30 slides from Dine Brands Global, Inc. Common Stock's investor presentation, Mar 4, 2015
Slide 1: Management Presentation March 2015
Great franchisees. Great brands. dineEquity’ MANAGEMENT PRESENTATION MARCH 2015 diNeEQUIty’ ———nwomeami wammener ABiedecs Md
Slide 2: Disclaimer: Forward-Looking Information
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 Gregg Kalvin Senior Vice President, Corporate Controller Management Introduction
Slide 4: Overview of DineEquity
OVERVIEW OF DINEEQUITY dineEquity’ ; @ierees
Slide 5: 99% franchised business model generates strong free cash flow
5 99% franchised business model generates strong free cash flow with reduced volatility Asset-lite franchise business model drives strong, consistent cash flow generation DineEquity has reduced its total debt by more than $1.0 billion since the end of 2007 (2) Applebee’s and IHOP are two iconic bran
Slide 6: Our Brands Lead Their Respective Categories
6 Our Brands Lead Their Respective Categories Casual Dining: Domestic System-wide Sales Family Dining: Domestic System-wide Sales Source: Nation’s Restaurant News, “Top 100,” June 30, 2014 (Applebee’s rank based on 2013 U.S. system-wide sales in the “casual” dining category; IHOP rank based on 2013
Slide 7: Solid Track Record of Delivering What We Promised
DineEquity has delivered on its goals to drive the business forward Solid Track Record of Delivering What We Promised Source: Company Form 10-K filings (1) Total Debt includes Long-Term Debt, Capital Lease and Financing Obligations (including current maturities), and Series A Preferred Stock 7 Goals
Slide 8: Consistent Franchisee Development
8 Consistent Franchisee Development IHOP and Applebee’s Consolidated Gross Development 2010-2014 Source: Company Form 10-K filings. Strong and stable franchisee development is a key strategic priority 0 20 40 60 80 100 2010 91 2011 82 2012 82 2013 84 2014 92 G r o s s D e v e l o p m e n t ( I H O P
Slide 9: Strong Presence Across All 50 States
9 Source: Company’S fiscal 2014 Form 10-K. Data as of December 31, 2014. Applebee’s and IHOP are powerful brands with a strong national presence across the U.S. Strong Presence Across All 50 States 5 4 19 1 4 1 20 7 9 3 5 8 19 21 7 2 3 5 9 12 12 15 15 30 22 37 32 21 32 39 24 32 23 28 28 22 30 150 79
Slide 10: DineEquity's Diversified Sources of Revenue
10 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 11: Our Strategy
OUR STRATEGY dineEquity’ Applebees
Slide 12: DineEquity's Value Creation Strategy
The DineEquity story is one of strong and stable free cash flow and returning it to shareholders Maximize the Business Innovate and Evolve Strong Brands Manage Costs 1 Facilitate Franchisee Development 2 3 DineEquity is focused on generating free cash flow DineEquity’s Value Creation Strategy 12 Dri
Slide 13: Same-Restaurant Sales Performance
14 Same-Restaurant Sales Performance Applebee’s System-wide Same-Restaurant Sales IHOP System-wide Same-Restaurant Sales Source: Company’s fiscal 2014 Form 10-K and Company’s 2015 financial performance guidance as of February 25, 2015 Innovate and Evolve Strong Brands 1
Slide 14: Applebee's Operational Excellence, Marketing and Menu
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 15: Applebee's Menu Innovation
Mushroom Swiss The American Standard Your Neighborhood Grill & Bar Refreshing Drinks New Appetizer Platform Every Day Value NEW All-In BurgersTM 16 Whiskey Smash Strawberry Lemonade Quencher Innovate and Evolve Strong Brands 1
Slide 16: Remodel Program
1 17 Remodel Program Innovate and Evolve Strong Brands 1
Slide 17: IHOP Operational Excellence
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 Increased contribution to the IHOP
Slide 18: Continuous Menu Innovation
1 Continuous Menu Innovation Raspberry White Chocolate Chip Pancakes NEW Salted Caramel Coffee Simple & Fit: Whole Wheat Waffle French Toast Combo NEW Turkey & Avocado Bennie NEW Criss-Croissants 19 Drive Excitement Through Culinary Innovation and Advertising Innovate and Evolve Strong Brands 1
Slide 19: Remodel Program
1 20 Innovate and Evolve Strong Brands 1 Remodel Program
Slide 20: Long-term brand building business
DineEquity is in the long-term brand building business 21 Innovate and Evolve Strong Brands 1
Slide 21: Investing in Talent and Systems to Drive Development Globally
2 Note: As of December 31, 2014, DineEquity’s company restaurant operations segment consisted of 23 Applebee's company-operated restaurants and 11 IHOP company-operated restaurants. Source: Company ‘s fiscal 2014 Form 10-K IHOP’s restaurant base has grown by approximately 23% since the end of 2007 D
Slide 22: Track Record of Cost Containment: G&A
3 Source: Company’s 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 acquisit
Slide 23: Track Record of Cost Containment: Interest Expense
3 Source: Company Form 10-K filings and press releases. (1) We incurred a substantial amount of indebtedness to finance the Applebee's acquisition. As a result, our interest expense increased significantly from that reported in prior years. 24 Track Record of Cost Containment Corporate Interest Expe
Slide 24: Minimal Capital Expenditures
3 Source: Company Form 10-K filings and press releases. 25 ($ in millions) Capital Expenditures (2009 - 2014) Manage Costs 3 99% Franchised System Requires Minimal Capital Expenditures DineEquity is making prudent investments in technology and future restaurant prototyping to drive future growth
Slide 25: Fiscal 2015 Free Cash Flow Guidance
Fiscal 2015 Free Cash Flow Guidance 26 Fiscal 2015 Free Cash Flow Guidance using New Definition (in millions) Cash flows provided by operations $115 - 125 Approximate receipts from long-term receivables (excluding direct financing leases) 8 Approximate capital expenditures (9) Free cash flow (1) $11
Slide 26: Refinancing and Capital Allocation
REFINANCING AND CAPITAL ALLOCATION 27
Slide 27: 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% 28 Total $1,226M x 7.32%(1) = $90M in Interest Securitized $1,300M x 4.28% = $56M in Interest Cash Interest Sa
Slide 28: New Capital Allocation Strategy
New Capital Allocation Strategy 29 Board has authorized a meaningful increase in the quarterly dividend Quarterly $0.75 $0.875 Annual $3.00 dividend $3.50 In addition, the Board has replenished our share repurchase authorization to $100 million Significant 17% increase in quarterly dividend announce
Slide 29: Capital Allocation Summary
30 Capital Allocation Summary Source: Company Form 10-K and Press Release (1) Excludes the fourth quarter 2014 declared dividend of approximately $17 million paid on January 9, 2015 ($ in Millions) Since the capital allocation strategy was announced in the first quarter of 2013, DineEquity has retur
Slide 30: Solid Track Record and What Lies Ahead
Solid 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 2014 based on U.S. system-wide sales (1) Disciplined G&A management Reduced total debt by over $1.0 bill