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     119  0 Kommentare Dine Brands Global, Inc. Reports Solid Fourth Quarter and Full-Year 2019 Results

    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 2019.

    “This past year for Dine Brands was defined by several significant achievements. Notably, we successfully completed a $1.3 billion refinancing of our existing debt through a securitization. We delivered a significant increase in net income of 30%, which resulted in strong growth in adjusted EBITDA of 19% for the year. Our franchised business model continued to generate robust adjusted free cash flow, enabling us to both return capital to shareholders and invest in technology. We also drove significant growth in our off-premise business at both Applebee’s and IHOP and launched domestic development initiatives at IHOP to expand our footprint in high-demand locations,” said Steve Joyce, Chief Executive Officer of Dine Brands Global, Inc.

    Mr. Joyce added, “We’ve built a solid foundation for sustainable growth. While we are pleased with our success, we will not be complacent. Looking ahead, we will leverage our accomplishments and focus on guest-centric decisions and opportunities that will deliver long-term profitability. We’re excited about our future and confident in our ability to build momentum.”

    Financial Summary

    ($ in 000's, except per share amounts)

    Fourth Quarter

     

    Fiscal Year

    2019

     

    2018

     

    % Change

     

    2019

     

    2018

     

    % Change

    Total revenues, excluding advertising revenues

    $156,378

     

    $139,461

     

    12.1%

     

    $627,163

     

    $512,637

     

    22.3%

    Total revenues, excluding Company restaurant sales

    $196,331

     

    $207,114

     

    -5.2%

     

    $778,964

     

    $773,847

     

    0.7%

    Diluted net income available to common stockholders per share

    $1.59

     

    $1.47

     

    8.2%

     

    $5.85

     

    $4.37

     

    33.9%

    Diluted net income available to common stockholders per share, as adjusted(1)

    $1.78

     

    $1.70

     

    4.7%

     

    $6.95

     

    $5.37

     

    29.4%

    Net income

    $27,396

     

    $26,981

     

    1.5%

     

    $104,346

     

    $80,354

     

    29.9%

    Consolidated adjusted EBITDA(1)(2)

    $67,481

     

    $65,027

     

    3.8%

     

    $273,546

     

    $230,590

     

    18.6%

    (1)

    See “Non-GAAP Financial Measures” and reconciliation of the Non-GAAP financial measure to the respective GAAP financial measure.

    (2)

    Does not conform to the definition of Covenant Adjusted EBITDA as found in the Base Indenture.

    Fourth Quarter and Fiscal 2019 Key Highlights

    • GAAP earnings per diluted share for the fourth quarter of 2019 increased 8.2% year-over-year to $1.59.
    • Adjusted earnings per diluted share for the fourth quarter of 2019 increased 4.7% year-over-year to $1.78. (See “Non-GAAP Financial Measures” and reconciliation of GAAP earnings per diluted share to adjusted earnings per diluted share.)
    • GAAP earnings per diluted share for fiscal 2019 increased 33.9% year-over-year to $5.85.
    • Adjusted earnings per diluted share for fiscal 2019 increased 29.4% year-over-year to $6.95. (See “Non-GAAP Financial Measures” and reconciliation of GAAP earnings per diluted share to adjusted earnings per diluted share.)
    • IHOP’s comparable same-restaurant sales increased 1.1% for the fourth quarter of 2019, achieving the eighth consecutive quarter of sales growth.
    • Applebee’s franchisees completed three transactions in 2019, bringing new and deeply experienced operators into the domestic system.
    • IHOP’s franchisees completed over 200 remodels in 2019, bringing the total number of domestic restaurants remodeled to approximately 1,100 since the inception of the current program.
    • IHOP’s reported system-wide sales for the fourth quarter of 2019 increased 2.1% year-over-year to $882.2 million.
    • General and administrative expenses for the fourth quarter of 2019 declined 7.8% year-over-year to $41.7 million.
    • Net income for fiscal 2019 increased 29.9% year-over-year to $104.3 million.
    • Consolidated adjusted EBITDA for fiscal 2019 increased 18.6% to $273.5 million compared to $230.6 million for fiscal 2018. (See “Non-GAAP Financial Measures” and reconciliation of GAAP net income to consolidated adjusted EBITDA.)
    • Cash flows from operating activities for fiscal 2019 increased 10.6% to $155.2 million compared to $140.3 million for fiscal 2018.
    • Adjusted free cash flow for fiscal 2019 increased 5.6% to $148.8 million compared to $140.9 million for fiscal 2018. (See “Non-GAAP Financial Measures” and reconciliation of the Company’s cash provided by operating activities to adjusted free cash flow.)
    • For 2019, the Company repurchased over 1.3 million shares of its common stock for a total cost of $111.7 million and paid quarterly cash dividends totaling $46.9 million.

    Domestic System-Wide Comparable Same-Restaurant Sales Performance

    Fourth Quarter of 2019

    • IHOP’s comparable same-restaurant sales increased 1.1% for the fourth quarter of 2019.
    • Applebee’s comparable same-restaurant sales decreased 2.5% for the fourth quarter of 2019.

    Fiscal 2019

    • IHOP’s comparable same-restaurant sales increased 1.1% for 2019.
    • Applebee’s comparable same-restaurant sales decreased 0.7% for 2019.

    Fourth Quarter of 2019 Financial Highlights

    • GAAP net income available to common stockholders was $26.5 million, or earnings per diluted share of $1.59, for the fourth quarter of 2019. This compares to net income available to common stockholders of $26.1 million, or earnings per diluted share of $1.47, for the fourth quarter of 2018. The increase in net income was primarily due to lower general and administrative expenses. These items were partially offset by a decline in gross profit.
    • Adjusted net income available to common stockholders was $29.7 million, or adjusted earnings per diluted share of $1.78, for the fourth quarter of 2019. This compares to adjusted net income available to common stockholders of $30.3 million, or adjusted earnings per diluted share of $1.70, for the fourth quarter of 2018. The decrease in adjusted net income was primarily due to lower gross profit and a slightly higher income tax rate. These items were partially offset by a decline in general and administrative expenses. The increase in adjusted earnings per diluted share was due to lower general and administrative expenses and fewer weighted average diluted shares outstanding. (See “Non-GAAP Financial Measures” below.)
    • General and administrative expenses were $41.7 million for the fourth quarter of 2019 compared to $45.3 million for the fourth quarter of 2018. The improvement was mainly due to lower compensation expenses and a decline in professional services costs.

    Fiscal 2019 Financial Highlights

    • GAAP net income available to common stockholders was $100.8 million, or earnings per diluted share of $5.85, for 2019. This compares to net income available to common stockholders of $77.6 million, or earnings per diluted share of $4.37, for 2018. The increase in net income was primarily due to higher gross profit as the result of $30 million in franchisor contributions to the Applebee’s national advertising fund made in 2018 that did not recur in 2019. This was partially offset by approximately $8.3 million in debt extinguishment costs related to the refinancing of our long-term debt, which was completed on June 5, 2019.
    • Adjusted net income available to common stockholders was $119.7 million, or adjusted earnings per diluted share of $6.95, for 2019. This compares to adjusted net income available to common stockholders of $95.5 million, or adjusted earnings per diluted share of $5.37 for fiscal 2018. The increase in adjusted net income was primarily due to higher gross profit as the result of $30.0 million in franchisor contributions to the Applebee’s national advertising fund made in 2018 that did not recur in 2019. (See “Non-GAAP Financial Measures” below.)
    • General and administrative expenses were approximately $162.8 million for 2019 compared to $166.7 million for 2018. The improvement was mainly due to lower compensation expenses and a decline in professional services costs.

    GAAP Effective Tax Rate

    Our effective tax rates for the fourth quarter and fiscal 2019 were 25.0% and 24.6%, respectively.

    Financial Performance Guidance for 2020

    The following financial performance guidance for fiscal 2020 is based on management’s expectations as of February 24, 2020. 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 0% and positive 2.0%.
    • IHOP’s domestic system-wide comparable same-restaurant sales performance is expected to range between 0% and positive 2.0%.
    • Domestic development activity by Applebee’s franchisees is expected to result in net closures between 0 and 10 restaurants.
    • Domestic development activity by IHOP franchisees and area licensees are expected to result in net new openings between 40 and 50 restaurants.
    • Total segment profit, excluding the company restaurants segment, is expected to be between approximately $385 million and $395 million.
    • General and administrative expenses are expected to range between approximately $170 million and $175 million, including non-cash stock-based compensation expense and depreciation totaling approximately $45 million. This projection includes approximately $5 million of general and administrative expenses related to the company restaurants segment.
    • GAAP net income is expected to range between approximately $105 million and approximately $115 million.
    • Consolidated adjusted EBITDA is expected to range between approximately $275 million and approximately $285 million. This projection includes company restaurants segment EBITDA, which is expected to be between approximately $9 million and approximately $11 million. (See “Non-GAAP Financial Measures” and reconciliation of GAAP net income to consolidated adjusted EBITDA.)
    • Capital expenditures are expected to be approximately $17 million, inclusive of approximately $4 million related to the company restaurants segment.
    • GAAP earnings per diluted share is expected to range from $6.40 to $6.60.
    • Adjusted earnings per diluted share is expected to range from $7.08 to $7.28 after tax. (See “Non-GAAP Financial Measures” and reconciliation of GAAP earnings per diluted share to adjusted earnings per diluted share.)

    2020 Diluted Net Income Available to Common Stockholders Per Share(1), As Adjusted Reconciliation Guidance Table

     

    Net income available to common stockholders per diluted share

    $6.40 – $6.60

    Closure and impairment charges

    0.08

    Amortization of intangible assets

    0.48

    Non-cash interest expense

    0.12

    Diluted net income available to common stockholders per share, as adjusted

    $7.08$7.28

    (1)

    The after-tax adjustments to net income available to common stockholders per diluted share are midpoint estimates.

    2020 Net Income to Consolidated Adjusted EBITDA Reconciliation Guidance Table(1)

    ($ in millions)

     

    Net income

     

    $105 – $115

    Interest charges on finance leases

     

    8

    All other interest charges

     

    65

    Income tax provision

     

    39

    Depreciation and amortization

     

    43

    Non-cash stock-based compensation

     

    13

    Impairment and closure charges

     

    2

    Consolidated adjusted EBITDA (Non-GAAP)

     

    $275$285

    (1)

    The adjustments to net income are midpoint estimates.

    Fourth Quarter and Fiscal 2019 Conference Call Details

    Dine Brands will host a conference call to discuss its results on February 24, 2020 at 9:00 a.m. Pacific Time/12:00 p.m. Eastern Time. To participate on the call, please dial (888) 771-4371 and reference passcode 49342172. International callers, please dial (847) 585-4405 and reference passcode 49342172.

    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 11:30 a.m. Pacific Time on February 24, 2020 through 8:59 p.m. Pacific Time on March 2, 2020 by dialing (888) 843-7419 and referencing passcode 49342172#. International callers, please dial (630) 652-3042 and reference passcode 49342172#. 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 over 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: 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 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 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)”, “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 Income

    (In thousands, except per share amounts)

     

     

     

    Three Months Ended

     

    Twelve Months Ended

     

     

    December 31,

     

    December 31,

     

     

    2019

     

    2018

     

    2019

     

    2018

     

     

    (Unaudited)

     

     

     

     

    Revenues:

     

     

     

     

     

     

     

     

    Franchise revenues:

     

     

     

     

     

     

     

     

    Royalties, franchise fees and other

     

    $

    92,259

     

     

    $

    99,865

     

     

    $

    368,171

     

     

    $

    375,640

     

    Advertising revenue

     

    71,133

     

     

    74,737

     

     

    283,015

     

     

    268,294

     

    Total franchise revenues

     

    163,392

     

     

    174,602

     

     

    651,186

     

     

    643,934

     

    Company restaurant sales

     

    31,180

     

     

    7,084

     

     

    131,214

     

     

    7,084

     

    Rental revenues

     

    31,107

     

     

    30,642

     

     

    120,666

     

     

    121,934

     

    Financing revenues

     

    1,832

     

     

    1,870

     

     

    7,112

     

     

    7,979

     

    Total revenues

     

    227,511

     

     

    214,198

     

     

    910,178

     

     

    780,931

     

    Cost of revenues:

     

     

     

     

     

     

     

     

    Franchise expenses:

     

     

     

     

     

     

     

     

    Advertising expenses

     

    69,899

     

     

    76,033

     

     

    281,781

     

     

    269,590

     

    Other franchise expenses

     

    9,068

     

     

    11,429

     

     

    30,973

     

     

    61,029

     

    Total franchise expenses

     

    78,967

     

     

    87,462

     

     

    312,754

     

     

    330,619

     

    Company restaurant expenses

     

    30,141

     

     

    5,872

     

     

    123,272

     

     

    5,872

     

    Rental expenses:

     

     

     

     

     

     

     

     

    Interest expense from finance leases

     

    1,277

     

     

    1,579

     

     

    5,602

     

     

    6,894

     

    Other rental expenses

     

    21,316

     

     

    20,766

     

     

    85,157

     

     

    83,862

     

    Total rental expenses

     

    22,593

     

     

    22,345

     

     

    90,759

     

     

    90,756

     

    Financing expenses

     

    142

     

     

    148

     

     

    579

     

     

    597

     

    Total cost of revenues

     

    131,843

     

     

    115,827

     

     

    527,364

     

     

    427,844

     

    Gross profit

     

    95,668

     

     

    98,371

     

     

    382,814

     

     

    353,087

     

    General and administrative expenses

     

    41,710

     

     

    45,260

     

     

    162,815

     

     

    166,683

     

    Interest expense, net

     

    15,160

     

     

    15,576

     

     

    60,393

     

     

    61,686

     

    Amortization of intangible assets

     

    2,928

     

     

    2,592

     

     

    11,702

     

     

    10,105

     

    Closure and impairment charges

     

    847

     

     

    1,988

     

     

    1,487

     

     

    2,107

     

    Loss on extinguishment of debt

     

     

     

     

     

    8,276

     

     

     

    Debt refinancing costs

     

     

     

    (9

    )

     

     

     

    2,523

     

    (Gain) loss on disposition of assets

     

    (1,519

    )

     

    910

     

     

    (332

    )

     

    (625

    )

    Income before income tax provision

     

    36,542

     

     

    32,054

     

     

    138,473

     

     

    110,608

     

    Income tax provision

     

    (9,146

    )

     

    (5,073

    )

     

    (34,127

    )

     

    (30,254

    )

    Net income

     

    $

    27,396

     

     

    $

    26,981

     

     

    $

    104,346

     

     

    $

    80,354

     

    Net income available to common stockholders:

     

     

     

     

     

     

     

     

    Net income

     

    $

    27,396

     

     

    $

    26,981

     

     

    $

    104,346

     

     

    $

    80,354

     

    Less: Net income allocated to unvested participating restricted stock

     

    (908

    )

     

    (917

    )

     

    (3,532

    )

     

    (2,711

    )

    Net income available to common stockholders

     

    $

    26,488

     

     

    $

    26,064

     

     

    $

    100,814

     

     

    $

    77,643

     

    Net income available to common stockholders per share:

     

     

     

     

     

     

     

     

    Basic

     

    $

    1.61

     

     

    $

    1.49

     

     

    $

    5.95

     

     

    $

    4.43

     

    Diluted

     

    $

    1.59

     

     

    $

    1.47

     

     

    $

    5.85

     

     

    $

    4.37

     

    Weighted average shares outstanding:

     

     

     

     

     

     

     

     

    Basic

     

    16,449

     

     

    17,446

     

     

    16,934

     

     

    17,533

     

    Diluted

     

    16,698

     

     

    17,785

     

     

    17,245

     

     

    17,789

     

     

     

     

     

     

     

     

     

     

    Dividends declared per common share

     

    $0.69

     

    $0.63

     

    $2.76

     

    $2.52

    Dividends paid per common share

     

    $0.69

    $0.63

    $2.70

     

    $2.86

    Dine Brands Global, Inc. and Subsidiaries

    Consolidated Balance Sheets

    (In thousands, except share and per share amounts

     

     

     

    December 31, 2019

     

    December 31, 2018

    Assets

     

     

     

     

    Current assets:

     

     

     

     

    Cash and cash equivalents

     

    $

    116,043

     

     

    $

    137,164

     

    Receivables, net

     

    136,869

     

     

    137,504

     

    Restricted cash

     

    40,732

     

     

    48,515

     

    Prepaid gift card costs

     

    36,077

     

     

    38,195

     

    Prepaid income taxes

     

    13,290

     

     

    17,402

     

    Other current assets

     

    3,906

     

     

    3,410

     

    Total current assets

     

    346,917

     

     

    382,190

     

    Other intangible assets, net

     

    575,103

     

     

    585,889

     

    Operating lease right-of-use asset

     

    366,931

     

     

     

    Goodwill

     

    343,862

     

     

    345,314

     

    Property and equipment, net

     

    216,420

     

     

    240,264

     

    Long-term receivables, net

     

    85,999

     

     

    103,102

     

    Deferred rent receivable

     

    70,308

     

     

    77,069

     

    Non-current restricted cash

     

    15,700

     

     

    14,700

     

    Other non-current assets, net

     

    28,271

     

     

    26,152

     

    Total assets

     

    $

    2,049,511

     

     

    $

    1,774,680

     

     

     

     

     

     

    Liabilities and Stockholders’ Deficit

     

     

     

     

    Current liabilities:

     

     

     

     

    Current maturities of long-term debt

     

    $

     

     

    $

    25,000

     

    Accounts payable

     

    40,925

     

     

    43,468

     

    Gift card liability

     

    159,019

     

     

    160,438

     

    Current maturities of operating lease obligations

     

    72,815

     

     

     

    Current maturities of finance lease and financing obligations

     

    13,669

     

     

    14,031

     

    Accrued employee compensation and benefits

     

    23,904

     

     

    27,479

     

    Dividends payable

     

    11,702

     

     

    11,389

     

    Deferred franchise revenue, short-term

     

    10,086

     

     

    10,138

     

    Other accrued expenses

     

    25,792

     

     

    24,243

     

    Total current liabilities

     

    357,912

     

     

    316,186

     

    Long-term debt, less current maturities

     

    1,288,248

     

     

    1,274,087

     

    Operating lease obligations, less current maturities

     

    359,025

     

     

     

    Finance lease obligations, less current maturities

     

    77,393

     

     

    87,762

     

    Financing obligations, less current maturities

     

    37,682

     

     

    38,482

     

    Deferred income taxes, net

     

    98,499

     

     

    105,816

     

    Deferred franchise revenue, long-term

     

    56,944

     

     

    64,557

     

    Other non-current liabilities

     

    15,582

     

     

    90,063

     

    Total liabilities

     

    2,291,285

     

     

    1,976,953

     

    Commitments and contingencies

     

     

     

     

    Stockholders’ deficit:

     

     

     

     

    Preferred stock, $1 par value, 10,000,000 shares authorized, no shares issued and outstanding

     

     

     

     

    Common stock, $0.01 par value; shares: 40,000,000 authorized; December 31, 2019 - 24,925,447 issued, 16,521,921 outstanding; December 31, 2018 - 24,984,898 issued, 17,644,267 outstanding

     

    249

     

     

    250

     

    Additional paid-in-capital

     

    246,192

     

     

    237,726

     

    Retained earnings

     

    61,653

     

     

    10,414

     

    Accumulated other comprehensive loss

     

    (58

    )

     

    (60

    )

    Treasury stock, at cost; shares: December 31, 2019 - 8,403,526; December 31, 2018 - 7,340,631

     

    (549,810

    )

     

    (450,603

    )

    Total stockholders’ deficit

     

    (241,774

    )

     

    (202,273

    )

    Total liabilities and stockholders’ deficit

     

    $

    2,049,511

     

     

    $

    1,774,680

    Dine Brands Global, Inc. and Subsidiaries

    Consolidated Statements of Cash Flows

    (In thousands)

     

     

     

    Twelve Months Ended

     

     

    December 31,

     

     

    2019

     

    2018

     

     

     

     

     

    Cash flows from operating activities:

     

     

     

     

    Net income

     

    $

    104,346

     

     

    $

    80,354

     

    Adjustments to reconcile net income to cash flows provided by operating activities:

     

     

     

     

    Depreciation and amortization

     

    42,493

     

     

    32,175

     

    Non-cash stock-based compensation expense

     

    10,808

     

     

    10,546

     

    Non-cash interest expense

     

    3,369

     

     

    3,792

     

    Loss on extinguishment of debt

     

    8,276

     

     

     

    Closure and impairment charges

     

    1,485

     

     

    2,038

     

    Deferred income taxes

     

    (5,494

    )

     

    (11,847

    )

    Deferred revenue

     

    (7,695

    )

     

    (5,577

    )

    Gain on disposition of assets

     

    (332

    )

     

    (623

    )

    Other

     

    (5,374

    )

     

    (949

    )

    Changes in operating assets and liabilities:

     

     

     

     

    Accounts receivable, net

     

    (396

    )

     

    3,149

     

    Current income tax receivables and payables

     

    8,677

     

     

    8,119

     

    Gift card receivables and payables

     

    (1,037

    )

     

    (1,488

    )

    Other current assets

     

    (498

    )

     

    10,425

     

    Accounts payable

     

    583

     

     

    (9,940

    )

    Accrued employee compensation and benefits

     

    (3,575

    )

     

    13,183

     

    Other current liabilities

     

    (456

    )

     

    6,989

     

    Cash flows provided by operating activities

     

    155,180

     

     

    140,346

     

    Cash flows from investing activities:

     

     

     

     

    Principal receipts from notes, equipment contracts and other long-term receivables

     

    24,075

     

     

    25,771

     

    Proceeds from sale of property and equipment

     

    2,540

     

     

    655

     

    Acquisition of business

     

     

     

    (20,155

    )

    Additions to property and equipment

     

    (19,424

    )

     

    (14,279

    )

    Additions to long-term receivables

     

    (6,955

    )

     

    (6,500

    )

    Other

     

    (389

    )

     

    (293

    )

    Cash flows used in investing activities

     

    (153

    )

     

    (14,801

    )

    Cash flows from financing activities:

     

     

     

     

    Proceeds from issuance of long-term debt

     

    1,300,000

     

     

     

    Repayment of long-term debt

     

    (1,283,750

    )

     

    (13,000

    )

    Borrowing from revolving credit facilities

     

     

     

    75,000

     

    Repayment of revolving credit facilities

     

    (25,000

    )

     

    (50,000

    )

    Dividends paid on common stock

     

    (46,859

    )

     

    (51,125

    )

    Repurchase of common stock

     

    (109,698

    )

     

    (33,603

    )

    Principal payments on finance lease obligations

     

    (13,639

    )

     

    (13,907

    )

    Payment of debt issuance costs

     

    (13,150

    )

     

    (3,633

    )

    Proceeds from stock options exercised

     

    11,969

     

     

    3,928

     

    Tax payments for restricted stock upon vesting

     

    (2,728

    )

     

    (1,972

    )

    Other

     

    (76

    )

     

     

    Cash flows used in financing activities

     

    (182,931

    )

     

    (88,312

    )

    Net change in cash, cash equivalents and restricted cash

     

    (27,904

    )

     

    37,233

     

    Cash, cash equivalents and restricted cash at beginning of period

     

    200,379

     

     

    163,146

     

    Cash, cash equivalents and restricted cash at end of period

     

    $

    172,475

     

     

    $

    200,379

     

    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: Amortization of intangible assets; loss on extinguishment of debt; non-cash interest expense; administrative reorganization costs; closure and impairment charges; debt refinancing costs; business acquisition costs; nonrecurring restaurant costs; 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,

     

     

    2019

     

    2018

     

    2019

     

    2018

     

     

     

     

     

     

     

     

     

    Net income available to common stockholders, as reported

     

    $

    26,488

     

     

    $

    26,064

     

     

    $

    100,814

     

     

    $

    77,643

     

    Amortization of intangible assets

     

    2,928

     

     

    2,592

     

     

    11,702

     

     

    10,105

     

    Loss on extinguishment of debt

     

     

     

     

     

    8,276

     

     

     

    Non-cash interest expense

     

    647

     

     

    1,103

     

     

    3,369

     

     

    3,792

     

    Administrative reorganization costs

     

    1,606

     

     

     

     

    1,606

     

     

     

    Closure and impairment charges

     

    847

     

     

    1,988

     

     

    1,487

     

     

    2,107

     

    Debt refinancing costs

     

     

     

    (9

    )

     

     

     

    2,523

     

    Business acquisition costs

     

     

     

    1,114

     

     

     

     

    1,114

     

    Nonrecurring restaurant costs

     

    2

     

     

     

     

    385

     

     

     

    (Gain) loss on disposition of assets

     

    (1,519

    )

     

    910

     

     

    (332

    )

     

    (625

    )

    Net income tax provision for above adjustments

     

    (1,173

    )

     

    (2,001

    )

     

    (6,888

    )

     

    (4,944

    )

    Income tax adjustments(1)

     

     

     

    (1,310

    )

     

     

     

    4,434

     

    Net income allocated to unvested participating restricted stock

     

    (108

    )

     

    (154

    )

     

    (673

    )

     

    (631

    )

    Net income available to common stockholders, as adjusted

     

    $

    29,718

     

     

    $

    30,297

     

     

    $

    119,746

     

     

    $

    95,518

     

     

     

     

     

     

     

     

     

     

    Diluted net income available to common stockholders per share:

     

     

     

     

     

     

     

     

    Net income available to common stockholders, as reported

     

    $

    1.59

     

     

    $

    1.47

     

     

    $

    5.85

     

     

    $

    4.37

     

    Amortization of intangible assets

     

    0.13

     

     

    0.11

     

     

    0.50

     

     

    0.42

     

    Loss on extinguishment of debt

     

     

     

     

     

    0.36

     

     

     

    Non-cash interest expense

     

    0.03

     

     

    0.05

     

     

    0.14

     

     

    0.16

     

    Administrative reorganization costs

     

    0.07

     

     

     

     

    0.07

     

     

     

    Closure and impairment charges

     

    0.04

     

     

    0.08

     

     

    0.06

     

     

    0.09

     

    Debt refinancing costs

     

    0.00

     

     

    (0.00

    )

     

     

     

    0.10

     

    Business acquisition costs

     

     

     

    0.05

     

     

     

     

    0.05

     

    Nonrecurring restaurant costs

     

    0.00

     

     

     

     

    0.02

     

     

     

    (Gain) loss on disposition of assets

     

    (0.07

    )

     

    0.04

     

     

    (0.01

    )

     

    (0.03

    )

    Income tax adjustments(1)

     

     

     

    (0.07

    )

     

     

     

    0.25

     

    Net income allocated to unvested participating restricted stock

     

    (0.01

    )

     

    (0.01

    )

     

    (0.04

    )

     

    (0.04

    )

    Rounding

     

     

     

    (0.02

    )

     

     

     

     

    Diluted net income available to common stockholders per share, as adjusted

     

    $

    1.78

     

     

    $

    1.70

     

     

    $

    6.95

     

     

    $

    5.37

     

     

     

     

     

     

     

     

     

     

    Numerator for basic EPS-income available to common stockholders, as adjusted

     

    $

    29,718

     

     

    $

    30,297

     

     

    $

    119,746

     

     

    $

    95,518

     

    Effect of unvested participating restricted stock using the two-class method

     

    8

     

     

    12

     

     

    44

     

     

    25

     

    Numerator for diluted EPS-income available to common stockholders, as adjusted

     

    $

    29,726

     

     

    $

    30,309

     

     

    $

    119,790

     

     

    $

    95,543

     

     

     

     

     

     

     

     

     

     

    Denominator for basic EPS-weighted-average shares

     

    16,449

     

     

    17,446

     

     

    16,934

     

     

    17,533

     

    Dilutive effect of stock options

     

    249

     

     

    339

     

     

    311

     

     

    256

     

    Denominator for diluted EPS-weighted-average shares

     

    16,698

     

     

    17,785

     

     

    17,245

     

     

    17,789

     

    (1)

    Charges related to adjustments resulting from IRS audits for tax years 2011 through 2013

    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.

     

     

    Twelve Months Ended

     

     

    December 31,

     

     

    2019

     

    2018

     

     

    (In millions)

    Cash flows provided by operating activities

     

    $

    155.2

     

     

    $

    140.3

     

    Receipts from notes and equipment contracts receivable

     

    13.0

     

     

    14.9

     

    Additions to property and equipment

     

    (19.4

    )

     

    (14.3

    )

    Adjusted free cash flow

     

    148.8

     

     

    140.9

     

    Dividends paid on common stock

     

    (46.9

    )

     

    (51.1

    )

    Repurchase of Dine Brands Global common stock

     

    (109.7

    )

     

    (33.6

    )

     

     

    $

    (7.8

    )

     

    $

    56.2

     

    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 interest charges, income tax provision or benefit, depreciation and amortization, non-cash stock-based compensation, closure and impairment charges, debt refinancing costs, gain or loss related to the extinguishment of debt and 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

     

    Twelve Months Ended

     

     

    December 31,

     

    December 31,

     

     

    2019

     

    2018

     

    2019

     

    2018

     

     

     

     

     

     

     

     

     

    Net income, as reported

     

    $

    27,396

     

     

    $

    26,981

     

     

    $

    104,346

     

     

    $

    80,354

     

    Interest charges on finance leases

     

    1,788

     

     

    1,724

     

     

    7,707

     

     

    7,040

     

    All other interest charges

     

    16,192

     

     

    16,205

     

     

    64,072

     

     

    64,497

     

    Income tax provision

     

    9,146

     

     

    5,073

     

     

    34,127

     

     

    30,254

     

    Depreciation and amortization

     

    10,978

     

     

    8,445

     

     

    42,493

     

     

    32,175

     

    Non-cash stock-based compensation

     

    2,588

     

     

    2,530

     

     

    10,808

     

     

    10,546

     

    Closure and impairment charges

     

    847

     

     

    1,988

     

     

    1,487

     

     

    2,107

     

    Debt refinancing costs

     

     

     

     

     

     

     

    2,523

     

    Loss on extinguishment of debt

     

     

     

     

     

    8,276

     

     

     

    (Gain) loss on disposition of assets

     

    (1,519

    )

     

    910

     

     

    (332

    )

     

    (625

    )

    Business acquisition costs

     

     

     

    1,114

     

     

     

     

    1,114

     

    Other taxes

     

    65

     

     

    57

     

     

    562

     

     

    605

     

    Adjusted EBITDA

     

    $

    67,481

     

     

    $

    65,027

     

     

    $

    273,546

     

     

    $

    230,590

     

    Dine Brands Global, Inc. and Subsidiaries
    Restaurant Data
    (Unaudited)

    The following table sets forth, for the three and twelve months ended December 31, 2019 and 2018, 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

     

    Twelve Months Ended

     

     

    December 31,

     

    December 31,

     

     

    2019

     

    2018

     

    2019

     

    2018

     

     

     

    Applebee's

     

     

     

     

     

     

     

     

    Effective Restaurants(a)

     

     

     

     

     

     

     

     

    Franchise

     

    1,725

     

     

    1,835

     

     

    1,745

     

     

    1,883

     

    Company

     

    69

     

     

    11

     

     

    69

     

     

    3

     

    Total

     

    1,794

     

     

    1,846

     

     

    1,814

     

     

    1,886

     

     

     

     

     

     

     

     

     

     

    System-wide(b)

     

     

     

     

     

     

     

     

    Domestic sales percentage change(c)

     

    (3.8

    )%

     

    0.3

    %

     

    (3.0

    )%

     

    2.3

    %

    Domestic same-restaurant sales percentage change(d)

     

    (2.5

    )%

     

    3.5

    %

     

    (0.7

    )%

     

    5.0

    %

     

     

     

     

     

     

     

     

     

    Franchise(b)

     

     

     

     

     

     

     

     

    Domestic sales percentage change(c) (e)

     

    (6.2

    )%

     

    (0.4

    )%

     

    (5.9

    )%

     

    2.1

    %

    Domestic same-restaurant sales percentage change(d)

     

    (2.5

    )%

     

    3.4

    %

     

    (0.7

    )%

     

    4.9

    %

    Average weekly domestic unit sales (in thousands)

     

    $

    46.1

     

     

    $

    46.5

     

     

    $

    47.3

     

     

    $

    46.7

     

     

    IHOP

     

     

     

     

     

     

     

     

    Effective Restaurants(a)

     

     

     

     

     

     

     

     

    Franchise

     

    1,670

     

     

    1,649

     

     

    1,663

     

     

    1,633

     

    Area license

     

    159

     

     

    159

     

     

    157

     

     

    162

     

    Total

     

    1,829

     

     

    1,808

     

     

    1,820

     

     

    1,795

     

     

     

     

     

     

     

     

     

     

    System-wide(b)

     

     

     

     

     

     

     

     

    Sales percentage change(c)

     

    2.1

    %

     

    4.5

    %

     

    2.2

    %

     

    3.9

    %

    Domestic same-restaurant sales percentage change(d) (f)

     

    1.1

    %

     

    3.0

    %

     

    1.1

    %

     

    1.5

    %

     

     

     

     

     

     

     

     

     

    Franchise(b)

     

     

     

     

     

     

     

     

    Sales percentage change(c)

     

    2.0

    %

     

    5.2

    %

     

    2.2

    %

     

    4.4

    %

    Domestic same-restaurant sales percentage change(d)

     

    1.1

    %

     

    3.0

    %

     

    1.0

    %

     

    1.5

    %

    Average weekly unit sales (in thousands)

     

    $

    37.3

     

     

    $

    37.0

     

     

    $

    36.7

     

     

    $

    36.6

     

     

     

     

     

     

     

     

     

     

    Area License (b)

     

     

     

     

     

     

     

     

    Sales percentage change(c)

     

    3.7

    %

     

    (3.1

    )%

     

    2.7

    %

     

    0.5

    %

    Dine Brands Global, Inc. and Subsidiaries

    Restaurant Data

     

    (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 twelve months ended December 31, 2019 and 2018 and sales by company-operated restaurants were as follows:

     

    Three Months Ended

     

    Twelve Months Ended

     

    December 31,

     

    December 31,

     

    2019

     

    2018

     

    2019

     

    2018

     

    (In millions)

    Reported sales

     

     

     

     

     

     

     

    Applebee's domestic franchise restaurant sales

    $

    957.1

     

     

    $

    1,020.6

     

     

    $

    3,954.3

     

     

    $

    4,204.1

     

    Applebee's company-operated restaurants

    31.2

     

     

    7.1

     

     

    131.2

     

     

    7.1

     

    IHOP franchise restaurant sales

    809.9

     

     

    793.9

     

     

    3,174.2

     

     

    3,106.7

     

    IHOP area license restaurant sales

    72.3

     

     

    69.8

     

     

    289.5

     

     

    282.0

     

    Total

    $

    1,870.5

     

     

    $

    1,891.4

     

     

    $

    7,549.2

     

     

    $

    7,599.9

     

    (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.

    (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.

    (f)

    IHOP same-restaurant sales data includes area license restaurants beginning in 2019.

    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,

     

    2019

     

    2018

     

    2019

     

    2018

    Applebee's Restaurant Development Activity

     

     

     

     

     

    Summary - beginning of period:

     

     

     

     

     

     

     

    Franchise

    1,735

     

     

    1,856

     

     

    1,768

     

     

    1,936

     

    Company restaurants

    69

     

     

     

     

    69

     

     

     

    Total Applebee's restaurants, beginning of period

    1,804

     

     

    1,856

     

     

    1,837

     

     

    1,936

     

    Franchise restaurants opened:

     

     

     

     

     

     

     

    Domestic

    1

     

     

     

     

    1

     

     

    2

     

    International

    1

     

     

    2

     

     

    2

     

     

    5

     

    Total franchise restaurants opened

    2

     

     

    2

     

     

    3

     

     

    7

     

    Franchise restaurants closed:

     

     

     

     

     

     

     

    Domestic

    (3

    )

     

    (14

    )

     

    (29

    )

     

    (91

    )

    International

    (16

    )

     

    (7

    )

     

    (24

    )

     

    (15

    )

    Total franchise restaurants closed

    (19

    )

     

    (21

    )

     

    (53

    )

     

    (106

    )

    Net franchise restaurant reduction

    (17

    )

     

    (19

    )

     

    (50

    )

     

    (99

    )

    Franchise restaurants acquired by the Company

    (69

    )

    (69

    )

    Net franchise restaurant decrease

    (17

    )

     

    (88

    )

     

    (50

    )

     

    (168

    )

    Summary - end of period:

     

     

     

     

     

     

     

    Franchise

    1,718

     

     

    1,768

     

     

    1,718

     

     

    1,768

     

    Company

    69

     

     

    69

     

     

    69

     

     

    69

     

    Total Applebee's restaurants, end of period

    1,787

     

     

    1,837

     

     

    1,787

     

     

    1,837

     

    Domestic

    1,665

     

     

    1,693

     

     

    1,665

     

     

    1,693

     

    International

    122

     

     

    144

     

     

    122

     

     

    144

     

     

    IHOP Restaurant Development Activity

     

     

     

     

     

     

     

    Summary - beginning of period:

     

     

     

     

     

     

     

    Franchise

    1,675

     

     

    1,652

     

     

    1,669

     

     

    1,622

     

    Area license

    161

     

     

    162

     

     

    162

     

     

    164

     

    Total IHOP restaurants, beginning of period

    1,836

     

     

    1,814

     

     

    1,831

     

     

    1,786

     

    Franchise/area license restaurants opened:

     

     

     

     

     

     

     

    Domestic franchise

    10

     

     

    19

     

     

    33

     

     

    51

     

    Domestic area license

     

     

     

     

    5

     

     

    3

     

    International franchise

    4

     

     

    3

     

     

    13

     

     

    17

     

    Total franchise/area license restaurants opened

    14

     

     

    22

     

     

    51

     

     

    71

     

    Franchise/area license restaurants closed:

     

     

     

     

     

     

     

    Domestic franchise

    (8

    )

     

    (5

    )

     

    (27

    )

     

    (15

    )

    Domestic area license

     

     

     

     

    (6

    )

     

    (5

    )

    International franchise

    (1

    )

     

     

     

    (8

    )

     

    (6

    )

    Total franchise/area license restaurants closed

    (9

    )

     

    (5

    )

     

    (41

    )

     

    (26

    )

    Net franchise/area license restaurant development

    5

     

     

    17

     

     

    10

     

     

    45

     

    Refranchised from Company restaurants

     

     

     

     

     

     

    1

     

    Franchise restaurants reacquired by the Company

     

     

     

     

     

     

    (1

    )

    Net franchise/area license restaurant additions

    5

     

     

    17

     

     

    10

     

     

    45

     

    Summary - end of period

     

     

     

     

     

     

     

    Franchise

    1,680

     

     

    1,669

     

     

    1,680

     

     

    1,669

     

    Area license

    161

     

     

    162

     

     

    161

     

     

    162

     

    Total IHOP restaurants, end of period

    1,841

     

     

    1,831

     

     

    1,841

     

     

    1,831

     

    Domestic

    1,710

     

     

    1,705

     

     

    1,710

     

     

    1,705

     

    International

    131

     

     

    126

     

     

    131

     

     

    126

     

     



    Business Wire (engl.)
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    Dine Brands Global, Inc. Reports Solid Fourth Quarter and Full-Year 2019 Results 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 2019. “This past year for Dine Brands was defined by several …

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