Core Insights - Dine Brands (DIN) reported quarterly earnings of $1.71 per share, exceeding the Zacks Consensus Estimate of $1.65 per share, but down from $1.82 per share a year ago, indicating an earnings surprise of 3.64% [1] - The company posted revenues of $206.27 million for the quarter ended June 2024, missing the Zacks Consensus Estimate by 2.20% and down from $208.42 million year-over-year [2] - Dine Brands shares have declined approximately 35.7% year-to-date, contrasting with the S&P 500's gain of 9.9% [3] Earnings Outlook - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the next quarter is $1.56 on revenues of $206.97 million, and for the current fiscal year, it is $6.16 on revenues of $835.27 million [7] Industry Context - The Retail - Restaurants industry, to which Dine Brands belongs, is currently ranked in the bottom 27% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Dine Brands' stock performance [5] Estimate Revisions - Ahead of the earnings release, the estimate revisions trend for Dine Brands was unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Unaudited consolidated financial statements for Q2 and H1 2024, including Balance Sheets, Income, Stockholders' Deficit, Cash Flows, and detailed notes, are presented [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to **$1.69 billion**, liabilities to **$1.93 billion**, and stockholders' deficit improved to **$(231.7) million** by June 30, 2024 Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2024 (Unaudited) | December 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | **$1,693,502** | **$1,740,287** | | Cash and cash equivalents | $153,534 | $146,034 | | Goodwill | $254,062 | $254,062 | | **Total Liabilities** | **$1,925,204** | **$1,991,261** | | Long-term debt, net | $1,085,510 | $1,084,502 | | **Total Stockholders' Deficit** | **$(231,702)** | **$(250,974)** | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Q2 2024 revenues slightly decreased to **$206.3 million** while net income rose to **$23.2 million**; H1 2024 revenues and net income declined Key Income Statement Data (in thousands, except per share data) | Metric | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $206,267 | $208,415 | $412,502 | $422,182 | | Gross Profit | $99,271 | $97,342 | $196,695 | $200,958 | | Net Income | $23,182 | $18,248 | $40,655 | $45,658 | | Diluted EPS | $1.50 | $1.16 | $2.64 | $2.91 | [Consolidated Statements of Stockholders' Deficit](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Deficit) Stockholders' deficit improved to **$(231.7) million** by June 30, 2024, driven by net income, offset by share repurchases and dividends - During the first six months of 2024, the company purchased **269,621 shares** of its common stock for **$12.0 million**[12](index=12&type=chunk) - The company paid dividends on common stock totaling **$15.7 million** during the first six months of 2024[12](index=12&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased to **$52.2 million** in H1 2024, with total cash, cash equivalents, and restricted cash rising by **$17.8 million** Cash Flow Summary - Six Months Ended June 30 (in thousands) | Cash Flow Category | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $52,179 | $42,684 | | Net cash used in investing activities | $(1,072) | $(16,572) | | Net cash used in financing activities | $(33,308) | $(194,278) | | **Net change in cash, cash equivalents and restricted cash** | **$17,799** | **$(168,166)** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed notes explain accounting policies and financial figures, covering revenue, debt, equity, segments, and fair value measurements - The company's four reportable segments are: franchise operations, company-operated restaurant operations, rental operations, and financing operations[70](index=70&type=chunk) - The company's long-term debt is subject to covenants, including a Debt Service Coverage Ratio (DSCR) of approximately **3.5x** as of June 30, 2024, well above the **1.75x** trigger[51](index=51&type=chunk) - As of June 30, 2024, **$133.3 million** remained available for repurchases under the **$250 million** stock repurchase program authorized in February 2022[60](index=60&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=28&type=section&id=Item%202%E2%80%94Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses H1 2024 financial performance, key business drivers, and liquidity, highlighting mixed brand results, income decline, and improved adjusted free cash flow [Overview and Key Financial Results](index=28&type=section&id=Overview%20and%20Key%20Financial%20Results) Dine Brands operates nearly **3,600** restaurants globally; H1 2024 income before taxes decreased by **$5.3 million** due to lower gross profit and higher interest expense - The company is one of the largest full-service restaurant companies in the world with close to **3,600** restaurants under the Applebee's, IHOP, and Fuzzy's Taco Shop brands[87](index=87&type=chunk) Change in Income Before Income Taxes - H1 2024 vs H1 2023 (in millions) | Component | Variance | | :--- | :--- | | Decrease in gross profit | $(4.3) | | Increase in G&A expenses | $(0.1) | | Increase in interest expense, net | $(3.4) | | Favorable change in loss on disposition of assets | $2.2 | | **Total decrease in income before income taxes** | **$(5.3)** | [Key Performance Indicators and Restaurant Data](index=29&type=section&id=Key%20Performance%20Indicators%20and%20Restaurant%20Data) H1 2024 saw negative domestic same-restaurant sales across all brands and net restaurant count reductions, with off-premise sales remaining significant Domestic Same-Restaurant Sales % Change - H1 2024 vs H1 2023 | Brand | H1 2024 % Change | | :--- | :--- | | Applebee's | (3.2)% | | IHOP | (1.5)% | | Fuzzy's | (8.6)% | Net Restaurant Development - H1 2024 | Brand | Net Change | | :--- | :--- | | Applebee's | (17) | | IHOP | (3) | | Fuzzy's | (7) | - For H1 2024, off-premise sales mix was **21.8%** for Applebee's, **20.4%** for IHOP, and **40.1%** for Fuzzy's[96](index=96&type=chunk)[98](index=98&type=chunk)[100](index=100&type=chunk) [Consolidated Results of Operations](index=35&type=section&id=Consolidated%20Results%20of%20Operations) H1 2024 total revenue decreased to **$412.5 million** and gross profit to **$196.7 million**, driven by lower franchise and rental revenues and higher net interest expense Franchise Gross Profit - H1 2024 vs H1 2023 (in millions) | Brand | H1 2024 | H1 2023 | Variance | | :--- | :--- | :--- | :--- | | Applebee's | $86.4 | $87.3 | $(0.9) | | IHOP | $91.0 | $88.2 | $2.8 | | Fuzzy's | $3.5 | $6.8 | $(3.3) | | **Total** | **$180.9** | **$182.3** | **$(1.4)** | - G&A expenses for H1 2024 were **$99.0 million**, a marginal **0.1%** increase from the prior year, primarily due to higher stock-based compensation and severance, offset by the stopping of the IHOP Flip'd initiative[121](index=121&type=chunk) - Net interest expense for H1 2024 increased by **$3.4 million** to **$35.9 million**, driven by higher interest rates on refinanced securitized notes and the Credit Facility[122](index=122&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains liquidity with **$223.1 million** available on its credit facility, a **4.2x** leverage ratio, and improved adjusted free cash flow of **$52.9 million** in H1 2024 - As of June 30, 2024, the company had **$223.1 million** available for borrowing under its **$325 million** Credit Facility[129](index=129&type=chunk) - The company's leverage ratio was approximately **4.2x** as of June 30, 2024, below the **5.25x** threshold for mandatory principal payments on Class A-2 Notes[126](index=126&type=chunk) Adjusted Free Cash Flow Reconciliation (in millions) | Component | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Cash flows provided by operating activities | $52.2 | $42.7 | | Principal receipts from notes and equipment contracts | $7.5 | $4.2 | | Additions to property and equipment | $(6.8) | $(22.8) | | **Adjusted free cash flow** | **$52.9** | **$24.1** | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=42&type=section&id=Item%203%E2%80%94Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) No material changes occurred in market risk disclosures from the Annual Report on Form 10-K for the fiscal year ended December 31, 2023 - There were no material changes from the market risk information contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2023[143](index=143&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204%E2%80%94Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2024, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the Company's disclosure controls and procedures are effective at the reasonable assurance level as of the end of the reporting period[145](index=145&type=chunk) - No changes in internal control over financial reporting occurred during the fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal controls[146](index=146&type=chunk) [PART II. OTHER INFORMATION](index=44&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=44&type=section&id=Item%201%E2%80%94Legal%20Proceedings) The company is involved in various ordinary course legal proceedings, none of which are expected to have a material adverse impact - The Company is subject to various lawsuits and claims in the ordinary course of business but does not presently believe any will have a material adverse impact[148](index=148&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A%E2%80%94Risk%20Factors) No material changes occurred in the risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2023 - There are no material changes from the risk factors set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023[149](index=149&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202%E2%80%94Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details of Q2 2024 stock repurchase activity, with **141,142 shares** repurchased and **$133.3 million** remaining under authorization Share Repurchases - Q2 2024 | Period | Total Shares Purchased (Public Plan) | Average Price Paid | | :--- | :--- | :--- | | Apr 1 - Apr 28, 2024 | 44,519 | $44.89 | | Apr 29 - May 26, 2024 | 45,409 | $44.05 | | May 27 - Jun 30, 2024 | 51,214 | $39.03 | | **Total Q2 2024** | **141,142** | **-** | - As of June 30, 2024, approximately **$133,266,000** remained available for future share repurchases under the publicly announced plan[149](index=149&type=chunk) [Item 5. Other Information](index=44&type=section&id=Item%205%E2%80%94Other%20Information) No directors or executive officers adopted, modified, or terminated Rule 10b5-1 or other trading plans during Q2 2024 - During the fiscal quarter ended June 30, 2024, no directors or officers adopted, modified, or terminated a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement[151](index=151&type=chunk) [Item 6. Exhibits](index=45&type=section&id=Item%206%E2%80%94Exhibits) Exhibits filed with Form 10-Q include CEO and CFO certifications and Inline XBRL documents - Exhibits filed include certifications from the Chief Executive Officer and Chief Financial Officer, as well as Inline XBRL documents[153](index=153&type=chunk)

Financial Performance - Total revenues for Q2 2024 were $206.3 million, a decrease from $208.4 million in Q2 2023, primarily due to negative comparable same-restaurant sales growth at Applebee's and IHOP[3]. - GAAP net income for Q2 2024 was $22.5 million, or $1.50 per diluted share, compared to $17.8 million, or $1.16 per diluted share in Q2 2023[4]. - Adjusted net income for Q2 2024 was $25.6 million, or $1.71 per diluted share, down from $27.8 million, or $1.82 per diluted share in Q2 2023[5]. - Consolidated adjusted EBITDA for Q2 2024 was $67.0 million, slightly down from $67.3 million in Q2 2023[5]. - For the first six months of 2024, total revenues were $412.5 million, compared to $422.2 million in the same period of 2023[6]. - Adjusted free cash flow for the first six months of 2024 was $52.9 million, significantly up from $24.1 million in the first half of 2023[8]. - Net income for the six months ended June 30, 2024, was $39,449,000, compared to $44,533,000 for the same period in 2023, reflecting a decrease of approximately 11.7%[19]. - Adjusted EBITDA for the six months ended June 30, 2024, was $127.790 million, compared to $133.685 million in the prior year, reflecting a decrease of 4.4%[23]. Sales Performance - Applebee's domestic comparable same-restaurant sales declined by 1.8% year-over-year in Q2 2024, while IHOP's comparable sales declined by 1.4%[2][3]. - Applebee's domestic same-restaurant sales percentage change for the three months ended June 30, 2024, was (1.8)%, compared to (1.0)% in the same period last year[25]. - IHOP's domestic same-restaurant sales percentage change for the three months ended June 30, 2024, was (1.4)%, down from 2.1% in the prior year[25]. - Fuzzy's domestic same-restaurant sales percentage change for the three months ended June 30, 2024, was (7.5)%, compared to (4.0)% in the same period last year[26]. - Total reported sales for Applebee's franchise restaurants for the three months ended June 30, 2024, was $1,066.4 million, a decrease from $1,099.3 million in the prior year[27]. - Total reported sales for IHOP franchise restaurants for the three months ended June 30, 2024, was $822.0 million, slightly down from $822.7 million in the same period last year[27]. Cash and Assets - As of June 30, 2024, total cash and cash equivalents were approximately $218.4 million, with $153.5 million being unrestricted cash[8]. - The company reported a gross profit of $99,271 for the three months ended June 30, 2024, up from $97,342 in the same period last year, indicating a gross margin improvement[15]. - The company’s cash and cash equivalents increased to $153,534 as of June 30, 2024, compared to $146,034 at the end of 2023[16]. - Cash, cash equivalents, and restricted cash at the end of the period increased to $218,391,000 in 2024 from $156,818,000 in 2023, an increase of approximately 39.2%[17]. - The company reported a net change in cash of $17,799,000 for the six months ended June 30, 2024, compared to a net decrease of $168,166,000 in 2023, indicating a significant turnaround[17]. Liabilities and Equity - Total current assets decreased to $319,602 as of June 30, 2024, down from $357,778 at the end of 2023, primarily due to a reduction in receivables[16]. - Total liabilities decreased to $1,925,204 as of June 30, 2024, from $1,991,261 at the end of 2023, reflecting improved financial health[16]. - The gift card liability decreased to $142,206 as of June 30, 2024, down from $175,640 at the end of 2023, indicating improved cash flow management[16]. - Basic and diluted net income available to common stockholders per share for the three months ended June 30, 2024, was $1.50, up from $1.16 in the same period of 2023[15]. - The company paid dividends of $15,707,000 on common stock during the first half of 2024, slightly down from $15,970,000 in 2023, a decrease of about 1.6%[21]. Franchise Operations - The company revised its fiscal year 2024 guidance, expecting Applebee's same-restaurant sales to decline between 4% and 2%, and IHOP's to decline between 2% and 0%[10]. - The number of effective Applebee's restaurants decreased to 1,627 in the three months ended June 30, 2024, from 1,662 in the same period last year[25]. - Applebee's franchise restaurants decreased by 11 in Q2 2024, totaling 1,625 at the end of the period, compared to 1,661 in Q2 2023, reflecting a reduction of 2.2%[28]. - IHOP franchise and area license restaurants increased by 2 in Q2 2024, totaling 1,811 at the end of the period, compared to 1,790 in Q2 2023, representing an increase of 1.2%[29]. - Total franchise restaurants opened for Applebee's in Q2 2024 was 3, compared to 2 in Q2 2023, indicating a growth of 50%[28]. - Total franchise/area license restaurants opened for IHOP in the first half of 2024 was 20, down from 30 in the same period of 2023, a decrease of 33.3%[29]. - The total number of IHOP restaurants increased by 21 in the first half of 2024, with 124 international locations at the end of the period, compared to 109 in the previous year, an increase of 13.8%[28]. - The total number of franchise restaurants permanently closed for IHOP in the first half of 2024 was 23, compared to 21 in the same period of 2023, reflecting an increase of 9.5%[29].

Core Viewpoint - The upcoming earnings report for Dine Brands is anticipated to show a year-over-year decline in earnings despite higher revenues, with analysts becoming bearish on the company's earnings prospects [17][19]. Group 1: Earnings Expectations - Dine Brands is expected to report quarterly earnings of $1.65 per share, reflecting a year-over-year change of -9.3% [18]. - Revenues are projected to be $210.9 million, which is an increase of 1.2% from the same quarter last year [10]. - The consensus EPS estimate has been revised 0.51% lower over the last 30 days, indicating a reassessment by analysts [19]. Group 2: Earnings Surprise Prediction - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate being a more recent version [12]. - Dine Brands currently has a negative Earnings ESP of -9.31%, making it difficult to predict a positive earnings surprise [22]. - The company has a Zacks Rank of 5 (Strong Sell), further complicating the prediction of beating the consensus EPS estimate [14][27]. Group 3: Historical Performance - Over the last four quarters, Dine Brands has beaten consensus EPS estimates three times, indicating some potential for positive surprises [24]. - However, the stock may still move lower even with an earnings beat due to other disappointing factors [25]. - The historical performance of earnings surprises should be considered when gauging future expectations [23].

Core Viewpoint - The restaurant industry is facing challenges due to inflation and a slowing economy, but certain stocks near their 52-week lows present compelling investment opportunities as they are expected to recover in the coming months [1] Group 1: Portillo's (PTLO) - Portillo's is a small restaurant chain specializing in Chicago-style foods, with the stock down nearly 50% over the past year, presenting a value opportunity despite reasonable revenue growth [4] - The company is expanding aggressively into fast-growing states like Texas, Florida, and Arizona, which could transform it from a regional player to a nationwide brand [15] - Analysts have labeled Portillo's as a consensus strong buy in the restaurant sector [4] Group 2: Dine Brands (DIN) - Dine Brands operates several restaurant concepts, including Applebee's and IHOP, and has seen its stock fall 35% over the past year, with revenue expected to increase by about 1% this year [10] - The company operates primarily through a franchising model, which mitigates economic volatility as franchise operators bear the brunt of economic fluctuations [17] - Dine Brands is considered a deep value stock, trading at just 6 times forward earnings compared to peers like Brinker International, which trades at 18 times forward earnings despite similar revenue growth [18] Group 3: Yum China (YUMC) - Yum China operates KFC, Pizza Hut, and Taco Bell in China and has faced challenges due to the broader economic slump in the country, with its stock down by half from its 2023 peak [12] - The company reported record-high revenues of $11 billion in 2023, with expectations to reach $11.7 billion this year, and earnings per share are projected to grow by 9% this year [13] - Shares are trading at 15 times forward earnings, indicating potential for significant growth once the Chinese economy recovers [13]

photobyphm/iStock Editorial via Getty Images My Rating History on DIN (Seeking Alpha) Underneath the weak financials, same-restaurant sales are performing poorly, as Applebed's showed -5.9% a year-over-year performance in the quarter. IHOP's same- restaurant sales declined by -1.7%. Fuzzy's, representing a minimal part of total revenues, had the worst performance at -9.8%. The weaker foot traffic ultimately had an impact on profitability, as the operating margin declined from 23.3% to 20.5%. The 2024 financ ...

With the market continuing to generally rise above a wall of worries, the concept of bargain stocks to buy might seem sadly irrelevant. However, with so many opportunities available, it's not possible to provide equal coverage to every company. In other words, some ideas will slip through the cracks. For those who have procrastinated on this bull run, that's good news. While Wall Street has certainly ogled heavily hyped names, there are ideas that haven't quite grabbed the spotlight. Nevertheless, they dese ...

Applebee’s $1 margaritas and boneless wings have proven to be a sweet and satisfying deal for consumers as they chase promotional offers and value, according to Dine Brands CEO John Peyton. Dine Brands, a parent company that oversees some of the country’s popular eateries, has crafted irresistible promotions that are helping its restaurants navigate the money-conscious consumer in today’s economy. "The consumer sent a message this past quarter. It was a tough quarter for us, and it was a tough quarter for t ...

Smithtown, NY, May 08, 2024 (GLOBE NEWSWIRE) -- Note to editors: this press release updates the headline and opening paragraph of the prior version to clarify that the Military Appreciation Month coupon booklet campaign is available exclusively at all 19 Long Island IHOP restaurants. America's VetDogs, a national nonprofit that provides service dogs to veterans, active-duty service members, and first responders with disabilities, announced a new partnership with the Long Island IHOP® restaurants to celebrat ...

Dine Brands Global, Inc. (NYSE:DIN) Q1 2024 Results Conference Call May 8, 2024 9:00 AM ET Company Participants Matt Lee - SVP, Finance and IR John Peyton - CEO Vance Chang - CFO Tony Moralejo - President, Applebee's Jay Johns - President, IHOP Conference Call Participants Eric Gonzalez - KeyBanc Nick Setyan - Wedbush Dennis Geiger - UBS Todd Brooks - The Benchmark Company Brian Vaccaro - Raymond James Operator Good day, and thank you for standing by. Welcome to the Dine Brands First Quarter Earnings Confer ...