Dennys Corp (DENN), franchisor and operator of one of America's largest franchised full-service restaurant chains, has reported a 33.48 percent jump in profit for the quarter ended Jun. 25, 2014. The company earned $8.27 million or $0.09 a share in the second-quarter compared with $6.20 million or $0.07 a share a year ago. Adjusted earnings per share came in at $0.09, when analysts expected $0.08.
Revenue during the second-quarter went down marginally 1.68 percent to $114.61 million from $116.57 million in the last year period.
Gross margin expanded by 101 basis points over the last year period to 44.21 percent. Total expenses as a percentage of revenues decreased to 86.96 percent from 89.18 percent in the same period last year. That has resulted in improvement of 222 basis points in operating margins to 13.04 percent.
The company posted operating income of $14.94 million, compared with $12.61 million in the previous year period.
John Miller, president and chief executive officer, stated, ''We generated another quarter of growing franchise and company same-store sales as we continue to build on the positive momentum from our brand revitalization.''
Cash Flow
Dennys Corp has generated cash of $29.93 million from operating activities during the first half, up 23.07 percent or $5.61 million when compared with the last year period. The company has generated 13.21 cents of operating cash flow in every sales dollar for the first half, up from 10.53 cents in the same period last year.
The company has spent $12.96 million cash to meet investing activities during the first half, as against cash outgo of $6.87 million in the last year period. It has made net capital expenditure of $13.52 million during the first half, which was higher by 152.04 percent or $8.16 million, from a year ago.
The company's free cash flow accounted for 54.82 percent of operating cash flow for the first half, compared with 77.94 percent in the last year period.
The company has spent $18.69 million cash to meet financing activities during the first half, as against cash outgo of $29 million in the last year period. It has borrowed net of $5.29 million through debt during the first half. It has spent net of $23.61 million on repurchase of common stocks.
As on Jun. 25, 2014, the company's cash balance stood at $1.22 million, down 39.28 percent or $0.79 million from Jun. 26, 2013.
Working Capital
Dennys Corp working capital remained negative at $21.49 million on Jun. 25, 2014, compared with negative $26.10 million on Jun. 26, 2013. It registered an increase in current ratio to 0.68 as at Jun. 25, 2014 from 0.65 on Jun. 26, 2013.
Debt Position
Dennys Corp has witnessed an increase in the total debt over the last one year. As on Jun. 25, 2014, total debt stood at $179.85 million, up 1.82 percent or $3.22 million, from Jun. 26, 2013. The company's total debt was 63.29 percent of total assets as on Jun. 25, 2014, compared with 58.61 percent on Jun. 26, 2013.
Interest coverage ratio, which determines how easily a company can pay interest expenses on outstanding debt, has improved to 6.57 from 4.95 in the same period last year.
Shares of the company declined $0.01 or 0.16 percent to settle at $6.28 on Monday.
