Dine Brands Global, Inc.

Good day and thank you for standing by. Welcome to the Q4 2021 Dine Brands Global Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Ken Dipty, Executive Director, Investor Relations. Please go ahead.

Good morning, and welcome to DynBrand's fourth quarter fiscal 2021 conference call. I'm joined by John Payton, CEO, Vance Chang, CFO, John Zawinski, President of Athletes, and Jay Johns, President of IHOP. Before I turn the call 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 file. The forward-looking statements are as of today, and it seems no obligation to update or supplement these statements. You may also refer to certain non-GAAP financial measures which are described in our press release and also available on Dynabrand's Investor Relations website. With that, I'll turn the call over to Tom.

Thanks, Ken, and good morning, everyone. On behalf of John, Jay, and Vance, thanks for joining us. We're at a moment in time that reminds me of A Tale of Two Cities. I read it in college for, you know, in our case, A Tale of Two Winds. It's headwinds and tailwinds, both at the same time. Tailwinds because guests are back in our restaurants and consumer intent to return to restaurants is at a pandemic period high. Our new, largely incremental off-premise business is holding steady at more than two times 2019, and restrictions are largely being rolled back across the country. Yet, at the same time, we're combating meaningful macroeconomic headwinds, inflation, the labor shortage, supply chain disruption, and now the war in Ukraine. That said, Dyn is stronger than ever, and that's because we played both defense and offense during the past two years. Our investments in tech, menu simplification, and off-premise business all position us for additional growth in 2022. COVID did surprise us again late in Q4, yet despite Omicron's impact beginning in mid-December, we maintained our momentum in Q4, delivering another solid quarter. Today I'll share highlights of our Q4 and our full year results. I'll talk about the impact of Omicron and other macroeconomic challenges. I'll frame up the ways in which the past two years made Dyn stronger than ever before, and I'll recap our most important accomplishments of 2021. So I'll begin by sharing the quarter's highlights, including comp sales, EBITDA, cash flow, and development. First, for the second consecutive quarter, average weekly sales for IHOP and Applebee's both surpassed the comparable quarter for 2019. For the sixth consecutive quarter, Applebee's beat its comp set, while IHOP outperformed its category two out of four quarters last year, according to Blackbox. We recognized revenue of $229.6 million and EBITDA of $60 million. which reflects the momentum of our brands, our franchise model, and consumer commitment to returning to restaurants. For the full year, our brands opened 46 new restaurants globally and closed 96. That's our best net development performance since 2019 and an indication that franchisees are pivoting from defense back to offense. And for the 12 months ending December of 2021, our asset-light model generated $191 million of adjusted free cash. That's an improvement of 79% compared to last year. So our Q4 and our full-year results are impressive, particularly considering the virus and certain macroeconomic headwinds. I'll address those now. Beginning in mid-December, Omicron briefly agitated staffing challenges and traffic before bouncing back in mid-February. At this point in time, the impact from Omicron has largely dissipated. We continue to see the impact of inflation on the cost of beef, poultry, pork products, oils, and eggs. And in light of the situation in Ukraine, we're closely following energy costs. And while we expect supply chain availability and pricing to moderate throughout 2022, the increases in cost of labor are likely to remain over the long term. Despite these headwinds, we are increasingly encouraged that we're at the beginning of the end of COVID, and as we transition to the endemic phase of the virus, we're optimistic that the days of mask requirements, proof of vaccination, and capacity restrictions are behind us. So Natalie just focused on dying and how we're emerging as stronger than ever from the past two years. And I think it's important to define what I mean by stronger. Strength is not only about the number of our brand's brick-and-mortar restaurants. Today, strength is all about in-restaurant technology, digital innovation, loyalty programs, communicating and serving our guests on their terms, when, where, and how they prefer. And in that context, I'll share examples of what we've done that have made us stronger. First, throughout the last two years, we've innovated the in-restaurant guest experience. For example, our hygiene and safety protocols are enhanced and will become the new standard. Guests can now put their names on our waitlists and pay their bills with their phones. Servers are now serving with server tablets, which help them with efficiency and speed of service. They also earn more money. This year, we're rolling out IHOP's new POS, and Applebee's is projected to follow in 2023. The new POS includes a new kitchen management system and server tablet integration and provides a boost to front-of-house and back-of-house productivity. It improves guest service and helps servers earn more. The second reason we're stronger is because we've innovated the off-premise experience. Applebee's and IHOP grew takeout and delivery more than two times versus 2019. This is largely incremental business that we intend to nurture and grow. To-go packaging is also next-gen. It keeps food hot longer, and it's designed to showcase our menu. We've supercharged technology investment and adoption, and throughout 2022, Applebee's.com, IHOP.com, Flip.com, and their associated mobile apps will all be brand new. We're changing back-of-house processes to better accommodate our higher off-premise volumes. For example, we introduced CarSide Express at Applebee's and Curbside at IHOP. The app used geosensing technology to track guest proximity to the restaurants and shorten handoff times. And importantly, we implemented a new CRM and digital platform that has vastly improved our digital marketing and marketing analytics, which serves as a foundation for our loyalty programs. Finally, we're stronger because we've streamlined operations and identified new sources of revenue that strengthen the financial performance of our franchisees. Today, for example, our menus are streamlined by more than a third compared to pre-COVID, and as a result, our kitchens are more efficient, there's less food waste, faster prep times, improved quality and consistency of those items that remain. Second, our franchisees embraced outdoor dining and expanded their seating capacity with minimal investment in capital. Applebee's launched Cosmic Wings, and IHOP is testing virtual brands Thrilled Cheese, and Super Mega Dia in seven test markets, with even more markets coming online, providing incremental revenue to our franchisees. And we work with our franchisees to expand our sales channels via ghost kitchens in the U.S. and abroad. Most importantly, our asset-light model allows us to invest in what we do best, menu innovation, marketing, and technology, all for the benefit of our franchisees. So our scale is also uniquely dying. Our IHOP and Applebee's purchasing co-op, for example, procures approximately $2 billion in goods and services annually, and this significant market footprint helps mitigate, to some extent, supply chain availability and cost dynamics. And our scale enables us to invest more in technology than either Applebee's or IHOP could do on its own. And finally, our world-class brands are also uniquely Dime. Applebee's and IHOP continue to gain share because guests trust us, love us, and appreciate that we're focused on delivering delicious food at a great value while also providing experiences that are enjoyable and safe. I purposely focused my comments this morning on our results and our 2021 accomplishments, and John, Jay, and Vance will do the same. That's because we're looking forward to sharing our plans for growth during our Investor and Analyst Day next Wednesday, March 9th, at the Westin Grand Central in New York City or via our virtual broadcast. And with that, I'll pass over to Vance, who will discuss our financial performance.