Denny's Corp (DENN) Reports In-Line Q2 EPS

Denny's Corp (NASDAQ: DENN) reported Q2 EPS of $0.13, in-line with the analyst estimate of $0.13. Revenue for the quarter came in at $124.32 million versus the consensus estimate of $125.78 million.

John Miller, President and Chief Executive Officer, stated, “We continued to generate strong Free Cash Flow* during the second quarter which supported ongoing investments in both Denny's brand revitalization and company restaurants and the return of capital to our shareholders. Not unlike others in the industry, our quarterly results were impacted by a challenging full-service dining environment as well as our prior year quarter, during which we achieved our strongest same-store sales performance in over a decade. Despite these circumstances, we continued to grow our revenues and improve our company and franchised restaurant margins through effective cost management. Going forward, we remain committed to delivering positive and profitable system sales growth by executing our brand revitalization strategy, enhancing the overall guest experience, and expanding our global reach.”

Business Outlook

Mark Wolfinger, Denny's Executive Vice President, Chief Administrative Officer and Chief Financial Officer, commented, “The continued successful execution of our brand transformation initiatives resulted in another quarter of increased revenues and company and franchise restaurant margins, along with greater profitability when excluding the one-time loss associated with our pension plan liquidation. Our highly franchised business is expected to generate over $50 million of Free Cash Flow* in 2016, after completing substantially all remodels at company restaurants and acquiring seven high-volume franchised restaurants."

The following full year 2016 estimates are based on management’s expectations at this time and exclude any impact from the liquidation of the Advantica Pension Plan.

• Same-store sales growth at company restaurants between 1.5% and 2.5% with same-store sales growth at domestic franchised restaurants between 1% and 2%.
• 44 to 48 new restaurant openings, with net restaurant growth of 10 to 15 restaurants.
• Acquisition of seven (vs. one**) franchised restaurants and refranchising of six (vs. four**) company restaurants.
• Total operating revenue between $505 and $508 million (vs. $500 and $505 million**) including franchise and licensing revenue between $139 and $140 million.
• Company restaurant margin between 17% and 17.5% (vs. 16.5% and 17.5%**) and franchise restaurant margin between 69% and 69.5% (vs. 68.5% and 69%**).
• Total general and administrative expenses between $65 and $67 million (vs. $64 and $67 million**).
• Adjusted EBITDA* between $96 and $98 million (vs. $94 and $96 million**).
• Depreciation and amortization expense between $21.5 and $22 million.
• Net interest expense between $11.5 and $12 million (vs. $11 and $11.5 million**).
• Effective income tax rate between 33% and 37% with $3 to $5 million of cash taxes.
• Cash capital expenditures between $29 and $31 million (vs. $19 and $21 million**) including the acquisition of seven franchised restaurants, completion of approximately 25 remodels at company restaurants, the opening of one new company restaurant, and the scrape and rebuild of one company restaurant.
• Free Cash Flow* between $51 and $53 million (vs. $60 and $62 million**).

For earnings history and earnings-related data on Denny's Corp (DENN) click here.

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