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8-K
false 0000049754 0000049754 2021-05-05 2021-05-05

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): May 5, 2021

 

 

Dine Brands Global, Inc.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware   001-15283   95-3038279
(State or other jurisdiction of
incorporation or organization)
  (Commission
File No.)
  (I.R.S. Employer
Identification No.)

 

450 North Brand Boulevard, Glendale, California   91203-2306
(Address of principal executive offices)   (Zip Code)

(818) 240-6055

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading
symbol(s)

 

Name of each exchange
on which registered

Common Stock, $.01 Par Value   DIN   New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 


Item 2.02 Results of Operations and Financial Condition

On May 5, 2021, Dine Brands Global, Inc., a Delaware corporation (the “Corporation”), issued a press release announcing its first quarter 2021 financial results. A copy of the press release is attached hereto as Exhibit 99.1, and is incorporated herein by reference.

The information contained in this Item 2.02, including the related information set forth in the press release attached hereto as Exhibit 99.1 and incorporated by reference herein, is being “furnished” and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise. The information in this Item 2.02 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or into any filing or other document pursuant to the Exchange Act, except as otherwise expressly stated in any such filing.

Item 7.01 Regulation FD

The press release referenced in Item 2.02 of this Current Report on Form 8-K also includes information concerning the Corporation’s 2021 financial outlook. A copy of the press release is attached hereto as Exhibit 99.1, and is incorporated herein by reference.

The information contained in this Item 7.01, including the related information set forth in the press release attached hereto as Exhibit 99.1 and incorporated by reference herein, is being “furnished” and shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act or otherwise. The information in this Item 7.01 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or into any filing or other document pursuant to the Exchange Act, except as otherwise expressly stated in any such filing.

Item 9.01. Financial Statements and Exhibits.

(d)    Exhibits.

 

Exhibit
Number

  

Description

99.1    Press Release issued by the Corporation on May 5, 2021.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document).


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Date: May 5, 2021     DINE BRANDS GLOBAL, INC.  
    By:  

/s/ Allison Hall

 
      Allison Hall  
      Interim Chief Financial Officer  
EX-99.1

Exhibit 99.1

 

LOGO

 

 

    News Release

Investor Contact

Ken Diptee

Executive Director, Investor Relations

Dine Brands Global, Inc.

818-637-3632

Ken.Diptee@dinebrands.com

Media Contact

Susan Nelson

Vice President, Global Communications

and Public Affairs

Dine Brands Global, Inc.

Susan.Nelson@dinebrands.com

Dine Brands Global, Inc. Reports First Quarter 2021 Results

Meaningful Improvement in Domestic System-Wide Comparable Same-Restaurant Sales

99% of Domestic Restaurants Open

Ten New Domestic Restaurants Opened by Franchisees

Robust Recovery Continued in the First Quarter

Cash Position Remains Strong

Repaid $220 Million Drawn Against Revolving Credit Facility

GLENDALE, Calif., May 5, 2021 – Dine Brands Global, Inc. (NYSE: DIN), the parent company of Applebee’s Neighborhood Grill + Bar® and IHOP® restaurants, today announced financial results for the first quarter of 2021.

“Dine Brands first-quarter 2021 results demonstrate positive momentum across our company. Thanks to the strength of our brands, and the resilience and collaboration of our franchisees and team members, we have a sharper focus on digital and marketing capabilities, operational basics and a steadfast dedication to the safety of our people, guests and the communities we serve,” said John Peyton, chief executive officer of Dine Brands Global, Inc.

Mr. Peyton continued, “The restaurant renaissance is here. As we transition to a post-pandemic environment, we see continued opportunity to invest in innovation and strategic platforms, building on the strong foundation we’ve established to drive market share gains and deliver profitable growth for years to come.”

 

Page 1 of 15


Allison Hall, interim chief financial officer and vice president, controller, added, “Dine Brands started the year in a position of strength. Our cash position remained strong, enabling us to repay the $220 million drawn against our revolving credit facility. Maintaining our financial flexibility will be a top priority as our business continues to improve.”

Domestic System-Wide Comparable Same-Restaurant Sales Performance Relative to Fiscal 2020

Domestic Same-Restaurant Sales (Fiscal Month)

 

     January   February   March   Q1 2021

Applebee’s

   (17.9%)   (16.9%)   103.3%   11.9%

IHOP

   (26.8%)   (27.5%)   81.2%   (0.9%)

Domestic Same-Restaurant Sales (Through Week Ending 5/2/21)

 

     April 2021 - Preliminary Sales

Applebee’s

   237.4%

IHOP

   297.4%

 

   

Applebee’s year-over-year comparable same-restaurant sales increased 11.9% for the first quarter of 2021. This compares to a decrease of 10.6% for the first quarter of 2020, representing a net increase of 22.5 percentage points.

 

   

IHOP’s comparable same-restaurant sales decreased 0.9% for the first quarter of 2021. This compares to a decrease of 14.7% for the first quarter of 2020, representing a net increase of 13.8 percentage points.

 

   

Comparable same-restaurant sales for the first quarter of 2021 at both Applebee’s and IHOP improved sequentially from the fourth quarter of 2020 partially due to the continued improvement in our business conditions as state and local level governments eased restrictions on dine-in operations in some states as well as a shift in consumer behavior.

Domestic System-Wide Comparable Same-Restaurant Sales Performance Relative to Fiscal 2019

Domestic Same-Restaurant Sales (Fiscal Month)

 

     January   February   March   Q1 2021

Applebee’s

   (15.1%)   (13.7%)   6.1%   (6.2%)

IHOP

   (27.1%)   (27.9%)   (12.0%)   (21.2%)

Domestic Same-Restaurant Sales (Through Week Ending 5/2/21)

 

     April 2021 - Preliminary Sales

Applebee’s

   11.4%

IHOP

   (4.7%)

Off-Premise and Dine-In Sales Growth Comparison

 

   

Applebee’s off-premise comparable same-restaurant sales for the first quarter of 2021 increased by 122.7%.

 

   

Applebee’s off-premise sales accounted for 36.7% of sales mix for the first quarter of 2021. This compares to 36.8% of sales mix for the fourth quarter of 2020.

 

Page 2 of 15


   

Applebee’s delivery sales accounted for 14.7% of sales mix and take-out sales accounted for 22.0% of sales mix for the first quarter of 2021. This compares to delivery sales mix of 14.0% and take-out sales mix of 22.8% for the fourth quarter of 2020.

 

   

IHOP’s off-premise comparable same-restaurant sales for the first quarter of 2021 increased by 123.7%.

 

   

IHOP’s off-premise sales accounted for 33.3% of sales mix for the first quarter of 2021, unchanged from the fourth quarter of 2020.

 

   

IHOP’s delivery sales accounted for 16.4% of sales mix and take-out sales accounted for 16.9% of sales mix for the first quarter of 2021. This compares to delivery sales mix of 15.6% and take-out sales mix of 17.7% for the fourth quarter of 2020.

First Quarter of 2021 Summary

 

   

GAAP earnings per diluted share of $1.51 for the first quarter of 2021 compared to earnings per diluted share of $1.31 for the first quarter of 2020. The increase was primarily due to lower income tax expense and an increase in gross profit, partially offset by higher general and administrative expenses and an increase in closure and impairment charges. The decline in income tax expense was mainly due to the recognition of excess tax benefits on stock-based compensation primarily associated with the departure of our previous chief executive officer. The improvement in gross profit was mainly due to higher revenue from Applebee’s company-operated restaurants because of a higher average check and increased traffic for the first quarter of 2021.

 

   

Adjusted earnings per diluted share of $1.75 for the first quarter of 2021 compared to adjusted earnings per diluted share of $1.45 for the first quarter of 2020. The increase was primarily due to lower taxes and higher gross profit as discussed above. (See “Non-GAAP Financial Measures” and reconciliation of GAAP earnings per diluted share to adjusted earnings per diluted share.)

 

   

General and administrative expenses for the first quarter of 2021 were $39.9 million compared to $37.6 million for the first quarter of 2020. The variance was mainly due to higher personnel costs related to equity-based and other incentive compensation. These costs were partially offset by lower travel expenses.

 

   

Consolidated adjusted EBITDA for the first quarter of 2021 was $58.1 million. This compares to $61.7 million for the first quarter of 2020. (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 2021 were $30.6 million. This compares to cash flows from operating activities of $29.6 million for the first quarter of 2020. The increase was mainly due to the recognition of excess tax benefits on stock-based compensation.

 

   

The Company generated strong adjusted free cash flow of $30.7 million for the first quarter of 2021. This compares to adjusted free cash flow of $27.5 million for the first quarter of 2020. The improvement is primarily due to the increase in cash flows from operating activities discussed above and lower capital expenditures compared to the first quarter of 2020. (See “Non-GAAP Financial Measures” and reconciliation of the Company’s cash provided by operating activities to adjusted free cash flow.)

 

   

Development activity by IHOP’s domestic franchisees resulted in the opening of eight new restaurants.

 

   

Development activity by Applebee’s domestic franchisees resulted in the opening of two new restaurants.

 

Page 3 of 15


Cash Position    

On March 5, 2021, the Company repaid the entire $220 million drawn from its revolving credit facility. As of March 31, 2021, $3.3 million was pledged against the revolving credit facility for outstanding letters of credit.

As of March 31, 2021, the Company had $272.4 million of total cash and cash equivalents, of which $179.6 million was unrestricted cash. Excluding the $220 million the Company drew from its revolving credit facility, the Company had total cash of $236.1 million as of December 31, 2020, of which $163.4 million was unrestricted cash. The Company believes that its asset-light business model and cash position will continue to provide strong liquidity as the recovery from the pandemic continues.

As of March 31, 2021, the Company’s leverage ratio was 7.02x.

GAAP Effective Tax Rate

Our effective tax rate for the first quarter of 2021 was -6.6% compared to 23.2% for the first quarter of 2020. The effective tax rate for the first quarter of 2021 was significantly different than the rate of the prior comparable period and the statutory federal tax rate of 21% primarily due to the recognition of excess tax benefits on stock-based compensation primarily associated with the departure of our previous chief executive officer.

Financial Performance Guidance for 2021

The Company believes that its consolidated financial results for 2021 could continue to be materially impacted by the global impact from COVID-19. Considering the uncertainty and timing of a reversal in consumer behavior due to the pandemic, the Company currently cannot provide a complete business outlook for fiscal 2021.

The projections are as of this date. The Company assumes no obligation to update or supplement this information.

 

   

Reiterates expectations for general and administrative expenses for 2021 to range between approximately $160 million and $170 million, including approximately $5 million of general and administrative expenses related to the Applebee’s company-owned restaurants. Expectations include non-cash stock-based compensation expense and depreciation totaling approximately $45 million, of which approximately $30 million is included in the general and administrative expense guidance cited above.

 

   

Revises expectations for capital expenditures, which are now projected to be approximately $19 million, inclusive of approximately $7 million related to the company restaurants segment. This compares to previous expectations of capital expenditures to be approximately $14 million, inclusive of approximately $5 million related to the company restaurants segment. This change is due to additional investments in the business.

Domestic System Reopening Update

As of March 31, 2021, out of 3,256 domestic restaurants, 3,224, or 99%, were open for either dine-in service or off-premise service comprised of take-out and delivery, and 32 were temporarily closed. This compares to as of December 31, 2020, when out 3,270 domestic restaurants, 3,211, or 98%, were open for either dine-in service or off-premise service comprised of take-out and delivery, and 59 were temporarily closed.

 

Page 4 of 15


Applebee’s Reopening Update

As of March 31, 2021, out of 1,596 domestic Applebee’s franchise and company-operated restaurants, 1,590, or approximately 100%, were open for either dine-in service or off-premise service comprised of take-out and delivery, and 6 were temporarily closed. This compares to as December 31, 2020, when out of 1,600 domestic Applebee’s franchise and company-operated restaurants, 1,591 were open for either dine-in service or off-premise service comprised of take-out and delivery, and 9 were temporarily closed.

IHOP Reopening Update

As of March 31, 2021, out of 1,660 domestic IHOP franchise and area license restaurants, 1,634, or 98%, were open for either dine-in service or off-premise service comprised of take-out and delivery, and 26 were temporarily closed. This compares to as of December 31, 2020, when out of 1,670 domestic IHOP franchise and area license restaurants, 1,620 were open for either dine-in service or off-premise service comprised of take-out and delivery, and 50 were temporarily closed.

First Quarter of 2021 Earnings Conference Call Details

Dine Brands will host a conference call to discuss its results on May 5, 2021 at 9:00 a.m. Pacific Time. To participate on the call, please dial (833) 528-0602 and enter the conference identification number 7382556. International callers, please dial (830) 221-9708 and enter the conference identification number 7382556.

A live webcast of the call will be available on 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 12:00 p.m. Pacific time on May 5, 2021 through 12:00 p.m. Pacific time on May 12, 2021 by dialing (855) 859-2056 and entering the conference identification number 7382556. International callers, please dial (404) 537-3406 and enter the conference identification number 7382556. 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 Glendale, California, Dine Brands Global, Inc. (NYSE: DIN), through its subsidiaries, franchises restaurants under both the Applebee’s Neighborhood Grill + Bar and IHOP brands. With approximately 3,500 restaurants combined in 17 countries and approximately 350 franchisees, Dine Brands is one of the largest full-service restaurant companies in the world. For more information on Dine Brands, visit the Company’s website located at www.dinebrands.com.

 

 

Page 5 of 15


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 Securities and Exchange Commission. The forward-looking statements contained in this press release are made as of the date hereof and the Corporation does not intend to, nor does it assume any obligation to, update or supplement any forward-looking statements after the date hereof to reflect actual results or future events or circumstances.

Non-GAAP Financial Measures

This press release includes references to the Company’s non-GAAP financial measure “adjusted net income available to common stockholders”, “adjusted earnings per diluted share (Adjusted EPS)”, “Adjusted EBITDA” and “Adjusted free cash flow.” Adjusted EPS is computed for a given period by deducting from net income or loss available to common stockholders for such period the effect of any closure and impairment charges, any intangible asset amortization, any non-cash interest expense, any gain or loss related to the disposition of assets, 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 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. 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.

 

Page 6 of 15


Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(In thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended  
     March 31,  
     2021     2020  

Revenues:

    

Franchise revenues:

    

Royalties, franchise fees and other

   $ 80,091   $ 83,314

Advertising revenues

     60,885     61,723
  

 

 

   

 

 

 

Total franchise revenues

     140,976     145,037

Company restaurant sales

     35,949     31,300

Rental revenues

     26,142     29,009

Financing revenues

     1,132     1,538
  

 

 

   

 

 

 

Total revenues

     204,199     206,884
  

 

 

   

 

 

 

Cost of revenues:

    

Franchise expenses:

    

Advertising expenses

     60,885     61,723

Bad debt (credit) expense

     (1,993     518

Other franchise expenses

     6,051     7,209
  

 

 

   

 

 

 

Total franchise expenses

     64,943     69,450

Company restaurant expenses

     32,884     30,332

Rental expenses:

    

Interest expense from finance leases

     962     1,210

Other rental expenses

     19,996     21,323
  

 

 

   

 

 

 

Total rental expenses

     20,958     22,533

Financing expenses

     128     142
  

 

 

   

 

 

 

Total cost of revenues

     118,913     122,457
  

 

 

   

 

 

 

Gross profit

     85,286     84,427

General and administrative expenses

     39,911     37,608

Interest expense, net

     16,496     15,172

Closure and impairment charges (credit)

     2,010     (12

Amortization of intangible assets

     2,688     2,826

Loss (gain) on disposition of assets

     167     (233
  

 

 

   

 

 

 

Income before income taxes

     24,014     29,066

Income tax benefit (provision)

     1,589     (6,738
  

 

 

   

 

 

 

Net income

   $ 25,603   $ 22,328
  

 

 

   

 

 

 

Net income available to common stockholders:

    

Net income

   $ 25,603   $ 22,328

Less: Net income allocated to unvested participating restricted stock

     (548     (748
  

 

 

   

 

 

 

Net income available to common stockholders

   $ 25,055   $ 21,580
  

 

 

   

 

 

 

Net income available to common stockholders per share:

    

Basic

   $ 1.52   $ 1.33
  

 

 

   

 

 

 

Diluted

   $ 1.51   $ 1.31
  

 

 

   

 

 

 

Weighted average shares outstanding:

    

Basic

     16,460     16,263
  

 

 

   

 

 

 

Diluted

     16,630     16,470
  

 

 

   

 

 

 

Dividends declared per common share

   $   $ 0.76
  

 

 

   

 

 

 

Dividends paid per common share

   $   $ 0.69
  

 

 

   

 

 

 

 

Page 7 of 15


Dine Brands Global, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

 

     March 31, 2021     December 31, 2020  
     (Unaudited)        
Assets     

Current assets:

    

Cash and cash equivalents

   $ 179,567   $ 383,369

Receivables, net of allowance of $11,854 (2021) and $15,057 (2020)

     107,387     121,897

Restricted cash

     60,063     39,884

Prepaid gift card costs

     22,581     29,080

Prepaid income taxes

     6,940     6,178

Other current assets

     9,171     6,098
  

 

 

   

 

 

 

Total current assets

     385,709     586,506

Other intangible assets, net

     547,098     549,671

Operating lease right-of-use assets

     338,572     346,086

Goodwill

     251,628     251,628

Property and equipment, net

     182,661     187,977

Long-term receivables, net of allowance of $6,455 (2021) and $7,999 (2020)

     51,605     54,512

Deferred rent receivable

     54,713     56,449

Non-current restricted cash

     32,800     32,800

Other non-current assets, net

     11,503     9,316
  

 

 

   

 

 

 

Total assets

   $ 1,856,289   $ 2,074,945
  

 

 

   

 

 

 
Liabilities and Stockholders’ Deficit     

Current liabilities:

    

Current maturities of long-term debt

   $ 13,000   $ 13,000

Accounts payable

     33,522     37,424

Gift card liability

     121,814     144,159

Current maturities of operating lease obligations

     70,270     69,672

Current maturities of finance lease and financing obligations

     11,052     11,293

Accrued employee compensation and benefits

     14,554     21,237

Accrued advertising

     44,477     21,641

Deferred franchise revenue, short-term

     8,990     7,682

Other accrued expenses

     17,417     22,460
  

 

 

   

 

 

 

Total current liabilities

     335,096     348,568

Long-term debt, net, less current maturities

     1,271,438     1,491,996

Operating lease obligations, less current maturities

     334,361     345,163

Finance lease obligations, less current maturities

     66,234     69,012

Financing obligations, less current maturities

     32,598     32,797

Deferred income taxes, net

     70,006     78,293

Deferred franchise revenue, long-term

     49,364     52,237

Other non-current liabilities

     14,594     11,530
  

 

 

   

 

 

 

Total liabilities

     2,173,691     2,429,596
  

 

 

   

 

 

 

Commitments and contingencies

    

Stockholders’ deficit:

    

Preferred stock, $1 par value, 10,000,000 shares authorized, no shares issued or outstanding

            

Common stock, $0.01 par value; shares: 40,000,000 authorized; March 31, 2021 - 25,033,181 issued, 17,142,367 outstanding; December 31, 2020 - 24,882,122 issued, 16,452,174 outstanding

     250     249

Additional paid-in-capital

     247,498     257,625

Accumulated deficit

     (29,950     (55,553

Accumulated other comprehensive loss

     (56     (55

Treasury stock, at cost; shares: March 31, 2021 - 7,890,814; December 31, 2020 - 8,429,948

     (535,144     (556,917
  

 

 

   

 

 

 

Total stockholders’ deficit

     (317,402     (354,651
  

 

 

   

 

 

 

Total liabilities and stockholders’ deficit

   $ 1,856,289   $ 2,074,945
  

 

 

   

 

 

 

 

Page 8 of 15


Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

     Three Months Ended  
     March 31,  
     2021     2020  

Cash flows from operating activities:

    

Net income

   $ 25,603   $ 22,328

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

    

Non-cash closure and impairment charges (credit)

     1,959     (12

Depreciation and amortization

     9,995     10,641

Non-cash stock-based compensation expense

     3,094     4,038

Non-cash interest expense

     712     655

Deferred income taxes

     (8,267     (10,491

Deferred revenue

     (1,565     (1,417

Loss (gain) on disposition of assets

     167     (227

Other

     (1,580     (1,293

Changes in operating assets and liabilities:

    

Accounts receivable, net

     (4,323     12,077

Current income tax receivables and payables

     (552     6,443

Gift card receivables and payables

     (3,246     11,693

Other current assets

     (3,072     (2,347

Accounts payable

     809     (12,748

Accrued employee compensation and benefits

     (6,968     (12,190

Accrued advertising expenses

     22,836     (4,719

Other current liabilities

     (5,037     7,214
  

 

 

   

 

 

 

Cash flows provided by operating activities

     30,565     29,645
  

 

 

   

 

 

 

Cash flows from investing activities:

    

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

     4,651     5,544

Net additions to property and equipment

     (2,357     (5,084

Proceeds from sale of property and equipment

     946     6

Additions to long-term receivables

           (1,511

Other

     (110     (195
  

 

 

   

 

 

 

Cash flows provided by (used in) investing activities

     3,130     (1,240
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Repayment of long-term debt

     (3,250      

Borrowing from revolving credit facility

           220,000

Repayment of revolving credit facility

     (220,000      

Dividends paid on common stock

           (11,451

Repurchase of common stock

           (29,853

Principal payments on finance lease obligations

     (2,621     (2,981

Proceeds from stock options exercised

     19,484     20,524

Tax payments for restricted stock upon vesting

     (1,220     (2,000

Tax payments for share settlement of restricted stock units

     (9,711      
  

 

 

   

 

 

 

Cash flows (used in) provided by financing activities

     (217,318     194,239
  

 

 

   

 

 

 

Net change in cash, cash equivalents and restricted cash

     (183,623     222,644

Cash, cash equivalents and restricted cash at beginning of period

     456,053     172,475
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash at end of period

   $ 272,430   $ 395,119
  

 

 

   

 

 

 

 

Page 9 of 15


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 expense; 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  
     March 31,  
     2021      2020  

Net income available to common stockholders, as reported

   $ 25,055    $ 21,580

Closure and impairment charges (credit)

     2,010      (12

Amortization of intangible assets

     2,688      2,826

Non-cash interest expense

     712      655

Loss (gain) on disposition of assets

     167      (233

Net income tax provision for above adjustments

     (1,506      (809

Net income allocated to unvested participating restricted stock

     (88      (83
  

 

 

    

 

 

 

Net income available to common stockholders, as adjusted

   $ 29,038    $ 23,924
  

 

 

    

 

 

 

Diluted net income available to common stockholders per share:

     

Net income available to common stockholders per share, as reported

   $ 1.51    $ 1.31

Closure and impairment charges (credit)

     0.09      (0.00

Amortization of intangible assets

     0.12      0.13

Non-cash interest expense

     0.03      0.03

Loss (gain) on disposition of assets

     0.01      (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

   $ 1.75    $ 1.45
  

 

 

    

 

 

 

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

   $ 29,038    $ 23,924

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

     7      5
  

 

 

    

 

 

 

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

   $ 29,045    $ 23,929
  

 

 

    

 

 

 

Denominator for basic EPS - weighted-average shares

     16,460      16,263

Dilutive effect of stock options

     170      207
  

 

 

    

 

 

 

Denominator for diluted EPS - weighted-average shares

     16,630      16,470
  

 

 

    

 

 

 

 

Page 10 of 15


Dine Brands Global, Inc. and Subsidiaries

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  
     March 31,  
     2021     2020  
     (In millions)  

Cash flows provided by operating activities

   $ 30.6   $ 29.6

Receipts from notes and equipment contracts receivable

     2.5     3.0

Net additions to property and equipment

     (2.4     (5.1
  

 

 

   

 

 

 

Adjusted free cash flow

     30.7     27.5

Dividends paid on common stock

           (11.5

Repurchase of common stock

           (29.9
  

 

 

   

 

 

 
   $ 30.7   $ (13.9
  

 

 

   

 

 

 

 

Page 11 of 15


Dine Brands Global, Inc. and Subsidiaries

Non-GAAP Financial Measures

(in thousands)

(Unaudited)

Reconciliation of the Company’s net income to “adjusted EBITDA.” The Company defines adjusted EBITDA as net income, adjusted for the effect of closure and impairment charges, interest charges, income tax provision or benefit, depreciation and amortization, non-cash stock-based compensation, 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  
     March 31,  
     2021      2020  

Net income, as reported

   $ 25,603    $ 22,328

Closure and impairment charges (credit)

     2,010      (12

Interest charges on finance leases

     1,464      1,723

All other interest charges

     17,244      16,242

Income tax (benefit) provision

     (1,589      6,738

Depreciation and amortization

     9,987      10,641

Non-cash stock-based compensation

     3,097      4,037

Loss (gain) on disposition of assets

     167      (233

Other

     134      219
  

 

 

    

 

 

 

Adjusted EBITDA

   $   58,117    $   61,683
  

 

 

    

 

 

 

 

Page 12 of 15


Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

The following table sets forth, for the three months ended March 31, 2021 and 2020, 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  
     March 31,  
     2021     2020  

Applebee’s

    

Effective Restaurants(a)

    

Franchise

     1,628     1,697  

Company

     69     69  
  

 

 

   

 

 

 

Total

     1,697     1,766  
  

 

 

   

 

 

 

System-wide(b)

    

Domestic sales percentage change(c)

     1.2     (12.1 )% 

Domestic same-restaurant sales percentage change(d)

     11.9     (10.6 )% 

Franchise(b)

    

Domestic sales percentage change(c)

     0.7     (12.1 )% 

Domestic same-restaurant sales percentage change(d)

     11.5     (10.6 )% 

Average weekly domestic unit sales (in thousands)

   $         46.8   $         44.6  

IHOP

    

Effective Restaurants(a)

    

Franchise

     1,563       1,660  

Area license

     157       161  
  

 

 

   

 

 

 

Total

     1,720       1,821  
  

 

 

   

 

 

 

System-wide(b)

    

Sales percentage change(c)

     (12.1 )%      (14.2 )% 

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

     (0.9 )%      (14.7 )% 

Franchise(b)

    

Sales percentage change(c)

     (12.9 )%      (14.3 )% 

Domestic same-restaurant sales percentage change(d)

     (1.9 )%      (14.7 )% 

Average weekly unit sales (in thousands)

   $ 29.4     $ 31.7  

Area License (b)

    

Sales percentage change(c)

     (3.7 )%      (13.8 )% 

 

Page 13 of 15


Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

 

(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 Effective Restaurants in the Applebee’s and IHOP systems, which includes 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 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. 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 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 March 31, 2021 and 2020 and sales by company-operated restaurants were as follows:

 

     Three Months Ended  
     March 31,  
     2021      2020  
     (In millions)  

Reported sales

     

Applebee’s domestic franchise restaurant sales

   $ 924.7    $ 918.2

Applebee’s company-operated restaurants

     35.9      31.3

IHOP franchise restaurant sales

     596.7      684.8

IHOP area license restaurant sales

     61.7      64.0
  

 

 

    

 

 

 

Total

   $     1,619.0    $     1,698.3
  

 

 

    

 

 

 

 

(c)

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

 

(d)

“Domestic same-restaurant sales percentage change” reflects the percentage change in sales, in any given fiscal period, compared to the same weeks in the prior 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.

 

Page 14 of 15


Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

 

     Three Months Ended  
     March 31,  
     2021     2020  

Applebee’s Restaurant Development Activity

    

Summary - beginning of period:

    

Franchise

     1,640     1,718

Company restaurants

     69     69
  

 

 

   

 

 

 

Total Applebee’s restaurants, beginning of period

     1,709     1,787
  

 

 

   

 

 

 

Franchise restaurants opened:

    

Domestic

     2      
  

 

 

   

 

 

 

Total franchise restaurants opened

     2      
  

 

 

   

 

 

 

Franchise restaurants permanently closed:

    

Domestic

     (4     (8

International

     (2     (4
  

 

 

   

 

 

 

Total franchise restaurants permanently closed

     (6     (12
  

 

 

   

 

 

 

Net franchise restaurant reduction

     (4     (12
  

 

 

   

 

 

 

Summary - end of period:

    

Franchise

     1,636     1,706

Company

     69     69
  

 

 

   

 

 

 

Total Applebee’s restaurants, end of period

     1,705     1,775
  

 

 

   

 

 

 

Domestic

     1,596     1,657

International

     109     118

IHOP Restaurant Development Activity

    

Summary - beginning of period:

    

Franchise

     1,611     1,680

Area license

     158     161

Company

     3      
  

 

 

   

 

 

 

Total IHOP restaurants, beginning of period

     1,772     1,841
  

 

 

   

 

 

 

Franchise/area license restaurants opened:

    

Domestic franchise

     8     6

Domestic area license

           1

International franchise

           2
  

 

 

   

 

 

 

Total franchise/area license restaurants opened

     8     9
  

 

 

   

 

 

 

Franchise/area license restaurants permanently closed:

    

Domestic franchise

     (16     (6

Domestic area license

     (2     (2

International franchise

     (9     (2
  

 

 

   

 

 

 

Total franchise/area license restaurants permanently closed

     (27     (10
  

 

 

   

 

 

 

Net franchise/area license restaurant (reduction) addition

     (19     (1

Franchise restaurants reacquired by the Company

     (1      
  

 

 

   

 

 

 

Net franchise/area license restaurant decrease

     (20     (1
  

 

 

   

 

 

 

Summary - end of period

    

Franchise

     1,593     1,680

Area license

     156     160

Company

     4      
  

 

 

   

 

 

 

Total IHOP restaurants, end of period

             1,753             1,840
  

 

 

   

 

 

 

Domestic

     1,660     1,709

International

     93     131

The restaurant counts and activity presented above do not include three domestic Applebee’s ghost kitchens (small kitchens with no store-front presence, used to fill off-premise orders) and two international IHOP ghost kitchens.

 

Page 15 of 15