Wendy's Q3 Results: Sales Growth Continues Amid EPS Adjustments
Wendy's Q3 Earnings Overview
The Wendy's Co (NASDAQ: WEN) recently announced its third-quarter results for the fiscal year 2024, showcasing a year-over-year increase in revenue. This report reveals that Wendy's recorded revenue growth of 2.9%, totaling $566.7 million. Notably, this figure exceeds the analyst consensus estimate, which was set at $560.75 million.
Key Financial Metrics
Adjusting the figures further, the company's adjusted revenues showed a slight increase of 0.5%, landing at $443.6 million. This growth reflects a 0.9% rise in systemwide sales across the U.S., alongside a substantial 7.7% increase in international sales. Despite these positive outcomes, Wendy's experienced a modest same-restaurant sales growth of 0.2%, with the U.S. company-operated restaurant margin steady at 15.6%, comparable to the previous year.
Operating Income Challenges
While revenue figures displayed growth, operating profit faced challenges, dipping by 6.8% to $94.7 million. Furthermore, the adjusted EBITDA decreased from $139.2 million to $135.2 million year over year. This decline in operating profit is attributed to a combination of higher advertising costs related to breakfast promotions, increased depreciation, and escalated general and administrative expenses.
Comparative Performance Indicators
Wendy's provided a detailed financial overview for shareholders. The adjusted earnings per share (EPS) stood at 25 cents, aligning with the consensus estimate. As of midyear, the company reported an impressive cash position, holding $482.2 million in cash and cash equivalents, along with restricted cash amounting to $35.180 million.
Cash Flow Position
In the first nine months, Wendy's generated an operating cash flow of $286.7 million, supplemented by a free cash flow of $234.1 million. These figures indicate a solid cash generation capability that underscores the company's financial health.
Share Repurchase Efforts
Wendy's also engaged in strategic buyback actions, repurchasing 1.5 million shares for $25.2 million during the third quarter of 2024. In addition, 0.2 million shares were bought back for $2.7 million as of late October. The company still has approximately $247.7 million remaining under its existing share repurchase authorization, which is valid until February 2027.
Dividend Information
On the shareholder return front, Wendy's declared its regular quarterly cash dividend of 25 cents per share. This dividend is set to be payable on December 16 to shareholders on record by December 2. Such moves highlight Wendy's commitment to returning value to its shareholders even amid fluctuating market conditions.
Revised Outlook for 2024
Looking ahead, Wendy's has adjusted its estimated EPS for the year, now forecasting a range between $0.99 and $1.01, a slight revision from the previous range of $0.98 to $1.02. Additionally, the company anticipates adjusted EBITDA to fall within a target range of $535 million to $545 million.
Sales Projection
Wendy's has revised its expectations for global systemwide sales growth, projecting it to remain at 3%, down from the initial forecast of 3% to 5%. The company has also reaffirmed its guidance regarding cash flows from operations, estimating between $365 million to $385 million, and for free cash flow between $275 million to $285 million.
Investment Opportunities
Investors looking to gain exposure to Wendy's stock may consider options like the VictoryShares US Small Cap High Dividend Volatility Weighted ETF (NASDAQ: CSB) and the ETC 6 Meridian Low Beta Equity ETF (NYSE: SIXL). These funds present an opportunity for individuals willing to diversify their investment portfolio while gaining exposure to Wendy's market performance.
Market Response
In terms of market performance, Wendy's shares recorded a drop of 4.43%, ending at $19.41 during the latest trading session. This decrease highlights the challenges the company faces in a competitive market environment and a significant focus on improving its financial metrics moving forward.
Frequently Asked Questions
What were Wendy's Q3 revenue figures?
Wendy's reported third-quarter revenue of $566.7 million, a 2.9% increase from the previous year.
How did Wendy's EPS perform in Q3 2024?
The adjusted EPS for Q3 came in at 25 cents, in line with market expectations.
What challenges affected Wendy's operating profit?
Increased advertising costs, higher depreciation, and increased general and administrative expenses negatively impacted operating profit.
What is the current share repurchase plan for Wendy's?
Wendy's has approximately $247.7 million remaining under its share repurchase authorization, which expires in February 2027.
What is the expected adjusted EBITDA for 2024?
Wendy's forecasts adjusted EBITDA to be between $535 million and $545 million for the year.
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