Wendy's Company (the) · NASDAQ:WEN
Wendy's Company (the) — Wendy's/Arby's Group — Q1 2010 Earnings Presentation
39 slides from Wendy's Company (the)'s earnings presentation, May 13, 2010
Slide 1: First Quarter 2010 Earnings Call & Webcast
First Quarter 2010 Earnings Call & Webcast May 13, 2010
Slide 2: Opening Comments
Opening Comments John Barker SVP and Chief Communications Officer
Slide 3: Agenda
§ Business Highlights - Roland Smith − First Quarter 2010 − Strategic Sourcing Group (SSG) § Financial Results - Steve Hare − First Quarter Consolidated Financial Overview − Cash Flow and Debt Capitalization − Refinancing − Stock Repurchase and Dividend − 2010 Financial Outlook § Brand and Internati
Slide 4: Wendy's/Arby's Group Reported Today
Wendy’s/Arby’s Group Reported Today: § First Quarter 2010 Results § Balance Sheet Highlights § Adjusted EBITDA § Selected Financial Highlights for each Brand § Form 10-Q First Quarter 2010
Slide 5: 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 6: First Quarter 2010 Highlights
First Quarter 2010 Highlights Roland Smith President & Chief Executive Officer
Slide 7: First Quarter 2010 Business Overview
§ Adjusted EBITDA* grew 14.7% to $92.1 million § Wendy’s: − Positive same-store sales − 430 basis point restaurant margin improvement in company-operated stores § Arby’s: – Sales and margins declined at Arby’s − Focused on turnaround plan to re-energize the brand − Continued $1 Value Menu rollout –
Slide 8: Wendy's First Quarter 2010 Results
Wendy’s First Quarter 2010 Results § North America systemwide same-store sales increased 0.8% − Same-store sales among strongest in the industry − Impacted by severe weather in February § 430 basis point restaurant margin increase
Slide 9: Wendy's First Quarter 2010 Marketing Calendar
Premium Fish Fillet Wendy’s First Quarter 2010 Marketing Calendar January February March 99¢
Slide 10: Arby's First Quarter 2010 Results
Arby’s First Quarter 2010 Results § North America systemwide same-store sales declined 11.5% § Margin decreased due to sales deleveraging
Slide 11: Arby's First Quarter 2010 Marketing Calendar
Premium Cod January February March Arby’s First Quarter 2010 Marketing Calendar
Slide 12: Strategic Sourcing Group
§ Formed a new independent purchasing cooperative, Strategic Sourcing Group Co-op, LLC (SSG) § Negotiates contracts for non-branded supplies and services for both Wendy’s and Arby’s, such as equipment, kitchen smallwares, furnishings, menuboards and signs, as well as utilities and restaurant-level c
Slide 13: Financial Overview
Financial Overview Steve Hare Chief Financial Officer
Slide 14: First Quarter 2010 Consolidated Operating Results
First Quarter 2010 Consolidated Operating Results
Slide 15: First Quarter 2010 EBITDA and Adjusted EBITDA
*See Appendix. First Quarter 2010 EBITDA and Adjusted EBITDA*
Slide 16: Cash Flow - First Quarter 2010
Cash Flow - First Quarter 2010
Slide 17: Total Debt, Cash and Net Debt
($ in Millions) Total Debt Cash and Cash Equivalents Net Debt Total Debt/ Adjusted EBITDA Net Debt/ Adjusted EBITDA WENDY'S ARBY'S GROUP Q1 2010 YIE 2009 $ 1,517.2 $ 1,522.9 507.3 591.7 $ 1,009.9 $ 931.2 3.5x 3.6x 2.3xX 2.2x
Slide 18: Refinancing
§ Planning to enter into a new $650 million Senior Secured Credit Facility – $150 million Revolver – $500 million Term Loan § The proceeds of the Term Loan will be used to: – Refinance existing term loan of $251 million – Refinance 6.25% senior notes due 2011 of $200 million § Enhances flexibility a
Slide 19: Stock Repurchase and Dividend
§ Stock Repurchase – $250 million authorized for stock repurchases – As of May 7, 2010, 40 million common stock shares repurchased for $190.2 million, at an average per share price of $4.76 – Company may repurchase additional shares as market conditions warrant through January 2, 2011 § Quarterly Ca
Slide 20: Financial Outlook: Unemployment and Consumer Confidence
Financial Outlook Source: U.S. Bureau of Labor Statistics, The Conference Board Unemployment rate remains high at 9.7% Confidence improved in March and April U.S. Unemployment Rate Remains High, but Consumer Confidence Improved in March and April
Slide 21: Financial Outlook 2010
§ Positive Same-store Sales at Wendy’s § Negative Same-store Sales at Arby’s, but Improving Year-over-Year § Continued G&A Savings § Total Capital Expenditures of $165 Million – Open 12 new Wendy’s – Remodel 100 Wendy’s and 100 Arby’s § Low-to-Mid Single Digit Growth in Adjusted EBITDA – Excludes ef
Slide 22: Brand and International Update
Brand and International Update Roland Smith President & Chief Executive Officer
Slide 23: Wendy's 2nd & 3rd Quarter 2010 Marketing Calendar
Wendy’s 2nd & 3rd Quarter 2010 Marketing Calendar April May June Q3
Slide 24: Wendy's Continuing to Improve Restaurant Operations
§ Steady Improvement in Operations Excellence – Number of “A” and “B” stores increased by 5 points Wendy’s Continuing to Improve Restaurant Operations Q1 2008 Q4 2009 Q1 2010 33% 68% 73%
Slide 25: Wendy's Remodel Update
§ 100 remodels in 2010 – Focusing on “Curve” and “Tower” upgrades Curve Tower Wendy’s Remodel Update
Slide 26: Wendy's Breakfast Update
§ “Real, Quality, Fresh” Positioning § Key Initiatives – 2010 First Quarter: Tested new menu and simplified operations – 2010 Second and Third Quarters: Beginning to introduce new menu in 3 existing breakfast markets – 2010 Fourth Quarter: Plan to expand into additional company and franchise markets
Slide 27: Arby's 2010 Initiatives
§ Execute Turnaround Plan: – Hire an experienced President – Expand value strategy – Validate brand positioning – Increase media efficiency – Improve advertising effectiveness – Revitalize product innovation – Launch a three-year remodeling program Arby’s 2010 Initiatives
Slide 28: Arby's New President Hala Moddelmog
§ Quick-Service Restaurant Industry Veteran Returns Home to the Arby’s Brand § Extensive Experience Leading Successful, High Performance Organizations – President of Church’s Chicken – President and CEO of Susan G. Komen – CEO of Catalytic Ventures – Market Research Manager for the Arby’s franchise
Slide 29: Arby's Value Strategy Driving Transaction Improvement
SSS = -8.4% SSS = -11.6% SSS = -12.6% Arby’s Value Strategy Driving Transaction Improvement
Slide 30: Arby's Media and Advertising
§ Increased National Media Rate from 1.2% to 2.4% § Revised Creative to Focus on Quality Products and Value Arby’s Media and Advertising
Slide 31: Arby's 2nd & 3rd Quarter 2010 Marketing Calendar
National Advertising (4/11-5/8) National Advertising (7/18-8/14) Arby’s 2nd & 3rd Quarter 2010 Marketing Calendar April May June Beef ‘n Cheddar Prime Cut™ Chicken Q3
Slide 32: Arby's Remodel Update
Pinnacle Remodel Arby’s Remodel Update New Pinnacle § 100 Remodels in 2010 § Three-year Remodeling Program
Slide 33: Dual-Branded Restaurant in Dubai
§ First dual-branded Wendy’s and Arby’s restaurant opened in Dubai on May 11, 2010 § Al Jammaz Group (franchisee) planning to open approximately 80 dual brand restaurants over the next 10 years in the Middle East – Initial focus on development in United Arab Emirates Dual-Branded Restaurant in Dubai
Slide 34: International Update
§ Opened Second New Restaurant in Singapore – Kopitiam franchisee plans to open 35 total restaurants over 10 years § 2010 Plans – Existing franchisees expected to open 35 to 45 new restaurants – Targeting development agreements for approximately 400 restaurants – Plan to enter 3 to 4 new countries –
Slide 35: Summary
§ Strong First Quarter 2010 Adjusted EBITDA* Growth of 14.7% § On Track with Wendy’s Brand Revitalization and Margin Improvement § Early Stage Turnaround for Arby’s § Formation of Strategic Sourcing Group § Long-Term Growth from New Investments – Breakfast, Remodels and International § Returning Cap
Slide 36: Upcoming Events
Upcoming Events § Stockholder Meeting - May 27 in New York § Oppenheimer Conference - June 29-30 in Boston § Analyst Day - November 18 in Dublin, OH
Slide 37: Wendy's/Arby's Group
\ WENDY'S ARBY'S GROUP SERVING FRESH IDEAS DAILY.
Slide 38: Wendy's/Arby's Group
\ WENDY'S ARBY'S GROUP SERVING FRESH IDEAS DAILY.
Slide 39: Reconciliation of EBITDA to Net Loss and Adjusted EBITDA
WENDY'S s\ ARBY'S GROUP Wendy's/Arby"s Group, Inc. and Subsidiaries Caleukation and Comparison of EBITDA and a Reconciliation of EBITDA to Net Loss (In Thousands) First Quarter (Unaudited) 2010 2008 EBITDA S 84.260 S T2476 Depreciation and amortization £46,326) (51,662) Impairment of other long-live