Core Viewpoint - The Wendy's Company reported third-quarter fiscal 2024 results with earnings meeting estimates and revenues exceeding expectations, driven by strong same-restaurant sales, U.S. breakfast sales, and digital sales momentum [1][3][4]. Financial Performance - Adjusted earnings per share (EPS) for Q3 were 25 cents, consistent with the Zacks Consensus Estimate, down from 27 cents in the prior-year quarter [3]. - Revenues reached $566.7 million, surpassing the consensus mark of $558.9 million, reflecting a year-over-year increase of 2.9% [4]. - Same-restaurant sales at international locations (excluding Argentina) rose 0.7% year-over-year, a decline from 7.8% a year ago, while global restaurant comps increased by 0.2% compared to 2.8% in the prior-year quarter [4][5]. Operational Highlights - The company-operated restaurant margin remained flat at 16.5% year-over-year, with higher labor costs offset by increased average checks and labor efficiencies [7]. - General and administrative expenses rose to $62.8 million from $59.3 million a year ago, driven by increased employee compensation and professional fees [8]. - Quarterly operating profit was $94.7 million, down 6.8% from the previous year, influenced by higher advertising costs and depreciation [9]. Balance Sheet and Cash Flow - As of September 29, 2024, cash and cash equivalents totaled $482.2 million, down from $516 million at the end of December 2023 [12]. - Long-term debt was reported at $2.72 billion, slightly down from $2.73 billion at the end of December 2023 [12]. - The company declared a quarterly dividend of 25 cents per share, payable on December 16, 2024 [12]. 2024 Outlook - For 2024, Wendy's expects global system-wide sales growth of around 3%, revised down from the previous estimate of 3-5% [13]. - Adjusted EBITDA is projected to remain in the range of $535-$545 million, with adjusted EPS anticipated between 99 cents and $1.01 [13][14].

Financial Data and Key Metrics Changes - In Q3 2024, global systemwide sales grew by 1.8%, with same-restaurant sales increasing by 0.2% [7][20] - U.S. company restaurant margin remained flat at 15.6%, impacted by labor rate inflation and customer account declines [20] - Adjusted EBITDA decreased by 2.9% to approximately $135 million, primarily due to increased investment in breakfast and higher general and administrative expenses [21] - Free cash flow increased due to a decrease in cash paid for cloud computing arrangements and capital expenditures [21] Business Line Data and Key Metrics Changes - The U.S. segment maintained traffic share in the QSR Burger category, with strong performance in the morning and late-night dayparts [7][9] - International segment achieved high single-digit systemwide sales growth, driven by nearly 100 new restaurant openings [8] - Digital sales grew almost 40% year-over-year, with a 17% digital sales mix in the U.S. [9] Market Data and Key Metrics Changes - October U.S. same-restaurant sales showed significant acceleration compared to Q3, indicating positive momentum heading into Q4 [22][51] - The company expects full-year global systemwide sales growth of approximately 3%, with same-restaurant sales growth of 1% to 2% [22] Company Strategy and Development Direction - The company is focused on operational excellence and enhancing customer experience across all restaurants [10][11] - New development incentives have been introduced in Canada and Latin America to stimulate growth [12] - The company aims for 3% to 4% net unit growth in 2025, with a focus on international development [29][14] Management's Comments on Operating Environment and Future Outlook - Management noted a challenging consumer environment in Q3 but observed momentum in the second half of the quarter and into Q4 [37] - The company remains optimistic about the future, with plans to continue investing in breakfast and enhancing the customer experience [34][19] Other Important Information - The company announced a fourth-quarter dividend of $0.25 per share, reflecting a full-year dividend of $1 per share in 2024 [24] - The company has repurchased approximately 3.6 million shares year-to-date, with $248 million remaining on its share repurchase authorization [25] Q&A Session Summary Question: Unit growth outlook and international development - Management indicated that the strategy is to strengthen the system by closing underperforming restaurants and focusing on international development, with a target of 70% international and 30% domestic growth [28][29] Question: Breakfast performance and future plans - Breakfast is seen as a long-term strategic initiative, with continued investment expected to drive growth [34] Question: Consumer health and macro pressures - Management acknowledged a challenging consumer environment but noted improved momentum in Q4 [37] Question: Prime costs and operational efficiency - Management is focused on improving labor and food costs through efficiency initiatives and menu optimization [40] Question: Adjusted EBITDA guidance despite sales shortfall - The guidance was maintained due to increased franchise fees and lower general and administrative expenses [42] Question: Beverage component of the offering - Management sees significant opportunities in the beverage category and plans to innovate further [45] Question: Performance of the Biggie Bag platform - The Biggie Bag platform performed well, helping maintain market share despite competitor promotions [55] Question: Acceleration in sales growth components - Management noted balanced growth across the menu, with strong performance from large sandwiches and innovative products [59] Question: Themes around store closures - Closures are spread across various geographies, focusing on strengthening the overall system rather than specific regions [62] Question: Incrementality of breakfast sales - Breakfast sales are highly incremental and contribute positively to overall growth [64] Question: Commodity and labor inflation outlook - Management expects slight inflation in commodities, particularly beef, while labor rates remain stable [67] Question: Operational improvements as a sales driver - Operational excellence is viewed as a key driver for sales growth and customer satisfaction [69] Question: Success of the $1 drink promotion - The promotion has been effective, with plans to leverage the beverage platform further [72] Question: Executive leadership changes and organizational priorities - Management is confident in the current leadership team and their ability to drive growth [74] Question: Engagement strategies for promotions - Successful promotions are attributed to a combination of menu quality, effective advertising, and strong digital engagement [76]

Core Insights - Wendy's reported revenue of $566.74 million for the quarter ended September 2024, reflecting a year-over-year increase of 2.9% and a surprise of +1.41% over the Zacks Consensus Estimate of $558.87 million [1] - The company's EPS for the quarter was $0.25, unchanged from the consensus estimate but down from $0.27 in the same quarter last year [1] Financial Performance Metrics - Same-Restaurant Sales in the U.S. increased by 0.2%, below the nine-analyst average estimate of 1.1% [3] - Total number of restaurants was 7,292, slightly below the average estimate of 7,312 [3] - Same-Restaurant Sales Internationally rose by 0.7%, compared to the 2.2% average estimate [3] - Franchised restaurants totaled 6,881, below the estimated 6,898 [3] - Advertising fund revenues were $123.15 million, exceeding the estimate of $112.01 million, marking a +13.1% change year-over-year [3] - Sales at Company-operated restaurants were $230.40 million, below the estimate of $234.54 million, representing a -1.8% change year-over-year [3] - Franchise rental income was $59.31 million, surpassing the estimate of $58.30 million, with a +3% year-over-year change [3] - Franchise royalty revenue and fees totaled $153.87 million, slightly below the estimate of $154.40 million, but showed an +18.3% change year-over-year [3] - Franchise royalty revenue was $132.60 million, compared to the estimate of $134.82 million [3] - Franchise fees reached $21.27 million, exceeding the estimate of $19.72 million, with a +10.4% year-over-year change [3] - Global Real Estate & Development revenues were $60.42 million, above the estimate of $58.74 million, reflecting a +3.9% change year-over-year [3] - U.S. revenues were $468.73 million, surpassing the estimate of $462.30 million, with a +2.5% year-over-year change [3] Stock Performance - Wendy's shares have returned +16.9% over the past month, outperforming the Zacks S&P 500 composite's +1% change [4] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [4]

Financial Performance - Wendy's reported quarterly earnings of $0.25 per share, matching the Zacks Consensus Estimate, but down from $0.27 per share a year ago [1] - The company posted revenues of $566.74 million for the quarter ended September 2024, exceeding the Zacks Consensus Estimate by 1.41% and up from $550.56 million year-over-year [2] Market Performance - Wendy's shares have increased approximately 4.3% since the beginning of the year, while the S&P 500 has gained 21.9% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.22 on revenues of $555.75 million, and for the current fiscal year, it is $0.98 on revenues of $2.22 billion [7] - The trend of estimate revisions for Wendy's is mixed, which may change following the recent earnings report [6] Industry Context - The Retail - Restaurants industry, to which Wendy's belongs, is currently ranked in the top 32% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Third Quarter 2024 Conference Call October 31, 2024 © Quality Is Our Recipe, LLC Aaron Broholm Head of Investor Relations © Quality Is Our Recipe, LLC Agenda Business Update Q3 Financial Results 2024 Financial Outlook IR Calendar Q&A THE WENDY'S COMPANY | 3 Forward-Looking Statements and Non-GAAP Financial Measures THE WENDY'S COMPANY | 4 This presentation, and certain information that management may discuss in connection with this presentation, contains certain statements that are "forward-looking statemen ...

[PART I: FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%3A%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, stockholders' equity, and cash flows, along with detailed notes [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) This section presents the unaudited condensed consolidated balance sheets as of September 29, 2024, and December 31, 2023 | Metric | September 29, 2024 (Thousands) | December 31, 2023 (Thousands) | | :----------------------------- | :----------------------------- | :---------------------------- | | Total Assets | $5,073,223 | $5,182,826 | | Total Liabilities | $4,813,370 | $4,873,047 | | Total Stockholders' Equity | $259,853 | $309,779 | - Total assets, liabilities, and stockholders' equity all decreased from December 31, 2023, to September 29, 2024[6](index=6&type=chunk) [Unaudited Condensed Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) This section presents the unaudited condensed consolidated statements of operations for the three and nine months ended September 29, 2024, and October 1, 2023 Consolidated Statements of Operations Highlights | Metric (Thousands) | Three Months Ended Sep 29, 2024 | Three Months Ended Oct 1, 2023 | Change (YoY) | Nine Months Ended Sep 29, 2024 | Nine Months Ended Oct 1, 2023 | Change (YoY) | | :----------------- | :------------------------------ | :----------------------------- | :----------- | :----------------------------- | :---------------------------- | :----------- | | Revenues | $566,739 | $550,555 | +$16,184 | $1,672,219 | $1,640,927 | +$31,292 | | Operating Profit | $94,675 | $101,603 | -$6,928 | $275,338 | $295,355 | -$20,017 | | Net Income | $50,224 | $58,049 | -$7,825 | $146,860 | $157,502 | -$10,642 | | Diluted EPS | $0.25 | $0.28 | -$0.03 | $0.71 | $0.74 | -$0.03 | - Revenues increased for both the three and nine-month periods, while operating profit, net income, and diluted EPS decreased year-over-year[7](index=7&type=chunk) [Unaudited Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the unaudited condensed consolidated statements of comprehensive income for the three and nine months ended September 29, 2024, and October 1, 2023 Consolidated Statements of Comprehensive Income Highlights | Metric (Thousands) | Three Months Ended Sep 29, 2024 | Three Months Ended Oct 1, 2023 | Nine Months Ended Sep 29, 2024 | Nine Months Ended Oct 1, 2023 | | :----------------- | :------------------------------ | :----------------------------- | :----------------------------- | :---------------------------- | | Net Income | $50,224 | $58,049 | $146,860 | $157,502 | | Other Comprehensive Income (Loss) | $4,382 | $(4,533) | $(2,215) | $574 | | Comprehensive Income | $54,606 | $53,516 | $144,645 | $158,076 | - Other comprehensive income showed a positive swing in the three months ended September 29, 2024, compared to a loss in the prior year, primarily due to foreign currency translation adjustment[8](index=8&type=chunk) [Unaudited Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section presents the unaudited condensed consolidated statements of stockholders' equity for the nine months ended September 29, 2024, and October 1, 2023 Stockholders' Equity Changes (Nine Months Ended Sep 29, 2024) | Metric (Thousands) | Balance at Dec 31, 2023 | Net Income | Cash Dividends | Repurchases of Common Stock | Balance at Sep 29, 2024 | | :----------------- | :---------------------- | :--------- | :------------- | :-------------------------- | :---------------------- | | Total Equity | $309,779 | $146,860 | $(153,411) | $(60,056) | $259,853 | - Total stockholders' equity decreased from **$309,779 thousand** at December 31, 2023, to **$259,853 thousand** at September 29, 2024, primarily due to cash dividends and common stock repurchases exceeding net income and other comprehensive income[10](index=10&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the unaudited condensed consolidated statements of cash flows for the nine months ended September 29, 2024, and October 1, 2023 Consolidated Statements of Cash Flows Highlights (Nine Months) | Cash Flow Activity (Thousands) | Sep 29, 2024 | Oct 1, 2023 | Change (YoY) | | :----------------------------- | :----------- | :---------- | :----------- | | Operating Activities | $286,681 | $269,525 | +$17,156 | | Investing Activities | $(68,796) | $(55,531) | -$13,265 | | Financing Activities | $(250,569) | $(373,225) | +$122,656 | | Net Decrease in Cash | $(34,287) | $(158,924) | +$124,637 | - Net cash provided by operating activities increased, while net cash used in investing activities also increased. Net cash used in financing activities significantly decreased, leading to a smaller net decrease in cash, cash equivalents, and restricted cash compared to the prior year[14](index=14&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes to the condensed consolidated financial statements, covering accounting policies, revenue, segment performance, and other critical financial disclosures [(1) Basis of Presentation](index=10&type=section&id=%281%29%20Basis%20of%20Presentation) The financial statements are unaudited, prepared under GAAP for interim reporting, and detail the Company's three operating segments and fiscal period structure - The Company manages and reports its business in three segments: Wendy's U.S., Wendy's International, and Global Real Estate & Development[17](index=17&type=chunk) - Fiscal periods consist of 52 or 53 weeks ending on the Sunday closest to or on December 31, with all three- and nine-month periods presented containing 13 weeks and 39 weeks, respectively[18](index=18&type=chunk) [(2) Revenue](index=10&type=section&id=%282%29%20Revenue) This note disaggregates revenue by segment and source for the three and nine months ended September 29, 2024, and October 1, 2023, detailing contract balances and anticipated future recognition Total Revenues by Segment (Thousands) | Segment | Three Months Ended Sep 29, 2024 | Three Months Ended Oct 1, 2023 | Nine Months Ended Sep 29, 2024 | Nine Months Ended Oct 1, 2023 | | :----------------------------- | :------------------------------ | :----------------------------- | :----------------------------- | :---------------------------- | | Wendy's U.S. | $468,725 | $457,240 | $1,384,163 | $1,366,981 | | Wendy's International | $37,598 | $35,167 | $106,774 | $97,162 | | Global Real Estate & Development | $60,416 | $58,148 | $181,282 | $176,784 | | **Total Revenues** | **$566,739** | **$550,555** | **$1,672,219** | **$1,640,927** | Deferred Franchise Fees (Thousands) | Metric | Sep 29, 2024 | Oct 1, 2023 | | :----------------------------- | :----------- | :---------- | | Deferred franchise fees at end of period | $100,754 | $99,889 | - Anticipated future recognition of deferred franchise fees totals **$100,754 thousand**, with **$6,427 thousand** expected in the remainder of 2024[24](index=24&type=chunk) [(3) System Optimization Gains, Net](index=12&type=section&id=%283%29%20System%20Optimization%20Gains%2C%20Net) The Company's system optimization initiative focuses on shifting to a predominantly franchised model, with gains and losses from 'Franchise Flips' and strategic dispositions recorded here - Company-operated restaurant ownership was approximately **5%** of the total system as of September 29, 2024[25](index=25&type=chunk) - The Company facilitated **14 Franchise Flips** during the nine months ended September 29, 2024, a decrease from **88** in the prior year period[25](index=25&type=chunk) System Optimization Gains, Net (Thousands) | Period | Sep 29, 2024 | Oct 1, 2023 | | :----------------------------- | :----------- | :---------- | | Three Months Ended | $420 | $120 | | Nine Months Ended | $573 | $119 | [(4) Reorganization and Realignment Costs](index=13&type=section&id=%284%29%20Reorganization%20and%20Realignment%20Costs) This note details costs associated with the Organizational Redesign Plan, approved in February 2023 to enhance efficiency and streamline decision-making, including new CEO appointment costs - The Organizational Redesign Plan, approved in February 2023, aims to maximize organizational efficiency and streamline decision-making, including costs related to the new CEO appointment in January 2024[32](index=32&type=chunk) - Total expected costs for the Organizational Redesign Plan are approximately **$18,000 thousand**, with **$15,000 thousand** in cash expenditures expected through 2026[32](index=32&type=chunk) Organizational Redesign Costs (Thousands) | Period | Sep 29, 2024 | Oct 1, 2023 | | :----------------------------- | :----------- | :---------- | | Three Months Ended | $296 | $579 | | Nine Months Ended | $8,327 | $7,986 | [(5) Investments](index=15&type=section&id=%285%29%20Investments) This note summarizes the carrying value of the Company's equity method investment in TimWen and other equity securities, reporting equity in earnings and impairment charges Carrying Value of Investments (Thousands) | Investment Type | Sep 29, 2024 | Dec 31, 2023 | | :---------------------- | :----------- | :----------- | | Equity method investment | $30,040 | $32,727 | | Other investments in equity securities | $1,718 | $1,718 | | **Total Investments** | **$31,758** | **$34,445** | Equity in Earnings from TimWen (Thousands) | Period | Sep 29, 2024 | Oct 1, 2023 | | :----------------------------- | :----------- | :---------- | | Nine Months Ended | $8,623 | $7,961 | - During the nine months ended October 1, 2023, the Company recorded impairment charges of **$10,389 thousand** for an investment in equity securities[41](index=41&type=chunk) [(6) Fair Value Measurements](index=16&type=section&id=%286%29%20Fair%20Value%20Measurements) This note defines the fair value hierarchy and presents carrying amounts and estimated fair values of financial instruments, detailing non-recurring fair value measurements for long-lived assets - Cash equivalents are classified as Level 1 inputs, while other investments in equity securities and various series of debt notes are classified as Level 2 inputs for fair value measurements[46](index=46&type=chunk) - Non-recurring fair value measurements for long-lived assets (held and used, and held for sale) are classified as Level 3 inputs, with total fair value of **$4,613 thousand** as of September 29, 2024[51](index=51&type=chunk) [(7) Impairment of Long-Lived Assets](index=17&type=section&id=%287%29%20Impairment%20of%20Long-Lived%20Assets) This note outlines impairment charges recorded for long-lived assets due to deteriorating operating performance, decisions to lease/sublease properties, and classifying surplus properties as held for sale Impairment of Long-Lived Assets (Thousands) | Asset Type | Three Months Ended Sep 29, 2024 | Three Months Ended Oct 1, 2023 | Nine Months Ended Sep 29, 2024 | Nine Months Ended Oct 1, 2023 | | :----------------------------- | :------------------------------ | :----------------------------- | :----------------------------- | :---------------------------- | | Company-operated restaurants | $0 | $0 | $2,418 | $428 | | Surplus properties | $178 | $59 | $455 | $85 | | **Total Impairment** | **$178** | **$59** | **$2,873** | **$513** | - The significant increase in impairment for the nine months ended September 29, 2024, was primarily due to the deteriorating operating performance of certain Company-operated restaurants[52](index=52&type=chunk)[53](index=53&type=chunk) [(8) Income Taxes](index=18&type=section&id=%288%29%20Income%20Taxes) This note details the Company's effective tax rates, explaining variations from the U.S. federal statutory rate due to state income taxes and foreign operations, and expected reductions in unrecognized tax benefits Effective Tax Rates | Period | Sep 29, 2024 | Oct 1, 2023 | | :----------------------------- | :----------- | :---------- | | Three Months Ended | 27.9% | 25.5% | | Nine Months Ended | 27.3% | 25.8% | - The increase in the effective tax rate for the three months ended September 29, 2024, was primarily due to increased tax effects of foreign operations, decreased benefit from share-based compensation, and higher state income taxes[55](index=55&type=chunk) - The Company believes it is reasonably possible to reduce unrecognized tax benefits by up to **$220 thousand** in the next twelve months due to lapses of statutes of limitations[57](index=57&type=chunk) [(9) Net Income Per Share](index=18&type=section&id=%289%29%20Net%20Income%20Per%20Share) This note provides the calculation of basic and diluted net income per share, along with weighted average shares outstanding, for the three and nine months ended September 29, 2024, and October 1, 2023 Net Income Per Share | Metric | Three Months Ended Sep 29, 2024 | Three Months Ended Oct 1, 2023 | Nine Months Ended Sep 29, 2024 | Nine Months Ended Oct 1, 2023 | | :----------------------------- | :------------------------------ | :----------------------------- | :----------------------------- | :---------------------------- | | Basic EPS | $0.25 | $0.28 | $0.72 | $0.75 | | Diluted EPS | $0.25 | $0.28 | $0.71 | $0.74 | | Weighted Average Basic Shares Outstanding (Thousands) | 203,264 | 208,834 | 204,518 | 210,668 | | Weighted Average Diluted Shares Outstanding (Thousands) | 204,254 | 210,602 | 205,803 | 212,853 | - Diluted net income per share decreased by **$0.03** for both the three and nine-month periods ended September 29, 2024, compared to the prior year[59](index=59&type=chunk) [(10) Stockholders' Equity](index=18&type=section&id=%2810%29%20Stockholders%27%20Equity) This note details the Company's dividend payments, common stock repurchase program, and accumulated other comprehensive loss, highlighting quarterly cash dividends and remaining repurchase authorization - The Company paid quarterly cash dividends of **$0.25 per share** during each of the first, second, and third quarters of 2024 and 2023[60](index=60&type=chunk) - During the nine months ended September 29, 2024, the Company repurchased **3,447 thousand shares** for **$59,637 thousand** under the January 2023 Authorization[62](index=62&type=chunk) - As of September 29, 2024, **$250,363 thousand** of availability remained under the January 2023 Authorization for common stock repurchases[62](index=62&type=chunk) Accumulated Other Comprehensive Loss (Thousands) | Period | Sep 29, 2024 | Oct 1, 2023 | | :----------------------------- | :----------- | :---------- | | Balance at end of period | $(60,590) | $(63,602) | [(11) Leases](index=19&type=section&id=%2811%29%20Leases) This note describes the Company's lease arrangements as both lessee and lessor, detailing restaurant counts by ownership/lease structure and presenting lease cost and income components Restaurant Count by Operation Type (Sep 29, 2024) | Category | Count | | :------------------------------------------- | :---- | | Company-operated restaurants | 411 | | Franchisee-operated restaurants | 6,881 | | **Total Company-operated and franchisee-operated restaurants** | **7,292** | Total Lease Cost (Thousands) | Period | Sep 29, 2024 | Oct 1, 2023 | | :----------------------------- | :----------- | :---------- | | Three Months Ended | $55,761 | $54,707 | | Nine Months Ended | $165,485 | $163,766 | Franchise Rental Income (Thousands) | Period | Sep 29, 2024 | Oct 1, 2023 | | :----------------------------- | :----------- | :---------- | | Three Months Ended | $59,314 | $57,567 | | Nine Months Ended | $177,938 | $173,407 | [(12) Supplemental Cash Flow Information](index=21&type=section&id=%2812%29%20Supplemental%20Cash%20Flow%20Information) This note provides supplemental non-cash investing and financing activities, such as capital expenditures and finance leases, and reconciles cash, cash equivalents, and restricted cash Supplemental Non-Cash Activities (Nine Months, Thousands) | Activity | Sep 29, 2024 | Oct 1, 2023 | | :------------------------------------------- | :----------- | :---------- | | Capital expenditures included in accounts payable | $10,734 | $10,856 | | Finance leases | $21,531 | $13,436 | Cash, Cash Equivalents and Restricted Cash (Thousands) | Category | Sep 29, 2024 | Dec 31, 2023 | | :------------------------------------------- | :----------- | :----------- | | Total cash, cash equivalents and restricted cash | $554,529 | $588,816 | [(13) Transactions with Related Parties](index=21&type=section&id=%2813%29%20Transactions%20with%20Related%20Parties) This note details significant transactions with related parties, including lease and management fee payments with TimWen, patronage dividends from QSCC, income from Yellow Cab, and advertising purchases from AMC Networks Inc - Wendy's paid TimWen **$16,065 thousand** for lease agreements during the nine months ended September 29, 2024[74](index=74&type=chunk) - Wendy's recorded **$3,493 thousand** in patronage dividends from QSCC during the nine months ended September 29, 2024, with **$2,909 thousand** in 'Other operating income, net' and **$584 thousand** reducing 'Cost of sales'[77](index=77&type=chunk) - The Company recognized **$11,397 thousand** in royalty, advertising fund, lease, and other income from Yellow Cab, a franchisee with related party ownership, during the nine months ended September 29, 2024[78](index=78&type=chunk) - Advertising purchases from AMC Networks Inc., where a Company director is CEO, amounted to approximately **$1,600 thousand** during the nine months ended September 29, 2024[79](index=79&type=chunk) [(14) Guarantees and Other Commitments and Contingencies](index=22&type=section&id=%2814%29%20Guarantees%20and%20Other%20Commitments%20and%20Contingencies) This note outlines the Company's guarantees and other commitments, including new franchisee incentive programs, lease guarantees for former Company-operated restaurants, outstanding letters of credit, and material purchase requirements - Wendy's announced a new development incentive structure in the U.S. and Canada, and select international markets, providing reductions in royalty and national advertising fees for qualifying new restaurants[81](index=81&type=chunk) - The Company has guaranteed certain leases and other obligations, primarily from former Company-operated restaurant locations, amounting to **$86,450 thousand** as of September 29, 2024[82](index=82&type=chunk) - Outstanding letters of credit totaled **$28,673 thousand** as of September 29, 2024[84](index=84&type=chunk) - Total purchase requirements under marketing and amended beverage agreements are estimated at approximately **$107,500 thousand** over their remaining lives[85](index=85&type=chunk) [(15) Legal and Environmental Matters](index=23&type=section&id=%2815%29%20Legal%20and%20Environmental%20Matters) The Company is involved in various litigation and claims incidental to its business, with accruals made for probable liabilities, though the aggregate possible loss range cannot be estimated - The Company believes it has adequate accruals for all legal and environmental matters[86](index=86&type=chunk) - The aggregate possible range of loss for existing litigation and claims cannot be estimated due to preliminary stages, pending motions, and indeterminate damages[86](index=86&type=chunk) [(16) Segment Information](index=23&type=section&id=%2816%29%20Segment%20Information) This note provides a detailed breakdown of revenues and segment profit for Wendy's U.S., Wendy's International, and Global Real Estate & Development, reconciling total segment profit to consolidated income before income taxes Revenues by Segment (Thousands) | Segment | Three Months Ended Sep 29, 2024 | Three Months Ended Oct 1, 2023 | Nine Months Ended Sep 29, 2024 | Nine Months Ended Oct 1, 2023 | | :----------------------------- | :------------------------------ | :----------------------------- | :----------------------------- | :---------------------------- | | Wendy's U.S. | $468,725 | $457,240 | $1,384,163 | $1,366,981 | | Wendy's International | $37,598 | $35,167 | $106,774 | $97,162 | | Global Real Estate & Development | $60,416 | $58,148 | $181,282 | $176,784 | | **Total Revenues** | **$566,739** | **$550,555** | **$1,672,219** | **$1,640,927** | Segment Profit (Thousands) | Segment | Three Months Ended Sep 29, 2024 | Three Months Ended Oct 1, 2023 | Nine Months Ended Sep 29, 2024 | Nine Months Ended Oct 1, 2023 | | :----------------------------- | :------------------------------ | :----------------------------- | :----------------------------- | :---------------------------- | | Wendy's U.S. | $129,790 | $134,887 | $392,323 | $403,064 | | Wendy's International | $11,046 | $10,831 | $32,411 | $26,808 | | Global Real Estate & Development | $27,237 | $24,418 | $79,480 | $76,020 | | **Total Segment Profit** | **$168,073** | **$170,136** | **$504,214** | **$505,892** | [(17) New Accounting Standards](index=24&type=section&id=%2817%29%20New%20Accounting%20Standards) This note discusses the adoption of a new FASB update in Q1 2024 regarding common-control lease arrangements, which did not materially impact the financial statements - The Company adopted a new FASB update on common-control lease arrangements in the first quarter of 2024[92](index=92&type=chunk) - The adoption of this amendment did not have a material impact on the Company's condensed consolidated financial statements[92](index=92&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a comprehensive discussion and analysis of the Company's financial condition and results of operations, covering business overview, key performance measures, financial highlights, and detailed analysis of revenues, costs, segment performance, liquidity, capital resources, and the impact of inflation and seasonality [Introduction](index=25&type=section&id=Introduction) This introduction outlines the Company's corporate structure, its primary business of operating, developing, and franchising quick-service restaurants, and its market position, defining the three reporting segments and segment profit measurement - Wendy's is the second largest quick-service restaurant company in the hamburger sandwich segment in the U.S. and the third largest globally, with **7,292 restaurants** as of September 29, 2024[95](index=95&type=chunk) - The Company's segments are Wendy's U.S., Wendy's International, and Global Real Estate & Development, with segment profit measured using segment adjusted EBITDA[96](index=96&type=chunk) [Executive Overview](index=26&type=section&id=Executive%20Overview) This overview highlights the Wendy's restaurant system size, revenue sources, and external factors, detailing long-term growth opportunities, key business measures, financial highlights, digital growth, and new restaurant development - As of September 29, 2024, the Wendy's restaurant system comprised **7,292 restaurants** globally, with Company-operated restaurants making up approximately **5%** of the total[99](index=99&type=chunk)[100](index=100&type=chunk) - Long-term growth opportunities include driving same-restaurant sales momentum, accelerating consumer-facing digital platforms, and expanding the Company's global footprint[102](index=102&type=chunk) Key Financial Highlights | Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :----------------------------- | :------ | :------ | :------- | :------- | | Revenue (Millions) | $566.7 | $550.6 | $1,670.0 | $1,640.0 | | Global Same-Restaurant Sales | +0.2% | N/A | +0.7% | N/A | | Global Company-Operated Restaurant Margin | 15.1% | 15.0% | 15.2% | 15.1% | | Net Income (Millions) | $50.2 | $58.0 | $146.9 | $157.5 | - Digital sales as a percent of global systemwide sales increased from approximately **12.8%** during the first nine months of 2023 to approximately **17.1%** during the first nine months of 2024[115](index=115&type=chunk) - The Company added **52 net new restaurants** across the system during the nine months ended September 29, 2024[116](index=116&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the Company's consolidated financial performance for the third quarter and first nine months of 2024 compared to 2023, breaking down changes in revenues and expenses Consolidated Revenues (Millions) | Revenue Source | Q3 2024 | Q3 2023 | Change (YoY) | YTD 2024 | YTD 2023 | Change (YoY) | | :----------------------------- | :------ | :------ | :----------- | :------- | :------- | :----------- | | Sales | $230.4 | $234.7 | $(4.3) | $693.1 | $703.4 | $(10.3) | | Franchise royalty revenue and fees | $153.9 | $149.4 | $4.5 | $458.0 | $444.0 | $14.0 | | Franchise rental income | $59.3 | $57.6 | $1.7 | $177.9 | $173.4 | $4.5 | | Advertising funds revenue | $123.1 | $108.9 | $14.2 | $343.2 | $320.1 | $23.1 | | **Total Revenues** | **$566.7**| **$550.6**| **$16.1** | **$1,672.2**| **$1,640.9**| **$31.3** | Key Business Measures | Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :----------------------------- | :------ | :------ | :------- | :------- | | U.S. Systemwide Same-Restaurant Sales | 0.2% | 2.2% | 0.5% | 4.7% | | International Same-Restaurant Sales | 0.7% | 7.8% | 2.1% | 9.4% | | Global Systemwide Same-Restaurant Sales | 0.2% | 2.8% | 0.7% | 5.2% | - Cost of sales as a percent of sales decreased by **0.1%** for both the third quarter and first nine months of 2024, primarily due to higher average check and labor efficiencies, partially offset by increased restaurant labor rates and decreased customer count[133](index=133&type=chunk) - Advertising funds expense is expected to be approximately **$22.0 million** higher than advertising funds revenue for 2024, reflecting the Company's plan to fund incremental breakfast advertising[138](index=138&type=chunk) - Impairment of long-lived assets increased significantly to **$2.9 million** for the first nine months of 2024 (from **$0.5 million** in 2023), primarily due to the deteriorating operating performance of certain Company-operated restaurants[146](index=146&type=chunk) [Segment Information](index=37&type=section&id=Segment%20Information) This section provides a detailed breakdown of revenues and segment profit for Wendy's U.S., Wendy's International, and Global Real Estate & Development, highlighting key drivers for each segment's performance Wendy's U.S. Performance (Millions) | Metric | YTD 2024 | YTD 2023 | Change (YoY) | | :----------------------------- | :------- | :------- | :----------- | | Total Revenues | $1,384.2 | $1,367.0 | +$17.2 | | Segment Profit | $392.3 | $403.1 | $(10.8) | - Wendy's U.S. segment profit decreased primarily due to an increase in the Company's funding of incremental advertising and a decrease in Company-operated sales, partially offset by increased franchise royalty revenue and fees[157](index=157&type=chunk) Wendy's International Performance (Millions) | Metric | YTD 2024 | YTD 2023 | Change (YoY) | | :----------------------------- | :------- | :------- | :----------- | | Total Revenues | $106.8 | $97.2 | +$9.6 | | Segment Profit | $32.4 | $26.8 | +$5.6 | - Wendy's International revenues and segment profit increased due to net new restaurant development and higher franchise same-restaurant sales[158](index=158&type=chunk)[159](index=159&type=chunk) Global Real Estate & Development Performance (Millions) | Metric | YTD 2024 | YTD 2023 | Change (YoY) | | :----------------------------- | :------- | :------- | :----------- | | Total Revenues | $181.3 | $176.8 | +$4.5 | | Segment Profit | $79.5 | $76.0 | +$3.5 | - Global Real Estate & Development revenues and segment profit increased primarily due to higher franchise rental income and an increase in lease buyout activity[161](index=161&type=chunk)[162](index=162&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the Company's primary sources of liquidity and principal uses of cash, summarizing cash flows, long-term debt, dividend payments, and the common stock repurchase program - Primary sources of liquidity are cash flows from operations and borrowings under the securitized financing facility[162](index=162&type=chunk) - Anticipated cash requirements for the remainder of 2024 include **$38.0 million to $48.0 million** in capital expenditures and approximately **$51.0 million** for cash dividends[163](index=163&type=chunk) Cash Flow Summary (Nine Months, Millions) | Cash Flow Activity | YTD 2024 | YTD 2023 | Change (YoY) | | :----------------------------- | :------- | :------- | :----------- | | Net cash provided by operating activities | $286.7 | $269.5 | +$17.2 | | Net cash used in investing activities | $(68.8) | $(55.5) | $(13.3) | | Net cash used in financing activities | $(250.6) | $(373.2) | +$122.6 | - During the nine months ended September 29, 2024, the Company repurchased **3.4 million shares** for **$59.6 million**, with **$250.4 million** remaining under the January 2023 Authorization[171](index=171&type=chunk) [General Inflation, Commodities and Changing Prices](index=40&type=section&id=General%20Inflation%2C%20Commodities%20and%20Changing%20Prices) This section addresses the impact of inflationary pressures on labor and commodity costs on the Company's consolidated results, highlighting strategies to manage these costs through selective menu price increases - Inflationary pressures on labor directly impacted consolidated results during the nine months ended September 29, 2024, and are expected to continue[173](index=173&type=chunk) - The Company attempts to manage inflationary costs and commodity price increases through selective menu price increases and product mix, but competitive pressures may limit recovery[173](index=173&type=chunk) [Seasonality](index=40&type=section&id=Seasonality) This section notes that Wendy's restaurant operations are moderately seasonal, with higher average sales typically occurring during the summer months, meaning quarterly results may not indicate full fiscal year performance - Wendy's average restaurant sales are normally higher during the summer months than during the winter months[174](index=174&type=chunk) - Due to seasonality, results for a particular quarter are not necessarily indicative of the results that may be achieved for any other quarter or for the full fiscal year[174](index=174&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section states that there have been no material changes in the Company's quantitative and qualitative disclosures about market risk since the filing of its Annual Report on Form 10-K for the fiscal year ended December 31, 2023 - No material changes from the market risk information contained in the Company's Form 10-K for the fiscal year ended December 31, 2023[175](index=175&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the Company's disclosure controls and procedures, confirming their effectiveness, and reports no material changes in internal control over financial reporting, acknowledging inherent limitations [Evaluation of Disclosure Controls and Procedures](index=40&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) The CEO and CFO concluded that the Company's disclosure controls and procedures were effective at a reasonable assurance level as of September 29, 2024, ensuring timely and accurate reporting - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective at a reasonable assurance level as of September 29, 2024[176](index=176&type=chunk) [Changes in Internal Control Over Financial Reporting](index=40&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) There were no changes in the Company's internal control over financial reporting during the third quarter of 2024 that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting - No material changes in the internal control over financial reporting of the Company occurred during the third quarter of 2024[177](index=177&type=chunk) [Inherent Limitations on Effectiveness of Controls](index=40&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls) This section acknowledges that all control systems have inherent limitations, such as human error and potential circumvention, providing only reasonable, not absolute, assurance of meeting control objectives - There are inherent limitations in the effectiveness of any control system, providing only reasonable, not absolute, assurance that control objectives are met[178](index=178&type=chunk) [PART II: OTHER INFORMATION](index=41&type=section&id=PART%20II%3A%20OTHER%20INFORMATION) This section includes forward-looking statements, legal proceedings, risk factors, equity security sales, exhibits, and required signatures [Special Note Regarding Forward-Looking Statements and Projections](index=41&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements%20and%20Projections) This section provides a cautionary statement regarding forward-looking statements, emphasizing that they are subject to various risks, uncertainties, and factors that could cause actual results to differ materially - Forward-looking statements are subject to risks and uncertainties, including competition, adverse economic conditions, changes in consumer spending, impacts to corporate reputation, food safety events, and labor costs[180](index=180&type=chunk)[181](index=181&type=chunk) - Risks associated with the predominantly franchised business model include the ability to attract and retain franchisees, their financial health, and their adherence to brand strategies[182](index=182&type=chunk) [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The Company is involved in litigation and claims incidental to its business, with accruals made for probable liabilities, though the aggregate possible loss range cannot be estimated - The Company believes it has adequate accruals for all legal and environmental matters[184](index=184&type=chunk) - The aggregate possible range of loss for existing litigation and claims cannot be estimated due to preliminary stages, pending motions, and indeterminate damages[184](index=184&type=chunk) [Item 1A. Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) This section refers readers to the comprehensive risk factors disclosed in the Company's Annual Report on Form 10-K, stating no material changes except as specifically described elsewhere - No material changes from the risk factors previously disclosed in the Company's Form 10-K, except as described elsewhere in this report[185](index=185&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the Company's common stock repurchases during Q3 2024, including shares purchased, average price, and remaining authorization under the January 2023 program Common Stock Repurchases (Q3 2024) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans | | :----------------------------------- | :----------------------------- | :--------------------------- | :--------------------------------------------------------------------------- | | July 1, 2024 through September 29, 2024 | 1,626,715 | $16.91 | $250,362,507 | - As of September 29, 2024, approximately **$250.4 million** remained available under the January 2023 Authorization for common stock repurchases[186](index=186&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q, including employment letters, CEO/CFO certifications, and financial information formatted in Inline XBRL - Exhibits include certifications of the CEO and CFO (31.1, 31.2, 32.1) and financial information formatted in Inline XBRL (101, 104)[190](index=190&type=chunk) [Signatures](index=45&type=section&id=Signatures) This section contains the required signatures, certifying the report on behalf of The Wendy's Company by its Chief Financial Officer and Chief Accounting Officer - The report was signed by Gunther Plosch, Chief Financial Officer, and Suzanne M. Thuerk, Chief Accounting Officer, on October 31, 2024[192](index=192&type=chunk)

THE WENDY'S COMPANY REPORTS THIRD QUARTER 2024 RESULTS Dublin, Ohio (October 31, 2024) - The Wendy's Company (Nasdaq: WEN) today reported unaudited results for the third quarter ended September 29, 2024. "Wendy's restaurants continued to deliver sales growth during the third quarter, maintaining overall traffic and dollar share in the QSR burger category," said Kirk Tanner, President and Chief Executive Officer. "We continued to strengthen the relationship with our customers through our digital and loyalty ...

Core Insights - The Wendy's Company reported third-quarter results for 2024, highlighting continued sales growth and customer engagement through digital and loyalty platforms [2][3]. Operational Highlights - Systemwide sales growth for the U.S. was 0.9% and 7.7% for international, with global growth at 1.8% [4]. - Same-restaurant sales growth in the U.S. was 0.2%, while international saw 0.7%, leading to global growth of 0.2% [4]. - Total systemwide sales in the U.S. reached $3,141 million, up from $3,113 million in Q3 2023 [4]. - The company opened 22 new restaurants in the U.S. and 42 internationally, resulting in a total of 6,011 U.S. restaurants and 1,281 international restaurants by the end of the quarter [4]. Financial Highlights - Total revenues increased to $566.7 million from $550.6 million year-over-year, marking a 2.9% increase [5]. - Adjusted revenues were $443.6 million, a slight increase of 0.5% from the previous year [5]. - U.S. company-operated restaurant margin remained flat at 15.6% compared to the prior year [5]. - Operating profit decreased to $94.7 million from $101.6 million, primarily due to increased advertising investments and higher general and administrative expenses [5][6]. - Net income for the quarter was $50.2 million, down from $58.0 million, reflecting a decrease in operating profit and a higher effective tax rate [5][6]. Cash Flow and Capital Expenditures - Cash flows from operations increased to $286.7 million, up 6.4% year-over-year [5]. - Capital expenditures were $52.4 million, a decrease of 6.0% from the previous year [5]. - Free cash flow rose to $234.1 million, reflecting a 3.4% increase [5]. Dividend and Share Repurchase - The company declared a quarterly cash dividend of $0.25 per share, payable on December 16, 2024 [6]. - In Q3 2024, the company repurchased 1.5 million shares for $25.2 million, with an additional 0.2 million shares repurchased in Q4 [6]. 2024 Outlook - The company expects global systemwide sales growth of approximately 3% and adjusted earnings per share between $0.99 and $1.01 [8]. - Adjusted EBITDA is projected to be between $535 million and $545 million, with cash flows from operations expected to range from $365 million to $385 million [8].

The whole family can celebrate Halloween with new limited-edition meal bundles beginning October 21 DUBLIN, Ohio, Oct. 21, 2024 /PRNewswire/ -- WHAT: Halloween treats aren't just for kids! HalloWEENDY's is delivering spooky food and fun for the whole family this season. Beginning October 21, Wendy's® fans can order a limited-edition Boo! Bag meal,* featuring a Dave's Single®, small Hot & Crispy Fry, small Frosty®, glow-in-the-dark Bone Chiller Frosty figure and a Boo! Books® coupon book. Adults can celebrat ...

Core Insights - Rebel Foods has successfully opened its 160th Wendy's restaurant in India within a record time of 36 months, showcasing rapid expansion in the market [1][2][3] - The new restaurant in Bengaluru features a digital-first design aimed at enhancing customer experience, with self-ordering kiosks and a seating capacity of over 50 [2][3] - Wendy's is focusing on innovative menu offerings tailored to Indian tastes, including the recently launched Chimichurri Burgers, which have gained popularity [3] Expansion Plans - Rebel Foods plans to continue expanding Wendy's presence in key markets such as Delhi NCR, Bengaluru, and Hyderabad, with additional dine-in restaurants and delivery services [4] - The company aims to add several dozen new restaurants by December, further increasing its footprint across various cities in India [4] Brand Strategy - Wendy's is committed to making its brand accessible to consumers throughout India, with a focus on both existing and new markets [3] - The partnership with Rebel Foods is integral to Wendy's strategy for growth in India, allowing the brand to reach customers in their local areas [3] Company Background - Rebel Foods is recognized as the world's largest internet restaurant company, operating over 450 kitchens across 70+ cities and managing multiple brands including Wendy's [7] - Wendy's, founded in 1969, is known for its high-quality food and has a global presence with over 7,000 restaurants [5][6]