DineEquity, Inc. Reports 32% Increase in Adjusted Earnings per Diluted Share for the Second Quarter 2015

Second Quarter 2015 Highlights

  • Second quarter 2015 adjusted EPS (Non-GAAP) of $1.53, an increase of 32% over second quarter 2014
  • Second quarter 2015 GAAP EPS of $1.40, a 40% increase over second quarter 2014
  • Returned approximately $37 million to shareholders, including $20 million in the form of share repurchases and approximately $17 million in cash dividends
  • Returned over $68 million combined to shareholders in the first six months of 2015
  • Second quarter domestic system-wide same-restaurant sales increased 6.2% at IHOP and 1.0% at Applebee's
  • IHOP and Applebee's each ranked number one by Nation's Restaurant News for the eighth consecutive year in their respective categories based on last fiscal year's U.S. system-wide same-restaurant sales

GLENDALE, Calif. - July 29, 2015 // PRNewswire // - DineEquity, Inc. (NYSE: DIN), the parent company of Applebee's Neighborhood Grill & Bar® and IHOP® restaurants, today announced financial results for the second quarter of fiscal 2015.

"This was another stellar quarter for DineEquity, reflecting strong financial discipline and the successful execution of our strategic priorities for DineEquity and our two category-leading brands," said Julia A. Stewart, Chairman and Chief Executive Officer of DineEquity, Inc.

Ms. Stewart continued, "IHOP's sales rose 6.2% for the second quarter, which is the largest increase in over a decade. We believe that our brand building initiatives at Applebee's and IHOP are laying a solid foundation for long-term growth."

Second Quarter of Fiscal 2015 Financial Highlights

  • Adjusted net income available to common stockholders was $28.9 million, representing adjusted earnings per diluted share of $1.53, for the second quarter of 2015. This compares to $22.1 million, representing adjusted earnings per diluted share of $1.16, for the same period of 2014. The increase in adjusted net income was mainly due to a significant decline in cash interest expense and higher gross segment profit. The growth in gross segment profit was mainly due to the 6.2% increase in IHOP's domestic system-wide same-restaurant sales, which was the highest quarterly sales increase since the first quarter of 2004. (See "Non-GAAP Financial Measures" below.)
  • GAAP net income available to common stockholders was $26.5 million for the second quarter of 2015, or earnings per diluted share of $1.40. This compares to net income available to common stockholders of $18.9 million, or earnings per diluted share of $1.00, for the second quarter of 2014. The increase was primarily due to significantly lower interest expense and higher gross segment profit.

First Six Months of Fiscal 2015 Financial Highlights

  • Adjusted net income available to common stockholders was $60.0 million, or adjusted earnings per diluted share of $3.17, for the first six months of 2015. This compares to $46.1 million, or adjusted earnings per diluted share of $2.43, for the same period of 2014. The increase in adjusted net income was primarily due to a significant decline in cash interest expense and higher gross segment profit. (See "Non-GAAP Financial Measures" below.)
  • GAAP net income available to common stockholders was $54.6 million for the first six months of 2015, or earnings per diluted share of $2.88. This compares to net income available to common stockholders of $39.3 million, or earnings per diluted share of $2.07, for the same period of 2014. The increase was mainly due to a substantial decline in interest expense and higher gross segment profit.
  • For the first six months of fiscal 2015, cash flows from operating activities were $48.1 million and free cash flow was $49.7 million. (See "Non-GAAP Financial Measures" below.)

Same-Restaurant Sales Performance

Second Quarter of Fiscal 2015

  • IHOP's domestic system-wide same restaurant sales increased 6.2% for the second quarter of 2015 compared to the same period in 2014.
  • Applebee's domestic system-wide same-restaurant sales increased 1.0% for the second quarter of 2015 compared to the second quarter of 2014.

First Six Months of Fiscal 2015

  • IHOP's domestic system-wide same restaurant sales increased 5.5% for the first six months of 2015 compared to the same period in 2014.
  • Applebee's domestic system-wide same-restaurant sales increased 2.0% for the first six months of 2015 compared to the same period in 2014.

Financial Performance Guidance for Fiscal 2015

DineEquity reiterates its financial performance guidance for fiscal 2015 contained in the press release issued on February 25, 2015 and the Form 8-K issued on February 26, 2015, except for domestic system-wide same-restaurant sales for both IHOP and Applebee's. The Company revised IHOP's sales performance guidance to range between positive 4.0% and positive 6.0%. This reflects an increase from the previous expectations of between positive 2.0% and positive 5.0%. Applebee's sales performance guidance was revised to range between positive 1.0% and positive 3.0%. This reflects a decrease from the previous expectations of between positive 1.0% and positive 4.0%. DineEquity's financial performance guidance reflects the impact of a 53rd operating week in fiscal 2015, in which the last month of the fiscal fourth quarter contains six weeks.

Investor Conference Call Today

DineEquity will host a conference call to discuss its results on the same day at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time. To participate on the call, please dial (800) 708-4539 and reference pass code 40097834. International callers, please dial (847) 619-6396 and reference pass code 40097834.

A live webcast of the call will be available on DineEquity's Web site at www.dineequity.com, and may be accessed by visiting Calls & 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 10:30 a.m. Pacific Time on July 29, 2015 through 11:59 p.m. Pacific Time on August 5, 2015 by dialing (888) 843-7419 and referencing pass code 40097834#. International callers, please dial (630) 652-3042 and reference pass code 40097834#. An online archive of the webcast will also be available on the Investors section of DineEquity's Web site.

About DineEquity, Inc.

Based in Glendale, California, DineEquity, Inc., through its subsidiaries, franchises and operates restaurants under the Applebee's Neighborhood Grill & Bar and IHOP brands. With more than 3,600 restaurants combined in 18 countries, over 400 franchisees and approximately 200,000 team members (including franchisee- and company-operated restaurant employees), DineEquity is one of the largest full-service restaurant companies in the world. For more information on DineEquity, visit the Company's Web site located at www.dineequity.com.

Forward-Looking Statements

Statements contained in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by words such as "may," "will," "should," "expect," "anticipate," "believe," "estimate," "intend," "plan" 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: the effect of general economic conditions; the Company's indebtedness; risk of future impairment charges; trading volatility and the price of the Company's common stock; the Company's results in any given period differing from guidance provided to the public; the highly competitive nature of the restaurant business; the Company's business strategy failing to achieve anticipated results; risks associated with the restaurant industry; risks associated with locations of current and future restaurants; rising costs for food commodities and utilities; shortages or interruptions in the supply or delivery of food; ineffective marketing and guest relationship initiatives and use of social media; changing health or dietary preferences; our engagement in business in foreign markets; harm to our brands' reputation; litigation; fourth-party claims with respect to intellectual property assets; environmental liability; liability relating to employees; failure to comply with applicable laws and regulations; failure to effectively implement restaurant development plans; our dependence upon our franchisees; concentration of Applebee's franchised restaurants in a limited number of franchisees; credit risk from IHOP franchisees operating under our previous business model; termination or non-renewal of franchise agreements; franchisees breaching their franchise agreements; insolvency proceedings involving franchisees; changes in the number and quality of franchisees; inability of franchisees to fund capital expenditures; heavy dependence on information technology; the occurrence of cyber incidents or a deficiency in our cybersecurity; failure to execute on a business continuity plan; inability to attract and retain talented employees; risks associated with retail brand initiatives; failure of our internal controls; and other factors discussed from time to time in the Company's Annual and Quarterly Reports on Forms 10-K and 10-Q and in the Company's other filings with the Securities and Exchange Commission. The forward-looking statements contained in this release are made as of the date hereof and the Company assumes no obligation to update or supplement any forward-looking statements.

Non-GAAP Financial Measures

This news release includes references to the Company's non-GAAP financial measures "adjusted net income available to common stockholders (adjusted EPS)," "free cash flow," and "segment EBITDA." "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, and any gain or loss related to the disposition of assets. This is presented on an aggregate basis and a per share (diluted) basis. For fiscal 2015, free cash flow" for a given period is defined as cash provided by operating activities, plus net receipts from notes and equipment contracts receivable, excluding direct financing lease receivables ("net receipts from notes and equipment contracts receivable"), less capital expenditures. "Segment EBITDA" for a given period is defined as gross profit plus depreciation and amortization as well as interest charges related to the segment. Management utilizes free cash flow to determine the amount of cash remaining for general corporate and strategic purposes and for the return of cash to stockholders pursuant to our capital allocation strategy, after the receipts from notes and equipment contracts receivable, and the funding of operating activities, capital expenditures and debt service. Management believes this information is helpful to investors to determine the Company's adherence to debt covenants and the Company's cash available for these purposes. Adjusted EPS, free cash flow and segment EBITDA 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 United States generally accepted accounting principles.

DineEquity, Inc. and Subsidiaries

Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)

 
 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2015

   

2014

   

2015

   

2014

Revenues:

             

Franchise and restaurant revenues

$

137,768

   

$

126,444

   

$

279,586

   

$

258,239

 

Rental revenues

31,132

   

30,709

   

62,534

   

61,462

 

Financing revenues

2,649

   

3,368

   

5,243

   

8,021

 

Total revenues

171,549

   

160,521

   

347,363

   

327,722

 

Cost of revenues:

             

Franchise and restaurant expenses

51,423

   

42,155

   

103,449

   

87,833

 

Rental expenses

23,319

   

23,653

   

46,809

   

47,519

 

Financing expenses

   

240

   

12

   

825

 

Total cost of revenues

74,742

   

66,048

   

150,270

   

136,177

 

Gross profit

96,807

   

94,473

   

197,093

   

191,545

 

General and administrative expenses

34,577

   

34,816

   

68,807

   

69,001

 

Interest expense

15,677

   

24,942

   

31,323

   

49,911

 

Amortization of intangible assets

2,500

   

3,070

   

5,000

   

6,141

 

Closure and impairment charges, net

475

   

637

   

2,302

   

837

 

Loss on extinguishment of debt

   

6

   

   

12

 

Loss (gain) on disposition of assets

66

   

(130)

   

57

   

797

 

Income before income tax provision

43,512

   

31,132

   

89,604

   

64,846

 

Income tax provision

(16,615)

   

(11,965)

   

(34,295)

   

(24,855)

 

Net income

$

26,897

   

$

19,167

   

$

55,309

   

$

39,991

 

Net income available to common stockholders:

             

Net income

$

26,897

   

$

19,167

   

$

55,309

   

$

39,991

 

Less: Net income allocated to unvested participating restricted stock

(359)

   

(307)

   

(726)

   

(649)

 

Net income available to common stockholders

$

26,538

   

$

18,860

   

$

54,583

   

$

39,342

 

Net income available to common stockholders per share:

             

Basic

$

1.41

   

$

1.00

   

$

2.90

   

$

2.09

 

Diluted

$

1.40

   

$

1.00

   

$

2.88

   

$

2.07

 

Weighted average shares outstanding:

             

Basic

18,763

   

18,776

   

18,819

   

18,785

 

Diluted

18,895

   

18,955

   

18,959

   

19,003

 
               

Dividends declared per common share

$

0.875

   

$

0.75

   

$

1.75

   

$

1.50

 

Dividends paid per common share

$

0.875

   

$

0.75

   

$

1.75

   

$

1.50

 

 

 

DineEquity, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

 
 

June 30,
 2015

 

December 31, 2014

 

(Unaudited)

   

Assets

     

Current assets:

     

Cash and cash equivalents

$

104,383

   

$

104,004

 

Receivables, net

107,807

   

153,498

 

Restricted cash

41,255

   

52,262

 

Prepaid gift card costs

41,559

   

51,268

 

Prepaid income taxes

1,278

   

11,753

 

Deferred income taxes

38,465

   

30,860

 

Other current assets

12,835

   

9,239

 

Total current assets

347,582

   

412,884

 

Long-term receivables, net

170,368

   

180,856

 

Property and equipment, net

231,124

   

241,229

 

Goodwill

697,470

   

697,470

 

Other intangible assets, net

777,425

   

782,336

 

Deferred rent receivable

90,917

   

91,117

 

Other non-current assets, net

40,972

   

42,216

 

Total assets

$

2,355,858

   

$

2,448,108

 
       

Liabilities and Stockholders' Equity

     

Current liabilities:

     

Accounts payable

$

39,162

   

$

41,771

 

Gift card liability

116,865

   

179,760

 

Accrued advertising

13,374

   

10,150

 

Accrued employee compensation and benefits

14,932

   

25,722

 

Dividends payable

16,546

   

16,635

 

Accrued interest payable

3,886

   

14,126

 

Current maturities of capital lease and financing obligations

15,291

   

14,852

 

Other accrued expenses

15,566

   

10,033

 

Total current liabilities

235,622

   

313,049

 

Long-term debt

1,300,000

   

1,300,000

 

Capital lease obligations, less current maturities

91,505

   

98,119

 

Financing obligations, less current maturities

42,461

   

42,524

 

Deferred income taxes

309,159

   

319,111

 

Deferred rent payable

74,874

   

75,375

 

Other non-current liabilities

21,365

   

20,857

 

Total liabilities

2,074,986

   

2,169,035

 

Commitments and contingencies

     

Stockholders' equity:

     

Common stock, $0.01 par value, shares: 40,000,000 authorized; June 30, 2015 - 25,212,715 issued, 18,873,985 outstanding; December 31, 2014 - 25,240,055 issued, 18,953,567 outstanding

252

   

252

 

Additional paid-in-capital

284,055

   

279,946

 

Retained earnings

335,750

   

313,644

 

Accumulated other comprehensive loss

(85)

   

(73)

 

Treasury stock, at cost; shares: June 30, 2015 - 6,338,730; December 31, 2014 - 6,286,488

(339,100)

   

(314,696)

 

Total stockholders' equity

280,872

   

279,073

 

Total liabilities and stockholders' equity

$

2,355,858

   

$

2,448,108

 

 

 

DineEquity, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 
 

Six Months Ended

 

June 30,

 

2015

    

2014

Cash flows from operating activities:

     

Net income

$

55,309

   

$

39,991

 

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

     

Depreciation and amortization

15,855

   

17,498

 

Non-cash interest expense

1,519

   

3,315

 

Deferred income taxes

(16,768)

   

(16,047)

 

Non-cash stock-based compensation expense

4,593

   

5,508

 

Tax benefit from stock-based compensation

4,688

   

3,578

 

Excess tax benefit from stock-based compensation

(4,572)

   

(4,455)

 

Closure and impairment charges

2,302

   

837

 

Loss on disposition of assets

57

   

797

 

Other

(1,534)

   

(1,704)

 

Changes in operating assets and liabilities:

     

Accounts receivable, net

(11,249)

   

(4,949)

 

Current income tax receivables and payables

9,717

   

16,004

 

Gift card receivables and payables

(3,256)

   

(4,165)

 

Prepaid expenses and other current assets

(2,299)

   

(1,608)

 

Accounts payable

6,024

   

10,103

 

Accrued employee compensation and benefits

(10,790)

   

(10,552)

 

Other current liabilities

(1,473)

   

1,841

 

Cash flows provided by operating activities

48,123

   

55,992

 

Cash flows from investing activities:

     

Additions to property and equipment

(4,612)

   

(4,086)

 

Proceeds from sale of property and equipment

800

   

681

 

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

9,517

   

6,066

 

Other

(110)

   

75

 

Cash flows provided by investing activities

5,595

   

2,736

 

Cash flows from financing activities:

     

Repayment of long-term debt

   

(2,400)

 

Principal payments on capital lease and financing obligations

(5,975)

   

(5,570)

 

Repurchase of DineEquity common stock

(35,007)

   

(30,006)

 

Dividends paid on common stock

(33,271)

   

(28,518)

 

Tax payments for restricted stock upon vesting

(3,010)

   

(1,944)

 

Proceeds from stock options exercised

8,374

   

6,658

 

Excess tax benefit from stock-based compensation

4,572

   

4,455

 

Change in restricted cash

11,007

   

(7,064)

 

Other

(29)

   

 

Cash flows used in financing activities

(53,339)

   

(64,389)

 

Net change in cash and cash equivalents

379

   

(5,661)

 

Cash and cash equivalents at beginning of period

104,004

   

106,011

 

Cash and cash equivalents at end of period

$

104,383

   

$

100,350

 

 

 

NON-GAAP FINANCIAL MEASURES

(In thousands, except per share amounts)

(Unaudited)

 

 

 

 

 

 

Reconciliation of net income available to common stockholders, as reported, to net income available to common stockholders, as adjusted to exclude: closure and impairment charges; loss on extinguishment of debt; amortization of intangible assets; non-cash interest expense; and gain or loss on disposition of assets, all items net of taxes, and related per share data:

 

 

 
 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2015

 

2014

 

2015

 

2014

Net income available to common stockholders, as reported

$

26,538

   

$

18,860

   

$

54,583

   

$

39,342

 

Closure and impairment charges

475

   

637

   

2,302

   

837

 

Loss on extinguishment of debt

   

6

   

   

12

 

Amortization of intangible assets

2,500

   

3,070

   

5,000

   

6,141

 

Non-cash interest expense

764

   

1,673

   

1,519

   

3,315

 

Loss (gain) on disposition of assets

66

   

(130)

   

57

   

797

 

Income tax provision

(1,446)

   

(1,997)

   

(3,373)

   

(4,219)

 

Net income allocated to unvested participating restricted stock

(30)

   

(55)

   

(73)

   

(116)

 

Net income available to common stockholders, as adjusted

$

28,867

   

$

22,064

   

$

60,015

   

$

46,109

 
               

Diluted net income available to common stockholders per share:

             

Net income available to common stockholders, as reported

$

1.40

   

$

1.00

   

$

2.88

   

$

2.07

 

Closure and impairment charges

0.02

   

0.02

   

0.08

   

0.02

 

Loss on extinguishment of debt

   

0.00

   

   

0.00

 

Amortization of intangible assets

0.08

   

0.10

   

0.16

   

0.20

 

Non-cash interest expense

0.03

   

0.06

   

0.05

   

0.11

 

Loss (gain) on disposition of assets

0.00

   

(0.01)

   

0.00

   

0.02

 

Net income allocated to unvested participating restricted stock

(0.00)

   

(0.00)

   

(0.00)

   

(0.00)

 

Rounding

   

(0.01)

   

   

0.01

 

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

$

1.53

   

$

1.16

   

$

3.17

   

$

2.43

 
               

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

$

28,867

   

$

22,064

   

$

60,015

   

$

46,109

 

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

1

   

1

   

3

   

3

 

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

$

28,868

   

$

22,065

   

$

60,018

   

$

46,112

 
               

Denominator for basic EPS-weighted-average shares

18,763

   

18,776

   

18,819

   

18,785

 

Dilutive effect of stock options

132

   

179

   

140

   

218

 

Denominator for diluted EPS-weighted-average shares and assumed conversions

18,895

   

18,955

   

18,959

   

19,003

 

 

DineEquity, Inc. and Subsidiaries

Non-GAAP Financial Measures

(Unaudited)

 

Reconciliation of the Company's cash provided by operating activities to "free cash flow" (cash provided by operating activities, plus net receipts from notes and equipment contracts receivable, less additions to property and equipment). We believe this information is helpful to investors to determine our cash available for general corporate purposes and for the return of cash to stockholders pursuant to our capital allocation strategy.

 

 

 
   

Six Months Ended

   

June 30,

   

2015

 

2014

   

(In millions)

Cash flows provided by operating activities

 

$

48.1

   

$

56.0

 

Net receipts from notes and equipment contracts receivable

 

6.2

   

2.7

 

Additions to property and equipment

 

(4.6)

   

(4.1)

 

Free cash flow

 

49.7

   

54.6

 

Dividends paid on common stock

 

(33.3)

   

(28.5)

 

Repurchase of DineEquity common stock

 

(35.0)

   

(30.0)

 
   

$

(18.6)

   

$

(3.9)

 

 

DineEquity, Inc. and Subsidiaries

Non-GAAP Financial Measures

(In thousands)

(Unaudited)

 

Reconciliation of U.S. GAAP gross profit to segment EBITDA:

 
 

Three months ended June 30, 2015

 

Franchise - Applebee's

 

Franchise - IHOP

 

Company Restaurants

 

Rental Operations

 

Financing Operations

 

Total

Revenue

$

49,920

   

$

70,361

   

$

17,487

   

$

31,132

   

$

2,649

   

$

171,549

 

Expense

1,730

   

32,338

   

17,355

   

23,319

   

   

74,742

 

Gross segment profit

48,190

   

38,023

   

132

   

7,813

   

2,649

   

96,807

 

Plus:

                     

Depreciation/amortization

2,588

   

   

184

   

3,196

   

   

5,968

 

Interest charges

   

   

98

   

3,374

   

   

3,472

 

Segment EBITDA

$

50,778

   

$

38,023

   

$

414

   

$

14,383

   

$

2,649

   

$

106,247

 
 
 

Three months ended June 30, 2014

 

Franchise - Applebee's

 

Franchise - IHOP

 

Company Restaurants

 

Rental Operations

 

Financing Operations

 

Total

Revenue

$

50,039

   

$

60,731

   

$

15,674

   

$

30,709

   

$

3,368

   

$

160,521

 

Expense

1,294

   

25,331

   

15,530

   

23,653

   

240

   

66,048

 

Gross segment profit

48,745

   

35,400

   

144

   

7,056

   

3,128

   

94,473

 

Plus:

                     

Depreciation/amortization

2,615

   

   

495

   

3,314

   

   

6,424

 

Interest charges

   

   

99

   

3,721

   

   

3,820

 

Segment EBITDA

$

51,360

   

$

35,400

   

$

738

   

$

14,091

   

$

3,128

   

$

104,717

 
 
 

Six months ended June 30, 2015

 

Franchise - Applebee's

 

Franchise - IHOP

 

Company Restaurants

 

Rental Operations

 

Financing Operations

 

Total

Revenue

$

102,351

   

$

142,472

   

$

34,763

   

$

62,534

   

$

5,243

   

$

347,363

 

Expense

3,326

   

66,259

   

33,864

   

46,809

   

12

   

150,270

 

Gross profit

99,025

   

76,213

   

899

   

15,725

   

5,231

   

197,093

 

Plus:

                     

Depreciation/amortization

5,180

   

   

373

   

6,420

   

   

11,973

 

Interest charges

   

   

197

   

6,875

   

   

7,072

 

Segment EBITDA

$

104,205

   

$

76,213

   

$

1,469

   

$

29,020

   

$

5,231

   

$

216,138

 
 
 

Six months ended June 30, 2014

 

Franchise - Applebee's

 

Franchise - IHOP

 

Company Restaurants

 

Rental Operations

 

Financing Operations

 

Total

Revenue

$

100,792

   

$

125,472

   

$

31,975

   

$

61,462

   

$

8,021

   

$

327,722

 

Expense

2,694

   

53,304

   

31,835

   

47,519

   

825

   

136,177

 

Gross profit

98,098

   

72,168

   

140

   

13,943

   

7,196

   

191,545

 

Plus:

                     

Depreciation/amortization

5,236

   

   

1,019

   

6,658

   

   

12,913

 

Interest charges

   

   

199

   

7,581

   

   

7,780

 

Segment EBITDA

$

103,334

   

$

72,168

   

$

1,358

   

$

28,182

   

$

7,196

   

$

212,238

 

 

Restaurant Data

 

The following table sets forth, for the three and six months ended June 30, 2015 and 2014, 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. 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 may be partially 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

 

Six Months Ended

   

June 30,

 

June 30,

 

2015

 

2014

 

2015

 

2014

 

(unaudited)

Applebee's Restaurant Data

             

Effective Restaurants(a)

             

Franchise

1,990

   

1,985

   

1,991

   

1,985

 

Company

23

   

23

   

23

   

23

 

Total

2,013

   

2,008

   

2,014

   

2,008

 
               

System-wide(b)

             

Sales percentage change(c)

2.0%

   

0.6%

   

2.9%

   

(0.1)%

 

Domestic same-restaurant sales percentage change(d)

1.0%

   

0.6%

   

2.0%

   

0.0%

 
               

Franchise(b)

             

Sales percentage change(c)

2.0%

   

0.6%

   

2.9%

   

(0.1)%

 

Domestic same-restaurant sales percentage change(d)

1.0%

   

0.6%

   

2.0%

   

0.1%

 

Average weekly domestic unit sales (in thousands)

$

48.9

   

$

48.2

   

$

50.0

   

$

48.8

 
                                 
                                 
 

Three Months Ended

 

Six Months Ended

   

June 30,

 

June 30,

 

2015

 

2014

 

2015

 

2014

 

(unaudited)

IHOP Restaurant Data

             

Effective Restaurants(a)

             

Franchise

1,471

   

1,448

   

1,471

   

1,444

 

Area license

167

   

167

   

167

   

167

 

Company

13

   

10

   

13

   

11

 

Total

1,651

   

1,625

   

1,651

   

1,622

 
               

System-wide(b)

             

Sales percentage change(c)

7.1%

   

6.0%

   

6.6%

   

6.2%

 

Domestic same-restaurant sales percentage change(d)

6.2%

   

3.2%

   

5.5%

   

3.6%

 
               

Franchise(b)

             

Sales percentage change(c)

6.8%

   

6.1%

   

6.4%

   

6.3%

 

Domestic same-restaurant sales percentage change(d)

6.2%

   

3.2%

   

5.5%

   

3.6%

 

Average weekly domestic unit sales (in thousands)

$

37.4

   

$

35.6

   

$

37.6

   

$

36.4

 
               

Area License (b)

             

Sales percentage change(c)

7.7%

   

5.8%

   

7.4%

   

6.9%

 

 

   

(a)   

"Effective Restaurants" are the weighted average number of restaurants open in a given fiscal period, adjusted to account for restaurants open for only a portion of the period. Information is presented for all Effective Restaurants in the Applebee's and IHOP systems, which includes restaurants owned by franchisees and area licensees as well as those owned by the Company.

   

(b)   

"System-wide" sales are retail sales at Applebee's restaurants operated by franchisees and IHOP restaurants operated by franchisees and area licensees, as reported to the Company, in addition to retail sales at company-operated restaurants.  Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company. Unaudited reported sales for Applebee's domestic franchise restaurants, IHOP franchise restaurants and IHOP area license restaurants for the three and six months ended June 30, 2015 and 2014 were as follows:

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2015

 

2014

 

2015

   

2014

 

(In millions)

Reported sales (unaudited)

                 

Applebee's domestic franchise restaurant sales

$

1,174.6

   

$

1,150.7

   

$

2,400.6

   

$

2,333.8

 

IHOP franchise restaurant sales

$

715.1

   

$

669.5

   

$

1,436.4

   

$

1,349.8

 

IHOP area license restaurant sales

$

69.8

   

$

64.8

   

$

144.8

   

$

134.9

 

 

   

(c)   

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

   

(d)   

"Domestic same-restaurant sales percentage change" reflects the percentage change in sales, in any given fiscal period, compared to the same weeks in the prior year for domestic restaurants that have been operated throughout both fiscal periods that are being compared and have been open for at least 18 months. Because of new unit openings and restaurant closures, the domestic restaurants open throughout both fiscal periods being compared may be different from period to period. Same-restaurant sales percentage change does not include data on IHOP area license restaurants located in Florida.

 

DineEquity, Inc. and Subsidiaries

Restaurant Data

(unaudited)

 

The following table summarizes our restaurant development activity:

 
 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2015

 

2014

 

2015

 

2014

Applebee's Restaurant Development Activity

         

Summary - beginning of period:

             

Franchise

1,991

   

1,988

   

1,994

   

1,988

 

Company restaurants

23

   

23

   

23

   

23

 

Total Applebee's restaurants, beginning of period

2,014

   

2,011

   

2,017

   

2,011

 

Franchise restaurants opened:

             

Domestic

6

   

5

   

10

   

13

 

International

2

   

1

   

4

   

1

 

Total franchise restaurants opened

8

   

6

   

14

   

14

 

Franchise restaurants closed:

             

Domestic

(4)

   

(5)

   

(8)

   

(10)

 

International

(2)

   

(3)

   

(7)

   

(6)

 

Total  franchise restaurants closed

(6)

   

(8)

   

(15)

   

(16)

 

Net franchise restaurant development (reduction)

2

   

(2)

   

(1)

   

(2)

 

Summary - end of period:

             

Franchise

1,993

   

1,986

   

1,993

   

1,986

 

Company restaurants

23

   

23

   

23

   

23

 

Total Applebee's restaurants, end of period

2,016

   

2,009

   

2,016

   

2,009

 

IHOP Restaurant Development Activity

             

Summary - beginning of period:

             

Franchise

1,470

   

1,449

   

1,472

   

1,439

 

Area license

167

   

168

   

167

   

168

 

Company

13

   

10

   

11

   

13

 

Total IHOP restaurants, beginning of period

1,650

   

1,627

   

1,650

   

1,620

 

Franchise/area license restaurants opened:

         

Domestic franchise

7

   

7

   

13

   

16

 

Domestic area license

1

   

1

   

2

   

2

 

International franchise

3

   

5

   

3

   

9

 

Total franchise/area license restaurants opened

11

   

13

   

18

   

27

 

Franchise/area license restaurants closed:

             

Domestic franchise

(1)

   

(6)

   

(7)

   

(11)

 

Domestic area license

(2)

   

(2)

   

(3)

   

(2)

 

International franchise

   

   

   

(1)

 

International area license

   

   

   

(1)

 

Total franchise/area license restaurants closed

(3)

   

(8)

   

(10)

   

(15)

 

       Net franchise/area license restaurant development

8

   

5

   

8

   

12

 

Refranchised from Company restaurants

   

1

   

1

   

4

 

Franchise restaurants reacquired by the Company

   

(1)

   

(3)

   

(1)

 

Net franchise/area license restaurant additions

8

   

5

   

6

   

15

 

Summary - end of period

             

Franchise

1,479

   

1,455

   

1,479

   

1,455

 

Area license

166

   

167

   

166

   

167

 

Company

13

   

10

   

13

   

10

 

Total IHOP restaurants, end of period

1,658

   

1,632

   

1,658

   

1,632

 

SOURCE DineEquity, Inc.

Contacts:

Ken Dipte
Investor Relations
DineEquity, Inc.
818-637-3632

Dan Goldstein
Media Relations
Sard Verbinnen & Co.
310-201-2040

Nazan Riahei
Media Relations
Sard Verbinnen & Co.
310-201-2040

###

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