Dunkin' Brands Group, Inc.
) posted fourth-quarter 2012 adjusted earnings of 34 cents per
share, beating the Zacks Consensus Estimate by a cent and the
year-ago quarter earnings of 30 cents. The earnings in the
quarter were driven by the company's high net adjusted income.
Moreover, Dunkin's low share outstanding also helped enhancing
the earnings further. On a reported basis, during the quarter,
the company has earned 32 cents per share compared with 10 cents
per share in the prior-year quarter.
For full year 2012, the company reported an adjusted net
income of $149.7 million or $1.28 per share compared with $101.7
million or 94 cents per share in the prior-year period. Reported
earnings for 2012 were ahead the Zacks Consensus Estimate of
Quarterly total revenue came in at $161.7 million, down 4.0% year
over year, owing to the low sales of the company's ice cream
products. The revenue figure missed the Zacks Consensus Estimate
of $171.0 million.
During fourth quarter, Dunkin' Donuts U.S. revenues increased
3.4% annually to $128.1 million on the back of high royalty
income, rise in other revenues and company-owned restaurants
sales. The segments' comparable store sales grew 3.2% versus 7.4%
in the prior year period. The comps improved with the rise in the
average ticket, innovative menu offerings and higher customer
traffic. Revenues from the Dunkin' Donuts International surged
2.9% year over year to $4 million led by high royalty income and
improved system wide sales. Comparable store sales at the segment
Baskin-Robbins U.S. segment's revenues amounted to $7.8
million, down 10.8% year over year, owing to the fall in royalty
and licensing income. The segment's comparable store sales rose
to 1.5%. The comps were led by introduction of new menu items.
Baskin-Robbins International's sales plunged 35.9% to nearly $18
million. The sales in the segment were affected by low ice cream
sales in Afghanistan and the company's change in manufacturing
over to Dean Foods.
In 2012, net sales were $658.2 million, up 4.8% year over year
but below the Zacks Consensus Estimate of $665 million.
In the reported quarter, operating income expanded 52.0% year
over year to $67.8 million, driven by an increase in royalty
income and non-cash impairment expenses. Operating margin was
41.9% versus 26.4% in the prior year period.
The company's franchisees and licensees have launched 256 new
restaurants worldwide during the fourth quarter, including 47
Dunkin' Donuts in the international market, 149 in U.S. locations
and 89 Baskin-Robbins outlets in international locations. This
also includes the shut down of 29 Baskin-Robbins stores in U.S.
In addition, during the quarter, Dunkin' Brands' franchisees have
renewed 205 units in U.S. As of December 31, 2012, the company
owned 10,400 Dunkin' Donuts restaurants and 7,000 Baskin-Robbins
Dunkin' Brands ended fourth quarter 2012 with cash and cash
equivalents of $252.6 million and shareholders' equity of $321.8
million. Long-term debt at the end of the quarter was $1,823.3
Dunkin' Brands increased its dividend to 19 cents per share for
the first quarter 2013, which will be paid on February 20, 2013
to shareholders of record as of February 11, 2013.
The company projects adjusted earnings in the range of $1.48
to $1.51 per share for 2013, up 15.6% - 17.9% year over year.
Revenue growth is projected to be 6%- 8% and adjusted operating
income is likely to grow by 10% - 12% in 2013. The company
anticipates that comps at Dunkin' Donuts and Baskin-Robbins in
U.S. will grow 3% - 4% and 1% - 3%, respectively.
The company expects to open nearly 700 - 860 new stores
worldwide with 400 - 500 units outside U.S. Dunkin' Donuts U.S.
is likely to introduce nearly 330 and 360 units with net unit
growth of 4.5% - 5%. It also anticipates that Baskin-Robbins U.S.
will witness shut down of 0 and 30 stores in 2013. The company
has recently declared its intention to extend its footprint in
Southern California and it has also entered into new franchise
agreements to open new units in Los Angeles, Riverside, San
Diego, San Bernardino, Ventura and Orange counties by 2015.
Canton, Massachusetts-based Dunkin' Brands remains focused on
its expansion plan, marketing innovation and menu innovation.
Although the company has experienced low sales due to the
company's ice cream business, we remain bullish on the company's
growth prospect in future. One of the company's peers
AFC Enterprises Inc.
) recently declared its preliminary fourth quarter and full year
2012 results. AFC provided a rosy outlook for 2013. AFC currently
holds a Zacks Rank #2 (Buy).
Dunkin' currently holds a Zacks Rank #2 (Buy). Other
restaurateurs, which are expected to perform well moving ahead
Krispy Kreme Doughnuts, Inc.
Burger King Worldwide, Inc.
) which carry a Zacks Rank #1 (Strong Buy) and a Zacks Rank #2
AFC ENTERPRISES (AFCE): Free Stock Analysis
BURGER KING WWD (BKW): Free Stock Analysis
DUNKIN BRANDS (DNKN): Free Stock Analysis
KRISPY KREME (KKD): Free Stock Analysis
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