AP Wendy's Still Mulling Possible Sale Saturday October 27, 1:13 am ET By Mark Williams, AP Business Writer Efficiencies Help Wendy's Beat 3Q Estimates; Review of Company Continuing
COLUMBUS, Ohio (AP) -- Wendy's International Inc. said changes at its restaurants are paying off, but that a decision about the possible sale of the nation's third-largest hamburger chain is taking longer than expected. ADVERTISEMENT
"It's a complicated process. I know you'd like to hear more, but the board's special committee is following a very disciplined approach," Wendy's Chief Financial Officer Jay Fitzsimmons said Friday on a conference call to discuss the company's third-quarter results, released Thursday.
Wendy's reported its third-quarter earnings fell 57 percent from a year ago, before it spun off the Tim Hortons. But its results easily beat Wall Street estimates, helped by improving margins and cost controls.
Wendy's said it made $29.9 million, or 34 cents a share, for the quarter ended Sept. 30 compared with earnings $69.2 million, or 58 cents a share, a year ago. Revenue was about flat at $631.1 million versus $630.1 million in the year-ago quarter.
Sales at stores opened at least a year, considered a key indicator of a retailer's strength, rose 0.2 percent in the quarter, compared with 4.1 percent a year ago.
Excluding charges stemming from the committee and last year's profits from Tim Hortons, Wendy's reported a profit of $38.6 million, or 44 cents a share, for the quarter compared with profits of $24.9 million, or 21 cents a share, a year ago.
Analysts surveyed by Thomson Financial expected earnings of 33 cents a share on revenue of $624 million. Thomson estimates typically exclude one-time items.
Wendy's shares rose 57 cents, or 1.7 percent, to close at $34.06 trading Friday. Shares have traded between $29.56 and $42.22 in the past year.
Wendy's said increases in menu prices along with labor efficiencies helped drive margins higher.
Wendy's also told analysts Friday that it is starting a new growth plan that will focus on Wendy's premium hamburger share, building off sandwiches like the Baconator. The sandwich includes a half-pound of beef and six strips of bacon.
The company will also update its value menu to focus on the critical 18- to 34-year-old customer and try to re-energize it's late night business.
Wendy's said Thursday it expects earnings per share for the year to be at the high end of its previous guidance of $1.09 to $1.23 per share. Wall Street is looking for profits of $1.13 per share.
For the first nine months of the year, Wendy's reported a profit of $73.8 million, or 81 cents a share, compared with $91.3 million, or 78 cents a share, a year ago. Wendy's had 88.4 million shares outstanding in the third quarter compared with 118.3 a year ago.
Year-to-date revenue was up slightly to $1.85 billion.
Wendy's formed a committee in April to determine how to boost its stock price, including a possible sale. Wendy's has already spun off the Tim Hortons coffee and doughnut chain, sold its money-losing Baja Fresh Mexican Grill chain and slashed corporate expenses.
The panel has not indicated when it will complete its review or decide on the chain's future, and Fitzsimmons said he could not comment on the review.
He did say part of the delay is due to the uncertainties in the debt markets.
Wendy's recorded a $13.4 million pretax charge in the quarter ended Sept. 30 for the committee's work.
Wendy's, based in the Columbus suburb of Dublin, operates about 6,600 restaurants in the United States and abroad. It trails McDonald's Corp. and Burger King Holdings Inc. in the burger business.