Wendy's Company (the) · NASDAQ:WEN
Wendy's Company (the) — Wendy's/Arby's Group — Q3 2010 Earnings Presentation
38 slides from Wendy's Company (the)'s earnings presentation, Nov 12, 2010
Slide 1: Third Quarter 2010 Earnings Call & Webcast
Third Quarter 2010 Earnings Call & Webcast November 12, 2010
Slide 2: John Barker, Chief Communications Officer
WENDY'S \ ARBY'S GROUP SERVING FRESH IDEAS DAILY. John Barker Chief Communications Officer
Slide 3: Agenda
• Business Highlights - Roland Smith – Third quarter 2010 highlights – Third quarter brand updates • Financial Overview - Steve Hare – Third quarter consolidated financial overview – Stock repurchases and dividends – 2010 financial outlook • Fourth Quarter Brand Strategies and Longer-Term Growth Ini
Slide 4: Today Wendy's/Arby's Group filed
Today Wendy’s/Arby’s Group filed: • Third Quarter 2010 Earnings Release – Includes new detail on cost of sales components for the quarter and year-to-date periods • Historical Sales and Margin Trends – Includes new detail of cost of sales components • Form 10-Q Third 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: Roland Smith, President & Chief Executive Officer
WENDY'S \ ARBY'S GROUP tll aS SERVING FRESH IDEAS DAILY. Roland Smith President & Chief Executive Officer
Slide 7: Third Quarter 2010 Overview
• Board Actions – Additional $170 million authorized for share repurchases – Quarterly dividend increased 33% to $0.02 per share • Results – Total revenue decreased slightly less than 5% to $861 million – Q3 adjusted EBITDA* fell 20% to $100 million • Net loss was $0.9 million – Year-to-date adjuste
Slide 8: Long-Term Growth Strategy
• Continue to innovate the menu • Expand into new dayparts • Continue remodeling programs • Expand internationally • Turnaround Arby’s Long-Term Growth Strategy
Slide 9: Wendy's 3rd Quarter 2010
*13.4% including incremental breakfast advertising of 110 bps July August September Q3 2010 N.A. Same-Store Sales Systemwide -1.7% Company-owned -3.1% Franchise -1.3% Company Restaurant Margin Q3 2010 14.5% Q3 2009 16.5% -200 bps Margin Variances -160 bps Increased Commodities * Wendy’s 3rd Quarter
Slide 10: Arby's 3rd Quarter 2010
National Event (7/18 - 8/14) LOCAL (8/22 - 9/18) Jr Deluxe Starting at $1 July August September Q3 2010 N.A. Same-Store Sales Systemwide -5.9% Company-owned -9.5% Franchise -4.1% Company Restaurant Margin Q3 2010 10.4% Q3 2009 12.1% -170 bps Margin Variances -110 bps Increased Commodities Arby’s 3rd
Slide 11: Steve Hare, Chief Financial Officer
WENDY'S \ ARBY'S GROUP SERVING FRESH IDEAS DAILY. Steve Hare Chief Financial Officer
Slide 12: Third Quarter 2010 Consolidated Operating Results
Third Quarter 2010 Consolidated Operating Results
Slide 13: Third Quarter and YTD 2010 Adjusted EBITDA
*See Appendix. Third Quarter and YTD 2010 Adjusted EBITDA*
Slide 14: Net Income and Special Items
Third Quarter and Year-to-Date 2010 Net Income and Special Items
Slide 15: Cash Flow - Year-to-Date 2010
Cash Flow - Year-to-Date 2010
Slide 16: Debt Capitalization
*See Appendix. Debt Capitalization
Slide 17: Stock Repurchases and Dividends
• Stock Repurchases – As of November 5, 2010, $80 million authorized and available – Recent authorization of $170 million brings the total amount authorized and available to $250 million – Expiration date extended from January 2, 2011 to January 1, 2012 • Quarterly Cash Dividend – Increase to $0.02
Slide 18: 2010 Outlook
• 2010 Adjusted EBITDA -3% to -5%* • 2010 Outlook includes the following expectations for the full-year: – Wendy’s same-store sales down approximately 1% – Improvement of 30 basis points in Wendy’s margin – Negative same-store sales at Arby’s, but improving on a year-over-year basis – Capital expend
Slide 19: Investor Day
• January 27, 2011 • Meeting will begin at 8:30 a.m. • The Lighthouse at Chelsea Piers (New York City) • Content – News release with preliminary 2010 results and 2011 outlook – Comprehensive overview of current performance – Overview of strategic growth plans for the next several years – Corporate a
Slide 20: Brand Strategies and Investment Highlights
Brand Strategies and Investment Highlights
Slide 21: Wendy's Quarter Marketing Calendar
2010 October November December Wendy’s 4 th Quarter Marketing Calendar
Slide 22: Holiday Value Book
2010 National Event (10/3 - 10/30) LOCAL (11/14 12/18) Holiday Value Book October November December
Slide 23: Achieved G&A Synergies and Margin Improvement
2009 Actual $62 million Original Plan $60 million Merger 11.6% 14.9% 15.2% 2010 Outlook* Wendy’s Margin Improvement 360 bps expansion G&A Synergies *Adjusted to exclude the incremental spending to support the expansion of Wendy’s new breakfast program and the impact of the 53 rd week in 2009. Achiev
Slide 24: Re-energizing Wendy's Brand
Re-energizing Wendy’s Brand • Introduced new positioning and advertising • Rebuilt new product pipeline • Improved core menu items • Improved customer experience
Slide 25: Longer-Term Growth Initiatives
Financial Strategies Build Sales at Both Brands Drive Global Growth Longer-Term Growth Initiatives
Slide 26: Arby's Turnaround in Process
Arby’s Turnaround in Process • Plan to provide turnaround details in January – Improve value ratings – Re-launch brand positioning – Introduce new advertising – Revitalize product innovation – Modernize facilities • Everyday Value Menu gaining traction
Slide 27: Wendy's - Attractive Growth Story
Wendy’s - Attractive Growth Story • Innovating core menu items • Introducing new products • Expanding dayparts • Modernizing our facilities
Slide 28: Wendy's Daypart Expansion to Leverage Fixed Costs
Wendy’s Daypart Expansion to Leverage Fixed Costs • Breakfast opportunity – Fastest growing daypart in QSR – Generates 25% of QSR traffic – Currently less than 2% of Wendy’s AUVs • Progress under way – Disciplined approach – Developed high quality menu – Operations testing in four markets – Moving t
Slide 29: Restaurant Remodel Program
Restaurant Remodel Program
Slide 30: Second Key Initiative - Global Expansion
Second Key Initiative - Global Expansion Financial Strategies Build Sales at Both Brands Drive Global Growth
Slide 31: Major New Development Agreements
Major New Development Agreements • Signed development agreements for 400 new franchise restaurants • Actively pursuing new development agreements in China, Brazil and Japan 35 restaurants (Wendy’s) Middle East 80 restaurants (dual-branded) Turkey 100 restaurants (Arby’s) 180 restaurants (dual-brande
Slide 32: Opportunity to Expand Wendy's in North America
Opportunity to Expand Wendy’s in North America Improved restaurant margins + Expanded average unit volumes = Increased return on investment U.S. Unit Count 13,980 7,545 5,877 Wendy’s is Under-penetrated Compared to McDonald’s and Burger King Source: company reports, 2009
Slide 33: Third Key Initiative - Financial Strategies
Financial Strategies Build Sales at Both Brands Drive Global Growth Third Key Initiative - Financial Strategies
Slide 34: \ WENDY'S
\ WENDY'S ARBY'S GROUP SERVING FRESH IDEAS DAILY.
Slide 35: Appendix
\ WENDY'S ARBY'S GROUP SERVING FRESH IDEAS DAILY.
Slide 36: EBITDA definition and use
EBITDA is used by the Company as a performance measure for benchmarking against the Company’s peers and competitors. The Company believes EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties to evaluate companies in the restaurant
Slide 37: Calculation of EBITDA and Reconciliation to Net Income
Wendl on and Comparison of EBITDA and a Reconciliation of EBITDA to Net Tncome Caleulat (In Thousands) (Unaudited) ERITDA Depreciation and amortization Impairment of long-lived as Operating profit Interest expense Toss om early tinguishment of Investment incame (expense), net (Other than temporary l
Slide 38: Calculation of EBITDA and Reconciliation to Net Income
WENDY'S ARBY'S ‘Wendy’s/Arby’s Group, Inc. and Subsidiaries elias: Calculation of EBITDA and a Reconciliation of EBITDA to Net Income a c (In Thousands) (Unaudited EBITDA Depreciation and wmortizaton, Impairment of long-lived assets Operating profit 111976 Interest expense (126,708) Investment expen