Wendy's Company (the) · NASDAQ:WEN
Wendy's Company (the) — Wendy's/Arby's Group — Q2 2009 Earnings Presentation
34 slides from Wendy's Company (the)'s earnings presentation, Aug 6, 2009
Slide 1: Second Quarter 2009 Earnings Call
Second Quarter 2009 Earnings Call August 6, 2009
Slide 2: Opening Comments
Opening Comments John Barker SVP and Chief Communications Officer
Slide 3: Agenda
n Second Quarter Highlights and Outlook - Roland Smith − Business Overview − 2 nd Quarter Financial Highlights − Key Profit Drivers − Outlook n Financial Results - Steve Hare − Consolidated Financial Overview − Brand Financials − G&A Savings Comparison − Debt − Board Actions n Brand Updates and Grow
Slide 4: Wendy's/Arby's Group Reported Today
Wendy’s/Arby’s Group Reported Today: n Q2 and YTD Results − Q2 2009 and YTD are not comparable to 2008 due to the merger n Balance Sheet Highlights n Adjusted EBITDA Compared to Pro-forma Adjusted EBITDA n Pro-forma Results for 2008 by Quarter − Available on our website and Form 8-K n Selected Finan
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: Second Quarter 2009 Highlights
Second Quarter 2009 Highlights Roland Smith President & Chief Executive Officer
Slide 7: Business Overview
n Strong Q2 Earnings Growth − 13.2% growth in adjusted EBITDA* n Building Momentum in the Wendy’s Brand − 370 basis points company-operated margin improvement in Q2 − Strong new product pipeline n Sequential Quarterly Improvement in Arby’s Same-Store Sales n Key Profit Drivers − On track to achieve
Slide 8: Wendy's Q2 2009 Highlights
Wendy’s Q2 2009 Highlights North America Same-Store Sales n Same-store sales at company-operated restaurants were +0.6%, excluding breakfast effect
Slide 9: Wendy's Q2 2009 Highlights: Restaurant Margin
Wendy’s Q2 2009 Highlights Restaurant Margin n Company-operated margin was +370 bps vs. year ago, without benefit of commodities Q2 2008 Q2 2009
Slide 10: Arby's Q2 2009 Highlights
Arby’s Q2 2009 Highlights North America Company Same-Store Sales n Same-store sales at company-operated restaurants improved sequentially from Q1 2009 and Q4 2008 n Company-operated margin declined 100 bps from a year ago, but improved versus Q1 2009 of 14.2% Restaurant Margin Q1 2009 Q2 2009 14.2%
Slide 11: Wendy's Restaurant Margin
§ 2009 goal was 160-180 bps improvement § Delivered +370 bps improvement in Q2 and +240 bps YTD § Expect commodities improvement in the second half, but less benefit from pricing § Now expect to exceed 200 bps improvement for FY 2009 Original Margin Improvement Targets by Year 150-170 bps 2008 2009
Slide 12: On Track to Achieve Cost Savings Goal of $60 Million
$25 million $35-45 million $60 million Target Additional Savings n $25 million in savings were achieved on an annualized basis by the end of 2008 n On track to achieve additional $10 to $20 million of targeted savings in 2009 ($35-45 million by YE 2009) n Key projects under way − Implementing Shared
Slide 13: Financial Outlook
n EBITDA Goal − Average annual adjusted EBITDA growth in the mid-teens through n 2009 Update − Expect to exceed 200 bps improvement in Wendy’s margin − G&A synergies and efficiencies ahead of schedule − Arby’s turnaround slower than anticipated − Expect mid-teens adjusted EBITDA growth in 2009 Finan
Slide 14: Financial Overview
Financial Overview Steve Hare Chief Financial Officer
Slide 15: Q2 Consolidated Operating Results
Q2 Consolidated Operating Results
Slide 16: Q2 EBITDA and Adjusted EBITDA
*See Appendix. Q2 EBITDA and Adjusted EBITDA*
Slide 17: Q2 Wendy's Operating Results
*See Appendix. Q2 Wendy’s Operating Results
Slide 18: Q2 Wendy's Operating Results ($ in Millions)
($ in Millions) Operating Results: Net Sales Royalty & Franchise Revenues Total Revenue N. America System SSS Restaurant Margin Restaurant Count: Company-Owned Franchised Total Q2 2009 $ 277 21 $ 298 (6.9)% 14.9% 1,170 2,575 3,745 $ 291 22 (3.2)% 15.9% 1,169 2,550 W Q2 2008 313 3,719 WENDY'S ARBY'S
Slide 19: G&A Savings Methodology - 2009 vs. 2008
*Excludes 53 rd week G&A Savings Methodology - 2009 vs. 2008
Slide 20: $565 Million Senior Unsecured Notes
n Issued by Wendy’s/Arby’s Restaurants, LLC in June 2009 n Priorities for Use of Proceeds – $132.5 million used to Reduce Bank Borrowings − Strategic Growth Initiatives • Breakfast • Dual Branding • International Expansion − Stock Repurchases $565 Million Senior Unsecured Notes
Slide 21: Debt Capitalization
*Represents trailing twelve month pro-forma adjusted EBITDA. Debt Capitalization
Slide 22: Recent Board Actions
n $50 Million Stock Repurchase Program − In effect through end of FY 2010 − Allows repurchases as market conditions warrant n Quarterly Dividend − $0.015 per share − Payable on September 15, 2009 to stockholders of record as of September 1, 2009 Recent Board Actions
Slide 23: Brand Updates and Growth Opportunities
Brand Updates and Growth Opportunities Roland Smith President & Chief Executive Officer
Slide 24: Re-Energizing the Wendy's Brand
n Launched Boneless Wings in June n Produced all-time record sales week for company- operated restaurants in late June n July same-store sales at company-operated restaurants increased approximately 2.0% Re-Energizing the Wendy’s Brand
Slide 25: Re-Energizing the Wendy's Brand
n Introducing a premium cheeseburger in Q4 n Unveiling new advertising campaign in Q4 n Selected The Kaplan Thaler Group as lead advertising agency Re-Energizing the Wendy’s Brand
Slide 26: Re-Energizing the Wendy's Brand: French-fry face-off
“French-fry face-off” #1 Re-Energizing the Wendy’s Brand
Slide 27: Arby's: Balancing Premium and Value
$5 Combos BBQ Roastburger n Continue to leverage brand equity in premium roast beef − Promoted BBQ Bacon Cheddar Roastburger TM Combo in July − July same-store sales improved to approximately -4.7% n Add “Everyday Value” − 5 for $5 Family & Friends Feast − Five full-sized sandwiches with fries and a
Slide 28: International Growth Opportunity
n Wendy’s and Arby’s are under-penetrated in international markets vs. QSR peers n Recently announced new franchise development agreements: − 35 Wendy’s in Singapore (Kopitiam Group) − 135 dual-branded units in the Middle East (Al Jammaz Group) Latin America/Caribbean 14 countries, 16 franchisees Ca
Slide 29: Dual Branding Opportunity
n Higher Sales Volumes and Greater ROI n Three Opportunities: − International − U.S. − Conversions n Initial Units: − Middle East − Atlanta (three) Artist rendering (not actual restaurant) Dual Branding Opportunity
Slide 30: Summary
n Strong Earnings Growth − 13.2% growth in adjusted EBITDA n Building Momentum in the Wendy’s Brand − 370 basis points company-operated margin improvement in Q2 − Strong new product pipeline n Sequential Quarterly Improvement in Arby’s Same-Store Sales n Key Profit Drivers on Track n Growth Opportun
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: Calculation of EBITDA and Reconciliation to Net Income
(o\_ ox = pal Arbyjs — WENDY'S ARBY'S GROUP ‘Wendy’vArby's Group, Ine. and Subsidiaries Calculation of EBITDA and a Reconcllation of EBITDA to Net Iicome (Loss) Compared to Pro-forma' 2008 Results (In Thousands) Second Quarter Six Months (Cnaudited) Pro-Forma ProForm 2009, 2008 2009 2008 EBITDA ¥ 10
Slide 34: Reconciliation of EBITDA to Adjusted EBITDA
WENDY'S .\ ARBY'S GROUP Reconciliation of EBITDA to Adjusted EBITDA (in Thousands) ‘Second Quarter ‘Six Months (Cnaudited) Fro-Forma FroForma 2009 2008 2009 2008 EBITDA FLOR 3 one 3 Raa 3 107s Plus Facilities relocation und eorporate restructuring 3013 14s 7174 2587 Integration costs in general and