Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 27, 2022 | Apr. 29, 2022 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 27, 2022 | |
Document Fiscal Year Focus | 2022 | |
Document Transition Report | false | |
Entity File Number | 0-21660 | |
Entity Registrant Name | PAPA JOHNS INTERNATIONAL INC | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 61-1203323 | |
Entity Address, Address Line One | 2002 Papa John’s Boulevard | |
Entity Address, City or Town | Louisville | |
Entity Address, State or Province | KY | |
Entity Address, Postal Zip Code | 40299-2367 | |
City Area Code | 502 | |
Local Phone Number | 261-7272 | |
Title of 12(b) Security | Common stock, $0.01 par value | |
Trading Symbol | PZZA | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 35,794,906 | |
Entity Central Index Key | 0000901491 | |
Current Fiscal Year End Date | --12-25 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 27, 2022 | Dec. 26, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 80,669 | $ 70,610 |
Accounts receivable, net | 81,229 | 81,370 |
Notes receivable, current portion | 9,108 | 12,352 |
Income tax receivable | 10,537 | 9,386 |
Inventories | 38,992 | 34,981 |
Prepaid expenses and other current assets | 46,461 | 46,310 |
Current assets | 19,273 | |
Total current assets | 286,269 | 255,009 |
Property and equipment, net | 216,253 | 223,856 |
Finance lease right-of-use assets, net | 20,159 | 20,907 |
Operating lease right-of-use assets | 177,767 | 176,256 |
Notes receivable, less current portion, net | 22,634 | 35,504 |
Goodwill | 71,593 | 80,632 |
Deferred income taxes | 6,535 | 5,156 |
Other assets | 84,416 | 88,384 |
Total assets | 885,626 | 885,704 |
Current liabilities: | ||
Accounts payable | 35,434 | 28,092 |
Income and other taxes payable | 27,973 | 19,996 |
Accrued expenses and other current liabilities | 156,203 | 190,116 |
Current deferred revenue | 19,649 | 21,700 |
Current finance lease liabilities | 5,190 | 4,977 |
Current operating lease liabilities | 20,938 | 22,543 |
Liabilities held for sale | 13,247 | |
Total current liabilities | 278,634 | 287,424 |
Deferred revenue | 12,381 | 13,846 |
Long-term finance lease liabilities | 15,696 | 16,580 |
Long-term operating lease liabilities | 164,738 | 160,672 |
Long-term debt, less current portion, net | 528,088 | 480,730 |
Deferred income taxes | 258 | |
Other long-term liabilities | 89,210 | 93,154 |
Total liabilities | 1,088,747 | 1,052,664 |
Redeemable noncontrolling interests | 5,323 | 5,498 |
Stockholders' deficit: | ||
Common stock ($0.01 par value per share; issued 49,074 at March 27, 2022 and 49,002 at December 26, 2021) | 491 | 490 |
Additional paid-in capital | 436,225 | 445,126 |
Accumulated other comprehensive loss | (9,316) | (9,971) |
Retained earnings | 181,124 | 183,157 |
Treasury stock (13,399 shares at March 27, 2022 and 13,205 shares at December 26, 2021, at cost) | (832,603) | (806,472) |
Total stockholders' deficit | (224,079) | (187,670) |
Noncontrolling interests in subsidiaries | 15,635 | 15,212 |
Total Stockholders' deficit | (208,444) | (172,458) |
Total liabilities, Redeemable noncontrolling interests and Stockholders' deficit | $ 885,626 | $ 885,704 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands | Mar. 27, 2022 | Dec. 26, 2021 |
Condensed Consolidated Balance Sheets | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares issued | 49,074 | 49,002 |
Treasury stock, shares | 13,399 | 13,205 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 27, 2022 | Mar. 28, 2021 | |
Revenues: | ||
Total revenues | $ 542,692 | $ 511,746 |
Costs and expenses: | ||
General and administrative expenses | 65,937 | 50,011 |
Depreciation and amortization | 11,940 | 12,876 |
Total costs and expenses | 517,097 | 464,884 |
Refranchising and impairment loss | (11,160) | |
Operating income | 14,435 | 46,862 |
Net interest expense | (4,264) | (3,647) |
Income before income taxes | 10,171 | 43,215 |
Income tax expense | (1,256) | 7,932 |
Net income before attribution to noncontrolling interests | 11,427 | 35,283 |
Net income attributable to noncontrolling interests | (933) | (1,400) |
Net income attributable to the Company | 10,494 | 33,883 |
Calculation of net income for earnings per share: | ||
Net income attributable to the Company | 10,494 | 33,883 |
Dividends paid to participating securities | (60) | (3,527) |
Net income attributable to participating securities | (3,243) | |
Net income attributable to common shareholders | $ 10,434 | $ 27,113 |
Basic earnings per common share (in dollar per share) | $ 0.29 | $ 0.83 |
Diluted earnings per common share (in dollar per share) | $ 0.29 | $ 0.82 |
Basic weighted average common shares outstanding (in shares) | 35,927 | 32,756 |
Diluted weighted average common shares outstanding (in shares) | 36,236 | 33,090 |
Dividends declared per common share (in dollar per share) | $ 0.350 | $ 0.225 |
Domestic company owned restaurants segment | ||
Revenues: | ||
Total revenues | $ 198,765 | $ 197,234 |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | 161,661 | 155,888 |
North America franchising | ||
Revenues: | ||
Total revenues | 34,268 | 32,715 |
North America commissary | ||
Revenues: | ||
Total revenues | 209,679 | 184,878 |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | 197,090 | 170,684 |
International | ||
Revenues: | ||
Total revenues | 34,617 | 34,607 |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | 19,914 | 19,618 |
Other segment | ||
Revenues: | ||
Total revenues | 65,363 | 62,312 |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | $ 60,555 | $ 55,807 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 27, 2022 | Mar. 28, 2021 | |
Condensed Consolidated Statements of Comprehensive Income | ||
Net income before attribution to noncontrolling interests | $ 11,427 | $ 35,283 |
Other comprehensive income, before tax: | ||
Foreign currency translation adjustments | (861) | 1,059 |
Interest rate swaps | 1,712 | |
Interest rate swaps | 1,795 | |
Other comprehensive income, before tax | 851 | 2,854 |
Income tax effect: | ||
Foreign currency translation adjustments | 198 | (244) |
Interest rate swaps | (394) | |
Interest rate swaps | (413) | |
Income tax effect | (196) | (657) |
Other comprehensive income, net of tax | 655 | 2,197 |
Comprehensive income before attribution to noncontrolling interests | 12,082 | 37,480 |
Less: comprehensive (income), redeemable noncontrolling interests | (510) | (787) |
Less: comprehensive (income), nonredeemable noncontrolling interests | (423) | (613) |
Comprehensive income attributable to the Company | $ 11,149 | $ 36,080 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 27, 2022 | Mar. 28, 2021 | |
Consolidated Statements of Comprehensive Income (Unaudited) | ||
Income tax expense (benefit) | $ (1,256) | $ 7,932 |
Net interest expense | (4,264) | (3,647) |
Interest rate swap | Amount reclassified from AOCI | ||
Consolidated Statements of Comprehensive Income (Unaudited) | ||
Income tax expense (benefit) | (120) | |
Interest expense | Interest rate swap | ||
Consolidated Statements of Comprehensive Income (Unaudited) | ||
Amount of Gain or (Loss) Reclassified from AOCL into Income | 535 | (1,709) |
Net interest expense | 4,264 | 3,647 |
Interest expense | Interest rate swap | Amount reclassified from AOCI | ||
Consolidated Statements of Comprehensive Income (Unaudited) | ||
Amount of Gain or (Loss) Reclassified from AOCL into Income | $ 535 | |
Qualifying as hedge | Interest rate swap | Amount reclassified from AOCI | ||
Consolidated Statements of Comprehensive Income (Unaudited) | ||
Income tax expense (benefit) | $ 385 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Stockholders' Deficit - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Treasury Stock | Noncontrolling Interests in Subsidiaries | Total |
Balance at Dec. 27, 2020 | $ 453 | $ 254,103 | $ (14,168) | $ 219,158 | $ (741,724) | $ 15,239 | $ (266,939) |
Balance (in shares) at Dec. 27, 2020 | 32,545 | ||||||
Net income | 33,883 | 613 | 34,496 | ||||
Other comprehensive income, net of tax | 2,197 | 2,197 | |||||
Cash dividends on common stock | 31 | (7,435) | (7,404) | ||||
Cash dividends on preferred stock | (3,412) | (3,412) | |||||
Exercise of stock options | 2,298 | 2,298 | |||||
Exercise of stock options (in shares) | 41 | ||||||
Acquisition of Company common stock | (1,267) | (1,267) | |||||
Acquisition of Company common stock (in shares) | (15) | ||||||
Stock-based compensation expense | 4,113 | 4,113 | |||||
Issuance of restricted stock | (5,371) | 5,371 | |||||
Issuance of restricted stock (in shares) | 104 | ||||||
Tax effect of restricted stock awards | (3,834) | (3,834) | |||||
Distributions to noncontrolling interests | (570) | (570) | |||||
Other | (55) | (75) | 352 | 222 | |||
Other (in shares) | 6 | ||||||
Balance at Mar. 28, 2021 | $ 453 | 251,285 | (11,971) | 242,119 | (737,268) | 15,282 | (240,100) |
Balance (in shares) at Mar. 28, 2021 | 32,681 | ||||||
Balance at Dec. 26, 2021 | $ 490 | 445,126 | (9,971) | 183,157 | (806,472) | 15,212 | (172,458) |
Balance (in shares) at Dec. 26, 2021 | 35,797 | ||||||
Net income | 10,494 | 423 | 10,917 | ||||
Other comprehensive income, net of tax | 655 | 655 | |||||
Cash dividends on common stock | 47 | (12,655) | (12,608) | ||||
Exercise of stock options | 741 | 741 | |||||
Exercise of stock options (in shares) | 17 | ||||||
Tax payments for equity award issuances | (7,461) | (7,461) | |||||
Tax payments for equity award issuances (in shares) | (69) | ||||||
Acquisition of Company common stock | (32,709) | (32,709) | |||||
Acquisition of Company common stock (in shares) | (301) | ||||||
Stock-based compensation expense | $ 1 | 4,175 | 4,176 | ||||
Issuance of restricted stock | (6,369) | 6,369 | |||||
Issuance of restricted stock (in shares) | 228 | ||||||
Other | (34) | 128 | 209 | 303 | |||
Other (in shares) | 3 | ||||||
Balance at Mar. 27, 2022 | $ 491 | $ 436,225 | $ (9,316) | $ 181,124 | $ (832,603) | $ 15,635 | $ (208,444) |
Balance (in shares) at Mar. 27, 2022 | 35,675 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Stockholders' Deficit (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 27, 2022 | Mar. 28, 2021 | |
Accumulated other comprehensive income (loss) | $ (9,316) | $ (11,971) |
Unrealized foreign currency translation gains (losses) | (5,533) | (2,977) |
Net unrealized gain (loss) on the interest rate swap agreements | (3,783) | (8,994) |
Joint ventures | ||
Net income (loss) allocated to the redeemable noncontrolling interest from joint venture arrangements | $ 510 | $ 787 |
Condensed Consolidated Statem_6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 27, 2022 | Mar. 28, 2021 | |
Operating activities | ||
Net income before attribution to noncontrolling interests | $ 11,427 | $ 35,283 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Provision (benefit) for allowance for credit losses on accounts and notes receivable | 15,167 | (1,098) |
Depreciation and amortization | 11,940 | 12,876 |
Refranchising and impairment loss | 11,160 | |
Deferred income taxes | (1,817) | 2,586 |
Stock-based compensation expense | 4,176 | 4,113 |
Other | (2,135) | 325 |
Changes in operating assets and liabilities, net of acquisitions: | ||
Accounts receivable | (2,503) | 13,349 |
Income tax receivable | (1,151) | 566 |
Inventories | (4,731) | 2,721 |
Prepaid expenses and other current assets | 77 | 711 |
Other assets and liabilities | (654) | (7,901) |
Accounts payable | 7,359 | (5,350) |
Income and other taxes payable | 8,013 | 15,045 |
Accrued expenses and other current liabilities | (29,469) | (9,736) |
Deferred revenue | (1,465) | (273) |
Net cash provided by operating activities | 25,394 | 63,217 |
Investing activities | ||
Purchases of property and equipment | (10,233) | (7,076) |
Notes issued | (272) | (3,417) |
Repayments of notes issued | 3,432 | 4,864 |
Acquisitions, net of cash acquired | (1,250) | (699) |
Other | 8 | 29 |
Net cash used in investing activities | (8,315) | (6,299) |
Financing activities | ||
Net proceeds of revolving credit facilities | 47,000 | 5,000 |
Proceeds from exercise of stock options | 741 | 2,298 |
Acquisition of Company common stock | (32,709) | (1,267) |
Dividends paid to common stockholders | (12,608) | (7,404) |
Dividends paid to preferred stockholders | (3,412) | |
Tax payments for equity award issuances | (7,461) | (3,834) |
Distributions to noncontrolling interests | (685) | (1,705) |
Repayments of term loan | (5,000) | |
Other | (1,065) | (756) |
Net cash used in financing activities | (6,787) | (16,080) |
Effect of exchange rate changes on cash and cash equivalents | (233) | 230 |
Change in cash and cash equivalents | 10,059 | 41,068 |
Cash and cash equivalents at beginning of period | 70,610 | 130,204 |
Cash and cash equivalents at end of period | $ 80,669 | $ 171,272 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 27, 2022 | |
Basis of Presentation | |
Basis of Presentation | 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete annual financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. Operating results for the three months ended March 27, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending December 25, 2022. For further information, refer to the consolidated financial statements and footnotes thereto included in the Annual Report on Form 10-K for Papa John’s International, Inc. (referred to as the “Company”, “Papa John’s” or in the first-person notations of “we”, “us” and “our”) for the year ended December 26, 2021. |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Mar. 27, 2022 | |
Significant Accounting Policies | |
Significant Accounting Policies | 2. Significant Accounting Policies Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Significant items that are subject to such estimates and assumptions include allowance for credit losses on accounts and notes receivable, intangible assets, contract assets and contract liabilities, including the online customer loyalty program obligation and gift card breakage, right-of-use assets and lease liabilities, insurance reserves and tax reserves. Although management bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, actual results could significantly differ from these estimates. Variable Interest Entity Papa John’s domestic restaurants, both Company-owned and franchised, participate in Papa John’s Marketing Fund, Inc. (“PJMF”), a nonstock corporation designed to operate at break-even as it spends all annual contributions received from the system. PJMF collects a percentage of revenues from Company-owned and franchised restaurants in the United States for the purpose of designing and administering advertising and promotional programs. PJMF is a variable interest entity (“VIE”) that funds its operations with ongoing financial support and contributions from the domestic restaurants, of which approximately 80% are franchised (85% following the divestiture of the Company’s interest in one joint venture subsequent to the end of the first quarter that included 90 restaurants as discussed in Note 10) and does not have sufficient equity to fund its operations without these ongoing financial contributions. Based on an assessment of the governance structure and operating procedures of PJMF, the Company determined it has the power to control certain significant activities of PJMF, and therefore, is the primary beneficiary. The Company has consolidated PJMF in its financial results in accordance with Accounting Standards Codification (“ASC”) 810, “ Consolidations Noncontrolling Interests Papa John’s has four joint venture arrangements in which there are noncontrolling interests held by third parties that include 188 restaurants at March 27, 2022 and March 28, 2021. Subsequent to the end of the first quarter, the Company divested its interest in one joint venture that included 90 restaurants. See Note 10 for additional information. Consolidated net income is required to be reported separately at amounts attributable to both the Company and the noncontrolling interests. Additionally, disclosures are required to clearly identify and distinguish between the interests of the Company and the interests of the noncontrolling owners, including a disclosure on the face of the Condensed Consolidated Statements of Operations of net income attributable to noncontrolling interests. Net income attributable to these joint ventures for the three months ended March 27, 2022 and March 28, 2021 was as follows (in thousands): Three Months Ended March 27, March 28, 2022 2021 Papa John’s International, Inc. $ 1,621 $ 2,349 Noncontrolling interests 933 1,400 Total net income $ 2,554 $ 3,749 The following summarizes the redemption feature, location and related accounting within the Condensed Consolidated Balance Sheets for these joint venture arrangements: Type of Joint Venture Arrangement Location within the Balance Sheets Recorded Value Joint ventures with no redemption feature Permanent equity Carrying value Joint ventures with option to require the Company to purchase the noncontrolling interest - not currently redeemable or redemption not probable Temporary equity Carrying value Deferred Income Tax Accounts and Tax Reserves We are subject to income taxes in the United States and several foreign jurisdictions. Significant judgment is required in determining Papa John’s provision for income taxes and the related assets and liabilities. The provision for income taxes includes income taxes paid, currently payable or receivable and those deferred. We use an estimated annual effective rate based on expected annual income to determine our quarterly provision for income taxes. The effective income tax rate includes the estimated domestic state effective income tax rate and applicable foreign income tax rates. The effective income tax rate is also impacted by various permanent items and credits, net of any related valuation allowances, and can vary based on changes in estimated annual income. Discrete items are recorded in the quarter in which they occur. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences reverse. Deferred tax assets are also recognized for the estimated future effects of tax attribute carryforwards (e.g., net operating losses, capital losses, and foreign tax credits). The effect on deferred taxes of changes in tax rates is recognized in the period in which the new tax rate is enacted. Valuation allowances are established when necessary on a jurisdictional basis to reduce deferred tax assets to the amounts we expect to realize. Tax authorities periodically audit the Company. We record reserves and related interest and penalties for identified exposures as income tax expense. We evaluate these issues on a quarterly basis to adjust for events, such as statute of limitations expirations, court or state rulings or audit settlements, which may impact our ultimate payment for such exposures. Fair Value Measurements and Disclosures The Company determines the fair value of financial assets and liabilities based on the price that would be received to sell the asset or paid to transfer the liability to a market participant. Certain assets and liabilities are measured at fair value on a recurring basis and are required to be classified and disclosed in one of the following three categories: ● Level 1: Quoted market prices in active markets for identical assets or liabilities. ● Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. ● Level 3: Unobservable inputs that are not corroborated by market data. Fair value is a market-based measurement, not an entity-specific measurement. Considerable judgment is required to interpret market data to estimate fair value; accordingly, the fair values presented do not necessarily indicate what the Company or its debtholders could realize in a current market exchange. Our financial assets and liabilities that were measured at fair value on a recurring basis as of March 27, 2022 and December 26, 2021 are as follows: Carrying Fair Value Measurements (in thousands) Value Level 1 Level 2 Level 3 March 27, 2022 Financial assets: Cash surrender value of life insurance policies (a) $ 34,205 $ 34,205 $ — $ — Financial liabilities: Interest rate swaps (b) $ 1,528 $ — $ 1,528 $ — December 26, 2021 Financial assets: Cash surrender value of life insurance policies (a) $ 41,904 $ 41,904 $ — $ — Financial liabilities: Interest rate swaps (b) $ 5,536 $ — $ 5,536 $ — (a) Represents life insurance policies held in our non-qualified deferred compensation plan. (b) The fair value of our interest rate swaps is based on the sum of all future net present value cash flows. The future cash flows are derived based on the terms of our interest rate swaps, as well as considering published discount factors, and projected London Interbank Offered Rates (“LIBOR”). The fair value of certain assets and liabilities approximates carrying value because of the short-term nature of the accounts, including cash and cash equivalents, accounts receivable, net of allowances, and accounts payable. The carrying value of notes receivable, net of allowances, also approximates fair value. The Company’s revolving credit facilities under its credit agreement approximate carrying value due to its variable market-based interest rate. The Company’s 3.875%senior notes are classified as a Level 2 fair value measurement since the Company estimates the fair value by using recent trading transactions, and has the following estimated fair values and carrying values (excluding the impact of unamortized debt issuance costs) as of March 27, 2022 and December 26, 2021, respectively: March 27, 2022 December 26, 2021 Carrying Fair Carrying Fair (in thousands) Value Value Value Value 3.875% Senior Notes $ 400,000 $ 362,000 $ 400,000 $ 396,000 Allowance for Credit Losses Estimates of expected credit losses, even if remote, are based upon historical account write-off trends, facts about the current financial condition of the debtor, forecasts of future operating results based upon current trends of select operating metrics, and macroeconomic factors. Credit quality is monitored through the timing of payments compared to the prescribed payment terms and known facts regarding the financial condition of the franchisee or customer. Account and note balances are charged off against the allowance after recovery efforts have ceased. The following table summarizes changes in our allowances for credit losses for accounts receivable and notes receivable: (in thousands) Accounts Receivable Notes Receivable Balance at December 26, 2021 $ 2,364 $ 1,500 Current period provision for expected credit losses (1) 2,613 12,560 Write-offs charged against the allowance (126) — Recoveries collected — (6) Balance at March 27, 2022 $ 4,851 $ 14,054 (1) The Company recorded $14.6 million of one -time, non-cash reserves for certain accounts receivable and notes receivable primarily associated with a master franchisee with operations principally in Russia. |
Leases
Leases | 3 Months Ended |
Mar. 27, 2022 | |
Leases | |
Leases | 3. Leases Lessor Operating Leases We sublease certain retail space to our franchisees in the United Kingdom which are primarily operating leases. At March 27, 2022, we leased and subleased approximately 430 Papa John’s restaurant properties to franchisees in the United Kingdom. The initial lease terms on the franchised sites in the United Kingdom are generally 15 years. The Company has the option to negotiate an extension toward the end of the lease term at the landlord’s discretion. Rental income, primarily derived from properties leased and subleased to franchisees in the United Kingdom, is recognized on a straight-line basis over the respective operating lease terms. We recognized total sublease income of $3.0 million and $2.8 million within Other revenues in the Condensed Consolidated Statements of Operations for the three months ended March 27, 2022 and March 28, 2021, respectively. Lease Guarantees As a result of assigning our interest in obligations under property leases as a condition of the refranchising of certain restaurants, we are contingently liable for payment of approximately 65 domestic leases. These leases have varying terms, the latest of which expires in 2036. As of March 27, 2022, the estimated maximum amount of undiscounted payments the Company could be required to make in the event of nonpayment by the primary lessees was $10.8 million. This contingent liability is not included in the Condensed Consolidated Balance Sheet as it is not probable to occur. The fair value of the guarantee is not material. Subsequent to quarter-end, we refranchised 90 Company-owned restaurants held in a consolidated joint venture in Texas through the sale of our 51% ownership in the joint venture, as discussed in Note 10. As part of this transaction, we are contingently liable for payment of 12 of the 90 domestic leases, and the estimated maximum amount of undiscounted payments the Company could be required to make in the event of nonpayment by the primary lessees for these stores is approximately $1.6 million. Supplemental Cash Flow & Other Information Supplemental cash flow information related to leases for the periods reported is as follows: Three Months Ended (in thousands) March 27, 2022 March 28, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 262 $ 278 Financing cash flows from finance leases 1,241 1,059 Operating cash flows from operating leases (a) 9,612 9,483 Right-of-use assets obtained in exchange for new finance lease liabilities 569 7,014 Right-of-use assets obtained in exchange for new operating lease liabilities (b) 20,801 28,428 Cash received from sublease income 3,092 2,987 (a) Included within the change in Other assets and liabilities within the Condensed Consolidated Statements of Cash Flows offset by non-cash operating lease right-of-use asset amortization and lease liability accretion. (b) Includes right-of-use assets of approximately |
Papa John's Marketing Fund, Inc
Papa John's Marketing Fund, Inc. | 3 Months Ended |
Mar. 27, 2022 | |
Papa John's Marketing Fund, Inc. | |
Papa John's Marketing Fund, Inc. | 4. Papa John’s Marketing Fund, Inc. PJMF collects a percentage of revenues from Company-owned and franchised restaurants in the United States, for the purpose of designing and administering advertising and promotional programs for all participating domestic restaurants. Contributions and expenditures are reported on a gross basis in the Condensed Consolidated Statements of Operations within Other revenues and Other expenses. Assets and liabilities of PJMF, which are restricted in their use, included in the Condensed Consolidated Balance Sheets were as follows (in thousands): March 27, December 26, 2022 2021 Assets Current assets: Cash and cash equivalents $ 24,136 $ 24,481 Accounts receivable, net 13,078 14,150 Income tax receivable 44 300 Prepaid expenses and other current assets 2,148 1,718 Total current assets 39,406 40,649 Deferred income taxes 604 614 Total assets $ 40,010 $ 41,263 Liabilities Current liabilities: Accounts payable $ 2,868 $ 140 Income and other taxes payable 2 2 Accrued expenses and other current liabilities 35,131 40,154 Current deferred revenue 4,320 4,317 Total current liabilities 42,321 44,613 Deferred revenue 1,399 2,478 Total liabilities $ 43,720 $ 47,091 |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 27, 2022 | |
Revenue Recognition | |
Revenue Recognition | 5. Revenue Recognition Contract Balances Our contract liabilities primarily relate to franchise fees, unredeemed gift card liabilities, and loyalty program obligations, which we classify as Deferred revenue on the Condensed Consolidated Balance Sheets. During the three months ended March 27, 2022 and March 28, 2021, the Company recognized $9.3 million and $9.1 million in revenue, respectively, related to deferred revenue. The following table includes a breakout of contract liability balances (in thousands): Contract Liabilities March 27, 2022 December 26, 2021 Change Franchise fees and unredeemed gift card liabilities $ 18,731 $ 20,410 $ (1,679) Customer loyalty program obligations 13,299 15,136 (1,837) Total contract liabilities $ 32,030 $ 35,546 $ (3,516) Our contract assets consist primarily of equipment incentives provided to franchisees. Equipment incentives are related to the future value of commissary revenue the Company will receive over the term of the incentive agreement. As of March 27, 2022 and December 26, 2021, the contract assets were approximately $5.6 million and $5.8 million, respectively. For both of the three months ended March 27, 2022 and March 28, 2021, revenue was reduced approximately $0.8 million for the amortization of contract assets over the applicable contract terms. Contract assets are included in Prepaid expenses and other current assets and Other assets on the Condensed Consolidated Balance Sheets. Transaction Price Allocated to the Remaining Performance Obligations The following table (in thousands) includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied at the end of the reporting period. Performance Obligations by Period Less than 1 Year 1-2 Years 2-3 Years 3-4 Years 4-5 Years Thereafter Total Franchise fees $ 2,011 $ 1,783 $ 1,601 $ 1,390 $ 1,127 $ 2,134 $ 10,046 Approximately $3.0 million of area development fees related to unopened stores and international unearned royalties are included in Deferred revenue. Timing of revenue recognition is dependent upon the timing of store openings and franchisees’ revenues. Gift card liabilities of approximately $5.7 million, included in Deferred revenue, will be recognized in Company-owned restaurant revenues when gift cards are redeemed. The Company will recognize redemption fee revenue in Other revenues when cards are redeemed at franchised restaurant locations. The Company applies the practical expedient in ASC 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less. |
Common Stock
Common Stock | 3 Months Ended |
Mar. 27, 2022 | |
Common Stock. | |
Common Stock and Series B Convertible Preferred Stock | 6. Common Stock Shares Authorized and Outstanding The Company has authorized 5.0 million shares of preferred stock (of which none were issued or outstanding at March 27, 2022 and December 26, 2021) and 100.0 million shares of common stock as of March 27, 2022 and December 26, 2021. There were 35.7 million shares of common stock outstanding, net of repurchased shares of common stock at March 27, 2022, compared to 35.8 million shares at December 26, 2021. Share Repurchase Program On October 28, 2021, our Board of Directors approved a share repurchase program with an indefinite duration for up to $425.0 million of the Company’s common stock. This share repurchase program operated alongside our previous $75.0 million share repurchase authorization, which began on November 4, 2020 and expired on December 26, 2021. The following table summarizes our repurchase activity for the three months ended March 27, 2022 and March 28, 2021: Maximum Dollar Total Average Aggregate Value of Shares Number Price Cost of that May Yet Be (in thousands, except average price per share) of Shares Paid per Shares Purchased Under the Three Months Ended Purchased Share Purchased Plans or Programs March 27, 2022 301 $ 108.76 $ 32,709 $ 392,091 March 28, 2021 15 $ 84.63 $ 1,267 $ 71,031 Subsequent to March 27, 2022, we acquired an additional 223,000 shares at an aggregate cost of $23.0 million and an average price of $102.97 per share. Approximately $369.1 million remained available under the Company’s share repurchase program as of April 29, 2022. The timing and volume of share repurchases under the Company’s share repurchase programs may be executed at the discretion of management on an opportunistic basis, subject to market and business conditions, regulatory requirements and other factors, or pursuant to trading plans or other arrangements. Repurchases under the programs may be made through open market, block, and privately negotiated transactions, including Rule 10b5-1 plans, at times and in such amounts as management deems appropriate. Repurchases under the Company’s share repurchase programs may be commenced or suspended from time to time at the Company’s discretion without prior notice. Funding for the share repurchase programs will be provided through our credit facility, operating cash flow, stock option exercises and cash and cash equivalents. Dividends The Company recorded dividends of approximately $12.6 million ($0.35 per share) in the first quarter of 2022. On April 26, 2022, our Board of Directors declared a second quarter dividend of $0.35 per common share (approximately $12.6 million in the aggregate), which will be paid on May 27, 2022 to stockholders of record as of the close of business on May 16, 2022. The declaration and payment of any future dividends will be at the discretion of our Board of Directors. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 27, 2022 | |
Earnings Per Share | |
Earnings Per Share | 7. Earnings Per Share We compute earnings per share using the two-class method. The two-class method requires an earnings allocation formula that determines earnings per share for common shareholders and participating security holders according to dividends declared and participating rights in undistributed earnings. The shares of the Company’s former Series B Convertible Preferred Stock (“Series B Preferred Stock”), all of which were repurchased by the Company or converted into shares of common stock during 2021, and time-based restricted stock awards are participating securities because holders of such shares have non-forfeitable dividend rights and participate in undistributed earnings with common stock. Under the two-class method, total dividends provided to the holders of participating securities and undistributed earnings allocated to participating securities, are subtracted from net income attributable to the Company in determining net income attributable to common shareholders. Additionally, any accretion to the redemption value for the Series B Preferred Stock was treated as a deemed dividend in the two-class earnings per share calculation. The calculations of basic and diluted earnings per common share are as follows: Three Months Ended March 27, March 28, 2022 2021 Basic earnings per common share (in thousands, except per share data) Net income attributable to the Company $ 10,494 $ 33,883 Dividends paid to participating securities (60) (3,527) Net income attributable to participating securities — (3,243) Net income attributable to common shareholders $ 10,434 $ 27,113 Basic weighted average common shares outstanding 35,927 32,756 Basic earnings per common share $ 0.29 $ 0.83 Diluted earnings per common share (in thousands, except per share data) Net income attributable to common shareholders $ 10,434 $ 27,113 Weighted average common shares outstanding 35,927 32,756 Dilutive effect of outstanding equity awards (a) 309 334 Diluted weighted average common shares outstanding (b) 36,236 33,090 Diluted earnings per common share $ 0.29 $ 0.82 (a) Excludes 21,000 and 18,000 equity awards for the three months ended March 27, 2022 and March 28, 2021, respectively, as the effect of including such awards would have been anti-dilutive. (b) The Company had 252,500 shares of Series B Preferred Stock outstanding at March 28, 2021 (none at March 27, 2022). For the fully diluted calculation, the Series B Preferred stock dividends were added back to net income attributable to common shareholders. The Company then applied the if-converted method to calculate dilution on the Series B Preferred Stock, which resulted in 5.0 million additional common shares for March 28, 2021. This calculation was anti-dilutive and as such was excluded. |
Debt
Debt | 3 Months Ended |
Mar. 27, 2022 | |
Debt | |
Debt | 8. Debt Long-term debt, net, consists of the following (in thousands): March 27, December 26, 2022 2021 Senior notes $ 400,000 $ 400,000 Revolving facilities 137,000 90,000 Outstanding debt $ 537,000 $ 490,000 Unamortized debt issuance costs (8,912) (9,270) Total long-term debt, net $ 528,088 $ 480,730 Senior Notes On September 14, 2021, the Company issued $400.0 million of 3.875% senior notes (the “Notes”) which will mature on September 15, 2029. Interest on the Notes is payable semi-annually in cash in arrears on March 15 and September 15 of each year at a fixed interest rate of 3.875% per annum. The Company may redeem the Notes, in whole or in part, at any time on or after September 15, 2024 at established redemption prices ranging from 97 to 194 basis points depending on when the Notes are redeemed. At any time prior to September 15, 2024, the Company may also redeem up to 40% of the Notes with net cash proceeds of certain equity offerings at a redemption price equal to 103.875% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, excluding the redemption date. In addition, at any time prior to September 15, 2024, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest and an applicable “make-whole” premium. The Notes also contain customary redemption provisions related to asset sales and certain change of control transactions. The Indenture governing the Notes contains customary events of default, including, among other things, payment default, failure to comply with covenants or agreements contained in the Indenture or the Notes and certain provisions related to bankruptcy events. The Indenture also contains customary negative covenants. Amended Credit Agreement The Company’s amended and restated credit agreement, dated September 14, 2021 (the “Amended Credit Agreement”) provides for a senior secured revolving credit facility in an aggregate available principal amount of $600.0 million (the “PJI Revolving Facility”), of which up to $40.0 million is available as swingline loans and up to $80.0 million is available as letters of credit. The PJI Revolving Facility will mature on September 14, 2026. Up to $50.0 million of the PJI Revolving Facility may be advanced in certain agreed foreign currencies, including Euros, Pounds Sterling, Canadian Dollars, Japanese Yen, and Mexican Pesos. Additionally, the Amended Credit Agreement includes an accordion feature allowing for a future increase of the PJI Revolving Facility and/or incremental term loans in an aggregate amount of up to $500.0 million, subject to certain conditions, including obtaining commitments from one or more new or existing lenders to provide such increased amounts and ongoing compliance with financial covenants. Loans under the PJI Revolving Facility accrue interest at a per annum rate equal to, at the Company’s election, either a LIBOR rate plus a margin ranging from 1.25% to 2.00% or a base rate (generally determined according to the greater of a prime rate, federal funds rate plus 0.50%, or a LIBOR rate plus 1.00%) plus a margin ranging from 0.25% to 1.00%. In each case, the actual margin is determined according to a ratio of the Company’s total indebtedness to earnings before interest, taxes, depreciation, and amortization (“EBITDA”) for the then most recently ended four quarter period (the “Leverage Ratio”). An unused commitment fee ranging from 18 to 30 basis points per annum, determined according to the Leverage Ratio, applies to the unutilized commitments under the PJI Revolving Facility. Loans outstanding under the PJI Revolving Facility may be prepaid at any time without premium or penalty, subject to customary breakage costs in the case of borrowings for which a LIBOR rate election is in effect. The Amended Credit Agreement also contain provisions specifying alternative interest rate calculations to be used at such time as LIBOR ceases to be available as a benchmark for establishing the interest rate on floating interest rate borrowings. The Amended Credit Agreement contains customary affirmative and negative covenants that, among other things, require customary reporting obligations, and restrict, subject to certain exceptions, the incurrence of additional indebtedness and liens, the consummation of certain mergers, consolidations, sales of assets and similar transactions, the making of investments, equity distributions and other restricted payments, and transactions with affiliates. In addition, the Company will be subject to the following financial covenants: (1) a maximum Leverage Ratio of 5.25 to 1.00, subject to the Company’s election to increase the maximum Leverage Ratio by 0.50 to 1.00 in connection with material acquisitions if the Company satisfies certain requirements, and (2) a minimum interest coverage ratio defined as EBITDA plus consolidated rental expense to consolidated interest expense plus consolidated rental expense of 2.00 to 1.00. We were in compliance with these financial covenants at March 27, 2022. Obligations under the Amended Credit Agreement are guaranteed by certain direct and indirect material domestic subsidiaries of the Company (the “Guarantors”) and are secured by a security interest in substantially all of the capital stock and equity interests of the Company’s and the Guarantors’ domestic and first tier material foreign subsidiaries. The Amended Credit Agreement contains customary events of default including, among other things, payment defaults, breach of covenants, cross acceleration to material indebtedness, bankruptcy-related defaults, judgment defaults, and the occurrence of certain change of control events. The occurrence of an event of default may result in the termination of the PJI Revolving Facility, acceleration of repayment obligations and the exercise of remedies by the Lenders with respect to the Guarantors. PJMF Revolving Facility PJMF has a $20.0 million revolving line of credit (the “PJMF Revolving Facility”) pursuant to a Revolving Loan Agreement, dated September 30, 2015 with U.S. Bank National Association, as lender. The PJMF Revolving Facility is secured by substantially all assets of PJMF. The PJMF Revolving Facility matures on September 30, 2022. The borrowings under the PJMF Revolving Facility accrue interest at a variable rate of the one-month LIBOR plus 1.75% . There was no debt outstanding under the PJMF Revolving Facility as of March 27, 2022 or December 26, 2021. The PJMF operating results and the related debt outstanding do not impact the financial covenants under the Amended Credit Agreement. Derivative Financial Instruments As of March 26, 2022, we have the following interest rate swap agreements with a total notional value of $350.0 million: Effective Dates Floating Rate Debt Fixed Rates April 30, 2018 through April 30, 2023 $ 55 million 2.33 % April 30, 2018 through April 30, 2023 $ 35 million 2.36 % April 30, 2018 through April 30, 2023 $ 35 million 2.34 % January 30, 2018 through August 30, 2022 $ 100 million 1.99 % January 30, 2018 through August 30, 2022 $ 75 million 1.99 % January 30, 2018 through August 30, 2022 $ 50 million 2.00 % Our interest rate swaps were de-designated as cash flow hedges following the issuance of the Notes. For these de-designated hedges, the portion of gains or losses on the derivative instruments previously recognized in accumulated other comprehensive loss (“AOCL”) will be reclassified into earnings as adjustments to interest expense on a straight-line basis over the remaining life of the originally hedged transactions. The following table provides information on the location and amounts of our swaps in the accompanying condensed consolidated financial statements (in thousands): Interest Rate Swap Derivatives Fair Value Fair Value March 27, December 26, Balance Sheet Location 2022 2021 Other current and long-term liabilities $ 1,528 $ 5,536 The effect of derivative instruments on the accompanying condensed consolidated financial statements is as follows (in thousands): Location of (Loss) Amount of (Loss) Derivatives - Amount of Gain or or Gain or Gain Total Net Interest Expense Cash Flow (Loss) Recognized Reclassified from Reclassified from on Condensed Hedging in AOCL AOCL into AOCL into Consolidated Statements Relationships on Derivative Income Income of Operations Interest rate swaps for the three months ended: March 27, 2022 $ 1,318 Interest expense $ 535 $ (4,264) March 28, 2021 $ 1,382 Interest expense $ (1,709) $ (3,647) Interest paid, including payments made or received under the swaps, was $10.1 million and $3.4 million for the three months ended March 27, 2022 and March 28, 2021, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 27, 2022 | |
Commitments and Contingencies | |
Commitments and Contingencies | 9. Commitments and Contingencies Litigation The Company is involved in a number of lawsuits, claims, investigations and proceedings, including those specifically identified below, consisting of intellectual property, employment, consumer, commercial and other matters arising in the ordinary course of business. In accordance with ASC 450, “ Contingencies In re Papa John’s Employee & Franchise Employee Antitrust Litigation Durling et al v. Papa John’s International, Inc. , |
Divestitures and Impairment
Divestitures and Impairment | 3 Months Ended |
Mar. 27, 2022 | |
Divestitures and Impairment | |
Divestitures and Impairment | 10. Divestitures and Impairment Assets and Liabilities Held for Sale On March 28, 2022, we refranchised our 51% ownership interest in a 90-restaurant consolidated joint venture in Texas for $14.0 million, net of transaction costs. The assets and liabilities associated with the joint venture are classified as held for sale in the Condensed Consolidated Balance Sheet as of March 27, 2022. March 27, 2022 Current assets $ 1,632 Property and equipment, net 7,030 Operating lease right-of-use assets 8,924 Goodwill 9,908 Other assets 191 Loss on impairment (8,412) Total assets held for sale $ 19,273 Accounts payable, taxes payable, accrued expenses and other $ 1,632 Current deferred revenue 1,930 Current operating lease liabilities 2,338 Long-term operating lease liabilities 7,097 Other long-term liabilities 250 Total liabilities held for sale $ 13,247 Upon reclassification of assets and liabilities held for sale, we recorded a one-time, non-cash charge of $8.4 million which reflects net sale proceeds of $14.0 million, the noncontrolling interest of $4.2 million, and the recognition of an unearned royalty stream of $12.2 million to be recognized as revenue over the 10-year term of the franchise agreement executed concurrent with the disposition in accordance with ASC 810, “ Consolidation.” Impairment of Reacquired Master Franchise Rights In the first quarter of 2022, the Company recorded an impairment of $2.8 million for reacquired franchise rights due to the financial and operational impact of the conflict in Ukraine and government actions taken in response to that conflict, including, but not limited to, international sanctions. The reacquired franchise rights were previously acquired from a former master franchisee and capitalized by the Company. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 27, 2022 | |
Segment Information | |
Segment Information | 11. Segment Information We have four reportable segments: domestic Company-owned restaurants, North America franchising, North America commissaries, and international operations. The domestic Company-owned restaurant segment consists of the operations of all domestic (“domestic” is defined as contiguous United States) Company-owned restaurants and derives its revenues principally from retail sales of pizza, Papadias, which are flatbread-style sandwiches, and side items, including breadsticks, cheesesticks, chicken poppers and wings, dessert items and canned or bottled beverages. The North America commissary segment consists of the operations of our regional dough production and product distribution centers and derives its revenues principally from the sale and distribution of food and paper products to domestic Company-owned and franchised restaurants in the United States and Canada. The North America franchising segment consists of our franchise sales and support activities and derives its revenues from sales of franchise and development rights and collection of royalties from our franchisees located in the United States and Canada. The international segment principally consists of distribution sales to franchised Papa John’s restaurants located in the United Kingdom and our franchise sales and support activities, which derive revenues from sales of franchise and development rights and the collection of royalties from our international franchisees. International franchisees are defined as all franchise operations outside of the United States and Canada. All other business units that do not meet the quantitative thresholds for determining reportable segments, which are not operating segments, we refer to as “all other,” which consists of operations that derive revenues from the sale, principally to Company-owned and franchised restaurants, of printing and promotional items, franchise contributions to marketing funds and information systems and related services used in restaurant operations, including our point-of-sale system, online and other technology-based ordering platforms. Generally, we evaluate performance and allocate resources based on operating income and intercompany eliminations. Certain administrative and capital costs are allocated to segments based upon predetermined rates or estimated resource usage. We account for intercompany sales and transfers as if the sales or transfers were to third parties and eliminate the activity in consolidation. Our reportable segments are business units that provide different products or services. Separate management of each segment is required because each business unit is subject to different operational issues and strategies. No single external customer accounted for 10% or more of our consolidated revenues. Our segment information is as follows: Three Months Ended March 27, March 28, (In thousands) 2022 2021 Revenues: Domestic Company-owned restaurants $ 198,765 $ 197,234 North America franchising 34,268 32,715 North America commissaries 209,679 184,878 International 42,707 42,604 All others 57,273 54,315 Total revenues $ 542,692 $ 511,746 Intersegment revenues: North America franchising $ 1,053 $ 1,060 North America commissaries 58,507 52,070 All others 19,379 19,148 Total intersegment revenues $ 78,939 $ 72,278 Operating income: Domestic Company-owned restaurants (1) $ 1,989 $ 15,324 North America franchising 32,137 30,443 North America commissaries 9,334 9,713 International (2) 4,455 8,364 All others 3,719 6,118 Unallocated corporate expenses (3) (37,111) (23,162) Elimination of intersegment (profits) losses (88) 62 Total operating income $ 14,435 $ 46,862 Property and equipment, net: Domestic Company-owned restaurants $ 220,357 North America commissaries 149,503 International 14,857 All others 112,037 Unallocated corporate assets 234,115 Accumulated depreciation and amortization (514,616) Total property and equipment, net $ 216,253 (1) Includes a one-time, non-cash charge of $8.4 million associated with the refranchising of the Company’s ownership interest in a 90-restaurant joint venture, recorded as Refranchising and impairment loss. See Note 10 for additional information. (2) Includes $3.5 million of one-time, non-cash reserves for certain accounts receivable and impairments of reacquired franchise rights in the first quarter of 2022. See Notes 2 and 10 for additional information. (3) For the first quarter of 2022, Unallocated corporate expenses include $13.9 million of one-time, non-cash reserves of certain notes receivable and $5.0 million for the Legal Settlement. For the first quarter of 2021, Unallocated corporate expense includes $3.9 million of reorganization costs. See Notes 2 and 9 for additional information. Disaggregation of Revenue In the following tables, revenues are disaggregated by major product/service line. The tables also include a reconciliation of the disaggregated revenues by the reportable segment (in thousands): Reportable Segments Three Months Ended March 27, 2022 Major Products/Services Lines Domestic Company-owned restaurants North America franchising North America commissaries International All others Total Company-owned restaurant sales $ 198,765 $ - $ - $ - $ - $ 198,765 Franchise royalties and fees - 35,321 - 13,435 - 48,756 Commissary sales - - 268,186 21,182 - 289,368 Other revenues - - - 8,090 76,652 84,742 Eliminations - (1,053) (58,507) - (19,379) (78,939) Total segment revenues $ 198,765 $ 34,268 $ 209,679 $ 42,707 $ 57,273 $ 542,692 International other revenues (1) - - - (8,090) 8,090 - Total revenues $ 198,765 $ 34,268 $ 209,679 $ 34,617 $ 65,363 $ 542,692 Reportable Segments Three Months Ended March 28, 2021 Major Products/Services Lines Domestic Company-owned restaurants North America franchising North America commissaries International All others Total Company-owned restaurant sales $ 197,234 $ - $ - $ - $ - $ 197,234 Franchise royalties and fees - 33,775 - 12,208 - 45,983 Commissary sales - - 236,948 22,399 - 259,347 Other revenues - - - 7,997 73,463 81,460 Eliminations - (1,060) (52,070) - (19,148) (72,278) Total segment revenues $ 197,234 $ 32,715 $ 184,878 $ 42,604 $ 54,315 $ 511,746 International other revenues (1) - - - (7,997) 7,997 - Total revenues $ 197,234 $ 32,715 $ 184,878 $ 34,607 $ 62,312 $ 511,746 (1) Other revenues as reported in the Condensed Consolidated Statements of Operations include $8.1 million and $8.0 million of revenue for the three months ended March 27, 2022 and March 28, 2021, respectively, that are part of the international reporting segment. These amounts include marketing fund contributions and sublease rental income from international franchisees in the United Kingdom that provide no significant contribution to operating income but must be reported on a gross basis under accounting requirements. The related expenses for these Other revenues are reported in Other expenses in the Condensed Consolidated Statements of Operations. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 27, 2022 | |
Related Party Transactions | |
Related Party Transactions | Note 12. Related Party Transactions Endorsement Agreement On April 10, 2022, the Company and PJMF entered into an Endorsement Agreement (the “Endorsement Agreement”), effective March 15, 2022, with ABG-Shaq, LLC (“ABG-Shaq”), an entity affiliated with Shaquille O’Neal, for the personal services of Mr. O’Neal. Mr. O’Neal is a non-independent director of the Company. The Endorsement Agreement replaces the previous Endorsement Agreement, effective March 15, 2019, by and between the Company, PJMF and ABG-Shaq, as amended (the “Prior Endorsement Agreement”) which expired by its terms on March 15, 2022. The terms of the Endorsement Agreement, which are detailed below, are substantially similar to the Prior Endorsement Agreement. Pursuant to the Endorsement Agreement, the Company and PJMF received the right and license to use Mr. O’Neal’s name, nickname, initials, autograph, voice, video or film portrayals, photograph, likeness and certain other intellectual property rights (individually and collectively, the “Personality Rights”), in each case, solely as approved by ABG-Shaq, in connection with the advertising, promotion and sale of Papa John’s-branded products. Mr. O’Neal will also provide brand ambassador services related to appearances, social media and public relations matters. The Endorsement Agreement also renewed the offering of the co-branded extra-large pizza product developed among the Company, PJMF and ABG-Shaq under the Prior Endorsement Agreement, and provides that one U.S. dollar for each unit of the co-branded pizza sold in the United States will be donated to The Papa John’s Foundation for Building Community and one Canadian dollar for each unit sold in Canada will be donated to a charity mutually agreed-upon between the parties. As consideration for the rights and services granted under the Endorsement Agreement, the Company and PJMF agreed to pay to ABG-Shaq aggregate cash payments of $5.625 million over the three years of the Endorsement Agreement. The Company and PJMF will also pay ABG-Shaq a royalty fee for the co-branded pizza product if the total amount of royalties in a given contract year (calculated as $0.20 per co-branded pizza sold) exceeds the contractual cash payment for that year, in which case the amount of the royalty payment will be the excess of the royalties over the cash payment amount. The Company and PJMF will also pay expenses related to the marketing and personal services provided by Mr. O’Neal. In addition, the Company agreed to grant 55,898 restricted stock units (the “RSUs”) to Mr. O’Neal (as agent of ABG) under the Company’s 2018 Omnibus Incentive Plan. The RSUs will vest into an equivalent number of shares of the Company’s common stock according to the following vesting schedule: ● 33% (18,632) of the RSUs will vest on April 12, 2023; ● 33% (18,632) of the RSUs will vest on March 15, 2024; and ● 33% (18,634) of the RSUs will vest on March 15, 2025. The initial term of the Endorsement Agreement ends on March 15, 2025, with an option for a one-year extension upon the parties’ mutual agreement. The Endorsement Agreement also includes customary exclusivity, termination and indemnification clauses. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 27, 2022 | |
Significant Accounting Policies | |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Significant items that are subject to such estimates and assumptions include allowance for credit losses on accounts and notes receivable, intangible assets, contract assets and contract liabilities, including the online customer loyalty program obligation and gift card breakage, right-of-use assets and lease liabilities, insurance reserves and tax reserves. Although management bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, actual results could significantly differ from these estimates. |
Variable Interest Entity | Variable Interest Entity Papa John’s domestic restaurants, both Company-owned and franchised, participate in Papa John’s Marketing Fund, Inc. (“PJMF”), a nonstock corporation designed to operate at break-even as it spends all annual contributions received from the system. PJMF collects a percentage of revenues from Company-owned and franchised restaurants in the United States for the purpose of designing and administering advertising and promotional programs. PJMF is a variable interest entity (“VIE”) that funds its operations with ongoing financial support and contributions from the domestic restaurants, of which approximately 80% are franchised (85% following the divestiture of the Company’s interest in one joint venture subsequent to the end of the first quarter that included 90 restaurants as discussed in Note 10) and does not have sufficient equity to fund its operations without these ongoing financial contributions. Based on an assessment of the governance structure and operating procedures of PJMF, the Company determined it has the power to control certain significant activities of PJMF, and therefore, is the primary beneficiary. The Company has consolidated PJMF in its financial results in accordance with Accounting Standards Codification (“ASC”) 810, “ Consolidations |
Noncontrolling Interests | Noncontrolling Interests Papa John’s has four joint venture arrangements in which there are noncontrolling interests held by third parties that include 188 restaurants at March 27, 2022 and March 28, 2021. Subsequent to the end of the first quarter, the Company divested its interest in one joint venture that included 90 restaurants. See Note 10 for additional information. Consolidated net income is required to be reported separately at amounts attributable to both the Company and the noncontrolling interests. Additionally, disclosures are required to clearly identify and distinguish between the interests of the Company and the interests of the noncontrolling owners, including a disclosure on the face of the Condensed Consolidated Statements of Operations of net income attributable to noncontrolling interests. Net income attributable to these joint ventures for the three months ended March 27, 2022 and March 28, 2021 was as follows (in thousands): Three Months Ended March 27, March 28, 2022 2021 Papa John’s International, Inc. $ 1,621 $ 2,349 Noncontrolling interests 933 1,400 Total net income $ 2,554 $ 3,749 The following summarizes the redemption feature, location and related accounting within the Condensed Consolidated Balance Sheets for these joint venture arrangements: Type of Joint Venture Arrangement Location within the Balance Sheets Recorded Value Joint ventures with no redemption feature Permanent equity Carrying value Joint ventures with option to require the Company to purchase the noncontrolling interest - not currently redeemable or redemption not probable Temporary equity Carrying value |
Deferred Income Tax Accounts and Tax Reserves | Deferred Income Tax Accounts and Tax Reserves We are subject to income taxes in the United States and several foreign jurisdictions. Significant judgment is required in determining Papa John’s provision for income taxes and the related assets and liabilities. The provision for income taxes includes income taxes paid, currently payable or receivable and those deferred. We use an estimated annual effective rate based on expected annual income to determine our quarterly provision for income taxes. The effective income tax rate includes the estimated domestic state effective income tax rate and applicable foreign income tax rates. The effective income tax rate is also impacted by various permanent items and credits, net of any related valuation allowances, and can vary based on changes in estimated annual income. Discrete items are recorded in the quarter in which they occur. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences reverse. Deferred tax assets are also recognized for the estimated future effects of tax attribute carryforwards (e.g., net operating losses, capital losses, and foreign tax credits). The effect on deferred taxes of changes in tax rates is recognized in the period in which the new tax rate is enacted. Valuation allowances are established when necessary on a jurisdictional basis to reduce deferred tax assets to the amounts we expect to realize. Tax authorities periodically audit the Company. We record reserves and related interest and penalties for identified exposures as income tax expense. We evaluate these issues on a quarterly basis to adjust for events, such as statute of limitations expirations, court or state rulings or audit settlements, which may impact our ultimate payment for such exposures. |
Fair Value Measurements and Disclosures | Fair Value Measurements and Disclosures The Company determines the fair value of financial assets and liabilities based on the price that would be received to sell the asset or paid to transfer the liability to a market participant. Certain assets and liabilities are measured at fair value on a recurring basis and are required to be classified and disclosed in one of the following three categories: ● Level 1: Quoted market prices in active markets for identical assets or liabilities. ● Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. ● Level 3: Unobservable inputs that are not corroborated by market data. Fair value is a market-based measurement, not an entity-specific measurement. Considerable judgment is required to interpret market data to estimate fair value; accordingly, the fair values presented do not necessarily indicate what the Company or its debtholders could realize in a current market exchange. Our financial assets and liabilities that were measured at fair value on a recurring basis as of March 27, 2022 and December 26, 2021 are as follows: Carrying Fair Value Measurements (in thousands) Value Level 1 Level 2 Level 3 March 27, 2022 Financial assets: Cash surrender value of life insurance policies (a) $ 34,205 $ 34,205 $ — $ — Financial liabilities: Interest rate swaps (b) $ 1,528 $ — $ 1,528 $ — December 26, 2021 Financial assets: Cash surrender value of life insurance policies (a) $ 41,904 $ 41,904 $ — $ — Financial liabilities: Interest rate swaps (b) $ 5,536 $ — $ 5,536 $ — (a) Represents life insurance policies held in our non-qualified deferred compensation plan. (b) The fair value of our interest rate swaps is based on the sum of all future net present value cash flows. The future cash flows are derived based on the terms of our interest rate swaps, as well as considering published discount factors, and projected London Interbank Offered Rates (“LIBOR”). The fair value of certain assets and liabilities approximates carrying value because of the short-term nature of the accounts, including cash and cash equivalents, accounts receivable, net of allowances, and accounts payable. The carrying value of notes receivable, net of allowances, also approximates fair value. The Company’s revolving credit facilities under its credit agreement approximate carrying value due to its variable market-based interest rate. The Company’s 3.875%senior notes are classified as a Level 2 fair value measurement since the Company estimates the fair value by using recent trading transactions, and has the following estimated fair values and carrying values (excluding the impact of unamortized debt issuance costs) as of March 27, 2022 and December 26, 2021, respectively: March 27, 2022 December 26, 2021 Carrying Fair Carrying Fair (in thousands) Value Value Value Value 3.875% Senior Notes $ 400,000 $ 362,000 $ 400,000 $ 396,000 |
Allowance for Credit Losses | Allowance for Credit Losses Estimates of expected credit losses, even if remote, are based upon historical account write-off trends, facts about the current financial condition of the debtor, forecasts of future operating results based upon current trends of select operating metrics, and macroeconomic factors. Credit quality is monitored through the timing of payments compared to the prescribed payment terms and known facts regarding the financial condition of the franchisee or customer. Account and note balances are charged off against the allowance after recovery efforts have ceased. The following table summarizes changes in our allowances for credit losses for accounts receivable and notes receivable: (in thousands) Accounts Receivable Notes Receivable Balance at December 26, 2021 $ 2,364 $ 1,500 Current period provision for expected credit losses (1) 2,613 12,560 Write-offs charged against the allowance (126) — Recoveries collected — (6) Balance at March 27, 2022 $ 4,851 $ 14,054 (1) The Company recorded $14.6 million of one -time, non-cash reserves for certain accounts receivable and notes receivable primarily associated with a master franchisee with operations principally in Russia. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 27, 2022 | |
Significant Accounting Policies | |
Schedule of net income attributable to Joint Ventures | Net income attributable to these joint ventures for the three months ended March 27, 2022 and March 28, 2021 was as follows (in thousands): Three Months Ended March 27, March 28, 2022 2021 Papa John’s International, Inc. $ 1,621 $ 2,349 Noncontrolling interests 933 1,400 Total net income $ 2,554 $ 3,749 |
Schedule of Joint Ventures in Which There are Noncontrolling Interests | The following summarizes the redemption feature, location and related accounting within the Condensed Consolidated Balance Sheets for these joint venture arrangements: Type of Joint Venture Arrangement Location within the Balance Sheets Recorded Value Joint ventures with no redemption feature Permanent equity Carrying value Joint ventures with option to require the Company to purchase the noncontrolling interest - not currently redeemable or redemption not probable Temporary equity Carrying value |
Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis | Our financial assets and liabilities that were measured at fair value on a recurring basis as of March 27, 2022 and December 26, 2021 are as follows: Carrying Fair Value Measurements (in thousands) Value Level 1 Level 2 Level 3 March 27, 2022 Financial assets: Cash surrender value of life insurance policies (a) $ 34,205 $ 34,205 $ — $ — Financial liabilities: Interest rate swaps (b) $ 1,528 $ — $ 1,528 $ — December 26, 2021 Financial assets: Cash surrender value of life insurance policies (a) $ 41,904 $ 41,904 $ — $ — Financial liabilities: Interest rate swaps (b) $ 5,536 $ — $ 5,536 $ — (a) Represents life insurance policies held in our non-qualified deferred compensation plan. (b) The fair value of our interest rate swaps is based on the sum of all future net present value cash flows. The future cash flows are derived based on the terms of our interest rate swaps, as well as considering published discount factors, and projected London Interbank Offered Rates (“LIBOR”). The fair value of certain assets and liabilities approximates carrying value because of the short-term nature of the accounts, including cash and cash equivalents, accounts receivable, net of allowances, and accounts payable. The carrying value of notes receivable, net of allowances, also approximates fair value. The Company’s revolving credit facilities under its credit agreement approximate carrying value due to its variable market-based interest rate. The Company’s 3.875%senior notes are classified as a Level 2 fair value measurement since the Company estimates the fair value by using recent trading transactions, and has the following estimated fair values and carrying values (excluding the impact of unamortized debt issuance costs) as of March 27, 2022 and December 26, 2021, respectively: March 27, 2022 December 26, 2021 Carrying Fair Carrying Fair (in thousands) Value Value Value Value 3.875% Senior Notes $ 400,000 $ 362,000 $ 400,000 $ 396,000 |
Schedule rollforward of the allowance for credit losses for accounts receivable, notes receivable and other assets | (in thousands) Accounts Receivable Notes Receivable Balance at December 26, 2021 $ 2,364 $ 1,500 Current period provision for expected credit losses (1) 2,613 12,560 Write-offs charged against the allowance (126) — Recoveries collected — (6) Balance at March 27, 2022 $ 4,851 $ 14,054 (1) The Company recorded $14.6 million of one -time, non-cash reserves for certain accounts receivable and notes receivable primarily associated with a master franchisee with operations principally in Russia. |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 27, 2022 | |
Leases | |
Schedule of supplemental cash flow information | Supplemental cash flow information related to leases for the periods reported is as follows: Three Months Ended (in thousands) March 27, 2022 March 28, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 262 $ 278 Financing cash flows from finance leases 1,241 1,059 Operating cash flows from operating leases (a) 9,612 9,483 Right-of-use assets obtained in exchange for new finance lease liabilities 569 7,014 Right-of-use assets obtained in exchange for new operating lease liabilities (b) 20,801 28,428 Cash received from sublease income 3,092 2,987 (a) Included within the change in Other assets and liabilities within the Condensed Consolidated Statements of Cash Flows offset by non-cash operating lease right-of-use asset amortization and lease liability accretion. (b) Includes right-of-use assets of approximately |
Papa John's Marketing Fund, I_2
Papa John's Marketing Fund, Inc. (Tables) | 3 Months Ended |
Mar. 27, 2022 | |
Papa John's Marketing Fund, Inc. | |
Schedule of Assets and Liabilities of PJMF | Assets and liabilities of PJMF, which are restricted in their use, included in the Condensed Consolidated Balance Sheets were as follows (in thousands): March 27, December 26, 2022 2021 Assets Current assets: Cash and cash equivalents $ 24,136 $ 24,481 Accounts receivable, net 13,078 14,150 Income tax receivable 44 300 Prepaid expenses and other current assets 2,148 1,718 Total current assets 39,406 40,649 Deferred income taxes 604 614 Total assets $ 40,010 $ 41,263 Liabilities Current liabilities: Accounts payable $ 2,868 $ 140 Income and other taxes payable 2 2 Accrued expenses and other current liabilities 35,131 40,154 Current deferred revenue 4,320 4,317 Total current liabilities 42,321 44,613 Deferred revenue 1,399 2,478 Total liabilities $ 43,720 $ 47,091 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 27, 2022 | |
Revenue Recognition | |
Schedule of information about contract liabilities | The following table includes a breakout of contract liability balances (in thousands): Contract Liabilities March 27, 2022 December 26, 2021 Change Franchise fees and unredeemed gift card liabilities $ 18,731 $ 20,410 $ (1,679) Customer loyalty program obligations 13,299 15,136 (1,837) Total contract liabilities $ 32,030 $ 35,546 $ (3,516) |
Schedule of estimated revenue expected to be recognized in the future | The following table (in thousands) includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied at the end of the reporting period. Performance Obligations by Period Less than 1 Year 1-2 Years 2-3 Years 3-4 Years 4-5 Years Thereafter Total Franchise fees $ 2,011 $ 1,783 $ 1,601 $ 1,390 $ 1,127 $ 2,134 $ 10,046 |
Common Stock (Tables)
Common Stock (Tables) | 3 Months Ended |
Mar. 27, 2022 | |
Common Stock. | |
Summary of repurchase activity | Maximum Dollar Total Average Aggregate Value of Shares Number Price Cost of that May Yet Be (in thousands, except average price per share) of Shares Paid per Shares Purchased Under the Three Months Ended Purchased Share Purchased Plans or Programs March 27, 2022 301 $ 108.76 $ 32,709 $ 392,091 March 28, 2021 15 $ 84.63 $ 1,267 $ 71,031 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 27, 2022 | |
Earnings Per Share | |
Schedule of Earnings (Loss) Per Share, Basic and Diluted | The calculations of basic and diluted earnings per common share are as follows: Three Months Ended March 27, March 28, 2022 2021 Basic earnings per common share (in thousands, except per share data) Net income attributable to the Company $ 10,494 $ 33,883 Dividends paid to participating securities (60) (3,527) Net income attributable to participating securities — (3,243) Net income attributable to common shareholders $ 10,434 $ 27,113 Basic weighted average common shares outstanding 35,927 32,756 Basic earnings per common share $ 0.29 $ 0.83 Diluted earnings per common share (in thousands, except per share data) Net income attributable to common shareholders $ 10,434 $ 27,113 Weighted average common shares outstanding 35,927 32,756 Dilutive effect of outstanding equity awards (a) 309 334 Diluted weighted average common shares outstanding (b) 36,236 33,090 Diluted earnings per common share $ 0.29 $ 0.82 (a) Excludes 21,000 and 18,000 equity awards for the three months ended March 27, 2022 and March 28, 2021, respectively, as the effect of including such awards would have been anti-dilutive. (b) The Company had 252,500 shares of Series B Preferred Stock outstanding at March 28, 2021 (none at March 27, 2022). For the fully diluted calculation, the Series B Preferred stock dividends were added back to net income attributable to common shareholders. The Company then applied the if-converted method to calculate dilution on the Series B Preferred Stock, which resulted in 5.0 million additional common shares for March 28, 2021. This calculation was anti-dilutive and as such was excluded. |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 27, 2022 | |
Debt | |
Schedule of long-term debt, net | Long-term debt, net, consists of the following (in thousands): March 27, December 26, 2022 2021 Senior notes $ 400,000 $ 400,000 Revolving facilities 137,000 90,000 Outstanding debt $ 537,000 $ 490,000 Unamortized debt issuance costs (8,912) (9,270) Total long-term debt, net $ 528,088 $ 480,730 |
Schedule of Interest Rate Swap Agreements | Effective Dates Floating Rate Debt Fixed Rates April 30, 2018 through April 30, 2023 $ 55 million 2.33 % April 30, 2018 through April 30, 2023 $ 35 million 2.36 % April 30, 2018 through April 30, 2023 $ 35 million 2.34 % January 30, 2018 through August 30, 2022 $ 100 million 1.99 % January 30, 2018 through August 30, 2022 $ 75 million 1.99 % January 30, 2018 through August 30, 2022 $ 50 million 2.00 % |
Schedule of Location and Amounts of Swaps in the Accompanying Consolidated Financial Statements | The following table provides information on the location and amounts of our swaps in the accompanying condensed consolidated financial statements (in thousands): Interest Rate Swap Derivatives Fair Value Fair Value March 27, December 26, Balance Sheet Location 2022 2021 Other current and long-term liabilities $ 1,528 $ 5,536 |
Schedule of Effect of Derivative Instruments on the Accompanying Consolidated Financial Statements | The effect of derivative instruments on the accompanying condensed consolidated financial statements is as follows (in thousands): Location of (Loss) Amount of (Loss) Derivatives - Amount of Gain or or Gain or Gain Total Net Interest Expense Cash Flow (Loss) Recognized Reclassified from Reclassified from on Condensed Hedging in AOCL AOCL into AOCL into Consolidated Statements Relationships on Derivative Income Income of Operations Interest rate swaps for the three months ended: March 27, 2022 $ 1,318 Interest expense $ 535 $ (4,264) March 28, 2021 $ 1,382 Interest expense $ (1,709) $ (3,647) |
Divestitures and Impairment (Ta
Divestitures and Impairment (Tables) | 3 Months Ended |
Mar. 27, 2022 | |
Divestitures and Impairment | |
Summary of assets and liabilities classified as held for sale | March 27, 2022 Current assets $ 1,632 Property and equipment, net 7,030 Operating lease right-of-use assets 8,924 Goodwill 9,908 Other assets 191 Loss on impairment (8,412) Total assets held for sale $ 19,273 Accounts payable, taxes payable, accrued expenses and other $ 1,632 Current deferred revenue 1,930 Current operating lease liabilities 2,338 Long-term operating lease liabilities 7,097 Other long-term liabilities 250 Total liabilities held for sale $ 13,247 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 27, 2022 | |
Segment Information | |
Schedule of Segment Reporting Information, by Segment | Three Months Ended March 27, March 28, (In thousands) 2022 2021 Revenues: Domestic Company-owned restaurants $ 198,765 $ 197,234 North America franchising 34,268 32,715 North America commissaries 209,679 184,878 International 42,707 42,604 All others 57,273 54,315 Total revenues $ 542,692 $ 511,746 Intersegment revenues: North America franchising $ 1,053 $ 1,060 North America commissaries 58,507 52,070 All others 19,379 19,148 Total intersegment revenues $ 78,939 $ 72,278 Operating income: Domestic Company-owned restaurants (1) $ 1,989 $ 15,324 North America franchising 32,137 30,443 North America commissaries 9,334 9,713 International (2) 4,455 8,364 All others 3,719 6,118 Unallocated corporate expenses (3) (37,111) (23,162) Elimination of intersegment (profits) losses (88) 62 Total operating income $ 14,435 $ 46,862 Property and equipment, net: Domestic Company-owned restaurants $ 220,357 North America commissaries 149,503 International 14,857 All others 112,037 Unallocated corporate assets 234,115 Accumulated depreciation and amortization (514,616) Total property and equipment, net $ 216,253 (1) Includes a one-time, non-cash charge of $8.4 million associated with the refranchising of the Company’s ownership interest in a 90-restaurant joint venture, recorded as Refranchising and impairment loss. See Note 10 for additional information. (2) Includes $3.5 million of one-time, non-cash reserves for certain accounts receivable and impairments of reacquired franchise rights in the first quarter of 2022. See Notes 2 and 10 for additional information. (3) For the first quarter of 2022, Unallocated corporate expenses include $13.9 million of one-time, non-cash reserves of certain notes receivable and $5.0 million for the Legal Settlement. For the first quarter of 2021, Unallocated corporate expense includes $3.9 million of reorganization costs. See Notes 2 and 9 for additional information. |
Schedule of revenue disaggregated by major product line | In the following tables, revenues are disaggregated by major product/service line. The tables also include a reconciliation of the disaggregated revenues by the reportable segment (in thousands): Reportable Segments Three Months Ended March 27, 2022 Major Products/Services Lines Domestic Company-owned restaurants North America franchising North America commissaries International All others Total Company-owned restaurant sales $ 198,765 $ - $ - $ - $ - $ 198,765 Franchise royalties and fees - 35,321 - 13,435 - 48,756 Commissary sales - - 268,186 21,182 - 289,368 Other revenues - - - 8,090 76,652 84,742 Eliminations - (1,053) (58,507) - (19,379) (78,939) Total segment revenues $ 198,765 $ 34,268 $ 209,679 $ 42,707 $ 57,273 $ 542,692 International other revenues (1) - - - (8,090) 8,090 - Total revenues $ 198,765 $ 34,268 $ 209,679 $ 34,617 $ 65,363 $ 542,692 Reportable Segments Three Months Ended March 28, 2021 Major Products/Services Lines Domestic Company-owned restaurants North America franchising North America commissaries International All others Total Company-owned restaurant sales $ 197,234 $ - $ - $ - $ - $ 197,234 Franchise royalties and fees - 33,775 - 12,208 - 45,983 Commissary sales - - 236,948 22,399 - 259,347 Other revenues - - - 7,997 73,463 81,460 Eliminations - (1,060) (52,070) - (19,148) (72,278) Total segment revenues $ 197,234 $ 32,715 $ 184,878 $ 42,604 $ 54,315 $ 511,746 International other revenues (1) - - - (7,997) 7,997 - Total revenues $ 197,234 $ 32,715 $ 184,878 $ 34,607 $ 62,312 $ 511,746 (1) Other revenues as reported in the Condensed Consolidated Statements of Operations include $8.1 million and $8.0 million of revenue for the three months ended March 27, 2022 and March 28, 2021, respectively, that are part of the international reporting segment. These amounts include marketing fund contributions and sublease rental income from international franchisees in the United Kingdom that provide no significant contribution to operating income but must be reported on a gross basis under accounting requirements. The related expenses for these Other revenues are reported in Other expenses in the Condensed Consolidated Statements of Operations. |
Significant Accounting Polici_4
Significant Accounting Policies - Noncontrolling Interest and Joint Ventures (Details) $ in Thousands | Mar. 28, 2022entityrestaurant | Mar. 27, 2022USD ($)entityrestaurant | Mar. 28, 2021USD ($)entityrestaurant |
Noncontrolling Interests | |||
Percentage of domestic restaurants franchised | 80.00% | ||
Number of Joint Ventures Having Noncontrolling Interests | entity | 4 | 4 | |
Income Amounts Attributable to Noncontrolling Interest, Disclosures | |||
Net income attributable to the Company | $ 10,494 | $ 33,883 | |
Subsequent events | |||
Noncontrolling Interests | |||
Number of joint ventures divested | entity | 1 | ||
Joint ventures | |||
Noncontrolling Interests | |||
Number of Restaurants | restaurant | 188 | 188 | |
Income Amounts Attributable to Noncontrolling Interest, Disclosures | |||
Papa John's International, Inc. | $ 1,621 | $ 2,349 | |
Noncontrolling interests | 933 | 1,400 | |
Net income attributable to the Company | $ 2,554 | $ 3,749 | |
Joint ventures | Subsequent events | |||
Noncontrolling Interests | |||
Percentage of franchised business units divested | 85.00% | ||
Number of Restaurants | restaurant | 90 |
Significant Accounting Polici_5
Significant Accounting Policies - Fair Value Measurements (Details) - USD ($) $ in Thousands | Mar. 27, 2022 | Dec. 26, 2021 | Sep. 14, 2021 |
Carrying Value | |||
Measurement of financial assets and liabilities at fair value on a recurring basis | |||
Cash surrender value of life insurance policies | $ 34,205 | $ 41,904 | |
Interest rate swap liabilities | $ 1,528 | $ 5,536 | |
Notes | |||
Measurement of financial assets and liabilities at fair value on a recurring basis | |||
Fixed interest rate (as a percent) | 3.875% | 3.875% | 3.875% |
Notes | Carrying Value | |||
Measurement of financial assets and liabilities at fair value on a recurring basis | |||
3.875% Fixed Rate Senior Notes | $ 400,000 | $ 400,000 | |
Measured on Recurring Basis | Level 1 | |||
Measurement of financial assets and liabilities at fair value on a recurring basis | |||
Cash surrender value of life insurance policies | 34,205 | 41,904 | |
Measured on Recurring Basis | Level 2 | |||
Measurement of financial assets and liabilities at fair value on a recurring basis | |||
Interest rate swap liabilities | 1,528 | 5,536 | |
Measured on Recurring Basis | Notes | Level 2 | |||
Measurement of financial assets and liabilities at fair value on a recurring basis | |||
3.875% Fixed Rate Senior Notes | $ 362,000 | $ 396,000 |
Significant Accounting Polici_6
Significant Accounting Policies - Schedule rollforward of the allowance for credit losses for accounts receivable, notes receivable and other assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 27, 2022 | Mar. 28, 2021 | |
Allowance for Credit Loss | ||
Current period provision for expected credit losses | $ 15,167 | $ (1,098) |
Allowance for Credit Losses | ||
Non-cash impairment | 11,160 | |
Accounts Receivable | ||
Allowance for Credit Loss | ||
Balance at beginning of period | 2,364 | |
Current period provision for expected credit losses | 2,613 | |
Write-offs charged against the allowance | (126) | |
Balance at end of period | 4,851 | |
Allowance for Credit Losses | ||
Non-cash impairment | 14,600 | |
Notes Receivable | ||
Allowance for Credit Losses | ||
Balance at beginning of period | 1,500 | |
Current period provision for expected credit losses | 12,560 | |
Recoveries collected | (6) | |
Balance at end of period | $ 14,054 |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments, Lessor Operating Leases, and Lease Guarantees (Details) $ in Millions | Mar. 28, 2022USD ($)restaurantlease | Mar. 27, 2022USD ($)itemrestaurantlease | Mar. 28, 2021USD ($) |
Leases | |||
sublease income | $ 3 | $ 2.8 | |
Number of stores available to be refranchised | item | 90 | ||
Number of domestic leases for which the Company is contingently liable | lease | 65 | ||
Estimated maximum amount of undiscounted payments in the event of nonpayment by primary lessees | $ 10.8 | ||
Held for sale | Joint ventures | Subsequent events | |||
Leases | |||
Number of stores available to be refranchised | restaurant | 90 | ||
Ownership percentage | 51.00% | ||
Number of domestic leases for which the Company is contingently liable | lease | 12 | ||
Estimated maximum amount of undiscounted payments in the event of nonpayment by primary lessees | $ 1.6 | ||
United Kingdom franchise-owned restaurants | |||
Leases | |||
Number of units leased and subleased | restaurant | 430 | ||
Initial lease terms on franchised sites | 15 years |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 27, 2022 | Mar. 28, 2021 | |
Leases | ||
Operating cash flows from finance leases | $ 262 | $ 278 |
Financing cash flows from finance leases | 1,241 | 1,059 |
Operating cash flows from operating leases | 9,612 | 9,483 |
Right-of-use assets obtained in exchange for new finance lease liabilities | 569 | 7,014 |
Right-of-use assets obtained in exchange for new operating lease liabilities | 20,801 | 28,428 |
Cash received from sublease income | $ 3,092 | 2,987 |
Corporate Headquarters Atlanta, Georgia | ||
Leases | ||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 14,500 |
Papa John's Marketing Fund, I_3
Papa John's Marketing Fund, Inc. (Details) - USD ($) $ in Thousands | Mar. 27, 2022 | Dec. 26, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 80,669 | $ 70,610 |
Accounts receivable, net | 81,229 | 81,370 |
Income tax receivable | 10,537 | 9,386 |
Prepaid expenses and other current assets | 46,461 | 46,310 |
Total current assets | 286,269 | 255,009 |
Deferred income taxes | 6,535 | 5,156 |
Total assets | 885,626 | 885,704 |
Current liabilities: | ||
Accounts payable | 35,434 | 28,092 |
Income and other taxes payable | 27,973 | 19,996 |
Accrued expenses and other current liabilities | 156,203 | 190,116 |
Current deferred revenue | 19,649 | 21,700 |
Total current liabilities | 278,634 | 287,424 |
Deferred revenue | 12,381 | 13,846 |
Total liabilities | 1,088,747 | 1,052,664 |
Papa John's Marketing Fund Inc. | ||
Current assets: | ||
Cash and cash equivalents | 24,136 | 24,481 |
Accounts receivable, net | 13,078 | 14,150 |
Income tax receivable | 44 | 300 |
Prepaid expenses and other current assets | 2,148 | 1,718 |
Total current assets | 39,406 | 40,649 |
Deferred income taxes | 604 | 614 |
Total assets | 40,010 | 41,263 |
Current liabilities: | ||
Accounts payable | 2,868 | 140 |
Income and other taxes payable | 2 | 2 |
Accrued expenses and other current liabilities | 35,131 | 40,154 |
Current deferred revenue | 4,320 | 4,317 |
Total current liabilities | 42,321 | 44,613 |
Deferred revenue | 1,399 | 2,478 |
Total liabilities | $ 43,720 | $ 47,091 |
Revenue Recognition - Contract
Revenue Recognition - Contract Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 27, 2022 | Mar. 28, 2021 | Dec. 26, 2021 | Dec. 27, 2020 | |
Revenue disaggregation | ||||
Cumulative effect of adoption of Topic 606 | $ (208,444) | $ (240,100) | $ (172,458) | $ (266,939) |
Revenue recognized related to deferred revenue and customer loyalty program | 9,300 | 9,100 | ||
Contract liabilities | 32,030 | 35,546 | ||
Change | (3,516) | |||
Contract assets | 5,600 | 5,800 | ||
Amortization expense related to contract assets | 800 | $ 800 | ||
Franchise fees and unredeemed gift card liabilities | ||||
Revenue disaggregation | ||||
Contract liabilities | 18,731 | 20,410 | ||
Change | (1,679) | |||
Customer loyalty program obligations | ||||
Revenue disaggregation | ||||
Contract liabilities | 13,299 | $ 15,136 | ||
Change | $ (1,837) |
Revenue Recognition - Transacti
Revenue Recognition - Transaction Price Allocated to Remaining Performance Obligations (Details) - USD ($) $ in Thousands | Mar. 27, 2022 | Dec. 26, 2021 |
Performance Obligations by Period | ||
Total deferred revenue | $ 32,030 | $ 35,546 |
Franchise royalties and fees | ||
Performance Obligations by Period | ||
Less than 1 Year | 2,011 | |
1-2 Years | 1,783 | |
2-3 Years | 1,601 | |
3-4 Years | 1,390 | |
4-5 Years | 1,127 | |
Thereafter | 2,134 | |
Total deferred revenue | 10,046 | |
Area development fees | ||
Performance Obligations by Period | ||
Total deferred revenue | 3,000 | |
Gift Card | ||
Performance Obligations by Period | ||
Total deferred revenue | $ 5,700 |
Common Stock - Shares Authorize
Common Stock - Shares Authorized and Outstanding (Details) - shares | Mar. 27, 2022 | Dec. 26, 2021 | Mar. 28, 2021 |
Authorized shares of preferred stock | 5,000,000 | 5,000,000 | |
Preferred stock shares issued | 0 | 0 | |
Preferred stock shares outstanding | 0 | 0 | |
Authorized shares of common stock | 100,000,000 | 100,000,000 | |
Common stock shares outstanding | 35,700,000 | 35,800,000 | |
Series B Preferred Stock | |||
Series B Convertible Preferred Stock, shares outstanding | 0 | 252,500 |
Common Stock - Share Repurchase
Common Stock - Share Repurchase Program (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | ||||
Apr. 29, 2022 | Mar. 27, 2022 | Mar. 28, 2021 | Dec. 26, 2021 | Oct. 28, 2021 | Nov. 04, 2020 | |
Share repurchase program | ||||||
Net (loss) income attributable to common shareholders | $ 10,434 | $ 27,113 | ||||
Stock repurchased during period, shares | 301,000 | 15,000 | ||||
Share repurchased during period, average cost per share | $ 108.76 | $ 84.63 | ||||
Stock repurchased during period, value | $ 32,709 | $ 1,267 | ||||
Stock repurchase program, remaining authorized amount | $ 392,091 | $ 71,031 | ||||
Preferred stock shares outstanding | 0 | 0 | ||||
Outstanding shares of common stock , net of repurchased stock | 35,700,000 | 35,800,000 | ||||
Common stock repurchase program | ||||||
Share repurchase program | ||||||
Stock repurchase program, authorized amount | $ 425,000 | $ 75,000 | ||||
Common stock repurchase program | Subsequent events | ||||||
Share repurchase program | ||||||
Stock repurchased during period, shares | 223,000 | |||||
Share repurchased during period, average cost per share | $ 102.97 | |||||
Stock repurchased during period, value | $ 23,000 | |||||
Stock repurchase program, remaining authorized amount | $ 369,100 |
Common Stock - Dividends (Detai
Common Stock - Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands | Apr. 26, 2022 | Mar. 27, 2022 | Mar. 28, 2021 |
Cash Dividend | |||
Total dividends | $ 12,600 | ||
Dividends paid to common shareholders | $ 12,608 | $ 7,404 | |
Quarterly dividend declared, per share (in dollars per share) | $ 0.35 | ||
Subsequent events | Forecast | |||
Cash Dividend | |||
Dividends paid to common shareholders | $ 12,600 | ||
Quarterly dividend declared, per share (in dollars per share) | $ 0.35 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 27, 2022 | Mar. 28, 2021 | |
Basic earnings (loss) per common share (in thousands, except per share data): | ||
Net income attributable to the Company | $ 10,494 | $ 33,883 |
Dividends paid to participating securities | (60) | (3,527) |
Net income attributable to participating securities | (3,243) | |
Net income attributable to common shareholders | $ 10,434 | $ 27,113 |
Basic weighted average common shares outstanding (in shares) | 35,927,000 | 32,756,000 |
Basic earnings per common share (in dollar per share) | $ 0.29 | $ 0.83 |
Diluted earnings (loss) per common share (in thousands, except per share data) | ||
Net income attributable to common shareholders | $ 10,434 | $ 27,113 |
Weighted average common shares outstanding | 35,927,000 | 32,756,000 |
Dilutive effect of outstanding equity awards | 309,000 | 334,000 |
Diluted weighted average common shares outstanding | 36,236,000 | 33,090,000 |
Diluted earnings (loss) per common share | $ 0.29 | $ 0.82 |
Weighted average antidilutive awards excluded from computation of earnings per share | 21,000 | 18,000 |
Series B Preferred Stock | ||
Diluted earnings (loss) per common share (in thousands, except per share data) | ||
Weighted average antidilutive awards excluded from computation of earnings per share | 5,000,000 | |
Series B Convertible Preferred Stock, shares outstanding | 0 | 252,500 |
Debt - Schedule of Long Term De
Debt - Schedule of Long Term Debt (Details) - USD ($) $ in Thousands | Mar. 27, 2022 | Dec. 26, 2021 |
Debt | ||
Outstanding debt | $ 537,000 | $ 490,000 |
Unamortized debt issuance costs | (8,912) | (9,270) |
Total long-term debt, net | 528,088 | 480,730 |
Revolving line of credit | ||
Debt | ||
Outstanding debt | 137,000 | 90,000 |
Notes | ||
Debt | ||
Outstanding debt | $ 400,000 | $ 400,000 |
Debt - Credit Agreements (Detai
Debt - Credit Agreements (Details) | Sep. 14, 2021USD ($) | Mar. 27, 2022USD ($)item | Mar. 28, 2021USD ($) | Dec. 26, 2021USD ($) | Sep. 26, 2021USD ($) | Dec. 27, 2020USD ($) |
Debt | ||||||
Outstanding debt | $ 537,000,000 | $ 490,000,000 | ||||
Debt issuance costs | 8,912,000 | 9,270,000 | ||||
Dividends paid to common shareholders | 12,608,000 | $ 7,404,000 | ||||
PJI Facilities | ||||||
Debt | ||||||
Line of credit facility, maximum borrowing capacity | $ 600,000,000 | |||||
Number of quarters in interest margin period | item | 4 | |||||
Line of credit facility, maximum borrowing capacity of foreign currencies | $ 50,000,000 | |||||
Additional amount that company has option to increase borrowing capacity | $ 500,000,000 | |||||
PJI Facilities | Minimum | ||||||
Debt | ||||||
Percentage of commitment fee on unused credit facility | 0.18% | |||||
PJI Facilities | Maximum | ||||||
Debt | ||||||
Percentage of commitment fee on unused credit facility | 0.30% | |||||
PJI Facilities | LIBOR | Minimum | ||||||
Debt | ||||||
Interest margin rate on debt | 1.25% | |||||
PJI Facilities | LIBOR | Maximum | ||||||
Debt | ||||||
Interest margin rate on debt | 2.00% | |||||
PJI Facilities | Base rate | Minimum | ||||||
Debt | ||||||
Interest margin rate on debt | 0.25% | |||||
PJI Facilities | Base rate | Maximum | ||||||
Debt | ||||||
Interest margin rate on debt | 1.00% | |||||
PJI Facilities | Federal funds rate | ||||||
Debt | ||||||
Interest margin rate on debt | 0.50% | |||||
PJI Facilities | London Interbank Offered Rate | ||||||
Debt | ||||||
Interest margin rate on debt | 1.00% | |||||
Amendment to Credit Agreement | Minimum | ||||||
Debt | ||||||
Interest coverage ratio | 2 | |||||
Amendment to Credit Agreement | Maximum | ||||||
Debt | ||||||
Leverage Ratio | 5.25 | |||||
Increase to maximum leverage ratio | 0.50 | |||||
PJMF Revolving Facility | ||||||
Debt | ||||||
Line of credit facility, maximum borrowing capacity | $ 20,000,000 | |||||
Outstanding debt | $ 0 | 0 | $ 0 | $ 0 | ||
PJMF Revolving Facility | One-month LIBOR | ||||||
Debt | ||||||
Interest margin rate on debt | 1.75% | |||||
Notes | ||||||
Debt | ||||||
Principal amount | $ 400,000,000 | |||||
Outstanding debt | $ 400,000,000 | $ 400,000,000 | ||||
Fixed interest rate | 3.875% | 3.875% | 3.875% | |||
Notes | Redemption at any time prior to September 15, 2024 | ||||||
Debt | ||||||
Redemption price percentage | 100.00% | |||||
Notes | Redemption upto 40% at any time prior to September 15,2024 | ||||||
Debt | ||||||
Redemption price percentage | 103.875% | |||||
Notes | Minimum | Redemptionat at any time on or after September 15, 2024 | ||||||
Debt | ||||||
Redemption price percentage | 0.97% | |||||
Notes | Maximum | Redemptionat at any time on or after September 15, 2024 | ||||||
Debt | ||||||
Redemption price percentage | 1.94% | |||||
Notes | Maximum | Redemption upto 40% at any time prior to September 15,2024 | ||||||
Debt | ||||||
Redemption percentage | 0.40 | |||||
Swingline loans | ||||||
Debt | ||||||
Line of credit facility, maximum borrowing capacity | $ 40,000,000 | |||||
Revolving line of credit | ||||||
Debt | ||||||
Outstanding debt | 137,000,000 | $ 90,000,000 | ||||
Letter of credit | ||||||
Debt | ||||||
Line of credit facility, maximum borrowing capacity | $ 80,000,000 |
Debt - Derivatives (Details)
Debt - Derivatives (Details) - USD ($) $ in Millions | Mar. 27, 2022 | Dec. 26, 2021 | Sep. 14, 2021 |
Interest rate swap, April 2018, 2.33% fixed | |||
Interest rate swaps | |||
Interest rate swap agreement, notional amount | $ 55 | ||
Interest rate swap agreement, fixed interest rate | 2.33% | ||
Interest rate swap, April 2018, 2.36% fixed | |||
Interest rate swaps | |||
Interest rate swap agreement, notional amount | $ 35 | ||
Interest rate swap agreement, fixed interest rate | 2.36% | ||
Interest rate swap, April 2018, 2.34% fixed | |||
Interest rate swaps | |||
Interest rate swap agreement, notional amount | $ 35 | ||
Interest rate swap agreement, fixed interest rate | 2.34% | ||
Interest rate swap, January 2018, 1.99% fixed, $100 million notional amount | |||
Interest rate swaps | |||
Interest rate swap agreement, notional amount | $ 100 | ||
Interest rate swap agreement, fixed interest rate | 1.99% | ||
Interest rate swap, January 2018, 1.99% fixed, $75 million notional amount | |||
Interest rate swaps | |||
Interest rate swap agreement, notional amount | $ 75 | ||
Interest rate swap agreement, fixed interest rate | 1.99% | ||
Interest rate swap, January 2018, 2.00% fixed, $50 Million notional amount | |||
Interest rate swaps | |||
Interest rate swap agreement, notional amount | $ 50 | ||
Interest rate swap agreement, fixed interest rate | 2.00% | ||
Interest rate swap | |||
Interest rate swaps | |||
Interest rate swap agreement, notional amount | $ 350 | ||
Notes | |||
Interest rate swaps | |||
Fixed interest rate | 3.875% | 3.875% | 3.875% |
Debt - Interest Rate Swaps (Det
Debt - Interest Rate Swaps (Details) - Interest rate swap - Other current and long-term Liabilities - USD ($) $ in Thousands | Mar. 27, 2022 | Dec. 26, 2021 |
Designated as a hedge | ||
Debt and Credit Arrangements | ||
Derivatives, fair value | $ 5,536 | |
Not designated as a hedge | ||
Debt and Credit Arrangements | ||
Derivatives, fair value | $ 1,528 |
Debt - Effect of Derivatives on
Debt - Effect of Derivatives on Financial Statements (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 27, 2022 | Mar. 28, 2021 | |
Debt and Credit Arrangements | ||
Total net interest expense on Condensed Consolidated Statements of Operations | $ (4,264) | $ (3,647) |
Interest paid, including payments made or received under the swaps | 10,100 | 3,400 |
Interest expense | Interest rate swap | ||
Debt and Credit Arrangements | ||
Amount of Gain or (Loss) Recognized in AOCL on Derivative | 1,318 | 1,382 |
Amount of Gain or (Loss) Reclassified from AOCL into Income | 535 | (1,709) |
Total net interest expense on Condensed Consolidated Statements of Operations | 4,264 | $ 3,647 |
Interest expense | Interest rate swap | Amount reclassified from AOCI | ||
Debt and Credit Arrangements | ||
Amount of Gain or (Loss) Reclassified from AOCL into Income | $ 535 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Apr. 14, 2022USD ($) | Mar. 27, 2022USD ($) | Oct. 29, 2018employee |
Pending Litigation | Durling et al v. Papa John's International, Inc. | |||
Loss Contingencies [Line Items] | |||
Approximate number of employees who opted into the class action | employee | 9,571 | ||
Expected future costs | $ 0 | ||
Settled Litigation | Papa Johns Employee And Franchise Employee Antitrust Litigation | |||
Loss Contingencies [Line Items] | |||
Settlement amount | $ 5,000,000 |
Divestitures and Impairment (De
Divestitures and Impairment (Details) $ in Thousands | Mar. 28, 2022USD ($)restaurant | Mar. 27, 2022USD ($)item |
Assets Held for Sale | ||
Number of stores available to be refranchised | item | 90 | |
Assets classified as held for sale | ||
Total assets held for sale | $ 19,273 | |
Liabilities classified as held for sale | ||
Impairment of certain franchise rights | 2,800 | |
Held for sale | ||
Assets Held for Sale | ||
Non-cash charge | 8,400 | |
Net sale proceeds | 14,000 | |
Noncontrolling interest | 4,200 | |
Unearned royalty stream | $ 12,200 | |
unearned royalty stream recognition period | 10 years | |
Assets classified as held for sale | ||
Current assets | $ 1,632 | |
Property and equipment, net | 7,030 | |
Operating lease right-of-use assets | 8,924 | |
Goodwill | 9,908 | |
Other assets | 191 | |
Loss on impairment | (8,412) | |
Total assets held for sale | 19,273 | |
Liabilities classified as held for sale | ||
Accounts payable | 1,632 | |
Current deferred revenue | 1,930 | |
Current operating lease liabilities | 2,338 | |
Long-term operating lease liabilities | 7,097 | |
Other long-term liabilities | 250 | |
Total liabilities held for sale | $ 13,247 | |
Held for sale | Joint ventures | Subsequent events | ||
Assets Held for Sale | ||
Ownership percentage | 51.00% | |
Number of stores available to be refranchised | restaurant | 90 | |
Loss recognized upon transfer to held for sale | $ 14,000 |
Segment Information - Concentra
Segment Information - Concentration (Details) | 3 Months Ended |
Mar. 27, 2022entitysegment | |
Major customers disclosures | |
Number of reportable segments | segment | 4 |
Consolidated revenues | |
Major customers disclosures | |
Concentration risk, number | entity | 0 |
Segment Information - Schedule
Segment Information - Schedule of Segment Reporting Information, by Segment (Details) $ in Thousands | 3 Months Ended | ||
Mar. 27, 2022USD ($)item | Mar. 28, 2021USD ($) | Dec. 26, 2021USD ($) | |
Segment Information | |||
Total revenues | $ 542,692 | $ 511,746 | |
Operating income | 14,435 | 46,862 | |
Income before income taxes | 10,171 | 43,215 | |
Accumulated depreciation and amortization | (514,616) | ||
Property and equipment, net | 216,253 | $ 223,856 | |
Refranchising loss | $ 8,400 | ||
Number of stores available to be refranchised | item | 90 | ||
Non-cash impairment | $ 11,160 | ||
Legal settlement expense | 5,000 | ||
Reorganization costs | 3,900 | ||
Accounts Receivable | |||
Segment Information | |||
Non-cash impairment | 14,600 | ||
Domestic company owned restaurants segment | |||
Segment Information | |||
Total revenues | 198,765 | 197,234 | |
North America commissary | |||
Segment Information | |||
Total revenues | 209,679 | 184,878 | |
North America commissaries | |||
Segment Information | |||
Total revenues | 209,679 | 184,878 | |
North America franchising | |||
Segment Information | |||
Total revenues | 34,268 | 32,715 | |
International | |||
Segment Information | |||
Total revenues | 34,617 | 34,607 | |
Other segment | |||
Segment Information | |||
Total revenues | 65,363 | 62,312 | |
Operating segments | |||
Segment Information | |||
Total revenues | 542,692 | 511,746 | |
Operating segments | Domestic company owned restaurants segment | |||
Segment Information | |||
Total revenues | 198,765 | 197,234 | |
Operating income | 1,989 | 15,324 | |
Property and equipment, gross | 220,357 | ||
Operating segments | North America commissary | |||
Segment Information | |||
Total revenues | 209,679 | 184,878 | |
Operating income | 9,334 | 9,713 | |
Property and equipment, gross | 149,503 | ||
Operating segments | North America commissaries | |||
Segment Information | |||
Total revenues | 209,679 | 184,878 | |
Operating segments | North America franchising | |||
Segment Information | |||
Total revenues | 34,268 | 32,715 | |
Operating income | 32,137 | 30,443 | |
Operating segments | International | |||
Segment Information | |||
Total revenues | 42,707 | 42,604 | |
Operating income | 4,455 | 8,364 | |
Property and equipment, gross | 14,857 | ||
Operating segments | International | Accounts Receivable | |||
Segment Information | |||
Non-cash impairment | 3,500 | ||
Operating segments | Other segment | |||
Segment Information | |||
Total revenues | 57,273 | 54,315 | |
Operating income | 3,719 | 6,118 | |
Property and equipment, gross | 112,037 | ||
Elimination | |||
Segment Information | |||
Total revenues | (78,939) | (72,278) | |
Operating income | (88) | 62 | |
Elimination | North America commissary | |||
Segment Information | |||
Total revenues | (58,507) | (52,070) | |
Elimination | North America commissaries | |||
Segment Information | |||
Total revenues | (58,507) | (52,070) | |
Elimination | North America franchising | |||
Segment Information | |||
Total revenues | (1,053) | (1,060) | |
Elimination | Other segment | |||
Segment Information | |||
Total revenues | (19,379) | (19,148) | |
Unallocated corporate | |||
Segment Information | |||
Operating income | (37,111) | $ (23,162) | |
Property and equipment, gross | 234,115 | ||
Unallocated corporate | Notes Receivable | |||
Segment Information | |||
Non-cash impairment | $ 13,900 |
Segment Information - Disaggreg
Segment Information - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 27, 2022 | Mar. 28, 2021 | |
Revenue disaggregation | ||
Total revenues | $ 542,692 | $ 511,746 |
Domestic company owned restaurants segment | ||
Revenue disaggregation | ||
Total revenues | 198,765 | 197,234 |
North America franchising | ||
Revenue disaggregation | ||
Total revenues | 34,268 | 32,715 |
North America commissaries | ||
Revenue disaggregation | ||
Total revenues | 209,679 | 184,878 |
International. | ||
Revenue disaggregation | ||
Total revenues | 34,617 | 34,607 |
International. | International other revenue | ||
Revenue disaggregation | ||
Total revenues | (8,090) | (7,997) |
All others | ||
Revenue disaggregation | ||
Total revenues | 65,363 | 62,312 |
All others | International other revenue | ||
Revenue disaggregation | ||
Total revenues | 8,090 | 7,997 |
Operating segments | ||
Revenue disaggregation | ||
Total revenues | 542,692 | 511,746 |
Operating segments | Company-owned Restaurants | ||
Revenue disaggregation | ||
Total revenues | 198,765 | 197,234 |
Operating segments | Franchise royalties and fees | ||
Revenue disaggregation | ||
Total revenues | 48,756 | 45,983 |
Operating segments | Commissary Sales | ||
Revenue disaggregation | ||
Total revenues | 289,368 | 259,347 |
Operating segments | Other Sales | ||
Revenue disaggregation | ||
Total revenues | 84,742 | 81,460 |
Operating segments | Domestic company owned restaurants segment | ||
Revenue disaggregation | ||
Total revenues | 198,765 | 197,234 |
Operating segments | Domestic company owned restaurants segment | Company-owned Restaurants | ||
Revenue disaggregation | ||
Total revenues | 198,765 | 197,234 |
Operating segments | North America franchising | ||
Revenue disaggregation | ||
Total revenues | 34,268 | 32,715 |
Operating segments | North America franchising | Franchise royalties and fees | ||
Revenue disaggregation | ||
Total revenues | 35,321 | 33,775 |
Operating segments | North America commissaries | ||
Revenue disaggregation | ||
Total revenues | 209,679 | 184,878 |
Operating segments | North America commissaries | Commissary Sales | ||
Revenue disaggregation | ||
Total revenues | 268,186 | 236,948 |
Operating segments | International. | ||
Revenue disaggregation | ||
Total revenues | 42,707 | 42,604 |
Other revenue from marketing fund contributions and sublease rental income | 8,100 | 8,000 |
Operating segments | International. | Franchise royalties and fees | ||
Revenue disaggregation | ||
Total revenues | 13,435 | 12,208 |
Operating segments | International. | Commissary Sales | ||
Revenue disaggregation | ||
Total revenues | 21,182 | 22,399 |
Operating segments | International. | Other Sales | ||
Revenue disaggregation | ||
Total revenues | 8,090 | 7,997 |
Operating segments | All others | ||
Revenue disaggregation | ||
Total revenues | 57,273 | 54,315 |
Operating segments | All others | Other Sales | ||
Revenue disaggregation | ||
Total revenues | 76,652 | 73,463 |
Elimination | ||
Revenue disaggregation | ||
Total revenues | (78,939) | (72,278) |
Elimination | North America franchising | ||
Revenue disaggregation | ||
Total revenues | (1,053) | (1,060) |
Elimination | North America commissaries | ||
Revenue disaggregation | ||
Total revenues | (58,507) | (52,070) |
Elimination | All others | ||
Revenue disaggregation | ||
Total revenues | $ (19,379) | $ (19,148) |
Related Party Transactions (Det
Related Party Transactions (Details) | Mar. 15, 2022USD ($)shares | Mar. 27, 2022USD ($) | Mar. 27, 2022CAD ($) |
Mr. Shaquille O'Neal | |||
Related party transactions | |||
Cash payments | $ | $ 5,625,000 | ||
Period of related party agreement | 3 years | ||
Royalty fee payable per each co-branded pizza sold | $ | $ 0.20 | ||
Related Party Restricted Stock Units Shares Issued | shares | 55,898 | ||
Period of extension of agreement | 1 year | ||
Mr. Shaquille O'Neal | Expected to be vested on April 12, 2023 | |||
Related party transactions | |||
Percentage of related party restricted stock units that are expected to be vested | 33.00% | ||
Related party restricted stock units that are expected to be vested | shares | 18,632 | ||
Mr. Shaquille O'Neal | Expected to be vested on March 15, 2024 | |||
Related party transactions | |||
Percentage of related party restricted stock units that are expected to be vested | 33.00% | ||
Related party restricted stock units that are expected to be vested | shares | 18,632 | ||
Mr. Shaquille O'Neal | Expected to be vested on March 15, 2025 | |||
Related party transactions | |||
Percentage of related party restricted stock units that are expected to be vested | 33.00% | ||
Related party restricted stock units that are expected to be vested | shares | 18,634 | ||
Papa John's Foundation for Building Community | |||
Related party transactions | |||
The amount of donation for every pizza sold in the United States of America | $ | $ 1 | ||
The amount of donation for every pizza sold in Canada. | $ | $ 1 |