Wendys Posts Upbeat Q1 Earnings, Plans To Sell Bakery Operations

Shares of

jumped over 5 percent in pre-market trading after the company reported better-than-expected earnings for the first quarter and announced its plans to sell its bakery operations this month. The company also announced plans to sell a total of approximately 640 of its company-owned restaurants to franchisees. The Dublin, Ohio-based company reported a quarterly profit of $27.5 million, or $0.07 per share, versus a year-ago profit of $46.3 million, or $0.12 per share. Excluding special items, the company earned $0.06 per share. Its revenue slipped 10.9 percent to $466.2 million. However, analysts were expecting a profit of $0.05 per share on revenue of $475.6 million. The average estimate among 10 Estimize users was for earnings of $0.06 per share and revenue of $485.99 million. Same-restaurant sales gained 3.2 percent for the quarter. Its same-restaurant sales rose 2.6 percent for North America company-operated restaurants, while same-restaurant sales climbed 3.4 percent for North America franchise-operated restaurants. Restaurant margin at North America Company-operated restaurants widened to 14.7 percent in North America, versus 13.1 percent. Adjusted EBITDA climbed 11.6 percent year-over-year to $84.0 million in the first quarter. "Our first-quarter results demonstrate continued progress with Wendy's® brand transformation," President and Chief Executive Officer Emil Brolick said. "We also plan to divest our bakery operations, a non-core asset," Brolick said. "We believe this divestiture will provide us with greater sourcing flexibility, focus resources on our core restaurant business and eliminate future bakery capital expenditures. We expect the transaction to close in the second quarter of 2015." Wendys reaffirmed its earnings forecast for 2015. The company now projects same-store sales to rise 2.5 percent to 3 percent for 2015, versus its earlier forecast for 3 percent growth. Wendys shares gained 5.45 percent to $11.03 in pre-market trading.