OAKVILLE, ON, Oct. 24, 2016
/CNW/ - Restaurant Brands International Inc. (TSX/NYSE: QSR, TSX:
QSP) today reported financial results for the third quarter ended
September 30, 2016.
(Photo:
http://photos.prnewswire.com/prnh/20161021/431310LOGO )
Daniel Schwartz, Chief Executive
Officer of Restaurant Brands International Inc. ("RBI") commented,
"We continued to grow our iconic brands, TIM HORTONS® and BURGER
KING®, increasing system-wide sales through restaurant development
and focus on guest satisfaction. We are encouraged with the
progress this quarter and are excited by the long term growth
prospects for our brands."
Third Quarter 2016 Highlights:
- RBI Total Revenues of $1,075.7
million versus $1,019.7
million in prior year period
- RBI Net Income Attributable to Common Shareholders of
$86.3 million versus $49.6 million in prior year period
- RBI Diluted EPS of $0.36 versus
$0.24 in prior year period
- Tim Hortons ("TH") comparable
sales increased 2.0% and Burger King ("BK") comparable sales
increased 1.7% in constant currency
- Restaurant count increased 3.4% at TH and 3.9% at BK
year-over-year
- System-wide sales grew 4.8% at TH and 7.0% at BK in constant
currency
- RBI Adjusted EBITDA of $488.9
million was up 11.3% on an organic basis versus prior year
results
- RBI Adjusted Diluted EPS of $0.43
was up 34.5% versus prior year results
- RBI declared a dividend of $0.17
per common share and partnership exchangeable unit of Restaurant
Brands International Limited Partnership for the fourth quarter of
2016
Consolidated Operational Highlights
|
Three Months Ended
September 30,
|
|
|
2016
|
|
|
2015
|
|
(unaudited)
|
Comparable Sales
Growth(1)
|
|
|
|
|
|
TH
|
|
2.0%
|
|
|
5.3%
|
BK
|
|
1.7%
|
|
|
6.2%
|
System Net Restaurant
Growth (NRG)
|
|
|
|
|
|
TH
(2)
|
|
28
|
|
|
22
|
BK
|
|
143
|
|
|
141
|
System-wide Sales
Growth(1)
|
|
|
|
|
|
TH
|
|
4.8%
|
|
|
8.2%
|
BK
|
|
7.0%
|
|
|
11.2%
|
System-wide Sales
(3)(in US$ millions)
|
|
|
|
|
|
TH
|
$
|
1,690.4
|
|
$
|
1,600.0
|
BK
|
$
|
4,776.7
|
|
$
|
4,520.6
|
|
|
(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 436 and 501 limited service kiosks as of September 30,
2016 and 2015, respectively. NRG excludes limited service kiosks.
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
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
September 30,
|
(in US$ millions,
except per share data)
|
|
2016
|
|
|
2015
|
|
(unaudited)
|
|
|
|
|
|
|
RBI Total
Revenues
|
$
|
1,075.7
|
|
$
|
1,019.7
|
RBI Net Income
Attributable to
Common Shareholders
|
$
|
86.3
|
|
$
|
49.6
|
RBI Diluted Net
Income Attributable to Common
Shareholders and Noncontrolling Interests
(4)
|
$
|
170.1
|
|
$
|
114.5
|
|
|
|
|
|
|
RBI Diluted Earnings
per Share
|
$
|
0.36
|
|
$
|
0.24
|
|
|
|
|
|
|
TH Adjusted EBITDA
(5)
|
$
|
287.1
|
|
$
|
244.0
|
BK Adjusted EBITDA
(5)
|
$
|
201.8
|
|
$
|
196.7
|
RBI Adjusted EBITDA
(6)
|
$
|
488.9
|
|
$
|
440.7
|
|
|
|
|
|
|
RBI Adjusted Net
Income (6)(7)
|
$
|
201.4
|
|
$
|
151.6
|
RBI Adjusted Diluted
Earnings per Share (6)(7)
|
$
|
0.43
|
|
$
|
0.32
|
|
|
(4)
|
Includes net income
available to common shareholders and net income attributable 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)
|
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 $1,075.7 million compared to $1,019.7 million in the prior year period
primarily as a result of system-wide sales growth at both TH and
BK. On a GAAP basis, RBI reported Net Income Attributable to Common
Shareholders of $86.3 million in the
third quarter, versus $49.6 million
in the prior year, and Diluted Earnings per Share of $0.36, compared to $0.24 in the prior year, primarily due to the
non-recurrence of TH transaction and restructuring costs. RBI
Adjusted EBITDA growth of 11.3%, excluding the impact of FX
movements, was driven by organic growth at both brands combined
with cost discipline.
TH Segment Results
|
Three Months Ended
September 30,
|
(in US$
millions)
|
|
2016
|
|
|
2015
|
|
(unaudited)
|
|
|
|
|
|
|
Comparable Sales
Growth (1)
|
|
2.0%
|
|
|
5.3%
|
System-wide Sales
Growth (1)
|
|
4.8%
|
|
|
8.2%
|
System-wide Sales
(3)
|
$
|
1,690.4
|
|
$
|
1,600.0
|
|
|
|
|
|
|
System Net Restaurant
Growth (NRG) (2)
|
|
28
|
|
|
22
|
System Restaurant
Count at Period End (2)
|
|
4,492
|
|
|
4,344
|
|
|
|
|
|
|
Sales
|
$
|
563.0
|
|
$
|
522.1
|
Franchise and
Property Revenues
|
$
|
226.9
|
|
$
|
215.6
|
TH Total
Revenues
|
$
|
789.9
|
|
$
|
737.7
|
|
|
|
|
|
|
Cost of
Sales
|
$
|
434.6
|
|
$
|
426.7
|
Franchise &
Property Expenses
|
$
|
79.8
|
|
$
|
79.2
|
Segment SG&A
(8)
|
$
|
17.0
|
|
$
|
18.5
|
Segment Depreciation
and Amortization (9)
|
$
|
25.7
|
|
$
|
27.3
|
TH Adjusted EBITDA
(5) (10)
|
$
|
287.1
|
|
$
|
244.0
|
|
|
(8)
|
Segment selling,
general and administrative expenses consists of segment selling
expenses and segment management general and administrative
expenses.
|
(9)
|
Segment depreciation
and amortization consists of depreciation and amortization included
in cost of sales and franchise and property expenses.
|
(10)
|
TH Adjusted EBITDA
for the three months ended September 30, 2016 includes $2.9 million
of cash distributions received from equity method investments. TH
Adjusted EBITDA for the three months ended September 30, 2015
excludes ($0.3) million of acquisition accounting impact on cost of
sales and includes $3.7 million of cash distributions received from
equity method investments.
|
|
|
At TH, comparable sales growth of 2.0% and year-over-year
restaurant count growth of 3.4% resulted in system-wide sales
growth of 4.8% in constant currency. New product launches drove
favorable comparable sales at TH. TH opened 28 net new restaurants
during the period, and ended the quarter with 4,492
restaurants.
Compared to prior year results, TH Total Revenues of
$789.9 million grew 7.1% (7.0%
excluding the impact of FX movements), primarily driven by
system-wide sales growth. TH Adjusted EBITDA of $287.1 million grew 17.7% (17.1% excluding the
impact of FX movements), primarily driven by organic growth and
cost discipline.
BK Segment Results
|
Three Months Ended
September 30,
|
(in US$
millions)
|
|
2016
|
|
|
2015
|
|
(unaudited)
|
|
|
|
|
|
|
Comparable Sales
Growth (1)
|
|
1.7%
|
|
|
6.2%
|
System-wide Sales
Growth (1)
|
|
7.0%
|
|
|
11.2%
|
System-wide
Sales(3)
|
$
|
4,776.7
|
|
$
|
4,520.6
|
|
|
|
|
|
|
System Net Restaurant
Growth (NRG)
|
|
143
|
|
|
141
|
System Restaurant
Count at Period End
|
|
15,243
|
|
|
14,669
|
|
|
|
|
|
|
Sales
|
$
|
23.4
|
|
$
|
23.8
|
Franchise and
Property Revenues
|
$
|
262.4
|
|
$
|
258.2
|
BK Total
Revenues
|
$
|
285.8
|
|
$
|
282.0
|
|
|
|
|
|
|
Cost of
Sales
|
$
|
20.4
|
|
$
|
19.9
|
Franchise &
Property Expenses
|
$
|
32.1
|
|
$
|
35.2
|
Segment SG&A
(8)
|
$
|
43.5
|
|
$
|
42.0
|
Segment Depreciation
and Amortization (9)
|
$
|
12.0
|
|
$
|
11.8
|
BK Adjusted EBITDA
(5)
|
$
|
201.8
|
|
$
|
196.7
|
|
|
|
|
|
|
System-wide sales at BK grew 7.0% year-over-year in constant
currency. Continued strength in Asia
Pacific ("APAC") and Latin
America and the Caribbean
("LAC"), along with strength in Europe, the Middle
East, and Africa ("EMEA"),
partially offset by softness in the U.S. and Canada ("US&C"), contributed to comparable
sales growth of 1.7% at BK. BK added 143 net new restaurants during
the quarter, growing restaurant count by 3.9% year-over-year,
ending the quarter with 15,243 restaurants.
BK Total Revenues of $285.8
million grew 1.3% (2.7% excluding the impact of FX
movements), compared to prior year results, driven by system-wide
sales growth. BK Adjusted EBITDA of $201.8
million grew 2.6% (4.2% excluding the impact of FX
movements), primarily driven by organic growth.
Cash and Liquidity
As of September 30, 2016, total
debt was $8.9 billion, and net
debt (total debt less cash and cash equivalents of
$1.3 billion) was $7.7 billion. On October
24, 2016, the RBI Board of Directors declared a dividend of
$0.17 per common share and Class B
exchangeable partnership unit of Restaurant Brands International
Limited Partnership for the fourth quarter of 2016. The dividend
will be payable on January 4, 2017 to
shareholders and unitholders of record at the close of business on
December 8, 2016.
Investor Conference Call
We will host an investor conference call and webcast at
8:30 a.m. Eastern Time on
Monday, October 24, 2016, to review
financial results for the third quarter ended September 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
$24 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 its ability to continue to grow its iconic
brands, TIM HORTONS® and BURGER KING®, by increasing system-wide
sales through restaurant development and focus on guest
satisfaction and RBI's current beliefs regarding the long-term
growth prospects for its brands. 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
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
$
|
586.4
|
|
$
|
545.9
|
|
$
|
1,635.5
|
|
$
|
1,613.2
|
|
Franchise and
property revenues
|
|
489.3
|
|
|
473.8
|
|
|
1,398.9
|
|
|
1,382.0
|
|
|
Total
revenues
|
|
1,075.7
|
|
|
1,019.7
|
|
|
3,034.4
|
|
|
2,995.2
|
Cost of
sales
|
|
455.0
|
|
|
446.6
|
|
|
1,279.0
|
|
|
1,354.6
|
Franchise and
property expenses
|
|
111.9
|
|
|
114.4
|
|
|
330.2
|
|
|
365.2
|
Selling, general and
administrative expenses
|
|
82.2
|
|
|
104.3
|
|
|
228.5
|
|
|
317.3
|
(Income) loss from
equity method investments
|
|
(2.6)
|
|
|
1.0
|
|
|
(16.6)
|
|
|
5.7
|
Other operating
expenses (income), net
|
|
8.7
|
|
|
9.4
|
|
|
38.2
|
|
|
82.2
|
|
Total operating costs
and expenses
|
|
655.2
|
|
|
675.7
|
|
|
1,859.3
|
|
|
2,125.0
|
Income from
operations
|
|
420.5
|
|
|
344.0
|
|
|
1,175.1
|
|
|
870.2
|
Interest expense,
net
|
|
117.3
|
|
|
116.0
|
|
|
349.6
|
|
|
362.3
|
(Gain) loss on early
extinguishment of debt
|
|
-
|
|
|
0.4
|
|
|
-
|
|
|
40.0
|
Income before income
taxes
|
|
303.2
|
|
|
227.6
|
|
|
825.5
|
|
|
467.9
|
|
Income tax
expense
|
|
64.6
|
|
|
44.7
|
|
|
171.0
|
|
|
140.7
|
Net income
|
|
238.6
|
|
|
182.9
|
|
|
654.5
|
|
|
327.2
|
|
Net income
attributable to noncontrolling interests
|
|
84.8
|
|
|
65.8
|
|
|
224.8
|
|
|
71.3
|
|
Preferred share
dividends
|
|
67.5
|
|
|
67.5
|
|
|
202.5
|
|
|
203.7
|
Net income
attributable to common shareholders
|
$
|
86.3
|
|
$
|
49.6
|
|
$
|
227.2
|
|
$
|
52.2
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.37
|
|
$
|
0.25
|
|
$
|
0.98
|
|
$
|
0.26
|
|
Diluted
|
$
|
0.36
|
|
$
|
0.24
|
|
$
|
0.96
|
|
$
|
0.25
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
233.9
|
|
|
202.4
|
|
|
232.5
|
|
|
202.3
|
|
Diluted
|
|
470.6
|
|
|
476.5
|
|
|
469.7
|
|
|
476.4
|
Cash dividends
declared per common share
|
$
|
0.16
|
|
$
|
0.12
|
|
$
|
0.45
|
|
$
|
0.31
|
|
|
|
|
|
|
|
|
|
|
|
|
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 and
nine months ended September 30, 2016, diluted EPS of $0.36 and
$0.96 per share, respectively, includes $86.3 million and $227.2
million net income attributable to common shareholders and $83.8
million and $222.0 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"),
respectively.
|
|
For the three and
nine months ended September 30, 2015, diluted EPS of $0.24 and
$0.25 per share, respectively, includes $49.6 million and $52.2
million net income attributable to common shareholders and $64.9
million and $68.4 million net income attributable to noncontrolling
interests related to the Partnership exchangeable units,
respectively.
|
|
The diluted earnings
per share calculation assumes conversion of 100% of the Partnership
exchangeable units to RBI common shares 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
|
|
September 30,
2016
|
|
December 31,
2015
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,274.4
|
|
$
|
757.8
|
|
Trade and notes
receivable, net of allowance of $14.1 million and $14.2
million,
|
|
|
|
|
|
|
|
respectively
|
|
374.3
|
|
|
422.0
|
|
Inventories and other
current assets, net
|
|
170.8
|
|
|
132.2
|
|
Advertising fund
restricted assets
|
|
57.7
|
|
|
57.5
|
|
|
Total current
assets
|
|
1,877.2
|
|
|
1,369.5
|
|
|
|
|
|
|
Property and
equipment, net of accumulated depreciation of $446.6 million
and
$339.3 million,
respectively
|
|
2,095.8
|
|
|
2,150.6
|
Intangible assets,
net
|
|
9,434.0
|
|
|
9,147.8
|
Goodwill
|
|
4,762.0
|
|
|
4,574.4
|
Net investment in
property leased to franchisees
|
|
100.1
|
|
|
117.2
|
Other assets,
net
|
|
924.3
|
|
|
1,051.6
|
|
|
Total
assets
|
$
|
19,193.4
|
|
$
|
18,411.1
|
LIABILITIES,
REDEEMABLE PREFERRED SHARES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts and drafts
payable
|
$
|
352.1
|
|
$
|
361.5
|
|
Other accrued
liabilities
|
|
506.8
|
|
|
441.3
|
|
Gift card
liability
|
|
124.2
|
|
|
168.5
|
|
Advertising fund
liabilities
|
|
112.7
|
|
|
93.6
|
|
Current portion of
long term debt and capital leases
|
|
94.1
|
|
|
56.1
|
|
|
Total current
liabilities
|
|
1,189.9
|
|
|
1,121.0
|
|
|
|
|
|
|
Term debt, net of
current portion
|
|
8,421.3
|
|
|
8,462.3
|
Capital leases, net
of current portion
|
|
213.9
|
|
|
203.4
|
Other liabilities,
net
|
|
903.5
|
|
|
795.9
|
Deferred income
taxes, net
|
|
1,648.7
|
|
|
1,618.8
|
|
|
Total
liabilities
|
|
12,377.3
|
|
|
12,201.4
|
|
|
|
|
|
|
Redeemable preferred
shares; $43.775848 par value; 68,530,939 shares authorized,
issued and outstanding at September 30, 2016 and December 31,
2015
|
|
3,297.0
|
|
|
3,297.0
|
|
|
|
|
|
|
Shareholders'
Equity:
|
|
|
|
|
|
|
Common shares; no par
value; unlimited shares authorized at September 30, 2016 and
December 31, 2015;
|
|
|
|
|
|
|
|
234,097,876 shares
issued and outstanding at September 30, 2016;
|
|
|
|
|
|
|
|
225,707,588 shares
issued and outstanding at December 31, 2015;
|
|
1,935.8
|
|
|
1,824.5
|
Retained
earnings
|
|
367.4
|
|
|
245.8
|
Accumulated other
comprehensive income (loss)
|
|
(594.9)
|
|
|
(733.7)
|
|
Total Restaurant
Brands International Inc. shareholders' equity
|
|
1,708.3
|
|
|
1,336.6
|
|
Noncontrolling
interests
|
|
1,810.8
|
|
|
1,576.1
|
|
Total shareholders'
equity
|
|
3,519.1
|
|
|
2,912.7
|
|
Total liabilities,
redeemable preferred shares and shareholders' equity
|
$
|
19,193.4
|
|
$
|
18,411.1
|
|
|
|
|
|
|
RESTAURANT BRANDS
INTERNATIONAL INC. AND SUBSIDIARIES
|
Condensed
Consolidated Statements of Cash Flows
|
(In millions of U.S.
dollars)
|
(Unaudited)
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
2016
|
|
|
2015
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net income
|
$
|
654.5
|
|
$
|
327.2
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
129.0
|
|
|
137.8
|
|
|
(Gain) loss on early
extinguishment of debt
|
|
-
|
|
|
40.0
|
|
|
Amortization of
deferred financing costs and debt issuance discount
|
|
29.1
|
|
|
25.0
|
|
|
(Income) loss from
equity method investments
|
|
(16.6)
|
|
|
5.7
|
|
|
Loss (gain) on
remeasurement of foreign denominated transactions
|
|
16.1
|
|
|
31.1
|
|
|
Amortization of
defined benefit pension and postretirement items
|
|
(1.9)
|
|
|
-
|
|
|
Net losses (gains) on
derivatives
|
|
15.3
|
|
|
50.1
|
|
|
Net losses (gains) on
refranchisings and dispositions of assets
|
|
10.0
|
|
|
(5.8)
|
|
|
Bad debt expense
(recoveries), net
|
|
(0.1)
|
|
|
0.9
|
|
|
Share-based
compensation expense
|
|
25.9
|
|
|
36.9
|
|
|
Acquisition
accounting impact on cost of sales
|
|
-
|
|
|
0.5
|
|
|
Deferred income
taxes
|
|
34.6
|
|
|
(114.8)
|
|
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
|
|
20.0
|
|
|
35.4
|
|
|
Inventories and other
current assets
|
|
(3.0)
|
|
|
(5.1)
|
|
|
Accounts and drafts
payable
|
|
11.8
|
|
|
138.8
|
|
|
Accrued
advertising
|
|
4.0
|
|
|
29.8
|
|
|
Other accrued
liabilities
|
|
(23.8)
|
|
|
172.2
|
|
Other long-term
assets and liabilities
|
|
14.1
|
|
|
(34.5)
|
|
|
Net cash provided by
operating activities
|
|
919.0
|
|
|
950.4
|
Cash flows from
investing activities:
|
|
|
|
|
|
Payments for property
and equipment
|
|
(18.2)
|
|
|
(82.9)
|
|
Proceeds from
refranchisings, disposition of assets and restaurant
closures
|
|
18.1
|
|
|
16.9
|
|
Return of investment
on direct financing leases
|
|
12.5
|
|
|
12.1
|
|
Settlement of
derivatives, net
|
|
4.9
|
|
|
11.8
|
|
Other investing
activities, net
|
|
2.0
|
|
|
2.1
|
|
|
Net cash provided by
(used for) investing activities
|
|
19.3
|
|
|
(40.0)
|
Cash flows from
financing activities:
|
|
|
|
|
|
Proceeds from Senior
Notes
|
|
-
|
|
|
1,250.0
|
|
Repayments of term
debt, Tim Hortons Notes and capital leases
|
|
(52.7)
|
|
|
(2,610.6)
|
|
Payment of financing
costs
|
|
-
|
|
|
(81.3)
|
|
Dividends paid on
common shares and preferred shares
|
|
(396.9)
|
|
|
(238.8)
|
|
Proceeds from stock
option exercises
|
|
12.5
|
|
|
1.6
|
|
Proceeds from
issuance of shares
|
|
-
|
|
|
2.1
|
|
Other financing
activities
|
|
0.8
|
|
|
(3.9)
|
|
|
Net cash provided by
(used for) financing activities
|
|
(436.3)
|
|
|
(1,680.9)
|
|
Effect of exchange
rates on cash and cash equivalents
|
|
14.6
|
|
|
(57.2)
|
|
Increase (decrease)
in cash and cash equivalents
|
|
516.6
|
|
|
(827.7)
|
|
Cash and cash
equivalents at beginning of period
|
|
757.8
|
|
|
1,803.2
|
|
Cash and cash
equivalents at end of period
|
$
|
1,274.4
|
|
$
|
975.5
|
|
|
|
|
|
|
Supplemental
cashflow disclosures:
|
|
|
|
|
|
|
Interest
paid
|
$
|
285.9
|
|
$
|
285.8
|
|
Income taxes
paid
|
$
|
93.3
|
|
$
|
91.8
|
Non-cash investing
and financing activities:
|
|
|
|
|
|
Acquisition of
property with capital lease obligations
|
$
|
22.5
|
|
$
|
10.4
|
|
|
|
|
|
|
|
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 September 30,
|
Key Business
Metrics
|
|
2016
|
|
2015
|
|
|
|
|
|
System-wide Sales
Growth
|
|
|
|
|
TH -
Canada
|
|
4.1 %
|
|
8.1 %
|
TH - US
|
|
7.9 %
|
|
8.5 %
|
TH -
International
|
|
34.8 %
|
|
40.8 %
|
BK -
US&C
|
|
(0.1)%
|
|
5.6 %
|
BK - EMEA
|
|
11.9 %
|
|
16.5 %
|
BK - APAC
|
|
20.5 %
|
|
17.7 %
|
BK - LAC
|
|
21.2 %
|
|
20.3 %
|
|
|
|
|
|
Comparable Sales
Growth
|
|
|
|
|
TH -
Canada
|
|
1.7 %
|
|
5.4 %
|
TH - US
|
|
4.5 %
|
|
4.3 %
|
TH -
International
|
|
8.4 %
|
|
15.5 %
|
BK -
US&C
|
|
(0.5)%
|
|
5.2 %
|
BK - EMEA
|
|
2.6 %
|
|
7.3 %
|
BK - APAC
|
|
5.3 %
|
|
5.3 %
|
BK - LAC
|
|
9.5 %
|
|
11.4 %
|
|
|
|
|
|
System NRG
|
|
|
|
|
TH -
Canada
|
|
25
|
|
15
|
TH - US
|
|
(1)
|
|
1
|
TH -
International
|
|
4
|
|
6
|
BK -
US&C
|
|
16
|
|
(20)
|
BK - EMEA
|
|
35
|
|
76
|
BK - APAC
|
|
82
|
|
60
|
BK - LAC
|
|
10
|
|
25
|
|
|
|
|
|
System Restaurant
Count
|
|
|
|
|
TH -
Canada
|
|
3,717
|
|
3,615
|
TH - US
|
|
657
|
|
658
|
TH -
International
|
|
118
|
|
71
|
BK -
US&C
|
|
7,382
|
|
7,370
|
BK - EMEA
|
|
4,184
|
|
3,977
|
BK - APAC
|
|
1,878
|
|
1,594
|
BK - LAC
|
|
1,799
|
|
1,728
|
|
|
|
|
|
RESTAURANT BRANDS
INTERNATIONAL INC. AND SUBSIDIARIES
|
Supplemental
Disclosure
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, General
and Administrative Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
(in US$
millions)
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
$
|
1.5
|
|
$
|
3.0
|
|
$
|
4.3
|
|
$
|
11.3
|
Management general
and administrative expenses
|
|
59.0
|
|
|
57.5
|
|
|
166.9
|
|
|
176.1
|
Share-based
compensation and non-cash incentive compensation expense
|
|
11.8
|
|
|
15.5
|
|
|
31.0
|
|
|
37.5
|
Depreciation and
amortization
|
|
5.5
|
|
|
4.0
|
|
|
15.9
|
|
|
12.7
|
TH transaction and
restructuring costs
|
|
-
|
|
|
24.3
|
|
|
-
|
|
|
79.7
|
Integration
costs
|
|
4.4
|
|
|
-
|
|
|
10.4
|
|
|
-
|
Total general and
administrative expenses
|
|
80.7
|
|
|
101.3
|
|
|
224.2
|
|
|
306.0
|
|
Selling, general and
administrative expenses
|
$
|
82.2
|
|
$
|
104.3
|
|
$
|
228.5
|
|
$
|
317.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Operating
Expenses (Income), net
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
(in US$
millions)
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
Net losses (gains) on
disposal of assets, restaurant closures and refranchisings
(1)
|
$
|
3.3
|
|
$
|
0.2
|
|
$
|
19.6
|
|
$
|
(3.2)
|
Litigation
settlements and reserves, net
|
|
0.4
|
|
|
(0.1)
|
|
|
2.0
|
|
|
1.8
|
Net losses (gains) on
derivatives (2)
|
|
-
|
|
|
(1.5)
|
|
|
-
|
|
|
37.3
|
Net losses (gains) on
foreign exchange (3)
|
|
4.1
|
|
|
10.8
|
|
|
16.1
|
|
|
45.1
|
Other, net
|
|
0.9
|
|
|
-
|
|
|
0.5
|
|
|
1.2
|
|
Other operating
expenses (income), net
|
$
|
8.7
|
|
$
|
9.4
|
|
$
|
38.2
|
|
$
|
82.2
|
|
(1) Net losses
(gains) on disposal of assets, restaurant closures and
refranchisings for the nine months ended September 30, 2016
primarily reflects losses in connection with refranchisings in our
TH business.
|
|
(2) Net losses
(gains) on derivatives for the nine months ended September 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 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, 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 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 believes 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
September 30, 2016
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of
FX
|
|
|
|
|
|
|
|
|
Actual
|
|
Q3 '16 vs. Q3
'15
|
|
Movements
|
|
Organic
Growth
|
(in US$
millions)
|
|
Q3
'16
|
|
Q3
'15
|
|
$
|
|
%
|
|
$
|
|
$
|
|
%
|
Calculation:
|
|
|
|
|
A
|
|
B
|
|
|
|
C
|
|
B-C=D
|
|
D/A
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TH
|
|
$
|
789.9
|
|
$
|
737.7
|
|
$
|
52.2
|
|
|
7.1 %
|
|
$
|
0.7
|
|
$
|
51.5
|
|
|
7.0 %
|
BK
|
|
$
|
285.8
|
|
$
|
282.0
|
|
$
|
3.8
|
|
|
1.3 %
|
|
$
|
(3.8)
|
|
$
|
7.6
|
|
|
2.7 %
|
|
RBI
|
|
$
|
1,075.7
|
|
$
|
1,019.7
|
|
$
|
56.0
|
|
|
5.5 %
|
|
$
|
(3.1)
|
|
$
|
59.1
|
|
|
5.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TH
|
|
$
|
287.1
|
|
$
|
244.0
|
|
$
|
43.1
|
|
|
17.7 %
|
|
$
|
1.4
|
|
$
|
41.7
|
|
|
17.1 %
|
BK
|
|
$
|
201.8
|
|
$
|
196.7
|
|
$
|
5.1
|
|
|
2.6 %
|
|
$
|
(3.1)
|
|
$
|
8.2
|
|
|
4.2 %
|
|
RBI
|
|
$
|
488.9
|
|
$
|
440.7
|
|
$
|
48.2
|
|
|
10.9 %
|
|
$
|
(1.7)
|
|
$
|
49.9
|
|
|
11.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
Segment
Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
TH
|
$
|
287.1
|
|
$
|
244.0
|
|
$
|
793.9
|
|
$
|
663.3
|
|
BK
|
|
201.8
|
|
|
196.7
|
|
|
581.9
|
|
|
560.3
|
|
|
Adjusted
EBITDA
|
|
488.9
|
|
|
440.7
|
|
|
1,375.8
|
|
|
1,223.6
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation and non-cash
incentive compensation expense (1)
|
|
11.8
|
|
|
15.5
|
|
|
31.0
|
|
|
37.5
|
Acquisition
accounting impact on cost of sales
|
|
-
|
|
|
(0.3)
|
|
|
-
|
|
|
0.5
|
TH transaction and
restructuring costs (2)
|
|
-
|
|
|
24.3
|
|
|
-
|
|
|
79.7
|
Integration costs
(3)
|
|
4.4
|
|
|
-
|
|
|
10.4
|
|
|
-
|
Impact of equity
method investments (4)
|
|
0.3
|
|
|
4.7
|
|
|
(7.6)
|
|
|
15.7
|
Other operating
expenses (income), net
|
|
8.7
|
|
|
9.4
|
|
|
38.2
|
|
|
82.2
|
|
EBITDA
|
|
463.7
|
|
|
387.1
|
|
|
1,303.8
|
|
|
1,008.0
|
Depreciation and
amortization
|
|
43.2
|
|
|
43.1
|
|
|
128.7
|
|
|
137.8
|
Income from
operations
|
|
420.5
|
|
|
344.0
|
|
|
1,175.1
|
|
|
870.2
|
Interest expense,
net
|
|
117.3
|
|
|
116.0
|
|
|
349.6
|
|
|
362.3
|
(Gain) loss on early
extinguishment of debt
|
|
-
|
|
|
0.4
|
|
|
-
|
|
|
40.0
|
Income tax
expense
|
|
64.6
|
|
|
44.7
|
|
|
171.0
|
|
|
140.7
|
|
Net income
|
$
|
238.6
|
|
$
|
182.9
|
|
$
|
654.5
|
|
$
|
327.2
|
|
|
|
|
|
|
|
|
|
|
|
|
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
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2016
|
|
|
2015
(7)
|
|
|
2016
|
|
|
2015
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
$
|
238.6
|
|
$
|
182.9
|
|
$
|
654.5
|
|
$
|
327.2
|
|
Income tax
expense
|
|
64.6
|
|
|
44.7
|
|
|
171.0
|
|
|
140.7
|
Income before
income taxes
|
|
303.2
|
|
|
227.6
|
|
|
825.5
|
|
|
467.9
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Franchise agreement
amortization
|
|
6.9
|
|
|
6.8
|
|
|
20.4
|
|
|
20.5
|
|
Amortization of
deferred financing costs and original issue discount
|
|
9.8
|
|
|
9.7
|
|
|
29.1
|
|
|
25.0
|
|
Interest expense and
loss on extinguished debt (5)
|
|
3.2
|
|
|
3.6
|
|
|
9.5
|
|
|
50.0
|
|
Acquisition
accounting impact on cost of sales
|
|
-
|
|
|
(0.3)
|
|
|
-
|
|
|
0.5
|
|
TH transaction and
restructuring costs (2)
|
|
-
|
|
|
24.3
|
|
|
-
|
|
|
79.7
|
|
Integration costs
(3)
|
|
4.4
|
|
|
-
|
|
|
10.4
|
|
|
-
|
|
Impact of equity
method investments (4)
|
|
0.3
|
|
|
4.7
|
|
|
(7.6)
|
|
|
15.7
|
|
Other operating
expenses (income), net
|
|
8.7
|
|
|
9.4
|
|
|
38.2
|
|
|
82.2
|
|
Total
adjustments
|
|
33.3
|
|
|
58.2
|
|
|
100.0
|
|
|
273.6
|
Adjusted income
before income taxes
|
|
336.5
|
|
|
285.8
|
|
|
925.5
|
|
|
741.5
|
|
Adjusted income tax
expense (6)
|
|
67.6
|
|
|
66.7
|
|
|
187.1
|
|
|
171.3
|
Adjusted net income
before preferred share dividends
|
|
268.9
|
|
|
219.1
|
|
|
738.4
|
|
|
570.2
|
|
Preferred share
dividends
|
|
67.5
|
|
|
67.5
|
|
|
202.5
|
|
|
203.7
|
Adjusted net
income
|
$
|
201.4
|
|
$
|
151.6
|
|
$
|
535.9
|
|
$
|
366.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted
earnings per share
|
$
|
0.43
|
|
$
|
0.32
|
|
$
|
1.14
|
|
$
|
0.77
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted average
shares outstanding
|
|
470.6
|
|
|
476.5
|
|
|
469.7
|
|
|
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 nine
months ended September 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 nine months ended
September 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
nine months ended September 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
nine months ended September 30, 2015, represents (gain) loss on
early extinguishment of debt, $3.2 million and $8.1 million of
non-cash interest expense, respectively, related to losses
reclassified from accumulated other comprehensive income (loss)
into interest expense in connection with interest rate swaps
settled in May 2015, and $1.9 million of incremental interest
expense for the nine months ended September 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 nine months ended September 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 Inc.