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8-K - 8-K - Dine Brands Global, Inc.a13-17457_18k.htm

Exhibit 99.1

 

GRAPHIC

 

Investor Contact

Ken Diptee

Executive Director, Investor Relations

DineEquity, Inc.

818-637-3632

 

Media Contact

Samantha Verdile

Sard Verbinnen & Co.

212-687-8080

 

DineEquity, Inc. Reports Strong Second Quarter 2013 Results

 

·                  Second quarter 2013 adjusted EPS (Non-GAAP) of $1.02 and GAAP EPS of $0.87

 

·                  IHOP domestic system-wide same-restaurant sales increased 1.9%

 

·                  Applebee’s domestic system-wide same-restaurant sales increased 1.3%

 

·                  Generated strong free cash flow of $52.1 million in the first six months of 2013

 

·                  Second quarter dividend of $0.75 per share of common stock paid and $14.5 million in common stock repurchased

 

·                  Over $43 million returned to shareholders in the first six months of 2013 in the form of cash dividends and share repurchases

 

GLENDALE, Calif., July 30, 2013 — DineEquity, Inc. (NYSE: DIN), the parent company of Applebee’s Neighborhood Grill & Bar® and IHOP® restaurants, today announced financial results for the second quarter of 2013.

 

“DineEquity’s second quarter included a number of accomplishments.  Same-restaurant sales were positive for both brands.  In particular, same-restaurant sales at IHOP rose 1.9%, with an increase in guest traffic.  This is IHOP’s first quarter of both positive same-restaurant sales and guest traffic since the fourth quarter of 2010.  We are very pleased with the results and will continue our efforts to build momentum.  Applebee’s performance was also strong in an uneven consumer environment, generating same-restaurant sales growth of 1.3%,” said Julia A. Stewart, Chairman and Chief Executive Officer of DineEquity, Inc.  “We are actively managing our Shared Services model, driving cost efficiencies and innovation for both brands.  We continued to execute on our balanced approach to return significant free cash flow to our stockholders, paying a second quarter dividend of $0.75 per share, resulting in a very competitive yield.  We also repurchased $14.5 million of our common stock, creating additional stockholder value.”

 

Second Quarter 2013 Financial Highlights

 

·                  Adjusted net income available to common stockholders was $19.7 million, representing adjusted earnings per diluted share of $1.02 for the second quarter of 2013. This compares to $19.1 million, or adjusted earnings per diluted share of $1.06, for the second quarter of 2012. The increase in adjusted net income was due to lower cash interest expense and a decline in general and administrative expenses. The increase was partially offset by, as expected, lower segment profit resulting from the refranchise and sale of 137 Applebee’s company-operated restaurants during the third and fourth quarters of 2012.  The decline in adjusted earnings per diluted share was due to a higher number of weighted average shares outstanding.  (See “Non-GAAP Financial Measures” below.)

 



 

·                  GAAP net income available to common stockholders was $16.6 million, or earnings per diluted share of $0.87 for the second quarter of 2013, compared to $15.9 million, or earnings per diluted share of $0.88, for the second quarter of 2012.  The increase in net income was primarily due to lower interest expense, a decline in general and administrative expenses, and lower asset disposition losses.  These items were partially offset by lower segment profit as a result of refranchising.

 

·                  Consolidated general and administrative expenses were $35.6 million for the second quarter of 2013 compared to $37.2 million in the second quarter of 2012.  The decrease was primarily due to lower personnel costs as a result of refranchising, the Company’s 2012 comprehensive restructuring initiative, and lower stock-based compensation.  The lower personnel costs were partially offset by higher costs for professional services and consumer research.

 

First Six Months of 2013 Highlights

 

·                  Adjusted net income available to common stockholders was $41.5 million in the first six months of 2013, representing adjusted earnings per diluted share of $2.16. This compares to $43.8 million, or adjusted earnings per diluted share of $2.41, for the same period in 2012.  The decrease was primarily due to lower segment profit as a result of refranchising.  These items were partially offset by lower cash interest expense and a decline in general and administrative expenses.  (See “Non-GAAP Financial Measures” below.)

 

·                  GAAP net income available to common stockholders was $34.5 million in the first six months of 2013, or earnings per diluted share of $1.80, compared to $45.8 million, or earnings per diluted share of $2.52 for the same period in 2012.  The decrease was primarily due to lower segment profit as a result of refranchising, lower asset disposition gains, and debt modification costs.  These items were partially offset by lower interest expense, a decline in general and administrative expenses, and the reduced impact from debt extinguishment.

 

·                  Consolidated general and administrative expenses were $69.7 million in the first six months of 2013 compared to $76.9 million for the same period of 2012.  The decrease was primarily due to lower personnel costs as a result of refranchising and the Company’s 2012 comprehensive restructuring initiative.  The Company’s strategy remains on track to deliver the targeted annualized savings in general and administrative expenses.

 

·                  EBITDA was $142.5 million for the first six months of 2013. (See “Non-GAAP Financial Measures” below.)

 

·                  For the first six months of 2013, cash flows from operating activities were $55.4 million, capital expenditures were $3.0 million, and free cash flow was $52.1 million.  (See “Non-GAAP Financial Measures” below.)

 

Same-Restaurant Sales Performance

 

Second Quarter 2013

 

·                  Applebee’s domestic system-wide same-restaurant sales increased 1.3% for the second quarter of 2013 compared to the second quarter of 2012.  The increase in same-restaurant sales reflected a higher average guest check, partially offset by a slight decline in traffic.

 

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·                  IHOP’s domestic system-wide same restaurant sales increased 1.9% for the second quarter of 2013 compared to the same quarter of 2012.  The increase in same-restaurant sales reflected a higher average guest check and an increase in traffic.

 

First Six Months of 2013 Highlights

 

·                  Applebee’s domestic system-wide same-restaurant sales were flat for the first six months of 2013 compared to the same period in 2012.  The flat same-restaurant sales reflected a higher average guest check offset by a decline in traffic.

 

·                  IHOP’s domestic system-wide same restaurant sales increased 0.7% for the first six months of 2013 compared to the first six months of 2012.  The increase in same-restaurant sales reflected a higher average guest check, partially offset by a decrease in traffic.

 

Financial Performance Guidance for Fiscal 2013

 

DineEquity reiterates its financial performance guidance for fiscal 2013 contained in the press release issued on February 27, 2013, except for consolidated general and administrative expenses. The Company revised consolidated general and administrative expenses to range between $142 million and $146 million.  This reflects a reduction from the previous expectations of between $144 million and $147 million.

 

Investor Conference Call Today

 

The Company will host an investor conference call on Tuesday, July 30, 2013, at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time to discuss its second quarter 2013 results.  To participate on the call, please dial (888) 713-4199 and reference pass code 61373373.  International callers, please dial (617) 213-4861 and reference pass code 61373373. Participants may also pre-register to obtain a unique pin number to join the live call without operator assistance by visiting the following Web site:

 

https://www.theconferencingservice.com/prereg/key.process?key=PQTM9UACN

 

A live webcast of the call will be available on DineEquity’s Web site at www.dineequity.com, and may be accessed by visiting Calls & 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 through 11:59 p.m. Pacific Time on August 6, 2013 by dialing (888) 286-8010 and referencing pass code 32557449.  International callers, please dial (617) 801-6888 and reference pass code 32557449.  An online archive of the webcast also will be available on the Investors section of DineEquity’s Web site.

 

About DineEquity, Inc.

 

Based in Glendale, California, DineEquity, Inc., through its subsidiaries, franchises and operates restaurants under the Applebee’s Neighborhood Grill & Bar and IHOP brands. With more than 3,600 restaurants combined in 19 countries, over 400 franchisees and approximately 200,000 team members (including franchisee- and company-operated restaurant employees), DineEquity is one of the largest full-service restaurant companies in the world. For more information on DineEquity, visit the Company’s Web site located at www.dineequity.com.

 

Forward-Looking Statements

 

Statements contained in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by words such as “may,” “will,” “should,”

 

3



 

“expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan” 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: the effect of general economic conditions; the Company’s indebtedness; risk of future impairment charges; trading volatility and the price of the Company’s common stock; the Company’s results in any given period differing from guidance provided to the public; the highly competitive nature of the restaurant business; the Company’s business strategy failing to achieve anticipated results; risks associated with the restaurant industry; risks associated with locations of current and future restaurants; rising costs for food commodities and utilities; shortages or interruptions in the supply or delivery of food; ineffective marketing and guest relationship initiatives and use of social media; changing health or dietary preferences; our engagement in business in foreign markets; harm to our brands’ reputation; litigation; third-party claims with respect to intellectual property assets; environmental liability; liability relating to employees; failure to comply with applicable laws and regulations; failure to effectively implement restaurant development plans; our dependence upon our franchisees; concentration of Applebee’s franchised restaurants in a limited number of franchisees; credit risk from IHOP franchisees operating under our previous business model; termination or non-renewal of franchise agreements; franchisees breaching their franchise agreements; insolvency proceedings involving franchisees; changes in the number and quality of franchisees; inability of franchisees to fund capital expenditures; heavy dependence on information technology; the occurrence of cyber incidents or a deficiency in our cybersecurity; failure to execute on a business continuity plan; inability to attract and retain talented employees; risks associated with retail brand initiatives; failure of our internal controls; 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 assumes no obligation to update or supplement any forward-looking statements.

 

Non-GAAP Financial Measures

 

This news release includes references to the Company’s non-GAAP financial measures “adjusted net income available to common stockholders (adjusted EPS),” “EBITDA,” “free cash flow,” and “segment EBITDA.” “Adjusted EPS” is computed for a given period by deducting from net income (loss) available to common stockholders for such period the effect of any impairment and closure charges, any gain or loss related to debt extinguishment, any intangible asset amortization, any non-cash interest expense, any debt modification costs, any one-time litigation settlement charges, any general and administrative restructuring costs, net of savings, any gain or loss related to the disposition of assets, and any state income tax impact of deferred taxes due to refranchising incurred in such period. This is presented on an aggregate basis and a per share (diluted) basis. The Company defines “EBITDA” for a given period as income before income taxes less interest expense, loss on retirement of debt, depreciation and amortization, impairment and closure charges, non-cash stock-based compensation, gain/loss on disposition of assets and other charge backs as defined by its credit agreement. “Free cash flow” for a given period is defined as cash provided by operating activities, plus receipts from notes and equipment contracts receivable (“long-term notes receivable”), less principal payments on capital lease and financing obligations, the mandatory 1% of Term Loan principal balance repayment, and capital expenditures. “Segment EBITDA” for a given period is defined as gross segment profit plus depreciation and amortization as well as interest charges related to the segment. Management utilizes EBITDA for debt covenant purposes and free cash flow to determine the amount of cash remaining for general corporate and strategic purposes after the receipts from long-term receivables, and the funding of operating activities, capital expenditures and dividends. Management believes this information is helpful to investors to determine the Company’s adherence to debt covenants and the Company’s cash available for these purposes. Adjusted EPS, EBITDA, free cash flow and segment EBITDA 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 United States generally accepted accounting principles.

 

4



 

DineEquity, Inc. and Subsidiaries

Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

Segment Revenues:

 

 

 

 

 

 

 

 

 

Franchise and restaurant revenues

 

$

124,153

 

$

196,261

 

$

252,482

 

$

405,555

 

Rental revenues

 

30,731

 

29,171

 

61,734

 

61,176

 

Financing revenues

 

3,230

 

3,959

 

7,067

 

8,242

 

Total segment revenues

 

158,114

 

229,391

 

321,283

 

474,973

 

Segment Expenses:

 

 

 

 

 

 

 

 

 

Franchise and restaurant expenses

 

42,308

 

105,920

 

86,784

 

217,735

 

Rental expenses

 

24,535

 

24,301

 

48,804

 

48,838

 

Financing expenses

 

245

 

916

 

245

 

1,571

 

Total segment expenses

 

67,088

 

131,137

 

135,833

 

268,144

 

Gross segment profit

 

91,026

 

98,254

 

185,450

 

206,829

 

General and administrative expenses

 

35,641

 

37,239

 

69,673

 

76,871

 

Interest expense

 

24,956

 

29,650

 

50,251

 

59,871

 

Amortization of intangible assets

 

3,069

 

3,075

 

6,140

 

6,150

 

Impairment and closure charges

 

324

 

122

 

1,162

 

844

 

Loss on extinguishment of debt

 

16

 

 

36

 

2,611

 

Debt modification costs

 

 

 

1,296

 

 

Loss (gain) on disposition of assets

 

64

 

741

 

(254

)

(15,992

)

Income before income taxes

 

26,956

 

27,427

 

57,146

 

76,474

 

Income tax provision

 

(10,019

)

(10,489

)

(21,970

)

(28,192

)

Net income

 

$

16,937

 

$

16,938

 

$

35,176

 

$

48,282

 

Net income available to common stockholders:

 

 

 

 

 

 

 

 

 

Net income

 

$

16,937

 

$

16,938

 

$

35,176

 

$

48,282

 

Less: Net income allocated to unvested participating restricted stock

 

(298

)

(388

)

(627

)

(1,169

)

Less: Accretion of Series B Convertible Preferred Stock

 

 

(677

)

 

(1,345

)

Net income available to common stockholders

 

$

16,639

 

$

15,873

 

$

34,549

 

$

45,768

 

Net income available to common stockholders per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.88

 

$

0.89

 

$

1.82

 

$

2.57

 

Diluted

 

$

0.87

 

$

0.88

 

$

1.80

 

$

2.52

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

18,953

 

17,890

 

18,932

 

17,786

 

Diluted

 

19,222

 

18,138

 

19,207

 

18,731

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.75

 

$

 

$

1.50

 

$

 

Dividends paid per common share

 

$

0.75

 

$

 

$

1.50

 

$

 

 

5



 

DineEquity, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

 

 

 

June 30,
2013

 

December 31,
2012

 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

75,637

 

$

64,537

 

Receivables, net

 

94,200

 

128,610

 

Prepaid income taxes

 

2,134

 

16,080

 

Prepaid gift cards

 

41,357

 

50,242

 

Deferred income taxes

 

22,810

 

21,772

 

Other current assets

 

4,058

 

13,214

 

Total current assets

 

240,196

 

294,455

 

Long-term receivables

 

204,952

 

212,269

 

Property and equipment, net

 

285,379

 

294,375

 

Goodwill

 

697,470

 

697,470

 

Other intangible assets, net

 

800,076

 

806,093

 

Other assets, net

 

109,369

 

110,738

 

Total assets

 

$

2,337,442

 

$

2,415,400

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current maturities of long-term debt

 

$

4,720

 

$

7,420

 

Accounts payable

 

38,694

 

30,751

 

Gift card liability

 

101,753

 

161,689

 

Accrued employee compensation and benefits

 

14,824

 

22,435

 

Accrued interest payable

 

13,291

 

13,236

 

Current maturities of capital lease and financing obligations

 

11,631

 

10,878

 

Other accrued expenses

 

18,682

 

21,351

 

Total current liabilities

 

203,595

 

267,760

 

Long-term debt, less current maturities

 

1,204,106

 

1,202,063

 

Capital lease obligations, less current maturities

 

118,481

 

124,375

 

Financing obligations, less current maturities

 

51,971

 

52,049

 

Deferred income taxes

 

347,874

 

362,171

 

Other liabilities

 

98,893

 

98,177

 

Total liabilities

 

2,024,920

 

2,106,595

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Common stock, $0.01 par value, shares: 40,000,000 authorized; June 30, 2013 - 25,346,997 issued, 19,167,937 outstanding; December 31, 2012 - 25,362,946 issued, 19,197,899 outstanding

 

253

 

254

 

Additional paid-in-capital

 

269,477

 

264,342

 

Retained earnings

 

328,311

 

322,045

 

Accumulated other comprehensive loss

 

(160

)

(152

)

Treasury stock, at cost; shares: June 30, 2013 - 6,179,060; December 31, 2012 - 6,165,047

 

(285,359

)

(277,684

)

Total stockholders’ equity

 

312,522

 

308,805

 

Total liabilities and stockholders’ equity

 

$

2,337,442

 

$

2,415,400

 

 

6



 

DineEquity, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2013

 

2012

 

Cash flows from operating activities:

 

 

 

 

 

Net income

 

$

35,176

 

$

48,282

 

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

 

 

 

 

 

Depreciation and amortization

 

17,636

 

20,956

 

Non-cash interest expense

 

3,054

 

3,045

 

Loss on extinguishment of debt

 

36

 

2,611

 

Impairment and closure charges

 

1,177

 

571

 

Deferred income taxes

 

(15,335

)

(15,969

)

Non-cash stock-based compensation expense

 

5,842

 

6,573

 

Tax benefit from stock-based compensation

 

2,943

 

4,653

 

Excess tax benefit from share-based compensation

 

(1,567

)

(2,820

)

Gain on disposition of assets

 

(254

)

(15,992

)

Other

 

1,140

 

894

 

Changes in operating assets and liabilities:

 

 

 

 

 

Receivables

 

34,670

 

38,598

 

Current income tax receivables and payables

 

8,716

 

7,414

 

Other current assets

 

16,476

 

(2,383

)

Accounts payable

 

8,089

 

69

 

Accrued employee compensation and benefits

 

(7,612

)

(7,084

)

Gift card liability

 

(59,936

)

(55,690

)

Other accrued expenses

 

5,178

 

2,628

 

Cash flows provided by operating activities

 

55,429

 

36,356

 

Cash flows from investing activities:

 

 

 

 

 

Additions to property and equipment

 

(2,953

)

(10,650

)

Proceeds from sale of property and equipment and assets held for sale

 

 

21,500

 

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

 

7,063

 

6,577

 

Other

 

11

 

(760

)

Cash flows provided by investing activities

 

4,121

 

16,667

 

Cash flows from financing activities:

 

 

 

 

 

Borrowings under revolving credit facilities

 

 

35,000

 

Repayments under revolving credit facilities

 

 

(35,000

)

Repayment of long-term debt (including premiums)

 

(2,400

)

(76,037

)

Payment of debt modification costs

 

(1,281

)

 

Principal payments on capital lease and financing obligations

 

(5,018

)

(6,125

)

Repurchase of DineEquity common stock

 

(14,504

)

 

Dividends paid on common stock

 

(28,885

)

 

Repurchase of restricted stock

 

(2,841

)

(1,344

)

Proceeds from stock options exercised

 

3,348

 

3,120

 

Excess tax benefit from share-based compensation

 

1,567

 

2,820

 

Change in restricted cash

 

1,564

 

(3,777

)

Cash flows used in financing activities

 

(48,450

)

(81,343

)

Net change in cash and cash equivalents

 

11,100

 

(28,320

)

Cash and cash equivalents at beginning of period

 

64,537

 

60,691

 

Cash and cash equivalents at end of period

 

$

75,637

 

$

32,371

 

 

7



 

NON-GAAP FINANCIAL MEASURES

(In thousands, except per share amounts)

(Unaudited)

 

Reconciliation of (i) net income available to common stockholders to (ii) net income available to common stockholders excluding impairment and closure charges; loss on extinguishment of debt; amortization of intangible assets; non-cash interest expense; debt modification costs; and gain on disposition of assets, all items net of taxes (as appropriate), and related per share data:

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

Net income available to common stockholders, as reported

 

$

16,639

 

$

15,873

 

$

34,549

 

$

45,768

 

Impairment and closure charges

 

324

 

122

 

1,162

 

844

 

Loss on extinguishment of debt

 

16

 

 

36

 

2,611

 

Amortization of intangible assets

 

3,069

 

3,075

 

6,140

 

6,150

 

Non-cash interest expense

 

1,551

 

1,516

 

3,054

 

3,045

 

Debt modification costs

 

 

 

1,296

 

 

Loss (gain) on disposition of assets

 

64

 

741

 

(254

)

(15,992

)

Income tax provision (benefit)

 

(1,909

)

(2,107

)

(4,345

)

1,291

 

Net income allocated to unvested participating restricted stock

 

(60

)

(80

)

(137

)

52

 

Net income available to common stockholders, as adjusted

 

$

19,694

 

$

19,140

 

$

41,501

 

$

43,769

 

 

 

 

 

 

 

 

 

 

 

Diluted net income available to common stockholders per share:

 

 

 

 

 

 

 

 

 

Net income available to common stockholders, as reported

 

$

0.87

 

$

0.88

 

$

1.80

 

$

2.52

 

Impairment and closure charges

 

0.01

 

0.01

 

0.04

 

0.03

 

Loss on extinguishment of debt

 

0.00

 

 

0.00

 

0.08

 

Amortization of intangible assets

 

0.10

 

0.10

 

0.20

 

0.20

 

Noncash interest expense

 

0.05

 

0.05

 

0.10

 

0.10

 

Debt modification costs

 

 

 

0.04

 

 

Loss (gain) on disposition of assets

 

0.00

 

0.02

 

(0.01

)

(0.51

)

Net income allocated to unvested participating restricted stock

 

0.00

 

0.00

 

(0.01

)

0.00

 

Change due increase in net income

 

(0.01

)

 

 

(0.01

)

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

 

$

1.02

 

$

1.06

 

$

2.16

 

$

2.41

 

 

 

 

 

 

 

 

 

 

 

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

 

$

19,694

 

$

19,140

 

$

41,501

 

$

43,769

 

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

 

1

 

23

 

4

 

55

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

Convertible Series B preferred stock

 

 

677

 

 

1,345

 

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

 

$

19,695

 

$

19,840

 

$

41,505

 

$

45,169

 

 

 

 

 

 

 

 

 

 

 

Denominator for basic EPS-weighted-average shares

 

18,953

 

17,890

 

18,932

 

17,786

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

Stock options

 

269

 

247

 

275

 

281

 

Convertible Series B preferred stock

 

 

663

 

 

663

 

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

 

19,222

 

18,800

 

19,207

 

18,730

 

 

8


 


 

DineEquity, Inc. and Subsidiaries

Non-GAAP Financial Measures

(In thousands)

(Unaudited)

 

Reconciliation of U.S. GAAP income before income taxes to EBITDA:

 

 

 

Six Months
Ended

 

Twelve Months
Ended

 

 

 

June 30, 2013

 

U.S. GAAP income before income taxes

 

$

57,146

 

$

175,595

 

Interest charges

 

58,603

 

121,721

 

Loss on extinguishment of debt

 

36

 

2,979

 

Depreciation and amortization

 

17,636

 

36,218

 

Non-cash stock-based compensation

 

5,842

 

10,711

 

Impairment and closure charges

 

1,162

 

4,536

 

Other

 

2,373

 

15,542

 

Gain on sale of assets

 

(254

)

(86,859

)

EBITDA

 

$

142,544

 

$

280,443

 

 

Reconciliation of the Company’s cash provided by operating activities to “free cash flow” (cash from operations, plus receipts from notes, equipment contracts and other long-term receivables, less consolidated capital expenditures, principal payments on capital leases and financing obligations and the mandatory annual repayment of 1% of our Term Loan principal balance):

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2013

 

2012

 

Cash flows provided by operating activities

 

$

55,429

 

$

36,356

 

Principal receipts from long-term receivables

 

7,063

 

6,577

 

Additions to property and equipment

 

(2,953

)

(10,650

)

Principal payments on capital lease and financing obligations

 

(5,018

)

(6,125

)

Mandatory 1% of Term Loans principal balance repayment

 

(2,400

)

(3,710

)

Free cash flow

 

52,121

 

22,448

 

Dividends paid on common stock

 

(28,885

)

 

Repurchase of DineEquity common stock

 

(14,504

)

 

 

 

$

8,732

 

$

22,448

 

 

9



 

DineEquity, Inc. and Subsidiaries

Non-GAAP Financial Measures

(In millions)

(Unaudited)

 

Reconciliation of U.S. GAAP gross segment profit to segment EBITDA:

 

 

 

Three Months Ended June 30, 2013

 

 

 

Franchise -
Applebee’s

 

Franchise -
IHOP

 

Company
Restaurants

 

Rental
Operations

 

Financing
Operations

 

Total

 

Revenue

 

$

50,223

 

$

57,773

 

$

16,157

 

$

30,731

 

$

3,230

 

$

158,114

 

Expense

 

1,448

 

24,695

 

16,165

 

24,535

 

245

 

67,088

 

Gross segment profit

 

48,775

 

33,078

 

(8

)

6,196

 

2,985

 

91,026

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation/amortization

 

2,710

 

 

542

 

3,346

 

 

6,598

 

Interest charges

 

 

 

93

 

4,021

 

 

4,114

 

Segment EBITDA

 

$

51,485

 

$

33,078

 

$

627

 

$

13,563

 

$

2,985

 

$

101,738

 

 

 

 

Three Months Ended June 30, 2012

 

 

 

Franchise -
Applebee’s

 

Franchise -
IHOP

 

Company
Restaurants

 

Rental
Operations

 

Financing
Operations

 

Total

 

Revenue

 

$

46,229

 

$

56,230

 

$

93,802

 

$

29,171

 

$

3,959

 

$

229,391

 

Expense

 

1,162

 

25,184

 

79,574

 

24,301

 

916

 

131,137

 

Gross segment profit

 

45,067

 

31,046

 

14,228

 

4,870

 

3,043

 

98,254

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation/amortization

 

2,493

 

 

2,285

 

3,449

 

 

8,227

 

Interest charges

 

 

 

95

 

4,292

 

 

4,387

 

Segment EBITDA

 

$

47,560

 

$

31,046

 

$

16,608

 

$

12,611

 

$

3,043

 

$

110,868

 

 

 

 

Six Months Ended June 30, 2013

 

 

 

Franchise -
Applebee’s

 

Franchise -
IHOP

 

Company
Restaurants

 

Rental
Operations

 

Financing
Operations

 

Total

 

Revenue

 

$

100,956

 

$

118,904

 

$

32,622

 

$

61,734

 

$

7,067

 

$

321,283

 

Expense

 

2,932

 

51,398

 

32,454

 

48,804

 

245

 

135,833

 

Gross segment profit

 

98,024

 

67,506

 

168

 

12,930

 

6,822

 

185,450

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation/amortization

 

5,471

 

 

1,071

 

6,754

 

 

13,296

 

Interest charges

 

 

 

187

 

8,112

 

 

8,299

 

Segment EBITDA

 

$

103,495

 

$

67,506

 

$

1,426

 

$

27,796

 

$

6,822

 

$

207,045

 

 

 

 

Six Months Ended June 30, 2012

 

 

 

Franchise -
Applebee’s

 

Franchise -
IHOP

 

Company
Restaurants

 

Rental
Operations

 

Financing
Operations

 

Total

 

Revenue

 

$

93,769

 

$

117,099

 

$

194,687

 

$

61,176

 

$

8,242

 

$

474,973

 

Expense

 

1,946

 

52,032

 

163,757

 

48,838

 

1,571

 

268,144

 

Gross segment profit

 

91,823

 

65,067

 

30,930

 

12,338

 

6,671

 

206,829

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation/amortization

 

4,938

 

 

4,709

 

6,909

 

 

16,556

 

Interest charges

 

 

 

192

 

8,646

 

 

8,838

 

Segment EBITDA

 

$

96,761

 

$

65,067

 

$

35,831

 

$

27,893

 

$

6,671

 

$

232,223

 

 

10



 

Restaurant Data

 

The following table sets forth, for the three and six months ended June 30, 2013 and 2012, 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. 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 may be partially 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 June 30,

 

Six Months Ended June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

(unaudited)

 

Applebee’s Restaurant Data

 

 

 

 

 

 

 

 

 

Effective Restaurants(a)

 

 

 

 

 

 

 

 

 

Franchise

 

2,003

 

1,859

 

2,005

 

1,857

 

Company

 

23

 

160

 

23

 

161

 

Total

 

2,026

 

2,019

 

2,028

 

2,018

 

 

 

 

 

 

 

 

 

 

 

System-wide(b)

 

 

 

 

 

 

 

 

 

Sales percentage change(c)

 

0.6

%

1.2

%

0.7

%

1.4

%

Domestic same-restaurant sales percentage change(d)

 

1.3

%

0.7

%

0.0

%

1.0

%

 

 

 

 

 

 

 

 

 

 

Franchise(b)(e)

 

 

 

 

 

 

 

 

 

Sales percentage change(c)

 

8.7

%

5.5

%

8.9

%

6.4

%

Domestic same-restaurant sales percentage change(d)

 

1.3

%

0.5

%

0.0

%

0.8

%

Average weekly domestic unit sales (in thousands)

 

$

47.4

 

$

46.9

 

$

48.3

 

$

48.5

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

(unaudited)

 

IHOP Restaurant Data

 

 

 

 

 

 

 

 

 

Effective Restaurants(a)

 

 

 

 

 

 

 

 

 

Franchise

 

1,410

 

1,377

 

1,409

 

1,375

 

Area license

 

167

 

164

 

167

 

164

 

Company

 

12

 

14

 

12

 

13

 

Total

 

1,589

 

1,555

 

1,588

 

1,552

 

 

 

 

 

 

 

 

 

 

 

System-wide(b)

 

 

 

 

 

 

 

 

 

Sales percentage change(c)

 

4.3

%

1.9

%

3.3

%

2.4

%

Domestic same-restaurant sales percentage change(d)

 

1.9

%

(1.4

)%

0.7

%

(0.9

)%

 

 

 

 

 

 

 

 

 

 

Franchise(b)

 

 

 

 

 

 

 

 

 

Sales percentage change(c)

 

4.3

%

1.7

%

3.3

%

2.2

%

Domestic same-restaurant sales percentage change(d)

 

1.9

%

(1.3

)%

0.7

%

(0.8

)%

Average weekly domestic unit sales (in thousands)

 

$

34.4

 

$

33.8

 

$

34.7

 

$

34.4

 

 

 

 

 

 

 

 

 

 

 

Area License (b)

 

 

 

 

 

 

 

 

 

Sales percentage change(c)

 

4.8

%

3.2

%

4.5

%

3.3

%

 

11



 


(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 the Company as well as those owned by franchisees and area licensees.

 

(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. 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, 2013 and 2012 were as follows:

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

(In millions)

 

Reported sales (unaudited)

 

 

 

 

 

 

 

 

 

Applebee’s franchise restaurant sales

 

$

1,144.2

 

$

1,042.5

 

$

2,335.7

 

$

2,154.0

 

IHOP franchise restaurant sales

 

$

630.9

 

$

604.8

 

$

1,270.2

 

$

1,229.8

 

IHOP area license restaurant sales

 

$

61.3

 

$

58.5

 

$

126.2

 

$

120.8

 

 

(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.

 

(e)          The sales percentage change for the three and six months ended June 30, 2013 and 2012 for Applebee’s franchise restaurants was impacted by the refranchising of 154 company-operated restaurants during 2012.

 

12



 

DineEquity, Inc. and Subsidiaries

Restaurant Data

 

The following table summarizes our restaurant development activity:

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

(unaudited)

 

Applebee’s Restaurant Development Activity

 

 

 

 

 

 

 

 

 

Beginning of period

 

2,031

 

2,021

 

2,034

 

2,019

 

New openings:

 

 

 

 

 

 

 

 

 

Franchise

 

4

 

3

 

6

 

9

 

Total new openings

 

4

 

3

 

6

 

9

 

Closings:

 

 

 

 

 

 

 

 

 

Franchise

 

(23

)

(6

)

(28

)

(10

)

Total closings

 

(23

)

(6

)

(28

)

(10

)

End of period

 

2,012

 

2,018

 

2,012

 

2,018

 

Summary - end of period

 

 

 

 

 

 

 

 

 

Franchise

 

1,989

 

1,858

 

1,989

 

1,858

 

Company

 

23

 

160

 

23

 

160

 

Total

 

2,012

 

2,018

 

2,012

 

2,018

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

(unaudited)

 

IHOP Restaurant Development Activity

 

 

 

 

 

 

 

 

 

Beginning of period

 

1,589

 

1,554

 

1,581

 

1,550

 

New openings:

 

 

 

 

 

 

 

 

 

Franchise

 

8

 

5

 

18

 

15

 

Area license

 

2

 

1

 

4

 

1

 

Total new openings

 

10

 

6

 

22

 

16

 

Closings:

 

 

 

 

 

 

 

 

 

Franchise

 

(5

)

(2

)

(9

)

(7

)

Area license

 

(1

)

(1

)

(1

)

(2

)

Total closings

 

(6

)

(3

)

(10

)

(9

)

End of period

 

1,593

 

1,557

 

1,593

 

1,557

 

Summary - end of period

 

 

 

 

 

 

 

 

 

Franchise

 

1,414

 

1,375

 

1,414

 

1,375

 

Area license

 

168

 

165

 

168

 

165

 

Company

 

11

 

17

 

11

 

17

 

Total

 

1,593

 

1,557

 

1,593

 

1,557

 

 

13