Wendy's Reports New $1.4 Bln Share Repurchase, Cuts FY EPS View; Stock Up

(RTTNews) - Fast food chain The Wendy's Co. (WEN) Wednesday said its Board of Directors has authorized a new $1.4 billion share repurchase program.

The company intends to repurchase shares with existing cash on its balance sheet, cash flow from operations and net proceeds of $925 million from its recently completed securitization refinancing.

The firm also plans to use its expected pretax proceeds of $400 million to $475 million from the third phase of its system optimization initiative and after-tax proceeds of approximately $50 million from the sale of its bakery operations for this purpose.

As part of the new authorization, the company will commence an $850 million share repurchase program today.

The company also updated its 2015 and long-term outlook to reflect the anticipated impact of the repurchase program, its recently completed refinancing and the sale of its bakery operations.

The company now expects 2015 adjusted earnings per share of $0.31 to $0.33. This represents an increase of 10 to 17 percent compared to the company's 2014 Adjusted EPS results, excluding approximately $0.02 per share of earnings attributable to its bakery operations.

On average, 17 analysts polled by Thomson Reuters expect earnings of $0.34 per share for the year. Analysts' estimates typically exclude special items.

The company last month said it expected adjusted earnings in the range of $0.33 to $0.35 per share for the year.

The company expects high single-digit adjusted earnings per share growth in 2016 and adjusted earnings per share growth in the high teens in 2017.

The stock, which closed down 0.2 percent on Tuesday at $11.10, climbed 5.3 percent in pre-market activity.