Domino s Pizza Investor Presentation. November 2009

Transcription

1 Domino s Pizza Investor Presentation November 2009

2 Forward-Looking Statements This presentation and our accompanying comments include forward-looking statements. These statements relate to future events or our future financial performance and are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. This presentation and our accompanying comments do not purport to identify the risks inherent in an investment in Domino s Pizza and factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, include but are not limited to those risk factors identified in Domino s Pizza, Inc. s Annual Report on Form10- K for the fiscal year ended December 28, 2008, as well as other SEC reports filed by Domino s Pizza, Inc. from time to time. Although we believe that the expectations reflected in the forward-looking statements are based upon reasonable estimates and assumptions, we cannot guarantee future results, levels of activity, performance or achievements. We caution you not to place undue reliance on forward-looking statements, which reflect our estimates and assumptions and speak only as of the date of this presentation. We undertake no obligation to update the forward-looking statements to reflect subsequent events or circumstances In light of the above, you are urged to review the disclosures contained in the Domino s Pizza, Inc. SEC reports, including the risk factors contained therein. This presentation contains trade names, trademarks and service marks of other companies. We do not intend our use or display of other parties trade names, trademarks and service marks to imply a relationship with, or endorsement or sponsorship of, these other parties. 2

3 Investment Questions for Any Company in Today s Environment 1. Is the business foundation strong? Business proposition Company position 2. Is the company stable? 3. Is the product attractive to consumers? Also needs to be affordable 4. Can the business grow? 5. Is the capital structure right for the business? 6. Does the company reward shareholders? 3

4 Domino s Scope Strong Foundation Delivery¹ $11 Billion Carry-Out¹ $14 Billion Pizza¹ = $34 Billion Pizza Channel Share³ 2007 Global Retail Sales: $5.4 Billion 25.7% 46.9% QSR¹ = $231 Billion Retail Food² = $570 Billion 59% 25.8% Food Industry² = $1.1 Trillion Domestic Landscape Carry-Out Delivery Dine-In Other 2008 Global Retail Sales: $5.5 Billion 5.6% 5-year CAGR 4 International 45% 55% Domestic ¹The NPD Group/CREST through YE 2008 ²Technomic YE 2008 ³November 2008 The NPD Group/CREST. Note: Carry-out includes Drive-Thru. 4 CAGR

5 Domino s Pizza Business Units Strong Foundation Domestic Stores Domestic Supply Chain International 4,456 Franchised Stores 481 Company-owned Stores 17 Dough Manufacturing & Supply Chain Facilities 1 Equipment and Supply Facility 3,949 Franchised Stores Currently no Company- Owned Stores 6 Dough Manufacturing & Supply Chain Facilities As of Q

6 Domino s Domestic Franchisees Strong Foundation Solid partnership¹ 19.5 years is the average relationship with our top 50 franchisees² 99%+ collection rate Have to win with Domino s Pizza Owner-operators with no outside business interests No significant concentrations¹ Approximately 1,200 franchisees Average franchisee owns 3-4 stores Only 6 franchisees have 50 or more stores ¹Statistics as of FY 2008 ²Top 50 franchisees ranked by store count 6

7 Domino s Pizza Unit Economics Strong Foundation Franchise Model Generates Sustainable Returns Focused and efficient operating model 1 Delivery and carry-out no dine-in Low cost to open / operate $150K - $250K average cost range for new store Bargains available for purchase of turnaround stores Minimal square footage Makeline + oven Strong cash-on-cash returns ¹ Statistics refer to domestic stores only 7

8 Stable Business Proven 49-Year History Domino s is a powerful global brand #1 pizza delivery company in the U.S. Strong and proven business model with superior returns Large and growing international presence Profitable, value-added supply chain Experienced management team with proven track record Stock is a value! Strong and Consistent Cash Flow Generator 8

9 High Household Penetration Affordable Product Virtually everyone eats pizza! Each man, woman and child in America eats an average of 46 slices (23 pounds) of pizza each year ¹ 67% of the U.S. population eats pizza once a month ² Pizza has been a Top 10 food consumed by Americans for over 20 years Domino s Pizza can feed a family of four for $25 Average ticket for a party of four eating QSR pizza: $25.19 ³ Average ticket for a party of four at a casual dining restaurant: $49.94 ³ ¹ Packaged Facts, New York ² Technomic ³ The NPD Group/CREST through Nov

10 Market Share Growth Opportunities Growth Opportunities Market Share Still Room to Grow #1 Pizza Delivery Company in the U.S. Small Chains & Small Chains & Independents Independents 54% 55% 19% 19% 11% 10% Domino s Pizza Domino s Pizza 17% 15% Pizza Delivery Dollar Share 2007 QSR Pizza Delivery Share Source: The NPD Group/CREST -Dollar Share, Year Ending August

11 Domestic Growth Opportunities Traffic growth is key bring excitement back to Domino s Pizza Sustainable, organic growth Today s traffic = tomorrow s same-store sales results Product platforms, not product-of-the-month LTOs don t drive sustained traffic Day part expansion Timely consumer insight and strategic response Delivery charge management Flexible pricing model ( barbell ) Menu strategy 11

12 Managing Commodities Stable Business Magnitude of Commodity Costs Pricing pass-through on most items Provides stable dollar operating profit for Supply Chain Multi-year purchasing agreement for cheese Lower volatility and improved budget planning Cheese prices have turned favorable in 2009 Supply Chain also manufactures dough Price of dough adjusted quarterly Fuel Costs Affects supply chain and consumer confidence primarily 12

13 International Growth Opportunities In 60 international markets International profits driven by franchise royalties: 93% of 2008 International operating income International represented 35% of total DPZ adjusted operating income in 2008 Growth Opportunities Limited investment with Master Franchise model drove 4-year retail sales CAGR of 14% International 2,749 International Store Growth 2,987 3,223 3,469 Four-Year Growth 977 Stores 3,726 International Same Store Sales Growth 5.9% 6.1% 6.7% 6.2% 4.0% Constant dollar 13

14 International Growth Opportunities Top 10 Markets Q Stores Delivery Market Position Potential Store Count Mexico 588 #1 700 United Kingdom 533 #1 900 Australia 407 #1 550 South Korea 315 #3 400 Canada 303 #3 400 India 275 #1 400 Japan 178 #3 700 France 152 #1 700 Taiwan 119 #2 150 Turkey 116 #1 300 TOTAL 2,986 5,200 Market position and potential store count based on Domino s Pizza International estimates. 14

15 2007 Asset-Backed Securitization Capital Structure Debt as of Year End 2008 $1.6B Senior ABS debt 5.961% cash interest rate $0.1B Subordinated debt 7.629% cash interest rate $1.7B Total funded debt 6.059% cash interest rate Senior debt wrapped with insurance Whole-business securitization secured with most cash flows of the company Fixed rate with no amortization for 5 years Two possible 1-year extensions o Current projections ¹ meet DSCR covenant for extensions ¹Projections through Q

16 Our Only Covenant: DSCR Capital Structure Debt Service Coverage Ratio (DSCR) = Collections / Senior Interest Expense Collections cannot be calculated using publicly-disclosed information, but it tracks closest to EBITDA EBITDA performance would need to drop by $65 - $75M annually before first trigger is reached 16

17 Rewarding Shareholders Long-Range Outlook Domestic Same Store Sales +1% to +3% International Same Store Sales +3% to +5% Net Units +200 to +250 Global Retail Sales +4% to +6% Normalized Annual Cap-Ex $20 to $30 million Tax Rate Approximately 40% 2009 Outlook Flat domestic same store sales Net negative domestic store growth Targeted G&A investments Lower commodity costs and the benefit of a 53 rd week Cap-Ex at the lower end of the $20 to $30 million range Significant negative impact on international royalties from FX movements Net positive international store growth Global net store growth in the 175 to 225 range Opportunistic debt repurchases Outlook does not constitute specific earnings guidance. Domino s does not provide quarterly or annual earnings estimates. 17

18 Opportunities to Deploy Capital to Build Shareholder Value Investment in Growing Business Pay Significant Dividends Paid out $14.45 / share in quarterly and special dividends since IPO, or over $900 million Repurchase Shares Authorized for a $200 million Open Market Repurchase Program Disbursed approximately 49% of authorized amount Deleverage Repurchased $160.9 million of principal on the fixed rate senior notes for a total purchase price of $108.9 million¹ Reduced risk of any loss of VFN (revolver) availability Set up a new, cash collateralized, $50M L/C facility ¹Includes disclosed repurchases subsequent to the current quarter 18

19 Domino s Pizza Thank you!