CANTON, Mass., April 28,
2016 /PRNewswire/ --
First quarter highlights include:
- Dunkin' Donuts U.S. comparable store sales growth of
2.0%
- Baskin-Robbins U.S. comparable store sales growth of
5.0%
- Added 114 net new restaurants worldwide, including 69 net
new Dunkin' Donuts in the U.S.
- Revenues increased 2.1%
- Diluted EPS increased 60.0% to $0.40
- Diluted adjusted EPS increased 10.0% to $0.44
Dunkin' Brands Group, Inc. (Nasdaq: DNKN), the parent company of
Dunkin' Donuts (DD) and Baskin-Robbins (BR), today reported results
for the first quarter ended March 26, 2016.
"We are encouraged by the first quarter Dunkin' Donuts U.S.
comparable store sales performance which was driven by growth in
beverages and breakfast sandwiches, along with price and favorable
weather," said Dunkin' Brands Chairman and Chief Executive Officer
Nigel Travis. "Admittedly we are
still in the early days of our five-part plan to drive positive
Dunkin' Donuts same-store sales, but as evidenced by the first
quarter results we are beginning to make progress with our strategy
which includes driving coffee innovation and culture;
faster-to-market product innovation; targeted value offerings and
smart pricing; increased use of digital technologies and an
improved restaurant experience."
"During the first quarter we continued to expand the national
presence of the Dunkin' Donuts brand through the addition of 69 net
new restaurants in the U.S. as well as through the continued growth
in sales of Dunkin' K-Cup pods in the retail channel," said
Paul Carbone, Chief Financial
Officer, Dunkin' Brands Group, Inc. "As we approach the first
anniversary of the launch of Dunkin' K-Cup pods into the retail
channel, we expect that Dunkin' Donuts K-Cup pods will be one of
the most successful new grocery products in recent history and we
have now exceeded the half-billion dollar annual retail sales
threshold for Dunkin' Donuts coffee products in total."
FIRST QUARTER 2016
KEY FINANCIAL HIGHLIGHTS
|
|
|
|
|
($ in millions,
except per share data)
|
Three months
ended
|
|
Increase
(Decrease)
|
Amounts and
percentages may not recalculate due to rounding
|
March 26,
2016
|
March 28,
2015
|
|
$ /
#
|
%
|
Systemwide
sales1
|
$
|
2,418.6
|
|
2,317.6
|
|
|
101.0
|
|
4.4
|
%
|
Comparable store
sales growth (decline):
|
|
|
|
|
|
DD
U.S.2
|
2.0
|
%
|
2.7
|
%
|
|
|
|
BR
U.S.2
|
5.0
|
%
|
8.6
|
%
|
|
|
|
DD
International
|
(2.3)
|
%
|
1.7
|
%
|
|
|
|
BR
International
|
(8.2)
|
%
|
0.3
|
%
|
|
|
|
Development
data:
|
|
|
|
|
|
Consolidated global
net POD development3
|
114
|
|
79
|
|
|
35
|
|
44.3
|
%
|
DD global PODs at
period end
|
11,833
|
|
11,367
|
|
|
466
|
|
4.1
|
%
|
BR global PODs at
period end
|
7,638
|
|
7,574
|
|
|
64
|
|
0.8
|
%
|
Consolidated global
PODs at period end
|
19,471
|
|
18,941
|
|
|
530
|
|
2.8
|
%
|
Financial
data:
|
|
|
|
|
|
Revenues
|
$
|
189.8
|
|
185.9
|
|
|
3.9
|
|
2.1
|
%
|
Operating
income
|
85.3
|
|
83.7
|
|
|
1.6
|
|
1.9
|
%
|
Operating income
margin
|
45.0
|
%
|
45.0
|
%
|
|
|
|
Adjusted operating
income4
|
$
|
91.2
|
|
87.6
|
|
|
3.6
|
|
4.2
|
%
|
Adjusted operating
income margin4
|
48.1
|
%
|
47.1
|
%
|
|
|
|
Net income
|
$
|
37.2
|
|
25.6
|
|
|
11.5
|
|
45.0
|
%
|
Adjusted net
income4
|
40.7
|
|
40.3
|
|
|
0.4
|
|
1.0
|
%
|
Earnings per
share:
|
|
|
|
|
|
Common–basic
|
0.41
|
|
0.26
|
|
|
0.15
|
|
57.7
|
%
|
Common–diluted
|
0.40
|
|
0.25
|
|
|
0.15
|
|
60.0
|
%
|
Diluted adjusted
earnings per share4
|
0.44
|
|
0.40
|
|
|
0.04
|
|
10.0
|
%
|
Weighted average
number of common shares – diluted (in millions)
|
92.6
|
|
101.5
|
|
|
(8.9)
|
|
(8.8)
|
%
|
|
|
|
|
|
|
|
|
|
|
1
Systemwide sales include sales at franchisee- and company-operated
restaurants, including joint ventures. While we do not record sales
by franchisees or licensees as revenue and such sales are not
included in our consolidated financial statements, we believe that
this operating measure is important in obtaining an understanding
of our financial performance. We believe systemwide sales
information aids in understanding how we derive royalty revenue and
in evaluating our performance relative to competitors. Beginning in
the first quarter of fiscal year 2016, we began presenting
systemwide sales rather than franchisee-reported sales, which
excludes sales of company-operated restaurants, as we believe the
systemwide sales information is a more complete metric in obtaining
an understanding of our financial performance. Prior period amounts
have been revised to reflect the change from franchisee-reported
sales to systemwide sales.
|
|
2
Comparable store sales growth for DD U.S. and BR U.S. for the three
months ended March 28, 2015 have been revised to include only those
restaurants that have been open at least 78 weeks (approximately 18
months) to conform to the current period calculation, whereas
previously reported figures included only those restaurants that
were open at least 54 weeks (approximately 12 months). Please refer
to "Non-GAAP Measures and Statistical Data" for further
detail.
|
|
3
Consolidated global net POD development reflects the
previously-announced closing of 2 self-serve coffee stations within
Speedway locations.
|
|
4 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 first quarter was
primarily attributable to global store development and Dunkin'
Donuts U.S. comparable store sales growth (which includes stores
open 78 weeks or more).
Dunkin' Donuts U.S. comparable store sales growth in the first
quarter was driven by increased average ticket and traffic.
Growth was driven by strong beverage sales, led by iced coffee and
hot and iced espresso-based beverages, and breakfast sandwiches,
led by the limited-time-offer GranDDe Burrito and the return of the
Chicken Apple Sausage breakfast sandwich. The in-restaurant
K-Cup and packaged coffee categories had a negative 80 basis point
impact on first quarter comparable store sales. We estimate that
weather resulted in approximately 90 basis points of positive
impact in the quarter.
Baskin-Robbins U.S. comparable store sales growth was driven by
increased sales of cups and cones, beverages, desserts, sundaes,
and cakes. Comparable store sales growth was driven primarily
by traffic. We estimate that weather resulted in approximately 300
basis points of positive impact in the quarter.
In the first quarter, Dunkin' Brands franchisees and licensees
opened 114 net new restaurants around the globe. This included 69
net new Dunkin' Donuts U.S. locations (including the closing of 2
Speedway self-serve coffee stations), 42 net new Baskin-Robbins
International locations, 14 net new Dunkin' Donuts International
locations, and 11 net closures for Baskin-Robbins U.S.
Additionally, Dunkin' Donuts U.S. franchisees remodeled 90
restaurants and Baskin-Robbins U.S. franchisees remodeled 35
restaurants during the quarter.
Revenues for the first quarter increased 2.1% compared to the
prior year period due primarily to increased royalty income as a
result of systemwide sales growth and an increase in sales of ice
cream and other products. These increases in revenues were offset
by a decrease in other revenues due primarily to a one-time upfront
license fee recognized in connection with the Dunkin' K-Cup® pod
licensing agreement in the first quarter of 2015.
Operating income and adjusted operating income for the first
quarter increased $1.6 million, or
1.9%, and $3.6 million, or 4.2%,
respectively, from the prior year period primarily as a result of
the increase in royalty income, as well as an increase in franchise
income and a gain recognized in connection with the sale of real
estate, offset by the decrease in other revenues due primarily to a
one-time upfront license fee recognized in connection with the
Dunkin' K-Cup® pod licensing agreement in the first quarter of
2015. Operating income in the prior year period was also favorably
impacted by a reduction in legal reserves.
Net income for the first quarter increased by $11.5 million, or 45.0%, compared to the prior
year period primarily as a result of the $20.6 million loss on debt extinguishment and
refinancing transactions recorded in the prior year period, as well
as the $1.6 million increase in
operating income, offset by a $7.9
million increase in income tax expense and additional
interest expense of $2.7 million,
driven by additional borrowings incurred in conjunction with the
securitization refinancing transaction completed in January 2015.
Adjusted net income for the first quarter increased by
$0.4 million, or 1.0%, compared to
the prior year period primarily as a result of the $3.6 million increase in adjusted operating
income, offset by increases in interest expense and income tax
expense.
Diluted earnings per share increased by 60.0% to $0.40 for the first quarter compared to the prior
year period as a result of the increase in net income, as well as a
decrease in shares outstanding. Diluted adjusted earnings per share
increased by 10.0% to $0.44 for the
first quarter compared to the prior year period as a result of the
decrease in shares outstanding, as well as the increase in adjusted
net income. 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.
FIRST QUARTER 2016 SEGMENT RESULTS
Beginning in the first quarter of fiscal year 2016, certain
segment profit amounts in the tables below have been reclassified
as a result of the realignment of our organizational structure to
better support our segment operations, including the allocation of
previously unallocated costs. Additionally, revenues, segment
profit, points of distribution information, and systemwide sales
related to restaurants located in Puerto
Rico were previously included in the Baskin-Robbins
International segment, but are now included in the Baskin-Robbins
U.S. segment based on functional responsibility. Prior period
amounts in the tables below have been revised to reflect these
changes for all periods presented.
Amounts and
percentages may not recalculate due to rounding
|
|
Three months
ended
|
|
Increase
(Decrease)
|
Dunkin' Donuts
U.S.
|
|
March 26,
2016
|
|
March 28,
2015
|
|
$ /
#
|
%
|
|
($ in thousands
except as otherwise noted)
|
Comparable store
sales growth1
|
|
2.0
|
%
|
|
2.7
|
%
|
|
|
|
Systemwide sales (in
millions)2
|
|
$
|
1,865.3
|
|
|
1,750.8
|
|
|
114.5
|
|
6.5
|
%
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
Royalty
income
|
|
$
|
101,523
|
|
|
95,007
|
|
|
6,516
|
|
6.9
|
%
|
Franchise
fees
|
|
7,068
|
|
|
8,264
|
|
|
(1,196)
|
|
(14.5)
|
%
|
Rental
income
|
|
22,385
|
|
|
22,681
|
|
|
(296)
|
|
(1.3)
|
%
|
Sales at
company-operated restaurants
|
|
5,670
|
|
|
6,558
|
|
|
(888)
|
|
(13.5)
|
%
|
Other
revenues
|
|
2,167
|
|
|
1,357
|
|
|
810
|
|
59.7
|
%
|
Total
revenues
|
|
$
|
138,813
|
|
|
133,867
|
|
|
4,946
|
|
3.7
|
%
|
|
|
|
|
|
|
|
|
Segment
profit
|
|
$
|
100,444
|
|
|
93,714
|
|
|
6,730
|
|
7.2
|
%
|
|
|
|
|
|
|
|
|
Points of
distribution
|
|
8,500
|
|
|
8,160
|
|
|
340
|
|
4.2
|
%
|
Gross
openings
|
|
93
|
|
|
101
|
|
|
(8)
|
|
(7.9)
|
%
|
Net
openings3
|
|
69
|
|
|
78
|
|
|
(9)
|
|
(11.5)
|
%
|
|
1
Comparable store sales growth for the three months ended March 28,
2015 have been revised to include only those restaurants that have
been open at least 78 weeks (approximately 18 months) to conform to
the current period calculation. Please refer to "Non-GAAP Measures
and Statistical Data" for further detail.
|
|
2
Systemwide sales include sales at franchisee- and company-operated
restaurants, including joint ventures. We do not record sales by
franchisees or licensees as revenue and such sales are not included
in our consolidated financial statements. Please refer to "Non-GAAP
Measures and Statistical Data" for further detail. Beginning in the
first quarter of fiscal year 2016, we began presenting systemwide
sales rather than franchisee-reported sales, which excludes sales
of company-operated restaurants. Prior period amounts have been
revised to reflect the change from franchisee-reported sales to
systemwide sales.
|
|
3 Net
openings reflects the previously-announced closing of 2 self-serve
coffee stations within Speedway locations.
|
Dunkin' Donuts U.S. first quarter revenues of $138.8 million represented an increase of 3.7%
over the prior year period. The increase was primarily a result of
increased royalty income due to an increase in systemwide sales, as
well as an increase in other revenues driven primarily by an
increase in transfer fee income. These increases in revenues were
offset by a decrease in franchise fees due to a decrease in gross
openings and unfavorable development mix, as well as a decrease in
renewal income. Also offsetting the increases in revenues was a
decrease in sales at company-operated restaurants driven by a net
decrease in the number of company-operated restaurants.
Dunkin' Donuts U.S. segment profit in the first quarter
increased $6.7 million over the prior
year period to $100.4 million, which
was driven primarily by growth in royalty income, an increase in
other operating income due to a gain recognized in connection with
the sale of real estate, and an increase in other revenues. These
increases were offset by a decrease in franchise fees and a
recovery of bad debt in the prior year period.
Amounts and
percentages may not recalculate due to rounding
|
|
Three months
ended
|
|
Increase
(Decrease)
|
Dunkin' Donuts
International
|
|
March 26,
2016
|
|
March 28,
2015
|
|
$ /
#
|
%
|
|
($ in thousands
except as otherwise noted)
|
Comparable store
sales growth (decline)
|
|
(2.3)
|
%
|
|
1.7
|
%
|
|
|
|
Systemwide sales (in
millions)1
|
|
$
|
167.5
|
|
|
168.2
|
|
|
(0.7)
|
|
(0.4)
|
%
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
Royalty
income
|
|
$
|
4,240
|
|
|
3,791
|
|
|
449
|
|
11.8
|
%
|
Franchise
fees
|
|
2,890
|
|
|
523
|
|
|
2,367
|
|
452.6
|
%
|
Rental
income
|
|
—
|
|
|
8
|
|
|
(8)
|
|
(100.0)
|
%
|
Other
revenues
|
|
120
|
|
|
2,256
|
|
|
(2,136)
|
|
(94.7)
|
%
|
Total
revenues
|
|
$
|
7,250
|
|
|
6,578
|
|
|
672
|
|
10.2
|
%
|
|
|
|
|
|
|
|
|
Segment
profit
|
|
$
|
3,758
|
|
|
3,674
|
|
|
84
|
|
2.3
|
%
|
|
|
|
|
|
|
|
|
Points of
distribution
|
|
3,333
|
|
|
3,207
|
|
|
126
|
|
3.9
|
%
|
Gross
openings
|
|
85
|
|
|
83
|
|
|
2
|
|
2.4
|
%
|
Net openings
(closings)
|
|
14
|
|
|
(21)
|
|
|
35
|
|
n/m
|
|
|
1
Systemwide sales include sales at franchisee- and company-operated
restaurants, including joint ventures. We do not record sales by
franchisees or licensees as revenue and such sales are not included
in our consolidated financial statements. Please refer to "Non-GAAP
Measures and Statistical Data" for further detail.
|
Dunkin' Donuts International first quarter systemwide sales
decreased 0.4% from the prior year period. Sales declines in
South Korea were offset by sales
growth in Europe and the
Middle East. Sales in South Korea, Asia, and South
America were negatively impacted by unfavorable foreign
exchange rates. On a constant currency basis, systemwide sales
increased by approximately 7%.
Dunkin' Donuts International first quarter revenues of
$7.3 million represented an increase
of 10.2% over the prior year period. The increase in revenues were
primarily a result of increased franchise fees due to development
in new markets, as well as an increase in royalty income, offset by
a decline in other revenues due to revenue recorded in the prior
year period in connection with a settlement reached with a master
licensee.
Segment profit for Dunkin' Donuts International increased
$0.1 million to $3.8 million in the first quarter primarily as a
result of revenue growth, offset by an increase in general and
administrative expenses driven primarily by increased personnel
costs and an increase in bad debt expense.
Amounts and
percentages may not recalculate due to rounding
|
|
Three months
ended
|
|
Increase
(Decrease)
|
Baskin-Robbins
U.S.
|
|
March 26,
2016
|
|
March 28,
2015
|
|
$ /
#
|
%
|
|
($ in thousands
except as otherwise noted)
|
Comparable store
sales growth1
|
|
5.0
|
%
|
|
8.6
|
%
|
|
|
|
Systemwide sales (in
millions)2
|
|
$
|
129.9
|
|
|
123.1
|
|
|
6.8
|
|
5.6
|
%
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
Royalty
income
|
|
$
|
6,223
|
|
|
5,916
|
|
|
307
|
|
5.2
|
%
|
Franchise
fees
|
|
346
|
|
|
220
|
|
|
126
|
|
57.3
|
%
|
Rental
income
|
|
713
|
|
|
799
|
|
|
(86)
|
|
(10.8)
|
%
|
Sales of ice cream
and other products
|
|
571
|
|
|
1,319
|
|
|
(748)
|
|
(56.7)
|
%
|
Other
revenues
|
|
2,708
|
|
|
2,055
|
|
|
653
|
|
31.8
|
%
|
Total
revenues
|
|
$
|
10,561
|
|
|
10,309
|
|
|
252
|
|
2.4
|
%
|
|
|
|
|
|
|
|
|
Segment
profit
|
|
$
|
7,300
|
|
|
6,088
|
|
|
1,212
|
|
19.9
|
%
|
|
|
|
|
|
|
|
|
Points of
distribution
|
|
2,518
|
|
|
2,526
|
|
|
(8)
|
|
(0.3)
|
%
|
Gross
openings
|
|
10
|
|
|
13
|
|
|
(3)
|
|
(23.1)
|
%
|
Net
closings
|
|
(11)
|
|
|
(3)
|
|
|
(8)
|
|
266.7
|
%
|
|
1
Comparable store sales growth for the three months ended March 28,
2015 have been revised to include only those restaurants that have
been open at least 78 weeks (approximately 18 months) to conform to
the current period calculation. Please refer to "Non-GAAP Measures
and Statistical Data" for further detail.
|
|
2
Systemwide sales include sales at franchisee- and company-operated
restaurants, including joint ventures. We do not record sales by
franchisees or licensees as revenue and such sales are not included
in our consolidated financial statements. Please refer to "Non-GAAP
Measures and Statistical Data" for further detail. Prior period
amounts have been revised to reflect the change from
franchisee-reported sales to systemwide sales. Additionally, the
prior period has been revised to reflect a reclassification of
systemwide sales generated in Puerto Rico from Baskin-Robbins
International to Baskin-Robbins U.S.
|
|
Baskin-Robbins U.S. first quarter revenue increased 2.4% from
the prior year period to $10.6
million due primarily to an increase in other revenues,
driven by an increase in licensing income, and increases in royalty
income and franchise fees, offset by a decrease in sales of ice
cream and other products. The fluctuations in licensing income and
sales of ice cream and other products can be attributed to a shift
in certain franchisees now purchasing ice cream directly from our
third-party ice cream manufacturer.
Segment profit for Baskin-Robbins U.S. increased $1.2 million in the first quarter, or 19.9%, over
the prior year period primarily as a result of the increases in
other revenues, royalty income, and franchise fees.
Amounts and
percentages may not recalculate due to rounding
|
|
Three months
ended
|
|
Increase
(Decrease)
|
Baskin-Robbins
International
|
|
March 26,
2016
|
|
March 28,
2015
|
|
$ /
#
|
%
|
|
($ in thousands
except as otherwise noted)
|
Comparable store
sales (decline) growth
|
|
(8.2)
|
%
|
|
0.3
|
%
|
|
|
|
Systemwide sales (in
millions)1
|
|
$
|
255.9
|
|
|
275.6
|
|
|
(19.7)
|
|
(7.1)
|
%
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
Royalty
income
|
|
$
|
1,380
|
|
|
1,407
|
|
|
(27)
|
|
(1.9)
|
%
|
Franchise
fees
|
|
113
|
|
|
197
|
|
|
(84)
|
|
(42.6)
|
%
|
Rental
income
|
|
106
|
|
|
118
|
|
|
(12)
|
|
(10.2)
|
%
|
Sales of ice cream
and other products
|
|
25,063
|
|
|
21,222
|
|
|
3,841
|
|
18.1
|
%
|
Other
revenues
|
|
172
|
|
|
186
|
|
|
(14)
|
|
(7.5)
|
%
|
Total
revenues
|
|
$
|
26,834
|
|
|
23,130
|
|
|
3,704
|
|
16.0
|
%
|
|
|
|
|
|
|
|
|
Segment
profit
|
|
$
|
8,384
|
|
|
7,057
|
|
|
1,327
|
|
18.8
|
%
|
|
|
|
|
|
|
|
|
Points of
distribution
|
|
5,120
|
|
|
5,048
|
|
|
72
|
|
1.4
|
%
|
Gross
openings
|
|
115
|
|
|
101
|
|
|
14
|
|
13.9
|
%
|
Net
openings
|
|
42
|
|
|
25
|
|
|
17
|
|
68.0
|
%
|
|
1
Systemwide sales include sales at franchisee- and company-operated
restaurants, including joint ventures. We do not record sales by
franchisees or licensees as revenue and such sales are not included
in our consolidated financial statements. Please refer to "Non-GAAP
Measures and Statistical Data" for further detail. The prior period
has been revised to reflect a reclassification of systemwide sales
generated in Puerto Rico from Baskin-Robbins International to
Baskin-Robbins U.S.
|
Baskin-Robbins International systemwide sales decreased 7.1% in
the first quarter compared to the prior year period driven by sales
declines in South Korea and the
Middle East, offset by sales
growth in Japan and Europe. Sales in South Korea were also negatively impacted by
unfavorable foreign exchange rates. On a constant currency basis,
systemwide sales decreased by approximately 3%.
Baskin-Robbins International first quarter revenues increased
16.0% over the prior year period to $26.8
million due primarily to an increase in sales of ice cream
and other products to the Middle
East. Systemwide sales and sales of ice cream and other
products are not directly correlated within a given period due to
the lag between shipment of products to licensees and retail sales
at franchised restaurants, as well as the overall timing of
deliveries between fiscal quarters.
First quarter segment profit increased 18.8% from the prior year
period to $8.4 million as a result of
an increase in net margin on ice cream driven primarily by
increases in sales volume and pricing, as well as a decrease in bad
debt expense. These increases in segment profit were offset by a
decrease in net income from our South
Korea joint venture.
COMPANY UPDATES
- The Company today announced that Paul
Twohig, President, Dunkin' Donuts U.S. and Canada, has decided to retire at the end of
the first quarter of 2017. The Company plans to name a successor
before the end of the year and is currently conducting a search
which will consider both internal and external candidates. Mr.
Twohig will remain in his current position, with responsibility for
Dunkin' Donuts U.S. and Canada
operations as well as global franchising and store development for
both Dunkin' Donuts and Baskin-Robbins, until a successor is
appointed and after that will remain actively involved with the
Company until he retires next year. The Company also announced the
promotions of Chris Fuqua to Senior
Vice President, Dunkin' Donuts Brand Marketing, Global Consumer
Insights & Product Innovation, and Scott Hudler to Chief Digital Officer.
- The Company today announced that the Board of Directors
declared a second quarter cash dividend of $0.30 per share, payable on June 8, 2016 to shareholders of record as of the
close of business on May 31,
2016.
- During the first quarter, the Company received nearly 500,000
shares upon final settlement of the accelerated share repurchase
("ASR") agreement that it entered into in October 2015. Under the agreement, the Company
repurchased a total of approximately 3.0 million shares at a
weighted average cost per share of $41.51. Also during the first quarter, the
Company entered into and completed an additional ASR agreement for
$30 million, resulting in the
repurchase of approximately 700,000 shares at a weighted average
cost per share of $42.72.
FISCAL YEAR 2016 TARGETS
As described below, the Company is reiterating each of its
targets regarding 2016 expectations.
- The Company continues to expect Donuts U.S. comparable store
sales growth of 0 to 2 percent and Baskin-Robbins U.S. comparable
store sales growth of 1 to 3 percent.
- The Company continues to expect that Dunkin' Donuts U.S. will
add between 430 and 460 net new restaurants, excluding the closure
of approximately 30 Speedway self-serve coffee stations. The
Company continues to expect Baskin-Robbins U.S. will add between 5
and 10 net new restaurants.
- Internationally, the Company continues to target opening
approximately 200 net new restaurants across the two brands. It
continues to expect net income of equity method investments to be
slightly less than 2015 full-year results.
- The Company continues to expect revenue growth of between 4 and
6 percent; adjusted operating income growth of between 8 and 10
percent; and adjusted earnings per share of $2.20 to $2.22 on a 53-week basis. The
adjusted earnings per share range assumes 94,000,000 shares
outstanding and a 38.5 percent tax rate.
- Fiscal year 2016 is a 53-week year for the Company. The target
ranges for revenue and adjusted operating income growth are
applicable on both a 52- and 53-week basis. The impact of the 53rd
week on adjusted earnings per share is approximately $0.03.
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 91087454.
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," or "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 such as 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. The Company uses these non-GAAP measures as key
performance measures for the purpose of evaluating performance
internally. We also believe these non-GAAP measures provide our
investors with useful information regarding our historical
operating 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, and diluted adjusted
earnings per share may differ from similar measures reported by
other companies. These non-GAAP measures 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 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.
Systemwide sales include sales at franchisee- and
company-operated restaurants, including joint ventures. While we do
not record sales by franchisees, licensees, or joint ventures as
revenue, and such sales are not included in our consolidated
financial statements, we believe that this operating measure is
important in obtaining an understanding of our financial
performance. We believe systemwide sales information aids in
understanding how we derive royalty revenue and in evaluating our
performance relative to competitors.
The Company uses "DD U.S. comparable store sales growth" and "BR
U.S. comparable store sales growth," which are calculated by
including only sales from franchisee- and company-operated
restaurants that have been open at least 78 weeks and that have
reported sales in the current and comparable prior year week.
Previously, DD U.S. comparable store sales growth and BR U.S.
comparable store sales growth were calculated including only sales
from franchisee- and company-operated restaurants that had been
open at least 54 weeks and that had reported sales in the current
and comparable prior year week. The calculation of this operating
measure was revised in the third quarter of 2015 to more accurately
reflect sales growth at comparable stores by minimizing the impact
of strong new store openings, particularly as we develop in newer
markets. All prior year amounts have been revised to conform to the
78-week calculation. There was no financial statement impact from
revising the calculation of this operating measure.
The Company uses "DD International comparable store sales
growth" and "BR International comparable store sales growth," which
are calculated by including only sales from franchisee- and
company-operated restaurants that have been open at least 54 weeks
and that have reported sales in the current and comparable prior
year week.
About Dunkin' Brands Group, Inc.
With more than 19,000 points of distribution in more than 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 the first quarter 2016, Dunkin'
Brands' nearly 100 percent franchised business model included more
than 11,800 Dunkin' Donuts restaurants and more than 7,600
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
|
|
|
March
26, 2016
|
|
March
28, 2015
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
Franchise fees and
royalty income
|
|
$
|
123,783
|
|
|
|
115,325
|
|
Rental
income
|
|
23,225
|
|
|
|
23,627
|
|
Sales of ice cream
and other products(1)
|
|
25,891
|
|
|
|
23,068
|
|
Sales at
company-operated restaurants
|
|
5,670
|
|
|
|
6,558
|
|
Other
revenues(1)
|
|
11,207
|
|
|
|
17,327
|
|
Total
revenues
|
|
189,776
|
|
|
|
185,905
|
|
Operating costs and
expenses:
|
|
|
|
|
|
Occupancy
expenses—franchised restaurants
|
|
13,196
|
|
|
|
13,518
|
|
Cost of ice cream and
other products(1)
|
|
17,234
|
|
|
|
15,346
|
|
Company-operated
restaurant expenses
|
|
6,493
|
|
|
|
6,858
|
|
General and
administrative expenses, net(1)
|
|
61,195
|
|
|
|
57,840
|
|
Depreciation
|
|
5,133
|
|
|
|
5,110
|
|
Amortization of other
intangible assets
|
|
5,761
|
|
|
|
6,200
|
|
Long-lived asset
impairment charges
|
|
93
|
|
|
|
264
|
|
Total operating costs
and expenses
|
|
109,105
|
|
|
|
105,136
|
|
Net income of equity
method investments
|
|
2,964
|
|
|
|
2,947
|
|
Other operating
income, net
|
|
1,698
|
|
|
|
24
|
|
Operating
income
|
|
85,333
|
|
|
|
83,740
|
|
Other income
(expense), net:
|
|
|
|
|
|
Interest
income
|
|
149
|
|
|
|
122
|
|
Interest
expense
|
|
(24,881)
|
|
|
|
(22,164)
|
|
Loss on debt
extinguishment and refinancing transactions
|
|
—
|
|
|
|
(20,554)
|
|
Other losses,
net
|
|
(370)
|
|
|
|
(545)
|
|
Total other expense,
net
|
|
(25,102)
|
|
|
|
(43,141)
|
|
Income before income
taxes
|
|
60,231
|
|
|
|
40,599
|
|
Provision for income
taxes
|
|
23,077
|
|
|
|
15,174
|
|
Net income including
noncontrolling interests
|
|
37,154
|
|
|
|
25,425
|
|
Net loss attributable
to noncontrolling interests
|
|
—
|
|
|
|
(206)
|
|
Net income
attributable to Dunkin' Brands
|
|
$
|
37,154
|
|
|
|
25,631
|
|
|
|
|
|
|
|
Earnings per
share—basic
|
|
$
|
0.41
|
|
|
|
0.26
|
|
Earnings per
share—diluted
|
|
0.40
|
|
|
|
0.25
|
|
|
|
|
|
|
|
|
|
(1) Sales
of products sold to Dunkin' Donuts International franchisees that
have historically been included in other revenues are now included
in sales of ice cream and other products. The related costs have
historically been included in general and administrative expenses,
net and are now included in cost of ice cream and other products.
Sales and costs from these transactions were reclassified for all
prior periods presented to conform to the current period
presentation.
|
DUNKIN' BRANDS
GROUP, INC. AND SUBSIDIARIES
|
Condensed
Consolidated Balance Sheets
|
(In
thousands)
|
(Unaudited)
|
|
|
March 26,
2016
|
|
December 26,
2015
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
223,524
|
|
|
|
260,430
|
|
Restricted
cash
|
|
67,665
|
|
|
|
71,917
|
|
Accounts, notes, and
other receivables, net
|
|
74,353
|
|
|
|
128,360
|
|
Other current
assets
|
|
91,702
|
|
|
|
97,117
|
|
Total current
assets
|
|
457,244
|
|
|
|
557,824
|
|
Property and
equipment, net
|
|
180,699
|
|
|
|
182,614
|
|
Equity method
investments
|
|
111,690
|
|
|
|
106,878
|
|
Goodwill and other
intangible assets, net
|
|
2,284,587
|
|
|
|
2,290,796
|
|
Other
assets
|
|
59,714
|
|
|
|
59,007
|
|
Total
assets
|
|
$
|
3,093,934
|
|
|
|
3,197,119
|
|
Liabilities and
Stockholders' Deficit
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Current portion of
long-term debt
|
|
$
|
25,000
|
|
|
|
25,000
|
|
Accounts
payable
|
|
15,270
|
|
|
|
18,663
|
|
Other current
liabilities
|
|
299,723
|
|
|
|
375,129
|
|
Total current
liabilities
|
|
339,993
|
|
|
|
418,792
|
|
Long-term debt,
net
|
|
2,415,909
|
|
|
|
2,420,600
|
|
Deferred income
taxes, net
|
|
471,907
|
|
|
|
476,510
|
|
Other long-term
liabilities
|
|
100,717
|
|
|
|
101,960
|
|
Total long-term
liabilities
|
|
2,988,533
|
|
|
|
2,999,070
|
|
Total stockholders'
deficit
|
|
(234,592)
|
|
|
|
(220,743)
|
|
Total liabilities and
stockholders' deficit
|
|
$
|
3,093,934
|
|
|
|
3,197,119
|
|
DUNKIN' BRANDS
GROUP, INC. AND SUBSIDIARIES
|
Condensed
Consolidated Statements of Cash Flows
|
(In
thousands)
|
(Unaudited)
|
|
|
Three months
ended
|
|
|
March
26,
2016
|
|
March
28, 2015
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities
|
|
$
|
26,525
|
|
|
|
(8,980)
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Additions to property
and equipment
|
|
(3,184)
|
|
|
|
(6,233)
|
|
Proceeds from sale of
real estate
|
|
2,645
|
|
|
|
—
|
|
Other, net
|
|
80
|
|
|
|
(1,499)
|
|
Net cash used in
investing activities
|
|
(459)
|
|
|
|
(7,732)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Proceeds from
issuance of long-term debt
|
|
—
|
|
|
|
2,500,000
|
|
Repayment of
long-term debt
|
|
(6,250)
|
|
|
|
(1,818,971)
|
|
Payment of deferred
financing and other debt-related costs
|
|
—
|
|
|
|
(40,953)
|
|
Dividends paid on
common stock
|
|
(27,395)
|
|
|
|
(25,688)
|
|
Repurchases of common
stock, including accelerated share repurchases
|
|
(30,000)
|
|
|
|
(459,821)
|
|
Exercise of stock
options
|
|
1,086
|
|
|
|
1,209
|
|
Change in restricted
cash
|
|
(6)
|
|
|
|
(6,900)
|
|
Other, net
|
|
(584)
|
|
|
|
538
|
|
Net cash provided by
(used in) financing activities
|
|
(63,149)
|
|
|
|
149,414
|
|
Effect of exchange
rates on cash and cash equivalents
|
|
177
|
|
|
|
(389)
|
|
Increase (decrease)
in cash and cash equivalents
|
|
(36,906)
|
|
|
|
132,313
|
|
Cash and cash
equivalents, beginning of period
|
|
260,430
|
|
|
|
208,080
|
|
Cash and cash
equivalents, end of period
|
|
$
|
223,524
|
|
|
|
340,393
|
|
DUNKIN' BRANDS
GROUP, INC. AND SUBSIDIARIES
|
Non-GAAP
Reconciliations
|
(In thousands, except
share and per share data)
|
(Unaudited)
|
|
|
Three months
ended
|
|
|
March
26, 2016
|
|
March
28, 2015
|
Operating
income
|
|
$
|
85,333
|
|
|
|
83,740
|
|
Operating income
margin
|
|
45.0
|
%
|
|
|
45.0
|
%
|
Adjustments:
|
|
|
|
|
|
Amortization of other
intangible assets
|
|
$
|
5,761
|
|
|
|
6,200
|
|
Long-lived asset
impairment charges
|
|
93
|
|
|
|
264
|
|
Transaction-related
costs(a)
|
|
55
|
|
|
|
154
|
|
Bertico and related
litigation(b)
|
|
—
|
|
|
|
(2,753)
|
|
Adjusted operating
income
|
|
$
|
91,242
|
|
|
|
87,605
|
|
Adjusted operating
income margin
|
|
48.1
|
%
|
|
|
47.1
|
%
|
|
|
|
|
|
|
Net income
attributable to Dunkin' Brands
|
|
$
|
37,154
|
|
|
|
25,631
|
|
Adjustments:
|
|
|
|
|
|
Amortization of other
intangible assets
|
|
5,761
|
|
|
|
6,200
|
|
Long-lived asset
impairment charges
|
|
93
|
|
|
|
264
|
|
Transaction-related
costs(a)
|
|
55
|
|
|
|
154
|
|
Bertico and related
litigation(b)
|
|
—
|
|
|
|
(2,753)
|
|
Loss on debt
extinguishment and refinancing transactions
|
|
—
|
|
|
|
20,554
|
|
Tax impact of
adjustments(c)
|
|
(2,364)
|
|
|
|
(9,768)
|
|
Adjusted net
income
|
|
$
|
40,699
|
|
|
|
40,282
|
|
|
|
|
|
|
|
Adjusted net
income
|
|
$
|
40,699
|
|
|
|
40,282
|
|
Weighted average
number of common shares – diluted
|
|
|
92,618,269
|
|
|
|
101,502,438
|
|
Diluted adjusted
earnings per share
|
|
$
|
0.44
|
|
|
|
0.40
|
|
|
|
|
|
|
|
(a) Represents
non-capitalizable costs incurred as a result of the securitized
financing facility, which was completed in January 2015.
|
(b) Represents a net
reduction to legal reserves for the Bertico litigation and related
matters, as a result of the Quebec Court of Appeals (Montreal)
ruling to reduce the damages assessed against the Company in the
Bertico litigation from approximately C$16.4 million to
approximately C$10.9 million, plus costs and interest.
|
(c) Tax impact of
adjustments calculated at a 40% effective tax rate.
|
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SOURCE Dunkin' Brands Group, Inc.