Adjusted EBITDA was $44.4 million, up 26% year-over-year, primarily due to higher gross profit partially offset by increased SG&A expenses.
Adjusted gross margin improved to 46.9% from 45.9% in the prior year period, driven by lower input costs, higher yields, and reduced quality costs.
Adjusted SG&A was 30.1% of net sales, down from 31.0% the prior year, with media spend increasing to 15% of net sales from 12.2%.
Capital spending for Q2 was $33.4 million, with operating cash flow of $33.9 million and cash on hand of $243.7 million at quarter end.
Household penetration grew 11% year-over-year to 14.4 million households, with MVPs (most valuable pet parents) growing 18% to 2.2 million households, representing 70% of sales.
Logistics costs remained stable at 5.7% of net sales compared to 5.8% last year.
Second quarter net sales were $264.7 million, up 12.5% year-over-year, driven primarily by volume growth.
Free cash flow was $325 million in Q2, strengthening sequentially, with expectations for acceleration in the second half and healthy full-year cash generation.
Gross margin contracted 110 basis points due to inflationary pressures but was offset by strong SG&A leverage and disciplined expense management, resulting in steady operating margins and double-digit EPS growth.
International segment net sales increased 6%, driven by pricing and volume mix, with operating income growth of 2.6% despite a challenging macro environment.
Keurig Dr Pepper delivered strong second quarter results with net sales increasing 7%, driven by price and volume mix across U.S. refreshment beverages, International, and sequential progress in coffee.
Leverage remains comfortable at 3.3x with a long-term goal of 2.5x or lower.
U.S. coffee net sales declined modestly by 0.2% but showed sequential improvement with net price realization strengthening to 3.6%, despite volume mix decline of 3.8%.
U.S. refreshment beverages net sales grew almost 11%, led by core strength and rapid expansion in white spaces like energy and sports hydration.
Adjusted operating margins declined to 3.5% from 6.0% last year, impacted by inflation in COGS (3.3%), labor (3.4%), health insurance, and higher operating expenses.
GAAP diluted earnings per share were $0.29, up from $0.28 last year; adjusted diluted EPS was $0.32, above guidance range of $0.22 to $0.27 but down from $0.45 last year.
Net debt was $867 million with leverage at 2.7x net debt to adjusted EBITDA and 4.1x lease adjusted net leverage; company aims to reduce lease-adjusted leverage below 3.0x.
Quarterly dividend declared at $0.15 per share; share repurchases are not planned currently.
Total revenues for Q2 2025 were $1 billion, slightly up from $999 million last year, driven by restaurant openings and closures.
U.S. comparable restaurant sales declined by 10 basis points, with traffic down 200 basis points, but results exceeded company expectations.
Adjusted EBITDA for Q2 2025 exceeded $1 billion, beating expectations despite a modestly negative system-wide RevPAR decline of 50 basis points year-over-year.
Adjusted EPS also exceeded expectations, with adjusted diluted EPS of $2.20 for the quarter.
Adjusted EPS also exceeded expectations, with diluted EPS adjusted for special items at $2.20 for the quarter.
Full year 2025 guidance includes system-wide RevPAR growth of 0% to 2%, adjusted EBITDA between $3.65 billion and $3.71 billion, and adjusted diluted EPS between $7.83 and $8.00.
Management franchise fees grew 8% year-over-year.
Q3 2025 guidance expects flat to modestly down system-wide RevPAR, adjusted EBITDA between $935 million and $955 million, and adjusted diluted EPS between $1.98 and $2.04.
Regional RevPAR performance varied: U.S. down 1.5%, Americas ex-U.S. up 3.8%, Europe up 2%, Middle East and Africa up 10.3%, Asia Pacific up 0.3% with China down 3.4%.
Year-to-date, Hilton returned $1.7 billion to shareholders and expects to return approximately $3.3 billion for the full year.
Adjusted diluted EPS declined to $1.17 from $1.71 in the prior year quarter.
Adjusted EBITDA decreased to $56.2 million from $67 million year-over-year.
Adjusted free cash flow for the first six months of 2025 was $48.7 million, down from $52.9 million in the same period last year.
Applebee's reported a 4.9% increase in comp sales with positive traffic growth, the first positive traffic since Q1 2023.
Company-owned portfolio showed solid progress with comp sales improving over Q1 and performing near system average.
Consolidated total revenues increased 11.9% to $230.8 million in Q2 2025 compared to $206.3 million in Q2 2024, driven primarily by increased company restaurant sales.
IHOP posted a negative 2.3% comp sales but showed sequential improvement from Q1 and achieved second consecutive quarter of traffic outperformance relative to Black Box.
Adjusted EBITDA declined to $15.3 million from $20.1 million, reflecting lower margins and higher noncash expenses related to self-insurance.
Bombshells segment revenues declined due to divestitures and same-store sales decline but returned to profitability with an operating income of $87,000 versus a loss of $8.9 million last year.
Free cash flow remained stable at $13.3 million, with a sequential increase in free cash flow margin to 19% of revenues.
GAAP EPS was $0.46 compared to a loss of $0.56 per share last year; non-GAAP EPS was $0.77 versus $1.35 year-over-year.
Net income attributable to common shareholders was $4.1 million, a significant improvement from a loss of $5.2 million in the prior year quarter.
Nightclub revenues were nearly flat with a slight decline in same-store sales offset by acquisitions; operating income increased to $17.8 million with a margin of 28.5%.
Total revenues for Q3 2025 were $71.1 million, down from $76.2 million year-over-year, primarily due to the sale and divestiture of underperforming Bombshells locations.
Adjusted earnings per share were $3.19, up about 5% versus the prior year quarter in constant currencies.
Adjusted operating margin was nearly 47% for the first half of the year, with restaurant margin increasing about 5% in constant currency.
Full year adjusted operating margin target remains mid- to high 40% range, with company-operated restaurant margin target adjusted to around 14.8%.
International Developmental Licensed (IDL) Markets delivered comp sales growth of more than 5.5%, led by Japan and positive comps across all geographies.
McDonald's reported global system-wide sales growth of over 6% in constant currency and global comparable sales growth of nearly 4% in Q2 2025.
The Internationally Operated Market (IOM) segment saw comp sales increase by 4%, with all markets driving positive comp sales growth.
U.S. comparable sales were up 2.5% in the quarter, outperforming near competitors despite challenging QSR traffic trends.
Top 4 DMAs (Los Angeles, San Francisco, Houston, Phoenix) experienced outsized macroeconomic pressures in Q2, contributing to a 30 basis point reduction in system-wide same-restaurant sales.
Markets affected by macro pressures saw a significant downturn starting mid-June, punctuated by headlines and macroeconomic news.
Management remains optimistic that consumer sentiment volatility will moderate over time, which could stabilize sales.
Dafinchi
