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8-K
false 0000049754 0000049754 2022-08-09 2022-08-09

 

 

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): August 9, 2022

 

 

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 August 9, 2022, Dine Brands Global, Inc., a Delaware corporation (the “Corporation”), issued a press release announcing its second quarter 2022 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 2022 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 August 9, 2022.
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: August 9, 2022     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

Brett Levy

Vice President, Investor Relations

Dine Brands Global, Inc.

(818) 637-3632

Brett.Levy@dinebrands.com

Media Contact

Susan Nelson

Vice President, Global Communications

Dine Brands Global, Inc.

Susan.Nelson@dinebrands.com

Dine Brands Global, Inc. Reports Second Quarter 2022 Results

Applebee’s and IHOP Achieve Positive Comparable Sales; Average Weekly Sales Exceed Q2 2019

Company Reaffirms 2022 Financial Performance Guidance

Company Repurchased 912,992 Shares and Returned $61 Million to Shareholders

Applebee’s and IHOP Franchisees Opened 14 New Restaurants

GLENDALE, Calif., August 9, 2022 – Dine Brands Global, Inc. (NYSE: DIN), the parent company of Applebee’s Neighborhood Grill + Bar® and IHOP® restaurants, today announced financial results for the second quarter of fiscal 2022.

“Thanks to the hard work of our team members and franchisees, Dine delivered a solid performance in the second quarter. Sustained off-premise traffic and continued recovery of dine-in contributed to positive comparable restaurant sales, driving average weekly sales at both brands above pre-pandemic levels” said John Peyton, chief executive officer of Dine Brands Global, Inc. “While the backdrop we are all operating in remains challenging, I’m confident we are well positioned for the current environment and for the long-term. Applebee’s and IHOP are both value leaders in their categories with long track records of executing enhanced value and marketing propositions that meet guests where they are.”

Vance Chang, chief financial officer, added, “We remain cautiously optimistic about Dine’s near-term outlook and are reaffirming our 2022 guidance. Our strong balance sheet and asset-light model protect us in this volatile and inflationary environment, as we continue to return capital to shareholders. Our focus on delivering long term restaurant profitability continues, which we believe remains a key driver to our franchisee’s ongoing investments in growth.”

 

Page 1 of 15


Domestic Restaurant Sales for the Second Quarter of 2022

 

   

Applebee’s year-over-year comparable same-restaurant sales increased 1.8% for the second quarter of 2022. Off-premise sales accounted for 25.6% of sales mix, representing average weekly sales of approximately $13,900.

 

   

IHOP’s year-over-year comparable same-restaurant sales increased 3.6% for the second quarter of 2022. Off-premise sales accounted for 21.3% of sales mix, representing average weekly sales of approximately $8,300.

Second Quarter of 2022 Summary

 

   

Total revenues for the second quarter of 2022 were $237.8 million compared to $233.6 million for the second quarter of 2021. The increase was primarily due to positive comparable same restaurant sales growth at both brands.

 

   

Consolidated adjusted EBITDA for the second quarter of 2022 was $66.1 million compared to $71.7 million for the second quarter of 2021. The decrease was primarily due to G&A investments as well as the impact from inflation on our company restaurant operations. (See “Non-GAAP Financial Measures” and reconciliation of GAAP net income to consolidated adjusted EBITDA.)

 

   

General and administrative expenses for the second quarter of 2022 were $44.1 million compared to $39.3 million for the second quarter of 2021. The variance was primarily due to strategic growth investments as well as higher personnel-related costs and travel-related costs to support franchisees, associated with the return to normal operations.

 

   

GAAP earnings per diluted share of $1.45 for the second quarter of 2022 compared to earnings per diluted share of $1.69 for the second quarter of 2021. The variance was primarily due to an increase in general and administrative expenses and a decrease in gross profit, partially offset by a decrease in closure and impairment charges.

 

   

Adjusted earnings per diluted share of $1.65 for the second quarter of 2022 compared to adjusted earnings per diluted share of $1.94 for the second quarter of 2021. The variance was primarily due to an increase in general and administrative expenses and a decrease in gross profit, partially offset by lower income tax expense. (See “Non-GAAP Financial Measures” and reconciliation of GAAP earnings per diluted share to adjusted earnings per diluted share.)

 

   

Development activity by Applebee’s and IHOP franchisees for the second quarter of 2022 resulted in the opening of 14 new restaurants and the closure of 8 restaurants.

 

Page 2 of 15


First Six Months of 2022 Summary

 

   

Total revenues for the first six months of 2022 were $468.2 million compared to $437.8 million for the first six months of 2021. The increase was primarily due to strong comparable same restaurant sales growth at both brands.

 

   

Consolidated adjusted EBITDA for the first six months of 2022 was $131.3 million. This compares to $129.9 million for the first six months of 2021. The increase was primarily due to strong comparable same restaurant sales growth at both brands offset by strategic growth investments as well as higher expenses associated with return to normal operations. (See “Non-GAAP Financial Measures” and reconciliation of GAAP net income to consolidated adjusted EBITDA.)

 

   

General and administrative expenses for the first six months of 2022 were $85.6 million compared to $79.2 million for the first six months of 2021. The variance was primarily due to strategic growth investments as well as higher personnel-related costs and travel-related costs to support franchisees, associated with the return to normal operations.

 

   

GAAP earnings per diluted share of $2.90 for the first six months of 2022 compared to earnings per diluted share of $3.19 for the first six months of 2021. The variance was primarily due to higher income tax expense and an increase in general and administrative expenses, partially offset by an increase in gross profit and a decrease in closure and impairment charges.

 

   

Adjusted earnings per diluted share of $3.19 for the first six months of 2022 compared to adjusted earnings per diluted share of $3.67 for the first six months of 2021. The variance was primarily due to higher income tax expense and an increase in general and administrative expenses, partially offset by an increase in gross profit and lower interest expense. See “Non-GAAP Financial Measures” and reconciliation of GAAP earnings per diluted share to adjusted earnings per diluted share.)

 

   

Cash flows from operating activities for the first six months of 2022 were $29.9 million. This compares to cash provided from operating activities of $106.0 million for the first six months of 2021. The decline was primarily due to the change in working capital, reflecting the one-time collection of franchisee deferrals in the first six months of 2021, payments made in the first six months of 2022 related to higher incentive compensation earned in 2021 and the timing of marketing disbursements.

 

   

The Company had adjusted free cash flow of $23.1 million for the first six months of 2022. This compares to adjusted free cash flow of $107.3 million for the first six months of 2021. (See “Non-GAAP Financial Measures” and reconciliation of the Company’s cash provided by operating activities to adjusted free cash flow.)

 

   

Development activity by Applebee’s and IHOP franchisees for the first six months of 2022 resulted in the opening of 25 new restaurants and the closure of 19 restaurants.

Key Balance Sheet Metrics (as of June 30, 2022)

 

   

Total cash, cash equivalents and restricted cash of $329.7 million, of which $263.5 million was unrestricted cash.

 

Page 3 of 15


   

Leverage ratio of 4.27x compared to 4.05x as of March 31, 2022.

 

   

Debt service coverage ratio was approximately 4.3x compared to approximately 4.6x as of March 31, 2022.

 

   

Capacity under the revolving credit facility of $221.5 million available, with no outstanding borrowings and $3.5 million pledged.

GAAP Effective Tax Rate

The Company’s effective tax rate for the second quarter of 2022 was 26.3% compared to 24.0% for second quarter of 2021. The variance was primarily due to the decrease of unrecognized tax benefits resulting from the closing of a state audit in the second quarter of 2021.

Capital Return to Shareholders

The Company repurchased 912,992 shares of its common stock in the second quarter of 2022 for a total of approximately $61 million.

On May 12, 2022, the Company announced that its Board of Directors declared and approved a 11% increase in the quarterly cash dividend to $0.51 per share of common stock. The dividend was paid on July 8, 2022, to the Company’s stockholders of record at the close of business on June 20, 2022.

Financial Performance Guidance for 2022

The Company reiterates its fiscal 2022 guidance:

 

   

Domestic development activity by Applebee’s franchisees to result in between 5 and 15 net fewer restaurants.

 

   

Domestic development activity by IHOP franchisees and area licensees to result in net new openings between 50 and 65 restaurants.

 

   

Consolidated adjusted EBITDA to range between approximately $235 million and $250 million. This range is inclusive of adjusted EBITDA related to the company restaurants segment.

 

   

General and administrative expenses to range between approximately $188 million and $198 million, including non-cash stock-based compensation expense and depreciation of approximately $30 million. This range reflects incremental investments in technology and operational initiatives as well as unit development and is inclusive of general and administrative expenses related to the company restaurants segment.

 

   

Capital expenditures to range between $33 million and $38 million, reflecting incremental investments in the business to support sustainable growth.

 

Page 4 of 15


Second Quarter of 2022 Earnings Conference Call Details

Dine Brands will host a conference call to discuss its results on August 9, 2022 at 9:00 a.m. Eastern time. To access the call, please go to this link (https://register.vevent.com/register/BIc88b05e3032041849605213f69a1b860), and you will be provided with dial in details. A replay of the webcast will also be available for a limited time at https://investors.dinebrands.com/investor-overview

A live webcast of the call will be available on https://investors.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. 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 Applebee’s Neighborhood Grill + Bar® and IHOP® brands. With over 3,400 restaurants combined in 16 countries and 338 franchisees as of December 31, 2021, 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, including the impact of inflation; 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.

 

Page 5 of 15


Non-GAAP Financial Measures

This press release includes references to the Company’s non-GAAP financial measure “adjusted net income available to common stockholders”, “adjusted earnings per diluted share (Adjusted EPS)”, “Adjusted EBITDA” and “Adjusted free cash flow.” Adjusted EPS is computed for a given period by deducting from net income or loss available to common stockholders for such period the effect of any closure and impairment charges, any gain or loss related to debt extinguishment, any intangible asset amortization, any non-cash interest expense, any gain or loss related to the disposition of assets, and other items deemed not reflective of current operations. This is presented on an aggregate basis and a per share (diluted) basis. Adjusted EBITDA is computed for a given period by deducting from net income or loss for such period the effect of any closure and impairment charges, any interest charges, any income tax provision or benefit, any non-cash stock-based compensation, any depreciation and amortization, any gain or loss related to the disposition of assets and other items deemed not reflective of current operations. “Adjusted free cash flow” for a given period is defined as cash provided by operating activities, plus receipts from notes and equipment contracts receivable, less capital expenditures. Management may use certain of these non-GAAP financial measures along with the corresponding 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 amount)

(Unaudited)

 

     Three Months Ended     Six Months Ended  
     June 30,     June 30,  
     2022     2021     2022     2021  

Revenues:

        

Franchise revenues:

        

Royalties, franchise fees and other

   $ 94,148     $ 94,630     $ 184,497     $ 174,721  

Advertising revenues

     74,111       72,324       144,994       133,209  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total franchise revenues

     168,259       166,954       329,491       307,930  

Company restaurant sales

     39,511       38,194       78,927       74,143  

Rental revenues

     29,066       27,382       57,873       53,524  

Financing revenues

     958       1,089       1,926       2,221  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     237,794       233,619       468,217       437,818  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues:

        

Franchise expenses:

        

Advertising expenses

     74,111       72,324       144,994       133,209  

Bad debt credit

     (147     (291     (446     (2,284

Other franchise expenses

     8,305       7,224       15,753       13,275  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total franchise expenses

     82,269       79,257       160,301       144,200  

Company restaurant expenses

     37,881       34,759       75,289       67,643  

Rental expenses:

        

Interest expense from finance leases

     746       893       1,514       1,855  

Other rental expenses

     21,097       19,718       42,452       39,714  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total rental expenses

     21,843       20,611       43,966       41,569  

Financing expenses

     106       115       213       243  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     142,099       134,742       279,769       253,655  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     95,695       98,877       188,448       184,163  

General and administrative expenses

     44,063       39,276       85,611       79,187  

Interest expense, net

     15,359       15,739       30,892       32,235  

Closure and impairment charges

     1,311       2,571       1,457       4,581  

Amortization of intangible assets

     2,665       2,663       5,330       5,351  

(Gain) loss on disposition of assets

     (234     (30     (1,530     137  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     32,531       38,658       66,688       62,672  

Income tax provision

     (8,569     (9,296     (17,876     (7,707
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 23,962     $ 29,362     $ 48,812     $ 54,965  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income available to common stockholders:

        

Net income

   $ 23,962     $ 29,362     $ 48,812     $ 54,965  

Less: Net income allocated to unvested participating restricted stock

     (673     (657     (1,273     (1,431
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income available to common stockholders

   $ 23,289     $ 28,705     $ 47,539     $ 53,534  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income available to common stockholders per share:

        

Basic

   $ 1.45     $ 1.70     $ 2.90     $ 3.21  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 1.45     $ 1.69     $ 2.90     $ 3.19  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding:

        

Basic

     16,050       16,886       16,386       16,673  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     16,080       16,977       16,418       16,802  
  

 

 

   

 

 

   

 

 

   

 

 

 

Dividends declared per common share

   $ 0.51     $ —       $ 0.97     $ —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Dividends paid per common share

   $ —       $ —       $ 0.86     $ —    
  

 

 

   

 

 

   

 

 

   

 

 

 

 

Page 7 of 15


Dine Brands Global, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

 

     June 30, 2022     December 31, 2021  
Assets    (Unaudited)        

Current assets:

    

Cash and cash equivalents

   $ 263,536     $ 361,412  

Receivables, net of allowance of $4,500 (2022) and $4,959 (2021)

     91,888       119,968  

Restricted cash

     49,776       47,541  

Prepaid gift card costs

     25,028       28,175  

Prepaid income taxes

     6,890       10,529  

Other current assets

     12,710       6,728  
  

 

 

   

 

 

 

Total current assets

     449,828       574,353  

Other intangible assets, net

     534,247       539,390  

Operating lease right-of-use assets

     355,149       335,428  

Goodwill

     251,628       251,628  

Property and equipment, net

     175,265       179,411  

Deferred rent receivable

     46,293       50,257  

Long-term receivables, net of allowance of $5,713 (2022) and $6,897 (2021)

     43,076       42,493  

Non-current restricted cash

     16,400       16,400  

Other non-current assets, net

     9,880       10,006  
  

 

 

   

 

 

 

Total assets

   $ 1,881,766     $ 1,999,366  
  

 

 

   

 

 

 

Liabilities and Stockholders’ Deficit

    

Current liabilities:

    

Accounts payable

   $ 38,537     $ 55,956  

Gift card liability

     133,874       165,530  

Current maturities of operating lease obligations

     71,663       72,079  

Current maturities of finance lease and financing obligations

     10,662       10,693  

Accrued employee compensation and benefits

     21,202       40,785  

Accrued advertising

     33,574       33,752  

Deferred franchise revenue, short-term

     7,077       7,246  

Dividends payable

     8,239       6,919  

Other accrued expenses

     18,970       17,770  
  

 

 

   

 

 

 

Total current liabilities

     343,798       410,730  

Long-term debt, net, less current maturities

     1,280,747       1,279,623  

Operating lease obligations, less current maturities

     338,169       320,848  

Finance lease obligations, less current maturities

     63,562       59,625  

Financing obligations, less current maturities

     29,887       31,967  

Deferred income taxes, net

     75,064       76,228  

Deferred franchise revenue, long-term

     43,873       46,100  

Other non-current liabilities

     15,322       17,052  
  

 

 

   

 

 

 

Total liabilities

     2,190,422       2,242,173  
  

 

 

   

 

 

 

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; 2022 -24,991,163 issued, 16,746,028 outstanding; 2021 - 24,992,275 issued, 17,163,946 outstanding

     250       250  

Additional paid-in-capital

     253,213       256,189  

Retained earnings

     68,265       35,415  

Accumulated other comprehensive loss

     (63     (59

Treasury stock, at cost; shares: 2022 - 8,245,135; 2021 - 7,828,329

     (630,321     (534,602
  

 

 

   

 

 

 

Total stockholders’ deficit

     (308,656     (242,807
  

 

 

   

 

 

 

Total liabilities and stockholders’ deficit

   $ 1,881,766     $ 1,999,366  
  

 

 

   

 

 

 

 

Page 8 of 15


Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

     Six Months Ended
June 30,
 
     2022     2021  

Cash flows from operating activities:

    

Net income

   $ 48,812     $ 54,965  

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

    

Depreciation and amortization

     19,969       19,976  

Non-cash stock-based compensation expense

     8,327       5,612  

Non-cash closure and impairment charges

     1,348       4,514  

Non-cash interest expense

     1,436       1,427  

Deferred income taxes

     (773     (10,007

Deferred revenue

     (2,396     (4,678

(Gain) loss on disposition of assets

     (1,530     137  

Other

     (2,647     2,139  

Changes in operating assets and liabilities:

    

Accounts receivable, net

     (1,114     4,928  

Deferred rent receivable

     3,964       3,432  

Current income tax receivables and payables

     3,715       5,315  

Gift card receivables and payables

     (8,397     (3,837

Other current assets

     (5,983     (2,036

Accounts payable

     (9,656     6,195  

Operating lease assets and liabilities

     (5,724     (9,179

Accrued employee compensation and benefits

     (18,894     1,466  

Accrued advertising expenses

     (178     31,066  

Other current liabilities

     (400     (5,419
  

 

 

   

 

 

 

Cash flows provided by operating activities

     29,879       106,016  
  

 

 

   

 

 

 

Cash flows from investing activities:

    

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

     9,476       9,703  

Net additions to property and equipment

     (12,749     (4,064

Proceeds from sale of property and equipment

     3,658       946  

Additions to long-term receivables

     (1,069     —    

Other

     (93     (237
  

 

 

   

 

 

 

Cash flows (used in) provided by investing activities

     (777     6,348  
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Repayment of long-term debt

     —         (6,500

Repayment of revolving credit facility

     —         (220,000

Dividends paid on common stock

     (14,588     —    

Repurchase of common stock

     (102,394     —    

Principal payments on finance lease obligations

     (4,696     (5,244

Proceeds from stock options exercised

     241       22,511  

Repurchase of restricted stock for tax payments upon vesting

     (2,353     (1,403

Tax payments for share settlement of restricted stock units

     (953     (9,783
  

 

 

   

 

 

 

Cash flows used in financing activities

     (124,743     (220,419
  

 

 

   

 

 

 

Net change in cash, cash equivalents and restricted cash

     (95,641     (108,055

Cash, cash equivalents and restricted cash at beginning of period

     425,353       456,053  
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash at end of period

   $ 329,712     $ 347,998  
  

 

 

   

 

 

 

 

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
June 30,
     Six Months Ended
June 30,
 
     2022      2021      2022      2021  

Net income available to common stockholders

   $ 23,289      $ 28,705      $ 47,539      $ 53,534  

Closure and impairment charges

     1,311        2,571        1,457        4,581  

Amortization of intangible assets

     2,665        2,663        5,330        5,351  

Non-cash interest expense

     722        715        1,436        1,427  

(Gain) loss on disposition of assets

     (234      (30      (1,530      137  

Net income tax provision for above adjustments

     (1,161      (1,598      (1,740      (3,104

Net income allocated to unvested participating restricted stock

     (95      (97      (128      (219
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income available to common stockholders, as adjusted

   $ 26,497      $ 32,929      $ 52,364      $ 61,707  
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted net income available to common stockholders per share:

           

Net income available to common stockholders per share:

   $ 1.45      $ 1.69      $ 2.90      $ 3.19  

Closure and impairment charges

     0.06        0.11        0.07        0.20  

Amortization of intangible assets

     0.12        0.11        0.24        0.23  

Non-cash interest expense

     0.03        0.03        0.06        0.06  

(Gain) loss on disposition of assets

     (0.01      (0.00      (0.07      0.01  

Net income allocated to unvested participating restricted stock

     (0.01      (0.01      (0.01      (0.01

Rounding

     0.01        0.01               (0.01
  

 

 

    

 

 

    

 

 

    

 

 

 

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

   $ 1.65      $ 1.94      $ 3.19      $ 3.67  
  

 

 

    

 

 

    

 

 

    

 

 

 

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

   $ 26,497      $ 32,929      $ 52,364      $ 61,707  

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

     1        3        1        12  
  

 

 

    

 

 

    

 

 

    

 

 

 

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

   $ 26,498      $ 32,932      $ 52,365      $ 61,719  
  

 

 

    

 

 

    

 

 

    

 

 

 

Denominator for basic EPS - weighted-average shares

     16,050        16,886        16,386        16,673  

Dilutive effect of stock options

     30        91        32        129  
  

 

 

    

 

 

    

 

 

    

 

 

 

Denominator for diluted EPS - weighted-average shares

     16,080        16,977        16,418        16,802  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

Page 10 of 15


Dine Brands Global, Inc. and Subsidiaries

Non-GAAP Financial Measures

(Unaudited)

Reconciliation of the Company’s cash flows provided by operating activities to “adjusted free cash flow” (cash flows 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.

 

     Six Months Ended
June 30,
 
     2022      2021  
     (In millions)  

Cash flows provided by operating activities

   $ 29.9      $ 106.0  

Receipts from notes and equipment contracts receivable

     5.9        5.4  

Net additions to property and equipment

     (12.7      (4.1
  

 

 

    

 

 

 

Adjusted free cash flow

     23.1        107.3  

Dividends paid on common stock

     (14.6      —    

Repurchase of common stock

     (102.4      —    
  

 

 

    

 

 

 
   $ (93.9    $ 107.3  
  

 

 

    

 

 

 

 

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 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
June 30,
     Six Months Ended
June 30,
 
     2022      2021      2022      2021  

Net income, as reported

   $ 23,962      $ 29,362      $ 48,812      $ 54,965  

Closure and impairment charges

     1,311        2,571        1,457        4,581  

Interest charges on finance leases

     1,217        1,383        2,468        2,847  

All other interest charges

     16,354        16,446        32,716        33,691  

Income tax provision

     8,569        9,296        17,876        7,707  

Depreciation and amortization

     10,022        9,972        19,952        19,959  

Non-cash stock-based compensation

     3,985        2,517        8,327        5,614  

(Gain) loss on disposition of assets

     (234      (30      (1,530      137  

Other

     882        221        1,194        353  
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

   $ 66,068      $ 71,738      $ 131,272      $ 129,854  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

Page 12 of 15


Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

The following table sets forth, for the three and six months ended June 30, 2022 and 2021, 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 June 30,
    Six Months Ended
June 30,
 
     2022     2021     2022     2021  

Applebee’s

        

Global Effective Restaurants(a)

        

Franchise

     1,604       1,623       1,605       1,625  

Company

     69       69       69       69  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

     1,673       1,692       1,674       1,694  
  

 

 

   

 

 

   

 

 

   

 

 

 

System-wide(b)

        

Domestic sales percentage change(c)

     1.4     125.3     7.2     43.3

Domestic same-restaurant sales percentage change(d)

     1.8     102.2     7.6     46.4

Franchise(b)

        

Domestic sales percentage change(c)

     1.3     125.2     7.3     43.0

Domestic same-restaurant sales percentage change(d)

     1.7     102.1     7.6     46.1

Average weekly domestic unit sales (in thousands)

   $ 55.1     $ 53.8     $ 54.5     $ 50.3  

IHOP

        

Global Effective Restaurants(a)

        

Franchise

     1,593       1,568       1,590       1,566  

Area license

     156       155       156       156  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

     1,749       1,723       1,746       1,722  
  

 

 

   

 

 

   

 

 

   

 

 

 

System-wide(b)

        

Sales percentage change(c)

     5.7     163.6     12.1     39.2

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

     3.6     120.1     10.1     40.7

Franchise(b)

        

Sales percentage change(c)

     5.6     163.1     12.3     38.5

Domestic same-restaurant sales percentage change(d)

     3.6     118.2     10.4     39.4

Average weekly unit sales (in thousands)

   $ 37.9     $ 36.4     $ 36.4     $ 32.9  

Area License (b)

        

Sales percentage change(c)

     6.2     168.8     10.0     46.7

 

Page 13 of 15


Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

 

(a)

“Global 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 six months ended June 30, 2022 and 2021 were as follows:

 

     Three Months Ended
June 30,
     Six Months Ended
June 30,
 
     2022      2021      2022      2021  
     (In millions)  

Reported sales

           

Applebee’s domestic franchise restaurant sales

   $ 1,076.7      $ 1,062.8      $ 2,131.7      $ 1,987.5  

Applebee’s company-operated restaurants

     39.5        38.2        78.9        74.1  

IHOP franchise restaurant sales

     783.8        742.0        1,503.5        1,338.8  

IHOP area license restaurant sales

     75.3        70.9        145.8        132.6  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 1,975.3      $ 1,913.9      $ 3,859.9      $ 3,533.0  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(c)

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

 

(d)

“Domestic same-restaurant sales percentage change” reflects the percentage change in sales, in any given fiscal period, compared to the same weeks in the prior year for domestic restaurants that have been operated 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 14 of 15


Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

 

     Three Months
Ended June 30,
     Six Months
Ended June 30,
 
     2022      2021      2022      2021  

Applebee’s Restaurant Development Activity

        

Summary - beginning of period:

           

Franchise

     1,606        1,636        1,611        1,640  

Company

     69        69        69        69  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Applebee’s restaurants, beginning of period

     1,675        1,705        1,680        1,709  
  

 

 

    

 

 

    

 

 

    

 

 

 

Franchise restaurants opened:

           

Domestic

     1        —          2        2  

International

     —          1        —          1  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total franchise restaurants opened

     1        1        2        3  
  

 

 

    

 

 

    

 

 

    

 

 

 

Franchise restaurants closed:

           

Domestic

     (2      (6      (6      (10

International

     (1      (4      (3      (6
  

 

 

    

 

 

    

 

 

    

 

 

 

Total franchise restaurants closed

     (3      (10      (9      (16
  

 

 

    

 

 

    

 

 

    

 

 

 

Net franchise restaurant reduction

     (2      (9      (7      (13
  

 

 

    

 

 

    

 

 

    

 

 

 

Summary - end of period:

           

Franchise

     1,604        1,627        1,604        1,627  

Company

     69        69        69        69  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Applebee’s restaurants, end of period

     1,673        1,696        1,673        1,696  
  

 

 

    

 

 

    

 

 

    

 

 

 

Domestic

     1,574        1,590        1,574        1,590  

International

     99        106        99        106  

IHOP Restaurant Development Activity

           

Summary - beginning of period:

           

Franchise

     1,600        1,593        1,595        1,611  

Area license

     156        156        156        158  

Company

     —          4        —          3  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total IHOP restaurants, beginning of period

     1,756        1,753        1,751        1,772  
  

 

 

    

 

 

    

 

 

    

 

 

 

Franchise/area license restaurants opened:

           

Domestic franchise

     8        7        15        15  

Domestic area license

     —          1        1        1  

International franchise

     5        1        7        1  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total franchise/area license restaurants opened

     13        9        23        17  
  

 

 

    

 

 

    

 

 

    

 

 

 

Franchise/area license restaurants closed:

           

Domestic franchise

     (4      (14      (7      (30

Domestic area license

     —          —          (1      (2

International franchise

     (1      —          (2      (9

International area license

     —          (1      —          (1
  

 

 

    

 

 

    

 

 

    

 

 

 

Total franchise/area license restaurants closed

     (5      (15      (10      (42
  

 

 

    

 

 

    

 

 

    

 

 

 

Net franchise/area license restaurant additions (reductions)

     8        (6      13        (25

Refranchised from Company restaurants

     —          1        —          1  

Franchise restaurants reacquired by the Company

     —          —          —          (1
  

 

 

    

 

 

    

 

 

    

 

 

 

Net franchise/area license restaurant increase (decrease)

     8        (5      13        (25
  

 

 

    

 

 

    

 

 

    

 

 

 

Summary - end of period

           

Franchise

     1,608        1,588        1,608        1,588  

Area license

     156        156        156        156  

Company

     —          3        —          3  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total IHOP restaurants, end of period

     1,764        1,747        1,764        1,747  
  

 

 

    

 

 

    

 

 

    

 

 

 

Domestic

     1,665        1,654        1,665        1,654  

International

     99        93        99        93  

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), 12 international Applebee’s ghost kitchens and 28 international IHOP ghost kitchens at June 30, 2022. There were two domestic and one international Applebee’s ghost kitchens and three international IHOP ghost kitchens at June 30, 2021.

 

Page 15 of 15