Wendy's Co Q4 FY2024 earnings call

• Q4 results in line with expectations, global system-wide sales up over 5%, same-restaurant sales up over 4%.
• U.S. growth led by Paramount collaboration, innovative LTOs, and strong morning daypart sales.
• International growth with 11% system-wide sales growth on constant currency, driven by net unit growth.
• Digital mix grew 130 basis points to 19% globally, digital sales up nearly 40% YOY, loyalty members up 25% to over 46 million.
• Opened 113 new restaurants in Q4 and 276 globally in 2024, closed underperforming restaurants.
• 2025 plans include three strategic initiatives: fresh famous food, exceptional customer experience, and accelerating global unit development; focus on value leadership, breakfast innovation, operational intensity, and digital technology investments.

In the fourth quarter, global system-wide sales increased over 5% and same-restaurant sales grew over 4%. In the U.S., traffic and dollar growth outpaced the QSR burger category, led by the Paramount collaboration and innovative LTOs. Morning daypart sales were up over 4%. Internationally, system-wide sales grew 11% on a constant currency basis, driven by net unit growth. Digital mix globally grew 130 basis points to 19%, digital sales grew nearly 40% YOY, and loyalty members were up 25% to over 46 million. Full year 2024 saw total system-wide sales reach $14.5 billion, up over 3%, with U.S. same-restaurant sales up 1.4%, international up 9%, breakfast sales up over 6%, and digital sales up nearly 40%.

• 2025 global system-wide sales growth expected to be approximately 2%-3%, driven by same-restaurant sales and new unit growth.
• Global net new unit growth expected to be between 2%-3%.
• U.S. company-operated restaurant margin around 16% ±50 basis points.
• Adjusted EBITDA expected to be between $550M-$560M.
• Adjusted EPS expected to range from $0.98-$1.02 per share.
• Free cash flow expected to be between $275M-$285M.
• Q1 SRS expected to be down YOY, with Q1 being the trough and growth improving later in the year.

• Commodity inflation, particularly beef costs, as a risk for 2025.
• Weather impact on traffic, which exacerbated industry headwinds in Q1.
• Intense competition in the QSR market.

Q: Jeff Bernstein asked about embedded comp expectations for 2025 and Q1 trends.

A: Ken Cook said SRS expected to be positive for 2025, with Q1 being the trough and growth improving later due to industry traffic improvements and programming.

Q: Dennis Geiger inquired about unit development outlook.

A: Kirk Tanner said they have high confidence in 2% to 3% net unit growth, with agreements in place and close-in build, and details to be shared at Investor Day.

Q: David Palmer asked about menu opportunities and organizational restructuring.

A: Kirk Tanner discussed menu innovation in core portfolio, pure innovation, and value, and operational intensity to deliver perfect customer experience.

Q: Jon Tower asked about dividend cut and debt refinancing.

A: Kirk Tanner talked about capital allocation policy and Ken Cook discussed debt refinancing plans.

Q: Brian Mullan asked about breakfast strategy.

A: Kirk Tanner said breakfast is a top priority, with continued investment in awareness, innovation, and execution.