Pizza delivery company Domino's Pizza Inc. (DPZ) said Tuesday that its third-quarter profit surged 76.6% from the prior year, driven by gains on debt extinguishment, improved operating margins, lower interest expense and international store growth, despite a decline in revenues.
The Ann Arbor, Michigan-based company's net income for the quarter increased to $17.8 million or $0.31 per share from $10.1 million or $0.17 per share in the previous year.
Domino's Pizza said its reported financial results for the third quarter and first three quarters of 2009 are not comparable to the reported financial results for the prior-year comparable periods.
According to the company, items affecting comparability in 2009 were gain on debt extinguishment of $0.15 per share and deferred financing fee write-off of $0.01 per share. In addition, the company said it experienced lower interest expense primarily as a result of lower debt levels and impacts comparability to periods in the prior year.
The decrease in ongoing interest expense resulted in an increase in earnings per share of about $0.03 in the third quarter of 2009 and $0.04 in the first three quarters of 2009, compared to the same periods in year 2008.
Items affecting comparability in 2008 were gain on sale of company-owned stores of $0.02 per share and tax reserve reversals of $0.03 per share.
Excluding items affecting comparability, diluted earnings per share increased $0.04, mainly due to operating margin improvements and lower interest expense primarily from recent debt extinguishments.
Earnings on a per share basis, adjusted for the items that affect comparability to the prior year periods were $0.17 per share, up from $0.13 per share in the prior-year quarter.
On average, 8 analysts polled by Thomson Reuters expected the company to report earnings of $0.15 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenues for the quarter decreased to $302.71 million from $323.59 million in the same quarter last year. Three analysts estimated revenues of $308.92 million for the quarter.
Revenues from Domestic Company-owned stores declined to $72.69 million from $77.81 million in the prior year. Domestic franchise revenues were $34.31 million, compared to $34.68 million a year ago. Revenues from Domestic supply chain dropped to $163.15 million from $177.85 million in the earlier year. International revenues also decreased to $32.55 million from $33.25 million in the comparable quarter last year.
During the third quarter, domestic same store sales were flat while international same store sales grew 2.7%.
The company said it repurchased and retired $71.8 million in principal amount of its fixed rate senior notes during the quarter, which resulted in pre-tax gains of about $14.3 million.
For the nine-month period, Domino's posted net income of $56.13 million or $0.97 per share, higher than $42.94 million or $0.73 per share in the previous year. Total revenues for the period declined to $941.17 million from $996.95 million in the preceding year.
Year-to-date, the company said it repurchased nearly $161 million in principal amount of its long-term debt.
DPZ is currently trading at $8.6, down $0.77 or 8.22%, on a volume of 371 thousand shares.
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