Wendy's/Arby's Group, Inc. Reports Third Quarter and Nine Month 2008 Pre-Merger Results for Triarc and Wendy's

New Leadership Team Focused on Driving Sales, Store-Level Profit Margins and EBITDA Growth

Initiatives Launched to Drive $100 Million in Incremental Operating Profit at Wendy's(R) and Reduce Corporate G&A by $60 Million Over the Next 2-3 Years

Wendy's Brand Turnaround Under Way and Sales Performance Improving With More Effective Execution of Value Strategy and Introduction of a New Premium Product, Same-Store Sales at Company-Operated Wendy's Restaurants Increased Approximately 5% in October 2008

Board Approves Quarterly Cash Dividend of $0.015 Per Share

Wendy's/Arby's Group, Inc. (NYSE: WEN), the parent company of Wendy's International, Inc. ('Wendy's') and Arby's Restaurant Group, Inc. ('Arby's'), today announced pre-merger results for Triarc and Wendy's(R) for the fiscal third quarter and nine months ended September 28, 2008. Triarc's results are detailed in a Form 10-Q filing with the Securities and Exchange Commission and Wendy's results are detailed in a Form 8-K filing with the SEC. The 8-K filing also includes select combined Triarc and Wendy's pro-forma results and balance sheet information. Investors should review these filings in conjunction with this news release. As previously announced, the merger between Triarc Companies, Inc. and Wendy's International, Inc. was completed on September 29, 2008. In connection with the merger, Wendy's became a wholly owned subsidiary of Triarc and Triarc changed its name to Wendy's/Arby's Group, Inc. Consolidated financial reporting including Wendy's will begin with the fiscal fourth quarter of 2008.

Triarc's Third-Quarter Highlights

Arby's(R) sales increased 0.7% to $287.6 million for company-operated restaurants and franchise revenues increased 4.6% to $22.8 million. Company same-store sales declined 7.2% and franchise same-store sales were down 4.0% as competitive discounting intensified. Triarc's net loss was $12.1 million, including pre-tax impairment charges totaling $14.1 million related to company-operated assets held for sale and to underperforming restaurants, as compared to net income of $3.7 million for the third quarter of 2007. Triarc's adjusted consolidated earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA)1 were $34.4 million, compared to $38.2 million in the third quarter of 2007.

Wendy's Third-Quarter Highlights

Wendy's sales decreased 1.2% during the quarter to $548.1 million for company-operated restaurants and franchise revenues increased 2.4% to $76.8 million. Company same-store sales declined 0.2% and franchise same-store sales increased 0.2%, with sequential improvement throughout the quarter. September and October same-store sales at company-operated restaurants were up 2.1% and approximately 5%, respectively. Wendy's net loss from continuing operations was $30.8 million, which included Special Committee and restructuring pre-tax charges of $68.5 million related to merger fees, costs related to change in control provisions in executive employment agreements and merger related equity compensation, a portion of which did not require the use of cash. The results also reflect the effect of flat sales, higher food costs and wage inflation. Wendy's Adjusted EBITDA2 was $81.1 million, compared to $95.1 million in the same quarter a year ago.

Management Focused on Turnaround of Wendy's Brand and Improving Arby's Results

Roland Smith, President and Chief Executive Officer of Wendy's/Arby's Group, said: 'Now that we have completed the merger, we are focused on the critical aspects of growing sales, store-level operating profit margins and cash flow. We have demonstrated the ability to drive superior profit margins in the past and are committed to building on that track record. Our immediate focus is to grow profitable transactions, run a lean and efficient organization, and capture synergies available to the third largest quick-service restaurant company in the U.S. with more than 10,000 restaurants system-wide.

'At Wendy's, we plan to re-establish the brand's premier quality positioning and take aggressive steps to grow sales and improve restaurant operating margins,' said Smith. 'We are encouraged that Wendy's same-store sales improved throughout the third quarter as we introduced an effective value offering in September featuring our great-tasting Double-Stack(TM) Cheeseburger, the Crispy Chicken Sandwich and the Junior Bacon Cheeseburger - all at a 99 cents price point. September same-store sales were positive and October results were even better as we featured new Flavor-Dipped Chicken sandwiches, reinforcing the premium quality of Wendy's tender center cut chicken fillets.

'Arby's same-store sales results during the quarter were indicative of the challenging operating environment and a decline in customer traffic, which primarily reflected aggressive price discounting and coupon offers by competitors,' said Smith. 'To restore momentum, we are focused on Arby's core customers and, specifically, the appeal of our premium roast beef products and toasted subs. We believe that the inherent strength of Arby's quality brand positioning, more targeted advertising and new products aimed at our core customers will lead to sales growth and improved operating margins.'

Wendy's/Arby's Group Launches Initiatives to Drive Performance

Following the completion of the merger, the Company has launched new initiatives aimed at:

• Achieving synergies and overhead reductions over the next 2-3 years that will result in annualized savings of approximately $60 million of reduced general and administrative expenses as compared to pre-merger forecasts through the elimination of duplicate corporate functions and a streamlining of support services.

• Generating approximately $100 million of annual incremental store-level operating profit at the Wendy's brand over the next 2-3 years, as compared to pre-merger results, with cost improvements in food, labor and general operating expenses.

• Expanding dayparts for both brands

• Exploring dual-concept unit development in countries outside the U.S. and possibly in high-cost U.S. real estate markets.

'Our newly assembled leadership team is leveraging Arby's and Wendy's teams' established track records of operational excellence and aggressively moving on a comprehensive integration plan and new organizational structure to enhance the long-term performance of both brands,' said Smith. 'We appreciate the overwhelming support of our stockholders in approving the merger in late September, and we are thrilled to lead two premier, high-quality brands in the quick-service restaurant business. Our leadership has been focused for the past several months on laying the foundation for significant long-term value creation for all of our stakeholders and I am optimistic about what we can achieve in 2009 and beyond.'

Board Approves Quarterly Dividend of $0.015 Per Share

The Board of Directors approved a quarterly cash dividend of $0.015 per share, payable on December 15, 2008, to Wendy's/Arby's Group, Inc. stockholders of record as of December 1, 2008.

'We believe paying a cash dividend provides our stockholders with an immediate investment return combined with our anticipated future growth. Our directors and management team are confident about the Company's future prospects,' said Smith. 'In these challenging economic times and tight credit markets, we will continue to be prudent stewards of our capital by maintaining a sharp focus on appropriate levels of liquidity and financial leverage. We will also focus on select high return strategic business investment projects.'

As of October 31, 2008 Wendy's/Arby's Group, Inc. had 469,769,742 shares of Common Stock outstanding.

Reader Comments:

Be the first to leave a comment for this article