Dine Brands Global, Inc. (DIN) Bundle
Understanding Dine Brands Global, Inc. (DIN) Revenue Streams
Understanding Dine Brands Global, Inc.’s Revenue Streams
For the three months ended September 30, 2024, total revenue was $195.1 million, a decrease of 3.7% compared to $202.5 million in the same period of 2023. For the nine months ended September 30, 2024, total revenue was $607.4 million, down 2.8% from $624.7 million in the prior year.
Breakdown of Primary Revenue Sources
Revenue can be categorized into several key segments:
- Franchise Operations: Generated $166.4 million for Q3 2024, down from $172.5 million in Q3 2023.
- Rental Operations: Brought in $28.0 million for Q3 2024, compared to $29.1 million in Q3 2023.
- Company Restaurant Operations: Reported $0.3 million for Q3 2024, unchanged from Q3 2023.
- Financing Operations: Totaled $0.4 million for Q3 2024, down from $0.6 million in Q3 2023.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rates reveal significant trends:
- Q3 2024 franchise revenue declined by 3.7% versus Q3 2023.
- For the nine months ended September 30, 2024, franchise revenue decreased by 2.2% year-over-year.
- Rental revenue for Q3 2024 decreased by 3.8% compared to Q3 2023.
Contribution of Different Business Segments to Overall Revenue
| Segment | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | Change (%) |
|---|---|---|---|
| Franchise Operations | $166.4 | $172.5 | -3.7% |
| Rental Operations | $28.0 | $29.1 | -3.8% |
| Company Restaurant Operations | $0.3 | $0.3 | 0.0% |
| Financing Operations | $0.4 | $0.6 | -33.3% |
| Total Revenue | $195.1 | $202.5 | -3.7% |
Analysis of Significant Changes in Revenue Streams
Significant changes in revenue streams include:
- The decline in franchise revenue is attributed to a decrease in domestic same-restaurant sales and a reduction in the number of effective restaurants.
- Rental operations revenue decreased due to operating lease terminations and a reduction in percentage rent.
- Company restaurant operations showed negligible change, reflecting stability in this segment.
For the nine months ended September 30, 2024, franchise revenue was $518.7 million, down from $530.4 million in the prior year, representing a decrease of 2.2%.
In summary, the overall revenue trends indicate a challenging business environment, with declines in key segments impacting total revenue performance.
A Deep Dive into Dine Brands Global, Inc. (DIN) Profitability
Profitability Metrics
Gross Profit for the three months ended September 30, 2024 was $86.6 million, compared to $89.4 million for the same period in 2023, reflecting a decrease of 3.1%. For the nine months ended September 30, 2024, gross profit totaled $267.6 million, down from $271.6 million in 2023, a decrease of 1.5%.
Gross profit margins as a percentage of total revenue were as follows:
| Period | Gross Profit Margin |
|---|---|
| Q3 2024 | 44.4% |
| Q3 2023 | 44.1% |
| 9M 2024 | 44.0% |
| 9M 2023 | 43.5% |
Operating Profit for the three months ended September 30, 2024 was $21.2 million, compared to $22.5 million for the same period in 2023, resulting in a margin of 10.9% for Q3 2024. For the nine months ended September 30, 2024, operating profit was $61.8 million, decreasing from $66.3 million in 2023, with a margin of 10.2%.
Net Profit for the three months ended September 30, 2024, was $18.5 million, or $1.24 per diluted share, compared to $18.0 million or $1.19 per diluted share for the same period in 2023. For the nine months ended September 30, 2024, net profit was $57.9 million compared to $62.6 million in 2023, translating to $3.88 and $4.10 per diluted share, respectively.
The following table summarizes profitability metrics and trends:
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Gross Profit | $86.6 million | $89.4 million | $267.6 million | $271.6 million |
| Operating Profit | $21.2 million | $22.5 million | $61.8 million | $66.3 million |
| Net Profit | $18.5 million | $18.0 million | $57.9 million | $62.6 million |
The operating efficiency metrics indicate a decline in profitability trends over the past year, particularly in franchise operations, which saw a revenue decrease primarily due to a 5.9% drop in domestic same-restaurant sales for Q3 2024 compared to the prior year.
In terms of operational efficiency, general and administrative (G&A) expenses decreased to $45.4 million for Q3 2024, down from $48.6 million in Q3 2023. For the nine months ended September 30, 2024, G&A expenses totaled $144.4 million, compared to $147.5 million in the prior year.
Comparison with Industry Averages: The profitability ratios are compared with industry averages, where the average gross profit margin for the restaurant industry is approximately 60%, indicating that the company is operating below the industry benchmark.
As for the operational efficiency, the decline in gross margins can be attributed to rising labor and commodity costs affecting overall profitability. The company’s ability to manage these expenses will be crucial for future profitability improvement.
Overall, the profitability metrics indicate a challenging environment for the company, necessitating focused management on cost control and revenue enhancement strategies.
Debt vs. Equity: How Dine Brands Global, Inc. (DIN) Finances Its Growth
Debt vs. Equity: How Dine Brands Global, Inc. Finances Its Growth
The company's financial structure is significantly influenced by its debt levels, which include both long-term and short-term debt. As of September 30, 2024, the long-term debt consists of:
| Debt Type | Principal Amount (in millions) | Interest Rate | Maturity Date |
|---|---|---|---|
| 2019 Class A-2-II Notes | $594.0 | 4.723% | June 2049 (anticipated repayment in June 2026) |
| 2022 Class A-1 Notes | $100.0 | 7.82% | June 2052 |
| 2023 Class A-2 Notes | $500.0 | 7.824% | March 2053 (anticipated repayment in June 2029) |
As of September 30, 2024, the company had a total long-term debt of $1.194 billion. The total debt-to-equity ratio stands at approximately 6.9, indicating a high reliance on debt compared to equity. This ratio is significantly higher than the industry average of 1.5, suggesting that the company is more leveraged than its peers in the restaurant sector.
Recently, the company has engaged in refinancing activities, including repaying approximately $585.1 million of its 2019 Class A-2-I Notes in April 2023. Additionally, the company recognized a $1.7 million loss on extinguishment of debt during the nine months ended September 30, 2023.
The credit ratings for the company's debt instruments reflect its financial health. The company has maintained a B3 rating from Moody's and a B- rating from S&P Global Ratings. These ratings indicate a higher risk of default compared to investment-grade companies, which is consistent with its high leverage ratios.
In balancing its financing between debt and equity, the company utilizes a combination of stock repurchase programs and dividend payments to manage shareholder expectations while maintaining liquidity. For the nine months ended September 30, 2024, the company repurchased 269,621 shares at a cost of $12.0 million.
In conclusion, the current financial strategy reflects a significant commitment to leveraging debt for growth while attempting to maintain shareholder value through repurchases and dividends.
Assessing Dine Brands Global, Inc. (DIN) Liquidity
Assessing Dine Brands Global, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is 1.1, indicating that the company has sufficient short-term assets to cover its short-term liabilities.
Quick Ratio: The quick ratio stands at 0.9, suggesting potential liquidity concerns as it indicates that the company may not have enough liquid assets to cover its current liabilities without relying on inventory sales.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is reported at $48.2 million, down from $50.5 million in the previous year, reflecting a slight decrease in operational liquidity.
| Period | Current Assets (in millions) | Current Liabilities (in millions) | Working Capital (in millions) |
|---|---|---|---|
| September 30, 2024 | $200.5 | $152.3 | $48.2 |
| September 30, 2023 | $210.3 | $159.8 | $50.5 |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, cash flow from operating activities totaled $77.7 million, a slight decline from $79.3 million reported in the prior year.
Cash used in investing activities was $0.7 million in 2024, a significant decrease from $26.6 million in 2023, primarily due to reduced capital expenditures.
Cash flows from financing activities reported a net outflow of $42.5 million, down from $218.0 million the previous year, largely due to less repayment of long-term debt.
| Cash Flow Type | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Activities | $77.7 | $79.3 |
| Investing Activities | ($0.7) | ($26.6) |
| Financing Activities | ($42.5) | ($218.0) |
Potential Liquidity Concerns or Strengths
The decrease in the quick ratio to 0.9 raises potential concerns regarding the company's ability to meet short-term obligations without relying on inventory. However, the current ratio of 1.1 indicates a generally favorable liquidity position.
The adjusted free cash flow for the nine months ended September 30, 2024, improved to $77.8 million compared to $54.0 million in 2023, signaling better cash generation capabilities despite the decline in operating cash flows.
Is Dine Brands Global, Inc. (DIN) Overvalued or Undervalued?
Valuation Analysis
To evaluate the financial health of the company, we will analyze key valuation metrics including the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the company's diluted earnings per share (EPS) was $3.88. The stock price at that time was approximately $60.00, leading to a P/E ratio calculation of:
- P/E Ratio = Stock Price / EPS = $60.00 / $3.88 = 15.46
Price-to-Book (P/B) Ratio
The total stockholders' equity as of September 30, 2024, was ($216.670 million), with total shares outstanding of 15,273,565. The book value per share is:
- Book Value per Share = Total Equity / Shares Outstanding = ($216,670,000) / 15,273,565 = ($14.19)
- P/B Ratio = Stock Price / Book Value per Share = $60.00 / ($14.19) = Not applicable (negative book value)
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value (EV) is calculated as follows:
- Market Capitalization = Stock Price Shares Outstanding = $60.00 15,273,565 = $916.413 million
- Total Debt = $1,086.0 million
- Cash and Cash Equivalents = $34.5 million
- EV = Market Cap + Total Debt - Cash = $916.413 million + $1,086.0 million - $34.5 million = $1,967.913 million
For the EBITDA, the nine-month EBITDA as of September 30, 2024, was approximately $90 million. Thus, the EV/EBITDA ratio is:
- EV/EBITDA = EV / EBITDA = $1,967.913 million / $90 million = 21.87
Stock Price Trends
Over the last 12 months, the stock price has shown volatility, with the following notable points:
- 12 months ago: $55.00
- 6 months ago: $70.00
- Current price: $60.00
Dividend Yield and Payout Ratios
The company has consistently paid dividends of $0.51 per share per quarter. The annual dividend yield is calculated as:
- Annual Dividend = $0.51 4 = $2.04
- Dividend Yield = Annual Dividend / Stock Price = $2.04 / $60.00 = 3.40%
The payout ratio based on the EPS is:
- Payout Ratio = Annual Dividend / EPS = $2.04 / $3.88 = 52.57%
Analyst Consensus on Stock Valuation
As of the latest reports, the consensus among analysts is as follows:
- Buy: 6
- Hold: 4
- Sell: 1
Summary Table of Valuation Metrics
| Metric | Value |
|---|---|
| P/E Ratio | 15.46 |
| P/B Ratio | Not applicable |
| EV/EBITDA Ratio | 21.87 |
| Current Stock Price | $60.00 |
| Annual Dividend | $2.04 |
| Dividend Yield | 3.40% |
| Payout Ratio | 52.57% |
| Analyst Consensus (Buy/Hold/Sell) | 6/4/1 |
Key Risks Facing Dine Brands Global, Inc. (DIN)
Key Risks Facing Dine Brands Global, Inc.
Understanding the risk factors impacting Dine Brands Global, Inc. is crucial for assessing its financial health and future performance. Both internal and external risks play a significant role in shaping the company's operations and profitability.
Industry Competition
The casual dining industry remains highly competitive. The company faces challenges from both traditional competitors and emerging fast-casual dining options. As of September 30, 2024, the company reported a 7.1% decrease in Applebee's reported retail sales compared to the previous year, indicating pressure from competitive offerings.
Regulatory Changes
Changes in federal, state, and local regulations can impact operational costs and compliance requirements. Increased minimum wage laws and health regulations can lead to higher operational expenses. The effective tax rate for the company was reported at 28.0% for the three months ended September 30, 2024, an increase from 25.9% in the same period of the previous year.
Market Conditions
Fluctuations in consumer spending and economic downturns can adversely affect sales. The overall revenue for the three months ended September 30, 2024, decreased by 3.7% compared to the same period in 2023, underscoring the impact of market conditions on the company's financial performance.
Operational Risks
Operational risks include supply chain disruptions and increased costs related to commodities and labor. The company reported increased costs in labor and other restaurant operating expenses, which can directly impact profit margins.
Financial Risks
The company carries significant long-term debt, which poses financial risks. As of September 30, 2024, the long-term debt consisted of:
| Debt Type | Amount (in millions) | Interest Rate |
|---|---|---|
| 2019 Class A-2-II Notes | 594.0 | 4.723% |
| 2023 Class A-2 Notes | 500.0 | 7.824% |
| Credit Facility | 100.0 | 7.93% (weighted average) |
The total outstanding debt as of September 30, 2024, was approximately 1,294.0 million.
Strategic Risks
Strategic risks include the company's ability to adapt to changing consumer preferences and innovate its menu offerings. The company has faced challenges in maintaining its brand relevance, with reported decreases in same-restaurant sales across its primary brands, such as a 5.9% decrease for Applebee's.
Mitigation Strategies
To address these risks, the company is focusing on enhancing operational efficiencies and cost management strategies. It has reported a decrease in general and administrative expenses by 6.1% for the three months ended September 30, 2024. Additionally, the company is exploring menu innovations and marketing strategies aimed at attracting a broader customer base.
Future Growth Prospects for Dine Brands Global, Inc. (DIN)
Future Growth Prospects for Dine Brands Global, Inc.
Analysis of Key Growth Drivers
Key growth drivers for Dine Brands Global, Inc. include product innovations, market expansions, and strategic acquisitions. As of September 30, 2024, the company operates 1,618 Applebee's, 1,809 IHOP, and 118 Fuzzy's restaurants worldwide. This extensive franchise network provides a solid foundation for growth.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, total revenues were $607.5 million, a decline from $624.8 million in the previous year. The company reported a net income of $59.7 million for the same period. Future revenue projections suggest a focus on improving franchise operations, as evidenced by a slight increase in proprietary product sales at IHOP, which offset some declines in other areas.
Strategic Initiatives or Partnerships
Dine Brands has been active in enhancing its technology and customer engagement initiatives. The company has invested in information technology projects, which are expected to streamline operations and improve customer experience. Additionally, the company’s ongoing franchisee support and product innovation initiatives are designed to drive sales growth across its brands.
Competitive Advantages
The company benefits from its strong brand recognition and diverse portfolio, which includes established names like Applebee's and IHOP. The weighted average remaining lease term for its properties is 5.6 years for finance leases and 6.0 years for operating leases, providing stability in costs. Moreover, the company has a significant amount of $480 million in future minimum rents receivable from operating leases, ensuring a steady income stream.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Total Revenue | $195.0 million | $202.6 million | (3.7%) |
| Net Income | $19.1 million | $18.5 million | (3.2%) |
| Franchise Operations Revenue | $166.4 million | $172.5 million | (3.5%) |
| Company Restaurant Sales | $0.3 million | $0.3 million | 0.0% |
| Rental Operations Revenue | $28.0 million | $29.1 million | (3.8%) |
These figures highlight the challenges facing the company, particularly in franchise operations. However, the potential for recovery through strategic initiatives and market expansions remains significant.
Conclusion
As Dine Brands Global, Inc. continues to navigate the competitive landscape, its focus on innovation, strategic partnerships, and leveraging its established brands will be crucial for future growth.
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Updated on 16 Nov 2024
Resources:
- Dine Brands Global, Inc. (DIN) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Dine Brands Global, Inc. (DIN)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Dine Brands Global, Inc. (DIN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.