Wendy's Company (The)

Good morning. Welcome to the Wendy's Company Preliminary Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star followed by the number two. Thank you. Kelsey Freed, Director of Investor Relations, you may begin your conference.

Thank you, and good morning everyone. Today's conference call and webcast includes a PowerPoint presentation, which is available on our Investor Relations website, irwendings.com. Before we begin, please take note of the safe harbor statement that appears at the end of our earnings release. This disclosure reminds investors that certain information we may discuss today is forward-looking. Various factors could affect our results and cause those results to differ materially from the projections set forth in our forward-looking statements. Also, some of today's comments will reference non-GAAP financial measures. Investors should refer to our reconciliations of non-GAAP financial measures to the most directly comparable GAAP measure at the end of this presentation or in our earnings release. On our conference call today, our President and Chief Executive Officer, Todd Penegor, and our Chief Financial Officer, Gunther Plush, we'll briefly review our preliminary Q4 and full year 2022 results and provide an update on our capital allocation actions. From there, we will open up the line for questions. With that, I will hand things over to Todd.

Thanks, Kelsey, and good morning, everyone. I'm pleased to speak with all of you a bit earlier this quarter to announce our preliminary fourth quarter financial performance and revisit our capital allocation policy. Before diving into our strong results, I did want to take a moment to comment on Tryon Partners' amended 13D that was filed this morning. We look forward to continuing our partnership with Tryon Partners with a shared goal of delivering value for all shareholders. Wendy's continues to make meaningful progress against our three strategic growth pillars, and we are pleased with Tryon Partners' confidence in our growth strategy. Today's call will be focused on our preliminary fourth quarter and full year 2022 results and the capital allocation actions we announced earlier this morning. I look forward to sharing the detailed drivers of our 2022 results and providing our 2023 and long-term financial outlook as part of our full earnings release on March the 1st. Now let's turn to our preliminary fourth quarter and full year 2022 results, which highlight the strength and resiliency of the Wendy's brand as we continue to deliver compelling growth. 2022 global system-wide sales grew 6.8%, supported by a second consecutive year of double-digit two-year global same restaurant sales, as well as over 275 new restaurants we opened across the globe. This sales strength, along with a step down in inflationary pressures, underpinned the almost 300 basis point improvement in company-operated restaurant margin over the course of the year. This momentum, alongside the hard work and dedication of our restaurant crews, franchisees, and support center staff, drove our full-year adjusted EBITDA of approximately $498 million, a 6.6% improvement versus the prior year. The strength we are driving in the business, alongside our robust liquidity position, supports the capital allocation actions we announced this morning. We have achieved our 12th consecutive year of global same-restaurant sales growth which is a streak we plan to keep alive in 2023 and beyond. 2022 also marked our second consecutive year of double-digit global same restaurant sales on a two-year basis, which is truly remarkable. This growth extended across the globe with double-digit two-year same restaurant sales in both our U.S. and international segments. Our sales results have enabled the Wendy's system to weather the unprecedented headwinds over the last few years and set us up for further growth next year. Our sales momentum picked up even further to close the year as our two-year same restaurant sales results accelerated in Q4 versus the prior quarter. Our international business continued to achieve outstanding results, supported by growth across all our regions. This sales strength further bolsters our confidence in accelerated international expansion in the coming years. The acceleration in our U.S. business same restaurant sales was supported by our strategic mix of craveable innovation and compelling price points across a variety of occasions. We launched the decadent Italian mozzarella sandwiches and garlic fries, delivered another exciting extension of an iconic product with the peppermint frosty, and continued to promote our ownable $5 Biggie Bay. At the breakfast day part, we enticed trial with our $3 croissant promotion and continued to see our French toast sticks resonate with customers. I'm excited to share more about our strong sales results including updates on our breakfast and digital pillars at our full earnings call in March. I am proud of the new net unit growth our team was able to deliver in 2022, despite ongoing development challenges across the industry. We opened over 275 new restaurants globally, reaching 2.1% net unit growth and marking a second consecutive year of net unit growth accelerations. This growth was spread across the globe, with the U.S. and international segments making up approximately 40% and 60% of our net unit growth, respectively. Turning to the U.K., we have grown the market to a footprint of almost 30 restaurants in well under two years. As of year end, this includes 12 company-operated restaurants, as well as our first traditional franchise-operated restaurant. We are excited for all the growth that's ahead for this market in 2023 and beyond, including our first drive-through restaurant expected to open in the coming weeks. Finally, our focus on franchise recruiting has paid off with nearly 40 new franchisees joining the Wendy's family across the globe in 2022. This signals just how much excitement there is in the investment opportunity of the Wendy's brand. In addition to the new development commitments to come along with these new franchisees, we are excited by the wealth of experience and growth mindset that they bring to the system. We are committed to bringing Wendy's to more of our fans and are excited about the strong foundation we set for further growth ahead. We remain committed to driving accelerated growth across our three strategic pillars, building our breakfast day park, accelerating our digital business, and growing our global footprint. Before turning it over to GP to walk through our capital allocation updates, I want to take a moment to comment on the redesign of the company's organizational structure that we communicated this morning. The redesign is being made in an effort to better support the execution of our long-term growth strategy by maximizing organizational efficiency and streamlining decision-making. Following this change, we intend to embark on a broader redesign of our organizational structure as we see an opportunity to operate as a fully global brand with a unified voice, approach, and operating model. We anticipate that our 2023 and 2024 GNA will be relatively flat versus 2022, despite elevated inflationary pressures. As a result of the redesign, we are now beginning in service of accelerating our growth even further. With that, I'll turn it over to GP to walk through our capital allocation actions.