Wendy's Company (the) · NASDAQ:WEN
Wendy's Company (the) — ICR XChange Conference 2014
46 slides from Wendy's Company (the)'s conference presentation, Jan 13, 2014
Slide 1: ICR XChange Conference January 13, 2014
ICR XChange Conference January 13, 2014 Exhibit 99.1
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation, and certain information that management may discuss in connection with this presentation, contains certain statements that are not historical facts, including information concerning possible or assumed future results of our operations. Those statements c
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures In addition, this presentation and certain information management may discuss in connection with this presentation reference non-GAAP financial measures, such as adjusted earnings before interest, taxes, depreciation and amortization, or adjusted EBITDA, and adjusted earn
Slide 4: President & CEO Emil Brolick
President & CEO EMIL BROLICK
Slide 5: 2013 Very Rewarding Year
2013 Very Rewarding Year * Open/Under Construction Revitalizing brand proposition to “A Cut Above” through our “Recipe to Win” Regaining product innovation leadership with the successful launch of Pretzel Bacon Cheeseburger, Pretzel Pub Chicken and Bacon Portabella Melt on Brioche Provided 89% total
Slide 6: Wendy's "A Cut Above" Investment
Wendy’s “A Cut Above” Investment • “A Cut Above” Brand Positioning Is Unique, It’s Working, Has Legs • IA Repositioning Restaurant Experience To “New QSR” Standard • Product/Price Segmentation Differentiating Brand And Growing SRS • System Optimization Impact, EBITDA Neutral, Lifting Margins, Increa
Slide 7: Growth...The Imperative
GROWTH…The Imperative $435 Billion 61+ Billion Visits QSR 79% Casual Dining 10% Mid Scale 10% Source: NPD Crest 2013 Restaurant Industry Sales
Slide 8: QSR Best Delivers on Convenience & Value Needs
QSR BEST DELIVERS ON CONVENIENCE & VALUE NEEDS 11.1 11.2 76.3 10.3 9.8 78.5 +2.2 2008 2013 (1.4) (0.8) QSR Mid Scale Casual Dining Traffic Share Y/E November Source: NPD Crest
Slide 9: Key Brand Growth Drivers
KEY BRAND GROWTH DRIVERS BRAND RELEVANCE ECONOMIC MODEL RELEVANCE
Slide 10: Brand Vision
HIGH LOW FUNCTIONAL EMOTIONAL BRAND VISION EXPERIENCE HIGH LOW FUNCTIONAL EMOTIONAL A B C New QSR Traditional QSR
Slide 11: Recipe to Win
RECIPE TO WIN PEOPLE 5-Star Talent PRICE New QSR Quality PRODUCT Playing a Different Game PROMOTION Tactically Brilliant PLACE Brand Transformation PERFORMANCE Keeping Brand Promise
Slide 12: Economic Model Improving: Company AUV
2010 $1.418M 2011 $1.456M 2012 $1.484M 2013 $1.514M Economic Model Improving… N.A. COMPANY AUV
Slide 13: Company Restaurant Margins Improving
2011 14.0% 2012 14.0% 2013 15.4% N.A. COMPANY RESTAURANT MARGINS IMPROVING
Slide 14: Image Activation 2013 A and 2014 E
2013 A IMAGE ACTIVATION 2014 E IMAGE ACTIVATION Company * Open or Under Construction, pre-System Optimization ownership Reimages Including New Builds * Company Franchise * Reimages 150-200 195-245 Franchise
Slide 15: Message, Media, Creative: Playing a Different Game
MESSAGE MEDIA CREATIVE PLAYING A DIFFERENT GAME MESSAGE MEDIA CREATIVE
Slide 16: Execute Effective High-Low Strategy
EXECUTE EFFECTIVE HIGH-LOW STRATEGY PREMIUM PRICE / VALUE
Slide 17: Brand Communications Working
BRAND COMMUNICATIONS WORKING +8pts vs 2011 Source: Millward Brown as of August 2013 BRAND COMMUNICATIONS WORKING HIGHEST AWARENESS SINCE 2005 HIGHEST AWARENESS SINCE 2005 Total Communication Awareness 2009 2010 2011 2012 YTD 2013
Slide 18: How We Grow
HOW WE GROW Shareholder Value-Enhancing Initiatives Core Organic Growth Strategies Restaurant Ownership Optimization Financial Management New Restaurant Growth Image / Experience Activation North America Same-Restaurant Sales Growth BRAND RELEVANCE + ECONOMIC RELEVANCE = GROWTH Global Growth Restaur
Slide 19: Brand Relevance and Economic Model Relevance
BRAND LEVANCE ECONOMIC MODEL RELEVANCE VAN
Slide 20: Strategic Reasons to Believe
Strategic Reasons to Believe • Strong Brand Heritage • Unique Brand Position • IA Contemporizing Brand Image • Strong Leadership Team, Growing 5-Star Talent • Economic Model Improving • Exceptional Franchisee Base and Commitment
Slide 21: Chief Financial Officer Todd Penegor
Chief Financial Officer TODD PENEGOR
Slide 22: Financial Update
FINANCIAL UPDATE • 2013 Results • Image Activation Update • System Optimization Status • 2014 & Long-Term Outlook • Plans to Build Shareholder Value
Slide 23: Q4 Financial Highlights
Q4 FINANCIAL HIGHLIGHTS N.A. Company SRS 3.1% (0.2)% 2013 2012 Adjusted EBITDA* $89.0M $95.9M (7.2)% Adjusted EPS* $0.10-0.11 $0.09 +11-22% N.A. Company Rest. Margin 16.3% 15.9% +40bps * See reconciliation of Adjusted EBITDA and Adjusted EPS in the appendix B/(W) 2-YEAR 2.9%
Slide 24: Full Year Financial Highlights
FULL YEAR FINANCIAL HIGHLIGHTS N.A. Company SRS 1.9% 1.6% 2013 Adjusted EBITDA* $367.1M $333.3M +10.1% Adjusted EPS* $0.29-0.30 $0.17 +71-76% N.A. Company Rest. Margin 15.4% 14.0% +140bps * See reconciliation of Adjusted EBITDA and Adjusted EPS in the appendix 2012 B/(W) 2-YEAR 3.5%
Slide 25: Image Activation Targets Met; 2014 Accelerates
Company 200 100 +100 Franchise* 150-200 99 +51-101 Total 350-400 199 +151-201 2013 2014 vs. 2013 Company 15 26 (11) Franchise* 45 11 +34 Total 60 37 +23 * Open or Under Construction; excludes 24 Franchise Non-IA New Builds in 2013 410-460 236 +174-224 2013 IMAGE ACTIVATION TARGETS MET 2014 ACCELERAT
Slide 26: Image Activation: Aim for the Sweet Spot
Image Activation Aim for the SWEET SPOT ECONOMICS OPERATIONS CONSUMERS ECONOMICS OPERATIONS CONSUMERS Solution: Ultra Modern Design with Customizable Upgrades
Slide 27: Quality Is Our Recipe
Wendys @) QUALITY IS OUR RECIPE.
Slide 28: One Size Does Not Fit All
ONE SIZE DOES NOT FIT ALL ~40% ~60% 25-40 YEARS OLD < 25 YEARS OLD Solutions for 85-90% of System Solutions for 85-90% of System
Slide 29: IA Target Investment and Return
IA Target Investment and Return Designing for Optimal Financial Returns Investment $450-650K $1.5-1.9M Reimages* Scrape & Rebuilds* Sustainable Sales Lift 10-20% 25-35% Profit Flow Through 40% 40% Percent Of IA 80% 20% * Estimates based on Company’s current outlook; Excludes Maintenance; Median Cost
Slide 30: System Optimization Supports Growth
System Optimization Supports Growth Sales Agreements will Include Commitments to Image Activate 180 Restaurants and Develop 100 New Restaurants over 5 Years Strategic Growth Initiative to Sell 415 Company-Owned Restaurants • Concentrates Company Ownership to about 15% • Generates Higher Restaurant O
Slide 31: System Optimization Progress
System Optimization Progress SOLD IN 2013 243 $138M BUYERS IDENTIFIED 31 ** TOTAL 415 $235M UNDER CONTRACT * 141 ** * Executed Asset Purchase Agreement or LOI ** RESTAURANTS PROCEEDS ** Estimated Cash Proceeds Including Technical Assistance Fees SOLD IN 2013 $138M BUYERS IDENTIFIED ** TOTAL $235M UN
Slide 32: Continued Momentum in 2014: SRS and Margins
Continued Momentum in 2014 SRS GROWTH +60-160 bps +30 bps RESTAURANT MARGINS +140 bps +140-160 bps 1.6% 1.9% 2.5-3.5% 2012 2013 2014 A A E 14.0% 15.4% 16.8-17.0% 2012 2013 2014 A A E N.A. Company Operated Restaurants
Slide 33: Continued Momentum in 2014: Adjusted EBITDA and EPS
Continued Momentum in 2014 ADJUSTED EBITDA +10% +6-9% ADJUSTED EPS +71-76% Mid-teens + $333M $367M $390-400M 2012 2013 2014 A A E 17¢ 29-30¢ 34-36¢ 2012 2013 2014 A A E See reconciliation of Adjusted EBITDA and Adjusted EPS in appendix
Slide 34: 2014 Improved Quality of Earnings
2014 Improved Quality of Earnings Expecting 6-9% Adjusted EBITDA Growth with 415 Fewer Restaurants 2013 Adjusted EBITDA $367M Core Restaurant $30 - $40M Franchise Rev & G&A Savings $70 - $80M IA Impact $0 - $(5)M 2014E Adjusted EBITDA $390 - $400M Sold Restaurants $(75) - $(80)M See reconciliation o
Slide 35: Long-Term Outlook
Long-Term Outlook SAME RESTAURANT SALES 3% + ADJUSTED EBITDA Growth Rate in the High-Single to Low-Double Digit Range ADJUSTED EPS Growth Rate in Mid-Teens
Slide 36: Image Activation System Adoption Accelerating
Image Activation System Adoption Accelerating COMPANY FRANCHISE Company Providing Leadership, Franchisees Quickly Surpassing 2011A 2012A 2013A 2014E 2015E 2016E 2017E to 2011A 2012A 2013A 2014E 2015E 2016E 2017E 85% COMPANY ADOPTION YE 2017 35% SYSTEM ADOPTION YE 2017 Includes Reimages & New Builds,
Slide 37: Image Activation Capital Spending Expected to Peak 2014/2015
Investment Expected to Peak in 2014/2015 to Drive Image Activation Capital Spending $280-290M $275-300M $250-275M $175-200M $100-125M 2014E 2015E 2016E 2017E 2018E Long-Term Perspective
Slide 38: Image Activation Investment Drives Accelerated Adjusted EBITDA Growth
Image Activation Investment Drives Accelerated Adjusted EBITDA Growth Adjusted EBITDA Growth 2014E 2015E 2016E 2017E 2018E Low-Double High-Single Long-Term Perspective
Slide 39: Cash Priorities
CASH PRIORITIES Ended 2013 with $580M of Cash Building Shareholder Value Invest in our Business Invest in our Business Image Activation Reimages, including Increasing Scrape & Rebuilds Dividend Growth Dividend Growth Generally in line with EPS growth (subject to Board approval) Share Repurchase Shar
Slide 40: Slide 40
Slide 41: Building A Stronger Wendy's
Building A Stronger Wendy’s • Results Exceeded Adjusted EBITDA/EPS Guidance • Restaurant Economic Model Improving • 2013 Image Activation Targets Met; Accelerates for 2014 • System Optimization Enhancing Quality of Earnings • Finished 2013 with Significant Cash • 2014 Positioned for Another Solid Ye
Slide 42: ICR Xchange Conference January 13, 2014
ICR Xchange Conference January 13, 2014
Slide 43: Important Information Regarding the Anticipated Tender Offer
Important Information Regarding the Anticipated Tender Offer This presentation is for informational purposes only and is not an offer to buy or the solicitation of an offer to sell any shares of the Company’s common stock. The anticipated tender offer described in this presentation has not yet comme
Slide 44: Adjusted EBITDA Reconciliation: Fourth Quarter
Low End High End 2013 2013 2012 Adjusted EBITDA from continuing operations 89,011 $ 89,011 $ 95,883 $ (Less) plus: Pension withdrawal expense in cost of sales (13,500) (13,500) - Depreciation and amortization (47,518) (47,518) (36,840) Facilities action (income) charges, net 16,040 16,040 (13,470) I
Slide 45: Adjusted EBITDA Reconciliation: Full Year
Low End High End 2013 2013 2012 Adjusted EBITDA from continuing operations 367,133 $ 367,133 $ 333,328 $ (Less) plus: Pension withdrawal expense in cost of sales (13,500) (13,500) - Depreciation and amortization (182,359) (182,359) (146,976) Facilities action (income) charges, net (15,650) (15,650)
Slide 46: Adjusted Income and EPS Reconciliation
Per share Per share Per share Adjusted income and adjusted earnings per share from continuing operations 40,976 $ 0.10 $ 44,476 $ 0.11 $ 33,629 $ 0.09 $ (Less) plus: Impairment of goodwill (9,207) (0.02) (9,207) (0.02) - - Depreciation of assets that will be replaced as part of the Image Activation