8-K
false 0000049754 0000049754 2024-02-28 2024-02-28

 

 

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): February 28, 2024

 

 

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.)

 

10 West Walnut Street, 5th Floor,

Pasadena, California

  91103
(Address of principal executive offices)   (Zip Code)

(818) 240-6055

(Registrant’s telephone number, including area code)

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

 

 

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))

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 February 28, 2024, Dine Brands Global, Inc., a Delaware corporation (the “Corporation”), issued a press release announcing its fourth quarter and fiscal year 2023 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 9.01. Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit

Number

  

Description

99.1    Press Release issued by the Corporation on February 28, 2024.
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.

 

   

DINE BRANDS GLOBAL, INC.

Date: February 28, 2024     By:  

/s/ Vance Y. Chang

      Vance Y. Chang
     

Chief Financial Officer

EX-99.1

Exhibit 99.1

 

LOGO

 

 

 News Release

Investor Contact

Matt Lee

Sr. Vice President, Finance and Investor Relations

Dine Brands Global, Inc.

IR@dinebrands.com

Media Contact

Susan Nelson

Sr. Vice President, Global Communications

Dine Brands Global, Inc.

Susan.Nelson@dinebrands.com

Dine Brands Global, Inc. Reports Fourth Quarter and Fiscal Year 2023 Results

PASADENA, Calif., February 28, 2024 – Dine Brands Global, Inc. (NYSE: DIN), the parent company of Applebee’s Neighborhood Grill & Bar®, IHOP® and Fuzzy’s Taco Shop® restaurants, today announced financial results for the fourth quarter and fiscal year 2023.

“Our solid performance in the fourth quarter concluded a year of significant progress for Dine. We delivered another year of positive comp sales growth at IHOP and Applebee’s and generated year-over-year EBITDA growth while fully integrating Fuzzy’s into our system,” said John Peyton, chief executive officer, Dine Brands Global, Inc. “We are further strengthening our recipe for growth in 2024 with our methodical development strategy that will generate sustainable value over the long-term for our shareholders and franchisees.”

Vance Chang, chief financial officer, Dine Brands Global, Inc. added, “Our financial performance in the fourth quarter and throughout the course of 2023 has allowed us to strengthen our balance sheet and invest in our business while returning capital to shareholders. In spite of the challenging operating environment, we continued to improve our profitability and exceeded our EBITDA guidance. Overall, Dine remains very well positioned to support its franchisees, navigate near-term headwinds and drive growth over time.”

Domestic Restaurant Sales for the Fourth Quarter of 2023

 

   

Applebee’s year-over-year comparable same-restaurant sales declined 0.5% for the fourth quarter of 2023. Off-premise sales accounted for 20.8% of sales mix, representing per restaurant average weekly sales of approximately $10,900.


   

IHOP’s year-over-year domestic comparable same-restaurant sales increased 1.6% for the fourth quarter of 2023. Off-premise sales accounted for 20.4% of sales mix, representing per restaurant average weekly sales of approximately $8,000.

Fourth Quarter of 2023 Summary

 

   

Total revenues for the fourth quarter of 2023 were $206.3 million compared to $208.0 million for the fourth quarter of 2022. The decline was primarily due to the refranchising of the 69 company-operated Applebee’s units in October 2022 and the negative comparable same-restaurant sales growth at Applebee’s, offset by the positive comparable same-restaurants sales growth at IHOP and a full quarter’s revenue contribution from Fuzzy’s acquired in December 2022. Total revenues excluding the refranchised Applebee’s restaurants for the fourth quarter of 2023 were $204.3 million compared to $196.5 million for the fourth quarter of 2022.

 

   

General and Administrative (“G&A”) expenses for the fourth quarter of 2023 were $50.5 million compared to $58.8 million for the fourth quarter of 2022. The variance was primarily attributable to transaction costs related to the acquisition of Fuzzy’s in December 2022, a decrease in compensation-related expenses, the refranchising of the Applebee’s restaurants and lower conference expenses partially offset by the inclusion of Fuzzy’s operations in the fourth quarter of 2023.

 

   

GAAP net income available to common stockholders was $32.3 million, or earnings per diluted share of $2.14, for the fourth quarter of 2023 compared to net income available to common stockholders of $11.0 million, or earnings per diluted share of $0.72 for the fourth quarter of 2022. The increase was primarily due to an income tax benefit resulting from the conclusion of a state income tax audit settlement, a decrease in G&A expenses and a decrease in weighted-average diluted shares as a result of share repurchases.

 

   

Adjusted net income available to common stockholders was $21.1 million, or adjusted earnings per diluted share of $1.40, for the fourth quarter of 2023 compared to adjusted net income available to common stockholders of $20.6 million, or adjusted earnings per diluted share of $1.34, for the fourth quarter of 2022. The increase was primarily due to an increase in segment profit, a decrease in G&A expenses and a decrease in weighted-average diluted shares as a result of share repurchases offset by higher interest expense and income taxes. (See “Non-GAAP Financial Measures” and reconciliation of GAAP net income available to common stockholders to adjusted net income available to common stockholders.)

 

   

Consolidated adjusted EBITDA for the fourth quarter of 2023 was $62.2 million compared to $57.0 million for the fourth quarter of 2022. (See “Non-GAAP Financial Measures” and reconciliation of GAAP net income to consolidated adjusted EBITDA.)

 

   

Development activity by Applebee’s and IHOP franchisees for the fourth quarter of 2023 resulted in 24 new restaurant openings and the closure of 14 restaurants.

 

Page 2 of 16


2023 Summary

 

   

Total 2023 revenues were $831.1 million compared to $909.4 million for the prior year. The decline was primarily due to the refranchising of the 69 company-operated Applebee’s units in October 2022, offset by the positive comparable same-restaurants sales growth at IHOP and Applebee’s. Total revenues excluding the refranchised Applebee’s restaurants for 2023 were $822.7 million compared to $780.7 million for the prior year.

 

   

G&A expenses for 2023 were $198.1 million compared to $190.7 million for 2022. The variance was primarily due to costs resulting from the inclusion of Fuzzy’s operations acquired in December 2022, the stopping of the IHOP Flip’d initiative and increases in professional services, compensation-related and software maintenance costs, partially offset by the decreases due to the refranchised Applebee’s restaurants and the transaction costs related to the Fuzzy’s acquisition in 2022.

 

   

GAAP net income available to common stockholders was $94.9 million, or earnings per diluted share of $6.22, for 2023 compared to net income available to common stockholders of $78.9 million, or earnings per diluted share of $4.96 for 2022. The increase was primarily due to an increase in segment profit, an income tax benefit resulting from the conclusion of a state income tax audit settlement and a decrease in weighted-average diluted shares as a result of share repurchases offset by an increase in interest expense and an increase in G&A expenses.

 

   

Adjusted net income available to common stockholders was $101.4 million, or adjusted earnings per diluted share of $6.65, for 2023 compared to adjusted net income available to common stockholders of $98.5 million, or adjusted earnings per diluted share of $6.20, for 2022. The increase was primarily due to an increase in segment profit and a decrease in weighted-average diluted shares as a result of shares repurchases offset by higher G&A expenses and interest expense. (See “Non-GAAP Financial Measures” and reconciliation of GAAP net income available to common stockholders to adjusted net income available to common stockholders.)

 

   

Consolidated adjusted 2023 EBITDA was $256.4 million compared to $251.9 million for 2022. (See “Non-GAAP Financial Measures” and reconciliation of GAAP net income to consolidated adjusted EBITDA.)

 

   

Cash flows provided by operating activities for 2023 were $131.1 million. This compares to cash provided by operating activities of $89.3 million for 2022. The increase was primarily due to a favorable change in working capital and an increase in segment profit.

 

   

The Company had adjusted free cash flow of $103.3 million for 2023. This compares to adjusted free cash flow of $64.6 million for 2022. (See “Non-GAAP Financial Measures” and reconciliation of the Company’s cash provided by operating activities to adjusted free cash flow.)

 

   

Development activity by Applebee’s and IHOP franchisees for 2023 resulted in 72 new restaurant openings and the closure of 75 restaurants.

 

Page 3 of 16


Key Balance Sheet Metrics (as of December 31, 2023)

 

   

Total cash, cash equivalents and restricted cash of approximately $200.6 million, of which approximately $146.0 million was unrestricted cash.

 

   

Leverage ratio of approximately 4.2x compared with approximately 4.6x as of September 30, 2023.

 

   

Available borrowing capacity under the Variable Funding Senior Secured Notes is over $220 million.

GAAP Effective Tax Rate

The fiscal year 2023 effective tax rate of 13.0% applied to pretax book income was different than the statutory Federal income tax rate of 21% primarily due to the conclusion of a state income tax audit settlement, resulting in an income tax benefit of $15.1 million.

Capital Returns to Equity Holders

During the fourth quarter of 2023, the Company repurchased approximately $6 million of its common stock. In 2023, the Company repurchased approximately $26 million of its common stock.

On February 26, 2024, the Company announced that its Board of Directors declared and approved a quarterly cash dividend of $0.51 per share of common stock. The dividend will be paid on April 5, 2024, to the Company’s stockholders of record at the close of business on March 20, 2024.

Financial Performance Guidance for 2024

The Company introduced its fiscal 2024 guidance items:

 

   

Applebee’s domestic system-wide comparable same-restaurant sales performance is expected to range between 0% and 2%.

 

   

IHOP’s domestic system-wide comparable same-restaurant sales performance is expected to range between 1% and 3%.

 

   

Domestic development activity for Applebee’s franchisees is between 25 and 35 net fewer restaurants.

 

   

Domestic development activity by IHOP franchisees and area licensees is expected to be between 15 and 25 net new openings.

 

   

Consolidated adjusted EBITDA is expected to range between approximately $255 million and $265 million.

 

Page 4 of 16


   

G&A expenses are expected to range between approximately $200 million and $210 million. This total includes non-cash stock-based compensation expense and depreciation of approximately $35 million.

 

   

Gross capital expenditures are expected to range between approximately $15 million and $20 million.

Dine Brands does not provide forward-looking guidance for GAAP net income because it is unable to predict certain items contained in the GAAP measure without unreasonable efforts. These items may include closure and impairment charges, loss on extinguishment of debt, gain or loss on disposition of assets, other non-income-based taxes and other items deemed not reflective of current operations.

Fourth Quarter of 2023 Earnings Conference Call Details

Dine Brands will host a conference call to discuss its results on February 28, 2024, at 9:00 a.m. Eastern time. To access the call, please click this conference call registration link, and you will be provided with dial in details. A live webcast of the call, along with a replay will be available for a limited time at https://investors.dinebrands.com. 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 Pasadena, California, Dine Brands Global, Inc. (NYSE: DIN), through its subsidiaries and franchisees, supports and operates restaurants under the Applebee’s Neighborhood Grill + Bar®, IHOP®, and Fuzzy’s Taco Shop® brands. As of December 31, 2023, these three brands consisted of over 3,500 restaurants across 18 international markets. Dine Brands is one of the largest full-service restaurant companies in the world and in 2022 expanded into the Fast Casual segment. 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: general economic conditions, including the impact of inflation, particularly as it may impact our franchisees directly; our level of indebtedness; compliance with the terms of our securitized debt; our ability to refinance our current indebtedness or obtain additional financing; our dependence on information technology; potential cyber incidents; the implementation of restaurant development plans; our dependence on our franchisees; the concentration of our Applebee’s franchised restaurants in a limited number of franchisees; the financial health of our franchisees including any insolvency or bankruptcy; credit risks from our IHOP franchisees operating under our previous IHOP business model in which we built and equipped IHOP restaurants and then franchised them to franchisees; insufficient insurance coverage to cover potential risks associated with the ownership and operation of restaurants; our franchisees’ and other licensees’ compliance with our quality standards and trademark usage; general risks associated with the restaurant industry; potential harm to our brands’ reputation; risks of food-borne illness or food tampering; possible future impairment charges; trading volatility and fluctuations in the price of our stock; our ability to achieve the financial guidance we provide to investors; successful implementation of our business strategy; the availability of suitable locations for new restaurants; shortages or interruptions in the supply or delivery of products from third parties or availability of utilities; the management and forecasting of appropriate inventory levels; development and implementation of innovative marketing and use of social media; changing health or dietary preference of consumers; risks associated with doing business in international markets; the results of litigation and other legal proceedings; third-party claims with respect to intellectual property assets; delivery initiatives and use of third-party delivery vendors; our allocation of human capital and our ability to attract and retain management and other key employees; compliance with federal, state and local governmental regulations; risks associated with our self-insurance; natural disasters, pandemics, epidemics, or other serious incidents; our success with development initiatives outside of our core business; the adequacy of our internal controls over financial reporting and future changes in accounting standards; and other factors discussed from time to time in the Corporation’s Annual and Quarterly Reports on Forms 10-K and 10-Q and in the Corporation’s other filings with the 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 16


Non-GAAP Financial Measures

This press release includes references to the Company’s non-GAAP financial measure “adjusted net income available to common stockholders”, “adjusted earnings per diluted share (Adjusted EPS)”, “Adjusted EBITDA” and “Adjusted free cash flow.” Adjusted EPS is computed for a given period by deducting from net income or loss available to common stockholders for such period the effect of any closure and impairment charges, any intangible asset amortization, any non-cash interest expense, any gain or loss related to the disposition of assets, any gain or loss related to debt extinguishment, any charges related to stopping the IHOP Flip’d initiative, 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 interest charges, any income tax provision or benefit, any depreciation and amortization, any non-cash stock-based compensation, any closure and impairment charges, any gain or loss related to debt extinguishment, 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. Additionally, the Company has provided total revenues excluding the refranchised Applebee’s restaurants for the three and twelve months ended December 31, 2023 and for the comparative prior year periods. 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. Total revenues excluding the refranchised Applebee’s restaurants is helpful for Management to evaluate the performance of franchised restaurants over comparative periods. 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 16


Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(In thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended     Twelve Months Ended  
     December 31,     December 31,  
     2023     2022     2023     2022  
Revenues:       

Franchise revenues:

        

Royalties, franchise fees and other

    $ 101,571      $ 95,398      $ 405,569      $ 373,110  

Advertising revenues

     74,395       72,642       300,796       289,328  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total franchise revenues

     175,966       168,040       706,365       662,438  

Company restaurant sales

     289       9,694       2,128       126,869  

Rental revenues

     29,451       29,411       119,970       116,491  

Financing revenues

     596       820       2,605       3,604  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     206,302       207,965       831,068       909,402  
  

 

 

   

 

 

   

 

 

   

 

 

 
Cost of revenues:         

Franchise expenses:

        

Advertising expenses

     74,561       70,377       300,962       287,063  

Bad debt expense

     66       784       2,659       261  

Other franchise expenses

     10,992       10,182       40,782       34,584  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total franchise expenses

     85,619       81,343       344,403       321,908  

Company restaurant expenses

     303       9,920       2,136       121,722  

Rental expenses:

        

Interest expense from finance leases

     699       708       2,771       2,962  

Other rental expenses

     21,167       21,313       84,705       85,033  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total rental expenses

     21,866       22,021       87,476       87,995  

Financing expenses

     86       102       369       419  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     107,874       113,386       434,384       532,044  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     98,428       94,579       396,684       377,358  

General and administrative expenses

     50,512       58,800       198,057       190,746  

Interest expense, net

     18,498       14,760       70,047       60,952  

Closure and impairment charges

     506       (31     3,594       3,062  

Amortization of intangible assets

     2,721       2,565       10,923       10,559  

(Gain) loss on extinguishment of debt

           (1,371     10       (210

Loss (gain) on disposition of assets

     41       496       2,350       (2,536
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     26,150       19,360       111,703       114,785  

Income tax (provision) benefit

     6,889       (8,009     (14,527     (33,674
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     33,039       11,351       97,176       81,111  

Other comprehensive income, net of tax:

        

Foreign currency translation adjustment

     3       3       1       (6
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

    $ 33,042      $ 11,354      $ 97,177      $ 81,105  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income available to common stockholders:

        
Net income     $ 33,039      $ 11,351      $ 97,176      $ 81,111  

Less: Net income allocated to unvested participating restricted stock

     (751     (311     (2,317     (2,174
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income available to common stockholders

    $ 32,288      $ 11,040      $ 94,859      $ 78,937  
  

 

 

   

 

 

   

 

 

   

 

 

 
Net income available to common stockholders per share:         

Basic

    $ 2.14      $ 0.72      $ 6.23      $ 4.97  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

    $ 2.14      $ 0.72      $ 6.22      $ 4.96  
  

 

 

   

 

 

   

 

 

   

 

 

 
Weighted average shares outstanding:         

Basic

     15,106       15,344       15,233       15,873  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     15,106       15,370       15,242       15,901  
  

 

 

   

 

 

   

 

 

   

 

 

 


Dine Brands Global, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share amounts) (Unaudited)

 

     December 31, 2023   December 31, 2022
     (Unaudited)    
Assets     

Current assets:

    

Cash and cash equivalents

    $ 146,034      $ 269,655  

Receivables, net of allowance of $4,462 (2023) and $4,806 (2022)

     127,937       119,981  

Restricted cash

     35,058       38,929  

Prepaid gift card costs

     29,545       30,235  

Prepaid income taxes

     3,445       3,063  

Other current assets

     15,759       17,901  
  

 

 

 

 

 

 

 

Total current assets

     357,778       479,764  

Other intangible assets, net

     586,033       597,028  

Operating lease right-of-use assets

     275,214       289,123  

Goodwill

     254,062       253,956  

Property and equipment, net

     161,891       145,277  

Long-term receivables, net of allowance of $5,002 (2023) and $5,529 (2022)

     35,602       39,697  

Deferred rent receivable

     33,326       42,329  

Non-current restricted cash

     19,500       16,400  

Other non-current assets, net

     16,881       17,917  
  

 

 

 

 

 

 

 

Total assets

    $ 1,740,287      $ 1,881,491  
  

 

 

 

 

 

 

 

Liabilities and Stockholders’ Deficit     

Current liabilities:

    

Current maturities of long-term debt

    $ 100,000      $ 100,000  

Accounts payable

     36,193       52,067  

Gift card liability

     175,640       171,966  

Current maturities of operating lease obligations

     63,498       59,071  

Current maturities of finance lease and financing obligations

     7,243       7,542  

Accrued employee compensation and benefits

     23,211       23,456  

Accrued advertising expenses

     9,446       24,157  

Dividends payable

     7,827       8,017  

Other accrued expenses

     37,394       24,446  
  

 

 

 

 

 

 

 

Total current liabilities

     460,452       470,722  

Long-term debt, net, less current maturities

     1,084,502       1,241,914  

Operating lease obligations, less current maturities

     269,097       275,120  

Finance lease obligations, less current maturities

     34,389       30,377  

Financing obligations, less current maturities

     26,984       28,358  

Deferred income taxes, net

     60,829       74,651  

Deferred franchise revenue, long-term

     38,658       42,343  

Other non-current liabilities

     16,350       19,090  
  

 

 

 

 

 

 

 

Total liabilities

     1,991,261       2,182,575  
  

 

 

 

 

 

 

 

Commitments and contingencies

    

Stockholders’ deficit:

    

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

            

Common stock, $0.01 par value; shares: 40,000,000 authorized; 2023 -24,870,529 issued, 15,344,768 outstanding; 2022 - 24,959,972 issued, 15,599,239 outstanding

     249       250  

Additional paid-in-capital

     256,542       259,339  

Retained earnings

     150,008       84,538  

Accumulated other comprehensive loss

     (64     (65

Treasury stock, at cost; shares: 2023 - 9,525,761; 2022 - 9,360,733

     (657,709     (645,146
  

 

 

 

 

 

 

 

Total stockholders’ deficit

     (250,974     (301,084
  

 

 

 

 

 

 

 

Total liabilities and stockholders’ deficit

    $     1,740,287      $     1,881,491  
  

 

 

 

 

 

 

 


Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

     Twelve Months Ended
     December 31,
     2023   2022

Cash flows from operating activities

    

Net income

    $ 97,176      $ 81,111  

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

    

Depreciation and amortization

     35,630       37,952  

Non-cash stock-based compensation expense

     11,990       16,131  

Non-cash closure and impairment charges

     3,594       2,927  

Non-cash interest expense

     3,505       3,226  

Deferred income taxes

     (13,822     (1,071

Deferred revenue

     (4,224     (4,474

Loss (gain) on extinguishment of debt

     10       (210

Loss (gain) on disposition of assets

     2,359       (2,536

Other

     (3,552     (5,160

Changes in operating assets and liabilities:

    

Accounts receivable, net

     1,913       (2,574

Deferred rent receivable

     9,003       7,928  

Current income tax receivables and payables

     1,160       8,326  

Operating lease assets and liabilities

     7,256       (11,823

Gift card receivables and payables

     5,095       2,783  

Other current assets

     1,911       (12,706

Accounts payable

     (16,027     (3,665

Accrued employee compensation and benefits

     (1,748     (16,264

Accrued advertising expenses

     (14,711     (10,020

Other current liabilities

     4,622       (545
  

 

 

 

 

 

 

 

Cash flows provided by operating activities

     131,140       89,336  
  

 

 

 

 

 

 

 

Cash flows from investing activities

    

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

     9,319       17,057  

Net additions to property and equipment

     (37,172     (35,318

Proceeds from sale of property and equipment

     10       17,028  

Additions to long-term receivables

     (1,069     (1,069

Acquisition of business, net of cash acquired

     (101     (78,264

Other

     (1,084     (338
  

 

 

 

 

 

 

 

Cash flows used in investing activities

     (30,097     (80,904
  

 

 

 

 

 

 

 

Cash flows from financing activities

    

Proceeds from issuance of long-term debt, including revolving line of credit

     530,000       100,000  

Repayment of long-term debt

     (651,713     (38,768

Repayments of revolving credit facility

     (30,000      

Payment of debt issuance costs

     (8,044     (6,289

Dividends paid on common stock

     (31,715     (30,765

Repurchase of common stock

     (26,130     (120,452

Principal payments of finance lease and financing obligations

     (6,431     (8,946

Proceeds from stock options exercised

     3,812       241  

Repurchase of restricted stock for tax payments upon vesting

     (4,355     (2,867

Tax payments for share settlement of restricted stock units

     (859     (955
  

 

 

 

 

 

 

 

Cash flows used in financing activities

     (225,435     (108,801
  

 

 

 

 

 

 

 

Net change in cash, cash equivalents and restricted cash

     (124,392     (100,369

Cash, cash equivalents and restricted cash at beginning of year

     324,984       425,353  
  

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash at end of year

    $    200,592      $    324,984  
  

 

 

 

 

 

 

 

Supplemental disclosures

    

Interest paid

    $ 73,976      $ 64,599  

Income taxes paid

    $ 28,409      $ 28,085  

Non-cash conversion of accounts receivable to notes receivable

    $ 1,367      $ 84  

Non-cash balance sheet gross-up of receivables and other accrued expenses

    $ (11,000    $  


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 expenses; gain or loss on disposition of assets; gain or loss on extinguishment of debt; acquisition costs; charges related to stopping the IHOP Flip’d initiative; other EBITDA adjustments; the combined tax effect of the preceding adjustments; and income tax adjustments related to the tax impact from a state settlement (2023) and from the Mid-Atlantic sale (2022), as well as related per share data:

 

     Three Months Ended
December 31,
  Twelve Months Ended
December 31,
     2023   2022   2023   2022

Net income available to common stockholders, as reported

    $ 32,288      $ 11,040      $ 94,859      $ 78,937  

Closure and impairment charges

     506       (31     3,594       3,062  

Amortization of intangible assets

     2,722       2,565       10,924       10,559  

Noncash interest expense

     791       1,016       3,505       3,226  

Loss (gain) on disposition of assets

     41       496       2,350       (2,536

(Gain) loss on extinguishment of debt

           (1,371     10       (210

Acquisition costs

           5,052       804       6,027  

IHOP Flip’d initiative

                 5,121        

Other EBITDA adjustments

     863       1,755       3,095       3,268  

Net income tax provision for above adjustments

     (1,280     (2,465     (7,645     (6,083

Income tax adjustments

     (15,063     2,833       (15,063     2,833  

Net income allocated to unvested participating restricted stock

     257       (272     (159     (538
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders, as adjusted

    $ 21,125      $ 20,618      $ 101,395      $ 98,545  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net income available to common stockholders per share:

        

Net income available to common stockholders

    $ 2.14      $ 0.72      $ 6.22      $ 4.96  

Closure and other impairment charges

     0.02       (0.00     0.17       0.14  

Amortization of intangible assets

     0.13       0.12       0.53       0.49  

Non-cash interest expense

     0.04       0.05       0.17       0.15  

Loss (gain) on disposition of assets

     0.00       0.02       0.11       (0.12

(Gain) loss on extinguishment of debt

           (0.07     0.00       (0.01

Merger and acquisition costs

           0.24       0.04       0.28  

IHOP Flip’d initiative

                 0.25        

Other EBITDA adjustments

     0.04       0.08       0.15       0.15  

Net income tax provision for above adjustments

     (1.00     0.18       (0.99     0.18  

Net income allocated to unvested participating restricted stock

     0.02       (0.02     (0.01     (0.03

Rounding

     0.01       0.02       0.01       0.01  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

    $ 1.40      $ 1.34      $ 6.65      $ 6.20  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

    $ 21,125      $ 20,618      $ 101,395      $ 98,545  

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

     1                   1  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

    $   21,126      $   20,618      $   101,395      $   98,546  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator for basic EPS - weighted-average shares

     15,106       15,344       15,233       15,873  

Dilutive effect of stock options

           26       9       28  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator for diluted EPS - weighted-average shares

     15,106       15,370       15,242       15,901  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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.

 

     Twelve Months Ended
December 31,
     2023   2022
     (In thousands)

Cash flows provided by operating activities

    $ 131,140      $ 89,336  

Principal receipts from notes and equipment contracts

     9,319       10,615  

Net additions to property and equipment

     (37,172     (35,318
  

 

 

 

 

 

 

 

Adjusted free cash flow

     103,287       64,633  

(Repayment) issuance of long-term debt, net

     (151,713     61,232  

Dividends paid on common stock

     (31,715     (30,765

Repurchase of common stock

     (26,130     (120,452
  

 

 

 

 

 

 

 

    $     (106,271    $     (25,352
  

 

 

 

 

 

 

 


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 interest charges, income tax provision or benefit, depreciation and amortization, non-cash stock-based compensation, closure and impairment charges, gain or loss on extinguishment of debt, gain or loss on disposition of assets, 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
December 31,
  Twelve Months Ended
December 31,
     2023   2022   2023    2022

Net income, as reported

    $ 33,039      $ 11,351      $ 97,176       $ 81,111  

Interest charges on finance leases

     699       849       2,771        4,519  

All other interest charges

     20,664       17,813       79,336        67,713  

Income tax (benefit) provision

     (6,889     8,009       14,527        33,674  

Depreciation and amortization

     9,408       9,073       35,630        37,918  

Non-cash stock-based compensation

     3,823       4,003       11,990        16,131  

Closure and impairment charges

     506       (31     3,594        3,062  

(Gain) loss on extinguishment of debt

           (1,371     10        (210

Loss (gain) on disposition of assets

     41       496       2,350        (2,536

Merger and acquisition costs

           5,052       804        6,027  

IHOP Flip’d initiative

                 5,121         

Other

     864       1,756       3,095        4,463  
  

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

Adjusted EBITDA

    $   62,155      $   57,000      $   256,404       $   251,872  
  

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 


Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

The following table sets forth, for the three and twelve months ended December 31, 2023 and 2022, 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   Twelve Months Ended
     December 31,   December 31,
     2023   2022   2023   2022
                  
     (Unaudited)

Applebee’s Restaurant Data

  

Global Effective Restaurants(a)

        

Franchise

     1,646       1,657       1,659       1,617  

Company

           16             56  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

     1,646       1,673       1,659       1,673  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

System-wide(b)

        

Domestic sales percentage change(c)

     (1.5 )%      1.0     (0.1 )%      4.7

Domestic same-restaurant sales percentage change(d)

     (0.5 )%      1.7     0.6     5.1

Franchise(b)

        

Domestic sales percentage change(c)

     (0.6 )%      3.7     2.9     5.3

Domestic same-restaurant sales percentage change(d)

     (0.5 )%      1.7     0.6     5.1

Average weekly domestic unit sales (in thousands)

    $    52.6      $    52.5      $    54.0      $    53.7  

IHOP Restaurant Data

        

Global Effective Restaurants(a)

        

Franchise

     1,639       1,610       1,629       1,597  

Area license

     157       156       156       156  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

     1,796       1,766       1,785       1,753  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

System-wide(b)

        

Sales percentage change(c)

     4.2     3.9     6.0     7.7

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

     1.6     2.0     3.5     5.8

Franchise(b)

        

Sales percentage change(c)

     4.1     3.7     6.1     7.7

Domestic same-restaurant sales percentage change(d)

     1.7     1.6     3.6     5.7

Average weekly unit sales (in thousands)

    $ 39.1      $ 38.2      $ 38.5      $ 37.0  

Area License(b)

        

Sales percentage change(c)

     5.2     6.5     4.3     7.9

 

(a)

“Effective Restaurants” are the weighted average number of restaurants open in each fiscal period, adjusted to account for restaurants open for only a portion of the period. Information is presented for all Effective Restaurants in the Applebee’s and IHOP systems, which consist of 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 Applebee’s restaurants operated by franchisees and IHOP restaurants operated by franchisees and area licensees, as reported to the Company, in addition to retail sales at company-operated Applebee’s restaurants. System-wide sales do not include retail sales of ghost kitchens. Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company. An increase in franchisees’ reported sales will result in a corresponding increase in our royalty revenue, while a decrease in franchisees’ reported sales will result in a corresponding decrease in our royalty revenue. Unaudited reported sales for Applebee’s domestic franchise restaurants, Applebee’s company-operated restaurants, IHOP franchise restaurants and IHOP area license restaurants were as follows:

 

     Three Months Ended
December 31,
     Twelve Months Ended
December 31,
 
     2023      2022      2023      2022  
                             
     (Unaudited)  

Reported sales (in millions)

  

Applebee’s domestic franchise restaurant sales

    $ 1,052.7       $ 1,059.1       $ 4,356.6      $  4,235.3  

Applebee’s company-operated restaurants

            9.5               126.7  

IHOP franchise restaurant sales

     832.4        799.7        3,258.3        3,070.0  

IHOP area license restaurant sales

     77.2        73.4        305.3        292.7  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

    $    1,962.3       $    1,941.7       $    7,920.2       $    7,724.7  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(c)

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

(d)

“Domestic same-restaurant sales percentage change” reflects the percentage change in sales in any given fiscal period, compared to the same weeks in the prior fiscal period, for domestic restaurants that have been operated during both fiscal periods that are being compared and have been open for at least 18 months. Because of new restaurant openings and restaurant closures, the domestic restaurants open throughout both fiscal periods being compared may be different from period to period.


Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

 

Restaurant Development Activity    Three Months
Ended
December 31,
  Twelve Months Ended
December 31,
     2023   2022   2023   2022
                  
     (Unaudited)

Applebee’s

  

Summary - beginning of period:

        

Franchise

     1,652       1,601       1,678       1,611  

Company

           69             69  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of period         1,652          1,670          1,678       1,680  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Franchise restaurants opened:

        

Domestic

           2       3       4  

International

     2       11       7       12  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total franchise restaurants opened

     2       13       10       16  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Franchise restaurants permanently closed:

        

Domestic

     (8     (4     (36     (13

International

     (4     (1     (10     (5
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total franchise restaurants permanently closed

     (12     (5     (46     (18
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net franchise restaurant development (reduction)

     (10     8       (36     (2

Refranchised from Company restaurants

           69             69  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net franchise restaurant additions (reductions)

     (10     77       (36     67  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary - end of period:

        

Franchise

     1,642       1,678       1,642       1,678  

Company

                        
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Applebee’s restaurants, end of period

     1,642       1,678       1,642       1,678  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic

     1,536       1,569       1,536       1,569  

International

     106       109       106       109  

IHOP

        

Summary - beginning of period:

        

Franchise

     1,638       1,610       1,625       1,595  

Area license

     156       156       156       156  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total IHOP restaurants, beginning of period

     1,794       1,766       1,781       1,751  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Franchise/area license restaurants opened:

        

Domestic franchise

     16       14       43       34  

Domestic area license

     1       1       3       3  

International franchise

     5       4       16       14  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total franchise/area license restaurants opened

     22       19       62       51  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Franchise/area license restaurants permanently closed:

        

Domestic franchise

     (2     (2     (25     (14

Domestic area license

           (1     (2     (3

International franchise

           (1     (2     (4
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total franchise/area license restaurants permanently closed

     (2     (4     (29     (21
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net franchise/area license restaurant additions

     20       15       33       30  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase in franchise/area license restaurants

     20       15       33       30  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary - end of period:         

Franchise

     1,657       1,625       1,657       1,625  

Area license

     157       156       157       156  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total IHOP restaurants, end of period

     1,814       1,781       1,814       1,781  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic

     1,696       1,677       1,696       1,677  

International

     118       104       118       104  


As of December 31, 2023, 44 franchise groups operated 131 Fuzzy’s restaurants in 18 states within the United States and we had one company-owned restaurant in Texas, totaling 132 restaurants. Fuzzy’s average weekly sales for the three and twelve months ended December 31, 2023 were $27,406 and $30,547, respectively.

The restaurant counts and activity presented above do not include one domestic Applebee’s ghost kitchen (small kitchens with no store-front presence, used to fill off-premise orders), 10 international Applebee’s ghost kitchens and 33 international IHOP ghost kitchens at December 31, 2023. There were seven domestic and 15 international Applebee’s ghost kitchens and 42 international IHOP ghost kitchens at December 31, 2022.