• Denny’s Corporation Reports Results For Third Quarter 2022

    来源: Nasdaq GlobeNewswire / 01 11月 2022 16:05:02   America/New_York

    SPARTANBURG, S.C., Nov. 01, 2022 (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 28, 2022 and provided a business update on the Company’s operations.

    Kelli Valade, Chief Executive Officer, stated, "We were pleased with our solid performance as our long-standing commitment to everyday value resonated in this complex and challenging environment. The positive consumer response to our Summer Slamcation and recently launched All Day Diner Deals value menus drove incremental traffic at Denny's in the quarter and induced new customer trial."

    Third Quarter 2022 Highlights

    • Acquired Keke's on July 20, 2022 for $82.5 million.
    • Total operating revenue grew 13.2% to $117.5 million compared to the prior year quarter.
    • Denny's domestic system-wide same-store sales** grew 1.5% compared to the equivalent fiscal period in 2021, including a 1.1% increase at domestic franchised restaurants and a 7.1% increase at company restaurants.
    • Opened eight franchised restaurants, including one international location and one Keke's location.
    • Completed 19 remodels, including 16 franchised restaurants.
    • Operating income was $15.8 million compared to $17.7 million in the prior year quarter.
    • Franchise Operating Margin* was $30.7 million, or 47.0% of franchise and license revenue, and Company Restaurant Operating Margin* was $3.8 million, or 7.2% of company restaurant sales.
    • Net income was $17.1 million, or $0.29 per diluted share.
    • Adjusted Net Income* and Adjusted Net Income Per Share* were $7.1 million and $0.12, respectively.
    • Adjusted EBITDA* was $19.2 million, which included $1.6 million in legal settlement expense.
    • Cash provided by (used in) operating, investing, and financing activities was $15.3 million, ($77.3) million, and $64.9 million, respectively.
    • Adjusted Free Cash Flow* was $8.7 million.
    • Repurchased $7.9 million of common stock.

    Third Quarter Results

    Total operating revenue increased 13.2% to $117.5 million compared to $103.8 million in the prior year quarter.

    Franchise and license revenue was $65.2 million compared to $57.3 million in the prior year quarter. This increase was primarily driven by $5.6 million related to the kitchen modernization rollout and $1.1 million of Keke's franchise revenue in the current quarter.

    Company restaurant sales were $52.2 million compared to $46.5 million in the prior year quarter. This increase is comprised of benefits from Denny's price increases and changes in product mix compared to the prior year quarter and $2.7 million of Keke's company restaurant sales in the current quarter.

    Franchise Operating Margin* was $30.7 million, or 47.0% of franchise and license revenue, compared to $29.9 million, or 52.1%, in the prior year quarter. The margin rate was impacted by approximately 440 basis points as kitchen modernization equipment is sold to franchisees at cost.

    Company Restaurant Operating Margin* was $3.8 million, or 7.2% of company restaurant sales, compared to $7.9 million, or 17.0%, in the prior year quarter. This margin change was primarily due to commodity and labor inflation and $1.6 million in legal settlement expense, partially offset by the improvement in sales performance at company restaurants.

    The provision for income taxes was $5.5 million, reflecting an effective tax rate of 24.3%. Approximately $1.5 million in cash taxes were paid during the quarter.

    Net income was $17.1 million, or $0.29 per diluted share, compared to $12.3 million, or $0.19 per diluted share, in the prior year quarter. Adjusted Net Income* per share was $0.12 compared to $0.16 in the prior year quarter.

    The Company ended the quarter with $278.2 million of total debt outstanding, including $266.5 million of borrowings under its credit facility.

    Adjusted Free Cash Flow* and Capital Allocation

    Adjusted Free Cash Flow* in the quarter was $8.7 million after investing $5.1 million in cash capital expenditures, including the remodel of three company restaurants, facilities maintenance, and the acquisition of a Denny's franchise restaurant.

    During the quarter, the Company allocated $7.9 million to share repurchases resulting in approximately $160 million remaining under its existing repurchase authorization.

    Business Outlook

    The following expectations for the fiscal fourth quarter ending December 28, 2022 reflect management's expectations that the current consumer and economic environment will not change materially.

    • Denny's domestic system-wide same-store sales** between 1% and 3%.
    • Consolidated total general and administrative expenses between $17 million and $18 million, including approximately $2 million related to share-based compensation expense.
    • Consolidated Adjusted EBITDA* between $21 million and $23 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

    The Company will provide further commentary on the results for the third quarter ended September 28, 2022 on its quarterly investor conference call today, Tuesday, November 1, 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 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 28, 2022, the Company consisted of 1,666 restaurants, 1,592 of which were franchised and licensed restaurants and 74 of which were company operated.

    Denny's Corporation consists of the Denny’s brand and the Keke’s brand. Keke’s was acquired on July 20, 2022. As of September 28, 2022, the Denny's brand consisted of 1,613 global restaurants, 1,547 of which were franchised and licensed restaurants and 66 of which were company operated. At September 28, 2022, the Keke's brand consisted of 53 restaurants, 45 of which were franchised restaurants and 8 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.

     

    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)9/28/22 12/29/21
    Assets   
     Current assets   
      Cash and cash equivalents$4,346  $30,624 
      Investments 1,763   2,551 
      Receivables, net 24,513   19,621 
      Inventories 9,018   5,060 
      Assets held for sale 1,061   — 
      Prepaid and other current assets 9,709   11,393 
       Total current assets 50,410   69,249 
     Property, net 95,547   91,176 
     Finance lease right-of-use assets, net 6,879   7,709 
     Operating lease right-of-use assets, net 130,650   128,727 
     Goodwill 72,740   36,884 
     Intangible assets, net 95,465   50,226 
     Deferred financing costs, net 2,496   2,971 
     Deferred income taxes, net —   11,502 
     Other noncurrent assets 43,481   37,083 
       Total assets$497,668  $435,527 
           
    Liabilities   
     Current liabilities   
      Current finance lease liabilities$1,833  $1,952 
      Current operating lease liabilities 15,831   15,829 
      Accounts payable 12,248   15,595 
      Other current liabilities 62,768   64,146 
       Total current liabilities 92,680   97,522 
     Long-term liabilities   
      Long-term debt 266,500   170,000 
      Noncurrent finance lease liabilities 9,884   10,744 
      Noncurrent operating lease liabilities 127,620   126,296 
      Liability for insurance claims, less current portion 7,514   8,438 
      Deferred income taxes, net 7,890   — 
      Other noncurrent liabilities 30,210   87,792 
       Total long-term liabilities 449,618   403,270 
       Total liabilities 542,298   500,792 
           
    Shareholders' deficit   
      Common stock 650   642 
      Paid-in capital 140,234   135,596 
      Deficit (54,500)  (116,441)
      Accumulated other comprehensive loss, net (43,303)  (54,470)
      Treasury stock (87,711)  (30,592)
       Total shareholders' deficit (44,630)  (65,265)
       Total liabilities and shareholders' deficit$497,668  $435,527 
           
    Debt Balances
     Credit facility revolver due 2026$266,500  $170,000 
     Finance lease liabilities 11,717   12,696 
      Total debt$278,217  $182,696 


    DENNY’S CORPORATION
    Condensed Consolidated Statements of Operations
    (Unaudited)
          
       Quarter Ended
    ($ in thousands, except per share amounts)9/28/22 9/29/21
    Revenue:   
     Company restaurant sales$52,211  $46,470 
     Franchise and license revenue 65,245   57,324 
      Total operating revenue 117,456   103,794 
    Costs of company restaurant sales, excluding depreciation and amortization 48,451   38,569 
    Costs of franchise and license revenue, excluding depreciation and amortization 34,579   27,469 
    General and administrative expenses 16,607   16,497 
    Depreciation and amortization 3,914   3,822 
    Operating (gains), losses and other charges, net (1,897)  (215)
      Total operating costs and expenses, net 101,654   86,142 
    Operating income 15,802   17,652 
    Interest expense, net 3,691   3,671 
    Other nonoperating income, net (10,461)  (2,368)
    Income before income taxes 22,572   16,349 
    Provision for income taxes 5,489   4,084 
    Net income$17,083  $12,265 
          
    Net income per share - basic$0.29  $0.19 
    Net income per share - diluted$0.29  $0.19 
          
    Basic weighted average shares outstanding 59,020   65,447 
    Diluted weighted average shares outstanding 59,040   65,829 
          
    Comprehensive income$20,061  $13,089 
        
    General and Administrative Expenses 
     Corporate administrative expenses$13,758  $11,157 
     Share-based compensation 1,947   3,352 
     Incentive compensation 1,187   1,893 
     Deferred compensation valuation adjustments (285)  95 
      Total general and administrative expenses$16,607  $16,497 


    DENNY’S CORPORATION
    Condensed Consolidated Statements of Operations
    (Unaudited)
          
       Three Quarters Ended
    ($ in thousands, except per share amounts)9/28/22 9/29/21
    Revenue:   
     Company restaurant sales$145,354  $127,611 
     Franchise and license revenue 190,226   162,924 
      Total operating revenue 335,580   290,535 
    Costs of company restaurant sales, excluding depreciation and amortization 131,904   106,546 
    Costs of franchise and license revenue, excluding depreciation and amortization 100,513   79,962 
    General and administrative expenses 50,188   50,992 
    Depreciation and amortization 11,052   11,380 
    Operating (gains), losses and other charges, net (1,051)  204 
      Total operating costs and expenses, net 292,606   249,084 
    Operating income 42,974   41,451 
    Interest expense, net 9,529   12,014 
    Other nonoperating income, net (49,871)  (16,165)
    Income before income taxes 83,316   45,602 
    Provision for income taxes 21,375   10,984 
    Net income$61,941  $34,618 
          
    Net income per share - basic$1.01  $0.53 
    Net income per share - diluted$1.00  $0.53 
          
    Basic weighted average shares outstanding 61,558   65,413 
    Diluted weighted average shares outstanding 61,686   65,814 
          
    Comprehensive income$73,108  $38,767 
        
    General and Administrative Expenses 
     Corporate administrative expenses$38,303  $32,374 
     Share-based compensation 9,467   10,212 
     Incentive compensation 4,945   7,011 
     Deferred compensation valuation adjustments (2,527)  1,395 
      Total general and administrative expenses$50,188  $50,992 


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

    The Company believes that, in addition to 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, net income per share, net cash provided by operating activities, or other financial performance and liquidity measures prepared in accordance with GAAP.

     Quarter Ended Three Quarters Ended
    ($ in thousands)9/28/22 9/29/21 9/28/22 9/29/21
    Net income$17,083  $12,265  $61,941  $34,618 
    Provision for income taxes 5,489   4,084   21,375   10,984 
    Operating (gains), losses and other charges, net (1,897)  (215)  (1,051)  204 
    Other nonoperating income, net (10,461)  (2,368)  (49,871)  (16,165)
    Share-based compensation expense 1,947   3,352   9,467   10,212 
    Deferred compensation plan valuation adjustments (285)  95   (2,527)  1,395 
    Interest expense, net 3,691   3,671   9,529   12,014 
    Depreciation and amortization 3,914   3,822   11,052   11,380 
    Cash payments for restructuring charges and exit costs (284)  (274)  (665)  (1,548)
    Cash payments for share-based compensation —   —   (5,147)  (1,565)
    Adjusted EBITDA$19,197  $24,432  $54,103  $61,529 


    DENNY’S CORPORATION
    Reconciliation of Net Income and Net Cash Provided by Operating Activities to Non-GAAP Financial Measures Continued
    (Unaudited)
       Quarter Ended Three Quarters Ended
    ($ in thousands)9/28/22 9/29/21 9/28/22 9/29/21
    Net cash provided by operating activities$15,341  $19,858  $24,950  $63,229 
    Capital expenditures (4,375)  (2,213)  (10,146)  (5,321)
    Acquisition of restaurant(1) (750)  —   (750)  — 
    Cash payments for restructuring charges and exit costs (284)  (274)  (665)  (1,548)
    Cash payments for share-based compensation —   —   (5,147)  (1,565)
    Deferred compensation plan valuation adjustments (285)  95   (2,527)  1,395 
    Other nonoperating income, net (10,461)  (2,368)  (49,871)  (16,165)
    Gains (losses) on investments (66)  14   (289)  11 
    Gains (losses) on early termination of debt and leases 53   (20)  29   52 
    Amortization of deferred financing costs (158)  (258)  (475)  (946)
    Gains and amortization on interest rate swap derivatives, net 10,754   2,265   52,678   14,771 
    Interest expense, net 3,691   3,671   9,529   12,014 
    Cash interest expense, net(2) (3,823)  (4,195)  (10,998)  (13,236)
    Deferred income tax expense (4,903)  (1,502)  (15,669)  (3,713)
    Provision for income taxes 5,489   4,084   21,375   10,984 
    Income taxes paid, net (1,517)  (3,696)  (6,161)  (5,638)
    Changes in operating assets and liabilities, excluding acquisitions and dispositions       
    Receivables 1,369   (3,425)  4,788   (4,182)
    Inventories (3,282)  (49)  3,866   49 
    Other current assets 1,880   2,381   (1,683)  (4,296)
    Other noncurrent assets 2,936   (296)  (3,189)  1,021 
    Operating lease assets and liabilities 94   329   560   1,150 
    Accounts payable 1,574   (740)  3,115   (6,360)
    Accrued payroll (2,336)  530   3,385   (1,462)
    Accrued taxes (2,264)  (819)  (1,926)  (1,253)
    Other accrued liabilities (2,979)  (1,241)  2,024   (5,890)
    Other noncurrent liabilities 3,034   2,197   9,245   4,233 
    Adjusted Free Cash Flow$8,732  $14,328  $26,048  $37,334 


    (1)For quarter and year-to-date periods ended September 28, 2022, amounts include cash paid for the acquisition of a Denny's franchise restaurant and exclude capital paid for the acquisition of Keke's.
    (2)Includes cash interest expense, net and cash payments of approximately $0.3 million and $2.0 million for dedesignated interest rate swap derivatives for the quarter and year-to-date periods ended September 28, 2022, respectively. Includes cash interest expense, net and cash payments of approximately $0.8 million and $2.3 million for dedesignated interest rate swap derivatives for the quarter and year-to-date periods ended September 29, 2021, respectively.


    DENNY’S CORPORATION
    Reconciliation of Net Income and Net Cash Provided by Operating Activities to Non-GAAP Financial Measures Continued
    (Unaudited)
       Quarter Ended Three Quarters Ended
    ($ in thousands, except per share amounts)9/28/22 9/29/21 9/28/22 9/29/21
    Adjusted EBITDA$19,197  $24,432  $54,103  $61,529 
    Cash interest expense, net(1) (3,823)  (4,195)  (10,998)  (13,236)
    Cash paid for income taxes, net (1,517)  (3,696)  (6,161)  (5,638)
    Cash paid for capital expenditures(2) (5,125)  (2,213)  (10,896)  (5,321)
    Adjusted Free Cash Flow$8,732  $14,328  $26,048  $37,334 
            
    Net income$17,083  $12,265  $61,941  $34,618 
    Gains and amortization on interest rate swap derivatives, net (10,754)  (2,265)  (52,678)  (14,771)
    Gains on sales of assets and other, net (3,066)  (93)  (3,311)  (1,100)
    Impairment charges 697   —   963   — 
    Tax effect(3) 3,163   636   14,142   3,825 
    Adjusted Net Income$7,123  $10,543  $21,057  $22,572 
            
    Diluted weighted average shares outstanding 59,040   65,829   61,686   65,814 
            
    Net Income Per Share - Diluted$0.29  $0.19  $1.00  $0.53 
    Adjustments Per Share$(0.17) $(0.03) $(0.66) $(0.19)
    Adjusted Net Income Per Share$0.12  $0.16  $0.34  $0.34 


    (1)Includes cash interest expense, net and cash payments of approximately $0.3 million and $2.0 million for dedesignated interest rate swap derivatives for the quarter and year-to-date periods ended September 28, 2022, respectively. Includes cash interest expense, net and cash payments of approximately $0.8 million and $2.3 million for dedesignated interest rate swap derivatives for the quarter and year-to-date periods ended September 29, 2021, respectively.
    (2)For quarter and year-to-date periods ended September 28, 2022, amounts include cash paid for capital expenditures and the acquisition of a Denny's franchise restaurant, and exclude capital paid for the acquisition of Keke's.
    (3)Tax adjustments for the quarter and year-to-date periods ended September 28, 2022 reflect an effective tax rates of 24.1% and 25.7%, respectively. Tax adjustments for the quarter and year-to-date periods ended September 29, 2021 reflect an effective tax rate of 27.0% and 24.1%, 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 GAAP. 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 Three Quarters Ended
    ($ in thousands)9/28/22 9/29/21 9/28/22 9/29/21
    Operating income$15,802  $17,652  $42,974  $41,451
    General and administrative expenses 16,607   16,497   50,188   50,992
    Depreciation and amortization 3,914   3,822   11,052   11,380
    Operating (gains), losses and other charges, net (1,897)  (215)  (1,051)  204
    Restaurant-level Operating Margin$34,426  $37,756  $103,163  $104,027
            
    Restaurant-level Operating Margin consists of:       
    Company Restaurant Operating Margin(1)$3,760  $7,901  $13,450  $21,065
    Franchise Operating Margin(2) 30,666   29,855   89,713   82,962
    Restaurant-level Operating Margin$34,426  $37,756  $103,163  $104,027


    (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.


    DENNY’S CORPORATION
    Operating Margins
    (Unaudited)
           
        Quarter Ended
    ($ in thousands)9/28/22 9/29/21
    Company restaurant operations: (1)     
     Company restaurant sales$52,211 100.0% $46,470 100.0%
     Costs of company restaurant sales, excluding depreciation and amortization:     
      Product costs 14,462 27.7%  11,430 24.6%
      Payroll and benefits 20,176 38.6%  17,404 37.5%
      Occupancy 4,294 8.2%  3,013 6.5%
      Other operating costs:     
       Utilities 1,984 3.8%  1,660 3.6%
       Repairs and maintenance 1,089 2.1%  722 1.6%
       Marketing 1,340 2.6%  1,239 2.7%
       Legal settlements 1,567 3.0%  237 0.5%
       Other direct costs 3,539 6.8%  2,864 6.2%
     Total costs of company restaurant sales, excluding depreciation and amortization$48,451 92.8% $38,569 83.0%
     Company restaurant operating margin (non-GAAP)(2)$3,760 7.2% $7,901 17.0%
             
    Franchise operations:(3)     
     Franchise and license revenue:     
     Royalties$28,992 44.4% $27,336 47.7%
     Advertising revenue 18,950 29.0%  18,215 31.8%
     Initial and other fees 7,749 11.9%  1,442 2.5%
     Occupancy revenue 9,554 14.6%  10,331 18.0%
     Total franchise and license revenue$65,245 100.0% $57,324 100.0%
             
     Costs of franchise and license revenue, excluding depreciation and amortization:     
     Advertising costs$18,950 29.0% $18,216 31.8%
     Occupancy costs 5,910 9.1%  6,445 11.2%
     Other direct costs 9,719 14.9%  2,808 4.9%
     Total costs of franchise and license revenue, excluding depreciation and amortization$34,579 53.0% $27,469 47.9%
     Franchise operating margin (non-GAAP)(2)$30,666 47.0% $29,855 52.1%
             
    Total operating revenue(4)$117,456 100.0% $103,794 100.0%
    Total costs of operating revenue(4) 83,030 70.7%  66,038 63.6%
    Restaurant-level operating margin (non-GAAP)(4)(2)$34,426 29.3% $37,756 36.4%
             
    Other operating expenses:(4)(2)     
     General and administrative expenses$16,607 14.1% $16,497 15.9%
     Depreciation and amortization 3,914 3.3%  3,822 3.7%
     Operating (gains), losses and other charges, net (1,897)(1.6)%  (215)(0.2)%
     Total other operating expenses$18,624 15.9% $20,104 19.4%
             
    Operating income(4)$15,802 13.5% $17,652 17.0%
             
    (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 or other financial measures prepared in accordance with GAAP.
    (3) As a percentage of franchise and license revenue.
    (4) As a percentage of total operating revenue.


    DENNY’S CORPORATION
    Operating Margins
    (Unaudited)
           
        Three Quarters Ended
    ($ in thousands)9/28/22 9/29/21
    Company restaurant operations: (1)     
     Company restaurant sales$145,354 100.0% $127,611100.0%
     Costs of company restaurant sales, excluding depreciation and amortization:     
      Product costs 38,874 26.7%  31,14924.4%
      Payroll and benefits 55,598 38.3%  47,33937.1%
      Occupancy 11,316 7.8%  8,7076.8%
      Other operating costs:     
       Utilities 5,211 3.6%  4,2753.4%
       Repairs and maintenance 2,803 1.9%  1,8901.5%
       Marketing 3,877 2.7%  3,5712.8%
       Legal settlements 4,223 2.9%  1,1440.9%
       Other direct costs 10,002 6.9%  8,4716.6%
     Total costs of company restaurant sales, excluding depreciation and amortization$131,904 90.7% $106,54683.5%
     Company restaurant operating margin (non-GAAP)(2)$13,450 9.3% $21,06516.5%
             
    Franchise operations:(3)     
     Franchise and license revenue:     
     Royalties$84,276 44.3% $75,29746.2%
     Advertising revenue 56,642 29.8%  50,92631.3%
     Initial and other fees 20,035 10.5%  5,3463.3%
     Occupancy revenue 29,273 15.4%  31,35519.2%
     Total franchise and license revenue$190,226 100.0% $162,924100.0%
             
     Costs of franchise and license revenue, excluding depreciation and amortization:     
     Advertising costs$56,642 29.8% $50,92731.3%
     Occupancy costs 18,351 9.6%  19,86312.2%
     Other direct costs 25,520 13.4%  9,1725.6%
     Total costs of franchise and license revenue, excluding depreciation and amortization$100,513 52.8% $79,96249.1%
     Franchise operating margin (non-GAAP)(2)$89,713 47.2% $82,96250.9%
             
    Total operating revenue(4)$335,580 100.0% $290,535100.0%
    Total costs of operating revenue(4) 232,417 69.3%  186,50864.2%
    Restaurant-level operating margin (non-GAAP)(4)(2)$103,163 30.7% $104,02735.8%
             
    Other operating expenses:(4)(2)     
     General and administrative expenses$50,188 15.0% $50,99217.6%
     Depreciation and amortization 11,052 3.3%  11,3803.9%
     Operating (gains), losses and other charges, net (1,051)(0.3)%  2040.1%
     Total other operating expenses$60,189 17.9% $62,57621.5%
             
    Operating income(4)$42,974 12.8% $41,45114.3%
             
    (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 or other financial measures prepared in accordance with GAAP.
    (3) As a percentage of franchise and license revenue.
    (4) As a percentage of total operating revenue.


    DENNY’S CORPORATION
    Statistical Data
    (Unaudited)
                      
       Denny's Keke's (2)
    Changes in Same-Store Sales (1) vs. Prior YearQuarter Ended Three Quarters Ended Quarter Ended Three Quarters Ended
    (Increase (decrease))9/28/22 9/29/21 9/28/22 9/29/21 9/28/22 9/29/21 9/28/22 9/29/21
     Company Restaurants 7.1%  67.7%  12.1%  54.1% N/A N/A N/A N/A
     Domestic Franchise Restaurants 1.1%  48.9%  7.6%  37.2% N/A N/A N/A N/A
     Domestic System-wide Restaurants 1.5%  50.2%  7.9%  38.3% N/A N/A N/A N/A
                      
       Denny's Keke's (2)
    Average Unit SalesQuarter Ended Three Quarters Ended Quarter Ended Three Quarters Ended
    ($ in thousands)9/28/22 9/29/21 9/28/22 9/29/21 9/28/22 9/29/21 9/28/22 9/29/21
     Company Restaurants$766  $717  $2,209  $1,974  $334 N/A $334 N/A
     Franchised Restaurants$435  $424  $1,281  $1,166  $349 N/A $349 N/A
                      
    (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.
     Keke's comparable same-store sales will not be reported for the first year following the acquisition.
    (2)Effective July 20, 2022, the Company acquired Keke's, as such the data represents post-acquisition results.


       Denny's Keke's
         Franchised     Franchised  
    Restaurant Unit ActivityCompany & Licensed Total Company & Licensed Total
    Ending Units June 29, 202265  1,566  1,631  — — —
     Units Opened—  7  7  — 1 1
     Units Acquired (3)—  —  —  8 44 52
     Units Reacquired1  (1) —  — — —
     Units Closed—  (25) (25) — — —
      Net Change1  (19) (18) 8 45 53
    Ending Units September 28, 202266  1,547  1,613  8 45 53
                  
    Equivalent Units           
     Third Quarter 202265  1,560  1,625  6 34 40
     Third Quarter 202165  1,578  1,643  — — —
      Net Change—  (18) (18) 6 34 40
                  
       Denny's Keke's
         Franchised     Franchised  
    Restaurant Unit ActivityCompany & Licensed Total Company & Licensed Total
    Ending Units December 29, 202165  1,575  1,640  — — —
     Units Opened—  16  16  — 1 1
     Units Acquired (3)—  —  —  8 44 52
     Units Reacquired1  (1) —  — — —
     Units Closed—  (43) (43) — — —
      Net Change1  (28) (27) 8 45 53
    Ending Units September 28, 202266  1,547  1,613  8 45 53
                  
    Equivalent Units           
     Year-to-Date 202264  1,566  1,630  2 11 13
     Year-to-Date 202165  1,581  1,646  — — —
      Net Change(1) (15) (16) 2 11 13
      
    (3) Effective July 20, 2022, the Company acquired Keke's, consisting of 8 company operated restaurants and 44 franchised restaurants.


    Investor Contact:
Curt Nichols
877-784-7167

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

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