plki 2015 investor presentation

8/20/2019 PLKI 2015 Investor Presentation

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Popeyes 2015 Analyst Day

October 13 | Atlanta, GA


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Forward-looking StatementCertain statements in this presentation contain “forward-looking statements” within the meaning of the federal securities laws . Statements regarding future events

developments and our future performance, as well as management’s current expectations, beliefs, plans, estimates or projections relating to the future, are forwa

statements within the meaning of these laws. These forward-looking statements are subject to a number of risks and uncertainties. Examples of such statements

presentation include discussions regarding the Company’s planned implementation of its strategic plan, planned share repurchases, projections and expectation

same-store sales for fiscal 2015 and beyond, expectations regarding future growth and commodity costs, expectations regarding restaurant reimaging, guidance

restaurant openings and closures, effective income tax rate, and the Company’s anticipated fiscal 2015 and long-term performance, including projections regardi

and administrative expenses, capital expenditures and adjusted earnings per diluted share, and similar statements of belief or expectation regarding future event

the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: competition from other resta

concepts and food retailers, continued disruptions in the financial markets, the loss of franchisees and other business partners, labor shortages or increased labo

increased costs of our principal food products, changes in consumer preferences and demographic trends, as well as concerns about health or food quality, insta

avian flu or other disease outbreaks, instances of salmonella or other food-borne illnesses, general economic conditions, the loss of senior management and the

attract and retain additional qualified management personnel, limitations on our business under our 2013 Credit Facility, our ability to comply with the repayment

requirements, covenants, tests and restrictions contained in our 2013 Credit Faci lity, failure of our franchisees, a decline in the number of franchised units, a decl

ability to franchise new units, slowed expansion into new markets, unexpected and adverse fluctuations in quarterly results, increased government regulation, eff

volatile gasoline prices, supply and delivery shortages or interruptions, currency, economic and political factors that affect our international operations, inadequat

of our intellectual property and liabilities for environmental contamination and the other risk factors detailed in the Company’s 2014 Annual Report on Form 10-K

documents we file with the Securities and Exchange Commission. Therefore, you should not place undue reliance on any forward-looking statements.

©Copyright. 2015. Popeyes Louisiana Kitchen, Inc. All rights reserved.


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2015 Analyst Day

Schedule Subject/Event Presen9:00 a.m. – 9:35 a.m. Dare to Serve Cheryl Bachelder

Chief Executive Officer

9:35 a.m. – 10:20 a.m. Inspired Food Amy Alarcon, Vice President of

10:20 a.m. – 10:30 a.m. Passionate People Lynne Zappone

Chief People Experience Office

10:30 a.m. – 10:45 a.m. Coffee Break

10:45 a.m. – 11:30 a.m. Operations Execution John Merkin

Chief Operating Officer

11:30 a.m. – 12:15 p.m. Popeyes International Andy SkehanPresident – International

12:15 p.m. – 1:00 p.m. Lunch

1:00 p.m. – 1:30 p.m. ONE Technology Will Matt

Chief Financial Officer

1:30 p.m. – 2:00 p.m. Capital Structure Will Matt

Chief Financial Officer

2:00 p.m. – 3:00 p.m. Closing Remarks

Dessert Reception

Cheryl Bachelder

Chief Executive Officer


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Cheryl BachelderChief Executive Officer


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Popeyes Story


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Declare a Daring Destination

“The Hottest Concept in Quick Service Res

Declare a Daring Destination


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We created a plan…


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G u e s t s

Shareholders A n a l y s t s

Employees

Management M a n a g

e r s

Vendors

I n v e s

t o r s

B a n k

e r s

CrewFranchisees


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DO YOU

Choose to Serve

LOVETHE PEOPLE YOU LEAD?


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FranchiseSurveyResults


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THERE ARE NO GREAT LEADERS

WITHOUT GREATRESULTS.


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Popeyes Results

13

Popeyes Results


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Seven Years of Consistent Result

14


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The Next Daring Destination


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The Next

Roadmap


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The People

We Serve


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The Next Performance Results

P h o t o

c r e d i t : G .

P a s c h


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Dare to ServeThe Atlanta Chorale

21


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Amy AlarconVice President of Culinary Inno

Inspired Food


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“To bring the heart and

soul of Louisiana cooking

to the fast food world.”


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Louisiana RootsChefs John Folse & Leah Chase

24

Our Louisiana heritage inspires


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Our Louisiana heritage inspiresour innovation

The foods

inspire

distinct

ingredie

cooking t

of Lo


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• Family

• Camaraderie

• Savoring Life

• Celebration

• Creativity• Passion for Food

Louisiana values inform our innovat


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Popeyes menu strategy framewor

Objective

Key Strategies

Categories

Foods you love, inspired by theflavors, ingredients and cookintechniques of Louisiana

• Authentic L• Competitiv

• Bonafide: Spicy & Mild• Tenders: Mild, Spicy & Blackened• Seafood: Fish & Shrimp

• Strategic: BIC, Boneless, Seafood, Beverages

• Secondary: Sides, Desserts

• Beverages: Cane S• Signature Sides

• Premium quality products• Freshly prepared in-house• Platform product Innovation

Platforms


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Our Innovation ProcessCROSS-FUNCTIONAL TEAMS WORKING IN HAR

28


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New product development funnel

Ideas Products48 MarketTests12300

Annual Cycle

Ideas


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The components of successful LTO


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Stories are important

• Every product should tell a story

• The message should create a connection wguest and inspire them to visit the restaur

• All roads lead home, our products need to

distinctive attribute that reflects our herita


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The art of ideation

Food that tells astory

Agency

Marketing

Culinary:internal

andexternal


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Who are the players?

Right people,right place

PopeyesCulinary

Team

SupplierCulinaryTeams

AgencyPartner

ProductMarketing

Team


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Explorers at heart

• Each ideation begins with a journey

• Dine-arounds and city explorationsspark our creativity and provideinspiration

• In search of a good story


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The volume of ideas

Right brain moves to left brain


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Right brain moves to left brain

Action

Feasibility &

ActionBrainstorming


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Consumer Check-ins

CCT CLT SMT


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Following the Path: From ideation tonational launch

RED STICK CHICKEN | AVERY ISLAND, LA


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L ti


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Location as muse


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Ti h d t h i


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Time-honored technique

Th d ti k


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The red stick

Le petit bâton rouge, aka, the little

red stick, is a painted stick that was

used as a color guide for determining

when the peppers were at peak

ripeness and flavor so they could be

picked and started along the process

of making Tabasco® Hot Sauce

Idea turns into concept


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Idea turns into concept

• Features Tabasco as a key ingredient for flavor and heat

• New cut of boneless chicken highlights our expertise at pchicken in fun, new and interesting ways that are a breaair for consumers

• Plays to our strength of hand battering and breading BO

delivers a fresh and handcrafted experience

Popeyes Red Stick Chicken $3 99


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Popeyes Red Stick Chicken $3.99

Tender, juicy, all white meat chicken tenderloin strips (the most tender and juicy

meat chicken), marinated in cayenne and tabasco pepper marinade, hand batter

then cooked until golden brown and crispy. Served with Cajun Fries, buttermil

Smok’n Pepper Ranch for dipping.

Transformation


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Transformation


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Annie Explains

47

Great story = Great message


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Going beyond traditional media

• Chicken Staredown app• A great product story provides

paths to communicationbeyond traditional media

Great story = Great message

SXSW launch


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SXSW launch

Did it work?


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Did it work?

Absolutely!

During the Red Stick Chicken LTO westablished a new all-time weekly record for the Brand

Louisiana-inspired FoodPassionResult


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Lynne ZapponeChief People Experience Office

Passionate People


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“If you are any good a

all, you know you can

do better.” - L. Bucking

Restaurant General Managers exp


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g p

BSimplify Work

Two key areas of focus for enhanced RGM success 360 suppor

clarification

Cultural transformation model


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Cultural transformation model

Source: Essential Marketing Models http://bit.ly/smartmodels

Leadership Development Framewo


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Leadership Development Framewo

Lead from the HeartDay One


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ay 1:

The Leader in You

• Explore Leadership• Servant Leadership at

Popeyes• Your Values• StandOut™ Strengths

Assessment

• Your Personal Purpose• Identify Your Actions and

Bring it to Life at Popeyes

Day One

Lead from the HeartDay Two


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ay 2:

Leading the Business

• Know the Popeyes• Your Role in Leading the

Business

Day Two

Lead from the HeartDay Three


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ay 3:

Skills for Leading Your Team

• Getting to Know Your• Setting Clear Expectations• Coaching and

• Follow-up and

Day Three

Early adopter status


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a y adopte status

Franchise Engagement Employee Engagement Guest Engagemen

Action plans to drive results

Franchise EFranchise D

Franchise CFranchise B

Franchise A

Above

Store

Leader

RGM

Crew

Voice of the Gue

Next steps


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p

• Capture Early Adopter feedback on each tool and p

– Ease of use and impact

• Monitor impact on performance

– Targeting employee engagement

• Field team providing follow up and coaching

• Revise tools and launch phased roll out in 2016


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John MerkinChief Operating OfficerOperations Execution


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“We are what we repeatedo. Excellence, then, is no

an act, but a habit.” – William Durant, historian, philosopher and founder of Gene

What we’ve learned by listening t


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• Our Team: Spread too thin to make the most effe

• Franchisees: “Please help me become great” • RGM’s: Simplify operations; build my skills

• Team Members: Set me up for success

• Guests: Make the service as good as the food

Moving performance


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Elevating consistency of execution must hapayoff for our franchisees


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BrandSupport

FranchiseeCompetency

Restaurant

General Manager

Engagement

Improved GuesExperience

ImprovedFranchise

Profitability

High impact opportunities


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DriveProfitableSales &Traffic

CreateCommonStandards

&

Processes

Train &Prepare

Coach &Inspire

Measure&

Celebrate

Leverage TechnologyLeverage Technology

Consistent

Execution

Consistent

ExecutionConsistent

Execution

Consistent

Execution

Structure and Systems

Brand supportWhat is being planned to win?


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Structure Improvement

• Increase restaurant visits• Introduce multi-level training

• Increase consultative skills

• Look for incremental successopportunities

Process Improveme

• Introduce multi-level Rdevelopment

• Deliver a standards m

• Drive evaluation proc

• Create consequencescompliance shortfalls


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Update

COMPANY RESTAURANTS

Highly-franchised business model


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Restaurant Count 2010 2014

Company 38 65Franchise 1,504 1,740

International 397 509

Global 1,939 2,314

% Franchisee global restaurant 98% 97%

Company restaurant goals


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“What a great

Popeyes

looks like”

“What a great

Popeyes

looks like”

Maximize shareholde

Optimize developme

operations excellence

Control testing platfo

People Practices

Company marketsRecent development in Indianapolis & Charlotte


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New Orleans

New company marketIndianapolis, IN


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Company restaurant growth


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38

53

65 67

4045

Company restaurant sales & profit g


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* Company operated restaurant operating profit is not a GAAP measure, includes rent expenses. Please refer to definitions and recon

the appendix.

Improvement planNew market restaurants


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• Assessed leadership and team members

• Re-established standards and training

• Utilized expertise from Heritage Markets

• Defined New Market goals

• Created market timing maps for development

Actions taken


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Strong growth in new domestic op


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* 2012 included 2 rest. and 2013 included 24 rest. related to 2012 acquisition

* *

New restaurant openings


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30% opened since 2008


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Andrew (Andy) SkehanPresident - International

International Update

“No matter how many


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No matter how many

goals you have achieved,you must set your sights

a higher one.” - Jessica Sa

We’re growing


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Crossed the 500 restaurant threshold

Four years of steadily increasing sales and unit

Roadmap strategies proven and effective

Domestic success generating increased interest

Over 530 International restaurant


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Restaurant count as of 2015 Q2

Latin

77 in 10 countries

and 2 territories

Canada 87

Middle East 71

in 5 countries

Europe

141 in 6

countries

North Asia123 in 2 Countries

and 1 territory

Q2 summary metrics


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Q2 Actual Q2 YTD

Comp Sales 4.4% 5.3%

Openings 19 43

Closings 2 13

International same store sales


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2.6%

4.7%5.0% 5.3%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2012 2013 2014 2015 Q2 YTD

International growth2012-2015 (as of Q2)

100Forecast 85-9


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5771

81

43

0

10

20

30

40

50

60

70

80

90

100

2012 2013 2014 2015YTD + Fcs


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Roadmap

INTERNATIONAL

L


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2 0

1 5 I N T E R N A T

I O N A

Build Distinctive BrandDefine and Differentiate


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Grow Same Store Sales and Average Unit Volumes

Utilize local cultural insights to develop unique and memadvertising creative. Build awareness and generate triaearly television advertising through co-investment.

ObjectiveObjective

Strategy

Description

Strategy

Description


MARKET TURKEY


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MARKET TURKEY

Marination =

WellMannered

Marination =

WellMannered

InsightInsight

BrandConnection

BrandConnection

Local Adaptation

Local Adaptation

12 Hours ofMarination12 Hours ofMarination


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MARKET TURKEYMIDDLE

EAST


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MARKET TURKEYEAST

Marination =

WellMannered

Marination =

WellMannered

InsightInsight

BrandConnection

BrandConnection

Local Adaptation

Local Adaptation


Bolder,Flavorful

Food

Bolder,Flavorful

Food

A Man Eats

as much asHe Does

A Man Eats

as much asHe Does


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MIDDLE EAST


MARKET TURKEYMIDDLE

EAST


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MARKET TURKEYEAST

Marination =

Well-Mannered

Marination =

Well-Mannered

InsightInsight

BrandConnection

BrandConnection

Local Adaptation

Local Adaptation


Bolder,Flavorful

Food

Bolder,Flavorful

Food

A Man Eats

as much asHe Does

A Man Eats

as much asHe Does


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SINGAPORE


MARKET TURKEYMIDDLE

EAST


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EAST

Marination =

Well-Mannered

Marination =

Well-Mannered

InsightInsight

BrandConnection

BrandConnection

Local Adaptation

Local Adaptation


Bolder,Flavorful

Food

Bolder,Flavorful

Food

A Man Eats

as much asHe Does

A Man Eats

as much asHe Does

Create memorable experiencesPopeyes Delivers


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Grow sales through the introductiosupport of home delivery

Build a comprehensive Delivery suproviding solutions addressing calmanagement, online ordering, opeexecution, marketing support and mechanisms

ObjectiveObjective

Strategy

Description

Strategy

Description


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Development

INTERNATIONAL

O ti i d l t tE i ti

Growth channels


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• Optimize development agreements

• Pursue new or additional franchise partnfill market gaps

ExistingMarkets

• Leverage regional infrastructure

• Build on regional interest and awarenes

AdjacentMarkets

• Target high potential QSR markets• Seek best in class partners

• Consider equity as a growth catalystNew Markets

Development considerations

G l d l t i t t i hi k QSR


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• General and prevalent interest in chicken QSR

• Domestic success driving quality interest in Popeyes

• International improvement reinforcing that interest

• PLKI seen as a highly competitive alternative

SummaryInternational


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Brand and product travel well

Advertising support is working well and will c

Steady and improving sales and unit growth

Popeyes is an attractive CQSR option


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Why ONE Technology?

T h l i it t t t i i di t


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• Technology in its current state is an impediment

• Information distribution across multiple systems is ineff

• Without ONE Technology, it is impossible to achieve ouaspirational vision of world-class customer service and $AUVs

The next horizon…

ONE Technology is a BOLD transformational initiative to upgrade technology in all


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Engagedfranchisee,RGM, crew

Engagedfranchisee,RGM, crew

Superiorguest

experience

Superiorguest

experience

ConsistentexecutionConsistentexecution

Highoperatingstandards

Highoperatingstandards

C R I T I C A L E N A

B L E R S

ONE TechnologyONE Technology

ONE Technology: The challengeOver 40 different POS systems in place today

POS standardization is a prerequisite


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Each color segment rep

ONE TechnologyMore than just POS

One of each component is optimal Two or more of each is unm


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Keeping it manageable

Balancing three key areas

1 2


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Employee

Experience

Guest

Experience

Technology prov

hire, train and co

peo

Seismic Technology shifts are

affecting how consumers transact

and obtain brand information

Essential systems for the RGM to

lead consistent execution, efficiency

and ease of operation

RGM Experience

3

The What

C t li


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• Leverage our cobest pricing on and services

• Eliminate the neto fend for the tmarketplace

• Modular, best-of-breed approach;allows us to focus on and solve for oneset of integrations

• Includes all in-restaurant technology;not just POS

• Provides common infrastructureneeded for online ordering, mobile-payment, etc.

• Popeyes-dedicated resources focusedon optimizing all systems for Popeyesoperations

• One-push deployment of updates andenhancements to all restaurantssimultaneously

• Get franchisees out of the I.T. businessso they can focus on running greatrestaurants

One Standardized

Technology Platform

Centralized Data Management,

Configuration & Support

Centraliz

Pro

Total alignment between our business goals and our technology

Future possibilities Project

ONE Technology


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techn

G

•

•••••

•

Employee Experience

• Training• Online Work Schedules• Paperless Applications• News Updates• Performance and

Talent Tracking

• Real-Time Feedback

• Daily Routines

Provide new ways to hire,

train and communicate

with our people

RGM Experience

• Labor Scheduling• Production Planning• Inventory

Management

• Paperless OrderingProcess

• Integrated Dashboards

and Analytics• Support Service Speed

Simplify and support the

role of Restaurant General

Manager

Franchisee Experience

• Integrated technologyPlatform

• Data Management andSupport

• One-Push Deploymentof Updates

• Centralized

Procurementfor Best Pricing

Provide world-class

service to our Franchisee

Partners

What to expect next


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ScopeScopeRFP

ProcessRFP

ProcessTalentTalent TT


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Capital Structure

FINANCIAL UPDATE

Organic growth initiatives funded financial strategies as a suppleme


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Inspired FoodPassionate

People

Operations

Execution

ONE Technology

Ca

Driver

Supplemental toBusiness Drivers


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Balancing investment time horizo

Short-term

Investor

Long-term

Investor

Popeyes

Franchisor


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1-5 years 5-10 years 10 years

Must balanceinterests betweenOur shareholders

• Our highly-franchised model (97%) results in an investment that is very attractive t

• With our franchisees investing approximately $1.4 to $2mm per location, signing 20agreements and typically providing personal guarantees, our investors enjoy an "as

• All these favorable investment characteristics are predicated on the continued long-tfranchisees

• We have to balance the interests of our shareholders with that of our number one cfranchisees

Our franchised model deliverssteady, free cash flow ($M)

$60.0


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$23.7$26.3

$28.5

$36.7

$42.0

$48.0

$24.2

$-

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

2009 2010 2011 2012 2013 2014 YTD Q2 20

Cash usage history

Share Repurchases ($M)

$191

$250Total Debt Outst


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In addition to the special dividend in 2005 ofapproximately $350 million, we have repurchased

over $215 million of outstanding shares since 2005

$15.4 $20.3

$39.4

$19.0

$- $-

$22.3$15.2

$19.9

$40.0

$26.0

$-

$10.0

$20.0 $30.0

$40.0

$50.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD

Q2

2015

$191

$134 $133$119

$83$66 $

$-

$50

$100

$150

$200

2005 2006 2007 2008 2009 2010 20

Total Leverage Ratio wathe end of Q2 2015. Ou

average interest rate wa

Capex investment historyCapex increased during 2013 and 2014 as we have funded comp

development and completed the opportunistic purchase of two


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$1.4 $3.2

$7.6

$26.2

$32.8

$27.8

$7.9

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

$35.0

2009 2010 2011 2012 2013 2014 YTD Q2

2015

Debt• $110MM Outstanding

Equity• Common Stock ~23.0

Popeyes current capital structure


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• Total debt capacity under the current facility $250MM

• 5 yr. All Bank Revolving Credit Facility

o Maturity Date Dec. 2018

• Weighted Average Interest Rate Base ~(2.50%)

• 80% fixed, 20% floating interest currently

• Interest rate locked on fixed portion 2015-2017

• Limited, flexible covenant package

o Total Leverage Ratio (TLR) < 3.5 to 1.0

o Minimum Fixed Charge Coverage Ratio > 1.25 to 1.0

o We can repurchase shares when the TLR < 3.0 to 1.0

outstanding

• Market Cap Q2 2015 ~

Capital Structure decision principl• Support the operating needs of the business

O i th i iti ti f d d fi t d h d bt


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• Organic growth initiatives are funded first and any excess cash or debt

be used to return cash to shareholders

• We provided guidance we would increase our leverage to 2.5x to 3.5x o

from 2015 to 2017

• Capital structure strategies are used to support the business and are no

of the business

• Credit facility decisions are primarily based on: 1) Flexibility, 2) Total Co

Simplicity and 4) Fit with the size and operating characteristics of the b

Share repurchase decision princip

Share repurchases are currentlyfavored over dividends due to:

Share repurchase decisguided by consideration


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favored over dividends due to:

• EPS benefit of share repurchases

• Our current growth trend would favorreinvestment to support organic growth

guided by consideration

• Availability of excess ca

• Intrinsic value

• Share price (P/E multip

• Interest rates

• EPS accretion

Share repurchases have been consistently made in the past andto continue to make share repurchases in the future

Share repurchase general guidelinesIncorporating share price, interest rate and EPS accretion

• Consider repurchasing shares when the share price and rate could generate a positive EPS


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rate could generate a positive EPS

• Evaluate repurchase decisions to serve the best interestshareholders and the company

• Determine the amount and timing of levered share repubased on market conditions

Capital StructureChanges planned during 2016-2017

• Plan to go into the traditional bank markets and negotiate a new credit


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• Could supplement share repurchases from excess operating cash flows wrepurchases from borrowed funds

• Seeking Board approval of our 2016 Plan, including planned capital struc

• Plan to issue guidance in early 2016

Significant market cap growthsince 2008

Improvements in Earnings and increasing our P/E Multiplehave driven our Market Cap and Share Price

$56 03$1 400


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P/E 5.8 11.3 16.4 15.3 20.0 26.8 34.0

$4.37$8.38

$14.76 $14.88

$24.83

$38.55

$56.03

$111

$213$378 $363

$596

$916

$1,300

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

2008 2009 2010 2011 2012 2013 Q4 201

October 5, 2015 Update:

• Share Price $56.29• Market Cap $1.3B


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Closing Remarks2015 Analyst Day

October 13, 2015

• Highly-franchised system

G i k t h

Key investment highlights


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• Growing market share

• Consistent, reliable cash flow• Strong unit economics

• Collaborative relationship with franchisees

• Steadily growing restaurant development

• Opportunity to double U.S. restaurants

• Untapped International growth


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The Next Horizon: Your Quest


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Non-GAAP Reconciliations

APPENDIX

Adjusted earnings per diluted share, Operating EBITDA and Free cash flowGAAP financial measures. The Company uses Adjusted earnings per diluteEBITDA and Free cash flow in addition to net income, operating profit and

Reconciliation of Non-GAAP Financial M


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operating activities to assess its performance and believes it is important fable to evaluate the Company using the same measures used by managembelieves these measures are important indicators of its operational strengtperformance of its business. Adjusted earnings per diluted share, OperatinFree cash flow as calculated by the Company are not necessarily comparabtitled measures reported by other companies. In addition, Adjusted earninshare, Operating EBITDA and Free cash flow: (a) do not represent net incofrom operations or earnings per share as defined by GAAP; (b) are not necof cash available to fund cash flow needs; and (c) should not be considere

to net income, earnings per share, operating profit, cash flows from operaother financial information determined under GAAP.

• The Company defines adjusted net i ncome for the periods presented as the Company’s reported net income after adjusting for certain non-operating items consisting of the foll owin

a) other expense (income), net, which included $0.1 million net loss on disposals of fixed assets for the twenty eight weeks ended July 12, 2105 and July 13, 2014, $0.2 and $0.4 millioexpenses in the twenty eight week period ended July 12, 2105 and July 13, 2014, respectively, and

• Other income of $0.4 million for recoveries under the Deepwater Horizon Economic and Property Damages Settlement Program for the twenty eight week period ended July 12, 2these adjustments at the effective statutory rates.

b) fiscal 2014, $0.5 million in tax expense for an out-of-period adjustment to the Company’s deferred tax liability associated with its indefinite lived intangible assets as discussed in NotConsolidated Financial Statements;

c) fiscal 2013, $0.4 million in interest expenses from the retirement of the 2010 Credit Facility fiscal 2012, $0.5 million in legal fees related to licensing arrangements;

d) fiscal 2011, $0.5 million in accelerated depreciation related to the Company’s relocation to a new corporate service center;

e) fiscal 2010 $0 6 million in interest charges associated with the retirement of the Company’s 2005 Credit Facility and a $1 4 million tax audit benefit related to the completion of a fe

Adjusted Earnings Per Diluted Sh


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e) fiscal 2010, $0.6 million in interest charges associated with the retirement of the Company s 2005 Credit Facility, and a $1.4 million tax audit benefit related to the completion of a feyears 2004 and 2005;

f) fiscal 2009, $1.9 million in interest charges associated with the Company’s 2005 Credit Facility amendment; and

g) the tax effect of these adjustments.

• Adjusted earnings per diluted share provides the per share effect of adjusted net income on a diluted basis. The following table reconciles on a historical basis for fiscal years 2009 tsixteen week periods ended April 19, 2015 and April 20, 2014, the Company’s adjusted earnings per diluted share on a consolidated basis to the line on its consolidated statement oincome, which the Company believes is the most directly comparable GAAP measure on it s consolidated statement of operations:

Fiscal Fiscal Fiscal F

(in millions, except per share data) 2015 2014 2014 2013 2012 2

Net Income 23.9$ 19.4$ 38.0$ 34.1$ 30.4$ $

Other expense (income), net (0.2) 1.5 1.2 0.3 (0.5) Interest expense associated with credit facility retirements and amendments - - - 0.4 -

Legal fees related to licensing arrangements - - - - 0.5

Accelerated deprecia tion related to the Com pany's relocation to a new Global

Service Center - - - - - Tax audit benefit - - 0.5 - -

Tax effect 0.1 (0.6) (0.5) (0.3) -

Adjus ted earn ings 23.8$ 20.3$ 39.2$ 34.5$ 30.4$ $

Adjus ted earn ings per di luted s hare 1.02$ 0.85$ 1.65$ 1.43$ 1.24$ $

Weighted average diluted shares outstanding 23.3 23.8 23.8 24.1 24.5

YTD Q2 2015

The Company defines operating EBITDA as earnings before interest expense, taxes, depreciatiamortization, and other expenses (income), net. The following table reconciles on a historical bdate period through the second quarter 2015 and year to date period through the second quarCompany’s operating EBITDA on a consolidated basis to the line on its condensed consolidatedoperations entitled net income, which the Company believes is the most directly comparable GOperating EBITDA margin is defined as operating EBITDA divided by total revenues.

Operating EBITDA


136/138

Q2

($M) 2015

Net income$23.9

Interest expense, net 1.9

Income tax expense14.8

Depreciation and amortization 5.2

Other expenses (income), net(0.2)

Operating EBITDA $45.6

Total revenues$138.9

Operating EBITDA margin32.8%


• The Company defines free cash flow as net income plus depreciation and amortization plus stock-based compensation expense min

expenditures which includes:

a) for the twenty eight weeks ended July 12, 2015, $06 million of information technology and other corporate assets, and $0.4 millionmaintain, replace and extend the lives of Company-operated restaurant facilities and equipment; and

b) for the twenty eight weeks ended July 13, 2014, $0.6 million in Company-operated restaurant reimaging, $1.4 million of informatiocorporate assets, and $0.7 million in other capital assets to maintain, replace and extend the lives of Company-operated restaurant

c) for fiscal 2014, $0.6 million in company-operated restaurant reimages, $0.8 million of information technology hardware and softwarcapital assets to maintain, replace and extend the lives of company-operated restaurant and corporate facilities and equipment;

d) for fiscal 2013 $2 2 million in company-operated restaurant reimages $0 9 million of information technology hardware and softwar

Free Cash Flow


137/138

d) for fiscal 2013, $2.2 million in company operated restaurant reimages, $0.9 million of information technology hardware and softwarcapital assets to maintain, replace and extend the lives of company-operated restaurant facilities and equipment;

e) for fiscal 2012, $0.6 million in Company-operated restaurant reimages, $1.1 million of information technology projects and $1.5 mi

maintain, replace and extend the lives of Company-operated restaurant facilities equipment,

f) for fiscal 2011, $1.5 million in Company-operated restaurant reimages, $0.8 million of information technology projects and $0.5 mimaintain, replace and extend the lives of Company-operated restaurant facilities and equipment.,

g) for fiscal 2010, $1.4 million for information technology projects, $1.2 million for reopening a company-operated restaurant in New Oreimaging and corporate office construction, and $0.6 million in other capital assets to maintain, replace and extend the lives of comequipment and facilities; and

h) for fiscal 2009 $0.3 million for information technology projects, and $1.1 million in other capital assets to maintain, replace and extoperated restaurant facilities and equipment.

• The following table reconciles on a historical basis for year to date period through the second quarter 2015, the year to date period2014 and fiscal years 2009 through 2014 the Company’s free cash flow on a consolidated basis to the line on its condensed consoloperations entitled net income, which the Company believes is the most directly comparable GAAP measure on its condensed cons

operations. Free cash flow margin is defined as free cash flow divided by total revenues

Fiscal Fiscal Fiscal Fiscal

(in millions) 2015 2014 2014 2013 2012 2011

Net income 23.9$ 19.4$ 38.0$ 34.1$ 30.4$ 24.2$

Depreciation and amortization 5.2 4.6 8.7 6.7 4.6 4.2

Stock-based compensation expense 3.2 2.9 5.3 5.4 4.9 2.9

Maintenance capital expenditures (1.0) (2.7) (4.0) (4.2) (3.2) (2.8

Free cash flow 31.3$ 24.2$ 48.0$ 42.0$ 36.7$ 28.5$

YTD Q2

The Company defines Company-operated restaurant operating profit as sales by Company-opminus restaurant food, beverages and packaging minus restaurant employee, occupancy and The following table reconciles on a historical basis for the twelve week and twenty-eight week

Company Operated RestaurantOperating Profit


138/138

The following table reconciles on a historical basis for the twelve week and twenty eight week July 12, 2015 and July 13, 2014 , respectively, Company-operated restaurant operating profiton its condensed consolidated statement of operations entitled sales by Company-operated re

the Company believes is the most directly comparable GAAP measure. Company-operated resprofit margin is defined as Company-operated restaurant operating profit divided by sales by restaurants.

YTD Q

($M) 2015

Sales by Company-operated restaurants $59.8

Restaurant food, beverages and packaging 19.4

Restaurant employee, occupancy and other expenses28.0

Company-operated restaurant operating profit$12.4

Company-operated restaurant operating profit margin20.7%


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