Papa John’s (PZZA) reported its first-quarter results on May 7 after the market closed. The company posted an adjusted EPS of $0.31 on revenues of $398.4 million. Papa John’s outperformed analysts’ EPS estimate of $0.24 and revenue estimate of $386 million.
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Papa John’s revenues fell 11.5% YoY (year-over-year) from $450.1 million in the first quarter of 2018. Refranchising of company-owned restaurants, negative SSSG (same-store sales growth), and unfavorable currency translation led to a fall in the company’s revenues. In the last four quarters, the unit count of company-owned restaurants has fallen by 68 units, while the unit count of franchised restaurants has increased by 192 units.
During the same period, the same-store sales in North America restaurants fell 6.9%. The domestic company-owned restaurants fell 9.0%, while North America franchised restaurants fell 6.1%. In international markets, the company posted a systemwide SSSG of -0.1%.
Decline in EPS
For the first quarter, Papa John’s posted a loss of $0.12 per share. However, removing one-time or unusual items, the company’s adjusted EPS was $0.31—a fall of 40.4% from $0.52 in the first quarter of 2018. The lower revenues, lower EBIT margin, and higher interest expenses lowered Papa John’s EPS during the quarter. However, some of the declines in the EPS were offset by share repurchases in the last four quarters.
During the first quarter, Papa John’s EBIT margin fell from 6.4% in the first quarter of 2018 to 5.4%. The negative SSSG and short-term royalty waivers led to a fall in the company’s EBIT margin, which was partially offset by favorable commodity and labor expenses.