Domino's Pizza (NYSE:DPZ) reported a robust first quarter of 2024, surpassing analyst earnings expectations and witnessing a 4% surge in its share price. The company achieved an adjusted earnings per share (EPS) of $3.58, topping the consensus estimate by $0.19. Revenue matched the analyst projection of $1.08 billion, maintaining stability in the company's financial performance.
The pizza giant's positive earnings report was driven by a comprehensive strategy that emphasized sales, store expansion, and profit growth. According to CEO Russell Weiner, the company's "Hungry for MORE" strategy and the revamped Domino's Rewards loyalty program contributed to significant same-store sales growth and profitability. The U.S. market experienced a 5.6% increase in same-store sales, while international growth, excluding foreign currency impact, was more modest at 0.9%.
Domino's also reported a 5.9% increase in revenue compared to the first quarter of the previous year, primarily due to an uptick in supply chain revenues and U.S. franchise royalties and fees. The company's income from operations rose by 18.6%, or 19.4% when adjusting for the negative impact of foreign currency exchange rates. This growth in operations income was a key factor in the 20.1% increase in net income year-over-year (YoY).
The company's share price responded positively to the earnings beat, climbing 4% as investors reacted to the strong financial results. The earnings beat is attributed to a combination of higher U.S. franchise royalties and fees, improved gross margins within the supply chain, and lower food costs.
Domino's continues to focus on franchisee profitability and store growth, with the CEO highlighting the company's expansion into new sales channels, such as Uber Eats. The long-term guidance remains unchanged, with expectations of 7%+ annual global retail sales growth, 1,100+ annual global net store growth, and 8%+ annual income from operations growth.
Investors may also take note of the company's commitment to shareholder returns, as evidenced by the declaration of a $1.51 per share quarterly dividend and the repurchase of 56,372 shares of common stock for $25.0 million during the quarter.
The company's financial health is further underscored by an increase in free cash flow to $103.3 million in 2024 from $95.7 million in the previous year, reflecting higher net income and disciplined capital management.
In line with the company's performance, CEO Russell Weiner stated, "Our growth in the U.S. came through positive order counts in both our carryout and delivery businesses for the second quarter in a row." This statement reflects the company's successful execution of its strategic initiatives and its ability to adapt to evolving consumer preferences.