Dine Brands Global, Inc. Common Stock · NYSE:DIN
Dine Brands Global, Inc. Common Stock — DineEquity — Non-Deal Roadshow (November 2014)
29 slides from Dine Brands Global, Inc. Common Stock's roadshow presentation, Nov 4, 2014
Slide 1: Management Presentation November 4-6, 2014
Management Presentation November 4-6, 2014 © 2014 DineEquity, Inc. All rights reserved.
Slide 2: Disclaimer
Disclaimer 2 Forward-Looking Information Statements contained in this presentation may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by words such as "may," "will," "should," "expect
Slide 3: Management Introduction
3 Julia Stewart Chairman and Chief Executive Officer Tom Emrey Chief Financial Officer Management Introduction
Slide 4: Overview of DineEquity
Great franchisees. Great brands. dineEquity’ Overview of DineEquity
Slide 5: 99% franchised business model generates strong free cash flow with reduced volatility
5 99% franchised business model generates strong free cash flow with reduced volatility Transformed asset-lite franchise business model drives strong, consistent cash flow generation DineEquity has reduced its total debt by more than $1.25 billion since the end of 2007 (2) Applebee’s and IHOP are tw
Slide 6: Chain Overview
6 Chain Overview Founded in 1958, IHOP is an American icon Family dining restaurant leader with differentiated brand As of 9/30/2014, the IHOP system had: 1,566 U.S. franchise and area license locations (95%) 68 international franchise locations (4%) 10 U.S. company-operated locations (<1%) Founded
Slide 7: Strategic Rationale for the 2007 Acquisition of Applebee's
Strategic Rationale for the 2007 Acquisition of Applebee’s 7 Management team with proven skill set Brand revitalization Business model transformation Proven franchise model with significant cash generation and ability to return capital to stakeholders No direct competition with IHOP concept Large fr
Slide 8: We Have Delivered What We Promised
Since acquiring Applebee’s in November 2007, DineEquity has delivered on its goals for the business We Have Delivered What We Promised Source: Company Form 10-K and Form 10-Q filings. Free Cash Flow defined as Cash Flows from Operating Activities, less Capital Expenditures, plus Principal Receipts f
Slide 9: Strong Presence Across All 50 States
9 Source: Company Fiscal 2013 Form 10-K. Data as of December 31, 2013. Applebee’s and IHOP are powerful brands with a strong national presence across the U.S. Strong Presence Across All 50 States 6 4 20 1 4 1 17 7 8 3 5 8 19 20 7 2 5 5 9 11 12 15 15 29 21 36 31 21 32 40 24 31 23 27 28 22 30 150 80 5
Slide 10: Experienced Franchisee Base Across Both Brands
Experienced Franchisee Base Across Both Brands 10 Overview of Applebee’s Franchisees Overview of IHOP Franchisees 348 total franchisees Average franchisee operates 5 units Top 10 franchisees operate approximately 31% of total franchised units Top 10 franchisees have an average tenure of 20 years in
Slide 11: DineEquity Strategy
Great franchisees. Great brands. dineEquity’ DineEquity Strategy
Slide 12: The DineEquity story is one of strong and stable free cash flow
The DineEquity story is one of strong and stable free cash flow 3 2 Maximize the Business Innovate and Evolve Strong Brands Manage G&A Costs 1 Facilitate Franchisee Development 2 3 Generate Significant Free Cash Flow 1 DineEquity is focused on generating free cash flow DineEquity’s Value Creation St
Slide 13: Applebee's Operational Excellence, Marketing, Menu and Remodel
1 Operational Excellence Achieving consistent operations executional excellence Testing new service and guest interface models Streamlined the menu, making it easier to execute and a better experience for our guests Marketing Goal to be number one in brand perception with our target markets Emphasis
Slide 14: Innovate and Evolve Applebee's – Menu Innovation
1 Mushroom Swiss NEW Crosscut Ribs The American Standard Quesadilla Burger See You Tomorrow SM Refreshing Drinks Fan Favorites Every Day Value NEW All-In BurgersTM 15 Innovate and Evolve Applebee’s – Menu Innovation NEW Salted Caramel Pretzel Bites Strawberry Lemonade Quencher NEW Malibu® Red Tropic
Slide 15: Innovate and Evolve Applebee's – Remodel Program
1 16 Innovate and Evolve Applebee’s – Remodel Program
Slide 16: IHOP Operational Excellence, Marketing, Menu and Remodel
1 Operational Excellence Improving operations to drive sustainable and positive same-restaurant sales and traffic Marketing Refining our marketing message and guest testimonial creative strategy Communicating our value proposition effectively Advertising and Media Maximizing media investment through
Slide 17: IHOP – Drive Excitement Through Culinary Innovation and Advertising
1 NEW menu design launched in June 2013 Unveiled the NEW IHOP.com NEW Hot Apple Cider Simple & Fit: Whole Wheat Waffle French Toast Combo NEW Pumpkin Pancakes NEW Bac ‘n’ Cheddar Waffullicious Waffles 18 Innovate and Evolve IHOP – Drive Excitement Through Culinary Innovation and Advertising
Slide 18: DineEquity is now a 99% franchised system
2 DineEquity is now a 99% franchised system Note: As of September 30, 2014, DineEquity’s company restaurant operations segment consisted of 23 Applebee's company-operated restaurants and 10 IHOP company-operated restaurants. Source: Company Form 10-K and Form 10-Q filings. IHOP’s restaurant base has
Slide 19: International: An Exciting Development Opportunity
2 Source: Company Form 10-K and Form 10-Q filings. · Applebee’s has 145 franchised restaurants internationally as of 9/30/2014 · Expanded into Egypt and the Dominican Republic in 2013 · IHOP has 68 franchised restaurants internationally as of 9/30/2014 · Expanded into the Middle East and the Philipp
Slide 20: Track Record of Tight G&A Management
3 Source: Company Form 10-K filings and press releases. Comprised of actual IHOP G&A expense plus pro forma Applebee’s G&A expense as disclosed in the Company’s 2007 Form 10-K, less certain one-time costs primarily related to additional stock-based compensation triggered by the Applebee’s acquisitio
Slide 21: Historical Financial Performance
Historical Financial Performance
Slide 22: DineEquity's Diversified Sources of Revenue
23 Royalties ~4.5% Sale of Pancake / Waffle Dry-Mix Franchise Fees (1) Financing Revenues Rental Revenues Royalties ~4.0% Franchise Fees Note: IHOP revenue sources exclude advertising fund contributions from franchisees, which are recognized as revenue and a corresponding expense of franchise operat
Slide 23: Significant Free Cash Flow Generation
Significant Free Cash Flow Generation DineEquity has a history of operating a strong, consistent cash flow business DineEquity generates significant free cash flow from its franchise system that is conducive to a strengthening credit profile Generated $135 million of free cash flow in 2013 and more
Slide 24: Historical Capital Expenditures
(1) Capex as % of EBITDA As DineEquity has refranchised the majority of its company-owned restaurants, it has been very focused on managing its capital expenditures ($ in millions) Source: Company Form 10-K filings and press releases. Company’s 2014 financial performance guidance as of October 28, 2
Slide 25: Refinancing and Capital Allocation Update
Refinancing and Capital Allocation Update
Slide 26: Whole Business Securitization Refinancing Completed
Whole Business Securitization Refinancing Completed (1) Blended interest rate on Senior Secured Credit Facility at a variable interest rate of 3.75% and Senior Notes at a fixed rate of 9.5% 27 Total $1,226M x 7.32%(1) = $90M in Interest Securitized $1,300M x 4.277% = $56M in Interest Savings: Roughl
Slide 27: New Capital Allocation Strategy
New Capital Allocation Strategy 28 We plan to return capital to shareholders through a sustainable program of quarterly cash dividends and share repurchases. Significant 17% increase in quarterly dividend
Slide 28: Strong Track Record
Strong Track Record Strong brand performance at both Applebee’s and IHOP DineEquity has two strong brands – each ranked #1 in their respective categories for seven consecutive years through fiscal 2013 based on U.S. system-wide sales (1) Disciplined G&A management Reduced total debt by over $1.25 bi
Slide 29: Appendix: Free Cash Flow Reconciliation to GAAP
Appendix: Free Cash Flow Reconciliation to GAAP(1) (1) Source: The Company’s Form 10-K and Form 10-Q filings with the Securities and Exchange Commission 30 ($, in 000's) Fiscal 2008 Fiscal 2009 Fiscal 2010 Fiscal 2011 Fiscal 2012 Fiscal 2013 Year-to-Date 9/30/14 Total Cash flows provided by operatin