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OAKVILLE, ON, Aug. 1, 2018 /CNW/ - Restaurant Brands International Inc. (TSX/NYSE: QSR, TSX: QSP) today reported financial results for the second quarter ended June 30, 2018.

Daniel Schwartz, Chief Executive Officer of Restaurant Brands International Inc. ("RBI") commented, "During the second quarter, we continued to grow each of our three iconic brands, and we made good progress against the 2018 priorities that we outlined last quarter. At Tim Hortons, we have implemented a number of initiatives under our 'Winning Together' plan - including the launch of Breakfast Anytime - which we believe will drive improved comparable sales over the long run. We also delivered strong system-wide sales growth at Burger King and Popeyes, driven by accelerated net restaurant growth. We are very optimistic about the long-term growth potential for each of our brands and remain focused on driving improved guest satisfaction and franchisee profitability."

Consolidated Operational Highlights

  Three Months Ended June 30,
  2018   2017
  (Unaudited)
System-wide Sales Growth  
  TH                                                  2.2%   2.6%
  BK 8.4%   10.6%
  PLK 10.7%   3.3%
System-wide sales (in US$ millions)      
  TH $ 1,741.7   $ 1,645.9
  BK $ 5,403.4   $ 4,961.1
  PLK $ 937.6   $ 890.4
Comparable Sales      
  TH —%   (0.8)%
  BK 1.8%   3.9%
  PLK 2.9%   (2.7)%
Net Restaurant Growth      
  TH 3.0%   4.3%
  BK 6.4%   6.0%
  PLK 7.5%   5.3%
System Restaurant Count at Period End      
  TH 4,794   4,655
  BK 17,022   16,000
  PLK 2,975   2,768

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 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.

Consolidated Financial Highlights

  Three Months Ended June 30,
(in US$ millions, except per share data) 2018   2018   2017    
  New Standard   Previous Standards   Previous Standards    
  (Unaudited)
Total Revenues $ 1,343.4   $ 1,144.3   $ 1,132.7    
Net Income Attributable to Common Shareholders $ 167.6   $ 169.1   $ 89.5    
Net Income Attributable to Common Shareholders and Noncontrolling Interests $ 314.0   $ 316.8   $ 175.6    
Diluted Earnings per Share $ 0.66   $ 0.67   $ 0.37    
               
TH Adjusted EBITDA(1) $ 285.5   $ 288.6   $ 281.1    
BK Adjusted EBITDA(1) $ 236.4   $ 232.0   $ 216.8    
PLK Adjusted EBITDA(1) $ 40.2   $ 42.5   $ 33.2    
Adjusted EBITDA(2) $ 562.1   $ 563.1   $ 531.1    
               
Adjusted Net Income(2) $ 313.2   $ 312.4   $ 241.7    
Adjusted Diluted Earnings per Share(2) $ 0.66   $ 0.66   $ 0.51    
(1) TH Adjusted EBITDA, BK Adjusted EBITDA and PLK Adjusted EBITDA are our measures of segment profitability.
(2) 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.

Effective January 1, 2018, we adopted the new revenue recognition accounting standard ("New Standard"). Our consolidated financial statements for 2018 reflect the application of the New Standard, while our consolidated financial statements for 2017 were prepared under the guidance of previously applicable accounting standards ("Previous Standards"). Our results presented herein indicate which revenue recognition methodology applies in each respective period.

The implementation of the New Standard impacted our year-over-year results on a consolidated basis and for each segment as follows:

  • Total Revenues increased primarily as a result of the inclusion of advertising fund contributions
  • Selling, General, and Administrative Expenses increased as a result of the inclusion of advertising fund expenditures

Under Previous Standards, Total Revenues for the second quarter grew primarily as a result of system-wide sales growth, as well as a favorable impact of FX movements, partially offset by a decrease in supply chain related revenues at TH.

Net Income Attributable to Common Shareholders for the quarter, under both Previous Standards and the New Standard, was driven by growth in segment income, the change in other operating expenses (income), net (driven by FX), and the redemption of our preferred shares in December of 2017.

Under Previous Standards, Adjusted EBITDA for the quarter grew 3.7% on an organic basis versus prior year results, driven primarily by an increase in revenues at BK and PLK, partially offset by a decrease in supply chain related revenues at TH.

TH Segment Results

  Three Months Ended June 30,
(in US$ millions) 2018   2017
  New Standard   Previous Standards
  (Unaudited)
System-wide Sales Growth   2.2%     2.6%
System-wide Sales $ 1,741.7   $ 1,645.9
Comparable Sales   —%     (0.8)%
           
Net Restaurant Growth   3.0%     4.3%
System Restaurant Count at Period End   4,794     4,655
           
Sales $ 548.0   $ 553.9
Franchise and Property Revenues $ 275.0   $ 218.4
Total Revenues $ 823.0   $ 772.3
           
Cost of Sales $ 417.4   $ 417.1
Franchise and Property Expenses $ 68.8   $ 79.8
Segment SG&A $ 80.3   $ 22.2
Segment Depreciation and Amortization $ 25.8   $ 24.7
Adjusted EBITDA(1)(3) $ 285.5   $ 281.1
(3) TH Adjusted EBITDA includes $3.2 million of cash distributions received from equity method investments for the three months ended June 30, 2018 and 2017.

For the second quarter of 2018, system-wide sales growth was primarily driven by net restaurant growth of 3.0%. Comparable sales were flat, including Canada comparable sales of 0.3%.

Under Previous Standards, Total Revenues for the quarter declined (0.3)% ((3.8)% excluding the impact of FX movements) versus prior year, primarily reflecting a decrease in supply chain related revenues, partially offset by a favorable impact of FX movements.

Under Previous Standards, Adjusted EBITDA for the quarter increased 2.7% ((1.0)% excluding the impact of FX movements) versus prior year, primarily as a result of a favorable impact of FX movements, partially offset by a decrease in Total Revenues.

BK Segment Results

  Three Months Ended June 30,
(in US$ millions) 2018   2017
  New Standard   Previous Standards
    (Unaudited)
System-wide Sales Growth   8.4%     10.6%
System-wide Sales $ 5,403.4   $ 4,961.1
Comparable Sales   1.8%     3.9%
           
Net Restaurant Growth   6.4%     6.0%
System Restaurant Count at Period End   17,022     16,000
           
Sales $ 18.9   $ 25.2
Franchise and Property Revenues $ 399.2   $ 268.5
Total Revenues $ 418.1   $ 293.7
           
Cost of Sales $ 16.7   $ 23.9
Franchise and Property Expenses $ 31.4   $ 31.6
Segment SG&A $ 145.5   $ 34.1
Segment Depreciation and Amortization $ 11.9   $ 12.7
Adjusted EBITDA(1) $ 236.4   $ 216.8

For the second quarter of 2018, system-wide sales growth was driven by net restaurant growth of 6.4% and comparable sales of 1.8%, including US comparable sales of 1.8%.

Under Previous Standards, Total Revenues for the quarter grew 4.3% (3.3% excluding the impact of FX movements) versus prior year, reflecting growth in system-wide sales.

Under Previous Standards, Adjusted EBITDA for the quarter grew 7.0% (6.3% excluding the impact of FX movements) versus prior year, primarily as a result of an increase in Total Revenues.

PLK Segment Results

  Three Months Ended June 30,
(in US$ millions) 2018   2017
     New Standard      Previous Standard
  (Unaudited)
System-wide Sales Growth   10.7%     3.3%
System-wide Sales $ 937.6   $ 890.4
Comparable Sales   2.9%     (2.7)%
           
Net Restaurant Growth   7.5%     5.3%
System Restaurant Count at Period End   2,975     2,768
           
Sales $ 19.3   $ 23.0
Franchise and Property Revenues $ 83.0   $ 43.7
Total Revenues $ 102.3   $ 66.7
           
Cost of Sales $ 14.8   $ 19.2
Franchise and Property Expenses $ 2.2   $ 2.3
Segment SG&A $ 47.6   $ 14.4
Segment Depreciation and Amortization $ 2.5   $ 2.4
Adjusted EBITDA(1) $ 40.2   $ 33.2

For the second quarter of 2018, system-wide sales growth was driven by net restaurant growth of 7.5% and comparable sales of 2.9%, including US comparable sales of 1.8%.

Under Previous Standards, Total Revenues for the quarter grew 1.6% (1.8% excluding the impact of FX movements) versus prior year, reflecting growth in system-wide sales.

Under Previous Standards, Adjusted EBITDA for the quarter grew 28.0% (28.4% excluding the impact of FX movements) versus prior year, as a result of an increase in Total Revenues as well as effective cost management.

Cash and Liquidity

As of June 30, 2018, total debt was $12.2 billion, and net debt (total debt less cash and cash equivalents of $1.0 billion) was $11.3 billion. The RBI Board of Directors has declared a dividend of $0.45 per common share and partnership exchangeable unit of Restaurant Brands International Limited Partnership for the third quarter of 2018. The dividend will be payable on October 1, 2018 to shareholders and unitholders of record at the close of business on September 7, 2018.

Investor Conference Call

We will host an investor conference call and webcast at 8:30 a.m. Eastern Time on Wednesday, August 1, 2018, to review financial results for the second quarter ended June 30, 2018. 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.