Business Wire | Aug 5, 2021 07:00AM EDT

Papa John's Announces Second Quarter 2021 Financial Results and Significant Increase in Dividend

Aug. 05, 2021

LOUISVILLE, Ky.--(BUSINESS WIRE)--Aug. 05, 2021--Papa John's International, Inc. (NASDAQ: PZZA) today announced financial results for the three and six months ended June 27, 2021.

Second quarter 2021 highlights compared to prior year

* Total company revenues increased 11.8% to $515.0 million * Comparable sales up 5.2% in North America and 21.2% Internationally; Global system-wide restaurant sales of $1.2 billion, up 12.2% driven by innovation, strong customer retention and accelerating domestic and international unit growth * 55 net unit openings driven by International growth * Loss per diluted share of ($2.30), including Special items of $3.23 per share, largely related to repurchase and conversion of Series B Convertible Preferred Stock; Adjusted earnings per diluted share grew to $0.93 from $0.48 a year ago * For first six months of 2021, cash flow from operations of $128.0 million, up from $87.7 million a year ago; free cash flow of $100.1 million up from $67.0 million * Increases return to common shareholders with 56% increase in annual dividend rate to $1.40 per share; declares third quarter dividend of $0.35 per share

"Papa John's delivered an eighth consecutive quarter of growth, with system-wide sales up 12% in Q2. We extended the record sales results we achieved a year ago, sustaining our industry outperformance as markets continue reopening," said President & CEO Rob Lynch. "Robust two-year comparable sales results - up 33% in North America and 27% internationally - reflect the impact our multi-faceted innovation strategy has had across every area of our business, powered by the effort of our team members and franchisees."

Mr. Lynch continued, "Papa John's strong brand and highly-attractive unit economics are driving accelerated restaurant openings by both new and existing franchisees, resulting in a record 123 net unit openings in the first half of 2021. In addition to growing AUVs, development is now a significant component of rising system-wide sales. With our business firing on all cylinders, we are more confident than ever that Papa John's strategy and growth model position us solidly for long-term growth, as we build the world's best pizza delivery company."

Financial Highlights

Three Months Ended Six Months Ended

Inthousands, June 27, June 28, Increase June 27, June 28, Increaseexcept per 2021 2020 (Decrease) 2021 2020 (Decrease)shareamounts Revenue $ 515,008 $ 460,623 $ 54,385 $ 1,026,754 $ 870,482 $ 156,272

Operating 44,637 30,534 14,103 91,499 46,006 45,493 incomeNet income 32,254 20,614 11,640 66,137 29,057 37,080

Diluted(loss) (2.30 ) 0.48 (2.78 ) (1.47 ) 0.65 (2.12 )earningsper shareAdjusteddiluted 0.93 0.48 0.45 1.94 0.65 1.29 earningsper share(a)(a)

Adjusted diluted earnings per share is a non-GAAP measure that excludes "Special items," which impact comparability. Special items of $112.4 million and $115.4 million for the three and six months ended June 27, 2021 include $109.9 million of a one-time charge in each period associated with the repurchase and conversion of all shares of the company's Series B Convertible Preferred Stock ("Series B Preferred Stock") and $3.3 million and $7.2 million for the three and six month ended June 27, 2021, respectively, of strategic corporate reorganization costs associated with the company's new office in Atlanta, Georgia projected to open in the fall of 2021. The reconciliation of GAAP to non-GAAP financial results is included in "Reconciliation of Non-GAAP Financial Measures" below.

Revenues

Consolidated revenues of $515.0 million increased $54.4 million, or 11.8%, in the second quarter of 2021 compared to the second quarter of 2020 primarily as a result of higher comparable sales of 5.2% for North America restaurants, which benefited from continued menu, delivery and digital innovation as reflected in higher company-owned restaurant revenues, franchise royalties and commissary sales. Higher commodity costs also positively impacted commissary sales. International revenues also increased primarily due to higher royalties from strong comparable sales results of 21.2% for the quarter and higher unit counts.

Operating Results

Consolidated operating income of $44.6 million for the second quarter of 2021 increased $14.1 million compared to the second quarter of 2020. The increase primarily reflects strong sales on higher comparable sales and year-over-year unit growth domestically and internationally. Additionally, the second quarter of 2021 benefited from a higher effective royalty rate and additional franchise royalties of $5.1 million compared to the comparable period in 2020 primarily as a result of ending in the third quarter of 2020 our temporary franchise support program.

Diluted loss per share was $2.30 for the second quarter of 2021 representing a decrease of $2.78 over the second quarter of 2020. Diluted loss per share included $3.15 per diluted share in the second quarter of 2021 from a reduction in net income attributable to common shareholders related to the repurchase and conversion of all shares of Series B Preferred Stock. This charge reflects the excess of the one-time cash payment over the carrying value of the Series B Preferred Stock. Excluding the impact of Special items, adjusted diluted earnings per share was $0.93 representing an increase of $0.45 over the second quarter of 2020.

Global Restaurant Sales Information

Global restaurant and comparable sales information for the three and six months ended June 27, 2021, compared to the three and six months ended June 28, 2020 are as follows (See "Supplemental Information and Financial Statements" below for related definitions):

Adjusted diluted earnings per share is a non-GAAP measure that excludes "Special items," which impact comparability. Special items of $112.4 million and $115.4 million for the three and six months ended June 27, 2021 include $109.9 million of a one-time charge in each period associated with the repurchase and conversion of all shares of the company's Series B(a) Convertible Preferred Stock ("Series B Preferred Stock") and $3.3 million and $7.2 million for the three and six month ended June 27, 2021, respectively, of strategic corporate reorganization costs associated with the company's new office in Atlanta, Georgia projected to open in the fall of 2021. The reconciliation of GAAP to non-GAAP financial results is included in "Reconciliation of Non-GAAP Financial Measures" below.

Revenues

Consolidated revenues of $515.0 million increased $54.4 million, or 11.8%, in the second quarter of 2021 compared to the second quarter of 2020 primarily as a result of higher comparable sales of 5.2% for North America restaurants, which benefited from continued menu, delivery and digital innovation as reflected in higher company-owned restaurant revenues, franchise royalties and commissary sales. Higher commodity costs also positively impacted commissary sales. International revenues also increased primarily due to higher royalties from strong comparable sales results of 21.2% for the quarter and higher unit counts.

Operating Results

Consolidated operating income of $44.6 million for the second quarter of 2021 increased $14.1 million compared to the second quarter of 2020. The increase primarily reflects strong sales on higher comparable sales and year-over-year unit growth domestically and internationally. Additionally, the second quarter of 2021 benefited from a higher effective royalty rate and additional franchise royalties of $5.1 million compared to the comparable period in 2020 primarily as a result of ending in the third quarter of 2020 our temporary franchise support program.

Diluted loss per share was $2.30 for the second quarter of 2021 representing a decrease of $2.78 over the second quarter of 2020. Diluted loss per share included $3.15 per diluted share in the second quarter of 2021 from a reduction in net income attributable to common shareholders related to the repurchase and conversion of all shares of Series B Preferred Stock. This charge reflects the excess of the one-time cash payment over the carrying value of the Series B Preferred Stock. Excluding the impact of Special items, adjusted diluted earnings per share was $0.93 representing an increase of $0.45 over the second quarter of 2020.

Global Restaurant Sales Information

Global restaurant and comparable sales information for the three and six months ended June 27, 2021, compared to the three and six months ended June 28, 2020 are as follows (See "Supplemental Information and Financial Statements" below for related definitions):

Three Months Six Months Ended Ended June June June June 27, 28, 27, 28, 2021 2020 2021 2020Comparable sales growth:Domestic company-owned restaurants 5.6% 22.6% 13.8% 14.4%

North America franchised restaurants 5.2% 29.7% 15.1% 17.2%

North America restaurants 5.2% 28.0% 14.8% 16.6%

International restaurants 21.2% 5.3% 22.2% 3.8%

Total comparable sales growth 9.0% 22.2% 16.6% 13.3%

System-wide restaurant sales growth:(excluding the impact of foreign currency)Domestic company-owned restaurants 5.2% 13.9% 13.1% 6.9%

North America franchised restaurants 6.4% 29.4% 15.8% 17.5%

North America restaurants 6.2% 25.7% 15.2% 15.0%

International restaurants 35.7% 5.5% 32.2% 6.8%

Total global system-wide restaurant sales 12.2% 20.8% 19.0% 13.0%growth Global Restaurant Unit Data

As of June 27, 2021, there were 5,523 Papa John's restaurants operating in 49 countries and territories, as follows:

Domestic Franchised Total Company- North North International System-wide owned America America

Second QuarterBeginning - March 589 2,709 3,298 2,170 5,468 28, 2021Opened - 24 24 71 95

Closed - (13 ) (13 ) (27 ) (40 )

Ending - June 27, 589 2,720 3,309 2,214 5,523 2021Net unit growth - 11 11 44 55

Trailing four (9 ) 34 25 151 176 quarters net store(decline)/growth Free Cash Flow

The company's free cash flow (a non-GAAP financial measure defined as net cash provided by operating activities, less purchases of property and equipment and dividends paid to preferred shareholders) for the six months ended 2021 and 2020, respectively, was as follows (in thousands):

Six Months Ended

June 27, June 28,

2021 2020

Net cash provided by operating activities $ 128,030 $ 87,658

Purchases of property and equipment (21,543 ) (13,795 )

Dividends paid to preferred shareholders (1) (6,394 ) (6,825 )

Free cash flow $ 100,093 $ 67,038

(1)

This does not include the cash consideration paid for the repurchase and conversion of the Series B Preferred Stock. See "Repurchase and Conversion of Series B Preferred Stock" below for additional information.

We view free cash flow as an important financial measure because it is one factor that management uses in determining the amount of cash available for discretionary investment. Free cash flow is not a term defined by GAAP, and as a result, our measure of free cash flow might not be comparable to similarly titled measures used by other companies. Free cash flow should not be construed as a substitute for or a better indicator of the company's performance than the company's GAAP measures.

See the Management's Discussion and Analysis of Financial Condition and Results of Operations section of our Quarterly Report on Form 10-Q filed with the SEC for additional information concerning our operating results for the three and six months and cash flow for the six months ended June 27, 2021.

Repurchase and Conversion of Series B Preferred Stock

On May 13, 2021, the company completed the previously announced repurchase and conversion to common stock of all of the shares of Series B Preferred Stock owned by affiliates of Starboard Value LP. Additionally, on June 7, 2021, all of the remaining outstanding shares of the Series B Preferred Stock, owned by certain franchisee investors, were repurchased or converted to common stock. Collectively, these actions were taken in return for cash payments of $188.6 million. The company also recorded a reduction to net income attributable to common shareholders of $109.9 million as a result of the transaction. This one-time charge to equity reflects the excess of the cash payments over the carrying value of the respective Series B Preferred Stock. Following these transactions, there was no Series B Preferred Stock outstanding as of the end of the quarter.

Cash Dividend

The company paid common and preferred stock dividends of $10.4 million in the second quarter of 2021. On August 3, 2021, our Board of Directors approved a 55.6% increase in the company's dividend rate per common share, from $0.90 on an annual basis to $1.40 on an annual basis, and subsequently declared a third quarter dividend of $0.35 per common share, of which approximately $12.8 million will be paid to common stockholders. The common share dividend will be paid on August 27, 2021 to stockholders of record as of the close of business on August 16, 2021. The declaration and payment of any future dividends will be at the discretion of our Board of Directors.

Conference Call

A conference call is scheduled for August 5, 2021 at 8:00 a.m. Eastern Time to review the company's second quarter 2021 earnings results. The call can be accessed from the company's web page at www.papajohns.com in a listen-only mode or dial 877-312-8816 (U.S. and Canada) or 253-237-1189 (International). The conference call will be available for replay, including by downloadable podcast, from the company's web. The Conference ID is 2924699.

Forward-Looking Statements

Certain matters discussed in this press release and other company communications that are not statements of historical fact constitute forward-looking statements within the meaning of the federal securities laws. Generally, the use of words such as "expect," "intend," "estimate," "believe," "anticipate," "will," "forecast," "plan," "project," or similar words identify forward-looking statements that we intend to be included within the safe harbor protections provided by the federal securities laws. Such forward-looking statements include or may relate to projections or guidance concerning business performance, revenue, earnings, cash flow, earnings per share, share repurchases, the financial impact of the temporary business opportunities, disruptions and temporary changes in demand we are experiencing related to the current outbreak of the novel coronavirus disease (COVID-19), commodity costs, currency fluctuations, profit margins, unit growth, unit level performance, capital expenditures, restaurant and franchise development, the duration of changes in consumer behavior caused by the pandemic, our plans to open a new office in Atlanta, the associated reorganization costs and the related organizational, employment and real estate changes that are expected, royalty relief, the effectiveness of our menu innovations and other business initiatives, marketing efforts, liquidity, compliance with debt covenants, strategic decisions and actions, dividends, effective tax rates, regulatory changes and impacts, adoption of new accounting standards, and other financial and operational measures. Such statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond our control.

Our forward-looking statements are based on our assumptions which are based on currently available information, including assumptions about our ability to manage difficulties and opportunities associated with or related to the COVID-19 pandemic, including risks related to: the impact of governmental restrictions on freedom of movement and business operations including quarantines, social distancing requirements and mandatory business closures; changes in consumer demand or behavior; labor shortages at company and/or franchised stores; impact of delayed new store openings, both domestically and internationally; the overall contraction in global economic activity, including increased unemployment; our ability to navigate changing governmental programs and regulations relating to the pandemic; the increased risk of phishing and other cyber-attacks; and our ability to successfully implement or fully realize the anticipated benefits of our corporate reorganization and new office in Atlanta, Georgia and corporate reorganization in the timeframes we desire or within the expected range of expenses, or at all. In addition, turnover in our support teams due to our relocations to Georgia could distract our employees, decrease employee morale, harm our reputation, and negatively impact the overall performance of our corporate support teams. Actual outcomes and results may differ materially from those matters expressed or implied in such forward-looking statements. These and other risks, uncertainties and assumptions that are involved in our forward-looking statements are discussed in detail in "Part I. Item 1A. - Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 27, 2020. We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise, except as required by law.

For more information about the company, please visit www.papajohns.com.

Supplemental Information and Financial Statements

Definition

"Comparable sales" represents the change in year-over-year sales for the same base of restaurants for the same fiscal periods. "Global system-wide restaurant sales" represents total restaurant sales for all company-owned and franchised stores open during the comparable periods, and "Global system-wide restaurant sales growth" represents the change in such sales year-over-year. We believe North America, international and global restaurant and comparable sales growth and Global system-wide restaurant sales information is useful in analyzing our results since our franchisees pay royalties and marketing fund contributions that are based on a percentage of franchise sales. Comparable sales and Global system-wide restaurant sales results for restaurants operating outside of the United States are reported on a constant dollar basis, which excludes the impact of foreign currency translation. Franchise sales also generate commissary revenue in the United States and in certain international markets. Franchise restaurant and comparable sales growth information is also useful for comparison to industry trends and evaluating the strength of our brand. Management believes the presentation of franchise restaurant sales growth, excluding the impact of foreign currency, provides investors with useful information regarding underlying sales trends and the impact of new unit growth without being impacted by swings in the external factor of foreign currency. Franchise restaurant sales are not included in the company's revenues.

Reconciliation of Non-GAAP Financial Measures

The table below reconciles our GAAP financial results to our adjusted financial results, which are non-GAAP measures. The non-GAAP adjusted results shown below and within this press release, which exclude the items in the table below (collectively defined as "Special items"), should not be construed as a substitute for or a better indicator of the company's performance than the company's GAAP results. Management believes presenting certain financial information excluding the Special items is important for purposes of comparison to current year results. In addition, management uses these metrics to evaluate the company's underlying operating performance and to analyze trends.

This does not include the cash consideration paid for the repurchase and(1) conversion of the Series B Preferred Stock. See "Repurchase and Conversion of Series B Preferred Stock" below for additional information.

We view free cash flow as an important financial measure because it is one factor that management uses in determining the amount of cash available for discretionary investment. Free cash flow is not a term defined by GAAP, and as a result, our measure of free cash flow might not be comparable to similarly titled measures used by other companies. Free cash flow should not be construed as a substitute for or a better indicator of the company's performance than the company's GAAP measures.

See the Management's Discussion and Analysis of Financial Condition and Results of Operations section of our Quarterly Report on Form 10-Q filed with the SEC for additional information concerning our operating results for the three and six months and cash flow for the six months ended June 27, 2021.

Repurchase and Conversion of Series B Preferred Stock

On May 13, 2021, the company completed the previously announced repurchase and conversion to common stock of all of the shares of Series B Preferred Stock owned by affiliates of Starboard Value LP. Additionally, on June 7, 2021, all of the remaining outstanding shares of the Series B Preferred Stock, owned by certain franchisee investors, were repurchased or converted to common stock. Collectively, these actions were taken in return for cash payments of $188.6 million. The company also recorded a reduction to net income attributable to common shareholders of $109.9 million as a result of the transaction. This one-time charge to equity reflects the excess of the cash payments over the carrying value of the respective Series B Preferred Stock. Following these transactions, there was no Series B Preferred Stock outstanding as of the end of the quarter.

Cash Dividend

The company paid common and preferred stock dividends of $10.4 million in the second quarter of 2021. On August 3, 2021, our Board of Directors approved a 55.6% increase in the company's dividend rate per common share, from $0.90 on an annual basis to $1.40 on an annual basis, and subsequently declared a third quarter dividend of $0.35 per common share, of which approximately $12.8 million will be paid to common stockholders. The common share dividend will be paid on August 27, 2021 to stockholders of record as of the close of business on August 16, 2021. The declaration and payment of any future dividends will be at the discretion of our Board of Directors.

Conference Call

A conference call is scheduled for August 5, 2021 at 8:00 a.m. Eastern Time to review the company's second quarter 2021 earnings results. The call can be accessed from the company's web page at www.papajohns.com in a listen-only mode or dial 877-312-8816 (U.S. and Canada) or 253-237-1189 (International). The conference call will be available for replay, including by downloadable podcast, from the company's web. The Conference ID is 2924699.

Forward-Looking Statements

Certain matters discussed in this press release and other company communications that are not statements of historical fact constitute forward-looking statements within the meaning of the federal securities laws. Generally, the use of words such as "expect," "intend," "estimate," "believe," "anticipate," "will," "forecast," "plan," "project," or similar words identify forward-looking statements that we intend to be included within the safe harbor protections provided by the federal securities laws. Such forward-looking statements include or may relate to projections or guidance concerning business performance, revenue, earnings, cash flow, earnings per share, share repurchases, the financial impact of the temporary business opportunities, disruptions and temporary changes in demand we are experiencing related to the current outbreak of the novel coronavirus disease (COVID-19), commodity costs, currency fluctuations, profit margins, unit growth, unit level performance, capital expenditures, restaurant and franchise development, the duration of changes in consumer behavior caused by the pandemic, our plans to open a new office in Atlanta, the associated reorganization costs and the related organizational, employment and real estate changes that are expected, royalty relief, the effectiveness of our menu innovations and other business initiatives, marketing efforts, liquidity, compliance with debt covenants, strategic decisions and actions, dividends, effective tax rates, regulatory changes and impacts, adoption of new accounting standards, and other financial and operational measures. Such statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond our control.

Our forward-looking statements are based on our assumptions which are based on currently available information, including assumptions about our ability to manage difficulties and opportunities associated with or related to the COVID-19 pandemic, including risks related to: the impact of governmental restrictions on freedom of movement and business operations including quarantines, social distancing requirements and mandatory business closures; changes in consumer demand or behavior; labor shortages at company and/or franchised stores; impact of delayed new store openings, both domestically and internationally; the overall contraction in global economic activity, including increased unemployment; our ability to navigate changing governmental programs and regulations relating to the pandemic; the increased risk of phishing and other cyber-attacks; and our ability to successfully implement or fully realize the anticipated benefits of our corporate reorganization and new office in Atlanta, Georgia and corporate reorganization in the timeframes we desire or within the expected range of expenses, or at all. In addition, turnover in our support teams due to our relocations to Georgia could distract our employees, decrease employee morale, harm our reputation, and negatively impact the overall performance of our corporate support teams. Actual outcomes and results may differ materially from those matters expressed or implied in such forward-looking statements. These and other risks, uncertainties and assumptions that are involved in our forward-looking statements are discussed in detail in "Part I. Item 1A. - Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 27, 2020. We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise, except as required by law.

For more information about the company, please visit www.papajohns.com.

Supplemental Information and Financial Statements

Definition

"Comparable sales" represents the change in year-over-year sales for the same base of restaurants for the same fiscal periods. "Global system-wide restaurant sales" represents total restaurant sales for all company-owned and franchised stores open during the comparable periods, and "Global system-wide restaurant sales growth" represents the change in such sales year-over-year. We believe North America, international and global restaurant and comparable sales growth and Global system-wide restaurant sales information is useful in analyzing our results since our franchisees pay royalties and marketing fund contributions that are based on a percentage of franchise sales. Comparable sales and Global system-wide restaurant sales results for restaurants operating outside of the United States are reported on a constant dollar basis, which excludes the impact of foreign currency translation. Franchise sales also generate commissary revenue in the United States and in certain international markets. Franchise restaurant and comparable sales growth information is also useful for comparison to industry trends and evaluating the strength of our brand. Management believes the presentation of franchise restaurant sales growth, excluding the impact of foreign currency, provides investors with useful information regarding underlying sales trends and the impact of new unit growth without being impacted by swings in the external factor of foreign currency. Franchise restaurant sales are not included in the company's revenues.

Reconciliation of Non-GAAP Financial Measures

The table below reconciles our GAAP financial results to our adjusted financial results, which are non-GAAP measures. The non-GAAP adjusted results shown below and within this press release, which exclude the items in the table below (collectively defined as "Special items"), should not be construed as a substitute for or a better indicator of the company's performance than the company's GAAP results. Management believes presenting certain financial information excluding the Special items is important for purposes of comparison to current year results. In addition, management uses these metrics to evaluate the company's underlying operating performance and to analyze trends.

Three Months Ended Six Months Ended

June 27, June 28, June 27, June 28,

(In thousands, except per 2021 2020 2021 2020share amounts) GAAP operating income $ 44,637 $ 30,534 $ 91,499 $ 46,006

Strategic corporate 3,328 - 7,211 -reorganization costs (1)Adjusted operating income $ 47,965 $ 30,534 $ 98,710 $ 46,006

GAAP net (loss)/income $ (79,898 ) $ 15,707 $ (49,542 ) $ 20,933attributable to commonshareholdersStrategic corporate 3,328 - 7,211 -reorganization costs (1)Repurchase and conversion of 109,852 - 109,852 -Series B Preferred Stock (2)Tax effect of strategic (745 ) - (1,615 ) -corporate reorganization costs(3)Adjusted net income $ 32,537 $ 15,707 $ 65,906 $ 20,933attributable to commonshareholders GAAP diluted (loss)/earnings $ (2.30 ) $ 0.48 $ (1.47 ) $ 0.65per shareStrategic corporate 0.10 - 0.22 -reorganization costs (1)Repurchase and conversion of 3.15 - 3.23 -Series B Preferred Stock (2)Tax effect of strategic (0.02 ) - (0.04 ) -corporate reorganization costs(3)Adjusted diluted earnings per $ 0.93 $ 0.48 $ 1.94 $ 0.65share(Note) The above table does not include the impact of allocation of undistributed earnings to participating securities for Special items.

(1)

Represents strategic corporate reorganization costs associated with our new office in Atlanta, Georgia projected to open in the fall of 2021.

(2)

Represents the one-time charge related to the repurchase and conversion of all shares of Series B Preferred Stock and includes related professional fees incurred as part of the transaction.

(3)

The tax effect for strategic corporate reorganization costs was calculated by applying the 2021 marginal tax rate of 22.4%. There was no tax effect on the repurchase and conversion of the Series B Preferred Stock as the one-time charge was non-deductible for tax purposes.

(Note) The above table does not include the impact of allocation ofundistributed earnings to participating securities for Special items.

(1) Represents strategic corporate reorganization costs associated with our new office in Atlanta, Georgia projected to open in the fall of 2021.

Represents the one-time charge related to the repurchase and conversion of(2) all shares of Series B Preferred Stock and includes related professional fees incurred as part of the transaction.

The tax effect for strategic corporate reorganization costs was calculated(3) by applying the 2021 marginal tax rate of 22.4%. There was no tax effect on the repurchase and conversion of the Series B Preferred Stock as the one-time charge was non-deductible for tax purposes.

Papa John's International, Inc. and SubsidiariesCondensed Consolidated Balance Sheets June 27, December 27,

2021 2020

(In thousands) (Unaudited) (Note) AssetsCurrent assets:Cash and cash equivalents $ 96,213 $ 130,204

Accounts receivable, net 75,839 90,135

Notes receivable, current portion 11,398 11,318

Income tax receivable 1,084 1,273

Inventories 29,843 30,265

Prepaid expenses and other current assets 47,966 43,212

Total current assets 262,343 306,407

Property and equipment, net 198,818 200,895

Finance lease right-of-use assets, net 22,840 16,840

Operating lease right-of-use assets 166,090 148,110

Notes receivable, less current portion, net 34,418 36,538

Goodwill 81,103 80,791

Deferred income taxes 10,388 10,800

Other assets 79,744 72,389

Total assets $ 855,744 $ 872,770

Liabilities, Series B Convertible Preferred Stock,Redeemable noncontrolling interests andStockholders' deficitCurrent liabilities:Accounts payable $ 31,496 $ 37,370

Income and other taxes payable 28,763 10,263

Accrued expenses and other current liabilities 187,789 174,563

Current deferred revenue 20,536 19,590

Current finance lease liabilities 4,726 3,545

Current operating lease liabilities 23,194 23,538

Current portion of long-term debt 20,000 20,000

Total current liabilities 316,504 288,869

Deferred revenue 13,017 13,664

Long-term finance lease liabilities 18,555 13,531

Long-term operating lease liabilities 143,940 124,666

Long-term debt, less current portion, net 403,810 328,292

Deferred income taxes 278 948

Other long-term liabilities 100,699 111,364

Total liabilities 996,803 881,334

Series B Convertible Preferred Stock - 251,901

Redeemable noncontrolling interests 6,839 6,474

Total Stockholders' deficit (147,898 ) (266,939 )

Total liabilities, Series B Convertible Preferred $ 855,744 $ 872,770 Stock, Redeemable noncontrolling interests andStockholders' deficitNote: The Condensed Consolidated Balance Sheet at December 27, 2020 has been derived from the audited consolidated financial statements, but does not include all information and footnotes required by accounting principles generally accepted in the United States for a complete set of financial statements.Note: The Condensed Consolidated Balance Sheet at December 27, 2020 has beenderived from the audited consolidated financial statements, but does notinclude all information and footnotes required by accounting principlesgenerally accepted in the United States for a complete set of financialstatements.Papa John's International, Inc. and SubsidiariesCondensed Consolidated Statements of Operations Three Months Ended Six Months Ended

June 27, June 28, June 27, 2021 June 28, 2021 2020 2020

(In thousands, except (Unaudited) (Unaudited) (Unaudited) (Unaudited)per share amounts)Revenues:Domestic $ 196,124 $ 186,506 $ 393,358 $ 347,946 company-ownedrestaurant salesNorth America 32,475 24,174 65,190 43,614 franchise royaltiesand feesNorth America 186,641 167,619 371,519 323,041 commissary revenuesInternational 37,614 28,093 72,221 54,152 revenuesOther revenues 62,154 54,231 124,466 101,729

Total revenues 515,008 460,623 1,026,754 870,482

Costs and expenses:Operating costs(excludingdepreciation andamortizationshown separatelybelow):Domestic 154,293 145,168 310,181 274,279 company-ownedrestaurant expensesNorth America 172,227 154,467 342,911 298,739 commissary expensesInternational 21,430 18,304 41,048 33,405 expensesOther expenses 56,246 51,345 112,053 97,302

General and 53,698 48,428 103,709 96,079 administrativeexpensesDepreciation and 12,477 12,377 25,353 24,672 amortizationTotal costs and 470,371 430,089 935,255 824,476 expensesOperating income 44,637 30,534 91,499 46,006

Net interest expense (3,649 ) (3,627 ) (7,296 ) (7,594 )

Income before income 40,988 26,907 84,203 38,412 taxesIncome tax expense 7,398 4,956 15,330 7,468

Net income beforeattribution to 33,590 21,951 68,873 30,944 noncontrollinginterestsNet incomeattributable to (1,336 ) (1,337 ) (2,736 ) (1,887 )noncontrollinginterestsNet income $ 32,254 $ 20,614 $ 66,137 $ 29,057 attributable to thecompany Calculation of net(loss) income forearnings per share:Net income $ 32,254 $ 20,614 $ 66,137 $ 29,057 attributable to thecompanyDividends onredemption of Series (109,852 ) - (109,852 ) - B ConvertiblePreferred StockDividends paid to (2,300 ) (3,347 ) (5,827 ) (6,818 )participatingsecuritiesNet incomeattributable to - (1,560 ) - (1,306 )participatingsecuritiesNet (loss) income $ (79,898 ) $ 15,707 $ (49,542 ) $ 20,933 attributable tocommon shareholders Basic (loss) earnings $ (2.30 ) $ 0.49 $ (1.47 ) $ 0.65 per common shareDiluted (loss) $ (2.30 ) $ 0.48 $ (1.47 ) $ 0.65 earnings per commonshare Basic weighted 34,729 32,335 33,739 32,214 average common sharesoutstandingDiluted weighted 34,729 32,619 33,739 32,444 average common sharesoutstanding Dividends declared $ 0.225 $ 0.225 $ 0.450 $ 0.450 per common sharePapa John's International, Inc. and SubsidiariesCondensed Consolidated Statements of Cash Flows Six Months Ended(In thousands) June 27, June 28, 2021 2020 (Unaudited) (Unaudited)Operating activitiesNet income before attribution to noncontrolling $ 68,873 $ 30,944 interestsAdjustments to reconcile net income to net cashprovided byoperating activities:(Credit) provision for allowance for credit losses on (1,200 ) 1,051 accounts and notes receivableDepreciation and amortization 25,353 24,672

Deferred income taxes (1,397 ) (1,502 )

Stock-based compensation expense 8,202 8,742

Other 467 1,090

Changes in operating assets and liabilities, net ofacquisitions:Accounts receivable 13,299 (8,571 )

Income tax receivable 189 4,278

Inventories 430 (5,017 )

Prepaid expenses and other current assets 1,092 9,657

Other assets and liabilities (11,380 ) 8,065

Accounts payable (5,874 ) 1,558

Income and other taxes payable 18,500 3,601

Accrued expenses and other current liabilities 12,123 10,269

Deferred revenue (647 ) (1,179 )

Net cash provided by operating activities 128,030 87,658

Investing activitiesPurchases of property and equipment (21,543 ) (13,795 )

Notes issued (5,263 ) (9,596 )

Repayments of notes issued 7,922 6,462

Acquisitions, net of cash acquired (699 ) -

Other 116 14

Net cash used in investing activities (19,467 ) (16,915 )

Financing activitiesRepayments of term loan (10,000 ) (10,000 )

Net proceeds (repayments) of revolving credit 85,000 (9,884 )facilitiesProceeds from exercise of stock options 8,100 21,704

Dividends paid to common stockholders (14,844 ) (14,520 )

Dividends paid to preferred stockholders (6,394 ) (6,825 )

Tax payments for equity award issuances (3,887 ) (1,579 )

Repurchase of Series B Convertible Preferred Stock (188,647 ) -

Acquisition of Company common stock (8,188 ) -

Distributions to noncontrolling interests (2,320 ) (945 )

Other (1,691 ) (704 )

Net cash used in financing activities (142,871 ) (22,753 )

Effect of exchange rate changes on cash and cash 317 (202 )equivalentsChange in cash and cash equivalents (33,991 ) 47,788

Cash and cash equivalents at beginning of period 130,204 27,911

Cash and cash equivalents at end of period $ 96,213 $ 75,699

View source version on businesswire.com: https://www.businesswire.com/news/home/20210805005125/en/

CONTACT: Ann Gugino Chief Financial Officer 502-261-7272

CONTACT: Steve Coke Senior Vice President of Financial Operations, Accounting and Reporting 502-261-7272