Wingstop Inc.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Wingstop Fiscal Fourth Quarter and Full Year 2024 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 19, 2025. On the call today are Michael Skipworth, President and Chief Executive Officer, Alex Kalida, Senior Vice President and Chief Financial Officer, and Kristen Thomas, Senior Manager of Investor Relations. I would now like to turn the conference over to Kristen. Please go ahead.

Thank you, and welcome to the fiscal fourth quarter and full year 2024 earnings conference call for Wingstop. Our results were published earlier this morning and are available on our investor relations 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 an isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations to comparable GAAP measures are contained in our earnings release. Lastly, for 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 Michael.

Thank you, Kristen, and good morning. We appreciate everyone joining our call. Before discussing our results, I want to take a moment to acknowledge those affected by the devastation from the wildfires in Southern California. California has always been a special place for Wingstop, where we have several hundred Wingstop restaurants and millions of fans. Our thoughts and prayers go out to those impacted. Tragic events like this can have a profound impact on entire communities. To help support those in need and in partnership with the American Red Cross, during the month of February, we will match contributions made through our Roundup program dollar for dollar up to $500,000. We also extend our deepest gratitude to the first responders who have worked heroically and tirelessly to protect our communities. Now onto our results. 2024 was another record year, surpassing our industry-leading year in 2023 that showcases the category of one in which we operate. We achieved record top and bottom line results, extending our unprecedented streak of 21 consecutive years of same-store sales growth. For fiscal 2024, domestic same-store sales grew by 19.9%. primarily driven by transactions. And that translates to a two-year stacked comp of 38%. We opened a record 349 net new restaurants delivering a 15.8% unit growth. And we grew system-wide sales by 36.8% to $4.8 billion. Adjusted EBITDA increased 44.8% to $212 million. Our fourth quarter results were strong. We opened 105 net new restaurants in the quarter and delivered 10.1% same store sales growth, a comp that continues to be driven primarily by transaction growth. Digital sales mix increased to 70%. Adjusted EBITDA increased 44% to $56.3 million. These results are a demonstration of the success and staying power of our strategies which continue to fuel demand for growth in all facets of our business. In 2024, we saw double-digit transaction growth and an increase in frequency with our digital guests, which is the first time this has happened in my 10 years here at Wingstop. I believe the underlying health of the Wingstop business is as strong as it's ever been, yet we feel like we are just getting started. I want to acknowledge and thank our passionate team members in the restaurant and our global support center, our brand partners and our supplier partners. Without them, these results would not be possible. Within the industry leading results in 2024, we surpassed our previous target of $2 million average unit volumes, a target set just over two years ago. As we have scaled, we took an opportunity in 2024 to reevaluate the global opportunity for Wingstop. Based on this effort, we established new long-term targets for both AUVs and global units. We believe we can grow AUVs to $3 million and scale our global unit count to over 10,000 restaurants. As I reflect back over the last couple of years, Wingstop has transformed into a brand with scale. creating greater capacity to invest behind our strategies. While the consumer is facing tough choices when it comes to restaurant occasions, they also are recognizing the quality and value proposition Wingstop delivers. And yet, we still believe we're the largest brand no one has heard of. With system-wide sales of over $4.8 billion, We now have an ad fund budget that has greater scale, enabling us to show up in a meaningful way to bring awareness to that indulgent Wingstop occasion. We are building brand awareness at a steady pace, increasing by a low single digit percentage in the past couple years, but our gap remains at over 20% to more mature brands. Our opportunity is significant to bring Wingstop into more households and attract new lifelong fans into the brand. Consistent with previous years, in 2025, we are laser focused on executing our multi-year sales strategies to move us closer to our $3 million AUV target. Our strategies consist of scaling brand awareness, driving menu innovation, expanding our delivery channels, leveraging data-driven marketing, and continuing our digital transformation. It's clear to see the impact our strategies are having on our business. From a brand health standpoint, we are seeing improvements in quality, value, consideration, and purchase intent scores, finishing 2024 at record levels. Over the past two years, our brand partners and restaurant team members have been focused on operating with excellence and our internal scores, along with our transaction growth, showcase the impact we are having. There remains a significant runway ahead of Wingstop, and we believe we are entering this next phase of growth. We spent a fair amount of time extracting insights from our digital guests, learning from our customers, consumers, as well as those that are more broadly frequent restaurants. What we're learning gives us confidence in the strategies we're executing, and we continue to have significant opportunities to gain our fair share in the restaurant industry. We will continue to lean into our always-on marketing strategy and are excited to see the effectiveness of our media placements. We look forward to further advancing our relationship as the official chicken and chicken wing partner of the NBA. A great example is the multiple activations we executed at the NBA All-Star Game this past weekend, supported by marquee players in the league. You will also see us expand our presence in both familiar and new spaces, including the NFL, WWE, and the UFC. This sizable opportunity and brand awareness combined with the strategies we are executing give us confidence in our ability to grow transactions on top of two record years of sales growth. as we have demonstrated in our 21 consecutive years of same store sales growth. Technology has always been at the forefront for us at Wingstop and 2024 was a transformational year for our digital business. We launched our proprietary tech stack, My Wingstop in 2024, which we believe will further advance our best in class digital platform. Our digital database has surpassed 50 million customers nearly 30% growth versus the prior year, which is truly remarkable. The most pronounced impacts we have seen early into our launch center around new guest acquisition with a record pace of registrations, increased frequency, and improved ROIs on our hyper-personalization strategies. Guests are beginning to experience a new level of hyper-personalization enabled by the data gathered from our platform providing them with relevant, personalized, and optimized content. Over the past two quarters, we have seen an increase in the number of guests opting in for notifications and registering with our platform. This information will help us to fine-tune our robust profiles to engage with our guests in a way that personally resonates with them, creating a more meaningful and engaging experience, which we feel is a competitive advantage for Wingstop. And while many of our investments in the past have been focused on more of our consumer facing digital platform, we also have been innovating around technology that can optimize the back of the house in the restaurant. A little over two years ago, we started working on a solution that we believe will unlock unmet demand. The variability in demand can be a challenge for restaurants to operate using our manual processes today and potentially impact or create an inconsistent guest experience. It could lead to longer quote times that can risk curbing demand. And as we consider future day part opportunities in an example like lunch, shortening quote times could be another opportunity to capitalize on and expand the consideration set for consumers. While our brand experienced a step function growth in AUVs benefiting from almost 40% same store sales growth that was primarily driven by transactions over the past two years, We have been focused on positioning the brand for the next phase of growth and invested in a technology solution that will allow us to fundamentally change our back of house operations. A solution that further improves overall quality, our brand is built to deliver. That cook to order, hand-sauced and tossed chicken in one of our 12 bold, distinctive flavors. We have developed a proprietary AI-enabled kitchen operating platform that will allow us to have a meaningful reduction in our quote times and deliver on guests' expectations around speed of service on a consistent basis. In doing this, we believe we will unlock pent-up demand and become more of the consideration set while also improving team member productivity in the restaurant. Ultimately, we discovered an opportunity to monetize how we operate our kitchens. We believe this new kitchen technology system will be another powerful unlock for our brand and enable an increase in frequency over time. And I want to be clear, this is not about a throughput issue. Over 10% of our system is already above our average unit volume target of $3 million. And we have plenty of experience with restaurants, that are operating volumes north of $4 million. This is about capturing our fair share and ensuring Wingstop continues to be a part of the consideration set for guests. This new platform supports our existing strategies we are executing, and it just further strengthens our confidence in scaling AUVs to our new target of $3 million. We unveiled this solution at our brand partner convention last quarter, and they too see the unlock this investment can be for their restaurants. Our new kitchen platform, which is a modest upfront investment, still allows us to maintain our industry-leading returns of 70% plus our brand partners have grown accustomed to. We are excited to begin the system-wide rollout, a true game changer for Wingstop, and we'll provide more updates in the coming year on this initiative. Essential to successful franchise system is the unit economics, and we believe we have the best in the industry. With our supply chain strategy, 2024 created a level of predictability into food costs we haven't seen in the past. Coupling food cost predictability with our average unit volumes of more than $2.1 million, our brand partners are seeing cash flows at record levels. And they, in turn, are investing behind their infrastructure and operations to scale their businesses alongside this growth. Our brand partners' demand for growth is demonstrated in the record 349 net new restaurants opened in 2024, as well as what we anticipate for 2025, which is a unit growth rate of 14 to 15 percent. We continue to see roughly 95% of our development come from existing brand partners reinvesting back into Wingstop. This demand for growth is translating into a record development pipeline with nearly 2000 restaurant commitments under development agreements at the end of 2024, the strongest pipeline ever for Wingstop. The demand we're seeing for more Wingstops transcends into our international business, We ended the year with 359 international locations and successfully added our 11th market in the fourth quarter. The success in our international expansion strategy was showcased by the level of interest in our UK business, roughly 60 restaurants that was acquired last month for over $500 million, and showcases the value creation Wingstop can provide. Although Wingstop is so early in its international expansion, it is encouraging to see our brand resonate so well with consumers across the globe. Consistent with what we see globally, our brand attracts a Gen Z millennial consumer that sparks to that quality and value we can deliver. We are excited to see 2025 be another accelerator in our journey to scale Wingstop to a top 10 global restaurant brand. Lastly, I'd like to close by sharing exciting news of a fundraising program for our new partnership with St. Jude's Children's Research Hospital. During the fourth quarter, we created an opportunity for those who share in our success to give back. And we did so in a big way. Our team, along with our brand partners, raised over $2 million that will directly support St. Jude's efforts to advance research and treatment for childhood cancer and other life-threatening diseases. The impact St. Jude has on families is incredible, and we are grateful for the opportunities to support this life-saving mission. I'm also happy to share that our charities organization in 2024 delivered over $3.7 million in community grants and sponsorships to local and national organizations. We believe, along with our brand partners, that it is our obligation to give back and we'll continue to look for these opportunities to partner with world-class organizations such as St. Jude. 2024 was an exceptional year for Wingstop, a step change year. and one we believe positions us well for this next phase of growth. The underlying momentum and health of our business is strong. As we move into 2025, we are focused on the disciplined execution of our strategies, which we believe will bring us closer to realizing our vision of becoming a top 10 global restaurant brand. With that, I'd like to turn the call over to Alex.