Domino's Pizza Enterprises Limited · ASX:DMP
Domino's Pizza Enterprises — H1 2023 Earnings Presentation
67 slides from Domino's Pizza Enterprises's earnings presentation, Feb 22, 2023
Slide 1: Domino's Pizza Enterprises Limited ASX market presentation cover letter
Domino’s Pizza Enterprises Limited 1/485 Kingsford Smith Drive Hamilton, QLD, Australia 4007 ACN: 010 489 326 www.dominos.com.au 22 February 2023 The Manager Market Announcements Office Australian Securities Exchange 4th Floor, 20 Bridge Street SYDNEY NSW 2000 Dear Sir Market presentation for the ha
Slide 2: Half-year results
Half-year results Period ending 01.01.2023
Slide 3: HOTT
HOTT SUS TNE DELIVERY
Slide 4: Group – value equation
Group – value equation Proximity to Customers – allows for quicker, more Fortressing – consistent delivery brings us closer experience Management is working with franchisees to Customers to deliver ▪ The Value Equation is at the heart of Domino’s strategy Improved customer ▪ During this Half, Domino
Slide 5: Group – key metrics
Group – key metrics H122 H123 Growth vs. H120 (1) Growth vs. H122 Actual Actual (Pre COVID to now) Network Sales $2,048.4m $1,966.3m -$82.1m -4.0% +$384.1m +24.3% Online Sales $1,597.7m $1,525.1m -$72.6m -4.5% +$394.7m +34.9% Same Store Sales Growth +2.8% -0.6% Network Store Count 3,227 stores 3,736
Slide 6: Group – EBIT performance – pre covid to now
Group – ebit performance – pre covid to now (1) +13.7% -1.5% ▪ 3-Year EBIT growth +13.7%, excluding Germany royalty payment step-up, Denmark investment and FX translation headwind ▪ 3-Year EBIT growth includes the benefit of Malaysia and Singapore acquisitions from December 2022, and Taiwan acquisit
Slide 7: Group – trading update
Group – trading update Trading Update Half Year Results First Weeks of Trade for H2 H122 H123 H221 H222 H223 (1) (2) (3) Actual Actual Actual YTD Actual YTD Actual YTD Network Sales Growth +11.1% -4.0% +20.9% +6.0% +4.2% Same Store Sales Growth +2.8% -0.6% +10.1% +1.7% -2.2% +129 stores +79 stores N
Slide 8: Group – short-term headwinds
Group – short-term headwinds Lower than anticipated SSS and pass-through of inflation affected earnings ▪ Response to inflation – Domino’s acted to offset rapidly increasing inflation, including through price rises ▪ After multiple buy cycles some of the initial positive effect unwound in December,
Slide 9: Group – recent performance achievements
Group – recent performance achievements ▪ Domino’s team members – Management recognises the extraordinary and ongoing efforts of our team members in stores and in corporate roles, navigating historic inflation to deliver for customers, franchisees and the greater business ▪ Digital technology innova
Slide 10: Group – network sales
Group – network sales (1) NETWORK SALES ONLINE SALES Online Sales H118 H119 H120 H121 H122 H123 +11.5% -4.5% +26.7% +21.0% $1,597.7m $1,525.1m +17.7% $1,432.5m +20.5% $1,130.4m $934.3m $794.0m 77.7% 78.0% 77.6% 63.6% 65.3% 71.4% (2) (3) Online Sales (4) Online % (5) ▪ Network Sales declined -4.0% (-
Slide 11: Group – store additions
Group – store additions NETWORK STORE COUNT EXISTING AND NEW NETWORK SALES (1) (1) (2) ▪ Group: +357 stores added to the network during ▪ Continued significant store growth, from both new H123 (+79 organic stores and +278 acquired stores) and existing stores ▪ Asia: +36 new stores, plus +278 stores
Slide 12: Group – H123 dashboard
Group – H123 dashboard Network sales Organic New store additions $1.97b +79 stores Underlying ebit (1) net capex (investing activities) $113.9m $65.4m 1) Underlying EBIT, excluding significant charges 2) Note a 3-Year Dashboard is also available in Appendix 3 11
Slide 13: Group – franchisee dashboard
Group – franchisee dashboard (1) (3) (2) (4) 1) Franchised Store Count – is based on closing period store counts as per Appendix 2 4) Franchisee profitability - includes 73% of stores that have submitted P&Ls during Q1 23 12-month 2) Number of stores per Franchisee, including Taiwan for all periods
Slide 14: Group financials
N GROUP FINANCIALS
Slide 15: Group – financial highlights (including fx)
Group – financial highlights (including fx) H122 H123 Growth vs. Underlying Underlying H122 $ mil $ mil $ mil % Network Sales 2,048.4 1,966.3 -82.1 -4.0% Revenue 1,206.6 1,154.5 -52.2 -4.3% EBIT 144.7 113.9 -30.8 -21.3% NPAT 91.3 71.7 -19.6 -21.5% EPS (basic) 105.5 cps 82.5 cps -23.0 cps -21.8% Divi
Slide 16: Group – geographic summary (including fx)
Group – geographic summary (including fx) H120 H121 H122 H123 Growth vs. Underlying Underlying Underlying Underlying H122 $ mil $ mil $ mil $ mil $ mil % Revenue Europe 281.0 324.8 361.0 364.3 +3.3 +0.9% ANZ 343.1 383.0 403.0 402.7 -0.3 -0.1% Asia 281.7 387.3 442.6 387.5 -55.1 -12.5% Total Revenue 9
Slide 17: Group – non-recurring costs
Group – non-recurring costs (1) ▪ $5.4m – ANZ Fast Food Industry Award class action legal defense costs (2) ▪ $3.2m – Acquisition and integration costs, primarily incurred in ANZ, relating to specialist advisors for the Malaysia, Singapore and Cambodia acquisitions ▪ $2.5m – EU Non-Recurring costs,
Slide 18: Group – free cash flow
Group – free cash flow (1) H1 21 H1 22 H1 23 Statutory Statutory Statutory $ mil $ mil $ mil Underlying EBITDA 218.2 212.8 182.3 Change in working capital (11.7) (57.2) (11.6) ▪ Working Capital is $11.6m higher than FY22. Primarily as a Profit on sale of non-current assets (13.2) (13.3) (11.4) resul
Slide 19: Group – investing activities (CAPEX)
Group – investing activities (CAPEX) ▪ H123 Net CAPEX excluding acquisitions $65.4m (Prior Half $66.1m) ▪ CAPEX which Recycles $29.9m (Prior Year $28.5m) ‒ Gross CAPEX $66.4m, including investment in new corporate stores (primarily Japan), franchisee loans for new and existing stores and franchisee
Slide 20: Group – balance sheet
Group – balance sheet vs. FY22 H123 FY22 $ mil $ mil $ mil ▪ Net Debt (1) $666.5m– $95.8m higher than FY22, primarily as a Cash & cash equivalents 76.9 143.7 66.8 Trade and other receivables 163.6 170.8 7.2 result of higher borrowings relating to the Malaysia and Singapore Inventories 30.9 58.7 27.9
Slide 21: Group – debt position
Group – debt position DPE strengthens its balance sheet & funding capability Banking Covenant Ratios H122 FY22 H123 12 Month Rolling EBITDA (ex AASB 16) $362.6m $339.7m $310.8m ▪ The Group raised new debt, with a 4-year term, to fund the Total Debt $598.5m $647.5m $810.2m acquisition of Malaysia and
Slide 22: Group – key financial ratios
Group – key financial ratios H122 FY22 H123 Underlying Underlying Underlying DPE Key Financial Ratios (1) Return on Equity 48.0% 42.3% 29.3% ▪ ROE lower, as a result of lower profits and a small dilution from the recent capital raising Return on Capital Employed 18.1% 16.8% 13.0% ▪ ROCE lower, due t
Slide 23: Group – underlying EPS
Group – underlying eps ▪ Underlying EPS 82.5c, -21.8% on H122 ▪ Underlying EPS 5-Year CAGR +2.9% ▪ Underlying EPS 10-Year CAGR +15.3% 22
Slide 24: Europe Performance
Dominos EUROPE PERFORMANCE
Slide 25: Europe financial highlights AUD – constant currency
Eu financial highlights AUD – constant currency (1) H122 H1 23 Growth vs. Underlying Underlying H122 Europe $ mil $ mil $ mil % Network Sales 759.0 769.0 +10.1 +1.3% Revenue 343.9 364.3 +20.4 +5.9% EBITDA 67.1 46.5 -20.6 -30.7% EBIT 47.4 25.6 -21.7 -45.8% EBITDA on Revenue 19.5% 12.8% EBIT on Revenu
Slide 26: Europe - Performance
Europe - Performance ▪ Our European business has faced significant geopolitical disruption, challenging macro- economic conditions, including navigating the highest levels of inflation across the Group ▪ Price increases to the customer has seen a decline in customer counts, particularly within deliv
Slide 27: Asia Performance
Dominos ASIA PERFORMANCE
Slide 28: Asia financial highlights AUD – constant currency
Asia financial highlights AUD – constant currency (1) H122 H1 23 Growth vs. Underlying Underlying H122 Asia $ mil $ mil $ mil % Network Sales 494.9 510.0 +15.1 +3.0% Revenue 391.6 387.5 -4.1 -1.0% EBITDA 67.1 64.1 -2.9 -4.4% EBIT 40.2 36.4 -3.8 -9.5% EBITDA on Revenue 17.1% 16.6% EBIT on Revenue 10.
Slide 29: Asia - Performance
Asia - Performance ▪ Our Markets in Asia are materially larger vs pre-COVID, with mature stores (+5 years) delivering strong returns for franchised and corporate operations ▪ Sales in Asia increased +3.0% on a constant currency basis ▪ The newly acquired markets (Malaysia and Singapore) are performi
Slide 30: Australia & New Zealand Performance
Australia & New Zealand Performance
Slide 31: ANZ – financial highlights
ANZ – financial highlights H122 H1 23 Growth vs. H120 H1 23 G Underlying Underlying H122 Underlying Underlying (Pr ANZ $ mil $ mil $ mil % $ mil $ mil $m Network Sales 689.6 687.3 -2.3 -0.3% 613.2 687.3 +74. Revenue 403.0 402.7 -0.3 -0.1% 343.1 402.7 +59. EBITDA 78.7 81.9 +3.3 +4.1% 76.8 81.9 +5.1 E
Slide 32: ANZ - Performance
ANZ - Performance ▪ EBIT grew +5.2% to $63.4 million, with Network Sales marginally lower (-0.3%), to $687.3 million ▪ Reinvestment in the franchise base (Project Ignite) has delivered network expansion, with +23 new stores opened in the Half, versus 23 in the prior Full Year (including +3 Mobile Pi
Slide 33: Domino's for GooD
Domino’s for GooD Environment, Social, Governance
Slide 34: Sustainability Report highlights
Sustainability Report highlights ▪ Submitted our Science Based Targets and developed our environmental strategy and climate roadmap ▪ Approaching our 2030 target of 40% female leadership across all regions ▪ Making strong advances on animal welfare through new initiatives and partnerships: our work
Slide 35: ESG - environmental strategy
ESG - environmental strategy Key focus areas and current actions ▪ Roadmaps for every Centre of Excellence that include near term targets and a clear direction for the markets towards 2030 ▪ Improving data quality and measurement to help us target our actions and report on progress ▪ Guidelines on s
Slide 36: Looking forward
Dominos LOOKING FORWARD
Slide 37: Rebuilding with customers first
Looking forward Rebuilding with customers first ▪ Commodity and labour increases are anticipated in the short term, continuing into FY24, albeit not as significant as previous increases passed through in FY23 ▪ There remains a potential for further, unanticipated inflationary pressures to affect uni
Slide 38: Domino's Value Tree
Slide 39: Domino's Value tree: store initiatives (NPS)
Domino’s Value tree: store initiatiVes (nPs) Store Initiatives ▪ Delivery times remain industry-leading through fortressing, e-bikes and Domino’s end-to-end ownership of the ordering experience ▪ Supply-chain initiatives, including the expansion of in-store dough making in Asia, will support operati
Slide 40: Domino's Value tree: Brand Positive
Domino’s Value tree: BranD PositiVe Digital ▪ Domino’s digital sales channels are performing strongly, led by the new- generation mobile application ▪ The new app is delivering a record proportion of online sales ▪ App users demonstrate a higher Customer Lifetime Value (CLV) through increased order
Slide 41: Domino's Value tree: inflation Busters
Domino’s Value tree: inflation Busters Pricing ▪ Menu and promotional pricing remains highly complex – balancing different cohorts, occasions and ordering channels ▪ Repeated buying cycles has provided Domino’s additional insights into the affect of pricing changes on customer behaviour ▪ These insi
Slide 42: Outlook
Dominos OUTLOOK ASIA PACIFIC | EUROPE
Slide 43: Group – future outlook
group – future outlook ▪ Europe milestone 3,050 stores by 2033 − Europe 2.2x current market size ▪ ANZ store target 1,200 by 2025-2028 − ANZ 1.3x current market size ▪ Asia milestone 3,000 stores by 2033 − Asia 2.1x current market size ▪ Group milestone 7,250 stores by 2033 − Group 1.9x current mark
Slide 44: 3-5 year group outlook
3-5 year group outlook H121 H122 H123 3-5 Year Actual Actual Actual Annual Outlook Same Store Sales Growth +8.5% +2.8% -0.6% +3-6% +131 stores +129 stores +79 stores New Organic Store Additions +8-10% of network +4.7% of network +4.0% of network +2.1% of network Net CAPEX(1) $36.4m $66.1m $65.4m $10
Slide 45: Conclusion: performance
Conclusion: performance ▪ Group Network Sales – were positive in Q2, however, not as strong as anticipated ▪ Inflation – Domino’s has seen a short-term decline in delivery customers and is rebalancing the value equation ▪ FX headwinds – c. $5m NPAT for H1, with the AUD strengthening against both the
Slide 46: Conclusion: outlook
Conclusion: outlook with new markets anD organic growth, Domino’s is now 1,140 stores (44%) larger than h120 ▪ People – Domino’s is confident in the power of our people to navigate these extraordinary times. Management is proud of their efforts to respond and lift our performance ▪ Performance – DPE
Slide 47: Dashboards
Dominos DASHBOARDS
Slide 48: Europe – dashboard (euro)
Europe – dashboard (euro) (1) (2) (3) (4) 1) H123 closing same-store count was 967 out of 1,413 total stores (68.4%) 3) Online Sales percentage calculated as total Online Sales divided by total Network Sales 47 2) Including sales via aggregator platforms 4) New organic stores include all new stores
Slide 49: Europe – region in focus
Europe – region in focus Germany Benelux France 416 TOTAL STORES H123 486 TOTAL STORES H123 484 TOTAL STORES H123 +8 NEW STORES NIL NEW STORES +11 NEW STORES AVERAGE NUMBER OF STORES PER AVERAGE NUMBER OF STORES PER AVERAGE NUMBER OF STORES PER FRANCHISEE: FRANCHISEE: FRANCHISEE: 2.4 (+0.1) 2.6 (+0.
Slide 50: Asia – dashboard (AUD including fx)
Asia – dashboard (AUD including fx) (1) (2) (3) (4) 1) H123 closing same-store count was 886 out of 1,417 total stores (62.5%) 3) Online Sales percentage calculated as total Online Sales divided by total Network Sales 49 2) Including sales via aggregator platforms from FY20 onwards 4) New organic st
Slide 51: Asia – region in focus
ASIA – region in focus Japan Taiwan 957 TOTAL STORES H123 181 TOTAL STORES H123 +24 NEW STORES +11 NEW STORES AVERAGE NUMBER OF STORES PER AVERAGE NUMBER OF STORES PER FRANCHISEE: FRANCHISEE: 4.3 (+0.2) 4.1 (-0.3) POPULATION: 126.2M POPULATION: 23.9M 132,000+ 132,000+ PEOPLE PER STORE PEOPLE PER STO
Slide 52: Asia – region in focus continued
ASIA – region in focus continued Malaysia Singapore 241 TOTAL STORES H123 38 TOTAL STORES H123 +1 NEW STORES NIL NEW STORES POPULATION: 32.8M POPULATION: 5.5M 136,000+ 145,000+ PEOPLE PER STORE PEOPLE PER STORE 51
Slide 53: ANZ – dashboard (AUD)
ANZ – dashboard (AUD) (1) (2) (3) (4) 1) H123 closing same-store count was 767 out of 906 total stores (84.7%) 3) Online Sales percentage calculated as total Online Sales divided by total Network Sales 52 2) Including sales via aggregator platforms 4) New organic stores include all new stores opened
Slide 54: ANZ – region in focus
ANZ – region in focus 906 TOTAL STORES H123 +23 NEW STORES AVERAGE NUMBER OF STORES PER FRANCHISEE: 2.2 (+0.0) POPULATION: 31.0M 34,000+ PEOPLE PER STORE 53
Slide 55: Appendix
Dominos APPENDIX
Slide 56: Appendix 1 – investor relations calendar
Appendix 1 – investor relations calendar ▪ May – ASEAN Investor Day (virtual) ▪ August 23 – DMP Full Year Results ▪ November 1 – DMP Annual General Meeting Clarification: FY22 Annual Report A graphic on page 15 of the Annual Report showing ‘APAC 107.3 million pizzas sold’ in FY22, reflected only ANZ
Slide 57: Appendix 2 – network store count
Appendix 2 – network store count H1 20 FY 20 H1 21 FY 21 H1 22 FY 22 H1 23 European stores Franchised stores 1,042 1,060 1,105 1,174 1,198 1,267 1,278 Corporate stores 81 101 102 112 123 134 135 European Network Stores 1,123 1,161 1,207 1,286 1,321 1,401 1,413 Net stores added in period 26 64 46 125
Slide 58: Appendix 3 – group 3-year performance dashboard
Appendix 3 – group 3-year performance dashboard $1,97b +339 stores (1) H121 $10.3m $6.8m $10.8m $8.5m $36.4m H122 $28.5m $21.0m $6.5m $10.1m $66.1m $113.9m H123 $29.9m $23.3m $6.7m $5.5m $65.4m CAPEX which Recycles Digital Capex Stay in Business CAPEX Other Investments 1) Underlying EBIT, excluding
Slide 59: Appendix 4 – group P&L highlights
Appendix 4 – group P&L highlights 2-Year Movement 3-Year Movement H1 22 H1 23 +/(-) H122 H1 21 +/(-) H121 H120 +/(-) H120 Underlying Underlying Underlying Underlying Underlying Underlying Underlying $ mil $ mil % $ mil % % % Network Sales 2,048.4 1,966.3 (4.0%) 1,843.0 6.7% 1,582.2 24.3% Revenue 1,2
Slide 60: Appendix 5 – group statutory to underlying reconciliation
Appendix 5 – group statutory to underlying reconciliation H122 H122 H122 H123 H123 H123 (1) +/(-) H122 Significant Significant Statutory Underlying Statutory Underlying Underlying Charges Charges $ mil $ mil $ mil $ mil $ mil $ mil % Network Sales 2,048.4 2,048.4 1,966.3 1,966.3 (4.0%) Revenue 1,206
Slide 61: Appendix 6 – group litigation update
Appendix 6 – group litigation update ▪ The Company rejects the allegations and has been defending the action vigorously ▪ The trial was held in November 2022 and a judgment is not expected to be delivered before June 2023 ▪ The statement of claim does not quantify any loss by the lead applicant or t
Slide 62: Appendix 6 – group litigation update continued
Appendix 6 – group litigation update continued ▪ Multiple separate proceedings have been brought in relation to matters which occurred before the Company's ownership of the Pizza Sprint company: ▪ In one proceeding brought by the French Ministry for the Economy and Finance, the Court ruled in favour
Slide 63: Appendix 7 – group financial ratios
Appendix 7 – group financial ratios H122 FY22 H123 H122 FY22 H123 (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) 193.2 173.0 150.4 12 Month Rolling
Slide 64: Appendix 8 – group financial ratios continued
Appendix 8 – group financial ratios continued H122 FY22 H123 H122 FY22 H123 Cash Conversion Movement in Working Capital Underlying Underlying Underlying $ mil $ mil $ mil $ mil $ mil $ mil Operating cash flow before interest & tax 140.0 283.7 157.9 Trade and other receivables (5.9) (16.0) (11.5) Tra
Slide 65: Appendix 9 – group banking covenant ratios
Appendix 9 – group banking covenant ratios H122 FY22 H123 H122 FY22 H123 Interest Coverage Underlying Underlying Underlying (1) 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 (
Slide 66: Appendix 10 – group network & same-store calculation
Appendix 10 – group network & same-store calculation ▪ 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 y
Slide 67: Disclaimer and important information
Disclaimer and important information ▪ 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 pro
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