OTCQX Virtual Investor Conference October 5, 2017

Transcription

1 OTCQX Virtual Investor Conference October 5, 2017

2 SAFE HARBOR STATEMENT Certain information in this presentation, particularly information regarding future economic performance and finances, and plans, expectations and objectives of management, constitutes forward-looking statements. Factors set forth in our Safe Harbor Statement, in addition to other possible factors not listed, could affect the Company s actual results and cause such results to differ materially from those expressed in forward-looking statements. Please review the Company s Safe Harbor Statement at.

3 The Nations Premier Franchise Operator MICHIGAN 60 restaurants OHIO 15 restaurants Virginia 11 restaurants North Carolina 2 restaurants South Carolina 1 restaurant Georgia 37 restaurants OKLAHOMA 20 restaurants Tennessee Arkansas, Missouri, Mississippi 57 restaurants FLORIDA 51 restaurants 254 Restaurant Locations

4 2017 Outlook Guidance Full-year financial targets Year over year percentage change Sales +30% to 40% Income from Ops. +45% to 55% Net Earnings +45% to 55% EBITDA +35% to 45%

5 Month Financial Review (period ended July 2) 6 Months Months 2017 % Difference Sales $112.6M $140.7M +24.9% Income from Operations Net Earnings $5.6M $8.8M +56.5% $2.6M $5.0M +93.6% EBITDA $8.4M $14.1M +68.5% Number of Restaurants %

6 Strong Team Serving those who Serve our Guests Jeff Van Haitsma Director of Organization Development Member Wendy s HR Council Gary Rose President and Chief Operating Officer Robert Schermer, Jr. Chief Executive Officer Tracey Smith Vice President and Chief Financial Officer Member Wendy s CFO Forum Al Pruitt President of Wendy s Lindsay Stone Director of Marketing Member Wendy s Marketing Academy Brad Teachout Director of Casual Dining Concepts Doug Poland Director of Real Estate Member Wendy s Builders Forum Robert Potts Real Estate Attorney Josiah Becker Director of I.T. Member Wendy s CIO Forum

7 Key Stock Data P/E Ratio (TTM) 14.93(Q2 2017) EPS (TTM) $1.34 (Q2 2017) Market Cap $124.6M Shares Outstanding 6.1M Public Float 3.0M Yield (TTM).04% Strong Results 5-Year Common Stock Performance +761% MHGU NASDAQ Composite EV/EBITDA (TTM) 8.45x (Q2 2017) Stock Prices as of 9/28/17

8 Profitable Growth Consolidated EBITDA, the Stock-Value Driver Small Company $28.8 Significant Returns +761% MHGU Consolidated EBITDA ($in millions) $17.1 $18.5 Estimate 5-Year Stock Performance $8.4 $8.6 $5.0 $ % NASDAQ Composite E Stock Prices as of 9/28/17

9 Rewarding Shareholders Dividend Growth Commensurate with Earnings Growth $28.8 $0.095 Consolidated EBITDA ($in millions) $17.1 $18.5 Estimate Common Stock Cash Dividends $0.06 $0.07 Estimate $8.4 $8.6 $0.03 $5.0 $5.3 $0.02 $ E E

10 So... How We Do It? Wendy s Restaurant Growth 2017 Acceptable vs. Exceptional

11 System Background Brand Transformation First Generation Franchisee Retirement It s Still Early in the Consolidation Cycle North America Wendy s Restaurant Locations Franchise System Synopsis 6,537 Total System Restaurants Operated by 294 Franchisees Wendy s is planning to reduce G&A expenses $35M by 2018 (fewer field employees) Wendy s facilitating franchisee-to-franchisee transfers ( Buy and Flips ) Today s Average Wendy s Franchisee; 68 years old Owns 18 restaurants 1/3 of system franchise agreements expiring in 36 months Renewals require significant investment and commitment to long-term growth Major facilities Reimaging POS & IT Systems upgrade Development of New Locations

12 Our Growth History 19 Tuck-in Acquisitions 196 Restaurants Acquired

13 Building a Stronger Wendy s System Acquired Restaurants Operating Performance > 12 Months 117 Restaurants Restaurant Sales (in millions) $152.0 Six fewer Restaurants Sales Higher Franchise flow-thru Stronger Included Sales from 6 Wendy s that MHG closed Average Wendy s closure costs range $300K - $500K $146.5 Restaurant Sales Date of Purchase TTM Q TTM

14 Store-Level EBITDA Acquired Restaurants Operating Performance > 12 Months 117 Restaurants ($ in 000 s) $21, Wendy s Restaurants 117 Wendy s Restaurants Acquired $12,534 Store-Level EBITDA EBITDA Higher Franchise Stronger Date of Purchase TTM Q TTM

15 Performance Catalysts IT Platform & Reimaging Reimaging Lilburn, GA Modernization EBITDA grew from $82,000 to $197,000 (9 months of 2015) IT Platform EBITDA margin expansion generally +2% to +4% of Sales higher than acquired operations Atlanta 7 Wendy s $490,000 $872,000 $946,000 $952,000 $1,100,000 $1,124,000 Store-Level EBITDA Pre-Acquisition

16 MHG s Design Standard Drives Higher Sales, Employee Satisfaction and OSAT Scores Renovation Earnings Catalyst Before During After

17 Wendy s Restaurant Development MHG s Average Sales Lift +18% REMODEL REFRESH New US BUILDING (USB)

18 Restaurants Under Development (Including 18 new Ground-Up Wendy s) Typical Scrape 10 New & Re-locations 8 Scrape & Rebuilds 9 Renovations

19 Vision Year Growth Plan

20 The Big Picture Scale provides opportunity for People, Process and Performance Today Number of Restaurants E 2018E 2019E 2020E 2021E 5 Year Plan

21 Restaurants 5-Year Plan Vision 2021 Ambitious and Achievable Targets $700 Million Sales $60 Million EBITDA +39% 5-Year Annual Growth Rate +45% 5-Year Annual Growth Rate 400*20

22 Key Investment Considerations Best-in-Class Multi-Unit Franchisee Well Prepared People, Operating & Accounting Systems and Credit Facilities in place to support the 5 year growth plan. Successful Acquisition History Meritage's proven operating and development acumen has provided meaningful sales and cash earnings growth in 19 acquired legacy markets. Financial Metrics Experienced management team with a successful track record of improving capital structure, leverage ratios and asset quality in Wendy s acquisitions. Operations Platform Company has created a unique web-based operating, accounting, and HRIS architecture that is highly scalable to support restaurant acquisitions and new development.

23 Uncommon Hospitality We go above and beyond by treating our guests, teammates and communities like friends We Love What We do. QUESTIONS? Thank-you for your interest today. and family