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Denny's Corporation (DENN) reported its financial results on Tuesday for the second quarter ended July 1, 2009.
Total operating revenue, including company restaurant sales and franchise revenue, of $155.8 million compared with $190.3 million in the prior year quarter. Same-store sales decreased 2.7% at company units and decreased 4.7% at franchised units.
Denny's reported net income of $9.3 million for the second quarter, or $0.09 per diluted common share, compared with prior year period net income of $3.2 million, or $0.03 per diluted common share. This beat estimates from analaysts for net income of $0.05 per share.
Nelson Marchioli, President and CEO of Denny's, commmented in a conference call, "We continue to deliver growth and profits despite unprecedented pressures on same-store sales in our industry. Our ongoing trnasition to a more franchise-based business model that is inclusive of a more effective organizational structure has allowed us to deliver profit growth with consistenty and increased predictability."
He continued, "Our Q2 performance also reflected cost control efforts in our company-owned restaurants through efficiency gains. Despite an 18% decrease in revenues , we delivered adjusted EBITDA growth of 27%. We also opened 10 new franchise restaurants in an environment when the industry is cutting back development. We also sold 22 company restaurants to franchisees during the quarter. In addition, we cut SG&A, interest and depreciation expenses and voluntarily paid down $9 million in debt. Since mid-2006, we have paid down $238 million, or 43% of our debt. Q2 was also the third consecutive quarter that our franchise gross profit contributions exceeded that of the company units."
Mr. Marchioli added, "Our transformation has increased operating margins, earnings power and systems unit growth, while lowering business and financial risks. Our business model is now better suited to withstand and succeed in a challenging economic climate."
He concluded, "We recognize that some of our competitors are delivering same-store sales results that are outperforming us. We are committed to improving sales and guest counts through marketing promotions. Our marketing programs are pursuing guest count growth through the positioning of our 'Real Breakfast,' strong lunch and dinner offerings and a clearly differentiated last night experience through our 'All Nighter' program. We believe this will continue to differentiate us by promoting value, new product innovations and imrpoving customer experience."
Denny's expects company same-store sales of (3.0%) to (1.0%), and franchise same-store sales of (5.0%) to (3.0%). for 2009 for 2009. The Company also expects adjusted income before taxes of between $15 million and $20 million for 2009.
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