false 0000049754 0000049754 2024-08-07 2024-08-07

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): August 7, 2024

 

 

Dine Brands Global, Inc.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware   001-15283   95-3038279

(State or other jurisdiction of

incorporation or organization)

  

(Commission

File No.)

  

(I.R.S. Employer

Identification No.)

10 West Walnut Street, 5th Floor,

Pasadena, California

   91103
(Address of principal executive offices)   (Zip Code)

(818) 240-6055

(Registrant’s telephone number, including area code)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

  

Trading

symbol(s)

  

Name of each exchange

on which registered

Common Stock, $.01 Par Value   DIN   New York Stock Exchange

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2. below):

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Item 2.02

Results of Operations and Financial Condition

On August 7, 2024, Dine Brands Global, Inc., a Delaware corporation (the “Corporation”), issued a press release announcing its second quarter 2024 financial results. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information contained in this Item 2.02, including the related information set forth in the press release attached hereto as Exhibit 99.1 and incorporated by reference herein, is being “furnished” and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise. The information in this Item 2.02 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or into any filing or other document pursuant to the Exchange Act, except as otherwise expressly stated in any such filing.

Item 9.01.

Financial Statements and Exhibits.

 

  (d)

Exhibits.

 

Exhibit

Number

   

Description

99.1    Press Release issued by the Corporation on August 7, 2024.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Date: August 7, 2024   DINE BRANDS GLOBAL, INC.
    By:  

/s/ Vance Y. Chang

     

Vance Y. Chang

Chief Financial Officer

Exhibit 99.1

 

LOGO

 

 

News Release

Investor Contact

Matt Lee

Sr. Vice President, Finance and Investor Relations

Dine Brands Global, Inc.

IR@dinebrands.com

Media Contact

Susan Nelson

Sr. Vice President, Global Communications

Dine Brands Global, Inc.

Mediainquiries@dinebrands.com

Dine Brands Global, Inc. Reports Second Quarter 2024 Results

PASADENA, Calif., August 7, 2024 – Dine Brands Global, Inc. (NYSE: DIN), the parent company of Applebee’s Neighborhood Grill & Bar®, IHOP® and Fuzzy’s Taco Shop® restaurants, today announced financial results for the second quarter of fiscal year 2024.

“Our brands have a long history of weathering economic cycles and despite the consumer pullback the industry witnessed this quarter, we are confident that our strategies around profitable promotions, menu innovation and development will help us manage both short-term challenges while positioning us for the long term,” said John Peyton, chief executive officer, Dine Brands Global, Inc.

Vance Chang, chief financial officer, Dine Brands Global, Inc. added, “Our asset light model allows us to return capital to investors and maintain the strength of our balance sheet in all economic cycles. We are revising our financial guidance for the remainder of the fiscal year to reflect the current macro conditions and we are optimistic about the strategic advantage of Dine’s platform to create value for all stakeholders in the long term.”

Domestic Restaurant Sales for the Second Quarter of 2024

 

  ●  

Applebee’s year-over-year domestic comparable same-restaurant sales declined 1.8% for the second quarter of 2024. Off-premise sales mix accounted for 21.4% in the second quarter of 2024 compared to 22.6% in the second quarter of 2023.

 

  ●  

IHOP’s year-over-year domestic comparable same-restaurant sales declined 1.4% for the second quarter of 2024. Off-premise sales mix accounted for 19.8% in the second quarter of 2024 compared to 20.7% in the second quarter of 2023.

 

Page 1 of 16

Second Quarter of 2024 Summary

 

  ●  

Total revenues for the second quarter of 2024 were $206.3 million compared to $208.4 million for the second quarter of 2023. The decrease was primarily due to the negative comparable same-restaurant sales growth at Applebee’s and IHOP, partially offset by increases in the number of effective franchise restaurants and proprietary product sales at IHOP.

 

  ●  

General and Administrative (“G&A”) expenses for the second quarter of 2024 were $46.9 million compared to $47.8 million for the second quarter of 2023. The variance was primarily attributable to the stopping of the IHOP Flip’d initiative in the prior year offset by an increase in compensation-related expenses and an increase in depreciation expense.

 

  ●  

GAAP net income available to common stockholders was $22.5 million, or earnings per diluted share of $1.50, for the second quarter of 2024 compared to net income available to common stockholders of $17.8 million, or earnings per diluted share of $1.16 for the second quarter of 2023. The increase was primarily due to an increase in segment profit, a prior year loss on disposition of assets, a prior year loss on debt extinguishment and a decrease in G&A expenses, partially offset by an increase in income taxes.

 

  ●  

Adjusted net income available to common stockholders was $25.6 million, or adjusted earnings per diluted share of $1.71, for the second quarter of 2024 compared to adjusted net income available to common stockholders of $27.8 million, or adjusted earnings per diluted share of $1.82, for the second quarter of 2023. The decline was primarily due to an increase in G&A expenses, partially offset by a decrease in the number of diluted shares. (See “Non-GAAP Financial Measures” for definition and reconciliation of GAAP net income available to common stockholders to adjusted net income available to common stockholders.)

 

  ●  

Consolidated adjusted EBITDA for the second quarter of 2024 was $67.0 million compared to $67.3 million for the second quarter of 2023. (See “Non-GAAP Financial Measures” for definition and reconciliation of GAAP net income to consolidated adjusted EBITDA.)

 

  ●  

Development activity by Applebee’s and IHOP franchisees for the second quarter of 2024 resulted in 16 new restaurant openings and 25 restaurant closures.

First Six Months of 2024 Summary

 

  ●  

Total revenues for the first six months of 2024 were $412.5 million compared to $422.2 million for the first six months of 2023. The decline was primarily due to the negative comparable same-restaurant sales growth at Applebee’s and IHOP, partially offset by increases in the number of effective franchise restaurants and proprietary product sales at IHOP.

 

  ●  

G&A expenses for the first six months of 2024 were $99.0 million compared to $98.9 million for the first six months of 2023. The variance was primarily due to an increase in stock-based compensation, depreciation and severance expense, offset by the stopping of the IHOP Flip’d initiative in the prior period and a decrease in occupancy costs.

 

Page 2 of 16

  ●  

GAAP net income available to common stockholders was $39.4 million, or earnings per diluted share of $2.64, for the first six months of 2024 compared to net income available to common stockholders of $44.5 million, or earnings per diluted share of $2.91 for the first six months of 2023. The decline was primarily due to a decrease in segment profit and an increase in interest expense as a result of our April 2023 refinancing, partially offset by a prior year loss on disposition of assets.

 

  ●  

Adjusted net income available to common stockholders was $45.5 million, or adjusted earnings per diluted share of $3.04, for the first 6 months of 2024 compared to adjusted net income available to common stockholders of $58.0 million, or adjusted earnings per diluted share of $3.79, for the first six months of 2023. The decline was primarily due to a decrease in segment profit, an increase in G&A expenses and an increase in interest expense as a result of our April 2023 refinancing, partially offset by a decrease in income taxes. (See “Non-GAAP Financial Measures” for definition and reconciliation of GAAP net income available to common stockholders to adjusted net income available to common stockholders.)

 

  ●  

Consolidated adjusted EBITDA for the first six months of 2024 was $127.8 million compared to $133.7 million for the first six months of 2023. (See “Non-GAAP Financial Measures” for definition and reconciliation of GAAP net income to consolidated adjusted EBITDA.)

 

  ●  

Cash flows provided by operating activities for the first six months of 2024 were $52.2 million. This compares to cash flows provided by operating activities of $42.7 million for the first six months of 2023. The increase was primarily due to a favorable increase in working capital, partially offset by a decrease in segment profit.

 

  ●  

Adjusted free cash flow was $52.9 million for the first six months of 2024. This compares to adjusted free cash flow of $24.1 million for the first six months of 2023. (See “Non-GAAP Financial Measures” for definition and reconciliation of the Company’s cash provided by operating activities to adjusted free cash flow.)

 

  ●  

Development activity by Applebee’s and IHOP franchisees for the first six months of 2024 resulted in 25 new restaurant openings and 45 restaurant closures.

Key Balance Sheet Metrics (as of June 30, 2024)

 

  ●  

Total cash, cash equivalents and restricted cash of approximately $218.4 million, of which approximately $153.5 million was unrestricted cash.

 

  ●  

Available borrowing capacity under the Variable Funding Senior Secured Notes is over $223 million.

GAAP Effective Tax Rate

The Company’s effective tax rate was 26.4% for the six months ended June 30, 2024, as compared to 24.7% for the six months ended June 30, 2023. The effective tax rate for the six months ended June 30, 2024 was higher than the rate of the prior comparable period primarily due to a lower tax deduction related to stock-based compensation.

 

Page 3 of 16

Capital Returns to Equity Holders

During the second quarter of 2024, the Company repurchased approximately $6.0 million of its common stock and paid quarterly cash dividends totaling approximately $7.9 million.

Financial Performance Guidance for 2024

The Company‘s fiscal year 2024 guidance items have been revised as follows:

 

  ●  

Reduced: Applebee’s domestic system-wide comparable same-restaurant sales performance is expected to range between negative 4% and negative 2% (versus between 0% and 2% previously).

 

  ●  

Reduced: IHOP’s domestic system-wide comparable same-restaurant sales performance is expected to range between negative 2% and 0% (versus between 1% and 3% previously).

 

  ●  

Reiterated: Domestic development activity for Applebee’s franchisees is between 25 and 35 net fewer restaurants.

 

  ●  

Reduced: Domestic development activity by IHOP franchisees and area licensees is expected to be between 0 and 10 net new openings (versus between 15 to 25 net new openings previously).

 

  ●  

Reduced: Consolidated adjusted EBITDA is expected to range between approximately $245 million and $255 million (versus between $255 million and $265 million previously).

 

  ●  

Narrowed: G&A expenses are expected to range between approximately $200 million and $205 million (versus between $200 million and $210 million previously). This total includes non-cash stock-based compensation expense and depreciation of approximately $35 million.

 

  ●  

Reduced: Gross capital expenditures are expected to range between approximately $14 million and $16 million (versus between $15 million and $20 million previously).

Dine Brands does not provide forward-looking guidance for GAAP net income because it is unable to predict certain items contained in the GAAP measure without unreasonable efforts. These items may include closure and impairment charges, loss on extinguishment of debt, gain or loss on disposition of assets, other non-income-based taxes and other items deemed not reflective of current operations.

Second quarter of 2024 Earnings Conference Call Details

Dine Brands will host a conference call to discuss its results on August 7, 2024, at 9:00 a.m. Eastern time. To access the call, please click this conference call registration link, and you will be provided with dial in details. A live webcast of the call, along with a replay will be available for a limited time at https://investors.dinebrands.com. 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. An online archive of the webcast will also be available on Events and Presentations under the Investors section of the Company’s website.

 

Page 4 of 16

About Dine Brands Global, Inc.

Based in Pasadena, California, Dine Brands Global, Inc. (NYSE: DIN), through its subsidiaries and franchisees, supports and operates restaurants under the Applebee’s Neighborhood Grill + Bar®, IHOP®, and Fuzzy’s Taco Shop® brands. As of June 30, 2024, these three brands consisted of close to 3,600 restaurants across 18 international markets. Dine Brands is one of the largest full-service restaurant companies in the world and in 2022 expanded into the Fast Casual segment. 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, including the impact of inflation, particularly as it may impact our franchisees directly; 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 including any insolvency or bankruptcy; credit risks from our IHOP franchisees operating under our previous IHOP business model in which we built and equipped IHOP restaurants and then franchised them to franchisees; insufficient insurance coverage to cover potential risks associated with the ownership and operation of restaurants; 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; risks of food-borne illness or food tampering; possible future impairment charges; 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; delivery initiatives and use of third-party delivery vendors; our allocation of human capital and our ability to attract and retain management and other key employees; compliance with federal, state and local governmental regulations; risks associated with our self-insurance; natural disasters, pandemics, epidemics, or other serious incidents; our success with development initiatives outside of our core business; the adequacy of our internal controls over financial reporting and future changes in accounting standards; and other factors discussed from time to time in the Corporation’s Annual and Quarterly Reports on Forms 10-K and 10-Q and in the Corporation’s other filings with the Securities and Exchange Commission. The forward-looking statements contained in this press release are made as of the date hereof and the Corporation does not intend to, nor does it assume any obligation to, update or supplement any forward-looking statements after the date hereof to reflect actual results or future events or circumstances.

 

Page 5 of 16

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 intangible asset amortization, any non-cash interest expense, any gain or loss related to the disposition of assets, any gain or loss related to debt extinguishment, 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 interest charges, any income tax provision or benefit, any depreciation and amortization, any non-cash stock-based compensation, any closure and impairment charges, any gain or loss related to debt extinguishment, 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. 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.

FBN-R

 

Page 6 of 16

Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(In thousands, except per share amounts)

(Unaudited)

 

                                                                                       
     Three Months Ended
June 30,		   Six Months Ended
June 30,
     2024   2023   2024   2023

Revenues:

       

Franchise revenues:

         

Royalties, franchise fees and other

     $ 101,980      $ 101,938      $ 202,596      $ 204,863  

Advertising revenues

      74,518       75,979       149,779       153,016  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total franchise revenues

      176,498       177,917       352,375       357,879  

Company restaurant sales

      299       474       573       1,531  

Rental revenues

      29,006       29,440       58,555       61,391  

Financing revenues

      464       584       999       1,381  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total revenues

      206,267       208,415       412,502       422,182  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Cost of revenues:

         

Franchise expenses:

         

Advertising expenses

      74,518       75,979       149,779       153,016  

Bad debt (credit) expense

      (729 )      1,721       (546 )      2,644  

Other franchise expenses

      11,164       10,580       22,193       19,986  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total franchise expenses

      84,953       88,280       171,426       175,646  

Company restaurant expenses

      312       431       611       1,510  

Rental expenses:

         

Interest expense from finance leases

      739       695       1,479       1,404  

Other rental expenses

      20,911       21,573       42,126       42,472  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total rental expenses

      21,650       22,268       43,605       43,876  

Financing expenses

      81       94       165       192  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total cost of revenues

      106,996       111,073       215,807       221,224  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Gross profit

      99,271       97,342       196,695       200,958  

General and administrative expenses

      46,858       47,840       99,045       98,927  

Interest expense, net

      17,850       17,781       35,922       32,490  

Closure and impairment charges

      442       847       1,076       1,314  

Amortization of intangible assets

      2,723       2,719       5,445       5,493  

Loss on extinguishment of debt

      —       1,671       —       10  

Loss (gain) on disposition of assets

      174       2,047       (63 )      2,118  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Income before income taxes

      31,224       24,437       55,270       60,606  

Income tax provision

      (8,042 )      (6,189 )      (14,615 )      (14,948 ) 
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Net income

      23,182       18,248       40,655       45,658  

Other comprehensive (loss) income net of tax:

         

Foreign currency translation adjustment

      (3 )      (1 )      (5 )      —  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total comprehensive income

     $ 23,179      $ 18,247      $ 40,650      $ 45,658  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Net income available to common stockholders:

         

Net income

     $ 23,182      $ 18,248      $ 40,655      $ 45,658  

Less: Net income allocated to unvested participating restricted stock

      (703 )      (446 )      (1,206 )      (1,125 ) 
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Net income available to common stockholders

     $ 22,479      $ 17,802      $ 39,449      $ 44,533  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Net income available to common stockholders per share:

         

Basic

     $ 1.50      $ 1.16      $ 2.64      $ 2.91  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Diluted

     $ 1.50      $ 1.16      $ 2.64      $ 2.91  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Weighted average shares outstanding:

         

Basic

      14,943       15,308       14,962       15,304  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Diluted

      14,943       15,317       14,962       15,324  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

 

Page 7 of 16

Dine Brands Global, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

 

                                                       
     June 30, 2024   December 31, 2023
       (Unaudited)

Assets

     

Current assets:

     

Cash and cash equivalents

     $ 153,534      $ 146,034  

Receivables, net of allowance

      83,184       127,937  

Restricted cash

      45,357       35,058  

Prepaid gift card costs

      23,501       29,545  

Prepaid income taxes

      2,767       3,445  

Other current assets

      11,259       15,759  
  

 

 

 

  

 

 

 

Total current assets

      319,602       357,778  

Non-current restricted cash

      19,500       19,500  

Property and equipment, net

      158,101       161,891  

Operating lease right-of-use assets

      280,641       275,214  

Deferred rent receivable

      28,888       33,326  

Long-term receivables, net of allowance

      33,720       35,602  

Goodwill

      254,062       254,062  

Other intangible assets, net

      580,793       586,033  

Other non-current assets, net

      18,195       16,881  
  

 

 

 

  

 

 

 

Total assets

     $ 1,693,502      $ 1,740,287  
  

 

 

 

  

 

 

 

Liabilities and Stockholders’ Deficit

     

Current liabilities:

     

Current maturities of long-term debt

     $ 100,000      $ 100,000  

Accounts payable

      31,512       36,193  

Gift card liability

      142,206       175,640  

Current maturities of operating lease obligations

      62,216       63,498  

Current maturities of finance lease and financing obligations

      6,630       7,243  

Accrued employee compensation and benefits

      14,173       23,211  

Accrued advertising expenses

      494       9,446  

Dividends payable

      7,805       7,827  

Other accrued expenses

      29,135       37,394  
  

 

 

 

  

 

 

 

Total current liabilities

      394,171       460,452  

Long-term debt, net, less current maturities

      1,085,510       1,084,502  

Operating lease obligations, less current maturities

      271,100       269,097  

Finance lease obligations, less current maturities

      37,090       34,389  

Financing obligations, less current maturities

      25,304       26,984  

Deferred income taxes, net

      58,898       60,829  

Deferred franchise revenue, long-term

      37,201       38,658  

Other non-current liabilities

      15,930       16,350  
  

 

 

 

  

 

 

 

Total liabilities

      1,925,204       1,991,261  
  

 

 

 

  

 

 

 

Commitments and contingencies

     

Stockholders’ deficit:

     

Common stock

      248       249  

Additional paid-in-capital

      249,265       256,542  

Retained earnings

      174,972       150,008  

Accumulated other comprehensive loss

      (69 )      (64 ) 

Treasury stock, at cost

      (656,118 )      (657,709 ) 
  

 

 

 

  

 

 

 

Total stockholders’ deficit

      (231,702 )      (250,974 ) 
  

 

 

 

  

 

 

 

Total liabilities and stockholders’ deficit

     $ 1,693,502      $ 1,740,287  
  

 

 

 

  

 

 

 

 

Page 8 of 16

Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands) (Unaudited)

 

                                           
     Six Months Ended
     June 30,
     2024   2023

Cash flows from operating activities:

     

Net income

     $ 40,655      $ 45,658  

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

     

Depreciation and amortization

      19,395       17,651  

Non-cash closure and impairment charges

      1,076       1,296  

Non-cash stock-based compensation expense

      8,757       5,309  

Non-cash interest expense

      1,619       1,935  

Loss on extinguishment of debt

      —       10  

Deferred income taxes

      (1,931 )      (2,939 ) 

Deferred revenue

      (3,387 )      (1,730 ) 

(Gain) loss on disposition of assets

      (63 )      2,118  

Other

      (940 )      88  

Changes in operating assets and liabilities:

     

Receivables, net

      6,085       (285 ) 

Deferred rent receivable

      4,438       4,651  

Current income tax receivables and payables

      487       (3,006 ) 

Gift card receivables and payables

      (6,228 )      (6,204 ) 

Other current assets

      4,472       4,502  

Accounts payable

      (2,260 )      (13,307 ) 

Operating lease assets and liabilities

      (6,569 )      3,806  

Accrued employee compensation and benefits

      (8,948 )      (10,170 ) 

Accrued advertising

      (1,941 )      (13,177 ) 

Other current liabilities

      (2,538 )      6,478  
  

 

 

 

  

 

 

 

Cash flows provided by operating activities

      52,179       42,684  
  

 

 

 

  

 

 

 

Cash flows from investing activities:

     

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

      7,542       6,261  

Additions to property and equipment

      (6,779 )      (22,787 ) 

Proceeds from sale of property and equipment

      81       —  

Additions to long-term receivables

      (1,790 )      —  

Other

      (126 )      (46 ) 
  

 

 

 

  

 

 

 

Cash flows used in investing activities

      (1,072 )      (16,572 ) 
  

 

 

 

  

 

 

 

Cash flows from financing activities:

     

Proceeds from issuance of long-term debt

      —       500,000  

Repayment of long-term debt

      —       (651,713 ) 

Borrowing from revolving credit facility

      —       15,000  

Repayment of revolving credit facility

      —       (15,000 ) 

Payment of debt issuance costs

      —       (7,967 ) 

Dividends paid on common stock

      (15,707 )      (15,970 ) 

Repurchase of common stock

      (12,000 )      (14,017 ) 

Principal payments on finance lease and financing obligations

      (3,080 )      (3,623 ) 

Proceeds from stock options exercised

      —       3,812  

Repurchase of restricted stock for tax payments upon vesting

      (2,486 )      (3,941 ) 

Tax payments for share settlement of restricted stock units

      (30 )      (859 ) 

Other

      (5 )      —  
  

 

 

 

  

 

 

 

Cash flows used in financing activities

      (33,308 )      (194,278 ) 
  

 

 

 

  

 

 

 

Net change in cash, cash equivalents and restricted cash

      17,799       (168,166 ) 

Cash, cash equivalents and restricted cash at beginning of period

      200,592       324,984  
  

 

 

 

  

 

 

 

Cash, cash equivalents and restricted cash at end of period

     $ 218,391      $ 156,818  
  

 

 

 

  

 

 

 

 

Page 9 of 16

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: Closure and impairment charges; amortization of intangible assets; non-cash interest expenses; loss on extinguishment of debt; gain or loss on disposition of assets; acquisition costs; IHOP Flip’d initiative; other EBITDA adjustments; and the combined tax effect of the preceding adjustments, as well as related per share data:

 

     Three Months Ended June 30,   Six Months Ended June 30,
     2024   2023     2024   2023  
  

 

 

 

  

 

 

 

Net income available to common stockholders

     $   22,479     $   17,802      $   39,449     $   44,533  

Closure and impairment charges

      442       847       1,076       1,314  

Amortization of intangible assets

      2,723       2,719       5,445       5,493  

Non-cash interest expense

      816       764       1,619       1,935  

Loss (gain) on disposition of assets

      174       2,047       (63 )      2,118  

Loss on extinguishment of debt

      —       1,671       —       10  

Acquisition costs

      —       33       —       804  

IHOP Flip’d initiative

      —       5,121       —       5,121  

Other EBITDA adjustments

      165       654       365       1,871  

Net income tax provision for above adjustments

      (1,123 )      (3,603 )      (2,195 )      (4,853 ) 

Net income allocated to unvested participating restricted stock

      (101 )      (254 )      (185 )      (343 ) 
  

 

 

 

Net income available to common stockholders, as adjusted

     $ 25,575     $ 27,801      $ 45,511     $ 58,003  
  

 

 

 

Diluted net income available to common stockholders per share (a):

         

Net income available to common stockholders

     $ 1.50     $ 1.16      $ 2.64     $ 2.91  

Closure and impairment charges

      0.02       0.04       0.05       0.06  

Amortization of intangible assets

      0.13       0.13       0.27       0.27  

Non-cash interest expense

      0.04       0.04       0.08       0.09  

Loss (gain) on disposition of assets

      0.01       0.10       0.00       0.10  

Loss on extinguishment of debt

      —       0.08       —       0.00  

Acquisition costs

      —       0.00       —       0.04  

IHOP Flip’d initiative

      —       0.25       —       0.25  

Other EBITDA adjustments

      0.01       0.03       0.02       0.09  

Net income allocated to unvested participating restricted stock

      (0.01 )      (0.02 )      (0.01 )      (0.02 ) 

Rounding

      0.01       0.01       (0.01 )      —  
  

 

 

 

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

     $ 1.71     $ 1.82      $ 3.04     $ 3.79  
  

 

 

 

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

     $ 25,575     $ 27,801      $ 45,511     $ 58,003  

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

      1       —       —       —  
  

 

 

 

  

 

 

 

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

     $ 25,576     $ 27,801      $ 45,511     $ 58,003  
  

 

 

 

  

 

 

 

Denominator for basic EPS - weighted-average shares

      14,943       15,308       14,962       15,304  

Dilutive effect of stock options

      —       9       —       20  
  

 

 

 

  

 

 

 

Denominator for diluted EPS - weighted-average shares

      14,943       15,317       14,962       15,324  
  

 

 

 

  

 

 

 

 

(a)

Diluted net income available to common stockholders per share for the three and six months ended June 30, 2024 and 2023 presented on an after-tax basis.

 

Page 10 of 16

Dine Brands Global, Inc. and Subsidiaries

Non-GAAP Financial Measures

(Unaudited)

Reconciliation of the Company’s cash flows provided by operating activities to “adjusted free cash flow” (cash flows provided by operating activities, plus receipts from notes and equipment contracts receivable, less additions to property and equipment). Management uses this liquidity measure in its periodic assessments of, among other things, the amount of cash dividends per share of common stock and repurchases of common stock. We believe it is important for investors to have the same measure used by management for that purpose. Adjusted free cash flow does not represent residual cash flow available for discretionary purposes.

 

     Six Months Ended June 30,
     2024   2023
     (In thousands)

Cash flows provided by operating activities

     $   52,179      $   42,684  

Principal receipts from notes and equipment contracts

      7,542       4,200  

Net additions to property and equipment

      (6,779 )      (22,787 ) 
  

 

 

 

  

 

 

 

Adjusted free cash flow

      52,942       24,097  

Repayment of long-term debt, net

      —       (151,713 ) 

Dividends paid on common stock

      (15,707 )      (15,970 ) 

Repurchase of common stock

      (12,000 )      (14,017 ) 
  

 

 

 

  

 

 

 

    $ 25,235      $ (157,603 ) 
  

 

 

 

  

 

 

 

 

Page 11 of 16

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 or loss, adjusted for the effect of interest charges, income tax provision or benefit, depreciation and amortization, non-cash stock-based compensation, closure and impairment charges, loss on extinguishment of debt, gain or loss on disposition of assets, 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 June 30,      Six Months Ended June 30, 2024 
    2024   2023   2024   2023
 

 

 

 

  

 

 

 

  

 

 

 

Net income, as reported

    $ 23,182      $ 18,248      $ 40,655      $ 45,658  

Interest charges on finance leases

     739       695       1,479       1,404  

All other interest charges

     20,749       19,813       41,512       37,494  

Income tax provision

     8,042       6,189       14,615       14,948  

Depreciation and amortization

     9,654       8,421       19,395       17,634  

Non-cash stock-based compensation

     3,833       3,591       8,756       5,309  

Closure and impairment charges

     442       847       1,076       1,314  

Loss on extinguishment of debt

     —       1,671       —       10  

Loss (gain) on disposition of assets

     174       2,047       (63 )      2,118  

IHOP Flip’d initiative

     —       5,121       —       5,121  

Other

     165       687       365       2,675  
 

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Adjusted EBITDA

    $   66,980      $   67,330      $   127,790      $   133,685  
 

 

 

 

  

 

 

 

  

 

 

 

 

Page 12 of 16

Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

The following table sets forth, for the three and six months ended June 30, 2024, the number of “Effective Restaurants” in the Applebee’s, IHOP and Fuzzy’s 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 June 30,   Six Months Ended June 30,
    2024   2023   2024   2023

Applebee’s Restaurant Data

  

Global Effective Restaurants(a)

        

Franchise

     1,627       1,662       1,631       1,667   

Company

     —       —       —       —   
 

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total

     1,627       1,662       1,631       1,667   
 

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

System-wide(b)

        

Domestic sales percentage change(c)

     (3.0 )%      (1.5 )%      (4.5 )%      2.0  % 

Domestic same-restaurant sales percentage change(d)

     (1.8 )%      (1.0 )%      (3.2 )%      2.5  % 

Franchise(b)

        

Domestic sales percentage change(c)

     (3.0 )%      2.1  %      (4.5 )%      5.8  % 

Domestic same-restaurant sales percentage change(d)

     (1.8 )%      (1.0 )%      (3.2 )%      2.5  % 

Average weekly domestic unit sales (in thousands)

    $ 53.9      $ 54.3      $ 54.3      $ 55.6   

IHOP Restaurant Data

        

Global Effective Restaurants(a)

        

Franchise

     1,647       1,628       1,645       1,622   

Area license

     155       155       156       156   
 

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total

     1,802       1,783       1,801       1,778   
 

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

System-wide(b)

        

Sales percentage change(c)

     (0.2 )%      4.6  %      0.0  %      7.8  % 

Domestic same-restaurant sales percentage change, including area license restaurants(d)

     (1.4 )%      2.1  %      (1.5 )%      5.3  % 

Franchise(b)

        

Sales percentage change(c)

     (0.1 )%      5.0  %      0.1  %      8.1  % 

Domestic same-restaurant sales percentage change(d)

     (1.2 )%      2.2  %      (1.6 )%      5.4  % 

Average weekly unit sales (in thousands)

    $     38.4     $     38.9     $     38.0     $     38.5   

Area License(b)

        

Sales percentage change(c)

     (1.2 )%      0.9 %      (0.6 )%      5.5  % 

 

Page 13 of 16

     Three Months Ended June 30,   Six Months Ended June 30,
     2024   2023   2024   2023
                  
     (Unaudited)

Fuzzy’s Restaurant Data

   

Global Effective Restaurants(a)

         

Franchise

      124       136       126       135  

Company

      1       1       1       2  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total

      125       137       127       137  
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

System-wide(b)

         

Domestic sales percentage change(c)

      (12.4 )%      (1.3 )%      (12.7 )%      1.0  % 

Domestic same-restaurant sales percentage change(d)

      (7.5 ) %      (4.0 )%      (8.6 )%      (2.4 )% 

Franchise(b)

         

Domestic sales percentage change(c)

      (12.2 )%      (0.2 )%      (12.0 )%      1.5  % 

Domestic same-restaurant sales percentage change(d)

      (7.6 )%      (4.1 )%      (8.6 )%      (2.4 )% 

Average weekly domestic unit sales (in thousands)

    $     32.2     $    33.5     $    30.4     $    32.1  

 

(a)

“Effective Restaurants” are the weighted average number of restaurants open in each 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 consist of restaurants owned by franchisees and area licensees as well as those owned by the Company. Effective Restaurants do not include units operated as ghost kitchens (small kitchens with no store-front presence, used to fill off-premise orders).

(b)

“System-wide sales” are retail sales at Applebee’s and Fuzzy’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 Fuzzy’s restaurants. System-wide sales do not include retail sales of ghost kitchens. 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 and Fuzzy’s domestic franchise restaurants, Fuzzy’s company-operated restaurants, IHOP franchise restaurants and IHOP area license restaurants were as follows:

 

    Three Months Ended June 30,     Six Months Ended June 30,  
    2024     2023     2024     2023  

Reported sales (in millions)

  

Applebee’s franchise restaurant sales

    $      1,066.4       $      1,099.3       $      2,154.5       $      2,255.4   

IHOP franchise restaurant sales

     822.0        822.7        1,625.9        1,624.9   

IHOP area license restaurant sales

     75.1        76.0        152.9        153.8   

Fuzzy’s franchise restaurant sales

     51.9        59.1        99.1        112.7   

Fuzzy’s company-operated restaurants

     0.3        0.5        0.6        1.5   
 

 

 

    

 

 

    

 

 

  

Total

    $ 2,015.7       $ 2,057.6       $ 4,033.0       $ 4,148.3   
 

 

 

    

 

 

    

 

 

  

 

(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 fiscal period, for domestic restaurants that have been operated during both fiscal periods that are being compared and have been open for at least 18 months. Because of new restaurant openings and restaurant closures, the domestic restaurants open throughout both fiscal periods being compared may be different from period to period.

 

Page 14 of 16

Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

 

Restaurant Development Activity     Three Months Ended June 30,        Six Months Ended June 30,   
  

 

 

  
     2024      2023      2024      2023  
  

 

 

     

 

 

     

 

 

  

Applebee’s

   

Summary - beginning of period:

            

Franchise

      1,636         1,673         1,642         1,678   

Company

      —         —         —         —   
  

 

 

     

 

 

     

 

 

  

Beginning of period

      1,636         1,673         1,642         1,678   
  

 

 

     

 

 

     

 

 

  

Franchise restaurants opened:

            

Domestic

      —         1         —         1   

International

      3         1         5         3   
  

 

 

     

 

 

     

 

 

  

 Total franchise restaurants opened

      3         2         5         4   
  

 

 

     

 

 

     

 

 

  

Franchise restaurants permanently closed:

            

Domestic

      (11)        (10)        (16)        (16)  

International

      (3)        (4)        (6)        (5)  
  

 

 

     

 

 

     

 

 

  

 Total franchise restaurants permanently closed

      (14)        (14)        (22)        (21)  
  

 

 

     

 

 

     

 

 

  

Net franchise restaurant reduction

      (11)        (12)        (17)        (17)  
  

 

 

     

 

 

     

 

 

  

Summary - end of period:

            

Franchise

      1,625         1,661         1,625         1,661   

Company

      —         —         —         —   
  

 

 

     

 

 

     

 

 

  

Total Applebee’s restaurants, end of period

      1,625         1,661         1,625         1,661   
  

 

 

     

 

 

     

 

 

  

Domestic

      1,520         1,554         1,520         1,554   

International

      105         107         105         107   

IHOP

            

Summary - beginning of period:

            

Franchise

      1,653         1,633         1,657         1,625   

Area license

      156         157         157         156   
  

 

 

     

 

 

     

 

 

  

Total IHOP restaurants, beginning of period

      1,809         1,790         1,814         1,781   
  

 

 

     

 

 

     

 

 

  

Franchise/area license restaurants opened:

            

Domestic franchise

      5         9         10         22   

Domestic area license

      1         —         1         2   

International franchise

      7         2         9         6   
  

 

 

     

 

 

     

 

 

  

 Total franchise/area license restaurants opened

      13         11         20         30   
  

 

 

     

 

 

     

 

 

  

Franchise/area license restaurants permanently closed:

            

Domestic franchise

      (9)        (10)        (17)        (18)  

Domestic area license

      (2)        (1)        (3)        (2)  

International franchise

      —         —         (3)        (1)  
  

 

 

     

 

 

     

 

 

  

 Total franchise/area license restaurants permanently closed

      (11)        (11)        (23)        (21)  
  

 

 

     

 

 

     

 

 

  

Net increase (decrease) in franchise/area license restaurants

      2         —         (3)        9   
  

 

 

     

 

 

     

 

 

  

Summary - end of period:

            

Franchise

      1,656         1,634         1,656         1,634   

Area license

      155         156         155         156   
  

 

 

     

 

 

     

 

 

  

Total IHOP restaurants, end of period

      1,811         1,790         1,811         1,790   
  

 

 

     

 

 

     

 

 

  

Domestic

      1,687         1,681         1,687         1,681   

International

      124         109         124         109   

 

Page 15 of 16

Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

 

Restaurant Development Activity (continued)     Three Months Ended June 30,        Six Months Ended June 30,   
  

 

 

  
     2024      2023      2024      2023  
  

 

 

     

 

 

     

 

 

  

Fuzzy’s

   

Summary - beginning of period:

            

Franchise

      127         134         131         134   

Company

      1         3         1         3   
  

 

 

     

 

 

     

 

 

  

Beginning of period

      128         137         132         137   
  

 

 

     

 

 

     

 

 

  

Franchise restaurants opened:

            

Domestic

      —         2         —         2   
  

 

 

     

 

 

     

 

 

  

Franchise restaurants permanently closed:

            

Domestic

      (3)        (1)        (7)        (1)  
  

 

 

     

 

 

     

 

 

  

Net franchise restaurant addition (reduction)

      (3)        1         (7)        1   
  

 

 

     

 

 

     

 

 

  

Refranchised from Company restaurants

      —         2         —         2   
  

 

 

     

 

 

     

 

 

  

Net franchise restaurant addition (reduction)

      (3)        3         (7)        3   
  

 

 

     

 

 

     

 

 

  

Summary - end of period:

            

Franchise

      124         137         124         137   

Company

      1         1         1         1   
  

 

 

     

 

 

     

 

 

  

Total Fuzzy’s restaurants, end of period

      125         138         125         138   
  

 

 

     

 

 

     

 

 

  

Domestic

      125         138         125         138   

International

      —         —         —         —   

The restaurant counts and activity presented above do not include one domestic Applebee’s ghost kitchens (small kitchens with no store-front presence, used to fill off-premise orders), eight international Applebee’s ghost kitchens and 38 international IHOP ghost kitchens at June 30, 2024, and one domestic Applebee’s ghost kitchens, 12 international Applebee’s ghost kitchens and 41 international IHOP ghost kitchens at June 30, 2023.

 

Page 16 of 16

v3.24.2.u1
Document and Entity Information
Aug. 07, 2024
Cover [Abstract]  
Amendment Flag false
Entity Central Index Key 0000049754
Document Type 8-K
Document Period End Date Aug. 07, 2024
Entity Registrant Name Dine Brands Global, Inc.
Entity Incorporation State Country Code DE
Entity File Number 001-15283
Entity Tax Identification Number 95-3038279
Entity Address, Address Line One 10 West Walnut Street
Entity Address, Address Line Two 5th Floor
Entity Address, City or Town Pasadena
Entity Address, State or Province CA
Entity Address, Postal Zip Code 91103
City Area Code (818)
Local Phone Number 240-6055
Security 12b Title Common Stock, $.01 Par Value
Trading Symbol DIN
Security Exchange Name NYSE
Written Communications false
Soliciting Material false
Pre Commencement Tender Offer false
Pre Commencement Issuer Tender Offer false
Entity Emerging Growth Company false
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