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| 8-K - FORM 8-K - DUNKIN' BRANDS GROUP, INC. | d301724d8k.htm |
 Dunkin’
Dunkin’
Brands Group, Inc.
Brands Group, Inc.
Investor Presentation
Investor Presentation
Fourth Quarter 2011
Fourth Quarter 2011
Exhibit 99.1 |
 Confidential information: Copying, dissemination or distribution of this
information is strictly prohibited. Forward-looking statements
Certain
information
contained
in
this
presentation,
particularly
information
regarding
future
economic
performance, finances, and expectations and objectives of management constitutes
forward-looking statements. Forward-looking statements can be
identified by the fact that they do not relate strictly to historical
or
current
facts
and
are
generally
contain
words
such
as
“believes,”
“expects,”
“may,”
“will,”
“should,”
“seeks,”
“approximately,”
“intends,”
“plans,”
“estimates”
or “anticipates”
or similar expressions.
Our
forward-looking
statements
are
subject
to
risks
and
uncertainties,
which
may
cause
actual
results
to
differ materially from those projected or implied by the forward-looking
statement. Forward-looking statements are based on current expectations
and assumptions and currently available data
and
are
neither
predictions
nor
guarantees
of
future
events
or
performance.
You
should
not
place
undue reliance on forward-looking statements, which speak only as of the date
hereof. We do not undertake to update or revise any
forward-looking statements after they are made, whether as a result of
new
information,
future
events,
or
otherwise,
except
as
required
by
applicable
law.
Regulation G
This presentation contains certain non-GAAP measures which are provided to
assist in an understanding of the Dunkin’
Brands Group, Inc. business and its performance. These measure should always be
considered in conjunction with the appropriate GAAP measure. Reconciliations
of non-GAAP amounts to the relevant GAAP amount are provided as an
attachment to these slides. 2
Confidential information: Copying, dissemination or distribution of this
information is strictly prohibited. |
 Confidential information: Copying, dissemination or distribution of this
information is strictly prohibited. Strong platform for continued growth
Our key business strengths
Strong and established brands with leading market positions
Two strong and highly recognized global brands that generated 2011
franchisee-reported sales of $8.3 bn Strong comp store sales
trajectory Significant opportunities to grow brands globally
Over 16,700 global locations with significant opportunity for domestic and
international growth Invested during downturn to position ourselves for
growth Franchised business model provides platform for growth
Nearly
100%
franchised
business
model
generates
high
margins
with
low
capex
requirements,
driving
cash
flow generation
Store-level
economics
generates
franchisee
demand
for
additional
restaurants
Strong performance since IPO underscores long-term growth opportunity
Highly
experienced,
aligned
and
motivated
management
team
with
franchise
“operating”
philosophy
3 |
 Confidential information: Copying, dissemination or distribution of this
information is strictly prohibited. Two leading global brands
each with over 60 years of heritage
Source:
NPD Group/CREST for year ending February 2011; Omnibus Awareness Study, July
2010; 4
Over 95% aided brand awareness in U.S.
#1 in QSR customer loyalty for 6 straight years
1 bn+ cups of coffee sold in the U.S. annually
#1 position in Hot Regular/Flavored/Decaf Coffee,
Iced Coffee, Donuts, Bagels and tied in Muffins
Over 50% share of New England coffee servings and
morning meal traffic
36 U.S. states and in 31 other countries
1,000+ ice cream flavors
95% aided brand awareness in U.S
#1 hard serve ice cream position in U.S.
#1 market share positions in Fast Food Ice Cream
category in Japan and South Korea in 2010
45 U.S. states and in 46 other countries
More Flavors, More Fun™
America
Runs
on
Dunkin’
®
Brand Keys |
 U.S.
$6.4 bn
(77%)
Intl
$1.9bn
(23%)
$6.6bn
(79%)
$1.8bn
(21%)
10,083
(60%)
6,711
(40%)
U.S.
9,472
(56%)
Intl
7,322
(44%)
Substantial global platform across both brands
5
1. Data as of December 31, 2011
2011 Franchisee-Reported Sales
Global Points of Distribution
1
Confidential information: Copying, dissemination or distribution of this
information is strictly prohibited. |
 Confidential information: Copying, dissemination or distribution of this
information is strictly prohibited. 6
Our growth strategy |
 Confidential information: Copying, dissemination or distribution of this
information is strictly prohibited. 7
Focused growth strategies across each segment
7% of 2011 revenue
73% of 2011revenue
20% of 2011 revenue
Increase comparable
store sales and
profitability in DD U.S.
Continue DD U.S.
contiguous store
expansion
Increase comparable
store sales growth of BR
U.S.
Drive accelerated
international growth
across both brands |
 Confidential information: Copying, dissemination or distribution of this
information is strictly prohibited. 8
Strong DD U.S. comp growth momentum
Resilient comp performance throughout economic cycles
Note: Fiscal year-end changed from August to December starting in 2006
45 consecutive
quarters of
comparable store
sales growth
Dunkin’
Donuts U.S. comparable store sales growth |
 Confidential information: Copying, dissemination or distribution of this
information is strictly prohibited. 9
Dunkin’
Donuts U.S. strategy
Drive comparable store sales and profitability
•
Successful product innovation record with strong pipeline
•
Differentiated brand platform with high-impact marketing
•
Operations-focused culture driving improved in-store
experience
Accelerate profitable and contiguous POD growth
•
Among one of the industry-leading expansion track records
•
Significant opportunity across U.S. |
 Confidential
information: Copying, dissemination or distribution of this information is strictly prohibited.
10
Powerful track record of product innovation
1995
Coffee excellence
•
Hazelnut and
French Vanilla
1996
Breakfast sandwiches
Bagels
1998
2001
Vanilla Chai
2003
Hot
espresso
platform
2004
Iced lattes
2008
DD
Smart
®
Flatbreads
2010
Bagel twists
Coolatta
®
mixology
PM snacks
2009
Wake-Up
Wrap
®
2011
Big n’
Toasted
Shaped donuts
Dunkin’
K-Cups
Frozen Iced Tea
Captain
America
Coolatta
2005
Turbo Ice
®
Tropicana
®
Coolatta
®
9 iced coffee and hot
coffee flavors
2000
Dunkaccino
®
Hot chocolate
Fruit
Coolatta
® |
 11
High impact marketing with broad reach
Produce news “buzz”
from both new products
and Limited Time
Offerings
TV, Radio, Print, Public Relations, Point
of Purchase, Local Marketing
Growing interactive, internet
and social media
Strong in both traditional and new media
Growing loyalty
program
Strong grocery
coffee business
Confidential information: Copying, dissemination or distribution of this
information is strictly prohibited. |
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information is strictly prohibited. 12
Intense focus on restaurant level
operational support
Clearly defined store
standards
Strong remodel program
Strong support to
franchisees and
restaurant managers with
training and marketing
Effective systems for
back-office management
People &
systems
Great guest
experience
Profitable
topline sales
Strong guest satisfaction scores |
 Confidential information: Copying, dissemination or distribution of this
information is strictly prohibited. 13
Our U.S. development opportunity |
 Confidential information: Copying, dissemination or distribution of this
information is strictly prohibited. Region
Population
(mm)
Stores
(1)
Penetration
Core
36.0
3,768
1:9,560
Eastern Established
53.8
2,227
1:24,160
Eastern Emerging
88.7
891
1:99,600
West
130.0
129
1:1,008,100
14
Significant opportunity for profitable growth
1. As of 12/31/2011 |
 Confidential information: Copying, dissemination or distribution of this
information is strictly prohibited. 15
Proven ability to increase penetration
in Established markets
Core
Established
Emerging
23%
2011 net new
open (% of total)
(1)
32%
37%
West
8%
Note: Penetration figures based on store counts as of 12/31/11
1. Represents net development of the region, not select DMAs, for full year
2011 Total penetration of select markets
5,800
5,500
6,600
13,700
14,850
20,000
24,000
30,000
31,000
47,900
77,200
81,000
102,000
105,200
108,000
130,500
0
50,000
100,000
150,000
200,000
350,000
342,000
34,200
18,800
0
25,000
50,000
2000
2011 |
 16
Significant long-term expansion opportunity
for Dunkin’
Donuts U.S.
~15,000
7,015
1:9,200
1:20,000
1:23,000
1:25,000
1:20,000
DD pro forma long-term penetration
Dunkin’
Donuts U.S. bridge to long-term goal (existing stores + new net
development) Confidential information: Copying, dissemination or
distribution of this information is strictly prohibited. Core
Established
Emerging
West
Established
Emerging
West
Core
Long-term
3,768
~3,900
2,227
891
129
~2,700
~3,900
~5,000
~5,000
~3,000
~550
~200
Q4 2011 |
 Confidential information: Copying, dissemination or distribution of this
information is strictly prohibited. 17
Our international growth opportunity |
 Note:
Unit count as of 12/31/11
Both brands have strong international
presence with significant growth potential
Store
count:
5,368
429
605
90
830
18
900
800
700
600
500
400
300
200
100
-
Baskin-Robbins
Dunkin’
Donuts
2,396
249
91
321
11
2,972
581
338
284
79
Asia
Middle East
Europe
Americas
Australia / NZ
Confidential information: Copying, dissemination or distribution of this
information is strictly prohibited. 6,000 |
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information is strictly prohibited. Drive continued international growth
for both brands
19
A history of successful international growth
Focused international growth priorities
Drive growth and increase penetration in established
markets (Japan, Korea and Middle East)
Leverage brands’
strengths to grow in newer, high-
potential markets
•
Accelerate China growth for both brands
•
Launch Dunkin’
Donuts in India
•
Build-out other emerging markets
History of successful international growth, particularly
in Asia
Dunkin’
Brands is among the largest U.S. QSR
companies overseas by unit count
Emphasis on improving penetration in existing
markets, given strong concept acceptance
Both brands have been able to grow in new markets
•
Baskin-Robbins has close-to-universal product
appeal
•
Dunkin’
Donuts’
platform allows for localization
and flexibility
2007 –
2011 international growth:
•
13% international SWS CAGR
•
8% international POD CAGR |
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information is strictly prohibited. 20
Continue to re-energize Baskin-Robbins U.S.
Leveraging 65-year heritage and 95% aided brand awareness
Implementing focused strategic plan aimed at improving comp sales
•
Sharpening brand differentiation
•
Improving operations and marketing
•
Optimizing supply chain to increase franchisee profitability
•
Introducing standardized retail technology
•
Accelerating store transfer program
Current results are encouraging
•
Improving comp sales trend (+5.8% in Q4 2011)
•
Increased franchisee engagement
•
Reached an all-time high in overall guest satisfaction
|
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information is strictly prohibited. 21
Financial highlights |
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information is strictly prohibited. 22
Fourth quarter and fiscal year 2011 results
Three months
ended 12/31/11
Increase /
(decrease) to prior
year period
Fiscal year 2011
Increase /
(decrease) to prior
year period
Select operating metrics
Systemwide sales growth
15.0%
680 bps
9.1%
240 bps
Dunkin' Donuts U.S. comp
7.4%
270 bps
5.1%
280 bps
Baskin-Robbins U.S. comp
5.8%
660 bps
0.5%
570 bps
Consolidated global PODs¹
16,794
3.7%
16,794
3.7%
Dunkin' Donuts global PODs
10,083
3.3%
10,083
3.3%
Baskin-Robbins global PODs
6,711
4.3%
6,711
4.3%
Select income statement items ($mm)
Revenues
$168.5
12.5%
$628.2
8.8%
Adjusted operating income
73.0
31.2%
270.7
16.2%
Adjusted operating margin
43.3%
610 bps
43.1%
270 bps
Adjusted net income
36.2
36.6%
101.7
15.9%
Select balance sheet items ($mm)
Cash and cash equivalents
$246.7
Net debt
4
/ LTM adjusted EBITDA
4.4x
1
Global net development was 601 PODs in FY2011
2
Adjusted operating income and adjusted net income are non-GAAP measures
reflecting operating income and net income, determined in accordance with GAAP, further adjusted for amortization of
intangible assets, impairment charges, and other non-recurring items, net of the
tax impact of such adjustments. 3
Amount includes $123.1mm cash held for advertising funds or reserved for gift
card/certificate programs 4
Net debt excludes cash held or reserved for gift card/gift certificate
programs 5
Adjusted EBITDA reflects fiscal year 2011 credit agreement EBITDA of $314.1mm
2
2
3
Financial highlights
5 |
 Confidential
information: Copying, dissemination or distribution of this information is strictly prohibited.
23
2012 Guidance
Dunkin’
Donuts U.S.
•
3.5% –
4.5% comps store sales growth
•
260 –
280 total net unit development
•
600 –
650 remodels
International (DD & BR)
•
350 –
450 total net unit development
Baskin-Robbins U.S.
•
0 –
2% comps store sales growth
•
(60) –
(90) total net unit development
550 –
650 total global net unit
development
6 –
7% revenue growth
10 –
12% adjusted operating
income
growth
45 –
46%
adjusted operating
income margin
$1.19 –
$1.23 EPS
$100 –
$110M Free Cash Flow
Business Segments
Dunkin’
Brands
* These targets are forward-looking, are subject to significant
business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond the control of the Company and
its management, and are based upon assumptions with respect to future
decisions, which are subject to change. Actual results will vary and those variations may be material. For discussion of some
of the important factors that could cause these variations, please
consult the “Risk Factors” section of the preliminary prospectus. Nothing in this presentation should be regarded as a representation by
any person that these targets will be achieved and the Company
undertakes no duty to update its targets. |
 Confidential
information: Copying, dissemination or distribution of this information is strictly prohibited.
24
Long-term earnings target
Drivers
Long-term targets*
6–8% revenue growth
10–12% operating income
(excl. intangibles
amortization) growth
15%+ EPS (excl. intangibles
amortization) growth
Strong, consistent revenue growth
•
U.S. consolidated comps in the
2–4% range
•
Total net unit development of
approximately 3–5% with
opportunity to accelerate
Highly leverageable cost structure
•
Drives margin expansion of
150–200 bps per year
Strong free cash flow
•
Facilitates earnings growth through
deleveraging or shareholder payout
* These targets are forward-looking, are subject to
significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond the control of the Company and
its management, and are based upon assumptions with respect to future
decisions, which are subject to change. Actual results will vary and those variations may be material. For discussion of some
of the important factors that could cause these variations, please
consult the “Risk Factors” section of the preliminary prospectus. Nothing in this presentation should be regarded as a representation by
any person that these targets will be achieved and the Company
undertakes no duty to update its targets. |
 Confidential information: Copying, dissemination or distribution of this
information is strictly prohibited. 25
Executing on growth initiatives since IPO
Beverage, breakfast sandwich and bakery sandwich innovation driving traffic and
higher average ticket sales for DD U.S.
Strong core comps , K-Cups and retail technology program helping further
improve franchisee profitability
•
No cannibalization of in-store ready-brewed coffee by K-Cups
Global
promotions
and
“What
Are
You
Drinkin’?”
campaign
reinforce
position
as
#1retailer
of
hot and iced coffee in U.S.
Average
age
of
DD
U.S.
restaurant
image
now
less
than
5
years
–
636
remodels
in
2011
243
net
new
DD
U.S.
restaurants
in
2011;
601
net
new
restaurants
globally
for
both
brands
Strong interest from franchisee candidates for newly released markets in
U.S. New Baskin-Robbins International store design and localized
product offerings support further expansion in existing and new
markets Q4 Baskin-Robbins U.S. comparable store sales of 5.8% highlight
ongoing operational improvements and successful promotional
activities Strong finish to 2011 –
Adj. Net Income up 36.6% driven
by
7.4% Dunkin’
Donuts U.S. comp store sales increase |
 Confidential information: Copying, dissemination or distribution of this
information is strictly prohibited. Brands have unique mix of heritage and
consumer buzz Track record of driving strong comps
Both domestic and international white space growth
opportunities
Experienced management team focused on disciplined
growth
Committed to strong long-term
earnings growth and cash flow
generation with an asset-light
business model
Summary
26 |
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information is strictly prohibited. 27
Attachment –
Non-GAAP Reconciliation
Three months ended
Fiscal year ended
December
31, 2011
December
25, 2010
Increase
(Decrease)
December
31, 2011
December
25, 2010
Increase
(Decrease)
Operating income
$44,567
$44,380
0.4%
$205,309
$193,525
6.1%
Adjustments:
Sponsor termination fee
–
–
–
14,671
–
n/m
Amortization of intangible assets
6,919
7,152
(3.3)%
28,025
32,467
(13.7)%
Impairment charges
840
4,120
(79.6)%
2,060
7,075
(70.9)%
Korea joint venture impairment, net
18,776
–
n/m
18,776
–
n/m
Secondary offering costs
1,899
–
n/m
1,899
–
n/m
Adjusted operating income
$73,001
$55,652
31.2%
$270,740
$233,067
16.2%
Adjusted operating income is reconciled to operating income for the periods presented
as follows: |
 Confidential information: Copying, dissemination or distribution of this
information is strictly prohibited. 28
Attachment –
Non-GAAP Reconciliation
Three months ended
Fiscal year ended
December
31, 2011
December
25, 2010
Basis
Point
Increase
(Decrease)
December
31, 2011
December
25, 2010
Basis
Point
Increase
(Decrease)
Operating income margin
26.4%
29.6%
(320)
32.7%
33.5%
(80)
Adjustments:
Sponsor termination fee
–
–
–
2.3%
–
230
Amortization of intangible assets
4.1%
4.8%
(70)
4.5%
5.6%
(110)
Impairment charges
0.5%
2.8%
(230)
0.3%
1.3%
(100)
Korea joint venture impairment, net
11.2%
–
1,120
3.0%
–
300
Secondary offering costs
1.1%
–
110
0.3%
–
30
Adjusted operating income margin
43.3%
37.2%
610
43.1%
40.4%
270
Adjusted operating income margin is reconciled to operating income margin for the
periods presented as follows: |
 Confidential
information: Copying, dissemination or distribution of this information is strictly prohibited.
29
Attachment –
Non-GAAP Reconciliation
Three months ended
Fiscal year ended
December
31, 2011
December
25, 2010
Increase
(Decrease)
December
31, 2011
December
25, 2010
Increase
(Decrease)
Net income (loss)
$11,591
$(15,256)
176.0%
$34,442
$26,861
28.2%
Adjustments:
Sponsor termination fee
–
–
–
14,671
–
n/m
Amortization of intangible assets
6,919
7,152
(3.3)%
28,025
32,467
(13.7)%
Impairment charges
840
4,120
(79.6)%
2,060
7,075
(70.9)%
Korea joint venture impairment, net
18,776
–
n/m
18,776
–
n/m
Secondary offering costs
1,899
–
n/m
1,899
–
n/m
Loss on debt extinguishment and
refinancing transactions
–
58,262
(100.0)%
34,222
61,955
(44.8%)
Tax impact of adjustments
(3,863)
(27,814)
86.1%
(32,351)
(40,599)
20.3%
Adjusted net income
$36,162
$26,464
36.6%
$101,744
$87,759
15.9%
Adjusted net income is reconciled to net income for the periods presented as follows:
1
Tax impact of adjustments calculated at 40% effective tax rate for each period presented, excluding
the Korea joint venture impairment charge in fiscal year 2011 as there was no tax impact
related to that charge. 1 |
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information is strictly prohibited. 30 |