Wendy's Company (the) · NASDAQ:WEN
Wendy's Company (the) — Wendy's/Arby's Group — Q2 2010 Earnings Presentation
35 slides from Wendy's Company (the)'s earnings presentation, Aug 12, 2010
Slide 1: Second Quarter 2010 Earnings Call & Webcast
Second Quarter 2010 Earnings Call & Webcast August 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 – Economic and competitive environment – Second quarter 2010 highlights – Second quarter brand updates – Recent international developments • Financial Overview - Steve Hare – Second quarter consolidated financial overview – Stock repurchases and dividends – 2010
Slide 4: Wendy's/Arby's Group Reported Today
Wendy’s/Arby’s Group Reported Today: • Second Quarter 2010 Results • Updated 2010 Outlook • Balance Sheet Highlights • Adjusted EBITDA • Selected Brand Financial Highlights • Form 10-Q Second 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: Unemployment Remains High and Consumer Confidence Declined in June and July
Unemployment Remains High and Consumer Confidence Declined in June and July
Slide 8: QSR Restaurant Brands are Still Emphasizing Value Promotions
QSR Brands Value Tier McDonald’s Dollar menu, including breakfast (national) $2.99 mini combo meals (regional) $0.49 hamburger/$0.59 cheeseburger (regional) Burger King $1 double cheeseburger Taco Bell $2 mini combo meals Pizza Hut $10 any pizza Subway $5 for any footlong sub Sonic $2.99 footlong qu
Slide 9: Second Quarter 2010 Business Overview
• Adjusted EBITDA* grew 3.2% to $120.9 million – Net income was $10.7 million • Wendy’s: – 50 basis point restaurant margin improvement in company- operated stores • Arby’s: – Focused on turnaround plan to re-energize the brand – Transactions improved to flat • G&A Expense decreased 13.5% to $97.5 m
Slide 10: Wendy's 2nd Quarter 2010
April May June Q2 2010 N.A. Same-Store Sales Systemwide (1.7%) Company-owned (2.9%) Franchise (1.4%) Restaurant Margin Q2 2010 16.4% Q2 2009 15.9% Wendy’s 2 nd Quarter 2010
Slide 11: Arby's 2nd Quarter 2010
Beef ‘n Cheddar Steakhouse Toasted Sub National: Value Menu Q2 2010 N.A. Same-Store Sales Systemwide (7.4%) Company-owned (8.8%) Franchise (6.7%) Restaurant Margin Q2 2010 13.4% Q2 2009 14.9% April May June Arby’s 2 nd Quarter 2010
Slide 12: Wendy's/Arby's International Major New Development Agreements
Latin America/Caribbean - 216 restaurants Europe/Middle East - 11 restaurants Asia/Pacific - 84 restaurants Current International Restaurants 311 as of Q2 2010 International excludes 476 restaurants in Canada Singapore 35 restaurants (Wendy’s) Middle East 80 restaurants (dual-branded) Turkey 100 res
Slide 13: Steve Hare, Chief Financial Officer
WENDY'S \ ARBY'S GROUP SERVING FRESH IDEAS DAILY. Steve Hare Chief Financial Officer
Slide 14: Second Quarter 2010 Consolidated Operating Results
Second Quarter 2010 Consolidated Operating Results
Slide 15: Second Quarter and YTD 2010 Adjusted EBITDA
*See Appendix. Second Quarter and YTD 2010 Adjusted EBITDA*
Slide 16: Second Quarter 2010 Net Income and Special Items
Second Quarter 2010 Net Income and Special Items
Slide 17: Six Months Cash Flow Summary
WENDY'S ARBY'S GROUP ($ in Millions) Six Months Ended _July 4, 2010 \ Cash from operations $ 102.2 eo Capital expenditures ($2.7) ey Net cash from operations 49.5 Proceeds from long-term debt, net 31.3 ’\ Proceeds from repayment of note receivable 30.8 1 1 Stock buybacks and dividends (186.5) Arbyjs
Slide 18: Total Debt, Cash and Net Debt
($ in Millions) Total Debt Cash and Cash Equivalents Net Debt Total Debt / Adjusted EBITDA Net Debt / Adjusted EBITDA WENDY'S ARBY'S GROUP July 4, 2010 Y/E 2009 $ 1,574.6 $ 1,522.9 508.4 591.7 $ 1,066.2 $ 931.2 3.6x 3.6x 2.4x 2.2x
Slide 19: Stock Repurchases and Dividends
• Stock Repurchases – $325 million authorized for stock repurchases of which $80 million remains available – As of August 6, 2010, 52 million common stock shares repurchased for $245 million, at an average per share price of $4.69 – Company may repurchase additional shares as market conditions warra
Slide 20: Outlook
• 2010 Adjusted EBITDA -3% to -5%, as compared to 2009 Adjusted EBITDA* of $411.6 million, normalized for the 53rd week (2009 net income was $5.1 million) – 2010 Outlook excludes approximately $8 million of Wendy’s new breakfast advertising – 2010 Outlook includes the following expectations for the
Slide 21: Brand Strategies and Investment Highlights
Brand Strategies and Investment Highlights
Slide 22: Wendy's Marketing Calendar 2010
2010 Wendy’s Marketing Calendar
Slide 23: WM GROUP
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Slide 24: Arby's Marketing Calendar
National Event (7/18 - 8/14) Local (8/22 - 9/18) National Event (10/3 - 10/30) 2010 July Aug/Sept October Arby’s Marketing Calendar
Slide 25: Arby's Value Strategy
Classic Favorites Premium Value Specialty Indulgence 3-Tier Value Approach: Everyday Affordability for All Occasions Entry Value Value Menu Arby’s Value Strategy
Slide 26: Consumers Are Positive about the Arby's Value Menu
Value Menu Users have a much more positive impression of the brand - even on non-value related attributes Consumers Are Positive about the Arby’s Value Menu • 83% of users indicated that they will definitely or probably visit again in next 30 days
Slide 27: Long-Term Growth Initiatives: Wendy's Breakfast
• Introducing new menu in three existing breakfast markets – Pittsburgh – Kansas City – Phoenix • Beginning television advertising in the three markets in September • Initial results are encouraging • Expanding into additional company and franchise markets in Q4 Long-Term Growth Initiatives Wendy’s
Slide 28: Long-Term Growth Initiatives: Remodels
• Major initiative under way to upgrade restaurants – Wendy’s:100 remodels in 2010 – Arby’s:100 remodels in 2010 Long-Term Growth Initiatives Remodels
Slide 29: Long-Term Growth Initiatives: International
• Investing significant resources • Early progress encouraging – Signed development agreements > 400 restaurants – Brazil – Japan – China Long-Term Growth Initiatives International
Slide 30: Investment Highlights
Investment Highlights • Wendy’s: – Delivering margin improvement – Focused on “Real” brand positioning and product innovation – Maintaining value perception • Arby’s: – Focused on turnaround – Transactions are improving – Testing core/premium value • Investing in Long-Term Growth • Strong Cash Flow
Slide 31: \ WENDY'S
\ WENDY'S ARBY'S GROUP SERVING FRESH IDEAS DAILY.
Slide 32: \ WENDY'S
\ WENDY'S ARBY'S GROUP SERVING FRESH IDEAS DAILY.
Slide 33: Disclosure Regarding Non-GAAP Financial Measures
Disclosure Regarding Non-GAAP Wee Financial Measures 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 inter
Slide 34: Calculation and Comparison of EBITDA and Reconciliation to Net Income
Wendy's/Arby’s Group, Inc. and Subsidiaries \ Caleulation and Comparison of EBITDA and a Reconciliation of EBITDA to Net Income (in Thousands) Second Quarter Six Months (Wnaudited) ore 2005 2010 2007 EBITDA 3 120021 3 toygoe ~S_20naeT ~S_18D370 Depreciation and amortization (44944) (44,687) (01,270)
Slide 35: Calculation of EBITDA and Reconciliation of EBITDA to Net Income
WENDY'S .\ ARBY'S GROUP Wendy's/Arby’s Group, Inc. and Subsidiaries Calculation of EBITDA and a Reconciliation of EBITDA to Net Income (In Thousands) (naudited) TDA, Depreciation and amortization Impairment of long-lived assets Operating profit Interest expense Investment expense, net Other than tem