Wingstop Inc. Q3 FY2024 earnings call

• Acknowledged the tremendous effort of the entire Wingstop team in achieving record results.
• Domestic same-store sales growth of 20.9% driven by transaction growth, on track for 21st consecutive year of same-store sales growth. AUVs for restaurants surpassed $2.1 million, with confidence in scaling to $3 million over time.
• Record Q3 for new restaurant development, opening over 100 restaurants, with a net new target of 320-330 in 2024. New unit productivity is strong, with a record development pipeline.
• Media strategy focused on live sports, streaming, and effective creative, with an ad fund growing at 40% like system sales. Partnership with NBA launched.
• MyWingstop launched, moving over $2.5B in digital sales, enhancing operational capabilities and guest experience, with digital sales mix at 69% and first-party database up 35%.
• Supply chain strategy mitigated wing cost volatility, with food costs on track for mid-30% range and visibility into 2025 food costs.
• International business on fire, with over 750 restaurant opportunity in new markets including France, Gulf Coast countries, and Australia. Pop-up in France and first restaurants in Paris.
• Partnership with St. Jude's Children's Research Hospital for October roundup donations to support childhood cancer research.

Domestic same-store sales growth was 20.9% in the third quarter, primarily driven by transaction growth. Domestic AUVs increased to $2.1 million. System-wide sales growth in the third quarter was 39.4%. Royalty revenues, franchise fees, and other revenue increased by $21.2 million in Q3. Company-owned restaurant sales totaled $31.3 million in Q3, with a 7.3% increase in company-owned same-store sales. Food costs are on track for the mid-30% range, with visibility into mid-30% range for 2025 system-wide average food cost.

• Reiterated domestic same-store sales growth guidance of approximately 20%.
• Updated net new restaurant target to 320-330 in 2024 (previously 285-300).
• SG&A guidance updated to $117.5M-$118.5M, including ~$22.5M stock-based compensation expense (previously ~$20M).
• Adjusted EBITDA was $53.7 million in Q3, up 39.5% year-over-year. EPS was $0.88, up 35.4% year-over-year.
• Board approved a $0.27 per share dividend, payable on December 6, 2024, to stockholders of record as of November 15, 2024.

• Risks related to forward-looking statements not guaranteeing future performance, subject to numerous uncertainties affecting operating results and financial condition. SEC filings describe various risks that could cause actual results to differ materially from expectations.

Q: Jeffrey Bernstein asked about comp trends and Q4 implications, questioning potential comp slowdown and attributing factors.

A: Michael Skipworth responded that the business is managed for the long-term, with strategies having multiyear benefits, and Q4 will lap high same-store sales growth, but the business is executing proven strategies.

Q: David Tarantino inquired about Europe market opportunity and which markets are included in the 750 restaurant opportunity.

A: Michael Skipworth replied that the opportunity includes France, Gulf Coast countries, Australia, and others, aggregating to over 750 restaurants.

Q: Andrew Charles asked about comp trends on a three-year basis and new store economics.

A: Michael Skipworth stated confidence in strategies with runway for growth, and new store volumes are strong with double-digit same-store sales growth across all vintages.

Q: Sara Senatore asked about international expansion and the NBA partnership.

A: Alex Kaleida mentioned the 750 opportunity contemplates expansion, and Michael Skipworth discussed the NBA partnership unlocking opportunities in NBA programming to drive awareness.

Q: Brian Harbour asked about company-owned store margins and food costs.

A: Alex Kaleida explained company-owned store margins were affected by acquisitions, but food costs are effective with supply chain strategy, and Q4 food costs are anticipated to step down.