Domino’s Pizza(US:DPZ)2020-02-20 21:54Financial Data and Key Metrics Changes - In Q4 2019, diluted EPS was $3.12, a 19.1% increase from the prior year quarter, driven by strong operational results [7][16] - Total revenues for Q4 increased by 6.3% year-over-year, primarily due to higher U.S. franchise retail sales and international retail sales [12] - Net income for Q4 rose by $17.7 million or 15.8% compared to the prior year quarter [16] Business Line Data and Key Metrics Changes - U.S. same-store sales grew by 3.4%, compared to a prior year increase of 5.6%, while international same-store sales grew by 1.7%, down from 2.4% [9] - U.S. franchise business increased by 3.3%, and company-owned stores were up by 3.9% [10] - The company opened 141 net new U.S. stores in Q4 and 351 net new international stores, totaling 1,106 units opened globally in 2019 [11][46] Market Data and Key Metrics Changes - Global retail sales grew by 6.9% year-over-year, with a 7.6% increase when excluding foreign currency impacts [9] - The company reported a 9% retail sales growth in international markets, excluding foreign currency impacts [49] Company Strategy and Development Direction - The company plans to continue fortressing markets, focusing on improving service and delivery efficiency [36][40] - New supply chain centers are set to open in 2020 to enhance operational capacity [38] - The company is committed to technological innovation, including GPS technology and AI-based labor scheduling to improve efficiency [41][80] Management's Comments on Operating Environment and Future Outlook - Management noted a challenging competitive environment in the restaurant delivery space but emphasized the company's ability to grow sales and profitability [28][91] - The company expects continued volatility in effective tax rates due to equity-based compensation [15] - Management expressed confidence in achieving a 6% to 8% global unit growth outlook over the next two to three years [67] Other Important Information - The company returned nearly $650 million to shareholders in Q4 through share buybacks and dividends [8][22] - A quarterly dividend of $0.78 per share was declared, marking a 20% increase over the previous quarter [23] Q&A Session Summary Question: What drove the acceleration in traffic this quarter? - Management indicated that the acceleration was driven by proactive internal strategies, including the launch of a delivery insurance program and promotions for carryout business [54] Question: Was the EBITDA growth primarily due to flow-through or unique benefits? - Management confirmed that financial discipline and reduced CapEx contributed to EBITDA growth, alongside strategic investments in supply chain and customer experience [57] Question: How does the digital sales percentage break down between carryout and delivery? - Management noted that delivery has a higher digital sales percentage, and efforts are being made to increase digital uptake in carryout through innovations like Pie Pass technology [60] Question: What is the status of the autonomous delivery tests? - Management reported positive progress in testing with Nuro for autonomous deliveries, with ongoing regulatory approvals [61] Question: How does the company plan to address cost pressures on franchisees? - Management highlighted initiatives to improve efficiencies, including GPS technology and AI-based labor scheduling to mitigate rising labor costs [80] Question: What is the current service level compared to the past? - Management stated that while current delivery service levels are strong, there is a need for continuous improvement to meet future expectations [85] Question: How does the company view the competitive landscape with a major competitor facing bankruptcy? - Management acknowledged the tough operating environment but emphasized the importance of growing sales to maintain profitability [91]