The Wendy's Company reported unaudited results for the third quarter ended October 2, 2016.
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Same-restaurant sales increased 1.4 percent at North America system restaurants in the third quarter of 2016. On a two-year basis, third-quarter 2016 same-restaurant sales increased 4.5 percent for the North America system.
Revenues were $364.0 million in the third quarter of 2016, compared to $464.6 million in the third quarter of 2015. The 21.7 percent decrease resulted primarily from the ownership of 433 fewer Company-operated restaurants at the end of the 2016 third quarter compared to the beginning of the 2015 third quarter.
Franchise revenues were $135.4 million in the third quarter of 2016, compared to $105.6 million in the third quarter of 2015. The 28.2 percent increase resulted from higher rental income, franchise fees and royalty revenue primarily as a result of the Company's system optimization initiative, in addition to an increase in same-restaurant sales.
North America Company-operated restaurant margin was 18.4 percent in the third quarter of 2016, compared to 18.8 percent in the third quarter of 2015. The 40 basis-point decrease was primarily the result of higher other operating costs and increased labor rates, partly offset by lower commodity costs and the favorable impact from the Company's Image Activation program.
General and administrative expense was $58.9 million in the third quarter of 2016, compared to $63.7 million in the third quarter of 2015. The 7.5 percent decrease resulted primarily from cost savings related to the Company's system optimization initiative, as well as lower share-based compensation and incentive compensation, partly offset by higher professional fees and legal fees related to the unusual payment card activity.
Operating profit was $106.1 million in the third quarter of 2016, compared to $55.9 million in the third quarter of 2015. The 89.8 percent increase resulted primarily from a year-over-year increase in System optimization gains, net and higher Franchise revenues, partly offset by a year-over-year increase in Other operating expense, net.
Interest expense was $28.7 million in the third quarter of 2016, compared to $27.9 million in the third quarter of 2015.
Income from continuing operations was $48.9 million in the third quarter of 2016, compared to $8.3 million in the third quarter of 2015. The increase resulted from the year-over-year increase in Operating profit, partly offset by a year-over-year increase in income taxes.
Net income was $48.9 million in the third quarter of 2016, compared to $7.6 million in the third quarter of 2015.
Adjusted EBITDA from continuing operations was $100.2 million in the third quarter of 2016, compared to $99.7 million in the third quarter of 2015, despite the ownership of 433 fewer Company-operated restaurants at the end of the 2016 third quarter compared to the beginning of the 2015 third quarter.
Adjusted EBITDA margin (adjusted EBITDA divided by total revenues) was 27.5 percent in the third quarter of 2016, compared to 21.5 percent in the third quarter of 2015. The 600 basis-point improvement reflects the positive impact of the Company's system optimization initiative.
Reported diluted earnings per share from continuing operations were $0.18 in the third quarter of 2016, compared to $0.03 in the third quarter of 2015. The increase reflects a 10.8 percent year-over-year reduction in the weighted average diluted shares outstanding.
Reported diluted earnings per share were $0.18 in the third quarter of 2016, compared to $0.03 in the third quarter of 2015.
Adjusted earnings per share from continuing operations were $0.11 in the third quarter of 2016, compared to $0.09 in the third quarter of 2015. ■