CANTON, Mass., Feb. 5, 2015 /PRNewswire/ --
Fourth quarter highlights include:
- Dunkin' Donuts U.S. comparable store sales growth of
1.4%
- Added 260 net new restaurants worldwide including 141 net
new Dunkin' Donuts in the U.S.
- Revenue increased 5.5%
- Adjusted operating income increased 8.4%; adjusted operating
income margin of 50.1%
- Diluted adjusted EPS increased 7.0% to $0.46
Fiscal year 2014 highlights include:
- Dunkin' Donuts U.S. comparable store sales growth of
1.6%
- Added 704 net new restaurants worldwide including 405 net
new Dunkin' Donuts in the U.S.
- Positive Baskin-Robbins U.S. net store growth
- Continued challenges facing the Company's Joint Venture in
Japan
- Revenue increased 4.9%
- Adjusted operating income increased 7.5%; adjusted operating
income margin of 48.9%
- Diluted adjusted EPS increased 13.7% to $1.74
Company news:
- Board of Directors declares $0.265 first quarter dividend representing a 15%
increase over the Company's fourth quarter 2014 dividend
- Board of Directors authorized new $700 million share repurchase program
Dunkin' Brands Group, Inc. (Nasdaq: DNKN), the parent company of
Dunkin' Donuts (DD) and Baskin-Robbins (BR), today reported results
for the fourth quarter ended December 27, 2014.
"Highlights from our performance in 2014 included: strong
domestic restaurant level unit economics; robust U.S.
restaurant development for both brands, including the opening
of our first traditional Dunkin' Donuts restaurants in California; growing transactions in the
Dunkin' Donuts U.S. business in the face of macroeconomic and
competitive headwinds; the launch of both the DD Perks loyalty
program, which now has more than 2.5 million members, and
Baskin-Robbins online cake ordering; and progress with the
retooling of our international businesses as demonstrated by the
signing of significant international development agreements in
Sweden, Austria, and China," said Nigel Travis, Chairman
& CEO, Dunkin' Brands Group, Inc. "Our nearly
100-percent franchised business model delivered another year of
double-digit adjusted earnings per share growth, and most notably,
more than 50 percent free cash flow growth. While our earnings
growth expectations for 2015 are below our longer-term targets, we
are committed to returning to double-digit growth in subsequent
years."
"We are very pleased with our recently completed
debt refinancing which increases our financial
flexibility and provides us with the stability of fixed rate
interest over the next several years," said Paul Carbone, Chief Financial Officer, Dunkin'
Brands Group, Inc. "As a demonstration of
our commitment to returning capital to our shareholders,
our Board of Directors authorized a new share repurchase program of
up to an aggregate of $700 million
and increased our quarterly dividend by 15 percent over the prior
quarter."
FISCAL YEAR 2014
KEY FINANCIAL HIGHLIGHTS
|
|
($ in millions,
except per share data)
|
Fiscal year
ended
|
|
Increase
(Decrease)
|
Amounts and
percentages may not recalculate due to rounding
|
December 27,
2014
|
December 28,
2013
|
|
$ /
#
|
%
|
Franchisee reported
sales
|
$
|
9,751.3
|
|
9,276.4
|
|
|
474.9
|
|
5.1
|
%
|
Systemwide sales
growth
|
5.1
|
%
|
5.8
|
%
|
|
|
|
|
|
Comparable store
sales growth (decline):
|
|
|
|
|
|
|
|
|
|
DD U.S. comparable
store sales growth
|
1.6
|
%
|
3.4
|
%
|
|
|
|
|
|
BR U.S. comparable
store sales growth
|
4.7
|
%
|
0.8
|
%
|
|
|
|
|
|
DD International
comparable store sales decline
|
(2.0)
|
%
|
(0.4)
|
%
|
|
|
|
|
|
BR International
comparable store sales growth (decline)
|
(1.2)
|
%
|
1.9
|
%
|
|
|
|
|
|
Development
data:
|
|
|
|
|
|
|
|
|
|
Consolidated global
net POD development
|
704
|
|
790
|
|
|
(86)
|
|
(10.9)
|
%
|
DD global PODs at
period end
|
11,310
|
|
10,858
|
|
|
452
|
|
4.2
|
%
|
BR global PODs at
period end
|
7,552
|
|
7,300
|
|
|
252
|
|
3.5
|
%
|
Consolidated global
PODs at period end
|
18,862
|
|
18,158
|
|
|
704
|
|
3.9
|
%
|
|
|
|
|
|
|
|
|
|
|
Financial
data:
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
748.7
|
|
713.8
|
|
|
34.9
|
|
4.9
|
%
|
Operating
income
|
338.9
|
|
304.7
|
|
|
34.1
|
|
11.2
|
%
|
Operating income
margin
|
45.3
|
%
|
42.7
|
%
|
|
|
|
|
|
Adjusted operating
income1
|
$
|
366.0
|
|
340.4
|
|
|
25.6
|
|
7.5
|
%
|
Adjusted operating
income margin1
|
48.9
|
%
|
47.7
|
%
|
|
|
|
|
|
Net income
|
$
|
176.4
|
|
146.9
|
|
|
29.5
|
|
20.0
|
%
|
Adjusted net
income1
|
186.1
|
|
165.8
|
|
|
20.4
|
|
12.3
|
%
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
Common–basic
|
1.67
|
|
1.38
|
|
|
0.29
|
|
21.0
|
%
|
Common–diluted
|
1.65
|
|
1.36
|
|
|
0.29
|
|
21.3
|
%
|
Diluted adjusted
earnings per share1
|
1.74
|
|
1.53
|
|
|
0.21
|
|
13.7
|
%
|
Weighted average
number of common shares – diluted (in millions)
|
106.7
|
|
108.2
|
|
|
(1.5)
|
|
(1.4)
|
%
|
|
|
|
|
|
|
|
|
|
|
1 Adjusted
operating income, adjusted operating income margin, and adjusted
net income are non-GAAP measures reflecting operating income and
net income adjusted for amortization of intangible assets,
long-lived asset impairments, and other non-recurring, infrequent,
or unusual charges, net of the tax impact of such adjustments in
the case of adjusted net income. Diluted adjusted earnings per
share is a non-GAAP measure calculated using adjusted net income.
Please refer to "Non-GAAP Measures and Statistical Data" and
"Dunkin' Brands Group, Inc. Non-GAAP Reconciliations" for further
detail.
|
FOURTH QUARTER
2014 KEY FINANCIAL HIGHLIGHTS
|
|
($ in millions,
except per share data)
|
Three months
ended
|
|
Increase
(Decrease)
|
Amounts and
percentages may not recalculate due to rounding
|
December 27,
2014
|
December 28,
2013
|
|
$ /
#
|
%
|
Franchisee reported
sales
|
$
|
2,463.1
|
|
2,355.6
|
|
|
107.5
|
|
4.6
|
%
|
Systemwide sales
growth
|
4.5
|
%
|
6.5
|
%
|
|
|
|
|
|
Comparable store
sales growth (decline):
|
|
|
|
|
|
|
|
|
|
DD U.S. comparable
store sales growth
|
1.4
|
%
|
3.5
|
%
|
|
|
|
|
|
BR U.S. comparable
store sales growth
|
9.3
|
%
|
2.2
|
%
|
|
|
|
|
|
DD International
comparable store sales growth (decline)
|
0.3
|
%
|
(0.3)
|
%
|
|
|
|
|
|
BR International
comparable store sales growth (decline)
|
(2.2)
|
%
|
1.6
|
%
|
|
|
|
|
|
Development
data:
|
|
|
|
|
|
|
|
|
|
Consolidated global
net POD development
|
260
|
|
309
|
|
|
(49)
|
|
(15.9)
|
%
|
DD global PODs at
period end
|
11,310
|
|
10,858
|
|
|
452
|
|
4.2
|
%
|
BR global PODs at
period end
|
7,552
|
|
7,300
|
|
|
252
|
|
3.5
|
%
|
Consolidated global
PODs at period end
|
18,862
|
|
18,158
|
|
|
704
|
|
3.9
|
%
|
Financial
data:
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
193.2
|
|
183.2
|
|
|
10.0
|
|
5.5
|
%
|
Operating
income
|
89.7
|
|
82.2
|
|
|
7.5
|
|
9.1
|
%
|
Operating income
margin
|
46.4
|
%
|
44.9
|
%
|
|
|
|
|
|
Adjusted operating
income1
|
$
|
96.7
|
|
89.2
|
|
|
7.5
|
|
8.4
|
%
|
Adjusted operating
income margin1
|
50.1
|
%
|
48.7
|
%
|
|
|
|
|
|
Net income
|
$
|
52.5
|
|
42.1
|
|
|
10.4
|
|
24.8
|
%
|
Adjusted net
income1
|
48.2
|
|
46.3
|
|
|
1.9
|
|
4.1
|
%
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
Common–basic
|
0.50
|
|
0.39
|
|
|
0.11
|
|
28.2
|
%
|
Common–diluted
|
0.50
|
|
0.39
|
|
|
0.11
|
|
28.2
|
%
|
Diluted adjusted
earnings per share1
|
0.46
|
|
0.43
|
|
|
0.03
|
|
7.0
|
%
|
Weighted average
number of common shares – diluted (in millions)
|
105.7
|
|
108.3
|
|
|
(2.6)
|
|
(2.4)
|
%
|
|
|
|
|
|
|
|
|
|
|
1 Adjusted
operating income, adjusted operating income margin, and adjusted
net income are non-GAAP measures reflecting operating income and
net income adjusted for amortization of intangible assets,
long-lived asset impairments, and other non-recurring, infrequent,
or unusual charges, net of the tax impact of such adjustments in
the case of adjusted net income. Diluted adjusted earnings per
share is a non-GAAP measure calculated using adjusted net income.
Please refer to "Non-GAAP Measures and Statistical Data" and
"Dunkin' Brands Group, Inc. Non-GAAP Reconciliations" for further
detail.
|
Global systemwide sales growth in the fourth quarter was
primarily attributable to global store development and Dunkin'
Donuts U.S. comparable store sales growth (which includes stores
open 54 weeks or more).
Dunkin' Donuts U.S. comparable store sales growth in the fourth
quarter was driven by increased average ticket and higher traffic
resulting from our focus on operational excellence and product and
marketing innovation. Ticket and traffic growth were balanced in
the fourth quarter. Product and marketing innovations
resulted in strong beverage growth, led by Iced Coffee, the launch
of Dark Roast Coffee, Hot and Iced Espresso, and record seasonal
results from Frozen Beverages and Iced Tea; continued breakfast
sandwich momentum across core and limited time offer sandwiches
including the national return of Spicy Smoked Sausage and the
Breakfast Burrito and Chicken Biscuit in select markets; and donut
category growth driven by the launch of the Croissant Donut. The
K-Cup and packaged coffee categories had a significant negative
impact on fourth quarter comparable store sales. There are now more
than 2.5 million members in the DD Perks Rewards program, which
will be discussed in greater detail on the Company's earnings
call.
Baskin-Robbins U.S. comparable store sales growth was driven by
sales of Cups & Cones, Beverages, Desserts and Take-Home as a
result of news on flavors, increased sales of cakes, driven by
online cake ordering, and take-home ice cream quarts.
In the fourth quarter, Dunkin' Brands franchisees and licensees
opened 260 net new restaurants around the globe. This includes 141
net new Dunkin' Donuts U.S. locations, 75 net new Baskin-Robbins
International locations, 46 net new Dunkin' Donuts International
locations, and two net closures for Baskin-Robbins U.S.
Additionally, Dunkin' Donuts U.S. franchisees remodeled 172
restaurants during the quarter.
Revenues for the fourth quarter increased 5.5 percent compared
to the prior year period due primarily to increased royalty income
as a result of systemwide sales growth, as well as increased sales
of ice cream products.
Operating income and adjusted operating income for the fourth
quarter increased $7.5 million, or
9.1 percent, and $7.5 million, or 8.4
percent, respectively, from the prior year period primarily as a
result of increases in royalty income and margin on sales of ice
cream products.
Net income for the fourth quarter increased by $10.4 million, or 24.8 percent, compared to the
prior year period primarily as a result of the $7.5 million increase in operating income and a
$3.1 million decrease in interest
expense. Income tax expense for the fourth quarter remained
consistent with the prior year period despite the increase in
income before income taxes, as the effective tax rate for the
fourth quarter of 2014 was favorably impacted by tax benefits
resulting from a restructuring of our Canadian subsidiaries.
Adjusted net income for the fourth quarter increased by
$1.9 million, or 4.1 percent,
compared to the fourth quarter of 2013 primarily as a result of the
$7.5 million increase in adjusted
operating income and a $3.1 million
decrease in interest expense, offset by an $8.3 million increase in income tax expense.
Diluted adjusted earnings per share increased by 7.0 percent to
$0.46 for the fourth quarter of 2014
compared to the prior year period as a result of the increase in
adjusted net income and a decrease in shares outstanding. The
decrease in shares outstanding from the prior year period is due
primarily to the repurchase of shares, offset by the exercise of
stock options.
FOURTH QUARTER
2014 SEGMENT RESULTS
|
|
Amounts and
percentages may not recalculate due to rounding
|
|
Three months
ended
|
|
Increase
(Decrease)
|
Dunkin' Donuts
U.S.
|
|
December 27,
2014
|
|
December 28,
2013
|
|
$ /
#
|
%
|
|
($ in thousands
except as otherwise noted)
|
Comparable store
sales growth
|
|
1.4
|
%
|
|
3.5
|
%
|
|
|
|
|
|
Systemwide sales
growth
|
|
6.6
|
%
|
|
7.9
|
%
|
|
|
|
|
|
Franchisee reported
sales (in millions)
|
|
$
|
1,885.5
|
|
|
1,767.5
|
|
|
118.0
|
|
6.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Royalty
income
|
|
$
|
102,181
|
|
|
95,468
|
|
|
6,713
|
|
7.0
|
%
|
Franchise
fees
|
|
10,254
|
|
|
11,534
|
|
|
(1,280)
|
|
(11.1)
|
%
|
Rental
income
|
|
23,036
|
|
|
22,112
|
|
|
924
|
|
4.2
|
%
|
Sales at
company-owned restaurants
|
|
5,887
|
|
|
6,715
|
|
|
(828)
|
|
(12.3)
|
%
|
Other
revenues
|
|
2,719
|
|
|
2,790
|
|
|
(71)
|
|
(2.5)
|
%
|
Total
revenues
|
|
$
|
144,077
|
|
|
138,619
|
|
|
5,458
|
|
3.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
profit1
|
|
$
|
106,536
|
|
|
102,469
|
|
|
4,067
|
|
4.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Points of
distribution
|
|
8,082
|
|
|
7,677
|
|
|
405
|
|
5.3
|
%
|
Gross
openings
|
|
179
|
|
|
187
|
|
|
(8)
|
|
(4.3)
|
%
|
Net
openings
|
|
141
|
|
|
149
|
|
|
(8)
|
|
(5.4)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Prior
year amounts reflect change in segment profit measure. Please refer
to "Segment Profit Comparability" for further detail.
|
Dunkin' Donuts U.S. fourth quarter revenues of $144.1 million represented an increase of 3.9
percent year-over-year. The increase was primarily a result
of increased royalty income, offset by a decrease in franchise fees
due primarily to the timing of franchise renewals.
Dunkin' Donuts U.S. segment profit in the fourth quarter
increased $4.1 million over the prior
year period to $106.5 million, which
was driven primarily by revenue growth, offset by the impact of
reserves, including the reversal of reserves in the prior year
period.
Amounts and
percentages may not recalculate due to rounding
|
|
Three months
ended
|
|
Increase
(Decrease)
|
Dunkin' Donuts
International
|
|
December 27,
2014
|
|
December 28,
2013
|
|
$ /
#
|
%
|
|
($ in thousands
except as otherwise noted)
|
Comparable store
sales growth (decline)
|
|
0.3
|
%
|
|
(0.3)
|
%
|
|
|
|
|
|
Systemwide sales
growth
|
|
2.5
|
%
|
|
2.7
|
%
|
|
|
|
|
|
Franchisee reported
sales (in millions)
|
|
$
|
183.6
|
|
|
179.0
|
|
|
4.5
|
|
2.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Royalty
income
|
|
$
|
4,144
|
|
|
3,879
|
|
|
265
|
|
6.8
|
%
|
Franchise
fees
|
|
2,553
|
|
|
1,714
|
|
|
839
|
|
48.9
|
%
|
Rental
income
|
|
8
|
|
|
37
|
|
|
(29)
|
|
(78.4)
|
%
|
Other
revenues
|
|
(16)
|
|
|
(42)
|
|
|
26
|
|
(61.9)
|
%
|
Total
revenues
|
|
$
|
6,689
|
|
|
5,588
|
|
|
1,101
|
|
19.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
profit1
|
|
$
|
4,346
|
|
|
4,379
|
|
|
(33)
|
|
(0.8)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Points of
distribution
|
|
3,228
|
|
|
3,181
|
|
|
47
|
|
1.5
|
%
|
Gross
openings
|
|
140
|
|
|
105
|
|
|
35
|
|
33.3
|
%
|
Net
openings
|
|
46
|
|
|
44
|
|
|
2
|
|
4.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Prior
year amounts reflect change in segment profit measure. Please refer
to "Segment Profit Comparability" for further detail.
|
Dunkin' Donuts International fourth quarter systemwide sales
increased 2.5 percent from the prior year period, driven by sales
growth in the Middle East and
Europe, offset by a decline in
South Korea. On a constant currency basis, systemwide sales
increased by approximately 6 percent.
Dunkin' Donuts International fourth quarter revenues of
$6.7 million represented an increase
of 19.7% year-over-year. The increase in revenue was primarily a
result of an increase in franchise fees due to openings in existing
and new international markets and additional franchise renewals,
offset by income recognized in connection with the termination of
development agreements in Asia in
the prior year period. Also contributing to the increase in
revenues was an increase in royalty income.
Segment profit for Dunkin' Donuts International of $4.3 million in the fourth quarter remained
consistent with the prior year period, as revenue growth was offset
by increases in general and administrative expenses and a decrease
in income from our South Korea
joint venture.
Amounts and
percentages may not recalculate due to rounding
|
|
Three months
ended
|
|
Increase
(Decrease)
|
Baskin-Robbins
U.S.
|
|
December 27,
2014
|
|
December 28,
2013
|
|
$ /
#
|
%
|
|
($ in thousands
except as otherwise noted)
|
Comparable store
sales growth
|
|
9.3
|
%
|
|
2.2
|
%
|
|
|
|
|
|
Systemwide sales
growth
|
|
12.7
|
%
|
|
0.9
|
%
|
|
|
|
|
|
Franchisee reported
sales (in millions)
|
|
$
|
103.1
|
|
|
91.5
|
|
|
11.6
|
|
12.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Royalty
income
|
|
$
|
5,090
|
|
|
4,577
|
|
|
513
|
|
11.2
|
%
|
Franchise
fees
|
|
178
|
|
|
383
|
|
|
(205)
|
|
(53.5)
|
%
|
Rental
income
|
|
815
|
|
|
866
|
|
|
(51)
|
|
(5.9)
|
%
|
Sales of ice cream
products
|
|
801
|
|
|
774
|
|
|
27
|
|
3.5
|
%
|
Other
revenues
|
|
1,585
|
|
|
1,552
|
|
|
33
|
|
2.1
|
%
|
Total
revenues
|
|
$
|
8,469
|
|
|
8,152
|
|
|
317
|
|
3.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
profit1
|
|
$
|
4,485
|
|
|
4,944
|
|
|
(459)
|
|
(9.3)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Points of
distribution
|
|
2,484
|
|
|
2,467
|
|
|
17
|
|
0.7
|
%
|
Gross
openings
|
|
26
|
|
|
19
|
|
|
7
|
|
36.8
|
%
|
Net
closings
|
|
(2)
|
|
|
(4)
|
|
|
2
|
|
(50.0)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Prior
year amounts reflect change in segment profit measure. Please refer
to "Segment Profit Comparability" for further detail.
|
Baskin-Robbins U.S. fourth quarter revenue increased 3.9 percent
from the prior year period to $8.5
million due primarily to increased royalty income, offset by
a decrease in franchise fees driven primarily by timing of
franchise renewals.
Segment profit for Baskin-Robbins U.S. decreased $0.5 million in the fourth quarter, or 9.3
percent, year-over-year primarily as a result of increases in
general and administrative expenses, including investments in
advertising and other brand-building activities and an increase in
personnel costs, offset by the increase in revenues.
Amounts and
percentages may not recalculate due to rounding
|
|
Three months
ended
|
|
Increase
(Decrease)
|
Baskin-Robbins
International
|
|
December 27,
2014
|
|
December 28,
2013
|
|
$ /
#
|
%
|
|
($ in thousands
except as otherwise noted)
|
Comparable store
sales growth (decline)
|
|
(2.2)
|
%
|
|
1.6
|
%
|
|
|
|
|
|
Systemwide sales
growth (decline)
|
|
(8.4)
|
%
|
|
2.6
|
%
|
|
|
|
|
|
Franchisee reported
sales (in millions)
|
|
$
|
290.9
|
|
|
317.6
|
|
|
(26.7)
|
|
(8.4)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Royalty
income
|
|
$
|
1,714
|
|
|
1,701
|
|
|
13
|
|
0.8
|
%
|
Franchise
fees
|
|
477
|
|
|
675
|
|
|
(198)
|
|
(29.3)
|
%
|
Rental
income
|
|
133
|
|
|
123
|
|
|
10
|
|
8.1
|
%
|
Sales of ice cream
products
|
|
27,409
|
|
|
24,655
|
|
|
2,754
|
|
11.2
|
%
|
Other
revenues
|
|
178
|
|
|
75
|
|
|
103
|
|
137.3
|
%
|
Total
revenues
|
|
$
|
29,911
|
|
|
27,229
|
|
|
2,682
|
|
9.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
profit1
|
|
$
|
9,084
|
|
|
8,753
|
|
|
331
|
|
3.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Points of
distribution
|
|
5,068
|
|
|
4,833
|
|
|
235
|
|
4.9
|
%
|
Gross
openings
|
|
153
|
|
|
178
|
|
|
(25)
|
|
(14.0)
|
%
|
Net
openings
|
|
75
|
|
|
120
|
|
|
(45)
|
|
(37.5)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Prior
year amounts reflect change in segment profit measure. Please refer
to "Segment Profit Comparability" for further detail.
|
Baskin-Robbins International systemwide sales decreased 8.4
percent in the fourth quarter compared to the prior year period
driven by a sales decline in Japan, primarily as a result of unfavorable
exchange rates, as well as a sales decline in the Middle East. On a constant currency basis,
systemwide sales decreased by approximately 3 percent.
Baskin-Robbins International fourth quarter revenues increased
9.8 percent year-over-year to $29.9
million due primarily to increases in sales of ice cream
products in the Middle East and
Asia, offset by a decline in
franchise fees.
Fourth quarter segment profit increased 3.8 percent
year-over-year to $9.1 million,
resulting from an increase in net margin on ice cream driven by the
increase in sales, as well as an increase in income from our
South Korea joint venture, offset
by a $0.5 million decrease in income
from our Japan joint venture and
increases in advertising and personnel costs.
COMPANY UPDATES
- The Company announced on January 26,
2015 that it completed a refinancing of its senior secured
credit facility with the placement by its subsidiary of a
$2.6 billion securitized debt
facility. The securitized debt facility includes $2.5 billion Class A-2 Senior Secured Notes
("Notes"), which consist of two tranches with anticipated repayment
dates of four years ($750 million)
and seven years ($1.75 billion),
respectively. The Notes will bear interest at a rate of 3.262
percent per annum for the four year tranche and 3.980 percent per
annum for the seven year tranche, resulting in a weighted-average
effective interest rate of 3.765 percent per annum, payable
quarterly. As a result, the Company expects its 2015 annual
interest expense to be approximately $96.5
million.
- The Company announced on January 26,
2015 that the Board of Directors authorized a new program to
repurchase up to an aggregate of $700
million of its outstanding common stock over the next two
years.
- The Company today announced that the Board of Directors
declared a first quarter cash dividend of $0.265 per share, payable on March 18, 2015 to shareholders of record as of
the close of business on March 9,
2015. This represents a 15 percent increase over the
Company's fourth quarter 2014 dividend.
FISCAL YEAR 2015 TARGETS
As described below, the Company is reiterating certain targets
regarding its 2015 expectations.
- The Company expects Dunkin' Donuts U.S. comparable store sales
growth of 1 to 3 percent and Baskin-Robbins U.S. comparable store
sales growth of 1 to 3 percent.
- The Company expects that Dunkin' Donuts U.S. will add between
410 and 440 net new restaurants, for greater than 5 percent net
unit growth, and expects Baskin-Robbins U.S. will add between 5 and
10 net new restaurants.
- Internationally, the Company is targeting opening 200 to 300
net new restaurants across the two brands. It expects net income of
equity method investments to be approximately $13 million.
- Globally, the Company expects to open between 615 and 750 net
new units.
- The Company expects revenue growth of between 5 and 7 percent
and adjusted operating income growth of between 6 and 8
percent.
- The Company expects adjusted earnings per share of $1.83 to $1.87.
Conference Call
As previously announced, Dunkin' Brands will be holding a
conference call today at 8:00 am ET
hosted by Nigel Travis, Chairman
& Chief Executive Officer, and Paul
Carbone, Chief Financial Officer. The dial-in number is
(866) 393-1607 or (914) 495-8556, conference number 63732202.
Dunkin' Brands will broadcast the conference call live over the
Internet at http://investor.dunkinbrands.com. A replay of the
conference call will be available on the Company's website at
http://investor.dunkinbrands.com.
The Company's consolidated statements of operations, condensed
consolidated balance sheets, condensed consolidated statements of
cash flows and other additional information have been provided with
this press release. This information should be reviewed in
conjunction with this press release.
Forward-Looking Statements
Certain statements contained herein are not based on historical
fact and are "forward-looking statements" within the meaning of the
applicable securities laws and regulations. Generally, these
statements can be identified by the use of words such as
"anticipate," "believe," "could," "estimate," "expect," "feel,"
"forecast," "intend," "may," "plan," "potential," "project,"
"should," "would," and similar expressions intended to identify
forward-looking statements, although not all forward-looking
statements contain these identifying words. By their
nature, forward-looking statements involve risks and uncertainties
because they relate to events and depend on circumstances that may
or may not occur in the future. These risk and uncertainties
include, but are not limited to: the ongoing level of profitability
of franchisees and licensees; our franchisees' and licensees'
ability to sustain same store sales growth; changes in
working relationships with our franchisees and licensees and the
actions of our franchisees and licensees; our master franchisees'
relationships with sub-franchisees; the strength of our brand in
the markets in which we compete; changes in competition within the
quick-service restaurant segment of the food industry; changes in
consumer behavior resulting from changes in technologies or
alternative methods of delivery; economic and political conditions
in the countries where we operate; our substantial indebtedness;
our ability to protect our intellectual property rights; consumer
preferences, spending patterns and demographic trends; the impact
of seasonal changes, including weather effects, on our business;
the success of our growth strategy and international development;
changes in commodity and food prices, particularly coffee, dairy
products and sugar, and other operating costs; shortages of coffee;
failure of our network and information technology systems;
interruptions or shortages in the supply of products to our
franchisees and licensees; the impact of food borne-illness or food
safety issues or adverse public or media opinions regarding the
health effects of consuming our products; our ability to collect
royalty payments from our franchisees and licensees; the ability of
our franchisees and licensees to open new restaurants and keep
existing restaurants in operation; our ability to retain key
personnel; any inability to protect consumer credit card data and
catastrophic events.
Forward-looking statements reflect management's analysis as of
the date of this press release. Important factors that could
cause actual results to differ materially from our expectations are
more fully described in our other filings with the Securities and
Exchange Commission, including under the section headed "Risk
Factors" in our most recent annual report on Form 10-K. Except as
required by applicable law, we do not undertake to publicly update
or revise any of these forward-looking statements, whether as a
result of new information, future events or otherwise.
Non-GAAP Measures and Statistical Data
In addition to the GAAP financial measures set forth in this
press release, the Company has included certain non-GAAP
measurements, adjusted operating income, adjusted operating income
margin, adjusted net income, and diluted adjusted earnings per
share, which present operating results on a basis adjusted for
certain items. Additionally, the Company has included growth in
free cash flow, which is a non-GAAP measurement reflecting net cash
provided by operating and investing activities, excluding the
impact of changes in cash held for advertising funds and gift
card/certificate programs. The Company uses all of these non-GAAP
measures as key performance measures for the purpose of evaluating
performance internally and our ability to generate cash. We also
believe these non-GAAP measures provide our investors with useful
information regarding our historical operating and cash flow
results. These non-GAAP measures are not intended to replace the
presentation of our financial results in accordance with GAAP. Use
of the terms adjusted operating income, adjusted operating income
margin, adjusted net income, diluted adjusted earnings per share,
and free cash flow may differ from similar measures reported by
other companies. Adjusted operating income, adjusted net
income, and free cash flow are reconciled from the respective
measures determined under GAAP in the attached tables "Dunkin'
Brands Group, Inc. Non-GAAP Reconciliations."
Additionally, the Company has included metrics such as
systemwide sales growth and comparable store sales growth, which
are commonly used statistical measures in the quick service
restaurant industry and are important to understanding the
Company's performance.
The Company uses "systemwide sales growth" to refer to the
percentage change in sales at both franchisee- and company-owned
restaurants from the comparable period of the prior year. Changes
in systemwide sales are driven by changes in comparable store sales
and changes in the number of restaurants.
The Company uses "DD U.S. comparable store sales growth," "BR
U.S. comparable store sales growth," "DD International comparable
store sales growth," and "BR International comparable store sales
growth," which are calculated by including only sales from
franchisee- and company-owned restaurants that have been open at
least 54 weeks and that have reported sales in the current and
comparable prior year week.
Segment Profit Comparability
Beginning in fiscal year 2014, the key measure used by the
Company to assess the performance of and allocate resources to each
reportable segment, referred to as segment profit, was revised to
better align the segments with our consolidated performance
measures and incentive targets. As a result, segment profit now
reflects operating income adjusted for amortization of intangible
assets, long-lived asset impairments, and other non-recurring,
infrequent, or unusual charges, and does not reflect the allocation
of any corporate charges. Prior to fiscal year 2014, segment profit
was measured based on earnings before interest, taxes,
depreciation, amortization, impairment charges, loss on debt
extinguishment and refinancing transactions, other gains and
losses, and unallocated corporate charges. The segment profit
amounts included herein for the three months ended December 28, 2013 have been restated to reflect
this change to the measurement of segment profit to enable
comparability with the three months ended December 27, 2014.
About Dunkin' Brands Group, Inc.
With more than 18,800 points of distribution in nearly 60
countries worldwide, Dunkin' Brands Group, Inc. (Nasdaq: DNKN) is
one of the world's leading franchisors of quick service restaurants
(QSR) serving hot and cold coffee and baked goods, as well as
hard-serve ice cream. At the end of fiscal 2014, Dunkin' Brands'
nearly 100 percent franchised business model included more than
11,300 Dunkin' Donuts restaurants and more than 7,500
Baskin-Robbins restaurants. Dunkin' Brands Group, Inc. is
headquartered in Canton, Mass.
DUNKIN' BRANDS
GROUP, INC. AND SUBSIDIARIES
|
Consolidated
Statements of Operations
|
(In thousands, except
per share data)
|
(Unaudited)
|
|
|
Three months
ended
|
|
Fiscal year
ended
|
|
|
December 27,
2014
|
|
December 28,
2013
|
|
December 27,
2014
|
|
December 28,
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Franchise fees and
royalty income
|
|
$
|
126,591
|
|
|
119,931
|
|
|
482,329
|
|
|
453,976
|
|
Rental
income
|
|
24,013
|
|
|
23,158
|
|
|
97,663
|
|
|
96,082
|
|
Sales of ice cream
products
|
|
28,248
|
|
|
25,458
|
|
|
116,320
|
|
|
112,276
|
|
Sales at
company-owned restaurants
|
|
5,887
|
|
|
6,715
|
|
|
22,206
|
|
|
24,976
|
|
Other
revenues
|
|
8,474
|
|
|
7,915
|
|
|
30,191
|
|
|
26,530
|
|
Total
revenues
|
|
193,213
|
|
|
183,177
|
|
|
748,709
|
|
|
713,840
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy
expenses—franchised restaurants
|
|
13,565
|
|
|
13,056
|
|
|
53,395
|
|
|
52,097
|
|
Cost of ice cream
products
|
|
19,623
|
|
|
18,091
|
|
|
81,896
|
|
|
79,278
|
|
Company-owned
restaurant expenses
|
|
5,915
|
|
|
6,663
|
|
|
22,687
|
|
|
24,480
|
|
General and
administrative expenses, net
|
|
55,128
|
|
|
53,838
|
|
|
227,534
|
|
|
230,847
|
|
Depreciation
|
|
4,976
|
|
|
5,462
|
|
|
19,779
|
|
|
22,423
|
|
Amortization of other
intangible assets
|
|
6,638
|
|
|
6,858
|
|
|
25,760
|
|
|
26,943
|
|
Long-lived asset
impairment charges
|
|
205
|
|
|
116
|
|
|
1,484
|
|
|
563
|
|
Total operating costs
and expenses
|
|
106,050
|
|
|
104,084
|
|
|
432,535
|
|
|
436,631
|
|
Net income of equity
method investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income, excluding
impairment
|
|
2,332
|
|
|
3,173
|
|
|
14,846
|
|
|
19,243
|
|
Impairment
charge
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(873)
|
|
Net income of equity
method investments
|
|
2,332
|
|
|
3,173
|
|
|
14,846
|
|
|
18,370
|
|
Other operating income (expense),
net
|
|
229
|
|
|
(31)
|
|
|
7,838
|
|
|
9,157
|
|
Operating
income
|
|
89,724
|
|
|
82,235
|
|
|
338,858
|
|
|
304,736
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
73
|
|
|
94
|
|
|
274
|
|
|
404
|
|
Interest
expense
|
|
(16,654)
|
|
|
(19,712)
|
|
|
(68,098)
|
|
|
(80,235)
|
|
Loss on debt
extinguishment and refinancing transactions
|
|
—
|
|
|
—
|
|
|
(13,735)
|
|
|
(5,018)
|
|
Other losses,
net
|
|
(896)
|
|
|
(608)
|
|
|
(1,566)
|
|
|
(1,799)
|
|
Total other
expense
|
|
(17,477)
|
|
|
(20,226)
|
|
|
(83,125)
|
|
|
(86,648)
|
|
Income before income
taxes
|
|
72,247
|
|
|
62,009
|
|
|
255,733
|
|
|
218,088
|
|
Provision for income
taxes
|
|
19,907
|
|
|
20,120
|
|
|
80,170
|
|
|
71,784
|
|
Net income including
noncontrolling interests
|
|
52,340
|
|
|
41,889
|
|
|
175,563
|
|
|
146,304
|
|
Net loss attributable
to noncontrolling interests
|
|
(173)
|
|
|
(183)
|
|
|
(794)
|
|
|
(599)
|
|
Net income
attributable to Dunkin' Brands
|
|
$
|
52,513
|
|
|
42,072
|
|
|
176,357
|
|
|
146,903
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share—basic
|
|
$
|
0.50
|
|
|
0.39
|
|
|
1.67
|
|
|
1.38
|
|
Earnings per
share—diluted
|
|
0.50
|
|
|
0.39
|
|
|
1.65
|
|
|
1.36
|
|
DUNKIN' BRANDS
GROUP, INC. AND SUBSIDIARIES
|
Condensed
Consolidated Balance Sheets
|
(In
thousands)
|
(Unaudited)
|
|
|
December 27,
2014
|
|
December 28,
2013
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
208,080
|
|
|
256,933
|
|
Accounts, notes, and
other receivables, net
|
|
105,060
|
|
|
79,765
|
|
Other current
assets
|
|
129,478
|
|
|
125,062
|
|
Total current
assets
|
|
442,618
|
|
|
461,760
|
|
Property and
equipment, net
|
|
182,061
|
|
|
182,858
|
|
Equity method
investments
|
|
164,493
|
|
|
170,644
|
|
Goodwill and other
intangible assets, net
|
|
2,317,167
|
|
|
2,343,803
|
|
Other
assets
|
|
71,044
|
|
|
75,625
|
|
Total
assets
|
|
$
|
3,177,383
|
|
|
3,234,690
|
|
Liabilities,
Redeemable Noncontrolling Interests, and Stockholders'
Equity
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Current portion of
long-term debt
|
|
$
|
3,852
|
|
|
5,000
|
|
Accounts
payable
|
|
13,814
|
|
|
12,445
|
|
Other current
liabilities
|
|
337,853
|
|
|
326,853
|
|
Total current
liabilities
|
|
355,519
|
|
|
344,298
|
|
Long-term debt,
net
|
|
1,807,081
|
|
|
1,818,609
|
|
Deferred income
taxes, net
|
|
540,339
|
|
|
561,714
|
|
Other long-term
liabilities
|
|
99,494
|
|
|
97,781
|
|
Total long-term
liabilities
|
|
2,446,914
|
|
|
2,478,104
|
|
Redeemable
noncontrolling interests
|
|
6,991
|
|
|
4,930
|
|
Total stockholders'
equity
|
|
367,959
|
|
|
407,358
|
|
Total liabilities,
redeemable noncontrolling interests, and stockholders'
equity
|
|
$
|
3,177,383
|
|
|
3,234,690
|
|
DUNKIN' BRANDS
GROUP, INC. AND SUBSIDIARIES
|
Condensed
Consolidated Statements of Cash Flows
|
(In
thousands)
|
(Unaudited)
|
|
|
Fiscal year
ended
|
|
|
December 27,
2014
|
|
December 28,
2013
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
|
199,323
|
|
|
141,799
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
Additions to property
and equipment
|
|
(23,638)
|
|
|
(31,099)
|
|
Proceeds from sale of
joint venture
|
|
—
|
|
|
6,682
|
|
Proceeds from sale of
real estate and company-owned restaurants
|
|
14,361
|
|
|
5,387
|
|
Other, net
|
|
(4,827)
|
|
|
(3,876)
|
|
Net cash used in
investing activities
|
|
(14,104)
|
|
|
(22,906)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
Repayment of
long-term debt, net
|
|
(15,000)
|
|
|
(24,157)
|
|
Payment of deferred
financing and other debt-related costs
|
|
(9,213)
|
|
|
(6,157)
|
|
Dividends paid on
common stock
|
|
(96,775)
|
|
|
(81,008)
|
|
Repurchases of common
stock
|
|
(130,171)
|
|
|
(27,963)
|
|
Exercise of stock
options
|
|
5,120
|
|
|
7,963
|
|
Other, net
|
|
12,682
|
|
|
17,148
|
|
Net cash used in
financing activities
|
|
(233,357)
|
|
|
(114,174)
|
|
Effect of exchange
rates on cash and cash equivalents
|
|
(715)
|
|
|
(404)
|
|
Increase (decrease)
in cash and cash equivalents
|
|
(48,853)
|
|
|
4,315
|
|
Cash and cash
equivalents, beginning of period
|
|
256,933
|
|
|
252,618
|
|
Cash and cash
equivalents, end of period
|
|
$
|
208,080
|
|
|
256,933
|
|
DUNKIN' BRANDS
GROUP, INC. AND SUBSIDIARIES
|
Non-GAAP
Reconciliations
|
(In thousands, except
per share data)
|
(Unaudited)
|
|
|
Three months
ended
|
|
Fiscal year
ended
|
|
|
December 27,
2014
|
|
December 28,
2013
|
|
December 27,
2014
|
|
December 28,
2013
|
Operating
income
|
|
$
|
89,724
|
|
|
82,235
|
|
|
338,858
|
|
|
304,736
|
|
Operating income
margin
|
|
46.4
|
%
|
|
44.9
|
%
|
|
45.3
|
%
|
|
42.7
|
%
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of other
intangible assets
|
|
$
|
6,638
|
|
|
6,858
|
|
|
25,760
|
|
|
26,943
|
|
Long-lived asset
impairment charges
|
|
205
|
|
|
116
|
|
|
1,484
|
|
|
563
|
|
Third-party product
volume guarantee
|
|
—
|
|
|
—
|
|
|
(300)
|
|
|
7,500
|
|
Peterborough plant
closure(a)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
654
|
|
Transaction
costs(b)
|
|
154
|
|
|
—
|
|
|
154
|
|
|
—
|
|
Adjusted operating
income
|
|
$
|
96,721
|
|
|
89,209
|
|
|
365,956
|
|
|
340,396
|
|
Adjusted operating
income margin
|
|
50.1
|
%
|
|
48.7
|
%
|
|
48.9
|
%
|
|
47.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Dunkin' Brands
|
|
$
|
52,513
|
|
|
42,072
|
|
|
176,357
|
|
|
146,903
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of other
intangible assets
|
|
6,638
|
|
|
6,858
|
|
|
25,760
|
|
|
26,943
|
|
Long-lived asset
impairment charges
|
|
205
|
|
|
116
|
|
|
1,484
|
|
|
563
|
|
Third-party product
volume guarantee
|
|
—
|
|
|
—
|
|
|
(300)
|
|
|
7,500
|
|
Peterborough plant
closure(a)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
654
|
|
Transaction
costs(b)
|
|
154
|
|
|
—
|
|
|
154
|
|
|
—
|
|
Loss on debt
extinguishment and refinancing transactions
|
|
—
|
|
|
—
|
|
|
13,735
|
|
|
5,018
|
|
Tax impact of
adjustments(c)
|
|
(2,799)
|
|
|
(2,790)
|
|
|
(16,333)
|
|
|
(16,271)
|
|
Income tax audit
settlements(d)
|
|
—
|
|
|
—
|
|
|
(6,717)
|
|
|
(8,417)
|
|
Tax impact of legal
entity conversion(e)
|
|
(8,541)
|
|
|
—
|
|
|
(8,541)
|
|
|
—
|
|
State tax
apportionment(f)
|
|
—
|
|
|
—
|
|
|
514
|
|
|
2,868
|
|
Adjusted net
income
|
|
$
|
48,170
|
|
|
46,256
|
|
|
186,113
|
|
|
165,761
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net
income
|
|
$
|
48,170
|
|
|
46,256
|
|
|
186,113
|
|
|
165,761
|
|
Weighted average
number of common shares – diluted
|
|
105,687,479
|
|
|
108,332,148
|
|
|
106,705,778
|
|
|
108,217,011
|
|
Diluted adjusted
earnings per share
|
|
$
|
0.46
|
|
|
0.43
|
|
|
1.74
|
|
|
1.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) For the fiscal
year ended December 28, 2013, the adjustment represents
transition-related general and administrative costs incurred
related to the closure of the Baskin-Robbins ice cream
manufacturing plant in Peterborough, Canada, such as information
technology integration, project management, and transportation
costs.
|
(b) Represents costs
incurred in connection with obtaining a new securitized financing
facility, which was completed in January 2015.
|
(c) Tax impact of
adjustments calculated at a 40% effective tax rate.
|
(d) Represents income
tax benefits resulting from the resolution of historical tax
positions settled during the period.
|
(e) Represents the
net tax impact of converting Dunkin' Brands Canada Ltd. to Dunkin'
Brands Canada ULC.
|
(f) Represents tax
expense recognized due to an increase in our overall state tax rate
for a shift in the apportionment of income to certain state
jurisdictions.
|
DUNKIN' BRANDS
GROUP, INC. AND SUBSIDIARIES
|
Non-GAAP
Reconciliations (continued)
|
(In
thousands)
|
(Unaudited)
|
|
Fiscal year
ended
|
|
December 27,
2014
|
|
December 28,
2013
|
|
Change
%
|
Net cash provided by
operating activities
|
$
|
199,323
|
|
|
141,799
|
|
|
|
Less: Increase in
cash held for advertising funds and gift card/certificate
programs
|
(8,781)
|
|
|
(2,006)
|
|
|
|
Less: Net cash used
in investing activities
|
(14,104)
|
|
|
(22,906)
|
|
|
|
Free cash flow,
excluding cash held for advertising funds and gift card/certificate
programs
|
$
|
176,438
|
|
|
116,887
|
|
50.9%
|
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SOURCE Dunkin' Brands Group, Inc.