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Form 8-K Wendy's Co For: May 11

May 11, 2016 9:04 AM EDT

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 11, 2016

 

 

THE WENDY’S COMPANY

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   1-2207   38-0471180

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

One Dave Thomas Blvd., Dublin, Ohio   43017
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (614) 764-3100

Not Applicable

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 7.01 Regulation FD Disclosure.

On May 11, 2016, management of The Wendy’s Company (the “Company”) gave a slide presentation during the Company’s fiscal 2016 first quarter conference call. The presentation materials are attached hereto as Exhibit 99.1 and incorporated herein by reference. These materials may also be used by the Company at one or more subsequent conferences with analysts and investors.

The information contained in the attached presentation materials is summary information that is intended to be considered in the context of the Company’s Securities and Exchange Commission filings and other public announcements. The Company undertakes no duty or obligation to publicly update or revise this information, although it may do so from time to time.

The information in this Current Report on Form 8-K, including the exhibit furnished pursuant to Item 9.01, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities under that section. Furthermore, the information in this Current Report on Form 8-K, including the exhibit furnished pursuant to Item 9.01, shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit No.    Description
99.1    Conference call slide presentation materials used beginning on May 11, 2016.


SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    THE WENDY’S COMPANY
Date: May 11, 2016     By:  

/s/ Dana Klein

      Dana Klein
      Senior Vice President – Corporate and Securities
     

Counsel, and Assistant Secretary

interim General Counsel


EXHIBIT INDEX

 

Exhibit No.    Description
99.1    Conference call slide presentation materials used beginning on May 11, 2016.
© 2015 Quality Is Our Recipe, LLC
First-Quarter 2016
Conference Call
May 11, 2016
Exhibit 99.1


© 2015 Quality Is Our Recipe, LLC
LILIANA ESPOSITO
Chief Communications Officer


Today’s Agenda
First Quarter Update
Todd Penegor
President & Chief Financial Officer
CFO Introduction
Gunther
Plosch
Incoming Chief Financial Officer
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 May 11, 2016
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), adjusted EBITDA margin and adjusted earnings per
share. Adjusted EBITDA, adjusted EBITDA margin 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 May 11, 2016 and posted on www.aboutwendys.com.
Forward-Looking Statements and Non-GAAP
Financial Measures
4


5


1968-2016
David Poplar


7


© 2015 Quality Is Our Recipe, LLC
TODD PENEGOR
President and Chief
Financial Officer


© 2015 Quality Is Our Recipe, LLC
NA COMPANY-OPERATED RESTAURANT
MARGIN INCREASES 250 BPS TO 17.2%
SYSTEM OPTIMIZATION, IMAGE
ACTIVATION, NEW RESTAURANT
DEVELOPMENT ON TRACK
9
Q1 NA SYSTEM SRS OF 3.6%; TWO-YEAR
SRS OF 6.8% HIGHEST IN 10+ YEARS
COMPANY RAISES 2016 ADJ. EPS
OUTLOOK TO $0.38 TO $0.40
COMPANY RAISES 2016 ADJ. EBITDA
OUTLOOK TO DOWN 1% TO UP 1%


Long-Term Growth Drivers
10
2016 & Beyond
SRS Acceleration
(~3% System Growth)
2017 & Beyond
N.A. Net Restaurant Development
(~500 Net New Restaurants)
2019 & Beyond
International Expansion
(Establish Foundation for Accelerated Growth)



12
Balance Across the Menu
Price/Value
Core
LTO


Customers
Are
Noticing
the
Stronger
Wendy’s 
Source:  Wendy’s Brand Health Tracking, Q1 2016 vs.Q1 2015
High Quality
Food
Worth What
You Pay
Modern and
Up To Date
Restaurants
13
+25%
+12%
+16%


N.A. System SRS
3.6%
3.2%
2-Year 6.8%
N.A. Co. Rest. Margin
17.2%
14.7%
+250 bps
G&A
$64.6
$59.7
(8.2%)
Adjusted EBITDA**
$98.1
$80.8
21.4%
Adjusted EBITDA Margin**
25.9%
17.9%
+800
bps
Adjusted EPS**
$0.11
$0.06
83.3%
$ Mils (except per share amounts)
First Quarter Financial Highlights
2016*
2015*
B/(W)
**  See Reconciliation of Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EPS in the Appendix.
14
(Unaudited)
* Due
to
the
May
2015
sale
of
its
bakery
business,
the
Company
has
presented
its
bakery
results
as
discontinued
operations
in
its
financial
statements.


Q1 2016 vs. Q1 2015: Adjusted EBITDA
15
*
* Excludes ~$3M of Bakery EBITDA
(Unaudited)
$ in millions
Q1 2015
Restaruant
EBITDA (incl IA)
$81
$10
Lease Buyout
$7
($16)
($5)
$21
Disposed
Restaurant
EBITDA (Sys Op)
Q1 2016
G&A
$98
Royalties,
Franchise Fees &
Net Rental
Income
375 Fewer
Company
Restaurant


Q1 2016 vs. Q1 2015: Adjusted EPS
Interest
Expense
Q1 2016
$0.04
$0.06
Q1 2015
Adjusted
EBITDA
Share
Repurchases
Depreciation
$0.01
($0.03)
$0.03
$0.11
16
(Unaudited)


Committed to Returning Cash to Shareholders
17
Ended Q1 with $313 million of cash
Repurchased 4.9 Million shares for $48.2 Million in Q1
Approximately $308 Million remains against $1.4 Billion share repurchase
authorization
Remain committed to utilize remaining authorization as proceeds come in
from System Optimization sales


System Optimization Update
System
Optimization III
On track to complete by the end of 2016
55 restaurants sold in Q1
Continue to expect pre-tax proceeds of
$400-$475M
Expect Company ownership of ~5% at YE
Ongoing System
Optimization
Facilitated 113 franchisee-to-franchisee
transfers via “Buy and Flip” in Q1
Catalyst
for growth by evolving
franchisee base & driving new restaurant
development / reimaging
18


Reimaging Momentum Continues
10
74
308
794
1,313
1,853
2011
2012
2013
2014
2015
2016E
Total System Annual
Reimages & New Builds*
Total System Cumulative
Reimages & New Builds*
10
64
234
486
519
540
2011
2012
2013
2014
2015
2016E
~24% of NA
system Image
Activated at the
end of Q1 2016
* Counts include Franchise Reimages open or under construction
19


Compelling Reimaging Economics
Mid-Single Digit to Low-Double Digit Sales Lift
Minimal Closure Time
~70-80% of Sales Retained During Closure Time
Profit Flow Through 40-50%**
Optional Upgrades to Tailor to Trade Area
STANDARD
REFRESH
$300K US Investment*
$500K US Investment*
* Does not include deferred maintenance or franchisee chosen upgrades, ** Profit Before Occupancy Flow Through
20


2016
Outlook
Reaffirming
NA System SRS of ~3%
Company-operated restaurant margin of 18.5 to 19.0 percent
CAPEX of ~$135 million to $145 million
Free Cash Flow of ~$50 million to $75 million
Revising
Commodity costs to decrease ~3%
Reported effective tax rate of ~38 to 40% / Adjusted tax rate of ~32 to 34%
G&A expense of ~$245 to $250 million
COMPANY NOW EXPECTS ADJ. EPS  OF $0.38-$0.40 AND              
ADJ. EBITDA OF DOWN 1% TO UP 1%
21


2020 North America System Goals Are On Track!
AUVs
Restaurant
Margins
Sales to
Investment
Ratio
New
Restaurants
Total
Reimaged
Restaurants
Achievement requires two growth drivers:
22
(~500 Net)
$2MM
20%
1.3x
1,000
60%
+
BRAND
RELEVANCE
ECONOMIC MODEL
RELEVANCE


© 2015 Quality Is Our Recipe, LLC
GUNTHER
PLOSCH
Incoming Chief
Financial Officer


© 2015 Quality Is Our Recipe, LLC
Peter Koumas
Manager –
Investor Relations
Peter.Koumas@wendys.com
(614) 764 -
8478


2016 Investor Relations Calendar: Key Dates
May 20
Kansas City (SunTrust)
June 6
CFO Reception (New York)
June 7
Goldman Sachs (New York)
June 8
Stephens (New York)
June 13-14
Los Angeles, Pasadena, Santa Monica
(Guggenheim –
debt / CL King –
equity)
August 10
2Q earnings release
25


Q&A
26


Appendix
27


Reconciliation of Income from Continuing Operations to Adjusted EBITDA from
Continuing Operations
28
In Thousands (Unaudited)


Reconciliation of Income and Diluted Earnings Per Share from Continuing Operations to
Adjusted Income and Adjusted Earnings Per Share from Continuing Operations
29
In Thousands except per-share amounts
(Unaudited)


30


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