Papa John's International Inc. (NASDAQ:PZZA) Q2 2019 Earnings Conference Call - Final Transcript

Aug 06, 2019 • 05:00 pm ET


Papa John's International Inc. (NASDAQ:PZZA) Q2 2019 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and welcome to Papa John's Second Quarter 2019 Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to introduce your host for today's call, Mr. Steve Coke, Vice President of Investor Relations and Strategy. Mr. Coke, you may now begin.

Steven R. Coke

Thank you, Sherry. Good afternoon. Joining me on the call today are President and CEO, Steve Ritchie; and our CFO, Joe Smith. Steve and Joe will have comments about our business and provide a financial update. After the prepared remarks, Steve and Joe will be joined by Mike Nettles, our Chief Operating and Growth Officer, for Q&A. Our discussion today will contain forward-looking statements involving risks that could cause actual results to differ materially from these statements. Forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and the risk factors included in our SEC filings. Please refer to our earnings release in the Investor Relations section of our website for a reconciliation of non-GAAP financial measures discussed on this call.

Finally, we ask any members of the media to be in a listen-only mode. Now I'd like to turn the call over to Steve Ritchie for his comments. Steve?

Steve M. Ritchie

Thank you, Steve, and good afternoon, everyone. Papa John's second quarter was marked by good progress against our five strategic pillars, as we delivered results in line with our fiscal 2019 plan. I'll begin with an update on key results. In the second quarter, North America comp sales were down 5.7% versus a decline of 6.9% in the first quarter. This was our third quarter of sequential improvement in comp sales. Negative but improving comp sales reflect the consumer sentiment challenges that the brand has faced over the past 12 months, which are now in the early stages of stabilizing and turning around, as we refocus our organization around people and our brand. For the second half of fiscal 2019, we expect further improvements in North America comp sales as we anniversary-ed events of July 2018 and begin to see the benefits of our strategic turnaround. Consequently, we are raising the bottom end of our guidance for North America comp sales to negative 1% to negative 4% for the full year.

In our strong and growing international business, comp sales swung to positive 0.3% in the quarter, driven by a return to positive comp sales growth in UK and continued strong positive results in the Middle East. As a result, we are reaffirming our guidance for international comp sales of flat to positive 3% for the full year.

Now I'd like to provide more detail on our progress in the quarter, beginning with some more color on our June announcement that we are increasing investment in marketing and brand initiatives, while providing additional scheduled financial assistance for North America franchisees that will expire in 2020. When Starboard made its strategic investment in Papa John's in February, we said that we intended to