GLENDALE, Calif., Nov. 1, 2016 /PRNewswire/ -- DineEquity, Inc.
(NYSE: DIN), the parent company of Applebee's Neighborhood Grill
& Bar® and IHOP® restaurants, today
announced financial results for the third quarter of fiscal
2016.
"Despite challenges facing the industry, DineEquity again posted
year-over-year growth in earnings per diluted share and generated
substantial adjusted free cash flow. We reaffirmed our
commitment to return significant cash to shareholders by increasing
the quarterly dividend by 5.4%, effective with the next dividend
paid on January 6, 2017.
Additionally, we completed our restaurant support center
consolidation, which enables us to reallocate resources as needed,"
said Julia A. Stewart, Chairman and
Chief Executive Officer of DineEquity, Inc.
Ms. Stewart concluded, "Our top priority is driving the
performance of the Applebee's brand. In addition, we
recognize that there is more work to be done to sustain the
momentum at IHOP and we're taking action. I'm pleased to say
that we held successful franchise conferences for both Applebee's
and IHOP in September and we're collaborating with franchisees to
execute our long-term strategy to strengthen the brands."
Third Quarter of Fiscal 2016 Financial Highlights
- GAAP net income available to common stockholders was
$23.9 million for the third quarter
of 2016, or earnings per diluted share of $1.33. This compares to net income
available to common stockholders of $23.9
million, or earnings per diluted share of $1.28, for the third quarter of 2015. GAAP
net income for the third quarter of 2016 was essentially flat
compared to the same period of 2015 mainly due to gross profit
declines being offset by lower general and administrative expenses.
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
$26.4 million, or adjusted earnings
per diluted share of $1.46, for the
third quarter of 2016. This compares to $26.7 million, or adjusted earnings per diluted
share of $1.43, for the same period
of 2015. The slight decrease in adjusted net income was
mainly due to lower gross profit. The decrease was partially
offset by lower income taxes and a decline in 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 $36.0 million for the third quarter of
2016. This compares to approximately $41.6 million for the same period of 2015.
The decrease was primarily due to lower non-recurring restaurant
support center consolidation costs, partially offset by higher
costs associated with the timing of franchise conferences.
First Nine Months of Fiscal 2016 Financial Highlights
- GAAP net income available to common stockholders was
$75.5 million for the first nine
months of fiscal 2016, or earnings per diluted share of
$4.15. This compares to net
income available to common stockholders of $78.5 million, or earnings per diluted share of
$4.16, for the first nine months of
fiscal 2015. The decrease in GAAP net income was primarily
due to lower gross profit and a loss on the disposition of assets
in the first nine months of 2016 compared to a gain in the same
period of 2015. The decrease was partially offset by lower income
tax expense. The decline in earnings per diluted share was
less than the decline in net income due to fewer weighted average
diluted shares outstanding.
- Adjusted net income available to common stockholders was
$84.3 million, or adjusted earnings
per diluted share of $4.63, for the
first nine months of fiscal 2016. This compares to
$86.7 million, or adjusted earnings
per diluted share of $4.59, for the
same period of fiscal 2015. The decline in adjusted net
income was mainly due to lower gross profit and higher general and
administrative expenses, partially offset by lower income
taxes. Despite the decrease in adjusted earnings, adjusted
earnings per diluted share increased due to fewer weighted average
diluted shares outstanding. (See "Non-GAAP Financial Measures"
below.)
- General and administrative expenses were $111.9 million for the first nine months of
2016. This compares to $110.4
million for the same period of 2015. The slight
increase was primarily due to higher costs associated with the
timing of franchise conferences, partially offset by a decrease in
personnel and related
costs.
- In the nine months of fiscal 2016, cash flows from operating
activities were $62.1 million
compared to $70.6 million in the same
period of fiscal 2015. Adjusted free cash flow was
$66.2 million for the first nine
months of fiscal 2016, compared to $75.6
million for the first nine months of fiscal 2015. (See
"Non-GAAP Financial Measures" below.)
Same-Restaurant Sales Performance
Third Quarter of Fiscal 2016
- IHOP's domestic system-wide comparable same restaurant sales
were negative 0.1% for the third quarter of 2016.
- Applebee's domestic system-wide comparable same-restaurant
sales declined 5.2% for the third quarter of 2016.
First Nine Months of Fiscal 2016
- IHOP's domestic system-wide comparable same restaurant sales
increased 0.5% for the first nine months of fiscal 2016.
- Applebee's domestic system-wide comparable same-restaurant
sales declined 4.4% for the first nine 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 August 3, 2016 and the Form 8-K filed on August 3, 2016, except for the revisions noted
below.
- Revised Applebee's comparable same-restaurant sales
performance to range between negative 4.0% and negative 5.0%.
This compares to the previous expectations of between negative 3.0%
and negative 4.5%. The Company expects comparable
same-restaurant sales to be near the low end of the guidance
range.
- Reiterated IHOP's comparable same-restaurant sales
performance to range between positive 0.5% and positive 2.0%.
The Company expects comparable same-restaurant sales to be near the
low end of the guidance range.
- Reiterated worldwide development expectations for
Applebee's franchisees to develop between 25 and 33 new
restaurants. IHOP franchisees and its area licensee are expected to
develop between 65 and 77 new restaurants.
- Revised expectations for Franchise segment profit to be
between $340 million and $345
million. This compares to the previous expectations of
between $342 million and $352
million.
- Reiterated expectations for the Rental and Financing
segments to generate roughly $40
million in combined profit.
- Revised expectations for general and administrative
expenses to range between $150 million and
$154 million, including non-cash stock-based compensation
expense and depreciation of approximately $20 million, reflecting an improvement from
previous expectations of between $154
million and $158 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.
- Reiterated expectations for weighted average diluted
shares outstanding to be approximately 18.2 million
shares.
- Reiterated expectations for the income tax rate to be
approximately 37%.
- Reiterated expectations for cash flows provided by
operating activities to range between $112
million and $120 million.
- Reiterated expectations for capital expenditures to be
roughly $8 million.
- Reiterated expectations for adjusted free cash flow (See
"Non-GAAP Financial Measures" below) to range between $113 million and $121 million. Our guidance
reflects approximately $9 million in
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.
Additionally, our guidance reflects non-recurring tax
payments totaling approximately $7
million related to deferred gains from the repurchase of our
debt, primarily in 2008 and 2009. The total tax payments were
made in the third quarter of 2016. The Company previously
estimated non-recurring tax payments totaling approximately
$10 million.
|
2016 Adjusted 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)
|
|
|
Adjusted 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 43500950. International callers,
please dial (847) 585-4405 and reference passcode 43500950.
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 November 1, 2016
through 8:59 p.m. Pacific Time on
November 8, 2016 by dialing (888)
843-7419 and referencing passcode 43500950#. International callers,
please dial (630) 652-3042 and reference passcode 43500950#. 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 20
countries and U.S. territories and approximately 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.
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)" 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 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. 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
United States generally accepted
accounting principles.
|
DineEquity, Inc. and
Subsidiaries
|
|
Consolidated
Statements of Income
|
|
(In thousands,
except per share amounts)
|
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Franchise and
restaurant revenues
|
|
$
|
123,259
|
|
|
$
|
128,188
|
|
|
$
|
380,034
|
|
|
$
|
407,774
|
|
|
Rental
revenues
|
|
30,507
|
|
|
31,221
|
|
|
92,746
|
|
|
93,755
|
|
|
Financing
revenues
|
|
2,251
|
|
|
3,028
|
|
|
7,019
|
|
|
8,271
|
|
|
Total
revenues
|
|
156,017
|
|
|
162,437
|
|
|
479,799
|
|
|
509,800
|
|
|
Cost of
revenues:
|
|
|
|
|
|
|
|
|
|
Franchise and
restaurant expenses
|
|
41,553
|
|
|
41,984
|
|
|
122,129
|
|
|
145,433
|
|
|
Rental
expenses
|
|
22,771
|
|
|
23,264
|
|
|
69,032
|
|
|
70,073
|
|
|
Financing
expenses
|
|
9
|
|
|
504
|
|
|
155
|
|
|
516
|
|
|
Total cost of
revenues
|
|
64,333
|
|
|
65,752
|
|
|
191,316
|
|
|
216,022
|
|
|
Gross
profit
|
|
91,684
|
|
|
96,685
|
|
|
288,483
|
|
|
293,778
|
|
|
General and
administrative expenses
|
|
36,002
|
|
|
41,577
|
|
|
111,937
|
|
|
110,384
|
|
|
Interest
expense
|
|
15,358
|
|
|
15,434
|
|
|
46,107
|
|
|
46,757
|
|
|
Amortization of
intangible assets
|
|
2,500
|
|
|
2,500
|
|
|
7,480
|
|
|
7,500
|
|
|
Closure and
impairment charges, net
|
|
206
|
|
|
(72)
|
|
|
3,932
|
|
|
2,230
|
|
|
Loss (gain) on
disposition of assets
|
|
113
|
|
|
(2,351)
|
|
|
679
|
|
|
(2,294)
|
|
|
Income before income
tax provision
|
|
37,505
|
|
|
39,597
|
|
|
118,348
|
|
|
129,201
|
|
|
Income tax
provision
|
|
(13,232)
|
|
|
(15,340)
|
|
|
(41,703)
|
|
|
(49,635)
|
|
|
Net
income
|
|
$
|
24,273
|
|
|
$
|
24,257
|
|
|
$
|
76,645
|
|
|
$
|
79,566
|
|
|
Net income
available to common stockholders:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
24,273
|
|
|
$
|
24,257
|
|
|
$
|
76,645
|
|
|
$
|
79,566
|
|
|
Less: Net income
allocated to unvested participating restricted stock
|
|
(338)
|
|
|
(316)
|
|
|
(1,103)
|
|
|
(1,042)
|
|
|
Net income available
to common stockholders
|
|
$
|
23,935
|
|
|
$
|
23,941
|
|
|
$
|
75,542
|
|
|
$
|
78,524
|
|
|
Net income
available to common stockholders per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.33
|
|
|
$
|
1.29
|
|
|
$
|
4.17
|
|
|
$
|
4.19
|
|
|
Diluted
|
|
$
|
1.33
|
|
|
$
|
1.28
|
|
|
$
|
4.15
|
|
|
$
|
4.16
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
17,950
|
|
|
18,573
|
|
|
18,099
|
|
|
18,737
|
|
|
Diluted
|
|
18,041
|
|
|
18,706
|
|
|
18,201
|
|
|
18,874
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
|
$
|
0.92
|
|
|
$
|
0.875
|
|
|
$
|
2.76
|
|
|
$
|
2.625
|
|
|
Dividends paid per
common share
|
|
$
|
0.92
|
|
|
$
|
0.875
|
|
|
$
|
2.76
|
|
|
$
|
2.625
|
|
|
DineEquity, Inc. and
Subsidiaries
|
|
Consolidated
Balance Sheets
|
|
(In thousands,
except share and per share amounts)
|
|
|
|
September
30,
2016
|
|
December 31,
2015
|
|
|
(Unaudited)
|
|
|
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
107,823
|
|
|
$
|
144,785
|
|
|
Receivables,
net
|
|
93,935
|
|
|
139,206
|
|
|
Restricted
cash
|
|
34,958
|
|
|
32,528
|
|
|
Prepaid gift card
costs
|
|
36,728
|
|
|
46,792
|
|
|
Prepaid income
taxes
|
|
1,966
|
|
|
5,186
|
|
|
Other current
assets
|
|
5,036
|
|
|
4,212
|
|
|
Total current
assets
|
|
280,446
|
|
|
372,709
|
|
|
Long-term
receivables, net
|
|
145,072
|
|
|
160,695
|
|
|
Property and
equipment, net
|
|
205,230
|
|
|
219,580
|
|
|
Goodwill
|
|
697,470
|
|
|
697,470
|
|
|
Other intangible
assets, net
|
|
765,773
|
|
|
772,949
|
|
|
Deferred rent
receivable
|
|
88,034
|
|
|
90,030
|
|
|
Other non-current
assets, net
|
|
18,396
|
|
|
18,417
|
|
|
Total assets
|
|
$
|
2,200,421
|
|
|
$
|
2,331,850
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$
|
32,625
|
|
|
$
|
55,019
|
|
|
Gift card
liability
|
|
104,201
|
|
|
167,657
|
|
|
Accrued employee
compensation and benefits
|
|
15,792
|
|
|
25,085
|
|
|
Dividends
payable
|
|
16,675
|
|
|
17,082
|
|
|
Current maturities of
capital lease and financing obligations
|
|
14,346
|
|
|
14,320
|
|
|
Accrued
advertising
|
|
11,875
|
|
|
8,758
|
|
|
Accrued interest
payable
|
|
4,314
|
|
|
4,257
|
|
|
Other accrued
expenses
|
|
6,565
|
|
|
6,251
|
|
|
Total current
liabilities
|
|
206,393
|
|
|
298,429
|
|
|
Long-term debt,
net
|
|
1,281,873
|
|
|
1,279,473
|
|
|
Capital lease
obligations, less current maturities
|
|
73,603
|
|
|
84,781
|
|
|
Financing
obligations, less current maturities
|
|
39,518
|
|
|
42,395
|
|
|
Deferred income
taxes, net
|
|
252,907
|
|
|
269,469
|
|
|
Deferred rent
payable
|
|
71,574
|
|
|
69,397
|
|
|
Other non-current
liabilities
|
|
18,027
|
|
|
20,683
|
|
|
Total
liabilities
|
|
1,943,895
|
|
|
2,064,627
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
Common stock, $0.01
par value, shares: 40,000,000 authorized; September 30, 2016 -
25,138,172 issued, 18,092,139 outstanding; December 31, 2015 -
25,186,048 issued, 18,535,027 outstanding
|
|
251
|
|
|
252
|
|
|
Additional
paid-in-capital
|
|
290,365
|
|
|
286,952
|
|
|
Retained
earnings
|
|
378,172
|
|
|
351,923
|
|
|
Accumulated other
comprehensive loss
|
|
(107)
|
|
|
(107)
|
|
|
Treasury stock, at
cost; shares: September 30, 2016 - 7,046,033; December 31,
2015 - 6,651,021
|
|
(412,155)
|
|
|
(371,797)
|
|
|
Total stockholders'
equity
|
|
256,526
|
|
|
267,223
|
|
|
Total liabilities and
stockholders' equity
|
|
$
|
2,200,421
|
|
|
$
|
2,331,850
|
|
|
DineEquity, Inc. and
Subsidiaries
|
|
Consolidated
Statements of Cash Flows
|
|
(In
thousands)
|
|
(Unaudited)
|
|
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
|
2016
|
|
2015
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net income
|
|
$
|
76,645
|
|
|
$
|
79,566
|
|
|
Adjustments to
reconcile net income to cash flows provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
22,924
|
|
|
24,134
|
|
|
Non-cash interest
expense
|
|
2,400
|
|
|
2,292
|
|
|
Deferred income
taxes
|
|
(14,852)
|
|
|
(12,512)
|
|
|
Non-cash stock-based
compensation expense
|
|
8,215
|
|
|
6,312
|
|
|
Tax benefit from
stock-based compensation
|
|
1,153
|
|
|
4,850
|
|
|
Excess tax benefit
from stock-based compensation
|
|
(966)
|
|
|
(4,577)
|
|
|
Closure and
impairment charges
|
|
1,461
|
|
|
2,230
|
|
|
Loss (gain) on
disposition of assets
|
|
679
|
|
|
(2,294)
|
|
|
Other
|
|
456
|
|
|
(1,303)
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Accounts receivable,
net
|
|
4,312
|
|
|
(95)
|
|
|
Current income tax
receivables and payables
|
|
(1,138)
|
|
|
5,703
|
|
|
Gift card receivables
and payables
|
|
(30,355)
|
|
|
(11,816)
|
|
|
Other current
assets
|
|
(824)
|
|
|
(3,304)
|
|
|
Accounts
payable
|
|
(1,397)
|
|
|
2,147
|
|
|
Accrued employee
compensation and benefits
|
|
(9,293)
|
|
|
(4,915)
|
|
|
Accrued interest
payable
|
|
57
|
|
|
(10,275)
|
|
|
Other current
liabilities
|
|
2,581
|
|
|
(5,554)
|
|
|
Cash flows provided
by operating activities
|
|
62,058
|
|
|
70,589
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Additions to property
and equipment
|
|
(3,543)
|
|
|
(5,765)
|
|
|
Proceeds from sale of
property and equipment
|
|
—
|
|
|
10,782
|
|
|
Principal receipts
from notes, equipment contracts and other long-term
receivables
|
|
13,969
|
|
|
16,498
|
|
|
Other
|
|
(393)
|
|
|
(274)
|
|
|
Cash flows provided
by investing activities
|
|
10,033
|
|
|
21,241
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Principal payments on
capital lease and financing obligations
|
|
(10,391)
|
|
|
(9,711)
|
|
|
Dividends paid on
common stock
|
|
(50,790)
|
|
|
(49,786)
|
|
|
Repurchase of common
stock
|
|
(45,010)
|
|
|
(50,010)
|
|
|
Tax payments for
restricted stock upon vesting
|
|
(2,680)
|
|
|
(3,389)
|
|
|
Proceeds from stock
options exercised
|
|
1,282
|
|
|
8,426
|
|
|
Excess tax benefit
from stock-based compensation
|
|
966
|
|
|
4,577
|
|
|
Change in restricted
cash
|
|
(2,430)
|
|
|
10,036
|
|
|
Other
|
|
—
|
|
|
(91)
|
|
|
Cash flows used in
financing activities
|
|
(109,053)
|
|
|
(89,948)
|
|
|
Net change in cash
and cash equivalents
|
|
(36,962)
|
|
|
1,882
|
|
|
Cash and cash
equivalents at beginning of period
|
|
144,785
|
|
|
104,004
|
|
|
Cash and cash
equivalents at end of period
|
|
$
|
107,823
|
|
|
$
|
105,886
|
|
|
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
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Net income available
to common stockholders, as reported
|
|
$
|
23,935
|
|
|
$
|
23,941
|
|
|
$
|
75,542
|
|
|
$
|
78,524
|
|
|
Kansas City Support
Center consolidation costs(1)
|
|
306
|
|
|
3,595
|
|
|
5,338
|
|
|
3,595
|
|
|
Amortization of
intangible assets
|
|
2,500
|
|
|
2,500
|
|
|
7,480
|
|
|
7,500
|
|
|
Closure and
impairment charges
|
|
206
|
|
|
(72)
|
|
|
1,461
|
|
|
2,230
|
|
|
Non-cash interest
expense
|
|
809
|
|
|
773
|
|
|
2,400
|
|
|
2,292
|
|
|
Loss (gain) on
disposition of assets
|
|
113
|
|
|
(2,351)
|
|
|
679
|
|
|
(2,294)
|
|
|
Income tax
provision
|
|
(1,456)
|
|
|
(1,689)
|
|
|
(6,422)
|
|
|
(5,063)
|
|
|
Deferred tax
adjustments(2)
|
|
—
|
|
|
—
|
|
|
(2,002)
|
|
|
—
|
|
|
Net income allocated
to unvested participating restricted stock
|
|
(34)
|
|
|
(37)
|
|
|
(130)
|
|
|
(109)
|
|
|
Net income available
to common stockholders, as adjusted
|
|
$
|
26,379
|
|
|
$
|
26,660
|
|
|
$
|
84,346
|
|
|
$
|
86,675
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income
available to common stockholders per share:
|
|
|
|
|
|
|
|
|
|
Net income available
to common stockholders, as reported
|
|
$
|
1.33
|
|
|
$
|
1.28
|
|
|
$
|
4.15
|
|
|
$
|
4.16
|
|
|
Kansas City Support
Center consolidation costs(1)
|
|
0.01
|
|
|
0.12
|
|
|
0.18
|
|
|
0.12
|
|
|
Amortization of
intangible assets
|
|
0.09
|
|
|
0.08
|
|
|
0.26
|
|
|
0.25
|
|
|
Closure and
impairment charges
|
|
0.01
|
|
|
(0.00)
|
|
|
0.05
|
|
|
0.07
|
|
|
Non-cash interest
expense
|
|
0.03
|
|
|
0.03
|
|
|
0.08
|
|
|
0.08
|
|
|
Loss (gain) on
disposition of assets
|
|
0.00
|
|
|
(0.08)
|
|
|
0.02
|
|
|
(0.08)
|
|
|
Deferred tax
adjustments(2)
|
|
—
|
|
|
—
|
|
|
(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
|
|
$
|
1.46
|
|
|
$
|
1.43
|
|
|
$
|
4.63
|
|
|
$
|
4.59
|
|
|
|
|
|
|
|
|
|
|
|
Numerator for basic
EPS-income available to common stockholders, as adjusted
|
|
$
|
26,379
|
|
|
$
|
26,660
|
|
|
$
|
84,346
|
|
|
$
|
86,675
|
|
|
Effect of unvested
participating restricted stock using the two-class
method
|
|
1
|
|
|
1
|
|
|
3
|
|
|
4
|
|
|
Numerator for diluted
EPS-income available to common stockholders after assumed
conversions, as adjusted
|
|
$
|
26,380
|
|
|
$
|
26,661
|
|
|
$
|
84,349
|
|
|
$
|
86,679
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for basic
EPS-weighted-average shares
|
|
17,950
|
|
|
18,573
|
|
|
18,099
|
|
|
18,737
|
|
|
Dilutive effect of
stock options
|
|
91
|
|
|
133
|
|
|
102
|
|
|
137
|
|
|
Denominator for
diluted EPS-weighted-average shares and assumed
conversions
|
|
18,041
|
|
|
18,706
|
|
|
18,201
|
|
|
18,874
|
|
|
|
|
(1)
|
Includes $2,471 of
lease termination costs for the nine months ended September 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 " 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
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.
|
|
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
|
2016
|
|
2015
|
|
|
(In
millions)
|
|
Cash flows provided
by operating activities
|
|
$
|
62.1
|
|
|
$
|
70.6
|
|
|
Receipts from notes
and equipment contracts receivable
|
|
7.6
|
|
|
10.8
|
|
|
Additions to property
and equipment
|
|
(3.5)
|
|
|
(5.8)
|
|
|
Adjusted free cash
flow
|
|
66.2
|
|
|
75.6
|
|
|
Dividends paid on
common stock
|
|
(50.8)
|
|
|
(49.8)
|
|
|
Repurchase of
DineEquity common stock
|
|
(45.0)
|
|
|
(50.0)
|
|
|
|
$
|
(29.6)
|
|
|
$
|
(24.2)
|
|
Restaurant Data
The following table sets forth, for the three and nine months
ended September 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
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 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
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
(unaudited)
|
|
Applebee's
Restaurant Data
|
|
|
|
|
|
|
|
|
|
Effective
Restaurants(a)
|
|
|
|
|
|
|
|
|
|
Franchise
|
|
2,028
|
|
|
2,011
|
|
|
2,029
|
|
|
1,998
|
|
|
Company
|
|
—
|
|
|
5
|
|
|
—
|
|
|
17
|
|
|
Total
|
|
2,028
|
|
|
2,016
|
|
|
2,029
|
|
|
2,015
|
|
|
|
|
|
|
|
|
|
|
|
System-wide(b)
|
|
|
|
|
|
|
|
|
|
Sales percentage
change(c)
|
|
(5.1)%
|
|
|
0.4
|
%
|
|
(4.5)%
|
|
|
2.1
|
%
|
|
Domestic
same-restaurant sales percentage change(d)
|
|
(5.2)%
|
|
|
(0.5)
|
%
|
|
(4.4)%
|
|
|
1.2
|
%
|
|
|
|
|
|
|
|
|
|
|
Franchise(b)
|
|
|
|
|
|
|
|
|
|
Sales percentage
change(c)
|
|
(4.9)%
|
|
|
1.2
|
%
|
|
(3.7)%
|
|
|
2.3
|
%
|
|
Domestic
same-restaurant sales percentage change(d)
|
|
(5.2)%
|
|
|
0.5
|
%
|
|
(4.4)%
|
|
|
1.2
|
%
|
|
Average weekly
domestic unit sales (in thousands)
|
|
$
|
43.5
|
|
|
$
|
45.9
|
|
|
$
|
46.2
|
|
|
$
|
48.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
(unaudited)
|
|
IHOP Restaurant
Data
|
|
|
|
|
|
|
|
|
|
Effective
Restaurants(a)
|
|
|
|
|
|
|
|
|
|
Franchise
|
|
1,521
|
|
|
1,482
|
|
|
1,512
|
|
|
1,474
|
|
|
Area
license
|
|
167
|
|
|
166
|
|
|
165
|
|
|
167
|
|
|
Company
|
|
10
|
|
|
12
|
|
|
11
|
|
|
13
|
|
|
Total
|
|
1,698
|
|
|
1,660
|
|
|
1,688
|
|
|
1,654
|
|
|
|
|
|
|
|
|
|
|
|
System-wide(b)
|
|
|
|
|
|
|
|
|
|
Sales percentage
change(c)
|
|
1.3
|
%
|
|
7.0
|
%
|
|
2.0
|
%
|
|
6.8
|
%
|
|
Domestic
same-restaurant sales percentage change(d)
|
|
(0.1)
|
%
|
|
5.8
|
%
|
|
0.5
|
%
|
|
5.6
|
%
|
|
|
|
|
|
|
|
|
|
|
Franchise(b)
|
|
|
|
|
|
|
|
|
|
Sales percentage
change(c)
|
|
1.4
|
%
|
|
6.8
|
%
|
|
2.2
|
%
|
|
6.5
|
%
|
|
Domestic
same-restaurant sales percentage change(d)
|
|
(0.1)
|
%
|
|
5.8
|
%
|
|
0.5
|
%
|
|
5.6
|
%
|
|
Average weekly
domestic unit sales (in thousands)
|
|
$
|
37.1
|
|
|
$
|
37.6
|
|
|
$
|
37.5
|
|
|
$
|
37.6
|
|
|
|
|
|
|
|
|
|
|
|
Area License
(b)
|
|
|
|
|
|
|
|
|
|
Sales percentage
change(c)
|
|
2.4
|
%
|
|
8.0
|
%
|
|
1.1
|
%
|
|
7.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 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. 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
nine months ended September 30, 2016 and 2015 were as
follows:
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(In millions)
|
|
Reported sales
(unaudited)
|
|
|
|
|
|
|
|
|
Applebee's domestic
franchise restaurant sales
|
$
|
1,058.9
|
|
|
$
|
1,113.2
|
|
|
$
|
3,382.1
|
|
|
$
|
3,513.8
|
|
|
IHOP franchise
restaurant sales
|
734.3
|
|
|
$
|
724.5
|
|
|
2,208.6
|
|
|
$
|
2,160.9
|
|
|
IHOP area license
restaurant sales
|
71.0
|
|
|
$
|
69.4
|
|
|
216.5
|
|
|
$
|
214.2
|
|
|
Total
|
$
|
1,864.2
|
|
|
$
|
1,907.1
|
|
|
$
|
5,807.2
|
|
|
$
|
5,888.9
|
|
|
|
|
(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
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Applebee's
Restaurant Development Activity
|
|
|
|
|
|
|
Summary -
beginning of period:
|
|
|
|
|
|
|
|
|
Franchise
|
2,027
|
|
1,993
|
|
2,033
|
|
1,994
|
|
Company
restaurants
|
—
|
|
23
|
|
—
|
|
23
|
|
Total Applebee's
restaurants, beginning of period
|
2,027
|
|
2,016
|
|
2,033
|
|
2,017
|
|
Franchise restaurants
opened:
|
|
|
|
|
|
|
|
|
Domestic
|
6
|
|
7
|
|
13
|
|
17
|
|
International
|
3
|
|
2
|
|
7
|
|
6
|
|
Total franchise
restaurants opened
|
9
|
|
9
|
|
20
|
|
23
|
|
Franchise restaurants
closed:
|
|
|
|
|
|
|
|
|
Domestic
|
(8)
|
|
(6)
|
|
(20)
|
|
(14)
|
|
International
|
(1)
|
|
(1)
|
|
(6)
|
|
(8)
|
|
Total franchise
restaurants closed
|
(9)
|
|
(7)
|
|
(26)
|
|
(22)
|
|
Net franchise
restaurant development (reduction)
|
—
|
|
2
|
|
(6)
|
|
1
|
|
Refranchised from
Company restaurants
|
—
|
|
23
|
|
—
|
|
23
|
|
Net franchise
restaurant additions (reductions)
|
—
|
|
25
|
|
(6)
|
|
24
|
|
Summary - end of
period:
|
|
|
|
|
|
|
|
|
Franchise
|
2,027
|
|
2,018
|
|
2,027
|
|
2,018
|
|
Company
restaurants
|
—
|
|
—
|
|
—
|
|
—
|
|
Total Applebee's
restaurants, end of period
|
2,027
|
|
2,018
|
|
2,027
|
|
2,018
|
|
|
IHOP Restaurant
Development Activity
|
|
|
|
|
|
|
|
|
Summary -
beginning of period:
|
|
|
|
|
|
|
|
|
Franchise
|
1,519
|
|
1,479
|
|
1,507
|
|
1,472
|
|
Area
license
|
166
|
|
166
|
|
165
|
|
167
|
|
Company
|
10
|
|
13
|
|
11
|
|
11
|
|
Total IHOP
restaurants, beginning of period
|
1,695
|
|
1,658
|
|
1,683
|
|
1,650
|
|
Franchise/area
license restaurants opened:
|
|
|
|
|
|
|
Domestic
franchise
|
7
|
|
11
|
|
26
|
|
24
|
|
Domestic area
license
|
1
|
|
—
|
|
3
|
|
2
|
|
International
franchise
|
8
|
|
2
|
|
11
|
|
5
|
|
Total franchise/area
license restaurants opened
|
16
|
|
13
|
|
40
|
|
31
|
|
Franchise/area
license restaurants closed:
|
|
|
|
|
|
|
|
|
Domestic
franchise
|
(2)
|
|
(4)
|
|
(10)
|
|
(11)
|
|
Domestic area
license
|
—
|
|
—
|
|
(1)
|
|
(3)
|
|
International
franchise
|
—
|
|
—
|
|
(3)
|
|
—
|
|
Total franchise/area
license restaurants closed
|
(2)
|
|
(4)
|
|
(14)
|
|
(14)
|
|
Net franchise/area
license restaurant development
|
14
|
|
9
|
|
26
|
|
17
|
|
Refranchised from
Company restaurants
|
—
|
|
2
|
|
1
|
|
3
|
|
Franchise restaurants
reacquired by the Company
|
—
|
|
—
|
|
—
|
|
(3)
|
|
Net franchise/area
license restaurant additions (reductions)
|
14
|
|
11
|
|
27
|
|
17
|
|
Summary - end of
period
|
|
|
|
|
|
|
|
|
Franchise
|
1,532
|
|
1,490
|
|
1,532
|
|
1,490
|
|
Area
license
|
167
|
|
166
|
|
167
|
|
166
|
|
Company
|
10
|
|
11
|
|
10
|
|
11
|
|
Total IHOP
restaurants, end of period
|
1,709
|
|
1,667
|
|
1,709
|
|
1,667
|
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SOURCE DineEquity, Inc.