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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 2, 2022

or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to _______________

Commission file number: 1-2207
THE WENDY’S COMPANY
(Exact name of registrant as specified in its charter)
Delaware38-0471180
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
One Dave Thomas Blvd.
Dublin,
Ohio43017
(Address of principal executive offices)(Zip Code)

(614) 764-3100
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $.10 par valueWENThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.




Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No

There were 213,026,982 shares of The Wendy’s Company common stock outstanding as of November 2, 2022.



THE WENDY’S COMPANY AND SUBSIDIARIES
INDEX TO FORM 10-Q
Page
3

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.
THE WENDY’S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except Par Value)
October 2,
2022
January 2,
2022
ASSETS(Unaudited)
Current assets:
Cash and cash equivalents$731,801 $249,438 
Restricted cash34,363 27,535 
Accounts and notes receivable, net142,447 119,540 
Inventories6,578 5,934 
Prepaid expenses and other current assets28,795 30,584 
Advertising funds restricted assets150,662 159,818 
Total current assets1,094,646 592,849 
Properties882,283 906,867 
Finance lease assets237,517 244,279 
Operating lease assets765,688 812,620 
Goodwill772,984 775,278 
Other intangible assets1,252,198 1,280,791 
Investments45,482 49,870 
Net investment in sales-type and direct financing leases310,576 299,707 
Other assets163,615 139,130 
Total assets$5,524,989 $5,101,391 
LIABILITIES AND STOCKHOLDERS’ EQUITY 
Current liabilities:  
Current portion of long-term debt$29,250 $24,250 
Current portion of finance lease liabilities17,585 15,513 
Current portion of operating lease liabilities47,481 47,315 
Accounts payable34,667 41,163 
Accrued expenses and other current liabilities130,202 140,783 
Advertising funds restricted liabilities159,231 157,901 
Total current liabilities418,416 426,925 
Long-term debt2,827,493 2,356,416 
Long-term finance lease liabilities567,472 559,587 
Long-term operating lease liabilities804,632 853,328 
Deferred income taxes276,089 267,710 
Deferred franchise fees91,669 88,102 
Other liabilities101,839 112,918 
Total liabilities5,087,610 4,664,986 
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.10 par value; 1,500,000 shares authorized;
     470,424 shares issued; 212,945 and 215,849 shares outstanding, respectively
47,042 47,042 
Additional paid-in capital2,930,388 2,898,633 
Retained earnings400,111 344,198 
Common stock held in treasury, at cost; 257,479 and 254,575 shares, respectively
(2,871,442)(2,805,268)
Accumulated other comprehensive loss(68,720)(48,200)
Total stockholders’ equity437,379 436,405 
Total liabilities and stockholders’ equity$5,524,989 $5,101,391 

See accompanying notes to condensed consolidated financial statements.
4

THE WENDY’S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Per Share Amounts)

Three Months EndedNine Months Ended
October 2,
2022
October 3,
2021
October 2,
2022
October 3,
2021
(Unaudited)
Revenues:
Sales$228,786 $171,078 $668,930 $553,660 
Franchise royalty revenue and fees141,733 138,755 414,145 398,246 
Franchise rental income58,463 62,446 174,944 182,190 
Advertising funds revenue103,587 97,976 300,976 289,699 
532,569 470,255 1,558,995 1,423,795 
Costs and expenses:
Cost of sales196,168 146,436 578,506 457,440 
Franchise support and other costs12,728 10,509 34,456 27,080 
Franchise rental expense31,687 34,424 92,699 101,058 
Advertising funds expense108,269 108,529 317,042 310,642 
General and administrative62,523 62,840 186,506 178,576 
Depreciation and amortization (exclusive of amortization of cloud computing arrangements shown separately below)34,252 30,940 100,911 93,243 
Amortization of cloud computing arrangements888  888  
System optimization gains, net(452)(1,437)(4,138)(32,719)
Reorganization and realignment costs8 345 628 7,381 
Impairment of long-lived assets206 566 2,682 1,831 
Other operating income, net(11,843)(3,092)(20,482)(10,800)
434,434 390,060 1,289,698 1,133,732 
Operating profit98,135 80,195 269,297 290,063 
Interest expense, net(31,916)(26,000)(90,406)(82,990)
Loss on early extinguishment of debt   (17,917)
Investment income, net  2,107 6 
Other income, net2,910 171 4,355 455 
Income before income taxes69,129 54,366 185,353 189,617 
Provision for income taxes(18,587)(13,195)(49,258)(41,356)
Net income$50,542 $41,171 $136,095 $148,261 
Net income per share:
Basic$.24 $.19 $.64 $.67 
Diluted.24 .18 .63 .66 

See accompanying notes to condensed consolidated financial statements.
5

THE WENDY’S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands)

Three Months EndedNine Months Ended
October 2,
2022
October 3,
2021
October 2,
2022
October 3,
2021
(Unaudited)
Net income$50,542 $41,171 $136,095 $148,261 
Other comprehensive (loss) income:
Foreign currency translation adjustment(14,183)(4,659)(20,520)908 
Other comprehensive (loss) income(14,183)(4,659)(20,520)908 
Comprehensive income $36,359 $36,512 $115,575 $149,169 

See accompanying notes to condensed consolidated financial statements.
6

THE WENDY’S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In Thousands)

Common
Stock
Additional
Paid-In
Capital
Retained EarningsCommon Stock Held in TreasuryAccumulated Other Comprehensive LossTotal
(Unaudited)
Balance at January 2, 2022$47,042 $2,898,633 $344,198 $(2,805,268)$(48,200)$436,405 
Net income  37,402   37,402 
Other comprehensive income    1,118 1,118 
Cash dividends  (26,911)  (26,911)
Repurchases of common stock, including accelerated share repurchase 18,750  (18,750)  
Share-based compensation 6,348    6,348 
Common stock issued upon exercises of stock options
 237  1,354  1,591 
Common stock issued upon vesting of restricted shares
 (1,989) 459  (1,530)
Other 63 (8)57  112 
Balance at April 3, 2022$47,042 $2,922,042 $354,681 $(2,822,148)$(47,082)$454,535 
Net income  48,151   48,151 
Other comprehensive loss    (7,455)(7,455)
Cash dividends  (26,635)  (26,635)
Repurchases of common stock   (51,950) (51,950)
Share-based compensation 6,122    6,122 
Common stock issued upon exercises of stock options
 (300) 399  99 
Common stock issued upon vesting of restricted shares
 (1,178) 1,073  (105)
Other 53 (10)58  101 
Balance at July 3, 2022$47,042 $2,926,739 $376,187 $(2,872,568)$(54,537)$422,863 
Net income  50,542   50,542 
Other comprehensive loss    (14,183)(14,183)
Cash dividends  (26,607)  (26,607)
Share-based compensation 5,027    5,027 
Common stock issued upon exercises of stock options
 450  241  691 
Common stock issued upon vesting of restricted shares
 (1,876) 817  (1,059)
Other 48 (11)68  105 
Balance at October 2, 2022$47,042 $2,930,388 $400,111 $(2,871,442)$(68,720)$437,379 

See accompanying notes to condensed consolidated financial statements.

7

THE WENDY’S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY—CONTINUED
(In Thousands)
Common
Stock
Additional
Paid-In
Capital
Retained EarningsCommon Stock Held in TreasuryAccumulated Other Comprehensive LossTotal
(Unaudited)
Balance at January 3, 2021$47,042 $2,899,276 $238,674 $(2,585,755)$(49,641)$549,596 
Net income  41,366   41,366 
Other comprehensive income    2,220 2,220 
Cash dividends  (20,156)  (20,156)
Repurchases of common stock   (56,084) (56,084)
Share-based compensation 5,151    5,151 
Common stock issued upon exercises of stock options
 (20) 683  663 
Common stock issued upon vesting of restricted shares
 (2,996) 817  (2,179)
Other 49 (5)44  88 
Balance at April 4, 2021$47,042 $2,901,460 $259,879 $(2,640,295)$(47,421)$520,665 
Net income  65,724   65,724 
Other comprehensive income    3,347 3,347 
Cash dividends  (22,123)  (22,123)
Repurchases of common stock   (27,291) (27,291)
Share-based compensation 5,882    5,882 
Common stock issued upon exercises of stock options
 850  23,466  24,316 
Common stock issued upon vesting of restricted shares
 (959) 714  (245)
Other 41 (5)45  81 
Balance at July 4, 2021$47,042 $2,907,274 $303,475 $(2,643,361)$(44,074)$570,356 
Net income  41,171   41,171 
Other comprehensive loss    (4,659)(4,659)
Cash dividends  (26,684)  (26,684)
Repurchases of common stock   (43,857) (43,857)
Share-based compensation 5,702    5,702 
Common stock issued upon exercises of stock options
 351  1,465  1,816 
Common stock issued upon vesting of restricted shares
 (1,835) 642  (1,193)
Other 60 (6)48  102 
Balance at October 3, 2021$47,042 $2,911,552 $317,956 $(2,685,063)$(48,733)$542,754 

See accompanying notes to condensed consolidated financial statements.
8

THE WENDY’S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Nine Months Ended
October 2,
2022
October 3,
2021
(Unaudited)
Cash flows from operating activities:
Net income$136,095 $148,261 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (exclusive of amortization of cloud computing arrangements shown separately below)100,911 93,243 
Amortization of cloud computing arrangements888  
Share-based compensation17,497 16,735 
Impairment of long-lived assets2,682 1,831 
Deferred income tax10,214 (25)
Non-cash rental expense, net26,164 28,421 
Change in operating lease liabilities(34,241)(34,220)
Net receipt of deferred vendor incentives1,884 1,906 
System optimization gains, net(4,138)(32,719)
Distributions received from joint ventures, net of equity in earnings3,468 3,561 
Long-term debt-related activities, net5,746 23,043 
Cloud computing arrangements expenditures(22,685)(5,619)
Changes in operating assets and liabilities and other, net(61,846)32,255 
Net cash provided by operating activities182,639 276,673 
Cash flows from investing activities:  
Capital expenditures(50,036)(43,401)
Franchise development fund(2,484) 
Acquisitions 4,879 
Dispositions3,731 52,657 
Notes receivable, net2,713 907 
Net cash (used in) provided by investing activities(46,076)15,042 
Cash flows from financing activities:  
Proceeds from long-term debt500,000 1,100,000 
Repayments of long-term debt(19,437)(955,782)
Repayments of finance lease liabilities(13,411)(9,021)
Deferred financing costs(10,232)(20,873)
Repurchases of common stock(51,950)(125,656)
Dividends(80,153)(68,963)
Proceeds from stock option exercises2,668 27,204 
Payments related to tax withholding for share-based compensation(2,980)(4,390)
Net cash provided by (used in) financing activities324,505 (57,481)
Net cash provided by operations before effect of exchange rate changes on cash461,068 234,234 
Effect of exchange rate changes on cash(7,176)177 
Net increase in cash, cash equivalents and restricted cash453,892 234,411 
Cash, cash equivalents and restricted cash at beginning of period366,966 418,241 
Cash, cash equivalents and restricted cash at end of period$820,858 $652,652 

See accompanying notes to condensed consolidated financial statements.
9

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)



(1) Basis of Presentation

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 October 2, 2022, the results of our operations for the three and nine months ended October 2, 2022 and October 3, 2021 and cash flows for the nine months ended October 2, 2022 and October 3, 2021. The results of operations for the nine months ended October 2, 2022 are not necessarily indicative of the results to be expected for the full 2022 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 January 2, 2022 (the “Form 10-K”).

In March 2020, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic. We continue to monitor the dynamic nature of the COVID-19 pandemic on our business, results and financial condition; however, we cannot predict the ultimate duration, scope or severity of the COVID-19 pandemic or its ultimate impact on our results of operations, financial condition and prospects.

The principal 100% owned subsidiary of the Company is Wendy’s International, LLC and its subsidiaries (“Wendy’s”). The Company manages and internally reports its business in the following segments: (1) Wendy’s U.S., (2) Wendy’s International and (3) Global Real Estate & Development. See Note 18 for further information.

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 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.

Our significant interim accounting policies include the recognition of advertising funds expense in proportion to advertising funds revenue.

Reclassifications

Beginning in 2022, the Company has reclassified payments for cloud computing arrangements to “Cloud computing arrangements expenditures,” which were previously recorded to “Changes in operating assets and liabilities and other, net.” The prior period amounts in the condensed consolidated statement of cash flows reflect the reclassification of these cash flows to conform to the current year presentation. There was no impact to “Net cash provided by operating activities.”

The following table illustrates the reclassifications made to the condensed consolidated statement of cash flows for the nine months ended October 3, 2021:
As Previously ReportedReclassificationsAs Currently Reported
Cloud computing arrangements expenditures$ $(5,619)$(5,619)
Changes in operating assets and liabilities and other, net26,636 5,619 32,255 

10

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)


(2) Revenue

Disaggregation of Revenue

The following tables disaggregate revenue by segment and source:
Wendy’s U.S.Wendy’s InternationalGlobal Real Estate & DevelopmentTotal
Three Months Ended October 2, 2022
Sales at Company-operated restaurants$225,245 $3,541 $ $228,786 
Franchise royalty revenue108,780 15,777  124,557 
Franchise fees15,294 1,257 625 17,176 
Franchise rental income  58,463 58,463 
Advertising funds revenue96,615 6,972  103,587 
Total revenues$445,934 $27,547 $59,088 $532,569 
Nine Months Ended October 2, 2022
Sales at Company-operated restaurants$659,649 $9,281 $ $668,930 
Franchise royalty revenue315,572 45,743  361,315 
Franchise fees46,685 3,695 2,450 52,830 
Franchise rental income