Collins Foods Limited · ASX:CKF
Collins Foods — H1 FY2013 Earnings Presentation
34 slides from Collins Foods's earnings presentation, Nov 30, 2012
Slide 1: FY13 Half Year Results
For personal use only FY13 HALF YEAR RESULTS 30 November 2012 COLLINS FOODS LIMITED 0
Slide 2: Today's agenda
Today’s agenda For personal use only SECTION 1 – HY13 IN REVIEW SECTION 2 – FINANCIAL PERFORMANCE SECTION 3 – KFC SECTION 4 – SIZZLER SECTION 5 – INDUSTRY DYNAMICS AND MARKET OUTLOOK COLLINS FOODS LIMITED 1
Slide 3: HY13 in Review
For personal use only HY13 IN REVIEW COLLINS FOODS LIMITED 2
Slide 4: HY13 results snapshot
HY13 results snapshot For personal use only Statutory results • Revenue up 5.6% to $197.9m – driven by increased restaurant numbers and positive KFC SSSG • NPAT of $7.4m (HY12: $0.6m) • Operating cashflow up 64% to $18.1m • Strong balance sheet – no change to debt – remain comfortably within covenan
Slide 5: HY13 operational snapshot
HY13 operational snapshot For personal use only • Improved trading conditions, still highly competitive – KFC sales up with SSSG of 3.6% – Sizzler trading improving, below long term trend – margin pressures from value offers and higher input costs • New store rollouts continue – 1 new KFC restaurant
Slide 6: Financial Performance
For personal use only FINANCIAL PERFORMANCE COLLINS FOODS LIMITED 5
Slide 7: Growth returns to top line
Growth returns to top line For personal use only COLLINS FOODS LIMITED 6
Slide 8: Recovery is in progress
Recovery is in progress For personal use only • Revenue up 5.2% to $197.9m HY13 HY12 Change Actual Proforma − improved sales growth $million (a) Avg # restaurants(b) 147.7 144.3 3.4 value offers Revenue 197.9 188.1 5.2% brand and product initiatives % Growth 5.2% (1.3%) new stores Gross pr
Slide 9: Strong balance sheet
Strong balance sheet For personal use only Balance Sheet $m 14 October 12 29 April 12 • Cash of $12.5m (down $6.7m) Cash & Equivalents 12.5 19.2 – maiden dividend paid $6.0m Current assets 21.1 25.3 – final buyback of shares of former Non current assets 311.5 308.9 parent $9.4m Total assets 332.6 33
Slide 10: Strong cash generation
Strong cash generation For personal use only HY13 HY12 • Operating cashflow up 64% to $18.1m $million Actual Actual Net operating cash – interest down $8.0m flows before interest 22.4 22.1 and tax rate and debt down on prior year Net interest paid (3.0) (11.0) – tax paid up $1.2m (tax losses utili
Slide 11: KFC
For personal use only KFC COLLINS FOODS LIMITED 10
Slide 12: KFC performance reflects improved sales momentum
KFC performance reflects improved sales momentum For personal use only HY13 HY12 • Revenue up 5.6% to $148.2m Change $million Actual Actual increase in average restaurant numbers Restaurants SSSG up to 3.6% Average 120.7 118.3 2.4 Period end 121.0 120.0 1.0 free-standing restaurants drivin
Slide 13: Growth capex focused on KFC
Growth capex focused on KFC For personal use only New restaurants • Total capex of $9.6m in line with Maintenance $0.9m expectations − new restaurants – 1 $2.1m Rebuilding $4.7m − rebuilding - 2 completed and existing site in Gladstone purchased − refurbishments – 2 completed Refurbishment • On trac
Slide 14: New stores
New stores For personal use only Valley Metro – opened Aug 2012 Financial Snapshot Capital Spend $ 843,000 Sales Variance (Actual v Capex Sales) +4.2% COLLINS FOODS LIMITED 13
Slide 15: Rebuilds and refurbishments
Rebuilds and refurbishments For personal use only Browns Plains – refurbishment – Rockhampton North - rebuild - opened Aug 2012 opened Oct 2012 Financial Snapshot – post refurb Financial Snapshot – post rebuild Capital Spend $ 1,581,000 Capital Spend (est) $ 2,550,000 Sales Variance Sales Variance (
Slide 16: Marketing campaigns rebuilding and growing core business
Marketing campaigns rebuilding and growing core business For personal use only COLLINS FOODS LIMITED 15
Slide 17: Focus on innovation in product development and targeted value offers
Focus on innovation in product development and targeted value offers For personal use only • Ongoing development of non-fried products new grilled product developed - launch before year end • Value offers resonating well with customers Family Dinner Box and WOW Dinner – 9 pieces for $9.95 and 2
Slide 18: Initiatives to improve operating efficiencies
Initiatives to improve operating efficiencies For personal use only • New service flow methodologies rolled out in select stores • Online ordering trial • Indirect labour restructuring • Rollout of Small Ticket Pre Approved payment facility (for up to $35 payments) commenced • New maintenance system
Slide 19: Online and mobile ordering trial underway
Online and mobile ordering trial underway For personal use only • On trial in 7 stores in Townsville • Slow take up to date • Average order values higher than average credit/debit payment in store • Conducting customer research to address barriers and improve processes COLLINS FOODS LIMITED 18
Slide 20: Key priorities for 2H13
Key priorities for 2H13 For personal use only • 2 new stores and 4 refurbishments • Innovative brand marketing campaigns − Summer Cricket Campaign − local area marketing activities to leverage involvement with KFC T20 Big Bash COLLINS FOODS LIMITED 19
Slide 21: Key priorities for 2H13 (cont'd)
Key priorities for 2H13 (cont’d) For personal use only • Core product building − burger campaign launch • Product development with ‘Better for You’ range launches − grilled product − kids menu • Establishing a permanent sustainable “value” layer • Ongoing trials of online ordering • Breakfast pilot
Slide 22: Sizzler
For personal use only SIZZLER COLLINS FOODS LIMITED 21
Slide 23: Sizzler sales showing signs of improvement
Sizzler sales showing signs of improvement For personal use only HY13 HY12 • Revenue up 4.0% to $49.7m Change $million Actual Actual − increase in restaurant numbers Restaurants Average 27.0 26.0 1.0 (Mackay opened Dec 2011) Period End 27.0 26.0 1.0 − SSSG down 0.1% (substantial Revenue 49.7 47.
Slide 24: Solely maintenance capex
Solely maintenance capex For personal use only • Maintenance capex spend primarily on HY13 Total $0.9m Maintenance restaurant facilities capex • All Sizzler refurbishments on hold in FY13 until revised capital strategy finalised COLLINS FOODS LIMITED 23
Slide 25: Brand and product campaigns to reconnect with customers
Brand and product campaigns to reconnect with customers For personal use only • Legendary Sizzler Salad Bar sub-Brand launched − increase value perception COLLINS FOODS LIMITED 24
Slide 26: Product development and promotional initiatives
Product development and promotional initiatives For personal use only • New Winter Menu and combos rolled out • Soft trade period opportunities targeted − early week promotions − day part offers including special light lunches “one trip” salad bar • Key event promotions such as Mother’s Day reso
Slide 27: Key priorities for 2H13
Key priorities for 2H13 For personal use only • Continued focus on brand building − Legendary Sizzler Salad Bar campaign • Targeted promotional and value plays, with focus on soft trade periods − add on promotion − 2 for 1 Tuesdays − value priced lunch meals • New product and promotional initiatives
Slide 28: Industry Dynamics and Market Outlook
For personal use only INDUSTRY DYNAMICS AND MARKET OUTLOOK COLLINS FOODS LIMITED 27
Slide 29: QSR landscape
QSR landscape For personal use only • Product innovation is key to stimulating demand • Need to focus on increasing average transaction value • Retail is doing it tough in multi-speed economy • Margin pressures persist... discounting to drive sales and increased costs • QSR sales trend appears to be
Slide 30: Qld retail trading environment showing signs of improvement
Qld retail trading environment appears to be showing some signs of improvement amidst ongoing volatility For personal use only QLD retail indicators 2011 to 2012 (yoy ) 3 2.3% 2.2% 2 1 0.1% Inflation Growth rate (%) 0.0% 0 Household Household Unemployment Retail trade consumption savings ratio* -1 -
Slide 31: FY13 outlook
FY13 outlook For personal use only • Return to same store sales growth – KFC FY13 SSSG expected of 4.8% – Sizzler FY13 SSSG expected of 1.9% • Carbon Tax is impacting as expected ($2.5m pre-tax for FY13) – current trading conditions do not allow CKF to pass on full cost increases • Further increases
Slide 32: In summary…
In summary… For personal use only • HY13 financial performance driven by improved KFC top line offset by margin compression • Strong balance sheet • HY13 fully franked dividend of 4.0 cps • Continued focus on growing and rebuilding core businesses – new KFC stores to leverage attractive opportunitie
Slide 33: Thank you & questions
For personal use only THANK YOU & QUESTIONS COLLINS FOODS LIMITED 32
Slide 34: Disclaimer
DISCLAIMER For personal use only "This presentation contains forward looking statements which may be subject to significant uncertainties beyond CKF's control. No representation is made as to the accuracy or reliability of forward looking statements or the assumptions on which they are based. Circum