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Second Quarter 2019Conference Call
August 7, 2019
© Quality Is Our Recipe, LLC
Greg LemenchickDirector – Investor Relations
© Quality Is Our Recipe, LLC
Forward-Looking Statements and
Non-GAAP Financial Measures
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 release issued on August 7, 2019 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 (i.e. adjusted revenue, adjusted EBITDA, adjusted earnings per share, adjusted tax rate, free cash flow and systemwide sales). These non-GAAP financial measures exclude certain expenses and benefits. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are provided in the Appendix to this presentation.
THE WENDY'S COMPANY | 3
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AgendaKey Initiatives
Financial Update
IR Calendar
Q&A
Todd PenegorPresident & Chief Executive Officer
© Quality Is Our Recipe, LLC
Global systemwide sales growth of 3.3%
NA SRS 1.4%; 3.3% on a two-year basis
Global expansion continues; opened 28 restaurants; 71 YTD
Company restaurant margin of 16.5%
Adjusted EBITDA* growth of 8%
Adjusted EPS* growth of 29%
Year-to-Date free cash flow* generation of $125M, an increase of 6%
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Q2 Highlights
* See reconciliation of non-GAAP financial measures in the Appendix.
Continue Expansion of NA Restaurant Footprint
THE WENDY'S COMPANY | 8
2019: Strengthening the Foundation for Growth
Restaurant Economic Model
Accelerate North AmericaSame-Restaurant Sales
Accelerate Global Restaurant Expansion
1 More Visit, 1 More Dollar
Digital Acceleration
Operational ExcellenceStrengthen International
Foundation
THE WENDY'S COMPANY | 9
One More Visit, One More Dollar Momentum
Continued Focus on Operational Excellence
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THE WENDY'S COMPANY |
Accelerating our Digital Platforms
11
Delivery: met our goal to expand to 80% of the NA system by end of ‘19
Mobile Ordering: on track to be activated across the NA system by end of ’19
Scanners: on track to have these activated by the end of ‘19
THE WENDY'S COMPANY |
THE WENDY'S COMPANY | 12
2019: Strengthening the Foundation for Growth
Restaurant Economic Model
Continue Expansion of NA Restaurant Footprint
Strengthen International Foundation
Accelerate Global Restaurant Expansion
© Quality Is Our Recipe, LLC THE WENDY'S COMPANY | 13
WENDY’S CREATES JOY & OPPORTUNITY THROUGH FOOD, FAMILY & COMMUNITY
A place I love to go
CLEAN & WELL MAINTAINEDUP TO DATE
EASY & CONVENIENTUPBEAT & COMFORTABLE
FOODFood I love
FRESHHONEST INGREDIENTS
CRAVEABLE TASTEMADE RIGHT
VALUEWorth what I pay
COMPETITIVE PRICEWENDY’S QUALITYGREAT EXPERIENCE
SERVICEAn experience that
brings me back
FRIENDLYACCURATE
FAST
Q U A L I T Y I S O U R R E C I P E T R E A T P E O P L E W I T H R E S P E C T D O T H E R I G H T T H I N G P R O F I T M E A N S G R O W T H G I V E S O M E T H I N G B A C K
RESTAURANTS
Gunther PloschChief Financial Officer
© Quality Is Our Recipe, LLC
Second Quarter Financial Highlights$ Mils (except per share amounts)(Unaudited)
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2019 2018 B/(W)
North America System SRS 1.4% 1.9% 2-Year 3.3%
Adjusted Revenues* $348.7 $326.4 6.8%
Company Restaurant Margin 16.5% 17.4% (90) bps
G&A $50.8 $49.2 (3.3%)
Adjusted EBITDA* $117.8 $109.5 7.6%
Adjusted EPS* $0.18 $0.14 28.6%
Year-to-Date Free Cash Flow* $125.3 $117.8 6.4%* See reconciliation of non-GAAP financial measures in the Appendix.
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Franchise Financial Health Update
2018 NA Franchise Economics
Restaurant Economic Model
Sales Growth = ~2% EBITDA = ~Flat
Leverage Ratio* @ 6/30/2019: 4.7x Leverage Ratio Target: 4.5-5.5x
Wtd. Avg. Life of Debt**: 7.3 years
Flexible Capital Structure Supports Growth Initiatives
$450
$500$400
$475 $450
$150
$100
2024 2025 2026 2027 2028 2029Securitized Notes VFN (Revolver) Debentures
THE WENDY'S COMPANY | 17
$100
3.573% 2018 Notes(Callable at par
March 2022)3.884%
2018 Notes(Callable at par
March 2024)
7.0% 1995 Debentures
$ Mils
4.497% 2015 Notes(Callable at par
June 2021)
$450M
*Net Funded Debt (excl. Capital Leases) + Fully Drawn VFN / TTM Adj. EBITDA** Weighted average life of debt reflects fixed rate securitization and debenture debt
3.783% 2019 Notes(Callable at par
March 2024)
4.080% 2019 Notes(Callable at par
September 2026)
THE WENDY'S COMPANY | 18
2019 Outlook Reaffirmed
Global Systemwide Sales growth of ~3 to 4%
G&A Expense of ~$195M
Adjusted EBITDA growth of ~2.5 to 4.5%
Adjusted Tax Rate of ~22 to 23%
Adjusted Earnings Per Share growth of ~3.5 to 7.0%
CAPEX of ~$75 to $80M
Free Cash Flow of ~$230 to $240M** The Company now expects the impact of the proposed settlement of the Financial Institutions case to take place in early 2020 as opposed to late 2019.
Greg LemenchickDirector – Investor Relations
© Quality Is Our Recipe, LLC
Wendy’s Investor Day 2019
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Date: October 10, 2019
Location: Dublin, Ohio
Purpose: Showcase our long-term strategic vision and issue additional long-term guidance
Investor Relations Calendar (Tentative)
• August 13: BAML NDR (Boston)
• August 14: Oppenheimer NDR (NYC)
• October 10: Investor Day
• November 6: Third Quarter Earnings Release & Call
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Q&A
Appendix
Reconciliation of Non-GAAP Financial MeasuresIn addition to the GAAP financial measures included in this presentation, the Company has presented certain non-GAAP financial measures (i.e., adjusted revenues, adjusted EBITDA, adjusted earnings per share, adjusted tax rate, free cash flow and systemwide sales). These non-GAAP financial measures exclude certain expenses and benefits as detailed in the accompanying reconciliation tables.
This presentation also includes forward-looking guidance for certain non-GAAP financial measures including adjusted EBITDA, adjusted earnings per share, adjusted tax rate, free cash flow and systemwide sales. The Company excludes certain expenses and benefits from adjusted EBITDA, adjusted earnings per share, adjusted tax rate and free cash flow, such as impairment of long-lived assets, reorganization and realignment costs, system optimization (gains) losses, net, timing and resolution of certain tax matters, the impact of our advertising funds, and the legal reserve relating to the FI case. Due to the uncertainty and variability of the nature and amount of those expenses and benefits, the Company is unable without unreasonable effort to provide projections of net income, earnings per share or reported tax rate or a reconciliation of those projected measures.
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Reconciliations of Net Income to Adjusted EBITDA and Revenues to Adjusted Revenues
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In Thousands (Unaudited)
Reconciliation of Net Income and Diluted Earnings Per Share to Adjusted Income and Adjusted Earnings Per Share
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In Thousands except per-share amounts (Unaudited)
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
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In Thousands (Unaudited)