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Dine Brands Global, Inc. Reports First Quarter 2024 Results

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.

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.
  • 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 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.

FBN-R

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

Assets

 

(Unaudited)

 

 

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

 

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.

Contacts

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

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