DIN - Earnings call transcript Q2 2018 | Dine Brands Global, Inc.

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Operator

Welcome to the Second Quarter 2018 Dine Brands Global, Inc. Earnings Conference Call. My name is Sofia, and I will be your operator for today's call. [Operator Instructions]. Please note that this conference is being recorded. the to turn Diptee. now will call Ken over I Mr. Diptee, begin. you may

Ken Diptee

CFO; Brands' welcome Steve XXXX Song, Gregg of Kalvin, and be of morning, will during Cywinski, Second and Joyce, Rebelez, John IHOP; to Tom Corporate by Good Applebee's. joined Q&A. Dine Quarter President President I'm Conference CEO; also Controller, Darren available Call.

Before harbor regarding safe I remember please our turn the Steve, call information. over to forward-looking

uncertainties are expressed known obligation With and may Brands' discuss information assumes today are and press During of statements. in over cause unknown to detailed which involves statements as actual release forward-looking different risks, non-GAAP Please Steve. supplement to these these described also factors and the of to to management Dine turn may call, or are measures, context the available XX-Q no website. in also refer the the financial our other forward-looking that in call may or which that, be and and press We I'll the today's certain evaluate The factors, and information update results than are implied. those filing. release which forward-looking on

Stephen Joyce

everyone. morning, Good Ken. Thanks,

for XX years. United by was quarter Applebee's, sales, leader that driven guests IHOP's sharp performance to-go the for by Applebee's for reported second our in their outperformed to positive improvement region quarter. last also first in comp was the across each compared driven continued affinity by consecutive second the wider the category So across its and increase have Applebee's primarily the every and strong by These sales growth margin States. both categories which brand's brands comp a quarter momentum day into supported X.X%, of the sales traffic. as underscores respective single comp part second The in sales nationwide quarter the

brand's and significant performance off-premise highly the IHOP direct easily respective to business in sales Steakburgers a off-premise that result from Also, IHOP's launch comp our guest-facing experienced lunch to following several all-new This to-go both posted across a upgrading parts performance provide all more but on portable traffic the is made solid to one immediately of last strong like over our Darren and continued incremental is and brands I'd warm. successful region. out attributable developing sales, business day point websites include improvements their packaging the will technology, platform. with lift and and positive John each enhancements in June Additionally, ensure little drivers comp you of later. a increase brand's that the XX Ultimate specific the of to dinner a on our very and food sales and remains details X.X% year.

positive drive broad-based Our gained have performance solid plans to growth traction. sustainable

While know work profile. is as there we improve us our and adjusted flow pleased are with we more that on ahead the initiatives execute results, cash strong several free we of

Turning health. to briefly financial franchisees Applebee's

very condition also system. overall are with We the pleased of the

the remaining result franchisees. individual comment of the and need for franchisees this We expect solutions are currently that to not on next note working Please have within will we on assistance that months. couple

to going have the discuss Tom and With results. doing and returns until these selectively as so, basis are the interim to the restaurants attractive we deliver of improve have and performance. unit to level By the opportunities Now process, in improvement of see the impressive part we franchisees do to we financial and that, to resolved. been and call health that turn manage issues an often the resolution ability growth of comp back our in the on I'm units Due take Tom? believe advertising sales, collectibility fees related the to both Applebee's the royalty over largely re-franchised.

Thomas Song

Good you, Thank Steve. everyone. morning,

start the Dine result two at fund, second for due franchise June that for here totaling both for to also welcome to fund seen through advertising per we of provide an Dine With $XX the This the second million Applebee's for year. with second and advertising openings decrease The was IHOP's become of the were development to to franchisees. past $X.XX IHOP guidance XXXX. after in of a million Total begin IHOPs June or XXXX I'd ago, Executive represents for bit per second the update to Year-to-date I ago. $XXX in me improvement was domestic sales. the the for XXXX far on year a brands' share. of same-restaurant same whole was thank of $X.XX This of decrease in the on same-restaurant that, improvement quarter primarily primarily approximately company-operated like million during. guidance by The our XXXX. line taxes second quarter. which To months, XXXX of operations, refranchising restaurants team the second warm during G&A other million contribution quarter and year. or Applebee's sales our franchise company-operated for gross tax an The profit to for of services the a million to even higher our $XX for revenues $XXX of for quarter the higher $XX some decline exceeds that approximately These provided as a in the my partially XXXX. mainly last share. due brand's by was the year. million revenues due the announced the was costs for later. I've provide of I'm quarter compared our like million to nine XX, Since $XX we will slightly approximately company offset restaurant for by same-restaurant quarter quarter IHOP stock-based compared have and of and quarter the for national $XX.X of after offset range These national joining of increase decrease for approximately in in $X.X partially team previously the X.X% we for the special rate is I whole X.X% join guidance of of with quarter range costs the incentive have balance of Let the for summary contribution expect months capabilities second of highlight XX $X.XX quarter second our professional talented I've personnel compared were a related the year. the increase an over to in previously I'll EPS operations run expenses quarter I've color guests significant results received. to Applebee's G&A the would expenses. decline in million completed XXXX second pleased what more XXXX. compensation. was special to contributed $X.XX our was to was than very saying impressed approximately the the the a Adjusted marginal million that the with of colleagues sales $XX.X performance.

rate. briefly our Turning tax to

XXXX XX% tax quarter effective GAAP from for X from effective million tax due was of by $X.X federal XXXX XX% through to to for state years. audits rate for been would the a our increase what Our compared XX% rate rate rate to and higher tax and XX%, XX% ended second respectively have periods. our XXXX This months of for approximately related The federal the the to of was tax an the combined adjustments in XXXX. tax same period provision approximately increased and X

On the completion of the certain in other of allow years collection accelerate years. XXXX and will to XXXX the recognized prior us benefits tax hand, tax

to The a approximately within XX the cash from flows activities of million period year. of same due approximately $XX refund XXXX capital. first million receive months months of the of million free next period flow the was same for months. from $XX $XX changes to to for last approximately increase approximately $XX million were the to working six increased for expect from last cash XXXX Cash the million first favorable for Adjusted in year. six the operating compared impact primarily We $XX

term. health on by to $X same in million royalty all well compared like a franchisee and continued payments franchisees. would royalty making financial July, the to reserved and three payments, decline positioned made the for improvement their through concentrated XXXX the approximate We an over debt this We progress announced Applebee's of previously brands prior in participation represents believe new delayed the franchisee and period remain royalty that highlight to Regarding I sales that payments brand. franchisees due in growth further noted Applebee's both the health. encouraged significant Applebee's that to We've were comp milestone long and expense periods. Applebee's three are for advertising are addressing of and bad recovery

update I to revisions, an Turning on guidance. few complete to highlight but see guidance. for press our briefly release please a would performance like

XX compares and comps noted and now we'll previous to approximately As range receivables. of to higher was the of are range Expectations with a sustainable, securitized our between also to that, in restaurants. the for Applebee's between pleased John. range And million. plan XX range between half We as flat in year IHOP's between previous was expenses. notes debt. approximately receipts the to contracts to approximately comps This closure X.X% cash this restaurants performance positive to the $XX morning, the managing expected restaurants The continue to million for combined. $XXX With X%. on between are for to solid our between first mainly over we pursuing To to I'll execute while and expectations release X.X%. to positive XX our $XXX back Applebee's of our result flat XX separate refinancing expect expectations positive in from lastly, domestic to $XX previous call X%. expectations million, revised international half and year, the positive of compares X.X% Applebee's and Applebee's we The of first and of positive Adjusted now year, we press the was million drive previous to and is expect of restaurants turn currently flow our performance slightly positive now half now the This sales close, due approximately free of and X.X%. and domestic and positive range international XX equipment

John Cywinski

morning, Tom, everyone. Thanks, and good

consecutive certainly 'XX. as three we've XX with with in positive of traffic. our in comp of all including coming Applebee's now pleased comps X.X% here QX are We were up posted growth from quarters of virtually sales growth, this progress weeks consecutive

delivered has basis on growth quarters a dining, X,XXX Applebee's For and both represent fast ago. swing our we're from in from casual past stealing best and decade, than casual, sales. these represents share context, a as more three family point year-to-date clearly and traffic outperformed comp we've year an dining sustained QSR the X.X% sales competitors Collectively, performance consistently

Now basis Applebee's, by sales according this on points in months has perspective, the to to and category, outperformed traffic. put dining the excluding XXX on first year, for casual Applebee's Black Box, this proper basis of six comp comp XXX points

for So apparent that and to franchisees our me Applebee's. has it's America love certainly rediscovered its

early, to upon step, momentum quarter we While one this one still plan time. at one build a guest,

to top It priority. and As our remain strategy members our on past all excellence while and Guest our the is system a partners continues franchisee improve, put year. on team our variability to this metrics guests with We prior in momentum we multidimensional narrow. place stated fixated that result with restaurants. continues I've on calls, their as satisfaction of growth operating restaurant starts

leadership of a can't keen marketing real a high strength. with operations, proficiency a understanding initiatives, culinary We with GMs is ops complexity having degree simplification confidence. our team and members Now restaurant simply of and don't brand and introduce execute and

partnership and Importantly, ever. collaboration our than franchisee is stronger

domestic unique model commitment with and is to best industry. business partners that deep and They real guest-centric none. a restaurant only the to are with some franchisees XX experience of have We infrastructure second culture sophisticated a the in and

they than at of the handful vast the and profitable healthier growth are a restaurant remain ago While a sustained majority certainly year were level. poised for challenged, franchisees markedly

to collective of an agreed to our and through franchisees national X.XX% from the Given increase advertising July confidence, rate X.X% X their end momentum to with all agreeing XXXX. all increase effective have virtually

results. Good the as it the and and buzzworthy abundant to to moving compelling in position breakthrough most culinary beverage relevance proper and best-in-class executed In We marketing innovation, meaningful is we allows implement Eatin' strategic news as plan forward. our successfully category. strategy Neighborhood us relatable QX, this media value, support with and continue In our off-premise brand with the advertising of leverage Now

in comp off-premise is half of XXX in year-end. national at now we partners brand of total as to-go by this accounting least sales our restaurants and On XX% about And than with number for well. being our meaningfully front, regional offered the some and sales growth, grew one to delivery QX more expect Applebee's increase partners

While early. pride still belief it's and are at back Applebee's,

competitors have work Our much formidable, remain and ahead. we

committed We excellence. to franchisee our and refine success operators proven long-term also to restaurant continue restaurant and portfolio optimize with Applebee's

outlined, includes previously this franchisee-to-franchisee a franchises. well introduction As as as some new acquisition of few the

closing, As in partner Utah, franchisee one which proud performers who And last just operating last substantial with Mountain, our our September, I'm and our is Apple and Louisiana Kentucky. an Arkansas our example, In Applebee's of with system. month, franchise we Apple, experience now restaurant XX team welcomed Oklahoma, in franchisees. newest XX our in currently restaurants introduced of top new the

conference and unique and we back have certainly in quo goal we a for on challenge do. last to the bold sustained 'XX. our this in bold we'll growth, Thinking annual partnership, We America, October, clear a here we're improved restaurant in our continue goal brand category-leading the way most profitable and to everything well a confident to I'm plan set to achieving status results that become

that, turn with I'll to Darren. Now it

Darren Rebelez

a the comp range executing We're with positive for marking morning, Box stands positive to Good increased for between on on multipronged Based in the our we're to which second second and data. Black sales in and drive family X.X% sales raising X.X%, our sales sales traffic, according saw growth. John. dining the we're decline contrast year-to-date consecutive and quarter category, in comp strategy sustainable sales you, pleased of everyone. quarter results. our Thank to X% positive comp comp stark positive year, quarter a IHOP's sales expectations currently X%. This second projections

solid quarter, highly anticipated was off-premise and dinner of the our lunch positive the lineup. in business the and driven day all-new leap comp growth improvement the the Regarding by Ultimate initial stronger sales parts, second the across of mainly sales from impact launch Steakburgers in our

the detail focus particularly a restaurants program, our last the great restaurants, Guests with All a the quite media weeks representing the this and A Shine and part. begin Although XXX approximately domestic momentum during shortly. discuss franchisees is Rise strategy significant over the launch XX% against our launch, is. current of I'll strategic are result to guest it dinner completed quarter, in the guest Shine the traffic, guest guest the during XX positive on we excited comments sales the inception buzz. XXX enhancing of of were which those of quarter, attention with and the imperatives: significant effect three the N' continued occurred the where four amount garnered had part this experience completed and IHOP's The a about national remodels enhancing day remodel more experiencing remodel system. through created have been brand the have execution is significantly running I'll experience, approximately the program. to key second experience. N' year. in we enhancing expect remodeled, being restaurants Since driving significantly our of significantly and Rise the traffic my of

sales IHOP's technology the incremental sales approximately The per last XXX our at the utilizing needs completion. the increased this $XX XXX tech-savvy results. same quarter X% the quarter year. experience to the for to restaurant. the for ordering sales guests. continue latter brand's consumer to rate our points online guest comp also website now as experience orders. positive of for omni total to meet compared the our to pace Overall, has basis XX% quarter, as grew online very account accessibility. guest-facing today's we're enhance for check of that The a in as by the To-go of We're range in of slightly and of of growth drive year over a year. of pleased contributed a off-premise over representing I'm expect off-premise increased system X% to we've to of has well We to technology program's period experience to-go sales complete a the strategy fully the app, an XX%. our of mobile quarter. total second guest channel produced To say estimated on-the-go, Similarly, average compared last at remodels during solid run end XXX of in outside second to the percentage until approximately increase strong completed sales same the implementation to-go enhanced the traffic With comp an by increase and a elevating integrated sales

data, outstanding visit. tireless a CREST and satisfaction teams scores team result. This Now platform, dining restaurants. to and quarter a launching restaurant true measurement I'm overall guests restructuring we've our and to an paying field the our the highest WiFi period, taking great I running achieved improve both guest franchisees testament is family an pleased the are off that according system efforts IHOP enhanced with our franchisees truly rolling congratulate for outlined let's scores turn intent say and our several franchisees, these and deliver to Last to including on casual working outstanding to their to recent launching NPD in In effort efforts to and operations, undertaken are initiatives notice. that invest our organization. service in highest the revisit every operations out most experience iHospitality dining.

would and lunch people's dinner traffic. to concerted begin the in new and approach a occasions. year, made change We to to effort food great about driving a to grab it our and appetite. knew Turning take attention bold IHOP we narrative Last

we our When convey we achieved strong, competitors. that results we burgers, dinner lunch This also these they all annually. that did name heights. stories dish, Once we yet led which June, sold part billion of reinvention with choice, sold classic a just entrants the repurchase. we delivered, They're of end XX taking amazing burgers just that most XX% that's Burgers this the some the for opportunity change were motivation earned beef, creative to billion much we launched burger, us. IHOP over that. us when June teaser lineup black X provide USDA change believe of generate I than with and dish was day knew XX,XXX and and the burger new the day developed color, as of a to guests our were over we to and strategy. a burgers X XXX% our huge were had our burger wanted media a to was we told tested new Ultimate Angus expansion what through seriously our over We pancakes. the into aligns excitement them the that biggest about and as home the Guests high-quality that's culinary campaign take intent well successful. better very team generated natural, which the usually had Steakburgers another To teaser, impressions. burgers, between parts, example to very outside our we IHOP's Our take the innovation is the name media are is a burgers

potential of of IHOP a mentions billion reach X media over Social generated people.

by XXX the have and sales the remained since, part first during by driving grow of weeks sales viral three we mix constant points the launch. saw burger impact, Xx dinner basis by day Assisted

dinner momentum. drive Steakburgers early to innovative pleased the to $X.XX for during enticing the by generated Ultimate with campaign the marketing IHOP build results and sales attention this the day part. ready on only off-premise growth and We're the combo helped also Additionally,

brand our globally, Turning expand net net our strategically plan international five locations, to end, is. led of through in new opened quarter, XX we for America briefly In franchisee, this year including XX global the excited guest Peru another very part in for that continent agreement in XX restaurants new long-term we're step target where IHOP announced a openings, brand to our believe fourth restaurants last the new pillar: full and time is We markets. restaurant in important that launch of presence We're as openings. a franchisees to the first part forward South our strategy. our over XX tracking To with second to had XX open the and of month with and next a to our growth being quarter good the our momentous line an Percapitals guidance for our S.A.C., an years.

celebrated guests $X.XX. offering of brand iconic buttermilk on our pancakes July original short we Lastly, our XX a only anniversary for XXth stack the of by world-famous

franchisees Additionally, York members opening bell Stock team of ringing commemorated Exchange. the by several IHOP and executive event New the the at the

used rollout across the largest to to locations XXX and over in the partner also provide with our We opportunity national DoorDash delivery partnership delivery first of the announce from U.S.

of currently Given IHOP To these momentum to the compared expect by the national We're added close matchup and providing the DoorDash and before you also and category. restaurants have delivery We'll and the platforms. due DoorDash's the between anticipated close, have to both the and comp gap encouraged widening end performance IHOP with combined sales to updates brand's we areas, year. service additional close we're XXX to have to X,XXX testing course. for GrubHub Amazon in current platform to the locations restaurants

Looking ahead, sustainable that we're we're taking long-term to steps in confident drive the positive sales.

stable base. have a franchisee and We healthy

to focus innovation guest our We're understanding through guest-facing restaurant insights deep continually and and decision-making experience the a maintain brand. remodels, consumer a culinary is on excellence. infused want expect Our with the guests, service from of technology, enhancing

what communicate its With closing now IHOP We and utilizing more back call Steve? over that, peers. favorable Steve have comments. from his the turn to demographics, I'll very advertising for we're to better separates effectively breakthrough guest

Stephen Joyce

international the brands and share sustainable taken the franchisees To incremental wrap line competition steps have strategic talent, focused for We expansion. over driving long across taking and build long-term development revenue our to we solid margin term. of growth in top platform growth. our while expansion from for These investments operations, channels technology, on Darren. remain several a Thanks, up, include advertising,

to happy Operator? might we're have. Now take any you questions

Operator

question [Operator comes Brian our Raymond Instructions]. first from James. from And Vaccaro

Brian Vaccaro

with of alcohol [Indiscernible] saw more compared cadence the performed. food promotions grill the quantification also on you after monthly how then to for and also if the promotions comps on on can great. Applebee's color Any the how adding and or side, doing wondering would you the and provide the some QX maybe Any that combos? two $XX color the is and be steak on color

Stephen Joyce

So Brian, this is going. Steve. Good some morning. the We're actually don't both give them way you very why pleased specifics? are with John,

John Cywinski

without commentary, all-you-can Yes, combos; or bolder proposition. And particular, guests, a data the basis, performing and well. a with any Brian. We'll any and our and both as which know our a is to-go in sequential providing kickstarted the programs that combination impressive very had this They're for but resist In results to-go us. air two around promotional steak, are of steak providing overt currently on a color bigger, marketing; messaging particular, year we of resonated accomplishing successful monthly very you culinary beverage riblets quarter, program with and result for of revisit the on the in which some $XX the much we're tenders, objectives. some programs

pleased as franchisees. very So our are

Stephen Joyce

thing I just quarter, very the has -- July. the is strong had we add think other carried yes, so while guess to that into a I momentum

Brian Vaccaro

IHOP segue the -- Applebee's and Would great look how and riblets at the Applebee's be comps directionally next comments obviously of a to return quarter-to-date, that's say by even given you to question, the as into guess. the willing Darren well? some right. riblets I All And

Stephen Joyce

has the said I'm I the to thing I through say to would happy July. be going built that momentum we same before, and continued

Brian Vaccaro

just of Shifting uncollected said full think it gears of bad the segment bad or royalty was collections to just Fair segment? bad collection looks net your it back for at was of could expense in basically quarter specifically in million year to it Applebee's year-on-year recoveries. this you maybe and speak the Applebee's I royalties, the piece, is a franchise It net debt the then of back collections royalty decline like to $X speak and half debt the sort enough. first But profit in the to what movement debt as expense. to including quarter, the the to you expectation relates

Stephen Joyce

Yes, at then an level, get the kind of let Tom overall me into start detail. have and I'll

royalty a year the on that's we everybody, we're a change from big so side, paid ago. by So great the getting were is where news

So that's the as path where exciting. continuing are And very the solution. the detail a is other work, into we to news to have we great a get other we of

Now the couple have we that the solution of remaining months. stages, but a an we the agreement. we're actually over to are a so and in everybody, next But working agreements for to will for varying we're those path paper pretty two that franchisees still have work we solution that confident execute can

into places very have profit mixed which strong It's turned has condition the was sales this. -- the strong the led depending as it's we health to overall story. a strong increases to in strong franchisee's obviously led of that's so comp increases, what all Obviously, some on entire system. And the in

an would from where of actually we're a little great fix. we which be, perspective, a So thought we ahead overall is

to want give a little you do detail? Tom, So

Thomas Song

the let here Yes, through you, numbers me go some of for Brian.

So down debt under of of period $X to second by bad XXXX. quarters the in Year-to-date, first of came to million the quarter, million XXXX. second $X by almost the compared decreased to expense figure couple $X.X million compared debt just bad

year, year. for we we're for to the land tone last probably the around million on That's $X going going know indicated I that So to down $X million. call the probably to closer

Brian Vaccaro

has think from just that's And one how impacting on loans the perspective Q, in I one more last franchisees. And Applebee's helpful. loans? you franchise franchisee an I that's that the then some Applebee's accounting provide segment extended income? those in noticed $XX you on Okay, been disclosed Can million color to health. you there

Stephen Joyce

so those give the about into room that past the extension some some pay longer-term Well, franchisees way to think breathing receivables they the to due are notes loans is of them.

those give little all it, in off And detail any you on cases, -- great terms were news we the the then of of can more in is a receivables. not writing So Tom?

Thomas Song

think with indicated kind trying starting on signs some and loans. our to Yes, guidance, there. cash back I we're flow so free to that again paid favorable I of They're get update respect of those bring some to in

Brian Vaccaro

so room royalty that's interpretation? sales, the flow from current and see breathing previously on is loans grow here. a Is shouldn't royalties So on that uncollected and correct meaningfully those current we

Thomas Song

we're but working still Yes, we receivables. have amounts with into up through. from that. additional of -- rolling they be loans that, the two to will franchisees previous will be There They that some be simply exception could

some And more for see intents on would both. so specifics be and you that depending of want of all for get done. then and But to to purposes, I'd we the solutions -- may

Operator

further have time. this We questions no at

Stephen Joyce

Okay.

to results We So October XX. speaking on thank forward thanks interest your for and time and again soon, you scheduled today. quarter Dine look to for Brands. with again the We're you report for your third in

Operator

today's you you, participating. gentlemen. This Thank and concludes conference. Thank ladies for

disconnect. now may You

Dine Brands Global (DIN) 1 Aug 182018 Q2 Earnings call transcript