GLENDALE, Calif., Feb. 20, 2018 /PRNewswire/ -- Dine Brands
Global, Inc. (NYSE: DIN), the parent company of Applebee's
Neighborhood Grill & Bar® and IHOP® restaurants, today
announced financial results for the fourth quarter and fiscal
2017. Additionally, the Company's Board of Directors declared
a cash dividend of $0.63 per share of
common stock for the first quarter of 2018. The dividend will
be payable on April 6, 2018 to the
Company's stockholders of record at the close of business on
March 19, 2018. The Company
also announced that it will change its name to Dine Brands Global,
Inc., effective February 20, 2018, as
part of its ongoing transformation strategy.
"We continue to make excellent progress against our plan to
stabilize and grow performance at both brands. We are working
on several exciting initiatives to expand our revenue channels,
continually enhance the guest experience, improve operations and
grow our global presence while investing in the long-term health of
our two strong brands," said Stephen P.
Joyce, Chief Executive Officer of Dine Brands Global,
Inc.
Mr. Joyce continued, "Our new company name reflects a shift in
strategy and a values-based performance culture with greater
autonomy and accountability at the brand level. We are
focused on returning to a growth company and delivering strong
returns to our shareholders. We believe the change in our
quarterly dividend to a more appropriate dividend yield will result
in a favorable capital allocation framework and provide us the
opportunity for meaningful share repurchases, investments in our
brands as well as opportunities to scale our business. I am
very confident that the steps we are taking will drive sustainable
results as we continue to build on the encouraging positive
same-restaurant sales and traffic performance of both brands in
January."
Fourth Quarter of Fiscal 2017 Financial Highlights
- GAAP net income available to common stockholders was
$83.0 million, or earnings per
diluted share of $4.67 for the fourth
quarter of 2017. This compares to net income available to common
stockholders of $21.1 million, or
earnings per diluted share of $1.18,
for the fourth quarter of fiscal 2016. The increase in net income
was primarily due to a tax benefit of $66.6
million mainly as the result of the revaluation of our
deferred tax assets and liabilities due to a future reduction in
our corporate tax rate following the enactment of the Tax Cuts and
Jobs Act tax legislation in December
2017. This item was partially offset by a decline in gross
profit. The decrease in gross profit was due to an increase in
franchisor contributions to the Applebee's national advertising
fund, higher bad debt expense, a reduction in revenue recognized
due to the non-collectability of Applebee's franchisee royalties
and the impact of restaurant closures.
- Adjusted net income available to common stockholders was
$13.1 million, or adjusted earnings
per diluted share of $0.74, for the
fourth quarter of fiscal 2017. This compares to adjusted net income
available to common stockholders of $24.5
million, or adjusted earnings per diluted share of
$1.37, for the fourth quarter of
fiscal 2016. The decrease in adjusted net income was mainly due to
a decline in gross profit, as explained in the previous paragraph.
The impact of lower adjusted net income on adjusted earnings per
diluted share was partially offset by fewer weighted average
diluted shares outstanding. (See "Non-GAAP Financial Measures"
below.)
- General and administrative expenses were approximately
$40.0 million for the fourth quarter
of fiscal 2017. This compares to $37.0
million for the fourth quarter of fiscal 2016. The increase
was mainly due to higher personnel costs.
Fiscal 2017 Financial Highlights
- GAAP net loss available to common stockholders was $324.0 million, or net loss per diluted share of
$18.28 for fiscal 2017. This
compares to net income available to common stockholders of
$96.6 million, or earnings per
diluted share of $5.33, for fiscal
2016. The net loss was primarily due to non-cash impairment
charges in fiscal 2017 totaling $531.6
million related to the write-downs in the third quarter of
Applebee's goodwill and other intangible assets as well as lower
gross profit. These items were partially offset by a tax
benefit of $94.8 million primarily as
the result of the fourth-quarter revaluation of our deferred tax
assets and liabilities due to a future reduction in our corporate
tax rate.
- Adjusted net income available to common stockholders was
$73.7 million, or adjusted earnings
per diluted share of $4.15, for
fiscal 2017. This compares to adjusted net income available
to common stockholders of $108.9
million, or adjusted earnings per diluted share of
$6.01, for fiscal 2016. The
decrease in adjusted net income was mainly due to lower gross
profit and an increase in general and administrative
expenses. The decline in gross profit was due to higher bad
debt expense, an increase in franchisor contributions to the
Applebee's national advertising fund, a reduction in revenue
recognized due to the non-collectability of Applebee's franchisee
royalties, the impact of restaurant closures and a 5.3% decline in
Applebee's domestic system-wide comparable same-restaurant sales.
(See "Non-GAAP Financial Measures" below.)
- General and administrative expenses were $165.7 million for fiscal 2017 compared to
$148.9 million for fiscal 2016.
The increase was primarily due to approximately $9 million of non-recurring cash severance and
equity compensation charges incurred in the first quarter of 2017
and higher costs for professional services associated with
investments in Applebee's stabilization
initiatives.
- Cash flows from operating activities were $65.7 million for fiscal 2017 compared to
$118.1 million for fiscal 2016.
The decline was primarily due to a decrease in gross profit from
franchise operations and an increase in general and administrative
expenses. Adjusted free cash flow was $63.0 million for fiscal 2017, compared to
$122.5 million for fiscal 2016.
(See "Non-GAAP Financial Measures" below.)
Same-Restaurant Sales Performance
Fourth Quarter of Fiscal 2017
- Applebee's domestic system-wide comparable same-restaurant
sales increased 1.3% for the fourth quarter of 2017.
- IHOP's domestic system-wide comparable same-restaurant sales
modestly declined 0.4% for the fourth quarter of 2017.
Fiscal 2017
- Applebee's domestic system-wide comparable same-restaurant
sales declined 5.3% for fiscal 2017.
- IHOP's domestic system-wide comparable same-restaurant sales
declined 1.9% for fiscal 2017.
Financial Performance Guidance for Fiscal 2018
The following financial performance guidance for fiscal 2018 is
based on management's expectations as of February 20, 2018. The projections are as
of this date and the Company assumes no obligation to update or
supplement these estimates.
- Applebee's domestic system-wide comparable same-restaurant
sales performance is expected to range between flat and
positive 3.0%.
- IHOP's domestic system-wide comparable same-restaurant sales
performance is expected to range between flat and positive
3.0%.
- Applebee's franchisees are expected to develop between 10 and
15 new restaurants globally, the majority of which are expected to
be international openings. As part of our ongoing system-wide
analysis to optimize the health of the franchisee system, we
anticipate the closure of approximately 60 to 80 restaurants.
The expected closures will be based on several criteria, including
meeting our brand and image standards as well as operational
results.
- IHOP franchisees and its area licensee are expected to develop
between 85 and 100 restaurants globally, the majority of which are
expected to be domestic openings. We expect the closure of
approximately 30 to 40 restaurants.
- Franchise segment profit is expected to be between
approximately $289 million and
$307 million. Included in this
amount is a one-time $30 million
franchise expense that will be contributed to the Applebee's
national advertising fund, continuing the 2017 contribution of
$9.5 million. We expect the
$30 million to be expensed ratably
over the first and second quarters of
2018.
- Rental and Financing segments are expected to generate
approximately $37 million in combined
profit.
- General and administrative expenses are expected to range
between $147 million and $156 million, including non-cash stock-based
compensation expense and depreciation of approximately $21 million.
- Interest expense is expected to be approximately $61 million. Approximately $3 million is projected to be non-cash interest
expense.
- Weighted average diluted shares outstanding are expected to be
approximately 18 million shares.
- The income tax rate is expected to be approximately
26%.
- Cash flows provided by operating activities are expected to
range between $100 million and
$120
million.
- Capital expenditures are projected to be approximately
$16 million.
- GAAP earnings per diluted share is expected to range from
$4.31 to $4.61.
- Adjusted earnings per diluted share (See "Non-GAAP Financial
Measures" below) is expected to range from $4.95 to $5.25.
- Adjusted free cash flow (See "Non-GAAP Financial Measures"
below) is expected to range between $94
million and $114
million.
2018 Adjusted
earnings per diluted share (Non-GAAP) Guidance Table
|
|
|
|
GAAP earnings per
diluted share
|
$4.31-$4.61
|
|
Amortization of
intangible assets
|
0.57
|
|
Closure and
impairment charges
|
0.10
|
|
Non-cash interest
expense
|
0.20
|
|
Income tax provision
for above adjustments at 26%
|
(0.23)
|
|
Adjusted earnings
per diluted share (Non-GAAP)
|
$4.95-$5.25
|
|
|
2018 Adjusted Free
Cash Flow (Non-GAAP) Guidance Table
|
|
|
(In
millions)
|
|
Cash flows from
operations
|
$100 – 120
|
|
Approximate net
receipts from notes and equipment contracts receivable
|
10
|
|
Approximate capital
expenditures
|
(16)
|
|
Adjusted free cash
flow (Non-GAAP)
|
$94 -
114
|
|
Investor and Analyst Day on February
21, 2018
The Company will discuss certain long-term financial
projections, business strategy and corporate rebranding during its
investor and analyst day on February 21,
2018 in New York City. The business presentations,
followed by Q&A, are scheduled to begin at approximately at
8:00 a.m. Eastern Time and conclude
at approximately 12:00 p.m. Eastern
Time. A live webcast, including presentation material,
will be available on the Company's website at www.dinebrands.com
and may be accessed by visiting Events and Presentations under the
site's Investors section.
Fourth Quarter and Fiscal 2017 Results Conference Call
Today
The Company will host a conference call today at 5:00 a.m. Pacific Time/8:00 a.m. Eastern Time to discuss its fourth
quarter and fiscal 2017 financial results. To participate on
the call, please dial (888) 771-4371 and reference passcode
46299784. International callers, please dial (847) 585-4405 and
reference passcode 46299784. A live webcast of the call will
be available at www.dinebrands.com and may be accessed by visiting
Events and 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 7:30
a.m. Pacific Time on February 20,
2018 through 8:59 p.m. Pacific
Time on February 27, 2018 by
dialing (888) 843-7419 and referencing passcode 46299784#.
International callers, please dial (630) 652-3042 and reference
passcode 46299784#. 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 more than 3,700 restaurants
combined in 18 countries and over 380 franchisees, Dine Brands is
one of the largest full-service restaurant companies in the world.
For more information on Dine Brands, visit the Company's website
located at www.dinebrands.com.
Forward-Looking Statements
Statements contained in this press release may constitute
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. You can identify these
forward-looking statements by words such as "may," "will," "would,"
"should," "could," "expect," "anticipate," "believe," "estimate,"
"intend," "plan," "goal" and other similar expressions. These
statements involve known and unknown risks, uncertainties and other
factors, which may cause actual results to be materially different
from those expressed or implied in such statements. These factors
include, but are not limited to: general economic conditions; our
level of indebtedness; compliance with the terms of our securitized
debt; our ability to refinance our current indebtedness or obtain
additional financing; our dependence on information technology;
potential cyber incidents; the implementation of restaurant
development plans; our dependence on our franchisees; the
concentration of our Applebee's franchised restaurants in a limited
number of franchisees; the financial health 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)"
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 free cash flow" for a given
period is defined as cash provided by operating activities, plus
receipts from notes and equipment contracts receivable, less
capital expenditures. Management may use certain of these
non-GAAP financial measures along with the corresponding U.S. GAAP
measures to evaluate the performance of the business and to make
certain business decisions. Management uses adjusted free
cash flow in its periodic assessments of, among other things, the
amount of cash dividends per share of common stock and repurchases
of common stock and we believe it is important for investors to
have the same measure used by management for that purpose.
Adjusted free cash flow does not represent residual cash flow
available for discretionary purposes. Additionally, adjusted
EPS is one of the metrics used in determining payouts under the
Company's annual cash incentive plan. Management believes
that these non-GAAP financial measures provide additional
meaningful information that should be considered when assessing the
business and the Company's performance compared to prior periods
and the marketplace. Adjusted EPS and adjusted free cash flow
are supplemental non-GAAP financial measures and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with U.S. GAAP.
Dine Brands
Global, Inc. and Subsidiaries
|
Consolidated
Statements of Income (Loss)
|
(In thousands,
except per share amounts)
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenues:
|
|
|
|
|
|
|
|
|
Franchise and
restaurant revenues
|
|
$
|
116,118
|
|
|
$
|
121,711
|
|
|
$
|
475,030
|
|
|
$
|
501,745
|
|
Rental
revenues
|
|
30,585
|
|
|
30,291
|
|
|
121,437
|
|
|
123,037
|
|
Financing
revenues
|
|
2,072
|
|
|
2,172
|
|
|
8,352
|
|
|
9,191
|
|
Total
revenues
|
|
148,775
|
|
|
154,174
|
|
|
604,819
|
|
|
633,973
|
|
Cost of
revenues:
|
|
|
|
|
|
|
|
|
Franchise and
restaurant expenses
|
|
48,507
|
|
|
40,731
|
|
|
171,983
|
|
|
162,860
|
|
Rental
expenses
|
|
22,927
|
|
|
22,508
|
|
|
90,592
|
|
|
91,540
|
|
Financing
expenses
|
|
149
|
|
|
—
|
|
|
598
|
|
|
155
|
|
Total cost of
revenues
|
|
71,583
|
|
|
63,239
|
|
|
263,173
|
|
|
254,555
|
|
Gross
profit
|
|
77,192
|
|
|
90,935
|
|
|
341,646
|
|
|
379,418
|
|
Impairment of
goodwill and intangible assets
|
|
—
|
|
|
—
|
|
|
531,634
|
|
|
—
|
|
General and
administrative expenses
|
|
39,978
|
|
|
36,998
|
|
|
165,679
|
|
|
148,935
|
|
Interest
expense
|
|
15,483
|
|
|
15,372
|
|
|
61,979
|
|
|
61,479
|
|
Amortization of
intangible assets
|
|
2,502
|
|
|
2,501
|
|
|
10,009
|
|
|
9,981
|
|
Closure and
impairment charges
|
|
162
|
|
|
1,160
|
|
|
3,968
|
|
|
5,092
|
|
Loss (gain) on
disposition of assets
|
|
138
|
|
|
130
|
|
|
(6,249)
|
|
|
809
|
|
Income (loss) before
income tax benefit (provision)
|
|
18,929
|
|
|
34,774
|
|
|
(425,374)
|
|
|
153,122
|
|
Income tax benefit
(provision)
|
|
66,607
|
|
|
(13,427)
|
|
|
94,835
|
|
|
(55,130)
|
|
Net income
(loss)
|
|
$
|
85,536
|
|
|
$
|
21,347
|
|
|
$
|
(330,539)
|
|
|
$
|
97,992
|
|
Net income (loss)
available to common stockholders:
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
85,536
|
|
|
$
|
21,347
|
|
|
$
|
(330,539)
|
|
|
$
|
97,992
|
|
Less: net (income)
loss allocated to unvested participating restricted
stock
|
|
(2,563)
|
|
|
(288)
|
|
|
6,519
|
|
|
(1,387)
|
|
Net income (loss)
available to common stockholders
|
|
$
|
82,973
|
|
|
$
|
21,059
|
|
|
$
|
(324,020)
|
|
|
$
|
96,605
|
|
Net income (loss)
available to common stockholders per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
4.68
|
|
|
$
|
1.18
|
|
|
$
|
(18.28)
|
|
|
$
|
5.36
|
|
Diluted
|
|
$
|
4.67
|
|
|
$
|
1.18
|
|
|
$
|
(18.28)
|
|
|
$
|
5.33
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
17,745
|
|
|
17,826
|
|
|
17,725
|
|
|
18,030
|
|
Diluted
|
|
17,764
|
|
|
17,916
|
|
|
17,740
|
|
|
18,125
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
|
$
|
0.97
|
|
|
$
|
0.97
|
|
|
$
|
3.88
|
|
|
$
|
3.73
|
|
Dividends paid per
common share
|
|
$
|
0.97
|
|
|
$
|
0.92
|
|
|
$
|
3.88
|
|
|
$
|
3.68
|
|
Dine Brands
Global, Inc. and Subsidiaries
|
Consolidated
Balance Sheets
|
(In thousands,
except share and per share amounts)
|
|
|
|
December
31,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
117,010
|
|
|
$
|
140,535
|
|
Receivables,
net
|
|
150,174
|
|
|
141,389
|
|
Restricted
cash
|
|
31,436
|
|
|
30,256
|
|
Prepaid gift card
costs
|
|
40,725
|
|
|
47,115
|
|
Prepaid income
taxes
|
|
43,654
|
|
|
2,483
|
|
Other current
assets
|
|
12,615
|
|
|
4,370
|
|
Total current
assets
|
|
395,614
|
|
|
366,148
|
|
Long-term
receivables, net
|
|
131,212
|
|
|
141,152
|
|
Property and
equipment, net
|
|
199,585
|
|
|
205,055
|
|
Goodwill
|
|
339,236
|
|
|
697,470
|
|
Other intangible
assets, net
|
|
582,787
|
|
|
763,431
|
|
Deferred rent
receivable
|
|
82,971
|
|
|
86,981
|
|
Other non-current
assets, net
|
|
18,835
|
|
|
18,346
|
|
Total
assets
|
|
$
|
1,750,240
|
|
|
$
|
2,278,583
|
|
|
|
|
|
|
Liabilities and
Stockholders' (Deficit) Equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current maturities of
long-term debt
|
|
$
|
12,965
|
|
|
$
|
—
|
|
Accounts
payable
|
|
55,028
|
|
|
50,503
|
|
Gift card
liability
|
|
164,441
|
|
|
170,812
|
|
Dividends
payable
|
|
17,748
|
|
|
17,465
|
|
Current maturities of
capital lease and financing obligations
|
|
14,193
|
|
|
13,144
|
|
Accrued employee
compensation and benefits
|
|
13,547
|
|
|
14,609
|
|
Other accrued
expenses
|
|
17,780
|
|
|
19,779
|
|
Total current
liabilities
|
|
295,702
|
|
|
286,312
|
|
Long-term debt, net,
less current maturities
|
|
1,269,849
|
|
|
1,282,691
|
|
Capital lease
obligations, less current maturities
|
|
61,895
|
|
|
74,665
|
|
Financing
obligations, less current maturities
|
|
39,200
|
|
|
39,499
|
|
Deferred income
taxes, net
|
|
138,177
|
|
|
253,898
|
|
Deferred rent
payable
|
|
69,112
|
|
|
69,572
|
|
Other non-current
liabilities
|
|
23,003
|
|
|
19,174
|
|
Total
liabilities
|
|
1,896,938
|
|
|
2,025,811
|
|
Commitments and
contingencies
|
|
|
|
|
Stockholders'
(deficit) equity:
|
|
|
|
|
Common stock, $0.01
par value; shares: 40,000,000 authorized; 2017 - 25,022,312 issued,
17,993,124 outstanding; 2016 - 25,134,223 issued, 17,969,636
outstanding
|
|
250
|
|
|
251
|
|
Additional
paid-in-capital
|
|
276,408
|
|
|
292,809
|
|
(Accumulated deficit)
retained earnings
|
|
(1,098)
|
|
|
382,082
|
|
Accumulated other
comprehensive loss
|
|
(105)
|
|
|
(107)
|
|
Treasury stock, at
cost; shares: 2017 - 7,029,188; 2016 - 7,164,587
|
|
(422,153)
|
|
|
(422,263)
|
|
Total stockholders'
(deficit) equity
|
|
(146,698)
|
|
|
252,772
|
|
Total liabilities and
stockholders' (deficit) equity
|
|
$
|
1,750,240
|
|
|
$
|
2,278,583
|
|
Dine Brands
Global, Inc. and Subsidiaries
|
Consolidated
Statements of Cash Flows
|
(In
thousands)
|
|
|
|
Twelve Months
Ended
|
|
|
December
31,
|
|
|
2017
|
|
2016
|
Cash flows from
operating activities:
|
|
|
|
|
Net (loss)
income
|
|
$
|
(330,539)
|
|
|
$
|
97,992
|
|
Adjustments to
reconcile net (loss) income to cash flows provided by operating
activities:
|
|
|
|
|
Impairment of
goodwill and intangible assets
|
|
531,634
|
|
|
—
|
|
Depreciation and
amortization
|
|
30,648
|
|
|
30,606
|
|
Non-cash interest
expense
|
|
3,364
|
|
|
3,218
|
|
Closure and other
impairment charges
|
|
3,834
|
|
|
2,621
|
|
Deferred income
taxes
|
|
(145,402)
|
|
|
(14,434)
|
|
Non-cash stock-based
compensation expense
|
|
10,783
|
|
|
10,926
|
|
Tax benefit from
stock-based compensation
|
|
—
|
|
|
1,132
|
|
Excess tax benefit
from stock-based compensation
|
|
—
|
|
|
(1,019)
|
|
(Gain) loss on
disposition of assets
|
|
(6,249)
|
|
|
809
|
|
Other
|
|
(4,796)
|
|
|
(1,302)
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Accounts receivable,
net
|
|
(8,908)
|
|
|
3,178
|
|
Current income tax
receivables and payables
|
|
(8,491)
|
|
|
(909)
|
|
Gift card receivables
and payables
|
|
(3,322)
|
|
|
(4,288)
|
|
Prepaid expenses and
other current assets
|
|
(8,247)
|
|
|
(156)
|
|
Accounts
payable
|
|
7,208
|
|
|
89
|
|
Accrued employee
compensation and benefits
|
|
(1,126)
|
|
|
(10,476)
|
|
Accrued interest
payable
|
|
717
|
|
|
51
|
|
Other current
liabilities
|
|
(5,375)
|
|
|
72
|
|
Cash flows provided
by operating activities
|
|
65,733
|
|
|
118,110
|
|
Cash flows from
investing activities:
|
|
|
|
|
Principal receipts
from notes, equipment contracts and other long-term
receivables
|
|
20,486
|
|
|
18,689
|
|
Proceeds from sale of
property and equipment
|
|
1,100
|
|
|
—
|
|
Additions to property
and equipment
|
|
(13,370)
|
|
|
(5,637)
|
|
Other
|
|
(541)
|
|
|
(503)
|
|
Cash flows provided
by investing activities
|
|
7,675
|
|
|
12,549
|
|
Cash flows from
financing activities:
|
|
|
|
|
Repayment of
long-term debt
|
|
(3,250)
|
|
|
—
|
|
Dividends paid on
common stock
|
|
(69,790)
|
|
|
(67,429)
|
|
Repurchase of
DineEquity common stock
|
|
(10,003)
|
|
|
(55,343)
|
|
Principal payments on
capital lease and financing obligations
|
|
(12,949)
|
|
|
(13,978)
|
|
Proceeds from stock
options exercised
|
|
2,635
|
|
|
1,409
|
|
Tax payments for
restricted stock upon vesting
|
|
(2,396)
|
|
|
(2,859)
|
|
Excess tax benefit
from share-based compensation
|
|
—
|
|
|
1,019
|
|
Cash flows used in
financing activities
|
|
(95,753)
|
|
|
(137,181)
|
|
Net change in cash,
cash equivalents and restricted cash
|
|
(22,345)
|
|
|
(6,522)
|
|
Cash, cash
equivalents and restricted cash at beginning of year
|
|
185,491
|
|
|
192,013
|
|
Cash, cash
equivalents and restricted cash at end of year
|
|
$
|
163,146
|
|
|
$
|
185,491
|
|
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:
Impairment of goodwill and intangible assets; executive separation
costs; Kansas City Support Center consolidation costs; amortization
of intangible assets; closure and other impairment charges;
non-cash interest expense; gain or loss on disposition of assets;
the combined tax effect of the preceding adjustments, and income
tax adjustments considered unrelated to the respective current
period operations, as well as related per share data:
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net income (loss)
available to common stockholders, as reported
|
|
$
|
82,973
|
|
|
$
|
21,059
|
|
|
$
|
(324,020)
|
|
|
$
|
96,605
|
|
Impairment of
goodwill and intangible assets
|
|
—
|
|
|
—
|
|
|
531,634
|
|
|
—
|
|
Executive separation
costs
|
|
—
|
|
|
—
|
|
|
8,782
|
|
|
—
|
|
Kansas City Support
Center consolidation costs(1)
|
|
—
|
|
|
835
|
|
|
—
|
|
|
6,173
|
|
Amortization of
intangible assets
|
|
2,502
|
|
|
2,501
|
|
|
10,009
|
|
|
9,981
|
|
Closure and other
impairment charges
|
|
162
|
|
|
762
|
|
|
3,968
|
|
|
2,223
|
|
Non-cash interest
expense
|
|
855
|
|
|
818
|
|
|
3,364
|
|
|
3,218
|
|
Loss (gain) on
disposition of assets
|
|
138
|
|
|
130
|
|
|
(6,249)
|
|
|
809
|
|
Net income tax
provision for above adjustments
|
|
(1,390)
|
|
|
(1,867)
|
|
|
(73,444)
|
|
|
(8,289)
|
|
Income tax
adjustments(2)
|
|
(74,330)
|
|
|
316
|
|
|
(72,111)
|
|
|
(1,686)
|
|
Net income allocated
to unvested participating restricted stock
|
|
2,158
|
|
|
(47)
|
|
|
(8,283)
|
|
|
(177)
|
|
Net income
available to common stockholders, as adjusted
|
|
$
|
13,068
|
|
|
$
|
24,507
|
|
|
$
|
73,650
|
|
|
$
|
108,857
|
|
|
|
|
|
|
|
|
|
|
Diluted net income
available to common stockholders per share:
|
|
|
|
|
|
|
|
Net income (loss)
available to common stockholders, as reported
|
|
$
|
4.67
|
|
|
$
|
1.18
|
|
|
$
|
(18.28)
|
|
|
$
|
5.33
|
|
Impairment of
goodwill and intangible assets
|
|
—
|
|
|
—
|
|
|
26.25
|
|
|
—
|
|
Executive separation
costs
|
|
—
|
|
|
—
|
|
|
0.31
|
|
|
|
Kansas City Support
Center consolidation costs(1)
|
|
—
|
|
|
0.03
|
|
|
—
|
|
|
0.21
|
|
Amortization of
intangible assets
|
|
0.09
|
|
|
0.09
|
|
|
0.35
|
|
|
0.34
|
|
Closure and other
impairment charges
|
|
0.01
|
|
|
0.03
|
|
|
0.14
|
|
|
0.08
|
|
Non-cash interest
expense
|
|
0.03
|
|
|
0.03
|
|
|
0.12
|
|
|
0.11
|
|
Loss (gain) on
disposition of assets
|
|
0.00
|
|
|
0.00
|
|
|
(0.22)
|
|
|
0.03
|
|
Income tax
adjustments(2)
|
|
(4.19)
|
|
|
0.02
|
|
|
(4.07)
|
|
|
(0.09)
|
|
Net loss (income)
allocated to unvested participating restricted stock
|
|
0.12
|
|
|
(0.00)
|
|
|
(0.46)
|
|
|
(0.01)
|
|
Rounding
|
|
0.01
|
|
|
(0.01)
|
|
|
0.01
|
|
|
0.01
|
|
Diluted net income
available to common stockholders per share, as
adjusted
|
|
$
|
0.74
|
|
|
$
|
1.37
|
|
|
$
|
4.15
|
|
|
$
|
6.01
|
|
|
|
|
|
|
|
|
|
|
Numerator for basic
EPS-income available to common stockholders, as adjusted
|
|
$
|
13,068
|
|
|
$
|
24,507
|
|
|
$
|
73,650
|
|
|
$
|
108,857
|
|
Effect of unvested
participating restricted stock using the two-class
method
|
|
(1)
|
|
|
1
|
|
|
—
|
|
|
2
|
|
Numerator for diluted
EPS-income available to common stockholders after assumed
conversions, as adjusted
|
|
$
|
13,067
|
|
|
$
|
24,508
|
|
|
$
|
73,650
|
|
|
$
|
108,859
|
|
|
|
|
|
|
|
|
|
|
Denominator for basic
EPS-weighted-average shares
|
|
17,745
|
|
|
17,826
|
|
|
17,725
|
|
|
18,030
|
|
Effect of dilutive
securities:
|
|
|
|
|
|
|
|
|
Stock
options
|
|
19
|
|
|
90
|
|
|
15
|
|
|
95
|
|
Denominator for
diluted EPS-weighted-average shares and assumed
conversions
|
|
17,764
|
|
|
17,916
|
|
|
17,740
|
|
|
18,125
|
|
|
(1)
|
Includes $398 and
$2,869 of lease termination costs for the three and twelve months
ended December 31, 2016, respectively, reported in "closure and
other impairment charges" in the Consolidated Statements of
Comprehensive (Loss) Income
|
(2)
|
Adjustments to
deferred tax balances: 2017 - primarily related to revaluation of
deferred taxes at a federal tax rate of 21% in accordance with the
Tax Cuts and Jobs Act; 2016 - primarily due to change in state tax
rates because of Support Center consolidation
|
Dine Brands
Global, Inc. and Subsidiaries
|
Non-GAAP Financial
Measures
|
(In
thousands)
|
(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 contract receivables, 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
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.
|
|
|
|
Twelve Months
Ended
|
|
|
December
31,
|
|
|
2017
|
|
2016
|
Cash flows provided
by operating activities
|
|
$
|
65,733
|
|
|
$
|
118,110
|
|
Net receipts from
notes and equipment contract receivables
|
|
10,614
|
|
|
10,036
|
|
Additions to property
and equipment
|
|
(13,370)
|
|
|
(5,637)
|
|
Adjusted free cash
flow
|
|
62,977
|
|
|
122,509
|
|
Dividends paid on
common stock
|
|
(69,790)
|
|
|
(67,429)
|
|
Repurchase of
DineEquity common stock
|
|
(10,003)
|
|
|
(55,343)
|
|
|
|
$
|
(16,816)
|
|
|
$
|
(263)
|
|
Dine Brands
Global, Inc. and Subsidiaries
|
Restaurant Data
(unaudited)
|
|
The following table
sets forth, for the three and twelve months ended December 31,
2017 and 2016, 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 and, as such, the percentage changes in sales presented
below are based on non-GAAP sales data. However, we believe that
presentation of this information is useful in analyzing our
revenues because franchisees and area licensees pay us royalties
and advertising fees that are generally based on a percentage of
their sales, and, where applicable, rental payments under leases
that partially may be based on a percentage of their sales.
Management also uses this information to make decisions about
future plans for the development of additional restaurants as well
as evaluation of current operations.
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
(unaudited)
|
Applebee's
Restaurant Data
|
|
|
|
|
|
|
|
|
Effective
Restaurants(a)
|
|
|
|
|
|
|
|
|
Franchise
|
|
1,936
|
|
|
2,020
|
|
|
1,970
|
|
|
2,027
|
|
Company
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
|
1,936
|
|
|
2,020
|
|
|
1,970
|
|
|
2,027
|
|
|
|
|
|
|
|
|
|
|
System-wide(b)
|
|
|
|
|
|
|
|
|
Sales percentage
change(c)
|
|
(1.1)
|
%
|
|
(13.5)
|
%
|
|
(6.8)
|
%
|
|
(6.8)
|
%
|
Domestic
same-restaurant sales percentage change(d)
|
|
1.3
|
%
|
|
(7.2)
|
%
|
|
(5.3)
|
%
|
|
(5.0)
|
%
|
|
|
|
|
|
|
|
|
|
Franchise(b)
|
|
|
|
|
|
|
|
|
Sales percentage
change(c)
|
|
(1.1)
|
%
|
|
(13.5)
|
%
|
|
(6.8)
|
%
|
|
(6.2)
|
%
|
Domestic
same-restaurant sales percentage change(d)
|
|
1.3
|
%
|
|
(7.2)
|
%
|
|
(5.3)
|
%
|
|
(5.0)
|
%
|
Average weekly
domestic unit sales (in thousands)
|
|
$
|
44.2
|
|
|
$
|
42.8
|
|
|
$
|
43.6
|
|
|
$
|
45.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
(unaudited)
|
IHOP Restaurant
Data
|
|
|
|
|
|
|
|
|
Effective
Restaurants(a)
|
|
|
|
|
|
|
|
|
Franchise
|
|
1,598
|
|
|
1,530
|
|
|
1,576
|
|
|
1,517
|
|
Area
license
|
|
164
|
|
|
167
|
|
|
164
|
|
|
166
|
|
Company
|
|
—
|
|
|
10
|
|
|
5
|
|
|
10
|
|
Total
|
|
1,762
|
|
|
1,707
|
|
|
1,745
|
|
|
1,693
|
|
|
|
|
|
|
|
|
|
|
System-wide(b)
|
|
|
|
|
|
|
|
|
Sales percentage
change(c)
|
|
3.1
|
%
|
|
(6.7)
|
%
|
|
0.7
|
%
|
|
(0.3)
|
%
|
Domestic
same-restaurant sales percentage change(d)
|
|
(0.4)%
|
|
|
(2.1)
|
%
|
|
(1.9)
|
%
|
|
(0.1)
|
%
|
|
|
|
|
|
|
|
|
|
Franchise(b)
|
|
|
|
|
|
|
|
|
Sales percentage
change(c)
|
|
3.1
|
%
|
|
(7.1)
|
%
|
|
1.2
|
%
|
|
(0.3)
|
%
|
Domestic
same-restaurant sales percentage change(d, e)
|
|
(0.4)
|
%
|
|
(2.1)
|
%
|
|
(1.9)
|
%
|
|
(0.1)
|
%
|
Average weekly unit
sales (in thousands)
|
|
$
|
36.3
|
|
|
$
|
36.8
|
|
|
$
|
36.3
|
|
|
$
|
37.3
|
|
|
|
|
|
|
|
|
|
|
Area License
(b)
|
|
|
|
|
|
|
|
|
Sales percentage
change(c)
|
|
9.0
|
%
|
|
(1.0)
|
%
|
|
(0.7)
|
%
|
|
0.6
|
%
|
|
(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 the Company as well as those owned by
franchisees and area licensees.
|
(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. 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 domestic franchise restaurants, IHOP franchise
restaurants and IHOP area license restaurants for the three and
twelve months ended December 31, 2017 and 2016 were as
follows:
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(In millions)
|
Reported sales
(unaudited)
|
|
|
|
|
|
|
|
Applebee's franchise
restaurant sales
|
$
|
1,024.8
|
|
|
$
|
1,036.4
|
|
|
$
|
4,117.1
|
|
|
$
|
4,418.6
|
|
IHOP franchise
restaurant sales
|
754.3
|
|
|
731.4
|
|
|
2,974.6
|
|
|
2,939.9
|
|
IHOP area license
restaurant sales
|
72.0
|
|
|
66.0
|
|
|
280.6
|
|
|
282.5
|
|
Total
|
$
|
1,851.1
|
|
|
$
|
1,833.8
|
|
|
$
|
7,372.3
|
|
|
$
|
7,641.0
|
|
|
|
(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 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.
|
Dine Brands
Global, Inc. and Subsidiaries
|
Restaurant Data
(unaudited)
|
|
The following table
summarizes our restaurant development activity:
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Applebee's
Restaurant Development Activity
|
|
|
|
|
|
Total
Applebee's franchise restaurants, beginning of
period
|
1,945
|
|
|
2,027
|
|
|
2,016
|
|
|
2,033
|
|
Franchise restaurants
opened:
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
3
|
|
|
6
|
|
|
10
|
|
|
19
|
|
International
|
3
|
|
|
3
|
|
|
9
|
|
|
10
|
|
Total franchise
restaurants opened
|
6
|
|
|
9
|
|
|
19
|
|
|
29
|
|
Franchise restaurants
closed:
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
(12)
|
|
|
(19)
|
|
|
(86)
|
|
|
(39)
|
|
International
|
(3)
|
|
|
(1)
|
|
|
(13)
|
|
|
(7)
|
|
Total franchise
restaurants closed
|
(15)
|
|
|
(20)
|
|
|
(99)
|
|
|
(46)
|
|
Net franchise
restaurant reduction
|
(9)
|
|
|
(11)
|
|
|
(80)
|
|
|
(17)
|
|
Total Applebee's
franchise restaurants, end of period
|
1,936
|
|
|
2,016
|
|
|
1,936
|
|
|
2,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IHOP Restaurant
Development Activity
|
|
|
|
|
|
|
|
|
|
|
|
Summary -
beginning of period:
|
|
|
|
|
|
|
|
|
|
|
|
Franchise
|
1,596
|
|
|
1,532
|
|
|
1,556
|
|
|
1,507
|
|
Area
license
|
165
|
|
|
167
|
|
|
167
|
|
|
165
|
|
Company(a)
|
—
|
|
|
10
|
|
|
10
|
|
|
11
|
|
Total IHOP
restaurants, beginning of period
|
1,761
|
|
|
1,709
|
|
|
1,733
|
|
|
1,683
|
|
Franchise/area
license restaurants opened:
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
franchise
|
17
|
|
|
17
|
|
|
48
|
|
|
43
|
|
Domestic area
license
|
—
|
|
|
—
|
|
|
1
|
|
|
3
|
|
International
franchise
|
10
|
|
|
9
|
|
|
28
|
|
|
20
|
|
Total franchise/area
license restaurants opened
|
27
|
|
|
26
|
|
|
77
|
|
|
66
|
|
Franchise/area
license restaurants closed:
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
franchise
|
—
|
|
|
(2)
|
|
|
(11)
|
|
|
(12)
|
|
Domestic area
license
|
(1)
|
|
|
—
|
|
|
(3)
|
|
|
(1)
|
|
International
franchise
|
(1)
|
|
|
—
|
|
|
(8)
|
|
|
(3)
|
|
International area
license
|
—
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
Total franchise/area
license restaurants closed
|
(2)
|
|
|
(2)
|
|
|
(23)
|
|
|
(16)
|
|
Net franchise/area
license restaurant development
|
25
|
|
|
24
|
|
|
54
|
|
|
50
|
|
Refranchised from
Company restaurants
|
—
|
|
|
—
|
|
|
9
|
|
|
1
|
|
Net franchise/area
license restaurant additions
|
25
|
|
|
24
|
|
|
63
|
|
|
51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary - end of
period
|
|
|
|
|
|
|
|
|
|
|
|
Franchise
|
1,622
|
|
|
1,556
|
|
|
1,622
|
|
|
1,556
|
|
Area
license
|
164
|
|
|
167
|
|
|
164
|
|
|
167
|
|
Company(a)
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
Total IHOP
restaurants, end of period
|
1,786
|
|
|
1,733
|
|
|
1,786
|
|
|
1,733
|
|
|
a)
|
During the twelve
months ending December 31, 2017, nine company-operated restaurants
were refranchised and one was permanently closed.
|
View original content with
multimedia:http://www.prnewswire.com/news-releases/dineequity-inc-reports-fourth-quarter-and-fiscal-2017-results-300600964.html
SOURCE DineEquity, Inc.