Domino's Pizza Enterprises Limited · ASX:DMP
Domino's Pizza Enterprises — H1 FY24 Earnings Presentation
40 slides from Domino's Pizza Enterprises's earnings presentation, Feb 21, 2024
Slide 1: Market presentation for the half-year ended 31 December 2023
Domino’s Pizza Enterprises Limited 1/485 Kingsford Smith Drive Hamilton, QLD, Australia 4007 ACN: 010 489 326 www.dominos.com.au 21 February 2024 The Manager Market Announcements Office Australian Securities Exchange 4th Floor, 20 Bridge Street SYDNEY NSW 2000 Market presentation for the half-year e
Slide 2: Domino's Pizza Enterprises Limited (DPE) Period Ending 31.12.2023
DOMINO’S PIZZA ENTERPRISES LIMITED (DPE) PERIOD ENDING 31.12.2023
Slide 3: Our mission and strategy is clear…
Our mission and strategy is clear…
Slide 4: A period of change: what we have been delivering in H1
3 A period of change: what we have been delivering in H1 Reassessment Creating Centers Proving our Applying learning and streamlining of Expertise for strategies in in the rest of the of our business competitive leading markets business structures advantage (ANZ/Germany) WE ARE CONTINUING THIS FOCUS
Slide 5: Product-led approach delivering inspired results
PRODUCT-LED APPROACH DELIVERING nspiRED RESULTS IN PRODUCTS ANZ /GERMANY WITH APPLICABILITY IN OTHER MARKETS
Slide 6: Network sales growth, underlying NPBT and EBIT growth
(1,2) 5 NETWORK SALES GROWTH (vs. H123) UNDERLYING NPBT ($87-90m per January update) UNDERLYING EBIT GROWTH (vs. H123) 1) Underlying Performance – excluding Significant Items; see slides 12 and 28 for further details 2) Free Cash Flow and Net CAPEX – excluding capital expenditure relating to acquisi
Slide 7: Trading update: network sales, same store sales, new stores
6 Prior corresponding period +4.2% NETWORK SALES GROWTH excluding FX (1,2) Prior corresponding period -2.2% (1) SAME STORE SALES Prior corresponding period +15 stores (1) NEW STORE OPENINGS 1) Trading Update – during the first 7 weeks of H224 vs. first 7 weeks of H223 2) FX – Network Sales growth, e
Slide 8: Franchise partner profitability and EBITDA per store
7 AVERAGE NUMBER OF STORES GROUP FRANCHISE PARTNER WEIGHTED AVERAGE PER FRANCHISE PARTNER (1) COMPANY EBITDA ($AUD) ‘000S (3,5) 2.8 22.9% 23.2% 2.6 2.5 2.3 $343.9 11.2% $317.9 $277.2 $262.4 2 3-5 6 or more 12-Month Rolling Q1 21 12-Month Rolling Q1 22 12-Month Rolling Q1 23 12-Month Rolling Q1 24 H1
Slide 9: FY24 target network savings ~$50M
8 FY24 TARGET NETWORK SAVINGS ~$50M (1) ~$21M GROSS SAVINGS ACHIEVED H1 Some savings delayed, largely due to timing of store closures in France Final restructure planned in this market to take place during Q4 24 1/3rd OF BENEFITS ARE BEING SHARED WITH FRANCHISE PARTNERS (2) 1) Network savings includ
Slide 10: Slide 10
Slide 11: Group half-year highlights: sales, EBIT, NPAT, dividend
10 (1) ▪ Network Sales +8.8% vs. Last Year (+5.2% excluding FX) ▪ EBIT -5.3% vs. Last Year (-7.5% excluding FX)(1), +22.8% vs. H2 23 ▪ NPAT -13.0% vs. Last Year (-14.9% excluding FX) , +22.3% vs. H2 23 (1) ▪ Half Year Dividend 55.5 cents per share (unfranked), -17.7% vs. Last Year; fully underwritte
Slide 12: Group - Geographic Summary
GROUP - GEOGRAPHIC SUMMARY’ Metric Same Store Sales Growth ANZ Europe Asia Revenue ANZ Europe Asia EBIT ANZ Europe Asia Global EBIT % of Revenue ANZ Europe Asia Current Period H124 1.25% $443.7m $395.3m $1,272.2m 0.20% 0.41% 3.31% 4.84% $1,212.3m $398.0m $386.7m $427.6m $87.8m $49.0m $27.2m $23.8m -
Slide 13: Net non-recurring costs
12 Net Non-Recurring Costs are $6m, primarily relating to: ▪ Group restructuring costs: - Streamlining of Operations $7.6m, including employee termination and shared services transition costs - Optimising the Store Network $2.3m - Closure of Supply & Service Business in Australia and Commissary clos
Slide 14: Group Cash Flow
13 Group Cash Flow ▪ Higher receivables & inventories in Japan due to seasonality of sales ▪ Non-recurring cash costs, predominantly associated with recent restructure ▪ Interest paid increased, due to recent acquisitions and higher base rates ▪ Partial reimbursement of FY23 tax instalments due to l
Slide 15: Net CAPEX excluding acquisitions
14 ▪ H124 Net CAPEX excluding acquisitions $42.5m (H123 $65.4m) ▪ CAPEX which Recycles $11.8m (H123 $29.9m) $3.9 m ‒ Gross CAPEX $47.5m (prior-year $66.4m), including investment in new corporate stores, franchisee loans for new and existing stores and $11.8 m franchisee acquisitions $5.5 m ‒ Cash in
Slide 16: Material improvement in net leverage covenant headroom
15 (1) BANKING COVENANT RATIOS MATERIAL IMPROVEMENT IN NET LEVERAGE COVENANT HEADROOM ▪ As communicated at the Full Year FY23 Market Presentation; DPE has (exl AASB16) deployed a range of capital management initiatives, which have resulted in a $68.7m reduction in net debt during H124, including: -
Slide 17: Slide 17
Slide 18: ANZ, Europe and Asia same store sales trading
17 (1) EUROPE ASIA Stronger product-led Domino’s is growing performance to weekly orders where we grow customers but deliver value, but SAME STORE SALES face some external SAME STORE SALES requires more traction (Germany +6.08%) headwinds (Japan +6.73%) in some markets ANZ Domino’s is growing custom
Slide 19: Best practice local ownership
18 BEST PRACTICE LOCAL OWNERSHIP CENTRES OF EXPERTISE LOCAL CEOS AND LEADERSHIP • Develop and share best practice • Franchise partner engagement • CoEs are well progressed in ANZ • Execution of Company strategy • Global contracts with international partners • Building high-performing teams to delive
Slide 20: Key outcomes include…
19 Key outcomes include… Reducing costs Reinvesting the 1/3rd Reducing duplication Application of best of savings into franchise and achieving practice across the partner unit economics increased efficiencies Group
Slide 21: Online sales account for >78% of total sales
20 (1) ONLINE SALES ACCOUNT FOR >78% OF TOTAL SALES, >$3 BILLION PER YEAR OneDigital New Priority Timing A current Global approaches given based based on example roll-out trialled on global maximum includes locally benefits impact personalised upselling Maximising our digital platforms underpins our
Slide 22: Aggregators, media and product launches
21 Strong growth in Improved use of Inspired product aggregators media $$$ launches
Slide 23: Successful approaches from other markets are being applied
22 Successful approaches from other markets are being applied – but more time is required Consistent Wider Inspired Winning pricing with adoption of new inside lower entry proven product Aggregators point promotions • Products including Burger Pizza range resonate locally • Inspired new products hav
Slide 24: Historical store count and future outlook
23 (2) HISTORICAL STORE COUNT AND FUTURE OUTLOOK (1) ASIA 2.0X CURRENT MARKET SIZE ANZ 1.3X CURRENT MARKET SIZE HISTORICAL UNDERLYING EBIT EUROPE 2.0X CURRENT MARKET SIZE GROUP 1.9X CURRENT MARKET SIZE STORE EXPANSION IS IMPORTANT TO THE GROWTH OF FRANCHISE PARTNERS AND DPE, BUT RELIES ON IMPROVED U
Slide 25: Outlook: performance, savings and trading
24 Our most recent performance has been a period of change and has not met expectations The new organisational structure is delivering increased efficiencies and savings for the network Recent trading has demonstrated successful Domino’s initiatives (including aggregators, technology, marketing, pro
Slide 26: Domino's Value Equation and mission
25 Domino’s Value Equation relies on in-store execution, inspired new product development, and appropriate pricing to deliver both value for customers and margins for franchise partners As markets return to stronger unit economics, new store openings and a reduction in corporate stores will follow i
Slide 27: Appendices
APPENDICE
Slide 28: Upcoming corporate events
27 CORPORATE EUROPEAN FY24 FULL DMP ANNUAL STRATEGY DAY SITE TOURS YEAR RESULTS GENERAL MEETING Brisbane France & Germany Sydney Brisbane
Slide 29: Reconciliation - Statutory profit to underlying H124 and H123
28 Reconciliation – Reconciliation – (1) Statutory profit to Underlying – H124 Statutory profit to Underlying – H123 Items Items 1) H123 Underlying Profit and Significant Items, as presented at DPE’s H123 Market Presentation (Feb 2023), including revenue and costs associated with Denmark, which have
Slide 30: Group Balance Sheet
29 Group Balance Sheet H124 FY23 Var ▪ Trade receivables and inventories have increased by $13.7m and $6.8m, respectively; driven mainly by the seasonality of sales in Japan (timing) ▪ Other current asset decreased -$25.8m, primarily relating to tax refund received, due to lower FY23 Statutory profi
Slide 31: Banking covenant ratios
30 (1) 1) The Group has obtained agreement from its lenders for a temporary increase in its Net Leverage covenant to 3.5x, from 3.0x, for both H124 and Full Year FY24 reporting periods
Slide 32: Return on capital employed, return on equity, cash conversion
31 RETURN ON CAPITAL EMPLOYED RETURN ON EQUITY CASH CONVERSION
Slide 33: Net leverage ratio and interest coverage
32 (1) NET LEVERAGE RATIO INTEREST COVERAGE (2) 1) The Group has obtained agreement from its lenders for a temporary increase in its Net Leverage covenant to 3.5x, from 3.0x, for both H124 and Full Year FY24 reporting periods 2) Interest Coverage Ratio has been restated to reflect definitions of EBI
Slide 34: Group - Historic AUD FX conversion rates
a A GROUP —HISTORIC AUD FX CONVERSION RATES s H123 FY23 H124 Currency B/S P&L B/S P&L B/S P&L EUR 0.6359 06616 0.6099 0.6433 0.6183 0.6032 JPY 89.8800 93.7378 95.9200 92.4503 96.7000 95.3877 MYR 2.9898 2.9803 3.1021 3.0100 3.1434 3.0440 NZD 1.0711 1.1020 1.0884 1.0926 1.0769 1.0805 SGD 0.9102 0.9132
Slide 35: Group and regional network store count
34 GROUP NETWORK STORE COUNT REGIONAL STORE COUNT AS A % OF NETWORK STORE COUNT REGIONAL STORE COUNT ▪ +73 New store openings during H1 24 ▪ +68 “bricks and mortar” stores ▪ +5 Mobile Pizza Kitchens
Slide 36: Network sales, sales growth and store count
(1) 35 NETWORK SALES SALES GROWTH NETWORK STORE COUNT EXISTING AND NEW STORE SALES 1) Where applicable, prior-period Online Sales and Online Sales Growth figures have been re-stated, reflecting updated internal Management Reporting
Slide 37: Network sales, sales growth and store count (excluding FX)
(1,2) 36 NETWORK SALES SALES GROWTH NETWORK STORE COUNT EXISTING AND NEW STORE SALES 1) FX translation headwind has been removed from the above by re-translating current period and prior-periods using H123 FX rates 2) Where applicable, prior-period Online Sales and Online Sales Growth figures have b
Slide 38: Network sales, sales growth and store count (excluding FX)
(1,2) 37 NETWORK SALES SALES GROWTH NETWORK STORE COUNT EXISTING AND NEW STORE SALES 1) FX translation headwind has been removed from the above by re-translating current period and prior-periods using H123 FX rates 2) Where applicable, prior-period Online Sales and Online Sales Growth figures have b
Slide 39: Same store sales and network sales calculations
38 SAME STORE SALES ARE CALCULATED NETWORK SALES ARE CALCULATED IN BOTH WEEKLY, MEASURED IN LOCAL CURRENCY LOCAL CURRENCY AND AUD Same Store Sales is the process of comparing year- Network Sales growth includes sales for all stores on-year growth of existing, mature, stores Stores are included from
Slide 40: Disclaimer
39 • Domino’s Pizza Enterprises Limited (Domino’s) advises that the information in this presentation contains forward looking statements which may be subject to significant uncertainties outside of Domino’s control • Domino’s does not undertake any obligation to provide recipients of this presentati
Domino's Pizza Enterprises — H1 FY24 Earnings Presentation on 6ix