Oakville / CA. (rbi) Restaurant Brands International Inc. (RBI) reported financial results for the third quarter ended September 30, 2017. Daniel Schwartz, Chief Executive Officer of RBI commented, «During the third quarter, we continued to grow each of our three iconic brands all around the world. «Burger King’s» strong momentum continued in the US and internationally, both in terms of comparable sales and net restaurant growth. At «Tim Hortons», we began to see the positive impact of our recent initiatives, including the roll out of our espresso-based beverage platform, as well as our mobile app launch. We made further progress integrating «Popeyes», and we continue to be very excited about the growth prospects for the brand in the US and around the world. We believe that, together with our restaurant owners, we have the right strategy in place to drive long-term growth for each of our three iconic brands».
Third Quarter 2017 Highlights:
- Total Revenues of USD 1’208.6 million versus USD 1’075.7 million in prior year period
- Net Income Attributable to Common Shareholders of USD 91.4 million versus USD 86.3 million in prior year period
- Diluted EPS of USD 0.37 versus USD 0.36 in prior year period
- Comparable sales, in constant currency, of 0.3 percent at Tim Hortons (TH), 3.6 percent at Burger King (BK), and (1.8) percent at Popeyes Louisiana Kitchen (PLK)
- System-wide sales growth, in constant currency, of 3.0 percent at TH, 11.2 percent at BK, and 4.5 percent at PLK
- Adjusted Ebitda of USD 565.1 million was up 7.6 percent on an organic basis versus prior year combined results (including Popeyes)
- Adjusted Diluted EPS of USD 0.58 versus USD 0.43 in prior year period
- RBI declared dividends of USD 0.21 per common share and partnership exchangeable unit of Restaurant Brands International Limited Partnership for the fourth quarter of 2017
Consolidated Operational Highlights
(unaudited) | Q3/2017 | Q3/2016 | ||||
Comparable Sales | ||||||
TH | 0.3% | 2.0% | ||||
BK | 3.6% | 1.7% | ||||
PLK | (1.8)% | 1.8% | ||||
Net Restaurant Growth | ||||||
TH | 4.2% | 3.4% | ||||
BK | 6.6% | 3.9% | ||||
PLK | 5.9% | 5.9% | ||||
System Restaurant Count at Period End | ||||||
TH | 4’680 | 4’492 | ||||
BK | 16’253 | 15’243 | ||||
PLK | 2’809 | 2’653 | ||||
System-wide Sales Growth | ||||||
TH | 3.0% | 4.8% | ||||
BK | 11.2% | 7.0% | ||||
PLK | 4.5% | 8.3% | ||||
System-wide sales (in USUSD millions) | ||||||
TH | USD | 1’812.3 | USD | 1’690.4 | ||
BK | USD | 5’335.0 | USD | 4’776.7 | ||
PLK | USD | 897.3 | USD | 781.6 |
Note: Comparable sales and system-wide sales growth are calculated on a constant currency basis and include sales at franchise restaurants and company-owned restaurants. System-wide sales are driven by sales at franchised restaurants, as approximately 100 percent of current restaurants are franchised. We do not record franchise sales as revenues; however, our franchise revenues include royalties based on a percentage of franchise sales. For 2016, PLK figures are shown for informational purposes only.
Consolidated Financial Highlights
(in USD millions, except per share data) | Q3/2017 | Q3/2016 | |||
(unaudited) | |||||
Total Revenues | USD | 1’208.6 | USD | 1’075.7 | |
Net Income Attributable to Common Shareholders(1) | USD | 91.4 | USD | 86.3 | |
Net Income Attributable to Common Shareholders and Noncontrolling Interests(1) | USD | 179.0 | USD | 170.1 | |
Diluted Earnings per Share(1) | USD | 0.37 | USD | 0.36 | |
TH Adjusted Ebitda(2) | USD | 294.4 | USD | 287.1 | |
BK Adjusted Ebitda(2) | USD | 233.9 | USD | 201.8 | |
PLK Adjusted Ebitda(2) | USD | 36.8 | N/A | ||
Adjusted Ebitda(3) | USD | 565.1 | USD | 488.9 | |
Adjusted Net Income(1)(3) | USD | 275.6 | USD | 201.4 | |
Adjusted Diluted Earnings per Share(1)(3) | USD | 0.58 | USD | 0.43 |
- On January 1, 2017, we adopted a new accounting standard related to the tax impact of equity based compensation. As a result, our effective tax rate was reduced by 6.8 percent and 4.5 percent for the three and nine months ended September 30, 2017, respectively, and our effective adjusted tax rate was reduced by 5.0 percent and 3.3 percent for the three and nine months ended September 30, 2017, respectively. There was no impact to our results for the three and nine months ended September 30, 2016.
- TH Adjusted Ebitda, BK Adjusted Ebitda and PLK Adjusted Ebitda are our measures of segment profitability.
Total Revenues for the third quarter grew primarily as a result of the inclusion of our PLK segment, as well as system-wide sales growth at both TH and BK. Net Income Attributable to Common Shareholders for the quarter was driven by the inclusion of our PLK segment and growth in TH and BK segment income, offset primarily by an increase in loss on early extinguishment of debt, due to the early partial redemption of our 6 percent Second Lien Notes.
Adjusted Ebitda for the quarter grew 7.6 percent on an organic basis versus prior year combined results (including Popeyes), driven primarily by an increase in revenue.
TH Segment Results
(in USD millions) | Q3/2017 | Q3/2016 | |||||
(unaudited) | |||||||
Comparable Sales | 0.3% | 2.0% | |||||
System-wide Sales Growth | 3.0% | 4.8% | |||||
System-wide Sales | USD | 1’812.3 | USD | 1’690.4 | |||
Net Restaurant Growth | 4.2% | 3.4% | |||||
System Restaurant Count at Period End | 4’680 | 4’492 | |||||
Sales | USD | 585.5 | USD | 563.0 | |||
Franchise and Property Revenues | USD | 241.5 | USD | 226.9 | |||
Total Revenues | USD | 827.0 | USD | 789.9 | |||
Cost of Sales | USD | 454.2 | USD | 436.7 | |||
Franchise and Property Expenses | USD | 83.2 | USD | 77.7 | |||
Segment SG+A | USD | 24.1 | USD | 17.0 | |||
Segment Depreciation and Amortization | USD | 26.1 | USD | 25.7 | |||
Adjusted Ebitda(2)(4) | USD | 294.4 | USD | 287.1 |
4. TH Adjusted Ebitda includes USD 2.8 million and USD 2.9 million of cash distributions received from equity method investments for the three months ended September 30, 2017 and 2016, respectively.For the third quarter of 2017, system-wide sales growth was primarily driven by net restaurant growth of 4.2 percent. Comparable sales of 0.3 percent was primarily driven by Canada comparable sales of 0.6 percent.Total Revenues for the quarter grew 4.7 percent (1.0 percent excluding the impact of FX movements) versus prior year, reflecting growth in system-wide sales.Adjusted Ebitda for the quarter grew 2.5 percent ((1.1) percent excluding the impact of FX movements) versus the prior year period, primarily as a result of an increase in Total Revenues, including a favorable impact of FX movements.BK Segment Results
(in USUSD millions) | Q3/2017 | Q3/2016 | |||||
(unaudited) | |||||||
Comparable Sales | 3.6% | 1.7% | |||||
System-wide Sales Growth | 11.2% | 7.0% | |||||
System-wide Sales | USD | 5’335.0 | USD | 4’776.7 | |||
Net Restaurant Growth | 6.6% | 3.9% | |||||
System Restaurant Count at Period End | 16’253 | 15’243 | |||||
Sales | USD | 23.4 | USD | 23.4 | |||
Franchise and Property Revenues | USD | 290.2 | USD | 262.4 | |||
Total Revenues | USD | 313.6 | USD | 285.8 | |||
Cost of Sales | USD | 21.3 | USD | 20.4 | |||
Franchise and Property Expenses | USD | 33.1 | USD | 32.1 | |||
Segment SG+A | USD | 38.0 | USD | 43.5 | |||
Segment Depreciation and Amortization | USD | 12.7 | USD | 12.0 | |||
Adjusted Ebitda(2) | USD | 233.9 | USD | 201.8 |
.
For the third quarter of 2017, system-wide sales growth was driven by net restaurant growth of 6.6 percent and comparable sales of 3.6 percent, which was primarily driven by US comparable sales of 4.0 percent.
Total Revenues for the quarter grew 9.7 percent (9.2 percent excluding the impact of FX movements) versus prior year, reflecting growth in system-wide sales.
Adjusted Ebitda for the quarter grew 15.9 percent (15.5 percent excluding the impact of FX movements) versus prior year, primarily as a result of an increase in Total Revenues.
PLK Segment Results
(in USUSD millions) | Q3/2017 | Q3/2016 | |||
(unaudited) | |||||
Comparable Sales | (1.8)% | 1.8% | |||
System-wide Sales Growth | 4.5% | 8.3% | |||
System-wide Sales | USD | 897.3 | USD | 781.6 | |
Net Restaurant Growth | 5.9% | 5.9% | |||
System Restaurant Count at Period End | 2’809 | 2’653 | |||
Sales | USD | 22.7 | N/A | ||
Franchise and Property Revenues | USD | 45.3 | N/A | ||
Total Revenues | USD | 68.0 | N/A | ||
Cost of Sales | USD | 17.8 | N/A | ||
Franchise and Property Expenses | USD | 2.2 | N/A | ||
Segment SG+A | USD | 12.8 | N/A | ||
Segment Depreciation and Amortization | USD | 1.6 | N/A | ||
Adjusted Ebitda(2) | USD | 36.8 | N/A |
.
For the third quarter of 2017, system-wide sales growth was driven by net restaurant growth of 5.9 percent, partially offset by comparable sales of (1.8) percent, which was primarily driven by US comparable sales of (2.6) percent.
Cash and Liquidity
As of September 30, 2017, total debt was USD 11.8 billion, and net debt (total debt less cash and cash equivalents of USD 3.6 billion) was USD 8.2 billion. On October 25, 2017, the RBI Board of Directors declared a dividend of USD 0.21 per common share and Class B exchangeable limited partnership unit of Restaurant Brands International Limited Partnership for the fourth quarter of 2017. The dividend will be payable on January 3, 2018 to shareholders and unitholders of record at the close of business on December 15, 2017.