• Denny’s Corporation Reports Results for Second Quarter 2022

    المصدر: Nasdaq GlobeNewswire / 02 أغسطس 2022 15:05:03   America/Chicago

    SPARTANBURG, S.C., Aug. 02, 2022 (GLOBE NEWSWIRE) -- Denny’s Corporation (NASDAQ: DENN), franchisor and operator of one of America's largest franchised full-service restaurant chains, today reported results for its second quarter ended June 29, 2022 and provided a business update on the Company’s operations.

    Kelli Valade, Chief Executive Officer and President, stated, "We were pleased to have delivered Adjusted EBITDA* within our guided range despite the many inflationary pressures weighing on our performance and impacting consumer trends as we moved through the second quarter. While there is a level of volatility within the macroeconomic environment, we take pride in Denny’s being an iconic brand that is cycle-tested and resilient with deeply embedded value attributes. Moreover, our company has a solid foundation with significant competitive advantages that we believe can help us unlock shareholder value.”

    Ms. Valade continued, "Last month, we welcomed the Keke’s Breakfast Café team and franchisees to the Denny’s family. We believe Keke’s has attractive unit economics and strong potential within the fast-growing A.M. eatery segment which provides expansion opportunities as a complementary concept to the Denny's brand. We are excited to have Keke’s as part of our restaurant portfolio.”

    Second Quarter 2022 Highlights

    • Total operating revenue grew 8.3% to $115.0 million compared to the prior year quarter.
    • Domestic system-wide same-store sales** grew 2.5% compared to the equivalent fiscal period in 2021, including a 2.4% increase at domestic franchised restaurants and a 3.8% increase at company restaurants.
    • Opened four franchised restaurants, including one international location.
    • Completed 11 remodels, including 7 franchised restaurants.
    • Operating income was $13.9 million compared to $18.3 million in the prior year quarter.
    • Franchise Operating Margin* was $30.6 million, or 46.4% of franchise and license revenue, and Company Restaurant Operating Margin* was $4.3 million, or 8.8% of company restaurant sales.
    • Net income was $23.0 million, or $0.37 per diluted share.
    • Adjusted Net Income* and Adjusted Net Income Per Share* were $7.0 million and $0.11, respectively.
    • Adjusted EBITDA* was $17.2 million.
    • Cash provided by (used in) operating, investing, and financing activities was $16.7 million, ($2.9) million, and ($18.5) million, respectively.
    • Adjusted Free Cash Flow* was $6.6 million.
    • Repurchased $37.4 million of common stock.

    Second Quarter Results

    Denny’s total operating revenue increased 8.3% to $115.0 million compared to $106.2 million in the prior year quarter.

    Franchise and license revenue was $65.9 million compared to $58.6 million in the prior year quarter. Royalties were $28.8 million compared to $27.1 million in the prior year quarter. Advertising revenue was $19.5 million compared to $18.6 million in the prior year quarter. Initial and other fees were $7.8 million, including $5.7 million related to the kitchen modernization rollout, compared to $2.1 million in the prior year. Occupancy revenue was $9.8 million compared to $10.8 million in the prior year quarter.

    Company restaurant sales were $49.2 million compared to $47.6 million in the prior year quarter. This increase was primarily due to price increases and changes in product mix.

    Franchise Operating Margin* was $30.6 million, or 46.4% of franchise and license revenue, compared to $29.9 million, or 51.0%, in the prior year quarter. This margin dollar increase was primarily due to the improvement in sales performance at franchised restaurants. The margin rate was impacted by approximately 450 basis points due to the kitchen modernization rollout.

    Company Restaurant Operating Margin* was $4.3 million, or 8.8% of company restaurant sales, compared to $9.8 million, or 20.5%, in the prior year quarter. This margin change was primarily due to approximately $2.3 million of unfavorable legal reserve adjustments and commodity and labor inflation, partially offset by the improvement in sales performance at company restaurants.

    Total general and administrative expenses were $16.6 million, compared to $17.5 million in the prior year quarter. This improvement was primarily due to a benefit from deferred compensation valuation adjustments and a reduction in corporate incentive compensation, partially offset by an increase in corporate administrative expenses.

    The provision for income taxes was $7.8 million, reflecting an effective tax rate of 25.3%. Approximately $4.2 million in cash taxes were paid during the quarter.

    Net income was $23.0 million, or $0.37 per diluted share, compared to net loss of $0.8 million, or $0.01 per diluted share, in the prior year quarter. Adjusted Net Income* per share was $0.11 compared to $0.18 in the prior year quarter.

    Denny’s ended the quarter with $199.0 million of total debt outstanding, including $187.0 million of borrowings under its credit facility.

    Adjusted Free Cash Flow* and Capital Allocation

    Denny’s generated $6.6 million of Adjusted Free Cash Flow* in the quarter after investing $3.0 million in cash capital expenditures, including the remodel of four company restaurants and facilities maintenance.

    During the quarter, the Company allocated $37.4 million to share repurchases resulting in approximately $168 million remaining under its existing repurchase authorization.

    Business Outlook

    The following expectations for the fiscal third quarter ending September 28, 2022, inclusive of Keke's Breakfast Café, reflect management's expectations that the current consumer and economic environment will not change materially.

    • Denny's domestic system-wide same-store sales** between 0% and 2%.
    • Consolidated total general and administrative expenses between $17.5 million and $18.5 million, including approximately $2 million related to share-based compensation expense.
    • Consolidated Adjusted EBITDA* between $19 million and $21 million.

    * Please refer to the Reconciliation of Net Income and Net Cash Provided by (Used In) Operating Activities to Non-GAAP Financial Measures, as well as the Reconciliation of Operating Income to Non-GAAP Financial Measures included in the following tables. The Company is not able to reconcile the forward-looking non-GAAP estimates set forth above to their most directly comparable U.S. generally accepted accounting principles (GAAP) estimates without unreasonable efforts because it is unable to predict, forecast or determine the probable significance of the items impacting these estimates, including gains, losses and other charges, with a reasonable degree of accuracy. Accordingly, the most directly comparable forward-looking GAAP estimates are not provided.

    ** Same-store sales include sales at company restaurants and non-consolidated franchised and licensed restaurants that were open during the comparable periods noted. Total operating revenue is limited to company restaurant sales and royalties, advertising revenue, fees and occupancy revenue from non-consolidated franchised and licensed restaurants. Accordingly, domestic franchise same-store sales and domestic system-wide same-store sales should be considered as a supplement to, not a substitute for, the Company's results as reported under GAAP.

    Conference Call and Webcast Information

    Denny’s will provide further commentary on the results for the second quarter ended June 29, 2022 on its quarterly investor conference call today, Tuesday, August 2, 2022 at 4:30 p.m. Eastern Time. Interested parties are invited to listen to a live broadcast of the conference call accessible through the Denny's investor relations website at investor.dennys.com.

    About Denny’s

    Denny's Corporation is the franchisor and operator of one of America's largest franchised full-service restaurant chains, based on the number of restaurants. As of June 29, 2022, Denny’s had 1,631 franchised, licensed, and company restaurants around the world including 154 restaurants in Canada, Puerto Rico, Mexico, the Philippines, New Zealand, Honduras, the United Arab Emirates, Costa Rica, Guam, Guatemala, El Salvador, Indonesia, and the United Kingdom. For further information on Denny's, including news releases, links to SEC filings, and other financial information, please visit the Denny's investor relations website at investor.dennys.com.

    About Keke’s Breakfast Café

    Keke’s Breakfast Café is the franchisor and operator of a full-service A.M. eatery concept, currently consisting of 52 domestic restaurants in Florida, including 44 franchised locations. For further information on Keke’s, please visit kekes.com.

    Cautionary Language Regarding Forward-Looking Statements

    The Company urges caution in considering its current trends and any outlook on earnings disclosed in this press release. In addition, certain matters discussed in this release may constitute forward-looking statements. These forward-looking statements, which reflect management's best judgment based on factors currently known, are intended to speak only as of the date such statements are made and involve risks, uncertainties, and other factors that may cause the actual performance of Denny’s Corporation, its subsidiaries, and underlying restaurants to be materially different from the performance indicated or implied by such statements. Words such as “expect”, “anticipate”, “believe”, “intend”, “plan”, “hope”, "will", and variations of such words and similar expressions are intended to identify such forward-looking statements. Except as may be required by law, the Company expressly disclaims any obligation to update these forward-looking statements to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events. Factors that could cause actual performance to differ materially from the performance indicated by these forward-looking statements include, among others: the evolving COVID-19 pandemic and related containment measures, including the potential for further operational disruption from government mandates affecting restaurants; economic, public health and political conditions that impact consumer confidence and spending, including COVID-19; commodity and labor inflation; the ability to effectively staff restaurants; the Company's ability to maintain adequate levels of liquidity for its cash needs, including debt obligations, payment of dividends, planned share repurchases and capital expenditures as well as the ability of its customers, suppliers, franchisees and lenders to access sources of liquidity to provide for their own cash needs; competitive pressures from within the restaurant industry; the Company's ability to integrate and derive the expected benefits from our acquisition of Keke's Breakfast Cafe; the level of success of the Company’s operating initiatives and advertising and promotional efforts; adverse publicity; health concerns arising from food-related pandemics, outbreaks of flu viruses or other diseases; changes in business strategy or development plans; terms and availability of capital; regional weather conditions; overall changes in the general economy (including with regard to energy costs), particularly at the retail level; political environment and geopolitical events (including acts of war and terrorism); and other factors from time to time set forth in the Company’s SEC reports and other filings, including but not limited to the discussion in Management’s Discussion and Analysis and the risks identified in Item 1A. Risk Factors contained in the Company’s Annual Report on Form 10-K for the year ended December 29, 2021 (and in the Company’s subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K).

    DENNY’S CORPORATION
    Condensed Consolidated Balance Sheets
    (Unaudited)
        
    ($ in thousands)6/29/22 12/29/21
    Assets   
    Current assets   
    Cash and cash equivalents$1,360  $30,624 
    Investments 3,529   2,551 
    Receivables, net 23,193   19,621 
    Inventories 12,208   5,060 
    Assets held for sale 1,319   — 
    Prepaid and other current assets 7,829   11,393 
    Total current assets 49,438   69,249 
    Property, net 92,934   91,176 
    Financing lease right-of-use assets, net 7,103   7,709 
    Operating lease right-of-use assets, net 124,176   128,727 
    Goodwill 36,884   36,884 
    Intangible assets, net 49,581   50,226 
    Deferred financing costs, net 2,654   2,971 
    Deferred income taxes, net —   11,502 
    Other noncurrent assets 30,048   37,083 
    Total assets$392,818  $435,527 
        
    Liabilities   
    Current liabilities   
    Current finance lease liabilities$1,896  $1,952 
    Current operating lease liabilities 15,051   15,829 
    Accounts payable 16,675   15,595 
    Other current liabilities 56,680   64,146 
    Total current liabilities 90,302   97,522 
    Long-term liabilities   
    Long-term debt 187,000   170,000 
    Noncurrent finance lease liabilities 10,117   10,744 
    Noncurrent operating lease liabilities 121,807   126,296 
    Liability for insurance claims, less current portion 7,386   8,438 
    Deferred income taxes, net 1,994   — 
    Other noncurrent liabilities 32,920   87,792 
    Total long-term liabilities 361,224   403,270 
    Total liabilities 451,526   500,792 
        
    Shareholders' deficit   
    Common stock 650   642 
    Paid-in capital 138,347   135,596 
    Deficit (71,583)  (116,441)
    Accumulated other comprehensive loss, net (46,281)  (54,470)
    Treasury stock (79,841)  (30,592)
    Total shareholders' deficit (58,708)  (65,265)
    Total liabilities and shareholders' deficit$392,818  $435,527 
        
    Debt Balances
    Credit facility revolver due 2026$187,000  $170,000 
    Finance lease liabilities 12,013   12,696 
    Total debt$199,013  $182,696 
            


    DENNY’S CORPORATION
    Condensed Consolidated Statements of Operations
    (Unaudited)
        
     Quarter Ended
    ($ in thousands, except per share amounts)6/29/22 6/30/21
    Revenue:   
    Company restaurant sales$49,167  $47,572 
    Franchise and license revenue 65,850   58,593 
    Total operating revenue 115,017   106,165 
    Costs of company restaurant sales, excluding depreciation and amortization 44,828   37,813 
    Costs of franchise and license revenue, excluding depreciation and amortization 35,265   28,735 
    General and administrative expenses 16,623   17,548 
    Depreciation and amortization 3,590   3,897 
    Operating (gains), losses and other charges, net 846   (113)
    Total operating costs and expenses, net 101,152   87,880 
    Operating income 13,865   18,285 
    Interest expense, net 2,878   4,066 
    Other nonoperating expense (income), net (19,795)  16,251 
    Income (loss) before income taxes 30,782   (2,032)
    Provision for (benefit from) income taxes 7,779   (1,204)
    Net income (loss)$23,003  $(828)
        
    Net income (loss) per share - basic$0.37  $(0.01)
    Net income (loss) per share - diluted$0.37  $(0.01)
        
    Basic weighted average shares outstanding 62,306   65,294 
    Diluted weighted average shares outstanding 62,430   65,294 
        
    Comprehensive income (loss)$25,411  $(578)
        
    General and Administrative Expenses  
    Corporate administrative expenses$13,162  $10,345 
    Share-based compensation 3,505   3,388 
    Incentive compensation 1,639   3,032 
    Deferred compensation valuation adjustments (1,683)  783 
    Total general and administrative expenses$16,623  $17,548 
            


    DENNY’S CORPORATION
    Condensed Consolidated Statements of Operations
    (Unaudited)
        
     Two Quarters Ended
    ($ in thousands, except per share amounts)6/29/22 6/30/21
    Revenue:   
    Company restaurant sales$93,143  $81,141 
    Franchise and license revenue 124,981   105,600 
    Total operating revenue 218,124   186,741 
    Costs of company restaurant sales, excluding depreciation and amortization 83,453   67,977 
    Costs of franchise and license revenue, excluding depreciation and amortization 65,934   52,493 
    General and administrative expenses 33,581   34,495 
    Depreciation and amortization 7,138   7,558 
    Operating (gains), losses and other charges, net 846   419 
    Total operating costs and expenses, net 190,952   162,942 
    Operating income 27,172   23,799 
    Interest expense, net 5,838   8,343 
    Other nonoperating income, net (39,410)  (13,797)
    Income before income taxes 60,744   29,253 
    Provision for income taxes 15,886   6,900 
    Net income$44,858  $22,353 
        
    Net income per share - basic$0.71  $0.34 
    Net income per share - diluted$0.71  $0.34 
        
    Basic weighted average shares outstanding 62,822   65,273 
    Diluted weighted average shares outstanding 63,003   65,789 
        
    Comprehensive income$53,047  $25,678 
        
    General and Administrative Expenses  
    Corporate administrative expenses$24,545  $21,217 
    Share-based compensation 7,520   6,860 
    Incentive compensation 3,758   5,118 
    Deferred compensation valuation adjustments (2,242)  1,300 
    Total general and administrative expenses$33,581  $34,495 
            


    DENNY’S CORPORATION
    Reconciliation of Net Income (Loss) and Net Cash Provided by Operating Activities to Non-GAAP Financial Measures
    (Unaudited)

    The Company believes that, in addition to U.S. generally accepted accounting principles (GAAP) measures, certain non-GAAP financial measures are appropriate indicators to assist in the evaluation of operating performance and liquidity on a period-to-period basis. The Company uses Adjusted EBITDA, Adjusted Free Cash Flow, Adjusted Net Income and Adjusted Net Income Per Share internally as performance measures for planning purposes, including the preparation of annual operating budgets, and for compensation purposes, including incentive compensation for certain employees. Adjusted EBITDA is also used in the calculation of financial covenant ratios in accordance with the Company’s credit facility. Adjusted Free Cash Flow is also used as a non-GAAP liquidity measure by Management to assess the Company’s ability to generate cash and plan for future operating and capital actions. Management believes that the presentation of Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income Per Share and Adjusted Free Cash Flow provide useful information to investors and analysts about the Company’s operating results, financial condition or cash flows. However, each of these non-GAAP financial measures should be considered as a supplement to, not a substitute for, operating income, net income (loss), net income (loss) per share, net cash provided by operating activities, or other financial performance and liquidity measures prepared in accordance with GAAP.

     Quarter Ended Two Quarters Ended
    ($ in thousands)6/29/22 6/30/21 6/29/22 6/30/21
    Net income (loss)$23,003  $(828) $44,858  $22,353 
    Provision for (benefit from) income taxes 7,779   (1,204)  15,886   6,900 
    Operating (gains), losses and other charges, net 846   (113)  846   419 
    Other nonoperating expense (income), net (19,795)  16,251   (39,410)  (13,797)
    Share-based compensation expense 3,505   3,388   7,520   6,860 
    Deferred compensation plan valuation adjustments (1,683)  783   (2,242)  1,300 
    Interest expense, net 2,878   4,066   5,838   8,343 
    Depreciation and amortization 3,590   3,897   7,138   7,558 
    Cash payments for restructuring charges and exit costs (208)  (869)  (381)  (1,274)
    Cash payments for share-based compensation (2,693)  (69)  (5,147)  (1,565)
    Adjusted EBITDA$17,222  $25,302  $34,906  $37,097 
            


    DENNY’S CORPORATION
    Reconciliation of Net Income (Loss) and Net Cash Provided by Operating Activities
    to Non-GAAP Financial Measures Continued
    (Unaudited)
     
     Quarter Ended Two Quarters Ended
    ($ in thousands)6/29/22 6/30/21 6/29/22 6/30/21
    Net cash provided by operating activities$16,673  $33,136  $9,609  $43,371 
    Capital expenditures (2,993)  (1,525)  (5,771)  (3,108)
    Cash payments for restructuring charges and exit costs (208)  (869)  (381)  (1,274)
    Cash payments for share-based compensation (2,693)  (69)  (5,147)  (1,565)
    Deferred compensation plan valuation adjustments (1,683)  783   (2,242)  1,300 
    Other nonoperating expense (income), net (19,795)  16,251   (39,410)  (13,797)
    Gains (losses) on investments (158)  5   (223)  (3)
    Gains (losses) on early termination of debt and leases —   106   (24)  72 
    Amortization of deferred financing costs (159)  (344)  (317)  (688)
    Gains (losses) and amortization on interest rate swap derivatives, net 21,671   (17,227)  41,924   12,506 
    Interest expense, net 2,878   4,066   5,838   8,343 
    Cash interest expense, net (1) (3,449)  (4,455)  (7,175)  (9,041)
    Deferred income tax (expense) benefit (6,330)  1,888   (10,766)  (2,211)
    Provision for (benefit from) income taxes 7,779   (1,204)  15,886   6,900 
    Income taxes paid, net (4,195)  (1,521)  (4,644)  (1,942)
    Changes in operating assets and liabilities       
    Receivables (148)  (404)  3,419   (757)
    Inventories 2,380   111   7,148   98 
    Other current assets (112)  (1,383)  (3,563)  (6,677)
    Other noncurrent assets (2,040)  1,116   (6,125)  1,317 
    Operating lease assets and liabilities 222   217   466   821 
    Accounts payable (864)  (3,800)  1,541   (5,620)
    Accrued payroll (1,754)  (3,696)  5,721   (1,992)
    Accrued taxes 337   (814)  338   (434)
    Other accrued liabilities (2,485)  (3,454)  5,003   (4,649)
    Other noncurrent liabilities 3,711   887   6,211   2,036 
    Adjusted Free Cash Flow$6,585  $17,801  $17,316  $23,006 
            

    (1) Includes cash interest expense, net and cash payments of approximately $0.7 million and $1.7 million for dedesignated interest rate swap derivatives for the quarter and year-to-date periods ended June 29, 2022, respectively. Includes cash interest expense, net and cash payments of approximately $0.8 million and $1.6 million for dedesignated interest rate swap derivatives for the quarter and year-to-date periods ended June 30, 2021, respectively.

    DENNY’S CORPORATION
    Reconciliation of Net Income (Loss) and Net Cash Provided by Operating Activities
    to Non-GAAP Financial Measures Continued
    (Unaudited)
     
     Quarter Ended Two Quarters Ended
    ($ in thousands, except per share amounts)6/29/22 6/30/21 6/29/22 6/30/21
    Adjusted EBITDA$17,222  $25,302  $34,906  $37,097 
    Cash interest expense, net (1) (3,449)  (4,455)  (7,175)  (9,041)
    Cash paid for income taxes, net (4,195)  (1,521)  (4,644)  (1,942)
    Cash paid for capital expenditures (2,993)  (1,525)  (5,771)  (3,108)
    Adjusted Free Cash Flow$6,585  $17,801  $17,316  $23,006 
            
    Net income (loss)$23,003  $(828) $44,858  $22,353 
    Gains (losses) and amortization on interest rate swap derivatives, net (21,671)  17,227   (41,924)  (12,506)
    Gains on sales of assets and other, net (99)  (65)  (245)  (1,007)
    Impairment charges 266   —   266   — 
    Tax effect (2) 5,451   (4,756)  10,979   3,189 
    Adjusted Net Income$6,950  $11,578  $13,934  $12,029 
            
    Adjusted diluted weighted average shares outstanding 62,430   65,829   63,003   65,789 
            
    Net Income (Loss) Per Share - Diluted$0.37  $(0.01) $0.71  $0.34 
    Adjustments Per Share$(0.26) $0.19  $(0.49) $(0.16)
    Adjusted Net Income Per Share$0.11  $0.18  $0.22  $0.18 
            

    (1) Includes cash interest expense, net and cash payments of approximately $0.7 million and $1.7 million for dedesignated interest rate swap derivatives for the quarter and year-to-date periods ended June 29, 2022, respectively. Includes cash interest expense, net and cash payments of approximately $0.8 million and $1.6 million for dedesignated interest rate swap derivatives for the quarter and year-to-date periods ended June 30, 2021, respectively.

    (2) Tax adjustments for the quarter and year-to-date periods ended June 29, 2022 reflect an effective tax rates of 25.3% and 26.2%, respectively. Tax adjustments for the quarter and year-to-date periods ended June 30, 2021 reflect an effective tax rates of 27.7% and 23.6%, respectively.

    DENNY’S CORPORATION
    Reconciliation of Operating Income to Non-GAAP Financial Measures
    (Unaudited)

    The Company believes that, in addition to GAAP measures, certain other non-GAAP financial measures are appropriate indicators to assist in the evaluation of restaurant-level operating efficiency and performance of ongoing restaurant-level operations. The Company uses Restaurant-level Operating Margin, Company Restaurant Operating Margin and Franchise Operating Margin internally as performance measures for planning purposes, including the preparation of annual operating budgets, and these three non-GAAP measures are used to evaluate operating effectiveness.

    The Company defines Restaurant-level Operating Margin as operating income excluding the following three items: general and administrative expenses, depreciation and amortization, and operating (gains), losses and other charges, net. Restaurant-level Operating Margin is presented as a percent of total operating revenue. The Company excludes general and administrative expenses, which include primarily non-restaurant-level costs associated with support of company and franchised restaurants and other activities at their corporate office. The Company excludes depreciation and amortization expense, substantially all of which is related to company restaurant-level assets, because such expenses represent historical sunk costs which do not reflect current cash outlays for the restaurants. The Company excludes special items, included within operating (gains), losses and other charges, net, to provide investors with a clearer perspective of its ongoing operating performance and a more relevant comparison to prior period results.

    Restaurant-level Operating Margin is the total of Company Restaurant Operating Margin and Franchise Operating Margin. The Company defines Company Restaurant Operating Margin as company restaurant sales less costs of company restaurant sales (which include product costs, company restaurant level payroll and benefits, occupancy costs, and other operating costs including utilities, repairs and maintenance, marketing and other expenses) and presents it as a percent of company restaurant sales. The Company defines Franchise Operating Margin as franchise and license revenue (which includes franchise royalties and other non-food and beverage revenue streams such as initial franchise and other fees, advertising revenue and occupancy revenue) less costs of franchise and license revenue and presents it as a percent of franchise and license revenue.

    These non-GAAP financial measures provide a meaningful comparison between periods and enable investors to focus on the performance of restaurant-level operations by excluding revenues and costs unrelated to food and beverage sales in addition to corporate general and administrative expense, depreciation and amortization, and operating (gains), losses and other charges, net. However, each of these non-GAAP financial measures should be considered as a supplement to, not a substitute for, operating income, net income or other financial performance measures prepared in accordance with U.S. generally accepted accounting principles. Restaurant-level Operating Margin, Company Restaurant Operating Margin and Franchise Operating Margin do not accrue directly to the benefit of shareholders because of the aforementioned excluded items and are not indicative of the overall results for the Company.

     Quarter Ended Two Quarters Ended
    ($ in thousands)6/29/22 6/30/21 6/29/22 6/30/21
    Operating income$13,865  $18,285  $27,172  $23,799 
    General and administrative expenses 16,623   17,548   33,581   34,495 
    Depreciation and amortization 3,590   3,897   7,138   7,558 
    Operating (gains), losses and other charges, net 846   (113)  846   419 
    Restaurant-level Operating Margin$34,924  $39,617  $68,737  $66,271 
            
    Restaurant-level Operating Margin consists of:       
    Company Restaurant Operating Margin (1)$4,339  $9,759  $9,690  $13,164 
    Franchise Operating Margin (2) 30,585   29,858   59,047   53,107 
    Restaurant-level Operating Margin$34,924  $39,617  $68,737  $66,271 
                    

    (1) Company Restaurant Operating Margin is calculated as operating income plus general and administrative expenses; depreciation and amortization; operating (gains), losses and other charges, net; and costs of franchise and license revenue; less franchise and license revenue.  

    (2) Franchise Operating Margin is calculated as operating income plus general and administrative expenses; depreciation and amortization; operating (gains), losses and other charges, net; and costs of company restaurant sales; less company restaurant sales.

    DENNY’S CORPORATION
    Operating Margins
    (Unaudited)
        
     Quarter Ended
    ($ in thousands)6/29/22 6/30/21
    Company restaurant operations: (1)     
    Company restaurant sales$49,167 100.0% $47,572 100.0%
    Costs of company restaurant sales:     
    Product costs 13,168 26.8%  11,447 24.1%
    Payroll and benefits 18,336 37.3%  16,970 35.7%
    Occupancy 3,782 7.7%  2,844 6.0%
    Other operating costs:     
    Utilities 1,650 3.4%  1,390 2.9%
    Repairs and maintenance 889 1.8%  635 1.3%
    Marketing 1,330 2.7%  1,365 2.9%
    Other direct costs 5,673 11.5%  3,162 6.6%
    Total costs of company restaurant sales$44,828 91.2% $37,813 79.5%
    Company restaurant operating margin (non-GAAP) (2)$4,339 8.8% $9,759 20.5%
          
    Franchise operations: (3)     
    Franchise and license revenue:     
    Royalties$28,759 43.7% $27,117 46.3%
    Advertising revenue 19,486 29.6%  18,600 31.7%
    Initial and other fees 7,779 11.8%  2,066 3.5%
    Occupancy revenue 9,826 14.9%  10,810 18.4%
    Total franchise and license revenue$65,850 100.0% $58,593 100.0%
          
    Costs of franchise and license revenue:     
    Advertising costs$19,486 29.6% $18,600 31.7%
    Occupancy costs 6,064 9.2%  6,879 11.7%
    Other direct costs 9,715 14.8%  3,256 5.6%
    Total costs of franchise and license revenue$35,265 53.6% $28,735 49.0%
    Franchise operating margin (non-GAAP) (2)$30,585 46.4% $29,858 51.0%
          
    Total operating revenue (4)$115,017 100.0% $106,165 100.0%
    Total costs of operating revenue (4) 80,093 69.6%  66,548 62.7%
    Restaurant-level operating margin (non-GAAP) (4)(2)$34,924 30.4% $39,617 37.3%
          
    Other operating expenses: (4)(2)     
    General and administrative expenses$16,623 14.5% $17,548 16.5%
    Depreciation and amortization 3,590 3.1%  3,897 3.7%
    Operating (gains), losses and other charges, net 846 0.7%  (113)(0.1)%
    Total other operating expenses$21,059 18.3% $21,332 20.1%
          
    Operating income (4)$13,865 12.1% $18,285 17.2%
          

    (1) As a percentage of company restaurant sales.  
    (2) Other operating expenses such as general and administrative expenses and depreciation and amortization relate to both company and franchise operations and are not allocated to costs of company restaurant sales and costs of franchise and license revenue. As such, operating margin is considered a non-GAAP financial measure. Operating margins should be considered as a supplement to, not as a substitute for, operating income, net income (loss) or other financial measures prepared in accordance with U.S. generally accepted accounting principles.  
    (3) As a percentage of franchise and license revenue.  
    (4) As a percentage of total operating revenue.

    DENNY’S CORPORATION
    Operating Margins
    (Unaudited)
        
     Two Quarters Ended
    ($ in thousands)6/29/22 6/30/21
    Company restaurant operations: (1)     
    Company restaurant sales$93,143 100.0% $81,141 100.0%
    Costs of company restaurant sales:     
    Product costs 24,412 26.2%  19,719 24.3%
    Payroll and benefits 35,422 38.0%  29,935 36.9%
    Occupancy 7,022 7.5%  5,694 7.0%
    Other operating costs:     
    Utilities 3,227 3.5%  2,615 3.2%
    Repairs and maintenance 1,714 1.8%  1,168 1.4%
    Marketing 2,537 2.7%  2,332 2.9%
    Other direct costs 9,119 9.8%  6,514 8.0%
    Total costs of company restaurant sales$83,453 89.6% $67,977 83.8%
    Company restaurant operating margin (non-GAAP) (2)$9,690 10.4% $13,164 16.2%
          
    Franchise operations: (3)     
    Franchise and license revenue:     
    Royalties$55,284 44.2% $47,961 45.4%
    Advertising revenue 37,692 30.2%  32,711 31.0%
    Initial and other fees 12,286 9.8%  3,904 3.7%
    Occupancy revenue 19,719 15.8%  21,024 19.9%
    Total franchise and license revenue$124,981 100.0% $105,600 100.0%
          
    Costs of franchise and license revenue:     
    Advertising costs$37,692 30.2% $32,711 31.0%
    Occupancy costs 12,441 10.0%  13,418 12.7%
    Other direct costs 15,801 12.6%  6,364 6.0%
    Total costs of franchise and license revenue$65,934 52.8% $52,493 49.7%
    Franchise operating margin (non-GAAP) (2)$59,047 47.2% $53,107 50.3%
          
    Total operating revenue (4)$218,124 100.0% $186,741 100.0%
    Total costs of operating revenue (4) 149,387 68.5%  120,470 64.5%
    Restaurant-level operating margin (non-GAAP) (4)(2)$68,737 31.5% $66,271 35.5%
          
    Other operating expenses: (4)(2)     
    General and administrative expenses$33,581 15.4% $34,495 18.5%
    Depreciation and amortization 7,138 3.3%  7,558 4.0%
    Operating (gains), losses and other charges, net 846 0.4%  419 0.2%
    Total other operating expenses$41,565 19.1% $42,472 22.7%
          
    Operating income (4)$27,172 12.5% $23,799 12.7%
          

    (1) As a percentage of company restaurant sales.  
    (2) Other operating expenses such as general and administrative expenses and depreciation and amortization relate to both company and franchise operations and are not allocated to costs of company restaurant sales and costs of franchise and license revenue. As such, operating margin is considered a non-GAAP financial measure. Operating margin should be considered as a supplement to, not as a substitute for, operating income, net income (loss) or other financial measures prepared in accordance with U.S. generally accepted accounting principles.  
    (3) As a percentage of franchise and license revenue.  
    (4) As a percentage of total operating revenue.

    DENNY’S CORPORATION
    Statistical Data
    (Unaudited)
            
    Changes in Same-Store Sales (1) vs. Prior YearQuarter Ended Two Quarters Ended
    (Increase (decrease))6/29/22 6/30/21 6/29/22 6/30/21
    Company Restaurants 3.8%  172.1%  14.9%  46.8%
    Domestic Franchised Restaurants 2.4%  113.2%  11.2%  30.8%
    Domestic System-wide Restaurants 2.5%  117.0%  11.5%  31.9%
            
    Average Unit SalesQuarter Ended Two Quarters Ended
    ($ in thousands)6/29/22 6/30/21 6/29/22 6/30/21
    Company Restaurants$761  $732  $1,443  $1,257 
    Franchised Restaurants$442  $416  $846  $742 
            
       Franchised    
    Restaurant Unit ActivityCompany & Licensed Total  
    Ending Units March 30, 2022 65   1,569   1,634   
    Units Opened —   4   4   
    Units Closed —   (7)  (7)  
    Net Change —   (3)  (3)  
    Ending Units June 29, 2022 65   1,566   1,631   
            
    Equivalent Units       
    Second Quarter 2022 64   1,567   1,631   
    Second Quarter 2021 65   1,582   1,647   
    Net Change (1)  (15)  (16)  
            
       Franchised    
    Restaurant Unit ActivityCompany & Licensed Total  
    Ending Units December 29, 2021 65   1,575   1,640   
    Units Opened —   9   9   
    Units Closed —   (18)  (18)  
    Net Change —   (9)  (9)  
    Ending Units June 29, 2022 65   1,566   1,631   
            
    Equivalent Units       
    Year-to-Date 2022 64   1,570   1,634   
    Year-to-Date 2021 65   1,583   1,648   
    Net Change (1)  (13)  (14)  
            

    (1) Same-store sales include sales at company restaurants and non-consolidated franchised and licensed restaurants that were open during the comparable periods noted. Total operating revenue is limited to company restaurant sales and royalties, advertising revenue, fees and occupancy revenue from non-consolidated franchised and licensed restaurants. Accordingly, domestic franchise same-store sales and domestic system-wide same-store sales should be considered as a supplement to, not a substitute for, the Company's results as reported under GAAP.


    Investor Contact:
Curt Nichols
877-784-7167

Media Contact:
Hadas Streit, Allison+Partners
646-428-0629

    Primary Logo

شارك على،