OAKVILLE, ON, Feb. 13, 2017 /PRNewswire/ - Restaurant Brands International Inc. (TSX/NYSE: QSR, TSX: QSP) today reported financial results for the full year and fourth quarter ended December 31, 2016.

Daniel Schwartz, Chief Executive Officer of Restaurant Brands International Inc. ("RBI"), commented, "We are pleased to report another year of solid results, with strong financial performance in the fourth quarter. Our continued focus on guest satisfaction and value creation for all of our stakeholders has resulted in accelerated restaurant development and continued system-wide sales growth at both of our iconic brands, TIM HORTONS® and BURGER KING®. We are excited about our progress this year and are committed to building on these results to achieve long-term sustainable growth."

Full Year 2016 Highlights:

• RBI Total Revenues of $4,145.8 million versus $4,052.2 million in prior year
• RBI Net Income Attributable to Common Shareholders of $345.6 million versus $103.9 million in prior year
• RBI Diluted EPS of $1.45 versus $0.50 in prior year
• Tim Hortons ("TH") comparable sales increased 2.5% and Burger King ("BK") comparable sales increased 2.3% in constant currency
• Restaurant count increased 4.5% at TH and 4.9% at BK year-over-year
• System-wide sales grew 5.2% at TH and 7.8% at BK in constant currency
• RBI Adjusted EBITDA of $1,888.2 million was up 16.4% on an organic basis versus prior year results
• RBI Adjusted Diluted EPS of $1.58 was up 45.0% versus prior year results
• RBI declared dividends of $0.62 per common share and partnership exchangeable unit of Restaurant Brands International Limited Partnership in 2016, up 40.9% versus prior year declared dividends

 

Fourth Quarter 2016 Highlights:

• RBI Total Revenues of $1,111.4 million versus $1,057.0 million in prior year period
• RBI Net Income Attributable to Common Shareholders of $118.4 million versus $51.7 million in prior year period
• RBI Diluted EPS of $0.50 versus $0.25 in prior year period
• TH comparable sales increased 0.2% and BK comparable sales increased 2.8% in constant currency
• System-wide sales grew 2.4% at TH and 8.5% at BK in constant currency
• RBI Adjusted EBITDA of $512.4 million was up 16.4% on an organic basis versus prior year results
• RBI Adjusted Diluted EPS of $0.44 was up 37.5% versus prior year results

Consolidated Operational Highlights

 

Consolidated Financial Highlights

 

RBI Total Revenues for the year and fourth quarter grew primarily as a result of system-wide sales growth at both TH and BK, partially offset by unfavorable FX movements. For the year and fourth quarter, growth in RBI Net Income Attributable to Common Shareholders and Diluted Earnings per Share was primarily due to segment income growth in both of our brands and the non-recurrence of TH transaction and restructuring costs.

RBI Adjusted EBITDA for both the year and the fourth quarter grew 16.4%, excluding the impact of FX movements, driven by revenue growth and cost discipline at both brands.

 

TH Segment Results

 

 In 2016, TH system-wide sales growth was driven by the following:

• Comparable Sales Growth: growth in the breakfast, lunch, and dinner dayparts, with notable growth in the US
• Restaurant count growth: 4.5% year-over-year

TH Total Revenues grew versus prior year at the following rates, primarily as a result of system-wide sales growth:

• Full Year 2016: 1.5% (4.6% excluding the impact of FX movements)
• Fourth Quarter 2016: 2.9% (2.6% excluding the impact of FX movements)

TH Adjusted EBITDA grew versus prior year at the following rates, primarily as a result of TH Total Revenues growth and cost discipline:

• Full Year 2016: 18.3% (21.8% excluding the impact of FX movements)
• Fourth Quarter 2016: 14.4% (14.1% excluding the impact of FX movements)

 

BK Segment Results

 

In 2016, BK system-wide sales growth was driven by the following:

• Comparable Sales Growth: strength in Latin America and the Caribbean ("LAC") and Asia Pacific ("APAC"), partially offset by softness in Europe, the Middle East, and Africa ("EMEA") and the U.S. and Canada ("US&C")
• Restaurant count growth: 4.9% year-over-year

BK Total Revenues grew versus prior year at the following rates, primarily as a result of system-wide sales growth:

• Full Year 2016: 4.5% (6.5% excluding the impact of FX movements)
• Fourth Quarter 2016: 11.2% (12.6% excluding the impact of FX movements)

BK Adjusted EBITDA grew versus prior year at the following rates, primarily as a result of BK Total Revenues growth and cost discipline:

• Full Year 2016: 7.4% (10.1% excluding the impact of FX movements)
• Fourth Quarter 2016: 17.5% (19.3% excluding the impact of FX movements)

Cash and Liquidity

As of December 31, 2016, total debt was $8.9 billion, and net debt (total debt less cash and cash equivalents of $1.5 billion) was $7.4 billion. On February 13, 2017, the RBI Board of Directors declared a dividend of $0.18 per common share and Class B exchangeable limited partnership unit of Restaurant Brands International Limited Partnership for the first quarter of 2017. The dividend will be payable on April 4, 2017 to shareholders and unitholders of record at the close of business on March 3, 2017.

Investor Conference Call

We will host an investor conference call and webcast at 8:30 a.m. Eastern Time on Monday, February 13, 2017, to review financial results for the full year and fourth quarter ended December 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 $24 billion in system-wide sales and over 20,000 restaurants in more than 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 beliefs regarding its ability to build on the results of 2016 to achieve long-term sustainable growth at both of its iconic brands. 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.

 

Memo: Basic earnings per common share is determined by dividing net income attributable to common shareholders by the weighted average number of common shares outstanding during the period.

For the three and twelve months ended December 31, 2016, diluted EPS of $0.50 and $1.45 per share, respectively, includes $118.4 million and $345.6 million net income attributable to common shareholders and $114.8 million and $336.8 million net income attributable to noncontrolling interests related to the Class B exchangeable limited partnership units of Restaurant Brands International Limited Partnership ("Partnership exchangeable units"), respectively.

For the three and twelve months ended December 31, 2015, diluted EPS of $0.25 and $0.50 per share, respectively, includes $51.7 million and $103.9 million net income attributable to common shareholders and $64.8 million and $133.2 million net income attributable to noncontrolling interests related to the Partnership exchangeable units, respectively.

The diluted earnings per share calculation assumes conversion of 100% of the Partnership exchangeable units to RBI common shares under the "if converted" method.

 

 

 

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 franchise and company-owned 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. System-wide sales growth and comparable 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.

System-wide sales represent sales at all franchise restaurants and company-owned restaurants. We do not record franchise sales as revenues; however, our franchise revenues include royalties based on a percentage of franchise sales.

 

 

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 why we believe this information is useful to management and may be useful to investors. These measures do not have standardized meanings under GAAP and 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 Earnings per Share ("Adjusted Diluted EPS"), Organic revenue growth and Organic Adjusted EBITDA growth. We believe that these non-GAAP measures are useful to investors in assessing our operating performance, as it provides them with the same tools that management uses to evaluate our performance and is responsive to questions we receive from both investors and analysts.  By disclosing these non-GAAP measures, we intend to provide investors with a consistent comparison of our operating results and trends for the periods presented.

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 non-cash impact of share-based compensation and non-cash incentive compensation expense and (income) loss from equity method investments, net of cash distributions received from equity method investments, as well as other operating expenses (income), net. Other specifically identified costs associated with non-recurring projects are also excluded from Adjusted EBITDA, including acquisition accounting impact on cost of sales, Tim Hortons transaction and restructuring costs and integration costs, each of which is associated with the acquisition of Tim Hortons. Adjusted EBITDA is used by management to measure operating performance of the business, excluding these non-cash and other specifically identified items that management believes are not relevant to management's assessment of operating performance or the performance of an acquired business. Adjusted EBITDA, as defined above, also represents our measure of segment income.

Adjusted Net Income is defined as net income excluding (i) franchise agreement amortization, which is a non-cash expense arising as a result of acquisition accounting that may hinder the comparability of our operating results to our industry peers, (ii) amortization of deferred financing costs and original issue discount, a non-cash component of interest expense, and (gains) losses on early extinguishment of debt, which are non-cash charges that vary by the timing, terms and size of debt financing transactions, (iii) (income) loss from equity method investments, net of cash distributions received from equity method investments, (iv) other operating expenses (income), net, and (v) other specifically identified costs associated with non-recurring projects. Adjusted Net Income includes preferred share dividends.

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 operating performance of the business, excluding certain non-cash and other specifically identified items that management believes are not relevant to management's assessment of operating performance or the performance of an acquired 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 operating performance of our business as it helps identify underlying business trends, without distortion from the effects of FX movements. We calculate the impact of FX movements by translating current year results at prior year monthly average exchange rates.

 

 

 

 

SOURCE Restaurant Brands International Inc.