The Wendy's Company reported unaudited results for the second quarter ended July 3, 2016. Same-restaurant sales increased 0.4 percent at North America system restaurants in the second quarter of 2016.
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On a two-year basis, same-restaurant sales increased 2.6 percent for the North America system.
Revenues were $382.7 million in the second quarter of 2016, compared to $489.5 million in the second quarter of 2015. The 21.8 percent decrease resulted primarily from the ownership of 361 fewer Company-operated restaurants at the end of the 2016 second quarter compared to the beginning of the 2015 second quarter.
Franchise revenues were $123.5 million in the second quarter of 2016, compared to $104.5 million in the second quarter of 2015. The 18.2 percent increase resulted from higher rental income and royalty revenue primarily as a result of Wendy's system optimization initiative.
North America Company-operated restaurant margin was 21.9 percent in the second quarter of 2016, compared to 18.2 percent in the second quarter of 2015. The 370 basis-point increase was primarily the result of the positive impact of lower commodity costs and the favorable impact from Wendy's Image Activation program.
General and administrative expense was $61.1 million in the second quarter of 2016, compared to $60.8 million in the second quarter of 2015.
Operating profit was $65.6 million in the second quarter of 2016, compared to $64.3 million in the second quarter of 2015.
The 2.0 percent increase resulted primarily from higher franchise revenues, a year-over-year decrease in Depreciation and amortization and lower Impairment of long-lived assets, partly offset by a year-over-year decrease in System optimization gains, net and a year-over-year increase in Other operating expense, net.
Interest expense was $28.6 million in the second quarter of 2016, compared to $17.2 million in the second quarter of 2015. The increase resulted primarily from higher total debt levels related to Wendy's debt restructuring completed in the second quarter of 2015.
Income from continuing operations was $26.5 million in the second quarter of 2016, compared to $24.8 million in the second quarter of 2015.
The 6.9 percent increase resulted from year-over-year decreases in Loss on early extinguishment of debt and Provision for income taxes, in addition to the items mentioned above.
Net income was $26.5 million in the second qarter of 2016, compared to $40.2 million in the second quarter of 2015
The 34.1 percent decrease resulted primarily from a year-over-year decrease in Gain on disposal of discontinued operations, net of income taxes, in addition to the items mentioned above.
Adjusted EBITDA from continuing operations was $102.5 million in the second quarter of 2016, compared to $104.3 million in the second quarter of 2015.
The 1.7 percent decrease resulted primarily from the ownership of 361 fewer Company-operated restaurants at the end of the 2016 second quarter compared to the beginning of the 2015 second quarter.
Adjusted EBITDA margin (adjusted EBITDA divided by total revenues) was 26.8 percent in the second quarter of 2016, compared to 21.3 percent in the second quarter of 2015. The 550 basis-point improvement reflects the positive impact of Wendy's system optimization initiative.
Reported diluted earnings per share from continuing operations were $0.10 in the second quarter of 2016, compared to $0.07 in the second quarter of 2015. The increase is primarily the result of a 27.1 percent year-over-year reduction in the weighted average diluted shares outstanding.
Reported diluted earnings per share were $0.10 in the second quarter of 2016, compared to $0.11 in the second quarter of 2015.
Adjusted earnings per share from continuing operations were $0.10 in the second quarter of 2016, compared to $0.08 in the second quarter of 2015. ■