Continued improvement in global system-wide
sales growth, accelerating to +4% compared to 2019
Unit growth returns to pre-pandemic levels with 378 net new
restaurants opened in the 1st half
Digital sales in home markets scale up by nearly +60% year over
year and +15% sequentially
Liquidity expands to $2.8 billion,
net leverage declines significantly and Board authorizes
$1 billion buyback program
TORONTO, July 30, 2021 /CNW/ - Restaurant Brands
International Inc. (TSX: QSR) (NYSE: QSR) (TSX: QSP) today reported
financial results for the second quarter ended June 30, 2021.
José E. Cil, Chief Executive Officer of Restaurant Brands
International Inc. ("RBI") commented, "We are encouraged by the
momentum across our business – including sales increases driven by
quality menu items, rapid adoption of our digital channels by our
guests and an acceleration in new restaurant openings around the
world by our franchisees who believe strongly in our brands and
business model."
Cil continued, "We also announced an increase in our share
buyback authorization to $1 billion
over the next two years, demonstrating our confidence in the value
creation opportunity we have ahead of us with our three iconic
brands, scalable business model, expanding digital strength and
dedicated franchise partners. We believe we are well positioned to
drive sustainable, long-term sales growth across the business and
to continue enhancing shareholder returns with significant returns
of capital through our industry-leading dividend and opportunistic
share buybacks under our newly expanded authorization."
Consolidated
Operational Highlights
|
Three Months Ended
June 30,
|
|
2021
|
|
2020
|
|
(Unaudited)
|
System-wide Sales
Growth
|
|
|
|
TH
|
33.0%
|
|
(33.4)%
|
BK
|
37.9%
|
|
(25.2)%
|
PLK
|
10.5%
|
|
24.0%
|
Consolidated
|
31.9%
|
|
(20.9)%
|
System-wide Sales (in
US$ millions)
|
|
|
|
TH
|
$
|
1,637
|
|
$
|
1,108
|
BK
|
$
|
5,883
|
|
$
|
4,127
|
PLK
|
$
|
1,386
|
|
$
|
1,247
|
Consolidated
|
$
|
8,906
|
|
$
|
6,482
|
Net Restaurant
Growth
|
|
|
|
TH
|
2.7%
|
|
1.3%
|
BK
|
0.1%
|
|
4.2%
|
PLK
|
5.7%
|
|
6.7%
|
Consolidated
|
1.3%
|
|
3.9%
|
System Restaurant
Count at Period End
|
|
|
|
TH
|
5,065
|
|
4,934
|
BK
|
18,776
|
|
18,756
|
PLK
|
3,562
|
|
3,369
|
Consolidated
|
27,403
|
|
27,059
|
Comparable
Sales
|
|
|
|
TH
|
27.6%
|
|
(29.3)%
|
BK
|
18.2%
|
|
(13.4)%
|
PLK
|
(0.3)%
|
|
24.8%
|
|
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
June 30,
|
(in US$ millions,
except per share data)
|
2021
|
|
2020
|
|
(Unaudited)
|
Total
Revenues
|
$
|
1,438
|
|
$
|
1,048
|
Net Income
Attributable to Common Shareholders and Noncontrolling
Interests
|
$
|
390
|
|
$
|
163
|
Diluted Earnings per
Share
|
$
|
0.84
|
|
$
|
0.35
|
|
|
|
|
|
|
TH Adjusted
EBITDA(1)
|
$
|
253
|
|
$
|
147
|
BK Adjusted
EBITDA(1)
|
$
|
266
|
|
$
|
160
|
PLK Adjusted
EBITDA(1)
|
$
|
58
|
|
$
|
51
|
Adjusted
EBITDA(2)
|
$
|
577
|
|
$
|
358
|
|
|
|
|
|
|
Adjusted Net
Income(2)
|
$
|
358
|
|
$
|
154
|
Adjusted Diluted
Earnings per Share(2)
|
$
|
0.77
|
|
$
|
0.33
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
2021
|
|
2020
|
|
(Unaudited)
|
Net cash provided by
operating activities
|
$
|
745
|
|
$
|
196
|
Net cash (used for)
provided by investing activities
|
$
|
(36)
|
|
$
|
(12)
|
Net cash (used for)
provided by financing activities
|
$
|
(516)
|
|
$
|
(161)
|
|
|
|
|
LTM Free Cash
Flow(2)
|
$
|
1,346
|
|
$
|
1,110
|
Net Debt
|
$
|
11,194
|
|
$
|
11,320
|
Net
Leverage(2)
|
5.3x
|
|
5.6x
|
|
|
(1)
|
TH Adjusted EBITDA,
BK Adjusted EBITDA and PLK 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.
|
The year-over-year increase in Total Revenues on an as reported
and on an organic basis was primarily driven by an increase in
system-wide sales in all of our brands. System-wide sales were more
severely impacted by COVID-19 (defined below) during the three
months ended 2020 than in the same period in 2021. Favorable FX
movements also contributed to the year-over-year increase in Total
Revenues on an as reported basis.
The increase in Net Income Attributable to Common Shareholders
and Noncontrolling Interests for the second quarter was primarily
driven by an increase in segment income in all of our segments and
a favorable change in the results from other operating expenses
(income), net, partially offset by a decrease in income tax
benefits. Refer to "Non-GAAP Financial Measures" footnote four for
further details on income tax benefits.
The year-over-year increase in Adjusted EBITDA on an as reported
and on an organic basis was driven by an increase in Tim Hortons, Burger King and Popeyes Adjusted
EBITDA.
The year-over-year increase in Adjusted Net Income was primarily
driven by the increase in Adjusted EBITDA in all of our brands,
partially offset by an increase in adjusted income tax expense.
Refer to "Non-GAAP Financial Measures" footnote four and six for
further details on income tax expense.
COVID-19
The global crisis resulting from the spread of coronavirus
("COVID-19") impacted our global restaurant operations for the
three and six months ended June 30,
2021 and 2020. While the impact of COVID-19 on system-wide
sales growth, system-wide sales, comparable sales and net
restaurant growth was severe for the three and six months ended
June 30, 2020, in the 2021 period
these metrics were affected to a lesser extent for the entire
period, with variations among brands and regions. During 2020 and
the six months ended June 30, 2021,
substantially all TH, BK and PLK restaurants remained open in
North America, 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. During the three months ended June 30, 2021, on average 96% of our restaurants
were open worldwide, including approximately 97% of our restaurants
in North America, approximately
96% of our restaurants in Asia
Pacific, approximately 94% of our restaurants in
Europe, Middle East and Africa, and approximately 91% of our
restaurants in Latin America. By
contrast, during the three months ended June
30, 2020, on average 81% of our restaurants were open
worldwide, including approximately 94% of our restaurants in
North America, approximately 87%
of our restaurants in Asia
Pacific, approximately 57% of our restaurants in
Europe, Middle East and Africa, and approximately 56% of our
restaurants in Latin America.
Certain jurisdictions, such as Canada, Europe, and Brazil, that had eased restrictions during
2020, re-imposed lockdowns and curfews in the six months ended
June 30, 2021. In comparison, during
the six months ended June 30, 2020, a
number of other markets required temporary complete closures while
implementing lock-down orders. We expect local conditions to
continue to dictate limitations on restaurant operations, capacity,
and hours of operation.
With the pandemic affecting consumer behavior, the importance of
digital sales, including delivery, has grown. We expect to continue
to support enhancements of our digital and marketing capabilities.
While we do not know the full future impact COVID-19 will have on
our business, we expect to see a continued impact from COVID-19 on
our results in 2021.
Reclassification of Advertising Revenues and Expenses
Certain prior year amounts in the statement of operations and
accompanying segment results have been reclassified in order to be
comparable with the current year classifications. These consist of
the quarter and year to date June 30,
2020 reclassification of advertising fund contributions from
Franchise and property revenues to Advertising revenues and
advertising fund expenses from Selling, general and administrative
expenses to Advertising expenses, with General and administrative
expenses now presented separately. Depreciation and amortization
expenses related to the advertising funds have also been
reclassified from Franchise and property expenses to Advertising
expenses. 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.
TH Segment Results
|
Three Months Ended
June 30,
|
(in US$
millions)
|
2021
|
|
|
2020
|
|
(Unaudited)
|
System-wide Sales
Growth
|
|
33.0 %
|
|
|
(33.4) %
|
System-wide
Sales
|
$
|
1,637
|
|
$
|
1,108
|
Comparable
Sales
|
|
27.6 %
|
|
|
(29.3) %
|
|
|
|
|
|
|
Net Restaurant
Growth
|
|
2.7 %
|
|
|
1.3 %
|
System Restaurant
Count at Period End
|
|
5,065
|
|
|
4,934
|
|
|
|
|
|
|
Sales
|
$
|
556
|
|
$
|
374
|
Franchise and
Property Revenues
|
$
|
219
|
|
$
|
154
|
Advertising
Revenues
|
$
|
56
|
|
$
|
39
|
Total
Revenues
|
$
|
831
|
|
$
|
567
|
|
|
|
|
|
|
Cost of
Sales
|
$
|
434
|
|
$
|
307
|
Franchise and
Property Expenses
|
$
|
86
|
|
$
|
81
|
Advertising
Expenses
|
$
|
68
|
|
$
|
43
|
Segment
G&A
|
$
|
26
|
|
$
|
20
|
Segment Depreciation
and Amortization
|
$
|
32
|
|
$
|
28
|
Adjusted
EBITDA(1)(3)
|
$
|
253
|
|
$
|
147
|
|
|
(3)
|
TH Adjusted EBITDA
includes $3 million and $2 million of cash distributions received
from equity method investments for the three months ended June 30,
2021 and 2020, respectively.
|
For the second quarter of 2021, the increase in system-wide
sales was primarily driven by comparable sales of 27.6%, including
Canada comparable sales of 27.4%,
as well as a decrease in the impact of temporary closures of
certain restaurants related to the COVID-19 pandemic, and net
restaurant growth of 2.7%.
The year-over-year increase in Total Revenues on an as reported
and on an organic basis was primarily driven by an increase in
system-wide sales. This increase was also driven by favorable FX
movements on an as reported basis.
The year-over-year increase in Adjusted EBITDA on an as reported
and on an organic basis was primarily driven by an increase in
system-wide sales. This increase was also driven by FX movements on
an as reported basis.
BK Segment Results
|
Three Months Ended
June 30,
|
(in US$
millions)
|
2021
|
|
2020
|
|
|
(Unaudited)
|
System-wide Sales
Growth
|
|
37.9 %
|
|
|
(25.2) %
|
System-wide
Sales
|
$
|
5,883
|
|
$
|
4,127
|
Comparable
Sales
|
|
18.2 %
|
|
|
(13.4) %
|
|
|
|
|
|
|
Net Restaurant
Growth
|
|
0.1 %
|
|
|
4.2 %
|
System Restaurant
Count at Period End
|
|
18,776
|
|
|
18,756
|
|
|
|
|
|
|
Sales
|
$
|
17
|
|
$
|
15
|
Franchise and
Property Revenues
|
$
|
324
|
|
$
|
233
|
Advertising
Revenues
|
$
|
118
|
|
$
|
99
|
Total
Revenues
|
$
|
459
|
|
$
|
347
|
|
|
|
|
|
|
Cost of
Sales
|
$
|
17
|
|
$
|
16
|
Franchise and
Property Expenses
|
$
|
33
|
|
$
|
48
|
Advertising
Expenses
|
$
|
110
|
|
$
|
105
|
Segment
G&A
|
$
|
45
|
|
$
|
30
|
Segment Depreciation
and Amortization
|
$
|
12
|
|
$
|
12
|
Adjusted
EBITDA(1)(4)
|
$
|
266
|
|
$
|
160
|
|
|
(4)
|
No significant cash
distributions were received from equity method investments for the
three months ended June 30, 2021 and 2020.
|
For the second quarter of 2021, the increase in system-wide
sales was driven by comparable sales of 18.2%, including US
comparable sales of 13.0% as well as a decrease in the impact
of temporary closures of certain restaurants related to the
COVID-19 pandemic.
The year-over-year change in Total Revenues on an as reported
and on an organic basis was primarily driven by the increase in
system-wide sales. This increase was also driven by favorable FX
movements on an as reported basis.
The year-over-year change in Adjusted EBITDA on an as reported
and on an organic basis was primarily driven by the increase in
system-wide sales, bad debt recoveries in the current year compared
to bad debt expense in the prior year, and advertising revenues
exceeding advertising fund expenses in the current year compared to
advertising fund expenses exceeding advertising revenues in the
prior year, partially offset by an increase in Segment G&A.
This increase in Adjusted EBITDA was also driven by favorable FX
movements on an as reported basis.
PLK Segment Results
|
Three Months Ended
June 30,
|
(in US$
millions)
|
2021
|
|
2020
|
|
(Unaudited)
|
System-wide Sales
Growth
|
|
10.5 %
|
|
|
24.0 %
|
System-wide
Sales
|
$
|
1,386
|
|
$
|
1,247
|
Comparable
Sales
|
|
(0.3) %
|
|
|
24.8 %
|
|
|
|
|
|
|
Net Restaurant
Growth
|
|
5.7 %
|
|
|
6.7 %
|
System Restaurant
Count at Period End
|
|
3,562
|
|
|
3,369
|
|
|
|
|
|
|
Sales
|
$
|
17
|
|
$
|
17
|
Franchise and
Property Revenues
|
$
|
71
|
|
$
|
63
|
Advertising
Revenues
|
$
|
60
|
|
$
|
54
|
Total
Revenues
|
$
|
148
|
|
$
|
134
|
|
|
|
|
|
|
Cost of
Sales
|
$
|
16
|
|
$
|
16
|
Franchise and
Property Expenses
|
$
|
2
|
|
$
|
3
|
Advertising
Expenses
|
$
|
60
|
|
$
|
55
|
Segment
G&A
|
$
|
13
|
|
$
|
10
|
Segment Depreciation
and Amortization
|
$
|
1
|
|
$
|
2
|
Adjusted
EBITDA(1)
|
$
|
58
|
|
$
|
51
|
For the second quarter of 2021, the increase in system-wide
sales growth was driven by net restaurant growth of 5.7% as well as
a decrease in the impact of temporary closures of certain
restaurants related to the COVID-19 pandemic, partially offset by a
decrease in comparable sales of (0.3)%, including a decrease in US
comparable sales of (2.5)%.
The year-over-year change in Total Revenues and Adjusted EBITDA
on an as reported and on an organic basis was primarily driven by
system-wide sales growth.
Cash and Liquidity
As of June 30, 2021, total debt was $13.0 billion, net debt (total debt less cash and
cash equivalents of $1.8 billion) was
$11.2 billion, and net leverage was
5.3x. Following quarter end, we issued $800
million of 3.875% First Lien Notes due 2028 and redeemed
$775 million of our 4.25% First Lien
Notes due 2024.
The RBI Board of Directors has declared a dividend of
$0.53 per common share and
partnership exchangeable unit of Restaurant Brands International
Limited Partnership for the second quarter of 2021. The dividend
will be payable on October 5, 2021 to shareholders and
unitholders of record at the close of business on
September 21, 2021.
Our board of directors approved a share repurchase authorization
that allows us to repurchase up to $1
billion of our common shares over the next two years. We
plan to submit a new normal course issuer bid, subject to TSX
approval, to be effective following expiration of the current
one.
Investor Conference Call
We will host an investor conference call and webcast at
8:30 a.m. Eastern Time on Friday,
July 30, 2021, to review financial results for the second
quarter ended June 30, 2021. 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. is one of the world's
largest quick service restaurant companies with approximately
$33 billion in annual system-wide
sales and over 27,000 restaurants in more than 100 countries. 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 45 years.
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 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, and our
ability to continue to navigate the impact of the pandemic, the
impact of our strategic initiatives on the long-term growth
prospects of our brands and our ability to achieve our long-term
growth goals and prospects, the impact of our investments in
digital and marketing initiatives, our ability to continue to
return capital to our shareholders through dividends and share
repurchases, our ability to grow throughout 2021 at pre-pandemic
levels, our ability to achieve our long-term restaurant growth
goals and our long-term growth prospects. 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 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; and changes in applicable
tax laws 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
June 30,
|
|
Six Months Ended
June 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Revenues:
|
|
|
|
|
|
|
|
Sales
|
$
|
590
|
|
$
|
406
|
|
$
|
1,097
|
|
$
|
909
|
Franchise and property
revenues
|
614
|
|
450
|
|
1,162
|
|
975
|
Advertising
revenues
|
234
|
|
192
|
|
439
|
|
389
|
Total
revenues
|
1,438
|
|
1,048
|
|
2,698
|
|
2,273
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
Cost of
sales
|
467
|
|
339
|
|
868
|
|
738
|
Franchise and property
expenses
|
121
|
|
132
|
|
237
|
|
255
|
Advertising
expenses
|
238
|
|
203
|
|
474
|
|
429
|
General and
administrative expenses
|
113
|
|
94
|
|
218
|
|
196
|
(Income) loss from
equity method investments
|
3
|
|
16
|
|
5
|
|
18
|
Other operating
expenses (income), net
|
8
|
|
21
|
|
(34)
|
|
5
|
Total operating costs
and expenses
|
950
|
|
805
|
|
1,768
|
|
1,641
|
Income from
operations
|
488
|
|
243
|
|
930
|
|
632
|
Interest expense,
net
|
126
|
|
128
|
|
250
|
|
247
|
Income before income
taxes
|
362
|
|
115
|
|
680
|
|
385
|
Income tax (benefit)
expense
|
(29)
|
|
(49)
|
|
18
|
|
(3)
|
Net income
|
391
|
|
164
|
|
662
|
|
388
|
Net income
attributable to noncontrolling interests
|
132
|
|
58
|
|
224
|
|
138
|
Net income
attributable to common shareholders
|
$
|
259
|
|
$
|
106
|
|
$
|
438
|
|
$
|
250
|
Earnings per common
share
|
|
|
|
|
|
|
|
Basic
|
$
|
0.84
|
|
$
|
0.35
|
|
$
|
1.43
|
|
$
|
0.83
|
Diluted
|
$
|
0.84
|
|
$
|
0.35
|
|
$
|
1.42
|
|
$
|
0.83
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
Basic
|
307
|
|
301
|
|
307
|
|
300
|
Diluted
|
466
|
|
469
|
|
465
|
|
469
|
Cash dividends
declared per common share
|
$
|
0.53
|
|
$
|
0.52
|
|
$
|
1.06
|
|
$
|
1.04
|
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In millions of U.S. dollars, except share data)
(Unaudited)
|
As
of
|
|
June 30,
2021
|
|
December 31,
2020
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
1,762
|
|
$
|
1,560
|
Accounts and notes
receivable, net of allowance of $23 and $42,
respectively
|
535
|
|
536
|
Inventories,
net
|
99
|
|
96
|
Prepaids and other
current assets
|
132
|
|
72
|
Total current
assets
|
2,528
|
|
2,264
|
Property and
equipment, net of accumulated depreciation and amortization of $940
and $879, respectively
|
2,033
|
|
2,031
|
Operating lease
assets, net
|
1,143
|
|
1,152
|
Intangible assets,
net
|
10,820
|
|
10,701
|
Goodwill
|
5,831
|
|
5,739
|
Net investment in
property leased to franchisees
|
80
|
|
66
|
Other assets,
net
|
806
|
|
824
|
Total
assets
|
$
|
23,241
|
|
$
|
22,777
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts and drafts
payable
|
$
|
575
|
|
$
|
464
|
Other accrued
liabilities
|
812
|
|
835
|
Gift card
liability
|
149
|
|
191
|
Current portion of
long-term debt and finance leases
|
113
|
|
111
|
Total current
liabilities
|
1,649
|
|
1,601
|
Long-term debt, net
of current portion
|
12,375
|
|
12,397
|
Finance leases, net
of current portion
|
326
|
|
315
|
Operating lease
liabilities, net of current portion
|
1,078
|
|
1,082
|
Other liabilities,
net
|
2,110
|
|
2,236
|
Deferred income
taxes, net
|
1,444
|
|
1,425
|
Total
liabilities
|
18,982
|
|
19,056
|
Shareholders'
equity:
|
|
|
|
Common shares, no par
value; unlimited shares authorized at June 30, 2021 and December
31, 2020; 308,040,537 shares issued and outstanding at June 30,
2021; 304,718,749 shares issued and outstanding at December 31,
2020
|
2,512
|
|
2,399
|
Retained
earnings
|
728
|
|
622
|
Accumulated other
comprehensive income (loss)
|
(679)
|
|
(854)
|
Total Restaurant
Brands International Inc. shareholders' equity
|
2,561
|
|
2,167
|
Noncontrolling
interests
|
1,698
|
|
1,554
|
Total shareholders'
equity
|
4,259
|
|
3,721
|
Total liabilities and
shareholders' equity
|
$
|
23,241
|
|
$
|
22,777
|
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
Condensed Consolidated Statements of Cash
Flows
(In millions of U.S. dollars)
(Unaudited)
|
Six Months Ended
June 30,
|
|
2021
|
|
2020
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
662
|
|
$
|
388
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
100
|
|
91
|
Amortization of
deferred financing costs and debt issuance discount
|
13
|
|
12
|
(Income) loss from
equity method investments
|
5
|
|
18
|
(Gain) loss on
remeasurement of foreign denominated transactions
|
(35)
|
|
10
|
Net (gains) losses on
derivatives
|
42
|
|
(1)
|
Share-based
compensation expense
|
40
|
|
39
|
Deferred income
taxes
|
24
|
|
(131)
|
Other
|
(12)
|
|
20
|
Changes in current
assets and liabilities, excluding acquisitions and
dispositions:
|
|
|
|
Accounts and notes
receivable
|
17
|
|
(36)
|
Inventories and
prepaids and other current assets
|
(5)
|
|
(28)
|
Accounts and drafts
payable
|
103
|
|
(158)
|
Other accrued
liabilities and gift card liability
|
(123)
|
|
(13)
|
Tenant inducements
paid to franchisees
|
(1)
|
|
(5)
|
Other long-term assets
and liabilities
|
(85)
|
|
(10)
|
Net cash provided by
operating activities
|
745
|
|
196
|
Cash flows from
investing activities:
|
|
|
|
Payments for property
and equipment
|
(46)
|
|
(39)
|
Net proceeds from
disposal of assets, restaurant closures, and
refranchisings
|
14
|
|
5
|
Settlement/sale of
derivatives, net
|
1
|
|
22
|
Other investing
activities, net
|
(5)
|
|
—
|
Net cash (used for)
provided by investing activities
|
(36)
|
|
(12)
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
revolving line of credit and long-term debt
|
—
|
|
1,585
|
Repayments of
revolving line of credit, long-term debt and finance
leases
|
(54)
|
|
(1,045)
|
Payment of financing
costs
|
—
|
|
(10)
|
Payment of dividends
on common shares and distributions on Partnership exchangeable
units
|
(484)
|
|
(716)
|
Proceeds from stock
option exercises
|
56
|
|
41
|
(Payments) proceeds
from derivatives
|
(32)
|
|
(14)
|
Other financing
activities, net
|
(2)
|
|
(2)
|
Net cash (used for)
provided by financing activities
|
(516)
|
|
(161)
|
Effect of exchange
rates on cash and cash equivalents
|
9
|
|
(16)
|
Increase (decrease) in
cash and cash equivalents
|
202
|
|
7
|
Cash and cash
equivalents at beginning of period
|
1,560
|
|
1,533
|
Cash and cash
equivalents at end of period
|
$
|
1,762
|
|
$
|
1,540
|
Supplemental cash
flow disclosures:
|
|
|
|
Interest
paid
|
$
|
198
|
|
$
|
234
|
Income taxes
paid
|
$
|
142
|
|
$
|
60
|
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 and company-owned restaurants 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 and BK 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 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.
|
Three Months Ended
June 30,
|
KPIs by
Market
|
2021
|
|
|
2020
|
|
Unaudited)
|
System-wide
Sales Growth
|
|
|
|
|
|
TH -
Canada
|
|
29.8%
|
|
|
(34.0)%
|
TH - Rest of
World
|
|
55.5%
|
|
|
(29.9)%
|
TH -
Global
|
|
33.0%
|
|
|
(33.4)%
|
|
|
|
|
|
|
BK - US
|
|
13.2%
|
|
|
(10.5)%
|
BK - Rest of
World
|
|
67.1%
|
|
|
(38.2)%
|
BK -
Global
|
|
37.9%
|
|
|
(25.2)%
|
|
|
|
|
|
|
PLK - US
|
|
5.1%
|
|
|
31.3%
|
PLK - Rest of
World
|
|
70.4%
|
|
|
(24.8)%
|
PLK -
Global
|
|
10.5%
|
|
|
24.0%
|
|
|
|
|
|
|
System-wide
Sales (in US$ millions)
|
|
|
|
|
|
TH -
Canada
|
$
|
1,399
|
|
$
|
956
|
TH - Rest of
World
|
$
|
238
|
|
$
|
152
|
TH -
Global
|
$
|
1,637
|
|
$
|
1,108
|
|
|
|
|
|
|
BK - US
|
$
|
2,618
|
|
$
|
2,314
|
BK - Rest of
World
|
$
|
3,265
|
|
$
|
1,813
|
BK -
Global
|
$
|
5,883
|
|
$
|
4,127
|
|
|
|
|
|
|
PLK - US
|
$
|
1,209
|
|
$
|
1,150
|
PLK - Rest of
World
|
$
|
177
|
|
$
|
97
|
PLK -
Global
|
$
|
1,386
|
|
$
|
1,247
|
|
|
|
|
|
|
Comparable
Sales
|
|
|
|
|
|
TH -
Canada
|
|
27.4%
|
|
|
(29.9)%
|
TH - Rest of
World
|
|
28.7%
|
|
|
(24.5)%
|
TH -
Global
|
|
27.6%
|
|
|
(29.3)%
|
|
|
|
|
|
|
BK - US
|
|
13.0%
|
|
|
(9.9)%
|
BK - Rest of
World
|
|
24.8%
|
|
|
(18.1)%
|
BK -
Global
|
|
18.2%
|
|
|
(13.4)%
|
|
|
|
|
|
|
PLK - US
|
|
(2.5)%
|
|
|
28.5%
|
PLK - Rest of
World
|
|
24.7%
|
|
|
(11.0)%
|
PLK -
Global
|
|
(0.3)%
|
|
|
24.8%
|
|
As of June
30,
|
KPIs by
Market
|
2021
|
|
2020
|
|
(Unaudited)
|
Net Restaurant
Growth
|
|
|
|
TH -
Canada
|
(1.5)%
|
|
0.5%
|
TH - Rest of
World
|
20.3%
|
|
4.9%
|
TH -
Global
|
2.7%
|
|
1.3%
|
|
|
|
|
BK - US
|
(2.2)%
|
|
(0.2)%
|
BK - Rest of
World
|
1.6%
|
|
7.1%
|
BK -
Global
|
0.1%
|
|
4.2%
|
|
|
|
|
PLK - US
|
5.8%
|
|
6.0%
|
PLK - Rest of
World
|
5.5%
|
|
9.1%
|
PLK -
Global
|
5.7%
|
|
6.7%
|
|
|
|
|
Restaurant
Count
|
|
|
|
TH -
Canada
|
3,938
|
|
3,997
|
TH - Rest of
World
|
1,127
|
|
937
|
TH -
Global
|
5,065
|
|
4,934
|
|
|
|
|
BK - US
|
7,095
|
|
7,257
|
BK - Rest of
World
|
11,681
|
|
11,499
|
BK -
Global
|
18,776
|
|
18,756
|
|
|
|
|
PLK - US
|
2,667
|
|
2,521
|
PLK - Rest of
World
|
895
|
|
848
|
PLK -
Global
|
3,562
|
|
3,369
|
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
Supplemental Disclosure
(Unaudited)
General and Administrative Expenses
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
(in US$
millions)
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Segment G&A
TH(1)
|
$
|
26
|
|
$
|
20
|
|
$
|
50
|
|
$
|
45
|
Segment G&A
BK(1)
|
45
|
|
30
|
|
81
|
|
67
|
Segment G&A
PLK(1)
|
13
|
|
10
|
|
27
|
|
23
|
Share-based
compensation and non-cash incentive compensation expense
|
20
|
|
23
|
|
46
|
|
44
|
Depreciation and
amortization(2)
|
6
|
|
4
|
|
10
|
|
9
|
Corporate
restructuring and tax advisory fees
|
3
|
|
7
|
|
4
|
|
8
|
General and
administrative expenses
|
$
|
113
|
|
$
|
94
|
|
$
|
218
|
|
$
|
196
|
|
|
(1)
|
Segment G&A
includes segment general and administrative expenses and excludes
share-based compensation and non-cash incentive compensation
expense, depreciation and amortization, and corporate restructuring
and tax advisory fees.
|
(2)
|
Segment depreciation
and amortization reflects depreciation and amortization included in
the respective segment cost of sales, franchise and property
expenses and advertising expenses. Depreciation and amortization
included in general and administrative expenses reflects all other
depreciation and amortization.
|
Other Operating Expenses (Income), net
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
(in US$
millions)
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net losses (gains) on
disposal of assets, restaurant closures, and
refranchisings(3)
|
$
|
1
|
|
$
|
—
|
|
$
|
(1)
|
|
$
|
(2)
|
Litigation settlement
(gains) and reserves, net
|
1
|
|
1
|
|
3
|
|
1
|
Net losses (gains) on
foreign exchange(4)
|
8
|
|
18
|
|
(35)
|
|
10
|
Other, net
|
(2)
|
|
2
|
|
(1)
|
|
(4)
|
Other operating expenses
(income), net
|
$
|
8
|
|
$
|
21
|
|
$
|
(34)
|
|
$
|
5
|
|
|
(3)
|
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.
|
(4)
|
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 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 and Net Leverage. We believe that these
non-GAAP measures are useful to investors in assessing our
operating performance or liquidity, as it provides them with the
same tools that management uses to evaluate our performance or
liquidity 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 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 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 three operating segments.
LTM Adjusted EBITDA is defined as Adjusted EBITDA for the last
twelve month period to the date reported. LTM Adjusted EBITDA as of
June 30, 2021 is the sum of the Adjusted EBITDA for the
quarters ended June 30, 2021,
March 31, 2021, December 31, 2020 and September 2020, while LTM Adjusted EBITDA as of
June 30, 2020 is the sum of the Adjusted EBITDA for the
quarters ended June 30, 2020,
March 31, 2020, December 31, 2019 and September 30, 2019. A reconciliation of
Adjusted EBITDA for each of those quarters was included in our
press release attached as Exhibit 99 to our Form 8-Ks filed with
the SEC on April 30, 2021,
February 11, 2021, and October 27, 2020.
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
and November 2019, (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 or the
performance of an acquired business.
Net Leverage is defined as net debt (total debt less cash and
cash equivalents) divided by LTM Adjusted EBITDA. Net Leverage is a
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.
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. 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
Three Months Ended June 30, 2021
(Unaudited)
|
|
|
|
|
|
|
|
|
Impact of
FX
|
|
|
|
|
|
Actual
|
|
Q2 '21 vs. Q2
'20
|
|
Movements
|
|
Organic
Growth
|
(in US$
millions)
|
Q2
'21
|
|
Q2
'20
|
|
$
|
|
%
|
|
$
|
|
|
$
|
|
%
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TH
|
$
|
831
|
|
$
|
567
|
|
$
|
264
|
|
46.5%
|
|
$
|
64
|
|
$
|
200
|
|
31.6%
|
BK
|
$
|
459
|
|
$
|
347
|
|
$
|
112
|
|
32.1%
|
|
$
|
8
|
|
$
|
104
|
|
29.3%
|
PLK
|
$
|
148
|
|
$
|
134
|
|
$
|
14
|
|
10.4%
|
|
$
|
—
|
|
$
|
14
|
|
10.2%
|
Total
Revenues
|
$
|
1,438
|
|
$
|
1,048
|
|
$
|
390
|
|
37.1%
|
|
$
|
72
|
|
$
|
318
|
|
28.3%
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TH
|
$
|
253
|
|
$
|
147
|
|
$
|
106
|
|
72.5%
|
|
$
|
17
|
|
$
|
89
|
|
54.4%
|
BK
|
$
|
266
|
|
$
|
160
|
|
$
|
106
|
|
66.4%
|
|
$
|
5
|
|
$
|
101
|
|
61.7%
|
PLK
|
$
|
58
|
|
$
|
51
|
|
$
|
7
|
|
13.2%
|
|
$
|
—
|
|
$
|
7
|
|
12.7%
|
Adjusted
EBITDA
|
$
|
577
|
|
$
|
358
|
|
$
|
219
|
|
61.2%
|
|
$
|
22
|
|
$
|
197
|
|
51.8%
|
|
Note: Percentage
changes may not recalculate due to rounding.
|
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
Non-GAAP Financial Measures
Reconciliation of EBITDA and Adjusted EBITDA to Net Income
(Unaudited)
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
(in US$
millions)
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Segment
income:
|
|
|
|
|
|
|
|
TH
|
$
|
253
|
|
$
|
147
|
|
$
|
460
|
|
$
|
336
|
BK
|
266
|
|
160
|
|
483
|
|
360
|
PLK
|
58
|
|
51
|
|
114
|
|
106
|
Adjusted
EBITDA
|
577
|
|
358
|
|
1,057
|
|
802
|
Share-based
compensation and non-cash incentive compensation
expense(1)
|
20
|
|
23
|
|
46
|
|
44
|
Corporate
restructuring and tax advisory fees(2)
|
3
|
|
7
|
|
4
|
|
8
|
Impact of equity
method investments(3)
|
7
|
|
18
|
|
11
|
|
22
|
Other operating
expenses (income), net
|
8
|
|
21
|
|
(34)
|
|
5
|
EBITDA
|
539
|
|
289
|
|
1,030
|
|
723
|
Depreciation and
amortization
|
51
|
|
46
|
|
100
|
|
91
|
Income from
operations
|
488
|
|
243
|
|
930
|
|
632
|
Interest expense,
net
|
126
|
|
128
|
|
250
|
|
247
|
Income tax (benefit)
expense(4)
|
(29)
|
|
(49)
|
|
18
|
|
(3)
|
Net income
|
$
|
391
|
|
$
|
164
|
|
$
|
662
|
|
$
|
388
|
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
June 30,
|
|
Six Months Ended
June 30,
|
(in US$ millions,
except per share data)
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net income
|
$
|
391
|
|
$
|
164
|
|
$
|
662
|
|
$
|
388
|
Income tax
expense(4)
|
(29)
|
|
(49)
|
|
18
|
|
(3)
|
Income before income
taxes
|
362
|
|
115
|
|
680
|
|
385
|
Adjustments:
|
|
|
|
|
|
|
|
Franchise agreement
amortization
|
8
|
|
8
|
|
16
|
|
16
|
Amortization of
deferred financing costs and debt issuance discount
|
6
|
|
6
|
|
13
|
|
12
|
Interest expense and
loss on extinguished debt(5)
|
7
|
|
7
|
|
15
|
|
15
|
Corporate
restructuring and tax advisory fees(2)
|
3
|
|
7
|
|
4
|
|
8
|
Impact of equity
method investments(3)
|
7
|
|
18
|
|
11
|
|
22
|
Other operating
expenses (income), net
|
8
|
|
21
|
|
(34)
|
|
5
|
Total
adjustments
|
39
|
|
67
|
|
25
|
|
78
|
Adjusted income
before income taxes
|
401
|
|
182
|
|
705
|
|
463
|
Adjusted income tax
expense(4)(6)
|
43
|
|
28
|
|
90
|
|
82
|
Adjusted net
income
|
$
|
358
|
|
$
|
154
|
|
$
|
615
|
|
$
|
381
|
Adjusted diluted
earnings per share
|
$
|
0.77
|
|
$
|
0.33
|
|
$
|
1.32
|
|
$
|
0.81
|
Weighted average
diluted shares outstanding
|
466
|
|
469
|
|
465
|
|
469
|
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
Non-GAAP Financial Measures
Reconciliation of Net Leverage and Free Cash Flow
(Unaudited)
|
As
of
|
(in US$ millions,
except ratio)
|
June 30,
2021
|
|
June 30,
2020
|
Long-term debt, net of
current portion
|
$
|
12,375
|
|
$
|
12,310
|
Finance leases, net of
current portion
|
326
|
|
299
|
Current portion of
long-term debt and finance leases
|
113
|
|
106
|
Unamortized deferred
financing costs and deferred issue discount
|
142
|
|
145
|
Total
debt
|
12,956
|
|
12,860
|
|
|
|
|
Cash and cash
equivalents
|
1,762
|
|
1,540
|
Net debt
|
11,194
|
|
11,320
|
LTM adjusted
EBITDA
|
2,119
|
|
2,026
|
Net
leverage
|
5.3x
|
|
5.6x
|
|
Six Months Ended
June 30,
|
|
Twelve Months
Ended
December 31,
|
|
Twelve Months
Ended
June 30,
|
(in US$
millions)
|
2021
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2021
|
|
2020
|
Calculation:
|
A
|
|
B
|
|
C
|
|
D
|
|
E
|
|
A + D - B
|
|
B + E - C
|
Net cash provided by
operating activities
|
$
|
745
|
|
$
|
196
|
|
$
|
475
|
|
$
|
921
|
|
$
|
1,476
|
|
$
|
1,470
|
|
$
|
1,197
|
Payments for property
and equipment
|
(46)
|
|
(39)
|
|
(14)
|
|
(117)
|
|
(62)
|
|
(124)
|
|
(87)
|
Free Cash
flow
|
$
|
699
|
|
$
|
157
|
|
$
|
461
|
|
$
|
804
|
|
$
|
1,414
|
|
$
|
1,346
|
|
$
|
1,110
|
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 2020 and 2021 cash bonus, respectively.
|
|
|
(2)
|
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.
|
|
|
(3)
|
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.
|
|
|
(4)
|
The effective tax
rate during the three and six months ended June 30, 2021 reflects
$89 million and $87 million, respectively, from the result of net
reserve releases related to expiring statutes of limitation for
certain prior tax years which reduced our effective tax rate by
approximately 24.7% and 12.8% for the three and six months ended
June 30, 2021, respectively. The impact of the net reserve releases
decreased our adjusted effective tax rate by 6.1% and 3.2% for the
three and six months ended June 30, 2021, respectively. The
effective tax rate during three and six months ended June 30, 2020
reflects a $64 million increase in deferred tax assets which
decreased the effective tax rate by 55.2% and 16.5% during the
three and six months ended June 30, 2020, respectively. Based on
the analysis of final guidance related to the Tax Cuts and Jobs Act
(the "Tax Act") received during the second quarter of 2020, a
deferred tax asset was recorded. Adjusted income tax expense
excludes the impact of this adjustment. The effective tax rate was
reduced by 1.0% and 1.5% for the three and six months ended June
30, 2021, respectively, and our adjusted effective tax rate was
reduced by 0.9% and 1.5% for the three and six months ended June
30, 2021, respectively, as a result of excess tax benefits from
equity-based compensation. The effective tax rate was reduced by
1.2% and 0.4% for the three and six months ended June 30, 2020,
respectively, and our adjusted effective tax rate was reduced by
0.8% and 0.4% for the three and six months ended June 30, 2020,
respectively, as a result of excess tax benefits from equity-based
compensation.
|
|
|
(5)
|
Represents loss on
early extinguishment of debt and interest expense. No loss on early
extinguishment of debt was recognized during three and six months
ended June 30, 2021 and 2020. 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 and November 2019.
|
|
|
(6)
|
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. Adjusted income tax expense has been
adjusted to remove the net tax benefits associated with the release
of tax reserves related to certain prior corporate restructurings
that when previously incurred were excluded from adjusted income
tax expense as non-cash adjustments that did not impact our core
operational results. Subsequent interest accrued on such reserves
was treated as impacting core operational results and included in
adjusted income tax expense, accordingly, the reversal of such
interest is included in adjusted income tax expense. The Company
views interest on tax reserves as a normal course of business
expense regardless of the origin of the underlying tax
reserve.
|
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SOURCE Restaurant Brands International Inc.