Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Wingstop Inc. | a8-kinvestorpresentation.htm |
R 161
G 153
B 88
R 0
G 105
B 56
R 128
G 38
B 41
R 218
G 215
B 187
R 136
G 170
B 136
R 191
G 191
B 191
Investor
Presentation
JANUARY 2017
1
Confidential Information - Do Not Distribute
Forward-Looking Statements
This presentation contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact or relating to present
facts or current conditions included in this presentation are forward-looking statements. Forward-looking statements give Wingstop Inc.’s (the “Company”) current expectations
and projections relating to its financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the
fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipates,” “believes,” “continues,” “estimates,” “expects,”
“goal,” “objectives” “intends,” “may,” “opportunity,” “plans,” “potential,” “near-term,” “long-term,” “projections,” “assumptions,” “projects,” “guidance,” “forecasts,” “outlook,”
“target,” “trends,” “should,” “could,” “would,” “will” and similar expressions and terms of similar meaning in connection with any discussion of the timing or nature of future
operating or financial performance or other events.
The forward-looking statements contained in this presentation are based on assumptions that the Company has made in light of its industry experience and perceptions of
historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. As you read and consider this
presentation, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (many of which are beyond our
control) and assumptions. Although the Company believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many
factors could affect its actual operating and financial performance and cause its performance to differ materially from the performance anticipated in the forward-looking
statements. The Company believes these factors include, but are not limited to, those described under the sections “Risk Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” in its Form 10-K filed with the SEC. Should one or more of these risks or uncertainties materialize, or should any of
these assumptions prove incorrect, the Company’s actual operating and financial performance may vary in material respects from the performance projected in these forward-
looking statements.
Any forward-looking statement made by the Company in this presentation speaks only as of the date on which it is made. Factors or events that could cause the Company’s
actual operating and financial performance to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no
obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
Non-GAAP Financial Measures
This presentation contains certain non-GAAP financial measures. A “non-GAAP financial measure” is defined as a numerical measure of a company’s financial performance
that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in the statements of
income, balance sheets or statements of cash flow of the company. The Company has provided a reconciliation of Adjusted EBITDA, a non-GAAP financial measure, to net
income in the Appendix to this presentation. Adjusted EBITDA is presented because management believes that such financial measure, when viewed with the Company’s
results of operations in accordance with GAAP and the reconciliation of Adjusted EBITDA to net income (loss), provides additional information to investors about certain
material non-cash items and about unusual items that the Company does not expect to continue at the same level in the future. Adjusted EBITDA is used by investors as a
supplemental measure to evaluate the overall operating performance of companies in the Company’s industry, you should not consider it in isolation, or as a substitute for
analysis of results as reported under GAAP. Our calculation of Adjusted EBITDA may not be comparable to that reported by other companies. For additional information about
our non-GAAP financial measures, see our filings with the Securities and Exchange Commission.
JOBS Act
The Company is an “emerging growth company” within the meaning of the Jumpstart Our Business Startups Act. As a result, the Company will be subject to reduced public
company reporting requirements.
FORWARD-LOOKING STATEMENTS
A CATEGORY OF ONE
3
2016 – ANOTHER STRONG YEAR!
$2.90/share Special
Dividend (2)
10% Return of Market
Cap (2)
104 New Openings (Net)
Q3 YTD (1)
18% Unit Growth Rate (1)
3.9% Domestic (1)
SSS Growth Q3 YTD
2016 will be the 13th Consecutive Year of SSS Growth
Note:
(1) Thirty-Nine Weeks ended September 24, 2016
(2) Special dividend paid in July 2016
4
CONTINUES A LONG TRACK RECORD OF
DELIVERING OUTSTANDING RESULTS
Note:
(1) Three year period ended September 24, 2016
(2) Refer to Adjusted EBITDA reconciliation in Appendix
3 Year CAGR (1)
Unit Development 18%
System-Wide Sales 19%
Revenue 16%
Adjusted EBITDA (2) 20%
5
11.3%
13.2%
17.1%
16.7%
58.2%
49.2%
36.8%
27.9%
22.2% 21.2%
18.5%
14.3%
9.5% 8.6%
Source: Company filings
2015
2014
2013
58% Unit Growth since 2013 (Domestic)
INDUSTRY LEADING DEVELOPMENT…
Notes:
Q3 2016
(1) Domestic system-wide
(2) Dunkin U.S. segment only
(1) (1) (2) (1) (1) (1) (1) (1) (1) (1)
6
13.8%
9.9%
12.5%
7.9%
3.9%
48.0%
38.2% 37.7%
35.7%
26.2%
24.0% 23.6%
16.0%
13.9%
12.0%
8.1% 8.0%
Source: Company filings
2014
2013
2012
2012 – YTD Q3 2016 Stacked Same Store Sales
AND INDUSTRY LEADING SSS
Notes:
(1) (2) (3) (5) (1) (2) (2) (1) (2) (4) (6)
2015
(1)
(1) Domestic system-wide
(2) Domestic company-owned
(3) Global company-owned
(4) Franchised
(5) System-wide
(6) Dunkin U.S. segment only
YTD Q3 2016
7
98.1 96.9
94.2
88.4 87.1
DIN DNKN WS DPZ PLKI
Q4 2013 Q4 2014 Q1 2015
Post Recap.
Q2 2016 Q2 2016
Pro-Forma
Q3 2016
SHAREHOLDER FRIENDLY MODEL
Notes:
3. Leverage = Net Debt / LTM Adjusted EBITDA (Refer to appendix for reconciliation)
4. Primary proceeds were used to pay a $2.90 per share special cash dividend.
Refer to appendix for Pro-Forma reconciliation.
EBITDA Growth and Cash Generation Support Return of Capital and Deleveraging
(4)
$48M
Dividend
$38M
Dividend
(2)
(2)
% YTD Q3 2016 Cash Conversion (1)
$83M
Dividend
Notes:
1. Defined as (EBITDA – CapEx) / EBITDA
2. Calculations use Adj. EBITDA
Source: Public company filings
Net Debt / LTM Adjusted EBITDA (3)
5.1x 5.2x
2.4x
5.0x
4.6x
3.4x
8
WITH SIGNIFICANT GROWTH OPPORTUNITY
DOMESTIC INTERNATIONAL
• 882 Restaurants in 40 states (1)
• 17% Unit Growth Rate
• Compelling Economic Model
• Strong Pipeline
• 2,500 unit potential
Note:
(1) Restaurant count as of 9/24/16
• 67 Restaurants in 5 countries (1)
• Growing brand awareness
• Accelerating Sales / Investment Ratio
• Recent territory agreements
• Significant franchisee interest
Domestic Development
10
DIFFERENTIATED BRAND
• Simple concept
• Efficient operating model
• Coveted consumer
• Compelling economic model
11
PASSIONATE & ENGAGED FANS
Source: Netbase 2016 Industry Report: US Restaurants
40%
65%
90%
115%
0 1,000 2,000 3,000 4,000
B
ra
n
d
Se
n
ti
me
n
t
(%
P
o
s
it
iv
e
S
o
c
ia
l
C
omments
)
Brand Conversation Volume
(Mentions per $1MM in Revenue)
LOW HIGH
LOW
HIGH
Brand Sentiment & Conversation Volume
Top 20 US Restaurant Brands
12
Franchisee
Year 2
Target (1)
Domestic
System
Average (4)
Unit Economics
AUV $890k $1.1M
Investment Cost (2) $370k
Unlevered Year 2 COC Return (3) 35% - 40% 50% +
Notes:
(1) AUV based on year 2 sales volumes for the 2014 vintage years
(2) Investment cost based on last 2 fiscal years actual costs; excludes pre-opening and working capital
(3) Average store economics are internal Company estimates based on unaudited results reported by franchise owners
(4) As of September 24, 2016
FRANCHISEES LOVE OUR MODEL
13
1
2012 2013 2014 2015 20162011 2012 2013 2014 2015 LTM Q3
2016
Domestic Gross New Unit Openings Domestic Restaurant Opening Commitments
79% of current domestic pipeline is from existing
franchisees as of 12/31/16
Mix of small and large franchisees
Healthy Franchisee Base
… AND CONTINUE TO INVEST
Rapid Unit Development
274
363
503
530
29
53
64
82
128
518
118
14
PROVEN PORTABILITY
40 State Footprint with Room to Grow in All Markets (1)
Note:
(1) Restaurant count as of 9/24/16
Total Domestic Store Count – 882 Averaging 3 Domestic Closures Per Year Since 2013
Opened restaurants in 28 states YTD Q3 2016
15
882
1,645
855
Q3 2016 (actual) Existing Market Potential New Market Potential Long-Term Domestic Potential
827
791
2,500
2,500 Unit Domestic Potential
Existing Markets
New Markets
(1)
Note:
(1) Includes 818 restaurants in existing markets and 64 restaurants in new markets as of 9/24/16.
LONG-TERM DOMESTIC ROADMAP
Q3 2016 (actual) (1)
Strengthening the Model
17
32% Restaurants > 20% Online Sales(2)
ONLINE SALES GROWTH
23 24
Poised for Continued Growth
(1) Olo
(2) As of quarter ended 9/24/2016
Sources:
Q3’15
Q3’16
13.5%
14.0%
14.5%
15.0%
15.5%
16.0%
16.5%
17.0%
17.5%
18.0%
0
50
100
150
200
250
300
350
400
2015 2016 2016 2016
Q4 Q1 Q2 Q3
T
o
tal O
n
lin
e
S
al
e
s
%
S
to
re
C
o
u
n
t
Online % of Sales
Less than 10% Between 10-15% Between 15-20%
Greater than 20% Total Online Sales %
• 75% Take-Out
• ~50% of orders come in
over the phone
• $4 Higher Online Average
Ticket
• 90%+ system POS
conversion in 24 months
• Exited Q3 with online
sales of 19% vs. fast
casual average of 6% (1)
18
LAUNCHING ORDERING WITH AMAZON ALEXA
• First voice-activated ordering with
menu item customization
• Builds on order channel innovation
Facebook Messenger
Twitter
“Alexa, ask Wingstop to order an
8 piece classic wing combo with
lemon pepper, fries and ranch.”
19
2017 NATIONAL ADVERTISING LAUNCH
23 24
Television
Digital &
Social
National digital delivering high
ROI & driving online orders
More national digital delivering
high ROI & driving online orders
2016 2017
(~60% of system sales) (100% of system sales)
22 Weeks of TV
Ad Fund 1% National / 3% Local 3% National / 1% Local
TV Reach
Co-op Markets ~ 70%
Non Co-op Markets – 0%
Average market ~ 85%
20
INTRODUCTORY MESSAGE FOCUS:
KEY BRAND ATTRIBUTES
Young Adult (18-34 Skew)
Male & Female (50/50)
Multicultural (Hispanic & AA Skew)
FLAVOR CRAVER
AUDIENCE
21
21
TELEVISION
TARGETED MEDIA PROPERTIES
Flavor Craver Cable Mix Diverse Sports Universe Univision Partnership
DIGITAL
Social Activation Performance Digital Online Video
International Development
23
STRONG BUSINESS PERFORMANCE
Market/Date open Restaurant (1)
Mexico (11/09) 39
Indonesia (6/14) 13
Philippines (7/14) 11
Singapore (12/13) 2
UAE (4/15) 2
Saudi Arabia (2017) -
Colombia (2017) -
Panama (2017) -
Totals 67
Note:
1. Unit data as of Q3’16
2. As of 12/31/16
Current Footprint Business Performance
• Accelerating sales to investment
ratio
• Improving unit economics
• Aligned and supportive franchise
community
• Recent Territory Agreements
Saudi Arabia 100 restaurants
over 10 years
Colombia/Panama 30
restaurants over 5 years
• Total pipeline of 349 restaurant
commitments (2)
24
ADAPTIVE FORMAT TO MEET LOCAL
MARKET NEEDS
Sports theme design
Table service
Full bar
20+ TV monitors & audio
150-200 seats
Contemporary design
Order at counter
Table delivery and beer (optional)
Digital menu boards
50-70 seats
Sports – Casual Dining Fast Casual
25
Asia
A
North
America
Middle
East
South
America
Strong Interest from Potential Franchisees
INTERNATIONAL POTENTIAL
U.S. Consumption: 44kg
Europe
Market Consumption
European Union 21kg
Africa
Market Consumption
South Africa 31kg
Americas
Market Consumption
Latin America
and Caribbean
30kg
Brazil 39kg
Canada 32kg
Asia
Market Consumption
Malaysia 41kg
Australia 39kg
New Zealand 35kg
China 12kg
India 2kg
Note:
(1) Poultry consumption in estimated average kilograms per capita from 2012 to 2014
Europe
Africa
Asia
Source: OECD-FAO Agricultural Outlook 2015
Middle East
Market Consumption
Kuwait 32kg
Bahrain 24kg
26
UNIQUELY POSITIONED FRANCHISE MODEL
LONG-TERM FINANCIAL TARGETS*
10%+ annual unit growth
~2,500 domestic unit potential
Growing international opportunity
Disciplined Unit Growth
Attractive Business Model Long-Term Growth Targets
*These are not projections; they are goals and are forward-looking, 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 in our Form 10-K and other filings with the SEC. Nothing in this presentation should be regarded as a representation by any person that these goals
will be achieved and the Company undertakes no duty to update its goals.
Strong Same Store Sales Growth
Steady, Reliable Profit Growth
Low single digit annual growth
Online ordering
National advertising
+
=
13% - 15% Adjusted EBITDA growth
18% - 20% Net Income / EPS growth
Strong free cash flow and conversion
27
#Appendix
28
HISTORICAL ADJUSTED EBITDA
RECONCILIATION
Notes:
1. One-time fee of approx. $3.3 million paid in consideration of termination of management agreement with Roark Capital Management, LLC
2. Includes management fees and other out-of-pocket expenses paid to Roark Capital Management, LLC
3. Represents costs and expenses related to refinancings of our credit agreement and our public offerings
4. Represents non-cash gains and losses resulting from the sale of company-owned restaurants to a franchisee and associated goodwill impairment
5. Includes non-cash, stock-based compensation
6. Represents an earn-out payment made to our prior owner based on us achieving revenue benchmarks specified in the acquisition agreement governing our purchase.
There are no further obligations related to the earn-out remaining under the acquisition agreement
(1)
In $000s
Year Ended Year Ended Year Ended Year Ended YTD YTD
December 29, 2012 December 28, 2013 December 27, 2014 December 26, 2015 September 26, 2015 September 24, 2016
Net income 3,580 7,530 8,986 10,106 6,311 11,122
Interest expense, net 2,431 2,863 3,684 3,477 2,764 2,858
Income tax expense 3,000 4,493 5,312 5,739 3,753 6,714
Depreciation and
amortization
2,930 3,030 2,904 2,682 1,944 2,187
EBITDA 11,941 17,916 20,886 22,004 14,772 22,881
Adjustments
Management agreement
termination fee(1)
– – – 3,297 3,297 –
Management fees(2) 422 436 449 237 237 –
Transaction costs(3) 308 395 2,169 2,186 2,186 2,272
Gains and losses on disposal
of assets(4)
(20) – (86) – – –
Stock-based compensation
expense(5)
464 748 960 1,155 492 392
Earn-out obligation(6) 2,500 – – – – –
Adjusted EBITDA 15,615 19,495 24,378 28,879 20,984 25,545
29
NET DEBT RECONCILIATION
In $000s
Adjustments for Q2 Pro-Forma
June 25, 2016 Refinance and Dividend (1) Ending Balance September 24, 2016
Total debt 85,500 79,500 165,000 158,000
Cash and cash equivalents 10,014 (3,684) 6,330 3,828
Net debt 75,486 83,184 158,670 154,172
Notes:
1. Adjusted for proceeds from the new senior secured debt facility and available cash used to fund the special cash dividend.