Miami / FL. (bk) Burger King Worldwide Inc. reported financial results for its second quarter ended June 30, 2012. Second quarter highlights:
- System-wide comparable sales increased 4,4 percent and system-wide sales increased 6,4 percent on a constant currency basis
- Adjusted Ebitda increased 19 percent on an organic basis to 172,0 million USD
- Adjusted diluted EPS increased 29 percent to 0,17 USD
- Established master franchise joint ventures in Russia and China to aggressively expand brand presence
- Listed Burger King Worldwide on NYSE
«I am pleased with the progress made this quarter, with system-wide comparable sales up 4,4 percent and adjusted Ebitda up 19 percent year over year on an organic basis», said Bernardo Hees, chief executive officer. «In the U.S. and Canada, our focus on menu, restaurant image, operations and marketing communication is beginning to generate tangible results. Internationally, we are laying the foundation for accelerated development worldwide through the formation of partnerships in Russia and China. We are excited to have listed on the NYSE this quarter and believe BKW is well positioned for long-term growth».
Organic revenue growth was 5,4 percent, excluding the impact of re-franchising and FX headwinds. On a reported basis, total revenues decreased 9,2 percent to 540,8 million USD, compared to 595,4 million USD in the prior year period due to re-franchising transactions in the U.S. and Canada and EMEA and unfavourable FX impact, partially offset by comparable sales growth across all segments and increased franchise and property revenues.
Organic Adjusted Ebitda growth was 19,0 percent, excluding the impact of re-franchising and FX headwinds. On a reported basis, Adjusted Ebitda increased 14,7 percent to 172,0 million USD, compared to 149,9 million USD in the prior year period due to improved results in all operating segments. Results were particularly strong in the U.S. and Canada due to the positive impact from our new product launches and accompanying advertising campaign.
Adjusted net income and diluted adjusted EPS increased 31,8 percent and 29,5 percent, respectively, compared to the prior year, primarily due to an increase in income from operations, partially offset by increases in interest expense and income tax expense.
Operational and Segment Highlights
System-wide comparable sales growth was positive across all segments. The U.S. and Canada delivered 4,4 percent comparable sales growth driven by strong sales and product volumes from the largest expansion of menu items in BKW´s history, including smoothies, frappes and wraps, introduced in April. Latin America and the Caribbean (LAC) delivered double-digit comparable sales growth of 10,5 percent, driven by strong performance in Brazil and Mexico. EMEA delivered comparable sales growth of 3,3 percent, driven by successful promotions in Germany and APAC delivered comparable sales growth of 2,1 percent, primarily driven by the impact of an extra trading week in the quarter in Australia.
As part of BKW´s global re-franchising strategy, the company re-franchised 386 company-owned restaurants domestically and 78 company-owned restaurants internationally during the quarter. This includes 278 restaurants that were sold to Carrols Restaurant Group, BKW´s largest franchisee, in return for a 28,9 percent equity stake and total cash payments of approximately 16,2 million USD. In connection with this quarter´s re-franchising transactions, BKW´s U.S. and Canadian franchisees have agreed to remodel 564 restaurants, bringing the total remodel commitment in the region to more than 1’500 restaurants as of June 30, 2012.
As part of BKW´s international expansion strategy, the company announced the establishment of two joint ventures with proven franchisees in Russia and China. In Russia, the joint venture has committed to open several hundred restaurants over the next few years. In China, the joint venture has committed to open 1’000 restaurants over the next five to seven years, representing the largest multi-unit development agreement in the brand´s history.
Cash and Liquidity
At quarter end, total debt was 3,1 billion USD and net debt was 2,7 billion USD. During the six months ended June 30, 2012, BKW repurchased and retired Senior Notes with an aggregate face value of 3,0 million USD and repurchased Discount Notes with an aggregate accreted value of 61,1 million USD, which represents 13,6 percent of the original issuance. As a result of the improvement in net debt and in trailing twelve month adjusted Ebitda, the net debt to adjusted Ebitda ratio improved to 4,2x at June 30, 2012 from 4,6x at December 31, 2011.
Public Offering
On June 20, 2012, Burger King Worldwide Holdings Inc. announced the consummation of its business combination with a subsidiary of Justice Holdings Limited. As a result of this transaction, the shares of Burger King Worldwide were listed on the New York Stock Exchange under the ticker symbol «BKW». Following the listing, the investment fund affiliated with 3G Capital Partners Limited continued to hold approximately 71 percent of the outstanding shares.
