Domino's Pizza Enterprises Limited · ASX:DMP
Domino's Pizza Enterprises — FY2021 Earnings Presentation
63 slides from Domino's Pizza Enterprises's earnings presentation, Aug 18, 2021
Slide 1: ASX market announcement cover letter
Domino’s Pizza Enterprises Limited 1/485 Kingsford Smith Drive Hamilton, QLD, Australia 4007 ACN: 010 489 326 www.dominos.com.au 18 August 2021 The Manager Market Announcements Office Australian Securities Exchange 4th Floor, 20 Bridge Street SYDNEY, NSW, 2000 Dear Sir, Market presentation for the y
Slide 2: Full Year Results
Sy Dominos FULL YEAR RESULTS PERIOD ENDING 27 JUNE 2021 AUSTRALIA NEW ZEALAND BELGIUM FRANCE THE NETHERLANOS JAPAN GERMANY LUXEMBOURG DENMARK
Slide 3: Presented By
S Dominos PRESENTED BY AUSTRALIA NEW ZEALAND DON MEld RICHARD CONEY GROUP CEO & MANAGING DIRECTOR © GROUP CFO ANDRE TEN WOLDE JOSH KILIMNIK DPE EUROPE CEO JAPAN CEO ANDREW BRADLEY NICK KNIGHT FRANCE CEO AUSTRALIA & NEW ZEALAND CEO BELGIUM FRANCE THE NETHERLANDS JAPAN GERMANY LUXEMBOURG DENMARK
Slide 4: Thank You
ya THANK YOU.” COVID-19 continues to affect the communities which Domino's Pizza Enterprises Ltd serves The board and management thank our Franchisees and team members for their extraordinary efforts again this year Despite challenging conditions, they have demonstrated the very best of Domino's val
Slide 5: Group Key Developments
GROUP KEY DEVELOPMENTS FRANCHISEE PROFITABILITY INCREASED hb Today's results are the dividends ate 13 NEW DEBT from previous long-term investment FACILITIES in our business. PAGE 22 LONG-TERM 3-5 YEAR DIVIDEND OUTLOOK INVESTMENT IN PAYOUT RATIO UPGRADED DOMINO'S: INCREASED OUR FRANCHISEES AND OUR FU
Slide 6: FY21 Actual Year-on-Year
FY21 Year-on-Year Year-on-Year Actual Growth % Growth Network Sales $3,744.4m +$476.5m +14.6% Online Sales $2,929.8m +$519.4m +21.5% Same Store Sales Growth +9.3% Network Store Count 2,949 stores +285 new stores EBITDA(1) $424.9m +$69.0m +19.4% EBIT(1) $293.0m +$62.7m +27.2% NPAT (after Minority Int
Slide 7: Same Store Sales Growth 3-5 Year Outlook
3-5 Year FY21 Outlook(1) Actual Same Store Sales Growth +3-6% +9.3% (3) +285 stores New Organic Store Additions +7-9% of network +10.7% of network Net CAPEX(2) $60-100m $85.4m ▪ Very strong SSS and Network Sales Growth; Japan and Germany continue to outperform ▪ Record new store openings from both F
Slide 8: Regional Performance Highlights
(1) ▪ France: Franchisee partnerships and incentives, such as the Manager-to-Franchisee pathway, have lifted performance and store opening cadence ▪ Germany: Strategic acquisitions delivered scale through a unified national brand; delivering rapid sales growth and a step-change in organic growth ▪ B
Slide 9: Strategic New Roles
▪ During FY21, Management has made a significant investment in strategic new roles, including an Developing our vision Leveraging higher Partnering with DPZ Maximising our additional 28 team members at a for a positive future Network Sales, to deliver global opportunities to Group and Regional level
Slide 10: Actual Full Year Trading Update
Actual Trading Update (1) Full Year First 7 Weeks FY20 FY21 FY21 YTD(1) FY22 YTD(2) Network Sales Growth +12.8% +14.6% +18.5% +7.7% Same Store Sales Growth +5.8% +9.3% +11.0% +2.7% New Organic Store Additions +163 stores +285 stores +24 stores +26 Stores ▪ Strong Network Sales growth and store openi
Slide 11: Network Sales Growth and Online Sales
(1) (2) (3) (4) ▪ Network Sales growth +14.6%, (+18.8% in constant currency), SSS +9.3% ▪ Group Online Sales growth +21.5% 1) Total Network Sales growth using Full Year average FX rates, as reported during the respective periods 2) SSS is calculated in constant currency 3) Including sales via aggreg
Slide 12: New Store Additions
(1) (1) (2) ▪ Group: +285 new stores added to the network; ▪ Continued significant store growth, from both new 94% of new Franchised stores opened were from and existing stores internal candidates(3) ▪ Europe: +129 new stores ▪ ANZ: +30 new stores ▪ Japan: +126 new stores ▪ See Appendix 2 for furthe
Slide 13: Regional EBIT Contribution
+30 +129 EU +11.1% $1,472.5m $1,296.4m ANZ +3.6% $975.5m +126 JP +18.7% EU ANZ JP EU ANZ JP (1) $88.2m $116.8m ($23.3m) $111.3m EU ANZ JP Global 1) Underlying EBIT, including AASB16, excluding significant charges 12
Slide 14: Group Franchisee Enterprise EBITDA
1) Franchisee profitability includes 77% of stores that have submitted P&Ls during Q3 21 12-month rolling 2) Group Franchisee Enterprise EBITDA is calculated on the basis of multiplying Group weighted average 13 period and 81% of stores that have submitted P&Ls during Q3 20 12-month rolling period s
Slide 15: Group Financials
GROUP FINANCIALS 14
Slide 16: Group Financials
FY20 FY21 +/(-) FY20 Underlying Underlying Underlying(1) $ mil $ mil % Network Sales 3,267.9 3,744.4 14.6% ▪ Very strong Network Sales growth across the Group (+18.8% in constant currency) Revenue 1,905.3 2,199.1 15.4% ▪ Revenue growth benefitted from strong Network Sales growth, as well as revenue
Slide 17: Group EBIT Growth
FY20 FY21 +/(-) FY20 Underlying Underlying Underlying(1) $ mil $ mil % Revenue ▪ Group EBIT growth +27.2% Europe 560.1 665.1 18.7% (EBIT growth +33.0% in constant currency) ANZ 693.4 756.6 9.1% Group FX translation headwind $13.3m Japan 651.8 777.4 19.3% Total Revenue 1,905.3 2,199.1 15.4% ▪ Europe
Slide 18: Non-recurring costs by region
Europe ▪ $3.1m – As part of our COVID-19 strategy to protect our team members, a significant number of face masks were sourced in advance and held in stock at price points which were artificially inflated, due to global supply constraints. At year-end, we revalued the stock to current market prices,
Slide 19: Working Capital and Cash Flow
FY20 FY21 $ mil $ mil Underlying EBITDA 355.9 424.9 Change in working capital 63.6 42.1 ▪ Working Capital benefit(1), predominantly due to Corporate stores revenue expansion. Profit on sale of non-current assets (21.3) (23.0) H1 22 Working Capital headwind expected, due to timing of financial close
Slide 20: FY21 Net CAPEX
▪ FY21 Net CAPEX $85.4m (Prior Year $97.4m) ▪ CAPEX which Recycles $30.5m ‒ Gross CAPEX $99.5m, including investment in new Corporate stores (primarily Japan), Franchisee loans for new and existing stores and Franchisee acquisitions (predominantly Europe and ANZ) ‒ Cash inflows $69.0m, arising from
Slide 21: Net Debt Reduced
FY20 FY21 +/(-) FY20 Statutory Statutory Statutory $ mil $ mil $ mil Cash & cash equivalents 245.7 174.7 (71.0) Trade and other receivables 146.5 145.8 (0.7) Other current assets 130.3 134.3 4.1 Total Current Assets 522.4 454.8 (67.6) ▪ Net debt(1) reduced $118.7m vs. Full Year and $48.1m vs. H121,
Slide 22: DPE Key Financial Ratios
FY20 H121 FY21 Underlying Underlying Underlying DPE Key Financial Ratios (1) (2) Return on Equity 38.1% 44.4% 49.0% ▪ ROE increases, due to strong NPAT growth Return on Capital Employed 14.1% 16.1% 18.7% ▪ ROCE increases, due to significant EBIT growth, whilst DPE continues to invest in our internat
Slide 23: Refinancing of Debt Facilities
▪ Subsequent to year-end, the Group has re-financed its bi-lateral loan funding arrangements, which were due to expire in September 2022 (2) ▪ The refinancing term is for an additional five years, expiring in and around August 2026 ▪ The refinancing process, undertaken by DPE on a bi-lateral basis a
Slide 24: Dividend Payout Ratio Increased
(2) ▪ Dividend payout ratio to be increased to 80%, from 70% of underlying NPAT (after MI), from H2 21 onwards − It is anticipated that the increased dividend will be largely funded from DPE’s existing Free Cash Flows − The final dividend for FY21 will be franked at 70%; it is forecast that future d
Slide 25: Underlying EPS Growth
▪ Underlying EPS 217.6c, +28.7% on FY20 ▪ Underlying EPS 3-Year CAGR +12.5% ▪ Underlying EPS 10-Year CAGR +21.9% 24
Slide 26: Europe
EUROPE
Slide 27: Europe Store Counts
(1) (2) (3) (4) 1) FY21 Year End closing store count of same-stores was 863 out of 1,286 total stores (67.1%) 3) Online Sales percentage calculated as total Online Sales divided by total Network Sales 26 2) Including sales via aggregator platforms 4) New organic stores include all new stores opened
Slide 28: Germany Benelux France Denmark
Germany Benelux France 370 TOTAL STORES FY21 448 TOTAL STORES FY21 449 TOTAL STORES FY21 +40 NEW STORES +45 NEW STORES +38 NEW STORES AVERAGE NUMBER OF STORES PER AVERAGE NUMBER OF STORES PER AVERAGE NUMBER OF STORES PER FRANCHISEE: FRANCHISEE: FRANCHISEE: 2.1 (+0.3) 2.8 (+0.1) 3.0 (-0.3) POPULATION
Slide 29: Europe Performance Drivers
Strong sales through continued demand for delivery, with carry-out sales slowly recovering ▪ Long-term focus on aligning Franchisees has delivered: record new store openings with very strong order counts ▪ More stores and more marketing, leading to increased brand preference in all markets ▪ Improve
Slide 30: Asia
ASIA
Slide 31: Asia Store Counts
(1) (2) (3) (4) 1) FY21 Year End closing store count of same-stores was 228 out of 800 total stores (28.5%) 3) Online Sales percentage calculated as total Online Sales divided by total Network Sales 30 2) Including sales via aggregator platforms from FY20 onwards, FY21 ¥6.6b and FY20 ¥3.9b 4) New or
Slide 32: Japan and Taiwan
Japan Taiwan 800 TOTAL STORES FY21 157 TOTAL STORES FY21 +126 NEW STORES AVERAGE NUMBER OF STORES PER FRANCHISEE: 3.2 (+0.6) POPULATION: 126.0M POPULATION: 23.9M 157,000+ 149,000+ PEOPLE PER STORE PEOPLE PER STORE 31
Slide 33: Japan Performance
The extraordinary results from Domino’s Japan this FY were a result of a long-term, focussed, strategy & world-class execution ▪ Franchisees and Corporate stores recorded record profits for the Financial Year ▪ Management is balancing the growth of its expansion, through opening a combination of for
Slide 34: Australia & New Zealand
AUSTRALIA & NEW ZEALAND
Slide 35: Australia & New Zealand Store Counts
(1) (2) (3) (4) 1) FY21 Year End closing store count of same-stores was 760 out of 863 total stores (88.1%) 3) Online Sales percentage calculated as total Online Sales divided by total Network Sales 34 2) Including sales via aggregator platforms 4) New organic stores include all new stores opened af
Slide 36: Australia & New Zealand
863 TOTAL STORES FY21 +30 NEW STORES AVERAGE NUMBER OF STORES PER FRANCHISEE: 2.1 (+0.1) POPULATION: 30.7M 35,000+ PEOPLE PER STORE 35
Slide 37: Franchisee Base Improvement
Ongoing program to improve the strength of Franchisee base – started with Operations 360 – is delivering results ▪ Re-franchising of Corporate stores and strategic expansion of multi-unit Franchisees, is building leadership capacity ▪ A new generation of young, multi-unit, Franchisees have demonstra
Slide 38: Domino's For Good
DOMINO’S FOR GOOD ENVIRONMENTAL, SOCIAL AND GOVERNANCE Os
Slide 39: Global ESG Working Group
Our Global ESG working Group has progressed meaningful initiatives: FY19 FY20 H1 21 ▪ Delivering our first Modern Slavery Statement (Benchmark) 3.61 tonnes CO2e 3.41 tonnes CO2e 1.78 tonnes CO2e ▪ Revising our Business Partner Code of Conduct CO2e emissions per store per store per store Number of St
Slide 40: Focus in FY22
Our focus in FY22 will be to better measure, manage and report on ESG materiality topics, targets and initiatives. Furthermore, we intend to: ▪ Create a (structural) measurement and reporting framework ▪ Ensure compliance and risk management for crucial ESG topics ▪ Communicate and engage with our s
Slide 41: Outlook
OUTLOOK
Slide 42: Outlook and Key Assumptions
▪ COVID-19 continues to affect our markets, particularly carry-out, with societal restrictions still anticipated ▪ DPE is closely monitoring commodity pricing and supply chain pressures − Our long-term partnerships are expected to limit pricing increases this calendar year − As such, food pricing in
Slide 43: Management Confidence for FY22
Management is confident of a strong year ahead: record store openings and operational excellence to deliver results ▪ Continued focus on delivery – rebuilding carry-out remains an opportunity as restrictions ease ▪ Management remains vigilant as high levels of COVID-19 in European markets continue A
Slide 44: Future Business Priorities
COVID-19 continues to bring short-term uncertainty - however certainty in our model is resolute ▪ The short- and long-term future of our business remains firmly focused on: − Superior Product, Service and Image at an affordable price − Digital delivery – which relies on efficient delivery territorie
Slide 45: Delivery is the Future
Delivery is the future – our moat relies on the most efficient delivery model and territories “Project Ignite has provided us with an opportunity to expand our ▪ Data shows the #1 driver of Same Store Sales is operational excellence: our improved network faster. We currently have Franchisee base can
Slide 46: Japan and Taiwan Update
Local Franchisees and team members have demonstrated that High Volume Mentality is a Domino’s Japan mentality ▪ DPJ is reinvesting for the future, including training additional store managers and Franchisees for medium-term growth ▪ Market-leading operations & menu offerings have built confidence, w
Slide 47: FY22 and Long-Term Store Growth
▪ In FY22, the Network will expand by circa 500 stores, through both organic new store openings and the integration of Taiwan ▪ DPE plans to open our 3,000th store in the next two months, our 4,000th store in Calendar Year 2023, and our 5,000th store during Calendar Years 2026-27 ▪ A review of our m
Slide 48: Store Milestones by Region
▪ Europe milestone upgraded to 3,050 stores by 2033 − Benelux upgraded by +200 stores − Europe 2.4x current market size ▪ ANZ store target unchanged at 1,200 by 2025-2028 − ANZ 1.4x current market size ▪ Asia milestone upgraded to 2,400 stores by 2033 − Taiwan +400 stores (new Market acquired) − Jap
Slide 49: Medium-Term Outlook
Existing New FY21 3-5 Year 3-5 Year Actual Outlook Outlook Same Store Sales Growth +9.3% +3-6% +3-6% +285 stores New Organic Store Additions +7-9% of network +9-12% of network +10.7% of network Net CAPEX(1) $85.4m $60-100m $100-150m ▪ COVID-19 has reinforced our long-term view of the growing importa
Slide 50: Long-Term Value Creation
▪ “A single-minded focus, clear strategy, and long-term decision making, have delivered Domino’s to this time” – H1 21 ▪ The strength of our business model and long term strategic focus have allowed us to return more to shareholders, invest in our business and grow organically & inorganically, throu
Slide 51: FY22 Priorities and Milestones
▪ Our Franchisees and team members have demonstrated their excellence in navigating the tumult of COVID-19 – we anticipate these headwinds will continue at least into the 2022 calendar year ▪ We will continue to invest in the future of our business and our Franchisees – including through Project Ign
Slide 52: Slow Where It Matters
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Slide 53: Lil
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Slide 54: Dividend and Investor Events Calendar
▪ 24 August, 2020 – Ex-dividend date ▪ 25 August, 2021 – Dividend record date ▪ 9 September, 2021 – Dividend payment date ▪ October, 2021 – EU Investor Day – online ▪ 3 November, 2021 – DMP Annual General Meeting ▪ DMP intends to expand the use of transcripts for investor events – with the transcrip
Slide 55: Store Count Tables
FY 19 H1 20 FY 20 H1 21 FY 21 European stores Franchised stores 1,028 1,042 1,060 1,105 1,174 Corporate stores 69 81 101 102 112 European Network Stores 1,097 1,123 1,161 1,207 1,286 Net stores added in period 43 26 64 46 125 ANZ stores Franchised stores 716 713 714 736 763 ▪ Group – 285 new store a
Slide 56: Summary Returns and Capital Employed
FY20 H121 FY21 FY20 H121 FY21 Return on Equity Return on Capital Employed Underlying Underlying Underlying Underlying Underlying Underlying $ mil $ mil $ mil $ mil $ mil $ mil 12 Month Rolling NPAT (Before Minority Interest) 151.6 177.6 197.6 EBIT (Underlying) - current period 230.4 153.0 293.0 EBIT
Slide 57: Cash Conversion and Working Capital
FY20 H121 FY21 FY20 FY21 Cash Conversion Movement in Working Capital Underlying Underlying Underlying Operating cash flow before interest & tax 396.7 195.6 449.1 $ mil $ mil Trade and other receivables (51.9) 0.8 EBITDA 355.9 218.7 424.9 Trade and other payables 134.1 43.8 Inventories (5.6) (2.4) Ca
Slide 58: Interest Coverage and Net Debt
FY20 H121 FY21 FY20 H121 FY21 Interest Coverage Underlying Underlying Underlying Net Debt Underlying Underlying Underlying Pre AASB16 Pre AASB16 Pre AASB16 Pre AASB 16 Pre AASB 16 Pre AASB 16 $ mil $ mil $ mil $ mil $ mil $ mil 12 Month Rolling EBITDA (ex AASB16) 303.0 342.8 369.5 Non-current borrow
Slide 59: FY21 Statutory and Underlying Results
FY20 FY20 FY20 FY21 FY21 FY21 +/(-) FY20 Significant Significant Statutory Underlying Statutory Underlying Underlying(1) Charges Charges $ mil $ mil $ mil $ mil $ mil $ mil % Network Sales 3,267.9 3,267.9 3,744.4 3,744.4 14.6% Revenue 1,905.3 1,905.3 2,199.1 2,199.1 15.4% EBITDA 343.4 12.4 355.9 418
Slide 60: FY21 Pre AASB16 Reconciliation
FY20 FY20 FY20 FY21 FY21 FY21 +/(-) FY20 Underlying AASB 16 Underlying Underlying AASB 16 Underlying Underlying(3) (1) (2) Post AASB16 Pre AASB16 Adjustments(2) Post AASB16 Pre AASB16 Adjustments Pre AASB16 $ mil $ mil $ mil $ mil % Network Sales 3,267.9 3,267.9 3,744.4 3,744.4 14.6% Revenue 1,920.4
Slide 61: Same Store Sales Calculations
▪ Same Store Sales are calculated weekly, measured in local currency ▪ Same Store Sales is the process of comparing year-on-year growth of existing, mature, stores ▪ Stores are included after two years of trading (either two years of DPE, or one year pre-acquisition plus one year of DPE) ▪ Where a d
Slide 62: Class Action Update
CLASS ACTION ▪ The Company rejects the allegations and has been defending the action vigorously. A defence denying the allegations has been filed and an application to have the statement of claim (or parts thereof) struck out was heard on 9 June 2020. The Federal Court dismissed the application on 1
Slide 63: Forward Looking Statements
▪ Domino’s Pizza Enterprises Limited (Domino’s) advises that the information in this presentation contains forward looking statements which may be subject to significant uncertainties outside of Domino’s control ▪ Domino’s does not undertake any obligation to provide recipients of this presentation
Domino's Pizza Enterprises — FY2021 Earnings Presentation on 6ix