Wendy’s Cuts Costs, Beats Q1 Estimates
Wendy's first-quarter net income spiked on lower costs and a sharp decline in interest expenses. The hamburger chain's profit and revenue beat estimates, and its stock raced nearly 6 percent higher in premarket trading Thursday.
Wendy's Co. earned $46.3 million, or 12 cents per share, for the three months ended March 30. That compares with $2.1 million, or 1 cent per share, a year earlier.
Total costs and expenses dropped to $434.2 million from $581.2 million. Interest expense fell to $13 million from $21 million.
The company also booked $8.6 million on the sale of some restaurants, as well as a gain on the sale of other surplus properties.
Removing non-repeating items, earnings were 7 cents per share. Analysts surveyed by FactSet predicted earnings of 5 cents per share.
CEO Emil Brolick said that the solid performance was particularly rewarding given an extremely rough winter that cut down on foot traffic, on top of already intense competition in the sector.
Sales at company-run restaurants open at least a year climbed 1.3 percent mostly from better traffic at some locations and successful product promotions. The company also cited the Easter holiday, which landed in the second quarter this year.
Revenue declined 13 percent to $523.2 million due to the sale of 418 company-run restaurants, but that was still better than the $502.7 million Wall Street expected.
Company shares rose 48 cents to $8.81 before the market opened.
The restaurant operator reiterated its guidance for 2014 adjusted earnings between 34 and 36 cents per share. Analysts expect 34 cents per share.
Long term, Wendy's still anticipates mid-teens growth in adjusted earnings per share.
The Dublin, Ohio, company has more than 6,500 franchise and company-operated restaurants in the U.S. and 28 countries and U.S. territories worldwide.
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