0001193125-21-237059.txt : 20210805 0001193125-21-237059.hdr.sgml : 20210805 20210805081635 ACCESSION NUMBER: 0001193125-21-237059 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 16 CONFORMED PERIOD OF REPORT: 20210805 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20210805 DATE AS OF CHANGE: 20210805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Dine Brands Global, Inc. CENTRAL INDEX KEY: 0000049754 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 953038279 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-15283 FILM NUMBER: 211146446 BUSINESS ADDRESS: STREET 1: 450 N BRAND BLVD 3RD FLR CITY: GLENDALE STATE: CA ZIP: 91203-1903 BUSINESS PHONE: 818-240-6055 MAIL ADDRESS: STREET 1: 450 N. BRAND BLVD, 7TH FLOOR CITY: GLENDALE STATE: CA ZIP: 91203 FORMER COMPANY: FORMER CONFORMED NAME: DineEquity, Inc DATE OF NAME CHANGE: 20080530 FORMER COMPANY: FORMER CONFORMED NAME: IHOP CORP DATE OF NAME CHANGE: 19940204 8-K 1 d181248d8k.htm 8-K 8-K
false 0000049754 0000049754 2021-08-05 2021-08-05

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): August 5, 2021

 

 

Dine Brands Global, Inc.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware   001-15283   95-3038279

(State or other jurisdiction

of incorporation or organization)

 

(Commission

File No.)

 

(I.R.S. Employer

Identification No.)

 

450 North Brand Boulevard, Glendale, California   91203-2306
(Address of principal executive offices)   (Zip Code)

(818) 240-6055

(Registrant’s telephone number, including area code)

 

 

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

 

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

 

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

 

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

 

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

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

 

Title of each class

 

Trading

symbol(s)

 

Name of each exchange

on which registered

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

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

Emerging growth company

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

 

 

 


Item 2.02 Results of Operations and Financial Condition

On August 5, 2021, Dine Brands Global, Inc., a Delaware corporation (the “Corporation”), issued a press release announcing its second quarter 2021 financial results. A copy of the press release is attached hereto as Exhibit 99.1, and is incorporated herein by reference.

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

Item 7.01 Regulation FD

The press release referenced in Item 2.02 of this Current Report on Form 8-K also includes information concerning the Corporation’s 2021 financial outlook. A copy of the press release is attached hereto as Exhibit 99.1, and is incorporated herein by reference.

The information contained in this Item 7.01, including the related information set forth in the press release attached hereto as Exhibit 99.1 and incorporated by reference herein, is being “furnished” and shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act or otherwise. The information in this Item 7.01 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or into any filing or other document pursuant to the Exchange Act, except as otherwise expressly stated in any such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit
Number    

  

Description

99.1    Press Release issued by the Corporation on August 5, 2021.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document).


SIGNATURES

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

 

Date: August 5, 2021     DINE BRANDS GLOBAL, INC.
    By:    

/s/ Vance Y. Chang

      Vance Y. Chang
      Chief Financial Officer
EX-99.1 2 d181248dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

 

 

News Release

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

Dine Brands Global, Inc. Reports Second Quarter 2021 Results

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

99% of Domestic Restaurants Open

Ten New Restaurants Opened by Franchisees

Cash Position Remains Strong

GLENDALE, Calif., August 5, 2021 – 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.”

 

Page 1 of 16


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 IntelligenceTM.

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.

 

Page 2 of 16


Historical Domestic System-Wide Comparable Same-Restaurant Sales Relative to the Prior Year

 

LOGO

 

LOGO

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.

 

Page 3 of 16


   

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.

 

Page 4 of 16


   

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.

 

Page 5 of 16


   

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 3,500 restaurants combined in 16 countries and approximately 350 franchisees, Dine Brands is one of the largest full-service restaurant companies in the world. For more information on Dine Brands, visit the Company’s website located at www.dinebrands.com.

Forward-Looking Statements

Statements contained in this press release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You can identify these forward-looking statements by words such as “may,” “will,” “would,” “should,” “could,” “expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan,” “goal” and other similar expressions. These statements involve known and unknown risks, uncertainties and other factors, which may cause actual results to be materially different from those expressed or implied in such statements. These factors include, but are not limited to: uncertainty regarding the duration and severity of the ongoing COVID-19 pandemic and its ultimate impact on the Company; the effectiveness of related containment measures; general economic conditions; our level of indebtedness; compliance with the terms of our securitized debt; our ability to refinance our current indebtedness or obtain additional financing; our dependence on information technology; potential cyber incidents; the implementation of restaurant development plans; our dependence on our franchisees; the concentration of our Applebee’s franchised restaurants in a limited number of franchisees; the financial health of our franchisees; our franchisees’ and other licensees’ compliance with our quality standards and trademark usage; general risks associated with the restaurant industry; potential harm to our brands’ reputation; possible future impairment charges; the effects of tax reform; trading volatility and fluctuations in the price of our stock; our ability to achieve the financial guidance we provide to investors; successful implementation of our business strategy; the availability of suitable locations for new restaurants; shortages or interruptions in

 

Page 6 of 16


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.

 

Page 7 of 16


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
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 8 of 16


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
  

 

 

 

 

 

 

 

 

Page 9 of 16


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
  

 

 

 

 

 

 

 

 

Page 10 of 16


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

 

June 30,

  Six Months Ended

 

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
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 11 of 16


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 )  
  

 

 

 

 

 

 

 

 

Page 12 of 16


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
  

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

Page 13 of 16


Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

The following table sets forth, for the three and six months ended June 30, 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 )% 

 

Page 14 of 16


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.

 

Page 15 of 16


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.

 

Page 16 of 16

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DE 001-15283 95-3038279 450 North Brand Boulevard Glendale CA 91203-2306 (818) 240-6055 false false false false Common Stock, $.01 Par Value DIN NYSE false XML 10 R1.htm IDEA: XBRL DOCUMENT v3.21.2
Document and Entity Information
Aug. 05, 2021
Cover [Abstract]  
Amendment Flag false
Entity Central Index Key 0000049754
Document Type 8-K
Document Period End Date Aug. 05, 2021
Entity Registrant Name Dine Brands Global, Inc.
Entity Incorporation State Country Code DE
Entity File Number 001-15283
Entity Tax Identification Number 95-3038279
Entity Address, Address Line One 450 North Brand Boulevard
Entity Address, City or Town Glendale
Entity Address, State or Province CA
Entity Address, Postal Zip Code 91203-2306
City Area Code (818)
Local Phone Number 240-6055
Written Communications false
Soliciting Material false
Pre Commencement Tender Offer false
Pre Commencement Issuer Tender Offer false
Security 12b Title Common Stock, $.01 Par Value
Trading Symbol DIN
Security Exchange Name NYSE
Entity Emerging Growth Company false
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