The Wendy's Company reported unaudited results for the first quarter ended April 3, 2016. Same-restaurant sales increased 3.6 percent at North America system restaurants.
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On a two-year basis, first-quarter 2016 same-restaurant sales increased 6.8 percent for the North America system.
Revenues were $378.8 million in the first quarter of 2016, compared to $451.8 million in the first quarter of 2015.
The 16.2 percent decrease resulted primarily from the ownership of 375 fewer company-operated restaurants at the end of the 2016 first quarter compared to the beginning of the 2015 first quarter.
Franchise revenues were $119.5 million in the first quarter of 2016, compared to $94.2 million in the first quarter of 2015.
The 26.8 percent increase resulted primarily from higher rental income, royalty revenue and franchise fees primarily as a result of the company's system optimization initiative, in addition to an increase in same-restaurant sales.
Wendy's North America company-operated restaurant margin was 17.2 percent in the first quarter of 2016, compared to 14.7 percent in the first quarter of 2015. The 250 basis-point increase was primarily the result of higher same-restaurant sales and the positive impact of lower commodity costs.
General and administrative expense was $64.6 million in the first quarter of 2016, compared to $59.7 million in the first quarter of 2015.
The 8.2 percent increase resulted primarily from a $3.7 million increase in professional fees and legal reserves, along with a year-over-year increase of approximately $1.2 million in incentive compensation accruals due to the company's first-quarter outperformance relative to its targets.
Wendy's adjusted EBITDA from continuing operations was $98.1 million in the first quarter of 2016, a 21.4 percent increase compared to $80.8 million in the first quarter of 2015, despite the ownership of 375 fewer company-operated restaurants at the end of the 2016 first quarter compared to the beginning of the 2015 first quarter.
The company's 2016 results include a year-over-year net positive impact of approximately $9.6 million from a lease buyout. Partly offsetting this gain was an increase in professional fees and legal reserves, along with higher incentive compensation accruals.
Adjusted EBITDA margin was 25.9 percent in the first quarter of 2016, compared to 17.9 percent in the first quarter of 2015. The 800-basis point improvement reflects the positive impact of the company's system optimization initiative, as well as the lease buyout gain mentioned above.
Operating profit was $63.8 million in the first quarter of 2016, compared to $37.9 million in the first quarter of 2015.
The 68.3 percent increase resulted primarily from higher franchise revenues, a year-over-year increase in net gains from the company's system optimization initiative and lower Other operating expense, net, partly offset by a year-over-year increase in impairment charges and higher G&A expense.
Wendy's operating profit margin was 16.9 percent in the first quarter of 2016, compared to 8.4 percent in the first quarter of 2015, an improvement of 850 basis points.
Interest expense was $28.1 million in the first quarter of 2016, compared to $12.7 million in the first quarter of 2015. The increase resulted primarily from higher total debt levels related to the company's debt restructuring completed in the second quarter of 2015.
Income from continuing operations was $25.4 million in the first quarter of 2016, compared to $18.2 million in the first quarter of 2015.
Net income was $25.4 million in the first quarter of 2016, compared to $27.5 million in the first quarter of 2015.
Reported diluted earnings per share from continuing operations were $0.09 in the first quarter of 2016, compared to $0.05 in the first quarter of 2015. The increase is partly the result of a 26.4 percent year-over-year reduction in the weighted average diluted shares outstanding.
Reported diluted earnings per share were $0.09 in the first quarter of 2016, compared to $0.07 in the first quarter of 2015.
Adjusted Earnings per Share from continuing operations were $0.11 in the first quarter of 2016, compared to $0.06 in the first quarter of 2015. ■