WEN - Wendy's slips after U.S. comparable sales in Q2 trail estimates
2023-08-09 08:21:17 ET
The Wendy's Company ( NASDAQ: WEN ) reported systemwide sales growth of 6.9% in Q2 , led by a 12.7% jump in the international business. Systemwide sales were up 6.1% for the U.S. business. The restaurant operator noted that the increase in revenue resulted primarily from higher sales at company-operated restaurants, an increase in franchise royalty revenue, and an increase in advertising funds revenue. Those increases were primarily driven by higher same-restaurant sales.
Same-restaurant sales were up 5.1% for the quarter, with international same-restaurant sales 7.2% higher and U.S same-restaurant sales up 4.9% vs. +5.8% consensus.
U.S. company-operated restaurant margin improved to 17.3% of sales from 15.0% a year ago. The increase in U.S. company-operated restaurant margin was primarily the result of a higher average check. This increase was partially offset by higher labor costs, customer count declines, and higher commodity costs.
The global reimaging completion percentage rose to 82.0% from 75.0% a year ago.
Wendy's ( WEN ) churned up adjusted EBITDA of $144.5M during the quarter vs. $132.9M a year ago. The increase in adjusted EBITDA resulted primarily from higher franchise royalty revenue and an increase in U.S. Company-operated restaurant margin.
Free cash flow year-to-date at the end of the quarter was $133.5M vs. $95.2M a year ago. The increase in free cash flow resulted primarily from higher net income adjusted for non-cash expenses and a decrease in payments for incentive compensation. These increases were partially offset by an increase in cash paid for income taxes.
CEO update: "We continued to drive significant profit expansion, supported by strong same-restaurant sales momentum, resulting in an over 200 basis point year-over-year increase in U.S. Company-operated restaurant margin. During the quarter, our breakfast and late-night dayparts delivered outsized growth and we sustained our digital strength. We also continued to make progress against our development goal with 80 global restaurant openings year to date. With the results we delivered in the first half of the year and the significant runway remaining for each of our strategic growth pillars, I am confident we will deliver our short and long-term outlook, driving meaningful global growth in 2023 and beyond."
Shares of Wendy's ( WEN ) fell 0.41% in premarket trading to $21.64 vs. the 52-week trading range of $18.50 to $23.90.
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Wendy's slips after U.S. comparable sales in Q2 trail estimates