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 17, 2023, Domino’s Pizza, Inc. had 35,094,304 shares of common stock, par value $0.01 per share, outstanding.

(1) The condensed consolidated balance sheet at January 1, 2023 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 18, 2023 and June 19, 2022
	U.S.		Supply		International		Intersegment
	Stores		Chain		Franchise		Revenues			Other			Total
Revenues
2023	$	338,421	$	641,481	$	70,495	$	(25,770	)	$	—		$	1,024,627
2022		351,681		683,298		66,915		(36,712	)		—			1,065,182
Segment Income
2023	$	123,592	$	60,026	$	58,865	N/A			$	(18,865	)	$	223,618
2022		104,055		53,633		52,890	N/A				(5,621	)		204,957


	Two Fiscal Quarters Ended June 18, 2023 and June 19, 2022
	U.S.		Supply		International		Intersegment
	Stores		Chain		Franchise		Revenues			Other			Total
Revenues
2023	$	668,922	$	1,291,605	$	140,166	$	(51,668	)	$	—		$	2,049,025
2022		684,450		1,325,260		135,748		(69,127	)		—			2,076,331
Segment Income
2023	$	236,275	$	108,541	$	117,004	N/A			$	(34,587	)	$	427,233
2022		201,347


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 18, 2023 and January 1, 2023	3

	Condensed Consolidated Statements of Income (Unaudited) – Fiscal quarters and two fiscal quarters ended June 18, 2023 and June 19, 2022	4

	Condensed Consolidated Statements of Comprehensive Income (Unaudited) – Fiscal quarters and two fiscal quarters ended June 18, 2023 and June 19, 2022	5

	Condensed Consolidated Statements of Cash Flows (Unaudited) – Two fiscal quarters ended June 18, 2023 and June 19, 2022	6

	Notes to Condensed Consolidated Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4.	Controls and Procedures	26

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	27

Item 1A.	Risk Factors	27

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 3.	Defaults Upon Senior Securities	27

Item 4.	Mine Safety Disclosures	27

Item 5.	Other Information	27

Item 6.	Exhibits	28

SIGNATURES		29


(In thousands)	June 18, 2023			January 1, 2023 (1)
Assets
Current assets:
Cash and cash equivalents	$	77,020		$	60,356
Restricted cash and cash equivalents		189,694			191,289
Accounts receivable, net		260,024			257,492
Inventories		65,627			81,570
Prepaid expenses and other		53,201			37,287
Advertising fund assets, restricted		154,052			162,660
Total current assets		799,618			790,654
Property, plant and equipment:
Land and buildings		105,847			105,659
Leasehold and other improvements		175,944			172,725
Equipment		351,927			333,787
Construction in progress		15,089			22,536
		648,807			634,707
Accumulated depreciation and amortization		(352,872	)		(332,472	)
Property, plant and equipment, net		295,935			302,235
Other assets:
Operating lease right-of-use assets		213,817			219,202
Goodwill		11,688			11,763
Capitalized software, net		119,299			108,354
Investment in DPC Dash		110,876			125,840
Deferred income tax assets, net		2,492			1,926
Other assets		42,445			42,247
Total other assets		500,617			509,332
Total assets	$	1,596,170		$	1,602,221
Liabilities and stockholders’ deficit
Current liabilities:
Current portion of long-term debt	$	55,745		$	54,813
Accounts payable		90,688			89,715
Operating lease liabilities		37,611			34,877
Insurance reserves		30,197			31,435
Dividends payable		43,586			866
Advertising fund liabilities		150,365			157,909
Other accrued liabilities		139,336			167,006
Total current liabilities		547,528			536,621
Long-term liabilities:
Long-term debt, less current portion		4,944,678			4,967,420
Operating lease liabilities		188,694			195,244
Insurance reserves		36,507			40,179
Deferred income tax liabilities		1,242			7,761
Other accrued liabilities		44,087			44,061
Total long-term liabilities		5,215,208			5,254,665
Stockholders’ deficit:
Common stock		351			354
Additional paid-in capital		3,370			9,693
Retained deficit		(4,166,520	)		(4,194,418	)
Accumulated other comprehensive loss		(3,767	)		(4,694	)
Total stockholders’ deficit		(4,166,566	)		(4,189,065	)
Total liabilities and stockholders’ deficit	$	1,596,170		$	1,602,221


	Fiscal Quarter Ended						Two Fiscal Quarters Ended
	June 18,			June 19,			June 18,			June 19,
(In thousands, except per share data)	2023			2022			2023			2022
Revenues:
U.S. Company-owned stores	$	87,694		$	112,502		$	172,605		$	216,397
U.S. franchise royalties and fees		139,268			128,098			272,132			250,383
Supply chain		615,711			646,586			1,239,937			1,256,133
International franchise royalties and fees		70,495			66,915			140,166			135,748
U.S. franchise advertising		111,459			111,081			224,185			217,670
Total revenues		1,024,627			1,065,182			2,049,025			2,076,331
Cost of sales:
U.S. Company-owned stores		71,423			94,065			141,995			181,440
Supply chain		548,548			584,852			1,116,827			1,140,002
Total cost of sales		619,971			678,917			1,258,822			1,321,442
Gross margin		404,656			386,265			790,203			754,889
General and administrative		97,794			97,070			192,983			194,564
U.S. franchise advertising		111,459			111,081			224,185			217,670
Refranchising loss		—			—			149			—
Income from operations		195,403			178,114			372,886			342,655
Other expense		(14,964	)		—			(14,964	)		—
Interest income		2,537			219			4,928			268
Interest expense		(44,932	)		(44,851	)		(91,479	)		(91,723	)
Income before provision for income taxes		138,044			133,482			271,371			251,200
Provision for income taxes		28,664			30,989			57,221			57,743
Net income	$	109,380		$	102,493		$	214,150		$	193,457
Earnings per share:
Common stock - basic	$	3.11		$	2.85		$	6.07		$	5.38
Common stock - diluted	$	3.08		$	2.82		$	6.02		$	5.32


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