Domino’s Pizza(US:DPZ)2020-04-23 20:29Financial Data and Key Metrics Changes - The company reported a diluted EPS of $3.07 for Q1 2020, a 39.5% increase from the prior year quarter, primarily due to a lower effective tax rate and strong operational results [37] - Global retail sales grew by 4.4% compared to the prior year quarter, with a 5.9% increase when excluding foreign currency impacts [38] - The effective tax rate for the quarter was negative 3.7%, down 18.8 percentage points from the prior year, influenced by tax benefits on equity-based compensation [45] Business Line Data and Key Metrics Changes - U.S. same-store sales grew by 1.6%, while international same-store sales increased by 1.5% [39] - The U.S. franchise business saw a 1.5% increase, while company-owned stores experienced a 3.9% rise [39] - The company opened 178 gross new stores and 69 net new stores in Q1, despite the closure of 71 stores in South Africa unrelated to COVID-19 [36] Market Data and Key Metrics Changes - U.S. comps were up 7.1% during the first four weeks of Q2, with retail sales increasing by 10.7% [52] - International comps were down 3.2% during the first three weeks of Q2, reflecting the impact of COVID-19 on sales [54] - Retail sales excluding foreign exchange were down 13.2% internationally over the same period [56] Company Strategy and Development Direction - The company is focused on health and safety, implementing a 100% contactless delivery model and adapting operational procedures to the new environment [15][64] - Investments are being made in team members and communities, including bonuses and enhanced sick pay for employees [28][34] - The company has withdrawn its 2020 guidance due to uncertainty surrounding the global economy and business operations [50][66] Management's Comments on Operating Environment and Future Outlook - The management acknowledged the existential crisis facing the restaurant industry and the uncertainty regarding consumer behavior post-COVID-19 [7][8] - The company remains optimistic about long-term growth despite withdrawing short-term forecasts due to the unpredictable environment [66][67] - The management emphasized the importance of maintaining a strong financial position and cash flow during the crisis [61] Other Important Information - The company has committed to providing 10 million slices of pizza to communities in need through the Feed the Need program [31] - The company has over $325 million in available cash and has not repaid amounts on its variable funding notes as a precautionary measure [61][62] Q&A Session Summary Question: Recent improvement in business trends - Management noted that recent improvements are attributed to pantry loading by consumers and potential impacts from stimulus dollars, alongside the company's quick adaptation to contactless delivery [71][74] Question: Clarification on $15 million and $5 million charges - The $15 million is related to safety measures and bonuses for team members, while the $5 million reflects anticipated royalty losses from international franchise stores [78][84] Question: Plans for new product launches - The company still plans to launch a new product in 2020, targeting a summer release despite the current operating environment [85] Question: Differences in weekday versus weekend sales - Management observed stronger weekday sales due to families being at home, while weekend sales are pressured, with no discernible patterns across income categories [88][90] Question: Operations and delivery times - The company has successfully adapted operations to maintain high service levels despite increased sales, implementing new procedures for contactless delivery and carryout [94] Question: International business management during closures - International master franchisees are managing through closures by prioritizing safety and liquidity, with some markets beginning to reopen [119]