Wendy’s(WEN) - 2026 Q2 - Quarterly Report

PART I: FINANCIAL INFORMATION Financial Statements This section presents The Wendy's Company's unaudited condensed consolidated financial statements for the quarterly period ended June 29, 2025, including Balance Sheets, Statements of Operations, Comprehensive Income, Stockholders' Equity, and Cash Flows, along with detailed notes explaining the basis of presentation and key accounting policies Condensed Consolidated Balance Sheets As of June 29, 2025, total assets decreased to $4.89 billion from $5.03 billion at year-end 2024, primarily due to a reduction in cash and cash equivalents, while total liabilities remained relatively stable at $4.78 billion, and total stockholders' equity decreased significantly from $259.4 million to $112.9 million, driven by treasury stock repurchases Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 29, 2025 | December 29, 2024 | | :--- | :--- | :--- | | Total Assets | $4,894,148 | $5,034,843 | | Cash and cash equivalents | $281,226 | $450,512 | | Total Liabilities | $4,781,260 | $4,775,491 | | Long-term debt | $2,650,907 | $2,662,130 | | Total Stockholders' Equity | $112,888 | $259,352 | Condensed Consolidated Statements of Operations For the second quarter of 2025, total revenues slightly decreased to $560.9 million compared to $570.7 million in Q2 2024, yet operating profit increased to $104.3 million from $99.5 million, and net income was stable at $55.1 million, with diluted EPS rising to $0.29 from $0.27 year-over-year Q2 and H1 2025 vs 2024 Performance (in thousands, except EPS) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $560,929 | $570,727 | $1,084,401 | $1,105,480 | | Operating Profit | $104,260 | $99,507 | $187,386 | $180,663 | | Net Income | $55,110 | $54,643 | $94,342 | $96,636 | | Diluted EPS | $0.29 | $0.27 | $0.48 | $0.47 | Condensed Consolidated Statements of Cash Flows For the six months ended June 29, 2025, net cash from operating activities was stable at $146.0 million, cash used in investing activities increased to $52.3 million, and cash used in financing activities significantly increased to $272.7 million, primarily due to a large increase in common stock repurchases ($186.5 million in 2025 vs. $34.2 million in 2024), resulting in a net decrease in cash of $173.5 million Six Months Ended Cash Flow Summary (in thousands) | Cash Flow Activity | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $146,008 | $145,463 | | Net cash used in investing activities | ($52,264) | ($43,958) | | Net cash used in financing activities | ($272,687) | ($162,382) | | Net decrease in cash | ($173,506) | ($64,175) | Notes to Condensed Consolidated Financial Statements This section provides detailed disclosures on key financial statement components, outlining the basis of presentation, disaggregating revenue by segment, detailing lease accounting, long-term debt structure, stockholder equity activities including dividends and repurchases, and providing segment-level financial performance - The company's business is managed and reported in three segments: Wendy's U.S., Wendy's International, and Global Real Estate & Development[25] Total Revenues by Segment - Q2 2025 (in thousands) | Segment | Q2 2025 Revenue | | :--- | :--- | | Wendy's U.S. | $461,142 | | Wendy's International | $38,850 | | Global Real Estate & Development | $60,937 | | Total | $560,929 | - During Q1 and Q2 2025, the company paid dividends of $0.25 and $0.14 per share, respectively[66] - In the first six months of 2025, the company repurchased 12,957 thousand shares for an aggregate price of $186.0 million under its January 2023 authorization, leaving $49.0 million available[67] Management's Discussion and Analysis (MD&A) Management discusses the company's financial performance for the second quarter and first half of 2025, covering a slight decrease in global systemwide sales and revenues, segment performance, revenue and expense fluctuations, and an overview of liquidity, capital resources, and cash flows Executive Overview and Key Business Measures As of June 29, 2025, the Wendy's system comprised 7,334 restaurants, with approximately 5% being company-operated, and management tracks performance using key metrics such as Same-Restaurant Sales, Company-Operated Restaurant Margin, and Systemwide Sales - As of June 29, 2025, the Wendy's system had 7,334 restaurants, with 5,967 in the U.S. and 1,367 internationally[119] - Key business measures used by management include Same-Restaurant Sales, Company-Operated Restaurant Margin, and Systemwide Sales[123][124] Results of Operations In Q2 2025, revenues decreased 1.7% to $560.9 million, and global same-restaurant sales fell 2.9%, driven by a 3.6% decline in the U.S. despite a 1.8% increase internationally, primarily due to lower traffic partially offset by a higher average check Same-Restaurant Sales Growth - Q2 2025 vs Q2 2024 | Region/Type | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | U.S. Systemwide | (3.6)% | 0.6% | | International | 1.8% | 2.5% | | Global Systemwide | (2.9)% | 0.8% | - The decrease in sales for company-operated restaurants was primarily due to a decrease in traffic, partially offset by a higher average check[140] - Cost of sales as a percentage of sales increased in Q2 2025, driven by higher commodity costs and restaurant labor rates, which was partially offset by labor efficiencies and higher average check[146] Segment Information In Q2 2025, Wendy's U.S. segment revenues declined to $461.1 million but profit slightly increased to $137.2 million, while Wendy's International segment saw revenue growth to $38.9 million and profit increase to $13.2 million, and Global Real Estate & Development segment's revenue and profit both slightly decreased Segment Profit (Adjusted EBITDA) - Q2 2025 vs Q2 2024 (in millions) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Wendy's U.S. | $137.2 | $136.7 | | Wendy's International | $13.2 | $10.7 | | Global Real Estate & Development | $27.3 | $28.2 | Liquidity and Capital Resources As of June 29, 2025, the company held $330.1 million in cash, cash equivalents, and restricted cash, with management believing current cash and operating cash flows are sufficient for the next 12 months, despite significant cash used in financing activities due to $186.0 million in stock repurchases and $76.2 million in dividends - The company repurchased 13.0 million shares for $186.0 million in the first six months of 2025[170] - Dividends paid in the first half of 2025 totaled $76.2 million[171] - The significant increase in cash used in financing activities was primarily due to a $152.3 million increase in common stock repurchases compared to the prior year[177] Quantitative and Qualitative Disclosures about Market Risk The company reports that as of June 29, 2025, there have been no material changes to the market risk information previously disclosed in its Annual Report on Form 10-K for the fiscal year ended December 29, 2024 - There were no material changes from the market risk information contained in the Company's Form 10-K for the fiscal year ended December 29, 2024[180] Controls and Procedures Management, including the Interim CEO and CFO, concluded the company's disclosure controls and procedures were effective as of June 29, 2025, with no material changes in internal control over financial reporting during the second quarter of 2025 - Based on evaluations, the Interim CEO and CFO concluded that as of June 29, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level[181] - No changes in internal control over financial reporting occurred during the second quarter of 2025 that materially affected, or are reasonably likely to materially affect, its internal control[182] PART II: OTHER INFORMATION Legal Proceedings The company is involved in various litigation and claims incidental to its business, for which management believes it has established adequate accruals, though an aggregate possible range of loss cannot be estimated due to the preliminary stage of many proceedings - The Company believes it has adequate accruals for all of its legal and environmental matters but cannot estimate the aggregate possible range of loss for existing litigation and claims[186] Risk Factors The company states that there have been no material changes from the risk factors that were previously disclosed in its Annual Report on Form 10-K - There have been no material changes from the risk factors previously disclosed in the Company's Form 10-K[187] Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's common stock repurchases during the second quarter of 2025, with 4.78 million shares repurchased at an average price of $12.97 per share, leaving $49.0 million available under the existing plan Share Repurchases in Q2 2025 | Period | Total Shares Purchased | Average Price Paid per Share | Value Remaining Under Plan | | :--- | :--- | :--- | :--- | | Total Q2 2025 | 4,777,483 | $12.97 | $49,037,650 | - The Board of Directors authorized a $500.0 million repurchase program in January 2023, effective through February 28, 2027[192] Exhibits This section lists the exhibits filed with the Form 10-Q, including a marketing consulting agreement and certifications from the Interim CEO and CFO as required by the Sarbanes-Oxley Act - Exhibits filed include a Marketing Consulting Agreement, CEO/CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906, and financial data in Inline XBRL format[193]