Scout Capital Reduces Stake In DineEquity

Scout Capital Reduces Stake In DineEquity

Scout Capital Management, a hedge fund co-founded by James Crichton and James Weiss reduced its stake in DineEquity Inc (NYSE:DIN), the parent company of Applebee’s Neighborhood Grill & Bar and IHOP restaurants.


Scout Capital’s stake in DineEquity

Based on the its 13D latest filing with the Securities and Exchange Commission (SEC), Scout Capital Management owns 5.4 percent stake or 1,034,762 shares of DineEquity Inc (NYSE:DIN) as of June 30, 2013.

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In May, the hedge fund held 6.62 percent stake or 1,280, 321 shares of the restaurant operator last May, which means it recently sold 72,338 shares.

DineEquity’s Q2 results:

DineEquity Inc (NYSE:DIN) reported its financial results for the second quarter of the current fiscal year on Tuesday. The restaurant operator reported a net income of $19.7 million or $0.87 diluted earnings per share (GAAP).

According to the restaurant operator, the domestic system-wide, same-store sales of its IHOP increased by 1.9 percent and Applebee’s rose by 1.3 percent during the quarter. Its total segment revenues were $158.11 million including $124.15 million from franchise and restaurants, $30.73 million from rental, and $3.23 million from financing

During the period, DineEquity Inc (NYSE:DIN) said its administrative expenses were $35.6 million, lower than its $37.2 million expenses in the same period a year earlier due to lower personnel costs driven by refranchising, comprehensive restructuring initiatives, and lesser stock-based compensation.

DineEquity Inc (NYSE:DIN) returned capital to shareholders by distributing a dividend of $0.75 per share and repurchased $14.5 million worth of its common stock during the second quarter. The company said it generated $52.1 million in free cash flow (FCF) in the first six months of 2013.

In a statement, Julia A. Stewart, chairman and CEO of DineEquity Inc (NYSE:DIN) said, “Same-restaurant sales were positive for both brands. In particular, same-restaurant sales at IHOP rose 1.9 percent, with an increase in guest traffic. This is IHOP’s first quarter of both positive same-restaurant sales and guest traffic since the fourth quarter of 2010.”

“Applebee’s performance was also strong in an uneven consumer environment, generating same-restaurant sales growth of 1.3 percent. We are actively managing our Shared Services model, driving cost efficiencies and innovation for both brands,” added Stewart.

DineEquity Inc (NYSE:DIN) maintained its earnings guidance for the fiscal 2013, wherein the company expects Applebee’s and IHOP’s system-wide domestic same store sales performance in the range of -1.5 percent to 1.5 percent. The company estimated that its franchise revenue will be around $312 million to $345 million and rental & financing revenue at approximately $34 million to $35 million. The restaurant operator revised its consolidated general and administrative expenses at about $142 million to $146 million.

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