The Wendy's Company reported preliminary unaudited results for the fourth quarter and full year ended January 3, 2016.
Article continues below
Same-restaurant sales increased 4.8 percent at North America system restaurants in the fourth quarter of 2015.
Same-restaurant sales increased 4.9 percent at North America franchise-operated restaurants. Same-restaurant sales increased 3.7 percent at North America company-operated restaurants.
On a two-year basis, fourth-quarter 2015 same-restaurant sales increased 6.4 percent for the North America system, 6.5 percent at North America franchise-operated restaurants and 5.6 percent at North America company-operated restaurants.
Revenues were $464.4 million in the fourth quarter of 2015, compared to $487.3 million in the fourth quarter of 2014. The 4.7 percent decrease resulted primarily from the ownership of 363 fewer company-operated restaurants at the end of the 2015 fourth quarter compared to the beginning of the 2014 fourth quarter.
Franchise revenues were $127.2 million in the fourth quarter of 2015 compared to $98 million in the fourth quarter of 2014.
The 29.8 percent increase resulted from higher royalty revenue, franchise fees and rental income primarily as a result of the company's system optimization initiative and the 4.9 percent same-restaurant sales increase at franchise-operated restaurants.
North America company-operated restaurant margin was 19.2 percent in the fourth quarter of 2015, compared to 16.8 percent in the fourth quarter of 2014.
The 240 basis-point increase was primarily the result of higher same-restaurant sales, the positive impact from the company's Image Activation reimaging program and the impact of the company's system optimization initiative, partly offset by higher labor rates.
General and administrative expense was $72.4 million in the fourth quarter of 2015, compared to $59.5 million in the fourth quarter of 2014.
The increase resulted primarily from higher incentive compensation due to the company's year-over-year outperformance relative to its targets, along with the impact of the 53rd operating week.
Adjusted EBITDA from continuing operations was $107.6 million in the fourth quarter of 2015, a 12.3 percent increase compared to $95.8 million in the fourth quarter of 2014, despite the ownership of 363 fewer company-operated restaurants at the end of the 2015 fourth quarter compared to the beginning of the 2014 fourth quarter.
Adjusted EBITDA margin was 23.2 percent in the fourth quarter of 2015 compared to 19.7 percent in the fourth quarter of 2014. The 350-basis-point improvement reflects the positive impact of the second phase of the company's system optimization initiative.
Operating profit was $116.3 million in the fourth quarter of 2015, compared to $49.9 million in the fourth quarter of 2014. The 133 percent increase resulted primarily from a year-over-year increase in net gains from the company's system optimization initiative.
Operating profit margin was 25 percent in the fourth quarter of 2015 compared to 10.2 percent in the fourth quarter of 2014, an improvement of 1,480 basis points.
Wendy's interest expense was $28.2 million in the fourth quarter of 2015, compared to $12.8 million in the fourth quarter of 2014. The increase resulted primarily from higher total debt levels related to the company's debt restructuring during 2015.
Income from continuing operations was $88.7 million in the fourth quarter of 2015 compared to $23.0 million in the fourth quarter of 2014.
The increase was primarily due to a year-over-year increase in investment income as a result of a $54.9 million ($38.6 million after-tax) distribution the company received from its 18.5 percent indirect ownership interest in Arby's Restaurant Group.
Wendy's has excluded this distribution from its Adjusted EBITDA and Adjusted Earnings per Share results for the fourth quarter and full year.
Also affecting income from continuing operations was an effective tax rate of 36.8 percent in the fourth quarter of 2015 compared to 38.4 percent in the fourth quarter of 2014.
Net income was $85.9 million in the fourth quarter of 2015, compared to $23.3 million in the fourth quarter of 2014. These results include the impact of discontinued operations.
Reported diluted earnings per share from continuing operations were $0.32 in the fourth quarter of 2015 compared to $0.06 in the fourth quarter of 2014. The increase reflects a 25.1 percent year-over-year reduction in the weighted average diluted shares outstanding.
Reported diluted earnings per share were $0.31 in the fourth quarter of 2015, compared to $0.06 in the fourth quarter of 2014.
Adjusted earnings per share from continuing operations were $0.12 in the fourth quarter of 2015, compared to $0.08 in the fourth quarter of 2014. These results exclude the impact of certain items, including system optimization gains and the Arby's distribution.
Wendy's plans to file its audited financial results on or before March 3, 2016. ■
An upper level high pressure system is expected to continue aiding well above average and potentially dangerous temperatures throughout the West into the first full weekend of September.