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Domino's Pizza's (DPZ) CEO Patrick Doyle on Q1 2016 Results - Earnings Call Transcript

Q1 2016 Earnings Conference Call

April 28, 2016, 10:00 ET

Executives

Lynn Liddle - EVP, Communications

Jeff Lawrence - Chief Financial Officer

Patrick Doyle - President & CEO

Analysts

Brian Bittner - Oppenheimer

Karen Holthouse - Goldman Sachs

John Glass - Morgan Stanley

Alton Stump - Longbow Research

Peter Saleh - BTIG LLC

John Ivankoe - JPMorgan

Joseph Buckley - Bank of America Merrill Lynch

Steve Anderson - Maxim Group

Jeffrey Bernstein - Barclays

Operator

My name is Dennis and I will be your conference operator today. At this I would like to welcome everyone to the Domino's Pizza First Quarter 2016 Earnings Conference Call. [Operator Instructions]. I will now turn the call over to Ms. Lynn Liddle. Please go ahead, ma'am.

Lynn Liddle

Thanks, Dennis and good morning, everybody, and welcome to our first quarter 2016 earnings call. I've got the privilege today of doing this opening for the very last time, so I'm excited to tell you that we're going to follow our usual pattern of pointing towards our Safe Harbor Statement, make sure that you have all seen that, and I will ask also the media as per usual to be in listen-only mode. We're going to spend the next little while with prepared comments from both our Chief Executive Officer and our Chief Financial Officer and then we will open it up for questions for all of you. So let's kick it off this morning with Jeff Lawrence, our Chief Financial Officer.

Jeff Lawrence

Thank you, Lynn. And good morning, everyone. In the first quarter our positive brand momentum continued as we once again posted strong same-store stores in both our domestic and international businesses. UF -- by 4% and international comps grew by 7.9%. A fantastic outcome when considering the great results that we were rolling over from Q1 a year ago. We have now had 20 straight quarters of positive U.S. comps, and more than 22 consecutive years of positive international comps. We also continue to increase our store count at a healthy pace, which we believe is more evidence that our brand is strong and growing. Our diluted EPS grew 9.9% over the prior year quarter.

With that let's take a closer look at the financial results for Q1. Global retail sales, which are the total retail sales at franchise and company owned stores worldwide, grew 7.3% in the quarter. When we exclude the adverse impact of foreign currency, global retail sales grew by 11.7%. The drivers of this retail sales growth included strong domestic same-store sales, which as I mentioned grew by 6.4% in the quarter, broken down are U.S. franchise business was up 6.6%, while our corporate stores were up 4%. Both of these comp increases were driven primarily by traffic or order count growth as consumers continue to respond positively to the overall brand experience that we offer them to a lesser extent, we also saw some ticket growth during the quarter.

On the unit count front, we were also very pleased to report that we opened 16 net domestic stores in the first quarter, consisting of 18 store openings and two closures. Our international division had another strong quarter as same-store sales grew 7.9%, lapping a prior year quarter increase of 7.8%. Our international division added 146 stores during Q1, comprised of 163 story openings and 17 closures. We continue to have broad, diversified strength across our international markets, which is driving these results. Turning to revenues, total revenues were up 7.4% from the prior year.

This increase was primarily a result of increased global comp and store count growth which also drove higher supply chain volumes. Currency exchange rates negatively impacted international revenues this quarter by $3 million versus the prior year quarter. Due to the dollar strengthening against most of our currencies. For the full fiscal year we continued to estimate that foreign currency could have an 8 to $12 million negative year-over-year impact on pretax earnings. As you know, there are many uncontrollable factors that drive the underlying exchange rates, which make this a harder part of our business to predict. Our revenues were also negatively impacted by a calendar shift as the New Year's Eve and New Year's day positive impact of our franchise businesses.