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Wendy's (WEN) Earnings & Revenues Surpass Estimates in Q1
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The Wendy's Company (WEN - Free Report) reported strong first-quarter fiscal 2021 results, wherein both earnings and revenues beat the Zacks Consensus Estimate after missing the in the preceding quarter. Moreover, the bottom and the top lines improved year over year.
President and CEO Todd Penegor said, “The robust growth in our business continued in the first quarter of 2021 as sales significantly exceeded our expectations and fueled our restaurant economic model, leading to outsized profits.”
Delving Deeper
During the fiscal first quarter, the company reported adjusted earnings of 20 cents per share, up 122.2% year over year. The figure also beat the Zacks Consensus Estimate of 14 cents by 42.9%.
Quarterly revenues of $460.2 million outpaced the consensus mark of $444 million. Further, the top line increased 13.6% on a year-over-year basis. The upside can primarily be attributed to higher sales at company-operated restaurants, rise in franchisee royalty revenues and fees, and advertising funds.
Meanwhile, same-restaurant sales at International restaurants (excluding Venezuela and Argentina) rose 7.9% against 1.6% decline in the year-ago quarter. Comps at Global restaurants grew 13% against a decline of 0.2% in the prior-year quarter. Moreover, comps in the United States witnessed growth of 13.5%.
The Wendys Company Price, Consensus and EPS Surprise
Global system-wide sales — including company-operated and franchise restaurants — were nearly $3 million in the reported quarter, up 12.9% from the prior-year quarter. U.S. system-wide sales were $2.6 million in the quarter, up 13% year over year. System-wide sales in the International segment amounted to $0.3 million in the quarter, up 11.4% from the prior-year quarter level.
Operating Highlights
Company-operated restaurant margin was 17% in the reported quarter compared with 10.1% in the year-ago quarter. The increase was primarily owing to higher average check and lower insurance costs. However, this was partially offset by customer count declines due to the pandemic and higher labor rate.
General and administrative expenses in the quarter were $52.6 million, down 1.9% from $51.6 million in the prior-year quarter. The increase was primarily on account of higher incentive compensation accrual, which was partly offset by lower travel related expenses as a result of reduced travel.
Quarterly operating profit amounted to $83.1 million, up 70.6% from the year-ago quarter’s reported figure. The increase can primarily be attributed to higher franchise royalty revenues and fees, and rise in company-operated restaurant margin. However, this was partially negated by $3.5 million investment in breakfast advertising.
Net income during the fiscal first quarter soared 186.4% to $41.4 million, compared with $14.4 million in the year-ago quarter. The increase was primarily owing to a rise in operating profit.
Adjusted EBITDA during the quarter totaled $121 million, up 35.4% from $89.3 million in the prior-year quarter. The increase was backed by higher franchise royalty revenue and fees and an increase in company-operated restaurant margin, partially offset by investment in breakfast advertising.
Balance Sheet
Cash and cash equivalents as of Apr 4, 2021, were $316.5 million compared with $307 million on Jan 3, 2021.
Inventories at the end of the first quarter amounted to $4.7 million, flat sequentially. Long-term debt was $2205.6 million as of Apr 4, 2021, compared with $2,218.2 million on Jan 3, 2021.
The company has increased its quarterly dividend by 11% to 10 cents, payable on Jun 15, 2021, to shareholder of record as of Jun 1, 2021.
Other Developments
In the quarter under review, Wendy’s had 38 global restaurant openings with an increase of 10 net new unit. The company is likely to open restaurants in the U.K. in the first half of 2021.
2021 Outlook
For 2021, the company expects global system-wide sales growth in the range of 8% to 10%, compared with the prior estimate of 6% to 8%. Adjusted EBITDA is projected in the band of $445 million to $465 million, up from the earlier estimate of $445-$455 million. Adjusted earnings per share for 2021 in the range of 72 cents to 74 cents, compared with the prior projection of 67 cents to 69 cents. The company expects cash flow from operations in the band of $330 million to $350 million, while capital expenditure is expected between $80 million and $90 million. Free cash flow is anticipated between $250 million and $260 million.
Yum! Brands, Inc. (YUM - Free Report) reported strong first-quarter 2021 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. The metrics also improved year over year. The company’s adjusted earnings of $1.07 beat the Zacks Consensus Estimate of 85 cents. In the prior-year quarter, the company had reported adjusted earnings of 64 cents. Quarterly revenues of $1,486 million surpassed the consensus estimate of $1,461 million. The top line also rose 17.7% year over year. The upside can be attributed to increase in sales, and rise in franchise and property revenues.
McDonald's Corporation (MCD - Free Report) reported robust first-quarter 2021 results, wherein both earnings and revenues outpaced the Zacks Consensus Estimate. The company reported adjusted earnings of $1.92 per share, which surpassed the Zacks Consensus Estimate of $1.81. Moreover, the bottom line rose 31% year over year. Quarterly revenues of $5,124.6 million beat the Zacks Consensus Estimate of $5,047 million. Moreover, the figure rose 9% year over year. The top line benefited from increase in global comparable sales.
Starbucks Corporation (SBUX - Free Report) reported mixed second-quarter fiscal 2021 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same. The company reported adjusted EPS of 62 cents, which beat the Zacks Consensus Estimate of 52 cents. In the prior-year quarter, the company had reported adjusted EPS of 32 cents. Meanwhile, quarterly revenues of $6,668 million lagged the Zacks Consensus Estimate of $6,803 million. However, the top line increased 11.2% from the year-ago quarter’s levels. The uptick was driven by growth in comparable store sales, partially offset by the unfavorable impact of Global Coffee Alliance transition-related activities.
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Wendy's (WEN) Earnings & Revenues Surpass Estimates in Q1
The Wendy's Company (WEN - Free Report) reported strong first-quarter fiscal 2021 results, wherein both earnings and revenues beat the Zacks Consensus Estimate after missing the in the preceding quarter. Moreover, the bottom and the top lines improved year over year.
President and CEO Todd Penegor said, “The robust growth in our business continued in the first quarter of 2021 as sales significantly exceeded our expectations and fueled our restaurant economic model, leading to outsized profits.”
Delving Deeper
During the fiscal first quarter, the company reported adjusted earnings of 20 cents per share, up 122.2% year over year. The figure also beat the Zacks Consensus Estimate of 14 cents by 42.9%.
Quarterly revenues of $460.2 million outpaced the consensus mark of $444 million. Further, the top line increased 13.6% on a year-over-year basis. The upside can primarily be attributed to higher sales at company-operated restaurants, rise in franchisee royalty revenues and fees, and advertising funds.
Meanwhile, same-restaurant sales at International restaurants (excluding Venezuela and Argentina) rose 7.9% against 1.6% decline in the year-ago quarter. Comps at Global restaurants grew 13% against a decline of 0.2% in the prior-year quarter. Moreover, comps in the United States witnessed growth of 13.5%.
The Wendys Company Price, Consensus and EPS Surprise
The Wendys Company price-consensus-eps-surprise-chart | The Wendys Company Quote
System-Wide Sales Discussion
Global system-wide sales — including company-operated and franchise restaurants — were nearly $3 million in the reported quarter, up 12.9% from the prior-year quarter. U.S. system-wide sales were $2.6 million in the quarter, up 13% year over year. System-wide sales in the International segment amounted to $0.3 million in the quarter, up 11.4% from the prior-year quarter level.
Operating Highlights
Company-operated restaurant margin was 17% in the reported quarter compared with 10.1% in the year-ago quarter. The increase was primarily owing to higher average check and lower insurance costs. However, this was partially offset by customer count declines due to the pandemic and higher labor rate.
General and administrative expenses in the quarter were $52.6 million, down 1.9% from $51.6 million in the prior-year quarter. The increase was primarily on account of higher incentive compensation accrual, which was partly offset by lower travel related expenses as a result of reduced travel.
Quarterly operating profit amounted to $83.1 million, up 70.6% from the year-ago quarter’s reported figure. The increase can primarily be attributed to higher franchise royalty revenues and fees, and rise in company-operated restaurant margin. However, this was partially negated by $3.5 million investment in breakfast advertising.
Net income during the fiscal first quarter soared 186.4% to $41.4 million, compared with $14.4 million in the year-ago quarter. The increase was primarily owing to a rise in operating profit.
Adjusted EBITDA during the quarter totaled $121 million, up 35.4% from $89.3 million in the prior-year quarter. The increase was backed by higher franchise royalty revenue and fees and an increase in company-operated restaurant margin, partially offset by investment in breakfast advertising.
Balance Sheet
Cash and cash equivalents as of Apr 4, 2021, were $316.5 million compared with $307 million on Jan 3, 2021.
Inventories at the end of the first quarter amounted to $4.7 million, flat sequentially. Long-term debt was $2205.6 million as of Apr 4, 2021, compared with $2,218.2 million on Jan 3, 2021.
The company has increased its quarterly dividend by 11% to 10 cents, payable on Jun 15, 2021, to shareholder of record as of Jun 1, 2021.
Other Developments
In the quarter under review, Wendy’s had 38 global restaurant openings with an increase of 10 net new unit. The company is likely to open restaurants in the U.K. in the first half of 2021.
2021 Outlook
For 2021, the company expects global system-wide sales growth in the range of 8% to 10%, compared with the prior estimate of 6% to 8%. Adjusted EBITDA is projected in the band of $445 million to $465 million, up from the earlier estimate of $445-$455 million. Adjusted earnings per share for 2021 in the range of 72 cents to 74 cents, compared with the prior projection of 67 cents to 69 cents. The company expects cash flow from operations in the band of $330 million to $350 million, while capital expenditure is expected between $80 million and $90 million. Free cash flow is anticipated between $250 million and $260 million.
Zacks Rank & Peer Releases
Wendy's currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Yum! Brands, Inc. (YUM - Free Report) reported strong first-quarter 2021 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. The metrics also improved year over year. The company’s adjusted earnings of $1.07 beat the Zacks Consensus Estimate of 85 cents. In the prior-year quarter, the company had reported adjusted earnings of 64 cents. Quarterly revenues of $1,486 million surpassed the consensus estimate of $1,461 million. The top line also rose 17.7% year over year. The upside can be attributed to increase in sales, and rise in franchise and property revenues.
McDonald's Corporation (MCD - Free Report) reported robust first-quarter 2021 results, wherein both earnings and revenues outpaced the Zacks Consensus Estimate. The company reported adjusted earnings of $1.92 per share, which surpassed the Zacks Consensus Estimate of $1.81. Moreover, the bottom line rose 31% year over year. Quarterly revenues of $5,124.6 million beat the Zacks Consensus Estimate of $5,047 million. Moreover, the figure rose 9% year over year. The top line benefited from increase in global comparable sales.
Starbucks Corporation (SBUX - Free Report) reported mixed second-quarter fiscal 2021 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same. The company reported adjusted EPS of 62 cents, which beat the Zacks Consensus Estimate of 52 cents. In the prior-year quarter, the company had reported adjusted EPS of 32 cents. Meanwhile, quarterly revenues of $6,668 million lagged the Zacks Consensus Estimate of $6,803 million. However, the top line increased 11.2% from the year-ago quarter’s levels. The uptick was driven by growth in comparable store sales, partially offset by the unfavorable impact of Global Coffee Alliance transition-related activities.
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