The Wendy's company reported unaudited results for the second quarter ended June 28, 2015. Same-restaurant sales increased 2.4 percent at North America company-operated restaurants, while same-restaurant sales increased 2.2 percent at North America franchise-operated restaurants.
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Systemwide same-restaurant sales increased 2.2 percent during the second quarter of 2015. Higher sales at reimaged Image Activation restaurants contributed approximately 170 basis points to company-operated same-restaurant sales results, primarily from increased customer counts.
On a two-year basis, second-quarter 2015 same-restaurant sales increased 6.3 percent at North America company-operated restaurants, 5.3 percent at North America franchise-operated restaurants and 5.4 percent for the Wendy's system.
Revenues were $489.5 million in the second quarter of 2015, compared to $506.1 million in the second quarter of 2014. The 3.3 percent decrease resulted primarily from the ownership of 141 fewer company-operated restaurants at the end of the 2015 second quarter compared to the beginning of the 2014 second quarter. Franchise revenues were $104.5 million in the second quarter of 2015 compared to $98.4 million in the second quarter of 2014.
The 6.2 percent increase resulted from higher rent revenue and higher technical assistance fees attributable to a year-over-year increase in the number of company-operated restaurants sold.
North America company-operated restaurant margin was 18.2 percent in the second quarter of 2015, compared to 17.8 percent in the second quarter of 2014. The 40 basis-point increase was the result of higher same-restaurant sales, favorable product mix and the positive impact from the company's Image Activation reimaging program.
General and administrative expense was $60.8 million in the second quarter of 2015, compared to $66.4 million in the second quarter of 2014. The 8.4 percent decrease resulted primarily from cost savings related to the company's system optimization initiative and resource realignment announced in 2014.
Adjusted EBITDA from continuing operations was $104.3 million in the second quarter of 2015, a 5.2 percent increase compared to second-quarter 2014 Adjusted EBITDA from continuing operations of $99.1 million, despite the ownership of 141 fewer company-operated restaurants at the end of the 2015 second quarter compared to the beginning of the 2014 second quarter.
The 2015 and 2014 results exclude $15.7 million and $1.4 million, respectively, in pretax gains, primarily from the sale of company-operated restaurants. (See "Changes to presentation in statement of operations" below.)
Adjusted EBITDA margin was 21.3 percent in the second quarter of 2015 compared to 19.6 percent in the second quarter of 2014.
The 170-basis-point improvement reflects the positive impact of the second phase of the company's system optimization initiative, including increased rental income, along with a reduction in G&A expense, partly offset by impairment charges primarily related to the company's system optimization initiative.
Operating profit was $64.3 million in the second quarter of 2015, compared to $61.2 million in the second quarter of 2014.
The 5.1 percent increase resulted primarily from year-over year increases in gains on the sale of company-operated restaurants, in addition to a reduction in G&A expense, partly offset by impairment charges primarily related to the company's system optimization initiative.
Operating profit margin was 13.1 percent in the second quarter of 2015 compared to 12.1 percent in the second quarter of 2014, an improvement of 100 basis-points.
Interest expense was $17.2 million in the second quarter of 2015, compared to $13.1 million in the second quarter of 2014. The 31-percent increase resulted primarily from higher total debt levels related to the company's recent debt refinancing.
Income from continuing operations was $24.8 million in the second quarter of 2015 compared to $27.3 million in the second quarter of 2014. The 2015 results include debt extinguishment costs of $7.3 million related to the company's recent debt refinancing.
Net income was $40.2 million in the second quarter of 2015, compared to $29.0 million in the second quarter of 2014. These results include the impact of discontinued operations.
Adjusted Earnings Per Share from continuing operations were $0.08 in the second quarter of 2015, compared to $0.09 in the second quarter of 2014. The 2015 results include $4.1 million in tax expense related to the company's recent debt refinancing.
The 2015 and 2014 results exclude gains from the sale of company-operated restaurants and other items affecting comparability (See "Changes to presentation in statement of operations" below.)
Reported diluted earnings per share from continuing operations were $0.07 in both the second quarter of 2015 and the second quarter of 2014.
Reported diluted earnings per share were $0.11 in the second quarter of 2015, compared to $0.08 in the second quarter of 2014. ■