Dine Brands Global, Inc. (NYSE: DIN), the parent company of Applebee’s Neighborhood Grill & Bar^®, IHOP^® and Fuzzy’s Taco Shop^® restaurants, today announced financial results for the third quarter of fiscal 2023.

“Dine Brands maintained its course in the third quarter, leaning into our brands’ abundant value proposition and demonstrating solid performance as we continued to advance our strategic growth agenda,” said John Peyton, chief executive officer, Dine Brands Global. “Despite the ongoing volatile macroeconomic environment, we are leveraging our strengths in technology, menu innovation and marketing and are well positioned to create long term shareholder value.”

Vance Chang, chief financial officer, Dine Brands Global added, “Our third quarter results underscore the resiliency of our business model and our ability to generate cash flow. As we look towards the end of the year, we have adjusted our EBITDA guidance to show our progress year-to-date and provide a better understanding of where we expect to see our business at the close of fourth quarter.”

Domestic Restaurant Sales for the Third Quarter of 2023

• Applebee’s year-over-year comparable same-restaurant sales declined 2.4% for the third quarter of 2023. Off-premise sales accounted for 21.5% of sales mix, representing per restaurant average weekly sales of approximately $11,200.

• IHOP’s year-over-year domestic comparable same-restaurant sales increased 2.0% for the third quarter of 2023. Off-premise sales accounted for 19.5% of sales mix, representing per restaurant average weekly sales of approximately $7,400.

Third Quarter of 2023 Summary

• Total revenues for the third quarter of 2023 were $202.6 million compared to $233.2 million for the third quarter of 2022. The decline was primarily due to the refranchising of the 69 company-operated Applebee’s units in October 2022 and the negative comparable same-restaurant sales growth at Applebee’s, offset by the positive comparable same-restaurants sales growth at IHOP. Total revenues excluding the refranchised Applebee’s restaurants for the third quarter of 2023 were $200.9 million compared to $195.0 million for the third quarter of 2022.

• General and Administrative (“G&A”) expenses for the third quarter of 2023 were $48.6 million compared to $46.3 million for the third quarter of 2022. The variance was primarily attributable to higher compensation-related expenses offset by a decrease in occupancy costs.

• Net income for the third quarter of 2023 was $18.5 million compared to $20.9 million for the third quarter of 2022. The decrease was primarily due to higher interest and G&A expenses offset by an increase in segment profit.

• GAAP net income available to common stockholders was $18.0 million, or earnings per diluted share of $1.19, for the third quarter of 2023 compared to net income available to common stockholders of $20.4 million, or earnings per diluted share of $1.32 for the third quarter of 2022. The decrease was primarily due to an increase in interest expense and an increase in G&A expenses, offset by an increase in segment profit.

• Adjusted net income available to common stockholders was $22.3 million, or adjusted earnings per diluted share of $1.46, for the third quarter of 2023 compared to adjusted net income available to common stockholders of $25.6 million, or adjusted earnings per diluted share of $1.66, for the third quarter of 2022. The decrease was primarily due to an increase in G&A expenses and an increase in interest expense, offset by an increase in segment profit and a decrease in income taxes. (See “Non-GAAP Financial Measures” and reconciliation of GAAP net income available to common stockholders to adjusted net income available to common stockholders.)

• Consolidated adjusted EBITDA for the third quarter of 2023 was $60.6 million compared to $63.6 million for the third quarter of 2022. (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 2023 resulted in 14 new restaurant openings and the closure of 19 restaurants.

First Nine Months of 2023 Summary

• Total revenues for the first nine months of 2023 were $624.8 million compared to $701.4 million for the first nine months of 2022. The decline was primarily due to the refranchising of the 69 company-operated Applebee’s units in October 2022, offset by the positive comparable same-restaurants sales growth at IHOP and Applebee’s. Total revenues excluding the refranchised Applebee’s restaurants for the first nine months of 2023 were $618.4 million compared to $584.3 million for the first nine months of 2022.

• G&A expenses for the first nine months of 2023 were $147.5 million compared to $131.9 million for the first nine months of 2022. The variance was primarily due to an increase in professional services, an increase in compensation-related expenses, costs resulting from the stopping of the IHOP Flip’d initiative, an increase in software maintenance and an increase in occupancy costs.

• Net income for the first nine months of 2023 was $64.1 million compared to $69.8 million for the first nine months of 2022. The decrease was primarily due to higher G&A and interest expenses offset by an increase in segment profit.

• GAAP net income available to common stockholders was $62.6 million, or earnings per diluted share of $4.09, for the first nine months of 2023 compared to net income available to common stockholders of $67.9 million, or earnings per diluted share of $4.22 for the first nine months of 2022. The decrease was primarily due to an increase in G&A expenses and an increase in interest expense, offset by an increase in segment profit.

• Adjusted net income available to common stockholders was $80.3 million, or adjusted earnings per diluted share of $5.25, for the first nine months of 2023 compared to adjusted net income available to common stockholders of $77.9 million, or adjusted earnings per diluted share of $4.85, for the first nine months of 2022. The increase was primarily due to an increase in segment profit and a decrease in income taxes, offset by an increase in G&A expenses and an increase in interest expense. (See “Non-GAAP Financial Measures” and reconciliation of GAAP net income available to common stockholders to adjusted net income available to common stockholders.)

• Consolidated adjusted EBITDA for the first nine months of 2023 was $194.2 million compared to $194.9 million for the first nine months of 2022. (See “Non-GAAP Financial Measures” and reconciliation of GAAP net income to consolidated adjusted EBITDA.)

• Cash flows from operating activities for the first nine months of 2023 were $79.3 million. This compares to cash provided from operating activities of $63.5 million for the first nine months of 2022. The increase was primarily due to a favorable change in working capital and an increase in segment profit.

• The Company had adjusted free cash flow of $54.0 million for the first nine months of 2023. This compares to adjusted free cash flow of approximately $52.4 million for the first nine months of 2022. (See “Non-GAAP Financial Measures” and reconciliation of the Company’s cash provided by operating activities to adjusted free cash flow.)

• Development activity by Applebee’s and IHOP franchisees for the first nine months of 2023 resulted in 48 new restaurant openings and the closure of 61 restaurants.

Key Balance Sheet Metrics (as of September 30, 2023)

• Total cash, cash equivalents and restricted cash of approximately $159.6 million, of which approximately $98.2 million was unrestricted cash.

• Leverage ratio of approximately 4.6x compared with approximately 4.5x as of June 30, 2023.

• Available borrowing capacity under the Variable Funding Senior Secured Notes is over $220 million.

GAAP Effective Tax Rate

The Company’s effective tax rate was 25% for the nine months ended September 30, 2023, as compared to 26.9% for the nine months ended September 30, 2022. The effective tax rate for the nine months ended September 30, 2023 was different than the rate of the prior comparable period primarily due to the recognition of higher excess tax benefits from stock-based compensation and lower non-deductible executive compensation.

Capital Returns to Equity Holders

During the quarter ended September 30, 2023, the Company repurchased approximately $6.0 million of its common stock. Through the first nine months of 2023, the Company repurchased approximately $20.0 million of its common stock.

On September 7, 2023, the Company announced that its Board of Directors declared and approved a quarterly cash dividend of $0.51 per share of common stock. The dividend was paid on September 29, 2023, to the Company’s stockholders of record at the close of business on September 19, 2023.

Financial Performance Guidance for 2023

The Company’s fiscal 2023 guidance items:

• Reiterated: Our domestic development activity target for Applebee’s franchisees is between 25 and 35 net fewer restaurants.

• Reduced: Domestic development activity by IHOP franchisees and area licensees is expected to be between 20 and 30 net new openings (versus 45 to 60 net new openings previously) due to ongoing permitting and construction delays.

• Narrowed: Consolidated adjusted EBITDA is expected to be in the range of between approximately $245 million and $255 million (versus between $243 million and $255 million previously).

• Narrowed: G&A expenses are expected to range between approximately $200 million and $205 million (versus between $200 million and $210 million previously). This total includes non-cash stock-based compensation expense and depreciation of approximately $30 million.

• Reiterated: Gross capital expenditures are expected to range between $33 million and $38 million.

Dine Brands does not provide forward-looking guidance for GAAP net income because it is unable to predict certain items contained in the GAAP measure without unreasonable efforts. These items may include closure and impairment charges, loss on extinguishment of debt, gain or loss on disposition of assets, other non-income based taxes and other items deemed not reflective of current operations.

Third Quarter of 2023 Earnings Conference Call Details

Dine Brands will host a conference call to discuss its results on November 1, 2023, at 9:00 a.m. Eastern time. To access the call, please click this conference call registration link, and you will be provided with dial in details. A live webcast of the call, along with a replay will be available for a limited time at https://investors.dinebrands.com. 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. 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 Pasadena, California, Dine Brands Global, Inc. (NYSE: DIN), through its subsidiaries and franchisees, supports and operates restaurants under the Applebee's Neighborhood Grill + Bar®, IHOP®, and Fuzzy’s Taco Shop® brands. As of September 30, 2023, these three brands consisted of over 3,500 restaurants across 18 international markets. Dine Brands is one of the largest full-service restaurant companies in the world and in 2022 expanded into the Fast Casual segment. 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, including the impact of inflation, particularly as it may impact our franchisees directly; 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 including any insolvency or bankruptcy; credit risks from our IHOP franchisees operating under our previous IHOP business model in which we built and equipped IHOP restaurants and then franchised them to franchisees; insufficient insurance coverage to cover potential risks associated with the ownership and operation of restaurants; 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; risks of food-borne illness or food tampering; possible future impairment charges; 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; delivery initiatives and use of third-party delivery vendors; our allocation of human capital and 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, any merger and acquisition costs 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, any merger and acquisition costs 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. Additionally, the Company has provided total revenues excluding the refranchised Applebee’s restaurants for the three and nine months ended September 30, 2023 and for the comparative prior year periods. 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. Total revenues excluding the refranchised Applebee’s restaurants is helpful for Management to evaluate the performance of franchised restaurants over comparative periods. 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.

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