Wendy's Mixed Q3: EPS Outlook Narrows Despite Revenue Beats, Sales Growth

The Wendy's Co WEN shares are trading lower after the company reported third-quarter 2024 revenue growth of  2.9% year-over-year to $566.7 million, beating the analyst consensus estimate of $560.75 million.

• Adjusted revenues increased 0.5% to $443.6 million. Systemwide sales in the U.S. rose 0.9%, and International increased 7.7%.
• Global same-restaurant sales growth was 0.2%. U.S. company-operated restaurant margin was 15.6% (flat year-on-year).
• Wendy’s strengthened its “digital and loyalty platforms,” CEO Kirk Tanner said.
• Operating profit for the quarter declined 6.8% year over year to $94.7 million. Adjusted EBITDA was $135.2 million versus $139.2 million year over year.
• Operating profit decreased due to increased breakfast advertising costs, higher depreciation, and higher general and administrative expenses.
• Adjusted EPS of 25 cents in line with the consensus estimate.
• As of June, the company held $482.2 million in cash, cash equivalents, and restricted cash of $35.180 million.
• Operating cash flow for the nine months totaled $286.7 million, with a free cash flow of $234.1 million.

Buyback: In the third quarter of 2024, the company repurchased 1.5 million shares for $25.2 million and 0.2 million shares for $2.7 million through Oct. 24. Approximately $247.7 million remains available as of October 24 under the company's existing share repurchase authorization that expires in February 2027.

Dividend: The company declared its regular quarterly cash dividend of 25 cents per share, payable on December 16, to shareholders of record as of Dec. 2.

2024 Outlook: Wendy's now expects adjusted EPS of $0.99-$1.01 (vs. $0.99 Estimate) compared to the prior view of $0.98-$1.02.

The company continues to see adjusted EBITDA of $535 million-$545 million.

WEN now sees Global systemwide sales growth of 3% (vs. 3% to 5% earlier) and reiterated guidance for cash flows from operations of $365 million to $385 million, and free cash flow of $275 million to $285 million.

Investors can gain exposure to the stock via VictoryShares US Small Cap High Div Volatility Wtd ETF CSB and ETC 6 Meridian Low Beta Equity ETF SIXL.

Price Action: Wendy’s shares are down 4.43% at $19.41 at the last check Thursday.

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