Dine Brands Global, Inc. Reports Third Quarter 2019 Results

Earnings Per Diluted Share (GAAP) Increased 5.4%

Adjusted Earnings Per Diluted Share (Non-GAAP) Increased 1.3%

Total Revenues, Excluding Advertising Revenues, Increased 21.8%

GLENDALE, Calif.--(BUSINESS WIRE)--Dine Brands Global, Inc. (NYSE: DIN), the parent company of Applebee's Neighborhood Grill + Bar^® and IHOP^® restaurants, today announced financial results for the third quarter of 2019.

“We are pleased with our overall performance. Our business model continues to deliver robust margin expansion and generate significant adjusted free cash flow. IHOP achieved its seventh consecutive quarter of positive sales growth. While Applebee’s faced a difficult comparison against very strong same-restaurant sales in the third quarter of 2018, we are confident in the brand’s strategy that’s in place,” said Steve Joyce, Chief Executive Officer of Dine Brands Global, Inc.

Mr. Joyce added, “We are seeing significant unit growth opportunities as demonstrated by the largest multi-unit franchise agreement signed in IHOP’s history.”

Key Highlights

• IHOP signs largest multi-unit franchise agreement in the brand’s history with TravelCenters of America to develop nearly 100 restaurants.
• Total revenues for the third quarter of 2019, excluding advertising revenues and including Company restaurant sales, increased 22% year-over-year to $149.9 million.
• IHOP’s reported system-wide sales for the third quarter of 2019 increased 1.2% year-over-year to $845 million.
• General and administrative expenses for the third quarter of 2019 declined 4.5% year-over-year to $38.9 million.
• GAAP earnings per diluted share for the third quarter of 2019 increased 5.4% year-over-year to $1.36.
• Adjusted earnings per diluted share for the third quarter of 2019 increased 1.3% year-over-year to $1.55. (See “Non-GAAP Financial Measures” and reconciliation of GAAP earnings per diluted share to adjusted earnings per diluted share.)
• Net income for the third quarter of 2019 increased 1.4% year-over-year to $23.9 million.
• Consolidated adjusted EBITDA for the third quarter increased 2.0% to $63.4 million compared to $62.2 million for the third quarter of 2018. (See “Non-GAAP Financial Measures” and reconciliation of GAAP net income to consolidated adjusted EBITDA.)
• During the third quarter of 2019, the Company repurchased 523,898 shares of its common stock for a total cost of $42.7 million and paid quarterly cash dividends totaling $11.9 million.
• Cash flows from operating activities for the first nine months of 2019 increased 71.4% to $105.6 million compared to $61.6 million for the same period of 2018.
• Adjusted free cash flow for the first nine months of 2019 increased 61.0% to $100.8 million compared to $62.6 million for the same period of 2018. (See “Non-GAAP Financial Measures” and reconciliation of the Company’s cash provided by operating activities to adjusted free cash flow.)

Financial Summary
($ in 000's, except per share amounts)	Third Quarter			First Nine Months
	2019	2018	% Change	2019	2018	% Change
Total revenues, excluding advertising revenues	$149,891	$123,083	22%	$470,785	$373,176	26%
Total revenues, excluding Company restaurant sales	$186,857	$194,099	-4%	$582,633	$566,733	3%
Net income available to common stockholders per share	$1.36	$1.29	5%	$4.27	$2.90	47%
Diluted net income available to common stockholders per share, as adjusted^(1)	$1.55	$1.53	1%	$5.17	$3.66	41%
Net income	$23,917	$23,587	1%	$76,950	$53,373	44%
Consolidated adjusted EBITDA^(1)(2)	$63,394	$62,154	2%	$206,065	$165,581	24%

⁽¹⁾ See “Non-GAAP Financial Measures” and reconciliation of the Non-GAAP financial measure to the respective GAAP financial measure.
⁽²⁾ Does not conform to the definition of Covenant Adjusted EBITDA as found in the Base Indenture.

Domestic System-Wide Comparable Same-Restaurant Sales Performance

Third Quarter of 2019

• Applebee’s comparable same-restaurant sales decreased 1.6% for the third quarter of 2019.
• IHOP’s comparable same-restaurant sales were slightly positive, 0.03%, for the third quarter of 2019, marking the seventh consecutive quarter of sales growth.

First Nine Months of 2019

• Applebee’s comparable same-restaurant sales decreased 0.1% for the nine months of 2019.
• IHOP’s comparable same-restaurant sales increased 1.1% for the first nine months of 2019.

Third Quarter of 2019 Financial Highlights

• GAAP net income available to common stockholders was $23.1 million, or earnings per diluted share of $1.36, for the third quarter of 2019. This compared to net income available to common stockholders of $22.8 million, or earnings per diluted share of $1.29, for the third quarter of 2018. The increase in net income was primarily due to debt modification costs incurred in the third quarter of 2018 that did not recur in the third quarter of 2019 and a decrease in general and administrative expenses. These items were partially offset by a decline in gross profit.
• Adjusted net income available to common stockholders was $26.4 million, or adjusted earnings per diluted share of $1.55, for the third quarter of 2019. This compares to adjusted net income available to common stockholders of $27.2 million, or adjusted earnings per diluted share of $1.53, for the third quarter of 2018. The decrease in adjusted net income was primarily due to lower gross profit. The increase in adjusted earnings per diluted share was due to a decrease in weighted average diluted shares outstanding. (See “Non-GAAP Financial Measures” below.)
• General and administrative expenses were $38.9 million for the third quarter of 2019 compared to $40.8 million for the third quarter of 2018. The decrease was primarily due to lower personnel-related costs.

First Nine Months of 2019 Financial Highlights

• GAAP net income available to common stockholders was $74.3 million, or earnings per diluted share of $4.27, for the first nine months of 2019. This compared to net income available to common stockholders of $51.6 million, or earnings per diluted share of $2.90, for the first nine months of 2018. The increase in net income was primarily due to higher gross profit as the result of $30.0 million in franchisor contributions to the Applebee’s national advertising fund made in the first nine months of 2018 that did not recur in 2019. This was partially offset by approximately $8.3 million in debt extinguishment costs related to the refinancing of our long-term debt, which was completed on June 5, 2019.
• Adjusted net income available to common stockholders was $90.0 million, or adjusted earnings per diluted share of $5.17, for the first nine months of 2019. This compares to adjusted net income available to common stockholders of $65.2 million, or adjusted earnings per diluted share of $3.66, for the first nine months of 2018. The increase in adjusted net income was primarily due to higher gross profit as the result of $30.0 million in franchisor contributions to the Applebee’s national advertising fund made in the first nine months of 2018 that did not recur in 2019. (See “Non-GAAP Financial Measures” below.)
• General and administrative expenses were approximately $121.1 million for the first nine months of 2019 compared to $121.4 million for the same period of 2018.

GAAP Effective Tax Rate

Our effective tax rate of 24.6% for the third quarter of 2019 was similar to the effective tax rate of 24.5% for the comparable period of 2018.

Financial Performance Guidance for 2019

Dine Brands revises certain components of its financial performance guidance for 2019 contained in the press release issued on July 31, 2019 and the Form 8-K filed on the same day, as follows.

The projections are as of this date and do not take into consideration any transactions the Company may enter into after such date that may impact this guidance. The Company assumes no obligation to update or supplement these estimates.

• Revised expectations for Applebee’s domestic system-wide comparable same-restaurant sales performance to range between 0.0% and negative 1.0%. This compares to previous expectations of between 0.0% and positive 1.5%.
• Revised expectations for IHOP’s domestic system-wide comparable same-restaurant sales performance to range between positive 1.0% and positive 2.0%. This compares to previous expectations of between positive 1.0% and positive 3.0%.
• Revised development activity by Applebee’s franchisees, which is expected to result in net closures between 30 and 40 restaurants globally, the majority of which are expected to be domestic closures. This compares to previous expectations of between 20 and 30 net closures globally.
• Revised expectations for development activity by IHOP franchisees and area licensees, which is now expected to result in between 10 and 20 net new restaurants globally, the majority of which are expected to be domestic openings. This compares to previous expectations of between 20 and 30 net new restaurants globally.
• Reiterated expectations for total segment profit, excluding the company restaurants segment, which is expected to be between approximately $370 million and $380 million.
• Reiterated expectations for general and administrative expenses, which are expected to range between approximately $163 million and approximately $166 million, including non-cash stock-based compensation expense and depreciation totaling approximately $40 million. This projection includes approximately $6 million of general and administrative expenses related to the company restaurants segment.
• Reiterated expectations for GAAP net income, which is expected to range between approximately $97 million and approximately $106 million.
• Reiterated consolidated adjusted EBITDA, which is expected to range between approximately $268 million and approximately $277 million. This projection includes company restaurants segment EBITDA, which is expected to be between approximately $9 million and approximately $11 million. (See “Non-GAAP Financial Measures” and reconciliation of GAAP net income to consolidated adjusted EBITDA.)
• Revised expectations for GAAP earnings per diluted share, which are now expected to range from $5.70 to $5.95. This compares to previous expectations of between $5.75 to $6.00.
• Revised expectations for adjusted earnings per diluted share, which are now expected to range from $6.75 to $7.00. This compares to previous expectations of between $6.80 to $7.05. (See “Non-GAAP Financial Measures” and reconciliation of GAAP earnings per diluted share to adjusted earnings per diluted share.)

2019 Diluted Net Income Available to Common Stockholders Per Share^(1), As Adjusted Reconciliation Guidance Table
Net income available to common stockholders per diluted share	$5.70 – $5.95
Closure and impairment charges	0.04
Amortization of intangible assets	0.68
Loss on extinguishment of debt	0.48
Loss (gain) on disposition of assets	0.03
Non-cash interest expense	0.19
Income tax provision for above adjustments at 25%	(0.37)
Diluted net income available to common stockholders per share, as adjusted	$6.75 – $7.00

^(1)The adjustments to net income available to common stockholders per diluted share are midpoint estimates.

2019 Net Income to Consolidated Adjusted EBITDA Reconciliation Guidance Table^(1) ($ in millions)
Net income	$97 – $106
Interest charges	72
Income tax provision	35
Depreciation and amortization	42
Non-cash stock-based compensation	12
Loss on extinguishment of debt	8
Impairment and closure charges	2
Consolidated adjusted EBITDA (Non-GAAP)	$268 – 277

^(1)The adjustments to net income are midpoint estimates.

Third Quarter of 2019 Results Conference Call Details

Dine Brands will host a conference call to discuss its results on October 30, 2019 at 9:00 a.m. Pacific Time/12:00 p.m. Eastern Time. To participate on the call, please dial [phone] and reference passcode 49091078. International callers, please dial [phone] and reference passcode 49091078.

A live webcast of the call will be available on www.dinebrands.com and may be accessed by visiting Events and 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 11:30 a.m. Pacific Time on October 30, 2019 through 11:59 p.m. Pacific Time on November 6, 2019 by dialing [phone] and referencing passcode 49091078#. International callers, please dial [phone] and reference passcode 49091078#. An online archive of the webcast will also be available on Events and Presentations under the Investors section of the Company’s website.

About Dine Brands Global, Inc.

Based in Glendale, California, Dine Brands Global, Inc. (NYSE: DIN), through its subsidiaries, franchises restaurants under both the Applebee's Neighborhood Grill + Bar and IHOP brands. With approximately 3,640 restaurants combined in 18 countries and approximately 370 franchisees, Dine Brands is one of the largest full-service restaurant companies in the world. For more information on Dine Brands, visit the Company’s website located at www.dinebrands.com.

Forward-Looking Statements

Statements contained in this press release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You can identify these forward-looking statements by words such as "may," "will," “would,” "should," “could,” "expect," "anticipate," "believe," "estimate," "intend," "plan," “goal” 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: general economic conditions; our level of indebtedness; compliance with the terms of our securitized debt; our ability to refinance our current indebtedness or obtain additional financing; our dependence on information technology; potential cyber incidents; the implementation of restaurant development plans; our dependence on our franchisees; the concentration of our Applebee’s franchised restaurants in a limited number of franchisees; the financial health our franchisees; our franchisees’ and other licensees’ compliance with our quality standards and trademark usage; general risks associated with the restaurant industry; potential harm to our brands’ reputation; possible future impairment charges; the effects of tax reform; trading volatility and fluctuations in the price of our stock; our ability to achieve the financial guidance we provide to investors; successful implementation of our business strategy; the availability of suitable locations for new restaurants; shortages or interruptions in the supply or delivery of products from third parties or availability of utilities; the management and forecasting of appropriate inventory levels; development and implementation of innovative marketing and use of social media; changing health or dietary preference of consumers; risks associated with doing business in international markets; the results of litigation and other legal proceedings; third-party claims with respect to intellectual property assets; our ability to attract and retain management and other key employees; compliance with federal, state and local governmental regulations; risks associated with our self-insurance; natural disasters or other series incidents; our success with development initiatives outside of our core business; the adequacy of our internal controls over financial reporting and future changes in accounting standards; 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 does not intend to, nor does it assume any obligation to, update or supplement any forward-looking statements after the date hereof to reflect actual results or future events or circumstances.

Non-GAAP Financial Measures

This press release includes references to the Company's non-GAAP financial measure “adjusted net income available to common stockholders”, “adjusted earnings per diluted share (Adjusted EPS)”, “Adjusted EBITDA” and “Adjusted free cash flow.” 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, any gain or loss related to the disposition of assets, and other items deemed not reflective of current operations. This is presented on an aggregate basis and a per share (diluted) basis. Adjusted EBITDA is computed for a given period by deducting from net income or loss for such period the effect of any closure and impairment charges, any interest charges, any income tax provision or benefit, any non-cash stock-based compensation, any depreciation and amortization, any gain or loss related to the disposition of assets and other items deemed not reflective of current operations. “Adjusted free cash flow” for a given period is defined as cash provided by operating activities, plus receipts from notes and equipment contracts receivable, less capital expenditures. Management may use certain of these non-GAAP financial measures along with the corresponding U.S. GAAP measures to evaluate the performance of the business and to make certain business decisions. Management uses adjusted free cash flow in its periodic assessments of, among other things, the amount of cash dividends per share of common stock and repurchases of common stock and we believe it is important for investors to have the same measure used by management for that purpose. Adjusted free cash flow does not represent residual cash flow available for discretionary purposes. Additionally, adjusted EPS is one of the metrics used in determining payouts under the Company’s annual cash incentive plan. Management believes that these non-GAAP financial measures provide additional meaningful information that should be considered when assessing the business and the Company’s performance compared to prior periods and the marketplace. Adjusted EPS and adjusted free cash flow 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 U.S. GAAP.

Dine Brands Global, Inc. and Subsidiaries Consolidated Statements of Comprehensive Income (In thousands, except per share amounts) (Unaudited)
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Revenues:
Franchise revenues:
Royalties, franchise fees and other	$	88,686		$	91,062		$	275,912		$	275,775
Advertising revenue		67,514			71,016			211,882			193,557
Total franchise revenues		156,200			162,078			487,794			469,332
Company restaurant sales		30,548		—				100,034		—
Rental revenues		28,970			30,127			89,559			91,292
Financing revenues		1,687			1,894			5,280			6,109
Total revenues		217,405			194,099			682,667			566,733
Cost of revenues:
Franchise expenses:
Advertising expenses		67,514			71,016			211,882			193,557
Other franchise expenses		7,063			7,325			21,905			49,600
Total franchise expenses		74,577			78,341			233,787			243,157
Company restaurant expenses		30,361		—				93,131		—
Rental expenses:
Interest expense from finance leases		1,351			1,668			4,325			5,315
Other rental expenses		21,251			21,314			63,841			63,096
Total rental expenses		22,602			22,982			68,166			68,411
Financing expenses		145			150			437			449
Total cost of revenues		127,685			101,473			395,521			312,017
Gross profit		89,720			92,626			287,146			254,716
General and administrative expenses		38,922			40,753			121,105			121,423
Interest expense, net		15,238			15,430			45,233			46,110
Amortization of intangible assets		2,925			2,505			8,774			7,513
Closure and impairment charges		157			217			640			119
Loss on extinguishment of debt	—			—				8,276		—
Debt refinancing costs	—				2,532		—				2,532
Loss (gain) on disposition of assets		746			(58	)		1,187			(1,535	)
Income before income tax provision		31,732			31,247			101,931			78,554
Income tax provision		(7,815	)		(7,660	)		(24,981	)		(25,181	)
Net income	$	23,917		$	23,587		$	76,950		$	53,373
Net income available to common stockholders:
Net income	$	23,917		$	23,587		$	76,950		$	53,373
Less: Net income allocated to unvested participating restricted stock		(795	)		(799	)		(2,621	)		(1,793	)
Net income available to common stockholders	$	23,122		$	22,788		$	74,329		$	51,580
Net income available to common stockholders per share:
Basic	$	1.38		$	1.31		$	4.35		$	2.94
Diluted	$	1.36		$	1.29		$	4.27		$	2.90
Weighted average shares outstanding:
Basic		16,762			17,439			17,095			17,562
Diluted		17,055			17,738			17,432			17,797
Dividends declared per common share	$	0.69		$	0.63		$	2.07		$	1.89
Dividends paid per common share	$	0.69		$	0.63		$	2.01		$	2.23

Dine Brands Global, Inc. and Subsidiaries Consolidated Balance Sheets (In thousands, except share and per share amounts)
	September 30, 2019			December 31, 2018
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	100,518		$	137,164
Receivables, net		91,426			137,504
Restricted cash		36,694			48,515
Prepaid gift card costs		29,090			38,195
Prepaid income taxes		11,349			17,402
Other current assets		6,928			3,410
Total current assets		276,005			382,190
Other intangible assets, net		577,357			585,889
Operating lease right-of-use asset		370,500		—
Goodwill		343,862			345,314
Property and equipment, net		220,744			240,264
Long-term receivables, net		93,262			103,102
Deferred rent receivable		72,366			77,069
Non-current restricted cash		15,700			14,700
Other non-current assets, net		27,712			26,152
Total assets	$	1,997,508		$	1,774,680
Liabilities and Stockholders’ Deficit
Current liabilities:
Current maturities of long-term debt	$	—		$	25,000
Accounts payable		33,689			43,468
Gift card liability		103,756			160,438
Current maturities of operating lease obligations		67,815		—
Current maturities of finance lease and financing obligations		13,219			14,031
Accrued employee compensation and benefits		21,410			27,479
Dividends payable		11,831			11,389
Deferred franchise revenue, short-term		10,328			10,138
Other accrued expenses		28,686			24,243
Total current liabilities		290,734			316,186
Long-term debt, less current maturities		1,287,738			1,274,087
Operating lease obligations, less current maturities		369,164		—
Finance lease obligations, less current maturities		81,317			87,762
Financing obligations, less current maturities		37,939			38,482
Deferred income taxes, net		100,455			105,816
Deferred franchise revenue, long-term		57,997			64,557
Other non-current liabilities		11,946			90,063
Total liabilities		2,237,290			1,976,953
Commitments and contingencies
Stockholders’ deficit:
Common stock, $0.01 par value; shares: 40,000,000 authorized; September 30, 2019 - 24,934,363 issued, 16,786,860 outstanding; December 31, 2018 - 24,984,898 issued, 17,644,267 outstanding		249			250
Additional paid-in-capital		243,358			237,726
Retained earnings		45,939			10,414
Accumulated other comprehensive loss		(60	)		(60	)
Treasury stock, at cost; shares: September 30, 2019 - 8,147,503; December 31, 2018 - 7,340,631		(529,268	)		(450,603	)
Total stockholders’ deficit		(239,782	)		(202,273	)
Total liabilities and stockholders’ deficit	$	1,997,508		$	1,774,680

Dine Brands Global, Inc. and Subsidiaries Consolidated Statements of Cash Flows (In thousands) (Unaudited)
	Nine Months Ended
	September 30,
	2019			2018
Cash flows from operating activities:
Net income	$	76,950		$	53,373
Adjustments to reconcile net income to cash flows provided by operating activities:
Depreciation and amortization		31,515			23,730
Non-cash stock-based compensation expense		8,220			8,016
Non-cash interest expense		2,722			2,689
Loss on extinguishment of debt		8,276		—
Debt refinancing costs	—				875
Closure and impairment charges		640			61
Deferred income taxes		(2,890	)		(4,706	)
Deferred revenue		(6,590	)		(4,017	)
Gain (loss) on disposition of assets		1,187			(1,535	)
Other		(4,584	)		(2,088	)
Changes in operating assets and liabilities:
Accounts receivable, net		4,233			(7,222	)
Current income tax receivables and payables		7,101			4,088
Gift card receivables and payables		(15,868	)		(22,797	)
Other current assets		(3,519	)		9,254
Accounts payable		359			(5,764	)
Accrued employee compensation and benefits		(6,069	)		5,761
Other current liabilities		3,916			1,908
Cash flows provided by operating activities		105,599			61,626
Cash flows from investing activities:
Principal receipts from notes, equipment contracts and other long-term receivables		16,156			20,029
Additions to property and equipment		(13,360	)		(11,018	)
Proceeds from sale of property and equipment		400			655
Additions to long-term receivables		(6,955	)		(6,030	)
Other		(258	)		(236	)
Cash flows (used in) provided by investing activities		(4,017	)		3,400
Cash flows from financing activities:
Proceeds from issuance of long-term debt		1,300,000		—
Repayment of long-term debt		(1,283,750	)		(9,750	)
Borrowing from revolving credit facility	—				50,000
Repayment of revolving credit facilities		(25,000	)		(30,000	)
Dividends paid on common stock		(35,273	)		(39,973	)
Repurchase of common stock		(90,073	)		(27,880	)
Principal payments on finance lease obligations		(10,329	)		(10,374	)
Payment of debt issuance costs		(12,707	)		(3,118	)
Proceeds from stock options exercised		10,672			3,887
Tax payments for restricted stock upon vesting		(2,589	)		(1,731	)
Cash flows used in financing activities		(149,049	)		(68,939	)
Net change in cash, cash equivalents and restricted cash		(47,467	)		(3,913	)
Cash, cash equivalents and restricted cash at beginning of period		200,379			163,146
Cash, cash equivalents and restricted cash at end of period	$	152,912		$	159,233

Dine Brands Global, Inc. and Subsidiaries
Non-GAAP Financial Measures
(In thousands, except per share amounts)
(Unaudited)

Reconciliation of net income available to common stockholders to net income available to common stockholders, as adjusted for the following items: amortization of intangible assets; closure and impairment charges; non-cash interest expense; gain or loss on disposition of assets; loss on extinguishment of debt; debt refinancing costs; nonrecurring restaurant costs; the combined tax effect of the preceding adjustments; and discrete tax adjustments, as well as related per share data:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019				2018
Net income available to common stockholders, as reported	$	23,122		$	22,788		$	74,329			$	51,580
Amortization of intangible assets		2,925			2,505			8,774				7,513
Closure and impairment charges		157			217			640				119
Non-cash interest expense		639			945			2,722				2,689
Loss (gain) on disposition of assets		746			(58	)		1,187				(1,535	)
Loss on extinguishment of debt	—			—				8,276			—
Debt refinancing costs	—				2,532		—					2,532
Nonrecurring restaurant costs		54		—				383			—
Income tax provision		(1,175	)		(1,597	)		(5,715	)			(2,943	)
Income tax adjustments ^(1)	—			—			—					5,744
Net income allocated to unvested participating restricted stock		(113	)		(156	)		(567	)			(482	)
Net income available to common stockholders, as adjusted	$	26,355		$	27,176		$	90,029			$	65,217
Diluted net income available to common stockholders per share:
Net income available to common stockholders, as reported	$	1.36		$	1.29		$	4.27			$	2.90
Amortization of intangible assets		0.13			0.10			0.37				0.31
Closure and impairment charges		0.01			0.01			0.03				0.00
Non-cash interest expense		0.03			0.04			0.12				0.11
Loss (gain) on disposition of assets		0.03			(0.00	)		0.05				(0.06	)
Loss on extinguishment of debt	—			—				0.35			—
Debt refinancing costs	—				0.11		—					0.11
Nonrecurring restaurant costs		0.00		—				0.02			—
Income tax adjustments ^(1)	—			—			—			—		0.32
Net income allocated to unvested participating restricted stock		(0.01	)		(0.01	)		(0.03	)			(0.02	)
Rounding	—				(0.01	)		(0.01	)			(0.01	)
Diluted net income available to common stockholders per share, as adjusted	$	1.55		$	1.53		$	5.17			$	3.66
Numerator for basic EPS-income available to common stockholders, as adjusted	$	26,355		$	27,176		$	90,029			$	65,217
Effect of unvested participating restricted stock using the two-class method		8			3			39				7
Numerator for diluted EPS-income available to common stockholders, as adjusted	$	26,363		$	27,179		$	90,068			$	65,224
Denominator for basic EPS-weighted-average shares		16,762			17,439			17,095				17,562
Dilutive effect of stock options		293			299			337				235
Denominator for diluted EPS-weighted-average shares		17,055			17,738			17,432				17,797

^(1)Charges related to adjustments resulting from IRS audits for tax years 2011 through 2013

Dine Brands Global, Inc. and Subsidiaries
Non-GAAP Financial Measures
(Unaudited)

Reconciliation of the Company's cash provided by operating activities to “adjusted free cash flow” (cash provided by operating activities, plus receipts from notes and equipment contracts receivable, less additions to property and equipment). Management uses this liquidity measure in its periodic assessments of, among other things, the amount of cash dividends per share of common stock and repurchases of common stock. We believe it is important for investors to have the same measure used by management for that purpose. Adjusted free cash flow does not represent residual cash flow available for discretionary purposes.

	Nine Months Ended
	September 30,
	2019			2018
	(In millions)
Cash flows provided by operating activities	$	105.6		$	61.6
Receipts from notes and equipment contracts receivable		8.6			12.0
Additions to property and equipment		(13.4	)		(11.0	)
Adjusted free cash flow		100.8			62.6
Dividends paid on common stock		(35.3	)		(40.0	)
Repurchase of Dine Brands Global common stock		(90.1	)		(27.9	)
	$	(24.6	)	$	(5.3	)

Dine Brands Global, Inc. and Subsidiaries
Non-GAAP Financial Measures
(in thousands)
(Unaudited)

Reconciliation of the Company's net income to “adjusted EBITDA.” The Company defines adjusted EBITDA as net income, adjusted for the effect of any interest charges, any income tax provision or benefit, any depreciation and amortization, any non-cash stock-based compensation, any closure and impairment charges, debt refinancing costs, any gain or loss related to the extinguishment of debt and disposition of assets, other non-income based taxes and other items deemed not reflective of current operations. Management may use certain non-GAAP measures along with the corresponding U. S. GAAP measures to evaluate the performance of the company and to make certain business decisions.

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2019		2018			2019		2018
Net income, as reported	$	23,917	$	23,587		$	76,950	$	53,373
Interest charges on finance leases		1,866		1,668			5,919		5,315
All other interest charges		15,794		16,161			47,880		48,312
Income tax provision		7,815		7,660			24,981		25,181
Depreciation and amortization		10,715		7,888			31,515		23,730
Non-cash stock-based compensation		2,326		2,375			8,220		8,016
Closure and impairment charges		157		217			640		119
Debt refinancing costs	—			2,532		—			2,532
Loss on extinguishment of debt	—		—				8,276	—
Loss (gain) on disposition of assets		746		(58	)		1,187		(1,535	)
Other taxes		58		124			497		538
Adjusted EBITDA	$	63,394	$	62,154		$	206,065	$	165,581

Dine Brands Global, Inc. and Subsidiaries
Restaurant Data
(Unaudited)

The following table sets forth, for the three and nine months ended September 30, 2019 and 2018, 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 and, as such, the percentage change in sales at Effective Restaurants is based on non-GAAP sales data. 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 partially may be 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						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Applebee's
Effective Restaurants^(a)
Franchise		1,741			1,875			1,752			1,899
Company		69		—				69		—
Total		1,810			1,875			1,821			1,899
System-wide^(b)
Domestic sales percentage change^(c)		(3.8	)%		5.1	%		(2.7	)%		3.0	%
Domestic same-restaurant sales percentage change^(d)		(1.6	)%		7.7	%		(0.1	)%		5.5	%
Franchise^(b)
Domestic sales percentage change^(c)		(6.8	)%		5.1	%		(5.9	)%		3.0	%
Domestic same-restaurant sales percentage change^(d)		(1.7	)%		7.7	%		(0.2	)%		5.5	%
Average weekly domestic unit sales (in thousands)	$	45.0		$	44.8		$	47.7		$	46.7
IHOP
Effective Restaurants^(a)
Franchise		1,667			1,640			1,660			1,628
Area license		158			162			156			163
Total		1,825			1,802			1,816			1,791
System-wide^(b)
Sales percentage change^(c)		1.2	%		3.9	%		2.2	%		3.6	%
Domestic same-restaurant sales percentage change, including area license restaurants^(d)		0.03	%		1.4	%		1.1	%		1.1	%
Domestic same-restaurant sales percentage change, excluding area license restaurants^(d)		0.03	%		1.2	%		1.0	%		1.0	%
Franchise^(b)
Sales percentage change^(c)		1.1	%		3.9	%		2.2	%		4.2	%
Domestic same-restaurant sales percentage change^(d)		0.03	%		1.2	%		1.0	%		1.0	%
Average weekly unit sales (in thousands)	$	35.7		$	35.9		$	36.5		$	36.4
Area License ^(b)
Sales percentage change^(c)		2.4	%		3.7	%		2.4	%		1.7	%

Dine Brands Global, Inc. and Subsidiaries Restaurant Data
(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 domestic 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. An increase or decrease in franchisees' reported sales will result in a corresponding increase or decrease in our royalty revenue. Unaudited reported sales for Applebee's domestic franchise restaurants, IHOP franchise restaurants and IHOP area license restaurants for the three and nine months ended September 30, 2019 and 2018 and sales by company-operated restaurants were as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
	(In millions)
Reported sales
Applebee's domestic franchise restaurant sales	$	936.5	$	1,005.0	$	2,997.2	$	3,183.5
Applebee's company-operated restaurants		30.5	—			100.0	—
IHOP franchise restaurant sales		773.9		765.6		2,364.4		2,312.8
IHOP area license restaurant sales		71.1		69.4		217.2		212.2
Total	$	1,812.0	$	1,840.0	$	5,678.8	$	5,708.5

(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.

Dine Brands Global, Inc. and Subsidiaries Restaurant Data (Unaudited)
The following table summarizes our restaurant development activity:
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Applebee's Restaurant Development Activity
Summary - beginning of period:
Franchise	1,746		1,883		1,768		1,936
Company restaurants	69		—		69		—
Beginning of period	1,815		1,912		1,837		1,936
Franchise restaurants opened:
Domestic	—		1		—		2
International	—		—		1		3
Total franchise restaurants opened	—		1		1		5
Franchise restaurants closed:
Domestic	(9	)	(25	)	(26	)	(77	)
International	(2	)	(3	)	(8	)	(8	)
Total franchise restaurants closed	(11	)	(28	)	(34	)	(85	)
Net franchise restaurant reduction	(11	)	(27	)	(33	)	(80	)
Summary - end of period:
Franchise	1,735		1,856		1,735		1,856
Company	69		—		69		—
Total Applebee's restaurants, end of period	1,804		1,856		1,804		1,856
Domestic	1,667		1,707		1,667		1,707
International	137		149		137		149
IHOP Restaurant Development Activity
Summary - beginning of period:
Franchise	1,669		1,640		1,669		1,622
Area license	159		165		162		164
Total IHOP restaurants, beginning of period	1,828		1,805		1,831		1,786
Franchise/area license restaurants opened:
Domestic franchise	8		10		23		32
Domestic area license	3		1		5		3
International franchise	7		6		9		14
Total franchise/area license restaurants opened	18		17		37		49
Franchise/area license restaurants closed:
Domestic franchise	(7	)	(4	)	(19	)	(10	)
Domestic area license	(1	)	(4	)	(6	)	(5	)
International franchise	(2	)	—		(7	)	(6	)
Total franchise/area license restaurants closed	(10	)	(8	)	(32	)	(21	)
Net franchise/area license restaurant development	8		9		5		28
Refranchised by the Company	—		—		—		1
Franchise restaurants reacquired by the Company	—		—		—		(1	)
Net franchise/area license restaurant additions	8		9		5		28
Summary - end of period
Franchise	1,675		1,652		1,675		1,652
Area license	161		162		161		162
Total IHOP restaurants, end of period	1,836		1,814		1,836		1,814
Domestic	1,708		1,691		1,708		1,691
International	128		123		128		123