Dine Brands Global, Inc. Reports Fourth Quarter and Fiscal Year 2023 Results
PASADENA, Calif., Feb. 28 /BusinessWire/ --
Dine Brands Global, Inc. (NYSE:DIN), the parent company of Applebee's Neighborhood Grill & Bar®, IHOP® and Fuzzy's Taco Shop® restaurants, today announced financial results for the fourth quarter and fiscal year 2023.
"Our solid performance in the fourth quarter concluded a year of significant progress for Dine. We delivered another year of positive comp sales growth at IHOP and Applebee's and generated year-over-year EBITDA growth while fully integrating Fuzzy's into our system," said John Peyton, chief executive officer, Dine Brands Global, Inc. "We are further strengthening our recipe for growth in 2024 with our methodical development strategy that will generate sustainable value over the long-term for our shareholders and franchisees."
Vance Chang, chief financial officer, Dine Brands Global, Inc. added, "Our financial performance in the fourth quarter and throughout the course of 2023 has allowed us to strengthen our balance sheet and invest in our business while returning capital to shareholders. In spite of the challenging operating environment, we continued to improve our profitability and exceeded our EBITDA guidance. Overall, Dine remains very well positioned to support its franchisees, navigate near-term headwinds and drive growth over time."
Domestic Restaurant Sales for the Fourth Quarter of 2023
Applebee's year-over-year comparable same-restaurant sales declined 0.5% for the fourth quarter of 2023. Off-premise sales accounted for 20.8% of sales mix, representing per restaurant average weekly sales of approximately $10,900.
IHOP's year-over-year domestic comparable same-restaurant sales increased 1.6% for the fourth quarter of 2023. Off-premise sales accounted for 20.4% of sales mix, representing per restaurant average weekly sales of approximately $8,000.
Fourth Quarter of 2023 Summary
Total revenues for the fourth quarter of 2023 were $206.3 million compared to $208.0 million for the fourth quarter of 2022. The decline was primarily due to the refranchising of the 69 company-operated Applebee's units in October 2022 and the negative comparable same-restaurant sales growth at Applebee's, offset by the positive comparable same-restaurants sales growth at IHOP and a full quarter's revenue contribution from Fuzzy's acquired in December 2022. Total revenues excluding the refranchised Applebee's restaurants for the fourth quarter of 2023 were $204.3 million compared to $196.5 million for the fourth quarter of 2022.
General and Administrative ("G&A") expenses for the fourth quarter of 2023 were $50.5 million compared to $58.8 million for the fourth quarter of 2022. The variance was primarily attributable to transaction costs related to the acquisition of Fuzzy's in December 2022, a decrease in compensation-related expenses, the refranchising of the Applebee's restaurants and lower conference expenses partially offset by the inclusion of Fuzzy's operations in the fourth quarter of 2023.
GAAP net income available to common stockholders was $32.3 million, or earnings per diluted share of $2.14, for the fourth quarter of 2023 compared to net income available to common stockholders of $11.0 million, or earnings per diluted share of $0.72 for the fourth quarter of 2022. The increase was primarily due to an income tax benefit resulting from the conclusion of a state income tax audit settlement, a decrease in G&A expenses and a decrease in weighted-average diluted shares as a result of share repurchases.
Adjusted net income available to common stockholders was $21.1 million, or adjusted earnings per diluted share of $1.40, for the fourth quarter of 2023 compared to adjusted net income available to common stockholders of $20.6 million, or adjusted earnings per diluted share of $1.34, for the fourth quarter of 2022. The increase was primarily due to an increase in segment profit, a decrease in G&A expenses and a decrease in weighted-average diluted shares as a result of share repurchases offset by higher interest expense and income taxes. (See "Non-GAAP Financial Measures" and reconciliation of GAAP net income available to common stockholders to adjusted net income available to common stockholders.)
Consolidated adjusted EBITDA for the fourth quarter of 2023 was $62.2 million compared to $57.0 million for the fourth quarter of 2022. (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 2023 resulted in 24 new restaurant openings and the closure of 14 restaurants.
2023 Summary
Total 2023 revenues were $831.1 million compared to $909.4 million for the prior year. The decline was primarily due to the refranchising of the 69 company-operated Applebee's units in October 2022, offset by the positive comparable same-restaurants sales growth at IHOP and Applebee's. Total revenues excluding the refranchised Applebee's restaurants for 2023 were $822.7 million compared to $780.7 million for the prior year.
G&A expenses for 2023 were $198.1 million compared to $190.7 million for 2022. The variance was primarily due to costs resulting from the inclusion of Fuzzy's operations acquired in December 2022, the stopping of the IHOP Flip'd initiative and increases in professional services, compensation-related and software maintenance costs, partially offset by the decreases due to the refranchised Applebee's restaurants and the transaction costs related to the Fuzzy's acquisition in 2022.
GAAP net income available to common stockholders was $94.9 million, or earnings per diluted share of $6.22, for 2023 compared to net income available to common stockholders of $78.9 million, or earnings per diluted share of $4.96 for 2022. The increase was primarily due to an increase in segment profit, an income tax benefit resulting from the conclusion of a state income tax audit settlement and a decrease in weighted-average diluted shares as a result of share repurchases offset by an increase in interest expense and an increase in G&A expenses.
Adjusted net income available to common stockholders was $101.4 million, or adjusted earnings per diluted share of $6.65, for 2023 compared to adjusted net income available to common stockholders of $98.5 million, or adjusted earnings per diluted share of $6.20, for 2022. The increase was primarily due to an increase in segment profit and a decrease in weighted-average diluted shares as a result of shares repurchases offset by higher G&A expenses and interest expense. (See "Non-GAAP Financial Measures" and reconciliation of GAAP net income available to common stockholders to adjusted net income available to common stockholders.)
Consolidated adjusted 2023 EBITDA was $256.4 million compared to $251.9 million for 2022. (See "Non-GAAP Financial Measures" and reconciliation of GAAP net income to consolidated adjusted EBITDA.)
Cash flows provided by operating activities for 2023 were $131.1 million. This compares to cash provided by operating activities of $89.3 million for 2022. The increase was primarily due to a favorable change in working capital and an increase in segment profit.
The Company had adjusted free cash flow of $103.3 million for 2023. This compares to adjusted free cash flow of $64.6 million for 2022. (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 for 2023 resulted in 72 new restaurant openings and the closure of 75 restaurants.
Key Balance Sheet Metrics (as of December 31, 2023)
Total cash, cash equivalents and restricted cash of approximately $200.6 million, of which approximately $146.0 million was unrestricted cash.
Leverage ratio of approximately 4.2x compared with approximately 4.6x as of September 30, 2023.
Available borrowing capacity under the Variable Funding Senior Secured Notes is over $220 million.
GAAP Effective Tax Rate
The fiscal year 2023 effective tax rate of 13.0% applied to pretax book income was different than the statutory Federal income tax rate of 21% primarily due to the conclusion of a state income tax audit settlement, resulting in an income tax benefit of $15.1 million.
Capital Returns to Equity Holders
During the fourth quarter of 2023, the Company repurchased approximately $6 million of its common stock. In 2023, the Company repurchased approximately $26 million of its common stock.
On February 26, 2024, the Company announced that its Board of Directors declared and approved a quarterly cash dividend of $0.51 per share of common stock. The dividend will be paid on April 5, 2024, to the Company's stockholders of record at the close of business on March 20, 2024.
Financial Performance Guidance for 2024
The Company introduced its fiscal 2024 guidance items:
Applebee's domestic system-wide comparable same-restaurant sales performance is expected to range between 0% and 2%.
IHOP's domestic system-wide comparable same-restaurant sales performance is expected to range between 1% and 3%.
Domestic development activity for Applebee's franchisees is between 25 and 35 net fewer restaurants.
Domestic development activity by IHOP franchisees and area licensees is expected to be between 15 and 25 net new openings.
Consolidated adjusted EBITDA is expected to range between approximately $255 million and $265 million.
G&A expenses are expected to range between approximately $200 million and $210 million. This total includes non-cash stock-based compensation expense and depreciation of approximately $35 million.
Gross capital expenditures are expected to range between approximately $15 million and $20 million.
Dine Brands does not provide forward-looking guidance for GAAP net income because it is unable to predict certain items contained in the GAAP measure without unreasonable efforts. These items may include closure and impairment charges, loss on extinguishment of debt, gain or loss on disposition of assets, other non-income-based taxes and other items deemed not reflective of current operations.
Fourth Quarter of 2023 Earnings Conference Call Details
Dine Brands will host a conference call to discuss its results on February 28, 2024, at 9:00 a.m. Eastern time. To access the call, please click this conference call registration link, and you will be provided with dial in details. A live webcast of the call, along with a replay will be available for a limited time at https://investors.dinebrands.com. 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. 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 Pasadena, California, Dine Brands Global, Inc. (NYSE: DIN), through its subsidiaries and franchisees, supports and operates restaurants under the Applebee's Neighborhood Grill + Bar®, IHOP®, and Fuzzy's Taco Shop® brands. As of December 31, 2023, these three brands consisted of over 3,500 restaurants across 18 international markets. Dine Brands is one of the largest full-service restaurant companies in the world and in 2022 expanded into the Fast Casual segment. 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: general economic conditions, including the impact of inflation, particularly as it may impact our franchisees directly; 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 including any insolvency or bankruptcy; credit risks from our IHOP franchisees operating under our previous IHOP business model in which we built and equipped IHOP restaurants and then franchised them to franchisees; insufficient insurance coverage to cover potential risks associated with the ownership and operation of restaurants; 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; risks of food-borne illness or food tampering; possible future impairment charges; trading volatility and fluctuations in the price of our stock; our ability to achieve the financial guidance we provide to investors; successful implementation of our business strategy; the availability of suitable locations for new restaurants; shortages or interruptions in the supply or delivery of products from third parties or availability of utilities; the management and forecasting of appropriate inventory levels; development and implementation of innovative marketing and use of social media; changing health or dietary preference of consumers; risks associated with doing business in international markets; the results of litigation and other legal proceedings; third-party claims with respect to intellectual property assets; delivery initiatives and use of third-party delivery vendors; our allocation of human capital and 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 intangible asset amortization, any non-cash interest expense, any gain or loss related to the disposition of assets, any gain or loss related to debt extinguishment, any charges related to stopping the IHOP Flip'd initiative, 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 interest charges, any income tax provision or benefit, any depreciation and amortization, any non-cash stock-based compensation, any closure and impairment charges, any gain or loss related to debt extinguishment, 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. Additionally, the Company has provided total revenues excluding the refranchised Applebee's restaurants for the three and twelve months ended December 31, 2023 and for the comparative prior year periods. 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. Total revenues excluding the refranchised Applebee's restaurants is helpful for Management to evaluate the performance of franchised restaurants over comparative periods. 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.
FBN-R
Dine Brands Global, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2023
2022
2023
2022
Revenues:
Franchise revenues:
Royalties, franchise fees and other
$
101,571
$
95,398
$
405,569
$
373,110
Advertising revenues
74,395
72,642
300,796
289,328
Total franchise revenues
175,966
168,040
706,365
662,438
Company restaurant sales
289
9,694
2,128
126,869
Rental revenues
29,451
29,411
119,970
116,491
Financing revenues
596
820
2,605
3,604
Total revenues
206,302
207,965
831,068
909,402
Cost of revenues:
Franchise expenses:
Advertising expenses
74,561
70,377
300,962
287,063
Bad debt expense
66
784
2,659
261
Other franchise expenses
10,992
10,182
40,782
34,584
Total franchise expenses
85,619
81,343
344,403
321,908
Company restaurant expenses
303
9,920
2,136
121,722
Rental expenses:
Interest expense from finance leases
699
708
2,771
2,962
Other rental expenses
21,167
21,313
84,705
85,033
Total rental expenses
21,866
22,021
87,476
87,995
Financing expenses
86
102
369
419
Total cost of revenues
107,874
113,386
434,384
532,044
Gross profit
98,428
94,579
396,684
377,358
General and administrative expenses
50,512
58,800
198,057
190,746
Interest expense, net
18,498
14,760
70,047
60,952
Closure and impairment charges
506
(31
)
3,594
3,062
Amortization of intangible assets
2,721
2,565
10,923
10,559
(Gain) loss on extinguishment of debt
-
(1,371
)
10
(210
)
Loss (gain) on disposition of assets
41
496
2,350
(2,536
)
Income before income taxes
26,150
19,360
111,703
114,785
Income tax (provision) benefit
6,889
(8,009
)
(14,527
)
(33,674
)
Net income
33,039
11,351
97,176
81,111
Other comprehensive income, net of tax:
Foreign currency translation adjustment
3
3
1
(6
)
Total comprehensive income
$
33,042
$
11,354
$
97,177
$
81,105
Net income available to common stockholders:
Net income
$
33,039
$
11,351
$
97,176
$
81,111
Less: Net income allocated to unvested participating restricted stock
(751
)
(311
)
(2,317
)
(2,174
)
Net income available to common stockholders
$
32,288
$
11,040
$
94,859
$
78,937
Net income available to common stockholders per share:
Basic
$
2.14
$
0.72
$
6.23
$
4.97
Diluted
$
2.14
$
0.72
$
6.22
$
4.96
Weighted average shares outstanding:
Basic
15,106
15,344
15,233
15,873
Diluted
15,106
15,370
15,242
15,901
Dine Brands Global, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share and per share amounts) (Unaudited)
December 31,
December 31,
Assets
2023
2022
(Unaudited)
Current assets:
Cash and cash equivalents
$
146,034
$
269,655
Receivables, net of allowance of $4,462 (2023) and $4,806 (2022)
127,937
119,981
Restricted cash
35,058
38,929
Prepaid gift card costs
29,545
30,235
Prepaid income taxes
3,445
3,063
Other current assets
15,759
17,901
Total current assets
357,778
479,764
Other intangible assets, net
586,033
597,028
Operating lease right-of-use assets
275,214
289,123
Goodwill
254,062
253,956
Property and equipment, net
161,891
145,277
Long-term receivables, net of allowance of $5,002 (2023) and $5,529 (2022)
35,602
39,697
Deferred rent receivable
33,326
42,329
Non-current restricted cash
19,500
16,400
Other non-current assets, net
16,881
17,917
Total assets
$
1,740,287
$
1,881,491
Liabilities and Stockholders' Deficit
Current liabilities:
Current maturities of long-term debt
$
100,000
$
100,000
Accounts payable
36,193
52,067
Gift card liability
175,640
171,966
Current maturities of operating lease obligations
63,498
59,071
Current maturities of finance lease and financing obligations
7,243
7,542
Accrued employee compensation and benefits
23,211
23,456
Accrued advertising expenses
9,446
24,157
Dividends payable
7,827
8,017
Other accrued expenses
37,394
24,446
Total current liabilities
460,452
470,722
Long-term debt, net, less current maturities
1,084,502
1,241,914
Operating lease obligations, less current maturities
269,097
275,120
Finance lease obligations, less current maturities
34,389
30,377
Financing obligations, less current maturities
26,984
28,358
Deferred income taxes, net
60,829
74,651
Deferred franchise revenue, long-term
38,658
42,343
Other non-current liabilities
16,350
19,090
Total liabilities
1,991,261
2,182,575
Commitments and contingencies
Stockholders' deficit:
Preferred stock, $1 par value, 10,000,000 shares authorized, no shares issued and outstanding
-
-
Common stock, $0.01 par value; shares: 40,000,000 authorized; 2023 -24,870,529 issued, 15,344,768 outstanding; 2022 - 24,959,972 issued, 15,599,239 outstanding
Adjustments to reconcile net income to cash flows provided by operating activities:
Depreciation and amortization
35,630
37,952
Non-cash stock-based compensation expense
11,990
16,131
Non-cash closure and impairment charges
3,594
2,927
Non-cash interest expense
3,505
3,226
Deferred income taxes
(13,822
)
(1,071
)
Deferred revenue
(4,224
)
(4,474
)
Loss (gain) on extinguishment of debt
10
(210
)
Loss (gain) on disposition of assets
2,359
(2,536
)
Other
(3,552
)
(5,160
)
Changes in operating assets and liabilities:
Accounts receivable, net
1,913
(2,574
)
Deferred rent receivable
9,003
7,928
Current income tax receivables and payables
1,160
8,326
Operating lease assets and liabilities
7,256
(11,823
)
Gift card receivables and payables
5,095
2,783
Other current assets
1,911
(12,706
)
Accounts payable
(16,027
)
(3,665
)
Accrued employee compensation and benefits
(1,748
)
(16,264
)
Accrued advertising expenses
(14,711
)
(10,020
)
Other current liabilities
4,622
(545
)
Cash flows provided by operating activities
131,140
89,336
Cash flows from investing activities
Principal receipts from notes, equipment contracts and other long-term receivables
9,319
17,057
Net additions to property and equipment
(37,172
)
(35,318
)
Proceeds from sale of property and equipment
10
17,028
Additions to long-term receivables
(1,069
)
(1,069
)
Acquisition of business, net of cash acquired
(101
)
(78,264
)
Other
(1,084
)
(338
)
Cash flows used in investing activities
(30,097
)
(80,904
)
Cash flows from financing activities
Proceeds from issuance of long-term debt, including revolving line of credit
530,000
100,000
Repayment of long-term debt
(651,713
)
(38,768
)
Repayments of revolving credit facility
(30,000
)
-
Payment of debt issuance costs
(8,044
)
(6,289
)
Dividends paid on common stock
(31,715
)
(30,765
)
Repurchase of common stock
(26,130
)
(120,452
)
Principal payments of finance lease and financing obligations
(6,431
)
(8,946
)
Proceeds from stock options exercised
3,812
241
Repurchase of restricted stock for tax payments upon vesting
(4,355
)
(2,867
)
Tax payments for share settlement of restricted stock units
(859
)
(955
)
Cash flows used in financing activities
(225,435
)
(108,801
)
Net change in cash, cash equivalents and restricted cash
(124,392
)
(100,369
)
Cash, cash equivalents and restricted cash at beginning of year
324,984
425,353
Cash, cash equivalents and restricted cash at end of year
$
200,592
$
324,984
Supplemental disclosures
Interest paid
$
73,976
$
64,599
Income taxes paid
$
28,409
$
28,085
Non-cash conversion of accounts receivable to notes receivable
$
1,367
$
84
Non-cash balance sheet gross-up of receivables and other accrued expenses
$
(11,000
)
$
-
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: Closure and impairment charges; amortization of intangible assets; non-cash interest expenses; gain or loss on disposition of assets; gain or loss on extinguishment of debt; acquisition costs; charges related to stopping the IHOP Flip'd initiative; other EBITDA adjustments; the combined tax effect of the preceding adjustments; and income tax adjustments related to the tax impact from a state settlement (2023) and from the Mid-Atlantic sale (2022), as well as related per share data:
Three Months Ended December 31,
Twelve Months Ended December 31,
2023
2022
2023
2022
Net income available to common stockholders, as reported
$
32,288
$
11,040
$
94,859
$
78,937
Closure and impairment charges
506
(31
)
3,594
3,062
Amortization of intangible assets
2,722
2,565
10,924
10,559
Noncash interest expense
791
1,016
3,505
3,226
Loss (gain) on disposition of assets
41
496
2,350
(2,536
)
(Gain) loss on extinguishment of debt
-
(1,371
)
10
(210
)
Acquisition costs
-
5,052
804
6,027
IHOP Flip'd initiative
-
-
5,121
-
Other EBITDA adjustments
863
1,755
3,095
3,268
Net income tax provision for above adjustments
(1,280
)
(2,465
)
(7,645
)
(6,083
)
Income tax adjustments
(15,063
)
2,833
(15,063
)
2,833
Net income allocated to unvested participating restricted stock
257
(272
)
(159
)
(538
)
Net income available to common stockholders, as adjusted
$
21,125
$
20,618
$
101,395
$
98,545
Diluted net income available to common stockholders per share:
Net income available to common stockholders
$
2.14
$
0.72
$
6.22
$
4.96
Closure and other impairment charges
0.02
(0.00
)
0.17
0.14
Amortization of intangible assets
0.13
0.12
0.53
0.49
Non-cash interest expense
0.04
0.05
0.17
0.15
Loss (gain) on disposition of assets
0.00
0.02
0.11
(0.12
)
(Gain) loss on extinguishment of debt
-
(0.07
)
0.00
(0.01
)
Merger and acquisition costs
-
0.24
0.04
0.28
IHOP Flip'd initiative
-
-
0.25
-
Other EBITDA adjustments
0.04
0.08
0.15
0.15
Net income tax provision for above adjustments
(1.00
)
0.18
(0.99
)
0.18
Net income allocated to unvested participating restricted stock
0.02
(0.02
)
(0.01
)
(0.03
)
Rounding
0.01
0.02
0.01
0.01
Diluted net income available to common stockholders per share, as adjusted
$
1.40
$
1.34
$
6.65
$
6.20
Numerator for basic EPS - net income available to common stockholders, as adjusted
$
21,125
$
20,618
$
101,395
$
98,545
Effect of unvested participating restricted stock using the two-class method
1
-
-
1
Numerator for diluted EPS - net income available to common stockholders, as adjusted
$
21,126
$
20,618
$
101,395
$
98,546
Denominator for basic EPS - weighted-average shares
15,106
15,344
15,233
15,873
Dilutive effect of stock options
-
26
9
28
Denominator for diluted EPS - weighted-average shares
15,106
15,370
15,242
15,901
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,
2023
2022
(In thousands)
Cash flows provided by operating activities
$
131,140
$
89,336
Principal receipts from notes and equipment contracts
9,319
10,615
Net additions to property and equipment
(37,172
)
(35,318
)
Adjusted free cash flow
103,287
64,633
(Repayment) issuance of long-term debt, net
(151,713
)
61,232
Dividends paid on common stock
(31,715
)
(30,765
)
Repurchase of common stock
(26,130
)
(120,452
)
$
(106,271
)
$
(25,352
)
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 or loss, adjusted for the effect of interest charges, income tax provision or benefit, depreciation and amortization, non-cash stock-based compensation, closure and impairment charges, gain or loss on extinguishment of debt, gain or loss on disposition of assets, 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 December 31,
Twelve Months Ended December 31,
2023
2022
2023
2022
Net income, as reported
$
33,039
$
11,351
$
97,176
$
81,111
Interest charges on finance leases
699
849
2,771
4,519
All other interest charges
20,664
17,813
79,336
67,713
Income tax (benefit) provision
(6,889
)
8,009
14,527
33,674
Depreciation and amortization
9,408
9,073
35,630
37,918
Non-cash stock-based compensation
3,823
4,003
11,990
16,131
Closure and impairment charges
506
(31
)
3,594
3,062
(Gain) loss on extinguishment of debt
-
(1,371
)
10
(210
)
Loss (gain) on disposition of assets
41
496
2,350
(2,536
)
Merger and acquisition costs
-
5,052
804
6,027
IHOP Flip'd initiative
-
-
5,121
-
Other
864
1,756
3,095
4,463
Adjusted EBITDA
$
62,155
$
57,000
$
256,404
$
251,872
Dine Brands Global, Inc. and Subsidiaries
Restaurant Data
(Unaudited)
The following table sets forth, for the three and twelve months ended December 31, 2023 and 2022, 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.
"Effective Restaurants" are the weighted average number of restaurants open in each 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 consist of 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 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 Applebee's 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 in franchisees' reported sales will result in a corresponding increase in our royalty revenue, while a decrease in franchisees' reported sales will result in a corresponding 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 were as follows:
Three Months Ended December 31,
Twelve Months Ended December 31,
2023
2022
2023
2022
Reported sales (in millions)
(Unaudited)
Applebee's domestic franchise restaurant sales
$
1,052.7
$
1,059.1
$
4,356.6
$
4,235.3
Applebee's company-operated restaurants
-
9.5
-
126.7
IHOP franchise restaurant sales
832.4
799.7
3,258.3
3,070.0
IHOP area license restaurant sales
77.2
73.4
305.3
292.7
Total
$
1,962.3
$
1,941.7
$
7,920.2
$
7,724.7
(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 fiscal period, 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 restaurant openings and restaurant closures, the domestic restaurants open throughout both fiscal periods being compared may be different from period to period.
Total franchise/area license restaurants permanently closed
(2
)
(4
)
(29
)
(21
)
Net franchise/area license restaurant additions
20
15
33
30
Net increase in franchise/area license restaurants
20
15
33
30
Summary - end of period:
Franchise
1,657
1,625
1,657
1,625
Area license
157
156
157
156
Total IHOP restaurants, end of period
1,814
1,781
1,814
1,781
Domestic
1,696
1,677
1,696
1,677
International
118
104
118
104
As of December 31, 2023, 44 franchise groups operated 131 Fuzzy's restaurants in 18 states within the United States and we had one company-owned restaurant in Texas, totaling 132 restaurants. Fuzzy's average weekly sales for the three and twelve months ended December 31, 2023 were $27,406 and $30,547, respectively.
The restaurant counts and activity presented above do not include one domestic Applebee's ghost kitchen (small kitchens with no store-front presence, used to fill off-premise orders), 10 international Applebee's ghost kitchens and 33 international IHOP ghost kitchens at December 31, 2023. There were seven domestic and 15 international Applebee's ghost kitchens and 42 international IHOP ghost kitchens at December 31, 2022.