OAKVILLE, ON, Aug. 4, 2016 /PRNewswire/ - Restaurant Brands
International Inc. (TSX/NYSE: QSR, TSX: QSP) today reported
financial results for second quarter ended June 30, 2016.
(LOGO:
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Daniel Schwartz, Chief Executive
Officer of Restaurant Brands International Inc. ("RBI") commented,
"We ended the second quarter with solid system-wide sales growth at
both of our iconic brands, TIM HORTONS® and BURGER
KING®, driven by growth in our global restaurant
footprint and compelling product launches. We continued to achieve
strong earnings growth versus prior year results and believe that
the execution of our brand-specific strategies by our franchisees
and employees will drive sustainable value for years to come."
Second Quarter 2016 Highlights:
- RBI Total Revenues of $1,040.2
million versus $1,042.2
million in prior year period
- RBI Net Income Attributable to Common Shareholders of
$90.9 million versus $11.0 million in prior year period
- RBI Diluted EPS of $0.38 versus
$0.05 in prior year period
- Tim Hortons ("TH") comparable sales increased 2.7% and Burger
King ("BK") comparable sales increased 0.6% in constant
currency
- Restaurant count increased 3.3% at TH and 3.9% at BK
year-over-year
- System-wide sales grew 4.8% at TH and 5.9% at BK in constant
currency
- RBI Adjusted EBITDA of $479.1
million was up 16.2% on an organic basis versus prior year
results
- RBI Adjusted Diluted EPS of $0.41
was up 38.3% versus prior year results
- RBI declared a dividend of $0.16
per common share and partnership exchangeable unit of Restaurant
Brands International Limited Partnership for the third quarter of
2016
Consolidated Operational Highlights
|
|
Three Months Ended June
30,
|
|
|
2016
|
|
2015
|
|
|
(unaudited)
|
Comparable Sales
Growth(1)
|
|
|
|
|
|
|
TH
|
|
|
2.7%
|
|
|
5.5%
|
BK
|
|
|
0.6%
|
|
|
6.7%
|
System Net Restaurant Growth
(NRG)
|
|
|
|
|
|
|
TH
(2)
|
|
|
26
|
|
|
23
|
BK
|
|
|
92
|
|
|
141
|
System-wide Sales
Growth(1)
|
|
|
|
|
|
|
TH
|
|
|
4.8%
|
|
|
8.4%
|
BK
|
|
|
5.9%
|
|
|
11.6%
|
System-wide Sales (3)(in US$
millions)
|
|
|
|
|
|
|
TH
|
|
$
|
1,667.9
|
|
$
|
1,657.6
|
BK
|
|
$
|
4,544.1
|
|
$
|
4,406.1
|
(1)
|
Comparable sales growth and
system-wide sales growth are calculated on a constant currency
basis and include sales at franchise restaurants and company-owned
restaurants.
|
(2)
|
Restaurant count excludes
420 and 454 limited service kiosks as of June 30, 2016 and 2015,
respectively. NRG excludes limited service kiosks for the three
months ended June 30, 2016 and 2015. Commencing in the fourth
quarter of 2015, we revised our presentation of restaurant counts
to exclude limited service kiosks, with the revision applied
retrospectively to the earliest period presented to provide
period-to-period
comparability.
|
(3)
|
System-wide sales are
primarily driven by sales at franchise restaurants, as
approximately 100% of current restaurants are franchised. We do not
record franchise sales as revenue; however, our franchise revenues
include royalties based on a percentage of franchise
sales.
|
Consolidated Financial Highlights
|
|
|
|
|
|
|
Three Months Ended June
30,
|
(in US$ millions, except per share
data)
|
|
2016
|
|
2015
(7)
|
|
|
(unaudited)
|
|
|
|
|
|
RBI Total
Revenues
|
|
$
|
1,040.2
|
|
$
|
1,042.2
|
RBI Net Income Attributable
to
|
|
|
|
|
|
Common
Shareholders
|
|
$
|
90.9
|
|
$
|
11.0
|
RBI Dilutive Net Income Attributable to
Common
|
|
|
|
|
|
Shareholders and
Noncontrolling Interests
(4)
|
|
$
|
179.2
|
|
$
|
25.3
|
RBI Diluted Earnings per
Share
|
|
$
|
0.38
|
|
$
|
0.05
|
|
|
|
|
|
TH Adjusted EBITDA
(5)
|
|
$
|
279.0
|
|
$
|
234.9
|
BK Adjusted EBITDA
(5)
|
|
$
|
200.1
|
|
$
|
192.9
|
RBI Adjusted EBITDA
(6)
|
|
$
|
479.1
|
|
$
|
427.8
|
|
|
|
|
|
RBI Adjusted Net Income
(6)(8)
|
|
$
|
192.4
|
|
$
|
141.0
|
RBI Adjusted Diluted Earnings per Share
(6)(8)
|
|
$
|
0.41
|
|
$
|
0.30
|
(4)
|
Includes net income
available to common shareholders and net income available to
noncontrolling interests related to the Class B exchangeable
limited partnership units of Restaurant Brands International
Limited
Partnership.
|
(5)
|
TH Adjusted EBITDA and BK
Adjusted EBITDA are our measures of segment
profitability.
|
(6)
|
RBI Adjusted EBITDA, RBI
Adjusted Net Income, and RBI Adjusted Diluted Earnings per Share
are non-GAAP financial measures. Please refer to "Non-GAAP
Financial Measures" for further
detail.
|
(7)
|
TH results for the three
months ended June 30, 2015 have been retrospectively adjusted to
reflect the final purchase price allocation for Tim
Hortons.
|
(8)
|
Commencing in the first
quarter of 2016, we revised our presentation of Adjusted Net Income
and Adjusted Diluted Earnings per Share to include share-based
compensation and non-cash incentive compensation expense, with the
revision applied retrospectively to the earliest period presented
to provide period-to-period
comparability.
|
RBI Total Revenues for the quarter were $1,040.2 million compared to $1,042.2 million in the prior year period
primarily as a result of unfavorable FX movements, partially offset
by system-wide sales growth at both TH and BK. On a GAAP basis, RBI
reported Net Income Attributable to Common Shareholders of
$90.9 million in the second quarter,
versus $11.0 million in the prior
year, and Diluted Earnings per Share of $0.38, compared to $0.05 in the prior year, primarily due to the
non-recurrence of one-time expenses arising from the 2015 debt
refinancing, effective cost management, and the non-recurrence of
one-time expenses arising from the Tim Hortons transaction.
Adjusted EBITDA growth of 16.2%, excluding the impact of FX
movements, was driven by organic growth at both brands combined
with cost discipline.
TH Segment Results
|
|
Three Months Ended June
30,
|
(in US$
millions)
|
|
2016
|
|
2015
(7)
|
|
|
(unaudited)
|
|
|
|
|
|
Comparable Sales Growth
(1)
|
|
2.7%
|
|
5.5%
|
System-wide Sales Growth
(1)
|
|
4.8%
|
|
8.4%
|
System-wide Sales
(3)
|
|
$
|
1,667.9
|
|
$
|
1,657.6
|
|
|
|
|
|
System Net Restaurant Growth (NRG)
(2)
|
|
26
|
|
23
|
System Restaurant Count at Period End
(2)
|
|
4,464
|
|
4,322
|
|
|
|
|
|
Sales
|
|
$
|
535.5
|
|
$
|
539.0
|
Franchise and Property
Revenues
|
|
$
|
224.3
|
|
$
|
225.0
|
TH Total
Revenues
|
|
$
|
759.8
|
|
$
|
764.0
|
|
|
|
|
|
Cost of
Sales
|
|
$
|
415.5
|
|
$
|
449.8
|
Franchise & Property
Expenses
|
|
$
|
79.6
|
|
$
|
88.6
|
Segment SG&A
(9)
|
|
$
|
15.1
|
|
$
|
23.0
|
Segment Depreciation and Amortization
(10)
|
|
$
|
26.1
|
|
$
|
29.6
|
TH Adjusted EBITDA (5)
(11)
|
|
$
|
279.0
|
|
$
|
234.9
|
(9)
|
Segment selling, general
and administrative expenses consists of segment selling expenses
and segment management general and administrative
expenses.
|
(10)
|
Segment depreciation and
amortization consists of depreciation and amortization included in
cost of sales and franchise and property
expenses.
|
(11)
|
TH Adjusted EBITDA for the
three months ended June 30, 2016 includes $3.3 million of cash
distributions received from equity method investments. TH Adjusted
EBITDA for the three months ended June 30, 2015 includes ($1.0)
million of acquisition accounting impact on cost of sales and $3.7
million of cash distributions received from equity method
investments.
|
At TH, year-over-year restaurant count growth of 3.3% combined
with comparable sales growth of 2.7% resulted in system-wide sales
growth of 4.8% in constant currency. Impactful new product launches
drove favorable comparable sales at TH. TH ended the second quarter
with 4,464 restaurants, opening 26 net new restaurants during the
period.
TH experienced a 4.2% FX headwind to Total
Revenues for the second quarter. Compared to prior year
results, TH Total Revenues of $759.8
million declined 0.5% but grew 3.8% excluding the impact of
FX movements. TH Adjusted EBITDA of $279.0
million grew 18.8% and 24.1% excluding the impact of FX
movements, primarily driven by system-wide sales growth and cost
discipline.
BK Segment Results
|
|
Three Months Ended June
30,
|
(in US$
millions)
|
|
2016
|
|
2015
|
|
|
(unaudited)
|
|
|
|
|
|
Comparable Sales Growth
(1)
|
|
0.6%
|
|
6.7%
|
System-wide Sales Growth
(1)
|
|
5.9%
|
|
11.6%
|
System-wide
Sales(3)
|
|
$
|
4,544.1
|
|
$
|
4,406.1
|
|
|
|
|
|
System Net Restaurant Growth
(NRG)
|
|
|
92
|
|
141
|
System Restaurant Count at Period
End
|
|
|
15,100
|
|
14,528
|
|
|
|
|
|
Sales
|
|
$
|
23.1
|
|
$
|
28.8
|
Franchise and Property
Revenues
|
|
$
|
257.3
|
|
$
|
249.4
|
BK Total
Revenues
|
|
$
|
280.4
|
|
$
|
278.2
|
|
|
|
|
|
Cost of
Sales
|
|
$
|
20.3
|
|
$
|
25.0
|
Franchise & Property
Expenses
|
|
$
|
34.5
|
|
$
|
33.1
|
Segment SG&A
(9)
|
|
$
|
37.4
|
|
$
|
39.2
|
Segment Depreciation and Amortization
(10)
|
|
$
|
11.9
|
|
$
|
12.0
|
BK Adjusted EBITDA
(5)
|
|
$
|
200.1
|
|
$
|
192.9
|
At BK, system-wide sales grew 5.9% year-over-year in constant
currency. Strength in Asia Pacific
("APAC") and Latin America and the
Caribbean ("LAC"), partially
offset by softness in the U.S. and Canada ("US&C"), contributed to comparable
sales growth of 0.6% at BK. Year-over-year, BK achieved restaurant
count growth of 3.9% with 92 net new restaurants added during the
quarter, ending the quarter with 15,100 restaurants.
BK experienced a 2.0% FX headwind to Total Revenues for the
second quarter. Compared to prior year results, BK Total Revenues
of $280.4 million grew 0.8% and 2.8%
excluding the impact of FX movements. BK Adjusted EBITDA of
$200.1 million grew 3.7% and 6.5%
excluding the impact of FX movements, driven by system-wide sales
growth and discipline on costs.
Cash and Liquidity
As of June 30, 2016, total debt
was $8.9 billion, and net debt,
excluding total cash and cash equivalents of $1.0 billion, was $7.9
billion. On August 3,
2016, the RBI Board of Directors declared a dividend of
$0.16 per common share and Class B
exchangeable partnership unit of Restaurant Brands International
Limited Partnership for the third quarter of 2016. The dividend
will be payable on October 4, 2016 to
shareholders and unitholders of record at the close of business on
September 6, 2016.
On August 2, 2016, the
RBI Board of Directors approved a share repurchase
authorization whereby RBI may purchase up to $300 million of its common shares over the next 5
years. Repurchases under the company's new authorization will be
made in the open market or through privately negotiated
transactions.
Investor Conference Call
We will host an investor conference call and webcast at
8:30 a.m. Eastern Time on
Thursday, August 4, 2016, to review
financial results for the second quarter ended June 30, 2016. The earnings call will be
broadcast live via our investor relations website at
http://investor.rbi.com and a replay will be available for 30
days following the release. The dial-in number is (877) 317-6711
for U.S. callers, (866) 450-4696 for Canadian callers, and (412)
317-5475 for callers from other countries.
About Restaurant Brands International Inc.
Restaurant Brands International Inc. ("RBI") is one of the
world's largest quick service restaurant companies with more than
$23 billion in system-wide sales and
over 19,000 restaurants in more than 100 countries and U.S.
territories. RBI owns two of the world's most prominent and iconic
quick service restaurant brands – TIM HORTONS® and
BURGER KING®. These independently operated brands have
been serving their respective guests, franchisees and communities
for over 50 years. To learn more about RBI, please visit the
company's website at www.rbi.com.
Forward-Looking Statements
This press release contains certain forward-looking
statements and information, which reflect management's current
beliefs and expectations regarding future events and operating
performance and speak only as of the date hereof. These
forward-looking statements are not guarantees of future performance
and involve a number of risks and uncertainties. These
forward-looking statements include statements about RBI's current
beliefs regarding the ability of its franchisees and employees to
execute on its brand-specific strategies to drive sustainable value
for years to come. The factors that could cause actual results to
differ materially from RBI's expectations are detailed in filings
of RBI with the Securities and Exchange Commission and applicable
Canadian securities regulatory authorities, such as its annual and
quarterly reports and current reports on Form 8-K, and include the
following: risks related to RBI's ability to successfully implement
its domestic and international growth strategy; and risks related
to RBI's ability to compete domestically and internationally in an
intensely competitive industry. Other than as required under U.S.
federal securities laws or Canadian securities laws, we do not
assume a duty to update these forward-looking statements, whether
as a result of new information, subsequent events or circumstances,
change in expectations or otherwise.
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
|
Condensed Consolidated Statements of
Operations
|
(In millions of U.S. dollars, except per share
data)
|
(Unaudited)
|
|
|
|
|
|
Three Months Ended June
30,
|
|
|
2016
|
|
2015
|
Revenues:
|
|
|
|
Sales
|
|
$
|
558.6
|
|
$
|
567.8
|
|
Franchise and property
revenues
|
|
|
481.6
|
|
474.4
|
|
|
Total
revenues
|
|
|
1,040.2
|
|
1,042.2
|
Cost of
sales
|
|
|
435.8
|
|
|
474.8
|
Franchise and property
expenses
|
|
|
114.1
|
|
|
121.7
|
Selling, general and administrative
expenses
|
|
|
73.1
|
|
|
102.0
|
(Income) loss from equity method
investments
|
|
|
4.5
|
|
|
6.4
|
Other operating expenses (income),
net
|
|
|
(11.3)
|
|
|
35.2
|
|
Total operating costs and
expenses
|
|
|
616.2
|
|
740.1
|
Income from
operations
|
|
|
424.0
|
|
|
302.1
|
Interest expense,
net
|
|
|
117.2
|
|
|
123.2
|
(Gain) loss on early extinguishment of
debt
|
|
|
-
|
|
|
39.9
|
Income before income
taxes
|
|
|
306.8
|
|
|
139.0
|
|
Income tax
expense
|
|
|
59.2
|
|
45.2
|
Net
income
|
|
|
247.6
|
|
|
93.8
|
|
Net income attributable to noncontrolling
interests
|
|
|
89.2
|
|
15.3
|
|
Preferred share
dividends
|
|
|
67.5
|
|
67.5
|
Net income attributable to common
shareholders
|
|
$
|
90.9
|
|
$
|
11.0
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.39
|
|
$
|
0.05
|
|
Diluted
|
|
$
|
0.38
|
|
$
|
0.05
|
Weighted average shares
outstanding
|
|
|
|
|
|
|
|
Basic
|
|
|
233.5
|
|
202.4
|
|
Diluted
|
|
|
470.1
|
|
476.4
|
Cash dividends declared per common
share
|
|
$
|
0.15
|
|
$
|
0.10
|
Memo: Basic earnings per
common share is determined by dividing net income attributable to
common shareholders by the weighted average number of common shares
outstanding during the period. For the three months ended June 30,
2016, diluted EPS of $0.38 per share includes $90.9 million net
income attributable to common shareholders and $88.3 million
net income attributable to noncontrolling interests related to the
Class B exchangeable limited partnership units of Restaurant Brands
International Limited Partnership ("Partnership exchangeable
units") and assumes conversion of Partnership exchangeable units to
RBI common shares. For the three months ended June 30, 2015,
diluted EPS of $0.05 per share includes $11.0 million net income
attributable to common shareholders and $14.3 million net income
attributable to noncontrolling interests related to the Partnership
exchangeable units and assumes conversion of Partnership
exchangeable units to RBI common shares. The diluted earnings per
share calculation assumes conversion of 100% of the Partnership
exchangeable units under the "if converted"
method.
|
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
|
Condensed Consolidated Statements of
Operations
|
(In millions of U.S. dollars, except per share
data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Six Months Ended June
30,
|
|
|
2016
|
|
2015
|
Revenues:
|
|
|
|
|
|
|
|
Sales
|
|
$
|
1,049.1
|
|
$
|
1,067.3
|
|
Franchise and property
revenues
|
|
|
909.6
|
|
|
908.2
|
|
|
Total
revenues
|
|
|
1,958.7
|
|
|
1,975.5
|
Cost of
sales
|
|
|
824.0
|
|
|
908.0
|
Franchise and property
expenses
|
|
|
218.3
|
|
|
250.8
|
Selling, general and administrative
expenses
|
|
|
146.3
|
|
|
213.0
|
(Income) loss from equity method
investments
|
|
|
(14.0)
|
|
|
4.7
|
Other operating expenses (income),
net
|
|
|
29.5
|
|
|
72.8
|
|
Total operating costs and
expenses
|
|
|
1,204.1
|
|
|
1,449.3
|
Income from
operations
|
|
|
754.6
|
|
|
526.2
|
Interest expense,
net
|
|
|
232.3
|
|
|
246.3
|
(Gain) loss on early extinguishment of
debt
|
|
|
-
|
|
|
39.6
|
Income before income
taxes
|
|
|
522.3
|
|
|
240.3
|
|
Income tax
expense
|
|
|
106.4
|
|
|
95.9
|
Net
income
|
|
|
415.9
|
|
|
144.4
|
|
Net income attributable to noncontrolling
interests
|
|
|
140.0
|
|
|
5.5
|
|
Preferred share
dividends
|
|
|
135.0
|
|
|
136.2
|
Net income attributable to common
shareholders
|
|
$
|
140.9
|
|
$
|
2.7
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.61
|
|
$
|
0.01
|
|
Diluted
|
|
$
|
0.59
|
|
$
|
0.01
|
Weighted average shares
outstanding
|
|
|
|
|
|
|
|
Basic
|
|
|
231.8
|
|
|
202.3
|
|
Diluted
|
|
|
469.2
|
|
|
476.4
|
Cash dividends declared per common
share
|
|
$
|
0.29
|
|
$
|
0.19
|
Memo: Basic earnings per common share is determined
by dividing net income attributable to common shareholders by the
weighted average number of common shares outstanding during the
period. For the six months ended June 30, 2016, diluted EPS of
$0.59 per share includes $140.9 million net income attributable to
common shareholders and $138.2 million net income attributable to
noncontrolling interests related to the Class B exchangeable
limited partnership units of Restaurant Brands International
Limited Partnership ("Partnership exchangeable units") and assumes
conversion of Partnership exchangeable units to RBI common shares.
For the six months ended June 30, 2015, diluted EPS of $0.01 per
share includes $2.7 million net income attributable to common
shareholders and $3.5 million net income attributable to
noncontrolling interests related to the Partnership exchangeable
units and assumes conversion of Partnership exchangeable units to
RBI common shares. The diluted earnings per share calculation
assumes conversion of 100% of the Partnership exchangeable units
under the "if converted"
method.
|
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
|
Condensed Consolidated Balance
Sheets
|
(In millions of U.S. dollars, except share
data)
|
(Unaudited)
|
|
|
|
|
|
|
|
As
of
|
|
June 30,
2016
|
|
December 31,
2015
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
998.1
|
|
$
|
757.8
|
|
Trade and notes receivable, net of allowance of $13.9
million
and
|
|
|
|
|
|
|
|
$14.2 million,
respectively
|
|
380.2
|
|
|
422.0
|
|
Inventories and other current assets,
net
|
|
217.5
|
|
|
132.2
|
|
Advertising fund restricted
assets
|
|
44.7
|
|
|
57.5
|
|
|
Total current
assets
|
|
1,640.5
|
|
|
1,369.5
|
|
|
|
|
|
|
Property and equipment, net of accumulated
depreciation
of
|
|
|
|
|
|
|
$413.0 million and $339.3 million,
respectively
|
|
2,140.5
|
|
|
2,150.6
|
Intangible assets,
net
|
|
9,541.2
|
|
|
9,147.8
|
Goodwill
|
|
4,815.7
|
|
|
4,574.4
|
Net investment in property leased to
franchisees
|
|
106.5
|
|
|
117.2
|
Other assets,
net
|
|
877.4
|
|
|
1,051.6
|
|
|
Total
assets
|
$
|
19,121.8
|
|
$
|
18,411.1
|
LIABILITIES, REDEEMABLE PREFERRED SHARES AND
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts and drafts
payable
|
$
|
359.9
|
|
$
|
361.5
|
|
Other accrued
liabilities
|
|
473.2
|
|
|
441.3
|
|
Gift card
liability
|
|
131.4
|
|
|
168.5
|
|
Advertising fund
liabilities
|
|
87.3
|
|
|
93.6
|
|
Current portion of long term debt and capital
leases
|
|
94.9
|
|
|
56.1
|
|
|
Total current
liabilities
|
|
1,146.7
|
|
|
1,121.0
|
|
|
|
|
|
|
Term debt, net of current
portion
|
|
8,425.2
|
|
|
8,462.3
|
Capital leases, net of current
portion
|
|
211.6
|
|
|
203.4
|
Other liabilities,
net
|
|
891.7
|
|
|
795.9
|
Deferred income taxes,
net
|
|
1,631.2
|
|
|
1,618.8
|
|
|
Total
liabilities
|
|
12,306.4
|
|
|
12,201.4
|
|
|
|
|
|
|
Redeemable preferred shares; $43.775848 par value;
68,530,939
|
|
|
|
|
|
|
shares authorized, issued
and outstanding at June 30, 2016
and
|
|
|
|
|
|
|
December 31,
2015
|
|
3,297.0
|
|
|
3,297.0
|
|
|
|
|
|
|
Shareholders'
Equity:
|
|
|
|
|
|
|
Common shares; no par value; unlimited shares
authorized
|
|
|
|
|
|
|
at June 30, 2016 and December 31,
2015;
|
|
|
|
|
|
|
|
233,740,606 shares issued and outstanding at June 30,
2016;
|
|
|
|
|
|
|
|
225,707,588 shares issued and outstanding at December
31,
2015;
|
|
1,923.2
|
|
|
1,824.5
|
|
Retained
earnings
|
|
318.8
|
|
|
245.8
|
|
Accumulated other comprehensive income
(loss)
|
|
(540.4)
|
|
|
(733.7)
|
|
|
Total Restaurant Brands International Inc.
shareholders'
equity
|
|
1,701.6
|
|
|
1,336.6
|
|
|
Noncontrolling
interests
|
|
1,816.8
|
|
|
1,576.1
|
|
|
Total shareholders'
equity
|
|
3,518.4
|
|
|
2,912.7
|
|
|
Total liabilities, redeemable preferred shares and
shareholders'
equity
|
$
|
19,121.8
|
|
$
|
18,411.1
|
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
|
Condensed Consolidated Statements of Cash
Flows
|
(In millions of U.S.
dollars)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Six Months Ended June
30,
|
|
|
2016
|
|
2015
|
Cash flows from operating
activities:
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
415.9
|
|
$
|
144.4
|
|
Adjustments to reconcile net income to net cash
provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
85.7
|
|
|
94.7
|
|
|
(Gain) loss on early extinguishment of
debt
|
|
|
-
|
|
|
39.6
|
|
|
Amortization of deferred financing costs and debt
issuance
discount
|
|
|
19.3
|
|
|
15.3
|
|
|
(Income) loss from equity method
investments
|
|
|
(14.0)
|
|
|
4.7
|
|
|
Loss (gain) on remeasurement of foreign denominated
transactions
|
|
|
19.0
|
|
|
27.5
|
|
|
Amortization of defined benefit pension and
postretirement
items
|
|
|
(1.2)
|
|
|
(0.1)
|
|
|
Net losses (gains) on
derivatives
|
|
|
9.4
|
|
|
46.6
|
|
|
Net losses (gains) on refranchisings and dispositions
of
assets
|
|
|
9.0
|
|
|
(0.6)
|
|
|
Bad debt expense (recoveries),
net
|
|
|
(0.7)
|
|
|
0.7
|
|
|
Share-based compensation
expense
|
|
|
16.1
|
|
|
22.5
|
|
|
Acquisition accounting impact on cost of
sales
|
|
|
-
|
|
|
0.8
|
|
|
Deferred income
taxes
|
|
|
10.5
|
|
|
(83.3)
|
|
Changes in current assets and liabilities, excluding
acquisitions and
dispositions:
|
|
|
|
|
|
|
|
|
Reclassification of restricted cash to cash and cash
equivalents
|
|
|
-
|
|
|
79.2
|
|
|
Trade and notes
receivable
|
|
|
21.4
|
|
|
59.9
|
|
|
Inventories and other current
assets
|
|
|
(69.4)
|
|
|
5.0
|
|
|
Accounts and drafts
payable
|
|
|
7.4
|
|
|
39.3
|
|
|
Accrued
advertising
|
|
|
(15.8)
|
|
|
6.2
|
|
|
Other accrued
liabilities
|
|
|
(17.5)
|
|
|
36.9
|
|
Other long-term assets and
liabilities
|
|
|
10.2
|
|
|
(31.1)
|
|
|
Net cash provided by operating
activities
|
|
|
505.3
|
|
|
508.2
|
Cash flows from investing
activities:
|
|
|
|
|
|
|
|
Payments for property and
equipment
|
|
|
(12.8)
|
|
|
(57.0)
|
|
Proceeds from refranchisings, disposition of assets
and restaurant
closures
|
|
|
13.2
|
|
|
10.7
|
|
Return of investment on direct financing
leases
|
|
|
8.1
|
|
|
8.0
|
|
Settlement of derivatives,
net
|
|
|
1.5
|
|
|
11.5
|
|
Other investing activities,
net
|
|
|
1.8
|
|
|
2.3
|
|
|
Net cash provided by (used for) investing
activities
|
|
|
11.8
|
|
|
(24.5)
|
Cash flows from financing
activities:
|
|
|
|
|
|
|
|
Proceeds from Senior
Notes
|
|
|
-
|
|
|
1,250.0
|
|
Repayments of term debt, Tim Hortons Notes and
capital
leases
|
|
|
(34.6)
|
|
|
(2,592.4)
|
|
Payment of financing
costs
|
|
|
-
|
|
|
(81.3)
|
|
Dividends paid on common shares and preferred
shares
|
|
|
(260.2)
|
|
|
(124.5)
|
|
Proceeds from stock option
exercises
|
|
|
10.7
|
|
|
1.6
|
|
Proceeds from issuance of
shares
|
|
|
-
|
|
|
2.1
|
|
Other financing
activities
|
|
|
1.1
|
|
|
(0.7)
|
|
|
Net cash provided by (used for) financing
activities
|
|
|
(283.0)
|
|
|
(1,545.2)
|
|
Effect of exchange rates on cash and cash
equivalents
|
|
|
6.2
|
|
|
(52.8)
|
|
Increase (decrease) in cash and cash
equivalents
|
|
|
240.3
|
|
|
(1,114.3)
|
|
Cash and cash equivalents at beginning of
period
|
|
|
757.8
|
|
|
1,803.2
|
|
Cash and cash equivalents at end of
period
|
|
$
|
998.1
|
|
$
|
688.9
|
|
|
|
|
|
|
|
Supplemental cashflow
disclosures:
|
|
|
|
|
|
|
|
Interest
paid
|
|
$
|
199.7
|
|
$
|
224.8
|
|
Income taxes
paid
|
|
$
|
76.6
|
|
$
|
79.6
|
Non-cash investing and financing
activities:
|
|
|
|
|
|
|
|
Acquisition of property with capital lease
obligations
|
|
$
|
8.3
|
|
$
|
7.9
|
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
Key Business Metrics
We evaluate our restaurants and assess our business based on the
following operating metrics.
System-wide sales growth refers to the change in sales at all
company-owned and franchise restaurants in one period from the same
period in the prior year. Comparable sales growth refers to the
change in restaurant sales in one period from the same prior year
period for restaurants that have been open for thirteen months or
longer. Company-owned restaurants refranchised during a quarterly
period are included with franchise restaurants for the purpose of
calculating comparable sales growth for the quarter. Comparable
sales and sales growth are measured on a constant currency basis,
which means that results exclude the effect of foreign currency
translation and are calculated by translating prior year results at
current year monthly average exchange rates. We analyze key
operating metrics on a constant currency basis as this helps
identify underlying business trends, without distortion from the
effects of currency movements.
System-wide sales represent sales at all company-owned
restaurants and franchise restaurants. We do not record franchise
sales as revenues; however, our franchise revenues include
royalties based on a percentage of franchise sales.
Key Business Metrics by Brand
Market
|
|
|
|
Three Months Ended June
30,
|
Key Business
Metrics
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
System-wide Sales
Growth
|
|
|
|
|
|
|
TH -
Canada
|
|
|
|
4.4 %
|
|
8.1 %
|
TH -
US
|
|
|
|
6.1 %
|
|
10.6 %
|
TH -
International
|
|
|
|
33.5 %
|
|
12.6 %
|
BK -
US&C
|
|
|
|
0.0 %
|
|
7.9 %
|
BK -
EMEA
|
|
|
|
10.7 %
|
|
15.4 %
|
BK -
APAC
|
|
|
|
18.4 %
|
|
14.8 %
|
BK -
LAC
|
|
|
|
15.7 %
|
|
18.3 %
|
|
|
|
|
|
|
|
Comparable Sales
Growth
|
|
|
|
|
|
|
TH -
Canada
|
|
|
|
2.3 %
|
|
5.4 %
|
TH -
US
|
|
|
|
5.9 %
|
|
7.0 %
|
TH -
International
|
|
|
|
(3.3)%
|
|
(3.2)%
|
BK -
US&C
|
|
|
|
(0.8)%
|
|
7.9 %
|
BK -
EMEA
|
|
|
|
0.8 %
|
|
5.1 %
|
BK -
APAC
|
|
|
|
5.3 %
|
|
2.3 %
|
BK -
LAC
|
|
|
|
4.9 %
|
|
8.5 %
|
|
|
|
|
|
|
|
System
NRG
|
|
|
|
|
|
|
TH -
Canada
|
|
|
|
25
|
|
17
|
TH -
US
|
|
|
|
2
|
|
-
|
TH -
International
|
|
|
|
(1)
|
|
6
|
BK -
US&C
|
|
|
|
(15)
|
|
11
|
BK -
EMEA
|
|
|
|
51
|
|
80
|
BK -
APAC
|
|
|
|
46
|
|
45
|
BK -
LAC
|
|
|
|
10
|
|
5
|
|
|
|
|
|
|
|
System Restaurant
Count
|
|
|
|
|
|
|
TH -
Canada
|
|
|
|
3,692
|
|
3,600
|
TH -
US
|
|
|
|
658
|
|
657
|
TH -
International
|
|
|
|
114
|
|
65
|
BK -
US&C
|
|
|
|
7,366
|
|
7,390
|
BK -
EMEA
|
|
|
|
4,149
|
|
3,901
|
BK -
APAC
|
|
|
|
1,796
|
|
1,534
|
BK -
LAC
|
|
|
|
1,789
|
|
1,703
|
RESTAURANT BRANDS
INTERNATIONAL INC. AND
SUBSIDIARIES
|
Supplemental
Disclosure
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June
30,
|
|
Six Months Ended June
30,
|
(in US$
millions)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
$
|
1.4
|
|
$
|
3.5
|
|
$
|
2.8
|
|
$
|
8.3
|
Management general and administrative
expenses
|
|
|
51.1
|
|
|
58.7
|
|
|
107.9
|
|
|
118.6
|
Share-based compensation and non-cash
incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
compensation
expense
|
|
|
11.3
|
|
|
8.1
|
|
|
19.2
|
|
|
22.0
|
Depreciation and
amortization
|
|
|
5.5
|
|
|
4.3
|
|
|
10.4
|
|
|
8.7
|
TH transaction and restructuring
costs
|
|
|
-
|
|
|
27.4
|
|
|
-
|
|
|
55.4
|
Integration
costs
|
|
|
3.8
|
|
|
-
|
|
|
6.0
|
|
|
-
|
Total general and administrative
expenses
|
|
|
71.7
|
|
|
98.5
|
|
|
143.5
|
|
|
204.7
|
|
Selling, general and administrative
expenses
|
|
$
|
73.1
|
|
$
|
102.0
|
|
$
|
146.3
|
|
$
|
213.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June
30,
|
|
Six Months Ended June
30,
|
(in US$
millions)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net losses (gains) on disposal of assets,
restaurant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
closures and refranchisings
(1)
|
|
$
|
1.0
|
|
$
|
(3.9)
|
|
$
|
16.3
|
|
$
|
(3.4)
|
Litigation settlements and reserves,
net
|
|
|
0.9
|
|
|
0.3
|
|
|
1.6
|
|
|
1.9
|
Net losses (gains) on derivatives
(2)
|
|
|
-
|
|
|
25.9
|
|
|
-
|
|
|
38.8
|
Net losses (gains) on foreign exchange
(3)
|
|
|
(12.1)
|
|
|
11.8
|
|
|
12.0
|
|
|
34.3
|
Other,
net
|
|
|
(1.1)
|
|
|
1.1
|
|
|
(0.4)
|
|
|
1.2
|
|
Other operating expenses (income),
net
|
|
$
|
(11.3)
|
|
$
|
35.2
|
|
$
|
29.5
|
|
$
|
72.8
|
(1) Net losses (gains) on disposal of assets,
restaurant closures and refranchisings for the six months ended
June 30, 2016 primarily reflects losses in connection with
refranchisings in our TH
business.
|
(2) Net losses (gains) on derivatives for the three
and six months ended June 30, 2015 is primarily due to changes in
fair value related to interest rate swaps not designated for hedge
accounting. These interest rate swaps were settled during May
2015.
|
(3) Net losses (gains) on foreign exchange is
primarily related to revaluation of foreign denominated assets and
liabilities.
|
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
Non-GAAP Financial Measures
(Unaudited)
Below, we define the non-GAAP financial measures, provide a
reconciliation of each non-GAAP financial measure to the most
directly comparable financial measure calculated in accordance with
U.S. Generally Accepted Accounting Principles ("GAAP"), and discuss
the reasons that we believe this information is useful to
management and may be useful to investors. These measures may
differ from similarly captioned measures of other companies in our
industry.
Non-GAAP Measures
To spplement our condensed consolidated financial statements
presented on a GAAP basis, RBI reports the following non-GAAP
financial measures: EBITDA, Adjusted EBITDA, Adjusted Net Income,
Adjusted Diluted Earnings per Share ("Adjusted Diluted EPS"),
Organic revenue growth and Organic Adjusted EBITDA growth. We
believe that these non-GAAP measures are useful to investors in
assessing our operating performance, as it provides them with the
same tools that management uses to evaluate our performance and is
responsive to questions we receive from both investors and
analysts. By disclosing these non-GAAP measures, we intend to
provide investors with a consistent comparison of our operating
results and trends for the periods presented.
EBITDA is defined as earnings (net income or loss) before
interest, (gain) loss on early extinguishment of debt, taxes, and
depreciation and amortization and is used by management to measure
operating performance of the business.
Adjusted EBITDA is defined as EBITDA excluding the non-cash
impact of share-based compensation and non-cash incentive
compensation expense and (income) loss from equity method
investments, net of cash distributions received from equity method
investments, as well as other operating expenses
(income), net. Other specifically identified costs associated with
non-recurring projects are also excluded from Adjusted EBITDA,
including acquisition accounting impact on cost of sales, Tim
Hortons transaction and restructuring costs and integration costs,
each of which is associated with the acquisition of Tim Hortons.
Adjusted EBITDA is used by management to measure operating
performance of the business, excluding these non-cash and other
specifically identified items that management believes are not
relevant to management's assessment of operating performance or the
performance of an acquired business. Adjusted EBITDA, as defined
above, also represents our measure of segment income.
Adjusted Net Income is defined as net income excluding (i)
franchise agreement amortization, which is a non-cash expense
arising as a result of acquisition accounting that may hinder the
comparability of our operating results to our industry peers, (ii)
amortization of deferred financing costs and original issue
discount, a non-cash component of interest expense, and (gains)
losses on early extinguishment of debt, which are non-cash charges
that vary by the timing, terms and size of debt financing
transactions, (iii) (income) loss from equity method investments,
net of cash distributions received from equity method investments,
(iv) other operating expenses (income), net, and (v) other
specifically identified costs associated with non-recurring
projects. Adjusted Net Income includes preferred share
dividends.
Adjusted Diluted EPS is calculated by dividing Adjusted Net
Income by the number of diluted shares of RBI during the reporting
period. Adjusted Net Income and Adjusted Diluted EPS are used by
management to evaluate the operating performance of the business,
excluding certain non-cash and other specifically identified items
that management are not relevant to management's assessment of
operating performance or the performance of an acquired
business.
Revenue growth and Adjusted EBITDA growth, on an organic basis,
are non-GAAP measures that exclude the impact of FX movements.
Management believes that organic growth is an important metric for
measuring the operating performance of our business as it excludes
the impact of changes in foreign currency exchange rates. We
calculate the impact of FX movements by translating current year
results at prior year monthly average exchange rates.
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
|
Organic Growth in Revenue and Adjusted
EBITDA
|
Three Months Ended June 30,
2016
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of
FX
|
|
|
|
Actual
|
|
Q2 '16 vs. Q2
'15
|
|
Movements
|
|
Organic
Growth
|
(in US$
millions)
|
Q2
'16
|
|
Q2
'15
|
|
$
|
|
%
|
|
$
|
|
$
|
|
%
|
Calculation:
|
|
|
|
A
|
|
B
|
|
|
|
C
|
|
B-C=D
|
|
D/A
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TH
|
$
|
759.8
|
|
$
|
764.0
|
|
$
|
(4.2)
|
|
(0.5)%
|
|
$
|
(33.4)
|
|
$
|
29.2
|
|
3.8%
|
BK
|
$
|
280.4
|
|
$
|
278.2
|
|
$
|
2.2
|
|
0.8 %
|
|
$
|
(5.7)
|
|
$
|
7.9
|
|
2.8%
|
|
RBI
|
$
|
1,040.2
|
|
$
|
1,042.2
|
|
$
|
(2.0)
|
|
(0.2)%
|
|
$
|
(39.1)
|
|
$
|
37.1
|
|
3.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TH
|
$
|
279.0
|
|
$
|
234.9
|
|
$
|
44.1
|
|
18.8%
|
|
$
|
(12.4)
|
|
$
|
56.5
|
|
24.1%
|
BK
|
$
|
200.1
|
|
$
|
192.9
|
|
$
|
7.2
|
|
3.7%
|
|
$
|
(5.4)
|
|
$
|
12.6
|
|
6.5%
|
|
RBI
|
$
|
479.1
|
|
$
|
427.8
|
|
$
|
51.3
|
|
12.0%
|
|
$
|
(17.8)
|
|
$
|
69.1
|
|
16.2%
|
RESTAURANT BRANDS INTERNATIONAL, INC. AND
SUBSIDIARIES
|
Non-GAAP Financial
Measures
|
Reconciliation of EBITDA and Adjusted EBITDA to Net
Income
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in US$
millions)
|
|
Three Months Ended June
30,
|
|
|
2016
|
|
2015
|
Segment
Income:
|
|
|
|
|
|
|
|
TH
|
|
$
|
279.0
|
|
$
|
234.9
|
|
BK
|
|
|
200.1
|
|
|
192.9
|
|
|
Adjusted
EBITDA
|
|
|
479.1
|
|
|
427.8
|
|
|
|
|
|
|
|
Share-based compensation and non-cash
incentive
|
|
|
|
|
|
|
|
compensation expense
(1)
|
|
|
11.3
|
|
|
8.1
|
Acquisition accounting impact on cost of
sales
|
|
|
-
|
|
|
(1.0)
|
TH transaction and restructuring costs
(2)
|
|
|
-
|
|
|
27.4
|
Integration costs
(3)
|
|
|
3.8
|
|
|
-
|
Impact of equity method investments
(4)
|
|
|
7.8
|
|
|
10.1
|
Other operating expenses (income),
net
|
|
|
(11.3)
|
|
|
35.2
|
|
EBITDA
|
|
|
467.5
|
|
|
348.0
|
Depreciation and
amortization
|
|
|
43.5
|
|
|
45.9
|
|
Income from
operations
|
|
|
424.0
|
|
|
302.1
|
Interest expense,
net
|
|
|
117.2
|
|
|
123.2
|
(Gain) loss on early extinguishment of
debt
|
|
|
-
|
|
|
39.9
|
Income tax
expense
|
|
|
59.2
|
|
|
45.2
|
|
Net
income
|
|
$
|
247.6
|
|
$
|
93.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RESTAURANT BRANDS INTERNATIONAL, INC. AND
SUBSIDIARIES
|
Non-GAAP Financial
Measures
|
Reconciliation of EBITDA and Adjusted EBITDA to Net
Income
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in US$
millions)
|
|
Six Months Ended June
30,
|
|
|
2016
|
|
2015
|
Segment
Income:
|
|
|
|
|
|
|
|
TH
|
|
$
|
506.8
|
|
$
|
419.3
|
|
BK
|
|
|
380.1
|
|
|
363.6
|
|
|
Adjusted
EBITDA
|
|
|
886.9
|
|
|
782.9
|
Share-based compensation and non-cash
incentive
|
|
|
|
|
|
|
|
compensation expense
(1)
|
|
|
19.2
|
|
|
22.0
|
Acquisition accounting impact on cost of
sales
|
|
|
-
|
|
|
0.8
|
TH transaction and restructuring costs
(2)
|
|
|
-
|
|
|
55.4
|
Integration costs
(3)
|
|
|
6.0
|
|
|
-
|
Impact of equity method investments
(4)
|
|
|
(7.9)
|
|
|
11.0
|
Other operating expenses (income),
net
|
|
|
29.5
|
|
|
72.8
|
|
EBITDA
|
|
|
840.1
|
|
|
620.9
|
Depreciation and
amortization
|
|
|
85.5
|
|
|
94.7
|
|
Income from
operations
|
|
|
754.6
|
|
|
526.2
|
Interest expense,
net
|
|
|
232.3
|
|
|
246.3
|
(Gain) loss on early extinguishment of
debt
|
|
|
-
|
|
|
39.6
|
Income tax
expense
|
|
|
106.4
|
|
|
95.9
|
|
Net
income
|
|
$
|
415.9
|
|
$
|
144.4
|
RESTAURANT BRANDS INTERNATIONAL, INC. AND
SUBSIDIARIES
|
Non-GAAP Financial
Measures
|
Reconciliation of Net Income to Adjusted Net Income
and Adjusted Diluted
EPS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in US$ millions, except per share
data)
|
|
Three Months Ended June
30,
|
|
|
2016
|
|
2015
(7)
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
247.6
|
|
$
|
93.8
|
|
Income tax
expense
|
|
|
59.2
|
|
|
45.2
|
Income before income
taxes
|
|
|
306.8
|
|
|
139.0
|
Adjustments:
|
|
|
|
|
|
|
|
Franchise agreement
amortization
|
|
|
6.8
|
|
|
6.8
|
|
Amortization of deferred financing costs and original
issue
discount
|
|
|
9.6
|
|
|
8.3
|
|
Interest expense and loss on extinguished debt
(5)
|
|
|
3.1
|
|
|
44.8
|
|
Acquisition accounting impact on cost of
sales
|
|
|
-
|
|
|
(1.0)
|
|
TH transaction and restructuring costs
(2)
|
|
|
-
|
|
|
27.4
|
|
Integration costs
(3)
|
|
|
3.8
|
|
|
-
|
|
Impact of equity method investments
(4)
|
|
|
7.8
|
|
|
10.1
|
|
Other operating expenses (income),
net
|
|
|
(11.3)
|
|
|
35.2
|
|
Total
adjustments
|
|
|
19.8
|
|
|
131.6
|
Adjusted income before income
taxes
|
|
|
326.6
|
|
|
270.6
|
|
Adjusted income tax expense
(6)
|
|
|
66.7
|
|
|
62.1
|
Adjusted net income before preferred share
dividends
|
|
|
259.9
|
|
|
208.5
|
|
Preferred share
dividends
|
|
|
67.5
|
|
|
67.5
|
Adjusted net
income
|
|
$
|
192.4
|
|
$
|
141.0
|
|
|
|
|
|
|
|
Adjusted diluted earnings per
share
|
|
$
|
0.41
|
|
$
|
0.30
|
|
|
|
|
|
|
|
Diluted average shares
outstanding
|
|
|
470.1
|
|
|
476.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RESTAURANT BRANDS INTERNATIONAL, INC. AND
SUBSIDIARIES
|
|
Non-GAAP Financial
Measures
|
Reconciliation of Net Income to Adjusted Net Income
and Adjusted Diluted
EPS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in US$ millions, except per share
data)
|
|
Six Months Ended June
30,
|
|
|
2016
|
|
2015
(7)
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
415.9
|
|
$
|
144.4
|
|
Income tax
expense
|
|
|
106.4
|
|
|
95.9
|
Income before income
taxes
|
|
|
522.3
|
|
|
240.3
|
Adjustments:
|
|
|
|
|
|
|
|
Franchise agreement
amortization
|
|
|
13.5
|
|
|
13.7
|
|
Amortization of deferred financing costs and original
issue
discount
|
|
|
19.3
|
|
|
15.3
|
|
Interest expense and loss on extinguished debt
(5)
|
|
|
6.3
|
|
|
46.4
|
|
Acquisition accounting impact on cost of
sales
|
|
|
-
|
|
|
0.8
|
|
TH transaction and restructuring costs
(2)
|
|
|
-
|
|
|
55.4
|
|
Integration costs
(3)
|
|
|
6.0
|
|
|
-
|
|
Impact of equity method investments
(4)
|
|
|
(7.9)
|
|
|
11.0
|
|
Other operating expenses (income),
net
|
|
|
29.5
|
|
|
72.8
|
|
Total
adjustments
|
|
|
66.7
|
|
|
215.4
|
Adjusted income before income
taxes
|
|
|
589.0
|
|
|
455.7
|
|
Adjusted income tax expense
(6)
|
|
|
119.5
|
|
|
104.6
|
Adjusted net income before preferred share
dividends
|
|
|
469.5
|
|
|
351.1
|
|
Preferred share
dividends
|
|
|
135.0
|
|
|
136.2
|
Adjusted net
income
|
|
$
|
334.5
|
|
$
|
214.9
|
|
|
|
|
|
|
|
Adjusted diluted earnings per
share
|
|
$
|
0.71
|
|
$
|
0.45
|
|
|
|
|
|
|
|
Diluted average shares
outstanding
|
|
|
469.2
|
|
|
476.4
|
Non-GAAP Financial Measures
Footnotes to
Reconciliation Tables
(1)
|
Represents share-based compensation expense
associated with equity awards for the periods indicated; also
includes the portion of annual non-cash incentive compensation
expense that eligible employees elected to receive or are expected
to elect to receive as common equity in lieu of their 2015 and 2016
cash bonus,
respectively.
|
|
|
(2)
|
In connection with the acquisition of Tim Hortons
Inc. and a series of post-closing transactions during 2015 that
resulted in changes to our legal and capital structure, we incurred
certain non-recurring selling, general and administrative expenses
during the three and six months ended June 30,
2015.
|
|
|
(3)
|
In connection with the implementation of initiatives
to integrate the back-office processes of TH and BK to enhance
efficiencies, we incurred certain non-recurring selling, general
and administrative expenses related to these initiatives during the
three and six months ended June 30, 2016, primarily consisting of
professional
fees.
|
|
|
(4)
|
Represents (i) (income) loss from equity investments
and (ii) cash distributions received from our equity method
investments. Cash distributions received from our equity method
investments are included in segment
income.
|
|
|
(5)
|
For the three and six months ended June 30, 2016,
represents non-cash interest expense related to losses reclassified
from accumulated other comprehensive income (loss) into interest
expense in connection with interest rate swaps settled in May 2015.
For the three and six months ended June 30, 2015, represents (gain)
loss on early extinguishment of debt, $4.9 million of non-cash
interest expense related to losses reclassified from accumulated
other comprehensive income (loss) into interest expense in
connection with interest rate swaps settled in May 2015, and $1.6
million of incremental interest expense for the six months ended
June 30, 2015 related to the redemption of the Tim Hortons Notes,
and the March 2015 mandatory prepayment of our term
loan.
|
|
|
(6)
|
Adjusted income tax expense for the three and six
months ended June 30, 2016 and 2015, respectively, includes the tax
impact of the non-GAAP adjustments and is calculated using our
statutory tax rate in the jurisdiction in which the costs were
incurred.
|
|
|
(7)
|
Commencing in the first quarter of 2016, we
revised our presentation of Adjusted Net Income and Adjusted
Diluted EPS to include share-based compensation and non-cash
incentive compensation expense, with the revision applied
retrospectively to the earliest period presented to provide
period-to-period
comparability.
|
SOURCE Restaurant Brands International