Dine Brands Global Inc
For the period ended Mar 31, 2025. Filed May 7, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 7, 2025
DIN$35.85-0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-06.
0001628280-24-045455
Item 2. —Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-07.
0001628280-25-022869
Item 2. —Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 125 previous paragraphs and 123 current paragraphs.
66 unchanged; 37 reworded; 19 added; 21 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 22 previous and 24 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
Applebee’s system-wide domestic same-restaurant sales decreased 2.2% for the three months ended March 31, 2025 as compared to the same period of 2024. The decrease in same-restaurant sales was primarily due to a decrease in traffic, partially offset by an increase in average check.
Current report
IHOP's system-wide domestic same-restaurant sales decreased 2.7% for the three months ended March 31, 2025 as compared to the same period of 2024. The decrease in same-restaurant sales was primarily due to a decrease in traffic and a decrease in average check.
Current report
Fuzzy's system-wide domestic same-restaurant sales decreased 12.2% for the three months ended March 31, 2025 as compared to the same period of 2024. The decrease in same-restaurant sales was primarily due to a decrease in traffic and a decrease in average check.
Current report
(e) The franchise sales percentage change for 2025 was impacted by the acquisition of 47 Applebee's restaurants in November 2024 and 10 IHOP restaurants in March 2025 now reported as company-operated.
Current report
Events Impacting Comparability of Financial Information
Current report
Acquisition of Franchise Restaurants and Refranchising of Company-Operated Restaurants
Current report
During the three months ended March 31, 2025, we operated 47 Applebee's restaurants across Georgia, Texas, Arkansas, Illinois, Kentucky, Tennessee, Mississippi and Missouri acquired in November 2024 and 10 IHOP restaurants in Ohio and Kentucky acquired in March 2025. During the three months ended March 31, 2024, we did not operate any Applebee's and IHOP restaurants.
Current report
While we currently intend to own and operate these restaurants for the near term, we will assess and monitor opportunities to refranchise these restaurants under favorable circumstances. From time to time, we may acquire restaurants from franchisees for a variety of reasons which is consistent with and should not be considered a change in our business strategy to operate as a highly franchised company.
Current report
Total revenue for the three months ended March 31, 2025 increased compared with the same period of the prior year, primarily due to the operation of 47 Applebee's restaurants acquired in November 2024 and 10 IHOP restaurants acquired in
Current report
Applebee's franchise fee revenue for the three months ended March 31, 2025 decreased 5.6% as compared with the same period of the prior year, primarily due to fewer effective franchise restaurants, the number of which declined due to our acquisition of 47 Applebee's restaurants in November 2024 and restaurant closures, and a 2.1% decrease in domestic franchise same-restaurant sales.
Current report
Applebee's franchise expenses for the three months ended March 31, 2025 increased $1.2 million compared with the same period of the prior year primarily due to an increase in bad debt expense and an increase in IT franchisee support costs.
Current report
IHOP's franchise fee revenue for the three months ended March 31, 2025 decreased 3.4%, as compared with the same period of the prior year, primarily due to a 2.6% decrease in domestic franchise same-restaurant sales and a decrease in the number of effective franchise restaurants as well as a decrease in proprietary product sales.
Current report
Fuzzy's franchise expenses for the three months ended March 31, 2025 decreased $1.1 million as compared with the same period of the prior year primarily due to a decrease in franchisor advertising contribution.
Current report
G&A expenses for the three months ended March 31, 2025 decreased 1.6% compared to the same period of the prior year, primarily due to a decrease in compensation-related expenses, partially offset by an increase in legal and professional services.
Current report
Interest expense, net
Current report
Closure and impairment charges
Current report
Closure and impairment charges for the three months ended March 31, 2025 increased $5.2 million compared to the same period of the prior year. The increase in closure and impairment charges was primarily attributable to the strategic realignment of the IHOP Cincinnati market resulting in the acquisition and closure of certain IHOP restaurants in March 2025.
Current report
On November 22, 2024, the Board of Directors declared a fourth quarter 2024 cash dividend of $0.51 per share of common stock, paid on January 7, 2025 to the stockholders of record as of the close of business on December 20, 2024.
Current report
Adjusted free cash flow for the three months ended March 31, 2025 decreased $15.1 million compared to the same period of the prior year primarily due to lower cash flows from operating activities.
Removed paragraphs (21)
Previous report
Total gross profit for the nine months ended September 30, 2024 decreased compared with the same period of the prior year due to decreased revenue from franchise and rental operations and increased franchisor advertising contribution. In addition, income before income taxes for the nine months ended September 30, 2024 decreased compared to the prior year period due to increased interest expense, offset by a decrease in G&A expenses, a loss on disposition of assets in the same period in the prior year. The increase in interest expense primarily related to higher-rate securitized notes and borrowings from our revolving line of credit. The decrease in G&A expenses is primarily attributable to expenses related to the stopping of the IHOP Flip'd initiative in the same period of the prior year, a decrease in professional services, a decrease in occupancy costs, and a decrease in compensation-related expenses, offset by an increase in depreciation expense (see G&A Expenses section below for further detail). The decrease in impairment charges is primarily related to the technology that was developed in connection with the IHOP Flip'd initiative that was stopped and the impairment of four IHOP master land and building leases in the same period of the prior year.
Previous report
Applebee’s system-wide domestic same-restaurant sales decreased 5.9% for the three months ended September 30, 2024 and decreased 4.1% for the nine months ended September 30, 2024 as compared to the same periods of 2023. The decrease in same-restaurant sales was primarily due to a decrease in traffic, partially offset by an increase in average check.
Previous report
IHOP's system-wide domestic same-restaurant sales decreased 2.1% for the three months ended September 30, 2024 and 1.7% for the nine months ended September 30, 2024 as compared to the same periods of 2023. The decrease in same-restaurant sales was primarily due to a decrease in traffic, partially offset by an increase in average check.
Previous report
Fuzzy's system-wide domestic same-restaurant sales decreased 9.6% for the three months ended September 30, 2024 and 8.9% for the nine months ended September 30, 2024 as compared to the same periods of 2023. The decrease in same-restaurant sales was primarily due to a decrease in traffic, partially offset by an increase in average check.
Previous report
Comparison of the Three and Nine Months Ended September 30, 2024 and 2023
Previous report
Applebee's franchise fee revenue for the three months ended September 30, 2024 decreased 4.0% as compared with the same period of the prior year, primarily attributable to the unfavorable impact on royalties of a 5.9% decrease in domestic same-restaurant sales and a decrease in the number of effective franchise restaurants, offset by improved collections from international franchisees. Applebee's franchise fee revenue for the nine months ended September 30, 2024 decreased 4.0% as compared with the same period of the prior year, primarily attributable to the unfavorable impact on royalties of a 4.1% decrease in domestic same-restaurant sales and the decrease in the number of effective franchise restaurants, offset by an increase in accelerated franchise fee recognition due to restaurant closures.
Previous report
Applebee's franchise expenses for the three months ended September 30, 2024 decreased $0.3 million compared with the same period of the prior year primarily due to a recovery of previously written off receivables from international franchisees. Applebee's franchise expenses for the nine months ended September 30, 2024 decreased $3.0 million compared with the same period of the prior year primarily due to a decrease in bad debt expense.
Previous report
IHOP's franchise fee revenue for the three months ended September 30, 2024 decreased 1.3% as compared with the same period of the prior year, primarily due to a decrease in domestic same-restaurant sales of 2.1% and a decrease in licensing revenue, partially offset by an increase in the number of effective franchise restaurants and proprietary product sales. IHOP's franchise fee revenue for the nine months ended September 30, 2024 increased 0.8%, as compared with the same period of the prior year, primarily due to an increase in proprietary product sales and the number of effective franchise restaurants, partially offset by a 1.7% decrease in domestic same-restaurant sales and a decrease in virtual brand revenue.
Previous report
Fuzzy's franchise expenses for the three months ended September 30, 2024 decreased $0.2 million as compared with the same period of the prior year primarily due to a decrease in the cost of proprietary product sales. Fuzzy's franchise expenses for the nine months ended September 30, 2024 increased $2.4 million as compared with the same period of the prior year primarily due to an increase in franchisor advertising contribution and an increase in bad debt expense.
Previous report
Applebee's advertising revenues and expenses for the nine months ended September 30, 2024 decreased 4.5% compared to the same period of the prior year primarily due to a 4.1% decrease in domestic franchise same-restaurant sales and decrease in the number of effective franchise restaurants. IHOP's advertising revenues and expenses for the nine months ended September 30, 2024 decreased 0.7% as compared with the same period of the prior year, primarily due to a 1.7% decrease in same-restaurant sales partially offset by an increase in the number of effective franchise restaurants.
Previous report
Rental operations gross profit for the nine months ended September 30, 2024 decreased as compared to the same period of the prior year, primarily due to prior year lease buyouts and operating lease terminations.
Previous report
G&A expenses for the three months ended September 30, 2024 decreased 6.6% compared to the same period of the prior year, primarily due to a decrease in compensation-related expenses (predominantly incentive compensation), partially offset by an increase in depreciation expense.
Previous report
G&A expenses for the nine months ended September 30, 2024 decreased 2.1% compared to the same period of the prior year, primarily due to a decrease in incentive compensations, expenses related to the stopping of the IHOP Flip'd initiative in the same period of the prior year, a decrease in professional services and a decrease in occupancy costs, offset by an increase in stock-based compensation, depreciation expense and severance costs.
Previous report
Interest expense, net and loss on extinguishment of debt
Previous report
Interest expense, net for the nine months ended September 30, 2024 increased compared to the same periods of the prior year, primarily due to the higher interest rate on our refinanced securitized notes as well as on our Credit Facility, partially offset by the increase in interest income from improved yields.
Previous report
The Company repaid the entire outstanding balance of approximately $585.1 million of its 2019 Class A-2 Notes during the nine months ended September 30, 2023 and recognized a $1.7 million loss on extinguishment of debt from the write-off of the related remaining issuance costs. This loss was offset by a $1.7 million gain on extinguishment of debt from the purchase of $67.9 million of its 2019 Class A-2 Notes under par during the nine months ended September 30, 2023.
Previous report
Loss (gain) on disposition of assets
Previous report
The loss on disposition of assets for the three and nine months ended September 30, 2023 primarily related to the disposition of certain IHOP Flip'd assets.
Previous report
On May 14, 2024, the Board of Directors declared a second quarter 2024 cash dividend of $0.51 per share of common stock, paid on July 5, 2024 to the stockholders of record as of the close of business on June 20, 2024.
Previous report
On September 5, 2024, the Board of Directors declared a third quarter 2024 cash dividend of $0.51 per share of common stock, paid on October 8, 2024 to the stockholders of record as of the close of business on September 20, 2024.
Previous report
Adjusted free cash flow for the nine months ended September 30, 2024 improved compared to the same period of the prior year due to the decrease in capital expenditures and an increase in principal receipts from notes and equipment contracts receivable, partially offset by a decrease in cash flows provided by operating activities.
Reworded paragraphs (37)
Previous wording
The effective tax rate for the three and nine months ended September 30, 2024 was higher than the rate of the comparable prior periods primarily due to a lower tax deduction related to stock-based compensation.
Current wording
The effective tax rate for the three months ended March 31, 2025 was higher than the rate of the prior comparable period primarily due to a lower tax deduction related to stock-based compensation, resulting from the changes in our stock price.
Previous wording
The following table highlights the primary components of the increase (decrease) in our income before income taxes for the three and nine months ended September 30, 2024, compared to our income before income taxes for the comparable prior periods (in millions):
Current wording
The following table highlights the primary components of the decrease in our income before income taxes for the three months ended March 31, 2025, compared to our income before income taxes for the comparable prior period (in millions):
Previous wording
Total gross profit for the three months ended September 30, 2024 decreased compared with the same period of the prior year due to decreased revenue from franchise and rental operations. Income before income taxes for the three months ended September 30, 2024 increased compared to the prior year period primarily due to decreased G&A expenses, decreased impairment charges and decreased interest expense. The decrease in G&A expenses is primarily attributable to a decrease in compensation-related expenses (predominantly incentive compensation), partially offset by an increase in depreciation expense. The decrease in impairment charges is primarily related to the impairment of four IHOP master land and building leases in the same period of the prior year.
Current wording
Income before income taxes for the three months ended March 31, 2025 decreased compared to the prior year period primarily due to a decrease in gross profit and an increase in closure and impairment charges, partially offset by a decrease in G&A expenses. Total gross profit for the three months ended March 31, 2025 decreased compared with the same period of the prior year due to decreased revenue from franchise and rental operations. The increase in closure and impairment charges was primarily attributable to the strategic realignment of the IHOP Cincinnati market resulting in the acquisition and closure of certain IHOP restaurants in March 2025. The decrease in G&A expenses is primarily attributable to a decrease in compensation-related expenses, partially offset by an increase in legal and professional services.
Previous wording
See“Consolidated Results of Operations - Comparison of the Three and Nine Months Ended September 30, 2024 and 2023” for additional discussion of the changes shown above.
Current wording
See“Consolidated Results of Operations - Comparison of the Three Months Ended March 31, 2025 and 2024” for additional discussion of the changes shown above.
Previous wording
Our key performance indicators for the three and nine months ended September 30, 2024 were as follows:
Current wording
Our key performance indicators for the three months ended March 31, 2025 were as follows:
Previous wording
(1) Franchise and area license restaurant closings, net of openings, during the three and nine months ended September 30, 2024.
Current wording
(1) Franchise and area license restaurant closings, net of openings, during the three months ended March 31, 2025.
Previous wording
(2) Change in the weighted average number of franchise, area license and company-operated restaurants open during the three and nine months ended September 30, 2024, compared to the weighted average number of those open during the same periods of 2023.
Current wording
(2) Change in the weighted average number of franchise, area license and company-operated restaurants open during the three months ended March 31, 2025, compared to the weighted average number of those open during the same period of 2024.
Previous wording
Based on data from Black Box Intelligence, a restaurant sales reporting firm (“Black Box”), Applebee's same-restaurant sales for the three and nine months ended September 30, 2024 underperformed the casual dining segment of the restaurant industry (excluding Applebee's) during the same period.
Current wording
Based on data from Black Box Intelligence, a restaurant sales reporting firm (“Black Box”), Applebee's same-restaurant sales for the three months ended March 31, 2025 underperformed the casual dining segment of the restaurant industry (excluding Applebee's) during the same period.
Previous wording
Based on data from Black Box, IHOP's decrease in same-restaurant sales for the three and nine months ended September 30, 2024 underperformed the family dining segment of the restaurant industry (excluding IHOP) during the same period.
Current wording
Based on data from Black Box, IHOP's same-restaurant sales for the three months ended March 31, 2025 underperformed the family dining segment of the restaurant industry (excluding IHOP) during the same period.
Previous wording
(b) “System-wide sales” are retail sales at Applebee’s and Fuzzy's restaurants operated by franchisees and IHOP restaurants operated by franchisees and area licensees, as reported to the Company, in addition to retail sales at company-operated Fuzzy's restaurants. System-wide sales do not include retail sales of ghost kitchens. Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company. An increase in franchisees' reported sales will result in a corresponding increase in our royalty revenue, while a decrease in franchisees' reported sales will result in a corresponding decrease in our royalty revenue. Unaudited reported sales for Applebee's and Fuzzy's franchise restaurants, Fuzzy's company-operated restaurants, IHOP franchise restaurants and IHOP area license restaurants were as follows:
Current wording
(b) “System-wide sales” are retail sales at Applebee’s and Fuzzy's restaurants operated by franchisees and IHOP restaurants operated by franchisees and area licensees, as reported to the Company, in addition to retail sales at company-operated Applebee's, IHOP and Fuzzy's restaurants. System-wide sales do not include retail sales of ghost kitchens. Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company. An increase in franchisees' reported sales will result in a corresponding increase in our royalty revenue, while a decrease in franchisees' reported sales will result in a corresponding decrease in our royalty revenue. Unaudited reported sales for Applebee's and Fuzzy's franchise restaurants, IHOP franchise restaurants, IHOP area license restaurants, and Applebee's, IHOP and Fuzzy's company-operated restaurants were as follows:
Previous wording
The restaurant counts and activity presented above include 13 dual-branded international Applebee's and IHOP restaurants at September 30, 2024, and six dual-branded international Applebee's and IHOP restaurants at September 30, 2023, which are tabulated in both brands’ activities. Dual-branded restaurants are defined as restaurants that run two of our concepts and share an entrance, front of the house staff and a kitchen. The restaurant counts and activity presented above do not include one domestic Applebee's ghost kitchen (small kitchens with no store-front presence, used to fill off-premise orders), seven international Applebee's ghost kitchens and 34 international IHOP ghost kitchens.
Current wording
The restaurant counts and activity presented above include 19 dual-branded international and one dual-branded domestic Applebee's and IHOP restaurants at March 31, 2025, and eight dual-branded international Applebee's and IHOP restaurants at March 31, 2024, which are separately counted in each of our brands' restaurant counts and activity. Dual-branded restaurants are defined as restaurants that reside in one location and operate two of our restaurant concepts under two separate franchise agreements.
Previous wording
Total revenue for the three and nine months ended September 30, 2024 decreased compared with the same periods of the prior year, primarily due to the decrease in franchise and rental operations revenue. The decrease in franchise operations revenue was primarily attributable to the decrease in domestic same-restaurant sales and the decrease in the number of Applebee's and Fuzzy's effective restaurants, partially offset by increases in the number of effective restaurants and proprietary product sales at IHOP. Rental operations revenue for the three months ended September 30, 2024 decreased compared with the same period of the prior year, primarily due to operating lease terminations and a decrease in percentage rent. Rental operations revenue for the nine months ended September 30, 2024 decreased compared with the same period of the prior year, primarily due to prior year lease buyouts and operating lease terminations.
Current wording
March 2025, partially offset by the decrease in franchise and rental operations revenue. The decrease in franchise operations revenue was primarily attributable to the decrease in domestic same-restaurant sales, the decrease in the number of effective restaurants and the decrease in proprietary product sales at IHOP. Rental operations revenue for the three months ended March 31, 2025 decreased compared with the same period of the prior year, primarily due to lease terminations and a decrease in percentage rent due to lower system sales.
Previous wording
Total gross profit for the three and nine months ended September 30, 2024 decreased compared with the same periods of the prior year, primarily due to the decrease in franchise and rental operations revenue. The franchise operations gross profit decreased for the three months ended September 30, 2024 primarily due Applebee's and IHOP decreased franchise gross profit. The franchise operations gross profit decreased for the nine months ended September 30, 2024 primarily due to Fuzzy's and
Current wording
Total gross profit for the three months ended March 31, 2025 decreased compared with the same period of the prior year, primarily due to the decrease in franchise and rental operations revenue. The franchise operations gross profit decreased primarily due to Applebee's and IHOP decreased franchise operations gross profit. The decrease in rental operations gross profit for the three months ended March 31, 2025 was primarily due to decreased rental revenue as described above.
Previous wording
IHOP's franchise expenses for the three months ended September 30, 2024 increased $0.6 million as compared with the same period of the prior year, primarily due to an increase in bad debt expense and an increase in the cost of proprietary product sales. IHOP's franchise expenses for the nine months ended September 30, 2024 decreased $0.2 million as compared with the same period of the prior year, primarily due to a decrease in bad debt expense and a decrease in franchisee IT support costs, partially offset by an increase in franchisor advertising contribution.
Current wording
IHOP's franchise expenses for the three months ended March 31, 2025 decreased $0.6 million as compared with the same period of the prior year, primarily due to a decrease in franchisor advertising contribution and a decrease in the cost of proprietary product sales, partially offset by an increase in bad debt expense.
Previous wording
Fuzzy's franchise fee revenue for the three months ended September 30, 2024 decreased 6.8% as compared with the same period of the prior year, primarily attributable to the unfavorable impact on royalties of a 9.6% decrease in same-restaurant sales, the decrease in the number of effective franchise restaurants and a decrease in proprietary product sales, partially offset by an increase in termination fees. Fuzzy's franchise fee revenue for the nine months ended September 30, 2024 decreased $0.9 million as compared with the same period of the prior year, primarily attributable to a 8.9% decrease in same-restaurant sales and a decrease in the number of effective franchise restaurants, partially offset by an increase in termination fees.
Current wording
Fuzzy's franchise fee revenue for the three months ended March 31, 2025 decreased $0.6 million as compared with the same period of the prior year, primarily due to the unfavorable impact on royalties of a 12.2% decrease in franchise same-restaurant sales and a decrease in the number of effective franchise restaurants.
Previous wording
Applebee's advertising revenues and expenses for the three months ended September 30, 2024 decreased 6.7% compared to the same period of the prior year primarily due to a 5.9% decrease in domestic franchise same-restaurant sales and a decrease in the number of effective franchise restaurants. IHOP advertising revenues and expenses for the three months ended September 30, 2024 decreased 2.2% compared to the same period of the prior year, primarily due to a 2.1% decrease in same-restaurant sales, partially offset by an increase in the number of effective franchise restaurants.
Current wording
Applebee's advertising revenues and expenses for the three months ended March 31, 2025 decreased $3.5 million compared to the same period of the prior year primarily due to fewer effective franchise restaurants, the number of which declined due to our acquisition of 47 Applebee's restaurants in November 2024 (whose contributions to the national advertising fund are reflected as company restaurant expenses instead of advertising revenues) and restaurant closures, and a 2.1% decrease in domestic franchise same-restaurant sales. IHOP advertising revenues and expenses for the three months ended March 31, 2025 decreased 3.9% compared to the same period of the prior year, primarily due to a 2.6% decrease in domestic franchise same-restaurant sales and a decrease in the number of effective franchise restaurants.
Previous wording
Rental operations relate primarily to IHOP franchise restaurants. Rental income includes sublease revenue from operating leases and interest income from finance leases. Rental expenses are costs of prime operating leases and interest expense on prime finance leases.
Current wording
Rental operations relate primarily to IHOP franchise restaurants. Rental income includes sublease revenue from operating leases and interest income from real estate leases. Rental expenses are costs of prime operating leases and interest expense on prime finance leases.
Previous wording
Rental operations gross profit for the three months ended September 30, 2024 decreased compared with the same period of the prior year, primarily due to operating lease terminations and a decrease in percentage rent.
Current wording
Rental operations gross profit for the three months ended March 31, 2025 decreased as compared to the same period of the prior year, primarily due to lease terminations and a decrease in percentage rent due to lower system sales.
Previous wording
For the three and nine months ended September 30, 2023, company restaurant operations consisted of three Fuzzy's restaurants that were acquired in December 2022, of which two were subsequently refranchised in the second quarter of 2023. Company segment restaurant expenses may include costs associated with reacquired restaurants in the process of being refranchised. There were no reacquired restaurants expenses during the nine months ended September 30, 2024 and 2023.
Current wording
As discussed under "Events Impacting Comparability of Financial Information," company restaurant operations for the three months ended March 31, 2025 included 47 Applebee's restaurants acquired in November 2024, 10 IHOP restaurants acquired in March 2025, and one Fuzzy's restaurant. Company restaurant operations for the three months ended March 31, 2024 included one Fuzzy's restaurant. Company segment restaurant expenses may include costs associated with acquired restaurants in the process of being refranchised. There were no acquired restaurants expenses during the three months ended March 31, 2024.
Previous wording
Financing revenues primarily consist of interest income from the financing of IHOP equipment leases and franchise fees as well as interest income on notes receivable due from franchisees. Financing expenses are sales and use taxes related to IHOP equipment leases. Financing revenue and gross profit for the three and nine months ended September 30, 2024 declined compared to the same periods of the prior year, primarily due to progressive decline in interest income as note balances are repaid.
Current wording
Financing revenues primarily consist of interest income from the financing of IHOP equipment leases and franchise fees as well as interest income on notes receivable due from franchisees. Financing expenses are sales and use taxes related to IHOP equipment leases. Financing revenue and gross profit for the three months ended March 31, 2025 declined compared to the same period of the prior year, primarily due to progressive decline in interest income as note balances are repaid.
Previous wording
Interest expense, net for the three months ended September 30, 2024 was slightly lower than the same period of the prior year, primarily due to lower interest expense from less borrowings under the revolving Credit Facility as well as an increase in interest income.
Current wording
Interest expense, net for the three months ended March 31, 2025 was slightly lower than the same period of the prior year, primarily due to the decrease in interest rates on our Credit Facility as well as an increase in interest income from improved yields.
Previous wording
Our income tax provision or benefit will vary from period to period in our normal course of business for two reasons: a change in income before income taxes and a change in the effective tax rate. Changes in our income before income taxes were addressed in the preceding sections of“Consolidated Results of Operations - Comparison of the Three and Nine Months Ended September 30, 2024 and 2023."
Current wording
Our income tax provision or benefit will vary from period to period in our normal course of business for two reasons: a change in income before income taxes and a change in the effective tax rate. Changes in our income before income taxes were addressed in the preceding sections of“Consolidated Results of Operations - Comparison of the Three Months Ended March 31, 2025 and 2024."
Previous wording
Our effective tax rate for the three and nine months ended September 30, 2024 was higher than the rate of the comparable prior periods primarily due to a lower tax deduction related to stock-based compensation.
Current wording
Our effective tax rate for the three months ended March 31, 2025 was higher than the rate of the prior comparable period primarily due to a lower tax deduction related to stock-based compensation, resulting from the changes in our stock price.
Previous wording
Our long-term debt includes two series of fixed rate senior secured notes, the Series 2019-1 4.723% Fixed Rate Senior Secured Notes in an initial aggregate principal amount of $600 million (the “2019 Class A-2-II Notes”) and the Series 2023-1 7.824% Fixed Rate Senior Secured Notes, Class A-2 in an initial aggregate principal amount of $500 million (the “2023 Class A-2 Notes” and, together with the 2019 Class A-2-II Notes, the “Class A-2 Notes”). The Series 2019-1 4.194% Fixed Rate Senior Secured Notes, Class A-2-I (the “Class A-2-I Notes”) were voluntarily repaid in full on April 17, 2023. For a description of the 2019 Class A-2-I Notes, refer to Note 8 — Long-Term Debt of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Current wording
Our long-term debt includes two series of fixed rate senior secured notes, the Series 2019-1 4.723% Fixed Rate Senior Secured Notes in an initial aggregate principal amount of $600 million (the “2019 Class A-2-II Notes”) and the Series 2023-1 7.824% Fixed Rate Senior Secured Notes, Class A-2 in an initial aggregate principal amount of $500 million (the “2023 Class A-2 Notes” and, together with the 2019 Class A-2-II Notes, the “Class A-2 Notes”).
Previous wording
While the Class A-2 Notes are outstanding, payment of principal and interest is required to be made on the Class A-2 Notes on a quarterly basis. The payment of principal on the Class A-2 Notes may be suspended when the leverage ratio for the Company and its subsidiaries is less than or equal to 5.25x. As of September 30, 2024, our leverage ratio was approximately 4.1x. Therefore, quarterly principal payments are not required.
Current wording
While the Class A-2 Notes are outstanding, payment of principal and interest is required to be made on the Class A-2 Notes on a quarterly basis. The payment of principal on the Class A-2 Notes may be suspended when the leverage ratio for the Company and its subsidiaries is less than or equal to 5.25x. As of March 31, 2025, our leverage ratio was approximately 4.15x. Therefore, quarterly principal payments are not required.
Previous wording
We may voluntarily repay the Class A-2 Notes at any time; however, if repaid prior to certain dates we would be required to pay make-whole premiums. As of September 30, 2024, there was no make-whole premium associated with voluntary prepayment of the 2019 Class A-2-II Notes. As of September 30, 2024, the make-whole premium associated with voluntary prepayment of the 2023 Class A-2 Notes was approximately $37.8 million. We also would be subject to a make-whole premium in the event of a mandatory prepayment required following certain rapid amortization events or certain asset dispositions. The mandatory make-whole premium requirements are considered derivatives embedded that must be bifurcated for separate valuation. We estimated the fair value of these derivatives to be immaterial as of September 30, 2024, based on the probability-weighted discounted cash flows associated with either event.
Current wording
We may voluntarily repay the Class A-2 Notes at any time; however, if repaid prior to certain dates we would be required to pay make-whole premiums. As of March 31, 2025, there was no make-whole premium associated with voluntary prepayment of the 2019 Class A-2-II Notes. As of March 31, 2025, the make-whole premium associated with voluntary prepayment of the 2023 Class A-2 Notes was approximately $27.2 million. We also would be subject to a make-whole premium in the event of a mandatory prepayment required following certain rapid amortization events or certain asset dispositions. The mandatory make-whole premium requirements are considered derivatives embedded that must be bifurcated for separate valuation. We estimated the fair value of these derivatives to be immaterial as of March 31, 2025, based on the probability-weighted discounted cash flows associated with either event.
Previous wording
Our DSCR for the reporting period ended September 30, 2024 was approximately 3.5x.
Current wording
Our DSCR for the reporting period ended March 31, 2025 was approximately 3.4x.
Previous wording
As of September 30, 2024, the outstanding balance of the Credit Facility was $100 million. The amount of $0.6 million was pledged against the Credit Facility for outstanding letters of credit, leaving $224.4 million of the Credit Facility available for borrowing at September 30, 2024. It is anticipated that any principal and interest on the Credit Facility outstanding will be repaid in full on or prior to the quarterly payment date in June 2027, subject to two additional one-year extensions at the option of the Company upon the satisfaction of certain conditions. The letters of credit are used primarily to satisfy insurance-related collateral requirements. The weighted average interest rate on Credit Facility borrowings for the period outstanding during the nine months ended September 30, 2024 was 7.93%.
Current wording
As of March 31, 2025, the outstanding balance of the Credit Facility was $100 million. The amount of $0.6 million was pledged against the Credit Facility for outstanding letters of credit, leaving $224.4 million of the Credit Facility available for borrowing at March 31, 2025. It is anticipated that any principal and interest on the Credit Facility outstanding will be repaid in full on or prior to the quarterly payment date in June 2027, subject to two additional one-year extensions at the option of the Company upon the satisfaction of certain conditions. The letters of credit are used primarily to satisfy insurance-related collateral requirements. The weighted average interest rate on Credit Facility borrowings for the period outstanding during the three months ended March 31, 2025 was 6.95%.
Previous wording
Dividends declared and paid per share for the three and nine months ended September 30, 2024 and 2023 were as follows:
Current wording
Dividends declared and paid per share for the three months ended March 31, 2025 and 2024 were as follows:
Previous wording
During the nine months ended September 30, 2024 and 2023, the Company paid dividends of $23.5 million and $31.7 million, respectively.
Current wording
During the three months ended March 31, 2025 and 2024, the Company paid dividends of $7.8 million and $7.8 million, respectively.
Previous wording
During the nine months ended September 30, 2024, the Company repurchased 269,621 shares of common stock at a cost of $12.0 million. Cumulatively, the Company has repurchased 1,865,399 shares at a cost of $116.7 million under the 2022 Repurchase Program.
Current wording
During the three months ended March 31, 2025, the Company repurchased 64,869 shares of common stock at a cost of $1.6 million. Cumulatively, the Company has repurchased 1,930,268 shares at a cost of $118.4 million under the 2022 Repurchase Program.
Previous wording
From time to time, we also repurchase shares owned and tendered by employees to satisfy tax withholding obligations on the vesting of restricted stock awards. Shares are deemed purchased at the closing price of our common stock on the vesting date. See Part II, Item 2 for detail on this stock repurchase activity during the nine months ended September 30, 2024.
Current wording
From time to time, we also repurchase shares owned and tendered by employees to satisfy tax withholding obligations on the vesting of restricted stock awards. Shares are deemed purchased at the closing price of our common stock on the vesting date. See Part II, Item 2 for detail on this stock repurchase activity during the three months ended March 31, 2025.
Previous wording
In summary, our cash flows for the nine months ended September 30, 2024 and September 30, 2023 were as follows:
Current wording
In summary, our cash flows for the three months ended March 31, 2025 and 2024 were as follows:
Previous wording
Cash provided by operating activities is primarily driven by revenues earned and collected from our franchisees, and profit from our rental operations, financing operations and our company-owned restaurant. Cash provided by operating activities decreased $1.6 million during the nine months ended September 30, 2024 compared to the same period of the prior year. This decrease was primarily attributable to a decrease in gross segment profit partially offset by a decrease in G&A expenses, as discussed in the preceding sections of this MD&A, and a favorable increase in working capital.
Current wording
Cash provided by operating activities is primarily driven by revenues earned and collected from our franchisees, and profit from our rental operations, financing operations and our company-owned restaurant. Cash provided by operating activities decreased $14.5 million during the three months ended March 31, 2025 compared to the same period of the prior year. This decrease was primarily attributable to a decrease in gross segment profit and an unfavorable decrease in working capital resulting from timing of prepaid rent payments and the collection of an income tax settlement in the same period of the prior year, partially offset by a decrease in incentive compensation payments.
Previous wording
Investing activities used net cash of $0.7 million for the nine months ended September 30, 2024 compared to $26.6 million for the nine months ended September 30, 2023. The decrease in cash used by investing activities of $25.9 million was primarily attributable to a decrease in capital expenditures compared to the same period of the prior year, partially offset by an increase in principal receipts from notes and equipment contracts receivables. The Company increased spending in information technology and other projects in fiscal year 2023.
Current wording
Investing activities used net cash of $1.9 million for the three months ended March 31, 2025 compared to $1.2 million for the three months ended March 31, 2024. The increase in cash used by investing activities of $0.7 million was primarily attributable to an increase in long-term receivables and a decrease in principal receipts from notes and equipment contracts receivables compared to the same period of the prior year, partially offset by an increase in proceeds from the sale of assets primarily from the sale of the land and building on which an IHOP restaurant was located.
Previous wording
Financing activities used net cash of $42.5 million for the nine months ended September 30, 2024. The decrease in cash used by financing activities of $175.5 million was primarily due to the repayment and issuance of long-term debt of $159.8 million during the nine months ended September 30, 2023, a decrease in dividends paid due to timing and a $8.0 million decrease in repurchase of common stock. There was no repayment or issuance of long-term debt during the nine months ended September 30, 2024.
Current wording
Financing activities used net cash of $12.4 million for the three months ended March 31, 2025. The decrease in cash used by financing activities of $5.4 million was primarily due to a $4.4 million decrease in repurchase of common stock and a $0.6 million decrease in repurchase of surrendered shares.
Previous wording
A summary of our critical accounting estimates is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2023. During the nine months ended September 30, 2024, there were no significant changes in our critical accounting policies or in our critical accounting estimates.
Current wording
A summary of our critical accounting estimates is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2024. During the three months ended March 31, 2025, there were no significant changes in our critical accounting policies or in our critical accounting estimates.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Comparison of the Three Months Ended March 31, 2025 and 2024
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Applebee's decreased franchise gross profit. The decrease in rental operations gross profit for the three and nine months ended September 30, 2024 was primarily due to decreased rental revenue as described above.