Domino's 1st-Quarter Results: Key Takeaways for Investors

Pizza chain posts mixed results

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Apr 30, 2021
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On April 29 before the market opened, Domino's Pizza Inc. (DPZ, Financial), a popular pizza chain based in Ann Arbor, Michigan, reported its results for its first quarter of 2021.

The company recorded better-than-expected results, citing positive comps growth in the U.S. as more customers ordered pizza delivery during the Covid-19 pandemic. However, revenue fell short of expectations due to higher expenses.

Performance at a glance

The pizza chain posted earnings per share of $3 for the quarter, which decreased 2.3% from the prior-year quarter but was above Refinitiv's consensus estimates of $2.94. Revenue grew 17.9% year-over-year to $983.7 million, which was below analysts' expectations of $985 million. Revenue was, however, up from the $873.1 million reported last year.

Domino's CEO Ritch Allison had the following to say on the earnings report:

"It was a strong first quarter for the Domino's brand, with balanced growth across all areas of our global business. I applaud our franchisees and operators all across the globe, who once again demonstrated why they are the best in the restaurant business."

Despite stiff competition from third-party delivery services, Domino's witnessed strong same-store sales growth of 13.4% in the U.S., including company-owned and franchise stores. Worldwide comps, barring foreign currency translation, were up 11.8%.

The first quarter marked the 40th straight quarter of positive domestic same-store sales growth and the 109th quarter of consecutive international comps growth.

The pandemic boosted the company's sales, but simultaneously pushed costs higher. The pandemic risks resulted in the comapany raising wages for hourly employees, and the rise in sales also meant increased compensation for higher-level employees and executives.

In the first quarter, the company opened 175 net new stores, of which net 36 were in the U.S. and 139 were net new international locations.

Financials

At the end of the quarter, Domino's had unrestricted cash and cash equivalents of $267.7 million and total debt of $4.12 billion.

Due to uncertainty caused by the Covid-19 pandemic, the company borrowed $158 million in the second quarter under its variable funding notes. Of the total amount, $100 million was repaid in the second quarter itself, while the remaining amount was paid back in the third quarter.

The Board of Directors of Domino's declared a dividend of 94 cents per share payable to shareholders on June 30.

Disclosure: I do not hold any positions in the stocks mentioned.

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