PZZA — Papa John's International, Inc.

Summary of Papa John's Q1 2026 Earnings Call

1. Key Financial Results and Metrics:

• Global System-Wide Restaurant Sales: $1.2 billion, down 3% in constant currency.
• Consolidated Revenue: $479 million, down 8% year-over-year.
• North America Comparable Sales: Down mid-single digits, primarily due to declining orders and lower new customer acquisition.
• International Comparable Sales: Up 3.6%, marking six consecutive quarters of positive growth, with notable performance in the U.K. (11% growth) and the Middle East (9% growth).
• Adjusted EBITDA: Approximately $48 million, a decrease of $2 million from the previous year.
• 4-wall EBITDA Margin: 11.9% for domestic company-owned restaurants, an improvement of 140 basis points.
• Liquidity: Total available liquidity at $498 million with a covenant leverage ratio of 3.3x.
• Free Cash Flow: Outflow of $6 million compared to an inflow of $19 million last year.

2. Strategic Updates and Business Highlights:

• Continued execution of a transformation plan aimed at improving customer experience and operational efficiency.
• Strong international performance driven by new menu offerings and enhanced marketing strategies.
• Introduction of new products: Pan Pizza and oven-toasted sandwiches, which are expected to drive customer acquisition and sales.
• Enhanced value offerings, including promotions like Buy One Get One free and $9.99 three-topping pizzas.
• Reestablishment of local advertising co-ops to improve market targeting.
• Investment in technology, including a new POS system and enhancements to the digital ordering experience.

3. Forward Guidance and Outlook:

• 2026 Global System-Wide Sales: Expected to range from flat to low single-digit declines.
• North America Comparable Sales: Expected to decline by 2% to 4%.
• International Comparable Sales: Expected to increase between 2% and 4%.
• Consolidated Adjusted EBITDA: Projected to be between $200 million and $210 million.
• Plans to open 40-50 new restaurants in North America and 180-220 internationally, with closures of 200 restaurants in North America.

4. Bad News, Challenges, or Points of Concern:

• North America comparable sales are declining, primarily due to lower transaction counts and new customer acquisition challenges.
• Competitive pressures in the QSR space are intense, with aggressive pricing strategies from competitors impacting margins.
• April's North American comparable sales are trending slightly worse than Q1, raising concerns about the consumer environment.
• Weather impacts accounted for approximately 40 basis points of sales drag in Q1.
• The company is facing challenges in maintaining customer engagement and transaction sizes, particularly with single-pizza orders.

5. Notable Q&A Insights:

• Management emphasized the importance of a long-term strategy to navigate competitive pressures and consumer headwinds.
• The three-year stack approach for same-store sales was defended as a prudent method to account for competitive landscape changes.
• The introduction of new menu items was designed to reduce operational complexity, with a focus on training and execution.
• There is a recognition of the need to balance pricing and promotions in response to competitive intensity, particularly in the third-party delivery space.

Overall, while Papa John's is making strides in its transformation and international growth, it faces significant challenges in the North American market, particularly regarding sales performance and competitive pressures. The company remains optimistic about its strategic initiatives and long-term growth potential.