Dine Brands Global, Inc. Reports Third Quarter 2023 Results
“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
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 inOctober 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 inOctober 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
-
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
Capital Returns to Equity Holders
During the quarter ended
On
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
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: 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
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
FBN-R
|
Consolidated Statements of Comprehensive Income (In thousands, except per share amounts) (Unaudited) |
||||||||||||||||
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Three Months Ended |
|
Nine Months Ended |
||||||||||||
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|
|
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||||||||||||
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|
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|
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 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
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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 |
|
|
|
Consolidated Balance Sheets (In thousands, except share and per share amounts) |
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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 |
|
|
|
|
|
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, |
|
|
— |
|
|
|
— |
|
|
Common stock, |
|
|
249 |
|
|
|
250 |
|
|
Additional paid-in-capital |
|
|
253,080 |
|
|
|
259,339 |
|
|
Retained earnings |
|
|
124,806 |
|
|
|
84,538 |
|
|
Accumulated other comprehensive loss |
|
|
(67 |
) |
|
|
(65 |
) |
|
|
|
|
(651,774 |
) |
|
|
(645,146 |
) |
|
Total stockholders’ deficit |
|
|
(273,706 |
) |
|
|
(301,084 |
) |
|
Total liabilities and stockholders’ deficit |
|
$ |
1,659,581 |
|
|
$ |
1,881,491 |
|
|
Consolidated Statements of Cash Flows (In thousands) (Unaudited) |
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|
|
|
Nine Months Ended |
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|
|
|
|
|||||||
|
|
|
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 |
|
|
| 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
|
|
Nine Months Ended
|
||||||||||||
|
|
|
|
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 |
|
||
| 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
|
||||||
|
|
|
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 |
) |
| 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 |
|
|
|
Three Months Ended |
Nine Months Ended |
|||||||||||||
|
|
|
|
|
|||||||||||||
|
|
|
|
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 |
|
|||
| Restaurant Data |
| (Unaudited) |
|
The following table sets forth, for the three and nine months ended |
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
Applebee's Restaurant Data |
(Unaudited) |
||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
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 |
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
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 |
|
|
(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
|
Nine Months Ended
|
|||||||||||||
|
|
|
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. |
|
Restaurant Data (Unaudited) |
|||||||||||
|
Restaurant Development Activity |
Three Months Ended |
Nine Months Ended |
|||||||||
|
|
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 |
|
|
|
Restaurant Data (Unaudited) |
|||||||||||
|
|
|
|
|
|
|||||||
|
Restaurant Development Activity (continued) |
Three Months Ended |
Nine Months Ended |
|||||||||
|
|
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
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
Vice President, Investor Relations
IR@dinebrands.com
Media Contact
Sr. Vice President,
Susan.Nelson@dinebrands.com
Source: