Dine Brands(DIN) - 2025 Q1 - Quarterly Results

First Quarter 2025 Results Management Commentary Management acknowledges a challenging operating environment due to consumer price sensitivity but notes that the business fundamentals remain strong. They report steady improvement in sales, traffic, and development since the latter half of the quarter. The company is focused on enhancing guest experience, strengthening menus and value, and driving clearer marketing messages. The asset-light business model continues to generate solid cash flow, enabling investments and shareholder returns - The company is advancing its long-term strategy by focusing on near-term priorities: enhancing guest experience, strengthening menu and value platforms, and improving value messaging through marketing[3] - Despite consumer price sensitivity, the company's asset-light business model remains steady, providing solid cash flow for brand investment and shareholder capital returns[3] First Quarter 2025 Performance Summary In Q1 2025, total revenues increased to $214.8 million, primarily due to the acquisition of 47 Applebee's restaurants, which offset a decrease in franchise revenues. However, both GAAP and adjusted net income declined compared to Q1 2024, mainly due to lower segment profit and higher closure charges. Cash flow from operations also decreased significantly. Both Applebee's and IHOP experienced declines in domestic comparable same-restaurant sales Q1 2025 Key Financial Highlights (vs. Q1 2024) | Financial Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $214.8M | $206.2M | +4.2% | | G&A Expenses | $51.3M | $52.2M | -1.7% | | GAAP Net Income | $7.8M | $17.0M | -54.1% | | GAAP Diluted EPS | $0.53 | $1.13 | -53.1% | | Adjusted Net Income | $15.4M | $19.9M | -22.6% | | Adjusted Diluted EPS | $1.03 | $1.33 | -22.6% | | Consolidated Adjusted EBITDA | $54.7M | $60.8M | -10.0% | | Cash Flow from Operations | $16.1M | $30.6M | -47.4% | | Adjusted Free Cash Flow | $14.6M | $29.7M | -50.8% | Q1 2025 Domestic Same-Restaurant Sales | Brand | Same-Restaurant Sales (YoY) | Off-Premise Sales Mix | | :--- | :--- | :--- | | Applebee's | -2.2% | 23.5% | | IHOP | -2.7% | 21.2% | - Development activity in Q1 2025 resulted in 9 new restaurant openings and 39 closures across Applebee's and IHOP[7] - As of March 31, 2025, the company held total cash, cash equivalents, and restricted cash of approximately $250.4 million, with over $224 million in available borrowing capacity[7] Capital Returns and 2025 Financial Guidance In the first quarter of 2025, the company returned capital to shareholders through $1.6 million in common stock repurchases and $7.8 million in cash dividends. The company reiterated its full-year 2025 financial guidance, expecting continued pressure on same-restaurant sales for Applebee's and mixed results for IHOP, with a net reduction in Applebee's domestic restaurants - During Q1 2025, the company repurchased $1.6 million of its common stock and paid $7.8 million in quarterly cash dividends[9] Reiterated Fiscal 2025 Guidance | Metric | 2025 Guidance | | :--- | :--- | | Applebee's Domestic SSS | -2.0% to +1.0% | | IHOP Domestic SSS | -1.0% to +2.0% | | Applebee's Net Restaurants | 20 to 35 net fewer | | IHOP Net Restaurants | -10 to +10 net change | | Consolidated Adjusted EBITDA | $235M to $245M | | G&A Expenses | $200M to $205M | | Capital Expenditures | $20M to $30M | Consolidated Financial Statements Consolidated Statements of Comprehensive Income For the first quarter ended March 31, 2025, total revenues increased to $214.8 million from $206.2 million year-over-year, driven by company restaurant sales from acquisitions. However, gross profit decreased, and higher closure charges led to a significant drop in net income to $8.2 million, compared to $17.5 million in the prior-year period. Earnings per diluted share fell to $0.53 from $1.13 Q1 2025 vs. Q1 2024 Income Statement (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $214,780 | $206,235 | | Gross Profit | $90,310 | $97,424 | | General and administrative expenses | $51,337 | $52,187 | | Income before income taxes | $12,795 | $24,046 | | Net Income | $8,197 | $17,473 | | Net income available to common stockholders | $7,844 | $16,961 | | Diluted EPS | $0.53 | $1.13 | Consolidated Balance Sheets As of March 31, 2025, Dine Brands reported total assets of $1.766 billion, a slight decrease from $1.791 billion at year-end 2024. Total liabilities also decreased to $1.982 billion. The company maintained a stockholders' deficit of $215.7 million. Cash and cash equivalents remained stable at $186.5 million Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $186,505 | $186,650 | | Total current assets | $360,121 | $385,999 | | Total assets | $1,766,340 | $1,790,584 | | Long-term debt, net | $1,087,084 | $1,086,551 | | Total liabilities | $1,982,086 | $2,006,603 | | Total stockholders' deficit | ($215,746) | ($216,019) | Consolidated Statements of Cash Flows For the first quarter of 2025, cash flows provided by operating activities were $16.1 million, a significant decrease from $30.6 million in the same period of 2024. The decline was primarily due to an unfavorable change in working capital and lower segment profit. Cash used in financing activities was $12.4 million, mainly for dividends and stock repurchases. The company ended the period with $250.4 million in total cash, cash equivalents, and restricted cash Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Cash flows provided by operating activities | $16,133 | $30,553 | | Cash flows used in investing activities | ($1,880) | ($1,174) | | Cash flows used in financing activities | ($12,407) | ($17,846) | | Net change in cash | $1,846 | $11,533 | | Cash at end of period | $250,444 | $212,125 | Non-GAAP Financial Measures Reconciliation of Net Income to Adjusted Net Income The company provides a reconciliation from GAAP net income to adjusted net income, which excludes items like closure charges, amortization, and non-cash interest. For Q1 2025, adjusted net income was $15.4 million, or $1.03 per diluted share, compared to $19.9 million, or $1.33 per diluted share, in Q1 2024 Reconciliation to Adjusted Net Income (in thousands, except per share) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income available to common stockholders (GAAP) | $7,844 | $16,961 | | Adjustments (Closure charges, amortization, etc.) | $7,558 | $3,039 | | Net income available to common stockholders, as adjusted (Non-GAAP) | $15,402 | $19,926 | | Diluted EPS (GAAP) | $0.53 | $1.13 | | Diluted EPS, as adjusted (Non-GAAP) | $1.03 | $1.33 | Reconciliation of Operating Cash Flow to Adjusted Free Cash Flow Adjusted free cash flow, a non-GAAP measure used by management to assess liquidity for dividends and buybacks, was $14.6 million for Q1 2025. This is a significant decrease from $29.7 million in Q1 2024. After accounting for dividends and stock repurchases, the remaining cash was $5.2 million Adjusted Free Cash Flow Reconciliation (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Cash flows provided by operating activities | $16,133 | $30,553 | | Principal receipts from notes | $1,820 | $2,525 | | Net additions to property and equipment | ($3,325) | ($3,335) | | Adjusted free cash flow | $14,628 | $29,743 | Reconciliation of Net Income to Adjusted EBITDA Consolidated adjusted EBITDA for Q1 2025 was $54.7 million, down from $60.8 million in Q1 2024. The reconciliation from net income adjusts for interest, taxes, depreciation, amortization, stock-based compensation, and other non-operational items Adjusted EBITDA Reconciliation (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income, as reported | $8,197 | $17,473 | | Interest, Taxes, D&A, and other adjustments | $46,534 | $43,337 | | Adjusted EBITDA | $54,731 | $60,810 | Restaurant Data and Development Restaurant Sales Performance In Q1 2025, all three brands saw a decline in domestic same-restaurant sales year-over-year. Applebee's sales fell by 2.2%, IHOP's by 2.7%, and Fuzzy's by 12.2%. Average weekly unit sales were flat for Applebee's but declined for both IHOP and Fuzzy's. Total system-wide reported sales decreased to $1.97 billion from $2.05 billion in the prior year Q1 2025 Domestic Same-Restaurant Sales Change (YoY) | Brand | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Applebee's | (2.2)% | (4.6)% | | IHOP | (2.7)% | (1.7)% | | Fuzzy's | (12.2)% | (9.8)% | Q1 2025 Average Weekly Domestic Unit Sales (in thousands) | Brand | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Applebee's | $54.7 | $54.7 | | IHOP | $36.5 | $37.6 | | Fuzzy's | $26.5 | $28.6 | Total Reported Sales (in millions) | Brand System | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Applebee's | $1,075.2 | $1,120.9 | | IHOP | $855.5 | $881.6 | | Fuzzy's | $39.5 | $47.6 | | Total | $1,970.2 | $2,050.1 | Restaurant Development Activity During the first quarter of 2025, the company experienced a net reduction in restaurants across all brands. Applebee's saw a net decrease of 20 restaurants, primarily due to domestic closures. IHOP had a net reduction of 10 franchise/area license restaurants and reacquired 10 locations, ending the period with a total of 1,814 restaurants. Fuzzy's saw a net reduction of 3 franchise restaurants Q1 2025 Restaurant Development Activity | Brand | Beginning of Period | Opened | Closed | End of Period | Net Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Applebee's | 1,614 | 1 | (21) | 1,594 | (20) | | IHOP | 1,824 | 8 | (18) | 1,814 | (10) | | Fuzzy's | 117 | 1 | (4) | 114 | (3) | - IHOP reacquired 10 franchise restaurants during the quarter, which are now reported as company-operated[39]