OAKVILLE, ON, April 26, 2017 /CNW/ - Restaurant Brands
International Inc. (TSX/NYSE: QSR, TSX: QSP) today reported
financial results for the first quarter ended March 31, 2017.
Daniel Schwartz, Chief Executive
Officer of Restaurant Brands International Inc. ("RBI") commented,
"This quarter, we are excited to have completed our acquisition of
POPEYES®, an iconic brand with a rich Louisiana heritage. We also continued to grow
our TIM HORTONS® and BURGER KING® brands, increasing system-wide
sales despite relatively flat comparable sales growth, through
continued net restaurant growth around the world. We remain
confident in our strategies to accelerate comparable sales growth
and to grow franchisee profitability for each of our three brands
for years to come."
First Quarter 2017 Highlights:
- Total Revenues of $1,000.6
million versus $918.5 million
in prior year period
- Net Income Attributable to Common Shareholders of $50.2 million versus $50.0
million in prior year period
- Diluted EPS of $0.21 versus
$0.21 in prior year period
- Comparable sales growth, in constant currency, of (0.1)% at Tim
Hortons ("TH"), (0.1)% at Burger King ("BK"), and (0.2)% at Popeyes
Louisiana Kitchen ("PLK")
- System-wide sales growth, in constant currency, of 3.3% at TH
and 6.2% at BK
- Adjusted EBITDA of $443.3 million
was up 6.8% on an organic basis versus prior year results
- Adjusted Diluted EPS of $0.36 was
up 20.0% versus prior year results
- RBI declared dividends of $0.19
per common share and partnership exchangeable unit of Restaurant
Brands International Limited Partnership for the second quarter of
2017
Consolidated Operational Highlights
|
Three Months Ended
March 31,
|
|
2017
|
|
2016
|
|
(unaudited)
|
Comparable Sales
Growth(1)
|
|
|
|
TH
|
(0.1)%
|
|
5.6%
|
BK
|
(0.1)%
|
|
4.6%
|
PLK(2)
|
(0.2)%
|
|
1.6%
|
Net Restaurant
Growth(3)
|
|
|
|
TH
|
4.6%
|
|
3.2%
|
BK
|
5.1%
|
|
4.3%
|
PLK(2)
|
5.8%
|
|
6.4%
|
System Restaurant
Count at Period End
|
|
|
|
TH
|
4,644
|
|
4,438
|
BK
|
15,768
|
|
15,008
|
PLK(2)
|
2,743
|
|
2,592
|
System-wide Sales
Growth(1)
|
|
|
|
TH
|
3.3%
|
|
7.9%
|
BK
|
6.2%
|
|
10.0%
|
System-wide
Sales(4)(in US$ millions)
|
|
|
|
TH
|
$
|
1,514.0
|
|
$
|
1,424.7
|
BK
|
$
|
4,477.0
|
|
$
|
4,236.8
|
(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)
|
PLK figures are shown
for informational purposes only. Comparable sales growth is for the
period from December 26, 2016 through March 27, 2017 for the
current period, and from December 28, 2015 through April 17, 2016
for the comparative period. Net restaurant growth is for the period
from April 17, 2016 through March 27, 2017 for the current period,
and from April 19, 2015 through April 17, 2016 for the comparative
period. Restaurant count is as of March 27, 2017 for the current
period, and as of April 17, 2016 for the comparative period,
inclusive of temporary closures.
|
(3)
|
Commencing in the
first quarter of 2017, we are presenting net restaurant growth on a
percentage basis, reflecting the net increase in restaurant count
(openings, net of closures) over a trailing twelve month period,
divided by the restaurant count at the beginning of the trailing
twelve month period. This presentation has been applied
retrospectively to the earliest period presented to provide
period-to-period comparability. Previously, we presented net
restaurant growth as the number of new restaurants opened, net of
closures, during a stated period.
|
(4)
|
System-wide sales are
driven by sales at franchised restaurants, as approximately 100% of
current restaurants are franchised. We do not record franchise
sales as revenues; however, our franchise revenues include
royalties based on a percentage of franchise sales.
|
Note: As a result of the acquisition of PLK, we have three
operating segments: Tim Hortons, Burger King, and Popeyes Louisiana
Kitchen. Our financial results and operational highlights will be
disclosed based on these segments each quarter. Comparable sales
growth will also be provided quarterly for each brand's largest
respective country of operations, which as of March 31, 2017 were TH Canada, BK US, and PLK US.
Country-level system restaurant counts will also be provided
annually for a few of each brand's largest markets.
Comparable sales growth at each of TH, BK, and PLK was
relatively flat during the three months ended March 31, 2017, including an impact of
approximately (1%) due to a leap day in the prior-year
period. Improvement in net restaurant growth at TH and BK
illustrates our acceleration of new restaurant development around
the world, and contributed to system-wide sales growth for the
three months ended March 31,
2017.
Consolidated Financial Highlights
PLK revenues and segment income for the period from the
acquisition date of March 27, 2017
through March 31, 2017 were not
material to our consolidated financial statements, and therefore
are not included in our consolidated statement of operations for
the three months ended March 31,
2017. PLK revenues and segment income for this period will
be included in our consolidated statement of operations for the
three months ending June 30,
2017.
|
Three Months Ended
March 31,
|
(in US$ millions,
except per share data)
|
2017
|
|
2016
|
|
(unaudited)
|
|
|
|
|
Total
Revenues
|
$
|
1,000.6
|
|
$
|
918.5
|
Net Income
Attributable to
|
|
|
|
|
|
|
Common
Shareholders
|
$
|
50.2
|
|
$
|
50.0
|
Diluted Net Income
Attributable to Common
|
|
|
|
|
|
|
Shareholders and
Noncontrolling Interests(5)
|
$
|
98.7
|
|
$
|
99.9
|
Diluted Earnings per
Share
|
$
|
0.21
|
|
$
|
0.21
|
|
|
|
|
TH Adjusted
EBITDA(6)
|
$
|
256.2
|
|
$
|
227.8
|
BK Adjusted
EBITDA(6)
|
$
|
187.1
|
|
$
|
180.0
|
Adjusted
EBITDA(7)
|
$
|
443.3
|
|
$
|
407.8
|
|
|
|
|
Adjusted Net
Income(7)
|
$
|
170.6
|
|
$
|
142.1
|
Adjusted Diluted
Earnings per Share(7)
|
$
|
0.36
|
|
$
|
0.30
|
(5)
|
Includes net income
attributable 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.
|
(6)
|
TH Adjusted EBITDA
and BK Adjusted EBITDA are our measures of segment
income.
|
(7)
|
Adjusted EBITDA,
Adjusted Net Income, and Adjusted Diluted Earnings per Share are
non-GAAP financial measures. Please refer to "Non-GAAP Financial
Measures" for further detail.
|
Total Revenues for the first quarter grew primarily as a result
of system-wide sales growth at both TH and BK, along with favorable
FX movements. Net Income Attributable to Common Shareholders for
the quarter was driven by growth in segment income, offset by
non-recurring transaction costs as a result of the Popeyes
acquisition.
Adjusted EBITDA for the quarter grew 6.8%, excluding the impact
of FX movements, driven primarily by revenue growth.
TH Segment Results
|
Three Months Ended
March 31,
|
(in US$
millions)
|
2017
|
|
2016
|
|
(unaudited)
|
|
|
|
|
Comparable Sales
Growth(1)
|
(0.1)%
|
|
5.6%
|
System-wide Sales
Growth(1)
|
3.3%
|
|
7.9%
|
System-wide
Sales(4)
|
$
|
1,514.0
|
|
$
|
1,424.7
|
|
|
|
|
Net Restaurant
Growth(3)
|
4.6%
|
|
3.2%
|
System Restaurant
Count at Period End
|
4,644
|
|
4,438
|
|
|
|
|
Sales
|
$
|
527.4
|
|
$
|
467.3
|
Franchise and
Property Revenues
|
$
|
206.2
|
|
$
|
190.5
|
Total
Revenues
|
$
|
733.6
|
|
$
|
657.8
|
|
|
|
|
Cost of
Sales
|
$
|
402.5
|
|
$
|
372.0
|
Franchise and
Property Expenses
|
$
|
77.7
|
|
$
|
69.7
|
Segment
SG&A(8)
|
$
|
25.1
|
|
$
|
16.2
|
Segment Depreciation
and Amortization(9)
|
$
|
25.1
|
|
$
|
25.1
|
Adjusted
EBITDA(6)(10)
|
$
|
256.2
|
|
$
|
227.8
|
(8)
|
Segment selling,
general and administrative expenses ("Segment SG&A") includes
segment selling expenses and segment 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
includes $2.8 million of cash distributions received from equity
method investments in each of the three months ended March 31, 2017
and 2016.
|
For the first quarter of 2017, system-wide sales growth was
driven by net restaurant growth of 4.6%, slightly offset by
comparable sales growth, which declined modestly by (0.1)%,
primarily driven by a slight decline in Canada comparable sales growth of (0.2)%.
Total Revenues for the quarter grew 11.5% (8.2% excluding the
impact of FX movements) versus prior year, primarily as a result of
system-wide sales growth.
Adjusted EBITDA for the quarter grew 12.5% (9.0% excluding the
impact of FX movements) versus prior year, primarily as a result of
Total Revenues growth.
BK Segment Results
|
Three Months Ended
March 31,
|
(in US$
millions)
|
2017
|
|
2016
|
|
(unaudited)
|
|
|
|
|
Comparable Sales
Growth(1)
|
(0.1)%
|
|
4.6%
|
System-wide Sales
Growth(1)
|
6.2%
|
|
10.0%
|
System-wide
Sales(4)
|
$
|
4,477.0
|
|
$
|
4,236.8
|
|
|
|
|
Net Restaurant
Growth(3)
|
5.1%
|
|
4.3%
|
System Restaurant
Count at Period End
|
15,768
|
|
15,008
|
|
|
|
|
Sales
|
$
|
23.0
|
|
$
|
23.2
|
Franchise and
Property Revenues
|
$
|
244.0
|
|
$
|
237.5
|
Total
Revenues
|
$
|
267.0
|
|
$
|
260.7
|
|
|
|
|
Cost of
Sales
|
$
|
20.9
|
|
$
|
18.6
|
Franchise and
Property Expenses
|
$
|
33.3
|
|
$
|
32.1
|
Segment
SG&A(8)
|
$
|
38.2
|
|
$
|
42.0
|
Segment Depreciation
and Amortization(9)
|
$
|
12.5
|
|
$
|
12.0
|
Adjusted
EBITDA(6)
|
$
|
187.1
|
|
$
|
180.0
|
For the first quarter of 2017, system-wide sales growth was
driven by net restaurant growth of 5.1%, slightly offset by
comparable sales growth of (0.1)%, which was primarily driven by a
decline in US comparable sales growth of (2.2)% offset by growth in
other markets.
Total Revenues for the quarter grew 2.4% (2.6% excluding the
impact of FX movements) versus prior year, primarily as a result of
system-wide sales growth.
Adjusted EBITDA for the quarter grew 3.9% (4.1% excluding the
impact of FX movements) versus prior year, primarily as a result of
Total Revenues growth.
Cash and Liquidity
As of March 31, 2017, total debt
was $10.1 billion, and net debt
(total debt less cash and cash equivalents of $0.9 billion) was $9.2
billion. These figures include the February 2017 Term Loan refinancing and the
incremental debt incurred in connection with the Popeyes
acquisition. On April 26, 2017, the
RBI Board of Directors declared a dividend of $0.19 per common share and Class B exchangeable
limited partnership unit of Restaurant Brands International Limited
Partnership for the second quarter of 2017. The dividend will be
payable on July 6, 2017 to
shareholders and unitholders of record at the close of business on
May 15, 2017.
Investor Conference Call
We will host an investor conference call and webcast at
8:30 a.m. Eastern Time on
Wednesday, April 26, 2017, to review
financial results for the first quarter ended March 31, 2017. 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
$27 billion in system-wide sales and
over 23,000 restaurants in more than 100 countries and U.S.
territories. RBI owns three of the world's most prominent and
iconic quick service restaurant brands – TIM HORTONS®, BURGER
KING®, and POPEYES®. These independently operated brands have been
serving their respective guests, franchisees and communities for
over 40 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
confidence in its strategies to accelerate comparable sales
growth and to grow franchisee profitability for each of its three
brands for years to come. The factors that could cause
actual results to differ materially from RBI's expectations are
detailed in filings of RBI with the Securities and Exchange
Commission and applicable Canadian securities regulatory
authorities, such as its annual and quarterly reports and current
reports on Form 8-K, and include the following: risks related to
RBI's ability to successfully implement its domestic and
international growth strategy; and risks related to RBI's ability
to compete domestically and internationally in an intensely
competitive industry. Other than as required under U.S. federal
securities laws or Canadian securities laws, we do not assume a
duty to update these forward-looking statements, whether as a
result of new information, subsequent events or circumstances,
change in expectations or otherwise.
RESTAURANT BRANDS
INTERNATIONAL INC. AND SUBSIDIARIES
|
Condensed
Consolidated Statements of Operations
|
(In millions of U.S.
dollars, except per share data)
|
(Unaudited)
|
|
|
Three Months Ended
March 31,
|
|
2017
|
|
2016
|
Revenues:
|
|
|
|
|
Sales
|
$
|
550.4
|
|
$
|
490.5
|
|
Franchise and
property revenues
|
450.2
|
|
428.0
|
|
|
Total
revenues
|
1,000.6
|
|
918.5
|
Cost of
sales
|
423.4
|
|
390.6
|
Franchise and
property expenses
|
111.0
|
|
101.8
|
Selling, general and
administrative expenses
|
121.9
|
|
73.2
|
(Income) loss from
equity method investments
|
(5.7)
|
|
(18.5)
|
Other operating
expenses (income), net
|
13.8
|
|
40.8
|
|
Total operating costs
and expenses
|
664.4
|
|
587.9
|
Income from
operations
|
336.2
|
|
330.6
|
Interest expense,
net
|
111.4
|
|
115.1
|
Loss on early
extinguishment of debt
|
20.4
|
|
-
|
Income before income
taxes
|
204.4
|
|
215.5
|
|
Income tax
expense
|
37.8
|
|
47.2
|
Net income
|
166.6
|
|
168.3
|
|
Net income
attributable to noncontrolling interests
|
48.9
|
|
50.8
|
|
Preferred share
dividends
|
67.5
|
|
67.5
|
Net income
attributable to common shareholders
|
$
|
50.2
|
|
$
|
50.0
|
|
|
|
|
Earnings per common
share
|
|
|
|
|
Basic
|
$
|
0.21
|
|
$
|
0.22
|
|
Diluted
|
$
|
0.21
|
|
$
|
0.21
|
Weighted average
shares outstanding
|
|
|
|
|
Basic
|
234.7
|
|
230.0
|
|
Diluted
|
476.5
|
|
468.4
|
Dividends per common
share
|
$
|
0.18
|
|
$
|
0.14
|
Memo: Basic earnings per common share is determined by dividing
net income attributable to common shareholders by the weighted
average number of common shares outstanding during the period.
For the three months ended March 31,
2017 and 2016, diluted EPS of $0.21 and $0.21 per
share, respectively, includes $50.2
million and $50.0 million of
net income attributable to common shareholders and $48.5 million and $49.9
million of 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.
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
|
|
March 31,
2017
|
|
December 31,
2016
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash equivalents
|
$
|
923.9
|
|
$
|
1,460.4
|
|
Accounts and notes receivable, net of allowance of
$16.1 million and $14.3 million,
|
|
|
|
|
|
respectively
|
362.0
|
|
403.5
|
|
Inventories, net
|
83.3
|
|
71.8
|
|
Advertising fund restricted assets
|
85.7
|
|
57.7
|
|
Prepaids and other current assets
|
122.2
|
|
103.6
|
|
|
Total current
assets
|
1,577.1
|
|
2,097.0
|
|
|
|
Property and
equipment, net of accumulated depreciation and amortization of
$507.2 million
|
|
|
|
|
and $474.5 million,
respectively
|
2,140.4
|
|
2,054.7
|
Intangible assets,
net
|
10,293.5
|
|
9,228.0
|
Goodwill
|
5,787.3
|
|
4,675.1
|
Net investment in
property leased to franchisees
|
85.3
|
|
91.9
|
Derivative
assets
|
659.8
|
|
717.9
|
Other assets,
net
|
279.0
|
|
260.3
|
|
|
Total
assets
|
$
|
20,822.4
|
|
$
|
19,124.9
|
LIABILITIES,
REDEEMABLE PREFERRED SHARES AND SHAREHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts and drafts
payable
|
$
|
391.4
|
|
$
|
369.8
|
|
Other accrued
liabilities
|
496.4
|
|
469.3
|
|
Gift card
liability
|
139.1
|
|
194.4
|
|
Advertising fund
liabilities
|
137.9
|
|
83.3
|
|
Current portion of
long term debt and capital leases
|
110.1
|
|
93.9
|
|
|
Total current
liabilities
|
1,274.9
|
|
1,210.7
|
|
|
|
Term debt, net of
current portion
|
9,531.5
|
|
8,410.2
|
Capital leases, net
of current portion
|
226.5
|
|
218.4
|
Other liabilities,
net
|
806.0
|
|
784.9
|
Deferred income
taxes, net
|
2,089.2
|
|
1,715.1
|
|
|
Total
liabilities
|
13,928.1
|
|
12,339.3
|
|
|
|
Redeemable preferred
shares; no par value; 68,530,939 shares authorized, issued
and
|
|
|
|
|
|
outstanding at March
31, 2017 and December 31, 2016
|
3,297.0
|
|
3,297.0
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
Common shares, no par
value; unlimited shares authorized at March 31, 2017 and December
31, 2016;
|
|
|
|
|
|
235,479,654 shares
issued and outstanding at March 31, 2017;
|
|
|
|
|
|
234,236,678 shares
issued and outstanding at December 31, 2016
|
1,987.0
|
|
1,955.1
|
|
Retained
earnings
|
453.3
|
|
445.7
|
|
Accumulated other
comprehensive income (loss)
|
(666.6)
|
|
(698.3)
|
|
|
Total Restaurant
Brands International Inc. shareholders' equity
|
1,773.7
|
|
1,702.5
|
|
|
Noncontrolling
interests
|
1,823.6
|
|
1,786.1
|
|
|
Total shareholders'
equity
|
3,597.3
|
|
3,488.6
|
|
|
Total liabilities,
redeemable preferred shares and shareholders' equity
|
$
|
20,822.4
|
|
$
|
19,124.9
|
RESTAURANT BRANDS
INTERNATIONAL INC. AND SUBSIDIARIES
|
Condensed
Consolidated Statements of Cash Flows
|
(In millions of U.S.
dollars)
|
(Unaudited)
|
|
Three Months Ended
March 31,
|
|
2017
|
|
2016
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
|
$
|
166.6
|
|
$
|
168.3
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
43.4
|
|
42.1
|
|
|
Non-cash loss on
extinguishment of debt
|
17.9
|
|
-
|
|
|
Amortization of
deferred financing costs and debt issuance discount
|
8.5
|
|
9.7
|
|
|
(Income) loss from
equity method investments
|
(5.7)
|
|
(18.5)
|
|
|
Loss (gain) on
remeasurement of foreign denominated transactions
|
10.4
|
|
28.0
|
|
|
Net losses on
derivatives
|
5.8
|
|
3.5
|
|
|
Share-based
compensation expense
|
16.5
|
|
6.4
|
|
|
Deferred income
taxes
|
15.3
|
|
-
|
|
|
Other
|
3.6
|
|
8.5
|
|
Changes in current
assets and liabilities, excluding acquisitions and
dispositions:
|
|
|
|
|
|
Accounts and notes
receivable
|
47.8
|
|
33.8
|
|
|
Inventories and
prepaids and other current assets
|
(8.4)
|
|
(79.0)
|
|
|
Accounts and drafts
payable
|
14.6
|
|
(6.0)
|
|
|
Advertising fund
restricted assets and fund liabilities
|
27.2
|
|
(15.7)
|
|
|
Other accrued
liabilities and gift card liability
|
(82.6)
|
|
3.6
|
|
Other long-term
assets and liabilities
|
(5.3)
|
|
(1.4)
|
|
|
Net cash provided by
operating activities
|
275.6
|
|
183.3
|
Cash flows from
investing activities:
|
|
|
|
|
Payments for property
and equipment
|
(4.1)
|
|
(5.6)
|
|
Proceeds from
disposal of assets, restaurant closures, and
refranchisings
|
6.8
|
|
7.2
|
|
Net payment for
purchase of Popeyes, net of cash acquired
|
(1,635.9)
|
|
-
|
|
Return of investment
on direct financing leases
|
4.1
|
|
4.1
|
|
Settlement/sale of
derivatives, net
|
5.2
|
|
(1.1)
|
|
Other investing
activities, net
|
(0.8)
|
|
2.2
|
|
|
Net cash provided by
(used for) investing activities
|
(1,624.7)
|
|
6.8
|
Cash flows from
financing activities:
|
|
|
|
|
Proceeds from
issuance of long-term debt
|
1,300.0
|
|
-
|
|
Repayments of
long-term debt and capital leases
|
(319.9)
|
|
(17.2)
|
|
Payment of financing
costs
|
(31.8)
|
|
-
|
|
Payment of dividends
on common and preferred shares and distributions on
Partnership
|
|
|
|
|
|
exchangeable
units
|
(145.9)
|
|
(128.3)
|
|
Proceeds from stock
option exercises
|
8.0
|
|
6.5
|
|
Other financing
activities, net
|
(1.1)
|
|
3.1
|
|
|
Net cash provided by
(used for) financing activities
|
809.3
|
|
(135.9)
|
|
Effect of exchange
rates on cash and cash equivalents
|
3.3
|
|
13.9
|
|
Increase (decrease)
in cash and cash equivalents
|
(536.5)
|
|
68.1
|
|
Cash and cash
equivalents at beginning of period
|
1,460.4
|
|
757.8
|
|
Cash and cash
equivalents at end of period
|
$
|
923.9
|
|
$
|
825.9
|
|
|
|
|
Supplemental
cashflow disclosures:
|
|
|
|
|
Interest
paid
|
$
|
80.1
|
|
$
|
82.4
|
|
Income taxes
paid
|
$
|
24.1
|
|
$
|
47.6
|
Non-cash investing
and financing activities:
|
|
|
|
|
Acquisition of
property with capital lease obligations
|
$
|
13.7
|
|
$
|
5.4
|
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 change in sales at all
franchise and company-owned 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 for TH and BK and 65 weeks or longer for PLK. System-wide
sales growth and comparable 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 franchise restaurants
and company-owned restaurants. We do not record franchise sales as
revenues; however, our franchise revenues include royalties based
on a percentage of franchise sales.
|
|
Three Months
Ended March 31,
|
Comparable Sales
Growth by Largest Market
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
TH -
Canada
|
|
(0.2)%
|
|
5.6 %
|
BK - US
|
|
(2.2)%
|
|
4.2 %
|
PLK -
US(1)
|
|
(0.4)%
|
|
1.0 %
|
(1)
|
PLK figures are shown
for informational purposes only. Comparable sales growth is
for the period from December 26, 2016 through March 27, 2017 for
the current period, and from December 28, 2015 through April 17,
2016 for the comparative period.
|
RESTAURANT BRANDS
INTERNATIONAL INC. AND SUBSIDIARIES Supplemental
Disclosure
(Unaudited)
|
|
|
Selling, General
and Administrative Expenses
|
|
|
Three Months Ended
March 31,
|
(in US$
millions)
|
2017
|
|
2016
|
|
|
|
|
Segment SG&A
TH
|
$
|
25.1
|
|
$
|
16.2
|
Segment SG&A
BK
|
38.2
|
|
42.0
|
Share-based
compensation and non-cash incentive compensation expense
|
18.5
|
|
7.9
|
Depreciation and
amortization
|
5.7
|
|
4.9
|
PLK Transaction
costs
|
34.4
|
|
-
|
Integration
costs
|
-
|
|
2.2
|
|
Selling, general and
administrative expenses
|
$
|
121.9
|
|
$
|
73.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Operating
Expenses (Income), net
|
|
|
|
|
Three Months Ended
March 31,
|
(in US$
millions)
|
2017
|
|
2016
|
|
|
Net losses (gains) on
disposal of assets, restaurant closures, and
refranchisings(1)
|
$
|
2.9
|
|
$
|
15.3
|
Litigation
settlements and reserves, net
|
-
|
|
0.7
|
Net losses (gains) on
foreign exchange(2)
|
10.4
|
|
24.1
|
Other, net
|
0.5
|
|
0.7
|
|
Other operating
expenses (income), net
|
$
|
13.8
|
|
$
|
40.8
|
(1)
|
Net losses 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.
|
(2)
|
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 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 Financial 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 PLK
transaction costs associated with the acquisition of Popeyes and
integration costs associated with the acquisition of Tim Hortons.
Adjusted EBITDA is used by management to measure operating
performance of the business, excluding these non-cash and other
specifically identified items that management believes are not
relevant to management's assessment of operating performance or the
performance of an acquired business. Adjusted EBITDA, as defined
above, also represents our measure of segment income for each of
our three operating segments. PLK revenues and segment income for
the period from the acquisition date of March 27, 2017 through March 31, 2017 was not material to our
consolidated financial statements, and therefore, are not
included in our consolidated statement of operations for the three
months ended March 31, 2017. PLK
segment income for this period will be included in our consolidated
statement of operations for the three months ending June 30, 2017.
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 helps
identify underlying business trends, without distortion from the
impact of FX movements. 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
March 31, 2017
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of
FX
|
|
|
|
|
|
|
Actual
|
|
Q1 '17 vs. Q1
'16
|
|
Movements
|
|
Organic
Growth
|
(in US$
millions)
|
|
Q1
'17
|
|
Q1
'16
|
|
$
|
|
%
|
|
$
|
|
$
|
|
%
|
Calculation:
|
|
|
|
A
|
|
B
|
|
|
|
C
|
|
B-C=D
|
|
D/A
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TH
|
|
$
|
733.6
|
|
$
|
657.8
|
|
$
|
75.8
|
|
11.5 %
|
|
$
|
21.8
|
|
$
|
54.0
|
|
8.2 %
|
BK
|
|
$
|
267.0
|
|
$
|
260.7
|
|
$
|
6.3
|
|
2.4 %
|
|
$
|
(0.6)
|
|
$
|
6.9
|
|
2.6 %
|
|
Total
Revenues
|
|
$
|
1,000.6
|
|
$
|
918.5
|
|
$
|
82.1
|
|
8.9 %
|
|
$
|
21.2
|
|
$
|
60.9
|
|
6.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TH
|
|
$
|
256.2
|
|
$
|
227.8
|
|
$
|
28.4
|
|
12.5 %
|
|
$
|
8.0
|
|
$
|
20.4
|
|
9.0 %
|
BK
|
|
$
|
187.1
|
|
$
|
180.0
|
|
$
|
7.1
|
|
3.9 %
|
|
$
|
(0.2)
|
|
$
|
7.3
|
|
4.1 %
|
|
Adjusted
EBITDA
|
|
$
|
443.3
|
|
$
|
407.8
|
|
$
|
35.5
|
|
8.7 %
|
|
$
|
7.8
|
|
$
|
27.7
|
|
6.8 %
|
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
March 31,
|
|
2017
|
|
2016
|
Segment
income:
|
|
TH
|
$
|
256.2
|
|
$
|
227.8
|
BK
|
187.1
|
|
180.0
|
|
Adjusted
EBITDA
|
443.3
|
|
407.8
|
|
|
|
|
Share-based
compensation and non-cash
|
|
|
|
|
incentive
compensation expense(1)
|
18.5
|
|
7.9
|
PLK Transaction
costs(2)
|
34.4
|
|
-
|
Integration
costs(3)
|
-
|
|
2.2
|
Impact of equity
method investments(4)
|
(2.9)
|
|
(15.7)
|
Other operating
expenses (income), net
|
13.8
|
|
40.8
|
|
EBITDA
|
379.5
|
|
372.6
|
Depreciation and
amortization
|
43.3
|
|
42.0
|
|
Income from
operations
|
336.2
|
|
330.6
|
Interest expense,
net
|
111.4
|
|
115.1
|
Loss on early
extinguishment of debt
|
20.4
|
|
-
|
Income tax
expense
|
37.8
|
|
47.2
|
|
Net income
|
$
|
166.6
|
|
$
|
168.3
|
|
|
|
|
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
March 31,
|
|
2017
|
|
2016
|
|
|
|
|
Net
income
|
$
|
166.6
|
|
$
|
168.3
|
|
Income tax
expense
|
37.8
|
|
47.2
|
Income before
income taxes
|
204.4
|
|
215.5
|
Adjustments:
|
|
|
|
|
Franchise agreement
amortization
|
6.9
|
|
6.7
|
|
Amortization of
deferred financing costs and original issue discount
|
8.5
|
|
9.7
|
|
Interest expense and
loss on extinguished debt(5)
|
23.5
|
|
3.2
|
|
PLK Transaction
costs(2)
|
34.4
|
|
-
|
|
Integration costs
(3)
|
-
|
|
2.2
|
|
Impact of equity
method investments(4)
|
(2.9)
|
|
(15.7)
|
|
Other operating
expenses (income), net
|
13.8
|
|
40.8
|
|
Total
adjustments
|
84.2
|
|
46.9
|
Adjusted income
before income taxes
|
288.6
|
|
262.4
|
|
Adjusted income tax
expense(6)
|
50.5
|
|
52.8
|
Adjusted net income
before preferred share dividends
|
238.1
|
|
209.6
|
|
Preferred share
dividends
|
67.5
|
|
67.5
|
Adjusted net
income
|
$
|
170.6
|
|
$
|
142.1
|
|
|
|
|
Adjusted diluted
earnings per share
|
$
|
0.36
|
|
$
|
0.30
|
|
|
|
|
Weighted
average diluted shares outstanding
|
476.5
|
|
468.4
|
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 2016 and 2017 cash bonus, respectively.
|
|
|
(2)
|
In connection with
the acquisition of Popeyes Louisiana Kitchen, Inc., we incurred
certain non-recurring selling, general and administrative expenses
during the three months ended March 31, 2017, primarily consisting
of professional fees and compensation related expenses.
|
|
|
(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 months ended March 31, 2016,
primarily consisting of professional fees.
|
|
|
(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 are
included in segment income.
|
|
|
(5)
|
Represents loss on
early extinguishment of debt and 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.
|
|
|
(6)
|
Adjusted income tax
expense for the three months ended March 31, 2017 and 2016,
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.
|
SOURCE Restaurant Brands International Inc.