Dine Brands Global, Inc. Reports Second Quarter 2021 Results

Significant Improvement in Domestic System-Wide Comparable Same-Restaurant Sales

99% of Domestic Restaurants Open

Ten New Restaurants Opened by Franchisees

Cash Position Remains Strong

Historical Domestic System-Wide Comparable Same-Restaurant Sales Relative to the Prior Year - Quarterly Domestic Same-Restaurant Sales - IHOP (Graphic: Business Wire)

GLENDALE, Calif.--()--Dine Brands Global, Inc. (NYSE: DIN), the parent company of Applebee's Neighborhood Grill + Bar® and IHOP® restaurants, today announced financial results for the second quarter of 2021.

“Our strong second-quarter results reflect the perseverance of the Dine Brands system as comp sales for both brands improved significantly. I’m thankful to our teams who have worked so hard to serve our guests and enhance the restaurant experience,” said John Peyton, chief executive officer of Dine Brands Global, Inc.

Mr. Peyton added, “Both Applebee’s and IHOP continue to make meaningful progress in a challenging environment. Relative to 2019, Applebee’s posted its best quarterly comp sales performance in over a decade. IHOP’s second-quarter comp sales improved markedly relative to 2019. Our solid fundamentals generated significant adjusted free cash flow and enabled us to maintain a healthy cash position. Our business is built to win thanks to our two iconic brands. Our franchisees are emerging from the pandemic with stable fundamentals. I’m confident we will continue to build on this momentum as we further accelerate innovation, while also focusing on our guests’ needs and accelerating growth.”

Vance Chang, chief financial officer, added, “We are very pleased with the progress we have made in the second quarter. Looking ahead, our optimism is somewhat tempered by continued volatility, which include labor shortages and variants of COVID-19. We remain steadfast in executing our strategy to improve profitability and accelerate sustainable growth.”

Domestic System-Wide Comparable Same-Restaurant Sales Relative to the Second Quarter of 2020

Domestic Same-Restaurant Sales (Fiscal Month)

April

 

May

 

June

 

Q2 2021

Applebee's

237.4%

 

116.3%

 

49.2%

 

102.2%

 

 

 

 

 

 

 

IHOP

297.4%

 

134.6%

 

63.4%

 

120.1%

  • Applebee’s year-over-year comparable same-restaurant sales increased 102.2% for the second quarter of 2021. This compares to an increase of 11.9% for the first quarter of 2021.
  • IHOP’s comparable same-restaurant sales increased 120.1% for the second quarter of 2021. This compares to a decrease of 0.9% for the first quarter of 2021.
  • Comparable same-restaurant sales for the second quarter of 2021 for both Applebee’s and IHOP improved sequentially from the first quarter of 2021. Both brands outperformed their respective categories in the second quarter of 2021, according to Black Box Intelligence™.

Domestic System-Wide Comparable Same-Restaurant Sales Relative to the Second Quarter of 2019

Domestic Same-Restaurant Sales (Fiscal Month)

April

 

May

 

June

 

Q2 2021

Applebee's

11.7%

 

8.1%

 

11.4%

 

10.5%

 

 

 

 

 

 

 

IHOP

(4.7%)

 

(4.8%)

 

(1.4%)

 

(3.4%)

  • Applebee’s year-over-year comparable same-restaurant sales increased 10.5% for the second quarter of 2021 compared to a decrease of 6.2% for the first quarter of 2021. This reflects an improvement of 16.7 percentage points.
  • IHOP’s comparable same-restaurant sales decreased 3.4% for the second quarter of 2021 compared to a decrease of 21.2% for the first quarter of 2021. This reflects an improvement of 17.8 percentage points.

Domestic Average Weekly Sales Comparison to the Second Quarter of 2019

Average Weekly Domestic Unit Sales (in thousands)

Q2 2021

 

Q2 2019

 

% of Pre-Pandemic Sales Recovered

Applebee's

$53.8

 

$48.4

 

111.2%

 

 

 

 

 

IHOP

$36.4

 

$36.8

 

98.9%

Off-Premise Sales Growth Comparison Relative to the Second Quarter of 2020

  • Applebee’s off-premise comparable same-restaurant sales for the second quarter of 2021 increased by 8.0%. This compares to an increase of 122.7% for the first quarter of 2021.
  • Applebee’s off-premise sales accounted for 30.3% of sales mix for the second quarter of 2021.
  • Applebee’s Carside To Go sales accounted for 17.3% of sales mix for the second quarter of 2021 and delivery sales accounted for 13.0% of sales mix.
  • IHOP’s off-premise comparable same-restaurant sales for the second quarter of 2021 increased by 6.3%. This compares to an increase of 123.7% for the first quarter of 2021.
  • IHOP’s off-premise sales accounted for 26.1% of sales mix for the second quarter of 2021.
  • IHOP’s delivery sales accounted for 13.9% of sales mix and take-out sales accounted for 12.2% of sales mix for the second quarter of 2021.

Second Quarter of 2021 Summary

  • GAAP earnings per diluted share of $1.69 for the second quarter of 2021 compared to a net loss per diluted share of $8.33 for the second quarter of 2020. This variance was primarily due to non-cash impairment charges incurred in the second quarter of 2020 totaling $106.5 million related to the write-downs of Applebee’s goodwill and other intangible assets as a result of the impact of COVID-19 on the Company’s operations and higher gross profit. There were no similar impairments in the second quarter of 2021.
  • Adjusted earnings per diluted share of $1.94 for the second quarter of 2021 compared to an adjusted net loss per diluted share of $0.87 for the second quarter of 2020. The increase was primarily due to higher gross profit. (See “Non-GAAP Financial Measures” and reconciliation of GAAP earnings per diluted share to adjusted earnings per diluted share.)
  • General and administrative expenses for the second quarter of 2021 were $39.3 million compared to $30.9 million for the second quarter of 2020. The variance was mainly due to higher incentive compensation accrual.
  • Consolidated adjusted EBITDA for the second quarter of 2021 was $71.7 million compared to $12.1 million for the second quarter of 2020. (See “Non-GAAP Financial Measures” and reconciliation of GAAP net income to consolidated adjusted EBITDA.)
  • Development activity by Applebee’s and IHOP franchisees resulted in the opening of 10 new restaurants.

First Six Months of 2021 Summary

  • GAAP earnings per diluted share of $3.19 for the first six months of 2021 compared to a net loss per diluted share of $6.96 for the first six months of 2020. This variance was primarily due to non-cash impairment charges incurred in the first six months of 2020 totaling $106.5 million related to the write-downs of Applebee’s goodwill and other intangible assets as a result of the impact of COVID-19 on the Company’s operations and higher gross profit. There were no similar impairments in the first six months of 2021.
  • Adjusted earnings per diluted share of $3.67 for the first six months of 2021 compared to adjusted earnings per diluted share of $0.61 for the first six months of 2020. The increase was primarily due to higher gross profit. (See “Non-GAAP Financial Measures” and reconciliation of GAAP earnings per diluted share to adjusted earnings per diluted share.)
  • General and administrative expenses for the first six months of 2021 were $79.2 million compared to $68.5 million for the first six months of 2020. The variance was mainly due to higher incentive compensation accrual.
  • Consolidated adjusted EBITDA for the first six months of 2021 was $129.9 million. This compares to $73.8 million for the first six months of 2020. (See “Non-GAAP Financial Measures” and reconciliation of GAAP net income to consolidated adjusted EBITDA.)
  • Cash flows from operating activities for the first six months of 2021 were $106.0 million. This compares to cash used in operating activities of $10.5 million for the first six months of 2020. The increase was mainly due to an improvement in gross profit, partially offset by an increase in general and administrative expenses.
  • The Company generated adjusted free cash flow of $107.3 million for the first six months of 2021. This compares to negative adjusted free cash flow of $12.4 million for the first six months of 2020. The increase is primarily due to the improvement in cash flows from operating activities discussed above. (See “Non-GAAP Financial Measures” and reconciliation of the Company’s cash provided by operating activities to adjusted free cash flow.)
  • Development activity by Applebee’s and IHOP franchisees resulted in the opening of 20 new restaurants.

Cash Position

As of June 30, 2021, the Company had $348.0 million of total cash and cash equivalents, of which $259.5 million was unrestricted cash. The Company believes that its asset-light business model and cash position will continue to provide strong liquidity as the recovery from the pandemic continues.

As of June 30, 2021, there were no outstanding borrowings under the revolving credit facility. As of June 30, 2021, $3.3 million was pledged against the revolving credit facility for outstanding letters of credit.

As of June 30, 2021, the Company’s leverage ratio was 4.94x compared to 7.02x as of March 31, 2021. As a result, quarterly principal payments on the Company’s fixed rate senior secured notes will no longer be required after a $3.25 million principal payment is made in September 2021.

As of June 30, 2021, the Company’s debt service coverage ratio was approximately 4.6x compared to 3.45x as of March 31, 2021.

The Company voluntarily reduced its interest reserve on its fixed rate senior secured notes in the second quarter of 2021 back to the required $16.4 million due to the strong improvement in the Company’s business over the last 12 months.

GAAP Effective Tax Rate

The Company’s effective tax rate for the second quarter of 2021 was a 24.0% tax expense compared to an 8.2% tax benefit for the second quarter of 2020. The Company’s effective tax rate for the second quarter of 2021 was significantly different than the rate for the same quarter of last year primarily due to the non-deductible impairment of goodwill in the second quarter of 2020, which reduced the overall tax benefit generated by the pre-tax book loss.

Financial Performance Guidance for 2021

The Company believes that its consolidated financial results for 2021 could continue to be materially impacted by COVID-19. Considering the ongoing uncertainty of the pandemic and the possible emergence of new variants, the Company currently cannot provide a complete business outlook for fiscal 2021. The Company’s guidance assumes there are no significant disruptions to its business due to COVID-19 during the second half of fiscal 2021. The projections are as of this date. The Company assumes no obligation to update or supplement this information.

  • The Company expects higher incentive compensation for 2021, which is a variable component of general and administrative expenses that will fluctuate based on business performance. As such, the Company revises expectations for general and administrative expenses for 2021 to range between approximately $168 million and $178 million, including non-cash stock-based compensation expense and depreciation of approximately $30 million. This compares to previous expectations for general and administrative expenses for 2021 to range between approximately $160 million and $170 million.
  • The Company reiterates capital expenditures are expected to be approximately $19 million, inclusive of approximately $7 million related to the company restaurants segment.

Domestic System Reopening Update

As of June 30, 2021, out of 3,244 domestic restaurants, 3,222, or 99%, were open for either dine-in service or off-premise service comprised of take-out and delivery, and 22 were temporarily closed. This compares to as of March 31, 2021, when out of 3,256 domestic restaurants, 3,224, or 99%, were open for either dine-in service or off-premise service comprised of take-out and delivery, and 32 were temporarily closed.

Second Quarter of 2021 Earnings Conference Call Details

Dine Brands will host a conference call to discuss its results on August 5, 2021 at 9:00 a.m. Pacific time. To participate on the call, please dial (833) 528-0602 and enter the conference identification number 6786828. International callers, please dial (830) 221-9708 and enter the conference identification number 6786828.

A live webcast of the call will be available on www.dinebrands.com and may be accessed by visiting Events and Presentations under the site’s Investors section. Participants should allow approximately ten minutes prior to the call’s start time to visit the site and download any streaming media software needed to listen to the webcast. A telephonic replay of the call may be accessed from 12:00 p.m. Pacific time on August 5, 2021 through 12:00 p.m. Pacific time on August 12, 2021 by dialing (855) 859-2056 and entering the conference identification number 6786828. International callers, please dial (404) 537-3406 and enter the conference identification number 6786828. An online archive of the webcast will also be available on Events and Presentations under the Investors section of the Company’s website.

About Dine Brands Global, Inc.

Based in Glendale, California, Dine Brands Global, Inc. (NYSE: DIN), through its subsidiaries, franchises restaurants under both the Applebee's Neighborhood Grill + Bar and IHOP brands. With approximately 3,440 restaurants combined in 16 countries and approximately 350 franchisees, Dine Brands is one of the largest full-service restaurant companies in the world. For more information on Dine Brands, visit the Company’s website located at www.dinebrands.com.

Forward-Looking Statements

Statements contained in this press release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You can identify these forward-looking statements by words such as “may,” “will,” “would,” “should,” “could,” “expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan,” “goal” and other similar expressions. These statements involve known and unknown risks, uncertainties and other factors, which may cause actual results to be materially different from those expressed or implied in such statements. These factors include, but are not limited to: uncertainty regarding the duration and severity of the ongoing COVID-19 pandemic and its ultimate impact on the Company; the effectiveness of related containment measures; general economic conditions; our level of indebtedness; compliance with the terms of our securitized debt; our ability to refinance our current indebtedness or obtain additional financing; our dependence on information technology; potential cyber incidents; the implementation of restaurant development plans; our dependence on our franchisees; the concentration of our Applebee’s franchised restaurants in a limited number of franchisees; the financial health of our franchisees; our franchisees’ and other licensees’ compliance with our quality standards and trademark usage; general risks associated with the restaurant industry; potential harm to our brands’ reputation; possible future impairment charges; the effects of tax reform; trading volatility and fluctuations in the price of our stock; our ability to achieve the financial guidance we provide to investors; successful implementation of our business strategy; the availability of suitable locations for new restaurants; shortages or interruptions in the supply or delivery of products from third parties or availability of utilities; the management and forecasting of appropriate inventory levels; development and implementation of innovative marketing and use of social media; changing health or dietary preference of consumers; risks associated with doing business in international markets; the results of litigation and other legal proceedings; third-party claims with respect to intellectual property assets; our ability to attract and retain management and other key employees; compliance with federal, state and local governmental regulations; risks associated with our self-insurance; natural disasters, pandemics, epidemics, or other serious incidents; our success with development initiatives outside of our core business; the adequacy of our internal controls over financial reporting and future changes in accounting standards; and other factors discussed from time to time in the Corporation’s Annual and Quarterly Reports on Forms 10-K and 10-Q and in the Corporation’s other filings with the Securities and Exchange Commission. The forward-looking statements contained in this press release are made as of the date hereof and the Corporation does not intend to, nor does it assume any obligation to, update or supplement any forward-looking statements after the date hereof to reflect actual results or future events or circumstances.

Non-GAAP Financial Measures

This press release includes references to the Company's non-GAAP financial measure “adjusted net income available to common stockholders”, “adjusted earnings per diluted share (Adjusted EPS)”, “Adjusted EBITDA” and “Adjusted free cash flow.” Adjusted EPS is computed for a given period by deducting from net income or loss available to common stockholders for such period the effect of any closure and impairment charges, any gain or loss related to debt extinguishment, any intangible asset amortization, any non-cash interest expense, any gain or loss related to the disposition of assets, and other items deemed not reflective of current operations. This is presented on an aggregate basis and a per share (diluted) basis. Adjusted EBITDA is computed for a given period by deducting from net income or loss for such period the effect of any closure and impairment charges, any interest charges, any income tax provision or benefit, any non-cash stock-based compensation, any depreciation and amortization, any gain or loss related to the disposition of assets and other items deemed not reflective of current operations. “Adjusted free cash flow” for a given period is defined as cash provided by operating activities, plus receipts from notes and equipment contracts receivable, less capital expenditures. Management may use certain of these non-GAAP financial measures along with the corresponding U.S. GAAP measures to evaluate the performance of the business and to make certain business decisions. Management uses adjusted free cash flow in its periodic assessments of, among other things, the amount of cash dividends per share of common stock and repurchases of common stock and we believe it is important for investors to have the same measure used by management for that purpose. Adjusted free cash flow does not represent residual cash flow available for discretionary purposes. Additionally, adjusted EPS is one of the metrics used in determining payouts under the Company’s annual cash incentive plan. Management believes that these non-GAAP financial measures provide additional meaningful information that should be considered when assessing the business and the Company’s performance compared to prior periods and the marketplace. Adjusted EPS and adjusted free cash flow are supplemental non-GAAP financial measures and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with U.S. GAAP.

 

Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(In thousands, except per share amounts)

(Unaudited)

 

 

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2021

 

2020

 

2021

 

2020

 

 

 

 

Revenues:

 

 

 

 

Franchise revenues:

 

 

 

 

Royalties, franchise fees and other

$

94,630

 

$

38,781

 

$

174,721

 

$

122,095

 

Advertising revenues

72,324

 

29,095

 

133,209

 

90,818

 

Total franchise revenues

166,954

 

67,876

 

307,930

 

212,913

 

Company restaurant sales

38,194

 

16,774

 

74,143

 

48,074

 

Rental revenues

27,382

 

23,707

 

53,524

 

52,716

 

Financing revenues

1,089

 

1,355

 

2,221

 

2,893

 

Total revenues

233,619

 

109,712

 

437,818

 

316,596

 

Cost of revenues:

 

 

 

 

Franchise expenses:

 

 

 

 

Advertising expenses

72,324

 

29,095

 

133,209

 

90,818

 

Bad debt (credit) expense

(291

)

5,053

 

(2,284

)

5,571

 

Other franchise expenses

7,224

 

2,932

 

13,275

 

10,141

 

Total franchise expenses

79,257

 

37,080

 

144,200

 

106,530

 

Company restaurant expenses

34,759

 

21,139

 

67,643

 

51,471

 

Rental expenses:

 

 

 

 

Interest expense from finance leases

893

 

1,137

 

1,855

 

2,347

 

Other rental expenses

19,718

 

20,106

 

39,714

 

41,429

 

Total rental expenses

20,611

 

21,243

 

41,569

 

43,776

 

Financing expenses

115

 

128

 

243

 

270

 

Total cost of revenues

134,742

 

79,590

 

253,655

 

202,047

 

Gross profit

98,877

 

30,122

 

184,163

 

114,549

 

General and administrative expenses

39,276

 

30,870

 

79,187

 

68,478

 

Interest expense, net

15,739

 

17,127

 

32,235

 

32,299

 

Impairment and closure charges

2,571

 

124,365

 

4,581

 

124,353

 

Amortization of intangible assets

2,663

 

2,755

 

5,351

 

5,581

 

(Gain) loss on disposition of assets

(30

)

1,776

 

137

 

1,543

 

Income before income taxes

38,658

 

(146,771

)

62,672

 

(117,705

)

Income tax (provision) benefit

(9,296

)

11,992

 

(7,707

)

5,254

 

Net income (loss)

$

29,362

 

$

(134,779

)

$

54,965

 

$

(112,451

)

 

Net income (loss) available to common stockholders:

 

 

 

 

Net income (loss)

$

29,362

 

$

(134,779

)

$

54,965

 

$

(112,451

)

Less: Net income allocated to unvested participating restricted stock

(657

)

 

(1,431

)

(420

)

Net income (loss) available to common stockholders

$

28,705

 

$

(134,779

)

$

53,534

 

$

(112,871

)

 

Net income (loss) available to common stockholders per share:

 

 

 

 

Basic

$

1.70

 

$

(8.33

)

$

3.21

 

$

(6.96

)

Diluted

$

1.69

 

$

(8.33

)

$

3.19

 

$

(6.96

)

 

Weighted average shares outstanding:

 

 

 

 

Basic

16,886

 

16,177

 

16,673

 

16,215

 

Diluted

16,977

 

16,177

 

16,802

 

16,215

 

 

 

 

 

 

Dividends declared per common share

$

 

$

 

$

 

$

0.76

 

Dividends paid per common share

$

 

$0.76

 

$

 

$

1.45

 

 

 

 

 

 

Dine Brands Global, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

 

 

 

 

 

 

 

June 30,
2021

 

December 31,
2020

 

 

(Unaudited)

 

 

Assets

 

 

Current assets:

 

 

Cash and cash equivalents

$

259,461

 

$

383,369

 

Receivables, net of allowance of $10,095 (2021) and $15,057 (2020)

99,308

 

121,897

 

Restricted cash

72,137

 

39,884

 

Prepaid gift card costs

21,716

 

29,080

 

Prepaid income taxes

397

 

6,178

 

Other current assets

8,134

 

6,098

 

Total current assets

461,153

 

586,506

 

Other intangible assets, net

544,587

 

549,671

 

Operating lease right-of-use assets

331,826

 

346,086

 

Goodwill

251,628

 

251,628

 

Property and equipment, net

178,571

 

187,977

 

Long-term receivables, net of allowance of $5,503 (2021) and $7,999 (2020)

47,839

 

54,512

 

Deferred rent receivable

53,017

 

56,449

 

Non-current restricted cash

16,400

 

32,800

 

Other non-current assets, net

10,902

 

9,316

 

Total assets

$

1,895,923

 

$

2,074,945

 

Liabilities and Stockholders’ Deficit

 

 

Current liabilities:

 

 

Current maturities of long-term debt

$

3,250

 

$

13,000

 

Accounts payable

40,126

 

37,424

 

Gift card liability

120,842

 

144,159

 

Current maturities of operating lease obligations

70,491

 

69,672

 

Current maturities of finance lease and financing obligations

10,954

 

11,293

 

Accrued employee compensation and benefits

22,785

 

21,237

 

Accrued advertising

52,707

 

21,641

 

Deferred franchise revenue, short-term

7,447

 

7,682

 

Other accrued expenses

16,253

 

22,460

 

Total current liabilities

344,855

 

348,568

 

Long-term debt, net, less current maturities

1,278,504

 

1,491,996

 

Operating lease obligations, less current maturities

325,278

 

345,163

 

Finance lease obligations, less current maturities

64,095

 

69,012

 

Financing obligations, less current maturities

32,393

 

32,797

 

Deferred income taxes, net

67,780

 

78,293

 

Deferred franchise revenue, long-term

47,794

 

52,237

 

Other non-current liabilities

17,975

 

11,530

 

Total liabilities

2,178,674

 

2,429,596

 

Commitments and contingencies

 

 

Stockholders’ deficit:

 

 

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

 

 

Common stock, $0.01 par value; shares: 40,000,000 authorized; June 30, 2021 - 25,011,253 issued, 17,177,950 outstanding; December 31, 2020 - 24,882,122 issued, 16,452,174 outstanding

250

 

249

 

Additional paid-in-capital

250,509

 

257,625

 

Accumulated deficit

(588

)

(55,553

)

Accumulated other comprehensive loss

(57

)

(55

)

Treasury stock, at cost; shares: June 30, 2021 - 7,833,303; December 31, 2020 - 8,429,948

(532,865

)

(556,917

)

Total stockholders’ deficit

(282,751

)

(354,651

)

Total liabilities and stockholders’ deficit

$

1,895,923

 

$

2,074,945

 

 

Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

 

 

Six Months Ended

 

 

June 30,

 

 

2021

 

2020

 

 

 

Cash flows from operating activities:

 

 

Net income (loss)

$

54,965

 

$

(112,451

)

Adjustments to reconcile net income (loss) to cash flows provided by (used in) operating activities:

 

 

Non-cash impairment and closure charges

4,514

 

124,343

 

Depreciation and amortization

19,976

 

21,345

 

Non-cash stock-based compensation expense

5,612

 

6,670

 

Non-cash interest expense

1,427

 

1,318

 

Deferred income taxes

(10,007

)

(10,793

)

Deferred revenue

(4,678

)

(4,840

)

Loss on disposition of assets

137

 

1,543

 

Other

(3,608

)

(252

)

Changes in operating assets and liabilities:

 

 

Accounts receivable, net

4,928

 

(31,039

)

Current income tax receivables and payables

5,315

 

(5,456

)

Gift card receivables and payables

(3,837

)

2,293

 

Other current assets

(2,036

)

(2,503

)

Accounts payable

6,195

 

(903

)

Accrued employee compensation and benefits

1,466

 

(13,336

)

Accrued advertising expenses

31,066

 

13,012

 

Other current liabilities

(5,419

)

532

 

Cash flows provided by (used in) operating activities

106,016

 

(10,517

)

Cash flows from investing activities:

 

 

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

9,703

 

10,772

 

Net additions to property and equipment

(4,064

)

(7,380

)

Proceeds from sale of property and equipment

946

 

456

 

Additions to long-term receivables

 

(1,475

)

Other

(237

)

(276

)

Cash flows provided by investing activities

6,348

 

2,097

 

Cash flows from financing activities:

 

 

Repayment of long-term debt

(6,500

)

 

Borrowing from revolving credit facility

 

220,000

 

Repayment of revolving credit facility

(220,000

)

 

Dividends paid on common stock

 

(23,934

)

Repurchase of common stock

 

(29,853

)

Principal payments on finance lease obligations

(5,244

)

(5,993

)

Proceeds from stock options exercised

22,511

 

20,523

 

Tax payments for restricted stock upon vesting

(1,403

)

(2,129

)

Tax payments for share settlement of restricted stock units

(9,783

)

(178

)

Cash flows (used in) provided by financing activities

(220,419

)

178,436

 

Net change in cash, cash equivalents and restricted cash

(108,055

)

170,016

 

Cash, cash equivalents and restricted cash at beginning of period

456,053

 

172,475

 

Cash, cash equivalents and restricted cash at end of period

$

347,998

 

$

342,491

 

 

Dine Brands Global, Inc. and Subsidiaries
Non-GAAP Financial Measures
(In thousands, except per share amounts)
(Unaudited)

Reconciliation of net income (loss) available to common stockholders to net income (loss) available to common stockholders, as adjusted for the following items: Impairment and closure charges; amortization of intangible assets; non-cash interest expense; gain or loss on disposition of assets; and the combined tax effect of the preceding adjustments, as well as related per share data:

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

Net income (loss) available to common stockholders, as reported

$

28,705

 

$

(134,779

)

$

53,534

 

$

(112,871

)

Impairment and closure charges

2,571

 

124,365

 

4,581

 

124,353

 

Amortization of intangible assets

2,663

 

2,755

 

5,351

 

5,581

 

Non-cash interest expense

715

 

663

 

1,427

 

1,318

 

(Gain) loss on disposition of assets

(30

)

1,776

 

137

 

1,543

 

Net income tax provision for above adjustments

(1,598

)

(9,331

)

(3,104

)

(10,140

)

Net income allocated to unvested participating restricted stock

(97

)

514

 

(219

)

88

 

Net income (loss) available to common stockholders, as adjusted

$

32,929

 

$

(14,037

)

$

61,707

 

$

9,872

 

 

 

 

 

 

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

 

 

 

 

Net income (loss) available to common stockholders per share, as reported

$

1.69

 

$

(8.33

)

$

3.19

 

$

(6.96

)

Impairment and closure charges

0.11

 

7.19

 

0.20

 

7.14

 

Amortization of intangible assets

0.11

 

0.13

 

0.23

 

0.26

 

Non-cash interest expense

0.03

 

0.03

 

0.06

 

0.06

 

(Gain) loss on disposition of assets

(0.00

)

0.08

 

0.01

 

0.07

 

Net income allocated to unvested participating restricted stock

(0.01

)

0.03

 

(0.01

)

0.01

 

Rounding

0.01

 

 

(0.01

)

0.03

 

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

$

1.94

 

$

(0.87

)

$

3.67

 

$

0.61

 

 

 

 

 

 

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

$

32,929

 

$

(14,037

)

$

61,707

 

$

9,872

 

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

3

 

1

 

12

 

 

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

$

32,932

 

$

(14,036

)

$

61,719

 

$

9,872

 

 

 

 

 

 

Denominator for basic EPS - weighted-average shares

16,886

 

16,177

 

16,673

 

16,215

 

Dilutive effect of stock options

91

 

 

129

 

101

 

Denominator for diluted EPS - weighted-average shares

16,977

 

16,177

 

16,802

 

16,316

 

 

Dine Brands Global, Inc. and Subsidiaries
Non-GAAP Financial Measures
(Unaudited)

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

 

Six Months Ended

 

June 30,

 

2021

 

2020

 

(In millions)

Cash flows provided by (used in) operating activities

$

106.0

 

$

(10.5

)

Receipts from notes and equipment contracts receivable

5.4

 

5.5

 

Net additions to property and equipment

(4.1

)

(7.4

)

Adjusted free cash flow

107.3

 

(12.4

)

Dividends paid on common stock

 

(23.9

)

Repurchase of common stock

 

(29.9

)

 

$

107.3

 

$

(66.2

)

 

Dine Brands Global, Inc. and Subsidiaries
Non-GAAP Financial Measures
(in thousands)
(Unaudited)

Reconciliation of the Company's net income (loss) to “adjusted EBITDA.” The Company defines adjusted EBITDA as net income or loss, adjusted for the effect of impairment and closure charges, interest charges, income tax provision or benefit, depreciation and amortization, non-cash stock-based compensation, gain or loss on disposition of assets, other non-income based taxes and other items deemed not reflective of current operations. Management may use certain non-GAAP measures along with the corresponding U.S. GAAP measures to evaluate the performance of the Company and to make certain business decisions.

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

Net income (loss), as reported

$

29,362

 

$

(134,779

)

$

54,965

$

(112,451

)

Impairment and closure charges

2,571

 

124,365

 

4,581

124,353

 

Interest charges on finance leases

1,383

 

1,646

 

2,847

3,369

 

All other interest charges

16,446

 

17,657

 

33,691

33,899

 

Income tax provision (benefit)

9,296

 

(11,992

)

7,707

(5,254

)

Depreciation and amortization

9,972

 

10,695

 

19,959

21,345

 

Non-cash stock-based compensation

2,517

 

2,632

 

5,614

6,670

 

(Gain) loss on disposition of assets

(30

)

1,776

 

137

1,543

 

Other

221

 

86

 

353

304

 

Adjusted EBITDA

$

71,738

 

$

12,086

 

$

129,854

$

73,778

 

 

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

The following table sets forth, for the three and six months ended June 30, 2021 and 2020, the number of “Effective Restaurants” in the Applebee’s and IHOP systems and information regarding the percentage change in sales at those restaurants compared to the same periods in the prior year and, as such, the percentage change in sales at Effective Restaurants is based on non-GAAP sales data. Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company. However, we believe that presentation of this information is useful in analyzing our revenues because franchisees and area licensees pay us royalties and advertising fees that are generally based on a percentage of their sales, and, where applicable, rental payments under leases that partially may be based on a percentage of their sales. Management also uses this information to make decisions about future plans for the development of additional restaurants as well as evaluation of current operations.

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2021

 

2020

 

2021

 

2020

 

 

Applebee's

 

 

 

 

Effective Restaurants(a)

 

 

 

 

Franchise

1,623

 

1,527

 

1,625

 

1,612

 

Company

69

 

67

 

69

 

68

 

Total

1,692

 

1,594

 

1,694

 

1,680

 

 

 

 

 

 

System-wide(b)

 

 

 

 

Domestic sales percentage change(c)

125.3

%

(53.5

)%

43.3

%

(32.5

)%

Domestic same-restaurant sales percentage change(d)

102.2

%

(49.4

)%

46.4

%

(29.1

)%

 

 

 

 

 

Franchise(b)

 

 

 

 

Domestic sales percentage change(c)

125.2

%

(53.6

)%

43.0

%

(32.5

)%

Domestic same-restaurant sales percentage change(d)

102.1

%

(49.4

)%

46.1

%

(29.0

)%

Average weekly domestic unit sales (in thousands)

$

53.8

 

$

25.0

 

$

50.3

 

$

35.2

 

 

IHOP

 

 

 

 

Effective Restaurants(a)

 

 

 

 

Franchise

1,568

 

1,375

 

1,566

 

1,510

 

Area license

155

 

144

 

156

 

153

 

Total

1,723

 

1,519

 

1,722

 

1,663

 

 

 

 

 

 

System-wide(b)

 

 

 

 

Sales percentage change(c)

163.6

%

(64.3

)%

39.2

%

(39.1

)%

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

120.1

%

(59.1

)%

40.7

%

(35.6

)%

 

 

 

 

 

Franchise(b)

 

 

 

 

Sales percentage change(c)

163.1

%

(64.4

)%

38.5

%

(39.2

)%

Domestic same-restaurant sales percentage change(d)

118.2

%

(58.9

)%

39.4

%

(35.4

)%

Average weekly unit sales (in thousands)

$

36.4

 

$

15.8

 

$

32.9

 

$

24.6

 

 

 

 

 

 

Area License (b)

 

 

 

 

Sales percentage change(c)

168.8

%

(63.3

)%

46.7

%

(38.1

)%

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

(a)

“Effective Restaurants” are the weighted average number of restaurants open in a given fiscal period, adjusted to account for restaurants open for only a portion of the period. Information is presented for all Effective Restaurants in the Applebee’s and IHOP systems, which includes restaurants owned by franchisees and area licensees as well as those owned by the Company. 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 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. 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 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, Applebee's company-operated restaurants, IHOP franchise restaurants and IHOP area license restaurants for the three and six months ended June 30, 2021 and 2020 were as follows:

 

Three Months Ended

Six Months Ended

 

June 30,

June 30,

 

2021

2020

2021

2020

 

(In millions)

Reported sales

 

 

 

 

Applebee's domestic franchise restaurant sales

$

1,062.8

$

472.0

$

1,987.5

$

1,390.2

Applebee's company-operated restaurants

38.2

16.8

74.1

48.1

IHOP franchise restaurant sales

742.0

282.1

1,338.8

966.9

IHOP area license restaurant sales

70.9

26.4

132.6

90.4

Total

$

1,913.9

$

797.3

$

3,533.0

$

2,495.6

(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 during 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 during both fiscal periods being compared may be different from period to period.

 

Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

Applebee's Restaurant Development Activity

2021

 

2020

 

2021

 

2020

Summary - beginning of period:

 

 

 

 

Franchise

1,636

 

1,706

 

1,640

 

1,718

 

Company

69

 

69

 

69

 

69

 

Total Applebee's restaurants, beginning of period

1,705

 

1,775

 

1,709

 

1,787

 

 

Franchise restaurants opened:

 

 

 

 

Domestic

 

 

2

 

 

International

1

 

 

1

 

 

Total franchise restaurants opened

1

 

 

3

 

 

Franchise restaurants permanently closed:

 

 

 

 

Domestic

(6

)

(24

)

(10

)

(32

)

International

(4

)

(2

)

(6

)

(6

)

Total franchise restaurants permanently closed

(10

)

(26

)

(16

)

(38

)

Net franchise restaurant reduction

(9

)

(26

)

(13

)

(38

)

 

Summary - end of period:

 

 

 

 

Franchise

1,627

 

1,680

 

1,627

 

1,680

 

Company

69

 

69

 

69

 

69

 

Total Applebee's restaurants, end of period

1,696

 

1,749

 

1,696

 

1,749

 

Domestic

1,590

 

1,633

 

1,590

 

1,633

 

International

106

 

116

 

106

 

116

 

 

IHOP Restaurant Development Activity

 

 

 

 

Summary - beginning of period:

 

 

 

 

Franchise

1,593

 

1,680

 

1,611

 

1,680

 

Area license

156

 

160

 

158

 

161

 

Company

4

 

 

3

 

 

Total IHOP restaurants, beginning of period

1,753

 

1,840

 

1,772

 

1,841

 

 

Franchise/area license restaurants opened:

 

 

 

 

Domestic franchise

7

 

1

 

15

 

7

 

Domestic area license

1

 

 

1

 

1

 

International franchise

1

 

 

1

 

2

 

Total franchise/area license restaurants opened

9

 

1

 

17

 

10

 

Franchise/area license restaurants permanently closed:

 

 

 

 

Domestic franchise

(14

)

(13

)

(30

)

(19

)

Domestic area license

 

(1

)

(2

)

(3

)

International franchise

 

(2

)

(9

)

(4

)

International area license

(1

)

(2

)

(1

)

(2

)

Total franchise/area license restaurants permanently closed

(15

)

(18

)

(42

)

(28

)

Net franchise/area license restaurant reduction

(6

)

(17

)

(25

)

(18

)

Refranchised from Company restaurants

1

 

 

1

 

 

Franchise restaurants reacquired by the Company

 

 

(1

)

 

Net franchise/area license restaurant decrease

(5

)

(17

)

(25

)

(18

)

 

Summary - end of period

 

 

 

 

Franchise

1,588

 

1,666

 

1,588

 

1,666

 

Area license

156

 

157

 

156

 

157

 

Company

3

 

 

3

 

 

Total IHOP restaurants, end of period

1,747

 

1,823

 

1,747

 

1,823

 

Domestic

1,654

 

1,696

 

1,654

 

1,696

 

International

93

 

127

 

93

 

127

 

 

The restaurant counts and activity presented above do not include three domestic Applebee's ghost kitchens (small kitchens with no store-front presence, used to fill off-premise orders) and two international IHOP ghost kitchens.

Contacts

Investor Contact
Ken Diptee
Executive Director, Investor Relations
Dine Brands Global, Inc.
818-637-3632
Ken.Diptee@dinebrands.com

Media Contact
Susan Nelson
Vice President, Global Communications and Public Affairs
Dine Brands Global, Inc.
Susan.Nelson@dinebrands.com

Contacts

Investor Contact
Ken Diptee
Executive Director, Investor Relations
Dine Brands Global, Inc.
818-637-3632
Ken.Diptee@dinebrands.com

Media Contact
Susan Nelson
Vice President, Global Communications and Public Affairs
Dine Brands Global, Inc.
Susan.Nelson@dinebrands.com