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First Quarter Overview
Systemwide sales grew 7.1% to a record $1.9 billion.
The Company and its franchisees opened 92 new restaurants systemwide during the quarter, including 52 Wendy's and 40 Tim Hortons. New restaurant development for the corporation is on track for the year.
Total revenues increased 7.1% to a record $556 million.
Same-store sales grew 1.4% at Wendy's U.S. company restaurants, on top of a 3.5% increase in 2000. Same-store sales at Tim Hortons® restaurants in Canada grew 9.9% on top of a 9.9% increase a year ago. Same-store sales at Tim Hortons restaurants in the U.S. grew 8.6% on top of a 14.8% increase the year before.
Wendy's domestic operating margin was 13.8%, which is down from 15.8% in the same quarter a year ago, due primarily to higher costs for beef and utilities as well as higher labor costs as a percent of sales. Net income for the quarter increased 7.7% to $38.7 million and diluted EPS were $0.33, up 10% from $0.30 a year ago. The Company previously announced, on March 19, that it expected first quarter EPS of $0.33. The Company purchased 700,000 shares of Wendy's common stock in the quarter for $14.9 million. Year to date, through May 1, the Company purchased a total of 1.15 million shares for $25.3 million. Since initiating a share repurchase program in 1998, the Company has bought a total of 22.5 million shares for $506 million.
Chairman and CEO Jack Schuessler said: "We delivered a solid performance in what was a difficult quarter for many companies. It was a good illustration of the importance of Tim Hortons to our corporate performance. Tim Hortons had an outstanding quarter while Wendy's focused on overcoming the impact from severe winter weather in the U.S. during January and early February and deep discounting within the quick-service restaurant industry. We also faced the impact of foreign currency translation, due to the weaker Canadian dollar.
"We are optimistic about the remainder of 2001,'' Schuessler said. "Our Wendy's U.S. business is improving and Tim Hortons continues to perform above our expectations.''
Tim Hortons continues outstanding performance
Paul House, president and chief operating officer of Tim Hortons, said: ``Our team delivered another remarkable quarter with very strong same-store sales growth in Canada and the United States. In Canada, we are leveraging Tim Hortons' leading brand position with our 'Always Fresh(TM)' coffee and baked goods.
"We continue to focus on new products such as our coffee cake and 'Tim's Own®' soups and sandwiches, as well as successful promotions such as our recent 'Roll Up The Rim to Win®' campaign, House said.
"In the U.S., we continue to penetrate our core markets of upper New York, Ohio, Michigan and West Virginia,'' said House. "Coffee sales at Tim Hortons continue to increase, consumer loyalty is improving and we are on track with our U.S. plan to generate profits and improved return on capital.''
April sales trends improving at Wendy's
For April, preliminary same-store sales were up in the 3% to 3.5% range at Wendy's U.S. company restaurants, on top of a 3.0% increase in 2000. The April accounting period ends on May 6. Same-store sales at Tim Hortons restaurants in Canada were up in the 7% to 8% range in April on top of a 7.3% increase a year ago.
"Our Wendy's business is building momentum. Our March same-store sales were stronger than either of the first two months and we are pleased with the improving trend in April,'' said Tom Mueller, president and chief operating officer of Wendy's North America. "Our new 'Garden Sensations(TM)' salad test is very promising, Service Excellence® continues to deliver results and we are optimistic about our 'Late Night(TM)' campaign for 2001.''
Schuessler named Chairman
The Board of Directors named Jack Schuessler as the Company's Chairman and Chief Executive Officer during its meeting on May 1, effective immediately. Schuessler was previously CEO and President.
"The promotion reflects the outstanding leadership Jack has displayed since being named our CEO in March of 2000,'' said Wendy's Founder and Senior Chairman Dave Thomas. "He has done a great job organizing a talented executive team and he has emphasized the core values of our company—quality food, superior restaurant operations, excellent relationships with franchisees and great customer service - as well as the concept of continuous improvement throughout the entire organization.
"Jack, along with our CFO Kerrii Anderson, has also directed the development of a corporate strategic plan focused on profitable growth and shareholder value,'' Thomas said. ``I am optimistic about the future of the Company and so are all of the directors.''
Schuessler, a 26-year company veteran, was named to the board in 2000. Before being named CEO, he had been President and Chief Operating Officer of Wendy's U.S.
Quarterly dividend approved
The Board of Directors approved a quarterly dividend of 6 cents per share, payable on May 25 to shareholders of record as of May 14. It will be the company's 93rd consecutive dividend payment to shareholders.
Annual Meeting of Shareholders
The company will host its Annual Meeting of Shareholders at 10:00 a.m. EDT on Wednesday, May 2. The meeting, which will be held at the AMC Lennox Towne Center Theatres, 777 Kinnear Road, Columbus, Ohio, will be accessible via a simultaneous Internet web cast. To access the Company's web cast, go to www.wendys.com , select "investor information and news releases'' and then select "Annual Meeting of Shareholders web cast''.
Earnings conference call and Internet web cast
The company will host its first quarter conference call and Internet web cast with the investment community at 9:00 a.m. EDT on Thursday, May 3. To access the company's web cast, go to www.wendys.com, select "investor information and news releases'' and then select "2001 First Quarter Earnings web cast.''