Papa John’s Announces Fourth Quarter and Full Year 2020 Financial Results

Papa John’s International, Inc. (NASDAQ: PZZA) today announced financial results for the three months and full year ended December 27, 2020.

Fourth quarter highlights compared to prior year

  • Total revenues of $469.8 million, up 12.5% over 2019
  • Comparable sales up by 13.5% in North America and 21.4% Internationally
  • Earnings per diluted share rose to $0.28 from loss per diluted share of ($0.18)
  • Adjusted earnings per diluted share grew to $0.40 versus adjusted loss per diluted share of ($0.25), excluding Special items
  • 40 net unit openings in the fourth quarter driven by International
  • Paid end-of-year bonuses to front-line team members of $2.7 million ($0.06 per diluted share)

Full year 2020 highlights compared to prior year

  • Total revenues of $1,813.2 million, up 12.0% over 2019
  • Comparable sales up by 17.6% in North America and 12.6% Internationally
  • Earnings per diluted share rose to $1.28 compared to loss per diluted share of ($0.24)
  • Adjusted earnings per diluted share grew to $1.40 from adjusted earnings per diluted share of $0.03, excluding Special items
  • Cash flow from operations of $186.4 million and free cash flow of $137.1 million for full year 2020

“2020 was a transformational year for Papa John’s, as we turned our focus to the future. We were able to deliver industry-leading sales growth and significant profitability by coming together as a system to take care of our team members, customers and communities in one of the most challenging years in history,” said President & CEO Rob Lynch. “Q4 2020 was the third consecutive quarter of double-digit comparable sales growth and the sixth straight quarter of positive comparable sales in North America. We ended the year with the launch of Epic Stuffed Crust, the biggest product innovation in the company’s history, and our future is extremely bright.”

Mr. Lynch continued, “We are confident that the foundations of our business – our company’s core values, our iconic brand, our dedicated team members, our strong franchise system and our rapidly improving financial performance – are stronger than ever, and we continue to build momentum. We remain hopeful for a swift end to the global pandemic and continue to prioritize the health and safety of our team and customers, while we meet our responsibility to serve millions of new and returning customers.”

Global Restaurant and Comparable Sales Information

Global restaurant and comparable sales information for the three months and full year ended December 27, 2020, compared to the three months and full year ended December 29, 2019 are as follows:

    Three Months Ended   Year Ended
    Dec. 27,
2020
  Dec. 29,
2019
  Dec. 27,
2020
  Dec. 29,
2019
                 
Global restaurant sales growth / (decline) (a)  

15.5%

 

4.4%

 

15.1%

 

(0.8%)

                 
Global restaurant sales growth, excluding the impact of foreign currency (a)  

15.4%

 

4.7%

 

15.9%

 

0.3%

                 
Comparable sales growth / (decline) (b)                
Domestic company-owned restaurants  

10.2%

 

4.1%

 

14.2%

 

(2.7%)

North America franchised restaurants  

14.5%

 

3.3%

 

18.6%

 

(2.0%)

System-wide North America restaurants  

13.5%

 

3.5%

 

17.6%

 

(2.2%)

                 
System-wide international restaurants (c)  

21.4%

 

2.4%

 

12.6%

 

1.1%

(a)

Includes both company-owned and franchised restaurant sales.

(b)

Represents the change in year-over-year sales for the same base of restaurants for the same fiscal periods. Comparable sales results for restaurants operating outside of the United States are reported on a constant dollar basis, which excludes the impact of foreign currency translation. See “Supplemental Information and Financial Statements” below for a discussion of comparable sales, a key operating metric.

(c)

Includes the impact of temporarily closed stores. Excluding those stores, comparable sales growth for System-wide international restaurants would have been approximately 22.9% and 15.9% for the three months and full year ended December 27, 2020, respectively. There were no temporarily closed stores for the comparable periods ended December 29, 2019.

Financial Highlights

    Three Months Ended   Year Ended
In thousands, except per share amounts   Dec. 27,
2020
  Dec. 29,
2019
  Increase   Dec. 27,
2020
  Dec. 29,
2019
  Increase
Revenue  

$

469,811

 

$

417,514

 

 

$

52,297

 

$

1,813,234

 

$

1,619,248

 

 

$

193,986

Operating income (loss)  

 

19,698

 

 

(132

)

 

 

19,830

 

 

90,253

 

 

24,535

 

 

 

65,718

Net income (loss)  

 

13,167

 

 

(2,142

)

 

 

15,309

 

 

57,932

 

 

4,866

 

 

 

53,066

Diluted earnings (loss) per share  

 

0.28

 

 

(0.18

)

 

 

0.46

 

 

1.28

 

 

(0.24

)

 

 

1.52

Adjusted diluted earnings per share (a)  

 

0.40

 

 

(0.25

)

 

 

0.65

 

 

1.40

 

 

0.03

 

 

 

1.37

(a)

Adjusted diluted earnings per share is a non-GAAP measure that excludes “Special items,” which impact comparability. Special items for 2020 include strategic corporate reorganization costs associated with our new office in Atlanta, Georgia projected to open in the summer of 2021. The reconciliation of GAAP to non-GAAP financial results is included in “Reconciliation of Non-GAAP Financial Measures” below.

Revenues

Consolidated revenues of $469.8 million increased $52.3 million, or 12.5%, in the fourth quarter of 2020 compared to the fourth quarter of 2019 primarily due to strong comparable sales results for North America restaurants, including 10.2% for company-owned restaurants and 14.5% for franchised restaurants, resulting in higher company-owned restaurant revenues, franchise royalties and commissary sales. International revenues also increased primarily due to higher commissary revenues and higher royalties from strong comparable sales results of 21.4% for the quarter.

Operating Results

Consolidated operating income of $19.7 million for the fourth quarter of 2020 increased $19.8 million compared to the fourth quarter of 2019. Excluding the impact of Special items, consolidated operating income increased $28.7 million for the three months ended December 27, 2020. See “Reconciliation of Non-GAAP Financial Measures,” for additional information. The increase, excluding Special items, was primarily due to temporary franchise support of $25.4 million in the fourth quarter of 2019 (see “Temporary Franchise Support” below) and higher income from higher comparable sales both domestically and internationally.

Diluted earnings per share was $0.28 for the fourth quarter of 2020 representing an increase of $0.46 over the fourth quarter of 2019. Excluding Special items, diluted earnings per share was $0.40 representing an increase of $0.65 over the fourth quarter of 2019. Diluted earnings per share was reduced by approximately $0.01 per diluted share in the fourth quarter of 2020 ($0.03 impact when excluding Special items) due to income attributable to participating securities, including our Series B Convertible Preferred Stock (the “Series B Preferred Stock”), based on the allocation of undistributed earnings to participating securities in the period. See “Participating Securities Earnings Per Share” for additional information related to the calculation of income attributable to participating securities for the three months ended December 27, 2020.

Segment Results

   

Three Months Ended

   

Reported

 

Special

 

Adjusted

 

Reported

 

Special

 

Adjusted

 

Adjusted

   

Dec. 27,

 

items

 

Dec. 27,

 

Dec. 29,

 

items

 

Dec. 29,

 

Increase

(In thousands)  

2020

 

in 2020

 

2020

 

2019

 

in 2019

 

2019

 

(Decrease)

                             
Domestic Company-owned restaurants  

$

3,197

 

 

$

 

$

3,197

 

 

$

12,486

 

 

$

(2,850

)

 

$

9,636

 

 

$

(6,439

)

North America franchising  

 

26,946

 

 

 

 

 

26,946

 

 

 

16,669

 

 

 

 

 

 

16,669

 

 

 

10,277

 

North America commissaries  

 

8,606

 

 

 

 

 

8,606

 

 

 

8,488

 

 

 

 

 

 

8,488

 

 

 

118

 

International  

 

7,198

 

 

 

 

 

7,198

 

 

 

4,084

 

 

 

 

 

 

4,084

 

 

 

3,114

 

All others  

 

2,013

 

 

 

 

 

2,013

 

 

 

192

 

 

 

 

 

 

192

 

 

 

1,821

 

Unallocated corporate expenses  

 

(28,091

)

 

 

5,985

 

 

(22,106

)

 

 

(42,121

)

 

 

 

 

 

(42,121

)

 

 

20,015

 

Elimination of intersegment (profits) losses  

 

(171

)

 

 

 

 

(171

)

 

 

70

 

 

 

 

 

 

70

 

 

 

(241

)

Adjusted operating income (loss)  

$

19,698

 

 

$

5,985

 

$

25,683

 

 

$

(132

)

 

$

(2,850

)

 

$

(2,982

)

 

$

28,665

 

                             
                             
   

Year Ended

   

Reported

 

Special

 

Adjusted

 

Reported

 

Special

 

Adjusted

 

 

   

Dec. 27,

 

items

 

Dec. 27,

 

Dec. 29,

 

items

 

Dec. 29,

 

Adjusted

(In thousands)  

2020

 

in 2020

 

2020

 

2019

 

in 2019

 

2019

 

Increase

                             
Domestic Company-owned restaurants  

$

37,049

 

 

$

 

$

37,049

 

 

$

33,957

 

 

$

(4,739

)

 

$

29,218

 

 

$

7,831

 

North America franchising  

 

89,801

 

 

 

 

 

89,801

 

 

 

64,362

 

 

 

 

 

 

64,362

 

 

 

25,439

 

North America commissaries  

 

33,185

 

 

 

 

 

33,185

 

 

 

30,690

 

 

 

 

 

 

30,690

 

 

 

2,495

 

International  

 

24,034

 

 

 

 

 

24,034

 

 

 

18,738

 

 

 

 

 

 

18,738

 

 

 

5,296

 

All others  

 

7,043

 

 

 

 

 

7,043

 

 

 

(1,966

)

 

 

 

 

 

(1,966

)

 

 

9,009

 

Unallocated corporate expenses  

 

(100,069

)

 

 

5,985

 

 

(94,084

)

 

 

(120,280

)

 

 

14,221

 

 

 

(106,059

)

 

 

11,975

 

Elimination of intersegment (profits) losses  

 

(790

)

 

 

 

 

(790

)

 

 

(966

)

 

 

 

 

 

(966

)

 

 

176

 

Adjusted operating income  

$

90,253

 

 

$

5,985

 

$

96,238

 

 

$

24,535

 

 

$

9,482

 

 

$

34,017

 

 

$

62,221

 

Consolidated operating income of $19.7 million for the fourth quarter of 2020 increased $19.8 million from the fourth quarter of 2019. Excluding the impact of Special items, the increase was $28.7 million. Significant changes in operating income and operating income, excluding Special items, are as follows:

  • Domestic Company-owned restaurants operating income was $3.2 million for the fourth quarter of 2020, a decrease of $6.4 million. The higher profits from comparable sales of 10.2% were offset by labor initiatives, bonuses, including the previously announced special end-of-year bonus for front-line team members, and increased commodities costs. Additionally, the prior period benefited from the expiration of customer rewards associated with our Papa Rewards loyalty program ($2.6 million benefit for the fourth quarter of 2019).
  • North America franchising increased $10.3 million to $26.9 million primarily due to higher comparable sales of 14.5% and a higher effective royalty rate due to the completion of our franchise assistance program in the third quarter of 2020 (see “Temporary Franchise Support” for additional information).
  • North America commissaries was relatively flat as higher profits from higher volumes were substantially offset by higher bonuses, including the bonus for front-line team members previously mentioned.
  • International increased $3.1 million to $7.2 million primarily due to higher profits from higher comparable sales of 21.4% and higher PJUK commissary income attributable to higher comparable sales and increased units.
  • All others, which primarily includes our online and mobile ordering business, our wholly owned print and promotions subsidiary and our North America marketing funds, increased $1.8 million primarily due to higher online revenues.
  • Unallocated corporate expenses decreased approximately $20.0 million primarily due to lower discretionary marketing fund investments (see “Temporary Franchise Support” for additional information).

Full Year Results

Consolidated revenues increased 12.0% to $1,813.2 million for the year ended December 27, 2020, compared to the prior year comparable period, primarily due to higher comparable sales which benefited each of the company’s operating segments. Consolidated operating income increased $65.7 million for the year ended December 27, 2020 ($62.2 million excluding Special items), compared to the prior year comparable period, primarily due to improved results from North America franchising and Domestic Company-owned restaurants and lower temporary franchise support.

For the year ended December 27, 2020, diluted earnings per share was $1.28 representing an increase of $1.52 over the prior year period. Excluding Special items, diluted earnings per share was $1.40 representing an increase of $1.37 over the prior year period. Diluted earnings per share was reduced by approximately $0.07 per share for the year ($0.09 impact when excluding Special items) due to income attributable to participating securities, including Series B Preferred Stockholders, based on the allocation of undistributed earnings to participating securities in the period. See “Participating Securities Earnings Per Share” for additional information related to the calculation of income attributable to participating securities for the year ended December 27, 2020.

The company’s cash flow from operating activities for the year ended December 27, 2020 was $186.4 million, compared to $61.7 million a year ago, reflecting higher net income and favorable working capital changes, including timing of payments. This resulted in significantly higher free cash flow (a non-GAAP financial measure defined as net cash provided by operating activities, less purchases of property and equipment and dividends paid to preferred shareholders) of $137.1 million, compared to $14.0 million for the year ended December 29, 2019. See “Free Cash Flow” for additional information.

See the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K filed with the SEC for additional information concerning our operating results and cash flow for the year ended December 27, 2020.

Cash Dividend

The company paid common and preferred stock dividends of $10.9 million in the fourth quarter of 2020. The company declared first quarter 2021 dividends of approximately $10.8 million on January 25, 2021, which were paid to common shareholders on February 19, 2021. The first quarter preferred dividend will be paid on April 1, 2021. The declaration and payment of any future dividends on our common stock will be at the discretion of our Board of Directors, subject to the company’s financial results, cash requirements, and other factors deemed relevant by our Board of Directors. The holders of Series B Preferred Stock receive quarterly preferred dividends and common stock dividends on an as converted to common stock basis.

Global Restaurant Unit Data

As of December 27, 2020, there were 5,400 Papa John’s restaurants operating in 48 countries and territories, as follows:

    Domestic
Company-
owned
  Franchised
North
America
  Total North
America
  International   System-wide
Fourth Quarter                    
Beginning – September 28, 2020  

597

 

 

2,689

 

 

3,286

 

 

2,074

 

 

5,360

 

Opened  

1

 

 

24

 

 

25

 

 

73

 

 

98

 

Closed  

(10

)

 

(12

)

 

(22

)

 

(36

)

 

(58

)

Ending – December 27, 2020 (1)  

588

 

 

2,701

 

 

3,289

 

 

2,111

 

 

5,400

 

                     
Year Ended                    
Beginning – December 29, 2019  

598

 

 

2,690

 

 

3,288

 

 

2,107

 

 

5,395

 

Opened  

2

 

 

62

 

 

64

 

 

156

 

 

220

 

Closed  

(12

)

 

(51

)

 

(63

)

 

(152

)

 

(215

)

Ending – December 27, 2020 (1)  

588

 

 

2,701

 

 

3,289

 

 

2,111

 

 

5,400

 

Net unit growth (decline)  

(10

)

 

11

 

 

1

 

 

4

 

 

5

 

% increase (decrease)  

(1.7

%)

 

0.4

%

 

0.0

%

 

0.2

%

 

0.1

%

(1)

 

Temporary closures as a result of the COVID-19 outbreak are not reflected as “closed” in the restaurant progression above. Of the company’s 2,111 international franchised stores, approximately 65 stores were temporarily closed as of December 27, 2020, principally in Latin America and Europe, in accordance with government policies. In North America, almost all traditional restaurants remain open and fully operational. A number of non-traditional restaurants located in universities and stadiums are temporarily closed; these non-traditional locations are not significant to our revenues and operating results.

Our development pipeline as of December 27, 2020 included approximately 1,460 restaurants (210 units in North America and 1,250 units internationally), the majority of which are scheduled to open over the next six years.

Strategic Corporate Reorganization for Long-term Growth

On September 17, 2020, we announced plans to open an office in Atlanta, Georgia. The Atlanta office is part of a broader strategic reorganization of corporate functions reflecting the company’s ongoing transformation into a brand and culture that can effectively and efficiently deliver on the company’s purpose, values and strategic business priorities. The opening of the Atlanta location and related organizational changes are expected to be completed by the summer of 2021. Affected employees who do not relocate to Atlanta have been offered a separation package. We expect to incur certain one-time corporate reorganization costs of approximately $15 to $20 million related to employee severance and transition, recruitment and relocation, and third-party and other costs through 2021, and $6.0 million (or approximately $0.12 per diluted share) of these strategic corporate reorganization costs were incurred in the fourth quarter of 2020. See “Reconciliation of Non-GAAP Financial Measures” for additional information.

2021 Outlook

Given on-going uncertainty surrounding the future impact of COVID-19, we are not providing outlook for 2021 at this time.

   

Three Months Ended

 

Year Ended

   

Dec. 27,

 

Dec. 29,

 

Dec. 27,

 

Dec. 29,

(In thousands, except per share amounts)  

2020

 

2019

 

2020

 

2019

                 
GAAP operating income (loss)  

$

19,698

 

 

$

(132

)

 

$

90,253

 

 

$

24,535

 

Strategic corporate reorganization costs (1)  

 

5,985

 

 

 

 

 

 

5,985

 

 

 

 

Special charges:                
Legal and advisory fees (2)  

 

 

 

 

 

 

 

 

 

 

5,922

 

Mark-to-market adjustment on option valuation (3)  

 

 

 

 

 

 

 

 

 

 

5,914

 

Other costs (4)  

 

 

 

 

 

 

 

 

 

 

2,385

 

Refranchising gains  

 

 

 

 

(2,850

)

 

 

 

 

 

(4,739

)

Adjusted operating income (loss)  

$

25,683

 

 

$

(2,982

)

 

$

96,238

 

 

$

34,017

 

                 
GAAP net income (loss) attributable to common shareholders  

$

9,319

 

 

$

(5,612

)

 

$

41,737

 

 

$

(7,633

)

Strategic corporate reorganization costs (1)  

 

5,985

 

 

 

 

 

 

5,985

 

 

 

 

Special charges:                
Legal and advisory fees (2)  

 

 

 

 

 

 

 

 

 

 

5,922

 

Mark-to-market adjustment on option valuation (3)  

 

 

 

 

 

 

 

 

 

 

5,914

 

Other costs (4)  

 

 

 

 

 

 

 

 

 

 

2,385

 

Refranchising gains  

 

 

 

 

(2,850

)

 

 

 

 

 

(4,739

)

Tax effect of Non-GAAP items (5) (6)  

 

(1,346

)

 

 

635

 

 

 

(1,346

)

 

 

(799

)

Two-class impact for Non-GAAP adjustment to net income (7)  

 

(658

)

 

 

 

 

 

(662

)

 

 

 

Adjusted net income (loss) attributable to common shareholders  

$

13,300

 

 

$

(7,827

)

 

$

45,714

 

 

$

1,050

 

                 
GAAP diluted earnings (loss) per share  

$

0.28

 

 

$

(0.18

)

 

$

1.28

 

 

$

(0.24

)

Strategic corporate reorganization costs (1)  

 

0.18

 

 

 

 

 

 

0.18

 

 

 

 

Special charges:                
Legal and advisory fees (2)  

 

 

 

 

 

 

 

 

 

 

0.19

 

Mark-to-market adjustment on option valuation (3)  

 

 

 

 

 

 

 

 

 

 

0.19

 

Other costs (4)  

 

 

 

 

 

 

 

 

 

 

0.07

 

Refranchising gains  

 

 

 

 

(0.09

)

 

 

 

 

 

(0.15

)

Tax effect of Non-GAAP items (5) (6)  

 

(0.04

)

 

 

0.02

 

 

 

(0.04

)

 

 

(0.03

)

Two-class impact for Non-GAAP adjustment to earnings per share (7)  

 

(0.02

)

 

 

 

 

 

(0.02

)

 

 

 

Adjusted diluted earnings (loss) per share  

$

0.40

 

 

$

(0.25

)

 

$

1.40

 

 

$

0.03

 

(1)

 

Represents strategic corporate reorganization costs associated with our new office in Atlanta, Georgia projected to open in the summer of 2021. See “Strategic Corporate Reorganization for Long-term Growth” for additional information.

(2)

 

Represents advisory and legal costs incurred in 2019 primarily associated with the review of a wide range of strategic opportunities that culminated in the strategic investment in the company by affiliates of Starboard Value LP (“Starboard”) as well as certain litigation costs associated with legal proceedings initiated by our founder.

(3)

 

Represents a one-time mark-to-market adjustment of $5.9 million primarily related to the increase in the fair value of the Starboard option to purchase Series B Preferred Stock that culminated in the purchase of additional preferred stock in late March 2019.

(4)

 

Includes severance costs for our former CEO and costs related to the termination of a license agreement for intellectual property no longer being utilized.

(5)

 

The tax effect for strategic corporate reorganization costs was calculated by applying the 2020 full year marginal tax rate of 22.5%.

(6)

 

The tax effect for Legal and advisory fees, Other costs, and Refranchising gains was calculated by applying the 2019 full year marginal rate of 22.4%. The mark-to-market adjustment on option valuation was non-deductible for tax purposes.

(7)

 

Represents an adjustment to the allocation of undistributed earnings to participating securities for the strategic corporate reorganization costs.

Temporary Franchise Support

Beginning in the third quarter of 2018, the company began providing various forms of support and financial assistance to the North America franchise system in response to declining North America sales. In July 2019, the company announced a formal relief program to provide our North America franchisees with certainty regarding the availability and schedule of the temporary relief which concluded in the third quarter of 2020.

As previously mentioned, effective as of the first quarter of 2020, the company no longer presents certain royalty relief and discretionary marketing fund investments, included herein as “Temporary Franchise Support,” as Special items within its adjusted financial results. The prior period adjusted financial measures presented above in “Reconciliation of non-GAAP Financial Measures” have also been revised to remove the impact of these items. The Temporary Franchise Support concluded in the third quarter of 2020.

Temporary Franchise Support investments were $29.3 million (or approximately $0.69 per diluted share) for the full year ended December 27, 2020 (none for the three-month period), compared to $25.4 million (or approximately $0.62 per diluted share) and $46.6 million (or approximately $1.14 per diluted share) for the three and twelve months ended December 29, 2019, respectively, as follows (in thousands):

   

Three Months Ended

 

Year Ended

   

Dec. 27,
2020

 

Dec. 29,
2019

 

Dec. 27,
2020

 

Dec. 29,
2019

Royalty relief (a)  

$

 

$

5,404

 

$

14,270

 

$

19,096

Marketing fund investments (b)  

 

 

 

20,000

 

 

15,000

 

 

27,500

Total Temporary Franchise Support  

$

 

$

25,404

 

$

29,270

 

$

46,596

(a)

Represents financial assistance provided to the North America system in the form of temporary royalty reductions that are above and beyond the level of franchise assistance the company would incur in the ordinary course of its business. These royalty reductions are not an expense, but rather consist of the amount of waived royalties that the company would otherwise have been entitled to absent the waiver. The waived royalties are not included in North America franchise royalties and fees revenues.

(b)

Represents incremental discretionary marketing fund investments in excess of contractual company-owned restaurant-level contributions, which were made as part of our previously announced temporary financial support package to our franchisees. The marketing fund investments are included in Unallocated corporate expenses.

Free Cash Flow

We define free cash flow as net cash provided by operating activities (from the Consolidated Statements of Cash Flows) less the purchases of property and equipment and dividends paid to preferred shareholders. We view free cash flow as an important measure because it is one factor that management uses in determining the amount of cash available for discretionary investment. Free cash flow is not a term defined by GAAP, and as a result, our measure of free cash flow might not be comparable to similarly titled measures used by other companies. Free cash flow should not be construed as a substitute for or a better indicator of the company’s performance than the company’s GAAP measures. The company’s free cash flow for the years ended December 27, 2020 and December 29, 2019, respectively were as follows (in thousands):

   

Year Ended

   

Dec. 27,

 

Dec. 29,

   

2020

 

2019

         
Net cash provided by operating activities  

$

186,439

 

 

$

61,749

 

Purchases of property and equipment  

 

(35,652

)

 

 

(37,711

)

Dividends paid to preferred shareholders  

 

(13,649

)

 

 

(10,020

)

Free cash flow  

$

137,138

 

 

$

14,018

 

Participating Securities Earnings Per Share

We compute earnings per common share using the two-class method, by which net income attributable to participating securities, in addition to preferred stock dividends and accretion, is deducted from net income attributable to the company to determine net income attributable to common shareholders. Net income attributable to participating securities is the portion of undistributed earnings, defined as net income attributable to the company, less dividends paid to common and preferred shareholders, that would be allocated to the holders of participating securities on an as-converted basis.

The calculation to determine the amount of undistributed earnings to allocate to participating securities is as follow (in thousands):

    Three Months Ended   Year Ended
    Dec. 27,
2020
  Allocation
%
  Dec. 27,
2020
  Allocation
%
Calculation of net income attributable to participating securities and common shareholders:                
                 
Share count allocation calculation:                
Diluted weighted average common shares outstanding  

 

32,981

 

 

85.8

%

 

 

32,717

 

 

85.7

%

Participating preferred stock weighted average shares outstanding, as-converted (252,530,000/$50.06)  

 

5,045

 

 

13.1

%

 

 

5,045

 

 

13.2

%

Participating unvested restricted stock weighted average shares outstanding  

 

412

 

 

1.1

%

 

 

425

 

 

1.1

%

Total share count  

 

38,438

 

 

100.0

%

 

 

38,187

 

 

100.0

%

                 
Undistributed earnings allocation:                
Net income attributable to the company  

$

13,167

 

     

$

57,932

 

   
Dividends paid to common and preferred stock  

 

(10,797

)

     

 

(43,011

)

   
Total undistributed earnings  

$

2,370

 

     

$

14,921

 

   
                 
Net income attributable to participating securities:                
Total undistributed earnings – allocable to participating preferred stock  

$

(311

)

 

13.1

%

 

$

(1,971

)

 

13.2

%

Total undistributed earnings – allocable to participating unvested restricted stock  

 

(24

)

 

1.1

%

 

 

(165

)

 

1.1

%

Total net income attributable to participating securities  

$

(335

)

 

14.2

%

 

$

(2,136

)

 

14.3

%

                 
Net income attributable to common shareholders:                
Net income attributable to the company  

$

13,167

 

     

$

57,932

 

   
Dividends paid to participating securities and accretion  

 

(3,513

)

     

 

(14,059

)

   
Net income attributable to participating securities  

 

(335

)

     

 

(2,136

)

   
Net income attributable to common shareholders  

$

9,319

 

     

$

41,737

 

   
         
Papa John’s International, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
         
         
   

December 27,

 

December 29,

   

2020

 

2019

(In thousands)        
         
Assets        
Current assets:        
Cash and cash equivalents  

$

130,204

 

 

$

27,911

 

Accounts receivable, net  

 

90,135

 

 

 

70,462

 

Notes receivable, current portion  

 

11,318

 

 

 

7,790

 

Income tax receivable  

 

1,273

 

 

 

4,024

 

Inventories  

 

30,265

 

 

 

27,529

 

Prepaid expenses and other current assets  

 

43,212

 

 

 

43,830

 

Total current assets  

 

306,407

 

 

 

181,546

 

         
Property and equipment, net  

 

200,895

 

 

 

211,741

 

Finance lease right-of-use assets, net  

 

16,840

 

 

 

9,383

 

Operating lease right-of-use assets  

 

148,110

 

 

 

148,229

 

Notes receivable, less current portion, net  

 

36,538

 

 

 

33,010

 

Goodwill  

 

80,791

 

 

 

80,340

 

Deferred income taxes  

 

10,800

 

 

 

1,839

 

Other assets  

 

72,389

 

 

 

64,633

 

Total assets  

$

872,770

 

 

$

730,721

 

         
         
Liabilities, Series B Convertible Preferred Stock, Redeemable noncontrolling interests and Stockholders’ deficit        
Current liabilities:        
Accounts payable  

$

37,370

 

 

$

29,141

 

Income and other taxes payable  

 

10,263

 

 

 

7,599

 

Accrued expenses and other current liabilities  

 

174,563

 

 

 

108,517

 

Current deferred revenue  

 

19,590

 

 

 

17,673

 

Current finance lease liabilities  

 

3,545

 

 

 

1,789

 

Current operating lease liabilities  

 

23,538

 

 

 

23,226

 

Current portion of long-term debt  

 

20,000

 

 

 

20,000

 

Total current liabilities  

 

288,869

 

 

 

207,945

 

         
Deferred revenue  

 

13,664

 

 

 

14,722

 

Long-term finance lease liabilities  

 

13,531

 

 

 

7,629

 

Long-term operating lease liabilities  

 

124,666

 

 

 

125,297

 

Long-term debt, less current portion, net  

 

328,292

 

 

 

347,290

 

Deferred income taxes  

 

948

 

 

 

2,649

 

Other long-term liabilities  

 

111,364

 

 

 

84,927

 

Total liabilities  

 

881,334

 

 

 

790,459

 

         
Series B Convertible Preferred Stock  

 

251,901

 

 

 

251,133

 

Redeemable noncontrolling interests  

 

6,474

 

 

 

5,785

 

         
Total Stockholders’ deficit  

 

(266,939

)

 

 

(316,656

)

Total liabilities, Series B Convertible Preferred Stock, Redeemable noncontrolling interests and Stockholders’ deficit  

$

872,770

 

 

$

730,721

 

         
Note: The Condensed Consolidated Balance Sheets have been derived from the audited consolidated financial statements, but do not include all information and footnotes required by accounting principles generally accepted in the United States for a complete set of financial statements.
                                 
Papa John’s International, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
 
                 
   

Three Months Ended

 

Year Ended

   

Dec. 27, 2020

 

Dec. 29, 2019

 

Dec. 27, 2020

 

Dec. 29, 2019

(In thousands, except per share amounts)                
Revenues:                
Domestic company-owned restaurant sales  

$

174,440

 

 

$

161,459

 

 

$

700,757

 

 

$

652,053

 

North America franchise royalties and fees  

 

27,837

 

 

 

18,613

 

 

 

96,732

 

 

 

71,828

 

North America commissary revenues  

 

176,414

 

 

 

161,917

 

 

 

680,793

 

 

 

612,652

 

International revenues  

 

36,371

 

 

 

27,081

 

 

 

123,963

 

 

 

102,924

 

Other revenues  

 

54,749

 

 

 

48,444

 

 

 

210,989

 

 

 

179,791

 

Total revenues  

 

469,811

 

 

 

417,514

 

 

 

1,813,234

 

 

 

1,619,248

 

                 
Costs and expenses:                
Operating costs (excluding depreciation and amortization shown separately below):                
Domestic company-owned restaurant expenses  

 

144,717

 

 

 

127,197

 

 

 

563,799

 

 

 

526,237

 

North America commissary expenses  

 

164,261

 

 

 

149,255

 

 

 

630,937

 

 

 

569,180

 

International expenses  

 

21,219

 

 

 

15,188

 

 

 

73,994

 

 

 

57,702

 

Other expenses  

 

52,085

 

 

 

46,573

 

 

 

200,304

 

 

 

175,592

 

General and administrative expenses  

 

55,562

 

 

 

70,104

 

 

 

204,242

 

 

 

223,460

 

Depreciation and amortization  

 

12,269

 

 

 

12,179

 

 

 

49,705

 

 

 

47,281

 

Total costs and expenses  

 

450,113

 

 

 

420,496

 

 

 

1,722,981

 

 

 

1,599,452

 

Refranchising gains  

 

 

 

 

2,850

 

 

 

 

 

 

4,739

 

Operating income (loss)  

 

19,698

 

 

 

(132

)

 

 

90,253

 

 

 

24,535

 

Investment income (loss)  

 

436

 

 

 

(145

)

 

 

2,131

 

 

 

1,104

 

Interest expense  

 

(4,097

)

 

 

(4,547

)

 

 

(17,022

)

 

 

(20,593

)

Income (loss) before income taxes  

 

16,037

 

 

 

(4,824

)

 

 

75,362

 

 

 

5,046

 

Income tax expense (benefit)  

 

2,764

 

 

 

(3,146

)

 

 

14,748

 

 

 

(611

)

Net income (loss) before attribution to noncontrolling interests  

 

13,273

 

 

 

(1,678

)

 

 

60,614

 

 

 

5,657

 

Net income attributable to noncontrolling interests  

 

(106

)

 

 

(464

)

 

 

(2,682

)

 

 

(791

)

Net income (loss) attributable to the company  

$

13,167

 

 

$

(2,142

)

 

$

57,932

 

 

$

4,866

 

                 
Calculation of net income (loss) for earnings (loss) per share:                
Net income (loss) attributable to the company  

$

13,167

 

 

$

(2,142

)

 

$

57,932

 

 

$

4,866

 

Dividends paid to participating securities and accretion  

 

(3,513

)

 

 

(3,470

)

 

 

(14,059

)

 

 

(12,499

)

Net income attributable to participating securities  

 

(335

)

 

 

 

 

 

(2,136

)

 

 

 

Net income (loss) attributable to common shareholders  

$

9,319

 

 

$

(5,612

)

 

$

41,737

 

 

$

(7,633

)

                 
Basic earnings (loss) per common share  

$

0.29

 

 

$

(0.18

)

 

$

1.29

 

 

$

(0.24

)

Diluted earnings (loss) per common share  

$

0.28

 

 

$

(0.18

)

 

$

1.28

 

 

$

(0.24

)

                 
Basic weighted average common shares outstanding  

 

32,698

 

 

 

31,783

 

 

 

32,421

 

 

 

31,632

 

Diluted weighted average common shares outstanding  

 

32,981

 

 

 

31,783

 

 

 

32,717

 

 

 

31,632

 

                 
Dividends declared per common share  

$

0.225

 

 

$

0.225

 

 

$

0.900

 

 

$

0.900

 

                 
Papa John’s International, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
 
         
    Year Ended
(In thousands)   Dec. 27, 2020   Dec. 29, 2019
         
Operating activities        
Net income before attribution to noncontrolling interests  

$

60,614

 

 

$

5,657

 

Adjustments to reconcile net income to net cash provided by operating activities:        
(Credit) provision for allowance for credit losses on accounts and notes receivable  

 

(4,734

)

 

 

3,139

 

Depreciation and amortization  

 

49,705

 

 

 

47,281

 

Deferred income taxes  

 

(9,268

)

 

 

(3,764

)

Preferred stock option mark-to-market adjustment  

 

 

 

 

5,914

 

Stock-based compensation expense  

 

16,310

 

 

 

15,303

 

Refranchising gains  

 

 

 

 

(4,739

)

Other  

 

2,257

 

 

 

3,203

 

Changes in operating assets and liabilities:        
Accounts receivable  

 

(22,420

)

 

 

(6,181

)

Income tax receivable  

 

3,760

 

 

 

12,122

 

Inventories  

 

(2,736

)

 

 

(326

)

Prepaid expenses and other current assets  

 

2,884

 

 

 

1,367

 

Other assets and liabilities  

 

20,879

 

 

 

(6,354

)

Accounts payable  

 

8,229

 

 

 

2,035

 

Income and other taxes payable  

 

2,664

 

 

 

1,009

 

Accrued expenses and other current liabilities  

 

59,353

 

 

 

(11,331

)

Deferred revenue  

 

(1,058

)

 

 

(2,586

)

Net cash provided by operating activities  

 

186,439

 

 

 

61,749

 

         
Investing activities        
Purchases of property and equipment  

 

(35,652

)

 

 

(37,711

)

Notes issued  

 

(16,589

)

 

 

(15,864

)

Repayments of notes issued  

 

11,154

 

 

 

5,616

 

Proceeds from divestitures of restaurants  

 

 

 

 

13,495

 

Other  

 

16

 

 

 

1,889

 

Net cash used in investing activities  

 

(41,071

)

 

 

(32,575

)

         
Financing activities        
Repayments of term loan  

 

(20,000

)

 

 

(15,000

)

Net repayments of revolving credit facilities  

 

 

 

 

(240,026

)

Proceeds from exercise of stock options  

 

30,622

 

 

 

16,010

 

Dividends paid to common stockholders  

 

(29,362

)

 

 

(28,552

)

Dividends paid to preferred stockholders  

 

(13,649

)

 

 

(10,020

)

Tax payments for equity award issuances  

 

(3,974

)

 

 

(1,433

)

Acquisition of Company common stock  

 

(2,701

)

 

 

 

Proceeds from issuance of preferred stock  

 

 

 

 

252,530

 

Issuance costs associated with preferred stock  

 

 

 

 

(7,527

)

Contributions from noncontrolling interests  

 

 

 

 

840

 

Distributions to noncontrolling interests  

 

(2,420

)

 

 

(870

)

Other  

 

(1,977

)

 

 

(526

)

Net cash used in financing activities  

 

(43,461

)

 

 

(34,574

)

         
Effect of exchange rate changes on cash and cash equivalents  

 

386

 

 

 

53

 

Change in cash and cash equivalents  

 

102,293

 

 

 

(5,347

)

Cash and cash equivalents at beginning of period  

 

27,911

 

 

 

33,258

 

         
Cash and cash equivalents at end of period  

$

130,204

 

 

$

27,911