Peter Koumas - Group Manager, Investor Relations Todd Penegor - President and Chief Executive Officer Gunther Plosch - Chief Financial Officer

John Glass - Morgan Stanley Will Slabaugh - Stephens, Inc. Michael Gallo - C.L. King Jeff Farmer - Wells Fargo Sara Senatore - Bernstein Matt McGinley - Evercore ISI Chris O’Cull - KeyBanc David Palmer - RBC Capital Markets Matthew DiFrisco - Guggenheim Securities Jeffrey Bernstein - Barclays John Ivankoe - JP Morgan Joseph Buckley - Bank of America

[Starts Abruptly] I will now turn the conference over to Peter Koumas, Group Manager, Investor Relations. Please go ahead sir.

Thank you and good morning, everyone. Our conference call today will start with comments from our President and Chief Executive Officer, Todd Penegor, followed by our Chief Financial Officer, Gunther Plosch, who will review our results and outlook. Then Todd will conclude with an update on key initiatives. After that we will open up the line for questions. Today's conference call and webcast includes a PowerPoint presentation, which is available on the Investors section of our website, www.aboutwendys.com. Before we begin, please take note of the Safe Harbor statement appears at the end of our earnings release. This disclosure reminds investors that certain information we may disclose 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, such as adjusted EBITDA, adjusted EBITDA margin, adjusted earnings per share, adjusted tax rate, and free cash flow. Investors should refer to our reconciliations of non-GAAP financial measures to the most directly comparable GAAP measure. And with that, I'll now turn the call over to our President and Chief Executive Officer, Todd Penegor.

Thank you, Peter, and good morning, everyone. We are pleased to report solid third quarter results which reflect the benefit of our brand transformation efforts and a strengthened economics model. Starting with the top line, North America’s systems same restaurant sales increased 1.4% or 4.5% on a two year basis. This is our fifteenth consecutive quarter of positive same restaurant sales, which demonstrates the long term strength and relevance of our brand. Adjusted EIBIDA margin improved in the third quarter by 600 basis points to 27.5%. This significant improvement continues to demonstrate the higher quality of earnings that we are generating as a result of our system optimization initiative. Royalties and rental income are contributing a higher amount of our earnings along with ongoing focus on G&A expense. Image Activation which includes restaurant reimaging and new restaurant development has been a cornerstone of our brand transformation and it's a key driver of our growth strategy going forward. Franchisees continue to see the benefits of Image Activation and are accelerating their pace of reimaging. We now expect to image activate approximately 600 restaurants in 2016 which is a significant step up from our original expectations of 540. In light of our third quarter results, we are increasing our 2106 guidance for both adjusted earnings per share and adjusted EBITDA. Lastly, as part of our previously announced share repurchase authorization we intend to enter into an accelerated share repurchase transaction for $150 million in the near future. We also announced that our Board of Directors has authorized an 8% increase in our quarterly dividend rate. We continue to deliver on our commitment to return significant amounts of capital to our shareholders and remain focused on returning excess cash to shareholders going forward. On our second quarter conference call, we stressed the importance of a balanced marketing approach particularly in today's environment. After a slightly LTO heavy promotional calendar in Q2, we shifted our messaging in Q3 to emphasize our core and price value offerings. By highlighting core menu items offerings that are only available in Wendy's restaurants every day, we can promote brand equities that differentiate us from the competition, quality, freshness and sandwiches made to order or some of the qualities that have been instilled in our restaurants since 1669 and are as important as ever to consumers today. On the price value front are 4 for $4 offering which launched a little over a year ago has been a hit with consumers and we’ve remained focused on continuing to find ways to provide value across our entire menu. Our promotional calendar in the third quarter came together nicely, and was successful in refocusing attention on core and price value, and our results benefited greatly. The Summer Berry Chicken Salad was our first national message in Q3. This salad LTO highlighted our focus on freshness by serving fresh strawberries and blackberries on a bed of hand cut lettuce with better cheese, apple chips, and grilled chicken a great combination of sweet and savory. Next up was the Baconator, a deliciously different menu item that features fresh never frozen North American beef and six trips of Applewood Smoked Bacon cooked in our restaurants each day. By also offering Baconator fries in an attractive price point of a $1.99, we were able to provide compelling value to consumers while also highlighting our brand equities through a core offering. Following the Baconator promotion with $0.50 frosty, which droves strong customer accounts in a very profitable way. What better way to fight the dog days of summer with an amazing deal on an iconic product that you can only get at Wendy's! Rounding out the Q3 calendar was our redesigned grilled chicken sandwich, which features a fantastic new multigrain bun and fresh grilled cooking procedures that results in a more tender and juicy chicken fillet. We leverage the $5 price point for a small combo they gave our customers great value on an upgraded core menu item. The balanced approach in the third quarter promotional calendar drove a solid increase in both our one and two years same restaurant sales in North America. Our same restaurant sales outperform the QSR sandwich category for seven consecutive weeks to end the third quarter according to the NPD Group’s sales track weekly, included in the segment our 16 of the top QSR sandwich and hamburger chains in the U.S. Our outperformance versus our peers started with the introduction of the $0.50 frosty promotion and continued with the launch of our upgraded grilled chicken sandwich. Both promotions brought profitable customer counts into our restaurants and helped us gain QSR burger category traffic share in the third quarter according to the NPD Group. The solid third quarter results were achieved in spite of tougher 2015 compares and without relief from the challenging industry conditions. It is imperative that we continue to find ways to meet the consumer's economic model. Our brand position of delivering new QSR quality at traditional QSR prices has allowed us to drive profitable customer counts even in a difficult environment, which becomes evident when you take a deeper look at our Q3 results. Our third quarter same restaurant sales for the North American system were driven by strong customer count growth and a slight increase in average check. The benefits from our brand initiatives, Image Activation in our systems continued progress and discipline pricing has contributed to us bringing in more customers to our restaurants. Conversely, the QSR hamburgers categories growth was driven by an increase in average eater check which was largely offset by a substantial decrease in customer accounts. We believe the healthy and sustainable way to grow is to remain committed to driving profitable customer counts. We are focused on bringing in more customers more often to our restaurants. This is more important than ever as the gap between food at home, and food away from home prices in the restaurant industry continues to widen. The focus on our core brand equities and a balanced marketing strategy across core, price value in LTO’s has resulted in year-over-year improvements in key brand health metrics. Our food quality and messaging continues to resonate with consumers as evidence by a 16% increase in our key quality metric high quality food. Wendy's is consistently ranked the highest among traditional QSR hamburger competitors for food quality and we remain committed to winding this gap even further. Our efforts upgrading our hamburger line and grilled chicken offering are delighting customers. Our focus on price value is connecting with consumers as reflected by a 7% increase in our key value metric worth what you pay. The year-over-year improvements we have seen in our brand health metrics are encouraging and we will continue to strive to provide consumers an even better total experience in our restaurants. Everything at Wendy centers around delivering on our brand promise of delighting every customer period. In order to achieve this, we have to be focused on our food, providing great value, delivering exceptional service and elevating our restaurants. Fresh honest ingredients, cravable taste, made right that is how we create food our customers love. Competitive prices, Wendy's quality and a great experience are going to make our customers feel Wendy's is worth what they pay. Service is a key pillar for us. Service that is friendly, accurate and fast creates an experience that brings our customers back. Last but not least, our restaurants have to be clean and well maintained, up to date convenient, up beaten comfortable in the eyes of our customers a place they just love to go. We can create joy in opportunity through our food, family, and community when we are excelling in these key focus areas. And now here is GP to take you through our third quarter financial highlights.

Thanks, Todd. North America system same-restaurant sales increased 1.4%, 4.5% on a two-year basis. Higher sales at reimaged restaurants contributed approximately 80 basis points to our North America system same-restaurant sales results in quarter three. North America company-restaurant margin came in at 18.4% in quarter three, a slight decrease compared to the third quarter of 2015. General and administrative expense was $58.9 million in quarter three, compared to $63.7 million in 2015. The 7.5% year-over-year decrease was mainly due to savings from systems optimization and lower share based compensation and incentive compensation which were partially offset by an increase in professional and legal fees associated with the unusual payment card activity. Adjusted EBITDA was $100.2 million in the third quarter of 2016, a slight increase compared to the third quarter of last year. Our strong adjusted EBITDA performance as well as the 600 basis point improvement in adjusted EBITDA margin exemplifies our higher quality of earnings resulting from our system optimization initiative. Adjusted earnings per share were $0.11 in the third quarter of 2016 compared to $0.09 in this third quarter of 2015. Now we will take a deeper look at our adjusted EBITDA performance. During the third quarter, adjusted EBITDA was essentially flat year-over-year, but we are proud of the fact that we successfully replaced the EBITDA that was lost from owning 433 fewer company restaurants with royalties, franchise fees and net rental income, which increased by $24 million compared to quarter three of 2015. Switching now to our $0.02 improvement in adjusted earnings per share, in the third quarter, we saw $0.01 of accretion from our ongoing share repurchase program. During the quarter, we repurchased $5.3 million shares for $53.1 million and we have reduced our shares outstanding for over 10% since the end of the third quarter of 2015. This marks the first quarter that share repurchase activity net of interest expense has been accretive to EPS as we are now lapping over the higher debt levels resulting from our 2015 whole business securitization. Depreciation declined year-over-year primarily due to the sale of company operated restaurants, which resulted in another $0.01 of EPS improvement. Now I would like to provide an update on where we stand with our capital return plans. Year-to-date, we have repurchased 18 million shares for around $185 million. As noted in our release, today we announced our intent to repurchase $150 million of our stock in an accelerated share repurchase transaction in the near future. After the completion of the anticipated transaction, we will have utilized substantially all of our $1.4 billion share repurchase authorization that was approved by our Board of Directors last June. We also announced that our Board has authorized an 8% increase in our quarterly dividend rate from $0.06 per share to $0.065 share effective with our December dividend. This marks the fifth consecutive year that we have raised our dividend. And during that time, our dividend has grown by 225%. We plan to provide additional details on our future capital allocation strategy when we provide updated guidance early next year. Now let's take a look at our full year 2016 outlook. We are increasing our guidance for adjusted earnings per share to $0.40 to $0.41, up from our prior guidance of $0.39 to $40. We also expect adjusted EBITDA to come in at the high end of our previously issued range of flat to up 1% compared to 2015. With a little over seven weeks to go for the year, we are tightening our same restaurant sales guidance to approximately 1.5% growth for the North American system. This updated guidance implies slightly positive same restaurant sales in the fourth quarter as we lap over their launch of 4 for $4 in October of last year. We have also updated our guidance for cash flow from operations to $180 million to $200 million. Capital expenditures are now expected to be approximately $145 million and we now expect free cash flow to come in at approximately $35 million to $55 million. We continue to expect commodity deflation of 5% to 6%, company operated restaurant margin of approximately 19%, general and administrative expense of approximately $245 million to $250 million and an adjusted tax rate of approximately 32% to 34%. I will now turn the presentation back over to Todd to provide a brief update on some of our key growth initiatives.

Thanks GP. We are in the final stages of the third phase of system optimization. As of today, we have completed about 85% of the 2016 transactions. The remaining markets we expect to sell have been awarded the respective buyers and we remain on track to close all remaining deals by year end. During 2016, we expect to sell a total of approximately 315 restaurants on top of the 227 restaurants that were sold in the second half of 2015, which will leave the company with ownership of approximately 5%. We continue to expect total pretax proceeds for system optimization three of approximately $435 million and after tax proceeds of approximately $340 million. Going forward as part of our ongoing system optimization strategy, we will continue to facilitate franchisee to franchisee restaurant transfers through our buy-and-flip strategy. During the third quarter, 18 restaurants were transferred through buy-and-flip transactions, which brings our year-to-date total to 144. We continue to expect about 200 restaurants to be transferred through buy-and-flips in 2016. System optimization is all about building an even stronger system and serving as a catalyst for growth by putting restaurants in the hands of strong operators who are committed to driving new restaurant development and accelerating reimaging. Turning to Image Activation, we now expect the North America system to image activate approximately 600 restaurants, which includes about 100 new builds. As I mentioned earlier this is a significant increase from our prior expectation of 540 reimaged and new restaurants. About 28% of the Wendy's system is now image activated and we expect that number will exceed 30% by the end of this year. The evolution of Image Activation and the improvement in our restaurant economic model is also enabling us to make progress with our new restaurant development goals. We now expect to achieve total net new development in 2016 of 15 to 20 restaurants for the North American system, which is higher than our original plans of five to 10. This would be our first year of positive net new restaurant opening since 2010 a great momentum builder for future development goals. And finally, we are on track with our 2020 goals. For the North America system, we continue to target average unit sales volumes of $2 million, restaurant margins of 20%, sales to investment ratio of at least 1.3 times for new restaurants, restaurant development growth of a 1000 new restaurants and approximately 500 net and image activating at least 60% of our restaurants. We also remained committed to our 2020 company goal, delivering adjusted EBITDA margin of 38% to 40% and we plan to provide additional details on our roadmap to deliver this margin expansion early next year when we provide updated guidance. Now, here’s Peter.

Thanks, Todd. Please, note that we would be returning scheduled calls with the self-side for the remainder of the day, but if you need to reach us, please email at peter.koumas@wendys.com or leave a message at 614-764-8478 and we’ll get back to you as soon as we can. Before we open the phone line for questions, I would like to review some upcoming events on our Investor Relations calendar. On Tuesday, November 15, GP and I will be in New York for the Morgan Stanley Consumer and Retail Conference. A few weeks later on Friday, December, 9, we will be in New York for a one day Road Show hosted by Bernstein. If you are interested in meeting with us at these events, please contact the respective self-side analysts or equity sales contact at the host firm. And finally, on Thursday February, 16, we plan to host our 2017 Investor Day here in Dublin, where we will issue our preliminary 2016 earnings release and updated outlook. Please hold the date, we you will give get few more details soon. With that, we are now ready to take your questions

[Operator Instructions] Your first question comes from the line of John Glass of Morgan Stanley.

Thanks very much, and morning. First, can you just maybe bridge the change in your free cash flow guidance and your cash from operation guidance versus what you reported, you raised your EBITDA guidance for the high end in earnings and you’ve lowered yeah you lowered cash from operations by $5 million to $20 million, I understand higher interest is a piece of that, but what are the other components of the cash from operations change?

Good morning, John. It’s Gunther. Thanks for your question. And you’re right. We changed cash for guidance a little bit. Basically what happened is, we lowered cash from operations to slightly lower end of the range. Capital came in slightly higher as a result of it, be kind of slightly lower the guidance for the year. I do want to point out that the cash flow guidance for 2017 and 2018 remains unchanged as we have previously communicated.

And why did that - why did the CapEx come in at the high end, is this a timing issue or remodels more expensive than you thought, what are the dynamics driving the higher CapEx?

I think the majority is timing issue. And again, we have this complicated situation that we’re trying to sell off our market. We obviously have a much more stable picture going forward in 2017 and 2018. And we have a fair amount of confidence that we’re going to stay within the capital guidance we have previously issued which is in the $80 million to $90 million range.

Okay. And then just finally just going to commented on the capital allocation announcement coming up the year next, is this about levered target or what do you thinking about make this out a year ago.

So I think so your question was in terms of allocation guidance. So what we have is we stay committed that we returning all excess cash to our investor. So you continue to can expect that we are continued going to do dividends and continue going to the share repurchases. As you know the share repurchase authorization has expired or will expire at the end of the year and we are going through an internal process with our Board of Directors at the moment how we might allocate those excess funds out to our investor community.

Thanks very much.

Thanks.

Thanks. Your next question comes from the line of Will Slabaugh of Stephens, Inc.

Yes, thanks guys. I want to ask you on menu innovation which you went through a little bit as far how it worked out for 3Q, and also another 4 for $4 is worthwhile alongside with that and that continues to mix well. Can you talk about where there might be additional opportunities to bring new product news I know you’re lapping up against pretty tough comparisons going forward. So not focusing too much on the short term, but just wanted to get a sense of where your head was in terms of where the opportunities could be on the menu for more innovation and driving more traffic?

Hey, well, good morning. And this is Todd. I think it is a balance. As you guys know there are a lot of things that we continue to test out in the marketplace to bring news to the brand. But we’re really focused on is telling our unique brand story. And if you look at where our calendar has gone into the early fourth quarter and we brought news against our 4 for $4 promotion, we brought the Swiss JVC into play to make sure that we can keep the 4 for $4 fresh and ownable. We brought back something that’s truly differentiated in the category from a burger QSR perspective, the Taco Salad LTO which, not just an LTO it’s going to be permanent on our calendar long term. And then really coming back to some of our equity messaging that’s out there right now and really talking about fresh beef and the messaging frozen is for later and fresh is for now is something that’s truly differentiated in our space. And we think we can continue to have a nice balance between focus on the core and telling our brand story, bringing a bit of news into play as we’ve always has with some impactful LTOs, but also making sure that we continue to bring a value that could be 4 for $4. They could be the total experience in the restaurant. And you saw that work with things like the $0.50 frosty we’re able to put that out there to really drive some profitable customer count growth.

Got it, thank you. If I could talk really quickly on the raise guidance, to get down to the high end of the EPS range given the strength you saw in 3Q have to assume some pretty material deleveraging at the restaurant level for 4Q, which looks like you may be include some cost of sales rising sequentially as well. So any thoughts on where the deleveraging might show up in 4Q more materially as you lap over that tough comparison?

I think, well I’ll turn it over to GP in a moment on deleveraging. We don’t really have deleveraging built in tremendously I think if you get into our fourth quarter our tough comp it’s really driven by two things. Remember we still got a 53 week that we have to lap and we said that was about $7 million of EBITDA on the past. So that’s one of the headwinds. In last year, you may recall with a lot of the system optimization activity, we had a lot of TAS that came through in the quarter. So that’s more the function of the EBITDA growth year-in-year. We don’t see and I’m looking over to GP and giving a little more color on any material deleveraging is we’re still confident at 19% full year restaurant operating margin.

That exactly right, Todd. What we had, year-to-date we have a restaurant margin of 19.2% regarding to 19. So you can expect that the fourth quarter is going to be slightly below the 19% mark and it’s really in line with the guidance we gave it in the second quarter. So really no surprise for us our restaurant margin constructs.

Understood. Thank you.

Your next question comes from the line of Michael Gallo of C.L. King.

Hi. Good morning.

Good morning, Mike.

One question and one follow-up. Todd, obviously nice to see the acceleration in Image Activation. I was wondering how much of that is a function of just as you start to get these transactions done versus franchisees just getting increasingly confident that they’re getting the returns and sales lift that that they would like? And then I have a follow-up.

Hey Michael, it’s less of a function of the transactions that are happening. It’s nice that we get commitments for reimaging and commitments to new builds with the system optimization initiatives in the buying flips that we’re doing. But it really continued momentum as we continue to work the economic model on reimaging and really try to work to find the sweet spot on the investment in the return. It’s driven a lot of confidence in our franchise community that they feel good that that investment will drive a return. And all the work that we’ve done along the way to really optimize the investment as well as continue expand our margins has been helpful. And what we’re seeing is a nice positive trend in the health of our franchise community with positive cash flow which helps to continue to reinvest in the business to stimulate growth for the future. So we feel good about that momentum that we’re seeing.

Okay, great and then a follow-up for GP. GP, how much was the cost for the unusual credit card payment activity in the third quarter and what’s the year-to-date, should we assume that this is pretty much down on a go forward basis.

Good morning, Mike. So what we have it in the year-to-date basis, our cost has been in the $4 million to $5 million range. Remember in the first quarter, we highlighted that about $2million. And in the third quarter, it’s a little bit more than $2 million since basically in the Q explained there. Are we done? No, we are not done. Obviously, we still have two pending lawsuits that we need to work through. So expect that it’s going to be a little bit more cost to come. And we have taken care of debt cost estimate in our outlook for year.

Okay. Thank you.

Your next question comes from the line of Jeff Farmer of Wells Fargo.

Great, thank you. Franchise rental income has been the largest revenue growth contributor for company, so looks like over the last several quarters. So can you help us just better project future rental income by providing some detail on. I think it’s a number of restaurants that you own and then rent to franchisees and then the number of restaurants that you rent and then sublease to franchisees. Any detail there would help us think about this moving forward?

Yeah. So we keep looking through the rental income stream and we keep actually revising the projections upwards absolutely right. What we have at moment we have about 667 properties that we own. And as we said in 2015, we had kind of monetized about 50% of it. As we are fast forwarding where we have 5% of our comp of all restaurants being company restaurants, you’re going to expect about 45% of them are going to be on land and building that we own. So as a result, right 45% of about 320 restaurants you can basically estimate that we have about monetized 78% of all our land and building. You can also expect that since we are now finished really with system optimization by the end of the year that we have reached our peak will rental income kind of some 2017 onwards slightly increase, yes a little bit but only because of the kind of industry stand at rent escalators and dealings, but the brand of the income is now generated come at the end of the year. I hope I answered your question.

Yeah. Thank you.

Your next question comes in the line of Sara Senatore of Bernstein.

Hi, thank you very much. Two questions I may, one is on commodity cost. In particular I think if they didn’t - your outlook didn’t change for this year, I know we don’t have too much of the year. But I was wondering if you could share your thoughts on that, does that suggest things are stabilizing because it had looked us the futures markets were suggesting, so might have another couple of quarters before that happen. And I guess I ask in the context of the food away versus food at home gap and if you think that that might improve where sort of industry trends go, because I notice that you I think you took the comp guidance out of your kind of longer term guidance, kept the AUVs but the comp guidance seems to have gone away. So I was just wondering if you could tie those together kind of a commodity outlook in the context of food at home and food away from home. And then I have a second question, please.

Good morning, Sara. This is GP. Yes, in the commodity side, you’re right. We maintained the outlook of 5% to 6% deflation, if you are betting, it probably coming high on what in the midpoint. Be confident on the commodities going forward. I would say grain supply is great, stocked well. So we actually expect that commodities going to stay our friend for next year. But we’re going to update more specific guidance on Investor Day as we layout all the expectations we have for 2017. On your subsequent question in terms of food away from home and at home inflation, deflation, I think Todd wants to add a couple of points.

And as the years progress right, we’ve continued to see that widen but as you get into next year and commodities kind of flatten out. I think you’ll see that gap slightly start come back together which would be a healthy thing for the industry over time, be just a function of lapping what happened this year. And as your question on same restaurant sales guidance, we’ve been sticking to our long term guidance of approximately 3% for the system and that holds.

Okay. That’s great. And I just sorry I one question on the margin side, I know you said you’ll give more details on the margin, you have a longer term margin targets, but I notice that this quarter, you’re pretty close to your franchise mix target of 95%, but your EBITDA margin is somewhere around a 1,000 to 1,300 basis points below the longer term. Is there any way just you can give some sort of broad guardrails about where that margin expansion might come from?

Hi Sara. Good quick question. I assume you’re referring to this 38% to 40% EBITDA margin target for 2020.

I am in.

Okay, that’s what I thought. So what’s going to do happen is, we continue to expect - our restaurant margin is going to expand. We continue to expect that we are going to develop our restaurants both in North America and in international, that’s going to create scale for us. And we continue to expect that obviously G&A is going to come down, right. As you know we have in midpoint of the guidance range with this year is $248 million. We had previously said that needs to come down to $230 million. So you can at least expect that’s to happen. And the combination of all of those, so growth plus moderate margin expansion of restaurant business plus continued prudent approach in G&A is going to drive our margin into that range.

I think the other pieces you got a satisfactory in the net new restaurant development both from what we’re seeing here with the momentum in North America as well as our longer term plans and that development across international. And we’ll provide more insight on our international clients at our Analyst Day in February.

Thank you.

Your next question comes from the line of Matt McGinley of Evercore ISI.

Hi, good morning. My question is on the cash balances, obviously very high quarter end and that’s probably why you announce the intention in ASR. But at steady state, when you’re done with the refranchising in your theoretically this much more asset like business, how much cash do you think you need to maintain on your balance sheet just to run Wendy’s as a business?

Good morning, Matt. Great, question. So we think we need about $150 million. We are setting aside about $100 million for international and about $50 million to run the North American operation.

Okay. And on the restaurant labor and occupancy cost, it looks like it had gone from a benefit to a headwind a little bit of headwind in the third quarter relative to the prior quarters. Is that a function of you’re just not getting as much benefit or something has change with the labor rates or your ability to get efficiency or is that just related to mix as you sell off these stores?

Great question, Matt. Overall, we actually proud in terms of how we progress with margin, if you think about it restaurant margin, overall year-to-date is 19.2%. So we expanded margin by 200 basis points, so that plan works. What has changed versus the second quarter, I would say we implemented minimum wage in the Chicago area in the third quarter but put a little bit of pressure on to the labor rates, which we couldn’t quite overcome in the quarter. Don’t forget, we remained totally committed that we’re going to continue to invest in mobile ordering, mobile kiosks, back-of-the-house automation to make sure that that headwind that is coming towards us on labor rate is the real track on our earnings. And this Todd always says right, we’re driving very hard traffic, because you know the way our restaurant structure is, the more traffic you run through the more leverage you get.

Okay. Thank you very much.

Our next question comes in the line of Chris O’Cull of KeyBanc. Chris O’Cull: Thanks. Good morning, guys. GP, what working capital needs will continue in 2017 that maybe could depress CFO, for example deferred tax liabilities has been a fairly significant use of cash this year. Things like that, should that continue in 2017?

Yeah. We keep looking obviously at the components of the free cash flow, right. The biggest improvement for us is clearly getting down to a capital number which we are confident about. Secondly, you’re absolutely right, we have in the base a fairly complicated situation with deferred taxes and the like. So we think that’s going to ease on the going forward basis. And absolutely, we’re going to watch our co-working capital a little bit because if you get more franchise, your receivables are going to go up over time and your payables are going down. So it’s kind of a headwind for your co-working capital performance and we’re trying to get on top that. Chris O’Cull: Okay. Thank you. That’s helpful. And then, can you update us on what the growth rental expense is estimated to be after you complete the system optimization program?

The number is about $80 million. Expense? So you asked for expense. So that what we always said is net rental income is about $170 million, expense is $80 million, so the net income is $90 million. Chris O’Cull: Is the $80 million of rental expense, is that include any existing leases or rent expense that the company is going to have or is that just the incremental. I’m trying to get to what the gross rental expense for the company will be going forward, so you can kind of stand lease adjusted leverage?

That is total number. Chris O’Cull: Okay. Great, that’s helpful. Thank you.

Your next question comes in the line of David Palmer of RBC Capital Markets.

Hey, guys, good morning. A quick one on Image Activation, how is the average investment and lift these days. My suspicion is that many of the franchisees are choosing that lower spend option, you may have even commented on this, and the lift may also be more moderate than it had been in the past, and I have a follow-up?

Hey, David, you know with the momentum that we have in the choices that we have out there, you are seeing more of the lower investment reimages take place in the marketplace, but with the evolution of the design there's still really impactful. And we're seeing some really nice lists in the in the mid-single digit range for the lower cost investment option. In for the higher investment option the more the standard build, and we're still seeing the high-single low-double digit lifts on that straight and rebuilds are still north of 20%. So we're still need to see in a nice combination. And what we've really been doing is working with the franchise community on the joint capital planning and really looking at what does it take to compete in that particular trade area to really optimize their investment and their return. But what we're really feeling good about is, when you go into any of our new reimaged restaurants whether it's the lower cost option or all the way up to a scrape and rebuild it feels like a new Wendy's a much more modern and contemporary and it's driving excitement into the restaurants and clearly driving the franchise community invest behind with the acceleration on the reimaging.

Thanks. And just a follow-up on value and marketing, it's you seem to be having way more success than your competition with premium items, and marketing like you know taco salads, Baconator, but I can't decide how dependent you are on value, you had 4 for $4 the $0.50 Frosty seem to have been a big hit. Those seem to be important to driving traffic. So it don't seem like you're exactly free from meaning to reheat value when you're off air from a value perspective, are you holding up on traffic and what do you think your value strategy will be going forward?

David, now it's a balance, and I think when we have the momentum really on, we have a balanced message around either the core or an LTO as well as an underlying message on value. And if you look at the progression that happens through third quarter with things like $0.50 Frosty, things like the work that we did on renovating our grilled chicken sandwich to make it more juicy and tender at a price point to actually drive trial in and then bring that repeat back overtime. Those are healthy options to continue to drive predictable sustainable growth for the long run. And you'll see that balance continue into the fourth quarter and we've got a big comp that we're up against in the fourth quarter. But we feel like we have the tools in the tool box to lap that as evidenced by our guidance. The quarter started out a little slower with the headwinds from hurricane Matthew, but has really continue to progress with that nice balance around what we have on the taco salad, which I said is unique to the category. What we're seeing on our fresh beef messaging right now in frozen is for later, and the continued news that we have to keep the 4 for $4 fresh and ownable with the Swiss JBC being added to the lineup, so it is that balance that really plays well. But all under the needs the overarching ladder of quality is our recipe within the Wendy's brand.

Thank you.

Our next question comes from the line of Matthew DiFrisco of Guggenheim Securities.

Thank you. My question is with respect to the 500 net number being added over 2020. I wonder a lot has changed in the global world then domestic world as well since you set out that target labor obviously has become a greater headwind when then maybe you initially have thought interest rates obviously looking like they're going to rise. I wonder how has that 500 net the composite of that changed if at all. Can you describe that as far as the balance between domestic and international as well as how that might progress over the next five years as should we thinking it's a very, very back end waited because of I guess the pace are coming from now 2015 to 2020 net development this year and then also under going to have it looks like a pace of almost over 100 per year net over the year remaining couple of years.

So first half Matt, remember that 1000 gross and 500 net is a North American number. So you know that is the focus across North America, we haven't put out a net development goal yet for international and we'll talk about that more in February in Analyst Day. And remember through the whole system optimization process, we didn't get a lot of commitments around new builds, so between system optimization one, two, and three all the buy-and-flip activity that's been out there. We've got about 325 commitments for new builds over the next five years from that activity, companies always said that we will do our fair share, so about 50 new builds from 2015 to 2020. And we continue to expect to see a lot of buy-and-flip activity into the foreseeable future, and we set about 200 every year, which can generate even more commitments around new development. And that's just with the restaurants that have been impacted as part of that system optimization initiative. We've got a lot of work that's going on enjoying capital planning, they continues to get folks excited about driving growth, right, we've got the markets identified where we think we can grow. We've got margin expansion which is healthy. We're seeing strong free cash flow from our franchise operators keeping them encourage to reinvest back into their restaurants. And we continue to provide different designs, this smart design that we've now have a restaurant opened in Canada, and in a few in the U.S. not for every trade area, but gives us a whole another opportunity to have a restaurant that's a little lower investment cost still has all the while of a reimage Wendy’s, but can actually fit into different trade areas that we might not been able to access in the past. So it's that composite of all of that activity that gives us a great confidence that we can continue to grow net new restaurants across North America. Really under the guise of the equality message that we have the Wendy's right, when you think about fresh customization you think it's a point of difference it's continue to attract more customers more often.

I guess is there something that you would cite as the third rail that might derail that or change that view of 500, I mean obviously wage pressure is mounting, and interest rates are going up. What would make those make your franchise community may be trying to first some of those commitments a little bit longer term?

We feel a lot more confident that we can continue the momentum. The biggest offset to the wage inflation is bringing in more customer accounts and driving leverage in the restaurants. And we believe we've got the programs of the high low, telling our unique brand story to continue all of that momentum. We've built a stronger franchise system over the last several years so there are more healthy than ever and really committed to really aligning behind the brand initiatives in the spirit of being a vibrant and growing system, so we feel good on all those fronts. We will have to do a lot of work to help the system to manage some of these headwinds around labor inflation, and you know the work that we're doing around kiosks, the work that we're doing around mobile order, those not only help drive productivity within the restaurants, but they actually provide an even better customer experience in those restaurants to as that customer comes more in control of the whole service experience. We think those things are all healthy for the long term growth.

Great, thank you.

Your next question comes from the line of Jeffrey Bernstein of Barclays.

Great, thank you very much. Two questions as well. One Todd, just as you look at the broader quick service category, you gave some good color in your prepared remarks that seems like your accomplishment driven by traffic and yet your peers all the sudden are sitting more significant average check increase, but traffic down significantly. And I think you made reference to the west seven weeks of the quarter where you were beating the industry pretty consistently. So I was wondering if you can provide any kind of high level color on what you're seeing across the industry from the competitive environment standpoint promotional activity maybe whether there's an even directional change from the competitive landscape just over the past quarter or so, and then I had a follow-up.

No real directional change, it still is intensely competitive out there, which we would expect it to always be right the consumer economic model continues to be under pressure, right, there see an increases in rents healthcare cost, student loans, the gap between food at home and food away from home had continued to widen. But that's going to continue to happen through any cycle in the restaurant business, and what we need to do is break through the clutter and make sure that you have a strong brand, a brand that is relevant for the long term. And coming back to the earlier comments that's where I think when we can really play our game the best, and we're focused on being the best Wendy's that we can be. We have this balance of this high low message and really coming back to our core attributes of the brand, quality freshness, customization and really providing that new QSR experience, at traditional QSR prices that really allows us to stand out from our competitive set.

Got it. And then just as you look to 2017, I can understand that I guess we should expect 2017 guidance within the 4Q results at the Investor Day, but I’m from just wondering in terms of the key features I mean you've provided some guidance in the past specific to 2017. So I’m just wondering if it's still reasonable to believe that another 3% comp would hold in 2017 and I mean that would seem to be a nice acceleration from what has been a strong 1.5% this year and whether it's still reasonable to assume that flattish EBITD and high teens EPS that you’re talking about before or might there be meaningful change to any of those kind of guardrails as we think about 2017 versus what you've provided already?

As we said the past, I don't want to make news on this call. But when you think about the guidance that we've previously provided, we still feel quite good about that guidance and that we can continue to deliver on those expectations, and if you look at our track record over the last four years we've absolutely we've been doing what we said, we would do. So we do believe that we're creating some confidence that when we set our goals. We will find ways to deliver on those expectations, but a lot more to come to your point when we get Analyst Day in February.

Got it. Thank you for color.

Your next question comes from the line of John Ivankoe of JP Morgan.

G&A is very, very topical for a lot of companies for a lot of different reasons now and you know GP I’ve heard you I guess you know basically confirm your previous guidance on 2017 and 2018 in terms of G&A being around $230 million. Yeah, I guess just in terms of kind of taking the most modern thinking that's available, how should we think about G&A, should we think about it on a system wide sales basis, should we think about it on a store basis and it's productivity is such an important thing for companies today, do you think that number has an opportunity to come down?

Good morning, John. You're right, it's Todd, I don't want to make news and provide new G&A guidance for 2017 and 2018, so you can expect that we at least going to get to the $230 million number that we have. The other thing I want to point out is we need to strike the right balance for our G&A and I keep saying this need to provide the right service to our franchisees to make sure they should really motivated to be part of the system, so they keep investing in it. And that's what we're going to continue to do. We're going to continue to do. We’re going to thread the needle to make sure we getting the balance quite right. In terms of benchmarks that I see I think all benchmarks have its merit just be careful as you compare you really in most cases compare apples with oranges, because different companies have different franchise levels, and different companies are disclosing their P&L slightly differently, so the biggest difference is we don't have the franchise expense line couple of other competitors do and that creates obviously some noise as you do your benchmarks. Do we have absolutely believe that the $248 million that we have this is to high absolutely doesn’t need to come down, yes.

That’s excellent color.

John, remember our G&A guidance is through 2018, but we did provide some updated longer range guidance to 2020 with an EBITDA margin of 38 to 40. So if you do the math across all the components so that right is GP said earlier, we're going to have to work hard against all of those levers to deliver on that commitment.

Thank you. That’s excellent color from both. Can I ask, do you guys think about CapEx is a percentage of EBITDA overtime as we kind of think about those long term targets, I mean is that metric that you all think about in terms of how much CapEx you want to invest against that growing EBITDA number?

John it's a great question. Let me think about this note haven't done before be more think in dollar ranges and be more think about like what's the capital spend we have on per restaurant basis. That's kind of more a guide range that we have. Present of sales interesting, we need to think about.

For percent of EBITDA for example.

We really look at what does it take to grow and deliver our growth targets, and when you think about our business going forward. You're right it is about our fair share of new restaurant development, you know what we need to do to continue to reimage to get our restaurants almost all the way there which we've made great progress against investments in technology for the system and ongoing maintenance CapEx being the big buckets. So we look more added on what's necessary to operate and drive the business for long term sustainable growth.

Thank you. Your next question comes from the line of Joseph Buckley of Bank of America.

I thank you. Todd when would you get maybe just specific breakdown of checking traffic for the quarter. I know you said traffic was up and the check was up slightly and then maybe if you can compare it to the QSR sandwich category that would be helpful, and then can I have one more?

Yes Joe, I won't give you the specifics because we haven't done that in the past, but if you think about where our system growth was for the quarter at 1.4 as we said on the call that was almost all driven by traffic. So just face very slight increase in average check. That's for the system. If you dig into the Q when you look at the specifics on the company, the company was growing at 2.7% different mix of restaurants, but from a company perspective customer accounts were up even more than the sales growth with a slight degradation and average check. So we look at that as a very healthy growth mix. On the call we talked a little bit about the directional trends on the NPD data that we're seeing, and I won't be able to give the specifics on that data, but you will see and you guys will see it through the data that you're see in customer accounts or traffic down fairly dramatic, really offset by average eater checks increasing and you know got to looked at with the widening gap between food at home food away from home is that a healthy sustainable way to grow for the long run, and we’ve chose to play the game a little different.

I was curious on image activated restaurants over time do you see the dining business picking up versus drive through this there, is there change in that mix overtime?

What we've historically seen Joe, as I you know when you image activated restaurant you see the lift across you know take away dine in and drive through. It's slightly changes the mix of bit towards that dine in as you get a nice looking restaurant that folks want to come in and sit in for up for a lunch or for a dinner, but not that dramatic. If you look at the trends over the last few years you will see that you know the mix is stripped down a little bit on the amount of business that goes through the drive through, but at the end of the day why we’re well so well positioned for the long term in the QSR space, it’s around speed, convenience, affordability and the drive through business and the on the move business is a big part of that, and we’ll always continue to be a big part of that.

Okay. Just one more if I can, GP I think you said you're kind of your ongoing normalized cash be a better 150 million hours, 100 million of that being international, which kind of surprised me. Can you talk a little bit about that on why the international cash levels would be so much higher than domestic?

There's a great question. So what we have to remember as we sold off our Canadian restaurants we don't own any of restaurants in Canada. We have because of perceived defect and of around $87 million Canadian and that cash is permanently invested in international, and we obviously using this cash to develop the Canadian market right we want to get from 350 restaurants to 500 and it's also into be our legal structure goal it's also cash that we can invest in the rest of the international business.

So Joe, it's really cash that we can effectively efficiently tax efficiently get back to the U.S., but we have a great use for that cash as GP said with the build-to-suit program in Canada which is helping to stimulate growth.

That's helpful. Thank you.

Your next question comes from line of Jake Bartlett of SunTrust.

Great, thanks for taking the question. First, I had a question just maybe clarification on the unit growth targets you talked about 15 to 20 net in 2016. I'm wondering first whether that includes any international stores I believe the Japanese franchise you starting to convert the First Kitchen. And then maybe if you can remind us what the pace of the First Kitchen conversions would be it looks like there's over 130 stores that could be coming into the store base here, is that something that's going to dramatically impact 2017?

Yeah, Jake, as we provide our guidance the 1000 gross in the 500 net new restaurants that's again all North America driven, so when you think about that 15 to 20 number this year that's North America net new openings. So on top of that you'll see that pop in the Q, we are seeing net new openings in international year-to-date where about five net new openings on the international front, so 17 new restaurants against 12 closures. You know within the numbers we will have a few with the conversions come through on First Kitchen by the end of this calendar year, you'll start to see that activity really ramp up in 2017 and 2018. And we're still really encouraged about that partnership with our franchisee in that market and the access to some great locations in Japan.

Great. And then I had a question on the Image Activation, the impact to same store sales it was now above where you would originally or maybe last your Investor Day talked about it 40 basis points to 50 basis points. It's been 60 basis points last two quarters and now it's 80 basis points. Should we can expect that to continue to rise maybe what's driving that is that simply the that you're the reimagings are happening quicker And then building on that question, it looks like there's some momentum with the reimaging them among the franchisees is that should be expected to, I mean when you're giving guidance now, but it is reasonable to expect a material increase just the fact that you're kind of increase in the back half of the year should we expect pretty strong momentum in the 2017 and 2018?

We continue to see a nice tailwind in our same restaurant sales, and you're right it has picked up we’ve talked about 40 basis points and 50 basis points in the past. We're seeing it more on that 60 basis and that’s what kind of built into our long term guidance. It will, depending on the pace of activity and the mix of restaurants, it could go up or down, but on average it’s about 60 basis points of tailwind that we would expect to continue to see. And I think the great news is because we’ve got a lot of options out there and we’re really partnering with our franchise community in joint capital planning. You know we’re really customizing what does it take to win in each individual trade area. What investment, what return are they looking for and it’s given them the confidence to continue to invest back into the Wendy’s brand. And it’s not just about the economics of the restaurants for say, it’s about the complete picture, what’s happening on the restaurant, is that continues to grow, what’s happening at the restaurant level cash flow, what are we doing around telling our unique brand story to make that we are differentiated in the market place, so we can bring in more customers more often. All of those things lead to long term faith and confidence that we reinvest back in the brand. As well as the ongoing system optimization initiative is we continue to bring some fresh cooks into the system. They are very interested in continuing to invest for the long run, but we are also seeing a lot of our existing franchises, really excited about where we can take the brand in the long term.

Great. And then lastly, it look you are going to have about two years over, you are not taking any menu price at least at the company’s side, I assume it’s fairly similar across the system. Does that create opportunity to take some price in 2017 or given that commodities are expected to be friendly, would you kind of take the same stands and maybe have three years in a row of no menu price?

Yeah. And built into our guidance, we’ve basically been saying not only near term but longer term guidance that you know that is minimal pricing. And you know the consumer model is still under pressure and we need to take that into consideration. We can’t provide choices right with the high low, we can’t bring great LTOs to market to get folks to trade up and make their choice with their pocket books if they want to pay a little bit more, but also have some great value offerings out there consistently. And we really think the right game is to continue to drive a little more loyalty into our brand by bringing more customers in more often. And having that discipline on price is part of the work that we are doing with our system right now.

Great, thank you very much.

That was our final question. We thank you for participating in the Wendy’s Company third quarter 2016 earnings results conference call. You may now disconnect your line. And have a wonderful day.