“The system optimization initiative will create a growth opportunity for both the company and strong franchise operators by expanding participation in our image activation program to a larger base of franchisees," said Emil Brolick, president and CEO. “We expect to generate a higher operating margin and stronger free cash flow along with further enhancing the quality of our earnings with a more predictable revenue stream from a higher percentage of royalty and rent income. We believe system optimization will also enable us to increase our long-term earnings per share growth rate and return incremental cash to shareholders in the form of dividends and share repurchases, beginning with a 25 percent increase in our third-quarter dividend.”
The company hopes to close on the transactions by the end of the second quarter of 2014. The company just completed the sale of 24 Wendy’s restaurants in the Kansas City area to a subsidiary of NPC International Inc., the eighth-largest restaurant operator in the United States. NPC also recently signed an agreement to acquire 13 more Wendy’s restaurants in Kansas City to another franchisee, and the company sold five other restaurants in the area to Kirk Williams of Legacy Restaurant Group.
Through these efforts, the company hopes to reduce annualized general and administrative expense, improve company-operated restaurant operating margin, have a higher cash flow and a lower annualized depreciation expense.
The company also posted preliminary financial results indicating an income of $12,224,000, equal to 3 cents per share, during the second quarter ended June 30, which compared with a loss of $5,493,000 during the same period of the previous year. Sales for the quarter were $571,198,000, up 1 percent from $566,116,000 during the same quarter of the previous year. For the six months ended June 30, the company saw income rise 109 percent to $14,357,000, or 4 cents per share, which compared with $6,857,000, or 2 cents per share, during the same period of the previous year. The company will post official financial results on Aug. 7.