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Item 1. Financial Statements

2024-05-09 compared with 2023-11-02 · 173 added, 273 removed, 495 unchanged (47% of the section changed)

3 unchanged sentences

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts) September 24,

(In thousands, except per share amounts) March 31,

2024 December 31,

6 unchanged sentences

Prepaid expenses and other current assets 57,872 42,285

Assets held for sale (a)

Total current assets 225,927 231,018

25 unchanged sentences

Common stock ($ 0.01 par value per share;

issued 49,227 at September 24, 2023 and 49,138 at December 25, 2022)

issued 49,278 at March 31, 2024 and 49,235 at December 31, 2023)

Additional paid-in capital 444,793 452,290

1 unchanged sentence

Retained earnings 218,608 219,027

Treasury stock ( 16,754 shares at September 24, 2023 and 14,402 shares at December 25, 2022, at cost)

Treasury stock ( 16,674 shares at March 31, 2024 and 16,747 shares at December 31, 2023, at cost)

( 1,118,196 ) ( 1,123,098 )

3 unchanged sentences

Total Liabilities, Redeemable noncontrolling interests and Stockholders’ deficit $ 847,167 $ 875,005

(a) Represents vacant land adjacent to the Company’s Louisville office, which was sold on September 29, 2023.

See accompanying notes.

2 unchanged sentences

Condensed Consolidated Statements of Operations

Three Months Ended Nine Months Ended

(In thousands, except per share amounts) September 24,

2023 September 25,

2022 September 24,

2023 September 25,

Three Months Ended

(In thousands, except per share amounts) March 31,

2024 March 26,

Domestic Company-owned restaurant sales $ 176,224 $ 179,866

13 unchanged sentences

Total costs and expenses 480,198 489,253

Refranchising and impairment loss — ( 905 ) — ( 12,065 )

Operating income 33,718 37,796

5 unchanged sentences

Net income attributable to the Company $ 14,636 $ 22,376

Calculation of net income for earnings per share:

Net income attributable to the Company $ 15,861 $ 8,331 $ 56,005 $ 44,258

Dividends paid to participating securities — ( 86 ) — ( 228 )

Net income attributable to participating securities — — — ( 34 )

Net income attributable to common shareholders $ 15,861 $ 8,245 $ 56,005 $ 43,996

Basic earnings per common share $ 0.45 $ 0.66

7 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

Three Months Ended Nine Months Ended

(In thousands) September 24,

2023 September 25,

2022 September 24,

2023 September 25,

Three Months Ended

(In thousands) March 31,

2024 March 26,

Net income before attribution to noncontrolling interests $ 14,914 $ 22,546

2 unchanged sentences

Interest rate swaps (1)

1,039 1,169 2,889 4,758

Other comprehensive income (loss), before tax 322 1,778

10 unchanged sentences

___________________________________

(1) Amounts reclassified out of accumulated other comprehensive loss into net interest income (expense) include $ 203 and $( 40 ) for the three and nine months ended September 24, 2023, respectively and $( 1,650 ) and $( 1,850 ) for the three and nine months ended September 25, 2022, respectively.

(2) The income tax effects of amounts reclassified out of accumulated other comprehensive loss were $( 46 ) and $ 9 for the three and nine months ended September 24, 2023, respectively and $ 371 and $ 416 for the three and nine months ended September 25, 2022, respectively.

(1) Amounts reclassified out of accumulated other comprehensive loss into net interest income (expense) include $ 200 and $( 207 ) for the three months ended March 31, 2024 and March 26, 2023, respectively.

(2) The income tax effects of amounts reclassified out of accumulated other comprehensive loss were $( 45 ) and $ 47 for the three months ended March 31, 2024 and March 26, 2023, respectively.

See accompanying notes.

9 unchanged sentences

Earnings Treasury

Noncontrolling

Stock Noncontrolling

Subsidiaries Total

1 unchanged sentence

For the three months ended

September 24, 2023

Balance at June 25, 2023 32,394 $ 492 $ 445,964 $ ( 7,289 ) $ 207,461 $ ( 1,127,669 ) $ 15,562 $ ( 465,479 )

Net income (1)

— — — — 15,861 — 60 15,921

Other comprehensive income (loss), net of tax — — — ( 627 ) — — — ( 627 )

Dividends on common stock — — 34 — ( 15,190 ) — — ( 15,156 )

Exercise of stock options 18 — 1,134 — — — — 1,134

Stock-based compensation expense — — 4,726 — — — — 4,726

Issuance of restricted stock 7 — ( 315 ) — — 315 — —

Tax effect of restricted stock awards ( 2 ) — ( 171 ) — — — — ( 171 )

Distributions to noncontrolling interests — — — — — — ( 328 ) ( 328 )

Other 56 — ( 3,673 ) — — 3,755 — 82

Balance at September 24, 2023 32,473 $ 492 $ 447,699 $ ( 7,916 ) $ 208,132 $ ( 1,123,599 ) $ 15,294 $ ( 459,898 )

For the nine months ended

September 24, 2023

March 31, 2024

Balance at December 31, 2023 32,488 $ 492 $ 452,290 $ ( 7,803 ) $ 219,027 $ ( 1,123,098 ) $ 15,476 $ ( 443,616 )

5 unchanged sentences

Acquisition of Company common stock — — — — — — — —

( 2,523 ) — — — — ( 212,444 ) — ( 212,444 )

Stock-based compensation expense — — ( 370 ) — — — — ( 370 )

3 unchanged sentences

Other 2 — ( 97 ) — — 192 — 95

Balance at September 24, 2023 32,473 $ 492 $ 447,699 $ ( 7,916 ) $ 208,132 $ ( 1,123,599 ) $ 15,294 $ ( 459,898 )

(1) Net income to the Company for the three and nine months ended September 24, 2023 excludes $ 30 and $ 135 , respectively, allocable to the redeemable noncontrolling interests for our joint venture arrangements.

(2) At September 24, 2023, the accumulated other comprehensive loss of $ 7,916 was comprised of net unrealized foreign currency translation loss of $ 8,702 and net unrealized gain on the interest rate swap agreements of $ 786 .

(3) Acquisition of Company common stock for the nine months ended September 24, 2023 includes $ 2,804 of transaction costs directly attributable to share repurchases, including a 1% excise tax incurred under the Inflation Reduction Act of 2022.

Balance at March 31, 2024 32,604 $ 493 $ 444,793 $ ( 7,554 ) $ 218,608 $ ( 1,118,196 ) $ 15,433 $ ( 446,423 )

(1) Net income to the Company for the three months ended March 31, 2024 excludes $ 99 , respectively, allocable to the redeemable noncontrolling interests for our joint venture arrangements.

(2) At March 31, 2024, the accumulated other comprehensive loss of $ 7,554 was comprised of net unrealized foreign currency translation loss of $ 7,912 and net unrealized gain on the interest rate swap agreements of $ 358 .

See accompanying notes.

9 unchanged sentences

Earnings Treasury

Stock Noncontrolling

Noncontrolling

Subsidiaries Total

1 unchanged sentence

For the three months ended

September 25, 2022

Balance at June 26, 2022 35,248 $ 491 $ 442,255 $ ( 11,034 ) $ 193,934 $ ( 875,205 ) $ 15,761 $ ( 233,798 )

Net income (1)

— — — — 8,331 — 102 8,433

Other comprehensive income (loss), net of tax — — — ( 2,834 ) — — — ( 2,834 )

Dividends on common stock — — 57 — ( 14,979 ) — — ( 14,922 )

Exercise of stock options 16 — 823 — — — — 823

Acquisition of Company common stock ( 229 ) — — — — ( 19,529 ) — ( 19,529 )

Stock-based compensation expense — — 5,146 — — — — 5,146

Issuance of restricted stock 50 — ( 1,671 ) — — 1,760 — 89

Tax effect of restricted stock awards ( 22 ) — ( 1,900 ) — — — — ( 1,900 )

Distributions to noncontrolling interests — — — — — — ( 216 ) ( 216 )

Other 2 — ( 67 ) — — 156 — 89

Balance at September 25, 2022 35,065 $ 491 $ 444,643 $ ( 13,868 ) $ 187,286 $ ( 892,818 ) $ 15,647 $ ( 258,619 )

For the nine months ended

September 25, 2022

March 25, 2023

Balance at December 25, 2022 34,736 $ 491 $ 449,829 $ ( 10,135 ) $ 195,856 $ ( 922,434 ) $ 15,729 $ ( 270,664 )

10 unchanged sentences

Other 3 — ( 46 ) — — 133 — 87

Balance at September 25, 2022 35,065 $ 491 $ 444,643 $ ( 13,868 ) $ 187,286 $ ( 892,818 ) $ 15,647 $ ( 258,619 )

(1) Net income to the Company for the three and nine months ended September 25, 2022 excludes $ 31 and $ 559 , respectively, allocable to the redeemable noncontrolling interests for our joint venture arrangements.

(2) At September 25, 2022, the accumulated other comprehensive loss of $ 13,868 was comprised of net unrealized foreign currency translation loss of $ 12,430 and net unrealized loss on the interest rate swap agreements of $ 1,438 .

Balance at March 26, 2023 32,356 $ 492 $ 443,686 $ ( 8,766 ) $ 203,569 $ ( 1,130,136 ) $ 15,830 $ ( 475,325 )

(1) Net income to the Company for the three months ended March 26, 2023 excludes $ 46 allocable to the redeemable noncontrolling interests for our joint venture arrangements.

(2) At March 26, 2023, the accumulated other comprehensive loss of $ 8,766 was comprised of net unrealized foreign currency translation loss of $ 7,586 and net unrealized loss on the interest rate swap agreements of $ 1,180 .

(3) Acquisition of Company common stock for the three months ended March 26, 2023, includes $ 2,804 of transaction costs directly attributable to share repurchases, including a 1% excise tax incurred under the Inflation Reduction Act of 2022.

See accompanying notes.

2 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Nine Months Ended

(In thousands) September 24,

2023 September 25,

Three Months Ended

(In thousands) March 31,

2024 March 26,

Operating activities

3 unchanged sentences

Depreciation and amortization 17,674 14,721

Refranchising and impairment loss — 12,065

Deferred income taxes 532 2,031

Stock-based compensation expense ( 370 ) 3,898

Impairment loss 7,554 —

Loss on disposal of property and equipment 688 —

Other 315 496

14 unchanged sentences

Repayments of notes issued 886 1,069

Acquisitions, net of cash acquired ( 5,599 ) ( 1,346 )

Proceeds from refranchising, net of cash transferred — 13,588

Other 2,174 42

Net cash used in investing activities ( 10,152 ) ( 18,275 )

6 unchanged sentences

Distributions to noncontrolling interests ( 231 ) ( 23 )

Principal payments on finance leases ( 2,433 ) ( 1,743 )

Other 182 ( 18 )

8 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 24, 2023

March 31, 2024

Basis of Presentation

3 unchanged sentences

In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included.

Operating results for the three and nine months ended September 24, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2023.

Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending December 29, 2024.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Annual Report on Form 10-K for Papa John’s International, Inc.

7 unchanged sentences

Variable Interest Entity

Papa John’s domestic restaurants, both Company-owned and franchised, participate in Papa John’s Marketing Fund, Inc.

Papa Johns Domestic restaurants, both Company-owned and franchised, participate in Papa John’s Marketing Fund, Inc.

(“PJMF”), a nonstock corporation designed to operate at break-even as it spends all annual contributions received from the system.

PJMF collects a percentage of revenues from Company-owned and franchised restaurants in the United States and Canada for the purpose of designing and administering advertising and promotional programs.

PJMF is a variable interest entity (“VIE”) that funds its operations with ongoing financial support and contributions from the North America restaurants, of which approximately 85 percent are franchised, and does not have sufficient equity to fund its operations without these ongoing financial contributions.

PJMF is a variable interest entity (“VIE”) that funds its operations with ongoing financial support and contributions from the Domestic restaurants, of which approximately 85 percent are franchised, and does not have sufficient equity to fund its operations without these ongoing financial contributions.

Based on an assessment of the governance structure and operating procedures of PJMF, the Company determined it has the power to control certain significant activities of PJMF, and therefore, is the primary beneficiary.

2 unchanged sentences

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes.

Significant items that are subject to such estimates and assumptions include the allowance for credit losses on accounts and notes receivable, intangible assets, contract assets and contract liabilities including the customer loyalty program obligation, right-of-use assets and lease liabilities, unredeemed gift card liabilities, insurance reserves and tax reserves.

Significant items that are subject to such estimates and assumptions include the allowance for credit losses on accounts and notes receivable, intangible assets, contract assets and contract liabilities including the customer loyalty program obligation, property and equipment, right-of-use assets and lease liabilities, gift card breakage, insurance reserves and tax reserves.

Although management bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, actual results could significantly differ from these estimates.

Noncontrolling Interests

Papa John’s has joint venture arrangements in which there are noncontrolling interests held by third parties that includ ed 98 restaurants at September 24, 2023 and September 25, 2022, respectively.

As further described in “Note 10.

Divestitures” we divested our 51 percent interest in one joint venture in Texas that owned 90 restaurants in the second quarter of 2022.

Consolidated net income is required to be reported separately at amounts attributable to both the Company and the noncontrolling interests.

Net income attributable to these joint ventures for the three and nine months ended September 24, 2023 and September 25, 2022 was as follows (in thousands):

Three Months Ended Nine Months Ended

September 24,

2023 September 25,

2022 September 24,

2023 September 25,

Papa Johns has joint venture arrangements in which there are noncontrolling interests held by third parties that includ ed 98 restaurants at March 31, 2024 and March 26, 2023, respectively.

Consolidated net income is required to be reported separately at amounts attributable to both the Company and the noncontrolling interests held by third parties.

Net income attributable to these joint ventures for the three months ended March 31, 2024 and March 26, 2023 was as follows:

Three Months Ended

(In thousands) March 31,

2024 March 26,

Papa John’s International, Inc.

$ 196 $ 314 $ 821 $ 2,642

Noncontrolling interests 90 133 351 1,363

Redeemable noncontrolling interests 99 46

Nonredeemable noncontrolling interests 179 124

Total net income $ 870 $ 567

29 unchanged sentences

accordingly, the fair values presented do not necessarily indicate what the Company or its debtholders could realize in a current market exchange.

Our financial assets that were measured at fair value on a recurring basis as of September 24, 2023 and December 25, 2022 are as follows:

Our financial assets that were measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023 are as follows:

Fair Value Measurements

1 unchanged sentence

Value Level 1 Level 2 Level 3

September 24, 2023

March 31, 2024

Financial assets:

3 unchanged sentences

$ 367 $ — $ 367 $ —

Financial liabilities:

Interest rate swaps (b)

$ 72 $ — $ 72 $ —

December 31, 2023

4 unchanged sentences

$ 107 $ — $ 107 $ —

Financial liabilities:

Interest rate swaps (b)

$ 483 $ — $ 483 $ —

___________________________________

(a) Represents life insurance policies held in our non-qualified deferred compensation plan.

2 unchanged sentences

Interest rate swaps entered into prior to 2023 were based on London Interbank Offered Rates (“LIBOR”).

There were no transfers among levels within the fair value hierarchy during the three months ended March 31, 2024 or fiscal year 2023.

The fair value of certain assets and liabilities approximates carrying value because of the short-term nature of the accounts, including cash and cash equivalents, accounts receivable, net of allowances, and accounts payable.

1 unchanged sentence

The Company’s revolving credit facilities under the Company’s credit agreement approximate carrying value due to their variable market-based interest rate.

The Company’s 3.875 % senior notes are classified as a Level 2 fair value measurement since the Company estimates the fair value by using recent trading transactions, and have the following estimated fair values and carrying values (excluding the impact of unamortized debt issuance costs) as of September 24, 2023 and December 25, 2022:

September 24, 2023 December 25, 2022

March 31, 2024 December 31, 2023

(In thousands) Carrying

11 unchanged sentences

Write-offs charged against the allowance ( 1,097 ) —

Balance at September 24, 2023 $ 6,456 $ 14,466

Balance at March 31, 2024 $ 7,940 $ 16,012

Recent Accounting Pronouncements

Segment Disclosures

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-07, “ Improvements to Reportable Segment Disclosure s.” The ASU expands the scope and frequency of segment disclosures and introduces the concept of a “significant expense principle,” which requires entities to disclose significant expense categories and amounts that are regularly provided to the chief operating decision maker (“CODM”) and included within the reported measure of a segment’s profit or loss.

The ASU also changes current disclosure requirements by allowing entities to report multiple measures of a segment’s profit or loss, provided the reported measures are used by the CODM to assess performance and allocate resources and that the measure closest to GAAP is also provided.

Finally, the ASU requires all segment profit or loss and assets disclosures to be provided on both an annual and interim basis and requires entities to disclose the title and position of the individual identified as the CODM.

The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 and shall be applied retrospectively to all periods presented in the financial statements.

The Company is currently evaluating the standard and determining the extent of additional interim and annual segment disclosures that will be required.

Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, “ Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.” The ASU provides for additional levels of details within the required rate reconciliation table to include additional categories of information about federal, state, and foreign income taxes and requires entities to further disaggregate information about income taxes paid, net of refunds.

The ASU is effective for fiscal years beginning after December 15, 2024 and shall be applied prospectively.

The Company is currently evaluating the standard and determining the extent of additional disclosures that will be required.

Lessor Operating Leases

The Company subleases certain retail space to our franchisees in the United Kingdom (“UK”), which are primarily operating leases.

At September 24, 2023, we leased and subleased 340 Papa Johns restaurants to franchisees in the UK.

At March 31, 2024, we leased and subleased 323 Papa Johns restaurants to franchisees in the UK.

The initial lease terms on the franchised sites in the UK are generally 15 years.

2 unchanged sentences

Rental income, primarily derived from properties leased and subleased to franchisees in the UK, is recognized on a straight-line basis over the respective operating lease terms.

The Company recognized total sublease income of $ 2.3 million and $ 8.0 million for the three and nine months ended September 24, 2023, respectively, and $ 3.0 million and $ 9.0 million for the three and nine months ended September 25, 2022, respectively, within Other revenues in the Condensed Consolidated Statements of Operations.

The Company recognized total sublease income of $ 2.3 million and $ 2.9 million for the three months ended March 31, 2024 and March 26, 2023, respectively, within Other revenues in the Condensed Consolidated Statements of Operations.

Lease Guarantees

1 unchanged sentence

These leases have varying terms, the latest of which expires in 2036.

As of September 24, 2023, the estimated maximum amount of undiscounted payments the Company could be required to make in the event of nonpayment by the primary lessees was $ 7.7 million.

As of March 31, 2024, the estimated maximum amount of undiscounted payments the Company could be required to make in the event of nonpayment by the primary lessees was $ 6.8 million.

This contingent liability is not included in the Condensed Consolidated Balance Sheets as it is not probable to occur.

2 unchanged sentences

Supplemental cash flow information related to leases for the periods reported is as follows:

Nine Months Ended

(In thousands) September 24, 2023 September 25, 2022

Three Months Ended

(In thousands) March 31, 2024 March 26, 2023

Cash paid for amounts included in the measurement of lease liabilities:

2 unchanged sentences

Operating cash flows from operating leases (a)

$ 28,394 $ 26,771

Right-of-use assets obtained in exchange for new finance lease liabilities 1,496 4,764

8 unchanged sentences

Assets and liabilities of PJMF, which are utilized solely for the Company’s advertising and promotional programs, were as follows in the Condensed Consolidated Balance Sheets (in thousands):

September 24,

2024 December 31, 2023

17 unchanged sentences

Our contract liabilities primarily relate to franchise fees, unredeemed gift card liabilities, and loyalty program obligations, which we classify as Deferred revenue on the Condensed Consolidated Balance Sheets.

During the three and nine months ended September 24, 2023, the Company recognized $ 8.1 million and $ 24.4 million in revenue, respectively, related to deferred revenue compared to $ 8.0 million and $ 25.6 million for the three and nine months ended September 25, 2022.

During the three months ended March 31, 2024 and March 26, 2023, the Company recognized $ 8.1 million and $ 8.4 million in revenue, respectively, related to deferred revenue.

The following table includes a breakout of contract liability balances (in thousands):

Contract Liabilities

September 24, 2023 December 25, 2022 Change

Franchise fees and unredeemed gift card liabilities $ 27,189 $ 30,710 $ ( 3,521 )

March 31, 2024 December 31, 2023 Change

Franchise fee liabilities $ 20,068 $ 20,564 $ ( 496 )

Unredeemed gift card liabilities 6,255 6,955 ( 700 )

Customer loyalty program obligations 13,184 13,274 ( 90 )

2 unchanged sentences

Equipment incentives are related to the future value of commissary revenue the Company will receive over the term of the incentive agreement.

As of September 24, 2023 and December 25, 2022, the contract assets were approximately $ 6.7 million and $ 6.2 million, respectively.

For the three and nine months ended September 24, 2023, revenue was reduced approximately $ 0.9 million and $ 2.7 million, respectively, for the amortization of contract assets over the applicable contract terms.

For the three and nine months ended September 25, 2022, revenue was reduced approximately $ 0.8 million and $ 2.7 million, respectively, for the amortization of contract assets over the applicable contract terms.

Contract assets were approximately $ 7.9 million at both March 31, 2024 and December 31, 2023.

For the three months ended March 31, 2024 and March 26, 2023, revenue was reduced approximately $ 1.2 million and $ 0.9 million respectively, for the amortization of contract assets over the applicable contract terms.

Contract assets are included in Prepaid expenses and other current assets and Other assets on the Condensed Consolidated Balance Sheets.

4 unchanged sentences

Franchise fees $ 2,792 $ 2,582 $ 2,413 $ 2,187 $ 1,951 $ 4,841 $ 16,766

At September 24, 2023, approximately $ 3.5 million of area development fees related to unopened stores and international unearned royalties are included in Deferred revenue.

At March 31, 2024, approximately $ 3.3 million of area development fees related to unopened stores and international unearned royalties are included in Deferred revenue.

Timing of revenue recognition is dependent upon the timing of store openings and franchisees’ revenues.

Gift card liabilities of approximately $ 5.4 million, included in Deferred revenue, will be recognized in Company-owned restaurant revenues when gift cards are redeemed.

Gift card liabilities, which are included in Deferred revenue, will be recognized in Company-owned restaurant revenues when gift cards are redeemed.

The Company will recognize redemption fee revenue in Other revenues when cards are redeemed at franchised restaurant locations.

1 unchanged sentence

Shares Authorized and Outstanding

The Company has authorized 100.0 million shares of common stock as of September 24, 2023 and December 25, 2022.

The Company’s outstanding shares of common stock outstanding, net of repurchased shares of common stock held as treasury stock, were 32.5 million shares at September 24, 2023, compared to 34.7 million shares at December 25, 2022.

The Company has authorized 100.0 million shares of common stock as of March 31, 2024 and December 31, 2023.

The Company’s outstanding shares of common stock, net of repurchased shares of common stock held as treasury stock, were 32.6 million shares at March 31, 2024, compared to 32.5 million shares at December 31, 2023.

Share Repurchase Program

On October 28, 2021, our Board of Directors (the “Board”) approved a share repurchase program with an indefinite duration for up to $ 425.0 million of the Company’s common stock.

The following table summarizes our repurchase activity under our share repurchase programs for the three and nine months ended September 24, 2023 and September 25, 2022:

(In thousands, except average price per share) Total Number of Shares Purchased Average Price Paid per Share Aggregate Cost of Shares Purchased Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs

Three Months Ended

September 24, 2023 — $ — $ — $ 90,160

September 25, 2022 229 $ 85.15 $ 19,529 $ 329,800

The following table summarizes our repurchase activity under our share repurchase programs for the three months ended March 31, 2024 and March 26, 2023:

(In thousands, except average price per share) Total Number of Shares Purchased Average Price Paid per Share Aggregate Cost of Shares Purchased (a)

Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs

Nine Months Ended

September 24, 2023 2,523 $ 83.10 $ 209,640 $ 90,160

September 25, 2022 982 $ 96.71 $ 95,000 $ 329,800

(a) Aggregate cost of shares purchased for the nine months ended September 24, 2023 excludes $ 2.8 million of transaction costs directly attributable to share repurchases, including a 1% excise tax incurred under the Inflation Reduction Act of 2022.

Of these costs, $ 2.1 million were classified as non-cash financing activities during the nine months ended September 24, 2023.

The shares repurchased during the nine months ended September 24, 2023 included 2,176,928 shares repurchased on March 1, 2023 from certain funds affiliated with, or managed by, Starboard Value LP (collectively, “Starboard”), at a price of $ 82.52 per share, for aggregate consideration of $ 179.6 million.

Three Months Ended

March 31, 2024 — $ — $ — $ 90,160

March 26, 2023 2,523 $ 83.10 $ 209,640 $ 90,160

(a) Aggregate cost of shares purchased for the three months ended March 26, 2023 excluded $ 2.8 million of transaction costs directly attributable to share repurchases, including a 1% excise tax incurred under the Inflation Reduction Act of 2022.

These costs were classified as non-cash financing activities during the three months ended March 26, 2023.

The shares repurchased during the three months ended March 26, 2023 included 2,176,928 shares repurchased on March 1, 2023 from certain funds affiliated with, or managed by, Starboard Value LP (collectively, “Starboard”), at a price of $ 82.52 per share, for aggregate consideration of $ 179.6 million.

The transaction was negotiated by an independent committee of the Board of Directors formed for the purpose of evaluating a possible transaction involving Starboard, and was approved by the full Board of Directors upon such independent committee’s recommendation.

4 unchanged sentences

Funding for the share repurchase programs will be provided through our credit facility, operating cash flow, stock option exercises and cash and cash equivalents.

The Company paid dividends of approx imately $ 43.6 million ($ 1.30 per share) f or the nine months ended September 24, 2023.

On October 24, 2023, our Board of Directors declared a fourth quarter dividend of $ 0.46 per common share (approximately $ 15.1 million in the aggregate), which will be paid on November 24, 2023 to stockholders of record as of the close of business on November 13, 2023.

The Company paid aggregate cash dividends of approx imately $ 15.1 million ($ 0.46 per share) f or the three months ended March 31, 2024.

On May 2, 2024, our Board of Directors declared a second quarter dividend of $ 0.46 per common share (approximately $ 15.2 million in the aggregate), which will be paid on May 31, 2024 to stockholders of record as of the close of business on May 20, 2024.

The declaration and payment of any future dividends will be at the discretion of our Board of Directors.

Earnings per Share

We compute earnings per share using the two-class method.

The two-class method requires an earnings allocation formula that determines earnings per share for common shareholders and participating security holders according to dividends declared and participating rights in undistributed earnings.

Time-based restricted stock awards are participating securities because holders of such shares have non-forfeitable dividend rights and participate in undistributed earnings with common stock.

Under the two-class method, total dividends provided to the holders of participating securities and undistributed earnings allocated to participating securities, are subtracted from net income attributable to the Company in determining net income attributable to common shareholders.

Basic earnings per common share are computed by dividing net income attributable to common shareholders by the weighted-average common shares outstanding.

2 unchanged sentences

The calculations of basic and diluted earnings per common share are as follows (in thousands, except per share data):

Three Months Ended Nine Months Ended

September 24,

2023 September 25,

2022 September 24,

2023 September 25,

Basic earnings per common share

Net income attributable to the Company $ 15,861 $ 8,331 $ 56,005 $ 44,258

Dividends paid to participating securities — ( 86 ) — ( 228 )

Net income attributable to participating securities — — — ( 34 )

Net income attributable to common shareholders $ 15,861 $ 8,245 $ 56,005 $ 43,996

Basic weighted average common shares outstanding 32,564 35,259 33,053 35,602

Basic earnings per common share $ 0.49 $ 0.23 $ 1.69 $ 1.23

Diluted earnings per common share

Net income attributable to common shareholders $ 15,861 $ 8,245 $ 56,005 $ 43,996

Weighted average common shares outstanding 32,564 35,259 33,053 35,602

Three Months Ended

2024 March 26,

Net income available to common stockholders $ 14,636 $ 22,376

Basic weighted average number of shares 32,644 34,155

Dilutive effect of outstanding equity awards (a)

236 189 234 238

Diluted weighted average common shares outstanding 32,800 35,448 33,287 35,840

Diluted weighted average number of shares 32,909 34,324

Basic earnings per common share $ 0.45 $ 0.66

Diluted earnings per common share $ 0.44 $ 0.65

___________________________________

(a) Excludes 48,000 and 147,000 shares underlying equity awards for the three and nine months ended September 24, 2023, respectively, and 58,000 and 47,000 shares underlying equity awards for the three and nine months ended September 25, 2022, respectively, as the effect of including such awards would have been anti-dilutive.

(a) Excludes 103,000 and 22,000 shares underlying equity awards for the three months ended March 31, 2024 and March 26, 2023, respectively, as the effect of including such awards would have been anti-dilutive.

Long-term debt, net, consists of the following (in thousands):

September 24,

2024 December 31,

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(a) Revolving facilities as of September 24, 2023 includes $ 14.8 million outstanding under the PJMF Revolving Facility as defined and discussed below.

(a) Revolving facilities as of March 31, 2024 includes $ 1.8 million outstanding under the PJMF Revolving Facility as defined and discussed below.

On September 14, 2021, the Company issued $ 400.0 million of 3.875 % senior notes (the “Notes”) which will mature on September 15, 2029.

Interest on the Notes is payable semi-annually in cash in arrears on March 15 and September 15 of each year at a fixed interest rate of 3.875 % per annum.

Refer to Note 12 of the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 25, 2022.

for further description of the provisions and covenant requirements under the Senior Notes.

Refer to Note 12 of the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023 for further description of the provisions and covenant requirements under the Senior Notes.

Credit Agreement

The Company’s amended and restated credit agreement, dated September 14, 2021 (the “Credit Agreement”) provides for a senior secured revolving credit facility in an aggregate available principal amount of $ 600.0 million (the “PJI Revolving Facility”), of which up to $ 40.0 million is available as swingline loans and up to $ 80.0 million is available as letters of credit.

The Company’s amended and restated credit agreement, dated September 14, 2021 and amended May 30, 2023 (as amended, the “Credit Agreement”), provides for a senior secured revolving credit facility in an aggregate available principal amount of $ 600.0 million (the “PJI Revolving Facility”), of which up to $ 40.0 million is available as swingline loans and up to $ 80.0 million is available as letters of credit.

The PJI Revolving Facility will mature on September 14, 2026.

The remaining availability under the PJI Revolving Facility was approximately $ 224.0 million as of September 24, 2023.

The remaining availability under the PJI Revolving Facility was approximately $ 232.5 million as of March 31, 2024.

PJMF Revolving Facility

PJMF has a $ 20.0 million revolving line of credit (the “PJMF Revolving Facility”) pursuant to a Revolving Loan Agreement, dated September 30, 2015 with U.S.

PJMF has a $ 30.0 million revolving line of credit (the “PJMF Revolving Facility”) pursuant to a Revolving Loan Agreement, dated September 30, 2015, and amended September 30, 2023, with U.S.

Bank National Association, as lender.

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The borrowings under the PJMF Revolving Facility accrue interest at a variable rate of a one month SOFR plus 1.975 %.

The applicable interest rate on the PJMF Revolving facility was 6.9 % for the three months ended September 24, 2023.

As of September 24, 2023, t he principal amount of debt outstanding under the PJMF Revolving Facility was approximately $ 14.8 million and is classified as Current portion of long-term debt in the Condensed Consolidated Balance Sheets .

The PJMF operating results and the related debt outstanding do not impact the financial covenants under the Credit Agreement.

On September 30, 2023, the Company amended the PJMF Revolving Facility to, among other items:

(i) extend the maturity date to September 30, 2024;

(ii) amend the variable interest rate to a one month SOFR plus 1.975 %;

and (iii) expand the capacity from $ 20.0 million to $ 30.0 million.

The applicable interest rate on the PJMF Revolving facility was 7.3 % for the three months ended March 31, 2024.

As of March 31, 2024, t he principal amount of debt outstanding under the PJMF Revolving Facility was approximately $ 1.8 million and is classified as Current portion of long-term debt in the Condensed Consolidated Balance Sheets .

The PJMF operating results and the related debt outstanding do not impact the financial covenants under the Company’s Credit Agreement.

Derivative Financial Instruments

On June 23, 2023, the Company entered into a new interest rate swap with an initial notional value of $ 100.0 million to replace the Company’s prior interest swaps, which had a notional value of $ 125.0 million and matured on April 30, 2023.

On June 23, 2023, the Company entered into a new interest rate swap with an initial notional value of $ 100.0 million to replace the Company’s prior interest rate swaps, which had a notional value of $ 125.0 million and matured on April 30, 2023.

The objective of the interest rate swap is to mitigate the Company’s exposure to the impact of interest rate changes associated with our variable rate debt under the PJI Revolving Facility.

We have designated the interest rate swap as a cash flow hedge and will assess hedge effectiveness at regular intervals through the maturity date of June 30, 2025.

The interest rate swaps are recorded at fair value at each reporting date, and any unrealized gains or losses are included in Accumulated

other comprehensive loss in the Condensed Consolidated Balance Sheets and reclassified to Net interest expense in the Condensed Consolidated Statements of Operations in the same period or periods during which the hedged transaction affect earnings.

As of September 24, 2023, we have the following interest rate swap agreements:

The interest rate swaps are recorded at fair value at each reporting date, and any unrealized gains or losses are included in Accumulated other comprehensive loss in the Condensed Consolidated Balance Sheets and reclassified to Net interest expense in the Condensed Consolidated Statements of Operations in the same period or periods during which the hedged transaction affect earnings.

As of March 31, 2024, we have the following interest rate swap agreements:

Effective Dates Floating Rate Debt Fixed Rates

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Balance Sheet Location Fair Value

September 24,

2024 Fair Value

Other current assets $ 726 $ 986

Other assets $ 59 $ —

Prepaid and other current assets $ 367 $ 107

Other long-term liabilities $ 72 $ 483

The effect of derivative instruments on the accompanying condensed consolidated financial statements is as follows (in thousands):

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Interest rate swaps for the three months ended:

September 24, 2023 $ 801 Interest expense $ 203 $ ( 11,378 )

September 25, 2022 $ 901 Interest expense $ ( 1,650 ) $ ( 7,623 )

Interest rate swaps for the nine months ended:

September 24, 2023 $ 2,225 Interest Expense $ ( 40 ) $ ( 31,674 )

September 25, 2022 $ 3,664 Interest Expense $ ( 1,850 ) $ ( 17,967 )

Net interest paid, including payments made or received under the swaps, was $ 11.2 million and $ 9.6 million for the three months ended September 24, 2023 and September 25, 2022, respectively, and $ 28.0 million and $ 22.2 million for the nine months ended September 24, 2023 and September 25, 2022, respectively.

March 31, 2024 $ 672 Interest expense $ 200 $ ( 11,063 )

March 26, 2023 $ 259 Interest expense $ ( 207 ) $ ( 9,021 )

Net interest paid, including payments made or received under the swaps, was $ 14.5 million and $ 10.9 million for the three months ended March 31, 2024 and March 26, 2023, respectively.

Restructuring

International Restructuring

In December 2023, the Company announced international transformation initiatives (“International Transformation Plan”) designed to evolve our business structure to deliver an enhanced value proposition to our International customers and franchisees, ensure targeted investments and efficient resource management, and better position our largest markets, including the UK, for long-term profitable growth and brand strength.

During the fourth quarter of the year ended December 31, 2023, the Company commenced approved initiatives under the International Transformation Plan related to establishing new regional hubs across APAC (Asia Pacific), EMEA (Europe, Middle East and Africa), and Latin America that will be led by experienced general managers and their teams.

During the quarter ended March 31, 2024, the Company commenced the next phase of the International Transformation Plan as approved by the Board of Directors, and began the process to close 43 underperforming Company-owned restaurants in the UK.

The purpose of this plan is to optimize the Company's restaurant portfolio in the UK and improve overall profitability by closing unprofitable locations and allowing the Company to focus on improving profitability across its remaining portfolio of Company-owned and franchised restaurants in the UK.

The Company is on track to complete these store closures in the second quarter of 2024.

We are continuing to evaluate our restaurant portfolio in the UK, which may result in additional strategic restaurant closures or divestitures.

The Company evaluates its property and equipment and other long-lived assets (primarily right-of-use operating lease assets) for potential indicators of impairment at least annually, or as facts and circumstances indicate that the carrying value of the asset group may not be recoverable.

The asset group is at the store level for our UK Company-owned restaurants and primarily includes lease right-of-use assets and fixed assets.

Due to indicators of potential impairment associated with the 43 store closures, the Company performed a recoverability test and determined that the carrying amount of the asset groups were not recoverable.

For the three months ended March 31, 2024, we recognized impairment charges for the amount by which the carrying value exceeded the estimated fair value of the asset groups.

Fair values were determined based on an income approach, specifically a discounted cash flow ("DCF") model, primarily using estimated sublease income considering market rental rates.

Management judgment is involved in determining the estimated fair value and includes uncertainties that under different assumptions and circumstances could drive material changes in the fair value determination.

In connection with these actions, the Company incurred restructuring related costs of $ 9.5 million for the three months ended March 31, 2024 primarily related to lease right-of-use asset and fixed asset impairment charges, employee severance benefits accounted for under ASC 712, “Compensation – Nonretirement Postemployment Benefits,” and professional advisory services.

The Company has incurred total restructuring related costs of $ 11.7 million since commencement of the International Transformation Plan.

These costs were included in General and administrative expenses in the Condensed Consolidated Statements of Operations.

Total estimated pre-tax costs associated with the International Transformation Plan are approximately $ 25 million to $ 35 million (inclusive of the $ 11.7 million spent through the first quarter of 2024), all of which will be recorded within our International segment, and we expect to incur the remainder of these costs through 2024 and 2025.

The following table summarizes restructuring related costs recorded for the three months ended March 31, 2024 (in thousands):

Three Months Ended March 31, 2024

Long-lived asset impairment charges $ 7,554

Employee severance 643

Professional services and other related costs 1,346

Total international transformation costs 9,543

Stock-based compensation forfeitures on unvested awards ( 20 )

Total international transformation costs, net of stock-based award forfeitures $ 9,523

The following table presents changes in the balance of accrued expenses relating to approved initiatives, which are recorded in accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets (in thousands):

Employee severance Professional services and other related costs Recruiting Total

Balance as of December 31, 2023 $ 1,227 $ 527 $ 29 $ 1,783

Charges 643 1,346 — 1,989

Payments ( 648 ) ( 543 ) ( 29 ) ( 1,220 )

Balance as of March 31, 2024 $ 1,222 $ 1,330 $ — $ 2,552

Litigation, Commitments and Contingencies

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We review these provisions at least quarterly and adjust these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case.

Durling et al v.

Papa John’s International, Inc.

, is a conditionally certified collective action filed in May 2016 in the United States District Court for the Southern District of New York, alleging that corporate restaurant delivery drivers were

not properly reimbursed for vehicle mileage and expenses in accordance with the Fair Labor Standards Act.

In July 2018, the District Court granted a motion to certify a conditional corporate collective class and the opt-in notice process has been completed.

As of the close of the opt-in period on October 29, 2018, 9,571 drivers opted into the collective class.

On September 30, 2022, the parties reached a settlement in principle to resolve the case.

On December 19, 2022, the District Court granted preliminary approval of the settlement, and following a hearing on July 27, 2023, the District Court granted final approval of the settlement.

Pursuant to the terms of the settlement, which contemplated a total aggregate settlement amount of no more than $ 20.0 million subject to a claims-made process, all claims in the action will be dismissed, the litigation will be terminated, and the Company will receive a release.

The settlement also includes resolution of a companion case, Hubbard, et al.

Papa John’s International, Inc.

, pending in the United States District Court for the Western District of Kentucky.

The settlement is subject to a claims-made process whereby unclaimed funds revert to the Company, and the Company was only responsible for payments to class and collective action members who timely submitted a claim form.

On January 18, 2023, the Company remitted $ 5.0 million to the settlement administrator as partial funding of the settlement in accordance with the terms of the applicable settlement agreement.

On August 10, 2023, the Company remitted the remaining $ 5.6 million settlement amount to the administrator in accordance with the final settlement terms.

The settlement of these claims and lawsuits is materially complete, and the Company anticipates that the claims process will be concluded by the end of 2023.

In re Papa John’s Employee & Franchise Employee Antitrust Litigation is a putative class action filed in December 2018 in the United States District Court for the Western District of Kentucky.

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Pursuant to the terms of the proposed settlement, in exchange for the Company’s payment of a total aggregate settlement amount of $ 5.0 million and other non-monetary consideration, all claims in the action will be dismissed, the litigation will be terminated, and the Company will receive a release.

The settlement amount was recorded in General and administrative expenses in the Condensed Consolidated Statements of Operations in the first quarter of 2022 and remained accrued in Accrued expenses and other accrued liabilities in the Condensed Consolidated Balance Sheets as of September 24, 2023.

The settlement amount was recorded in General and administrative expenses in the Condensed Consolidated Statements of Operations in the first quarter of 2022 and remained accrued in Accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets as of March 31, 2024.

The proposed settlement remains subject to approval by the District Court and contains certain customary contingencies.

The Company continues to deny any liability or wrongdoing in this matter.

Refranchising Loss

On March 28, 2022, we refranchised our 51 % ownership interest in a 90 -restaurant consolidated joint venture in Texas for $ 14.0 million, net of transaction costs.

In connection with the divestiture, we recorded a one-time, non-cash charge of $ 8.4 million in Refranchising and impairment loss in the Condensed Consolidated Statements of Operations, which reflects net sale proceeds of $ 14.0 million, the noncontrolling interest of $ 4.2 million, and the recognition of an unearned royalty stream of $ 12.2 million to be recognized as revenue over the 10 -year term of the franchise agreement executed concurrent with the disposition in accordance with ASC 810, “ Consolidation .” The $ 8.4 million of the one-time, non-cash refranchising loss was recorded in the first quarter of 2022 and realized upon consummation of the sale in the second quarter of 2022.

Impairment of Reacquired Master Franchise Rights

In the first quarter of 2022 , the Company recorded an impairment of $ 2.8 million in Refranchising and impairment loss in the Condensed Consolidated Statements of Operations for reacquired franchise rights due to the financial and operational impact of the conflict in Ukraine and government actions taken in response to that conflict, including, but not limited to, international sanctions.

The reacquired franchise rights were previously acquired from a former master franchisee and capitalized by the Company.

Segment Information

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Domestic Company-owned restaurants, North America franchising, North America commissaries, and International operations.

The Domestic Company-owned restaurant segment consists of the operations of all Domestic Company-owned restaurants and derives its revenues principally from retail sales of pizza, Papadias, which are flatbread-style sandwiches, and side items, including breadsticks, cheesesticks, chicken poppers and wings, dessert items and canned or bottled beverages.

The Domestic Company-owned restaurant segment consists of the operations of all Domestic Company-owned restaurants and derives its revenues principally from retail sales of pizza, Papadias, and side items, including breadsticks, Papa Bites, cheesesticks, boneless chicken wings and bone-in chicken wings, dessert items and canned or bottled beverages.

The North America franchising segment consists of our franchise sales and support activities and derives its revenues from sales of franchise and development rights and collection of royalties from our franchisees located in the United States and Canada.

The North America commissary segment consists of the operations of our regional dough production and product distribution centers and derives its revenues principally from the sale and distribution of food and paper products to Domestic Company-owned and franchised restaurants in the United States and

The International segment consists of the operations of all Company-owned restaurants located in the UK, as well as distribution sales to franchised Papa John’s restaurants located in the UK and our franchise sales and support activities, which derive revenues from sales of franchise and development rights and the collection of royalties from our International franchisees.

The International segment consists of the operations of all Company-owned restaurants located in the UK, as well as distribution sales to franchised Papa Johns restaurants located in the UK and our franchise sales and support activities, which derive revenues from sales of franchise and development rights and the collection of royalties from our International franchisees.

All other business units that do not meet the quantitative thresholds for determining reportable segments, which are not operating segments, we refer to as “all other,” which consists of operations that derive revenues from the sale, principally to Company-owned and franchised restaurants, of printing and promotional items, franchise contributions to marketing funds and information systems and related services used in restaurant operations, including our point-of-sale system, online and other technology-based ordering platforms.

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The following tables present our segment information.

Three Months Ended Nine Months Ended

(In thousands) September 24,

2023 September 25,

2022 September 24,

2023 September 25,

Three Months Ended

(In thousands) March 31,

2024 March 26,

Domestic Company-owned restaurants $ 176,224 $ 179,866

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Operating income:

Domestic Company-owned restaurants (a)

$ 6,147 $ 3,667 $ 19,438 $ 11,579

Domestic Company-owned restaurants $ 10,359 $ 6,650

North America franchising 33,711 33,400

North America commissaries 12,335 10,730

International (b)

International (a)

( 5,989 ) 7,232

All others 3,198 3,157

Unallocated corporate expenses (c)

Unallocated corporate expenses (b)

( 19,642 ) ( 23,366 )

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___________________________________

(a) The nine months ended September 25, 2022 includes a one-time, non-cash charge of $ 8.4 million associated with the refranchising of the Company’s ownership interest in a 90 -restaurant joint venture, recorded as Refranchising and impairment loss.

See “Note 10.

Divestitures” for additional information.

(b) The three and nine months ended September 24, 2023 includes $ 1.2 million and $ 2.5 million of costs associated with repositioning the UK portfolio as well as transaction costs related to the acquisition of stores from franchisees.

The three and nine months ended September 25, 2022 includes a charge of $ 4.1 million related to the reserve of certain accounts and notes receivable and operating lease right-of-use assets impairment associated with the termination of a significant franchise in the United Kingdom.

The three and nine months ended September 25, 2022 also includes $ 3.5 million of one-time, non-cash reserves for certain accounts receivable and impairments of reacquired franchise rights.

See “Notes 2.

Significant Accounting Policies”, “10.

Divestitures” and “12.

Acquisitions” for additional information.

(c) The nine months ended September 24, 2023 includes $ 2.0 million of severance and related costs associated with the transition of certain executives.

The three and nine months ended September 24, 2023 includes $ 0.6 million for certain legal settlements.

Unallocated corporate expenses includes $ 10.0 million for certain legal settlements for the three months ended September 25, 2022.

The nine months ended September 25, 2022 includes $ 13.9 million of one-time, non-cash reserves of certain notes receivable, $ 15.0 million for certain legal settlements, and $ 1.5 million of advisory fees and severance costs associated with the transition of certain

See “Notes 2.

Significant Accounting Policies” and “9.

Litigation, Commitments and Contingencies” for additional information.

(a) The three months ended March 31, 2024 includes $ 9.5 million of costs related to the International Transformation Plan.

Restructuring” for additional information.

(b) The three months ended March 26, 2023 includes $ 1.4 million of severance and related costs associated with the transition of certain executives.

Disaggregation of Revenue

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Reportable Segments

Three Months Ended September 24, 2023

Major Products/Services Lines Domestic Company-owned restaurants North America franchising North America commissaries International All others Total

Company-owned restaurant sales $ 177,195 $ — $ — $ 14,013 $ — $ 191,208

Franchise royalties and fees — 36,081 — 12,219 — 48,300

Commissary sales — — 256,124 16,695 — 272,819

Other revenues — — — 5,554 73,388 78,942

Eliminations — ( 1,040 ) ( 51,237 ) — ( 16,180 ) ( 68,457 )

Total segment revenues 177,195 35,041 204,887 48,481 57,208 522,812

International other revenues (a)

— — — ( 5,554 ) 5,554 —

Total revenues $ 177,195 $ 35,041 $ 204,887 $ 42,927 $ 62,762 $ 522,812

Reportable Segments

Three Months Ended September 25, 2022

Major Products/Services Lines Domestic Company-owned restaurants North America franchising North America commissaries International All others Total

Company-owned restaurant sales $ 166,050 $ — $ — $ — $ — $ 166,050

Franchise royalties and fees — 34,708 — 11,619 — 46,327

Commissary sales — — 267,445 19,116 — 286,561

Other revenues — — — 6,972 72,490 79,462

Eliminations — ( 996 ) ( 51,330 ) — ( 15,562 ) ( 67,888 )

Total segment revenues 166,050 33,712 216,115 37,707 56,928 510,512

International other revenues (a)

— — — ( 6,972 ) 6,972 —

Total revenues $ 166,050 $ 33,712 $ 216,115 $ 30,735 $ 63,900 $ 510,512

Reportable Segments

Nine Months Ended September 24, 2023

Three Months Ended March 31, 2024

Major Products/Services Lines Domestic Company-owned restaurants North America franchising North America commissaries International All others Total

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Reportable Segments

Nine Months Ended September 25, 2022

Three Months Ended March 26, 2023

Major Products/Services Lines Domestic Company-owned restaurants North America franchising North America commissaries International All others Total

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(a) Other revenues as reported in the Condensed Consolidated Statements of Operations include $ 5.6 million and $ 19.5 million of revenues for the three and nine months ended September 24, 2023, respectively, and $ 7.0 million and $ 22.4 million for the three and nine months ended September 25, 2022, respectively, that are part of the International reporting segment.

These amounts include marketing fund contributions and sublease rental income from international franchisees in the United Kingdom that provide no significant contribution to operating income but must be reported on a gross basis under accounting requirements.

(a) Other revenues as reported in the Condensed Consolidated Statements of Operations include $ 6.0 million and $ 7.2 million of revenues for the three months ended March 31, 2024 and March 26, 2023, respectively, that are part of the International reporting segment.

These amounts include marketing fund contributions and sublease rental income from international franchisees in the United Kingdom that provide no significant contribution to income before income taxes but must be reported on a gross basis under accounting requirements.

The related expenses for these Other revenues are reported in Other expenses in the Condensed Consolidated Statements of Operations.

UK Franchisee Acquisitions

As part of our investment to reposition our UK business, we have acquired a portfolio of Company-owned restaurants in the UK market that were previously franchised.

Our control and ownership of this portfolio enables us to implement operating model enhancements in the restaurants including revenue management capabilities, product and technological innovation and operational efficiencies to improve sales and restaurant-level profitability, and to drive initiatives for future growth and profitability in the Company’s largest market outside of North America.

As part of our investment to reposition our UK business, during 2023 we acquired a portfolio of Company-owned restaurants in the UK market that were previously franchised.

As part of this investment, the Company acquired 91 Papa Johns restaurants previously operated by the M25 division of Drake Food Service International in the United Kingdom on June 2, 2023 for total consideration of approximately $ 13.7 million.

The Company acquired an additional 27 Papa Johns restaurants in the United Kingdom during the three months ended September 24, 2023 for total consideration of approximately $ 1.5 million.

Collectively, we refer to these acquisitions as the “UK franchisee acquisitions.”

During the three and nine months ended September 24, 2023, the Company incurred $ 0.8 million and $ 2.1 million, respectively, of acquisition and transition costs related to the UK franchisee acquisitions.

These expenses were recorded within General and administrative expenses and within the International segment in the Condensed Consolidated Statements of Operations.

The results of operations of the acquired restaurants after their respective acquisition dates are included within the International segment in the Company’s Condensed Consolidated Statements of Operations.

The Company acquired an additional 27 Papa Johns restaurants in the United Kingdom during the third quarter of 2023 for total consideration of approximately $ 1.5 million.

Collectively, we refer to these acquisitions as the “UK franchisee acquisitions.” The Company incurred substantially all acquisition and transition costs related to the UK franchisee acquisitions during the year ended December 31, 2023.

r esults of operations of the acquired restaurants after their respective acquisition dates are included within the International segment in the Company’s Condensed Consolidated Statements of Operations.

The impact of the acquisitions was not material to the Company’s Condensed Consolidated Financial Statements.

The UK franchisee acquisitions have been accounted for as business combinations.

As such, the Company concluded that the consideration was measured at fair value and has recorded the preliminary estimated fair value of the assets acquired and liabilities assumed as of the respective acquisition dates.

Total consideration was approximately $ 15.2 million, of which $ 13.7 million was pre-existing accounts receivable and notes receivable and was classified as a noncash investing transaction within the Condensed Consolidated Statements of Cash Flows during the nine months ended September 24, 2023.

As such, the Company concluded that the consideration was measured at fair value and has recorded the estimated fair value of the assets acquired and liabilities assumed as of the respective acquisition dates.

Total consideration was approximately $ 15.2 million, of which $ 13.7 million was pre-existing accounts receivable and notes receivable.

Assets acquired include approximately $ 10.6 million of property and equipment, net, $ 0.3 million of inventories and other assets and $ 4.3 million of goodwill.

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Goodwill also includes certain other benefits that do not qualify for recognition as intangible assets, such as an assembled workforce.

Domestic Acquisitions

During the nine months ended September 24, 2023, we acquired ten Domestic restaurants for a total purchase price of $ 4.1 million, which was classified as cash used in investing activities within the Condensed Consolidated Statements of Cash Flows.

The impact of the acquisitions was not material to the Company’s Condensed Consolidated Financial Statements.

Acquired assets recorded within the Condensed Consolidated Balance Sheets as of September 24, 2023 primarily included store property and equipment of $ 1.4 million, reacquired franchise rights of $ 1.5 million, and goodwill of $ 1.1 million.

The amounts recorded as a result of our preliminary acquisition accounting for the UK franchisee and Domestic acquisitions are subject to change and further refinement.

The Company is still assessing the condition and finalizing the fair value of acquired property and equipment and intangible assets as well as gathering information regarding leases and other assets.

There were no measurement period adjustments recorded during the three months ended September 24, 2023, and the Company expects these items to be finalized prior to the one-year anniversary date of the respective acquisitions.

The following summarizes changes in the Company’s goodwill by reportable segment (in thousands):

Domestic Company-owned restaurants International All others Total

Domestic Company-owned restaurants International Total

Balance at December 31, 2023 $ 56,609 $ 19,597 $ 76,206

Acquisitions (a)

1,102 4,274 — 5,376

Acquisition accounting adjustments (a)

Foreign currency adjustments — ( 326 ) ( 326 )

Balance at September 24, 2023 $ 56,609 $ 18,966 $ 436 $ 76,011

(s) Goodwill from acquisitions during the nine months ended September 24, 2023 include $ 4.3 million from the UK franchisee acquisitions described above as well as $ 1.1 million related to the Domestic store acquisitions described above.

Balance at March 31, 2024 $ 56,609 $ 19,366 $ 75,975

___________________________________

(a) We recorded acquisition accounting adjustments during the three months ended March 31, 2024 to increase property and equipment to fair value as a result of the finalization of our valuation of acquired property and equipment.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements