GLENDALE, Calif., Aug. 3, 2016 /PRNewswire/
-- DineEquity, Inc. (NYSE: DIN), the parent company of
Applebee's Neighborhood Grill & Bar® and
IHOP® restaurants, today announced financial results for
the second quarter of fiscal 2016.
"We posted growth in adjusted earnings per diluted share for the
second quarter, despite soft comparable sales at Applebee's and
IHOP. While we are dissatisfied with the comparable sales
results, we are confident in our clear long-term strategies for
both brands," said Julia A. Stewart,
Chairman and Chief Executive Officer of DineEquity, Inc.
Ms. Stewart concluded, "These long-term strategies will build
our brands across the spectrum of food and beverage innovation,
social and digital marketing, development expansion as well as
platforms to meet the convenience needs of today's consumer, such
as delivery, to-go initiatives and mobile applications to name a
few."
Second Quarter Fiscal 2016 Financial Summary
- GAAP net income available to common stockholders was
$26.4 million for the second quarter
of 2016, or earnings per diluted share of $1.45. This compares to net income available to
common stockholders of $26.5 million,
or earnings per diluted share of $1.40, for the second quarter of 2015. The slight
decrease in GAAP net income was mainly due to higher closure and
impairment charges and an increase in general and administrative
expenses. The decrease was partially offset by lower income tax
expense, higher gross profit and a decline in interest expense. The
increase in earnings per diluted share was due to a decrease in
weighted average diluted shares outstanding.
- Adjusted net income available to common stockholders was
$28.8 million, or adjusted earnings
per diluted share of $1.59, for the
second quarter of 2016. This compares to $28.9 million, or adjusted earnings per diluted
share of $1.53, for the same period
of 2015. The slight decrease in adjusted net income was mainly due
to higher general and administrative expenses. The increase in
adjusted earnings per diluted share was due to a decrease in
weighted average diluted shares outstanding. (See "Non-GAAP
Financial Measures" below.)
- General and administrative expenses were $36.5 million for the second quarter of 2016.
This compares to $34.6 million for
the same period of 2015. The expected increase was mainly due to
higher personnel costs for several senior management positions
filled after the first quarter of 2015. Approximately $0.5 million of the general and administrative
expenses was related to the strategic consolidation of our
restaurant support center announced on September 3, 2015.
First Six Months of Fiscal 2016 Summary
- GAAP net income available to common stockholders was
$51.6 million for the first six
months of fiscal 2016, or earnings per diluted share of
$2.82. This compares to net income
available to common stockholders of $54.6
million, or earnings per diluted share of $2.88, for the first six months of fiscal 2015.
The decrease in GAAP net income was primarily due to higher general
and administrative expenses and higher closure and impairment
charges in the first six months of fiscal 2016 compared to the same
period of 2015. The decrease was partially offset by lower income
tax expense and a decline in interest expense. Additionally,
earnings per diluted share were favorably impacted by a decrease in
weighted average diluted shares outstanding.
- Adjusted net income available to common stockholders was
$58.0 million, or adjusted earnings
per diluted share of $3.17, for the
first six months of fiscal 2016. This compares to $60.0 million, or adjusted earnings per diluted
share of $3.17, for the same period
of fiscal 2015. The decline in adjusted net income was mainly due
to higher general and administrative expenses. The decline was
partially offset by lower income taxes and a decrease in cash
interest expense. Despite the decrease in adjusted earnings,
earnings per diluted share were unchanged due to a decrease in
weighted average diluted shares outstanding. (See "Non-GAAP
Financial Measures" below.)
- General and administrative expenses were $75.9 million for the first six months of 2016.
This compares to $68.8 million for
the same period of 2015. The increase was primarily due to higher
personnel costs. Approximately $2.6
million of the increase in general and administrative
expenses was due to the strategic consolidation of our restaurant
support center.
- In the first six months of fiscal 2016, cash flows from
operating activities were $53.9
million compared to $48.1
million in the same period of fiscal 2015. Free cash flow
was $56.4 million for the first six
months of fiscal 2016, compared to $49.7
million for the first six months of fiscal 2015. (See
"Non-GAAP Financial Measures" below.)
Same-Restaurant Sales Performance
Second Quarter of Fiscal 2016
- IHOP's domestic system-wide comparable same restaurant sales
increased 0.2% for the second quarter of 2016.
- Applebee's domestic system-wide comparable same-restaurant
sales declined 4.2% for the second quarter of 2016.
First Six Months of Fiscal 2016
- IHOP's domestic system-wide comparable same restaurant sales
increased 0.8% for the first six months of fiscal 2016.
- Applebee's domestic system-wide comparable same-restaurant
sales declined 3.9% for the first six months of fiscal 2016.
Financial Performance Guidance for Fiscal 2016
DineEquity reiterates its financial performance guidance
for fiscal 2016 contained in the press release issued
on February 24, 2016 and the Form 8-K filed on February 24, 2016, except for the revisions noted
below.
- Revised Applebee's comparable same-restaurant sales
performance to range between negative 3.0% and negative 4.5%. This
compares to the previous expectations of between negative 2.0% and
positive 2.0%.
- Revised IHOP's comparable same-restaurant sales
performance to range between positive 0.5% and positive 2.0%. This
compares to the previous expectations of between positive 1.0% and
positive 4.0%.
- Revised expectations for Applebee's franchisees to
develop between 25 and 33 new restaurants, reflecting a reduction
from previous expectations of between 35 and 45 new restaurants.
IHOP franchisees and its area licensee are expected to develop
between 65 and 77 new restaurants. This compares to the previous
projections of between 60 and 70 new restaurants.
- Revised expectations for Franchise segment profit to be
between $342 million and $352
million. This compares to the previous expectations of
between $345 million and $360
million.
- Reiterated expectations for the Rental and Financing
segments to generate roughly $40
million in combined profit.
- Reiterated expectations for general and administrative
expenses to range between $154 million and
$158 million, including non-cash stock-based compensation
expense and depreciation of approximately $20 million. This amount includes approximately
$4 million of non-recurring costs
related to our restaurant support center consolidation.
- Reiterated expectations for interest expense to be
approximately $62 million.
Approximately $3 million is projected
to be non-cash interest expense.
- Revised expectations for weighted average diluted shares
outstanding to be approximately 18.2 million shares. This compares
to the previous expectations of approximately 18.5 million
shares.
- Reiterated expectations for the income tax rate to be
approximately 37%.
- Revised expectations for cash flows provided by
operating activities to range between $112
million and $120 million. This compares to previous
expectations of between $115 million and
$125 million.
- Reiterated expectations for capital expenditures to be
roughly $8 million.
- Revised expectations for free cash flow (See "Non-GAAP
Financial Measures" below) to range between $113 million and $121 million. This compares to
the original expectations of between $116
million and $126 million. Our guidance reflects
non-recurring tax payments totaling approximately $10 million related to deferred gains from the
repurchase of our debt, primarily in 2008 and 2009, approximately
$9 million in pre-tax cash payments
related to our restaurant support center consolidation and the
impact of fiscal 2016 containing 52 weeks compared to 53 weeks in
fiscal 2015, taking into account the effect on working capital,
including gift card receivables.
|
2016 Free Cash
Flow (Non-GAAP) Guidance Table
|
|
(In
millions)
|
|
|
Cash flows from
operations
|
$112 - 120
|
|
|
Approximate net
receipts from notes and equipment contracts receivable
|
9
|
|
|
Approximate capital
expenditures
|
(8)
|
|
|
Free cash flow
(Non-GAAP)
|
$113 -
121
|
|
Investor Conference Call Today
DineEquity will host a conference call to discuss its results on
the same day at 11:00 a.m. Eastern
Time/ 8:00 a.m. Pacific
Time. To participate on the call, please dial (888)
771-4371 and reference passcode 42944239. International callers,
please dial (847) 585-4405 and reference passcode 42944239.
A live webcast of the call will be available at
www.dineequity.com, and may be accessed by visiting Calls &
Presentations on 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 10:30 a.m. Pacific
Time on August 3, 2016 through
8:59 p.m. Pacific Time on
August 10, 2016 by dialing (888)
843-7419 and referencing passcode 42944239#. International callers,
please dial (630) 652-3042 and reference passcode 42944239#. An
online archive of the webcast will also be available on the
Investors section of DineEquity's website.
About DineEquity, Inc.
Based in Glendale, California,
DineEquity, Inc., through its subsidiaries, franchises and operates
restaurants under the Applebee's Neighborhood Grill & Bar and
IHOP brands. With more than 3,700 restaurants combined in 19
countries and U.S. territories and over 400 franchisees, DineEquity
is one of the largest full-service restaurant companies in the
world. For more information on DineEquity, visit the Company's Web
site located at www.dineequity.com.
Forward-Looking Statements
Statements contained in this press release may constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. You can identify these
forward-looking statements by words such as "may," "will,"
"should," "could," "expect," "anticipate," "believe," "estimate,"
"intend," "plan" 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: the effect of general economic
conditions; the Company's indebtedness; risk of future impairment
charges; trading volatility and the price of the Company's common
stock; the Company's results in any given period differing from
guidance provided to the public; the highly competitive nature of
the restaurant business; the Company's business strategy failing to
achieve anticipated results; risks associated with the restaurant
industry; risks associated with locations of current and future
restaurants; rising costs for food commodities and utilities;
shortages or interruptions in the supply or delivery of food;
ineffective marketing and guest relationship initiatives and use of
social media; changing health or dietary preferences; our
engagement in business in foreign markets; harm to our brands'
reputation; litigation; fourth-party claims with respect to
intellectual property assets; environmental liability; liability
relating to employees; failure to comply with applicable laws and
regulations; failure to effectively implement restaurant
development plans; our dependence upon our franchisees;
concentration of Applebee's franchised restaurants in a limited
number of franchisees; credit risk from IHOP franchisees operating
under our previous business model; termination or non-renewal of
franchise agreements; franchisees breaching their franchise
agreements; insolvency proceedings involving franchisees; changes
in the number and quality of franchisees; inability of franchisees
to fund capital expenditures; heavy dependence on information
technology; the occurrence of cyber incidents or a deficiency in
our cybersecurity; failure to execute on a business continuity
plan; inability to attract and retain talented employees; risks
associated with retail brand initiatives; failure of our internal
controls; 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 assumes no
obligation to update or supplement any forward-looking
statements.
Non-GAAP Financial Measures
This news release includes references to the Company's non-GAAP
financial measures "adjusted net income available to common
stockholders (adjusted EPS)," "free cash flow," and "segment
EBITDA." "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. "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. "Segment EBITDA" for a
given period is defined as gross profit plus depreciation and
amortization as well as interest charges related to the
segment. Management utilizes free cash flow to determine the
amount of cash available for general corporate and strategic
purposes and for the return of cash to stockholders pursuant to our
capital allocation strategy. Management believes this information
is helpful to investors to determine the Company's adherence to
debt covenants and the Company's cash available for these purposes.
Adjusted EPS and 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
United States generally accepted
accounting principles.
|
DineEquity, Inc. and
Subsidiaries
|
|
Consolidated
Statements of Income
|
|
(In thousands,
except per share amounts)
|
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Franchise and
restaurant revenues
|
|
$
|
126,989
|
|
|
$
|
137,768
|
|
|
$
|
256,775
|
|
|
$
|
279,586
|
|
|
Rental
revenues
|
|
30,830
|
|
|
31,132
|
|
|
62,239
|
|
|
62,534
|
|
|
Financing
revenues
|
|
2,439
|
|
|
2,649
|
|
|
4,768
|
|
|
5,243
|
|
|
Total
revenues
|
|
160,258
|
|
|
171,549
|
|
|
323,782
|
|
|
347,363
|
|
|
Cost of
revenues:
|
|
|
|
|
|
|
|
|
|
Franchise and
restaurant expenses
|
|
39,707
|
|
|
51,423
|
|
|
80,576
|
|
|
103,449
|
|
|
Rental
expenses
|
|
23,030
|
|
|
23,319
|
|
|
46,261
|
|
|
46,809
|
|
|
Financing
expenses
|
|
146
|
|
|
—
|
|
|
146
|
|
|
12
|
|
|
Total cost of
revenues
|
|
62,883
|
|
|
74,742
|
|
|
126,983
|
|
|
150,270
|
|
|
Gross
profit
|
|
97,375
|
|
|
96,807
|
|
|
196,799
|
|
|
197,093
|
|
|
General and
administrative expenses
|
|
36,511
|
|
|
34,577
|
|
|
75,935
|
|
|
68,807
|
|
|
Interest
expense
|
|
15,383
|
|
|
15,677
|
|
|
30,749
|
|
|
31,323
|
|
|
Amortization of
intangible assets
|
|
2,500
|
|
|
2,500
|
|
|
4,980
|
|
|
5,000
|
|
|
Closure and
impairment charges, net
|
|
3,291
|
|
|
475
|
|
|
3,726
|
|
|
2,302
|
|
|
(Gain) loss on
disposition of assets
|
|
(48)
|
|
|
66
|
|
|
566
|
|
|
57
|
|
|
Income before income
tax provision
|
|
39,738
|
|
|
43,512
|
|
|
80,843
|
|
|
89,604
|
|
|
Income tax
provision
|
|
(12,909)
|
|
|
(16,615)
|
|
|
(28,471)
|
|
|
(34,295)
|
|
|
Net
income
|
|
$
|
26,829
|
|
|
$
|
26,897
|
|
|
$
|
52,372
|
|
|
$
|
55,309
|
|
|
Net income
available to common stockholders:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
26,829
|
|
|
$
|
26,897
|
|
|
$
|
52,372
|
|
|
$
|
55,309
|
|
|
Less: Net income
allocated to unvested participating restricted stock
|
|
(384)
|
|
|
(359)
|
|
|
(766)
|
|
|
(726)
|
|
|
Net income available
to common stockholders
|
|
$
|
26,445
|
|
|
$
|
26,538
|
|
|
$
|
51,606
|
|
|
$
|
54,583
|
|
|
Net income
available to common stockholders per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.46
|
|
|
$
|
1.41
|
|
|
$
|
2.84
|
|
|
$
|
2.90
|
|
|
Diluted
|
|
$
|
1.45
|
|
|
$
|
1.40
|
|
|
$
|
2.82
|
|
|
$
|
2.88
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
18,085
|
|
|
18,763
|
|
|
18,173
|
|
|
18,819
|
|
|
Diluted
|
|
18,188
|
|
|
18,895
|
|
|
18,280
|
|
|
18,959
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
|
$
|
0.92
|
|
|
$
|
0.875
|
|
|
$
|
1.84
|
|
|
$
|
1.75
|
|
|
Dividends paid per
common share
|
|
$
|
0.92
|
|
|
$
|
0.875
|
|
|
$
|
1.84
|
|
|
$
|
1.75
|
|
|
DineEquity, Inc. and
Subsidiaries
|
|
Consolidated
Balance Sheets
|
|
(In thousands,
except share and per share amounts)
|
|
|
|
June 30,
2016
|
|
December 31,
2015
|
|
|
(Unaudited)
|
|
|
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
118,293
|
|
|
$
|
144,785
|
|
|
Receivables,
net
|
|
101,081
|
|
|
139,206
|
|
|
Restricted
cash
|
|
42,831
|
|
|
32,528
|
|
|
Prepaid gift card
costs
|
|
36,455
|
|
|
46,792
|
|
|
Prepaid income
taxes
|
|
—
|
|
|
5,186
|
|
|
Other current
assets
|
|
5,637
|
|
|
4,212
|
|
|
Total current
assets
|
|
304,297
|
|
|
372,709
|
|
|
Long-term
receivables, net
|
|
150,922
|
|
|
160,695
|
|
|
Property and
equipment, net
|
|
209,323
|
|
|
219,580
|
|
|
Goodwill
|
|
697,470
|
|
|
697,470
|
|
|
Other intangible
assets, net
|
|
768,096
|
|
|
772,949
|
|
|
Deferred rent
receivable
|
|
88,802
|
|
|
90,030
|
|
|
Other non-current
assets, net
|
|
18,358
|
|
|
18,417
|
|
|
Total
assets
|
|
$
|
2,237,268
|
|
|
$
|
2,331,850
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$
|
46,625
|
|
|
$
|
55,019
|
|
|
Gift card
liability
|
|
114,302
|
|
|
167,657
|
|
|
Accrued employee
compensation and benefits
|
|
14,136
|
|
|
25,085
|
|
|
Dividends
payable
|
|
16,792
|
|
|
17,082
|
|
|
Income taxes
payable
|
|
5,278
|
|
|
—
|
|
|
Current maturities of
capital lease and financing obligations
|
|
14,559
|
|
|
14,320
|
|
|
Accrued
advertising
|
|
5,948
|
|
|
8,758
|
|
|
Accrued interest
payable
|
|
4,310
|
|
|
4,257
|
|
|
Other accrued
expenses
|
|
13,725
|
|
|
6,251
|
|
|
Total current
liabilities
|
|
235,675
|
|
|
298,429
|
|
|
Long-term debt,
net
|
|
1,281,064
|
|
|
1,279,473
|
|
|
Capital lease
obligations, less current maturities
|
|
77,116
|
|
|
84,781
|
|
|
Financing
obligations, less current maturities
|
|
42,325
|
|
|
42,395
|
|
|
Deferred income
taxes, net
|
|
254,758
|
|
|
269,469
|
|
|
Deferred rent
payable
|
|
71,929
|
|
|
69,397
|
|
|
Other non-current
liabilities
|
|
18,235
|
|
|
20,683
|
|
|
Total
liabilities
|
|
1,981,102
|
|
|
2,064,627
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
Common stock, $0.01
par value, shares: 40,000,000 authorized; June 30, 2016 -
25,153,608 issued, 18,218,872 outstanding; December 31, 2015 -
25,186,048 issued, 18,535,027 outstanding
|
|
252
|
|
|
252
|
|
|
Additional
paid-in-capital
|
|
288,279
|
|
|
286,952
|
|
|
Retained
earnings
|
|
370,546
|
|
|
351,923
|
|
|
Accumulated other
comprehensive loss
|
|
(106)
|
|
|
(107)
|
|
|
Treasury stock, at
cost; shares: June 30, 2016 - 6,934,736; December 31, 2015 -
6,651,021
|
|
(402,805)
|
|
|
(371,797)
|
|
|
Total stockholders'
equity
|
|
256,166
|
|
|
267,223
|
|
|
Total liabilities and
stockholders' equity
|
|
$
|
2,237,268
|
|
|
$
|
2,331,850
|
|
|
DineEquity, Inc. and
Subsidiaries
|
|
Consolidated
Statements of Cash Flows
|
|
(In
thousands)
|
|
(Unaudited)
|
|
|
|
Six Months
Ended
|
|
|
June
30,
|
|
|
2016
|
|
2015
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net income
|
|
$
|
52,372
|
|
|
$
|
55,309
|
|
|
Adjustments to
reconcile net income to cash flows provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
15,554
|
|
|
15,855
|
|
|
Non-cash interest
expense
|
|
1,591
|
|
|
1,519
|
|
|
Deferred income
taxes
|
|
(11,896)
|
|
|
(12,612)
|
|
|
Non-cash stock-based
compensation expense
|
|
5,647
|
|
|
4,593
|
|
|
Tax benefit from
stock-based compensation
|
|
1,169
|
|
|
4,688
|
|
|
Excess tax benefit
from stock-based compensation
|
|
(865)
|
|
|
(4,572)
|
|
|
Closure and
impairment charges
|
|
1,249
|
|
|
2,302
|
|
|
Loss on disposition
of assets
|
|
566
|
|
|
57
|
|
|
Other
|
|
416
|
|
|
(1,534)
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Accounts receivable,
net
|
|
880
|
|
|
(11,249)
|
|
|
Current income tax
receivables and payables
|
|
5,291
|
|
|
5,561
|
|
|
Gift card receivables
and payables
|
|
(18,311)
|
|
|
(3,256)
|
|
|
Other current
assets
|
|
(1,424)
|
|
|
(2,299)
|
|
|
Accounts
payable
|
|
8,544
|
|
|
6,024
|
|
|
Accrued employee
compensation and benefits
|
|
(10,949)
|
|
|
(10,790)
|
|
|
Accrued interest
payable
|
|
53
|
|
|
(10,240)
|
|
|
Other current
liabilities
|
|
4,024
|
|
|
8,767
|
|
|
Cash flows provided
by operating activities
|
|
53,911
|
|
|
48,123
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Additions to property
and equipment
|
|
(1,931)
|
|
|
(4,612)
|
|
|
Proceeds from sale of
property and equipment
|
|
—
|
|
|
800
|
|
|
Principal receipts
from notes, equipment contracts and other long-term
receivables
|
|
8,658
|
|
|
9,517
|
|
|
Other
|
|
(250)
|
|
|
(110)
|
|
|
Cash flows provided
by investing activities
|
|
6,477
|
|
|
5,595
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Principal payments on
capital lease and financing obligations
|
|
(6,853)
|
|
|
(5,975)
|
|
|
Repurchase of common
stock
|
|
(35,008)
|
|
|
(35,007)
|
|
|
Dividends paid on
common stock
|
|
(34,029)
|
|
|
(33,271)
|
|
|
Tax payments for
restricted stock upon vesting
|
|
(2,432)
|
|
|
(3,010)
|
|
|
Proceeds from stock
options exercised
|
|
880
|
|
|
8,374
|
|
|
Excess tax benefit
from stock-based compensation
|
|
865
|
|
|
4,572
|
|
|
Change in restricted
cash
|
|
(10,303)
|
|
|
11,007
|
|
|
Other
|
|
—
|
|
|
(29)
|
|
|
Cash flows used in
financing activities
|
|
(86,880)
|
|
|
(53,339)
|
|
|
Net change in cash
and cash equivalents
|
|
(26,492)
|
|
|
379
|
|
|
Cash and cash
equivalents at beginning of period
|
|
144,785
|
|
|
104,004
|
|
|
Cash and cash
equivalents at end of period
|
|
$
|
118,293
|
|
|
$
|
104,383
|
|
|
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: Kansas
City Support Center consolidation costs; amortization of intangible
assets; closure and impairment charges; non-cash interest expense;
gain or loss on disposition of assets; and the combined tax effect
of the preceding adjustments; and deferred tax adjustments
considered unrelated to current period operations, as well as
related per share data:
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Net income available
to common stockholders, as reported
|
|
$
|
26,445
|
|
|
$
|
26,538
|
|
|
$
|
51,606
|
|
|
$
|
54,583
|
|
|
Kansas City Support
Center consolidation costs(1)
|
|
2,966
|
|
|
—
|
|
|
5,032
|
|
|
—
|
|
|
Amortization of
intangible assets
|
|
2,500
|
|
|
2,500
|
|
|
4,980
|
|
|
5,000
|
|
|
Closure and
impairment charges
|
|
820
|
|
|
475
|
|
|
1,255
|
|
|
2,302
|
|
|
Non-cash interest
expense
|
|
800
|
|
|
764
|
|
|
1,591
|
|
|
1,519
|
|
|
(Gain) loss on
disposition of assets
|
|
(48)
|
|
|
66
|
|
|
566
|
|
|
57
|
|
|
Income tax
provision
|
|
(2,605)
|
|
|
(1,446)
|
|
|
(4,967)
|
|
|
(3,373)
|
|
|
Deferred tax
adjustments(2)
|
|
(2,002)
|
|
|
—
|
|
|
(2,002)
|
|
|
—
|
|
|
Net income allocated
to unvested participating restricted stock
|
|
(35)
|
|
|
(30)
|
|
|
(97)
|
|
|
(73)
|
|
|
Net income available
to common stockholders, as adjusted
|
|
$
|
28,841
|
|
|
$
|
28,867
|
|
|
$
|
57,964
|
|
|
$
|
60,015
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income
available to common stockholders per share:
|
|
|
|
|
|
|
|
|
|
Net income available
to common stockholders, as reported
|
|
$
|
1.45
|
|
|
$
|
1.40
|
|
|
$
|
2.82
|
|
|
$
|
2.88
|
|
|
Kansas City Support
Center consolidation costs(1)
|
|
0.10
|
|
|
—
|
|
|
0.17
|
|
|
—
|
|
|
Amortization of
intangible assets
|
|
0.08
|
|
|
0.08
|
|
|
0.17
|
|
|
0.16
|
|
|
Closure and
impairment charges
|
|
0.03
|
|
|
0.02
|
|
|
0.04
|
|
|
0.08
|
|
|
Non-cash interest
expense
|
|
0.03
|
|
|
0.03
|
|
|
0.05
|
|
|
0.05
|
|
|
(Gain) loss on
disposition of assets
|
|
(0.00)
|
|
|
0.00
|
|
|
0.02
|
|
|
0.00
|
|
|
Deferred tax
adjustments(2)
|
|
(0.11)
|
|
|
—
|
|
|
(0.11)
|
|
|
—
|
|
|
Net income allocated
to unvested participating restricted stock
|
|
(0.00)
|
|
|
(0.00)
|
|
|
(0.00)
|
|
|
(0.00)
|
|
|
Rounding
|
|
0.01
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
|
Diluted net income
available to common stockholders per share, as adjusted
|
|
$
|
1.59
|
|
|
$
|
1.53
|
|
|
$
|
3.17
|
|
|
$
|
3.17
|
|
|
|
|
|
|
|
|
|
|
|
Numerator for basic
EPS-income available to common stockholders, as adjusted
|
|
$
|
28,841
|
|
|
$
|
28,867
|
|
|
$
|
57,964
|
|
|
$
|
60,015
|
|
|
Effect of unvested
participating restricted stock using the two-class
method
|
|
1
|
|
|
1
|
|
|
2
|
|
|
3
|
|
|
Numerator for diluted
EPS-income available to common stockholders after assumed
conversions, as adjusted
|
|
$
|
28,842
|
|
|
$
|
28,868
|
|
|
$
|
57,966
|
|
|
$
|
60,018
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for basic
EPS-weighted-average shares
|
|
18,085
|
|
|
18,763
|
|
|
18,173
|
|
|
18,819
|
|
|
Dilutive effect of
stock options
|
|
103
|
|
|
132
|
|
|
107
|
|
|
140
|
|
|
Denominator for
diluted EPS-weighted-average shares and assumed
conversions
|
|
18,188
|
|
|
18,895
|
|
|
18,280
|
|
|
18,959
|
|
|
|
|
(1)
|
Includes $2,471 of
lease termination costs for the three and six months ended June 30,
2016 reported in "closure and impairment charges" in the
Consolidated Statements of Comprehensive Income
|
|
(2)
|
Adjustments to
deferred tax balances primarily due to reduction of effective state
tax rate because of Support Center consolidation.
|
|
DineEquity, Inc.
and Subsidiaries
|
|
Non-GAAP Financial
Measures
|
|
(Unaudited)
|
|
|
Reconciliation of the
Company's cash provided by operating activities to "free cash flow"
(cash provided by operating activities, plus receipts from notes
and equipment contracts receivable, less additions to property and
equipment). We believe this information is helpful to investors to
determine our cash available for general corporate purposes and for
the return of cash to stockholders pursuant to our capital
allocation strategy, and is the same measure used by management for
these purposes.
|
|
|
|
|
|
Six Months
Ended
|
|
|
June
30,
|
|
|
2016
|
|
2015
|
|
|
(In
millions)
|
|
Cash flows provided
by operating activities
|
|
$
|
53.9
|
|
|
$
|
48.1
|
|
|
Receipts from notes
and equipment contracts receivable
|
|
4.4
|
|
|
6.2
|
|
|
Additions to property
and equipment
|
|
(1.9)
|
|
|
(4.6)
|
|
|
Free cash
flow
|
|
56.4
|
|
|
49.7
|
|
|
Dividends paid on
common stock
|
|
(34.0)
|
|
|
(33.3)
|
|
|
Repurchase of
DineEquity common stock
|
|
(35.0)
|
|
|
(35.0)
|
|
|
|
$
|
(12.6)
|
|
|
$
|
(18.6)
|
|
|
DineEquity, Inc. and
Subsidiaries
|
|
Non-GAAP Financial
Measures
|
|
(In
thousands)
|
|
(Unaudited)
|
|
|
Reconciliation of
U.S. GAAP gross profit to segment EBITDA:
|
|
|
|
Three months ended
June 30, 2016
|
|
|
Franchise -
Applebee's
|
|
Franchise -
IHOP
|
|
Company
Restaurants
|
|
Rental
Operations
|
|
Financing
Operations
|
|
Total
|
|
Revenue
|
|
$
|
48,376
|
|
|
$
|
74,144
|
|
|
$
|
4,469
|
|
|
$
|
30,830
|
|
|
$
|
2,439
|
|
|
$
|
160,258
|
|
|
Expense
|
|
1,715
|
|
|
33,303
|
|
|
4,689
|
|
|
23,030
|
|
|
146
|
|
|
62,883
|
|
|
Gross
profit
|
|
46,661
|
|
|
40,841
|
|
|
(220)
|
|
|
7,800
|
|
|
2,293
|
|
|
97,375
|
|
|
Plus:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation/amortization
|
|
2,625
|
|
|
—
|
|
|
104
|
|
|
3,138
|
|
|
—
|
|
|
5,867
|
|
|
Interest
charges
|
|
—
|
|
|
—
|
|
|
96
|
|
|
3,012
|
|
|
—
|
|
|
3,108
|
|
|
Segment
EBITDA
|
|
$
|
49,286
|
|
|
$
|
40,841
|
|
|
$
|
(20)
|
|
|
$
|
13,950
|
|
|
$
|
2,293
|
|
|
$
|
106,350
|
|
|
|
Three months ended
June 30, 2015
|
|
|
Franchise -
Applebee's
|
|
Franchise -
IHOP
|
|
Company
Restaurants
|
|
Rental
Operations
|
|
Financing
Operations
|
|
Total
|
|
Revenue
|
|
$
|
49,920
|
|
|
$
|
70,361
|
|
|
$
|
17,487
|
|
|
$
|
31,132
|
|
|
$
|
2,649
|
|
|
$
|
171,549
|
|
|
Expense
|
|
1,730
|
|
|
32,338
|
|
|
17,355
|
|
|
23,319
|
|
|
—
|
|
|
74,742
|
|
|
Gross
profit
|
|
48,190
|
|
|
38,023
|
|
|
132
|
|
|
7,813
|
|
|
2,649
|
|
|
96,807
|
|
|
Plus:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation/amortization
|
|
2,588
|
|
|
—
|
|
|
184
|
|
|
3,196
|
|
|
—
|
|
|
5,968
|
|
|
Interest
charges
|
|
—
|
|
|
—
|
|
|
98
|
|
|
3,374
|
|
|
—
|
|
|
3,472
|
|
|
Segment
EBITDA
|
|
$
|
50,778
|
|
|
$
|
38,023
|
|
|
$
|
414
|
|
|
$
|
14,383
|
|
|
$
|
2,649
|
|
|
$
|
106,247
|
|
|
|
Six months ended
June 30, 2016
|
|
|
Franchise -
Applebee's
|
|
Franchise -
IHOP
|
|
Company
Restaurants
|
|
Rental
Operations
|
|
Financing
Operations
|
|
Total
|
|
Revenue
|
|
$
|
99,461
|
|
|
$
|
148,033
|
|
|
$
|
9,281
|
|
|
$
|
62,239
|
|
|
$
|
4,768
|
|
|
$
|
323,782
|
|
|
Expense
|
|
3,600
|
|
|
67,075
|
|
|
9,901
|
|
|
46,261
|
|
|
146
|
|
|
126,983
|
|
|
Gross
profit
|
|
95,861
|
|
|
80,958
|
|
|
(620)
|
|
|
15,978
|
|
|
4,622
|
|
|
196,799
|
|
|
Plus:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation/amortization
|
|
5,221
|
|
|
—
|
|
|
215
|
|
|
6,280
|
|
|
—
|
|
|
11,716
|
|
|
Interest
charges
|
|
—
|
|
|
—
|
|
|
192
|
|
|
6,122
|
|
|
—
|
|
|
6,314
|
|
|
Segment
EBITDA
|
|
$
|
101,082
|
|
|
$
|
80,958
|
|
|
$
|
(213)
|
|
|
$
|
28,380
|
|
|
$
|
4,622
|
|
|
$
|
214,829
|
|
|
|
Six months ended
June 30, 2015
|
|
|
Franchise -
Applebee's
|
|
Franchise -
IHOP
|
|
Company
Restaurants
|
|
Rental
Operations
|
|
Financing
Operations
|
|
Total
|
|
Revenue
|
|
$
|
102,351
|
|
|
$
|
142,472
|
|
|
$
|
34,763
|
|
|
$
|
62,534
|
|
|
$
|
5,243
|
|
|
$
|
347,363
|
|
|
Expense
|
|
3,326
|
|
|
66,259
|
|
|
33,864
|
|
|
46,809
|
|
|
12
|
|
|
150,270
|
|
|
Gross
profit
|
|
99,025
|
|
|
76,213
|
|
|
899
|
|
|
15,725
|
|
|
5,231
|
|
|
197,093
|
|
|
Plus:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation/amortization
|
|
5,180
|
|
|
—
|
|
|
373
|
|
|
6,420
|
|
|
—
|
|
|
11,973
|
|
|
Interest
charges
|
|
—
|
|
|
—
|
|
|
197
|
|
|
6,875
|
|
|
—
|
|
|
7,072
|
|
|
Segment
EBITDA
|
|
$
|
104,205
|
|
|
$
|
76,213
|
|
|
$
|
1,469
|
|
|
$
|
29,020
|
|
|
$
|
5,231
|
|
|
$
|
216,138
|
|
|
Restaurant
Data
|
|
|
The following table
sets forth, for the three and six months ended June 30, 2016 and
2015, 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. 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 may be partially 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
|
|
Six Months
Ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
(unaudited)
|
|
Applebee's
Restaurant Data
|
|
|
|
|
|
|
|
|
|
Effective
Restaurants(a)
|
|
|
|
|
|
|
|
|
|
Franchise
|
|
2,028
|
|
|
1,990
|
|
|
2,029
|
|
|
1,991
|
|
|
Company
|
|
—
|
|
|
23
|
|
|
—
|
|
|
23
|
|
|
Total
|
|
2,028
|
|
|
2,013
|
|
|
2,029
|
|
|
2,014
|
|
|
|
|
|
|
|
|
|
|
|
System-wide(b)
|
|
|
|
|
|
|
|
|
|
Sales percentage
change(c)
|
|
(4.4)
|
%
|
|
2.0
|
%
|
|
(4.2)
|
%
|
|
2.9
|
%
|
|
Domestic
same-restaurant sales percentage change(d)
|
|
(4.2)
|
%
|
|
1.0
|
%
|
|
(3.9)
|
%
|
|
2.0
|
%
|
|
|
|
|
|
|
|
|
|
|
Franchise(b)
|
|
|
|
|
|
|
|
|
|
Sales percentage
change(c)
|
|
(3.4)
|
%
|
|
2.0
|
%
|
|
(3.2)
|
%
|
|
2.9
|
%
|
|
Domestic
same-restaurant sales percentage change(d)
|
|
(4.2)
|
%
|
|
1.0
|
%
|
|
(3.9)
|
%
|
|
2.0
|
%
|
|
Average weekly
domestic unit sales (in thousands)
|
|
$
|
46.5
|
|
|
$
|
48.9
|
|
|
$
|
47.6
|
|
|
$
|
50.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
(unaudited)
|
|
IHOP Restaurant
Data
|
|
|
|
|
|
|
|
|
|
Effective
Restaurants(a)
|
|
|
|
|
|
|
|
|
|
Franchise
|
|
1,510
|
|
|
1,471
|
|
|
1,508
|
|
|
1,471
|
|
|
Area
license
|
|
165
|
|
|
167
|
|
|
165
|
|
|
167
|
|
|
Company
|
|
11
|
|
|
13
|
|
|
11
|
|
|
13
|
|
|
Total
|
|
1,686
|
|
|
1,651
|
|
|
1,684
|
|
|
1,651
|
|
|
|
|
|
|
|
|
|
|
|
System-wide(b)
|
|
|
|
|
|
|
|
|
|
Sales percentage
change(c)
|
|
2.5
|
%
|
|
7.1
|
%
|
|
2.4
|
%
|
|
6.6
|
%
|
|
Domestic
same-restaurant sales percentage change(d)
|
|
0.2
|
%
|
|
6.2
|
%
|
|
0.8
|
%
|
|
5.5
|
%
|
|
|
|
|
|
|
|
|
|
|
Franchise(b)
|
|
|
|
|
|
|
|
|
|
Sales percentage
change(c)
|
|
2.8
|
%
|
|
6.8
|
%
|
|
2.6
|
%
|
|
6.4
|
%
|
|
Domestic
same-restaurant sales percentage change(d)
|
|
0.2
|
%
|
|
6.2
|
%
|
|
0.8
|
%
|
|
5.5
|
%
|
|
Average weekly
domestic unit sales (in thousands)
|
|
$
|
37.5
|
|
|
$
|
37.4
|
|
|
$
|
37.6
|
|
|
$
|
37.6
|
|
|
|
|
|
|
|
|
|
|
|
Area License
(b)
|
|
|
|
|
|
|
|
|
|
Sales percentage
change(c)
|
|
0.5
|
%
|
|
7.7
|
%
|
|
0.4
|
%
|
|
7.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 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. Unaudited reported sales for Applebee's domestic franchise
restaurants, IHOP franchise restaurants and IHOP area license
restaurants for the three and six months ended June 30, 2016 and
2015 were as follows:
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(In millions)
|
|
Reported sales
(unaudited)
|
|
|
|
|
|
|
|
|
Applebee's domestic
franchise restaurant sales
|
$
|
1,134.2
|
|
|
$
|
1,174.6
|
|
|
$
|
2,323.2
|
|
|
$
|
2,400.6
|
|
|
IHOP franchise
restaurant sales
|
735.4
|
|
|
$
|
715.1
|
|
|
1,474.3
|
|
|
$
|
1,436.4
|
|
|
IHOP area license
restaurant sales
|
70.2
|
|
|
$
|
69.8
|
|
|
145.5
|
|
|
$
|
144.8
|
|
|
Total
|
$
|
1,939.8
|
|
|
$
|
1,959.5
|
|
|
$
|
3,943.0
|
|
|
$
|
3,981.8
|
|
|
|
|
(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. Same-restaurant sales percentage change does not
include data on IHOP area license restaurants located in
Florida.
|
|
DineEquity, Inc. and
Subsidiaries
|
|
Restaurant
Data
|
|
(unaudited)
|
|
|
The following table
summarizes our restaurant development activity:
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Applebee's
Restaurant Development Activity
|
|
|
|
|
|
|
Summary -
beginning of period:
|
|
|
|
|
|
|
|
|
Franchise
|
2,029
|
|
|
1,991
|
|
|
2,033
|
|
|
1,994
|
|
|
Company
restaurants
|
—
|
|
|
23
|
|
|
—
|
|
|
23
|
|
|
Total Applebee's
restaurants, beginning of period
|
2,029
|
|
|
2,014
|
|
|
2,033
|
|
|
2,017
|
|
|
Franchise restaurants
opened:
|
|
|
|
|
|
|
|
|
Domestic
|
2
|
|
|
6
|
|
|
7
|
|
|
10
|
|
|
International
|
3
|
|
|
2
|
|
|
4
|
|
|
4
|
|
|
Total franchise
restaurants opened
|
5
|
|
|
8
|
|
|
11
|
|
|
14
|
|
|
Franchise restaurants
closed:
|
|
|
|
|
|
|
|
|
Domestic
|
(6)
|
|
|
(4)
|
|
|
(12)
|
|
|
(8)
|
|
|
International
|
(1)
|
|
|
(2)
|
|
|
(5)
|
|
|
(7)
|
|
|
Total franchise
restaurants closed
|
(7)
|
|
|
(6)
|
|
|
(17)
|
|
|
(15)
|
|
|
Net franchise
restaurant (reduction) development
|
(2)
|
|
|
2
|
|
|
(6)
|
|
|
(1)
|
|
|
Summary - end of
period:
|
|
|
|
|
|
|
|
|
Franchise
|
2,027
|
|
|
1,993
|
|
|
2,027
|
|
|
1,993
|
|
|
Company
restaurants
|
—
|
|
|
23
|
|
|
—
|
|
|
23
|
|
|
Total Applebee's
restaurants, end of period
|
2,027
|
|
|
2,016
|
|
|
2,027
|
|
|
2,016
|
|
|
|
|
IHOP Restaurant
Development Activity
|
|
|
|
|
|
|
|
|
Summary -
beginning of period:
|
|
|
|
|
|
|
|
|
Franchise
|
1,509
|
|
|
1,470
|
|
|
1,507
|
|
|
1,472
|
|
|
Area
license
|
164
|
|
|
167
|
|
|
165
|
|
|
167
|
|
|
Company
|
11
|
|
|
13
|
|
|
11
|
|
|
11
|
|
|
Total IHOP
restaurants, beginning of period
|
1,684
|
|
|
1,650
|
|
|
1,683
|
|
|
1,650
|
|
|
Franchise/area
license restaurants opened:
|
|
|
|
|
|
|
Domestic
franchise
|
13
|
|
|
7
|
|
|
19
|
|
|
13
|
|
|
Domestic area
license
|
2
|
|
|
1
|
|
|
2
|
|
|
2
|
|
|
International
franchise
|
2
|
|
|
3
|
|
|
3
|
|
|
3
|
|
|
Total franchise/area
license restaurants opened
|
17
|
|
|
11
|
|
|
24
|
|
|
18
|
|
|
Franchise/area
license restaurants closed:
|
|
|
|
|
|
|
|
|
Domestic
franchise
|
(5)
|
|
|
(1)
|
|
|
(8)
|
|
|
(7)
|
|
|
Domestic area
license
|
—
|
|
|
(2)
|
|
|
(1)
|
|
|
(3)
|
|
|
International
franchise
|
(1)
|
|
|
—
|
|
|
(3)
|
|
|
—
|
|
|
Total franchise/area
license restaurants closed
|
(6)
|
|
|
(3)
|
|
|
(12)
|
|
|
(10)
|
|
|
Net franchise/area
license restaurant development
|
11
|
|
|
8
|
|
|
12
|
|
|
8
|
|
|
Refranchised from
Company restaurants
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
Franchise restaurants
reacquired by the Company
|
—
|
|
|
—
|
|
|
—
|
|
|
(3)
|
|
|
Net franchise/area
license restaurant additions (reductions)
|
12
|
|
|
8
|
|
|
13
|
|
|
6
|
|
|
Summary - end of
period
|
|
|
|
|
|
|
|
|
Franchise
|
1,519
|
|
|
1,479
|
|
|
1,519
|
|
|
1,479
|
|
|
Area
license
|
166
|
|
|
166
|
|
|
166
|
|
|
166
|
|
|
Company
|
10
|
|
|
13
|
|
|
10
|
|
|
13
|
|
|
Total IHOP
restaurants, end of period
|
1,695
|
|
|
1,658
|
|
|
1,695
|
|
|
1,658
|
|
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SOURCE DineEquity, Inc.