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8-K
false 0000049754 0000049754 2021-11-04 2021-11-04

 

 

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): November 4, 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 November 4, 2021, Dine Brands Global, Inc., a Delaware corporation (the “Corporation”), issued a press release announcing its third 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 November 4, 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: November 4, 2021   DINE BRANDS GLOBAL, INC.
  By:  

/s/ Vance Y. Chang

    Vance Y. Chang
    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 Third Quarter 2021 Results

Third Quarter 2021 Domestic Average Weekly Unit Sales

for Both Brands Exceed Pre-Pandemic Levels

Both Brands Outperformed Their Respective Categories

for the Second Consecutive Quarter, According to Black Box IntelligenceTM

Company Declared Dividend for the Fourth Quarter 2021

and Announced Intent to Resume Share Repurchases

GLENDALE, Calif., November 4, 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 third quarter of 2021.

“This was another strong quarter for Dine Brands. We recorded a second consecutive period of both IHOP and Applebee’s beating their competitive sets, average weekly sales for both brands exceeded 2019 pre-pandemic levels, and we delivered a 48% increase in quarter-over-quarter EBITDA. The strength of our two world-class brands, combined with the benefits of our asset-lite business model, is fueling the acceleration in system-wide sales growth across each of our brands and driving long-term sustainable growth in the business,” said John Peyton, chief executive officer of Dine Brands Global, Inc.

Mr. Peyton added, “Our asset-light structure allows us to keep our operations lean and our movements agile; it reduces complexity, requires less capital and is a significant generator of cash. Our highly franchised model allows us to invest in what we do best—menu, marketing, and technology innovation.”

Vance Chang, chief financial officer, added, “The sequential improvement in our business continued in the third quarter and helped us maintain a strong cash position and financial flexibility. While we are pleased with our progress to date, we remain focused on accelerating growth and making disciplined investments in our brands to support sustainable growth. We are confident that we have the right strategy in place to create long-term shareholder value.”

 

Page 1 of 16


Domestic System-Wide Comparable Same-Restaurant Sales Relative to the Third Quarter of 2020

Domestic Same-Restaurant Sales (Fiscal Month)

 

     July   August   September   Q3 2021

Applebee’s

   35.5%   30.3%   19.9%   27.7%

IHOP

   59.4%   40.7%   25.9%   40.1%

 

   

Applebee’s year-over-year comparable same-restaurant sales increased 27.7% for the third quarter of 2021.

 

   

IHOP’s comparable same-restaurant sales increased 40.1% for the third quarter of 2021.

 

   

Both brands outperformed their respective categories in the third quarter of 2021 relative to the third quarter of 2020, according to Black Box IntelligenceTM.

Domestic System-Wide Comparable Same-Restaurant Sales Relative to the Third Quarter of 2019

Domestic Same-Restaurant Sales (Fiscal Month)

 

     July   August   September   Q3 2021

Applebee’s

   12.2%   12.4%   12.9%   12.5%

IHOP

   2.5%   (1.1%)   (2.3%)   (0.4%)

 

   

Applebee’s year-over-year comparable same-restaurant sales increased 12.5% for the third quarter of 2021 compared to an increase of 10.5% for the second quarter of 2021.

 

   

IHOP’s comparable same-restaurant sales decreased 0.4% for the third quarter of 2021 compared to a decrease of 3.4% for the second quarter of 2021.

 

   

Both brands outperformed their respective categories in the third quarter of 2021 relative to the third quarter of 2019, according to Black Box IntelligenceTM.

Historical Domestic System-Wide Comparable Same-Restaurant Sales Relative to the Prior Year

 

LOGO

 

Page 2 of 16


LOGO

Domestic Average Weekly Sales Comparison Relative to the Third Quarter of 2019

Average Weekly Domestic Unit Sales (in thousands)

Average Weekly Domestic Unit Sales (in thousands)

 

     Q3 2021    Q3 2019    % of Pre-Pandemic Sales Recovered

Applebee’s

   $51.4    $45.0    114.2%

IHOP

   $36.2    $35.7    101.4%

Off-Premise Sales Growth Comparison Relative to the Third Quarter of 2020

 

   

Applebee’s off-premise comparable same-restaurant sales for the third quarter of 2021 increased by 3.3%.

 

   

Applebee’s off-premise sales accounted for 27.5% of sales mix for the third quarter of 2021.

 

   

IHOP’s off-premise comparable same-restaurant sales for the third quarter of 2021 decreased by 3.2%.

 

   

IHOP’s off-premise sales accounted for 23.3% of sales mix for the third quarter of 2021.

Third Quarter of 2021 Summary

 

   

GAAP earnings per diluted share of $1.33 for the third quarter of 2021 compared to earnings per diluted share of $0.60 for the third quarter of 2020. This variance was primarily due to an increase in gross profit, partially offset by higher income tax expense and an increase in general and administrative expenses.

 

   

Adjusted earnings per diluted share of $1.55 for the third quarter of 2021 compared to adjusted earnings per diluted share of $0.80 for the third quarter of 2020. The increase was primarily due to higher gross profit, partially offset by higher general and administrative expenses. (See “Non-GAAP Financial Measures” and reconciliation of GAAP earnings per diluted share to adjusted earnings per diluted share.)

 

Page 3 of 16


   

General and administrative expenses for the third quarter of 2021 were $43.7 million compared to $36.9 million for the third quarter of 2020. The variance was mainly due to higher incentive compensation accrual.

 

   

Consolidated adjusted EBITDA for the third quarter of 2021 was $63.3 million compared to $42.7 million for the third quarter of 2020. (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 2021 resulted in the opening of 11 new restaurants on a gross basis.

First Nine Months of 2021 Summary

 

   

GAAP earnings per diluted share of $4.52 for the first nine months of 2021 compared to a net loss per diluted share of $6.34 for the first nine months of 2020. This variance was primarily due to closure and impairment charges incurred in the first nine months of 2020 totaling $124.5 million primarily related to the non-cash write-downs of Applebee’s goodwill and other intangible assets because of the impact of COVID-19 on the Company’s operations and higher gross profit for the first nine months of 2021. There were no similar impairments in the first nine months of 2021.

 

   

Adjusted earnings per diluted share of $5.22 for the first nine months of 2021 compared to adjusted earnings per diluted share of $1.40 for the first nine months of 2020. The increase was primarily due to higher gross profit, partially offset by an increase in general and administrative expenses. (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 nine months of 2021 were $122.9 million compared to $105.4 million for the first nine months of 2020. The variance was mainly due to higher incentive compensation accrual.

 

   

Consolidated adjusted EBITDA for the first nine months of 2021 was $193.2 million. This compares to $116.5 million for the first nine months of 2020. (See “Non-GAAP Financial Measures” and reconciliation of GAAP net income to consolidated adjusted EBITDA.)

 

   

The Company generated adjusted free cash flow of $146.1 million for the first nine months of 2021. This compares to adjusted free cash flow of $35.6 million for the first nine months of 2020. (See “Non-GAAP Financial Measures” and reconciliation of the Company’s cash provided by operating activities to adjusted free cash flow.)

 

   

Cash flows from operating activities for the first nine months of 2021 were $145.6 million. This compares to cash flows from operating activities of $36.7 million for the first nine months of 2020. The improvement in both adjusted free cash flow and cash flows from operating activities was mainly due to a favorable change in working capital and an improvement in gross profit, partially offset by an increase in general and administrative expenses and the recognition of excess tax benefits on stock-based compensation.

 

   

Development activity by Applebee’s and IHOP franchisees for the first nine months of 2021 resulted in the opening of 31 new restaurants on a gross basis.

Cash Position    

As of September 30, 2021, the Company had $385.2 million of total cash, cash equivalents and restricted cash, of which $304.2 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.

 

Page 4 of 16


As of September 30, 2021, the Company’s leverage ratio was 4.36x compared to approximately 4.94x as of June 30, 2021. As a result, quarterly principal payments on the Company’s fixed rate senior secured notes are no longer required.

As of September 30, 2021, the Company’s debt service coverage ratio was approximately 4.8x compared to approximately 4.6x as of June 30, 2021.

As of September 30, 2021, there were no outstanding borrowings under the revolving credit facility. As of September 30, 2021, $3.3 million was pledged against the revolving credit facility for outstanding letters of credit, leaving $221.7 million available.

GAAP Effective Tax Rate

The Company’s effective tax rate for the third quarter of 2021 was a 24.9% tax expense compared to a 9.5% tax benefit for the third quarter of 2020. The Company’s effective tax rate for the third quarter of 2021 was significantly different than the rate for the same quarter of last year primarily due to the one-time recognition of income tax benefits from the release of unrecognized tax benefits in the third quarter of 2020.

Capital Return to Shareholders

On October 29, 2021, the Company announced that its Board of Directors declared and approved a cash dividend of $0.40 per share of common stock for the fourth quarter of 2021. The dividend will be payable on January 7, 2022 to the Company’s stockholders of record at the close of business on December 20, 2021. The Company also announced it intends to resume opportunistic repurchases of its common stock. As of September 30, 2021, there was $70.2 million remaining on the Company’s current share repurchase authorization.

Financial Performance Guidance for 2021

The Company’s guidance assumes there are no significant disruptions to its business due to COVID-19 during the fourth quarter of fiscal 2021. The projections are as of this date. The Company assumes no obligation to update or supplement this information.

 

   

The Company reiterates expectations for general and administrative expenses for 2021 to range between approximately $168 million and $178 million. The Company expects general and administrative expenses for 2021 to be near the high end of the range.

 

   

The Company reiterates expectations for capital expenditures for 2021 to be approximately $19 million, inclusive of approximately $7 million related to the company restaurants segment.

 

   

Consolidated adjusted EBITDA is expected to range between approximately $245 million and $250 million.

Third Quarter of 2021 Earnings Conference Call Details

Dine Brands will host a conference call to discuss its results on November 4, 2021 at 9:00 a.m. Eastern time. To participate on the call, please dial (833) 528-0602 and enter the conference identification number 1750945. International callers, please dial (830) 221-9708 and enter the conference identification number 1750945.

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. Eastern time on

 

Page 5 of 16


November 4, 2021 through 11:00 p.m. Eastern time on November 11, 2021 by dialing (855) 859-2056 and entering the conference identification number 1750945. International callers, please dial (404) 537-3406 and enter the conference identification number 1750945. 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 3,440 restaurants combined in 16 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.

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 gain or loss related to debt extinguishment, any intangible asset

 

Page 6 of 16


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 7 of 16


Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(In thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2021     2020     2021     2020  

Revenues:

        

Franchise revenues:

        

Royalties, franchise fees and other

   $ 90,417   $ 69,820   $ 265,138   $ 191,915

Advertising revenues

     70,709     51,932     203,918     142,750
  

 

 

   

 

 

   

 

 

   

 

 

 

Total franchise revenues

     161,126     121,752     469,056     334,665

Company restaurant sales

     35,275     27,353     109,418     75,427

Rental revenues

     31,273     26,194     84,797     78,910

Financing revenues

     1,045     1,344     3,266     4,237
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     228,719     176,643     666,537     493,239
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues:

        

Franchise expenses:

        

Advertising expenses

     70,709     51,932     203,918     142,750

Bad debt (credit) expense

     (1,962     2,845     (4,246     8,416

Other franchise expenses

     6,922     5,858     20,197     15,999
  

 

 

   

 

 

   

 

 

   

 

 

 

Total franchise expenses

     75,669     60,635     219,869     167,165

Company restaurant expenses

     33,867     28,303     101,510     79,774

Rental expenses:

        

Interest expense from finance leases

     822     1,106     2,677     3,453

Other rental expenses

     23,645     19,692     63,359     61,121
  

 

 

   

 

 

   

 

 

   

 

 

 

Total rental expenses

     24,467     20,798     66,036     64,574

Financing expenses

     113     123     356     393
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     134,116     109,859     387,771     311,906
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     94,603     66,784     278,766     181,333

General and administrative expenses

     43,704     36,873     122,891     105,351

Interest expense, net

     15,721     16,844     47,956     49,143

Impairment and closure charges

     443     168     5,024     124,521

Amortization of intangible assets

     2,664     2,659     8,015     8,240

Loss on disposition of assets

     1,299     1,087     1,436     2,630
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     30,772     9,153     93,444     (108,552

Income tax (provision) benefit

     (7,661     865     (15,368     6,119
  

 

 

   

 

 

   

 

 

   

 

 

 
Net income (loss)    $ 23,111   $ 10,018   $ 78,076   $ (102,433
  

 

 

   

 

 

   

 

 

   

 

 

 
Net income (loss) available to common stockholders:         
Net income (loss)    $ 23,111   $ 10,018   $ 78,076   $ (102,433

Less: Net income allocated to unvested participating restricted stock

     (502     (329     (1,920     (420
  

 

 

   

 

 

   

 

 

   

 

 

 
Net income (loss) available to common stockholders    $ 22,609   $ 9,689   $ 76,156   $ (102,853
  

 

 

   

 

 

   

 

 

   

 

 

 
Net income (loss) available to common stockholders per share:         

Basic

   $ 1.34   $ 0.60   $ 4.55   $ (6.34
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 1.33   $ 0.60   $ 4.52   $ (6.34
  

 

 

   

 

 

   

 

 

   

 

 

 
Weighted average shares outstanding:         

Basic

     16,911     16,221     16,752     16,229
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     16,971     16,283     16,858     16,229
  

 

 

   

 

 

   

 

 

   

 

 

 
Dividends declared per common share    $   $   $   $ 0.76
  

 

 

   

 

 

   

 

 

   

 

 

 
Dividends paid per common share    $   $   $   $ 1.45
  

 

 

   

 

 

   

 

 

   

 

 

 

 

Page 8 of 16


Dine Brands Global, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

 

       September 30, 2021         December 31, 2020    
     (Unaudited)        
Assets     

Current assets:

    

Cash and cash equivalents

   $ 304,159   $ 383,369

Receivables, net of allowance of $5,852 (2021) and $15,057 (2020)

     92,135     121,897

Restricted cash

     64,685     39,884

Prepaid gift card costs

     21,890     29,080

Prepaid income taxes

     2,025     6,178

Other current assets

     8,744     6,098
  

 

 

   

 

 

 

Total current assets

     493,638     586,506

Other intangible assets, net

     541,999     549,671

Operating lease right-of-use assets

     334,624     346,086

Goodwill

     251,628     251,628

Property and equipment, net

     175,318     187,977

Long-term receivables, net of allowance of $7,344 (2021) and $7,999 (2020)

     46,622     54,512

Deferred rent receivable

     51,820     56,449

Non-current restricted cash

     16,400     32,800

Other non-current assets, net

     10,450     9,316
  

 

 

   

 

 

 

Total assets

   $ 1,922,499   $ 2,074,945
  

 

 

   

 

 

 
Liabilities and Stockholders’ Deficit     

Current liabilities:

    

Current maturities of long-term debt

   $   $ 13,000

Accounts payable

     42,586     37,424

Gift card liability

     115,878     144,159

Current maturities of operating lease obligations

     71,219     69,672

Current maturities of finance lease and financing obligations

     10,608     11,293

Accrued employee compensation and benefits

     30,752     21,237

Accrued advertising

     53,873     21,641

Deferred franchise revenue, short-term

     7,388     7,682

Other accrued expenses

     12,678     22,460
  

 

 

   

 

 

 

Total current liabilities

     344,982     348,568

Long-term debt, net, less current maturities

     1,279,071     1,491,996

Operating lease obligations, less current maturities

     323,855     345,163

Finance lease obligations, less current maturities

     61,499     69,012

Financing obligations, less current maturities

     32,183     32,797

Deferred income taxes, net

     69,008     78,293

Deferred franchise revenue, long-term

     46,723     52,237

Other non-current liabilities

     19,495     11,530
  

 

 

   

 

 

 

Total liabilities

     2,176,816     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; September 30, 2021 - 25,003,116 issued, 17,219,847 outstanding; December 31, 2020 - 24,882,122 issued, 16,452,174 outstanding

     250     249

Additional paid-in-capital

     253,751     257,625

Retained earnings (accumulated deficit)

     22,523     (55,553)  

Accumulated other comprehensive loss

     (59     (55)  

Treasury stock, at cost; shares: September 30, 2021 - 7,783,269; December 31, 2020 - 8,429,948

     (530,782     (556,917)  
  

 

 

   

 

 

 

Total stockholders’ deficit

     (254,317     (354,651)  
  

 

 

   

 

 

 

Total liabilities and stockholders’ deficit

   $ 1,922,499   $ 2,074,945
  

 

 

   

 

 

 

 

Page 9 of 16


Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

     Nine Months Ended  
     September 30,  
     2021     2020  

Cash flows from operating activities:

    

Net income (loss)

   $ 78,076   $ (102,433

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

    

Non-cash impairment and closure charges

     4,949     124,469

Depreciation and amortization

     29,995     32,053

Non-cash stock-based compensation expense

     8,572     9,193

Non-cash interest expense

     2,146     1,990

Deferred income taxes

     (9,156     24,172

Deferred revenue

     (5,808     (5,067

Loss on disposition of assets

     1,436     2,630

Other

     (8,418     1,173

Changes in operating assets and liabilities:

    

Accounts receivable, net

     8,398     (27,849

Current income tax receivables and payables

     4,544     (41,426

Gift card receivables and payables

     (9,215     (1,980

Other current assets

     (2,645     (2,034

Accounts payable

     9,678     6,777

Accrued employee compensation and benefits

     9,569     (6,406

Accrued advertising expenses

     32,232     19,579

Other current liabilities

     (8,791     1,887
  

 

 

   

 

 

 

Cash flows provided by operating activities

     145,562     36,728
  

 

 

   

 

 

 

Cash flows from investing activities:

    

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

     14,795     15,731

Net additions to property and equipment

     (7,923     (9,088

Proceeds from sale of property and equipment

     946     517

Additions to long-term receivables

           (1,475

Other

     (357     (358
  

 

 

   

 

 

 

Cash flows provided by investing activities

     7,461     5,327
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Repayment of long-term debt

     (9,750      

Borrowing from revolving credit facility

           220,000

Repayment of revolving credit facility

     (220,000      

Dividends paid on common stock

           (23,934

Repurchase of common stock

           (29,853

Principal payments on finance lease obligations

     (7,772     (9,034

Proceeds from stock options exercised

     25,016     20,523

Tax payments for restricted stock upon vesting

     (1,543     (2,438

Tax payments for share settlement of restricted stock units

     (9,783     (205
  

 

 

   

 

 

 

Cash flows (used in) provided by financing activities

     (223,832     175,059
  

 

 

   

 

 

 

Net change in cash, cash equivalents and restricted cash

     (70,809     217,114

Cash, cash equivalents and restricted cash at beginning of period

     456,053     172,475
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash at end of period

   $ 385,244   $ 389,589
  

 

 

   

 

 

 

 

Page 10 of 16


Dine Brands Global, Inc. and Subsidiaries

Non-GAAP Financial Measures

(In thousands, except per share amounts)

(Unaudited)

Reconciliation of net income (loss) available to common stockholders to net income (loss) 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     Nine Months Ended  
     September 30,     September 30,  
     2021     2020     2021     2020  

Net income (loss) available to common stockholders, as reported

   $ 22,609   $ 9,689   $ 76,156   $ (102,853

Closure and impairment charges

     443     168     5,024     124,521

Amortization of intangible assets

     2,664     2,659     8,015     8,240

Non-cash interest expense

     719     672     2,146     1,990

Loss on disposition of assets

     1,299     1,087     1,436     2,630

Net income tax provision for above adjustments

     (1,384     (1,146     (4,488     (11,287

Net income allocated to unvested participating restricted stock

     (81     (112     (298     (367
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) available to common stockholders, as adjusted

   $ 26,269   $ 13,017   $ 87,991   $ 22,874
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted net income (loss) available to common stockholders per share:

        

Net income (loss) available to common stockholders per share, as reported

   $ 1.33   $ 0.60   $ 4.52   $ (6.34

Closure and impairment charges

     0.02     0.01     0.22     7.15

Amortization of intangible assets

     0.11     0.12     0.35     0.38

Non-cash interest expense

     0.03     0.03     0.09     0.09

Loss on disposition of assets

     0.06     0.05     0.06     0.12

Net income allocated to unvested participating restricted stock

     (0.00     (0.01     (0.02     (0.02

Rounding

                       0.02
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted net income available to common stockholders per share, as adjusted

   $ 1.55   $ 0.80   $ 5.22   $ 1.40
  

 

 

   

 

 

   

 

 

   

 

 

 

Numerator for basic EPS - net income (loss) available to common stockholders, as adjusted

   $ 26,269   $ 13,017   $ 87,991   $ 22,874

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

     2     1     15     2
  

 

 

   

 

 

   

 

 

   

 

 

 

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

   $     26,271   $     13,018   $     88,006   $ 22,876
  

 

 

   

 

 

   

 

 

   

 

 

 

Denominator for basic EPS - weighted-average shares

     16,911     16,221     16,752     16,229

Dilutive effect of stock options

     60     62     106     86
  

 

 

   

 

 

   

 

 

   

 

 

 

Denominator for diluted EPS - weighted-average shares

     16,971     16,283     16,858     16,315
  

 

 

   

 

 

   

 

 

   

 

 

 

 

Page 11 of 16


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.

 

     Nine Months Ended
September 30,
 
     2021     2020  
     (In millions)  

Cash flows provided by operating activities

   $ 145.6   $ 36.7

Receipts from notes and equipment contracts receivable

     8.4     8.0

Net additions to property and equipment

     (7.9     (9.1
  

 

 

   

 

 

 

Adjusted free cash flow

     146.1     35.6

Dividends paid on common stock

           (23.9

Repurchase of common stock

           (29.9
  

 

 

   

 

 

 
   $ 146.1   $ (18.2
  

 

 

   

 

 

 

 

Page 12 of 16


Dine Brands Global, Inc. and Subsidiaries

Non-GAAP Financial Measures

(in thousands)

(Unaudited)

Reconciliation of the Company’s net income (loss) to “adjusted EBITDA.” The Company defines adjusted EBITDA as net income or loss, 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

 

September 30,

    Nine Months Ended

 

September 30,

 
     2021      2020     2021      2020  

Net income (loss), as reported

   $ 23,111    $ 10,018   $ 78,076    $ (102,433

Closure and impairment charges

     443      168     5,024      124,521

Interest charges on finance leases

     1,304      1,605     4,151      4,974

All other interest charges

     16,419      17,437     50,109      51,336

Income tax provision (benefit)

     7,661      (865     15,368      (6,119

Depreciation and amortization

     10,010      10,685     29,969      32,030

Non-cash stock-based compensation

     2,961      2,524     8,574      9,194

Loss on disposition of assets

     1,299      1,087     1,436      2,630

Other

     98      67     454      372
  

 

 

    

 

 

   

 

 

    

 

 

 

Adjusted EBITDA

   $     63,306    $     42,726   $     193,161    $     116,505
  

 

 

    

 

 

   

 

 

    

 

 

 

 

Page 13 of 16


Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

The following table sets forth, for the three and nine months ended September 30, 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

 

September 30,

    Nine Months Ended

 

September 30,

 
             2021                     2020                     2021                     2020          

Applebee’s

        

Effective Restaurants(a)

        

Franchise

     1,619     1,636       1,623     1,620  

Company

     69     69       69     68  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

     1,688     1,705       1,692     1,688  
  

 

 

   

 

 

   

 

 

   

 

 

 

System-wide(b)

        

Domestic sales percentage change(c)

     30.2     (16.7 )%      38.6     (27.6 )% 

Domestic same-restaurant sales percentage change(d)

     27.7     (13.3 )%      39.5     (24.1 )% 

Franchise(b)

        

Domestic sales percentage change(c)

     30.2     (16.9 )%      38.4     (27.7 )% 

Domestic same-restaurant sales percentage change(d)

     27.8     (13.4 )%      39.3     (24.1 )% 

Average weekly domestic unit sales (in thousands)

   $         51.4   $         39.2     $         50.6   $         36.6  

IHOP

        

Effective Restaurants(a)

        

Franchise

     1,573     1,530       1,568     1,517  

Area license

     156     157       156     153  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

     1,729     1,687       1,724     1,670  
  

 

 

   

 

 

   

 

 

   

 

 

 

System-wide(b)

        

Sales percentage change(c)

     46.1     (34.4 )%      41.6     (37.6 )% 

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

     40.1     (30.2 )%      40.5     (33.8 )% 

Franchise(b)

        

Sales percentage change(c)

     45.7     (34.3 )%      40.9     (37.6 )% 

Domestic same-restaurant sales percentage change(d)

     39.4     (29.9 )%      39.4     (33.6 )% 

Average weekly unit sales (in thousands)

   $ 36.2   $ 25.6     $ 34.0   $ 24.9  

Area License (b)

        

Sales percentage change(c)

     50.9     (35.0 )%      48.1     (37.1 )% 

 

Page 14 of 16


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, Applebee’s company-operated restaurants, IHOP franchise restaurants and IHOP area license restaurants for the three and nine months ended September 30, 2021 and 2020 were as follows:

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
             2021                      2020                      2021                      2020          
     (In millions)  

Reported sales

           

  Applebee’s domestic franchise restaurant sales

   $ 1,013.3    $ 778.2    $ 3,000.8    $ 2,168.4

  Applebee’s company-operated restaurants

     35.2      27.4      109.4      75.4

  IHOP franchise restaurant sales

     740.4      508.3      2,079.2      1,475.2

  IHOP area license restaurant sales

     69.8      46.2      202.4      136.6
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $     1,858.7    $     1,360.1    $     5,391.8    $     3,855.6
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(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 during 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 during both fiscal periods being compared may be different from period to period.

 

Page 15 of 16


Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

 

     Three Months Ended

 

September 30,

    Nine Months Ended

 

September 30,

 
             2021                     2020                     2021                     2020          

Applebee’s Restaurant Development Activity

      

Summary - beginning of period:

        

Franchise

     1,627     1,680     1,640     1,718

Company

     69     69     69     69
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Applebee’s restaurants, beginning of period

     1,696     1,749     1,709     1,787
  

 

 

   

 

 

   

 

 

   

 

 

 
Franchise restaurants opened:         

Domestic

     2     1     4     1

International

           3     1     3
  

 

 

   

 

 

   

 

 

   

 

 

 

Total franchise restaurants opened

     2     4     5     4
  

 

 

   

 

 

   

 

 

   

 

 

 
Franchise restaurants permanently closed:         

Domestic

     (5     (20     (15     (52

International

     (4     (5     (10     (11
  

 

 

   

 

 

   

 

 

   

 

 

 

Total franchise restaurants permanently closed

     (9     (25     (25     (63
  

 

 

   

 

 

   

 

 

   

 

 

 

Net franchise restaurant reduction

     (7     (21     (20     (59
  

 

 

   

 

 

   

 

 

   

 

 

 

Summary - end of period:

        

Franchise

     1,620     1,659     1,620     1,659

Company

     69     69     69     69
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Applebee’s restaurants, end of period

             1,689             1,728             1,689             1,728
  

 

 

   

 

 

   

 

 

   

 

 

 

Domestic

     1,587     1,614     1,587     1,614

International

     102     114     102     114

IHOP Restaurant Development Activity

      

Summary - beginning of period:

        

Franchise

     1,588     1,666     1,611     1,680

Area license

     156     157     158     161

Company

     3           3      
  

 

 

   

 

 

   

 

 

   

 

 

 

Total IHOP restaurants, beginning of period

     1,747     1,823     1,772     1,841
  

 

 

   

 

 

   

 

 

   

 

 

 

Franchise/area license restaurants opened:

        

Domestic franchise

     7     1     22     8

Domestic area license

     1     2     2     3

International franchise

     1     3     2     5
  

 

 

   

 

 

   

 

 

   

 

 

 
Total franchise/area license restaurants opened      9     6     26     16
  

 

 

   

 

 

   

 

 

   

 

 

 

Franchise/area license restaurants permanently closed:

        

Domestic franchise

     (5     (16     (35     (35

Domestic area license

     (1           (3     (3

International franchise

           (6     (9     (10

International area license

                 (1     (2
  

 

 

   

 

 

   

 

 

   

 

 

 

Total franchise/area license restaurants permanently closed

     (6     (22     (48     (50
  

 

 

   

 

 

   

 

 

   

 

 

 

Net franchise/area license restaurant reduction

     3     (16     (22     (34

Franchise restaurants reacquired by the Company

                 (1      
  

 

 

   

 

 

   

 

 

   

 

 

 

Net franchise/area license restaurant decrease

     3     (16     (22     (34
  

 

 

   

 

 

   

 

 

   

 

 

 

Summary - end of period

        

Franchise

     1,591     1,648     1,591     1,648

Area license

     156     159     156     159

Company

     3           3      
  

 

 

   

 

 

   

 

 

   

 

 

 

Total IHOP restaurants, end of period

     1,750     1,807     1,750     1,807
  

 

 

   

 

 

   

 

 

   

 

 

 

Domestic

     1,656     1,683     1,656     1,683

International

     94     124     94     124

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

 

Page 16 of 16