Wendy’s(US:WEN)2023-05-09 16:00Revenue and Sales Performance - Revenue increased 8.2% to $528.8 million in Q1 2023 compared to $488.6 million in Q1 2022[110] - Global same-restaurant sales increased 8.0%, U.S. same-restaurant sales increased 7.2%, and international same-restaurant sales increased 13.9% compared to Q1 2022[110] - Revenues for the first quarter of 2023 increased to $528.8 million, up 8.2% from $488.6 million in 2022[115] - Sales rose to $227.9 million, an increase of 8.9% compared to $209.3 million in the same quarter of 2022[115] - Franchise royalty revenue and fees grew by 12.8% to $141.7 million, up from $128.9 million in the prior year[122] - U.S. same-restaurant sales for company-operated locations increased by 7.4%, compared to a 2.9% increase in the first quarter of 2022[119] - Global systemwide sales increased by 10.0% on a constant currency basis, reaching $3,363.3 million, compared to $3,071.8 million in 2022[120] Profitability and Margins - Global Company-operated restaurant margin was 13.8% in Q1 2023, an increase of 220 basis points compared to Q1 2022[110] - Net income increased 6.4% to $39.8 million in Q1 2023 compared to $37.4 million in Q1 2022[110] - Operating profit for the first quarter was $84.5 million, a 12.8% increase from $74.9 million in the previous year[115] - Net income for the first quarter was $39.8 million, up from $37.4 million in the same period last year, reflecting a 6.4% increase[115] - The cost of sales as a percentage of sales decreased to 86.2% from 88.4% in the prior year, primarily due to higher average check[126] Expenses and Costs - General and administrative expenses in Q1 2023 were flat compared to Q1 2022, primarily due to a decrease in share-based compensation, offset by higher professional fees and increased incentive compensation accruals[132] - Depreciation and amortization increased to $33.5 million in Q1 2023 from $33.2 million in Q1 2022, driven by technology investments and new restaurant assets[133] - Interest expense increased to $31.7 million in Q1 2023 from $26.4 million in Q1 2022, mainly due to a debt financing transaction completed in Q1 2022[140] Cash Flow and Capital Expenditures - Cash provided by operating activities was $53.0 million in Q1 2023, significantly up from $21.0 million in Q1 2022, due to higher net income and decreased payments for incentive compensation[158] - Cash used in investing activities was $12.1 million in Q1 2023, a slight decrease from $13.0 million in Q1 2022, primarily due to reduced expenditures on the franchise development fund[159] - The Company expects total anticipated cash capital expenditures for the year to be approximately $75.0 million to $85.0 million[159] Debt and Financing Activities - Cash used in financing activities was $(132.3) million in Q1 2023, a decrease of $585.1 million compared to $452.8 million in Q1 2022, primarily due to increased long-term debt activities and stock repurchases[160] - The company repurchased $31.6 million in principal of its 7% debentures during the three months ended April 2, 2023[161] - The Board of Directors authorized up to $75.0 million in total debt repurchases for 2023, with $43.4 million remaining as of April 2, 2023[162] - The company authorized a stock repurchase program of up to $500.0 million through February 2027, with $461.2 million remaining as of April 2, 2023[165] Tax and Regulatory Matters - The effective tax rate increased to 28.0% in Q1 2023 from 26.4% in Q1 2022, influenced by a one-time adjustment to foreign deferred income taxes[144] Strategic Initiatives - The Company has implemented a new restaurant development incentive program in the U.S. and Canada, waiving certain fees for qualifying new restaurants for up to three years[110] - The Company aims to drive strong same-restaurant sales momentum through menu innovation and improvements in restaurant operations[108] Organizational Changes - The Organizational Redesign Plan is expected to incur total costs of approximately $11 million to $13 million, with $6.7 million recognized in Q1 2023[112] - The Company recognized reorganization costs of $6.8 million in Q1 2023, including $6.7 million for organizational redesign, primarily for severance and related employee costs[136] Market Conditions and Challenges - Inflationary pressures and commodity price increases impacted consolidated results in Q1 2023, with expectations for continued effects throughout 2023[167] - The company plans to manage inflationary costs through selective menu price increases, although competitive pressures may limit recovery[168] - Wendy's restaurant operations are moderately seasonal, with higher average sales during summer months compared to winter[169] - There were no material changes to the company's debt obligations since January 1, 2023, and it remained in compliance with debt covenants as of April 2, 2023[163]