Dunkin' Brands Group, Inc. (
posted third quarter 2012 adjusted earnings of 37 cents per
share, beating the Zacks Consensus Estimate by 2 cents and the
year-ago quarter earnings by 9 cents. The quarter marked the
fifth consecutive double-digit adjusted earnings per share
On a reported basis, the company earned 26 cents per share
compared with a loss of $1.01 per share in the prior-year
Total revenue came in at $171.7 million, up 5.0% year over year,
mainly driven by an increase in franchise fees and royalty
income. However, the revenue figure missed the Zacks Consensus
Estimate of $174.0 million.
Global system-wide sales increased 4.7% in the third quarter,
mainly driven by new unit development and hike in comparable
sales of Dunkin' Donuts U.S. and Baskin-Robbins International
Within the segments, Dunkin' Donuts comparable sales grew 2.8%
and 2.1% in U.S. and the international market, respectively. The
U.S. business comps were driven by increased average ticket,
innovative menu offerings and higher customer traffic.
On the other hand, comparable sales for Baskin-Robbins increased
1.1% and 3.0% in U.S. and the international market, respectively.
The U.S business comps were driven by introduction of new menu
In the reported quarter, operating income expanded 30.0% year
over year to $16.2 million, driven by an increase in royalty
income and one-time expenses related to company's IPO in 2011.
In the third quarter, the company's franchisees and licensees
opened 187 new restaurants worldwide, including 36 Dunkin' Donuts
in the international market, 78 in U.S. locations and 74
Baskin-Robbins outlets in international locations. This also
includes the closure of one Baskin-Robbins unit in U.S. In
addition, Dunkin' Brands' U.S. franchisees remodeled 144 units
during the reported quarter.
As of September 30, 2012, the company owned 10,283 Dunkin' Donuts
restaurants and 6,920 Baskin-Robbins restaurants worldwide.
Dunkin' Brands ended third quarter 2012 with cash and cash
equivalents of $165.6 million and shareholders' equity of $321.5
million. Long-term debt at the end of the quarter was $1,829.6
Share Repurchases & Dividend
In the reported quarter, the company repurchased 15 million
shares worth $450 million.
Dunkin' Brands also announced a dividend of 15 cents per share
for the fourth quarter 2012, payable on November 14, 2012 to
shareholders of record as of November 5, 2012.
The company reaffirmed its comps and operating income guidance
for 2012. Dunkin' Brands continues to project comps increase for
Dunkin' Donuts U.S. in the range of 4%-5% and for Baskin-Robbins
U.S. in the range of 2%-4%. On the other hand, operating income
increase is anticipated to be in the range of 12%-14%.
Dunkin' reduced its revenue growth guidance for 2012 on account
of change in ice cream shipping terms related to the
manufacturing shift to Dean Foods, which will result in one-time
setback in revenue recognition that will affect sales of ice
cream products in the upcoming fourth quarter. Revenue growth is
expected to be in the range of 6%- 7%, down from the previous
guidance of 7%-8%.
However, Dunkin' Brands increased its adjusted earnings per share
and units growth guidance for 2012. The company now expects
adjusted earnings in the range of $1.25 to $1.27 per share, up
from the previous guidance of $1.22 to $1.25. The optimism
reflects Dunkin' Brands' consistent comps growth and strong
performance in the reported quarter.
The company expects worldwide unit growth in the range of 620 to
710, up from the previous range of 600-700 units. It upped its
guidance to addition of 280-300 Dunkin' Donuts U.S restaurants,
from the previous guidance of 260- 280.
Dunkin' affirmed its guidance for closure of around 40-60 net
Baskin-Robbins U.S. restaurants and opening 400 to 450 new units
across the two brands, on the international front.
DUNKIN BRANDS (DNKN): Free Stock Analysis
YUM! BRANDS INC (YUM): Free Stock Analysis
To read this article on Zacks.com click here.
Canton, Massachusetts-based Dunkin' Brands remains focused on its
expansion plan, marketing innovation and menu innovation. Based
on this, we expect analysts to revise their estimates upward in
the coming days. Currently, the Zacks Consensus Estimate for 2012
and 2013 are pegged at $1.26 and $1.50, respectively.
Dunkin' Brands competes with the likes of
Yum! Brands, Inc. (
, which reported its third quarter 2012 adjusted earnings of 99
cents per share, beating the Zacks Consensus Estimate by 2 cents.
Dunkin' Brands currently carries a Zacks #3 Rank, implying a
short-term Hold rating. We also reiterate our long-term Neutral
recommendation on the stock.