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Denny’s Corporation Reports Results for Third Quarter 2024 and Hosts Investor Day Today

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Denny's (NASDAQ: DENN) reported results for Q3 2024 and hosted an Investor Day. Key highlights include:

- Total operating revenue: $111.8 million (down from $114.2 million in Q3 2023)
- Denny's domestic system-wide same-restaurant sales: -0.1%
- Net income: $6.5 million, or $0.12 per diluted share
- Adjusted EBITDA: $20.0 million

The company outperformed the BBI Family Dining index for the third consecutive quarter, driven by the relaunch of its $2-$4-$6-$8 value menu and expansion of off-premises dining. Keke's experienced significant sequential improvement in same-restaurant sales. The company updated its full-year 2024 outlook, expecting Denny's domestic system-wide same-restaurant sales between -1% and 0%, and Adjusted EBITDA between $81 million and $84 million.

Denny's (NASDAQ: DENN) ha riportato i risultati per il terzo trimestre del 2024 e ha ospitato una Giornata degli Investitori. I punti salienti includono:

- Ricavi operativi totali: 111,8 milioni di dollari (in calo rispetto ai 114,2 milioni di dollari nel terzo trimestre del 2023)
- Vendite per ristoranti comparabili nel sistema domestico di Denny's: -0,1%
- Utile netto: 6,5 milioni di dollari, ossia 0,12 dollari per azione diluita
- EBITDA rettificato: 20,0 milioni di dollari

L'azienda ha sovraperformato l'indice BBI Family Dining per il terzo trimestre consecutivo, grazie al rilancio del suo menu a valore di 2-$4-$6-$8 e all'espansione della ristorazione al di fuori del locale. Keke's ha registrato un miglioramento significativo nelle vendite degli stessi ristoranti. L'azienda ha aggiornato le sue previsioni per l'intero anno 2024, aspettandosi vendite per ristoranti comparabili nel sistema domestico di Denny's tra -1% e 0%, e un EBITDA rettificato compreso tra 81 milioni e 84 milioni di dollari.

Denny's (NASDAQ: DENN) reportó resultados para el tercer trimestre de 2024 y organizó un Día del Inversor. Los aspectos más destacados incluyen:

- Ingresos operativos totales: 111.8 millones de dólares (una disminución de 114.2 millones de dólares en el Q3 de 2023)
- Ventas de restaurantes comparables a nivel nacional en Denny's: -0.1%
- Ingreso neto: 6.5 millones de dólares, o 0.12 dólares por acción diluida
- EBITDA ajustado: 20.0 millones de dólares

La compañía superó el índice BBI Family Dining por tercer trimestre consecutivo, impulsada por el relanzamiento de su menú de valor de 2-$4-$6-$8 y la expansión de la venta de alimentos fuera del local. Keke's experimentó una mejora significativa en las ventas de restaurantes comparables. La empresa actualizó su perspectiva para todo el año 2024, esperando ventas de restaurantes comparables a nivel nacional en Denny's entre -1% y 0%, y un EBITDA ajustado de entre 81 millones y 84 millones de dólares.

Denny's (NASDAQ: DENN)는 2024년 3분기 실적을 발표하고 투자자 데이를 개최했습니다. 주요 내용은 다음과 같습니다:

- 총 운영 수익: 1억 1,180만 달러 (2023년 3분기의 1억 1,420만 달러에서 감소)
- Denny's 국내 시스템 전반의 동종 식당 매출: -0.1%
- 순이익: 650만 달러, 즉 희석 주당 0.12 달러
- 조정 EBITDA: 2천만 달러

회사는 3분기 연속 BBI Family Dining 지수를 초과 달성했으며, 이는 2-$4-$6-$8 가치 메뉴의 재출시와 비매장 식사 확장 덕분입니다. Keke's는 동종 식당 매출에서 상당한 개선을 경험했습니다. 회사는 2024년 전체에 대한 전망을 업데이트하며, Denny's의 국내 시스템 전반의 동종 식당 매출이 -1%에서 0% 사이일 것으로 예상하며, 조정 EBITDA는 8,100만 달러에서 8,400만 달러 사이일 것으로 보고했습니다.

Denny's (NASDAQ: DENN) a publié ses résultats pour le troisième trimestre 2024 et a organisé une journée pour les investisseurs. Les principaux points à retenir incluent :

- Revenus d'exploitation total : 111,8 millions de dollars (en baisse par rapport à 114,2 millions de dollars au T3 2023)
- Ventes aux restaurants comparables dans le système domestique de Denny's : -0,1%
- Résultat net : 6,5 millions de dollars, soit 0,12 dollar par action diluée
- EBITDA ajusté : 20,0 millions de dollars

L'entreprise a surpassé l'indice BBI Family Dining pour le troisième trimestre consécutif, soutenue par le relancement de son menu à prix avantageux de 2-$4-$6-$8 et l'expansion de la restauration en dehors du site. Keke's a connu une amélioration significative des ventes dans ses restaurants comparables. L'entreprise a mis à jour ses prévisions pour l'ensemble de l'année 2024, s'attendant à ce que les ventes de Denny's dans le système domestique se situent entre -1% et 0%, et un EBITDA ajusté entre 81 millions et 84 millions de dollars.

Denny's (NASDAQ: DENN) hat die Ergebnisse für das 3. Quartal 2024 bekannt gegeben und einen Investorentag veranstaltet. Zu den wichtigsten Highlights gehören:

- Gesamter Betriebsumsatz: 111,8 Millionen US-Dollar (rückläufig von 114,2 Millionen US-Dollar im 3. Quartal 2023)
- Denny's nationale Betriebsumsatzentwicklung: -0,1%
- Nettoergebnis: 6,5 Millionen US-Dollar, oder 0,12 US-Dollar je verwässerter Aktie
- Bereinigtes EBITDA: 20,0 Millionen US-Dollar

Das Unternehmen hat den BBI Family Dining-Index im dritten Quartal in Folge übertroffen, was durch die Wiederbelebung des 2-$4-$6-$8-Wertmenüs und die Expansion des Essens außerhalb des Hauses unterstützt wurde. Keke's verzeichnete eine signifikante Verbesserung der gleichen Restaurantverkäufe. Das Unternehmen hat seinen Ausblick für das Gesamtjahr 2024 aktualisiert und erwartet eine Entwicklung der nationalen Betriebsumsätze von Denny's zwischen -1% und 0% sowie ein bereinigtes EBITDA zwischen 81 Millionen und 84 Millionen US-Dollar.

Positive
  • Outperformed BBI Family Dining index for third consecutive quarter
  • Keke's experienced significant sequential improvement in same-restaurant sales
  • Opened two Denny's domestic franchised restaurants
  • Completed six Denny's remodels, including three company remodels
Negative
  • Total operating revenue decreased to $111.8 million from $114.2 million in Q3 2023
  • Denny's domestic system-wide same-restaurant sales declined 0.1%
  • Operating income decreased to $11.7 million from $14.0 million in Q3 2023
  • Adjusted company restaurant operating margin decreased to 11.8% from 14.3% in Q3 2023
  • Lowered full-year 2024 Adjusted EBITDA guidance to $81-$84 million from $83-$87 million

Insights

Denny's Q3 2024 results show a mixed performance with some concerning trends. Total operating revenue decreased to $111.8 million from $114.2 million year-over-year, indicating challenges in maintaining growth. The domestic system-wide same-restaurant sales of -0.1% suggest stagnation in customer traffic and spending.

The company's profitability metrics have declined, with operating income falling to $11.7 million from $14.0 million in the prior year quarter. The adjusted company restaurant operating margin decreased significantly to 11.8% from 14.3%, primarily due to increased marketing investments and higher occupancy costs.

On a positive note, Denny's outperformed the BBI Family Dining index for the third consecutive quarter, indicating relative strength against competitors. The company's focus on value offerings and off-premises expansion through virtual brands like Banda Burrito shows adaptability to changing consumer preferences.

The revised full-year 2024 outlook, with Adjusted EBITDA expectations lowered to $81-$84 million from $83-$87 million, suggests caution about near-term performance. Investors should monitor the company's ability to navigate inflationary pressures and execute its strategic initiatives to improve sales and profitability.

Denny's strategic focus on value and off-premises dining is a response to evolving consumer behavior in the challenging restaurant industry landscape. The relaunch of the $2-$4-$6-$8 value menu demonstrates an understanding of price-sensitive customers, which is important in the current inflationary environment.

The expansion into virtual brands, such as Banda Burrito, aligns with the growing trend of ghost kitchens and delivery-focused concepts. This diversification could help Denny's capture additional market share in the competitive fast-casual segment.

However, the planned closure of lower-volume restaurants indicates a strategic shift towards optimizing the restaurant portfolio. While this may improve overall efficiency, it could impact total system-wide sales in the short term. The projected net decline of 45 to 55 restaurants is significant and warrants close attention.

The focus on Keke's expansion, with 12 to 16 new restaurants planned, suggests confidence in this newer brand's growth potential. This multi-brand strategy could provide a hedge against challenges in the core Denny's business, but successful execution will be critical.

SPARTANBURG, S.C., Oct. 22, 2024 (GLOBE NEWSWIRE) -- Denny’s Corporation (the "Company") (NASDAQ: DENN), owner and operator of Denny's Inc. ("Denny's") and Keke's Inc. ("Keke's") today reported results for its third quarter ended September 25, 2024 and provided a business update on the Company’s operations.

Kelli Valade, Chief Executive Officer, stated, “Our third quarter sales results directly reflect ongoing brand investments and dedicated focus on value that resulted in outpacing the category. Denny’s domestic system-wide same-restaurant sales** outperformed the BBI Family Dining index for the third consecutive quarter driven by the relaunch of our fan favorite $2-$4-$6-$8 value menu and the continued expansion of off-premises with our third virtual brand, Banda Burrito. Keke’s also experienced significant sequential improvement in same-restaurant sales** as our initiatives to enact foundational marketing strategies and expand the alcohol program continued our efforts to close the gap to the competitive set. We are also very excited to be hosting an Investor Day today.”

Beginning at 9:00am EST this morning, the Company will be hosting an Investor Day in New York, as well as a live webcast, to detail strategic initiatives to build on its third quarter progress and ensure long-term financial opportunities for its brands. The investor day will highlight the Company’s plan to grow average unit volume sales, margins and the portfolio, while balancing capital allocations to maximize shareholder returns.

Third Quarter 2024 Highlights(1)

  • Total operating revenue was $111.8 million compared to $114.2 million for the prior year quarter.
  • Denny's domestic system-wide same-restaurant sales** were (0.1%) compared to the equivalent fiscal period in 2023, including (0.1%) at domestic franchised restaurants and (0.4%) at company restaurants.
  • Opened two Denny's domestic franchised restaurants.
  • Completed six Denny's remodels, including three company remodels.
  • Operating income was $11.7 million compared to $14.0 million for the prior year quarter.
  • Adjusted franchise operating margin* was $30.1 million, or 51.0% of franchise and license revenue, and Adjusted company restaurant operating margin* was $6.2 million, or 11.8% of company restaurant sales.
  • Net income was $6.5 million, or $0.12 per diluted share.
  • Adjusted net income* and adjusted net income per share* were $7.2 million and $0.14, respectively.
  • Adjusted EBITDA* was $20.0 million.

(1) Beginning fiscal 2024, the Company has evolved its definition of non-GAAP measures. Please see the definitions, explanations, and reconciliations further in this release.

Third Quarter 2024 Results

Total operating revenue was $111.8 million compared to $114.2 million for the prior year quarter.

Franchise and license revenue was $59.1 million compared to $61.0 million for the prior year quarter. This change was primarily driven by a decrease in initial and other fees associated with the sale of kitchen equipment in the prior year quarter, and decreases in equivalent units and franchise occupancy revenue, partially offset by an increase in franchise advertising revenue primarily related to higher local advertising co-op contributions for the current quarter.

Company restaurant sales were $52.7 million compared to $53.2 million for the prior year quarter primarily driven by four fewer Denny's equivalent units, including three refranchised units, partially offset by three additional Keke's equivalent units for the current quarter.

Adjusted franchise operating margin* was $30.1 million, or 51.0% of franchise and license revenue, compared to $31.1 million, or 51.0% for the prior year quarter. This margin change was primarily driven by the impact of fewer equivalent units on royalty revenues and lease terminations.

Adjusted company restaurant operating margin* was $6.2 million, or 11.8% of company restaurant sales, compared to $7.6 million, or 14.3% for the prior year quarter. This margin change was primarily due to investments in marketing and higher occupancy costs, including general liability insurance costs, for the current quarter.

Total general and administrative expenses were $19.8 million compared to $18.2 million in the prior year quarter. This change was primarily due to an increase in corporate administration expense.

The provision for income taxes was $1.5 million, reflecting an effective tax rate of 18.5% for the current quarter.

Net income was $6.5 million, or $0.12 per diluted share. Adjusted net income* per share was $0.14.

The Company ended the quarter with $272.0 million of total debt outstanding, including $261.0 million of borrowings under its credit facility.

Capital Allocation

The Company invested $7.8 million in cash capital expenditures, which included Keke's new development and Denny's company remodels.

During the quarter, the Company allocated $1.8 million to share repurchases resulting in approximately $89.2 million remaining under its existing repurchase authorization.

Business Outlook

The following full year 2024 expectations reflect management's expectations that the current consumer and economic environment will not change materially, as well as the Company's strategic initiative to accelerate the closure of lower volume Denny's restaurants.

  • Denny's domestic system-wide same-restaurant sales** between (1%) and 0% (vs. between (1%) and 1%).
  • Consolidated restaurant openings of 30 to 40, including 12 to 16 new Keke's restaurants, with a consolidated net decline of 45 to 55 (vs. 20 to 30).
  • Commodity inflation of approximately 2% (vs. between 0% and 2%).
  • Labor inflation between 3% and 4%.
  • Total general and administrative expenses between $82 million and $85 million, including approximately $11 million related to share-based compensation expense which does not impact Adjusted EBITDA*.
  • Adjusted EBITDA* between $81 million and $84 million (vs. between $83 million and $87 million).
* Please refer to the Reconciliation of Net Income to Non-GAAP Financial Measures, as well as the Reconciliation of Operating Income to Non-GAAP Financial Measures included in the tables below. The Company is not able to reconcile the forward-looking non-GAAP estimate set forth above to its 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 estimate is not provided.
  
**Same-restaurant 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, initial and other fees and occupancy revenue from non-consolidated franchised and licensed restaurants. Accordingly, domestic franchise same-restaurant sales and domestic system-wide same-restaurant 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

The Company will provide further commentary on the results for the third quarter ended September 25, 2024 and its investor day on a webcast today, Tuesday, October 22, 2024 at 9:00 a.m. Eastern Time. Interested parties are invited to listen to the webcast accessible through the Company's investor relations website at investor.dennys.com.

About Denny's Corporation

Denny’s Corporation is one of America’s largest full-service restaurant chains based on number of restaurants. As of September 25, 2024, the Company consisted of 1,586 restaurants, 1,514 of which were franchised and licensed restaurants and 72 of which were company operated.

The Company consists of the Denny’s brand and the Keke’s brand. As of September 25, 2024, the Denny's brand consisted of 1,525 global restaurants, 1,464 of which were franchised and licensed restaurants and 61 of which were company operated. As of September 25, 2024, the Keke's brand consisted of 61 restaurants, 50 of which were franchised restaurants and 11 of which were company operated.

For further information on Denny's Corporation, including news releases, links to SEC filings, and other financial information, please visit investor.dennys.com.

Non-GAAP Definition Changes

The Company has evolved its definition of non-GAAP financial measures starting in fiscal 2024 to provide more clarity and comparability relative to peers. Denny's Corporation management uses certain non-GAAP measures in analyzing operating performance and believes that the presentation of these measures provides investors and analysts with information that is beneficial to gaining an understanding of the Company's financial results. Non-GAAP disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP.

The Company excludes legal settlement expenses, pre-opening expenses, and other items management does not consider in the evaluation of its ongoing core operating performance from adjusted operating margin*, adjusted net income*, adjusted net income per share*, and adjusted EBITDA*. In addition, the Company no longer deducts cash payments for restructuring and exit costs, or cash payments for share-based compensation from Adjusted EBITDA*. Lastly, the Company has transitioned to utilizing GAAP cash flows included in its SEC filed documents in lieu of a non-GAAP financial measure.

Reconciliations of these non-GAAP measures are included in the tables of this press release and a recast of historical non-GAAP financial measures can be found on the Company's website, or its most recent investor presentation.

 

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: economic, public health and political conditions that impact consumer confidence and spending, commodity and labor inflation; the ability to effectively staff restaurants and support personnel; 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 its 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 27, 2023 (and in the Company’s subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K).

 
DENNY’S CORPORATION
Consolidated Balance Sheets
(Unaudited)
       
($ in thousands)9/25/24 12/27/23
Assets   
 Current assets   
  Cash and cash equivalents$1,466  $4,893 
  Investments 2,902   1,281 
  Receivables, net 17,038   21,391 
  Inventories 1,835   2,175 
  Assets held for sale    1,455 
  Prepaid and other current assets 10,610   12,855 
   Total current assets 33,851   44,050 
 Property, net 101,532   93,494 
 Finance lease right-of-use assets, net 6,411   6,098 
 Operating lease right-of-use assets, net 121,169   116,795 
 Goodwill 66,357   65,908 
 Intangible assets, net 92,112   93,428 
 Deferred financing costs, net 1,225   1,702 
 Other noncurrent assets 38,966   43,343 
   Total assets$461,623  $464,818 
       
Liabilities   
 Current liabilities   
  Current finance lease liabilities$1,457  $1,383 
  Current operating lease liabilities 15,076   14,779 
  Accounts payable 14,685   24,070 
  Other current liabilities 56,474   63,068 
   Total current liabilities 87,692   103,300 
 Long-term liabilities   
  Long-term debt 261,000   255,500 
  Noncurrent finance lease liabilities 9,540   9,150 
  Noncurrent operating lease liabilities 117,390   114,451 
  Liability for insurance claims, less current portion 7,160   6,929 
  Deferred income taxes, net 4,619   6,582 
  Other noncurrent liabilities 28,705   31,592 
   Total long-term liabilities 428,414   424,204 
   Total liabilities 516,106   527,504 
       
Shareholders' deficit   
  Common stock 533   529 
  Paid-in capital 13,129   6,688 
  Deficit (7,009)  (21,784)
  Accumulated other comprehensive loss, net (43,445)  (41,659)
  Treasury stock (17,691)  (6,460)
   Total shareholders' deficit (54,483)  (62,686)
   Total liabilities and shareholders' deficit$461,623  $464,818 
       
Debt Balances
 Credit facility revolver due 2026$261,000  $255,500 
 Finance lease liabilities 10,997   10,533 
  Total debt$271,997  $266,033 
          


 
DENNY’S CORPORATION
Condensed Consolidated Statements of Income
(Unaudited)
      
   Quarter Ended
($ in thousands, except per share amounts)9/25/24 9/27/23
Revenue:   
 Company restaurant sales$52,701  $53,153 
 Franchise and license revenue 59,058   61,030 
  Total operating revenue 111,759   114,183 
Costs of company restaurant sales, excluding depreciation and amortization 46,820   45,893 
Costs of franchise and license revenue, excluding depreciation and amortization 28,999   29,810 
General and administrative expenses 19,831   18,237 
Depreciation and amortization 3,622   3,605 
Operating (gains), losses and other charges, net 746   2,620 
  Total operating costs and expenses, net 100,018   100,165 
Operating income 11,741   14,018 
Interest expense, net 4,571   4,381 
Other nonoperating (income) expense, net (824)  43 
Income before income taxes 7,994   9,594 
Provision for income taxes 1,478   1,686 
Net income$6,516  $7,908 
      
Net income per share - basic$0.12  $0.14 
Net income per share - diluted$0.12  $0.14 
      
Basic weighted average shares outstanding 52,148   55,869 
Diluted weighted average shares outstanding 52,207   56,082 
      
Comprehensive (loss) income$(2,468) $20,469 
    
General and Administrative Expenses  
 Corporate administrative expenses$15,875  $14,580 
 Share-based compensation 3,006   2,864 
 Incentive compensation 447   1,049 
 Deferred compensation valuation adjustments 503   (256)
  Total general and administrative expenses$19,831  $18,237 
          


 
DENNY’S CORPORATION
Condensed Consolidated Statements of Income
(Unaudited)
      
   Three Quarters Ended
($ in thousands, except per share amounts)9/25/24 9/27/23
Revenue:   
 Company restaurant sales$159,391  $161,486 
 Franchise and license revenue 178,269   187,083 
  Total operating revenue 337,660   348,569 
Costs of company restaurant sales, excluding depreciation and amortization 142,516   138,953 
Costs of franchise and license revenue, excluding depreciation and amortization 89,801   92,657 
General and administrative expenses 61,539   58,515 
Depreciation and amortization 10,938   10,878 
Goodwill impairment charges 20    
Operating (gains), losses and other charges, net 1,984   2,467 
  Total operating costs and expenses, net 306,798   303,470 
Operating income 30,862   45,099 
Interest expense, net 13,564   13,288 
Other nonoperating (income) expense, net (1,685)  9,470 
Income before income taxes 18,983   22,341 
Provision for income taxes 4,208   5,298 
Net income$14,775  $17,043 
      
Net income per share - basic$0.28  $0.30 
Net income per share - diluted$0.28  $0.30 
      
Basic weighted average shares outstanding 52,635   56,764 
Diluted weighted average shares outstanding 52,739   56,973 
      
Comprehensive income$12,989  $31,980 
    
General and Administrative Expenses  
 Corporate administrative expenses$46,843  $43,919 
 Share-based compensation 8,406   8,477 
 Incentive compensation 4,868   5,335 
 Deferred compensation valuation adjustments 1,422   784 
  Total general and administrative expenses$61,539  $58,515 
          


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

The Company believes that, in addition to GAAP measures, certain non-GAAP financial measures are useful information to investors and analysts to assist in the evaluation of operating performance on a period-to-period basis. However, non-GAAP measures should be considered as a supplement to, not a substitute for, operating income, net income, and net income per share, or other financial performance measures prepared in accordance with GAAP. The Company uses adjusted EBITDA, 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. These non-GAAP measures are adjusted for certain items the Company does not consider in the evaluation of its ongoing core operating performance. These adjustments are either non-recurring in nature or vary from period to period without correlation to the Company's ongoing core operating performance.

 Quarter Ended Three Quarters Ended
($ in thousands, except per share amounts)9/25/24 9/27/23 9/25/24 9/27/23
Net income$6,516  $7,908  $14,775  $17,043 
Provision for income taxes 1,478   1,686   4,208   5,298 
Goodwill impairment charges       20    
Operating (gains), losses and other charges, net 746   2,620   1,984   2,467 
Other nonoperating (income) expense, net (824)  43   (1,685)  9,470 
Share-based compensation expense 3,006   2,864   8,406   8,477 
Deferred compensation plan valuation adjustments 503   (256)  1,422   784 
Interest expense, net 4,571   4,381   13,564   13,288 
Depreciation and amortization 3,622   3,605   10,938   10,878 
Legal settlement expenses 152   245   1,809   475 
Pre-opening expenses 209   105   766   130 
Other adjustments 40   (78)  2,532   (75)
Adjusted EBITDA$20,019  $23,123  $58,739  $68,235 
        
Net income$6,516  $7,908  $14,775  $17,043 
Losses and amortization on interest rate swap derivatives, net 194   94   502   10,838 
Losses (gains) on sales of assets and other charges, net 6   (88)  (88)  (2,132)
Impairment charges (1) 78   1,711   812   1,840 
Legal settlement expenses 152   245   1,809   475 
Pre-opening expenses 209   105   766   130 
Other adjustments 40   (78)  2,532   (75)
Tax effect (2) (4)  (237)  (1,406)  (2,581)
Adjusted net income$7,191  $9,660  $19,702  $25,538 
        
Diluted weighted average shares outstanding 52,207   56,082   52,739   56,973 
        
Net income per share - diluted$0.12  $0.14  $0.28  $0.30 
Adjustments per share 0.02   0.03   0.09   0.15 
Adjusted net income per share$0.14  $0.17  $0.37  $0.45 
                


(1)Impairment charges include goodwill impairment charges of less than $0.1 million for the year-to-date period ended September 25, 2024.
(2)Tax adjustments for the quarter and year-to-date period ended September 25, 2024 reflect effective tax rates of 0.6% and 22.2%, respectively. Tax adjustments for the quarter and year-to-date period ended September 27, 2023 reflect effective tax rates of 11.9% and 23.3%, 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 useful information to investors and analysts to assist in the evaluation of restaurant-level operating efficiency and performance of ongoing restaurant-level operations. However, non-GAAP measures should be considered as a supplement to, not a substitute for, operating income, net income, and net income per share, or other financial performance measures prepared in accordance with GAAP. 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 for compensation purposes, including incentive compensation for certain employees.

Restaurant-level operating margin is the total of company restaurant operating margin and franchise operating margin and excludes: (i) 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; (ii) 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; (iii) 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.

Company restaurant operating margin is defined 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. Adjusted company operating restaurant margin is defined as company restaurant operating margin less certain items such as legal settlement expenses, pre-opening expenses, and other items the Company does not consider in the evaluation of its ongoing core operating performance.

Franchise operating margin is defined 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. Adjusted franchise operating margin is defined as franchise operating margin less certain items the Company does not consider in the evaluation of its ongoing core operating performance.

Adjusted restaurant-level operating margin is the total of adjusted company restaurant operating margin and adjusted franchise operating margin and is defined as restaurant-level operating margin adjusted for certain items the Company does not consider in the evaluation of its ongoing core operating performance. These adjustments are either non-recurring in nature or vary from period to period without correlation to the Company's ongoing core operating performance.

 Quarter Ended Three Quarters Ended
($ in thousands)9/25/24 9/27/23 9/25/24 9/27/23
Operating income$11,741 $14,018 $30,862 $45,099 
General and administrative expenses 19,831  18,237  61,539  58,515 
Depreciation and amortization 3,622  3,605  10,938  10,878 
Goodwill impairment charges     20   
Operating (gains), losses and other charges, net 746  2,620  1,984  2,467 
Restaurant-level operating margin$35,940 $38,480 $105,343 $116,959 
        
Restaurant-level operating margin consists of:       
Company restaurant operating margin (1)$5,881 $7,260 $16,875 $22,533 
Franchise operating margin (2) 30,059  31,220  88,468  94,426 
Restaurant-level operating margin$35,940 $38,480 $105,343 $116,959 
Adjustments (3) 401  272  5,107  530 
Adjusted restaurant-level operating margin$36,341 $38,752 $110,450 $117,489 
             


(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, excluding depreciation and amortization; 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, excluding depreciation and amortization; less company restaurant sales.
(3)Adjustments include legal settlement expenses, pre-opening costs, and other adjustments the Company does not consider in the evaluation of its ongoing core operating performance. Adjustments for the year-to-date period ended September 25, 2024 include a $2.6 million distribution to franchisees related to a review of advertising costs.
   


 
DENNY’S CORPORATION
Operating Margins
(Unaudited)
       
    Quarter Ended
($ in thousands)9/25/24 9/27/23
Company restaurant operations: (1)     
 Company restaurant sales$52,701100.0% $53,153 100.0%
 Costs of company restaurant sales, excluding depreciation and amortization:     
  Product costs 13,61125.8%  13,587 25.6%
  Payroll and benefits 19,83837.6%  19,754 37.2%
  Occupancy 4,4438.4%  4,085 7.7%
  Other operating costs:     
   Utilities 1,9593.7%  2,120 4.0%
   Repairs and maintenance 9641.8%  996 1.9%
   Marketing 1,8593.5%  1,393 2.6%
   Legal settlements 1520.3%  245 0.5%
   Pre-opening costs 2090.4%  105 0.2%
   Other direct costs 3,7857.2%  3,608 6.8%
 Total costs of company restaurant sales, excluding depreciation and amortization$46,82088.8% $45,893 86.3%
 Company restaurant operating margin (non-GAAP) (2)$5,88111.2% $7,260 13.7%
   Adjustments (3) 3610.7%  350 0.7%
 Adjusted company restaurant operating margin (non-GAAP) (2)$6,24211.8% $7,610 14.3%
         
Franchise operations: (4)     
 Franchise and license revenue:     
 Royalties$29,10149.3% $29,703 48.7%
 Advertising revenue 20,17234.2%  19,297 31.6%
 Initial and other fees 1,6392.8%  3,388 5.6%
 Occupancy revenue 8,14613.8%  8,642 14.2%
 Total franchise and license revenue$59,058100.0% $61,030 100.0%
         
 Costs of franchise and license revenue, excluding depreciation and amortization:     
 Advertising costs$20,17234.2% $19,297 31.6%
 Occupancy costs 5,2568.9%  5,389 8.8%
 Other direct costs 3,5716.0%  5,124 8.4%
 Total costs of franchise and license revenue, excluding depreciation and amortization$28,99949.1% $29,810 48.8%
 Franchise operating margin (non-GAAP) (2)$30,05950.9% $31,220 51.2%
  Adjustments (3) 400.1%  (78)(0.1) %
 Adjusted franchise operating margin (non-GAAP) (2)$30,09951.0% $31,142 51.0%
         
Total operating revenue (5)$111,759100.0% $114,183 100.0%
Total costs of operating revenue (5) 75,81967.8%  75,703 66.3%
Restaurant-level operating margin (non-GAAP) (5)$35,94032.2% $38,480 33.7%
         
(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 and adjusted operating margin are considered non-GAAP financial measures and should be considered as a supplement to, not as a substitute for, operating income, net income or other financial measures prepared in accordance with GAAP.
(3)Adjustments include legal settlement expenses, pre-opening costs, and other adjustments the Company does not consider in the evaluation of its ongoing core operating performance.
(4)As a percentage of franchise and license revenue.
(5)As a percentage of total operating revenue.
   


 
DENNY’S CORPORATION
Operating Margins
(Unaudited)
       
    Three Quarters Ended
($ in thousands)9/25/24 9/27/23
Company restaurant operations: (1)     
 Company restaurant sales$159,391100.0% $161,486 100.0%
 Costs of company restaurant sales, excluding depreciation and amortization:     
  Product costs 40,55425.4%  41,796 25.9%
  Payroll and benefits 60,80538.1%  60,482 37.5%
  Occupancy 13,6878.6%  12,259 7.6%
  Other operating costs:     
   Utilities 5,3093.3%  6,037 3.7%
   Repairs and maintenance 2,9771.9%  2,667 1.7%
   Marketing 5,3393.3%  4,207 2.6%
   Legal settlements 1,8091.1%  475 0.3%
   Pre-opening costs 7660.5%  130 0.1%
   Other direct costs 11,2707.1%  10,900 6.7%
 Total costs of company restaurant sales, excluding depreciation and amortization$142,51689.4% $138,953 86.0%
 Company restaurant operating margin (non-GAAP) (2)$16,87510.6% $22,533 14.0%
  Adjustments (3) 2,5751.6%  605 0.4%
 Adjusted company restaurant operating margin (non-GAAP) (2)$19,45012.2% $23,138 14.3%
         
Franchise operations: (4)     
 Franchise and license revenue:     
 Royalties$88,42149.6% $90,106 48.2%
 Advertising revenue 59,09833.2%  58,818 31.4%
 Initial and other fees 5,9033.3%  10,994 5.9%
 Occupancy revenue 24,84713.9%  27,165 14.5%
 Total franchise and license revenue$178,269100.0% $187,083 100.0%
         
 Costs of franchise and license revenue, excluding depreciation and amortization:     
 Advertising costs$59,09833.2% $58,818 31.4%
 Occupancy costs 15,4828.7%  16,853 9.0%
 Other direct costs 15,2218.5%  16,986 9.1%
 Total costs of franchise and license revenue, excluding depreciation and amortization$89,80150.4% $92,657 49.5%
 Franchise operating margin (non-GAAP) (2)$88,46849.6% $94,426 50.5%
 Adjustments (3) 2,5321.4%  (75)0.0%
 Adjusted franchise operating margin (non-GAAP) (2)$91,00051.0% $94,351 50.4%
         
Total operating revenue (5)$337,660100.0% $348,569 100.0%
Total costs of operating revenue (5) 232,31768.8%  231,610 66.4%
Restaurant-level operating margin (non-GAAP) (5)$105,34331.2% $116,959 33.6%
         
(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 and adjusted operating margin are considered non-GAAP financial measures and should be considered as a supplement to, not as a substitute for, operating income, net income or other financial measures prepared in accordance with GAAP.
(3)Adjustments include legal settlement expenses, pre-opening costs, and other adjustments the Company does not consider in the evaluation of its ongoing core operating performance. Adjustments for the year-to-date period ended September 25, 2024 include a $2.6 million distribution to franchisees related to a review of advertising costs.
(4)As a percentage of franchise and license revenue.
(5)As a percentage of total operating revenue.
   


 
DENNY’S CORPORATION
Statistical Data
(Unaudited)
                  
   Denny's Keke's
Changes in Same-Restaurant Sales (1)Quarter Ended Three Quarters Ended Quarter Ended Three Quarters Ended
(Increase (decrease) vs. prior year)9/25/24 9/27/23 9/25/24 9/27/23 9/25/24 9/27/23 9/25/24 9/27/23
 Company Restaurants(0.4)% (1.4)% (2.0%) 4.1% (1.7)% (3.4)% (2.4%) (3.4)%
 Domestic Franchise Restaurants(0.1)% 2.1% (0.6%) 4.3% (0.9)% (5.3)% (3.2%) (5.3)%
 Domestic System-wide Restaurants(0.1)% 1.8% (0.7%) 4.3% (1.0)% (5.0)% (3.1%) (5.0)%
                  
Average Unit Sales       
($ in thousands)               
 Company Restaurants$771 $755 $2,288 $2,303 $423 $429 $1,323 $1,354
 Franchised Restaurants$465 $458 $1,395 $1,376 $439 $430 $1,368 $1,397
                  


(1)Same-restaurant 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, initial and other fees and occupancy revenue from non-consolidated franchised and licensed restaurants. Accordingly, domestic franchise same-restaurant sales and domestic system-wide same-restaurant sales should be considered as a supplement to, not a substitute for, the Company's results as reported under GAAP.

 

Restaurant Unit ActivityDenny's Keke's
     Franchised     Franchised  
   Company & Licensed Total Company & Licensed Total
Ending Units June 26, 202464  1,477  1,541  11  51  62 
 Units Opened  2  2       
 Units Refranchised(3) 3         
 Units Closed  (18) (18)   (1) (1)
  Net Change(3) (13) (16)   (1) (1)
Ending Units September 25, 202461  1,464  1,525  11  50  61 
              
Equivalent Units           
 Third Quarter 202462  1,470  1,532  11  50  61 
 Third Quarter 202366  1,523  1,589  8  48  56 
  Net Change(4) (53) (57) 3  2  5 
              
Ending Units December 27, 202365  1,508  1,573  8  50  58 
 Units Opened  10  10  4    4 
 Units Refranchised(3) 3    (1) 1   
 Units Closed(1) (57) (58)   (1) (1)
  Net Change(4) (44) (48) 3    3 
Ending Units September 25, 202461  1,464  1,525  11  50  61 
              
Equivalent Units           
 Year-to-Date 202463  1,485  1,548  10  50  60 
 Year-to-Date 202365  1,525  1,590  8  47  55 
  Net Change(2) (40) (42) 2  3  5 
  

FAQ

What were Denny's Q3 2024 earnings results?

Denny's reported Q3 2024 net income of $6.5 million, or $0.12 per diluted share, with total operating revenue of $111.8 million.

How did Denny's same-restaurant sales perform in Q3 2024?

Denny's domestic system-wide same-restaurant sales decreased by 0.1% compared to the equivalent fiscal period in 2023.

What is Denny's outlook for domestic system-wide same-restaurant sales in 2024?

Denny's expects domestic system-wide same-restaurant sales to be between -1% and 0% for the full year 2024.

How many new restaurants does Denny's plan to open in 2024?

Denny's expects consolidated restaurant openings of 30 to 40, including 12 to 16 new Keke's restaurants, with a consolidated net decline of 45 to 55 restaurants.

DENNY'S CORP

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Restaurants
Retail-eating Places
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