10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 14, 2022, Domino’s Pizza, Inc. had 35,885,105 shares of common stock, par value $0.01 per share, outstanding.

(1) The condensed consolidated balance sheet at January 2, 2022 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

The accompanying notes are an integral part of these condensed consolidated financial statements.

(Unaudited; tabular amounts in thousands, except percentages, share and per share amounts)

2. Segment Information

The following tables summarize revenues and earnings before interest, taxes, depreciation, amortization and other, which is the measure by which the Company allocates resources to its segments and which the Company refers to as Segment Income, for each of its reportable segments. Intersegment revenues are comprised of sales of food, equipment and supplies from the supply chain segment to the Company-owned stores in the U.S. stores segment. Intersegment sales prices are market based. The “Other” column as it relates to Segment Income below primarily includes corporate administrative costs that are not allocable to a reportable segment, including labor, computer expenses, professional fees, travel and entertainment, rent, insurance and other corporate administrative costs.


	Fiscal Quarters Ended June 19, 2022 and June 20, 2021
	U.S.		Supply		International		Intersegment
	Stores		Chain		Franchise		Revenues			Other			Total
Revenues
2022	$	351,681	$	683,298	$	66,915	$	(36,712	)	$	—		$	1,065,182
2021		359,765		635,592		69,745		(32,630	)		—			1,032,472
Segment Income
2022	$	104,055	$	53,633	$	52,890	N/A			$	(5,621	)	$	204,957
2021		111,847		58,593		56,365	N/A				(9,627	)		217,178


	Two Fiscal Quarters Ended June 19, 2022 and June 20, 2021
	U.S.		Supply		International		Intersegment
	Stores		Chain		Franchise		Revenues			Other			Total
Revenues
2022	$	684,450	$	1,325,260	$	135,748	$	(69,127	)	$	—		$	2,076,331
2021		708,355		1,234,769		136,515		(63,469	)		—			2,016,170
Segment Income
2022	$	201,347	$	99,982	$	107,936	N/A			$	(13,331	)	$	395,934
2021		219,283		111,145		110,833	N/A				(15,715	)		425,546

The following table reconciles total Segment Income to consolidated income before provision for income taxes.

Fiscal Quarter Ended

Two Fiscal Quarters Ended

June 19,


Delaware		38-2511577
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
30 Frank Lloyd Wright Drive Ann Arbor, Michigan		48105
(Address of Principal Executive Offices)		(Zip Code)


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Domino’s Pizza, Inc. Common Stock, $0.01 par value	DPZ	New York Stock Exchange


		Page No.
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	Condensed Consolidated Balance Sheets (Unaudited) – As of June 19, 2022 and January 2, 2022	3

	Condensed Consolidated Statements of Income (Unaudited) – Fiscal quarters and two fiscal quarters ended June 19, 2022 and June 20, 2021	4

	Condensed Consolidated Statements of Comprehensive Income (Unaudited) – Fiscal quarters and two fiscal quarters ended June 19, 2022 and June 20, 2021	5

	Condensed Consolidated Statements of Cash Flows (Unaudited) – Two fiscal quarters ended June 19, 2022 and June 20, 2021	6

	Notes to Condensed Consolidated Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25

Item 4.	Controls and Procedures	25

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	26

Item 1A.	Risk Factors	26

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26

Item 3.	Defaults Upon Senior Securities	26

Item 4.	Mine Safety Disclosures	26

Item 5.	Other Information	26

Item 6.	Exhibits	27

SIGNATURES		28


(In thousands)	June 19, 2022			January 2, 2022 (1)
Assets
Current assets:
Cash and cash equivalents	$	114,353		$	148,160
Restricted cash and cash equivalents		158,215			180,579
Accounts receivable, net		274,957			255,327
Inventories		70,201			68,328
Prepaid expenses and other		45,645			27,242
Advertising fund assets, restricted		182,499			180,904
Total current assets		845,870			860,540
Property, plant and equipment:
Land and buildings		108,245			108,372
Leasehold and other improvements		195,834			193,572
Equipment		322,079			312,772
Construction in progress		27,161			27,815
		653,319			642,531
Accumulated depreciation and amortization		(339,507	)		(318,466	)
Property, plant and equipment, net		313,812			324,065
Other assets:
Operating lease right-of-use assets		222,780			210,702
Goodwill		16,153			15,034
Capitalized software, net		103,137			95,558
Investments		125,840			125,840
Other assets		40,652			37,968
Deferred income taxes		2,386			2,109
Total other assets		510,948			487,211
Total assets	$	1,670,630		$	1,671,816
Liabilities and stockholders' deficit
Current liabilities:
Current portion of long-term debt	$	55,654		$	55,588
Accounts payable		99,465			91,547
Operating lease liabilities		41,682			37,155
Insurance reserves		32,157			32,588
Dividends payable		40,624			918
Advertising fund liabilities		175,069			173,737
Other accrued liabilities		130,798			199,208
Total current liabilities		575,449			590,741
Long-term liabilities:
Long-term debt, less current portion		4,989,578			5,014,638
Operating lease liabilities		194,674			184,471
Insurance reserves		36,213			36,913
Other accrued liabilities		48,724			50,667
Deferred income taxes		6,301			3,922
Total long-term liabilities		5,275,490			5,290,611
Stockholders' deficit:
Common stock		359			361
Additional paid-in capital		3,589			840
Retained deficit		(4,180,367	)		(4,207,917	)
Accumulated other comprehensive loss		(3,890	)		(2,820	)
Total stockholders' deficit		(4,180,309	)		(4,209,536	)
Total liabilities and stockholders' deficit	$	1,670,630		$	1,671,816


	Fiscal Quarter Ended						Two Fiscal Quarters Ended
	June 19,			June 20,			June 19,			June 20,
(In thousands, except per share data)	2022			2021			2022			2021
Revenues:
U.S. Company-owned stores	$	112,502		$	116,589		$	216,397		$	229,333
U.S. franchise royalties and fees		128,098			126,836			250,383			251,322
Supply chain		646,586			602,962			1,256,133			1,171,300
International franchise royalties and fees		66,915			69,745			135,748			136,515
U.S. franchise advertising		111,081			116,340			217,670			227,700
Total revenues		1,065,182			1,032,472			2,076,331			2,016,170
Cost of sales:
U.S. Company-owned stores		94,065			88,019			181,440			173,761
Supply chain		584,852			536,763			1,140,002			1,045,568
Total cost of sales		678,917			624,782			1,321,442			1,219,329
Gross margin		386,265			407,690			754,889			796,841
General and administrative		97,070			100,448			194,564			191,701
U.S. franchise advertising		111,081			116,340			217,670			227,700
Income from operations		178,114			190,902			342,655			377,440
Other income		—			—			—			2,500
Interest income		219			68			268			90
Interest expense		(44,851	)		(45,877	)		(91,723	)		(85,299	)
Income before provision for income taxes		133,482			145,093			251,200			294,731
Provision for income taxes		30,989			28,474			57,743			60,351
Net income	$	102,493		$	116,619		$	193,457		$	234,380
Earnings per share:
Common stock - basic	$	2.85		$	3.10		$	5.38		$	6.14
Common stock - diluted		2.82			3.06			5.32			6.06


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐