Popeyes Lousiana Kitchen, Inc. Makes Domestic Progress

Image source: Popeyes Louisiana Kitchen.

Popeyes Louisiana Kitchen(NASDAQ: PLKI)released solid third-quarter 2016 results Wednesday after the market closed. With shares down slightly since the chicken-centric fast-food chain revealed that competition was putting pressure on last quarter's same-store sales, let's fasten our bibs and dig in to what Popeyes accomplished over the past three months.

Popeyes Louisiana Kitchen results: The raw numbers

Data source: Popeyes Louisiana Kitchen.

What happened with Popeyes Louisiana Kitchen this quarter?

On an adjusted (non-GAAP) basis, which notably excludes the impact of $3.7 million in asset impairment expenses related to company-owned restaurants, Popeyes' net income increased 17.8% year over year, to $12.6 million, and grew 25.6% on a per-share basis, to $0.59.
Popeyes didn't offer specific financial guidance last quarter. But for perspective -- and though we don't pay close attention to Wall Street's quarterly expectations -- analysts' consensus estimates predicted lower adjusted earnings of $0.53 per share on slightly higher revenue of $64.9 million.
Global same-store sales grew 1.8%, including:
1.5% growth in domestic same-store sales. Last quarter, domestic same-store sales were flat on a year-over-year basis, ending a more than five-year streak of positive domestic same-store-sales growth.
A 3.7% increase in international same-store sales, marking its 27th straight quarter of positive international same-store sales growth.
Popeyes' domestic market share of the chicken quick-service restaurant (QSR) segment increased to 26.9%, up from 26.6% last quarter and 26% at the end of last year's third quarter.
Company-owned restaurant sales were $26.1 million, up from $25.4 million in the same year-ago period.
Company-owned restaurant operating profit was $5.0 million, or 19.2% of sales, up slightly from $4.9 million, or 19.3% of sales, last in last year's third quarter.
Forty restaurants opened during the quarter, including 24 domestic and 16 international locations.
Net restaurant openings numbered 25, bringing Popeyes' total restaurant count to 2,631 company-operated and franchised locations at the end of the quarter, a 6.3% year-over-year increase.
Popeyes has generated $43 million in free cash flow through the first three quarters of 2016, up 16.2% year over year.
Popeyes repurchased 537,957 shares of common stock during the quarter for $30 million, or an average cost of approximately $55.77 per share.

What management had to say

With last quarter's domestic same-store sales weakness in mind, Popeyes CEO Cheryl Bachelder stated:

Looking forward

Even so, Popeyes modestly reduced its earnings guidance for the full year and now expects adjusted earnings per share to be near the lower end of its prior $2.10-to-$2.15 range. Meanwhile, Popeyes effectively reiterated its guidance for net new restaurant openings this year of 140 to 185 (including 85 to 100 internationally), and for share repurchases of roughly $100 million, the midpoint of its previous $80 million-to-$120 million range. Same-store-sales growth is still expected to be in the range of 1% to 2% for the year.

All told, there were no big surprises from Popeyes this quarter. Rather, investors saw more of the same market-share gains and a return to modest same-store-sales growth in the domestic chicken QSR segment. All the while, Popeyes continues its steady global expansion and generous capital returns initiatives. So while the market's reaction on Thursday might not indicate as much, given another selective reduction to guidance, I think Popeyes investors should be happy with where their company stands today.

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Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Popeyes Louisiana Kitchen. Try any of our Foolish newsletter services free for 30 days. 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.