What changed in this filing

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Item 1. Financial Statements

2024-10-31 compared with 2024-08-01 · 199 added, 115 removed, 548 unchanged (36% of the section changed)

3 unchanged sentences

(In Thousands Except Par Value)

September 29,

2024 December 31,

52 unchanged sentences

(In Thousands Except Per Share Amounts)

Three Months Ended Six Months Ended

2023 June 30,

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

Sales $ 230,403 $ 234,721 $ 693,081 $ 703,358

11 unchanged sentences

Amortization of cloud computing arrangements 3,576 3,844 10,637 7,692

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

System optimization gains, net ( 420 ) ( 120 ) ( 573 ) ( 119 )

Reorganization and realignment costs 354 611 8,479 8,100

17 unchanged sentences

(In Thousands)

Three Months Ended Six Months Ended

2023 June 30,

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

Net income $ 50,224 $ 58,049 $ 146,860 $ 157,502

Other comprehensive (loss) income:

Other comprehensive income (loss):

Foreign currency translation adjustment 4,382 ( 4,533 ) ( 2,215 ) 574

Other comprehensive (loss) income ( 2,011 ) 4,949 ( 6,597 ) 5,107

Other comprehensive income (loss) 4,382 ( 4,533 ) ( 2,215 ) 574

Comprehensive income $ 54,606 $ 53,516 $ 144,645 $ 158,076

28 unchanged sentences

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

Net income — — 50,224 — — 50,224

Other comprehensive income — — — — 4,382 4,382

Cash dividends — — ( 50,785 ) — — ( 50,785 )

Repurchases of common stock — — — ( 25,418 ) — ( 25,418 )

Share-based compensation — 6,814 — — — 6,814

Common stock issued upon exercises of stock options

— 258 — 2,133 — 2,391

Common stock issued upon vesting of restricted shares

— ( 3,654 ) — 2,069 — ( 1,585 )

Other — 30 ( 16 ) 63 — 77

Balance at September 29, 2024 $ 47,042 $ 2,967,927 $ 403,259 $ ( 3,097,785 ) $ ( 60,590 ) $ 259,853

See accompanying notes to condensed consolidated financial statements.

27 unchanged sentences

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

Net income — — 58,049 — — 58,049

Other comprehensive loss — — — — ( 4,533 ) ( 4,533 )

Cash dividends — — ( 52,156 ) — — ( 52,156 )

Repurchases of common stock — — — ( 56,714 ) — ( 56,714 )

Share-based compensation — 6,551 — — — 6,551

Common stock issued upon exercises of stock options

— 210 — 894 — 1,104

Common stock issued upon vesting of restricted shares

— ( 1,658 ) — 702 — ( 956 )

Other — 59 ( 18 ) 63 — 104

Balance at October 1, 2023 $ 47,042 $ 2,950,916 $ 414,324 $ ( 3,006,116 ) $ ( 63,602 ) $ 342,564

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In Thousands)

Six Months Ended

Nine Months Ended

September 29,

2024 October 1,

Cash flows from operating activities:

11 unchanged sentences

Net receipt of deferred vendor incentives 1,449 4,007

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

System optimization (gains), net ( 573 ) ( 119 )

Distributions received from joint ventures, net of equity in earnings 2,055 1,349

28 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 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.

In our opinion, the Financial Statements contain all adjustments of a normal recurring nature necessary to present fairly our financial position as of September 29, 2024, the results of our operations for the three and nine months ended September 29, 2024 and October 1, 2023 and cash flows for the nine months ended September 29, 2024 and October 1, 2023.

The results of operations for the nine months ended September 29, 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- and six-month periods presented herein contain 13 weeks and 26 weeks, respectively.

All three- and nine-month periods presented herein contain 13 weeks and 39 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 June 30, 2024

Three Months Ended September 29, 2024

Sales at Company-operated restaurants $ 222,745 $ 7,658 $ — $ 230,403

4 unchanged sentences

Total revenues $ 468,725 $ 37,598 $ 60,416 $ 566,739

Three Months Ended July 2, 2023

Three Months Ended October 1, 2023

Sales at Company-operated restaurants $ 227,674 $ 7,047 $ — $ 234,721

8 unchanged sentences

Wendy’s International Global Real Estate & Development Total

Six Months Ended June 30, 2024

Nine Months Ended September 29, 2024

Sales at Company-operated restaurants $ 673,364 $ 19,717 $ — $ 693,081

4 unchanged sentences

Total revenues $ 1,384,163 $ 106,774 $ 181,282 $ 1,672,219

Six Months Ended July 2, 2023

Nine Months Ended October 1, 2023

Sales at Company-operated restaurants $ 685,168 $ 18,190 $ — $ 703,358

6 unchanged sentences

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

September 29,

2024 (a) December 31, 2023 (a)

7 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 $ 10,954 and $ 89,054 , respectively, as of June 30, 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 $ 11,454 and $ 89,300 , respectively, as of September 29, 2024, and $ 10,673 and $ 90,132 , respectively, as of December 31, 2023.

Significant changes in deferred franchise fees are as follows:

Six Months Ended

Nine Months Ended

September 29,

2024 October 1,

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

13 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.

(3) System Optimization (Gains) Losses, Net

(3) System Optimization Gains, 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 June 30, 2024, Company-operated restaurant ownership was approximately 5 % of the total system.

As of September 29, 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 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.

During the nine months ended September 29, 2024 and October 1, 2023, the Company facilitated 14 and 88 Franchise Flips, respectively.

Additionally, during the nine months ended September 29, 2024, the Company completed the sale of one Company-operated restaurant to a franchisee.

No Company-operated restaurants were sold to or purchased from franchisees during the nine months ended October 1, 2023.

Gains and losses recognized on dispositions are recorded to “System optimization gains, 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.”

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

1 unchanged sentence

(In Thousands Except Per Share Amounts)

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

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

Number of restaurants sold to franchisees 1 — 1 —

Proceeds from sales of restaurants $ 834 $ — $ 834 $ —

Net assets sold (a) ( 725 ) — ( 725 ) —

Other 6 — 6 —

Post-closing adjustments on sales of restaurants (b) 440 537 694 537

Gain on sales of restaurants, net 555 537 809 537

Loss on sales of other assets, net (c) ( 135 ) ( 417 ) ( 236 ) ( 418 )

System optimization gains, net $ 420 $ 120 $ 573 $ 119

_______________

(a) Net assets sold consisted primarily of land.

(b) 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.

(c) During the three and nine months ended September 29, 2024, the Company received net cash proceeds of $ 1,787 and $ 2,388 , respectively, primarily from the sale of surplus and other properties.

During the nine months ended October 1, 2023, the Company received net cash proceeds of $ 280 primarily from the sale of surplus and other properties .

Assets Held for Sale

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.

As of September 29, 2024 and December 31, 2023, the Company had assets held for sale of $ 2,517 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 Six Months Ended

2023 June 30,

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

Organizational redesign $ 296 $ 579 $ 8,327 $ 7,986

1 unchanged sentence

Reorganization and realignment costs $ 354 $ 611 $ 8,479 $ 8,100

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Organizational Redesign

5 unchanged sentences

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 .

During the nine months ended September 29, 2024 and October 1, 2023, the Company recognized costs totaling $ 8,327 and $ 7,986 , respectively, which primarily included severance and related employee costs.

The Company expects to incur additional costs aggregating approximately $ 800 , comprised primarily of share-based compensation.

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

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

Three Months Ended Six Months Ended Total Incurred Since Inception

2023 June 30,

Three Months Ended Nine Months Ended Total Incurred Since Inception

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

Severance and related employee costs $ 12 $ 114 $ 7,322 $ 5,674 $ 13,565

6 unchanged sentences

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

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.

As of September 29, 2024, the accruals for the Organizational Redesign Plan are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled $ 4,210 and $ 1,215 , respectively.

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

Charges Payments Balance

September 29,

Severance and related employee costs $ 1,692 $ 7,322 $ ( 3,589 ) $ 5,425

7 unchanged sentences

$ — $ 6,882 $ ( 4,732 ) $ 2,150

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Other Reorganization and Realignment Plans

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.

Costs incurred under the Company’s other reorganization and realignment plans were not material during the nine months ended September 29, 2024 and October 1, 2023.

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

1 unchanged sentence

The following is a summary of the carrying value of our investments:

September 29,

2024 December 31,

6 unchanged sentences

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:

Six Months Ended

Nine Months Ended

September 29,

2024 October 1,

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

2 unchanged sentences

Distributions received ( 10,678 ) ( 9,310 )

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

( 1,118 ) 786

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

Balance at end of period $ 30,040 $ 32,723

2 unchanged sentences

Other Investments 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.

During the nine months ended October 1, 2023, the Company recorded impairment charges of $ 10,389 for the difference between the estimated fair value and the carrying value of an investment in equity securities.

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(6) Fair Value Measurements

9 unchanged sentences

The inputs into the determination of fair value require significant management judgment or estimation.

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Financial Instruments

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments:

September 29,

2024 December 31,

31 unchanged sentences

Fair Value Measurements

September 29,

2024 Level 1 Level 2 Level 3

10 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 Six Months Ended

2023 June 30,

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

Company-operated restaurants $ — $ — $ 2,418 $ 428

5 unchanged sentences

(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 for the three months ended September 29, 2024 and October 1, 2023 was 27.9 % and 25.5 %, 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.

federal statutory rate of 21 % for the three months ended September 29, 2024 primarily due to state income taxes and the tax effects of our foreign operations.

The Company’s effective tax rate for the nine months ended September 29, 2024 and October 1, 2023 was 27.3 % and 25.8 %, 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.

federal statutory rate of 21 % for the nine months ended September 29, 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 nine months ended September 29, 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 $ 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.

The current portion of refundable income taxes was $ 9,307 and $ 5,284 as of September 29, 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 September 29, 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 Six Months Ended

2023 June 30,

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

Net income $ 50,224 $ 58,049 $ 146,860 $ 157,502

7 unchanged sentences

Diluted $ .25 $ .28 $ .71 $ .74

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.

Basic net income per share for the three and nine months ended September 29, 2024 and October 1, 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 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.

We excluded potential common shares of 8,605 and 7,667 for the three and nine months ended September 29, 2024, respectively, and 5,204 and 4,719 for the three and nine months ended October 1, 2023, respectively, from our diluted net income per share calculation as they would have had anti-dilutive effects.

(10) Stockholders’ Equity

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

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

Repurchases of Common Stock

4 unchanged sentences

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 .

During the nine months ended September 29, 2024, the Company repurchased 3,447 shares under the January 2023 Authorization with an aggregate purchase price of $ 59,637 , of which $ 203 was accrued as of September 29, 2024, and excluding excise tax of $ 441 and commissions of $ 49 .

As of September 29, 2024, the Company had $ 250,363 of availability remaining under the January 2023 Authorization.

Subsequent to September 29, 2024 through October 24, 2024, the Company repurchased 150 shares under the January 2023 Authorization with an aggregate purchase price of $ 2,679 , excluding applicable excise tax and commissions.

During the nine months ended October 1, 2023, the Company repurchased 6,730 shares under the January 2023 Authorization with an aggregate purchase price of $ 144,320 , of which $ 2,001 was accrued as of October 1, 2023, and excluding excise tax of $ 1,293 and commissions of $ 94 .

Accumulated Other Comprehensive Loss

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

Six Months Ended

Nine Months Ended

September 29,

2024 October 1,

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

6 unchanged sentences

The Company also leases restaurant, office and transportation equipment.

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

As of September 29, 2024, the nature of restaurants operated by the Company and its franchisees was as follows:

September 29,

Company-operated restaurants:

14 unchanged sentences

The components of lease cost are as follows:

Three Months Ended Six Months Ended

2023 June 30,

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

Finance lease cost:

8 unchanged sentences

_______________

(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.

(a) Includes expenses for executory costs of $ 10,108 and $ 9,777 for the three months ended September 29, 2024 and October 1, 2023, respectively, and $ 30,362 and $ 29,797 for the nine months ended September 29, 2024 and October 1, 2023, respectively, for which the Company is reimbursed by sublessees.

(b) Includes $ 32,197 and $ 31,824 for the three months ended September 29, 2024 and October 1, 2023, respectively, and $ 96,270 and $ 94,751 for the nine months ended September 29, 2024 and October 1, 2023, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees.

Also includes $ 7,299 and $ 7,570 for the three months ended September 29, 2024 and October 1, 2023, respectively, and $ 22,089 and $ 22,981 for the nine months ended September 29, 2024 and October 1, 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 Six Months Ended

2023 June 30,

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

Sales-type and direct-financing leases:

6 unchanged sentences

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

(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.

(b) Includes sublease income of $ 43,698 and $ 42,545 recognized during the three months ended September 29, 2024 and October 1, 2023, respectively, and $ 131,530 and $ 128,457 recognized during the nine months ended September 29, 2024 and October 1, 2023, respectively.

Sublease income includes lessees’ variable payments to the Company for executory costs of $ 10,112 and $ 9,811 for the three months ended September 29, 2024 and October 1, 2023,

THE WENDY’S COMPANY AND SUBSIDIARIES

1 unchanged sentence

(In Thousands Except Per Share Amounts)

respectively, and $ 30,356 and $ 29,704 for the nine months ended September 29, 2024 and October 1, 2023, respectively.

(12) Supplemental Cash Flow Information

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

Six Months Ended

Nine Months Ended

September 29,

2024 October 1,

Supplemental non-cash investing and financing activities:

2 unchanged sentences

The following table includes a reconciliation of cash, cash equivalents and restricted cash:

September 29,

2024 December 31,

8 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 $ 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.”

Wendy’s paid TimWen $ 16,065 and $ 15,713 under these lease agreements during the nine months ended September 29, 2024 and October 1, 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 $ 179 and $ 181 during the nine months ended September 29, 2024 and October 1, 2023, respectively, which is included as a reduction to “General and administrative.”

Transactions with QSCC

3 unchanged sentences

QSCC’s supply chain management facilitates continuity of supply and provides consolidated purchasing efficiencies while monitoring and seeking to minimize possible obsolete inventory throughout the Wendy’s supply chain in the U.S.

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Wendy’s and its franchisees pay sourcing fees to third-party vendors on certain products sourced by QSCC.

2 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 $ 3,379 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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Wendy’s recorded its share of patronage dividends of $ 3,493 during the nine months ended September 29, 2024, of which $ 2,909 is included in “Other operating income, net” and $ 584 is included as a reduction of “Cost of sales.” Wendy’s recorded its share of patronage dividends of $ 363 during the nine months ended October 1, 2023, all of which is included as a reduction of “Cost of sales.”

Transactions with Yellow Cab

Certain family members and/or affiliates of Mr.

Nelson Peltz, our Chairman, Mr.

Nelson Peltz, our former Chairman, Mr.

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 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.

Matthew Peltz, our Vice Chairman, hold minority ownership interests in Yellow Cab Holdings, LLC (“Yellow Cab”), a Wendy’s franchisee, that as of September 29, 2024 owns and operates 87 Wendy’s restaurants, and/or certain of the operating companies managed by Yellow Cab.

During the nine months ended September 29, 2024 and October 1, 2023, the Company recognized $ 11,397 and $ 11,143 , 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 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.”

As of September 29, 2024 and December 31, 2023, $ 1,099 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 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.

During the nine months ended September 29, 2024 and October 1, 2023, the Company purchased approximately $ 1,600 and $ 1,800 , 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 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

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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.

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

and Canada and select international markets, respectively, 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 $ 89,111 as of June 30, 2024.

These leases extend through 2045.

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

We have had no judgments against us as guarantor of these leases as of September 29, 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 June 30, 2024.

Letters of Credit

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.

We do not expect any material loss to result from these letters of credit.

The liability recorded for our probable exposure associated with these lease guarantees was not material as of September 29, 2024.

THE WENDY’S COMPANY AND SUBSIDIARIES

1 unchanged sentence

(In Thousands Except Per Share Amounts)

Letters of Credit

As of September 29, 2024, the Company had outstanding letters of credit with various parties totaling $ 28,673 .

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

We do not expect any material loss to result from these letters of credit.

Purchase and Capital Commitments

The Company has material purchase requirements under a marketing agreement with two national broadcasters and a beverage agreement with a vendor.

In August 2024, the Company amended its contract with the beverage vendor, which now expires upon reaching a threshold usage requirement or, if certain undertakings are not fulfilled, at the later of reaching a threshold usage requirement or December 31, 2034.

Our total purchase requirements under the marketing agreement and the amended beverage agreement are estimated to be approximately $ 107,500 over the remaining life of the contracts.

(15) Legal and Environmental Matters

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Revenues by segment are as follows:

Three Months Ended Six Months Ended

2023 June 30,

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

$ 468,725 $ 457,240 $ 1,384,163 $ 1,366,981

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Total revenues $ 566,739 $ 550,555 $ 1,672,219 $ 1,640,927

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

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

Three Months Ended Six Months Ended

2023 June 30,

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

(a) $ 129,790 $ 134,887 $ 392,323 $ 403,064

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Amortization of cloud computing arrangements ( 3,576 ) ( 3,844 ) ( 10,637 ) ( 7,692 )

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

System optimization gains, net 420 120 573 119

Reorganization and realignment costs ( 354 ) ( 611 ) ( 8,479 ) ( 8,100 )

7 unchanged sentences

_______________

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(a) Wendy’s U.S.

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.

includes advertising funds expense of $ 5,977 and $ 13,386 for the three and nine months ended September 29, 2024 related to the Company’s funding of incremental advertising.

(b) Wendy’s International includes advertising funds expense of $ 622 and $ 1,387 for the three and nine months ended September 29, 2024, respectively, and $ 596 and $ 1,802 for the three and nine months ended October 1, 2023, respectively, related to the Company’s funding of incremental advertising in Canada.

In addition, Wendy’s International includes other international-related advertising (deficit) surplus of $( 170 ) and $( 640 ) for the three and nine months ended September 29, 2024, respectively, and $ 535 and $( 789 ) for the three and nine months ended October 1, 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