Business Wire | Nov 4, 2021 06:01AM EDT

Dine Brands Global, Inc. Reports Third Quarter 2021 Results

Nov. 04, 2021

GLENDALE, Calif.--(BUSINESS WIRE)--Nov. 04, 2021--Dine Brands Global, Inc. (NYSE: DIN), the parent company of Applebee's Neighborhood Grill + Bar(r) and IHOP(r) restaurants, today announced financial results for the third quarter of 2021.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20211104005457/en/

Historical Domestic System-Wide Comparable Same-Restaurant Sales Relative to the Prior Year (Graphic: Business Wire)

"This was another strong quarter for Dine Brands. We recorded a second consecutive period of both IHOP and Applebee's beating their competitive sets, average weekly sales for both brands exceeded 2019 pre-pandemic levels, and we delivered a 48% increase in quarter-over-quarter EBITDA. The strength of our two world-class brands, combined with the benefits of our asset-lite business model, is fueling the acceleration in system-wide sales growth across each of our brands and driving long-term sustainable growth in the business," said John Peyton, chief executive officer of Dine Brands Global, Inc.

Mr. Peyton added, "Our asset-light structure allows us to keep our operations lean and our movements agile; it reduces complexity, requires less capital and is a significant generator of cash. Our highly franchised model allows us to invest in what we do best-menu, marketing, and technology innovation."

Vance Chang, chief financial officer, added, "The sequential improvement in our business continued in the third quarter and helped us maintain a strong cash position and financial flexibility. While we are pleased with our progress to date, we remain focused on accelerating growth and making disciplined investments in our brands to support sustainable growth. We are confident that we have the right strategy in place to create long-term shareholder value."

Domestic System-Wide Comparable Same-Restaurant Sales Relative to the Third Quarter of 2020

Domestic Same-Restaurant Sales (Fiscal Month) July August September Q3 2021

Applebee's 35.5% 30.3% 19.9% 27.7%



IHOP 59.4% 40.7% 25.9% 40.1%

* Applebee's year-over-year comparable same-restaurant sales increased 27.7% for the third quarter of 2021.

* IHOP's comparable same-restaurant sales increased 40.1% for the third quarter of 2021.

* Both brands outperformed their respective categories in the third quarter of 2021 relative to the third quarter of 2020, according to Black Box Intelligence(tm).

Domestic System-Wide Comparable Same-Restaurant Sales Relative to the Third Quarter of 2019

Domestic Same-Restaurant Sales (Fiscal Month) July August September Q3 2021

Applebee's 12.2% 12.4% 12.9% 12.5%



IHOP 2.5% (1.1%) (2.3%) (0.4%)

* Applebee's year-over-year comparable same-restaurant sales increased 12.5% for the third quarter of 2021 compared to an increase of 10.5% for the second quarter of 2021.

* IHOP's comparable same-restaurant sales decreased 0.4% for the third quarter of 2021 compared to a decrease of 3.4% for the second quarter of 2021.

* Both brands outperformed their respective categories in the third quarter of 2021 relative to the third quarter of 2019, according to Black Box Intelligence(tm).

Domestic Average Weekly Sales Comparison Relative to the Third Quarter of 2019

Average Weekly Unit Sales Recovery Comparisons Average Weekly Domestic Unit Sales (in thousands) Q3 2021 Q3 2019 % of Pre-Pandemic Sales Recovered

Applebee's $51.4 $45.0 114.2%



IHOP $36.2 $35.7 101.4%

Off-Premise Sales Growth Comparison Relative to the Third Quarter of 2020

* Applebee's off-premise comparable same-restaurant sales for the third quarter of 2021 increased by 3.3%.

* Applebee's off-premise sales accounted for 27.5% of sales mix for the third quarter of 2021.

* IHOP's off-premise comparable same-restaurant sales for the third quarter of 2021 decreased by 3.2%.

* IHOP's off-premise sales accounted for 23.3% of sales mix for the third quarter of 2021.

Third Quarter of 2021 Summary

* GAAP earnings per diluted share of $1.33 for the third quarter of 2021 compared to earnings per diluted share of $0.60 for the third quarter of 2020. This variance was primarily due to an increase in gross profit, partially offset by higher income tax expense and an increase in general and administrative expenses.

* Adjusted earnings per diluted share of $1.55 for the third quarter of 2021 compared to adjusted earnings per diluted share of $0.80 for the third quarter of 2020. The increase was primarily due to higher gross profit, partially offset by higher general and administrative expenses. (See "Non-GAAP Financial Measures" and reconciliation of GAAP earnings per diluted share to adjusted earnings per diluted share.)

* General and administrative expenses for the third quarter of 2021 were $43.7 million compared to $36.9 million for the third quarter of 2020. The variance was mainly due to higher incentive compensation accrual.

* Consolidated adjusted EBITDA for the third quarter of 2021 was $63.3 million compared to $42.7 million for the third quarter of 2020. (See "Non-GAAP Financial Measures" and reconciliation of GAAP net income to consolidated adjusted EBITDA.)

* Development activity by Applebee's and IHOP franchisees for the third quarter of 2021 resulted in the opening of 11 new restaurants on a gross basis.

First Nine Months of 2021 Summary

* GAAP earnings per diluted share of $4.52 for the first nine months of 2021 compared to a net loss per diluted share of $6.34 for the first nine months of 2020. This variance was primarily due to closure and impairment charges incurred in the first nine months of 2020 totaling $124.5 million primarily related to the non-cash write-downs of Applebee's goodwill and other intangible assets because of the impact of COVID-19 on the Company's operations and higher gross profit for the first nine months of 2021. There were no similar impairments in the first nine months of 2021.

* Adjusted earnings per diluted share of $5.22 for the first nine months of 2021 compared to adjusted earnings per diluted share of $1.40 for the first nine months of 2020. The increase was primarily due to higher gross profit, partially offset by an increase in general and administrative expenses. (See "Non-GAAP Financial Measures" and reconciliation of GAAP earnings per diluted share to adjusted earnings per diluted share.)

* General and administrative expenses for the first nine months of 2021 were $122.9 million compared to $105.4 million for the first nine months of 2020. The variance was mainly due to higher incentive compensation accrual.

* Consolidated adjusted EBITDA for the first nine months of 2021 was $193.2 million. This compares to $116.5 million for the first nine months of 2020. (See "Non-GAAP Financial Measures" and reconciliation of GAAP net income to consolidated adjusted EBITDA.)

* The Company generated adjusted free cash flow of $146.1 million for the first nine months of 2021. This compares to adjusted free cash flow of $35.6 million for the first nine months of 2020. (See "Non-GAAP Financial Measures" and reconciliation of the Company's cash provided by operating activities to adjusted free cash flow.)

* Cash flows from operating activities for the first nine months of 2021 were $145.6 million. This compares to cash flows from operating activities of $36.7 million for the first nine months of 2020. The improvement in both adjusted free cash flow and cash flows from operating activities was mainly due to a favorable change in working capital and an improvement in gross profit, partially offset by an increase in general and administrative expenses and the recognition of excess tax benefits on stock-based compensation.

* Development activity by Applebee's and IHOP franchisees for the first nine months of 2021 resulted in the opening of 31 new restaurants on a gross basis.

Cash Position

As of September 30, 2021, the Company had $385.2 million of total cash, cash equivalents and restricted cash, of which $304.2 million was unrestricted cash. The Company believes that its asset-light business model and cash position will continue to provide strong liquidity as the recovery from the pandemic continues.

As of September 30, 2021, the Company's leverage ratio was 4.36x compared to approximately 4.94x as of June 30, 2021. As a result, quarterly principal payments on the Company's fixed rate senior secured notes are no longer required.

As of September 30, 2021, the Company's debt service coverage ratio was approximately 4.8x compared to approximately 4.6x as of June 30, 2021.

As of September 30, 2021, there were no outstanding borrowings under the revolving credit facility. As of September 30, 2021, $3.3 million was pledged against the revolving credit facility for outstanding letters of credit, leaving $221.7 million available.

GAAP Effective Tax Rate

The Company's effective tax rate for the third quarter of 2021 was a 24.9% tax expense compared to a 9.5% tax benefit for the third quarter of 2020. The Company's effective tax rate for the third quarter of 2021 was significantly different than the rate for the same quarter of last year primarily due to the one-time recognition of income tax benefits from the release of unrecognized tax benefits in the third quarter of 2020.

Capital Return to Shareholders

On October 29, 2021, the Company announced that its Board of Directors declared and approved a cash dividend of $0.40 per share of common stock for the fourth quarter of 2021. The dividend will be payable on January 7, 2022 to the Company's stockholders of record at the close of business on December 20, 2021. The Company also announced it intends to resume opportunistic repurchases of its common stock.

As of September 30, 2021, there was $70.2 million remaining on the Company's current share repurchase authorization.

Financial Performance Guidance for 2021

The Company's guidance assumes there are no significant disruptions to its business due to COVID-19 during the fourth quarter of fiscal 2021. The projections are as of this date. The Company assumes no obligation to update or supplement this information.

* The Company reiterates expectations for general and administrative expenses for 2021 to range between approximately $168 million and $178 million. The Company expects general and administrative expenses for 2021 to be near the high end of the range.

* The Company reiterates expectations for capital expenditures for 2021 to be approximately $19 million, inclusive of approximately $7 million related to the company restaurants segment.

* Consolidated adjusted EBITDA is expected to range between approximately $245 million and $250 million.

Third Quarter of 2021 Earnings Conference Call Details

Dine Brands will host a conference call to discuss its results on November 4, 2021 at 9:00 a.m. Eastern time. To participate on the call, please dial (833) 528-0602 and enter the conference identification number 1750945. International callers, please dial (830) 221-9708 and enter the conference identification number 1750945.

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 12:00 p.m. Eastern time on November 4, 2021 through 11:00 p.m. Eastern time on November 11, 2021 by dialing (855) 859-2056 and entering the conference identification number 1750945. International callers, please dial (404) 537-3406 and enter the conference identification number 1750945. 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 3,440 restaurants combined in 16 countries and approximately 350 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: uncertainty regarding the duration and severity of the ongoing COVID-19 pandemic and its ultimate impact on the Company; the effectiveness of related containment measures; 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 of 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, pandemics, epidemics, or other serious incidents; our success with development initiatives outside of our core business; the adequacy of our internal controls over financial reporting and future changes in accounting standards; and other factors discussed from time to time in the Corporation's Annual and Quarterly Reports on Forms 10-K and 10-Q and in the Corporation's other filings with the Securities and Exchange Commission. The forward-looking statements contained in this press release are made as of the date hereof and the Corporation does not intend to, nor does it assume any obligation to, update or supplement any forward-looking statements after the date hereof to reflect actual results or future events or circumstances.

Non-GAAP Financial Measures

This press release includes references to the Company's non-GAAP financial measure "adjusted net income available to common stockholders", "adjusted earnings per diluted share (Adjusted EPS)", "Adjusted EBITDA" and "Adjusted free cash flow." Adjusted EPS is computed for a given period by deducting from net income or loss available to common stockholders for such period the effect of any closure and impairment charges, any 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 (Loss)

(In thousands, except per share amounts)

(Unaudited)

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Revenues:

Franchise revenues:

Royalties, franchise fees $ 90,417 $ 69,820 $ 265,138 $ 191,915 and other

Advertising revenues 70,709 51,932 203,918 142,750

Total franchise revenues 161,126 121,752 469,056 334,665

Company restaurant sales 35,275 27,353 109,418 75,427

Rental revenues 31,273 26,194 84,797 78,910

Financing revenues 1,045 1,344 3,266 4,237

Total revenues 228,719 176,643 666,537 493,239

Cost of revenues:

Franchise expenses:

Advertising expenses 70,709 51,932 203,918 142,750

Bad debt (credit) expense (1,962 ) 2,845 (4,246 ) 8,416

Other franchise expenses 6,922 5,858 20,197 15,999

Total franchise expenses 75,669 60,635 219,869 167,165

Company restaurant expenses 33,867 28,303 101,510 79,774

Rental expenses:

Interest expense from 822 1,106 2,677 3,453 finance leases

Other rental expenses 23,645 19,692 63,359 61,121

Total rental expenses 24,467 20,798 66,036 64,574

Financing expenses 113 123 356 393

Total cost of revenues 134,116 109,859 387,771 311,906

Gross profit 94,603 66,784 278,766 181,333

General and administrative 43,704 36,873 122,891 105,351 expenses

Interest expense, net 15,721 16,844 47,956 49,143

Impairment and closure 443 168 5,024 124,521 charges

Amortization of intangible 2,664 2,659 8,015 8,240 assets

Loss on disposition of 1,299 1,087 1,436 2,630 assets

Income before income taxes 30,772 9,153 93,444 (108,552 )

Income tax (provision) (7,661 ) 865 (15,368 ) 6,119 benefit

Net income (loss) $ 23,111 $ 10,018 $ 78,076 $ (102,433 )

Net income (loss) available to common stockholders:

Net income (loss) $ 23,111 $ 10,018 $ 78,076 $ (102,433 )

Less: Net income allocatedto unvested participating (502 ) (329 ) (1,920 ) (420 )restricted stock

Net income (loss) available $ 22,609 $ 9,689 $ 76,156 $ (102,853 )to common stockholders

Net income (loss) availableto common stockholders per share:

Basic $ 1.34 $ 0.60 $ 4.55 $ (6.34 )

Diluted $ 1.33 $ 0.60 $ 4.52 $ (6.34 )

Weighted average shares outstanding:

Basic 16,911 16,221 16,752 16,229

Diluted 16,971 16,283 16,858 16,229



Dividends declared per $ - $ - $ - $ 0.76 common share

Dividends paid per common $ - $ - $ - $ 1.45 share



Dine Brands Global, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

September 30, 2021

December 31, 2020

(Unaudited)

Assets

Current assets:

Cash and cash equivalents

$

304,159

$

383,369

Receivables, net of allowance of $5,852 (2021) and $15,057 (2020)

92,135

121,897

Restricted cash

64,685

39,884

Prepaid gift card costs

21,890

29,080

Prepaid income taxes

2,025

6,178

Other current assets

8,744

6,098

Total current assets

493,638

586,506

Other intangible assets, net

541,999

549,671

Operating lease right-of-use assets

334,624

346,086

Goodwill

251,628

251,628

Property and equipment, net

175,318

187,977

Long-term receivables, net of allowance of $7,344 (2021) and $7,999 (2020)

46,622

54,512

Deferred rent receivable

51,820

56,449

Non-current restricted cash

16,400

32,800

Other non-current assets, net

10,450

9,316

Total assets

$

1,922,499

$

2,074,945

Liabilities and Stockholders' Deficit

Current liabilities:

Current maturities of long-term debt

$

-

$

13,000

Accounts payable

42,586

37,424

Gift card liability

115,878

144,159

Current maturities of operating lease obligations

71,219

69,672

Current maturities of finance lease and financing obligations

10,608

11,293

Accrued employee compensation and benefits

30,752

21,237

Accrued advertising

53,873

21,641

Deferred franchise revenue, short-term

7,388

7,682

Other accrued expenses

12,678

22,460

Total current liabilities

344,982

348,568

Long-term debt, net, less current maturities

1,279,071

1,491,996

Operating lease obligations, less current maturities

323,855

345,163

Finance lease obligations, less current maturities

61,499

69,012

Financing obligations, less current maturities

32,183

32,797

Deferred income taxes, net

69,008

78,293

Deferred franchise revenue, long-term

46,723

52,237

Other non-current liabilities

19,495

11,530

Total liabilities

2,176,816

2,429,596

Commitments and contingencies

Stockholders' deficit:

Preferred stock, $1 par value, 10,000,000 shares authorized, no shares issued or outstanding

-

-

Common stock, $0.01 par value; shares: 40,000,000 authorized; September 30, 2021 - 25,003,116 issued, 17,219,847 outstanding; December 31, 2020 - 24,882,122 issued, 16,452,174 outstanding

250

249

Additional paid-in-capital

253,751

257,625

Retained earnings (accumulated deficit)

22,523

(55,553

)

Accumulated other comprehensive loss

(59

)

(55

)

Treasury stock, at cost; shares: September 30, 2021 - 7,783,269; December 31, 2020 - 8,429,948

(530,782

)

(556,917

)

Total stockholders' deficit

(254,317

)

(354,651

)

Total liabilities and stockholders' deficit

$

1,922,499

$

2,074,945

Dine Brands Global, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

September 30, December 31, 2021 2020

(Unaudited)

Assets

Current assets:

Cash and cash equivalents $ 304,159 $ 383,369

Receivables, net of allowance of $5,852 (2021) 92,135 121,897 and $15,057 (2020)

Restricted cash 64,685 39,884

Prepaid gift card costs 21,890 29,080

Prepaid income taxes 2,025 6,178

Other current assets 8,744 6,098

Total current assets 493,638 586,506

Other intangible assets, net 541,999 549,671

Operating lease right-of-use assets 334,624 346,086

Goodwill 251,628 251,628

Property and equipment, net 175,318 187,977

Long-term receivables, net of allowance of $7,344 46,622 54,512 (2021) and $7,999 (2020)

Deferred rent receivable 51,820 56,449

Non-current restricted cash 16,400 32,800

Other non-current assets, net 10,450 9,316

Total assets $ 1,922,499 $ 2,074,945

Liabilities and Stockholders' Deficit

Current liabilities:

Current maturities of long-term debt $ - $ 13,000

Accounts payable 42,586 37,424

Gift card liability 115,878 144,159

Current maturities of operating lease obligations 71,219 69,672

Current maturities of finance lease and financing 10,608 11,293 obligations

Accrued employee compensation and benefits 30,752 21,237

Accrued advertising 53,873 21,641

Deferred franchise revenue, short-term 7,388 7,682

Other accrued expenses 12,678 22,460

Total current liabilities 344,982 348,568

Long-term debt, net, less current maturities 1,279,071 1,491,996

Operating lease obligations, less current 323,855 345,163 maturities

Finance lease obligations, less current 61,499 69,012 maturities

Financing obligations, less current maturities 32,183 32,797

Deferred income taxes, net 69,008 78,293

Deferred franchise revenue, long-term 46,723 52,237

Other non-current liabilities 19,495 11,530

Total liabilities 2,176,816 2,429,596

Commitments and contingencies

Stockholders' deficit:

Preferred stock, $1 par value, 10,000,000 shares - - authorized, no shares issued or outstanding

Common stock, $0.01 par value; shares: 40,000,000authorized; September 30, 2021 - 25,003,116 250 249 issued, 17,219,847 outstanding; December 31, 2020- 24,882,122 issued, 16,452,174 outstanding

Additional paid-in-capital 253,751 257,625

Retained earnings (accumulated deficit) 22,523 (55,553 )

Accumulated other comprehensive loss (59 ) (55 )

Treasury stock, at cost; shares: September 30, (530,782 ) (556,917 )2021 - 7,783,269; December 31, 2020 - 8,429,948

Total stockholders' deficit (254,317 ) (354,651 )

Total liabilities and stockholders' deficit $ 1,922,499 $ 2,074,945

Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Nine Months Ended

September 30,

2021

2020

Cash flows from operating activities:

Net income (loss)

$

78,076

$

(102,433

)

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

Non-cash impairment and closure charges

4,949

124,469

Depreciation and amortization

29,995

32,053

Non-cash stock-based compensation expense

8,572

9,193

Non-cash interest expense

2,146

1,990

Deferred income taxes

(9,156

)

24,172

Deferred revenue

(5,808

)

(5,067

)

Loss on disposition of assets

1,436

2,630

Other

(8,418

)

1,173

Changes in operating assets and liabilities:

Accounts receivable, net

8,398

(27,849

)

Current income tax receivables and payables

4,544

(41,426

)

Gift card receivables and payables

(9,215

)

(1,980

)

Other current assets

(2,645

)

(2,034

)

Accounts payable

9,678

6,777

Accrued employee compensation and benefits

9,569

(6,406

)

Accrued advertising expenses

32,232

19,579

Other current liabilities

(8,791

)

1,887

Cash flows provided by operating activities

145,562

36,728

Cash flows from investing activities:

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

14,795

15,731

Net additions to property and equipment

(7,923

)

(9,088

)

Proceeds from sale of property and equipment

946

517

Additions to long-term receivables

-

(1,475

)

Other

(357

)

(358

)

Cash flows provided by investing activities

7,461

5,327

Cash flows from financing activities:

Repayment of long-term debt

(9,750

)

-

Borrowing from revolving credit facility

-

220,000

Repayment of revolving credit facility

(220,000

)

-

Dividends paid on common stock

-

(23,934

)

Repurchase of common stock

-

(29,853

)

Principal payments on finance lease obligations

(7,772

)

(9,034

)

Proceeds from stock options exercised

25,016

20,523

Tax payments for restricted stock upon vesting

(1,543

)

(2,438

)

Tax payments for share settlement of restricted stock units

(9,783

)

(205

)

Cash flows (used in) provided by financing activities

(223,832

)

175,059

Net change in cash, cash equivalents and restricted cash

(70,809

)

217,114

Cash, cash equivalents and restricted cash at beginning of period

456,053

172,475

Cash, cash equivalents and restricted cash at end of period

$

385,244

$

389,589

Dine Brands Global, Inc. and Subsidiaries Non-GAAP Financial Measures (In thousands, except per share amounts) (Unaudited)

Reconciliation of net income (loss) available to common stockholders to net income (loss) available to common stockholders, as adjusted for the following items: Closure and impairment charges; amortization of intangible assets; non-cash interest expense; gain or loss on disposition of assets; and the combined tax effect of the preceding adjustments, as well as related per share data:

Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Nine Months Ended

September 30,

2021 2020



Cash flows from operating activities:

Net income (loss) $ 78,076 $ (102,433 )

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

Non-cash impairment and closure charges 4,949 124,469

Depreciation and amortization 29,995 32,053

Non-cash stock-based compensation expense 8,572 9,193

Non-cash interest expense 2,146 1,990

Deferred income taxes (9,156 ) 24,172

Deferred revenue (5,808 ) (5,067 )

Loss on disposition of assets 1,436 2,630

Other (8,418 ) 1,173

Changes in operating assets and liabilities:

Accounts receivable, net 8,398 (27,849 )

Current income tax receivables and payables 4,544 (41,426 )

Gift card receivables and payables (9,215 ) (1,980 )

Other current assets (2,645 ) (2,034 )

Accounts payable 9,678 6,777

Accrued employee compensation and benefits 9,569 (6,406 )

Accrued advertising expenses 32,232 19,579

Other current liabilities (8,791 ) 1,887

Cash flows provided by operating activities 145,562 36,728

Cash flows from investing activities:

Principal receipts from notes, equipment contracts 14,795 15,731 and other long-term receivables

Net additions to property and equipment (7,923 ) (9,088 )

Proceeds from sale of property and equipment 946 517

Additions to long-term receivables - (1,475 )

Other (357 ) (358 )

Cash flows provided by investing activities 7,461 5,327

Cash flows from financing activities:

Repayment of long-term debt (9,750 ) -

Borrowing from revolving credit facility - 220,000

Repayment of revolving credit facility (220,000 ) -

Dividends paid on common stock - (23,934 )

Repurchase of common stock - (29,853 )

Principal payments on finance lease obligations (7,772 ) (9,034 )

Proceeds from stock options exercised 25,016 20,523

Tax payments for restricted stock upon vesting (1,543 ) (2,438 )

Tax payments for share settlement of restricted (9,783 ) (205 )stock units

Cash flows (used in) provided by financing (223,832 ) 175,059 activities

Net change in cash, cash equivalents and restricted (70,809 ) 217,114 cash

Cash, cash equivalents and restricted cash at 456,053 172,475 beginning of period

Cash, cash equivalents and restricted cash at end of $ 385,244 $ 389,589 period

Dine Brands Global, Inc. and Subsidiaries Non-GAAP Financial Measures (In thousands, except per share amounts) (Unaudited)

Reconciliation of net income (loss) available to common stockholders to net income (loss) available to common stockholders, as adjusted for the following items: Closure and impairment charges; amortization of intangible assets; non-cash interest expense; gain or loss on disposition of assets; and the combined tax effect of the preceding adjustments, as well as related per share data:

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020



Net income (loss) availableto common stockholders, as $ 22,609 $ 9,689 $ 76,156 $ (102,853 )reported

Closure and impairment 443 168 5,024 124,521 charges

Amortization of intangible 2,664 2,659 8,015 8,240 assets

Non-cash interest expense 719 672 2,146 1,990

Loss on disposition of assets 1,299 1,087 1,436 2,630

Net income tax provision for (1,384 ) (1,146 ) (4,488 ) (11,287 )above adjustments

Net income allocated tounvested participating (81 ) (112 ) (298 ) (367 )restricted stock

Net income (loss) availableto common stockholders, as $ 26,269 $ 13,017 $ 87,991 $ 22,874 adjusted



Diluted net income (loss)available to common stockholders per share:

Net income (loss) availableto common stockholders per $ 1.33 $ 0.60 $ 4.52 $ (6.34 )share, as reported

Closure and impairment 0.02 0.01 0.22 7.15 charges

Amortization of intangible 0.11 0.12 0.35 0.38 assets

Non-cash interest expense 0.03 0.03 0.09 0.09

Loss on disposition of assets 0.06 0.05 0.06 0.12

Net income allocated tounvested participating (0.00 ) (0.01 ) (0.02 ) (0.02 )restricted stock

Rounding - - - 0.02

Diluted net income availableto common stockholders per $ 1.55 $ 0.80 $ 5.22 $ 1.40 share, as adjusted



Numerator for basic EPS - netincome (loss) available to $ 26,269 $ 13,017 $ 87,991 $ 22,874 common stockholders, asadjusted

Effect of unvestedparticipating restricted 2 1 15 2 stock using the two-classmethod

Numerator for diluted EPS -net income available to $ 26,271 $ 13,018 $ 88,006 $ 22,876 common stockholders, asadjusted



Denominator for basic EPS - 16,911 16,221 16,752 16,229 weighted-average shares

Dilutive effect of stock 60 62 106 86 options

Denominator for diluted EPS - 16,971 16,283 16,858 16,315 weighted-average shares

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,

2021 2020

(In millions)

Cash flows provided by operating activities $ 145.6 $ 36.7

Receipts from notes and equipment contracts receivable 8.4 8.0

Net additions to property and equipment (7.9 ) (9.1 )

Adjusted free cash flow 146.1 35.6

Dividends paid on common stock - (23.9 )

Repurchase of common stock - (29.9 )

$ 146.1 $ (18.2 )

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

Reconciliation of the Company's net income (loss) to "adjusted EBITDA." The Company defines adjusted EBITDA as net income or loss, adjusted for the effect of closure and impairment charges, interest charges, income tax provision or benefit, depreciation and amortization, non-cash stock-based compensation, gain or loss on 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,

2021 2020 2021 2020



Net income (loss), as reported $ 23,111 $ 10,018 $ 78,076 $ (102,433 )

Closure and impairment charges 443 168 5,024 124,521

Interest charges on finance 1,304 1,605 4,151 4,974 leases

All other interest charges 16,419 17,437 50,109 51,336

Income tax provision (benefit) 7,661 (865 ) 15,368 (6,119 )

Depreciation and amortization 10,010 10,685 29,969 32,030

Non-cash stock-based 2,961 2,524 8,574 9,194 compensation

Loss on disposition of assets 1,299 1,087 1,436 2,630

Other 98 67 454 372

Adjusted EBITDA $ 63,306 $ 42,726 $ 193,161 $ 116,505

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

The following table sets forth, for the three and nine months ended September 30, 2021 and 2020, 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,

2021 2020 2021 2020



Applebee's

Effective Restaurants^(a)

Franchise 1,619 1,636 1,623 1,620

Company 69 69 69 68

Total 1,688 1,705 1,692 1,688



System-wide^(b)

Domestic sales percentage change^(c) 30.2 % (16.7 ) % 38.6 % (27.6 ) %

Domestic same-restaurant sales 27.7 % (13.3 ) % 39.5 % (24.1 ) %percentage change^(d)



Franchise^(b)

Domestic sales percentage change^(c) 30.2 % (16.9 ) % 38.4 % (27.7 ) %

Domestic same-restaurant sales 27.8 % (13.4 ) % 39.3 % (24.1 ) %percentage change^(d)

Average weekly domestic unit sales (in $ 51.4 $ 39.2 $ 50.6 $ 36.6 thousands)

IHOP

Effective Restaurants(a)

Franchise

1,573

1,530

1,568

1,517

Area license

156

157

156

153

Total

1,729

1,687

1,724

1,670

System-wide(b)

Sales percentage change(c)

46.1

%

(34.4

)

%

41.6

%

(37.6

)

%

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

40.1

%

(30.2

)

%

40.5

%

(33.8

)

%

Franchise(b)

Sales percentage change(c)

45.7

%

(34.3

)

%

40.9

%

(37.6

)

%

Domestic same-restaurant sales percentage change(d)

39.4

%

(29.9

)

%

39.4

%

(33.6

)

%

Average weekly unit sales (in thousands)

$

36.2

$

25.6

$

34.0

$

24.9

Area License (b)

Sales percentage change(c)

50.9

%

(35.0

)

%

48.1

%

(37.1

)

%

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

IHOP

Effective Restaurants^(a)

Franchise 1,573 1,530 1,568 1,517

Area license 156 157 156 153

Total 1,729 1,687 1,724 1,670



System-wide^(b)

Sales percentage change^(c) 46.1 % (34.4 ) % 41.6 % (37.6 ) %

Domestic same-restaurant salespercentage change, including area 40.1 % (30.2 ) % 40.5 % (33.8 ) %license restaurants^(d)



Franchise^(b)

Sales percentage change^(c) 45.7 % (34.3 ) % 40.9 % (37.6 ) %

Domestic same-restaurant sales 39.4 % (29.9 ) % 39.4 % (33.6 ) %percentage change^(d)

Average weekly unit sales (in $ 36.2 $ 25.6 $ 34.0 $ 24.9 thousands)



Area License ^(b)

Sales percentage change^(c) 50.9 % (35.0 ) % 48.1 % (37.1 ) %

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

"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(a) 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. Effective Restaurants do not include units operated as ghost kitchens (small kitchens with no store-front presence, used to fill off-premise orders).



"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. System-wide sales do not include retail sales of ghost kitchens. Sales at restaurants that are owned by(b) 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, Applebee's company-operated restaurants, IHOP franchise restaurants and IHOP area license restaurants for the three and nine months ended September 30, 2021 and 2020 were as follows:

Three Months Ended

Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020

(In millions)

Reported sales

Applebee's domestic franchise restaurant sales

$

1,013.3

$

778.2

$

3,000.8

$

2,168.4

Applebee's company-operated restaurants

35.2

27.4

109.4

75.4

IHOP franchise restaurant sales

740.4

508.3

2,079.2

1,475.2

IHOP area license restaurant sales

69.8

46.2

202.4

136.6

Total

$

1,858.7

$

1,360.1

$

5,391.8

$

3,855.6

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

(In millions)

Reported sales

Applebee's domestic franchise $ 1,013.3 $ 778.2 $ 3,000.8 $ 2,168.4 restaurant sales

Applebee's company-operated 35.2 27.4 109.4 75.4 restaurants

IHOP franchise restaurant 740.4 508.3 2,079.2 1,475.2 sales

IHOP area license restaurant 69.8 46.2 202.4 136.6 sales

Total $ 1,858.7 $ 1,360.1 $ 5,391.8 $ 3,855.6

(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 during 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 during both fiscal periods being compared may be different from period to period.

"Sales percentage change" reflects, for each category of restaurants, the(c) percentage change in sales in any given fiscal period compared to the prior fiscal period for all restaurants in that category.



"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(d) operated during 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 during both fiscal periods being compared may be different from period to period.

Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020

Applebee's Restaurant Development Activity

Summary - beginning of period:

Franchise

1,627

1,680

1,640

1,718

Company

69

69

69

69

Total Applebee's restaurants, beginning of period

1,696

1,749

1,709

1,787

Franchise restaurants opened:

Domestic

2

1

4

1

International

-

3

1

3

Total franchise restaurants opened

2

4

5

4

Franchise restaurants permanently closed:

Domestic

(5

)

(20

)

(15

)

(52

)

International

(4

)

(5

)

(10

)

(11

)

Total franchise restaurants permanently closed

(9

)

(25

)

(25

)

(63

)

Net franchise restaurant reduction

(7

)

(21

)

(20

)

(59

)

Summary - end of period:

Franchise

1,620

1,659

1,620

1,659

Company

69

69

69

69

Total Applebee's restaurants, end of period

1,689

1,728

1,689

1,728

Domestic

1,587

1,614

1,587

1,614

International

102

114

102

114

Dine Brands Global, Inc. and Subsidiaries

Restaurant Data

(Unaudited)

Three Months Nine Months Ended Ended

September 30, September 30,

2021 2020 2021 2020

Applebee's Restaurant Development Activity

Summary - beginning of period:

Franchise 1,627 1,680 1,640 1,718

Company 69 69 69 69

Total Applebee's restaurants, beginning 1,696 1,749 1,709 1,787 of period

Franchise restaurants opened:

Domestic 2 1 4 1

International - 3 1 3

Total franchise restaurants opened 2 4 5 4

Franchise restaurants permanently closed:

Domestic (5 ) (20 ) (15 ) (52 )

International (4 ) (5 ) (10 ) (11 )

Total franchise restaurants permanently (9 ) (25 ) (25 ) (63 )closed

Net franchise restaurant reduction (7 ) (21 ) (20 ) (59 )

Summary - end of period:

Franchise 1,620 1,659 1,620 1,659

Company 69 69 69 69

Total Applebee's restaurants, end of 1,689 1,728 1,689 1,728 period

Domestic 1,587 1,614 1,587 1,614

International 102 114 102 114

IHOP Restaurant Development Activity

Summary - beginning of period:

Franchise

1,588

1,666

1,611

1,680

Area license

156

157

158

161

Company

3

-

3

-

Total IHOP restaurants, beginning of period

1,747

1,823

1,772

1,841

Franchise/area license restaurants opened:

Domestic franchise

7

1

22

8

Domestic area license

1

2

2

3

International franchise

1

3

2

5

Total franchise/area license restaurants opened

9

6

26

16

Franchise/area license restaurants permanently closed:

Domestic franchise

(5

)

(16

)

(35

)

(35

)

Domestic area license

(1

)

-

(3

)

(3

)

International franchise

-

(6

)

(9

)

(10

)

International area license

-

-

(1

)

(2

)

Total franchise/area license restaurants permanently closed

(6

)

(22

)

(48

)

(50

)

Net franchise/area license restaurant reduction

3

(16

)

(22

)

(34

)

Franchise restaurants reacquired by the Company

-

-

(1

)

-

Net franchise/area license restaurant decrease

3

(16

)

(22

)

(34

)

Summary - end of period

Franchise

1,591

1,648

1,591

1,648

Area license

156

159

156

159

Company

3

-

3

-

Total IHOP restaurants, end of period

1,750

1,807

1,750

1,807

Domestic

1,656

1,683

1,656

1,683

International

94

124

94

124

The restaurant counts and activity presented above do not include two domestic Applebee's ghost kitchens (small kitchens with no store-front presence, used to fill off-premise orders) and one Applebee's and six IHOP international ghost kitchens.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211104005457/en/

CONTACT: Investor Contact Ken Diptee Executive Director, Investor Relations Dine Brands Global, Inc. 818-637-3632 Ken.Diptee@dinebrands.com

CONTACT: Media Contact Susan Nelson Vice President, Global Communications and Public Affairs Dine Brands Global, Inc. Susan.Nelson@dinebrands.com