Dennys Corp (DENN) has reported an 8.67 percent rise in profit for the quarter ended Sep. 28, 2016. The company has earned $9.73 million, or $0.13 a share in the quarter, compared with $8.95 million, or $0.11 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $9.68 million, or $0.13 a share compared with $9.32 million or $0.11 a share, a year ago.
Revenue during the quarter grew 3.72 percent to $128.39 million from $123.78 million in the previous year period. Gross margin for the quarter expanded 120 basis points over the previous year period to 31.93 percent. Total expenses were 86.31 percent of quarterly revenues, down from 87.30 percent for the same period last year. This has led to an improvement of 99 basis points in operating margin to 13.69 percent.
Operating income for the quarter was $17.58 million, compared with $15.72 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $24.94 million compared with $23.56 million in the prior year period. At the same time, adjusted EBITDA margin improved 39 basis points in the quarter to 19.43 percent from 19.03 percent in the last year period.
John Miller, president and chief executive officer, stated, "As we continue to build one of the leading franchise systems in the country, our strategic initiatives have resulted in consistent revenue and earnings growth along with stable Free Cash Flow generation. During the third quarter, we achieved positive system same-store sales and significantly improved both our company and franchise operating margins as we continued with our improvements in guest appeal."
For financial year 2016, Dennys Corp expects revenue to be in the range of $506 million to $509 million.
Working capital remains negative
Working capital of Dennys Corp was negative $48.05 million on Sep. 28, 2016 compared with negative $18.28 million on Sep. 30, 2015. Current ratio was at 0.35 as on Sep. 28, 2016, down from 0.75 on Sep. 30, 2015.
Days sales outstanding were almost stable at 10 days for the quarter, when compared with the last year period.
At the same time, days payable outstanding was almost stable at 14 days for the quarter, when compared with the previous year period.
Debt increases substantially
Dennys Corp has witnessed an increase in total debt over the last one year. It stood at $228.54 million as on Sep. 28, 2016, up 34.67 percent or $58.83 million from $169.70 million on Sep. 30, 2015. Total debt was 76.76 percent of total assets as on Sep. 28, 2016, compared with 58.58 percent on Sep. 30, 2015. Interest coverage ratio deteriorated to 5.64 for the quarter from 6.76 for the same period last year.
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