Domino's Pizza Enterprises Limited · ASX:DMP
Domino's Pizza Enterprises — FY2023 Earnings Presentation
59 slides from Domino's Pizza Enterprises's earnings presentation, Aug 23, 2023
Slide 1: Domino's Pizza Enterprises Limited ASX market announcement cover letter
Domino’s Pizza Enterprises Limited 1/485 Kingsford Smith Drive Hamilton, QLD, Australia 4007 ACN: 010 489 326 www.dominos.com.au 23 August 2023 The Manager Market Announcements Office Australian Securities Exchange 4th Floor, 20 Bridge Street SYDNEY NSW 2000 Dear Sir Market presentation for the year
Slide 2: Asia Pacific Europe
ASIA PACIFIC EUROPE Period Ending 02.07.2023
Slide 3: We are the dominant sustainable delivery QSR
WE ARE THE DOMINANT SUSTAINABLE DELIVERY QSR = 2030
Slide 4: When Domino's balances the value equation
Proximity to Customers – allows for quicker, more Fortressing – consistent delivery When Domino’s balances the value equation – brings us closer experience to Customers Franchisee PARTNERS, customers and DPE win - In FY23 Domino’s increased prices to protect Franchisee Partners’ margins in the face
Slide 5: Positive H2 SSS in Europe
3-5 Year FY21 FY22 FY23 Annual Outlook(1) Actual Actual Actual (1) (2) (3) Same Store Sales Growth +3-6% +9.3% -0.3% -0.2% +285 stores +294 stores +205 stores New Organic Store Additions +8-10% of network +10.7% of network +10.0% of network +6.1% of network Net CAPEX(2) $100-150m $84.3m $137.6m $159
Slide 6: Trading Update for first 7 weeks of FY24 and FY23
Trading Update Full Year Results First Weeks of Trade FY22 FY23 FY23 FY24 (1) (2) (3) Actual Actual Actual Actual Network Sales Growth 4.6% +2.2% -2.4% +12.6% Same Store Sales Growth -0.3% -0.2% -1.1% +2.8% +294 stores +205 stores New Organic Store Additions +13 stores +9 stores +10.0% of network +6
Slide 7: Network Sales growth +4.3% excluding FX
(1) FY22 FY23 Growth vs. FY22 Actual Actual Network Sales $3,918.0m $4,005.6m +$87.6m +2.2% Online Sales $3,059.6m $3,132.8m +$73.2m +2.4% Same Store Sales Growth -0.3% -0.2% Network Store Count 3,387 stores 3,782 stores +395 stores +11.7% EBITDA(3) $396.5m $347.2m -$49.3m -12.4% EBIT(3) $262.9m $20
Slide 8: Franchised store count and franchisee profitability
(1) (3) (2) (4) 1) Franchised Store Count – is based on closing period store counts as per Slide 51 4) Franchisee profitability - includes 72% of stores that have submitted P&Ls during Q3 23 12-month 2) Number of stores per Franchisee, including Taiwan for all periods rolling period, 77% of stores f
Slide 9: In the face of extraordinary inflation
▪ In the face of extraordinary inflation, management moved to protect franchisee partners by increasing menu prices ▪ The scale and pace of inflation meant not all menu price initiatives could be tested in the usual manner ▪ The size of some* increases, or the manner (e.g. Delivery Service Fees) red
Slide 10: FY24 network savings forecast to be $30-31m
▪ Domino’s has taken steps to deliver material, near-term, cost savings Closure of the loss-making Danish market (27 stores) FY24 network savings forecast to be $30-31m Closure of 56 stores across the group (provision for additional 18 store closures) These stores were not expected to reach sustaina
Slide 11: Building the structure for Domino's 2030 and beyond
builDinG the stRuctuRe FoR Domino’s 2030 anD beYonD DPE announced a plan in June to realign & streamline its operations 1 Group CEO/CFO taking dual Global and local roles (Responsibility for Group and ANZ, similar dual roles in other selected roles) Key changes expected include: CEOs more capacity t
Slide 12: Group financials
N GROUP FINANCIALS
Slide 13: Network Sales growth +2.2% (+4.3% excluding FX)
FY22 FY23 Growth vs. Underlying Underlying FY22 $ mil $ mil $ mil % Network Sales 3,918.0 4,005.6 87.6 2.2% Revenue 2,289.3 2,366.8 77.5 3.4% EBIT 262.9 201.7 -61.2 -23.3% NPAT 165.0 122.6 -42.3 -25.7% EPS (basic) 190.6 cps 139.4 cps -51.3 cps -26.9% Dividend Per Share 156.5 cps 110.0 cps -46.5 cps
Slide 14: Growth vs. FY22 by region
FY20 FY21 FY22 FY23 Growth vs. Underlying Underlying Underlying Underlying FY22 $ mil $ mil $ mil $ mil $ mil % Revenue Europe 560.1 665.1 704.2 751.0 +46.8 +6.6% ANZ 693.4 756.6 782.5 800.7 +18.2 +2.3% Asia 651.8 777.4 802.6 815.1 +12.5 +1.6% Total Revenue 1,905.3 2,199.1 2,289.3 2,366.8 +77.5 +3.4
Slide 15: Total Non-Recurring Costs
▪ Total Non-Recurring Costs (including costs arising due to discontinued operations) were $116.6m ▪ Non-Recurring Costs arising from cost initiatives and discontinued operations were $105.0m (see next slide) ▪ Additional Non-Recurring costs of $11.6m, primary relating to: ▪ ANZ Fast Food Industry Aw
Slide 16: Total FY23 Non-Recurring Costs arising from initiatives
FY23 Actual FY24 Forecast FY25 Target Per 13 June Announcement Region - $m Non Recurring Costs Network Savings Network Savings Non Recurring Costs Annualised Network Savings Denmark Market Closure $26.2m $12m $12m $20-26m $12m Optimising the Corporate Store Network $68.1m $16m $30-35m $50-55m $16-20
Slide 17: Net Operating Cash Flow up +37.2%, to $260.8m
FY22 FY23 Statutory Statutory $ mil $ mil Underlying EBITDA 396.5 347.2 Change in working capital (77.5) 36.5 ▪ Working Capital is $36.5m favourable, predominately due to positive movement in payables in Japan, Profit on sale of non-current assets (28.1) (19.0) Australia, Malaysia/Singapore acquisit
Slide 18: FY23 Net CAPEX excluding acquisitions $159.1m
▪ FY23 Net CAPEX excluding acquisitions $159.1m (Prior Year $137.6m) ▪ CAPEX which Recycles $84.1m (Prior Year $59.5m) $13.3m ‒ Gross CAPEX $130.9m (prior-year $132.5m), including investment in new corporate stores (primarily Japan), franchisee loans for new and existing stores and franchisee acquis
Slide 19: Net Debt of $819m increases by $252m vs. FY22
vs. FY22 FY23 FY22 $ mil $ mil $ mil Cash & cash equivalents 76.9 159.9 83.0 ▪ Net Debt of $819m increases by $252m vs. FY22(1), as a result of the Malaysia, Trade and other receivables 163.6 176.2 12.6 Singapore and Cambodia acquisitions ($206m) and higher capital expenditure Inventories 30.9 43.1
Slide 20: Leverage ratio and capital management
(1) LEVERAGE RATIO AND CAPITAL MANAGEMENT Banking Covenant Ratios FY22 H123 FY23 ▪ Total available cash and cash equivalents of $159.9m, with multi- 12 Month Rolling EBITDA (ex AASB 16) $339.7m $310.8m $287.1m currency undrawn debt facilities of $257.3m Total Debt $647.5m $810.2m $998.6m ▪ June Net
Slide 21: ROE lower, as a result of lower profits & dilution
FY22 H123 FY23 Underlying Underlying Underlying DPE Key Financial Ratios (1) Return on Equity 42.3% 29.3% 26.5% ▪ ROE lower, as a result of lower profits & dilution from $163.2m net capital raising Return on Capital Employed 16.8% 13.0% 11.6% ▪ ROCE lower, due to lower EBIT, combined with investment
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Slide 23: Asia – SSS currently negative due to Japan and Taiwan
(1) ▪ Asia – SSS currently negative due to Japan and Taiwan lower than expectations (SSS -7.8%) ▪ Taiwan continues to roll high COVID-related sales, continuing until end of Q1 FY24 ▪ Japan is focused on executing proven volume growth strategies from other markets to rebuild order counts ▪ Growth pla
Slide 24: Domino's intends to 'Play to Win' inside aggregators
▪ Aggregator marketplaces continue to be a source of incremental customer growth ▪ These partnerships build delivery volumes for Domino’s stores, with existing team members facilitating the delivery ▪ The size of aggregator markets allows Domino’s to win share from other QSR The recently announced i
Slide 25: Volume-driving special occasions drive sales
▪ Management believes pricing now appropriately balances input costs with customer value ▪ The key to rebuilding DPE and franchisee profitability in FY24 is volume ▪ New low-cost products to be launched have higher contribution margins ▪ Commodity price relief will accelerate improvement in unit eco
Slide 26: Value = Product + Service + Image / Affordable Price
Value = Product + Service + Image / Affordable Price ▪ Product: New product planning is producing some of the highest rated new products since pre-COVID – growing customers and occasions ▪ This includes new loaded fries (Europe) the My Domino’s Box (Asia) and new pizza ranges (ANZ) with more to come
Slide 27: Asia milestone 3,000 stores by 2033
▪ Asia milestone 3,000 stores by 2033 − Asia 2.0x current market size ▪ ANZ target 1,200 stores by 2027-2028 − ANZ 1.3x current market size ▪ Europe milestone 2,900 stores by 2033 − Europe 2.1x current market size ▪ Group milestone 7,100 stores by 2033 − Group 1.9x current market size ▪ Management h
Slide 28: Management reaffirms its 3-5 year Group Outlook for SSS
FY21 FY22 FY23 3-5 Year Actual Actual Actual Annual Outlook Same Store Sales Growth +9.3% -0.3% -0.2% +3-6% +285 stores +294 stores +205 stores New Organic Store Additions +7-9% of network +10.7% of network +10.0% of network +6.1% of network Net CAPEX(1) $84.3m $137.6m $159.1m $100-150m ▪ Management
Slide 29: DPE's response to inflation did not reach initial expectations
▪ DPE’s response to inflation did not reach initial expectations – franchisee partners were able to trade through, however lower volumes affected both unit economics and DPE earnings DOMINO’S IS WORKING THROUGH ITS VALUE EQUATION: Product + Service + Image / Affordable price ▪ Affordable Pricing: DP
Slide 30: Domino's does not expect customers to pay more in FY24
DOMINO’S DOES NOT EXPECT CUSTOMERS TO PAY MORE IN FY24 ▪ Management’s focus in all markets is winning more customers, on more occasions ▪ The pricing structures for stores is in place – now every market is focused on growing volumes ▪ High Volume Mentality: DPE’s experience shows increased store vol
Slide 31: DPE is optimistic of the short-term and resolute in medium- and long-term outlook
DPE IS OPTIMISTIC OF THE SHORT-TERM AND RESOLUTE IN THE MEDIUM- AND LONG-TERM OUTLOOK ▪ Domino’s is rebuilding customer order counts through proven strategies – while this is underway management is optimistic on the short-term outlook, provided momentum continues ▪ However, the flow-through to DPE e
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Slide 33: Australia New Zealand
AUSTRALIA |) NEW ZEALAND
Slide 34: ANZ Network Sales growth +1.4% (+$18.3m)
(1) FY22 FY23 Growth vs. Underlying Underlying FY22 ANZ $ mil $ mil $ mil % Network Sales 1,337.7 1,355.9 +18.3 +1.4% Revenue 780.2 800.7 +20.4 +2.6% EBITDA 156.1 150.0 -6.1 -3.9% EBIT 120.8 112.4 -8.3 -6.9% EBITDA on Revenue 20.0% 18.7% EBIT on Revenue 15.5% 14.0% ▪ Network Sales growth +1.4% (+$18
Slide 35: Network Sales – key metrics
(1) NETWORK SALES – key metrics SALES growth – key metrics NETWORK STORE COUNT EXISTING AND NEW NETWORK SALES 1) Where applicable, prior-period Online Sales and Online Sales Growth figures have been re-stated, reflecting updated internal Management Reporting 34
Slide 36: Total stores FY23
897 TOTAL STORES FY23 +38 NEW STORES (INCLUDING +5 MY PIZZA KITCHENS) AVERAGE NUMBER OF STORES PER FRANCHISEE: 2.2 (+0.0) POPULATION: 31.6M 35,000+ PEOPLE PER STORE 35
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Slide 38: Europe Network Sales growth +3.8% (+$58.2m)
(1) FY22 FY23 Growth vs. Underlying Underlying FY22 Europe $ mil $ mil $ mil % Network Sales 1,536.8 1,594.9 +58.2 +3.8% Revenue 704.8 751.0 +46.2 +6.6% EBITDA 120.3 95.5 -24.8 -20.6% EBIT 78.9 52.9 -26.1 -33.0% EBITDA on Revenue 17.1% 12.7% EBIT on Revenue 11.2% 7.0% ▪ Network Sales growth +3.8% (+
Slide 39: Network Sales – key metrics
(1,2) NETWORK SALES – key metrics SALES growth – key metrics NETWORK STORE COUNT EXISTING AND NEW NETWORK SALES 1) FX translation headwind has been removed from the above by re-translating figures for prior-periods using FY23 FX rates 2) Where applicable, prior-period Online Sales and Online Sales G
Slide 40: Germany Benelux France
Germany Benelux France 416 TOTAL STORES FY23 502 TOTAL STORES FY23 489 TOTAL STORES FY23 +25 NEW STORES +17 NEW STORES +20 NEW STORES AVERAGE NUMBER OF STORES PER AVERAGE NUMBER OF STORES PER AVERAGE NUMBER OF STORES PER FRANCHISEE: FRANCHISEE: FRANCHISEE: 2.4 (+0.1) 2.7 (+0.1) 3.2 (+0.2) POPULATION
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Slide 42: Asia Network Sales growth +9.4% (+$90.3m)
(1) FY22 FY23 Growth vs. Underlying Underlying FY22 Asia $ mil $ mil $ mil % Network Sales 964.5 1,054.7 +90.3 +9.4% Revenue 742.5 815.1 +72.6 +9.8% EBITDA 129.8 122.3 -7.5 -5.8% EBIT 78.6 60.2 -18.4 -23.4% EBITDA on Revenue 17.5% 15.0% EBIT on Revenue 10.6% 7.4% ▪ Network Sales growth +9.4% (+$90.3
Slide 43: Network Sales – key metrics
(1,2) NETWORK SALES – key metrics SALES growth – key metrics NETWORK STORE COUNT EXISTING AND NEW NETWORK SALES 1) FX translation headwind has been removed from the above by re-translating figures for prior-periods using FY23 FX rates 2) Where applicable, prior-period Online Sales and Online Sales G
Slide 44: Japan Taiwan
Japan Taiwan 986 TOTAL STORES FY23 188 TOTAL STORES FY23 +69 NEW STORES +18 NEW STORES AVERAGE NUMBER OF STORES PER AVERAGE NUMBER OF STORES PER FRANCHISEE: FRANCHISEE: 4.7 (+0.6) 4.3 (-0.1) POPULATION: 124.6M POPULATION: 23.9M 126,000+ 127,000+ PEOPLE PER STORE PEOPLE PER STORE 43
Slide 45: Malaysia Singapore Cambodia
Malaysia Singapore CAMBODIA 253 TOTAL STORES FY23 42 TOTAL STORES FY23 9 TOTAL STORES FY23 +13 NEW STORES +4 NEW STORES NIL NEW STORES POPULATION: 34.3M POPULATION: 6.0M POPULATION: 16.9M 136,000+ 143,000+ 1,900,000+ PEOPLE PER STORE PEOPLE PER STORE PEOPLE PER STORE 44
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Slide 47: Underlying EPS 139.4c, -26.9% on FY22
▪ Underlying EPS 139.4c, -26.9% on FY22 ▪ Underlying EPS 5-year CAGR -1.8% ▪ Underlying EPS 10-Year CAGR +12.9% 46
Slide 48: Group - FY23 Dashboard
GROUP - FY23 DASHBOARD Store Additions Network Sales 139M 40056M @ANZ @ Europe @Asia Bet || 8 27% @ANZ @Europe @ Asia osama 13559 4,005.6M sos 43% ne 45% 3,9180M S TES 104m || 722 ope Ala 7123 Underlying EBIT Net CAPEX (Investing Activities) @ANZ @ Europe @Asia @Giobal 2629 @CAPEX which recycles @Di
Slide 49: FY23 Network Sales, FY23 Store Additions
FY23 NETWORK SALES FY23 STORE ADDITIONS 48
Slide 50: Network Sales – key metrics
(1-5) NETWORK SALES – key metrics SALES growth – key metrics ▪ Network Sales +2.2% (+$87.6m) – DPE is cycling an additional trading week and an FX translation headwind of c. $79m vs. FY22 (Network Sales +4.3% in constant currency) ▪ Group Online Sales +2.4%, noting a shift in ordering from delivery
Slide 51: Network store count existing and new network sales
(1,2) NETWORK STORE COUNT EXISTING AND NEW NETWORK SALES ▪ Group: +492 stores added to the network during ▪ Continued significant store growth, from both new FY23 (+205 organic stores and +287 acquired stores) and existing stores ▪ Asia: +104 new stores, plus +287 stores acquired from Malaysia, Sing
Slide 52: +395 net stores added to the Group during FY23
FY20 H1 21 FY21 H1 22 FY22 H1 23 FY23 European stores Franchised stores 1,060 1,105 1,174 1,198 1,267 1,278 1,314 Corporate stores 101 102 112 123 134 135 93 European Network Stores 1,161 1,207 1,286 1,321 1,401 1,413 1,407 Net stores added in period 64 46 125 35 115 12 6 ANZ stores +395 net stores
Slide 53: Statutory Profit Non-Recurring Costs
(1,2) Statutory Profit Non-Recurring Costs Statutory to Underlying Profit Reconciliation FY23 FY23 FY23 FY23 FY23 FY23 FY23 FY23 FY23 +/(-) FY22 Continuing Discontinued Denmark Non- Significant Non-Recurring Non-Recurring Underlying - Total Total Underlying Operations Operations Recurring Costs Char
Slide 54: Summary: ROE and ROCE
FY22 H123 FY23 FY22 H123 FY23 (1) Return on Equity Return on Capital Employed Underlying Underlying Underlying Underlying Underlying Underlying $ mil $ mil $ mil $ mil $ mil $ mil 12 Month Rolling NPAT (Before Minority Interest) 173.0 150.4 124.7 12 Month Rolling EBIT 262.9 232.1 201.7 Shareholders
Slide 55: Summary: Cash conversion and working capital
FY22 H123 FY23 FY22 H123 FY23 Cash Conversion Movement in Working Capital Underlying Underlying Underlying $ mil $ mil $ mil $ mil $ mil $ mil Operating cash flow before interest & tax 283.7 157.9 357.3 Trade and other receivables (16.0) (11.5) (7.3) Trade and other payables (44.0) 24.0 51.1 EBITDA
Slide 56: Summary: Interest coverage and net debt
FY22 H123 FY23 FY22 H123 FY23 (1) Interest Coverage Underlying Underlying Underlying Net Debt Underlying Underlying Underlying Pre AASB16 Pre AASB16 Pre AASB16 Pre AASB 16 Pre AASB 16 Pre AASB 16 $ mil $ mil $ mil $ mil $ mil $ mil 12 Month Rolling EBITDA (ex AASB16) 339.7 310.8 287.1 Non-current bo
Slide 57: Same Store Sales are calculated weekly, measured in local currency
▪ Same Store Sales are calculated weekly, measured in local currency ✓ Same Store Sales is the process of comparing year-on-year growth of existing, mature, stores ✓ Stores are included after two years of trading (either two years of DPE, or one year pre-acquisition plus one year of DPE) ✓ Where a d
Slide 58: Forward looking statements disclaimer
▪ 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 presentation
Slide 59: OHBeeoe
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