Dunkin' Brands Group, Inc. (NASDAQ:DNKN) Q1 2019 Earnings Conference Call Transcript

May 02, 2019 • 08:00 am ET


Dunkin' Brands Group, Inc. (NASDAQ:DNKN) Q1 2019 Earnings Conference Call Transcript


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Good day, ladies and gentlemen, and welcome to the Dunkin' Brands First Quarter 2019 Earnings Call. (Operator Instructions) And as a reminder, this conference may be recorded. I would now like to turn the call over to Stacey Caravella, you may begin.

Stacey Caravella

Thank you, operator, and good morning, everyone. Speaking on today's call will be Dunkin' Brands' Chief Executive Officer, Dave Hoffmann; and Dunkin' Brands' Chief Financial Officer, Kate Jaspon. Today's call is being webcast live and recorded for replay.

Before I turn the call over to Dave, I'd like to remind everyone that the language on forward-looking statements included in our earnings release also applies to our comments made during this call. Our release can be found on our website, investor.dunkinbrands.com along with any reconciliation of non-GAAP financial measures mentioned on the call with their corresponding GAAP measures. Lastly, let me remind you of our tentative dates for the release of quarterly earnings in 2019. We plan to release Q2 on August 1 and Q3 on October 31.

Now I'll turn the call over to Dave.

Dave Hoffmann

Thanks, Stacey. During the first quarter of 2019, we made strong progress against our plans to unlock healthy growth and modernize our brands for the next generation of consumers. The Blueprint for Growth, our long-term strategy for Dunkin' U.S., is producing meaningful results for customers and franchisees. In the first quarter, Dunkin' U.S. delivered 5.5% system-wide sales growth and 2.4% same-store sales growth. And by the way, this was our largest quarterly increase in 4 years. Performance was enabled by the actions we put in place throughout 2018 such as menu simplification, re-branding, our first foray into national value, espresso, improvements to the app and all of this coupled with some intensive focus on training and better execution. These results demonstrate the $100 million investment we committed to the Dunkin' U.S. business last year is paying off.

As for our international business, we continue to focus on strategic markets including the Middle East and parts of Asia as well as long-term growth opportunities such as strengthening our delivery infrastructure. And Baskin-Robbins U.S. stepped up its restaurant base optimization efforts through strategic closures and restaurant transfers as part of its raising-the-bar plan. From a financial standpoint, we achieved approximately 6% revenue growth, more than 11% adjusted operating income growth and $0.67 adjusted earnings per share, which is inclusive of $0.01 of excess tax benefits. We are still in the early innings of implementing our plans, and we're confident about the progress we made in Q1 to transform our brands globally. Key to our accomplishments is the strong collaboration we have with our franchisees and licensees. We are making smarter decisions together than ever before and creating a healthy business for the next generation of business owners and consumers alike.

All right. So now onto Dunkin' U.S. As I said earlier, Q1 system-wide sales grew 5.5% and comparable store sales grew 2.4%. This quarter was marked by terrific consumer reception to our new handcrafted espresso beverages,