Attached files
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| 8-K - Wendy's Co | a8-11x11conferencecallslid.htm |
Second Quarter 2011 Earnings Call
August 11, 2011
August 11, 2011
Opening Comments
John Barker SVP and Chief Communications Officer
John Barker SVP and Chief Communications Officer
Agenda
Forward-Looking Statements and Regulation G
This presentation, and certain information that management may discuss in connection with this presentation, may contain statements that are not historical facts, including, importantly, information concerning possible or assumed future results of our operations. Those statements constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). For all our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Reform Act. Many important factors could affect our future results and could cause those results to differ materially from those expressed in or implied by our forward-looking statements. Such factors, all of which are difficult or impossible to predict accurately, and many of which are beyond our control, include but are not limited to those identified under the caption “Forward-Looking Statements” in our most recent earnings press release and in the “Special Note Regarding Forward-Looking Statements and Projections” and “Risk Factors” sections of our most recent Form 10-K and subsequent Form 10-Qs. In addition, this presentation and certain information management may discuss in connection with this presentation reference non-GAAP financial measures, such as earnings before interest, taxes, depreciation and amortization, or EBITDA. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measure are in the Appendix to this presentation, and are included in the earnings release and posted on the Investor Relations section of our website.
This presentation, and certain information that management may discuss in connection with this presentation, may contain statements that are not historical facts, including, importantly, information concerning possible or assumed future results of our operations. Those statements constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). For all our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Reform Act. Many important factors could affect our future results and could cause those results to differ materially from those expressed in or implied by our forward-looking statements. Such factors, all of which are difficult or impossible to predict accurately, and many of which are beyond our control, include but are not limited to those identified under the caption “Forward-Looking Statements” in our most recent earnings press release and in the “Special Note Regarding Forward-Looking Statements and Projections” and “Risk Factors” sections of our most recent Form 10-K and subsequent Form 10-Qs. In addition, this presentation and certain information management may discuss in connection with this presentation reference non-GAAP financial measures, such as earnings before interest, taxes, depreciation and amortization, or EBITDA. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measure are in the Appendix to this presentation, and are included in the earnings release and posted on the Investor Relations section of our website.
Business Highlights
Roland Smith President & Chief Executive Officer
Roland Smith President & Chief Executive Officer
A New Day – The Wendy’s Company
Completed sale of Arby’s to Roark Capital Group effective July 4, 2011 Company name changed to The Wendy’s Company Corporate headquarters moving to Dublin, OH Reduced support center and international division in Atlanta, GA
Completed sale of Arby’s to Roark Capital Group effective July 4, 2011 Company name changed to The Wendy’s Company Corporate headquarters moving to Dublin, OH Reduced support center and international division in Atlanta, GA
A New Day – The Wendy’s Company
Launched new corporate website – www.aboutwendys.com
Launched new corporate website – www.aboutwendys.com
Q2 2011 Business Overview
Revenues grew 2.5% to $622 million North America Company-owned same-store sales of +2.3% Positive transactions of +0.9% Adjusted EBITDA* was $89.4 million
* See Appendix
Performance met Company’s expectations
Revenues grew 2.5% to $622 million North America Company-owned same-store sales of +2.3% Positive transactions of +0.9% Adjusted EBITDA* was $89.4 million
* See Appendix
Performance met Company’s expectations
Wendy’s Q2 2011
June
Berry Almond Chicken Salad & Wild Berry Tea
May
April
Natural-Cut Fries with Sea Salt
Bacon Mushroom
Flavor Dipped Chicken
June
Berry Almond Chicken Salad & Wild Berry Tea
May
April
Natural-Cut Fries with Sea Salt
Bacon Mushroom
Flavor Dipped Chicken
Q2 2011 Results & Full-Year Outlook
Steve Hare Chief Financial Officer
Steve Hare Chief Financial Officer
Changes in Q2 Financial Presentation
Income Statement Arby’s results are accounted for as discontinued operations for all periods presented G&A costs that directly relate to Arby’s are included in discontinued operations Shared G&A costs that indirectly relate to Arby’s are included in G&A expense for continuing operations Balance Sheet Arby’s assets and liabilities as of Q2 2011 are summarized and reclassified as discontinued operations 2010 year end balances have not been reclassified Cash flow Arby’s is included and reported in all line items
Income Statement Arby’s results are accounted for as discontinued operations for all periods presented G&A costs that directly relate to Arby’s are included in discontinued operations Shared G&A costs that indirectly relate to Arby’s are included in G&A expense for continuing operations Balance Sheet Arby’s assets and liabilities as of Q2 2011 are summarized and reclassified as discontinued operations 2010 year end balances have not been reclassified Cash flow Arby’s is included and reported in all line items
Q2 2011 Results
*See Appendix.
*See Appendix.
Q2 2011 Special Items Included in Income from Continuing Operations
General and Administrative Expense
Cash Flow Q2 YTD 2011
* Includes commissions of $0.1 million and excludes $9.2 million of repurchases that were not settled until after quarter end.
Company Supporting Franchisee Key Initiatives
Dave’s Hot ‘N Juicy Cheeseburger Toasters and Grill enhancements Subsidized franchisee loans Supplemental loan guarantees Breakfast Equipment $20 million loan program for 1,000 stores Royalty abatement to fund advertising New Restaurant Development U.S. reduced development fees and royalties Canada lease guarantees
Toaster
Double Sided Grill
Dave’s Hot ‘N Juicy Cheeseburger Toasters and Grill enhancements Subsidized franchisee loans Supplemental loan guarantees Breakfast Equipment $20 million loan program for 1,000 stores Royalty abatement to fund advertising New Restaurant Development U.S. reduced development fees and royalties Canada lease guarantees
Toaster
Double Sided Grill
Consolidated Debt
* Includes $118 million for sale of Arby's (Purchase price of $130 million less transaction costs)
* Includes $118 million for sale of Arby's (Purchase price of $130 million less transaction costs)
Stock Repurchases and Dividends
Quarterly Cash Dividend $0.02 per share Payable on September 15, 2011 to stockholders of record as of September 1, 2011
Quarterly Cash Dividend $0.02 per share Payable on September 15, 2011 to stockholders of record as of September 1, 2011
2011 Outlook
Expect $330-340 million adjusted EBITDA1 Key Assumptions: Wendy’s same-store sales growth +1% to +3% Wendy’s company-operated restaurant margin2 down 50-100 basis points Capital expenditures of $145 million Restaurant development 20 North America Company-owned 45 North America franchise 40 international franchise
1 Only includes continuing operations. See appendix. 2 Includes incremental new breakfast advertising expense in 2010 and 2011.
Expect $330-340 million adjusted EBITDA1 Key Assumptions: Wendy’s same-store sales growth +1% to +3% Wendy’s company-operated restaurant margin2 down 50-100 basis points Capital expenditures of $145 million Restaurant development 20 North America Company-owned 45 North America franchise 40 international franchise
1 Only includes continuing operations. See appendix. 2 Includes incremental new breakfast advertising expense in 2010 and 2011.
Wendy’s Initiatives & Global Expansion
Roland Smith President & Chief Executive Officer
Roland Smith President & Chief Executive Officer
Value
Chicken
Hamburgers
Salads
Fries
Chicken
Hamburgers
Salads
Fries
Recent Product Introductions
Local Options
Local Options
Upcoming Beverage and Snack Products
Local Options
Local Options
Enhanced Chicken Menu
Local Options
Local Options
Dave’s Hot ’N Juicy Cheeseburgers
October 2011 Launch
October 2011 Launch
Wendy’s Breakfast Opportunity
Customer reaction to new menu is positive Annualized average weekly sales meeting incremental breakfast sales target of $150,000, Represents a 10% sales lift to $1.4 million average unit volumes Maintaining targeted sales levels with reduced couponing
Artisan Egg Sandwich
Fresh Baked Biscuit
Mornin’ Melt Panini
Fresh Cut Fruit
Home-Style Potatoes
Fresh Baked Oatmeal Bar
Customer reaction to new menu is positive Annualized average weekly sales meeting incremental breakfast sales target of $150,000, Represents a 10% sales lift to $1.4 million average unit volumes Maintaining targeted sales levels with reduced couponing
Artisan Egg Sandwich
Fresh Baked Biscuit
Mornin’ Melt Panini
Fresh Cut Fruit
Home-Style Potatoes
Fresh Baked Oatmeal Bar
Breakfast Menu Test – Premium Coffee
2011 Breakfast Expansion Timeline
Q4 2011
Q2 2011
Q3 2011
Q1 2011
2010
1,000 STORES
YE 2011
CONVERT 300 STORES FROM OLD TO NEW MENU
NEW MENU LAUNCH
LOUISVILLE & SAN ANTONIO
ADDITIONAL MARKETS
Kansas City Phoenix Pittsburgh Shreveport
Improving Operational Performance Internal Operational Ratings for North American Restaurants
A & B
F
Q2 2011
2008
Q2 2011
2008
A & B
F
Q2 2011
2008
Q2 2011
2008
Highest Rated QSR Hamburger Chain
Source: American Customer Satisfaction Index, June 2011
Source: American Customer Satisfaction Index, June 2011
Remodel Designs to be Tested
Modern
Contemporary
Urban
Traditional
Modern
Contemporary
Urban
Traditional
First Modern Design Opens in Columbus, Ohio
Digital Signage
Casual Seating
Digital Signage
Casual Seating
Wendy’s International Division
Long-term development agreements signed since Q4 2008 Joint venture agreement with Higa Industries Target countries – Brazil and China
Brazil
China
Potential for 8,000 international restaurants Currently 333 international locations (all franchised) +700 future commitments for restaurants
Wendy’s Enters the Russian Market
First Moscow location celebrated grand opening on June 23 Part of development agreement with Wenrus Restaurant Group, LTD., a Wendy’s franchisee Wenrus plans to develop 180 restaurants over the next 10 years.
First Moscow location celebrated grand opening on June 23 Part of development agreement with Wenrus Restaurant Group, LTD., a Wendy’s franchisee Wenrus plans to develop 180 restaurants over the next 10 years.
Average annual EBITDA growth of 10-15%, beginning in 2012
Q&A
Appendix
Reconciliation of EBITDA to Adjusted EBITDA
The Wendy’s Company and Subsidiaries Calculation and Comparison of EBITDA and Reconciliation of EBITDA to Net Income
The Wendy’s Company and Subsidiaries Calculation and Comparison of EBITDA and Reconciliation of EBITDA to Net Income