Dine Brands Global, Inc. Reports Solid Fourth Quarter and Full-Year 2019 Results

February 24, 2020 at 8:00 AM EST

Fourth Quarter Earnings Per Diluted Share (GAAP) Increased 8.2%

Fourth Quarter Adjusted Earnings Per Diluted Share (Non-GAAP) Increased 4.7%

Full-Year Earnings Per Diluted Share (GAAP) Increased 33.9%

Full-Year Adjusted Earnings Per Diluted Share (Non-GAAP) Increased 29.4%

GLENDALE, Calif.--(BUSINESS WIRE)--Feb. 24, 2020-- Dine Brands Global, Inc. (NYSE: DIN), the parent company of Applebee's Neighborhood Grill + Bar® and IHOP® restaurants, today announced financial results for the fourth quarter and fiscal 2019.

“This past year for Dine Brands was defined by several significant achievements. Notably, we successfully completed a $1.3 billion refinancing of our existing debt through a securitization. We delivered a significant increase in net income of 30%, which resulted in strong growth in adjusted EBITDA of 19% for the year. Our franchised business model continued to generate robust adjusted free cash flow, enabling us to both return capital to shareholders and invest in technology. We also drove significant growth in our off-premise business at both Applebee’s and IHOP and launched domestic development initiatives at IHOP to expand our footprint in high-demand locations,” said Steve Joyce, Chief Executive Officer of Dine Brands Global, Inc.

Mr. Joyce added, “We’ve built a solid foundation for sustainable growth. While we are pleased with our success, we will not be complacent. Looking ahead, we will leverage our accomplishments and focus on guest-centric decisions and opportunities that will deliver long-term profitability. We’re excited about our future and confident in our ability to build momentum.”

Financial Summary

($ in 000's, except per share amounts)

Fourth Quarter

 

Fiscal Year

2019

 

2018

 

% Change

 

2019

 

2018

 

% Change

Total revenues, excluding advertising revenues

$156,378

 

$139,461

 

12.1%

 

$627,163

 

$512,637

 

22.3%

Total revenues, excluding Company restaurant sales

$196,331

 

$207,114

 

-5.2%

 

$778,964

 

$773,847

 

0.7%

Diluted net income available to common stockholders per share

$1.59

 

$1.47

 

8.2%

 

$5.85

 

$4.37

 

33.9%

Diluted net income available to common stockholders per share, as adjusted(1)

$1.78

 

$1.70

 

4.7%

 

$6.95

 

$5.37

 

29.4%

Net income

$27,396

 

$26,981

 

1.5%

 

$104,346

 

$80,354

 

29.9%

Consolidated adjusted EBITDA(1)(2)

$67,481

 

$65,027

 

3.8%

 

$273,546

 

$230,590

 

18.6%

(1)

See “Non-GAAP Financial Measures” and reconciliation of the Non-GAAP financial measure to the respective GAAP financial measure.

(2)

Does not conform to the definition of Covenant Adjusted EBITDA as found in the Base Indenture.

Fourth Quarter and Fiscal 2019 Key Highlights

  • GAAP earnings per diluted share for the fourth quarter of 2019 increased 8.2% year-over-year to $1.59.
  • Adjusted earnings per diluted share for the fourth quarter of 2019 increased 4.7% year-over-year to $1.78. (See “Non-GAAP Financial Measures” and reconciliation of GAAP earnings per diluted share to adjusted earnings per diluted share.)
  • GAAP earnings per diluted share for fiscal 2019 increased 33.9% year-over-year to $5.85.
  • Adjusted earnings per diluted share for fiscal 2019 increased 29.4% year-over-year to $6.95. (See “Non-GAAP Financial Measures” and reconciliation of GAAP earnings per diluted share to adjusted earnings per diluted share.)
  • IHOP’s comparable same-restaurant sales increased 1.1% for the fourth quarter of 2019, achieving the eighth consecutive quarter of sales growth.
  • Applebee’s franchisees completed three transactions in 2019, bringing new and deeply experienced operators into the domestic system.
  • IHOP’s franchisees completed over 200 remodels in 2019, bringing the total number of domestic restaurants remodeled to approximately 1,100 since the inception of the current program.
  • IHOP’s reported system-wide sales for the fourth quarter of 2019 increased 2.1% year-over-year to $882.2 million.
  • General and administrative expenses for the fourth quarter of 2019 declined 7.8% year-over-year to $41.7 million.
  • Net income for fiscal 2019 increased 29.9% year-over-year to $104.3 million.
  • Consolidated adjusted EBITDA for fiscal 2019 increased 18.6% to $273.5 million compared to $230.6 million for fiscal 2018. (See “Non-GAAP Financial Measures” and reconciliation of GAAP net income to consolidated adjusted EBITDA.)
  • Cash flows from operating activities for fiscal 2019 increased 10.6% to $155.2 million compared to $140.3 million for fiscal 2018.
  • Adjusted free cash flow for fiscal 2019 increased 5.6% to $148.8 million compared to $140.9 million for fiscal 2018. (See “Non-GAAP Financial Measures” and reconciliation of the Company’s cash provided by operating activities to adjusted free cash flow.)
  • For 2019, the Company repurchased over 1.3 million shares of its common stock for a total cost of $111.7 million and paid quarterly cash dividends totaling $46.9 million.

Domestic System-Wide Comparable Same-Restaurant Sales Performance

Fourth Quarter of 2019

  • IHOP’s comparable same-restaurant sales increased 1.1% for the fourth quarter of 2019.
  • Applebee’s comparable same-restaurant sales decreased 2.5% for the fourth quarter of 2019.

Fiscal 2019

  • IHOP’s comparable same-restaurant sales increased 1.1% for 2019.
  • Applebee’s comparable same-restaurant sales decreased 0.7% for 2019.

Fourth Quarter of 2019 Financial Highlights

  • GAAP net income available to common stockholders was $26.5 million, or earnings per diluted share of $1.59, for the fourth quarter of 2019. This compares to net income available to common stockholders of $26.1 million, or earnings per diluted share of $1.47, for the fourth quarter of 2018. The increase in net income was primarily due to lower general and administrative expenses. These items were partially offset by a decline in gross profit.
  • Adjusted net income available to common stockholders was $29.7 million, or adjusted earnings per diluted share of $1.78, for the fourth quarter of 2019. This compares to adjusted net income available to common stockholders of $30.3 million, or adjusted earnings per diluted share of $1.70, for the fourth quarter of 2018. The decrease in adjusted net income was primarily due to lower gross profit and a slightly higher income tax rate. These items were partially offset by a decline in general and administrative expenses. The increase in adjusted earnings per diluted share was due to lower general and administrative expenses and fewer weighted average diluted shares outstanding. (See “Non-GAAP Financial Measures” below.)
  • General and administrative expenses were $41.7 million for the fourth quarter of 2019 compared to $45.3 million for the fourth quarter of 2018. The improvement was mainly due to lower compensation expenses and a decline in professional services costs.

Fiscal 2019 Financial Highlights

  • GAAP net income available to common stockholders was $100.8 million, or earnings per diluted share of $5.85, for 2019. This compares to net income available to common stockholders of $77.6 million, or earnings per diluted share of $4.37, for 2018. The increase in net income was primarily due to higher gross profit as the result of $30 million in franchisor contributions to the Applebee’s national advertising fund made in 2018 that did not recur in 2019. This was partially offset by approximately $8.3 million in debt extinguishment costs related to the refinancing of our long-term debt, which was completed on June 5, 2019.
  • Adjusted net income available to common stockholders was $119.7 million, or adjusted earnings per diluted share of $6.95, for 2019. This compares to adjusted net income available to common stockholders of $95.5 million, or adjusted earnings per diluted share of $5.37 for fiscal 2018. The increase in adjusted net income was primarily due to higher gross profit as the result of $30.0 million in franchisor contributions to the Applebee’s national advertising fund made in 2018 that did not recur in 2019. (See “Non-GAAP Financial Measures” below.)
  • General and administrative expenses were approximately $162.8 million for 2019 compared to $166.7 million for 2018. The improvement was mainly due to lower compensation expenses and a decline in professional services costs.

GAAP Effective Tax Rate

Our effective tax rates for the fourth quarter and fiscal 2019 were 25.0% and 24.6%, respectively.

Financial Performance Guidance for 2020

The following financial performance guidance for fiscal 2020 is based on management’s expectations as of February 24, 2020. The projections are as of this date, and the Company assumes no obligation to update or supplement these estimates.

  • Applebee’s domestic system-wide comparable same-restaurant sales performance is expected to range between 0% and positive 2.0%.
  • IHOP’s domestic system-wide comparable same-restaurant sales performance is expected to range between 0% and positive 2.0%.
  • Domestic development activity by Applebee’s franchisees is expected to result in net closures between 0 and 10 restaurants.
  • Domestic development activity by IHOP franchisees and area licensees are expected to result in net new openings between 40 and 50 restaurants.
  • Total segment profit, excluding the company restaurants segment, is expected to be between approximately $385 million and $395 million.
  • General and administrative expenses are expected to range between approximately $170 million and $175 million, including non-cash stock-based compensation expense and depreciation totaling approximately $45 million. This projection includes approximately $5 million of general and administrative expenses related to the company restaurants segment.
  • GAAP net income is expected to range between approximately $105 million and approximately $115 million.
  • Consolidated adjusted EBITDA is expected to range between approximately $275 million and approximately $285 million. This projection includes company restaurants segment EBITDA, which is expected to be between approximately $9 million and approximately $11 million. (See “Non-GAAP Financial Measures” and reconciliation of GAAP net income to consolidated adjusted EBITDA.)
  • Capital expenditures are expected to be approximately $17 million, inclusive of approximately $4 million related to the company restaurants segment.
  • GAAP earnings per diluted share is expected to range from $6.40 to $6.60.
  • Adjusted earnings per diluted share is expected to range from $7.08 to $7.28 after tax. (See “Non-GAAP Financial Measures” and reconciliation of GAAP earnings per diluted share to adjusted earnings per diluted share.)

2020 Diluted Net Income Available to Common Stockholders Per Share(1), As Adjusted Reconciliation Guidance Table

 

Net income available to common stockholders per diluted share

$6.40$6.60

Closure and impairment charges

0.08

Amortization of intangible assets

0.48

Non-cash interest expense

0.12

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

$7.08$7.28

(1)

The after-tax adjustments to net income available to common stockholders per diluted share are midpoint estimates.

2020 Net Income to Consolidated Adjusted EBITDA Reconciliation Guidance Table(1)

($ in millions)

 

Net income

 

$105$115

Interest charges on finance leases

 

8

All other interest charges

 

65

Income tax provision

 

39

Depreciation and amortization

 

43

Non-cash stock-based compensation

 

13

Impairment and closure charges

 

2

Consolidated adjusted EBITDA (Non-GAAP)

 

$275 $285

(1)

The adjustments to net income are midpoint estimates.

Fourth Quarter and Fiscal 2019 Conference Call Details

Dine Brands will host a conference call to discuss its results on February 24, 2020 at 9:00 a.m. Pacific Time/12:00 p.m. Eastern Time. To participate on the call, please dial (888) 771-4371 and reference passcode 49342172. International callers, please dial (847) 585-4405 and reference passcode 49342172.

A live webcast of the call will be available on www.dinebrands.com and may be accessed by visiting Events and Presentations under the site’s Investors section. Participants should allow approximately ten minutes prior to the call’s start time to visit the site and download any streaming media software needed to listen to the webcast. A telephonic replay of the call may be accessed from 11:30 a.m. Pacific Time on February 24, 2020 through 8:59 p.m. Pacific Time on March 2, 2020 by dialing (888) 843-7419 and referencing passcode 49342172#. International callers, please dial (630) 652-3042 and reference passcode 49342172#. An online archive of the webcast will also be available on Events and Presentations under the Investors section of the Company’s website.

About Dine Brands Global, Inc.

Based in Glendale, California, Dine Brands Global, Inc. (NYSE: DIN), through its subsidiaries, franchises restaurants under both the Applebee's Neighborhood Grill + Bar and IHOP brands. With over 3,600 restaurants combined in 17 countries and approximately 370 franchisees, Dine Brands is one of the largest full-service restaurant companies in the world. For more information on Dine Brands, visit the Company’s website located at www.dinebrands.com.

Forward-Looking Statements

Statements contained in this press release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You can identify these forward-looking statements by words such as "may," "will," “would,” "should," “could,” "expect," "anticipate," "believe," "estimate," "intend," "plan," “goal” and other similar expressions. These statements involve known and unknown risks, uncertainties and other factors, which may cause actual results to be materially different from those expressed or implied in such statements. These factors include, but are not limited to: general economic conditions; our level of indebtedness; compliance with the terms of our securitized debt; our ability to refinance our current indebtedness or obtain additional financing; our dependence on information technology; potential cyber incidents; the implementation of restaurant development plans; our dependence on our franchisees; the concentration of our Applebee’s franchised restaurants in a limited number of franchisees; the financial health of our franchisees; our franchisees’ and other licensees’ compliance with our quality standards and trademark usage; general risks associated with the restaurant industry; potential harm to our brands’ reputation; possible future impairment charges; the effects of tax reform; trading volatility and fluctuations in the price of our stock; our ability to achieve the financial guidance we provide to investors; successful implementation of our business strategy; the availability of suitable locations for new restaurants; shortages or interruptions in the supply or delivery of products from third parties or availability of utilities; the management and forecasting of appropriate inventory levels; development and implementation of innovative marketing and use of social media; changing health or dietary preference of consumers; risks associated with doing business in international markets; the results of litigation and other legal proceedings; third-party claims with respect to intellectual property assets; our ability to attract and retain management and other key employees; compliance with federal, state and local governmental regulations; risks associated with our self-insurance; natural disasters 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 Company's Annual and Quarterly Reports on Forms 10-K and 10-Q and in the Company's other filings with the Securities and Exchange Commission. The forward-looking statements contained in this release are made as of the date hereof and the Company does not intend to, nor does it assume any obligation to, update or supplement any forward-looking statements after the date hereof to reflect actual results or future events or circumstances.

Non-GAAP Financial Measures

This press release includes references to the Company's non-GAAP financial measure “adjusted net income available to common stockholders”, “adjusted earnings per diluted share (Adjusted EPS)”, “Adjusted EBITDA” and “Adjusted free cash flow.” Adjusted EPS is computed for a given period by deducting from net income or loss available to common stockholders for such period the effect of any closure and impairment charges, any gain or loss related to debt extinguishment, any intangible asset amortization, any non-cash interest expense, any gain or loss related to the disposition of assets, and other items deemed not reflective of current operations. This is presented on an aggregate basis and a per share (diluted) basis. Adjusted EBITDA is computed for a given period by deducting from net income or loss for such period the effect of any closure and impairment charges, any interest charges, any income tax provision or benefit, any non-cash stock-based compensation, any depreciation and amortization, any gain or loss related to the disposition of assets and other items deemed not reflective of current operations. “Adjusted free cash flow” for a given period is defined as cash provided by operating activities, plus receipts from notes and equipment contracts receivable, less capital expenditures. Management may use certain of these non-GAAP financial measures along with the corresponding U.S. GAAP measures to evaluate the performance of the business and to make certain business decisions. Management uses adjusted free cash flow in its periodic assessments of, among other things, the amount of cash dividends per share of common stock and repurchases of common stock and we believe it is important for investors to have the same measure used by management for that purpose. Adjusted free cash flow does not represent residual cash flow available for discretionary purposes. Additionally, adjusted EPS is one of the metrics used in determining payouts under the Company’s annual cash incentive plan. Management believes that these non-GAAP financial measures provide additional meaningful information that should be considered when assessing the business and the Company’s performance compared to prior periods and the marketplace. Adjusted EPS and adjusted free cash flow are supplemental non-GAAP financial measures and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with U.S. GAAP.

Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(In thousands, except per share amounts)

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31,

 

December 31,

 

 

2019

 

2018

 

2019

 

2018

 

 

(Unaudited)

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

Franchise revenues:

 

 

 

 

 

 

 

 

Royalties, franchise fees and other

 

$

92,259

 

 

$

99,865

 

 

$

368,171

 

 

$

375,640

 

Advertising revenue

 

71,133

 

 

74,737

 

 

283,015

 

 

268,294

 

Total franchise revenues

 

163,392

 

 

174,602

 

 

651,186

 

 

643,934

 

Company restaurant sales

 

31,180

 

 

7,084

 

 

131,214

 

 

7,084

 

Rental revenues

 

31,107

 

 

30,642

 

 

120,666

 

 

121,934

 

Financing revenues

 

1,832

 

 

1,870

 

 

7,112

 

 

7,979

 

Total revenues

 

227,511

 

 

214,198

 

 

910,178

 

 

780,931

 

Cost of revenues:

 

 

 

 

 

 

 

 

Franchise expenses:

 

 

 

 

 

 

 

 

Advertising expenses

 

69,899

 

 

76,033

 

 

281,781

 

 

269,590

 

Other franchise expenses

 

9,068

 

 

11,429

 

 

30,973

 

 

61,029

 

Total franchise expenses

 

78,967

 

 

87,462

 

 

312,754

 

 

330,619

 

Company restaurant expenses

 

30,141

 

 

5,872

 

 

123,272

 

 

5,872

 

Rental expenses:

 

 

 

 

 

 

 

 

Interest expense from finance leases

 

1,277

 

 

1,579

 

 

5,602

 

 

6,894

 

Other rental expenses

 

21,316

 

 

20,766

 

 

85,157

 

 

83,862

 

Total rental expenses

 

22,593

 

 

22,345

 

 

90,759

 

 

90,756

 

Financing expenses

 

142

 

 

148

 

 

579

 

 

597

 

Total cost of revenues

 

131,843

 

 

115,827

 

 

527,364

 

 

427,844

 

Gross profit

 

95,668

 

 

98,371

 

 

382,814

 

 

353,087

 

General and administrative expenses

 

41,710

 

 

45,260

 

 

162,815

 

 

166,683

 

Interest expense, net

 

15,160

 

 

15,576

 

 

60,393

 

 

61,686

 

Amortization of intangible assets

 

2,928

 

 

2,592

 

 

11,702

 

 

10,105

 

Closure and impairment charges

 

847

 

 

1,988

 

 

1,487

 

 

2,107

 

Loss on extinguishment of debt

 

 

 

 

 

8,276

 

 

 

Debt refinancing costs

 

 

 

(9

)

 

 

 

2,523

 

(Gain) loss on disposition of assets

 

(1,519

)

 

910

 

 

(332

)

 

(625

)

Income before income tax provision

 

36,542

 

 

32,054

 

 

138,473

 

 

110,608

 

Income tax provision

 

(9,146

)

 

(5,073

)

 

(34,127

)

 

(30,254

)

Net income

 

$

27,396

 

 

$

26,981

 

 

$

104,346

 

 

$

80,354

 

Net income available to common stockholders:

 

 

 

 

 

 

 

 

Net income

 

$

27,396

 

 

$

26,981

 

 

$

104,346

 

 

$

80,354

 

Less: Net income allocated to unvested participating restricted stock

 

(908

)

 

(917

)

 

(3,532

)

 

(2,711

)

Net income available to common stockholders

 

$

26,488

 

 

$

26,064

 

 

$

100,814

 

 

$

77,643

 

Net income available to common stockholders per share:

 

 

 

 

 

 

 

 

Basic

 

$

1.61

 

 

$

1.49

 

 

$

5.95

 

 

$

4.43

 

Diluted

 

$

1.59

 

 

$

1.47

 

 

$

5.85

 

 

$

4.37

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

16,449

 

 

17,446

 

 

16,934

 

 

17,533

 

Diluted

 

16,698

 

 

17,785

 

 

17,245

 

 

17,789

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$0.69

 

$0.63

 

$2.76

 

$2.52

Dividends paid per common share

 

$0.69

$0.63

$2.70

 

$2.86

Dine Brands Global, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share amounts

 

 

 

December 31, 2019

 

December 31, 2018

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

116,043

 

 

$

137,164

 

Receivables, net

 

136,869

 

 

137,504

 

Restricted cash

 

40,732

 

 

48,515

 

Prepaid gift card costs

 

36,077

 

 

38,195

 

Prepaid income taxes

 

13,290

 

 

17,402

 

Other current assets

 

3,906

 

 

3,410

 

Total current assets

 

346,917

 

 

382,190

 

Other intangible assets, net

 

575,103

 

 

585,889

 

Operating lease right-of-use asset

 

366,931

 

 

 

Goodwill

 

343,862

 

 

345,314

 

Property and equipment, net

 

216,420

 

 

240,264

 

Long-term receivables, net

 

85,999

 

 

103,102

 

Deferred rent receivable

 

70,308

 

 

77,069

 

Non-current restricted cash

 

15,700

 

 

14,700

 

Other non-current assets, net

 

28,271

 

 

26,152

 

Total assets

 

$

2,049,511

 

 

$

1,774,680

 

 

 

 

 

 

Liabilities and Stockholders’ Deficit

 

 

 

 

Current liabilities:

 

 

 

 

Current maturities of long-term debt

 

$

 

 

$

25,000

 

Accounts payable

 

40,925

 

 

43,468

 

Gift card liability

 

159,019

 

 

160,438

 

Current maturities of operating lease obligations

 

72,815

 

 

 

Current maturities of finance lease and financing obligations

 

13,669

 

 

14,031

 

Accrued employee compensation and benefits

 

23,904

 

 

27,479

 

Dividends payable

 

11,702

 

 

11,389

 

Deferred franchise revenue, short-term

 

10,086

 

 

10,138

 

Other accrued expenses

 

25,792

 

 

24,243

 

Total current liabilities

 

357,912

 

 

316,186

 

Long-term debt, less current maturities

 

1,288,248

 

 

1,274,087

 

Operating lease obligations, less current maturities

 

359,025

 

 

 

Finance lease obligations, less current maturities

 

77,393

 

 

87,762

 

Financing obligations, less current maturities

 

37,682

 

 

38,482

 

Deferred income taxes, net

 

98,499

 

 

105,816

 

Deferred franchise revenue, long-term

 

56,944

 

 

64,557

 

Other non-current liabilities

 

15,582

 

 

90,063

 

Total liabilities

 

2,291,285

 

 

1,976,953

 

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; December 31, 2019 - 24,925,447 issued, 16,521,921 outstanding; December 31, 2018 - 24,984,898 issued, 17,644,267 outstanding

 

249

 

 

250

 

Additional paid-in-capital

 

246,192

 

 

237,726

 

Retained earnings

 

61,653

 

 

10,414

 

Accumulated other comprehensive loss

 

(58

)

 

(60

)

Treasury stock, at cost; shares: December 31, 2019 - 8,403,526; December 31, 2018 - 7,340,631

 

(549,810

)

 

(450,603

)

Total stockholders’ deficit

 

(241,774

)

 

(202,273

)

Total liabilities and stockholders’ deficit

 

$

2,049,511

 

 

$

1,774,680

Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

 

 

 

Twelve Months Ended

 

 

December 31,

 

 

2019

 

2018

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

Net income

 

$

104,346

 

 

$

80,354

 

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

 

 

 

 

Depreciation and amortization

 

42,493

 

 

32,175

 

Non-cash stock-based compensation expense

 

10,808

 

 

10,546

 

Non-cash interest expense

 

3,369

 

 

3,792

 

Loss on extinguishment of debt

 

8,276

 

 

 

Closure and impairment charges

 

1,485

 

 

2,038

 

Deferred income taxes

 

(5,494

)

 

(11,847

)

Deferred revenue

 

(7,695

)

 

(5,577

)

Gain on disposition of assets

 

(332

)

 

(623

)

Other

 

(5,374

)

 

(949

)

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable, net

 

(396

)

 

3,149

 

Current income tax receivables and payables

 

8,677

 

 

8,119

 

Gift card receivables and payables

 

(1,037

)

 

(1,488

)

Other current assets

 

(498

)

 

10,425

 

Accounts payable

 

583

 

 

(9,940

)

Accrued employee compensation and benefits

 

(3,575

)

 

13,183

 

Other current liabilities

 

(456

)

 

6,989

 

Cash flows provided by operating activities

 

155,180

 

 

140,346

 

Cash flows from investing activities:

 

 

 

 

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

 

24,075

 

 

25,771

 

Proceeds from sale of property and equipment

 

2,540

 

 

655

 

Acquisition of business

 

 

 

(20,155

)

Additions to property and equipment

 

(19,424

)

 

(14,279

)

Additions to long-term receivables

 

(6,955

)

 

(6,500

)

Other

 

(389

)

 

(293

)

Cash flows used in investing activities

 

(153

)

 

(14,801

)

Cash flows from financing activities:

 

 

 

 

Proceeds from issuance of long-term debt

 

1,300,000

 

 

 

Repayment of long-term debt

 

(1,283,750

)

 

(13,000

)

Borrowing from revolving credit facilities

 

 

 

75,000

 

Repayment of revolving credit facilities

 

(25,000

)

 

(50,000

)

Dividends paid on common stock

 

(46,859

)

 

(51,125

)

Repurchase of common stock

 

(109,698

)

 

(33,603

)

Principal payments on finance lease obligations

 

(13,639

)

 

(13,907

)

Payment of debt issuance costs

 

(13,150

)

 

(3,633

)

Proceeds from stock options exercised

 

11,969

 

 

3,928

 

Tax payments for restricted stock upon vesting

 

(2,728

)

 

(1,972

)

Other

 

(76

)

 

 

Cash flows used in financing activities

 

(182,931

)

 

(88,312

)

Net change in cash, cash equivalents and restricted cash

 

(27,904

)

 

37,233

 

Cash, cash equivalents and restricted cash at beginning of period

 

200,379

 

 

163,146

 

Cash, cash equivalents and restricted cash at end of period

 

$

172,475

 

 

$

200,379

 

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: Amortization of intangible assets; loss on extinguishment of debt; non-cash interest expense; administrative reorganization costs; closure and impairment charges; debt refinancing costs; business acquisition costs; nonrecurring restaurant costs; gain or loss on disposition of assets; the combined tax effect of the preceding adjustments, and income tax adjustments considered unrelated to the respective current period operations, as well as related per share data:

 

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31,

 

December 31,

 

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

Net income available to common stockholders, as reported

 

$

26,488

 

 

$

26,064

 

 

$

100,814

 

 

$

77,643

 

Amortization of intangible assets

 

2,928

 

 

2,592

 

 

11,702

 

 

10,105

 

Loss on extinguishment of debt

 

 

 

 

 

8,276

 

 

 

Non-cash interest expense

 

647

 

 

1,103

 

 

3,369

 

 

3,792

 

Administrative reorganization costs

 

1,606

 

 

 

 

1,606

 

 

 

Closure and impairment charges

 

847

 

 

1,988

 

 

1,487

 

 

2,107

 

Debt refinancing costs

 

 

 

(9

)

 

 

 

2,523

 

Business acquisition costs

 

 

 

1,114

 

 

 

 

1,114

 

Nonrecurring restaurant costs

 

2

 

 

 

 

385

 

 

 

(Gain) loss on disposition of assets

 

(1,519

)

 

910

 

 

(332

)

 

(625

)

Net income tax provision for above adjustments

 

(1,173

)

 

(2,001

)

 

(6,888

)

 

(4,944

)

Income tax adjustments(1)

 

 

 

(1,310

)

 

 

 

4,434

 

Net income allocated to unvested participating restricted stock

 

(108

)

 

(154

)

 

(673

)

 

(631

)

Net income available to common stockholders, as adjusted

 

$

29,718

 

 

$

30,297

 

 

$

119,746

 

 

$

95,518

 

 

 

 

 

 

 

 

 

 

Diluted net income available to common stockholders per share:

 

 

 

 

 

 

 

 

Net income available to common stockholders, as reported

 

$

1.59

 

 

$

1.47

 

 

$

5.85

 

 

$

4.37

 

Amortization of intangible assets

 

0.13

 

 

0.11

 

 

0.50

 

 

0.42

 

Loss on extinguishment of debt

 

 

 

 

 

0.36

 

 

 

Non-cash interest expense

 

0.03

 

 

0.05

 

 

0.14

 

 

0.16

 

Administrative reorganization costs

 

0.07

 

 

 

 

0.07

 

 

 

Closure and impairment charges

 

0.04

 

 

0.08

 

 

0.06

 

 

0.09

 

Debt refinancing costs

 

0.00

 

 

(0.00

)

 

 

 

0.10

 

Business acquisition costs

 

 

 

0.05

 

 

 

 

0.05

 

Nonrecurring restaurant costs

 

0.00

 

 

 

 

0.02

 

 

 

(Gain) loss on disposition of assets

 

(0.07

)

 

0.04

 

 

(0.01

)

 

(0.03

)

Income tax adjustments(1)

 

 

 

(0.07

)

 

 

 

0.25

 

Net income allocated to unvested participating restricted stock

 

(0.01

)

 

(0.01

)

 

(0.04

)

 

(0.04

)

Rounding

 

 

 

(0.02

)

 

 

 

 

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

 

$

1.78

 

 

$

1.70

 

 

$

6.95

 

 

$

5.37

 

 

 

 

 

 

 

 

 

 

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

 

$

29,718

 

 

$

30,297

 

 

$

119,746

 

 

$

95,518

 

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

 

8

 

 

12

 

 

44

 

 

25

 

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

 

$

29,726

 

 

$

30,309

 

 

$

119,790

 

 

$

95,543

 

 

 

 

 

 

 

 

 

 

Denominator for basic EPS-weighted-average shares

 

16,449

 

 

17,446

 

 

16,934

 

 

17,533

 

Dilutive effect of stock options

 

249

 

 

339

 

 

311

 

 

256

 

Denominator for diluted EPS-weighted-average shares

 

16,698

 

 

17,785

 

 

17,245

 

 

17,789

 

(1)

Charges related to adjustments resulting from IRS audits for tax years 2011 through 2013

Dine Brands Global, Inc. and Subsidiaries
Non-GAAP Financial Measures
(Unaudited)

Reconciliation of the Company's cash provided by operating activities to “adjusted free cash flow” (cash provided by operating activities, plus receipts from notes and equipment contracts receivable, less additions to property and equipment). Management uses this liquidity measure in its periodic assessments of, among other things, the amount of cash dividends per share of common stock and repurchases of common stock. We believe it is important for investors to have the same measure used by management for that purpose. Adjusted free cash flow does not represent residual cash flow available for discretionary purposes.

 

 

Twelve Months Ended

 

 

December 31,

 

 

2019

 

2018

 

 

(In millions)

Cash flows provided by operating activities

 

$

155.2

 

 

$

140.3

 

Receipts from notes and equipment contracts receivable

 

13.0

 

 

14.9

 

Additions to property and equipment

 

(19.4

)

 

(14.3

)

Adjusted free cash flow

 

148.8

 

 

140.9

 

Dividends paid on common stock

 

(46.9

)

 

(51.1

)

Repurchase of Dine Brands Global common stock

 

(109.7

)

 

(33.6

)

 

 

$

(7.8

)

 

$

56.2

 

Dine Brands Global, Inc. and Subsidiaries
Non-GAAP Financial Measures
(in thousands)
(Unaudited)

Reconciliation of the Company's net income to “adjusted EBITDA.” The Company defines adjusted EBITDA as net income, adjusted for the effect of interest charges, income tax provision or benefit, depreciation and amortization, non-cash stock-based compensation, closure and impairment charges, debt refinancing costs, gain or loss related to the extinguishment of debt and disposition of assets, other non-income based taxes and other items deemed not reflective of current operations. Management may use certain non-GAAP measures along with the corresponding U. S. GAAP measures to evaluate the performance of the company and to make certain business decisions.

 

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31,

 

December 31,

 

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

Net income, as reported

 

$

27,396

 

 

$

26,981

 

 

$

104,346

 

 

$

80,354

 

Interest charges on finance leases

 

1,788

 

 

1,724

 

 

7,707

 

 

7,040

 

All other interest charges

 

16,192

 

 

16,205

 

 

64,072

 

 

64,497

 

Income tax provision

 

9,146

 

 

5,073

 

 

34,127

 

 

30,254

 

Depreciation and amortization

 

10,978

 

 

8,445

 

 

42,493

 

 

32,175

 

Non-cash stock-based compensation

 

2,588

 

 

2,530

 

 

10,808

 

 

10,546

 

Closure and impairment charges

 

847

 

 

1,988

 

 

1,487

 

 

2,107

 

Debt refinancing costs

 

 

 

 

 

 

 

2,523

 

Loss on extinguishment of debt

 

 

 

 

 

8,276

 

 

 

(Gain) loss on disposition of assets

 

(1,519

)

 

910

 

 

(332

)

 

(625

)

Business acquisition costs

 

 

 

1,114

 

 

 

 

1,114

 

Other taxes

 

65

 

 

57

 

 

562

 

 

605

 

Adjusted EBITDA

 

$

67,481

 

 

$

65,027

 

 

$

273,546

 

 

$

230,590

 

Dine Brands Global, Inc. and Subsidiaries
Restaurant Data
(Unaudited)

The following table sets forth, for the three and twelve months ended December 31, 2019 and 2018, 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,

 

 

2019

 

2018

 

2019

 

2018

 

 

 

Applebee's

 

 

 

 

 

 

 

 

Effective Restaurants(a)

 

 

 

 

 

 

 

 

Franchise

 

1,725

 

 

1,835

 

 

1,745

 

 

1,883

 

Company

 

69

 

 

11

 

 

69

 

 

3

 

Total

 

1,794

 

 

1,846

 

 

1,814

 

 

1,886

 

 

 

 

 

 

 

 

 

 

System-wide(b)

 

 

 

 

 

 

 

 

Domestic sales percentage change(c)

 

(3.8

)%

 

0.3

%

 

(3.0

)%

 

2.3

%

Domestic same-restaurant sales percentage change(d)

 

(2.5

)%

 

3.5

%

 

(0.7

)%

 

5.0

%

 

 

 

 

 

 

 

 

 

Franchise(b)

 

 

 

 

 

 

 

 

Domestic sales percentage change(c) (e)

 

(6.2

)%

 

(0.4

)%

 

(5.9

)%

 

2.1

%

Domestic same-restaurant sales percentage change(d)

 

(2.5

)%

 

3.4

%

 

(0.7

)%

 

4.9

%

Average weekly domestic unit sales (in thousands)

 

$

46.1

 

 

$

46.5

 

 

$

47.3

 

 

$

46.7

 

 

IHOP

 

 

 

 

 

 

 

 

Effective Restaurants(a)

 

 

 

 

 

 

 

 

Franchise

 

1,670

 

 

1,649

 

 

1,663

 

 

1,633

 

Area license

 

159

 

 

159

 

 

157

 

 

162

 

Total

 

1,829

 

 

1,808

 

 

1,820

 

 

1,795

 

 

 

 

 

 

 

 

 

 

System-wide(b)

 

 

 

 

 

 

 

 

Sales percentage change(c)

 

2.1

%

 

4.5

%

 

2.2

%

 

3.9

%

Domestic same-restaurant sales percentage change(d) (f)

 

1.1

%

 

3.0

%

 

1.1

%

 

1.5

%

 

 

 

 

 

 

 

 

 

Franchise(b)

 

 

 

 

 

 

 

 

Sales percentage change(c)

 

2.0

%

 

5.2

%

 

2.2

%

 

4.4

%

Domestic same-restaurant sales percentage change(d)

 

1.1

%

 

3.0

%

 

1.0

%

 

1.5

%

Average weekly unit sales (in thousands)

 

$

37.3

 

 

$

37.0

 

 

$

36.7

 

 

$

36.6

 

 

 

 

 

 

 

 

 

 

Area License (b)

 

 

 

 

 

 

 

 

Sales percentage change(c)

 

3.7

%

 

(3.1

)%

 

2.7

%

 

0.5

%

Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

 

(a)

“Effective Restaurants” are the weighted average number of restaurants open in a given fiscal period, adjusted to account for restaurants open for only a portion of the period. Information is presented for all Effective Restaurants in the Applebee’s and IHOP systems, which includes restaurants owned by franchisees and area licensees as well as those owned by the Company.

 

 

(b)

“System-wide” sales are retail sales at domestic Applebee’s restaurants operated by franchisees and IHOP restaurants operated by franchisees and area licensees, as reported to the Company, in addition to retail sales at company-operated restaurants. Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company. An increase or decrease in franchisees' reported sales will result in a corresponding increase or decrease in our royalty revenue. Unaudited reported sales for Applebee's domestic franchise restaurants, IHOP franchise restaurants and IHOP area license restaurants for the three and twelve months ended December 31, 2019 and 2018 and sales by company-operated restaurants were as follows:

 

Three Months Ended

 

Twelve Months Ended

 

December 31,

 

December 31,

 

2019

 

2018

 

2019

 

2018

 

(In millions)

Reported sales

 

 

 

 

 

 

 

Applebee's domestic franchise restaurant sales

$

957.1

 

 

$

1,020.6

 

 

$

3,954.3

 

 

$

4,204.1

 

Applebee's company-operated restaurants

31.2

 

 

7.1

 

 

131.2

 

 

7.1

 

IHOP franchise restaurant sales

809.9

 

 

793.9

 

 

3,174.2

 

 

3,106.7

 

IHOP area license restaurant sales

72.3

 

 

69.8

 

 

289.5

 

 

282.0

 

Total

$

1,870.5

 

 

$

1,891.4

 

 

$

7,549.2

 

 

$

7,599.9

 

(c)

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

(d)

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

(e)

The franchise sales percentage change for 2019 was impacted by the acquisition of 69 franchise restaurants in December 2018 now reported as company-operated.

(f)

IHOP same-restaurant sales data includes area license restaurants beginning in 2019.

Dine Brands Global, Inc. and Subsidiaries
Restaurant Data
(Unaudited)

The following table summarizes our restaurant development activity:

 

Three Months Ended

 

Twelve Months Ended

 

December 31,

 

December 31,

 

2019

 

2018

 

2019

 

2018

Applebee's Restaurant Development Activity

 

 

 

 

 

Summary - beginning of period:

 

 

 

 

 

 

 

Franchise

1,735

 

 

1,856

 

 

1,768

 

 

1,936

 

Company restaurants

69

 

 

 

 

69

 

 

 

Total Applebee's restaurants, beginning of period

1,804

 

 

1,856

 

 

1,837

 

 

1,936

 

Franchise restaurants opened:

 

 

 

 

 

 

 

Domestic

1

 

 

 

 

1

 

 

2

 

International

1

 

 

2

 

 

2

 

 

5

 

Total franchise restaurants opened

2

 

 

2

 

 

3

 

 

7

 

Franchise restaurants closed:

 

 

 

 

 

 

 

Domestic

(3

)

 

(14

)

 

(29

)

 

(91

)

International

(16

)

 

(7

)

 

(24

)

 

(15

)

Total franchise restaurants closed

(19

)

 

(21

)

 

(53

)

 

(106

)

Net franchise restaurant reduction

(17

)

 

(19

)

 

(50

)

 

(99

)

Franchise restaurants acquired by the Company

(69

)

(69

)

Net franchise restaurant decrease

(17

)

 

(88

)

 

(50

)

 

(168

)

Summary - end of period:

 

 

 

 

 

 

 

Franchise

1,718

 

 

1,768

 

 

1,718

 

 

1,768

 

Company

69

 

 

69

 

 

69

 

 

69

 

Total Applebee's restaurants, end of period

1,787

 

 

1,837

 

 

1,787

 

 

1,837

 

Domestic

1,665

 

 

1,693

 

 

1,665

 

 

1,693

 

International

122

 

 

144

 

 

122

 

 

144

 

 

IHOP Restaurant Development Activity

 

 

 

 

 

 

 

Summary - beginning of period:

 

 

 

 

 

 

 

Franchise

1,675

 

 

1,652

 

 

1,669

 

 

1,622

 

Area license

161

 

 

162

 

 

162

 

 

164

 

Total IHOP restaurants, beginning of period

1,836

 

 

1,814

 

 

1,831

 

 

1,786

 

Franchise/area license restaurants opened:

 

 

 

 

 

 

 

Domestic franchise

10

 

 

19

 

 

33

 

 

51

 

Domestic area license

 

 

 

 

5

 

 

3

 

International franchise

4

 

 

3

 

 

13

 

 

17

 

Total franchise/area license restaurants opened

14

 

 

22

 

 

51

 

 

71

 

Franchise/area license restaurants closed:

 

 

 

 

 

 

 

Domestic franchise

(8

)

 

(5

)

 

(27

)

 

(15

)

Domestic area license

 

 

 

 

(6

)

 

(5

)

International franchise

(1

)

 

 

 

(8

)

 

(6

)

Total franchise/area license restaurants closed

(9

)

 

(5

)

 

(41

)

 

(26

)

Net franchise/area license restaurant development

5

 

 

17

 

 

10

 

 

45

 

Refranchised from Company restaurants

 

 

 

 

 

 

1

 

Franchise restaurants reacquired by the Company

 

 

 

 

 

 

(1

)

Net franchise/area license restaurant additions

5

 

 

17

 

 

10

 

 

45

 

Summary - end of period

 

 

 

 

 

 

 

Franchise

1,680

 

 

1,669

 

 

1,680

 

 

1,669

 

Area license

161

 

 

162

 

 

161

 

 

162

 

Total IHOP restaurants, end of period

1,841

 

 

1,831

 

 

1,841

 

 

1,831

 

Domestic

1,710

 

 

1,705

 

 

1,710

 

 

1,705

 

International

131

 

 

126

 

 

131

 

 

126

 

 

Investor Contact
Ken Diptee
Executive Director, Investor Relations
Dine Brands Global, Inc.
818-637-3632

Media Contact
Susan Nelson
Vice President, Global Communications and Public Affairs
Dine Brands Global, Inc.
818-637-4726

Source: Dine Brands Global, Inc.

Investor Contact
Ken Diptee
Executive Director, Investor Relations
Dine Brands Global, Inc.
818-637-3632

Media Contact
Susan Nelson
Vice President, Global Communications and Public Affairs
Dine Brands Global, Inc.
818-637-4726