Dine Brands Global, Inc. Reports Second Quarter 2021 Results

Dine Brands Global, Inc. (NYSE: DIN), the parent company of Applebee’s Neighborhood Grill + Bar and IHOP restaurants, today announced financial results for the 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.

 

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.