Dine Brands Global, Inc. Reports First Quarter 2020 Results
Comments on Strong Liquidity and Cash Position
“As we continue to face new challenges posed by the COVID-19 pandemic, I’d like to extend a heartfelt thank you to our family of team members and franchisees for their tireless dedication and resilience. Despite the tremendous adversity we’ve seen, and will continue to see, I could not be prouder of how our teams, franchisees and brands have come together to support one another and their communities. As we work to navigate this situation together, protecting our team members and our guests has remained our number one priority and guides every decision. We have enhanced procedures throughout our system to improve upon restaurant health and safety amid this pandemic, leveraging information from the experts, the
Cash Position
Dine Brands has taken precautionary measures to increase the Company’s financial flexibility due to the unprecedented conditions caused by COVID-19. As previously disclosed on
As of
The Company estimates its cash general and administrative expenses to be approximately
These projections exclude gross lease exposure of approximately
The Company has temporarily suspended its quarterly cash dividend due to the COVID-19 crisis. On
Domestic System-Wide Comparable Same-Restaurant Sales Performance
First Quarter of 2020
- Despite 10 consecutive weeks of positive comparable same-restaurant sales and 9 consecutive weeks of positive comparable traffic since the beginning of 2020, Applebee’s comparable same-restaurant sales decreased 10.6% for the first quarter of 2020.
- IHOP’s comparable same-restaurant sales decreased 14.7% for the first quarter of 2020.
- The decline in sales for both brands was primarily due to the impact of COVID-19 and mandated restrictions on restaurant operations at the Federal, state and local levels, which resulted in a meaningful decline in traffic.
| Domestic Same-Restaurant Sales | ||||||
|
QTD through |
|
Q1 2020 |
||||
| Applebee's |
3.2% |
|
(10.6%) |
|||
|
|
|
|
|
|
||
| IHOP |
(0.6%) |
|
(14.7%) |
|||
| Domestic Same-Restaurant Sales (Week Ending) | April Sales Are Preliminary | ||||||||
| WE 3/8 | WE 3/15 | WE 3/22 | WE 3/29 | WE 4/5 | WE 4/12 | WE 4/19 | WE 4/26 | ||
| Applebee's |
1.9% |
(15.8%) |
(76.0%) |
(80.6%) |
(76.2%) |
(76.5%) |
(64.9%) |
(64.4%) |
|
|
|
|
|
|
|
|
|
|
||
| IHOP |
(3.9%) |
(25.4%) |
(75.3%) |
(84.6%) |
(81.5%) |
(79.4%) |
(76.3%) |
(75.4%) |
|
Off-Premise Sales Growth Comparison
- Off-premise sales at both Applebee’s and IHOP increased significantly as a result of local and state government mandates, which placed restrictions on dine-in service.
| Domestic Same-Restaurant Off-Premise Sales Growth | |||||
|
Q1 2020 |
Q2 2020 QTD WE 4/26 |
||||
| Applebee's |
12.5% |
121.6% |
|||
| IHOP |
15.7% |
131.7% |
|||
Operating Update of Domestic Applebee’s and
Applebee’s
As of
Off-premise sales accounted for 16.3% of sales mix for the first quarter of 2020, as compared to 13.0% of sales mix for the fourth quarter of 2019 and 13.0% of sales mix for the first quarter of 2019.
Delivery sales accounted for 4.8% of sales mix and take-out sales accounted for 11.5% of sales mix for the first quarter of 2020.
IHOP
As of
Off-premise sales comprised 12.8% of sales mix in the first quarter of 2020, as compared to 10.1% of sales mix for the fourth quarter of 2019 and 9.5% of sales mix for the first quarter of 2019.
Delivery sales accounted for 3.7% of sales mix and take-out sales accounted for 5.9% of sales mix for the first quarter of 2020.
First Quarter of 2020 Summary
-
GAAP earnings per diluted share for the first quarter of 2020 were
$1.31 compared to$1.73 for the first quarter of 2019. -
Adjusted earnings per diluted share for first quarter of 2020 were
$1.45 compared to$1.90 for the first quarter of 2019. (See “Non-GAAP Financial Measures” and reconciliation of GAAP earnings per diluted share to adjusted earnings per diluted share.) -
IHOP’s reported system-wide sales for the first quarter of 2020 were
$748.8 million compared to$873.1 million for the first quarter of 2019. - IHOP’s franchisees completed 28 remodels in the first quarter of 2020, bringing the total number of domestic restaurants remodeled to over 1,100 since the inception of the current program.
-
General and administrative expenses for the first quarter of 2020 declined 12.2% year-over-year to
$37.6 million . -
Net income for the first quarter of 2020 was
$22.3 million compared to$31.6 million the first quarter of 2019. -
Consolidated adjusted EBITDA for the first quarter of 2020 was
$61.7 million . This compares to$74.7 million the first quarter of 2019. (See “Non-GAAP Financial Measures” and reconciliation of GAAP net income to consolidated adjusted EBITDA.) -
Cash flows from operating activities for the first quarter of 2020 were
$29.6 million compared to$28.9 million for the first quarter of 2019. -
Adjusted free cash flow for the first quarter of 2020 was
$27.5 million , similar to the$27.7 million for the comparable period for 2019. (See “Non-GAAP Financial Measures” and reconciliation of the Company’s cash provided by operating activities to adjusted free cash flow.) -
During the first quarter of 2020, the Company repurchased 459,899 shares of its common stock for a total cost of
$26.5 million and paid quarterly cash dividends totaling$11.5 million . -
GAAP net income available to common stockholders was
$21.6 million , or earnings per diluted share of$1.31 , for the first quarter of 2020. This compares to net income available to common stockholders of$30.5 million , or earnings per diluted share of$1.73 , for the first quarter of 2019. The decrease in net income was primarily due to a decline in gross profit. This was partially offset by the continued decline in general and administrative expenses. The decrease in gross profit was primarily due to a significant decrease in guest traffic resulting from government measures undertaken to stem the spread of COVID-19. -
Adjusted net income available to common stockholders was
$23.9 million , or adjusted earnings per diluted share of$1.45 , for the first quarter of 2020. This compares to adjusted net income available to common stockholders of$33.7 million , or adjusted earnings per diluted share of$1.90 , for the first quarter of 2019. The decrease in adjusted net income was primarily due to lower gross profit for the reasons described above. These items were partially offset by fewer weighted average diluted shares outstanding and lower general and administrative expenses. (See “Non-GAAP Financial Measures” below.) -
General and administrative expenses were
$37.6 million for the first quarter of 2020 compared to$42.8 million for the first quarter of 2019. The improvement was mainly due to lower compensation expenses.
GAAP Effective Tax Rate
Our effective tax rate for the first quarter of 2020 was 23.2%, essentially flat compared to the effective tax rate of 23.1% for the first quarter of 2019.
Financial Performance Guidance for 2020 Withdrawn
The Company disclosed on
First Quarter of 2020 Earnings Conference Call Details
Dine Brands will host a conference call to discuss its results on
A live webcast of the call will be available on the Company’s website, www.dinebrands.com, and may be accessed by visiting Events and Presentations under the site’s Investors section. 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. A telephonic replay of the call may be accessed from
About
Based in
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: uncertainty regarding the duration and severity of the ongoing COVID-19 pandemic and its ultimate impact on the Company; the effectiveness of related containment measures; general economic conditions; 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; 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; possible future impairment charges; the effects of tax reform; 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; 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
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, 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 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
|
Consolidated Statements of Comprehensive Income (In thousands, except per share amounts) (Unaudited) |
||||||||
|
|
|
Three Months Ended |
||||||
|
|
|
|
||||||
|
|
|
2020 |
|
2019 |
||||
|
|
|
|
|
|
||||
|
Revenues: |
|
|
|
|
||||
|
Franchise revenues: |
|
|
|
|
||||
|
Royalties, franchise fees and other |
|
$ |
83,314 |
|
|
$ |
96,296 |
|
|
Advertising revenue |
|
61,723 |
|
|
72,630 |
|
||
|
Total franchise revenues |
|
145,037 |
|
|
168,926 |
|
||
|
Company restaurant sales |
|
31,300 |
|
|
35,735 |
|
||
|
Rental revenues |
|
29,009 |
|
|
30,711 |
|
||
|
Financing revenues |
|
1,538 |
|
|
1,810 |
|
||
|
Total revenues |
|
206,884 |
|
|
237,182 |
|
||
|
Cost of revenues: |
|
|
|
|
||||
|
Franchise expenses: |
|
|
|
|
||||
|
Advertising expenses |
|
61,723 |
|
|
72,630 |
|
||
|
Bad debt expense (credit) |
|
518 |
|
|
(467 |
) |
||
|
Other franchise expenses |
|
7,209 |
|
|
8,140 |
|
||
|
Total franchise expenses |
|
69,450 |
|
|
80,303 |
|
||
|
Company restaurant expenses |
|
30,332 |
|
|
31,538 |
|
||
|
Rental expenses: |
|
|
|
|
||||
|
Interest expense from finance leases |
|
1,210 |
|
|
1,529 |
|
||
|
Other rental expenses |
|
21,323 |
|
|
21,095 |
|
||
|
Total rental expenses |
|
22,533 |
|
|
22,624 |
|
||
|
Financing expenses |
|
142 |
|
|
146 |
|
||
|
Total cost of revenues |
|
122,457 |
|
|
134,611 |
|
||
|
Gross profit |
|
84,427 |
|
|
102,571 |
|
||
|
General and administrative expenses |
|
37,608 |
|
|
42,819 |
|
||
|
Interest expense, net |
|
15,172 |
|
|
15,393 |
|
||
|
Amortization of intangible assets |
|
2,826 |
|
|
2,924 |
|
||
|
Closure and impairment (credit) charges |
|
(12 |
) |
|
194 |
|
||
|
(Gain) loss on disposition of assets |
|
(233 |
) |
|
109 |
|
||
|
Income before income tax provision |
|
29,066 |
|
|
41,132 |
|
||
|
Income tax provision |
|
(6,738 |
) |
|
(9,489 |
) |
||
|
Net income |
|
$ |
22,328 |
|
|
$ |
31,643 |
|
|
Net income available to common stockholders: |
|
|
|
|
||||
|
Net income |
|
$ |
22,328 |
|
|
$ |
31,643 |
|
|
Less: Net income allocated to unvested participating restricted stock |
|
(748 |
) |
|
(1,111 |
) |
||
|
Net income available to common stockholders |
|
$ |
21,580 |
|
|
$ |
30,532 |
|
|
Net income available to common stockholders per share: |
|
|
|
|
||||
|
Basic |
|
$ |
1.33 |
|
|
$ |
1.76 |
|
|
Diluted |
|
$ |
1.31 |
|
|
$ |
1.73 |
|
|
Weighted average shares outstanding: |
|
|
|
|
||||
|
Basic |
|
16,263 |
|
|
17,343 |
|
||
|
Diluted |
|
16,470 |
|
|
17,690 |
|
||
|
|
|
|
|
|
||||
|
Dividends declared per common share |
|
|
|
|
||||
|
Dividends paid per common share |
|
|
|
|
||||
|
Consolidated Balance Sheets (In thousands, except share and per share amounts) |
||||||||
|
|
|
|
|
|
||||
|
Assets |
|
(Unaudited) |
|
|
||||
|
Current assets: |
|
|
|
|
||||
|
Cash and cash equivalents |
|
$ |
344,560 |
|
|
$ |
116,043 |
|
|
Receivables, gross |
|
85,321 |
|
|
140,007 |
|
||
|
Less: allowance for credit losses |
|
(4,906 |
) |
|
(3,138 |
) |
||
|
Receivables, net |
|
80,415 |
|
|
136,869 |
|
||
|
Restricted cash |
|
34,159 |
|
|
40,732 |
|
||
|
Prepaid gift card costs |
|
27,563 |
|
|
36,077 |
|
||
|
Prepaid income taxes |
|
7,039 |
|
|
13,290 |
|
||
|
Other current assets |
|
6,254 |
|
|
3,906 |
|
||
|
Total current assets. |
|
499,990 |
|
|
346,917 |
|
||
|
Other intangible assets, net |
|
572,449 |
|
|
575,103 |
|
||
|
Operating lease right-of-use asset |
|
364,875 |
|
|
366,931 |
|
||
|
|
|
343,862 |
|
|
343,862 |
|
||
|
Property and equipment, net |
|
211,835 |
|
|
216,420 |
|
||
|
Long-term receivables, gross |
|
90,123 |
|
|
94,154 |
|
||
|
Less: allowance for credit losses |
|
(8,375 |
) |
|
(8,155 |
) |
||
|
Long-term receivables, net |
|
81,748 |
|
|
85,999 |
|
||
|
Deferred rent receivable |
|
68,759 |
|
|
70,308 |
|
||
|
Non-current restricted cash |
|
16,400 |
|
|
15,700 |
|
||
|
Other non-current assets, net |
|
25,552 |
|
|
28,271 |
|
||
|
Total assets |
|
$ |
2,185,470 |
|
|
$ |
2,049,511 |
|
|
Liabilities and Stockholders’ Deficit |
|
|
|
|
||||
|
Current liabilities: |
|
|
|
|
||||
|
Accounts payable |
|
25,389 |
|
|
40,925 |
|
||
|
Gift card liability |
|
120,187 |
|
|
159,019 |
|
||
|
Current maturities of operating lease obligations |
|
72,508 |
|
|
72,815 |
|
||
|
Current maturities of finance lease and financing obligations |
|
13,502 |
|
|
13,669 |
|
||
|
Accrued employee compensation and benefits |
|
11,714 |
|
|
23,904 |
|
||
|
Dividends payable |
|
12,739 |
|
|
11,702 |
|
||
|
Deferred franchise revenue, short-term |
|
9,567 |
|
|
10,086 |
|
||
|
Other accrued expenses |
|
24,972 |
|
|
25,792 |
|
||
|
Total current liabilities |
|
290,578 |
|
|
357,912 |
|
||
|
Long-term debt |
|
1,506,203 |
|
|
1,288,248 |
|
||
|
Operating lease obligations, less current maturities |
|
355,160 |
|
|
359,025 |
|
||
|
Finance lease obligations, less current maturities |
|
74,498 |
|
|
77,393 |
|
||
|
Financing obligations, less current maturities |
|
35,944 |
|
|
37,682 |
|
||
|
Deferred income taxes, net |
|
87,851 |
|
|
98,499 |
|
||
|
Deferred franchise revenue, long-term |
|
56,046 |
|
|
56,944 |
|
||
|
Other non-current liabilities |
|
15,567 |
|
|
15,582 |
|
||
|
Total liabilities |
|
2,421,847 |
|
|
2,291,285 |
|
||
|
Commitments and contingencies |
|
|
|
|
||||
|
Stockholders’ deficit: |
|
|
|
|
||||
|
Preferred stock, |
|
— |
|
|
— |
|
||
|
Common stock, |
|
249 |
|
|
249 |
|
||
|
Additional paid-in-capital |
|
252,443 |
|
|
246,192 |
|
||
|
Retained earnings |
|
70,769 |
|
|
61,653 |
|
||
|
Accumulated other comprehensive loss |
|
(58 |
) |
|
(58 |
) |
||
|
|
|
(559,780 |
) |
|
(549,810 |
) |
||
|
Total stockholders’ deficit |
|
(236,377 |
) |
|
(241,774 |
) |
||
|
Total liabilities and stockholders’ deficit |
|
$ |
2,185,470 |
|
|
$ |
2,049,511 |
|
|
Consolidated Statements of Cash Flows (In thousands) |
||||||||
|
|
|
Three Months Ended |
||||||
|
|
|
|
||||||
|
|
|
2020 |
|
2019 |
||||
|
|
|
|
|
|
||||
|
Cash flows from operating activities: |
|
|
|
|
||||
|
Net income. |
|
$ |
22,328 |
|
|
$ |
31,643 |
|
|
Adjustments to reconcile net income to cash flows provided by operating activities: |
|
|
|
|
||||
|
Depreciation and amortization |
|
10,641 |
|
|
10,179 |
|
||
|
Non-cash stock-based compensation expense |
|
4,038 |
|
|
4,107 |
|
||
|
Non-cash interest expense |
|
655 |
|
|
1,118 |
|
||
|
Closure and impairment (credit) charges |
|
(12 |
) |
|
194 |
|
||
|
Deferred income taxes |
|
(10,491 |
) |
|
(1,149 |
) |
||
|
Deferred revenue |
|
(1,417 |
) |
|
(1,877 |
) |
||
|
(Gain) loss on disposition of assets |
|
(227 |
) |
|
109 |
|
||
|
Other |
|
(1,293 |
) |
|
(2,099 |
) |
||
|
Changes in operating assets and liabilities: |
|
|
|
|
||||
|
Accounts receivable, net |
|
12,077 |
|
|
(3,210 |
) |
||
|
Current income tax receivables and payables |
|
6,443 |
|
|
(1,399 |
) |
||
|
Gift card receivables and payables |
|
11,693 |
|
|
(890 |
) |
||
|
Other current assets |
|
(2,347 |
) |
|
(2,570 |
) |
||
|
Accounts payable |
|
(12,748 |
) |
|
1,826 |
|
||
|
Accrued employee compensation and benefits |
|
(12,190 |
) |
|
(12,141 |
) |
||
|
Other current liabilities |
|
2,495 |
|
|
5,088 |
|
||
|
Cash flows provided by operating activities |
|
29,645 |
|
|
28,929 |
|
||
|
Cash flows from investing activities: |
|
|
|
|
||||
|
Principal receipts from notes, equipment contracts and other long-term receivables |
|
5,544 |
|
|
5,260 |
|
||
|
Net additions to property and equipment |
|
(5,084 |
) |
|
(4,717 |
) |
||
|
Proceeds from sale of property and equipment |
|
6 |
|
|
400 |
|
||
|
Additions to long-term receivables |
|
(1,511 |
) |
|
(395 |
) |
||
|
Other |
|
(195 |
) |
|
(100 |
) |
||
|
Cash flows (used in) provided by investing activities |
|
(1,240 |
) |
|
448 |
|
||
|
Cash flows from financing activities: |
|
|
|
|
||||
|
Borrowing from revolving credit facility |
|
220,000 |
|
|
— |
|
||
|
Repayment of revolving credit facilities |
|
— |
|
|
(25,000 |
) |
||
|
Dividends paid on common stock |
|
(11,451 |
) |
|
(11,153 |
) |
||
|
Repurchase of common stock |
|
(29,853 |
) |
|
(10,802 |
) |
||
|
Principal payments on finance lease obligations |
|
(2,981 |
) |
|
(3,466 |
) |
||
|
Proceeds from stock options exercised |
|
20,524 |
|
|
6,768 |
|
||
|
Tax payments for restricted stock upon vesting |
|
(2,000 |
) |
|
(1,817 |
) |
||
|
Cash flows provided by (used in) financing activities |
|
194,239 |
|
|
(45,470 |
) |
||
|
Net change in cash, cash equivalents and restricted cash |
|
222,644 |
|
|
(16,093 |
) |
||
|
Cash, cash equivalents and restricted cash at beginning of period |
|
172,475 |
|
|
200,379 |
|
||
|
Cash, cash equivalents and restricted cash at end of period |
|
$ |
395,119 |
|
|
$ |
184,286 |
|
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: Amortization of intangible assets; non-cash interest expense; closure and impairment charges; debt; nonrecurring restaurant costs; gain or loss on disposition of assets; and the combined tax effect of the preceding adjustments, as well as related per share data:
|
|
|
Three Months Ended |
||||||
|
|
|
|
||||||
|
|
|
2020 |
|
2019 |
||||
|
|
|
|
|
|
||||
|
Net income available to common stockholders, as reported |
|
$ |
21,580 |
|
|
$ |
30,532 |
|
|
Amortization of intangible assets |
|
2,826 |
|
|
2,924 |
|
||
|
Non-cash interest expense |
|
655 |
|
|
1,118 |
|
||
|
Closure and impairment (credit) charges |
|
(12 |
) |
|
194 |
|
||
|
Nonrecurring restaurant costs |
|
— |
|
|
61 |
|
||
|
(Gain) loss on disposition of assets |
|
(233 |
) |
|
109 |
|
||
|
Net income tax provision for above adjustments |
|
(809 |
) |
|
(1,146 |
) |
||
|
Net income allocated to unvested participating restricted stock |
|
(83 |
) |
|
(112 |
) |
||
|
Net income available to common stockholders, as adjusted |
|
$ |
23,924 |
|
|
$ |
33,680 |
|
|
|
|
|
|
|
||||
|
Diluted net income available to common stockholders per share: |
|
|
|
|
||||
|
Net income available to common stockholders, as reported |
|
$ |
1.31 |
|
|
$ |
1.73 |
|
|
Amortization of intangible assets |
|
0.13 |
|
|
0.12 |
|
||
|
Non-cash interest expense |
|
0.03 |
|
|
0.05 |
|
||
|
Closure and impairment (credit) charges |
|
(0.00 |
) |
|
0.01 |
|
||
|
Nonrecurring restaurant costs |
|
— |
|
|
0.00 |
|
||
|
(Gain) loss on disposition of assets |
|
(0.01 |
) |
|
— |
|
||
|
Net income allocated to unvested participating restricted stock |
|
(0.01 |
) |
|
(0.01 |
) |
||
|
Diluted net income available to common stockholders per share, as adjusted |
|
$ |
1.45 |
|
|
$ |
1.90 |
|
|
|
|
|
|
|
||||
|
Numerator for basic EPS-income available to common stockholders, as adjusted |
|
$ |
23,924 |
|
|
$ |
33,680 |
|
|
Effect of unvested participating restricted stock using the two-class method |
|
5 |
|
|
15 |
|
||
|
Numerator for diluted EPS-income available to common stockholders, as adjusted |
|
$ |
23,929 |
|
|
$ |
33,695 |
|
|
|
|
|
|
|
||||
|
Denominator for basic EPS-weighted-average shares |
|
16,263 |
|
|
17,343 |
|
||
|
Dilutive effect of stock options |
|
207 |
|
|
347 |
|
||
|
Denominator for diluted EPS-weighted-average shares |
|
16,470 |
|
|
17,690 |
|
||
Non-GAAP Financial Measures
(Unaudited)
Reconciliation of the Company's cash provided by operating activities to “adjusted free cash flow” (cash 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.
|
|
|
Three Months Ended |
||||||
|
|
|
|
||||||
|
|
|
2020 |
|
2019 |
||||
|
|
|
(In millions) |
||||||
|
Cash flows provided by operating activities |
|
$ |
29.6 |
|
|
$ |
28.9 |
|
|
Receipts from notes and equipment contracts receivable |
|
3.0 |
|
|
3.5 |
|
||
|
Additions to property and equipment |
|
(5.1 |
) |
|
(4.7 |
) |
||
|
Adjusted free cash flow |
|
27.5 |
|
|
27.7 |
|
||
|
Dividends paid on common stock |
|
(11.5 |
) |
|
(11.2 |
) |
||
|
Repurchase of |
|
(29.9 |
) |
|
(10.8 |
) |
||
|
|
|
$ |
(13.9 |
) |
|
$ |
5.7 |
|
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, adjusted for the effect of interest charges, income tax provision or benefit, depreciation and amortization, non-cash stock-based compensation, closure and impairment charges, 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 |
|
||||||
|
|
|
|
|
||||||
|
|
|
2020 |
|
2019 |
|
||||
|
|
|
|
|
|
|
||||
|
Net income, as reported |
|
$ |
22,328 |
|
|
$ |
31,643 |
|
|
|
Interest charges on finance leases |
|
1,723 |
|
|
2,083 |
|
|
||
|
All other interest charges |
|
16,242 |
|
|
16,642 |
|
|
||
|
Income tax provision |
|
6,738 |
|
|
9,489 |
|
|
||
|
Depreciation and amortization |
|
10,641 |
|
|
10,179 |
|
|
||
|
Non-cash stock-based compensation |
|
4,037 |
|
|
4,107 |
|
|
||
|
Closure and impairment (credit) charges |
|
(12 |
) |
|
194 |
|
|
||
|
(Gain) loss on disposition of assets |
|
(233 |
) |
|
109 |
|
|
||
|
Other taxes |
|
219 |
|
|
203 |
|
|
||
|
Adjusted EBITDA |
|
$ |
61,683 |
|
|
$ |
74,649 |
|
|
Restaurant Data
(Unaudited)
The following table sets forth, for the three months ended
|
|
Three Months Ended |
|
|||||||||
|
|
|
|
|||||||||
|
|
2020 |
|
2019 |
|
|||||||
|
|
|
|
|||||||||
|
Applebee's |
|
|
|
|
|||||||
|
|
|
|
|
|
|||||||
|
Franchise |
|
1,697 |
|
|
|
1,762 |
|
|
|||
|
Company |
|
69 |
|
|
|
69 |
|
|
|||
|
Total |
|
1,766 |
|
|
|
1,831 |
|
|
|||
|
|
|
|
|
|
|||||||
|
System-wide(b) |
|
|
|
|
|||||||
|
Domestic sales percentage change(c) |
|
(12.1 |
)% |
|
|
(1.4 |
)% |
|
|||
|
Domestic same-restaurant sales percentage change(d) |
|
(10.6 |
)% |
|
|
1.8 |
% |
|
|||
|
|
|
|
|
|
|||||||
|
Franchise(b) |
|
|
|
|
|||||||
|
Domestic sales percentage change(c) (e) |
|
(12.1 |
)% |
|
|
(4.7 |
)% |
|
|||
|
Domestic same-restaurant sales percentage change(d) |
|
(10.6 |
)% |
|
|
1.6 |
% |
|
|||
|
Average weekly domestic unit sales (in thousands) |
$ |
|
44.6 |
|
|
$ |
|
49.6 |
|
|
|
|
IHOP |
|
|
|
||||||||
|
|
|
|
|
||||||||
|
Franchise |
|
1,660 |
|
|
|
1,657 |
|
||||
|
Area license |
|
161 |
|
|
|
156 |
|
||||
|
Total |
|
1,821 |
|
|
|
1,813 |
|
||||
|
|
|
|
|
||||||||
|
System-wide(b) |
|
|
|
||||||||
|
Sales percentage change(c) |
|
(14.2 |
)% |
|
|
2.4 |
% |
||||
|
Domestic same-restaurant sales percentage change, including area license restaurants(d) |
|
(14.7 |
)% |
|
|
1.2 |
% |
||||
|
|
|
|
|
||||||||
|
Franchise(b) |
|
|
|
||||||||
|
Sales percentage change(c) |
|
(14.3 |
)% |
|
|
2.3 |
% |
||||
|
Domestic same-restaurant sales percentage change(d) |
|
(14.7 |
)% |
|
|
1.1 |
% |
||||
|
Average weekly unit sales (in thousands) |
|
$ |
31.7 |
|
|
$ |
|
37.1 |
|
||
|
|
|
|
|
||||||||
|
Area License (b) |
|
|
|
||||||||
|
Sales percentage change(c) |
|
(13.8 |
)% |
|
|
2.7 |
% |
||||
|
Restaurant Data |
|
|
(a) |
“Effective Restaurants” are the weighted average number of restaurants open in a given fiscal period, adjusted to account for restaurants open for only a portion of the period. Information is presented for all |
|
|
|
|
(b) |
“System-wide” sales are retail sales at domestic 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 restaurants. Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company. An increase or decrease in franchisees' reported sales will result in a corresponding increase or decrease in our royalty revenue. Unaudited reported sales for Applebee's domestic franchise restaurants, IHOP franchise restaurants and IHOP area license restaurants for the three months ended |
|
|
|
Three Months Ended |
||||||
|
|
|
|
||||||
|
|
|
2020 |
|
2019 |
||||
|
|
(In millions) |
|||||||
|
Reported sales |
|
|
|
|
||||
|
Applebee's domestic franchise restaurant sales |
|
$ |
918.2 |
|
|
$ |
1,044.2 |
|
|
Applebee's company-operated restaurants |
|
31.3 |
|
|
35.7 |
|
||
|
IHOP franchise restaurant sales |
|
684.8 |
|
|
798.8 |
|
||
|
IHOP area license restaurant sales |
|
64.0 |
|
|
74.3 |
|
||
|
Total |
|
$ |
1,698.3 |
|
|
$ |
1,953.0 |
|
|
(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 year for domestic restaurants that have been operated throughout both fiscal periods that are being compared and have been open for at least 18 months. Because of new unit openings and restaurant closures, the domestic restaurants open throughout both fiscal periods being compared may be different from period to period. |
|
|
|
|
(e) |
The franchise sales percentage change for 2019 was impacted by the acquisition of 69 franchise restaurants in |
|
Restaurant Data (Unaudited) |
|||||
|
The following table summarizes our restaurant development activity: |
|||||
|
|
Three Months Ended |
||||
|
|
|
||||
|
|
2020 |
|
2019 |
||
|
Applebee's Restaurant Development Activity |
|
|
|
||
|
Summary - beginning of period: |
|
|
|
||
|
Franchise |
1,718 |
|
|
1,768 |
|
|
Company restaurants |
69 |
|
|
69 |
|
|
Total Applebee's restaurants, beginning of period |
1,787 |
|
|
1,837 |
|
|
|
|
|
|
||
|
Total franchise restaurants opened |
— |
|
— |
||
|
Franchise restaurants permanently closed: |
|
|
|
||
|
Domestic |
(8 |
) |
|
(4 |
) |
|
International |
(4 |
) |
|
(3 |
) |
|
Total franchise restaurants permanently closed |
(12 |
) |
|
(7 |
) |
|
Net franchise restaurant reduction |
(12 |
) |
|
(7 |
) |
|
Summary - end of period: |
|
|
|
||
|
Franchise |
1,706 |
|
|
1,761 |
|
|
Company |
69 |
|
|
69 |
|
|
Total Applebee's restaurants, end of period |
1,775 |
|
|
1,830 |
|
|
Domestic |
1,657 |
|
|
1,689 |
|
|
International |
118 |
|
|
141 |
|
|
IHOP Restaurant Development Activity |
|
|
|||
|
Summary - beginning of period: |
|
|
|||
|
Franchise |
1,680 |
|
1,669 |
|
|
|
Area license |
161 |
|
162 |
|
|
|
Total IHOP restaurants, beginning of period |
1,841 |
|
1,831 |
|
|
|
Franchise/area license restaurants opened: |
|
|
|||
|
Domestic franchise |
6 |
|
6 |
|
|
|
Domestic area license |
1 |
|
— |
||
|
International franchise |
2 |
|
— |
||
|
Total franchise/area license restaurants opened |
9 |
|
6 |
|
|
|
Franchise/area license restaurants permanently closed: |
|
|
|||
|
Domestic franchise |
(6 |
) |
(11 |
) |
|
|
Domestic area license |
(2 |
) |
(3 |
) |
|
|
International franchise |
(2 |
) |
(1 |
) |
|
|
Total franchise/area license restaurants permanently closed |
(10 |
) |
(15 |
) |
|
|
Net franchise/area license restaurant reduction |
(1 |
) |
(9 |
) |
|
|
Summary - end of period |
|
|
|||
|
Franchise |
1,680 |
|
1,663 |
|
|
|
Area license |
160 |
|
159 |
|
|
|
Total IHOP restaurants, end of period |
1,840 |
|
1,822 |
|
|
|
Domestic |
1,709 |
|
1,697 |
|
|
|
International |
131 |
|
125 |
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20200429005247/en/
Investor Contact
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818-637-3632
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818-637-4726
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