Post Earnings Coverage as Dunkin’ Brands Q3 EPS Surge 18.8 Percent Beating Estimates

LONDON, UK / ACCESSWIRE / October 27, 2016 / Active Wall St. announces its post-earnings coverage on Dunkin’ Brands Group, Inc. (NASDAQ: DNKN). The company posted its financial results for the third quarter fiscal 2016 (Q3 FY16) on October 20, 2016. The Canton, Massachusetts-based company reported a 1.3% y-o-y decline in its revenues; yet diluted EPS surged 18.8% y-o-y during the reported quarter. Register with us now for your free membership at: http://www.activewallst.com/register/.

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Earnings Reviewed

Dunkin’ Brands reported total revenue of $207.10 million in Q3 FY16 compared to $209.81 million recorded in Q3 FY15. Total revenue numbers fell marginally short of market forecasts of $213 million. The company attributed this decline in quarterly revenue numbers to a decrease in the number of company-operated restaurants along with fall in franchise fees due to decline in gross openings and renewal income, and falling product sales in the Middle East region.

The quick service restaurateur’s net income increased to $52.71 million, or $0.57 per diluted share, in Q3 FY16 from $46.22 million, or $0.48 per diluted share, in Q3 FY15. The company’s adjusted net income for the reported quarter stood at $55.96 million, or $0.60 per diluted share, compared to $50.18 million, or $0.52 per diluted share, in Q3 FY15. Furthermore, diluted adjusted net income outperformed market expectations of $0.58 per diluted share.

In the quarter ended September 24, 2016, Dunkin’ Brands franchisees and licensees inaugurated 115 net new restaurants across the globe. This included 56 net new Dunkin’ Donuts brand store across U.S. locations, 11 net new Dunkin’ Donuts stores outside U.S. and 3 net new Baskin-Robbins stores in U.S.

Operating Metrics

In Q3 FY16, the company’s Global Systemwide sales grew 6.3% y-o-y to $2.82 billion from $2.65 billion in the year-ago period, primarily due to development of global stores and rise in Dunkin’ Donuts store sales in the U.S. region.

During the quarter, operating margins improved to $109.36 million, or 52.8% of total revenue, compared to $99.76 million, or 47.5% of total revenues. The improved margins reflect the rise in royalty income along with a reduction in general and administrative expenses, partially offset by the decrease in franchise fees. Furthermore, adjusted margin improved from $105.96 million, or 50.5% of total revenues, in Q3 FY15 to $114.76 million, or $55.4% of total revenues in Q3 FY16.

Segment-wise

Dunkin’ Donuts U.S. segment’s revenues fell 1.3% y-o-y to $152.43 million in Q3 FY16. During the reported quarter, comparable store sales growth was 2.0% y-o-y compared to a growth of 1.1% y-o-y in the quarter ended September 26, 2015. Furthermore, the segment reported profit of $119.43 million for Q3 FY16, which was higher than $113,197 million recorded in the year ago quarter.

During Q3 FY16, Dunkin’ Donuts International segment reported total revenues of $4.45 million compared to $4.63 million in the last year comparable quarter. The comparable store sales declined 1.4% in the reported quarter versus a growth of 0.8% in the year ago quarter. In Q3 FY16, the segment’s profit declined 29.5% y-o-y to $0.71 million.

Baskin-Robbins U.S. segment’s total revenues came in at $13.78 million for Q3 FY16 compared to $13.58 million recorded in the previous year’s quarter. However, the segment’s comparable sales fell 0.9% during the reported period, while the segment had registered comparable stores sales growth of 7.5% in the year ago quarter. Furthermore, the segment’s profit surged 13% y-o-y to $11,085 million in Q3 FY16.

In the reported period, Baskin-Robbins International segment’s total revenue fell 8.8% y-o-y to $27.90 million. The segment reported a 2.9% decline in comparable sales during the quarter compared to a 2.4% y-o-y decline in Q3 FY15. Additionally, this segment’s profits increased 18.5% y-o-y to $11,154 in the reported quarter.

Cash Matters and Balance Sheet

During the nine months ended September 24, 2016, net cash provided by operating activities was $130.34 million compared to $83.24 million in the comparable year ago period. Dunkin’ Brands had cash and cash equivalents worth $270.23 million at the close of its books on September 24, 2016, versus cash and cash equivalents worth $260.43 million as on December 26, 2015. The company reduced its long-term debt during the nine months, which stood at $2.41 billion as on September 24, 2016, compared to $2.42 billion as on December 26, 2015.

Dividend

In a separate press release on October 20, 2016, Dunkin’ Brands’ Board of Directors announced a quarterly cash of $0.30 per share of common stock dividend to its common shareholders. The dividend will be paid on November 30, 2016, to all shareholders of record as of the close of business on November 21, 2016.

Stock Performance

On Wednesday, the stock closed the trading session at $47.87, falling 0.62% from its previous closing price of $48.17. A total volume of 1.49 million shares have exchanged hands, which was higher than the 3-month average volume of 1.43 million shares. Dunkin’ Brands’ stock price advanced 5.28% in the past three months, 2.18% in the previous six months, and 21.20% in the last twelve months. Furthermore, since the start of the year, shares of the company have gained 14.62%. The stock is trading at a PE ratio of 33.83 and has a dividend yield of 2.51%.

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