INVESTOR PRESENTATION - RUSSEL CREEDY GRANT ELLIS - Restaurant Brands
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RESTAURANT BRANDS NEW ZEALAND LIMITED (RBD)
INVESTOR PRESENTATION
MAY 2018
RUSSEL CREEDY GRANT ELLIS
GROUP CHIEF EXECUTIVE OFFICER GROUP CHIEF FINANCIAL OFFICER
1
OUTLINE
Restaurant Brands 101 Growth Opportunities
FY18 Results Outlook
New Zealand Operations Questions
Australia Operations Summary
Hawaii Operations
2
RESTAURANT BRANDS
A CORPORATE FRANCHISEE, OPERATING ACROSS THE PACIFIC
SAIPAN & GUAM HAWAII
NEW ZEALAND
AUSTRALIA 3
RBD INVESTMENT THESIS
AN ATTRACTIVE INVESTMENT ON A NUMBER OF LEVELS
PROVEN CAPABILITY IN SHARPLY FOCUSED GROWTH INVESTMENT IN
MANAGING AND GROWING A HIGH STRATEGY THAT HAS TRANSFORMED STRONG CASH
PERFORMING STABLE OF ICONIC, THE COMPANY INTO A MULTI-BRAND GENERATING
BRANDED FOOD CHAINS INTERNATIONAL BUSINESS BUSINESSES
Consistent track record of continued Demonstrated execution capability with a track Strong balance sheet
growth in revenues and earnings record of store transformation and operational and cash flows
excellence that can be replicated in new
World-class corporate franchisee with acquisitions and across additional brands Consistent and growing
recognised skills in marketing, facility dividend yields
and supply chain management Strong capital allocation capabilities that have
consistently grown returns for shareholders
4
GROUP FINANCIAL OVERVIEW
TRACK RECORD OF DELIVERING CONTINUED GROWTH EVIDENCED BY FY18 NUMBERS
740.8
121.9
497.2 86.2
359.5 387.6 66.9
329.3 53.5 61.5
FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18
TOTAL SALES (NZ$M) TOTAL EBITDA (NZ$M)
40.4 28.0
23.0
21.0
30.6 19.0
16.5
22.5 24.2
18.9
FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18
TOTAL NPAT (excluding non-trading items) (NZ$M) DIVIDEND PER SHARE (NZ cents)
5
GROUP FINANCIAL OVERVIEW
AUSTRALIA (QSR) AND HAWAII (PIR) ADDED STRONGLY TO FY18 STORE SALES AND
MARGIN GROWTH, UNDERPINNED BY A STRONG NZ KFC PERFORMANCE
740.8
167.5
121.9
497.2
151.8 24.1
387.6 97.2 86.2
66.9 22.0
15.0
HAWAII
387.6 400.0 421.4
66.9 71.2 75.8 AUSTRALIA
NEW ZEALAND
FY1 6 FY1 7 FY1 8 FY1 6 FY1 7 FY1 8
SALES CONTRIBUTION (NZ$M) EBITDA CONTRIBUTION (NZ$M)
6
GROUP FINANCIAL OVERVIEW
FY18 OPERATING CASH FLOWS UP 42% IN LINE WITH PROFITABILITY
INVESTING CASH FLOWS REFLECT LARGER ASSET BASE
67.8
47.9
44.3
31.1
20.8 20.3
OPERATING INVESTING
NET INFLOWS NET OUTFLOWS*
FY16 FY17 FY18 * Excluding acquisitions and divestments
GROUP CASH FLOW (NZ$M)
7
CAPITAL MANAGEMENT
FY18 SAW BANK DEBT UP ON AUSTRALIA AND HAWAII ACQUISITIONS BUT WELL WITHIN
FACILITY LIMITS AND WITHOUT ANY PRESSURE ON THE BALANCE SHEET
253
55
166.8
74
166.8 FACILITY:
BTMU (A$50m)
46.5
125 FIRST HAWAIIAN (US$51M)
22.6
8.1 12.7
WESTPAC (NZ$60M & A$60M)
FY14 FY15 FY16 FY17 FY18 ACTUAL* FACILITY
BANK DEBT(NZ$M) BANK DEBT (NZ$M)
Net Debt: EBITDA 1.7:1
Gearing (D:D+E) 44%
8
NEW ZEALAND
OPERATIONS
9
STRONG REVENUES
THE NEW ZEALAND BUSINESS CONTINUED SOLID GROWTH
WITH FY18 SALES IN EXCESS OF $420M, LED BY KFC
421.4
400.0
387.6 34.9
36.3
33.4 25.8
26.7
26.8 41.1
40.5
44.9
CARL'S JR.
319.6 STARBUCKS
296.5
282.5 PIZZA HUT
KFC
FY16 FY17 FY18
SALES (NZ$M)
10EARNINGS MOMENTUM
KFC DRIVES NEW ZEALAND EARNINGS GROWTH
75.8
71.2
66.9 2.0
1.0 4.8
0.4 4.8 3.1
4.4 4.1
4.9
61.4 66.0
CARL'S JR.
57.2
STARBUCKS
PIZZA HUT
KFC
FY16 FY17 FY18
EBITDA (NZ$M)
KFC EBITDA 20.2% 20.7% 20.6%
% SALES
11STRATEGIC AGENDA – NEW ZEALAND
Resolve Starbucks position
Formalise master franchise for Pizza Hut
Enhance Carl’s Jr. profitability with a view to further development
Build Pizza Hut network in NZ through independent franchisee ownership (120+ stores)
Maintain KFC margins and sales growth over long term
New KFC store builds (2+ pa) with wider store design options
Introduce a further brand to NZ
12AUSTRALIA
OPERATIONS
13KFC AUSTRALIA OPPORTUNITIES
THE KFC BUSINESS IN NSW CONTINUES TO EXPAND WITH NEWLY
ACQUIRED STORES AND ORGANIC SALES GROWTH
Northern Territory
c.5 restaurants
There are over 600 KFC Queensland
c.130
restaurants across Australia, restaurants
mostly held by franchisees
NT
QLD
WA
SA
New South Wales
Western Australia c.200 restaurants
NSW RBD 61
c.40 restaurants
ACT Yum! 50
South Australia VIC c.15 restaurants Other Franchisees 90
c.50 restaurants
Victoria Tasmania
TAS c.15 restaurants
c.150 restaurants
14FY18 SOLID SALES AND EARNINGS GROWTH
TOTAL SALES UP 56% WITH ORGANIC GROWTH, FULL YEAR TRADING (VS FY17) AND ACQUISITIONS
EBITDA UP 47% WITH SOME SOFTENING OF MARGIN BUT 15% OF SALES SUSTAINABLE
151.8 22.0
SSS +4.9%
97.2 15.0
FY17 FY18 FY17 FY18
SALES (NZ$M) EBITDA (NZ$M)
15EXPANSION OF THE BEACHHEAD
STORE GROWTH BY ACQUISITION SAW STORE NUMBERS UP 45% BY YEAR END
10 STORES 1 STORE 61 STORES
NEW STORE
8 STORES AQUIRED BUILDS
FROM
PURCHASES YUM!
42 STORES
FROM SMALLER
FRANCHISEES
ORIGINAL ACQUISITION STORES AS AT
APRIL 2016 FEB 2018
16STRATEGIC AGENDA – AUSTRALIA
Consolidate recent acquisitions and above-store structure
Continue to acquire smaller independent KFC franchisees (primarily NSW)
New store builds in growth corridors and CBD locations
Acquire large parcels of KFC stores as and when opportunities arise
Introduce a further brand to Australia
17HAWAII
OPERATIONS
18SALES - FY18 DELIVERED ON BUSINESS CASE
122.4 119.8
55.6 51.5
66.8 68.3 PIZZA HUT
TACO BELL
YR 1 BUSINESS CASE FY18 ACT UAL
SALES (US$M)
19EBITDA – OVERALL ON TARGET
TACO BELL MARGINS STRENGTHENED WHILE PIZZA HUT WAS IMPACTED BY US
NATIONAL VALUE CAMPAIGNS AND LABOUR COST PRESSURES
19.0
17.2
6.1 3.3
12.9 13.9
PIZZA HUT
TACO BELL
YR 1 BUSINESS CASE FY18 ACT UAL
EBITDA (US$M)
20THE STORE TRANSFORMATION
PROCESS IS UNDERWAY
FY18 FY19
1 - NEW STORES 2 1
1 2 MINOR REFURBISHMENTS - 5
2 3 MAJOR REFURBISHMENTS 2 3
Kailua Taco Bell
- - RELOCATES - - SSS +60%
- 1 TRANSFORMATIONS - 3
21STRATEGIC AGENDA – HAWAII
Return Pizza Hut to positive SSS growth and margins above current levels
Drive new store builds and transformations of Taco Bell brand
Accelerate move out of large Pizza Hut red roof stores into smaller delcos
Build new delcos
KFC business in Hawaii (by acquisition or new store builds)
22GROWTH
OPPORTUNITIES
23POTENTIAL FOR EXPANSION IN ALL MARKETS
THERE ARE CONSIDERABLE NETWORK GROWTH POSSIBILITIES IN EXISTING
MARKETS; HOWEVER THE US MAINLAND PRESENTS A STEP-CHANGE OPPORTUNITY
New Zealand Australia Hawaii US
Store builds Store build (corridors) Potential acquisition Potential acquisition
Small franchisee New store builds (beachhead)
acquisitions
Large acquisition
Store builds (network) N/A Relocations
New store builds
Potential entry Potential entry New store builds Potential acquisition
Transformations (beachhead)
24US EXPANSION – THE OPPORTUNITY
Market potential – California 6th largest economy in the world
Proven first tier global brands (KFC and Taco Bell)
Relative under-penetration in the target market
Tested beachhead model (critical mass, proven management)
Established QSR market (still growing strongly)
Proven brand operating experience in multiple markets
Strong franchisor relationship
25OUTLOOK FY19
Current strategies The Taco Bell and Australian store KFC New Zealand Absent any major
across all Pizza Hut brands acquisitions continues to changes to
geographic in Hawaii have continue to add strongly underpin economic or
markets are delivered a solid to growth in that continuation of market conditions,
delivering positive contribution in the market. profit growth in the Group will
results. first period of that market. deliver a Net Profit
ownership. after Tax (excluding
The opportunity non-trading items)
there is network for the FY19 year
enhancement of at least 10%
through new store above current
builds and year’s
transformations. performance.
26QUESTIONS?
QUESTIONS
DISCLAIMER
The information in this presentation:
• Is provided by Restaurant Brands New Zealand Limited (“RBD”) for general information purposes and does not constitute investment advice or an offer of or invitation to purchase RBD securities.
• Includes forward-looking statements. These statements are not guarantees or predictions of future performance. They involve known and unknown risks, uncertainties and other factors, many of which are
beyond RBD’s control, and which may cause actual results to differ materially from those contained in this presentation.
• Includes statements relating to past performance which should not be regarded as reliable indicators of future performance.
• Is current at the date of this presentation, unless otherwise stated. Except as required by law or the NZX Main Board and ASX listing rules, RBD is not under any obligation to update this presentation, whether
as a result of new information, future events or otherwise.
• Should be read in conjunction with RBD’s audited consolidated financial statements for the year to 26 February 2018 and NZX and ASX market releases.
• Includes non-GAAP financial measures including "EBITDA”. These measures do not have a standardised meaning prescribed by GAAP and therefore may not be comparable to similar financial information
presented by other entities. However, they should not be used in substitution for, or isolation of, RBD’s audited consolidated financial statements. We monitor EBITDA as a key performance indicator and we
believe it assists investors in assessing the performance of the core operations of our business.
• Has been prepared with due care and attention. However, RBD and its directors and employees accept no liability for any errors or omissions.
• Contains information from third parties RBD believes reliable. However, no representations or warranties are made as to the accuracy or completeness of such information.
27SUMMARY
RBD – a corporate franchisee, New Zealand-based but successfully diversified into Australia and Hawaii
FY18 – a record year with sales of $740.8 million (+49%) and NPAT (excluding non-trading)
of $40.4 million (+32%)
Hawaiian acquisition in nearly a full year’s trading performed close to expectations
Major expansion of Australia KFC beachhead with 18 stores acquired (increase of 42%)
NZ business continues to provide a strong base to sales and earnings
Final FY18 dividend of 18 cps (+33%) for a full year of 28 cps
Potential growth opportunities in the US
28RESTAURANT BRANDS NEW ZEALAND LIMITED (RBD)
INVESTOR PRESENTATION
MAY 2018
RUSSEL CREEDY GRANT ELLIS
GROUP CHIEF EXECUTIVE OFFICER GROUP CHIEF FINANCIAL OFFICER
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