Wendy's shares up on profit forecast, buyback plans


January 13, 2014

Wendy's shares are up sharply after the fast-food company said its fourth-quarter and 2014 results likely will beat analysts’ estimates and that it will buy back a large amount of its stock this month.

The Dublin company’s shares are up more than 7 percent to a multi-year high in late-morning trading. It expects to buy back up to $275 million-worth of its shares, or about 8 percent of shares outstanding, on Jan. 14 by offering shareholders between $8.50 and $9.25 per share in a tender offer.

Early this morning, Wendy’s reported preliminary net income of between $25.2 million, or 6 cents a share, and $28.7 million, or 7 cents a share, in the fourth quarter, ended Dec. 29. That would be between 4.6 percent below and 8.7 percent above last-year’s fourth quarter’s results of $26.4 million, or 7 cents a share.

The company reported its preliminary numbers in ranges because it has not yet completed its tax closing procedures for 2013. The numbers are preliminary because the company isn’t finished calculating recent results but wanted to release early numbers to investors at a major consumer conference this morning.

Adjusted earnings (omitting one-time items such as higher incentive compensation and professional services, a loss for paying off debt early and investment income) were $89.0 million, or about 10 cents a share, a decrease of 7.2 percent, as expected, from the year-ago quarter.

A consensus of earnings expectations compiled by First Call pegged fourth-quarter adjusted earnings at 6 cents a share. Fourth quarter revenue was $592.4 million, down 6 percent from $629.9 million in the year-ago quarter.

“Wendy’s made tremendous strategic and financial progress in 2013” with it’s A Cut Above brand positioning, and by speeding up its restaurant remodeling program and starting to sell up to 425 stores to franchisees who commit to the remodeling program, said Emil Brolick, president and CEO, in a statement.

Preliminary earnings for the full year were between $37.6 million, or 9 cents a share, and $41.1 million, or 10 cents a share, up between 430 percent and 480 percent from $7.1 million, or 2 cents a share, in 2012.

Full-year revenue  is expected to fall 1 percent to $2.5 billion, from 2012.