Wendy's Company (the) · NASDAQ:WEN
Wendy's Company (the) — Wendy's/Arby's Group — Q4 2010 Earnings Presentation
36 slides from Wendy's Company (the)'s earnings presentation, Mar 3, 2011
Slide 1: Fourth Quarter and Full-Year 2010 Earnings Call
Fourth Quarter and Full-Year 2010 Earnings Call March 3, 2011
Slide 2: Opening Comments
Opening Comments John Barker SVP and Chief Communications Officer
Slide 3: Business Highlights and Agenda
Business Highlights — Roland Smith — Key fourth quarter and full-year 2010 results — Update on Arby’s Financial Results and Outlook — Steve Hare — Fourth quarter and full-year 2010 financial overview - Cash flow and debt capitalization — 2011 Outlook Wendy’s Key Initiatives and Global Expansion — Ro
Slide 4: 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 5: Business Highlights
Business Highlights Roland Smith President & Chief Executive Officer
Slide 6: Key Results by Brand - Q4 and Full-Year 2010
Key Results by Brand - Q4 and Full-Year 2010 * *Restaurant Margin adjusted to exclude breakfast impact of 0.4% in Q4 and 0.4% for full-year 2010. *
Slide 7: Q4 and Full-Year 2010 Results
Q4 and Full-Year 2010 Results *See Appendix for adjustments, which include: PY results adjusted to exclude 53rd week of $13.6 million.
Slide 8: Update on Arby's
Update on Arby’s • Announced on January 20 th that we are exploring strategic alternatives for Arby’s, including a sale • Re-launch of the brand with national advertising began on February 27 th
Slide 9: 2010 Results and 2011 Outlook
2010 Results and 2011 Outlook Steve Hare Chief Financial Officer
Slide 10: Fourth Quarter and Full-Year 2010 Results
Fourth Quarter and Full-Year 2010 Results *See Appendix.
Slide 11: 2010 Cash Flow
(S in Millions) 2010 Cash Flow from Operations $ 226.3 Capital Expenditures, net (148.0) Proceeds from Dispositions 5.7 Debt Principal Proceeds, net of Payments 22.9 Share Repurchases (173.5) Dividends to Shareholders (27.6) Investment Activities, Net a 32.2 Other Financing / Investing Activities (1
Slide 12: Consolidated Debt
Consolidated Debt *See Appendix.
Slide 13: 2011: Transition Year
• Pursuing strategic alternatives for Arby’s, including a potential sale • Reducing corporate G&A to support single brand 2011: Transition Year
Slide 14: Benefits of Potential Sale of Arby's
Sale expected to be accretive to net income and free cash flow Benefits of Potential Sale of Arby’s • Ability to focus resources on the Wendy’s brand • Reduce corporate G&A to support a single brand • Reduce capitalized lease obligations • Reduce future capital expenditures • Proceeds from sale woul
Slide 15: Reduce G&A to Support Single Brand
Reduce G&A to Support Single Brand • In 2010, approximately 1/3 of our $417 million G&A expenses related to Arby’s • Arby’s G&A included direct G&A as well and allocation of indirect support center G&A • Assuming a sale of Arby’s, direct and indirect G&A related to Arby’s expected to transfer to the
Slide 16: 2011 Outlook
2011 Outlook • Expect $345-355 million of pro forma (1) Company EBITDA • Key Assumptions: – Wendy’s same-store sales growth +1% to +3% – Wendy’s company-operated restaurant margin (2) improvement of 30 to 60 basis points • Commodities increasing 2-3% – Capital expenditures of $145 million ( 1) Assum
Slide 17: Uses of Capital 2011 and beyond
Uses of Capital 2011 and beyond • Investments in Organic Growth & Operations – Breakfast (new kitchen equipment, coffee program, menuboards) – Remodeling – POS/restaurant technology – New restaurant development - North America – Expansion in international markets • Common Stock Repurchase and Divide
Slide 18: Wendy's Initiatives & Global Expansion
Wendy’s Initiatives & Global Expansion Roland Smith President & Chief Executive Officer
Slide 19: Wendy's Key 2011 Initiatives
Drive Positive Same-Store Sales Wendy’s Key 2011 Initiatives • Reinforce “Real” Brand Positioning • Introduce New Dave’s Hot ‘N Juicy Cheeseburger • Launch New Products & Reinforce “My 99” • Expand Breakfast Menu • Deliver Operational Excellence • Remodel Facilities • Prepare for New Restaurant Grow
Slide 20: Slide 20
Slide 21: Dave's Hot 'N Juicy Cheeseburgers National Launch
National Launch 2 nd Half 2011 • Fresh, never frozen, 100% pure North American beef • 40% thicker patty • Quality toppings • Crinkle-cut pickle • Red onion • Toasted and buttered bun Dave’s Hot ‘N Juicy Cheeseburgers Feature:
Slide 22: Gold Hamburger Test Results
Gold Hamburger Test Results 4 Week Base 1 st Media Flight 2 nd Media Flight Dave’s Hot n’ Juicy Cheeseburgers Test Market Average Unit Sales (vs base) +27%
Slide 23: Wendy's New Products and My 99 Everyday Value Menu
Seasonal Salads Fish & Chips Fresh Berry Frosty Asiago Chicken Club Wendy’s New Products and My 99 Everyday Value Menu Seasonal Salads Fish & Chips Fresh Berry Frosty Asiago Chicken Club
Slide 24: Wendy's Breakfast Opportunity
Wendy’s Breakfast Opportunity • Wendy’s is the only major QSR hamburger chain with an opportunity to introduce breakfast • AUVs $1.4 million without breakfast • Breakfast can add $140,000-$150,000 to AUVs in the near-term
Slide 25: 2011 Breakfast Expansion Timeline
1,000 STORES CONVERT 300 OLD MENU STORES NEW MENU LAUNCH ADDITIONAL MARKETS 2011 Breakfast Expansion Timeline Q4 Q2 Q3 Q1 YE LOUISVILLE & SAN ANTONIO • Kansas City • Phoenix • Pittsburgh • Shreveport
Slide 26: Wendy's Facility Remodels and New Designs
Wendy’s Facility Remodels and New Designs Next Generation Designs in process 100 Remodels planned for 2011 75 to be in new design
Slide 27: North America Store Growth
~6,000 store base North America - Store Growth 1,000 new stores
Slide 28: 8,000 Store Opportunity
8,000 store opportunity 8,000 store opportunity
Slide 29: Recent International Announcements
Recent International Announcements Philippines • Expanding existing development agreement with Wenphil – Adding 44 new restaurants for a total of 75 Wendy’s locations in the country Japan • New joint venture agreement with Higa Industries Co., Ltd – Leading food importer and distributor – Successful
Slide 30: International Development Pipeline
International* Development Pipeline ~1,000 *excludes Canada.
Slide 31: Growth Initiatives Summary
Growth Initiatives Summary • Introduce exciting, new products • Expand dayparts - especially breakfast • Focus on operational excellence • Modernize our facilities • Pursue global expansion Average annual EBITDA growth of 10-15%, beginning in 2012
Slide 32: Recent and Upcoming Events
Recent and Upcoming Events • January 27 Investor Day • March 9 Bank of America Merrill Lynch 2011 Consumer Conference • March 14 Roth Capital Annual Orange County Growth Stock Conference • March 28 J.P. Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum 2011 • May 10 Q1 Earnings Re
Slide 33: Wendy's/Arby's Group
\ WENDY'S ARBY'S GROUP SERVING FRESH IDEAS DAILY.
Slide 34: Wendy's/Arby's Group
\ WENDY'S ARBY'S GROUP SERVING FRESH IDEAS DAILY.
Slide 35: Reconciliation of Company-Operated Restaurant Margin
Reconciliation of Company-Operated Restaurant Margin to Adjusted Company-Operated Restaurant Margin (Unaudited) Wendy's Fourth Quarter ‘Twelve Months Preliminary ‘Actual Preliminary ‘Actual 2010 2009 2010 2009 Company-operated restaurant margin 14.0% 15.9% 14.8% 149% Incremental advertising for Wend
Slide 36: EBITDA Reconciliation
(In Thousands) Fourth Quarter Twelve Months (Unaudited) 2010 (13 weeks) 2009 (14 weeks) 2010 (52 weeks) 2009 (53 weeks) EBITDA $ 85,824 $ 82,619 $ 384,037 $ 384,359 Depreciation and amortization (44,724) (46,882) (182,172) (190,251) Impairment of long-lived assets (28,053) (51,024) (69,477) (82,132)