restaurant brands new zealand limited (rbd)...
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RUSSEL CREEDYGROUP CHIEF EXECUTIVE OFFICER
RESTAURANT BRANDS NEW ZEALAND LIMITED (RBD)
GRANT ELLISGROUP CHIEF FINANCIAL OFFICER
INVESTOR PRESENTATIONMAY 2018
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OUTLINE
Restaurant Brands 101
FY18 Results
New Zealand Operations
Australia Operations
Hawaii Operations
Growth Opportunities
Outlook
Questions
Summary
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RESTAURANT BRANDSA CORPORATE FRANCHISEE, OPERATING ACROSS THE PACIFIC
SAIPAN & GUAM
AUSTRALIANEW ZEALAND
HAWAII
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SHARPLY FOCUSED GROWTH STRATEGY THAT HAS TRANSFORMED THE COMPANY INTO A MULTI-BRAND INTERNATIONAL BUSINESS
Demonstrated execution capability with a track record of store transformation and operational excellence that can be replicated in new acquisitions and across additional brands
Strong capital allocation capabilities that have consistently grown returns for shareholders
RBD INVESTMENT THESISAN ATTRACTIVE INVESTMENT ON A NUMBER OF LEVELS
PROVEN CAPABILITY IN MANAGING AND GROWING A HIGH PERFORMING STABLE OF ICONIC, BRANDED FOOD CHAINS
Consistent track record of continued growth in revenues and earnings
World-class corporate franchisee with recognised skills in marketing, facility and supply chain management
INVESTMENT IN STRONG CASH GENERATING BUSINESSES
Strong balance sheet and cash flows
Consistent and growing dividend yields
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GROUP FINANCIAL OVERVIEWTRACK RECORD OF DELIVERING CONTINUED GROWTH EVIDENCED BY FY18 NUMBERS
TOTAL SALES (NZ$M)
329.3 359.5 387.6497.2
740.8
FY14 FY15 FY16 FY17 FY18
TOTAL EBITDA (NZ$M)
53.5 61.5 66.986.2
121.9
FY14 FY15 FY16 FY17 FY18
TOTAL NPAT (excluding non-trading items) (NZ$M)
18.9 22.5 24.230.6
40.4
FY14 FY15 FY16 FY17 FY18
DIVIDEND PER SHARE (NZ cents)
16.519.0 21.0 23.0 28.0
FY14 FY15 FY16 FY17 FY18
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387.6 400.0 421.4
97.2151.8
167.5
FY16 FY17 FY18
SALES CONTRIBUTION (NZ$M)
GROUP FINANCIAL OVERVIEWAUSTRALIA (QSR) AND HAWAII (PIR) ADDED STRONGLY TO FY18 STORE SALES AND MARGIN GROWTH, UNDERPINNED BY A STRONG NZ KFC PERFORMANCE
NEW ZEALAND
HAWAII
AUSTRALIA
EBITDA CONTRIBUTION (NZ$M)
66.9 71.2 75.8
15.022.0
24.1
FY16 FY17 FY18
387.6
497.2
740.8
66.9
86.2
121.9
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GROUP CASH FLOW (NZ$M)
GROUP FINANCIAL OVERVIEWFY18 OPERATING CASH FLOWS UP 42% IN LINE WITH PROFITABILITY INVESTING CASH FLOWS REFLECT LARGER ASSET BASE
OPERATING NET INFLOWS
INVESTING NET OUTFLOWS*
* Excluding acquisitions and divestments
44.347.9
67.8
20.8 20.3
31.1
FY16 FY17 FY18
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CAPITAL MANAGEMENTFY18 SAW BANK DEBT UP ON AUSTRALIA AND HAWAII ACQUISITIONS BUT WELL WITHIN FACILITY LIMITS AND WITHOUT ANY PRESSURE ON THE BALANCE SHEET
Net Debt: EBITDA 1.7:1
Gearing (D:D+E) 44%
BANK DEBT(NZ$M)
8.122.6 12.7
46.5
166.8
FY14 FY15 FY16 FY17 FY18
125
74
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ACTUAL* FACILITY
WESTPAC (NZ$60M & A$60M)
FIRST HAWAIIAN (US$51M)
BTMU (A$50m)
FACILITY:
BANK DEBT (NZ$M)
253
166.8
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NEW ZEALAND OPERATIONS
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STRONG REVENUESTHE NEW ZEALAND BUSINESS CONTINUED SOLID GROWTH WITH FY18 SALES IN EXCESS OF $420M, LED BY KFC
SALES (NZ$M)
282.5 296.5
44.9 40.5
26.8 26.7
33.4 36.3
387.6400.0
421.4
319.6
41.1
25.8
34.9
KFC
STARBUCKS
PIZZA HUT
CARL'S JR.
FY16 FY17 FY18
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EARNINGS MOMENTUMKFC DRIVES NEW ZEALAND EARNINGS GROWTH
EBITDA (NZ$M)
57.2 61.4 66.0
4.9 4.1
3.14.4 4.8
4.80.4
1.0 66.971.2
75.8
KFC EBITDA% SALES
20.2% 20.7% 20.6%
2.0
KFC
STARBUCKS
PIZZA HUT
CARL'S JR.
FY16 FY17 FY18
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STRATEGIC AGENDA – NEW ZEALAND
Resolve Starbucks position
Formalise master franchise for Pizza Hut
Enhance Carl’s Jr. profitability with a view to further development
Build Pizza Hut network in NZ through independent franchisee ownership (120+ stores)
Maintain KFC margins and sales growth over long term
New KFC store builds (2+ pa) with wider store design options
Introduce a further brand to NZ
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AUSTRALIAOPERATIONS
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QLD
Queenslandc.130 restaurants
NSW
New South Walesc.200 restaurants
ACTc.15 restaurants
TASTasmaniac.15 restaurants
VIC
Victoriac.150 restaurants
SA
South Australiac.50 restaurants
WA
Western Australiac.40 restaurants
NT
Northern Territoryc.5 restaurants
KFC AUSTRALIA OPPORTUNITIESTHE KFC BUSINESS IN NSW CONTINUES TO EXPAND WITH NEWLY ACQUIRED STORES AND ORGANIC SALES GROWTH
RBD 61Yum! 50Other Franchisees 90
There are over 600 KFC restaurants across Australia, mostly held by franchisees
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EBITDA (NZ$M)SALES (NZ$M)
FY17 FY18
FY18 SOLID SALES AND EARNINGS GROWTHTOTAL SALES UP 56% WITH ORGANIC GROWTH, FULL YEAR TRADING (VS FY17) AND ACQUISITIONS EBITDA UP 47% WITH SOME SOFTENING OF MARGIN BUT 15% OF SALES SUSTAINABLE
97.2
151.8
FY17 FY18
15.0
22.0SSS +4.9%
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EXPANSION OF THE BEACHHEADSTORE GROWTH BY ACQUISITION SAW STORE NUMBERS UP 45% BY YEAR END
42 STORES
8 STORES
10 STORES 1 STORE 61 STORES
ORIGINAL ACQUISITION APRIL 2016
PURCHASES FROM SMALLER FRANCHISEES
AQUIRED FROM YUM!
NEW STORE BUILDS
STORES AS AT FEB 2018
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STRATEGIC AGENDA – AUSTRALIA
Consolidate recent acquisitions and above-store structure
Continue to acquire smaller independent KFC franchisees (primarily NSW)
New store builds in growth corridors and CBD locations
Acquire large parcels of KFC stores as and when opportunities arise
Introduce a further brand to Australia
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HAWAIIOPERATIONS
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SALES (US$M)
SALES - FY18 DELIVERED ON BUSINESS CASE
66.8 68.3
55.6 51.5
YR 1 BUSINESS CASE FY18 ACTUAL
122.4 119.8
TACO BELL
PIZZA HUT
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EBITDA – OVERALL ON TARGETTACO BELL MARGINS STRENGTHENED WHILE PIZZA HUT WAS IMPACTED BY US NATIONAL VALUE CAMPAIGNS AND LABOUR COST PRESSURES
EBITDA (US$M)
TACO BELL
PIZZA HUT12.9 13.9
6.1 3.3
YR 1 BUSINESS CASE FY18 ACTUAL
19.017.2
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Kailua Taco BellSSS +60%
THE STORE TRANSFORMATION PROCESS IS UNDERWAY
FY18 FY19
1 - NEW STORES 2 1
1 2 MINOR REFURBISHMENTS - 5
2 3 MAJOR REFURBISHMENTS 2 3
- - RELOCATES - -
- 1 TRANSFORMATIONS - 3
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STRATEGIC 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)
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GROWTHOPPORTUNITIES
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New Zealand Australia Hawaii US
Store builds Store build (corridors)Small franchisee acquisitionsLarge acquisition
Potential acquisitionNew store builds
Potential acquisition(beachhead)
Store builds (network) N/A RelocationsNew store builds
Potential entry Potential entry New store buildsTransformations
Potential acquisition(beachhead)
POTENTIAL FOR EXPANSION IN ALL MARKETSTHERE ARE CONSIDERABLE NETWORK GROWTH POSSIBILITIES IN EXISTING MARKETS; HOWEVER THE US MAINLAND PRESENTS A STEP-CHANGE OPPORTUNITY
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US 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
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OUTLOOK FY19
Current strategies across all geographic markets are delivering positive results.
The Taco Bell and Pizza Hut brands in Hawaii have delivered a solid contribution in the first period of ownership. The opportunity there is network enhancement through new store builds and transformations.
Australian store acquisitions continue to add to growth in that market.
KFC New Zealand continues to strongly underpin continuation of profit growth in that market.
Absent any major changes to economic or market conditions, the Group will deliver a Net Profit after Tax (excluding non-trading items) for the FY19 year of at least 10% above current year’s performance.
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QUESTIONS?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.
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SUMMARY
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
RUSSEL CREEDYGROUP CHIEF EXECUTIVE OFFICER
RESTAURANT BRANDS NEW ZEALAND LIMITED (RBD)
GRANT ELLISGROUP CHIEF FINANCIAL OFFICER
INVESTOR PRESENTATIONMAY 2018
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