Dunkin' Brands Group, the parent company of Dunkin' Donuts (DD) and Baskin-Robbins (BR), reported results for the third quarter ended September 26, 2015.
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Revenues for the third quarter increased 8.9% compared to the prior year period due primarily to increased royalty income as a result of systemwide sales growth, an increase in sales at company-operated restaurants due to a net increase in the number of company-operated restaurants, increased sales of ice cream and other products, and licensing fees earned from the sale of Dunkin' K-Cup pods.
Operating income and adjusted operating income for the third quarter increased $7.3 million, or 7.9%, and $6.5 million, or 6.6%, respectively, from the prior year period primarily as a result of the increases in royalty income, ice cream margin due primarily to the increase in sales, and licensing fees earned from the sale of Dunkin' K-Cup pods.
The increases in revenues were offset by an increase in general and administrative expenses driven primarily by an increase in personnel costs and bad debt expense.
Net income for the third quarter decreased by $8.5 million, or 15.5%, compared to the prior year period primarily as a result of additional interest expense of $8.1 million, driven by additional borrowings incurred in conjunction with the securitization refinancing transaction completed in January 2015, and an increase in income tax expense of $7.5 million as the prior year period was favorably impacted by the settlement of certain tax audits.
These decreases were offset by the $7.3 million increase in operating income.
Adjusted net income for the third quarter decreased by $2.0 million, or 3.8%, compared to the third quarter of 2014 primarily as a result of increases in interest expense, offset by the $6.5 million increase in adjusted operating income.
Diluted earnings per share decreased by 7.7% to $0.48 for the third quarter of 2015 compared to the prior year period as a result of the decrease in net income, offset by a decrease in shares outstanding.
Diluted adjusted earnings per share increased by 6.1% to $0.52 for the third quarter of 2015 compared to the prior year period as a result of the decrease in shares outstanding, offset by the decrease in adjusted net income.
The decrease in shares outstanding from the prior year period is due primarily to the repurchase of shares, offset by the exercise of stock options. ■