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8-K - 8-K - Dine Brands Global, Inc.a14-17946_18k.htm
EX-99.2 - EX-99.2 - Dine Brands Global, Inc.a14-17946_1ex99d2.htm

Exhibit 99.1

 

GRAPHIC

 

Investor Contact

Ken Diptee

Executive Director, Investor Relations

DineEquity, Inc.

818-637-3632

 

Media Contact

Stacy Roughan and Samantha Verdile

Sard Verbinnen & Co.

310-201-2040 and 212-687-8080

 

DineEquity, Inc. Reports Successful Second Quarter 2014 Results

 

·                  Second quarter 2014 adjusted EPS (Non-GAAP) of $1.16 and GAAP EPS of $1.00

 

·                  Adjusted EPS (Non-GAAP) increased 14% compared to the second quarter of 2013

 

·                  Generated strong free cash flow of $50.0 million in the first six months of 2014

 

·                  Over $29 million returned to shareholders in the form of a second quarter cash dividend of $0.75 per share of common stock and share repurchases

 

·                  Second quarter domestic system-wide same restaurant sales increased 3.2% and 0.6% at IHOP and Applebee’s, respectively

 

·                  Both IHOP and Applebee’s ranked number one by Nation’s Restaurant News for the seventh consecutive year in their respective categories based on last fiscal year’s U.S. system-wide same-restaurant sales

 

GLENDALE, Calif., July 29, 2014 — 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 fiscal 2014.

 

“We delivered successful results for the second quarter, driven by the continued focus on our strategic objectives,” said Julia A. Stewart, Chairman and Chief Executive Officer of DineEquity, Inc.  Ms. Stewart added, “We are very pleased to announce that IHOP and Applebee’s reported positive same-restaurant sales and outperformed their respective categories based on industry sales data.  We are doing the work necessary to drive long-term success at both of our brands.  In addition, we continue to generate substantial free cash flow, tightly manage our general and administrative expenses, and return significant cash to shareholders.  We remain clearly focused on maximizing shareholder value and driving sustainable growth.”

 

Second Quarter 2014 Financial Highlights

 

·                  Adjusted net income available to common stockholders was $22.1 million, representing adjusted earnings per diluted share of $1.16 for the second quarter of 2014. This compares to $19.7 million, or adjusted earnings per diluted share of $1.02, for the second quarter of 2013. Adjusted earnings per diluted share increased by 14% compared to the second quarter of 2013.  The improvement in adjusted net income was due to higher segment profit, lower general and administrative expenses, and lower cash interest expense. These items were partially offset by higher income taxes.  (See “Non-GAAP Financial Measures” below.)

 

·                  GAAP net income available to common stockholders was $18.9 million, or earnings per diluted share of $1.00, for the second quarter of 2014.  This compares to $16.6 million, or earnings per

 



 

DineEquity, Inc.

Page 2 of 13

 

diluted share of $0.87, for the second quarter of 2013.  Earnings per diluted share improved by 15% compared to the second quarter of 2013.  The increase in net income was primarily due to higher segment profit, lower general and administrative expenses, and a gain on the disposition of assets in the second quarter of 2014 compared to a loss in the same period of 2013.  These items were partially offset by higher income tax expense and an increase in closure and impairment charges.

 

·                  General and administrative expenses were $34.8 million for the second quarter of 2014 compared to $35.6 million for the same period of 2013.

 

First Six Months of 2014 Highlights

 

·                  Adjusted net income available to common stockholders was $46.1 million in the first six months of 2014, representing adjusted earnings per diluted share of $2.43.  This compares to $41.5 million, or adjusted earnings per diluted share of $2.16, for the same period in 2013.  Adjusted earnings per diluted share for the first six months of 2014 rose by 13% compared to the same period in 2013. The increase was primarily due to higher segment profit, lower general and administrative expenses, and a decline in cash interest expense.  These items were partially offset by higher income taxes.  (See “Non-GAAP Financial Measures” below.)

 

·                  GAAP net income available to common stockholders was $39.3 million in the first six months of 2014, or earnings per diluted share of $2.07, compared to $34.5 million, or earnings per diluted share of $1.80 for the same period in 2013.  Earnings per diluted share for the first six months of 2014 improved by 15% compared to the same period in 2013.  The increase was primarily due to higher segment profit, debt modification costs that occurred in the first six months of 2013 that did not recur in the first six months of 2014, and a decline in general and administrative expenses.  These items were partially offset by higher income tax expense and a loss on the disposition of assets in the first six months of 2014 compared to a gain in the first six months of 2013.

 

·                  General and administrative expenses were $69.0 million in the first six months of 2014 compared to $69.7 million for the same period of 2013.

 

·                  EBITDA was $149.4 million for the first six months of 2014. (See “Non-GAAP Financial Measures” below.)

 

·                  For the first six months of 2014, cash flows from operating activities were $56.0 million and free cash flow was $50.0 million.  (See “Non-GAAP Financial Measures” below.)

 

Same-Restaurant Sales Performance

 

Second Quarter 2014

 

·                  Applebee’s domestic system-wide same-restaurant sales increased 0.6% for the second quarter of 2014 compared to the second quarter of 2013.

 

·                  IHOP’s domestic system-wide same restaurant sales increased 3.2% for the second quarter of 2014 compared to the same quarter of 2013.

 

First Six Months of 2014 Highlights

 

·                  Applebee’s domestic system-wide same-restaurant sales remained flat for the first six months of 2014 compared to the same period in 2013.

 

·                  IHOP’s domestic system-wide same restaurant sales increased 3.6% for the first six months of 2014 compared to the first six months of 2013.

 



 

DineEquity, Inc.

Page 3 of 13

 

Financial Performance Guidance for Fiscal 2014

 

DineEquity reiterates its financial performance guidance for fiscal 2014 contained in the press release issued on February 26, 2014, except for IHOP’s domestic system-wide same restaurant sales.  The Company revised IHOP’s sales performance guidance to range between positive 1.0% and positive 2.5%.  This reflects an increase from the previous expectations of between positive 0.5% and positive 2.0%.

 

Investor Conference Call Today

 

The Company will host a conference call to discuss its results on the same day at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time.  To participate on the call, please dial (800) 708-4539 and reference pass code 37666196.  International callers, please dial (847) 619-6396 and reference pass code 37666196.

 

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 from 10:30 a.m. Pacific Time on July 29, 2014 through 11:59 p.m. Pacific Time on August 5, 2014 by dialing (888) 843-7419 and referencing pass code 37666196#. International callers, please dial (630) 652-3042 and reference pass code 37666196#.  An online archive of the webcast will also 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,” “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 and risks associated with the timing and our ability to refinance 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; fourth-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

 



 

DineEquity, Inc.

Page 4 of 13

 

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 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 debt modification costs, and any gain or loss related to the disposition of assets. 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 extinguishment of debt, depreciation and amortization, closure and impairment charges, non-cash stock-based compensation, gain or 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 and for the return of cash to stockholders pursuant to our capital allocation strategy, after the receipts from long-term receivables, and the funding of operating activities, capital expenditures and debt service. 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.

 



 

DineEquity, Inc.

Page 5 of 13

 

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,

 

 

 

2014

 

2013

 

2014

 

2013

 

Segment Revenues:

 

 

 

 

 

 

 

 

 

Franchise and restaurant revenues

 

$

126,444

 

$

124,153

 

$

258,239

 

$

252,482

 

Rental revenues

 

30,709

 

30,731

 

61,462

 

61,734

 

Financing revenues

 

3,368

 

3,230

 

8,021

 

7,067

 

Total segment revenues

 

160,521

 

158,114

 

327,722

 

321,283

 

Segment Expenses:

 

 

 

 

 

 

 

 

 

Franchise and restaurant expenses

 

42,155

 

42,308

 

87,833

 

86,784

 

Rental expenses

 

23,653

 

24,535

 

47,519

 

48,804

 

Financing expenses

 

240

 

245

 

825

 

245

 

Total segment expenses

 

66,048

 

67,088

 

136,177

 

135,833

 

Gross segment profit

 

94,473

 

91,026

 

191,545

 

185,450

 

General and administrative expenses

 

34,816

 

35,641

 

69,001

 

69,673

 

Interest expense

 

24,942

 

24,956

 

49,911

 

50,251

 

Amortization of intangible assets

 

3,070

 

3,069

 

6,141

 

6,140

 

Closure and impairment charges

 

637

 

324

 

837

 

1,162

 

Loss on extinguishment of debt

 

6

 

16

 

12

 

36

 

Debt modification costs

 

 

 

 

1,296

 

(Gain) loss on disposition of assets

 

(130

)

64

 

797

 

(254

)

Income before income tax provision

 

31,132

 

26,956

 

64,846

 

57,146

 

Income tax provision

 

(11,965

)

(10,019

)

(24,855

)

(21,970

)

Net income

 

$

19,167

 

$

16,937

 

$

39,991

 

$

35,176

 

Net income available to common stockholders:

 

 

 

 

 

 

 

 

 

Net income

 

$

19,167

 

$

16,937

 

$

39,991

 

$

35,176

 

Less: Net income allocated to unvested participating

 

(307

)

(298

)

(649

)

(627

)

Net income available to common stockholders

 

$

18,860

 

$

16,639

 

$

39,342

 

$

34,549

 

Net income available to common stockholders per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

1.00

 

$

0.88

 

$

2.09

 

$

1.82

 

Diluted

 

$

1.00

 

$

0.87

 

$

2.07

 

$

1.80

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

18,776

 

18,953

 

18,785

 

18,932

 

Diluted

 

18,955

 

19,222

 

19,003

 

19,207

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.75

 

$

0.75

 

$

1.50

 

$

1.50

 

Dividends paid per common share

 

$

0.75

 

$

0.75

 

$

1.50

 

$

1.50

 

 



 

DineEquity, Inc.

Page 6 of 13

 

DineEquity, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

 

 

 

June 30,
 2014

 

December 31,
2013

 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

100,350

 

$

106,011

 

Receivables, net

 

91,187

 

144,137

 

Prepaid gift cards

 

40,459

 

49,223

 

Prepaid income taxes

 

 

4,708

 

Deferred income taxes

 

28,874

 

23,853

 

Other current assets

 

12,323

 

3,650

 

Total current assets

 

273,193

 

331,582

 

Long-term receivables, net

 

190,380

 

197,153

 

Property and equipment, net

 

261,201

 

274,295

 

Goodwill

 

697,470

 

697,470

 

Other intangible assets, net

 

788,105

 

794,057

 

Other assets, net

 

108,740

 

110,085

 

Total assets

 

$

2,319,089

 

$

2,404,642

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current maturities of long-term debt

 

$

4,720

 

$

4,720

 

Accounts payable

 

41,138

 

40,050

 

Gift card liability

 

108,046

 

171,955

 

Accrued employee compensation and benefits

 

14,404

 

24,956

 

Accrued interest payable

 

13,622

 

13,575

 

Income taxes payable

 

10,812

 

 

Current maturities of capital lease and financing obligations

 

12,936

 

12,247

 

Other accrued expenses

 

19,098

 

16,770

 

Total current liabilities

 

224,776

 

284,273

 

Long-term debt, net (less current maturities)

 

1,202,995

 

1,203,517

 

Capital lease obligations (less current maturities)

 

105,212

 

111,707

 

Financing obligations (less current maturities)

 

46,815

 

48,843

 

Deferred income taxes

 

330,525

 

341,578

 

Other liabilities

 

98,173

 

99,545

 

Total liabilities

 

2,008,496

 

2,089,463

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Common stock, $0.01 par value, shares: 40,000,000 authorized; June 30, 2014 - 25,277,373 issued, 18,967,460 outstanding; December 31, 2013 - 25,299,315 issued, 19,040,890 outstanding

 

253

 

253

 

Additional paid-in-capital

 

276,636

 

274,202

 

Retained earnings

 

348,026

 

336,578

 

Accumulated other comprehensive loss

 

(56

)

(164

)

Treasury stock, at cost; shares: June 30, 2014 - 6,309,913; December 31, 2013 - 6,258,425

 

(314,266

)

(295,690

)

Total stockholders’ equity

 

310,593

 

315,179

 

Total liabilities and stockholders’ equity

 

$

2,319,089

 

$

2,404,642

 

 



 

DineEquity, Inc.

Page 7 of 13

 

DineEquity, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2014

 

2013

 

Cash flows from operating activities:

 

 

 

 

 

Net income

 

$

39,991

 

$

35,176

 

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

 

 

 

 

 

Depreciation and amortization

 

17,498

 

17,636

 

Non-cash interest expense

 

3,315

 

3,054

 

Deferred income taxes

 

(16,047

)

(15,335

)

Non-cash stock-based compensation expense

 

5,508

 

5,842

 

Tax benefit from stock-based compensation

 

3,578

 

2,943

 

Excess tax benefit from share-based compensation

 

(4,455

)

(1,567

)

Loss (gain) on disposition of assets

 

797

 

(254

)

Debt modification costs

 

 

1,281

 

Other

 

(867

)

1,072

 

Changes in operating assets and liabilities:

 

 

 

 

 

Receivables, net

 

54,225

 

34,670

 

Current income tax receivables and payables

 

16,004

 

8,716

 

Prepaid expenses and other current assets

 

7,156

 

16,476

 

Accounts payable

 

1,911

 

8,089

 

Accrued employee compensation and benefits

 

(10,552

)

(7,612

)

Gift card liability

 

(63,911

)

(59,936

)

Other accrued expenses

 

1,841

 

5,178

 

Cash flows provided by operating activities

 

55,992

 

55,429

 

Cash flows from investing activities:

 

 

 

 

 

Additions to property and equipment

 

(4,086

)

(2,953

)

Proceeds from sale of property and equipment

 

681

 

 

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

 

6,066

 

7,063

 

Other

 

75

 

11

 

Cash flows provided by investing activities

 

2,736

 

4,121

 

Cash flows from financing activities:

 

 

 

 

 

Repayment of long-term debt

 

(2,400

)

(2,400

)

Payment of debt modification costs

 

 

(1,281

)

Principal payments on capital lease and financing obligations

 

(5,570

)

(5,018

)

Repurchase of DineEquity common stock

 

(30,006

)

(14,504

)

Dividends paid on common stock

 

(28,518

)

(28,885

)

Repurchase of restricted stock

 

(1,944

)

(2,841

)

Proceeds from stock options exercised

 

6,658

 

3,348

 

Excess tax benefit from share-based compensation

 

4,455

 

1,567

 

Change in restricted cash

 

(7,064

)

1,564

 

Cash flows used in financing activities

 

(64,389

)

(48,450

)

Net change in cash and cash equivalents

 

(5,661

)

11,100

 

Cash and cash equivalents at beginning of period

 

106,011

 

64,537

 

Cash and cash equivalents at end of period

 

$

100,350

 

$

75,637

 

 



 

DineEquity, Inc.

Page 8 of 13

 

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 closure and impairment charges; loss on extinguishment of debt; amortization of intangible assets; non-cash interest expense; debt modification costs; and  gain or loss on disposition of assets, all items net of taxes, and related per share data:

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

Net income available to common stockholders, as reported

 

$

18,860

 

$

16,639

 

$

39,342

 

$

34,549

 

Closure and impairment charges

 

637

 

324

 

837

 

1,162

 

Loss on extinguishment of debt

 

6

 

16

 

12

 

36

 

Amortization of intangible assets

 

3,070

 

3,069

 

6,141

 

6,140

 

Non-cash interest expense

 

1,673

 

1,551

 

3,315

 

3,054

 

Debt modification costs

 

 

 

 

1,296

 

(Gain) loss on disposition of assets

 

(130

)

64

 

797

 

(254

)

Income tax provision

 

(1,997

)

(1,909

)

(4,219

)

(4,345

)

Net income allocated to unvested participating restricted stock

 

(55

)

(60

)

(116

)

(137

)

Net income available to common stockholders, as adjusted

 

$

22,064

 

$

19,694

 

$

46,109

 

$

41,501

 

 

 

 

 

 

 

 

 

 

 

Diluted net income available to common stockholders per share:

 

 

 

 

 

 

 

 

 

Net income available to common stockholders, as reported

 

$

1.00

 

$

0.87

 

$

2.07

 

$

1.80

 

Closure and impairment charges

 

0.02

 

0.01

 

0.02

 

0.04

 

Loss on extinguishment of debt

 

0.00

 

0.00

 

0.00

 

0.00

 

Amortization of intangible assets

 

0.10

 

0.10

 

0.20

 

0.20

 

Noncash interest expense

 

0.06

 

0.05

 

0.11

 

0.10

 

Debt modification costs

 

 

 

 

0.04

 

(Gain) loss on disposition of assets

 

(0.01

)

0.00

 

0.02

 

(0.01

)

Net income allocated to unvested participating restricted stock

 

0.00

 

0.00

 

0.00

 

(0.01

)

Rounding

 

(0.01

)

(0.01

)

0.01

 

 

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

 

$

1.16

 

$

1.02

 

$

2.43

 

$

2.16

 

 

 

 

 

 

 

 

 

 

 

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

 

$

22,064

 

$

19,694

 

$

46,109

 

$

41,501

 

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

 

1

 

1

 

3

 

4

 

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

 

$

22,065

 

$

19,695

 

$

46,112

 

$

41,505

 

 

 

 

 

 

 

 

 

 

 

Denominator for basic EPS-weighted-average shares

 

18,776

 

18,953

 

18,785

 

18,932

 

Dilutive effect of stock options

 

179

 

269

 

218

 

275

 

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

 

18,955

 

19,222

 

19,003

 

19,207

 

 



 

DineEquity, Inc.

Page 9 of 13

 

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, 2014

 

U.S. GAAP income before income taxes

 

$

64,846

 

$

118,317

 

Interest charges

 

57,741

 

115,591

 

Depreciation and amortization

 

17,498

 

35,217

 

Non-cash stock-based compensation

 

5,508

 

9,030

 

Closure and impairment charges

 

837

 

1,487

 

Gain on sale of assets

 

797

 

828

 

Other

 

2,154

 

3,453

 

EBITDA

 

$

149,381

 

$

283,923

 

 

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,

 

 

 

2014

 

2013

 

Cash flows provided by operating activities

 

$

55,992

 

$

55,429

 

Principal receipts from long-term receivables

 

6,066

 

7,063

 

Additions to property and equipment

 

(4,086

)

(2,953

)

Free cash flow before debt service

 

57,972

 

59,539

 

Principal payments on capital lease and financing obligations

 

(5,570

)

(5,018

)

Mandatory 1% of Term Loans principal balance repayment

 

(2,360

)

(2,360

)

Free cash flow

 

50,042

 

52,161

 

Dividends paid on common stock

 

(28,518

)

(28,885

)

Repurchase of DineEquity common stock

 

(30,006

)

(14,504

)

 

 

$

(8,482

)

$

8,772

 

 



 

DineEquity, Inc.

Page 10 of 13

 

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, 2014

 

 

 

Franchise -
Applebee’s

 

Franchise -
IHOP

 

Company
Restaurants

 

Rental
Operations

 

Financing
Operations

 

Total

 

Revenue

 

$

50,039

 

$

60,731

 

$

15,674

 

$

30,709

 

$

3,368

 

$

160,521

 

Expense

 

1,294

 

25,331

 

15,530

 

23,653

 

240

 

66,048

 

Gross segment profit

 

48,745

 

35,400

 

144

 

7,056

 

3,128

 

94,473

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation/amortization

 

2,615

 

 

495

 

3,314

 

 

6,424

 

Interest charges

 

 

 

99

 

3,721

 

 

3,820

 

Segment EBITDA

 

$

51,360

 

$

35,400

 

$

738

 

$

14,091

 

$

3,128

 

$

104,717

 

 

 

 

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

 

2,711

 

 

542

 

3,346

 

 

6,599

 

Interest charges

 

 

 

93

 

4,020

 

 

4,113

 

Segment EBITDA

 

$

51,486

 

$

33,078

 

$

627

 

$

13,562

 

$

2,985

 

$

101,738

 

 

 

 

Six months ended June 30, 2014

 

 

 

Franchise -
Applebee’s

 

Franchise -
IHOP

 

Company
Restaurants

 

Rental
Operations

 

Financing
Operations

 

Total

 

Revenue

 

$

100,792

 

$

125,472

 

$

31,975

 

$

61,462

 

$

8,021

 

$

327,722

 

Expense

 

2,694

 

53,304

 

31,835

 

47,519

 

825

 

136,177

 

Gross segment profit

 

98,098

 

72,168

 

140

 

13,943

 

7,196

 

191,545

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation/amortization

 

5,236

 

 

1,019

 

6,658

 

 

12,913

 

Interest charges

 

 

 

199

 

7,581

 

 

7,780

 

Segment EBITDA

 

$

103,334

 

$

72,168

 

$

1,358

 

$

28,182

 

$

7,196

 

$

212,238

 

 

 

 

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

 

 



 

DineEquity, Inc.

Page 11 of 13

 

Restaurant Data

 

The following table sets forth, for the three and six months ended June 30, 2014 and 2013, 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

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

 

 

(unaudited)

 

Applebee’s Restaurant Data

 

 

 

 

 

 

 

 

 

Effective Restaurants(a)

 

 

 

 

 

 

 

 

 

Franchise

 

1,985

 

2,003

 

1,985

 

2,005

 

Company

 

23

 

23

 

23

 

23

 

Total

 

2,008

 

2,026

 

2,008

 

2,028

 

 

 

 

 

 

 

 

 

 

 

System-wide(b)

 

 

 

 

 

 

 

 

 

Sales percentage change(c)

 

0.6

%

0.6

%

(0.1

)%

0.7

%

Domestic same-restaurant sales percentage change(d)

 

0.6

%

1.3

%

0.0

%

0.0

%

 

 

 

 

 

 

 

 

 

 

Franchise(b)(e)

 

 

 

 

 

 

 

 

 

Sales percentage change(c)

 

0.6

%

8.7

%

(0.1

)%

8.9

%

Domestic same-restaurant sales percentage change(d)

 

0.6

%

1.3

%

0.1

%

0.0

%

Average weekly domestic unit sales (in thousands)

 

$

48.2

 

$

47.4

 

$

48.8

 

$

48.3

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

 

 

(unaudited)

 

IHOP Restaurant Data

 

 

 

 

 

 

 

 

 

Effective Restaurants(a)

 

 

 

 

 

 

 

 

 

Franchise

 

1,448

 

1,410

 

1,444

 

1,409

 

Area license

 

167

 

167

 

167

 

167

 

Company

 

10

 

12

 

11

 

12

 

Total

 

1,625

 

1,589

 

1,622

 

1,588

 

 

 

 

 

 

 

 

 

 

 

System-wide(b)

 

 

 

 

 

 

 

 

 

Sales percentage change(c)

 

6.0

%

4.3

%

6.2

%

3.3

%

Domestic same-restaurant sales percentage change(d)

 

3.2

%

1.9

%

3.6

%

0.7

%

 

 

 

 

 

 

 

 

 

 

Franchise(b)

 

 

 

 

 

 

 

 

 

Sales percentage change(c)

 

6.1

%

4.3

%

6.3

%

3.3

%

Domestic same-restaurant sales percentage change(d)

 

3.2

%

1.9

%

3.6

%

0.7

%

Average weekly domestic unit sales (in thousands)

 

$

35.6

 

$

34.4

 

$

36.4

 

$

34.7

 

 

 

 

 

 

 

 

 

 

 

Area License (b)

 

 

 

 

 

 

 

 

 

Sales percentage change(c)

 

5.8

%

4.8

%

6.9

%

4.5

%

 



 

DineEquity, Inc.

Page 12 of 13

 


“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, 2014 and 2013 were as follows:

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

 

 

(In millions)

 

Reported sales (unaudited)

 

 

 

 

 

 

 

 

 

Applebee’s franchise restaurant sales

 

$

1,150.7

 

$

1,144.2

 

$

2,333.8

 

$

2,335.7

 

IHOP franchise restaurant sales

 

$

669.5

 

$

630.9

 

$

1,349.8

 

$

1,270.2

 

IHOP area license restaurant sales

 

$

64.8

 

$

61.3

 

$

134.9

 

$

126.2

 

 

(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.

 



 

DineEquity, Inc.

Page 13 of 13

 

DineEquity, Inc. and Subsidiaries

Restaurant Data

 

The following table summarizes our restaurant development activity:

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Applebee’s Restaurant Development Activity

 

 

 

 

 

 

 

 

 

Summary - beginning of period:

 

 

 

 

 

 

 

 

 

Franchise

 

1,988

 

2,008

 

1,988

 

2,011

 

Company restaurants

 

23

 

23

 

23

 

23

 

Total Applebee’s restaurants, beginning of period

 

2,011

 

2,031

 

2,011

 

2,034

 

Franchise restaurants opened:

 

 

 

 

 

 

 

 

 

Domestic

 

5

 

3

 

13

 

5

 

International

 

1

 

1

 

1

 

1

 

Total franchise restaurants opened

 

6

 

4

 

14

 

6

 

Franchise restaurants closed:

 

 

 

 

 

 

 

 

 

Domestic

 

(5

)

(22

)

(10

)

(25

)

International

 

(3

)

(1

)

(6

)

(3

)

Total franchise restaurants closed

 

(8

)

(23

)

(16

)

(28

)

Net franchise restaurant (reduction) development

 

(2

)

(19

)

(2

)

(22

)

Summary - end of period:

 

 

 

 

 

 

 

 

 

Franchise

 

1,986

 

1,989

 

1,986

 

1,989

 

Company restaurants

 

23

 

23

 

23

 

23

 

Total Applebee’s restaurants, end of period

 

2,009

 

2,012

 

2,009

 

2,012

 

 

 

 

 

 

 

 

 

 

 

IHOP Restaurant Development Activity

 

 

 

 

 

 

 

 

 

Summary - beginning of period:

 

 

 

 

 

 

 

 

 

Franchise

 

1,449

 

1,410

 

1,439

 

1,404

 

Area license

 

168

 

167

 

168

 

165

 

Company

 

10

 

12

 

13

 

12

 

Total IHOP restaurants, beginning of period

 

1,627

 

1,589

 

1,620

 

1,581

 

Franchise/area license restaurants opened:

 

 

 

 

 

 

 

 

 

Domestic franchise

 

7

 

7

 

16

 

15

 

Domestic area license

 

1

 

1

 

2

 

3

 

International franchise

 

5

 

1

 

9

 

3

 

International area license

 

 

1

 

 

1

 

Total franchise/area license restaurants opened

 

13

 

10

 

27

 

22

 

Franchise/area license restaurants closed:

 

 

 

 

 

 

 

 

 

Domestic franchise

 

(6

)

(5

)

(11

)

(9

)

Domestic area license

 

(2

)

 

(2

)

 

International franchise

 

 

 

(1

)

 

International area license

 

 

(1

)

(1

)

(1

)

Total franchise/area license restaurants closed

 

(8

)

(6

)

(15

)

(10

)

Net franchise/area license restaurant development

 

5

 

4

 

12

 

12

 

Refranchised from Company restaurants

 

1

 

1

 

4

 

1

 

Franchise restaurants reacquired by the Company

 

(1

)

 

(1

)

 

Net franchise/area license restaurant additions

 

5

 

5

 

15

 

13

 

Summary - end of period

 

 

 

 

 

 

 

 

 

Franchise

 

1,455

 

1,414

 

1,455

 

1,414

 

Area license

 

167

 

168

 

167

 

168

 

Company

 

10

 

11

 

10

 

11

 

Total IHOP restaurants, end of period

 

1,632

 

1,593

 

1,632

 

1,593