2/9/01–Wendy’s International, Inc. (NYSE: WEN) announced
today its financial results for year 2000 and the fourth
quarter. The company’s fiscal year and quarter ended on
December 31, 2000.
2000 Highlights
• Systemwide sales grew 8.9% to a record $7.7 billion,
consisting of $6.4 billion in systemwide sales for Wendy’s®
and $1.3 billion for Tim Hortons®.
• The company opened a record 552 new restaurants
systemwide during the year, raising total systemwide units
to an all-time high of 7,772. The total consists of 5,792
Wendy’s and 1,980 Tim Hortons.
• Total revenues increased 8.2% to a record $2.2 billion.
• Same-store sales grew 3.1% at Wendy’s U.S. company
restaurants, on top of a 7.9% increase in 1999. Average
unit sales at Wendy’s U.S. company restaurants reached an
all-time high of $1.31 million.
• Same-store sales at Tim Hortons restaurants in Canada
grew 9.1% on top of a 10.5% increase a year ago. Average
unit sales at Tim Hortons standard units in Canada reached
an all-time high of $1.35 million (Canadian). Same-store
sales at Tim Hortons restaurants in the U.S. grew 12.7%
on top of a 13.9% increase the year before.
• Wendy’s domestic operating margin declined 20 basis
points in 2000 to 16.5%, due primarily to higher average
crew wages.
• Reported net income was a record $170 million and
diluted earnings per share (EPS) were $1.44. The results
include a non-recurring charge for closing the company’s
unprofitable Argentina market in the fourth quarter. The
charge, which was disclosed in November, totaled $18 million
on a pretax basis and $0.09 per share for the year.
• Excluding the charge, net income was a record $181
million, up 8.7% from a year ago, and diluted EPS were $1.53,
up 16% from a year ago.
• Diluted EPS excluding asset gains and the charge
were $1.50, up 19% compared to $1.26 a year ago. Asset gains
were $0.03 per share in 2000 versus $0.06 per share in 1999.
• The company purchased 5.4 million shares of Wendy’s
common stock in 2000 for $93 million. Since initiating a
share repurchase program in 1998, the company has bought
a total of 21.9 million shares for $491million.
Chief Executive Officer and President Jack Schuessler said:
"2000 was a very good year overall. We delivered strong
sales growth at Wendy’s and Tim Hortons, good cost controls
throughout the corporation and excellent earnings performance
above our expectations, excluding the non-recurring charge
for the strategic action in Argentina.
"Several strategies contributed to our performance in
2000. We continued to leverage our two leading brands and
our superior quality position within the quick-service restaurant
industry,” Schuessler said. "We focused on continuous
improvement and our long-term principles that prioritize
excellent restaurant operations, responsible new restaurant
growth and balanced marketing focused on quality products.”
Tom Mueller, president and chief operating officer of Wendy’s
North America, said: "Wendy’s U.S. delivered solid same-store
sales growth on top of a truly outstanding year in 1999.
We opened 367 new Wendy’s restaurants worldwide, with 286
of those in the U.S. where we have most of our units and
the strongest performance. We look forward to another good
year in 2001.”
Paul House, president and chief operating officer of Tim
Hortons, said: "Our corporate team and our franchisees
delivered another remarkable year with outstanding same-store
sales growth in Canada and the U.S. The system opened 185
new Tim Hortons restaurants for the year, which was about
10% growth (on a gross basis) in new units. We continue
to penetrate the Canada marketplace and fill in our U.S.
markets of Buffalo, central Ohio and Michigan.”
- Fourth Quarter Highlights
- Systemwide sales grew 8.2% to a record $1.9 billion.
- The company opened 243 new restaurants systemwide during
the quarter,
including 153 Wendy’s and 90 Tim Hortons.
- Total revenues increased 7.6% to a record $572 million.
- Same-store sales grew 3.2% at Wendy’s U.S. company restaurants,
on top of a 6.4% increase in 1999. - Same-store sales at Tim Hortons restaurants in Canada
grew 8.8% on top of a 6.6% increase a year ago. Same-store
sales at Tim Hortons restaurants in the U.S. grew 13.0%
on top of a 14.6% increase the year before. - Wendy’s domestic operating margin declined 60 basis
points to 15.9%, due primarily to higher labor costs and
store-level labor inefficiencies caused by severe winter
weather. - Reported net income for the quarter was $34.4 million
and diluted EPS were $0.29. The results include the non-recurring
charge, which was $18 million on a pretax basis and $0.10
per share for the quarter. - Excluding the charge, net income was $46 million, up
13.1% compared to a year ago, and diluted EPS were $0.39,
up 18% compared to $0.33 a year ago. The company reported
no asset gains in the fourth quarter this year or in the
quarter a year ago.
Kerrii Anderson, executive vice president and chief financial
officer, said: "Our fourth quarter performance, excluding
the charge, was better than expected due in large part to
Tim Hortons very strong results in Canada and good cost
controls in all areas of our business.
"It was our eighth consecutive quarter of 17% or higher
EPS growth, excluding asset gains and the charge,” said
Anderson. "Looking ahead, our goal is to grow EPS in the
12-15% range during 2001. We expect the second half of 2001
to be stronger than the first half. We are very focused
on quality earnings growth and continued progress on improving
returns.”
Quarterly dividend approved
The Board of Directors today approved a quarterly dividend
of 6 cents per share, payable on March 6 to shareholders
of record as of February 20. It will be the company’s 92nd
consecutive dividend payment to shareholders.
Analyst meeting, conference call and Internet web cast
The company will host a breakfast meeting for analysts,
investors and the media at 8:00 a.m. E.S.T. on Monday, February
12, 2001. The meeting, which will be held at the Crowne
Plaza Hotel Manhattan, 1605 Broadway (at 49th Street), will
be accessible via a simultaneous conference call and Internet
web cast.
- To attend the meeting at the Crowne Plaza Hotel, please
R.S.V.P. to Meredith Russell at 614-764-3251. - To access the company’s web cast, go to www.wendys.com
, select "investor information and news releases” and
then select "web cast.”
Wendy’s International, Inc. is one of the world’s largest
restaurant operating and franchising companies, with $7.7
billion in 2000 systemwide sales and two quality brands
— Wendy’s and Tim Hortons. Wendy’s Old Fashioned Hamburgers®
was founded in 1969 by Dave Thomas and is the third largest
quick-service hamburger chain in the world with nearly 5,800
restaurants in the United States, Canada and international
markets. Tim Hortons was founded in 1964 by Tim Horton and
Ron Joyce and is the largest coffee and fresh baked goods
chain in Canada. There are nearly 2,000 Tim Hortons restaurants
of which more than 1,800 are in Canada.
Competition. The quick-service restaurant industry
is intensely competitive with respect to price, service,
location, personnel and type and quality of food. The company
and its franchisees compete with international, regional
and local organizations primarily through the quality, variety
and value perception of food products offered. The number
and location of units, quality and speed of service, attractiveness
of facilities, effectiveness of advertising and marketing
programs, and new product development by the company and
its competitors are also important factors. The company
anticipates that intense competition will continue to focus
on pricing. Certain of the company’s competitors have substantially
larger marketing budgets.
Economic, Market and Other Conditions. The quick-service
restaurant industry is affected by changes in international,
national, regional, and local economic conditions, consumer
preferences and spending patterns, demographic trends, consumer
perceptions of food safety, weather, traffic patterns and
the type, number and location of competing restaurants.
Factors such as inflation, food costs, labor and benefit
costs, legal claims, and the availability of management
and hourly employees also affect restaurant operations and
administrative expenses. The ability of the company and
its franchisees to finance new restaurant development, improvements
and additions to existing restaurants, and the acquisition
of restaurants from, and sale of restaurants to franchisees
is affected by economic conditions, including interest rates
and other government policies impacting land and construction
costs and the cost and availability of borrowed funds.
Importance of Locations. The success of company
and franchised restaurants is dependent in substantial part
on location. There can be no assurance that current locations
will continue to be attractive, as demographic patterns
change. It is possible the neighborhood or economic conditions
where restaurants are located could decline in the future,
thus resulting in potentially reduced sales in those locations.
Government Regulation. The company and its franchisees
are subject to various federal, state, and local laws affecting
their business. The development and operation of restaurants
depend to a significant extent on the selection and acquisition
of suitable sites, which are subject to zoning, land use,
environmental, traffic, and other regulations. Restaurant
operations are also subject to licensing and regulation
by state and local departments relating to health, sanitation
and safety standards, federal and state labor laws (including
applicable minimum wage requirements, overtime, working
and safety conditions, and citizenship requirements), federal
and state laws which prohibit discrimination and other laws
regulating the design and operation of facilities, such
as the Americans with Disabilities Act of 1990. Changes
in these laws and regulations, particularly increases in
applicable minimum wages, may adversely affect financial
results. The operation of the company’s franchisee system
is also subject to regulation enacted by a number of states
and rules promulgated by the Federal Trade Commission. The
company cannot predict the effect on its operations, particularly
on its relationship with franchisees, of the future enactment
of additional legislation regulating the franchise relationship.
Growth Plans. The company plans to increase the
number of systemwide Wendy’s and Tim Hortons restaurants
open or under construction. There can be no assurance that
the company or its franchisees will be able to achieve growth
objectives or that new restaurants opened or acquired will
be profitable.
The opening and success of restaurants depends on various
factors, including the identification and availability of
suitable and economically viable locations, sales levels
at existing restaurants, the negotiation of acceptable lease
or purchase terms for new locations, permitting and regulatory
compliance, the ability to meet construction schedules,
the financial and other development capabilities of franchisees,
the ability of the company to hire and train qualified management
personnel, and general economic and business conditions.
International Operations. The company’s business
outside of the United States is subject to a number of additional
factors, including international economic and political
conditions, differing cultures and consumer preferences,
currency regulations and fluctuations, diverse government
regulations and tax systems, uncertain or differing interpretations
of rights and obligations in connection with international
franchise agreements and the collection of royalties from
international franchisees, the availability and cost of
land and construction costs and the availability of experienced
management, appropriate franchisees, and joint venture partners.
Although the company believes it has developed the support
structure required for international growth, there is no
assurance that such growth will occur or that international
operations will be profitable.
Disposition of Restaurants. The disposition of company
operated restaurants to new or existing franchisees is part
of the company’s strategy to develop the overall health
of the system by acquiring restaurants from, and disposing
of restaurants to, franchisees where prudent. The realization
of gains from future dispositions of restaurants depends
in part on the ability of the company to complete disposition
transactions on acceptable terms.
Transactions to Improve Return on Investment. The
sale of real estate previously leased to franchisees is
generally part of the program to improve the company’s return
on invested capital. There are various reasons why the program
might be unsuccessful, including changes in economic, credit
market, real estate market or other conditions, and the
ability of the company to complete sale transactions on
acceptable terms and at or near the prices estimated as
attainable by the company.
