The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price is on watch this morning after the company reported a 90.6% jump in full-year free cash flow.
Why is the Domino’s share price on watch?
For the year ended 30 June 2020 (FY20), Domino’s increased its Network and Online sales by 12.8% and 21.4%, respectively. Combined, those pre-AASB16 sales totalled $5,624.9 million for the year with same-store sales growth of 5.8%.
Japan proved to be a strong growth market in FY20 with Network sales up 38.0% (18.4% in constant currency terms) with Online sales up 44.1% for the year.
The group’s store count climbed 6.5% to 2,668 with no new franchisees leaving due to the coronavirus pandemic. That included a further 78 stores in Europe, 75 in Japan and 10 across Australia and New Zealand.
Earnings before interest, tax, depreciation and amortisation (EBITDA) climbed 7.3% to $303.0 million. EBIT climbed 3.6% to $228.7 million while net profit after tax (NPAT) was up 3.3% to $145.8 million.
The Domino’s share price is worth watching today after increasing both earnings per share (EPS) and its final dividend. EPS came in 2.7% higher at 169.4 cents while dividend per share climbed 3.3% to 119.3 cents.
Free cash flow was the big mover, however, surging 90.6% higher to $161.8 million during the year. That could see the Domino’s share price be an early mover in today’s trade as investors take in the latest result.
COVID-19 impact
There were some impacts felt from the pandemic in the FY20 result, particularly on EBITDA figures. That included $14.1 million of store support provided, which was offset by $2.7 million of royalties, revenues and lower costs as well as $3.2 million of government assistance received.
Performance vs guidance
Domino’s had previously provided guidance and a 3-5 year outlook on 21 August 2019. Forecast same-store sales growth was 3-6%, compared to 5.8% in today’s result.
New organic store additions climbed 6.5% for the year, just shy of the 7-9% forecast last August. Net capital expenditure totalled $97.4 million within the $60-100 million guidance figure provided.
FY21 trading update
The Domino’s share price will be one to watch this morning after the company also provided an early FY21 trading update.
Network sales growth is up 18.5% in the year to date (YTD) while same-store sales growth has climbed 11.0%. Both of these are well up on FY20 numbers of 12.8% and 5.8%, respectively. Domino’s has also added 24 new organic store additions to its network in FY21. The Domino’s share price has risen nearly 43% in year-to-date trading and is up almost 72% from its March low.
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More reading
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- Earnings preview: What to expect from the Domino’s Pizza FY 2020 result
- Will the Domino’s share price continue to surge in August?
Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Domino’s Pizza Enterprises Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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