8-K
false 0000049754 0000049754 2024-05-08 2024-05-08

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): May 8, 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 May 8, 2024, Dine Brands Global, Inc., a Delaware corporation (the “Corporation”), issued a press release announcing its first quarter 2024 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 May 8, 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: May 8, 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.

Mediainquiries@dinebrands.com

Dine Brands Global, Inc. Reports First Quarter 2024 Results

PASADENA, Calif., May 8, 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 first quarter of fiscal year 2024.

“While we are not content with the start of the year, we are encouraged by the response of our value offerings and targeted promotions which drove improved performance as the quarter progressed,” said John Peyton, chief executive officer, Dine Brands Global, Inc. “This quarter is an important reminder that our guests are craving abundant value and we are committed to meet their need through our upcoming campaigns and new menu items, while leveraging the resources of our platform to support franchisees.”

Vance Chang, chief financial officer, Dine Brands Global, Inc. added, “Our brands have been tested through many economic cycles in the past decades and while our first quarter results reflect the impact of consumer price sensitivity and challenging weather conditions, our fundamental business model remains steady with solid cash flow and positioning us to deliver on our guidance for the year.”

Domestic Restaurant Sales for the First Quarter of 2024

 

   

Applebee’s year-over-year domestic comparable same-restaurant sales declined 4.6% for the first quarter of 2024. Off-premise sales mix accounted for 22.1% in the first quarter of 2024 compared to 23.1% in the first quarter of 2023.

 

   

IHOP’s year-over-year domestic comparable same-restaurant sales declined 1.7% for the first quarter of 2024. Off-premise sales mix accounted for 21.0% in the first quarter of 2024 compared to 21.7% in the first quarter of 2023.


First Quarter of 2024 Summary

 

   

Total revenues for the first quarter of 2024 were $206.2 million compared to $213.8 million for the first quarter of 2023. The decline was primarily due to the negative comparable same-restaurant sales growth at Applebee’s and IHOP, partially offset by increases in the number of effective franchise restaurants and proprietary product sales at IHOP.

 

   

General and Administrative (“G&A”) expenses for the first quarter of 2024 were $52.2 million compared to $51.1 million for the first quarter of 2023. The variance was primarily attributable to an increase in compensation-related expenses (predominantly stock-based compensation) and an increase in consumer research expenses, partially offset by a decrease in professional services.

 

   

GAAP net income available to common stockholders was $17.0 million, or earnings per diluted share of $1.13, for the first quarter of 2024 compared to net income available to common stockholders of $26.7 million, or earnings per diluted share of $1.74 for the first quarter of 2023. The decline was primarily due to a decrease in segment profit, an increase in interest expense as a result of our April 2023 refinancing and a prior year gain on debt extinguishment, partially offset by a decrease in income taxes.

 

   

Adjusted net income available to common stockholders was $19.9 million, or adjusted earnings per diluted share of $1.33, for the first quarter of 2024 compared to adjusted net income available to common stockholders of $30.2 million, or adjusted earnings per diluted share of $1.97, for the first quarter of 2023. The decline was primarily due to a decrease in segment profit, an increase in interest expense as a result of our April 2023 refinancing and an increase in G&A expenses, partially offset by a decrease in income taxes. (See “Non-GAAP Financial Measures” and reconciliation of GAAP net income available to common stockholders to adjusted net income available to common stockholders.)

 

   

Consolidated adjusted EBITDA for the first quarter of 2024 was $60.8 million compared to $66.4 million for the first quarter of 2023. (See “Non-GAAP Financial Measures” and reconciliation of GAAP net income to consolidated adjusted EBITDA.)

 

   

Cash flows provided by operating activities for the first quarter of 2024 were $30.6 million. This compares to cash flows provided by operating activities of $16.1 million for the first quarter of 2023. The increase was primarily due to a favorable increase in working capital, partially offset by a decrease in segment profit.

 

   

Adjusted free cash flow was $29.7 million for the first quarter of 2024. This compares to adjusted free cash flow of $2.3 million for the first quarter of 2023. (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 quarter of 2024 resulted in nine new restaurant openings and the closure of 20 restaurants.

 

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Key Balance Sheet Metrics (as of March 31, 2024)

 

   

Total cash, cash equivalents and restricted cash of approximately $212.1 million, of which approximately $145.0 million was unrestricted cash.

 

   

Leverage ratio of approximately 4.3x compared to approximately 4.2x as of December 31, 2023.

 

   

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

GAAP Effective Tax Rate

The Company’s effective tax rate was 27.3% for the three months ended March 31, 2024, as compared to 24.2% for the three months ended March 31, 2023. The effective tax rate for the three months ended March 31, 2024, was higher than the rate of the prior comparable period primarily due to a lower tax deduction related to stock-based compensation.

Capital Returns to Equity Holders

During the first quarter of 2024, the Company repurchased approximately $6.0 million of its common stock and paid quarterly cash dividends totaling approximately $7.8 million.

Financial Performance Guidance for 2024

The Company reiterated its fiscal year 2024 guidance items:

 

   

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

 

   

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

 

   

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

 

   

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

 

   

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

 

   

Reiterated: 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.

 

Page 3 of 15


   

Reiterated: 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.

First quarter of 2024 Earnings Conference Call Details

Dine Brands will host a conference call to discuss its results on May 8, 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 March 31, 2024, these three brands consisted of close to 3,600 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

 

Page 4 of 15


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.

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, 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. 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 5 of 15


Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(In thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended  
     March 31,  
     2024     2023  
Revenues:   

Franchise revenues:

    

Royalties, franchise fees and other

    $ 100,616      $ 102,925  

Advertising revenues

     75,261       77,037  
  

 

 

   

 

 

 

Total franchise revenues

     175,877       179,962  

Company restaurant sales

     274       1,057  

Rental revenues

     29,549       31,951  

Financing revenues

     535       797  
  

 

 

   

 

 

 

Total revenues

     206,235       213,767  
  

 

 

   

 

 

 
Cost of revenues:     

Franchise expenses:

    

Advertising expenses

     75,261       77,037  

Bad debt expense

     183       923  

Other franchise expenses

     11,029       9,406  
  

 

 

   

 

 

 

Total franchise expenses

     86,473       87,366  

Company restaurant expenses

     299       1,079  

Rental expenses:

    

Interest expense from finance leases

     740       709  

Other rental expenses

     21,215       20,899  
  

 

 

   

 

 

 

Total rental expenses

     21,955       21,608  

Financing expenses

     84       98  
  

 

 

   

 

 

 

Total cost of revenues

     108,811       110,151  
  

 

 

   

 

 

 

Gross profit

     97,424       103,616  

General and administrative expenses

     52,187       51,087  

Interest expense, net

     18,072       14,709  

Closure and impairment charges

     634       467  

Amortization of intangible assets

     2,722       2,774  

Gain on extinguishment of debt

           (1,661

(Gain) loss on disposition of assets

     (237     71  
  

 

 

   

 

 

 

Income before income taxes

     24,046       36,169  

Income tax provision

     (6,573     (8,759
  

 

 

   

 

 

 

Net income

     17,473       27,410  

Other comprehensive (loss) income net of tax:

    

Foreign currency translation adjustment

     (2     1  
  

 

 

   

 

 

 

Total comprehensive income

   $ 17,471     $ 27,411  
  

 

 

   

 

 

 

Net income available to common stockholders:

    
Net income     $ 17,473      $ 27,410  

Less: Net income allocated to unvested participating restricted stock

     (512     (679
  

 

 

   

 

 

 

Net income available to common stockholders

    $ 16,961      $ 26,731  
  

 

 

   

 

 

 
Net income available to common stockholders per share:     

Basic

    $ 1.13      $ 1.75  
  

 

 

   

 

 

 

Diluted

    $ 1.13      $ 1.74  
  

 

 

   

 

 

 
Weighted average shares outstanding:     

Basic

     14,980       15,304  
  

 

 

   

 

 

 

Diluted

     14,980       15,339  
  

 

 

   

 

 

 


Dine Brands Global, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

 

     March 31, 2024   December 31, 2023
     (Unaudited)    
Assets     

Current assets:

    

Cash and cash equivalents

    $ 144,994      $ 146,034  

Receivables, net of allowance

     90,694       127,937  

Restricted cash

     47,631       35,058  

Prepaid gift card costs

     23,242       29,545  

Prepaid income taxes

           3,445  

Other current assets

     10,638       15,759  
  

 

 

 

 

 

 

 

Total current assets

     317,199       357,778  

Non-current restricted cash

     19,500       19,500  

Property and equipment, net

     159,706       161,891  

Operating lease right-of-use assets

     278,056       275,214  

Deferred rent receivable

     31,140       33,326  

Long-term receivables, net of allowance

     35,439       35,602  

Goodwill

     254,062       254,062  

Other intangible assets, net

     583,373       586,033  

Other non-current assets, net

     16,734       16,881  
  

 

 

 

 

 

 

 

Total assets

    $ 1,695,209      $ 1,740,287  
  

 

 

 

 

 

 

 

Liabilities and Stockholders’ Deficit     

Current liabilities:

    

Current maturities of long-term debt

    $ 100,000      $ 100,000  

Accounts payable

     42,975       36,193  

Gift card liability

     146,714       175,640  

Current maturities of operating lease obligations

     63,110       63,498  

Current maturities of finance lease and financing obligations

     6,886       7,243  

Accrued employee compensation and benefits

     11,600       23,211  

Accrued advertising expenses

     2,290       9,446  

Dividends payable

     7,881       7,827  

Other accrued expenses

     28,514       37,394  
  

 

 

 

 

 

 

 

Total current liabilities

     409,970       460,452  

Long-term debt, net, less current maturities

     1,085,002       1,084,502  

Operating lease obligations, less current maturities

     269,913       269,097  

Finance lease obligations, less current maturities

     36,489       34,389  

Financing obligations, less current maturities

     25,657       26,984  

Deferred income taxes, net

     58,808       60,829  

Deferred franchise revenue, long-term

     37,288       38,658  

Other non-current liabilities

     16,887       16,350  
  

 

 

 

 

 

 

 

Total liabilities

     1,940,014       1,991,261  
  

 

 

 

 

 

 

 

Commitments and contingencies

    

Stockholders’ deficit:

    

Common stock

     248       249  

Additional paid-in-capital

     245,680       256,542  

Retained earnings

     159,597       150,008  

Accumulated other comprehensive loss

     (66     (64

Treasury stock, at cost

     (650,264     (657,709
  

 

 

 

 

 

 

 

Total stockholders’ deficit

     (244,805     (250,974
  

 

 

 

 

 

 

 

Total liabilities and stockholders’ deficit

    $     1,695,209      $     1,740,287  
  

 

 

 

 

 

 

 


Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

     Three Months Ended
     March 31,
     2024   2023

Cash flows from operating activities:

    

Net income

    $ 17,473      $ 27,410  

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

    

Depreciation and amortization

     9,741       9,222  

Non-cash closure and impairment charges

     634       459  

Non-cash stock-based compensation expense

     4,923       1,718  

Non-cash interest expense

     803       1,171  

Gain on extinguishment of debt

           (1,661

Deferred income taxes

     1,086       (2,901

Deferred revenue

     (1,583     (1,193

(Gain) loss on disposition of assets

     (237     71  

Other

     (212     (308

Changes in operating assets and liabilities:

    

Receivables, net

     1,833       (2,369

Deferred rent receivable

     2,186       2,557  

Current income tax receivables and payables

     9,388       224  

Gift card receivables and payables

     (978     (2,310

Other current assets

     5,120       5,024  

Accounts payable

     (2,158     (7,579

Operating lease assets and liabilities

     (3,327     340  

Accrued employee compensation and benefits

     (11,449     (11,801

Accrued advertising

     (2,801     (5,067

Other current liabilities

     111       3,069  
  

 

 

 

 

 

 

 

Cash flows provided by operating activities

     30,553       16,076  
  

 

 

 

 

 

 

 

Cash flows from investing activities:

    

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

     2,525       3,345  

Additions to property and equipment

     (3,335     (16,030

Proceeds from sale of property and equipment

     81        

Additions to long-term receivables

     (371      

Other

     (74     (54
  

 

 

 

 

 

 

 

Cash flows used in investing activities

     (1,174     (12,739
  

 

 

 

 

 

 

 

Cash flows from financing activities:

    

Repayment of long-term debt

           (66,574

Dividends paid on common stock

     (7,827     (15,971

Repurchase of common stock

     (6,000     (5,000

Principal payments on finance lease and financing obligations

     (1,640     (1,870

Proceeds from stock options exercised

           584  

Repurchase of restricted stock for tax payments upon vesting

     (2,347     (3,527

Tax payments for share settlement of restricted stock units

     (29     (859

Other

     (3      
  

 

 

 

 

 

 

 

Cash flows used in financing activities

     (17,846     (93,217
  

 

 

 

 

 

 

 

Net change in cash, cash equivalents and restricted cash

     11,533       (89,880

Cash, cash equivalents and restricted cash at beginning of period

     200,592       324,984  
  

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash at end of period

    $    212,125      $    235,104  
  

 

 

 

 

 

 

 

Supplemental disclosures:

    

Interest paid in cash

    $ 19,846      $ 16,702  

Income taxes paid in cash

    $ 2,907      $ 11,937  


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 on extinguishment of debt; gain or loss on disposition of assets; acquisition costs; other EBITDA adjustments; and the combined tax effect of the preceding adjustments, as well as related per share data:

 

     Three Months Ended
March 31,
     2024   2023

Net income available to common stockholders

    $ 16,961      $ 26,731  

Closure and impairment charges

     634       467  

Amortization of intangible assets

     2,722       2,774  

Non-cash interest expense

     803       1,171  

(Gain) loss on disposition of assets

     (237     71  

Gain on extinguishment of debt

           (1,661

Acquisition costs

           771  

Other EBITDA adjustments

     200       1,217  

Net income tax provision for above adjustments

     (1,072     (1,251

Net income allocated to unvested participating restricted stock

     (85     (89
  

 

 

 

 

 

 

 

Net income available to common stockholders, as adjusted

    $ 19,926      $ 30,201  
  

 

 

 

 

 

 

 

Diluted net income available to common stockholders per share:

    

Net income available to common stockholders

    $ 1.13      $ 1.74  

Closure and impairment charges

     0.03       0.02  

Amortization of intangible assets

     0.13       0.13  

Non-cash interest expense

     0.04       0.06  

(Gain) loss on disposition of assets

     (0.01     0.00  

Gain on extinguishment of debt

           (0.08

Acquisition costs

           0.04  

Other EBITDA adjustments

     0.01       0.06  

Net income allocated to unvested participating restricted stock

     (0.01     (0.01

Rounding

     0.01       0.01  
  

 

 

 

 

 

 

 

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

    $ 1.33      $ 1.97  
  

 

 

 

 

 

 

 

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

    $ 19,926      $ 30,201  

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

           2  
  

 

 

 

 

 

 

 

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

    $   19,926      $   30,203  
  

 

 

 

 

 

 

 

Denominator for basic EPS - weighted-average shares

     14,980       15,304  

Dilutive effect of stock options

           35  
  

 

 

 

 

 

 

 

Denominator for diluted EPS - weighted-average shares

     14,980       15,339  
  

 

 

 

 

 

 

 

 

Page 9 of 16


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.

 

     Three Months Ended
March 31,
     2024   2023
     (In thousands)

Cash flows provided by operating activities

    $ 30,553      $ 16,076  

Principal receipts from notes and equipment contracts

     2,525       2,223  

Net additions to property and equipment

     (3,335     (16,030
  

 

 

 

 

 

 

 

Adjusted free cash flow

     29,743       2,269  

Repayment of long-term debt, net

           (66,574

Dividends paid on common stock

     (7,827     (15,971

Repurchase of common stock

     (6,000     (5,000
  

 

 

 

 

 

 

 

    $     15,916      $     (85,276
  

 

 

 

 

 

 

 


Dine Brands Global, Inc. and Subsidiaries

Non-GAAP Financial Measures

(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
March 31,
     2024   2023
     (In thousands)  

Net income, as reported

    $ 17,473      $ 27,410  

Interest charges on finance leases

     740       709  

All other interest charges

     20,763       17,681  

Income tax provision

     6,573       8,759  

Depreciation and amortization

     9,741       9,213  

Non-cash stock-based compensation

     4,923       1,718  

Closure and impairment charges

     634       467  

Gain on extinguishment of debt

           (1,661

Loss (gain) on disposition of assets

     (237     71  

Merger and acquisition costs

           771  

Other

     200       1,217  
  

 

 

 

 

 

 

 

Adjusted EBITDA

    $   60,810      $   66,355  
  

 

 

 

 

 

 

 


Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

The following table sets forth, for the three months ended March 31, 2024, the number of “Effective Restaurants” in the Applebee’s, IHOP and Fuzzy’s systems and information regarding the percentage change in sales at those restaurants compared to the same periods in the prior year and, as such, the percentage change in sales at Effective Restaurants is based on non-GAAP sales data. Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company. However, we believe that presentation of this information is useful in analyzing our revenues because franchisees and area licensees pay us royalties and advertising fees that are generally based on a percentage of their sales, and, where applicable, rental payments under leases that partially may be based on a percentage of their sales. Management also uses this information to make decisions about future plans for the development of additional restaurants as well as evaluation of current operations.

 

     Three Months Ended
     March 31,
     2024   2023

Applebee’s Restaurant Data

  

Global Effective Restaurants(a)

    

Franchise

     1,635       1,673  

Company

            
  

 

 

 

 

 

 

 

Total

     1,635       1,673  
  

 

 

 

 

 

 

 

System-wide(b)

    

Domestic sales percentage change(c)

     (5.9 )%      5.6

Domestic same-restaurant sales percentage change(d)

     (4.6 )%      6.1

Franchise(b)

    

Domestic sales percentage change(c)

     (5.9 )%      9.6

Domestic same-restaurant sales percentage change(d)

     (4.6 )%      5.6

Average weekly domestic unit sales (in thousands)

    $    54.7      $    56.8  

IHOP Restaurant Data

    

Global Effective Restaurants(a)

    

Franchise

     1,644       1,617  

Area license

     156       156  
  

 

 

 

 

 

 

 

Total

     1,800       1,773  
  

 

 

 

 

 

 

 

System-wide(b)

    

Sales percentage change(c)

     0.2     11.4

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

     (1.7 )%      8.7

Franchise(b)

    

Sales percentage change(c)

     0.2     11.5

Domestic same-restaurant sales percentage change(d)

     (1.9 )%      8.8

Average weekly unit sales (in thousands)

    $ 37.6      $ 38.2  

Area License(b)

    

Sales percentage change(c)

     0.0     10.3


Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

 

     Three Months Ended
     March 31,
     2024   2023

Fuzzy’s Restaurant Data

  

Global Effective Restaurants(a)

    

Franchise

     127       134  

Company

     1       3  
  

 

 

 

 

 

 

 

Total

     128       137  
  

 

 

 

 

 

 

 

System-wide(b)

    

Domestic sales percentage change(c)

     (13.1 )%      3.5

Domestic same-restaurant sales percentage change(d)

     (9.8 )%      (0.4 )% 

Franchise(b)

    

Domestic sales percentage change(c)

     (11.9 )%      3.5

Domestic same-restaurant sales percentage change(d)

     (9.8 )%      (0.5 )% 

Average weekly domestic unit sales (in thousands)

    $    28.6      $    30.8  

 

(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, IHOP and Fuzzy’s 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 and Fuzzy’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 Fuzzy’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 and Fuzzy’s franchise restaurants, Fuzzy’s company-operated restaurants, IHOP franchise restaurants and IHOP area license restaurants were as follows:

 

     Three Months Ended
March 31,
 
     2024      2023  

Reported sales (in millions)

  

Applebee’s franchise restaurant sales

    $ 1,120.9       $ 1,190.3  

IHOP franchise restaurant sales

     803.8        802.2  

IHOP area license restaurant sales

     77.8        77.8  

Fuzzy’s franchise restaurant sales

     47.3        53.6  

Fuzzy’s company-operated restaurants

     0.3        1.1  
  

 

 

    

 

 

 

Total

    $    2,050.1       $    2,125.0  
  

 

 

    

 

 

 

 

(c)

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

(d)

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


Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

 

Restaurant Development Activity    Three Months Ended
March 31,
     2024   2023

Applebee’s

  

Summary - beginning of period:

    

Franchise

     1,642       1,678  

Company

            
  

 

 

 

 

 

 

 

Beginning of period         1,642          1,678  
  

 

 

 

 

 

 

 

Franchise restaurants opened:

    

Domestic

            

International

     2       2  
  

 

 

 

 

 

 

 

Total franchise restaurants opened

     2       2  
  

 

 

 

 

 

 

 

Franchise restaurants permanently closed:

    

Domestic

     (5     (6

International

     (3     (1
  

 

 

 

 

 

 

 

Total franchise restaurants permanently closed

     (8     (7
  

 

 

 

 

 

 

 

Net franchise restaurant reduction

     (6     (5
  

 

 

 

 

 

 

 

Summary - end of period:

    

Franchise

     1,636       1,673  

Company

            
  

 

 

 

 

 

 

 

Total Applebee’s restaurants, end of period

     1,636       1,673  
  

 

 

 

 

 

 

 

Domestic

     1,531       1,563  

International

     105       110  


Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

 

Restaurant Development Activity (Continued)    Three Months Ended
March 31,
     2024   2023

IHOP

    

Summary - beginning of period:

    

Franchise

     1,657       1,625  

Area license

     157       156  

Company

            
  

 

 

 

 

 

 

 

Total IHOP restaurants, beginning of period

     1,814       1,781  
  

 

 

 

 

 

 

 

Franchise/area license restaurants opened:

    

Domestic franchise

     5       13  

Domestic area license

           2  

International franchise

     2       4  
  

 

 

 

 

 

 

 

Total franchise/area license restaurants opened

     7       19  
  

 

 

 

 

 

 

 

Franchise/area license restaurants permanently closed:

    

Domestic franchise

     (8     (8

Domestic area license

     (1     (1

International franchise

     (3     (1
  

 

 

 

 

 

 

 

Total franchise/area license restaurants permanently closed

     (12     (10
  

 

 

 

 

 

 

 

Net increase (decrease) in franchise/area license restaurants

     (5     9  
  

 

 

 

 

 

 

 

Summary - end of period:     

Franchise

     1,653       1,633  

Area license

     156       157  
  

 

 

 

 

 

 

 

Total IHOP restaurants, end of period

     1,809       1,790  
  

 

 

 

 

 

 

 

Domestic

        1,692          1,683  

International

     117       107  


Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

 

Restaurant Development Activity (Continued)    Three Months Ended
March 31,
     2024   2023

Fuzzy’s

  

Summary - beginning of period:

    

Franchise

        131          134  

Company

     1       3  
  

 

 

 

 

 

 

 

Beginning of period      132       137  
  

 

 

 

 

 

 

 

Franchise restaurants opened:

    

Domestic

            
  

 

 

 

 

 

 

 

Franchise restaurants permanently closed:

    

Domestic

     (4      
  

 

 

 

 

 

 

 

Net franchise restaurant reduction      (4 )       
  

 

 

 

 

 

 

 

Refranchised from Company restaurants

            

Net franchise restaurant reductions

     (4      
Summary - end of period:     

Franchise

     127       134  

Company

     1       3  
  

 

 

 

 

 

 

 

Total Fuzzy’s restaurants, end of period

     128       137  
  

 

 

 

 

 

 

 

Domestic

     128       137  

International

            

The restaurant counts and activity presented above do not include one domestic Applebee’s ghost kitchens (small kitchens with no store-front presence, used to fill off-premise orders), 11 international Applebee’s ghost kitchens and 41 international IHOP ghost kitchens as of March 31, 2024, and two domestic Applebee’s ghost kitchens, 12 international Applebee’s ghost kitchens and 42 international IHOP ghost kitchens as of March 31, 2023.