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Wendy's (WEN) 4Q Earnings Beat Estimates; Guides 2013 Above Street

 January 16, 2013 07:54 AM

(By Balaseshan) Wendy's Co. (NASDAQ: WEN) reported a jump in preliminary quarterly earnings on higher sales including Image Activation, and a reduction in breakfast advertising expense. The quick-service hamburger company guided fiscal 2013 earnings above Street's view.

Earnings from continuing operations for the fourth quarter were $21.41 million or $0.06 per share, up from $4.29 million or $0.01 per share last year. Adjusted earnings per share (EPS) from continuing operations rose to $0.08 from $0.04.

Revenue increased 2.4% to $629.88 million. Wendy's North America company-operated restaurants generated a same-store sales decrease of 0.2%, while franchise same-store sales in North America declined 0.6%.

[Related -The Wendy's Co (NASDAQ:WEN) Q4 Earnings Preview: Beefy Costs to Hurt Margins?]

Analysts, on average, polled by Thomson Reuters had expected profit of $0.04 per share on revenue of $637.76 million for the fourth quarter.

Sales for the quarter grew to $553.93 million from $538.50 million, while franchise revenue fell to $75.94 million from $76.52 million.

The company-operated restaurant margin rose to 15.9% from 15.0%, primarily due to higher sales including Image Activation, and a reduction in breakfast advertising expense, partially offset by commodity cost increases.

Looking ahead into fiscal 2013, the company reiterated its preliminary outlook for adjusted EBITDA of $350 million to $360 million. Wendy's expects adjusted earnings of $0.18 to $0.20 per share for the full year, while Street predicts $0.17 per share. Same-store sales growth is predicted to be 2.0% to 3.0% at Wendy's North America company-operated restaurants.

[Related -The Wendy's Co (WEN), McDonald's Corporation (MCD) - Lock In Your Gains On This Fast-Food Stock And Buy Its Rival]

For 2013, the company expects its depreciation and amortization to rise 15% to 20% from last year, and capital expenditures of about $245 million. Wendy's company-operated restaurant margin is projected to be 14.2% to 14.5%.

The company continues to target long-term adjusted EBITDA and adjusted earnings per share growth beyond 2013 in the high single-digit to low double-digit range, based on progress with its "Recipe to Win" strategy including the success of the Image Activation program.

WEN closed Wednesday's regular session up 1.03% at $4.90. The stock has been trading between $4.09 and $5.41 for the past 52 weeks.

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