Burger King Worldwide — ICR XChange Conference 2013
30 slides from Burger King Worldwide's conference presentation, Jan 16, 2013
Slide 1: ICR XChange Conference
ICR XChange Conference January 16, 2013 0
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain statements made in this presentation that reflect management’s expectations regarding future events and economic performance are forward-looking in nature and, accordingly, are subject to risks and uncertainties. These forward-looking statements include statements regar
Slide 3: Agenda
Agenda Company Overview and Investment Highlights 3 Business Strategy 13 Financial Overview 21 Appendix 24 2
Slide 4: Agenda
Agenda Company Overview and Investment Highlights 3 Business Strategy 13 Financial Overview 21 Appendix 24 3
Slide 5: Burger King Worldwide Investment Highlights
Burger King Worldwide Investment Highlights 1. Global iconic brand with presence in over 80 countries 2. Franchise business model enabling growth with minimal capex and strong EBITDA margin 3. Strong, sustainable free cash flow resulting in substantial deleveraging 4. Opportunity to close sales gap
Slide 6: 1. Global Footprint
1. Global Footprint 1954: One Restaurant in Miami 2012: 12,667 Restaurants Globally Worldwide US & Canada Latin America EMEA APAC Restaurants 12,667 7,453 1,280 2,994 940 % Total 100% 59% 10% 24% 7% • $15.6 billion in system-wide sales (1) • 95% franchised system (1) • Over $800 million in owned re
Slide 7: 2. Franchise-Focused Business Model
2. Franchise-Focused Business Model • Once the company has reached a ~100% franchise mix, BURGER KING® will be one of the few pure play franchisor/real estate companies in its peer group • 95% of system restaurants are franchised (1) with goal of approaching ~100% QSR Percent Franchised System Resta
Slide 8: 2. EBITDA Margin Evolution
2. EBITDA Margin Evolution • Burger King already has one of the highest Adjusted EBITDA margins in the industry, and expects its margins to further increase as the company continues to implement its refranchising strategy EBITDA Margin (1) 45% 36% 29% 23% 20% 21% 18% 19% 19% 17% 12% WEN PNRA SBUX DP
Slide 9: 3. Stable Cash Flow Generation Results in Substantial Deleveraging
3. Stable Cash Flow Generation Results in Substantial Deleveraging • Free cash flow has increased over 70% since the 3G acquisition LTM Adj. EBITDA–Capex Proforma Net Debt to LTM Adjusted EBITDA (1,2) ($ in millions) ($ in millions) 6.6x $558 $554 6.2x $519 $503 5.9x $478 $432 5.0x 4.6x 4.4x 4.2x 4.
Slide 10: 4. US & Canada: Closing the Gap
4. US & Canada: Closing the Gap • We believe the Four Pillars Plan will enable BURGER KING® to close the ARS gap with peers LTM North America Average Restaurant Sales (1) Near-Term Opportunities ($ in millions) • Increase traffic of women, parties with kids, $2.52 and seniors through broader message
Slide 11: 5. International Development Opportunities
5. International Development Opportunities • Burger King has identified the potential to more than double its current international presence EMEA Today: 2,994 restaurants Potential: 2x (1) APAC Today: 940 restaurant Potential: 3x (1) LatAm Today: 1,280 restaurants Potential: 2x (1) 1) As of 9/30/201
Slide 12: 6. Senior Management Team
6. Senior Management Team • BKW’s management team consists of 3G Capital partners, former InBev/AmBev executives, internally promoted team members, and a former Burger King franchisee • All four Zone Presidents have extensive QSR industry experience Bernardo Hees (3G Partner) Chief Executive Officer
Slide 13: 6. Progress Under New Management
6. Progress Under New Management • Substantial financial progress under new management team since 3G acquisition LTM Adjusted EBITDA (1) 3G Acquisition $631 $585 $500 $456 $461 6/30/2009 6/30/2010 6/30/2011 12/31/2011 9/30/2012 Source: Company filings 1) Adjusted EBITDA is a non-GAAP number. See app
Slide 14: Agenda
Agenda Company Overview and Investment Highlights 3 Business Strategy 13 Financial Overview 21 Appendix 24 13
Slide 15: Business Strategy: Strategy Initiatives
Business Strategy STRATEGY INITIATIVES Menu Marketing Communications U.S. & Canada Increase average unit sales with Four Pillars Plan Image Operations Accelerate NRG by creating Master Franchise JVs and Development Agreements International Accelerate NRG and continued SSS growth Capitalize on emergi
Slide 16: Business Strategy: Pillars – Menu
Business Strategy: 4 Pillars – Menu Enhance Core Menu Items Address Menu Gaps Platforms to Build on New & Improved Platforms Winter New Product Offerings 15
Slide 17: Business Strategy: Pillars – Marketing
Business Strategy: 4 Pillars – Marketing • New marketing campaign launched in April 2012 to re-engage our guests • Marketing to all demographics Broaden • 18-35 males too narrow of a target Marketing market Message • Focus on bringing back women, parties with children and seniors • Continued progres
Slide 18: Business Strategy: Pillars – Image
Business Strategy: 4 Pillars – Image • Goal to have 40% of U.S. and Canada system units on a modern image by 2015, up from 11% at the end of 2011 • Average re-imaging costs are approximately $300,000 per restaurant • Re-imaged restaurants continue to experience an average sales uplift of 10-15% Lega
Slide 19: Business Strategy: Pillars – Operations
Business Strategy: 4 Pillars – Operations • We have further enhanced our evaluation tools with the introduction of an Operations Performance Index (“OPI”) Ops Performance Index (“OPI”) • Reflects both guest view and BKW internal Metric Description metrics like coach visit scores and speed of service
Slide 20: Business Strategy: International
Business Strategy: International • Capitalizing on growth opportunities through the formation of Master Franchise Joint Ventures and Master Development Agreements with experienced local partners • International master franchise agreements grant exclusive development rights to a region, align experie
Slide 21: Business Strategy: Global Refranchising
Business Strategy: Global Refranchising • Refranchised 221 restaurants in 3Q12, including 182 in the U.S. and Canada • Secured 356 re-imaging commitments in connection with U.S. and Canada transactions • BKW typically receives cash, re-imaging and development commitments in each refranchising transa
Slide 22: Agenda
Agenda Company Overview and Investment Highlights 3 Business Strategy 13 Financial Overview 21 Appendix 24 21
Slide 23: Results since 3G Acquisition
Results since 3G Acquisition Global Same Store Sales Management G&A Adjusted EBITDA (5) 3.4% 356 631 585 249 454 223 -0.5% -2.3% 2010 (1) 2011(3) YTD 2012 (4) 2010 (2) 2011(3) LTM (6) 2010 (2) 2011(3) LTM (6) System wide Sales Adjusted Net Income (5) Adj. EBITDA – Capex (5,8) Franchise Sales (7) Com
Slide 24: Initiation of Quarterly Cash Dividend
Initiation of Quarterly Cash Dividend • On October 28, 2012, BKW’s Board of Directors approved the initiation of a quarterly cash dividend • Initial dividend was $0.04 per share paid to holders of record on November 29, 2012 • Demonstrates our confidence in BKW’s business plan and ability to execute
Slide 25: Agenda
Agenda Company Overview and Investment Highlights 3 Business Strategy 13 Financial Overview 21 Appendix 24 24
Slide 26: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures Below, we define the non-GAAP financial measures, provide a reconciliation of each non-GAAP financial measure to the most directly comparable financial measure calculated in accordance with GAAP, and discuss the reasons that we believe this information is useful to
Slide 27: EBITDA and Adj. EBITDA to Net Income
EBITDA and Adj. EBITDA to Net Income Three Months Ended Nine Months Ended Twelve Months Ended September 30, September 30, September 30, September 30, September 30, December 31, December 31, June 30, 2012 2011 2012 2011 2012 2011 2010 2010 EBITDA and adjusted EBITDA: (In millions) U.S. and Canada $ 1
Slide 28: Reconciliation of Net Income to Adj. Net Income
Reconciliation of Net Income to Adj. Net Income Three Months Ended Nine Months Ended Twelve Months Ended September 30, September 30, September 30, September 30, December 31, December 31, June 30, 2012 2011 2012 2011 2011 2010 2010 Adjusted net income (In millions) (In millions) (In millions) Net inc
Slide 29: LTM EBITDA and Adjusted EBITDA
LTM EBITDA and Adjusted EBITDA Twelve Months Ended December 31, December 31, September 30, 2012 2011 2010 EBITDA and adjusted EBITDA (In millions) Net income $ 94.1 $ 88.1 $ 45.4 Interest expense, net 234.6 226.7 96.6 Loss on early extinguishment of debt 35.7 21.1 - Income tax expense 29.3 26.6 35.4
Slide 30: Footnotes to Reconciliation Tables
Footnotes to Reconciliation Tables (1) Represents share-based compensation expense associated with employee stock options, and for the twelve months ended September 30, 2012 and December 31, 2011, also includes the portion of annual non-cash incentive compensation that eligible employees elected to