Dunkin’ Brands Reports Second Quarter 2019 Results

Second quarter highlights include:

  • Dunkin’ U.S. comparable store sales growth of 1.7%
  • Baskin-Robbins U.S. comparable store sales decline of 1.4%
  • Added 46 net new Dunkin’ locations in the U.S.; total of 109 net new Dunkin’ and Baskin-Robbins locations globally
  • Revenues increased 2.5%
  • Diluted EPS decreased by 1.4% to $0.71
  • Diluted adjusted EPS increased by 11.7% to $0.86

Dunkin’ Brands Group, Inc. (Nasdaq: DNKN), the parent company of Dunkin’ and Baskin-Robbins (BR), today reported results for the second quarter ended June 29, 2019.

“Continuing the momentum established earlier in the year, our second quarter performance was highlighted by double-digit sales growth of espresso, our national value platforms, and terrific consumer reception to our latest menu innovation, our better-for-you Power Platform. We’re attracting a new consumer with both espresso and our Power Platform and will continue to bring more on-trend innovation to fuel guests throughout the day,” said David Hoffmann, Dunkin’ Brands Chief Executive Officer and President of Dunkin’ U.S. “Additionally, as a result of a highly-collaborative process with our franchisees, the Next Generation restaurant design, with nearly 300 already in the marketplace, is now the standard image for all new builds and remodels. This new store design takes our commitment to serving “great coffee, fast” to the next level through an optimized mobile order pick-up experience, iced beverage tap system, and drive-thru enhancements that make it even easier to use Dunkin’ on-the-go. We are pleased with the progress we are making against our Dunkin’ U.S. Blueprint for Growth, largely driven by our strong franchisee/franchisor relationship, which continues to be our number one asset.”

“The investment our system made in espresso equipment and training in 2018 continued to deliver strong returns. Espresso, a critical component of our beverage-led strategy, is now our fastest growing category with sales for the second quarter up more than 40 percent versus the prior year period,” said Kate Jaspon, Chief Financial Officer, Dunkin’ Brands Group, Inc. “The introduction of Dunkin’ Handcrafted Signature Lattes was a key contributor to total espresso growth and helped drive our second quarter performance, including 1.7 percent growth in Dunkin’ U.S. comparable store sales, and nearly 8 percent operating income growth for Dunkin’ Brands.”

SECOND QUARTER 2019 KEY FINANCIAL HIGHLIGHTS

(Unaudited, $ in millions, except per share data)

Three months ended

Increase (Decrease)

Amounts and percentages may not recalculate due to rounding

June 29,
 2019

June 30,
 2018

$ / #

%

Financial data:

Revenues

$

359.3

350.6

8.7

2.5

%

Operating income

122.7

113.9

8.8

7.7

%

Operating income margin

34.1

%

32.5

%

Adjusted operating income(1)

$

127.3

119.8

7.5

6.2

%

Adjusted operating income margin(1)

35.4

%

34.2

%

Net income

$

59.6

60.5

(0.9)

(1.4)

%

Adjusted net income(1)

72.4

64.8

7.6

11.7

%

Earnings per share:

Common–basic

0.72

0.73

(0.01)

(1.4)

%

Common–diluted

0.71

0.72

(0.01)

(1.4)

%

Diluted adjusted earnings per share(1)

0.86

0.77

0.09

11.7

%

Weighted-average number of common shares – diluted (in millions)

83.7

84.1

(0.4)

(0.5)

%

Systemwide sales(2)

$

3,144.6

3,030.0

114.6

3.8

%

Comparable store sales growth (decline):

Dunkin’ U.S.

1.7

%

1.4

%

BR U.S.

(1.4)

%

(0.4)

%

Dunkin’ International

5.6

%

4.0

%

BR International

3.2

%

(2.5)

%

Development data:

Consolidated global net POD development

109

96

13

13.5

%

Dunkin’ global PODs at period end

12,957

12,676

281

2.2

%

BR global PODs at period end

8,072

8,011

61

0.8

%

Consolidated global PODs at period end

21,029

20,687

342

1.7

%

(1) Adjusted operating income, adjusted operating income margin, and adjusted net income are non-GAAP measures reflecting operating income and net income adjusted for amortization of intangible assets, long-lived asset impairments, and certain other items, net of the tax impact of such adjustments in the case of adjusted net income. Diluted adjusted earnings per share is a non-GAAP measure calculated using adjusted net income. See “Non-GAAP Measures and Statistical Data” and “Dunkin’ Brands Group, Inc. Non-GAAP Reconciliations” for further detail.

(2) Systemwide sales include sales at franchisee-operated restaurants, including joint ventures. While we do not record sales by franchisees, licensees, or joint ventures as revenue, and such sales are not included in our consolidated financial statements, we believe that this operating measure is important in obtaining an understanding of our financial performance. We believe systemwide sales information aids in understanding how we derive royalty revenue and in evaluating our performance relative to competitors.

Global systemwide sales growth of 3.8% in the second quarter was primarily attributable to global store development, Dunkin’ U.S. comparable store sales growth, and Dunkin’ International comparable store sales growth.

Dunkin’ U.S. comparable store sales grew 1.7% in the second quarter as an increase in average ticket was partially offset by a decrease in traffic. The increase in average ticket was driven by strategic pricing increases coupled with favorable mix shift to premium priced espresso and cold brew beverages, as well as continued adoption of our Go2s value platform, which had an average ticket of nearly $9.

Baskin-Robbins U.S. comparable store sales declined 1.4% in the second quarter as a decrease in traffic was partially offset by an increase in average ticket. The increase in average ticket was driven by strategic pricing increases.

In the second quarter, Dunkin’ Brands franchisees and licensees opened 109 net new restaurants globally. This included 46 net new Dunkin’ U.S. locations, 43 Baskin-Robbins International locations, 11 Dunkin’ International locations, and 9 Baskin-Robbins U.S. locations. Additionally, Dunkin’ U.S. franchisees remodeled 30 restaurants and Baskin-Robbins U.S. franchisees remodeled 12 restaurants during the quarter.

Revenues for the second quarter increased $8.7 million, or 2.5%, compared to the prior year period due primarily to an increase in royalty income as a result of Dunkin’ U.S. systemwide sales growth, as well as an increase in rental income, offset by a decrease in advertising fees and related income. The increase in rental income resulted from the adoption of the new lease accounting standard in the first quarter of fiscal year 2019, which requires gross presentation of certain lease costs that the Company passes through to franchisees. See “Adoption of New Accounting Standard” for further detail. The decrease in advertising fees and related income was due primarily to a decrease in gift card program service fees, offset by an increase in advertising fees as a result of systemwide sales growth.

Operating income and adjusted operating income for the second quarter increased $8.8 million, or 7.7%, and $7.5 million, or 6.2%, respectively, from the prior year period primarily as a result of the increase in royalty income, as well as other operating income in the current quarter compared to other operating loss in the prior year period.

Net income for the second quarter decreased by $0.9 million, or 1.4%, compared to the prior year period primarily as a result of a $13.1 million loss on debt extinguishment recorded in the current period, offset by the increase in operating income, an increase in interest income earned on our cash balances, and a decrease in income tax expense as a result of the decrease in income in the current period. The loss on debt extinguishment was due to the write-off of debt issuance costs in conjunction with a refinancing transaction completed during the second quarter.

Adjusted net income for the second quarter increased by $7.6 million, or 11.7%, compared to the prior year period primarily as a result of the increases in adjusted operating income and interest income, offset by an increase in income tax expense.

Diluted earnings per share for the second quarter decreased by 1.4% to $0.71 compared to the prior year period as a result of the decrease in net income. Diluted adjusted earnings per share increased by 11.7% to $0.86 compared to the prior year period as a result of the increase in adjusted net income. Excluding the impact of recognized excess tax benefits, both diluted earnings per share and diluted adjusted earnings per share would have been lower by approximately $0.02 for each of the second quarters of fiscal years 2019 and 2018.

SECOND QUARTER 2019 SEGMENT RESULTS

Amounts and percentages may not recalculate due to rounding

Three months ended

Increase (Decrease)

Dunkin’ U.S.

June 29,
 2019

June 30,
 2018

$ / #

%

(Unaudited, $ in thousands except as otherwise noted)

Revenues:

Royalty income

$

131,682

125,221

6,461

5.2

%

Franchise fees

3,418

4,765

(1,347)

(28.3)

%

Rental income

30,491

26,506

3,985

15.0

%

Other revenues

986

898

88

9.8

%

Total revenues

$

166,577

157,390

9,187

5.8

%

Segment profit

$

127,099

119,562

7,537

6.3

%

Comparable store sales growth

1.7

%

1.4

%

Systemwide sales (in millions)(1)

$

2,382.6

2,275.6

107.0

4.7

%

Points of distribution

9,499

9,261

238

2.6

%

Gross openings

93

99

(6)

(6.1)

%

Net openings

46

64

(18)

(28.1)

%

(1) Systemwide sales include sales at franchisee-operated restaurants, including joint ventures. We do not record sales by franchisees, licensees, or joint ventures as revenue and such sales are not included in our consolidated financial statements. See “Non-GAAP Measures and Statistical Data” for further detail.

Dunkin’ U.S. second quarter revenues of $166.6 million represented an increase of 5.8% compared to the prior year period. The increase was primarily a result of an increase in royalty income driven by systemwide sales growth, as well as an increase in rental income, offset by a decrease in franchise fees due primarily to franchisee incentives provided as part of the investments to support the Dunkin’ U.S. Blueprint for Growth that are being recognized over the remaining term of each respective franchise agreement. The increase in rental income resulted from the adoption of the new lease accounting standard in the first quarter of fiscal year 2019. See “Adoption of New Accounting Standard” for further detail.

Dunkin’ U.S. segment profit in the second quarter increased to $127.1 million, an increase of $7.5 million over the prior year period, driven primarily by the increase in royalty income and a decrease in general and administrative expenses due primarily to expenses incurred in the second quarter of fiscal year 2018 to support the Dunkin’ U.S. Blueprint for Growth investments, offset by the decrease in franchise fees and a decrease in rental margin. The decrease in rental margin was due primarily to amortization of certain lease intangible assets, previously recorded within amortization, now included within occupancy expenses—franchised restaurants.  See “Adoption of New Accounting Standard” for further detail.

Amounts and percentages may not recalculate due to rounding

Three months ended

Increase (Decrease)

Dunkin’ International

June 29,
 2019

June 30,
 2018

$ / #

%

(Unaudited, $ in thousands except as otherwise noted)

Revenues:

Royalty income

$

5,396

4,732

664

14.0

%

Franchise fees

2,030

535

1,495

279.4

%

Other revenues

44

(9)

53

n/m   

Total revenues

$

7,470

5,258

2,212

42.1

%

Segment profit

$

5,484

3,503

1,981

56.6

%

Comparable store sales growth

5.6

%

4.0

%

Systemwide sales (in millions)(1)

$

199.5

183.5

16.0

8.7

%

Points of distribution

3,458

3,415

43

1.3

%

Gross openings

97

86

11

12.8

%

Net openings

11

14

(3)

(21.4)

%

(1) Systemwide sales include sales at franchisee-operated restaurants, including joint ventures. We do not record sales by franchisees, licensees, or joint ventures as revenue and such sales are not included in our consolidated financial statements. See “Non-GAAP Measures and Statistical Data” for further detail.

Dunkin’ International second quarter systemwide sales increased 8.7% from the prior year period driven by sales growth in the Middle East, Asia, Europe, and South Korea. Sales across all regions were negatively impacted by unfavorable foreign exchange rates. On a constant currency basis, systemwide sales increased by approximately 14%.

Dunkin’ International second quarter revenues of $7.5 million represented an increase of 42.1% from the prior year period. The increase in revenues was primarily a result of an increase in franchise fees due primarily to additional deferred revenue recognized in the current period upon closure of an international market, as well as an increase in royalty income driven by systemwide sales growth.

Segment profit for Dunkin’ International increased $2.0 million to $5.5 million in the second quarter primarily as a result of the increase in revenues, offset by an increase in general and administrative expenses.

Amounts and percentages may not recalculate due to rounding

Three months ended

Increase (Decrease)

Baskin-Robbins U.S.

June 29,
 2019

June 30,
 2018

$ / #

%

(Unaudited, $ in thousands except as otherwise noted)

Revenues:

Royalty income

$

8,828

9,005

(177)

(2.0)

%

Franchise fees

344

303

41

13.5

%

Rental income

973

763

210

27.5

%

Sales of ice cream and other products

1,080

842

238

28.3

%

Other revenues

3,063

3,186

(123)

(3.9)

%

Total revenues

$

14,288

14,099

189

1.3

%

Segment profit

$

10,076

10,622

(546)

(5.1)

%

Comparable store sales decline

(1.4)

%

(0.4)

%

Systemwide sales (in millions)(1)

$

184.8

187.7

(2.9)

(1.6)

%

Points of distribution

2,556

2,561

(5)

(0.2)

%

Gross openings

24

13

11

84.6

%

Net openings (closings)

9

(5)

14

n/m      

(1) Systemwide sales include sales at franchisee-operated restaurants, including joint ventures. We do not record sales by franchisees, licensees, or joint ventures as revenue and such sales are not included in our consolidated financial statements. See “Non-GAAP Measures and Statistical Data” for further detail.

Baskin-Robbins U.S. second quarter revenues increased 1.3% from the prior year period to $14.3 million due primarily to increases in sales of ice cream and other products and rental income, offset by a decrease in royalty income driven by a systemwide sales decline, as well as a decrease in other revenues. The increase in rental income resulted from the adoption of the new lease accounting standard in the first quarter of fiscal year 2019. See “Adoption of New Accounting Standard” for further detail.

Segment profit for Baskin-Robbins U.S. decreased to $10.1 million in the second quarter, a decrease of 5.1%, primarily as a result of an increase in general and administrative expenses, as well as the decreases in royalty income and other revenues.

Amounts and percentages may not recalculate due to rounding

Three months ended

Increase (Decrease)

Baskin-Robbins International

June 29,
 2019

June 30,
 2018

$ / #

%

(Unaudited, $ in thousands except as otherwise noted)

Revenues:

Royalty income

$

1,953

2,154

(201)

(9.3)

%

Franchise fees

520

251

269

107.2

%

Rental income

215

131

84

64.1

%

Sales of ice cream and other products

29,997

31,409

(1,412)

(4.5)

%

Other revenues

(8)

73

(81)

(111.0)

%

Total revenues

$

32,677

34,018

(1,341)

(3.9)

%

Segment profit

$

12,089

11,526

563

4.9

%

Comparable store sales growth (decline)

3.2

%

(2.5)

%

Systemwide sales (in millions)(1)

$

377.7

383.3

(5.6)

(1.5)

%

Points of distribution

5,516

5,450

66

1.2

%

Gross openings

111

98

13

13.3

%

Net openings

43

23

20

87.0

%

(1) Systemwide sales include sales at franchisee-operated restaurants, including joint ventures. We do not record sales by franchisees, licensees, or joint ventures as revenue and such sales are not included in our consolidated financial statements. See “Non-GAAP Measures and Statistical Data” for further detail.

Baskin-Robbins International systemwide sales decreased 1.5% in the second quarter compared to the prior year period driven by sales declines in Japan, the Middle East, and Asia, offset by sales growth in South Korea. Sales across all regions were negatively impacted by unfavorable foreign exchange rates. On a constant currency basis, systemwide sales increased by approximately 2%.

Baskin-Robbins International second quarter revenues of $32.7 million represented a decrease of 3.9% from the prior year period due primarily to decreases in sales of ice cream and other products and royalty income, offset by an increase in franchise fees. Systemwide sales and sales of ice cream products are not directly correlated within a given period due to certain licensees sourcing their own ice cream products, the lag between shipment of products to licensees and retail sales at franchised restaurants, and the overall timing of deliveries between fiscal quarters. The increase in franchise fees in the second quarter was due primarily to additional deferred revenue recognized in the current period upon closure of certain international markets.

Second quarter segment profit increased 4.9% from the prior year period to $12.1 million primarily as a result of increases in net income from our South Korea and Japan joint ventures, as well as the increase in franchise fees, offset by the decrease in royalty income.

Three months ended

Increase (Decrease)

U.S. Advertising Funds

June 29,
 2019

June 30,
 2018

$ / #

%

(Unaudited, $ in thousands)

Revenues:

Advertising fees and related income

$

123,588

119,174

4,414

3.7

%

Total revenues

$

123,588

119,174

4,414

3.7

%

Segment profit

$

%

U.S. Advertising Funds second quarter revenues of $123.6 million represented an increase of 3.7% compared to the prior year period driven primarily by Dunkin’ U.S. systemwide sales growth. Expenses for the U.S. Advertising Funds were equivalent to revenues in each period, resulting in no segment profit.

COMPANY UPDATES

  • The Company today announced that the Board of Directors declared a cash dividend of $0.3750 per share, payable on September 12, 2019, to shareholders of record as of the close of business on September 3, 2019.
  • During the second quarter, the Company repurchased 132,899 shares of common stock in the open market at a weighted-average cost per share of $75.25. The Company’s shares outstanding as of June 29, 2019 were 82,755,494.

FISCAL YEAR 2019 TARGETS
As described below, the Company is reiterating and updating certain of its 2019 performance targets.

  • The Company continues to expect low-single digit comparable store sales growth for Dunkin’ U.S. and now expects flat to slightly negative comparable store sales growth for Baskin-Robbins U.S.
  • The Company continues to expect to be at the low end of the range of 200 to 250 net new Dunkin’ U.S. units. It expects new Dunkin’ U.S. restaurants opened in 2019 will contribute at least $130 million in systemwide sales in 2019.
  • The Company continues to expect Baskin-Robbins U.S. franchisees to close approximately ten net units.
  • The Company continues to expect low-to-mid single digit percent revenue growth.
  • The Company continues to expect low-to-mid single digit percent other revenue growth driven by consumer packaged goods.
  • The Company continues to expect ice cream margin dollars to be flat compared to 2018 from a profit dollar standpoint.
  • The Company continues to expect net income of equity method investments (JV net income) to be flat compared to 2018.
  • The Company continues to expect a mid-single digit percent reduction to general and administrative expenses.
  • The Company continues to expect mid-to-high single digit percent operating and adjusted operating income growth.
  • The Company now expects its full-year effective tax rate to be approximately 27% (previously approximately 28%) and now expects net interest expense to be approximately $119 million (previously $122 million). The tax guidance excludes any potential future impact from material excess tax benefits in the second half of 2019.
  • The Company continues to expect full-year weighted-average shares outstanding of approximately 84 million.
  • The Company now expects GAAP diluted earnings per share of $2.71 to $2.78 (previously $2.63 to $2.72) and diluted adjusted earnings per share of $3.02 to $3.05 (previously $2.94 to $2.99).
  • The Company continues to expect capital expenditures to be approximately $40 million.

About Dunkin’ Brands Group, Inc.

With more than 21,000 points of distribution in more than 60 countries worldwide, Dunkin’ Brands Group, Inc. (Nasdaq: DNKN) is one of the world’s leading franchisors of quick service restaurants (QSR) serving hot and cold coffee and baked goods, as well as hard-serve ice cream. At the end of the second quarter 2019, Dunkin’ Brands’ 100 percent franchised business model included over 12,900 Dunkin’ restaurants and more than 8,000 Baskin-Robbins restaurants. Dunkin’ Brands Group, Inc. is headquartered in Canton, Mass.

DUNKIN’ BRANDS GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

Three months ended

Six months ended

June 29, 2019

June 30, 2018

June 29, 2019

June 30, 2018

Revenues:

Franchise fees and royalty income(1)

$

158,258

151,242

297,586

283,749

Advertising fees and related income

129,259

131,539

246,457

242,546

Rental income(2)

31,679

27,400

60,707

51,878

Sales of ice cream and other products(1)

27,258

28,140

47,991

49,917

Other revenues

12,883

12,319

25,687

23,892

Total revenues

359,337

350,640

678,428

651,982

Operating costs and expenses:

Occupancy expenses—franchised restaurants(2)

19,697

14,314

39,172

28,294

Cost of ice cream and other products

22,018

22,781

38,658

39,645

Advertising expenses

130,961

132,579

249,052

244,551

General and administrative expenses, net

59,922

59,301

116,125

119,125

Depreciation

4,711

5,125

9,332

10,158

Amortization of other intangible assets(2)

4,626

5,307

9,259

10,682

Long-lived asset impairment charges

2

653

325

1,154

Total operating costs and expenses

241,937

240,060

461,923

453,609

Net income of equity method investments

4,427

3,845

6,657

5,878

Other operating income (loss), net

825

(575)

862

(570)

Operating income

122,652

113,850

224,024

203,681

Other income (expense), net:

Interest income

3,079

1,516

4,910

3,158

Interest expense

(32,842)

(32,538)

(64,971)

(65,015)

Loss on debt extinguishment

(13,076)

(13,076)

Other loss, net

(46)

(272)

(50)

(599)

Total other expense, net

(42,885)

(31,294)

(73,187)

(62,456)

Income before income taxes

79,767

82,556

150,837

141,225

Provision for income taxes

20,145

22,058

38,892

30,575

Net income

$

59,622

60,498

111,945

110,650

Earnings per share—basic

$

0.72

0.73

1.35

1.31

Earnings per share—diluted

0.71

0.72

1.34

1.29

(1) For the three months ended June 29, 2019 and June 30, 2018, $4.1 million and $4.3 million, respectively, and for the six months ended June 29, 2019 and June 30, 2018, $7.2 million and $7.4 million, respectively, of sales of ice cream and other products have been allocated to franchise fees and royalty income as consideration for the use of the franchise license.

(2) The Company adopted new guidance for lease accounting in the first quarter of fiscal year 2019 on a modified retrospective transition method and elected the option to not restate comparative periods. See “Adoption of New Accounting Standard” for further detail.

DUNKIN’ BRANDS GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands)

(Unaudited)

June 29,
 2019

December 29,
 2018

Assets

Current assets:

Cash and cash equivalents

$

474,265

517,594

Restricted cash

88,562

79,008

Accounts receivable, net

87,412

75,963

Notes and other receivables, net

45,594

64,412

Prepaid income taxes

21,378

27,005

Prepaid expenses and other current assets

47,456

49,491

Total current assets

764,667

813,473

Property, equipment, and software, net

215,248

209,202

Operating lease assets(1)

375,165

Equity method investments

145,114

146,395

Goodwill

888,286

888,265

Other intangible assets, net

1,311,923

1,334,767

Other assets

67,544

64,479

Total assets

$

3,767,947

3,456,581

Liabilities and Stockholders’ Deficit

Current liabilities:

Current portion of long-term debt

$

31,150

31,650

Operating lease liabilities(1)

33,282

Accounts payable

58,308

80,037

Deferred revenue

38,521

38,541

Other current liabilities

315,333

389,353

Total current liabilities

476,594

539,581

Long-term debt, net

3,017,360

3,010,626

Operating lease liabilities(1)

388,081

Deferred revenue

321,989

331,980

Deferred income taxes, net

198,689

204,027

Other long-term liabilities

22,035

83,164

Total long-term liabilities

3,948,154

3,629,797

Stockholders’ deficit:

Common stock

83

82

Additional paid-in capital

603,868

642,017

Treasury stock, at cost

(3,291)

(1,060)

Accumulated deficit

(1,238,190)

(1,338,709)

Accumulated other comprehensive loss

(19,271)

(15,127)

Total stockholders’ deficit

(656,801)

(712,797)

Total liabilities and stockholders’ deficit

$

3,767,947

3,456,581

(1) The Company adopted new guidance for lease accounting in the first quarter of fiscal year 2019 on a modified retrospective transition method and elected the option to not restate comparative periods. See “Adoption of New Accounting Standard” for further detail.

DUNKIN’ BRANDS GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Six months ended

June 29, 2019

June 30, 2018

Net cash provided by operating activities

$

53,077

67,739

Cash flows from investing activities:

Additions to property and equipment

(19,000)

(32,902)

Other, net

1,168

Net cash used in investing activities

(17,832)

(32,902)

Cash flows from financing activities:

Proceeds from issuance of long-term debt

1,700,000

Repayment of long-term debt

(1,691,450)

(15,750)

Payment of debt issuance and other debt-related costs

(17,937)

Dividends paid on common stock

(61,985)

(57,439)

Repurchases of common stock, including accelerated share repurchases

(10,129)

(650,368)

Exercise of stock options

16,745

30,433

Other, net

(4,443)

(901)

Net cash used in financing activities

(69,199)

(694,025)

Effect of exchange rates on cash, cash equivalents, and restricted cash

49

(228)

Decrease in cash, cash equivalents, and restricted cash

(33,905)

(659,416)

Cash, cash equivalents, and restricted cash, beginning of period

598,321

1,114,099

Cash, cash equivalents, and restricted cash, end of period

$

564,416

454,683

DUNKIN’ BRANDS GROUP, INC. AND SUBSIDIARIES

Non-GAAP Reconciliations

(In thousands, except share and per share data)

(Unaudited)

Three months ended

Six months ended

June 29, 2019

June 30, 2018

June 29, 2019

June 30, 2018

Operating income

$

122,652

113,850

224,024

203,681

Operating income margin

34.1

%

32.5

%

33.0

%

31.2

%

Adjustments:

Amortization of other intangible assets

$

4,626

5,307

9,259

10,682

Long-lived asset impairment charges

2

653

325

1,154

Adjusted operating income

$

127,280

119,810

233,608

215,517

Adjusted operating income margin

35.4

%

34.2

%

34.4

%

33.1

%

Net income

$

59,622

60,498

111,945

110,650

Adjustments:

Amortization of other intangible assets

4,626

5,307

9,259

10,682

Long-lived asset impairment charges

2

653

325

1,154

Loss on debt extinguishment

13,076

13,076

Tax impact of adjustments(1)

(4,957)

(1,669)

(6,345)

(3,314)

Adjusted net income

$

72,369

64,789

128,260

119,172

Adjusted net income

$

72,369

64,789

128,260

119,172

Weighted-average number of common shares – diluted

83,696,721

84,113,681

83,564,388

85,995,475

Diluted adjusted earnings per share

$

0.86

0.77

1.53

1.39

(1) Tax impact of adjustments calculated at a 28% effective tax rate.

DUNKIN’ BRANDS GROUP, INC. AND SUBSIDIARIES

Non-GAAP Reconciliations (continued)

(Unaudited)

Fiscal year ended

December 28, 2019

Low

High

(projected)

(projected)

Diluted earnings per share

$

2.71

2.78

Adjustments:

Amortization of other intangible assets

0.23

0.22

Long-lived asset impairment charges

0.04

Loss on debt extinguishment

0.16

0.16

Tax impact of adjustments(1)

(0.12)

(0.11)

Diluted adjusted earnings per share

$

3.02

3.05

(1) Tax impact of adjustments calculated at a 28% effective tax rate.

SOURCE Dunkin’ Brands Group, Inc.