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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240807670518/en/
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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