Wendy's Company (the) · NASDAQ:WEN
Wendy's Company (the) — Q2 2013 Earnings Presentation
33 slides from Wendy's Company (the)'s earnings presentation, Jul 23, 2013
Slide 1: Second Quarter 2013 Conference Call
Second Quarter 2013 Conference Call Exhibit 99.1 © 2013 Oldemark LLC July 23, 2013
Slide 2: John Barker, Chief Communications Officer
© 2013 Oldemark LLC JOHN BARKER 2 Chief Communications Officer
Slide 3: Today's Agenda
Today’s Agenda CEO Overview Emil Brolick Financial Update Steve Hare Q&A
Slide 4: Emil Brolick, President & CEO
© 2013 Oldemark LLC EMIL BROLICK 5 President & CEO
Slide 5: Strong Q2 Earnings
STRONG Q2 EARNINGS … ADJUSTED EBITDA & EPS 2013 OUTLOOK TRENDING TOWARD HIGH END OF RANGE BRAND TRANSFORMATION PROGRESS CONTINUES 2012 INITIATIVES CONTRIBUTING TO SOLID 2013 SYSTEM OPTIMIZATION TO IMPROVE EARNINGS QUALITY
Slide 6: Preliminary Q2 2013 Highlights
Preliminary Q2 2013 Highlights +15% +60% 3.6% 2-year +260bps Adjusted EBITDA* $102.1 mil vs. $89.1 mil Adjusted EPS* $0.08 vs. $0.05 Co.-Op. Rest. Margin 16.7% vs. 14.1% Co.-Op. SSS 0.4% vs. 3.2% *See reconciliation of Adjusted EBITDA and Adjusted EPS in the appendix.
Slide 7: Pretzel Bacon Cheeseburger
PRETZEL BACON CHEESEBURGER
Slide 8: Pretzel Bacon Cheeseburger PR / Social Media Highlights
• More than One Billion Consumer Impressions • Over 60 Million views of promotional videos • National broadcast segments: • CNN ‘New Day’ and TODAY with Kathie Lee & Hoda • Partnered with celebrity Nick Lachey to host a Pretzel Love Songs media event to kick off the #PretzelLoveSongs digital campaig
Slide 9: System Optimization
System Optimization Next Phase of Brand Transformation… © 2013 Oldemark LLC
Slide 10: NOILVIANNOASNVY
NOILVIANNOASNVY anvug
Slide 11: Core Organic Growth Strategies and Shareholder Value Initiatives
Image / Experience Activation System Optimization Financial Management Global Growth New Restaurant Development North America Same-Store Sales Growth Core Organic Growth Strategies Shareholder Value-Enhancing Initiatives Restaurant Utilization & Daypart Expansion
Slide 12: Optimize Restaurant Portfolio
Optimize Restaurant Portfolio • • Sell approx. 425 restaurants by mid-2014 Sell approx. 425 restaurants by mid-2014 • • Lower company ownership from 22% to 15% Lower company ownership from 22% to 15% • • Concentrate company ownership Concentrate company ownership • • Generate a higher restaurant ope
Slide 13: Prospective Buyers of Restaurants
PROSPECTIVE BUYERS 425 RESTAURANTS • New and existing franchisees • Strong operators with proven success • Strong financially and well-capitalized • Growth mindset – commitment to Image Activation and new restaurant development • Demonstrated commitment to customer service
Slide 14: Recent Progress
Recent Progress • Kansas City • 24 Wendy’s restaurants purchased from the company and agreement to acquire 13 restaurants from a franchisee • Largest Pizza Hut franchisee • Operated by current franchisee in Topeka, Kansas • 26 Wendy’s restaurants NPC Legacy Restaurant Group
Slide 15: Optimize Financial Performance
Optimize Financial Performance Lower Higher Maintain Adj. EPS growth Adj. EPS growth Margin Margin Royalty income Royalty income Rent income Rent income Cash flow Cash flow Sales Sales G&A G&A Cap ex Cap ex Depreciation Depreciation Adj. EBITDA growth Adj. EBITDA growth ENHANCE QUALITY OF EARNINGS *
Slide 16: Economics of System Optimization
Economics of System Optimization* Royalties $25 M Rent $20 M G&A $30 M EBITDA Divested EBITDA Gained = * Estimates based on Company’s current outlook.
Slide 17: Optimize Shareholder Returns
Optimize Shareholder Returns Organic Growth Organic Growth • • Continue to invest in core business Continue to invest in core business Shareholder Value Shareholder Value • • Opportunity for regular dividend growth and Opportunity for regular dividend growth and share repurchases share repurchases O
Slide 18: Steve Hare, Chief Financial Officer
STEVE HARE 19 © 2013 Oldemark LLC Chief Financial Officer Chief Financial Officer
Slide 19: Preliminary Q2 2013 Highlights
Preliminary Q2 2013 Highlights Q2 2013 North America Same-Store Sales 1-Year 2-Year Company-Operated 0.4% 3.6% Franchise 0.3% 3.5% N.A. Company Restaurant Margin +260 bps Q2 2013 16.7% Q2 2012 14.1% April June May N.A. Company Restaurant Margin +260 bps Q2 2013 16.7% Q2 2012 14.1%
Slide 20: Preliminary Q2 2013 Financial Summary
Preliminary Q2 2013 Financial Summary *See reconciliation of Adjusted EBITDA and Adjusted EPS in the appendix. Q2 Q2 % Change Sales 571.2 $ 566.1 $ 0.9% Franchise revenues 79.3 79.8 -0.5% Total revenues 650.5 $ 645.9 $ 0.7% Adjusted EBITDA* 102.1 $ 89.1 $ 14.6% Adjusted EPS* 0.08 $ 0.05 $ 60.0% ($ i
Slide 21: Adjusted Income and Special Items
Adjusted Income and Special Items Adjusted Income and Special Items *See reconciliation of Adjusted Income and Adjusted EPS in the appendix. (In Thousands Except Per Share Amounts) (Unaudited) Per share Per share (a) Adjusted income and adjusted earnings per share* 31,779 $ 0.08 $ 19,221 $ 0.05 $ (L
Slide 22: Selected Balance Sheet Highlights
Selected Balance Sheet Highlights ($ in millions) (unaudited) Cash $ Senior Debt 1,429 $ Capital Leases and Other Debt Total Debt 1,471 $ TTM Adjusted EBITDA* $ Total Debt / TTM Adjusted EBITDA* 4.1x Net Debt / TTM Adjusted EBITDA* 2.7x June 30, 2013 *See reconciliation of Adjusted EBITDA in the app
Slide 23: 2013 Outlook: Trending Toward High End of Range
2013 Outlook: Trending Toward High End of Range Adjusted EPS: $0.20 to $0.22, 18% to 29% increase vs. 2012 Adjusted EBITDA: $350 to $360 million, 5% to 8% increase vs. 2012 Estimates based on Company’s current outlook.
Slide 24: 25% Dividend Increase and Share Repurchase Authorization
25% Dividend Increase New quarterly rate $0.05 Payable: Sept. 17, 2013 Record Date: Sept. 3, 2013 $100 million Share Repurchase Authorization Intend to begin purchasing shares in Q3 Current authorization expires Dec. 29, 2013
Slide 25: Slide 25
Slide 26: Slide 26
Slide 27: Long-Term Outlook
Adjusted EBITDA growth rate in high-single to low-double-digit range Adjusted EPS growth rate to mid-teens Reaffirm Raising LONG-TERM OUTLOOK: © 2013 Oldemark LLC
Slide 28: John Barker, Chief Communications Officer
JOHN BARKER 28 © 2013 Oldemark LLC JOHN BARKER Chief Communications Chief Communications Officer Officer
Slide 29: Investor Relations Calendar
Investor Relations Calendar Events Aug. 7: 10-Q filing Aug. 15: Sell-side reception in New York Sept. 24: Image Activation tour in Philadelphia (host: CL King) Oct. 2: Image Activation tour in New York (host: JP Morgan) Nov. 7: 3Q earnings release Nov. 12: Image Activation tour in Dublin (host: Step
Slide 30: Q&A
Q&A
Slide 31: Appendix
Appendix
Slide 32: Reconciliation of Adjusted EBITDA to Net Income Attributable to The Wendy's Company
Reconciliation of Adjusted EBITDA to Net Income (Loss) Attributable to The Wendy's Company Adjusted EBITDA 102,086 $ 89,073 $ 179,385 $ 152,954 $ Less: Depreciation and amortization (38,719) (35,947) (90,516) (68,258) Impairment of long-lived assets - (3,270) - (7,781) Facilities action charges, net
Slide 33: Reconciliation of Adjusted Income and Adjusted EPS to Net Income and EPS
Reconciliation of Adjusted Income (Loss) and Adjusted Earnings Per Share to Net Income and Earnings Per Share Attributable to The Wendy's Company Per share Per share (a) Per share Per share Adjusted income and adjusted earnings per share 31,779 $ 0.08 $ 19,221 $ 0.05 $ 44,878 $ 0.11 $ 22,568 $ 0.06