Company Announces Revised 2007 Outlook
DUBLIN, OHIO, June 18 /CNW/ - Wendy's International, Inc. (NYSE: WEN)
announced today that the Special Committee of its Board of Directors, which is
reviewing the Company's strategic options, has decided to explore a possible
sale of the Company. There is no specific timetable for the process.
"The Special Committee has determined that the exploration of a sale is
the appropriate next step in the investigation of value-creating alternatives
for our stakeholders," said James V. Pickett, Chairman of the Board and the
Special Committee. "While a sale remains only one of the alternatives under
consideration, we believe it merits more thorough examination.
"Our goal is to move forward expeditiously and to minimize disruption to
the Company and its operations," said Pickett. "We want management and our
operators to focus on executing Wendy's business plan to grow sales and
JP Morgan, as lead advisor, and Lehman Brothers Inc., as co-advisor, will
conduct the sale exploration process in conjunction with the Special
The Special Committee is also evaluating a possible securitization
financing. Such a securitization could be used by a potential buyer or in a
recapitalization of the Company. Lehman Brothers, as lead structuring advisor,
and JP Morgan, as co-structuring advisor, are leading this evaluation on
behalf of the Special Committee.
There is no assurance that the steps announced today will result in any
changes to the Company's current plans, or that any transaction will be
consummated. A sale transaction would require approval by the full Board of
Directors and shareholders. In addition, the steps announced today do not
preclude the possibility of the Company pursuing other strategic alternatives
in the future.
The Company plans to report developments regarding the Special
Committee's actions only as circumstances warrant.
Company Announces Revised Outlook for 2007
The Company announced today that it is revising its 2007 outlook for
earnings before interest taxes depreciation and amortization (EBITDA) and
earnings per share (EPS) from continuing operations.
The Company's revised range for EBITDA is $295-315 million, compared to
previous guidance of $330-340 million. The revised range is a 33-42% increase
over 2006 adjusted EBITDA from continuing operations of $221 million. The
Company's revised range for EPS is $1.09-1.23 per share, compared to the
Company's previous guidance of $1.26-1.32 issued on March 20.
The primary reasons for the revised outlook are lower-than-planned
same-store sales and higher-than-expected commodity costs. Same-store sales
were up 3.8% at U.S. company restaurants in the 2007 first quarter and are up
0.7% in the 2007 second quarter through June 15.
The revised earnings outlook excludes expenses related to the Board's
Special Committee activities, up to $60 million in pension settlement costs
that the Company noted in February (some of these costs are expected to occur
in 2007), and any potential restructuring charges.
"Our strategy to revitalize the Wendy's(R) brand, improve our bond with
customers and generate sustainable same-stores growth is producing positive
results," said Chief Executive Officer and President Kerrii Anderson. "We've
delivered 12 consecutive months of positive same-store sales through May, but
the last two months have been challenging as we've aggressively adjusted
pricing to bring Wendy's more in line with the market. We believe our new
market-based pricing approach is the right long-term strategy to generate more
positive store operating margins, but it has pressured transactions in the
short-term. Our employees and operators are producing improved results, but
certain external factors have changed and are impacting results.
"Our goal is to keep everyone in the system focused on executing our
strategic plan to drive profitable sales and expanded margins at every
restaurant," Anderson said. "Our brand strategy and new advertising will
clearly tell consumers about Wendy's superior quality and great-tasting
products. We have been emphasizing our "fresh, never frozen beef" in our
newest ads. At the same time, we are focused on operational improvements
across the system and we expect to meet our store labor savings and G&A
Earnings Outlook and Guidance
The Company said that in view of the strategic review process now under
way, it is suspending its previous earnings guidance for 2008 and 2009.
Management does not plan to provide additional details on its earnings
guidance or to update it.
Disclosure Regarding Non-GAAP Financial Measures
EBITDA is used by management as a performance measure for benchmarking
against the Company's peers and competitors. The Company believes EBITDA is
useful to investors because it is frequently used by securities analysts,
investors and other interested parties to evaluate companies in the restaurant
industry. EBITDA is not a recognized term under GAAP. The Company also uses
adjusted EBITDA, which accounts for certain items unrelated to ongoing
operations, as an internal measure of business operating performance.
Management believes adjusted EBITDA provides a meaningful perspective of the
underlying operating performance of the business.
Below is a reconciliation of 2006 reported operating income to 2006
EBITDA and 2006 adjusted EBITDA:
2006 reported operating income $ 40.3 million
2006 depreciation and amortization $ 123.7 million
2006 EBITDA from continuing ops $ 164.0 million
2006 restructuring charges $ 38.9 million
2006 incremental advertising expense $ 25.0 million
2006 joint venture impact $ (7.2 million)
2006 adjusted EBITDA from continuing ops $ 220.7 million
Below is a reconciliation of 2007 estimated operating income to 2007
2007 estimated operating income $ 186-206 million
2007 estimated depreciation and amortization $ 109 million
2007 estimated EBITDA from continuing ops $ 295-315 million
Safe Harbor statement
Certain information in this news release, particularly information
regarding future economic performance and finances, and plans, expectations
and objectives of management, is forward looking. Factors set forth in our
Safe Harbor under the Private Securities Litigation Reform Act of 1995, in
addition to other possible factors not listed, could affect the Company's
actual results and cause such results to differ materially from those
expressed in forward-looking statements. Please review the Company's Safe
Harbor statement at http://www.wendys-invest.com/safeharbor.
Wendy's International, Inc. overview
Wendy's International, Inc. is one of the world's largest and most
successful restaurant operating and franchising companies. More information
about the Company is available at www.wendys-invest.com.
For further information:
For further information: Wendy's International, Inc. John Barker,
614-764-3044 email@example.com OR David Poplar, 614-764-3547