Dunkin' Brands Results

Dunkin' Brands Reports First Quarter 2019 Results

First quarter highlights include:

  • Dunkin' U.S. comparable store sales growth of 2.4%
  • Baskin-Robbins U.S. comparable store sales decline of 2.8%
  • Added 34 net new Dunkin' locations in the U.S.; total of 8 net new Dunkin' and Baskin-Robbins locations globally
  • Revenues increased 5.9%
  • Diluted EPS increased by 10.5% to $0.63
  • Diluted adjusted EPS increased by 8.1% to $0.67

Dunkin' Brands Group, Inc. (Nasdaq: DNKN), the parent company of Dunkin' and Baskin-Robbins (BR), today reported results for the first quarter ended March 30, 2019.

"While we are still in the early innings of the implementation of our Blueprint for Growth, Dunkin' U.S. delivered a strong first quarter, including 5.5 percent systemwide sales growth and a 2.4 percent increase in comparable store sales, which was the largest quarterly comparable store sales increase in four years. This solid performance, across both morning and afternoon, was driven by consistent, compelling national value promotions and continued beverage sales momentum. In particular, the relaunch of our highly successful handcrafted espresso platform, without impacting our trademark speed of service, has demonstrated our ability to deliver on the commitment of 'great coffee fast,'" said David Hoffmann, Dunkin' Brands Chief Executive Officer and President of Dunkin' U.S. "Going forward, the collaboration we have with our franchisees and licensees will remain our number one asset, and we will continue to work together to modernize our brands and deliver healthy growth."

"Our first quarter financial performance included approximately 6 percent revenue growth and double-digit operating income growth," said Kate Jaspon, Chief Financial Officer, Dunkin' Brands Group, Inc. "We completed a $1.7 billion placement of securitized debt on April 30 that replaced our 2015 notes and were pleased to maintain our overall blended fixed interest rate across all of the outstanding securitized debt under four percent. The refinancing provides strong fixed rates as well as flexibility to navigate future market environments."

FIRST QUARTER 2019 KEY FINANCIAL HIGHLIGHTS

(Unaudited, $ in millions, except per share data)

Three months ended

Increase (Decrease)

Amounts and percentages may not recalculate due to rounding

March 30,

 2019

March 31,

2018

$ / #

%

Financial data:

Revenues

$

319.1

301.3

17.7

5.9

%

Operating income

101.4

89.8

11.5

12.8

%

Operating income margin

31.8

%

29.8

%

Adjusted operating income(1)

$

106.3

95.7

10.6

11.1

%

Adjusted operating income margin(1)

33.3

%

31.8

%

Net income

$

52.3

50.2

2.2

4.3

%

Adjusted net income(1)

55.9

54.4

1.5

2.8

%

Earnings per share:

Common–basic

0.63

0.58

0.05

8.6

%

Common–diluted

0.63

0.57

0.06

10.5

%

Diluted adjusted earnings per share(1)

0.67

0.62

0.05

8.1

%

Weighted average number of common shares – diluted (in millions)

83.4

87.9

(4.4)

(5.1)

%

Systemwide sales(2)

$

2,768.2

2,660.0

108.2

4.1

%

Comparable store sales growth (decline):

Dunkin' U.S.

2.4

%

(0.5)

%

BR U.S.

(2.8)

%

(1.0)

%

Dunkin' International

2.9

%

2.1

%

BR International

(2.0)

%

10.0

%

Development data:

Consolidated global net POD development

8

71

(63)

(88.7)

%

Dunkin' global PODs at period end

12,900

12,598

302

2.4

%

BR global PODs at period end

8,020

7,993

27

0.3

%

Consolidated global PODs at period end

20,920

20,591

329

1.6

%

(1)

Adjusted operating income, adjusted operating income margin, and adjusted net income are non-GAAP measures reflecting operating income and net income adjusted for amortization of intangible assets, long-lived asset impairments, and certain other items, net of the tax impact of such adjustments in the case of adjusted net income. Diluted adjusted earnings per share is a non-GAAP measure calculated using adjusted net income. See "Non-GAAP Measures and Statistical Data" and "Dunkin' Brands Group, Inc. Non-GAAP Reconciliations" for further detail.

(2)

Systemwide sales include sales at franchisee-operated restaurants, including joint ventures. While we do not record sales by franchisees, licensees, or joint ventures as revenue, and such sales are not included in our consolidated financial statements, we believe that this operating measure is important in obtaining an understanding of our financial performance. We believe systemwide sales information aids in understanding how we derive royalty revenue and in evaluating our performance relative to competitors.

Global systemwide sales growth of 4.1% in the first quarter was primarily attributable to global store development, Dunkin' U.S. comparable store sales growth, and Dunkin' International comparable store sales growth.

Dunkin' U.S. comparable store sales grew 2.4% in the first quarter as an increase in average ticket was partially offset by a decrease in traffic. The increase in average ticket was driven by strategic pricing increases coupled with favorable mix shift to premium priced espresso and frozen beverages, as well as our Go2s value breakfast sandwich platform.

Baskin-Robbins U.S. comparable store sales declined 2.8% in the first quarter as a decrease in traffic was partially offset by an increase in average ticket. Unfavorable weather impact of more than 300 basis points significantly affected all product categories in the first quarter. The increase in average ticket was driven by strategic pricing increases coupled with favorable mix shift to beverages, take home quarts, and desserts.

In the first quarter, Dunkin' Brands franchisees and licensees opened 8 net new restaurants globally. This included 34 net new Dunkin' U.S. locations, offset by net closures of 18 Baskin-Robbins International locations, 5 Dunkin' International locations, and 3 Baskin-Robbins U.S. locations. Additionally, Dunkin' U.S. franchisees remodeled 33 restaurants and Baskin-Robbins U.S. franchisees remodeled 8 restaurants during the quarter.

Revenues for the first quarter increased $17.7 million, or 5.9%, compared to the prior year period due primarily to increases in royalty income and advertising fees as a result of systemwide sales growth, as well as an increase in rental income. The increase in rental income resulted from the adoption of a new lease accounting standard in the first quarter of fiscal year 2019, which requires gross presentation of certain lease costs that the Company passes through to franchisees. See "Adoption of New Accounting Standard" for further detail.

Operating income and adjusted operating income for the first quarter increased $11.5 million, or 12.8%, and $10.6 million, or 11.1%, respectively, from the prior year period primarily as a result of the increase in royalty income and a reduction in general and administrative expenses due primarily to a decrease in personnel costs.

Net income and adjusted net income for the first quarter increased by $2.2 million, or 4.3%, and $1.5 million, or 2.8%, respectively, compared to the prior year period primarily as a result of the increases in operating income and adjusted operating income, respectively, offset by an increase in income tax expense primarily driven by excess tax benefits from share-based compensation of $1.2 million compared to $7.6 million in the prior year period and the increase in income in the current period.

Diluted earnings per share and diluted adjusted earnings per share for the first quarter increased by 10.5% to $0.63 and 8.1% to $0.67, respectively, compared to the prior year period as a result of the increases in net income and adjusted net income, respectively, as well as a decrease in shares outstanding. The decrease in shares outstanding from the prior year period was due primarily to the repurchase of shares since the beginning of the first quarter of fiscal year 2018, offset by the exercise of stock options. Excluding the impact of recognized excess tax benefits, both diluted earnings per share and diluted adjusted earnings per share would have been lower by approximately $0.01 and $0.09 for the first quarter of fiscal years 2019 and 2018, respectively.

FIRST QUARTER 2019 SEGMENT RESULTS

Amounts and percentages may not recalculate due to rounding

Three months ended

Increase (Decrease)

Dunkin' U.S.

March 30,

 2019

March 31,

2018

$ / #

%

(Unaudited, $ in thousands except as otherwise noted)

Revenues:

Royalty income

$

117,097

110,833

6,264

5.7

%

Franchise fees

3,626

4,707

(1,081)

(23.0)

%

Rental income

27,848

23,591

4,257

18.0

%

Other revenues

1,174

780

394

50.5

%

Total revenues

$

149,745

139,911

9,834

7.0

%

Segment profit

$

111,034

105,063

5,971

5.7

%

Comparable store sales growth

2.4

%

(0.5)

%

Systemwide sales (in millions)(1)

$

2,126.3

2,015.9

110.3

5.5

%

Points of distribution

9,453

9,197

256

2.8

%

Gross openings

69

93

(24)

(25.8)

%

Net openings

34

56

(22)

(39.3)

%

(1)

Systemwide sales include sales at franchisee-operated restaurants, including joint ventures. We do not record sales by franchisees, licensees, or joint ventures as revenue and such sales are not included in our consolidated financial statements. See "Non-GAAP Measures and Statistical Data" for further detail.

Dunkin' U.S. first quarter revenues of $149.7 million represented an increase of 7.0% compared to the prior year period. The increase was primarily a result of an increase in royalty income driven by systemwide sales growth, as well as an increase in rental income, offset by a decrease in franchise fees due primarily to franchisee incentives provided in fiscal year 2018 as part of the investments in the Dunkin' U.S. Blueprint for Growth that are being recognized over the remaining term of each respective franchise agreement. The increase in rental income resulted from the adoption of the new lease accounting standard in the first quarter of fiscal year 2019. See "Adoption of New Accounting Standard" for further detail.

Dunkin' U.S. segment profit in the first quarter increased to $111.0 million, an increase of $6.0 million over the prior year period, driven primarily by the increase in royalty income and a decrease in general and administrative expenses due primarily to a decrease in personnel costs, offset by the decrease in franchise fees.

Amounts and percentages may not recalculate due to rounding

Three months ended

Increase (Decrease)

Dunkin' International

March 30,

 2019

March 31,

2018

$ / #

%

(Unaudited, $ in thousands except as otherwise noted)

Revenues:

Royalty income

$

5,913

4,938

975

19.7

%

Franchise fees

865

448

417

93.1

%

Other revenues

73

(21)

94

n/m

Total revenues

$

6,851

5,365

1,486

27.7

%

Segment profit

$

4,831

3,206

1,625

50.7

%

Comparable store sales growth

2.9

%

2.1

%

Systemwide sales (in millions)(1)

$

198.9

190.2

8.7

4.6

%

Points of distribution

3,447

3,401

46

1.4

%

Gross openings

72

86

(14)

(16.3)

%

Net openings (closings)

(5)

4

(9)

(225.0)

%

(1)

Systemwide sales include sales at franchisee-operated restaurants, including joint ventures. We do not record sales by franchisees, licensees, or joint ventures as revenue and such sales are not included in our consolidated financial statements. See "Non-GAAP Measures and Statistical Data" for further detail.

Dunkin' International first quarter systemwide sales increased 4.6% from the prior year period driven by sales growth in the Middle East. Sales across all regions were negatively impacted by unfavorable foreign exchange rates. On a constant currency basis, systemwide sales increased by approximately 9%.

Dunkin' International first quarter revenues of $6.9 million represented an increase of 27.7% from the prior year period. The increase in revenues was primarily a result of an increase in royalty income driven by a recovery of prior period royalties, as well as an increase in franchise fees due primarily to additional deferred revenue recognized in the current period upon closure of restaurants.

Segment profit for Dunkin' International increased $1.6 million to $4.8 million in the first quarter primarily as a result of the increase in revenues and a decrease in net loss from our South Korea joint venture.

Amounts and percentages may not recalculate due to rounding

Three months ended

Increase (Decrease)

Baskin-Robbins U.S.

March 30,

 2019

March 31,

2018

$ / #

%

(Unaudited, $ in thousands except as otherwise noted)

Revenues:

Royalty income

$

6,103

6,409

(306)

(4.8)

%

Franchise fees

312

289

23

8.0

%

Rental income

960

767

193

25.2

%

Sales of ice cream and other products

671

678

(7)

(1.0)

%

Other revenues

2,231

2,370

(139)

(5.9)

%

Total revenues

$

10,277

10,513

(236)

(2.2)

%

Segment profit

$

6,323

7,235

(912)

(12.6)

%

Comparable store sales decline

(2.8)

%

(1.0)

%

Systemwide sales (in millions)(1)

$

128.5

132.7

(4.2)

(3.2)

%

Points of distribution

2,547

2,566

(19)

(0.7)

%

Gross openings

12

16

(4)

(25.0)

%

Net openings (closings)

(3)

6

(9)

(150.0)

%

(1)

Systemwide sales include sales at franchisee-operated restaurants, including joint ventures. We do not record sales by franchisees, licensees, or joint ventures as revenue and such sales are not included in our consolidated financial statements. See "Non-GAAP Measures and Statistical Data" for further detail.

Baskin-Robbins U.S. first quarter revenues decreased 2.2% from the prior year period to $10.3 million due primarily to a decrease in royalty income driven by a systemwide sales decline, as well as a decrease in other revenues, offset by an increase in rental income. The increase in rental income resulted from the adoption of the new lease accounting standard in the first quarter of fiscal year 2019. See "Adoption of New Accounting Standard" for further detail.

Segment profit for Baskin-Robbins U.S. decreased to $6.3 million in the first quarter, a decrease of 12.6%, primarily as a result of the decreases in royalty income and other revenues, as well as an increase in general and administrative expenses.

Amounts and percentages may not recalculate due to rounding

Three months ended

Increase (Decrease)

Baskin-Robbins International

March 30,

 2019

March 31,

2018

$ / #

%

(Unaudited, $ in thousands except as otherwise noted)

Revenues:

Royalty income

$

1,905

1,543

362

23.5

%

Franchise fees

358

206

152

73.8

%

Rental income

220

120

100

83.3

%

Sales of ice cream and other products

23,075

23,972

(897)

(3.7)

%

Other revenues

21

47

(26)

(55.3)

%

Total revenues

$

25,579

25,888

(309)

(1.2)

%

Segment profit

$

7,802

7,441

361

4.9

%

Comparable store sales growth (decline)

(2.0)

%

10.0

%

Systemwide sales (in millions)(1)

$

314.6

321.2

(6.6)

(2.0)

%

Points of distribution

5,473

5,427

46

0.8

%

Gross openings

77

87

(10)

(11.5)

%

Net openings (closings)

(18)

5

(23)

(460.0)

%

(1)

Systemwide sales include sales at franchisee-operated restaurants, including joint ventures. We do not record sales by franchisees, licensees, or joint ventures as revenue and such sales are not included in our consolidated financial statements. See "Non-GAAP Measures and Statistical Data" for further detail.

Baskin-Robbins International systemwide sales decreased 2.0% in the first quarter compared to the prior year period driven by a sales decline in Japan, offset by sales growth in South Korea. Sales across all regions were negatively impacted by unfavorable foreign exchange rates. On a constant currency basis, systemwide sales increased by approximately 2%.

Baskin-Robbins International first quarter revenues of $25.6 million represented a decrease of 1.2% from the prior year period due primarily to a decrease in sales of ice cream and other products, offset by increases in royalty income, franchise fees, and rental income. Systemwide sales and sales of ice cream products are not directly correlated within a given period due to certain licensees sourcing their own ice cream products, the lag between shipment of products to licensees and retail sales at franchised restaurants, and the overall timing of deliveries between fiscal quarters. The increase in franchise fees was due primarily to additional deferred revenue recognized in the current period upon closure of restaurants.

First quarter segment profit increased 4.9% from the prior year period to $7.8 million primarily as a result of the increases in royalty income and franchise fees, as well as an increase in net income from our South Korea joint venture, offset by an increase in net loss from our Japan joint venture and a decrease in net margin on ice cream driven primarily by a decrease in sales volume.

Three months ended

Increase (Decrease)

U.S. Advertising Funds

March 30,

 2019

March 31,

 2018

$ / #

%

(Unaudited, $ in thousands)

Revenues:

Advertising fees and related income

$

108,642

104,167

4,475

4.3

%

Total revenues

$

108,642

104,167

4,475

4.3

%

Segment profit

$

%

U.S. Advertising Funds first quarter revenues of $108.6 million represented an increase of 4.3% compared to the prior year period driven primarily by Dunkin' U.S. systemwide sales growth. Expenses for the U.S. Advertising Funds were equivalent to revenues in each period, resulting in no segment profit.

COMPANY UPDATES

  • The Company today announced that the Board of Directors declared a cash dividend of $0.3750 per share, payable on June 12, 2019, to shareholders of record as of the close of business on June 3, 2019.
  • On April 30, 2019, the Company completed its previously announced debt refinancing transaction, with the placement by its special purpose subsidiary of a new series of $1.85 billion of securitized notes, consisting of $1.7 billion of senior secured notes with anticipated repayment dates of 4.75 years ($600 million), 7 years ($400 million), and 10 years ($700 million) and a new variable funding note facility ($150 million), which replaces the Company's existing variable funding note facility. The proceeds from the placement of the new notes were used to prepay and retire all of the outstanding notes issued in 2015, and to pay transaction fees. The Company's new annualized net interest expense is approximately $122 million, based on a blended rate of 3.978 percent, on $3.1 billion in securitized debt.

FISCAL YEAR 2019 TARGETS

As described below, the Company is reiterating and updating certain of its 2019 performance targets.

  • The Company continues to expect low-single digit comparable store sales growth for Dunkin' U.S. and Baskin-Robbins U.S.
  • The Company continues to expect to be at the low end of the range of 200 to 250 net new Dunkin' U.S. units. It expects new Dunkin' U.S. restaurants opened in 2019 will contribute at least $130 million in systemwide sales in 2019.
  • The Company continues to expect Baskin-Robbins U.S. franchisees to close approximately ten net units.
  • The Company continues to expect low-to-mid single digit percent revenue growth.
  • The Company continues to expect low-to-mid single digit percent other revenue growth driven by consumer packaged goods.
  • The Company continues to expect ice cream margin dollars to be flat compared to 2018 from a profit dollar standpoint.
  • The Company continues to expect net income of equity method investments (JV net income) to be flat compared to 2018.
  • The Company continues to expect a mid-single digit percent reduction to general and administrative expenses.
  • The Company continues to expect mid-to-high single digit percent operating and adjusted operating income growth.
  • The Company continues to expect its full-year effective tax rate to be approximately 28% and net interest expense to be approximately $122 million. The tax guidance excludes any potential future impact from material excess tax benefits in 2019.
  • The Company continues to expect full-year weighted-average shares outstanding of approximately 84 million.
  • The Company now expects GAAP diluted earnings per share of $2.63 to $2.72 (previously $2.74 to $2.83) and continues to expect diluted adjusted earnings per share of $2.94 to $2.99.
  • The Company continues to expect capital expenditures to be approximately $40 million.

The foregoing non-GAAP forward-looking financial measures are reconciled from the respective measures determined under GAAP in the attached tables "Dunkin' Brands Group, Inc. and Subsidiaries Non-GAAP Reconciliations."

Adoption of New Accounting Standard

In February 2016, the Financial Accounting Standards Board issued new guidance for lease accounting, which replaces existing lease accounting guidance. The Company adopted this new guidance in fiscal year 2019 using the modified retrospective transition method, and elected the option to not restate comparative periods in the year of adoption, including amounts as of December 29, 2018 and for the three months ended March 31, 2018 included herein. As a result of adopting this new guidance in the first quarter of fiscal year 2019, the Company recognized operating lease assets and liabilities of $380.2 million and $426.4 million, respectively, as of March 30, 2019. The adoption of this new guidance also resulted in the recognition of additional rental income and occupancy expenses–franchised restaurants of $4.7 million in the first quarter of fiscal year 2019 related to certain lease costs that the Company passes through to franchisees. Additionally, amortization of certain lease intangible assets, previously recorded within amortization of other intangible assets, is now recorded as part of the amortization of operating lease assets within occupancy expenses–franchised restaurants. Amortization of other intangible assets in the first quarter of 2018 includes $0.7 million of amortization expense related to these lease intangible assets. Additional information regarding the Company's adoption of the new lease accounting guidance is contained in our most recent annual report on Form 10-K, filed with the Securities and Exchange Commission on February 27, 2019.

About Dunkin' Brands Group, Inc.

With more than 20,900 points of distribution in more than 60 countries worldwide, Dunkin' Brands Group, Inc. (Nasdaq: DNKN) is one of the world's leading franchisors of quick service restaurants (QSR) serving hot and cold coffee and baked goods, as well as hard-serve ice cream. At the end of the first quarter 2019, Dunkin' Brands' 100 percent franchised business model included 12,900 Dunkin' restaurants and more than 8,000 Baskin-Robbins restaurants. Dunkin' Brands Group, Inc. is headquartered in Canton, Mass.

DUNKIN' BRANDS GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

Three months ended

March 30,

2019

March 31,

2018

Revenues:

Franchise fees and royalty income(1)

$

139,328

132,507

Advertising fees and related income

117,198

111,007

Rental income(2)

29,028

24,478

Sales of ice cream and other products(1)

20,733

21,777

Other revenues

12,804

11,573

Total revenues

319,091

301,342

Operating costs and expenses:

Occupancy expenses—franchised restaurants(2)

19,475

13,980

Cost of ice cream and other products

16,640

16,864

Advertising expenses

118,091

111,972

General and administrative expenses, net

56,203

59,824

Depreciation

4,621

5,033

Amortization of other intangible assets(2)

4,633

5,375

Long-lived asset impairment charges

323

501

Total operating costs and expenses

219,986

213,549

Net income of equity method investments

2,230

2,033

Other operating income, net

37

5

Operating income

101,372

89,831

Other income (expense), net:

Interest income

1,831

1,642

Interest expense

(32,129)

(32,477)

Other loss, net

(4)

(327)

Total other expense, net

(30,302)

(31,162)

Income before income taxes

71,070

58,669

Provision for income taxes

18,747

8,517

Net income

$

52,323

50,152

Earnings per share—basic

$

0.63

0.58

Earnings per share—diluted

0.63

0.57

(1)

For each of the three months ended March 30, 2019 and March 31, 2018, $3.1 million of sales of ice cream and other products have been allocated to franchise fees and royalty income as consideration for the use of the franchise license.

(2)

The Company adopted new guidance for lease accounting in the first quarter of fiscal year 2019 on a modified retrospective transition method and elected the option to not restate comparative periods. See "Adoption of New Accounting Standard" for further detail.

DUNKIN' BRANDS GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

March 30,

 2019

December 29,

 2018

Assets

Current assets:

Cash and cash equivalents

$

458,708

517,594

Restricted cash

79,555

79,008

Accounts receivable, net

78,246

75,963

Notes and other receivables, net

36,209

64,412

Prepaid income taxes

17,386

27,005

Prepaid expenses and other current assets

51,865

49,491

Total current assets

721,969

813,473

Property, equipment, and software, net

204,120

209,202

Operating lease assets(1)

380,209

Equity method investments

142,156

146,395

Goodwill

888,276

888,265

Other intangible assets, net

1,316,543

1,334,767

Other assets

72,100

64,479

Total assets

$

3,725,373

3,456,581

Liabilities and Stockholders' Deficit

Current liabilities:

Current portion of long-term debt

$

26,900

31,650

Operating lease liabilities(1)

33,146

Accounts payable

51,552

80,037

Deferred revenue

35,922

38,541

Other current liabilities

321,162

389,353

Total current liabilities

468,682

539,581

Long-term debt, net

3,008,745

3,010,626

Operating lease liabilities(1)

393,235

Deferred revenue

325,103

331,980

Deferred income taxes, net

198,597

204,027

Other long-term liabilities

22,304

83,164

Total long-term liabilities

3,947,984

3,629,797

Stockholders' deficit:

Common stock

83

82

Additional paid-in capital

618,326

642,017

Treasury stock, at cost

(3,291)

(1,060)

Accumulated deficit

(1,288,758)

(1,338,709)

Accumulated other comprehensive income

(17,653)

(15,127)

Total stockholders' deficit

(691,293)

(712,797)

Total liabilities and stockholders' deficit

$

3,725,373

3,456,581

(1)

The Company adopted new guidance for lease accounting in the first quarter of fiscal year 2019 on a modified retrospective transition method and elected the option to not restate comparative periods. See "Adoption of New Accounting Standard" for further detail.

DUNKIN' BRANDS GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Three months ended

March 30,

 2019

March 31,

2018

Net cash used in operating activities

$

(15,992)

(16,203)

Cash flows from investing activities:

Additions to property and equipment

(1,946)

(5,803)

Other, net

(304)

Net cash used in investing activities

(2,250)

(5,803)

Cash flows from financing activities:

Repayment of long-term debt

(7,912)

(7,875)

Dividends paid on common stock

(30,975)

(28,639)

Repurchases of common stock, including accelerated share repurchases

(129)

(650,368)

Exercise of stock options

3,830

18,175

Other, net

(5,065)

(731)

Net cash used in financing activities

(40,251)

(669,438)

Effect of exchange rates on cash, cash equivalents, and restricted cash

89

64

Decrease in cash, cash equivalents, and restricted cash

(58,404)

(691,380)

Cash, cash equivalents, and restricted cash, beginning of period

598,321

1,114,099

Cash, cash equivalents, and restricted cash, end of period

$

539,917

422,719

DUNKIN' BRANDS GROUP, INC. AND SUBSIDIARIES

Non-GAAP Reconciliations

(In thousands, except share and per share data)

(Unaudited)

Three months ended

March 30,

2019

March 31,

2018

Operating income

$

101,372

89,831

Operating income margin

31.8

%

29.8

%

Adjustments:

Amortization of other intangible assets

$

4,633

5,375

Long-lived asset impairment charges

323

501

Adjusted operating income

$

106,328

95,707

Adjusted operating income margin

33.3

%

31.8

%

Net income

$

52,323

50,152

Adjustments:

Amortization of other intangible assets

4,633

5,375

Long-lived asset impairment charges

323

501

Tax impact of adjustments(1)

(1,388)

(1,645)

Adjusted net income

$

55,891

54,383

Adjusted net income

$

55,891

54,383

Weighted average number of common shares – diluted

83,432,042

87,877,254

Diluted adjusted earnings per share

$

0.67

0.62

(1) Tax impact of adjustments calculated at a 28% effective tax rate.

DUNKIN' BRANDS GROUP, INC. AND SUBSIDIARIES

Non-GAAP Reconciliations (continued)

(Unaudited)

Fiscal year ended

December 28, 2019

Low

High

(projected)

(projected)

Diluted earnings per share

$

2.63

2.72

Adjustments:

Amortization of other intangible assets

0.23

0.22

Long-lived asset impairment charges

0.04

Loss on debt extinguishment and refinancing transactions

0.16

0.15

Tax impact of adjustments(1)

(0.12)

(0.10)

Diluted adjusted earnings per share

$

2.94

2.99

(1) Tax impact of adjustments calculated at a 28% effective tax rate.

SOURCE Dunkin' Brands Group, Inc.



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