Wendy's Q4 Earnings Beat Expectations, Accelerated Growth Investments And Dividend Cut On The Menu

Wendy’s Company WEN shares are trading lower on Thursday after the fourth-quarter FY24 results.

The company reported fourth-quarter sales growth of 6.2% year-on-year to $574.27 million, beating the analyst consensus estimate of $563.637 million.

The increase in revenues was driven by increases in franchise fees, Company-operated restaurant sales, advertising funds revenue, and franchise royalty revenue.

Adjusted revenues increased 6.4% to $459.3 million. Systemwide sales in the U.S. rose 4.5%, and International Jumped 11.3%. Global same-restaurant sales growth was 4.3%. U.S. company-operated restaurant margin was 16.5% versus 13.5% a year ago.

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Operating income for the quarter rose 10.9% Y/Y to $96 million. Adjusted EBITDA increased 8.6% Y/Y to $137.5 million. Adjusted EPS of $0.25 beat the consensus estimate of $0.24.

The company held $503.61 million in cash and equivalents as of December end. Operating cash flow for the year totaled $355.31 million, with a free cash flow of $278.95 million.

As of February 6, approximately $228.1 million remains available under the company’s existing share repurchase authorization that expires in February 2027.

The company declared its regular quarterly cash dividend to $0.25 per share, payable on March 17, 2025, to shareholders of record as of March 3, 2025.

The company said its new target dividend payout ratio is 50% to 60% of adjusted earnings. As a result, beginning in the second quarter of 2025, the company expects to pay a quarterly dividend of $0.14 per share.

Also, Wendy’s plans to repurchase up to $200 million of its shares in 2025, with a majority of the shares expected to be acquired over the next few months.

“I am excited about the opportunities ahead of us as we strengthen our system across the globe. Our new capital allocation policy will enable us to pursue these opportunities and maximize long-term shareholder value,” said President and CEO Kirk Tanner.

Outlook: Wendy’s expects FY25 adjusted EPS of $0.98 – $1.02 versus the consensus of $1.03.

WEN sees FY25 global systemwide sales growth of 2.0% – 3.0%. The company expects FY25 adjusted EBITDA of $550 million – $560 million.

Price Action: WEN shares are trading lower by 1.51% at $14.01 at the last check Thursday.

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