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Domino's Pizza Announces First Quarter 2006 Results

Diluted EPS of $0.39; up 11% versus First Quarter of 2005

ANN ARBOR, Mich., April 27 /PRNewswire-FirstCall/ -- Domino's Pizza, Inc. (NYSE: DPZ), the recognized world leader in pizza delivery, today announced results for the first quarter ended March 26, 2006.

    First Quarter Highlights:
    (dollars in millions, except per share data)    First
                                                   Quarter
                                                   of 2006

    Revenues                                        $347.7
    Net income                                       $26.2
    Weighted average diluted shares             67,672,576
    Diluted earnings per share                       $0.39

* Revenues were down 6.0% for the first quarter compared to the prior year period, due primarily to lower volumes in our distribution business, resulting from exceptionally high prior year same store sales growth, and lower food prices, primarily cheese. The average cheese block price per pound was $1.30 in the first quarter of 2006, down 16% from $1.54 in the first quarter of 2005.

* Net income was up 6.0% for the first quarter compared to the prior year period, driven primarily by strong performance in our international business, lower cheese prices and lower general and administrative expenses.

* Diluted EPS was $0.39 for the first quarter, up 11.4% from the prior year period, driven primarily by an increase in net income and a reduction in diluted shares outstanding.

                      Domestic     Domestic    Total
                    Company-owned  Franchise  Domestic  International
                       Stores       Stores     Stores     Stores       Total
    Store counts
      Store count at
       January 1, 2006    581       4,511       5,092      2,987      8,079
      Openings              -           9           9         55         64
      Closings             (1)        (14)        (15)        (4)       (19)
      Store count at
       March 26, 2006     580       4,506       5,086      3,038      8,124

      First quarter of
       2006 net growth     (1)         (5)         (6)        51         45

      Trailing 4 quarters
       net growth          12          59          71        254        325

                                                       First      First
                                                      Quarter    Quarter
                                                      of 2006    of 2005

    Same store sales growth (versus prior year period)
      Domestic Company-owned stores                    (3.0)%    + 13.8%
      Domestic franchise stores                        (4.0)%    + 10.8%
      Domestic stores                                  (3.8)%    + 11.2%

      International stores                             + 3.0%     + 8.5%

    Global retail sales growth (versus prior year period)
      Domestic stores                                  (2.8)%    + 11.6%
      International stores                             + 8.2%    + 18.8%
      Total                                            + 0.7%    + 13.8%

* Domestic same store sales results were negatively impacted as a result of rolling over a same store sales increase of 11.2% in the first quarter of 2005 (comprised of a 13.8% increase at domestic Company-owned stores and a 10.8% increase at domestic franchise stores).

* The 3.0% increase in international same store sales marks the 49th consecutive quarter of positive international same store sales growth. Management noted that its international division is entering its 13th consecutive year without negative quarterly same store sales.

* Global retail sales increases were driven primarily by increases in international same store sales and worldwide store counts.

David A. Brandon, Domino's Chairman and Chief Executive Officer, said: "We will never enjoy reporting negative same store sales. However, the first quarter of 2006 was destined to be a very difficult quarter for us from a comparative sales standpoint. We are proud to be such a steady performer in our category, but from time to time we will experience a negative sales quarter. The most impressive thing about our business model is demonstrated by the fact we grew earnings at a rate well within the long-range expectations we have provided, despite the tough sales comparison and market condition we were facing."

Brandon continued, "Establishing order count momentum during the first quarter of 2006 was a challenge. We believe a combination of factors led to this market environment. However, we look forward to the balance of 2006 with optimism and excitement. We continue to believe 2006 will be a successful growth year consistent with the long-range expectations we have established."

Conference Call Information

The Company plans to file its quarterly report on Form 10-Q this morning. Additionally, as previously announced, Domino's Pizza, Inc. will hold a conference call today at 10 a.m. (Eastern) to review its first quarter 2006 financial results. The call can be accessed by dialing (888) 306-6182 (U.S./Canada) or (706) 634-4947 (International). Ask for the Domino's Pizza conference call. The call will also be web cast at http://www.dominos.com . If you are unable to participate on the call, a replay will be available through midnight May 27, 2006 by dialing (800) 642-1687 (U.S./Canada) or (706) 645-9291 (International), Conference ID 3419927. The web cast will be archived for 30 days on http://www.dominos.com .

Company Repurchase of 5.6 Million Shares

As previously announced on March 13, 2006, the Company repurchased and retired approximately 5.6 million shares of its common stock on March 10, 2006 from investment funds associated with Bain Capital, LLC (collectively "Bain"), for $145.0 million, or $25.78 per share. The repurchase price of $25.78 per share in this private transaction was based on a discount from the market price of the Company's common stock negotiated between the Company and Bain.

Management believes this repurchase transaction, coupled with its recent increase in dividend payments, continues to demonstrate its commitment to realizing shareholder value through appropriate deployment of free cash flow. Additionally, this effective use of the Company's free cash flow did not impact its public float. This transaction is expected to increase 2006 diluted earnings per share by approximately 6 cents.

Increase in 2006 Dividend

The Company's 2005 fourth quarter dividend, in the amount of 12 cents per share, was paid on March 30, 2006 to shareholders of record as of the close of business on March 15, 2006. This was a 20% increase from the previous quarterly dividend of 10 cents per share.

Company to Hold its Annual Meeting of Shareholders

As previously announced, the Company's 2006 shareholders' meeting will be held on Wednesday, May 3, 2006, at 10 a.m. (Eastern) at Domino's Pizza World Resource Center at 30 Frank Lloyd Wright Drive, Ann Arbor, Michigan.

    Liquidity
    As of March 26, 2006, the Company had:
    *  $801.2 million in total debt,
    *  $16.4 million of cash and cash equivalents,
    *  no borrowings under its $125.0 million revolving credit facility, and

* letters of credit issued under its revolving credit facility of $31.3 million.

During the first quarter of 2006, the Company:

* voluntarily repaid $35.0 million of senior credit facility borrowings, and

* amended its senior credit facility to borrow an additional $100.0 million that, along with cash from operations, was used to repurchase and retire approximately 5.6 million shares of the Company's common stock from Bain for $145.0 million.

The Company's average borrowing rate for the first quarter of 2006 was 6.3%. The Company is not required to make the next scheduled senior credit facility principal payment of $1.3 million until March 31, 2007. The Company is not required to make principal payments on its senior subordinated notes until 2011.

The Company incurred $4.2 million in capital expenditures during the first quarter of 2006.

Comments on Regulation G

In addition to the GAAP financial measures set forth in this Press Release, the Company has included certain non-GAAP financial measures within the meaning of Regulation G, including metrics commonly used in the quick- service restaurant industry that are important to understanding Company performance.

The Company uses "Global retail sales" to refer to total worldwide retail sales at Company-owned and franchise stores. Management believes global retail sales information is useful in analyzing revenues, because franchisees pay royalties that are based on a percentage of franchise retail sales. Management reviews comparable industry global retail sales information to assess business trends and to track the growth of the Domino's Pizza(R) brand. In addition, distribution revenues are directly impacted by changes in domestic franchise retail sales. Retail sales for franchise stores are reported to the Company by its franchisees and are not included in Company revenues.

The Company uses "Same store sales growth," calculated including only sales from stores that also had sales in the comparable period of the prior year. International same store sales growth is calculated similarly to domestic same store sales growth. Changes in international same store sales are reported on a constant dollar basis which reflects changes in international local currency sales.

The Company defines "Free Cash Flow" as cash flows from operations less capital expenditures, both as reported. The Company's management believes that the free cash flow measure is important to investors and other interested persons and that such persons benefit from having a measure which communicates how much cash flows are available to be used for de-levering, making acquisitions, paying dividends, repurchasing shares or similar uses of cash.

About Domino's

Founded in 1960, Domino's Pizza is the recognized world leader in pizza delivery. Domino's is listed on the NYSE under the symbol "DPZ." Through its primarily franchised system, Domino's operates a network of 8,124 franchised and Company-owned stores in the United States and more than 50 countries. The Domino's Pizza(R) brand, named a Megabrand by Advertising Age magazine, had global retail sales of nearly $5.0 billion in 2005, comprised of $3.3 billion domestically and $1.7 billion internationally. Domino's Pizza was named "Chain of the Year" by Pizza Today magazine, the leading publication of the pizza industry and is the "Official Pizza of NASCAR(R)." More information on the Company, in English and Spanish, can be found on the web at http://www.dominos.com .

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995:

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relating to our anticipated profitability and operating performance reflect management's expectations based upon currently available information and data. However, actual results are subject to future risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties that can cause actual results to differ materially include: the uncertainties relating to litigation; consumer preferences, spending patterns and demographic trends; the effectiveness of our advertising, operations and promotional initiatives; our ability to retain key personnel; new product and concept developments by Domino's and other food-industry competitors; the ongoing profitability of our franchisees and the ability of Domino's and our franchisees to open new restaurants; changes in food prices, particularly cheese, labor, utilities, insurance, employee benefits and other operating costs; the impact that widespread illness or general health concerns may have on our business and the economy of the countries in which we operate; severe weather conditions and natural disasters; changes in our effective tax rate; changes in government legislation and regulations; adequacy of our insurance coverage; costs related to future financings and changes in accounting policies. Further information about factors that could affect Domino's financial and other results is included in the Company's filings with the Securities and Exchange Commission. We do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

                               TABLES TO FOLLOW


                    Domino's Pizza, Inc. and Subsidiaries
                 Condensed Consolidated Statements of Income
                                 (Unaudited)


                                              Fiscal Quarter Ended

                                       March 26,  % of    March 27,  % of
                                         2006     Total     2005     Total
                                                  Revenues           Revenues

    (In thousands, except per share data)
    Revenues:
       Domestic Company-owned stores    $96,478            $98,225
       Domestic franchise                38,129             39,233
       Domestic distribution            182,389            201,817
       International                     30,658             30,393
    Total revenues                      347,654   100.0%   369,668    100.0%

    Cost of sales:
       Domestic Company-owned stores     75,206             78,140
       Domestic distribution            162,643            182,110
       International                     15,510             16,405
    Total cost of sales                 253,359    72.9%   276,655     74.8%
    Operating margin                     94,295    27.1%    93,013     25.2%

    General and administrative           40,404    11.6%    42,965     11.6%
    Income from operations               53,891    15.5%    50,048     13.6%

    Interest expense, net                11,710     3.4%    10,402      2.8%
    Income before provision for
     income taxes                        42,181    12.1%    39,646     10.8%

    Provision for income taxes           16,029     4.6%    14,966      4.1%
    Net income                          $26,152     7.5%   $24,680      6.7%

    Earnings per share:
       Common stock - diluted             $0.39              $0.35



                    Domino's Pizza, Inc. and Subsidiaries
                    Condensed Consolidated Balance Sheets



                                      March 26, 2006        January 1, 2006
    (In thousands)                      (Unaudited)
    Assets
    Current assets:
        Cash and cash equivalents        $16,372                $66,919
        Accounts receivable               70,705                 74,437
        Inventories                       19,726                 24,231
        Advertising fund assets,
         restricted                       26,390                 35,643
        Other assets                      20,877                 20,116
    Total current assets                 154,070                221,346

    Property, plant and equipment, net   128,591                131,455

    Other assets                         104,234                108,273

    Total assets                        $386,895               $461,074

    Liabilities and stockholders' deficit
    Current liabilities:
        Current portion of long-term debt   $310                $35,304
        Accounts payable                  50,974                 60,330
        Advertising fund liabilities      26,390                 35,643
        Other accrued liabilities         86,419                 86,108
    Total current liabilities            164,093                217,385

    Long-term liabilities:
        Long-term debt, less current
         portion                         800,888                702,358
        Other accrued liabilities         53,774                 52,316
    Total long-term liabilities          854,662                754,674

    Total stockholders' deficit         (631,860)              (510,985)

    Total liabilities and stockholders'
     deficit                            $386,895               $461,074



                    Domino's Pizza, Inc. and Subsidiaries
               Condensed Consolidated Statements of Cash Flows
                                 (Unaudited)


                                                     Fiscal Quarter Ended
                                                   March 26,       March 27,
                                                     2006            2005
    (In thousands)
    Cash flows from operating activities:
      Net income                                   $26,152         $24,680
      Adjustments to reconcile net income to net
       cash flows provided by operating activities:
          Depreciation and amortization              7,499           7,321
          Amortization of deferred financing
           costs and debt discount                     965             844
          Provision for deferred income taxes          757             432
          Non-cash compensation expense              1,017             526
          Other, net                                  (265)            320
          Changes in operating assets and
           liabilities                              (7,456)          4,473
    Net cash provided by operating activities       28,669          38,596

    Cash flows from investing activities:
      Capital expenditures                          (4,161)         (6,693)
      Other, net                                       347           2,143
    Net cash used in investing activities           (3,814)         (4,550)

    Cash flows from financing activities:
      Repurchase of common stock                  (145,000)             -
      Proceeds from issuance of long-term debt     100,000              -
      Repayments of long-term debt and capital
       lease obligation                            (35,074)        (25,080)
      Tax benefit from exercise of stock options     2,116           2,075
      Other                                          2,558           1,899
    Net cash used in financing activities          (75,400)        (21,106)

    Effect of exchange rate changes on cash
     and cash equivalents                               (2)           (103)

    Increase (decrease) in cash and cash
     equivalents                                   (50,547)         12,837

    Cash and cash equivalents, at beginning
     of period                                      66,919          40,396

    Cash and cash equivalents, at end of period    $16,372         $53,233

SOURCE Domino's Pizza, Inc.
CONTACT: Lynn Liddle, Executive Vice President, Communications and Investor Relations of Domino's Pizza, Inc., +1-734-930-3008