Dunkin’ Donuts Earnings Recap

3rd Quarter 2018

Financial Highlights

• Dunkin’ U.S. comparable store sales increase of 1.3%
• Baskin-Robbins U.S. comparable store sales increase of 1.8%
• Added 77 net new Dunkin’ and Baskin-Robbins locations globally including 52 net new Dunkin’ locations in the U.S.
• Revenues increased 6.0%
• Diluted EPS increased by 75.6% to $0.79
• Diluted adjusted EPS increased by 69.4% to $0.83

Corporate Updates

• The Company today announced that the Board of Directors declared a cash dividend of $0.3475 per share. the dividend is payable on December 5, 2018 to shareholders of record as of the close of business on November 26, 2018.
• During the third quarter, the Company completed its repurchases under the two accelerated share repurchase agreements that it entered into in February 2018 for a total $650 million. At settlement, in August 2018, the Company received an additional 1.7 million shares. Under the agreements, the Company repurchased a total of approximately 10.2 million shares at a weighted average cost per share of $63.91. The Company’s shares outstanding as of September 29, 2018 were 82,441,928.

Updated Financial Targets

• The Company continues to expect approximately one percent comparable store sales growth for Dunkin’ U.S. and low-single digit comparable sales growth for Baskin-Robbins U.S.
• The Company continues to expect Dunkin’ U.S. franchisees to add greater than 275 net new restaurants.
• The Company now expects low-to-mid-single digit percent growth in other revenue (previously it expected high-single digit percent growth).
• The Company continues to expect low-to-mid single digit percent revenue growth.
• The Company continues to expect ice cream margin dollars to be flat compared to 2017 from a profit dollar standpoint.
• The Company continues to expect a low-single digit percent reduction to general and administrative expense.
• The Company continues to expect mid-single digit percent operating and adjusted operating income growth.
• The Company continues to expect full-year weighted-average shares outstanding of approximately 85 million. It now expects to have an effective tax rate of 23 percent, which is inclusive of the impact of the excess tax benefit recognized in the third quarter. This guidance excludes any potential future impact from material excess tax benefits in the fourth quarter of 2018.
• The Company now expects GAAP diluted earnings per share of $2.60 to $2.64 (previously it expected $2.48 to $2.56) and diluted adjusted earnings per share of $2.80 to $2.82 (previously it expected $2.68 to $2.72).
• The Company continues to expect capital expenditures to be approximately $45 to $50 million.

2nd Quarter 2018

Financial Highlights

• Dunkin’ Donuts U.S. comparable store sales increase of 1.4%
• Baskin-Robbins U.S. comparable store sales decline of 0.4%
• Added 96 net new Dunkin’ Donuts and Baskin-Robbins locations globally including 64 net new Dunkin’ Donuts in the U.S.
• Revenues increased 4.9%
• Diluted EPS increased by 30.9% to $0.72
• Diluted adjusted EPS increased by 30.5% to $0.77

Corporate Updates

• The Company today announced that the Board of Directors declared a cash dividend of $0.3475 per share, payable on September 5, 2018, to shareholders of record as of the close of business on August 27, 2018.
• The Company announced today that it had entered into an agreement to extend its relationship with CardFree, Inc., which will allow the Company to take greater control over the technology enabling its mobile payments and On-the-Go Mobile ordering through the Dunkin’ Mobile App.

Updated Financial Targets

• The Company continues to expect approximately one percent comparable store sales growth for Dunkin’ Donuts U.S. and low-single digit comparable sales growth for Baskin-Robbins U.S.
• The Company continues to expect Dunkin’ Donuts U.S. franchisees to add greater than 275 net new restaurants. In addition, the Company continues to expect Dunkin’ Donuts U.S. franchisees to open approximately 50 NextGenrestaurants, including both new and remodeled stores.
• The Company continues to expect high-single digit percent growth in Other Revenue driven by consumer packaged goods.
• The Company continues to expect low-to-mid single digit revenue growth.
• The Company continues to expect ice cream margin dollars to be flat compared to 2017 from a profit dollar standpoint.
• The Company now expects a low-single digit reduction to general and administrative expense (previously it expected a five percent reduction to general and administrative expense), which reflects investments to support the testing, training and roll-out of Dunkin’ Donuts U.S. Blueprint for Growth initiatives.
• The Company now expects mid-single digit operating and adjusted operating income growth (previously it expected mid-to-high single digit operating and adjusted operating income growth), which reflects the revised general and administrative expense guidance.
• The Company continues to expect full-year weighted-average shares outstanding of approximately 85 million and an effective tax rate of 25 percent.
• The Company now expects GAAP diluted earnings per share of $2.48 to $2.56 (previously it expected $2.49 to $2.58) and diluted adjusted earnings per share of $2.68 to $2.72 (previously it expected $2.69 to $2.74), which reflects the impact from the approximate $100 million investment in the Dunkin’ Donuts U.S. Blueprint for U.S. Growth.
• The Company now expects capital expenditures to be approximately $45 to $50 million (previously it expected capital expenditures to be approximately $25 million).

1st Quarter 2018

Financial Highlights

• Dunkin’ Donuts completed the roll out of menu simplification across 100% of the U.S. system
• Dunkin’ Donuts U.S. comparable store sales decline of 0.5%
• Baskin-Robbins U.S. comparable store sales decline of 1.0%
• Added 71 net new Dunkin’ Donuts and Baskin-Robbins locations globally including 56 net new Dunkin’ Donuts in the U.S.
• Revenues increased 1.7%
• Diluted EPS increased by $0.09 to $0.57
• Diluted adjusted EPS increased by $0.11 to $0.62
• Company entered into $650 million accelerated share repurchase agreement

Corporate Updates

• The Company today announced that the Board of Directors declared a cash dividend of $0.3475 per share, payable on June 6, 2018, to shareholders of record as of the close of business on May 29, 2018.

Updated Financial Targets

• The Company continues to expect approximately one percent comparable store sales growth for Dunkin’ Donuts U.S.
• The Company continues to expect Dunkin’ Donuts U.S. franchisees to add greater than 275 net new restaurants. In addition, the Company continues to expect to open approximately 50 NextGen restaurants, including both new and remodeled stores.
• The Company continues to expect low-to-mid single digit revenue growth.
• The Company continues to expect high-single digit percent other revenue growth driven by consumer packaged goods.
• The Company continues to expect mid-to-high single digit operating and adjusted operating income growth.
• The Company continues to expect ice cream margin dollars to be flat compared to 2017 from a profit dollar standpoint.
• The Company continues to expect a five percent reduction to G&A expense.
• The Company now expects full-year weighted-average shares outstanding of approximately 85 million and an effective tax rate of 25 percent, which is inclusive of the share repurchase entered in the first quarter and impact of the excess tax benefit recognized. The $7.6 million excess tax benefit recognized in the first quarter reduced the expected full-year effective tax rate by approximately 300 basis points. This guidance excludes any potential future impact from material excess tax benefits in subsequent quarters of 2018.
• The Company now expects GAAP diluted earnings per share of $2.49 to $2.58 (previously it expected $2.20 to $2.29) and diluted adjusted earnings per share of $2.69 to $2.74 (previously it expected $2.40 to $2.45), which reflects the impact from the above revised share count and full-year effective tax rate and excludes any impact of the $100 million investment in the Blueprint for Dunkin’ Donuts U.S. Growth.

Sources: 3Q18, 2Q18, 1Q18