Dine Brands(US:DIN)2019-02-21 19:03Financial Data and Key Metrics Changes - The company reported adjusted EPS of $1.70 for Q4 2018, a significant increase from $0.48 in Q4 2017, primarily driven by a 46% increase in franchise segment profit and a decline in bad debt expense [20][21][22] - For fiscal 2018, adjusted EPS was $5.37 compared to $4.09 in 2017, attributed to lower income tax expense and higher franchise segment profit [21][22] - Adjusted free cash flow for 2018 was approximately $141 million, up from $66 million in 2017, due to increased cash from operations and favorable changes in working capital [26] Business Line Data and Key Metrics Changes - Applebee's achieved a 3.5% comp sales growth in Q4 2018, marking the fifth consecutive quarter of positive growth, and a full-year comp sales increase of 5%, the best in 25 years [37][39] - IHOP reported a 3% comp sales growth in Q4 2018, with a full-year growth of 1.5% and total revenue growth of 3.9%, the best performance since 2015 [49][50] Market Data and Key Metrics Changes - Off-premise comp sales for Applebee's and IHOP increased by approximately 32% and 30% respectively in 2018, driven mainly by double-digit traffic growth [16] - Approximately 7% of the company's restaurants are located outside the U.S., with ongoing interest in international expansion, including new openings in Thailand, Peru, and Ecuador [17] Company Strategy and Development Direction - The company is focused on enhancing brand relevance and building momentum at Applebee's and IHOP, with a multi-pronged strategy aimed at returning to growth [7][8] - Plans include exploring opportunities in urban and rural areas, leveraging non-traditional formats, and enhancing technology to improve guest experience [15] - The company aims to maintain a strong return of capital to shareholders, with a new share repurchase authorization of up to $200 million [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's trajectory for 2019, highlighting a strong foundation for growth and improved franchisee financial health [13][64] - The company anticipates comp sales growth of 2% to 4% for both Applebee's and IHOP in 2019, supported by ongoing sales and traffic-driving initiatives [31][32] Other Important Information - The company completed a $30 million contribution to Applebee's national advertising fund, which is non-recurring, and improved visibility into royalty collections [14] - G&A expenses for Q4 2018 were approximately $45.3 million, up from $40 million in the same period last year, primarily due to higher personnel-related costs [23] Q&A Session Summary Question: Opportunities for Applebee's moving forward - Management highlighted the return to profitability and growth, with plans to explore off-premise opportunities and new unit openings by the end of the year [66][68] Question: Clarification on delivery units - Management confirmed that the number of Applebee's units offering delivery has increased to over 1,100, with plans to expand further [76][77] Question: Improvements in in-restaurant experience - Management noted significant reductions in variability between top and bottom performers, leading to improved guest satisfaction and operational metrics [78][79] Question: Franchise segment profitability - Management indicated that franchisee profitability is improving, with expectations for continued margin enhancement despite rising labor costs [108][109]