The Wendy’s Company Reports Solid 3rd Quarter 2011 Results

The Wendy’s Company (NYSE: WEN) today reported results for the third quarter ended October 2, 2011. Due to the sale of Arby’s Restaurant Group, Inc. on July 4, 2011, Arby’s® results of operations are reflected as discontinued operations for all periods presented.

Emil Brolick, President and Chief Executive Officer of The Wendy’s Company said, “We generated transaction growth, which contributed to a 1.8% same-store sales increase at Wendy’s® North America Company-operated restaurants, during the third quarter of 2011. Wendy’s remains on track to produce positive transactions for the year.

“Adjusted EBITDA ¹ increased 6.5% for the 2011 third quarter compared to the third quarter of 2010, despite exceptionally high beef costs,” Brolick said. “Looking to the fourth quarter, the very successful October launch of Dave’s Hot ‘N Juicy™ cheeseburger product line has exceeded our expectations and will re-establish our leadership in the premium-quality hamburger category. As a result of our strong sales and effective cost control, we are re-affirming our 2011 adjusted EBITDA outlook of $330 million to $340 million, despite the industry-wide challenge presented by higher food costs.”

Consolidated Third Quarter 2011 Summary

• Consolidated revenues were $611.4 million in the third quarter of 2011 and increased $10.7 million compared to third quarter 2010 revenues of $600.7 million.
• Third quarter 2011 adjusted EBITDA, which excludes special items totaling $23.8 million for transaction-related costs, was $87.0 million, an increase of 6.5% compared to third quarter 2010 adjusted EBITDA of $81.8 million, which excludes special items of $7.9 million.
• Third quarter 2011 income from continuing operations was $2.5 million, or $0.01 per share, including after-tax special items of $15.0 million for transaction-related costs, or $0.04 per share. Third quarter 2010 loss from continuing operations was $0.8 million, or $0.00 per share, including after-tax special items of $17.9 million, or $0.04 per share.

Consolidated Year-to-Date 2011 Summary

• Consolidated revenues were $1.8 billion, a slight increase compared to 2010 year-to-date revenues.
• Adjusted EBITDA, which excludes special items of $43.1 million, was $250.2 million, compared to 2010 year-to-date adjusted EBITDA of $268.7 million, which excludes special items of $33.9 million.
• Income from continuing operations was $13.6 million, or $0.03 per share, including net after-tax special items of $32.3 million, or $0.08 per share, compared to 2010 year-to-date income from continuing operations of $12.0 million, or $0.03 per share, including net after-tax special items of $47.7 million, or $0.11 per share.

Wendy’s Third Quarter 2011 Brand Summary

• Wendy’s North America systemwide same-store sales increased 0.9%.
• Wendy’s North America Company-operated restaurants same-store sales increased 1.8%, due to increased transactions of +1.1% and increased average check of +0.7%.
• Wendy’s Company-operated restaurant margin increased 30 basis points to 13.7%. The year-over-year improvement was primarily due to pricing and positive sales leverage offsetting a 140 basis-point increase in commodity costs.
• Wendy’s North America franchise same-store sales increased 0.7%.

“Wendy’s strategy during the third quarter was to reinforce our brand positioning with the introduction of two new products, the Wild Berry Frosty™ parfait in July and the Monterey Ranch Crispy Chicken sandwich on our My 99¢ Everyday Value Menu in August. Wendy’s is already recognized for high-quality menu items, and we were pleased that in September 2011, Zagat® rated Wendy’s as the top overall mega-chain, based on food, facilities and service,” said Brolick.