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Dine Brands Global, Inc. Reports Second Quarter 2018 Results

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Dine Brands Global, Inc. Reports Second Quarter 2018 Results

Applebee's Achieves Highest Quarterly Comparable Sales Increase in Ten Years

IHOP Continues Positive Quarterly Comparable Sales Momentum

PR Newswire

GLENDALE, Calif., Aug. 1, 2018 /PRNewswire/ -- 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 fiscal 2018. 

(PRNewsfoto/DineEquity, Inc.)

"Applebee's and IHOP's domestic same-restaurant sales increased 5.7% and 0.7%, respectively.  Positive sales momentum for both brands continued into the second quarter.  I am pleased to report that for the third consecutive quarter, both Applebee's and IHOP outperformed their respective categories based on sales and traffic. The execution of our strategic growth plans over the past year are producing meaningful results.  Applebee's achieved its highest quarterly domestic sales increase in over a decade.  Additionally, IHOP successfully launched its all new Ultimate Steakburgers platform, further establishing the brand as a destination beyond breakfast.  We also recently announced that IHOP will be introduced in South America for the first time through an agreement with a new franchisee to open 25 restaurants in Peru over the next ten years," said Steve Joyce, Chief Executive Officer of Dine Brands Global, Inc. 

Mr. Joyce added, "We've made great progress stabilizing the performance of our brands and we are excited about the results to date.  We are also working on a number of key initiatives that we believe will create significant long-term value for our shareholders, including the refinancing of our debt this year." 

 Second Quarter of Fiscal 2018 Financial Highlights      

  • GAAP net income available to common stockholders was $12.3 million, or earnings per diluted share of $0.69 for the second quarter of 2018. This compares to net income available to common stockholders of $21.8 million, or earnings per diluted share of $1.23, for the second quarter of fiscal 2017. The decrease in net income was primarily due to lower segment profit as the result of $16.5 million in franchisor contributions to the Applebee's national advertising fund, partially offset by a decline in bad debt expense, IHOP restaurant development over the past twelve months and improvement in Applebee's and IHOP's domestic same-restaurant sales.
  • Adjusted net income available to common stockholders was $18.3 million, or adjusted earnings per diluted share of $1.03, for the second quarter of fiscal 2018. This compares to adjusted net income available to common stockholders of $23.8 million, or adjusted earnings per diluted share of $1.34, for the second quarter of fiscal 2017. The decrease in adjusted net income was mainly due to lower segment profit as the result of $16.5 million in franchisor contributions to the Applebee's national advertising fund, partially offset by a decline in bad debt expense, IHOP restaurant development over the past twelve months and improvement in Applebee's and IHOP's domestic same-restaurant sales. (See "Non-GAAP Financial Measures" below.)
  • General and administrative expenses were $38.8 million for the second quarter of fiscal 2018 compared to $37.4 million for the second quarter of fiscal 2017. The increase was primarily due to higher personnel-related costs, partially offset by a decline in professional services expenses.

First Six Months of Fiscal 2018 Financial Highlights

  • GAAP net income available to common stockholders was $28.8 million, or earnings per diluted share of $1.61 for the first six months of fiscal 2018. This compares to net income available to common stockholders of $37.1 million, or earnings per diluted share of $2.09, for the first six months of fiscal 2017. The decrease in net income was primarily due to lower segment profit as the result of $30.0 million in franchisor contributions to the Applebee's national advertising fund, partially offset by a decline in bad debt expense, IHOP restaurant development over the past twelve months and improvement in Applebee's and IHOP's domestic same-restaurant sales. The impact of lower segment profit was partially offset by lower income tax expense and a decline in general and administrative expenses.
  • Adjusted net income available to common stockholders was $38.0 million, or adjusted earnings per diluted share of $2.13, for the first six months of fiscal 2018. This compares to adjusted net income available to common stockholders of $46.6 million, or adjusted earnings per diluted share of $2.63, for the first six months of fiscal 2017. The decrease in adjusted net income was mainly due to lower segment profit, as explained in the paragraph above. The impact of lower segment profit was partially offset by lower income taxes and a decline in general and administrative expenses. (See "Non-GAAP Financial Measures" below.)
  • General and administrative expenses were $80.7 million for the first six months of fiscal 2018 compared to $87.7 million for the same period of fiscal 2017. The decline was primarily due to approximately $8.8 million in executive separation costs incurred during the first six months of 2017 that did not recur in the comparable period of fiscal 2018.  
  • Cash flows from operating activities were approximately $25.8 million for the first six months of fiscal 2018 compared to approximately $20.9 million for the first six months of fiscal 2017. Adjusted free cash flow was $28.1 million for the first six months of fiscal 2018.  This compares to $19.2 million for the first six months of fiscal 2017.  (See "Non-GAAP Financial Measures" below.)

Same-Restaurant Sales Performance

Second Quarter of Fiscal 2018

  • Applebee's domestic system-wide comparable same-restaurant sales increased 5.7% for the second quarter of 2018.
  • IHOP's domestic system-wide comparable same-restaurant sales increased 0.7% for the second quarter of 2018. 

First Six Months of Fiscal 2018

  • Applebee's domestic system-wide comparable same-restaurant sales increased 4.5% for the first six months of 2018. 
  • IHOP's domestic system-wide comparable same-restaurant sales increased 0.9% for the first six months of 2018. 

GAAP Effective Tax Rate

Our effective tax rates for the three and six months ended June 30, 2018 were impacted by two events. The Tax Cuts and Jobs Act (the "Tax Act") enacted in December 2017 lowered the federal statutory corporate tax rate from 35% to 21%, beginning in 2018. However, during the three months ended June 30, 2018, we increased our tax provision by $5.7 million related to adjustments resulting from IRS audits for tax years 2011 through 2013. This adjustment increased our effective tax rates for the three and six months ended June 30, 2018, offsetting the lower federal statutory corporate tax rate resulting from the Tax Act.  Completion of the IRS audits for tax years 2011 through 2013 will allow us to accelerate the collection of certain tax benefits recognized in prior years.  As a result, we expect to receive a cash refund of approximately $12 million within the next 12 months.  The expected refund is currently included in Prepaid Income Taxes in the Consolidated Balance Sheets.

Financial Performance Guidance for Fiscal 2018

Dine Brands reiterates its financial performance guidance for fiscal 2018 contained in the press release issued on February 20, 2018 and the Form 8-K filed on the same day, except for the revisions noted below.

  • Revised expectations for Applebee's domestic system-wide comparable same-restaurant sales performance to range between positive 3.5% and positive 4.5%.  This compares to previous expectations of between flat and positive 3.0%. 
  • Revised expectations for IHOP's domestic system-wide comparable same-restaurant sales performance to range between positive 0.5% and positive 2.0%.  This compares to previous expectations of between flat and positive 3.0%. 
  • Revised expectations for the closure of approximately 80 to 90 domestic Applebee's restaurants and approximately 10 international Applebee's restaurants.  This compares to previous expectations for the closure of approximately 60 to 80 restaurants for domestic and international combined.  The expected closures will be based on several criteria, including meeting our brand and image standards as well as operational results.
  • Revised expectations for adjusted free cash flow (See "Non-GAAP Financial Measures" below) to range between $99 million and $119 million.  This compares to previous expectations for adjusted free cash flow to range between $94 million and $114 million.   
  • Reiterates expectations for Applebee's franchisees to develop between 10 and 15 new restaurants globally, the majority of which are expected to be international openings. 
  • Reiterates expectations for IHOP franchisees and its area licensee to develop between 85 and 100 restaurants globally, the majority of which are expected to be domestic openings. We expect the closure of approximately 30 to 40 restaurants, or on a full-year net development basis, a range of 45 to 70 incremental restaurants. 
  • Reiterates expectations for Franchise segment profit to be between approximately $289 million and $307 million.  Included in this amount is a one-time $30 million franchise expense that was contributed to the Applebee's national advertising fund in the first half of 2018.  This is in addition to the 2017 contribution of $9.5 million
  • Reiterates expectations for Rental and Financing segments to generate approximately $37 million in combined profit.
  • Reiterates expectations for general and administrative expenses to range between $147 million and $156 million, including non-cash stock-based compensation expense and depreciation of approximately $21 million
  • Reiterates expectations for interest expense to be approximately $61 million. Approximately $3 million is projected to be non-cash interest expense.
  • Reiterates expectations for weighted average diluted shares outstanding to be approximately 18 million shares.
  • Reiterates expectations for the income tax rate to be approximately 26%.     
  • Reiterates expectations for cash flows provided by operating activities to range between $100 million and $120 million.    
  • Reiterates expectations for capital expenditures to be approximately $16 million.
  • Reiterates expectations for GAAP earnings per diluted share to range between $4.31 and $4.61.
  • Reiterates expectations for adjusted earnings per diluted share (See "Non-GAAP Financial Measures" below) to range from $4.95 to $5.25.

 

2018 Adjusted earnings per diluted share (Non-GAAP) Guidance Table




GAAP earnings per diluted share

$4.31-$4.61


Amortization of intangible assets

0.57


Closure and impairment charges

0.10


Non-cash interest expense

0.20


Income tax provision for above adjustments at 26%

(0.23)


Adjusted earnings per diluted share (Non-GAAP)

$4.95-$5.25




2018 Adjusted Free Cash Flow (Non-GAAP) Guidance Table





(In millions)


Cash flows from operations

$100 – 120


Approximate net receipts from notes and equipment contracts receivable

15


Approximate capital expenditures

(16)


Adjusted free cash flow (Non-GAAP)

$99 - 119


 

Second Quarter Fiscal 2018 Results Conference Call Today

The Company will host a conference call to discuss its results on the same day at 6:00 a.m. Pacific Time/ 9:00 a.m. Eastern Time. To participate on the call, please dial (888) 771-4371 and reference passcode 47253774. International callers, please dial (847) 585-4405 and reference passcode 47253774.  A live webcast of the call will be available on www.dinebrands.com and may be accessed by visiting Events and Presentations under the site's Investors section.  Participants should allow approximately ten minutes prior to the call's start time to visit the site and download any streaming media software needed to listen to the webcast.  A telephonic replay of the call may be accessed from 7:30 a.m. Pacific Time/10:30 a.m. Eastern Time on August 1, 2018 through 8:59 p.m. Pacific Time/11:59 p.m. Eastern Time on August 8, 2018 by dialing (888) 843-7419 and referencing passcode 47253774#.  International callers, please dial (630) 652-3042 and reference passcode 47253774#.  An online archive of the webcast will also be available on Events and Presentations under the Investors section of the Company's website.

About Dine Brands Global, Inc.

Based in Glendale, California, Dine Brands Global, Inc. (NYSE:DIN), through its subsidiaries, franchises restaurants under both the Applebee's Neighborhood Grill & Bar and IHOP brands.  With approximately 3,700 restaurants combined in 18 countries and approximately 380 franchisees, Dine Brands is one of the largest full-service restaurant companies in the world. For more information on Dine Brands, visit the Company's website located at www.dinebrands.com.

Forward-Looking Statements

Statements contained in this press release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You can identify these forward-looking statements by words such as "may," "will," "would," "should," "could," "expect," "anticipate," "believe," "estimate," "intend," "plan," "goal" and other similar expressions. These statements involve known and unknown risks, uncertainties and other factors, which may cause actual results to be materially different from those expressed or implied in such statements. These factors include, but are not limited to: general economic conditions; our level of indebtedness; compliance with the terms of our securitized debt; our ability to refinance our current indebtedness or obtain additional financing; our dependence on information technology; potential cyber incidents; the implementation of restaurant development plans; our dependence on our franchisees; the concentration of our Applebee's franchised restaurants in a limited number of franchisees; the financial health our franchisees; our franchisees' and other licensees' compliance with our quality standards and trademark usage; general risks associated with the restaurant industry; potential harm to our brands' reputation; possible future impairment charges; the effects of tax reform; trading volatility and fluctuations in the price of our stock; our ability to achieve the financial guidance we provide to investors; successful implementation of our business strategy; the availability of suitable locations for new restaurants; shortages or interruptions in the supply or delivery of products from third parties or availability of utilities; the management and forecasting of appropriate inventory levels; development and implementation of innovative marketing and use of social media; changing health or dietary preference of consumers; risks associated with doing business in international markets; the results of litigation and other legal proceedings; third-party claims with respect to intellectual property assets; our ability to attract and retain management and other key employees; compliance with federal, state and local governmental regulations; risks associated with our self-insurance; natural disasters or other series 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 Company's Annual and Quarterly Reports on Forms 10-K and 10-Q and in the Company's other filings with the Securities and Exchange Commission. The forward-looking statements contained in this release are made as of the date hereof and the Company 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)" and "Adjusted free cash flow."  Adjusted EPS is computed for a given period by deducting from net income or loss available to common stockholders for such period the effect of any closure and impairment charges, any gain or loss related to debt extinguishment, any intangible asset amortization, any non-cash interest expense, any gain or loss related to the disposition of assets, and other items deemed not reflective of current operations.  This is presented on an aggregate basis and a per share (diluted) basis.  "Adjusted free cash flow" for a given period is defined as cash provided by operating activities, plus receipts from notes and equipment contracts receivable, less capital expenditures.  Management may use certain of these non-GAAP financial measures along with the corresponding U.S. GAAP measures to evaluate the performance of the business and to make certain business decisions.  Management uses adjusted free cash flow in its periodic assessments of, among other things, the amount of cash dividends per share of common stock and repurchases of common stock and we believe it is important for investors to have the same measure used by management for that purpose.  Adjusted free cash flow does not represent residual cash flow available for discretionary purposes.  Additionally, adjusted EPS is one of the metrics used in determining payouts under the Company's annual cash incentive plan.  Management believes that these non-GAAP financial measures provide additional meaningful information that should be considered when assessing the business and the Company's performance compared to prior periods and the marketplace.  Adjusted EPS and adjusted free cash flow are supplemental non-GAAP financial measures and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with U.S. GAAP.

 

Dine Brands Global, Inc. and Subsidiaries
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)








Three Months Ended


Six Months Ended



June 30,


June 30,



2018


2017


2018


2017

Revenues:




(as adjusted)




(as adjusted)

Franchise revenues


$

151,941



$

153,064



$

307,254



$

307,789


Rental revenues


30,324



30,124



61,165



60,589


Financing revenues


2,206



2,088



4,215



4,219


Company restaurant sales




3,378





7,518


Total revenues


184,471



188,654



372,634



380,115


Cost of revenues:









Franchise expenses


82,944



69,522



164,816



139,689


Rental expenses


22,788



22,681



45,429



45,347


Financing expenses


149





299




Company restaurant expenses




3,447





7,790


Total cost of revenues


105,881



95,650



210,544



192,826


Gross profit


78,590



93,004



162,090



187,289


General and administrative expenses


38,759




37,366




80,670




87,671


Interest expense


15,481




15,780




30,680




31,143


Closure and impairment (credits) charges


(2,702)




2,701




(98)




2,918


Amortization of intangible assets


2,506




2,500




5,008




5,000


Gain on disposition of assets


(50)




(6,243)




(1,477)




(6,352)


Income before income tax provision


24,596




40,900




47,307




66,909


Income tax provision



(11,883)




(18,793)




(17,521)




(29,207)


Net income


$

12,713



$

22,107



$

29,786



$

37,702


Net income available to common stockholders:









Net income


$

12,713



$

22,107



$

29,786



$

37,702


Less: Net income allocated to unvested participating restricted stock


(428)



(356)



(1,000)



(635)


Net income available to common stockholders


$

12,285



$

21,751



$

28,786



$

37,067


Net income available to common stockholders per share:









Basic


$

0.70



$

1.23



$

1.63



$

2.09


Diluted


$

0.69



$

1.23



$

1.61



$

2.09


Weighted average shares outstanding:









Basic


17,544



17,719



17,623



17,707


Diluted


17,803



17,725



17,827



17,721











Dividends declared per common share


$0.63



$0.97



$1.26



$1.94


Dividends paid per common share


$0.63



$0.97



$1.60



$1.94


 

Dine Brands Global, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share and per share amounts)








June 30, 2018


December 31, 2017



(Unaudited)


(as adjusted)

Assets





Current assets:





Cash and cash equivalents


$

95,718



$

117,010


Receivables, net


103,015



140,188


Restricted cash


39,430



31,436


Prepaid gift card costs


29,464



40,725


Prepaid income taxes


42,107



45,981


Other current assets


6,764



12,615


Total current assets


316,498



387,955


Long-term receivables, net


118,173



126,570


Property and equipment, net


197,220



199,585


Other intangible assets, net


579,369



582,787


Goodwill


339,236



339,236


Deferred rent receivable


80,358



82,971


Non-current restricted cash


14,700



14,700


Other non-current assets, net


4,752



4,135


Total assets


$

1,650,306



$

1,737,939







Liabilities and Stockholders' Deficit





Current liabilities:





Current maturities of long-term debt


$

32,965



$

12,965


Accounts payable


47,694



55,028


Gift card liability


108,695



164,441


Dividends payable


11,430



17,748


Current maturities of capital lease and financing obligations


12,752



14,193


Accrued employee compensation and benefits


12,136



13,547


Deferred franchise revenue, short-term


10,765



11,001


Other accrued expenses


14,484



16,001


Total current liabilities


250,921



304,924


Long-term debt, less current maturities


1,265,093



1,269,849


Capital lease obligations, less current maturities


57,624



61,895


Financing obligations, less current maturities


38,820



39,200


Deferred income taxes, net


112,073



119,996


Deferred rent payable


60,853



69,112


Deferred franchise revenue, long-term


67,246



70,432


Other non-current liabilities


20,927



18,071


Total liabilities


1,873,557



1,953,479


Commitments and contingencies





Stockholders' deficit:





Common stock, $0.01 par value; shares: 40,000,000 authorized; June 30, 2018 - 25,005,404 issued, 17,802,953 outstanding; December 31, 2017 -  25,022,312 issued, 17,993,124 outstanding


250



250


Additional paid-in-capital


254,912



276,408


Accumulated deficit


(40,154)



(69,940)


Accumulated other comprehensive loss


(61)



(105)


Treasury stock, at cost; shares: June 30, 2018 - 7,202,451; December 31, 2017 - 7,029,188


(438,198)



(422,153)


Total stockholders' deficit


(223,251)



(215,540)


Total liabilities and stockholders' deficit


$

1,650,306



$

1,737,939


 

Dine Brands Global, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)






Six Months Ended



June 30,



2018


2017





(as adjusted)

Cash flows from operating activities:





Net income


$

29,786



$

37,702


Adjustments to reconcile net income to cash flows provided by operating activities:





Depreciation and amortization


15,842



15,422


Non-cash interest expense


1,744



1,663


Deferred income taxes


(3,606)



(7,633)


Non-cash stock-based compensation expense


5,641



7,567


Gain on disposition of assets


(1,477)



(6,352)


Closure and impairment charges


(114)



2,910


Other


(8,438)



(4,863)


Changes in operating assets and liabilities:





Accounts receivable, net


(10,924)



(694)


Current income tax receivables and payables


2,776



(482)


Gift card receivables and payables


(10,334)



(14,121)


Other current assets


5,851



(2,215)


Accounts payable


3,816



(8,153)


Accrued employee compensation and benefits


(1,411)



(4,743)


Other current liabilities


(3,360)



4,886


Cash flows provided by operating activities


25,792



20,894


Cash flows from investing activities:





Additions to property and equipment


(7,339)



(6,945)


Proceeds from sale of property and equipment


655



1,100


Principal receipts from notes, equipment contracts and other long-term receivables


14,923



9,946


Additions to long-term receivables


(3,030)




Other


(246)



(292)


Cash flows provided by investing activities


4,963



3,809


Cash flows from financing activities:





Borrowings under Variable Funding Notes


20,000




Repayment of long-term debt


(6,500)




Dividends paid on common stock


(28,757)



(34,879)


Repurchase of common stock


(20,003)



(10,003)


Principal payments on capital lease and financing obligations


(8,013)



(7,170)


Tax payments for restricted stock upon vesting


(1,400)



(2,320)


Proceeds from stock options exercised


620



2,635


Cash flows used in financing activities


(44,053)



(51,737)


Net change in cash, cash equivalents and restricted cash


(13,298)



(27,034)


Cash, cash equivalents and restricted cash at beginning of period


163,146



185,491


Cash, cash equivalents and restricted cash at end of period


$

149,848



$

158,457


 

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; executive separation costs; amortization of intangible assets; non-cash interest expense; gain or loss on disposition of assets; the combined tax effect of the preceding adjustments; and other tax-related adjustments, as well as related per share data:








Three Months Ended


Six Months Ended



June 30,


June 30,



2018


2017


2018


2017





(as adjusted)




(as adjusted)

Net income available to common stockholders, as reported


$

12,285



$

21,751



$

28,786



$

37,067


Closure and impairment (credit) charges


(2,702)



2,701



(98)



2,918


Executive separation costs








8,782


Amortization of intangible assets


2,506



2,500



5,008



5,000


Non-cash interest expense


880



836



1,744



1,663


Gain on disposition of assets


(50)



(6,243)



(1,477)



(6,352)


Income tax provision


(165)



78



(1,346)



(4,564)


Income tax adjustments (1)


5,744



2,219



5,744



2,219


Net income allocated to unvested participating restricted stock


(216)



(35)



(324)



(156)


Net income available to common stockholders, as adjusted


$

18,282



$

23,807



$

38,037



$

46,577











Diluted net income available to common stockholders per share:









Net income available to common stockholders, as reported


$

0.69



$

1.23



$

1.61



$

2.09


Closure and impairment (credit) charges


(0.11)



0.09



(0.00)



0.10


Executive separation costs








0.31


Amortization of intangible assets


0.10



0.09



0.21



0.17


Non-cash interest expense


0.04



0.03



0.07



0.06


Gain on disposition of assets


(0.00)



(0.22)



(0.06)



(0.22)


Income tax adjustments (1)


0.32



0.13



0.32



0.13


Net income allocated to unvested participating restricted stock


(0.01)



(0.00)



(0.01)



(0.01)


Rounding




(0.01)



(0.01)




Diluted net income available to common stockholders per share, as adjusted


$

1.03



$

1.34



$

2.13



$

2.63











Numerator for basic EPS-income available to common stockholders, as adjusted


$

18,282



$

23,807



$

38,037



$

46,577


Effect of unvested participating restricted stock using the two-class method


4





4



1


Numerator for diluted EPS-income available to common stockholders after assumed conversions, as adjusted


$

18,286



$

23,807



$

38,041



$

46,578











Denominator for basic EPS-weighted-average shares


17,544



17,719



17,623



17,707


Dilutive effect of stock options


259



6



204



14


Denominator for diluted EPS-weighted-average shares and assumed conversions


17,803



17,725



17,827



17,721




(1)

2018: Charges related to adjustments resulting from IRS audits for tax years 2011 through 2013; 2017: unrecognized tax benefits related to domestic manufacturing deductions taken in years prior to 2017.

 

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 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.






Six Months Ended



June 30,



2018


2017



(In millions)

Cash flows provided by operating activities


$

25.8



$

20.9


Receipts from notes and equipment contracts receivable


9.6



5.2


Additions to property and equipment


(7.3)



(6.9)


Adjusted free cash flow


28.1



19.2


Dividends paid on common stock


(28.8)



(34.9)


Repurchase of Dine Brands common stock


(20.0)



(10.0)




$

(20.7)



$

(25.7)


 

Dine Brands Global, Inc. and Subsidiaries
Restaurant Data






The following table sets forth, for the three and six months ended June 30, 2018 and 2017, 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,



2018


2017


2018


2017



(Unaudited)

Applebee's Restaurant Data









Effective Restaurants(a)









Franchise


1,900



1,984



1,912



1,995











System-wide(b)









Sales percentage change(c)


3.2

%


(7.5)

%


2.0

%


(8.1)

%

Domestic same-restaurant sales percentage change(d)


5.7

%


(6.2)

%


4.5

%


(7.0)

%










Franchise(b)









Domestic sales percentage change(c)


3.2

%


(7.5)

%


2.0

%


(8.1)

%

Domestic same-restaurant sales percentage change(d)


5.7

%


(6.2)

%


4.5

%


(7.0)

%

Average weekly domestic unit sales (in thousands)


$

47.6



$

44.2



$

47.6



$

44.7



















IHOP Restaurant Data









Effective Restaurants(a)









Franchise


1,627



1,565



1,623



1,559


Area license


163



166



163



166


Company




9





9


Total


1,790



1,740



1,786



1,734











System-wide(b)









Sales percentage change(c)


3.1

%


0.2

%


3.5

%


0.2

%

Domestic same-restaurant sales percentage change(d)


0.7

%


(2.6)

%


0.9

%


(2.1)

%










Franchise(b)









Sales percentage change(c)


3.7

%


0.5

%


4.3

%


0.6

%

Domestic same-restaurant sales percentage change(d)


0.7

%


(2.6)

%


0.9

%


(2.1)

%

Average weekly domestic unit sales (in thousands)


$

36.2



$

36.3



$

36.7



$

36.6











Area License (b)









Sales percentage change(c)


1.8

%


(1.4)

%


0.8

%


(2.6)

%


















 

Dine Brands Global, Inc. and Subsidiaries
Restaurant Data


(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 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 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, IHOP franchise restaurants and IHOP area license restaurants for the three and six months ended June 30, 2018 and 2017 were as follows:



















Three Months Ended


Six Months Ended


June 30,


June 30,


2018


2017


2018


2017


(In millions)

Reported sales (unaudited)








Applebee's domestic franchise restaurant sales

$

1,082.9



$

1,049.6



$

2,178.5



$

2,135.8


IHOP franchise restaurant sales

766.6



$

739.2



1,547.2



$

1,483.4


IHOP area license restaurant sales

70.4



$

69.2



142.8



$

141.7


Total

$

1,919.9



$

1,858.0



$

3,868.5



$

3,760.9




(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. Same-restaurant sales percentage change does not include data on IHOP area license restaurants located in Florida.

 

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,


2018


2017


2018


2017

Applebee's Restaurant Development Activity






Beginning of period:

1,912



1,998



1,936



2,016


Franchise restaurants opened:












       Domestic

1



4



1



5


       International

1



4



3



4


Total franchise restaurants opened

2



8



4



9


Franchise restaurants closed:












       Domestic

(30)



(33)



(52)



(52)


       International

(1)



(5)



(5)



(5)


Total franchise restaurants closed

(31)



(38)



(57)



(57)


Net franchise restaurant reduction

(29)



(30)



(53)



(48)


Total Applebee's restaurants, end of period

1,883



1,968



1,883



1,968


Domestic

1,731



1,811



1,731



1,811


International

152



157



152



157


IHOP Restaurant Development Activity








Summary - beginning of period:








Franchise

1,627



1,564



1,622



1,556


Area license

164



167



164



167


Company



10





10


Total IHOP restaurants, beginning of period

1,791



1,741



1,786



1,733


Franchise/area license restaurants opened:








Domestic franchise

9



9



22



20


Domestic area license

2





2




International franchise

5



8



8



12


Total franchise/area license restaurants opened

16



17



32



32


Franchise/area license restaurants closed:








Domestic franchise

(1)



(2)



(6)



(9)


Domestic area license

(1)



(1)



(1)



(1)


International franchise



(2)



(6)



(2)


Total franchise/area license restaurants closed

(2)



(5)



(13)



(12)


Net franchise/area license restaurant development

14



12



19



20


Refranchised from Company restaurants



9



1



9


Franchise restaurants reacquired by the Company





(1)




Net franchise/area license restaurant additions

14



21



19



29


Summary - end of period








Franchise

1,640



1,586



1,640



1,586


Area license

165



166



165



166


Company








Total IHOP restaurants, end of period

1,805



1,752



1,805



1,752


Domestic

1,688



1,646



1,688



1,646


International

117



106



117



106


 

Cision View original content with multimedia:http://www.prnewswire.com/news-releases/dine-brands-global-inc-reports-second-quarter-2018-results-300689938.html

SOURCE Dine Brands Global, Inc.

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