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Transcription:

Investor Presentation JANUARY 2016

FORWARD-LOOKING STATEMENTS Forward-Looking Statements This presentation contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact or relating to present facts or current conditions included in this presentation are forward-looking statements. Forward-looking statements give Wingstop Inc. s (the Company ) current expectations and projections relating to its financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as anticipates, believes, continues, estimates, expects, goal, objectives intends, may, opportunity, plans, potential, near-term, long-term, projections, assumptions, projects, guidance, forecasts, outlook, target, trends, should, could, would, will and similar expressions and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. The forward-looking statements contained in this presentation are based on assumptions that the Company has made in light of its industry experience and perceptions of historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. As you read and consider this presentation, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (many of which are beyond our control) and assumptions. Although the Company believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect its actual operating and financial performance and cause its performance to differ materially from the performance anticipated in the forward-looking statements. The Company believes these factors include, but are not limited to, those described under the sections Risk Factors in the prospectus for the Company s initial public offering and in its other filings with the SEC, which can be found at the SEC s website www.sec.gov. Further, the Company has not yet completed closing procedures for fiscal fourth quarter or full year 2015, and our independent registered public accounting firm has not yet reviewed or audited the results. Accordingly, these preliminary results are subject to change pending finalization, and actual results could differ materially as we finalize such results. Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove incorrect, the Company s actual operating and financial performance may vary in material respects from the performance projected in these forward-looking statements. Any forward-looking statement made by the Company in this presentation speaks only as of the date on which it is made. Factors or events that could cause the Company s actual operating and financial performance to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. Non-GAAP Financial Measures This presentation contains certain non-gaap financial measures. A non-gaap financial measure is defined as a numerical measure of a company s financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in the statements of income, balance sheets or statements of cash flow of the company. The Company has provided reconciliations of each non-gaap financial measure presented to the most directly comparable GAAP measure in the Appendix to this presentation. You should not consider it in isolation, or as a substitute for analysis of results as reported under GAAP. Our calculation of Adjusted EBITDA may not be comparable to that reported by other companies. For additional information about our non-gaap financial measures, see our filings with the Securities and Exchange Commission. 1

A CATEGORY OF ONE

WHAT MAKES WINGSTOP UNIQUE? SIMPLE CONCEPT Pioneered Wings as center of the plate Fast Casual; 98% franchised 11 Flavors spanning spicy, savory, sweet COVETED CONSUMER 49% of guests are Millennials (1) 53% female skew; strong family appeal (2) Best in class social sentiment EFFICIENT OPERATING MODEL $1.1M Average Unit Volume 35-40% Year 2 Cash-on-cash return 75% Take-Out TECH FORWARD 15% of sales from online in Q4 2015 Social at the core; engagement over 30% (3) Digital-first advertising strategy with high ROI Sources: (1) (2) (3) MRI Data Burke Research Forbes, November 2014 3

NO DIRECT NATIONAL COMPETITORS Fast Casual, National Footprint & Focused Menu Sets Wingstop Apart Bar Centric QSR Chicken Pizza Delivery Small Regional 4

2015 ANOTHER TERRIFIC YEAR! INSERT NEW PIC 845 Locations 133 New Openings (Net) 39 states 19% Unit Growth Rate 7.9% Domestic SSS Growth 7 countries 12 Consecutive Years of SSS Growth 5

INDUSTRY LEADING SSS 2012 2015 Q3 YTD Stacked Same Store Sales % 2015 Q3 YTD 2014 2013 2012 Cumulative SSS (1) (2) (3) (3) (1) (2) (3) (1) (4) (1) (5) (6) (3) Source: Company filings Notes: (1) Domestic system-wide (2) Global company-owned (3) Domestic company-owned (4) Franchised (5) Dunkin U.S. segment only (6) System-wide 6

Confidential Information - Do Not Distribute 7

To Serve We strive to deliver on our commitments to our guests, team members, franchisees & shareholders. The World Our brand knows no boundaries due to our unique product, complex flavors and commitment to quality. Intensely loyal fan base Best in class franchisee returns High growth, asset light model; best of both worlds for investors 59 int l locations in 6 countries, and we're just getting started Portable concept; <1% domestic closure rate in 2015 Ubiquitous flavor profile works just about everywhere Always cooked to order Flavor The Craft, the Crave and the Culture. Scratch made sides and dips Hand-cut seasoned fries Menu appeal for individuals, groups, families and events 8

COVETED GUEST BASE MILLENNIALS 18-24 year old Millennial males African American and Hispanic skew Group-centered occasions FAMILIES 24-34 year old Millennial females Hispanic mom skew Orders for the whole family FLAVOR CRAVERS Broad, loyal and diverse guest base attracted by unique flavor experience, product quality, brand personality and convivial nature of eating wings 9

PASSIONATE & ENGAGED FANS Engagement Ratio % 69% of positive social media comments are about the CRAVE! Engagement Ratio: A weighted composite of the total number of engagements (likes, comments, favorites, retweets) that followers have with a brand relative to total engagements (1) Source: (1) Followers MM Infegy McDonald s KFC Pizza Hut Applebee s Burger King Starbucks Coffee Subway Domino s Wendy s Dunkin Donuts 7-Eleven Buffalo Wild Wings Taco Bell Dairy Queen Olive Garden Baskin-Robbins Chick-fil-A Whataburger Hard Rock Outback Steakhouse Hooters Krispy Kreme Red Lobster Wingstop Morton s Steakhouse Source: Forbes, November 2014 10

FUELING DEMAND THROUGH TECHNOLOGY Poised for Continued Growth Average Ticket Online % of Sales ~ 15% Doubled Sales Mix in 2015 ~ $20 ~ $16 Millennial customer base ~ 3-6% ~ 1-3% QSR (1) Fast Casual (1) Wingstop Online Online Ordering All Orders In-Restaurant Conversion Rate (2) 75% Take-Out App Ratings (3) 29% 3.0 4.5 10% 4.5 23 Food & Beverage Industry Wingstop Sources: (1) Olo (2) MarketingSherpa Ecommerce Benchmark Study 2014 (3) App Store Current Versions Jan 5, 2016 4.5 Simple menu 24 4.5 60% of orders still come in over the phone Creates efficiencies at store level 11

AMPLIFIED BY HIGH ROI DIGITAL-FIRST MARKETING APPROACH Illustrative Ad Spend Growth (1) Scaling to National Media Current Potential for the Future Future potential to expand into traditional media and national sponsorships 1000 restaurants in US is target for converting to national Transitioning first through national digital buys Illustrative National Ad Budget 13 advertising cooperatives and growing 23 24 Local Note: (1) Current reflects markets that have shared comprehensive media plans with Wingstop National 12

RESULT: COMPELLING UNIT ECONOMICS In $000s Franchisee Year 2 Target Franchise Awards Unit Economics AUV (1) 890 Investment Cost (2) 370 Unlevered Year 2 COC Return 35% - 40% 78% of current commitments from existing franchisees 2015 Franchisee Satisfaction - Best Franchise Top 10 Fastest Growing Chains Top 40, Best Franchises for African Americans The Best Franchise Deal in North America #24, Top Movers and Shakers List #1 in System Sales Growth Whitespace opportunity to grow Most Effective Use of Social Media 2015 Golden Chain Winner Notes: (1) AUV based on 2013 vintage year 1 performance of approximately $820,000 and year 2 growth rate for all new stores since 2006 of approximately 8.5% (2) Investment cost based on last 2 fiscal years actual costs; excludes pre-opening and working capital 13

VALIDATED BY STRONG COMPANY STORE PERFORMANCE 19 Company-Owned Restaurants in Dallas (12), Houston (2), and Las Vegas (5) Same Store Sales(1) % Average Unit Volume(2) Restaurant Profit(2)(3) $MM $MM Margin 12 14 +881 bps 7.8 7.9 5.9 4.7 2012 Total Units: 23 24 19 19 % 17.6% Margin: Notes: (1) For 19 company-owned restaurants as of 9/26/15; excludes re-franchised restaurants (2) Includes all company-owned restaurants. 1 was re-franchised in October of 2012 and 5 were re-franchised in February 2014 (3) Sales less Cost of Goods Sold, Labor and Other Operating Expenses 2013 2014 LTM Sep. 2015 20.4% 26.4% 25.8% 14

PROVEN CONCEPT ACROSS A VARIETY OF MARKETS 39 State Footprint with Room to Grow in All Markets (1) Total Domestic Store Count Q3: 756 Averaging 3 Domestic Closures Per Year Since 2013 Note: (1) Restaurant count as of 09/26/15 15

ACCELERATING PACE OF DEVELOPMENT Gross New Unit Openings by Year Domestic Restaurant Opening Commitments Rapid Unit Development Healthy Franchisee Base 142 78% of current domestic pipeline is from existing franchisees as of 12/26/15 Mix of small and large franchisees 24 530 503 102 20 363 74 10 57 4 118 274 1 82 35 6 64 53 29 2011 2012 Domestic 2013 International 2014 2015 2012 2013 2014 2015 Development Commitments 16

LONG-TERM STORE POTENTIAL ROADMAP Domestic Bridge to Long-Term Goal Remaining Opportunity Domestic Commitments 814 2,500 Existing Markets New Markets 618 855 900 196 566 786 334 1,645 786 (1) 2015 2014(actual) (actual)(1) Existing Market Potential Note: (1) Includes 745 restaurants in existing markets and 41 restaurants in new markets as of 12/26/15. New Market Potential Long-Term Domestic Potential 17

INTERNATIONAL POTENTIAL Current Units and Per Capita Poultry Consumption(1) A Europe Market Europe Consumption European Union AsiaAsia 21kg North America Africa U.S. Consumption: 44kg Middle East Asia Africa Americas Market Consumption Latin America and Caribbean 30kg Brazil 39kg Canada 32kg Mexico 25kg Market South America Market Consumption South Africa 31kg Existing Footprint Market Units Mexico 30 Philippines 8 Indonesia 7 Russia 3 Singapore 2 UAE 1 Middle East (1) Market Saudi Arabia Consumption 44kg Consumption Asia and Pacific 8kg Malaysia 41kg Australia 39kg New Zealand 35kg China 12kg Indonesia 6kg India 2kg Source: OECD-FAO Agricultural Outlook 2015 Total 51 Note: (1) Unit data as of Q3 15; Poultry consumption in estimated average kilograms per capita from 2012 to 2014 18

LONG TRACK RECORD OF DELIVERING OUTSTANDING RESULTS Total Units System-Wide Sales 845 $MM ~821 821 712 614 679 546 550 457 Growth %: 2012 2013 2014 9.4% 12.5% 16.0% 2015 2015 est (2) 2012 18.7% 2013 2014 2015 est (2) 2015 Adjusted EBITDA(1) Total Revenue $MM $MM 77.6 77.9 2015 est (2) High Growth + Franchisor Cash Flow Notes: (1) Refer to Appendix for reconciliation (2) 2015 estimates represent updated guidance issued on 01/11/16. 19

THE BEST OF BOTH WORLDS Rapid Expansion Robust Cash Conversion % FY 2014 Cash Conversion and Unit Growth (1) LTM Q3 Gross Unit Openings 15 (2) (2) (2) Unit Growth: Source: Public company filings 2.4% 16.0% 3.9% 6.8% 3.0% Notes: 1. Defined as (EBITDA CapEx) / EBITDA 2. Calculations use Adj. EBITDA 6.9% 20

SIMPLE AND STRONG BALANCE SHEET EBITDA Growth and Cash Generation Support Deleveraging(1) Balance Sheet ($MM) Capitalization as of Q1 2015 (Inclusive of Recap) Capitalization as of Q2 2015 (Post-IPO) Capitalization as of Q3 2015 Cash 2.9 4.9 5.7 Revolving Credit Facility 0.0 0.0 0.0 Term Loan 132.5 100.5 95.5 Total Debt 132.5 100.5 95.5 Total Debt / LTM Adjusted EBITDA 5.3x 3.9x 3.6x (2) Notes: (1) Leverage = Gross Debt / LTM Adjusted EBITDA (2) Primary proceeds at IPO used to achieve leverage of ~3.9x LTM Adj. EBITDA 21

LONG-TERM FINANCIAL TARGETS* Attractive Business Model Disciplined Unit Growth Long-Term Growth Targets 10%+ annual unit growth ~2,500 domestic unit potential + Strong Same Store Sales Growth Low single digit annual growth Consistent new store ramp = 13% - 15% Adjusted EBITDA growth Steady, Reliable Profit Growth 18% - 20% Net Income / EPS growth Strong free cash flow and conversion *These are not projections; they are goals and are forward-looking, subject to significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management, and are based upon assumptions with respect to future decisions, which are subject to change. Actual results will vary and those variations may be material. For discussion of some of the important factors that could cause these variations, please consult the Risk Factors section in the prospectus for the Company s initial public offering and in it s other filings with the SEC. Nothing in this presentation should be regarded as a representation by any person that these goals will be achieved and the Company undertakes no duty to update its goals. 22

#Appendix 23

YTD HISTORICAL ADJUSTED EBITDA RECONCILIATION In $000s Year Ended December 29, 2012 Year Ended December 28, 2013 Year Ended December 27, 2014 YTD September 27, 2014 (1) (1) YTD September 26, 2015 Net income 3,580 7,530 8,986 7,485 6,311 Interest expense, net 2,431 2,863 3,684 2,871 2,764 Income tax expense 3,000 4,493 5,312 4,426 3,753 Depreciation and amortization 2,930 3,030 2,904 2,232 1,944 11,941 17,916 20,886 17,014 14,772 3,297 Management fees(3) 422 436 449 338 237 Transaction costs(4) 308 395 2,169 976 2,186 Gains and losses on disposal of assets(5) (20) (86) (86) Stock-based compensation expense(6) 464 748 960 322 492 2,500 15,615 19,495 24,378 18,564 20,984 EBITDA Adjustments Management agreement termination fee(2) Earn-out obligation(7) Adjusted EBITDA Notes: 1. LTM Adjusted EBITDA calculated as YTD September 26, 2015 + Year Ended December 27, 2014 YTD September 27, 2014 2. One-time fee of approx. $3.3 million paid in consideration of termination of management agreement with Roark Capital Management, LLC 3. Includes management fees and other out-of-pocket expenses paid to Roark Capital Management, LLC 4. Represents costs and expenses related to refinancings of our credit agreement and our initial public offering 5. Represents non-cash gains and losses resulting from the sale of company-owned restaurants to a franchisee and associated goodwill impairment 6. Includes non-cash, stock-based compensation 7. Represents an earn-out payment made to our prior owner based on us achieving revenue benchmarks specified in the acquisition agreement governing our purchase. There are no further obligations related to the earn-out remaining under the acquisition agreement 24

QUARTERLY HISTORICAL ADJUSTED EBITDA RECONCILIATION In $000s Year Ended December 29, 2012 Year Ended December 28, 2013 Year Ended December 27, 2014 Quarter Ended September 27, 2014 Quarter Ended September 26, 2015 Net income 3,580 7,530 8,986 1,993 3,173 Interest expense, net 2,431 2,863 3,684 876 800 Income tax expense 3,000 4,493 5,312 1,178 1,784 Depreciation and amortization 2,930 3,030 2,904 690 636 11,941 17,916 20,886 4,737 6,393 Management fees(2) 422 436 449 111 Transaction costs(3) 308 395 2,169 776 Gains and losses on disposal of assets(4) (20) (86) Stock-based compensation expense(5) 464 748 960 112 150 2,500 15,615 19,495 24,378 5,736 6,543 EBITDA Adjustments Management agreement termination fee(1) Earn-out obligation(6) Adjusted EBITDA Notes: 1. One-time fee of approx. $3.3 million paid in consideration of termination of management agreement with Roark Capital Management, LLC 2. Includes management fees and other out-of-pocket expenses paid to Roark Capital Management, LLC 3. Represents costs and expenses related to refinancings of our credit agreement and our initial public offering 4. Represents non-cash gains and losses resulting from the sale of company-owned restaurants to a franchisee and associated goodwill impairment 5. Includes non-cash, stock-based compensation 6. Represents an earn-out payment made to our prior owner based on us achieving revenue benchmarks specified in the acquisition agreement governing our purchase. There are no further obligations related to the earn-out remaining under the acquisition agreement 25