Published Nov. 12, 2015
The repurchase agreement is part of a larger plan to buy back up to $100 million of Denny’s common stock, which the company agreed to on April 1. Denny’s will fund its share repurchase with its revolving credit facility. The company said that revolving credit was recently increased from $250 million to $350 million.
Mark Wolfinger, executive vice president and CFO of Denny’s Corp., said the company remains in the early stages of upgrading its restaurants to its “heritage image.” He said about 28% of the company’s stores have been upgraded to the new branding.
“Our plan to accelerate our share repurchase program, in conjunction with the expansion of our credit facility, demonstrates the confidence we have in our strategies to grow the Denny’s brand,” Wolfinger said in a statement.
He said the company has exceeded $200 million in share repurchases since November 2010 with more than “$100 million repurchased in 2015 alone.” The number of shares the most recent accelerated repurchase will fund will be based on the daily volume-weighted prices of Denny’s common stock. The agreement is expected to be completed no later than July 2016, but Denny’s said that timeline may be accelerated or even extended at Wells Fargo’s option.
“Going forward, we will continue to balance the allocation of our free cash flow between reinvestment in the brand and our company restaurants and returning value to our shareholders through our ongoing share repurchase program,” Wolfinger said.
According to its latest filing with the Securities and Exchange Commission, Denny’s Corp. experienced a 6.1% growth in its U.S. system and an increase in its margin of 2.6 percentage points, or $3.2 million. The company’s net income increased 7.3% to $9 million in the third quarter. The total operating revenue climbed 5.8% to $123.8 million following the addition of nine franchised restaurants, including one international location in Dubai.
“Based on our improved operations, we expect to continue to invest in our strategies to further elevate the Denny’s experience and build on our momentum in the coming years,” said Denny’s Corp. CEO John Miller in a statement.