Wendy's Beats On Q2 Earnings, But Revenue Misses

Wendy’s Co WEN reported second-quarter FY23 sales growth of 4.4% year-on-year to $561.57 million, missing the analyst consensus of $566.95 million.

Adjusted revenues increased 4.4% to $451.8 million. Systemwide sales in the U.S. rose 6.1%, and International increased 12.7%. Global same-restaurant sales growth was 5.1%. U.S. company-operated restaurant margin was 17.3% versus 15% a year ago. 

Operating margin was 19.4%, and operating income for the quarter rose 13.5% Y/Y to $109.3 million.

Adjusted EBITDA increased 8.7% Y/Y to $144.5 million. Adjusted EPS of $0.28 beat the consensus estimate of $0.27.

The company held $700.3 million in cash and equivalents. Operating cash flow, year-to-date totaled $141.5 million, with a free cash flow of $133.5 million.

As of August 2, approximately $396.6 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 September 15, 2023, to shareholders of record as of August 2, 2023.

Outlook: Wendy's continues to expect FY23 adjusted EPS of $0.95 - $1.00 versus the consensus of $0.98.

WEN sees FY23 global systemwide sales growth of 6% to 8%. The company expects FY23 adjusted EBITDA of $530 million - $540 million.

For the long-term 2024 – 2025, Wendy's maintains systemwide sales growth of mid-single digits and free cash flow growth of high-single to low-double digits.

Price Action: WEN shares are trading lower by 0.36% at $21.65 on the last check Wednesday.