Papa John's International Inc. (NASDAQ:PZZA) Q1 2015 Earnings Conference Call - Final Transcript

May 06, 2015 • 10:00 am ET

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Papa John's International Inc. (NASDAQ:PZZA) Q1 2015 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to the Papa John's First Quarter 2015 Conference Call and Webcast. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session with instructions following at that time. [Operator Instructions]. As a reminder, this conference call is being recorded.

Now, I'll turn the call over to Lance Tucker, Senior Vice President and Chief Financial Officer. Please begin.

Executive
Lance Tucker

Thank you, Tyrone. Good morning, everyone. Joining me on the call today are our Founder, Chairman, President, and CEO, John Schnatter, COO, Steve Ritchie, and CMO, Bob Kraut, and other members of our senior management team. After the financial update, John and Steve will have comments about our business and the management team will then be available for Q&A.

Our discussion today will contain forward-looking statements that involve risks relating to future events. Actual events may differ materially from the projections discussed today. All forward-looking statements should be considered in conjunction with the cautionary statements in our earnings press release and the risk factors included in our SEC filings. And all statements made on this call are as of today.

Please refer to our earnings press release in the Investor Relations section of our website for a reconciliation and other disclosures related to our discussion of non-GAAP financial measures on this call. Unless otherwise noted, all comparisons are versus the comparable periods from a year ago. This call is being taped, and the replay will be available for a limited time on our website and in downloadable podcast format.

Now onto a discussion of our first quarter operating results. EPS in the first quarter was $0.55, up 22% with strong domestic and international comp sales growth and favorable commodity trends. Our first quarter revenues increased nearly 8% versus the prior year, as we continued to see excellent comp sales driving our revenue growth, with first quarter comp increases of 6.5% for North America and 7.7% for international.

Revenues also increased due to a 6% increase in the number of units operating globally on a year-over-year basis. These increases were somewhat offset by lower block cheese prices, which drove lower revenues in our PJ food service business since we have a constant dollar markup on cheese. We opened 36 net global units in the first quarter, with 35 net international openings, and one net North America opening.

On a business segment basis, operating income for domestic Company-owned restaurants increased $5.2 million in the first quarter, due primarily to 8.1% Company-owned comp sales increases and lower commodity costs. Operating income for the North America franchising segment increased approximately $2.8 million in the first quarter, due primarily to the increase in comparable sales of 6% and reduced performance-based royalty incentives.

Operating income for our domestic commissary segment increased by approximately $1.4 million in the first quarter due primarily to higher volumes that were partially offset by higher driver compensation and higher insurance costs. Operating results for our international segment increased approximately $600,000 in the