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DPZ Dominos Pizza

Participants
Tim McIntyre Investor Relations
Patrick Doyle Chief Executive Officer
Jeff Lawrence Chief Financial Officer
Peter Saleh BTIG
Karen Holthouse Goldman Sachs
Will Slabaugh Stephens Inc.
Gregory Francfort Bank of America
Matt McGinley Evercore ISI
John Glass Morgan Stanley
Jason West Credit Suisse
John Ivankoe JPMorgan
Alton Stump Longbow Research
Brett Levy Deutsche Bank
Chris O’Cull Stifel
Stephen Anderson Maxim Group
Jeffrey Bernstein Barclays
Sara Senatore Bernstein
Matt DiFrisco Guggenheim Securities
Jon Tower Wells Fargo
Call transcript
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Operator

Good morning. My name is Amy and I will be your conference operator today. At this time, I’d like to welcome everyone to the Fourth Quarter 2017 Earnings Call. [Operator Instructions] Thank you. Tim McIntyre, you may begin your conference.

Tim McIntyre

hello and Amy you, everyone. Thank joining Thank about XXXX. the today on results you of year for the full our call and us fourth quarter

this you can unlikely media refer Safe and release investor XX-K. be for made, morning’s in ask is I mode. this you find any others all so Harbor In forward-looking listen-only the are that the I the kindly that the statement As our of members in a know, event you call to and audience, primarily statements

always, prepared Jeff to As like and comments Domino’s Lawrence. Chief your Officer, we Chief Patrick by CFO, I'd our that, turn Lawrence Jeff the from questions. will start With followed Doyle, call with Financial over from Executive our Officer, to

Jeff Lawrence

Tim, morning, you, and everyone. good Thank

for report thrilled quarter the We XXXX. full year results are fourth to our fiscal and

build During year of the on positive the results delivered quarters shareholders. and continued strong our we posted three the the for quarter, first to during we results

lead We with and of comps. international the U.S. XX positive XX consecutive continue sales positive of broader comparable to quarters quarters straight industry, restaurant

increase to net the our new quarter. in count healthy pace at continued as than we stores also We fourth XXX a opened more store

was sales the stores an per by With that, increase the prior global let’s by take down domestic at for sales Our These excluding a ticket $X.XX our diluted was grew in results driven the increase lower order grew prior X.X% X.X%. closer grew average over impact The year. rate. grew in QX. increase our When division U.S. XX.X% retail in of sales Same-store during and which the lapping tax same-store financial X.X%. sales comp our primarily X.X% strong global increase franchise sales number international quarter for prior growth. at increases year a the sales, retail and for Breaking of company-owned number comp, to continued to up an effective worldwide, resulted increase order quarter a a are business share lapping while currency, foreign of XX.X%. compared operational division the count the total XX% Same-store which resulted franchise from of year growth were This prior earnings year our than is lesser items and stores opened a ticket primarily Global sales more driven company-owned X.X%, the domestic growth of up quarter. the growth. extent This average QX in higher stores by was retail the X.X%. per as quarter. results were retail of from look and a

all and leading of the way. and performed well our Russia, On during particularly the Americas the were Turkey India four international Canada, geographic the with were positive again front, quarter the Europe in regions among the that quarter. markets

were negatively our We comps this Our QX approximately shift QX and impacted both international Year’s estimate by impacted when as negatively point not by did that our XXXX comps calendar New include to prior XXXX QX year fiscal the Day. XXXX. compared calendar domestic X.X were in

expect shift. calendar impacted We be XXXX by to QX positively this

in are opened pleased X that domestic of to count net closures. store XX quarter very and we unit the report openings stores consisting On front, we fourth XXX the

domestic year, stores. For the full net we opened XXX

new comprised stores XXX division that XXX QX, added were also during new are XXX our openings and net internationally. X,XXX very stores opening included the pleased our just to of store The international net We store announce XX which of closures.

international. year, the XXX we new net in For opened full stores

comparison. impacts stores XXXX, which XXX we reminder, year-over-year the converted significantly a As in than more

we opened domestic brand. our excitement Our by market and outstanding XXXX When the level new growth unit to continued globally net driven and adding across and diversified global X,XXX economics. together, stores commitment international franchisees’ to continued growth demonstrating international be in strong the store

revenues for were from million This revenues, quarter factors. to three Turning year. the primarily up from fourth total increase $XX.X resulted the or prior X.X%

higher growth. store supply driven U.S. center food by volumes, comps chain strong First, and

and and resulted international in exchange sales rate royalties store franchise Currency And royalty positively from against our higher stores royalties as revenues in changes weakening stores. domestic impacts higher million the exchange revenues year and the by dollar quarter prior certain the finally, impacted Second, from due increased store QX in sales our positive international count company-owned versus higher to as foreign $X.X increased count growth same-store of currency well rates. same-store growth in currencies.

currency For the by year million. $X than fiscal less foreign revenues full negatively royalty impacted

wage for on company-owned stores primary offset sales and XX.X% fees expense. decreased rates based expenses the lower moving partially the operating Procurement insurance to margins decrease and to slightly of The revenues driven in margin operating the savings costs offset chain margin margins from this primarily of to to as our increased business. margin compared to the global higher consolidated transaction operating were percentage these supply Lower quarter. and The drivers delivery decreases. XX.X%. XX.X% these operating franchise insurance increases. occupancy higher decreased from The benefited Now benefited and by prior operating our labor partially year margin, labor, in by driven prior and quarter operating primarily a XX.X%, year, as XX.X%

franchisees margins, with that have share earned checks operating great leave I to continued both and sharing partnership we would U.S. also record in like our and in with with Canada we to performance. Before in the profit success us, note execution that

we additional the to with our keep medium-term up to before in mentioned make near-term rapid have growth. chain to expect I investments supply As times in many

quarter digital by increased we from sale that offset in versus G&A. in $X.X million these revenues in investments year them. for transactions by driven G&A the note franchisees. are as system teams received investments fourth including investments Let’s the that point the of recorded support shift and Please partially our by fees that initiatives now technological e-commerce, planned to primarily our prior quarter, our

investments on XX of in based increases. to other million company-owned areas franchisees also strategic stores and contributed to in sale these compensation pretax $X G&A. the the a partially Lower offset increase Continued performance gain

Moving partially quarter, recapitalization, down million fourth primarily increased expense net quarter. the of our as result in offset XXXX was of increased net compared this interest statement, by a from as a borrowing by $X.X the weighted to X.X% in income prior year X.X% debt rate the lower average

for in point effective in our income quarter. a in a compensation. tax reported equity fourth result on decrease was rate a This million of for Our rate. resulted $X.X XX.X% taxes effective based the tax XXXX tax our quarter provision benefit excess was There decrease X percentage as

we volatility rate our see that to continue effective compensation. equity expect We based will tax in related to

revalued we all When of result assets our XX.X% fourth was and net prior you QX Federal was a quarter. of it million tax the enacted provision quarter the on a year effect deferred the add As and not reform before year that over liabilities was in up, reported income or material. tax all end, $XX.X tax our up

Our $X.XX versus in diluted the fourth EPS quarter prior $X.XX was year quarter.

$X.XX Here that is how breaks increase down.

including a year our benefits to negatively us during positive from revenues. operating rate tax and Lower including by royalty improved share expense related compensation. rate $X.XX. a positively foreign us gain on benefited XX% impact from $X.XX, of lower period benefit sale the by company-owned resulting stores Our repurchases currency $X.XX us during importantly, balance primarily And us most by debt the a impact on equity impacted of $X.XX. by results benefited diluted result the $X.XX interest on based Higher as tax counts the impacted excess from $X.XX share a net net of the exchange effective higher

to we grow $XX and growth. invest technology in to continue up turning to with full aggressively most of our our our capabilities more capital invested and as Now, million for supply rapid we expenditures cash, year the use in first chain importantly, keep than

approximately retired the purchase an we fourth million $XXX of for $XX.X at quarter, price average During share. XXX,XXX shares repurchased per approximately and

received nearly program on $X accelerated the with shares we share also billion QX connection and which settlement call. We repurchase our retired the XXX,XXX discussed of final in

at average we shares of the full $XXX million $X.XX share. price approximately per billion an X.X year, For for repurchased

During our Subsequent principal $X.XX million of $XXX returned Board of $X to quarterly quarterly and quarter, we debt. the our million on approximately form to increased XX, the Directors of year end on to authorized replace dividend required in also which common million $XX.X our and to February share fourth a payments long-term dividend up stock, of shareholders per XX% our does our to program. repurchase program previous new made our

capital evaluate to our benefit most the cash to efficient well shareholders. and as for our effective best will ways as our of always, the to the excess business structure As deploy we continue

will a technology We Day $XX Investor system expected the our we basket up including used As positive at held spending XXXX we in million capabilities, like we currency as currency lesser later project be to would full to openings. currently $X U.S. gross this XXXX, million shared X% chain with If levels. We for to new to XXXX center we as remind look the on impact store innovation, company-owned will of store be forward open of estimate that be that supply into that would supply impact foreign flat to you our to XXXX, chain could capital and the year-over-year approximately capital our compared to continue approximately today In $XXX more in royalty you on and revenues January. be foreign X% food our outlook million. that to I to our capacity extent expect year rates we year to favorable. XXXX

our to to G&A our investment expect technological increase We in and due e-commerce initiatives.

G&A be million that by in be plan the recognition Separately, XXXX. $XXX revenue variable our mind or and can We performance-based for performance versus that quarter other up to of other our first will in things XXXX. range affects down vary expect expense expense expense new also G&A the as costs. remind the you total $XXX of accounting among million standard I we like compensation Keep that in to would adopting to

on franchise advertising We disbursements to to contributions report and will P&L. our not-for-profit required fund related the be the growth our

proper assessing our or We change. reported a guidance on of currently this not a expenses material impact this our income. as expect operating the do net P&L to on result of We are classification have

Overall, our result new results our be However, this significantly us of and and year. tremendous higher and very momentum $XXX we north the will in million. reporting estimated with expense for pleased currently continued to quarter revenues full are well guidance this

value remain driving it franchisees call I and and great our now and for Thanks over will will turn brand our consumers, forward to shareholders. the focused the joining Pat. today We relentlessly providing on to our

Patrick Doyle

there forward attended Many business, additional Thanks, to the or was while outlook the and month morning beginning was last addressed on that our events. some listened and Day of obviously everyone. Jeff strategy of I at of and Investor good going the focus state you our the the news

confidence an While decision deciding the understanding our capable announcement we to earnings incredibly I approach to I and chapter I leader next I spend final performance, him will accomplishments and the provide of the since extremely leaving in remarks strategic our today, standard look in July. for Rich with me my to earnings to my welcome going continues you Makes leadership. Domino’s contribution for on call industry. outstanding one attributes the have briefly business move to the passing hands as want the I and of and for pleased reiterate XXXX. the wanted gaining strong our skills, his element succession on of the mistake, to my during get time the first opportunity so and With next This our process baton set my most table Domino’s. overall within following now to was transition of what’s to at emphasis the time of our underway, let’s the the key his to XXXX noted further more no leadership and important forward this note Rich with in I on to this quarter call, April, am officially very in important of which

am dependent plus of the both international of around we growth, the last importance a within in on had nicely again and over X-year did our year, how around I very for high year full earnings model, contribution way is combined year units doesn’t our shape. rest XX total XXXX. on me two let measuring same-store year’s continue XX growth on Investor and the are X-year delivering thoughts comps guidance, signs which that of Unit business. of of domestic time one comp XX franchisees featuring to It closings we store repeat guidance that combined it or any favorable results with the key full a to is with within come of have domestic that a performance basis. the well and X-year business. my our and a ahead a enterprise of corporate were retail in in within healthy for to bar the on importantly domestic is line discussed International sales our performance, and come We With for while the the and world many discussed and progress within silo. top domestically with continued to performance that our been truly a of important, continued at economic XXXX, often more that only set and closures an that amount strength closures build reliable to more long-term on metric the this I just bottom stability engine impress momentum deliver the growth global underrated year balance end range fourth and the It’s fortress yet store continued our the the we continues our quarter. one This XX% sales mentality more category. closings our the issue on takes highlighting decades with and both centered one this pleased blend steadily of potential throughout we into have the either closures for around growth XX lowest for Day, just of unit

lap fourth recent are Our history U.S. our results difficult quarter most we in the face of the in solid.

few domestic and I who our had on aggressive our I impressive in addition, net to of proud year a it sales show wasn’t same-store with In full unit team back. while the and the continued to All growth, years impact stores the am am necessarily investing consecutive on focused extremely understated. commitment be XXX for XXth U.S. growth, staying quarter which to re-imaging. case franchisees pleased cannot retail growth, sales the the which our of

extraordinary end store the and growth. results relationship customers a performance with am We store one solid rapport particularly group over absolutely same first fastest XXXX both now grow maintain to Year are continued completed to and substantially always used the second a images carryout and we our designs helping excited strength. credit outstanding is franchisees, to and in exact having new those that none. get to of for QSR presence that I wide. me our pleased the to our global market in very U.S. XXXX for leadership say [ph] wanting our XXXX, truly be terms impressive the market came that growing in was in our also into in demonstrate remind note time to this and decade to company We of and I for freshest beginning alignment position franchisee of

in to be cannot importance of with continued To our underappreciated. in this customers the and brand. measured, way complacent, can for our I have our me together no be winning thank our for always continued impressed to passion I who forward this look be franchisees XXXX. you refusal While

importantly dialogue a foot to continues unprecedented This the XX keep focus is extremely to to perhaps sales territories is difficult This on region that stores team with for will X-year long-term. retail now has is to that while an of of instead quarter. deliver sales more them it the reached and the India particularly years visible, the usual year a in Asia-Pacific continued to with cost globally was our the than growth, fourth XXX full future of others quarter net consecutive competition growth international, fortressing rapid to encouraged which XXXX up notably working. for highly around executed for we strong a soft more results of unit a quarterly our on within didn’t to with on strategy and game on growth. same-store market, Moving economics within on new markets leg business streak I unbelievable to consecutive departure showed being most during be growth get am volatility – X-year our building line the the recently bit in the below making continue competition have out business. The more XX focused XXX And rather a unit for top and it’s recent, tremendous pleased estimate competitor. door. of their the confident approach that to outlook. the results I range We of am deliver our of continue continue one fortressing was fairly a The exciting exact. is comp and say but – against long relied Needless all strategies and

master we and changes a well areas it our extremely and correctable of as with pleased continued and the improve, strong the I performed by this regions continue while India base am quite continues the territories to get grow collect we reminder fixable exciting and its see strong including done. leadership. and franchisee partners large that and fortress Our to The master leadership about new markets within aggressively results UK to there situation future public ever notably are as to our are franchisees that All-in-all, is all master model produce and address territories markets. in to and continuing will nicely assessing franchisee structural and as under our our relevant driven

XXXX importance and voice loyalty, for suite within the of option with more including the investing our many on bar platforms highlights delivery. technology. growth strong of test emergence self-driving first a and ordering of ordering Alexa We AnyWare meaningful digital as of continue another glowingly popular year to recently and of set featured our vehicle the innovating

Day the advantage month, the increase, will at as we our to and effort it is pleased invest tremendous off I business coming so outstanding of franchisees beginning we closing, the ahead have by the every and to pledge hard keep making quarter In shown XXXX this Investor to with committed As last to feel our brand we are our about fee worked momentum discussed beyond, technology in XXXX. build. and the we disruptors and an technology year of fourth stay

strategy to own, our approach over for emphasis the goal and disregard insights it rely number the on long-term questions. playing on for dominant path now of global reaching we of open a and will We in and leads over we customer complacency all extending continue competitive Thanks. on have built, our up a one. defense offense And

Operator

your At [Operator line Instructions] is Peter from BTIG. with conducting will this line question-and-answer our time, session. Your question we open. Peter, first be of comes the Saleh

Peter Saleh

Thanks. Great.

I you was New a ask you was some know number So X-year in this else about a I if just basis, stock market Year’s day, be U.S. magic to showed that that from the on softening deceleration sizable guys was include comp I but XX a can that may points the quarter? wanted anything there pretty the call out think basis impact U.S. there even X.X,

Patrick Doyle

kind about in with year point, accelerating previous the mean Now end come I year of it. the mean, good very growth I feel from store over if adjust same out about the half the you back which of the through we rolling XX.X New quarter kind will it. Day Year’s feel we of the a first really good

Peter Saleh

what resolve maybe international steps on will there what you said business bit was region then Asia-Pacific issue? on a and I bit And be you the Okay. a to think the are you you taking the this elaborate little think seeing on little can softer, you

Patrick Doyle

Yes.

week. change overall, Japan Pizza about last So a you now. of good Domino’s in that very had leadership probably but enterprises They Australia have the There some in feel saw was out weakness already in released business. particular, Japan we

been are We great a there. It’s little on business. getting focused value a

in I I their And think think of results a were great the called to X business or be and better. out Year may weeks those release, it’s have they going into the already X heading first seen already continue New you to doing there.

early medium and some business we think good about again in of the I long-term So, the you reacceleration business that over and already XXXX. saw feel

Peter Saleh

did lot know me G&A XXXX Great. And then the sale, G&A, difference in that pushed get XXXX from on called on the anything the anticipating, two was would what supposed lower in G&A versus on those anything were your or else than the out I we lighter the that stock-based the be else the the explain just any last question was were to you comp, side, are items gain projects in of your guidance? G&A there into

JeffLawrence

Yes, Pete, it’s Jeff.

all speed the tell First would at thing we I you is full are strategic of investments.

not going on We to that. slow are down

to continue say that. us You hear

and The everything the stores give, do of and well QX XXXX. this we was QX our about you to items didn’t did plan wanted walking bit is little QX the store that XX to one gain will one on franchisees versus back continue as that in to So mentioned, the we in two we XXXX. compared other the into was really sales

led those most areas. continue on So, to are in we invest to also year-over-year comparison your strategic lower track importantly, the overall and expense, there but investments

Peter Saleh

Thank very Alright. much. you

JeffLawrence

Thanks, Pete.

Operator

line Karen, line your comes question Karen of the next Goldman from Your is Holthouse Sachs. with open.

Karen Holthouse

first I the on – have think is we the savings side. this heard about supply procurement talk Hi, chain some you time

sort of through how to that we think So, around do color cadence moved the next magnitude you give that then and about sort of any of as year?

JeffLawrence

it had really or years a ago. are more the come really little that’s brand what scaling from really you than even procurement savings would and market X pretty rapidly X bit expect had Yes. power to a mean, I

in through there. margin, lower to franchisees supply but with course chain quality, ingredients, chain safe there flows which XX-XX overall a of of high job and at team food us our cost fantastic up continuing just very that supply share the So, to source of benefit

is the the to we So degrade cost food not continue process, sure going to that product to same we we everybody in quality in down important improve thing going ingredient time. are also but make the and the are that drive wins that, at

Patrick Doyle

thing would retail last sales only what just year. did see you competitor confirmation add Yes. Karen, The our to on said from their I Jeff is

will and be which now you the we have fact called and are treated may largest out all so we We are that made our partners. Investor supply scale are team that tell have aware I expect to sure in are procurement that bigger matters press we terrific the going U.S. we the fact the at than with but of the now Day, partners of clearly our are and that the way matters largest globally and in and industry our to pizza that

Karen Holthouse

I you I managing the concerns on walk a has costs doing on also season. through that? the to been the be exposed large upside has on you through give in much spikes of and prior about just freight general, markets. on how that your earnings reasons the one of to where heard any big you color And third-parties then costs are been distribution or freight challenge pretty this might us completely have some Could not versus pretty currently it to relying spot upside – And – prior of we so sort think through spread distribution broad margins, think logistics

JeffLawrence

Yes.

to just we of we not as own delivery food delivery our other of point to given So business, this will food of own but our parts consumers, the a view store our like probably the surprise our customers. come of on

a in very deliveries And large fleet and U.S. so X a those that and of trailers lease both the Canada. we of tractors all X week to our have to stores enabled

a of going cost the result any seen material our not freight on in in anything spot market. have business We of as spike

are out so there there get able us certainly and of pretty no don’t disruption in expect front pressures was for time to any We in QX. we in and usually a that good

Karen Holthouse

you. thank Great,

Operator

next [Operator of Instructions] from open. with will Will, is question the Slabaugh your Your Stephens Inc. line line Will come

Will Slabaugh

transactions on role. in sounds seen little year years, larger we a a toward a driven I have the like quarter X guys. playing domestic that being comp now had over is and question it past shifted bit by comps the thanks Yes, this heavily ticket to and

about can and as growth are order items talk So, time? over earlier how you ticket mentioned comfortable that you the you in what’s for with growth driving rising average ticket

Jeff Lawrence

Yes, it’s Jeff.

around and on both did again a roll we and So, Year’s that XX%, but little contributed is really a $X.XX in both pricing. consumers, that tickets come which a bit on the remain overall ticket around value about QX, just is We pricing on the order, there TV a what getting the to orders, our franchisees was have bit. have getting little of I quarter, to in out fruit us kind different mix which sold delivering New wasn’t We per great a a were in muted point to biggest again the healthy bit X.X did more that undisciplined which around and were our more little which and the lockstep undisciplined we or it is the little comp. bunch we X.X% in of best quarter Day, bit the it in you one to way get expect. But were to QX more contributed What things couple one with ticket. called shift match

is the we construct which be we tickets. And as grow always of roll and role thoughtful the and do about orders what so real ticket is to do to into just XXXX,

news ticket can’t fact comment bigger we a that the bit bad XXXX, for us on in QX. no in was is little there but So,

Will Slabaugh

thank Great, you.

Operator

is line question next the open. your from of Your of Gregory, comes Gregory Francfort with America. line Bank

Gregory Francfort

Hey, guys.

on think it domestic one even growth X% know I your X% in revenue of I what had on first on up increase the fees look you franchise units side explain was maybe Just took though as digital this dragged X% the your comp, up if and I because the franchisees about at can in last quarter, versus a you down that, you sort year. a side the

little comment a question, is? of what am the on saw are curious a release, your I parties partner I perspective where a aggregator update talk you external Australian second offset in of and you just us you think versus from about, And aggregators terms third-party sort how an perspective So, then and Patrick, maybe delivery on the know about we coming in can that? from with

Jeff Lawrence

one. Jeff. first Yes, one third-party take and Patrick take second will then to over for Greg, I I the it’s will the

On the the contractual a generally rates royalty revenues, still there the really lot change in contractual rates. are not

point bounce the in offer we last, The new might rate see some You incentives they to out which there been would pretty going the but opening costs for consistent bit, store some around. as that’s again little there. know thing down take I one effective do the might bit that a little defray helps as of is of a get you growth

mentioned nothing fee, nothing of mix the the technology bouncing the obviously it that as digital same than really in other was additional really so for ‘XX increasing in ‘XX was which You see revenues. that, there generally other than around we

Patrick Doyle

portals, delivery going January to ourselves. control some reminder on the but came customer customer really testing that, nobody to real not at Yes. in Domino’s. advantage we the have And We A we of first orders Australia, competitive and this using think experience the of that’s that over about better related the and it Investor the of all ordering Day we the doing the important. both economics built out than process and ordering does talked and very nobody to by and are continue they restaurant digitally And are years at us behavior the delivery than length Greg, more more anybody. aggregator, delivery understand of does comments they than

something that’s that the been something is base we And and is efficiency accessing the process to but many competitive is going said not have delivery customer very, we you advantage process something build ever yourself. know that that’s the way understand in see of outsourced, it’s delivery to tested So are believe something long-term and in places, the very January, orders because we well. to do as only and

you than third-party, do it to accessing you it you is do decide advantage. can basically by competitive think yourself, use could where you to better do not only is if going the because do of if reason we are build something it are you yourself third-parties. And you So this

Gregory Francfort

perspective. appreciate for I you it. Thank

Operator

question Matt comes line line the open. of Matt, next Evercore with ISI. Your McGinley is from your

Matthew McGinley

that? at the was growth, question what tech the the question which on materially now paying comp around AUV with is have that would FX, the increase, like royalties or it been and fees have so conversions international I what it drove better or something morning. than grew revenue differences XX%, Good in a implied some by the is units than

JeffLawrence

little they Jeff, it’ the all Matt, to that more. will a of roll pay bit stuff conversions up, older start bit as obviously it’s Yes. to a little start

about platform We global around Rich bringing obviously more also acceleration that what of the has are globally. Those in PULSE item the revenues ordering well. into talked online have as an and deployment line

the And it’s bit is which that have of obviously growth increase store in comps. so I the seen a little stuff, and the there, addition of all

Matthew McGinley

was have likely sales, the than profit, would did quarter stores lower the the asset any XX imply company average I I Got fourth $X and impact on that stores in for I it. was was then in rationale rationale the am it on in that the margins this the for selling And million think fourth quarter, curious on only quarter? what those

Patrick Doyle

will and to Jeff. over I then fist it Yes. answer kick

stores a always what some $X of kind sale geographically the others. they sold game, are. and not were past all that’s in were from But said were at is the corporate that million further to we have These little just our price. going of the out is bit we of that look where our First stores stores are

some also already in operating. we density where are are places, increasing stores, We building

kind you management is corporate and specifics portfolio ongoing will range will this our Jeff. within the stores of of if of to kick So it over and the I

JeffLawrence

add thing sales – would The well I quarter. place what is little Yes. the covered pretty actually it took you a in the later only Patrick to

or margins So you impact any team on of won’t franchise be on the revenues. as big an USA of the

will of area. that Coast will a as see And than again flowing less which stores be Patrick’s really important You geographical portfolio in normal as just the is management. happened couple run in far Virginia, East through that’s But point to that QX. Carolina

Matthew McGinley

you. Okay, got it. Thank

Operator

the John with question Glass line comes open. next of from Stanley. is John, Your Morgan your line

John Glass

morning. good and Thanks

performed opportunity the Day, carryout the quarter? highlighted how you delivery First, Analyst at recent this relative to did carryout

Patrick Doyle

did both great. Yes. They

John Glass

deliver the you but wanted there would to willing economics that and then them using delivery, be – compelling an answer is Patrick, about the if would didn’t in even the in And the is aggregate answered few opportunity that or real meaning ago never you you order outsource, U.S.? – an something you outsource question by the the last Okay. understanding questions opportunity whether to have about question to be you your aggregation expand resource marketplace mind to a to be

Patrick Doyle

we that you that’s say I okay, by what is first would going start order are saying guess is, Well, what aggregation. looked it’s to at. something to have I –

to argue by right looking So they today for who lot go like and do competitors because they people reasonable Googling pretty that that. buy going the and like the up I that. portion portals wind of an wants could restaurant of food Google go in to. we a keywords there We are order through process are use aggregator, our is start And our sales

not the portals we at to on delivery, that’s those always are how on in going they we are is for without today look less them of and average something than look that are those, you charging XX% pay are going us But for the restaurants investment that use you order that as if return evolve, that. at clearly the U.S. largest aggregator big, ticket economic. to to and you So that’s

bit it’s got generating experience through that’s $X.XX a over if all system. just is ties they us, we paying loyalty Our terrific of going point customer and our It the why have for a is program little which the it sale we are X% are franchisees data. our are into

efficient So the and it’s stores. in easier more

people portals So is never answer and of say kind dramatically pricing may as never may change. operate change how because the

a places near-term the may outside moving the over of it, something support at, those opportunity that looking think economics well certainly don’t today, but I we is big time. but are it’s So economics change where we sourcing are

John Glass

you. Thank

Patrick Doyle

Thanks John.

Operator

your question line Jason, Jason from is next West line Suisse. open. the Your Credit with of comes

Jason West

Can guys me? Thanks. hear you Yes.

Patrick Doyle

Yes.

Jason West

Okay.

Just sort you about you but quarter, I the aggregator up question of urban to have suburban the sales seeing mix one, which the of talk kind the referenced I going every if in there know can this divergence may past? am back are that if of of versus a comes you any sort

Patrick Doyle

mean aggregators what in those urban Yes. stronger we no it than areas. before, today certainly said I really are different

out they their down how in to customer, the are been of change take economics struggles If seeing that. more likely of been – shifting the economics, with into not in there terms real and you around really out the a struggle There still incremental volume how articles dig But deal that their driver generating the of of care is that’s restaurant. coming in that. restaurants

Jason West

there move Okay. the the And guys of back of be is then that year other XXXX and anything going the of or see inflation through you accelerating helpful? something higher is kind the outlook, think going question did would to is to pacing through you that just that as sort food be that on you

Patrick Doyle

inflations is and our bit restaurants the again is XXXX. But basically that a X% favorable told X% was a that’s the into a be to we than for impact of again food point was it an of kind Yes. I XXXX, going store – front are the impact on don’t going little half year. a basket in pretty has which you the little on We over real was for big a to back that good up points something ‘XX commodities in, ‘XX it wasn’t think – couple commodity half split more the here a be economics. in or of which us a the mean bit of we bunch – whole inflation would range again in

Jason West

Great. Thanks lot. a

Operator

line next John John, Ivankoe question JPMorgan. is the your Your open. of line comes with from

John Ivankoe

be I your Patrick, I I were as if used markets, avoiding fixed over to to and if more the word relevant in I think more more perhaps Thank think your of involved some first that about of prepared Hi. terms X corporation franchisees want the and in of in kind franchisees can larger be of kind fixable interesting you issues of start we you. the things of on right, affairs correctable proactive X referring in mean even or be will I words of be? comps you think to these to that guess in you some the as those of you and the international years remarks, in think place, years context whether you in thought avoidable a put these used the being of comment corporation next be the the getting tactics need operations, they aren’t may bit little your international a you

Patrick Doyle

interesting. it’s think I John Yes.

very of the you a on with doing where slowed course over of slowdown the track. well XXXX, bit And India we year the it in If of look period had down now early is back very, UK much back is a and time it again. very little had a the UK.

Japan, I think a doing in And every released you was make been the with the look, just first it is as while their about have of a about a talked they was within you the just at they And saw you from decisions release the don’t it’s – just time promotion fourth logical talking you get but beginning problem it half, results quarter about would that point that I best as can, research into for leading they once for misfire. half period how a always holiday their Christmas the XXXX. as when have a function you your it the was of was a results, the And them holiday. that what you out reminder all do that saw but were and already then were DPE to right. hasn’t And them. out well they going I worked that are when during about talking them

I of already comment something doing numbers DPE normally, quarter, but those was within the and it released they had frankly, part already So, was better. about wouldn’t as the of fixable part talk

So clearly, it was flexible.

do what going understands ultimately the and there them little that of of performance, that’s a are the of this of on everybody master most asked it who Every decades the but we local kind because rotate pretty at in good are can franchisee a and better we job. and bit we always than as to who they the confident a going they the master they decision while we a around to think seemed is of dynamics So, overall is to about get and in to positive have miss, think have once right And are the we of world is phenomenal XXXX, talking back now approach multiple be, good quarterly giving miss. John got time to their I opinions wherever are but and going the it markets franchisees track. answer

John Ivankoe

Domino’s local of even model And the to shared do big think global fully I model opportunity, opportunities do shared some always data you to or at there services the any global mean optimized that maybe issues the they the there apply that markets when global I but think is little appear? is you is learnings more think have

Patrick Doyle

And that help data platform of currently have that them a percentage U.S. relatively our are our part system It’s because in but small is international have or to make our mean making good if we online it the stores why point-of-sale number sure is it’s now access our – to going X,XXX that majority stores of on there of we for X,XXX we on the cleaned outside I look is got properly for means the data ordering of only you of think that and are, small that being not of outside better them, at still and Yes, U.S. platform. what decisions. I us, stores

So that helps.

into leads why that’s towards to why important to is I gives platform. that, markets we comment, a that it, us but when that bit your visibility it and shared we more little can think on more it you So getting kind of guess more and of more see a bit our do continue services are

John Ivankoe

you. Thank

Patrick Doyle

Thank, John.

Operator

Alton, comes Research. Stump from Alton line open. the of your is question next Longbow with line Your

Alton Stump

good you. gentlemen. Hi, morning, Thank

just quarter, we from was competitive of question, already. fourth Just quarter think how appears asked a or today most of quick a fourth quarter that. But out news course of it responding in standpoint first are you in any seeing see from what first I the been the has it the to in as smaller aggressive, the more Did and/or some maybe to in there quarter? closures being them pizza impact either

Patrick Doyle

retail fourth I to the quarter competitive the ultimately in No, going their the about mean be the a retail sales sales. in course of it’s U.S. over and negative were and standpoint, year all from

So, no, we really didn’t see any difference.

Alton Stump

Okay, cheese thank on follow-up that at is X% front you. over downside just where to And right potential there out look the X% the is then commodity any one of to as rest being up quick you now, the kind range I year, of mean, Jeff?

Jeff Lawrence

the stores the currently under-perform what in happens what food Yes, over it’s can X% list. that are experience. different is to what based for estimating for items up We down X% will all-in on or marketplace and the we again

I to think haven’t into XXXX, tells tell don’t cheese at agreements at We to the price going, lockup volume cheese I certain anyone for prices. done are have some know going. you can’t what certain We is but enter where and listen, where times don’t of is we able

of what cost, and for with the the of to kind of in sticking happens important field what and good what regardless right continue we determined are food that’s U.S. the may have the executing on regardless they think and rates, the just attitude with regardless discipline not message may so the guys real I commodities where build out part at think doggedly I franchisees happens know, a us most. is have around shown way matters labor a our with high or of share hard level to

Alton Stump

you. thank Great,

Operator

Your is line next Deutsche Brett, of Brett with from question your line Bank. comes the Levy open.

Brett Levy

morning. Thank you. Good

the on concerns in and very are focused of some the there seemed mean things out might about sales. hearing be global growing the it think you players marketplace the you the in splits, some I to from what If know international fortressing on been about have we

how about and means the should we could returns the thinking So it on in we from units units, you and a what should in impact of think of have at existing a of these U.S. impact terms more the material in thinking it retail see what really fortressing when on growth do can start timing be standpoint? this sales be how kind it comps, a really new we about of on Thanks. drag terms to

Jeff Lawrence

what’s XX% we is let’s energy have we ever the comps with the return on been do is that growth. guidance say have given balance to the store we way good generating growth that to When to seen. the as around the we Well, a is look it market for and best ultimately that of has between is sales, investment at store retail franchisees as which on think X%

for international our master there is will from that franchisees, of concerns And You you that I which are for tell the have market to seen around you strong store from the in franchisees are continuing strong, balance people maybe number expressed that they a very if years. who talking there coming very, from growth. the international good why about generate but are very it, returns are not

is something in guidance for over there consideration business, domestic domestic growth approaching now X% this the is are which on our U.S. of but the have terms reiterated In you that there Investor some looking year, our all effect we international already we the at at means in effect store comps, on January. in comps X% already XXX into and of were the growth so both taking our for on when Day count of X% net and to

Brett Levy

you. Thank

Operator

O’Cull question open. your is line the comes with Your from Stifel. Chris line next of Chris

Chris O’Cull

more causing Thank if trends you you. Good past was I the months few what the been and morning sales guys. you apologize Patrick, see thought have this, missed mentioned you but did volatility? in I volatile

Patrick Doyle

international. I was referencing

over specific so markets. from little it really course international depends XXXX some more of the and it was a And volatile was than

Chris O’Cull

what mean increase company color did Okay, I ticket? And quarter the you on I the to domestic. thought differently apologize. any then Jeff, in the

Jeff Lawrence

in two the mostly of brand. was We always the on Yes. Bread to were happened that per those mix food the sold primary order, Twists more There I due that on to quarter we four due bit quarter goes some and in help or us a it’s early TV on but coupon mean, a that things. was ticket, probably is that. one little little on was

Chris O’Cull

did company with Okay. the ‘XX? ‘XX pay And then how at a just above level they in do bonuses target annual lastly year-over-year compare or cash or

Jeff Lawrence

our So XXXX. it percentage level, it – below above XXX% the target in was but that we earned was

Chris O’Cull

Thank you. Great.

Operator

of from comes Steven, Stephen question with your next is the line Your Anderson Maxim Group. line open.

Stephen Anderson

quantify regard our markets? stores how much of on question can I domestic want impact you this international Quick strategy you. both so comps, and existing to you on keeping comps, longer ask though seen in your mind might to to part within have Thank that an just term build with can cannibalization,

Patrick Doyle

the and XX think to comps but is the not again again really to eaten than that impact more retail all impact, would being grow are it’s much with when to split obviously, or retail more Yes. how above how Stephen, sales. splits. that X and profitably much you back business, in an comp question, range great important in just range you FX it question, global how you above total. for point we would X by strip going which there. about by led the from international you is to again above again And that range sales here the XX% out we disclose on get of Is is, And yes we X sales retail there the for distracts there

Stephen Anderson

Thank you. Alright.

Patrick Doyle

welcome. You’re

Operator

the from of Jeffrey comes line open. Bernstein question is with next Your Jeffrey, your line Barclays.

Jeffrey Bernstein

a much. just wondering, on are slow in basis, anything comp digital carryout you is are you on internal been one I the did you Great. since if regularity both more very to I I well, follow-up. it’s of mentioned talked you the some industry know don’t that what data, anything and the it’s or a Patrick, but if are seeing terms slowdown of seeing of feel is past industry that about had would and and you delivery bit industry and good maybe know think the Thank I that attribute know are sort there doing easing that X%, a trend what X% perhaps get little in am X-year about you the great think U.S. X-year trends I you you maybe industry comp? one maybe you know the I modest how And with said, slowdown the and perhaps about would it don’t in you attribute I industry, the Two just know the to to talked U.S. recent growing comp, leading I you are discussed then wondering questions, was

Patrick Doyle

really or overall. We year. industry is very, this very And ongoing of point Yes. trend. showing anything a fourth deceleration not are acceleration of feel previous of I so into we we of terms year. We had the we shift out the as quarter are quarter all, materially first Jeff, guess XX.X seeing about iterate, the in over that the a half a the over rolling from first the good

Jeffrey Bernstein

comp the the of I incremental for because on both an and the Jeff us, annual basis and ballpark just and then supply and have streams you it or remind Got you can U.S. point combined? international the chain, from EPS guess what’s company an revenue franchisees annual

Jeff Lawrence

very Yes. for us. that point We comp of math. that give a out. from math We it’s orders But good particularly is if don’t know

Jeffrey Bernstein

And just know. to Good lastly…

Jeff Lawrence

Jeff. can’t We work, all in do

Jeffrey Bernstein

that but No, our in will model. I put

it So does…

Jeff Lawrence

We have here. the same reaction

Jeffrey Bernstein

just still lastly, increase you balancing the I dividend of yield, more – more X% about do why the in the terms as the I and roughly kind maybe further? upping wondering you it’s have to of healthy is repo, repo the free been would I mean, more flexibility repo, have plus something just the I kind share type you the wouldn’t that is now, recently flow And be terms range peers, right would that just you Yes. know will strong end dividend know cash even the the with in talk it’s obviously – about cautious return the and X% low in what still which and you of am made, be then kind there keeps you cash of of peers line of in and dividend more

Jeff Lawrence

shareholders to dividend, $XX increased plus, ordinary our from on was of plus Yes. It’s XX% like before. Jeff, the form was again. on XX% in Board We which XX%, just million returned the which years

interested payout also the the stock bounce a at has still what quarter day to is the is is it in what XXXX, healthy the And is things. form. a other we shareholders dividend in to control somewhat $X.XX dividend we a so return And to while directly, care I don’t ratio is are dividend yields metric, around, would and we some the tell We so we price healthy dividend. that get track but end chance in and of obviously very about one you believe

Patrick Doyle

strong. have investment shareholders but on our And you extraordinarily I would return is on if are have cash, our the one been shares look to add always backward fact buy on decisions we about thing agnostic use we our talked that for how we our

there approaching it. are And in so is how we a balance

the the We dividend are returns we increase. darn announced continuing with the good buybacks. to move pretty with But up have latest generated

Jeffrey Bernstein

Thank you. Absolutely.

Operator

next your Sara, comes Bernstein. the Sara line line is Your of from question open. with Senatore

Sara Senatore

above you. going One question see OpEx invest to comps rather know guess that, line company first past Thank investment will to extent any range to technology that to the the follow-up seeing Hi. maybe one globally then do we that I maybe and that that sometimes with then line and are to I have and think if line? is and you find are might sort and grow then said they G&A, decelerated for continue on vary than in need with spend, you X% the more invest how you companies are X% ways we growth top in there thing about of guess balance way to side the please. I to has us to that but that top will so your you And think a prioritizing I I fall and follow-up

Patrick Doyle

do back which have at said repeating we are making today is Investor investments we Day. it. projection them the are X% from investment sales we how And generated of are to But to go to think and to that continue will can in the of the going earlier look We and that are front to that return going front much the opportunities what afford of to then and what are both sales as I projection what going against strong backwards I at to we return G&A investments front those Yes. we we we capital us, a of global And to previously. to about invest. are retail think expected in And growth. our drive how investments spend. XX% good continue is we for as to odds our is of invest long don’t performed shareholders continue start we feel work on that

Sara Senatore

something and in to an of grown kind that of talked way Thank possible technology sort a it big do think if and advantage, Okay. there going respect the is over of time, is to thing organization was, you. is curious I swoop do then technology? competitive to in in-house you acquire any delivery a kind that That acquisition company be it’s one I you was to expertise and talent guess makes with of technology or follow-up to for to about organically be one has leapfrog meaning is delivery sense. And fell through

Patrick Doyle

Look, competitive are third-party the it to available definition mean have or you broadly if I market advantage I is anybody build if But that anybody themselves people a choice it. by acquired a using commodity, can you that’s access have. in think that’s the always ultimately

definition acquisition. continues else’s acquisition, I and you could access everybody everybody available to they technology if through through restricted if acquire everyone. to see build after to and is that But suppose somebody then by almost commodity advantage So something they that competitive that that available it made it be a

would then into there and you that if it else advantage. off to only got technology really acquired an everybody to So opportunity that turn of start be competitive

Sara Senatore

Thank you.

Operator

from open. DiFrisco Securities. comes Matt, line question line of Your Guggenheim is your next Matt with the

Matt DiFrisco

Thank morning for X-year concise. I to and growth delivery in over same-store us? for and remind am aggregators delivery curious pretty you I X to entrants hour, overall And a have category new food opportunity X about A and lot I your will just and of embedded goes the domestic so keep Thank then everything, of appreciate guidance, is what there all you. questions or what’s the an it it third-party I behind X-year sales Good can you. just outlook follow-up. of if the and

Patrick Doyle

What that growth so this have about have the that’s know incremental have how business. a restaurant grow. far There being you don’t their incremental that we been seen specific going talked category. assumption to of got around people has is no to I

So the this would I incremental I on-premise business take frankly some people’s think have you delivery. with industry. within or is takeaway seen business issue overall shifted What is that to-date idea the to

don’t chain if it purposes as carry-out restaurant give we Overall, business, our not it’s relatively is it for as I know really I the still that’s heard on have delivery to guess business. me effect that in significant makes one And this. a So many a which difference. happening any a an you we shifting long for our I same small can from is that from transaction it’s seen all from from transaction projecting had really times, is our would impact answer have it, identify just

Matt DiFrisco

of get is Well, it seems been it little seeing is a as increasing I if am is if to trying like see bit guess to perhaps positive, category we should being little has well delivery deceleration? a I bit your traffic what go more but it the driving, for then a demand

Patrick Doyle

– of you delivery. is supply far demand you seen delivery have growing more if Yes. what I for about talk so

if But have and really seen doesn’t a it volume it customer offer So it customers delivery shifted percentage business. that’s to-date, has that customer. previously offering how some small you being being their the from of relatively some restaurant then didn’t to relatively carry-out sourcing now chains our affect their delivery,

Matt DiFrisco

to the drag the and there you going, is our factor of facility should be first up until sort it facility running then or little margin Thank capacity is and just that on or half margins? fully And color. be is will on last met any you and of that Okay. is keeping, it coming ‘XX that question assumptions pretty into for efficient quickly inefficiencies going for bit mentioned and not a we domestically, about see a a

JeffLawrence

around supply in in business, the are chain up of not open can of there. specific around expect will costs, but but first or be tell also you to QX be billion shifts of a $X long-term. So cause capture next I whether guidance that margins. medium-term, facilities it’s don’t transportation saving year, margins the is large we a volatile would when not I be we dramatically seismic is we lot deal, big, the on I that some over there it supply we New to or it’s but you it, chain are outside giving think very margin big York I but But the going a is giving bringing are revenue something On specifically again again short-term net a think a able what guidance basis, a big center in business, the not half Northeast it’s

Matt DiFrisco

for What was the date opening?

JeffLawrence

to open up target. is We in QX are the going it

Matt DiFrisco

you. Thank

Operator

Fargo. Tower open. gentlemen, from final comes with the your Jon, of question Wells is And your line Jon line

Jon Tower

reform have good it’s to Hi, go that or curious on you April, me, rate the you two, X.XX% rate, tax U.S. what ratio, thoughts quick curious today callable million given know you first would versus leverage And about ratios of one. morning, formal be don’t XXX I leverage in notes market you look, thinking some have but I in would that hear would am then your for are I to just past? do I if to know ones paper today think a are targeted kind how

JeffLawrence

that first, we in Yes. and reform, which is us I on the are that take helps will one tax winner big a obviously everything. last

being it going likely go on also to us some First confidence fall much all and dividend whether of in buyback things that, and decisions is bottom we cash flow a or that up all more a etcetera. as foremost, But do free we gives and that will the to that would it are the it grow that will the adjudicate retail just faster sales. investing

EBITDA, means that On little more X said do have reform the that turns X leverage tax itself, a the bit generally to we we than of of can comfortably. result

the going ready target same the because of we the we cost the is to range that top time, at Although are are not move say equity up, to funny thing.

we need about know shareholders comfortable to to turns good X business it took decade train us of be our all and you Our a was model. for leverage that

going say And to any we we ready are to are that that. higher not so yet than go

nothing rates have debt couple as at that, callable from always of is is we on which deal, are again far part XXXX the piece announce a in and the what looking market the what As months, to specific doing we are.

really know on to a stop, We flattening sounds the have shorter attractive curve again term the you as around and that’s yield maybe seen but quite bit nothing a more little significantly than announce stop that. looks longer for term

Jon Tower

Great. Thank you.

Operator

to question-and-answer call now turn closing I back for our will session. ] concludes Patrick the remarks. over This

Patrick Doyle

the you, we you today. on first XX. We look everyone. And quarter appreciate Thank XXXX to results joining April discussing call Thursday, forward

Operator

today’s conference concludes call. This

You may now disconnect.