RBI returns to growth with system-wide sales up
compared to 2019
RBI adds 148 net new restaurants, nearing best-ever Q1 unit
growth
Tim Hortons posts 31% digital sales in Q1 in Canada and drives two million app downloads in
March alone
Burger King U.S. launch of $1 Your
Way value menu driving encouraging results
Popeyes announces plans to add over 1,000 restaurants over 10 years
across the UK, India, Mexico and Saudi
Arabia
TORONTO, April 30, 2021 /PRNewswire/ - Restaurant
Brands International Inc. (TSX: QSR) (NYSE: QSR) (TSX: QSP) today
reported financial results for the first quarter ended March 31, 2021.
José E. Cil, Chief Executive Officer of Restaurant Brands
International Inc. ("RBI") commented, "Our first quarter results
signal our return to growth with system-wide sales surpassing Q1
2019 and net restaurant growth nearly matching our best-ever Q1
performance in 2018. We are excited by the global growth
potential of our brands and are encouraged by this early momentum
as we work toward a return to historic levels of unit growth this
year."
"Our home market recovery from the pandemic is well-underway,
including at Tim Hortons in Canada
where our business fundamentals have continued to improve as we
execute on our Back to Basics plan, which included exciting product
launches in Q1 like our new dark roast coffee and fresh cracked egg
breakfast sandwiches. Our C$80M
investment announced during the quarter to supercharge our
advertising and digital platforms is a further indication of our
strong confidence in Tim Horton's
market-leading position as the Canadian economy fully reopens later
this year," said Cil.
Cil continued, "The results of long-term investments we are
making in digital initiatives, such as loyalty programs and our
branded apps, were best demonstrated in Canada during Q1 where digital channels drove
nearly one-third of all sales for Tim Hortons in the quarter;
almost twice the levels for the same period last year and the
largest quarter yet for digital sales for any of our brands in
Canada and the U.S. Our
digital channels will allow us to drive incrementality for our
restaurants as well as a more personalized and valuable experience
for our guests."
"We exited the quarter with confidence knowing that we have the
right plan, a motivated corporate team and dedicated, hard-working
franchisees to drive long-term growth for 2021 and beyond,"
concluded Cil.
Consolidated Operational Highlights
|
Three Months Ended
March 31,
|
|
2021
|
|
2020
|
|
(Unaudited)
|
System-wide Sales
Growth
|
|
|
|
|
TH
|
|
(4.9)%
|
|
|
(9.9)%
|
BK
|
|
1.8%
|
|
|
(3.0)%
|
PLK
|
|
7.0%
|
|
|
32.3%
|
Consolidated
|
|
1.4%
|
|
|
0.0%
|
System-wide Sales (in
US$ millions)
|
|
|
|
|
|
TH
|
$
|
1,379
|
|
$
|
1,382
|
BK
|
$
|
5,173
|
|
$
|
4,999
|
PLK
|
$
|
1,344
|
|
$
|
1,258
|
Consolidated
|
$
|
7,896
|
|
$
|
7,639
|
Net Restaurant
Growth
|
|
|
|
|
|
TH
|
|
1.3%
|
|
|
1.2%
|
BK
|
|
(0.8)%
|
|
|
5.8%
|
PLK
|
|
4.8%
|
|
|
6.9%
|
Consolidated
|
|
0.2%
|
|
|
5.0%
|
System Restaurant
Count at Period End
|
|
|
|
|
|
TH
|
|
4,987
|
|
|
4,925
|
BK
|
|
18,691
|
|
|
18,848
|
PLK
|
|
3,495
|
|
|
3,336
|
Consolidated
|
|
27,173
|
|
|
27,109
|
Comparable
Sales
|
|
|
|
|
|
TH
|
|
(2.3)%
|
|
|
(10.3)%
|
BK
|
|
0.7%
|
|
|
(3.7)%
|
PLK
|
|
1.5%
|
|
|
26.2%
|
|
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
March 31,
|
(in US$ millions,
except per share data)
|
2021
|
|
2020
|
|
(Unaudited)
|
Total
Revenues
|
$
|
1,260
|
|
$
|
1,225
|
Net Income
Attributable to Common Shareholders and Noncontrolling
Interests
|
$
|
270
|
|
$
|
224
|
Diluted Earnings per
Share
|
$
|
0.58
|
|
$
|
0.48
|
|
|
|
|
|
|
TH Adjusted
EBITDA(1)
|
$
|
207
|
|
$
|
189
|
BK Adjusted
EBITDA(1)
|
$
|
217
|
|
$
|
200
|
PLK Adjusted
EBITDA(1)
|
$
|
56
|
|
$
|
55
|
Adjusted
EBITDA(2)
|
$
|
480
|
|
$
|
444
|
|
|
|
|
|
Adjusted Net
Income(2)
|
$
|
257
|
|
$
|
227
|
Adjusted Diluted
Earnings per Share(2)
|
$
|
0.55
|
|
$
|
0.48
|
|
As of March
31,
|
|
2021
|
|
2020
|
|
(Unaudited)
|
Net cash provided by
operating activities
|
$
|
266
|
|
$
|
136
|
Net cash used for
investing activities
|
$
|
(7)
|
|
$
|
(3)
|
Net cash (used for)
provided by financing activities
|
$
|
(261)
|
|
$
|
855
|
|
|
|
|
|
|
LTM Free Cash
Flow(2)
|
$
|
938
|
|
$
|
1,382
|
Net Debt
|
$
|
11,401
|
|
$
|
10,852
|
Net
Leverage(2)
|
|
6.0x
|
|
|
4.8x
|
|
|
(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, 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
basis was primarily driven by favorable FX movements. On an organic
basis, the year-over-year decrease in Total Revenues was primarily
driven by a decrease in system-wide sales at Tim Hortons, partially
offset by an increase in retail sales at Tim Hortons and an
increase in system-wide sales at Burger King and Popeyes.
The increase in Net Income Attributable to Common Shareholders
and Noncontrolling Interests for the first quarter was primarily
driven by a favorable change in the results from other operating
expenses (income), net, and an increase in segment income in all of
our segments, partially offset by an increase in share-based
compensation and non-cash incentive compensation expenses, an
increase in interest expense, net, an increase in depreciation and
amortization, and an increase in income tax expense.
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.
COVID-19
The global crisis resulting from the spread of coronavirus
("COVID-19") had a substantial impact on our global restaurant
operations for the three months ended March
31, 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 last few weeks of the
quarter ended March 31, 2020, in the
2021 period these metrics were affected to a lesser extent for the
entire period, with variations among brands and regions.
As of the end of March 2021, 95%
of our restaurants were open worldwide, including substantially all
of our restaurants in North
America and Asia Pacific
and approximately 92% and 84% of our restaurants in Europe, Middle
East and Africa and
Latin America, respectively.
Certain jurisdictions, such as Canada, Europe, and Brazil, that had eased restrictions during
2020, re-imposed lockdowns and curfews in the quarter ended
March 31, 2021. In March 2020, a number of markets required
temporary complete closures while implementing lock-down orders,
while others adopted limited operations, such as drive-thru,
takeout and delivery (where applicable), reduced if any dine-in
capacity, and/or restrictions on hours of operation. We expect
local conditions to continue to dictate limitations on operations,
capacity, and hours of restaurants.
While we do not know the future impact COVID-19 will have on our
business, or when our business will fully return to normal
operations, 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 year to date March 31, 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
March 31,
|
(in US$
millions)
|
2021
|
|
2020
|
|
(Unaudited)
|
System-wide Sales
Growth
|
|
(4.9)%
|
|
|
(9.9)%
|
System-wide
Sales
|
$
|
1,379
|
|
$
|
1,382
|
Comparable
Sales
|
|
(2.3)%
|
|
|
(10.3)%
|
|
|
|
|
|
|
Net Restaurant
Growth
|
|
1.3%
|
|
|
1.2%
|
System Restaurant
Count at Period End
|
|
4,987
|
|
|
4,925
|
|
|
|
|
|
|
Sales
|
$
|
473
|
|
$
|
465
|
Franchise and
Property Revenues
|
$
|
190
|
|
$
|
188
|
Advertising
Revenues
|
$
|
47
|
|
$
|
46
|
Total
Revenues
|
$
|
710
|
|
$
|
699
|
|
|
|
|
|
|
Cost of
Sales
|
$
|
370
|
|
$
|
366
|
Franchise and
Property Expenses
|
$
|
81
|
|
$
|
81
|
Advertising
Expenses
|
$
|
62
|
|
$
|
65
|
Segment
G&A
|
$
|
24
|
|
$
|
25
|
Segment Depreciation
and Amortization
|
$
|
31
|
|
$
|
26
|
Adjusted
EBITDA(1)(3)
|
$
|
207
|
|
$
|
189
|
|
|
(3)
|
TH Adjusted EBITDA
includes $3 million and $2 million of cash distributions received
from equity method investments for the three months ended March 31,
2021 and 2020, respectively.
|
For the first quarter of 2021, the decrease in system-wide sales
was primarily driven by comparable sales of (2.3)%, including
Canada comparable sales of (3.3)%,
as well as an increase in the impact of temporary
closures of certain restaurants related to the COVID-19 pandemic,
partially offset by net restaurant growth of 1.3%.
The year-over-year increase in Total Revenues on an as reported
basis was primarily driven by favorable FX movements. The
year-over-year decrease in Total Revenues on an organic basis was
primarily driven by a decline in system-wide sales and a decrease
in supply chain sales, partially offset by an increase in sales to
retailers.
The year-over-year increase in Adjusted EBITDA on an as reported
and on an organic basis was primarily driven by advertising fund
expenses exceeding advertising revenues to a lesser extent than
prior year.
BK Segment Results
|
Three Months Ended
March 31,
|
(in US$
millions)
|
2021
|
|
2020
|
|
(Unaudited)
|
System-wide Sales
Growth
|
|
1.8%
|
|
|
(3.0)%
|
System-wide
Sales
|
$
|
5,173
|
|
$
|
4,999
|
Comparable
Sales
|
|
0.7%
|
|
|
(3.7)%
|
|
|
|
|
|
|
Net Restaurant
Growth
|
|
(0.8)%
|
|
|
5.8%
|
System Restaurant
Count at Period End
|
|
18,691
|
|
|
18,848
|
|
|
|
|
|
|
Sales
|
$
|
16
|
|
$
|
17
|
Franchise and
Property Revenues
|
$
|
289
|
|
$
|
273
|
Advertising
Revenues
|
$
|
102
|
|
$
|
98
|
Total
Revenues
|
$
|
407
|
|
$
|
388
|
|
|
|
|
|
|
Cost of
Sales
|
$
|
16
|
|
$
|
17
|
Franchise and
Property Expenses
|
$
|
33
|
|
$
|
39
|
Advertising
Expenses
|
$
|
117
|
|
$
|
108
|
Segment
G&A
|
$
|
36
|
|
$
|
37
|
Segment Depreciation
and Amortization
|
$
|
12
|
|
$
|
12
|
Adjusted
EBITDA(1)(4)
|
$
|
217
|
|
$
|
200
|
|
|
(4)
|
No significant cash
distributions were received from equity method investments for the
three months ended March 31, 2021 and 2020.
|
For the first quarter of 2021, the increase in system-wide sales
was driven by an increase in comparable sales of 0.7%, including an
increase in US comparable sales of 6.6%, partially offset by net
restaurant growth of (0.8)% as well as an increase 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 and bad debt recoveries in the current year
compared to bad debt expense in the prior year, partially offset by
advertising fund expenses exceeding advertising revenues to a
greater extent than prior year. This increase in Adjusted EBITDA
was also driven by favorable FX movements on an as reported
basis.
PLK Segment Results
|
Three Months Ended
March 31,
|
(in US$
millions)
|
2021
|
|
2020
|
|
(Unaudited)
|
System-wide Sales
Growth
|
|
7.0%
|
|
|
32.3%
|
System-wide
Sales
|
$
|
1,344
|
|
$
|
1,258
|
Comparable
Sales
|
|
1.5%
|
|
|
26.2%
|
|
|
|
|
|
|
Net Restaurant
Growth
|
|
4.8%
|
|
|
6.9%
|
System Restaurant
Count at Period End
|
|
3,495
|
|
|
3,336
|
|
|
|
|
|
|
Sales
|
$
|
18
|
|
$
|
21
|
Franchise and
Property Revenues
|
$
|
69
|
|
$
|
64
|
Advertising
Revenues
|
$
|
56
|
|
$
|
53
|
Total
Revenues
|
$
|
143
|
|
$
|
138
|
|
|
|
|
|
|
Cost of
Sales
|
$
|
15
|
|
$
|
16
|
Franchise and
Property Expenses
|
$
|
2
|
|
$
|
3
|
Advertising
Expenses
|
$
|
57
|
|
$
|
53
|
Segment
G&A
|
$
|
14
|
|
$
|
13
|
Segment Depreciation
and Amortization
|
$
|
2
|
|
$
|
2
|
Adjusted
EBITDA(1)
|
$
|
56
|
|
$
|
55
|
For the first quarter of 2021, system-wide sales growth was
driven by comparable sales growth of 1.5%, including US comparable
sales growth of 0.9%, as well as net restaurant growth of
4.8%.
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 March 31, 2021, total debt was $13.0 billion, net debt (total debt less cash and
cash equivalents of $1.6 billion) was
$11.4 billion, and net leverage was
6.0x.
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 July 7, 2021 to shareholders and
unitholders of record at the close of business on June 23,
2021.
Investor Conference Call
We will host an investor conference call and webcast at
8:30 a.m. Eastern Time on Friday,
April 30, 2021, to review financial results for the first quarter
ended March 31, 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
$31 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, the impact of our investments in digital
initiatives, our long-term plans with respect to adding new Popeyes
restaurants and the amount of and timing and regions for such
expansion, 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
March 31,
|
|
2021
|
|
2020
|
Revenues:
|
|
|
|
|
|
Sales
|
$
|
507
|
|
$
|
503
|
Franchise and property
revenues
|
|
548
|
|
|
525
|
Advertising
revenues
|
|
205
|
|
|
197
|
Total
revenues
|
|
1,260
|
|
|
1,225
|
Operating costs and
expenses:
|
|
|
|
|
|
Cost of
sales
|
|
401
|
|
|
399
|
Franchise and property
expenses
|
|
116
|
|
|
123
|
Advertising
expenses
|
|
236
|
|
|
226
|
General and
administrative expenses
|
|
105
|
|
|
102
|
(Income) loss from
equity method investments
|
|
2
|
|
|
2
|
Other operating
expenses (income), net
|
|
(42)
|
|
|
(16)
|
Total operating costs
and expenses
|
|
818
|
|
|
836
|
Income from
operations
|
|
442
|
|
|
389
|
Interest expense,
net
|
|
124
|
|
|
119
|
Income before income
taxes
|
|
318
|
|
|
270
|
Income tax
expense
|
|
47
|
|
|
46
|
Net income
|
|
271
|
|
|
224
|
Net income
attributable to noncontrolling interests
|
|
92
|
|
|
80
|
Net income
attributable to common shareholders
|
$
|
179
|
|
$
|
144
|
Earnings per common
share
|
|
|
|
|
|
Basic
|
$
|
0.59
|
|
$
|
0.48
|
Diluted
|
$
|
0.58
|
|
$
|
0.48
|
Weighted average
shares outstanding
|
|
|
|
|
|
Basic
|
|
306
|
|
|
299
|
Diluted
|
|
465
|
|
|
469
|
Cash dividends
declared per common share
|
$
|
0.53
|
|
$
|
0.52
|
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In millions of U.S. dollars, except share data)
(Unaudited)
|
As
of
|
|
March 31,
2021
|
|
December 31,
2020
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
1,563
|
|
$
|
1,560
|
Accounts and notes
receivable, net of allowance of $30 and $42,
respectively
|
519
|
|
536
|
Inventories,
net
|
98
|
|
96
|
Prepaids and other
current assets
|
111
|
|
72
|
Total current
assets
|
2,291
|
|
2,264
|
Property and
equipment, net of accumulated depreciation and amortization of $915
and $879, respectively
|
2,028
|
|
2,031
|
Operating lease
assets, net
|
1,140
|
|
1,152
|
Intangible assets,
net
|
10,742
|
|
10,701
|
Goodwill
|
5,781
|
|
5,739
|
Net investment in
property leased to franchisees
|
67
|
|
66
|
Other assets,
net
|
808
|
|
824
|
Total
assets
|
$
|
22,857
|
|
$
|
22,777
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts and drafts
payable
|
$
|
488
|
|
$
|
464
|
Other accrued
liabilities
|
805
|
|
835
|
Gift card
liability
|
147
|
|
191
|
Current portion of
long-term debt and finance leases
|
112
|
|
111
|
Total current
liabilities
|
1,552
|
|
1,601
|
Long-term debt, net
of current portion
|
12,386
|
|
12,397
|
Finance leases, net
of current portion
|
318
|
|
315
|
Operating lease
liabilities, net of current portion
|
1,075
|
|
1,082
|
Other liabilities,
net
|
2,089
|
|
2,236
|
Deferred income
taxes, net
|
1,435
|
|
1,425
|
Total
liabilities
|
18,855
|
|
19,056
|
Shareholders'
equity:
|
|
|
|
Common shares, no par
value; unlimited shares authorized at March 31, 2021 and December
31, 2020; 306,959,241 shares issued and outstanding at March 31,
2021; 304,718,749 shares issued and outstanding at December 31,
2020
|
2,454
|
|
2,399
|
Retained
earnings
|
635
|
|
622
|
Accumulated other
comprehensive income (loss)
|
(719)
|
|
(854)
|
Total Restaurant
Brands International Inc. shareholders' equity
|
2,370
|
|
2,167
|
Noncontrolling
interests
|
1,632
|
|
1,554
|
Total shareholders'
equity
|
4,002
|
|
3,721
|
Total liabilities and
shareholders' equity
|
$
|
22,857
|
|
$
|
22,777
|
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
Condensed Consolidated Statements of Cash
Flows
(In millions of U.S. dollars)
(Unaudited)
|
Three Months Ended
March 31,
|
|
2021
|
|
2020
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
271
|
|
$
|
224
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
49
|
|
45
|
Amortization of
deferred financing costs and debt issuance discount
|
7
|
|
6
|
(Income) loss from
equity method investments
|
2
|
|
2
|
(Gain) loss on
remeasurement of foreign denominated transactions
|
(43)
|
|
(8)
|
Net (gains) losses on
derivatives
|
20
|
|
(6)
|
Share-based
compensation expense
|
22
|
|
19
|
Deferred income
taxes
|
14
|
|
(31)
|
Other
|
(8)
|
|
(4)
|
Changes in current
assets and liabilities, excluding acquisitions and
dispositions:
|
|
|
|
Accounts and notes
receivable
|
24
|
|
94
|
Inventories and
prepaids and other current assets
|
(4)
|
|
(13)
|
Accounts and drafts
payable
|
19
|
|
(136)
|
Other accrued
liabilities and gift card liability
|
(113)
|
|
(67)
|
Tenant inducements
paid to franchisees
|
—
|
|
(3)
|
Other long-term assets
and liabilities
|
6
|
|
14
|
Net cash provided by
operating activities
|
266
|
|
136
|
Cash flows from
investing activities:
|
|
|
|
Payments for property
and equipment
|
(15)
|
|
(19)
|
Net proceeds from
disposal of assets, restaurant closures, and
refranchisings
|
11
|
|
4
|
Settlement/sale of
derivatives, net
|
2
|
|
12
|
Other investing
activities, net
|
(5)
|
|
—
|
Net cash (used for)
provided by investing activities
|
(7)
|
|
(3)
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
revolving line of credit and long-term debt
|
—
|
|
1,085
|
Repayments of
revolving line of credit, long-term debt and finance
leases
|
(27)
|
|
(25)
|
Payment of dividends
on common shares and distributions on Partnership exchangeable
units
|
(239)
|
|
(232)
|
Proceeds from stock
option exercises
|
20
|
|
30
|
(Payments) proceeds
from derivatives
|
(16)
|
|
(2)
|
Other financing
activities, net
|
1
|
|
(1)
|
Net cash (used for)
provided by financing activities
|
(261)
|
|
855
|
Effect of exchange
rates on cash and cash equivalents
|
5
|
|
(23)
|
Increase (decrease) in
cash and cash equivalents
|
3
|
|
965
|
Cash and cash
equivalents at beginning of period
|
1,560
|
|
1,533
|
Cash and cash
equivalents at end of period
|
$
|
1,563
|
|
$
|
2,498
|
Supplemental cash
flow disclosures:
|
|
|
|
Interest
paid
|
$
|
72
|
|
$
|
104
|
Income taxes
paid
|
$
|
96
|
|
$
|
48
|
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
March 31,
|
KPIs by
Market
|
2021
|
|
2020
|
|
(Unaudited)
|
System-wide
Sales Growth
|
|
|
|
|
|
TH -
Canada
|
|
(7.3)%
|
|
|
(10.4)%
|
TH - Rest of
World
|
|
10.9%
|
|
|
(6.4)%
|
TH -
Global
|
|
(4.9)%
|
|
|
(9.9)%
|
|
|
|
|
|
|
BK - US
|
|
4.7%
|
|
|
(5.0)%
|
BK - Rest of
World
|
|
(0.6)%
|
|
|
(1.3)%
|
BK -
Global
|
|
1.8%
|
|
|
(3.0)%
|
|
|
|
|
|
|
PLK - US
|
|
5.7%
|
|
|
35.9%
|
PLK - Rest of
World
|
|
17.8%
|
|
|
9.2%
|
PLK -
Global
|
|
7.0%
|
|
|
32.3%
|
|
|
|
|
|
|
System-wide
Sales (in US$ millions)
|
|
|
|
|
|
TH -
Canada
|
$
|
1,165
|
|
$
|
1,190
|
TH - Rest of
World
|
$
|
214
|
|
$
|
192
|
TH -
Global
|
$
|
1,379
|
|
$
|
1,382
|
|
|
|
|
|
|
BK - US
|
$
|
2,369
|
|
$
|
2,263
|
BK - Rest of
World
|
$
|
2,804
|
|
$
|
2,736
|
BK -
Global
|
$
|
5,173
|
|
$
|
4,999
|
|
|
|
|
|
|
PLK - US
|
$
|
1,182
|
|
$
|
1,118
|
PLK - Rest of
World
|
$
|
162
|
|
$
|
140
|
PLK -
Global
|
$
|
1,344
|
|
$
|
1,258
|
|
|
|
|
|
|
Comparable
Sales
|
|
|
|
|
|
TH -
Canada
|
|
(3.3)%
|
|
|
(10.8)%
|
TH - Rest of
World
|
|
5.1%
|
|
|
(7.1)%
|
TH -
Global
|
|
(2.3)%
|
|
|
(10.3)%
|
|
|
|
|
|
|
BK - US
|
|
6.6%
|
|
|
(6.5)%
|
BK - Rest of
World
|
|
(4.6)%
|
|
|
(1.0)%
|
BK -
Global
|
|
0.7%
|
|
|
(3.7)%
|
|
|
|
|
|
|
PLK - US
|
|
0.9%
|
|
|
29.2%
|
PLK - Rest of
World
|
|
7.2%
|
|
|
2.4%
|
PLK -
Global
|
|
1.5%
|
|
|
26.2%
|
|
As of March
31,
|
KPIs by
Market
|
2021
|
|
2020
|
|
(Unaudited)
|
Net Restaurant
Growth
|
|
|
|
TH -
Canada
|
(1.7)%
|
|
0.8%
|
TH - Rest of
World
|
14.0%
|
|
3.1%
|
TH -
Global
|
1.3%
|
|
1.2%
|
|
|
|
|
BK - US
|
(2.8)%
|
|
0.3%
|
BK - Rest of
World
|
0.4%
|
|
9.5%
|
BK -
Global
|
(0.8)%
|
|
5.8%
|
|
|
|
|
PLK - US
|
5.6%
|
|
5.8%
|
PLK - Rest of
World
|
2.4%
|
|
10.4%
|
PLK -
Global
|
4.8%
|
|
6.9%
|
|
|
|
|
Restaurant
Count
|
|
|
|
TH -
Canada
|
3,935
|
|
4,002
|
TH - Rest of
World
|
1,052
|
|
923
|
TH -
Global
|
4,987
|
|
4,925
|
|
|
|
|
BK - US
|
7,097
|
|
7,304
|
BK - Rest of
World
|
11,594
|
|
11,544
|
BK -
Global
|
18,691
|
|
18,848
|
|
|
|
|
PLK - US
|
2,633
|
|
2,494
|
PLK - Rest of
World
|
862
|
|
842
|
PLK -
Global
|
3,495
|
|
3,336
|
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
Supplemental Disclosure
(Unaudited)
General and Administrative Expenses
|
Three Months Ended
March 31,
|
(in US$
millions)
|
2021
|
|
2020
|
Segment G&A
TH(1)
|
$
|
24
|
|
$
|
25
|
Segment G&A
BK(1)
|
36
|
|
37
|
Segment G&A
PLK(1)
|
14
|
|
13
|
Share-based
compensation and non-cash incentive compensation expense
|
26
|
|
21
|
Depreciation and
amortization(2)
|
4
|
|
5
|
Corporate
restructuring and tax advisory fees
|
1
|
|
1
|
General and
administrative expenses
|
$
|
105
|
|
$
|
102
|
|
|
(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
March 31,
|
(in US$
millions)
|
2021
|
|
2020
|
Net losses (gains) on
disposal of assets, restaurant closures, and
refranchisings(3)
|
$
|
(2)
|
|
$
|
(2)
|
Litigation settlement
(gains) and reserves, net
|
2
|
|
—
|
Net losses (gains) on
foreign exchange(4)
|
(43)
|
|
(8)
|
Other, net
|
1
|
|
(6)
|
Other operating
expenses (income), net
|
$
|
(42)
|
|
$
|
(16)
|
|
|
(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
consulting services related to the interpretation of final and
proposed regulations and guidance under the Tax Cuts and Jobs Act
(the "Tax Act"). 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
March 31, 2021 is the sum of the
Adjusted EBITDA for the quarters ended March
31, 2021, December 31, 2020,
September 2020 and June 30, 2020, while LTM Adjusted EBITDA as of
March 31, 2020 is the sum of the
Adjusted EBITDA for the quarters ended March
31, 2020, December 31, 2019,
September 30, 2019 and June 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
February 11, 2021, October 27, 2020, and August 6, 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.
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
Non-GAAP Financial Measures
Organic Growth in Revenue and Adjusted EBITDA
Three Months Ended March 31, 2021
(Unaudited)
|
Actual
|
|
Q1 '21 vs. Q1
'20
|
|
Impact of
FX Movements
|
|
Organic
Growth
|
(in US$
millions)
|
Q1
'21
|
|
Q1
'20
|
|
$
|
|
%
|
|
$
|
|
$
|
|
%
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TH
|
$
|
710
|
|
$
|
699
|
|
$
|
11
|
|
1.6%
|
|
$
|
36
|
|
$
|
(25)
|
|
(3.3)%
|
BK
|
$
|
407
|
|
$
|
388
|
|
$
|
19
|
|
4.9%
|
|
$
|
6
|
|
$
|
13
|
|
3.3%
|
PLK
|
$
|
143
|
|
$
|
138
|
|
$
|
5
|
|
3.7%
|
|
$
|
—
|
|
$
|
5
|
|
3.7%
|
Total
Revenues
|
$
|
1,260
|
|
$
|
1,225
|
|
$
|
35
|
|
2.9%
|
|
$
|
42
|
|
$
|
(7)
|
|
(0.5)%
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TH
|
$
|
207
|
|
$
|
189
|
|
$
|
18
|
|
9.3%
|
|
$
|
9
|
|
$
|
9
|
|
4.6%
|
BK
|
$
|
217
|
|
$
|
200
|
|
$
|
17
|
|
8.5%
|
|
$
|
4
|
|
$
|
13
|
|
6.3%
|
PLK
|
$
|
56
|
|
$
|
55
|
|
$
|
1
|
|
2.8%
|
|
$
|
—
|
|
$
|
1
|
|
2.9%
|
Adjusted
EBITDA
|
$
|
480
|
|
$
|
444
|
|
$
|
36
|
|
8.2%
|
|
$
|
13
|
|
$
|
23
|
|
5.2%
|
|
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
March 31,
|
(in US$
millions)
|
2021
|
|
2020
|
Segment
income:
|
|
|
|
TH
|
$
|
207
|
|
$
|
189
|
BK
|
217
|
|
200
|
PLK
|
56
|
|
55
|
Adjusted
EBITDA
|
480
|
|
444
|
Share-based
compensation and non-cash incentive compensation
expense(1)
|
26
|
|
21
|
Corporate
restructuring and tax advisory fees(2)
|
1
|
|
1
|
Impact of equity
method investments(3)
|
4
|
|
4
|
Other operating
expenses (income), net
|
(42)
|
|
(16)
|
EBITDA
|
491
|
|
434
|
Depreciation and
amortization
|
49
|
|
45
|
Income from
operations
|
442
|
|
389
|
Interest expense,
net
|
124
|
|
119
|
Income tax
expense(4)
|
47
|
|
46
|
Net income
|
$
|
271
|
|
$
|
224
|
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
March 31,
|
(in US$ millions,
except per share data)
|
2021
|
|
2020
|
Net income
|
$
|
271
|
|
$
|
224
|
Income tax
expense(4)
|
47
|
|
46
|
Income before income
taxes
|
318
|
|
270
|
Adjustments:
|
|
|
|
Franchise agreement
amortization
|
8
|
|
8
|
Amortization of
deferred financing costs and debt issuance discount
|
7
|
|
6
|
Interest expense and
loss on extinguished debt(5)
|
8
|
|
8
|
Corporate
restructuring and tax advisory fees(2)
|
1
|
|
1
|
Impact of equity
method investments(3)
|
4
|
|
4
|
Other operating
expenses (income), net
|
(42)
|
|
(16)
|
Total
adjustments
|
(14)
|
|
11
|
Adjusted income
before income taxes
|
304
|
|
281
|
Adjusted income tax
expense(4)(6)
|
47
|
|
54
|
Adjusted net
income
|
$
|
257
|
|
$
|
227
|
Adjusted diluted
earnings per share
|
$
|
0.55
|
|
$
|
0.48
|
Weighted average
diluted shares outstanding
|
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)
|
March 31,
2021
|
|
March 31,
2020
|
Long-term debt, net of
current portion
|
$
|
12,386
|
|
$
|
12,822
|
Finance leases, net of
current portion
|
318
|
|
283
|
Current portion of
long-term debt and finance leases
|
112
|
|
103
|
Unamortized deferred
financing costs and deferred issue discount
|
148
|
|
142
|
Total
debt
|
12,964
|
|
13,350
|
|
|
|
|
Cash and cash
equivalents
|
1,563
|
|
2,498
|
Net debt
|
11,401
|
|
10,852
|
LTM adjusted
EBITDA
|
1,900
|
|
2,248
|
Net
leverage
|
6.0x
|
|
4.8x
|
|
Three Months Ended
March 31,
|
|
Twelve Months
Ended
December 31,
|
|
Twelve Months
Ended
March 31,
|
(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
|
$
|
266
|
|
$
|
136
|
|
$
|
154
|
|
$
|
921
|
|
$
|
1,476
|
|
$
|
1,051
|
|
$
|
1,458
|
Payments for property
and equipment
|
(15)
|
|
(19)
|
|
(5)
|
|
(117)
|
|
(62)
|
|
(113)
|
|
(76)
|
Free Cash
flow
|
$
|
251
|
|
$
|
117
|
|
$
|
149
|
|
$
|
804
|
|
$
|
1,414
|
|
$
|
938
|
|
$
|
1,382
|
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 consulting services related to the
interpretation of final and proposed regulations and guidance under
the Tax Cuts and Jobs Act (the "Tax Act").
|
|
|
(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 was reduced by 2.1% and 0.1% for the three months ended March
31, 2021 and 2020, respectively, and our adjusted effective tax
rate was reduced by 2.2% and 0.1% for the three months ended March
31, 2021 and 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 March 31, 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.
|
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SOURCE Restaurant Brands International Inc.