Dine Brands Global, Inc. Reports Second Quarter 2020 Results
Applebee's comparable same-restaurant sales improved 11 out of 13 weeks through the week ended June 28, 2020 from a decrease of 77.0% to a decrease of 17.8%, representing an increase of 59.2 percentage points during this period.
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 2020.
“As we continue to navigate through the challenges currently facing our industry, we have remained resolute in our focus to return to growth. Throughout the second quarter, weekly comparable sales and traffic at both Applebee’s and IHOP improved as state and local governments began to ease restrictions on dining room operations. This, coupled with the significant growth of our brands’ off-premise business, contributed to the progress made during the quarter,” said Steve Joyce, chief executive officer of Dine Brands Global, Inc.
Mr. Joyce added, “I’m confident in our long-term strategy and ability to quickly adapt to the ever-changing industry landscape. We have strong liquidity with approximately $342 million of cash, of which $279 million is unrestricted cash. We’ve been through challenging times before, and I believe we are well-positioned to emerge from the pandemic and restore our momentum.”
Domestic System-Wide Comparable Same-Restaurant Sales Performance
| Domestic Same-Restaurant Sales | Preliminary | |||
| Q2 2020 | Q3 QTD through WE 7/26 | |||
| Applebee's | (49.4%) | (18.4%) | ||
| IHOP | (59.1%) | (37.6%) | ||
| Domestic Same-Restaurant Sales (Week Ending) | ||||||||||||||
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|
| WE 4/5 | WE 4/12 | WE 4/19 | WE 4/26 | WE 5/3 | WE 5/10 | WE 5/17 | WE 5/24 | WE 5/31 | WE 6/7 | WE 6/14 | WE 6/21 | WE 6/28 |
| Applebee's |
| (77.0%) | (77.3%) | (64.2%) | (64.4%) | (60.8%) | (54.3%) | (52.8%) | (49.5%) | (42.7%) | (37.0%) | (30.3%) | (18.4%) | (17.8%) |
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| IHOP |
| (81.5%) | (79.4%) | (76.3%) | (75.4%) | (72.6%) | (65.4%) | (61.5%) | (58.3%) | (52.1%) | (46.2%) | (42.9%) | (33.3%) | (34.4%) |
| Domestic Same-Restaurant Sales (Week Ending) | |||||
| July Sales Are Preliminary | |||||
| WE 7/5 | WE 7/12 | WE 7/19 | WE 7/26 | ||
| Applebee's | (22.3%) | (17.0%) | (18.8%) | (15.6%) | |
| IHOP | (40.4%) | (35.7%) | (39.1%) | (35.0%) | |
Second Quarter of 2020
- Applebee’s comparable same-restaurant sales improved 11 out of 13 weeks through the week ended June 28, 2020 from a decrease of 77.0% to a decrease of 17.8%, representing an increase of 59.2 percentage points during this period.
- IHOP’s comparable same-restaurant sales improved sequentially for 12 consecutive weeks out of 13 through the week ended June 28, 2020 from a decrease of 81.5% to a decrease of 34.4%, representing an increase of 47.1 percentage points during this period.
- Comparable same-restaurant sales for the second quarter of 2020 declined at both Applebee’s and IHOP primarily due to the impact of COVID-19 and related governmental restrictions on restaurant operations at the federal, state and local levels, which resulted in a meaningful decline in traffic for the second quarter of 2020.
- As of June 30, 2020, 3,154 of our domestic restaurants, or 95%, were open for either dine-in service or off-premise service comprised of take-out and delivery.
Off-Premise Sales Growth Comparison
- Off-premise sales at both Applebee’s and IHOP increased significantly primarily as a result of governmental mandates, which placed restrictions on dine-in service as well as the favorable impact of the Company’s digital initiatives.
- Applebee’s off-premise sales accounted for 60.5% of sales mix for the second quarter of 2020, as compared to 16.3% of sales mix for the first quarter of 2020 and 13.0% of sales mix for the fourth quarter of 2019.
- Applebee’s delivery sales accounted for 16.8% of sales mix and take-out sales accounted for 43.8% of sales mix for the second quarter of 2020.
- Applebee’s online sales as a percentage of total sales increased by 17.8 percentage points in the second quarter of 2020 to 22.9%. This compares to 5.1% of total sales for the first quarter of 2020.
- IHOP’s off-premise sales accounted for 53.6% of sales mix for the second quarter of 2020, as compared to 12.8% of sales mix for the first quarter of 2020 and 10.1% of sales mix for the fourth quarter of 2019.
- IHOP’s delivery sales accounted for 23.4% of sales mix and take-out sales accounted for 33.5% of sales mix for the second quarter of 2020.
- IHOP’s online sales as a percentage of total sales increased by 27.8 percentage points in the second quarter of 2020 to 34.7%. This compares to 6.9% of total sales for the first quarter of 2020.
Second Quarter of 2020 Summary
- GAAP net loss per diluted share of $8.04 for the second quarter of 2020 compared to earnings per diluted share of $1.18 for the second quarter of 2019.
This variance was primarily due to non-cash impairment charges 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. These items were partially offset by a deferred tax benefit of $3.4 million attributable to the other intangible assets charge.
Additionally, gross profit decreased primarily due to a significant decline in customer traffic as a result of governmental measures to stem the spread of the coronavirus and related changes in consumer behavior.
- Adjusted net loss per diluted share of $0.87 for the second quarter of 2020 compared to adjusted earnings per diluted share of $1.71 for the second quarter of 2019. (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 2020 declined 21.6% year-over-year to $30.9 million. The improvement was mainly due to lower compensation expenses.
- Net loss of $134.8 million for the second quarter of 2020 compared to net income of $21.4 million the second quarter of 2019.
- Consolidated adjusted EBITDA for the second quarter of 2020 was $12.1 million. This compares to $68.0 million for the second quarter of 2019. (See “Non-GAAP Financial Measures” and reconciliation of GAAP net income to consolidated adjusted EBITDA.)
- Cash used in operating activities for the first six months of 2020 was $10.5 million. This compares to cash flows from operating activities of $69.3 million for the first six months of 2019. The decrease mainly was due a significant decline in customer traffic at our restaurants that adversely impacted our segment operations as well as payment deferrals we offered to our franchisees primarily for the months of March 2020 and April 2020.
- The Company had negative adjusted free cash flow of $12.4 million for the first six months of 2020. This compares to adjusted free cash flow of $66.0 million for the first six months of 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 $130.0 million, or net loss per diluted share of $8.04, for the second quarter of 2020. This compares to net income available to common stockholders of $20.7 million, or earnings per diluted share of $1.18, for the second quarter of 2019. The decrease in net income was primarily due to the impairment charges and decline in gross profit discussed above. These items were partially offset by a decline in general and administrative expenses.
- Adjusted net loss available to common stockholders was $14.0 million, or adjusted net loss per diluted share of $0.87, for the second quarter of 2020. This compares to adjusted net income available to common stockholders of $30.0 million, or adjusted earnings per diluted share of $1.71, for the second quarter of 2019. The decrease in adjusted net income was primarily due to lower gross profit for the reasons described 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 borrowed $220 million from its revolving financing facility, all of which remains drawn as of June 30, 2020. As of June 30, 2020, $2.8 million was pledged against the revolving financing facility for outstanding letters of credit.
As of June 30, 2020, the Company had $342.5 million of total cash, including restricted cash of $64.0 million. 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 anticipates making a principal payment of $3.25 million 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 June 30, 2020, the Company’s leverage ratio was 6.30x.
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 the second quarter of 2020 was an 8.2% tax benefit compared to a 26.4% expense for the second quarter of 2019. The variance is primarily due to the non-deductibility of the Applebee’s goodwill impairment discussed earlier.
Financial Performance Guidance for 2020 Withdrawn
The Company disclosed on March 19, 2020 that it believes its consolidated financial results for 2020 could be materially impacted by the global impact from COVID-19. As a result, the Company withdrew its 2020 financial performance guidance issued on February 24, 2020. The Company assumes no obligation to update or supplement its financial performance guidance issued on February 24, 2020.
Applebee’s Reopening Update
Applebee’s restaurants began reopening their dining rooms on April 27, 2020. As of June 30, 2020, out of 1,639 domestic Applebee’s franchise restaurants, 1,523 were open for in-restaurant dining, 70 were open for only off-premise sales, comprised of take-out and delivery, and 46 were temporarily closed.
IHOP Reopening Update
IHOP restaurants began reopening their dining rooms on April 21, 2020. As of June 30, 2020, out of 1,695 domestic IHOP franchise and area license restaurants, 1,485 were open for in-restaurant dining, 76 were open only for off-premise sales, comprised of take-out and delivery, and 134 were temporarily closed.
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 3,600 restaurants combined in 17 countries and approximately 370 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 (Loss) Income | ||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
|
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| Three Months Ended |
| Six Months Ended | ||||||||||||
|
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| June 30, |
| June 30, | ||||||||||||
|
|
| 2020 |
| 2019 |
| 2020 |
| 2019 | ||||||||
| Revenues: |
|
|
|
|
|
|
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| ||||||||
| Franchise revenues: |
|
|
|
|
|
|
|
| ||||||||
| Royalties, franchise fees and other |
| $ | 38,781 |
|
| $ | 90,930 |
|
| $ | 122,095 |
|
| $ | 187,226 |
|
| Advertising revenues |
| 29,095 |
|
| 71,738 |
|
| 90,818 |
|
| 144,368 |
| ||||
| Total franchise revenues |
| 67,876 |
|
| 162,668 |
|
| 212,913 |
|
| 331,594 |
| ||||
| Company restaurant sales |
| 16,774 |
|
| 33,751 |
|
| 48,074 |
|
| 69,486 |
| ||||
| Rental revenues |
| 23,707 |
|
| 29,878 |
|
| 52,716 |
|
| 60,589 |
| ||||
| Financing revenues |
| 1,355 |
|
| 1,783 |
|
| 2,893 |
|
| 3,593 |
| ||||
| Total revenues |
| 109,712 |
|
| 228,080 |
|
| 316,596 |
|
| 465,262 |
| ||||
| Cost of revenues: |
|
|
|
|
|
|
|
| ||||||||
| Franchise expenses: |
|
|
|
|
|
|
|
| ||||||||
| Advertising expenses |
| 29,095 |
|
| 71,738 |
|
| 90,818 |
|
| 144,368 |
| ||||
| Bad debt expense (credit) |
| 5,053 |
|
| (126) |
|
| 5,571 |
|
| (593) |
| ||||
| Other franchise expenses |
| 2,932 |
|
| 7,295 |
|
| 10,141 |
|
| 15,435 |
| ||||
| Total franchise expenses |
| 37,080 |
|
| 78,907 |
|
| 106,530 |
|
| 159,210 |
| ||||
| Company restaurant expenses |
| 21,139 |
|
| 31,232 |
|
| 51,471 |
|
| 62,770 |
| ||||
| Rental expenses: |
|
|
|
|
|
|
|
| ||||||||
| Interest expense from finance leases |
| 1,137 |
|
| 1,445 |
|
| 2,347 |
|
| 2,974 |
| ||||
| Other rental expenses |
| 20,106 |
|
| 21,495 |
|
| 41,429 |
|
| 42,590 |
| ||||
| Total rental expenses |
| 21,243 |
|
| 22,940 |
|
| 43,776 |
|
| 45,564 |
| ||||
| Financing expenses |
| 128 |
|
| 146 |
|
| 270 |
|
| 292 |
| ||||
| Total cost of revenues |
| 79,590 |
|
| 133,225 |
|
| 202,047 |
|
| 267,836 |
| ||||
| Gross profit |
| 30,122 |
|
| 94,855 |
|
| 114,549 |
|
| 197,426 |
| ||||
| General and administrative expenses |
| 30,870 |
|
| 39,364 |
|
| 68,478 |
|
| 82,183 |
| ||||
| Interest expense, net |
| 17,127 |
|
| 14,602 |
|
| 32,299 |
|
| 29,995 |
| ||||
| Impairment and closure charges |
| 124,365 |
|
| 289 |
|
| 124,353 |
|
| 483 |
| ||||
| Amortization of intangible assets |
| 2,755 |
|
| 2,925 |
|
| 5,581 |
|
| 5,849 |
| ||||
| Loss on extinguishment of debt |
| — |
|
| 8,276 |
|
| — |
|
| 8,276 |
| ||||
| Loss on disposition of assets |
| 1,776 |
|
| 332 |
|
| 1,543 |
|
| 441 |
| ||||
| (Loss) income before income tax provision |
| (146,771) |
|
| 29,067 |
|
| (117,705) |
|
| 70,199 |
| ||||
| Income tax benefit (provision) |
| 11,992 |
|
| (7,677) |
|
| 5,254 |
|
| (17,166) |
| ||||
| Net (loss) income |
| $ | (134,779) |
|
| $ | 21,390 |
|
| $ | (112,451) |
|
| $ | 53,033 |
|
| Net (loss) income available to common stockholders: |
|
|
|
|
|
|
|
| ||||||||
| Net (loss) income |
| $ | (134,779) |
|
| $ | 21,390 |
|
| $ | (112,451) |
|
| $ | 53,033 |
|
| Less: Net loss (income) allocated to unvested participating restricted stock |
| 4,763 |
|
| (719) |
|
| 3,961 |
|
| (1,827) |
| ||||
| Net (loss) income available to common stockholders |
| $ | (130,016) |
|
| $ | 20,671 |
|
| $ | (108,490) |
|
| $ | 51,206 |
|
| Net (loss) income available to common stockholders per share: |
|
|
|
|
|
|
|
| ||||||||
| Basic |
| $ | (8.04) |
|
| $ | 1.20 |
|
| $ | (6.69) |
|
| $ | 2.97 |
|
| Diluted |
| $ | (8.04) |
|
| $ | 1.18 |
|
| $ | (6.69) |
|
| $ | 2.91 |
|
| Weighted average shares outstanding: |
|
|
|
|
|
|
|
| ||||||||
| Basic |
| 16,177 |
|
| 17,181 |
|
| 16,215 |
|
| 17,262 |
| ||||
| Diluted |
| 16,177 |
|
| 17,563 |
|
| 16,215 |
|
| 17,626 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||||||
| Dividends declared per common share |
| — |
| $0.69 |
| $0.76 |
| $1.38 | ||||||||
| Dividends paid per common share |
| $0.76 |
| $0.69 |
| $1.45 |
| $1.32 | ||||||||
| Dine Brands Global, Inc. and Subsidiaries | ||||||||
| Consolidated Balance Sheets | ||||||||
| (In thousands, except share and per share amounts) | ||||||||
|
|
| June 30, 2020 |
| December 31, 2019 | ||||
| Assets |
| (Unaudited) |
|
| ||||
| Current assets: |
|
|
|
| ||||
| Cash and cash equivalents |
| $ | 278,507 |
|
| $ | 116,043 |
|
| Receivables, net of allowance of $11,709 (2020) and $3,138 (2019) |
| 124,619 |
|
| 136,869 |
| ||
| Restricted cash |
| 31,184 |
|
| 40,732 |
| ||
| Prepaid gift card costs |
| 27,370 |
|
| 36,077 |
| ||
| Prepaid income taxes |
| 17,880 |
|
| 13,290 |
| ||
| Other current assets |
| 6,410 |
|
| 3,906 |
| ||
| Total current assets |
| 485,970 |
|
| 346,917 |
| ||
| Other intangible assets, net |
| 555,495 |
|
| 575,103 |
| ||
| Operating lease right-of-use assets |
| 349,103 |
|
| 366,931 |
| ||
| Goodwill |
| 251,628 |
|
| 343,862 |
| ||
| Property and equipment, net |
| 203,540 |
|
| 216,420 |
| ||
| Long-term receivables, net of allowance of $7,981 (2020) and $8,155 (2019) |
| 74,015 |
|
| 85,999 |
| ||
| Deferred rent receivable |
| 65,126 |
|
| 70,308 |
| ||
| Non-current restricted cash |
| 32,800 |
|
| 15,700 |
| ||
| Other non-current assets, net |
| 25,590 |
|
| 28,271 |
| ||
| Total assets |
| $ | 2,043,267 |
|
| $ | 2,049,511 |
|
| Liabilities and Stockholders’ Deficit |
|
|
|
| ||||
| Current liabilities: |
|
|
|
| ||||
| Current maturities of long-term debt |
| $ | 9,750 |
|
| $ | — |
|
| Accounts payable |
| 19,181 |
|
| 40,925 |
| ||
| Gift card liability |
| 121,994 |
|
| 159,019 |
| ||
| Current maturities of operating lease obligations |
| 71,837 |
|
| 72,815 |
| ||
| Current maturities of finance lease and financing obligations |
| 13,307 |
|
| 13,669 |
| ||
| Accrued employee compensation and benefits |
| 10,568 |
|
| 23,904 |
| ||
| Dividends payable |
| — |
|
| 11,702 |
| ||
| Deferred franchise revenue, short-term |
| 8,921 |
|
| 10,086 |
| ||
| Accrued advertising expenses |
| 21,772 |
|
| 8,760 |
| ||
| Other accrued expenses |
| 23,376 |
|
| 17,032 |
| ||
| Total current liabilities |
| 300,706 |
|
| 357,912 |
| ||
| Long-term debt |
| 1,497,116 |
|
| 1,288,248 |
| ||
| Operating lease obligations, less current maturities |
| 350,418 |
|
| 359,025 |
| ||
| Finance lease obligations, less current maturities |
| 74,051 |
|
| 77,393 |
| ||
| Financing obligations, less current maturities |
| 34,682 |
|
| 37,682 |
| ||
| Deferred income taxes, net |
| 86,221 |
|
| 98,499 |
| ||
| Deferred franchise revenue, long-term |
| 53,269 |
|
| 56,944 |
| ||
| Other non-current liabilities |
| 15,375 |
|
| 15,582 |
| ||
| Total liabilities |
| 2,411,838 |
|
| 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; June 30, 2020 - 24,900,436 issued, 16,417,618 outstanding; December 31, 2019 - 24,925,447 issued, 16,521,921 outstanding |
| 249 |
|
| 249 |
| ||
| Additional paid-in-capital |
| 254,429 |
|
| 246,192 |
| ||
| (Accumulated deficit) retained earnings |
| (64,010) |
|
| 61,653 |
| ||
| Accumulated other comprehensive loss |
| (58) |
|
| (58) |
| ||
| Treasury stock, at cost; shares: June 30, 2020 - 8,482,818; December 31, 2019 - 8,403,526 |
| (559,181) |
|
| (549,810) |
| ||
| Total stockholders’ deficit |
| (368,571) |
|
| (241,774) |
| ||
| Total liabilities and stockholders’ deficit |
| $ | 2,043,267 |
|
| $ | 2,049,511 |
|
| Dine Brands Global, Inc. and Subsidiaries | ||||||||
| Consolidated Statements of Cash Flows | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
|
| ||||||||
|
|
| Six Months Ended | ||||||
|
|
| June 30, | ||||||
|
|
| 2020 |
| 2019 | ||||
|
|
|
|
|
| ||||
| Cash flows from operating activities: |
|
|
|
| ||||
| Net (loss) income |
| $ | (112,451) |
|
| $ | 53,033 |
|
| Adjustments to reconcile net (loss) income to cash flows (used in) provided by operating activities: |
|
|
|
| ||||
| Depreciation and amortization |
| 21,345 |
|
| 20,800 |
| ||
| Non-cash stock-based compensation expense |
| 6,670 |
|
| 5,894 |
| ||
| Non-cash interest expense |
| 1,318 |
|
| 2,083 |
| ||
| Loss on extinguishment of debt |
| — |
|
| 8,276 |
| ||
| Impairment and closure charges |
| 124,343 |
|
| 483 |
| ||
| Deferred income taxes |
| (10,793) |
|
| (3,186) |
| ||
| Deferred revenue |
| (4,840) |
|
| (4,179) |
| ||
| Loss on disposition of assets |
| 1,543 |
|
| 441 |
| ||
| Other |
| (252) |
|
| (3,499) |
| ||
| Changes in operating assets and liabilities: |
|
|
|
| ||||
| Accounts receivable, net |
| (31,039) |
|
| (1,976) |
| ||
| Current income tax receivables and payables |
| (5,456) |
|
| 9,442 |
| ||
| Gift card receivables and payables |
| 2,293 |
|
| (7,444) |
| ||
| Other current assets |
| (2,503) |
|
| (3,607) |
| ||
| Accounts payable |
| (903) |
|
| 8,995 |
| ||
| Accrued employee compensation and benefits |
| (13,336) |
|
| (9,872) |
| ||
| Other current liabilities |
| 13,544 |
|
| (6,355) |
| ||
| Cash flows (used in) provided by operating activities |
| (10,517) |
|
| 69,329 |
| ||
| Cash flows from investing activities: |
|
|
|
| ||||
| Principal receipts from notes, equipment contracts and other long-term receivables |
| 10,772 |
|
| 11,386 |
| ||
| Net additions to property and equipment |
| (7,380) |
|
| (9,175) |
| ||
| Proceeds from sale of property and equipment |
| 456 |
|
| 400 |
| ||
| Additions to long-term receivables |
| (1,475) |
|
| (1,555) |
| ||
| Other |
| (276) |
|
| (186) |
| ||
| Cash flows provided by investing activities |
| 2,097 |
|
| 870 |
| ||
| Cash flows from financing activities: |
|
|
|
| ||||
| Proceeds from issuance of long-term debt |
| — |
|
| 1,300,000 |
| ||
| Repayment of long-term debt |
| — |
|
| (1,283,750) |
| ||
| Borrowing from revolving credit facilities |
| 220,000 |
|
| — |
| ||
| Repayment of revolving credit facilities |
| — |
|
| (25,000) |
| ||
| Payment of debt issuance costs |
| — |
|
| (12,189) |
| ||
| Dividends paid on common stock |
| (23,934) |
|
| (23,346) |
| ||
| Repurchase of common stock |
| (29,853) |
|
| (46,383) |
| ||
| Principal payments on finance lease obligations |
| (5,993) |
|
| (6,964) |
| ||
| Proceeds from stock options exercised |
| 20,523 |
|
| 6,938 |
| ||
| Tax payments for restricted stock upon vesting |
| (2,129) |
|
| (2,242) |
| ||
| Other |
| (178) |
|
| — |
| ||
| Cash flows provided by (used in) financing activities |
| 178,436 |
|
| (92,936) |
| ||
| Net change in cash, cash equivalents and restricted cash |
| 170,016 |
|
| (22,737) |
| ||
| Cash, cash equivalents and restricted cash at beginning of period |
| 172,475 |
|
| 200,379 |
| ||
| Cash, cash equivalents and restricted cash at end of period |
| $ | 342,491 |
|
| $ | 177,642 |
|
| Dine Brands Global, Inc. and Subsidiaries | ||||||||||||||||
| Non-GAAP Financial Measures | ||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Reconciliation of net income available to common stockholders to net income available to common stockholders, as adjusted for the following items: Impairment and closure charges; amortization of intangible assets; non-cash interest expense; debt; nonrecurring restaurant costs; 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, | ||||||||||||
|
|
| June 30, 2020 |
| June 30, 2019 |
| 2020 |
| 2019 | ||||||||
|
|
|
|
|
|
|
|
|
| ||||||||
| Net (loss) income available to common stockholders, as reported |
| $ | (130,016) |
|
| $ | 20,671 |
|
| $ | (108,490) |
|
| $ | 51,206 |
|
| Impairment and closure charges |
| 124,365 |
|
| 289 |
|
| 124,353 |
|
| 483 |
| ||||
| Amortization of intangible assets |
| 2,755 |
|
| 2,925 |
|
| 5,581 |
|
| 5,849 |
| ||||
| Loss on extinguishment of debt |
| — |
|
| 8,276 |
|
| — |
|
| 8,276 |
| ||||
| Non-cash interest expense |
| 663 |
|
| 965 |
|
| 1,318 |
|
| 2,083 |
| ||||
| Nonrecurring restaurant costs |
| — |
|
| 269 |
|
| — |
|
| 329 |
| ||||
| Loss on disposition of assets |
| 1,776 |
|
| 332 |
|
| 1,543 |
|
| 441 |
| ||||
| Net income tax provision for above adjustments |
| (9,331) |
|
| (3,395) |
|
| (10,140) |
|
| (4,540) |
| ||||
| Net income allocated to unvested participating restricted stock |
| (4,249) |
|
| (340) |
|
| (4,293) |
|
| (458) |
| ||||
| Net (loss) income available to common stockholders, as adjusted |
| $ | (14,037) |
|
| $ | 29,992 |
|
| $ | 9,872 |
|
| $ | 63,669 |
|
|
|
|
|
|
|
|
|
|
| ||||||||
| Diluted net (loss) income available to common stockholders per share: |
|
|
|
|
|
|
|
| ||||||||
| Net (loss) income available to common stockholders, as reported |
| $ | (8.04) |
|
| $ | 1.18 |
|
| $ | (6.69) |
|
| $ | 2.91 |
|
| Impairment and closure charges |
| 7.19 |
|
| 0.01 |
|
| 7.14 |
|
| 0.02 |
| ||||
| Amortization of intangible assets |
| 0.13 |
|
| 0.12 |
|
| 0.26 |
|
| 0.25 |
| ||||
| Loss on extinguishment of debt |
| — |
|
| 0.35 |
|
| — |
|
| 0.35 |
| ||||
| Non-cash interest expense |
| 0.03 |
|
| 0.04 |
|
| 0.06 |
|
| 0.09 |
| ||||
| Nonrecurring restaurant costs |
| — |
|
| 0.01 |
|
| — |
|
| 0.01 |
| ||||
| Loss on disposition of assets |
| 0.08 |
|
| 0.01 |
|
| 0.07 |
|
| 0.02 |
| ||||
| Net income allocated to unvested participating restricted stock |
| (0.26) |
|
| (0.02) |
|
| (0.25) |
|
| (0.03) |
| ||||
| Rounding |
| — |
|
| 0.01 |
|
| 0.02 |
|
| (0.01) |
| ||||
| Diluted net (loss) income available to common stockholders per share, as adjusted |
| $ | (0.87) |
|
| $ | 1.71 |
|
| $ | 0.61 |
|
| $ | 3.61 |
|
|
|
|
|
|
|
|
|
|
| ||||||||
| Numerator for basic EPS-(loss) income available to common stockholders, as adjusted |
| $ | (14,037) |
|
| $ | 29,992 |
|
| $ | 9,872 |
|
| $ | 63,669 |
|
| Effect of unvested participating restricted stock using the two-class method |
| 1 |
|
| 14 |
|
| — |
|
| 30 |
| ||||
| Numerator for diluted EPS-(loss) income available to common stockholders, as adjusted |
| $ | (14,036) |
|
| $ | 30,006 |
|
| $ | 9,872 |
|
| $ | 63,699 |
|
|
|
|
|
|
|
|
|
|
| ||||||||
| Denominator for basic EPS-weighted-average shares |
| 16,177 |
|
| 17,181 |
|
| 16,215 |
|
| 17,262 |
| ||||
| Dilutive effect of stock options |
| — |
|
| 382 |
|
| 101 |
|
| 364 |
| ||||
| Denominator for diluted EPS-weighted-average shares |
| 16,177 |
|
| 17,563 |
|
| 16,316 |
|
| 17,626 |
| ||||
| 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, | ||||||
|
|
| 2020 |
| 2019 | ||||
|
|
| (In millions) | ||||||
| Cash flows (used in) provided by operating activities |
| $ | (10.5) |
|
| $ | 69.3 |
|
| Receipts from notes and equipment contracts receivable |
| 5.5 |
|
| 5.9 |
| ||
| Additions to property and equipment |
| (7.4) |
|
| (9.2) |
| ||
| Adjusted free cash flow |
| (12.4) |
|
| 66.0 |
| ||
| Dividends paid on common stock |
| (23.9) |
|
| (23.3) |
| ||
| Repurchase of Dine Brands Global common stock |
| (29.9) |
|
| (46.4) |
| ||
|
|
| $ | (66.2) |
|
| $ | (3.7) |
|
| Dine Brands Global, Inc. and Subsidiaries | ||||||||||||
| Non-GAAP Financial Measures | ||||||||||||
| (in thousands) | ||||||||||||
| (Unaudited) | ||||||||||||
| Reconciliation of the Company's net income to “adjusted EBITDA.” The Company defines adjusted EBITDA as net income, 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, | ||||||||||
|
| 2020 |
| 2019 |
| 2020 |
| 2019 | |||||
|
|
|
|
|
| ||||||||
| Net (loss) income, as reported | $ | (134,779) | $ | 21,390 | $ | (112,451) | $ | 53,033 | ||||
| Impairment and closure charges | 124,365 | 289 | 124,353 | 483 | ||||||||
| Interest charges on finance leases | 1,646 | 1,970 | 3,369 | 4,053 | ||||||||
| All other interest charges | 17,657 | 15,390 | 33,899 | 32,087 | ||||||||
| Income tax (benefit) provision | (11,992) | 7,677 | (5,254) | 17,166 | ||||||||
| Depreciation and amortization | 10,695 | 10,620 | 21,345 | 20,800 | ||||||||
| Non-cash stock-based compensation | 2,632 | 1,787 | 6,670 | 5,893 | ||||||||
| Loss on extinguishment of debt | — | 8,276 | — | 8,276 | ||||||||
| Loss on disposition of assets | 1,776 | 332 | 1,543 | 441 | ||||||||
| Other taxes | 86 | 237 | 304 | 439 | ||||||||
| Adjusted EBITDA | $ | 12,086 | $ | 67,968 | $ | 73,778 | $ | 142,671 | ||||
| Dine Brands Global, Inc. and Subsidiaries | |||||||||||||||||||||||||||
| Restaurant Data | |||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||
| The following table sets forth, for the three and six months ended June 30, 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 |
| Six Months Ended | |||||||||||||||||||||||
|
|
| June 30, |
| June 30, | |||||||||||||||||||||||
|
|
| 2020 |
| 2019 |
| 2020 |
| 2019 | |||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
| Applebee's |
|
|
|
|
|
|
|
| |||||||||||||||||||
| Effective Restaurants(a) |
|
|
|
|
|
|
|
| |||||||||||||||||||
| Franchise |
| 1,527 |
|
| 1,753 |
|
| 1,612 |
|
| 1,758 |
| |||||||||||||||
| Company |
| 67 |
|
| 69 |
|
| 68 |
|
| 69 |
| |||||||||||||||
| Total |
| 1,594 |
|
| 1,822 |
|
| 1,680 |
|
| 1,827 |
| |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
| System-wide(b) |
|
|
|
|
|
|
|
| |||||||||||||||||||
| Domestic sales percentage change(c) |
| (53.5) | % |
| (3.0) | % |
| (32.5) | % |
| (2.2) | % | |||||||||||||||
| Domestic same-restaurant sales percentage change(d) |
| (49.4) | % |
| (0.5) | % |
| (29.1) | % |
| 0.6 | % | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
| Franchise(b) |
|
|
|
|
|
|
|
| |||||||||||||||||||
| Domestic sales percentage change(c) (e) |
| (53.6) | % |
| (6.1) | % |
| (32.5) | % |
| (5.4) | % | |||||||||||||||
| Domestic same-restaurant sales percentage change(d) |
| (49.4) | % |
| (0.6) | % |
| (29.0) | % |
| 0.5 | % | |||||||||||||||
| Average weekly domestic unit sales (in thousands) |
| $ | 25.0 |
|
| $ | 48.4 |
|
| $ | 35.2 |
|
| $ | 49.0 |
| |||||||||||
| IHOP |
|
|
|
|
|
|
|
|
| ||||||||||||||||||
| Effective Restaurants(a) |
|
|
|
|
|
|
|
|
| ||||||||||||||||||
| Franchise |
| 1,375 |
|
| 1,656 |
|
| 1,510 |
|
| 1,656 |
|
| ||||||||||||||
| Area license |
| 144 |
|
| 155 |
|
| 153 |
|
| 156 |
|
| ||||||||||||||
| Total |
| 1,519 |
|
| 1,811 |
|
| 1,663 |
|
| 1,812 |
|
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
| System-wide(b) |
|
|
|
|
|
|
|
|
| ||||||||||||||||||
| Sales percentage change(c) |
| (64.3) | % |
| 3.2 | % |
| (39.1) | % |
| 2.8 | % |
| ||||||||||||||
| Domestic same-restaurant sales percentage change, including area license restaurants(d) |
| (59.1) | % |
| 2.0 | % |
| (35.6) | % |
| 1.7 | % |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
| Franchise(b) |
|
|
|
|
|
|
|
|
| ||||||||||||||||||
| Sales percentage change(c) |
| (64.4) | % |
| 3.3 | % |
| (39.2) | % |
| 2.8 | % |
| ||||||||||||||
| Domestic same-restaurant sales percentage change(d) |
| (58.9) | % |
| 1.9 | % |
| (35.4) | % |
| 1.5 | % |
| ||||||||||||||
| Average weekly unit sales (in thousands) |
| $ | 15.8 |
|
| $ | 36.8 |
|
| $ | 24.6 |
|
| $ | 36.9 |
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
| Area License (b) |
|
|
|
|
|
|
|
|
| ||||||||||||||||||
| Sales percentage change(c) |
| (63.3) | % |
| 2.0 | % |
| (38.1) | % |
| 2.3 | % |
| ||||||||||||||
| 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 six months ended June 30, 2020 and 2019 and sales by company-operated restaurants were as follows: | |
|
| Three Months Ended |
| Six Months Ended | ||||||||||||
|
| June 30, |
| June 30, | ||||||||||||
|
| 2020 |
| 2019 |
| 2020 |
| 2019 | ||||||||
|
| (In millions) | ||||||||||||||
| Reported sales |
|
|
|
|
|
|
| ||||||||
| Applebee's domestic franchise restaurant sales | $ | 472.0 |
|
| $ | 1,016.5 |
|
| $ | 1,390.2 |
|
| $ | 2,060.7 |
|
| Applebee's company-operated restaurants | 16.8 |
|
| 33.7 |
|
| 48.1 |
|
| 69.5 |
| ||||
| IHOP franchise restaurant sales | 282.1 |
|
| 791.6 |
|
| 966.9 |
|
| 1,590.4 |
| ||||
| IHOP area license restaurant sales | 26.4 |
|
| 71.8 |
|
| 90.4 |
|
| 146.1 |
| ||||
| Total | $ | 797.3 |
|
| $ | 1,913.6 |
|
| $ | 2,495.6 |
|
| $ | 3,866.7 |
|
| (c) | “Sales percentage change” reflects, for each category of restaurants, the percentage change in sales in any given fiscal period compared to the prior fiscal period for all restaurants in that category. | |
|
| ||
| (d) | “Domestic same-restaurant sales percentage change” reflects the percentage change in sales, in any given fiscal period, compared to the same weeks in the prior 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) | |||||||||||
| The following table summarizes our restaurant development activity: | |||||||||||
|
| Three Months Ended |
| Six Months Ended | ||||||||
|
| June 30, |
| June 30, | ||||||||
|
| 2020 |
| 2019 |
| 2020 |
| 2019 | ||||
| Applebee's Restaurant Development Activity |
|
|
|
|
| ||||||
| Summary - beginning of period: |
|
|
|
|
|
|
| ||||
| Franchise | 1,706 |
|
| 1,761 |
|
| 1,718 |
|
| 1,768 |
|
| Company restaurants | 69 |
|
| 69 |
|
| 69 |
|
| 69 |
|
| Total Applebee's restaurants, beginning of period | 1,775 |
|
| 1,830 |
|
| 1,787 |
|
| 1,837 |
|
| Franchise restaurants opened |
|
|
|
|
|
|
| ||||
| Domestic | — |
|
| — |
|
| — |
|
| — |
|
| International | — |
|
| 1 |
|
| — |
|
| 1 |
|
| Total franchise restaurants opened | — |
|
| 1 |
|
| — |
|
| 1 |
|
| Franchise restaurants permanently closed: |
|
|
|
|
|
|
| ||||
| Domestic | (24) |
|
| (13) |
|
| (32) |
|
| (17) |
|
| International | (2) |
|
| (3) |
|
| (6) |
|
| (6) |
|
| Total franchise restaurants permanently closed | (26) |
|
| (16) |
|
| (38) |
|
| (23) |
|
| Net franchise restaurant reduction | (26) |
|
| (15) |
|
| (38) |
|
| (22) |
|
| Summary - end of period: |
|
|
|
|
|
|
| ||||
| Franchise | 1,680 |
|
| 1,746 |
|
| 1,680 |
|
| 1,746 |
|
| Company | 69 |
|
| 69 |
|
| 69 |
|
| 69 |
|
| Total Applebee's restaurants, end of period | 1,749 |
|
| 1,815 |
|
| 1,749 |
|
| 1,815 |
|
| Domestic | 1,633 |
|
| 1,676 |
|
| 1,633 |
|
| 1,676 |
|
| International | 116 |
|
| 139 |
|
| 116 |
|
| 139 |
|
| IHOP Restaurant Development Activity |
|
|
|
|
|
|
| ||||
| Summary - beginning of period: |
|
|
|
|
|
|
| ||||
| Franchise | 1,680 |
|
| 1,663 |
|
| 1,680 |
|
| 1,669 |
|
| Area license | 160 |
|
| 159 |
|
| 161 |
|
| 162 |
|
| Total IHOP restaurants, beginning of period | 1,840 |
|
| 1,822 |
|
| 1,841 |
|
| 1,831 |
|
| Franchise/area license restaurants opened: |
|
|
|
|
|
|
| ||||
| Domestic franchise | 1 |
|
| 9 |
|
| 7 |
|
| 15 |
|
| Domestic area license | — |
|
| 2 |
|
| 1 |
|
| 2 |
|
| International franchise | — |
|
| 2 |
|
| 2 |
|
| 2 |
|
| Total franchise/area license restaurants opened | 1 |
|
| 13 |
|
| 10 |
|
| 19 |
|
| Franchise/area license restaurants permanently closed: |
|
|
|
|
|
|
| ||||
| Domestic franchise | (13) |
|
| (1) |
|
| (19) |
|
| (12) |
|
| Domestic area license | (1) |
|
| (2) |
|
| (3) |
|
| (5) |
|
| International franchise | (2) |
|
| (4) |
|
| (4) |
|
| (5) |
|
| International area license | (2) |
|
| — |
|
| (2) |
|
| — |
|
| Total franchise/area license restaurants permanently closed | (18) |
|
| (7) |
|
| (28) |
|
| (22) |
|
| Net franchise/area license restaurant reduction | (17) |
|
| 6 |
|
| (18) |
|
| (3) |
|
| Summary - end of period |
|
|
|
|
|
|
| ||||
| Franchise | 1,666 |
|
| 1,669 |
|
| 1,666 |
|
| 1,669 |
|
| Area license | 157 |
|
| 159 |
|
| 157 |
|
| 159 |
|
| Total IHOP restaurants, end of period | 1,823 |
|
| 1,828 |
|
| 1,823 |
|
| 1,828 |
|
| Domestic | 1,696 |
|
| 1,705 |
|
| 1,696 |
|
| 1,705 |
|
| International | 127 |
|
| 123 |
|
| 127 |
|
| 123 |
|