A Look at IHOP's Financial Menu: Fool by Numbers

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On April 25, IHOP (NYSE: IHP) released first-quarter earnings for the period ended March 31.

• Net sales improved 1.8% because of an increase in the average check. The "All You Can Eat Pancakes" and "Cinn-A-Stacks" limited-time offers helped, but guest traffic still declined.
• Earnings per share declined 7.4% because of a pre-payment penalty on the company's pre-existing debt and costs related to the write-off of deferred financing costs.
• Management reiterated its estimated EPS to a range between $2.50 and $2.60 per diluted share for fiscal 2007 and repurchased 659,400 shares during first-quarter 2007 for $37.6 million.

(Figures in thousands, except per-share data.)

Income Statement Highlights

	Q1 2007	Q1 2006	Change
Sales	$90,124	$88,517	1.8%
Net Profit	$11,313	$12,594	(10.2%)
EPS	$0.63	$0.68	(7.4%)
Diluted Shares	18,046	18,650	(3.2%)

Get back to basics with the income statement.

Margin Checkup

	Q1 2007	Q1 2006	Change*
Gross Margin	41.5%	41.3%	0.2
Operating Margin	22.4%	23%	(0.6)
Net Margin	12.6%	14.2%	(1.7)

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets	Q1 2007	Q1 2006	Change
Cash + ST Invest.	$51,818	$34,919	48.4%
Accounts Rec.	$42,811	$42,816	(0%)
Inventory	$415	$696	(40.4%)

Liabilities	Q1 2007	Q1 2006	Change
Accounts Payable	$14,694	$21,498	(31.6%)
Long-Term Debt	$175,000	$113,654	54%

The balance sheet reflects the company's health.

Cash Flow Highlights

	Q1 2007	Q1 2006	Change
Cash From Ops.	$14,598	$21,502	(32.1%)
Capital Expenditures	$784	$241	225.3%
Free Cash Flow	$13,814	$21,261	(35%)

Free cash flow is a Fool's best friend.

Related Foolishness:

• Short Stack at IHOP
• Food Fight at Applebee's
• Free Eats on Tax Day

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Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean. This data has been provided by Netscribes. To provide feedback on this article, please click on the "feedback" button below.