Robust Off-Premise Growth Continued
Cash Position Remains Strong
98% of Domestic Restaurants Open
Dine Brands Global, Inc. (NYSE: DIN), the parent company of
Applebee's Neighborhood Grill + Bar® and IHOP® restaurants, today
announced financial results for the fourth quarter and fiscal
2020.
“Dine Brands enters 2021 positioned for improved sales and
robust off-premise growth. In the face of the unprecedented
environment resulting from the pandemic, our franchisees, team
members and restaurant teams rose to the challenge. Operationally,
the collective system implemented heightened cleanliness standards
to enhance the safety and well-being of our teams and guests, for
both dine-in and off-premise occasions. In 2020, Dine moved swiftly
to right size our business and brands in response to the
precipitous decline in revenue by reducing costs, strengthening our
balance sheet, and lowering capital spending. While the current
environment remains challenging, we believe our financial condition
is strong and we look ahead to the rest of 2021 with optimism,”
said John Peyton, chief executive officer of Dine Brands Global,
Inc.
Mr. Peyton added, “I’m proud to be here and I’ve joined an
outstanding team made up of an exceptionally talented group of
leaders, franchisees and team members. Dine is a well-positioned
company with a strong portfolio of brands. We’re confident we have
the right plans in place to drive long-term growth for all
stakeholders.”
Allison Hall, interim chief financial officer and vice
president, controller, added, “Our fourth quarter results are
evidence our brands remain effectively positioned to win in an
off-premise environment and that our business model is positioned
for solid growth once we emerge from the pandemic. Off-premise
comparable sales at both Applebee’s and IHOP increased
significantly primarily due to the resurgence of COVID-19 cases
nationwide and the related reinstatement of federal, state and
local level governmental restrictions on dine-in service as well as
a shift in consumer behavior. With iconic category-leading brands,
Dine is well positioned for future growth for years to come.”
Domestic System-Wide Comparable Same-Restaurant Sales
Performance
Domestic Same-Restaurant Sales Preliminary Sales
Q4 2020 Q1 2021 QTD through WE 2/21 Applebee's
(17.6%)
(18.1%)
IHOP
(30.1%)
(27.2%)
Domestic Same-Restaurant Sales (Week Ending) WE 10/4
WE 10/11 WE 10/18 WE 10/25 WE 11/1
WE 11/8 WE 11/15 WE 11/22 WE 11/29
WE 12/6 WE 12/13 WE 12/20 WE 12/27
WE 1/03 Applebee's
(1.6%)
(1.4%)
(1.9%)
(2.5%)
(11.7%)
(12.3%)
(14.5%)
(21.8%)
(29.3%)
(26.7%)
(26.8%)
(31.1%)
(36.5%)
(27.3%)
IHOP
(24.3%)
(26.3%)
(23.5%)
(21.4%)
(21.1%)
(23.3%)
(24.8%)
(30.4%)
(38.5%)
(32.8%)
(36.4%)
(38.9%)
(40.6%)
(33.8%)
Domestic Same-Restaurant Sales (Week Ending) Preliminary
January Sales Preliminary February Sales WE 1/10
WE 1/17 WE 1/24 WE 1/31 WE 2/7 WE
2/14 WE 2/21 Applebee's
(18.9%)
(15.9%)
(19.9%)
(17.0%)
(16.9%)
(19.0%)
(19.1%)
IHOP
(26.9%)
(26.6%)
(28.5%)
(25.1%)
(28.1%)
(26.6%)
(28.1%)
Fourth Quarter of 2020
- Applebee’s comparable same-restaurant sales decreased 17.6% for
the fourth quarter of 2020.
- IHOP’s comparable same-restaurant sales decreased 30.1% for the
fourth quarter of 2020.
- Comparable same-restaurant sales for the fourth quarter of 2020
declined at both Applebee’s and IHOP primarily due to the impact of
the resurgence of COVID-19 cases nationwide and the related
reinstatement of federal, state and local level governmental
restrictions on in-restaurant dining operations, which resulted in
a meaningful decline in traffic.
Fiscal 2020 Summary
- Applebee’s comparable same-restaurant sales decreased 22.4% for
2020.
- IHOP’s comparable same-restaurant sales decreased 32.8% for
2020.
- Comparable same-restaurant sales for 2020 declined at both
Applebee’s and IHOP primarily due to the impact COVID-19 cases
nationwide and the related federal, state and local level
governmental restrictions on in-restaurant dining operations, which
resulted in a meaningful decline in traffic.
Off-Premise and Dine-In Sales Growth Comparison
- Applebee’s off-premise comparable same-restaurant sales for the
fourth quarter of 2020 increased by 133.3% primarily due to the
resurgence of COVID-19 cases nationwide and the related
reinstatement of federal, state and local level governmental
restrictions on dine-in service as well as a shift in consumer
behavior.
- Applebee’s off-premise sales accounted for 36.8% of sales mix
for the fourth quarter of 2020. This compares to 34.6% of sales mix
for the third quarter of 2020.
- Applebee’s delivery sales accounted for 14.0% of sales mix and
take-out sales accounted for 22.8% of sales mix for the fourth
quarter of 2020. This compares to delivery sales mix of 11.5% and
take-out sales mix of 23.1% for the third quarter of 2020.
- Applebee’s online sales accounted for 12.4% of total sales for
the fourth quarter of 2020. This compares to 12.2% of total sales
for the third quarter of 2020.
- IHOP’s off-premise comparable same-restaurant sales for the
fourth quarter of 2020 increased by 130.4% primarily due to the
resurgence of COVID-19 cases nationwide discussed above.
- IHOP’s off-premise sales accounted for 33.3% of sales mix for
the fourth quarter of 2020. This compares to 32.4% of sales mix for
the third quarter of 2020.
- IHOP’s delivery sales accounted for 15.6% of sales mix and
take-out sales accounted for 17.7% of sales mix for the fourth
quarter of 2020. This compares to delivery sales mix of 15.7% and
take-out sales mix of 18.3% for the third quarter of 2020.
- IHOP’s online sales accounted for 22.7% of total sales for the
fourth quarter of 2020. This compares to 22.0% of total sales for
the third quarter of 2020.
Fourth Quarter of 2020 Summary
- GAAP net loss per diluted share of $0.10 for the fourth quarter
of 2020 compared to earnings per diluted share of $1.59 for the
fourth quarter of 2019. The variance was primarily due to a decline
in gross profit resulting from a significant decrease in customer
traffic due to federal, state and local level governmental
restrictions on in-restaurant dining operations to stem the spread
of the coronavirus and related changes in consumer behavior.
- Adjusted earnings per diluted share of $0.39 for the fourth
quarter of 2020 compared to adjusted earnings per diluted share of
$1.78 for the fourth quarter of 2019. The variance was primarily
due to a decline in gross profit resulting from a significant
decrease in customer traffic due to the reasons discussed above.
(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 fourth quarter of
2020 declined 5.4% year-over-year to $39.4 million from $41.7
million for the fourth quarter of 2019. The improvement was mainly
due to lower travel and compensation costs. These cost reductions
were due to the Company’s ability to tightly manage general and
administrative expenses during a period of austerity.
- Consolidated adjusted EBITDA for the fourth quarter of 2020 was
$42.0 million. This compares to $67.5 million for the fourth
quarter of 2019. The variance was primarily due to a significant
decrease in customer traffic resulting from governmental measures
to stem the spread of the coronavirus, which led to declines in
both total revenues and gross profit. (See “Non-GAAP Financial
Measures” and reconciliation of GAAP net income to consolidated
adjusted EBITDA.)
Fiscal 2020 Summary
- GAAP net loss per diluted share of $6.43 for 2020 compared to a
GAAP earnings per diluted share of $5.85 for 2019. The decrease was
primarily due to a decline in gross profit as discussed above and
an increase in impairment and closure charges compared to
2019.
- Adjusted earnings per diluted share of $1.79 for 2020 compared
to adjusted earnings per diluted share of $6.95 for 2019. The
decrease was primarily due to a decline in gross profit as
discussed above. (See “Non-GAAP Financial Measures” and
reconciliation of GAAP earnings per diluted share to adjusted
earnings per diluted share.)
- General and administrative expenses for 2020 declined 11.1% to
$144.8 million from $162.8 million for 2019. The improvement was
mainly due to lower compensation expense and travel costs resulting
from tight management of general and administrative expenses.
- Consolidated adjusted EBITDA for 2020 was $158.7 million. This
compares to $273.5 million for 2019. The variance was primarily due
to the significant decrease in customer traffic discussed above.
(See “Non-GAAP Financial Measures” and reconciliation of GAAP net
income to consolidated adjusted EBITDA.)
- Cash flows from operating activities for 2020 was $96.5
million. This compares to cash flows from operating activities of
$155.2 million for 2019. The decrease mainly was due to a
significant decrease in customer traffic due to governmental
measures to stem the spread of the coronavirus, which led to
declines in both total revenues and gross profit.
- The Company continued to generate strong adjusted free cash
flow of $106.6 million for 2020. This compares to adjusted free
cash flow of $148.8 million for 2019. (See “Non-GAAP Financial
Measures” and reconciliation of the Company’s cash provided by
operating activities to adjusted free cash flow.)
- GAAP net loss available to common stockholders was $104.4
million, or a net loss per diluted share of $6.43, for 2020. This
compares to net income available to common stockholders of $100.8
million, or earnings per diluted share of $5.85, for 2019. The
decrease in net income was primarily due to the decline in gross
profit discussed above and an increase in impairment and closure
charges compared to 2019. These items were partially offset by a
decline in general and administrative expenses.
- Adjusted net income available to common stockholders was $29.3
million, or adjusted earnings per diluted share of $1.79, for 2020.
This compares to adjusted net income available to common
stockholders of $119.7 million, or adjusted earnings per diluted
share of $6.95, for 2019. The decrease in adjusted net income was
primarily due to lower gross profit for the reasons discussed
above. This item was partially offset by fewer weighted average
diluted shares outstanding and lower general and administrative
expenses. (See “Non-GAAP Financial Measures” below.)
Cash Position
Dine Brands has taken precautionary measures to increase the
Company’s financial flexibility due to the conditions caused by
COVID-19. As previously disclosed on March 19, 2020, the Company
drew $220 million from its revolving credit facility, all of which
remained drawn as of December 31, 2020. As of December 31, 2020,
$2.8 million was pledged against the revolving credit facility for
outstanding letters of credit. The Company plans to repay the $220
million drawn from its revolving credit facility in the month of
March 2021.
As of December 31, 2020, the Company had $456.1 million of total
cash and cash equivalents, including restricted cash of $72.7
million. Excluding the $220 million the Company drew from its
revolving credit facility, the Company had total cash of $236.1
million as of December 31, 2020, $63.6 million above the total cash
of $172.5 million as of December 31, 2019. The variance was
primarily due to the temporary suspension of the Company’s
quarterly cash dividends and share repurchase program. These steps
were taken in response to the COVID-19 pandemic and to maintain
financial flexibility. The Company believes that its asset-light
business model and cash position will continue to provide strong
liquidity during the pandemic.
The Company makes $16.4 million of quarterly interest payments
on its Series 2019-1 Class A-2-I, Fixed Rate Senior Secured Notes
and Series 2019-1 Class A-2-II, Fixed Rate Senior Secured Notes
(the “Class A-2-I Notes”, together with the “Class A-2-II Notes”,
the “Class A-2 Notes”). In addition, the Company made a principal
payment of $3.25 million on its Class A-2 Notes beginning in the
fourth quarter of 2020. The quarterly principal payments under the
Class A-2 Notes may be voluntarily suspended when the leverage
ratio for the Company and its subsidiaries is less than or equal to
5.25x. As of December 31, 2020, the Company’s leverage ratio was
7.20x.
The Company voluntarily doubled its interest reserve on its
Class A-2 Notes during the second quarter of 2020 to $32.8 million
to enhance its securitization structure. This increased restricted
cash by $16.4 million.
GAAP Effective Tax Rate
Our effective tax rate for 2020 was 4.2% compared to 24.6% for
2019. The effective tax rate for 2020 of 4.2% applied to pretax
book loss was significantly different than the statutory Federal
income tax rate of 21% primarily because of a $92.2 million
impairment of goodwill incurred in the second quarter of 2020,
which is not deductible for income tax purposes and therefore has
no associated tax benefit.
Financial Performance Guidance for 2021
The Company believes that its consolidated financial results for
2021 could continue to be materially impacted by the global impact
from COVID-19. Considering the uncertainty and timing of a reversal
in consumer behavior due to the pandemic, the Company currently
cannot provide a complete business outlook for fiscal 2021. The
Company assumes no obligation to update or supplement this
information.
- General and administrative expenses for 2021 are expected to
range between approximately $160 million and $170 million,
including non-cash stock-based compensation expense and
depreciation totaling approximately $45 million. This projection
includes approximately $5 million of general and administrative
expenses related to the company restaurants.
- Capital expenditures are expected to be approximately $14
million, inclusive of approximately $5 million related to the
company restaurants segment.
Domestic System Reopening Update
As of December 31, 2020, 3,211 of our domestic restaurants, or
98%, were open for either dine-in service or off-premise service
comprised of take-out and delivery. This compares to 3,190 of our
domestic restaurants, or 97%, open for either dine-in service or
off-premise service comprised of take-out and delivery as of
September 30, 2020.
Applebee’s Reopening Update
As of December 31, 2020, out of 1,600 domestic Applebee’s
franchise and company-operated restaurants, 1,276 were open for
in-restaurant dining, 315 were open for only off-premise sales,
comprised of take-out and delivery, and 9 were temporarily closed.
This compares to as of September 30, 2020, when out of 1,614
domestic Applebee’s franchise and company-operated restaurants,
1,595 were open for in-restaurant dining, three were open for only
off-premise sales, comprised of take-out and delivery, and 16 were
temporarily closed.
IHOP Reopening Update
As of December 31, 2020, out of 1,670 domestic IHOP franchise
and area license restaurants, 1,174 were open for in-restaurant
dining, 446 were open only for off-premise sales, comprised of
take-out and delivery, and 50 were temporarily closed. This
compares to as of September 30, 2020, when out of 1,683 domestic
IHOP franchise and area license restaurants, 1,425 were open for
in-restaurant dining, 167 were open only for off-premise sales,
comprised of take-out and delivery, and 91 were temporarily
closed.
Fourth Quarter of 2020 Earnings Conference Call
Details
Dine Brands will host a conference call to discuss its results
on March 2, 2021 at 9:00 a.m. Pacific Time.
To participate on the call, please dial (833) 528-0602 and enter
the conference identification number 4374875. International
callers, please dial (830) 221-9708 and enter the conference
identification number 4374875.
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 March 2, 2021
through 12:00 p.m. Pacific Time on March 9, 2021 by dialing (855)
859-2056 and entering the conference identification number 4374875.
International callers, please dial (404) 537-3406 and enter the
conference identification number 4374875. 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 3,500 restaurants combined in 17 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 (Loss) Income
(In thousands, except per
share amounts)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
(Unaudited)
Revenues:
Franchise revenues:
Royalties, franchise fees and other
$
76,044
$
92,259
$
267,959
$
368,171
Advertising revenues
58,744
71,133
201,494
283,015
Total franchise revenues
134,788
163,392
469,453
651,186
Company restaurant sales
32,627
31,180
108,054
131,214
Rental revenues
27,029
31,107
105,939
120,666
Financing revenues
1,585
1,832
5,822
7,112
Total revenues
196,029
227,511
689,268
910,178
Cost of revenues:
Franchise expenses:
Advertising expenses
59,262
69,899
202,012
281,781
Bad debt expense (credit)
4,340
889
12,756
(365
)
Other franchise expenses
8,205
8,179
24,204
31,338
Total franchise expenses
71,807
78,967
238,972
312,754
Company restaurant expenses
31,776
30,141
111,550
123,272
Rental expenses:
Interest expense from finance leases
1,110
1,277
4,563
5,602
Other rental expenses
23,818
21,316
84,939
85,157
Total rental expenses
24,928
22,593
89,502
90,759
Financing expenses
135
142
528
579
Total cost of revenues
128,646
131,843
440,552
527,364
Gross profit
67,383
95,668
248,716
382,814
General and administrative expenses
39,440
41,710
144,791
162,815
Impairment and closure charges
8,099
847
132,620
1,487
Interest expense, net
17,752
15,160
66,895
60,393
Amortization of intangible assets
2,663
2,928
10,903
11,702
Loss on extinguishment of debt
—
—
—
8,276
(Gain) loss on disposition of assets
(561
)
(1,519
)
2,069
(332
)
(Loss) income before income taxes
(10
)
36,542
(108,562
)
138,473
Income tax (provision) benefit
(1,551
)
(9,146
)
4,568
(34,127
)
Net (loss) income
$
(1,561
)
$
27,396
$
(103,994
)
$
104,346
Net (loss) income available to common
stockholders:
Net (loss) income
$
(1,561
)
$
27,396
$
(103,994
)
$
104,346
Less: Net income allocated to unvested
participating restricted stock
—
(908
)
(420
)
(3,532
)
Net (loss) income available to common
stockholders
$
(1,561
)
$
26,488
$
(104,414
)
$
100,814
Net (loss) income available to common
stockholders per share:
Basic
$
(0.10
)
$
1.61
$
(6.43
)
$
5.95
Diluted
$
(0.10
)
$
1.59
$
(6.43
)
$
5.85
Weighted average shares
outstanding:
Basic
16,232
16,449
16,230
16,934
Diluted
16,232
16,698
16,230
17,245
Dividends declared per common share
—
$
0.69
$
0.76
$
2.76
Dividends paid per common share
—
$
0.69
$
1.45
$
2.70
Dine Brands Global, Inc. and
Subsidiaries
Consolidated Balance
Sheets
(In thousands, except share
and per share amounts)
December 31, 2020
December 31, 2019
Assets
Current assets:
Cash and cash equivalents
$
383,369
$
116,043
Receivables, net of allowance of $15,057
(2020) and $3,138 (2019)
121,897
136,869
Restricted cash
39,884
40,732
Prepaid gift card costs
29,080
36,077
Prepaid income taxes
6,178
13,290
Other current assets
6,098
3,906
Total current assets
586,506
346,917
Other intangible assets, net
549,671
575,103
Operating lease right-of-use assets
346,086
366,931
Goodwill
251,628
343,862
Property and equipment, net
187,977
216,420
Long-term receivables, net of allowance of
$7,999 (2020) and $8,155 (2019)
54,512
85,999
Deferred rent receivable
56,449
70,308
Non-current restricted cash
32,800
15,700
Other non-current assets, net
9,316
28,271
Total assets
$
2,074,945
$
2,049,511
Liabilities and Stockholders’
Deficit
Current liabilities:
Current maturities of long-term debt
$
13,000
$
—
Accounts payable
37,424
40,925
Gift card liability
144,159
159,019
Current maturities of operating lease
obligations
69,672
72,815
Current maturities of finance lease and
financing obligations
11,293
13,669
Accrued employee compensation and
benefits
21,237
23,904
Accrued advertising expenses
21,641
8,760
Deferred franchise revenue, short-term
7,682
10,086
Dividends payable
—
11,702
Other accrued expenses
22,460
17,032
Total current liabilities
348,568
357,912
Long-term debt, net, less current
maturities
1,491,996
1,288,248
Operating lease obligations, less current
maturities
345,163
359,025
Finance lease obligations, less current
maturities
69,012
77,393
Financing obligations, less current
maturities
32,797
37,682
Deferred income taxes, net
78,293
98,499
Deferred franchise revenue, long-term
52,237
56,944
Other non-current liabilities
11,530
15,582
Total liabilities
2,429,596
2,291,285
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; 2020 - 24,882,122 issued, 16,452,174
outstanding; 2019 - 24,925,447 issued, 16,521,921 outstanding
249
249
Additional paid-in-capital
257,625
246,192
(Accumulated deficit) retained
earnings
(55,553
)
61,653
Accumulated other comprehensive loss
(55
)
(58
)
Treasury stock, at cost; shares: 2020 -
8,429,948; 2019 - 8,403,526
(556,917
)
(549,810
)
Total stockholders’ deficit
(354,651
)
(241,774
)
Total liabilities and stockholders’
deficit
$
2,074,945
$
2,049,511
Dine Brands Global, Inc. and
Subsidiaries
Consolidated Statements of
Cash Flows
(In thousands)
Twelve Months Ended
December 31,
2020
2019
Cash flows from operating
activities:
Net (loss) income
$
(103,994
)
$
104,346
Adjustments to reconcile net (loss) income
to cash flows provided by operating activities:
Impairment and closure charges
132,501
1,485
Depreciation and amortization
42,829
42,493
Non-cash stock-based compensation
expense
12,508
10,808
Non-cash interest expense
2,698
3,369
Deferred income taxes
(20,049
)
(5,494
)
Deferred revenue
(7,111
)
(7,695
)
Loss on extinguishment of debt
—
8,276
Loss (gain) on disposition of assets
2,069
(332
)
Other
(2,566
)
(5,374
)
Changes in operating assets and
liabilities:
Accounts receivable, net
(9,750
)
(396
)
Current income tax receivables and
payables
16,143
8,677
Gift card receivables and payables
12,231
(1,037
)
Other current assets
(2,191
)
(498
)
Accounts payable
6,455
583
Accrued employee compensation and
benefits
(1,909
)
(3,575
)
Accrued advertising expenses
12,881
(1,166
)
Other current liabilities
3,758
710
Cash flows provided by operating
activities
96,503
155,180
Cash flows from investing
activities:
Principal receipts from notes, equipment
contracts and other long-term receivables
31,155
24,075
Net additions to property and
equipment
(10,927
)
(19,424
)
Proceeds from sale of property and
equipment
537
2,540
Additions to long-term receivables
(1,475
)
(6,955
)
Other
(565
)
(389
)
Cash flows provided by (used in) investing
activities
18,725
(153
)
Cash flows from financing
activities:
Proceeds from issuance of long-term
debt
—
1,300,000
Repayment of long-term debt
(3,250
)
(1,283,750
)
Borrowing from revolving credit
facility
220,000
—
Repayment of revolving credit facility
—
(25,000
)
Payment of debt issuance costs
—
(13,150
)
Dividends paid on common stock
(23,934
)
(46,859
)
Repurchase of common stock
(29,853
)
(109,698
)
Principal payments on finance lease
obligations
(12,451
)
(13,639
)
Proceeds from stock options exercised
20,523
11,969
Tax payments for restricted stock upon
vesting
(2,480
)
(2,728
)
Tax payments for share settlement of
restricted stock units
(205
)
(76
)
Cash flows provided by (used in) financing
activities
168,350
(182,931
)
Net change in cash, cash equivalents and
restricted cash
283,578
(27,904
)
Cash, cash equivalents and restricted cash
at beginning of period
172,475
200,379
Cash, cash equivalents and restricted cash
at end of period
$
456,053
$
172,475
Dine Brands Global, Inc. and Subsidiaries
Non-GAAP Financial Measures (In thousands, except per share
amounts) (Unaudited)
Reconciliation of net (loss) income available to common
stockholders to net income 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; loss on extinguishment of debt;
administrative reorganization costs; nonrecurring restaurant costs;
and the combined tax effect of the preceding adjustments, as well
as related per share data:
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
Net (loss) income available to common
stockholders, as reported
$
(1,561
)
$
26,488
$
(104,414
)
$
100,814
Impairment and closure charges
8,099
847
132,620
1,487
Amortization of intangible assets
2,663
2,928
10,903
11,702
Non-cash interest expense
708
647
2,698
3,369
(Gain) loss on disposition of assets
(561
)
(1,519
)
2,069
(332
)
Loss on extinguishment of debt
—
—
—
8,276
Administrative reorganization costs
—
1,606
—
1,606
Nonrecurring restaurant costs
—
2
—
385
Net income tax provision for above
adjustments
(2,727
)
(1,173
)
(14,014
)
(6,888
)
Net income allocated to unvested
participating restricted stock
(216
)
(108
)
(585
)
(673
)
Net income available to common
stockholders, as adjusted
$
6,405
$
29,718
$
29,277
$
119,746
Diluted net income available to common
stockholders per share:
Net (loss) income available to common
stockholders per share, as reported
$
(0.10
)
$
1.59
$
(6.43
)
$
5.85
Impairment and closure charges
0.37
0.04
7.50
0.06
Amortization of intangible assets
0.12
0.13
0.50
0.50
Non-cash interest expense
0.03
0.03
0.12
0.14
(Gain) loss on disposition of assets
(0.03
)
(0.07
)
0.10
(0.01
)
Loss on extinguishment of debt
—
—
—
0.36
Administrative reorganization costs
—
0.07
—
0.07
Nonrecurring restaurant costs
—
0.00
—
0.02
Net income allocated to unvested
participating restricted stock
(0.01
)
(0.01
)
(0.03
)
(0.04
)
Rounding
0.01
—
0.03
—
Diluted net income available to common
stockholders per share, as adjusted
$
0.39
$
1.78
$
1.79
$
6.95
Numerator for basic EPS - income available
to common stockholders, as adjusted
$
6,405
$
29,718
$
29,277
$
119,746
Effect of unvested participating
restricted stock using the two-class method
2
8
4
44
Numerator for diluted EPS - income
available to common stockholders, as adjusted
$
6,407
$
29,726
$
29,281
$
119,790
Denominator for basic EPS -
weighted-average shares
16,232
16,449
16,230
16,934
Dilutive effect of stock options
137
249
100
311
Denominator for diluted EPS -
weighted-average shares
16,369
16,698
16,330
17,245
Dine Brands Global, Inc. and Subsidiaries
Non-GAAP Financial Measures (Unaudited)
Reconciliation of the Company's cash provided by operating
activities to “adjusted free cash flow” (cash provided by operating
activities, plus receipts from notes and equipment contracts
receivable, less additions to property and equipment). Management
uses this liquidity measure in its periodic assessments of, among
other things, the amount of cash dividends per share of common
stock and repurchases of common stock. We believe it is important
for investors to have the same measure used by management for that
purpose. Adjusted free cash flow does not represent residual cash
flow available for discretionary purposes.
Twelve Months Ended
December 31,
2020
2019
(In millions)
Cash flows provided by operating
activities
$
96.5
$
155.2
Receipts from notes and equipment
contracts receivable
21.0
13.0
Net additions to property and
equipment
(10.9
)
(19.4
)
Adjusted free cash flow
106.6
148.8
Dividends paid on common stock
(23.9
)
(46.9
)
Repurchase of common stock
(29.9
)
(109.7
)
$
52.8
$
(7.8
)
Dine Brands Global, Inc. and Subsidiaries
Non-GAAP Financial Measures (in thousands) (Unaudited)
Reconciliation of the Company's net (loss) income to “adjusted
EBITDA.” The Company defines adjusted EBITDA as net (loss) income,
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
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
Net (loss) income, as reported
$
(1,561
)
$
27,396
$
(103,994
)
$
104,346
Impairment and closure charges
8,099
847
132,620
1,487
Interest charges on finance leases
1,644
1,788
6,618
7,707
All other interest charges
18,700
16,192
70,261
64,072
Income tax provision (benefit)
1,551
9,146
(4,568
)
34,127
Depreciation and amortization
10,769
10,978
42,800
42,493
Non-cash stock-based compensation
3,315
2,588
12,508
10,808
Loss on extinguishment of debt
—
—
—
8,276
(Gain) loss on disposition of assets
(561
)
(1,519
)
2,069
(332
)
Other
41
65
412
562
Adjusted EBITDA
$
41,997
$
67,481
$
158,726
$
273,546
Dine Brands Global, Inc. and Subsidiaries
Restaurant Data (Unaudited)
The following table sets forth, for the three and twelve months
ended December 31, 2020 and 2019, the number of “Effective
Restaurants” in the Applebee’s and IHOP systems and information
regarding the percentage change in sales at those restaurants
compared to the same periods in the prior year and, as such, the
percentage change in sales at Effective Restaurants is based on
non-GAAP sales data. Sales at restaurants that are owned by
franchisees and area licensees are not attributable to the Company.
However, we believe that presentation of this information is useful
in analyzing our revenues because franchisees and area licensees
pay us royalties and advertising fees that are generally based on a
percentage of their sales, and, where applicable, rental payments
under leases that partially may be based on a percentage of their
sales. Management also uses this information to make decisions
about future plans for the development of additional restaurants as
well as evaluation of current operations.
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
Applebee's
Effective Restaurants(a)
Franchise
1,636
1,725
1,624
1,745
Company
69
69
68
69
Total
1,705
1,794
1,692
1,814
System-wide(b)
Domestic sales percentage change(c)
(13.3
)
%
(3.8
)
%
(24.1
)
%
(3.0
)
%
Domestic same-restaurant sales percentage
change(d)
(17.6
)
%
(2.5
)
%
(22.4
)
%
(0.7
)
%
Franchise(b)
Domestic sales percentage change(c)
(e)
(13.8
)
%
(6.2
)
%
(24.3
)
%
(5.9
)
%
Domestic same-restaurant sales percentage
change(d)
(18.1
)
%
(2.5
)
%
(22.6
)
%
(0.7
)
%
Average weekly domestic unit sales (in
thousands)
$
38.4
$
46.1
$
37.1
$
47.3
IHOP
Effective Restaurants(a)
Franchise
1,577
1,670
1,532
1,663
Area license
157
159
155
157
Total
1,734
1,829
1,687
1,820
System-wide(b)
Sales percentage change(c)
(27.2
)
%
2.1
%
(34.9
)
%
2.2
%
Domestic same-restaurant sales percentage
change, including area license restaurants(d)
(30.1
)
%
1.10
%
(32.8
)
%
1.1
%
Franchise(b)
Sales percentage change(c)
(27.3
)
%
2
%
(35.0
)
%
2.2
%
Domestic same-restaurant sales percentage
change(d)
(30.6
)
%
1.10
%
(32.8
)
%
1.0
%
Average weekly unit sales (in
thousands)
$
26.7
$
37.3
$
25.4
$
36.7
Area License (b)
Sales percentage change(c)
(25.5
)
%
3.7
%
(34.2
)
%
2.7
%
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.
(b)
“System-wide” sales are retail sales at
domestic Applebee’s restaurants operated by franchisees and IHOP
restaurants operated by franchisees and area licensees, as reported
to the Company, in addition to retail sales at company-operated
restaurants. Sales at restaurants that are owned by franchisees and
area licensees are not attributable to the Company. An increase or
decrease in franchisees' reported sales will result in a
corresponding increase or decrease in our royalty revenue.
Unaudited reported sales for Applebee's domestic franchise
restaurants, IHOP franchise restaurants and IHOP area license
restaurants for the three and twelve months ended December 31, 2020
and 2019 and sales by company-operated restaurants were as
follows:
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
(In millions)
Reported sales
Applebee's domestic franchise restaurant
sales
$
824.6
$
957.1
$
2,993.0
$
3,954.3
Applebee's company-operated
restaurants
32.6
31.2
108.0
131.2
IHOP franchise restaurant sales
588.5
809.9
2,063.6
3,174.2
IHOP area license restaurant sales
53.9
72.3
190.5
289.5
Total
$
1,499.6
$
1,870.5
$
5,355.1
$
7,549.2
(c)
“Sales percentage change” reflects, for
each category of restaurants, the percentage change in sales in any
given fiscal period compared to the prior fiscal period for all
restaurants in that category.
(d)
“Domestic same-restaurant sales percentage
change” reflects the percentage change in sales, in any given
fiscal period, compared to the same weeks in the prior year for
domestic restaurants that have been operated throughout both fiscal
periods that are being compared and have been open for at least 18
months. Because of new unit openings and restaurant closures, the
domestic restaurants open throughout both fiscal periods being
compared may be different from period to period.
(e)
The franchise sales percentage change for
2019 was impacted by the acquisition of 69 franchise restaurants in
December 2018 now reported as company-operated.
Dine Brands Global, Inc. and
Subsidiaries
Restaurant Data
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
Applebee's Restaurant Development
Activity
Summary - beginning of period:
Franchise
1,659
1,735
1,718
1,768
Company restaurants
69
69
69
69
Total Applebee's restaurants, beginning
of period
1,728
1,804
1,787
1,837
Franchise restaurants opened
Domestic
2
1
3
1
International
—
1
3
2
Total franchise restaurants opened
2
2
6
3
Franchise restaurants permanently
closed:
Domestic
(16
)
(3
)
(68
)
(29
)
International
(3
)
(16
)
(14
)
(24
)
Total franchise restaurants permanently
closed
(19
)
(19
)
(82
)
(53
)
Net franchise restaurant
reduction
(17
)
(17
)
(76
)
(50
)
Summary - end of period:
Franchise
1,642
1,718
1,642
1,718
Company
69
69
69
69
Total Applebee's restaurants, end of
period
1,711
1,787
1,711
1,787
Domestic
1,600
1,665
1,600
1,665
International
111
122
111
122
IHOP Restaurant Development
Activity
Summary - beginning of period:
Franchise
1,648
1,675
1,680
1,669
Area license
159
161
161
162
Total IHOP restaurants, beginning of
period
1,807
1,836
1,841
1,831
Franchise/area license restaurants
opened:
Domestic franchise
8
10
16
33
Domestic area license
—
—
3
5
International franchise
3
4
8
13
Total franchise/area license restaurants
opened
11
14
27
51
Franchise/area license restaurants
permanently closed:
Domestic franchise
(21
)
(8
)
(56
)
(27
)
Domestic area license
—
—
(3
)
(6
)
International franchise
(24
)
(1
)
(34
)
(8
)
International area license
(1
)
—
(3
)
—
Total franchise/area license restaurants
permanently closed
(46
)
(9
)
(96
)
(41
)
Net franchise/area license restaurant
(reduction) addition
(35
)
5
(69
)
10
Franchise restaurants reacquired by the
Company
(3
)
—
(3
)
—
Net franchise/area license restaurant
decrease
(38
)
5
(72
)
10
Summary - end of period
Franchise
1,611
1,680
1,611
1,680
Area license
158
161
158
161
Company
3
—
3
—
Total IHOP restaurants, end of
period
1,772
1,841
1,772
1,841
Domestic
1,670
1,710
1,670
1,710
International
102
131
102
131
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210302005478/en/
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
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