Dine Brands (DIN) Q1 Earnings & Revenues Surpass Estimates

Dine Brands Global, Inc. (NYSE:DIN) , formerly known as DineEquity, Inc., reported better-than-expected earnings for the fifth straight quarter in first-quarter 2018. Also, the company’s revenues came ahead of the Zacks Consensus Estimate for the second straight quarter.

Adjusted earnings came in at $1.11 per share beating the consensus estimate of $1.07. However, the bottom line decreased 13.3% from the prior-year quarter. The downturn can be attributed to decline in the company’s gross profit, which was partially offset by lower tax rates and positive same-restaurant sales for both IHOP and Applebee's brands.

Total revenues in the quarter came in at $188.2 million, down 1.7% on a year-over-year basis. However, the top-line figure surpassed the consensus estimate of $174 million. Revenues were hurt by the latest franchising of IHOP company-operated restaurants.

Following the quarterly results, shares of the company declined nearly 2% in after-hours trading. In the past six months, Dine Brands has gained 71.4%, outperforming the industry’s rally of 0.2%. Let’s delve deeper into the numbers.

Brand Performances by Comps

Applebee's domestic system-wide comps increased 3.3%. This compares favorably with the prior-year quarter’s decline of 7.9%. Moreover, in the last reported quarter, the company’s brand has witnessed gain of 1.3%.

IHOP’s domestic system-wide comps were up 1% comparing favorably with the last reported quarter’s decline of 0.4% and the prior-year quarter’s decrease of 1.7%.

Cost, Gross Profit & Net Income

In the first quarter, total cost of revenues increased 7.7% year over year to $104.7 million. Subsequently, gross profit came in at $83.5 million, down 11.4% from the year-ago quarter.

General and administrative expenses in the quarter decreased 16.7% year over year to $41.9 million. However, net income was up 9.5% to $17.1 million compared with the year-ago quarter. The upside was primarily driven by income tax benefit.

Balance Sheet

As of Mar 31, 2018, cash and cash equivalents amounted to $96.4 million compared with $117 million as of Dec 31, 2017. Long-term debt at the end of first-quarter 2018 totaled $1,267.5 million compared with $1,269.8 million at the end of 2017. Goodwill as of Mar 31, 2018 was $339.2 million.
Cash flow from operating activities totaled $16.5 million as of Mar 31, 2018, compared with $19.5 million as of Dec 31, 2017.

In the reported quarter, the company paid dividend of 63 cents.

2018 View

Dine Brands reiterated its guidance for 2018. At Applebee's and IHOP brands, domestic system-wide comps are anticipated in the range of flat to up 3%. While Applebee's franchisees are expected to open 10 to15 restaurants globally, that of IHOP's might open 85 to 100 restaurants.

The company continues to expect adjusted EPS in the band of $4.95-$5.25.
General and administrative expenses are projected between $147 million and $156 million.

Zacks Rank & Peer Releases

Dine Brands carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Darden (NYSE:DRI) reported mixed third-quarter fiscal 2018 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues lagged the same. Adjusted earnings of $1.71 per share increased 29.5% year over year on the back of higher revenues.

Restaurant Brands’ (NYSE:QSR) first-quarter 2018 earnings and revenues surpassed the Zacks Consensus Estimate. Earnings under the previous accounting standard came in at 67 cents, improving 86.1% year over year.

Chipotle’s (NYSE:CMG) first-quarter 2018 earnings surpassed analysts’ expectations while revenues were in line with the same. Adjusted earnings of $2.13 per share surged 33.1% from the year-ago quarter, courtesy of higher revenues and lower food costs.

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