Core Insights - Dine Brands aims to enhance sales in 2025 through value meals and effective advertising after a disappointing 2024 for Applebee's and IHOP [1] - The company reported a decline in same-store sales for both Applebee's (4.7%) and IHOP (2.8%) in the fourth quarter, marking four consecutive quarters of declines [1][2] - Dine Brands' stock has decreased by 50% over the past year, resulting in a market capitalization of $386 million [1] Company Performance - The downturn in 2024 followed three years of growth driven by post-pandemic demand, but a shift in consumer behavior led to reduced spending, particularly among those earning less than $75,000 [2] - The casual dining sector has faced significant challenges, with several chains, including Red Lobster and TGI Friday's, filing for bankruptcy [3] Competitive Landscape - Applebee's has struggled to stand out amid intense competition in the value segment, with promotions failing to resonate against similar offers from competitors [4][5] - Brinker International, owner of Chili's, reported a remarkable same-store sales growth of 27.4%, highlighting its successful marketing strategies [6] Marketing and Strategy - Applebee's current value promotion, the two for $25 deal, constitutes about 20% of its sales, with plans to introduce new value options targeting larger groups [7] - The company is focusing on improving its social media presence and relevance in the market [8] Leadership Changes - Dine Brands is seeking a new president for Applebee's to enhance marketing efforts and connect with younger customers, following the resignation of Tony Moralejo [9] - The company is also looking to leverage menu innovation to attract younger diners [9] Future Projections - For 2025, Dine Brands anticipates Applebee's same-store sales to decline by 2% to increase by 1%, while IHOP's sales are expected to decrease by 1% to increase by 2% [10]

For the quarter ended December 2024, Dine Brands (DIN) reported revenue of $204.77 million, down 0.7% over the same period last year. EPS came in at $0.87, compared to $1.40 in the year-ago quarter.The reported revenue represents a surprise of +1.75% over the Zacks Consensus Estimate of $201.25 million. With the consensus EPS estimate being $1.35, the EPS surprise was -35.56%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determin ...

Financial Data and Key Metrics Changes - Dine Brands Global, Inc. generated $106.4 million in adjusted free cash flow for fiscal 2024, an increase from $103.3 million in the previous year, indicating financial stability [11][53] - Adjusted EBITDA for the full year was $239.8 million, down from $256.4 million in 2023, with Q4 adjusted EBITDA at $50.1 million compared to $62.2 million in the same quarter last year [12][51] - Total revenues decreased by 0.7% to $204.8 million in Q4, with a full-year revenue of $812.3 million, reflecting negative comps and a decrease in rental revenues [49][50] Business Line Data and Key Metrics Changes - IHOP experienced a full-year comp sales decline of 2%, with Q4 comp sales at negative 2.8% [13] - Applebee's comp sales were negative 4.2% for the full year and negative 4.7% in Q4, contrasting with previous growth [13][55] - The company took back 47 Applebee's restaurants in November, which contributed to an increase in company restaurant sales [12][49] Market Data and Key Metrics Changes - The macroeconomic environment in 2024 significantly impacted consumer spending, particularly among guests with household incomes under $75,000, who represent about two-thirds of the customer base [14] - Average weekly sales for Applebee's were $52.3 thousand, while IHOP's were $37.7 thousand, with off-premise sales contributing significantly to both brands [56] Company Strategy and Development Direction - The company aims to enhance guest experience through improved operations, menu enhancements, and dynamic marketing strategies [15][16] - Dine Brands Global plans to remodel 30 Applebee's restaurants under the "Lookin' Good" program and convert five to a dual-brand concept [17][25] - The dual-brand concept is a key part of the development strategy, with positive initial results from the first U.S. dual-brand location in Seguin, Texas [41][43] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2024 performance did not meet expectations but expressed confidence in the ability to improve in 2025 through targeted investments and enhanced execution [15][19] - The company is optimistic about international growth potential, particularly in Canada, Mexico, and the Middle East, and plans to expand dual-brand locations [39][40] Other Important Information - The company has initiated a nationwide search for a new leader for Applebee's following the resignation of Tony Moralejo [9][10] - G&A expenses for Q4 were $52.3 million, up from $50.5 million in the same period last year, but full-year G&A expenses decreased to $196.7 million [51] Q&A Session Summary Question: Marketing strategy and underperformance - Management acknowledged that guests are seeking value, particularly all-in meal value, and noted progress from recent promotions [70][72] Question: Total value incidents and Applebee's plans - The total mix for Applebee's was about 27-28%, with plans to expand the everyday value platform targeting singles, pairs, and groups [78][80] Question: Franchisee confidence in turnaround plan - Franchisees remain committed to investing in their brands, with strong cooperation and alignment on plans for 2025 [88][90] Question: IHOP's food cost outlook - IHOP expects low to mid-single-digit inflation primarily driven by egg prices, with no surcharges implemented by franchisees [106][107] Question: Innovation in 2024 and plans for 2025 - Management highlighted successful innovations, including the dual-brand concept and new menu items, with more innovations planned for 2025 [111][115]

Financial Data and Key Metrics Changes - Dine Brands Global, Inc. generated $106.4 million in adjusted free cash flow for fiscal 2024, an increase from $103.3 million in the previous year, indicating financial stability [10][52] - Adjusted EBITDA for the full year was $239.8 million, down from $256.4 million in 2023, with Q4 adjusted EBITDA at $50.1 million compared to $62.2 million in Q4 2023 [11][50] - Total revenues decreased by 0.7% to $204.8 million in Q4, with full-year revenues at $812.3 million, reflecting negative comps and a decrease in rental revenues [48][49] Business Line Data and Key Metrics Changes - IHOP experienced a full-year comp sales decline of 2%, with Q4 comp sales at negative 2.8% [12] - Applebee's comp sales were negative 4.2% for the full year, with a decline of 4.7% in Q4 [12] - The company took back 47 Applebee's restaurants in November, which contributed to an increase in company restaurant sales [11][48] Market Data and Key Metrics Changes - The macroeconomic environment in 2024 significantly impacted consumer spending, particularly affecting guests with household incomes under $75,000, who represent about two-thirds of the customer base [13] - Average weekly sales for Applebee's in 2024 were $52.3 thousand, while IHOP's average weekly sales were $37.7 thousand [54][55] Company Strategy and Development Direction - The company aims to improve performance in 2025 by focusing on enhancing guest experience, improving operations, and refining menu offerings [15][18] - Dine Brands plans to remodel 30 Applebee's restaurants under the "Lookin' Good" program and convert five restaurants to a dual-brand concept [16][24] - The dual-brand concept is seen as a competitive advantage, with locations achieving 1.5% to 2x the revenue compared to single-brand restaurants [40][42] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2024 performance did not meet expectations but expressed confidence in the company's ability to achieve better results in 2025 [14][46] - The company is optimistic about international growth potential, particularly in Canada, Mexico, and the Middle East, and plans to expand dual-brand locations [38][39] Other Important Information - The company has initiated a nationwide search for a new leader for Applebee's following the resignation of Tony Moralejo [8][9] - In 2024, the company implemented projects resulting in over $50 million of annualized savings across the system [58] Q&A Session Summary Question: What is the primary source of the recent underperformance of your brands? - Management indicated that the focus is on value communication and that recent promotions like the "Really Big Meal Deal" and "House Faves" have shown progress in increasing traffic [70][72] Question: Can you provide more details on the value plans for Applebee's? - The company is building an everyday value platform that includes new offerings for groups and individuals, expected to roll out in late spring or early summer [80][81] Question: How confident are franchisees in the turnaround plan? - Franchisees are aligned with the company's plans for 2025, with strong interest in renovation incentives and new openings [88][90] Question: What is the outlook for IHOP's food costs, particularly regarding eggs? - IHOP expects low to mid-single-digit inflation primarily driven by egg prices, but franchisees have not implemented surcharges [105][106] Question: What innovations were implemented in 2024, and what is planned for 2025? - Innovations included the dual-brand concept and new menu items, with plans to enhance the loyalty program and marketing strategies in 2025 [110][114]

Core Insights - Dine Brands (DIN) reported quarterly earnings of $0.87 per share, missing the Zacks Consensus Estimate of $1.35 per share, representing a -35.56% earnings surprise [1] - The company posted revenues of $204.77 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 1.75%, but down from $206.3 million year-over-year [2] - Dine Brands shares have declined approximately 22% year-to-date, contrasting with the S&P 500's decline of -1.8% [3] Earnings Performance - Over the last four quarters, Dine Brands has exceeded consensus EPS estimates twice [2] - The current consensus EPS estimate for the upcoming quarter is $1.33, with projected revenues of $202.96 million, and for the current fiscal year, the estimate is $5.70 on revenues of $809.5 million [7] Market Outlook - The stock's immediate price movement will largely depend on management's commentary during the earnings call [3] - The Zacks Rank for Dine Brands is currently 3 (Hold), indicating expected performance in line with the market in the near future [6] - The Retail - Restaurants industry is currently in the top 28% of Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] Competitor Insights - Darden Restaurants (DRI), a competitor in the same industry, is expected to report quarterly earnings of $2.82 per share, reflecting a year-over-year increase of +7.6% [9] - Darden's anticipated revenues are $3.22 billion, representing an 8.2% increase from the previous year [10]

Revenue Generation and Franchise Operations - For the year ended December 31, 2024, approximately 83% of total revenues were generated from the two largest franchise operating segments, Applebee's and IHOP[15]. - The company generated revenue from four reporting segments, including franchise operations, rental operations, financing operations, and company restaurant operations[18]. - Approximately 89% of franchise segment revenue for the year ended December 31, 2024, consisted of royalties and advertising revenue from Applebee's, IHOP, and Fuzzy's[50]. - The Applebee's franchise agreements require domestic franchisees to contribute 3.25% of gross sales to a national advertising fund, which can be increased to a maximum of 5%[42]. - IHOP franchise agreements generally require a local advertising fee of 2.0% and a national advertising fee of 1.0% of weekly gross sales[43]. - The company derives a substantial portion of revenues from royalties based on gross sales of franchised restaurants, which may be negatively impacted by various external factors[162]. Restaurant Operations and Development - As of December 31, 2024, the company operated 3,555 restaurants across all brands, with 97.1% of Applebee's restaurants being franchisee-owned[23]. - As of December 31, 2024, there were 1,567 Applebee's franchised restaurants, 1,824 IHOP franchised and area licensed restaurants, and 116 Fuzzy's franchised restaurants[18]. - The company has signed commitments from IHOP franchisees to build 285 new restaurants over the next six years, including 179 under international development agreements[54]. - The company will continue to evaluate the addition of new brands to its restaurant portfolio through acquisitions and strategic investments[17]. - The company operates 1,454 Applebee's and 1,548 IHOP restaurants in the United States, with a total of 3,312 domestic restaurants[185]. - The international presence includes 243 restaurants across various countries, with 113 in Canada and 92 in Mexico[186]. Financial Performance and Stockholder Returns - The company reported net income of $64.9 million, or $4.22 per diluted share, in 2024, down from $97.2 million, or $6.22 per diluted share, in 2023, primarily due to lower gross profit[208]. - Approximately $43.4 million was returned to stockholders, including $31.3 million in cash dividends and $12.1 million in stock repurchases[208]. - The effective tax rate for 2024 was 27.5%, differing from the statutory Federal income tax rate of 21% due to state and local taxes[212]. - The combined system-wide sales of all brands declined to $8.0 billion, a 3.9% decrease compared to 2023[208]. Operational Challenges and Risks - The company experienced a cumulative inflation of over 20% since 2020, negatively impacting consumers' discretionary income and dining out expenditures[96]. - The company faces rising costs for commodities, labor, and healthcare, which have been exacerbated during fiscal 2024[97]. - The company is subject to various federal and state regulations regarding franchising, labor laws, and food safety, which could impact operations[76][81][83]. - The company is facing an increasing number of lawsuits, including employment-related claims, which could divert significant operational resources and harm business results[117]. - The company may experience shortages or interruptions in the supply of food and other products, which could limit operational capabilities and affect revenue[167]. Technology and Cybersecurity - The company emphasizes the importance of technology in operations, including point of sale systems and inventory management, to support corporate operations and mitigate risks[73]. - The company maintains a focus on cybersecurity, conducting annual audits and implementing encryption technologies to protect financial and personal information[74]. - The cybersecurity risk management program is integrated into the broader Enterprise Risk Management program, with regular assessments conducted throughout the year[182]. - The Chief Information Security Officer (CISO) leads the cybersecurity team and has 30 years of experience in the field[182]. Workforce and Diversity - The company employed 992 individuals, with 396 in company restaurants and 596 in corporate roles[91]. - The company has a diverse workforce, with 59% of corporate employees being male and 41% female, and 54% being white while 46% are people of color[91]. - The company has established Team Member Resource Groups to promote diversity and inclusion within its workforce[89]. - The company is committed to a comprehensive Total Rewards Program to ensure the health and well-being of its team members[86]. Legal and Regulatory Environment - The company is subject to extensive governmental regulations, and any failure to comply could result in losses and harm to its brands[126]. - Changes in U.S. government regulations and trade policies could materially impact the company's operations and financial condition[132]. - Franchise agreements require franchisees to defend and indemnify the company, but claims against franchisees may reduce their ability to make payments[119]. Market and Economic Conditions - Future epidemics or public health emergencies could disrupt operations, affecting sales, staffing, and overall financial results[146]. - Actual operating and financial results may differ from public guidance due to various uncertainties and risks[145]. - The company is subject to reputational risks if franchisees do not adhere to quality and trademark usage standards, which could adversely affect brand goodwill[159].

Revenue Performance - Total revenues for Q4 2024 were $204.8 million, a decrease from $206.3 million in Q4 2023, primarily due to lower franchise revenues[6] - Total revenues for the three months ended December 31, 2024, were $204.77 million, a slight decrease of 0.8% compared to $206.30 million in the same period of 2023[19] - The total system-wide sales for all brands decreased to $1,944.4 million in Q4 2024 from $2,046.2 million in Q4 2023, a decline of 5.0%[35] Comparable Sales - Applebee's domestic comparable same-restaurant sales declined by 4.7% year-over-year in Q4 2024, while IHOP's comparable sales declined by 2.8%[3] - For 2025, Applebee's comparable same-restaurant sales are expected to range between negative 2% and positive 1%, while IHOP's is expected to range between negative 1% and positive 2%[13] - Domestic same-restaurant sales for Applebee's decreased by 4.7% in Q4 2024 compared to a decrease of 0.5% in Q4 2023[35] Net Income and Earnings - GAAP net income available to common stockholders for 2024 was $63.0 million, or $4.22 per diluted share, down from $94.9 million, or $6.22 per diluted share in 2023[8] - Adjusted net income available to common stockholders for 2024 was $79.8 million, or adjusted earnings per diluted share of $5.34, compared to $101.4 million, or $6.65 per diluted share in 2023[8] - Net income for the twelve months ended December 31, 2024, was $64.89 million, down 33.0% from $97.18 million in 2023[19] - Basic net income available to common stockholders per share for the twelve months ended December 31, 2024, was $4.22, down from $6.23 in 2023[19] Cash Flow and Expenses - The company had adjusted free cash flow of $106.4 million for 2024, compared to $103.3 million in 2023[8] - Cash flows provided by operating activities for the twelve months ended December 31, 2024, were $108.16 million, down from $131.14 million in 2023[23] - Cash flows provided by operating activities for the twelve months ended December 31, 2024, were $108,160 thousand, a decrease from $131,140 thousand in 2023[28] Restaurant Operations - Development activity resulted in 65 new restaurant openings and the closure of 83 restaurants in 2024[8] - Total Applebee's restaurants at the end of Q4 2024 were 1,614, down from 1,642 at the end of Q4 2023, reflecting a net reduction of 28 restaurants over the year[39] - IHOP's total restaurants increased to 1,824 at the end of Q4 2024, up from 1,814 at the end of Q4 2023, indicating a net increase of 10 restaurants[39] Franchise Sales - Applebee's franchise restaurant sales decreased to $1,011.6 million in Q4 2024 from $1,088.6 million in Q4 2023, a decline of 7.1%[35] - IHOP franchise restaurant sales were $812.9 million in Q4 2024, down from $832.4 million in Q4 2023, representing a decrease of 2.7%[35] - Fuzzy's franchise restaurant sales fell to $39.0 million in Q4 2024 from $47.7 million in Q4 2023, a decline of 18.1%[35] Assets and Liabilities - Total current assets rose to $385.99 million as of December 31, 2024, compared to $357.78 million in 2023, reflecting a 7.9% increase[21] - Total liabilities increased to $2.01 billion in 2024 from $1.99 billion in 2023, marking a growth of 1.4%[21] - The company’s total assets increased to $1.79 billion in 2024 from $1.74 billion in 2023, representing a growth of 2.0%[21] Charges and Costs - The company incurred closure and impairment charges of $9.24 million for the twelve months ended December 31, 2024, compared to $3.59 million in 2023, indicating increased restructuring efforts[19] - The company reported closure and impairment charges of $7,798 thousand for the three months ended December 31, 2024, compared to $506 thousand in the same period of 2023[31] - The company incurred merger and acquisition costs of $804 thousand for the twelve months ended December 31, 2023[31] Sales Performance Metrics - Average weekly domestic unit sales for Applebee's were $51.0 thousand in Q4 2024, down from $52.6 thousand in Q4 2023[34] - Average weekly unit sales for IHOP were $37.9 thousand in Q4 2024, a decrease from $39.1 thousand in Q4 2023[34] - Company restaurant sales increased significantly to $8.42 million in Q4 2024 from $0.29 million in Q4 2023[19] Future Projections - G&A expenses for 2025 are expected to range between approximately $200 million and $205 million[13] - Capital expenditures for 2025 are expected to range between approximately $20 million and $30 million[13]

Core Viewpoint - Dine Brands (DIN) is positioned well to continue its trend of beating earnings estimates, making it a stock worth considering for investors [1]. Earnings Performance - Dine Brands has a strong history of surpassing earnings estimates, averaging a 5.95% beat over the last two quarters [2]. - In the most recent quarter, Dine Brands reported earnings of $1.44 per share, exceeding the expected $1.33 by 8.27%. The previous quarter also saw a beat, with actual earnings of $1.71 per share against an estimate of $1.65, resulting in a 3.64% surprise [3]. Earnings Estimates and Predictions - There has been a favorable change in earnings estimates for Dine Brands, supported by a positive Zacks Earnings ESP (Expected Surprise Prediction), indicating a strong likelihood of another earnings beat [4]. - Stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have historically produced positive surprises nearly 70% of the time, suggesting a high probability of Dine Brands beating estimates again [5]. Earnings ESP Metric - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions [6]. - Dine Brands currently has an Earnings ESP of +1.92%, indicating recent bullish sentiment among analysts regarding the company's earnings prospects [7]. Importance of Earnings ESP - A negative Earnings ESP can reduce predictive power but does not necessarily indicate an earnings miss, as many companies can still beat consensus estimates [8]. - Checking a company's Earnings ESP before quarterly releases is crucial for increasing the odds of successful investment decisions [9].

Group 1 - The article discusses the strategy of paying a premium for quality stocks that are profitable and growing, which is generally considered a winning approach [1] - It highlights that growth stocks can sometimes become excessively expensive, leading to potential market distortions [1] - The author emphasizes a fundamental analysis approach, focusing on numerical data and maintaining skepticism towards company-reported pro-forma figures [1] Group 2 - The author has a beneficial long position in the shares of DIN, indicating a personal investment interest in the stock [2] - The article expresses the author's own opinions and is not influenced by compensation from any company mentioned [2] - There is a disclaimer that past performance does not guarantee future results, and no specific investment advice is provided [3]

Group 1 - Dine Brands (NYSE: DIN) shares have declined over 40% from their 52-week high due to softness in the casual dining sector [1] - The company's Applebee's business faced challenges in 2024, reporting negative comparable sales [1]