Denny’s(US:DENN)2022-05-02 16:00Revenue and Sales Performance - Company restaurant sales increased by $10.4 million, or 31.0%, for the quarter ended March 30, 2022, compared to the prior year period, primarily due to easing dine-in restrictions related to COVID-19[78] - Total operating revenue reached $103.1 million for the quarter, up from $80.6 million in the prior year, with franchise and license revenue contributing $59.1 million, a 25.8% increase[75][84] - Company same-store sales increased by 30.6% for the current year quarter compared to the prior year period, while domestic franchise same-store sales increased by 22.8%[78][84] - Franchise and license revenue increased by $12.1 million, or 25.8%, for the quarter compared to the prior year, with royalties increasing by $5.7 million, or 27.3%[84] Costs and Expenses - Total costs of company restaurant sales as a percentage of sales decreased to 87.8% from 89.9% in the prior year, with product costs at 25.6% compared to 24.6%[79] - Payroll and benefits accounted for 38.9% of company restaurant sales, slightly up from 38.6% in the prior year, primarily due to labor inflation[80] - Costs of franchise and license revenue rose by $6.9 million, or 29.1%, driven by increased advertising costs, with total costs reaching 51.9% of franchise revenue[86] - Total general and administrative expenses for the quarter ended March 30, 2022, were $16.96 million, slightly up from $16.95 million in the prior year period, with corporate administrative expenses increasing by $0.5 million due to prior year cost reductions related to COVID-19[89] Income and Profitability - Operating income for the quarter was $13.3 million, representing 12.9% of total operating revenue, compared to $5.5 million, or 6.8%, in the prior year[75] - Operating income increased to $13.3 million for the quarter ended March 30, 2022, compared to $5.5 million for the same quarter in the prior year[93] - Net income for the quarter was $21.9 million, or 21.2% of total operating revenue, down from $23.2 million, or 28.8%, in the prior year[75] - Net income for the quarter ended March 30, 2022, was $21.9 million, down from $23.2 million in the prior year period[97] Cash Flow and Investments - Net cash used in operating activities was $7.1 million for the quarter ended March 30, 2022, compared to net cash provided of $10.2 million for the same quarter in the prior year[101] - The company reported net cash flows used in investing activities of $3.8 million for the quarter ended March 30, 2022, primarily due to capital expenditures of $2.8 million[102] - Net cash flows used in financing activities were $13.7 million for the quarter ended March 30, 2022, which included stock repurchases of $12.5 million[103] - The company is investing approximately $18.3 million in kitchen equipment upgrades for franchise restaurants, with $5.7 million in commitments from the company[111] - The company has committed to investing approximately $10 million towards kitchen equipment and technology platform costs in domestic franchise restaurants[113] Debt and Interest Rate Swaps - As of March 30, 2022, the company had outstanding revolver loans of $171.5 million and unused commitments of $212.8 million under its credit facility[107] - As of March 30, 2022, the total notional amount of interest rate swaps was $290 million, exceeding 100% of the company's floating rate debt[120] - A hypothetical change of 100 basis points in LIBOR would result in an annual cash flow change of approximately $1.2 million[120] - The fair value of the swaps designated as cash flow hedges included a fair value of $104,000 for one swap and a negative fair value of $(59,000) for another[119] - The dedesignated swap from February 15, 2018, had a fair value of $(23,309,000) and a fixed rate of 3.19%[119] - The notional amounts of the swaps from February 15, 2018, will increase periodically, reaching a maximum of $425 million by September 28, 2029[119] - The total fair value of all interest rate swaps as of March 30, 2022, was $(23,264,000)[119] - The company continues to monitor market considerations that could affect the fair values of its interest rate swaps[120] - Additional information regarding interest rate swaps can be found in Notes 6, 7, and 13 of the unaudited Consolidated Financial Statements[120] Technology and Future Plans - A new cloud-based restaurant technology platform rollout is expected to begin in the second half of 2022 and be substantially complete by the end of 2023[112]