001-35258 | 20-4145825 |
(Commission File Number) | (IRS Employer Identification Number) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
99.1 | Press Release of Dunkin’ Brands Group, Inc. dated July 25, 2013 regarding the release of quarterly financial results and other information. |
99.2 | Press Release of Dunkin’ Brands Group, Inc. dated July 25, 2013 announcing the declaration of a $0.19 quarterly cash dividend. |
DUNKIN’ BRANDS GROUP, INC. | ||
By: | /s/ Nigel Travis | |
Nigel Travis | ||
Chief Executive Officer |
• | Dunkin' Donuts U.S. comparable store sales growth of 4.0% |
• | Added 151 net new restaurants worldwide including 63 net new Dunkin' Donuts in the U.S. |
• | Adjusted operating income increased 15.5% |
• | Adjusted operating income margin expanded 420 basis points to 50.0% |
• | Adjusted EPS increased approximately 24% to $0.41 |
• | Company returned nearly $40 million to shareholders through share repurchases and dividends |
($ in millions, except per share data) | Three months ended | Increase (Decrease) | ||||||||
June 29, 2013 | June 30, 2012 | $ / # | % | |||||||
Franchisee reported sales | $ | 2,397.6 | 2,273.0 | 124.6 | 5.5 | % | ||||
Systemwide sales growth | 5.5 | % | 6.9 | % | ||||||
Comparable store sales growth (decline): | ||||||||||
DD U.S. comparable store sales growth | 4.0 | % | 4.0 | % | ||||||
BR U.S. comparable store sales growth | 1.6 | % | 4.6 | % | ||||||
DD International comparable store sales growth (decline) | (1.7 | )% | 3.5 | % | ||||||
BR International comparable store sales growth | 2.6 | % | 1.5 | % | ||||||
Development data: | ||||||||||
Consolidated global net POD development | 151 | 140 | 11 | 7.9 | % | |||||
DD global PODs at period end | 10,647 | 10,169 | 478 | 4.7 | % | |||||
BR global PODs at period end | 7,071 | 6,847 | 224 | 3.3 | % | |||||
Consolidated global PODs at period end | 17,718 | 17,016 | 702 | 4.1 | % | |||||
Financial data: | ||||||||||
Revenues | $ | 182.5 | 172.4 | 10.1 | 5.9 | % | ||||
Operating income | 76.8 | 46.1 | 30.7 | 66.5 | % | |||||
Operating income margin | 42.1 | % | 26.8 | % | ||||||
Adjusted operating income1 | $ | 91.2 | 78.9 | 12.2 | 15.5 | % | ||||
Adjusted operating income margin1 | 50.0 | % | 45.8 | % | ||||||
Net income | $ | 40.8 | 18.5 | 22.3 | 120.6 | % | ||||
Adjusted net income1 | 43.9 | 40.3 | 3.6 | 8.8 | % | |||||
Earnings per share: | ||||||||||
Common – basic and diluted | 0.38 | 0.15 | 0.23 | 153.3 | % | |||||
Diluted adjusted earnings per share1 | 0.41 | 0.33 | 0.08 | 24.2 | % | |||||
Weighted average number of common shares – diluted (in millions) | 108.2 | 122.0 | (13.8 | ) | (11.3 | )% | ||||
(amounts and percentages may not recalculate due to rounding) |
Amounts and percentages may not recalculate due to rounding | ||||||||||||
Three months ended | Increase (Decrease) | |||||||||||
Dunkin' Donuts U.S. | June 29, 2013 | June 30, 2012 | $ / # | % | ||||||||
($ in thousands except as otherwise noted) | ||||||||||||
Comparable store sales growth | 4.0 | % | 4.0 | % | ||||||||
Systemwide sales growth | 8.2 | % | 7.8 | % | ||||||||
Franchisee reported sales (in millions) | $ | 1,704.5 | 1,574.9 | 129.6 | 8.2 | % | ||||||
Revenues: | ||||||||||||
Royalty income | $ | 91,954 | 84,897 | 7,057 | 8.3 | % | ||||||
Franchise fees | 5,694 | 6,363 | (669 | ) | (10.5 | )% | ||||||
Rental income | 24,042 | 24,789 | (747 | ) | (3.0 | )% | ||||||
Sales at company-owned restaurants | 6,240 | 5,894 | 346 | 5.9 | % | |||||||
Other revenues | 742 | 663 | 79 | 11.9 | % | |||||||
Total revenues | $ | 128,672 | 122,606 | 6,066 | 4.9 | % | ||||||
Segment profit | $ | 87,055 | 89,918 | (2,863 | ) | (3.2 | )% | |||||
Points of distribution | 7,447 | 7,079 | 368 | 5.2 | % | |||||||
Gross openings | 87 | 71 | 16 | 22.5 | % | |||||||
Net openings | 63 | 19 | 44 | 231.6 | % |
Amounts and percentages may not recalculate due to rounding | ||||||||||||
Three months ended | Increase (Decrease) | |||||||||||
Dunkin' Donuts International | June 29, 2013 | June 30, 2012 | $ / # | % | ||||||||
($ in thousands except as otherwise noted) | ||||||||||||
Comparable store sales growth (decline) | (1.7 | )% | 3.5 | % | ||||||||
Systemwide sales growth | 3.5 | % | 1.5 | % | ||||||||
Franchisee reported sales (in millions) | $ | 170.8 | 164.9 | 5.8 | 3.5 | % | ||||||
Revenues: | ||||||||||||
Royalty income | $ | 3,535 | 3,266 | 269 | 8.2 | % | ||||||
Franchise fees | 342 | 595 | (253 | ) | (42.5 | )% | ||||||
Rental income | 31 | 36 | (5 | ) | (13.9 | )% | ||||||
Other revenues | 23 | (27 | ) | 50 | n/m | |||||||
Total revenues | $ | 3,931 | 3,870 | 61 | 1.6 | % | ||||||
Segment profit | $ | 1,587 | 1,933 | (346 | ) | (17.9 | )% | |||||
Points of distribution | 3,200 | 3,090 | 110 | 3.6 | % | |||||||
Gross openings | 80 | 70 | 10 | 14.3 | % | |||||||
Net openings | 33 | 29 | 4 | 13.8 | % |
Amounts and percentages may not recalculate due to rounding | ||||||||||||
Three months ended | Increase (Decrease) | |||||||||||
Baskin-Robbins U.S. | June 29, 2013 | June 30, 2012 | $ / # | % | ||||||||
($ in thousands except as otherwise noted) | ||||||||||||
Comparable store sales growth | 1.6 | % | 4.6 | % | ||||||||
Systemwide sales growth | 2.0 | % | 5.5 | % | ||||||||
Franchisee reported sales (in millions) | $ | 161.9 | 158.7 | 3.2 | 2.0 | % | ||||||
Revenues: | ||||||||||||
Royalty income | $ | 8,174 | 7,999 | 175 | 2.2 | % | ||||||
Franchise fees | 203 | 195 | 8 | 4.1 | % | |||||||
Rental income | 820 | 1,024 | (204 | ) | (19.9 | )% | ||||||
Sales of ice cream products | 1,087 | 1,155 | (68 | ) | (5.9 | )% | ||||||
Sales at company-owned restaurants | — | 72 | (72 | ) | (100.0 | )% | ||||||
Other revenues | 2,205 | 2,295 | (90 | ) | (3.9 | )% | ||||||
Total revenues | $ | 12,489 | 12,740 | (251 | ) | (2.0 | )% | |||||
Segment profit | $ | 7,955 | 8,860 | (905 | ) | (10.2 | )% | |||||
Points of distribution | 2,470 | 2,493 | (23 | ) | (0.9 | )% | ||||||
Gross openings | 19 | 19 | — | — | % | |||||||
Net openings | 5 | 5 | — | — | % |
Amounts and percentages may not recalculate due to rounding | ||||||||||||
Three months ended | Increase (Decrease) | |||||||||||
Baskin-Robbins International | June 29, 2013 | June 30, 2012 | $ / # | % | ||||||||
($ in thousands except as otherwise noted) | ||||||||||||
Comparable store sales growth | 2.6 | % | 1.5 | % | ||||||||
Systemwide sales growth (decline) | (3.8 | )% | 6.3 | % | ||||||||
Franchisee reported sales (in millions) | $ | 360.4 | 374.5 | (14.1 | ) | (3.8 | )% | |||||
Revenues: | ||||||||||||
Royalty income | $ | 2,591 | 2,336 | 255 | 10.9 | % | ||||||
Franchise fees | 301 | 277 | 24 | 8.7 | % | |||||||
Rental income | 142 | 136 | 6 | 4.4 | % | |||||||
Sales of ice cream products | 31,722 | 27,287 | 4,435 | 16.3 | % | |||||||
Other revenues | 161 | 70 | 91 | 130.0 | % | |||||||
Total revenues | $ | 34,917 | 30,106 | 4,811 | 16.0 | % | ||||||
Segment profit | $ | 19,434 | 11,842 | 7,592 | 64.1 | % | ||||||
Points of distribution | 4,601 | 4,354 | 247 | 5.7 | % | |||||||
Gross openings | 114 | 131 | (17 | ) | (13.0 | )% | ||||||
Net openings | 50 | 87 | (37 | ) | (42.5 | )% |
• | The Company has extended its promotion, manufacturing and distribution agreement with Green Mountain Coffee Roasters, Inc. (GMCR) through February 2016. GMCR exclusively packages Dunkin'® K-Cup® packs using coffee sourced and roasted to Dunkin' Donuts' exacting specifications. The Companies first entered into the agreement in February 2011. Dunkin' Donuts began offering 14-count boxes of Dunkin'® K-Cup® packs exclusively at its restaurants in the U.S. and Canada in the summer of 2011. Today, Dunkin'® K-Cup® packs are available in five popular Dunkin' Donuts flavors, including Original Blend, Dunkin' Decaf, French Vanilla, Hazelnut and Dunkin' Dark® as well as limited time offer varieties. |
• | The Company today announced that the Board of Directors declared a third quarter cash dividend of $0.19 per share, payable on September 4, 2013 to shareholders of record as of the close of business on August 26, 2013. |
• | The Company announced on July 10, 2013 that it elected Carl Sparks to its Board of Directors effective on July 26, 2013. Mr. Sparks is the President and Chief Executive Officer of Travelocity Global. |
• | The Company repurchased approximately 400,000 shares of common stock during the second quarter; approximately $33 million remains available for purchase under previous authorizations. |
DUNKIN’ BRANDS GROUP, INC. AND SUBSIDIARIES | |||||||||||||
Consolidated Statements of Operations | |||||||||||||
(In thousands, except per share data) | |||||||||||||
(Unaudited) | |||||||||||||
Three months ended | Six months ended | ||||||||||||
June 29, | June 30, | June 29, | June 30, | ||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||
Revenues: | |||||||||||||
Franchise fees and royalty income | $ | 112,794 | 105,928 | 216,559 | 201,972 | ||||||||
Rental income | 25,055 | 26,002 | 47,487 | 48,941 | |||||||||
Sales of ice cream products | 32,809 | 28,442 | 56,389 | 51,165 | |||||||||
Sales at company-owned restaurants | 6,240 | 5,966 | 12,011 | 10,793 | |||||||||
Other revenues | 5,590 | 6,049 | 11,900 | 11,888 | |||||||||
Total revenues | 182,488 | 172,387 | 344,346 | 324,759 | |||||||||
Operating costs and expenses: | |||||||||||||
Occupancy expenses—franchised restaurants | 12,820 | 12,912 | 25,596 | 25,832 | |||||||||
Cost of ice cream products | 24,302 | 19,971 | 40,288 | 36,789 | |||||||||
Company-owned restaurant expenses | 5,940 | 6,130 | 11,595 | 10,946 | |||||||||
General and administrative expenses, net | 62,193 | 77,896 | 116,584 | 130,920 | |||||||||
Depreciation | 5,522 | 7,333 | 11,370 | 13,522 | |||||||||
Amortization of other intangible assets | 6,565 | 6,783 | 13,147 | 13,648 | |||||||||
Impairment charges | 107 | 377 | 355 | 386 | |||||||||
Total operating costs and expenses | 117,449 | 131,402 | 218,935 | 232,043 | |||||||||
Net income of equity method investments | 4,782 | 5,153 | 7,869 | 8,617 | |||||||||
Other operating income | 6,984 | — | 6,984 | — | |||||||||
Operating income | 76,805 | 46,138 | 140,264 | 101,333 | |||||||||
Other income (expense): | |||||||||||||
Interest income | 91 | 139 | 205 | 257 | |||||||||
Interest expense | (19,886 | ) | (16,690 | ) | (40,718 | ) | (33,386 | ) | |||||
Loss on debt extinguishment and refinancing transactions | — | — | (5,018 | ) | — | ||||||||
Other losses, net | (813 | ) | (267 | ) | (1,203 | ) | (207 | ) | |||||
Total other expense | (20,608 | ) | (16,818 | ) | (46,734 | ) | (33,336 | ) | |||||
Income before income taxes | 56,197 | 29,320 | 93,530 | 67,997 | |||||||||
Provision for income taxes | 15,487 | 11,101 | 29,159 | 23,864 | |||||||||
Net income including noncontrolling interests | 40,710 | 18,219 | 64,371 | 44,133 | |||||||||
Net loss attributable to noncontrolling interests | (102 | ) | (278 | ) | (239 | ) | (314 | ) | |||||
Net income attributable to Dunkin’ Brands | $ | 40,812 | 18,497 | 64,610 | 44,447 | ||||||||
Earnings per share—basic | $ | 0.38 | 0.15 | 0.61 | 0.37 | ||||||||
Earnings per share—diluted | 0.38 | 0.15 | 0.60 | 0.36 |
DUNKIN’ BRANDS GROUP, INC. AND SUBSIDIARIES | |||||||
Condensed Consolidated Balance Sheets | |||||||
(In thousands) | |||||||
(Unaudited) | |||||||
June 29, | December 29, | ||||||
Assets | 2013 | 2012 | |||||
Current assets: | |||||||
Cash and cash equivalents | $ | 176,999 | 252,618 | ||||
Accounts, notes, and other receivables, net | 59,225 | 53,056 | |||||
Other current assets | 108,429 | 114,106 | |||||
Total current assets | 344,653 | 419,780 | |||||
Property and equipment, net | 178,027 | 181,172 | |||||
Equity method investments | 159,786 | 174,823 | |||||
Goodwill and other intangible assets, net | 2,358,067 | 2,371,684 | |||||
Other assets | 80,003 | 70,054 | |||||
Total assets | $ | 3,120,536 | 3,217,513 | ||||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | — | 26,680 | ||||
Accounts payable | 12,118 | 16,256 | |||||
Other current liabilities | 246,122 | 310,579 | |||||
Total current liabilities | 258,240 | 353,515 | |||||
Long-term debt, net | 1,827,845 | 1,823,278 | |||||
Deferred income taxes, net | 570,168 | 569,126 | |||||
Other long-term liabilities | 106,250 | 121,619 | |||||
Total long-term liabilities | 2,504,263 | 2,514,023 | |||||
Total stockholders’ equity | 358,033 | 349,975 | |||||
Total liabilities and stockholders’ equity | $ | 3,120,536 | 3,217,513 |
DUNKIN’ BRANDS GROUP, INC. AND SUBSIDIARIES | |||||||
Condensed Consolidated Statements of Cash Flows | |||||||
(In thousands) | |||||||
(Unaudited) | |||||||
Six months ended | |||||||
June 29, | June 30, | ||||||
2013 | 2012 | ||||||
Net cash provided by operating activities | $ | 9,557 | 26,908 | ||||
Cash flows from investing activities: | |||||||
Additions to property and equipment | (12,507 | ) | (9,748 | ) | |||
Proceeds from sale of joint venture | 7,200 | — | |||||
Other, net | (1,522 | ) | (1,745 | ) | |||
Net cash used in investing activities | (6,829 | ) | (11,493 | ) | |||
Cash flows from financing activities: | |||||||
Repayment of long-term debt | (19,157 | ) | (10,441 | ) | |||
Payment of deferred financing and other debt-related costs | (6,157 | ) | — | ||||
Dividends paid on common stock | (40,450 | ) | (36,114 | ) | |||
Repurchases of common stock | (16,756 | ) | (25 | ) | |||
Exercise of stock options | 4,642 | 1,265 | |||||
Other, net | (208 | ) | 1,900 | ||||
Net cash used in financing activities | (78,086 | ) | (43,415 | ) | |||
Effect of exchange rates on cash and cash equivalents | (261 | ) | (30 | ) | |||
Decrease in cash and cash equivalents | (75,619 | ) | (28,030 | ) | |||
Cash and cash equivalents, beginning of period | 252,618 | 246,715 | |||||
Cash and cash equivalents, end of period | $ | 176,999 | 218,685 |
DUNKIN’ BRANDS GROUP, INC. AND SUBSIDIARIES | |||||||||||||
Non-GAAP Reconciliations | |||||||||||||
(In thousands, except per share data) | |||||||||||||
(Unaudited) | |||||||||||||
Three months ended | Six months ended | ||||||||||||
June 29, | June 30, | June 29, | June 30, | ||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||
Operating income | $ | 76,805 | 46,138 | 140,264 | 101,333 | ||||||||
Operating income margin | 42.1 | % | 26.8 | % | 40.7 | % | 31.2 | % | |||||
Adjustments: | |||||||||||||
Amortization of other intangible assets | 6,565 | 6,783 | 13,147 | 13,648 | |||||||||
Impairment charges | 107 | 377 | 355 | 386 | |||||||||
Third-party product volume guarantee | 7,500 | — | 7,500 | — | |||||||||
Secondary offering costs | — | 1,281 | — | 2,195 | |||||||||
Peterborough plant closure(a) | 191 | 3,678 | 588 | 3,678 | |||||||||
Bertico litigation(b) | — | 20,680 | — | 20,680 | |||||||||
Adjusted operating income | $ | 91,168 | 78,937 | 161,854 | 141,920 | ||||||||
Adjusted operating income margin | 50.0 | % | 45.8 | % | 47.0 | % | 43.7 | % | |||||
Net income attributable to Dunkin' Brands | $ | 40,812 | 18,497 | 64,610 | 44,447 | ||||||||
Adjustments: | |||||||||||||
Amortization of other intangible assets | 6,565 | 6,783 | 13,147 | 13,648 | |||||||||
Impairment charges | 107 | 377 | 355 | 386 | |||||||||
Third-party product volume guarantee | 7,500 | — | 7,500 | — | |||||||||
Secondary offering costs | — | 1,281 | — | 2,195 | |||||||||
Peterborough plant closure(a) | 191 | 3,678 | 588 | 3,678 | |||||||||
Loss on debt extinguishment and refinancing transactions | — | — | 5,018 | — | |||||||||
Bertico litigation(b) | — | 20,680 | — | 20,680 | |||||||||
Tax impact of adjustments, excluding Bertico litigation(c) | (5,745 | ) | (4,848 | ) | (10,643 | ) | (7,963 | ) | |||||
Tax on Bertico adjustments(d) | — | (6,123 | ) | — | (6,123 | ) | |||||||
Income tax audit settlements(e) | (8,417 | ) | — | (8,417 | ) | — | |||||||
State tax apportionment(f) | 2,868 | — | 2,868 | — | |||||||||
Adjusted net income | $ | 43,881 | 40,325 | 75,026 | 70,948 | ||||||||
Adjusted net income | $ | 43,881 | 40,325 | 75,026 | 70,948 | ||||||||
Less: Adjusted net income allocated to participating securities | — | (71 | ) | — | (142 | ) | |||||||
Adjusted net income available to common shareholders | $ | 43,881 | 40,254 | 75,026 | 70,806 | ||||||||
Weighted average number of common shares – diluted | 108,212 | 121,986 | 108,185 | 121,651 | |||||||||
Diluted adjusted earnings per share | $ | 0.41 | 0.33 | 0.69 | 0.58 | ||||||||
(a) 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 the incremental legal reserve recorded related to the Quebec Superior Court’s ruling in the Bertico litigation, in which the Court found for the Plaintiffs and issued a judgment against Dunkin’ Brands in the amount of approximately $C16.4 million, plus costs and interest. | |||||||||||||
(c) Tax impact of adjustments, excluding the Bertico litigation, calculated at a 40% effective tax rate. | |||||||||||||
(d) Tax impact of Bertico litigation adjustment calculated as if the incremental reserve had not been recorded. The tax impact includes $3.9 million representing the actual direct tax benefit expected to be realized, as well as a $2.2 million tax benefit recorded in the second quarter of 2012 that fully reversed in the third and fourth quarters of 2012 based on interim tax provision requirements. | |||||||||||||
(e) Represents income tax benefits resulting from the resolution of historical tax positions settled during the period. | |||||||||||||
(f) Primarily represents deferred tax expense recognized due to an increase in our overall state tax rate resulting from a shift in estimated apportionment of income within state jurisdictions. |
Stacey Caravella (Investors) | Michelle King (Media) | |
Director, Investor Relations | Director, Global Public Relations | |
Dunkin’ Brands Group, Inc. | Dunkin’ Brands Group, Inc. | |
investor.relations@dunkinbrands.com | michelle.king@dunkinbrands.com | |
781-737-3200 | 781-737-5200 |