RBI: Reports Fourth Quarter and FY 2017 Results

Oakville / CA. (rbi) Restaurant Brands International Inc. (RBI) reported financial results for the full year and fourth quarter ended December 31, 2017.

Chief Executive Daniel Schwartz commented, «We are pleased to report another year of strong results. After acquiring «Popeyes» earlier in 2017, we made good progress integrating the business, and we remain highly encouraged by the brand’s growth potential. We also improved system-wide sales growth at «Burger King» this year, driven by accelerated net restaurant growth and continued comparable sales momentum. At «Tim Hortons», we launched our mobile app and our espresso based beverage platform in Canada and the U.S. and also opened our first restaurants in Asia, Europe and Latin America. The continued growth prospects for each of our three iconic brands excites us, and we believe we have the right strategy in place to create further value for all of our stakeholders over the long run».

Full Year 2017 Highlights

Total Revenues of USD 4’576.1 million versus USD 4’145.8 million in prior year
Net Income Attributable to Common Shareholders of USD 626.1 million versus USD 345.6 million in prior year
Diluted EPS of USD 2.54 versus USD 1.45 in prior year
Comparable sales, in constant currency, of (0.1) percent at Tim Hortons (TH), 3.1 percent at Burger King (BK), and (1.5) percent at Popeyes Louisiana Kitchen (PLK)
Net restaurant growth of 2.9 percent at TH, 6.5 percent at BK, and 6.1 percent at PLK
System-wide sales growth, in constant currency, of 3.0 percent at TH, 10.1 percent at BK, and 5.1 percent at PLK
Adjusted Ebitda of USD 2’145.8 million
Combined Adjusted Ebitda growth (including a full year of Popeyes in both periods) of 8.3 percent on an organic basis
Adjusted Diluted EPS of USD 2.10 versus USD 1.58 in prior year

Fourth Quarter 2017 Highlights

Total Revenues of USD 1’234.2 million versus USD 1’111.4 million in prior year period
Net Income Attributable to Common Shareholders of USD 395.0 million versus USD 118.4 million in prior year period
Diluted EPS of USD 1.59 versus USD 0.50 in prior year period
Comparable sales, in constant currency, of 0.1 percent at TH, 4.6 percent at BK, and (1.3) percent at PLK
System-wide sales growth, in constant currency, of 2.4 percent at TH, 12.3 percent at BK, and 6.8 percent at PLK
Adjusted Ebitda of USD 606.3 million, up 10.8 percent on an organic basis versus prior year combined results (including Popeyes)
Adjusted Diluted EPS of USD 0.66 versus USD 0.44 in prior year period

Capital Structure and Dividend Update

During the fourth quarter, RBI completed the previously announced preferred share redemption and the repurchase of 5 million partnership exchangeable units of Restaurant Brands International Limited Partnership (RBI LP)
RBI announced that its board of directors declared a dividend of USD 0.45 per common share and partnership exchangeable unit of RBI LP for the first quarter of 2018
In connection with the declared dividend, RBI also announced that it is targeting a total of USD 1.80 in dividends per common share and partnership exchangeable unit of RBI LP for 2018

Consolidated Operational Highlights

(unaudited)

Q4/2017

Q4/2016

FY-2017

FY-2016

System-wide Sales Growth

2.4%

3.0%

5.2%

12.3%

8.5%

10.1%

7.8%

PLK

6.8%

8.8%

5.1%

7.4%

System-wide sales (in USD millions)

USD

1’745.1

USD

1’622.2

USD

6’716.9

USD

6’405.2

USD

5’302.0

USD

4’651.6

USD

20’075.1

USD

18’209.2

PLK

USD

888.0

USD

767.3

USD

3’511.5

USD

3’286.3

Comparable Sales

0.1%

0.2%

(0.1)%

2.5%

4.6%

2.8%

3.1%

2.3%

PLK

(1.3)%

2.8%

(1.5)%

1.7 %

Net Restaurant Growth

2.9%

4.5%

2.9%

4.5%

6.5%

4.9%

6.5%

4.9%

PLK

6.1%

6.2%

6.1%

6.2%

System Restaurant Count at Period End

4’748

4’613

4’748

4’613

16’767

15’738

16’767

15’738

PLK

2’892

2’725

2’892

2’725

Consolidated Financial Highlights

Total Revenues for the year and fourth 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 year and fourth quarter grew primarily as a result of one-time benefits related to the redemption of our preferred shares and a favorable tax impact resulting from the Tax Cuts and Jobs Act, which was enacted on December 22, 2017, both of which are excluded from our Adjusted Net Income.

Combined Adjusted Ebitda (including a full period of Popeyes’ results in both years) grew versus prior year, primarily driven by an increase in revenue and effective cost management, at the following rates:

Full Year 2017: 9.3 percent (8.3 percent excluding the impact of FX movements)
Fourth Quarter 2017: 13.7 percent (10.8 percent excluding the impact of FX movements)

TH Segment Results

For the year and fourth quarter, system-wide sales growth was primarily driven by net restaurant growth of 2.9 percent. For the year and fourth quarter, comparable sales were relatively flat, including Canada comparable sales of 0.2 percent and 0.8 percent, respectively.

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

Full Year 2017: 5.1 percent (3.2 percent excluding the impact of FX movements)
Fourth Quarter 2017: 3.5 percent ((0.9) percent excluding the impact of FX movements)

Adjusted Ebitda grew versus prior year, primarily driven by revenue growth, a favorable FX impact, and, in the case of fourth quarter results, a decrease in segment SG+A, at the following rates:

Full Year 2017: 5.9 percent (4.0 percent excluding the impact of FX movements)
Fourth Quarter 2017: 9.2 percent (4.7 percent excluding the impact of FX movements)

BK Segment Results

For the year and fourth quarter, system-wide sales growth was primarily driven by net restaurant growth of 6.5 percent as well as comparable sales of 3.1 percent and 4.6 percent, respectively. For the year and fourth quarter, comparable sales were primarily driven by US comparable sales of 2.5 percent and 5.1 percent, respectively.

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

Full Year 2017: 6.5 percent (6.4 percent excluding the impact of FX movements)
Fourth Quarter 2017: 8.6 percent (7.3 percent excluding the impact of FX movements)

Adjusted Ebitda grew versus prior year, primarily as a result of revenue growth and effective cost management, at the following rates:

Full Year 2017: 10.7 percent (10.6 percent excluding the impact of FX movements)
Fourth Quarter 2017: 13.4 percent (12.1 percent excluding the impact of FX movements)

PLK Segment Results

For the year and fourth quarter, system-wide sales growth was primarily driven by net restaurant growth of 6.1 percent, partially offset by comparable sales of (1.5) percent and (1.3) percent, respectively. For the year and fourth quarter, comparable sales were primarily driven by US comparable sales of (2.2) percent and (2.5) percent, respectively.

Cash and Liquidity

As of December 31, 2017, total debt was USD 12.3 billion, and net debt (total debt less cash and cash equivalents of USD 1.1 billion) was USD 11.2 billion. During the fourth quarter, we completed the redemption of our preferred shares, as well as the repurchase of 5 million partnership exchangeable units for approximately USD 330 million, as previously announced. On February 12, 2018, RBI announced that its board of directors declared a dividend of USD 0.45 per common share and partnership exchangeable unit of RBI LP for the first quarter of 2018. The dividend will be payable on April 2, 2018 to shareholders and unitholders of record at the close of business on March 15, 2018. In connection with the declared dividend, RBI also announced that it is targeting a total of USD 1.80 in dividends per common share and partnership exchangeable unit of RBI LP for 2018.