Dine Brands Global, Inc. Reports Second Quarter 2024 Results

Dine Brands Global, Inc. (NYSE: DIN), the parent company of Applebee’s Neighborhood Grill & Bar®, IHOP® and Fuzzy’s Taco Shop® restaurants, today announced financial results for the second quarter of fiscal year 2024.

“Our brands have a long history of weathering economic cycles and despite the consumer pullback the industry witnessed this quarter, we are confident that our strategies around profitable promotions, menu innovation and development will help us manage both short-term challenges while positioning us for the long term,” said John Peyton, chief executive officer, Dine Brands Global, Inc.

Vance Chang, chief financial officer, Dine Brands Global, Inc. added, “Our asset light model allows us to return capital to investors and maintain the strength of our balance sheet in all economic cycles. We are revising our financial guidance for the remainder of the fiscal year to reflect the current macro conditions and we are optimistic about the strategic advantage of Dine’s platform to create value for all stakeholders in the long term.”

Domestic Restaurant Sales for the Second Quarter of 2024

  • Applebee’s year-over-year domestic comparable same-restaurant sales declined 1.8% for the second quarter of 2024. Off-premise sales mix accounted for 21.4% in the second quarter of 2024 compared to 22.6% in the second quarter of 2023.
  • IHOP’s year-over-year domestic comparable same-restaurant sales declined 1.4% for the second quarter of 2024. Off-premise sales mix accounted for 19.8% in the second quarter of 2024 compared to 20.7% in the second quarter of 2023.

Second Quarter of 2024 Summary

  • Total revenues for the second quarter of 2024 were $206.3 million compared to $208.4 million for the second quarter of 2023. The decrease was primarily due to the negative comparable same-restaurant sales growth at Applebee’s and IHOP, partially offset by increases in the number of effective franchise restaurants and proprietary product sales at IHOP.
  • General and Administrative (“G&A”) expenses for the second quarter of 2024 were $46.9 million compared to $47.8 million for the second quarter of 2023. The variance was primarily attributable to the stopping of the IHOP Flip’d initiative in the prior year offset by an increase in compensation-related expenses and an increase in depreciation expense.
  • GAAP net income available to common stockholders was $22.5 million, or earnings per diluted share of $1.50, for the second quarter of 2024 compared to net income available to common stockholders of $17.8 million, or earnings per diluted share of $1.16 for the second quarter of 2023. The increase was primarily due to an increase in segment profit, a prior year loss on disposition of assets, a prior year loss on debt extinguishment and a decrease in G&A expenses, partially offset by an increase in income taxes.
  • Adjusted net income available to common stockholders was $25.6 million, or adjusted earnings per diluted share of $1.71, for the second quarter of 2024 compared to adjusted net income available to common stockholders of $27.8 million, or adjusted earnings per diluted share of $1.82, for the second quarter of 2023. The decline was primarily due to an increase in G&A expenses, partially offset by a decrease in the number of diluted shares. (See “Non-GAAP Financial Measures” for definition and reconciliation of GAAP net income available to common stockholders to adjusted net income available to common stockholders.)
  • Consolidated adjusted EBITDA for the second quarter of 2024 was $67.0 million compared to $67.3 million for the second quarter of 2023. (See “Non-GAAP Financial Measures” for definition and reconciliation of GAAP net income to consolidated adjusted EBITDA.)
  • Development activity by Applebee’s and IHOP franchisees for the second quarter of 2024 resulted in 16 new restaurant openings and 25 restaurant closures.

First Six Months of 2024 Summary

  • Total revenues for the first six months of 2024 were $412.5 million compared to $422.2 million for the first six months of 2023. The decline was primarily due to the negative comparable same-restaurant sales growth at Applebee’s and IHOP, partially offset by increases in the number of effective franchise restaurants and proprietary product sales at IHOP.
  • G&A expenses for the first six months of 2024 were $99.0 million compared to $98.9 million for the first six months of 2023. The variance was primarily due to an increase in stock-based compensation, depreciation and severance expense, offset by the stopping of the IHOP Flip’d initiative in the prior period and a decrease in occupancy costs.
  • GAAP net income available to common stockholders was $39.4 million, or earnings per diluted share of $2.64, for the first six months of 2024 compared to net income available to common stockholders of $44.5 million, or earnings per diluted share of $2.91 for the first six months of 2023. The decline was primarily due to a decrease in segment profit and an increase in interest expense as a result of our April 2023 refinancing, partially offset by a prior year loss on disposition of assets.
  • Adjusted net income available to common stockholders was $45.5 million, or adjusted earnings per diluted share of $3.04, for the first 6 months of 2024 compared to adjusted net income available to common stockholders of $58.0 million, or adjusted earnings per diluted share of $3.79, for the first six months of 2023. The decline was primarily due to a decrease in segment profit, an increase in G&A expenses and an increase in interest expense as a result of our April 2023 refinancing, partially offset by a decrease in income taxes. (See “Non-GAAP Financial Measures” for definition and reconciliation of GAAP net income available to common stockholders to adjusted net income available to common stockholders.)
  • Consolidated adjusted EBITDA for the first six months of 2024 was $127.8 million compared to $133.7 million for the first six months of 2023. (See “Non-GAAP Financial Measures” for definition and reconciliation of GAAP net income to consolidated adjusted EBITDA.)
  • Cash flows provided by operating activities for the first six months of 2024 were $52.2 million. This compares to cash flows provided by operating activities of $42.7 million for the first six months of 2023. The increase was primarily due to a favorable increase in working capital, partially offset by a decrease in segment profit.
  • Adjusted free cash flow was $52.9 million for the first six months of 2024. This compares to adjusted free cash flow of $24.1 million for the first six months of 2023. (See “Non-GAAP Financial Measures” for definition and reconciliation of the Company’s cash provided by operating activities to adjusted free cash flow.)
  • Development activity by Applebee’s and IHOP franchisees for the first six months of 2024 resulted in 25 new restaurant openings and 45 restaurant closures.

Key Balance Sheet Metrics (as of June 30, 2024)

  • Total cash, cash equivalents and restricted cash of approximately $218.4 million, of which approximately $153.5 million was unrestricted cash.
  • Available borrowing capacity under the Variable Funding Senior Secured Notes is over $223 million.

GAAP Effective Tax Rate

The Company’s effective tax rate was 26.4% for the six months ended June 30, 2024, as compared to 24.7% for the six months ended June 30, 2023. The effective tax rate for the six months ended June 30, 2024 was higher than the rate of the prior comparable period primarily due to a lower tax deduction related to stock-based compensation.

Capital Returns to Equity Holders

During the second quarter of 2024, the Company repurchased approximately $6.0 million of its common stock and paid quarterly cash dividends totaling approximately $7.9 million.

Financial Performance Guidance for 2024

The Company’s fiscal year 2024 guidance items have been revised as follows:

  • Reduced: Applebee’s domestic system-wide comparable same-restaurant sales performance is expected to range between negative 4% and negative 2% (versus between 0% and 2% previously).
  • Reduced: IHOP’s domestic system-wide comparable same-restaurant sales performance is expected to range between negative 2% and 0% (versus between 1% and 3% previously).
  • Reiterated: Domestic development activity for Applebee’s franchisees is between 25 and 35 net fewer restaurants.
  • Reduced: Domestic development activity by IHOP franchisees and area licensees is expected to be between 0 and 10 net new openings (versus between 15 to 25 net new openings previously).
  • Reduced: Consolidated adjusted EBITDA is expected to range between approximately $245 million and $255 million (versus between $255 million and $265 million previously).
  • Narrowed: G&A expenses are expected to range between approximately $200 million and $205 million (versus between $200 million and $210 million previously). This total includes non-cash stock-based compensation expense and depreciation of approximately $35 million.
  • Reduced: Gross capital expenditures are expected to range between approximately $14 million and $16 million (versus between $15 million and $20 million previously).

Dine Brands does not provide forward-looking guidance for GAAP net income because it is unable to predict certain items contained in the GAAP measure without unreasonable efforts. These items may include closure and impairment charges, loss on extinguishment of debt, gain or loss on disposition of assets, other non-income-based taxes and other items deemed not reflective of current operations.

Second quarter of 2024 Earnings Conference Call Details

Dine Brands will host a conference call to discuss its results on August 7, 2024, at 9:00 a.m. Eastern time. To access the call, please click this conference call registration link, and you will be provided with dial in details. A live webcast of the call, along with a replay will be available for a limited time at https://investors.dinebrands.com. Participants should allow approximately ten minutes prior to the call’s start time to visit the site and download any streaming media software needed to listen to the webcast. An online archive of the webcast will also be available on Events and Presentations under the Investors section of the Company’s website.

About Dine Brands Global, Inc.

Based in Pasadena, California, Dine Brands Global, Inc. (NYSE: DIN), through its subsidiaries and franchisees, supports and operates restaurants under the Applebee’s Neighborhood Grill + Bar®, IHOP®, and Fuzzy’s Taco Shop® brands. As of June 30, 2024, these three brands consisted of close to 3,600 restaurants across 18 international markets. Dine Brands is one of the largest full-service restaurant companies in the world and in 2022 expanded into the Fast Casual segment. For more information on Dine Brands, visit the Company’s website located at www.dinebrands.com.

Forward-Looking Statements

Statements contained in this press release may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You can identify these forward-looking statements by words such as “may,” “will,” “would,” “should,” “could,” “expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan,” “goal” and other similar expressions. These statements involve known and unknown risks, uncertainties and other factors, which may cause actual results to be materially different from those expressed or implied in such statements. These factors include, but are not limited to: general economic conditions, including the impact of inflation, particularly as it may impact our franchisees directly; our level of indebtedness; compliance with the terms of our securitized debt; our ability to refinance our current indebtedness or obtain additional financing; our dependence on information technology; potential cyber incidents; the implementation of restaurant development plans; our dependence on our franchisees; the concentration of our Applebee’s franchised restaurants in a limited number of franchisees; the financial health of our franchisees including any insolvency or bankruptcy; credit risks from our IHOP franchisees operating under our previous IHOP business model in which we built and equipped IHOP restaurants and then franchised them to franchisees; insufficient insurance coverage to cover potential risks associated with the ownership and operation of restaurants; our franchisees’ and other licensees’ compliance with our quality standards and trademark usage; general risks associated with the restaurant industry; potential harm to our brands’ reputation; risks of food-borne illness or food tampering; possible future impairment charges; trading volatility and fluctuations in the price of our stock; our ability to achieve the financial guidance we provide to investors; successful implementation of our business strategy; the availability of suitable locations for new restaurants; shortages or interruptions in the supply or delivery of products from third parties or availability of utilities; the management and forecasting of appropriate inventory levels; development and implementation of innovative marketing and use of social media; changing health or dietary preference of consumers; risks associated with doing business in international markets; the results of litigation and other legal proceedings; third-party claims with respect to intellectual property assets; delivery initiatives and use of third-party delivery vendors; our allocation of human capital and our ability to attract and retain management and other key employees; compliance with federal, state and local governmental regulations; risks associated with our self-insurance; natural disasters, pandemics, epidemics, or other serious incidents; our success with development initiatives outside of our core business; the adequacy of our internal controls over financial reporting and future changes in accounting standards; and other factors discussed from time to time in the Corporation’s Annual and Quarterly Reports on Forms 10-K and 10-Q and in the Corporation’s other filings with the Securities and Exchange Commission. The forward-looking statements contained in this press release are made as of the date hereof and the Corporation does not intend to, nor does it assume any obligation to, update or supplement any forward-looking statements after the date hereof to reflect actual results or future events or circumstances.

Non-GAAP Financial Measures

This press release includes references to the Company’s non-GAAP financial measure “adjusted net income available to common stockholders”, “adjusted earnings per diluted share (Adjusted EPS)”, “Adjusted EBITDA” and “Adjusted free cash flow.” Adjusted EPS is computed for a given period by deducting from net income or loss available to common stockholders for such period the effect of any closure and impairment charges, any intangible asset amortization, any non-cash interest expense, any gain or loss related to the disposition of assets, any gain or loss related to debt extinguishment, and other items deemed not reflective of current operations. This is presented on an aggregate basis and a per share (diluted) basis. Adjusted EBITDA is computed for a given period by deducting from net income or loss for such period the effect of any interest charges, any income tax provision or benefit, any depreciation and amortization, any non-cash stock-based compensation, any closure and impairment charges, any gain or loss related to debt extinguishment, any gain or loss related to the disposition of assets, and other items deemed not reflective of current operations. “Adjusted free cash flow” for a given period is defined as cash provided by operating activities, plus receipts from notes and equipment contracts receivable, less capital expenditures. Management may use certain of these non-GAAP financial measures along with the corresponding U.S. GAAP measures to evaluate the performance of the business and to make certain business decisions. Management uses adjusted free cash flow in its periodic assessments of, among other things, the amount of cash dividends per share of common stock and repurchases of common stock and we believe it is important for investors to have the same measure used by management for that purpose. Adjusted free cash flow does not represent residual cash flow available for discretionary purposes. Management believes that these non-GAAP financial measures provide additional meaningful information that should be considered when assessing the business and the Company’s performance compared to prior periods and the marketplace. Adjusted EPS and adjusted free cash flow are supplemental non-GAAP financial measures and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with U.S. GAAP.

FBN-R

Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Revenues:

 

 

 

 

 

 

Franchise revenues:

 

 

 

 

 

 

 

 

Royalties, franchise fees and other

 

$

101,980

 

 

$

101,938

 

 

$

202,596

 

 

$

204,863

 

Advertising revenues

 

 

74,518

 

 

 

75,979

 

 

 

149,779

 

 

 

153,016

 

Total franchise revenues

 

 

176,498

 

 

 

177,917

 

 

 

352,375

 

 

 

357,879

 

Company restaurant sales

 

 

299

 

 

 

474

 

 

 

573

 

 

 

1,531

 

Rental revenues

 

 

29,006

 

 

 

29,440

 

 

 

58,555

 

 

 

61,391

 

Financing revenues

 

 

464

 

 

 

584

 

 

 

999

 

 

 

1,381

 

Total revenues

 

 

206,267

 

 

 

208,415

 

 

 

412,502

 

 

 

422,182

 

Cost of revenues:

 

 

 

 

 

 

 

 

Franchise expenses:

 

 

 

 

 

 

 

 

Advertising expenses

 

 

74,518

 

 

 

75,979

 

 

 

149,779

 

 

 

153,016

 

Bad debt (credit) expense

 

 

(729

)

 

 

1,721

 

 

 

(546

)

 

 

2,644

 

Other franchise expenses

 

 

11,164

 

 

 

10,580

 

 

 

22,193

 

 

 

19,986

 

Total franchise expenses

 

 

84,953

 

 

 

88,280

 

 

 

171,426

 

 

 

175,646

 

Company restaurant expenses

 

 

312

 

 

 

431

 

 

 

611

 

 

 

1,510

 

Rental expenses:

 

 

 

 

 

 

 

 

Interest expense from finance leases

 

 

739

 

 

 

695

 

 

 

1,479

 

 

 

1,404

 

Other rental expenses

 

 

20,911

 

 

 

21,573

 

 

 

42,126

 

 

 

42,472

 

Total rental expenses

 

 

21,650

 

 

 

22,268

 

 

 

43,605

 

 

 

43,876

 

Financing expenses

 

 

81

 

 

 

94

 

 

 

165

 

 

 

192

 

Total cost of revenues

 

 

106,996

 

 

 

111,073

 

 

 

215,807

 

 

 

221,224

 

Gross profit

 

 

99,271

 

 

 

97,342

 

 

 

196,695

 

 

 

200,958

 

General and administrative expenses

 

 

46,858

 

 

 

47,840

 

 

 

99,045

 

 

 

98,927

 

Interest expense, net

 

 

17,850

 

 

 

17,781

 

 

 

35,922

 

 

 

32,490

 

Closure and impairment charges

 

 

442

 

 

 

847

 

 

 

1,076

 

 

 

1,314

 

Amortization of intangible assets

 

 

2,723

 

 

 

2,719

 

 

 

5,445

 

 

 

5,493

 

Loss on extinguishment of debt

 

 

 

 

 

1,671

 

 

 

 

 

 

10

 

Loss (gain) on disposition of assets

 

 

174

 

 

 

2,047

 

 

 

(63

)

 

 

2,118

 

Income before income taxes

 

 

31,224

 

 

 

24,437

 

 

 

55,270

 

 

 

60,606

 

Income tax provision

 

 

(8,042

)

 

 

(6,189

)

 

 

(14,615

)

 

 

(14,948

)

Net income

 

 

23,182

 

 

 

18,248

 

 

 

40,655

 

 

 

45,658

 

Other comprehensive (loss) income net of tax:

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(3

)

 

 

(1

)

 

 

(5

)

 

 

 

Total comprehensive income

 

$

23,179

 

 

$

18,247

 

 

$

40,650

 

 

$

45,658

 

Net income available to common stockholders:

 

 

 

 

 

 

 

 

Net income

 

$

23,182

 

 

$

18,248

 

 

$

40,655

 

 

$

45,658

 

Less: Net income allocated to unvested participating restricted stock

 

 

(703

)

 

 

(446

)

 

 

(1,206

)

 

 

(1,125

)

Net income available to common stockholders

 

$

22,479

 

 

$

17,802

 

 

$

39,449

 

 

$

44,533

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders per share:

 

 

 

 

 

 

 

 

Basic

 

$

1.50

 

 

$

1.16

 

 

$

2.64

 

 

$

2.91

 

Diluted

 

$

1.50

 

 

$

1.16

 

 

$

2.64

 

 

$

2.91

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

14,943

 

 

 

15,308

 

 

 

14,962

 

 

 

15,304

 

Diluted

 

 

14,943

 

 

 

15,317

 

 

 

14,962

 

 

 

15,324

 

Dine Brands Global, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

 

 

 

June 30, 2024

 

December 31, 2023

Assets

 

(Unaudited)

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

153,534

 

 

$

146,034

 

Receivables, net of allowance

 

 

83,184

 

 

 

127,937

 

Restricted cash

 

 

45,357

 

 

 

35,058

 

Prepaid gift card costs

 

 

23,501

 

 

 

29,545

 

Prepaid income taxes

 

 

2,767

 

 

 

3,445

 

Other current assets

 

 

11,259

 

 

 

15,759

 

Total current assets

 

 

319,602

 

 

 

357,778

 

Non-current restricted cash

 

 

19,500

 

 

 

19,500

 

Property and equipment, net

 

 

158,101

 

 

 

161,891

 

Operating lease right-of-use assets

 

 

280,641

 

 

 

275,214

 

Deferred rent receivable

 

 

28,888

 

 

 

33,326

 

Long-term receivables, net of allowance

 

 

33,720

 

 

 

35,602

 

Goodwill

 

 

254,062

 

 

 

254,062

 

Other intangible assets, net

 

 

580,793

 

 

 

586,033

 

Other non-current assets, net

 

 

18,195

 

 

 

16,881

 

Total assets

 

$

1,693,502

 

 

$

1,740,287

 

Liabilities and Stockholders’ Deficit

 

 

 

 

Current liabilities:

 

 

 

 

Current maturities of long-term debt

 

$

100,000

 

 

$

100,000

 

Accounts payable

 

 

31,512

 

 

 

36,193

 

Gift card liability

 

 

142,206

 

 

 

175,640

 

Current maturities of operating lease obligations

 

 

62,216

 

 

 

63,498

 

Current maturities of finance lease and financing obligations

 

 

6,630

 

 

 

7,243

 

Accrued employee compensation and benefits

 

 

14,173

 

 

 

23,211

 

Accrued advertising expenses

 

 

494

 

 

 

9,446

 

Dividends payable

 

 

7,805

 

 

 

7,827

 

Other accrued expenses

 

 

29,135

 

 

 

37,394

 

Total current liabilities

 

 

394,171

 

 

 

460,452

 

Long-term debt, net, less current maturities

 

 

1,085,510

 

 

 

1,084,502

 

Operating lease obligations, less current maturities

 

 

271,100

 

 

 

269,097

 

Finance lease obligations, less current maturities

 

 

37,090

 

 

 

34,389

 

Financing obligations, less current maturities

 

 

25,304

 

 

 

26,984

 

Deferred income taxes, net

 

 

58,898

 

 

 

60,829

 

Deferred franchise revenue, long-term

 

 

37,201

 

 

 

38,658

 

Other non-current liabilities

 

 

15,930

 

 

 

16,350

 

Total liabilities

 

 

1,925,204

 

 

 

1,991,261

 

Commitments and contingencies

 

 

 

 

Stockholders’ deficit:

 

 

 

 

Common stock

 

 

248

 

 

 

249

 

Additional paid-in-capital

 

 

249,265

 

 

 

256,542

 

Retained earnings

 

 

174,972

 

 

 

150,008

 

Accumulated other comprehensive loss

 

 

(69

)

 

 

(64

)

Treasury stock, at cost

 

 

(656,118

)

 

 

(657,709

)

Total stockholders’ deficit

 

 

(231,702

)

 

 

(250,974

)

Total liabilities and stockholders’ deficit

 

$

1,693,502

 

 

$

1,740,287

Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands) (Unaudited)

 

 

 

Six Months Ended

 

 

June 30,

 

 

 

2024

 

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

Net income

 

$

40,655

 

 

$

45,658

 

Adjustments to reconcile net income to cash flows provided by operating activities:

 

 

 

 

Depreciation and amortization

 

 

19,395

 

 

 

17,651

 

Non-cash closure and impairment charges

 

 

1,076

 

 

 

1,296

 

Non-cash stock-based compensation expense

 

 

8,757

 

 

 

5,309

 

Non-cash interest expense

 

 

1,619

 

 

 

1,935

 

Loss on extinguishment of debt

 

 

 

 

 

10

 

Deferred income taxes

 

 

(1,931

)

 

 

(2,939

)

Deferred revenue

 

 

(3,387

)

 

 

(1,730

)

(Gain) loss on disposition of assets

 

 

(63

)

 

 

2,118

 

Other

 

 

(940

)

 

 

88

 

Changes in operating assets and liabilities:

 

 

 

 

Receivables, net

 

 

6,085

 

 

 

(285

)

Deferred rent receivable

 

 

4,438

 

 

 

4,651

 

Current income tax receivables and payables

 

 

487

 

 

 

(3,006

)

Gift card receivables and payables

 

 

(6,228

)

 

 

(6,204

)

Other current assets

 

 

4,472

 

 

 

4,502

 

Accounts payable

 

 

(2,260

)

 

 

(13,307

)

Operating lease assets and liabilities

 

 

(6,569

)

 

 

3,806

 

Accrued employee compensation and benefits

 

 

(8,948

)

 

 

(10,170

)

Accrued advertising

 

 

(1,941

)

 

 

(13,177

)

Other current liabilities

 

 

(2,538

)

 

 

6,478

 

Cash flows provided by operating activities

 

 

52,179

 

 

 

42,684

 

Cash flows from investing activities:

 

 

 

 

Principal receipts from notes, equipment contracts and other long-term receivables

 

 

7,542

 

 

 

6,261

 

Additions to property and equipment

 

 

(6,779

)

 

 

(22,787

)

Proceeds from sale of property and equipment

 

 

81

 

 

 

 

Additions to long-term receivables

 

 

(1,790

)

 

 

 

Other

 

 

(126

)

 

 

(46

)

Cash flows used in investing activities

 

 

(1,072

)

 

 

(16,572

)

Cash flows from financing activities:

 

 

 

 

Proceeds from issuance of long-term debt

 

 

 

 

 

500,000

 

Repayment of long-term debt

 

 

 

 

 

(651,713

)

Borrowing from revolving credit facility

 

 

 

 

 

15,000

 

Repayment of revolving credit facility

 

 

 

 

 

(15,000

)

Payment of debt issuance costs

 

 

 

 

 

(7,967

)

Dividends paid on common stock

 

 

(15,707

)

 

 

(15,970

)

Repurchase of common stock

 

 

(12,000

)

 

 

(14,017

)

Principal payments on finance lease and financing obligations

 

 

(3,080

)

 

 

(3,623

)

Proceeds from stock options exercised

 

 

 

 

 

3,812

 

Repurchase of restricted stock for tax payments upon vesting

 

 

(2,486

)

 

 

(3,941

)

Tax payments for share settlement of restricted stock units

 

 

(30

)

 

 

(859

)

Other

 

 

(5

)

 

 

 

Cash flows used in financing activities

 

 

(33,308

)

 

 

(194,278

)

Net change in cash, cash equivalents and restricted cash

 

 

17,799

 

 

 

(168,166

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

200,592

 

 

 

324,984

 

Cash, cash equivalents and restricted cash at end of period

 

$

218,391

 

 

$

156,818

 

Dine Brands Global, Inc. and Subsidiaries

Non-GAAP Financial Measures

(In thousands, except per share amounts)

(Unaudited)

 

Reconciliation of net income available to common stockholders to net income available to common stockholders, as adjusted for the following items: Closure and impairment charges; amortization of intangible assets; non-cash interest expenses; loss on extinguishment of debt; gain or loss on disposition of assets; acquisition costs; IHOP Flip’d initiative; other EBITDA adjustments; and the combined tax effect of the preceding adjustments, as well as related per share data:

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

 

 

 

 

 

Net income available to common stockholders

 

$

22,479

 

$

17,802

 

 

$

39,449

 

$

44,533

 

Closure and impairment charges

 

 

442

 

 

847

 

 

 

1,076

 

 

1,314

 

Amortization of intangible assets

 

 

2,723

 

 

2,719

 

 

 

5,445

 

 

5,493

 

Non-cash interest expense

 

 

816

 

 

764

 

 

 

1,619

 

 

1,935

 

Loss (gain) on disposition of assets

 

 

174

 

 

2,047

 

 

 

(63

)

 

2,118

 

Loss on extinguishment of debt

 

 

 

 

1,671

 

 

 

 

 

10

 

Acquisition costs

 

 

 

 

33

 

 

 

 

 

804

 

IHOP Flip’d initiative

 

 

 

 

5,121

 

 

 

 

 

5,121

 

Other EBITDA adjustments

 

 

165

 

 

654

 

 

 

365

 

 

1,871

 

Net income tax provision for above adjustments

 

 

(1,123

)

 

(3,603

)

 

 

(2,195

)

 

(4,853

)

Net income allocated to unvested participating restricted stock

 

 

(101

)

 

(254

)

 

 

(185

)

 

(343

)

Net income available to common stockholders, as adjusted

 

$

25,575

 

$

27,801

 

 

$

45,511

 

$

58,003

 

 

 

 

 

 

 

 

Diluted net income available to common stockholders per share (a):

 

 

 

 

 

 

Net income available to common stockholders

 

$

1.50

 

$

1.16

 

 

$

2.64

 

$

2.91

 

Closure and impairment charges

 

 

0.02

 

 

0.04

 

 

 

0.05

 

 

0.06

 

Amortization of intangible assets

 

 

0.13

 

 

0.13

 

 

 

0.27

 

 

0.27

 

Non-cash interest expense

 

 

0.04

 

 

0.04

 

 

 

0.08

 

 

0.09

 

Loss (gain) on disposition of assets

 

 

0.01

 

 

0.10

 

 

 

0.00

 

 

0.10

 

Loss on extinguishment of debt

 

 

 

 

0.08

 

 

 

 

 

0.00

 

Acquisition costs

 

 

 

 

0.00

 

 

 

 

 

0.04

 

IHOP Flip’d initiative

 

 

 

 

0.25

 

 

 

 

 

0.25

 

Other EBITDA adjustments

 

 

0.01

 

 

0.03

 

 

 

0.02

 

 

0.09

 

Net income allocated to unvested participating restricted stock

 

 

(0.01

)

 

(0.02

)

 

 

(0.01

)

 

(0.02

)

Rounding

 

 

0.01

 

 

0.01

 

 

 

(0.01

)

 

 

Diluted net income available to common stockholders per share, as adjusted

 

$

1.71

 

$

1.82

 

 

$

3.04

 

$

3.79

 

 

 

 

 

 

 

 

Numerator for basic EPS - net income available to common stockholders, as adjusted

 

$

25,575

 

$

27,801

 

 

$

45,511

 

$

58,003

 

Effect of unvested participating restricted stock using the two-class method

 

 

1

 

 

 

 

 

 

 

 

Numerator for diluted EPS - net income available to common stockholders, as adjusted

 

$

25,576

 

$

27,801

 

 

$

45,511

 

$

58,003

 

 

 

 

 

 

 

 

Denominator for basic EPS - weighted-average shares

 

 

14,943

 

 

15,308

 

 

 

14,962

 

 

15,304

 

Dilutive effect of stock options

 

 

 

 

9

 

 

 

 

 

20

 

Denominator for diluted EPS - weighted-average shares

 

 

14,943

 

 

15,317

 

 

 

14,962

 

 

15,324

 

_________________________________

(a)

Diluted net income available to common stockholders per share for the three and six months ended June 30, 2024 and 2023 presented on an after-tax basis.

Dine Brands Global, Inc. and Subsidiaries

Non-GAAP Financial Measures

(Unaudited)

 

Reconciliation of the Company’s cash flows provided by operating activities to “adjusted free cash flow” (cash flows provided by operating activities, plus receipts from notes and equipment contracts receivable, less additions to property and equipment). Management uses this liquidity measure in its periodic assessments of, among other things, the amount of cash dividends per share of common stock and repurchases of common stock. We believe it is important for investors to have the same measure used by management for that purpose. Adjusted free cash flow does not represent residual cash flow available for discretionary purposes.

 

 

Six Months Ended June 30,

 

 

2024

 

 

 

2023

 

 

(In thousands)

Cash flows provided by operating activities

$

52,179

 

 

$

42,684

 

Principal receipts from notes and equipment contracts

 

7,542

 

 

 

4,200

 

Net additions to property and equipment

 

(6,779

)

 

 

(22,787

)

Adjusted free cash flow

 

52,942

 

 

 

24,097

 

Repayment of long-term debt, net

 

 

 

 

(151,713

)

Dividends paid on common stock

 

(15,707

)

 

 

(15,970

)

Repurchase of common stock

 

(12,000

)

 

 

(14,017

)

 

$

25,235

 

 

$

(157,603

)

Dine Brands Global, Inc. and Subsidiaries

Non-GAAP Financial Measures

(in thousands)

(Unaudited)

 

Reconciliation of the Company’s net income to “adjusted EBITDA.” The Company defines adjusted EBITDA as net income or loss, adjusted for the effect of interest charges, income tax provision or benefit, depreciation and amortization, non-cash stock-based compensation, closure and impairment charges, loss on extinguishment of debt, gain or loss on disposition of assets, and other items deemed not reflective of current operations. Management may use certain non-GAAP measures along with the corresponding U.S. GAAP measures to evaluate the performance of the Company and to make certain business decisions.

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30, 2024

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

 

 

 

 

 

 

 

Net income, as reported

 

$

23,182

 

$

18,248

 

$

40,655

 

 

$

45,658

Interest charges on finance leases

 

 

739

 

 

 

695

 

 

 

1,479

 

 

 

1,404

 

All other interest charges

 

 

20,749

 

 

 

19,813

 

 

 

41,512

 

 

 

37,494

 

Income tax provision

 

 

8,042

 

 

 

6,189

 

 

 

14,615

 

 

 

14,948

 

Depreciation and amortization

 

 

9,654

 

 

 

8,421

 

 

 

19,395

 

 

 

17,634

 

Non-cash stock-based compensation

 

 

3,833

 

 

 

3,591

 

 

 

8,756

 

 

 

5,309

 

Closure and impairment charges

 

 

442

 

 

 

847

 

 

 

1,076

 

 

 

1,314

 

Loss on extinguishment of debt

 

 

 

 

 

1,671

 

 

 

 

 

 

10

 

Loss (gain) on disposition of assets

 

 

174

 

 

 

2,047

 

 

 

(63

)

 

 

2,118

 

IHOP Flip’d initiative

 

 

 

 

 

5,121

 

 

 

 

 

 

5,121

 

Other

 

 

165

 

 

 

687

 

 

 

365

 

 

 

2,675

 

Adjusted EBITDA

 

$

66,980

 

 

$

67,330

 

 

$

127,790

 

 

$

133,685

 

Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

 

The following table sets forth, for the three and six months ended June 30, 2024, the number of “Effective Restaurants” in the Applebee’s, IHOP and Fuzzy’s systems and information regarding the percentage change in sales at those restaurants compared to the same periods in the prior year and, as such, the percentage change in sales at Effective Restaurants is based on non-GAAP sales data. Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company. However, we believe that presentation of this information is useful in analyzing our revenues because franchisees and area licensees pay us royalties and advertising fees that are generally based on a percentage of their sales, and, where applicable, rental payments under leases that partially may be based on a percentage of their sales. Management also uses this information to make decisions about future plans for the development of additional restaurants as well as evaluation of current operations.

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Applebee’s Restaurant Data

 

Global Effective Restaurants(a)

 

 

 

 

 

 

 

Franchise

 

1,627

 

 

 

1,662

 

 

 

1,631

 

 

 

1,667

 

Company

 

 

 

 

 

 

 

 

 

 

 

Total

 

1,627

 

 

 

1,662

 

 

 

1,631

 

 

 

1,667

 

System-wide(b)

 

 

 

 

 

 

 

Domestic sales percentage change(c)

 

(3.0

)%

 

 

(1.5

)%

 

 

(4.5

)%

 

 

2.0

%

Domestic same-restaurant sales percentage change(d)

 

(1.8

)%

 

 

(1.0

)%

 

 

(3.2

)%

 

 

2.5

%

Franchise(b)

 

 

 

 

 

 

 

Domestic sales percentage change(c)

 

(3.0

)%

 

 

2.1

%

 

 

(4.5

)%

 

 

5.8

%

Domestic same-restaurant sales percentage change(d)

 

(1.8

)%

 

 

(1.0

)%

 

 

(3.2

)%

 

 

2.5

%

Average weekly domestic unit sales (in thousands)

$

53.9

 

 

$

54.3

 

 

$

54.3

 

 

$

55.6

 

 

 

 

 

 

 

 

 

IHOP Restaurant Data

 

 

 

 

 

 

 

Global Effective Restaurants(a)

 

 

 

 

 

 

 

Franchise

 

1,647

 

 

 

1,628

 

 

 

1,645

 

 

 

1,622

 

Area license

 

155

 

 

 

155

 

 

 

156

 

 

 

156

 

Total

 

1,802

 

 

 

1,783

 

 

 

1,801

 

 

 

1,778

 

System-wide(b)

 

 

 

 

 

 

 

Sales percentage change(c)

 

(0.2

)%

 

 

4.6

%

 

 

0.0

%

 

 

7.8

%

Domestic same-restaurant sales percentage change, including area license restaurants(d)

 

(1.4

)%

 

 

2.1

%

 

 

(1.5

)%

 

 

5.3

%

Franchise(b)

 

 

 

 

 

 

 

Sales percentage change(c)

 

(0.1

)%

 

 

5.0

%

 

 

0.1

%

 

 

8.1

%

Domestic same-restaurant sales percentage change(d)

 

(1.2

)%

 

 

2.2

%

 

 

(1.6

)%

 

 

5.4

%

Average weekly unit sales (in thousands)

$

38.4

 

 

$

38.9

 

 

$

38.0

 

 

$

38.5

 

Area License(b)

 

 

 

 

 

 

 

Sales percentage change(c)

 

(1.2

)%

 

 

0.9

%

 

 

(0.6

)%

 

 

5.5

%

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Fuzzy’s Restaurant Data

(Unaudited)

Global Effective Restaurants(a)

 

 

 

 

 

 

 

Franchise

 

124

 

 

 

136

 

 

 

126

 

 

 

135

 

Company

 

1

 

 

 

1

 

 

 

1

 

 

 

2

 

Total

 

125

 

 

 

137

 

 

 

127

 

 

 

137

 

System-wide(b)

 

 

 

 

 

 

 

Domestic sales percentage change(c)

 

(12.4

)%

 

 

(1.3

)%

 

 

(12.7

)%

 

 

1.0

%

Domestic same-restaurant sales percentage change(d)

 

(7.5

)%

 

 

(4.0

)%

 

 

(8.6

)%

 

 

(2.4

)%

Franchise(b)

 

 

 

 

 

 

 

Domestic sales percentage change(c)

 

(12.2

)%

 

 

(0.2

)%

 

 

(12.0

)%

 

 

1.5

%

Domestic same-restaurant sales percentage change(d)

 

(7.6

)%

 

 

(4.1

)%

 

 

(8.6

)%

 

 

(2.4

)%

Average weekly domestic unit sales (in thousands)

$

32.2

 

 

$

33.5

 

 

$

30.4

 

 

$

32.1

 

_________________________________

(a)

“Effective Restaurants” are the weighted average number of restaurants open in each fiscal period, adjusted to account for restaurants open for only a portion of the period. Information is presented for all Effective Restaurants in the Applebee’s and IHOP systems, which consist of restaurants owned by franchisees and area licensees as well as those owned by the Company. Effective Restaurants do not include units operated as ghost kitchens (small kitchens with no store-front presence, used to fill off-premise orders).

(b)

“System-wide sales” are retail sales at Applebee’s and Fuzzy’s restaurants operated by franchisees and IHOP restaurants operated by franchisees and area licensees, as reported to the Company, in addition to retail sales at company-operated Fuzzy’s restaurants. System-wide sales do not include retail sales of ghost kitchens. Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company. An increase in franchisees’ reported sales will result in a corresponding increase in our royalty revenue, while a decrease in franchisees’ reported sales will result in a corresponding decrease in our royalty revenue. Unaudited reported sales for Applebee’s and Fuzzy’s domestic franchise restaurants, Fuzzy’s company-operated restaurants, IHOP franchise restaurants and IHOP area license restaurants were as follows:

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Reported sales (in millions)

 

Applebee’s franchise restaurant sales

$

1,066.4

 

$

1,099.3

$

2,154.5

 

$

2,255.4

IHOP franchise restaurant sales

 

822.0

 

 

 

822.7

 

 

1,625.9

 

 

 

1,624.9

 

IHOP area license restaurant sales

 

75.1

 

 

 

76.0

 

 

152.9

 

 

 

153.8

 

Fuzzy’s franchise restaurant sales

 

51.9

 

 

 

59.1

 

 

99.1

 

 

 

112.7

 

Fuzzy’s company-operated restaurants

 

0.3

 

 

 

0.5

 

 

0.6

 

 

 

1.5

 

Total

$

2,015.7

 

 

$

2,057.6

 

$

4,033.0

 

 

$

4,148.3

 

(c)

“Sales percentage change” reflects, for each category of restaurants, the percentage change in sales in any given fiscal period compared to the prior fiscal period for all restaurants in that category.

(d)

“Domestic same-restaurant sales percentage change” reflects the percentage change in sales in any given fiscal period, compared to the same weeks in the prior fiscal period, for domestic restaurants that have been operated during both fiscal periods that are being compared and have been open for at least 18 months. Because of new restaurant openings and restaurant closures, the domestic restaurants open throughout both fiscal periods being compared may be different from period to period.

Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

 

Restaurant Development Activity

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2024

 

2023

 

2024

 

2023

Applebee’s

 

Summary - beginning of period:

 

 

 

 

 

 

Franchise

1,636

 

 

1,673

 

1,642

 

 

1,678

 

Company

 

 

 

 

 

 

Beginning of period

1,636

 

 

1,673

 

1,642

 

 

1,678

 

 

 

 

 

 

 

 

Franchise restaurants opened:

 

 

 

 

 

 

Domestic

 

 

1

 

 

 

1

 

International

3

 

 

1

 

5

 

 

3

 

Total franchise restaurants opened

3

 

 

2

 

5

 

 

4

 

Franchise restaurants permanently closed:

 

 

 

 

 

 

Domestic

(11

)

 

(10

)

(16

)

 

(16

)

International

(3

)

 

(4

)

(6

)

 

(5

)

Total franchise restaurants permanently closed

(14

)

 

(14

)

(22

)

 

(21

)

Net franchise restaurant reduction

(11

)

 

(12

)

(17

)

 

(17

)

 

 

 

 

 

 

 

Summary - end of period:

 

 

 

 

 

 

Franchise

1,625

 

 

1,661

 

1,625

 

 

1,661

 

Company

 

 

 

 

 

 

Total Applebee’s restaurants, end of period

1,625

 

 

1,661

 

1,625

 

 

1,661

 

Domestic

1,520

 

 

1,554

 

1,520

 

 

1,554

 

International

105

 

 

107

 

105

 

 

107

 

IHOP

 

 

 

 

 

 

Summary - beginning of period:

 

 

 

 

 

 

Franchise

1,653

 

 

1,633

 

1,657

 

 

1,625

 

Area license

156

 

 

157

 

157

 

 

156

 

Total IHOP restaurants, beginning of period

1,809

 

 

1,790

 

1,814

 

 

1,781

 

 

 

 

 

 

 

 

Franchise/area license restaurants opened:

 

 

 

 

 

 

Domestic franchise

5

 

 

9

 

10

 

 

22

 

Domestic area license

1

 

 

 

1

 

 

2

 

International franchise

7

 

 

2

 

9

 

 

6

 

Total franchise/area license restaurants opened

13

 

 

11

 

20

 

 

30

 

Franchise/area license restaurants permanently closed:

 

 

 

 

 

 

Domestic franchise

(9

)

 

(10

)

(17

)

 

(18

)

Domestic area license

(2

)

 

(1

)

(3

)

 

(2

)

International franchise

 

 

 

(3

)

 

(1

)

Total franchise/area license restaurants permanently closed

(11

)

 

(11

)

(23

)

 

(21

)

Net increase (decrease) in franchise/area license restaurants

2

 

 

 

(3

)

 

9

 

 

 

 

 

 

 

 

Summary - end of period:

 

 

 

 

 

 

Franchise

1,656

 

 

1,634

 

1,656

 

 

1,634

 

Area license

155

 

 

156

 

155

 

 

156

 

Total IHOP restaurants, end of period

1,811

 

 

1,790

 

1,811

 

 

1,790

 

Domestic

1,687

 

 

1,681

 

1,687

 

 

1,681

 

International

124

 

 

109

 

124

 

 

109

 

Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

 

Restaurant Development Activity (continued)

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2024

 

2023

 

2024

 

2023

Fuzzy’s

 

Summary - beginning of period:

 

 

 

 

 

 

 

Franchise

127

 

 

134

 

 

131

 

 

134

 

Company

1

 

 

3

 

 

1

 

 

3

 

Beginning of period

128

 

 

137

 

 

132

 

 

137

 

 

 

 

 

 

 

 

 

Franchise restaurants opened:

 

 

 

 

 

 

 

Domestic

 

 

2

 

 

 

 

2

 

Franchise restaurants permanently closed:

 

 

 

 

 

 

 

Domestic

(3

)

 

(1

)

 

(7

)

 

(1

)

Net franchise restaurant addition (reduction)

(3

)

 

1

 

 

(7

)

 

1

 

Refranchised from Company restaurants

 

 

2

 

 

 

 

2

 

Net franchise restaurant addition (reduction)

(3

)

 

3

 

 

(7

)

 

3

 

 

 

 

 

 

 

 

 

Summary - end of period:

 

 

 

 

 

 

 

Franchise

124

 

 

137

 

 

124

 

 

137

 

Company

1

 

 

1

 

 

1

 

 

1

 

Total Fuzzy’s restaurants, end of period

125

 

 

138

 

 

125

 

 

138

 

Domestic

125

 

 

138

 

 

125

 

 

138

 

International

 

 

 

 

 

 

 

The restaurant counts and activity presented above do not include one domestic Applebee’s ghost kitchens (small kitchens with no store-front presence, used to fill off-premise orders), eight international Applebee’s ghost kitchens and 38 international IHOP ghost kitchens at June 30, 2024, and one domestic Applebee’s ghost kitchens, 12 international Applebee’s ghost kitchens and 41 international IHOP ghost kitchens at June 30, 2023.

Contacts

Investor Contact

Matt Lee

Sr. Vice President, Finance and Investor Relations

Dine Brands Global, Inc.

IR@dinebrands.com

Media Contact

Susan Nelson

Sr. Vice President, Global Communications

Dine Brands Global, Inc.

Mediainquiries@dinebrands.com

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