Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Wendy's Co | form8-k_q12010slides.htm |
First Quarter 2010
Earnings Call & Webcast
Earnings Call & Webcast
May 13, 2010
Opening Comments
John Barker
SVP and Chief Communications Officer
SVP and Chief Communications Officer
2
§ Business Highlights - Roland Smith
− First Quarter 2010
− Strategic Sourcing Group (SSG)
§ Financial Results - Steve Hare
− First Quarter Consolidated Financial Overview
− Cash Flow and Debt Capitalization
− Refinancing
− Stock Repurchase and Dividend
− 2010 Financial Outlook
§ Brand and International Updates - Roland Smith
§ Q&A
Agenda
3
Wendy’s/Arby’s Group Reported Today:
§ First Quarter 2010 Results
§ Balance Sheet Highlights
§ Adjusted EBITDA
§ Selected Financial Highlights for each Brand
§ Form 10-Q
First Quarter 2010
4
Forward-Looking Statements and
Regulation G
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 operations. Those statements
constitute “forward-looking statements” within the meaning of the Private Securities Litigation
Reform Act of 1995 (the “Reform Act”). For all our forward-looking statements, we claim the
protection of the safe harbor for forward-looking statements contained in the Reform Act.
presentation, may contain statements that are not historical facts, including, importantly,
information concerning possible or assumed future results of our operations. Those statements
constitute “forward-looking statements” within the meaning of the Private Securities Litigation
Reform Act of 1995 (the “Reform Act”). For all our forward-looking statements, we claim the
protection of the safe harbor for forward-looking statements contained in the Reform Act.
Many important factors could affect our future results and could cause those results to differ
materially from those expressed in or implied by our forward-looking statements. Such factors,
all of which are difficult or impossible to predict accurately, and many of which are beyond our
control, include but are not limited to those identified under the caption “Forward-Looking
Statements” in our most recent earnings press release and in the “Special Note Regarding
Forward-Looking Statements and Projections” and “Risk Factors” sections of our most recent
Form 10-K and subsequent Form 10-Qs.
materially from those expressed in or implied by our forward-looking statements. Such factors,
all of which are difficult or impossible to predict accurately, and many of which are beyond our
control, include but are not limited to those identified under the caption “Forward-Looking
Statements” in our most recent earnings press release and in the “Special Note Regarding
Forward-Looking Statements and Projections” and “Risk Factors” sections of our most recent
Form 10-K and subsequent Form 10-Qs.
In addition, this presentation and certain information management may discuss in connection
with this presentation reference non-GAAP financial measures, such as earnings before
interest, taxes, depreciation and amortization, or EBITDA. Reconciliations of non-GAAP
financial measures to the most directly comparable GAAP financial measure are in the
Appendix to this presentation, and are included in the earnings release and posted on the
Investor Relations section of our website.
with this presentation reference non-GAAP financial measures, such as earnings before
interest, taxes, depreciation and amortization, or EBITDA. Reconciliations of non-GAAP
financial measures to the most directly comparable GAAP financial measure are in the
Appendix to this presentation, and are included in the earnings release and posted on the
Investor Relations section of our website.
First Quarter 2010 Highlights
Roland Smith
President & Chief Executive Officer
President & Chief Executive Officer
6
§ Adjusted EBITDA* grew 14.7% to $92.1 million
§ Wendy’s:
− Positive same-store sales
− 430 basis point restaurant margin improvement in
company-operated stores
company-operated stores
§ Arby’s:
– Sales and margins declined at Arby’s
− Focused on turnaround plan to re-energize the brand
− Continued $1 Value Menu rollout
– Transactions improved
*See Appendix.
First Quarter 2010 Business Overview
7
Wendy’s First Quarter 2010 Results
§ North America systemwide same-store sales increased 0.8%
− Same-store sales among strongest in the industry
− Impacted by severe weather in February
§ 430 basis point restaurant margin increase
8
Wendy’s First Quarter 2010
Marketing Calendar
January
February
March
Premium
Fish Fillet
99¢
9
Arby’s First Quarter 2010 Results
§ North America systemwide same-store sales declined 11.5%
§ Margin decreased due to sales deleveraging
10
January
February
March
Premium
Cod
Arby’s First Quarter 2010
Marketing Calendar
11
§ Formed a new independent purchasing cooperative,
Strategic Sourcing Group Co-op, LLC (SSG)
Strategic Sourcing Group Co-op, LLC (SSG)
§ Negotiates contracts for non-branded supplies and services
for both Wendy’s and Arby’s, such as equipment, kitchen
smallwares, furnishings, menuboards and signs, as well as
utilities and restaurant-level contract services
for both Wendy’s and Arby’s, such as equipment, kitchen
smallwares, furnishings, menuboards and signs, as well as
utilities and restaurant-level contract services
§ Commitment to fund $4.9 million of operating expense,
which was recorded as a charge in the First Quarter of 2010
and will be paid over a 24-month period
which was recorded as a charge in the First Quarter of 2010
and will be paid over a 24-month period
Strategic Sourcing Group
Financial Overview
Steve Hare
Chief Financial Officer
13
First Quarter 2010 Consolidated
Operating Results
Operating Results
14
*See Appendix.
First Quarter 2010 EBITDA and
Adjusted EBITDA*
Adjusted EBITDA*
15
Cash Flow - First Quarter 2010
16
Debt Capitalization
17
§ Planning to enter into a new $650 million Senior Secured
Credit Facility
Credit Facility
– $150 million Revolver
– $500 million Term Loan
§ The proceeds of the Term Loan will be used to:
– Refinance existing term loan of $251 million
– Refinance 6.25% senior notes due 2011 of $200 million
§ Enhances flexibility and addresses medium term debt
maturities
maturities
§ Potential annual interest expense savings
Refinancing
18
§ Stock Repurchase
– $250 million authorized for stock repurchases
– As of May 7, 2010, 40 million common stock shares
repurchased for $190.2 million, at an average per share
price of $4.76
repurchased for $190.2 million, at an average per share
price of $4.76
– Company may repurchase additional shares as market
conditions warrant through January 2, 2011
conditions warrant through January 2, 2011
§ Quarterly Cash Dividend
– $0.015 per share
– Payable on June 15, 2010 to stockholders of record as of
June 1, 2010
June 1, 2010
Stock Repurchase and Dividend
19
Financial Outlook
Source: U.S. Bureau of Labor Statistics, The Conference Board
Unemployment rate
remains high at 9.7%
Confidence improved in
March and April
March and April
U.S. Unemployment Rate Remains High, but Consumer Confidence
Improved in March and April
Improved in March and April
20
§ Positive Same-store Sales at Wendy’s
§ Negative Same-store Sales at Arby’s, but Improving
Year-over-Year
Year-over-Year
§ Continued G&A Savings
§ Total Capital Expenditures of $165 Million
– Open 12 new Wendy’s
– Remodel 100 Wendy’s and 100 Arby’s
§ Low-to-Mid Single Digit Growth in Adjusted EBITDA
– Excludes effect of 53rd week ($14 million in 2009)
– Excludes investment spending on Wendy’s breakfast
Financial Outlook 2010
Brand and International Update
Roland Smith
President & Chief Executive Officer
President & Chief Executive Officer
22
Wendy’s 2nd & 3rd Quarter 2010
Marketing Calendar
Marketing Calendar
April
May
June
Q3
23
§ Steady Improvement in Operations Excellence
– Number of “A” and “B” stores increased by 5 points
Wendy’s Continuing to Improve
Restaurant Operations
Q1 2008
Q4 2009
Q1 2010
33%
68%
73%
24
§ 100 remodels in 2010
– Focusing on “Curve” and “Tower” upgrades
Curve
Tower
Wendy’s Remodel Update
26
§ “Real, Quality, Fresh” Positioning
§ Key Initiatives
– 2010 First Quarter: Tested new menu
and simplified operations
and simplified operations
– 2010 Second and Third Quarters: Beginning to
introduce new menu in 3 existing breakfast
markets
introduce new menu in 3 existing breakfast
markets
– 2010 Fourth Quarter: Plan to expand into
additional company and franchise markets
additional company and franchise markets
– Late 2011: begin national introduction
Wendy’s Breakfast Update
26
§ Execute Turnaround Plan:
– Hire an experienced President
– Expand value strategy
– Validate brand positioning
– Increase media efficiency
– Improve advertising effectiveness
– Revitalize product innovation
– Launch a three-year remodeling program
Arby’s 2010 Initiatives
27
§ Quick-Service Restaurant Industry
Veteran Returns Home to the
Arby’s Brand
Veteran Returns Home to the
Arby’s Brand
§ Extensive Experience Leading
Successful, High Performance
Organizations
Successful, High Performance
Organizations
– President of Church’s Chicken
– President and CEO of Susan G. Komen
– CEO of Catalytic Ventures
– Market Research Manager for the Arby’s
franchise marketing association (AFA)
franchise marketing association (AFA)
– Vice President Product Development &
Strategic Planning for AFA
Strategic Planning for AFA
Arby’s New President
Hala Moddelmog
Hala Moddelmog
28
SSS = -8.4%
SSS = -11.6%
SSS = -12.6%
Arby’s Value Strategy Driving
Transaction Improvement
Transaction Improvement
29
§ Increased National Media Rate from 1.2% to 2.4%
§ Revised Creative to Focus on Quality Products and
Value
Value
Arby’s Media and Advertising
30
Arby’s 2nd & 3rd Quarter 2010
Marketing Calendar
Marketing Calendar
April
May
June
Beef ‘n Cheddar
Prime Cut™ Chicken
Q3
National Advertising
(4/11-5/8)
National
Advertising
Advertising
(7/18-8/14)
31
Pinnacle Remodel
Arby’s Remodel Update
New Pinnacle
§ 100 Remodels in 2010
§ Three-year Remodeling Program
32
§ First dual-branded Wendy’s and
Arby’s restaurant opened in
Dubai on May 11, 2010
Arby’s restaurant opened in
Dubai on May 11, 2010
§ Al Jammaz Group (franchisee)
planning to open approximately
80 dual brand restaurants over
the next 10 years in the Middle
East
planning to open approximately
80 dual brand restaurants over
the next 10 years in the Middle
East
– Initial focus on development in
United Arab Emirates
United Arab Emirates
Dual-Branded Restaurant in Dubai
International Update
33
§ Opened Second New Restaurant
in Singapore
in Singapore
– Kopitiam franchisee plans to open
35 total restaurants over 10 years
35 total restaurants over 10 years
§ 2010 Plans
– Existing franchisees expected to
open 35 to 45 new restaurants
open 35 to 45 new restaurants
– Targeting development agreements
for approximately 400 restaurants
for approximately 400 restaurants
– Plan to enter 3 to 4 new countries
– Identifying new franchise partner for
Japan
Japan
New Wendy’s Restaurant in Singapore
New Wendy’s Restaurant in Mexico
International Update
34
§ Strong First Quarter 2010 Adjusted EBITDA* Growth
of 14.7%
of 14.7%
§ On Track with Wendy’s Brand Revitalization and Margin
Improvement
Improvement
§ Early Stage Turnaround for Arby’s
§ Formation of Strategic Sourcing Group
§ Long-Term Growth from New Investments
– Breakfast, Remodels and International
§ Returning Capital to Stockholders
§ Deliver Low-to-Mid Single Digit Growth in 2010
Adjusted EBITDA
Adjusted EBITDA
*See Appendix.
Summary
35
Upcoming Events
§ Stockholder Meeting - May 27 in New York
§ Oppenheimer Conference - June 29-30 in Boston
§ Analyst Day - November 18 in Dublin, OH
www.wendysarbys.com
Q&A
Appendix
38