DOMINOS PIZZA INC

Previous wording

The 2026 and 2025 second quarters referenced herein represent the twelve-week periods ended June 14, 2026 and June 15, 2025, respectively. The 2026 and 2025 two fiscal quarters referenced herein represent the twenty-four-week periods ended June 14, 2026 and June 15, 2025, respectively. In this section, we discuss the results of our operations for the second quarter and two fiscal quarters of 2026 as compared to the second quarter and two fiscal quarters of 2025.

Current wording

The 2026 and 2025 third quarters referenced herein represent the twelve-week periods ended September 6, 2026 and September 7, 2025, respectively. The 2026 and 2025 three fiscal quarters referenced herein represent the thirty-six-week periods ended September 6, 2026 and September 7, 2025, respectively. In this section, we discuss the results of our operations for the third quarter and three fiscal quarters of 2026 compared to the third quarter and three fiscal quarters of 2025.

Previous wording

Domino’s is the largest pizza company in the world with more than 22,500 locations in over 90 markets around the world as of June 14, 2026, 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. For more than 65 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 22,700 locations in over 90 markets around the world as of September 6, 2026, 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. For more than 65 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

Two Fiscal Quarters of 2026 Highlights

Current wording

Third Quarter of 2026 Highlights

Previous wording

MORE Sales: Global retail sales, excluding foreign currency impact (which includes total retail sales at Company-owned and franchised stores worldwide), increased 3.0% as compared to the second quarter of 2025. U.S. retail sales increased 1.9% and international retail sales, excluding foreign currency impact, increased 4.1% as compared to the second quarter of 2025. Same store sales increased 0.1% in our U.S. stores and declined 0.1% in our international stores (excluding foreign currency impact).

Current wording

MORE Sales: Global retail sales, excluding foreign currency impact (which includes total retail sales at Company-owned and franchised stores worldwide), increased 3.2% compared to the third quarter of 2025. U.S. retail sales increased 2.1% and international retail sales, excluding foreign currency impact, increased 4.3% compared to the third quarter of 2025. Same store sales increased 0.3% in our U.S. stores and increased 0.2% in our international stores (excluding foreign currency impact).

Previous wording

MORE Stores: Global net store growth of 209 stores, including 26 net store openings in the U.S. and 183 net store openings internationally.

Current wording

MORE Stores: Global net store growth of 175 stores, including 26 net store openings in the U.S. and 149 net store openings internationally.

Previous wording

MORE Profits: Income from operations increased 3.1%.

Current wording

MORE Profits: Income from operations increased 8.3%.

Previous wording

Second Quarter of 2026 Highlights

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Three Fiscal Quarters of 2026 Highlights

Previous wording

MORE Sales: Global retail sales, excluding foreign currency impact (which includes total retail sales at Company-owned and franchised stores worldwide), increased 3.2% as compared to the two fiscal quarters of 2025. U.S. retail sales increased 2.3% and international retail sales, excluding foreign currency impact, increased 4.0% as compared to the two fiscal quarters of 2025. Same store sales increased 0.5% in our U.S. stores and declined 0.2% in our international stores (excluding foreign currency impact).

Current wording

MORE Sales: Global retail sales, excluding foreign currency impact (which includes total retail sales at Company-owned and franchised stores worldwide), increased 3.2% compared to the three fiscal quarters of 2025. U.S. retail sales increased 2.3% and international retail sales, excluding foreign currency impact, increased 4.1% compared to the three fiscal quarters of 2025. Same store sales increased 0.4% in our U.S. stores and declined 0.1% in our international stores (excluding foreign currency impact).

Previous wording

MORE Stores: Global net store growth of 389 stores, including 45 net store openings in the U.S. and 344 net store openings internationally.

Current wording

MORE Stores: Global net store growth of 564 stores, including 71 net store openings in the U.S. and 493 net store openings internationally.

Previous wording

MORE Profits: Income from operations increased 6.3%.

Current wording

MORE Profits: Income from operations increased 7.0%.

Previous wording

Excluding the positive impact of foreign currency, Domino’s experienced global retail sales growth during the second quarter and two fiscal quarters of 2026, driven by net store growth during the trailing four quarters in both our U.S. and international businesses. 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.

Current wording

Excluding the impact of changes in foreign currency, Domino’s experienced global retail sales growth during the third quarter and three fiscal quarters of 2026, driven by net store growth during the trailing four quarters in both our U.S. and international businesses. 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 growth, excluding foreign currency impact is a commonly used statistical measure in the quick-service restaurant industry that is important to understanding performance. Global retail sales growth, excluding foreign currency impact, is calculated as the change of international local currency global retail sales against the comparable period of the prior year. Changes in global retail sales growth, excluding foreign currency impact are primarily driven by same store sales growth and net store growth.

Current wording

Global retail sales growth, excluding foreign currency impact is a commonly used statistical measure in the quick-service restaurant industry that is important to understanding performance. Global retail sales growth, excluding foreign currency impact, is calculated as the change of local currency global retail sales against the comparable period of the prior year. Changes in global retail sales growth, excluding foreign currency impact are primarily driven by same store sales growth and net store growth.

Previous wording

U.S. same store sales increased 0.1% in the second quarter of 2026, rolling over an increase in U.S. same store sales of 3.4% in the second quarter of 2025. U.S. same store sales increased 0.5% in the two fiscal quarters of 2026, rolling over an increase in U.S. same store sales of 1.4% in the two fiscal quarters of 2025. The increases in U.S. same store sales in both the second quarter and two fiscal quarters of 2026 were driven by higher customer transaction counts, offset by lower average ticket. International same store sales (excluding foreign currency impact) declined 0.1% in the second quarter of 2026, rolling over an increase in international same store sales (excluding foreign currency impact) of 2.4% in the second quarter of 2025. International same store sales (excluding foreign currency impact) declined 0.2% in the two fiscal quarters of 2026, rolling over an increase in international same store sales (excluding foreign currency impact) of 3.0% in the two fiscal quarters of 2025.

Current wording

U.S. same store sales increased 0.3% in the third quarter of 2026, rolling over an increase in U.S. same store sales of 5.2% in the third quarter of 2025. U.S. same store sales increased 0.4% in the three fiscal quarters of 2026, rolling over an increase in U.S. same store sales of 2.7% in the three fiscal quarters of 2025. The increases in U.S. same store sales in both the third quarter and three fiscal quarters of 2026 were driven by higher customer transaction counts, partially offset by lower average ticket. International same store sales (excluding foreign currency impact) increased 0.2% in the third quarter of 2026, rolling over an increase in international same store sales (excluding foreign currency impact) of 1.7% in the third quarter of 2025. International same store sales (excluding foreign currency impact) declined 0.1% in the three fiscal quarters of 2026, rolling over an increase in international same store sales (excluding foreign currency impact) of 2.5% in the three fiscal quarters of 2025.

Previous wording

Consolidated revenues increased $49.3 million, or 4.3%, in the second quarter of 2026 as compared to the second quarter of 2025, and consolidated revenues increased $87.8 million, or 3.9%, in the two fiscal quarters of 2026 as compared to the two fiscal quarters of 2025, primarily due to higher supply chain revenues and higher global franchise royalties and advertising revenues. The increases in supply chain revenues were primarily attributable to higher order volumes, as well as an increase in our food basket pricing to stores. The increases in U.S. franchise royalties and fees and U.S. franchise advertising revenues were driven primarily by net store growth during the trailing four quarters. International franchise royalties increased primarily as a result of net store growth during the trailing four quarters, as well as the positive impact of foreign currency exchange rates on international franchise royalty revenues. These increases were partially offset by lower U.S. Company-owned store revenues as a result of the refranchising of certain of our U.S. Company-owned store markets in the second quarters of 2026 and 2025. These changes in revenues are described in more detail below.

Current wording

Consolidated revenues increased $38.5 million, or 3.4%, in the third quarter of 2026 compared to the third quarter of 2025, and consolidated revenues increased $126.4 million, or 3.7%, in the three fiscal quarters of 2026 compared to the three fiscal quarters of 2025, primarily due to higher supply chain revenues and higher global franchise royalty revenues. The increases in supply chain revenues were primarily attributable to higher order volumes, as well as an increase in our food basket pricing to stores. The increases in U.S. and international franchise royalties and fees revenues were driven primarily by net store growth during the trailing four quarters. These increases in revenues were partially offset by lower U.S. Company-owned store revenues as a result of the refranchising of certain of our U.S. Company-owned store markets. These changes in revenues are described in more detail below.

Previous wording

Revenues from U.S. Company-owned store operations decreased $10.6 million, or 11.5%, in the second quarter of 2026, and decreased $20.1 million, or 10.9%, in the two fiscal quarters of 2026, each as a result of the refranchising of certain of our U.S. Company-owned store markets in the second quarters of 2026 and 2025. These decreases were partially offset by higher same store sales.

Current wording

Revenues from U.S. Company-owned store operations decreased $21.3 million, or 25.8%, in the third quarter of 2026 as a result of the refranchising of certain of our U.S. Company-owned store markets in the second quarter of 2026. Revenues from U.S. Company-owned store operations decreased $41.4 million, or 15.5%, in the three fiscal quarters of 2026 as a result of the refranchising of certain of our U.S. Company-owned store markets in the second quarters of 2026 and 2025. These decreases were partially offset by higher same store sales.

Previous wording

U.S. Company-owned same store sales increased 2.1% in the second quarter of 2026 and increased 2.6% in the second quarter of 2025. U.S. Company-owned same store sales increased 3.3% in the two fiscal quarters of 2026 and declined 0.2% in the two fiscal quarters of 2025.

Current wording

U.S. Company-owned same store sales increased 1.0% in the third quarter of 2026 and increased 3.4% in the third quarter of 2025. U.S. Company-owned same store sales increased 2.5% in the three fiscal quarters of 2026 and increased 1.0% in the three fiscal quarters of 2025.

Previous wording

U.S. franchise same store sales were flat in the second quarter of 2026 and increased 3.4% in the second quarter of 2025. U.S. franchise same store sales increased 0.4% in the two fiscal quarters of 2026 and increased 1.5% in the two fiscal quarters of 2025.

Current wording

U.S. franchise same store sales increased 0.3% in the third quarter of 2026 and increased 5.3% in the third quarter of 2025. U.S. franchise same store sales increased 0.4% in the three fiscal quarters of 2026 and increased 2.7% in the three fiscal quarters of 2025.

Previous wording

Supply chain revenues increased $44.6 million, or 6.5%, in the second quarter of 2026, and increased $73.7 million, or 5.4%, in the two fiscal quarters of 2026, primarily due to higher order volumes, as well as an increase in our food basket pricing to stores. Our food basket pricing to stores increased 2.2% in the second quarter of 2026 and increased 2.4% in the two fiscal quarters of 2026, which resulted in an estimated $19 million increase in supply chain revenues in the second quarter of 2026, and an estimated $35 million increase in the two fiscal quarters of 2026. 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.

Current wording

Supply chain revenues increased $49.2 million, or 7.1%, in the third quarter of 2026, and increased $122.9 million, or 6.0%, in the three fiscal quarters of 2026, primarily due to higher order volumes, as well as an increase in our food basket pricing to stores. Our food basket pricing to stores increased 2.2% in the third quarter of 2026 and increased 2.3% in the three fiscal quarters of 2026, which resulted in an estimated $17 million increase in supply chain revenues in the third quarter of 2026 and an estimated $51 million increase in the three fiscal quarters of 2026. 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 $4.7 million, or 6.0%, in the second quarter of 2026, and increased $10.1 million, or 6.6% in the two fiscal quarters of 2026, 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 the positive impact of changes in foreign currency exchange rates of approximately $1.1 million in the second quarter of 2026 and $4.7 million in the two fiscal quarters of 2026. 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 $5.2 million, or 6.6%, in the third quarter of 2026, and increased $15.2 million, or 6.6%, in the three fiscal quarters of 2026, primarily due to an increase in the average number of international franchised stores open during the period resulting from net store growth during the trailing four quarters. The negative impact of changes in foreign currency exchange rates of approximately $0.2 million in the third quarter of 2026 partially offset the increase in international franchise royalties and fees revenues, while the positive impact of changes in foreign currency exchange rates of approximately $4.5 million in the three fiscal quarters of 2026 further contributed to the increase in international franchise royalties and fees revenues. 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 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

International franchise same store sales declined 0.1% in the second quarter of 2026 and increased 2.4% in the second quarter of 2025, each excluding the impact of foreign currency exchange rates. International franchise same store sales declined 0.2% in the two fiscal quarters of 2026 and increased 3.0% in the two fiscal quarters of 2025, each excluding the impact of foreign currency exchange rates.

Current wording

International franchise same store sales increased 0.2% in the third quarter of 2026 and increased 1.7% in the third quarter of 2025, each excluding the impact of foreign currency exchange rates. International franchise same store sales declined 0.1% in the three fiscal quarters of 2026 and increased 2.5% in the three fiscal quarters of 2025, each excluding the impact of 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 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 $17.3 million, or 3.7%, in the second quarter of 2026, and increased $38.6 million, or 4.3%, in the two fiscal quarters of 2026, due primarily to higher global franchise royalty revenues as discussed above, as well as gross margin dollar growth within supply chain, discussed below. These increases were partially offset by lower U.S. Company-owned store gross margins, 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 $16.5 million, or 3.6%, in the third quarter of 2026, and increased $55.1 million, or 4.0%, in the three fiscal quarters of 2026, each primarily due to higher global franchise royalty revenues as discussed above, as well as gross margin dollar growth within supply chain, discussed below. These increases were partially offset by lower U.S. Company-owned store gross margins, 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, consolidated gross margin decreased 0.3 percentage points to 40.0% in the second quarter of 2026 from 40.3% in the second quarter of 2025. Consolidated gross margin, as a percentage of revenues, increased 0.1 percentage points to 40.2% in the two fiscal quarters of 2026 from 40.1% in the two fiscal quarters of 2025. U.S. Company-owned store gross margin decreased 4.2 and 4.0 percentage points in the second quarter and two fiscal quarters of 2026, respectively. Supply chain gross margin increased 0.2 and 0.4 percentage points in the second quarter and two fiscal quarters of 2026, respectively. Changes in the significant components of gross margin are described in more detail below.

Current wording

As a percentage of revenues, consolidated gross margin increased 0.1 percentage points to 40.2% in both the third quarter and three fiscal quarters of 2026, from 40.1% in both the third quarter and three fiscal quarters of 2025. U.S. Company-owned store gross margin decreased 4.3 and 4.1 percentage points in the third quarter and three fiscal quarters of 2026, respectively. Supply chain gross margin increased 0.9 and 0.5 percentage points in the third quarter and three fiscal quarters of 2026, respectively. 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) decreased $5.1 million, or 35.3%, in the second quarter of 2026 and decreased $9.8 million, or 33.4%, in the two fiscal quarters of 2026. As a percentage of store revenues, U.S. Company-owned store gross margin decreased 4.2 percentage points in the second quarter of 2026 and decreased 4.0 percentage points in the two fiscal quarters of 2026. 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 $6.2 million, or 45.6%, in the third quarter of 2026 and decreased $15.9 million, or 37.3%, in the three fiscal quarters of 2026. As a percentage of store revenues, U.S. Company-owned store gross margin decreased 4.3 percentage points in the third quarter of 2026 and decreased 4.1 percentage points in the three fiscal quarters of 2026. These changes in gross margin as a percentage of revenues are discussed in additional detail below.

Previous wording

Food costs increased 0.8 percentage points to 30.3% in the second quarter of 2026 and increased 0.7 percentage points to 30.3% in the two fiscal quarters of 2026, each driven by the increases in the food basket pricing to stores.

Current wording

Food costs increased 0.6 percentage points to 30.3% in the third quarter of 2026 and increased 0.7 percentage points to 30.3% in the three fiscal quarters of 2026, each driven by the increase in the food basket pricing to stores.

Previous wording

Labor costs increased 1.0 percentage point to 30.9% in the second quarter of 2026 and increased 1.2 percentage points to 32.1% in the two fiscal quarters of 2026, each driven by higher wage rates.

Current wording

Labor costs increased 0.6 percentage points to 31.5% in the third quarter of 2026 and increased 1.0 percentage point to 31.9% in the three fiscal quarters of 2026, each driven by higher wage rates.

Previous wording

Supply chain gross margin increased $7.0 million, or 8.7%, in the second quarter of 2026, and increased $14.1 million, or 8.9%, in the two fiscal quarters of 2026. As a percentage of supply chain revenues, supply chain gross margin increased 0.2 and 0.4 percentage points in the second quarter and two fiscal quarters of 2026, respectively. These changes in gross margin as a percentage of revenues are discussed in additional detail below.

Current wording

Supply chain gross margin increased $12.0 million, or 15.1%, in the third quarter of 2026, and increased $26.0 million, or 10.9%, in the three fiscal quarters of 2026. As a percentage of supply chain revenues, supply chain gross margin increased 0.9 and 0.5 percentage points in the third quarter and three fiscal quarters of 2026, respectively. These changes in gross margin as a percentage of revenues are discussed in additional detail below.

Previous wording

Food costs decreased 0.8 percentage points to 70.2% in the second quarter of 2026 and decreased 0.6 percentage points to 70.1% in the two fiscal quarters of 2026, driven primarily by procurement productivity, partially offset by the increase in the cost of our food basket.

Current wording

Food costs decreased 0.7 percentage points to 70.4% in the third quarter of 2026 and decreased 0.6 percentage points to 70.2% in the three fiscal quarters of 2026, each driven primarily by procurement productivity.

Previous wording

Higher delivery costs partially offset these improvements in supply chain gross margin as a percentage of revenues in the respective periods.

Current wording

Higher delivery expenses attributable to higher fuel cost partially offset these improvements in supply chain gross margin as a percentage of revenues in the respective periods.

Previous wording

General and administrative expenses increased $7.8 million, or 7.2%, in the second quarter of 2026 primarily due to expenses related to our Worldwide Rally in the second quarter of 2026 that takes place every two years. General and administrative expenses increased $10.1 million, or 4.7%, in the two fiscal quarters of 2026 primarily due to expenses related to our Worldwide Rally, which takes place every two years, in the second quarter of 2026, as discussed above, as well as higher professional fees and computer expenses, but these increases were partially offset by approximately $5 million in severance expenses associated with an organizational realignment that took place in the first quarter of 2025 that did not reoccur in 2026.

Current wording

General and administrative expenses increased $0.6 million, or 0.6%, in the third quarter of 2026. General and administrative expenses increased $10.7 million, or 3.3%, in the three fiscal quarters of 2026 primarily due to expenses related to our Worldwide Rally, which takes place every two years, in the second quarter of 2026, as well as higher computer expenses, but these increases were partially offset by approximately $5 million in severance expenses associated with an organizational realignment that took place in the first quarter of 2025 that did not reoccur in 2026.

Previous wording

U.S. franchise advertising expenses increased $2.7 million, or 2.0%, in the second quarter of 2026, and increased $9.3 million, or 3.6%, in the two fiscal quarters of 2026, 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.

Current wording

U.S. franchise advertising expenses decreased $3.0 million, or 2.3%, in the third quarter of 2026, and increased $6.3 million, or 1.6%, in the three fiscal quarters of 2026, consistent with the changes 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 second quarter of 2026, we refranchised 77 U.S. Company-owned stores in Virginia and Michigan for proceeds of $19.8 million, of which $12.4 million was collected subsequent to the end of the second quarter of 2026. The pre-tax refranchising gain associated with the sale of the related assets and liabilities, including a $2.8 million reduction in goodwill, was $4.1 million and recorded in refranchising gain in our condensed consolidated statements of income.

Current wording

During the second quarter of 2026, we refranchised 77 U.S. Company-owned stores in Virginia and Michigan for proceeds of $19.8 million. The pre-tax refranchising gain associated with the sale of the related assets and liabilities, including a $2.8 million reduction in goodwill, was $3.9 million and recorded in refranchising gain in our condensed consolidated statements of income.

Previous wording

During the second quarter and two fiscal quarters of 2026, we recorded a $12.4 million and $18.4 million pre-tax unrealized loss, respectively, on our investment in DPC Dash (refer to Note 5 of the condensed consolidated financial statements). During the second quarter and two fiscal quarters of 2025, we recorded a total net $16.0 million pre-tax realized and unrealized loss and a total net $8.1 million pre-tax realized and unrealized gain, respectively, on our investment in DPC Dash. The recorded amount of our investment is based on the active exchange quoted price for the equity security.

Current wording

During the third quarter and three fiscal quarters of 2026, we recorded a $2.5 million and $20.9 million pre-tax unrealized loss, respectively, on our investment in DPC Dash (refer to Note 5 of the condensed consolidated financial statements). During the third quarter and three fiscal quarters of 2025, we recorded a total net $3.0 million pre-tax unrealized loss and a total net $5.0 million pre-tax realized and unrealized gain, respectively, on our investment in DPC Dash. The recorded amount of our investment is based on the active exchange quoted price for the equity security.

Previous wording

Interest expense, net increased $3.6 million, or 8.9%, in the second quarter of 2026, and increased $5.7 million, or 6.9%, in the two fiscal quarters of 2026, primarily driven by lower interest income on our cash equivalents.

Current wording

Interest expense, net increased $3.2 million, or 7.8%, in the third quarter of 2026, and increased $8.9 million, or 7.2%, in the three fiscal quarters of 2026, primarily driven by lower interest income on our cash equivalents as well as a higher weighted average borrowing rate.

Previous wording

Our weighted average borrowing rate increased to 3.9% in each of the second quarters and two fiscal quarters of 2026 from 3.8% in the second quarters and two fiscal quarters of 2025.

Current wording

Our weighted average borrowing rate increased to 3.9% in the third quarter and three fiscal quarters of 2026 from 3.8% in the third quarter and three fiscal quarters of 2025.

Previous wording

Provision for income taxes increased $2.3 million, or 6.2%, in the second quarter of 2026 due to higher income before provision for income taxes and a higher effective tax rate. The effective tax rate increased to 22.5% during the second quarter of 2026 as compared to 22.1% in the second quarter of 2025, driven primarily by a 0.4 percentage point unfavorable change in the impact of excess tax benefits from equity-based compensation.

Current wording

Provision for income taxes increased $3.0 million, or 7.6%, in the third quarter of 2026 due to higher income before provision for income taxes, partially offset by a lower effective tax rate. The effective tax rate decreased to 22.0% during the third quarter of 2026 compared to 22.3% in the third quarter of 2025.

Previous wording

Provision for income taxes increased $0.3 million, or 0.4%, in the two fiscal quarters of 2026 due to a higher effective tax rate, partially offset by lower income before provision for income taxes. The effective tax rate increased to 22.6% during the two fiscal quarters of 2026 as compared to 22.2% in the two fiscal quarters of 2025, driven primarily by a 0.5 percentage point unfavorable change in the impact of excess tax benefits from equity-based compensation.

Current wording

Provision for income taxes increased $3.3 million, or 2.8%, in the three fiscal quarters of 2026 due to higher income before provision for income taxes, as well as a higher effective tax rate. The effective tax rate increased to 22.4% during the three fiscal quarters of 2026 compared to 22.2% in the three fiscal quarters of 2025.

Previous wording

U.S. stores Segment Adjusted Income from Operations increased $3.0 million, or 2.3%, in the second quarter of 2026, and increased $6.5 million, or 2.5%, in the two fiscal quarters of 2026, each driven primarily by higher U.S. franchise royalties and fees revenues, as discussed above. These increases were partially offset by the $5.1 million decrease in U.S. Company-owned store gross margin in the second quarter of 2026 and the $9.8 million decrease in U.S. Company-owned store gross margin in the two fiscal quarters of 2026, each as discussed above. Additionally, higher general and administrative expenses in both the second quarter and two fiscal quarters of 2026, primarily related to our Worldwide Rally in the second quarter of 2026, partially offset the increases in U.S. stores Segment Adjusted Income from Operations in both the second quarter and two fiscal quarters of 2026, as discussed above.

Current wording

U.S. stores Segment Adjusted Income from Operations increased $4.1 million, or 3.1%, in the third quarter of 2026, and increased $10.5 million, or 2.7%, in the three fiscal quarters of 2026, each driven primarily by higher U.S. franchise royalties and fees revenues, as discussed above. These increases were partially offset by the $6.2 million decrease in U.S. Company-owned store gross margin in the third quarter of 2026 and the $15.9 million decrease in U.S. Company-owned store gross margin in the three fiscal quarters of 2026, each as discussed above. Additionally, higher general and administrative expenses in the three fiscal quarters of 2026, primarily related to our Worldwide Rally in the second quarter of 2026, partially offset the increase in U.S. stores Segment Adjusted Income from Operations in the three fiscal quarters of 2026, as discussed above.

Previous wording

Supply chain Segment Adjusted Income from Operations increased $11.7 million, or 18.1%, in the second quarter of 2026, and increased $13.6 million, or 10.6%, in the two fiscal quarters of 2026, primarily due to the $7.0 million increase in supply chain gross margin in the second quarter of 2026 and the $14.1 million increase in supply chain gross margin in the two fiscal quarters of 2026, each as discussed above.

Current wording

Supply chain Segment Adjusted Income from Operations increased $11.9 million, or 19.6%, in the third quarter of 2026, and increased $25.5 million, or 13.5%, in the three fiscal quarters of 2026, primarily due to the $12.0 million increase in supply chain gross margin in the third quarter of 2026 and the $26.0 million increase in supply chain gross margin in the three fiscal quarters of 2026, each as discussed above.

Previous wording

International franchise Segment Adjusted Income from Operations increased $2.9 million, or 4.4%, in the second quarter of 2026, and increased $8.7 million, or 6.7%, in the two fiscal quarters of 2026, each driven primarily by higher international franchise royalties and fees revenues, as discussed above. These increases were partially offset by higher general and administrative expenses in both the second quarter and two fiscal quarters of 2026, primarily related to our Worldwide Rally in the second quarter of 2026, 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 Adjusted Income from Operations.

Current wording

International franchise Segment Adjusted Income from Operations increased $4.5 million, or 6.7%, in the third quarter of 2026, and increased $13.2 million, or 6.7%, in the three fiscal quarters of 2026, each driven primarily by higher international franchise royalties and fees revenues, as discussed above. Higher general and administrative expenses in the three fiscal quarters of 2026, primarily related to our Worldwide Rally in the second quarter of 2026, partially offset the increase in international franchise Segment Adjusted Income from Operations, 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 Adjusted Income from Operations.

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 June 14, 2026, we had working capital of $127.3 million, excluding restricted cash and cash equivalents of $187.9 million, advertising fund assets, restricted, of $119.4 million and advertising fund liabilities of $117.8 million. Working capital includes total unrestricted cash and cash equivalents of $164.8 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 September 6, 2026, we had negative working capital totaling $1.13 billion, 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 $168.0 million, advertising fund assets, restricted, of $98.0 million and advertising fund liabilities of $96.6 million. Working capital includes total unrestricted cash and cash equivalents of $229.0 million.