Papa John's Clocks ~2% Dip In Q2 Revenues, Boosts Dividend, Sees Macroeconomic Challenges Ahead

Papa John's International, Inc. PZZA reported a Q2 2023 revenue decline of 1.6% Y/Y to $514.53 million, missing the consensus of $530.10 million.

Adjusted EPS of $0.59 was in line with the Street view.

The revenue decline was driven by lower North American commissary revenues, lower sales volume, and decreased commodity prices Y/Y. 

North American comparable sales were down 1%, while International comparable sales were down 1%.

"While we know there will be macro-economic challenges ahead, particularly in the short term, we're confident that we can improve sales and profitability within our UK market, and in our international segment overall," said Rob Lynch, President and CEO. 

Papa John's opened 47 net units in the quarter, driven by International growth. As of June 25, 2023, 5,780 restaurants operated in 48 countries and territories.

Adjusted operating income for the quarter declined to $36.88 million from $40.41 million in the prior year.

The company held $43.77 million in cash and equivalents as of the quarter end. 

"Our continued investments in sales-driving capabilities and operational excellence, combined with the strength of our balance sheet, gives us confidence that we will produce positive comp sales and attractive new unit development growth in the back half of 2023 and over the long-term," Lynch added.

Dividend

PZZA announced a 10% increase in the annual dividend rate to $1.84 per share.

The company declared a Q3 dividend of $0.46 per common share, representing a 10% increase from the previous one. The dividend will be paid on August 25, 2023, to stockholders of record as of the close of business on August 14, 2023.

Outlook

The company continues to expect 270 to 310 net new units in 2023.

Price Action: PZZA shares are trading lower by 3.22% at $79.00 on the last check Thursday.