Wingstop Inc. · NASDAQ:WING
Wingstop — Investor Presentation (January 2018)
37 slides from Wingstop's investor presentation, Jan 8, 2018
Slide 1: January 2018 Investor Presentation
0 JANUARY 2018 INVESTOR PRESENTATION
Slide 2: Forward-Looking Statements
1 Forward-Looking Statements This presentation contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact or relating to present facts or current conditions included in this presentation are forward-looking statements. For
Slide 3: Category of One
2 CATEGORY OF ONE
Slide 4: 2017 Tested the Strength of Our Model
3 Challenging Backdrop • 40%+ wing inflation with record wing costs; peak food cost impact of 680 bps • Post-election environment resulted in negative Q1 SSS • 135(2) net new openings; 13.5%(1) growth • 14th consecutive year of positive SSS • Q4 SSS growth of 5.2% • Q4 system-wide sales growth of 15
Slide 5: Long Track Record of Outstanding Results Continues
4 LONG TRACK RECORD OF OUTSTANDING RESULTS CONTINUES Notes: (1) Three-year period ended September 30, 2017. (2) Refer to Adjusted EBITDA reconciliation in Appendix. 3 Year CAGR(1) Unit Development 17% System-Wide Sales 18% Revenue 15% Adjusted EBITDA(2) 20%
Slide 6: SSS Outpace Top Industry Brands
5 Source: Company filings. Notes: (1) Domestic system-wide (2) Americas (3) Total System (4) North America 2014 2013 2012 2012 – 2016 Stacked Same Store Sales SSS OUTPACE TOP INDUSTRY BRANDS 2015 (1) (1) (3) (1) (1) (3) (4) (3) (1) (2) 47.3% 38.5% 29.0% 19.7% 17.0% 16.7% 14.0% 12.1% 9.8% 3.2% 2.0% (
Slide 7: Long-Term Growth Drivers
6 LONG-TERM GROWTH DRIVERS National Advertising Digital Expansion Delivery International
Slide 8: National Advertising
7 NATIONAL ADVERTISING NATIONAL ADVERTISING
Slide 9: Successful National Advertising Rollout with Upside Opportunity
8 SUCCESSFUL NATIONAL ADVERTISING ROLLOUT WITH UPSIDE OPPORTUNITY 2017 National Advertising Launch • Launched mid-February • Reach of 80% adults 18-49 • Cadence of 2-3 weeks on/off • Aided brand awareness improvement of 500 bps 2017 2018 2019 Future of National Ad Fund • National Ad Fund will grow w
Slide 10: Sales Trends Pre-National Advertising Rollout
9 4.9% 6.5% 4.6% -2.1% -9.1% -9.6% -6.6% 6.9% -4.7% 12.1% -2.6% -8.9% -12.1% -5.5% -9.7% -4.6% -8.6% -9.2% -8.7% -12.2% -12.7% -15.5% -5.5% -5.3% -9.2% -10.5% -11.8% -3.4% -10.6% -6.6% -15.8% -4.5% -16.8% -11.8% -9.0% -5.7% -9.3% -17% to -12% -12% to -8% -8% to 0% 0% to 5% 5% to 13% Wingstop SSS var
Slide 11: Sales Trends Post-National Advertising Rollout
10 7.1% 30.9% 1.7% 11.4% 11.9% 27.4% 3.0% 7.9% 10.9% 4.3% 11.1% 1.0% 7.5% 10.6% 30.4% 17.0% 55.3% 8.3% 17.9% 6.7% 14.2% 7.9% 11.4% 9.8% 22.9% 23.6% 17.3% 32.6% 32.9% 7.2% 4.6% 25.4% 16.4% 27.3% 9.5% 22.8% 1.5% Wingstop SSS variance to the APT Index - four weeks ended December 16, 2017 SALES TRENDS P
Slide 12: Delivery
11 DELIVERY
Slide 13: Early Success in Initial Delivery Test Markets
12 • Initial test market of Las Vegas market experienced 10%+ incremental sales lift • Expanded test in late Q4 to Chicago and Austin markets • Strategic partnership with DoorDash • Likely rollout market-by-market beginning late 2018 / early 2019 EARLY SUCCESS IN INITIAL DELIVERY TEST MARKETS -10.00
Slide 14: Digital
13 DIGITAL
Slide 15: Poised for Continued Digital Growth
14 16% 17% 18% 19% 20% 21% 22% - 50 100 150 200 250 300 350 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 T o tal O n line S al e s % S to re C o u n t Less than 10% Between 10-15% Between 15-20% Between 20-25% Greater than 25% Total Digital Sales % POISED FOR CONTINUED DIGITAL GROWTH Sources: (1) As of q
Slide 16: On Our Way to Best in Class Digital Sales
15 ON OUR WAY TO BEST IN CLASS DIGITAL SALES Sources: (1) Q4 2016 earnings call transcript. (2) Papa John’s Investor Presentation, Nov 2017. (3) Q3 2017 earnings call transcript. (4) Q4 2017 earnings call transcript. (1) (2) (3) (3) (3) (3) 0% 10% 20% 30% 40% 50% 60% (4) Potential impact from delive
Slide 17: Meeting Digital Guests Where They Are
16 MEETING DIGITAL GUESTS WHERE THEY ARE First to launch: • Bot technology and customizable ordering on Facebook Messenger, Twitter and Amazon Alexa • Order directly from your GM vehicle via OnStar Marketplace
Slide 18: International
17 INTERNATIONAL
Slide 19: Vision: Top Global Restaurant Brand
18 VISION: TOP 10 GLOBAL RESTAURANT BRAND Note: Unit counts as shown on most recent 10-Q or 10-K, except for the following: (1) Source - http://www.subway.com/en-us/exploreourworld 25.8 14.2 13.9 4.2 7.6 7.2 5.5 9.0 2.6 6.7 6.5 18.3 22.7 13.4 16.9 8.9 8.6 8.9 3.4 5.4 44.1 36.9 27.3 21.1 16.6 15.7 14
Slide 20: Strong Emerging International Business
19 STRONG EMERGING INTERNATIONAL BUSINESS Market (Date Open) Current Store Count (1) Potential Store Count (2) Mexico (11/09) 60 200 Indonesia (6/14) 21 75 Philippines (7/14) 11 50 Singapore (12/13) 5 15 UAE (4/15) 4 20 Malaysia (6/17) 2 50 Saudi Arabia (7/17) 1 125 Colombia (12/17) 2 30 Panama (201
Slide 21: Compelling SSS Growth and Unit Level Economics
20 COMPELLING SSS GROWTH AND UNIT LEVEL ECONOMICS 4.9% 11.2% 13.4% 3.9% 15.3% 9.9% 2012 2013 2014 2015 2016 2017 International SSS(1) Momentum Market Sales to Investment Ratio (2) Mexico 2.0:1 Indonesia 2.0:1 Philippines 1.5:1 Singapore 3.5:1 UAE 1.5:1 Malaysia 4.0:1 Saudi Arabia 2.0:1 United States
Slide 22: With Proven Portability to Meet Local Market Needs
21 FAST CASUAL SPORTS – CASUAL DINING • Contemporary design • Order at counter • Table delivery and beer (optional) • Digital menu boards • 50-70 seats • Sports theme design • Table service • Full bar • 20+ TV monitors & audio • 150-200 seats WITH PROVEN PORTABILITY TO MEET LOCAL MARKET NEEDS
Slide 23: Proven International Model - Mexico
22 • First Wingstop Opened in 2009 • 60 restaurants as of 12/30/2017 • Sports – Casual Dining Model • Clear market leader chicken wing concept 10 14 18 24 34 44 60 2011 2012 2013 2014 2015 2016 2017 2011 2012 2013 2014 2015 2016 2017 PROVEN INTERNATIONAL MODEL - MEXICO Total Store Count AUV and Same
Slide 24: Proven International Model - Indonesia
23 5 10 15 21 2014 2015 2016 2017 2015 2016 2017 PROVEN INTERNATIONAL MODEL - INDONESIA Total Store Count AUV and Same Store Sales Growth • First Wingstop Opened in 2014 • 21 restaurants as of 12/30/2017 • Fast Casual Model • 20%+ Delivery Sales Mix 22% 35% 23% AUV Market Overview
Slide 25: Proven Portability with Significant Whitespace
24 Americas Market Consumption Brazil 39kg Canada 32kg Colombia/Panama 31kg PROVEN PORTABILITY WITH SIGNIFICANT WHITESPACE Source: EOCD-FAO Agricultural Outlook 2015. Note: (1) Unit data as of Q3’15; Poultry consumption in estimated average kilograms per capita from 2012 to 2014. Signed/to be launch
Slide 26: Distrito Federal, Mexico
istrito Federal, Mexico D See as
Slide 27: Distrito Federal, Mexico
1. a oe < | _ a = Distrito Federal, Mexico.
Slide 28: Manila, Philippines
27 Manila, Philippines
Slide 29: Long-Term Growth Drivers
28 LONG-TERM GROWTH DRIVERS National Advertising Digital Expansion Delivery International
Slide 30: Global Momentum
29 53 64 82 118 139 115 4 10 20 24 20 32 57 74 102 142 159 147 2012 2013 2014 2015 2016 2017 Domestic International 274 363 503 530 518 445 107 136 268 249 359 596 381 499 771 779 877 1041 2012 2013 2014 2015 2016 2017 Domestic International GLOBAL MOMENTUM Global Gross New Unit Openings Global Rest
Slide 31: Favorable Trends in Wings
30 FAVORABLE TRENDS IN WINGS Fresh Jumbo Wing Price Per Pound $1.25 $1.35 $1.45 $1.55 $1.65 $1.75 $1.85 $1.95 $2.05 $2.15 $2.25 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2016 2017
Slide 32: Best in Class Unit Level Economics
31 Franchisee Year 2 Target(1) Domestic System Average(4) Unit Economics AUV $890k $1.1M Investment Cost(2) $370k Unlevered Year 2 COC Return(3) 35%-40% 50%+ BEST IN CLASS UNIT LEVEL ECONOMICS Notes: (1) AUV based on year 2 sales volumes for the 2014 vintage years. (2) Investment cost based on last
Slide 33: Shareholder Friendly Model
32 5.2x 2.4x 5.0x 3.4x Q1 2015 Post Recap. Q2 2016 Q2 2016 Pro- Forma Q3 2017 97.1 95.9 94.0 90.6 71.4 EBITDA Growth and Cash Generation Support Return of Capital and Deleveraging (5) $1.83 Per Share Dividend (2) (2) (4) % LTM Q3 2017 Cash Conversion(1) $2.90 Per Share Dividend Net Debt / LTM Adjust
Slide 34: Attractive Business Model and Long-Term Financial Targets
33 Disciplined Unit Growth Strong Same Store Sales Growth Steady, Reliable Profit Growth + = ATTRACTIVE BUSINESS MODEL LONG-TERM GROWTH TARGETS UNIQUELY POSITIONED FRANCHISE MODEL LONG-TERM FINANCIAL TARGETS* *These are not projections; they are goals and are forward-looking, subject to significant
Slide 35: Appendix
34 APPENDIX
Slide 36: Historical Adjusted EBITDA Reconciliation
35 (1) In $000s Year Ended Dec. 28, 2013 Year Ended Dec. 27, 2014 Year Ended Dec. 26, 2015 Year Ended Dec. 31, 2016 YTD Sept. 26, 2015 YTD Sept. 24, 2016 YTD Sept. 30, 2017 Net income 7,530 8,986 10,106 15,434 6,311 11,122 16,807 Interest expense, net 2,863 3,684 3,477 4,396 2,764 2,858 3,908 Income
Slide 37: Net Debt Reconciliation
36 In $000s June 25, 2016 Adjustments for Refinance and Dividend(1) Q2 Pro-Forma Ending Balance September 30, 2017 Total Debt 85,500 79,500 165,000 140,625 Cash and Cash Equivalents 10,014 (3,684) 6,330 4,589 Net debt 75,486 83,184 158,670 136,036 NET DEBT RECONCILIATION Note: (1) Adjusted for proce