KKD Jan 2016 Investor Presentation
-
Upload
ala-baster -
Category
Documents
-
view
219 -
download
0
Transcript of KKD Jan 2016 Investor Presentation
-
8/20/2019 KKD Jan 2016 Investor Presentation
1/28
ICR CONFERENCE01.13.2016
-
8/20/2019 KKD Jan 2016 Investor Presentation
2/28
FORWARD-LOOKING STATEMENTSSome of the information in this presentation represents forward-looking statements that are
protected under the Private Securities Litigation Reform Act of 1995. Such statements may
reflect our expectations or beliefs about the future, including, without limitation, expectations
or beliefs regarding our financial performance. We cannot assure you that we will achieve orrealize these expectations.
Like any such statements, they are subject to a number of factors, risks and uncertainties that
could cause actual results to differ materially from our expectations or beliefs. These factors
include items discussed in our SEC filings, including our annual report on Form 10-K for the
year ended February 1, 2015. New factors emerge from time to time, and it is not possible for
us to predict all such factors or assess the impact of each such factor on Krispy Kreme.
If we do make forward-looking statements, we undertake no obligation to update those
statements in the future in light of subsequent events. Please note that all of our SEC filings,
along with other shareholder relevant information, can be found on the IR portion of our
website at www.krispykreme.com.
2
-
8/20/2019 KKD Jan 2016 Investor Presentation
3/28
Our Mission Statement
3
-
8/20/2019 KKD Jan 2016 Investor Presentation
4/28
• Global brand w/over 1,100 locations in
25 countries
• $1.3 billion in systemwide sales• Indulgent treat vs. meal replacement
• Dozens based business
• 80% of our business is doughnuts
• Average ticket of approximately $7.75• Daypart transactions are evenly spread
throughout the day
Who We Are
4
-
8/20/2019 KKD Jan 2016 Investor Presentation
5/28
6
300
142 76
62
67
13
129576
1
18
33
20
114
25
22
87
133
15
Where We Are
1,116 locations in 25 countries as of December 27, 2015
5
2
21
1
1
-
8/20/2019 KKD Jan 2016 Investor Presentation
6/28
COMPANY STORES (120) DOMESTIC FRANCHISE (180)
Systemwide sales of $485mm
Revenues of $28mm
INTERNATIONAL FRANCHISE (816)
Gross revenues of $254mm
External revenues of $125mm
[1] Systemwide sales and revenues
represent ttm ending Nov. 1, 2015; store
count as of December 27, 2015.
SUPPLY CHAIN
Systemwide sales of $354mm
Revenues of $15mm
We Operate 4 Unique Business Segments (1)6
Revenues of $346mm: ~55/45 Retail/CPG
-
8/20/2019 KKD Jan 2016 Investor Presentation
7/28
ENHANCING
CORE MENU
ACCELERATING
GLOBAL
GROWTH
MAXIMIZING
BRAND
AWARENESS
LEVERAGING
TECHNOLOGY
Our Business Strategy Revolves Around 4 Pillars
7
-
8/20/2019 KKD Jan 2016 Investor Presentation
8/28
Domestic• 60/40 Franchise vs. Company-Owned
• Opening 30 shops/year • Long-term potential for an additional 900 to 1,200
drive thru locations plus non-traditional locations
We Continue to Grow Both Domestically & Internationally
ACCELERATINGGLOBAL
GROWTH
8
Glasgow, Scotland
International
• Ongoing annual double-digit growth %
• Opening 100 net new shops/year
• Currently in 25 countries and targeting 5 to 7 new countries/year
-
8/20/2019 KKD Jan 2016 Investor Presentation
9/28
• Balance promotion with profitability
• Special event days vs. everyday promotions
• Leverage social media
• Exciting limited time offers (LTOs)
• Tiered/Premium pricing
• Increase coffee attachment rates
• Leverage guest engagement platform
• Opportunistic pricing actions
ACCELERATINGGLOBAL
GROWTH
We Are Intensely Focused on Consistently Driving Comp Sales
9
-
8/20/2019 KKD Jan 2016 Investor Presentation
10/28
10
ACCELERATINGGLOBAL
GROWTH
-
8/20/2019 KKD Jan 2016 Investor Presentation
11/28
11
Doughnuts and Coffee
ACCELERATINGGLOBAL
GROWTH
First Priority: Accelerate attachment• Order flow and operational improvements
• Making coffee part of our cultural DNA
Longer Term: Design intoour shops• Stronger visual and sensory signals
• Warmer, more inviting environment
-
8/20/2019 KKD Jan 2016 Investor Presentation
12/28
ACCELERATINGGLOBAL
GROWTH
Coffee – New Prototype Shop
12
-
8/20/2019 KKD Jan 2016 Investor Presentation
13/28
ACCELERATINGGLOBAL
GROWTH
The Focus is Enhancing the Overall Guest Experience…
13
-
8/20/2019 KKD Jan 2016 Investor Presentation
14/28
ACCELERATINGGLOBAL
GROWTH
…including More Inviting Atmosphere & Seating
14
-
8/20/2019 KKD Jan 2016 Investor Presentation
15/28
15
Enhanced Customer Ordering Process & Flow
Current Future
-
8/20/2019 KKD Jan 2016 Investor Presentation
16/28
16
MobileGUESTENGAGEMENT
Platform
Hot Light™ Feature• Find favorite or nearby shop
• Receive notifications for Hot Light
Digital Rewards• Simple program• Dashboard of reward status• Current promotions
• Stored value• Ability to gift
LEVERAGINGTECHNOLOGY
Our Loyalty Program is in Place…
MOBILE GUEST
ENGAGEMENT
-
8/20/2019 KKD Jan 2016 Investor Presentation
17/28
BUSINESS
ANALYTICS
POS
• Rolling out common platform to alldomestic locations by end of January
Business Analytics• Making strong progress with dashboards
and data mining
• Real-time analytics = action
LEVERAGINGTECHNOLOGY
…and We Are Making Headway on Analytics
17
-
8/20/2019 KKD Jan 2016 Investor Presentation
18/28
Short Term• Emphasis on coffee
• Doughnut variety• Premium offerings, incl. tiered pricing
• Engage millennials
Longer Term
• Explore complementary platforms• Customization
18
ENHANCINGCORE MENU
We Continue Enhancing our Menu
-
8/20/2019 KKD Jan 2016 Investor Presentation
19/28
CPG/Wholesale• Grocery/mass merchants &
convenience stores• Incremental business
• Different use occasion
MAXIMIZINGBRAND
AWARENESS
• Coffee products are current focus
o Top-of-mind awareness and trialo Increasing brand equity
• Establishes national platform
• Exploring longer shelf lifeopportunities
FUNDRAISING• Enables local charities to raise more than $35 million
• Uniquely positioned to expand through additional programs,increased awareness and technology.
Licensing
And, We Continue to Leverage our Brand in Other Channels
19
-
8/20/2019 KKD Jan 2016 Investor Presentation
20/28
FINANCIAL UPDATE
20
-
8/20/2019 KKD Jan 2016 Investor Presentation
21/28
21
Company-owned Retail Same-store Sales
FY13 excludes revenues for 53rd week
We Have Experienced Solid Financial Growth
Revenues ($’s in millions)
$0.31
$0.47
$0.61$0.70
FY12 FY13 FY14 FY15
Adjusted EPS
$34
$59 $57$63
FY12 FY13 FY14 FY15
Cash Flow from Operations ($’s in millions)
Adjusted EPS is a non-GAAP measure
6.2%6.9%
8.3%
1.3%
FY12 FY13 FY14 FY15
$403$427
$460$490
FY12 FY13 FY14 FY15
-
8/20/2019 KKD Jan 2016 Investor Presentation
22/28
22
• Consistently allocating capital to share repurchases to compliment organic growth
• Since FY 2013 through FY16 Q3, we have repurchased $132 million worth of stock
$’s repurchased in millions
We Have Used Excess Cash Flow to Repurchase Stock
$20$23
$39
$50
FY13 FY14 FY15 FY16Q3 YTD
-
8/20/2019 KKD Jan 2016 Investor Presentation
23/28
Driving New Shop Returns Continues to be a Focus
23
• We have 35 company-owned small shops
• On average, the returns are exceeding our cost of capital
• We modified our site selection process
• We continue to focus on enhancing returns:
o Topline
o Margins
o Investment Cost
-
8/20/2019 KKD Jan 2016 Investor Presentation
24/28
We Will Remain Disciplined With Our Capital• Growing at a rate that is right for us
• Funding business growth with cash flow from operations
• Use of capital expenditures to build new small retail
shops, remodel and maintain existing shops and invest in
technology
• Returning excess capital through share repurchases
o Repurchased $132mm of common stock since FY 2013
• Maintain a prudent balance sheet
24
-
8/20/2019 KKD Jan 2016 Investor Presentation
25/28
25
Summary• The KKD brand is much larger than the
company
• We are growing shops at a low double digit
rate
• We are intensely focused on further
improving our (and franchisee) returns
• We have a number of initiatives to continue
driving comp sales• We are maintaining a prudent balance sheet,
while continuing to return significant capital
via share repurchases
-
8/20/2019 KKD Jan 2016 Investor Presentation
26/28
APPENDIX
-
8/20/2019 KKD Jan 2016 Investor Presentation
27/28
KRISPY KREME DOUGHNUTS, INC.NON-GAAP FINANCIAL INFORMATION
27
As of February 1, 2015, the Company had net deferred income tax assets of approximately $92 million, of which approximately $44
million related to federal and state net operating loss carryovers. The Company’s federal net operating loss carryovers totaled
approximately $159 million.
The Company has reported cumulative pretax income of over $160 million since the beginning of fiscal 2010, and the Companyalso has generated significant taxable income during this period. However, because of the Company’s utilization of its federal and
state net operating loss carryovers and other deferred tax assets, the Company’s cash payments for income taxes have been
relatively insignificant during this period. As a result, the provision for income tax expense has substantially exceeded cash
payments for income taxes. Until such time as the Company’s net operating loss carryovers are exhausted or expire, GAAP income
tax expense is expected to continue to substantially exceed the amount of cash income taxes payable by the Company.
The Company recorded a pretax charge of approximately $2.5 million in the fourth quarter of fiscal 2015 for the settlement of
amounts due under an employment agreement with the Company’s former chief executive officer. That officer, who was mostrecently the Company’s Executive Chairman, transitioned from that role to the non-employee role of non-executive chairman of the
board of directors in late January 2015. Charges of this nature are not expected to recur on a regular basis.
The following non-GAAP financial information and related reconciliation of adjusted net income to GAAP net income are provided
to assist the reader in understanding the effects of the above facts and transactions on the Company’s results of operations. In
addition, the non-GAAP financial information is intended to illustrate the material difference between the Company’s income tax
expense and income taxes currently payable. These non-GAAP performance measures are consistent with other measurements
made by management in the operation of the business which do not consider income taxes except to the extent to which those taxescurrently are payable, for example, capital allocation decisions and incentive compensation measurements that are made on a pretax
basis.
-
8/20/2019 KKD Jan 2016 Investor Presentation
28/28
KRISPY KREMEDOUGHNUTS, INC.NON-GAAP FINANCIALINFORMATION
The Company’s fiscal year ends on the Sunday closest to January 31, which periodically results in a 53-week year. Fiscal 2013 contained 53 weeks.
28
Historical Periods
Year Ended Year Ended Year Ended Year Ended
January 29, February 3, February 2, February 2,
2012 2013 2014 2015
(In thousands, except per share amounts)
Net income (loss), as reported................................................. $ 166,269 $ 20,779 $ 34,256 $ 30,060
Charge for settlement of employment contract.................... 2,464
Loss on refinancing of debt...................................................... - - 967
Gain on sale of interest in KK Mexico
(net of income taxes of $1,492)............................................. (4,706) - -
Earnings for the 53rd week..................................................... - (1,273) -
Provision for deferred income taxes...................................... (139,403) 13,413 8,014 15,729
Adjusted net income (loss)....................................................... $ 22,160 $ 32,919 $ 43,237 $ 48,253
Adjusted earnings (loss) per common share:
Basic............................................................................ $ 0.32 $ 0.49 $ 0.64 $ 0.73
Diluted......................................................................... $ 0.31 $ 0.47 $ 0.61 $ 0.70
Weighted average shares outstanding:
Basic............................................................................ 69,145 67,624 67,261 66,360
Diluted......................................................................... 71,497 69,896 71,054 68,929