Slide 1: Steve Hare, Chief Financial Officer
STEVE HARE CHIEF FINANCIAL OFFICER
Slide 2: Financial Overview
FINANCIAL OVERVIEW Preliminary Q4 & 2011 Results 2012 and Long-Term Outlook International Update The Wendy’s Company
Slide 3: Q4 2011 Financial Highlights
Q4 2011 FINANCIAL HIGHLIGHTS Consolidated Revenues: $615.0 million Increase of 5.6% vs. $582.6 in Q4 2010 Wendy’s North America Company-Operated Same-Store Sales: +5.1% Best quarterly SSS growth since Q2 2004 Company-Operated Restaurant Margin: 15.0% Increase of 100 bps vs. 14.0% in Q4 2010 G
Slide 4: Q4 2011 Financial Highlights: Adjusted EBITDA and EPS
The Wendy’s Company Adjusted EBITDA* $80.9 million 10.5% increase vs. Q4 2010 *Earnings per share and Adjusted Earnings Per Share references in this release reflect earnings per share from continuing operations and Adjusted Earnings Per Share from continuing operations. See reconciliation of Adjuste
Slide 5: Wendy's Q4 2011 Company SSS
Wendy’s Q4 2011 Company SSS Q4 2011 N.A. Same-Store Sales Company-owned +5.1% Franchise +4.2% Systemwide +4.4% Company Restaurant Margin Q4 2011 15.0% Q4 2010 14.0% +100 bps Significant Margin Variances +220 bps sales leverage/pricing +90 bps insurance -170 bps increased commodities DEC NOV OCT
Slide 6: 2011 Financial Highlights
2011 FINANCIAL HIGHLIGHTS Consolidated Revenues: $2.43 billion Increase of 2.4% vs. $2.38 billion 2010 Wendy’s North America Company-Operated Same-Store Sales: +2.0% Positive transactions for the first year since 2002 Company-Operated Restaurant Margin: 14.0% Decrease of 80 bps vs. 14.8% in 20
Slide 7: 2011 Financial Highlights: Adjusted EPS and EBITDA
The Wendy’s Company 2011 FINANCIAL HIGHLIGHTS Adjusted EPS* $0.15 Adjusted EBITDA* $331.1 million *Earnings per share and Adjusted Earnings Per Share references in this release reflect earnings per share from continuing operations and Adjusted Earnings Per Share from continuing operations. See recon
Slide 8: Company Same-Store Sales
COMPANY SAME-STORE SALES Q4 was strongest quarter of SSS since Q2 2004 0.2% -2.9% -3.1% -0.9% -1.7% -0.9% 2.3% 1.8% 5.1% 2.0% Q1 Q2 Q3 Q4 Full Year 2010 2011
Slide 9: 2011 Financial Highlights: Capex, Dividends, Repurchases
2011 FINANCIAL HIGHLIGHTS Capital expenditures of $147 million Includes 20 new restaurants and 75 remodels (10 Image Activation) Dividends of $32 million Share repurchases of $157 million Share repurchases of $402 million since 2009 The Wendy’s Company Balanced re-investment and return to stockholde
Slide 10: 2011 Financial Highlights: Financial Flexibility
2011 FINANCIAL HIGHLIGHTS The Wendy’s Company Entering 2012 with significant financial flexibility Cash & Cash Equivalents $472 Total Debt $1,357 Net Debt $885 Net Debt/Adjusted EBITDA* 2.7x $ IN MILLIONS Y/E 2011 *Earnings per share and Adjusted Earnings Per Share references in this release reflect
Slide 11: 2011 Summary
2011 SUMMARY Completed sale of Arby’s Moved HQ back to Dublin, Ohio Announced consolidation of both Restaurant Support Centers The Wendy’s Company
Slide 12: 2012 and Long-Term Outlook
Pp» 2012 AND ty LONG-TERM OUTLOOK
Slide 13: Key Long-Term Growth Drivers
K EY L O N G -TE R M GR O W TH D R IVE R S The Wendy’s Company Int’l* Financial Strategies Breakfast Image Activation: New Image Activation: Remodels North America Business Improvement * International Growth (outside of North America)
Slide 14: 2012 Outlook
2012 OUTLOOK The Wendy’s Company Company-Operated Same-Store Sales 2 to 3% Commodity Basket Increase 115 to 145 bps Company-Operated Restaurant Margin Flat to +50 bps Adjusted EBITDA $335 to $345 million
Slide 15: 2012 Projected EBITDA Growth
2012 PROJECTED EBITDA GROWTH Organic growth and margin improvement significantly offset by commodity cost increases and investments in strategic initiatives Note: All numbers except 2011 adjusted EBITDA reflect the midpoint of the expected range for 2012. 2012 adjusted EBITDA is expected to be betwe
Slide 16: 2012 Outlook: Commodities Pressure Margins
2012 OUTLOOK The Wendy’s Company Commodities will continue to pressure restaurant-level margins Wendy’s commodity basket will be up 4 to 5 percent (115 to 145 bps) 2010 2011 2012E (Commodity Basket Increase) 2.2% 5.0% 4.0 to 5.0%
Slide 17: 2012 Financial Outlook: Commodities
2012 FINANCIAL OUTLOOK The Wendy’s Company Commodities will continue to pressure restaurant-level margins 19% 18%63% Beef Chicken Other2010 2011 2012E Beef 9.9% 9.6% 10.9% Chicken (5.8%) (3.1%) 5.0% Wendy’s Commodities as a % of Total Food and Paper Cost
Slide 18: 2012 Outlook: Development Growth
2012 OUTLOOK The Wendy’s Company Company North America Franchised North America International Investing to increase long-term shareholder value DEVELOPMENT GROWTH At least 20 new restaurants 50 remodels (Image Activation) 40 new restaurants 55 franchised and JV restaurants
Slide 19: 2012 Capital Expenditures
2012 CAPITAL EXPENDITURES The Wendy’s Company Investing to increase long-term shareholder value New Units $40 Remodels 40 Restaurant Equipment/Maintenance 65 Product Development 20 Technology 30 Other 30 Total Estimated Capex $225 $ IN MILLIONS
Slide 20: 2012 Outlook: Image Activation Targets
2012 OUTLOOK The Wendy’s Company Image Activation targets Investment $750 - $850K Sales Lift > 25% ROI > 15%
Slide 21: Long-Term Remodeling Vision Provides Platform for Growth
LONG-TERM REMODELING VISION PROVIDES PLATFORM FOR GROWTH % of Wendy’s System (~6,600 units) 80 restaurants will have full Image Activation by end of 2012 The Wendy’s Company 70% 5% 5% 10% 10% Image Activation Recent New & Remodeled Units Refresh Close/Relocate International
Slide 22: Image Activation
IMAGE ACTIVATION The Wendy’s Company
Slide 23: 2012 Outlook: Company/Franchise Ownership Model
2012 OUTLOOK The Wendy’s Company Company/Franchise Ownership Model Company 21.5% Franchise 78.5% Current Restaurant Ownership • Evaluate strategic purchases of franchised restaurants • Drive system Image Activation and new unit development in selected acquisition markets • Over long-term, balance pu
Slide 24: 2012 Outlook: Invest in Strategic Initiatives
2012 OUTLOOK INVEST IN STRATEGIC INITIATIVES TO DRIVE LONG-TERM RETURNS The Wendy’s Company Leverage strength of balance sheet to elevate brand Image Activation Remodels & New Unit Development POS Technology Enhancement Product Innovation
Slide 25: 2012 Outlook: Restaurant Support Center Consolidation
2012 OUTLOOK The Wendy’s Company Impact of Wendy’s Restaurant Support Center consolidation to Dublin, Ohio Estimated one-time costs of $23 million from office consolidation in 2012 excluded from outlook Includes office consolidation, relocation, recruiting, training, severance and retention Exclu
Slide 26: 2012 Outlook: Financial Strategies
2012 OUTLOOK 10% Notes callable in summer 2012 Call date: July 15, 2012 Call price: 107.5 Potential to lower overall effective borrowing rate Anticipate tax rate between 40% and 42% NOLs of $283 million, plus tax credits of $78 million, will provide a cash flow benefit in 2012 and beyond The
Slide 27: Key Long-Term Growth Drivers
K EY L O N G -TE R M GR O W TH D R IVE R S The Wendy’s Company Int’l* Financial Strategies Breakfast Image Activation: New Image Activation: Remodels North America Business Improvement * International Growth (outside of North America) 2012 Low-single digit Adjusted EBITDA growth 2013 & Beyond High-s
Slide 28: International Update
INTERNATIONAL UPDATE
Slide 29: International Update: 2011 Overview and Accomplishments
International Update 2011 Overview and Accomplishments Opened 35 stores & increased same-store sales 4.3% The Wendy’s Company Restaurants 350 Markets 26 AUVs $1.3 million System Sales $430 million Inte rn ational Snapsh ot
Slide 30: International Update: Development Strategy
International Update D eve lopment S tr ateg y International business will grow aggressively, yet responsibly EXISTING MARKETS • Optimize current development agreements • Sign new development agreements • Transition franchisee ownership in stagnant markets ADJACENT MARKETS • Expand with current fran
Slide 31: International Update
International Update International business will grow aggressively, yet responsibly The Wendy’s Company
Slide 32: International Update: A Cut Above – New Store Designs
International Update A CUT ABOVE – New Store Designs JAPAN ARGENTINA The Wendy’s Company
Slide 33: International Update: A Cut Above – Menu Choices
International Update A CUT ABOVE – Menu Choices JAPAN ARGENTINA
Slide 34: International Update: 2012 Priorities
International Update Continue to build momentum in 2012 for contributions in long-term The Wendy’s Company 2012 PRIORITIES •Translate and activate A CUT ABOVE in all markets •Achieve 4% SSS growth •Open 55 new restaurants •Enter 4 to 5 new countries
Slide 35: Key Long-Term Growth Drivers
K EY L O N G -TE R M GR O W TH D R IVE R S The Wendy’s Company Int’l* Financial Strategies Breakfast Image Activation: New Image Activation: Remodels North America Business Improvement * International Growth (outside of North America) 2012 Low-single digit Adjusted EBITDA growth 2013 & Beyond High-s
Slide 36: Appendix
Se ‘ st} APPENDIX Wi// “wUlyeaii?
Slide 37: Reconciliation of Adjusted EBITDA to Income from Continuing Operations
Reconciliation of Adjusted EBITDA to Income from Continuing Operations The Wendy’s Company
Slide 38: Reconciliation of Adjusted Income and Adjusted EPS to Income from Continuing Operations
Reconciliation of Adjusted Income from Continuing Operations and Adjusted Earnings per Share to Income from Continuing Operations and Earnings per Share The Wendy’s Company