Dublin,
Ohio, Aug. 1, 2024 /PRNewswire/ -- The Wendy's
Company (NASDAQ: WEN) today reported unaudited results for the
second quarter ended June 30,
2024.
"Our restaurants across the globe continued to deliver
same-restaurant sales growth, holding steady with the QSR burger
category in the second quarter," President and Chief Executive
Officer Kirk Tanner said. "Our
industry leading quality, exciting innovation, and compelling value
will remain in focus as we continue to execute our customer first
approach and drive the restaurant economic model throughout the
rest of the year and beyond."
Second Quarter 2024 Summary
See "Disclosure
Regarding Non-GAAP Financial Measures" and the reconciliation
tables that accompany this release for a discussion and
reconciliation of certain non-GAAP financial measures included in
this release.
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Operational
Highlights
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Second
Quarter
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Year-to-Date
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2023
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2024
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2023
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2024
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Systemwide Sales
Growth(1)
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U.S.
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6.1 %
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1.7 %
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7.3 %
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1.7 %
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International(2)
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12.7 %
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8.3 %
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16.6 %
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8.5 %
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Global
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6.9 %
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2.6 %
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8.4 %
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2.6 %
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Same-Restaurant Sales
Growth(1)
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U.S.
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4.9 %
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0.6 %
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6.0 %
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0.6 %
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International(2)
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7.2 %
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2.5 %
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10.3 %
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2.8 %
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Global
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5.1 %
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0.8 %
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6.5 %
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0.9 %
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Systemwide Sales (In
US$ Millions)(3)
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U.S.
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$3,185
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$3,240
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$6,129
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$6,234
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International(2)
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$461
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$490
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$879
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$944
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Global
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$3,646
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$3,729
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$7,009
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$7,177
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Restaurant
Openings
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U.S. - Total /
Net
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19 / 4
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25 / (15)
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39 / (1)
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43 / (17)
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International - Total /
Net
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22 / 16
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39 / 28
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41 / 21
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56 / 38
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Global - Total /
Net
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41/ 20
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64 / 13
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80 / 20
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99 / 21
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Quarter End Restaurant
Count
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U.S.
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5,993
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6,013
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International
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1,122
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1,248
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Global
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7,115
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7,261
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Global Reimaging
Completion Percentage
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82 %
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88 %
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(1)
Systemwide sales growth and same-restaurant sales growth are
calculated on a constant currency basis and include sales
by both Company-operated and franchise restaurants.
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(2) Excludes
Argentina.
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(3)
Systemwide sales include sales at both Company-operated and
franchise restaurants.
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Financial
Highlights
|
Second
Quarter
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Year-to-Date
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2023
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2024
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B /
(W)
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2023
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2024
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B /
(W)
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($ In Millions Except
Per Share Amounts)
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(Unaudited)
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(Unaudited)
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Total
Revenues
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$
561.6
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$
570.7
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1.6 %
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$ 1,090.4
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$ 1,105.5
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1.4 %
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Adjusted
Revenues(1)
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$
451.8
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$
455.7
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0.9 %
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$
879.2
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$
885.5
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0.7 %
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U.S. Company-Operated
Restaurant Margin
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17.3 %
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16.5 %
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(0.8) %
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16.0 %
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15.9 %
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(0.1) %
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General and
Administrative Expense
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$ 62.7
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$ 61.5
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1.9 %
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$
125.0
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$
125.3
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(0.2) %
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Operating
Profit
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$
109.3
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$ 99.5
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(9.0) %
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$
193.8
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$
180.7
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(6.8) %
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Reported Effective Tax
Rate
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24.4 %
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27.0 %
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(2.6) %
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25.9 %
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26.9 %
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(1.0) %
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Net Income
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$ 59.6
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$ 54.6
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(8.4) %
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$ 99.5
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$ 96.6
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(2.9) %
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Adjusted
EBITDA
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$
144.5
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$
143.1
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(1.0) %
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$
270.1
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$
270.9
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0.3 %
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Reported Diluted
Earnings Per Share
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$ 0.28
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$ 0.27
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(3.6) %
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$ 0.46
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$ 0.47
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2.2 %
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Adjusted Earnings Per
Share
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$ 0.28
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$ 0.27
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(3.6) %
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$ 0.49
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$ 0.51
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4.1 %
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Cash Flows from
Operations
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$
141.5
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$
145.5
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2.8 %
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Capital
Expenditures
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$
(30.2)
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$
(34.5)
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(14.3) %
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Free Cash
Flow(2)
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$
133.5
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$
124.4
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(6.8) %
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(1) Total
revenues less advertising funds revenue.
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(2) Cash
flows from operations minus capital expenditures and the impact of
our advertising funds.
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Second Quarter Financial Highlights
Total Revenues
The increase in revenues resulted primarily from
an increase in advertising funds revenue and an increase in
franchise royalty revenue, both driven by net new restaurant
development and higher same-restaurant sales.
U.S. Company-Operated Restaurant Margin
The decrease in U.S. Company-operated restaurant
margin was primarily the result of higher labor costs and customer
count declines. These were partially offset by a higher average
check.
General and Administrative Expense
The decrease in general and administrative
expense was primarily driven by a decrease in incentive
compensation accruals and lower outside professional services
driven by lapping costs associated with the implementation of the
Company's human capital management system in the prior year.
These were partially offset by an increase in employee compensation
and benefits.
Operating Profit
The decrease in operating profit resulted
primarily from an increase in the Company's incremental investment
in breakfast advertising, higher depreciation, higher amortization
of cloud-computing arrangement costs, and a decrease in US
Company-operated restaurant margin. These were partially offset by
higher franchise royalty revenue and lower general and
administrative expense.
Net Income
The decrease in net income resulted primarily
from a decrease in operating profit and a higher effective tax
rate. This was partially offset by lapping a decrease in
investment income.
Adjusted EBITDA
The decrease in adjusted EBITDA resulted
primarily from the Company's incremental investment in breakfast
advertising and a decrease in U.S. Company-operated restaurant
margin. These were partially offset by higher franchise royalty
revenue and lower general and administrative expense.
Adjusted Earnings Per Share
The decrease in adjusted earnings per share was
driven by a decrease in adjusted EBITDA, an increase in
depreciation and higher cloud computing amortization costs.
These were partially offset by fewer shares outstanding as a result
of the Company's share repurchase program and lapping a decrease in
investment income in the prior year.
Year to Date Free Cash Flow
The decrease in free cash flow resulted
primarily from the Company's incremental investment in breakfast
advertising and an increase in capital expenditures. These were
partially offset by a decrease in cash paid for cloud computing
costs.
Company Declares Quarterly Dividend
The Company
announced today the declaration of its regular quarterly cash
dividend of 25 cents per share. The
dividend is payable on September 17,
2024, to shareholders of record as of September 3, 2024. The number of common shares
outstanding as of July 25, 2024 was
approximately 203.2 million.
Share Repurchases
The Company repurchased 1.6 million
shares for $27.3 million in the
second quarter of 2024. In the third quarter of 2024, the Company
has repurchased 0.9 million shares for $15.6 million through July
25. As of July 25,
approximately $260.0 million remains
available under the Company's existing share repurchase
authorization that expires in February
2027.
2024 Outlook
This release includes forward-looking
projections for certain non-GAAP financial measures, including
systemwide sales, adjusted EBITDA, adjusted earnings per share and
free cash flow. The Company excludes certain expenses and benefits
from adjusted EBITDA, adjusted earnings per share and free cash
flow, such as the impact from our advertising funds, including the
net change in the restricted operating assets and liabilities and
any excess or deficit of advertising fund revenues over advertising
fund expenses, impairment of long-lived assets, reorganization and
realignment costs, system optimization gains, net, amortization of
cloud computing arrangements, gain on early extinguishment of debt,
net, and the timing and resolution of certain tax matters. Due to
the uncertainty and variability of the nature and amount of those
expenses and benefits, the Company is unable without unreasonable
effort to provide projections of net income, earnings per share or
net cash provided by operating activities, or a reconciliation of
those projected measures.
During 2024 the Company Now Expects:
- Global systemwide sales growth: 3 to 5 percent
- Cash flows from operations: $365
to $385 million
- Free cash flow: $275 to
$285 million
In Addition, the Company Continues to Expect:
- Adjusted EBITDA: $535 to
$545 million
- Adjusted earnings per share: $0.98 to $1.02
- Capital expenditures: $90 to
$100 million
Conference Call and Webcast Scheduled for 8:30 a.m. Today, August
1
The Company will host a conference call on
Thursday, August 1 at 8:30 a.m. ET, with a simultaneous webcast from
the Company's Investor Relations website at www.irwendys.com. The
related presentation materials will also be available on the
Company's Investor Relations website. The live conference call will
be available by telephone at (844) 200-6205 for domestic callers
and (929) 526-1599 for international callers, both using event ID
202635. An archived webcast and presentation materials will be
available on the Company's Investor Relations website.
Forward-Looking Statements
This release contains
certain statements that are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995
(the "Reform Act"). Generally, forward-looking statements
include the words "may," "believes," "plans," "expects,"
"anticipates," "intends," "estimate," "goal," "upcoming,"
"outlook," "guidance" or the negation thereof, or similar
expressions. In addition, all statements that address future
operating, financial or business performance, strategies or
initiatives, future efficiencies or savings, anticipated costs or
charges, future capitalization, anticipated impacts of recent or
pending investments or transactions and statements expressing
general views about future results or brand health are
forward-looking statements within the meaning of the Reform
Act. Forward-looking statements are based on the Company's
expectations at the time such statements are made, speak only as of
the dates they are made and are susceptible to a number of risks,
uncertainties and other factors. For all such forward-looking
statements, the Company claims the protection of the safe harbor
for forward-looking statements contained in the Reform Act.
The Company's actual results, performance and achievements may
differ materially from any future results, performance or
achievements expressed or implied by the Company's forward-looking
statements.
Many important factors could affect the Company's future results
and cause those results to differ materially from those expressed
in or implied by the Company's forward-looking statements.
Such factors include, but are not limited to, the following: (1)
the impact of competition or poor customer experiences at Wendy's
restaurants; (2) adverse economic conditions or disruptions,
including in regions with a high concentration of Wendy's
restaurants; (3) changes in discretionary consumer spending and
consumer tastes and preferences; (4) the disruption to the
Company's business from COVID-19 and its impact on the Company's
results of operations, financial condition and prospects; (5)
impacts to the Company's corporate reputation or the value and
perception of the Company's brand; (6) the effectiveness of the
Company's marketing and advertising programs and new product
development; (7) the Company's ability to manage the impact of
social media; (8) the Company's ability to protect its intellectual
property; (9) food safety events or health concerns involving the
Company's products; (10) our ability to deliver accelerated global
sales growth and achieve or maintain market share across our
dayparts; (11) the Company's ability to achieve its growth strategy
through new restaurant development and its Image Activation
program; (12) the Company's ability to effectively manage the
acquisition and disposition of restaurants or successfully
implement other strategic initiatives; (13) risks associated with
leasing and owning significant amounts of real estate, including
environmental matters; (14) risks associated with the Company's
international operations, including the ability to execute its
international growth strategy; (15) changes in commodity and other
operating costs; (16) shortages or interruptions in the supply or
distribution of the Company's products and other risks associated
with the Company's independent supply chain purchasing co-op; (17)
the impact of increased labor costs or labor shortages; (18) the
continued succession and retention of key personnel and the
effectiveness of the Company's leadership and organizational
structure; (19) risks associated with the Company's digital
commerce strategy, platforms and technologies, including its
ability to adapt to changes in industry trends and consumer
preferences; (20) the Company's dependence on computer systems and
information technology, including risks associated with the failure
or interruption of its systems or technology or the occurrence of
cyber incidents or deficiencies; (21) risks associated with the
Company's securitized financing facility and other debt agreements,
including compliance with operational and financial covenants,
restrictions on its ability to raise additional capital, the impact
of its overall debt levels and the Company's ability to generate
sufficient cash flow to meet its debt service obligations and
operate its business; (22) risks associated with the Company's
capital allocation policy, including the amount and timing of
equity and debt repurchases and dividend payments; (23) risks
associated with complaints and litigation, compliance with legal
and regulatory requirements and an increased focus on
environmental, social and governance issues; (24) risks associated
with the availability and cost of insurance, changes in accounting
standards, the recognition of impairment or other charges, changes
in tax rates or tax laws and fluctuations in foreign currency
exchange rates; (25) conditions beyond the Company's control, such
as adverse weather conditions, natural disasters, hostilities,
social unrest, health epidemics or pandemics or other catastrophic
events; and (26) other risks and uncertainties cited in the
Company's releases, public statements and/or filings with the
Securities and Exchange Commission, including those identified in
the "Risk Factors" sections of the Company's Forms 10-K and
10-Q.
In addition to the factors described above, there are risks
associated with the Company's predominantly franchised business
model that could impact its results, performance and achievements.
Such risks include the Company's ability to identify, attract and
retain experienced and qualified franchisees, the Company's ability
to effectively manage the transfer of restaurants between and among
franchisees, the business and financial health of franchisees, the
ability of franchisees to meet their royalty, advertising,
development, reimaging and other commitments, participation by
franchisees in brand strategies and the fact that franchisees are
independent third parties that own, operate and are responsible for
overseeing the operations of their restaurants. The Company's
predominantly franchised business model may also impact the ability
of the Wendy's system to effectively respond and adapt to market
changes.
All future written and oral forward-looking statements
attributable to the Company or any person acting on its behalf are
expressly qualified in their entirety by the cautionary statements
contained or referred to above. New risks and uncertainties arise
from time to time, and factors that the Company currently deems
immaterial may become material, and it is impossible for the
Company to predict these events or how they may affect the
Company.
The Company assumes no obligation to update any forward-looking
statements after the date of this release as a result of new
information, future events or developments, except as required by
federal securities laws, although the Company may do so from time
to time. The Company does not endorse any projections regarding
future performance that may be made by third parties.
There can be no assurance that any additional regular quarterly
cash dividends will be declared or paid after the date hereof, or
of the amount or timing of such dividends, if any. Future
dividend payments, if any, are subject to applicable law, will be
made at the discretion of the Board of Directors and will be based
on factors such as the Company's earnings, financial condition and
cash requirements and other factors.
Disclosure Regarding Non-GAAP Financial Measures
In
addition to the financial measures presented in this release in
accordance with U.S. Generally Accepted Accounting Principles
("GAAP"), the Company has included certain non-GAAP financial
measures in this release, including adjusted revenue, adjusted
EBITDA, adjusted earnings per share, free cash flow and systemwide
sales.
The Company uses adjusted revenue, adjusted EBITDA, adjusted
earnings per share and systemwide sales as internal measures of
business operating performance and as performance measures for
benchmarking against the Company's peers and competitors.
Adjusted EBITDA and systemwide sales are also used by the Company
in establishing performance goals for purposes of executive
compensation. The Company believes its presentation of
adjusted revenue, adjusted EBITDA, adjusted earnings per share and
systemwide sales provides a meaningful perspective of the
underlying operating performance of our current business and
enables investors to better understand and evaluate our historical
and prospective operating performance. The Company believes
these non-GAAP financial measures are important supplemental
measures of operating performance because they eliminate items that
vary from period to period without correlation to our core
operating performance and highlight trends in our business that may
not otherwise be apparent when relying solely on GAAP financial
measures. Due to the nature and/or size of the items being
excluded, such items do not reflect future gains, losses, expenses
or benefits and are not indicative of our future operating
performance. The Company believes investors, analysts and
other interested parties use adjusted revenue, adjusted EBITDA,
adjusted earnings per share and systemwide sales in evaluating
issuers, and the presentation of these measures facilitates a
comparative assessment of the Company's operating performance in
addition to the Company's performance based on GAAP results.
This release also includes disclosure regarding the Company's
free cash flow. Free cash flow is a non-GAAP financial
measure that is used by the Company as an internal measure of
liquidity. Free cash flow is also used by the Company in
establishing performance goals for purposes of executive
compensation. The Company defines free cash flow as cash
flows from operations minus (i) capital expenditures and (ii) the
net change in the restricted operating assets and liabilities of
the advertising funds and any excess/deficit of advertising funds
revenue over advertising funds expense included in net income, as
reported under GAAP. The impact of our advertising funds is
excluded because the funds are used solely for advertising and are
not available for the Company's working capital needs. The Company
may also make additional adjustments for certain non-recurring or
unusual items to the extent identified in the reconciliation tables
that accompany this release. The Company believes free cash flow is
an important liquidity measure for investors and other interested
persons because it communicates how much cash flow is available for
working capital needs or to be used for repurchasing shares, paying
dividends, repaying or refinancing debt, financing possible
acquisitions or investments or other uses of cash.
Adjusted revenue, adjusted EBITDA, adjusted earnings per share,
free cash flow and systemwide sales are not recognized terms under
GAAP, and the Company's presentation of these non-GAAP financial
measures does not replace the presentation of the Company's
financial results in accordance with GAAP. Because all
companies do not calculate adjusted revenue, adjusted EBITDA,
adjusted earnings per share, free cash flow and systemwide sales
(and similarly titled financial measures) in the same way, those
measures as used by other companies may not be consistent with the
way the Company calculates such measures. The non-GAAP
financial measures included in this release should not be construed
as substitutes for or better indicators of the Company's
performance than the most directly comparable GAAP financial
measures. See the reconciliation tables that accompany this
release for additional information regarding certain of the
non-GAAP financial measures included herein.
Key Business Measures
The Company tracks its results
of operations and manages its business using certain key business
measures, including same-restaurant sales, systemwide sales and
Company-operated restaurant margin, which are measures commonly
used in the quick-service restaurant industry that are important to
understanding Company performance.
Same-restaurant sales and systemwide sales each include sales by
both Company-operated and franchise restaurants. The Company
reports same-restaurant sales for new restaurants after they have
been open for 15 continuous months and for reimaged restaurants as
soon as they reopen. Restaurants temporarily closed for more than
one fiscal week are excluded from same-restaurant sales.
Franchise restaurant sales are reported by our franchisees and
represent their revenues from sales at franchised Wendy's
restaurants. Sales by franchise restaurants are not recorded as
Company revenues and are not included in the Company's consolidated
financial statements. However, the Company's royalty revenues are
computed as percentages of sales made by Wendy's franchisees and,
as a result, sales by franchisees have a direct effect on the
Company's royalty revenues and profitability.
Same-restaurant sales and systemwide sales exclude sales from
Argentina due to the highly
inflationary economy of that country.
The Company calculates same-restaurant sales and systemwide
sales growth on a constant currency basis. Constant currency
results exclude the impact of foreign currency translation and are
derived by translating current year results at prior year average
exchange rates. The Company believes excluding the impact of
foreign currency translation provides better year over year
comparability.
U.S. Company-operated restaurant margin is defined as sales from
U.S. Company-operated restaurants less cost of sales divided by
sales from U.S. Company-operated restaurants. Cost of sales
includes food and paper, restaurant labor and occupancy,
advertising and other operating costs. Cost of sales excludes
certain costs that support restaurant operations that are not
allocated to individual restaurants, which are included in "General
and administrative." Cost of sales also excludes depreciation and
amortization expense and impairment of long-lived assets.
Therefore, as restaurant margin as presented excludes certain costs
as described above, its usefulness may be limited and may not be
comparable to other similarly titled measures of other companies in
our industry.
About Wendy's
Wendy's® was founded in 1969
by Dave Thomas in Columbus, Ohio. Dave built his business on the
premise, "Quality is our Recipe®," which remains the
guidepost of the Wendy's system. Wendy's is best known for its
made-to-order square hamburgers, using fresh, never frozen beef*,
freshly-prepared salads, and other signature items like chili,
baked potatoes and the Frosty® dessert. The Wendy's
Company (Nasdaq: WEN) is committed to doing the right thing and
making a positive difference in the lives of others. This is
most visible through the Company's support of the Dave Thomas
Foundation for Adoption® and its signature Wendy's Wonderful
Kids® program, which seeks to find a loving, forever
home for every child waiting to be adopted from the North American
foster care system. Today, Wendy's and its franchisees employ
hundreds of thousands of people across over 7,000 restaurants
worldwide with a vision of becoming the world's most thriving and
beloved restaurant brand. For details on franchising, connect with
us at www.wendys.com/franchising. Visit www.wendys.com and
www.squaredealblog.com for more information and connect with us on
X and Instagram using @wendys, and on Facebook at
www.facebook.com/wendys.
*Fresh beef available in the contiguous U.S., Alaska, and Canada.
Investor Contact:
Nick Waters
Manager - Investor Relations
(614) 764-3316; nicholas.waters@wendys.com
Media Contact:
Heidi Schauer
Vice President – Communications, Public Affairs & Customer
Care
(614) 764-3368; heidi.schauer@wendys.com
|
The
Wendy's Company and Subsidiaries
|
|
Condensed
Consolidated Statements of Operations
|
|
Three and Six Month
Periods Ended July 2, 2023 and June 30,
2024
|
|
(In Thousands Except
Per Share Amounts)
|
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
2023
|
|
2024
|
|
2023
|
|
2024
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Sales
|
$
240,688
|
|
$
237,355
|
|
$
468,637
|
|
$
462,678
|
|
Franchise royalty
revenue
|
132,128
|
|
136,318
|
|
254,278
|
|
261,998
|
|
Franchise
fees
|
20,920
|
|
21,352
|
|
40,447
|
|
42,172
|
|
Franchise rental
income
|
58,033
|
|
60,638
|
|
115,840
|
|
118,624
|
|
Advertising funds
revenue
|
109,796
|
|
115,064
|
|
211,170
|
|
220,008
|
|
561,565
|
|
570,727
|
|
1,090,372
|
|
1,105,480
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
Cost of
sales
|
201,010
|
|
199,886
|
|
397,546
|
|
391,999
|
|
Franchise support and
other costs
|
13,787
|
|
16,222
|
|
27,047
|
|
30,964
|
|
Franchise rental
expense
|
32,396
|
|
32,390
|
|
63,025
|
|
64,168
|
|
Advertising funds
expense
|
109,618
|
|
120,817
|
|
211,279
|
|
228,191
|
|
General and
administrative
|
62,742
|
|
61,496
|
|
125,018
|
|
125,253
|
|
Depreciation and
amortization (exclusive of
amortization of cloud computing
arrangements shown separately below)
|
33,498
|
|
37,492
|
|
66,970
|
|
73,010
|
|
Amortization of cloud
computing arrangements
|
2,266
|
|
3,519
|
|
3,848
|
|
7,061
|
|
System optimization
losses (gains), net
|
6
|
|
(280)
|
|
1
|
|
(153)
|
|
Reorganization and
realignment costs
|
681
|
|
2,452
|
|
7,489
|
|
8,125
|
|
Impairment of
long-lived assets
|
78
|
|
689
|
|
454
|
|
2,695
|
|
Other operating
income, net
|
(3,791)
|
|
(3,463)
|
|
(6,057)
|
|
(6,496)
|
|
452,291
|
|
471,220
|
|
896,620
|
|
924,817
|
|
Operating
profit
|
109,274
|
|
99,507
|
|
193,752
|
|
180,663
|
|
Interest expense,
net
|
(31,136)
|
|
(30,995)
|
|
(62,841)
|
|
(61,530)
|
|
Loss on early
extinguishment of debt
|
—
|
|
—
|
|
(1,266)
|
|
—
|
|
Investment (loss)
income, net
|
(6,827)
|
|
11
|
|
(10,389)
|
|
11
|
|
Other income,
net
|
7,573
|
|
6,300
|
|
14,909
|
|
13,136
|
|
Income before income
taxes
|
78,884
|
|
74,823
|
|
134,165
|
|
132,280
|
|
Provision for income
taxes
|
(19,252)
|
|
(20,180)
|
|
(34,712)
|
|
(35,644)
|
|
Net income
|
$
59,632
|
|
$
54,643
|
|
$
99,453
|
|
$
96,636
|
|
|
|
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
|
|
|
|
Basic
|
$
.28
|
|
$
.27
|
|
$
.47
|
|
$
.47
|
|
Diluted
|
.28
|
|
.27
|
|
.46
|
|
.47
|
|
|
|
|
|
|
|
|
|
Number of shares used
to calculate basic income per share
|
210,624
|
|
204,919
|
|
211,585
|
|
205,145
|
|
|
|
|
|
|
|
|
|
Number of shares used
to calculate diluted income per share
|
212,928
|
|
206,185
|
|
213,978
|
|
206,578
|
|
The Wendy's Company
and Subsidiaries
|
|
Condensed Consolidated Balance
Sheets
|
|
As of December 31, 2023 and June 30,
2024
|
|
(In Thousands Except Par Value)
|
|
(Unaudited)
|
|
|
December 31,
2023
|
|
June 30,
2024
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
516,037
|
|
$
465,489
|
|
Restricted
cash
|
35,848
|
|
35,718
|
|
Accounts and notes
receivable, net
|
121,683
|
|
117,671
|
|
Inventories
|
6,690
|
|
6,379
|
|
Prepaid expenses and
other current assets
|
39,640
|
|
40,087
|
|
Advertising funds
restricted assets
|
117,755
|
|
125,215
|
|
Total current
assets
|
837,653
|
|
790,559
|
|
Properties
|
891,080
|
|
894,586
|
|
Finance lease
assets
|
228,936
|
|
231,390
|
|
Operating lease
assets
|
705,615
|
|
687,253
|
|
Goodwill
|
773,727
|
|
772,794
|
|
Other intangible
assets
|
1,219,129
|
|
1,202,525
|
|
Investments
|
34,445
|
|
32,181
|
|
Net investment in
sales-type and direct financing leases
|
313,664
|
|
291,493
|
|
Other assets
|
178,577
|
|
185,384
|
|
Total
assets
|
$
5,182,826
|
|
$
5,088,165
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current portion of
long-term debt
|
$
29,250
|
|
$
29,250
|
|
Current portion of
finance lease liabilities
|
20,250
|
|
21,220
|
|
Current portion of
operating lease liabilities
|
49,353
|
|
49,931
|
|
Accounts
payable
|
27,370
|
|
25,767
|
|
Accrued expenses and
other current liabilities
|
135,149
|
|
116,456
|
|
Advertising funds
restricted liabilities
|
120,558
|
|
122,239
|
|
Total current
liabilities
|
381,930
|
|
364,863
|
|
Long-term
debt
|
2,732,814
|
|
2,721,927
|
|
Long-term finance lease
liabilities
|
568,767
|
|
567,071
|
|
Long-term operating
lease liabilities
|
739,340
|
|
714,298
|
|
Deferred income
taxes
|
270,353
|
|
270,128
|
|
Deferred franchise
fees
|
90,132
|
|
89,054
|
|
Other
liabilities
|
89,711
|
|
87,071
|
|
Total
liabilities
|
4,873,047
|
|
4,814,412
|
|
Commitments and
contingencies
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Common stock, $0.10
par value; 1,500,000 shares authorized; 470,424 shares
issued; 205,397 and 204,149 shares outstanding,
respectively
|
47,042
|
|
47,042
|
|
Additional paid-in
capital
|
2,960,035
|
|
2,964,479
|
|
Retained
earnings
|
409,863
|
|
403,836
|
|
Common stock held in
treasury, at cost; 265,027 and 266,275 shares,
respectively
|
(3,048,786)
|
|
(3,076,632)
|
|
Accumulated other
comprehensive loss
|
(58,375)
|
|
(64,972)
|
|
Total stockholders'
equity
|
309,779
|
|
273,753
|
|
Total liabilities and
stockholders' equity
|
$
5,182,826
|
|
$
5,088,165
|
|
The Wendy's Company and
Subsidiaries
|
|
Condensed Consolidated Statements of Cash
Flows
|
|
Six Month Periods Ended July 2, 2023 and
June 30, 2024
|
|
(In Thousands)
|
|
(Unaudited)
|
|
|
Six Months
Ended
|
|
2023
|
|
2024
|
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
|
$
99,453
|
|
$
96,636
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization (exclusive of amortization of
cloud computing
arrangements shown separately below)
|
66,970
|
|
73,010
|
|
Amortization of cloud
computing arrangements
|
3,848
|
|
7,061
|
|
Share-based
compensation
|
10,218
|
|
11,677
|
|
Impairment of
long-lived assets
|
454
|
|
2,695
|
|
Deferred income
tax
|
4,254
|
|
(104)
|
|
Non-cash rental
expense, net
|
19,552
|
|
21,120
|
|
Change in operating
lease liabilities
|
(23,528)
|
|
(24,273)
|
|
Net receipt of
deferred vendor incentives
|
6,881
|
|
5,533
|
|
System optimization
losses (gains), net
|
1
|
|
(153)
|
|
Distributions received
from joint ventures, net of equity in earnings
|
542
|
|
1,146
|
|
Long-term debt-related
activities, net
|
5,334
|
|
3,738
|
|
Cloud computing
arrangements expenditures
|
(16,817)
|
|
(6,878)
|
|
Changes in operating
assets and liabilities and other, net
|
(35,658)
|
|
(45,745)
|
|
Net cash provided by
operating activities
|
141,504
|
|
145,463
|
|
Cash flows from
investing activities:
|
|
|
|
|
Capital
expenditures
|
(30,164)
|
|
(34,465)
|
|
Franchise development
fund
|
(395)
|
|
(11,477)
|
|
Dispositions
|
280
|
|
601
|
|
Notes receivable,
net
|
1,335
|
|
1,383
|
|
Net cash used in
investing activities
|
(28,944)
|
|
(43,958)
|
|
Cash flows from
financing activities:
|
|
|
|
|
Repayments of
long-term debt
|
(46,434)
|
|
(14,625)
|
|
Repayments of finance
lease liabilities
|
(12,336)
|
|
(10,336)
|
|
Repurchases of common
stock
|
(86,930)
|
|
(34,248)
|
|
Dividends
|
(105,715)
|
|
(102,626)
|
|
Proceeds from stock
option exercises
|
7,847
|
|
2,098
|
|
Payments related to
tax withholding for share-based compensation
|
(2,708)
|
|
(2,645)
|
|
Net cash used in
financing activities
|
(246,276)
|
|
(162,382)
|
|
Net cash used in
operations before effect of exchange rate
changes on
cash
|
(133,716)
|
|
(60,877)
|
|
Effect of exchange rate
changes on cash
|
2,161
|
|
(3,298)
|
|
Net decrease in cash,
cash equivalents and restricted cash
|
(131,555)
|
|
(64,175)
|
|
Cash, cash equivalents
and restricted cash at beginning of period
|
831,801
|
|
588,816
|
|
Cash, cash equivalents
and restricted cash at end of period
|
$
700,246
|
|
$
524,641
|
|
The Wendy's Company
and Subsidiaries
|
|
Reconciliations of Net Income to Adjusted EBITDA and
Revenues to Adjusted Revenues
|
|
Three and Six Month Periods Ended July 2, 2023
and June 30, 2024
|
|
(In Thousands)
|
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
2023
|
|
2024
|
|
2023
|
|
2024
|
|
|
|
|
|
|
|
|
|
Net income
|
$
59,632
|
|
$
54,643
|
|
$
99,453
|
|
$
96,636
|
|
Provision for income
taxes
|
19,252
|
|
20,180
|
|
34,712
|
|
35,644
|
|
Income before income
taxes
|
78,884
|
|
74,823
|
|
134,165
|
|
132,280
|
|
Other income,
net
|
(7,573)
|
|
(6,300)
|
|
(14,909)
|
|
(13,136)
|
|
Investment loss
(income), net
|
6,827
|
|
(11)
|
|
10,389
|
|
(11)
|
|
Loss on early
extinguishment of debt
|
—
|
|
—
|
|
1,266
|
|
—
|
|
Interest expense,
net
|
31,136
|
|
30,995
|
|
62,841
|
|
61,530
|
|
Operating
profit
|
109,274
|
|
99,507
|
|
193,752
|
|
180,663
|
|
Plus (less):
|
|
|
|
|
|
|
|
|
Advertising funds
revenue
|
(109,796)
|
|
(115,064)
|
|
(211,170)
|
|
(220,008)
|
|
Advertising funds
expense (a)
|
108,481
|
|
114,810
|
|
208,749
|
|
219,547
|
|
Depreciation and
amortization (exclusive of
amortization of cloud computing
arrangements
shown separately below)
|
33,498
|
|
37,492
|
|
66,970
|
|
73,010
|
|
Amortization of cloud
computing arrangements
|
2,266
|
|
3,519
|
|
3,848
|
|
7,061
|
|
System optimization
losses (gains), net
|
6
|
|
(280)
|
|
1
|
|
(153)
|
|
Reorganization and
realignment costs
|
681
|
|
2,452
|
|
7,489
|
|
8,125
|
|
Impairment of
long-lived assets
|
78
|
|
689
|
|
454
|
|
2,695
|
|
Adjusted
EBITDA
|
$
144,488
|
|
$
143,125
|
|
$
270,093
|
|
$
270,940
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
561,565
|
|
$
570,727
|
|
$
1,090,372
|
|
$
1,105,480
|
|
Less:
|
|
|
|
|
|
|
|
|
Advertising funds
revenue
|
(109,796)
|
|
(115,064)
|
|
(211,170)
|
|
(220,008)
|
|
Adjusted
revenues
|
$
451,769
|
|
$
455,663
|
|
$
879,202
|
|
$
885,472
|
|
|
|
(a)
|
Excludes advertising
funds expense of $658 and $1,206 for the three and six months ended
July 2, 2023, respectively, and $5,687 and $8,174 for the three and
six months ended and June 30, 2024, respectively, related to the
Company's funding of incremental advertising. In addition,
excludes other international-related advertising deficit of $479
and $1,324 for the three and six months ended July 2, 2023,
respectively, and $320 and $470 for the three and six months ended
June 30, 2024, respectively.
|
|
The Wendy's Company
and Subsidiaries
|
|
Reconciliation of Net Income and Diluted Earnings Per
Share to
|
|
Adjusted Income and Adjusted Earnings Per
Share
|
|
Three and Six Month Periods Ended July 2, 2023
and June 30, 2024
|
|
(In Thousands Except Per Share
Amounts)
|
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
2023
|
|
2024
|
|
2023
|
|
2024
|
|
|
|
|
|
|
|
|
|
Net income
|
$
59,632
|
|
$
54,643
|
|
$
99,453
|
|
$
96,636
|
|
Plus (less):
|
|
|
|
|
|
|
|
|
Advertising funds
revenue
|
(109,796)
|
|
(115,064)
|
|
(211,170)
|
|
(220,008)
|
|
Advertising funds
expense (a)
|
108,481
|
|
114,810
|
|
208,749
|
|
219,547
|
|
System optimization
losses (gains), net
|
6
|
|
(280)
|
|
1
|
|
(153)
|
|
Reorganization and
realignment costs
|
681
|
|
2,452
|
|
7,489
|
|
8,125
|
|
Impairment of
long-lived assets
|
78
|
|
689
|
|
454
|
|
2,695
|
|
Loss on early
extinguishment of debt, net
|
—
|
|
—
|
|
1,266
|
|
—
|
|
Total
adjustments
|
(550)
|
|
2,607
|
|
6,789
|
|
10,206
|
|
Income tax impact on
adjustments (b)
|
(154)
|
|
(604)
|
|
(2,085)
|
|
(2,248)
|
|
Total adjustments, net
of income taxes
|
(704)
|
|
2,003
|
|
4,704
|
|
7,958
|
|
Adjusted
income
|
$
58,928
|
|
$
56,646
|
|
$
104,157
|
|
$
104,594
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
$
.28
|
|
$
.27
|
|
$
.46
|
|
$
.47
|
|
Total adjustments per
share, net of income taxes
|
—
|
|
—
|
|
.03
|
|
.04
|
|
Adjusted earnings per
share
|
$
.28
|
|
$
.27
|
|
$
.49
|
|
$
.51
|
|
|
|
(a)
|
Excludes advertising
funds expense of $658 and $1,206 for the three and six months ended
July 2, 2023, respectively, and $5,687 and $8,174 for the three and
six months ended June 30, 2024, respectively, related to the
Company's funding of incremental advertising. In addition,
excludes other international-related advertising deficit of $479
and $1,324 for the three and six months ended July 2, 2023,
respectively, and $320 and $470 for the three and six months ended
June 30, 2024, respectively.
|
|
(b)
|
Adjustments relate to
the tax effect of non-GAAP adjustments, which were determined based
on the nature of the underlying non-GAAP adjustments and their
relevant jurisdictional tax rates.
|
|
The Wendy's Company
and Subsidiaries
|
|
Reconciliation of Net Cash Provided by Operating
Activities to Free Cash Flow
|
|
Six Month Periods Ended July 2, 2023 and
June 30, 2024
|
|
(In Thousands)
|
|
(Unaudited)
|
|
|
Six Months
Ended
|
|
2023
|
|
2024
|
|
Net cash provided by
operating activities
|
$
141,504
|
|
$
145,463
|
|
Plus (less):
|
|
|
|
|
Capital
expenditures
|
(30,164)
|
|
(34,465)
|
|
Advertising funds
impact (a)
|
22,117
|
|
13,353
|
|
Free cash
flow
|
$
133,457
|
|
$
124,351
|
|
|
|
(a)
|
Represents the net
change in the restricted operating assets and liabilities of our
advertising funds, which is included in "Changes in operating
assets and liabilities and other, net," and the excess of
advertising funds expense over advertising funds revenue, which is
included in "Net income."
|
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SOURCE The Wendy’s Company