Liquidity and Cash Position Remain
Strong
95% of Domestic Restaurants Open
Dine Brands Global, Inc. (NYSE: DIN), the parent company of
Applebee's Neighborhood Grill + Bar® and IHOP® restaurants, today
announced financial results for the second quarter of 2020.
“As we continue to navigate through the challenges currently
facing our industry, we have remained resolute in our focus to
return to growth. Throughout the second quarter, weekly comparable
sales and traffic at both Applebee’s and IHOP improved as state and
local governments began to ease restrictions on dining room
operations. This, coupled with the significant growth of our
brands’ off-premise business, contributed to the progress made
during the quarter,” said Steve Joyce, chief executive officer of
Dine Brands Global, Inc.
Mr. Joyce added, “I’m confident in our long-term strategy and
ability to quickly adapt to the ever-changing industry landscape.
We have strong liquidity with approximately $342 million of cash,
of which $279 million is unrestricted cash. We’ve been through
challenging times before, and I believe we are well-positioned to
emerge from the pandemic and restore our momentum.”
Domestic System-Wide Comparable Same-Restaurant Sales
Performance
Domestic
Same-Restaurant Sales
Preliminary
Q2
2020
Q3 QTD
through WE 7/26
Applebee's
(49.4%)
(18.4%)
IHOP
(59.1%)
(37.6%)
Domestic Same-Restaurant Sales
(Week Ending)
WE
4/5
WE
4/12
WE
4/19
WE
4/26
WE
5/3
WE
5/10
WE
5/17
WE
5/24
WE
5/31
WE
6/7
WE
6/14
WE
6/21
WE
6/28
Applebee's
(77.0%)
(77.3%)
(64.2%)
(64.4%)
(60.8%)
(54.3%)
(52.8%)
(49.5%)
(42.7%)
(37.0%)
(30.3%)
(18.4%)
(17.8%)
IHOP
(81.5%)
(79.4%)
(76.3%)
(75.4%)
(72.6%)
(65.4%)
(61.5%)
(58.3%)
(52.1%)
(46.2%)
(42.9%)
(33.3%)
(34.4%)
Domestic Same-Restaurant Sales (Week
Ending)
July
Sales Are Preliminary
WE
7/5
WE
7/12
WE
7/19
WE
7/26
Applebee's
(22.3%)
(17.0%)
(18.8%)
(15.6%)
IHOP
(40.4%)
(35.7%)
(39.1%)
(35.0%)
Second Quarter of 2020
- Applebee’s comparable same-restaurant sales improved 11 out of
13 weeks through the week ended June 28, 2020 from a decrease of
77.0% to a decrease of 17.8%, representing an increase of 59.2
percentage points during this period.
- IHOP’s comparable same-restaurant sales improved sequentially
for 12 consecutive weeks out of 13 through the week ended June 28,
2020 from a decrease of 81.5% to a decrease of 34.4%, representing
an increase of 47.1 percentage points during this period.
- Comparable same-restaurant sales for the second quarter of 2020
declined at both Applebee’s and IHOP primarily due to the impact of
COVID-19 and related governmental restrictions on restaurant
operations at the federal, state and local levels, which resulted
in a meaningful decline in traffic for the second quarter of
2020.
- As of June 30, 2020, 3,154 of our domestic restaurants, or 95%,
were open for either dine-in service or off-premise service
comprised of take-out and delivery.
Off-Premise Sales Growth Comparison
- Off-premise sales at both Applebee’s and IHOP increased
significantly primarily as a result of governmental mandates, which
placed restrictions on dine-in service as well as the favorable
impact of the Company’s digital initiatives.
- Applebee’s off-premise sales accounted for 60.5% of sales mix
for the second quarter of 2020, as compared to 16.3% of sales mix
for the first quarter of 2020 and 13.0% of sales mix for the fourth
quarter of 2019.
- Applebee’s delivery sales accounted for 16.8% of sales mix and
take-out sales accounted for 43.8% of sales mix for the second
quarter of 2020.
- Applebee’s online sales as a percentage of total sales
increased by 17.8 percentage points in the second quarter of 2020
to 22.9%. This compares to 5.1% of total sales for the first
quarter of 2020.
- IHOP’s off-premise sales accounted for 53.6% of sales mix for
the second quarter of 2020, as compared to 12.8% of sales mix for
the first quarter of 2020 and 10.1% of sales mix for the fourth
quarter of 2019.
- IHOP’s delivery sales accounted for 23.4% of sales mix and
take-out sales accounted for 33.5% of sales mix for the second
quarter of 2020.
- IHOP’s online sales as a percentage of total sales increased by
27.8 percentage points in the second quarter of 2020 to 34.7%. This
compares to 6.9% of total sales for the first quarter of 2020.
Second Quarter of 2020 Summary
- GAAP net loss per diluted share of $8.04 for the second quarter
of 2020 compared to earnings per diluted share of $1.18 for the
second quarter of 2019. This variance was primarily due to non-cash
impairment charges totaling $106.5 million related to the
write-downs of Applebee’s goodwill and other intangible assets as a
result of the impact of COVID-19 on the Company’s operations. These
items were partially offset by a deferred tax benefit of $3.4
million attributable to the other intangible assets charge.
Additionally, gross profit decreased primarily due to a significant
decline in customer traffic as a result of governmental measures to
stem the spread of the coronavirus and related changes in consumer
behavior.
- Adjusted net loss per diluted share of $0.87 for the second
quarter of 2020 compared to adjusted earnings per diluted share of
$1.71 for the second quarter of 2019. (See “Non-GAAP Financial
Measures” and reconciliation of GAAP earnings per diluted share to
adjusted earnings per diluted share.)
- General and administrative expenses for the second quarter of
2020 declined 21.6% year-over-year to $30.9 million. The
improvement was mainly due to lower compensation expenses.
- Net loss of $134.8 million for the second quarter of 2020
compared to net income of $21.4 million the second quarter of
2019.
- Consolidated adjusted EBITDA for the second quarter of 2020 was
$12.1 million. This compares to $68.0 million for the second
quarter of 2019. (See “Non-GAAP Financial Measures” and
reconciliation of GAAP net income to consolidated adjusted
EBITDA.)
- Cash used in operating activities for the first six months of
2020 was $10.5 million. This compares to cash flows from operating
activities of $69.3 million for the first six months of 2019. The
decrease mainly was due a significant decline in customer traffic
at our restaurants that adversely impacted our segment operations
as well as payment deferrals we offered to our franchisees
primarily for the months of March 2020 and April 2020.
- The Company had negative adjusted free cash flow of $12.4
million for the first six months of 2020. This compares to adjusted
free cash flow of $66.0 million for the first six months of 2019.
(See “Non-GAAP Financial Measures” and reconciliation of the
Company’s cash provided by operating activities to adjusted free
cash flow.)
- GAAP net loss available to common stockholders was $130.0
million, or net loss per diluted share of $8.04, for the second
quarter of 2020. This compares to net income available to common
stockholders of $20.7 million, or earnings per diluted share of
$1.18, for the second quarter of 2019. The decrease in net income
was primarily due to the impairment charges and decline in gross
profit discussed above. These items were partially offset by a
decline in general and administrative expenses.
- Adjusted net loss available to common stockholders was $14.0
million, or adjusted net loss per diluted share of $0.87, for the
second quarter of 2020. This compares to adjusted net income
available to common stockholders of $30.0 million, or adjusted
earnings per diluted share of $1.71, for the second quarter of
2019. The decrease in adjusted net income was primarily due to
lower gross profit for the reasons described above. This item was
partially offset by fewer weighted average diluted shares
outstanding and lower general and administrative expenses. (See
“Non-GAAP Financial Measures” below.)
Cash Position
Dine Brands has taken precautionary measures to increase the
Company’s financial flexibility due to the conditions caused by
COVID-19. As previously disclosed on March 19, 2020, the Company
borrowed $220 million from its revolving financing facility, all of
which remains drawn as of June 30, 2020. As of June 30, 2020, $2.8
million was pledged against the revolving financing facility for
outstanding letters of credit.
As of June 30, 2020, the Company had $342.5 million of total
cash, including restricted cash of $64.0 million. The Company
believes that its asset-light business model and cash position will
continue to provide strong liquidity during the pandemic.
The Company makes $16.4 million of quarterly interest payments
on its Series 2019-1 Class A-2-I, Fixed Rate Senior Secured Notes
and Series 2019-1 Class A-2-II, Fixed Rate Senior Secured Notes
(the “Class A-2-I Notes”, together with the “Class A-2-II Notes”,
the “Class A-2 Notes”). In addition, the Company anticipates making
a principal payment of $3.25 million in the fourth quarter of 2020.
The quarterly principal payments under the Class A-2 Notes may be
voluntarily suspended when the leverage ratio for the Company and
its subsidiaries is less than or equal to 5.25x. As of June 30,
2020, the Company’s leverage ratio was 6.30x.
The Company voluntarily doubled its interest reserve on its
Class A-2 Notes during the second quarter of 2020 to $32.8 million
to enhance its securitization structure. This increased restricted
cash by $16.4 million.
GAAP Effective Tax Rate
Our effective tax rate for the second quarter of 2020 was an
8.2% tax benefit compared to a 26.4% expense for the second quarter
of 2019. The variance is primarily due to the non-deductibility of
the Applebee’s goodwill impairment discussed earlier.
Financial Performance Guidance for 2020 Withdrawn
The Company disclosed on March 19, 2020 that it believes its
consolidated financial results for 2020 could be materially
impacted by the global impact from COVID-19. As a result, the
Company withdrew its 2020 financial performance guidance issued on
February 24, 2020. The Company assumes no obligation to update or
supplement its financial performance guidance issued on February
24, 2020.
Applebee’s Reopening Update
Applebee’s restaurants began reopening their dining rooms on
April 27, 2020. As of June 30, 2020, out of 1,639 domestic
Applebee’s franchise restaurants, 1,523 were open for in-restaurant
dining, 70 were open for only off-premise sales, comprised of
take-out and delivery, and 46 were temporarily closed.
IHOP Reopening Update
IHOP restaurants began reopening their dining rooms on April 21,
2020. As of June 30, 2020, out of 1,695 domestic IHOP franchise and
area license restaurants, 1,485 were open for in-restaurant dining,
76 were open only for off-premise sales, comprised of take-out and
delivery, and 134 were temporarily closed.
Second Quarter of 2020 Earnings Conference Call
Details
Dine Brands will host a conference call to discuss its results
on July 29, 2020 at 9:00 a.m. Pacific Time. To participate on the
call, please dial (833) 528-0602 and enter the conference
identification number 4180997. International callers, please dial
(830) 221-9708 and enter the conference identification number
4180997.
A live webcast of the call will be available on
www.dinebrands.com and may be accessed by visiting Events and
Presentations under the site’s Investors section. Participants
should allow approximately ten minutes prior to the call’s start
time to visit the site and download any streaming media software
needed to listen to the webcast. A telephonic replay of the call
may be accessed from 12:00 p.m. Pacific Time on July 29, 2020
through 12:00 p.m. Pacific Time on August 5, 2020 by dialing (855)
859-2056 and entering the conference identification number 4180997.
International callers, please dial (404) 537-3406 and enter the
conference identification number 4180997. An online archive of the
webcast will also be available on Events and Presentations under
the Investors section of the Company’s website.
About Dine Brands Global, Inc.
Based in Glendale, California, Dine Brands Global, Inc. (NYSE:
DIN), through its subsidiaries, franchises restaurants under both
the Applebee's Neighborhood Grill + Bar and IHOP brands. With
approximately 3,600 restaurants combined in 17 countries and
approximately 370 franchisees, Dine Brands is one of the largest
full-service restaurant companies in the world. For more
information on Dine Brands, visit the Company’s website located at
www.dinebrands.com.
Forward-Looking Statements
Statements contained in this press release may constitute
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. You can identify these
forward-looking statements by words such as “may,” “will,” “would,”
“should,” “could,” “expect,” “anticipate,” “believe,” “estimate,”
“intend,” “plan,” “goal” and other similar expressions. These
statements involve known and unknown risks, uncertainties and other
factors, which may cause actual results to be materially different
from those expressed or implied in such statements. These factors
include, but are not limited to: uncertainty regarding the duration
and severity of the ongoing COVID-19 pandemic and its ultimate
impact on the Company; the effectiveness of related containment
measures; general economic conditions; our level of indebtedness;
compliance with the terms of our securitized debt; our ability to
refinance our current indebtedness or obtain additional financing;
our dependence on information technology; potential cyber
incidents; the implementation of restaurant development plans; our
dependence on our franchisees; the concentration of our Applebee’s
franchised restaurants in a limited number of franchisees; the
financial health of our franchisees; our franchisees’ and other
licensees’ compliance with our quality standards and trademark
usage; general risks associated with the restaurant industry;
potential harm to our brands’ reputation; possible future
impairment charges; the effects of tax reform; trading volatility
and fluctuations in the price of our stock; our ability to achieve
the financial guidance we provide to investors; successful
implementation of our business strategy; the availability of
suitable locations for new restaurants; shortages or interruptions
in the supply or delivery of products from third parties or
availability of utilities; the management and forecasting of
appropriate inventory levels; development and implementation of
innovative marketing and use of social media; changing health or
dietary preference of consumers; risks associated with doing
business in international markets; the results of litigation and
other legal proceedings; third-party claims with respect to
intellectual property assets; our ability to attract and retain
management and other key employees; compliance with federal, state
and local governmental regulations; risks associated with our
self-insurance; natural disasters, 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 gain or loss related to
debt extinguishment, any intangible asset amortization, any
non-cash interest expense, any gain or loss related to the
disposition of assets, and other items deemed not reflective of
current operations. This is presented on an aggregate basis and a
per share (diluted) basis. Adjusted EBITDA is computed for a given
period by deducting from net income or loss for such period the
effect of any closure and impairment charges, any interest charges,
any income tax provision or benefit, any non-cash stock-based
compensation, any depreciation and amortization, any gain or loss
related to the disposition of assets and other items deemed not
reflective of current operations. “Adjusted free cash flow” for a
given period is defined as cash provided by operating activities,
plus receipts from notes and equipment contracts receivable, less
capital expenditures. Management may use certain of these non-GAAP
financial measures along with the corresponding U.S. GAAP measures
to evaluate the performance of the business and to make certain
business decisions. Management uses adjusted free cash flow in its
periodic assessments of, among other things, the amount of cash
dividends per share of common stock and repurchases of common stock
and we believe it is important for investors to have the same
measure used by management for that purpose. Adjusted free cash
flow does not represent residual cash flow available for
discretionary purposes. Additionally, adjusted EPS is one of the
metrics used in determining payouts under the Company’s annual cash
incentive plan. Management believes that these non-GAAP financial
measures provide additional meaningful information that should be
considered when assessing the business and the Company’s
performance compared to prior periods and the marketplace. Adjusted
EPS and adjusted free cash flow are supplemental non-GAAP financial
measures and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
U.S. GAAP.
Dine Brands Global, Inc. and
Subsidiaries
Consolidated Statements of
Comprehensive (Loss) Income
(In thousands, except per
share amounts)
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
Revenues:
Franchise revenues:
Royalties, franchise fees and other
$
38,781
$
90,930
$
122,095
$
187,226
Advertising revenues
29,095
71,738
90,818
144,368
Total franchise revenues
67,876
162,668
212,913
331,594
Company restaurant sales
16,774
33,751
48,074
69,486
Rental revenues
23,707
29,878
52,716
60,589
Financing revenues
1,355
1,783
2,893
3,593
Total revenues
109,712
228,080
316,596
465,262
Cost of revenues:
Franchise expenses:
Advertising expenses
29,095
71,738
90,818
144,368
Bad debt expense (credit)
5,053
(126)
5,571
(593)
Other franchise expenses
2,932
7,295
10,141
15,435
Total franchise expenses
37,080
78,907
106,530
159,210
Company restaurant expenses
21,139
31,232
51,471
62,770
Rental expenses:
Interest expense from finance leases
1,137
1,445
2,347
2,974
Other rental expenses
20,106
21,495
41,429
42,590
Total rental expenses
21,243
22,940
43,776
45,564
Financing expenses
128
146
270
292
Total cost of revenues
79,590
133,225
202,047
267,836
Gross profit
30,122
94,855
114,549
197,426
General and administrative expenses
30,870
39,364
68,478
82,183
Interest expense, net
17,127
14,602
32,299
29,995
Impairment and closure charges
124,365
289
124,353
483
Amortization of intangible assets
2,755
2,925
5,581
5,849
Loss on extinguishment of debt
—
8,276
—
8,276
Loss on disposition of assets
1,776
332
1,543
441
(Loss) income before income tax
provision
(146,771)
29,067
(117,705)
70,199
Income tax benefit (provision)
11,992
(7,677)
5,254
(17,166)
Net (loss) income
$
(134,779)
$
21,390
$
(112,451)
$
53,033
Net (loss) income available to common
stockholders:
Net (loss) income
$
(134,779)
$
21,390
$
(112,451)
$
53,033
Less: Net loss (income) allocated to
unvested participating restricted stock
4,763
(719)
3,961
(1,827)
Net (loss) income available to common
stockholders
$
(130,016)
$
20,671
$
(108,490)
$
51,206
Net (loss) income available to common
stockholders per share:
Basic
$
(8.04)
$
1.20
$
(6.69)
$
2.97
Diluted
$
(8.04)
$
1.18
$
(6.69)
$
2.91
Weighted average shares
outstanding:
Basic
16,177
17,181
16,215
17,262
Diluted
16,177
17,563
16,215
17,626
Dividends declared per common
share
—
$0.69
$0.76
$1.38
Dividends paid per common share
$0.76
$0.69
$1.45
$1.32
Dine Brands Global, Inc. and
Subsidiaries
Consolidated Balance
Sheets
(In thousands, except share
and per share amounts)
June 30, 2020
December 31, 2019
Assets
(Unaudited)
Current assets:
Cash and cash equivalents
$
278,507
$
116,043
Receivables, net of allowance of $11,709
(2020) and $3,138 (2019)
124,619
136,869
Restricted cash
31,184
40,732
Prepaid gift card costs
27,370
36,077
Prepaid income taxes
17,880
13,290
Other current assets
6,410
3,906
Total current assets
485,970
346,917
Other intangible assets, net
555,495
575,103
Operating lease right-of-use assets
349,103
366,931
Goodwill
251,628
343,862
Property and equipment, net
203,540
216,420
Long-term receivables, net of allowance of
$7,981 (2020) and $8,155 (2019)
74,015
85,999
Deferred rent receivable
65,126
70,308
Non-current restricted cash
32,800
15,700
Other non-current assets, net
25,590
28,271
Total assets
$
2,043,267
$
2,049,511
Liabilities and Stockholders’
Deficit
Current liabilities:
Current maturities of long-term debt
$
9,750
$
—
Accounts payable
19,181
40,925
Gift card liability
121,994
159,019
Current maturities of operating lease
obligations
71,837
72,815
Current maturities of finance lease and
financing obligations
13,307
13,669
Accrued employee compensation and
benefits
10,568
23,904
Dividends payable
—
11,702
Deferred franchise revenue, short-term
8,921
10,086
Accrued advertising expenses
21,772
8,760
Other accrued expenses
23,376
17,032
Total current liabilities
300,706
357,912
Long-term debt
1,497,116
1,288,248
Operating lease obligations, less current
maturities
350,418
359,025
Finance lease obligations, less current
maturities
74,051
77,393
Financing obligations, less current
maturities
34,682
37,682
Deferred income taxes, net
86,221
98,499
Deferred franchise revenue, long-term
53,269
56,944
Other non-current liabilities
15,375
15,582
Total liabilities
2,411,838
2,291,285
Commitments and contingencies
Stockholders’ deficit:
Preferred stock, $1 par value, 10,000,000
shares authorized, no shares issued or outstanding
—
—
Common stock, $0.01 par value; shares:
40,000,000 authorized; June 30, 2020 - 24,900,436 issued,
16,417,618 outstanding; December 31, 2019 - 24,925,447 issued,
16,521,921 outstanding
249
249
Additional paid-in-capital
254,429
246,192
(Accumulated deficit) retained
earnings
(64,010)
61,653
Accumulated other comprehensive loss
(58)
(58)
Treasury stock, at cost; shares: June 30,
2020 - 8,482,818; December 31, 2019 - 8,403,526
(559,181)
(549,810)
Total stockholders’ deficit
(368,571)
(241,774)
Total liabilities and stockholders’
deficit
$
2,043,267
$
2,049,511
Dine Brands Global, Inc. and
Subsidiaries
Consolidated Statements of
Cash Flows
(In thousands)
(Unaudited)
Six Months Ended
June 30,
2020
2019
Cash flows from operating
activities:
Net (loss) income
$
(112,451)
$
53,033
Adjustments to reconcile net (loss) income
to cash flows (used in) provided by operating activities:
Depreciation and amortization
21,345
20,800
Non-cash stock-based compensation
expense
6,670
5,894
Non-cash interest expense
1,318
2,083
Loss on extinguishment of debt
—
8,276
Impairment and closure charges
124,343
483
Deferred income taxes
(10,793)
(3,186)
Deferred revenue
(4,840)
(4,179)
Loss on disposition of assets
1,543
441
Other
(252)
(3,499)
Changes in operating assets and
liabilities:
Accounts receivable, net
(31,039)
(1,976)
Current income tax receivables and
payables
(5,456)
9,442
Gift card receivables and payables
2,293
(7,444)
Other current assets
(2,503)
(3,607)
Accounts payable
(903)
8,995
Accrued employee compensation and
benefits
(13,336)
(9,872)
Other current liabilities
13,544
(6,355)
Cash flows (used in) provided by operating
activities
(10,517)
69,329
Cash flows from investing
activities:
Principal receipts from notes, equipment
contracts and other long-term receivables
10,772
11,386
Net additions to property and
equipment
(7,380)
(9,175)
Proceeds from sale of property and
equipment
456
400
Additions to long-term receivables
(1,475)
(1,555)
Other
(276)
(186)
Cash flows provided by investing
activities
2,097
870
Cash flows from financing
activities:
Proceeds from issuance of long-term
debt
—
1,300,000
Repayment of long-term debt
—
(1,283,750)
Borrowing from revolving credit
facilities
220,000
—
Repayment of revolving credit
facilities
—
(25,000)
Payment of debt issuance costs
—
(12,189)
Dividends paid on common stock
(23,934)
(23,346)
Repurchase of common stock
(29,853)
(46,383)
Principal payments on finance lease
obligations
(5,993)
(6,964)
Proceeds from stock options exercised
20,523
6,938
Tax payments for restricted stock upon
vesting
(2,129)
(2,242)
Other
(178)
—
Cash flows provided by (used in) financing
activities
178,436
(92,936)
Net change in cash, cash equivalents and
restricted cash
170,016
(22,737)
Cash, cash equivalents and restricted cash
at beginning of period
172,475
200,379
Cash, cash equivalents and restricted cash
at end of period
$
342,491
$
177,642
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 and closure
charges; amortization of intangible assets; non-cash interest
expense; debt; nonrecurring restaurant costs; gain or loss on
disposition of assets; and the combined tax effect of the preceding
adjustments, as well as related per share data:
Three Months Ended
Six Months Ended
June 30,
June 30,
June 30, 2020
June 30, 2019
2020
2019
Net (loss) income available to common
stockholders, as reported
$
(130,016)
$
20,671
$
(108,490)
$
51,206
Impairment and closure charges
124,365
289
124,353
483
Amortization of intangible assets
2,755
2,925
5,581
5,849
Loss on extinguishment of debt
—
8,276
—
8,276
Non-cash interest expense
663
965
1,318
2,083
Nonrecurring restaurant costs
—
269
—
329
Loss on disposition of assets
1,776
332
1,543
441
Net income tax provision for above
adjustments
(9,331)
(3,395)
(10,140)
(4,540)
Net income allocated to unvested
participating restricted stock
(4,249)
(340)
(4,293)
(458)
Net (loss) income available to common
stockholders, as adjusted
$
(14,037)
$
29,992
$
9,872
$
63,669
Diluted net (loss) income available to
common stockholders per share:
Net (loss) income available to common
stockholders, as reported
$
(8.04)
$
1.18
$
(6.69)
$
2.91
Impairment and closure charges
7.19
0.01
7.14
0.02
Amortization of intangible assets
0.13
0.12
0.26
0.25
Loss on extinguishment of debt
—
0.35
—
0.35
Non-cash interest expense
0.03
0.04
0.06
0.09
Nonrecurring restaurant costs
—
0.01
—
0.01
Loss on disposition of assets
0.08
0.01
0.07
0.02
Net income allocated to unvested
participating restricted stock
(0.26)
(0.02)
(0.25)
(0.03)
Rounding
—
0.01
0.02
(0.01)
Diluted net (loss) income available to
common stockholders per share, as adjusted
$
(0.87)
$
1.71
$
0.61
$
3.61
Numerator for basic EPS-(loss) income
available to common stockholders, as adjusted
$
(14,037)
$
29,992
$
9,872
$
63,669
Effect of unvested participating
restricted stock using the two-class method
1
14
—
30
Numerator for diluted EPS-(loss) income
available to common stockholders, as adjusted
$
(14,036)
$
30,006
$
9,872
$
63,699
Denominator for basic EPS-weighted-average
shares
16,177
17,181
16,215
17,262
Dilutive effect of stock options
—
382
101
364
Denominator for diluted
EPS-weighted-average shares
16,177
17,563
16,316
17,626
Dine Brands Global, Inc. and
Subsidiaries
Non-GAAP Financial
Measures
(Unaudited)
Reconciliation of the Company's cash
provided by operating activities to “adjusted free cash flow” (cash
provided by operating activities, plus receipts from notes and
equipment contracts receivable, less additions to property and
equipment). Management uses this liquidity measure in its periodic
assessments of, among other things, the amount of cash dividends
per share of common stock and repurchases of common stock. We
believe it is important for investors to have the same measure used
by management for that purpose. Adjusted free cash flow does not
represent residual cash flow available for discretionary
purposes.
Six Months Ended
June 30,
2020
2019
(In millions)
Cash flows (used in) provided by operating
activities
$
(10.5)
$
69.3
Receipts from notes and equipment
contracts receivable
5.5
5.9
Additions to property and equipment
(7.4)
(9.2)
Adjusted free cash flow
(12.4)
66.0
Dividends paid on common stock
(23.9)
(23.3)
Repurchase of Dine Brands Global common
stock
(29.9)
(46.4)
$
(66.2)
$
(3.7)
Dine Brands Global, Inc. and
Subsidiaries
Non-GAAP Financial
Measures
(in thousands)
(Unaudited)
Reconciliation of the Company's net income
to “adjusted EBITDA.” The Company defines adjusted EBITDA as net
income, adjusted for the effect of impairment and closure charges,
interest charges, income tax provision or benefit, depreciation and
amortization, non-cash stock-based compensation, gain or loss on
disposition of assets, other non-income based taxes and other items
deemed not reflective of current operations. Management may use
certain non-GAAP measures along with the corresponding U. S. GAAP
measures to evaluate the performance of the company and to make
certain business decisions.
Three Months Ended
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
Net (loss) income, as reported
$
(134,779)
$
21,390
$
(112,451)
$
53,033
Impairment and closure charges
124,365
289
124,353
483
Interest charges on finance leases
1,646
1,970
3,369
4,053
All other interest charges
17,657
15,390
33,899
32,087
Income tax (benefit) provision
(11,992)
7,677
(5,254)
17,166
Depreciation and amortization
10,695
10,620
21,345
20,800
Non-cash stock-based compensation
2,632
1,787
6,670
5,893
Loss on extinguishment of debt
—
8,276
—
8,276
Loss on disposition of assets
1,776
332
1,543
441
Other taxes
86
237
304
439
Adjusted EBITDA
$
12,086
$
67,968
$
73,778
$
142,671
Dine Brands Global, Inc. and
Subsidiaries
Restaurant Data
(Unaudited)
The following table sets forth, for the
three and six months ended June 30, 2020 and 2019, the number of
“Effective Restaurants” in the Applebee’s and IHOP systems and
information regarding the percentage change in sales at those
restaurants compared to the same periods in the prior year and, as
such, the percentage change in sales at Effective Restaurants is
based on non-GAAP sales data. Sales at restaurants that are owned
by franchisees and area licensees are not attributable to the
Company. However, we believe that presentation of this information
is useful in analyzing our revenues because franchisees and area
licensees pay us royalties and advertising fees that are generally
based on a percentage of their sales, and, where applicable, rental
payments under leases that partially may be based on a percentage
of their sales. Management also uses this information to make
decisions about future plans for the development of additional
restaurants as well as evaluation of current operations.
Three Months Ended
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
Applebee's
Effective Restaurants(a)
Franchise
1,527
1,753
1,612
1,758
Company
67
69
68
69
Total
1,594
1,822
1,680
1,827
System-wide(b)
Domestic sales percentage change(c)
(53.5)
%
(3.0)
%
(32.5)
%
(2.2)
%
Domestic same-restaurant sales percentage
change(d)
(49.4)
%
(0.5)
%
(29.1)
%
0.6
%
Franchise(b)
Domestic sales percentage change(c)
(e)
(53.6)
%
(6.1)
%
(32.5)
%
(5.4)
%
Domestic same-restaurant sales percentage
change(d)
(49.4)
%
(0.6)
%
(29.0)
%
0.5
%
Average weekly domestic unit sales (in
thousands)
$
25.0
$
48.4
$
35.2
$
49.0
IHOP
Effective Restaurants(a)
Franchise
1,375
1,656
1,510
1,656
Area license
144
155
153
156
Total
1,519
1,811
1,663
1,812
System-wide(b)
Sales percentage change(c)
(64.3)
%
3.2
%
(39.1)
%
2.8
%
Domestic same-restaurant sales percentage
change, including area license restaurants(d)
(59.1)
%
2.0
%
(35.6)
%
1.7
%
Franchise(b)
Sales percentage change(c)
(64.4)
%
3.3
%
(39.2)
%
2.8
%
Domestic same-restaurant sales percentage
change(d)
(58.9)
%
1.9
%
(35.4)
%
1.5
%
Average weekly unit sales (in
thousands)
$
15.8
$
36.8
$
24.6
$
36.9
Area License (b)
Sales percentage change(c)
(63.3)
%
2.0
%
(38.1)
%
2.3
%
Dine Brands Global, Inc. and
Subsidiaries
Restaurant Data
(Unaudited)
(a)
“Effective Restaurants” are the weighted
average number of restaurants open in a given fiscal period,
adjusted to account for restaurants open for only a portion of the
period. Information is presented for all Effective Restaurants in
the Applebee’s and IHOP systems, which includes restaurants owned
by franchisees and area licensees as well as those owned by the
Company.
(b)
“System-wide” sales are retail sales at
domestic Applebee’s restaurants operated by franchisees and IHOP
restaurants operated by franchisees and area licensees, as reported
to the Company, in addition to retail sales at company-operated
restaurants. Sales at restaurants that are owned by franchisees and
area licensees are not attributable to the Company. An increase or
decrease in franchisees' reported sales will result in a
corresponding increase or decrease in our royalty revenue.
Unaudited reported sales for Applebee's domestic franchise
restaurants, IHOP franchise restaurants and IHOP area license
restaurants for the three and six months ended June 30, 2020 and
2019 and sales by company-operated restaurants were as follows:
Three Months Ended
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
(In millions)
Reported sales
Applebee's domestic franchise restaurant
sales
$
472.0
$
1,016.5
$
1,390.2
$
2,060.7
Applebee's company-operated
restaurants
16.8
33.7
48.1
69.5
IHOP franchise restaurant sales
282.1
791.6
966.9
1,590.4
IHOP area license restaurant sales
26.4
71.8
90.4
146.1
Total
$
797.3
$
1,913.6
$
2,495.6
$
3,866.7
(c)
“Sales percentage change” reflects, for
each category of restaurants, the percentage change in sales in any
given fiscal period compared to the prior fiscal period for all
restaurants in that category.
(d)
“Domestic same-restaurant sales percentage
change” reflects the percentage change in sales, in any given
fiscal period, compared to the same weeks in the prior year for
domestic restaurants that have been operated throughout both fiscal
periods that are being compared and have been open for at least 18
months. Because of new unit openings and restaurant closures, the
domestic restaurants open throughout both fiscal periods being
compared may be different from period to period.
(e)
The franchise sales percentage change for
2019 was impacted by the acquisition of 69 franchise restaurants in
December 2018 now reported as company-operated.
Dine Brands Global, Inc. and
Subsidiaries
Restaurant Data
(Unaudited)
The following table summarizes our
restaurant development activity:
Three Months Ended
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
Applebee's
Restaurant Development Activity
Summary - beginning of period:
Franchise
1,706
1,761
1,718
1,768
Company restaurants
69
69
69
69
Total Applebee's restaurants, beginning
of period
1,775
1,830
1,787
1,837
Franchise restaurants opened
Domestic
—
—
—
—
International
—
1
—
1
Total franchise restaurants opened
—
1
—
1
Franchise restaurants permanently
closed:
Domestic
(24)
(13)
(32)
(17)
International
(2)
(3)
(6)
(6)
Total franchise restaurants permanently
closed
(26)
(16)
(38)
(23)
Net franchise restaurant
reduction
(26)
(15)
(38)
(22)
Summary - end of period:
Franchise
1,680
1,746
1,680
1,746
Company
69
69
69
69
Total Applebee's restaurants, end of
period
1,749
1,815
1,749
1,815
Domestic
1,633
1,676
1,633
1,676
International
116
139
116
139
IHOP Restaurant
Development Activity
Summary - beginning of period:
Franchise
1,680
1,663
1,680
1,669
Area license
160
159
161
162
Total IHOP restaurants, beginning of
period
1,840
1,822
1,841
1,831
Franchise/area license restaurants
opened:
Domestic franchise
1
9
7
15
Domestic area license
—
2
1
2
International franchise
—
2
2
2
Total franchise/area license restaurants
opened
1
13
10
19
Franchise/area license restaurants
permanently closed:
Domestic franchise
(13)
(1)
(19)
(12)
Domestic area license
(1)
(2)
(3)
(5)
International franchise
(2)
(4)
(4)
(5)
International area license
(2)
—
(2)
—
Total franchise/area license restaurants
permanently closed
(18)
(7)
(28)
(22)
Net franchise/area license restaurant
reduction
(17)
6
(18)
(3)
Summary - end of period
Franchise
1,666
1,669
1,666
1,669
Area license
157
159
157
159
Total IHOP restaurants, end of
period
1,823
1,828
1,823
1,828
Domestic
1,696
1,705
1,696
1,705
International
127
123
127
123
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200729005346/en/
Investor Contact Ken Diptee
Executive Director, Investor Relations Dine Brands Global, Inc.
818-637-3632
Media Contact Susan Nelson
Vice President, Global Communications and Public Affairs Dine
Brands Global, Inc. 818-637-4726
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