PAPA JOHNS INTERNATIONAL INC

Previous wording

Papa John’s International, Inc. (referred to as the “Company,” “Papa John’s,” “Papa Johns” or in the first-person notations of “we,” “us” and “our”) operates and franchises pizza delivery and carryout restaurants and, in certain international markets, dine-in and delivery restaurants under the trademark “Papa John’s.” Papa John’s began operations in 1984. As of March 31, 2024, there were 5,914 Papa John’s restaurants in operation, consisting of 653 Company-owned and 5,261 franchised restaurants operating in 49 countries and territories. Our revenues are derived from retail sales of pizza and other food and beverage products to the general public by Company-owned restaurants, franchise royalties, and sales of franchise and development rights. Additionally, we derive revenues from sales to franchisees of various items including food and paper products from our Domestic Quality Control Centers (“QC Centers”), operation of our International QC Center in the United Kingdom (“UK”), contributions received by Papa John’s Marketing Fund (“PJMF”) which is our national marketing fund, printing and promotional items and information systems equipment, and software and related services. We believe that in addition to supporting both Company and franchised profitability and growth, these activities contribute to product quality and consistency throughout the Papa John’s system.

Current wording

Papa John’s International, Inc. (referred to as the “Company,” “Papa John’s,” “Papa Johns” or in the first-person notations of “we,” “us” and “our”) operates and franchises pizza delivery and carryout restaurants and, in certain international markets, dine-in and delivery restaurants under the trademark “Papa John’s.” Papa Johns began operations in 1984. As of June 30, 2024, there were 5,883 Papa John’s restaurants in operation, consisting of 570 Company-owned and 5,313 franchised restaurants operating in 49 countries and territories. Our revenues are derived from retail sales of pizza and other food and beverage products to the general public by Company-owned restaurants, franchise royalties, and sales of franchise and development rights. Additionally, we derive revenues from sales to franchisees of various items including food and paper products from our Domestic Quality Control Centers (“QC Centers”), operation of our International QC Center in the United Kingdom (“UK”), contributions received by Papa John’s Marketing Fund (“PJMF”) which is our national marketing fund, information systems equipment, and software and related services. We believe that in addition to supporting both Company and franchised profitability and growth, these activities contribute to product quality and consistency throughout the Papa Johns system.

Previous wording

The Company has focused on executing strategic priorities and building a foundation for long-term success, while navigating a challenging macroeconomic environment. Our progress and significant transactions during the first quarter of 2024 are described below.

Current wording

The Company has focused on executing strategic priorities and building a foundation for long-term success, while navigating a challenging macroeconomic environment. Our progress and significant transactions during the second quarter of 2024 are described below.

Previous wording

During the first quarter of 2024, the Company made significant progress against our priorities of Back to Better 2.0 and International Transformation.

Current wording

During the first half of 2024, the Company made significant progress against our priorities of Back to Better 2.0 and International Transformation.

Previous wording

•Product innovation and marketing strategy: We advanced our menu and digital innovations to drive new customers and ticket sales. At the end of the quarter, we launched our new Crispy Cuppy ‘Roni platform, which is available across a trio of menu items and price points. We also launched an all-new brand platform “Better Get You Some” that is part of our deepened commitment to, and investment in, our new marketing strategy. These investments are focused on improving audience segmentation, building consumer loyalty and driving cultural relevance.

Current wording

•Product innovation and marketing strategy: In the second quarter, the approved contribution rate increase to PJMF became effective, while local marketing spend remains optional. This strategy shift is intended to increase the productivity of franchisees’ marketing contributions by leveraging the scale that national investments deliver. In earlier 2024, we also launched an all-new brand platform “Better Get You Some” that is part of our deepened commitment to, and investment in, our new marketing strategy. These investments are focused on improving audience segmentation, building consumer loyalty and driving cultural relevance. Additionally during the quarter, we brought back the Cheesy Burger Pizza platform, which is available across a trio of menu items and price points.

Previous wording

•Domestic commissary growth strategy: Our previously-announced change in the Domestic Commissary profit model was implemented during the quarter, with the fixed operating margin that Domestic QC Centers charge increasing to 5% paired with increased rebate opportunities for franchisees. As of the end of the first quarter, we project that more than 40% of franchisees are on track to earn a rebate for 2024. The operating income of the North America Commissary business has also increased, reflecting benefits for both franchisees as well as the Commissary. We also continue to pursue productivity efficiencies throughout the supply chain through improved operations and supplier relationships.

Current wording

•Domestic commissary growth strategy: Our previously-announced change in the Domestic Commissary profit model was implemented during the first quarter, with the fixed operating margin that Domestic QC Centers charge increasing to 5% paired with increased rebate opportunities for franchisees. The operating income of the North America Commissary business has also increased, reflecting benefits for both franchisees as well as the Commissary. We also continue to pursue productivity efficiencies throughout the supply chain through improved operations and supplier relationships.

Previous wording

In December 2023, the Company announced international transformation initiatives (“International Transformation Plan”) designed to evolve our business structure to deliver an enhanced value proposition to our International customers and franchisees, ensure targeted investments and efficient resource management, and better position our largest markets, including the UK, for long-term profitable growth and brand strength. Total estimated pre-tax costs associated with the International Transformation Plan are expected to be approximately $25 million to $35 million (inclusive of the $11.7 million spent through the first quarter of 2024), which the Company currently expects to be recognized in 2024 and 2025.

Current wording

In December 2023, the Company announced international transformation initiatives (“International Transformation Plan”) designed to evolve our business structure to deliver an enhanced value proposition to our International customers and franchisees, ensure targeted investments and efficient resource management, and better position our largest markets, including the UK, for long-term profitable growth and brand strength. Total estimated pre-tax costs associated with the International Transformation Plan are expected to be approximately $25 million to $35 million (inclusive of the $17.9 million incurred through the second quarter of 2024), which the Company currently expects to be recognized in 2024 and 2025. See “Note 9. Restructuring” of “Notes to Condensed Consolidated Financial Statements” for additional details.

Previous wording

The comparability of results between 2024 and 2023 is impacted by the acquisition of 118 formerly franchised restaurants in the UK in the second and third quarters of 2023 (the “UK franchisee acquisitions”). The UK franchisee acquisitions impact the composition of International revenues and the results of the International segment. See “Note 12. Acquisitions” of the “Notes to Condensed Consolidated Financial Statements” for additional information on this transaction.

Current wording

The comparability of results between 2024 and 2023 is impacted by transactions that have changed the composition of restaurants in the UK during the periods presented. In the second and third quarters of 2023, the Company acquired 118 formerly franchised restaurants in the UK (the “UK franchisee acquisitions”). In the second quarter of 2024, the Company completed the previously-announced closure of 43 Company-owned restaurants in the UK and also refranchised 40 Company-owned restaurants in the UK. These transactions impact the composition of International revenues and the results of the International segment during the periods presented. On July 1, 2024, the Company refranchised an additional 20 Company-owned restaurants in the UK. After prior disposals of two mobile units, the Company is operating 13 UK Company-owned restaurants beginning in the third quarter of 2024. See “Note 9. Restructuring” of the “Notes to Condensed Consolidated Financial Statements” for additional information on these transactions.

Previous wording

Total revenues decreased $13.1 million or 2.5% to $513.9 million for the three months ended March 31, 2024, as compared to prior year comparable period. Changes in total revenues are impacted by the transaction noted above.

Current wording

Total revenues decreased $6.6 million or 1.3% to $507.9 million for the three months ended June 30, 2024 and decreased $19.8 million or 1.9% to $1.02 billion for the six months ended June 30, 2024, as compared to each prior year comparable period. Changes in total revenues are impacted by the transactions noted above and as detailed in the discussion below.

Previous wording

Domestic Company-owned restaurant sales decreased $3.6 million, or 2.0% for the three months ended March 31, 2024, as compared to the prior year comparable period. The decrease was primarily due to a decline in comparable sales of 3.0%, partially offset by increased equivalent units of 3.1% for the three months ended March 31, 2024.

Current wording

Domestic Company-owned restaurant sales decreased $2.6 million, or 1.5%, for the three months ended June 30, 2024 and decreased $6.2 million, or 1.7% for the six months ended June 30, 2024, as compared to each prior year comparable period. The decrease was primarily due to declines in comparable sales of 4.2% and 3.6% for the three and six months ended June 30, 2024, respectively. The comparable sales declines were partially offset by increased equivalent units of 4.1% and 2.3% for the same respective periods.

Previous wording

North America franchise royalties and fees decreased $0.4 million, or 1.0% for the three months ended March 31, 2024 as compared to the prior year comparable period primarily due to comparable sales decline of 1.5%. Equivalent units increased 2.1% for the three months ended March 31, 2024.

Current wording

North America franchise royalties and fees decreased $0.3 million, or 0.9%, for the three months ended June 30, 2024 and decreased $0.7 million, or 1.0% for the six months ended June 30, 2024, each as compared to each prior year comparable period. The decreases are primarily due to comparable sales declines of 3.4% and 2.4%, respectively. These declines were partially offset by lower royalty waivers in 2024 as compared to 2023 and growth in units. Equivalent units increased 3.7% and 3.3% for the three and six months ended June 30, 2024, respectively.

Previous wording

North America franchise restaurant sales decreased 1.6% to $759.3 million for the three months ended March 31, 2024 compared to the prior year comparable period. North America franchise restaurant sales are not included in Company revenues; however, our North America franchise royalties are derived from these sales.

Current wording

North America franchise restaurant sales decreased 2.0% to $732.5 million for the three months ended June 30, 2024 compared to the prior year comparable period. North America franchise restaurant sales decreased 1.8% to $1.5 billion for the six months ended June 30, 2024 as compared to the prior year comparable period. North America franchise restaurant sales are not included in Company revenues; however, our North America franchise royalties are derived from these sales.

Previous wording

International franchise restaurant sales decreased $18.4 million to $275.0 million for the three months ended March 31, 2024. Excluding the impact of the UK franchisee acquisitions and foreign currency fluctuations, International franchise restaurant sales decreased $3.7 million or 1.3% for the three months ended March 31, 2024. International franchise restaurant sales are not included in Company revenues; however, our international royalty revenue is derived from these sales.

Current wording

International franchise restaurant sales decreased $10.4 million to $287.1 million and decreased $28.8 million to $562.2 million for the three and six months ended June 30, 2024, respectively. This decrease includes the impact of the UK franchisee acquisitions moving out of franchise restaurant sales and into Company-owned sales. Excluding the impact of the UK franchisee acquisitions and foreign currency fluctuations, International franchise restaurant sales increased $12.2 million or 4.3% and $16.4 million or 2.9% for the three and six months ended June 30, 2024, respectively. International franchise restaurant sales are not included in Company revenues; however, our international royalty revenue is derived from these sales.

Previous wording

Other revenues, which primarily includes our national marketing funds and online and mobile ordering business, decreased $9.1 million, or 13.5%, for the three months ended March 31, 2024 compared to the prior year comparable period. The decrease reflects $5.1 million related to Preferred Marketing, our formerly wholly-owned print and promotions company, which was sold in the fourth quarter of 2023. The decrease was also driven by $2.7 million of lower marketing fees. The impact of the UK franchisee acquisitions decreased Other revenues by $1.4 million for the three months ended March 31, 2024.

Current wording

Other revenues, which primarily includes our national marketing funds and online and mobile ordering business, were flat and decreased $9.2 million, or 7.1%, for the three and six months ended June 30, 2024 compared to the prior year comparable periods. Our results for the three and six months ended June 25, 2023 included revenues of $4.8 million and $9.9 million, respectively, related to Preferred Marketing, our formerly wholly-owned print and promotions company which was sold in the fourth quarter of 2023. This was offset during the second quarter of 2024 primarily by a $4.2 million increase in marketing fees due to a planned increase in the national marketing fund contribution percentage that went into effect during the quarter and an increase in franchised locations.

Previous wording

Total costs and expenses were $480.2 million or 93.4% of total revenues for the three months ended March 31, 2024, as compared to $489.3 million, or 92.8% of total revenues for the prior year comparable period. The changes in total costs and expenses, as percentages of revenues, were primarily due to the following:

Current wording

Total costs and expenses were $479.7 million or 94.4% of total revenues for the three months ended June 30, 2024 as compared to $479.6 million or 93.2% of total revenues for the prior year comparable period. For the six months ended June 30, 2024, total costs and expenses were $959.9 million or 93.9% of total revenues, as compared to $968.9 million, or 93.0% of total revenues for the prior year comparable period. The changes in total costs and expenses, as percentages of revenues, were primarily due to the following:

Previous wording

North America commissary expenses were $185.2 million, or 91.1% of related revenues for the three months ended March 31, 2024, compared to expenses of $196.4 million or 92.4% of related revenues for the prior year period. The expense, as a percentage of related revenues, decreased 1.3% for the three months ended March 31, 2024 primarily due to declining commodity prices for cheese and lower volumes, partially offset by higher delivery costs in the first quarter of 2024.

Current wording

North America commissary expenses were $182.3 million, or 92.0% of related revenues for the three months ended June 30, 2024 as compared to $190.5 million, or 92.0% of related revenues for the prior year comparable period. For the six months ended June 30, 2024 North America commissary expenses were $367.5 million, or 91.5% of related revenues as compared to $386.9 million, or 92.2% of related revenues for the prior year comparable period. The expense, as a percentage of related revenues, was flat and decreased 0.7% for the three and six months ended June 30, 2024 primarily due to declining commodity prices for cheese and lower volumes.

Previous wording

International expenses were $28.3 million, or 69.6% of related revenues for the three months ended March 31, 2024, compared to expenses of $17.3 million, or 55.0% of related revenues for the prior year comparable period. International expenses increased in 2024 as a result of the UK franchisee acquisitions, which added operating costs related to Company-owned restaurants, partially offset by declining commodity prices at our International commissary.

Current wording

International expenses were $27.1 million, or 68.2% of related revenues for the three months ended June 30, 2024 as compared to $20.4 million, or 59.0% of related revenues for the prior year comparable period. For the six months ended June 30, 2024, International expenses were $55.4 million, or 68.9% of related revenues as compared to expenses of $37.7 million, or 57.1% of related revenues for the prior year comparable period. International expenses increased in 2024 as a result of the UK franchisee acquisitions, which added operating costs related to Company-owned restaurants, partially offset by declining commodity prices at our International commissary.

Previous wording

Plan (see “Note 9. Restructuring”). This increase was partially offset by lower equity compensation costs related to leadership changes.

Current wording

General and Administrative (“G&A”) expenses were $57.7 million, or 11.4% of revenues for the three months ended June 30, 2024 as compared to $50.3 million, or 9.8% of revenues for the prior year comparable period. For the six months ended June 30, 2024, G&A expenses were $116.2 million or 11.4% of revenues compared to $102.3 million or 9.8% of revenues for the prior year comparable period. G&A expenses increased $7.4 million and $13.9 million, respectively, for the three and six months ended June 30, 2024 primarily due to $6.1 million and $15.7 million incurred related to the International Transformation Plan (see “Note 9. Restructuring”) as well as $4.0 million related to a non-cash impairment charge to write down the carrying value of property and equipment and intangible assets for certain Domestic restaurants. This increase was partially offset by lower equity compensation costs related to leadership changes and lower costs in 2024 as the bi-annual franchise operating conference took place in 2023.

Previous wording

Depreciation and amortization expense was $17.7 million, or 3.4% of revenues for the three months ended March 31, 2024, compared to $14.7 million, or 2.8% of revenues, for the prior year comparable period. The increase was primarily due to higher depreciation expense related to the UK franchisee acquisitions and our investments in technology platforms.

Current wording

Depreciation and amortization expense was $17.6 million, or 3.5% of revenues for the three months ended June 30, 2024, as compared to $15.7 million, or 3.0% of revenues for the prior year comparable period. For the six months ended June 30, 2024, depreciation and amortization expense was $35.3 million, or 3.5% of revenues as compared to $30.4 million, or 2.9% of revenues for the prior year comparable period. The increases of $1.9 million and $4.9 million, respectively, for the three and six months ended June 30, 2024, was primarily due to higher depreciation expense related to our investments in technology platforms and the UK franchisee acquisitions.

Previous wording

Operating income was $33.7 million for the three months ended March 31, 2024 compared to $37.8 million for the prior year comparable period, a decrease of $4.1 million. Adjusted operating income was $43.2 million for the three months ended March 31, 2024 compared to $39.2 million for the prior year comparable period, an increase of $4.1 million. The fluctuations in adjusted operating income in 2024 compared to 2023 were primarily due to the following:

Current wording

Operating income was $28.2 million and $61.9 million for the three and six months ended June 30, 2024, respectively, as compared to $34.9 million and $72.7 million for the prior year comparable periods, a decrease of $6.7 million and $10.8 million, respectively. Adjusted operating income was $38.4 million and $81.6 million for the three and six months ended June 30, 2024, respectively, as compared to $36.9 million and $76.0 million for the prior year comparable periods, an increase of $1.5 million and $5.6 million, respectively. The fluctuations in adjusted operating income in 2024 compared to 2023 were primarily due to the following:

Previous wording

•Domestic Company-owned restaurants increased $3.7 million for the three months ended March 31, 2024. The increase was primarily due to lower commodity prices, lower advertising and utility costs, partially offset by lower revenues from a 3.0% decline in comparable sales.

Current wording

•Domestic Company-owned restaurants increased $2.1 million and $5.8 million for the three and six months ended June 30, 2024. The increase was primarily due to lower advertising, utility and insurance costs, combined with lower commodity prices, which were partially offset by lower revenues from 4.2% and 3.6% declines in comparable sales for the respective periods.

Previous wording

•North America franchising increased $0.3 million for the three months ended March 31, 2024 primarily due to a 2.1% increase in equivalent units, partially offset by a decrease in comparable sales of 1.5%.

Current wording

•North America franchising increased $0.3 million and $0.6 million for the three and six months ended June 30, 2024. The increase is primarily due to a 3.7% and 3.3% increase in equivalent units, partially offset by a decrease in comparable sales of 3.4% and 2.4% for the respective periods.

Previous wording

•North America commissaries increased $1.6 million for the three months ended March 31, 2024, primarily due to the increase in the commissary fixed operating margin, which was effective in 2024, partially offset by anticipated franchisee rebates.

Current wording

•North America commissaries increased $1.0 million and $2.6 million for the three and six months ended June 30, 2024, primarily due to the increase in the commissary fixed operating margin, which became effective in 2024, partially offset by anticipated franchisee rebates.

Previous wording

•International decreased $3.7 million for the three months ended March 31, 2024 primarily driven by operating losses, including increased depreciation expense attributable to the UK franchisee acquisitions as well as comparable sales declines of 2.6%.

Current wording

•International decreased $1.6 million and $5.3 million for the three and six months ended June 30, 2024 primarily driven by operating losses including increased depreciation expense attributable to the UK franchisee acquisitions as well as comparable sales declines of 0.1% and 1.4% for the respective periods. As mentioned above, during the second quarter of 2024, 43 of the UK Company-owned restaurants were closed and an additional 40 were refranchised. 20 additional UK Company-owned restaurants were refranchised effective July 1, 2024. Beginning in the third quarter of 2024, we will operate 13 Company-owned stores in the UK.

Previous wording

•All Others, which primarily includes our online and mobile ordering business and our marketing funds, was in line with the prior year comparable period.

Current wording

•All Others, which primarily includes our online and mobile ordering business and our marketing funds, increased $0.8 million and $0.9 million during the three and six months ended June 30, 2024 primarily due to prior year losses incurred by Preferred Marketing, our formerly wholly-owned print and promotions company, which was sold in the fourth quarter of 2023.

Previous wording

•Unallocated corporate expenses decreased $2.4 million for the three months ended March 31, 2024. The decrease was primarily due to the reversal of stock compensation expense for unvested equity units from leadership transition. This decrease was partially offset by higher professional fees and depreciation expense related to our investments in technology support initiatives.

Current wording

•Unallocated corporate expenses increased $0.6 million for three months ended June 30, 2024 and decreased $1.8 million for the six months ended June 30, 2024. The decrease during the year-to-date period was primarily due to the reversal of stock compensation expense for unvested equity units from leadership transitions, which was partially offset by higher depreciation expense related to our investments in technology support initiatives.

Previous wording

Net interest expense increased $2.0 million, or 22.6% for the three months ended March 31, 2024 due primarily to higher average outstanding debt as well as an increase in borrowing rates. Total debt outstanding was $769.3 million and $764.0 million as of March 31, 2024 and December 31, 2023, respectively.

Current wording

Net interest expense decreased $0.4 million and increased $1.7 million, or 3.4% and 8.2% for the three and six months ended June 30, 2024. The increase for the six months ended June 30, 2024 was due to higher average outstanding debt as well as an increase in borrowing rates.

Previous wording

Our effective income tax rate was 34.2% for the three months ended March 31, 2024 compared to an income tax rate of 21.6% for the prior year comparable period. The higher effective tax rate for the three months ended March 31, 2024 was driven by impairment charges related to the International Restructuring that created unrecognized tax losses and prevented the Company from generating foreign tax credits as well as a tax shortfall generated by stock option exercises and vesting of restricted shares in 2024 along with a lower pre-tax income.

Current wording

Our effective income tax rate was 27.7% and 31.3% for the three and six months ended June 30, 2024 as compared to an income tax rate of 24.4% and 22.9% for the prior year comparable periods. The higher effective tax rate for the three and six months ended June 30, 2024 was driven by impairment charges related to the International Restructuring that created unrecognized tax losses and prevented the Company from generating foreign tax credits as well as a tax shortfall generated by stock option exercises and vesting of restricted shares in 2024 along with a lower pre-tax income.

Previous wording

Net income attributable to noncontrolling interests was $0.3 million for the three months ended March 31, 2024 compared with $0.2 million for the prior year comparable period.

Current wording

Net income attributable to noncontrolling interests was $0.3 million and $0.6 million for the three and six months ended June 30, 2024 as compared with $0.1 million and $0.3 million for the prior year comparable periods.

Previous wording

Diluted earnings per common share was $0.44 for the three months ended March 31, 2024 as compared to $0.65 for the prior year comparable period, representing a decrease of $0.21. Adjusted diluted earnings per common share, a non-GAAP measure, was $0.67 for the three months ended March 31, 2024 as compared to adjusted diluted earnings per common share of $0.68 for the prior year comparable period representing decreases of $0.01. See “Non-GAAP Measures” for additional information.

Current wording

Diluted earnings per common share was $0.37 and $0.82 for the three and six months ended June 30, 2024 as compared to $0.54 and $1.20 for the prior year comparable periods, representing decreases of $0.17 and $0.38, respectively. Adjusted diluted earnings per common share, a non-GAAP measure, was $0.61 and $1.28 for the three and six months ended June 30, 2024 as compared to adjusted diluted earnings per common share of $0.59 and $1.28 for the prior year comparable periods, representing an increase of $0.02 for the quarter and flat for the six month period. See “Non-GAAP Measures” for additional information.

Previous wording

(b)Represents severance and related costs associated with the transition of certain executives, recorded in General and administrative expenses.

Current wording

(c)For the three and six months ended June 30, 2024, represents a non-cash impairment charge related to fixed and intangible assets related to certain Domestic restaurants. Refer to Note 2. Significant Accounting Policies of the “Notes to Condensed Consolidated Financial Statements” for further details. For the three and six months ended June 25, 2023, represents severance and related costs associated with the transition of certain executives, recorded in General and administrative expenses.

Previous wording

(c)The tax effect on non-GAAP adjustments was calculated by applying the marginal tax rates of 22.6% and 22.8% for the three-month periods ended March 31, 2024 and March 26, 2023, respectively.

Current wording

(d)The tax effect on non-GAAP adjustments was calculated by applying the marginal tax rates of 22.6% and 22.8% for the three and six months ended June 30, 2024 and June 25, 2023, respectively.

Previous wording

Our primary sources of liquidity and capital resources are cash flows from operations and borrowings under the PJI Revolving Facility. Our principal uses of cash are operating expenses, capital expenditures, and returning value to our shareholders in the form of cash dividends and share repurchases. Our capital priorities are:

Current wording

Our primary sources of liquidity and capital resources are cash flows from operations and borrowings under our senior secured revolving credit facility (the “PJI Revolving Facility”). Our principal uses of cash are operating expenses, capital expenditures, and returning value to our shareholders in the form of cash dividends and share repurchases. Our capital priorities are:

Previous wording

The table below summarizes our cash flows for the three months ended March 31, 2024 and March 26, 2023 (in thousands):

Current wording

The table below summarizes our cash flows for the six months ended June 30, 2024 and June 25, 2023 (in thousands):

Previous wording

Total cash provided by operating activities was $12.0 million for the three months ended March 31, 2024 compared to $40.8 million for the corresponding period of 2023. The decrease of $28.8 million primarily reflects unfavorable working capital changes in the first quarter of 2024, principally related to the timing of payments and higher accrual balances at December 31, 2023 related to the 53rd week of our 2023 fiscal year. These factors resulted in several large disbursements during the first quarter of 2024, driving outflows in working capital. In addition, in the first quarter of 2024 compared to the first quarter of 2023, depreciation expenses were higher due to the UK franchisee acquisitions and impairment charges were incurred due to UK restructuring initiatives, partially offset by stock compensation expense reversal for unvested equity units as a result of leadership transitions.

Current wording

Total cash provided by operating activities was $42.0 million for the six months ended June 30, 2024 compared to $93.7 million for the corresponding period of 2023. The decrease of $51.8 million primarily reflects unfavorable working capital changes in the first half of 2024, principally related to the timing of payments and higher accrual balances at December 31, 2023 related to the 53rd week of our 2023 fiscal year. These factors resulted in several large disbursements during the first half of 2024, driving outflows in working capital. In addition, in the first half of 2024 compared to the first half of 2023, depreciation expenses were higher due to the UK franchisee acquisitions and impairment charges which were incurred due to UK restructuring initiatives, partially offset by stock compensation expense reversal for unvested equity units as a result of leadership transitions.

Previous wording

Total cash used in investing activities was $10.2 million for the three months ended March 31, 2024 compared to $18.3 million for the same period in 2023, or a decrease of $8.1 million. The decrease in cash used in investing activities was primarily due to lower capital expenditures in the first quarter of 2024 as compared to 2023. We also received a $2.3 million investment distribution in the first quarter of 2024 related to our deferred compensation plan.

Current wording

Total cash used in investing activities was $23.8 million for the six months ended June 30, 2024 compared to $35.7 million for the same period in 2023, or a decrease of $11.9 million. The decrease in cash used in investing activities was primarily due to lower capital expenditures and fewer notes issued to franchisees in the first six months of 2024 as compared to 2023. We also received a $2.3 million investment distribution in the first six months of 2024 related to our deferred compensation plan.

Previous wording

Our capital expenditures consisted primarily of capital investments for existing stores, new store locations and capital expenditures for strategic initiatives. We estimate that our capital expenditures during 2024 will be approximately $75 million to $85 million. This estimate includes the acquisition of sites and construction costs for new Company-owned stores that have opened or that we expect to open during 2024. We intend to fund our capital expenditures with cash generated by operations and borrowings under our PJI Revolving Facility, as necessary.

Current wording

Our capital expenditures consisted primarily of capital investments for existing stores and new store locations as well as investments in technology platforms. We estimate that our capital expenditures during 2024 will be approximately $75 million to $85 million. This estimate includes the acquisition of sites and construction costs for new Company-owned stores that have opened or that we expect to open during 2024. We intend to fund our capital expenditures with cash generated by operations and borrowings under our PJI Revolving Facility, as necessary.

Previous wording

Total cash used in financing activities was $14.6 million for the three months ended March 31, 2024 compared to $23.2 million for the same period of 2023. In the first quarter of 2024, the principal financing outflows were related to dividend payments of $15.1 million, $3.2 million in tax payments on equity award issuances and $2.4 million in payments related to financing leases. These outflows were offset by net borrowings of $3.5 million from the PJI Revolving Facility and $1.8 million from the PJMF revolving line of credit (the “PJMF Revolving Facility”). There were no share repurchases in the first quarter of 2024.

Current wording

Total cash used in financing activities was $34.4 million for the six months ended June 30, 2024 compared to $61.6 million for the same period of 2023. In the first six months of 2024, the principal financing outflows were related to dividend payments of $30.2 million, $3.3 million in tax payments on equity award issuances and $4.8 million in payments related to financing leases. These outflows were offset by net borrowings of $0.6 million from the PJI Revolving Facility and $2.4 million from the PJMF revolving line of credit (the “PJMF Revolving Facility”). There were no share repurchases in the first six months of 2024.

Previous wording

In the first quarter of 2023, cash used for financing activities primarily reflects the impact of share repurchases of $209.6 million, which were financed through $208.2 million in net borrowing from the PJI Revolving Facility. Other financing outflows in the first quarter of 2023 included $14.6 million in dividend payments, $6.0 million in tax payments on equity award issuances and $1.7 million in payments related to financing leases.

Current wording

In the first six months of 2023, cash used for financing activities primarily reflects the impact of share repurchases of $210.3 million, which were financed through $186.5 million in net borrowing from the PJI Revolving Facility. Other financing outflows in the first six months of 2023 included $28.5 million in dividend payments, $6.1 million in tax payments on equity award issuances and $3.7 million in payments related to financing leases.

Previous wording

Our outstanding debt as of March 31, 2024 was $769.3 million, which was comprised of $400.0 million principal amount of our 3.875% senior notes (the “Notes”) and $369.3 million outstanding under the PJI Revolving Facility and the PJMF Revolving Facility. Remaining availability under the PJI Revolving Facility was approximately $232.5 million as of March 31, 2024.

Current wording

Our outstanding debt as of June 30, 2024 was $767.0 million, which was comprised of $400.0 million principal amount of our 3.875% senior notes (the “Notes”) and $367.0 million outstanding under the PJI Revolving Facility and the PJMF Revolving Facility. Remaining availability under the PJI Revolving Facility was approximately $235.3 million as of June 30, 2024.

Previous wording

The PJMF Revolving Facility consists of a$30.0 million revolving line of credit pursuant to a Revolving Loan Agreement, dated September 30, 2015, and amended September 30, 2023, with U.S. Bank National Association, as lender. Debt outstanding under the PJMF Revolving Facility was approximately $1.8 millionas of March 31, 2024. The PJMF operating results and the related debt outstanding do not impact the financial covenants under the Company’s Credit Agreement.

Current wording

The PJMF Revolving Facility consists of a$30.0 million revolving line of credit pursuant to a Revolving Loan Agreement, dated September 30, 2015, and amended September 30, 2023, with U.S. Bank National Association, as lender. Debt outstanding under the PJMF Revolving Facility was approximately $2.4 millionas of June 30, 2024. The PJMF operating results and the related debt outstanding do not impact the financial covenants under the Company’s Credit Agreement.