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8-K

 

 

 

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 1, 2019

 

 

Dine Brands Global, Inc.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware   001-15283   95-3038279                

(State or other jurisdiction
of incorporation or organization)

  (Commission File
No.)
 

(I.R.S. Employer                

Identification No.)                

                450 North Brand  Boulevard, Glendale,

California

    91203-2306                            

                     (Address of principal executive offices)

    (Zip Code)                            

(818) 240-6055

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2. below):

 

☐    

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐    

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐    

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐    

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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. ☐

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

 

 

 


Item 2.02 Results of Operations and Financial Condition

On May 1, 2019, Dine Brands Global, Inc., a Delaware corporation (the “Corporation”), issued a press release announcing its first quarter 2019 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 1, 2019.

 

2


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Date: May 1, 2019    

DINE BRANDS GLOBAL, INC.

    By:      

/s/ Thomas H. Song                                                         

     

Thomas H. Song

     

Chief Financial Officer

 

3

EX-99.1

Exhibit 99.1

 

LOGO

 

 

   News Release

Investor Contact

Ken Diptee

Executive Director, Investor Relations

Dine Brands Global, Inc.

818-637-3632

Media Contact

Thien Ho

Executive Director, Communications

Dine Brands Global, Inc.

818-549-4238

Dine Brands Global, Inc. Reports Strong First Quarter 2019 Results

Earnings Per Diluted Share (GAAP) Increased 88%

Adjusted Earnings Per Diluted Share (Non-GAAP) Increased 71.2%

Net Income Increased 85.3%; Adjusted EBITDA (Non-GAAP) Increased 40.4%

GLENDALE, Calif., May 1, 2019 – Dine Brands Global, Inc. (NYSE: DIN), the parent company of Applebee’s Neighborhood Grill + Bar® and IHOP® restaurants, today announced financial results for the first quarter of 2019.

“Dine Brands delivered another impressive quarter. Our performance and momentum reflect the continued improvement in our core business. We delivered double-digit growth in several key metrics. The implementation of multi-pronged strategies at Applebee’s and IHOP have produced positive results. Both brands reported positive comparable sales growth for the first quarter, lapping over positive sales results for the first quarter of 2018,” said Steve Joyce, Chief Executive Officer of Dine Brands Global, Inc.

Mr. Joyce continued, “We are taking a long-term approach to managing the business and focusing on platforms that will deliver sustainable positive results. This includes expanding our off-premise business at both brands and investing in guest-facing technology, where we have made foundational changes to further enhance the guest experience. With the great work being done across the organization, I am enthusiastic about the road ahead.”

 

($ in 000’s, except per share amounts)    First Quarter  
      2019      2018     % Change  

Total revenues, excluding Company restaurant sales

     $201,447        $188,163       7.1

Net income available to common stockholders per diluted share

     $1.73        $0.92       88.0

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

     $1.90        $1.11       71.2

Net income

     $31,643        $17,073       85.3

Adjusted EBITDA(1)(2)

     $74,649        $53,169       40.4

(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.


Page 2 of 14

 

Key Highlights

 

   

Total revenues, excluding Company restaurant sales, increased 7.1% to $201.4 million for the first quarter of 2019 compared to $188.2 million for the same period last year.

 

   

IHOP business segment revenues, inclusive of Rental and Financing revenues, accounted for approximately 66% of total revenues, excluding advertising revenues and Company restaurant sales, during the first quarter of 2019.

 

   

IHOP’s reported system-wide sales for the first quarter of 2019 increased 2.4% to $873.1 million compared to $852.9 million for the first quarter of 2018.

 

   

Gross profit for the first quarter of 2019 increased 22.8% to $102.6 million compared to $83.5 million for the first quarter of 2018. The increase in gross profit was mainly due to a $13.5 million franchisor contribution to the Applebee’s national advertising fund in the first quarter 2018 that did not recur in the first quarter of 2019. IHOP restaurant development and increased IHOP and Applebee’s royalties contributed to the increase in gross profit.

 

   

The Company restaurant segment contributed approximately $4.2 million of gross profit during their first full quarter of ownership.

 

   

GAAP earnings per diluted share increased 88.0% to $1.73 for the first quarter of 2019 compared to $0.92 for the first quarter of 2018.

 

   

Adjusted earnings per diluted share increased 71.2% to $1.90 for the first quarter of 2019 compared to $1.11 for the first quarter of 2018. (See “Non-GAAP Financial Measures” below.)

 

   

GAAP net income for the first quarter of 2019 increased 85.3% to $31.6 million compared to $17.1 million for the first quarter of 2018.

 

   

Consolidated adjusted EBITDA the first quarter of 2019 increased 40.4% to $74.6 million compared to $53.2 million for the first quarter of 2018. (See “Non-GAAP Financial Measures” and reconciliation of GAAP net income to consolidated adjusted EBITDA.)

 

   

For the three-month period ended March 31, 2019, the Company repurchased 151,316 shares of its common stock for a total cost of approximately $12.0 million and paid quarterly cash dividends totaling approximately $11.2 million.

 

   

Cash flows from operating activities were approximately $28.9 million for the first quarter of 2019 compared to approximately $16.5 million for the first quarter of 2018. Adjusted free cash flow was approximately $27.7 million for the first quarter of 2019. This compares to approximately $15.3 million for the first quarter of 2018. (See “Non-GAAP Financial Measures” and reconciliation of the Company’s cash provided by operating activities to adjusted free cash flow.)

 

   

Over 1,100 IHOP restaurants, or approximately 65% of the domestic system, have the new Rise ‘N Shine remodel image (including new restaurant openings).

 

   

Growth in off-premise sales at both brands during the first quarter of 2019 was primarily driven by online channels.


Page 3 of 14

 

Domestic System Same-Restaurant Sales Performance

 

   

Applebee’s comparable same-restaurant sales increased 1.8% for the first quarter of 2019, achieving the sixth consecutive quarter of sales growth.

 

   

IHOP’s comparable same-restaurant sales increased 1.2% for the first quarter of 2019, achieving the fifth consecutive quarter of sales growth.

GAAP Effective Tax Rate

Our effective tax rate of 23.1% for the first quarter of 2019 was lower than the effective tax rate of 24.8% for the comparable period of 2018 due to the recognition of excess tax benefits on stock-based compensation during the first quarter of 2019.

New Lease Accounting Standards ASC 842

Effective January 1, 2019, we adopted the lease accounting guidance codified in ASC 842. Upon adoption, we recognized operating lease obligations of approximately $453.0 million, discounted using the Company’s incremental borrowing rate and an adjustment to retained earnings upon adoption of $5.0 million, net of tax of $1.7 million. We reclassified $43.3 million of accrued rent payments and $7.4 million of previously established lease-related reserves. In offsetting these amounts, we recognized operating lease right-of-use assets of approximately $395.6 million.

Adoption of ASC 842 had no significant impact on our cash flows from operations or its results of operations.

Financial Performance Guidance for Fiscal 2019

Dine Brands reiterates its financial performance guidance for 2019 contained in the press release issued on February 21, 2019 and the Form 8-K filed on the same day. The projections are as of this date and do not take into consideration any transactions the Company may enter into after such date that may impact this guidance. The Company assumes no obligation to update or supplement these estimates.

First Quarter of 2019 Results Conference Call Details

Dine Brands will host a conference call to discuss its results on May 1, 2019 at 6:00 a.m. Pacific Time/9:00 a.m. Eastern Time. To participate on the call, please dial (888) 771-4371 and reference passcode 48515883. International callers, please dial (847) 585-4405 and reference passcode 48515883.

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 8:30 a.m. Pacific Time/11:30 a.m. Eastern Time on May 1, 2019 through 8:59 p.m. Pacific Time/11:59 p.m. Eastern Time on May 8, 2019 by dialing (888) 843-7419 and referencing passcode 48515883#. International callers, please dial (630) 652-3042 and reference passcode 48515883#. An online archive of the webcast will also be available on Events and Presentations under the Investors section of the Company’s website.

About Dine Brands Global, Inc.

Based in Glendale, California, Dine Brands Global, Inc. (NYSE: DIN), through its subsidiaries, franchises restaurants under both the Applebee’s Neighborhood Grill + Bar and IHOP brands. With approximately 3,700 restaurants combined in 18 countries and approximately 380 franchisees, Dine Brands is one of


Page 4 of 14

 

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 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 series 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


Page 5 of 14

 

free cash flow does not represent residual cash flow available for discretionary purposes. Additionally, adjusted EPS is one of the metrics used in determining payouts under the Company’s annual cash incentive plan. Management believes that these non-GAAP financial measures provide additional meaningful information that should be considered when assessing the business and the Company’s performance compared to prior periods and the marketplace. Adjusted EPS and adjusted free cash flow are supplemental non-GAAP financial measures and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with U.S. GAAP.


Page 6 of 14

 

Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(In thousands, except per share amounts)

(Unaudited)

 

             Three Months Ended        
March 31,
 
           2019                 2018        

Revenues:

    

Franchise revenues:

    

Royalties, franchise fees and other

   $ 96,296      $ 91,477   

Advertising revenue

     72,630        63,836   
  

 

 

   

 

 

 

Total franchise revenues

     168,926        155,313   

Company restaurant sales

     35,735        —   

Rental revenues

     30,711        30,841   

Financing revenues

     1,810        2,009   
  

 

 

   

 

 

 

Total revenues

             237,182        188,163   
  

 

 

   

 

 

 

Cost of revenues:

    

Franchise expenses:

    

Advertising expenses

     72,630        63,836   

Other franchise expenses

     7,673        18,036   
  

 

 

   

 

 

 

Total franchise expenses

     80,303        81,872   

Company restaurant expenses

     31,538        —   

Rental expenses:

    

Interest expense from finance leases

     1,529        1,877   

Other rental expenses

     21,095        20,764   
  

 

 

   

 

 

 

Total rental expenses

     22,624        22,641   

Financing expenses

     146        150   
  

 

 

   

 

 

 

Total cost of revenues

     134,611                104,663   
  

 

 

   

 

 

 

Gross profit

     102,571        83,500   

General and administrative expenses

     42,819        41,911   

Interest expense, net

     15,393        15,199   

Amortization of intangible assets

     2,924        2,502   

Closure and impairment charges

     194        2,604   

Loss (gain) on disposition of assets

     109        (1,427)  
  

 

 

   

 

 

 

Income before income tax provision

     41,132        22,711   

Income tax provision

     (9,489)       (5,638)  
  

 

 

   

 

 

 

Net income

   $ 31,643      $ 17,073   
  

 

 

   

 

 

 

Net income available to common stockholders:

          

Net income

   $ 31,643      $ 17,073   

Less: Net income allocated to unvested participating restricted stock

     (1,111)       (568)  
  

 

 

   

 

 

 

Net income available to common stockholders

   $ 30,532      $ 16,505   
  

 

 

   

 

 

 

Net income available to common stockholders per share:

    

Basic

   $ 1.76      $ 0.93   
  

 

 

   

 

 

 

Diluted

   $ 1.73      $ 0.92   
  

 

 

   

 

 

 

Weighted average shares outstanding:

          

Basic

     17,343        17,703   
  

 

 

   

 

 

 

Diluted

     17,690        17,845   
  

 

 

   

 

 

 

Dividends declared per common share

   $ 0.69      $ 0.63   
  

 

 

 

Dividends paid per common share

   $ 0.63      $ 0.97   
  

 

 

 


Page 7 of 14

 

Dine Brands Global, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share amounts

 

           March 31, 2019             December 31, 2018    
Assets    (Unaudited)        

Current assets:

    

Cash and cash equivalents

   $ 132,932      $ 137,164   

Receivables, net

     97,786        137,504   

Restricted cash

     36,654        48,515   

Prepaid gift card costs

     30,045        38,195   

Prepaid income taxes

     19,370        17,402   

Other current assets

     5,980        3,410   
  

 

 

   

 

 

 

Total current assets

     322,767        382,190   

Other intangible assets, net

     583,040        585,889   

Operating lease right-of-use assets

     383,962        —   

Goodwill

     343,862        345,314   

Property and equipment, net

     225,396        240,264   

Long-term receivables, net

     99,582        103,102   

Deferred rent receivable

     75,569        77,069   

Non-current restricted cash

     14,700        14,700   

Other non-current assets, net

     27,239        26,152   
  

 

 

   

 

 

 

Total assets

   $ 2,076,117      $ 1,774,680   
  

 

 

   

 

 

 
Liabilities and Stockholders’ Deficit             

Current liabilities:

    

Current maturities of long-term debt

   $ —      $ 25,000   

Accounts payable

     37,726        43,468   

Gift card liability

     115,974        160,438   

Current maturities of operating lease obligations

     67,340        —   

Current maturities of finance lease and financing obligations

     13,708        14,031   

Accrued employee compensation and benefits

     15,338        27,479   

Dividends payable

     12,461        11,389   

Deferred franchise revenue, short-term

     10,376        10,138   

Other accrued expenses

     30,167        24,243   
  

 

 

   

 

 

 

Total current liabilities

     303,090        316,186   

Long-term debt, less current maturities

     1,274,916        1,274,087   

Operating lease obligations, less current maturities

     386,364        —   

Finance lease obligations, less current maturities

     87,624        87,762   

Financing obligations, less current maturities

     38,306        38,482   

Deferred income taxes, net

     102,074        105,816   

Deferred franchise revenue, long-term

     62,472        64,557   

Other non-current liabilities

     12,092        90,063   
  

 

 

   

 

 

 

Total liabilities

     2,266,938        1,976,953   
  

 

 

   

 

 

 

Commitments and contingencies

    

Stockholders’ deficit:

    

Common stock, $0.01 par value; shares: 40,000,000 authorized; March 31, 2019 - 24,974,665 issued, 17,650,765 outstanding; December 31, 2018 - 24,984,898 issued, 17,644,267 outstanding

     250        250   

Additional paid-in-capital

     239,585        237,726   

Retained earnings

     24,588        10,414   

Accumulated other comprehensive loss

     (61)       (60)  

Treasury stock, at cost; shares: March 31, 2019 - 7,323,900; December 31, 2018 - 7,340,631

     (455,183)       (450,603)  
  

 

 

   

 

 

 

Total stockholders’ deficit

     (190,821)       (202,273)  
  

 

 

   

 

 

 

Total liabilities and stockholders’ deficit

   $           2,076,117      $           1,774,680   
  

 

 

   

 

 

 


Page 8 of 14

 

Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

               Three Months Ended          
March 31,
 
           2019                  2018        

Cash flows from operating activities:

     

Net income

   $ 31,643       $ 17,073   

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

     

Depreciation and amortization

     10,179         7,940   

Non-cash stock-based compensation expense

     4,107         3,368   

Non-cash interest expense

     1,118         864   

Closure and impairment charges

     194         2,594   

Deferred income taxes

     (1,149)        (1,182)  

(Loss) gain on disposition of assets

     109         (1,421)  

Other

     (3,976)        (6,199)  

Changes in operating assets and liabilities:

     

Accounts receivable, net

     (3,210)        (8,804)  

Current income tax receivables and payables

     (1,399)        5,529   

Gift card receivables and payables

     (890)        (2,269)  

Other current assets

     (2,570)        5,709   

Accounts payable

     1,826         65   

Accrued employee compensation and benefits

     (12,141)        (3,448)  

Other current liabilities

     5,088         (3,351)  
  

 

 

    

 

 

 

Cash flows provided by operating activities

     28,929         16,468   
  

 

 

    

 

 

 

Cash flows from investing activities:

     

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

     5,260         4,930   

Additions to property and equipment

     (4,717)        (3,488)  

Proceeds from sale of property and equipment

     400         655   

Additions to long-term receivables

     (395)        (2,325)  

Other

     (100)        (27)  
  

 

 

    

 

 

 

Cash flows provided by (used in) investing activities

     448         (255)  
  

 

 

    

 

 

 

Cash flows from financing activities:

     

Repayment of Variable Funding Notes

     (25,000)        —   

Repayment of long-term debt

     —         (3,250)  

Dividends paid on common stock

     (11,153)        (17,453)  

Repurchase of common stock

     (10,802)        (10,003)  

Principal payments on finance lease obligations

     (3,466)        (4,536)  

Proceeds from stock options exercised

     6,768         456   

Tax payments for restricted stock upon vesting

     (1,817)        (1,083)  
  

 

 

    

 

 

 

Cash flows used in financing activities

     (45,470)        (35,869)  
  

 

 

    

 

 

 

Net change in cash, cash equivalents and restricted cash

     (16,093)        (19,656)  

Cash, cash equivalents and restricted cash at beginning of period

     200,379         163,146   
  

 

 

    

 

 

 

Cash, cash equivalents and restricted cash at end of period

   $           184,286       $           143,490   
  

 

 

    

 

 

 


Page 9 of 14

 

Dine Brands Global, Inc. and Subsidiaries

Non-GAAP Financial Measures

(In thousands, except per share amounts)

(Unaudited)

Reconciliation of net income available to common stockholders to net income available to common stockholders, as adjusted for the following items: closure and impairment charges; amortization of intangible assets; non-cash interest expense; gain or loss on disposition of assets; nonrecurring restaurant costs; and the combined tax effect of the preceding adjustments, as well as related per share data:

 

             Three Months Ended          
     March 31,  
           2019                 2018        

Net income available to common stockholders, as reported

   $ 30,532      $ 16,505   

Closure and impairment charges

     194        2,604   

Amortization of intangible assets

     2,924        2,502   

Non-cash interest expense

     1,118        864   

Loss (gain) on disposition of assets

     109        (1,427)  

Nonrecurring restaurant costs

     61        —   

Income tax provision

     (1,146)       (1,181)  

Net income allocated to unvested participating restricted stock

     (112)       (111)  
  

 

 

   

 

 

 

Net income available to common stockholders, as adjusted

   $ 33,680      $ 19,756   
  

 

 

   

 

 

 

Diluted net income available to common stockholders per share:

    

Net income available to common stockholders, as reported

   $ 1.73      $ 0.92   

Closure and impairment charges

     0.01        0.11   

Amortization of intangible assets

     0.12        0.10   

Non-cash interest expense

     0.05        0.04   

Loss (gain) on disposition of assets

     0.00        (0.06)  

Nonrecurring restaurant costs

     0.00        —   

Net income allocated to unvested participating restricted stock

     (0.01)       (0.00)  

Rounding

     —        —   
  

 

 

   

 

 

 

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

   $ 1.90      $ 1.11   
  

 

 

   

 

 

 

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

   $         33,680      $         19,756   

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

     15         
  

 

 

   

 

 

 

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

   $ 33,695      $ 19,757   
  

 

 

   

 

 

 

Denominator for basic EPS-weighted-average shares

     17,343        17,703   

Dilutive effect of stock options

     347        142   
  

 

 

   

 

 

 

Denominator for diluted EPS-weighted-average shares and assumed conversions

     17,690        17,845   
  

 

 

   

 

 

 


Page 10 of 14

 

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.

 

     Three Months Ended  
     March 31,  
               2019                         2018            
    

(In millions)

 

Cash flows provided by operating activities

   $ 28.9      $ 16.5   

Receipts from notes and equipment contracts receivable

     3.5        2.3   

Additions to property and equipment

     (4.7)       (3.5)  
  

 

 

   

 

 

 

Adjusted free cash flow

     27.7        15.3   

Dividends paid on common stock

     (11.2)       (17.5)  

Repurchase of Dine Brands Global common stock

     (10.8)       (10.0)  
  

 

 

   

 

 

 
   $ 5.7      $ (12.2)  
  

 

 

   

 

 

 


Page 11 of 14

 

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, adjusted for 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, 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 evaluation the performance of the company and to make certain business decisions.

 

     Three Months Ended  
     March 31,  
             2019                      2018          

Net income, as reported

   $ 31,643       $ 17,073   

Interest charges on finance leases

     2,083         1,877   

All other interest charges

     16,642         15,950   

Income tax provision

     9,489         5,638   

Depreciation and amortization

     10,179         7,940   

Non-cash stock-based compensation

     4,107         3,369   

Closure and impairment charges

     194         2,604   

Loss (gain) on disposition of assets

     109         (1,427)  

Other taxes

     203         145   
  

 

 

    

 

 

 

Adjusted EBITDA

   $ 74,649       $ 53,169   
  

 

 

    

 

 

 


Page 12 of 14

 

Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

The following table sets forth, for the three months ended March 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
     March 31,
             2019                   2018        

Applebee’s

    

Effective Restaurants(a)

    

Franchise

     1,762        1,923   

Company

     69        
  

 

 

 

 

 

 

 

Total

     1,831       1,923  
  

 

 

 

 

 

 

 

System-wide(b)

    

Domestic sales percentage change(c)

     (1.4 )%      0.9

Domestic same-restaurant sales percentage change(d)

     1.8     3.3

Franchise(b)

    

Domestic sales percentage change(c)

     (4.7 )%      0.9

Domestic same-restaurant sales percentage change(d)

     1.6     3.3

Average weekly domestic unit sales (in thousands)

     $            49.6       $            47.6  

IHOP

    

Effective Restaurants(a)

    

Franchise

     1,657       1,619  

Area license

     156       164  
  

 

 

 

 

 

 

 

Total

     1,813       1,783  
  

 

 

 

 

 

 

 

System-wide(b)

    

Sales percentage change(c)

     2.4     3.9

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

     1.2     1.0

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

     1.1     1.0

Franchise(b)

    

Sales percentage change(c)

     2.3     4.9

Domestic same-restaurant sales percentage change(d)

     1.1     1.0

Average weekly unit sales (in thousands)

     $            37.1       $            37.1  

Area License (b)

    

Sales percentage change(c)

     2.7     (0.2 )% 


Page 13 of 14

 

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 months ended March 31, 2019 and 2018 and sales by company-operated restaurants were as follows:

 

     Three Months Ended  
     March 31,  
             2019                      2018          
     (In millions)  

Reported sales

     

Applebee’s domestic franchise restaurant sales

   $ 1,044.2       $ 1,095.6   

Applebee’s company-operated restaurants

     35.7         —   

IHOP franchise restaurant sales

     798.8         780.6   

IHOP area license restaurant sales

     74.3         72.3   
  

 

 

    

 

 

 

Total

   $ 1,953.0       $ 1,948.5   
  

 

 

    

 

 

 

 

(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.


Page 14 of 14

 

Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

The following table summarizes our restaurant development activity:

 

     Three Months Ended  
     March 31,  
               2019                          2018            

Applebee’s Restaurant Development Activity

     

Summary - beginning of period:

     

Franchise

     1,768         1,936   

Company restaurants

     69         —   
  

 

 

    

 

 

 

Beginning of period

     1,837         1,936   
  

 

 

    

 

 

 

Franchise restaurants opened:

     

International

     —          
  

 

 

    

 

 

 

Total franchise restaurants opened

     —          
  

 

 

    

 

 

 

Franchise restaurants closed:

     

Domestic

     (4)        (22)  

International

     (3)        (4)  
  

 

 

    

 

 

 

Total franchise restaurants closed

     (7)        (26)  
  

 

 

    

 

 

 

Net franchise restaurant reduction

     (7)        (24)  

Summary - end of period:

     

Franchise

     1,761         1,912   

Company

     69         —   
  

 

 

    

 

 

 

Total Applebee’s restaurants, end of period

     1,830         1,912   
  

 

 

    

 

 

 

Domestic

     1,689         1,760   

International

     141         152   

IHOP Restaurant Development Activity

     

Summary - beginning of period:

     

Franchise

     1,669         1,622   

Area license

     162         164   
  

 

 

    

 

 

 

Total IHOP restaurants, beginning of period

     1,831         1,786   
  

 

 

    

 

 

 

Franchise/area license restaurants opened:

     

Domestic franchise

            13   

International franchise

     —          
  

 

 

    

 

 

 

Total franchise/area license restaurants opened

            16   
  

 

 

    

 

 

 

Franchise/area license restaurants closed:

     

Domestic franchise

     (11)        (5)  

Domestic area license

     (3)        —   

International franchise

     (1)        (6)  
  

 

 

    

 

 

 

Total franchise/area license restaurants closed

     (15)        (11)  
  

 

 

    

 

 

 

Net franchise/area license restaurant (reduction) development

     (9)         

Refranchised from Company restaurants

     —          

Franchise restaurants reacquired by the Company

     —         (1)  
  

 

 

    

 

 

 

Net franchise/area license restaurant (reductions) additions

     (9)         
  

 

 

    

 

 

 

Summary - end of period

     

Franchise

     1,663         1,627   

Area license

     159         164   
  

 

 

    

 

 

 

Total IHOP restaurants, end of period

     1,822         1,791   
  

 

 

    

 

 

 

Domestic

     1,697         1,679   

International

     125         112