Dine Brands Global Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

din-20200630

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________________

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-15283

Dine Brands Global, Inc.

(Exact name of registrant as specified in its charter)

Delaware

95-3038279

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

450 North Brand Boulevard,

91203-1903

Glendale,

(Address of principal executive offices)

(Zip Code)


(818)			240-6055
(Registrant’s telephone number, including area code)

______________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	DIN	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐

No ☒

As of July 22, 2020, the Registrant had 16,419,070 shares of Common Stock outstanding.

Table of Contents

Dine Brands Global, Inc. and Subsidiaries

Index


		Page
PART I.	FINANCIAL INFORMATION	3
	Item 1—Financial Statements	3
	Consolidated Balance Sheets - June 3 0 , 2020 (unaudited) and December 31, 2019	3
	Consolidated Statements of Comprehensive (Loss) Income (unaudited) - Three and Six Months Ended June 3 0 , 2020 and 2019	4
	Consolidated Statements of Stockholders' Deficit (unaudited) - Three and Six Months Ended June 3 0 , 2020 and 2019	5
	Consolidated Statements of Cash Flows (unaudited) - Six Months Ended June 3 0 , 2020 and 2019	7
	Notes to Consolidated Financial Statements (unaudited)	8
	Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
	Item 3—Quantitative and Qualitative Disclosures about Market Risk	51
	Item 4—Controls and Procedures	51
PART II.	OTHER INFORMATION	52
	Item 1—Legal Proceedings	52
	Item 1A—Risk Factors	52
	Item 2—Unregistered Sales of Equity Securities and Use of Proceeds	52
	Item 3—Defaults Upon Senior Securities	52
	Item 4—Mine Safety Disclosures	52
	Item 5—Other Information	52
	Item 6—Exhibits	53
	Signatures	54

Cautionary Statement Regarding Forward-Looking Statements

Statements contained in this Quarterly Report on Form 10-Q 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. 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. 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. You should consider our forward-looking statements in light of the risks discussed under the heading “Risk Factors,” as well as our consolidated financial statements, related notes, and the other financial information appearing elsewhere in this report and our other filings with the United States Securities and Exchange Commission. The forward-looking statements contained in this report are made as of the date hereof and Dine Brands Global, Inc. does not intend to, nor does it assume any obligation to, update or supplement any forward-looking statements after the date of this report to reflect actual results or future events or circumstances.

Factors that could cause actual results to differ materially from the projections, forecasts, estimates and expectations discussed in this Quarterly Report on Form 10-Q include, among other things: uncertainty regarding the duration and severity of the ongoing COVID-19 pandemic and its ultimate impact on our business; 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, 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

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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 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 matters in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, many of which are beyond our control.

Fiscal Quarter End

The Company’s fiscal quarters end on the Sunday closest to the last day of each calendar quarter. For convenience, the fiscal quarters of each year are referred to as ending on March 31, June 30, September 30 and December 31. The first fiscal quarter of 2020 began on December 30, 2019 and ended on March 29, 2020; the second fiscal quarter of 2020 ended on June 28, 2020. The first fiscal quarter of 2019 began on December 31, 2018 and ended on March 31, 2019; the second fiscal quarter of 2019 ended on June 30, 2019.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Dine Brands Global, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share amounts)


Assets
	June 30, 2020		December 31, 2019
	(Unaudited)
Current assets:
Cash and cash equivalents	$	278,507	$	116,043


Receivables, net of allowance of $11,709 (2020) and $3,138 (2019)	124,619		136,869
Restricted cash	31,184		40,732
Prepaid gift card costs	27,370		36,077
Prepaid income taxes	17,880		13,290
Other current assets	6,410		3,906
Total current assets	485,970		346,917
Other intangible assets, net	555,495		575,103
Operating lease right-of-use assets	349,103		366,931
Goodwill	251,628		343,862
Property and equipment, net	203,540		216,420


Long-term receivables, net of allowance of $7,981 (2020) and $8,155 (2019)	74,015		85,999
Deferred rent receivable	65,126		70,308
Non-current restricted cash	32,800		15,700
Other non-current assets, net	25,590		28,271
Total assets	$	2,043,267	$	2,049,511
Liabilities and Stockholders’ Deficit
Current liabilities:
Current maturities of long-term debt	$	9,750	$	—
Accounts payable	19,181		40,925
Gift card liability	121,994		159,019
Current maturities of operating lease obligations	71,837		72,815
Current maturities of finance lease and financing obligations	13,307		13,669
Accrued employee compensation and benefits	10,568		23,904
Dividends payable	—		11,702



Deferred franchise revenue, short-term	8,921		10,086
Accrued advertising expenses	21,772		8,760
Other accrued expenses	23,376		17,032
Total current liabilities	300,706		357,912
Long-term debt	1,497,116		1,288,248
Operating lease obligations, less current maturities	350,418		359,025
Finance lease obligations, less current maturities	74,051		77,393
Financing obligations, less current maturities	34,682		37,682
Deferred income taxes, net	86,221		98,499
Deferred franchise revenue, long-term	53,269		56,944

Other non-current liabilities	15,375		15,582
Total liabilities	2,411,838		2,291,285
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; June 30, 2020 - 24,900,436 issued, 16,417,618 outstanding; December 31, 2019 - 24,925,447 issued, 16,521,921 outstanding	249		249
Additional paid-in-capital	254,429		246,192
(Accumulated deficit) retained earnings	(64,010)		61,653
Accumulated other comprehensive loss	(58)		(58)
Treasury stock, at cost; shares: June 30, 2020 - 8,482,818; December 31, 2019 - 8,403,526	(559,181)		(549,810)
Total stockholders’ deficit	(368,571)		(241,774)
Total liabilities and stockholders’ deficit	$	2,043,267	$	2,049,511

See the accompanying Notes to Consolidated Financial Statements.

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Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Comprehensive (Loss) Income

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended						Six Months Ended
	June 30, 2020						June 30, 2020
	2020		2019		2020		2019
Revenues:
Franchise revenues:
Royalties, franchise fees and other	$	38,781	$	90,930	$	122,095	$	187,226
Advertising revenues	29,095		71,738		90,818		144,368
Total franchise revenues	67,876		162,668		212,913		331,594
Company restaurant sales	16,774		33,751		48,074		69,486
Rental revenues	23,707		29,878		52,716		60,589
Financing revenues	1,355		1,783		2,893		3,593
Total revenues	109,712		228,080		316,596		465,262
Cost of revenues:
Franchise expenses:
Advertising expenses	29,095		71,738		90,818		144,368
Bad debt expense (credit)	5,053		(126)		5,571		(593)
Other franchise expenses	2,932		7,295		10,141		15,435
Total franchise expenses	37,080		78,907		106,530		159,210
Company restaurant expenses	21,139		31,232		51,471		62,770
Rental expenses:
Interest expense from finance leases	1,137		1,445		2,347		2,974
Other rental expenses	20,106		21,495		41,429		42,590
Total rental expenses	21,243		22,940		43,776		45,564
Financing expenses	128		146		270		292
Total cost of revenues	79,590		133,225		202,047		267,836
Gross profit	30,122		94,855		114,549		197,426
General and administrative expenses	30,870		39,364		68,478		82,183
Interest expense, net	17,127		14,602		32,299		29,995
Impairment and closure charges	124,365		289		124,353		483
Amortization of intangible assets	2,755		2,925		5,581		5,849

Loss on extinguishment of debt	—		8,276		—		8,276
Loss on disposition of assets	1,776		332		1,543		441
(Loss) income before income tax provision	(146,771)		29,067		(117,705)		70,199
Income tax benefit (provision)	11,992		(7,677)		5,254		(17,166)
Net (loss) income	(134,779)		21,390		(112,451)		53,033
Other comprehensive income net of tax:

Foreign currency translation adjustment	—		2		—		1
Total comprehensive (loss) income	$	(134,779)	$	21,392	$	(112,451)	$	53,034
Net (loss) income available to common stockholders:
Net (loss) income	$	(134,779)	$	21,390	$	(112,451)	$	53,033
Less: Net loss (income) allocated to unvested participating restricted stock	4,763		(719)		3,961		(1,827)
Net (loss) income available to common stockholders	$	(130,016)	$	20,671	$	(108,490)	$	51,206
Net (loss) income available to common stockholders per share:
Basic	$	(8.04)	$	1.20	$	(6.69)	$	2.97
Diluted	$	(8.04)	$	1.18	$	(6.69)	$	2.91
Weighted average shares outstanding:
Basic	16,177		17,181		16,215		17,262
Diluted	16,177		17,563		16,215		17,626

See the accompanying Notes to Consolidated Financial Statements.

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Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Stockholders' Deficit

(In thousands)

(Unaudited)


	Three Months ended June 30, 2020
	Common Stock									Accumulated Other Comprehensive Loss	Treasury Stock
	Shares Outstanding	Amount		Additional Paid-in Capital		(Accumulated Deficit) Retained Earnings					Shares		Cost		Total
Balance at March 31, 2020	16,421	$	249	$	252,443	$	70,769	$	(58)	8,496	$	(559,780)	$	(236,377)

Net loss	—	—		—		(134,779)		—		—	—		(134,779)


Reissuance of treasury stock	14	—		(600)		—		—		(13)	599		(1)
Net issuance of shares for stock plans	(14)	—		—		—		—		—	—		—
Repurchase of restricted shares for taxes	(3)	—		(129)		—		—		—	—		(129)
Stock-based compensation	—	—		2,632		—		—		—	—		2,632
Dividends on common stock	—	—		261		—		—		—	—		261
Other	—	—		(178)		—		—		—	—		(178)
Balance at June 30, 2020	16,418	$	249	$	254,429	$	(64,010)	$	(58)	8,483	$	(559,181)	$	(368,571)


	Six Months ended June 30, 2020
	Common Stock									Accumulated Other Comprehensive Loss	Treasury Stock
	Shares Outstanding	Amount		Additional Paid-in Capital		(Accumulated Deficit) Retained Earnings					Shares		Cost		Total
Balance at December 31, 2019	16,522	$	249	$	246,192	$	61,653	$	(58)	8,404	$	(549,810)	$	(241,774)
Adoption of credit loss accounting guidance (Note 3)	—	—		—		(497)		—		—	—		(497)
Net loss	—	—		—		(112,451)		—		—	—		(112,451)

Purchase of Company common stock	(460)	—		—		—		—		460	(26,527)		(26,527)
Reissuance of treasury stock	381	—		3,367		—		—		(381)	17,156		20,523
Net issuance of shares for stock plans	4	—		—		—		—		—	—		—
Repurchase of restricted shares for taxes	(29)	—		(2,129)		—		—		—	—		(2,129)
Stock-based compensation	—	—		6,670		—		—		—	—		6,670
Dividends on common stock	—	—		507		(12,715)		—		—	—		(12,208)
Other	—	—		(178)		—		—		—	—		(178)
Balance at June 30, 2020	16,418	$

Price	73.27	EPS	6
Shares	17	P/E	12
MCap	1,277	P/FCF	12
Net Debt	1,135	EBIT	167
TEV	2,412	TEV/EBIT	14
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-07-29
10-Q	2020-03-31	Filed 2020-04-29
10-K	2019-12-31	Filed 2020-02-24
10-Q	2019-09-30	Filed 2019-10-30
10-Q	2019-06-30	Filed 2019-07-31
10-Q	2019-03-31	Filed 2019-05-01
10-K	2018-12-31	Filed 2019-02-21
10-Q	2018-09-30	Filed 2018-10-31
10-Q	2018-06-30	Filed 2018-08-01
10-Q	2018-03-31	Filed 2018-05-02
10-K	2017-12-31	Filed 2018-02-20
10-Q	2017-09-30	Filed 2017-11-09
10-Q	2017-07-02	Filed 2017-08-10
10-Q	2017-03-31	Filed 2017-05-02
10-K	2016-12-31	Filed 2017-03-01
10-Q	2016-09-30	Filed 2016-11-01
10-Q	2016-06-30	Filed 2016-08-03
10-Q	2016-03-31	Filed 2016-05-05
10-K	2015-12-31	Filed 2016-02-24
10-Q	2015-09-30	Filed 2015-10-29
10-Q	2015-06-30	Filed 2015-07-29
10-Q	2015-03-31	Filed 2015-04-30
10-K	2014-12-31	Filed 2015-02-25
10-Q	2014-09-30	Filed 2014-10-28
10-Q	2014-06-30	Filed 2014-07-29
10-Q	2014-03-31	Filed 2014-05-01
10-K	2013-12-31	Filed 2014-02-26
10-Q	2013-09-30	Filed 2013-10-29
10-Q	2013-06-30	Filed 2013-07-30
10-Q	2013-03-31	Filed 2013-05-02
10-K	2012-12-31	Filed 2013-02-27
10-Q	2012-09-30	Filed 2012-10-30
10-Q	2012-06-30	Filed 2012-07-31
10-Q	2012-03-31	Filed 2012-05-01
10-K	2011-12-31	Filed 2012-03-01
10-Q	2011-09-30	Filed 2011-11-03
10-Q	2011-06-30	Filed 2011-08-03
10-Q	2011-03-31	Filed 2011-05-04
10-K	2010-12-31	Filed 2011-03-04
10-Q	2010-09-30	Filed 2010-11-03
10-Q	2010-06-30	Filed 2010-07-30
10-Q	2010-03-31	Filed 2010-05-05
10-K	2009-12-31	Filed 2010-03-04

8-K	2020-07-29	Earnings, Regulation FD, Exhibits
8-K	2020-07-14	Officers, Exhibits
8-K	2020-05-28
8-K	2020-05-12
8-K	2020-04-29
8-K	2020-04-16
8-K	2020-03-17
8-K	2020-03-03
8-K	2020-02-25
8-K	2020-02-24
8-K	2019-10-30
8-K	2019-10-08
8-K	2019-08-05
8-K	2019-08-01
8-K	2019-07-31
8-K	2019-06-05
8-K	2019-06-03
8-K	2019-05-28
8-K	2019-05-14
8-K	2019-05-13
8-K	2019-05-08
8-K	2019-05-01
8-K	2019-03-05
8-K	2019-02-21
8-K	2018-12-13
8-K	2018-12-04
8-K	2018-10-31
8-K	2018-10-23
8-K	2018-10-09
8-K	2018-09-05
8-K	2018-08-17
8-K	2018-08-02
8-K	2018-08-01
8-K	2018-05-15
8-K	2018-05-14
8-K	2018-05-14
8-K	2018-05-07
8-K	2018-05-02
8-K	2018-02-21
8-K	2018-02-20

EX-4.1	exhibit41dine2019-1xom.htm
EX-31.1	din-2020630x10qxex311.htm
EX-31.2	din-2020630x10qxex312.htm
EX-32.1	din-2020630x10qxex321.htm
EX-32.2	din-20200630x10qxex322.htm

DIN 10Q Quarterly Report

Dine Brands Global Earnings 2020-06-30