Dine Brands Global, Inc. Reports Fourth Quarter and Fiscal 2021 Results
Fourth Quarter 2021 Consolidated Revenues Increased 17% to $229.6 Million - Fourth Quarter 2021 Gross Profit Improved by 43% to $96.5 Million
Dine Brands Global, Inc. (NYSE: DIN), the parent company of Applebee’s Neighborhood Grill + Bar and IHOP restaurants, today announced financial results for the fourth quarter and fiscal 2021.
“This past year delivered strong growth for our business that can best be defined by our top-line results, Applebee’s record-setting full-year comp sales performance relative to 2019, marked improvement in gross profit, and the ability to resume returning capital to shareholders. We’re encouraged by our fourth-quarter results as our disciplined strategies continue to drive strong underlying performance. As we continue to evolve the company by making strategic investments in the business, we’ve broadened our vision to include our impact on the environment, society, and growing in a more sustainable way,” said John Peyton, chief executive officer of Dine Brands Global, Inc.
Vance Chang, chief financial officer, added, “We ended the year in a position of strength. Our highly franchised business model enabled us to generate meaningful adjusted free cash flow, supported by a stable recovery at our two strong brands. Looking ahead, we will continue to create value for our shareholders by returning capital while concurrently investing to unlock long-term growth.”
Domestic System-Wide Comparable Same-Restaurant Sales Relative to the Fourth Quarter of 2020
| Domestic Same-Restaurant Sales (Fiscal Month) | ||||||||
| October | November | December | Q4 2021 | |||||
| Applebee's | 19.2% | 36.1% | 49.7% | 34.8% | ||||
| IHOP | 26.1% | 40.2% | 50.1% | 39.2% | ||||
- Applebee’s year-over-year comparable same-restaurant sales increased 34.8% for the fourth quarter of 2021.
- IHOP’s year-over-year comparable same-restaurant sales increased 39.2% for the fourth quarter of 2021.
- Both brands outperformed their respective categories in the fourth quarter of 2021 relative to the fourth quarter of 2020, according to Black Box IntelligenceTM.
Domestic System-Wide Comparable Same-Restaurant Sales Relative to the Fourth Quarter of 2019
| Domestic Same-Restaurant Sales (Fiscal Month) | ||||||||
| October | November | December | Q4 2021 | |||||
| Applebee's | 13.6% | 10.0% | 5.0% | 9.1% | ||||
| IHOP | -3.0% | -1.0% | -4.6% | -3.0% | ||||
- Applebee’s two-year comparable same-restaurant sales increased 9.1% for the fourth quarter of 2021 relative to the fourth quarter of 2019.
- IHOP’s two-year comparable same-restaurant sales decreased 3.0% for the fourth quarter of 2021 relative to the fourth quarter of 2019.
- Applebee’s outperformed its category in the fourth quarter of 2021 relative to the fourth quarter of 2019, according to Black Box IntelligenceTM.
Average Weekly Unit Sales Comparison Relative to the Fourth Quarter of 2019
| ($ in thousands) | ||||||
| Q4 2021 | Q4 2019 | % Change Compared to Pre-Pandemic Sales | ||||
| Applebee's (Domestic Unit Sales) | $51.9 | $46.1 | 12.6% | |||
| IHOP | $37.5 | $37.3 | 0.5% | |||
- Applebee’s domestic franchise average weekly unit sales increased 12.6% for the fourth quarter of 2021 relative to the fourth quarter of 2019.
- IHOP’s average weekly unit sales increased 0.5% for the fourth quarter of 2021 relative to the fourth quarter of 2019.
Off-Premise Sales Growth Comparison Relative to the Fourth Quarter of 2020
- Applebee’s off-premise sales accounted for 26.9% of sales mix for the fourth quarter of 2021.
- Applebee’s off-premise average weekly sales were approximately $13,800 for the fourth quarter of 2021 compared to approximately $14,300 for the fourth quarter of 2020.
- IHOP’s off-premise sales accounted for 23.7% of sales mix for the fourth quarter of 2021.
- IHOP’s off-premise average weekly sales were approximately $9,300 for the fourth quarter of 2021 compared to approximately $9,200 for the fourth quarter of 2020.
Fourth Quarter of 2021 Summary
- GAAP earnings per diluted share of $1.14 for the fourth quarter of 2021 compared to a net loss per diluted share of $0.10 for the fourth quarter of 2020. This improvement was primarily due to an increase in gross profit and a decrease in closure and impairment charges, partially offset by an increase in general and administrative expenses and higher income tax expense.
- Adjusted earnings per diluted share of $1.32 for the fourth quarter of 2021 compared to adjusted earnings per diluted share of $0.39 for the fourth quarter of 2020. The increase was primarily due to higher gross profit, partially offset by higher general and administrative expenses. (See “Non-GAAP Financial Measures” and reconciliation of GAAP earnings per diluted share to adjusted earnings per diluted share.)
- General and administrative expenses for the fourth quarter of 2021 were $48.9 million compared to $39.4 million for the fourth quarter of 2020. The variance was mainly due to higher incentive compensation accrual.
- Consolidated adjusted EBITDA for the fourth quarter of 2021 was $60.1 million compared to $42.0 million for the fourth 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 for the fourth quarter of 2021 resulted in the opening of 15 new restaurants and the closure of 23 restaurants.
Fiscal 2021 Summary
- GAAP earnings per diluted share of $5.66 for 2021 compared to a net loss per diluted share of $6.43 for 2020. This variance was primarily due to closure and impairment charges incurred in 2020 totaling $132.6 million primarily related to the non-cash write-downs of Applebee’s goodwill and other intangible assets because of the impact of COVID-19 on the Company’s operations and higher gross profit for 2021, partially offset by higher general and administrative expenses. There were no similar impairments in 2021.
- Adjusted earnings per diluted share of $6.54 for 2021 compared to adjusted earnings per diluted share of $1.79 for 2020. The increase was primarily due to higher gross profit, partially offset by an increase in general and administrative expenses. (See “Non-GAAP Financial Measures” and reconciliation of GAAP earnings per diluted share to adjusted earnings per diluted share.)
- General and administrative expenses for 2021 were $171.8 million compared to $144.8 million for 2020. The variance was mainly due to higher incentive compensation accrual.
- Consolidated adjusted EBITDA for 2021 was $253.3 million. This compares to $158.7 million for 2020. (See “Non-GAAP Financial Measures” and reconciliation of GAAP net income to consolidated adjusted EBITDA.)
- The Company generated adjusted free cash flow of $191.0 million for 2021. This compares to adjusted free cash flow of $106.6 million for 2020. (See “Non-GAAP Financial Measures” and reconciliation of the Company’s cash provided by operating activities to adjusted free cash flow.)
- Cash flows from operating activities for 2021 were $195.8 million. This compares to cash flows from operating activities of $96.5 million for 2020. The improvement in both adjusted free cash flow and cash flows from operating activities was mainly due to an increase in gross profit and a favorable change in working capital, partially offset by an increase in general and administrative expenses.
- Development activity by Applebee’s and IHOP franchisees for 2021 resulted in the opening of 46 new restaurants and the closure of 96 restaurants. The number of closures in 2021 was 46% lower than in 2020.
Cash Position
As of December 31, 2021, the Company had $425.4 million of total cash, cash equivalents and restricted cash, of which $361.4 million was unrestricted cash. The Company believes that its asset-light business model and cash position will continue to provide strong liquidity during the ongoing recovery from the pandemic.
As of December 31, 2021, the Company’s leverage ratio was 3.86x compared to 4.36x as of September 30, 2021.
As of December 31, 2021, the Company’s debt service coverage ratio was approximately 4.7x compared to approximately 4.8x as of September 30, 2021.
As of December 31, 2021, there were no outstanding borrowings under the revolving credit facility. As of December 31, 2021, $3.3 million was pledged against the revolving credit facility for outstanding letters of credit, leaving $221.7 million available.
GAAP Effective Tax Rate
The Company’s effective tax rate for 2021 was a 19.7% tax expense compared to a 4.2% tax benefit for 2020. The 2021 effective tax rate of 19.7% applied to pretax book income was different than the statutory Federal income tax rate of 21% primarily due to the recognition of excess tax benefits on stock-based compensation. The 2020 effective tax rate of 4.2% applied to pretax book loss was significantly different than the statutory Federal income tax rate of 21% primarily because of the $92.2 million impairment of goodwill incurred, which was not deductible for income tax purposes and therefore had no associated tax benefit.
Capital Return to Shareholders
The Company repurchased 59,099 shares of its common stock in 2021 for a total of approximately $4.5 million. On October 29, 2021, the Company declared a cash dividend of $0.40 per share of common stock for the fourth quarter of 2021, which was paid on January 7, 2022.
On February 22, 2022, the Company announced that its Board of Directors declared and approved a 15% increase in the quarterly cash dividend to $0.46 per share of common stock. The dividend will be payable on April 1, 2022, to the Company’s stockholders of record at the close of business on March 21, 2022.
Effective April 1, 2022, the Company’s Board of Directors also approved a new share repurchase program of up to $250 million and terminated the existing share repurchase program, approved in February 2019. Approximately $66 million remained available for repurchases under the existing share repurchase program as of December 31, 2021.
Financial Performance Guidance for 2022
The Company’s guidance assumes there are no significant disruptions to its business due to COVID-19 during 2022, except for the impact from Omicron in the first quarter. The projections are as of this date. The Company assumes no obligation to update or supplement this information.
- General and administrative expenses are expected to range between approximately $188 million and $198 million, including non-cash stock-based compensation expense and depreciation of approximately $30 million. This range reflects incremental investments in technology and operational initiatives as well as unit development and is inclusive of general and administrative expenses related to the company restaurants segment.
- Capital expenditures are expected to range between $33 million and $38 million, reflecting incremental investments in the business to support sustainable growth.
- Domestic development activity by IHOP franchisees and area licensees are expected to result in net new openings between 50 and 65 restaurants.
- Domestic development activity by Applebee’s franchisees is expected to result in between 5 and 15 net fewer restaurants. In 2021, Applebee’s concluded a strategic initiative to close underperforming domestic restaurants to improve the performance of the franchised system.
- Consolidated adjusted EBITDA is expected to range between approximately $235 million and $250 million. This range is inclusive of adjusted EBITDA related to the company restaurants segment.
About Dine Brands Global, Inc.
Based in Glendale, California, Dine Brands Global, Inc. (NYSE: DIN), through its subsidiaries, franchises restaurants under both Applebee’s Neighborhood Grill + Bar and IHOP brands. With over 3,400 restaurants combined in 16 countries and 338 franchisees, Dine Brands is one of the largest full-service restaurant companies in the world.
| Dine Brands Global, Inc. and Subsidiaries | ||||||||||||||||
| Consolidated Statements of Comprehensive Income (Loss) | ||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| (Unaudited) | ||||||||||||||||
| Revenues: | ||||||||||||||||
| Franchise revenues: | ||||||||||||||||
| Royalties, franchise fees and other | $ | 92,008 | $ | 76,044 | $ | 357,146 | $ | 267,959 | ||||||||
| Advertising revenues | 70,872 | 58,744 | 274,790 | 201,494 | ||||||||||||
| Total franchise revenues | 162,880 | 134,788 | 631,936 | 469,453 | ||||||||||||
| Company restaurant sales | 36,582 | 32,627 | 146,000 | 108,054 | ||||||||||||
| Rental revenues | 29,136 | 27,029 | 113,933 | 105,939 | ||||||||||||
| Financing revenues | 1,032 | 1,585 | 4,298 | 5,822 | ||||||||||||
| Total revenues | 229,630 | 196,029 | 896,167 | 689,268 | ||||||||||||
| Cost of revenues: | ||||||||||||||||
| Franchise expenses: | ||||||||||||||||
| Advertising expenses | 68,385 | 59,262 | 272,303 | 202,012 | ||||||||||||
| Bad debt (credit) expense | (682 | ) | 4,340 | (4,928 | ) | 12,756 | ||||||||||
| Other franchise expenses | 8,315 | 8,205 | 28,512 | 24,204 | ||||||||||||
| Total franchise expenses | 76,018 | 71,807 | 295,887 | 238,972 | ||||||||||||
| Company restaurant expenses | 35,238 | 31,776 | 136,748 | 111,550 | ||||||||||||
| Rental expenses: | ||||||||||||||||
| Interest expense from finance leases | 769 | 1,110 | 3,446 | 4,563 | ||||||||||||
| Other rental expenses | 21,038 | 23,818 | 84,397 | 84,939 | ||||||||||||
| Total rental expenses | 21,807 | 24,928 | 87,843 | 89,502 | ||||||||||||
| Financing expenses | 108 | 135 | 464 | 528 | ||||||||||||
| Total cost of revenues | 133,171 | 128,646 | 520,942 | 440,552 | ||||||||||||
| Gross profit | 96,459 | 67,383 | 375,225 | 248,716 | ||||||||||||
| General and administrative expenses | 48,947 | 39,440 | 171,838 | 144,791 | ||||||||||||
| Interest expense, net | 15,375 | 17,752 | 63,331 | 66,895 | ||||||||||||
| Closure and impairment charges | 385 | 8,099 | 5,409 | 132,620 | ||||||||||||
| Amortization of intangible assets | 2,664 | 2,663 | 10,679 | 10,903 | ||||||||||||
| Loss (gain) on disposition of assets | 609 | (561 | ) | 2,045 | 2,069 | |||||||||||
| Income before income taxes | 28,479 | (10 | ) | 121,923 | (108,562 | ) | ||||||||||
| Income tax (provision) benefit | (8,691 | ) | (1,551 | ) | (24,059 | ) | 4,568 | |||||||||
| Net income (loss) | $ | 19,788 | $ | (1,561 | ) | $ | 97,864 | $ | (103,994 | ) | ||||||
| Net income (loss) available to common stockholders: | ||||||||||||||||
| Net income (loss) | $ | 19,788 | $ | (1,561 | ) | $ | 97,864 | $ | (103,994 | ) | ||||||
| Less: Net income allocated to unvested participating restricted stock | (409 | ) | — | (2,295 | ) | (420 | ) | |||||||||
| Net income (loss) available to common stockholders | $ | 19,379 | $ | (1,561 | ) | $ | 95,569 | $ | (104,414 | ) | ||||||
| Net income (loss) available to common stockholders per share: | ||||||||||||||||
| Basic | $ | 1.14 | $ | (0.10 | ) | $ | 5.69 | $ | (6.43 | ) | ||||||
| Diluted | $ | 1.14 | $ | (0.10 | ) | $ | 5.66 | $ | (6.43 | ) | ||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 16,941 | 16,232 | 16,799 | 16,230 | ||||||||||||
| Diluted | 16,991 | 16,232 | 16,890 | 16,230 | ||||||||||||
| Dividends declared per common share | $ | 0.40 | $ | — | $ | 0.40 | $ | 0.76 | ||||||||
| Dividends paid per common share | $ | — | $ | — | $ | — | $ | 1.45 | ||||||||
| Dine Brands Global, Inc. and Subsidiaries | ||||||||
| Consolidated Balance Sheets | ||||||||
| (In thousands, except share and per share amounts) | ||||||||
| December 31, 2021 | December 31, 2020 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 361,412 | $ | 383,369 | ||||
| Receivables, net of allowance of $4,959 (2021) and $15,057 (2020) | 119,968 | 121,897 | ||||||
| Restricted cash | 47,541 | 39,884 | ||||||
| Prepaid gift card costs | 28,175 | 29,080 | ||||||
| Prepaid income taxes | 10,529 | 6,178 | ||||||
| Other current assets | 6,728 | 6,098 | ||||||
| Total current assets | 574,353 | 586,506 | ||||||
| Other intangible assets, net | 539,390 | 549,671 | ||||||
| Operating lease right-of-use assets | 335,428 | 346,086 | ||||||
| Goodwill | 251,628 | 251,628 | ||||||
| Property and equipment, net | 179,411 | 187,977 | ||||||
| Deferred rent receivable | 50,257 | 56,449 | ||||||
| Long-term receivables, net of allowance of $6,897 (2021) and $7,999 (2020) | 42,493 | 54,512 | ||||||
| Non-current restricted cash | 16,400 | 32,800 | ||||||
| Other non-current assets, net | 10,006 | 9,316 | ||||||
| Total assets | $ | 1,999,366 | $ | 2,074,945 | ||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current liabilities: | ||||||||
| Current maturities of long-term debt | $ | — | $ | 13,000 | ||||
| Accounts payable | 55,956 | 37,424 | ||||||
| Gift card liability | 165,530 | 144,159 | ||||||
| Current maturities of operating lease obligations | 72,079 | 69,672 | ||||||
| Current maturities of finance lease and financing obligations | 10,693 | 11,293 | ||||||
| Accrued employee compensation and benefits | 40,785 | 21,237 | ||||||
| Accrued advertising | 33,752 | 21,641 | ||||||
| Deferred franchise revenue, short-term | 7,246 | 7,682 | ||||||
| Dividends payable | 6,919 | — | ||||||
| Other accrued expenses | 17,770 | 22,460 | ||||||
| Total current liabilities | 410,730 | 348,568 | ||||||
| Long-term debt, net, less current maturities | 1,279,623 | 1,491,996 | ||||||
| Operating lease obligations, less current maturities | 320,848 | 345,163 | ||||||
| Finance lease obligations, less current maturities | 59,625 | 69,012 | ||||||
| Financing obligations, less current maturities | 31,967 | 32,797 | ||||||
| Deferred income taxes, net | 76,228 | 78,293 | ||||||
| Deferred franchise revenue, long-term | 46,100 | 52,237 | ||||||
| Other non-current liabilities | 17,052 | 11,530 | ||||||
| Total liabilities | 2,242,173 | 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; 2021 -24,992,275 issued, 17,163,946 outstanding; 2020 - 24,882,122 issued, 16,452,174 outstanding | 250 | 249 | ||||||
| Additional paid-in-capital | 256,189 | 257,625 | ||||||
| Retained earnings (accumulated deficit) | 35,415 | (55,553 | ) | |||||
| Accumulated other comprehensive loss | (59 | ) | (55 | ) | ||||
| Treasury stock, at cost; shares: 2021 - 7,828,329; 2020 - 8,429,948 | (534,602 | ) | (556,917 | ) | ||||
| Total stockholders’ deficit | (242,807 | ) | (354,651 | ) | ||||
| Total liabilities and stockholders’ deficit | $ | 1,999,366 | $ | 2,074,945 | ||||
| Dine Brands Global, Inc. and Subsidiaries | ||||||||
| Consolidated Statements of Cash Flows | ||||||||
| (In thousands) | ||||||||
| Twelve Months Ended | ||||||||
| December 31, | ||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | 97,864 | $ | (103,994 | ) | |||
| Adjustments to reconcile net income (loss) to cash flows provided by operating activities: | ||||||||
| Depreciation and amortization | 39,885 | 42,829 | ||||||
| Non-cash stock-based compensation expense | 11,577 | 12,508 | ||||||
| Non-cash impairment and closure charges | 5,324 | 132,501 | ||||||
| Non-cash interest expense | 2,852 | 2,698 | ||||||
| Deferred income taxes | (2,065 | ) | (20,049 | ) | ||||
| Deferred revenue | (6,573 | ) | (7,111 | ) | ||||
| Loss on disposition of assets | 2,041 | 2,069 | ||||||
| Other | (1,593 | ) | (1,246 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | 7,301 | (9,750 | ) | |||||
| Deferred rent receivable | 6,192 | 13,859 | ||||||
| Current income tax receivables and payables | (3,837 | ) | 16,143 | |||||
| Operating lease assets and liabilities | (18,212 | ) | (15,179 | ) | ||||
| Gift card receivables and payables | 14,759 | 12,231 | ||||||
| Other current assets | (629 | ) | (2,191 | ) | ||||
| Accounts payable | 13,131 | 6,455 | ||||||
| Accrued employee compensation and benefits | 19,714 | (1,909 | ) | |||||
| Accrued advertising expenses | 12,111 | 12,881 | ||||||
| Other current liabilities | (4,007 | ) | 3,758 | |||||
| Cash flows provided by operating activities | 195,835 | 96,503 | ||||||
| Cash flows from investing activities: | ||||||||
| Principal receipts from notes, equipment contracts and other long-term receivables | 20,230 | 31,155 | ||||||
| Net additions to property and equipment | (16,849 | ) | (10,927 | ) | ||||
| Proceeds from sale of property and equipment | 946 | 537 | ||||||
| Additions to long-term receivables | — | (1,475 | ) | |||||
| Other | (466 | ) | (565 | ) | ||||
| Cash flows provided by investing activities | 3,861 | 18,725 | ||||||
| Cash flows from financing activities: | ||||||||
| Repayment of long-term debt | (9,750 | ) | (3,250 | ) | ||||
| 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 | (4,191 | ) | (29,853 | ) | ||||
| Principal payments on finance lease obligations | (10,238 | ) | (12,451 | ) | ||||
| Proceeds from stock options exercised | 25,337 | 20,523 | ||||||
| Repurchase of restricted stock for tax payments upon vesting | (1,771 | ) | (2,480 | ) | ||||
| Tax payments for share settlement of restricted stock units | (9,783 | ) | (205 | ) | ||||
| Cash flows (used in) provided by financing activities | (230,396 | ) | 168,350 | |||||
| Net change in cash, cash equivalents and restricted cash | (30,700 | ) | 283,578 | |||||
| Cash, cash equivalents and restricted cash at beginning of period | 456,053 | 172,475 | ||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 425,353 | $ | 456,053 | ||||
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: Closure and impairment 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 | Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Net income (loss) available to common stockholders, as reported | $ | 19,379 | $ | (1,561 | ) | $ | 95,569 | $ | (104,414 | ) | ||||||
| Closure and impairment charges | 385 | 8,099 | 5,409 | 132,620 | ||||||||||||
| Amortization of intangible assets | 2,664 | 2,663 | 10,679 | 10,903 | ||||||||||||
| Non-cash interest expense | 706 | 708 | 2,852 | 2,698 | ||||||||||||
| Loss (gain) on disposition of assets | 609 | (561 | ) | 2,045 | 2,069 | |||||||||||
| Net income tax provision for above adjustments | (1,178 | ) | (2,727 | ) | (5,666 | ) | (14,014 | ) | ||||||||
| Net income allocated to unvested participating restricted stock | (68 | ) | (216 | ) | (363 | ) | (585 | ) | ||||||||
| Net income available to common stockholders, as adjusted | $ | 22,497 | $ | 6,405 | $ | 110,525 | $ | 29,277 | ||||||||
| Diluted net income (loss) available to common stockholders per share: | ||||||||||||||||
| Net income (loss) available to common stockholders per share, as reported | $ | 1.14 | $ | (0.10 | ) | $ | 5.66 | $ | (6.43 | ) | ||||||
| Closure and impairment charges | 0.02 | 0.37 | 0.23 | 7.50 | ||||||||||||
| Amortization of intangible assets | 0.11 | 0.12 | 0.46 | 0.50 | ||||||||||||
| Non-cash interest expense | 0.03 | 0.03 | 0.12 | 0.12 | ||||||||||||
| Loss (gain) on disposition of assets | 0.03 | (0.03 | ) | 0.09 | 0.10 | |||||||||||
| Net income allocated to unvested participating restricted stock | (0.00 | ) | (0.01 | ) | (0.02 | ) | (0.03 | ) | ||||||||
| Rounding | (0.01 | ) | 0.01 | — | 0.03 | |||||||||||
| Diluted net income available to common stockholders per share, as adjusted | $ | 1.32 | $ | 0.39 | $ | 6.54 | $ | 1.79 | ||||||||
| Numerator for basic EPS - net income available to common stockholders, as adjusted | $ | 22,497 | $ | 6,405 | $ | 110,525 | $ | 29,277 | ||||||||
| Effect of unvested participating restricted stock using the two-class method | 1 | 2 | 15 | 4 | ||||||||||||
| Numerator for diluted EPS - net income available to common stockholders, as adjusted | $ | 22,498 | $ | 6,407 | $ | 110,540 | $ | 29,281 | ||||||||
| Denominator for basic EPS - weighted-average shares | 16,941 | 16,232 | 16,799 | 16,230 | ||||||||||||
| Dilutive effect of stock options | 50 | 137 | 91 | 100 | ||||||||||||
| Denominator for diluted EPS - weighted-average shares | 16,991 | 16,369 | 16,890 | 16,330 | ||||||||||||
Dine Brands Global, Inc. and Subsidiaries
Non-GAAP Financial Measures
(Unaudited)
Reconciliation of the Company’s cash flows provided by operating activities to “adjusted free cash flow” (cash flows provided by operating activities, plus receipts from notes and equipment contracts receivable, less additions to property and equipment). Management uses this liquidity measure in its periodic assessments of, among other things, the amount of cash dividends per share of common stock and repurchases of common stock. We believe it is important for investors to have the same measure used by management for that purpose. Adjusted free cash flow does not represent residual cash flow available for discretionary purposes.
| Twelve Months Ended | ||||||||
| December 31, | ||||||||
| 2021 | 2020 | |||||||
| (In millions) | ||||||||
| Cash flows provided by operating activities | $ | 195.8 | $ | 96.5 | ||||
| Receipts from notes and equipment contracts receivable | 12.0 | 21.0 | ||||||
| Net additions to property and equipment | (16.8 | ) | (10.9 | ) | ||||
| Adjusted free cash flow | 191.0 | 106.6 | ||||||
| Dividends paid on common stock | — | (23.9 | ) | |||||
| Repurchase of common stock | (4.2 | ) | (29.9 | ) | ||||
| $ | 186.8 | $ | 52.8 | |||||
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 closure and impairment charges, interest charges, income tax provision or benefit, depreciation and amortization, non-cash stock-based compensation, gain or loss on disposition of assets, other non-income based taxes and other items deemed not reflective of current operations. Management may use certain non-GAAP measures along with the corresponding U.S. GAAP measures to evaluate the performance of the Company and to make certain business decisions.
| Three Months Ended | Twelve Months Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Net income (loss), as reported | $ | 19,788 | $ | (1,561 | ) | $ | 97,864 | $ | (103,994 | ) | |||||
| Closure and impairment charges | 385 | 8,099 | 5,409 | 132,620 | |||||||||||
| Interest charges on finance leases | 1,246 | 1,644 | 5,397 | 6,618 | |||||||||||
| All other interest charges | 16,379 | 18,700 | 66,488 | 70,261 | |||||||||||
| Income tax provision (benefit) | 8,691 | 1,551 | 24,059 | (4,568 | ) | ||||||||||
| Depreciation and amortization | 9,882 | 10,769 | 39,851 | 42,800 | |||||||||||
| Non-cash stock-based compensation | 3,006 | 3,315 | 11,580 | 12,508 | |||||||||||
| Loss (gain) on disposition of assets | 609 | (561 | ) | 2,045 | 2,069 | ||||||||||
| Other | 113 | 41 | 567 | 412 | |||||||||||
| Adjusted EBITDA | $ | 60,099 | $ | 41,997 | $ | 253,260 | $ | 158,726 | |||||||
Dine Brands Global, Inc. and Subsidiaries
Restaurant Data
(Unaudited)
The following table sets forth, for the three and twelve months ended December 31, 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 | Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Applebee's | ||||||||||||||||
| Global Effective Restaurants(a) | ||||||||||||||||
| Franchise | 1,614 | 1,636 | 1,621 | 1,624 | ||||||||||||
| Company | 69 | 69 | 69 | 68 | ||||||||||||
| Total | 1,683 | 1,705 | 1,690 | 1,692 | ||||||||||||
| System-wide(b) | ||||||||||||||||
| Domestic sales percentage change(c) | 23.4 | % | (13.3 | ) % | 34.4 | % | (24.1 | ) % | ||||||||
| Domestic same-restaurant sales percentage change(d) | 34.8 | % | (17.6 | ) % | 38.2 | % | (22.4 | ) % | ||||||||
| Franchise(b) | ||||||||||||||||
| Domestic sales percentage change(c) | 23.8 | % | (13.8 | ) % | 34.4 | % | (24.3 | ) % | ||||||||
| Domestic same-restaurant sales percentage change(d) | 35.3 | % | (18.1 | ) % | 38.2 | % | (22.6 | ) % | ||||||||
| Average weekly domestic unit sales (in thousands) | $ | 51.9 | $ | 38.4 | $ | 50.9 | $ | 37.1 | ||||||||
| IHOP | ||||||||||||||||
| Global Effective Restaurants(a) | ||||||||||||||||
| Franchise | 1,581 | 1,577 | 1,571 | 1,532 | ||||||||||||
| Area license | 156 | 157 | 156 | 155 | ||||||||||||
| Total | 1,737 | 1,734 | 1,727 | 1,687 | ||||||||||||
| System-wide(b) | ||||||||||||||||
| Sales percentage change(c) | 30.8 | % | (27.2 | ) % | 38.5 | % | (34.9 | ) % | ||||||||
| Domestic same-restaurant sales percentage change, including area license restaurants(d) | 39.2 | % | (30.1 | ) % | 40.2 | % | (32.8 | ) % | ||||||||
| Franchise(b) | ||||||||||||||||
| Sales percentage change(c) | 31.0 | % | (27.3 | ) % | 38.1 | % | (35.0 | ) % | ||||||||
| Domestic same-restaurant sales percentage change(d) | 40.3 | % | (30.6 | ) % | 39.7 | % | (32.8 | ) % | ||||||||
| Average weekly unit sales (in thousands) | $ | 37.5 | $ | 26.7 | $ | 34.9 | $ | 25.4 | ||||||||
| Area License (b) | ||||||||||||||||
| Sales percentage change(c) | 27.9 | % | (25.5 | ) % | 42.4 | % | (34.2 | ) % | ||||||||
Dine Brands Global, Inc. and Subsidiaries
Restaurant Data
(Unaudited)
| (a) | “Global 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 twelve months ended December 31, 2021 and 2020 were as follows: |
| Three Months Ended | Twelve Months Ended | |||||||||||
| December 31, | December 31, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| (In millions) | ||||||||||||
| Reported sales | ||||||||||||
| Applebee's domestic franchise restaurant sales | $ | 1,020.9 | $ | 824.6 | $ | 4,021.7 | $ | 2,993.0 | ||||
| Applebee's company-operated restaurants | 36.6 | 32.6 | 146.0 | 108.0 | ||||||||
| IHOP franchise restaurant sales | 771.1 | 588.5 | 2,850.3 | 2,063.6 | ||||||||
| IHOP area license restaurant sales | 68.9 | 53.9 | 271.3 | 190.5 | ||||||||
| Total | $ | 1,897.5 | $ | 1,499.6 | $ | 7,289.3 | $ | 5,355.1 | ||||
| (c) | “Sales percentage change” reflects, for each category of restaurants, the percentage change in sales in any given fiscal period compared to the prior fiscal period for all restaurants in that category. | |
| (d) | “Domestic same-restaurant sales percentage change” reflects the percentage change in sales, in any given fiscal period, compared to the same weeks in the prior year for domestic restaurants that have been operated during both fiscal periods that are being compared and have been open for at least 18 months. Because of new unit openings and restaurant closures, the domestic restaurants open during both fiscal periods being compared may be different from period to period. |
Dine Brands Global, Inc. and Subsidiaries
Restaurant Data
(Unaudited)
| Three Months Ended | Twelve Months Ended | |||||||||||
| December 31, | December 31, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Applebee's Restaurant Development Activity | ||||||||||||
| Summary - beginning of period: | ||||||||||||
| Franchise | 1,620 | 1,659 | 1,640 | 1,718 | ||||||||
| Company | 69 | 69 | 69 | 69 | ||||||||
| Total Applebee's restaurants, beginning of period | 1,689 | 1,728 | 1,709 | 1,787 | ||||||||
| Franchise restaurants opened: | ||||||||||||
| Domestic | 1 | — | 5 | 1 | ||||||||
| International | — | — | 1 | 3 | ||||||||
| Total franchise restaurants opened | 1 | — | 6 | 4 | ||||||||
| Franchise restaurants closed: | ||||||||||||
| Domestic | (10 | ) | (16 | ) | (25 | ) | (68 | ) | ||||
| International | — | (3 | ) | (10 | ) | (14 | ) | |||||
| Total franchise restaurants closed | (10 | ) | (19 | ) | (35 | ) | (82 | ) | ||||
| Net franchise restaurant reduction | (9 | ) | (19 | ) | (29 | ) | (78 | ) | ||||
| Summary - end of period: | ||||||||||||
| Franchise | 1,611 | 1,640 | 1,611 | 1,640 | ||||||||
| Company | 69 | 69 | 69 | 69 | ||||||||
| Total Applebee's restaurants, end of period | 1,680 | 1,709 | 1,680 | 1,709 | ||||||||
| Domestic | 1,578 | 1,598 | 1,578 | 1,598 | ||||||||
| International | 102 | 111 | 102 | 111 | ||||||||
| IHOP Restaurant Development Activity | ||||||||||||
| Summary - beginning of period: | ||||||||||||
| Franchise | 1,591 | 1,648 | 1,611 | 1,680 | ||||||||
| Area license | 156 | 159 | 158 | 161 | ||||||||
| Company | 3 | — | 3 | — | ||||||||
| Total IHOP restaurants, beginning of period | 1,750 | 1,807 | 1,772 | 1,841 | ||||||||
| Franchise/area license restaurants opened: | ||||||||||||
| Domestic franchise | 13 | 8 | 35 | 16 | ||||||||
| Domestic area license | — | — | 2 | 3 | ||||||||
| International franchise | 1 | 3 | 3 | 8 | ||||||||
| Total franchise/area license restaurants opened | 14 | 11 | 40 | 27 | ||||||||
| Franchise/area license restaurants closed: | ||||||||||||
| Domestic franchise | (12 | ) | (21 | ) | (47 | ) | (56 | ) | ||||
| Domestic area license | — | — | (3 | ) | (3 | ) | ||||||
| International franchise | (1 | ) | (24 | ) | (10 | ) | (34 | ) | ||||
| International area license | — | (1 | ) | (1 | ) | (3 | ) | |||||
| Total franchise/area license restaurants closed | (13 | ) | (46 | ) | (61 | ) | (96 | ) | ||||
| Net franchise/area license restaurant reduction | 1 | (35 | ) | (21 | ) | (69 | ) | |||||
| Refranchised from Company restaurants | 3 | — | 4 | — | ||||||||
| Franchise restaurants reacquired by the Company | — | (3 | ) | (1 | ) | (3 | ) | |||||
| Net franchise/area license restaurant decrease | 4 | (38 | ) | (18 | ) | (72 | ) | |||||
| Summary - end of period | ||||||||||||
| Franchise | 1,595 | 1,611 | 1,595 | 1,611 | ||||||||
| Area license | 156 | 158 | 156 | 158 | ||||||||
| Company | — | 3 | — | 3 | ||||||||
| Total IHOP restaurants, end of period | 1,751 | 1,772 | 1,751 | 1,772 | ||||||||
| Domestic | 1,657 | 1,670 | 1,657 | 1,670 | ||||||||
| International | 94 | 102 | 94 | 102 | ||||||||
The restaurant counts and activity presented above do not include two domestic Applebee’s ghost kitchens (small kitchens with no store-front presence, used to fill off-premise orders) and eight Applebee’s and 13 IHOP international ghost kitchens at December 31, 2021 and two domestic Applebee’s ghost kitchens at December 31, 2020.