Miami / FL. (bk) Burger King Holdings Inc. reported results for the third quarter of 2011. System-wide comparable sales grew by 1,6 percent for the quarter, with international performance driving the positive results. In Latin America comparable sales grew by 10,5 percent and in Europe, Middle East, Africa and Asia Pacific (EMEA/APAC) by 3,0 percent. In the U.S. and Canada, comparable sales were relatively flat.
The company´s global net restaurant count increased by 59 restaurants. International operating segments accounted for over 90 percent of the net restaurant increase. The company also completed the re-franchising of 35 company restaurants in the U.S. and Canada during the third quarter.
Adjusted Ebitda of 161,0 million USD was positively impacted by strong international results, improved performance in the U.S. and continued benefits from the company´s previously disclosed global restructuring and zero-based budgeting (ZBB) program. Third quarter adjusted Ebitda increased by 39 percent when compared to adjusted Ebitda of 116,0 million USD in the same quarter of 2010. The company reported adjusted net income of 56,5 million USD for the quarter compared to adjusted net income of 49,4 million USD for the same quarter in the prior year. The company reported net income of 48,1 million USD for the quarter compared to net income of 63,4 million USD for the same quarter in the prior year, primarily due to a significant increase in interest expense as a result of the company´s debt structure. In addition, the company realized benefits from the sale of its Netherlands entity which positively impacted net income in the prior year.
«We are pleased with our global comparable sales performance and continued growth in adjusted Ebitda. This quarter marks our strongest growth in adjusted Ebitda since the acquisition in October 2010», said Daniel Schwartz, chief financial officer. «In the U.S., we remain focused on enhancing our menu, improving our restaurant image, streamlining operations and revamping our marketing communications process to appeal to a broader consumer base and drive profitable growth».
The company reported third quarter revenues of 608,1 million USD compared to 600,0 million USD in the same quarter of 2010, with all operating segments contributing positive results. Revenue increased due to comparable sales growth of 1,6 percent and the opening of 189 net restaurants over the past twelve months, partially offset by the net re-franchising of 49 company restaurants over the same period. Company restaurant margin decreased by 100 bps for the quarter, attributable primarily to an increase in depreciation and amortization charges and benefits derived from a favourable adjustment to the self-insurance reserve in the prior year.
Third quarter management general and administrative (G+A) expenses decreased by 33 percent or 31,4 million USD compared to the prior year. These expense reductions are directly attributable to the benefits derived from the company´s global restructuring efforts and the implementation of the ZBB program and are consistent with the company´s expectations that overall G+A expenses will decrease on an annual run rate basis by approximately 85 million USD to 110 million USD. Total selling, general and administrative expenses for the third quarter decreased by 14 percent or 17,6 million USD compared to the same period in the prior year.
As of September 30, 2011 the company´s total net debt to adjusted Ebitda ratio was 4,2 times for the trailing twelve month period, a 1,5 times decrease over the total net debt to adjusted Ebitda ratio of 5,7 times as of December 31, 2010. The company´s increased cash balance of 468,5 million USD coupled with the 22 percent increase in the trailing twelve month adjusted Ebitda drove the improvement.
Looking ahead, the company believes its improved operating cost structure and delivering on its four priorities for North America – marketing communications, menu, operations and image – will position it to enhance the performance of the company and its franchisees.
Internationally, the company´s growth strategy remains focused on continuing to grow comparable sales and driving aggressive net restaurant growth.
