Dine Brands Global (DIN)

Earlier today (Wednesday), Dine Brands reported third-quarter adjusted EPS of $1.44. This is above our $1.35 forecast and sell-side consensus (according to Consensus Metrix) of $1.34. At first glance, the earnings beat looks driven by lower-than-anticipated G&A expenses ($45.4 million actual vs. $50.5 million projected and consensus at $50.1 million).

Earlier today, Dine Brands reported second-quarter adjusted EPS of $1.71. This is above our $1.60 forecast and sell-side consensus (according to Consensus Metrix) of $1.62.

This morning, we published an industry report entitled “Updating our Q2 Kalinowski Casual Dining Same-Store Sales Index.” We encourage you to read that report in conjunction with this Dine Brands note.

Earlier today (Wednesday), Dine Brands reported adjusted Q1 EPS of $1.33. This was below our $1.52 forecast and sell-side consensus (according to Consensus Metrix) of $1.57. First-quarter adjusted EBITDA reached $60.8 million. This is lower than consensus of $62.9 million.

This morning, we published an industry report entitled “Updating our Q1 Kalinowski Casual Dining Same-Store Sales Index.” We encourage you to read that report in conjunction with this Dine Brands note.

Earlier today (Wednesday), Dine Brands reported Q4 adjusted EPS of $1.40. This was above our $1.20 forecast and sell-side consensus (according to Consensus Metrix) of $1.14. Fourth-quarter adjusted EBITDA reached $62.2 million was better than consensus of $55.5 million.

We believe that January has proven a tough month as regards same-store sales for a wide swath of the restaurant industry, including the casual dining and family dining segments. Based on our conversations with industry contacts, bad weather – lapping a mild winter from one year ago – clearly seems to be the #1 reason behind the challenged January sales trends. As of today, it’s possible that February could prove to be similarly challenged.

Dine Brands – the owner and franchisor of the IHOP family-dining concept and the Applebee’s casual-dining concept — tentatively plans to release its Q4 2023 earnings before the market open on Wednesday, February 28, 2024.

Earlier today, Dine Brands reported third-quarter adjusted EPS of $1.46, above our $1.30 forecast and sell-side consensus (according to Consensus Metrix) of $1.27. We attribute much of the earnings beat coming from G&A/Revenues amounting to 24.0% in Q3, more favorable than our 25.3% forecast and consensus of 25.4%.

Earlier today, Dine Brands reported second-quarter adjusted EPS of $1.82. This was well above our $1.53 forecast and consensus (according to Consensus Metrix) of $1.51. We attribute the EPS beat largely to lower-than-expected G&A expenses.

Dine Brands — the owner and franchisor of the Applebee’s casual-dining concept and the IHOP family-dining concept — likely plans to report its first quarter earnings before the market open on Wednesday, August 2nd.

Earlier today, Dine Brands reported adjusted first-quarter EPS of $1.97. This was quite a bit better than our $1.67 projection and sell-side consensus (according to Consensus Metrix) of $1.69. First-quarter adjusted EBITDA amounted to $66.4 million, which was higher than consensus of $60.8 million.

Dine Brands — the owner and franchisor of the Applebee’s casual-dining concept and the IHOP family-dining concept — likely plans to report its first quarter earnings before the market open on Wednesday, May 3rd.

Earlier today, Dine Brands reported fourth-quarter adjusted EPS of $1.34. While this came in below our $1.40 forecast, it was above sell-side consensus (according to Consensus Metrix) of $1.22. Fourth-quarter adjusted EBITDA amounted to $57.0 million, above consensus at $52.9 million.

Earlier today, Dine Brands – the owner and franchisor of the Applebee’s casual dining concept and the IHOP family dining concept – announced that it intends to acquire fast-casual concept Fuzzy’s Taco Shop. We view this planned acquisition favorably, with reasons including: (1) it’s not a “bet the company”-sized acquisition, (2) it’s an opportunity to leverage Dine Brands’ scale in multiple ways (supply chain, IT platform, franchisee partners, etc.), (3) we continue to favor the fast-casual Mexican space for long-term growth, (4) based on our customer experiences at Fuzzy’s Taco Shop, we believe it’s a solid concept in terms of guest appeal, and (5) differentiated quite a bit from fast-casual Mexican pioneer Chipotle Mexican Grill (CMG; Buy, $1,576.02).

Earlier today (Wednesday), Dine Brands reported adjusted Q3 EPS of $1.66, well above our $1.36 projection and sell-side consensus (according to Consensus Metrix) of $1.31.

Earlier today, Dine Brands reported Q2 adjusted EPS of $1.65. This was ahead of our $1.60 projection and sell-side consensus (according to Consensus Metrix) of $1.62. We note that while Q2 G&A expenses of $44.1 million were up year-to-year, this was still lower (better) than our $46.4 million estimate and consensus of $46.1 million.

Dine Brands — the owner and franchisor of the IHOP family-dining concept and the Applebee’s casual-dining concept — likely plans to report its second quarter earnings during the first week of August, perhaps before the market open on one date between Tuesday, August 2nd and Thursday, August 4th.

Dine Brands — the owner and franchisor of the Applebee’s casual-dining concept and the IHOP family-dining concept — likely plans to report its second quarter earnings during the first week of August, perhaps after the market close on one date between Tuesday, August 2nd and Thursday, August 4th.

Earlier today, Dine Brands reported Q1 adjusted EPS of $1.54. This was close to our $1.55 projection, and above sell-side consensus (according to Consensus Metrix) of $1.44.

Earlier today, Dine Brands — owner and franchisor of the Applebee’s casual dining concept and the IHOP family dining concept — hosted an Analyst Meeting in New York City. All in all, the goals unveiled and the commentary were very well-received by the Street (as in our view they should be).

Earlier today, Dine Brands reported adjusted Q4 EPS of $1.32, coming in ahead of our $1.26 forecast and sell-side consensus (according to Consensus Metrix) of $1.27.

Dine Brands — the owner and franchisor of the Applebee’s casual-dining concept and the IHOP family-dining concept — likely plans to report its fourth quarter earnings in late February or early March. There is the possibility that the company may choose to provide an update on Q1-to-date same-store sales trends on its related conference call that afternoon.

We believe that family-dining segment same-store sales in the U.S. likely came in worse than the Street expected for Q4 2021. This seems to have been caused in part by consumer concerns about rising U.S. Covid cases (particularly in December), as well as concerns about the Omicron variant (also primarily in December).

This past Thursday, Kalinowski Equity Research hosted a conference call featuring Dine Brands. We thank for their participation on the call Dine Brands’ CFO Vance Chang, and Executive Director, Investor Relations Ken Diptee. A replay of this call is available upon request. Here are some of the highlights of the conference call:

Kalinowski Equity Research invites you to participate in our latest “Ask the Experts” conference call, to take place tomorrow — Thursday, December 16th — starting at 1:00 PM Eastern time. The featured speakers will be Dine Brands’ CFO, Vance Chang; and Executive Director, Investor Relations, Ken Diptee. Institutional investors interested in joining the call are asked to register at: Campaign Registration (force.com)

Kalinowski Equity Research invites you to participate in our latest “Ask the Experts” conference call, to take place on Thursday, December 16th starting at 1:00 PM Eastern time. The featured speakers will be Dine Brands’ CFO, Vance Chang; and Executive Director, Investor Relations, Ken Diptee. Institutional investors interested in joining the call are asked to register at: Campaign Registration (force.com)

Now that sell-side consensus has settled out following Dine Brands’ recent Q3 earnings release, we notice that consensus (according to Consensus Metrix) for 2022E G&A/Revenues is at 19.1% (with consensus for 2021E at 19.5%). In other words, consensus presumes that G&A/Revenues is likely to be down by about -40 basis points for next year. However, we believe that G&A/Revenues will be up in 2022 vs. 2021.

Earlier today, Dine Brands reported adjusted Q3 EPS of $1.55. This was higher than our $1.40 forecast and sell-side consensus (according to Consensus Metrix) of $1.38. Adjusted EBITDA came to $63.3 million in Q3, above consensus of $59.1 million. We attribute the EPS beat to slightly better-than-expected same-store sales, as well as Q3 G&A/Revenues of 19.1% (more favorable than our 20.8% projection).

Earlier today, Dine Brands reported Q2 adjusted EPS of $1.94, well above our $1.65 forecast and sell-side consensus (according to Consensus Metrix) of $1.69. Adjusted EBITDA in Q2 came to $71.7 million, surpassing consensus of $67.0 million.

Although family dining segment same-store sales seem to be lagging those of most other U.S. restaurant sectors on a two-year basis, they have still come in somewhat better than we have been anticipating. As such, we raise our full-Q2E same-store sales forecast for IHOP to +128.0% (from +100.0%). This implies a two-year projection of about -7%. As of this writing, sell-side consensus — according to Consensus Metrix — for the Q2E one-year number is at +113.6%.

Based on continued strength in the casual dining segment over April, May, and early June, coupled with what we believe has been a fair amount of national advertising done by Applebee’s as of late, we raise our full-Q2E same-store sales forecast for Applebee’s to +117.4% (from +90.0%). This implies a two-year projection of +10.0%. As of this writing, sell-side consensus — according to Consensus Metrix — for the Q2E one-year number is at +103.5%.

Could Applebee’s sign a large franchise agreement with TravelCenters of America (TA; Not Rated)?

Earlier today, Dine Brands reported adjusted Q1 EPS of $1.75, well above our $0.80 forecast and sell-side consensus (according to Consensus Metrix) of $0.87. We attribute the EPS outperformance relative to our forecast to: (1) a much more favorable tax rate than projection (-6.6% actual vs. 25.0% projected); this helped Q1 EPS by about +46 cents, (2) better-than-expected Cost of Franchise and Restaurant Revenues as a percentage of Franchise and Restaurant Revenues (47.9% actual vs. 51.8% estimated), (3) more favorable than anticipated G&A/Revenue (19.5% actual vs. 20.6% forecasted), and (4) same-store sales than beat expectations for both Applebee’s U.S. and IHOP U.S.

With this report, we increase our Q1E U.S. same-store sales forecast for IHOP by +600 basis points, to -5.0%. As of this writing, sell-side consensus (according to Consensus Metrix) is at -9.9%. Our increased forecast represents (inter-related) factors including: (1) general improvement in one-year and two-year family dining sector sales trends, (2) benefits from stimulus-related consumer spending in March, and (3) “spring fever” perhaps finding itself a little more in bloom than usual amongst consumers this time of the year, given all that has been battled over the last 12+ months.

With this report, we increase our Q1E U.S. same-store sales forecast for Applebee’s by +450 basis points, to +1.0%. As of this writing, sell-side consensus (according to Consensus Metrix) is at -3.5%. Our increased forecast represents factors including: (1) general improvement in one-year and two-year casual dining sector trends, (2) Applebee’s resumption of national advertising in early March (which it did not have in January and February), coupled with (3) our belief that the Applebee’s guest in general may be more motivated to act by national advertising than the casual-dining guest in general. Keep in mind that about 48% of Applebee’s guests are under the age of 35, and also Applebee’s relative shift embracing more marketing on social-media platforms — to which guests 35 and under seem to respond relatively better than folks above the age of 35.

Earlier today, Dine Brands reported Q4 2020 adjusted EPS of $0.39, falling short of our recently-reduced $0.85 forecast and sell-side consensus (according to Consensus Metrix) of $0.67.

Dine Brands plans to release its Q4 2020 earnings before the market open on Tuesday, March 2nd. How do DIN shares tend to trade heading into earnings, and on the day of an earnings release?

Dine Brands plans to release its Q4 2020 earnings before the market open on Tuesday, March 2nd. As regards Q4E, we retain our IHOP U.S. same-store sales forecast of -30.0%, but we reduce our Applebee’s U.S. same-store sales projection by -200 basis points, to -7.5%. Dine Brands has previously announced that for the first four weeks of Q4E, IHOP’s same-store sales declined by -24.0%, while Applebee’s same-store sales decreased by -1.9%. Our updated Q4E projections incorporate implicit same-store sales assumptions for the remaining weeks of that quarter of -10% (or so) for Applebee’s and -33% (or so) for IHOP. As a result of all this, our Q4E EPS projection goes down by -2 cents, to $0.68. Our full-year 2020E EPS estimate also goes down by -2 cents (to $2.06).

About six months ago, we published a report examining market-share opportunities within the family dining sector. In this report, we update our numbers. One of the important changes is that we now look for 10%-25% of the family dining restaurants in the U.S. that were in operation as of the start of 2020 to be closed permanently by the end of March 2021. (Previously, we were looking for 5%-10% of family dining restaurants to be closed permanently by the end of December 2020.) Keep in mind that we expect these closures to be heavily weighted toward independents/momand-pops and, to a somewhat lesser degree, smaller (privately-held in nearly all cases) restaurant chains.

About six months ago, we published a report examining market-share opportunities within the casual dining sector. In this report, we update our numbers. One of the important changes is that we now look for 8%-20% of the casual dining restaurants in the U.S. that were in operation as of the start of 2020 to be closed permanently by the end of March 2021. (Previously, we were looking for 3%-15% of casual dining restaurants to be closed permanently by the end of December 2020.) Keep in mind that we expect these closures to be heavily weighted toward independents/momand-pops and, to a somewhat lesser degree, smaller (privately-held in nearly all cases) restaurant chains.

With this report, we update our data-driven Kalinowski Family Dining Index for Q4E to -23.2%. This figure is based on our latest proprietary checks/data as regards samestore sales performance for this segment during October and November. Our implied numbers for this October, November, and December are approximately -20%, -23%, and -27%, respectively.

With this report, we update our data-driven Kalinowski Casual Dining Index for Q4E to -18.4%. This figure is based on our latest proprietary checks/data as regards samestore sales performance for this segment during October and November. Our implied numbers for these October, November, and December are approximately -14%, -19%, and -22%, respectively.

Looking at unit closures announced and planned by large restaurant chains, and comparing these to unit closures from mom-and-pops/independents, goes to show just how large a market-share shift is going on in the U.S. restaurant industry. We look for most, if not all, of this market-share shift in favor of large concepts to persist in the years after 2020.

Based on our data-driven checks, we believe that same-store sales for U.S. chain restaurants in the casual dining, family dining, and fine dining segments are all showing sequential deceleration for the first half of November relative to fullOctober. This new trend follows 5-6 consecutive months of either sequentially improving full-service same-store sales (or at least not meaningfully deteriorating sequential same-store sales).

Earlier today, Dine Brands — parent company of the Applebee’s and IHOP restaurant concepts — reported adjusted Q3 EPS of $0.80, coming in well ahead of our $0.22 forecast and sell-side consensus (according to Consensus Metrix) of $0.37. A lowerthan-expected Q3 tax rate helped EPS by roughly +20 cents; we look for the tax rate to be at (or near) 26% in 2021E, but for Q4E we now project a tax rate of 41%. (Management does not quantify what to expect for the Q4 2020 tax rate, but does say to “expect it to be significantly higher than the normal statutory rate… a very high effective tax rate. It is possible that even our updated 41.0% forecast might be too low.)

With this report, we update our data-driven Kalinowski Casual Dining Index for Q3E to -19.6%. This figure is based on our latest proprietary checks/data as regards same-store sales performance for this segment during July, August, and September. Our implied numbers for these three months are about -24%, -19%, and -16%, respectively.

With this report, we update our data-driven Kalinowski Family Dining Index for Q3E to -29.0%. This figure is based on our latest proprietary checks/data as regards samestore sales performance for this segment during July 2020 and August 2020, as well as our best guess for what September 2020 is bringing us. The approximate monthly figures we use are -35% for July 2020, -29% for August 2020, and -25% for September 2020.

With this report, and based on our data-driven checks, we raise our Q3E U.S. samestore sales projections for both Applebee’s U.S. and IHOP U.S. to sell-side high forecasts (according to Consensus Metrix).

Yesterday, we hosted the latest in our “Ask the Experts” series of conference calls, this time around with featured speakers from Dine Brands: CFO Thomas Song, and Executive Director Investor Relations Ken Diptee. We thank them for their participation and insights.