Exhibit 99.1

 

THE WENDY’S COMPANY REPORTS FIRST QUARTER 2021 RESULTS

Dublin, Ohio (May 12, 2021) - The Wendy’s Company (Nasdaq: WEN) today reported unaudited results for the first quarter ended April 4, 2021.

“We are increasing our 2021 financial outlook meaningfully across all key financial metrics, driven by an outstanding first quarter that underscores our continued momentum and the overall strength of our business,” President and Chief Executive Officer 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. We remain committed to our three long-term growth pillars - significantly building our breakfast daypart, accelerating our digital business, and expanding our footprint across the globe - and continue to make great progress. I have never been more confident that we will achieve our vision of becoming the world’s most thriving and beloved restaurant brand as our System is stronger and more aligned than ever.”

First Quarter 2021 Summary

See “Disclosure Regarding Non-GAAP Financial Measures” and the reconciliation tables that accompany this release for a discussion and reconciliation of certain non-GAAP financial measures included in this release.

 

Operational Highlights		First Quarter
		2021				2020
Systemwide Sales Growth(1)
U.S.			13.1%				1.0%
International(2)			7.3%				1.0%
Global			12.5%				1.0%
Same-Restaurant Sales Growth(1)
U.S.			13.5%				0.0%
International(2)			7.9%				(1.6)%
Global			13.0%				(0.2)%
Systemwide Sales (In US$ Millions)(3)
U.S.			$2,647				$2,341
International(2)			$304				$273
Global			$2,951				$2,614
Restaurant Openings
U.S. - Total / Net			20 /  4				27 /  9
International - Total / Net			18 /  6				14 /  8
Global - Total / Net			38 / 10				41 / 17
Global Reimaging Completion Percentage			66%				60%

⁽¹⁾ Systemwide sales growth and same-restaurant sales growth are calculated on a constant currency basis and include sales by both Company-operated and franchise restaurants.

⁽²⁾ Excludes Venezuela and Argentina.

⁽³⁾ Systemwide sales include sales at both Company-operated and franchise restaurants.

 

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Financial Highlights		First Quarter
		2021		2020		B / (W)
(In Millions Except Per Share Amounts)		(Unaudited)
Total Revenues		$460.2		$405.0		13.6%
Adjusted Revenues(1)		$370.8		$326.4		13.6%
Company-Operated Restaurant Margin		17.0%		10.1%		6.9%
General and Administrative Expense		$52.6		$51.6		(1.9)%
Operating Profit		$83.1		$48.7		70.6%
Net Income		$41.4		$14.4		186.4%
Adjusted EBITDA		$121.0		$89.3		35.4%
Reported Diluted Earnings Per Share		$0.18		$0.06		200.0%
Adjusted Earnings Per Share		$0.20		$0.09		122.2%
Cash Flows from Operations		$85.8		$(19.4)		nm
Capital Expenditures		$(10.4)		$(12.6)		17.9%
Free Cash Flow(2)		$97.5		$(20.4)		nm

 

(1)	Total revenues less advertising funds revenue.

(2)	Cash flows from operations minus capital expenditures and the impact of our advertising funds

First Quarter Financial Highlights

Total Revenues

The increase in revenues was primarily driven by higher sales at Company-operated restaurants, an increase in franchise royalty revenue, and an increase in advertising funds. These increases were primarily driven by positive same-restaurant sales. Revenues also increased due to higher franchise fees primarily as the result of the Company’s new technology fee that was implemented in 2021.

Adjusted Revenues

The increase in adjusted revenues was primarily driven by higher sales at Company-operated restaurants and an increase in franchise royalty revenue. These increases were primarily driven by positive same-restaurant sales. Revenues also increased due to higher franchise fees primarily as the result of the Company’s new technology fee that was implemented in 2021.

Company-Operated Restaurant Margin

The increase in Company-operated restaurant margin was primarily the result of a higher average check and lower commodity costs, partially offset by labor rate increases and customer count declines.

General and Administrative Expense

The increase in general and administrative expense was primarily driven by a higher incentive compensation accrual, partially offset by lower travel related expenses as a result of reduced travel.

Operating Profit

The increase in operating profit resulted primarily from higher franchise royalty revenue and fees, and an increase in Company-operated restaurant margin. These increases were partially offset by the incremental Company investment in breakfast advertising of $3.5 million.

Net Income

The increase in net income resulted primarily from a higher operating profit.

Adjusted EBITDA

The increase in adjusted EBITDA resulted primarily from higher franchise royalty revenue and fees and an increase in Company-operated restaurant margin. These increases were partially offset by the incremental Company investment in breakfast advertising.

 

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Adjusted Earnings Per Share

The increase in adjusted earnings per share was primarily driven by an increase in adjusted EBITDA.

Free Cash Flow

The increase in free cash flow resulted primarily from a higher net income, the impact from the $24.7 million cash payment related to the settlement of the financial institutions case in January 2020, a decrease in accrued compensation and related items, the timing of receipts of franchisee rental payments, and the timing of vendor incentives.

Company Increases Quarterly Dividend to 10 Cents

The Company announced today a 11% increase in its regular quarterly cash dividend to 10 cents per share, payable on June 15, 2021, to stockholders of record as of June 1, 2021. The Company believes that its strengthening liquidity position, along with the momentum it is seeing in its business, supports this increase, while still leaving flexibility to invest in growth. The number of common shares outstanding as of May 5, 2021 was approximately 221 million.

Company Increases Share Repurchase Authorization by $50 million; Repurchased $56 million in the First Quarter

The Company announced today that its Board of Directors has approved an increase to the Company’s existing share repurchase authorization by $50 million to a total of $150 million after the Company exhausted its authorization due to favorable market conditions.

The Company repurchased 2.8 million shares for $56.0 million in the first quarter of 2021 and has repurchased 0.5 million shares for approximately $11.7 million thus far in the second quarter of 2021. As of the date of this release, approximately $50 million remains available under the Company’s increased share repurchase authorization, which expires in February 2022.

2021 Outlook

This release includes forward-looking projections for certain non-GAAP financial measures, including systemwide sales, adjusted EBITDA, adjusted earnings per share and free cash flow. The Company excludes certain expenses and benefits from adjusted EBITDA, adjusted earnings per share and free cash flow, such as the impact from our advertising funds, including the net change in the restricted operating assets and liabilities and any excess or deficit of advertising funds revenues over advertising funds expenses, impairment of long-lived assets, reorganization and realignment costs, system optimization (gains) losses, net, and the timing and resolution of certain tax matters. Due to the uncertainty and variability of the nature and amount of those expenses and benefits, the Company is unable without unreasonable effort to provide projections of net income, earnings per share or net cash provided by operating activities, or a reconciliation of those projected measures.

During 2021, the Company Now Expects:

 

•

Global systemwide sales growth: 8 to 10 percent (excluding the impact of the 53rd week)

 

•

Adjusted EBITDA: $455 to $465 million

 

•

Adjusted earnings per share: $0.72 to $0.74

 

•

Cash flows from operations: $330 to $350 million

 

•

Capital Expenditures: $80 to $90 million

 

•

Free cash flow: $250 to $260 million

Conference Call and Webcast Scheduled for 8:30 a.m. Today, May 12

The Company will host a conference call on Wednesday, May 12 at 8:30 a.m. ET, with a simultaneous webcast from the Company’s Investor Relations website at www.irwendys.com. The related presentation materials will also be available on the Company’s Investor Relations website. The live conference call will be available by telephone at (866) 211-4759 for domestic callers and (647) 689-6752 for international callers. An archived webcast and presentation materials will be available on the Company’s Investor Relations website.

Forward-Looking Statements

This release contains certain statements that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Generally, forward-looking statements include the words “may,” “believes,” “plans,” “expects,” “anticipates,” “intends,” “estimate,” “goal,” “upcoming,” “outlook,” “guidance” or the negation thereof, or similar expressions. In addition, all statements that address future operating, financial or business performance, strategies or initiatives, future efficiencies or savings, anticipated costs or charges, future capitalization, anticipated impacts of recent or pending investments or transactions and statements expressing general views about future results or brand health are forward-looking statements within the meaning of the Reform Act. Forward-looking statements are based on the Company’s

 

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expectations at the time such statements are made, speak only as of the dates they are made and are susceptible to a number of risks, uncertainties and other factors. For all such forward-looking statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Reform Act. The Company’s actual results, performance and achievements may differ materially from any future results, performance or achievements expressed or implied by the Company’s forward-looking statements.

Many important factors could affect the Company’s future results and cause those results to differ materially from those expressed in or implied by the Company’s forward-looking statements. Such factors include, but are not limited to, the following: (1) disruption to the Company’s business from the novel coronavirus (COVID-19) pandemic and the impact of the pandemic on the Company’s results of operations, financial condition and prospects; (2) the impact of competition or poor customer experiences at Wendy’s restaurants; (3) economic disruptions, including in regions with a high concentration of Wendy’s restaurants; (4) changes in discretionary consumer spending and consumer tastes and preferences; (5) impacts to the Company’s corporate reputation or the value and perception of the Company’s brand; (6) the effectiveness of the Company’s marketing and advertising programs and new product development; (7) the Company’s ability to manage the accelerated impact of social media; (8) the Company’s ability to protect its intellectual property; (9) food safety events or health concerns involving the Company’s products; (10) the Company’s ability to achieve its growth strategy through new restaurant development and its Image Activation program; (11) the Company’s ability to effectively manage the acquisition and disposition of restaurants or successfully implement other strategic initiatives; (12) risks associated with leasing and owning significant amounts of real estate, including environmental matters; (13) the Company’s ability to achieve and maintain market share in the breakfast daypart; (14) risks associated with the Company’s international operations, including the ability to execute its international growth strategy; (15) changes in commodity and other operating costs; (16) shortages or interruptions in the supply or distribution of the Company’s products and other risks associated with the Company’s independent supply chain purchasing co-op; (17) the impact of increased labor costs or labor shortages; (18) the continued succession and retention of key personnel and the effectiveness of the Company’s leadership structure; (19) risks associated with the Company’s digital commerce strategy, platforms and technologies, including its ability to adapt to changes in industry trends and consumer preferences; (20) the Company’s dependence on computer systems and information technology, including risks associated with the failure, misuse, interruption or breach of its systems or technology or other cyber incidents or deficiencies; (21) risks associated with the Company’s securitized financing facility and other debt agreements, including compliance with operational and financial covenants, restrictions on its ability to raise additional capital, the impact of its overall debt levels and the Company’s ability to generate sufficient cash flow to meet its debt service obligations and operate its business; (22) risks associated with the Company’s capital allocation policy, including the amount and timing of equity and debt repurchases and dividend payments; (23) risks associated with complaints and litigation, compliance with legal and regulatory requirements and an increased focus on environmental, social and governance issues; (24) risks associated with the availability and cost of insurance, changes in accounting standards, the recognition of impairment or other charges, the impact of realignment and reorganization initiatives, changes in tax rates or tax laws and fluctuations in foreign currency exchange rates; (25) conditions beyond the Company’s control, such as adverse weather conditions, natural disasters, hostilities, social unrest, health epidemics or pandemics or other catastrophic events; and (26) other risks and uncertainties cited in the Company’s releases, public statements and/or filings with the Securities and Exchange Commission, including those identified in the “Risk Factors” sections of the Company’s Forms 10-K and 10-Q.

In addition to the factors described above, there are risks associated with the Company’s predominantly franchised business model that could impact its results, performance and achievements. Such risks include the Company’s ability to identify, attract and retain experienced and qualified franchisees and effectively manage the transfer of restaurants between and among franchisees, the business and financial health of franchisees, the ability of franchisees to meet their royalty, advertising, development, reimaging and other commitments, participation by franchisees in brand strategies and the fact that franchisees are independent third parties that own, operate and are responsible for overseeing the operations of their restaurants. The Company’s predominantly franchised business model may also impact the ability of the Wendy’s system to effectively respond and adapt to market changes. Many of these risks have been or in the future may be heightened due to the business disruption and impact from the COVID-19 pandemic.

All future written and oral forward-looking statements attributable to the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained

 

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or referred to above. New risks and uncertainties arise from time to time, and it is impossible for the Company to predict these events or how they may affect the Company.

The Company assumes no obligation to update any forward-looking statements after the date of this release as a result of new information, future events or developments, except as required by federal securities laws, although the Company may do so from time to time. The Company does not endorse any projections regarding future performance that may be made by third parties.

There can be no assurance that any additional regular quarterly cash dividends will be declared or paid after the date hereof, or of the amount or timing of such dividends, if any. Future dividend payments, if any, are subject to applicable law, will be made at the discretion of the Board of Directors and will be based on factors such as the Company’s earnings, financial condition and cash requirements and other factors.

Disclosure Regarding Non-GAAP Financial Measures

In addition to the financial measures presented in this release in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), the Company has included certain non-GAAP financial measures in this release, including adjusted revenue, adjusted EBITDA, adjusted earnings per share, free cash flow and systemwide sales.

The Company uses adjusted revenue, adjusted EBITDA, adjusted earnings per share and systemwide sales as internal measures of business operating performance and as performance measures for benchmarking against the Company’s peers and competitors. Adjusted EBITDA is also used by the Company in establishing performance goals for purposes of executive compensation. The Company believes its presentation of adjusted revenue, adjusted EBITDA, adjusted earnings per share and systemwide sales provides a meaningful perspective of the underlying operating performance of our current business and enables investors to better understand and evaluate our historical and prospective operating performance. The Company believes these non-GAAP financial measures are important supplemental measures of operating performance because they eliminate items that vary from period to period without correlation to our core operating performance and highlight trends in our business that may not otherwise be apparent when relying solely on GAAP financial measures. Due to the nature and/or size of the items being excluded, such items do not reflect future gains, losses, expenses or benefits and are not indicative of our future operating performance. The Company believes investors, analysts and other interested parties use adjusted revenue, adjusted EBITDA, adjusted earnings per share and systemwide sales in evaluating issuers, and the presentation of these measures facilitates a comparative assessment of the Company’s operating performance in addition to the Company’s performance based on GAAP results.

This release also includes disclosure regarding the Company’s free cash flow. Free cash flow is a non-GAAP financial measure that is used by the Company as an internal measure of liquidity. Free cash flow is also used by the Company in establishing performance goals for purposes of executive compensation. The Company defines free cash flow as cash flows from operations minus (i) capital expenditures and (ii) the net change in the restricted operating assets and liabilities of the advertising funds and any excess/deficit of advertising funds revenue over advertising funds expense included in net income, as reported under GAAP. The impact of our advertising funds is excluded because the funds are used solely for advertising and are not available for the Company’s working capital needs. The Company may also make additional adjustments for certain non-recurring or unusual items to the extent identified in the reconciliation tables that accompany this release. The Company believes free cash flow is an important liquidity measure for investors and other interested persons because it communicates how much cash flow is available for working capital needs or to be used for repurchasing shares, paying dividends, repaying or refinancing debt, financing possible acquisitions or investments or other uses of cash.

Adjusted revenue, adjusted EBITDA, adjusted earnings per share, free cash flow and systemwide sales are not recognized terms under GAAP, and the Company’s presentation of these non-GAAP financial measures does not replace the presentation of the Company’s financial results in accordance with GAAP. Because all companies do not calculate adjusted revenue, adjusted EBITDA, adjusted earnings per share, free cash flow and systemwide sales (and similarly titled financial measures) in the same way, those measures as used by other companies may not be consistent with the way the Company calculates such measures. The non-GAAP financial measures included in this release should not be construed as substitutes for or better indicators of the Company’s performance than the most directly comparable GAAP financial measures. See the reconciliation tables that accompany this release for additional information regarding certain of the non-GAAP financial measures included herein.

 

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Key Business Measures

The Company tracks its results of operations and manages its business using certain key business measures, including same-restaurant sales, systemwide sales and Company-operated restaurant margin, which are measures commonly used in the quick-service restaurant industry that are important to understanding Company performance.

Same-restaurant sales and systemwide sales each include sales by both Company-operated and franchise restaurants. The Company reports same-restaurant sales for new restaurants after they have been open for 15 continuous months and for reimaged restaurants as soon as they reopen. Restaurants temporarily closed for more than one fiscal week are excluded from same-restaurant sales. For fiscal 2020, same-restaurant sales excluded the impact of a 53rd operating week. In fiscal 2020, same-restaurant sales compared the 52 weeks from December 30, 2019 through December 27, 2020 to the 52 weeks from December 31, 2018 through December 29, 2019. For fiscal 2021, same-restaurant sales will compare the 52 weeks from January 4, 2021 through January 2, 2022 to the 52 weeks from January 6, 2020 through January 3, 2021.

Franchise restaurant sales are reported by our franchisees and represent their revenues from sales at franchised Wendy’s restaurants. Sales by franchise restaurants are not recorded as Company revenues and are not included in the Company’s consolidated financial statements. However, the Company’s royalty revenues are computed as percentages of sales made by Wendy’s franchisees and, as a result, sales by franchisees have a direct effect on the Company’s royalty revenues and profitability.

Same-restaurant sales and systemwide sales exclude sales from Venezuela and Argentina due to the highly inflationary economies of those countries.

The Company calculates same-restaurant sales and systemwide sales growth on a constant currency basis. Constant currency results exclude the impact of foreign currency translation and are derived by translating current year results at prior year average exchange rates. The Company believes excluding the impact of foreign currency translation provides better year over year comparability.

Company-operated restaurant margin is defined as sales from Company-operated restaurants less cost of sales divided by sales from Company-operated restaurants. Cost of sales includes food and paper, restaurant labor and occupancy, advertising and other operating costs.

About Wendy’s

Wendy’s^® was founded in 1969 by Dave Thomas in Columbus, Ohio. Dave built his business on the premise, “Quality is our Recipe^®,” which remains the guidepost of the Wendy’s system. Wendy’s is best known for its made-to-order square hamburgers, using fresh, never frozen beef*, freshly-prepared salads, and other signature items like chili, baked potatoes and the Frosty^® dessert. The Wendy’s Company (Nasdaq: WEN) is committed to doing the right thing and making a positive difference in the lives of others. This is most visible through the Company’s support of the Dave Thomas Foundation for Adoption^® and its signature Wendy’s Wonderful Kids^® program, which seeks to find a loving, forever home for every child waiting to be adopted from the North American foster care system. Today, Wendy’s and its franchisees employ hundreds of thousands of people across more than 6,800 restaurants worldwide with a vision of becoming the world’s most thriving and beloved restaurant brand. For details on franchising, connect with us at www.wendys.com/franchising. Visit www.wendys.com and www.squaredealblog.com for more information and connect with us on Twitter and Instagram using @wendys, and on Facebook at www.facebook.com/wendys.

 

*	Fresh beef available in the contiguous U.S., Alaska, and Canada.

Investor Contact:

Greg Lemenchick

Senior Director - Investor Relations & Corporate FP&A

(614) 766-3977; greg.lemenchick@wendys.com

Media Contact:

Heidi Schauer

Vice President - Communications, Public Affairs & Customer Care

(614) 764-3368; heidi.schauer@wendys.com

 

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The Wendy’s Company and Subsidiaries

Condensed Consolidated Statements of Operations

Three Month Periods Ended April 4, 2021 and March 29, 2020

(In Thousands Except Per Share Amounts)

(Unaudited)

 

		Three Months Ended
		2021				2020
Revenues:
Sales		$	189,057			$	166,798
Franchise royalty revenue			108,334				95,356
Franchise fees			14,496				6,349
Franchise rental income			58,876				57,856
Advertising funds revenue			89,440				78,601
			460,203				404,960
Costs and expenses:
Cost of sales			156,850				149,999
Franchise support and other costs			7,686				8,013
Franchise rental expense			32,566				29,301
Advertising funds expense			94,238				79,988
General and administrative			52,622				51,639
Depreciation and amortization			31,542				31,046
System optimization gains, net			(516	)			(323	)
Reorganization and realignment costs			4,934				3,910
Impairment of long-lived assets			635				4,587
Other operating income, net			(3,476	)			(1,932	)
			377,081				356,228
Operating profit			83,122				48,732
Interest expense, net			(28,786	)			(28,525	)
Other income, net			129				1,076
Income before income taxes			54,465				21,283
Provision for income taxes			(13,099	)			(6,842	)
Net income		$	41,366			$	14,441
Net income per share:
Basic		$	.19			$	.06
Diluted			.18				.06
Number of shares used to calculate basic income per share			223,334				223,533
Number of shares used to calculate diluted income per share			226,727				228,007

 

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The Wendy’s Company and Subsidiaries

Consolidated Balance Sheets

As of April 4, 2021 and January 3, 2021

(In Thousands Except Par Value)

(Unaudited)

 

		April 4, 2021				January 3, 2021
ASSETS
Current assets:
Cash and cash equivalents		$	316,488			$	306,989
Restricted cash			37,948				33,973
Accounts and notes receivable, net			100,312				109,891
Inventories			4,733				4,732
Prepaid expenses and other current assets			48,498				89,732
Advertising funds restricted assets			133,518				142,306
Total current assets			641,497				687,623
Properties			898,420				915,889
Finance lease assets			201,249				206,153
Operating lease assets			806,614				821,480
Goodwill			751,957				751,049
Other intangible assets			1,219,089				1,224,960
Investments			43,743				44,574
Net investment in sales-type and direct financing leases			269,750				268,221
Other assets			124,351				120,057
Total assets		$	4,956,670			$	5,040,006
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt		$	31,250			$	28,962
Current portion of finance lease liabilities			12,582				12,105
Current portion of operating lease liabilities			45,498				45,346
Accounts payable			29,325				31,063
Accrued expenses and other current liabilities			140,720				155,321
Advertising funds restricted liabilities			137,144				140,511
Total current liabilities			396,519				413,308
Long-term debt			2,205,652				2,218,163
Long-term finance lease liabilities			501,422				506,076
Long-term operating lease liabilities			850,448				865,325
Deferred income taxes			280,077				280,755
Deferred franchise fees			86,532				89,094
Other liabilities			115,355				117,689
Total liabilities			4,436,005				4,490,410
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.10 par value; 1,500,000 shares authorized; 470,424 shares issued; 221,784 and 224,268 shares outstanding, respectively			47,042				47,042
Additional paid-in capital			2,901,460				2,899,276
Retained earnings			259,879				238,674
Common stock held in treasury, at cost; 248,640 and 246,156 shares, respectively			(2,640,295	)			(2,585,755	)
Accumulated other comprehensive loss			(47,421	)			(49,641	)
Total stockholders’ equity			520,665				549,596
Total liabilities and stockholders’ equity		$	4,956,670			$	5,040,006

 

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The Wendy’s Company and Subsidiaries

Condensed Consolidated Statements of Cash Flows

Three Month Periods Ended April 4, 2021 and March 29, 2020

(In Thousands)

(Unaudited)

 

		Three Months Ended
		2021				2020
Cash flows from operating activities:
Net income		$	41,366			$	14,441
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization			31,542				31,046
Share-based compensation			5,151				4,539
Impairment of long-lived assets			635				4,587
Deferred income tax			(1,116	)			748
Non-cash rental expense, net			10,152				6,218
Change in operating lease liabilities			(11,607	)			(10,611	)
Net receipt (recognition) of deferred vendor incentives			6,522				(2,305	)
System optimization gains, net			(516	)			(323	)
Distributions received from joint ventures, net of equity in earnings			1,409				180
Long-term debt-related activities, net			1,677				1,556
Changes in operating assets and liabilities and other, net			615				(69,445	)
Net cash provided by (used in) operating activities			85,830				(19,369	)
Cash flows from investing activities:
Capital expenditures			(10,364	)			(12,629	)
Acquisitions			4,879				—
Dispositions			3				195
Notes receivable, net			397				313
Net cash used in investing activities			(5,085	)			(12,121	)
Cash flows from financing activities:
Proceeds from long-term debt			—				153,315
Repayments of long-term debt			(11,900	)			(14,334	)
Repayments of finance lease liabilities			(2,659	)			(1,967	)
Repurchases of common stock			(55,611	)			(45,137	)
Dividends			(20,156	)			(26,793	)
Proceeds from stock option exercises			972				1,722
Payments related to tax withholding for share-based compensation			(2,308	)			(3,402	)
Net cash (used in) provided by financing activities			(91,662	)			63,404
Net cash (used in) provided by operations before effect of exchange rate changes on cash			(10,917	)			31,914
Effect of exchange rate changes on cash			823				(5,086	)
Net (decrease) increase in cash, cash equivalents and restricted cash			(10,094	)			26,828
Cash, cash equivalents and restricted cash at beginning of period			418,241				358,707
Cash, cash equivalents and restricted cash at end of period		$	408,147			$	385,535

 

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The Wendy’s Company and Subsidiaries

Reconciliations of Net Income to Adjusted EBITDA and Revenues to Adjusted Revenues

Three Month Periods Ended April 4, 2021 and March 29, 2020

(In Thousands)

(Unaudited)

 

		Three Months Ended
		2021				2020
Net income		$	41,366			$	14,441
Provision for income taxes			13,099				6,842
Income before income taxes			54,465				21,283
Other income, net			(129	)			(1,076	)
Interest expense, net			28,786				28,525
Operating profit			83,122				48,732
Plus (less):
Advertising funds revenue			(89,440	)			(78,601	)
Advertising funds expense (a)			90,704				79,988
Depreciation and amortization			31,542				31,046
System optimization gains, net			(516	)			(323	)
Reorganization and realignment costs			4,934				3,910
Impairment of long-lived assets			635				4,587
Adjusted EBITDA		$	120,981			$	89,339
Revenues		$	460,203			$	404,960
Less:
Advertising funds revenue			(89,440	)			(78,601	)
Adjusted revenues		$	370,763			$	326,359

 

(a)	For the three months ended April 4, 2021, excludes advertising funds expense of $3,534 related to the Company funding of incremental advertising during 2021.

 

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The Wendy’s Company and Subsidiaries

Reconciliation of Net Income and Diluted Earnings Per Share to

Adjusted Income and Adjusted Earnings Per Share

Three Month Periods Ended April 4, 2021 and March 29, 2020

(In Thousands Except Per Share Amounts)

(Unaudited)

 

		Three Months Ended
		2021				2020
Net income		$	41,366			$	14,441
Plus (less):
Advertising funds revenue			(89,440	)			(78,601	)
Advertising funds expense (a)			90,704				79,988
System optimization gains, net			(516	)			(323	)
Reorganization and realignment costs			4,934				3,910
Impairment of long-lived assets			635				4,587
Total adjustments			6,317				9,561
Income tax impact on adjustments (b)			(1,909	)			(3,430	)
Total adjustments, net of income taxes			4,408				6,131
Adjusted income		$	45,774			$	20,572
Diluted earnings per share		$	.18			$	.06
Total adjustments per share, net of income taxes			.02				.03
Adjusted earnings per share		$	.20			$	.09

 

(a)	For the three months ended April 4, 2021, excludes advertising funds expense of $3,534 related to the Company funding of incremental advertising during 2021.

(b)

The benefit from income taxes on “System optimization gains, net” was $476 and $1,246 for the three months ended April 4, 2021 and March 29, 2020, respectively. The benefit from income taxes on all other adjustments (excluding the advertising funds adjustments) was calculated using an effective tax rate of 25.74% and 25.70% for the three months ended April 4, 2021 and March 29, 2020, respectively.

 

11

The Wendy’s Company and Subsidiaries

Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow

Three Month Periods Ended April 4, 2021 and March 29, 2020

(In Thousands)

(Unaudited)

 

		Three Months Ended
		2021				2020
Net cash provided by operating activities		$	85,830			$	(19,369	)
Less:
Capital expenditures			(10,364	)			(12,629	)
Advertising funds impact (a)			22,046				11,605
Free cash flow		$	97,512			$	(20,393	)

 

(a)	Represents the net change in the restricted operating assets and liabilities of our advertising funds, which is included in “Changes in operating assets and liabilities and other, net,” and the excess of advertising funds expense over advertising funds revenue, which is included in “Net income.”

 

12