DINE Misses and has agressive guidence for 2023
The company misses 4Q22 SSS and guides 2023 EBITDA lower due to growth investments. The growth investments needed to make Fuzzy's Taco a growth vehicle have only just begun and will continue into 2023. The valued-oriented Applebee's brand SSS slowed from 3.8% in 3Q22 to 1.7% in 4Q22.
Dine Brands Global (DIN) 4Q22 GAAP EPS of $0.72 (-37%) vs. $1.14 in 4Q21. "The variance was primarily due to higher G&A expenses, including acquisition-related charges and lower contribution from company-operated units, partially offset by lower share count and a gain on debt extinguishment. Non-GAAP EPS of $1.34 beats by $0.11, including $0.02 benefit from rounding up, and Revenue of $207.97M (-9.4% Y/Y) misses by $5.29M. Revenue $208M vs FS $213.3M as SSS for Applebee's missed Applebee's reported 1.7% versus the street at +3.3% and 3.8% in 3Q22; IHOP reported 2.0% versus the street at +2.3%. Consolidated (A)EBITDA for 4Q22 was $57.0 million, below the $60.1 last year on lower company restaurants’ segment profits and G&A in 4Q22 of $58.8 vs $48.9 last year. "The variance was primarily due to continued strategic growth investments, including the acquisition of Fuzzy’s Taco Shop and other non-recurring costs, as well as a return to normalized operations." The company issues FY23 guidance:
- Adjusted EBITDA $243M-$255M vs FactSet $252.4M (the company is likely underestimating its strategic investment in its growth initiatives in 2023)
- Domestic development activity by Applebee's franchisees of between 10 and 20 net fewer restaurants (Applebee's is not a growth concept? What about the virtual store growth?).
- Domestic development activity by IHOP franchisees and area licensees is now expected to be between 45 and 60 net new openings.
- G&A expenses are expected to range between approximately $200M and $210M, due to some of our planned 2022 G&A investments extended into 2023 given the disruptions caused by last year's pandemic and other organic investments, including Fuzzy's. This range includes non-cash stock-based compensation expense and depreciation of approximately $30M.
- Gross capital expenditures are expected to range between $33M and $38M.
The CEO commentary discusses further investments needed: "The common denominator in the solid quarter and full-year results was the hard work of our entire team, from our franchisees to our creative and agile brand leaders,” said John Peyton, chief executive officer of Dine Brands Global, Inc. “Despite ongoing economic pressures and uncertainties, our value-oriented brands reliably continue to meet our customer’s needs and expectations. In tandem with supporting and investing in our brands, we have also taken actions to strengthen our business and create shareholder value via acquiring Fuzzy’s Taco Shop and through the incremental and accretive retirement of our long-term debt and repurchase of shares.”
RRGB
Nothing to see here; the five-point plan is bla bla bla
Red Robin Gourmet Burgers (RRGB) 4Q22 Non-GAAP EPS of -$1.35 misses by $0.73, and Revenue of $290.1M (+2.4% Y/Y) misses by $3.05. Net loss is $44.2 million, an increase of $22.9 million compared to 2021, and includes a non-cash impairment charge of $25.0 million. Adjusted EBITDA (a non-GAAP metric) was $8.9 million in 2022 and 2021.
WEN
I'm not paying up for the financial engineering in 2023
Wendy's (WEN) 4Q22 Non-GAAP EPS of $0.22 beats by $0.01, and Revenue of $536.51M (+13.4% Y/Y) beats by $2.45M. The revenue increase resulted from the favorable impact of acquiring 93 franchise-operated restaurants in Florida during the fourth quarter of 2021 and higher same-restaurant sales. The company pre-announced 4Q22 on Jan 17th, providing updates on its capital allocation strategy that includes a substantial increase in the regular dividend along with a new $500M share repurchase authorization expiring in 2027. The preliminary 4Q results had SSS ahead of expectations but disappointing unit growth with an outlook that is uncertain given the macro backdrop and inflationary headwinds. The G&A reorganization was a non-evert.
During 2023 the Company Expects:
- Global systemwide sales growth of 6-8% versus the street sales growth of 4%
- Adjusted EBITDA: $530 to $540 million (the street at $536MM, up 7.7%)
- Adjusted earnings per share: $0.95 to $1.00 vs. $1.00 consensus up 16% YoY
The company is expecting significant financial engineering in 2023!
- Cash flows from operations: $340 to $360 million
- Capital expenditures: $75 to $85 million
- Free cash flow: $265 to $275 million
