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The Wendy's Company Reports 2013 First-Quarter Results



            The Wendy's Company Reports 2013 First-Quarter Results

Adjusted EBITDA Increased 21% Compared to Prior Year; Adjusted EPS Increased
from $0.01 to $0.03

Company-Operated North America Same-Store Sales Increased 1.0%, Despite
Negative Impact of Holiday Shifts and Adverse Weather Conditions

Brand Transformation Accelerating; Wendy's on Track to Reimage 200 Systemwide
Restaurants in 2013

Company Expects 2013 Refinancing to Reduce Annualized Interest Expense by $20
million

Company Reiterates 2013 Adjusted EBITDA Outlook of $350 to $360 million;
Raises Adjusted EPS Outlook to a Range of $0.20 to $0.22 Due to Refinancing
Benefit

PR Newswire

DUBLIN, Ohio, May 8, 2013

DUBLIN, Ohio, May 8, 2013 /PRNewswire/ -- The Wendy's Company (NASDAQ: WEN)
today reported unaudited results for the first quarter ended March 31, 2013.

(Logo: http://photos.prnewswire.com/prnh/20120831/MM66742LOGO)

"Our solid first-quarter profitability increase was in line with our
expectations," President and Chief Executive Officer Emil Brolick said. "The
momentum from our 'Recipe to Win' brand transformation, Image Activation
progress and results from our new 'Right Price, Right Size Menu™' translated
into strong earnings growth in the first quarter. We generated positive
same-store sales and overcame the negative impact from the New Year and Easter
holiday shifts, as well as adverse weather conditions. We have also seen a
solid consumer response to the April introduction of our new Flatbread Grilled
Chicken sandwiches, although the price-value component of our business
continues to represent a challenge."

First-Quarter 2013 Summary
Highlights from the first quarter included the following:

  o Consolidated revenues increased to $603.7 million in the first quarter of
    2013, compared to $593.2 million in the first quarter of 2012. 
  o Wendy's^® North America Company-operated restaurants generated a
    same-store sales increase of 1.0 percent in the first quarter of 2013.
    Franchise same-store sales in North America increased 0.6 percent during
    the quarter.
  o Company-operated North America restaurant margin increased 100 basis
    points to 12.8 percent in the first quarter of 2013, compared to 11.8
    percent in the first quarter of 2012. The margin improvement was due
    primarily to higher same-store sales, including rollover pricing and
    favorable product mix, along with reductions in beverage costs and
    breakfast advertising expense, partly offset by an increase in commodity
    costs of 90 basis points.
  o Adjusted EBITDA increased 21.0 percent to $77.3 million in the first
    quarter of 2013, compared to first quarter 2012 Adjusted EBITDA of $63.9
    million. See "Disclosure Regarding Non-GAAP Financial Measures" below for
    a reconciliation of the non-GAAP measures included herein (i.e., Adjusted
    EBITDA and Adjusted Earnings Per Share).
  o Net income attributable to The Wendy's Company was $2.1 million in the
    first quarter of 2013, compared to $12.4 million in the first quarter of
    2012. The first-quarter 2012 results included an $18 million after-tax net
    gain on the sale of an investment.
  o Adjusted Earnings Per Share were $0.03 in the first quarter of 2013,
    compared to $0.01 in the first quarter of 2012.
  o Earnings per share were $0.01 in the first quarter of 2013, compared to
    $0.03 in the first quarter of 2012. The first-quarter 2012 results
    included an after-tax net gain on the sale of an investment of $0.05 per
    share.

Brand Transformation Accelerating; Image Activation Program Remains on Track
The Company is accelerating its brand transformation, including Image
Activation restaurants, a bold new Wendy's logo, stylish uniforms, updated
menu boards and innovative products. In March 2013, the Company also began
introducing new packaging prominently featuring the new logo.

As of April 30, 2013, the Wendy's system had opened a total of 86 new and
reimaged Image Activation restaurants since the program began, and the Company
continues to expect to reimage 50 percent of its Company-operated restaurants
by the end of 2015. "We are making excellent progress with Image Activation,
one of the most critical elements of our 'Recipe to Win' strategy," Brolick
said. "Consumer reaction to our Tier One reimages that we started in 2011 and
accelerated in 2012 has produced very positive traffic and sales growth. 
Early response to our Tier Two and Tier Three reimages, which have lower
investment costs, is also positive, and we expect to see an increase in these
openings throughout 2013."  

Wendy's is offering an incentive program to qualified franchisees completing
Image Activation restaurant reimages during 2013 and has expanded the program
to include all three of its Image Activation tiers. The Company has received
franchisee applications for more than 100 reimages across all three tiers. As
previously announced, the Company expects to record approximately $10 million
in incremental year-over-year G&A expense related to the incentive program
during the fourth quarter of 2013.

"We are excited about the positive response from franchisees to our Image
Activation incentive program," Chief Financial Officer Steve Hare said. "We
expect the number of reimaged franchised restaurants to increase over the next
three years as our brand transformation accelerates."

Total Shareholder Return Continues to Improve; 2013 Refinancing Adds to Total
Interest Expense Savings as Key Component of Financial Management Strategy
The Company recently announced that its indirect wholly owned subsidiary,
Wendy's International, Inc., has entered into an agreement to refinance its
existing credit facility. The Company expects this refinancing to generate
approximately $20 million in ongoing annualized interest expense savings,
including $12 million in 2013. This is in addition to the approximately $30
million in ongoing annualized net interest expense savings from the Company's
2012 refinancing. The Company expects the current refinancing transaction to
close on or after May 16, 2013.

On May 2, the Company announced the declaration of its regular quarterly cash
dividend of $0.04 per share. The dividend is payable on June 17, to
stockholders of record as of June 3. During the fourth quarter of 2012, the
Company's Board of Directors authorized a 100 percent increase in the
quarterly cash dividend rate from $0.02 to $0.04 per share, effective with the
Company's December 2012 dividend.

During the fourth quarter of 2012, the Company's Board of Directors also
authorized a share repurchase program for up to $100 million of the Company's
common stock through Dec. 29, 2013. The common stock repurchase program allows
the Company to make repurchases as market conditions warrant and to the extent
legally permissible. The Company did not repurchase any shares during 2012 or
the first quarter of 2013.

"The 2013 refinancing and recent dividend increase are important elements of
our financial management strategy, and dividends will continue to be part of
our commitment to improve total shareholder returns," Hare said. "Coupled with
our 2012 refinancing, we will have reduced our annualized net interest expense
by approximately $50 million compared to two years ago. This will benefit our
cash flow and earnings per share in the coming years, and provides us with
additional flexibility with respect to organic growth opportunities such as
Image Activation and shareholder value-enhancing initiatives."

Company Reiterates 2013 Adjusted EBITDA and Long-Term Outlook; Increases 2013
Adjusted EPS Outlook to a Range of $0.20 to $0.22 Due to Refinancing Benefit
For 2013, the Company reiterated its outlook for Adjusted EBITDA of $350
million to $360 million, a 5 to 8 percent increase compared to 2012. The
outlook for 2013 Adjusted EBITDA reflects:

  o Higher year-over-year profitability in each of the first three quarters,
    with lower growth rates in the second and third quarter of 2013, relative
    to the first quarter.
  o Lower year-over-year profitability in the fourth quarter, due primarily to
    the anticipated expense of about $10 million from the Company's Image
    Activation franchisee incentive program.

As a result of the expected benefit from the 2013 debt refinancing, the
Company increased its outlook for 2013 Adjusted Earnings Per Share from a
range of $0.18 to $0.20 to a range of $0.20 to $0.22. The new Adjusted
Earnings Per Share range represents an 18 to 29 percent increase compared to
2012.

Estimated 2013 Adjusted Earnings Per Share excludes $20 to $25 million of
anticipated pretax depreciation for existing assets that will be replaced as
part of the Company's Image Activation initiative. The Company expects its
total 2013 depreciation and amortization expense to increase 15 to 20 percent
compared to 2012.

Also included in the Company's 2013 outlook is:

  o Average same-store sales growth of 2.0 to 3.0 percent at Wendy's North
    America Company-operated restaurants.
  o New restaurant development and restaurant closures as follows:

       o North America Company-operated: 25 openings with 20 to 30 closures
       o North America franchise: 40 openings with 90 to 100 closures
       o International: 60 openings with 15 to 20 closures

  o The reimaging of 100 Company-operated restaurants.
  o Approximately $10 million in incremental year-over-year G&A expense
    associated with the Company's Image Activation franchisee incentive
    program, which includes the planned reimaging of 100 franchised
    restaurants in 2013. The Company expects to record this expense in the
    fourth quarter.
  o Company-operated restaurant margin of 14.2 to 14.5 percent, compared to
    14.0 percent in 2012. This estimate includes the benefit of same-store
    sales increases, Image Activation sales, discontinuation of breakfast at
    certain restaurants and cost-savings initiatives. It also assumes a 90 to
    120 basis-point impact from higher commodity costs, primarily in the
    second half of the year, driven by rising beef and chicken costs.
  o Capital expenditures of approximately $245 million, compared to $198
    million in 2012. This estimate includes $145 million for Image Activation
    designs at 25 new and 100 reimaged Company-operated restaurants in North
    America.

The Company continues to target long-term Adjusted EBITDA and Adjusted
Earnings Per Share growth beyond 2013 in the high single-digit to low
double-digit range.

Conference Call and Webcast Scheduled for 10 a.m. Today, May 8
The Company will host a conference call today at 10 a.m. ET, with a
simultaneous webcast from the investor relations section of the Company's
website at www.aboutwendys.com. Hosting the call will be President and Chief
Executive Officer Emil Brolick, Chief Financial Officer Steve Hare and Chief
Communications Officer John Barker. The live conference call will be available
at (877) 572-6014 or, for international callers, at (281) 913-8524. An
archived webcast with the accompanying slides will be available on the
Company's website at www.aboutwendys.com.

Second-Quarter Release and Conference Call Scheduled for Aug. 7
The Company plans to release its second-quarter results before the market
opens on Aug. 7 and host a conference call at 10 a.m. ET the same day with a
simultaneous webcast from the investor relations section of the Company's Web
site at www.aboutwendys.com. The live conference call will be available at
(877) 572-6014 or, for international callers, at (281) 913-8524.

Forward-Looking Statements  
This news release contains certain statements that are not historical facts,
including, most importantly, information concerning possible or assumed future
results of operations of The Wendy's Company and its subsidiaries
(collectively, the "Company"). Those statements, as well as statements
preceded by, followed by, or that include the words "may," "believes,"
"plans," "expects," "anticipates," or the negation thereof, or similar
expressions, constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 (the "Reform Act"). All
statements that address future operating, financial or business performance;
strategies or expectations; future synergies, efficiencies or overhead
savings; anticipated costs or charges; future capitalization; and anticipated
financial impacts of recent or pending transactions are forward-looking
statements within the meaning of the Reform Act. The 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. The Company's actual
results, performance and achievements may differ materially from any future
results, performance or achievements expressed in or implied by the
forward-looking statements. 

For all forward-looking statements, the Company claims the protection of the
safe harbor for forward-looking statements contained in the Reform Act. Many
important factors could affect future results and could cause those results to
differ materially from those expressed in or implied by the forward-looking
statements. Such factors, all of which are difficult or impossible to predict
accurately, and many of which are beyond the Company's control, include, but
are not limited to:

 1. changes in the quick-service restaurant industry, such as consumer trends
    toward value-oriented products and promotions or toward consuming fewer
    meals away from home;
 2. prevailing economic, market and business conditions affecting the Company,
    including competition from other food service providers, high unemployment
    and decreased consumer spending levels;
 3. the ability to effectively manage the acquisition and disposition of
    restaurants;
 4. cost and availability of capital;
 5. cost fluctuations associated with food, supplies, energy, fuel,
    distribution or labor;
 6. the financial condition of the Company's franchisees;
 7. food safety events, including instances of food-borne illness involving
    the Company or its supply chain;
 8. conditions beyond the Company's control such as weather, natural
    disasters, disease outbreaks, epidemics or pandemics impacting the
    Company's customers or food supplies, or acts of war or terrorism;
 9. the effects of negative publicity that can occur from increased use of
    social media;
10. the availability of suitable locations and terms for the development of
    new restaurants;
11. risks associated with the Image Activation program;
12. adoption of new, or changes in, laws, regulations or accounting policies
    and practices;
13. changes in debt, equity and securities markets;
14. goodwill and long-lived asset impairments;
15. changes in interest rates;
16. expenses and liabilities for taxes related to periods up to the date of
    sale of Arby's as a result of the indemnification provisions of the Arby's
    Purchase and Sale Agreement; and
17. other factors cited in the Company's news 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.

The Company's franchisees are independent third parties that the Company does
not control.  Numerous factors beyond the control of the Company and its
franchisees may affect new restaurant openings. Accordingly, there can be no
assurance that commitments under development agreements with franchisees will
result in new restaurant openings. In addition, numerous factors beyond the
control of the Company and its franchisees may affect franchisees' ability to
reimage existing restaurants in accordance with the Company's expectations.

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 it is impossible for the
Company to predict these events or their impact. The Company assumes no
obligation to update forward-looking statements as a result of new
information, future events or developments, except as required by federal
securities laws. The Company does not endorse any projections regarding future
performance that may be made by third parties.

Disclosure Regarding Non-GAAP Financial Measures
Adjusted EBITDA and Adjusted Earnings Per Share, which exclude certain
expenses, net of certain benefits, detailed in the reconciliation tables that
accompany this release, are used by the Company as performance measures for
benchmarking against the Company's peers and competitors, and as internal
measures of business operating performance. The Company believes Adjusted
EBITDA and Adjusted Earnings Per Share provide a meaningful perspective of the
underlying operating performance of the Company's current business. Adjusted
EBITDA and Adjusted Earnings Per Share are not recognized terms under U.S.
Generally Accepted Accounting Principles ("GAAP").

Because all companies do not calculate Adjusted EBITDA and Adjusted Earnings
Per Share (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 and should not be considered as alternative
measures of net income or earnings per share.

Because certain income statement items needed to calculate net income vary
from quarter to quarter, the Company is unable to provide projections of net
income or earnings per share, ora reconciliation of projected Adjusted EBITDA
to projected net income or projected Adjusted Earnings Per Share to projected
earnings per share.

The Company's presentation of Adjusted EBITDA and Adjusted Earnings Per Share
does not replace the presentation of the Company's financial results in
accordance with GAAP.

About The Wendy's Company
The Wendy's Company is the world's third-largest quick-service hamburger
company. The Wendy's system includes more than 6,500 franchise and
Company-operated restaurants in the United States and 27 countries and U.S.
territories worldwide. For more information, visit aboutwendys.com or
wendys.com.

 

 

 The Wendy's Company and Subsidiaries 
 Consolidated Statements of Operations 
 First Quarters Ended March 31, 2013 and April 1, 2012 
 (In Thousands Except Per Share Amounts) 
                                         First Quarter 
                                        2013                2012
                                         (Unaudited) 
 Revenues: 
 Sales                                  $       530,673     $       519,929
 Franchise revenues                     73,009              73,258
                                        603,682             593,187
 Costs and expenses: 
 Cost of sales                          460,828             455,467
 General and administrative             65,310              72,304
 Depreciation and amortization          51,797              32,311
 Impairment of long-lived assets        -                   4,511
 Facilities relocation costs and other  3,038               6,143
transactions 
 Other operating expense, net           245                 1,535
                                        581,218             572,271
 Operating profit                       22,464              20,916
 Interest expense                       (20,964)            (28,235)
 Other expense, net and investment      (2,271)             28,931
income, net 
 (Loss) income before income taxes and  (771)               21,612
noncontrolling interests 
 Benefit from (provision for) income    2,904               (6,878)
taxes 
 Net income                             2,133               14,734
 Net income attributable to             -                   (2,384)
noncontrolling interests 
 Net income attributable to The Wendy's $           2,133   $         12,350
Company 
 Basic and diluted net income per share $             0.01  $             0.03
attributable to The Wendy's Company 
 Number of shares used to calculate     392,498             389,701
basic income per share 
 Number of shares used to calculate     395,694             392,275
diluted income per share 
                                        March 31,           December 30,
                                         2013                2012
                                         (Unaudited)         (Audited) 
 Balance Sheet Data: 
 Cash and cash equivalents              $       428,684     $       453,361
 Total assets                           4,256,978           4,303,199
 Long-term debt, including current      1,455,545           1,457,562
portion 
 Total stockholders' equity             1,971,479           1,985,855

 

Reconciliation of Adjusted EBITDA to Net Income
Attributable to The Wendy's Company
(In Thousands)
(Unaudited)
                                                          First Quarter 
                                                         2013        2012
Adjusted EBITDA                                          $  77,299   $  63,881
Less:
Depreciation and amortization                            (51,797)    (32,311)
Impairment of long-lived assets                          -           (4,511)
Facilities relocation costs and other transactions       (3,038)     (6,143)
Operating profit                                         22,464      20,916
Interest expense                                         (20,964)    (28,235)
Other expense, net and investment income, net            (2,271)     28,931
(Loss) income before income taxes and noncontrolling     (771)       21,612
interests
Benefit from (provision for) income taxes                2,904       (6,878)
Net income                                               2,133       14,734
Net income attributable to noncontrolling interests      -           (2,384)
Net income attributable to The Wendy's Company           $    2,133  $  12,350

 

Reconciliation of Adjusted Income and Adjusted Earnings Per Share to Net
Income
and Earnings Per Share Attributable to The Wendy's Company
(In Thousands Except Per Share Amounts)
(Unaudited)
                                   First Quarter
                                   2013                  2012
                                              Per share             Per share
Adjusted income and adjusted       $          $          $          $        
earnings per share                  13,101       0.03     3,347        0.01
(Less) plus:
Depreciation of assets that will
be replaced as part of the Image   (9,068)    (0.02)     -          -
Activation initiative
Facilities relocation costs and    (1,900)    (0.00)     (3,808)    (0.01)
other transactions
Impairment of long-lived assets    -          -          (2,783)    (0.01)
Gain on sale of investment, net    -          -          17,978     0.05
   Total adjustments               (10,968)   (0.02)     11,387     0.03
Net income                         2,133      0.01       14,734     0.04
Net income attributable to         -          -          (2,384)    (0.01)
noncontrolling interests
Net income and earnings per share  $          $          $          $        
attributable to The Wendy's         2,133        0.01     12,350       0.03
Company

 

 

SOURCE The Wendy's Company

Website: http://www.aboutwendys.com
Contact: Media and Investor Contacts: John Barker: (614) 764-3044 or
john.barker@wendys.com; Dave Poplar: (614) 764-3311 or david.poplar@wendys.com
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