Wingstop Inc.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Wingstop, Inc. Fiscal Fourth Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. Please note that this conference is being recorded today, Wednesday, February 16, 2022. On the call today are Charlie Morrison, Chairman and Chief Executive Officer of Michael Skipworth, President and Chief Operations Officer, and Alex Kalida, Senior Vice President and Financial Officer. I would now like to turn the conference over to Susana Arevalo, Vice President of FP&A and Investor Relations. Please go ahead.

Thank you and welcome. Everyone should have access to our fiscal fourth quarter and full year 2021 earnings release. A copy is posted under the Investor Relations tab on our website at ir.wingstop.com. Our discussion today includes forward-looking statements. These statements are not guarantees of future performance and are subject to numerous risks and uncertainties that could cause our actual results to differ materially from what we currently expect. Our SEC filings describe various risks that could affect our future operating results and financial condition. We use certain non-GAAP financial measures that we believe can be useful in evaluating our performance. Presentation of such information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations to comparable GAAP measures are contained in our earnings release. Lastly, to the Q&A session, we ask that you please each keep to one question and a follow-up to allow as many participants as possible to ask a question. With that, I would like to turn the call over to Charlie.

Thank you and good morning. Our fourth quarter and full year results reflect continued momentum in our brand, despite the challenging operating environment. Today, I want to reflect on our journey since our initial public offering in June of 2015. Since that time, our shareholders who invested with us at that time and are still with us today have enjoyed a nearly 900% return. That return includes more than half a billion dollars in cash returned by way of dividends. Over that time, our team, combined with our investments in people and technology and the efforts of our franchisees, whom we affectionately call our brand partners, has delivered industry-leading results year after year. Over that time, domestic same-store sales growth has averaged 8.7% each year. New unit development has increased 13.5% annually. System sales growth has averaged 19.4%, and adjusted EBITDA growth has averaged 20.2%. We continue to streak of same-store sales growth that is now 18 years in length. I provide that context as a baseline for our results in 2021, as well as our outlook in 2022. In March 2020, our world changed dramatically. No one ever prepares their business for a pandemic, but Wingstop was ready. We were able to pivot quickly and leverage our strategic decision to invest in a robust technology stack that delivered best-in-class guest experience for digital and delivery ordering. We closed our dining rooms to protect our teams and our guests from the virus and settled into a year of record growth for the brand. Domestic same-store sales increased 21% in 2020. Many thought it would be hard for Wingstop to eclipse that performance in 2021 as the economy began to reopen and restaurants thankfully were able to accept customers for dine-in occasions again. In 2021, many brands saw same-store sales growth similar to what Wingstop experienced in 2020 as they lapped the challenges of the prior year due to the shutdowns. Wingstop continued to execute our strategic playbook in 2021, and as we sit here today, we are proud to say that not only did we lap the performance of 2021, delivering our 18th consecutive year of positive same-store sales growth and increasing our domestic average unit volumes to 1.6 million. But we did so in the face of an even tougher operating environment. The challenges we have seen associated with the extraordinary amount of stimulus that was pumped into the economy in 2020 and early 21 have led to the tightest job market we have seen in years, as well as a now 40-year high for inflation, peaking recently at 7.5% in January. But Wingstop experienced even greater inflationary pressures as the spot price of bone-in chicken wings rose more than 70% in the year. As a reminder, bone-in chicken wings are the core of our menu and make up approximately 65% of all product purchases. Our simple operating model allows us to absorb these swings and still keep our focus on our long-term strategies. Our brand partners understand this volatility and have aligned with us on price and product changes that we believe have mitigated most of the challenges and positioned us for continued growth. In the face of such adversity, we continued our pattern of industry leading growth. We opened 193 net new units, a new record for the brand. That is 12.5% growth. We ended the year with more than 700 commitments for domestic development, thus replenishing the pipeline from the start of 2021 and positioning us for another record year in 2022. Despite the cost headwinds of 2021, we delivered another year of 20% plus adjusted EBITDA growth, continuing on the trend our shareholders have enjoyed since our IPO. And our international business has returned to pre-pandemic levels and experienced net growth in the face of a challenging operating environment and plan to open new markets in 2022 to pursue our goal of 3,000 plus restaurants overseas. Our performance in 2021 was not just the result of rolling over a year after the pandemic subsided. It is reflective of a brand that is well positioned in a category all by itself. a brand that has stayed true to a proven strategy that has not changed in years. We are not in a turnaround. We have continued momentum that will take us well into the future. As I look to 2022, I am as excited as ever for the Wingstop brand. In collaboration with our brand partners, we are going to take our 1% local marketing allocation and consolidate it with our national fund to increase our total marketing spend to more than $100 million. We have built the infrastructure to convert our marketing approach from a promotional brand to a true MarTech platform focus, leveraging our database of more than 27 million users. We will also continue to build on our multi-year $50 million investment we started in 2021 to redefine our tech stack and position Wingstop for the future, expanding our global platform. This is not a story of a great quarter or a great year. This is a story about a unique brand that has been able to withstand the toughest tests and continue to showcase industry leading results. We are not concerned with what is going to happen in any given quarter. We see that the economy could slow down later in 2022, but we will stay true to our strategy. Shareholders expect us to deliver long-term, sustainable growth, even in the face of headwinds that might cause other brands to slow. That has been the experience so far, and we intend to continue our long-term growth. Our momentum is strong. In 2022, we intend to deliver on our mid-term algorithm of mid-single-digit domestic same-store sales growth and achieve a new record of approximately 200 net new restaurants. We will continue to make strategic investments to scale our business well into the future. With that, we now believe that our domestic footprint can scale to 4,000 restaurants and maintain our position for 3,000 international restaurants. That's a potential of 7,000 plus total restaurants. Our performance since our IPO has delivered approximately 900% total shareholder return, and this is something to be very proud of. But we believe we are just getting started. I'm very proud of the strong relationship we have with our brand partners who are growing this business with us. I'm honored to work with the strongest management team in the industry and thankful to our long-term shareholders for their continued confidence in Wingstop. 2021 was yet another great year for Wingstop, and we believe that 2022 is shaping up to be another one as well. With that, let me turn it over to Alex.