Dine Brands Global, Inc.

Hello, and welcome to the fourth quarter 2020 DynBrands Global Earnings Conference Call. My name is Grace, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press bar then zero on your touch-tone telephone. Please note that this conference call is being recorded. I will now turn the call over to Ken Dipty, Executive Director of Investor Relations. Sir, you may begin.

Good morning, and welcome to DynGrant's fourth quarter and fiscal 2020 conference call. I'm joined by John Payton, CEO, Allison Hall, Interim CFO of Controller, Jay Johns, President of IHOP, and John Zawinski, President of Appendix. Before I turn the call over to John, please remember our safe harbor regarding forward-looking information. During the call, Management may discuss information that is forward-looking and involves known and unknown risks, uncertainties, and other factors which may cause the actual results to be different than those expressed or implied. Please evaluate the forward-looking information in the context of these factors, which are detailed in today's press release and 10-K filing. The forward-looking statements are as of today and it assumes no obligation to update or supplement these statements. We may also refer to certain non-guest financial methods, which are described in our press release and also available on Dime Brands and the Financial Relations website. With that, I'll turn the call over to John.

Thanks, Ken. Good morning, everyone, and thanks for joining us. I'll start by saying it's an honor for me to join Dime Brands. I believe in Dime Brands because I believe in restaurants. Restaurants are essential to strong communities and human connections. And as we enter what we expect to be the beginning of the end of the pandemic, all restaurants face a common challenge, and that's that eating out in America has changed. Those who will win in the new era of restaurants are those who remained resilient and those who invested in new menu and service innovations and new technology during 2020. And that's the story of Dine Brands. We have solid fundamentals, two categories leading iconic brands, and certainly the most Let me pause and tell you a bit about my story. As a teen, I worked in my parents' restaurant. It was called the Southern Amla Station in West Philadelphia, and I was certainly humbled and stunned by the almost 24-7 demands required of my parents. After college, I went on to work as a consultant for PWC. I then was at Starwood Hotels, and most recently at Realogy. I joined Dine because I believe in the power and the allure of strong brands. Twenty years ago, a mentor of mine who was a marketing wizard taught me that brands win when they're different, better, and special. And our brands are truly different, better, and special. IHOP, for example, is a pancake-obsessed breakfast innovator that makes the most important meal of the day also the most fun. And Applebee's embodies what it means to be all-American and locally relevant. We call that eating good in the neighborhood. In other words, Applebee's and IHOP are iconic brands that connect in an emotional way with our guests. And that's important because we know restaurants are essential to the fabric of community and human connections. I also like our business model. We're 98% franchise and asset-like. We are a significant generator of cash. investments of capital, and it allows those who are best operating restaurants, our franchisee owners, to do so with our support. My 20-plus years at Starwood and Realogy taught me that successful franchising requires true partnership and that we work hard every day to ensure that our independent franchisees build valuable businesses that create generational wealth. So over the last two months, I've been on the move. I've conducted a deep dive across the company, learning more and more about our brands and dine dynamic corporate culture. So far, I've spoken with 40 franchisees in the US and around the world, and they represent 50% of the Applebee's system and more than a third of our IHOP restaurants. I've also connected with our suppliers and our bankers and our team members. I've visited our restaurants and our test kitchens, Now, despite the impact of the pandemic, Dyn's fundamentals remain solid. You may recall that in March of 2020, S&P placed the company's whole business securitization notes on CreditWatch negative, as it did with two other whole business securitizations in our industry at that time. Six months later, S&P removed our notes from CreditWatch and reaffirmed our BBB rating. Dyn was the only issuer of the three to not have its notes downgraded or remain on CreditWatch due to the pandemic. S&P's decision last fall was a great achievement for dying and illustrates that our fundamentals remain strong. And because we emerged in 2020 on sound financial footing, we plan to repay in full the $220 million drawn from our revolver last March. We expect to complete the repayment this month, resulting in interest expense savings of approximately $5 million. In addition to strong fundamentals, we have passionate franchisees who remain in very good standing. Our collection rate for royalty and marketing fees stands at approximately 99%, and the fees we deferred during Q2 of last year are being paid back according to schedule. And in addition to our fabulous franchisees, experience and industry knowledge. You'll hear from Jay and John shortly, and it's their expertise and collective wisdom that truly paid off via their extraordinary stewardship of the brands and our franchisees throughout the challenges of 2020. So looking ahead, we're anticipating a rebound in the second half of the year, driven primarily by increases in vaccination rates. Overall weekly sales trends for both brands have also improved since the week ending January We're also encouraged by our off-premise business. Both brands maintain off-premise sales of approximately one-third of total sales during the fourth quarter. And we view off-premise dining as a new consumer behavior that will live beyond the pandemic. We're continuing to invest in technology to support our growing off-premise business. And we're certainly optimistic about the athletes for Applebee's and IHOP because during times of crisis, guests, just like me and just like you, look to brands we trust. And as restaurant guests return to indoor dining, and IHOP and Applebee's are committed to their health and safety. So taken collectively, these fundamentals uniquely position Dime Brands to endure the challenges brought on by the pandemic and position us for long-term sustainable growth. Our teams focus on three objectives over the next 12 to 24 months. The first is to navigate what we believe is the beginning and the end of the crisis. The second is to win the recovery and win the new normal that follows. And the third is to evaluate long-term growth vehicles. So allow me to share a bit of my thinking about each of those. First is to navigate the beginning and the end of the crisis. Of course, we'll continue to monitor and protect cash, and we'll also focus on continuous improvement in operational health and safety standards in our restaurants. We're preparing compelling marketing campaigns and new products to drive as the recovery grows, and we are working intensely to ensure the financial health of our franchisees. Second, we'll win the recovery and win the new normal by leveraging our recent investments to reactivate our guests via one-to-one and highly targeted marketing. And we'll realign our menus to reflect learnings from the past 12 months and we'll reset the channel mix to reflect those learnings as well. And third, we'll continue to evaluate long-term growth vehicles. both traditional and non-traditional development, which includes everything from new prototypes for both brands, virtual brands, and ghost kitchens, both of which we have efforts underway. And we'll take a look at international expansion opportunities in key markets and possibly explore incorporating a third brand at the right time. As I wrap up, I want to emphasize that Dine views the crisis as both a threat and an opportunity. And while we knew it was important to play defense to protect our liquidity and our flexibility, we also played offense so that we would emerge from the crisis in a position to serve more guests, both inside and outside of our restaurants. Because we played offense in 2020, we continue to invest in new digital and CRM products that are coming online early this summer, as well as innovative menu items like IHOPpy Hour and burritos and bowls at IHOP, and Applebee's new virtual brand Cosmic Wings. And while we were investing in new technology and menu offerings, our franchisees invested in supporting their local communities by feeding and sheltering frontline workers and those in need. And so it's all of these investments combined that will pay off as our guests return to indoor dining. So with that, I'll turn the call over to Allison to provide an overview of our financial results.