investment banking i industry spotlight - fifth third bank · red farha john boisture principal...
TRANSCRIPT
1
Restaurants I Industry Spotlight
Q4 2017
Restaurants I Q4 2017
Investment Banking I Industry Spotlight
2
Restaurants I Industry Spotlight
Q4 2017
Charlie Hurt
Managing Director
(404) 279-4518
Red Farha
Principal
(704) 808-5129
Investment Banking
John Shoffner
Managing Director
(704) 688-1813
John Boisture
Director
(704) 688-4522
Bill Tyson
Co-Head, Capital Markets
(804) 916-1481
Eric Welsch
Sponsor Relationship Mgmt.
(216) 274-5793
Sponsor Coverage
Mike Brothers
Managing Director (DCM)
(312) 704-7362
Katie Marano
Vice President (DCM)
(312) 704-7328
Debt & Equity Capital Markets
Mike Ryan
Managing Director (ECM)
(615) 687-3123
Susannah Lunke
Director (ECM)
(615) 687-3047
Craig Wolf
C&R Group Head
(312) 704-2994
Jeff Hoffmann
National Restaurant Vertical
(312) 704-6246
Corporate Banking
Consumer & Retail Investment Banking
Representative Transactions
Key Contacts Consumer & Retail Investment Banking
Fifth Third Securities’ Consumer & Retail Investment Banking Group advises middle market and mid-cap companies on M&A advisory, capital raising, and strategic alternatives in the following sectors:
Consumer Food, Beverage & Agribusiness
Restaurants Retail
Apparel, Accessories & Footwear
Building Products
Interior Furnishings
Personal & Household Products
Recreational Products
Consumer Services
Entertainment, Lodging & Leisure
Agricultural Inputs
Beverages
Dairy Products
Foodservice Distribution
Ingredients and Flavors
Packaged Food/ Snack
Protein Processing
Casual Dining
Coffee & Specialty
Family Dining
Fast Casual
Fine Dining & Polished Casual
Franchisees
Quick Service (QSR)
Apparel, Accessories & Footwear
Discount & Off-Price
Furniture & Furnishings
Grocery & Pharmacy
Internet & e-Commerce
Mass Merchandise
Specialty
$425,000,000
has been acquired by
Sell-Side Advisor
has received an investment from
Financial Advisor
Planet Fitness Midwest
$650,000,000
Senior Unsecured Notes
Co-Manager
$442,000,000
Senior Secured Credit Facilities
Joint Lead Arranger
$51,000,000
Senior Secured Credit Facilities
Lead Arranger
$74,000,000
Senior Secured Credit Facilities
Franchisee
Lead Arranger
$250,000,000
First and Second Lien Credit Facilities
Lead Arranger
has been acquired by
a portfolio company of
Financial Advisor
3
Restaurants I Industry Spotlight
Q4 2017 Economic Dashboard
National Unemployment Rate Real GDP Growth Additions to Non-Farm Payrolls
Retail Gas Prices Consumer Sentiment Index Housing Starts
Source: Bureau of Economic Analysis Source: Bureau of Labor Statistics Source: Bureau of Labor Statistics
Source: University of Michigan Source: Energy Information Administration Source: United States Census Bureau
(in $’s per gallon)
(in thousands of employees)
(in thousands of units)
750
850
950
1,050
1,150
1,250
1,350
75
80
85
90
95
100
105
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
2.3%2.0%
2.6%
2.0%
0.9% 0.8%1.4%
3.5%
2.1%
1.4%
2.6%3.0%
4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
'15 '16 '170
100
200
300
400
4.0%
5.0%
6.0%
4
Restaurants I Industry Spotlight
Q4 2017
$0.25
$0.50
$0.75
$1.00
$1.25
$1.50
$1.75
Dec-16 Mar-17 Jun-17 Sep-17 Dec-17
Cattle Chicken Pork
(15.0%)
(5.0%)
5.0%
15.0%
25.0%
Dec-16 Mar-17 Jun-17 Sep-17 Dec-17
Full Service Restaurants Limited Service Restaurants S&P 500
(4.0%)
(2.0%)
0.0%
2.0%
4.0%
6.0%
8.0%
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2015 2016 2017
Full Service Restaurants Limited Service Restaurants
Same Store Sales (SSS) Growth
Food Prices ($ per pound)
LTM Share Price Performance
Restaurant Sector Insights
Source: S&P Capital IQ, Company Filings, Technomic
SSS Growth Continues to Remain Flat to Negative Across the Board
Since peaking in 2015, SSS growth has consistently declined despite record levels of consumer confidence, which generally acts as a tailwind for restaurant sales
Growing popularity of home meal delivery services and a growing focus on localized concepts have contributed to declines
Limited service returned to positive comp growth in Q3, while full service took a step backwards
Evolving Regulatory Landscape Continues to Impact Restaurants
The Department of Labor has recently introduced two rule changes that may have a positive impact of restaurant operators
– DOL proposed a rule that would allow restaurants to pool tips (subject to a minimum wage threshold)
– Withdrawal of guidance on a joint-employer rule that had introduced significant risk to the franchise business model
The Tax Reform and Jobs Act should benefit operators given the immediate expensing of CapEx and reduced corporate tax rates
Q4 Marked a Strong End to a Very Active Year in M&A Transactions
Roark Capital agreed to take Buffalo Wild Wings (BWLD) private at a valuation of $2.9 billion, or 11.3x EBITDA
– Roark is planning to package BWLD, Arby’s and various other concepts into a vehicle expected to eventually go public
Apollo Global Management is acquiring Qdoba for $305 million
– Qdoba had been a governor on performance and public market valuation of its parent company, Jack in the Box (JACK)
– JACK is expected to re-franchise restaurants and increase its balance sheet leverage to more closely mimic its peer group
JAB continued its consolidation of the breakfast/bakery-café segment through Panera’s acquisition of Au Bon Pain (ABP)
– Conclusion of a years-long battle for ABP to remain competitive with its former sister company
$1.17
$0.84
$0.65
+5.0%
+20.8%
+19.4%
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Restaurants I Industry Spotlight
Q4 2017
10.0x
15.0x
20.0x
25.0x
30.0x
Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17
Full Service Restaurants Limited Service Restaurants S&P 500
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17
Full Service Restaurants Limited Service Restaurants S&P 500
Public Equity Market Valuation Trends
5-Year Forward P/E Performance [1] 5-Year Share Price Performance
Sub-Sector Indices’ Share Price Performance [1]
Source: S&P Capital IQ as of December 29th, 2017 * Each index is comprised of the companies noted on page 12 [1] Forward P/E multiples in charts do not match the table, as 5-year performance chart is market capitalization weighted
+90.6%
+76.0%
+88.6%
18.8x
20.4x
25.6x
Median
Number of Enterprise Value Median EV Multiple Median Multiple
Sector/Sub-Sector Companies $ in Millions Revenue EBITDA LTM P/E Revenue EBITDA Forward P/E
Full Service Restaurants 23 $1,158 1.3x 9.9x 22.3x 1.2x 10.3x 19.6x
Casual Dining 13 2,211 1.3x 9.9x 24.2x 1.2x 10.5x 20.3x
Family Dining 7 1,158 1.4x 12.5x 19.2x 1.7x 10.3x 19.6x
Fine Dining & Polished Casual 3 363 1.0x 8.5x 22.3x 0.9x 7.5x 18.5x
Limited Service Restaurants 22 3,185 3.7x 15.9x 28.7x 3.7x 12.2x 24.1x
Coffee & Specialty 3 7,977 3.7x 16.9x 28.7x 6.1x 16.1x 24.1x
Quick Service 7 3,185 3.9x 13.2x 24.9x 3.7x 12.2x 22.4x
Fast Casual 12 364 0.8x 15.9x 41.0x 0.8x 8.6x 30.7x
S&P 500 500 NM 2.5x 12.8x 27.8x 2.3x 10.8x 18.4x
Median TEV/LTM Multiples Median TEV/Forward Multiples
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Restaurants I Industry Spotlight
Q4 2017
14.8%
13.6%
14.5%
10.0%
20.0%
13.3%
2.7%
3.1%
1.7%
0.6%
1.7%
40.3%
26.4%
12.8%
13.5%
9.0%
11.2%
24.1x
21.6x
19.8x
19.1x
27.9x
14.8x
16.1x
12.2x
10.5x
10.3x
8.6x
7.5x
Public Equity Market Valuation Trends (Cont’d)
Source: S&P Capital IQ as of December 29th, 2017 * Each index is comprised of the companies noted on page 12
EV / 2018P EBITDA 5-Year Est. EPS Growth LTM EBITDA Margin P / 2018 EPS
Quick Service
Coffee & Specialty
Fast Casual
Family Dining
Fine Dining & Polished
Casual
Casual Dining
3-Year Avg. SSS Growth
Median: 10.4x Median: 21.3x Median: 1.7% Median: 13.1% Median: 14.1%
(0.3%)
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Restaurants I Industry Spotlight
Q4 2017
$587
$700 $704$664
$612 $641 $618
$688 $715 $733 $739
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16
Cu
mu
lati
ve
Dry
Po
wd
er
($ i
n b
illi
on
s)
2017
2016
2015
2014
2013
2012
2011
2010
2009
Overhang by Vintage
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
U.S. corporate cash balances remain at record levels and are driving activity in strategic buyer M&A
Historically, M&A cycles have not extended past seven years; 2017 was year eight of the current cycle
2017 demonstrated signs that the buyout cycle is slowing, however, numerous positive drivers remain
− The public equity bull market continues to support M&A activity and elevated valuation multiples
Note: This data represents the entire U.S. market (all industries) Source: PitchBook, S&P Capital IQ, and S&P Capital IQ LCD
0
4,000
8,000
12,000
16,000
20,000
24,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Under $25mm $25 to $500mm Above $500mm Undisclosed
Transaction Volume
Recession Recession
▼ 9% ▲30%
S&P 500 – Aggregate Corporate Cash & Equivalents
Over $1.7 trillion
Global Private Equity Capital Overhang by Year
Private equity firms continue to sit on a built up level of dry powder, driving a need to deploy it for acquisitions
Over $735 billion
U.S. M&A Volume and Valuation Trends
($ in billions) ($ in billions)
8
Restaurants I Industry Spotlight
Q4 2017
8.6x10.0x 10.2x 9.5x
10.9x 11.1x9.8x 9.3x 9.5x
7.9x
9.8x 9.5x8.2x
9.8x 10.6x11.7x 11.1x
12.3x13.3x
12.0x
0.0x
5.0x
10.0x
15.0x
2009 2010 2011 2012 2013 2014 2015 2016 4Q2016 4Q2017
Middle Market > $1 Billion
$0
$50
$100
$150
$200
$250
1Q
200
9
2Q
200
9
3Q
200
9
4Q
200
9
1Q
201
0
2Q
201
0
3Q
201
0
4Q
201
0
1Q
201
1
2Q20
11
3Q
201
1
4Q
201
1
1Q
201
2
2Q
201
2
3Q
201
2
4Q
201
2
1Q
201
3
2Q
201
3
3Q
201
3
4Q
201
3
1Q
201
4
2Q
201
4
3Q
201
4
4Q
201
4
1Q
201
5
2Q20
15
3Q
201
5
4Q
201
5
1Q
201
6
2Q
201
6
3Q
201
6
4Q
201
6
1Q20
17
2Q
201
7
3Q
201
7
4Q
201
7
Middle Market > $1 Billion
0
250
500
750
1,000
1Q
200
9
2Q
200
9
3Q
200
9
4Q
200
9
1Q
201
0
2Q
201
0
3Q
201
0
4Q
201
0
1Q
201
1
2Q
201
1
3Q
201
1
4Q
201
1
1Q
201
2
2Q
201
2
3Q
201
2
4Q
201
2
1Q
201
3
2Q
201
3
3Q
201
3
4Q
201
3
1Q
201
4
2Q
201
4
3Q20
14
4Q
201
4
1Q
201
5
2Q
201
5
3Q
201
5
4Q
201
5
1Q
201
6
2Q
201
6
3Q
201
6
4Q
201
6
1Q
201
7
2Q
201
7
3Q
201
7
4Q
201
7
Q4 was an appropriate conclusion to a very strong year of restaurant M&A
Three headline transactions worth a combined $3.5 billion of value
In total, 2017 announced deal volume reached nearly $15 billion
Activity was widespread across the spectrum of full and limited service
Limited service was the more active category, with larger transactions
Eight transactions
$10+ billion of transaction volume
Median deal size of $1.2 billion
Full service experienced a rebound, driven by thesis-driven investments
Six transactions
$4.8 billion of transaction volume
Median deal size of $440 million
The above data supports trends that were consistent throughout 2017:
Limited service franchisors continue to command the highest valuations
Fast casual deal activity continues to be driven by growth investments in the lower middle market
Full service is once again attractive, but for different reasons than limited service (focus on IRR vs. growth)
Buyers are making smaller bets on full service businesses
Restaurant Sector M&A Trends
U.S. Consumer & Retail M&A Announced Deal Value ($ in billions) [1,2]
U.S. Consumer & Retail M&A Announced Deal Volume
U.S. Consumer & Retail M&A Closed Deal Average EV / EBITDA Multiple [1,2]
Source: Fifth Third Securities, S&P Capital IQ [1] Middle Market transactions defined by transactions with an enterprise value below $1 billion [2] U.S. Consumer & Retail transactions include Consumer Discretionary and Consumer Staples transactions, and exclude outlier multiples
Median Middle Market: $13.9
Median Middle Market: 9.8x
Median > $1 Billion: $26.6
Median > $1 Billion: 10.6x
9
Restaurants I Industry Spotlight
Q4 2017
Announced Enterprise LTM
Date Acquirer Target Value (EV) Revenue EBITDA Revenue EBITDA
12/19/17 Apollo Global Management (NYSE:APO) Qdoba Restaurant Corporation [3]$305 $457 $38 0.7x 8.0x
11/28/17 Roark Capital Group Buffalo Wild Wings, Inc. (NasdaqGS:BWLD) 2,885 2,061 $255 1.4x 11.3x
11/08/17 Panera Bread Co. / JAB Holding Co. Au Bon Pain Corporation - - - - -
10/16/17 NRD Capital Management Ruby Tuesday, Inc. (NYSE:RT) 314 1,046 37 0.3x 8.5x
09/06/17 FAT Brands (NasdaqCM:FAT) Ponderosa Franchising / Bonanza Restaurant Companies 11 4 2 2.8x 6.9x
08/24/17 Caribou Coffee Company Bruegger's Enterprises - - - - -
08/04/17 J. Alexander's Ninety Nine Restaurants, Inc. 199 304 30 0.7x 6.6x
06/06/17 Landry's Ignite Restaurant Group (OTCPK:IRGT) 55 550 17 0.1x 3.3x *
04/05/17 Axum Capital Partners Back Yard Burgers - - - - -
04/05/17 JAB Holding Co. Panera Bread Co. 7,500 2,885 424 2.6x 17.7x *
03/27/17 Darden Restaurants (NYSE:DRI) Cheddar's Scratch Kitchen 780 - 75 - 10.4x
03/23/17 Oak Hill Capital Partners Checkers Drive-In Restaurants, Inc. 525 - - - -
02/21/17 Restaurant Brands International Inc. (NYSE:QSR) Popeyes Louisiana Kitchen, Inc. 1,815 267 89 6.8x * 20.5x *
01/24/17 Golden Gate Capital Bob Evans Farms, LLC 565 - - - -
10/26/16 Restaurant Brands New Zealand Ltd. (NZSE:RBD) Pacific Island Restaurants 105 120 19 0.9x 5.5x
10/10/16 Thai Union Group Public Company Limited (SET:TU) Red Lobster Master Holdings, L.P. [4]1,265 2,479 144 0.5x 8.8x
09/08/16 Roark Capital Group Jimmy John's Franchise, LLC - - - - -
09/02/16 CenterOak Partners LLC Wetzel's Pretzels, LLC - - - - -
05/25/16 MTY Food Group (TSX:MTY) Kalaha Corp. (Multi-Concept Franchisee) 302 729 - 0.4x -
05/09/16 JAB Holding Co. Krispy Kreme Doughnuts, Inc. 1,298 519 73 2.5x 17.8x *
07/14/15 BC Partners Cote Restaurants 391 172 38 2.3x 10.4x
05/22/15 NRD Capital Frisch's Restaurants, Inc. 173 216 24 0.8x 7.3x
03/12/15 Levy Acquistion Group (n.k.a. NasdaqCM: TACO) Del Taco Holdings 500 385 59 1.3x 8.5x
Median - Strategic 0.8x 6.9x
Median - Financial 1.1x 8.5x
Median - All 0.8x 8.5x
EV / LTM
Restaurant Sector Precedent M&A Transactions ($ in millions) [1,2]
Restaurant Sector Precedent M&A Transactions
M&A Deals in the Headlines
Source: Company Filings, S&P Capital IQ [1] * Excluded from mean and median [2] Green shading indicates strategic acquisition [3] Qdoba’s EBITDA was estimated assuming that ~17% of JACK’s total SG&A is attributable to Qdoba operations [4] SET:TU acquired a 25% minority stake from Golden Gate Capital
Roark Capital to Acquire Buffalo Wild Wings
EV ($MM): $2,885
Revenue Multiple: 1.4x
EBITDA Multiple: 11.3x
Apollo Global Management to Acquire Qdoba Restaurant Corp.
EV ($MM): $305
Revenue Multiple: 0.7x
EBITDA Multiple: 8.0x
Parent company JACK had concerns that chain’s ailing performance and different business model weighed down JACK’s overall valuation
Qdoba transaction is part of a larger shift in strategic focus by JACK to focus on its core business as a franchisor of Jack in the Box Restaurants
Transactions completed or announced over the past three years
Activist hedge fund manager Marcato Capital Management won three BWLD board seats and pushed for a sale in a June proxy fight that was the result of a disappointing year BWLD
BWLD will become a privately held unit of Arby’s Restaurant Group but will continue to operate as an independent brand
Roark Capital
Buffalo Wild
Wings
Apollo Global
Qdoba Restaurant
Corp.
10
Restaurants I Industry Spotlight
Q4 2017
U.S. Private Equity deal flow was down during the fourth quarter of 2017 on both a volume and deal value basis
Uncertainty about tax reform may have contributed to the slowdown
Middle market businesses, bullish on the prospects of reform, deferred transactions into 2018
Private equity did reclaim the spotlight in restaurant deal activity during Q4
All four major transactions involved an active private equity investor
Deals ranged from:
– Corporate carve-out (Qdoba)
– Go-private (Buffalo Wild Wings)
– Bolt-on acquisition (Au Bon Pain)
– Turnaround (Ruby Tuesday)
The lack of new sponsors investing during 2017 is indicative of ongoing challenges in the sector
Several additional factors may be fueling the reluctance to complete deals
Pricing pressures persist with median deal multiples remaining above 10.0x, and the number of viable targets is likely lower than normal following the record levels in 2015 and 2016 on both the strategic and PE sides
Low yields and low returns on cash holdings may increase the pressure firms feel which need to invest
Middle Market Private Equity Activity
U.S. Private Equity Deal Flow ($ in billions)
U.S. Consumer & Retail Private Equity Deal Flow ($ in billions)
U.S. Consumer & Retail Private Equity Exits ($ in millions)
Source: Fifth Third Securities, PitchBook ND – No Transaction Values Disclosed *3Q17 preliminary PitchBook data
0
500
1,000
1,500
$0
$50
$100
$150
$200
$250
1Q
11
2Q11
3Q11
4Q
11
1Q
12
2Q
12
3Q
12
4Q
12
1Q
13
2Q
13
3Q
13
4Q
13
1Q
14
2Q
14
3Q
14
4Q
14
1Q
15
2Q
15
3Q
15
4Q
15
1Q
16
2Q
16
3Q
16
4Q
16
1Q
17
2Q17
3Q17
4Q
17*
Deal Value ($) # of Deals Closed
$43.3 $50.4 $54.9
$78.5
$57.9
$117.7
$65.3 $60.1
$9.5 $9.6
544 644 733 663 783882 795
509
190 151
2010 2011 2012 2013 2014 2015 2016 2017 4Q2016 4Q2017
Capital Invested ($) # of Deals Closed
$145.0 $100.0
$295.0 $196.8 $260.0
$148.0 $92.5
$446.0
$257.5 $223.0 105 121
165 148
204 197210
202
53 37
2010 2011 2012 2013 2014 2015 2016 2017 4Q2016 4Q2017
Median Deal Size ($) # of Exits
11
Restaurants I Industry Spotlight
Q4 2017
Note: This data represents the entire U.S. middle market (all industries) Note: The middle market is defined as deal size < $100 million and borrower sales < $500 million [1] Includes both non-sponsored and sponsored transactions; sufficient data not available for MM NR loans in 1Q15 and 1Q17 Source: Bloomberg, S&P Capital IQ LCD, and Thomson Reuters LPC
U.S. Middle Market Loan Market Trends
Loan Volume: Low Level of Supply Continues Yields Decline for Middle Market B-rated & Non-rated Issuers [1]
Middle Market Covenant-Lite Volume Declines in 3Q 2017 Leverage Multiples Remain Aggressive on Middle Market LBOs
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
Non-Sponsored Sponsored($ in billions)
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
MM B-rated MM NR
5.97%
5.90%
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
MM Covenant-Lite Volume($ in billions)
0.0x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
1st Lien Debt to EBITDA Junior Debt to EBITDA
12
Restaurants I Industry Spotlight
Q4 2017 Appendix: Key Disclosures
Casual Dining
BJRI – BJ’s Restaurants, Inc.
BLMN – Bloomin’ Brands, Inc.
BWLD – Buffalo Wild Wings Inc.
CHUY – Chuy’s Holdings, Inc.
DAVE – Famous Dave’s of America Inc.
DIN – DineEquity, Inc.
DRI – Darden Restaurants, Inc.
RRGB – Red Robin Gourmet Burgers Inc.
TXRH – Texas Roadhouse, Inc.
PLAY – Dave and Buster’s Entertainment, Inc.
EAT – Brinker International, Inc.
Family Dining
BH – Biglari Holdings Inc.
CBRL – Cracker Barrel Old Country Store, Inc.
DENN – Denny’s Corporation
Fine Dining & Polished Casual
BBRG – Bravo Brio Restaurant Group, Inc.
CAKE – The Cheesecake Factory Incorporated
DFRG – Del Frisco’s Restaurant Group, Inc.
FOGO – Fogo de Chao, Inc.
KONA – Kona Grill Inc.
RUTH – Ruth’s Hospitality Group Inc.
JAX – J. Alexander’s Holdings, Inc.
Limited Service Restaurants Full Service Restaurants
Coffee & Specialty
DNKN – Dunkin’ Brands Group, Inc.
JMBA – Jamba, Inc.
SBUX – Starbucks Corporation
Fast Casual
CMG – Chipotle Mexican Grill, Inc.
HABT – The Habit Restaurants, Inc.
NDLS – Noodles & Company
PBPB – Potbelly Corporation
SHAK – Shake Shack Inc.
ZOES – Zoe’s Kitchen, Inc.
FRGI – Fiesta Restaurant Group, Inc.
Quick Service Restaurants (QSR)
BOJA – Bojangles’, Inc.
DPZ – Domino’s Pizza, Inc.
FRSH – Papa Murphy’s Holdings, Inc.
JACK – Jack in the Box Inc.
LOCO – El Pollo Loco Holdings
MCD – McDonald’s Corp.
PZZA – Papa John’s International
QSR – Restaurant Brands International Inc.
SONC – Sonic Corp.
WEN – The Wendy’s Company
YUM – Yum! Brands, Inc.
WING – Wingstop Inc.
13
Restaurants I Industry Spotlight
Q4 2017 Notes & Definitions
S&P 500 Index- A broad index that includes American Companies. EBITDA- A company's earnings before interest, taxes, depreciation, and amortization, is an accounting measure calculated using a company's net earnings, before interest expenses, taxes, depreciation and amortization are subtracted, as a proxy for a company's current operating profitability. Dry Powder- Refers to cash reserves kept on hand to cover future obligations or to purchase assets. GDP- Gross domestic product is the market value of the goods and services produced by labor and property located in the United States Consumer Sentiment Index- The University of Michigan Consumer Sentiment Index is a consumer confidence index published monthly by the University of Michigan. The index is normalized to have a value of 100 in December 1964 National Unemployment Rate- the percentage of the total labor force that is unemployed but actively seeking employment and willing to work. Non-Farm Payroll- Nonfarm payroll employment is a compiled name for goods, construction and manufacturing companies in the US. It does not include farm workers, private household employees, non-profit organization employees, or government employees . It is an economic indicator released monthly by the United States Department of Labor as part of a comprehensive report on the state of the labor market. Housing Starts- are the number of new residential construction projects that have begun during any particular month. The Economist- offers authoritative insight and opinion on international news, politics, business, finance, science, technology and the connections between them LBO -- leveraged buyout (LBO) is the acquisition of another company using a significant amount of borrowed money to meet the cost of acquisition. The assets of the company being acquired are often used as collateral for the loans, along with the assets of the acquiring company. Industrial Production Index (IPI)- is an economic indicator published by the Federal Reserve Board of the United States that measures the real production output of manufacturing, mining, and utilities Capital Goods Orders. Covenant-lite loans- means that debt is being issued, both personally and commercially, to borrowers with less restrictions on collateral, payment terms, and level of income. IRR-Internal Rate of Return.
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