Restaurant Brands Half Year Results Presentation

Russel Creedy - Group CEOGrant Ellis - Group CFO29 August 2022
Restaurant Brands
New Zealand Limited
Results Presentation
6 Months to 30 June 2022 (1H 22)

•
Key Points
•
Results Overview
•
New Zealand Operations
•
Australia Operations
•
Hawaii Operations
•
California Operations
•
Outlook
•
Questions
Presentation Outline
2

Key Points
3
1H
 
22
 
vs.
 
1H
 
21
1H
 
20
1H
 
21
1H
 
22
•
   
Group
 
Sales
+8%
$383.4m
$540.6m
$584.9m
•
   
Reported
 
NPAT
‐
56%
$11.2m
$34.5m
$15.3m
•
   
Brand
 
EBITDA
‐
4%
$61.7m
$88.1m
$84.3m
•
   
Continued
 
sales
 
growth
 
across
 
all
 
divisions
 
boosted
 
by
 
new
 
store
 
openings
 
(and
 
favourable
 
exchange
 
rate)
•
  
COVID
‐
19
 
continues
 
to
 
impact
 
operations
 
in
 
all
 
markets
 
and
 
in
 
particular
 
staff
 
availability
 
and
 
supply
 
chain
•
   
Significant
 
increases
 
in
 
input
 
costs
 
resulted
 
in
 
short
 
term
 
margin
 
degradation
 
as
 
businesses
 
struggled
 
to
 
recover
 
costs
•
   
Prior
 
year
 
NPAT
 
comparison
 
distorted
 
by
 
"one
‐
offs"
 
and
 
adjustments
 
including
 
loan
 
forgiveness
 
of
 
$11.4m
 
Hawaii
 
PPP
 
loan

Whilst reported profit is down 56%, underlyi
ng brand EBITDA is only 5% down with
“one-off” comparisons and non-cash items
4
*pre G&A, NZ IFRS 16 and Other Expenses
$NZm
1H
 
21
1H
 
22
Change
 
B/(W)
Group
 
EBITDA
 
*
90
 
85
 
(5)
G&A
 
Expenses
22
 
25
 
(3)
68
 
60
 
(8)
Loan
 
Forgivness
(11)
‐
(11)
Other
 
Expenses
2
 
2
 
0
 
Depreciation
 
&
 
Amortisation
23
 
27
 
(4)
Operating
 
Profit
 
Pre
 
IFRS
 
16
54
 
31
 
(23)
IFRS
 
16
 
Adjustment
8
 
9
 
1
 
Operating
 
Profit
62
 
40
 
(22)
Financing
 
Expenses
18
 
20
 
(2)
Net
 
Profit
 
Before
 
Tax
44
 
20
 
(24)
Taxation
9
 
5
 
4
 
Net
 
Profit
 
After
 
Tax
35
 
15
 
(20)

5
Results Overview

6
Sales up $44m from acquisitions and store openings; however brand EBITDA down $4m with COVID related staff shortages and inflationary pressures
175
 
239
 
252
 
99
 
123
 
133
 
110
 
101
 
115
 
77
 
84
 
383
 
541
 
585
 
1H
 
20
 
(6
 
months)
1H
 
21
 
(6
 
months)
1H
 
22
 
(6
 
months)
Sales
$NZm
New
 
Zealand
Australia
Hawaii
California
34
 
43
 
41
 
12
 
16
 
14
 
16
 
16
 
21
 
13
 
9
 
62
 
88
 
84
 
1H
 
20
 
(6
 
months)
1H
 
21
 
(6
 
months)
1H
 
22
 
(6
 
months)
Brand
 
EBITDA
$NZm
New
 
Zealand
Australia
Hawaii
California

7
Net “non-trading” items primarily ERP implementation costs
$NZm
 
(Pre
 
tax)
1H
 
21
1H
 
22
ERP
 
implementation
1.2
 
3.4
 
Acquisition
 
costs
0.7
 
0.1
 
Gain
 
on
 
acquisition
‐
(0.9)
Sundry
 
other
 
income
 
&
 
expenses
(0.1)
‐
Gain
 
on
 
sale
 
Pizza
 
Hut
 
stores
(0.9)
‐
US
 
PPP
 
Loan
 
Forgiven
(11.4)
‐
Net
 
Other
 
(Income)/Expense
(10.5)
2.6
 

*Adjusted
 
for
 
payments
 
of
 
lease
 
interest
 
classified
 
as
 
operating
 
activities
 
under
 
NZ
 
IFRS
 
16
 
of
 
$14.2m
 
in
 
1H
 
21
 
and
 
$16.0m
 
in 1H 22,
 
and
 
payments
 
of
 
lease
 
costs
 
excluded
 
from
 
operating
 
activities
 
under
 
NZ
 
IFRS
 
16
 
of
 
$26.3m
 
in
 
1H
 
21
 
and
 
$29.3m
 
in
 
1H
 
22.
8
Operating cash flow down on prior year from cost pressures.Investing cash flow lower with COVID related construction delays.
$NZm
1H
 
21
1H
 
22
Operating Cash Flow (adjusted) *
50
 
35
 
Investing Cash Flow
(53)
(34)
Free Cash Flow
(3)
1
 

9
Net borrowings up on 2021 1H with ongoing new store construction and $40m dividend paid in April, but ratios remain well within required limits
*
EBITDA for rolling 12 months, including lease costs
$NZm
1H
 
21
1H
 
22
Net Debt
195
 
257
 
Net Debt:EBITDA*
1.4:1
2.1:1
Gearing (ND:ND+E)
42%
48%

10
New Zealand Operations

11
NZ sales up against prior year with moderate same store sales growth.EBITDA lower with COVID staff issues impacting on trading and cost pressures.
34
 
43
 
41
 
19.2%
18.0%
16.1%
1H
 
20
 
(6
 
months)
1H
 
21
 
(6
 
months)
1H
 
22
 
(6
 
months)
NZ
 
EBITDA
EBITDA
 
$m
EBITDA
 
%
 
of
 
Sales
175
 
239
 
252
 
2.7%
12.5%
1.4%
1H
 
20
 
(6
 
months)
1H
 
21
 
(6
 
months)
1H
 
22
 
(6
 
months)
NZ
 
Sales
Total
 
Sales
 
$m
Same
 
Store
 
Sales
 
%

12
Australia Operations

13
Australia business continues to grow with slow recovery in non-FSDT stores.Margins down from COVID related staff shortages, inflation and new Taco Bell mix.
94
 
115
 
123
 
0.3%
5.2%
3.4%
1H
 
20
 
(6
 
months)
1H
 
21
 
(6
 
months)
1H
 
22
 
(6
 
months)
Australia
 
Sales
Total
 
Sales
 
$Am
Same
 
Store
 
Sales
 
%
11
 
15
 
13
 
11.9%
13.3%
10.6%
1H
 
20
 
(6
 
months)
1H
 
21
 
(6
 
months)
1H
 
22
 
(6
 
months)
Australia
 
EBITDA
EBITDA
 
$Am
EBITDA
 
%
 
of
 
Sales

14
Hawaii Operations

15
Hawaii margin growth driven by continuing improvement in Taco Bell post-COVID restrictions
69
 
73
 
76
 
8.0%
9.9%
2.9%
1H
 
20
 
(6
 
months)
1H
 
21
 
(6
 
months)
1H
 
22
 
(6
 
months)
Hawaii
 
Sales
Total
 
Sales
 
$USm
Same
 
Store
 
Sales
 
%
10
 
12
 
14
 
14.8%
15.8%
18.0%
1H
 
20
 
(6
 
months)
1H
 
21
 
(6
 
months)
1H
 
22
 
(6
 
months)
Hawaii
 
EBITDA
EBITDA
 
$USm
EBITDA
 
%
 
of
 
Sales

16
California Operations

17
New store sales offset the impact of rolling prior year stimulus payments.Earnings adversely impacted by significant input cost inflation.
55
 
56
 
1H
 
21
 
(6
 
months)
1H
 
22
 
(6
 
months)
California
 
Sales
Total
 
Sales
 
$USm
9
 
6
 
16.5%
10.4%
1H
 
21
 
(6
 
months)
1H
 
22
 
(6
 
months)
California
 
EBITDA
EBITDA
 
$USm
SSS
-3.0%

18
Despite increased operating cost pressures. California built three new stores and acquired one other in 1H 2022. All are performing well against business case.
KFC Perris
KFC Waterman
KFC Barstow
Desert Hot Springs
(acquired)
+18% on
business
case
+55% on
business
case
+45% on
business
case
+5% on
business
case

Outlook
19
Despite a solid start to the year in terms of
sales growth, the continued challenges of the
COVID-19 pandemic and high inflation have adv
ersely impacted 1H profitability.
However, Taco Bell store builds will continue in
Australia and New Zealand (another five stores
expected to open by year end). New KFC store
openings will continue in New Zealand and
California. Hawaii will continue focus on mainta
ining the refurbishment programme momentum.
Significant uncertainty continues with CO
VID-19 and high inflation. However, the
company is confident in its ability to manage and recover input costs as the year progresses with some improvement alr
eady seen. Whilst the prevailing uncertainty
makes it difficult to provide firm guidance,
the company predicts a full year reported
NPAT of $32 to 37 million.

Questions
DISCLAIMERThe information in this presentation: 
Is provided by Restaurant Brands New Zealand Limited (“
RBD
”) for general information purposes and does not constitute investm
ent advice or an offer of or invitation to purchase RBD secu
rities.

Includes forward-looking statements. These
statements are not guarantees or
predictions of future performance. They involve kno
wn 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 and ASX listing rule
s, 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 unaudited consolidated
financial statements for the 6 months ending 30 June 2022 and NZ
X and ASX market releases.

Includes non-GAAP financial measures including "EBITDA”. These measures do not have a standardised meaning prescribed by GAAP a
nd therefore may not be com
parable to similar financial
information presented by other entities. However, they should not
be used in substitution for, or isolation of, RBD’s audited co
nsolidated 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. Ho
wever, no representations or wa
rranties are made as to the acc
uracy or completeness of such information.
20