Fourth Quarter 2012 Earnings Conference Call February 28, 2013 Exhibit 99.1 © 2013 Oldemark LLC |
© 2013 Oldemark LLC JOHN BARKER Chief Communications Officer 2 |
Today’s Agenda Opening Comments Emil Brolick Financial Update Steve Hare CEO Overview Emil Brolick Q&A 3 |
This presentation, and certain information that management may discuss in connection with this presentation, contains certain statements that are not historical facts, including 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 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 news release issued on February 28, 2013 and in the “Special Note Regarding Forward-Looking Statements and Projections” and “Risk Factors” sections of our most recent Form 10-K / 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 adjusted earnings before interest, taxes, depreciation and amortization, or adjusted EBITDA, and adjusted earnings per share. Adjusted EBITDA and adjusted earnings per share exclude certain expenses, net of certain benefits. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are provided in the Appendix to this presentation, and are included in our news release issued on February 28, 2013 and posted on www.aboutwendys.com. Forward-Looking Statements and Non-GAAP Financial Measures 4 |
EMIL BROLICK President & CEO 5 © 2013 Oldemark LLC |
FY Adjusted EBITDA* $333.3 mil vs. $331.1 mil Q4 Adjusted EBITDA* $ 95.9 mil vs. $ 80.9 mil FY Adjusted EPS* $0.17 vs. $0.15 FY SSS 1.6% vs. 2.0% Q4 SSS (0.2)% vs. 5.1% 2012 and Fourth-Quarter Highlights 6 2012 2011 *See reconciliation of Adjusted EBITDA from continuing operations and Adjusted EPS in the appendix. Doubled Quarterly Dividend Rate in Q4 2012: $0.04 per share |
7 Core Organic Growth Strategies Shareholder Value-Enhancing Initiatives Image / Experience Activation Restaurant Ownership Optimization Financial Management Global Growth Global Growth Restaurant Utilization & Daypart Expansion New Restaurant Development North America Same-Store Sales Growth |
PRICE New QSR Quality at QSR Price PRODUCT Play a different game … Superior perceived quality, competitive price PEOPLE 5-Star Performers PERFORMANCE Keeping the brand promise PROMOTION Strategically driven, tactically brilliant PLACE The complete brand experience 8 Enabling Profitable Growth THE RECIPE TO WIN |
Product / Price Segmentation Core and LTO Innovation Value Menu High Low 9 |
10 Right Price, Right Size |
Innovation: Premium Limited-Time Offerings 11 New QSR Quality at a QSR Price |
Image Activation Update 12 2011: 10 company prototypes 2012: 48 company Tier I reimages Reimages averaging +25% sales growth |
2013 Company Image Activation 13 Estimates based on Company’s current outlook. 32 Tier II Remodels in 2013 20 Tier III Remodels in 2013 Tier II Tier III |
Image Activation Multi-Year Growth Plan Image Activation Multi-Year Growth Plan 14 Cumulative IA Restaurants 10 76 301 766 1,331 Image Activation Progress by Year-End 2015: Note: New Company restaurants were Image Activation building design beginning in 2012; 2 of 45 new Franchise restaurants were Image Activation in 2012. Estimates based on Company’s current outlook. 10 48 100 200 200 100 200 300 20 16 25 69 45 40 40 40 2011 2012 2013 2014 Fr. New Co. New Fr. Reimage Co. Reimage 25 25 50% of Company restaurants 1 out of 5 of the Wendy’s System restaurants 2015 |
STEVE HARE Chief Financial Officer 15 © 2013 Oldemark LLC |
Q4 2012 Financial Summary 16 Q4 2012 Q4 2011 Better/ (Worse) Sales 554.0 $ 538.5 $ 15.5 $ Franchise revenues 75.9 76.5 (0.6) Total revenues 629.9 $ 615.0 $ 14.9 $ growth rate 2.4% Adjusted EBITDA from continuing operations* 95.9 $ 80.9 $ 15.0 $ Adjusted EPS* 0.09 $ 0.04 $ 0.05 $ (Unaudited) ($ in millions except per share amounts) *See reconciliation of Adjusted EBITDA from continuing operations and Adjusted EPS in the appendix. *See reconciliation of Adjusted EBITDA from continuing operations and Adjusted EPS in the appendix. |
FY 2012 Highlights 17 2012 North America Same-Store Sales 1-Year 2-Year 2012 Company Restaurant Margin 2012 14.0% 2011 14.0% Franchise 1.6% 3.5% 3.6% Company-Operated 1.6% |
FY 2012 Financial Summary 18 18 2012 2011 Better/ (Worse) Sales 2,198.3 $ 2,126.6 $ 71.7 $ Franchise revenues 306.9 304.8 2.1 Total revenues 2,505.2 $ 2,431.4 $ 73.8 $ growth rate 3.0% Adjusted EBITDA from continuing operations* 333.3 $ 331.1 $ 2.2 $ Adjusted EPS* 0.17 $ 0.15 $ 0.02 $ ($ in millions except per share amounts) *See reconciliation of Adjusted EBITDA from continuing operations and Adjusted EPS in the appendix. |
Income from Continuing Operations and Special Items 20 (Unaudited) ($ in Thousands, Except per Share Amounts) Per share Per share Per share Per share Adjusted income and adjusted earnings per share from continuing operations 33,629 $ 0.09 $ 16,425 $ 0.04 $ 65,316 $ 0.17 $ 62,080 $ 0.15 $ (Less) plus: Loss on early extinguishment of debt - - - - (46,547) (0.12) - - Facilities relocation costs and other transactions (8,311) (0.02) (9,288) (0.02) (25,349) (0.07) (28,514) (0.07) Gain on sale of investment, net - - - - 17,978 0.05 - - Impairment of long-lived assets (8,216) (0.02) (2,847) (0.01) (13,017) (0.04) (7,936) (0.02) Benefits of prior years' tax matters 5,439 0.01 - - 7,620 0.02 - - Dividend from Arby's 2,868 0.01 - - 2,868 0.01 - - Costs associated with closed restaurants in other operating expense, net - - - - (911) (0.00) - - Arby's indirect corporate overhead in general and administrative (G&A) - - - - - - (9,140) (0.02) SSG purchasing cooperative expenses in G&A - - - - - - 1,422 0.00 Total adjustments (8,220) (0.02) (12,135) (0.03) (57,358) (0.15) (44,168) (0.11) Income from continuing operations 25,409 0.07 4,290 0.01 7,958 0.02 17,912 0.04 Net income (loss) from discontinued operations 979 0.00 (306) (0.00) 1,509 0.00 (8,037) (0.02) Net income 26,388 0.07 3,984 0.01 9,467 0.02 9,875 0.02 Net income attributable to noncontrolling interests - - - - (2,384) (0.00) - - Net income and earnings per share attributable to The Wendy's Company 26,388 $ 0.07 $ 3,984 $ 0.01 $ 7,083 $ 0.02 $ 9,875 $ 0.02 $ 2012 2011 2012 2011 Three Months Twelve Months *See reconciliation of Adjusted EPS in the appendix. 19 |
FY 2012 Cash Flow Highlights 20 2012 IA Cap Ex Image Activation - New $27 Image Activation - Reimages 45 Total Image Activation $72 ($ in millions) Cash flow from operations 190.4 $ Capital expenditures 197.6 Beginning cash balance 475.2 $ Change in cash (21.8) Ending cash balance 453.4 $ 2012 |
Selected Balance Sheet Highlights 21 ($ in millions) Cash 453 $ Senior Debt 1,425 $ Capital Leases and Other Debt 33 Total Debt 1,458 $ 2012 Adjusted EBITDA* 333 $ Total Debt / 2012 Adjusted EBITDA* 4.4x Net Debt / 2012 Adjusted EBITDA* 3.0x Dec. 30, 2012 *See reconciliation of Adjusted EBITDA from continuing operations in the appendix. 21 *See reconciliation of Adjusted EBITDA from continuing operations in the appendix. |
• SSS +2% to 3% • Traffic and check growth from core business: new products, marketing, operations • Image Activation benefit, offset by fewer breakfast restaurants • Commodities +90 to 120 bps • Increases in beef and chicken, partially offset by cost-savings initiatives • Renewable Fuel Standard diverting more than 40% of U.S. corn crop to gasoline production • Company-Operated Restaurant Margin 14.2% to 14.5% (+20 to 50 bps from 14.0% in 2012) • Sales leverage, Image Activation impact, discontinuation of breakfast at certain restaurants and cost savings initiatives • Adj. EBITDA $350 to $360 million, +5% to 8% vs. $333.3 million in 2012 • Adj. EPS $0.18 to $0.20, +6% to 18% vs. $0.17 in 2012 2013 Outlook 22 Estimates based on Company’s current outlook. |
• 2013: Higher Adjusted EBITDA growth in Q1, lower growth in Q4 Factors Affecting 2013 Outlook vs. 2012 23 • Unusually soft results in Q1 2012, but expect Q1 2013 Adjusted EBITDA more in line with historical trends • Expect $10 million of Image Activation incentives will increase Q4 2013 G&A expense Q1 Q2 Q3 Q4 2012 SSS 0.8% 3.2% 2.7% -0.2% 1.6% Adj. EBITDA* $63.9 $89.1 $84.5 $95.9 $333.3 2012 SSS and Adjusted EBITDA* *See reconciliation of Q4 2012 and 2012 Adjusted EBITDA from continuing operations and Adjusted EPS in the appendix. *See reconciliation of Q4 2012 and 2012 Adjusted EBITDA from continuing operations in the appendix. |
2013 Image Activation Outlook 24 Q1 Q2 Q3 Q4 2013 Co. 6 35 37 22 100 Fran. 100 Total 200 Image Activation Quarterly Reopenings Company Image Activation Plan Estimates based on Company’s current outlook Estimates based on Company’s current outlook. Scrape & Rebuilds Tier I Reimages Tier II Reimages Tier III Reimages 28 20 32 20 |
2013 New Restaurant Development 25 Expect 120 to 130 New System Restaurants in 2013 Company Franchise Global Note: New restaurant numbers represent the midpoint of the expected range; Estimates based on Company’s current outlook. 2013 New Restaurants 25 40 60 2013 Expected Closures N.A. Company: 20 to 30 N.A. Franchise: 90 to 100 Global: 15 to 20 |
2013 Capital Expenditures 26 Restaurant Equipment & Maintenance $40 Product Dev./Equipment Upgrades/Other 20 Technology/POS 40 Base Cap Ex 100 New Restaurants 50 Reimages 95 Image Activation Cap Ex 145 Total Projected Cap Ex $245 2012 Cap Ex $198 mil Estimates based on Company’s current outlook Estimates based on Company’s current outlook. |
Strong Free Cash Flow & Balance Sheet 27 Accelerating Investment in Image Activation: Expect $440 to $500 million 2013 to 2015 Return Capital to Shareholders Estimates based on Company’s current outlook. $100 million share repurchase program authorized through 12/29/13 100% increase in quarterly dividend rate effective Q4 2012 Core Growth Priority |
2013 and Long-Term Earnings Outlook 28 Adjusted EBITDA: $350 to $360 million Adjusted EPS: $0.18 to $0.20 Average annual Adjusted EBITDA and Adjusted EPS growth rates in high-single-digit to low-double-digit range 2013 Long-Term Estimates based on Company’s current outlook 28 Estimates based on Company’s current outlook. |
EMIL BROLICK President & CEO 29 © 2013 Oldemark LLC |
A Total Brand Transformation 30 |
JOHN BARKER Chief Communications Officer 31 © 2013 Oldemark LLC |
2013 Events March 13: Bank of America Merrill Lynch Consumer Conference March 14: UBS Global Consumer Conference April 3-5: Morgan Stanley Retail Conference May 8: Q1 2013 Earnings Release May 23: Annual Shareholder Meeting Investor Relations Calendar 32 |
Q&A 33 |
Appendix 34 |
Reconciliation of Adjusted EBITDA from Continuing Operations to Net Income Attributable to The Wendy’s Company 36 35 (Unaudited) ($ in Thousands) 2012 2011 2012 2011 Adjusted EBITDA from continuing operations 95,883 $ 80,870 $ 333,328 $ 331,055 $ (Less) plus: Depreciation and amortization (36,840) (32,020) (146,976) (122,992) Impairment of long-lived assets (13,316) (4,621) (21,097) (12,883) Costs associated with closed restaurants in other operating expense, net - - (1,477) - Facilities relocation costs and other transactions (13,470) (14,949) (41,031) (45,711) Arby's indirect corporate overhead in general and administrative (G&A) - - - (14,623) SSG purchasing cooperative expense reversal in G&A - - - 2,275 Operating profit 32,257 29,280 122,747 137,121 Interest expense (20,801) (28,195) (98,604) (114,110) Loss on early extinguishment of debt - - (75,076) - Investment income, net 6,786 296 36,243 484 Other, net 551 239 1,565 945 Income (loss) from continuing operations before income taxes and noncontrolling interests 18,793 1,620 (13,125) 24,440 Benefit from (provision for) income taxes 6,616 2,670 21,083 (6,528) Income from continuing operations 25,409 4,290 7,958 17,912 Discontinued operations: Income (loss) from discontinued operations, net of income taxes 1,167 (356) 1,951 762 (Loss) income on disposal of discontinued operations, net of income taxes (188) 50 (442) (8,799) Net income (loss) from discontinued operations 979 (306) 1,509 (8,037) Net income 26,388 3,984 9,467 9,875 Net income attributable to noncontrolling interests - - (2,384) - Net income attributable to The Wendy's Company 26,388 $ 3,984 $ 7,083 $ 9,875 $ Three Months Twelve Months |
Reconciliation of Adjusted Income and Adjusted Earnings Per Share from Continuing Operations to Net Income and Earnings Per Share Attributable to The Wendy’s Company 36 (Unaudited) ($ in Thousands, Except per Share Amounts) Per share Per share Per share Per share Adjusted income and adjusted earnings per share from continuing operations 33,629 $ 0.09 $ 16,425 $ 0.04 $ 65,316 $ 0.17 $ 62,080 $ 0.15 $ (Less) plus: Loss on early extinguishment of debt - - - - (46,547) (0.12) - - Facilities relocation costs and other transactions (8,311) (0.02) (9,288) (0.02) (25,349) (0.07) (28,514) (0.07) Gain on sale of investment, net - - - - 17,978 0.05 - - Impairment of long-lived assets (8,216) (0.02) (2,847) (0.01) (13,017) (0.04) (7,936) (0.02) Benefits of prior years' tax matters 5,439 0.01 - - 7,620 0.02 - - Dividend from Arby's 2,868 0.01 - - 2,868 0.01 - - Costs associated with closed restaurants in other operating expense, net - - - - (911) (0.00) - - Arby's indirect corporate overhead in general and administrative (G&A) - - - - - - (9,140) (0.02) SSG purchasing cooperative expenses in G&A - - - - - - 1,422 0.00 Total adjustments (8,220) (0.02) (12,135) (0.03) (57,358) (0.15) (44,168) (0.11) Income from continuing operations 25,409 0.07 4,290 0.01 7,958 0.02 17,912 0.04 Net income (loss) from discontinued operations 979 0.00 (306) (0.00) 1,509 0.00 (8,037) (0.02) Net income 26,388 0.07 3,984 0.01 9,467 0.02 9,875 0.02 Net income attributable to noncontrolling interests - - - - (2,384) (0.00) - - Net income and earnings per share attributable to The Wendy's Company 26,388 $ 0.07 $ 3,984 $ 0.01 $ 7,083 $ 0.02 $ 9,875 $ 0.02 $ 2012 2011 2012 2011 Reconciliation of Adjusted Income and Adjusted Earnings Per Share from Continuing Operations to Net Income and Earnings Per Share Attributable to The Wendy's Company (In Thousands Except Per Share Amounts) (Unaudited) Three Months Twelve Months |