Denny’s(US:DENN)2023-10-29 16:00Financial Performance - Total operating revenue for the quarter ended September 27, 2023, was $114.183 million, a decrease of 2.2% compared to $117.456 million for the same quarter in 2022[87]. - Net income for the quarter was $7.908 million, a decrease of 53.7% compared to $17.083 million in the same quarter of the previous year[87]. - Operating income for the current quarter was $14.0 million, up from $15.8 million in the prior year, while year-to-date operating income increased to $45.1 million from $43.0 million[110]. - Net income for the quarter ended September 27, 2023, was $7.9 million, down from $17.1 million in the prior year, while year-to-date net income decreased to $17.0 million from $61.9 million[116]. Sales and Revenue - Company restaurant sales increased by $0.9 million, or 1.8%, for the quarter and $16.1 million, or 11.1%, year-to-date compared to the prior year periods[93]. - Denny's same-store sales decreased by 1.4% for the current quarter but increased by 4.1% year-to-date compared to the prior year periods[93]. - Franchise and license revenue for the quarter was $61.030 million, representing 53.4% of total operating revenue, down from 55.5% in the prior year[87]. - Keke's brand contributed less than 5% of total consolidated revenues for the quarter ended September 27, 2023[84]. - Franchise and license revenue decreased by $4.2 million, or 6.5%, for the quarter ended September 27, 2023, compared to the prior year period[99]. - Royalties increased by $0.7 million, or 2.5%, for the quarter ended September 27, 2023, compared to the prior year period[99]. Costs and Expenses - Total costs of company restaurant sales as a percentage of company restaurant sales were 86.3% for the quarter ended September 27, 2023, down from 92.8% in the prior year[94]. - Product costs as a percentage of company restaurant sales were 25.6% for the quarter ended September 27, 2023, compared to 27.7% for the prior year[95]. - Payroll and benefits as a percentage of company restaurant sales decreased to 37.2% for the quarter ended September 27, 2023, from 38.6% in the prior year period[96]. - Occupancy costs as a percentage of company restaurant sales were 7.9% for the quarter ended September 27, 2023, down from 8.2% in the prior year period[97]. - Other operating expenses decreased to 15.7% of company restaurant sales for the quarter ended September 27, 2023, compared to 18.2% in the prior year period[98]. - General and administrative expenses increased to $18.2 million for the quarter ended September 27, 2023, compared to $16.6 million in the prior year period[105]. - Total depreciation and amortization expense decreased to $3.6 million for the quarter ended September 27, 2023, from $3.9 million in the prior year period[106]. - Total restructuring and exit costs increased by $0.5 million for the quarter ended September 27, 2023, primarily due to severance costs related to leadership changes[108]. - Impairment charges recorded were $1.7 million for the quarter ended September 27, 2023, compared to $0.7 million and $1.0 million for the same periods in the prior year[109]. Cash Flow and Capital Expenditures - Net cash provided by operating activities was $50.8 million for the year-to-date period ended September 27, 2023, compared to $25.0 million for the same period in the prior year[118]. - Capital expenditures for the year-to-date period ended September 27, 2023, were $5.5 million, significantly lower than $10.1 million in the prior year[119]. Debt and Interest - Interest expense for the quarter was $4.381 million, an increase from $3.691 million in the prior year[87]. - Total cash interest expense, net increased by $0.6 million for the current quarter and $3.5 million year-to-date compared to the prior year periods, primarily due to increased average borrowings and higher average interest rates[112]. - As of September 27, 2023, the company had outstanding revolver loans of $248.1 million and outstanding letters of credit of $11.5 million, resulting in unused commitments of $140.4 million[124]. - The effective tax rate for the current quarter was 17.6%, down from 24.3% in the prior year, reflecting the impact of discrete items related to share-based compensation[115]. Working Capital and Financial Position - The working capital deficit increased to $56.0 million at September 27, 2023, compared to $43.3 million at December 28, 2022, primarily due to a decrease in receivables and inventories[121]. - As of September 27, 2023, the company has a total notional amount of $201 million in interest rate swaps, with a fair value of $27.324 million[132]. - The fixed rate debt ratio increased from 4% to 82% of total debt due to the interest rate swaps[134]. - A 100 basis point change in interest rates would result in a $0.3 million change in annual cash flow and income before taxes[134]. - The company transitioned its credit facility benchmark interest rate from LIBOR to Adjusted Daily Simple SOFR, with no material impact on financial position or operations[133]. - Fluctuations in the fair values of interest rate swaps could be significant, but no material changes in market risks have occurred since the prior reporting period[135].