What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-11-07 compared with 2024-08-08 · 167 added, 176 removed, 583 unchanged (37% of the section changed)

3 unchanged sentences

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts) June 30,

(In thousands, except per share amounts) September 29,

2024 December 31,

6 unchanged sentences

Prepaid expenses and other current assets 51,873 42,285

Assets held for sale 4,205 —

Total current assets 215,857 231,018

25 unchanged sentences

Common stock ($ 0.01 par value per share;

issued 49,280 at June 30, 2024 and 49,235 at December 31, 2023)

issued 49,282 at September 29, 2024 and 49,235 at December 31, 2023)

Additional paid-in capital 449,141 452,290

1 unchanged sentence

Retained earnings 242,269 219,027

Treasury stock ( 16,658 shares at June 30, 2024 and 16,747 shares at December 31, 2023, at cost)

Treasury stock ( 16,645 shares at September 29, 2024 and 16,747 shares at December 31, 2023, at cost)

( 1,116,256 ) ( 1,123,098 )

7 unchanged sentences

Condensed Consolidated Statements of Operations

Three Months Ended Six Months Ended

(In thousands, except per share amounts) June 30,

2024 June 25,

2023 June 30,

2024 June 25,

Three Months Ended Nine Months Ended

(In thousands, except per share amounts) September 29,

2024 September 24,

2023 September 29,

2024 September 24,

Domestic Company-owned restaurant sales $ 168,672 $ 177,195 $ 518,103 $ 532,841

18 unchanged sentences

Net income before attribution to noncontrolling interests 41,788 15,951 69,238 56,356

Net income attributable to noncontrolling interests ( 293 ) ( 91 ) ( 571 ) ( 261 )

Net loss (income) attributable to noncontrolling interests 20 ( 90 ) ( 551 ) ( 351 )

Net income attributable to the Company $ 41,808 $ 15,861 $ 68,687 $ 56,005

8 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

Three Months Ended Six Months Ended

(In thousands) June 30,

2024 June 25,

2023 June 30,

2024 June 25,

Three Months Ended Nine Months Ended

(In thousands) September 29,

2024 September 24,

2023 September 29,

2024 September 24,

Net income before attribution to noncontrolling interests $ 41,788 $ 15,951 $ 69,238 $ 56,356

12 unchanged sentences

comprehensive income, redeemable noncontrolling interests ( 43 ) ( 30 ) ( 233 ) ( 135 )

comprehensive income, nonredeemable noncontrolling interests ( 202 ) ( 32 ) ( 381 ) ( 156 )

comprehensive loss (income), nonredeemable noncontrolling interests 63 ( 60 ) ( 318 ) ( 216 )

Comprehensive income attributable to the Company $ 42,586 $ 15,234 $ 69,910 $ 58,224

___________________________________

(1) Amounts reclassified out of accumulated other comprehensive loss into net interest income (expense) include $ 197 and $ 397 for the three and six months ended June 30, 2024, respectively, and $( 36 ) and $( 243 ) for the three and six months ended June 25, 2023, respectively.

(2) The income tax effects of amounts reclassified out of accumulated other comprehensive loss were $( 45 ) and $( 90 ) for the three and six months ended June 30, 2024, respectively, and $ 8 and $ 55 for the three and six months ended June 25, 2023, respectively.

(1) Amounts reclassified out of accumulated other comprehensive loss into net interest income (expense) include $ 194 and $ 591 for the three and nine months ended September 29, 2024, respectively, and $ 203 and $( 40 ) for the three and nine months ended September 24, 2023, respectively.

(2) The income tax effects of amounts reclassified out of accumulated other comprehensive loss were $( 43 ) and $( 133 ) for the three and nine months ended September 29, 2024, respectively, and $( 46 ) and $ 9 for the three and nine months ended September 24, 2023, respectively.

See accompanying notes.

13 unchanged sentences

For the three months ended

June 30, 2024

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

September 29, 2024

Balance at June 30, 2024 32,622 $ 493 $ 446,547 $ ( 7,358 ) $ 215,800 $ ( 1,117,140 ) $ 15,518 $ ( 446,140 )

Net income (1)

8 unchanged sentences

Other 3 — ( 73 ) — — 252 — 179

Balance at June 30, 2024 32,622 $ 493 $ 446,547 $ ( 7,358 ) $ 215,800 $ ( 1,117,140 ) $ 15,518 $ ( 446,140 )

For the six months ended

June 30, 2024

Balance at September 29, 2024 32,637 $ 493 $ 449,141 $ ( 6,580 ) $ 242,269 $ ( 1,116,256 ) $ 15,314 $ ( 415,619 )

For the nine months ended

September 29, 2024

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

9 unchanged sentences

Other 8 — ( 417 ) — — 600 — 183

Balance at June 30, 2024 32,622 $ 493 $ 446,547 $ ( 7,358 ) $ 215,800 $ ( 1,117,140 ) $ 15,518 $ ( 446,140 )

(1) Net income to the Company for the three and six months ended June 30, 2024 excludes $ 91 and $ 190 , respectively, allocable to the redeemable noncontrolling interests for our joint venture arrangements.

(2) At June 30, 2024, the accumulated other comprehensive loss of $ 7,358 was comprised of net unrealized foreign currency translation loss of $ 7,784 and net unrealized gain on the interest rate swap agreements of $ 426 .

Balance at September 29, 2024 32,637 $ 493 $ 449,141 $ ( 6,580 ) $ 242,269 $ ( 1,116,256 ) $ 15,314 $ ( 415,619 )

(1) Net income to the Company for the three and nine months ended September 29, 2024 excludes $ 43 and $ 233 , respectively, allocable to the redeemable noncontrolling interests for our joint venture arrangements.

(2) At September 29, 2024, the accumulated other comprehensive loss of $ 6,580 was comprised of net unrealized foreign currency translation loss of $ 6,186 and net unrealized loss on the interest rate swap agreements of $ 394 .

See accompanying notes.

13 unchanged sentences

For the three months ended

June 25, 2023

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

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)

8 unchanged sentences

Other 56 — ( 3,673 ) — — 3,755 — 82

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

For the six months ended

June 25, 2023

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

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

5 unchanged sentences

Acquisition of Company common stock (3)

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

Stock-based compensation expense — — 13,224 — — — — 13,224

3 unchanged sentences

Other 66 — ( 4,122 ) — — 4,422 — 300

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

(1) Net income to the Company for the three and six months ended June 25, 2023 excludes $ 59 and $ 105 , respectively, allocable to the redeemable noncontrolling interests for our joint venture arrangements.

(2) At June 25, 2023, the accumulated other comprehensive loss of $ 7,289 was comprised of net unrealized foreign currency translation loss of $ 7,274 and net unrealized loss on the interest rate swap agreements of $ 15 .

(3) Acquisition of Company common stock for the six months ended June 25, 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 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.

See accompanying notes.

2 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Six Months Ended

(In thousands) June 30,

2024 June 25,

Nine Months Ended

(In thousands) September 29,

2024 September 24,

Operating activities

3 unchanged sentences

Depreciation and amortization 52,528 46,815

Refranchising and impairment loss 17,433 —

Deferred income taxes 3,877 3,481

Stock-based compensation expense 5,903 13,224

Refranchising and impairment losses 14,713 —

Loss on disposal of property and equipment 965 —

Gain on disposal of property and equipment ( 42,034 ) —

Other 614 331

14 unchanged sentences

Repayments of notes issued 3,148 5,759

Proceeds from dispositions, net of cash transferred 1,495 —

Acquisitions, net of cash acquired — ( 5,599 )

Proceeds from dispositions 49,012 —

Other 2,373 401

Net cash used in investing activities ( 23,841 ) ( 35,727 )

Net cash provided by (used in) investing activities 7,448 ( 57,654 )

Financing activities

Net proceeds of revolving credit facilities 3,024 186,529

Net (repayments) proceeds of revolving credit facilities ( 31,589 ) 185,789

Proceeds from exercise of stock options 1,021 1,816

14 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2024

September 29, 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 six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending December 29, 2024.

Operating results for the three and nine months ended September 29, 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 Johns Domestic restaurants, both Company-owned and franchised, participate in Papa John’s Marketing Fund, Inc.

Papa Johns North American 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 Domestic 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 North American 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.

5 unchanged sentences

Noncontrolling Interests

Papa Johns has joint venture arrangements in which there are noncontrolling interests held by third parties that includ ed 98 restaurants at June 30, 2024 and June 25, 2023, respectively.

Papa Johns has joint venture arrangements in which there are noncontrolling interests held by third parties that includ ed 98 restaurants at September 29, 2024 and September 24, 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 and six months ended June 30, 2024 and June 25, 2023 was as follows:

Three Months Ended Six Months Ended

(In thousands) June 30,

2024 June 25,

2023 June 30,

2024 June 25,

Net income attributable to these joint ventures for the three and nine months ended September 29, 2024 and September 24, 2023 was as follows:

Three Months Ended Nine Months Ended

(In thousands) September 29,

2024 September 24,

2023 September 29,

2024 September 24,

Papa John’s International, Inc.

33 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 and liabilities that were measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023 are as follows:

Our financial assets and liabilities that were measured at fair value on a recurring basis as of September 29, 2024 and December 31, 2023 are as follows:

Fair Value Measurements

1 unchanged sentence

Value Level 1 Level 2 Level 3

June 30, 2024

September 29, 2024

Financial assets:

1 unchanged sentence

$ 30,822 $ 30,822 $ — $ —

Financial liabilities:

Interest rate swaps (b)

10 unchanged sentences

___________________________________

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

(a) Represents life insurance policies held in our non-qualified deferred compensation plan, which are classified as Other assets on the Condensed Consolidated Balance Sheets

(b) The fair value of our interest rate swaps is based on the sum of all future net present value cash flows.

1 unchanged sentence

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 and six months ended June 30, 2024 or fiscal year 2023.

There were no transfers among levels within the fair value hierarchy during the three and nine months ended September 29, 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 June 30, 2024 and December 31, 2023:

June 30, 2024 December 31, 2023

September 29, 2024 December 31, 2023

(In thousands) Carrying

11 unchanged sentences

Write-offs charged against the allowance ( 1,235 ) —

Balance at June 30, 2024 $ 8,245 $ 17,416

Assets Held for Sale

Assets held for sale are recorded at the lower of their carrying value or fair value less estimated cost to sell.

Certain assets previously classified within property and equipment, net, related to two Domestic Quality Control Centers (“QC Centers”) that were sold on August 2, 2024 for a purchase price of $ 46.7 million were classified within Assets held for sale in the Condensed Consolidated Balance Sheets at June 30, 2024 for $ 3.4 million, which represents their carrying value.

Certain assets related to 20 Company-owned restaurants in the United Kingdom (“UK”) that were sold on July 1, 2024 were classified within Assets held for sale in the Condensed Consolidated Balance Sheets at June 30, 2024 and were remeasured to $ 0.8 million, which represents their fair value less estimated cost to sell.

The remeasurement resulted in charges of $ 0.6 million during the three months ended June 30, 2024, which were recorded within General and administrative expenses in the Condensed Consolidated Statements of Operations.

See also “Note 9.

Restructuring” for more information on the UK Company-owned restaurants and “Note 12.

Subsequent Events” for more information on the QC Centers.

Balance at September 29, 2024 $ 8,730 $ 17,416

Impairment of Long-lived Assets

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

For Domestic Company-owned restaurants, the evaluation is performed at the operating market level while International Company-owned restaurants are evaluated at the store level as these represent the lowest level for which identifiable cash flows and are largely independent of the cash flows of other assets and liabilities.

For Domestic Company-owned restaurants, the evaluation is performed at the operating market level while International Company-owned restaurants are evaluated at the restaurant level as these represent the lowest level for which identifiable cash flows and are largely independent of the cash flows of other assets and liabilities.

If the carrying amount of the long-lived asset group exceeds the amount of estimated future undiscounted cash flows, the fair value of the asset group is estimated and an impairment loss is recorded if the carrying value exceeds the estimated fair value.

The assumptions used in the undiscounted cash flow calculation related to future growth are subjective and may be negatively impacted by future changes in operating performance or economic conditions.

The Company determined that indicators of impairment existed as of June 30, 2024 within one Domestic Company-owned restaurant operating market and recorded non-cash impairment charges of $ 3.3 million for property and equipment and $ 0.7 million for intangible assets for the three and six months ended June 30, 2024.

Separately, the Company recorded impairments related to International Company-owned restaurants in connection with its International Transformation Plan during the three and six months ended June 30, 2024, as further described in “Note 9.

Restructuring”.

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

Recent Accounting Pronouncements

3 unchanged sentences

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 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.

6 unchanged sentences

The Company subleases certain retail space to our franchisees in the UK, which are primarily operating leases.

At June 30, 2024, we leased and subleased approximately 350 Papa Johns restaurants to franchisees in the UK.

At September 29, 2024, we leased and subleased approximately 350 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 $ 2.1 million and $ 4.4 million for the three and six months ended June 30, 2024, respectively, and $ 2.7 million and $ 5.6 million for the three and six months ended June 25, 2023, respectively, within Other revenues in the Condensed Consolidated Statements of Operations.

The Company recognized total sublease income of $ 2.7 million and $ 7.1 million for the three and nine months ended September 29, 2024, respectively,

and $ 2.3 million and $ 8.0 million for the three and nine months ended September 24, 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 2029.

As of June 30, 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 $ 6.6 million.

As of September 29, 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 $ 6.9 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:

Six Months Ended

(In thousands) June 30, 2024 June 25, 2023

Nine Months Ended

(In thousands) September 29, 2024 September 24, 2023

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

10 unchanged sentences

PJMF, which is a consolidated VIE where the Company has been identified as the primary beneficiary, collects a percentage of revenues from Company-owned and franchised restaurants in the United States for the purpose of designing and administering advertising and promotional programs for all participating Domestic restaurants.

Contributions and

expenditures are reported on a gross basis in the Condensed Consolidated Statements of Operations within Other revenues and Other expenses.

Contributions and expenditures are reported on a gross basis in the Condensed Consolidated Statements of Operations within Other revenues and Other expenses.

PJMF also has a wholly-owned subsidiary, Papa Card, Inc., which administers the Company’s gift card programs.

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 29,

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 six months ended June 30, 2024, the Company recognized $ 8.2 million and $ 16.3 million in revenue, respectively, related to deferred revenue compared to $ 7.9 million and $ 16.3 million, respectively, for the three and six months ended June 25, 2023.

During the three and nine months ended September 29, 2024, the Company recognized $ 7.8 million and $ 24.1 million in revenue, respectively, related to deferred revenue compared to $ 8.1 million and $ 24.4 million, respectively, for the three and nine months ended September 24, 2023.

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

Contract Liabilities

June 30, 2024 December 31, 2023 Change

September 29, 2024 December 31, 2023 Change

Franchise fee liabilities $ 19,670 $ 20,564 $ ( 894 )

4 unchanged sentences

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

Contract assets were approximately $ 12.2 million and $ 7.9 million, respectively, at June 30, 2024 and December 31, 2023.

For the three and six months ended June 30, 2024 and June 25, 2023, revenue was reduced approximately $ 1.4 million and $ 2.6 million and $ 0.9 million and $ 1.8 million, respectively, for the amortization of contract assets over the applicable contract terms.

Contract assets were approximately $ 13.4 million and $ 7.9 million, respectively, at September 29, 2024 and December 31, 2023.

For the three and nine months ended September 29, 2024 and September 24, 2023, revenue was reduced approximately $ 1.3 million and $ 4.0 million and $ 0.9 million and $ 2.7 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 $ 2,991 $ 2,615 $ 2,421 $ 2,175 $ 1,939 $ 4,193 $ 16,334

At June 30, 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.

At September 29, 2024, approximately $ 3.4 million of area development fees related to unopened restaurants and International unearned franchise fees are included in Deferred revenue.

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

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

2 unchanged sentences

Shares Authorized and Outstanding

The Company has authorized 100.0 million shares of common stock as of June 30, 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 June 30, 2024, compared to 32.5 million shares at December 31, 2023.

The Company has authorized 100.0 million shares of common stock as of September 29, 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 September 29, 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 six months ended June 30, 2024 and June 25, 2023:

The following table summarizes our repurchase activity under our share repurchase programs for the three and nine months ended September 29, 2024 and September 24, 2023:

(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

June 30, 2024 — $ — $ — $ 90,160

June 25, 2023 — $ — $ — $ 90,160

September 29, 2024 — $ — $ — $ 90,160

September 24, 2023 — $ — $ — $ 90,160

(In thousands, except average price per share) Total Number of Shares Purchased (a)

1 unchanged sentence

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

Six Months Ended

June 30, 2024 — $ — $ — $ 90,160

June 25, 2023 2,523 $ 83.10 $ 209,640 $ 90,160

(a) Shares repurchased during the six months ended June 25, 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.

Refer to Note 18 of the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023 for further details.

(b) Aggregate cost of shares purchased for the six months ended June 25, 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.

Of these costs, $ 2.1 million were classified as non-cash financing activities during the six months ended June 25, 2023.

Nine Months Ended

September 29, 2024 — $ — $ — $ 90,160

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

(a) 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.

(b) Aggregate cost of shares purchased for the nine months ended September 24, 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.

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

The timing and volume of share repurchases under the Company’s share repurchase programs may be executed at the discretion of management on an opportunistic basis, subject to market and business conditions, regulatory requirements and other factors, or pursuant to trading plans or other arrangements.

Repurchases under the programs may be made through open market, block, and privately negotiated transactions, including Rule 10b5-1 plans, at times and in such amounts as

management deems appropriate.

Repurchases under the Company’s share repurchase programs may be commenced or suspended from time to time at the Company’s discretion without prior notice.

Repurchases under the programs may be made through open market, block, and privately negotiated transactions, including Rule 10b5-1 plans, at times and in such amounts as management deems appropriate.

Repurchases under the Company’s share repurchase programs may be commenced or

suspended from time to time at the Company’s discretion without prior notice.

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 ag gregate cash dividends of approximately $ 30.2 million ($ 0.92 per share) for the six months ended June 30, 2024.

On July 31, 2024, our Board of Directors declared a third quarter dividend of $ 0.46 per common share (approximately $ 15.2 million in the aggregate), which will be paid on August 30, 2024 to stockholders of record as of the close of business on August 19, 2024.

The Company paid ag gregate cash dividends of approximately $ 45.4 million ($ 1.38 per share) for the nine months ended September 29, 2024.

On October 29, 2024, our Board of Directors declared a fourth quarter dividend of $ 0.46 per common share (approximately $ 15.2 million in the aggregate), which will be paid on November 29, 2024 to stockholders of record as of the close of business on November 18, 2024.

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

4 unchanged sentences

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

Three Months Ended Six Months Ended

2024 June 25,

2023 June 30,

2024 June 25,

Three Months Ended Nine Months Ended

September 29,

2024 September 24,

2023 September 29,

2024 September 24,

Net income available to common stockholders $ 41,808 $ 15,861 $ 68,687 $ 56,005

6 unchanged sentences

___________________________________

(a) Excludes 377,000 and 207,000 shares underlying equity awards for the three and six months ended June 30, 2024, respectively, and 103,000 and 49,000 shares underlying awards for the three and six months ended June 25, 2023, respectively, as the effect of including such awards would have been anti-dilutive.

(a) Excludes 345,000 and 384,000 shares underlying equity awards for the three and nine months ended September 29, 2024, respectively, and 48,000 and 147,000 shares underlying awards for the three and nine months ended September 24, 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 29,

2024 December 31,

7 unchanged sentences

___________________________________

(a) Revolving facilities as of June 30, 2024 includes $ 2.4 million outstanding under the PJMF Revolving Facility as defined and discussed below.

(a) Revolving facilities as of September 29, 2024 includes $ 5.7 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.

5 unchanged sentences

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

The remaining availability under the PJI Revolving Facility was approximately $ 235.3 million as of June 30, 2024.

The remaining availability under the PJI Revolving Facility was approximately $ 273.2 million as of September 29, 2024.

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 Credit Agreement.

PJMF Revolving Facility

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.

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 most recently amended on September 30, 2024.

The PJMF Revolving Facility is secured by substantially all assets of PJMF.

The PJMF Revolving F acility matures on September 30, 2024, but is subject to annual amendments.

The PJMF Revolving F acility matures on September 30, 2025, but is subject to annual renewals.

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 7.3 % for the three months ended June 30, 2024.

As of June 30, 2024, t he principal amount of debt outstanding under the PJMF Revolving Facility was approximately $ 2.4 million and is classified as Current portion of long-term debt in the Condensed Consolidated Balance Sheets .

The applicable interest rate on the PJMF Revolving facility was 7.2 % for the three months ended September 29, 2024.

As of September 29, 2024, t he principal amount of debt outstanding under the PJMF Revolving Facility was approximately $ 5.7 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.

4 unchanged sentences

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 June 30, 2024, we have the following interest rate swap agreements:

As of September 29, 2024, we have the following interest rate swap agreements:

Effective Dates Floating Rate Debt Fixed Rates

1 unchanged sentence

June 23, 2023 through June 30, 2025 $ 50 million 4.55 %

The following table provides information on the location and amounts of our current and expired swaps in the accompanying condensed consolidated financial statements (in thousands):

The following table provides information on the location and amounts of our current swaps in the accompanying condensed consolidated financial statements (in thousands):

Interest Rate Swap Derivatives

Balance Sheet Location Fair Value

September 29,

2024 Fair Value

Prepaid and other current assets $ — $ 107

Accrued expenses and other current liabilities $ 479 $ —

Other long-term liabilities $ — $ 483

11 unchanged sentences

Interest rate swaps for the three months ended:

June 30, 2024 $ 68 Interest expense $ 197 $ ( 10,896 )

June 25, 2023 $ 1,165 Interest expense $ ( 36 ) $ ( 11,275 )

Interest rate swaps for the six months ended:

June 30, 2024 $ 740 Interest expense $ 397 $ ( 21,959 )

June 25, 2023 $ 1,424 Interest expense $ ( 243 ) $ ( 20,296 )

Net interest paid, including payments made or received under the swaps, was $ 5.8 million and $ 20.4 million for the three and six months ended June 30, 2024, respectively, and $ 5.7 million and $ 16.6 million for the three and six months ended June 25, 2023, respectively.

September 29, 2024 $ ( 820 ) Interest expense $ 194 $ ( 10,629 )

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

Interest rate swaps for the nine months ended:

September 29, 2024 $ ( 80 ) Interest expense $ 591 $ ( 32,588 )

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

Net interest paid, including payments made or received under the swaps, was $ 13.9 million and $ 34.3 million for the three and nine months ended September 29, 2024, respectively, and $ 11.2 million and $ 28.0 million for the three and nine months ended September 24, 2023, respectively.

Restructuring

4 unchanged sentences

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 enhancing profitability across the remaining portfolio of Company-owned restaurants.

The execution of this phase of the International Transformation Plan resulted in the closure of 43 underperforming UK Company-owned restaurants during the three months ended June 30, 2024.

During the second quarter of 2024, the Company completed the refranchising of 40 formerly Company-owned restaurants to existing franchisees in June 2024, which resulted in a loss on sale of $ 1.2 million during the three months ended June 30, 2024.

Additionally, the Company refranchised an additional 20 formerly Company-owned restaurants effective July 1, 2024.

The assets of these 20 stores were classified as assets held for sale on the Condensed Consolidated Balance Sheets as of June 30, 2024, and the remeasurement of these assets resulted in charges of $ 0.6 million during the three months ended June 30, 2024.

The loss on sale and remeasurement charges were recorded within General and administrative expenses in the Condensed Consolidated Statements of Operations.

Further, as a result of ongoing evaluation of our UK market, the Company closed an additional 19 franchised locations during the first six months of 2024.

We are finalizing the evaluation of our restaurant portfolio in the UK, which may result in limited strategic restaurant closures with the Company’s efforts turning towards growth opportunities within this market as we complete optimization of the portfolio.

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-based restaurants and primarily includes lease right-of-use assets for franchised stores and lease right-of-use assets and leasehold improvements for Company-owned stores.

Due to indicators of potential impairment associated with the UK Company-owned and franchised store closures mentioned above, the Company performed an impairment analysis and determined that the carrying amount

of the assets related to the closing UK stores were not recoverable.

For the three and six months ended June 30, 2024, we recognized impairment charges for the amount by which the carrying value exceeded the estimated fair value of the asset groups.

The execution of this phase of the International Transformation Plan resulted in the closure of 43 underperforming UK Company-owned restaurants and 30 franchised locations closed during the first nine months of 2024.

Due to indicators of potential impairment associated with the UK Company-owned and franchised restaurant closures, the Company performed an impairment analysis and determined that the carrying amount of the assets related to the closing UK restaurants were not recoverable.

For the three and nine months ended September 29, 2024, we recognized impairment charges of $ 1.1 million and $ 10.1 million 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 the International Transformation Plan, the Company incurred restructuring related costs of $ 6.1 million and $ 15.7 million for the three and six months ended June 30, 2024, respectively, primarily related to lease right-of-use asset and leasehold improvement impairment charges, losses associated with the refranchising of corporate stores, losses on notes receivable with a UK franchisee in relation to franchised store closures, lease termination impacts related to closed stores, employee termination costs , and professional advisory services and other related costs.

The Company has incurred total restructuring related costs of $ 17.9 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 $ 17.9 million incurred through the second 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 and six months ended June 30, 2024 (in thousands):

Three Months Ended Six Months Ended

2024 June 30,

During the second and third quarters of 2024, the Company also completed the refranchising of 60 formerly Company-owned restaurants to primarily existing franchisees, which resulted in a loss on sale of $ 1.7 million during the nine months ended September 29, 2024.

We have completed nearly all of the strategic restaurant closures in the UK market and the Company’s efforts are turning towards growth opportunities and mitigating closure-related costs as we complete optimization of the portfolio.

The following table summarizes restructuring related costs recorded for the three and nine months ended September 29, 2024 (in thousands):

Three Months Ended Nine Months Ended

September 29,

2024 September 24,

Long-lived asset impairment charges $ 1,145 $ 10,121

Loss on franchisee notes receivable 171 1,735

Loss on refranchising Company-owned stores 1,737 1,737

Loss on refranchising Company-owned restaurants 7 1,744

Professional services and other related costs 2,029 4,730

2 unchanged sentences

Total international transformation costs, net $ 3,862 $ 19,514

(a) During the three months ended June 30, 2024, the Company had a partial reversal of severance originally estimated in connection with the closure of Company-owned restaurants.

Includes noncash reversal of $ 0.1 million related to the forfeiture of unvested stock-based compensation awards.

(a) Includes noncash reversal of $ 0.1 million related to the forfeiture of unvested stock-based compensation awards during the nine months ended September 29, 2024

The Company has incurred total restructuring related costs of $ 21.7 million since commencement of the International Transformation Plan, all of which 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 $ 21.7 million incurred through the third 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 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):

3 unchanged sentences

Payments ( 1,519 ) ( 4,181 ) ( 29 ) ( 5,729 )

Balance as of June 30, 2024 $ 385 $ 623 $ — $ 1,008

Balance as of September 29, 2024 $ 250 $ 1,076 $ — $ 1,326

Litigation, Commitments and Contingencies

1 unchanged sentence

In accordance with ASC 450, “ Contingencies, ” the Company has made accruals with respect to these matters, where appropriate, which are reflected in the Company’s condensed consolidated financial statements.

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.

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.

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.

2 unchanged sentences

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 current liabilities in the Condensed Consolidated Balance Sheets as of June 30, 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.

Sale-Leaseback of Texas and Florida Quality Control Centers

On August 2, 2024, the Company finalized the sale and subsequent leaseback of two Domestic Quality Control Center properties (“QC Centers”) in Texas and Florida for an aggregate purchase price of $ 46.7 million.

Under the terms of the leases, each of which commenced on August 2, 2024, we will lease the QC Centers for 17 years with two five-year renewal options.

The Company will pay annual rents under the operating leases of the Texas and Florida QC Centers of $ 2.0 million and $ 1.0 million, respectively, for the first year with annual rents increasing by 2.75 % thereafter.

During the three months ended September 29, 2024, we recorded a pre-tax gain on sale of approximately $ 41.3 million, net of transaction costs, which was recorded within General and administrative expenses in the Condensed Consolidated Statements of Operations, and sales proceeds of $ 46.7 million were recorded as investing cash inflows within the Condensed Consolidated Statements of Cash Flows.

Refranchising Loss

On September 30, 2024, the Company refranchised 15 Domestic Company-owned restaurants to an existing franchisee for a purchase price of approximately $ 2.6 million.

In connection with the divestiture, we recorded non-cash charges of $ 1.5 million and $ 5.5 million during the three and nine months ended September 29, 2024 to remeasure the net assets within the disposal group to fair value, less estimated costs to sell.

The remeasurement charges were recorded within General and administrative expenses in the Condensed Consolidated Statements of Operations.

Segment Information

13 unchanged sentences

The following tables present our segment information.

Three Months Ended Six Months Ended

(In thousands) June 30,

2024 June 25,

2023 June 30,

2024 June 25,

Three Months Ended Nine Months Ended

(In thousands) September 29,

2024 September 24,

2023 September 29,

2024 September 24,

Domestic Company-owned restaurants $ 168,672 $ 177,195 $ 518,103 $ 532,841

7 unchanged sentences

North America commissaries 52,063 51,237 151,633 154,640

International — 869 — 869

All others 13,472 16,180 40,422 49,363

4 unchanged sentences

North America franchising 31,865 32,234 97,985 97,745

North America commissaries 11,403 10,397 23,738 21,127

International (b)

North America commissaries (b)

53,599 10,691 77,337 31,818

International (c)

42 2,270 ( 8,612 ) 13,265

All others 2,834 2,379 8,202 6,879

Unallocated corporate expenses (c)

Unallocated corporate expenses (d)

( 21,106 ) ( 20,792 ) ( 60,346 ) ( 63,859 )

10 unchanged sentences

___________________________________

(a) The three and six months ended June 30, 2024 includes a $ 4.0 million non-cash impairment charge related to fixed and intangible assets related to certain Domestic restaurants.

(b) The three and six months ended June 30, 2024 includes $ 6.1 million and $ 15.7 million, respectively, of costs related to the International Transformation Plan.

(a) The three and nine months ended September 29, 2024 includes $ 1.5 million and $ 5.5 million, respectively, of non-cash impairment and remeasurement charges related primarily to fixed and intangible assets from the refranchising of 15 Domestic restaurants.

See “Note 11.

Divestitures”.

(b) The three and nine months ended September 29, 2024 includes $ 41.3 million pre-tax gain on sale of Texas and Florida QC Center properties, net of transaction costs.

See “Note 11.

Divestitures”.

(c) The three and nine months ended September 29, 2024 includes $ 3.9 million and $ 19.5 million, respectively, of costs related to the International Transformation Plan.

Restructuring” for additional information.

The three and six months ended June 25, 2023 includes $ 1.3 million of costs associated with repositioning the UK portfolio as well as transaction costs related to the acquisition of stores from franchisees.

(c) The three and six months ended June 25, 2023 includes $ 0.7 million and $ 2.0 million, respectively, of severance and related costs associated with the transition of certain executives.

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 restaurants from franchisees.

(d) 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.

Disaggregation of Revenue

2 unchanged sentences

Reportable Segments

Three Months Ended June 30, 2024

Three Months Ended September 29, 2024

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

9 unchanged sentences

Reportable Segments

Three Months Ended June 25, 2023

Three Months Ended September 24, 2023

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

9 unchanged sentences

Reportable Segments

Six Months Ended June 30, 2024

Nine Months Ended September 29, 2024

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

9 unchanged sentences

Reportable Segments

Six Months Ended June 25, 2023

Nine Months Ended September 24, 2023

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

9 unchanged sentences

___________________________________

(a) Other revenues as reported in the Condensed Consolidated Statements of Operations include $ 6.8 million and $ 12.8 million of revenues for the three and six months ended June 30, 2024, respectively, and $ 6.7 million and $ 14.0 million of revenues for the three and six months ended June 25, 2023, respectively, that are part of the International reporting segment.

(a) Other revenues as reported in the Condensed Consolidated Statements of Operations include $ 6.1 million and $ 18.9 million of revenues for the three and nine months ended September 29, 2024, respectively, and $ 5.6 million and $ 19.5 million of revenues for the three and nine months ended September 24, 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.

Subsequent Events

Sale-Leaseback of Texas and Florida QC Centers

On August 2, 2024, the Company finalized the sale and subsequent leaseback of two Domestic QC Centers for a purchase price of $ 46.7 million.

Under the terms of the leases, which commenced on August 2, 2024, we will lease the QC Centers for 17 years with two 5 year renewal options.

We have reclassified all long-lived assets associated with the transaction as held for sale as of the balance sheet date, in accordance with ASC 360.

We expect to record a pre-tax gain on sale of approximately $ 40.0 million to $ 42.0 million during the third quarter of 2024, as the sale was not executed as of June 30, 2024.

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