What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-01 compared with 2024-05-02 · 170 added, 109 removed, 493 unchanged (36% of the section changed)

57 unchanged sentences

(In Thousands Except Per Share Amounts)

Three Months Ended

2024 April 2,

Three Months Ended Six Months Ended

2023 June 30,

Sales $ 237,355 $ 240,688 $ 462,678 $ 468,637

11 unchanged sentences

Amortization of cloud computing arrangements 3,519 2,266 7,061 3,848

System optimization losses (gains), net 127 ( 5 )

System optimization (gains) losses, net ( 280 ) 6 ( 153 ) 1

Reorganization and realignment costs 2,452 681 8,125 7,489

5 unchanged sentences

Loss on early extinguishment of debt — — — ( 1,266 )

Investment loss, net — ( 3,562 )

Investment income (loss), net 11 ( 6,827 ) 11 ( 10,389 )

Other income, net 6,300 7,573 13,136 14,909

2 unchanged sentences

Net income $ 54,643 $ 59,632 $ 96,636 $ 99,453

Basic and diluted net income per share $ .20 $ .19

Net income per share:

Basic $ .27 $ .28 $ .47 $ .47

Diluted $ .27 $ .28 $ .47 $ .46

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In Thousands)

Three Months Ended

2024 April 2,

Three Months Ended Six Months Ended

2023 June 30,

Net income $ 54,643 $ 59,632 $ 96,636 $ 99,453

21 unchanged sentences

Balance at March 31, 2024 $ 47,042 $ 2,962,241 $ 400,465 $ ( 3,053,133 ) $ ( 62,961 ) $ 293,654

Net income — — 54,643 — — 54,643

Other comprehensive loss — — — — ( 2,011 ) ( 2,011 )

Cash dividends — — ( 51,252 ) — — ( 51,252 )

Repurchases of common stock — — — ( 27,493 ) — ( 27,493 )

Share-based compensation — 5,824 — — — 5,824

Common stock issued upon exercises of stock options

— ( 134 ) — 874 — 740

Common stock issued upon vesting of restricted shares

— ( 3,484 ) — 3,058 — ( 426 )

Other — 32 ( 20 ) 62 — 74

Balance at June 30, 2024 $ 47,042 $ 2,964,479 $ 403,836 $ ( 3,076,632 ) $ ( 64,972 ) $ 273,753

See accompanying notes to condensed consolidated financial statements.

THE WENDY’S COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY—CONTINUED

(In Thousands)

Stock Additional

Capital Retained Earnings Common Stock Held in Treasury Accumulated Other Comprehensive Loss Total

Balance at January 1, 2023 $ 47,042 $ 2,937,885 $ 414,749 $ ( 2,869,780 ) $ ( 64,176 ) $ 465,720

10 unchanged sentences

Balance at April 2, 2023 $ 47,042 $ 2,941,138 $ 401,445 $ ( 2,906,050 ) $ ( 64,018 ) $ 419,557

Net income — — 59,632 — — 59,632

Other comprehensive income — — — — 4,949 4,949

Cash dividends — — ( 52,612 ) — — ( 52,612 )

Repurchases of common stock — — — ( 50,183 ) — ( 50,183 )

Share-based compensation — 5,609 — — — 5,609

Common stock issued upon exercises of stock options

— 1,136 — 3,829 — 4,965

Common stock issued upon vesting of restricted shares

— ( 2,182 ) — 1,283 — ( 899 )

Other — 53 ( 16 ) 60 — 97

Balance at July 2, 2023 $ 47,042 $ 2,945,754 $ 408,449 $ ( 2,951,061 ) $ ( 59,069 ) $ 391,115

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In Thousands)

Three Months Ended

2024 April 2,

Six Months Ended

Cash flows from operating activities:

10 unchanged sentences

Change in operating lease liabilities ( 24,273 ) ( 23,528 )

Net receipt (recognition) of deferred vendor incentives 8,584 ( 1,197 )

System optimization losses (gains), net 127 ( 5 )

Net receipt of deferred vendor incentives 5,533 6,881

System optimization (gains) losses, net ( 153 ) 1

Distributions received from joint ventures, net of equity in earnings 1,146 542

17 unchanged sentences

Net cash used in financing activities ( 162,382 ) ( 246,276 )

Net cash provided by (used in) operations before effect of exchange rate changes on cash 6,544 ( 91,364 )

Net cash used in operations before effect of exchange rate changes on cash ( 60,877 ) ( 133,716 )

Effect of exchange rate changes on cash ( 3,298 ) 2,161

Net increase (decrease) in cash, cash equivalents and restricted cash 4,270 ( 91,235 )

Net decrease in cash, cash equivalents and restricted cash ( 64,175 ) ( 131,555 )

Cash, cash equivalents and restricted cash at beginning of period 588,816 831,801

6 unchanged sentences

The accompanying unaudited condensed consolidated financial statements (the “Financial Statements”) of The Wendy’s Company (“The Wendy’s Company” and, together with its subsidiaries, the “Company,” “we,” “us” or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and, therefore, do not include all information and footnotes required by GAAP for complete financial statements.

In our opinion, the Financial Statements contain all adjustments of a normal recurring nature necessary to present fairly our financial position as of March 31, 2024, the results of our operations for the three months ended March 31, 2024 and April 2, 2023 and cash flows for the three months ended March 31, 2024 and April 2, 2023.

The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the full 2024 fiscal year.

In our opinion, the Financial Statements contain all adjustments of a normal recurring nature necessary to present fairly our financial position as of June 30, 2024, the results of our operations for the three and six months ended June 30, 2024 and July 2, 2023 and cash flows for the six months ended June 30, 2024 and July 2, 2023.

The results of operations for the six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the full 2024 fiscal year.

The Financial Statements should be read in conjunction with the audited consolidated financial statements for The Wendy’s Company and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “Form 10-K”).

4 unchanged sentences

We report on a fiscal year consisting of 52 or 53 weeks ending on the Sunday closest to or on December 31.

All three-month periods presented herein contain 13 weeks.

All three- and six-month periods presented herein contain 13 weeks and 26 weeks, respectively.

All references to years, quarters and months relate to fiscal periods rather than calendar periods.

3 unchanged sentences

Wendy’s International Global Real Estate & Development Total

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

Sales at Company-operated restaurants $ 231,151 $ 6,204 $ — $ 237,355

4 unchanged sentences

Total revenues $ 472,591 $ 36,361 $ 61,775 $ 570,727

Three Months Ended April 2, 2023

Three Months Ended July 2, 2023

Sales at Company-operated restaurants $ 234,862 $ 5,826 $ — $ 240,688

7 unchanged sentences

(In Thousands Except Per Share Amounts)

Wendy’s International Global Real Estate & Development Total

Six Months Ended June 30, 2024

Sales at Company-operated restaurants $ 450,619 $ 12,059 $ — $ 462,678

Franchise royalty revenue 226,850 35,148 — 261,998

Franchise fees 35,652 4,278 2,242 42,172

Franchise rental income — — 118,624 118,624

Advertising funds revenue 202,317 17,691 — 220,008

Total revenues $ 915,438 $ 69,176 $ 120,866 $ 1,105,480

Six Months Ended July 2, 2023

Sales at Company-operated restaurants $ 457,494 $ 11,143 $ — $ 468,637

Franchise royalty revenue 221,260 33,018 — 254,278

Franchise fees 34,733 2,918 2,796 40,447

Franchise rental income — — 115,840 115,840

Advertising funds revenue 196,254 14,916 — 211,170

Total revenues $ 909,741 $ 61,995 $ 118,636 $ 1,090,372

Contract Balances

The following table provides information about receivables and contract liabilities (deferred franchise fees) from contracts with customers:

March 31, 2024 (a) December 31, 2023 (a)

2024 (a) December 31, 2023 (a)

Receivables, which are included in “Accounts and notes receivable, net” (b)

6 unchanged sentences

(b) Includes receivables related to “Sales” and “Franchise royalty revenue and fees.”

(c) Deferred franchise fees are included in “Accrued expenses and other current liabilities” and “Deferred franchise fees” and totaled $ 10,933 and $ 89,331 , respectively, as of March 31, 2024, and $ 10,673 and $ 90,132 , respectively, as of December 31, 2023.

(c) Deferred franchise fees are included in “Accrued expenses and other current liabilities” and “Deferred franchise fees” and totaled $ 10,954 and $ 89,054 , respectively, as of June 30, 2024, and $ 10,673 and $ 90,132 , respectively, as of December 31, 2023.

Significant changes in deferred franchise fees are as follows:

Three Months Ended

2024 April 2,

Six Months Ended

Deferred franchise fees at beginning of period $ 100,805 $ 99,208

3 unchanged sentences

Deferred franchise fees at end of period $ 100,008 $ 100,239

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Anticipated Future Recognition of Deferred Franchise Fees

5 unchanged sentences

(a) Represents franchise fees expected to be recognized for the remainder of 2024, which includes development-related franchise fees expected to be recognized over a duration of one year or less.

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(3) System Optimization Losses (Gains), Net

(3) System Optimization (Gains) Losses, Net

The Company’s system optimization initiative included a shift from Company-operated restaurants to franchised restaurants over time, through acquisitions and dispositions, as well as facilitating franchisee-to-franchisee restaurant transfers (“Franchise Flips”).

As of March 31, 2024, Company-operated restaurant ownership was approximately 5 % of the total system.

As of June 30, 2024, Company-operated restaurant ownership was approximately 5 % of the total system.

While the Company has no plans to move its ownership away from approximately 5 % of the total system, the Company expects to continue to optimize the Wendy’s system through Franchise Flips, as well as evaluating strategic acquisitions of franchised restaurants and strategic dispositions of Company-operated restaurants to existing and new franchisees, to further strengthen the franchisee base, drive new restaurant development and accelerate reimages.

During the three months ended March 31, 2024, the Company facilitated 11 Franchise Flips.

During the three months ended April 2, 2023, the Company did not facilitate any Franchise Flips.

No Company-operated restaurants were sold to or purchased from franchisees during the three months ended March 31, 2024 or April 2, 2023.

Gains and losses recognized on dispositions are recorded to “System optimization losses (gains), net” in our condensed consolidated statements of operations.

During the six months ended June 30, 2024 and July 2, 2023, the Company facilitated 14 and 88 Franchise Flips, respectively.

No Company-operated restaurants were sold to or purchased from franchisees during the six months ended June 30, 2024 or July 2, 2023.

Gains and losses recognized on dispositions are recorded to “System optimization (gains) losses, net” in our condensed consolidated statements of operations.

Costs related to acquisitions and dispositions under our system optimization initiative are recorded to “Reorganization and realignment costs,” which are further described in Note 4.

All other costs incurred related to facilitating Franchise Flips are recorded to “Franchise support and other costs.”

As part of our system optimization initiative, the Company recorded a (loss) gain on sales of surplus and other properties of $( 127 ) and $ 5 during the three months ended March 31, 2024 and April 2, 2023, respectively.

The Company received net cash proceeds from the sales of $ 26 and $ 287 during the three months ended March 31, 2024 and April 2, 2023, respectively.

The following is a summary of the disposition activity recorded as a result of our system optimization initiative:

Three Months Ended Six Months Ended

2023 June 30,

Post-closing adjustments on sales of restaurants (a) $ 254 $ — $ 254 $ —

Gain (loss) on sales of other assets, net (b) 26 ( 6 ) ( 101 ) ( 1 )

System optimization gains (losses), net $ 280 $ ( 6 ) $ 153 $ ( 1 )

_______________

(a) Represents the recognition of deferred gains as a result of the resolution of certain contingencies related to the extension of lease terms for restaurants previously sold to franchisees.

(b) During the three and six months ended June 30, 2024, the Company received net cash proceeds of $ 575 and $ 601 , respectively, primarily from the sale of surplus and other properties.

During the six months ended July 2, 2023, the Company received net cash proceeds of $ 280 primarily from the sale of surplus and other properties .

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Assets Held for Sale

As of March 31, 2024 and December 31, 2023, the Company had assets held for sale of $ 2,678 and $ 2,689 , respectively, primarily consisting of surplus properties.

As of June 30, 2024 and December 31, 2023, the Company had assets held for sale of $ 2,695 and $ 2,689 , respectively, primarily consisting of surplus properties.

Assets held for sale are included in “Prepaid expenses and other current assets.”

1 unchanged sentence

The following is a summary of the initiatives included in “Reorganization and realignment costs:”

Three Months Ended

2024 April 2,

Three Months Ended Six Months Ended

2023 June 30,

Organizational redesign $ 2,409 $ 670 $ 8,031 $ 7,407

7 unchanged sentences

Penegor, the Company’s previous President and Chief Executive Officer, who departed from the Company in February 2024.

The Company expects to incur total costs of approximately $ 17,000 to $ 19,000 related to the Organizational Redesign Plan, including costs related to the succession of the President and Chief Executive Officer role.

During the three months ended March 31, 2024 and April 2, 2023, the Company recognized costs totaling $ 5,622 and $ 6,737 , respectively, which primarily included severance and related employee costs.

The Company expects to incur additional costs aggregating approximately $ 2,500 to $ 4,500 , comprised of (1) severance and related employee costs of approximately $ 2,000 , (2) recruitment and relocation costs of approximately $ 200 and (3) share-based compensation of approximately $ 1,500 .

The Company expects to incur total costs of approximately $ 18,000 related to the Organizational Redesign Plan, including costs related to the succession of the President and Chief Executive Officer role.

During the six months ended June 30, 2024 and July 2, 2023, the Company recognized costs totaling $ 8,031 and $ 7,407 , respectively, which primarily included severance and related employee costs.

The Company expects to incur additional costs aggregating approximately $ 1,200 , comprised of (1) severance and related employee costs of approximately $ 400 and (2) share-based compensation of approximately $ 800 .

The Company expects costs related to the Organizational Redesign Plan to continue into 2026.

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

The following is a summary of the costs recorded as a result of the Organizational Redesign Plan:

Three Months Ended

2024 April 2,

2023 Total Incurred Since Inception

Three Months Ended Six Months Ended Total Incurred Since Inception

2023 June 30,

Severance and related employee costs $ 1,948 $ 21 $ 7,310 $ 5,560 $ 13,553

6 unchanged sentences

(a) Primarily represents the accelerated recognition of share-based compensation resulting from the termination of employees under the Organizational Redesign Plan.

As of March 31, 2024, the accruals for the Organizational Redesign Plan are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled $ 3,816 and $ 2,261 , respectively.

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

As of June 30, 2024, the accruals for the Organizational Redesign Plan are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled $ 4,558 and $ 2,211 , respectively.

The tables below present a rollforward of our accruals for the Organizational Redesign Plan.

10 unchanged sentences

Other Reorganization and Realignment Plans

Costs incurred under the Company’s other reorganization and realignment plans were not material during the three months ended March 31, 2024 and April 2, 2023.

Costs incurred under the Company’s other reorganization and realignment plans were not material during the six months ended June 30, 2024 and July 2, 2023.

The Company does not expect to incur any material additional costs under these plans.

2 unchanged sentences

2024 December 31,

Equity method investments $ 31,512 $ 32,727

Equity method investment $ 30,463 $ 32,727

Other investments in equity securities 1,718 1,718

$ 32,181 $ 34,445

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Equity Method Investments

Equity Method Investment

Wendy’s has a 50 % share in a partnership in a Canadian restaurant real estate joint venture (“TimWen”) with a subsidiary of Restaurant Brands International Inc., a quick-service restaurant company that owns the Tim Hortons ® brand (Tim Hortons is a registered trademark of Tim Hortons USA Inc.).

1 unchanged sentence

Such investment is accounted for using the equity method, under which our results of operations include our share of the income of the investee in “Other operating income, net.”

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Presented below is activity related to our investment in TimWen included in our condensed consolidated financial statements:

Three Months Ended

2024 April 2,

Six Months Ended

Balance at beginning of period $ 32,727 $ 33,921

3 unchanged sentences

Foreign currency translation adjustment included in “Other comprehensive (loss) income”

( 1,118 ) 786

Balance at end of period $ 30,463 $ 34,165

2 unchanged sentences

Other Investments in Equity Securities

During the three months ended April 2, 2023, the Company recorded an impairment charge of $ 3,562 for the difference between the estimated fair value and the carrying value of an investment in equity securities.

During the three and six months ended July 2, 2023, the Company recorded impairment charges of $ 6,827 and $ 10,389 , respectively, for the difference between the estimated fair value and the carrying value of an investment in equity securities.

(6) Fair Value Measurements

59 unchanged sentences

The following is a summary of impairment losses recorded, which represent the excess of the carrying amount over the fair value of the affected assets and are included in “Impairment of long-lived assets:”

Three Months Ended

2024 April 2,

Three Months Ended Six Months Ended

2023 June 30,

Company-operated restaurants $ 644 $ 78 $ 2,418 $ 428

1 unchanged sentence

$ 689 $ 78 $ 2,695 $ 454

(8) Income Taxes

The Company’s effective tax rate for the three months ended March 31, 2024 and April 2, 2023 was 26.9 % and 28.0 %, respectively.

The Company’s effective tax rate varied from the U.S.

federal statutory rate of 21 % for the three months ended March 31, 2024 primarily due to state income taxes and the tax effects of our foreign operations.

THE WENDY’S COMPANY AND SUBSIDIARIES

1 unchanged sentence

(In Thousands Except Per Share Amounts)

There were no significant changes to the unrecognized tax benefits or related interest and penalties for the three months ended March 31, 2024.

(8) Income Taxes

The Company’s effective tax rate for the three months ended June 30, 2024 and July 2, 2023 was 27.0 % and 24.4 %, respectively.

The Company’s effective tax rate varied from the U.S.

federal statutory rate of 21 % for the three months ended June 30, 2024 primarily due to state income taxes and the tax effects of our foreign operations.

The Company’s effective tax rate for the six months ended June 30, 2024 and July 2, 2023 was 26.9 % and 25.9 %, respectively.

The Company’s effective tax rate varied from the U.S.

federal statutory rate of 21 % for the six months ended June 30, 2024 primarily due to state income taxes and the tax effects of our foreign operations.

There were no significant changes to the unrecognized tax benefits or related interest and penalties for the three and six months ended June 30, 2024.

During the next twelve months, we believe it is reasonably possible the Company will reduce unrecognized tax benefits by up to $ 220 due to lapses of statutes of limitations.

The current portion of refundable income taxes was $ 6,830 and $ 5,284 as of March 31, 2024 and December 31, 2023, respectively, and is included in “Accounts and notes receivable, net.” There were no long-term refundable income taxes as of March 31, 2024 or December 31, 2023.

The current portion of refundable income taxes was $ 12,750 and $ 5,284 as of June 30, 2024 and December 31, 2023, respectively, and is included in “Accounts and notes receivable, net.” There were no long-term refundable income taxes as of June 30, 2024 or December 31, 2023.

(9) Net Income Per Share

The calculation of basic and diluted net income per share was as follows:

Three Months Ended

2024 April 2,

Three Months Ended Six Months Ended

2023 June 30,

Net income $ 54,643 $ 59,632 $ 96,636 $ 99,453

2 unchanged sentences

Dilutive effect of stock options and restricted shares

1,266 2,304 1,433 2,393

Weighted average diluted shares outstanding 206,185 212,928 206,578 213,978

Basic and diluted net income per share $ .20 $ .19

Basic net income per share for the three months ended March 31, 2024 and April 2, 2023 was computed by dividing net income amounts by the weighted average number of shares of common stock outstanding.

Net income per share:

Basic $ .27 $ .28 $ .47 $ .47

Diluted $ .27 $ .28 $ .47 $ .46

Basic net income per share for the three and six months ended June 30, 2024 and July 2, 2023 was computed by dividing net income amounts by the weighted average number of shares of common stock outstanding.

Diluted net income per share was computed by dividing net income by the weighted average number of basic shares outstanding plus the potential common share effect of dilutive stock options and restricted shares.

We excluded potential common shares of 6,789 and 4,532 for the three months ended March 31, 2024 and April 2, 2023, respectively, from our diluted net income per share calculation as they would have had anti-dilutive effects.

We excluded potential common shares of 7,606 and 7,197 for the three and six months ended June 30, 2024, respectively, and 4,420 and 4,476 for the three and six months ended July 2, 2023, respectively, from our diluted net income per share calculation as they would have had anti-dilutive effects.

(10) Stockholders’ Equity

During both the first quarter of 2024 and the first quarter of 2023, the Company paid dividends per share of $ .25 .

During each of the first and second quarters of 2024 and 2023, the Company paid dividends per share of $ .25 .

Repurchases of Common Stock

In January 2023, our Board of Directors authorized a repurchase program for up to $ 500,000 of our common stock through February 28, 2027, when and if market conditions warrant and to the extent legally permissible (the “January 2023 Authorization”).

During the three months ended March 31, 2024, the Company repurchased 392 shares under the January 2023 Authorization with an aggregate purchase price of $ 7,187 , of which $ 470 was accrued as of March 31, 2024, and excluding excise tax of $ 24 and commissions of $ 5 .

As of March 31, 2024, the Company had $ 302,813 of availability remaining under the January 2023 Authorization.

Subsequent to March 31, 2024 through April 25, 2024, the Company repurchased 229 shares under the January 2023 Authorization with an aggregate purchase price of $ 4,316 , excluding applicable excise tax and commissions.

During the three months ended April 2, 2023, the Company repurchased 1,794 shares under the January 2023 Authorization with an aggregate purchase price of $ 38,785 , of which $ 2,083 was accrued as of April 2, 2023, and excluding commissions of $ 25 .

THE WENDY’S COMPANY AND SUBSIDIARIES

1 unchanged sentence

(In Thousands Except Per Share Amounts)

Authorization”).

During the six months ended June 30, 2024, the Company repurchased 1,955 shares under the January 2023 Authorization with an aggregate purchase price of $ 34,448 , of which $ 801 was accrued as of June 30, 2024, and excluding excise tax of $ 233 and commissions of $ 28 .

As of June 30, 2024, the Company had $ 275,552 of availability remaining under the January 2023 Authorization.

Subsequent to June 30, 2024 through July 25, 2024, the Company repurchased 929 shares under the January 2023 Authorization with an aggregate purchase price of $ 15,552 , excluding applicable excise tax and commissions.

During the six months ended July 2, 2023, the Company repurchased 4,023 shares under the January 2023 Authorization with an aggregate purchase price of $ 88,254 , of which $ 1,380 was accrued as of July 2, 2023, and excluding excise tax of $ 683 and commissions of $ 56 .

Accumulated Other Comprehensive Loss

The following table provides a rollforward of accumulated other comprehensive loss, which is entirely comprised of foreign currency translation:

Three Months Ended

2024 April 2,

Six Months Ended

Balance at beginning of period $ ( 58,375 ) $ ( 64,176 )

6 unchanged sentences

The Company also leases restaurant, office and transportation equipment.

As of March 31, 2024, the nature of restaurants operated by the Company and its franchisees was as follows:

As of June 30, 2024, the nature of restaurants operated by the Company and its franchisees was as follows:

Company-operated restaurants:

14 unchanged sentences

The components of lease cost are as follows:

Three Months Ended

2024 April 2,

Three Months Ended Six Months Ended

2023 June 30,

Finance lease cost:

8 unchanged sentences

_______________

(a) Includes expenses for executory costs of $ 10,221 and $ 9,848 for the three months ended March 31, 2024 and April 2, 2023, respectively, for which the Company is reimbursed by sublessees.

(b) Includes $ 31,718 and $ 30,598 for the three months ended March 31, 2024 and April 2, 2023, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees.

Also includes $ 7,388 and $ 7,865 for the three months ended March 31, 2024 and April 2, 2023, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

(a) Includes expenses for executory costs of $ 10,033 and $ 10,172 for the three months ended June 30, 2024 and July 2, 2023, respectively, and $ 20,254 and $ 20,020 for the six months ended June 30, 2024 and July 2, 2023, respectively, for which the Company is reimbursed by sublessees.

(b) Includes $ 32,355 and $ 32,329 for the three months ended June 30, 2024 and July 2, 2023, respectively, and $ 64,073 and $ 62,927 for the six months ended June 30, 2024 and July 2, 2023, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees.

Also includes $ 7,402 and $ 7,546 for the three months ended June 30, 2024 and July 2, 2023, respectively, and $ 14,790 and $ 15,411 for the six months ended June 30, 2024 and July 2, 2023, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

Company as Lessor

The components of lease income are as follows:

Three Months Ended

2024 April 2,

Three Months Ended Six Months Ended

2023 June 30,

Sales-type and direct-financing leases:

Selling (loss) profit $ ( 16 ) $ 129

Selling profit $ 88 $ 1,072 $ 72 $ 1,201

Interest income (a) 7,178 7,868 14,897 15,730

4 unchanged sentences

(a) Included in “Interest expense, net.”

(b) Includes sublease income of $ 42,783 and $ 42,951 recognized during the three months ended March 31, 2024 and April 2, 2023, respectively.

Sublease income includes lessees’ variable payments to the Company for executory costs of $ 10,089 and $ 9,778 for the three months ended March 31, 2024 and April 2, 2023, respectively.

(b) Includes sublease income of $ 45,049 and $ 42,961 recognized during the three months ended June 30, 2024 and July 2, 2023, respectively, and $ 87,832 and $ 85,912 recognized during the six months ended June 30, 2024 and July 2, 2023, respectively.

Sublease income includes lessees’ variable payments to the Company for executory costs of $ 10,155 and $ 10,115 for the three months ended June 30, 2024 and July 2, 2023, respectively, and $ 20,244 and $ 19,893 for the six months ended June 30, 2024 and July 2, 2023, respectively.

THE WENDY’S COMPANY AND SUBSIDIARIES

3 unchanged sentences

The following table includes supplemental non-cash investing and financing activities:

Three Months Ended

2024 April 2,

Six Months Ended

Supplemental non-cash investing and financing activities:

12 unchanged sentences

A wholly-owned subsidiary of Wendy’s leases restaurant facilities from TimWen, which are then subleased to franchisees for the operation of Wendy’s/Tim Hortons combo units in Canada.

Wendy’s paid TimWen $ 5,030 and $ 4,673 under these lease agreements during the three months ended March 31, 2024 and April 2, 2023, respectively, which is recorded to “Franchise rental expense.” In addition, TimWen paid Wendy’s a management fee under the TimWen joint venture agreement of $ 60 during both the three months ended March 31, 2024 and the three months ended April 2, 2023, which is included as a reduction to “General and administrative.”

Wendy’s paid TimWen $ 10,522 and $ 10,140 under these lease agreements during the six months ended June 30, 2024 and July 2, 2023, respectively, which is recorded to “Franchise rental expense.” In addition, TimWen paid Wendy’s a management fee under the TimWen joint venture agreement of $ 120 and $ 121 during the six months ended June 30, 2024 and July 2, 2023, respectively, which is included as a reduction to “General and administrative.”

Transactions with QSCC

7 unchanged sentences

Should QSCC’s sourcing fees exceed its expected needs, QSCC’s board of directors may return some or all of the excess to its members in the form of a patronage dividend.

Wendy’s recorded its share of patronage dividends of $ 3,096 during the three months ended March 31, 2024, of which $ 2,909 is included in “Other operating income, net” and $ 187 is included as a reduction of “Cost of sales.” There were no patronage dividends recorded during the three months ended April 2, 2023.

Wendy’s recorded its share of patronage dividends of $ 3,379 during the six months ended June 30, 2024, of which $ 2,909 is included in “Other operating income, net” and $ 470 is included as a reduction of “Cost of sales.” There were no patronage dividends recorded during the six months ended July 2, 2023.

THE WENDY’S COMPANY AND SUBSIDIARIES

5 unchanged sentences

Peter May, our Senior Vice Chairman, and Mr.

Matthew Peltz, our Vice Chairman, hold minority ownership interests in Yellow Cab Holdings, LLC (“Yellow Cab”), a Wendy’s franchisee, that as of March 31, 2024 owns and operates 85 Wendy’s restaurants, and/or certain of the operating companies managed by Yellow Cab.

During the three months ended March 31, 2024 and April 2, 2023, the Company recognized $ 3,612 and $ 3,610 , respectively, in royalty, advertising fund, lease and other income from Yellow Cab and related entities.

Matthew Peltz, our Vice Chairman, hold minority ownership interests in Yellow Cab Holdings, LLC (“Yellow Cab”), a Wendy’s franchisee, that as of June 30, 2024 owns and operates 86 Wendy’s restaurants, and/or certain of the operating companies managed by Yellow Cab.

During the six months ended June 30, 2024 and July 2, 2023, the Company recognized $ 7,543 and $ 7,411 , respectively, in royalty, advertising fund, lease and other income from Yellow Cab and related entities.

In all transactions involving Yellow Cab, the Company’s standard franchisee recruiting and approval processes were followed, no modifications were made to the Company’s standard franchise agreements or related documents, and all deal terms and transaction documents were negotiated and executed on an arm’s-length basis, consistent with the Company’s comparable franchise transactions and relationships.

As of March 31, 2024 and December 31, 2023, $ 1,191 and $ 1,153 , respectively, was due from Yellow Cab for such income, which is included in “Accounts and notes receivable, net” and “Advertising funds restricted assets.”

As of June 30, 2024 and December 31, 2023, $ 1,134 and $ 1,153 , respectively, was due from Yellow Cab for such income, which is included in “Accounts and notes receivable, net” and “Advertising funds restricted assets.”

Transactions with AMC

1 unchanged sentence

Kristin Dolan, a director of the Company, was appointed as the Chief Executive Officer of AMC Networks Inc.

During the three months ended March 31, 2024 and April 2, 2023, the Company purchased approximately $ 500 and $ 419 , respectively, of advertising time from a subsidiary of AMC.

During the six months ended June 30, 2024 and July 2, 2023, the Company purchased approximately $ 1,100 and $ 1,200 , respectively, of advertising time from a subsidiary of AMC.

The Company’s advertising spend with AMC was made in the ordinary course of business and approved on an arm’s-length basis, consistent with the Company’s comparable advertising decisions.

As of March 31, 2024 and December 31, 2023, approximately $ 50 and $ 584 , respectively, was due to AMC for such advertising time, which is included in “Advertising funds restricted liabilities.”

As of December 31, 2023, approximately $ 584 was due to AMC for such advertising time, which is included in “Advertising funds restricted liabilities.” There were no amounts due to AMC as of June 30, 2024.

(14) Guarantees and Other Commitments and Contingencies

1 unchanged sentence

Refer to the Form 10-K for further information regarding the Company’s additional commitments and obligations.

Franchisee Incentive Programs

To promote new restaurant development, Wendy’s has provided franchisees with certain incentive programs for qualifying new restaurants.

In July 2024, Wendy’s announced a new development incentive structure in the U.S.

that provides for reductions in royalty and national advertising fees for qualifying new restaurants for two, three or four years of operation based on the number of restaurants committed to under the development agreement.

Lease Guarantees

Wendy’s has guaranteed the performance of certain leases and other obligations, primarily from former Company-operated restaurant locations now operated by franchisees, amounting to $ 93,979 as of March 31, 2024.

These leases extend through 2045.

We have had no judgments against us as guarantor of these leases as of March 31, 2024.

We have had no judgments against us as guarantor of these leases as of June 30, 2024.

In the event of default by a franchise owner where Wendy’s is called upon to perform under its guarantee, Wendy’s has the ability to pursue repayment from the franchise owner.

The liability recorded for our probable exposure associated with these lease guarantees was not material as of March 31, 2024.

The liability recorded for our probable exposure associated with these lease guarantees was not material as of June 30, 2024.

Letters of Credit

As of March 31, 2024, the Company had outstanding letters of credit with various parties totaling $ 28,842 .

As of June 30, 2024, the Company had outstanding letters of credit with various parties totaling $ 28,840 .

Substantially all of the outstanding letters of credit include amounts outstanding against the 2021-1 Variable Funding Senior Secured Notes, Class A-1.

12 unchanged sentences

Revenues by segment are as follows:

Three Months Ended

2024 April 2,

Three Months Ended Six Months Ended

2023 June 30,

$ 472,591 $ 468,753 $ 915,438 $ 909,741

3 unchanged sentences

The following table reconciles profit by segment to the Company’s consolidated income before income taxes:

Three Months Ended

2024 April 2,

Three Months Ended Six Months Ended

2023 June 30,

(a) $ 136,709 $ 142,947 $ 262,533 $ 268,177

7 unchanged sentences

Amortization of cloud computing arrangements ( 3,519 ) ( 2,266 ) ( 7,061 ) ( 3,848 )

System optimization (losses) gains, net ( 127 ) 5

System optimization gains (losses), net 280 ( 6 ) 153 ( 1 )

Reorganization and realignment costs ( 2,452 ) ( 681 ) ( 8,125 ) ( 7,489 )

3 unchanged sentences

Loss on early extinguishment of debt — — — ( 1,266 )

Investment loss, net — ( 3,562 )

Investment income (loss), net 11 ( 6,827 ) 11 ( 10,389 )

Other income, net 6,300 7,573 13,136 14,909

5 unchanged sentences

(a) Wendy’s U.S.

includes advertising funds expense of $ 2,325 for the three months ended March 31, 2024 related to the Company’s funding of incremental advertising.

(b) Wendy’s International includes advertising funds expense of $ 162 and $ 548 for the three months ended March 31, 2024 and April 2, 2023, respectively, related to the Company’s funding of incremental advertising in Canada.

In addition, Wendy’s International includes other international-related advertising deficit of $ 150 and $ 845 for the three months ended March 31, 2024 and April 2, 2023, respectively.

includes advertising funds expense of $ 5,084 and $ 7,409 for the three and six months ended June 30, 2024 related to the Company’s funding of incremental advertising.

(b) Wendy’s International includes advertising funds expense of $ 603 and $ 765 for the three and six months ended June 30, 2024, respectively, and $ 658 and $ 1,206 for the three and six months ended July 2, 2023, respectively, related to the Company’s funding of incremental advertising in Canada.

In addition, Wendy’s International includes other international-related advertising deficit of $ 320 and $ 470 for the three and six months ended June 30, 2024, respectively, and $ 479 and $ 1,324 for the three and six months ended July 2, 2023, respectively.

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements