Wendy's Company (the) · NASDAQ:WEN
Wendy's Company (the) — Wendy's/Arby's Group — Q1 2011 Earnings Presentation
37 slides from Wendy's Company (the)'s earnings presentation, May 10, 2011
Slide 1: First Quarter 2011 Earnings Call
First Quarter 2011 Earnings Call May 10, 2011
Slide 2: Opening Comments
Opening Comments John Barker SVP and Chief Communications Officer
Slide 3: Agenda
Business Highlights • Update on Arby’s strategic alternatives • Key first quarter 2011 results Roland Smith Financial Results and Outlook • First quarter 2011 financial overview • Cash flow and debt capitalization • Dividends and share repurchases • 2011 Outlook Steve Hare Wendy’s Key Initiatives an
Slide 4: Forward-Looking Statements and Regulation G
Forward-Looking Statements and Regulation G This presentation, and certain information that management may discuss in connection with this presentation, may contain statements that are not historical facts, including, importantly, information concerning possible or assumed future results of our oper
Slide 5: Business Highlights
Business Highlights Roland Smith President & Chief Executive Officer
Slide 6: Strategic Alternatives Update
Strategic Alternatives Update • In January 2011, announced exploring strategic alternatives for Arby’s, including a sale of the brand • Potential bidders interested and active • Focused on completing process as quickly as possible • Benefits of the potential sale – Focus resources on Wendy’s – Delev
Slide 7: Q1 2011 Business Overview
Q1 2011 Business Overview • Revenues grew 1.2% to $848 million • Adjusted EBITDA*, including Arby’s, was $83.5 million – Performance met Company’s expectations – Includes significant increase in commodities versus prior year – Includes incremental advertising for Wendy’s breakfast expansion in new m
Slide 8: Wendy's Q1 2011 Same-Store Sales and Margin
March January 99¢ Everyday Value Menu Fish & Chips Q1 2011 N.A. Same-Store Sales Systemwide* 0.0% Company-owned -0.9% Franchise +0.3% Company Restaurant Margin Q1 2011 13.4% Q1 2010 15.4% -200 bps Margin Variances -110 bps New breakfast advertising -80 bps Increased commodities February 99¢ Everyday
Slide 9: Arby's Q1 2011 Same-Store Sales and Margin
9 March January Q1 2011 N.A. Same-Store Sales Systemwide +5.5% Company-owned +6.8% Franchise +4.8% Company Restaurant Margin Q1 2011 10.6% Q1 2010 10.8% February Margin Variances -160 bps Increased commodities -20 bps
Slide 10: Q1 2011 Results and Full-Year Outlook
Q1 2011 Results and Full-Year Outlook Steve Hare Chief Financial Officer
Slide 11: Q1 2011 Results
Q1 2011 Results *See Appendix.
Slide 12: Pro Forma Adjusted EBITDA
Pro Forma Adjusted EBITDA *See Appendix. • Q1 2011 pro forma adjusted EBITDA* was $75 million − Excludes Arby’s adjusted EBITDA* of $8.5 million • Arby’s adjusted EBITDA includes brand G&A and an allocation of corporate G&A − Arby’s portion of the allocation of corporate G&A in Q1 2011 was $8.8 mill
Slide 13: Cash Flow
(S in Millions) 2011 Cash flow from operations s 53.5 Capital expenditures (28.6) Free cash flow 24.9 Repayments of long-term debt (30.2) Dividends paid (8.4) Other financing / investing activities 1.3 Net cash flow (12.4) Beginning cash balance 512.5 Ending cash balance $500.1
Slide 14: Consolidated Debt
Consolidated Debt *See Appendix.
Slide 15: Dividends and Stock Repurchases
• Quarterly Cash Dividend − $0.02 per share − Payable on June 15, 2011 to stockholders of record as of June 1, 2011 • Stock Repurchases − Total amount authorized and available is $250 million − No repurchases during the first quarter due to Arby’s strategic alternatives process Dividends and Stock R
Slide 16: Commodity Prices Increasing Significantly in 2011
Commodity Prices Increasing Significantly in 2011
Slide 17: Revised 2011 Outlook
Revised 2011 Outlook • Expect $330-340 million pro forma adjusted EBITDA 1 • Key Assumptions: – Wendy’s same-store sales growth +1% to +3% – Flat to slightly negative Wendy’s company-operated restaurant margin 2 – Capital expenditures of $145 million 1 Assumes sale of Arby’s and related G&A reductio
Slide 18: Wendy's Initiatives & Global Expansion
Wendy’s Initiatives & Global Expansion Roland Smith President & Chief Executive Officer
Slide 19: Value Hamburgers Salads Fries
Value Hamburgers Salads Fries
Slide 20: Wendy's Q2 2011 Marketing Calendar
June April Natural-Cut Fries with Sea Salt Coming in July: Fresh Berry Frosty Wendy’s Q2 2011 Marketing Calendar May Natural-Cut Fries with Sea Salt Flavor Flavor Dipped Dipped Chicken Chicken Bacon Bacon Mushroom Mushroom Melt Melt
Slide 21: Wendy's #1 in Salad Category
Wendy’s #1 in Salad Category Share of QSR/Fast Casual Entrée Salads Source: Third Party Research, for 3 month period ended January 2011 1st 2nd 3rd
Slide 22: Dave's Hot 'N Juicy Cheeseburgers
Dave’s Hot ‘N Juicy Cheeseburgers
Slide 23: Enhanced Chicken Menu
Asiago Ranch Q1 2011 Gold Chicken Q4 2011 Enhanced Filet Q3 2010 Enhanced Chicken Menu
Slide 24: Strategic Pricing
Strategic Pricing • Strategic pricing model provides information on demand elasticity for pricing actions • Wendy’s implementing selective price increases in • Objective is to partially offset commodity increases while protecting transactions and market share
Slide 25: Wendy's Facility Remodels
Wendy’s Facility Remodels Artist rendering of a Wendy’s facility remodel.
Slide 26: QSR Breakfast Opportunity
$7 bil Late Night $42 bil Core $13 bil Breakfast QSR Annual Sales: Hamburger Category Source: industry reports QSR Breakfast Opportunity
Slide 27: Wendy's Breakfast Update
Wendy’s Breakfast Update • Awareness, trial and repeat rates improving • Sales trends growing • Annualized average weekly sales meeting incremental breakfast sales target of $150,000 – 10% sales lift to $1.4 million average unit volumes
Slide 28: Breakfast Products Score High with Consumers
All Top-2 Box scores of 95% or higher Average Attribute Score: Breakfast Products Score High with Consumers Artisan Egg Sandwich 9.2 out of 10.0 Mornin’ Melt Panini 9.1 out of 10.0 Biscuit Sandwich 9.1 out of 10.0 Fire Roasted Burrito 9.0 out of 10.0
Slide 29: 2011 Breakfast Expansion Timeline
1,000 STORES CONVERT 300 OLD MENU STORES NEW MENU LAUNCH ADDITIONAL MARKETS 2011 Breakfast Expansion Timeline Q4 Q2 Q3 Q1 YE LOUISVILLE & SAN ANTONIO • Kansas City • Phoenix • Pittsburgh • Shreveport
Slide 30: Wendy's/Arby's International Development Since the Merger
Wendy’s/Arby’s International Development Since the Merger Singapore 35 restaurants Middle East 79 restaurants Turkey 100 restaurants Russia 180 restaurants Eastern Caribbean 24 restaurants Argentina 50 restaurants Japan joint venture • Six long-term development agreements covering 23 countries • Joi
Slide 31: Russia Restaurant Openings
Russia Restaurant Openings • First two restaurants in Moscow to open this month – Mall food court at Capitoly Vernadskogo – Arbat area of Moscow • Openings part of the development agreement announced in August 2010 with Wenrus Restaurant Group Limited – 180 restaurants in Russia over the next 10 yea
Slide 32: 2011: Transition Year
• Working on the strategic alternatives process for Arby’s, including a potential sale • Focusing our resources on the Wendy’s brand for future growth 2011: Transition Year
Slide 33: Wendy's Growth Initiatives - Summary
Wendy’s Growth Initiatives - Summary • Deliver “Real” brand positioning • Improve core menu • Introduce exciting, new products • Expand breakfast • Modernize our facilities • Pursue global expansion Average annual EBITDA growth of 10-15%, beginning in 2012
Slide 34: \ WENDY'S
\ WENDY'S ARBY'S GROUP SERVING FRESH IDEAS DAILY.
Slide 35: \ WENDY'S
\ WENDY'S ARBY'S GROUP SERVING FRESH IDEAS DAILY.
Slide 36: Reconciliation of EBITDA to Net Loss and Adjusted EBITDA
Wendy’s/Arby’s Group, Ine. and Sub: Calculation and Comparison of EBITDA and a Reconci ries tion of EBITDA to Net Loss (in Thousands) First Quarter (Unaudited) 2011 2010 EBITDA 383,377 3 84,260 Depreciation and amortization (43,125) (46,326) Impairment of long-lived assets (9,612) (11,601) Operating
Slide 37: Calculation of Pro Forma Adjusted EBITDA
Calculation of Pro Forma Adjusted EBITDA! (In Thousands) First Quarter (Unaudited) 2011 Adjusted EBITDA S 83,484 Less: Arby's adjusted EBITDA 8,531 Pro forma adjusted EBITDA $74,953 Segment Adjusted EBITDA First Quarter 2011 Unallocated Corporate (In Thousands) Wendy's Arby's G&A Total (Unaudited) O