OAKVILLE, ON, April 28, 2016 /PRNewswire/ - Restaurant Brands
International Inc. (TSX/NYSE: QSR, TSX: QSP) today reported
financial results for first quarter ended March 31, 2016.
(Logo:
http://photos.prnewswire.com/prnh/20160427/360532LOGO)
Daniel Schwartz, Chief Executive
Officer of Restaurant Brands International Inc. ("RBI") commented,
"Building on last year's performance, we generated strong results
at both of our iconic brands, TIM HORTONS® and BURGER KING®, during
the first quarter of 2016. Innovative product launches and
continued expansion of our global footprint drove favorable
comparable sales and system-wide sales growth for the quarter. We
believe our focused approach on delivering a great guest experience
and growing franchisee profitability will support long-term,
sustainable value for our guests, franchisees, employees and
shareholders."
First Quarter 2016 Highlights:
- Tim Hortons ("TH") comparable
sales increased 5.6% and Burger King ("BK") comparable sales
increased 4.6% in constant currency
- Delivered 25 net restaurant growth ("NRG") at TH and 5 NRG at
BK
- System-wide sales grew 7.9% at TH and 10.0% at BK in constant
currency
- RBI Adjusted EBITDA was up 22.9% on an organic basis to
$407.8 million
- RBI Adjusted Diluted EPS was up 95.6% to $0.30 per share versus prior year results
- RBI declared a dividend of $0.15
per common share and partnership exchangeable unit of Restaurant
Brands International Limited Partnership for the second quarter of
2016
Consolidated Operational Highlights
|
|
|
Three Months Ended
March 31,
|
|
|
|
2016
|
|
2015
|
|
|
|
(unaudited)
|
Comparable Sales
Growth(1)
|
|
|
|
|
|
|
|
TH
|
|
|
|
5.6%
|
|
|
5.3%
|
BK
|
|
|
|
4.6%
|
|
|
4.6%
|
System Net Restaurant
Growth (NRG)
|
|
|
|
|
|
|
|
TH
(3)
|
|
|
|
25
|
|
|
41
|
BK
|
|
|
|
5
|
|
|
15
|
System-wide Sales
Growth(1)
|
|
|
|
|
|
|
|
TH
|
|
|
|
7.9%
|
|
|
8.1%
|
BK
|
|
|
|
10.0%
|
|
|
9.6%
|
System-wide Sales
(2)(in US$ millions)
|
|
|
|
|
|
|
|
TH
|
|
|
$
|
1,424.7
|
|
$
|
1,459.5
|
BK
|
|
|
$
|
4,236.8
|
|
$
|
4,023.9
|
(1)
|
Comparable sales
growth and system-wide sales growth are calculated on a constant
currency basis and include sales at franchise restaurants and
company-owned restaurants.
|
(2)
|
System-wide sales are
primarily driven by sales at franchise restaurants, as
approximately 100% of current restaurants are franchised. We do not
record franchise sales as revenue; however, our franchise revenues
include royalties based on a percentage of franchise
sales.
|
(3)
|
Restaurant count
excludes 411 and 425 limited service kiosks as of March 31, 2016
and 2015, respectively. NRG excludes limited service kiosks for the
three months ended March 31, 2016 and 2015. Commencing in the
fourth quarter of 2015, we revised our presentation of restaurant
counts to exclude limited service kiosks, with the revision applied
retrospectively to the earliest period presented to provide
period-to-period comparability.
|
Consolidated Financial Highlights
|
|
|
Three Months Ended
March 31,
|
(in US$ millions,
except per share data)
|
|
|
2016
|
|
2015(6)
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
RBI Total
Revenues
|
|
|
$
|
918.5
|
|
$
|
933.3
|
RBI Net Income (Loss)
Attributable to
|
|
|
|
|
|
|
|
|
Common
Shareholders
|
|
|
$
|
50.0
|
|
$
|
(8.3)
|
RBI Diluted Earnings
(Loss) per Share
|
|
|
|
|
|
|
|
|
Attributable to
Common Shareholders
|
|
|
$
|
0.21
|
|
$
|
(0.04)
|
|
|
|
|
|
|
|
|
TH Adjusted EBITDA
(4)
|
|
|
$
|
227.8
|
|
$
|
184.4
|
BK Adjusted EBITDA
(4)
|
|
|
$
|
180.0
|
|
$
|
170.7
|
RBI Adjusted EBITDA
(5)
|
|
|
$
|
407.8
|
|
$
|
355.1
|
|
|
|
|
|
|
|
|
RBI Adjusted Net
Income (Loss) Attributable
|
|
|
|
|
|
|
|
|
to Common
Shareholders (5) (7)
|
|
|
$
|
142.1
|
|
$
|
73.9
|
RBI Adjusted Diluted
Earnings (Loss) per Share
|
|
|
|
|
|
|
|
|
Attributable to
Common Shareholders (5) (7)
|
|
|
$
|
0.30
|
|
$
|
0.16
|
(4)
|
TH Adjusted EBITDA
and BK Adjusted EBITDA are our measures of segment
profitability.
|
(5)
|
RBI Adjusted EBITDA,
RBI Adjusted Net Income (Loss), and RBI Adjusted Diluted Earnings
(Loss) per Share are non-GAAP financial measures. Please refer to
"Non-GAAP Financial Measures" for further detail.
|
(6)
|
TH Q1 2015 results
have been retrospectively adjusted to reflect the final purchase
price allocation for Tim Hortons.
|
(7)
|
Commencing in the
first quarter of 2016, we revised our presentation of Adjusted Net
Income and Adjusted Diluted EPS to include share-based compensation
and non-cash incentive compensation expense, with the revision
applied retrospectively to the earliest period presented to provide
period-to-period comparability.
|
RBI Adjusted EBITDA of $407.8
million was up 22.9% year-over-year, excluding the impact of
FX movements, driven by strong comparable sales and successful
execution of brand-specific strategic initiatives. At
TH, year-over-year restaurant count growth of 3.2%,
combined with comparable sales growth of 5.6%, led to system-wide
sales growth of 7.9% in constant currency versus prior year
results. TH performance was driven by continued strength in
beverages and grilled wraps as well as successful product launches,
such as the Pulled Pork Sandwich and the Croissant Breakfast
Sandwich. BK comparable sales growth of 4.6% and restaurant
count growth of 4.3% year-over-year led to system-wide sales
growth of 10.0% in constant currency. BK comparable sales growth
was a result of successful product launches and promotions,
including Grilled Dogs.
TH Segment Results
|
|
Three Months Ended
March 31,
|
(in US$
millions)
|
|
2016
|
|
2015(6)
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
Comparable Sales
Growth (1)
|
|
|
5.6%
|
|
|
5.3%
|
System-wide Sales
Growth (1)
|
|
|
7.9%
|
|
|
8.1%
|
System-wide Sales
(2)
|
|
$
|
1,424.7
|
|
$
|
1,459.5
|
|
|
|
|
|
|
|
System Net Restaurant
Growth (NRG) (3)
|
|
|
25
|
|
|
41
|
System Restaurant
Count at Period End (3)
|
|
|
4,438
|
|
|
4,299
|
|
|
|
|
|
|
|
Sales
|
|
$
|
467.3
|
|
$
|
480.1
|
Franchise and
Property Revenues
|
|
$
|
190.5
|
|
$
|
203.6
|
TH Total
Revenues
|
|
$
|
657.8
|
|
$
|
683.7
|
|
|
|
|
|
|
|
Cost of
Sales
|
|
$
|
369.6
|
|
$
|
416.3
|
Franchise &
Property Expenses
|
|
$
|
72.1
|
|
$
|
92.9
|
Segment SG&A
(8)
|
|
$
|
16.2
|
|
$
|
27.1
|
Segment Depreciation
and Amortization (9)
|
|
$
|
25.1
|
|
$
|
32.6
|
TH Adjusted EBITDA
(4) (10)
|
|
$
|
227.8
|
|
$
|
184.4
|
(8)
|
Segment selling,
general and administrative expenses consists of segment selling
expenses and segment management general and administrative
expenses.
|
(9)
|
Segment depreciation
and amortization consists of depreciation and amortization included
in cost of sales and franchise and property expenses.
|
(10)
|
TH Adjusted EBITDA
for the three months ended March 31, 2016 includes $2.8 million of
cash distributions received from equity method investments. TH
Adjusted EBITDA for the three months ended March 31, 2015 includes
$1.8 million of acquisition accounting impact on cost of sales and
$2.6 million of cash distributions received from equity method
investments.
|
For the first quarter of 2016, system-wide sales at TH grew
7.9%, in constant currency, as a result of favorable comparable
sales growth and net restaurant growth. TH opened 25 net new
restaurants for the quarter and reported restaurant
count growth of 3.2% year-over-year, ending the quarter with
4,438 restaurants. Comparable sales grew 5.6% for TH, with TH
Canada and TH US comparable sales growth of 5.6% and 5.8%,
respectively.
TH experienced an 8.6% FX headwind to revenues for the first
quarter. Compared to prior year's results and excluding the impact
of FX movements, TH Total Revenues of $657.8
million grew 5.2% while TH Adjusted EBITDA of $227.8 million grew 35.2%.
BK Segment Results
|
|
Three Months Ended
March 31,
|
(in US$
millions)
|
|
2016
|
|
2015
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
Comparable Sales
Growth (1)
|
|
|
4.6%
|
|
|
4.6%
|
System-wide Sales
Growth (1)
|
|
|
10.0%
|
|
|
9.6%
|
System-wide
Sales(2)
|
|
$
|
4,236.8
|
|
$
|
4,023.9
|
|
|
|
|
|
|
|
System Net Restaurant
Growth (NRG)
|
|
|
5
|
|
|
15
|
System Restaurant
Count at Period End
|
|
|
15,008
|
|
|
14,387
|
|
|
|
|
|
|
|
Sales
|
|
$
|
23.2
|
|
$
|
19.4
|
Franchise and
Property Revenues
|
|
$
|
237.5
|
|
$
|
230.2
|
BK Total
Revenues
|
|
$
|
260.7
|
|
$
|
249.6
|
|
|
|
|
|
|
|
Cost of
Sales
|
|
$
|
18.6
|
|
$
|
16.9
|
Franchise &
Property Expenses
|
|
$
|
32.1
|
|
$
|
36.2
|
Segment SG&A
(8)
|
|
$
|
42.0
|
|
$
|
37.6
|
Segment Depreciation
and Amortization (9)
|
|
$
|
12.0
|
|
$
|
11.8
|
BK Adjusted EBITDA
(4)
|
|
$
|
180.0
|
|
$
|
170.7
|
At BK, strong comparable sales growth and the addition of new
restaurants year-over-year helped drive system-wide sales
growth of 10.0% in constant currency versus prior year results.
Comparable sales increased 4.6% in the first quarter, with all BK
regions – the U.S. and Canada
("US&C"), Europe, the
Middle East, and Africa ("EMEA"), Latin America and the Caribbean ("LAC"), and Asia Pacific ("APAC") – achieving positive
comparable sales year-over-year. BK restaurant count increased to
15,008, with 5 net new restaurants added in the quarter,
representing restaurant count growth of 4.3% year-over-year.
Compared to prior year results and excluding the impact of FX
movements, BK revenues of $260.7
million grew 8.0% and BK Adjusted EBITDA of $180.0 million grew 9.7%.
Cash and Liquidity
As of March 31, 2016, total debt
was $9.0 billion, and net debt,
excluding total cash and cash equivalents of $0.8 billion, was $8.1
billion. On April 27, 2016,
our Board of Directors declared a dividend of $0.15 per common share and Class B exchangeable
partnership unit of Restaurant Brands International Limited
Partnership for the second quarter of 2016. The dividend will be
payable on July 6, 2016 to
shareholders and unitholders of record at the close of business on
May 16, 2016.
Investor Conference Call
We will host an investor conference call and webcast at
8:30 a.m. Eastern Time on
Thursday, April 28, 2016, to review
financial results for the first quarter ended March 31, 2016. The earnings call will be
broadcast live via our investor relations website at
http://investor.rbi.com and a replay will be available for 30 days
following the release. The dial-in number is (877) 317-6711 for
U.S. callers, (866) 450-4696 for Canadian callers, and (412)
317-5475 for callers from other countries.
About Restaurant Brands International Inc.
Restaurant Brands International Inc. ("RBI") is one of the
world's largest quick service restaurant companies with more than
$23 billion in system-wide sales and
over 19,000 restaurants in approximately 100 countries and U.S.
territories. RBI owns two of the world's most prominent and iconic
quick service restaurant brands – TIM HORTONS® and BURGER KING®.
These independently operated brands have been serving their
respective guests, franchisees and communities for over 50 years.
To learn more about RBI, please visit the company's website at
www.rbi.com.
Forward-Looking Statements
This press release contains certain forward-looking
statements and information, which reflect management's current
beliefs and expectations regarding future events and operating
performance and speak only as of the date hereof. These
forward-looking statements are not guarantees of future performance
and involve a number of risks and uncertainties. These
forward-looking statements include statements about RBI's current
expectations regarding its focused approach to delivering a great
guest experience and growing franchisee profitability and its
ability to support long-term, sustainable value for its guests,
franchisees, employees and shareholders, and initiatives to
integrate the back office processes of TH and BK to enhance
efficiencies. The factors that could cause actual results to differ
materially from RBI's expectations are detailed in filings of RBI
with the Securities and Exchange Commission and applicable Canadian
securities regulatory authorities, such as its annual and quarterly
reports and current reports on Form 8-K, and include the following:
risks related to RBI's ability to successfully implement its
domestic and international growth strategy; and risks related to
RBI's ability to compete domestically and internationally in an
intensely competitive industry. Other than as required under U.S.
federal securities laws or Canadian securities laws, we do not
assume a duty to update these forward-looking statements, whether
as a result of new information, subsequent events or circumstances,
change in expectations or otherwise.
RESTAURANT BRANDS
INTERNATIONAL INC. AND SUBSIDIARIES
|
Condensed
Consolidated Statements of Operations
|
(In millions of U.S.
dollars, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2016
|
|
2015
|
Revenues:
|
|
|
|
|
|
Sales
|
|
$
|
490.5
|
|
$
|
499.5
|
|
Franchise and
property revenues
|
|
|
428.0
|
|
|
433.8
|
|
Total revenues
|
|
|
918.5
|
|
|
933.3
|
Cost of
sales
|
|
|
388.2
|
|
|
433.2
|
Franchise and
property expenses
|
|
|
104.2
|
|
|
129.1
|
Selling, general and
administrative expenses
|
|
|
73.2
|
|
|
111.0
|
(Income) loss from
equity method investments
|
|
|
(18.5)
|
|
|
(1.7)
|
Other operating
expenses (income), net
|
|
|
40.8
|
|
|
37.6
|
|
Total operating costs
and expenses
|
|
|
587.9
|
|
|
709.2
|
Income from
operations
|
|
|
330.6
|
|
|
224.1
|
Interest expense,
net
|
|
|
115.1
|
|
|
123.1
|
(Gain) loss on early
extinguishment of debt
|
|
|
-
|
|
|
(0.3)
|
Income before income
taxes
|
|
|
215.5
|
|
|
101.3
|
|
Income tax
expense
|
|
|
47.2
|
|
|
50.7
|
Net income
|
|
|
168.3
|
|
|
50.6
|
|
Net income (loss)
attributable to noncontrolling interests
|
|
|
50.8
|
|
|
(9.8)
|
|
Preferred share
dividends
|
|
|
67.5
|
|
|
68.7
|
Net income (loss)
attributable to common shareholders
|
|
$
|
50.0
|
|
$
|
(8.3)
|
|
|
|
|
|
|
|
Earnings (loss) per
common share:
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.22
|
|
$
|
(0.04)
|
|
Diluted
|
|
$
|
0.21
|
|
$
|
(0.04)
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
Basic
|
|
|
230.0
|
|
|
202.2
|
|
Diluted
|
|
|
468.4
|
|
|
467.2
|
Cash dividends
declared per common share
|
|
$
|
0.14
|
|
$
|
0.09
|
Memo: Basic earnings
(loss) per common share is determined by dividing net income (loss)
attributable to common shareholders by the weighted average number
of common shares outstanding during the period. For the three
months ended March 31, 2016, diluted EPS of $0.21 per share assumes
$99.9 million of net income (loss) available to common
shareholders and noncontrolling interests related to the Class B
exchangeable partnership units of Restaurant Brands International
Limited Partnership ("Partnership exchangeable units") and assumes
conversion of Partnership exchangeable units to RBI common shares.
For the three months ended March 31, 2015, diluted EPS of $(0.04)
per share assumes $(19.1) million of net income (loss) available to
common shareholders and noncontrolling interests related to the
Partnership exchangeable units and assumes conversion of
Partnership exchangeable units to RBI common shares. The diluted
earnings (loss) per share calculation assumes conversion of 100% of
the Partnership exchangeable units under the "if converted"
method.
|
RESTAURANT BRANDS
INTERNATIONAL INC. AND SUBSIDIARIES
|
Condensed
Consolidated Balance Sheets
|
(In millions of U.S.
dollars, except share data)
|
(Unaudited)
|
|
|
As
of
|
|
|
|
March 31,
2016
|
|
December 31,
2015
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
825.9
|
|
$
|
757.8
|
|
Trade and notes
receivable, net of allowance of $15.5 million and
|
|
|
|
|
|
|
|
$14.2 million, respectively
|
|
|
366.4
|
|
|
422.0
|
|
Inventories and other
current assets, net
|
|
|
229.8
|
|
|
132.2
|
|
Advertising fund
restricted assets
|
|
|
50.9
|
|
|
57.5
|
|
|
Total current
assets
|
|
|
1,473.0
|
|
|
1,369.5
|
|
|
|
|
|
|
|
Property and
equipment, net of accumulated depreciation of
|
|
|
|
|
|
|
|
$378.3 million and
$339.3 million, respectively
|
|
|
2,169.6
|
|
|
2,150.6
|
Intangible assets,
net
|
|
|
9,539.5
|
|
|
9,147.8
|
Goodwill
|
|
|
4,797.7
|
|
|
4,574.4
|
Net investment in
property leased to franchisees
|
|
|
111.2
|
|
|
117.2
|
Other assets,
net
|
|
|
865.5
|
|
|
1,051.6
|
|
|
Total
assets
|
|
$
|
18,956.5
|
|
$
|
18,411.1
|
LIABILITIES,
REDEEMABLE PREFERRED SHARES AND
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts and drafts
payable
|
|
$
|
361.3
|
|
$
|
361.5
|
|
Other accrued
liabilities
|
|
|
479.6
|
|
|
441.3
|
|
Gift card
liability
|
|
|
132.5
|
|
|
168.5
|
|
Advertising fund
liabilities
|
|
|
78.7
|
|
|
93.6
|
|
Current portion of
long term debt and capital leases
|
|
|
57.6
|
|
|
56.1
|
|
|
Total current
liabilities
|
|
|
1,109.7
|
|
|
1,121.0
|
|
|
|
|
|
|
|
Term debt, net of
current portion
|
|
|
8,465.6
|
|
|
8,462.3
|
Capital leases, net
of current portion
|
|
|
213.6
|
|
|
203.4
|
Other liabilities,
net
|
|
|
918.5
|
|
|
795.9
|
Deferred income
taxes, net
|
|
|
1,613.4
|
|
|
1,618.8
|
|
|
Total
liabilities
|
|
|
12,320.8
|
|
|
12,201.4
|
|
|
|
|
|
|
|
Redeemable preferred
shares; $43.775848 par value; 68,530,939
|
|
|
|
|
|
|
|
shares authorized, issued and outstanding at March 31, 2016
and
|
|
|
|
|
|
|
|
December 31,
2015
|
|
|
3,297.0
|
|
|
3,297.0
|
|
|
|
|
|
|
|
Shareholders'
Equity:
|
|
|
|
|
|
|
|
Common shares; no par
value; unlimited shares authorized;
|
|
|
|
|
|
|
|
|
233,004,921 shares
issued and outstanding at March 31, 2016;
|
|
|
|
|
|
|
|
|
225,707,588 shares
issued and outstanding at December 31, 2015;
|
|
|
1,907.8
|
|
|
1,824.5
|
|
Retained
earnings
|
|
|
263.3
|
|
|
245.8
|
|
Accumulated other
comprehensive income (loss)
|
|
|
(568.7)
|
|
|
(733.7)
|
|
|
Total Restaurant
Brands International Inc. shareholders' equity
|
|
|
1,602.4
|
|
|
1,336.6
|
|
|
Noncontrolling
interests
|
|
|
1,736.3
|
|
|
1,576.1
|
|
|
Total shareholders'
equity
|
|
|
3,338.7
|
|
|
2,912.7
|
|
|
Total liabilities,
redeemable preferred shares and shareholders' equity
|
|
$
|
18,956.5
|
|
$
|
18,411.1
|
RESTAURANT BRANDS
INTERNATIONAL INC. AND SUBSIDIARIES
|
Condensed
Consolidated Statements of Cash Flows
|
(In millions of U.S.
dollars)
|
(Unaudited)
|
|
|
Three Months Ended
March 31,
|
|
|
2016
|
|
2015
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
|
|
$
|
168.3
|
|
$
|
50.6
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
42.1
|
|
|
48.8
|
|
|
(Gain) loss on early
extinguishment of debt
|
|
|
-
|
|
|
(0.3)
|
|
|
Amortization of
deferred financing costs and debt issuance discount
|
|
|
9.7
|
|
|
7.0
|
|
|
(Income) loss from
equity method investments
|
|
|
(18.5)
|
|
|
(1.7)
|
|
|
Loss (gain) on
remeasurement of foreign denominated transactions
|
|
|
28.0
|
|
|
18.1
|
|
|
Amortization of
defined benefit pension and postretirement items
|
|
|
(0.6)
|
|
|
-
|
|
|
Net losses (gains) on
derivatives
|
|
|
3.5
|
|
|
15.0
|
|
|
Net losses (gains) on
refranchisings and dispositions of assets
|
|
|
9.4
|
|
|
1.2
|
|
|
Bad debt expense
(recoveries), net
|
|
|
(0.3)
|
|
|
2.2
|
|
|
Share-based
compensation expense
|
|
|
6.4
|
|
|
15.5
|
|
|
Acquisition
accounting impact on cost of sales
|
|
|
-
|
|
|
1.8
|
|
|
Deferred income
taxes
|
|
|
-
|
|
|
(30.6)
|
|
Changes in current
assets and liabilities, excluding acquisitions and
dispositions:
|
|
|
|
|
|
|
|
|
Reclassification of
restricted cash to cash and cash equivalents
|
|
|
-
|
|
|
79.2
|
|
|
Trade and notes
receivable
|
|
|
33.8
|
|
|
53.0
|
|
|
Inventories and other
current assets
|
|
|
(79.0)
|
|
|
(3.0)
|
|
|
Accounts and drafts
payable
|
|
|
(6.0)
|
|
|
24.4
|
|
|
Accrued
advertising
|
|
|
(15.7)
|
|
|
(0.2)
|
|
|
Other accrued
liabilities
|
|
|
3.6
|
|
|
10.1
|
|
Other long-term
assets and liabilities
|
|
|
(1.4)
|
|
|
(29.4)
|
|
|
Net cash provided by
operating activities
|
|
|
183.3
|
|
|
261.7
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Payments for property
and equipment
|
|
|
(5.6)
|
|
|
(29.4)
|
|
Proceeds from
refranchisings, disposition of assets and restaurant
closures
|
|
|
7.2
|
|
|
4.5
|
|
Return of investment
on direct financing leases
|
|
|
4.1
|
|
|
4.0
|
|
Settlement of
derivatives, net
|
|
|
(1.1)
|
|
|
52.1
|
|
Other investing
activities, net
|
|
|
2.2
|
|
|
1.5
|
|
|
Net cash provided by
(used for) investing activities
|
|
|
6.8
|
|
|
32.7
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Repayments of term
debt, Tim Hortons Notes and capital leases
|
|
|
(17.2)
|
|
|
(1,020.6)
|
|
Dividends paid on
common shares and preferred shares
|
|
|
(128.3)
|
|
|
-
|
|
Proceeds from stock
option exercises
|
|
|
6.5
|
|
|
0.4
|
|
Proceeds from
issuance of shares
|
|
|
-
|
|
|
2.1
|
|
Other financing
activities
|
|
|
3.1
|
|
|
1.4
|
|
|
Net cash provided by
(used for) financing activities
|
|
|
(135.9)
|
|
|
(1,016.7)
|
|
Effect of exchange
rates on cash and cash equivalents
|
|
|
13.9
|
|
|
(59.0)
|
|
Increase (decrease)
in cash and cash equivalents
|
|
|
68.1
|
|
|
(781.3)
|
|
Cash and cash
equivalents at beginning of period
|
|
|
757.8
|
|
|
1,803.2
|
|
Cash and cash
equivalents at end of period
|
|
$
|
825.9
|
|
$
|
1,021.9
|
|
|
|
|
|
|
|
Supplemental
cashflow disclosures:
|
|
|
|
|
|
|
|
Interest
paid
|
|
$
|
82.4
|
|
$
|
88.5
|
|
Income taxes
paid
|
|
$
|
47.6
|
|
$
|
42.9
|
Non-cash investing
and financing activities:
|
|
|
|
|
|
|
|
Acquisition of
property with capital lease obligations
|
|
$
|
5.4
|
|
$
|
4.5
|
RESTAURANT BRANDS INTERNATIONAL INC. AND
SUBSIDIARIES
Key Business Metrics
We evaluate our restaurants and assess our business based on the
following operating metrics.
System-wide sales growth refers to the change in sales at all
company-owned and franchise restaurants in one period from the same
period in the prior year. Comparable sales growth refers to the
change in restaurant sales in one period from the same prior year
period for restaurants that have been open for thirteen months or
longer. Company-owned restaurants refranchised during a quarterly
period are included with franchise restaurants for the purpose of
calculating comparable sales growth for the quarter. Comparable
sales and sales growth are measured on a constant currency basis,
which means that results exclude the effect of foreign currency
translation and are calculated by translating prior year results at
current year monthly average exchange rates. We analyze key
operating metrics on a constant currency basis as this helps
identify underlying business trends, without distortion from the
effects of currency movements ("impact of FX movements").
System-wide sales represent sales at all company-owned
restaurants and franchise restaurants. We do not record franchise
sales as revenues; however, our franchise revenues include
royalties based on a percentage of franchise sales.
Key Business Metrics by Brand
Market
|
|
|
|
Three Months Ended
March 31,
|
Key Business
Metrics
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
System-wide Sales
Growth
|
|
|
|
|
|
|
TH -
Canada
|
|
|
|
7.9 %
|
|
7.5 %
|
TH - US
|
|
|
|
5.5 %
|
|
13.0 %
|
TH -
International
|
|
|
|
42.3 %
|
|
29.4 %
|
BK -
US&C
|
|
|
|
5.3 %
|
|
6.6 %
|
BK - EMEA
|
|
|
|
13.8 %
|
|
11.8 %
|
BK - LAC
|
|
|
|
21.5 %
|
|
14.7 %
|
BK - APAC
|
|
|
|
16.0 %
|
|
14.2 %
|
|
|
|
|
|
|
|
Comparable Sales
Growth
|
|
|
|
|
|
|
TH -
Canada
|
|
|
|
5.6 %
|
|
4.9 %
|
TH - US
|
|
|
|
5.8 %
|
|
8.9 %
|
TH -
International
|
|
|
|
6.8 %
|
|
0.6 %
|
BK -
US&C
|
|
|
|
4.4 %
|
|
6.9 %
|
BK - EMEA
|
|
|
|
3.6 %
|
|
0.7 %
|
BK - LAC
|
|
|
|
10.1 %
|
|
4.9 %
|
BK - APAC
|
|
|
|
4.7 %
|
|
1.7 %
|
|
|
|
|
|
|
|
System NRG
|
|
|
|
|
|
|
TH -
Canada
|
|
|
|
17
|
|
32
|
TH - US
|
|
|
|
6
|
|
8
|
TH -
International
|
|
|
|
2
|
|
1
|
BK -
US&C
|
|
|
|
(26)
|
|
(27)
|
BK - EMEA
|
|
|
|
21
|
|
19
|
BK - LAC
|
|
|
|
(14)
|
|
-
|
BK - APAC
|
|
|
|
24
|
|
23
|
RESTAURANT BRANDS
INTERNATIONAL INC. AND SUBSIDIARIES
|
Supplemental
Disclosure
|
(Unaudited)
|
|
|
|
|
|
|
|
Selling, General
and Administrative Expenses
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
(in US$
millions)
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
Selling
expenses
|
|
$
|
1.4
|
|
$
|
4.8
|
Management general
and administrative expenses
|
|
|
56.8
|
|
|
59.9
|
Share-based
compensation and non-cash incentive compensation expense
|
|
|
7.9
|
|
|
13.9
|
Depreciation and
amortization
|
|
|
4.9
|
|
|
4.4
|
TH transaction and
restructuring costs
|
|
|
-
|
|
|
28.0
|
Integration
costs
|
|
|
2.2
|
|
|
-
|
Total general and
administrative expenses
|
|
|
71.8
|
|
|
106.2
|
|
Selling, general and
administrative expenses
|
|
$
|
73.2
|
|
$
|
111.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Operating
Expenses (Income), net
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
(in US$
millions)
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
Net losses (gains) on
disposal of assets, restaurant closures and
refranchisings(1)
|
|
$
|
15.3
|
|
$
|
0.5
|
Litigation
settlements and reserves, net
|
|
|
0.7
|
|
|
1.6
|
Net losses (gains) on
derivatives(2)
|
|
|
-
|
|
|
12.9
|
Net losses (gains) on
foreign exchange(3)
|
|
|
24.1
|
|
|
22.5
|
Other, net
|
|
|
0.7
|
|
|
0.1
|
|
Other operating
expenses (income), net
|
|
$
|
40.8
|
|
$
|
37.6
|
(1) Net losses
(gains) on disposal of assets, restaurant closures and
refranchisings for the three months ended March 31, 2016 primarily
reflects losses in connection with sales of company-owned
restaurants, or refranchisings in our TH business.
|
(2) Net losses
(gains) on derivatives for the three months ended March 31, 2015 is
primarily due to changes in fair value related to interest rate
swaps not designated for hedge accounting. These interest rate
swaps were settled during May 2015.
|
(3) 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 that we believe this information is useful to
management and may be useful to investors. These measures 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, Adjusted Net Income,
Adjusted Diluted EPS, Organic revenue growth and Organic Adjusted
EBITDA growth.
EBITDA is defined as earnings (net income or loss) before
interest, (gain) loss on early extinguishment of debt, taxes, and
depreciation and amortization and is used by management to measure
operating performance of the business.
Adjusted EBITDA is defined as EBITDA excluding the impact of
share-based compensation and non-cash incentive compensation
expense, (income) loss from equity method investments, net of cash
distributions received from equity method investments, other
operating expenses (income), net, and all other specifically
identified costs associated with non-recurring projects, including
acquisition accounting impact on cost of sales, Tim Hortons transaction and restructuring costs
and integration costs. Adjusted EBITDA is used by management to
measure operating performance of the business, excluding
specifically identified items that management believes do not
directly reflect our core operations, and represents our measure of
segment income.
Adjusted Net Income is defined as net income (loss) excluding
the impact of those same items excluded from Adjusted EBITDA,
except for share-based compensation and non-cash incentive
compensation expense, and also excluding franchise agreement
amortization, amortization of deferred financing costs and original
issue discount, interest expense and (gain) loss on
early extinguishment of debt. Adjusted Diluted EPS is
calculated by dividing Adjusted Net Income by the number of diluted
shares of RBI during the reporting period. Adjusted Net Income and
Adjusted Diluted EPS are used by management to evaluate the core
operating performance of the business.
Revenue growth and Adjusted EBITDA growth, on an organic basis,
are non-GAAP measures that exclude the impact of FX movements.
Management believes that organic growth is an important metric for
measuring the core operating performance of the business as it
excludes the impact of foreign currency exchange rates. We
calculate the impact of FX movements by translating current year
results at prior year monthly average exchange rates.
RESTAURANT BRANDS
INTERNATIONAL INC. AND SUBSIDIARIES
|
Organic Growth in
Revenue and Adjusted EBITDA
|
Three Months Ended
March 31, 2016
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of
FX
|
|
|
|
|
|
|
|
Actual
|
|
Q1 '16 vs. Q1
'15
|
|
Movements
|
|
Organic
Growth
|
(in US$
millions)
|
|
Q1
'16
|
|
Q1
'15
|
|
$
|
|
%
|
|
$
|
|
$
|
|
%
|
Calculation:
|
|
|
|
|
A
|
|
B
|
|
|
|
C
|
|
B-C=D
|
|
D/A
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TH
|
|
$
|
657.8
|
|
$
|
683.7
|
|
$
|
(25.9)
|
|
(3.8)%
|
|
$
|
(61.7)
|
|
$
|
35.8
|
|
5.2 %
|
BK
|
|
$
|
260.7
|
|
$
|
249.6
|
|
$
|
11.1
|
|
4.4 %
|
|
$
|
(8.8)
|
|
$
|
19.9
|
|
8.0 %
|
RBI
|
|
$
|
918.5
|
|
$
|
933.3
|
|
$
|
(14.8)
|
|
(1.6)%
|
|
$
|
(70.5)
|
|
$
|
55.7
|
|
6.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TH
|
|
$
|
227.8
|
|
$
|
184.4
|
|
$
|
43.4
|
|
23.5 %
|
|
$
|
(21.5)
|
|
$
|
64.9
|
|
35.2 %
|
BK
|
|
$
|
180.0
|
|
$
|
170.7
|
|
$
|
9.3
|
|
5.4 %
|
|
$
|
(7.2)
|
|
$
|
16.5
|
|
9.7 %
|
RBI
|
|
$
|
407.8
|
|
$
|
355.1
|
|
$
|
52.7
|
|
14.8 %
|
|
$
|
(28.7)
|
|
$
|
81.4
|
|
22.9 %
|
RESTAURANT BRANDS
INTERNATIONAL, INC. AND SUBSIDIARIES
|
Non-GAAP Financial
Measures
|
Reconciliation of
EBITDA and Adjusted EBITDA to Net Income (Loss)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in US$
millions)
|
|
Three Months Ended
March 31,
|
|
|
2016
|
|
2015
|
Segment
Income:
|
|
|
|
|
|
|
|
TH
|
|
$
|
227.8
|
|
$
|
184.4
|
|
BK
|
|
|
180.0
|
|
|
170.7
|
|
Adjusted EBITDA
|
|
|
407.8
|
|
|
355.1
|
|
|
|
|
|
|
|
Share-based
compensation and non-cash
|
|
|
|
|
|
|
|
incentive
compensation expense(2)
|
|
|
7.9
|
|
|
13.9
|
Acquisition
accounting impact on cost of sales
|
|
|
-
|
|
|
1.8
|
TH transaction and
restructuring costs(3)
|
|
|
-
|
|
|
28.0
|
Integration
costs(4)
|
|
|
2.2
|
|
|
-
|
Impact of equity
method investments(5)
|
|
|
(15.7)
|
|
|
0.9
|
Other operating
expenses (income), net
|
|
|
40.8
|
|
|
37.6
|
|
EBITDA
|
|
|
372.6
|
|
|
272.9
|
Depreciation and
amortization
|
|
|
42.0
|
|
|
48.8
|
|
Income from
operations
|
|
|
330.6
|
|
|
224.1
|
Interest expense,
net
|
|
|
115.1
|
|
|
123.1
|
(Gain) loss on early
extinguishment of debt
|
|
|
-
|
|
|
(0.3)
|
Income tax
expense
|
|
|
47.2
|
|
|
50.7
|
|
Net income
|
|
$
|
168.3
|
|
$
|
50.6
|
|
|
RESTAURANT BRANDS
INTERNATIONAL, INC. AND SUBSIDIARIES
|
Non-GAAP Financial
Measures
|
Reconciliation of Net
Income (Loss) to Adjusted Net Income Attributable to Common
Shareholders and Adjusted Diluted EPS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in US$ millions,
except per share data)
|
|
Three Months Ended
March 31,
|
|
|
2016
|
|
2015(7)
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
168.3
|
|
$
|
50.6
|
|
Income tax
expense
|
|
|
47.2
|
|
|
50.7
|
Income before
income taxes
|
|
|
215.5
|
|
|
101.3
|
Adjustments:
|
|
|
|
|
|
|
|
Franchise agreement
amortization
|
|
|
6.7
|
|
|
6.9
|
|
Amortization of
deferred financing costs and original issue discount
|
|
|
9.7
|
|
|
7.0
|
|
Interest expense and
loss on extinguished debt(1)
|
|
|
3.2
|
|
|
1.6
|
|
Acquisition
accounting impact on cost of sales
|
|
|
-
|
|
|
1.8
|
|
TH transaction and
restructuring costs(3)
|
|
|
-
|
|
|
28.0
|
|
Integration
costs(4)
|
|
|
2.2
|
|
|
-
|
|
Impact of equity
method investments(5)
|
|
|
(15.7)
|
|
|
0.9
|
|
Other operating
expenses (income), net
|
|
|
40.8
|
|
|
37.6
|
|
Total
adjustments
|
|
|
46.9
|
|
|
83.8
|
Adjusted income
before income taxes
|
|
|
262.4
|
|
|
185.1
|
|
Adjusted income tax
expense(6)
|
|
|
52.8
|
|
|
42.5
|
Adjusted net
income
|
|
|
209.6
|
|
|
142.6
|
|
Preferred share
dividends
|
|
|
67.5
|
|
|
68.7
|
Adjusted net
income attributable to common shareholders
|
|
$
|
142.1
|
|
$
|
73.9
|
|
|
|
|
|
|
|
Adjusted diluted
earnings per share
|
|
$
|
0.30
|
|
$
|
0.16
|
|
|
|
|
|
|
|
Diluted average
shares outstanding
|
|
|
468.4
|
|
|
476.3
|
Non-GAAP Financial Measures
Footnotes
to Reconciliation Tables
(1)
|
Represents $3.2
million of non-cash interest expense for the three months ended
March 31, 2016, related to losses reclassified from accumulated
other comprehensive income (loss) into interest expense in
connection with interest rate swaps settled in May 2015.
|
|
|
(2)
|
Represents
share-based compensation expense associated with employee
stock awards for the periods indicated; also includes the
portion of annual non-cash incentive compensation that eligible
employees elected to receive or are expected to elect to receive as
common equity in lieu of their 2015 and 2016 cash bonus,
respectively.
|
|
|
(3)
|
In connection with
the acquisition of Tim Hortons Inc. and a series of post-closing
transactions during 2015 that resulted in changes to our legal and
capital structure, we incurred certain non-recurring selling,
general and administrative expenses during the three months ended
March 31, 2015.
|
|
|
(4)
|
In connection with
the implementation of initiatives to integrate the back-office
processes of TH and BK to enhance efficiencies, we incurred $2.2
million related to these initiatives during the three months ended
March 31, 2016, primarily professional fees.
|
|
|
(5)
|
Represents (i)
(income) loss from equity investments and (ii) cash distributions
received from our equity method investments. Cash distribution
received from our equity method investments are included in segment
income.
|
|
|
(6)
|
Adjusted income tax
expense for the three months ended March 31, 2016 and 2015,
respectively, is calculated using our statutory tax rate in the
jurisdiction in which the costs were incurred.
|
|
|
(7)
|
Commencing in the
first quarter of 2016, we revised our presentation of Adjusted Net
Income and Adjusted Diluted EPS to include share-based
compensation and non-cash incentive compensation expense, with
the revision applied retrospectively to the earliest period
presented to provide period-to-period comparability.
|
SOURCE Restaurant Brands International