10-Q - DENNY'S Corp (0000852772) (Filer)

Mon, May 5, 8:56 PM (18 days ago)

**Denny's Corporation (DENN) Q1 2025 Financial Summary** **Financial Health and Performance:** - **Revenue:** Total operating revenue was $111,637,000, a slight increase from $109,974,000 in Q1 2024. - **Profit Margins:** Operating income decreased to $5,210,000 from $10,006,000. Net income dropped significantly to $326,000 from $4,691,000. - **Cash Flow:** Net cash provided by operating activities was $5,015,000, a substantial increase from $215,000 in Q1 2024. However, net cash used in investing activities was $7,172,000, higher than the $5,327,000 in Q1 2024. - **Earnings Changes:** Net income per share was $0.01 for both basic and diluted, down from $0.09 in Q1 2024. **Key Metrics and Trends:** - **Revenue Breakdown:** Company restaurant sales were $53,900,000, up from $52,342,000. Franchise and license revenue was $57,737,000, slightly up from $57,632,000. - **Costs:** Total costs of company restaurant sales were $50,025,000, up from $48,118,000. Costs of franchise and license revenue were $28,354,000, up from $27,374,000. - **Operating Expenses:** General and administrative expenses decreased to $20,030,000 from $21,222,000. Depreciation and amortization increased to $4,107,000 from $3,581,000. - **Impairment Charges:** Recorded $3,216,000 in impairment charges, significantly higher than the $95,000 in Q1 2024. - **Restructuring:** Recorded $2,437,000 in restructuring charges, up from $198,000 in Q1 2024. **Uncertainties and Future Operations:** - **Economic Factors:** The company faces uncertainties related to economic conditions, commodity and labor inflation, and competitive pressures. - **Liquidity:** The company expects to meet its cash requirements through operating cash flows and borrowings under its credit facility. - **Capital Expenditures:** The company is investing in technology and new units, with significant capital expenditures planned. - **Share Repurchases:** The company repurchased $1,000,000 worth of shares, with $88,200,000 remaining under the current authorization. **Impact on Future Operations:** - **Technology Initiatives:** The company is investing in a new cloud-based restaurant technology platform, expected to enhance the guest experience and operational efficiency. - **Unit Activity:** The company opened 6 new franchised units and closed 14, ending the quarter with 1,491 total restaurants. - **Financial Covenants:** The company remains in compliance with its financial covenants, with a consolidated leverage ratio of 3.9 times and a consolidated fixed charge coverage ratio of 2.1 times. **Conclusion:** Denny's Corporation faced challenges in Q1 2025, with decreased profitability and increased costs. However, the company is focusing on strategic initiatives to enhance operational efficiency and guest experience, while maintaining financial discipline. The outlook remains cautious due to economic uncertainties and competitive pressures.