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]

Financial Performance - Global systemwide sales decreased 1.1% to $3.39 billion in the first quarter of 2025 compared to $3.45 billion in the first quarter of 2024[121] - Revenues decreased 2.1% to $523.5 million in the first quarter of 2025 compared to $534.8 million in the first quarter of 2024[121] - Global same-restaurant sales decreased 2.1%, with U.S. same-restaurant sales decreasing 2.8% and international same-restaurant sales increasing 2.3% compared to the first quarter of 2024[121] - Income before income taxes decreased 4.4% to $54.9 million in the first quarter of 2025 compared to $57.5 million in the first quarter of 2024[121] - Net income for the first quarter of 2025 was $39.2 million, down from $42.0 million in the first quarter of 2024[124] - Total revenues for the first quarter of 2025 were $523.5 million, a decrease of 2.4% from $534.8 million in 2024[125] Restaurant Operations - During the three months ended March 30, 2025, Wendy's added 68 net new restaurants across the system[122] - Company-operated restaurants comprised approximately 5% of the total Wendy's system as of March 30, 2025[110] - The total number of restaurants increased to 7,308 by the end of Q1 2025, with a net addition of 68 restaurants compared to the previous year[129] Sales and Margins - Global Company-operated restaurant margin was 14.3% in the first quarter of 2025, a decrease of 40 basis points compared to the first quarter of 2024[121] - U.S. same-restaurant sales for company-operated locations decreased by 1.2% in Q1 2025, compared to a decrease of 0.8% in Q1 2024[127] - The company-operated restaurant margin in the U.S. was $31.5 million, representing 14.8% of sales in Q1 2025, down from 15.3% in Q1 2024[131] Digital Sales - Digital sales increased from approximately 16.8% of global systemwide sales during the first quarter of 2024 to approximately 20.3% during the first quarter of 2025[120] Franchise and Royalties - Franchise royalty revenue and fees decreased to $145.1 million in the first quarter of 2025 from $146.6 million in the first quarter of 2024[124] - Franchise royalty revenue decreased by $4.0 million to $121.7 million in Q1 2025, primarily due to a 2.2% decrease in global franchise same-restaurant sales[132] Costs and Expenses - Total cost of sales as a percentage of sales increased to 85.7% in Q1 2025 from 85.3% in Q1 2024, driven by higher commodity costs and increased labor rates[136] - General and administrative expenses rose to $68.2 million in Q1 2025, up from $63.8 million in Q1 2024, primarily due to higher employee compensation[140] Other Financial Metrics - Advertising funds revenue decreased to $100.4 million in Q1 2025 from $104.9 million in Q1 2024, reflecting a net decrease in franchise same-restaurant sales[135] - The company recognized a net system optimization loss of $0.1 million in Q1 2025, consistent with the previous year[143] - Impairment of long-lived assets decreased to $1.4 million in Q1 2025 from $2.0 million in Q1 2024, attributed to lower impairment charges from certain underperforming restaurants[145] - Other operating income increased by $4.0 million to $6.3 million in Q1 2025, primarily due to a claim settlement[146] - Interest expense, net decreased by $1.0 million to $30.5 million in Q1 2025, attributed to lower interest income from amended leases[147] - The company recorded an investment loss of $1.7 million in Q1 2025 due to impairment charges on equity securities[148] Cash Flow and Financing - Cash provided by operating activities was $85.4 million in Q1 2025, down from $100.0 million in Q1 2024, primarily due to timing of marketing expense payments[165] - Cash used in financing activities rose to $179.3 million in Q1 2025, an increase of $106.7 million from Q1 2024, mainly due to higher stock repurchases[167] - The company had $389.0 million in cash, cash equivalents, and restricted cash as of March 30, 2025, with an additional $300.0 million available from a revolving financing facility[158] Tax and Share Repurchase - The effective tax rate increased to 28.6% in Q1 2025 from 26.9% in Q1 2024, influenced by adjustments related to deferred income taxes and state income taxes[150] - The company repurchased 8.2 million shares for $124.1 million under the stock repurchase program during Q1 2025, with $110.9 million remaining under the authorization[160]

Financial Performance - Global systemwide sales were $3.4 billion, a decrease of 1.1% compared to the previous year[4]. - Total revenues for the first quarter of 2025 were $523.5 million, a decrease of 2.1% year-over-year[5]. - Net income for the first quarter was $39.2 million, down 6.7% from the previous year[5]. - The Company reported revenues of $534.8 million for the three months ended March 31, 2024, compared to $523.5 million for the same period in 2025, reflecting a decrease of approximately 2.4%[37]. - Net income for the three months ended March 31, 2024, was $42.0 million, down from $39.2 million in 2025, representing a decline of about 4.3%[37]. - Adjusted EBITDA decreased to $127.8 million in 2024 from $124.5 million in 2025, indicating a decline of approximately 2.6%[43]. - Adjusted earnings per share decreased by 13.0% to $0.20[5]. - Diluted earnings per share fell from $0.20 in Q1 2024 to $0.19 in Q1 2025, a decrease of 5%[46]. Sales and Restaurant Performance - U.S. same-restaurant sales declined by 2.8%, while international same-restaurant sales grew by 2.3%[3]. - The company added 68 net new restaurants, contributing to a total restaurant count of 7,308 globally[4]. - Digital sales mix reached a record 20.3% of total sales[4]. - Same-restaurant sales and systemwide sales growth are calculated on a constant currency basis, excluding the impact of foreign currency translation for better year-over-year comparability[33]. Cash Flow and Liquidity - Free cash flow increased by 21.4% to $68.0 million[5]. - Cash and cash equivalents decreased from $450.5 million in December 2024 to $335.3 million in March 2025, a decline of about 25.6%[39]. - Net cash provided by operating activities decreased from $99,987,000 in Q1 2024 to $85,415,000 in Q1 2025, a decline of about 14.7%[49]. - The Company’s free cash flow is defined as cash flows from operations minus capital expenditures and other specified expenses, highlighting its importance for liquidity and investment opportunities[25]. Shareholder Returns and Capital Management - The company expects full-year adjusted EBITDA to be between $530 million and $545 million[18]. - The company plans to return $173.5 million to shareholders through dividends and share repurchases[4]. - Total liabilities increased slightly from $4.775 billion in December 2024 to $4.789 billion in March 2025, reflecting a growth of approximately 0.3%[39]. Advertising and Marketing - The Company’s advertising funds revenue decreased from $104.9 million in 2024 to $100.4 million in 2025, a decline of approximately 4.3%[37]. - Advertising funds revenue decreased from $104,944,000 in Q1 2024 to $100,360,000 in Q1 2025, a decline of about 4.6%[46]. - The company reported a net change in advertising funds impact from $(21,850,000) in Q1 2024 to $6,093,000 in Q1 2025, showing a significant turnaround[49]. Cost Management - Reorganization and realignment costs were $5,673,000 in Q1 2024, compared to a credit of $(692,000) in Q1 2025, indicating a shift in expenses[46]. - Capital expenditures were $17,354,000 in Q1 2024 and $17,679,000 in Q1 2025, indicating a slight increase[49]. Operating Performance - The Company’s operating profit rose from $81.2 million in 2024 to $83.1 million in 2025, an increase of about 2.4%[37]. - The number of shares used to calculate diluted income per share decreased from 206.9 million in 2024 to 201.6 million in 2025[37].

Core Insights - The Wendy's Company reported a decline in total revenues and net income for the first quarter of 2025, primarily due to lower sales in U.S. Company-operated restaurants and decreased franchise royalty revenue [5][8][12] - The company achieved systemwide sales growth of 8.9% in its International segment, while U.S. systemwide sales declined by 2.6% [2][9] - Wendy's added 68 net new restaurants globally and aims for a full-year net unit growth of 2-3% [2][9] Operational Highlights - Systemwide sales growth for the first quarter of 2025 was -1.1% globally, with U.S. same-restaurant sales down by 2.8% and International same-restaurant sales up by 2.3% [7][9] - Total systemwide sales reached $3.4 billion, a decrease of 1.1% compared to the previous year [9] - The company increased its global digital sales mix to a record 20.3% [9] Financial Performance - Total revenues for the first quarter of 2025 were $523.5 million, down 2.1% from $534.8 million in the same period of 2024 [5][9] - Net income decreased to $39.2 million, a decline of 6.7% from $42.0 million year-over-year [5][12] - Adjusted EBITDA fell to $124.5 million, down 2.6% from $127.8 million in the prior year [5][13] Cost and Expenses - U.S. Company-operated restaurant margin decreased to 14.8%, down 0.5% from the previous year, primarily due to commodity inflation and labor rate inflation [5][10] - General and administrative expenses increased by 6.9% to $68.2 million, attributed to higher employee compensation and benefits [5][11] Shareholder Returns - The company returned $173.5 million to shareholders through dividends and share repurchases [9] - A quarterly cash dividend of $0.14 per share was declared, payable on June 16, 2025 [14] Future Outlook - The company updated its full-year 2025 outlook to reflect the current consumer environment, maintaining a focus on strategic priorities [2][9] - Capital expenditures are projected to be between $100 million and $110 million, with adjusted earnings per share expected to range from $0.92 to $0.98 [9][19]

Core Insights - Wendy's Co (NASDAQ:WEN) is set to announce its first-quarter earnings on May 2, with significant options trading activity indicating heightened interest and potential volatility ahead of the report [1][2] - The current sentiment among options traders is leaning bearish, as evidenced by a high call/put volume ratio of 7.99, which ranks in the 98th percentile of annual readings [2] - Historically, Wendy's stock has shown mixed performance post-earnings, with an average next-day swing of 2.3% over the last two years, but current options pricing suggests a larger expected move of 7.1% [3] Stock Performance - Wendy's stock is currently trading at $12.47, down 1%, and is close to its five-year low of $12.05 reached on April 9 [4] - The stock has experienced a 23.5% year-to-date decline and has been under pressure from a descending 20-day moving average since late March [4] - The stock's rally attempts have been capped at the $16 level in late February, indicating resistance in the current market environment [4] Volatility Expectations - Wendy's stock has historically outperformed options traders' volatility expectations, as indicated by a Schaeffer's Volatility Scorecard (SVS) rating of 94 out of 100 [7]