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Restaurant Brands International Inc. Reports Third Quarter 2024 Results

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Restaurant Brands International reported Q3 2024 results with consolidated system-wide sales growth of 3.2% year-over-year. The company saw comparable sales increase of 0.3%, with Tim Hortons Canada at +2.7% and International at +1.8%. Financial highlights include Income from Operations of $577 million and Adjusted Operating Income of $652 million, up 6.1% organically. Diluted EPS remained steady at $0.79, while Adjusted Diluted EPS rose 4.6% organically to $0.93. The company remains confident in achieving its 8%+ Adjusted Operating Income growth target for 2024.

Restaurant Brands International ha riportato i risultati del terzo trimestre 2024 con una crescita delle vendite consolidate del 3,2% rispetto all'anno precedente. L'azienda ha registrato un aumento delle vendite comparabili dello 0,3%, con Tim Hortons Canada a +2,7% e l'International a +1,8%. I principali aspetti finanziari includono un reddito operativo di 577 milioni di dollari e un reddito operativo rettificato di 652 milioni di dollari, in crescita del 6,1% in modo organico. Il risultato per azione diluito è rimasto stabile a $0,79, mentre l'utile per azione diluito rettificato è aumentato del 4,6% in modo organico a $0,93. L'azienda rimane fiduciosa di raggiungere il suo obiettivo di crescita dell'8%+ del reddito operativo rettificato per il 2024.

Restaurant Brands International reportó los resultados del tercer trimestre de 2024 con un crecimiento de ventas consolidadas del 3,2% en comparación con el año anterior. La compañía vio un aumento de ventas comparables del 0,3%, con Tim Hortons Canadá en +2,7% y en Internacional en +1,8%. Los aspectos financieros destacados incluyen ingresos operativos de 577 millones de dólares y ingresos operativos ajustados de 652 millones de dólares, un aumento del 6,1% de manera orgánica. El EPS diluido se mantuvo estable en $0,79, mientras que el EPS diluido ajustado aumentó un 4,6% de manera orgánica a $0,93. La compañía sigue confiada en alcanzar su objetivo de crecimiento del 8%+ en ingresos operativos ajustados para 2024.

레스토랑 브랜드 인터내셔널은 2024년 3분기 실적을 발표하며 전년 대비 3.2%의 통합 시스템 매출 성장을 기록했습니다. 이 회사는 비교 가능한 매출이 0.3% 증가했습니다, 캐나다의 팀 호튼스는 +2.7%, 국제 부문은 +1.8%였습니다. 재무 하이라이트에는 운영 수익 5억 7700만 달러조정된 운영 수익 6억 5200만 달러가 포함되어 있으며, 이는 유기적으로 6.1% 증가했습니다. 희석 주당순이익은 $0.79로 안정적이었고, 조정 희석 주당순이익은 유기적으로 4.6% 증가하여 $0.93에 도달했습니다. 이 회사는 2024년 8% 이상의 조정 운영 수익 성장 목표를 달성할 수 있을 것으로 확신하고 있습니다.

Restaurant Brands International a annoncé les résultats du troisième trimestre 2024 avec une croissance des ventes consolidées de 3,2% par rapport à l'année précédente. L'entreprise a observé une augmentation des ventes comparables de 0,3%, avec Tim Hortons Canada à +2,7% et l'international à +1,8%. Les points forts financiers incluent un revenu d'exploitation de 577 millions de dollars et un revenu d'exploitation ajusté de 652 millions de dollars, en hausse organique de 6,1%. Le bénéfice par action dilué est resté stable à 0,79 $, tandis que le bénéfice par action dilué ajusté a augmenté de 4,6% pour atteindre 0,93 $ de manière organique. L'entreprise reste confiante dans sa capacité à atteindre son objectif de croissance de 8% ou plus du revenu d'exploitation ajusté pour 2024.

Restaurant Brands International berichtete über die Ergebnisse des dritten Quartals 2024 mit einem Wachstum des konsolidierten Systemumsatzes von 3,2% im Vergleich zum Vorjahr. Das Unternehmen verzeichnete einen anstieg der vergleichbaren Umsätze um 0,3%, wobei Tim Hortons Kanada bei +2,7% und International bei +1,8% liegt. Zu den finanziellen Höhepunkten gehören Betriebseinkommen von 577 Millionen Dollar und bereinigtes Betriebseinkommen von 652 Millionen Dollar, was organisch um 6,1% steigt. Der verwässerte Gewinn je Aktie blieb bei 0,79 USD stabil, während der bereinigte verwässerte Gewinn je Aktie organisch um 4,6% auf 0,93 USD stieg. Das Unternehmen ist zuversichtlich, sein Ziel von über 8% Wachstum des bereinigten Betriebseinkommens für 2024 zu erreichen.

Positive
  • System-wide sales increased 3.2% year-over-year
  • Adjusted Operating Income grew 6.1% organically to $652 million
  • Adjusted Diluted EPS increased 4.6% organically to $0.93
  • Net restaurant count grew 3.8%
Negative
  • Income from Operations declined to $577 million from $582 million
  • Burger King system-wide sales decreased 1.5%
  • Popeyes comparable sales declined 4.0%
  • Firehouse Subs comparable sales fell 4.8%

Insights

The Q3 2024 results show a mixed performance with some concerning trends. While system-wide sales grew 3.2%, comparable sales were weak at just 0.3%, with Burger King US showing negative comps of -0.4% and Popeyes declining -4.0%. The bright spots were Tim Hortons Canada at 2.7% and International at 1.8%.

Adjusted Operating Income increased 6.1% organically to $652 million, keeping RBI on track for its 8%+ growth target. However, net income declined slightly to $357 million from $364 million due to higher interest and tax expenses.

The company's significant debt position with Net Debt/Adjusted EBITDA at 4.8x and continued investments in the Reclaim the Flame initiative ($400 million total commitment) will pressure near-term cash flows, though free cash flow remains healthy at $898 million year-to-date.

The slowing comparable sales growth across major brands raises red flags about consumer spending patterns and competitive pressures in the QSR space. Popeyes' sharp -4.0% comp decline suggests significant challenges in maintaining momentum post the chicken sandwich boom.

The acquisition strategy (Carrols and Popeyes China) adds operational complexity and execution risk, though management plans to eventually refranchise these assets. The expansion in international markets remains a key growth driver with 7.6% net restaurant growth and 8.0% system-wide sales growth.

Management's commitment to additional investments through Royal Reset 2.0 ($300 million) demonstrates confidence in the brand transformation strategy but will require strong execution to generate returns. The October improvement in consolidated comps provides some optimism for Q4.

Consolidated system-wide sales grow +3.2% year-over-year
Global comparable sales of +0.3%, including +2.7% at TH Canada and +1.8% at INTL
Five franchisor segments deliver year-over-year growth in Adjusted Operating Income
RBI on track to deliver 8%+ organic Adjusted Operating Income growth for 2024    

TORONTO, Nov. 5, 2024 /PRNewswire/ - Restaurant Brands International Inc. ("RBI") (TSX: QSR) (NYSE: QSR) (TSX: QSP) today reported financial results for the third quarter ended September 30, 2024. Josh Kobza, Chief Executive Officer of RBI commented, "Our results demonstrate the resilience of our business and the dedication of our teams and franchisees. We remain focused on providing great value for guests, improving franchisee profitability, and investing in our brands for the long-term. We have been pleased to see an improvement in consolidated comparable sales in October and remain confident we will achieve our 8% plus Adjusted Operating Income growth target for 2024 and beyond."

Third Quarter 2024 Highlights:

  • Consolidated comparable sales were 0.3% and net restaurants grew 3.8% versus the prior year
  • System-wide sales increased 3.2% year-over-year
  • Income from Operations of $577 million versus $582 million in the prior year
  • Adjusted Operating Income of $652 million increased 6.1% organically (excluding FX and RH) versus the prior year
  • Diluted EPS of $0.79 was consistent with the prior year
  • Adjusted Diluted EPS of $0.93 increased 4.6% organically (excluding FX and RH) versus the prior year

Items Effecting Comparability and Restaurant Holdings Segment Reminder
We completed the acquisitions of Carrols Restaurant Group Inc. ("Carrols") ("the Carrols Acquisition") and Popeyes China ("PLK China") ("the PLK China Acquisition") on May 16, 2024 and June 28, 2024, respectively. Our consolidated results include Carrols and PLK China revenues, expenses and segment income from their acquisition dates.

Following the Carrols and PLK China Acquisitions, RBI established a new operating and reportable segment, Restaurant Holdings (RH), which includes results from the Carrols Burger King restaurants and the PLK China restaurants. RBI reports results under six operating and reportable segments consisting of the following: Tim Hortons (TH), Burger King (BK), Popeyes Louisiana Kitchen (PLK), Firehouse Subs (FHS), International (INTL) and RH. 

RBI plans to maintain the franchisor dynamics in its TH, INTL, BK, PLK and FHS segments ("five franchisor segments") to report results consistent with how the business will be managed long-term given RBI's plans to refranchise the vast majority of the Carrols Burger King restaurants and to find a new partner for PLK China in the future. RH results include Company restaurant sales and expenses, including expenses associated with royalties, rent, and advertising. These expenses are recognized, as applicable, as revenues in the respective franchisor segments (BK and INTL) and eliminated upon consolidation. For more information please review the "Restaurant Holdings Intersegment Dynamics" presentation posted on our IR website under "Events & Presentations" on August 8, 2024. 

During 2023 and the first quarter of 2024, BK also acquired restaurants from non-Carrols franchisees ("non-Carrols acquired BK restaurants"). BK owned and operated 165 Company restaurants as of September 30, 2024 as compared to 50 as of September 30, 2023.  The results from these restaurants are included in BK Company restaurants sales and expenses.

Key performances indicators are shown for RBI's five franchisor segments. RH results for the Carrols BK restaurants and PLK China restaurants are included in the BK segment and INTL segment, respectively.

Consolidated Operational Highlights

Three Months Ended September 30,


2024



2023


(Unaudited)

System-wide Sales Growth






    TH


2.8 %



8.1 %

    BK


(1.5) %



6.4 %

    PLK


(0.6) %



11.2 %

    FHS (a)


(1.3) %



7.0 %

 INTL


8.0 %



15.6 %

Consolidated


3.2 %



10.9 %







System-wide Sales (in US$ millions)






    TH

$

1,952


$

1,929

    BK

$

2,891


$

2,938

    PLK

$

1,509


$

1,520

    FHS (a)

$

301


$

305

    INTL

$

4,780


$

4,532

Consolidated (a)

$

11,433


$

11,224







Comparable Sales






    TH


2.3 %



7.6 %

    BK


(0.7) %



6.6 %

    PLK


(4.0) %



5.6 %

    FHS (a)


(4.8) %



3.6 %

    INTL


1.8 %



7.7 %

Consolidated


0.3 %



7.0 %







Net Restaurant Growth






    TH


0.0 %



(0.4) %

    BK


(1.5) %



(2.4) %

    PLK


4.1 %



5.3 %

    FHS


3.9 %



2.5 %

    INTL


7.6 %



9.5 %

Consolidated


3.8 %



4.2 %







System Restaurant Count at Period End






    TH


4,504



4,502

    BK


7,119



7,224

    PLK


3,465



3,329

    FHS


1,300



1,251

    INTL


15,137



14,069

Consolidated


31,525



30,375

(a)

2023 comparable sales and system wide sales amounts for FHS have been revised to make immaterial corrections and provide comparability with the current calculation methodology. These revisions have no impact on previously reported revenue and adjusted operating income for the FHS segment. These revisions had an immaterial impact to RBI consolidated system-wide sales and no impact to consolidated system-wide sales growth nor comparable sales.

Consolidated Financial Highlights


Three Months Ended September 30,

(in US$ millions, except per share data)

2024


2023


(Unaudited)

Total Revenues

$                    2,291


$                    1,837

Income from Operations

$                       577


$                       582

Net Income

$                       357


$                       364

Diluted Earnings per Share

$                      0.79


$                      0.79





TH

$                       284


$                       269

BK

$                       112


$                       111

PLK

$                         62


$                         58

FHS

$                         12


$                         10

INTL

$                       166


$                       161

RH

$                         16


$                         —

Adjusted Operating Income (a)

$                       652


$                       609





Adjusted EBITDA (a)

$                       748


$                       698





Adjusted Net Income (a)

$                       423


$                       413

Adjusted Diluted Earnings per Share (a)

$                      0.93


$                      0.90

 


Nine Months Ended September 30,

(in US$ millions, unaudited)

2024


2023


(Unaudited)

Net cash provided by operating activities

$                    1,022


$                       920

Net cash (used for) provided by investing activities

$                     (616)


$                       (11)

Net cash (used for) provided by financing activities

$                     (365)


$                     (774)

Free Cash Flow (a)

$                       898


$                       847






As of September 30,


2024


2023


(Unaudited)

Net Debt (a)

$                  12,950


$                  12,072

Net Income Net Leverage

7.2x


9.1x

Adjusted EBITDA Net Leverage (a)(b)

4.8x


4.8x

(a) 

Adjusted Operating Income, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted Earnings per Share, Free Cash Flow, Net Debt, and Adjusted EBITDA Net Leverage are non-GAAP financial measures. Please refer to "Non-GAAP Financial Measures" for further detail.  

(b)

Adjusted EBITDA Net Leverage only includes Carrols EBITDA from May 16, 2024 until quarter end.

Discussion of Consolidated Financial Results
The year-over-year increase in Total Revenues on an as reported basis was primarily driven by the inclusion of RH results, partially offset by the elimination of franchise and property revenues and advertising revenues and other services related to the RH restaurants.

On an organic basis, the increase in Total Revenues was largely due to the net impact of the non-Carrols acquired BK restaurants and the acquisition of PLK Carrols restaurants. Growth in organic Total Revenues was also driven by increases in system-wide sales at INTL and TH, partially offset by decreases in system-wide sales at BK, PLK and FHS. 

The year-over-year decrease in Income from Operations was primarily driven by an unfavorable change in other operating expenses (income), net, an increase in franchise agreement and reacquired franchise rights amortization, and an unfavorable FX Impact partially offset by increases in segment income at our five franchisor segments and the inclusion of RH segment income.

The year-over-year decrease in Net Income was primarily driven by the year-over-year decrease in Income from Operations, an increase in income tax expense and an increase in interest expense, net, partially offset by a favorable year-over-year decrease in loss on early extinguishment of debt.

The year-over-year increases in Adjusted Operating Income on an as reported and on an organic basis were primarily driven by increases in segment income at our five franchisor segments. On an as reported basis, the increase was also driven by the inclusion of RH Adjusted Operating Income, partially offset by unfavorable FX Impacts at TH and INTL.

The year-over-year increase in Adjusted Net Income was primarily driven by increases in segment income at our five franchisor segments and the inclusion of RH segment income, partially offset by an increase in adjusted interest expense, net, an increase in adjusted income tax expense, and an unfavorable FX Impact.

Burger King US Reclaim the Flame
In September 2022, Burger King shared the details of its "Reclaim the Flame" plan to accelerate sales growth and drive franchisee profitability. We are investing $400 million over the life of the plan, comprised of $150 million in advertising and digital investments ("Fuel the Flame") and $250 million in high-quality remodels and relocations, restaurant technology, kitchen equipment, and building enhancements ("Royal Reset").

During the three months ended September 30, 2024, we funded $8 million toward the Fuel the Flame investments and $16 million toward our Royal Reset investments. As of September 30, 2024, we have funded a total of $93 million toward the Fuel the Flame investments and $107 million toward our Royal Reset investments.

On April 30, 2024, Burger King announced its Royal Reset 2.0 program and expects to invest an additional $300 million in remodels from 2025 through 2028. Together with the initial Reclaim the Flame investment and plans to remodel 600 of the recently acquired Carrols restaurants, Burger King will be on a path to achieve its goal of 85% to 90% modern image by 2028.

TH Segment Results 


Three Months Ended September 30,

(in US$ millions)

2024


2023


(Unaudited)

System-wide Sales Growth


2.8 %



8.1 %

System-wide Sales

$

1,952


$

1,929

Comparable Sales


2.3 %



7.6 %







Net Restaurant Growth


0.0 %



(0.4) %

System Restaurant Count at Period End


4,504



4,502







Supply Chain Sales

$

699


$

706

Company Restaurant Sales

$

11


$

12

Franchise and Property Revenues

$

255


$

253

Advertising Revenues and Other Services

$

79


$

82

Total Revenues

$

1,044


$

1,052







Supply Chain Cost of Sales

$

559


$

572

Company Restaurant Expenses

$

9


$

10

Franchise and Property Expenses

$

83


$

80

Advertising Expenses and Other Services

$

78


$

84

Segment G&A

$

36


$

43

Adjustments:






Franchise Agreement Amortization

$

2


$

2

Cash Distributions Received from Equity Method Investments

$

4


$

4

Adjusted Operating Income

$

284


$

269







Share-based Compensation and Non-Cash Incentive Compensation Expense

$

10


$

13

Depreciation and Amortization, excluding Franchise Agreement Amortization

$

27


$

24

Adjusted EBITDA (a)

$

321


$

307

(a)

Adjusted EBITDA for TH is a non-GAAP financial measure. Please refer to "Non-GAAP Financial Measures" for further detail.

For the third quarter of 2024, the increase in system-wide sales was primarily driven by comparable sales of 2.3%, including Canada comparable sales of 2.7%.

The year-over-year decrease in Total Revenues on an as reported basis was primarily due to an unfavorable FX Impact. On an organic basis, the increase in Total Revenues was primarily driven by increases in equipment sales related to restaurant renovations, partially offset by a decrease in CPG net sales.

The year-over-year increase in Adjusted Operating Income on an as reported and on an organic basis were primarily driven by a decrease in Segment G&A, largely due to lower employee-related compensation, and a decrease in supply chain cost of sales due to lower average cost of supply chain and CPG inventory, partially offset by a decrease in CPG net sales. The increase in Adjusted Operating Income on an as reported basis was partially offset by an unfavorable FX Impact.  

BK Segment Results


Three Months Ended September 30,

(in US$ millions)

2024


2023


(Unaudited)

System-wide Sales Growth


(1.5) %



6.4 %

System-wide Sales

$

2,891


$

2,938

Comparable Sales


(0.7) %



6.6 %







Net Restaurant Growth


(1.5) %



(2.4) %

System Restaurant Count at Period End


7,119



7,224







Company Restaurant Sales

$

60


$

21

Franchise and Property Revenues (b)

$

179


$

183

Advertising Revenues and Other Services (c)

$

122


$

124

Total Revenues

$

362


$

329







Company Restaurant Expenses

$

56


$

20

Franchise and Property Expenses

$

32


$

32

Advertising Expenses and Other Services

$

133


$

131

Segment G&A

$

32


$

37

Adjustments:






Franchise Agreement Amortization

$

2


$

3

Adjusted Operating Income

$

112


$

111







Share-based Compensation and Non-Cash Incentive Compensation Expense

$

8


$

11

Depreciation and Amortization, excluding Franchise Agreement Amortization

$

10


$

9

Adjusted EBITDA (a)

$

131


$

131

(a)

Adjusted EBITDA for BK is a non-GAAP financial measure. Please refer to "Non-GAAP Financial Measures" for further detail.

(b)

For the three months ended September 30, 2024, Franchise and Property revenues include intersegment revenues with RH consisting of royalties of $20 million and rent of $8 million.

(c)

For the three months ended September 30, 2024, Advertising Revenues and Other Services include intersegment revenues with RH consisting of advertising contributions and tech fees of $18 million.

As a reminder, BK segment results are presented consistently with our franchisor model. As such, results include intersegment Franchise and Property revenues and Advertising Revenues and Other Services from the Carrols Burger King restaurants included in RH (as footnoted above).

For the third quarter of 2024, the decrease in system-wide sales was driven by comparable sales of (0.7)%, including US comparable sales of (0.4)%, and net restaurant growth of (1.5)%.

The year-over-year increase in Total Revenues was primarily driven by the net impact of the non-Carrols acquired BK restaurants, partially offset by a decrease in system-wide sales.

Adjusted Operating Income was relatively consistent on a year-over-year basis primarily due to a decrease in Segment G&A, largely a result of lower compensation-related expenses, and the net impact of the non-Carrols acquired BK restaurants, partially offset by the decrease in system-wide sales and an increase in Fuel the Flame spending versus the prior year period.

PLK Segment Results


Three Months Ended September 30,

(in US$ millions)

2024


2023


(Unaudited)

System-wide Sales Growth


(0.6) %



11.2 %

System-wide Sales

$

1,509


$

1,520

Comparable Sales


(4.0) %



5.6 %







Net Restaurant Growth


4.1 %



5.3 %

System Restaurant Count at Period End


3,465



3,329







Company Restaurant Sales

$

44


$

22

Franchise and Property Revenues

$

79


$

80

Advertising Revenues and Other Services

$

72


$

75

Total Revenues

$

195


$

177







Company Restaurant Expenses

$

38


$

20

Franchise and Property Expenses

$

2


$

2

Advertising Expenses and Other Services

$

74


$

77

Segment G&A

$

19


$

21

Adjustments:






Franchise Agreement Amortization

$

1


$

1

Adjusted Operating Income

$

62


$

58







Share-based Compensation and Non-Cash Incentive Compensation Expense

$

5


$

6

Depreciation and Amortization, excluding Franchise Agreement Amortization

$

3


$

2

Adjusted EBITDA (a)

$

68


$

67

(a)

Adjusted EBITDA for PLK is a non-GAAP financial measure. Please refer to "Non-GAAP Financial Measures" for further detail.

For the third quarter of 2024, the decrease in system-wide sales was driven by comparable sales of (4.0)%, including US comparable sales of (3.8)%, partially offset by net restaurant growth of 4.1%.

The year-over-year increases in Total Revenues and Adjusted Operating Income were primarily driven by the acquisition of 60 Company restaurants as part of the Carrols acquisition and improvements in PLK's underlying Company restaurant portfolio. As of September 30, 2024, PLK had 100 Company restaurants as compared to 41 in the prior year. 

FHS Segment Results


Three Months Ended September 30,

(in US$ millions)

2024


2023


(Unaudited)

System-wide Sales Growth (a)


(1.3) %



7.0 %

System-wide Sales (a)

$

301


$

305

Comparable Sales (a)


(4.8) %



3.6 %







Net Restaurant Growth


3.9 %



2.5 %

System Restaurant Count at Period End


1,300



1,251







Company Restaurant Sales

$

10


$

10

Franchise and Property Revenues

$

27


$

27

Advertising Revenues and Other Services

$

15


$

15

Total Revenues

$

53


$

51







Company Restaurant Expenses

$

9


$

8

Franchise and Property Expenses

$

4


$

4

Advertising Expenses and Other Services

$

16


$

15

Segment G&A

$

11


$

14

Adjusted Operating Income

$

12


$

10







Share-based Compensation and Non-Cash Incentive Compensation Expense

$

2


$

4

Depreciation and Amortization, excluding Franchise Agreement Amortization

$

1


$

1

Adjusted EBITDA (b)

$

15


$

15

(a)

2023 comparable sales and system wide sales amounts for FHS have been revised to make immaterial corrections and provide comparability with the current calculation methodology. These revisions have no effect on previously reported revenue and adjusted operating income for the FHS segment.

(b)

Adjusted EBITDA for FHS is a non-GAAP financial measure. Please refer to "Non-GAAP Financial Measures" for further detail.

For the third quarter of 2024, the decrease in system-wide sales was driven by comparable sales of (4.8)% partially offset by net restaurant growth of 3.9%.

The year-over-year increase in Adjusted Operating Income was primarily due to a decrease in Segment G&A driven by lower compensation-related expenses.

INTL Segment Results


Three Months Ended September 30,

(in US$ millions)

2024


2023


(Unaudited)

System-wide Sales Growth


8.0 %



15.6 %

System-wide Sales

$

4,780


$

4,532

Comparable Sales


1.8 %



7.7 %







Net Restaurant Growth


7.6 %



9.5 %

System Restaurant Count at Period End


15,137



14,069







Franchise and Property Revenues

$

222


$

210

Advertising Revenues and Other Services

$

20


$

18

Total Revenues

$

243


$

228







Franchise and Property Expenses

$

8


$

1

Advertising Expenses and Other Services

$

25


$

20

Segment G&A

$

48


$

49

Adjustments:






Franchise Agreement Amortization

$

3


$

3

Adjusted Operating Income

$

166


$

161







Share-based Compensation and Non-Cash Incentive Compensation Expense

$

12


$

14

Depreciation and Amortization, excluding Franchise Agreement Amortization

$

3


$

3

Adjusted EBITDA (a)

$

181


$

178

(a)

Adjusted EBITDA for INTL is a non-GAAP financial measure. Please refer to "Non-GAAP Financial Measures" for further detail.

For the third quarter of 2024, the increase in system-wide sales was driven by net restaurant growth of 7.6%, and comparable sales of 1.8%.

The year-over-year increase in Total Revenues on an as reported and on an organic basis were primarily driven by increases in BK royalties as a result of an increase in system-wide sales. The increase in Total Revenues on an as reported basis was partially offset by an unfavorable FX Impact.

The year-over-year increase in Adjusted Operating Income on an as reported and on an organic basis were primarily driven by the increase in system-wide sales, partially offset by bad debt expenses in the current year as compared to bad debt recoveries in the prior year and higher Advertising Expenses and Other Services due to the timing of advertising campaigns. The year-over-year increase in Adjusted Operating Income on an as reported basis was partially offset by an unfavorable FX impact.

RH Segment Results

(in US$ millions)

Three Months Ended
September 30, 2024

BK

(Unaudited)

System-wide Sales Growth


(3.0) %

System-wide Sales

$

444

Comparable Sales


(2.2) %

Net Restaurant Growth


0.2 %

System Restaurant Count at Period End


1,021

Restaurant-Level Margin (a)


12.4 %




INTL



System-wide Sales

$

2

System Restaurant Count at Period End


14




Total Revenues

$

441




Food, Beverage and Packaging Costs

$

123

Restaurant Wages and Related Expenses

$

141

Restaurant Occupancy and Other Expenses (b)

$

120

Company Restaurant Expenses

$

384

Advertising Expenses and Other Services (c)

$

19

Reacquired Franchise Rights Amortization

$

10

Segment G&A

$

23

Adjustments:



Reacquired Franchise Rights Amortization

$

10

Adjusted Operating Income

$

16

Depreciation and Amortization, excluding Reacquired Franchise Rights Amortization

$

16

Adjusted EBITDA (a)

$

32




Reconciliation of Restaurant-Level Margin (BK)



RH Adjusted Operating Income

$

16

   Less: INTL RH Adjusted Operating Income

$

(1)

BK RH Adjusted Operating Income

$

17

Add:



BK RH Segment G&A

$

22

BK RH Segment Depreciation and Amortization, excluding Reacquired Franchise Rights Amortization

$

16

BK RH Restaurant-Level EBITDA

$

54

BK RH Restaurant Sales

$

440

BK RH Restaurant Level Margin (a)


12.4 %

Note: RH KPIs are shown consistent with RBI's reporting calendar, but results from BK Carrols restaurants in the P&L are shown consistent with Carrols reporting calendar which for the third quarter ended on September 29, 2024.

(a)

Restaurant-Level margin and Adjusted EBITDA for RH are non-GAAP financial measures. Please refer to "Non-GAAP Financial Measures" for further detail.

(b)

For the three months ended September 30, 2024, Restaurant Occupancy and Other Expenses include intersegment expenses with BK related to royalties of $20 million and rent of $8 million.

(c)

For the three months ended September 30, 2024, Advertising Expenses and Other Services include intersegment expenses with BK related to advertising contributions and tech fees of $18 million.

Cash and Liquidity
As of September 30, 2024, Total debt was $14.1 billion, Net debt (Total debt less Cash and cash equivalents of $1.2 billion) was $13.0 billion, Net Income Net Leverage was 7.2x and Adjusted EBITDA Net Leverage was 4.8x. As a reminder, Adjusted EBITDA only includes results from Carrols beginning May 16, 2024. 

The RBI Board of Directors has declared a dividend of $0.58 per common share and partnership exchangeable unit of Restaurant Brands International Limited Partnership for the fourth quarter of 2024. The dividend will be payable on January 3, 2025 to shareholders and unitholders of record at the close of business on December 20, 2024.

During the third quarter, we issued $500 million of 5.625% First Lien Senior Secured Notes due 2029 and used the proceeds, together with cash on hand, to redeem our outstanding 5.750% First Lien Senior Secured Notes due 2025 and pay related fees and expenses. As a result of this transaction, RBI does not have any material debt maturities until 2028. 

2024 Financial Guidance
RBI continues to expect Adjusted Interest Expense, net between $565 million and $575 million and consolidated capital expenditures, tenant inducements and incentives (excluding RH) of approximately $300 million.

RBI now expects Segment G&A (excluding RH) for 2024 between $640 million and $650 million, including share-based compensation and non-cash incentive compensation expense between $170 million and $175 million

Long-Term Guidance
RBI hosted an investor event on February 15, 2024 and announced the following long-term consolidated performance that the Company continues to expect to achieve, on average, from 2024 to 2028:

  • 3%+ Comparable Sales;
  • 5%+ Net Restaurant Growth;
  • 8%+ System-wide Sales growth; and
  • Adjusted Operating Income growth at least as fast as system-wide sales growth.

Investor Conference Call
We will host an investor conference call and webcast at 8:45 a.m. Eastern Time on Tuesday, November 5, 2024, to review financial results for the third quarter ended September 30, 2024. The earnings call will be broadcast live via our investor relations website at http://rbi.com/investors and a replay will be available for 30 days following the release. The dial-in number is 1 (833)-470-1428 for U.S. callers, 1 (833)-950-0062 for Canadian callers, and 1 (929)-526-1599 for callers from other countries. For all dial-in numbers please use the following access code: 309027.

For further information: Investors: investor@rbi.com; Media: media@rbi.com

About Restaurant Brands International Inc.
Restaurant Brands International Inc. is one of the world's largest quick service restaurant companies with over $40 billion in annual system-wide sales and over 30,000 restaurants in more than 120 countries and territories. RBI owns four of the world's most prominent and iconic quick service restaurant brands – TIM HORTONS®, BURGER KING®, POPEYES®, and FIREHOUSE SUBS®. These independently operated brands have been serving their respective guests, franchisees and communities for decades. Through its Restaurant Brands for Good framework, RBI is improving sustainable outcomes related to its food, the planet, and people and communities. To learn more about RBI, please visit the company's website at www.rbi.com.

Forward-Looking Statements
This press release contains certain forward-looking statements and information, which reflect management's current beliefs and expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties.

These forward-looking statements include statements about (i) our expectations regarding the effects and continued impact of our digital, marketing, remodel and technology enhancement initiatives and expectations regarding "Reclaim the Flame" and our pace of remodels, (ii) our expectations regarding the number of Burger Kings that will be modern image by 2028, (iii) our commitment to growth opportunities and providing compelling value to guests, plans and strategies for each of our brands and ability to enhance operations and drive long-term, sustainable growth, (iv) our goals for our brands in China, (v) our expectations regarding consolidated capital expenditures, tenant inducements and incentives for 2024, (vi) our expectations regarding adjusted net interest expense, Segment G&A and share-based compensation, (vii) our expectations regarding opportunities for our brands outside of the U.S., (viii) our goals for franchise profitability by the end of 2026, (ix) our guidance for periods in 2024 through 2028 relating to system-wide sales, comparable sales, net restaurant growth, supply chain margins, adjusted effective tax rates, adjusted operating income, and organic adjusted operating income, and * our net leverage expectations.

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 (1) our substantial indebtedness, which could adversely affect our financial condition and prevent us from fulfilling our obligations; (2) global economic or other business conditions that may affect the desire or ability of our customers to purchase our products, such as inflationary pressures, high unemployment levels, declines in median income growth, consumer confidence and consumer discretionary spending and changes in consumer perceptions of dietary health and food safety; (3) our relationship with, and the success of, our franchisees and risks related to our nearly fully franchised business model; (4) our franchisees' financial stability and their ability to access and maintain the liquidity necessary to operate their businesses; (5) our supply chain operations; (6) our ownership and leasing of real estate; (7) the effectiveness of our marketing, advertising and digital programs and franchisee support of these programs; (8) significant and rapid fluctuations in interest rates and in the currency exchange markets and the effectiveness of our hedging activity; (9) our ability to successfully implement our domestic and international growth strategy for each of our brands and risks related to our international operations; (10) our reliance on franchisees, including subfranchisees to accelerate restaurant growth; (11) unforeseen events such as pandemics; (12) the ability of the counterparties to our credit facilities' and derivatives' to fulfill their commitments and/or obligations; (13) changes in applicable tax laws or interpretations thereof, and our ability to accurately interpret and predict the impact of such changes or interpretations on our financial condition and results; (14) evolving legislation and regulations in the area of franchise and labor and employment law; (15) our ability to address environmental and social sustainability issues; (16) the conflict between Russia and Ukraine, and the conflict in the Middle East; and (17) softening in the consumer environment.

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,


2024


2023


2024


2023

Revenues:








Supply chain sales

$              699


$              706


$           2,008


$           1,989

Company restaurant sales

567


65


1,016


194

Franchise and property revenues

735


753


2,194


2,163

Advertising revenues and other services

290


313


892


856

Total revenues

2,291


1,837


6,110


5,202

Operating costs and expenses:








Supply chain cost of sales

559


572


1,616


1,620

Company restaurant expenses

473


58


848


172

Franchise and property expenses

134


119


394


372

Advertising expenses and other services

327


326


972


909

General and administrative expenses

176


169


534


507

(Income) loss from equity method investments

3


1


(69)


19

Other operating expenses (income), net

42


10


31


20

Total operating costs and expenses

1,714


1,255


4,326


3,619

Income from operations

577


582


1,784


1,583

Interest expense, net

147


143


442


430

Loss on early extinguishment of debt

1


16


33


16

Income before income taxes

429


423


1,309


1,137

Income tax expense

72


59


225


145

Net income

357


364


1,084


992

Net income attributable to noncontrolling interests

105


112


322


310

Net income attributable to common shareholders

$              252


$              252


$              762


$              682

Earnings per common share








Basic

$             0.79


$             0.80


$             2.41


$             2.19

Diluted

$             0.79


$             0.79


$             2.39


$             2.16

Weighted average shares outstanding (in millions):








Basic

319


314


317


312

Diluted

454


459


453


458

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In millions of U.S. dollars, except share data)
(Unaudited)


As of


September 30, 2024


December 31, 2023

ASSETS




Current assets:




Cash and cash equivalents

$                           1,176


$                           1,139

Accounts and notes receivable, net of allowance of $39 and $37, respectively

693


749

Inventories, net

169


166

Prepaids and other current assets

217


119

Total current assets

2,255


2,173

Property and equipment, net of accumulated depreciation and amortization of $1,283 and $1,187, respectively

2,229


1,952

Operating lease assets, net

1,870


1,122

Intangible assets, net

11,347


11,107

Goodwill

6,187


5,775

Other assets, net

1,183


1,262

Total assets

$                         25,071


$                         23,391

LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




Accounts and drafts payable

$                              754


$                              790

Other accrued liabilities

1,158


1,005

Gift card liability

170


248

Current portion of long-term debt and finance leases

126


101

Total current liabilities

2,208


2,144

Long-term debt, net of current portion

13,571


12,854

Finance leases, net of current portion

305


312

Operating lease liabilities, net of current portion

1,775


1,059

Other liabilities, net

931


996

Deferred income taxes, net

1,242


1,296

Total liabilities

20,032


18,661

Shareholders' equity:




Common shares, no par value; unlimited shares authorized at September 30, 2024 and
December 31, 2023; 323,704,500 shares issued and outstanding at September 30, 2024;
312,454,851 shares issued and outstanding at December 31, 2023

2,300


1,973

Retained earnings

1,794


1,599

Accumulated other comprehensive income (loss)

(858)


(706)

Total Restaurant Brands International Inc. shareholders' equity

3,236


2,866

Noncontrolling interests

1,803


1,864

Total shareholders' equity

5,039


4,730

Total liabilities and shareholders' equity

$                         25,071


$                         23,391

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In millions of U.S. dollars)
(Unaudited)


Nine Months Ended
September 30,


2024


2023

Cash flows from operating activities:




Net income

$                    1,084


$                       992

Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization

187


142

Non-cash loss on early extinguishment of debt

23


5

Amortization of deferred financing costs and debt issuance discount

19


21

(Income) loss from equity method investments

(69)


19

(Gain) loss on remeasurement of foreign denominated transactions

15


(11)

Net (gains) losses on derivatives

(140)


(111)

Share-based compensation and non-cash incentive compensation expense

124


141

Deferred income taxes

(16)


(47)

Other

4


19

Changes in current assets and liabilities, excluding acquisitions and dispositions:




Accounts and notes receivable

57


(86)

Inventories and prepaids and other current assets

1


(49)

Accounts and drafts payable

(45)


(62)

Other accrued liabilities and gift card liability

(171)


(62)

Tenant inducements paid to franchisees

(23)


(15)

Other long-term assets and liabilities

(28)


24

Net cash provided by operating activities

1,022


920

Cash flows from investing activities:




Payments for property and equipment

(124)


(73)

Net proceeds from disposal of assets, restaurant closures, and refranchisings

17


23

Net payments for acquisition of franchised restaurants

(30)


Payment for purchase of Carrols Restaurant Group, net of cash acquired

(508)


Settlement/sale of derivatives, net

54


40

Other investing activities, net

(25)


(1)

Net cash used for investing activities

(616)


(11)

Cash flows from financing activities:




Proceeds from long-term debt

2,450


55

Repayments of long-term debt and finance leases

(2,164)


(79)

Payment of financing costs

(38)


(43)

Payment of common share dividends and Partnership exchangeable unit distributions

(767)


(741)

Repurchase of common shares


(115)

Proceeds from stock option exercises

71


52

Proceeds from derivatives

85


100

Other financing activities, net

(2)


(3)

Net cash used for financing activities

(365)


(774)

Effect of exchange rates on cash and cash equivalents

(4)


(3)

Increase in cash and cash equivalents

37


132

Cash and cash equivalents at beginning of period

1,139


1,178

Cash and cash equivalents at end of period

$                    1,176


$                    1,310

Supplemental cash flow disclosures:




Interest paid

$                       569


$                       544

Net interest paid (a)

$                       403


$                       380

Income taxes paid

$                       262


$                       184

(a)

Please refer to "Non-GAAP Financial Measures" for further detail.

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 franchised restaurants and Company restaurants (referred to as system-wide sales) in one period from the same period in the prior year. Comparable sales refers to the percentage change in restaurant sales in one period from the same prior year period for restaurants that have been open for 13 months or longer for Tim Hortons, Burger King and Firehouse and 17 months or longer for Popeyes. Additionally, if a restaurant is closed for a significant portion of a month, the restaurant is excluded from the monthly comparable sales calculation.
  • System-wide sales growth and comparable sales are measured on a constant currency basis, which means that results exclude the effect of foreign currency translation ("FX Impact") and are calculated by translating prior year results at current year monthly average exchange rates. We analyze key operating metrics on a constant currency basis as this helps identify underlying business trends, without distortion from the effects of currency movements.
  • Unless otherwise stated, system-wide sales growth, system-wide sales and comparable sales are presented on a system-wide basis, which means they include franchised restaurants and Company restaurants. System-wide results are driven by our franchised restaurants, as nearly all system-wide restaurants are franchised. Franchise sales represent sales at all franchised restaurants and are revenues to our franchisees. 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 ("NRG") refers to the net change 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. In determining whether a restaurant meets our definition of a restaurant that will be included in our net restaurant growth, we consider factors such as scope of operations, format and image, separate franchise agreement, and minimum sales thresholds. We refer to restaurants that do not meet our definition as "alternative formats." These alternative formats are helpful to build brand awareness, test new concepts and provide convenience in certain markets.

These metrics are important indicators of the overall direction of our business, including trends in sales and the effectiveness of each brand's marketing, operations and growth initiatives.

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Supplemental Disclosure - Home Market and International KPIs by Brand



Three Months Ended September 30,

KPIs by Market


2024



2023


(Unaudited)

System-wide Sales Growth






TH - Canada


2.9 %



8.5 %

BK - US


(1.5) %



6.0 %

PLK - US


(0.8) %



11.0 %

FHS - US


(3.7) %



6.8 %







International






TH


(1.5) %



34.1 %

BK


6.3 %



13.2 %

PLK


46.1 %



60.2 %

FHS


(1.1) %



14.4 %







System-wide Sales (in US$ millions)






TH - Canada

$

1,758


$

1,737

BK - US

$

2,759


$

2,800

PLK - US

$

1,408


$

1,421

FHS - US

$

280


$

291







International






TH

$

156


$

159

BK

$

4,282


$

4,125

PLK

$

337


$

244

FHS

$

4


$

4







Comparable Sales






TH - Canada


2.7 %



8.1 %

BK - US


(0.4) %



6.6 %

PLK - US


(3.8) %



5.6 %

FHS - US


(5.2) %



4.0 %







International






TH


(14.6) %



(4.5) %

BK


1.9 %



7.6 %

PLK


11.9 %



21.0 %

FHS


(12.6) %



(2.0) %


RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Supplemental Disclosure - Home Market and International KPIs by Brand


As of

KPIs by Market

September 30, 2024


September 30, 2023


(Unaudited)

Net Restaurant Growth




TH - Canada

(0.3) %


(0.6) %

BK - US

(1.6) %


(2.8) %

PLK - US

3.6 %


5.0 %

FHS - US

1.9 %


1.8 %





International




TH

14.6 %


35.6 %

BK

4.9 %


5.6 %

PLK

29.5 %


36.3 %

FHS

40.0 %


15.4 %





Restaurant Count




TH - Canada

3,861


3,874

BK - US

6,752


6,864

PLK - US

3,107


3,000

FHS - US

1,211


1,188





International




TH

1,374


1,199

BK

12,390


11,811

PLK

1,352


1,044

FHS

21


15

 

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Supplemental Disclosure
(Unaudited)

General and Administrative Expenses


Three Months Ended September 30,


Nine Months Ended September 30,

(in US$ millions)

2024


2023


2024


2023

Segment G&A:








TH

$                          36


$                          43


$                        116


$                        121

BK

32


37


104


106

PLK

19


21


62


64

FHS

11


14


39


40

INTL

48


49


150


140

RH

23



35


RH Transaction costs

4



17


FHS Transaction costs




19

Corporate restructuring and advisory fees

3


5


11


17

General and administrative expenses

$                        176


$                        169


$                        534


$                        507

 

Other Operating Expenses (Income), net


Three Months Ended September 30,


Nine Months Ended September 30,

(in US$ millions)

2024


2023


2024


2023

Net losses (gains) on disposal of assets, restaurant closures, and refranchisings (a)

$                          (4)


$                          30


$                            6


$                          19

Litigation settlement (gains) and reserves, net

1


1


2


(1)

Net losses (gains) on foreign exchange (b)

44


(18)


15


(11)

Other, net (c)

1


(3)


8


13

     Other operating expenses (income), net

$                          42


$                          10


$                          31


$                          20

 

(a)

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. The amount for the three and nine months ended September 30, 2023 includes asset write-offs and related costs in connection with the discontinuance of an internally developed software project.

(b)

Net losses (gains) on foreign exchange are primarily related to revaluation of foreign denominated assets and liabilities, primarily those denominated in euros and Canadian dollars.

(c)

Other, net for 2023 is primarily related to payments in connections with FHS area representative buyouts.

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: Adjusted Operating Income ("AOI"), EBITDA, Adjusted EBITDA (on a consolidated and a segment basis), Adjusted Net Income, Adjusted Interest Expense, net, Adjusted Diluted Earnings per Share ("Adjusted Diluted EPS"), Organic revenue growth, Organic AOI growth, Organic Adjusted EBITDA growth, Organic Net Income growth, Organic Adjusted Net Income growth, Organic Adjusted Diluted EPS growth, Restaurant-Level Margin, Free Cash Flow, Net Debt, and Adjusted EBITDA Net Leverage. We believe that these non-GAAP measures are useful to investors in assessing our operating performance or liquidity, as they provide them with the same tools that management uses to evaluate our performance or liquidity and are responsive to questions we receive from both investors and analysts. By disclosing these non-GAAP measures, we intend to provide investors with a consistent comparison of our operating results and trends for the periods presented.

AOI represents income from operations adjusted to exclude (i) franchise agreement and reacquired franchise right intangible asset amortization as a result of acquisition accounting, (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/expenses from non-recurring projects and non-operating activities. For the periods referenced in the following financial results, income/expenses from non-recurring projects and non-operating activities included (i) non-recurring fees and expense incurred in connection with the Firehouse Acquisition consisting of professional fees, compensation-related expenses and integration costs ("FHS Transaction costs"), (ii) non-recurring fees and expenses incurred in connection with the Carrols Acquisition and the PLK China acquisition, consisting primarily of professional fees, compensation related expenses and integration costs ("RH Transaction costs") and (iii) non-operating costs from professional advisory and consulting services associated with certain transformational corporate restructuring initiatives that rationalize our structure and optimize cash movements as well as services related to significant tax reform legislation and regulations ("Corporate restructuring and advisory fees"). 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. AOI is used by management to measure operating performance of the business, excluding these other specifically identified items that management believes are not relevant to management's assessment of our operating performance. AOI, as defined above, also represents our measure of segment income for each of our six operating segments.

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 (as described above). Adjusted EBITDA for each of the six reporting segments is defined as AOI for the respective segment operations adjusted to exclude (i) the non-cash impact of share-based compensation and non-cash incentive compensation expense associated with the segment and (ii) depreciation and amortization (excluding franchise agreement and reacquired franchise right intangible asset amortization as a result of acquisition accounting) associated with the segment.

Segment G&A (excluding RH) is defined as general and administrative expenses for our five franchisor segments excluding FHS Transaction costs, RH Transaction costs and Corporate restructuring and advisory fees.

Adjusted Net Income is defined as Net income excluding (i) franchise agreement and reacquired franchise right intangible asset 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 amounts reclassified from accumulated comprehensive income (loss) into interest expense in connection with restructured interest rate swaps, (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 Interest Expense, net is defined as interest expense, net less (i) amortization of deferred financing costs and debt issuance discount and (ii) non-cash interest expense related to amounts reclassified from accumulated comprehensive income (loss) into interest expense in connection with restructured interest rate swaps.

Adjusted Diluted EPS is calculated by dividing Adjusted Net Income by the weighted average diluted shares outstanding of RBI during the reporting period. Adjusted Net Income and Adjusted Diluted EPS are used by management to evaluate the operating performance of the business, excluding certain non-cash and other specifically identified items that management believes are not relevant to management's assessment of operating performance.

Net debt is defined as Total debt less cash and cash equivalents. Total debt is defined as long-term debt, net of current portion plus (i) Finance leases, net of current portion, (ii) Current portion of long-term debt and finance leases and (iii) Unamortized deferred financing costs and deferred issue discount. Net debt is used by management to evaluate the Company's liquidity. We believe this measure is an important indicator of the Company's ability to service its debt obligations.

Adjusted EBITDA Net Leverage is defined as Net Debt divided by Adjusted EBITDA. Net Income Net Leverage is defined as Net Debt divided by Net Income. Both of these metrics are operating performance measures that we believe provide 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, Adjusted Operating Income growth, Adjusted EBITDA growth, Adjusted Net Income growth and Adjusted Diluted EPS growth on an organic basis, are non-GAAP measures that exclude the impact of FX movements and also exclude the results of our RH segment for the first four full fiscal quarters following the BK Carrols and PLK China restaurant acquisitions. With respect to Adjusted Diluted EPS, growth on an organic basis also excludes the impact of incremental debt incurred as part of the Carrols transaction. Management believes that organic growth is an important metric for measuring the operating performance of our business as it helps identify underlying business trends, without distortion from the effects of FX movements and the RH segment. We calculate the impact of FX movements by translating prior year results at current year monthly average exchange rates.

Restaurant-Level Margin is defined as (1) BK RH Adjusted Operating Income adjusted to exclude depreciation, amortization, and general and administrative expenses, divided by (2) restaurant sales. This metric is used to evaluate BK RH store-level operating performance and profitability.

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.

Net Interest Paid is the total of cash interest paid in the period, cash proceeds (payments) related to derivatives, net from both investing activities and financing activities and cash interest income received. This liquidity measure is used by management to understand the net effect of interest paid, received and related hedging payments and receipts.

There are important components of estimated operating income (including impact of equity method investments and other operating expenses or income, net), interest expense, net, and general and administrative expenses that we have not determined and therefore, a reconciliation of estimated AOI to operating income, Adjusted Interest Expense, net to interest expense, net and Segment G&A to general and administrative expenses cannot be provided at this time. A full reconciliation of each of these measures will be provided when actual results are released.

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Non-GAAP Financial Measures
Organic Growth
(In millions of U.S. dollars, except per share data)
(Unaudited)



Three Months Ended

September 30,


Variance


RH Impact


FX Impact


Organic Growth



2024


2023


$


%


$


$


$


%

Revenue

















TH


$        1,044


$        1,053


$              (9)


(0.8) %


$          —


$               (16)


$               7


0.7 %

BK


362


328


34


10.1 %




34


10.2 %

PLK


195


177


18


9.7 %




18


9.8 %

FHS


53


51


2


4.1 %




2


4.2 %

INTL


243


228


15


6.4 %



(5)


20


8.6 %

RH


441



441


NM


441




NM

Elimination of intersegment revenues (a)


(47)



(47)


NM


(47)




NM

 Total Revenues


$        2,291


$        1,837


$           454


24.7 %


$        394


$               (21)


$             81


4.4 %


















Income from Operations


$           577


$           582


$              (5)


(0.6) %


$            5


$                 (9)


$              (1)


0.0 %

Net Income


$           357


$           364


$              (7)


(1.6) %


$            1


$                 (9)


$               1


0.7 %


















Adjusted Operating Income

















TH


$           284


$           269


$             15


6.0 %


$          —


$                 (4)


$             19


7.7 %

BK


112


111


1


1.1 %




1


1.2 %

PLK


62


58


4


6.2 %




4


6.4 %

FHS


12


10


2


28.5 %




2


28.6 %

INTL


166


161


5


2.3 %



(5)


10


5.3 %

RH


16



16


NM


16




NM

Adjusted Operating Income


$           652


$           609


$             43


7.1 %


$          16


$               (10)


$             36


6.1 %


















Adjusted EBITDA


$           748


$           698


$             50


7.2 %


$          32


$               (10)


$             28


4.1 %


















Adjusted Net Income


$           423


$           413


$             10


2.5 %


$            3


$                 (8)


$             15


3.6 %

Adjusted Diluted Earnings per Share


$          0.93


$          0.90


$          0.03


3.5 %


$       0.01


$            (0.02)


$          0.04


4.6 %

(a)

Consists of royalties, property revenues, advertising contribution revenues and tech fees from intersegment transactions with RH.

Note: Totals and percentage changes may not recalculate due to rounding.

NM - not meaningful        

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Non-GAAP Financial Measures
Reconciliation of Income from Operations to Adjusted Operating Income
(Unaudited)


Three Months Ended September 30,


Nine Months Ended September 30,

(in US$ millions)

2024


2023


2024


2023









Income from operations

$                    577


$                    582


$                 1,784


$                 1,583

Franchise agreement and reacquired franchise rights amortization

19


7


38


23

RH Transaction costs(2)

4



17


FHS Transaction costs(3)




19

Corporate restructuring and advisory fees(4)

3


5


11


17

Impact of equity method investments(5)

7


5


(57)


29

Other operating expenses (income), net

42


10


31


20

Adjusted Operating Income

$                    652


$                    609


$                 1,824


$                 1,691

 

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Non-GAAP Financial Measures
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
(Unaudited)


Three Months Ended September 30,


Nine Months Ended September 30,

(in US$ millions)

2024


2023


2024


2023









Net Income

$                    357


$                    364


$                 1,084


$                    992

Income tax expense(6)

72


59


225


145

Loss on early extinguishment of debt

1


16


33


16

Interest expense, net

147


143


442


430

Income from operations

577


582


1,784


1,583

Depreciation and amortization

78


47


186


142

EBITDA

655


629


1,970


1,725

Share-based compensation and non-cash incentive compensation expense(1)

37


49


124


141

RH Transaction costs(2)

4



17


FHS Transaction costs(3)




19

Corporate restructuring and advisory fees(4)

3


5


11


17

Impact of equity method investments(5)

7


5


(57)


29

Other operating expenses (income), net

42


10


31


20

Adjusted EBITDA

$                    748


$                    698


$                 2,096


$                 1,951

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Non-GAAP Financial Measures
Reconciliation of Net Income to Adjusted Net Income and Adjusted Diluted EPS
(Unaudited)


Three Months Ended September 30,


Nine Months Ended September 30,

(in US$ millions, except per share data)

2024


2023


2024


2023

Net income

$                    357


$                    364


$                 1,084


$                    992

Income tax expense(6)

72


59


225


145

Income before income taxes

429


423


1,309


1,137

Adjustments:








Franchise agreement and reacquired franchise rights amortization

19


7


38


23

Amortization of deferred financing costs and debt issuance discount

7


7


19


21

Interest expense and loss on extinguished debt(7)

(1)


28


32


53

RH Transaction costs(2)

4



17


FHS Transaction costs(3)




19

Corporate restructuring and advisory fees(4)

3


5


11


17

Impact of equity method investments(5)

7


5


(57)


29

Other operating expenses (income), net

42


10


31


20

Total adjustments

81


62


91


182

Adjusted income before income taxes

510


485


1,400


1,319

Adjusted income tax expense(6)(8)

87


72


254


179

Adjusted net income

$                    423


$                    413


$                 1,146


$                 1,140

Adjusted diluted earnings per share

$                  0.93


$                  0.90


$                  2.53


$                  2.49

Weighted average diluted shares outstanding

454


459


453


458

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Non-GAAP Financial Measures
Net Leverage, Reconciliation of Free Cash Flow and Net Interest Paid
(Unaudited)



As of

(in US$ millions, except ratio)


September 30, 2024


September 30, 2023

Long-term debt, net of current portion


$                             13,571


$                             12,862

Finance leases, net of current portion


305


305

Current portion of long-term debt and finance leases


126


87

Unamortized deferred financing costs and deferred issue discount


124


128

Total debt


14,126


13,382






Cash and cash equivalents


1,176


1,310

Net debt


12,950


12,072






LTM Net Income


1,810


1,328

Net Income Net leverage


7.2x


9.1x






LTM Adjusted EBITDA (a)


2,699


2,539

Adjusted EBITDA Net leverage


4.8x


4.8x



(a)

Adjusted EBITDA includes Adjusted EBITDA from Carrols from May 16, 2024 to third quarter end.





Nine Months Ended September 30,


Twelve Months Ended
December 31,


Twelve Months Ended

September 30,

(in US$ millions)


2024


2023


2022


2023


2022


2024


2023

Calculation:


A


B


C


D


E


A + D - B


B + E - C

Net cash provided by operating activities


$        1,022


$           920


$        1,067


$       1,323


$       1,490


$       1,425


$       1,343

Payments for property and equipment


(124)


(73)


(52)


(120)


(100)


(171)


(121)

Free Cash flow


$           898


$           847


$        1,015


$       1,203


$       1,390


$       1,254


$       1,222

 

(in US$ millions)


Nine Months Ended

September 30, 2024


Six Months Ended
June 30, 2024


Three Months Ended
September 30, 2024

Calculation:


A


B


A - B

Net cash provided by operating activities


$                             1,022


$                                482


$                                540

Payments for property and equipment


(124)


(69)


(55)

Free Cash flow


$                                898


$                                413


$                                485

 



Nine Months Ended September 30,

(in US$ millions)


2024


2023

Interest Paid


$                                  569


$                                  544

Proceeds from derivatives, net within investing activities (a)


52


35

Proceeds from derivatives, net within financing activities


85


100

Interest income


29


29

Net Interest Paid


$                                  403


$                                  380

(a)

Nine months ended September 30, 2024 and 2023 excludes $2 million and $5 million, respectively, of forward currency contracts included within supply chain cost of sales in earnings.  

 

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Non-GAAP Financial Measures
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
(Unaudited)



Nine Months Ended September 30,


Twelve Months Ended
December 31,


Twelve Months Ended

September 30,

(in US$ millions)


2024


2023


2022


2023


2022


2024


2023

Calculation:


A


B


C


D


E


A + D - B


B + E - C
















Net income


$        1,084


$           992


$        1,146


$       1,718


$       1,482


$       1,810


$       1,328

Income tax expense (benefit)


225


145


17


(265)


(117)


(185)


11

Loss on early extinguishment of debt


33


16



16



33


16

Interest expense, net


442


430


389


582


533


594


574

Income from operations


1,784


1,583


1,552


2,051


1,898


2,252


1,929

Depreciation and amortization


186


142


143


191


190


235


189

EBITDA


1,970


1,725


1,695


2,242


2,088


2,487


2,118

Share-based compensation and non-cash incentive compensation expense(1)


124


141


93


194


136


177


184

RH Transaction costs(2)


17






17


FHS Transaction costs(3)



19


8


19


24



35

Corporate restructuring and advisory fees(4)


11


17


21


38


46


32


42

Impact of equity method investments(5)


(57)


29


41


6


59


(80)


47

Other operating expenses (income), net


31


20


(68)


55


25


66


113

Adjusted EBITDA


$        2,096


$        1,951


$        1,790


$       2,554


$       2,378


$       2,699


$       2,539

 

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
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 2024 and 2023 cash bonus, respectively.



(2)

In connection with the Carrols Acquisition and the PLK China Acquisition, we incurred certain non-recurring fees and expenses ("RH Transaction costs") consisting primarily of professional fees, compensation related expenses and integration costs. We expect to incur additional RH Transaction costs through 2024 and into 2025.



(3)

In connection with the acquisition and integration of Firehouse Subs, we incurred certain non-recurring fees and expenses ("FHS Transaction costs") consisting of professional fees, compensation related expenses and integration costs. We did not incur any additional FHS Transaction costs subsequent to March 31, 2023.



(4)

Non-operating costs from professional advisory and consulting services associated with certain transformational corporate restructuring initiatives that rationalize our structure and optimize cash movements within our structure as well as services related to significant tax reform legislation and regulations.



(5)

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.



(6)

The effective tax rate was reduced by 1.1% and 0.5% for the nine months ended September 30, 2024 and 2023, respectively, and our adjusted effective tax rate was reduced by 1.1% and 0.4% for the nine months ended September 30, 2024 and 2023, respectively, as a result of excess tax benefits from equity-based compensation.



(7)

Represents loss on early extinguishment of debt and interest expense. Interest expense included in this amount represents non-cash interest expense related to amounts reclassified from accumulated comprehensive income (loss) into interest expense in connection with restructured interest rate swaps.



(8)

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.

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SOURCE Restaurant Brands International Inc.

FAQ

What was Restaurant Brands International's (QSR) system-wide sales growth in Q3 2024?

Restaurant Brands International (QSR) reported system-wide sales growth of 3.2% in Q3 2024.

What was QSR's Adjusted Operating Income for Q3 2024?

QSR's Adjusted Operating Income was $652 million in Q3 2024, representing a 6.1% organic increase year-over-year.

How did Tim Hortons Canada perform in comparable sales for Q3 2024?

Tim Hortons Canada achieved comparable sales growth of 2.7% in Q3 2024.

What was QSR's Adjusted Diluted EPS in Q3 2024?

QSR's Adjusted Diluted EPS was $0.93 in Q3 2024, increasing 4.6% organically from the previous year.

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22.37B
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1.66%
Restaurants
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