DOMINOS PIZZA INC

Previous wording

The 2024 and 2023 third quarters referenced herein represent the twelve-week periods ended September 8, 2024 and September 10, 2023, respectively. The 2024 and 2023 three fiscal quarters referenced herein represent the thirty-six-week periods ended September 8, 2024 and September 10, 2023, respectively. In this section, we discuss the results of our operations for the third quarter and three fiscal quarters of 2024 as compared to the third quarter and three fiscal quarters of 2023.

Current wording

The 2025 and 2024 first quarters referenced herein represent the twelve-week periods ended March 23, 2025 and March 24, 2024, respectively. In this section, we discuss the results of our operations for the first quarter of 2025 as compared to the first quarter of 2024.

Previous wording

Domino’s is the largest pizza company in the world, with more than 21,000 locations in over 90 markets around the world as of September 8, 2024, and operates two distinct service models within its stores with a significant business in both delivery and carryout. We are a highly recognized global brand, and we focus on value while serving neighborhoods locally through our large worldwide network of franchise owners and U.S. Company-owned stores through both the delivery and carryout service models. We have been selling quality, affordable food to our customers since 1960. We became “Domino’s Pizza” in 1965 and opened our first franchised store in 1967. Over more than 60 years, we have built Domino’s into one of the most widely-recognized consumer brands in the world. We believe our commitment to value, convenience, quality and new products continues to keep consumers engaged with the brand.

Current wording

Domino’s is the largest pizza company in the world, with more than 21,300 locations in over 90 markets around the world as of March 23, 2025, and operates two distinct service models within its stores with a significant business in both delivery and carryout. We are a highly recognized global brand, and we focus on value while serving neighborhoods locally through our large worldwide network of franchise owners and U.S. Company-owned stores through both the delivery and carryout service models. We have been selling quality, affordable food to our customers since 1960. We became “Domino’s Pizza” in 1965 and opened our first franchised store in 1967. Over more than 60 years, we have built Domino’s into one of the most widely-recognized consumer brands in the world. We believe our commitment to value, convenience, quality and new products continues to keep consumers engaged with the brand.

Previous wording

Domino’s business model is straightforward: Domino’s stores handcraft and serve quality food at a competitive price, with easy ordering access and efficient service, enhanced by our technological innovations. Our hand-tossed dough is made fresh and distributed to stores around the world by us and our franchisees.

Current wording

Domino’s business model is straightforward: Domino’s stores handcraft and serve quality food at a competitive price, with easy ordering access and efficient service, enhanced by our technological innovations. We also have a global agreement with Uber Technologies, Inc. to allow customers to order Domino’s products through their marketplace. Our hand-tossed dough is made fresh and distributed to stores around the world by us and our franchisees.

Previous wording

Domino’s generates revenues and earnings by charging royalties and fees to our franchisees. Royalties are ongoing percent-of-sales fees for use of the Domino’s® brand marks. We also generate revenues and earnings by selling food, equipment and supplies to franchisees through our supply chain operations primarily in the U.S. and Canada and by operating a number of Company-owned stores in the United States. Franchisees profit by selling pizza and other complementary items to their local customers. In our international markets, we generally grant geographical rights to the Domino’s Pizza® brand to master franchisees. These master franchisees are charged with developing their geographical area, and they may profit by sub-franchising and selling food and equipment to those sub-franchisees, as well as by running pizza stores. We believe that everyone in the system can benefit from the franchise model, including the end consumer, who can purchase Domino’s menu items for themselves and their family conveniently and economically.

Current wording

Domino’s generates revenues and earnings by charging royalties and fees to our franchisees. Royalties are ongoing percent-of-sales fees for use of the Domino’s® brand marks. We also generate revenues and earnings by selling food and, to a lesser extent, other products to franchisees through our supply chain operations primarily in the U.S. and Canada and by operating a number of Company-owned stores in the U.S. Franchisees profit by selling pizza and other complementary items to their local customers. In our international markets, we generally grant geographical rights to the Domino’s Pizza® brand to master franchisees. These master franchisees are charged with developing their geographical area, and they may profit by sub-franchising and selling food and, to a lesser extent, other products to those sub-franchisees, as well as by running pizza stores. We believe that everyone in the system can benefit from the franchise model, including the end consumer, who can purchase Domino’s menu items for themselves and their family conveniently and economically.

Previous wording

Domino’s business model can yield strong returns for our franchise owners and our Company-owned stores. It can also yield significant cash flows to us, through a consistent franchise royalty payment and supply chain revenue stream, through an asset-light model. We have historically returned cash to shareholders through dividend payments and share repurchases. Domino’s financial results are driven largely by retail sales at our franchised and Company-owned stores. Changes in retail sales are primarily driven by same store sales growth and net store growth. We monitor both of these metrics very closely, as they directly impact our revenues and profits, and we strive to consistently increase both metrics. Retail sales drive royalty payments from franchisees, as well as Company-owned store and supply chain revenues.

Current wording

Domino’s business model can yield strong returns for our franchise owners and our Company-owned stores. It can also yield significant cash flows to us, through a consistent franchise royalty payment and supply chain revenue stream, through an asset-light model. We have historically returned cash to shareholders through dividend payments and share repurchases. Domino’s financial results are driven largely by retail sales at our franchised and Company-owned stores. Changes in retail sales are primarily driven by same store sales growth and net store growth. We actively monitor both of these metrics, as they directly impact our revenues and profits, and we strive to consistently increase both metrics. Retail sales drive royalty payments from franchisees, as well as Company-owned store and supply chain revenues.

Previous wording

At Domino’s, we believe we have a proven business model for success that has historically driven strong returns for our shareholders. In 2023, we announced our Hungry for MORE strategy aimed at generating MORE sales, MORE stores and MORE profits. The strategic imperatives of our Hungry for MORE strategy are as follows:

Current wording

At Domino’s, we believe we have a proven business model for success that has historically driven strong returns for our shareholders. Our Hungry for MORE strategy aims to generate MORE sales, MORE stores and MORE profits. The strategic imperatives of our Hungry for MORE strategy are as follows:

Previous wording

MORE Sales: Global retail sales, excluding foreign currency impact (which includes total retail sales at Company-owned and franchised stores worldwide), increased 5.1% as compared to the third quarter of 2023. U.S. retail sales increased 5.1% and international retail sales, excluding foreign currency impact, increased 5.1% as compared to the third quarter of 2023. Same store sales increased 3.0% in our U.S. stores and increased 0.8% in our international stores (excluding foreign currency impact).

Current wording

Global retail sales, excluding foreign currency impact (which includes total retail sales at Company-owned and franchised stores worldwide), increased 4.7% as compared to the first quarter of 2024. U.S. retail sales increased 1.3% and international retail sales, excluding foreign currency impact, increased 8.2% as compared to the first quarter of 2024. Same store sales declined 0.5% in our U.S. stores and increased 3.7% in our international stores (excluding foreign currency impact).

Previous wording

Excluding the negative impact of foreign currency, Domino’s experienced global retail sales growth during the third quarter and three fiscal quarters of 2024, driven by same store sales growth and net store growth in both our U.S. and international businesses. These factors also contributed to an increase in income from operations. In the third quarter and three fiscal quarters of 2024, these increases in income from operations were partially offset by higher general and administrative expenses primarily driven by higher labor costs. Overall, we believe our global retail sales growth (excluding foreign currency impact) and our emphasis on technology, operations and marketing initiatives have combined to strengthen our brand. These financial and statistical measures are described in additional detail below.

Current wording

Excluding the negative impact of foreign currency, Domino’s experienced global retail sales growth during the first quarter of 2025, driven by net store growth during the trailing four quarters in both our U.S. and international businesses, as well as same store sales growth in our international business. Overall, we believe our global retail sales growth, excluding foreign currency impact, marketing initiatives, operations and emphasis on technology have combined to strengthen our brand. These financial and statistical measures are described in additional detail below.

Previous wording

Global retail sales is a commonly used statistical measure in the quick-service restaurant industry that is important to understanding performance. Global retail sales refers to total worldwide retail sales at Company-owned and franchised stores. We believe global retail sales information is useful in analyzing revenues because franchisees pay royalties and, in the U.S., advertising fees that are based on a percentage of franchise retail sales. We review comparable industry global retail sales information to assess business trends and to track the growth of the Domino’s Pizza brand, and we believe they are indicative of the financial health of our franchisee base. In addition, supply chain revenues are directly impacted by changes in franchise retail sales in the U.S. and Canada. As a result, sales by Domino’s franchisees have a direct effect on our profitability. Retail sales for franchised stores are reported to us by our franchisees and are not included in our revenues.

Current wording

Global retail sales is a commonly used statistical measure in the quick-service restaurant industry that is important to understanding performance. Global retail sales refers to total worldwide retail sales at Company-owned and franchised stores. We believe global retail sales information is useful in analyzing revenues because franchisees pay royalties and, in the U.S., advertising fees that are based on a percentage of franchise retail sales. We review comparable industry global retail sales information to assess business trends and to track the growth of the Domino’s Pizza brand, and we believe they are indicative of the financial health of our franchisee base. In addition, supply chain revenues are directly impacted by changes in franchise retail sales in the U.S. and Canada. As a result, sales by Domino’s franchisees have a direct effect on our profitability. Retail sales for franchised stores are reported to us by our franchisees and are not included in our revenues. The amounts below are presented in millions of U.S. dollars.

Previous wording

Revenues primarily consist of retail sales from our Company-owned stores, royalties and fees and advertising contributions from our U.S. franchised stores, royalties and fees from our international franchised stores and sales of food, equipment and supplies from our supply chain centers to substantially all of our U.S. franchised stores and certain international franchised stores. Company-owned store and franchised store revenues may vary from period to period due to changes in store count mix. Supply chain revenues may vary significantly from period to period as a result of fluctuations in commodity prices as well as the mix of products we sell.

Current wording

Revenues primarily consist of retail sales from our Company-owned stores, royalties and fees and advertising contributions from our U.S. franchised stores, royalties and fees from our international franchised stores and sales of food and, to a lesser extent, other products from our supply chain centers to substantially all of our U.S. franchised stores and certain international franchised stores. Company-owned store and franchised store revenues may vary from period to period due to changes in store count mix. Supply chain revenues may vary significantly from period to period as a result of fluctuations in commodity prices as well as the mix of products we sell.

Previous wording

Revenues from U.S. franchise advertising increased $9.4 million, or 8.4%, in the third quarter of 2024 primarily due to the return to the standard 6.0% advertising contribution rate at the beginning of the second quarter of 2024 following the end of the temporary reduction to 5.75% which began in the second quarter of 2023, as well as higher same store sales and net store growth. An increase in brand promotions partially offset the increase in U.S. franchise advertising revenues in the third quarter of 2024. Revenues from U.S. franchise advertising increased $20.5 million, or 6.1%, in the three fiscal quarters of 2024 primarily due to higher same store sales, net store growth and the return to the standard 6.0% advertising contribution rate at the beginning of the second quarter of 2024 following the end of the temporary reduction to 5.75% which began in the second quarter of 2023. An increase in brand promotions partially offset the increase in U.S. franchise advertising revenues in the three fiscal quarters of 2024.

Current wording

Revenues from U.S. franchise advertising increased $13.7 million, or 12.4%, in the first quarter of 2025 primarily due to a decrease in advertising incentives related to certain brand promotions and the return to the standard 6.0% advertising contribution rate at the beginning of the second quarter of 2024 following the end of the temporary reduction to 5.75%.

Previous wording

Supply chain revenues increased $33.2 million, or 5.4%, in the third quarter of 2024 primarily due to higher order volumes, as well as an increase in our food basket pricing to stores, but these increases were partially offset by a shift in the relative mix of products we sell. Our food basket pricing to stores increased 1.3% in the third quarter of 2024, which resulted in an estimated $9 million increase in supply chain revenues. The food basket pricing change, a statistical measure utilized by management, is calculated as the percentage change of the food basket (including both food and cardboard products) purchased by an average U.S. store (based on average weekly unit sales) from our U.S. supply chain centers against the comparable period of the prior year. We believe this measure is important to understanding Company performance because as our food basket prices fluctuate, our revenues, cost of sales and gross margin percentages in our supply chain segment also fluctuate. Supply chain revenues increased $111.7 million, or 6.0%, in the three fiscal quarters of 2024 primarily due to higher order volumes, but this increase was partially offset by a shift in the relative mix of products we sell. Our food basket pricing was flat in the three fiscal quarters of 2024 as compared to the three fiscal quarters of 2023.

Current wording

Supply chain revenues increased $10.7 million, or 1.6%, in the first quarter of 2025 primarily due to an increase in our food basket pricing to stores, partially offset by the transition of our equipment and supplies business to a third-party supplier and a shift in the relative mix of products we sell. Our food basket pricing to stores increased 4.8% in the first quarter of 2025, which resulted in an estimated $36 million increase in supply chain revenues. The food basket pricing change, a statistical measure utilized by management, is calculated as the percentage change of the food basket (including both food and cardboard products) purchased by an average U.S. store (based on average weekly unit sales) from our U.S. supply chain centers against the comparable period of the prior year. We believe this measure is important to understanding Company performance because as our food basket prices fluctuate, our revenues, cost of sales and gross margin percentages in our supply chain segment also fluctuate.

Previous wording

Revenues from international franchise royalties and fees increased $1.5 million, or 2.0%, in the third quarter of 2024, and increased $7.0 million, or 3.3%, in the three fiscal quarters of 2024 primarily due to an increase in the average number of international franchised stores open during the period resulting from net store growth as well as same store sales growth (excluding foreign currency impact), but these increases were partially offset by the negative impact of changes in foreign currency exchange rates of approximately $1.4 million in the third quarter of 2024 and $5.6 million in the three fiscal quarters of 2024. The impact of changes in foreign currency exchange rates on international franchise royalty revenues, a statistical measure utilized by management, is calculated as the difference in international franchise royalty revenues resulting from translating current year local currency results to U.S. dollars at current year exchange rates as compared to prior year exchange rates. We believe this measure is important to understanding Company performance given the significant variability in international franchise royalty revenues that can be driven by changes in foreign currency exchange rates.

Current wording

Revenues from international franchise royalties and fees increased $3.6 million, or 5.0%, in the first quarter of 2025 primarily due to same store sales growth (excluding foreign currency impact) and net store growth during the trailing four quarters, but these increases were partially offset by the negative impact of changes in foreign currency exchange rates of approximately $3.2 million in the first quarter of 2025. The impact of changes in foreign currency exchange rates on international franchise royalty revenues, a statistical measure utilized by management, is calculated as the difference in international franchise royalty revenues resulting from translating current year local currency results to U.S. dollars at current year exchange rates as compared to prior year exchange rates. We believe this measure is important to understanding Company performance given the significant variability in international franchise royalty revenues that can be driven by changes in foreign currency exchange rates.

Previous wording

Consolidated cost of sales consists of U.S. Company-owned store and supply chain costs incurred to generate related revenues. Components of consolidated cost of sales primarily include food, labor, delivery and occupancy costs. Consolidated gross margin (which we define as revenues less cost of sales) increased $25.5 million, or 6.4%, in the third quarter of 2024, and increased $94.2 million, or 7.9%, in the three fiscal quarters of 2024 primarily due to higher global franchise revenues, as well as gross margin dollar growth within supply chain, discussed below. Franchise revenues do not have a cost of sales component, so changes in these revenues have a disproportionate effect on gross margin. Additionally, as food basket prices fluctuate, revenues, cost of sales and gross margin percentages in our supply chain segment also fluctuate, and further, cost of sales, gross margins and gross margin percentages for our U.S. Company-owned stores also fluctuate.

Current wording

Consolidated cost of sales consists of U.S. Company-owned store and supply chain costs incurred to generate related revenues. Components of consolidated cost of sales primarily include food and labor costs, as well as other costs including delivery, occupancy costs (including rent, telephone, utilities and depreciation) and insurance expense. Consolidated gross margin (which we define as revenues less cost of sales) increased $21.2 million, or 5.0%, in the first quarter of 2025 due primarily to higher franchise advertising revenues (as discussed above), as well as gross margin dollar growth within supply chain, discussed below. Franchise revenues do not have a cost of sales component, so changes in these revenues have a disproportionate effect on gross margin. Additionally, as food basket prices fluctuate, revenues, cost of sales and gross margin percentages in our supply chain segment also fluctuate, and further, cost of sales, gross margins and gross margin percentages for our U.S. Company-owned stores also fluctuate.

Previous wording

As a percentage of revenues, the consolidated gross margin increased 0.4 and 0.7 percentage points in the third quarter and three fiscal quarters of 2024, respectively. U.S. Company-owned store gross margin increased 1.0 percentage point in the third quarter of 2024, and increased 0.2 percentage points in the three fiscal quarters of 2024. Supply chain gross margin increased 0.6 percentage points in the third quarter of 2024, and increased 1.1 percentage points in the three fiscal quarters of 2024. These changes in gross margin are described in more detail below.

Current wording

As a percentage of revenues, consolidated gross margin increased 0.9 percentage points to 39.8% in the first quarter of 2025 from 38.9% in the first quarter of 2024. U.S. Company-owned store gross margin decreased 1.5 percentage points in the first quarter of 2025, and supply chain gross margin increased 0.5 percentage points in the first quarter of 2025. Changes in the significant components of gross margin are described in more detail below.

Previous wording

U.S. Company-owned store gross margin (which does not include certain store-level costs such as royalties and advertising) increased $1.3 million, or 9.6%, in the third quarter of 2024, and increased $3.1 million, or 7.0%, in the three fiscal quarters of 2024. As a percentage of store revenues, U.S. Company-owned store gross margin increased 1.0 percentage point in the third quarter of 2024, and increased 0.2 percentage points in the three fiscal quarters of 2024. These changes in gross margin as a percentage of revenues are discussed in additional detail below.

Current wording

U.S. Company-owned store gross margin (which does not include certain store-level costs such as royalties and advertising) decreased $1.5 million, or 9.3%, in the first quarter of 2025. As a percentage of store revenues, U.S. Company-owned store gross margin decreased 1.5 percentage points in the first quarter of 2025. These changes in gross margin as a percentage of revenues are discussed in additional detail below.

Previous wording

Sales leverage driven by higher customer transaction counts contributed to the remaining increases in U.S. Company-owned store gross margin as a percentage of revenues.

Current wording

Lower sales leverage driven by lower order counts contributed to the remaining decrease in U.S. Company-owned store gross margin.

Previous wording

U.S. franchise advertising expenses increased $9.4 million, or 8.4%, in the third quarter of 2024, and increased $20.5 million, or 6.1%, in the three fiscal quarters of 2024 consistent with the increases in U.S. franchise advertising revenues. U.S. franchise advertising costs are accrued and expensed when the related U.S. franchise advertising revenues are recognized, as our consolidated not-for-profit advertising fund is obligated to expend such revenues on advertising and other activities that promote the Domino’s brand, and these revenues cannot be used for general corporate purposes.

Current wording

U.S. franchise advertising expenses increased $13.7 million, or 12.4%, in the first quarter of 2025, consistent with the increase in U.S. franchise advertising revenues, as discussed above. U.S. franchise advertising costs are accrued and expensed when the related U.S. franchise advertising revenues are recognized, as our consolidated not-for-profit advertising fund is obligated to expend such revenues on advertising and other activities that promote the Domino’s brand, and these revenues cannot be used for general corporate purposes.

Previous wording

During the third quarter and three fiscal quarters of 2024, we recorded a $26.2 million and $18.9 million unrealized gain, respectively, on our investment in DPC Dash (Note 6). During the third quarter and three fiscal quarters of 2023, we recorded a $28.2 million and $13.3 million unrealized gain, respectively, on our investment in DPC Dash. These unrealized gains were based on the active exchange quoted price for the equity security.

Current wording

During the first quarters of 2025 and 2024, we recorded a $24.0 million pre-tax unrealized gain and an $18.7 million pre-tax unrealized loss, respectively, on our investment in DPC Dash (refer to Note 5 of the condensed consolidated financial statements). The recorded amount of our investment is based on the active exchange quoted price for the equity security.

Previous wording

Interest expense, net, decreased $1.7 million, or 4.0%, in the third quarter of 2024, and decreased $5.6 million, or 4.4%, in the three fiscal quarters of 2024, each driven by higher interest income on our cash equivalents.

Current wording

Interest expense, net decreased $0.5 million, or 1.1%, in the first quarter of 2025, driven primarily by higher interest income on our cash equivalents.

Previous wording

Our weighted average borrowing rate was 3.8% in each of the third quarter and three fiscal quarters of 2024 and 2023.

Current wording

Our weighted average borrowing rate was 3.8% in both the first quarter of 2025 and 2024.

Previous wording

Provision for income taxes increased $9.8 million, or 35.1%, in the third quarter of 2024 due to a higher effective tax rate and higher income before provision for income taxes. The effective tax rate increased to 20.4% in the third quarter of 2024 as compared to 15.9% in the third quarter of 2023, driven by lower foreign tax credits as well as a 0.9 percentage point unfavorable change in the impact of excess tax benefits from equity-based compensation, which is recorded as a reduction to the provision for income taxes.

Current wording

Provision for income taxes increased $19.0 million, or 80.1%, in the first quarter of 2025 due to a higher effective tax rate, as well as higher income before provision for income taxes. The effective tax rate increased to 22.3% during the first quarter of 2025 as compared to 15.9% in the first quarter of 2024, driven primarily by a 4.6 percentage point unfavorable change in the impact of excess tax benefits from equity-based compensation, as well as other rate and discrete items.

Previous wording

We evaluate the performance of our reportable segments and allocate resources to them based on earnings before interest, taxes, depreciation, amortization and other, referred to as Segment Income. Segment Income for each of our reportable segments is summarized in the table below. Other Segment Income primarily includes corporate administrative costs that are not allocable to a reportable segment, including labor, computer expenses, professional fees, travel and entertainment, rent, insurance and other corporate administrative costs.

Current wording

We evaluate the performance of our reportable segments and allocate resources to them based on earnings before interest, taxes, depreciation, amortization and other, referred to as Segment Income. Segment Income for each of our reportable segments is summarized in the table below.

Previous wording

U.S. stores Segment Income increased $8.2 million, or 6.8%, in the third quarter of 2024 primarily due to higher U.S. franchise royalties and fees revenues, as well as the $1.3 million increase in U.S. Company-owned store gross margin, each as discussed above. U.S. stores Segment Income increased $37.6 million, or 10.5%, in the three fiscal quarters of 2024 primarily due to higher U.S. franchise royalties and fees revenues, as well as the $3.1 million increase in U.S. Company-owned store gross margin, each as discussed above. U.S. franchise revenues do not have a cost of sales component, so changes in these revenues have a disproportionate effect on U.S. stores Segment Income. U.S. franchise advertising costs are accrued and expensed when the related U.S. franchise advertising revenues are recognized and had no impact on U.S. stores Segment Income.

Current wording

U.S. franchise revenues do not have a cost of sales component, so changes in these revenues have a disproportionate effect on U.S. stores Segment Income. U.S. franchise advertising costs are accrued and expensed when the related U.S. franchise advertising revenues are recognized and had no impact on U.S. stores Segment Income.

Previous wording

International franchise Segment Income increased $0.9 million, or 1.5%, in the third quarter of 2024, and increased $2.3 million, or 1.3%, in the three fiscal quarters of 2024 primarily due to higher international franchise royalties and fees revenues, as discussed above. International franchise revenues do not have a cost of sales component, so changes in these revenues have a disproportionate effect on international franchise Segment Income. The increase in international franchise Segment Income in the three fiscal quarters of 2024 was partially offset by expenses for our Worldwide Rally that takes place every two years.

Current wording

International franchise Segment Income increased $4.4 million, or 7.5%, in the first quarter of 2025, primarily due to higher international franchise royalties and fees revenues, as discussed above. International franchise revenues do not have a cost of sales component, so changes in these revenues have a disproportionate effect on international franchise Segment Income.

Previous wording

Historically, our receivable collection periods and inventory turn rates are faster than the normal payment terms on our current liabilities resulting in efficient deployment of working capital. We generally collect our receivables within three weeks from the date of the related sale and we generally experience multiple inventory turns per month. In addition, our sales are not typically seasonal, which further limits variations in our working capital requirements. As of September 8, 2024, we had working capital of $174.4 million, excluding restricted cash and cash equivalents of $185.4 million, advertising fund assets, restricted, of $111.1 million and advertising fund liabilities of $109.2 million. Working capital includes total unrestricted cash and cash equivalents of $189.1 million.

Current wording

Historically, our receivable collection periods and inventory turn rates are faster than the normal payment terms on our current liabilities resulting in efficient deployment of working capital. We generally collect our receivables within three weeks from the date of the related sale and we generally experience multiple inventory turns per month. In addition, our sales are not typically seasonal, which further limits variations in our working capital requirements. As of March 23, 2025, we had negative working capital totaling $880.4 million, primarily due to the current portion of long-term debt (see discussion below, as well as Note 6 to the condensed consolidated financial statements). Our working capital amount excludes restricted cash and cash equivalents of $197.4 million, advertising fund assets, restricted, of $99.6 million and advertising fund liabilities of $97.4 million. Working capital includes total unrestricted cash and cash equivalents of $304.3 million.

Previous wording

Our primary sources of liquidity are cash flows from operations and availability of borrowings under our 2022 and 2021 Variable Funding Notes (as defined below). During the third quarter and three fiscal quarters of 2024, we experienced an increase in both U.S. and international same store sales (excluding foreign currency impact) versus the comparable periods in the prior year. Additionally, both our U.S. and international businesses grew store counts during the third quarter and three fiscal quarters of 2024. These factors contributed to our continued ability to generate positive operating cash flows. In addition to our cash flows from operations, we have two variable funding note facilities. These facilities include our Series 2022-1 Variable Funding Senior Secured Notes, Class A-1 Notes (the “2022 Variable Funding Notes”), which allows for advances of up to $120.0 million, as well as our Series 2021-1 Variable Funding Senior Secured Notes, Class A-1 Notes (the “2021 Variable Funding Notes,” and, together with the 2022 Variable Funding Notes, the “2022 and 2021 Variable Funding Notes”), which allows for advances of up to $200.0 million and certain other credit instruments, including letters of credit. The letters of credit primarily relate to our casualty insurance programs. As of September 8, 2024, we had no outstanding borrowings and $278.9 million of available borrowing capacity under our 2022 and 2021 Variable Funding Notes, net of letters of credit issued of $41.1 million.

Current wording

Our primary sources of liquidity are cash flows from operations and availability of borrowings under our variable funding notes. During the first quarter of 2025, we experienced an increase in both U.S. and international retail sales (excluding foreign currency impact). Additionally, both our U.S. and international businesses grew store counts during the trailing four quarters. These factors contributed to our continued ability to generate positive operating cash flows. In addition to our cash flows from operations, we have two variable funding note facilities. These facilities include our Series 2022-1 Variable Funding Senior Secured Notes, Class A-1 Notes (the “2022 Variable Funding Notes”), which allows for advances of up to $120.0 million, as well as our Series 2021-1 Variable Funding Senior Secured Notes, Class A-1 Notes (the “2021 Variable Funding Notes,” and, together with the 2022 Variable Funding Notes, the “2022 and 2021 Variable Funding Notes”), which allows for advances of up to $200.0 million and certain other credit instruments, including letters of credit. The letters of credit primarily relate to our casualty insurance programs. As of March 23, 2025, we had no outstanding borrowings and $263.6 million of available borrowing capacity under our 2022 and 2021 Variable Funding Notes, net of letters of credit issued of $56.4 million.

Previous wording

As of September 8, 2024, we had $134.2 million of restricted cash held for future principal and interest payments and other working capital requirements of our asset-backed securitization structure, $51.0 million of restricted cash held in a three-month interest reserve as required by the related debt agreements and $0.2 million of other restricted cash for a total of $185.4 million of restricted cash and cash equivalents. As of September 8, 2024, we also held $90.0 million of advertising fund restricted cash and cash equivalents, which can only be used for activities that promote the Domino’s brand.

Current wording

As of March 23, 2025, we had $146.9 million of restricted cash and cash equivalents held for future principal and interest payments and other working capital requirements of our asset-backed securitization structure, $50.3 million of restricted cash equivalents held in a three-month interest reserve as required by the indenture governing the securitized debt and $0.2 million of other restricted cash for a total of $197.4 million of restricted cash and cash equivalents. As of March 23, 2025, we also held $72.2 million of advertising fund restricted cash and cash equivalents which can only be used for activities that promote the Domino’s brand.

Previous wording

As of September 8, 2024, we had approximately $4.98 billion of long-term debt, of which $4.9 million was classified as a current liability. As of September 8, 2024, our fixed rate notes from the recapitalizations we completed in 2021, 2019, 2018, 2017 and 2015 had original scheduled principal payments of $38.6 million in the remainder of 2024, $1.17 billion in 2025, $39.3 million in 2026, $1.31 billion in 2027, $811.5 million in 2028, $625.9 million in 2029, $10.0 million in 2030 and $905.0 million in 2031. However, in accordance with our debt agreements, the payment of principal on our outstanding senior notes may be suspended if our Holdco Leverage Ratio is less than or equal to 5.0x total debt to adjusted EBITDA, as defined in the related agreements, and no catch-up provisions are applicable. As of the end of the first, second, and third quarters of 2024, we had a Holdco Leverage Ratio of less than 5.0x, and accordingly, did not make the previously scheduled debt amortization payments on our outstanding notes beginning in the second quarter of 2024. Accordingly, all principal amounts of our outstanding notes have been classified as long-term debt in our condensed consolidated balance sheet as of September 8, 2024.

Current wording

As of March 23, 2025, we had approximately $4.98 billion of long-term debt, of which $1.15 billion was classified as a current liability. As of March 23, 2025, our fixed rate notes from the recapitalizations we completed in 2021, 2019, 2018, 2017 and 2015 had original scheduled principal payments of $1.18 billion in the remainder of 2025, $39.3 million in 2026, $1.31 billion in 2027, $817.9 million in 2028, $631.0 million in 2029, $10.0 million in 2030 and $912.5 million in 2031. However, in accordance with our debt agreements, the payment of principal on our outstanding senior notes may be suspended if our Holdco Leverage Ratio is less than or equal to 5.0x total debt to Consolidated Adjusted EBITDA, each as defined in the indenture governing the securitized debt, and no catch-up provisions are applicable. As of the end of the first quarter of 2025 and the fourth quarter of 2024, we had a Holdco Leverage Ratio of less than 5.0x, and accordingly, the outstanding principal amounts of the Company’s 2021 Notes, 2019 Notes, 2018 9.25-Year Notes and 2017 Ten-Year Notes (refer to Note 6 to the condensed consolidated financial statements) have been classified as long-term debt in our condensed consolidated balance sheet as of March 23, 2025 and December 29, 2024.

Previous wording

The notes are subject to certain financial and non-financial covenants, including a debt service coverage ratio calculation. The covenant requires a minimum coverage ratio of 1.75x total debt service to securitized net cash flow, as defined in the related agreements. In the event that certain covenants are not met, the notes may become due and payable on an accelerated schedule.

Current wording

The notes are subject to certain financial and non-financial covenants, including a debt service coverage ratio calculation. The covenant requires a minimum coverage ratio of 1.75x total debt service to securitized net cash flow, each as defined in the indenture governing the securitized debt. In the event that certain covenants are not met, the notes may become due and payable on an accelerated schedule.

Previous wording

Our share repurchase programs have historically been funded by excess operating cash flows, excess proceeds from our recapitalization transactions and borrowings under our 2022 and 2021 Variable Funding Notes. On February 21, 2024, our Board of Directors authorized an additional share repurchase program to repurchase up to $1.0 billion of our common stock, in addition to the $141.3 million that was previously remaining for a total authorization of $1.14 billion for future share repurchases as of that date.

Current wording

Our share repurchase programs have historically been funded by excess operating cash flows, excess proceeds from our recapitalization transactions and borrowings under our 2022 and 2021 Variable Funding Notes.

Previous wording

During the third quarter and three fiscal quarters of 2024, we repurchased and retired 443,302 and 499,674 shares of our common stock under our Board of Directors-approved share repurchase program for a total of approximately $190.0 million and $215.0 million, respectively. As of September 8, 2024, we had a total remaining authorized amount for share repurchases of approximately $926.3 million.

Current wording

During the first quarter of 2025, we repurchased and retired 115,280 shares of our common stock under our Board of Directors-approved share repurchase program for a total of approximately $50.0 million. As of March 23, 2025, we had a total remaining authorized amount for share repurchases of approximately $764.3 million.

Previous wording

On July 16, 2024, our Board of Directors declared a $1.51 per share quarterly dividend on our outstanding common stock for shareholders of record as of September 13, 2024, which was paid on September 30, 2024. We had approximately $54.1 million accrued for common stock dividends at September 8, 2024. Subsequent to the end of the third quarter of 2024, on October 8, 2024, our Board of Directors declared a $1.51 per share quarterly dividend on our outstanding common stock for shareholders of record as of December 13, 2024, to be paid on December 27, 2024.

Current wording

On February 19, 2025, our Board of Directors declared a $1.74 per share quarterly dividend on our outstanding common stock for shareholders of record as of March 14, 2025, which was paid on March 28, 2025. We had approximately $61.4 million accrued for common stock dividends at March 23, 2025. Subsequent to the end of the first quarter of 2025, on April 23, 2025, our Board of Directors declared a $1.74 per share quarterly dividend on our outstanding common stock for shareholders of record as of June 13, 2025, to be paid on June 30, 2025.

Previous wording

Cash provided by operating activities increased $24.7 million in the three fiscal quarters of 2024, as a result of higher net income, excluding non-cash operating activities and a positive change in advertising fund assets and liabilities, restricted, partially offset by the negative impact of changes in operating assets and liabilities. Net income increased $52.9 million and non-cash adjustments increased $8.8 million, resulting in an overall increase to cash provided by operating activities in the three fiscal quarters of 2024 as compared to the three fiscal quarters of 2023 of $61.7 million. Additionally, an $8.3 million positive impact of changes in advertising fund assets and liabilities, restricted, in the three fiscal quarters of 2024 as compared to the three fiscal quarters of 2023 was a result of receipts for advertising contributions outpacing payments for advertising activities. The negative impact of changes in operating assets and liabilities of $45.3 million primarily related to timing of payments for accounts payable, accrued liabilities and income taxes in the three fiscal quarters of 2024 as compared to the three fiscal quarters of 2023.

Current wording

Cash provided by operating activities increased $55.6 million in the first quarter of 2025, as a result of the positive impact of changes in operating assets and liabilities and a positive change in restricted advertising fund assets and liabilities. The positive impact of changes in operating assets and liabilities of $50.8 million primarily related to the timing of payments on accounts payable and accrued liabilities in the first quarter of 2025 as compared to the first quarter of 2024. Additionally, the $22.8 million positive impact of changes in restricted advertising fund assets and liabilities in the first quarter of 2025 as compared to the first quarter of 2024 was a result of the timing and amount of advertising contributions and the timing and amount of payments for advertising activities. These increases were partially offset by lower net income, excluding non-cash adjustments. Net income increased $23.8 million; however, this increase was more than offset by non-cash adjustments of $41.8 million (primarily representing the changes in the unrealized gains and losses associated with the remeasurement of the Company’s investment in DPC Dash), resulting in an overall decrease to cash provided by operating activities in the first quarter of 2025 as compared to the first quarter of 2024 of $18.0 million.

Previous wording

Cash used in investing activities was $71.9 million in the three fiscal quarters of 2024, which primarily consisted of $70.8 million of capital expenditures (driven primarily by investments in technological initiatives, supply chain centers and corporate store operations).

Current wording

Cash used in investing activities was $16.0 million in the first quarter of 2025, which primarily consisted of $14.7 million of capital expenditures (driven primarily by investments in consumer and store technology, supply chain centers and corporate store operations).

Previous wording

Cash used in financing activities was $313.0 million in the three fiscal quarters of 2024, which included the repurchase of approximately $215.0 million in common stock under our Board of Directors-approved share repurchase program, dividend payments of $106.0 million, repayments of long-term debt and finance lease obligations of $16.0 million and tax payments for the vesting of restricted stock of $10.7 million. These uses of cash were partially offset by proceeds from the exercise of stock options of $34.7 million.

Current wording

Cash used in financing activities was $51.9 million in the first quarter of 2025, which included the repurchase of approximately $50.0 million in common stock under our Board of Directors-approved share repurchase program, tax payments for the vesting of restricted stock of $8.2 million, repayments of finance lease obligations of $0.6 million and dividend payments of $0.6 million. These uses of cash were partially offset by proceeds from the exercise of stock options of $7.5 million.

Previous wording

This filing contains various forward-looking statements about the Company within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”) that are based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. The following cautionary statements are being made pursuant to the provisions of the Act and with the intention of obtaining the benefits of the “safe harbor” provisions of the Act. You can identify forward-looking statements by the use of words such as “anticipates,” “believes,” “could,” “should,” “estimates,” “expects,” “intends,” “may,” “will,” “plans,” “predicts,” “projects,” “seeks,” “approximately,” “potential,” “outlook” and similar terms and phrases that concern our strategy, plans or intentions, including references to assumptions. These forward-looking statements address various matters including information concerning future results of operations and business strategy, our anticipated profitability, estimates in same store sales growth, store growth and the growth of our U.S. and international business in general, our ability to service our indebtedness, our future cash flows, our operating performance, trends in our business and other descriptions of future events reflect the Company’s expectations based upon currently available information and data. While we believe these expectations and projections are based on reasonable assumptions, such forward-looking statements are inherently subject to risks, uncertainties and assumptions. Important factors that could cause actual results to differ materially from our expectations are more fully described under the section headed “Risk Factors” in this filing and in our other filings with the Securities and Exchange Commission, including under the section headed “Risk Factors” in our 2023 Form 10-K for the fiscal year ended December 31, 2023. Actual results may differ materially from those expressed or implied in the forward-looking statements as a result of various factors, including but not limited to: our substantial indebtedness as a result of our recapitalization transactions and our ability to incur additional indebtedness or refinance or renegotiate key terms of that indebtedness in the future; the impact a downgrade in our credit rating may have on our business, financial condition and results of operations; our future financial performance and our ability to pay principal and interest on our indebtedness; the strength of our brand, including our ability to compete in the U.S. and internationally in our intensely competitive industry, including the food service and food delivery markets; our ability to successfully implement our growth strategy, including through our participation in the third-party order aggregation marketplace; labor shortages or changes in operating expenses resulting from incre…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This filing contains various forward-looking statements about the Company within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”) that are based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. The following cautionary statements are being made pursuant to the provisions of the Act and with the intention of obtaining the benefits of the “safe harbor” provisions of the Act. You can identify forward-looking statements by the use of words such as “anticipates,” “believes,” “could,” “should,” “estimates,” “expects,” “intends,” “may,” “will,” “plans,” “predicts,” “projects,” “seeks,” “approximately,” “potential,” “outlook” and similar terms and phrases that concern our strategy, plans or intentions, including references to assumptions. These forward-looking statements address various matters including information concerning future results of operations and business strategy, our anticipated profitability, estimates in same store sales growth, store growth and the growth of our U.S. and international business in general, our ability to service our indebtedness, our future cash flows, our operating performance, trends in our business and other descriptions of future events reflect the Company’s expectations based upon currently available information and data. While we believe these expectations and projections are based on reasonable assumptions, such forward-looking statements are inherently subject to risks, uncertainties and assumptions. Important factors that could cause actual results to differ materially from our expectations are more fully described in our filings with the Securities and Exchange Commission, including under the section headed “Risk Factors” in our 2024 Form 10-K for the fiscal year ended December 29, 2024. Actual results may differ materially from those expressed or implied in the forward-looking statements as a result of various factors, including but not limited to: our substantial indebtedness as a result of our recapitalization transactions and our ability to incur additional indebtedness or refinance or renegotiate key terms of that indebtedness in the future; the impact a downgrade in our credit rating may have on our business, financial condition and results of operations; our future financial performance and our ability to pay principal and interest on our indebtedness; the strength of our brand, including our ability to compete in the U.S. and internationally in our intensely competitive industry, including the food service and food delivery markets; our ability to successfully implement our growth strategy, including through our participation in the third-party order aggregation marketplace; labor shortages or changes in operating expenses resulting from increases in prices of food (particularly cheese), fuel and other comm…

Excerpt shortened here; the source contains the full paragraph.