART II. OTHER INFORMATION](index=42&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, including a notable antitrust case for which a **$5.0 million** settlement in principle was reached and remains accrued pending final court approval - The company has reached a settlement in principle for **$5.0 million** to resolve the 'In re Papa John's Employee & Franchise Employee Antitrust Litigation' regarding 'no-poaching' provisions, with the amount accrued and awaiting final court approval[81](index=81&type=chunk)[171](index=171&type=chunk) [Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 29, 2024 - No material changes to risk factors were reported since the last Annual Report on Form 10-K[172](index=172&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any shares under its approved program during Q1 2025, with approximately **$90.2 million** remaining available, but did acquire approximately **24,000 shares** from employees to satisfy tax withholding obligations - There was no share repurchase activity in Q1 2025, with approximately **$90.2 million** remaining available under the program[173](index=173&type=chunk) - The company acquired about **24,000 shares** from employees to cover tax withholding obligations on vested restricted stock[176](index=176&type=chunk) [Other Information](index=43&type=section&id=Item%205.%20Other%20Information) During the first quarter of 2025, no director or officer of the company adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement in Q1 2025[177](index=177&type=chunk) [Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Second Amended and Restated Credit Agreement, certifications by the CEO and CFO, and iXBRL interactive data files - Key exhibits include the new credit agreement dated March 26, 2025, and CEO/CFO certifications[178](index=178&type=chunk)

Exhibit 99.1 Louisville, Kentucky (May 8, 2025) – Papa John's International, Inc. (Nasdaq: PZZA) ("Papa Johns ") (the "Company") today announced financial results for the first quarter ended March 30, 2025. ® Highlights CEO Commentary "We are pleased with our continued progress in the first quarter to advance our transformation as we execute against our five key priorities. Our strategic investments in marketing and technology are driving early momentum in the business, and customers are responding positive ...

Group 1 - Building Benjamins is a free stock picking and market commentary investment newsletter published by Tradition Investment Management, LLC [1] - Benjamin Halliburton, the founder, has a notable background in investment, having founded Tradition Capital Management in 2000 and received multiple accolades for his performance [1] - Halliburton has extensive experience in the investment field, starting his career at Merrill Lynch in 1986 and earning an MBA with a focus on finance from Duke's Fuqua School of Business in 1990 [1] Group 2 - Halliburton earned the Chartered Financial Analyst designation in 1994 and was recognized as the top-performing portfolio manager at Brundage, Story and Rose [1] - His investment strategy, known as "Disciplined Growth Strategy," outperformed the S&P 500 during the 1990s bull market [1] - Halliburton was the youngest partner at his previous firm and received high praise from senior managing partners for his investment acumen [1]

Papa John's International, Inc. (PZZA) is doubling down on its technology-driven growth strategy with an expanded multiyear partnership with Google Cloud. The move supports the pizza chain’s commitment to leveraging artificial intelligence (AI), data analytics and machine learning to enhance its ordering process, customer interactions and overall operational efficiency. By integrating Google Cloud’s advanced AI capabilities, the company aims to create a seamless, personalized and engaging experience for its ...

I have been working in the logistics sector for almost two decades. I have been into stock investing and macroeconomic analysis for almost a decade. Currently, I focus on ASEAN and NYSE/NASDAQ Stocks, particularly in banks, telco, logistics, and hotels. Since 2014, I have been trading on the PH stock market. I focus on banking, telco, and retail sectors. A colleague encouraged me to engage in the stock market as part of my portfolio diversification instead of putting all my savings in banks and properties. ...