Consolidated system-wide sales grow 14%,
including 12% at Popeyes, 13% at Tim Hortons and 14% at Burger
King
Global comparable sales accelerate to 9%, led
by 11% growth at Tim Hortons Canada and 15% at Burger King
International
Digital sales grow 26% year-over-year to
approximately $3.4 billion,
representing a third of system-wide sales
RBI continues to return capital through its
industry-leading dividend while investing in its brands and
reducing net leverage
TORONTO, Nov. 3, 2022
/PRNewswire/ - Restaurant Brands International Inc. ("RBI") (TSX:
QSR) (NYSE: QSR) (TSX: QSP) today reported financial results for
the third quarter ended September 30,
2022.
José Cil, Chief Executive Officer of RBI commented, "Our strong
results this quarter, including 9% consolidated comparable sales
growth and 4% net restaurant growth, reflects the strength of our
diversified, global business model, strong free cash flow
generation and benefits from our focused investments in key areas
including operations, technology, marketing, franchising, and
people."
"Tim Hortons remains a loved destination, with strong sales
momentum driven by quality new menu items and great value for
money, resulting in accelerated comparable sales growth versus 2019
levels.
Additionally, we are proud that our Burger King franchisees are
behind our Reclaim the Flame plan to accelerate growth by
engaging existing and new guests, with important investments in
marketing, operations, digital, and remodels. Internationally, the
Burger King business is driving strong results with over 20%
system-wide sales growth for the quarter and remains a great
example of the power of being guest-led in everything we do.
From a development standpoint, our compelling unit economics and
years spent building quality partnerships with franchisees around
the world continues to fuel our ability to expand our footprint
alongside dedicated, well-capitalized franchisees," continued
Cil.
"We are fortunate to own iconic brands that offer great value
for money with menu offerings that are loved by our guests. We will
continue to provide guests with the value they love while driving
results in a profitable way for our franchisees. I am incredibly
proud of the hard work from our franchisees, team members and
employees as they execute against our plans and work towards our
big dream to build the most loved restaurant brands in the world,"
concluded Cil.
Consolidated
Operational Highlights
|
|
Three Months Ended
September 30,
|
|
|
2022
|
|
|
2021
|
|
|
(Unaudited)
|
System-wide Sales
Growth
|
|
|
|
|
|
TH
|
|
13.4 %
|
|
|
11.1 %
|
BK
|
|
14.5 %
|
|
|
12.3 %
|
PLK
|
|
12.3 %
|
|
|
4.4 %
|
Consolidated
(a)
|
|
14.0 %
|
|
|
10.8 %
|
FHS
(b)
|
|
3.8 %
|
|
|
19.3 %
|
System-wide Sales (in
US$ millions)
|
|
|
|
|
|
TH
|
$
|
1,945
|
|
$
|
1,774
|
BK
|
$
|
6,668
|
|
$
|
6,212
|
PLK
|
$
|
1,532
|
|
$
|
1,392
|
FHS
|
$
|
289
|
|
$
|
—
|
Consolidated
(a)
|
$
|
10,434
|
|
$
|
9,378
|
FHS
(b)
|
$
|
—
|
|
$
|
278
|
Net Restaurant
Growth
|
|
|
|
|
|
TH
|
|
5.2 %
|
|
|
4.1 %
|
BK
|
|
2.5 %
|
|
|
1.3 %
|
PLK
|
|
8.9 %
|
|
|
5.5 %
|
Consolidated
(a)
|
|
3.9 %
|
|
|
2.4 %
|
FHS
(b)
|
|
2.5 %
|
|
|
2.0 %
|
System Restaurant Count
at Period End
|
|
|
|
|
|
TH
|
|
5,405
|
|
|
5,137
|
BK
|
|
19,401
|
|
|
18,923
|
PLK
|
|
3,928
|
|
|
3,607
|
FHS
|
|
1,234
|
|
|
—
|
Consolidated
|
|
29,968
|
|
|
27,667
|
FHS
(b)
|
|
—
|
|
|
1,204
|
Comparable
Sales
|
|
|
|
|
|
TH
|
|
9.8 %
|
|
|
8.9 %
|
BK
|
|
10.3 %
|
|
|
7.9 %
|
PLK
|
|
3.1 %
|
|
|
(2.4) %
|
Consolidated
(a)
|
|
9.1 %
|
|
|
6.5 %
|
FHS
(b)
|
|
0.0 %
|
|
|
14.9 %
|
(a)
|
Consolidated
system-wide sales growth, consolidated net restaurant growth and
consolidated comparable sales do not include the results of
Firehouse Subs for all of the periods presented. Consolidated
system-wide sales do not include the results of Firehouse Subs for
2021.
|
|
|
(b)
|
2021 Firehouse Subs
figures are shown for informational purposes only, consistent with
its fiscal calendar.
|
|
|
Note: System-wide sales
growth and comparable sales are calculated on a constant currency
basis and include sales at franchise restaurants and company-owned
restaurants. System-wide sales are driven by sales at franchise
restaurants, as approximately 100% of current restaurants are
franchised. We do not record franchise sales as revenues; however,
our royalty revenues and advertising fund contributions are
calculated based on a percentage of franchise sales. Additionally,
if a restaurant is closed for a significant portion of a month, the
restaurant is excluded from the monthly comparable sales
calculation.
|
Consolidated Financial Highlights
|
Three Months Ended
September 30,
|
(in US$ millions,
except per share data)
|
2022
|
|
2021
|
|
(Unaudited)
|
Total
Revenues
|
$
1,726
|
|
$
1,495
|
Net Income
|
$
530
|
|
$
329
|
Diluted Earnings per
Share
|
$
1.17
|
|
$
0.70
|
|
|
|
|
TH Adjusted
EBITDA(1)
|
$
305
|
|
$
278
|
BK Adjusted
EBITDA(1)
|
$
262
|
|
$
272
|
PLK Adjusted
EBITDA(1)
|
$
62
|
|
$
57
|
FHS Adjusted
EBITDA(1)
|
$
13
|
|
$
—
|
Adjusted
EBITDA(2)
|
$
642
|
|
$
607
|
|
|
|
|
Adjusted Net
Income(2)
|
$
436
|
|
$
353
|
Adjusted Diluted
Earnings per Share(2)
|
$
0.96
|
|
$
0.76
|
|
Nine Months Ended
September 30,
|
|
2022
|
|
2021
|
|
(Unaudited)
|
Net cash provided by
operating activities
|
$
1,067
|
|
$
1,255
|
Net cash (used for)
provided by investing activities
|
$
(66)
|
|
$
(69)
|
Net cash (used for)
provided by financing activities
|
$
(1,111)
|
|
$
(970)
|
|
|
|
|
LTM Free Cash
Flow(2)
|
$
1,450
|
|
$
1,452
|
Net Debt
|
$
12,452
|
|
$
11,185
|
Net
Leverage(2)
|
5.2x
|
|
5.2x
|
(1)
|
TH Adjusted EBITDA, BK
Adjusted EBITDA, PLK Adjusted EBITDA and FHS Adjusted EBITDA are
our measures of segment profitability.
|
(2)
|
Adjusted EBITDA,
Adjusted Net Income, Adjusted Diluted Earnings per Share, LTM Free
Cash Flow, and Net Leverage are non-GAAP financial measures. Please
refer to "Non-GAAP Financial Measures" for further
detail.
|
|
|
Commencing upon the acquisition of Firehouse Subs in
December 2021, we have four operating
segments: Tim Hortons (TH), Burger King (BK), Popeyes Louisiana
Kitchen (PLK) and Firehouse Subs (FHS). Our financial results and
operational highlights are disclosed based on these segments each
quarter.
The year-over-year increases in Total Revenues on an as reported
and on an organic basis were primarily driven by increases in
system-wide sales at Tim Hortons, Burger King and Popeyes. On an as
reported basis the increase was also driven by the inclusion of
Firehouse Subs, partially offset by unfavorable FX movements.
The year-over-year increase in Net Income was primarily driven
by income tax benefit in the current year compared to an income tax
expense in the prior year, increases in segment income in our TH
and PLK segments, the inclusion of FHS segment income, a favorable
change from other operating expenses (income), net, and the
non-recurrence of a loss on early extinguishment of debt.
These factors were partially offset by unfavorable FX movements, a
decrease in BK segment income, an increase in share-based
compensation and non-cash incentive compensation expense, an
increase in Corporate restructuring and tax advisory fees, and an
increase in interest expense, net.
The year-over-year increase in Adjusted EBITDA on an as reported
basis was primarily driven by increases in TH and PLK Adjusted
EBITDA as well as the inclusion of FHS Adjusted EBITDA, partially
offset by unfavorable FX movements which impacted TH and PLK
Adjusted EBITDA and drove a decrease in BK Adjusted EBITDA.
The year-over-year increase in Adjusted EBITDA on an organic
basis was primarily driven by increases in TH, BK and PLK Adjusted
EBITDA.
The year-over-year increase in Adjusted Net Income was primarily
driven by a decrease in adjusted income tax expense, increases in
Adjusted EBITDA in our TH and PLK brands and the inclusion of FHS
Adjusted EBITDA, partially offset by unfavorable FX movements, a
decrease in Adjusted EBITDA in our BK brand, and increases in
share-based compensation and non-cash incentive compensation
expense.
War in Ukraine
During the first quarter of 2022, we shared a number of actions
that we have taken to date as a result of the events related to
Russia's military invasion of
Ukraine. Burger King is our only
brand with restaurants in Russia,
all of which are operated under a master franchise arrangement. We
suspended all corporate support for the Russian market, including
operations, marketing, and supply chain support in addition to
refusing approvals for new investment and expansion.
While we currently include results from our franchised
restaurants in Russia within
reported key business metrics, we do not expect to generate any
profits from restaurants in Russia
in 2022. During the third quarter, these restaurants had an
estimated $12 million, or 2%,
negative impact on our year-over-year organic adjusted EBITDA
growth.
Below are the RBI consolidated and BK segment operational
highlights excluding the results from Russia for the three months ended September 30, 2022 and 2021. Refer to page 26 for
the RBI consolidated and BK segment quarterly operational
highlights excluding the results from Russia for 2021.
Consolidated
Operational Highlights (excluding Russia)
|
|
Three Months Ended
September 30,
|
|
|
2022
|
|
|
2021
|
|
|
(Unaudited)
|
System-wide Sales
Growth
|
|
|
|
|
|
BK
|
|
13.6 %
|
|
|
11.7 %
|
Consolidated
(a)
|
|
13.4 %
|
|
|
10.4 %
|
System-wide Sales (in
US$ millions)
|
|
|
|
|
|
BK
|
$
|
6,346
|
|
$
|
6,017
|
Consolidated
(a)
|
$
|
10,112
|
|
$
|
9,182
|
Net Restaurant
Growth
|
|
|
|
|
|
BK
|
|
2.5 %
|
|
|
1.3 %
|
Consolidated
(a)
|
|
3.9 %
|
|
|
2.4 %
|
System Restaurant Count
at Period End
|
|
|
|
|
|
BK
|
|
18,581
|
|
|
18,131
|
Consolidated
|
|
29,148
|
|
|
26,875
|
Comparable
Sales
|
|
|
|
|
|
BK
|
|
9.6 %
|
|
|
7.4 %
|
Consolidated
(a)
|
|
8.6 %
|
|
|
6.1 %
|
(a)
|
Consolidated
system-wide sales growth, consolidated net restaurant growth and
consolidated comparable sales do not include the results of
Firehouse Subs for all of the periods presented. Consolidated
system-wide sales do not include the results of Firehouse Subs for
2021.
|
COVID-19 and Macro Economic
Environment
The global crisis resulting from the spread of coronavirus
("COVID-19") impacted our global restaurant operations for the
three months ended September 30, 2022
and 2021, though in 2022 the impact was more modest than in the
prior year. During the three months ended September 30, 2022 and 2021, substantially all
restaurants remained open, some with limited operations, such as
drive-thru, takeout and delivery (where applicable), reduced, if
any, dine-in capacity, and/or restrictions on hours of operation.
Certain markets periodically required temporary closures while
implementing government mandated lockdown orders. For example,
while most regions have eased restrictions, increases in cases and
new variants caused certain markets, including China, to re-impose temporary restrictions as
a result of government mandates. We expect local conditions to
continue to dictate limitations on restaurant operations, capacity,
and hours of operation. COVID-19 has also contributed to labor
challenges, which in some regions resulted in reduced operating
hours and service modes at select restaurants as well as supply
chain pressures.
During 2022, there have been increases in commodity, labor, and
energy costs partially due to the macroeconomic impact of both
COVID-19 and the War in Ukraine.
Further significant increases in inflation could affect the global,
Canadian and U.S. economies, resulting in foreign exchange
pressures and rising interest rates which could have an adverse
impact on our business and results of operations if we and our
franchisees are not able to adjust prices sufficiently to offset
the effect of cost increases without negatively impacting consumer
demand.
Reclassification of Technology
Revenues and Expenses
During the first quarter of 2022 we made a change to the way we
report revenues and expenses related to technology initiatives to
provide clarity and consistency across our brands and with our
industry peers. We had previously included revenue from technology
fees in Franchise and property revenues, while the associated
technology expenses were included in General and administrative
expenses. Starting in the first quarter of 2022, revenue from
technology fees will be reported in Advertising revenues and other
services, while the associated technology expenses will be reported
in Advertising expenses and other services.
Additionally, prior year amounts in the condensed consolidated
statements of operations and accompanying BK segment results have
been reclassified in order to be comparable with the current year
classifications. These reclassifications did not arise as a result
of any changes to accounting policies and relate entirely to
presentation with no effect on previously reported net income and
segment income. Refer to page 27 for the RBI consolidated and BK
segment quarterly results for 2021 adjusted for these
reclassifications.
TH Segment Results
|
|
Three Months Ended
September 30,
|
(in US$
millions)
|
|
2022
|
|
|
2021
|
|
|
(Unaudited)
|
System-wide Sales
Growth
|
|
13.4 %
|
|
|
11.1 %
|
System-wide
Sales
|
$
|
1,945
|
|
$
|
1,774
|
Comparable
Sales
|
|
9.8 %
|
|
|
8.9 %
|
|
|
|
|
|
|
Net Restaurant
Growth
|
|
5.2 %
|
|
|
4.1 %
|
System Restaurant Count
at Period End
|
|
5,405
|
|
|
5,137
|
|
|
|
|
|
|
Sales
|
$
|
710
|
|
$
|
592
|
Franchise and Property
Revenues
|
$
|
250
|
|
$
|
230
|
Advertising Revenues
and Other Services
|
$
|
73
|
|
$
|
63
|
Total
Revenues
|
$
|
1,033
|
|
$
|
885
|
|
|
|
|
|
|
Cost of
Sales
|
$
|
568
|
|
$
|
462
|
Franchise and Property
Expenses
|
$
|
87
|
|
$
|
84
|
Advertising Expenses
and Other Services
|
$
|
73
|
|
$
|
68
|
Segment
G&A
|
$
|
31
|
|
$
|
27
|
Segment Depreciation
and Amortization
|
$
|
26
|
|
$
|
31
|
Adjusted
EBITDA(1)(3)
|
$
|
305
|
|
$
|
278
|
(3)
|
TH Adjusted EBITDA
includes $5 million and $3 million of cash distributions received
from equity method investments for the three months ended September
30, 2022 and 2021, respectively.
|
For the third quarter of 2022, the increase in system-wide sales
was primarily driven by comparable sales of 9.8%, including
Canada comparable sales of 11.1%,
and net restaurant growth of 5.2%.
The year-over-year increases in Total Revenues on an as reported
and on an organic basis were primarily driven by an increase in
system-wide sales as well as increases in commodity prices passed
on to franchisees and an increase in sales to retailers. The
increase in Total Revenues on an as reported basis was partially
offset by unfavorable FX movements.
The year-over-year increases in Adjusted EBITDA on an as
reported and on an organic basis were primarily driven by the
increase in system-wide sales and by advertising revenues exceeding
advertising expenses in the current year period compared to
advertising expenses exceeding advertising revenues in the prior
year period driven by our support behind the marketing program in
Canada in the prior year period,
partially offset by an increase in Segment G&A. The increase in
Adjusted EBITDA on an as reported basis was partially offset by
unfavorable FX movements.
BK Segment Results
|
|
Three Months Ended
September 30,
|
(in US$
millions)
|
|
2022
|
|
|
2021
|
|
|
(Unaudited)
|
System-wide Sales
Growth
|
|
14.5 %
|
|
|
12.3 %
|
System-wide
Sales
|
$
|
6,668
|
|
$
|
6,212
|
Comparable
Sales
|
|
10.3 %
|
|
|
7.9 %
|
|
|
|
|
|
|
Net Restaurant
Growth
|
|
2.5 %
|
|
|
1.3 %
|
System Restaurant Count
at Period End
|
|
19,401
|
|
|
18,923
|
|
|
|
|
|
|
Sales
|
$
|
19
|
|
$
|
16
|
Franchise and Property
Revenues
|
$
|
349
|
|
$
|
333
|
Advertising Revenues
and Other Services
|
$
|
123
|
|
$
|
118
|
Total
Revenues
|
$
|
491
|
|
$
|
467
|
|
|
|
|
|
|
Cost of
Sales
|
$
|
19
|
|
$
|
16
|
Franchise and Property
Expenses
|
$
|
46
|
|
$
|
34
|
Advertising Expenses
and Other Services
|
$
|
130
|
|
$
|
118
|
Segment
G&A
|
$
|
45
|
|
$
|
38
|
Segment Depreciation
and Amortization
|
$
|
11
|
|
$
|
12
|
Adjusted
EBITDA(1)
|
$
|
262
|
|
$
|
272
|
|
|
|
|
|
|
For the third quarter of 2022, the increase in system-wide sales
was driven by comparable sales of 10.3%, including US comparable
sales of 4.0% and rest of the world comparable sales of 15.2%, and
net restaurant growth of 2.5%.
The year-over-year increases in Total Revenues on an as reported
and on an organic basis were primarily driven by the increase in
system-wide sales. The increase in Total Revenues on an as reported
basis was partially offset by unfavorable FX movements.
The year-over-year changes in Adjusted EBITDA on an as reported
and on an organic basis were primarily driven by the increase in
system-wide sales, partially offset by bad debt expenses in the
current year compared to bad debt recoveries in the prior year,
advertising expenses exceeding advertising revenues in the current
year compared to advertising revenues exceeding advertising
expenses in the prior year, an increase in expenses related to
technology initiatives, and higher Segment G&A largely as a
result of hiring across a number of key areas including operations
and franchising. On an as reported basis, Adjusted EBITDA was
impacted by unfavorable FX movements, resulting in a year-over-year
decrease in Adjusted EBITDA.
PLK Segment Results
|
|
Three Months Ended
September 30,
|
(in US$
millions)
|
|
2022
|
|
|
2021
|
|
|
(Unaudited)
|
System-wide Sales
Growth
|
|
12.3 %
|
|
|
4.4 %
|
System-wide
Sales
|
$
|
1,532
|
|
$
|
1,392
|
Comparable
Sales
|
|
3.1 %
|
|
|
(2.4) %
|
|
|
|
|
|
|
Net Restaurant
Growth
|
|
8.9 %
|
|
|
5.5 %
|
System Restaurant Count
at Period End
|
|
3,928
|
|
|
3,607
|
|
|
|
|
|
|
Sales
|
$
|
21
|
|
$
|
13
|
Franchise and Property
Revenues
|
$
|
78
|
|
$
|
72
|
Advertising Revenues
and Other Services
|
$
|
65
|
|
$
|
58
|
Total
Revenues
|
$
|
164
|
|
$
|
143
|
|
|
|
|
|
|
Cost of
Sales
|
$
|
19
|
|
$
|
12
|
Franchise and Property
Expenses
|
$
|
2
|
|
$
|
3
|
Advertising Expenses
and Other Services
|
$
|
66
|
|
$
|
59
|
Segment
G&A
|
$
|
16
|
|
$
|
15
|
Segment Depreciation
and Amortization
|
$
|
2
|
|
$
|
1
|
Adjusted
EBITDA(1)
|
$
|
62
|
|
$
|
57
|
|
|
|
|
|
|
For the third quarter of 2022, the increase in system-wide sales
was driven by net restaurant growth of 8.9% and comparable sales of
3.1%, including US comparable sales of 1.3%.
The year-over-year increases in Total Revenues on an as reported
and on an organic basis were primarily driven by the increase in
system-wide sales as well as an increase in sales from Company
restaurants. The increase in Total Revenues on an as reported basis
was partially offset by unfavorable FX movements.
The year-over-year increases in Adjusted EBITDA on an as
reported and on an organic basis were primarily driven by the
increase in system-wide sales, partially offset by an increase in
cost of sales. The increase in Adjusted EBITDA on an as reported
basis was partially offset by unfavorable FX movements.
FHS Segment Results
|
|
Three Months Ended
September 30,
|
(in US$
millions)
|
|
2022
|
|
|
2021
|
|
|
(Unaudited)
|
System-wide Sales
Growth (a)
|
|
3.8 %
|
|
|
19.3 %
|
System-wide Sales
(a)
|
$
|
289
|
|
$
|
278
|
Comparable Sales
(a)
|
|
0.0 %
|
|
|
14.9 %
|
|
|
|
|
|
|
Net Restaurant Growth
(a)
|
|
2.5 %
|
|
|
2.0 %
|
System Restaurant Count
at Period End (a)
|
|
1,234
|
|
|
1,204
|
|
|
|
|
|
|
Sales
|
$
|
9
|
|
|
N/A
|
Franchise and Property
Revenues
|
$
|
21
|
|
|
N/A
|
Advertising Revenues
and Other Services
|
$
|
8
|
|
|
N/A
|
Total
Revenues
|
$
|
38
|
|
|
N/A
|
|
|
|
|
|
|
Cost of
Sales
|
$
|
9
|
|
|
N/A
|
Franchise and Property
Expenses
|
$
|
2
|
|
|
N/A
|
Advertising Expenses
and Other Services
|
$
|
7
|
|
|
N/A
|
Segment
G&A
|
$
|
9
|
|
|
N/A
|
Segment Depreciation
and Amortization
|
$
|
1
|
|
|
N/A
|
Adjusted
EBITDA(1)
|
$
|
13
|
|
|
N/A
|
(a)
|
2021 Firehouse Subs
figures are shown for informational purposes only, consistent with
its fiscal calendar.
|
For the third quarter of 2022, the increase in system-wide sales
was driven by net restaurant growth of 2.5% and flat comparable
sales, which included an increase in US comparable sales of
0.3%.
Cash and Liquidity
As of September 30, 2022, total debt was $13.4 billion, net debt (total debt less cash and
cash equivalents of $0.9 billion) was
$12.5 billion, and net leverage was
5.2x.
The RBI Board of Directors has declared a dividend of
$0.54 per common share and
partnership exchangeable unit of Restaurant Brands International
Limited Partnership for the fourth quarter of 2022. The dividend
will be payable on January 4, 2023 to shareholders and
unitholders of record at the close of business on December 21,
2022.
In September 2022, Burger King
shared the details of its "Reclaim the Flame" plan to accelerate
sales growth and drive franchisee profitability. As part of the
plan, we will enhance ongoing franchisee investments by investing
$400 million over the next two years,
comprising $150 million in
advertising and digital investments and $250
million in restaurant technology, kitchen equipment,
building enhancements, and high-quality remodels and
relocations.
Investor Conference
Call
We will host an investor conference call and webcast at
8:30 a.m. Eastern Time on Thursday,
November 3, 2022, to review financial results for the third
quarter ended September 30, 2022. The earnings call will be
broadcast live via our investor relations website at
http://rbi.com/investors and a replay will be available for 30 days
following the release. The dial-in number is 1 (646)-904-5544 for
U.S. callers, 1 (226)-828-7575 for Canadian callers, and 1
(929)-526-1599 for callers from other countries. For all dial-in
numbers please use the following access code: 152376. For
further information:
Investors: investor@rbi.com; Media: media@rbi.com
About Restaurant Brands
International Inc.
Restaurant Brands International Inc. is one of the world's
largest quick service restaurant companies with over $35 billion in annual system-wide sales and over
29,000 restaurants in more than 100 countries. RBI owns four of the
world's most prominent and iconic quick service restaurant brands –
TIM HORTONS®, BURGER KING®, POPEYES®, and FIREHOUSE SUBS®. These
independently operated brands have been serving their respective
guests, franchisees and communities for decades. Through its
Restaurant Brands for Good framework, RBI is improving
sustainable outcomes related to its food, the planet, and people
and communities. 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 our expectations regarding the effects and
continued impact of the COVID-19 pandemic, the war in Ukraine and related macro-economic pressures,
such as inflation, rising interest rates and currency fluctuations,
on our results of operations, business, liquidity, prospects and
restaurant operations and those of our franchisees, including local
conditions and government-imposed limitations and restrictions, our
digital and marketing initiatives and expectations regarding
further expenditures relating to these initiatives, including as a
result of our plan to accelerate sales growth and drive franchisee
profitability at Burger King, our growth opportunities, plans and
strategies for each of our brands and ability to drive long-term,
sustainable growth, including through global expansion and
restaurant openings, and our suspension of operations in and
financial results from Russia. 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 unforeseen events such as pandemics; risks related
to supply chain; risks related to ownership and leasing of
properties; risks related to our franchisees financial stability
and their ability to access and maintain the liquidity necessary to
operate their business; risks related to our fully franchised
business model, including as a result of current and future
legislation, regulations and interpretations relating to joint
employer status and other labor matters; risks related to RBI's
ability to successfully implement its domestic and international
growth strategy and risks related to its international operations;
risks related to RBI's ability to compete domestically and
internationally in an intensely competitive industry; risks related
to technology; risks related to the conflict between Russia and Ukraine, and changes in applicable tax and
other laws and regulations or interpretations thereof. 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
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Revenues:
|
|
|
|
|
|
|
|
Sales
|
$
759
|
|
$
621
|
|
$
2,076
|
|
$
1,718
|
Franchise and property
revenues
|
698
|
|
635
|
|
1,989
|
|
1,795
|
Advertising revenues
and other services
|
269
|
|
239
|
|
751
|
|
680
|
Total
revenues
|
1,726
|
|
1,495
|
|
4,816
|
|
4,193
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
Cost of
sales
|
615
|
|
490
|
|
1,693
|
|
1,358
|
Franchise and property
expenses
|
137
|
|
121
|
|
392
|
|
358
|
Advertising expenses
and other services
|
276
|
|
245
|
|
782
|
|
725
|
General and
administrative expenses
|
156
|
|
115
|
|
435
|
|
327
|
(Income) loss from
equity method investments
|
8
|
|
7
|
|
30
|
|
12
|
Other operating
expenses (income), net
|
(27)
|
|
(16)
|
|
(68)
|
|
(50)
|
Total operating costs
and expenses
|
1,165
|
|
962
|
|
3,264
|
|
2,730
|
Income from
operations
|
561
|
|
533
|
|
1,552
|
|
1,463
|
Interest expense,
net
|
133
|
|
128
|
|
389
|
|
378
|
Loss on early
extinguishment of debt
|
—
|
|
11
|
|
—
|
|
11
|
Income before income
taxes
|
428
|
|
394
|
|
1,163
|
|
1,074
|
Income tax expense
(benefit)
|
(102)
|
|
65
|
|
17
|
|
83
|
Net income
|
530
|
|
329
|
|
1,146
|
|
991
|
Net income
attributable to noncontrolling interests
|
170
|
|
108
|
|
367
|
|
332
|
Net income attributable
to common shareholders
|
$
360
|
|
$
221
|
|
$
779
|
|
$
659
|
Earnings per common
share
|
|
|
|
|
|
|
|
Basic
|
$
1.18
|
|
$
0.71
|
|
$
2.53
|
|
$
2.14
|
Diluted
|
$
1.17
|
|
$
0.70
|
|
$
2.51
|
|
$
2.12
|
Weighted average shares
outstanding (in millions):
|
|
|
|
|
|
|
|
Basic
|
306
|
|
311
|
|
308
|
|
308
|
Diluted
|
454
|
|
465
|
|
455
|
|
465
|
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In millions of U.S. dollars, except share data)
(Unaudited)
|
As of
|
|
September 30,
2022
|
|
December 31,
2021
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
946
|
|
$
1,087
|
Accounts and notes
receivable, net of allowance of $26 and $18,
respectively
|
598
|
|
547
|
Inventories,
net
|
129
|
|
96
|
Prepaids and other
current assets
|
251
|
|
86
|
Total current
assets
|
1,924
|
|
1,816
|
Property and equipment,
net of accumulated depreciation and amortization of
$1,022 and $979, respectively
|
1,913
|
|
2,035
|
Operating lease assets,
net
|
1,056
|
|
1,130
|
Intangible assets,
net
|
10,831
|
|
11,417
|
Goodwill
|
5,605
|
|
6,006
|
Net investment in
property leased to franchisees
|
83
|
|
80
|
Other assets,
net
|
1,145
|
|
762
|
Total
assets
|
$
22,557
|
|
$
23,246
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts and drafts
payable
|
$
696
|
|
$
614
|
Other accrued
liabilities
|
959
|
|
947
|
Gift card
liability
|
148
|
|
221
|
Current portion of
long-term debt and finance leases
|
117
|
|
96
|
Total current
liabilities
|
1,920
|
|
1,878
|
Long-term debt, net of
current portion
|
12,853
|
|
12,916
|
Finance leases, net of
current portion
|
310
|
|
333
|
Operating lease
liabilities, net of current portion
|
1,003
|
|
1,070
|
Other liabilities,
net
|
1,044
|
|
1,822
|
Deferred income taxes,
net
|
1,388
|
|
1,374
|
Total
liabilities
|
18,518
|
|
19,393
|
Shareholders'
equity:
|
|
|
|
Common shares, no par
value; unlimited shares authorized at
September 30, 2022 and December 31, 2021; 305,859,367
shares issued
and outstanding at September 30, 2022; 309,025,068 shares
issued and
outstanding at December 31, 2021
|
1,964
|
|
2,156
|
Retained
earnings
|
1,062
|
|
791
|
Accumulated other
comprehensive income (loss)
|
(713)
|
|
(710)
|
Total Restaurant
Brands International Inc. shareholders' equity
|
2,313
|
|
2,237
|
Noncontrolling
interests
|
1,726
|
|
1,616
|
Total shareholders'
equity
|
4,039
|
|
3,853
|
Total liabilities and
shareholders' equity
|
$
22,557
|
|
$
23,246
|
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
Condensed Consolidated Statements of Cash
Flows
(In millions of U.S. dollars)
(Unaudited)
|
Nine Months Ended
September 30,
|
|
2022
|
|
2021
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
1,146
|
|
$
991
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
143
|
|
150
|
Premiums paid and
non-cash loss on early extinguishment of debt
|
—
|
|
11
|
Amortization of
deferred financing costs and debt issuance discount
|
21
|
|
20
|
(Income) loss from
equity method investments
|
30
|
|
12
|
(Gain) loss on
remeasurement of foreign denominated transactions
|
(82)
|
|
(58)
|
Net (gains) losses on
derivatives
|
17
|
|
65
|
Share-based
compensation and non-cash incentive compensation expense
|
93
|
|
71
|
Deferred income
taxes
|
(29)
|
|
35
|
Other
|
8
|
|
(14)
|
Changes in current
assets and liabilities, excluding acquisitions and
dispositions:
|
|
|
|
Accounts and notes
receivable
|
(93)
|
|
11
|
Inventories and
prepaids and other current assets
|
(67)
|
|
(3)
|
Accounts and drafts
payable
|
113
|
|
129
|
Other accrued
liabilities and gift card liability
|
(74)
|
|
(87)
|
Tenant inducements
paid to franchisees
|
(13)
|
|
(5)
|
Other long-term assets
and liabilities
|
(146)
|
|
(73)
|
Net cash provided by
operating activities
|
1,067
|
|
1,255
|
Cash flows from
investing activities:
|
|
|
|
Payments for property
and equipment
|
(52)
|
|
(70)
|
Net proceeds from
disposal of assets, restaurant closures, and
refranchisings
|
11
|
|
14
|
Net payments in
connection with purchase of Firehouse Subs
|
(12)
|
|
—
|
Settlement/sale of
derivatives, net
|
22
|
|
2
|
Other investing
activities, net
|
(35)
|
|
(15)
|
Net cash (used for)
provided by investing activities
|
(66)
|
|
(69)
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
long-term debt
|
2
|
|
802
|
Repayments of
long-term debt and finance leases
|
(71)
|
|
(865)
|
Payment of financing
costs
|
—
|
|
(7)
|
Payment of dividends
on common shares and distributions on Partnership
exchangeable units
|
(728)
|
|
(730)
|
Repurchase of common
shares
|
(326)
|
|
(182)
|
Proceeds from stock
option exercises
|
7
|
|
60
|
(Payments) proceeds
from derivatives
|
8
|
|
(45)
|
Other financing
activities, net
|
(3)
|
|
(3)
|
Net cash (used for)
provided by financing activities
|
(1,111)
|
|
(970)
|
Effect of exchange
rates on cash and cash equivalents
|
(31)
|
|
(3)
|
Increase (decrease) in
cash and cash equivalents
|
(141)
|
|
213
|
Cash and cash
equivalents at beginning of period
|
1,087
|
|
1,560
|
Cash and cash
equivalents at end of period
|
$
946
|
|
$
1,773
|
Supplemental cash
flow disclosures:
|
|
|
|
Interest
paid
|
$
318
|
|
$
281
|
Income taxes
paid
|
$
177
|
|
$
189
|
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
Key Operating Metrics
We evaluate our restaurants and assess our business based on the
following operating metrics.
System-wide sales growth refers to the percentage change in
sales at all franchise restaurants and Company restaurants
(referred to as system-wide sales) in one period from the same
period in the prior year. Comparable sales refers to the percentage
change in restaurant sales in one period from the same prior year
period for restaurants that have been open for 13 months or longer
for TH, BK and FHS and 17 months or longer for PLK. Additionally,
if a restaurant is closed for a significant portion of a month, the
restaurant is excluded from the monthly comparable sales
calculation. System-wide sales growth and comparable sales are
measured on a constant currency basis, which means that results
exclude the effect of foreign currency translation ("FX Impact")
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 franchise restaurants
and company-owned restaurants. We do not record franchise sales as
revenues; however, our royalty revenues and advertising fund
contributions are calculated based on a percentage of franchise
sales.
Net restaurant growth refers to the net increase in restaurant
count (openings, net of permanent closures) over a trailing twelve
month period, divided by the restaurant count at the beginning of
the trailing twelve month period.
These metrics are important indicators of the overall direction
of our business, including trends in sales and the effectiveness of
each brand's marketing, operations and growth initiatives.
|
|
Three Months Ended
September 30,
|
KPIs by
Market
|
|
2022
|
|
|
2021
|
|
|
(Unaudited)
|
System-wide Sales
Growth
|
|
|
|
|
|
TH - Canada
|
|
12.1 %
|
|
|
9.8 %
|
TH - Rest of
World
|
|
21.2 %
|
|
|
19.7 %
|
TH - Global
|
|
13.4 %
|
|
|
11.1 %
|
|
|
|
|
|
|
BK - US
|
|
4.4 %
|
|
|
(2.4) %
|
BK - Rest of
World
|
|
22.2 %
|
|
|
25.2 %
|
BK - Global
|
|
14.5 %
|
|
|
12.3 %
|
|
|
|
|
|
|
PLK - US
|
|
7.7 %
|
|
|
1.3 %
|
PLK - Rest of
World
|
|
43.4 %
|
|
|
28.3 %
|
PLK - Global
|
|
12.3 %
|
|
|
4.4 %
|
|
|
|
|
|
|
FHS - US (a)
|
|
3.3 %
|
|
|
18.5 %
|
FHS - Rest of World
(a)
|
|
15.6 %
|
|
|
39.8 %
|
FHS - Global
(a)
|
|
3.8 %
|
|
|
19.3 %
|
|
|
|
|
|
|
System-wide Sales
(in US$ millions)
|
|
|
|
|
|
TH - Canada
|
$
|
1,645
|
|
$
|
1,521
|
TH - Rest of
World
|
$
|
300
|
|
$
|
253
|
TH - Global
|
$
|
1,945
|
|
$
|
1,774
|
|
|
|
|
|
|
BK - US
|
$
|
2,641
|
|
$
|
2,530
|
BK - Rest of
World
|
$
|
4,027
|
|
$
|
3,682
|
BK - Global
|
$
|
6,668
|
|
$
|
6,212
|
|
|
|
|
|
|
PLK - US
|
$
|
1,280
|
|
$
|
1,194
|
PLK - Rest of
World
|
$
|
252
|
|
$
|
198
|
PLK - Global
|
$
|
1,532
|
|
$
|
1,392
|
|
|
|
|
|
|
FHS - US (a)
|
$
|
276
|
|
$
|
266
|
FHS - Rest of World
(a)
|
$
|
13
|
|
$
|
12
|
FHS - Global
(a)
|
$
|
289
|
|
$
|
278
|
|
|
|
|
|
|
Comparable
Sales
|
|
|
|
|
|
TH - Canada
|
|
11.1 %
|
|
|
9.5 %
|
TH - Rest of
World
|
|
2.1 %
|
|
|
4.5 %
|
TH - Global
|
|
9.8 %
|
|
|
8.9 %
|
|
|
|
|
|
|
BK - US
|
|
4.0 %
|
|
|
(1.6) %
|
BK - Rest of
World
|
|
15.2 %
|
|
|
16.2 %
|
BK - Global
|
|
10.3 %
|
|
|
7.9 %
|
|
|
|
|
|
|
PLK - US
|
|
1.3 %
|
|
|
(4.5) %
|
PLK - Rest of
World
|
|
16.4 %
|
|
|
14.8 %
|
PLK - Global
|
|
3.1 %
|
|
|
(2.4) %
|
|
|
|
|
|
|
FHS - US (a)
|
|
0.3 %
|
|
|
15.2 %
|
FHS - Rest of World
(a)
|
|
(6.6) %
|
|
|
8.3 %
|
FHS - Global
(a)
|
|
0.0 %
|
|
|
14.9 %
|
|
As of
|
KPIs by
Market
|
September 30,
2022
|
|
September 30,
2021
|
|
(Unaudited)
|
Net Restaurant
Growth
|
|
|
|
TH - Canada
|
(1.0) %
|
|
(1.0) %
|
TH - Rest of
World
|
25.8 %
|
|
25.6 %
|
TH - Global
|
5.2 %
|
|
4.1 %
|
|
|
|
|
BK - US
|
(0.4) %
|
|
(1.7) %
|
BK - Rest of
World
|
4.3 %
|
|
3.2 %
|
BK - Global
|
2.5 %
|
|
1.3 %
|
|
|
|
|
PLK - US
|
6.1 %
|
|
5.6 %
|
PLK - Rest of
World
|
17.1 %
|
|
5.4 %
|
PLK - Global
|
8.9 %
|
|
5.5 %
|
|
|
|
|
FHS - US (a)
|
2.2 %
|
|
1.0 %
|
FHS - Rest of World
(a)
|
10.2 %
|
|
32.4 %
|
FHS - Global
(a)
|
2.5 %
|
|
2.0 %
|
|
|
|
|
Restaurant
Count
|
|
|
|
TH - Canada
|
3,899
|
|
3,940
|
TH - Rest of
World
|
1,506
|
|
1,197
|
TH - Global
|
5,405
|
|
5,137
|
|
|
|
|
BK - US
|
7,062
|
|
7,093
|
BK - Rest of
World
|
12,339
|
|
11,830
|
BK - Global
|
19,401
|
|
18,923
|
|
|
|
|
PLK - US
|
2,858
|
|
2,693
|
PLK - Rest of
World
|
1,070
|
|
914
|
PLK - Global
|
3,928
|
|
3,607
|
|
|
|
|
FHS - US (a)
|
1,180
|
|
1,155
|
FHS - Rest of World
(a)
|
54
|
|
49
|
FHS - Global
(a)
|
1,234
|
|
1,204
|
(a)
|
2021 Firehouse Subs
figures are shown for informational purposes only, consistent with
its fiscal calendar.
|
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
Supplemental Disclosure
(Unaudited)
General and Administrative Expenses
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
(in US$
millions)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Segment G&A
TH(1)
|
$
31
|
|
$
27
|
|
$
92
|
|
$
77
|
Segment G&A
BK(1)
|
45
|
|
38
|
|
130
|
|
114
|
Segment G&A
PLK(1)
|
16
|
|
15
|
|
48
|
|
42
|
Segment G&A
FHS(1)
|
9
|
|
—
|
|
25
|
|
—
|
Share-based
compensation and non-cash incentive compensation
expense(2)
|
34
|
|
25
|
|
93
|
|
71
|
Depreciation and
amortization(3)
|
6
|
|
6
|
|
18
|
|
15
|
FHS Transaction
costs
|
3
|
|
—
|
|
8
|
|
—
|
Corporate restructuring
and tax advisory fees
|
12
|
|
4
|
|
21
|
|
8
|
General and
administrative expenses
|
$
156
|
|
$
115
|
|
$
435
|
|
$
327
|
(1)
|
Segment G&A
includes segment general and administrative expenses and excludes
share-based compensation and non-cash incentive compensation
expense, depreciation and amortization, FHS Transaction costs and
corporate restructuring and tax advisory fees.
|
(2)
|
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
2021 and 2022 cash bonus, respectively.
|
(3)
|
Segment depreciation
and amortization reflects depreciation and amortization included in
the respective segment cost of sales, franchise and property
expenses and advertising expenses and other services. Depreciation
and amortization included in general and administrative expenses
reflects all other depreciation and amortization.
|
Other Operating Expenses (Income), net
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
(in US$
millions)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net losses (gains) on
disposal of assets, restaurant closures, and
refranchisings(4)
|
$
1
|
|
$
2
|
|
$
2
|
|
$
1
|
Litigation settlement
(gains) and reserves, net
|
—
|
|
4
|
|
3
|
|
7
|
Net losses (gains) on
foreign exchange(5)
|
(30)
|
|
(23)
|
|
(82)
|
|
(58)
|
Other, net
|
2
|
|
1
|
|
9
|
|
—
|
Other operating expenses
(income), net
|
$
(27)
|
|
$
(16)
|
|
$
(68)
|
|
$
(50)
|
(4)
|
Net losses (gains) on
disposal of assets, restaurant closures, and refranchisings
represent sales of properties and other costs related to restaurant
closures and refranchisings. Gains and losses recognized in
the current period may reflect certain costs related to closures
and refranchisings that occurred in previous periods.
|
(5)
|
Net losses (gains) on
foreign exchange is primarily related to revaluation of foreign
denominated assets and liabilities, primarily those denominated in
Euros and Canadian dollars.
|
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 why we believe this information is useful to management
and may be useful to investors. These measures do not have
standardized meanings under GAAP and may differ from similarly
captioned measures of other companies in our industry.
Non-GAAP Measures
To supplement our condensed consolidated financial statements
presented on a GAAP basis, RBI reports the following non-GAAP
financial measures: EBITDA, Adjusted EBITDA, LTM Adjusted EBITDA,
Adjusted Net Income, Adjusted Diluted Earnings per Share ("Adjusted
Diluted EPS"), Organic revenue growth, Organic Adjusted EBITDA
growth, Free Cash Flow, LTM Free Cash Flow and Net Leverage. We
believe that these non-GAAP measures are useful to investors in
assessing our operating performance or liquidity, as they provide
them with the same tools that management uses to evaluate our
performance or liquidity and are 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 expense, net, (gain) loss on early extinguishment of debt,
income tax (benefit) expense, and depreciation and amortization and
is used by management to measure operating performance of the
business. Adjusted EBITDA is defined as EBITDA excluding (i) the
non-cash impact of share-based compensation and non-cash incentive
compensation expense, (ii) (income) loss from equity method
investments, net of cash distributions received from equity method
investments, (iii) other operating expenses (income), net, and (iv)
income or expense from non-recurring projects and non-operating
activities. For the periods referenced, this included non-recurring
fees and expenses incurred in connection with the Firehouse Subs
acquisition consisting of professional fees, compensation-related
expenses and integration costs as well as costs from professional
advisory and consulting services associated with certain
transformational corporate restructuring initiatives that
rationalize our structure and optimize cash movements, including
services related to significant tax reform legislation, regulations
and related restructuring initiatives. Management believes that
these types of expenses are either not related to our underlying
profitability drivers or not likely to re-occur in the foreseeable
future and the varied timing, size and nature of these projects may
cause volatility in our results unrelated to the performance of our
core business that does not reflect trends of our core operations.
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 our operating performance.
Adjusted EBITDA, as defined above, also represents our measure of
segment income for each of our four operating segments.
LTM Adjusted EBITDA is defined as Adjusted EBITDA for the last
twelve month period to the date reported. See reconciliation of LTM
Adjusted EBITDA in the following pages.
Adjusted Net Income is defined as net income excluding (i)
franchise agreement amortization as a result of acquisition
accounting, (ii) amortization of deferred financing costs and debt
issuance discount, (iii) loss on early extinguishment of debt and
interest expense, which represents non-cash interest expense
related to losses reclassified from accumulated comprehensive
income (loss) into interest expense in connection with interest
rate swaps de-designated in May 2015,
November 2019 and September 2021, (iv) (income) loss from equity
method investments, net of cash distributions received from equity
method investments, (v) other operating expenses (income), net, and
(vi) income or expense from non-recurring projects and
non-operating activities (as described above).
Adjusted Diluted EPS is calculated by dividing Adjusted Net
Income by the weighted average diluted shares outstanding 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 believes are not
relevant to management's assessment of operating performance.
Net Leverage is defined as net debt (total debt less cash and
cash equivalents) divided by LTM Adjusted EBITDA. Net Leverage is
an operating performance measure that we believe provides investors
a more complete understanding of our leverage position and
borrowing capacity after factoring in cash and cash equivalents
that eventually could be used to repay outstanding debt.
Revenue growth and Adjusted EBITDA growth, on an organic basis,
are non-GAAP measures that exclude the impact of FX movements and
also exclude the results of Firehouse Subs for the first four full
fiscal quarters following the acquisition. Management believes that
organic growth is an important metric for measuring the operating
performance of our business as it helps identify underlying
business trends, without distortion from the effects of FX
movements and the Firehouse Subs acquisition. We calculate the
impact of FX movements by translating prior year results at current
year monthly average exchange rates.
Free Cash Flow is the total of Net cash provided by operating
activities minus Payments for property and equipment. Free Cash
Flow is a liquidity measure used by management as one factor in
determining the amount of cash that is available for working
capital needs or other uses of cash, however, it does not represent
residual cash flows available for discretionary expenditures. LTM
Free Cash Flow is defined as Free Cash Flow for the last
twelve-month period to the date reported.
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
Non-GAAP Financial Measures
Organic Growth in Revenue and Adjusted EBITDA
(Unaudited)
|
|
Three Months
Ended
September
30,
|
|
Variance
|
|
FHS
Impact
|
|
Impact of FX
Movements
|
|
Organic
Growth
|
(in US$
millions)
|
|
2022
|
|
2021
|
|
$
|
|
%
|
|
$
|
|
$
|
|
$
|
|
%
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TH
|
|
$
1,033
|
|
$
885
|
|
$
148
|
|
16.6 %
|
|
$
—
|
|
$
(28)
|
|
$
176
|
|
20.5 %
|
BK
|
|
$
491
|
|
$
467
|
|
$
24
|
|
5.0 %
|
|
$
—
|
|
$
(19)
|
|
$
43
|
|
9.4 %
|
PLK
|
|
$
164
|
|
$
143
|
|
$
21
|
|
14.7 %
|
|
$
—
|
|
$
(1)
|
|
$
22
|
|
15.4 %
|
FHS
|
|
$
38
|
|
$
—
|
|
$
38
|
|
NM
|
|
$
38
|
|
$
—
|
|
$
—
|
|
— %
|
Total
Revenues
|
|
$
1,726
|
|
$
1,495
|
|
$
231
|
|
15.5 %
|
|
$
38
|
|
$
(48)
|
|
$
241
|
|
16.5 %
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TH
|
|
$
305
|
|
$
278
|
|
$
27
|
|
9.6 %
|
|
$
—
|
|
$
(9)
|
|
$
36
|
|
13.2 %
|
BK
|
|
$
262
|
|
$
272
|
|
$
(10)
|
|
(3.8) %
|
|
$
—
|
|
$
(16)
|
|
$
6
|
|
2.3 %
|
PLK
|
|
$
62
|
|
$
57
|
|
$
5
|
|
10.4 %
|
|
$
—
|
|
$
(1)
|
|
$
6
|
|
12.0 %
|
FHS
|
|
$
13
|
|
$
—
|
|
$
13
|
|
NM
|
|
$
13
|
|
$
—
|
|
$
—
|
|
— %
|
Adjusted
EBITDA
|
|
$
642
|
|
$
607
|
|
$
35
|
|
5.8 %
|
|
$
13
|
|
$
(26)
|
|
$
48
|
|
8.3 %
|
Note: Percentage
changes may not recalculate due to rounding.
NM - not meaningful
|
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
Non-GAAP Financial Measures
Reconciliation of EBITDA and Adjusted EBITDA to Net Income
(Unaudited)
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
(in US$
millions)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Segment
income:
|
|
|
|
|
|
|
|
TH
|
$
305
|
|
$
278
|
|
$
810
|
|
$
738
|
BK
|
262
|
|
272
|
|
761
|
|
755
|
PLK
|
62
|
|
57
|
|
179
|
|
171
|
FHS
|
13
|
|
—
|
|
40
|
|
—
|
Adjusted
EBITDA
|
642
|
|
607
|
|
1,790
|
|
1,664
|
Share-based
compensation and non-cash incentive
compensation expense(1)
|
34
|
|
25
|
|
93
|
|
71
|
FHS Transaction
costs(2)
|
3
|
|
—
|
|
8
|
|
—
|
Corporate restructuring
and tax advisory fees(3)
|
12
|
|
4
|
|
21
|
|
8
|
Impact of equity method
investments(4)
|
13
|
|
11
|
|
41
|
|
22
|
Other operating
expenses (income), net
|
(27)
|
|
(16)
|
|
(68)
|
|
(50)
|
EBITDA
|
607
|
|
583
|
|
1,695
|
|
1,613
|
Depreciation and
amortization
|
46
|
|
50
|
|
143
|
|
150
|
Income from
operations
|
561
|
|
533
|
|
1,552
|
|
1,463
|
Interest expense,
net
|
133
|
|
128
|
|
389
|
|
378
|
Loss on early
extinguishment of debt
|
—
|
|
11
|
|
—
|
|
11
|
Income tax expense
(benefit)(5)
|
(102)
|
|
65
|
|
17
|
|
83
|
Net income
|
$
530
|
|
$
329
|
|
$
1,146
|
|
$
991
|
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
Non-GAAP Financial Measures
Reconciliation of Net Income to Adjusted Net Income and Adjusted
Diluted EPS
(Unaudited)
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
(in US$ millions,
except per share data)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net income
|
$
530
|
|
$
329
|
|
$
1,146
|
|
$
991
|
Income tax expense
(benefit)(5)
|
(102)
|
|
65
|
|
17
|
|
83
|
Income before income
taxes
|
428
|
|
394
|
|
1,163
|
|
1,074
|
Adjustments:
|
|
|
|
|
|
|
|
Franchise agreement
amortization
|
8
|
|
8
|
|
24
|
|
24
|
Amortization of
deferred financing costs and debt issuance discount
|
7
|
|
7
|
|
21
|
|
20
|
Interest expense and
loss on extinguished debt(6)
|
16
|
|
24
|
|
48
|
|
39
|
FHS Transaction
costs(2)
|
3
|
|
—
|
|
8
|
|
—
|
Corporate
restructuring and tax advisory fees(3)
|
12
|
|
4
|
|
21
|
|
8
|
Impact of equity
method investments(4)
|
13
|
|
11
|
|
41
|
|
22
|
Other operating
expenses (income), net
|
(27)
|
|
(16)
|
|
(68)
|
|
(50)
|
Total
adjustments
|
32
|
|
38
|
|
95
|
|
63
|
Adjusted income before
income taxes
|
460
|
|
432
|
|
1,258
|
|
1,137
|
Adjusted income tax
expense(5)(7)
|
24
|
|
79
|
|
154
|
|
169
|
Adjusted net
income
|
$
436
|
|
$
353
|
|
$
1,104
|
|
$
968
|
Adjusted diluted
earnings per share
|
$
0.96
|
|
$
0.76
|
|
$
2.42
|
|
$
2.08
|
Weighted average
diluted shares outstanding
|
454
|
|
465
|
|
455
|
|
465
|
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
Non-GAAP Financial
Measures
Net Leverage and Reconciliation of Free Cash Flow
(Unaudited)
|
|
As of
|
(in US$ millions,
except ratio)
|
|
September 30,
2022
|
|
September 30,
2021
|
Long-term debt, net of
current portion
|
|
$
12,853
|
|
$
12,379
|
Finance leases, net of
current portion
|
|
310
|
|
328
|
Current portion of
long-term debt and finance leases
|
|
117
|
|
113
|
Unamortized deferred
financing costs and deferred issue discount
|
|
118
|
|
138
|
Total
debt
|
|
13,398
|
|
12,958
|
|
|
|
|
|
Cash and cash
equivalents
|
|
946
|
|
1,773
|
Net debt
|
|
12,452
|
|
11,185
|
LTM adjusted
EBITDA
|
|
2,374
|
|
2,165
|
Net
leverage
|
|
5.2x
|
|
5.2x
|
|
|
Nine Months
Ended
September 30,
|
|
Twelve Months
Ended
December 31,
|
|
Twelve Months
Ended
September 30,
|
(in US$
millions)
|
|
2022
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
2022
|
|
2021
|
Calculation:
|
|
A
|
|
B
|
|
C
|
|
D
|
|
E
|
|
A + D - B
|
|
B + E - C
|
Net cash provided by
operating activities
|
|
$
1,067
|
|
$
1,255
|
|
$
608
|
|
$
1,726
|
|
$
921
|
|
$
1,538
|
|
$
1,568
|
Payments for property
and equipment
|
|
(52)
|
|
(70)
|
|
(71)
|
|
(106)
|
|
(117)
|
|
(88)
|
|
(116)
|
Free Cash
flow
|
|
$
1,015
|
|
$
1,185
|
|
$
537
|
|
$
1,620
|
|
$
804
|
|
$
1,450
|
|
$
1,452
|
|
|
Nine Months
Ended
September 30,
|
|
Six Months Ended
June 30,
|
|
Three Months
Ended
September 30,
|
(in US$
millions)
|
|
2022
|
|
2022
|
|
2022
|
Calculation:
|
|
A
|
|
B
|
|
A -B
|
Net cash provided by
operating activities
|
|
$
1,067
|
|
$
669
|
|
$
398
|
Payments for property
and equipment
|
|
(52)
|
|
(28)
|
|
(24)
|
Free Cash
Flow
|
|
$
1,015
|
|
$
641
|
|
$
374
|
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
Non-GAAP Financial Measures
Reconciliation of EBITDA and Adjusted EBITDA to Net Income
(Unaudited)
|
|
Nine Months
Ended
September 30,
|
|
Twelve Months
Ended
December 31,
|
|
Twelve Months
Ended
September 30,
|
(in US$
millions)
|
|
2022
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
2022
|
|
2021
|
Calculation:
|
|
A
|
|
B
|
|
C
|
|
D
|
|
E
|
|
A + D - B
|
|
B + E - C
|
Segment
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TH
|
|
$
810
|
|
$
738
|
|
$
594
|
|
$
997
|
|
$
823
|
|
$
1,069
|
|
$
967
|
BK
|
|
761
|
|
755
|
|
605
|
|
1,021
|
|
823
|
|
1,027
|
|
973
|
PLK
|
|
179
|
|
171
|
|
164
|
|
228
|
|
218
|
|
236
|
|
225
|
FHS
|
|
40
|
|
—
|
|
—
|
|
2
|
|
—
|
|
42
|
|
—
|
Adjusted
EBITDA
|
|
1,790
|
|
1,664
|
|
1,363
|
|
2,248
|
|
1,864
|
|
2,374
|
|
2,165
|
Share-based
compensation and non-cash
incentive compensation expense(1)
|
|
93
|
|
71
|
|
63
|
|
102
|
|
84
|
|
124
|
|
92
|
FHS Transaction
costs(2)
|
|
8
|
|
—
|
|
—
|
|
18
|
|
—
|
|
26
|
|
—
|
Corporate restructuring
and tax advisory fees(3)
|
|
21
|
|
8
|
|
11
|
|
16
|
|
16
|
|
29
|
|
13
|
Impact of equity method
investments(4)
|
|
41
|
|
22
|
|
42
|
|
25
|
|
48
|
|
44
|
|
28
|
Other operating
expenses (income), net
|
|
(68)
|
|
(50)
|
|
59
|
|
7
|
|
105
|
|
(11)
|
|
(4)
|
EBITDA
|
|
1,695
|
|
1,613
|
|
1,188
|
|
2,080
|
|
1,611
|
|
2,162
|
|
2,036
|
Depreciation and
amortization
|
|
143
|
|
150
|
|
139
|
|
201
|
|
189
|
|
194
|
|
200
|
Income from
operations
|
|
1,552
|
|
1,463
|
|
1,049
|
|
1,879
|
|
1,422
|
|
1,968
|
|
1,836
|
Interest expense,
net
|
|
389
|
|
378
|
|
376
|
|
505
|
|
508
|
|
516
|
|
510
|
Loss on early
extinguishment of debt
|
|
—
|
|
11
|
|
—
|
|
11
|
|
98
|
|
—
|
|
109
|
Income tax expense
(benefit)(5)
|
|
17
|
|
83
|
|
62
|
|
110
|
|
66
|
|
44
|
|
87
|
Net income
|
|
$
1,146
|
|
$
991
|
|
$
611
|
|
$
1,253
|
|
$
750
|
|
$
1,408
|
|
$
1,130
|
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
2021 and 2022 cash bonus, respectively.
|
(2)
|
In connection with the
acquisition of Firehouse Subs, we incurred certain non-recurring
general and administrative expenses during the three and nine
months ended September 30, 2022, primarily consisting of
professional fees, compensation-related expenses and integration
costs.
|
(3)
|
Costs arising primarily
from professional advisory and consulting services associated with
certain transformational corporate restructuring initiatives that
rationalize our structure and optimize cash movements, including
services related to significant tax reform legislation, regulations
and related restructuring initiatives.
|
(4)
|
Represents (i) (income)
loss from equity method investments and (ii) cash distributions
received from our equity method investments. Cash distributions
received from our equity method investments is included in segment
income.
|
(5)
|
The effective tax rate
for the three and nine months ended September 30, 2022 included a
net decrease in tax reserves of $171 million related primarily to
expiring statute of limitations for certain prior tax years which
decreased the effective tax rate by 39.9% and 14.7% for the three
and nine months ended September 30, 2022, respectively. The impact
of the net reserve releases decreased our adjusted effective tax
rate by 9.5% and 3.5% for the three and nine months ended September
30, 2022, respectively. The effective tax rate for the nine months
ended September 30, 2021 included a net decrease in tax reserves of
$87 million related primarily to expiring statute of limitations
for certain prior tax years which decreased the effective tax rate
by 8.1%. The impact of the net reserves releases decreased our
adjusted effective tax rate by 2.0% for the nine months ended
September 30, 2021.
|
(6)
|
Represents loss on
early extinguishment of debt and interest expense. Interest expense
included in this amount represents non-cash interest expense
related to losses reclassified from accumulated comprehensive
income (loss) into interest expense in connection with interest
rate swaps de-designated in May 2015, November 2019 and September
2021.
|
(7)
|
Adjusted income tax
expense includes the tax impact of the non-GAAP adjustments and is
calculated using our statutory tax rate in the jurisdiction in
which the costs were incurred.
|
Consolidated Operational Highlights (excluding Russia)
Below are the RBI consolidated and BK segment operational
highlights excluding the results from Russia for each quarter of 2021.
|
|
Three Months
Ended
|
|
Twelve
Months
Ended
|
|
|
March 31,
2021
|
|
|
June
30,
2021
|
|
|
September
30, 2021
|
|
|
December
31, 2021
|
|
|
December
31, 2021
|
|
|
(Unaudited)
|
|
|
|
System-wide Sales
Growth
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BK
|
|
1.5 %
|
|
|
35.8 %
|
|
|
11.7 %
|
|
|
14.8 %
|
|
|
15.1 %
|
Consolidated
(a)
|
|
1.2 %
|
|
|
30.5 %
|
|
|
10.4 %
|
|
|
13.4 %
|
|
|
13.3 %
|
System-wide Sales (in
US$ millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BK
|
$
|
5,012
|
|
$
|
5,701
|
|
$
|
6,017
|
|
$
|
5,996
|
|
$
|
22,726
|
Consolidated
(a)
|
$
|
7,735
|
|
$
|
8,724
|
|
$
|
9,182
|
|
$
|
9,130
|
|
$
|
34,771
|
Net Restaurant
Growth
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BK
|
|
(0.8) %
|
|
|
0.1 %
|
|
|
1.3 %
|
|
|
3.2 %
|
|
|
3.2 %
|
Consolidated
(a)
|
|
0.3 %
|
|
|
1.3 %
|
|
|
2.4 %
|
|
|
4.4 %
|
|
|
4.4 %
|
System Restaurant Count
at Period End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BK
|
|
17,925
|
|
|
17,999
|
|
|
18,131
|
|
|
18,427
|
|
|
18,427
|
Consolidated
|
|
26,407
|
|
|
26,626
|
|
|
26,875
|
|
|
27,423
|
|
|
27,423
|
Comparable
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BK
|
|
0.7 %
|
|
|
16.8 %
|
|
|
7.4 %
|
|
|
10.9 %
|
|
|
8.7 %
|
Consolidated
(a)
|
|
0.2 %
|
|
|
15.6 %
|
|
|
6.1 %
|
|
|
9.0 %
|
|
|
7.6 %
|
(a)
|
Consolidated
system-wide sales growth, consolidated system-wide sales,
consolidated net restaurant growth and consolidated comparable
sales do not include the results of Firehouse Subs for all of the
periods presented.
|
Reclassification of Technology Revenues and Expenses for
2021
Below are the RBI consolidated and BK segment quarterly results
for 2021 adjusted for the reclassification of technology revenues
from Franchise and property revenues to Advertising revenues and
other services and technology expenses from General and
administrative expenses to Advertising expenses and other
services.
RBI Consolidated
Results
|
|
Three Months
Ended
|
(in US$
millions)
|
|
March 31,
2021
|
|
|
June 30,
2021
|
|
|
September 30,
2021
|
|
|
December 31,
2021
|
|
|
(Unaudited)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
$
|
507
|
|
$
|
590
|
|
$
|
621
|
|
$
|
660
|
Franchise and Property
Revenues (a)
|
|
548
|
|
|
612
|
|
|
635
|
|
|
648
|
Advertising Revenues
and Other Services (a)
|
|
205
|
|
|
236
|
|
|
239
|
|
|
238
|
Total
Revenues
|
|
1,260
|
|
|
1,438
|
|
|
1,495
|
|
|
1,546
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
Sales
|
|
401
|
|
|
467
|
|
|
490
|
|
|
532
|
Franchise and Property
Expenses
|
|
116
|
|
|
121
|
|
|
121
|
|
|
131
|
Advertising Expenses
and Other Services (b)
|
|
237
|
|
|
243
|
|
|
245
|
|
|
261
|
General and
Administrative Expenses (b)
|
|
104
|
|
|
108
|
|
|
115
|
|
|
157
|
(Income) Loss from
Equity Method Investments
|
|
2
|
|
|
3
|
|
|
7
|
|
|
(8)
|
Other Operating
Expenses (Income), net
|
|
(42)
|
|
|
8
|
|
|
(16)
|
|
|
57
|
Total Operating Costs
and Expenses
|
|
818
|
|
|
950
|
|
|
962
|
|
|
1,130
|
Income from
Operations
|
|
442
|
|
|
488
|
|
|
533
|
|
|
416
|
Interest Expense,
net
|
|
124
|
|
|
126
|
|
|
128
|
|
|
127
|
Loss on Early
Extinguishment of Debt
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
Income before Income
Taxes
|
|
318
|
|
|
362
|
|
|
394
|
|
|
289
|
Income Tax Expense
(Benefit)
|
|
47
|
|
|
(29)
|
|
|
65
|
|
|
27
|
Net Income
|
$
|
271
|
|
$
|
391
|
|
$
|
329
|
|
$
|
262
|
(a)
|
Reflects
reclassification of technology revenues from Franchise and property
revenues to Advertising revenues and other services of $2 million
for the three months ended June 30, 2021, $4 million for the three
months ended September 30, 2021 and $3 million for the three months
ended December 31, 2021. There were no related reclassifications
during the three months ended March 31, 2021.
|
|
|
(b)
|
Reflects
reclassification of technology expenses from General and
administrative expenses (Segment G&A for BK segment results) to
Advertising expenses and other services of $1 million for the three
months ended March 31, 2021, $5 million for the three months ended
June 30, 2021, $8 million for the three months ended September 30,
2021 and $10 million for the three months ended December 31,
2021.
|
BK Segment
Results
|
|
Three Months
Ended
|
(in US$
millions)
|
|
March 31,
2021
|
|
|
June 30,
2021
|
|
|
September 30,
2021
|
|
|
December 31,
2021
|
|
|
(Unaudited)
|
Sales
|
$
|
16
|
|
$
|
17
|
|
$
|
16
|
|
$
|
15
|
Franchise and Property
Revenues (a)
|
$
|
289
|
|
$
|
322
|
|
$
|
333
|
|
$
|
348
|
Advertising Revenues
and Other Services (a)
|
$
|
102
|
|
$
|
120
|
|
$
|
118
|
|
$
|
117
|
Total
Revenues
|
$
|
407
|
|
$
|
459
|
|
$
|
467
|
|
$
|
480
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
Sales
|
$
|
16
|
|
$
|
17
|
|
$
|
16
|
|
$
|
17
|
Franchise and Property
Expenses
|
$
|
33
|
|
$
|
33
|
|
$
|
34
|
|
$
|
42
|
Advertising Expenses
and Other Services (b)
|
$
|
118
|
|
$
|
115
|
|
$
|
118
|
|
$
|
123
|
Segment G&A
(b)
|
$
|
35
|
|
$
|
40
|
|
$
|
39
|
|
$
|
47
|
Segment Depreciation
and Amortization
|
$
|
12
|
|
$
|
12
|
|
$
|
12
|
|
$
|
12
|
Adjusted
EBITDA
|
$
|
217
|
|
$
|
266
|
|
$
|
272
|
|
$
|
266
|
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SOURCE Restaurant Brands International Inc.