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Dine Brands Global, Inc. Reports Fourth Quarter and Fiscal Year 2023 Results

PASADENA, Calif., February 28, 2024--(BUSINESS WIRE)--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 fourth quarter and fiscal year 2023.

"Our solid performance in the fourth quarter concluded a year of significant progress for Dine. We delivered another year of positive comp sales growth at IHOP and Applebee’s and generated year-over-year EBITDA growth while fully integrating Fuzzy’s into our system," said John Peyton, chief executive officer, Dine Brands Global, Inc. "We are further strengthening our recipe for growth in 2024 with our methodical development strategy that will generate sustainable value over the long-term for our shareholders and franchisees."

Vance Chang, chief financial officer, Dine Brands Global, Inc. added, "Our financial performance in the fourth quarter and throughout the course of 2023 has allowed us to strengthen our balance sheet and invest in our business while returning capital to shareholders. In spite of the challenging operating environment, we continued to improve our profitability and exceeded our EBITDA guidance. Overall, Dine remains very well positioned to support its franchisees, navigate near-term headwinds and drive growth over time."

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Domestic Restaurant Sales for the Fourth Quarter of 2023

  • Applebee’s year-over-year comparable same-restaurant sales declined 0.5% for the fourth quarter of 2023. Off-premise sales accounted for 20.8% of sales mix, representing per restaurant average weekly sales of approximately $10,900.

  • IHOP’s year-over-year domestic comparable same-restaurant sales increased 1.6% for the fourth quarter of 2023. Off-premise sales accounted for 20.4% of sales mix, representing per restaurant average weekly sales of approximately $8,000.

Fourth Quarter of 2023 Summary

  • Total revenues for the fourth quarter of 2023 were $206.3 million compared to $208.0 million for the fourth quarter of 2022. The decline was primarily due to the refranchising of the 69 company-operated Applebee’s units in October 2022 and the negative comparable same-restaurant sales growth at Applebee’s, offset by the positive comparable same-restaurants sales growth at IHOP and a full quarter’s revenue contribution from Fuzzy’s acquired in December 2022. Total revenues excluding the refranchised Applebee’s restaurants for the fourth quarter of 2023 were $204.3 million compared to $196.5 million for the fourth quarter of 2022.

  • General and Administrative ("G&A") expenses for the fourth quarter of 2023 were $50.5 million compared to $58.8 million for the fourth quarter of 2022. The variance was primarily attributable to transaction costs related to the acquisition of Fuzzy’s in December 2022, a decrease in compensation-related expenses, the refranchising of the Applebee’s restaurants and lower conference expenses partially offset by the inclusion of Fuzzy’s operations in the fourth quarter of 2023.

  • GAAP net income available to common stockholders was $32.3 million, or earnings per diluted share of $2.14, for the fourth quarter of 2023 compared to net income available to common stockholders of $11.0 million, or earnings per diluted share of $0.72 for the fourth quarter of 2022. The increase was primarily due to an income tax benefit resulting from the conclusion of a state income tax audit settlement, a decrease in G&A expenses and a decrease in weighted-average diluted shares as a result of share repurchases.

  • Adjusted net income available to common stockholders was $21.1 million, or adjusted earnings per diluted share of $1.40, for the fourth quarter of 2023 compared to adjusted net income available to common stockholders of $20.6 million, or adjusted earnings per diluted share of $1.34, for the fourth quarter of 2022. The increase was primarily due to an increase in segment profit, a decrease in G&A expenses and a decrease in weighted-average diluted shares as a result of share repurchases offset by higher interest expense and income taxes. (See "Non-GAAP Financial Measures" and reconciliation of GAAP net income available to common stockholders to adjusted net income available to common stockholders.)

  • Consolidated adjusted EBITDA for the fourth quarter of 2023 was $62.2 million compared to $57.0 million for the fourth quarter of 2022. (See "Non-GAAP Financial Measures" and reconciliation of GAAP net income to consolidated adjusted EBITDA.)

  • Development activity by Applebee’s and IHOP franchisees for the fourth quarter of 2023 resulted in 24 new restaurant openings and the closure of 14 restaurants.

2023 Summary

  • Total 2023 revenues were $831.1 million compared to $909.4 million for the prior year. The decline was primarily due to the refranchising of the 69 company-operated Applebee’s units in October 2022, offset by the positive comparable same-restaurants sales growth at IHOP and Applebee’s. Total revenues excluding the refranchised Applebee’s restaurants for 2023 were $822.7 million compared to $780.7 million for the prior year.

  • G&A expenses for 2023 were $198.1 million compared to $190.7 million for 2022. The variance was primarily due to costs resulting from the inclusion of Fuzzy’s operations acquired in December 2022, the stopping of the IHOP Flip’d initiative and increases in professional services, compensation-related and software maintenance costs, partially offset by the decreases due to the refranchised Applebee’s restaurants and the transaction costs related to the Fuzzy’s acquisition in 2022.

  • GAAP net income available to common stockholders was $94.9 million, or earnings per diluted share of $6.22, for 2023 compared to net income available to common stockholders of $78.9 million, or earnings per diluted share of $4.96 for 2022. The increase was primarily due to an increase in segment profit, an income tax benefit resulting from the conclusion of a state income tax audit settlement and a decrease in weighted-average diluted shares as a result of share repurchases offset by an increase in interest expense and an increase in G&A expenses.

  • Adjusted net income available to common stockholders was $101.4 million, or adjusted earnings per diluted share of $6.65, for 2023 compared to adjusted net income available to common stockholders of $98.5 million, or adjusted earnings per diluted share of $6.20, for 2022. The increase was primarily due to an increase in segment profit and a decrease in weighted-average diluted shares as a result of shares repurchases offset by higher G&A expenses and interest expense. (See "Non-GAAP Financial Measures" and reconciliation of GAAP net income available to common stockholders to adjusted net income available to common stockholders.)

  • Consolidated adjusted 2023 EBITDA was $256.4 million compared to $251.9 million for 2022. (See "Non-GAAP Financial Measures" and reconciliation of GAAP net income to consolidated adjusted EBITDA.)

  • Cash flows provided by operating activities for 2023 were $131.1 million. This compares to cash provided by operating activities of $89.3 million for 2022. The increase was primarily due to a favorable change in working capital and an increase in segment profit.

  • The Company had adjusted free cash flow of $103.3 million for 2023. This compares to adjusted free cash flow of $64.6 million for 2022. (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 for 2023 resulted in 72 new restaurant openings and the closure of 75 restaurants.

Key Balance Sheet Metrics (as of December 31, 2023)

  • Total cash, cash equivalents and restricted cash of approximately $200.6 million, of which approximately $146.0 million was unrestricted cash.

  • Leverage ratio of approximately 4.2x compared with approximately 4.6x as of September 30, 2023.

  • Available borrowing capacity under the Variable Funding Senior Secured Notes is over $220 million.

GAAP Effective Tax Rate

The fiscal year 2023 effective tax rate of 13.0% applied to pretax book income was different than the statutory Federal income tax rate of 21% primarily due to the conclusion of a state income tax audit settlement, resulting in an income tax benefit of $15.1 million.

Capital Returns to Equity Holders

During the fourth quarter of 2023, the Company repurchased approximately $6 million of its common stock. In 2023, the Company repurchased approximately $26 million of its common stock.

On February 26, 2024, the Company announced that its Board of Directors declared and approved a quarterly cash dividend of $0.51 per share of common stock. The dividend will be paid on April 5, 2024, to the Company’s stockholders of record at the close of business on March 20, 2024.

Financial Performance Guidance for 2024

The Company introduced its fiscal 2024 guidance items:

  • Applebee’s domestic system-wide comparable same-restaurant sales performance is expected to range between 0% and 2%.

  • IHOP’s domestic system-wide comparable same-restaurant sales performance is expected to range between 1% and 3%.

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

  • Domestic development activity by IHOP franchisees and area licensees is expected to be between 15 and 25 net new openings.

  • Consolidated adjusted EBITDA is expected to range between approximately $255 million and $265 million.

  • G&A expenses are expected to range between approximately $200 million and $210 million. This total includes non-cash stock-based compensation expense and depreciation of approximately $35 million.

  • Gross capital expenditures are expected to range between approximately $15 million and $20 million.

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.

Fourth Quarter of 2023 Earnings Conference Call Details

Dine Brands will host a conference call to discuss its results on February 28, 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.

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 December 31, 2023, these three brands consisted of over 3,500 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.

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, any charges related to stopping the IHOP Flip’d initiative, 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. Additionally, the Company has provided total revenues excluding the refranchised Applebee’s restaurants for the three and twelve months ended December 31, 2023 and for the comparative prior year periods. 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. Total revenues excluding the refranchised Applebee’s restaurants is helpful for Management to evaluate the performance of franchised restaurants over comparative periods. 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

 

Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31,

 

December 31,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenues:

 

 

 

 

 

 

Franchise revenues:

 

 

 

 

 

 

 

 

Royalties, franchise fees and other

 

$

101,571

 

 

$

95,398

 

 

$

405,569

 

 

$

373,110

 

Advertising revenues

 

 

74,395

 

 

 

72,642

 

 

 

300,796

 

 

 

289,328

 

Total franchise revenues

 

 

175,966

 

 

 

168,040

 

 

 

706,365

 

 

 

662,438

 

Company restaurant sales

 

 

289

 

 

 

9,694

 

 

 

2,128

 

 

 

126,869

 

Rental revenues

 

 

29,451

 

 

 

29,411

 

 

 

119,970

 

 

 

116,491

 

Financing revenues

 

 

596

 

 

 

820

 

 

 

2,605

 

 

 

3,604

 

Total revenues

 

 

206,302

 

 

 

207,965

 

 

 

831,068

 

 

 

909,402

 

Cost of revenues:

 

 

 

 

 

 

 

 

Franchise expenses:

 

 

 

 

 

 

 

 

Advertising expenses

 

 

74,561

 

 

 

70,377

 

 

 

300,962

 

 

 

287,063

 

Bad debt expense

 

 

66

 

 

 

784

 

 

 

2,659

 

 

 

261

 

Other franchise expenses

 

 

10,992

 

 

 

10,182

 

 

 

40,782

 

 

 

34,584

 

Total franchise expenses

 

 

85,619

 

 

 

81,343

 

 

 

344,403

 

 

 

321,908

 

Company restaurant expenses

 

 

303

 

 

 

9,920

 

 

 

2,136

 

 

 

121,722

 

Rental expenses:

 

 

 

 

 

 

 

 

Interest expense from finance leases

 

 

699

 

 

 

708

 

 

 

2,771

 

 

 

2,962

 

Other rental expenses

 

 

21,167

 

 

 

21,313

 

 

 

84,705

 

 

 

85,033

 

Total rental expenses

 

 

21,866

 

 

 

22,021

 

 

 

87,476

 

 

 

87,995

 

Financing expenses

 

 

86

 

 

 

102

 

 

 

369

 

 

 

419

 

Total cost of revenues

 

 

107,874

 

 

 

113,386

 

 

 

434,384

 

 

 

532,044

 

Gross profit

 

 

98,428

 

 

 

94,579

 

 

 

396,684

 

 

 

377,358

 

General and administrative expenses

 

 

50,512

 

 

 

58,800

 

 

 

198,057

 

 

 

190,746

 

Interest expense, net

 

 

18,498

 

 

 

14,760

 

 

 

70,047

 

 

 

60,952

 

Closure and impairment charges

 

 

506

 

 

 

(31

)

 

 

3,594

 

 

 

3,062

 

Amortization of intangible assets

 

 

2,721

 

 

 

2,565

 

 

 

10,923

 

 

 

10,559

 

(Gain) loss on extinguishment of debt

 

 

 

 

 

(1,371

)

 

 

10

 

 

 

(210

)

Loss (gain) on disposition of assets

 

 

41

 

 

 

496

 

 

 

2,350

 

 

 

(2,536

)

Income before income taxes

 

 

26,150

 

 

 

19,360

 

 

 

111,703

 

 

 

114,785

 

Income tax (provision) benefit

 

 

6,889

 

 

 

(8,009

)

 

 

(14,527

)

 

 

(33,674

)

Net income

 

 

33,039

 

 

 

11,351

 

 

 

97,176

 

 

 

81,111

 

Other comprehensive income, net of tax:

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

3

 

 

 

3

 

 

 

1

 

 

 

(6

)

Total comprehensive income

 

$

33,042

 

 

$

11,354

 

 

$

97,177

 

 

$

81,105

 

Net income available to common stockholders:

 

 

 

 

 

 

 

 

Net income

 

$

33,039

 

 

$

11,351

 

 

$

97,176

 

 

$

81,111

 

Less: Net income allocated to unvested participating restricted stock

 

 

(751

)

 

 

(311

)

 

 

(2,317

)

 

 

(2,174

)

Net income available to common stockholders

 

$

32,288

 

 

$

11,040

 

 

$

94,859

 

 

$

78,937

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders per share:

 

 

 

 

 

 

 

 

Basic

 

$

2.14

 

 

$

0.72

 

 

$

6.23

 

 

$

4.97

 

Diluted

 

$

2.14

 

 

$

0.72

 

 

$

6.22

 

 

$

4.96

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

15,106

 

 

 

15,344

 

 

 

15,233

 

 

 

15,873

 

Diluted

 

 

15,106

 

 

 

15,370

 

 

 

15,242

 

 

 

15,901

 

 

Dine Brands Global, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share amounts) (Unaudited)

 

 

 

 

December 31,

 

December 31,

Assets

 

2023

 

 

 

2022

 

 

(Unaudited)

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

146,034

 

 

$

269,655

 

Receivables, net of allowance of $4,462 (2023) and $4,806 (2022)

 

127,937

 

 

 

119,981

 

Restricted cash

 

35,058

 

 

 

38,929

 

Prepaid gift card costs

 

29,545

 

 

 

30,235

 

Prepaid income taxes

 

3,445

 

 

 

3,063

 

Other current assets

 

15,759

 

 

 

17,901

 

Total current assets

 

357,778

 

 

 

479,764

 

Other intangible assets, net

 

586,033

 

 

 

597,028

 

Operating lease right-of-use assets

 

275,214

 

 

 

289,123

 

Goodwill

 

254,062

 

 

 

253,956

 

Property and equipment, net

 

161,891

 

 

 

145,277

 

Long-term receivables, net of allowance of $5,002 (2023) and $5,529 (2022)

 

35,602

 

 

 

39,697

 

Deferred rent receivable

 

33,326

 

 

 

42,329

 

Non-current restricted cash

 

19,500

 

 

 

16,400

 

Other non-current assets, net

 

16,881

 

 

 

17,917

 

Total assets

$

1,740,287

 

 

$

1,881,491

 

 

 

 

 

Liabilities and Stockholders' Deficit

 

 

 

Current liabilities:

 

 

 

Current maturities of long-term debt

$

100,000

 

 

$

100,000

 

Accounts payable

 

36,193

 

 

 

52,067

 

Gift card liability

 

175,640

 

 

 

171,966

 

Current maturities of operating lease obligations

 

63,498

 

 

 

59,071

 

Current maturities of finance lease and financing obligations

 

7,243

 

 

 

7,542

 

Accrued employee compensation and benefits

 

23,211

 

 

 

23,456

 

Accrued advertising expenses

 

9,446

 

 

 

24,157

 

Dividends payable

 

7,827

 

 

 

8,017

 

Other accrued expenses

 

37,394

 

 

 

24,446

 

Total current liabilities

 

460,452

 

 

 

470,722

 

Long-term debt, net, less current maturities

 

1,084,502

 

 

 

1,241,914

 

Operating lease obligations, less current maturities

 

269,097

 

 

 

275,120

 

Finance lease obligations, less current maturities

 

34,389

 

 

 

30,377

 

Financing obligations, less current maturities

 

26,984

 

 

 

28,358

 

Deferred income taxes, net

 

60,829

 

 

 

74,651

 

Deferred franchise revenue, long-term

 

38,658

 

 

 

42,343

 

Other non-current liabilities

 

16,350

 

 

 

19,090

 

Total liabilities

 

1,991,261

 

 

 

2,182,575

 

Commitments and contingencies

 

 

 

Stockholders' deficit:

 

 

 

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

 

 

 

 

 

Common stock, $0.01 par value; shares: 40,000,000 authorized; 2023 -24,870,529 issued, 15,344,768 outstanding; 2022 - 24,959,972 issued, 15,599,239 outstanding

 

249

 

 

 

250

 

Additional paid-in-capital

 

256,542

 

 

 

259,339

 

Retained earnings

 

150,008

 

 

 

84,538

 

Accumulated other comprehensive loss

 

(64

)

 

 

(65

)

Treasury stock, at cost; shares: 2023 - 9,525,761; 2022 - 9,360,733

 

(657,709

)

 

 

(645,146

)

Total stockholders' deficit

 

(250,974

)

 

 

(301,084

)

Total liabilities and stockholders' deficit

$

1,740,287

 

 

$

1,881,491

 

 

Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands) (Unaudited)

 

 

Twelve Months Ended

 

 

December 31,

 

 

 

2023

 

 

 

2022

 

Cash flows from operating activities

 

 

 

 

Net income

 

$

97,176

 

 

$

81,111

 

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

 

 

 

 

Depreciation and amortization

 

 

35,630

 

 

 

37,952

 

Non-cash stock-based compensation expense

 

 

11,990

 

 

 

16,131

 

Non-cash closure and impairment charges

 

 

3,594

 

 

 

2,927

 

Non-cash interest expense

 

 

3,505

 

 

 

3,226

 

Deferred income taxes

 

 

(13,822

)

 

 

(1,071

)

Deferred revenue

 

 

(4,224

)

 

 

(4,474

)

Loss (gain) on extinguishment of debt

 

 

10

 

 

 

(210

)

Loss (gain) on disposition of assets

 

 

2,359

 

 

 

(2,536

)

Other

 

 

(3,552

)

 

 

(5,160

)

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable, net

 

 

1,913

 

 

 

(2,574

)

Deferred rent receivable

 

 

9,003

 

 

 

7,928

 

Current income tax receivables and payables

 

 

1,160

 

 

 

8,326

 

Operating lease assets and liabilities

 

 

7,256

 

 

 

(11,823

)

Gift card receivables and payables

 

 

5,095

 

 

 

2,783

 

Other current assets

 

 

1,911

 

 

 

(12,706

)

Accounts payable

 

 

(16,027

)

 

 

(3,665

)

Accrued employee compensation and benefits

 

 

(1,748

)

 

 

(16,264

)

Accrued advertising expenses

 

 

(14,711

)

 

 

(10,020

)

Other current liabilities

 

 

4,622

 

 

 

(545

)

Cash flows provided by operating activities

 

 

131,140

 

 

 

89,336

 

Cash flows from investing activities

 

 

 

 

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

 

 

9,319

 

 

 

17,057

 

Net additions to property and equipment

 

 

(37,172

)

 

 

(35,318

)

Proceeds from sale of property and equipment

 

 

10

 

 

 

17,028

 

Additions to long-term receivables

 

 

(1,069

)

 

 

(1,069

)

Acquisition of business, net of cash acquired

 

 

(101

)

 

 

(78,264

)

Other

 

 

(1,084

)

 

 

(338

)

Cash flows used in investing activities

 

 

(30,097

)

 

 

(80,904

)

Cash flows from financing activities

 

 

 

 

Proceeds from issuance of long-term debt, including revolving line of credit

 

 

530,000

 

 

 

100,000

 

Repayment of long-term debt

 

 

(651,713

)

 

 

(38,768

)

Repayments of revolving credit facility

 

 

(30,000

)

 

 

 

Payment of debt issuance costs

 

 

(8,044

)

 

 

(6,289

)

Dividends paid on common stock

 

 

(31,715

)

 

 

(30,765

)

Repurchase of common stock

 

 

(26,130

)

 

 

(120,452

)

Principal payments of finance lease and financing obligations

 

 

(6,431

)

 

 

(8,946

)

Proceeds from stock options exercised

 

 

3,812

 

 

 

241

 

Repurchase of restricted stock for tax payments upon vesting

 

 

(4,355

)

 

 

(2,867

)

Tax payments for share settlement of restricted stock units

 

 

(859

)

 

 

(955

)

Cash flows used in financing activities

 

 

(225,435

)

 

 

(108,801

)

Net change in cash, cash equivalents and restricted cash

 

 

(124,392

)

 

 

(100,369

)

Cash, cash equivalents and restricted cash at beginning of year

 

 

324,984

 

 

 

425,353

 

Cash, cash equivalents and restricted cash at end of year

 

$

200,592

 

 

$

324,984

 

Supplemental disclosures

 

 

 

 

Interest paid

 

$

73,976

 

 

$

64,599

 

Income taxes paid

 

$

28,409

 

 

$

28,085

 

Non-cash conversion of accounts receivable to notes receivable

 

$

1,367

 

 

$

84

 

Non-cash balance sheet gross-up of receivables and other accrued expenses

 

$

(11,000

)

 

$

 

 

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; gain or loss on disposition of assets; gain or loss on extinguishment of debt; acquisition costs; charges related to stopping the IHOP Flip'd initiative; other EBITDA adjustments; the combined tax effect of the preceding adjustments; and income tax adjustments related to the tax impact from a state settlement (2023) and from the Mid-Atlantic sale (2022), as well as related per share data:

 

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

 

2023

 

 

2022

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Net income available to common stockholders, as reported

 

$

32,288

 

$

11,040

 

 

$

94,859

 

$

78,937

 

Closure and impairment charges

 

 

506

 

 

(31

)

 

 

3,594

 

 

3,062

 

Amortization of intangible assets

 

 

2,722

 

 

2,565

 

 

 

10,924

 

 

10,559

 

Noncash interest expense

 

 

791

 

 

1,016

 

 

 

3,505

 

 

3,226

 

Loss (gain) on disposition of assets

 

 

41

 

 

496

 

 

 

2,350

 

 

(2,536

)

(Gain) loss on extinguishment of debt

 

 

 

 

(1,371

)

 

 

10

 

 

(210

)

Acquisition costs

 

 

 

 

5,052

 

 

 

804

 

 

6,027

 

IHOP Flip'd initiative

 

 

 

 

 

 

 

5,121

 

 

 

Other EBITDA adjustments

 

 

863

 

 

1,755

 

 

 

3,095

 

 

3,268

 

Net income tax provision for above adjustments

 

 

(1,280

)

 

(2,465

)

 

 

(7,645

)

 

(6,083

)

Income tax adjustments

 

 

(15,063

)

 

2,833

 

 

 

(15,063

)

 

2,833

 

Net income allocated to unvested participating restricted stock

 

 

257

 

 

(272

)

 

 

(159

)

 

(538

)

Net income available to common stockholders, as adjusted

 

$

21,125

 

$

20,618

 

 

$

101,395

 

$

98,545

 

 

 

 

 

 

 

 

Diluted net income available to common stockholders per share:

 

 

 

 

 

 

Net income available to common stockholders

 

$

2.14

 

$

0.72

 

 

$

6.22

 

$

4.96

 

Closure and other impairment charges

 

 

0.02

 

 

(0.00

)

 

 

0.17

 

 

0.14

 

Amortization of intangible assets

 

 

0.13

 

 

0.12

 

 

 

0.53

 

 

0.49

 

Non-cash interest expense

 

 

0.04

 

 

0.05

 

 

 

0.17

 

 

0.15

 

Loss (gain) on disposition of assets

 

 

0.00

 

 

0.02

 

 

 

0.11

 

 

(0.12

)

(Gain) loss on extinguishment of debt

 

 

 

 

(0.07

)

 

 

0.00

 

 

(0.01

)

Merger and acquisition costs

 

 

 

 

0.24

 

 

 

0.04

 

 

0.28

 

IHOP Flip'd initiative

 

 

 

 

 

 

 

0.25

 

 

 

Other EBITDA adjustments

 

 

0.04

 

 

0.08

 

 

 

0.15

 

 

0.15

 

Net income tax provision for above adjustments

 

 

(1.00

)

 

0.18

 

 

 

(0.99

)

 

0.18

 

Net income allocated to unvested participating restricted stock

 

 

0.02

 

 

(0.02

)

 

 

(0.01

)

 

(0.03

)

Rounding

 

 

0.01

 

 

0.02

 

 

 

0.01

 

 

0.01

 

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

 

$

1.40

 

$

1.34

 

 

$

6.65

 

$

6.20

 

 

 

 

 

 

 

 

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

 

$

21,125

 

$

20,618

 

 

$

101,395

 

$

98,545

 

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

 

 

1

 

 

 

 

 

 

 

1

 

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

 

$

21,126

 

$

20,618

 

 

$

101,395

 

$

98,546

 

 

 

 

 

 

 

 

Denominator for basic EPS - weighted-average shares

 

 

15,106

 

 

15,344

 

 

 

15,233

 

 

15,873

 

Dilutive effect of stock options

 

 

 

 

26

 

 

 

9

 

 

28

 

Denominator for diluted EPS - weighted-average shares

 

 

15,106

 

 

15,370

 

 

 

15,242

 

 

15,901

 

 

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.

 

 

Twelve Months Ended December 31,

 

 

2023

 

 

 

2022

 

 

(In thousands)

Cash flows provided by operating activities

$

131,140

 

 

$

89,336

 

Principal receipts from notes and equipment contracts

 

9,319

 

 

 

10,615

 

Net additions to property and equipment

 

(37,172

)

 

 

(35,318

)

Adjusted free cash flow

 

103,287

 

 

 

64,633

 

(Repayment) issuance of long-term debt, net

 

(151,713

)

 

 

61,232

 

Dividends paid on common stock

 

(31,715

)

 

 

(30,765

)

Repurchase of common stock

 

(26,130

)

 

 

(120,452

)

 

$

(106,271

)

 

$

(25,352

)

 

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, gain or 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 December 31,

 

Twelve Months Ended December 31,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

Net income, as reported

 

$

33,039

 

 

$

11,351

 

 

$

97,176

 

$

81,111

 

Interest charges on finance leases

 

 

699

 

 

 

849

 

 

 

2,771

 

 

4,519

 

All other interest charges

 

 

20,664

 

 

 

17,813

 

 

 

79,336

 

 

67,713

 

Income tax (benefit) provision

 

 

(6,889

)

 

 

8,009

 

 

 

14,527

 

 

33,674

 

Depreciation and amortization

 

 

9,408

 

 

 

9,073

 

 

 

35,630

 

 

37,918

 

Non-cash stock-based compensation

 

 

3,823

 

 

 

4,003

 

 

 

11,990

 

 

16,131

 

Closure and impairment charges

 

 

506

 

 

 

(31

)

 

 

3,594

 

 

3,062

 

(Gain) loss on extinguishment of debt

 

 

 

 

 

(1,371

)

 

 

10

 

 

(210

)

Loss (gain) on disposition of assets

 

 

41

 

 

 

496

 

 

 

2,350

 

 

(2,536

)

Merger and acquisition costs

 

 

 

 

 

5,052

 

 

 

804

 

 

6,027

 

IHOP Flip'd initiative

 

 

 

 

 

 

 

 

5,121

 

 

 

Other

 

 

864

 

 

 

1,756

 

 

 

3,095

 

 

4,463

 

Adjusted EBITDA

 

$

62,155

 

 

$

57,000

 

 

$

256,404

 

$

251,872

 

 

Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

 

The following table sets forth, for the three and twelve months ended December 31, 2023 and 2022, 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 December 31,

 

Twelve Months Ended December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Applebee's Restaurant Data

(Unaudited)

Global Effective Restaurants(a)

 

 

 

 

 

 

 

Franchise

 

1,646

 

 

 

1,657

 

 

 

1,659

 

 

 

1,617

 

Company

 

 

 

 

16

 

 

 

 

 

 

56

 

Total

 

1,646

 

 

 

1,673

 

 

 

1,659

 

 

 

1,673

 

System-wide(b)

 

 

 

 

 

 

 

Domestic sales percentage change(c)

(1.5

)%

 

1.0

%

 

(0.1

)%

4.7

%

Domestic same-restaurant sales percentage change(d)

 

(0.5

)%

 

 

1.7

%

 

 

0.6

%

 

 

5.1

%

Franchise(b)

 

 

 

 

 

 

 

Domestic sales percentage change(c)

 

(0.6

)%

 

 

3.7

%

 

 

2.9

%

 

 

5.3

%

Domestic same-restaurant sales percentage change(d)

 

(0.5

)%

 

 

1.7

%

 

 

0.6

%

 

 

5.1

%

Average weekly domestic unit sales (in thousands)

$

52.6

 

 

$

52.5

 

 

$

54.0

 

 

$

53.7

 

 

 

 

 

 

 

 

 

IHOP Restaurant Data

 

 

 

 

 

 

 

Global Effective Restaurants(a)

 

 

 

 

 

 

 

Franchise

 

1,639

 

 

 

1,610

 

 

 

1,629

 

 

 

1,597

 

Area license

 

157

 

 

 

156

 

 

 

156

 

 

 

156

 

Total

 

1,796

 

 

 

1,766

 

 

 

1,785

 

 

 

1,753

 

System-wide(b)

 

 

 

 

 

 

 

Sales percentage change(c)

 

4.2

%

 

 

3.9

%

 

 

6.0

%

 

 

7.7

%

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

 

1.6

%

 

 

2.0

%

 

 

3.5

%

 

 

5.8

%

Franchise(b)

 

 

 

 

 

 

 

Sales percentage change(c)

 

4.1

%

 

 

3.7

%

 

 

6.1

%

 

 

7.7

%

Domestic same-restaurant sales percentage change(d)

 

1.7

%

 

 

1.6

%

 

 

3.6

%

 

 

5.7

%

Average weekly unit sales (in thousands)

$

39.1

 

 

$

38.2

 

 

$

38.5

 

 

$

37.0

 

Area License(b)

 

 

 

 

 

 

 

Sales percentage change(c)

 

5.2

%

 

 

6.5

%

 

 

4.3

%

 

 

7.9

%

_________________________________

(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 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 Applebee'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 domestic franchise restaurants, Applebee's company-operated restaurants, IHOP franchise restaurants and IHOP area license restaurants were as follows:

 

Three Months Ended December 31,

Twelve Months Ended December 31,

 

2023

 

2022

2023

 

2022

Reported sales (in millions)

(Unaudited)

Applebee's domestic franchise restaurant sales

$

1,052.7

 

$

1,059.1

$

4,356.6

 

$

4,235.3

Applebee's company-operated restaurants

 

 

 

9.5

 

 

 

126.7

IHOP franchise restaurant sales

 

832.4

 

 

799.7

 

3,258.3

 

 

3,070.0

IHOP area license restaurant sales

 

77.2

 

 

73.4

 

305.3

 

 

292.7

Total

$

1,962.3

 

$

1,941.7

$

7,920.2

 

$

7,724.7

(c)

 

"Sales percentage change" reflects, for each category of restaurants, the percentage change in sales in any given fiscal period compared to the prior fiscal period for all restaurants in that category.

(d)

 

"Domestic same-restaurant sales percentage change" reflects the percentage change in sales in any given fiscal period, compared to the same weeks in the prior 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.

 

Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

 

Restaurant Development Activity

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2023

 

2022

 

2023

 

2022

Applebee's

(Unaudited)

Summary - beginning of period:

 

 

 

 

 

 

Franchise

1,652

 

 

1,601

 

1,678

 

 

1,611

 

Company

 

 

69

 

 

 

69

 

Beginning of period

1,652

 

 

1,670

 

1,678

 

 

1,680

 

 

 

 

 

 

 

 

Franchise restaurants opened:

 

 

 

 

 

 

Domestic

 

 

2

 

3

 

 

4

 

International

2

 

 

11

 

7

 

 

12

 

Total franchise restaurants opened

2

 

 

13

 

10

 

 

16

 

Franchise restaurants permanently closed:

 

 

 

 

 

 

Domestic

(8

)

 

(4

)

(36

)

 

(13

)

International

(4

)

 

(1

)

(10

)

 

(5

)

Total franchise restaurants permanently closed

(12

)

 

(5

)

(46

)

 

(18

)

Net franchise restaurant development (reduction)

(10

)

 

8

 

(36

)

 

(2

)

Refranchised from Company restaurants

 

 

69

 

 

 

69

 

Net franchise restaurant additions (reductions)

(10

)

 

77

 

(36

)

 

67

 

 

 

 

 

 

 

 

Summary - end of period:

 

 

 

 

 

 

Franchise

1,642

 

 

1,678

 

1,642

 

 

1,678

 

Company

 

 

 

 

 

 

Total Applebee's restaurants, end of period

1,642

 

 

1,678

 

1,642

 

 

1,678

 

Domestic

1,536

 

 

1,569

 

1,536

 

 

1,569

 

International

106

 

 

109

 

106

 

 

109

 

IHOP

 

 

 

 

 

 

Summary - beginning of period:

 

 

 

 

 

 

Franchise

1,638

 

 

1,610

 

1,625

 

 

1,595

 

Area license

156

 

 

156

 

156

 

 

156

 

Total IHOP restaurants, beginning of period

1,794

 

 

1,766

 

1,781

 

 

1,751

 

 

 

 

 

 

 

 

Franchise/area license restaurants opened:

 

 

 

 

 

 

Domestic franchise

16

 

 

14

 

43

 

 

34

 

Domestic area license

1

 

 

1

 

3

 

 

3

 

International franchise

5

 

 

4

 

16

 

 

14

 

Total franchise/area license restaurants opened

22

 

 

19

 

62

 

 

51

 

Franchise/area license restaurants permanently closed:

 

 

 

 

 

 

Domestic franchise

(2

)

 

(2

)

(25

)

 

(14

)

Domestic area license

 

 

(1

)

(2

)

 

(3

)

International franchise

 

 

(1

)

(2

)

 

(4

)

Total franchise/area license restaurants permanently closed

(2

)

 

(4

)

(29

)

 

(21

)

Net franchise/area license restaurant additions

20

 

 

15

 

33

 

 

30

 

Net increase in franchise/area license restaurants

20

 

 

15

 

33

 

 

30

 

 

 

 

 

 

 

 

Summary - end of period:

 

 

 

 

 

 

Franchise

1,657

 

 

1,625

 

1,657

 

 

1,625

 

Area license

157

 

 

156

 

157

 

 

156

 

Total IHOP restaurants, end of period

1,814

 

 

1,781

 

1,814

 

 

1,781

 

Domestic

1,696

 

 

1,677

 

1,696

 

 

1,677

 

International

118

 

 

104

 

118

 

 

104

 

As of December 31, 2023, 44 franchise groups operated 131 Fuzzy's restaurants in 18 states within the United States and we had one company-owned restaurant in Texas, totaling 132 restaurants. Fuzzy's average weekly sales for the three and twelve months ended December 31, 2023 were $27,406 and $30,547, respectively.

The restaurant counts and activity presented above do not include one domestic Applebee's ghost kitchen (small kitchens with no store-front presence, used to fill off-premise orders), 10 international Applebee's ghost kitchens and 33 international IHOP ghost kitchens at December 31, 2023. There were seven domestic and 15 international Applebee's ghost kitchens and 42 international IHOP ghost kitchens at December 31, 2022.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240228165969/en/

Contacts

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.
Susan.Nelson@dinebrands.com