Dine Brands Global, Inc. Reports Second Quarter 2024 Results

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 second quarter of fiscal year 2024.

"Our brands have a long history of weathering economic cycles and despite the consumer pullback the industry witnessed this quarter, we are confident that our strategies around profitable promotions, menu innovation and development will help us manage both short-term challenges while positioning us for the long term," said John Peyton, chief executive officer, Dine Brands Global, Inc.

Vance Chang, chief financial officer, Dine Brands Global, Inc. added, "Our asset light model allows us to return capital to investors and maintain the strength of our balance sheet in all economic cycles. We are revising our financial guidance for the remainder of the fiscal year to reflect the current macro conditions and we are optimistic about the strategic advantage of Dine's platform to create value for all stakeholders in the long term."

Domestic Restaurant Sales for the Second Quarter of 2024

• Applebee's year-over-year domestic comparable same-restaurant sales declined 1.8% for the second quarter of 2024. Off-premise sales mix accounted for 21.4% in the second quarter of 2024 compared to 22.6% in the second quarter of 2023.

• IHOP's year-over-year domestic comparable same-restaurant sales declined 1.4% for the second quarter of 2024. Off-premise sales mix accounted for 19.8% in the second quarter of 2024 compared to 20.7% in the second quarter of 2023.

Second Quarter of 2024 Summary

• Total revenues for the second quarter of 2024 were $206.3 million compared to $208.4 million for the second quarter of 2023. The decrease was primarily due to the negative comparable same-restaurant sales growth at Applebee's and IHOP, partially offset by increases in the number of effective franchise restaurants and proprietary product sales at IHOP.

• General and Administrative ("G&A") expenses for the second quarter of 2024 were $46.9 million compared to $47.8 million for the second quarter of 2023. The variance was primarily attributable to the stopping of the IHOP Flip'd initiative in the prior year offset by an increase in compensation-related expenses and an increase in depreciation expense.

• GAAP net income available to common stockholders was $22.5 million, or earnings per diluted share of $1.50, for the second quarter of 2024 compared to net income available to common stockholders of $17.8 million, or earnings per diluted share of $1.16 for the second quarter of 2023. The increase was primarily due to an increase in segment profit, a prior year loss on disposition of assets, a prior year loss on debt extinguishment and a decrease in G&A expenses, partially offset by an increase in income taxes.

• Adjusted net income available to common stockholders was $25.6 million, or adjusted earnings per diluted share of $1.71, for the second quarter of 2024 compared to adjusted net income available to common stockholders of $27.8 million, or adjusted earnings per diluted share of $1.82, for the second quarter of 2023. The decline was primarily due to an increase in G&A expenses, partially offset by a decrease in the number of diluted shares. (See "Non-GAAP Financial Measures" for definition and reconciliation of GAAP net income available to common stockholders to adjusted net income available to common stockholders.)

• Consolidated adjusted EBITDA for the second quarter of 2024 was $67.0 million compared to $67.3 million for the second quarter of 2023. (See "Non-GAAP Financial Measures" for definition and reconciliation of GAAP net income to consolidated adjusted EBITDA.)

• Development activity by Applebee's and IHOP franchisees for the second quarter of 2024 resulted in 16 new restaurant openings and 25 restaurant closures.

First Six Months of 2024 Summary

• Total revenues for the first six months of 2024 were $412.5 million compared to $422.2 million for the first six months of 2023. The decline was primarily due to the negative comparable same-restaurant sales growth at Applebee's and IHOP, partially offset by increases in the number of effective franchise restaurants and proprietary product sales at IHOP.

• G&A expenses for the first six months of 2024 were $99.0 million compared to $98.9 million for the first six months of 2023. The variance was primarily due to an increase in stock-based compensation, depreciation and severance expense, offset by the stopping of the IHOP Flip'd initiative in the prior period and a decrease in occupancy costs.

• GAAP net income available to common stockholders was $39.4 million, or earnings per diluted share of $2.64, for the first six months of 2024 compared to net income available to common stockholders of $44.5 million, or earnings per diluted share of $2.91 for the first six months of 2023. The decline was primarily due to a decrease in segment profit and an increase in interest expense as a result of our April 2023 refinancing, partially offset by a prior year loss on disposition of assets.

• Adjusted net income available to common stockholders was $45.5 million, or adjusted earnings per diluted share of $3.04, for the first 6 months of 2024 compared to adjusted net income available to common stockholders of $58.0 million, or adjusted earnings per diluted share of $3.79, for the first six months of 2023. The decline was primarily due to a decrease in segment profit, an increase in G&A expenses and an increase in interest expense as a result of our April 2023 refinancing, partially offset by a decrease in income taxes. (See "Non-GAAP Financial Measures" for definition and reconciliation of GAAP net income available to common stockholders to adjusted net income available to common stockholders.)

• Consolidated adjusted EBITDA for the first six months of 2024 was $127.8 million compared to $133.7 million for the first six months of 2023. (See "Non-GAAP Financial Measures" for definition and reconciliation of GAAP net income to consolidated adjusted EBITDA.)

• Cash flows provided by operating activities for the first six months of 2024 were $52.2 million. This compares to cash flows provided by operating activities of $42.7 million for the first six months of 2023. The increase was primarily due to a favorable increase in working capital, partially offset by a decrease in segment profit.

• Adjusted free cash flow was $52.9 million for the first six months of 2024. This compares to adjusted free cash flow of $24.1 million for the first six months of 2023. (See "Non-GAAP Financial Measures" for definition 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 six months of 2024 resulted in 25 new restaurant openings and 45 restaurant closures.

Key Balance Sheet Metrics (as of June 30, 2024)

• Total cash, cash equivalents and restricted cash of approximately $218.4 million, of which approximately $153.5 million was unrestricted cash.

• Available borrowing capacity under the Variable Funding Senior Secured Notes is over $223 million.

GAAP Effective Tax Rate

The Company's effective tax rate was 26.4% for the six months ended June 30, 2024, as compared to 24.7% for the six months ended June 30, 2023. The effective tax rate for the six months ended June 30, 2024 was higher than the rate of the prior comparable period primarily due to a lower tax deduction related to stock-based compensation.

Capital Returns to Equity Holders

During the second quarter of 2024, the Company repurchased approximately $6.0 million of its common stock and paid quarterly cash dividends totaling approximately $7.9 million.

Financial Performance Guidance for 2024

The Company's fiscal year 2024 guidance items have been revised as follows:

• Reduced: Applebee's domestic system-wide comparable same-restaurant sales performance is expected to range between negative 4% and negative 2% (versus between 0% and 2% previously).

• Reduced: IHOP's domestic system-wide comparable same-restaurant sales performance is expected to range between negative 2% and 0% (versus between 1% and 3% previously).

• Reiterated: Domestic development activity 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 0 and 10 net new openings (versus between 15 to 25 net new openings previously).

• Reduced: Consolidated adjusted EBITDA is expected to range between approximately $245 million and $255 million (versus between $255 million and $265 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 $35 million.

• Reduced: Gross capital expenditures are expected to range between approximately $14 million and $16 million (versus between $15 million and $20 million previously).

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.

Second quarter of 2024 Earnings Conference Call Details

Dine Brands will host a conference call to discuss its results on August 7, 2024, 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 June 30, 2024, these three brands consisted of close to 3,600 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 intangible asset amortization, any non-cash interest expense, any gain or loss related to the disposition of assets, any gain or loss related to debt extinguishment, 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 interest charges, any income tax provision or benefit, any depreciation and amortization, any non-cash stock-based compensation, any closure and impairment charges, any gain or loss related to debt extinguishment, 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. 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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