Atlanta / GA. (twc) The Wendy´s Company reported results for the second quarter ended July 03, 2011. The Company completed the sale of Arby´s Restaurant Group Inc. on July 04, 2011 and Arby´s results are reflected as discontinued operations for all periods presented.
Roland Smith, President and Chief Executive Officer of The Wendy´s Company: «We were pleased to produce a 2,3 percent same-store sales increase at Wendy´s North America Company-operated restaurants in the second quarter of 2011, which represents the brand´s best sales performance since the fourth quarter of 2008. Importantly, we generated positive transactions during the quarter, which we believe reflect the cumulative benefit of our ‘Real’ brand positioning and significant core menu improvements. Ebitda for the second quarter met our expectations and consequently we are re-affirming our 2011 adjusted Ebitda outlook of 330 million USD to 340 million USD. We anticipate strong same-store sales in the third and fourth quarters driven by innovative products and the launch of our new cheeseburger line.
«Having completed the sale of Arby´s, our sole focus will be on Wendy´s and delivering ten percent to 15 percent average annual Ebitda growth in 2012 and beyond. This growth will be driven by successfully executing our key strategies, including continuing to improve our core menu, capturing incremental sales through day part expansion, upgrading our existing store base and developing new restaurants within the United States and targeted international markets to expand the brand worldwide. We view investing in these areas as a great use of our capital and are confident that they will enable us to enhance value for our shareholders», said Smith.
Consolidated Second Quarter 2011 Summary
- Consolidated revenues were 622,5 million USD in the second quarter of 2011 and increased 15,1 million USD as compared to second quarter 2010 revenues of 607,4 million USD.
- Second quarter 2011 adjusted Ebitda, excluding special items totalling 11,8 million USD, was 89,4 million USD and decreased 10,0 million USD as compared to second quarter 2010 adjusted Ebitda of 99,4 million USD, excluding special items of 8,6 million USD.
- Second quarter 2011 net income from continuing operations was 11,4 million USD or 0,03 USD per share, including net after-tax special items of 7,6 million USD or 0,02 USD per share. Second quarter 2010 net income from continuing operations was 5,4 million USD or 0,02 USD per share, including after-tax special items of 18,8 million USD or 0,04 USD per share.
Consolidated Year-to-Date 2011 Summary
- Consolidated revenues were 1,2 billion USD and were unchanged as compared to 2010 year-to-date revenues.
- Adjusted Ebitda, excluding special items of 19,3 million USD, was 163,1 million USD, as compared to 2010 year-to-date adjusted Ebitda of 186,9 million USD, excluding special items of 26,0 million USD.
- Net income from continuing operations was 11,1 million USD or 0,03 USD per share, including net after-tax special items of 17,2 million USD or 0,04 USD per share, as compared to 2010 year-to-date net income from continuing operations of 12,8 million USD or 0,03 USD per share, including after-tax special items of 29,6 million USD or 0,07 USD per share.
Wendy´s Second Quarter 2011 Brand Summary
- Wendy´s North America system-wide same-store sales increased 2,3 percent, including a 2,3 percent increase in North America Company-operated restaurants due to increased average check of plus 1,4 percent and increased transactions of plus 0,9 percent.
- Wendy´s North America franchise same-store sales increased 2,3 percent.
- Wendy´s Company-operated restaurant margin was 13,9 percent, compared to 16,4 percent in the second quarter 2010, a decrease of approximately 250 basis points. The year-over-year difference was primarily due to higher commodity costs (180 basis points) and incremental advertising to support the introduction of Wendy´s new breakfast in additional markets (60 basis points).
«We are preparing for the national launch of our exciting new cheeseburger line, ‘Dave´s Hot ´N Juicy’, in October. We believe this new cheeseburger line will allow us to build upon our quality leadership position within the hamburger segment and continue to grow sales. In addition, we are encouraged by customer acceptance of our new breakfast and we are continuing the roll-out of our new menu as we make progress on our goal of serving the new breakfast menu in approximately 1’000 restaurants by year-end», said Smith.
International Expansion
Wendy´s expanded into Russia during the second quarter 2011, opening two restaurants. These openings are part of the development agreement announced in August of 2010 with franchisee Wenrus Restaurant Group Limited, which includes the development of 180 restaurants in the Russian Federation over the next ten years.
The Company currently has 333 franchise restaurants outside of North America and more than 700 future restaurant commitments, totalling over 1’000 restaurants. The Company is also actively pursuing opportunities in China, Brazil and other markets around the world.
Outlook
The Company has reaffirmed its 2011 expectations for adjusted Ebitda of 330 million USD to 340 million USD. This outlook only includes continuing operations and excludes items such as Arby´s indirect corporate overhead, retention program and other transaction related costs and SSG purchasing cooperative expenses. The Company´s 2011 outlook includes the following expectations:
- Same-store sales growth of one percent to three percent at Wendy´s North America Company-operated restaurants.
- Wendy´s Company-operated restaurant margin is now anticipated to be 50 to 100 basis points lower as compared to prior year, primarily due to higher commodity costs.
- Capital expenditures for the Wendy´s brand of approximately 145 million USD.
- Wendy´s North America unit development of approximately 20 company stores and 45 franchise stores, plus approximately 40 international franchise stores.
