What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-08 compared with 2024-11-07 · 296 added, 333 removed, 417 unchanged (60% of the section changed)

3 unchanged sentences

Condensed Consolidated Balance Sheets

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

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

2025 December 29,

22 unchanged sentences

Current operating lease liabilities 26,221 25,756

Current portion of long-term debt 5,650 —

Total current liabilities 282,899 277,963

8 unchanged sentences

Common stock ($ 0.01 par value per share;

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

issued 49,283 at March 30, 2025 and 49,283 at December 29, 2024)

Additional paid-in capital 449,625 452,449

1 unchanged sentence

Retained earnings 235,794 241,717

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

Treasury stock ( 16,555 shares at March 30, 2025 and 16,637 shares at December 29, 2024, at cost)

( 1,110,306 ) ( 1,115,729 )

7 unchanged sentences

Condensed Consolidated Statements of Operations

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

North America franchise royalties and fees 33,831 35,041 103,937 105,824

North America commissary revenues 210,389 204,887 611,873 624,433

International revenues 33,024 42,927 113,433 108,998

Three Months Ended

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

2025 March 31,

Company-owned restaurant sales $ 173,881 $ 191,251

Franchise royalties and fees 48,056 47,153

Commissary revenues 228,941 217,512

Other revenues 23,757 20,935

Advertising funds revenue 43,674 37,065

Total revenues 518,309 513,916

Costs and expenses:

Operating costs (excluding depreciation and amortization shown separately below):

Domestic Company-owned restaurant expenses 142,403 145,433 419,189 436,922

North America commissary expenses 193,818 189,551 561,316 576,434

International expenses 19,001 29,796 74,424 67,542

Other expenses 55,543 57,587 164,261 177,661

Cost of sales 366,496 367,666

General and administrative expenses 65,167 57,877

Depreciation and amortization 18,343 17,674

Advertising funds expense 44,338 36,981

Total costs and expenses 494,344 480,198

2 unchanged sentences

Income before income taxes 13,886 22,655

Income tax expense 12,812 4,539 25,347 16,546

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

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

Income tax expense (a)

( 4,543 ) ( 7,741 )

Net income 9,343 14,914

Net income attributable to noncontrolling interests ( 121 ) ( 278 )

Net income attributable to the Company $ 9,222 $ 14,636

Net income attributable to common shareholders $ 9,028 $ 14,636

Basic earnings per common share $ 0.28 $ 0.45

2 unchanged sentences

Diluted weighted average common shares outstanding 32,920 32,909

Dividends declared per common share $ 0.46 $ 0.46 $ 1.38 $ 1.30

(a) Note that we have changed the signage of income tax expense from historic presentation for consistency purposes.

See accompanying notes.

2 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

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

Three Months Ended

(In thousands) March 30,

2025 March 31,

Net income $ 9,343 $ 14,914

Other comprehensive income (loss), before tax:

1 unchanged sentence

Interest rate swaps (1)

( 1,059 ) 1,039 ( 103 ) 2,889

Other comprehensive income (loss), before tax 1,190 322

7 unchanged sentences

comprehensive income, redeemable noncontrolling interests ( 30 ) ( 99 )

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

comprehensive income, nonredeemable noncontrolling interests ( 91 ) ( 179 )

Comprehensive income attributable to the Company $ 10,138 $ 14,885

___________________________________

(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.

(1) Amounts reclassified out of accumulated other comprehensive loss into net interest income (expense) include $( 56 ) and $ 200 for the three months ended March 30, 2025 and March 31, 2024, respectively.

(2) The income tax effects of amounts reclassified out of accumulated other comprehensive loss were $ 13 and $( 45 ) for the three months ended March 30, 2025 and ended March 31, 2024, respectively.

See accompanying notes.

13 unchanged sentences

For the three months ended

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)

— — — — 41,808 — ( 63 ) 41,745

Other comprehensive income (loss), net of tax — — — 778 — — — 778

Dividends on common stock — — 31 — ( 15,339 ) — — ( 15,308 )

Exercise of stock options 2 — 88 — — — — 88

Stock-based compensation expense — — 3,358 — — — — 3,358

Issuance of restricted stock 14 — ( 632 ) — — 632 — —

Tax effect of restricted stock awards ( 4 ) — ( 178 ) — — — — ( 178 )

Distributions to noncontrolling interests — — — — — — ( 141 ) ( 141 )

Other 3 — ( 73 ) — — 252 — 179

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

March 30, 2025

Balance at December 29, 2024 32,646 $ 493 $ 452,449 $ ( 8,456 ) $ 241,717 $ ( 1,115,729 ) $ 15,310 $ ( 414,216 )

2 unchanged sentences

Other comprehensive income (loss), net of tax — — — 916 — — — 916

Dividends on common stock — — 95 — ( 45,445 ) — — ( 45,350 )

Dividends on common stock of ($ 0.46 per share)

— — 29 — ( 15,145 ) — — ( 15,116 )

Exercise of stock options — — — — — — — —

4 unchanged sentences

Other 3 — ( 187 ) — — 208 — 21

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 .

Balance at March 30, 2025 32,728 $ 493 $ 449,625 $ ( 7,540 ) $ 235,794 $ ( 1,110,306 ) $ 15,125 $ ( 416,809 )

(1) Net income to the Company for the three months ended March 30, 2025 excludes $ 30 allocable to the redeemable noncontrolling interests for our joint venture arrangements.

(2) At March 30, 2025, the accumulated other comprehensive loss of $ 7,540 was comprised of net unrealized foreign currency translation loss of $ 7,486 and net unrealized loss on the interest rate swap agreements of $ 54 .

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 )

2 unchanged sentences

Other comprehensive income (loss), net of tax — — — 249 — — — 249

Dividends on common stock — — 88 — ( 43,729 ) — — ( 43,641 )

Dividends on common stock of ($ 0.46 per share)

— — 32 — ( 15,055 ) — — ( 15,023 )

Exercise of stock options 18 1 840 — — — — 841

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 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.

2 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Nine Months Ended

(In thousands) September 29,

2024 September 24,

Three Months Ended

(In thousands) March 30,

2025 March 31,

Operating activities

Net income before attribution to noncontrolling interests $ 69,238 $ 56,356

Net income $ 9,343 $ 14,914

Adjustments to reconcile net income to net cash provided by operating activities:

1 unchanged sentence

Depreciation and amortization 18,343 17,674

Refranchising and impairment loss 17,433 —

Deferred income taxes 1,157 532

Stock-based compensation expense 3,669 ( 370 )

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

Impairment loss 6,308 7,554

Loss on disposal of property and equipment 151 688

Other ( 97 ) 302

9 unchanged sentences

Deferred revenue ( 2,794 ) ( 1,284 )

Advertising fund assets and liabilities 5,592 ( 4,683 )

Net cash provided by operating activities 31,336 11,987

3 unchanged sentences

Repayments of notes issued 978 886

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

Proceeds from dispositions 49,012 —

Proceeds from investments 4,739 2,275

Other ( 569 ) ( 101 )

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

Net cash used in investing activities ( 7,083 ) ( 10,152 )

Financing activities

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

Net (repayments of) proceeds from revolving credit facilities ( 196,838 ) 5,300

Proceeds from term loan 200,000 —

Debt issuance costs ( 2,991 ) —

Proceeds from exercise of stock options — 840

Acquisition of Company common stock — ( 210,348 )

Dividends paid to common stockholders ( 15,174 ) ( 15,068 )

12 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 29, 2024

March 30, 2025

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 29, 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 months ended March 30, 2025 are not necessarily indicative of the results that may be expected for the fiscal year ending December 28, 2025.

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.

6 unchanged sentences

All intercompany balances and transactions have been eliminated.

During the year ended December 29, 2024, the Company implemented several financial statement changes in its Annual Report on Form 10-K, concurrent with the adoption of Accounting Standard Update (“ASU”) 2023-07, “Improvements to Reportable Segment Disclosures.” These changes evolve and modernize our financial statements and footnotes to increase transparency and better reflect management’s key performance metrics.

Presentation changes to the Condensed Consolidated Statements of Operations and the Condensed Consolidated Statements of Cash Flows have been applied retrospectively, and as such, the results from the three months ended March 31, 2024 have been reclassified for consistency with the current year presentation.

Additionally, during the year ended December 29, 2024, the Company updated its internal cost allocation methodology to better reflect current levels of time and effort spent managing our different segments.

These updates resulted in a higher allocation of previously unallocated corporate expenses to primarily each of the North America franchising and International segments.

This update in methodology did not impact total reported expenses and was implemented prospectively beginning with the year ended December 29, 2024, and as such comparative information has been recast.

Variable Interest Entity

Papa Johns North American 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 American restaurants, of which approximately 85 percent are franchised, and does not have sufficient equity to fund its operations without these ongoing financial contributions.

PJMF 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.

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, property and equipment, right-of-use assets and lease liabilities, gift card breakage, 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, property and equipment, net and impairment of long-lived assets, 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 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.

Papa Johns has joint venture arrangements in which there are noncontrolling interests held by third parties that includ ed 98 restaurants at March 30, 2025 and March 31, 2024, 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 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,

Net income attributable to these joint ventures for the three months ended March 30, 2025 and March 31, 2024 was as follows:

Three Months Ended

(In thousands) March 30,

2025 March 31,

Papa John’s International, Inc.

$ ( 46 ) $ 196 $ 1,285 $ 821

Redeemable noncontrolling interests 30 99

7 unchanged sentences

We are subject to income taxes in the United States and several foreign jurisdictions.

Significant judgment is required in determining the provision for income taxes and the related assets and liabilities.

Management judgment is required in determining the provision for income taxes and the related assets and liabilities.

The provision for income taxes includes income taxes paid, currently payable or receivable and those deferred.

21 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 September 29, 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 March 30, 2025 and December 29, 2024 are as follows:

Fair Value Measurements

1 unchanged sentence

Value Level 1 Level 2 Level 3

September 29, 2024

March 30, 2025

Financial assets:

8 unchanged sentences

$ 30,775 $ 30,775 $ — $ —

Interest rate swaps (b)

$ 107 $ — $ 107 $ —

Financial liabilities:

5 unchanged sentences

The future cash flows are derived based on the terms of our interest rate swaps, as well as considering published discount factors, and projected Secured Overnight Financing Rates (“SOFR”).

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 nine months ended September 29, 2024 or fiscal year 2023.

There were no transfers among levels within the fair value hierarchy during the three months ended March 30, 2025 or fiscal year 2024.

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.

The carrying value of notes receivable, net of allowances, also approximates fair value.

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 29, 2024 and December 31, 2023:

September 29, 2024 December 31, 2023

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

Debt” for further discussion on the amendment to our credit agreement executed during the first quarter of 2025.

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 March 30, 2025 and December 29, 2024:

March 30, 2025 December 29, 2024

(In thousands) Carrying

11 unchanged sentences

Write-offs charged against the allowance ( 677 ) —

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

Balance at March 30, 2025 $ 8,249 $ 16,492

Impairment of Long-lived Assets

3 unchanged sentences

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.

Tornado Impact

During the first quarter of 2025, a tornado caused real and personal property damage to the Company’s leased Quality Control Center (“QC Center”) in Grand Prairie, Texas.

The Company recorded pre-tax expenses of $ 0.9 million during the three months ended March 30, 2025 related to these damages, which primarily reflect operating lease right-of-use asset impairment charges related to the leased property offset by expected property-related insurance proceeds.

Expenses incurred and the related anticipated insurance proceeds were recorded within General and administrative expenses in the Condensed Consolidated Statements of Operations.

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

Accounting Standards Not Yet Adopted

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

2 unchanged sentences

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

In November 2024, the FASB issued ASU No.

2024-03, “ Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.” The ASU includes

required disclosures in the notes to the consolidated financial statements of specific information about certain costs and expenses.

The amendments are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted and the standard may be applied either prospectively or retrospectively.

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 UK, which are primarily operating leases.

At September 29, 2024, we leased and subleased approximately 350 Papa Johns restaurants to franchisees in the UK.

At March 30, 2025, 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 $ 2.7 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.

The Company recognized total sublease income of $ 2.6 million and $ 2.3 million for the three months ended March 30, 2025 and March 31, 2024, respectively, within Other revenues in the Condensed Consolidated Statements of Operations.

Lease Guarantees

As a result of assigning our interest in obligations under property leases as a condition of the refranchising of certain restaurants, we are contingently liable for payment of 75 Domestic leases.

As a result of assigning our interest in obligations under property leases as a condition of the refranchising of certain restaurants, we are contingently liable for payment of approximately 75 Domestic leases.

These leases have varying terms, the latest of which expires in 2034.

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.

As of March 30, 2025, the estimated maximum amount of undiscounted payments the Company could be required to make in the event of nonpayment by the primary lessees was $ 9.8 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 29, 2024 September 24, 2023

Three Months Ended

(In thousands) March 30, 2025 March 31, 2024

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

2 unchanged sentences

Operating cash flows from operating leases (a)

30,045 28,394

Right-of-use assets obtained in exchange for new finance lease liabilities 15,664 1,496

5 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 Advertising funds revenue and Advertising funds expense, respectively.

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,

2025 December 29,

5 unchanged sentences

Deferred income taxes 1,019 1,019

Other assets 104 122

Total assets $ 38,809 $ 33,716

Current liabilities:

Accounts payable $ 10 $ 1,509

Income and other taxes payable 340 298

Accrued expenses and other current liabilities 36,078 30,324

Current portion of long-term debt 5,650 —

Current deferred revenue 4,425 4,911

4 unchanged sentences

Contract Balances

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 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.

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

During the three months ended March 30, 2025 and March 31, 2024, the Company recognized $ 9.7 million and $ 8.1 million in revenue, respectively, related to deferred revenue.

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

Contract Liabilities

September 29, 2024 December 31, 2023 Change

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

March 30, 2025 December 29, 2024 Change

Unearned franchise fees and royalties $ 21,103 $ 21,860 $ ( 757 )

Unredeemed gift card liabilities 6,978 7,694 ( 716 )

3 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 $ 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 were approximately $ 17.3 million and $ 16.6 million, respectively, at March 30, 2025 and December 29, 2024.

For the three months ended March 30, 2025 and March 31, 2024, revenue was reduced approximately $ 1.5 million and $ 1.2 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 $ 3,285 $ 2,945 $ 2,720 $ 2,475 $ 2,229 $ 4,985 $ 18,639

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.

At March 30, 2025, approximately $ 2.5 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.

Unredeemed gift card liabilities, which are included in Deferred revenue, will be recognized in Company-owned restaurant sales 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 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.

The Company has authorized 100.0 million shares of common stock as of March 30, 2025 and December 29, 2024.

The Company’s outstanding shares of common stock, net of repurchased shares of common stock held as treasury stock, were 32.7 million shares at March 30, 2025, compared to 32.6 million shares at December 29, 2024.

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 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

September 29, 2024 — $ — $ — $ 90,160

September 24, 2023 — $ — $ — $ 90,160

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

Average Price Paid per Share Aggregate Cost of Shares Purchased (b)

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

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.

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

There was no share repurchase activity during the three months ended March 30, 2025 or March 31, 2024.

Approximately $ 90.2 million remained available under the Company’s share repurchase program as of March 30, 2025.

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.

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 $ 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.

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 and cash and cash equivalents.

The Company paid aggregate cash dividends of approximately $ 15.2 million ($ 0.46 per share) for the three months ended March 30, 2025.

On May 1, 2025, our Board of Directors declared a second quarter dividend of $ 0.46 per common share (approximately $ 15.4 million in the aggregate), which will be paid on May 30, 2025 to stockholders of record as of the close of business on May 19, 2025.

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 unvested shares have rights to receive non-forfeitable dividends.

Under the two-class method, total dividends provided to the holders of participating securities are subtracted from net income attributable to the Company to determine net income attributable to common shareholders.

The Company may, at its sole discretion, require any dividends

paid on the unvested restricted stock awards to be paid in shares rather than in cash, which could then be forfeited if the employee forfeits the underlying awards.

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 29,

2024 September 24,

2023 September 29,

2024 September 24,

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

Basic weighted average number of shares 32,745 32,564 32,701 33,053

Dilutive effect of outstanding equity awards (a)

185 236 149 234

Diluted weighted average number of shares 32,930 32,800 32,850 33,287

Three Months Ended

2025 March 31,

Calculation of net income attributable to common shareholders

Net income attributable to the Company $ 9,222 $ 14,636

Net income attributable to participating securities ( 194 ) —

Net income attributable to common shareholders $ 9,028 $ 14,636

Basic earnings per common share

Basic weighted average common shares outstanding 32,778 32,644

Basic earnings per common share $ 0.28 $ 0.45

Diluted earnings per common share

Weighted average common shares outstanding 32,778 32,644

Dilutive effect of outstanding equity awards (a)

Diluted weighted average common shares outstanding 32,920 32,909

Diluted earnings per common share $ 0.27 $ 0.44

___________________________________

(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.

(a) Excludes 219,417 and 103,000 shares underlying equity awards for the three months ended March 30, 2025 and March 31, 2024, 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,

2025 December 29,

Senior Notes $ 400,000 $ 400,000

Revolving facilities (a)

332,412 364,000

Term Loan 200,000 —

Revolving Facilities 149,893 346,732

Outstanding debt $ 749,893 $ 746,732

Unamortized debt issuance costs ( 7,960 ) ( 5,082 )

Current portion of long-term debt ( 5,650 ) —

Total long-term debt, net $ 741,933 $ 741,650

___________________________________

(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.

On September 14, 2021, the Company issued $ 400.0 million of 3.875 % Senior Notes (the “Notes”) which 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 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 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 $ 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.

Refer to Note 12 of the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 29, 2024 for further description of the provisions and covenant requirements under the Senior Notes.

Term Loan and Revolving Facilities

On March 26, 2025, the Company amended and restated the Amended and Restated Credit Agreement, dated as of September 14, 2021 and amended May 30, 2023 (together, the “Previous Credit Agreement”) pursuant to the Second Amended and Restated Credit Agreement dated as of March 26, 2025 (the “Second Amended and Restated Credit Agreement”).

The Second Amended and Restated Credit Agreement provides for a senior secured term loan in a principal amount of $ 200.0 million (the “Term Loan”) and a senior secured revolving credit facility in an aggregate available principal amount of $ 600.0 million (the “PJI Revolving Facility” together with the Term Loan, the “PJI Credit Facilities”), of which up to $ 40.0 million is available as swingline loans and up to $ 80.0 million as letters of credit.

The PJI Credit Facilities will mature on March 26, 2030 (the “Maturity Date”) with term loans amortizing in quarterly installments commencing on June 30, 2026 in amounts as set forth in the Second Amended and Restated Credit Agreement and the unpaid balance maturing on the Maturity Date.

The remaining availability under the PJI Revolving Facility was approximately $ 450.1 million as of March 30, 2025.

Future principal maturities under the Term Loan by year are as follows (in thousands):

Thereafter 145,000

Total $ 200,000

The Term Loan was advanced in full at the closing of the Second Amended and Restated Credit Agreement, with the proceeds used to repay borrowings outstanding under the senior secured revolving credit facility under the Previous Credit Agreement.

The Company incurred $ 3.2 million of lender and third-party fees, which are being amortized into Net interest expense over the term of the Second Amended and Restated Credit Agreement.

Refer to Note 12 of the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 29, 2024 for further description of other key provisions and covenant requirements under the Second Amended and Restated Credit Agreement, which are similar to the terms of the Previous Credit Agreement.

PJMF Revolving Facility

3 unchanged sentences

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 7.2 % 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.

The Company did no t have any borrowings under the PJMF Revolving Facility as of March 30, 2025 or December 29, 2024.

The PJMF operating results and the related debt outstanding do not impact the financial covenants under the Company’s Second Amended and Restated 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 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 designated the interest rate swap as a cash flow hedge and 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 29, 2024, we have the following interest rate swap agreements:

The Company has historically entered into interest rate swaps with the objective of mitigating the Company’s exposure to the impact of interest rate changes associated with our variable rate debt under the PJI Credit Facilities.

As of March 30, 2025, 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 swaps in the accompanying condensed consolidated financial statements (in thousands):

We have designated the interest rate swaps as cash flow hedges and assess hedge effectiveness on a quarterly basis.

expense in the Condensed Consolidated Statements of Operations in the same period or periods during which the hedged transaction affect earnings.

On April 25, 2025, as part of our strategy to manage interest rate risk exposure beyond the maturity date of the interest rate swaps listed above, the Company entered into a new interest rate swap with a notional value of $ 50.0 million at a 3.49 % fixed rate that matures on April 25, 2028.

The following table provides information on the location and amounts of our current swaps in the accompanying Condensed Consolidated Balance Sheets (in thousands):

Interest Rate Swap Derivatives

Balance Sheet Location Fair Value

September 29,

2025 Fair Value

Prepaid and other current assets $ — $ 107

Accrued expenses and other current liabilities $ 70 $ 161

Other long-term liabilities $ — $ 483

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

6 unchanged sentences

Reclassified from

Income Total Net Interest Expense

Income Net Interest Expense

Consolidated Statements

1 unchanged sentence

Interest rate swaps for the three months ended:

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.

March 30, 2025 $ 71 Interest expense $ ( 56 ) $ ( 10,079 )

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

Net interest paid, including payments made or received under the swaps, was $ 17.6 million and $ 14.5 million for the three months ended March 30, 2025 and March 31, 2024, 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 first quarter of 2024, the Company commenced the next phase of the International Transformation Plan as approved by the Board, which involves strategic restaurant closures and divestitures 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 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 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.

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 restaurants 7 1,744

In December 2023, the Company announced international transformation initiatives (the “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 fiscal 2023 and 2024, the Company implemented 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.

During 2024, the Company commenced the next phase of the International Transformation Plan, which involves strategic restaurant closures and divestitures in the UK in order to optimize the Company’s UK restaurant portfolio and improve overall profitability by closing unprofitable locations and enhancing profitability across the remaining portfolio of Company-owned restaurants.

Execution on this phase resulted in the closure of 43 underperforming UK Company-owned restaurants and 30 franchised locations during 2024.

As of March 31, 2024, indicators of potential impairment existed specific to the pending UK Company-owned restaurant closures, and as such the Company performed a recoverability test and determined that the carrying amount of the related asset groups were not recoverable.

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

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

Management judgement 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.

During 2024, the Company also completed the refranchising of 60 formerly Company-owned restaurants to primarily existing franchisees.

We have completed substantially 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 months ended March 30, 2025 and March 31, 2024 (in thousands):

Three Months Ended

2025 March 31,

Professional services and other related costs $ 1,434 $ 1,346

Employee termination costs, net (a)

Operating lease terminations 426 732

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

(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

Loss on franchisee notes receivable 1,111 —

Lease terminations and other lease related costs ( 365 ) —

Long-lived asset impairment charges — 7,554

Employee termination costs — 643

Total international transformation costs $ 2,180 $ 9,543

Stock-based compensation forfeitures on unvested awards ( 45 ) ( 20 )

Total international transformation costs, net of stock-based award forfeitures $ 2,135 $ 9,523

The Company has incurred total restructuring related costs of $ 31.6 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.

Total estimated pre-tax costs associated with the International Transformation Plan are approximately $ 33 million to $ 35 million (inclusive of the $ 31.6 million incurred through the first quarter of 2025), substantially all of which will be recorded within our International segment, and we expect to incur the remainder of these costs through 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):

Employee severance Professional services and other related costs Other Total

Employee termination costs Professional services and other related costs Lease terminations and other lease related costs Total

Balance as of December 29, 2024 $ 133 $ 2,335 $ 2,073 $ 4,541

1 unchanged sentence

Payments — ( 2,892 ) ( 452 ) ( 3,344 )

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

Balance as of March 30, 2025 $ 133 $ 877 $ 1,621 $ 2,631

Litigation, Commitments and Contingencies

6 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 September 29, 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

1 unchanged sentence

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, 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 Canada.

The Domestic Company-owned restaurant segment consists of the operations of all Domestic Company-owned restaurants and principally generates revenues from retail sales of pizza and other food and beverage products.

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 the collection of royalties from our franchisees located in the United States and Canada.

The North America commissaries segment consists of the operations of our regional dough production and product distribution centers in the United States and Canada 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 Canada.

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 information systems and related services used in restaurant operations, including our point-of-sale system, online and other technology-based ordering platforms, as well as franchise contributions to marketing funds.

Generally, we evaluate performance and allocate resources based on operating income.

Certain administrative and capital costs are allocated to segments based upon predetermined rates or estimated resource usage.

We account for intercompany sales and transfers as if the sales or transfers were to third parties and eliminate the activity in consolidation.

Our reportable segments are business units that provide different products or services.

International franchisees are defined as all franchise operations outside of the United States and Canada.

Our reportable segments are distinct business units that provide different products or services.

Separate management of each segment is required because each business unit is subject to different operational issues and strategies.

No single external customer accounted for 10% or more of our consolidated revenues.

The following tables present our segment information.

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

North America franchising 33,831 35,041 103,937 105,824

North America commissaries 210,389 204,887 611,873 624,433

International 39,098 48,481 132,318 128,539

All others 54,817 57,208 162,386 172,754

Total revenues $ 506,807 $ 522,812 $ 1,528,617 $ 1,564,391

Certain administrative and capital costs are allocated to each of our segments based upon predetermined rates or estimated resource usage.

All other business units that do not meet the quantitative or qualitative thresholds for determining reportable segments, which are not operating segments, we refer to as “All Other”.

These consist of operations that derive revenues from 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.

Our chief operating decision maker (“CODM”) is the Chief Executive Officer.

Beginning in the first quarter of 2025, the Company updated its measure of segment profit or loss to be adjusted EBITDA, which aligns with how the CODM evaluates performance of and allocates resources to our segments.

For comparability purposes, segment results for the prior year period have been recast to reflect this change in measure of segment profit or loss.

Adjusted EBITDA represents Net income before Net interest expense, Income tax expense, Depreciation and amortization, Stock-based compensation expense, and other adjustments that vary from period to period, including certain general and administrative expenses and other items that do not reflect normal, recurring expenses necessary to operate our business.

During the annual budget and forecasting process, the CODM uses adjusted EBITDA to allocate resources (including employees, property, and financial or capital resources) to the segments.

The CODM regularly reviews trends in adjusted EBITDA on at least a quarterly basis to evaluate the profitability of the segments and to make resource allocation decisions.

When our CODM reviews balance sheet information, it is at a consolidated level.

Segment Results

The tables below present our operating results by segment (in thousands).

The significant expense categories and amounts presented in the tables below align with the segment-level information that is regularly provided to the CODM.

A reconciliation to Company results is included in the following section.

Three Months Ended March 30, 2025

Domestic Company-owned restaurants North America franchising North America commissaries International Total

Revenues from external customers $ 170,795 $ 35,552 $ 212,918 $ 39,111 $ 458,376

Intersegment revenues — 1,259 51,458 — 52,717

North America franchising $ 1,011 $ 1,040 $ 3,101 $ 3,117

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

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

Total intersegment revenues $ 66,546 $ 68,457 $ 195,156 $ 207,120

Operating income:

Domestic Company-owned restaurants (a)

Segment revenue $ 170,795 $ 36,811 $ 264,376 $ 39,111 $ 511,093

Less segment expenses (a) :

COS - Product Costs $ 52,137 $ — $ 189,469 $ 11,146 $ 252,752

COS - Salaries & Benefits 57,976 — 29,982 1,568 89,526

COS - Other (d)

44,900 — 16,280 7,071 68,251

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

North America commissaries (b)

General & Administrative 10,750 9,563 9,292 8,844 38,449

Other Segment Expenses (c)

— — — 5,101 5,101

International (c)

Segment adjusted EBITDA $ 5,032 $ 27,248 $ 19,353 $ 5,381 $ 57,014

Three Months Ended March 31, 2024

Domestic Company-owned restaurants North America franchising North America commissaries International Total

Revenues from external customers $ 176,224 $ 35,697 $ 203,287 $ 46,673 $ 461,881

Intersegment revenues — 1,049 49,267 — 50,316

Segment revenue $ 176,224 $ 36,746 $ 252,554 $ 46,673 $ 512,197

Less segment expenses (a) :

COS - Product Costs $ 50,528 $ — $ 182,124 $ 12,494 $ 245,146

COS - Salaries & Benefits 57,471 — 29,581 5,480 92,532

COS - Other (d)

43,107 — 14,582 12,881 70,570

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

Unallocated corporate expenses (d)

General & Administrative (b)

10,180 8,238 9,091 8,739 36,248

Elimination of intersegment (profits) losses ( 257 ) ( 1,061 ) ( 781 ) ( 710 )

Total operating income $ 65,229 $ 31,868 $ 127,173 $ 104,576

Property and equipment, net:

Domestic Company-owned restaurants $ 265,002

North America commissaries 150,527

International 26,902

All others 140,900

Unallocated corporate assets 248,855

Accumulated depreciation and amortization ( 565,678 )

Total property and equipment, net $ 266,508

Other Segment Expenses (c)

— — — 2,886 2,886

(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 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.

Segment adjusted EBITDA $ 14,938 $ 28,508 $ 17,176 $ 4,193 $ 64,815

___________________________________

(a) Segment expenses exclude Depreciation and amortization, Stock-based compensation expense, and certain general and administrative expenses and other items that do not reflect normal, recurring expenses necessary to operate our business (see reconciliation that follows).

(b) The Company prospectively adjusted for updates in internal cost allocation methodologies in our Annual Report on Form 10-K for the year ended December 29, 2024, which increased the amount of internal general and administrative expenses allocated to the segments from Unallocated corporate expenses.

These methodology updates have been reflected in the 2024 quarterly results.

Refer to Note 23 of the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 29, 2024 for additional information.

(c) Other Segment Expenses represent all operating expenses that are not included in the significant segment expense categories.

The components of Other Segment Expense are advertising fund expenses and other operating expenses.

(d) We have included “COS - Other” as a significant expense category beginning in the first quarter of 2025, consistent with the segment expense categories regularly provided to the CODM when evaluating segment performance and allocating resources.

“COS - Other” includes delivery expenses, Company-owned restaurant advertising costs, insurance, rent, aggregator fees, and other costs of sales.

For comparability purposes, we have recast quarterly 2024 segment results to include this expense category.

Reconciliation of Segment Results to Company Results

The following table reconciles Total Revenues from our segments to Total Revenues and Total Adjusted EBITDA from our segments to Income before income taxes (in thousands):

Three Months Ended

March 30, 2025 March 31, 2024

Total Segment Revenue $ 511,093 $ 512,197

All Other Revenue (a)

74,331 65,207

Elimination of intersegment revenue ( 67,115 ) ( 63,488 )

Total Revenue $ 518,309 $ 513,916

Three Months Ended

March 30, 2025 March 31, 2024

Total Segment adjusted EBITDA $ 57,014 $ 64,815

All Other adjusted EBITDA (a)

Unallocated corporate expenses, adjusted (b)

( 17,554 ) ( 11,148 )

Elimination of Intersegment profit (loss) — —

Other income/(expense) adjustments to reconcile to income before income before income taxes (c)

( 25,659 ) ( 26,847 )

Net interest expense ( 10,079 ) ( 11,063 )

Income before income taxes $ 13,886 $ 22,655

___________________________________

(a) As noted in the commentary above, All Other revenue and adjusted EBITDA is derived from business units that do not meet the quantitative or qualitative thresholds for determining reportable segments, including:

franchise contributions to marketing funds and information systems and related services used in restaurant operations.

(b) Unallocated corporate expenses represent administrative fees incurred by the restaurant support centers, including:

information systems and related services, corporate salaries and bonuses, and other corporate costs.

These expenses are adjusted for depreciation and amortization, stock-based compensation expense, and certain general and administrative expenses and other items that do not reflect normal, recurring expenses necessary to operate our business (see reconciliation that follows).

(c) Other income/(expense) adjustments represent Depreciation and amortization, Stock-based compensation expense, and certain general and administrative expenses and other items that do not reflect normal, recurring expenses necessary to operate our business.

As such, management excludes these items from the evaluation of adjusted EBITDA.

For the periods above, the adjustments include:

Three Months Ended

(in thousands) March 30, 2025 March 31, 2024

Depreciation and amortization $ 18,343 $ 17,674

International restructuring costs (see Note 9) 2,180 9,543

Net expenses due to natural disasters 892 —

Strategic initiative costs 575 —

Stock-based compensation expense 3,669 ( 370 )

Other (income)/expense adjustments $ 25,659 $ 26,847

Disaggregation of Revenue

Our segments earn revenue from both external and internal customers.

No single external customer accounted for 10% or more of our total revenues.

We account for intercompany sales and transfers as if the sales or transfers were to third parties and subsequently eliminate the activity.

The accounting policies of our segments are the same as those described in 2.

Significant Accounting Policies.

In the following tables, revenues are disaggregated by major product/service line.

The tables also include a reconciliation of the disaggregated revenues by the reportable segment (in thousands):

Reportable Segments

Three Months Ended September 29, 2024

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

Company-owned restaurant sales $ 168,672 $ — $ — $ 2,425 $ — $ 171,097

Franchise royalties and fees — 34,842 — 11,999 — 46,841

Commissary sales — — 262,452 18,600 — 281,052

Other revenues — — — 6,074 68,289 74,363

Eliminations — ( 1,011 ) ( 52,063 ) — ( 13,472 ) ( 66,546 )

Total segment revenues 168,672 33,831 210,389 39,098 54,817 506,807

International other revenues (a)

— — — ( 6,074 ) 6,074 —

Total revenues $ 168,672 $ 33,831 $ 210,389 $ 33,024 $ 60,891 $ 506,807

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

Nine Months Ended September 29, 2024

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

Three Months Ended March 30, 2025

Domestic Company-owned restaurants North America franchising North America commissaries International All Other Elimination of Intersegment Revenue Total

Company-owned restaurant sales $ 170,795 $ — $ — $ 3,086 $ — $ — $ 173,881

2 unchanged sentences

Other revenues — — — 3,284 25,078 ( 4,605 ) 23,757

Eliminations — ( 3,101 ) ( 151,633 ) — ( 40,422 ) ( 195,156 )

Total segment revenues 518,103 103,937 611,873 132,318 162,386 1,528,617

International other revenues (a)

— — — ( 18,885 ) 18,885 —

Advertising funds revenue — — — 4,215 49,253 ( 9,794 ) 43,674

Total revenues $ 170,795 $ 36,811 $ 264,376 $ 39,111 $ 74,331 $ ( 67,115 ) $ 518,309

Reportable Segments

Nine Months Ended September 24, 2023

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

Three Months Ended March 31, 2024

Domestic Company-owned restaurants North America franchising North America commissaries International All Other Elimination of Intersegment Revenue Total

Company-owned restaurant sales $ 176,224 $ — $ — $ 15,027 $ — $ — $ 191,251

2 unchanged sentences

Other revenues — — — 3,064 21,524 ( 3,653 ) 20,935

Eliminations — ( 3,117 ) ( 154,640 ) — ( 49,363 ) ( 207,120 )

Total segment revenues 532,841 105,824 624,433 128,539 172,754 1,564,391

International other revenues (a)

— — — ( 19,541 ) 19,541 —

Advertising funds revenue — — — 2,901 43,683 ( 9,519 ) 37,065

Total revenues $ 176,224 $ 36,746 $ 252,554 $ 46,673 $ 65,207 $ ( 63,488 ) $ 513,916

___________________________________

(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

Louisville Restaurant Support Center and QC Center Tornado Impact

On April 3, 2025, our restaurant support center and QC Center in Louisville, Kentucky were impacted by a tornado, which resulted in real and personal property damage.

The QC Center was temporarily closed and resumed full operating capacity as of April 15, 2025.

During the period of closure, our other QC Centers were able to ensure that restaurants were adequately supplied and therefore the temporary disruption did not have a significant impact on our operations.

The Company is working with insurance providers to assess the total financial impact, and this work is ongoing.

Management currently estimates that repair costs and asset replacements will range between $ 10 million and $ 12 million, which we anticipate will be covered under our insurance policy subject to a deductible between $ 2 million and $ 3 million with amounts in excess of the deductible expected to be reimbursed by our insurer.

These figures represent preliminary estimates, and are subject to change based on continued inspection of the property and assessment of damage incurred by both the Company and our insurer.

This event is not expected to materially affect our financial position, and the Company

will continue to evaluate any potential long-term impacts and will provide further details in subsequent filings as additional information becomes available.

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