Wendys Co (NASDAQ:WEN) Q3 2019 Earnings Conference Call - Final Transcript

Nov 06, 2019 • 08:30 am ET


Wendys Co (NASDAQ:WEN) Q3 2019 Earnings Conference Call - Final Transcript


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Good morning. Welcome to the Wendy's Company Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Greg Lemenchick, Senior Director, Investor Relations and Corporate FP&A, you may begin your conference.

Greg Lemenchick

Thank you and good morning everyone. Today's conference call and webcast include the PowerPoint presentation which is available on our Investor Relations website ir.wendys.com. Before we begin, please take note of the safe harbor statement that appears at the end of our earnings release. This disclosure reminds investors that certain information we may discuss today is forward-looking. Various factors could affect our results and cause those results to differ materially from the projections set forth in our forward-looking statements. Also some of today's comments will reference non-GAAP financial measures. Investors should refer to our reconciliations of non-GAAP financial measures to the most directly comparable GAAP measure at the end of this presentation or in our earnings release. On our conference call today, our President and Chief Executive Officer, Todd Penegor, will provide an update on key initiatives, and our Chief Financial officer, Dr. Plosch will review our third quarter results and full-year outlook. After that, we will open up the line for questions.

With that, I'll hand things over to Todd.

Todd A. Penegor

Thanks, Greg, and good morning, everyone. Before I get into our third quarter results, I want to take a moment to thank all of you who attended or tuned in to the Investor Day a few weeks ago. As we shared, we are striving to become an accelerated, efficient growth Company by playing a different game to unlock growth.

Let's dive into our third quarter results, which highlights the strong momentum we have in our business. As previously announced, we showcased our ability to be an accelerated, efficient growth Company through our robust system-wide sales increase of 5.7% on the backdrop of strong North America same-restaurant sales of 4.4% and continued global restaurant expansion, which translated into strong earnings growth. We opened 40 new restaurants across the globe in the third quarter and have opened 111 year-to-date. This is pacing slightly ahead of the openings we had this time last year, and we remain on track to deliver our goal of 1.5% net new unit growth in 2019.

We also continue to reimage our restaurants and now have 56% of the global system on the new image. Company restaurant margin came in at 16.2% for the quarter, growing 50 basis points from the prior year as we leverage our same-restaurant sales growth. Our Q3 results exceeded our expectations as we achieved approximately 3% adjusted EBITDA growth, 12% adjusted EPS growth and a 6% increase in our year-to-date free cash flow. This strong result will flow through to our updated outlook for the year, which GP will talk about in a moment.

Our balanced marketing strategy contributed to accelerated North America same-restaurant sales growth of 4.4% in Q3. We began