Dublin / OH. (twc) The Wendy’s Company reported unaudited results for the first quarter ended April 02, 2023. «Our strong first quarter results build on the momentum we created in 2022,» President and Chief Executive Officer Todd Penegor said. «We delivered our sixth consecutive quarter of double-digit global same-restaurant sales growth on a two-year basis driven in part by our compelling marketing programs, continued operational improvements, and the significant acceleration of our digital business. Our sales growth contributed to an over 250 basis point year-over-year expansion in U.S. Company-operated restaurant margin. Our successful start to the year and clear alignment behind our strategic pillars give us confidence that we will deliver meaningful global growth for the remainder of 2023 and beyond.»
First Quarter Financial Highlights
|(In Millions Except Per Share Amounts)||(Unaudited)|
|U.S. Company-Operated Restaurant Margin||%||12.0||%||14.7||%||2.7|
|General and Administrative Expense||USD||62.3||USD||62.3||%||–|
|Reported Effective Tax Rate||%||26.4||%||28.0||%||(1.6)|
|Reported Diluted Earnings Per Share||USD||0.17||USD||0.19||%||11.8|
|Adjusted Earnings Per Share||USD||0.17||USD||0.21||%||23.5|
|Cash Flows from Operations||USD||21.0||USD||53.0||%||152.4|
|Free Cash Flow||USD||44.4||USD||63.7||%||43.5|
Total Revenues: The increase in revenues resulted primarily from higher sales at Company-operated restaurants, an increase in franchise royalty revenue, and an increase in advertising funds revenue. These increases were primarily driven by higher same-restaurant sales.
U.S. Company-Operated Restaurant Margin: The increase in U.S. Company-operated restaurant margin was primarily the result of a higher average check. This increase was partially offset by higher commodity and labor costs, as well as customer count declines.
General and Administrative Expense: General and administrative expense held flat versus the prior year primarily due to a decrease in stock compensation, offset by higher information technology costs and a higher incentive compensation accrual.
Operating Profit: The increase in operating profit resulted primarily from higher franchise royalty revenue and an increase in U.S. Company-operated restaurant margin. These increases were partially offset by higher reorganization and realignment costs as a result of the Company’s organizational redesign.
Net Income: The increase in net income resulted primarily from an increase in operating profit and higher other income primarily driven by an increase in interest income. These increases were partially offset by a decrease in investment income, higher interest expense as a result of the Company’s debt raise completed in the first quarter of 2022, and a higher tax rate.
Adjusted Ebitda: The increase in adjusted Ebitda resulted primarily from higher franchise royalty revenue and an increase in U.S. Company-operated restaurant margin.
Adjusted Earnings Per Share: The increase in adjusted earnings per share was driven by an increase in adjusted Ebitda and higher interest income. These increases were partially offset by higher interest expense, a decrease in investment income, and higher amortization of cloud computing arrangement costs.
Free Cash Flow: The increase in free cash flow resulted primarily from a decrease in payments for incentive compensation and higher net income adjusted for non-cash expenses. These increases were partially offset by the timing of receipt of franchisee rental payments in the first quarter of 2022.