Executive Summary

Q4 2024 was broadly “in line” with internal expectations: revenue was $530.8M (-7% YoY on a 14→13 week compare; roughly flat ex-53rd week), GAAP EPS $0.44 and adjusted EPS $0.63, with comps improving sequentially vs Q3 but still negative in North America (-4% NA; +2% International) .
Mix/transaction headwinds and reinvestment in value weighed on margins; adjusted operating income was $37.3M (down $10M YoY), and adjusted operating margin was ~7% in Q4 (down vs prior year), with Domestic company-owned margins down ~400 bps YoY as the company leaned into value and loyalty .
2025 guidance frames an “investment year”: system-wide sales +2% to +5%, NA/International comps flat to +2%, adjusted EBITDA $200–$220M (vs ~$227M in 2024 per CFO), D&A $70–$75M, interest $40–$45M, capex $75–$85M, tax rate 28–32% .
Strategic focus and catalysts: stepped-up marketing and CRM/loyalty investments (up to $25M incremental), product barbell (e.g., Epic Stuffed Crust $13.99), and carryout/aggregator growth; early 2025 NA comps were down ~3% for the first eight weeks (improving ~130 bps vs Q4) .

What Went Well and What Went Wrong

What Went Well
- Sequential comp improvement in NA and strength in International: Q4 NA comps -4% (120 bps better than Q3), International +2%; Q4 global system sales were flat ex-53rd week .
- Loyalty overhaul and CRM traction: ~50% of loyalty orders redeemed Papa Dough (vs 21% a year ago), accelerating second orders and carryout frequency .
- Development momentum: 122 net openings in Q4 (63 NA, 83 International), crossing 6,000 units; domestic build cost per new company store reduced to ~$515K in 2H24 (>25% lower YoY) .
What Went Wrong
- Margin pressure at domestic company stores: ~400 bps YoY decline in Q4 (≈260 bps excluding 53rd week comp) on value investments, higher proteins/cheese, lower average ticket, and lower leverage; Q4 adjusted margin ~7% (down YoY) .
- North America traffic/ticket still soft despite improvements: Q4 transaction comps -2% and ticket -2%; first-party delivery remains the key headwind even as carryout and aggregator orders grow .
- Free cash flow compression: FY24 FCF fell to $34.1M vs $116.4M on working capital and tax timing (capex down $4.1M YoY), limiting near-term capital optionality .

Financial Results

Metric	Q2 2024	Q3 2024	Q4 2024
Total Revenues ($MM)	$507.9	$506.8	$530.8
Operating Income ($MM)	$28.2	$65.2	$29.5
Adjusted Operating Income ($MM)	$38.4	$29.3	$37.3
Diluted EPS ($)	$0.37	$1.27	$0.44
Adjusted Diluted EPS ($)	$0.61	$0.43	$0.63

Segment performance – Adjusted Operating Income (Q4 YoY):

Segment (Adj. Op Inc)	Q4 2023	Q4 2024
Domestic Company-owned Restaurants ($MM)	$14.0	$5.7
North America Franchising ($MM)	$36.1	$27.3
North America Commissaries ($MM)	$11.5	$12.9
International ($MM)	$3.3	$5.2

KPIs and operating trends:

KPI	Q2 2024	Q3 2024	Q4 2024
Global System-wide Sales ($B)	$1.20	$1.19	$1.23
North America Comparable Sales (%)	-4%	-6%	-4%
International Comparable Sales (%)	0%	-3%	+2%
Net Unit Openings (Units)	-31	+25	+122
Ending Global Restaurants (Units)	5,883	5,908	6,030

Notes:

Q4 2023 included an extra week, affecting YoY compares; Q4 2024 global system-wide sales were flat ex-53rd week .
Q4 adjusted operating margin was ~7% (down YoY) .
Non-GAAP adjustments included $7.8M of International restructuring in Q4; FY24 also included a $41.3M gain from QC center sales in Q3 (affecting GAAP vs adjusted) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
System-wide sales growth	FY2025	Introduced	+2% to +5%	New
North America comparable sales	FY2025	Introduced	Flat to +2%	New
International comparable sales	FY2025	Introduced	Flat to +2%	New
Adjusted EBITDA ($MM)	FY2025	Introduced	$200–$220	New; CFO notes FY24 was ~$227
Depreciation & Amortization ($MM)	FY2025	Introduced	$70–$75	New
Net Interest Expense ($MM)	FY2025	Introduced	$40–$45	New
Capital Expenditures ($MM)	FY2025	Introduced	$75–$85	New
Tax Rate	FY2025	Introduced	28%–32% (Q1: 43%–48%)	New
NA Gross Openings (Units)	FY2025	Introduced	85–115	New
International Gross Openings (Units)	FY2025	Introduced	180–200	New
Dividend	Q1 2025	—	$0.46 declared Jan 24, 2025	—

Management context: 2025 is positioned as an investment/transformation year with up to ~~$25M incremental marketing/loyalty spend, a biannual franchisee conference (~~$4M), and normalized performance comp; EBITDA guide embeds these investments .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q4)	Trend
Digital/CRM/Loyalty	Investing in digital, streamlining ordering, enhancing loyalty (Q2) ; improving value perception and loyalty/digital focus (Q3)	Loyalty revamp shows ~50% of loyalty orders redeeming Papa Dough; more personalization and frequency goals; up to $25M incremental marketing/CRM in 2025	Improving engagement and investment ramp
Value and Pricing	Value-forward stance; managing costs and product quality (Q2)	Barbell returns (Epic Stuffed Crust $13.99), Papa Pairings $6.99; transaction focus with strategic pricing while protecting franchisee economics	Stabilizing transactions; rebuilding check in 2H25
Supply Chain/Commissary	NA commissary revenues pressured by lower volume/commodities (Q2)	Commissary margins +70 bps YoY in Q4; fixed-margin model incentives; 2025 NA network review to improve 4-wall profitability	Improving margin structure; further optimization targeted
Product & Innovation	Emphasis on core pizza demand (Q2)	Strong event-driven offers (XL NY Style $11.99, heart-shaped pizza), highest sales day for Super Bowl/Valentine’s; robust 2H25 innovation planned	Positive consumer response; pipeline building
Channel Mix	—	Carryout and aggregators growing; first-party delivery lagging but sequentially improving; carryout mix rising (high-40s%)	Carryout/aggregator tailwinds; delivery recovery in progress
International	Strategic closures/refranchising in UK; comps flat to down (Q2/Q3)	Q4 comps +2%; focused “top 9” countries; early 2025 strength in Middle East (~~+20%), UK (~~+2%); plan 180–200 gross openings in 2025	Improving comps and focused growth markets
Development/Refranchising	Net closures on strategic actions (Q2); gross openings to exceed 100 NA/170–190 Intl in FY24 (Q3)	122 net Q4 openings; refranchised 15 WI units; considering additional refranchising (neutral to slightly accretive)	Accelerating new units; portfolio optimization

Management Commentary

“We are… improving our value perception, simplify[ing] our operations, and enhancing our digital and loyalty experiences… results consistent with our fourth quarter expectations.” — Todd Penegor, CEO .
“We launched… $11.99 XL New York Style Pizza ahead of the Super Bowl and [returned] our heart-shaped pizza… [delivering] our highest sales day for each respective occasion in company history.” — CEO .
“Approximately 50% of our loyalty orders [now] redeeming Papa Dough, up from 21% a year ago… new members are buying their second order quicker.” — CEO .
“Adjusted operating income margin was 7% in Q4… domestic company-owned segment margins declined ~400 bps YoY” on food basket inflation, ticket pressure, lower leverage, and higher insurance costs — CFO .
“Through the first 8 weeks of 2025, North America comparable sales… down 3%… ~130 bps improvement in trend from the fourth quarter.” — CFO .

Q&A Highlights

Guidance/investments: 2025 adjusted EBITDA $200–$220M vs ~$227M in 2024; includes up to ~$25M marketing/loyalty, ~$4M franchisee conference, and higher normalized performance comp — an “investment and transformation” year .
Traffic vs ticket: Q4 transactions -2% and ticket -2%; carryout positive, aggregator positive, first-party delivery still negative but sequentially improving; expect ticket to improve as barbell normalizes and innovation returns in 2H25 .
International execution: Focused on nine priority countries; early 2025 comps: UK >+2%, Middle East ~+20%, Chile/Peru high-single to low-double digit — runway not near saturation .
Refranchising/development: WI refranchised; active discussions on other markets; NA gross openings 85–115 in 2025; closures normalized to 1.5–2% of NA system; international gross openings 180–200 .
Operations simplification: Removing “rhythm breakers”/SKUs and optimizing ovens/process to enable best-in-class pizza execution in 2025 .

Estimates Context

Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable due to an S&P Global API request limit at the time of retrieval. As a result, we cannot present “vs. consensus” comparisons in this report. We attempted to fetch: Primary EPS Consensus Mean, Revenue Consensus Mean, and # of Estimates for Q4/Q3/Q2 2024; the request exceeded daily limits [GetEstimates error].

Key Takeaways for Investors

Sequential progress but investment-heavy 2025: Guidance targets modest comps and sales growth while stepping up marketing/loyalty and tech — near-term margin drag but necessary to accelerate transactions and share gains .
Mix and margin watch: Domestic company-owned margins compressed materially in Q4 (~400 bps YoY); catalysts to rebuild include barbell normalization, innovation, and loyalty-driven ticket/frequency gains in 2H25 .
Channel strategy: Carryout and aggregators are growing and accretive; first-party delivery is the key swing factor — expect ongoing sequential improvement as app, tracking, and loyalty value consolidate into 1P .
International recovery and focus: Q4 comps turned positive; 2025 growth concentrated in priority markets with strong early-2025 momentum in Middle East/UK and 180–200 gross openings planned .
Unit growth and capital intensity: Record Q4 net openings (122) and lower build costs (~$515K in 2H24) support domestic returns; refranchising can accelerate development with neutral to slight earnings accretion .
Cash/FCF: FY24 FCF fell to $34.1M on working capital/tax timing; dividend ($0.46) maintained; watch 2025 cash needs vs investment plan .
Early-2025 read: NA comps down ~3% for the first 8 weeks, an improvement vs Q4; monitoring ticket recovery as loyalty-induced discounting abates and barbell/innovation ramps .

Supporting Data (select additional references):

Q4 revenue bridge: -$41M from 53rd week comp; -$17.8M company-owned; +$14.0M commissary; +$3.2M ad funds .
Non-GAAP detail: Q4 International restructuring $7.8M; FY24 adj reconciliation reflecting $41.3M QC gain, $27.3M international restructuring, $5.5M domestic impairments .
Dividend: Q1 2025 dividend $0.46 paid Feb 21, 2025 .

Sources: Q4 2024 8-K/press release and supplement ; Q4 2024 earnings call transcript (prepared remarks and Q&A) ; prior quarter press releases for Q3 and Q2 2024 trend analysis .

PAPA JOHNS INTERNATIONAL INC (PZZA)·Q4 2024 Earnings Summary