Restaurant Brands International Results

Restaurant Brands International Inc. Reports Full Year and Fourth Quarter 2019 Results

RBI delivers consolidated system-wide sales growth of 10% in Q4 and over 8% in 2019

More than 27,000 restaurants now open globally following 1,342 net restaurant openings in 2019

BURGER KING® delivers over 9% system-wide sales growth and adds over 1,000 net new restaurants in 2019

POPEYES® delivers transformational system-wide sales growth of over 42% in Q4 boosted by the Chicken Sandwich

TIM HORTONS® announces plan to reignite growth in Canada by focusing on its fundamentals and founding values

Restaurant Brands International Inc. (TSX/NYSE: QSR, TSX: QSP) today reported financial results for the full year and fourth quarter ended December 31, 2019.

Jose Cil, Chief Executive Officer of Restaurant Brands International Inc. ("RBI") commented, "We have three iconic restaurant brands that are together growing rapidly around the world. Last year, we shared a long-term aspiration to build the most loved restaurant brands in the world and have more than 40,000 restaurants open within 8-10 years. I'm proud that our 2019 results have us solidly on track."

"Burger King delivered its strongest year of restaurant growth in the last two decades. Popeyes launched an iconic Chicken Sandwich that has proven to be a game changer for the brand in every way. At Tim Hortons, our performance did not reflect the incredible power of our brand and it is clear that we have a large opportunity to refocus on our founding values and what has made us famous with our guests over the years, which will be the basis for our plan in 2020."

2019 Growth and Profitability Highlights:

  • System-wide Sales Growth of 8.3%
  • Net Restaurant Growth of 5.2%
  • Diluted EPS of $2.37 versus $2.42 in prior year
  • Adjusted Diluted EPS of $2.72 versus $2.63 in prior year
  • Net Income Attributable to Common Shareholders and Noncontrolling Interests of $1,109 million versus $1,143 million in prior year
  • Adjusted EBITDA of $2,304 million increased 6.5% organically versus the prior year
  • Net cash provided by operating activities of $1,476 million and Free Cash Flow of $1,414 million

Dividend Update:

  • RBI announced that its board of directors declared a dividend of $0.52 per common share and partnership exchangeable unit of Restaurant Brands International Limited Partnership ("RBI LP") for Q1 of 2020
  • In connection with the declared dividend, RBI also announced that it is targeting a total of $2.08 in dividends per common share and partnership exchangeable unit of RBI LP for 2020

Consolidated Operational Highlights

Three Months Ended December 31,

Twelve Months Ended December 31,

2019

2018

2019

2018

(unaudited)

(unaudited)

System-wide Sales Growth

    TH

(2.9)%

2.4 %

(0.3)%

2.4 %

    BK

8.4 %

8.4 %

9.3 %

8.9 %

    PLK

42.3 %

6.3 %

18.5 %

8.9 %

Consolidated

9.9 %

6.8 %

8.3 %

7.4 %

System-wide Sales (in US$ millions)

    TH

$

1,679

$

1,727

$

6,716

$

6,869

    BK

$

5,905

$

5,528

$

22,921

$

21,624

    PLK

$

1,327

$

934

$

4,397

$

3,732

Consolidated

$

8,911

$

8,189

$

34,034

$

32,225

Net Restaurant Growth

    TH

1.8 %

2.1 %

1.8 %

2.1 %

    BK

5.9 %

6.1 %

5.9 %

6.1 %

    PLK

6.9 %

7.3 %

6.9 %

7.3 %

Consolidated

5.2 %

5.5 %

5.2 %

5.5 %

System Restaurant Count at Period End

    TH

4,932

4,846

4,932

4,846

    BK

18,838

17,796

18,838

17,796

    PLK

3,316

3,102

3,316

3,102

Consolidated

27,086

25,744

27,086

25,744

Comparable Sales

    TH

(4.3)%

1.9 %

(1.5)%

0.6 %

    BK

2.8 %

1.7 %

3.4 %

2.0 %

    PLK

34.4 %

0.1 %

12.1 %

1.6 %

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 franchised restaurants, as approximately 100% 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.

Consolidated Financial Highlights

Three Months Ended December 31,

Twelve Months Ended December 31,

(in US$ millions, except per share data)

2019

2018

2019

2018

(unaudited)

(unaudited)

Total Revenues

$

1,479

$

1,385

$

5,603

$

5,357

Net Income Attributable to Common Shareholders and

Noncontrolling Interests

$

255

$

301

$

1,109

$

1,143

Diluted Earnings per Share

$

0.54

$

0.64

$

2.37

$

2.42

TH Adjusted EBITDA(1)

$

297

$

297

$

1,122

$

1,127

BK Adjusted EBITDA(1)

$

266

$

247

$

994

$

928

PLK Adjusted EBITDA(1)

$

59

$

37

$

188

$

157

Adjusted EBITDA(2)

$

622

$

581

$

2,304

$

2,212

Adjusted Net Income(2)

$

351

$

318

$

1,274

$

1,242

Adjusted Diluted Earnings per Share(2)

$

0.75

$

0.68

$

2.72

$

2.63

As of December 31,

2019

2018

(unaudited)

LTM Free Cash Flow(2)

$

1,414

$

1,079

Net Debt

$

10,763

$

11,372

Net Leverage(2)

4.7x

5.1x

(1)

TH Adjusted EBITDA, BK Adjusted EBITDA, and PLK Adjusted EBITDA are our measures of segment profitability.

(2)

Adjusted EBITDA, Adjusted Net Income, 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.

Effective January 1, 2019, we adopted the new lease accounting standard ("New Standard"). Our consolidated financial statements for 2019 reflect the application of the New Standard, while our consolidated financial statements for 2018 were prepared under the guidance of the previously applicable lease accounting standard ("Previous Standard").

The year-over-year change in Total Revenues on a GAAP basis was primarily driven by system-wide sales growth, the impact of the New Standard on franchise and property revenues and an increase in supply chain sales, which include sales of products, supplies and restaurant equipment, as well as sales to retailers, partially offset by FX movements.

The decrease in Net Income Attributable to Common Shareholders and Noncontrolling Interests for the full year and fourth quarter was primarily driven by an increase in income tax expense, the change in other operating expenses (income), net (driven by FX) and loss on early extinguishment of debt, partially offset by growth in segment income.

The year-over year change in Adjusted EBITDA on an organic basis was primarily driven by system-wide sales growth.

TH Segment Results 

Three Months Ended December 31,

Twelve Months Ended December 31,

(in US$ millions)

2019

2018

2019

2018

(unaudited)

(unaudited)

System-wide Sales Growth

(2.9)%

2.4 %

(0.3)%

2.4 %

System-wide Sales

$

1,679

$

1,727

$

6,716

$

6,869

Comparable Sales

(4.3)%

1.9 %

(1.5)%

0.6 %

Net Restaurant Growth

1.8 %

2.1 %

1.8 %

2.1 %

System Restaurant Count at Period End

4,932

4,846

4,932

4,846

Sales

$

586

$

574

$

2,204

$

2,201

Franchise and Property Revenues

$

286

$

278

$

1,140

$

1,091

Total Revenues

$

872

$

852

$

3,344

$

3,292

Cost of Sales

$

444

$

438

$

1,677

$

1,688

Franchise and Property Expenses

$

90

$

69

$

358

$

279

Segment SG&A

$

73

$

76

$

309

$

314

Segment Depreciation and Amortization

$

26

$

24

$

106

$

102

Adjusted EBITDA(1)(3)

$

297

$

297

$

1,122

$

1,127

(3)

TH Adjusted EBITDA includes $5 million of cash distributions received from equity method investments for each of the three months ended December 31, 2019 and 2018. TH Adjusted EBITDA includes $16 million and $15 million of cash distributions received from equity method investments for the twelve months ended December 31, 2019 and 2018, respectively.

For the full year and fourth quarter, system-wide sales growth was primarily driven by a decrease in comparable sales of (1.5)% and (4.3)%, respectively, including Canada comparable sales of (1.4)% and (4.6)% for the same periods, partially offset by net restaurant growth of 1.8%.

The year-over-year change in Total Revenues on a GAAP basis was primarily driven by the impact of the New Standard on franchise and property revenues and supply chain sales, which include sales of products, supplies and restaurant equipment, as well as sales to retailers, partially offset by FX movements. On an organic basis, the year-over-year change in Total Revenues was primarily driven by supply chain sales.

The year-over-year change in Adjusted EBITDA on a GAAP and on an organic basis was primarily driven by supply chain and was offset by FX movements on a GAAP basis.

BK Segment Results

Three Months Ended December 31,

Twelve Months Ended December 31,

(in US$ millions)

2019

2018

2019

2018

(unaudited)

(unaudited)

System-wide Sales Growth

8.4 %

8.4 %

9.3 %

8.9 %

System-wide Sales

$

5,905

$

5,528

$

22,921

$

21,624

Comparable Sales

2.8 %

1.7 %

3.4 %

2.0 %

Net Restaurant Growth

5.9 %

6.1 %

5.9 %

6.1 %

System Restaurant Count at Period End

18,838

17,796

18,838

17,796

Sales

$

19

$

19

$

76

$

75

Franchise and Property Revenues

$

443

$

408

$

1,701

$

1,576

Total Revenues

$

462

$

427

$

1,777

$

1,651

Cost of Sales

$

18

$

17

$

71

$

67

Franchise and Property Expenses

$

44

$

34

$

168

$

131

Segment SG&A

$

151

$

144

$

600

$

577

Segment Depreciation and Amortization

$

12

$

12

$

49

$

48

Adjusted EBITDA(1)(4)

$

266

$

247

$

994

$

928

(4)

BK Adjusted EBITDA includes $4 million of cash distributions received from equity method investments for each of the three months ended December 31, 2019 and 2018. BK Adjusted EBITDA includes $6 million and $5 million of cash distributions received from equity method investments for the twelve months ended December 31, 2019 and 2018, respectively.

For the full year and fourth quarter, global system-wide sales growth included system-wide sales growth in the US of 2.7% and 1.4%, respectively, and system-wide sales growth in the rest of the world of 15.3% and 14.5%, respectively. For the full year and fourth quarter, net restaurant growth was 5.9%, while global comparable sales grew 3.4% and 2.8%, respectively, including US comparable sales growth of 1.7% and 0.6%, respectively.

The year-over-year change in Total Revenues on a GAAP basis was primarily driven by system-wide sales growth and the impact of the New Standard on franchise and property revenues, partially offset by FX movements. On an organic basis, the year-over-year change in Total Revenues was primarily driven by system-wide sales growth.

The year-over-year change in Adjusted EBITDA on a GAAP and on an organic basis was primarily driven by system-wide sales growth. This was partially offset by FX movements on a GAAP basis.

PLK Segment Results

Three Months Ended December 31,

Twelve Months Ended December 31,

(in US$ millions)

2019

2018

2019

2018

(unaudited)

(unaudited)

System-wide Sales Growth

42.3 %

6.3 %

18.5 %

8.9 %

System-wide Sales

$

1,327

$

934

$

4,397

$

3,732

Comparable Sales

34.4 %

0.1 %

12.1 %

1.6 %

Net Restaurant Growth

6.9 %

7.3 %

6.9 %

7.3 %

System Restaurant Count at Period End

3,316

3,102

3,316

3,102

Sales

$

22

$

19

$

82

$

79

Franchise and Property Revenues

$

123

$

87

$

400

$

335

Total Revenues

$

145

$

106

$

482

$

414

Cost of Sales

$

17

$

15

$

65

$

63

Franchise and Property Expenses

$

5

$

5

$

14

$

12

Segment SG&A

$

66

$

52

$

225

$

193

Segment Depreciation and Amortization

$

3

$

2

$

11

$

10

Adjusted EBITDA(1)

$

59

$

37

$

188

$

157

For the full year and fourth quarter, system-wide sales growth was primarily driven by comparable sales growth and net restaurant growth of 6.9%. For the full year and fourth quarter, comparable sales were 12.1% and 34.4%, respectively, including US comparable sales of 13.0% and 37.9%, respectively.

The year-over-year change in Total Revenues on a GAAP and on an organic basis was primarily driven by system-wide sales growth.

The year-over-year change in Adjusted EBITDA on a GAAP and on an organic basis was primarily driven by system-wide sales growth.

Cash and Liquidity

As of December 31, 2019, total debt was $12.3 billion, and net debt (total debt less cash and cash equivalents of $1.5 billion) was $10.8 billion, and net leverage was 4.7x. In the fourth quarter, we took advantage of favorable market conditions to refinance our Term Loan B and issue a New Second Lien Note with a favorable reduction to our overall cost of capital and extension of our debt maturity profile. The RBI board of directors has declared a dividend of $0.52 per common share and partnership exchangeable unit of RBI LP for the first quarter of 2020. The dividend will be payable on April 3, 2020 to shareholders and unitholders of record at the close of business on March 16, 2020. In connection with the declared dividend, RBI also announced that it is targeting a total of $2.08 in dividends per common share and partnership exchangeable unit of RBI LP for 2020.

About Restaurant Brands International Inc.

Restaurant Brands International Inc. ("RBI") is one of the world's largest quick service restaurant companies with more than $34 billion in system-wide sales and over 27,000 restaurants in more than 100 countries and U.S. territories. 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.



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