The Wendy's Company — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported total revenues of $547.0 million for the third quarter, a 0.5% decrease from $549.5 million in the prior year period; year-to-date revenues were $1,658.2 million, a 1.5% increase from $1,633.9 million.
• Net income was $15.1 million for the quarter, a 65.9% decrease from $44.3 million in the prior year; year-to-date net income was $70.4 million, a 49.2% decrease from $138.6 million.
• Adjusted EBITDA was $113.4 million for the quarter, a 17.8% decrease from $138.0 million in the prior year; year-to-date adjusted EBITDA was $348.8 million, a 14.8% decrease from $409.2 million.
• Reported diluted earnings per share (EPS) was $0.08 for the quarter, down 65.2% from $0.23; adjusted EPS was $0.13, down 45.8% from $0.24. Year-to-date reported diluted EPS was $0.37 (down 47.9%) and adjusted EPS was $0.43 (down 41.1%).
• U.S. Company-operated restaurant margin decreased 140 basis points to 11.7% in the quarter (from 13.1%) and 240 basis points to 12.3% year-to-date (from 14.7%).
• General and administrative expense increased 26.3% to $73.1 million in the quarter (from $57.9 million) and 14.3% to $212.1 million year-to-date (from $185.6 million).
• Operating profit decreased 39.3% to $55.8 million in the quarter (from $92.0 million) and 28.4% to $200.0 million year-to-date (from $279.4 million).
• Net cash provided by operating activities was $239.0 million for the first nine months of 2026, a 13.2% decrease from $275.3 million in the prior year period.
• Free cash flow was $174.2 million for the first nine months of 2026, a 10.9% decrease from $195.6 million in the prior year period.
• Cash and cash equivalents were $373.7 million as of September 27, 2026, compared to $300.8 million as of December 28, 2025.
• Long-term debt was $2.71 billion as of September 27, 2026, compared to $2.73 billion as of December 28, 2025.

Guidance and Future Outlook:

• Management expressed confidence in the financial capacity to execute the "Dave's Way" strategy, citing approximately $413 million in cash and $174 million of free cash flow year-to-date.
• The company anticipates that its decision to revise the breakfast strategy to be location-specific could unlock up to $200 million in restaurant-level EBITDA across the system.
• "Dave's Way" is a multi-year strategy focused on growing customer traffic and market share while strengthening restaurant profitability, with tests and new initiatives currently underway.

Business Segments and Product Lines:

• Global systemwide sales decreased 5.9% in the third quarter, driven by a 7.6% decline in the U.S. and a 3.5% increase in international markets.
• U.S. same-restaurant sales decreased 5.7% in the third quarter, while international same-restaurant sales decreased 2.2%.
• Year-to-date global systemwide sales decreased 6.0%, with U.S. sales down 7.7% and international sales up 4.3%.
• U.S. Company-operated restaurant margin decline was attributed to lower traffic, labor rate inflation, and commodity inflation, partially offset by an increase in average check and labor efficiencies.
• Revenue decreases were primarily driven by lower franchise royalty revenue, partially offset by higher advertising funds revenue due to reallocation of local funds to U.S. national advertising and higher Company-operated restaurant sales from acquisitions.
• The company initiated portfolio optimization actions, including planned Company restaurant acquisitions and transfers of franchised restaurants to well-capitalized, high-performing operators.
• The breakfast strategy was revised to be location-specific based on test results yielding significant profit improvement.
• Tariq Hassan was appointed as the new Chief Marketing and Customer Growth Officer.

Market and Competitive Landscape:

• The company operates across more than 7,000 restaurants worldwide, with a restaurant count of 7,194 at the end of the third quarter (down from 7,363 at the end of the prior year).
• U.S. restaurant count decreased to 5,711 at quarter-end from 5,979 at the prior year-end, while international count increased to 1,483 from 1,384.
• Year-to-date U.S. net restaurant change was -258, while international net change was +55.
• Systemwide sales growth and same-restaurant sales growth are calculated on a constant currency basis and exclude Argentina.

Risks and Challenges:

• Forward-looking statements note risks including competition, adverse economic conditions, changes in consumer spending and tastes, and supply chain disruptions.
• Specific risks include labor shortages, increased labor costs, commodity cost volatility, and the effectiveness of marketing and new product development.
• Risks related to the company's digital commerce strategy, cybersecurity incidents, and the ability to successfully implement strategic initiatives are highlighted.
• The company faces risks associated with its predominantly franchised business model and the potential impact of litigation or regulatory complaints.
• Trian Fund Management has indicated an intent to explore potential transactions to enhance stockholder value, which could impact the business.

Management Commentary and Tone:

• Bob Wright, President and CEO, stated he is encouraged by the speed at which the system has aligned around "Dave's Way," noting early progress in menu testing, marketing execution, and digital business acceleration.
• Steve Cirulis, CFO and Chief Strategy Officer, expressed confidence in the company's financial capacity to execute the strategy and balance investment with disciplined returns.
• Management highlighted that the breakfast strategy decision is expected to unlock significant EBITDA, reflecting a focus on long-term value creation.

Other Key Points:

• The Company declared a quarterly cash dividend of $0.07 per share, payable on December 15, 2026, to shareholders of record as of December 1, 2026.
• The Company signed a letter-of-intent with Meritage Hospitality Group to acquire up to 163 Wendy's restaurants, subject to definitive agreement, better offers, and court approval.
• No shares were repurchased in the third quarter of 2026 or the fourth quarter as of the release date; approximately $35.0 million remains available under the existing share repurchase authorization expiring in February 2027.
• Strategic initiative expenses of $11.9 million were incurred in the quarter and year-to-date, primarily related to third-party consulting and professional fees for "Dave's Way" and senior management actions.
• The company acquired franchise-operated restaurants during the third quarter of 2025, contributing to higher Company-operated restaurant sales in the current period.