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Dine Brands Global, Inc. Reports Third Quarter 2019 Results

October 30, 2019 8:00 AM

Earnings Per Diluted Share (GAAP) Increased 5.4%

Adjusted Earnings Per Diluted Share (Non-GAAP) Increased 1.3%

Total Revenues, Excluding Advertising Revenues, Increased 21.8%

GLENDALE, Calif.--(BUSINESS WIRE)-- Dine Brands Global, Inc. (NYSE: DIN), the parent company of Applebee's Neighborhood Grill + Bar® and IHOP® restaurants, today announced financial results for the third quarter of 2019.

“We are pleased with our overall performance. Our business model continues to deliver robust margin expansion and generate significant adjusted free cash flow. IHOP achieved its seventh consecutive quarter of positive sales growth. While Applebee’s faced a difficult comparison against very strong same-restaurant sales in the third quarter of 2018, we are confident in the brand’s strategy that’s in place,” said Steve Joyce, Chief Executive Officer of Dine Brands Global, Inc.

Mr. Joyce added, “We are seeing significant unit growth opportunities as demonstrated by the largest multi-unit franchise agreement signed in IHOP’s history.”

Key Highlights

Financial Summary

($ in 000's, except per share amounts)

Third Quarter

First Nine Months

2019

2018

% Change

2019

2018

% Change

Total revenues, excluding advertising revenues

$149,891

$123,083

22%

$470,785

$373,176

26%

Total revenues, excluding Company restaurant sales

$186,857

$194,099

-4%

$582,633

$566,733

3%

Net income available to common stockholders per share

$1.36

$1.29

5%

$4.27

$2.90

47%

Diluted net income available to common stockholders per share, as adjusted(1)

$1.55

$1.53

1%

$5.17

$3.66

41%

Net income

$23,917

$23,587

1%

$76,950

$53,373

44%

Consolidated adjusted EBITDA(1)(2)

$63,394

$62,154

2%

$206,065

$165,581

24%

(1) See “Non-GAAP Financial Measures” and reconciliation of the Non-GAAP financial measure to the respective GAAP financial measure.
(2) Does not conform to the definition of Covenant Adjusted EBITDA as found in the Base Indenture.

Domestic System-Wide Comparable Same-Restaurant Sales Performance

Third Quarter of 2019

First Nine Months of 2019

Third Quarter of 2019 Financial Highlights

First Nine Months of 2019 Financial Highlights

GAAP Effective Tax Rate

Our effective tax rate of 24.6% for the third quarter of 2019 was similar to the effective tax rate of 24.5% for the comparable period of 2018.

Financial Performance Guidance for 2019

Dine Brands revises certain components of its financial performance guidance for 2019 contained in the press release issued on July 31, 2019 and the Form 8-K filed on the same day, as follows.

The projections are as of this date and do not take into consideration any transactions the Company may enter into after such date that may impact this guidance. The Company assumes no obligation to update or supplement these estimates.

2019 Diluted Net Income Available to Common Stockholders Per Share(1), As Adjusted Reconciliation Guidance Table

Net income available to common stockholders per diluted share

$5.70 – $5.95

Closure and impairment charges

0.04

Amortization of intangible assets

0.68

Loss on extinguishment of debt

0.48

Loss (gain) on disposition of assets

0.03

Non-cash interest expense

0.19

Income tax provision for above adjustments at 25%

(0.37)

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

$6.75 – $7.00

(1) The adjustments to net income available to common stockholders per diluted share are midpoint estimates.

2019 Net Income to Consolidated Adjusted EBITDA Reconciliation Guidance Table(1) ($ in millions)

Net income

$97 – $106

Interest charges

72

Income tax provision

35

Depreciation and amortization

42

Non-cash stock-based compensation

12

Loss on extinguishment of debt

8

Impairment and closure charges

2

Consolidated adjusted EBITDA (Non-GAAP)

$268 – 277

(1) The adjustments to net income are midpoint estimates.

Third Quarter of 2019 Results Conference Call Details

Dine Brands will host a conference call to discuss its results on October 30, 2019 at 9:00 a.m. Pacific Time/12:00 p.m. Eastern Time. To participate on the call, please dial (888) 771-4371 and reference passcode 49091078. International callers, please dial (847) 585-4405 and reference passcode 49091078.

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 11:30 a.m. Pacific Time on October 30, 2019 through 11:59 p.m. Pacific Time on November 6, 2019 by dialing (888) 843-7419 and referencing passcode 49091078#. International callers, please dial (630) 652-3042 and reference passcode 49091078#. 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 3,640 restaurants combined in 18 countries and approximately 370 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)”, “Adjusted EBITDA” and “Adjusted free cash flow.” Adjusted EPS is computed for a given period by deducting from net income or loss available to common stockholders for such period the effect of any closure and impairment charges, any 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 EBITDA is computed for a given period by deducting from net income or loss for such period the effect of any closure and impairment charges, any interest charges, any income tax provision or benefit, any non-cash stock-based compensation, any depreciation and amortization, any gain or loss related to the disposition of assets and other items deemed not reflective of current operations. “Adjusted free cash flow” for a given period is defined as cash provided by operating activities, plus receipts from notes and equipment contracts receivable, less capital expenditures. 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 Comprehensive Income

(In thousands, except per share amounts)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2019

2018

2019

2018

Revenues:

Franchise revenues:

Royalties, franchise fees and other

$

88,686

$

91,062

$

275,912

$

275,775

Advertising revenue

67,514

71,016

211,882

193,557

Total franchise revenues

156,200

162,078

487,794

469,332

Company restaurant sales

30,548

—

100,034

—

Rental revenues

28,970

30,127

89,559

91,292

Financing revenues

1,687

1,894

5,280

6,109

Total revenues

217,405

194,099

682,667

566,733

Cost of revenues:

Franchise expenses:

Advertising expenses

67,514

71,016

211,882

193,557

Other franchise expenses

7,063

7,325

21,905

49,600

Total franchise expenses

74,577

78,341

233,787

243,157

Company restaurant expenses

30,361

—

93,131

—

Rental expenses:

Interest expense from finance leases

1,351

1,668

4,325

5,315

Other rental expenses

21,251

21,314

63,841

63,096

Total rental expenses

22,602

22,982

68,166

68,411

Financing expenses

145

150

437

449

Total cost of revenues

127,685

101,473

395,521

312,017

Gross profit

89,720

92,626

287,146

254,716

General and administrative expenses

38,922

40,753

121,105

121,423

Interest expense, net

15,238

15,430

45,233

46,110

Amortization of intangible assets

2,925

2,505

8,774

7,513

Closure and impairment charges

157

217

640

119

Loss on extinguishment of debt

—

—

8,276

—

Debt refinancing costs

—

2,532

—

2,532

Loss (gain) on disposition of assets

746

(58

)

1,187

(1,535

)

Income before income tax provision

31,732

31,247

101,931

78,554

Income tax provision

(7,815

)

(7,660

)

(24,981

)

(25,181

)

Net income

$

23,917

$

23,587

$

76,950

$

53,373

Net income available to common stockholders:

Net income

$

23,917

$

23,587

$

76,950

$

53,373

Less: Net income allocated to unvested participating restricted stock

(795

)

(799

)

(2,621

)

(1,793

)

Net income available to common stockholders

$

23,122

$

22,788

$

74,329

$

51,580

Net income available to common stockholders per share:

Basic

$

1.38

$

1.31

$

4.35

$

2.94

Diluted

$

1.36

$

1.29

$

4.27

$

2.90

Weighted average shares outstanding:

Basic

16,762

17,439

17,095

17,562

Diluted

17,055

17,738

17,432

17,797

Dividends declared per common share

$

0.69

$

0.63

$

2.07

$

1.89

Dividends paid per common share

$

0.69

$

0.63

$

2.01

$

2.23

Dine Brands Global, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

September 30, 2019

December 31, 2018

Assets

(Unaudited)

Current assets:

Cash and cash equivalents

$

100,518

$

137,164

Receivables, net

91,426

137,504

Restricted cash

36,694

48,515

Prepaid gift card costs

29,090

38,195

Prepaid income taxes

11,349

17,402

Other current assets

6,928

3,410

Total current assets

276,005

382,190

Other intangible assets, net

577,357

585,889

Operating lease right-of-use asset

370,500

—

Goodwill

343,862

345,314

Property and equipment, net

220,744

240,264

Long-term receivables, net

93,262

103,102

Deferred rent receivable

72,366

77,069

Non-current restricted cash

15,700

14,700

Other non-current assets, net

27,712

26,152

Total assets

$

1,997,508

$

1,774,680

Liabilities and Stockholders’ Deficit

Current liabilities:

Current maturities of long-term debt

$

—

$

25,000

Accounts payable

33,689

43,468

Gift card liability

103,756

160,438

Current maturities of operating lease obligations

67,815

—

Current maturities of finance lease and financing obligations

13,219

14,031

Accrued employee compensation and benefits

21,410

27,479

Dividends payable

11,831

11,389

Deferred franchise revenue, short-term

10,328

10,138

Other accrued expenses

28,686

24,243

Total current liabilities

290,734

316,186

Long-term debt, less current maturities

1,287,738

1,274,087

Operating lease obligations, less current maturities

369,164

—

Finance lease obligations, less current maturities

81,317

87,762

Financing obligations, less current maturities

37,939

38,482

Deferred income taxes, net

100,455

105,816

Deferred franchise revenue, long-term

57,997

64,557

Other non-current liabilities

11,946

90,063

Total liabilities

2,237,290

1,976,953

Commitments and contingencies

Stockholders’ deficit:

Common stock, $0.01 par value; shares: 40,000,000 authorized; September 30, 2019 - 24,934,363 issued, 16,786,860 outstanding; December 31, 2018 - 24,984,898 issued, 17,644,267 outstanding

249

250

Additional paid-in-capital

243,358

237,726

Retained earnings

45,939

10,414

Accumulated other comprehensive loss

(60

)

(60

)

Treasury stock, at cost; shares: September 30, 2019 - 8,147,503; December 31, 2018 - 7,340,631

(529,268

)

(450,603

)

Total stockholders’ deficit

(239,782

)

(202,273

)

Total liabilities and stockholders’ deficit

$

1,997,508

$

1,774,680

Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Nine Months Ended

September 30,

2019

2018

Cash flows from operating activities:

Net income

$

76,950

$

53,373

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

Depreciation and amortization

31,515

23,730

Non-cash stock-based compensation expense

8,220

8,016

Non-cash interest expense

2,722

2,689

Loss on extinguishment of debt

8,276

—

Debt refinancing costs

—

875

Closure and impairment charges

640

61

Deferred income taxes

(2,890

)

(4,706

)

Deferred revenue

(6,590

)

(4,017

)

Gain (loss) on disposition of assets

1,187

(1,535

)

Other

(4,584

)

(2,088

)

Changes in operating assets and liabilities:

Accounts receivable, net

4,233

(7,222

)

Current income tax receivables and payables

7,101

4,088

Gift card receivables and payables

(15,868

)

(22,797

)

Other current assets

(3,519

)

9,254

Accounts payable

359

(5,764

)

Accrued employee compensation and benefits

(6,069

)

5,761

Other current liabilities

3,916

1,908

Cash flows provided by operating activities

105,599

61,626

Cash flows from investing activities:

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

16,156

20,029

Additions to property and equipment

(13,360

)

(11,018

)

Proceeds from sale of property and equipment

400

655

Additions to long-term receivables

(6,955

)

(6,030

)

Other

(258

)

(236

)

Cash flows (used in) provided by investing activities

(4,017

)

3,400

Cash flows from financing activities:

Proceeds from issuance of long-term debt

1,300,000

—

Repayment of long-term debt

(1,283,750

)

(9,750

)

Borrowing from revolving credit facility

—

50,000

Repayment of revolving credit facilities

(25,000

)

(30,000

)

Dividends paid on common stock

(35,273

)

(39,973

)

Repurchase of common stock

(90,073

)

(27,880

)

Principal payments on finance lease obligations

(10,329

)

(10,374

)

Payment of debt issuance costs

(12,707

)

(3,118

)

Proceeds from stock options exercised

10,672

3,887

Tax payments for restricted stock upon vesting

(2,589

)

(1,731

)

Cash flows used in financing activities

(149,049

)

(68,939

)

Net change in cash, cash equivalents and restricted cash

(47,467

)

(3,913

)

Cash, cash equivalents and restricted cash at beginning of period

200,379

163,146

Cash, cash equivalents and restricted cash at end of period

$

152,912

$

159,233

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: amortization of intangible assets; closure and impairment charges; non-cash interest expense; gain or loss on disposition of assets; loss on extinguishment of debt; debt refinancing costs; nonrecurring restaurant costs; the combined tax effect of the preceding adjustments; and discrete tax adjustments, as well as related per share data:

Three Months Ended

Nine Months Ended

September 30,

September 30,

2019

2018

2019

2018

Net income available to common stockholders, as reported

$

23,122

$

22,788

$

74,329

$

51,580

Amortization of intangible assets

2,925

2,505

8,774

7,513

Closure and impairment charges

157

217

640

119

Non-cash interest expense

639

945

2,722

2,689

Loss (gain) on disposition of assets

746

(58

)

1,187

(1,535

)

Loss on extinguishment of debt

—

—

8,276

—

Debt refinancing costs

—

2,532

—

2,532

Nonrecurring restaurant costs

54

—

383

—

Income tax provision

(1,175

)

(1,597

)

(5,715

)

(2,943

)

Income tax adjustments (1)

—

—

—

5,744

Net income allocated to unvested participating restricted stock

(113

)

(156

)

(567

)

(482

)

Net income available to common stockholders, as adjusted

$

26,355

$

27,176

$

90,029

$

65,217

Diluted net income available to common stockholders per share:

Net income available to common stockholders, as reported

$

1.36

$

1.29

$

4.27

$

2.90

Amortization of intangible assets

0.13

0.10

0.37

0.31

Closure and impairment charges

0.01

0.01

0.03

0.00

Non-cash interest expense

0.03

0.04

0.12

0.11

Loss (gain) on disposition of assets

0.03

(0.00

)

0.05

(0.06

)

Loss on extinguishment of debt

—

—

0.35

—

Debt refinancing costs

—

0.11

—

0.11

Nonrecurring restaurant costs

0.00

—

0.02

—

Income tax adjustments (1)

—

—

—

—

0.32

Net income allocated to unvested participating restricted stock

(0.01

)

(0.01

)

(0.03

)

(0.02

)

Rounding

—

(0.01

)

(0.01

)

(0.01

)

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

$

1.55

$

1.53

$

5.17

$

3.66

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

$

26,355

$

27,176

$

90,029

$

65,217

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

8

3

39

7

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

$

26,363

$

27,179

$

90,068

$

65,224

Denominator for basic EPS-weighted-average shares

16,762

17,439

17,095

17,562

Dilutive effect of stock options

293

299

337

235

Denominator for diluted EPS-weighted-average shares

17,055

17,738

17,432

17,797

(1) Charges related to adjustments resulting from IRS audits for tax years 2011 through 2013

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. 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.

Nine Months Ended

September 30,

2019

2018

(In millions)

Cash flows provided by operating activities

$

105.6

$

61.6

Receipts from notes and equipment contracts receivable

8.6

12.0

Additions to property and equipment

(13.4

)

(11.0

)

Adjusted free cash flow

100.8

62.6

Dividends paid on common stock

(35.3

)

(40.0

)

Repurchase of Dine Brands Global common stock

(90.1

)

(27.9

)

$

(24.6

)

$

(5.3

)

Dine Brands Global, Inc. and Subsidiaries
Non-GAAP Financial Measures
(in thousands)
(Unaudited)

Reconciliation of the Company's net income to “adjusted EBITDA.” The Company defines adjusted EBITDA as net income, adjusted for the effect of any interest charges, any income tax provision or benefit, any depreciation and amortization, any non-cash stock-based compensation, any closure and impairment charges, debt refinancing costs, any gain or loss related to the extinguishment of debt and disposition of assets, other non-income based taxes and other items deemed not reflective of current operations. Management may use certain non-GAAP measures along with the corresponding U. S. GAAP measures to evaluate the performance of the company and to make certain business decisions.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2019

2018

2019

2018

Net income, as reported

$

23,917

$

23,587

$

76,950

$

53,373

Interest charges on finance leases

1,866

1,668

5,919

5,315

All other interest charges

15,794

16,161

47,880

48,312

Income tax provision

7,815

7,660

24,981

25,181

Depreciation and amortization

10,715

7,888

31,515

23,730

Non-cash stock-based compensation

2,326

2,375

8,220

8,016

Closure and impairment charges

157

217

640

119

Debt refinancing costs

—

2,532

—

2,532

Loss on extinguishment of debt

—

—

8,276

—

Loss (gain) on disposition of assets

746

(58

)

1,187

(1,535

)

Other taxes

58

124

497

538

Adjusted EBITDA

$

63,394

$

62,154

$

206,065

$

165,581

Dine Brands Global, Inc. and Subsidiaries
Restaurant Data
(Unaudited)

The following table sets forth, for the three and nine months ended September 30, 2019 and 2018, 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

Nine Months Ended

September 30,

September 30,

2019

2018

2019

2018

Applebee's

Effective Restaurants(a)

Franchise

1,741

1,875

1,752

1,899

Company

69

—

69

—

Total

1,810

1,875

1,821

1,899

System-wide(b)

Domestic sales percentage change(c)

(3.8

)%

5.1

%

(2.7

)%

3.0

%

Domestic same-restaurant sales percentage change(d)

(1.6

)%

7.7

%

(0.1

)%

5.5

%

Franchise(b)

Domestic sales percentage change(c)

(6.8

)%

5.1

%

(5.9

)%

3.0

%

Domestic same-restaurant sales percentage change(d)

(1.7

)%

7.7

%

(0.2

)%

5.5

%

Average weekly domestic unit sales (in thousands)

$

45.0

$

44.8

$

47.7

$

46.7

IHOP

Effective Restaurants(a)

Franchise

1,667

1,640

1,660

1,628

Area license

158

162

156

163

Total

1,825

1,802

1,816

1,791

System-wide(b)

Sales percentage change(c)

1.2

%

3.9

%

2.2

%

3.6

%

Domestic same-restaurant sales percentage change, including area license restaurants(d)

0.03

%

1.4

%

1.1

%

1.1

%

Domestic same-restaurant sales percentage change, excluding area license restaurants(d)

0.03

%

1.2

%

1.0

%

1.0

%

Franchise(b)

Sales percentage change(c)

1.1

%

3.9

%

2.2

%

4.2

%

Domestic same-restaurant sales percentage change(d)

0.03

%

1.2

%

1.0

%

1.0

%

Average weekly unit sales (in thousands)

$

35.7

$

35.9

$

36.5

$

36.4

Area License (b)

Sales percentage change(c)

2.4

%

3.7

%

2.4

%

1.7

%

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 domestic Applebee’s restaurants operated by franchisees and IHOP restaurants operated by franchisees and area licensees, as reported to the Company, in addition to retail sales at company-operated restaurants. Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company. An increase or decrease in franchisees' reported sales will result in a corresponding increase or decrease in our royalty revenue. Unaudited reported sales for Applebee's domestic franchise restaurants, IHOP franchise restaurants and IHOP area license restaurants for the three and nine months ended September 30, 2019 and 2018 and sales by company-operated restaurants were as follows:

Three Months Ended

Nine Months Ended

September 30,

September 30,

2019

2018

2019

2018

(In millions)

Reported sales

Applebee's domestic franchise restaurant sales

$

936.5

$

1,005.0

$

2,997.2

$

3,183.5

Applebee's company-operated restaurants

30.5

—

100.0

—

IHOP franchise restaurant sales

773.9

765.6

2,364.4

2,312.8

IHOP area license restaurant sales

71.1

69.4

217.2

212.2

Total

$

1,812.0

$

1,840.0

$

5,678.8

$

5,708.5

(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.

Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

The following table summarizes our restaurant development activity:

Three Months Ended

Nine Months Ended

September 30,

September 30,

2019

2018

2019

2018

Applebee's Restaurant Development Activity

Summary - beginning of period:

Franchise

1,746

1,883

1,768

1,936

Company restaurants

69

—

69

—

Beginning of period

1,815

1,912

1,837

1,936

Franchise restaurants opened:

Domestic

—

1

—

2

International

—

—

1

3

Total franchise restaurants opened

—

1

1

5

Franchise restaurants closed:

Domestic

(9

)

(25

)

(26

)

(77

)

International

(2

)

(3

)

(8

)

(8

)

Total franchise restaurants closed

(11

)

(28

)

(34

)

(85

)

Net franchise restaurant reduction

(11

)

(27

)

(33

)

(80

)

Summary - end of period:

Franchise

1,735

1,856

1,735

1,856

Company

69

—

69

—

Total Applebee's restaurants, end of period

1,804

1,856

1,804

1,856

Domestic

1,667

1,707

1,667

1,707

International

137

149

137

149

IHOP Restaurant Development Activity

Summary - beginning of period:

Franchise

1,669

1,640

1,669

1,622

Area license

159

165

162

164

Total IHOP restaurants, beginning of period

1,828

1,805

1,831

1,786

Franchise/area license restaurants opened:

Domestic franchise

8

10

23

32

Domestic area license

3

1

5

3

International franchise

7

6

9

14

Total franchise/area license restaurants opened

18

17

37

49

Franchise/area license restaurants closed:

Domestic franchise

(7

)

(4

)

(19

)

(10

)

Domestic area license

(1

)

(4

)

(6

)

(5

)

International franchise

(2

)

—

(7

)

(6

)

Total franchise/area license restaurants closed

(10

)

(8

)

(32

)

(21

)

Net franchise/area license restaurant development

8

9

5

28

Refranchised by the Company

—

—

—

1

Franchise restaurants reacquired by the Company

—

—

—

(1

)

Net franchise/area license restaurant additions

8

9

5

28

Summary - end of period

Franchise

1,675

1,652

1,675

1,652

Area license

161

162

161

162

Total IHOP restaurants, end of period

1,836

1,814

1,836

1,814

Domestic

1,708

1,691

1,708

1,691

International

128

123

128

123

Investor Contact

Ken Diptee

Executive Director, Investor Relations

Dine Brands Global, Inc.

818-637-3632

Media Contact

Thien Ho

Executive Director, Communications

Dine Brands Global, Inc.

818-549-4238

Source: Dine Brands Global, Inc.

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