Company Overview - Wendy's shares increased by 6% to close at $12.01, supported by higher trading volume compared to normal sessions, following a 1.5% loss over the past four weeks [1] - The stock's recent rally is attributed to investor optimism regarding Wendy's innovation-led growth strategy and digital upgrades, including the "100 Days of Summer" campaign and AI technology expansion [2] Financial Performance - Wendy's is expected to report quarterly earnings of $0.26 per share, reflecting a year-over-year decline of 3.7%, with revenues projected at $557.59 million, down 2.3% from the previous year [3] - The consensus EPS estimate for Wendy's has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without trends in earnings estimate revisions [4] Industry Context - Wendy's holds a Zacks Rank of 3 (Hold), similar to Cheesecake Factory, which closed 1.8% higher at $59.99 and has returned 12.6% over the past month [5] - Cheesecake Factory's consensus EPS estimate has decreased by 0.9% over the past month to $1.05, also reflecting a year-over-year decline of 3.7% [6]

Core Insights - Wendy's has launched a limited-time collaboration with Takis, introducing the Takis Fuego Meal featuring a Takis Fuego Chicken Sandwich and Fuego Fries, available in U.S. restaurants from June 20 and in Canada from June 30 [1][2] Group 1: Product Details - The Takis Fuego Chicken Sandwich includes a Spicy Chicken filet topped with crushed Takis Fuego chips, Chili Lime Sauce, creamy corn spread, and cheddar cheese sauce, creating a spicy and savory flavor profile [2] - Fuego Fries are made from Wendy's classic Hot & Crispy Fries, tossed in a tangy chili lime seasoning, and served in a custom tear-away bag for easy access [2] - The Takis Fuego Meal also includes a bag of Takis Fuego chips, available only while supplies last [2][7] Group 2: Marketing and Promotion - Wendy's Chief Marketing Officer emphasized the collaboration as a way to engage consumers' passion for flavor, highlighting the partnership with Takis as a strategic move to enhance their menu offerings [3] - An in-app game called Spice Invasion will be available from June 20 to July 20, allowing users to earn points and win prizes, including a grand prize of $10,000 [3][8] - Takis' U.S. Senior Director of Marketing expressed excitement about the collaboration, aiming to deliver a unique and intense flavor experience for fans [4] Group 3: Company Background - Wendy's operates over 7,000 restaurants globally and is known for its commitment to fresh food and popular menu items like the Spicy Chicken Sandwich [5] - Takis is a leading brand under Barcel USA, part of Grupo Bimbo, which is recognized for its intense snack offerings and has a strong market presence in the U.S. [6]

Core Insights - The collaboration between Cheez-It and Wendy's introduces a limited-edition product: Cheez-It x Wendy's Baconator crackers, combining the flavors of Wendy's Baconator with Cheez-It's signature crunch [1][2][3] Company Overview - Kellanova, the parent company of Cheez-It, reported net sales of $13 billion for 2023 and aims to become a leading snacks-led powerhouse [5] - Wendy's operates over 7,000 restaurants globally and is known for its fresh, made-to-order food, including the popular Baconator burger [7] Product Details - The new Baconator crackers will be available nationwide starting July 2025, with an exclusive bundle available on CheezIt.com that includes a Wendy's Frosty keychain [3] - The product features 100% real cheese and Applewood smoked bacon flavor, aiming to deliver a full burger experience in a snack format [2][3] Marketing and Promotions - The partnership aims to surprise Cheez-It fans with a unique flavor experience, leveraging the popularity of both brands [2] - A promotional offer includes a $2 discount on a Baconator sandwich through the Wendy's app for customers who purchase the new crackers [4][8]

Financial Performance - Global systemwide sales declined by 1.1%[11], while global same-restaurant sales (SRS) decreased by 2.1%[11] - International systemwide sales grew by 8.9%[12], with SRS growth of 2.3%[12] - U S Company restaurant margin was 14.8%[35], a decrease of 50 basis points compared to 15.3%[35] - Adjusted EBITDA decreased by 2.6% to $124.5 million[35] from $127.8 million[35] - Adjusted EPS decreased by 13.0% to $0.20[35] from $0.23[35] - Free cash flow increased by $12 million to $68 million[38] from $56 million[38] Capital Allocation - The company returned over $173 million to shareholders through dividends and share repurchases[12] - 8.2 million shares were repurchased in Q1[39] - The company anticipates repurchasing up to an additional $25 million of shares in 2025[39] - The Q2 dividend is $0.14 per share[39] 2025 Outlook - Net unit growth is projected to be between 2% and 3%[30, 40] - Global systemwide sales growth is expected to range from -2.0% to flat[40] - Adjusted EBITDA is projected to be between $530 million and $545 million[40] - Adjusted EPS is expected to be between $0.92 and $0.98[40] - Free cash flow is projected to be between $185 million and $205 million[40] - Capital expenditures are expected to be between $100 million and $110 million[40]

Core Viewpoint - Wendy's shares rose despite disappointing first-quarter sales, with analysts providing mixed assessments on the company's performance and outlook [1][2][6]. Financial Performance - Wendy's reported first-quarter adjusted EBITDA of $124.5 million, exceeding consensus estimates of $122.1 million [2]. - Total revenue for the quarter was $523.5 million, falling short of the consensus of $526.5 million [6]. - U.S. same-store sales declined by 2.8%, worse than the expected decline of 1.6% [2]. - Global same-store sales decreased by 2.1%, also worse than the consensus of a 1% decline [6]. Guidance and Outlook - Management lowered full-year systemwide sales growth guidance to a range of -2% to flat, down from a previous projection of +2% to +3% [3]. - The earnings guidance for 2025 was reduced to 92 cents-98 cents per share, from a prior range of 98 cents-$1.02 per share [7]. - EBITDA outlook for 2025 was trimmed to $530-$545 million, below Street expectations of $546 million [11]. Analyst Ratings and Insights - Truist Securities maintained a Buy rating but reduced the price target from $17 to $16 [2]. - RBC Capital Markets reiterated a Sector Perform rating with a price target of $14, noting consumer softness impacting sales [4]. - Stephens reaffirmed an Equal-weight rating and price target of $14, highlighting the impact of deteriorating consumer sentiment [6]. - KeyBanc Capital Markets maintained a Sector Weight rating, indicating expectations of low-to-middle single-digit same-store sales growth in the current quarter [8]. - Oppenheimer reiterated a Perform rating, reflecting concerns over the uncertain macroeconomic environment [11]. Market Trends and Challenges - The decline in same-store sales was attributed to adverse weather conditions and a macro pull-back in demand [3]. - Analysts noted that the trends turned negative after a brief positive period in late February and early March [12]. - The company is planning menu innovations and brand collaborations to boost momentum in the second half of the year [9][10].

Core Insights - Wendy's is anticipating financial pressure on customers for the remainder of the year, leading to a focus on value offerings to attract diners after a 2.1% decline in same-store sales [1][2] - The company is launching new initiatives such as Frosty Fusions and a "100 Days of Summer" program to drive traffic and enhance customer engagement [2] - Technological investments are being made to improve customer experience, including enhancements to the mobile app, loyalty program, and digital menu boards [3] Technological Enhancements - Wendy's is collaborating with Palantir to improve its supply chain through a digital twin that tracks the supply chain network in real time across 3,500 transportation units [4] - The digital twin system alerts Wendy's to potential stock shortages and helps manage raw material orders efficiently [5] - An example of the system's effectiveness is its ability to resolve a network-wide shortage of 10,200 cases of syrup in five minutes, a task that previously required extensive manual effort [6]

Core Viewpoint - Wendy's Company reported first-quarter fiscal 2025 results with earnings meeting expectations but revenues falling short, reflecting a decline in global systemwide sales primarily due to lower same-restaurant sales in the U.S. [1][3] Financial Performance - Adjusted earnings per share (EPS) were 20 cents, matching the Zacks Consensus Estimate, down from 23 cents in the prior-year quarter [3] - Total revenues were $523.5 million, missing the consensus mark by 0.1% and declining 2.1% year over year; adjusted revenues (excluding advertising funds) fell 1.6% to $423.1 million [3] - Net income decreased to $39.2 million, down 6.7% from $42 million in the year-ago quarter; adjusted EBITDA totaled $124.5 million, down 2.6% from $127.8 million [8] Sales and Restaurant Performance - Global system-wide sales declined 1.1% year over year, with U.S. sales down 2.6% while international sales increased by 8.9% [5] - Same-restaurant sales in the U.S. fell 2.8% year over year, compared to a 0.6% increase in the prior-year quarter; international same-restaurant sales rose 2.3% [4] Operational Highlights - U.S. company-operated restaurant margin was 14.8%, down 50 basis points year over year due to commodity inflation and labor rate inflation, partially offset by increased average check and labor efficiencies [6] - General and administrative expenses rose 6.9% year over year to $68.2 million, driven by increased employee compensation and benefits [7] Balance Sheet and Cash Flow - Cash and cash equivalents as of March 31, 2025, totaled $335.3 million, down from $450.5 million on December 29, 2024; long-term debt remained at $2.66 billion [9] - Free cash flow is now expected to be between $250 million and $270 million, revised down from a prior estimate of $275 million to $285 million [12] Dividend and Future Outlook - A quarterly dividend of 14 cents per share was declared, payable on June 16, 2025 [10] - The company revised its outlook for global system-wide sales growth to between -2% to flat, and adjusted EBITDA is now predicted to be between $530 million and $545 million [11]

Financial Data and Key Metrics Changes - Global same restaurant sales declined by 2.1%, leading to a 1.1% decline in global system sales [9][31] - U.S. same restaurant sales decreased by 2.8%, while system-wide sales were down by 2.6% [9][31] - International same restaurant sales grew by 2.3%, with system-wide sales growth of 8.9% [10][32] - Adjusted revenue was $423.1 million, a decrease of $6.7 million year-over-year [38] - Adjusted EBITDA was $124.5 million, down $3.3 million from the previous year [38] - Adjusted earnings per share decreased to $0.20, down $0.03 from the prior year [39] Business Line Data and Key Metrics Changes - The U.S. company-operated restaurant margin was 14.8%, a contraction of 50 basis points year-over-year [34] - Global company restaurant margin was 14.3% for the first quarter [34] - The company opened 74 new restaurants globally, with over 60% of these openings occurring internationally [24] Market Data and Key Metrics Changes - International system-wide sales grew by 8.9%, with Europe and Asia Pacific, Middle East, and Africa regions leading the growth [32][33] - Canadian business grew year-over-year, benefiting from a localized supply chain [33] Company Strategy and Development Direction - The company focuses on three strategic pillars: delivering fresh food, providing exceptional customer experience, and accelerating global net unit growth [10][11] - The company plans to launch a "100 Days of Summer" campaign to enhance customer engagement and drive traffic [15][28] - The company is investing in technology to improve customer experience and operational efficiency, including digital menu boards and FreshAI order taking [20][21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging consumer environment, particularly for households earning below $75,000, which saw significant traffic declines [81] - The company updated its full-year outlook, expecting global system-wide sales to be flat to down 2% [28][46] - Management remains confident in the company's strategy and brand strength to deliver long-term profitable growth [27][49] Other Important Information - The company returned over $173 million to shareholders through dividends and share repurchases [10] - The company plans to return up to $325 million of cash to shareholders in 2025, an increase compared to 2024 [44] Q&A Session Summary Question: Concerns about the 2025 guidance and consumer behavior - Management acknowledged consumer pressure reflected in Q1 numbers and emphasized a balanced approach to address customer needs [56][60] Question: Insights on consumer data and key metrics - Management highlighted operational excellence and accuracy as key drivers of customer satisfaction, with early positive results from initiatives [66][67] Question: Unit development outlook and franchisee demand - Management expressed confidence in unit growth, particularly in international markets, and noted a strong pipeline for 2025 and beyond [72][73] Question: Impact of weather and consumer behavior on performance - Management noted significant weather events affected Q1 performance, with a shift in consumer behavior leading to reduced demand [78][80] Question: Advertising spend and its effect on performance - Management indicated that while advertising spend was reduced, they maintained market share and focused on enhancing customer experience [90][91] Question: Effectiveness of collaborations and promotions - Management emphasized the importance of balancing core offerings with innovative collaborations to drive traffic and customer engagement [95][103]

Financial Performance - Wendy's reported quarterly earnings of $0.20 per share, matching the Zacks Consensus Estimate, but down from $0.23 per share a year ago [1] - The company posted revenues of $523.47 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 0.10% and down from $534.75 million year-over-year [2] - Over the last four quarters, Wendy's has surpassed consensus EPS estimates just once and topped consensus revenue estimates two times [2][3] Stock Performance - Wendy's shares have declined approximately 23.4% since the beginning of the year, compared to a 4.7% decline in the S&P 500 [3] - The current Zacks Rank for Wendy's is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The consensus EPS estimate for the upcoming quarter is $0.28 on revenues of $573.56 million, and for the current fiscal year, it is $0.99 on revenues of $2.24 billion [7] - The outlook for the Retail - Restaurants industry, to which Wendy's belongs, is currently in the bottom 16% of over 250 Zacks industries, which may impact stock performance [8]

Financial Data and Key Metrics Changes - Global same restaurant sales declined by 2.1%, leading to a 1.1% decline in global system sales [5][26] - U.S. same restaurant sales decreased by 2.8%, while system-wide sales were down by 2.6% [5][26] - International same restaurant sales grew by 2.3%, with system-wide sales growth of 8.9% [6][27] - Adjusted EBITDA was $124.5 million, a decrease of $3.3 million year-over-year [33] - Adjusted earnings per share was $0.20, down $0.03 from the prior year [34] - Free cash flow under the new definition was $68 million, improving by $12 million compared to the prior year [35] Business Line Data and Key Metrics Changes - The U.S. company-operated restaurant margin was 14.8%, a contraction of 50 basis points year-over-year [29] - International segment showed strong performance with system-wide sales growth of 8.9% [27][28] - The company opened 74 new restaurants globally, with over 60% of openings occurring internationally [20][21] Market Data and Key Metrics Changes - The consumer environment showed a decline in confidence, impacting demand negatively in March [27][78] - Traffic from households earning below $75,000 saw a high single-digit to low double-digit decline [80] - The QSR burger traffic was down mid-single digits in the first quarter, worse than expected [86] Company Strategy and Development Direction - The company is focused on three strategic pillars: delivering fresh food, providing exceptional customer experience, and accelerating global net unit growth [6][7] - The "100 Days of Summer" campaign aims to enhance customer engagement through value offerings and core innovations [11][23] - The company plans to invest in technology to improve customer experience and operational efficiency [15][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging consumer environment and updated the full-year outlook to reflect potential continued pressure [23][40] - The company remains committed to long-term growth despite current macroeconomic challenges [24][45] - Management expressed confidence in the brand's ability to win in the marketplace through strategic initiatives [24][56] Other Important Information - The company plans to return up to $325 million to shareholders in 2025 through dividends and share repurchases [39] - The adjusted EBITDA outlook for the full year is between $530 million and $545 million [43] - The company expects full-year global system-wide sales to range from flat to down 2% [41] Q&A Session Summary Question: Concerns about the 2025 guidance and consumer behavior - Management acknowledged the pressure on consumers and the need for a prudent approach, emphasizing confidence in upcoming initiatives like the "100 Days of Summer" campaign [52][56] Question: Insights on consumer data and key metrics - Management highlighted accuracy and hospitality as key drivers of customer satisfaction, with early results showing improvements [61][63] Question: Unit development outlook and franchisee demand - Management expressed confidence in unit growth, particularly in international markets, and noted a strong pipeline for future development [70][71] Question: Impact of advertising spend on performance - Management indicated that while advertising spend was reduced, they maintained market share and focused on enhancing customer experience to drive frequency [88] Question: Effectiveness of limited-time offers (LTOs) - Management emphasized the importance of balancing core offerings with innovative collaborations to drive traffic and customer engagement [91][95]