Core Insights - The article discusses the expertise of a specialized equity analyst in the restaurant sector, focusing on various dining segments in the U.S. market [1] Company Analysis - The company, Goulart's Restaurant Stocks, is dedicated to analyzing restaurant stocks across multiple segments, including QSR, fast casual, casual dining, fine dining, and family dining [1] - Advanced analytical models and specialized valuation techniques are employed to provide detailed insights and actionable strategies for investors [1] Industry Engagement - The analyst actively participates in academic and journalistic initiatives, contributing to institutions that promote individual and economic freedom [1] - Previous contributions include columns on monetary policy, financial education, and financial modeling aimed at making these topics accessible to a broader audience [1]

Papa John’s International, Inc. (PZZA) recorded better-than-expected fourth-quarter fiscal 2024 results, wherein adjusted earnings and revenues topped the Zacks Consensus Estimate. However, the metrics declined on a year-over-year basis.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.The year-over-year performance decline was attributable to a decrease in International revenues due to the adverse impact of the U.K. company-owned restaurants and a decrease in Domestic company-owned r ...

Core Insights - Papa Johns (PZZA) exceeded earnings estimates for Q4, reporting adjusted earnings per share of $0.63 and revenue of $530.77 million, both lower than the previous year but above analyst consensus [1] Financial Performance - Comparable store sales in North America decreased by 4% year-over-year, aligning with estimates, while international comparable sales increased by 2%, surpassing expectations [2] - For 2025, the company anticipates comparable store sales in North America and internationally to be flat or grow up to 2%, compared to current analyst projections of 0.77% and 0.54% growth, respectively [2] Strategic Initiatives - CEO Todd Penegor expressed satisfaction with the initial progress in the company's transformation efforts aimed at improving value perception, simplifying operations, and enhancing digital and loyalty experiences [3] - The company has outlined strategic priorities to capture market share and is focused on executing initiatives to drive near-term sales momentum while increasing profitability over time [3] Market Reaction - Following the earnings report, shares of Papa Johns rose approximately 1.6%, although they have declined about 35% over the past year [3]

Core Insights - Papa John's reported revenue of $530.77 million for the quarter ended December 2024, a decrease of 7.1% year-over-year, with EPS at $0.63 compared to $0.91 in the same quarter last year [1] - The revenue exceeded the Zacks Consensus Estimate of $513 million by 3.46%, while the EPS surpassed the consensus estimate of $0.48 by 31.25% [1] Financial Performance Metrics - The company-owned domestic restaurants numbered 539, slightly above the analyst estimate of 533 [4] - System-wide comparable sales growth in North America was -8.9%, worse than the average estimate of -3.6% [4] - Total system-wide restaurants reached 6,030, exceeding the average estimate of 6,004 [4] - Franchised North America restaurants totaled 2,975, above the average estimate of 2,967 [4] - Total North America restaurants were 3,514, compared to the average estimate of 3,496 [4] Revenue Breakdown - North America franchise royalties and fees generated $36.20 million, surpassing the estimate of $34.65 million, but reflecting a year-over-year decline of 6.5% [4] - International revenues were reported at $41.73 million, exceeding the estimate of $34.25 million, but down 13.4% year-over-year [4] - Other revenues were $22.82 million, significantly below the average estimate of $59.87 million, marking a 63.8% year-over-year decline [4] - North America commissary revenues reached $273.50 million, exceeding the estimate of $211.15 million, with a year-over-year increase of 20% [4] - Domestic company-owned restaurant sales were $174.63 million, slightly above the estimate of $172.18 million, but down 9.8% year-over-year [4] Stock Performance - Papa John's shares have returned +19% over the past month, contrasting with the Zacks S&P 500 composite's -2.2% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - For Q4 2024, global system-wide restaurant sales were $1.23 billion, down approximately 8% in constant currency, primarily due to an additional week of operation in the prior year [29] - Total revenues for Q4 were $531 million, down 7% from last year, but excluding the impact of the extra week, revenue was largely flat [35] - Adjusted operating income for Q4 was $37 million, down $10 million from a year ago, with an adjusted operating income margin of 7%, down from 8.3% in 2023 [37] Business Line Data and Key Metrics Changes - North America comparable sales were down 4% in Q4, showing a 120 basis points sequential improvement from Q3 [31] - International comparable sales were up 2% year-over-year in Q4, with strong performance in key markets like the Middle East [34] Market Data and Key Metrics Changes - Domestic average unit sales in North America were approximately $1.1 million in 2024 [23] - The North America market remains a significant development opportunity, with plans to open between 85 and 115 new restaurants in 2025 [48] Company Strategy and Development Direction - The company is focusing on franchisee profitability and operational excellence, with strategic priorities including product innovation, marketing amplification, and enhancing customer experience [10][11] - In 2024, the company opened over 300 new restaurants globally, marking a significant growth milestone [23] - The company plans to invest approximately $25 million in marketing in 2025, focusing on both corporate and franchise markets [17][81] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy to accelerate sales and drive long-term growth opportunities, despite a challenging operating environment [41] - For 2025, the company expects system-wide sales to increase between 2% and 5%, with North America comparable sales anticipated to be flat to up 2% [42] Other Important Information - The company plans to report adjusted EBITDA as a key performance measure starting in 2025, with an anticipated range of $200 million to $220 million [44] - The loyalty program has seen significant improvements, with approximately 50% of loyalty orders now redeeming rewards, up from 21% a year ago [21] Q&A Session Summary Question: Industry expectations for 2025 and performance relative to the industry - Management acknowledged a value-focused environment and expects the pizza category to be flattish to slightly down, but believes initiatives in loyalty and marketing will help gain market share [57][58] Question: International growth and market penetration - Management highlighted a focus on nine key international markets, indicating that they are not near saturation and see significant growth potential [68][70] Question: EBITDA guidance and investment breakdown - Management confirmed that the EBITDA guidance includes up to $25 million in marketing investments, with a focus on both corporate and franchise markets [76][81] Question: Development incentives and franchisee profitability - Management confirmed the three-year abatement for development incentives and emphasized the importance of balancing value perception with franchisee profitability [120][121] Question: Organic delivery channel improvement - Management noted a sequential improvement of 200 basis points in the organic delivery channel, indicating positive trends [130] Question: Development pipeline and net openings - Management indicated expectations for flat net openings in North America and 80 to 100 net openings internationally, with increased refranchising activity [130]

Financial Data and Key Metrics Changes - For Q4 2024, global system-wide restaurant sales were $1.23 billion, down approximately 8% in constant currency, primarily due to an additional week of operation in the prior year [29] - Total revenues for Q4 were $531 million, down 7% from last year, but excluding the impact of the additional week, revenue was largely flat [35] - Adjusted operating income for Q4 was $37 million, down $10 million from a year ago, with an adjusted operating income margin of 7%, down from 8.3% in 2023 [37] Business Line Data and Key Metrics Changes - North America comparable sales were down 4% in Q4, with transaction comps down 2% year-over-year, but showing sequential improvement [31] - International comparable sales were up 2% year-over-year in Q4, with strong performance in key markets like the Middle East [34] Market Data and Key Metrics Changes - Domestic average unit sales in North America were approximately $1.1 million in 2024, with the company opening more than 300 new restaurants globally [23] - The company opened nearly 200 new restaurants internationally in 2024 and anticipates similar growth in 2025 [25] Company Strategy and Development Direction - The company is focusing on franchisee profitability and operational excellence, with strategic priorities including product innovation, marketing amplification, and enhancing customer experience [10][11] - Plans for 2025 include investing up to an additional $25 million in marketing, focusing on both corporate and franchisee markets [17][81] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy to accelerate sales and drive long-term growth, despite a challenging operating environment [41] - For 2025, the company expects system-wide sales to increase between 2% and 5%, with North America comparable sales anticipated to be flat to up 2% [42] Other Important Information - The company plans to report adjusted EBITDA as a key performance measure starting in 2025, with an anticipated range of $200 million to $220 million [44] - The company refranchised 15 restaurants in Wisconsin and is in discussions to refranchise additional locations, which is expected to be neutral to slightly accretive to earnings [26] Q&A Session Summary Question: Industry expectations for 2025 and performance relative to the industry - Management acknowledged a value-focused environment and expects the pizza category to be flattish to slightly down, but believes initiatives in loyalty and marketing will help gain market share [56][58] Question: International growth and market penetration - Management highlighted a focus on nine core international markets, indicating significant growth potential and ongoing success in regions like the U.K. and the Middle East [66][70] Question: EBITDA guidance and investment breakdown - Management detailed that the EBITDA guidance includes up to $25 million in marketing investments, with a focus on both corporate and franchisee markets [76][81] Question: Development incentives and loyalty program performance - Management confirmed the three-year abatement for development incentives and noted significant growth in loyalty program membership and engagement [120][123]

Core Insights - Papa John's reported quarterly earnings of $0.63 per share, exceeding the Zacks Consensus Estimate of $0.48 per share, but down from $0.91 per share a year ago, representing an earnings surprise of 31.25% [1] - The company achieved revenues of $530.77 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 3.46%, although this is a decline from $571.32 million in the same quarter last year [2] - The stock has increased approximately 12.6% since the beginning of the year, outperforming the S&P 500's gain of 1.3% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.62 on revenues of $511.98 million, and for the current fiscal year, it is $2.39 on revenues of $2.07 billion [7] - The estimate revisions trend for Papa John's is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Retail - Restaurants industry, to which Papa John's belongs, is currently in the top 25% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Darden Restaurants, a peer in the same industry, is expected to report quarterly earnings of $2.82 per share, reflecting a year-over-year increase of 7.6%, with revenues projected at $3.22 billion, up 8.2% from the previous year [9][10]

Financial Data and Key Metrics Changes - For Q4 2024, global system-wide restaurant sales were $1.23 billion, down approximately 8% in constant currency, primarily due to an additional week of operations in the prior year [19] - North America comparable sales decreased by 4% in Q4, showing a 120 basis points sequential improvement from Q3 [19] - Adjusted operating income for Q4 was $37 million, down $10 million from the previous year, with an adjusted operating income margin of 7%, down from 8.3% in 2023 [24][25] Business Line Data and Key Metrics Changes - Company-owned restaurant revenue decreased by $18 million in Q4 compared to the prior year, driven by a decline in international and domestic comparable sales [23] - International comparable sales increased by 2% year-over-year in Q4, with strong performance in key markets like the Middle East [22][48] Market Data and Key Metrics Changes - North America average unit sales were approximately $1.1 million in 2024, with a focus on increasing market share through strategic new restaurant development [14] - Internationally, nearly 200 new restaurants were opened in 2024, with expectations to open a similar amount in 2025 [15] Company Strategy and Development Direction - The company is focusing on core product innovation, enhancing marketing messages, and investing in technology to improve customer experience and operational efficiency [6][7] - Strategic priorities include franchisee profitability and operational excellence, with a goal to increase market share through new restaurant development [7][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about entering 2025, highlighting sequential improvement in sales trends and opportunities for growth despite ongoing challenges [5][6] - For 2025, the company expects system-wide sales to increase by 25% compared to 2024, with North America comparable sales anticipated to be flat to up 2% [27] Other Important Information - The company plans to invest up to $25 million in marketing in 2025, focusing on both corporate and franchise markets [12][58] - The loyalty program has been revamped, with approximately 50% of loyalty orders now redeeming rewards, up from 21% a year ago [13][90] Q&A Session Summary Question: Industry expectations for 2025 and performance relative to the industry - Management acknowledged a value-focused environment and expects the pizza category to be flat to slightly down, but believes initiatives in loyalty and marketing will help gain market share [37][38] Question: International growth and market penetration - Management emphasized a focus on nine key international markets, indicating that they are not near saturation and see significant growth potential [44][48] Question: EBITDA guidance and investment breakdown - Management outlined that the EBITDA guidance for 2025 includes significant investments in marketing and franchisee support, with a focus on balancing value perception and franchisee profitability [54][58] Question: Ticket improvement expectations - Management expects ticket improvement driven by a return to a traditional pricing strategy and new product innovations [71][72] Question: Operations and menu simplification - Management reported progress in simplifying operations by removing low-performing SKUs and focusing on core menu items to enhance pizza quality [80][81]

Restaurant Operations - As of December 29, 2024, Papa John's operates 6,030 restaurants globally, with 3,514 in North America and 2,516 internationally, reflecting a net unit growth of 124 restaurants[26] - The company opened 310 new restaurants in 2024, with 198 of those being international locations, while 186 restaurants were closed[26] - The domestic company-owned restaurant growth strategy focuses on increasing market share and operational efficiencies through the opening of new locations[27] Franchise Operations - Franchise agreements in North America typically require a 5% royalty fee on sales, with most existing agreements having a 10-year term and a 10-year renewal option[30][31] - As of December 29, 2024, net loans outstanding to franchisees totaled $13.8 million, primarily for restaurant purchases and construction[35] Workforce and Employment - The company employs approximately 11,400 individuals, with around 8,800 working in company-owned restaurants, and estimates a total of 104,000 individuals in the Papa John's system including franchisees[40][41] - The company is committed to providing competitive pay and benefits, including a comprehensive benefits package and wellness services for team members[48][49] Marketing and Customer Engagement - The marketing strategy includes national advertising and a significant increase in digital marketing efforts, responding to rising customer engagement with online platforms[36] - The company expects to see more states in the U.S. enact data privacy laws that could affect marketing strategies[56] Supply Chain and Food Costs - Papa John's supply chain includes 11 QC Centers in the U.S. that produce dough and distribute key ingredients, ensuring consistent food quality across locations[53] - The company is actively managing food costs, especially cheese, through pricing agreements and forward purchase contracts[275] Industry Challenges - The U.S. Quick Service Restaurant pizza industry is highly competitive, with challenges from both large national chains and local independent operators, while international markets present growth opportunities[51][52] - The company has experienced inflationary pressures, particularly in food items, labor, and energy costs, which directly affect profitability and gross margins[275] - The company is facing challenges related to labor shortages and increased labor costs, which may impact restaurant operations[277] Regulatory and Compliance - The company is subject to various federal and state regulations regarding franchising, which may impact its operations and franchisee relationships[55] - The company anticipates no material environmental compliance-related capital expenditures for 2024 and 2025[60] Risk Management - The company is exposed to risks from geopolitical conflicts, which could impact its global operations[277] - The company has not guaranteed future performance in its forward-looking statements, which involve various risks and uncertainties[276] Intellectual Property - The company has a focus on protecting its intellectual property through trademarks and copyrights, and actively opposes any infringement[58] Investor Relations - The company utilizes its investor relations website as a primary channel for disclosing key information to investors[62]

Sales Performance - Global system-wide sales for Q4 2024 were approximately $1.2 billion, an 8% decrease from the prior year due to an additional week of operations in fiscal 2023[4] - North America comparable sales decreased by 4% in Q4 2024, with transactions and ticket down 2% each[4] - International comparable sales increased by 2% in Q4 2024 compared to the prior year[4] - For the full year 2024, global system-wide sales were approximately $4.9 billion, a 3% decrease from fiscal year 2023[8] - North America comparable sales for the full year 2024 were down 4%, with transactions down 3% and ticket down 1%[8] Restaurant Openings - Total net new restaurants opened in Q4 2024 reached 122, with 60 in North America and 62 internationally[4] - Total net new restaurants for fiscal year 2024 was 124, with 81 in North America and 43 internationally[8] - The company opened its 6,000th restaurant in fiscal year 2024, marking a significant growth milestone[2] Future Plans - The company plans to continue working with existing franchisees and welcoming new ones to expand in high-potential markets globally[2] - Final financial results for Q4 and fiscal year 2024 are expected to be released on February 27, 2025[6]