 Second
Quarter 2013 Conference Call
July 23, 2013
Exhibit 99.1
©
2013 Oldemark LLC |
 ©
2013 Oldemark LLC
JOHN BARKER
Chief Communications
Officer
2 |
 Today’s Agenda
CEO Overview
Emil Brolick
Financial Update
Steve Hare
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 July 23, 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 July 23, 2013 and posted on www.aboutwendys.com.
4
Forward-Looking Statements and Non-GAAP Financial Measures
|
 ©
2013 Oldemark LLC
EMIL BROLICK
President & CEO
5 |
 STRONG
Q2 EARNINGS … ADJUSTED EBITDA & EPS
2013 OUTLOOK TRENDING
TOWARD HIGH END OF RANGE
BRAND TRANSFORMATION
PROGRESS CONTINUES
2012 INITIATIVES
CONTRIBUTING TO SOLID 2013
SYSTEM OPTIMIZATION TO
IMPROVE EARNINGS QUALITY
6 |
 Adjusted
EBITDA* $102.1 mil
vs. $89.1 mil
Adjusted EPS*
$0.08 vs.
$0.05
Co.-Op. Rest. Margin
16.7% vs. 14.1%
Co.-Op. SSS
0.4% vs. 3.2%
7
Preliminary Q2 2013 Highlights
2013
2012
*See reconciliation of Adjusted EBITDA and Adjusted EPS in the appendix.
+15%
+60%
3.6%
2-year
+260bps |
 PRETZEL
BACON CHEESEBURGER 8 |
 9
Pretzel Love Songs Event with Nick Lachey
CNN anchor Kate Bolduan
TODAY with Kathie Lee and Hoda
•
More than One Billion Consumer Impressions
•
Over 60 Million views of promotional videos
•
National broadcast segments:
•
CNN ‘New Day’
and TODAY with Kathie Lee & Hoda
•
Partnered with celebrity Nick Lachey to host a
Pretzel Love Songs media event to kick off the
#PretzelLoveSongs
digital campaign
in NYC
COVERAGE:
PRETZEL BACON CHEESEBURGER
PRETZEL BACON CHEESEBURGER
PR / SOCIAL MEDIA HIGHLIGHTS
PR / SOCIAL MEDIA HIGHLIGHTS |
 System
Optimization
Next Phase of Brand
Transformation…
10
©
2013 Oldemark LLC |
 11 |
 12
Image / Experience Activation
Core Organic
Growth
Strategies
Shareholder
Value-Enhancing
Initiatives
System Optimization
Financial Management
Global Growth
Restaurant Utilization
& Daypart Expansion
New Restaurant Development
North America Same-Store Sales Growth |
 13
•
•
Sell approx. 425 restaurants by mid-2014
Sell approx. 425 restaurants by mid-2014
•
•
Lower company ownership from 22% to 15%
Lower company ownership from 22% to 15%
•
•
Concentrate company ownership
Concentrate company ownership
•
•
Generate a higher restaurant operating margin
Generate a higher restaurant operating margin
with more focused portfolio
with more focused portfolio
Optimize Restaurant Portfolio |
 PROSPECTIVE BUYERS
425 RESTAURANTS
•
New and existing franchisees
•
Strong operators with proven success
•
Strong financially and well-capitalized
•
Growth mindset –
commitment to
Image Activation and new restaurant
development
•
Demonstrated commitment to
customer service |
 15
Recent Progress
•
Kansas City
•
24 Wendy’s restaurants purchased from the
company and agreement to acquire 13 restaurants
from a franchisee
•
Largest Pizza Hut franchisee
•
Operated by current franchisee in Topeka, Kansas
•
26 Wendy’s restaurants
NPC
Legacy
Restaurant
Group |
 16
Adj. EPS growth
Adj. EPS growth
Margin
Margin
Royalty income
Royalty income
Rent income
Rent income
Cash flow
Cash flow
Optimize Financial Performance
Sales
Sales
G&A
G&A
Cap ex
Cap ex
Depreciation
Depreciation
Adj. EBITDA growth
Adj. EBITDA growth
ENHANCE QUALITY OF EARNINGS
Lower
Higher
Maintain
* Estimates based on Company’s current outlook. |
 Economics
of System Optimization* 17
Royalties
$25 M
Rent
$20 M
G&A
$30 M
EBITDA Divested
EBITDA Gained
=
* Estimates based on Company’s current outlook. |
 18
Organic Growth
Organic Growth
•
•
Continue to invest in core business
Continue to invest in core business
Shareholder Value
Shareholder Value
•
•
Opportunity for regular dividend growth and
Opportunity for regular dividend growth and
share repurchases
share repurchases
Optimize Shareholder Returns
Optimize Shareholder Returns |
 STEVE
HARE Chief Financial Officer
Chief Financial Officer
19
©
2013 Oldemark LLC |
 20
Preliminary Q2 2013 Highlights
Q2 2013 North America
Same-Store Sales
1-Year
2-Year
Company-Operated
0.4%
3.6%
Franchise
0.3%
3.5%
N.A. Company Restaurant
Margin +260 bps
Q2 2013 16.7%
Q2 2012 14.1%
N.A. Company Restaurant
Margin +260 bps
Q2 2013 16.7%
Q2 2012 14.1%
April
June
May |
 21
Preliminary Q2 2013 Financial Summary
*See reconciliation of Adjusted EBITDA and Adjusted EPS in the appendix.
Q2
2013
Q2
2012
%
Change
Sales
571.2
$
566.1
$
0.9%
Franchise revenues
79.3
79.8
-0.5%
Total revenues
650.5
$
645.9
$
0.7%
Adjusted EBITDA*
102.1
$
89.1
$
14.6%
Adjusted EPS*
0.08
$
0.05
$
60.0%
($ in millions except per share amounts)
(Unaudited) |
 Adjusted
Income and Special Items Adjusted Income and Special Items
22
*See reconciliation of Adjusted Income and Adjusted EPS in the appendix.
(In Thousands Except Per Share Amounts)
(Unaudited)
Per share
Per share
(a)
Adjusted income and adjusted earnings per share*
31,779
$
0.08
$
19,221
$
0.05
$
(Less) plus:
Loss on early extinguishment of debt
(13,137)
(0.03)
(15,621)
(0.04)
Depreciation of assets that will be replaced as part of the Image Activation
initiative (2,654)
(0.01)
-
-
Facilities action charges, net
(3,986)
(0.01)
(6,164)
(0.01)
Impairment of long-lived assets
-
-
(2,018)
(0.01)
Costs associated with closed restaurants in other operating expense, net
-
-
(911)
(0.00)
Total adjustments
(19,777)
(0.05)
(24,714)
(0.06)
Net income (loss)
12,002
0.03
(5,493)
(0.01)
Net loss attributable to noncontrolling interests
222
0.00
-
-
Net income (loss) and earnings per share attributable to The Wendy's Company
12,224
$
0.03
$
(5,493)
$
(0.01)
$
2013
2012
Second Quarter |
 23
Selected Balance Sheet Highlights
($ in millions)
(unaudited)
Cash
489
$
Senior Debt
1,429
$
Capital Leases and Other Debt
42
Total Debt
1,471
$
TTM Adjusted EBITDA*
360
$
Total Debt / TTM Adjusted EBITDA*
4.1x
Net Debt / TTM Adjusted EBITDA*
2.7x
June 30, 2013
*See reconciliation of Adjusted EBITDA in the appendix. |
 2013
Outlook: Trending Toward High End of Range Adjusted EPS:
$0.20 to $0.22, 18% to 29% increase vs. 2012
Estimates based on Company’s current outlook.
24
Adjusted EBITDA:
$350 to $360 million, 5% to 8% increase vs. 2012 |
 2013
Outlook 2013 Outlook
Estimates based on Company’s current outlook.
25
•
SSS of 2.0 to 3.0%
•
Restaurant margin of 14.2 to 14.5 percent
•
25 Company IA openings & 100 Company IA reimages
•
Franchise Reimages:
•
$10 million in IA franchisee incentive program expense
•
150 applications
•
100 restaurants in active process, expect most to be open or under construction by
end of 2013 |
 26
25% Dividend Increase
New quarterly rate $0.05
Payable: Sept. 17, 2013
Record Date: Sept. 3, 2013
$100 million Share Repurchase Authorization
Intend to begin purchasing shares in Q3
Current authorization expires Dec. 29, 2013 |
   Adjusted EBITDA
growth rate in high-single
to low-double-digit range
Reaffirm
Adjusted EPS
growth rate to mid-teens
Raising
LONG-TERM OUTLOOK:
27
©
2013 Oldemark LLC |
 JOHN
BARKER JOHN BARKER
Chief Communications
Chief Communications
Officer
Officer
28
©
2013 Oldemark LLC |
 2013
Events Aug. 7:
10-Q filing
Aug. 15: Sell-side reception in New York
Sept. 24: Image Activation tour in Philadelphia (host: CL King)
Oct. 2: Image Activation tour in New York (host: JP Morgan)
Nov. 7: 3Q earnings release
Nov. 12: Image Activation tour in Dublin (host: Stephens)
29
Investor Relations Calendar |
 Q&A
30 |
 Appendix
31 |
 Reconciliation of Adjusted EBITDA to Net Income (Loss)
Attributable to The Wendy's Company
32
2013
2012
2013
2012
Adjusted EBITDA
102,086
$
89,073
$
179,385
$
152,954
$
Less:
Depreciation and amortization
(38,719)
(35,947)
(90,516)
(68,258)
Impairment of long-lived assets
-
(3,270)
-
(7,781)
Facilities action charges, net
(6,377)
(9,988)
(9,415)
(16,131)
Costs associated with closed restaurants in other operating expense, net
-
(1,477)
-
(1,477)
Operating profit
56,990
38,391
79,454
59,307
Interest expense
(18,964)
(28,002)
(39,928)
(56,237)
Loss on early extinguishment of debt
(21,019)
(25,195)
(21,019)
(25,195)
Investment income and other income (expense), net
48
640
(2,223)
29,571
Income (loss) before income taxes and noncontrolling interests
17,055
(14,166)
16,284
7,446
(Provision for) benefit from income taxes
(5,053)
8,673
(2,149)
1,795
Net income (loss)
12,002
(5,493)
14,135
9,241
Net loss (income) attributable to noncontrolling interests
222
-
222
(2,384)
Net income (loss) attributable to The Wendy's Company
12,224
$
(5,493)
$
14,357
$
6,857
$
(In Thousands)
Reconciliation of Adjusted EBITDA to Net Income (Loss)
Attributable to The Wendy's Company
Six Months
Three Months
(Unaudited) |
 33
Reconciliation of Adjusted Income (Loss) and Adjusted Earnings Per Share to
Net Income and Earnings Per Share Attributable to The Wendy's Company
Per share
Per share
(a)
Per share
Per share
Adjusted income and adjusted earnings per share
31,779
$
0.08
$
19,221
$
0.05
$
44,878
$
0.11
$
22,568
$
0.06
$
(Less) plus:
Loss on early extinguishment of debt
(13,137)
(0.03)
(15,621)
(0.04)
(13,137)
(0.03)
(15,621)
(0.04)
Depreciation of assets that will be replaced as part of the Image Activation initiative
(2,654)
(0.01)
-
-
(11,721)
(0.03)
-
-
Facilities action charges, net
(3,986)
(0.01)
(6,164)
(0.01)
(5,885)
(0.01)
(9,972)
(0.03)
Gain on sale of investment, net
-
-
-
-
-
-
17,978
0.05
Impairment of long-lived assets
-
-
(2,018)
(0.01)
-
-
(4,801)
(0.02)
Costs associated with closed restaurants in other operating expense, net
-
-
(911)
(0.00)
-
-
(911)
(0.00)
Total adjustments
(19,777)
(0.05)
(24,714)
(0.06)
(30,743)
(0.07)
(13,327)
(0.04)
Net income (loss)
12,002
0.03
(5,493)
(0.01)
14,135
0.04
9,241
0.02
Net loss (income) attributable to noncontrolling interests
222
0.00
-
-
222
0.00
(2,384)
(0.00)
Net income (loss) and earnings per share attributable to The Wendy's Company
12,224
$
0.03
$
(5,493)
$
(0.01)
$
14,357
$
0.04
$
6,857
$
0.02
$
Reported number of shares used to calculate diluted income (loss) per share
397,884
389,978
396,789
392,001
Plus: Dilutive effect of stock options and restricted shares
-
1,748
-
-
Adjusted number of shares used to calculate adjusted earnings per share
397,884
391,726
396,789
392,001
per share amounts.
Included above is a reconciliation of the number of shares used to calculate
adjusted earnings used to calculate basic
and diluted loss per share, as the impact would have been anti-dilutive.
of stock options and restricted shares, which were excluded from the reported
number of shares (a)
Adjusted earnings per share amounts, for the second quarter of 2012, include the dilutive
effect 2013
2012
2013
2012
Reconciliation of Adjusted Income and Adjusted Earnings Per Share to Net Income (Loss)
and Earnings Per Share Attributable to The Wendy's Company
(In Thousands Except Per Share Amounts)
(Unaudited)
Three Months
Six Months |