LOUISVILLE Ky. Shares in Papa John's International Inc. rose more than 7 percent Wednesday, the day after the pizza company reported second-quarter results that included higher profit and positive same-store sales.
For the quarter ended June 28, Papa John's recorded net income of $14.2 million, or 51 cents a share, compared with net income of $7.6 million, or 27 cents a share, in the year-earlier second quarter.
Results included an after-tax benefit of $4.2 million, or 15 cents a share, from the consolidation of the results of Papa John’s franchisee-owned cheese purchasing cooperative, BIBP Commodities. Excluding the BIBP consolidation, second-quarter earnings would have totaled 36 cents per share, compared with 41 cents a share a year ago.
Second-quarter revenue fell 2.4 percent to $276.6 million, which the company attributed in part to the sale of 62 company restaurants to franchisees in last year's fourth quarter.
Domestic systemwide same-store sales rose 0.1 percent, Papa John's said.
“We are pleased with our first-half results, especially given the difficult economy and challenging competitive environment,” said John Schnatter, Papa John’s founder and chief executive. “The investments we have made in our system this year are continuing to drive positive results for both our company-owned and franchised restaurants. Our strong cash flow and conservative balance sheet provide us the flexibility to continue to invest in our business, even in the most challenging of times.”
Among those investments were the brand’s development incentives in honor of its 25th anniversary, including waiving the franchise fee and royalties for the first 12 months for new franchised stores, as well as a $10,000 bonus for opening a unit ahead of schedule.
Papa John's narrowed its earnings outlook for fiscal 2009, raising the low end of the guidance from $1.36 per share to $1.38 per share, while maintaining a top target of $1.44 per share, excluding the impact from the consolidation of BIBP results. Last year, Papa John's earned $1.68 per share, excluding BIBP consolidation.
The earnings guidance also includes 30 cents to 35 cents per share of negative impact from the franchisee-support measures, management transition costs and other initiatives focusing on improving quality, the company said.
“Our guidance reflects continued concern over the uncertainty of the economic environment, including consumer spending,” Papa John’s said in a statement, “and considers the impact of the federal and state minimum-wage increases that became effective in July. In addition, we plan to continue to assist our domestic franchisees by maintaining a reduced commissary operating margin during the last six months of 2009.”
Papa John's slightly raised its expectations for domestic same-store sales for the year to range from flat to a decrease of 1 percent. Previously, the company expected same-store sales to be flat to down 2 percent.
The company projects full-year net unit growth of between 100 and 140 locations. At the end of the second quarter, Papa John’s had 612 company-owned and 2,806 franchised locations in all 50 states and in 29 countries.
In trading on Wednesday, Papa John's share price rose 7.4 percent to close at $27.34.