Los Angeles Business Journal

Dine Equity Moves to Profit Despite Revenue Decline

By Deborah Crowe Thursday, March 1, 2012

DineEquity Inc. returned to a profit in the fourth quarter, despite a 19 percent decline in revenue at its IHOP and Applebee's Neighborhood Grill & Bar restaurants.

The Glendale company on Thursday reported net income of $28.6 million ($1.51 a share) compared with a loss of $50.8 million (-$3.33) in the same period a year earlier. The loss in the 2010 quarter was largely attributed to large debt-extinguishment costs.

Revenue fell 19 percent to $242 million. Domestic same-restaurant sales were up 1 percent at Applebee's locations but down 1 percent at IHOP locations. Both chains face challenges from rising food and gasoline costs.

Not counting a one-time tax benefit, the company said it would have earned $16.4 million, or 91 cents per share. Analysts surveyed by Thomson Reuters on average were expecting net income of 85 cents a share on revenue of $242 million.

“The company continued to generate robust free cash flow, pay down debt, manage (expenses) and differentiate our brands,” said Chief Executive Julia A. Stewart in a statement. “Today, at 95-percent franchised, we are unique in the full-service restaurant segment. Our business model generates strong free cash flow with substantially reduced volatility.”

Shares were up $1.22, or 2.3 percent, to $54.60 in midday trading on the New York Stock Exchange.