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 third
quarter of fiscal 2023.
“Dine Brands maintained its course in the third quarter, leaning
into our brands’ abundant value proposition and demonstrating solid
performance as we continued to advance our strategic growth
agenda,” said John Peyton, chief executive officer, Dine Brands
Global. “Despite the ongoing volatile macroeconomic environment, we
are leveraging our strengths in technology, menu innovation and
marketing and are well positioned to create long term shareholder
value.”
Vance Chang, chief financial officer, Dine Brands Global added,
“Our third quarter results underscore the resiliency of our
business model and our ability to generate cash flow. As we look
towards the end of the year, we have adjusted our EBITDA guidance
to show our progress year-to-date and provide a better
understanding of where we expect to see our business at the close
of fourth quarter.”
Domestic Restaurant Sales for the Third Quarter of
2023
- Applebee’s year-over-year comparable same-restaurant sales
declined 2.4% for the third quarter of 2023. Off-premise sales
accounted for 21.5% of sales mix, representing per restaurant
average weekly sales of approximately $11,200.
- IHOP’s year-over-year domestic comparable same-restaurant sales
increased 2.0% for the third quarter of 2023. Off-premise sales
accounted for 19.5% of sales mix, representing per restaurant
average weekly sales of approximately $7,400.
Third Quarter of 2023 Summary
- Total revenues for the third quarter of 2023 were $202.6
million compared to $233.2 million for the third quarter of 2022.
The decline was primarily due to the refranchising of the 69
company-operated Applebee’s units in October 2022 and the negative
comparable same-restaurant sales growth at Applebee’s, offset by
the positive comparable same-restaurants sales growth at IHOP.
Total revenues excluding the refranchised Applebee’s restaurants
for the third quarter of 2023 were $200.9 million compared to
$195.0 million for the third quarter of 2022.
- General and Administrative (“G&A”) expenses for the third
quarter of 2023 were $48.6 million compared to $46.3 million for
the third quarter of 2022. The variance was primarily attributable
to higher compensation-related expenses offset by a decrease in
occupancy costs.
- Net income for the third quarter of 2023 was $18.5 million
compared to $20.9 million for the third quarter of 2022. The
decrease was primarily due to higher interest and G&A expenses
offset by an increase in segment profit.
- GAAP net income available to common stockholders was $18.0
million, or earnings per diluted share of $1.19, for the third
quarter of 2023 compared to net income available to common
stockholders of $20.4 million, or earnings per diluted share of
$1.32 for the third quarter of 2022. The decrease was primarily due
to an increase in interest expense and an increase in G&A
expenses, offset by an increase in segment profit.
- Adjusted net income available to common stockholders was $22.3
million, or adjusted earnings per diluted share of $1.46, for the
third quarter of 2023 compared to adjusted net income available to
common stockholders of $25.6 million, or adjusted earnings per
diluted share of $1.66, for the third quarter of 2022. The decrease
was primarily due to an increase in G&A expenses and an
increase in interest expense, offset by an increase in segment
profit and a decrease in income taxes. (See “Non-GAAP Financial
Measures” and reconciliation of GAAP net income available to common
stockholders to adjusted net income available to common
stockholders.)
- Consolidated adjusted EBITDA for the third quarter of 2023 was
$60.6 million compared to $63.6 million for the third quarter of
2022. (See “Non-GAAP Financial Measures” and reconciliation of GAAP
net income to consolidated adjusted EBITDA.)
- Development activity by Applebee’s and IHOP franchisees for the
third quarter of 2023 resulted in 14 new restaurant openings and
the closure of 19 restaurants.
First Nine Months of 2023 Summary
- Total revenues for the first nine months of 2023 were $624.8
million compared to $701.4 million for the first nine months of
2022. The decline was primarily due to the refranchising of the 69
company-operated Applebee’s units in October 2022, offset by the
positive comparable same-restaurants sales growth at IHOP and
Applebee’s. Total revenues excluding the refranchised Applebee’s
restaurants for the first nine months of 2023 were $618.4 million
compared to $584.3 million for the first nine months of 2022.
- G&A expenses for the first nine months of 2023 were $147.5
million compared to $131.9 million for the first nine months of
2022. The variance was primarily due to an increase in professional
services, an increase in compensation-related expenses, costs
resulting from the stopping of the IHOP Flip’d initiative, an
increase in software maintenance and an increase in occupancy
costs.
- Net income for the first nine months of 2023 was $64.1 million
compared to $69.8 million for the first nine months of 2022. The
decrease was primarily due to higher G&A and interest expenses
offset by an increase in segment profit.
- GAAP net income available to common stockholders was $62.6
million, or earnings per diluted share of $4.09, for the first nine
months of 2023 compared to net income available to common
stockholders of $67.9 million, or earnings per diluted share of
$4.22 for the first nine months of 2022. The decrease was primarily
due to an increase in G&A expenses and an increase in interest
expense, offset by an increase in segment profit.
- Adjusted net income available to common stockholders was $80.3
million, or adjusted earnings per diluted share of $5.25, for the
first nine months of 2023 compared to adjusted net income available
to common stockholders of $77.9 million, or adjusted earnings per
diluted share of $4.85, for the first nine months of 2022. The
increase was primarily due to an increase in segment profit and a
decrease in income taxes, offset by an increase in G&A expenses
and an increase in interest expense. (See “Non-GAAP Financial
Measures” and reconciliation of GAAP net income available to common
stockholders to adjusted net income available to common
stockholders.)
- Consolidated adjusted EBITDA for the first nine months of 2023
was $194.2 million compared to $194.9 million for the first nine
months of 2022. (See “Non-GAAP Financial Measures” and
reconciliation of GAAP net income to consolidated adjusted
EBITDA.)
- Cash flows from operating activities for the first nine months
of 2023 were $79.3 million. This compares to cash provided from
operating activities of $63.5 million for the first nine months of
2022. The increase was primarily due to a favorable change in
working capital and an increase in segment profit.
- The Company had adjusted free cash flow of $54.0 million for
the first nine months of 2023. This compares to adjusted free cash
flow of approximately $52.4 million for the first nine months of
2022. (See “Non-GAAP Financial Measures” 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 nine months of 2023 resulted in 48 new restaurant openings
and the closure of 61 restaurants.
Key Balance Sheet Metrics (as of September 30, 2023)
- Total cash, cash equivalents and restricted cash of
approximately $159.6 million, of which approximately $98.2 million
was unrestricted cash.
- Leverage ratio of approximately 4.6x compared with
approximately 4.5x as of June 30, 2023.
- Available borrowing capacity under the Variable Funding Senior
Secured Notes is over $220 million.
GAAP Effective Tax Rate
The Company’s effective tax rate was 25% for the nine months
ended September 30, 2023, as compared to 26.9% for the nine months
ended September 30, 2022. The effective tax rate for the nine
months ended September 30, 2023 was different than the rate of the
prior comparable period primarily due to the recognition of higher
excess tax benefits from stock-based compensation and lower
non-deductible executive compensation.
Capital Returns to Equity Holders
During the quarter ended September 30, 2023, the Company
repurchased approximately $6.0 million of its common stock. Through
the first nine months of 2023, the Company repurchased
approximately $20.0 million of its common stock.
On September 7, 2023, the Company announced that its Board of
Directors declared and approved a quarterly cash dividend of $0.51
per share of common stock. The dividend was paid on September 29,
2023, to the Company’s stockholders of record at the close of
business on September 19, 2023.
Financial Performance Guidance for 2023
The Company’s fiscal 2023 guidance items:
- Reiterated: Our domestic development activity target 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 20 and 30 net new openings
(versus 45 to 60 net new openings previously) due to ongoing
permitting and construction delays.
- Narrowed: Consolidated adjusted EBITDA is expected to be in the
range of between approximately $245 million and $255 million
(versus between $243 million and $255 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
$30 million.
- Reiterated: Gross capital expenditures are expected to range
between $33 million and $38 million.
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.
Third Quarter of 2023 Earnings Conference Call
Details
Dine Brands will host a conference call to discuss its results
on November 1, 2023, 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 September 30,
2023, these three brands consisted of over 3,500 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 gain or loss related to
debt extinguishment, any intangible asset amortization, any
non-cash interest expense, any gain or loss related to the
disposition of assets, any merger and acquisition costs 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 closure and
impairment charges, any interest charges, any income tax provision
or benefit, any non-cash stock-based compensation, any depreciation
and amortization, any gain or loss related to the disposition of
assets, any merger and acquisition costs 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. Additionally, the Company has provided total
revenues excluding the refranchised Applebee’s restaurants for the
three and nine months ended September 30, 2023 and for the
comparative prior year periods. 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. Additionally, adjusted EPS is one of the
metrics used in determining payouts under the Company’s annual cash
incentive plan. Total revenues excluding the refranchised
Applebee’s restaurants is helpful for Management to evaluate the
performance of franchised restaurants over comparative periods.
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
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Revenues:
Franchise revenues:
Royalties, franchise fees and other
$
99,135
$
93,215
$
303,998
$
277,712
Advertising revenues
73,385
71,692
226,401
216,686
Total franchise revenues
172,520
164,907
530,399
494,398
Company restaurant sales
308
38,248
1,839
117,175
Rental revenues
29,128
29,207
90,519
87,080
Financing revenues
628
858
2,009
2,784
Total revenues
202,584
233,220
624,766
701,437
Cost of revenues:
Franchise expenses:
Advertising expenses
73,385
71,692
226,401
216,686
Bad debt (credit) expense
(51
)
(77
)
2,593
(523
)
Other franchise expenses
9,804
8,649
29,790
24,402
Total franchise expenses
83,138
80,264
258,784
240,565
Company restaurant expenses
323
36,513
1,833
111,802
Rental expenses:
Interest expense from finance leases
668
740
2,072
2,254
Other rental expenses
21,066
21,268
63,538
63,720
Total rental expenses
21,734
22,008
65,610
65,974
Financing expenses
91
104
283
317
Total cost of revenues
105,286
138,889
326,510
418,658
Gross profit
97,298
94,331
298,256
282,779
General and administrative expenses
48,618
46,335
147,545
131,946
Interest expense, net
19,059
15,300
51,549
46,192
Closure and impairment charges
1,774
1,636
3,088
3,093
Amortization of intangible assets
2,709
2,664
8,202
7,994
Loss on extinguishment of debt
—
1,161
10
1,161
Loss (gain) on disposition of assets
191
(1,502
)
2,309
(3,032
)
Income before income taxes
24,947
28,737
85,553
95,425
Income tax provision
(6,468
)
(7,789
)
(21,416
)
(25,665
)
Net income
18,479
20,948
64,137
69,760
Other comprehensive income net of
tax:
Foreign currency translation
adjustment
(2
)
(5
)
(2
)
(9
)
Total comprehensive income
$
18,477
$
20,943
$
64,135
$
69,751
Net income available to common
stockholders:
Net income
$
18,479
$
20,948
$
64,137
$
69,760
Less: Net income allocated to unvested
participating restricted stock
(431
)
(575
)
(1,551
)
(1,852
)
Net income available to common
stockholders
$
18,048
$
20,373
$
62,586
$
67,908
Net income available to common
stockholders per share:
Basic
$
1.19
$
1.32
$
4.10
$
4.23
Diluted
$
1.19
$
1.32
$
4.09
$
4.22
Weighted average shares
outstanding:
Basic
15,217
15,377
15,275
16,049
Diluted
15,220
15,403
15,289
16,079
Dine Brands Global, Inc. and
Subsidiaries
Consolidated Balance
Sheets
(In thousands, except share
and per share amounts)
September 30, 2023
December 31, 2022
Assets
(Unaudited)
Current assets:
Cash and cash equivalents
$
98,197
$
269,655
Receivables, net of allowance
85,742
119,981
Restricted cash
41,932
38,929
Prepaid gift card costs
23,550
30,235
Prepaid income taxes
3,063
3,063
Other current assets
11,317
17,901
Total current assets
263,801
479,764
Non-current restricted cash
19,500
16,400
Property and equipment, net
162,055
145,277
Operating lease right-of-use assets
283,854
289,123
Deferred rent receivable
35,537
42,329
Long-term receivables, net of
allowance
35,678
39,697
Goodwill
254,057
253,956
Other intangible assets, net
588,692
597,028
Other non-current assets, net
16,407
17,917
Total assets
$
1,659,581
$
1,881,491
Liabilities and Stockholders’
Deficit
Current liabilities:
Current maturities of long-term debt
$
100,000
$
100,000
Accounts payable
28,880
52,067
Gift card liability
131,490
171,966
Current maturities of operating lease
obligations
58,764
59,071
Current maturities of finance lease and
financing obligations
6,922
7,542
Accrued employee compensation and
benefits
19,970
23,456
Accrued advertising expenses
14,407
24,157
Dividends payable
.
—
8,017
Other accrued expenses
23,904
24,446
Total current liabilities
384,337
470,722
Long-term debt, net, less current
maturities
1,084,011
1,241,914
Operating lease obligations, less current
maturities
276,817
275,120
Finance lease obligations, less current
maturities
32,646
30,377
Financing obligations, less current
maturities
27,342
28,358
Deferred income taxes, net
70,229
74,651
Deferred franchise revenue, long-term
40,143
42,343
Other non-current liabilities
17,762
19,090
Total liabilities
1,933,287
2,182,575
Commitments and contingencies
Stockholders’ deficit:
Preferred stock, $1 par value, 10,000,000
shares authorized; no shares issued and outstanding
—
—
Common stock, $0.01 par value; shares:
40,000,000 authorized; September 30, 2023 - 24,883,740 issued,
15,484,512 outstanding; December 31, 2022 - 24,959,972 issued,
15,599,239 outstanding
249
250
Additional paid-in-capital
253,080
259,339
Retained earnings
124,806
84,538
Accumulated other comprehensive loss
(67
)
(65
)
Treasury stock, at cost; shares: September
30, 2023 - 9,399,228; December 31, 2022 - 9,360,733
(651,774
)
(645,146
)
Total stockholders’ deficit
(273,706
)
(301,084
)
Total liabilities and stockholders’
deficit
$
1,659,581
$
1,881,491
Dine Brands Global, Inc. and
Subsidiaries
Consolidated Statements of
Cash Flows
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
2023
2022
Cash flows from operating
activities:
Net income
$
64,137
$
69,760
Adjustments to reconcile net income to
cash flows provided by operating activities:
Depreciation and amortization
26,221
28,870
Non-cash closure and impairment
charges
3,088
2,975
Non-cash stock-based compensation
expense
8,167
12,128
Non-cash interest expense
2,714
2,210
Loss on extinguishment of debt
10
1,161
Deferred income taxes
(3,582
)
(1,376
)
Deferred revenue
(2,590
)
(3,773
)
Loss (gain) on disposition of assets
2,309
(3,032
)
Other
(1,577
)
(3,816
)
Changes in operating assets and
liabilities:
Accounts receivable, net
6,354
(734
)
Deferred rent receivable
6,792
5,951
Current income tax receivables and
payables
(186
)
7,361
Gift card receivables and payables
(13,588
)
(16,752
)
Other current assets
6,358
(5,948
)
Accounts payable
(15,527
)
(6,855
)
Operating lease assets and liabilities
2,438
(8,286
)
Accrued employee compensation and
benefits
(4,447
)
(18,738
)
Accrued advertising
(9,750
)
5,052
Other current liabilities
1,965
(2,668
)
Cash flows provided by operating
activities
79,306
63,490
Cash flows from investing
activities:
Principal receipts from notes, equipment
contracts and other long-term receivables
6,686
13,502
Net additions to property and
equipment
(31,968
)
(19,495
)
Proceeds from sale of property and
equipment
—
3,908
Additions to long-term receivables
(1,237
)
(1,069
)
Other
(113
)
(255
)
Cash flows used in investing
activities
(26,632
)
(3,409
)
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
30,000
100,000
Repayment of revolving credit facility
(30,000
)
—
Payment of debt issuance costs
(8,044
)
(6,286
)
Dividends paid on common stock
(31,740
)
(30,765
)
Repurchase of common stock
(20,017
)
(113,862
)
Principal payments on finance lease and
financing obligations
(5,329
)
(7,001
)
Proceeds from stock options exercised
3,812
241
Repurchase of restricted stock for tax
payments upon vesting
(4,139
)
(2,601
)
Tax payments for share settlement of
restricted stock units
(859
)
(955
)
Cash flows used in financing
activities
(218,029
)
(61,229
)
Net change in cash, cash equivalents and
restricted cash
(165,355
)
(1,148
)
Cash, cash equivalents and restricted cash
at beginning of period
324,984
425,353
Cash, cash equivalents and restricted cash
at end of period
$
159,629
$
424,205
Supplemental disclosures:
Interest paid in cash
$
54,032
$
47,478
Income taxes paid in cash
$
25,774
$
20,832
Non-cash conversion of accounts receivable
to notes receivable
$
969
$
84
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 September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net income available to common
stockholders
$
18,048
$
20,373
$
62,586
$
67,908
Closure and impairment charges
1,774
1,636
3,088
3,093
Amortization of intangible assets
2,709
2,664
8,202
7,994
Non-cash interest expense
779
774
2,714
2,210
Loss (gain) on disposition of assets
191
(1,502
)
2,309
(3,032
)
Loss on extinguishment of debt
—
1,161
10
1,161
IHOP Flip'd initiative
—
—
5,121
—
Other EBITDA adjustments
361
2,488
3,036
2,488
Net income tax provision for above
adjustments
(1,512
)
(1,878
)
(6,365
)
(3,618
)
Net income allocated to unvested
participating restricted stock
(99
)
(149
)
(439
)
(272
)
Net income available to common
stockholders, as adjusted
$
22,251
$
25,567
$
80,262
$
77,932
Diluted net income available to common
stockholders per share:
Net income available to common
stockholders
$
1.19
$
1.32
$
4.09
$
4.22
Closure and impairment charges
0.09
0.08
0.15
0.14
Amortization of intangible assets
0.13
0.13
0.40
0.37
Non-cash interest expense
0.04
0.04
0.13
0.10
Loss (gain) on disposition of assets
0.01
(0.07
)
0.11
(0.14
)
Loss on extinguishment of debt
—
0.06
0.00
0.05
IHOP Flip'd initiative
—
—
0.25
—
Other EBITDA adjustments
0.02
0.12
0.15
0.11
Net income allocated to unvested
participating restricted stock
(0.01
)
(0.01
)
(0.03
)
(0.02
)
Rounding
(0.01
)
(0.01
)
—
0.02
Diluted net income available to common
stockholders per share, as adjusted
$
1.46
$
1.66
$
5.25
$
4.85
Numerator for basic EPS - net income
available to common stockholders, as adjusted
$
22,251
$
25,567
$
80,262
$
77,932
Effect of unvested participating
restricted stock using the two-class method
—
1
—
4
Numerator for diluted EPS - net income
available to common stockholders, as adjusted
$
22,251
$
25,568
$
80,262
$
77,936
Denominator for basic EPS -
weighted-average shares
15,217
15,377
15,275
16,049
Dilutive effect of stock options
3
26
14
30
Denominator for diluted EPS -
weighted-average shares
15,220
15,403
15,289
16,079
Dine Brands Global, Inc. and Subsidiaries Non-GAAP
Financial Measures (In thousands, except per share
amounts) (Unaudited)
Reconciliation of the Company's cash flows
provided by operating activities to “adjusted free cash flow” (cash
flows (used in) 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.
Nine Months Ended
September 30,
2023
2022
(In millions)
Cash flows provided by operating
activities
$
79.3
$
63.5
Principal receipts from notes and
equipment contracts
6.7
8.4
Net additions to property and
equipment
(32.0
)
(19.5
)
Adjusted free cash flow
54.0
52.4
Repayment of long-term debt, net
(151.7
)
—
Dividends paid on common stock
(31.7
)
(30.8
)
Repurchase of common stock
(20.0
)
(113.9
)
$
(149.4
)
$
(92.3
)
Dine Brands Global, Inc. and Subsidiaries Non-GAAP
Financial Measures (In thousands, except per share
amounts) (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,
other non-income based taxes 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
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Net income, as reported
$
18,479
$
20,948
$
64,137
$
69,760
Interest charges on finance leases
668
1,202
2,072
3,670
All other interest charges
21,178
17,184
58,672
49,900
Income tax provision
6,468
7,789
21,416
25,665
Depreciation and amortization
8,587
8,893
26,221
28,845
Non-cash stock-based compensation
2,858
3,801
8,167
12,128
Closure and impairment charges
1,774
1,636
3,088
3,093
Loss on extinguishment of debt
—
1,161
10
1,161
Loss (gain) on disposition of assets
191
(1,502
)
2,309
(3,032
)
IHOP Flip'd initiative
—
—
5,121
—
Other
361
2,488
3,036
3,682
Adjusted EBITDA
$
60,564
$
63,600
$
194,249
$
194,872
Dine Brands Global, Inc. and Subsidiaries
Restaurant Data (Unaudited)
The following table sets forth, for the
three and nine months ended September 30, 2023, the number of
“Effective Restaurants” in the Applebee’s and IHOP 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 September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Applebee's Restaurant Data
(Unaudited)
Global Effective Restaurants(a)
Franchise
1,654
1,601
1,663
1,604
Company
—
69
—
69
Total
1,654
1,670
1,663
1,673
System-wide(b)
Domestic sales percentage change(c)
(3.2
)%
3.2
%
0.3
%
5.9
%
Domestic same-restaurant sales percentage
change(d)
(2.4
)%
3.8
%
0.9
%
6.3
%
Franchise(b)
Domestic sales percentage change(c)
0.4
%
3.1
%
4.0
%
5.8
%
Domestic same-restaurant sales percentage
change(d)
(2.4
)%
3.6
%
0.9
%
6.3
%
Average weekly domestic unit sales (in
thousands)
$
52.1
$
53.5
$
54.4
$
54.2
IHOP Restaurant Data
Global Effective Restaurants(a)
Franchise
1,631
1,602
1,626
1,594
Area license
156
157
156
156
Total
1,787
1,759
1,782
1,750
System-wide(b)
Sales percentage change(c)
4.2
%
3.7
%
6.6
%
9.1
%
Domestic same-restaurant sales percentage
change, including area license restaurants(d)
2.0
%
1.9
%
4.2
%
7.2
%
Franchise(b)
Sales percentage change(c)
4.5
%
3.6
%
6.9
%
9.2
%
Domestic same-restaurant sales percentage
change(d)
2.0
%
1.6
%
4.2
%
7.3
%
Average weekly unit sales (in
thousands)
$
37.8
$
36.8
$
38.3
$
36.5
Area License(b)
Sales percentage change(c)
1.1
%
5.2
%
4.0
%
8.4
%
_________________________________
(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 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 Applebee'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 domestic franchise
restaurants, Applebee's company-operated restaurants, IHOP
franchise restaurants and IHOP area license restaurants were as
follows:
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Reported sales (in millions)
(Unaudited)
Applebee's domestic franchise restaurant
sales
$
1,048.5
$
1,044.5
$
3,303.9
$
3,176.2
Applebee's company-operated
restaurants
—
38.2
—
117.2
IHOP franchise restaurant sales
801.0
766.8
2,425.9
2,270.3
IHOP area license restaurant sales
74.3
73.5
228.1
219.3
Total
$
1,923.8
$
1,923.0
$
5,957.9
$
5,783.0
(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 September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Applebee's
(Unaudited)
Summary -
beginning of period:
Franchise
1,661
1,604
1,678
1,611
Company
—
69
—
69
Beginning of period
1,661
1,673
1,678
1,680
Franchise restaurants opened:
Domestic
2
—
3
2
International
2
1
5
1
Total franchise restaurants opened
4
1
8
3
Franchise restaurants permanently
closed:
Domestic
(12
)
(3
)
(28
)
(9
)
International
(1
)
(1
)
(6
)
(4
)
Total franchise restaurants permanently
closed
(13
)
(4
)
(34
)
(13
)
Net franchise restaurant
reduction
(9
)
(3
)
(26
)
(10
)
Summary - end of period:
Franchise
1,652
1,601
1,652
1,601
Company
—
69
—
69
Total Applebee's restaurants, end of
period
1,652
1,670
1,652
1,670
Domestic
1,544
1,571
1,544
1,571
International
108
99
108
99
Dine Brands Global, Inc. and
Subsidiaries
Restaurant Data
(Unaudited)
Restaurant
Development Activity (continued)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
IHOP
Summary - beginning of period:
Franchise
1,634
1,608
1,625
1,595
Area license
156
156
156
156
Company
—
—
—
—
Total IHOP restaurants, beginning of
period
1,790
1,764
1,781
1,751
Franchise/area license restaurants
opened:
Domestic franchise
5
5
27
20
Domestic area license
—
1
2
2
International franchise
5
3
11
10
Total franchise/area license restaurants
opened
10
9
40
32
Franchise/area license restaurants
permanently closed:
Domestic franchise
(5
)
(5
)
(23
)
(12
)
Domestic area license
—
(1
)
(2
)
(2
)
International franchise
(1
)
(1
)
(2
)
(3
)
Total franchise/area license restaurants
permanently closed
(6
)
(7
)
(27
)
(17
)
Net franchise/area license restaurant
additions
4
2
13
15
Net increase in franchise/area license
restaurants
4
2
13
15
Summary - end of period:
Franchise
1,638
1,610
1,638
1,610
Area license
156
156
156
156
Total IHOP restaurants, end of
period
1,794
1,766
1,794
1,766
Domestic
1,681
1,665
1,681
1,665
International
113
101
113
101
As of September 30, 2023, 47 franchise groups operated 137
Fuzzy's restaurants in 18 states within the United States and we
had one company-owned restaurant in Texas, totaling 138
restaurants. Fuzzy's average weekly sales for the three and nine
months ended September 30, 2023 were $30,628 and $31,575,
respectively.
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), 10
international Applebee's ghost kitchens and 38 international IHOP
ghost kitchens.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231101283471/en/
Investor Contact Brett Levy
Vice President, Investor Relations Dine Brands Global, Inc.
IR@dinebrands.com
Media Contact Susan Nelson
Sr. Vice President, Global Communications Dine Brands Global, Inc.
Susan.Nelson@dinebrands.com
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