Domino’s Pizza(DPZ) - 2026 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements The company's Q2 2025 financial statements show total assets increased to $1.81 billion and YTD net income rose to $280.7 million Condensed Consolidated Balance Sheets As of June 15, 2025, total assets increased to $1.81 billion, while total liabilities rose to $5.79 billion, widening the stockholders' deficit Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 15, 2025 | December 29, 2024 | | :--- | :--- | :--- | | Total current assets | $1,007,558 | $905,278 | | Total assets | $1,811,293 | $1,737,013 | | Total current liabilities | $1,688,181 | $1,612,462 | | Total liabilities | $5,785,920 | $5,699,304 | | Total stockholders' deficit | ($3,974,627) | ($3,962,291) | Condensed Consolidated Statements of Income Q2 2025 total revenues increased to $1.15 billion, with YTD net income rising to $280.7 million and diluted EPS to $8.14 Key Income Statement Data (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $1,145,144 | $1,097,736 | $2,257,200 | $2,182,383 | | Income from Operations | $225,044 | $196,103 | $435,139 | $406,516 | | Net Income | $131,091 | $141,978 | $280,742 | $267,802 | | Diluted EPS | $3.81 | $4.03 | $8.14 | $7.61 | Condensed Consolidated Statements of Cash Flows YTD 2025 net cash from operating activities significantly increased to $366.9 million, while financing activities used $261.3 million Cash Flow Summary (in thousands) | Activity | Two Fiscal Quarters Ended June 15, 2025 | Two Fiscal Quarters Ended June 16, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $366,860 | $274,150 | | Net cash provided by (used in) investing activities | $14,795 | ($44,960) | | Net cash used in financing activities | ($261,312) | ($70,657) | - The increase in cash from financing activities was primarily due to a significant increase in purchases of common stock, which rose to $203.0 million from $25.0 million in the prior-year period[16] Notes to Condensed Consolidated Financial Statements Notes detail segment income, refranchising gains, DPC Dash investment sale, and a declared quarterly dividend of $1.74 per share Segment Income (YTD 2025 vs YTD 2024, in thousands) | Segment | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | U.S. Stores | $265,801 | $265,590 | | Supply Chain | $147,031 | $129,563 | | International Franchise | $129,343 | $118,429 | | Total Segment Income | $542,175 | $513,582 | - In Q2 2025, the company refranchised 36 U.S. Company-owned stores in Maryland for $8.5 million, recognizing a pre-tax gain of $3.9 million[54] - The company sold 4,200,000 ordinary shares of its investment in DPC Dash (China master franchisee) in Q2 2025 for net proceeds of $44.1 million[39] - Subsequent to the quarter end, on July 15, 2025, the Board of Directors declared a $1.74 per share quarterly dividend[34] Management's Discussion and Analysis of Financial Condition and Results of Operations Q2 2025 global retail sales grew 5.6%, consolidated revenues rose 4.3% to $1.15 billion, and operating income increased 14.8% Overview and Strategy Domino's, with over 21,500 locations, primarily operates as a franchisor, guided by its 'Hungry for MORE' growth strategy - As of June 15, 2025, Domino's has over 21,500 locations in over 90 markets, with approximately 99% being franchisee-owned[66][67] - The 'Hungry for MORE' strategy is built on four pillars: Most Delicious Food, Operational Excellence, Renowned Value, and Enhanced by Best-in-Class Franchisees[71][72] Performance and Statistical Measures Q2 2025 global retail sales grew 5.6% (ex-currency), with U.S. same-store sales up 3.4% and 178 net new stores added globally Global Retail Sales Growth (Excluding Foreign Currency) | Region | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | U.S. stores | +5.1% | +6.8% | | International stores | +6.0% | +7.7% | | Total | +5.6% | +7.2% | Same Store Sales Growth | Region | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | U.S. stores | +3.4% | +4.8% | | International stores (ex-currency) | +2.4% | +2.1% | - The company added a net of 178 stores in Q2 2025, comprising 30 net new stores in the U.S. and 148 internationally[85] Results of Operations Q2 2025 consolidated revenues increased 4.3% to $1.15 billion, driven by supply chain and franchise royalties, despite a DPC Dash investment loss - Consolidated revenues increased $47.4 million (4.3%) in Q2 2025, primarily due to higher supply chain revenues and U.S. franchise royalties and fees[88] - Supply chain revenues increased by $27.8 million (4.2%) in Q2 2025, driven by a 4.8% increase in food basket pricing and higher order volumes[95] - Consolidated gross margin percentage increased by 0.5 points to 40.3% in Q2 2025, helped by higher franchise revenues which have no cost of sales component[99] - General and administrative expenses decreased by $8.3 million (7.2%) in Q2 2025, primarily because the 2024 Worldwide Rally did not reoccur in 2025[103] - The company recorded a $16.0 million pre-tax loss on its investment in DPC Dash in Q2 2025, compared to an $11.4 million gain in Q2 2024[109] Segment Income All segments reported income growth in Q2 2025, with U.S. stores up 3.5%, supply chain up 14.2%, and international franchise up 11.0% Segment Income (in millions) | Segment | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | U.S. stores | $134.0 | $129.5 | +3.5% | | Supply chain | $74.2 | $65.0 | +14.2% | | International franchise | $65.6 | $59.1 | +11.0% | Liquidity and Capital Resources The company maintains strong liquidity with $272.9 million in cash and expects to refinance $1.14 billion of current long-term debt - Primary liquidity sources are cash from operations and two variable funding note facilities totaling $320.0 million in capacity[121] - As of June 15, 2025, the company had $263.6 million of available borrowing capacity under its variable funding notes[121] - The company repurchased $200.0 million of its common stock in the first two quarters of 2025, with $614.3 million remaining under the current authorization[130] - Approximately $1.14 billion of long-term debt is classified as current, related to notes with an anticipated repayment date of October 2025, which the company expects to refinance[126][127] Quantitative and Qualitative Disclosures About Market Risk The company faces interest rate risk on variable funding notes, commodity price volatility, and foreign currency exchange risk impacting international revenues - The company faces interest rate risk on its variable funding notes and expects to refinance $1.14 billion of maturing debt at higher interest rates[140][141] - The company is exposed to volatility in food costs, especially commodity prices for products like cheese[142] - A hypothetical 10% adverse change in foreign currency rates would have reduced royalty revenues by an estimated $13.4 million in the first two fiscal quarters of 2025[143] Controls and Procedures Management concluded disclosure controls were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of June 15, 2025[144] - No material changes were made to the Company's internal control over financial reporting during the second quarter of 2025[145] PART II. OTHER INFORMATION Legal Proceedings The company is involved in ordinary course litigation, which management does not expect to materially adversely affect its financial condition - The company is involved in ordinary course litigation but does not expect it to have a material adverse effect on its business or financial condition[146][147] Risk Factors No material changes to risk factors were reported since the 2024 Annual Report on Form 10-K - No material changes to risk factors were reported since the 2024 Form 10-K[148] Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2025, the company repurchased 315,696 shares for $150.0 million, with $614.3 million remaining for future repurchases Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | Shares Purchased as Part of Program | | :--- | :--- | :--- | :--- | | Period 4 (Mar 24 - Apr 20) | 1,205 | $458.23 | — | | Period 5 (Apr 21 - May 18) | 112,070 | $480.42 | 110,977 | | Period 6 (May 19 - Jun 15) | 206,250 | $472.23 | 204,719 | | Total | 319,525 | $475.05 | 315,696 | - As of June 15, 2025, $614.3 million remained available for future share repurchases under the authorized program[151] Other Information Three executive officers adopted new Rule 10b5-1 trading plans for future stock sales during Q2 2025 - Three Section 16 officers adopted Rule 10b5-1 trading arrangements during the quarter: Joseph H. Jordan (COO), Sandeep Reddy (CFO), and Kelly E. Garcia (CTDO)[157][159] Exhibits The report lists various exhibits filed, including corporate governance documents and CEO/CFO certifications - Filed exhibits include CEO/CFO certifications under Sarbanes-Oxley Sections 302 and 906, and corporate governance documents[160]