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Restaurant Brands International Inc. Reports Third Quarter 2022 Results

T.QSP.UN, T.QSR

Consolidated system-wide sales grow 14%, including 12% at Popeyes, 13% at Tim Hortons and 14% at Burger King

Global comparable sales accelerate to 9%, led by 11% growth at Tim Hortons Canada and 15% at Burger King International

Digital sales grow 26% year-over-year to approximately $3.4 billion, representing a third of system-wide sales

RBI continues to return capital through its industry-leading dividend while investing in its brands and reducing net leverage

TORONTO, Nov. 3, 2022 /PRNewswire/ - Restaurant Brands International Inc. ("RBI") (TSX: QSR) (NYSE: QSR) (TSX: QSP) today reported financial results for the third quarter ended September 30, 2022.

Restaurant Brands International Inc. Logo (CNW Group/Restaurant Brands International Inc.)

José Cil, Chief Executive Officer of RBI commented, "Our strong results this quarter, including 9% consolidated comparable sales growth and 4% net restaurant growth, reflects the strength of our diversified, global business model, strong free cash flow generation and benefits from our focused investments in key areas including operations, technology, marketing, franchising, and people."

"Tim Hortons remains a loved destination, with strong sales momentum driven by quality new menu items and great value for money, resulting in accelerated comparable sales growth versus 2019 levels.

Additionally, we are proud that our Burger King franchisees are behind our Reclaim the Flame plan to accelerate growth by engaging existing and new guests, with important investments in marketing, operations, digital, and remodels. Internationally, the Burger King business is driving strong results with over 20% system-wide sales growth for the quarter and remains a great example of the power of being guest-led in everything we do.

From a development standpoint, our compelling unit economics and years spent building quality partnerships with franchisees around the world continues to fuel our ability to expand our footprint alongside dedicated, well-capitalized franchisees," continued Cil.

"We are fortunate to own iconic brands that offer great value for money with menu offerings that are loved by our guests. We will continue to provide guests with the value they love while driving results in a profitable way for our franchisees. I am incredibly proud of the hard work from our franchisees, team members and employees as they execute against our plans and work towards our big dream to build the most loved restaurant brands in the world," concluded Cil.

Consolidated Operational Highlights


Three Months Ended September 30,



2022



2021



(Unaudited)

System-wide Sales Growth






TH


13.4 %



11.1 %

BK


14.5 %



12.3 %

PLK


12.3 %



4.4 %

Consolidated (a)


14.0 %



10.8 %

FHS (b)


3.8 %



19.3 %

System-wide Sales (in US$ millions)






TH

$

1,945


$

1,774

BK

$

6,668


$

6,212

PLK

$

1,532


$

1,392

FHS

$

289


$

Consolidated (a)

$

10,434


$

9,378

FHS (b)

$


$

278

Net Restaurant Growth






TH


5.2 %



4.1 %

BK


2.5 %



1.3 %

PLK


8.9 %



5.5 %

Consolidated (a)


3.9 %



2.4 %

FHS (b)


2.5 %



2.0 %

System Restaurant Count at Period End






TH


5,405



5,137

BK


19,401



18,923

PLK


3,928



3,607

FHS


1,234



Consolidated


29,968



27,667

FHS (b)




1,204

Comparable Sales






TH


9.8 %



8.9 %

BK


10.3 %



7.9 %

PLK


3.1 %



(2.4) %

Consolidated (a)


9.1 %



6.5 %

FHS (b)


0.0 %



14.9 %

(a)

Consolidated system-wide sales growth, consolidated net restaurant growth and consolidated comparable sales do not include the results of Firehouse Subs for all of the periods presented. Consolidated system-wide sales do not include the results of Firehouse Subs for 2021.



(b)

2021 Firehouse Subs figures are shown for informational purposes only, consistent with its fiscal calendar.



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 franchise restaurants, as approximately 100% of current restaurants are franchised. We do not record franchise sales as revenues; however, our royalty revenues and advertising fund contributions are calculated based on a percentage of franchise sales. Additionally, if a restaurant is closed for a significant portion of a month, the restaurant is excluded from the monthly comparable sales calculation.

Consolidated Financial Highlights


Three Months Ended September 30,

(in US$ millions, except per share data)

2022


2021


(Unaudited)

Total Revenues

$ 1,726


$ 1,495

Net Income

$ 530


$ 329

Diluted Earnings per Share

$ 1.17


$ 0.70





TH Adjusted EBITDA(1)

$ 305


$ 278

BK Adjusted EBITDA(1)

$ 262


$ 272

PLK Adjusted EBITDA(1)

$ 62


$ 57

FHS Adjusted EBITDA(1)

$ 13


$ —

Adjusted EBITDA(2)

$ 642


$ 607





Adjusted Net Income(2)

$ 436


$ 353

Adjusted Diluted Earnings per Share(2)

$ 0.96


$ 0.76


Nine Months Ended September 30,


2022


2021


(Unaudited)

Net cash provided by operating activities

$ 1,067


$ 1,255

Net cash (used for) provided by investing activities

$ (66)


$ (69)

Net cash (used for) provided by financing activities

$ (1,111)


$ (970)





LTM Free Cash Flow(2)

$ 1,450


$ 1,452

Net Debt

$ 12,452


$ 11,185

Net Leverage(2)

5.2x


5.2x

(1)

TH Adjusted EBITDA, BK Adjusted EBITDA, PLK Adjusted EBITDA and FHS 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.



Commencing upon the acquisition of Firehouse Subs in December 2021, we have four operating segments: Tim Hortons (TH), Burger King (BK), Popeyes Louisiana Kitchen (PLK) and Firehouse Subs (FHS). Our financial results and operational highlights are disclosed based on these segments each quarter.

The year-over-year increases in Total Revenues on an as reported and on an organic basis were primarily driven by increases in system-wide sales at Tim Hortons, Burger King and Popeyes. On an as reported basis the increase was also driven by the inclusion of Firehouse Subs, partially offset by unfavorable FX movements.

The year-over-year increase in Net Income was primarily driven by income tax benefit in the current year compared to an income tax expense in the prior year, increases in segment income in our TH and PLK segments, the inclusion of FHS segment income, a favorable change from other operating expenses (income), net, and the non-recurrence of a loss on early extinguishment of debt. These factors were partially offset by unfavorable FX movements, a decrease in BK segment income, an increase in share-based compensation and non-cash incentive compensation expense, an increase in Corporate restructuring and tax advisory fees, and an increase in interest expense, net.

The year-over-year increase in Adjusted EBITDA on an as reported basis was primarily driven by increases in TH and PLK Adjusted EBITDA as well as the inclusion of FHS Adjusted EBITDA, partially offset by unfavorable FX movements which impacted TH and PLK Adjusted EBITDA and drove a decrease in BK Adjusted EBITDA.

The year-over-year increase in Adjusted EBITDA on an organic basis was primarily driven by increases in TH, BK and PLK Adjusted EBITDA.

The year-over-year increase in Adjusted Net Income was primarily driven by a decrease in adjusted income tax expense, increases in Adjusted EBITDA in our TH and PLK brands and the inclusion of FHS Adjusted EBITDA, partially offset by unfavorable FX movements, a decrease in Adjusted EBITDA in our BK brand, and increases in share-based compensation and non-cash incentive compensation expense.

War in Ukraine

During the first quarter of 2022, we shared a number of actions that we have taken to date as a result of the events related to Russia's military invasion of Ukraine. Burger King is our only brand with restaurants in Russia, all of which are operated under a master franchise arrangement. We suspended all corporate support for the Russian market, including operations, marketing, and supply chain support in addition to refusing approvals for new investment and expansion.

While we currently include results from our franchised restaurants in Russia within reported key business metrics, we do not expect to generate any profits from restaurants in Russia in 2022. During the third quarter, these restaurants had an estimated $12 million, or 2%, negative impact on our year-over-year organic adjusted EBITDA growth.

Below are the RBI consolidated and BK segment operational highlights excluding the results from Russia for the three months ended September 30, 2022 and 2021. Refer to page 26 for the RBI consolidated and BK segment quarterly operational highlights excluding the results from Russia for 2021.

Consolidated Operational Highlights (excluding Russia)


Three Months Ended September 30,



2022



2021



(Unaudited)

System-wide Sales Growth






BK


13.6 %



11.7 %

Consolidated (a)


13.4 %



10.4 %

System-wide Sales (in US$ millions)






BK

$

6,346


$

6,017

Consolidated (a)

$

10,112


$

9,182

Net Restaurant Growth






BK


2.5 %



1.3 %

Consolidated (a)


3.9 %



2.4 %

System Restaurant Count at Period End






BK


18,581



18,131

Consolidated


29,148



26,875

Comparable Sales






BK


9.6 %



7.4 %

Consolidated (a)


8.6 %



6.1 %

(a)

Consolidated system-wide sales growth, consolidated net restaurant growth and consolidated comparable sales do not include the results of Firehouse Subs for all of the periods presented. Consolidated system-wide sales do not include the results of Firehouse Subs for 2021.

COVID-19 and Macro Economic Environment

The global crisis resulting from the spread of coronavirus ("COVID-19") impacted our global restaurant operations for the three months ended September 30, 2022 and 2021, though in 2022 the impact was more modest than in the prior year. During the three months ended September 30, 2022 and 2021, substantially all restaurants remained open, some with limited operations, such as drive-thru, takeout and delivery (where applicable), reduced, if any, dine-in capacity, and/or restrictions on hours of operation. Certain markets periodically required temporary closures while implementing government mandated lockdown orders. For example, while most regions have eased restrictions, increases in cases and new variants caused certain markets, including China, to re-impose temporary restrictions as a result of government mandates. We expect local conditions to continue to dictate limitations on restaurant operations, capacity, and hours of operation. COVID-19 has also contributed to labor challenges, which in some regions resulted in reduced operating hours and service modes at select restaurants as well as supply chain pressures.

During 2022, there have been increases in commodity, labor, and energy costs partially due to the macroeconomic impact of both COVID-19 and the War in Ukraine. Further significant increases in inflation could affect the global, Canadian and U.S. economies, resulting in foreign exchange pressures and rising interest rates which could have an adverse impact on our business and results of operations if we and our franchisees are not able to adjust prices sufficiently to offset the effect of cost increases without negatively impacting consumer demand.

Reclassification of Technology Revenues and Expenses

During the first quarter of 2022 we made a change to the way we report revenues and expenses related to technology initiatives to provide clarity and consistency across our brands and with our industry peers. We had previously included revenue from technology fees in Franchise and property revenues, while the associated technology expenses were included in General and administrative expenses. Starting in the first quarter of 2022, revenue from technology fees will be reported in Advertising revenues and other services, while the associated technology expenses will be reported in Advertising expenses and other services.

Additionally, prior year amounts in the condensed consolidated statements of operations and accompanying BK segment results have been reclassified in order to be comparable with the current year classifications. These reclassifications did not arise as a result of any changes to accounting policies and relate entirely to presentation with no effect on previously reported net income and segment income. Refer to page 27 for the RBI consolidated and BK segment quarterly results for 2021 adjusted for these reclassifications.

TH Segment Results



Three Months Ended September 30,

(in US$ millions)


2022



2021



(Unaudited)

System-wide Sales Growth


13.4 %



11.1 %

System-wide Sales

$

1,945


$

1,774

Comparable Sales


9.8 %



8.9 %







Net Restaurant Growth


5.2 %



4.1 %

System Restaurant Count at Period End


5,405



5,137







Sales

$

710


$

592

Franchise and Property Revenues

$

250


$

230

Advertising Revenues and Other Services

$

73


$

63

Total Revenues

$

1,033


$

885







Cost of Sales

$

568


$

462

Franchise and Property Expenses

$

87


$

84

Advertising Expenses and Other Services

$

73


$

68

Segment G&A

$

31


$

27

Segment Depreciation and Amortization

$

26


$

31

Adjusted EBITDA(1)(3)

$

305


$

278

(3)

TH Adjusted EBITDA includes $5 million and $3 million of cash distributions received from equity method investments for the three months ended September 30, 2022 and 2021, respectively.

For the third quarter of 2022, the increase in system-wide sales was primarily driven by comparable sales of 9.8%, including Canada comparable sales of 11.1%, and net restaurant growth of 5.2%.

The year-over-year increases in Total Revenues on an as reported and on an organic basis were primarily driven by an increase in system-wide sales as well as increases in commodity prices passed on to franchisees and an increase in sales to retailers. The increase in Total Revenues on an as reported basis was partially offset by unfavorable FX movements.

The year-over-year increases in Adjusted EBITDA on an as reported and on an organic basis were primarily driven by the increase in system-wide sales and by advertising revenues exceeding advertising expenses in the current year period compared to advertising expenses exceeding advertising revenues in the prior year period driven by our support behind the marketing program in Canada in the prior year period, partially offset by an increase in Segment G&A. The increase in Adjusted EBITDA on an as reported basis was partially offset by unfavorable FX movements.

BK Segment Results



Three Months Ended September 30,

(in US$ millions)


2022



2021



(Unaudited)

System-wide Sales Growth


14.5 %



12.3 %

System-wide Sales

$

6,668


$

6,212

Comparable Sales


10.3 %



7.9 %







Net Restaurant Growth


2.5 %



1.3 %

System Restaurant Count at Period End


19,401



18,923







Sales

$

19


$

16

Franchise and Property Revenues

$

349


$

333

Advertising Revenues and Other Services

$

123


$

118

Total Revenues

$

491


$

467







Cost of Sales

$

19


$

16

Franchise and Property Expenses

$

46


$

34

Advertising Expenses and Other Services

$

130


$

118

Segment G&A

$

45


$

38

Segment Depreciation and Amortization

$

11


$

12

Adjusted EBITDA(1)

$

262


$

272







For the third quarter of 2022, the increase in system-wide sales was driven by comparable sales of 10.3%, including US comparable sales of 4.0% and rest of the world comparable sales of 15.2%, and net restaurant growth of 2.5%.

The year-over-year increases in Total Revenues on an as reported and on an organic basis were primarily driven by the increase in system-wide sales. The increase in Total Revenues on an as reported basis was partially offset by unfavorable FX movements.

The year-over-year changes in Adjusted EBITDA on an as reported and on an organic basis were primarily driven by the increase in system-wide sales, partially offset by bad debt expenses in the current year compared to bad debt recoveries in the prior year, advertising expenses exceeding advertising revenues in the current year compared to advertising revenues exceeding advertising expenses in the prior year, an increase in expenses related to technology initiatives, and higher Segment G&A largely as a result of hiring across a number of key areas including operations and franchising. On an as reported basis, Adjusted EBITDA was impacted by unfavorable FX movements, resulting in a year-over-year decrease in Adjusted EBITDA.

PLK Segment Results



Three Months Ended September 30,

(in US$ millions)


2022



2021



(Unaudited)

System-wide Sales Growth


12.3 %



4.4 %

System-wide Sales

$

1,532


$

1,392

Comparable Sales


3.1 %



(2.4) %







Net Restaurant Growth


8.9 %



5.5 %

System Restaurant Count at Period End


3,928



3,607







Sales

$

21


$

13

Franchise and Property Revenues

$

78


$

72

Advertising Revenues and Other Services

$

65


$

58

Total Revenues

$

164


$

143







Cost of Sales

$

19


$

12

Franchise and Property Expenses

$

2


$

3

Advertising Expenses and Other Services

$

66


$

59

Segment G&A

$

16


$

15

Segment Depreciation and Amortization

$

2


$

1

Adjusted EBITDA(1)

$

62


$

57







For the third quarter of 2022, the increase in system-wide sales was driven by net restaurant growth of 8.9% and comparable sales of 3.1%, including US comparable sales of 1.3%.

The year-over-year increases in Total Revenues on an as reported and on an organic basis were primarily driven by the increase in system-wide sales as well as an increase in sales from Company restaurants. The increase in Total Revenues on an as reported basis was partially offset by unfavorable FX movements.

The year-over-year increases in Adjusted EBITDA on an as reported and on an organic basis were primarily driven by the increase in system-wide sales, partially offset by an increase in cost of sales. The increase in Adjusted EBITDA on an as reported basis was partially offset by unfavorable FX movements.

FHS Segment Results



Three Months Ended September 30,

(in US$ millions)


2022



2021



(Unaudited)

System-wide Sales Growth (a)


3.8 %



19.3 %

System-wide Sales (a)

$

289


$

278

Comparable Sales (a)


0.0 %



14.9 %







Net Restaurant Growth (a)


2.5 %



2.0 %

System Restaurant Count at Period End (a)


1,234



1,204







Sales

$

9



N/A

Franchise and Property Revenues

$

21



N/A

Advertising Revenues and Other Services

$

8



N/A

Total Revenues

$

38



N/A







Cost of Sales

$

9



N/A

Franchise and Property Expenses

$

2



N/A

Advertising Expenses and Other Services

$

7



N/A

Segment G&A

$

9



N/A

Segment Depreciation and Amortization

$

1



N/A

Adjusted EBITDA(1)

$

13



N/A

(a)

2021 Firehouse Subs figures are shown for informational purposes only, consistent with its fiscal calendar.

For the third quarter of 2022, the increase in system-wide sales was driven by net restaurant growth of 2.5% and flat comparable sales, which included an increase in US comparable sales of 0.3%.

Cash and Liquidity

As of September 30, 2022, total debt was $13.4 billion, net debt (total debt less cash and cash equivalents of $0.9 billion) was $12.5 billion, and net leverage was 5.2x.

The RBI Board of Directors has declared a dividend of $0.54 per common share and partnership exchangeable unit of Restaurant Brands International Limited Partnership for the fourth quarter of 2022. The dividend will be payable on January 4, 2023 to shareholders and unitholders of record at the close of business on December 21, 2022.

In September 2022, Burger King shared the details of its "Reclaim the Flame" plan to accelerate sales growth and drive franchisee profitability. As part of the plan, we will enhance ongoing franchisee investments by investing $400 million over the next two years, comprising $150 million in advertising and digital investments and $250 million in restaurant technology, kitchen equipment, building enhancements, and high-quality remodels and relocations.

Investor Conference Call

We will host an investor conference call and webcast at 8:30 a.m. Eastern Time on Thursday, November 3, 2022, to review financial results for the third quarter ended September 30, 2022. The earnings call will be broadcast live via our investor relations website at http://rbi.com/investors and a replay will be available for 30 days following the release. The dial-in number is 1 (646)-904-5544 for U.S. callers, 1 (226)-828-7575 for Canadian callers, and 1 (929)-526-1599 for callers from other countries. For all dial-in numbers please use the following access code: 152376. For further information:

Investors: investor@rbi.com; Media: media@rbi.com

About Restaurant Brands International Inc.

Restaurant Brands International Inc. is one of the world's largest quick service restaurant companies with over $35 billion in annual system-wide sales and over 29,000 restaurants in more than 100 countries. RBI owns four of the world's most prominent and iconic quick service restaurant brands – TIM HORTONS®, BURGER KING®, POPEYES®, and FIREHOUSE SUBS®. These independently operated brands have been serving their respective guests, franchisees and communities for decades. Through its Restaurant Brands for Good framework, RBI is improving sustainable outcomes related to its food, the planet, and people and communities. 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 our expectations regarding the effects and continued impact of the COVID-19 pandemic, the war in Ukraine and related macro-economic pressures, such as inflation, rising interest rates and currency fluctuations, on our results of operations, business, liquidity, prospects and restaurant operations and those of our franchisees, including local conditions and government-imposed limitations and restrictions, our digital and marketing initiatives and expectations regarding further expenditures relating to these initiatives, including as a result of our plan to accelerate sales growth and drive franchisee profitability at Burger King, our growth opportunities, plans and strategies for each of our brands and ability to drive long-term, sustainable growth, including through global expansion and restaurant openings, and our suspension of operations in and financial results from Russia. 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 unforeseen events such as pandemics; risks related to supply chain; risks related to ownership and leasing of properties; risks related to our franchisees financial stability and their ability to access and maintain the liquidity necessary to operate their business; risks related to our fully franchised business model, including as a result of current and future legislation, regulations and interpretations relating to joint employer status and other labor matters; risks related to RBI's ability to successfully implement its domestic and international growth strategy and risks related to its international operations; risks related to RBI's ability to compete domestically and internationally in an intensely competitive industry; risks related to technology; risks related to the conflict between Russia and Ukraine, and changes in applicable tax and other laws and regulations or interpretations thereof. 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.

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In millions of U.S. dollars, except per share data)
(Unaudited)


Three Months Ended
September 30,


Nine Months Ended
September 30,


2022


2021


2022


2021

Revenues:








Sales

$ 759


$ 621


$ 2,076


$ 1,718

Franchise and property revenues

698


635


1,989


1,795

Advertising revenues and other services

269


239


751


680

Total revenues

1,726


1,495


4,816


4,193

Operating costs and expenses:








Cost of sales

615


490


1,693


1,358

Franchise and property expenses

137


121


392


358

Advertising expenses and other services

276


245


782


725

General and administrative expenses

156


115


435


327

(Income) loss from equity method investments

8


7


30


12

Other operating expenses (income), net

(27)


(16)


(68)


(50)

Total operating costs and expenses

1,165


962


3,264


2,730

Income from operations

561


533


1,552


1,463

Interest expense, net

133


128


389


378

Loss on early extinguishment of debt


11



11

Income before income taxes

428


394


1,163


1,074

Income tax expense (benefit)

(102)


65


17


83

Net income

530


329


1,146


991

Net income attributable to noncontrolling interests

170


108


367


332

Net income attributable to common shareholders

$ 360


$ 221


$ 779


$ 659

Earnings per common share








Basic

$ 1.18


$ 0.71


$ 2.53


$ 2.14

Diluted

$ 1.17


$ 0.70


$ 2.51


$ 2.12

Weighted average shares outstanding (in millions):








Basic

306


311


308


308

Diluted

454


465


455


465

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In millions of U.S. dollars, except share data)
(Unaudited)


As of


September 30, 2022


December 31, 2021

ASSETS




Current assets:




Cash and cash equivalents

$ 946


$ 1,087

Accounts and notes receivable, net of allowance of $26 and $18, respectively

598


547

Inventories, net

129


96

Prepaids and other current assets

251


86

Total current assets

1,924


1,816

Property and equipment, net of accumulated depreciation and amortization of
$1,022 and $979, respectively

1,913


2,035

Operating lease assets, net

1,056


1,130

Intangible assets, net

10,831


11,417

Goodwill

5,605


6,006

Net investment in property leased to franchisees

83


80

Other assets, net

1,145


762

Total assets

$ 22,557


$ 23,246

LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




Accounts and drafts payable

$ 696


$ 614

Other accrued liabilities

959


947

Gift card liability

148


221

Current portion of long-term debt and finance leases

117


96

Total current liabilities

1,920


1,878

Long-term debt, net of current portion

12,853


12,916

Finance leases, net of current portion

310


333

Operating lease liabilities, net of current portion

1,003


1,070

Other liabilities, net

1,044


1,822

Deferred income taxes, net

1,388


1,374

Total liabilities

18,518


19,393

Shareholders' equity:




Common shares, no par value; unlimited shares authorized at
September 30, 2022 and December 31, 2021; 305,859,367 shares issued
and outstanding at September 30, 2022; 309,025,068 shares issued and
outstanding at December 31, 2021

1,964


2,156

Retained earnings

1,062


791

Accumulated other comprehensive income (loss)

(713)


(710)

Total Restaurant Brands International Inc. shareholders' equity

2,313


2,237

Noncontrolling interests

1,726


1,616

Total shareholders' equity

4,039


3,853

Total liabilities and shareholders' equity

$ 22,557


$ 23,246

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In millions of U.S. dollars)
(Unaudited)


Nine Months Ended September 30,


2022


2021

Cash flows from operating activities:




Net income

$ 1,146


$ 991

Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization

143


150

Premiums paid and non-cash loss on early extinguishment of debt


11

Amortization of deferred financing costs and debt issuance discount

21


20

(Income) loss from equity method investments

30


12

(Gain) loss on remeasurement of foreign denominated transactions

(82)


(58)

Net (gains) losses on derivatives

17


65

Share-based compensation and non-cash incentive compensation expense

93


71

Deferred income taxes

(29)


35

Other

8


(14)

Changes in current assets and liabilities, excluding acquisitions and dispositions:




Accounts and notes receivable

(93)


11

Inventories and prepaids and other current assets

(67)


(3)

Accounts and drafts payable

113


129

Other accrued liabilities and gift card liability

(74)


(87)

Tenant inducements paid to franchisees

(13)


(5)

Other long-term assets and liabilities

(146)


(73)

Net cash provided by operating activities

1,067


1,255

Cash flows from investing activities:




Payments for property and equipment

(52)


(70)

Net proceeds from disposal of assets, restaurant closures, and refranchisings

11


14

Net payments in connection with purchase of Firehouse Subs

(12)


Settlement/sale of derivatives, net

22


2

Other investing activities, net

(35)


(15)

Net cash (used for) provided by investing activities

(66)


(69)

Cash flows from financing activities:




Proceeds from long-term debt

2


802

Repayments of long-term debt and finance leases

(71)


(865)

Payment of financing costs


(7)

Payment of dividends on common shares and distributions on Partnership
exchangeable units

(728)


(730)

Repurchase of common shares

(326)


(182)

Proceeds from stock option exercises

7


60

(Payments) proceeds from derivatives

8


(45)

Other financing activities, net

(3)


(3)

Net cash (used for) provided by financing activities

(1,111)


(970)

Effect of exchange rates on cash and cash equivalents

(31)


(3)

Increase (decrease) in cash and cash equivalents

(141)


213

Cash and cash equivalents at beginning of period

1,087


1,560

Cash and cash equivalents at end of period

$ 946


$ 1,773

Supplemental cash flow disclosures:




Interest paid

$ 318


$ 281

Income taxes paid

$ 177


$ 189

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Key Operating Metrics

We evaluate our restaurants and assess our business based on the following operating metrics.

System-wide sales growth refers to the percentage change in sales at all franchise restaurants and Company restaurants (referred to as system-wide sales) in one period from the same period in the prior year. Comparable sales refers to the percentage change in restaurant sales in one period from the same prior year period for restaurants that have been open for 13 months or longer for TH, BK and FHS and 17 months or longer for PLK. Additionally, if a restaurant is closed for a significant portion of a month, the restaurant is excluded from the monthly comparable sales calculation. System-wide sales growth and comparable sales are measured on a constant currency basis, which means that results exclude the effect of foreign currency translation ("FX Impact") 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 royalty revenues and advertising fund contributions are calculated based on a percentage of franchise sales.

Net restaurant growth refers to the net increase in restaurant count (openings, net of permanent closures) over a trailing twelve month period, divided by the restaurant count at the beginning of the trailing twelve month period.

These metrics are important indicators of the overall direction of our business, including trends in sales and the effectiveness of each brand's marketing, operations and growth initiatives.



Three Months Ended September 30,

KPIs by Market


2022



2021



(Unaudited)

System-wide Sales Growth






TH - Canada


12.1 %



9.8 %

TH - Rest of World


21.2 %



19.7 %

TH - Global


13.4 %



11.1 %







BK - US


4.4 %



(2.4) %

BK - Rest of World


22.2 %



25.2 %

BK - Global


14.5 %



12.3 %







PLK - US


7.7 %



1.3 %

PLK - Rest of World


43.4 %



28.3 %

PLK - Global


12.3 %



4.4 %







FHS - US (a)


3.3 %



18.5 %

FHS - Rest of World (a)


15.6 %



39.8 %

FHS - Global (a)


3.8 %



19.3 %







System-wide Sales (in US$ millions)






TH - Canada

$

1,645


$

1,521

TH - Rest of World

$

300


$

253

TH - Global

$

1,945


$

1,774







BK - US

$

2,641


$

2,530

BK - Rest of World

$

4,027


$

3,682

BK - Global

$

6,668


$

6,212







PLK - US

$

1,280


$

1,194

PLK - Rest of World

$

252


$

198

PLK - Global

$

1,532


$

1,392







FHS - US (a)

$

276


$

266

FHS - Rest of World (a)

$

13


$

12

FHS - Global (a)

$

289


$

278







Comparable Sales






TH - Canada


11.1 %



9.5 %

TH - Rest of World


2.1 %



4.5 %

TH - Global


9.8 %



8.9 %







BK - US


4.0 %



(1.6) %

BK - Rest of World


15.2 %



16.2 %

BK - Global


10.3 %



7.9 %







PLK - US


1.3 %



(4.5) %

PLK - Rest of World


16.4 %



14.8 %

PLK - Global


3.1 %



(2.4) %







FHS - US (a)


0.3 %



15.2 %

FHS - Rest of World (a)


(6.6) %



8.3 %

FHS - Global (a)


0.0 %



14.9 %


As of

KPIs by Market

September 30, 2022


September 30, 2021


(Unaudited)

Net Restaurant Growth




TH - Canada

(1.0) %


(1.0) %

TH - Rest of World

25.8 %


25.6 %

TH - Global

5.2 %


4.1 %





BK - US

(0.4) %


(1.7) %

BK - Rest of World

4.3 %


3.2 %

BK - Global

2.5 %


1.3 %





PLK - US

6.1 %


5.6 %

PLK - Rest of World

17.1 %


5.4 %

PLK - Global

8.9 %


5.5 %





FHS - US (a)

2.2 %


1.0 %

FHS - Rest of World (a)

10.2 %


32.4 %

FHS - Global (a)

2.5 %


2.0 %





Restaurant Count




TH - Canada

3,899


3,940

TH - Rest of World

1,506


1,197

TH - Global

5,405


5,137





BK - US

7,062


7,093

BK - Rest of World

12,339


11,830

BK - Global

19,401


18,923





PLK - US

2,858


2,693

PLK - Rest of World

1,070


914

PLK - Global

3,928


3,607





FHS - US (a)

1,180


1,155

FHS - Rest of World (a)

54


49

FHS - Global (a)

1,234


1,204

(a)

2021 Firehouse Subs figures are shown for informational purposes only, consistent with its fiscal calendar.

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Supplemental Disclosure
(Unaudited)

General and Administrative Expenses


Three Months Ended September 30,


Nine Months Ended September 30,

(in US$ millions)

2022


2021


2022


2021

Segment G&A TH(1)

$ 31


$ 27


$ 92


$ 77

Segment G&A BK(1)

45


38


130


114

Segment G&A PLK(1)

16


15


48


42

Segment G&A FHS(1)

9



25


Share-based compensation and non-cash incentive compensation expense(2)

34


25


93


71

Depreciation and amortization(3)

6


6


18


15

FHS Transaction costs

3



8


Corporate restructuring and tax advisory fees

12


4


21


8

General and administrative expenses

$ 156


$ 115


$ 435


$ 327

(1)

Segment G&A includes segment general and administrative expenses and excludes share-based compensation and non-cash incentive compensation expense, depreciation and amortization, FHS Transaction costs and corporate restructuring and tax advisory fees.

(2)

Represents share-based compensation expense associated with equity awards for the periods indicated; also includes the portion of annual non-cash incentive compensation expense that eligible employees elected to receive or are expected to elect to receive as common equity in lieu of their 2021 and 2022 cash bonus, respectively.

(3)

Segment depreciation and amortization reflects depreciation and amortization included in the respective segment cost of sales, franchise and property expenses and advertising expenses and other services. Depreciation and amortization included in general and administrative expenses reflects all other depreciation and amortization.

Other Operating Expenses (Income), net


Three Months Ended September 30,


Nine Months Ended September 30,

(in US$ millions)

2022


2021


2022


2021

Net losses (gains) on disposal of assets, restaurant closures, and refranchisings(4)

$ 1


$ 2


$ 2


$ 1

Litigation settlement (gains) and reserves, net


4


3


7

Net losses (gains) on foreign exchange(5)

(30)


(23)


(82)


(58)

Other, net

2


1


9


Other operating expenses (income), net

$ (27)


$ (16)


$ (68)


$ (50)

(4)

Net losses (gains) on disposal of assets, restaurant closures, and refranchisings represent sales of properties and other costs related to restaurant closures and refranchisings. Gains and losses recognized in the current period may reflect certain costs related to closures and refranchisings that occurred in previous periods.

(5)

Net losses (gains) on foreign exchange is primarily related to revaluation of foreign denominated assets and liabilities, primarily those denominated in Euros and Canadian dollars.

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, LTM Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted Earnings per Share ("Adjusted Diluted EPS"), Organic revenue growth, Organic Adjusted EBITDA growth, Free Cash Flow, LTM Free Cash Flow and Net Leverage. We believe that these non-GAAP measures are useful to investors in assessing our operating performance or liquidity, as they provide them with the same tools that management uses to evaluate our performance or liquidity and are 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 expense, net, (gain) loss on early extinguishment of debt, income tax (benefit) expense, and depreciation and amortization and is used by management to measure operating performance of the business. Adjusted EBITDA is defined as EBITDA excluding (i) the non-cash impact of share-based compensation and non-cash incentive compensation expense, (ii) (income) loss from equity method investments, net of cash distributions received from equity method investments, (iii) other operating expenses (income), net, and (iv) income or expense from non-recurring projects and non-operating activities. For the periods referenced, this included non-recurring fees and expenses incurred in connection with the Firehouse Subs acquisition consisting of professional fees, compensation-related expenses and integration costs as well as costs from professional advisory and consulting services associated with certain transformational corporate restructuring initiatives that rationalize our structure and optimize cash movements, including services related to significant tax reform legislation, regulations and related restructuring initiatives. Management believes that these types of expenses are either not related to our underlying profitability drivers or not likely to re-occur in the foreseeable future and the varied timing, size and nature of these projects may cause volatility in our results unrelated to the performance of our core business that does not reflect trends of our core operations. 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 our operating performance. Adjusted EBITDA, as defined above, also represents our measure of segment income for each of our four operating segments.

LTM Adjusted EBITDA is defined as Adjusted EBITDA for the last twelve month period to the date reported. See reconciliation of LTM Adjusted EBITDA in the following pages.

Adjusted Net Income is defined as net income excluding (i) franchise agreement amortization as a result of acquisition accounting, (ii) amortization of deferred financing costs and debt issuance discount, (iii) loss on early extinguishment of debt and interest expense, which represents non-cash interest expense related to losses reclassified from accumulated comprehensive income (loss) into interest expense in connection with interest rate swaps de-designated in May 2015, November 2019 and September 2021, (iv) (income) loss from equity method investments, net of cash distributions received from equity method investments, (v) other operating expenses (income), net, and (vi) income or expense from non-recurring projects and non-operating activities (as described above).

Adjusted Diluted EPS is calculated by dividing Adjusted Net Income by the weighted average diluted shares outstanding 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.

Net Leverage is defined as net debt (total debt less cash and cash equivalents) divided by LTM Adjusted EBITDA. Net Leverage is an operating performance measure that we believe provides investors a more complete understanding of our leverage position and borrowing capacity after factoring in cash and cash equivalents that eventually could be used to repay outstanding debt.

Revenue growth and Adjusted EBITDA growth, on an organic basis, are non-GAAP measures that exclude the impact of FX movements and also exclude the results of Firehouse Subs for the first four full fiscal quarters following the acquisition. 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 and the Firehouse Subs acquisition. We calculate the impact of FX movements by translating prior year results at current year monthly average exchange rates.

Free Cash Flow is the total of Net cash provided by operating activities minus Payments for property and equipment. Free Cash Flow is a liquidity measure used by management as one factor in determining the amount of cash that is available for working capital needs or other uses of cash, however, it does not represent residual cash flows available for discretionary expenditures. LTM Free Cash Flow is defined as Free Cash Flow for the last twelve-month period to the date reported.

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Non-GAAP Financial Measures
Organic Growth in Revenue and Adjusted EBITDA
(Unaudited)



Three Months Ended

September 30,


Variance


FHS Impact


Impact of FX
Movements


Organic Growth

(in US$ millions)


2022


2021


$


%


$


$


$


%

Revenue

















TH


$ 1,033


$ 885


$ 148


16.6 %


$ —


$ (28)


$ 176


20.5 %

BK


$ 491


$ 467


$ 24


5.0 %


$ —


$ (19)


$ 43


9.4 %

PLK


$ 164


$ 143


$ 21


14.7 %


$ —


$ (1)


$ 22


15.4 %

FHS


$ 38


$ —


$ 38


NM


$ 38


$ —


$ —


— %

Total Revenues


$ 1,726


$ 1,495


$ 231


15.5 %


$ 38


$ (48)


$ 241


16.5 %

Adjusted EBITDA

















TH


$ 305


$ 278


$ 27


9.6 %


$ —


$ (9)


$ 36


13.2 %

BK


$ 262


$ 272


$ (10)


(3.8) %


$ —


$ (16)


$ 6


2.3 %

PLK


$ 62


$ 57


$ 5


10.4 %


$ —


$ (1)


$ 6


12.0 %

FHS


$ 13


$ —


$ 13


NM


$ 13


$ —


$ —


— %

Adjusted EBITDA


$ 642


$ 607


$ 35


5.8 %


$ 13


$ (26)


$ 48


8.3 %

Note: Percentage changes may not recalculate due to rounding.
NM - not meaningful

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Non-GAAP Financial Measures
Reconciliation of EBITDA and Adjusted EBITDA to Net Income
(Unaudited)


Three Months Ended September 30,


Nine Months Ended September 30,

(in US$ millions)

2022


2021


2022


2021

Segment income:








TH

$ 305


$ 278


$ 810


$ 738

BK

262


272


761


755

PLK

62


57


179


171

FHS

13



40


Adjusted EBITDA

642


607


1,790


1,664

Share-based compensation and non-cash incentive
compensation expense(1)

34


25


93


71

FHS Transaction costs(2)

3



8


Corporate restructuring and tax advisory fees(3)

12


4


21


8

Impact of equity method investments(4)

13


11


41


22

Other operating expenses (income), net

(27)


(16)


(68)


(50)

EBITDA

607


583


1,695


1,613

Depreciation and amortization

46


50


143


150

Income from operations

561


533


1,552


1,463

Interest expense, net

133


128


389


378

Loss on early extinguishment of debt


11



11

Income tax expense (benefit)(5)

(102)


65


17


83

Net income

$ 530


$ 329


$ 1,146


$ 991

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Non-GAAP Financial Measures
Reconciliation of Net Income to Adjusted Net Income and Adjusted Diluted EPS
(Unaudited)


Three Months Ended September 30,


Nine Months Ended September 30,

(in US$ millions, except per share data)

2022


2021


2022


2021

Net income

$ 530


$ 329


$ 1,146


$ 991

Income tax expense (benefit)(5)

(102)


65


17


83

Income before income taxes

428


394


1,163


1,074

Adjustments:








Franchise agreement amortization

8


8


24


24

Amortization of deferred financing costs and debt issuance discount

7


7


21


20

Interest expense and loss on extinguished debt(6)

16


24


48


39

FHS Transaction costs(2)

3



8


Corporate restructuring and tax advisory fees(3)

12


4


21


8

Impact of equity method investments(4)

13


11


41


22

Other operating expenses (income), net

(27)


(16)


(68)


(50)

Total adjustments

32


38


95


63

Adjusted income before income taxes

460


432


1,258


1,137

Adjusted income tax expense(5)(7)

24


79


154


169

Adjusted net income

$ 436


$ 353


$ 1,104


$ 968

Adjusted diluted earnings per share

$ 0.96


$ 0.76


$ 2.42


$ 2.08

Weighted average diluted shares outstanding

454


465


455


465

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Non-GAAP Financial Measures
Net Leverage and Reconciliation of Free Cash Flow
(Unaudited)



As of

(in US$ millions, except ratio)


September 30, 2022


September 30, 2021

Long-term debt, net of current portion


$ 12,853


$ 12,379

Finance leases, net of current portion


310


328

Current portion of long-term debt and finance leases


117


113

Unamortized deferred financing costs and deferred issue discount


118


138

Total debt


13,398


12,958






Cash and cash equivalents


946


1,773

Net debt


12,452


11,185

LTM adjusted EBITDA


2,374


2,165

Net leverage


5.2x


5.2x



Nine Months Ended
September 30,


Twelve Months Ended
December 31,


Twelve Months Ended
September 30,

(in US$ millions)


2022


2021


2020


2021


2020


2022


2021

Calculation:


A


B


C


D


E


A + D - B


B + E - C

Net cash provided by operating activities


$ 1,067


$ 1,255


$ 608


$ 1,726


$ 921


$ 1,538


$ 1,568

Payments for property and equipment


(52)


(70)


(71)


(106)


(117)


(88)


(116)

Free Cash flow


$ 1,015


$ 1,185


$ 537


$ 1,620


$ 804


$ 1,450


$ 1,452



Nine Months Ended
September 30,


Six Months Ended
June 30,


Three Months Ended
September 30,

(in US$ millions)


2022


2022


2022

Calculation:


A


B


A -B

Net cash provided by operating activities


$ 1,067


$ 669


$ 398

Payments for property and equipment


(52)


(28)


(24)

Free Cash Flow


$ 1,015


$ 641


$ 374

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Non-GAAP Financial Measures
Reconciliation of EBITDA and Adjusted EBITDA to Net Income
(Unaudited)



Nine Months Ended
September 30,


Twelve Months Ended
December 31,


Twelve Months Ended
September 30,

(in US$ millions)


2022


2021


2020


2021


2020


2022


2021

Calculation:


A


B


C


D


E


A + D - B


B + E - C

Segment income:















TH


$ 810


$ 738


$ 594


$ 997


$ 823


$ 1,069


$ 967

BK


761


755


605


1,021


823


1,027


973

PLK


179


171


164


228


218


236


225

FHS


40




2



42


Adjusted EBITDA


1,790


1,664


1,363


2,248


1,864


2,374


2,165

Share-based compensation and non-cash
incentive compensation expense(1)


93


71


63


102


84


124


92

FHS Transaction costs(2)


8




18



26


Corporate restructuring and tax advisory fees(3)


21


8


11


16


16


29


13

Impact of equity method investments(4)


41


22


42


25


48


44


28

Other operating expenses (income), net


(68)


(50)


59


7


105


(11)


(4)

EBITDA


1,695


1,613


1,188


2,080


1,611


2,162


2,036

Depreciation and amortization


143


150


139


201


189


194


200

Income from operations


1,552


1,463


1,049


1,879


1,422


1,968


1,836

Interest expense, net


389


378


376


505


508


516


510

Loss on early extinguishment of debt



11



11


98



109

Income tax expense (benefit)(5)


17


83


62


110


66


44


87

Net income


$ 1,146


$ 991


$ 611


$ 1,253


$ 750


$ 1,408


$ 1,130

Non-GAAP Financial Measures
Footnotes to Reconciliation Tables

(1)

Represents share-based compensation expense associated with equity awards for the periods indicated; also includes the portion of annual non-cash incentive compensation expense that eligible employees elected to receive or are expected to elect to receive as common equity in lieu of their 2021 and 2022 cash bonus, respectively.

(2)

In connection with the acquisition of Firehouse Subs, we incurred certain non-recurring general and administrative expenses during the three and nine months ended September 30, 2022, primarily consisting of professional fees, compensation-related expenses and integration costs.

(3)

Costs arising primarily from professional advisory and consulting services associated with certain transformational corporate restructuring initiatives that rationalize our structure and optimize cash movements, including services related to significant tax reform legislation, regulations and related restructuring initiatives.

(4)

Represents (i) (income) loss from equity method investments and (ii) cash distributions received from our equity method investments. Cash distributions received from our equity method investments is included in segment income.

(5)

The effective tax rate for the three and nine months ended September 30, 2022 included a net decrease in tax reserves of $171 million related primarily to expiring statute of limitations for certain prior tax years which decreased the effective tax rate by 39.9% and 14.7% for the three and nine months ended September 30, 2022, respectively. The impact of the net reserve releases decreased our adjusted effective tax rate by 9.5% and 3.5% for the three and nine months ended September 30, 2022, respectively. The effective tax rate for the nine months ended September 30, 2021 included a net decrease in tax reserves of $87 million related primarily to expiring statute of limitations for certain prior tax years which decreased the effective tax rate by 8.1%. The impact of the net reserves releases decreased our adjusted effective tax rate by 2.0% for the nine months ended September 30, 2021.

(6)

Represents loss on early extinguishment of debt and interest expense. Interest expense included in this amount represents non-cash interest expense related to losses reclassified from accumulated comprehensive income (loss) into interest expense in connection with interest rate swaps de-designated in May 2015, November 2019 and September 2021.

(7)

Adjusted income tax expense includes the tax impact of the non-GAAP adjustments and is calculated using our statutory tax rate in the jurisdiction in which the costs were incurred.

Consolidated Operational Highlights (excluding Russia)

Below are the RBI consolidated and BK segment operational highlights excluding the results from Russia for each quarter of 2021.



Three Months Ended


Twelve
Months
Ended



March 31,
2021



June 30,

2021



September
30, 2021



December
31, 2021



December
31, 2021



(Unaudited)




System-wide Sales Growth















BK


1.5 %



35.8 %



11.7 %



14.8 %



15.1 %

Consolidated (a)


1.2 %



30.5 %



10.4 %



13.4 %



13.3 %

System-wide Sales (in US$ millions)















BK

$

5,012


$

5,701


$

6,017


$

5,996


$

22,726

Consolidated (a)

$

7,735


$

8,724


$

9,182


$

9,130


$

34,771

Net Restaurant Growth















BK


(0.8) %



0.1 %



1.3 %



3.2 %



3.2 %

Consolidated (a)


0.3 %



1.3 %



2.4 %



4.4 %



4.4 %

System Restaurant Count at Period End















BK


17,925



17,999



18,131



18,427



18,427

Consolidated


26,407



26,626



26,875



27,423



27,423

Comparable Sales















BK


0.7 %



16.8 %



7.4 %



10.9 %



8.7 %

Consolidated (a)


0.2 %



15.6 %



6.1 %



9.0 %



7.6 %

(a)

Consolidated system-wide sales growth, consolidated system-wide sales, consolidated net restaurant growth and consolidated comparable sales do not include the results of Firehouse Subs for all of the periods presented.

Reclassification of Technology Revenues and Expenses for 2021

Below are the RBI consolidated and BK segment quarterly results for 2021 adjusted for the reclassification of technology revenues from Franchise and property revenues to Advertising revenues and other services and technology expenses from General and administrative expenses to Advertising expenses and other services.

RBI Consolidated Results


Three Months Ended

(in US$ millions)


March 31,
2021



June 30,
2021



September 30,
2021



December 31,
2021



(Unaudited)

Revenues:












Sales

$

507


$

590


$

621


$

660

Franchise and Property Revenues (a)


548



612



635



648

Advertising Revenues and Other Services (a)


205



236



239



238

Total Revenues


1,260



1,438



1,495



1,546

Operating costs and expenses:












Cost of Sales


401



467



490



532

Franchise and Property Expenses


116



121



121



131

Advertising Expenses and Other Services (b)


237



243



245



261

General and Administrative Expenses (b)


104



108



115



157

(Income) Loss from Equity Method Investments


2



3



7



(8)

Other Operating Expenses (Income), net


(42)



8



(16)



57

Total Operating Costs and Expenses


818



950



962



1,130

Income from Operations


442



488



533



416

Interest Expense, net


124



126



128



127

Loss on Early Extinguishment of Debt






11



Income before Income Taxes


318



362



394



289

Income Tax Expense (Benefit)


47



(29)



65



27

Net Income

$

271


$

391


$

329


$

262

(a)

Reflects reclassification of technology revenues from Franchise and property revenues to Advertising revenues and other services of $2 million for the three months ended June 30, 2021, $4 million for the three months ended September 30, 2021 and $3 million for the three months ended December 31, 2021. There were no related reclassifications during the three months ended March 31, 2021.



(b)

Reflects reclassification of technology expenses from General and administrative expenses (Segment G&A for BK segment results) to Advertising expenses and other services of $1 million for the three months ended March 31, 2021, $5 million for the three months ended June 30, 2021, $8 million for the three months ended September 30, 2021 and $10 million for the three months ended December 31, 2021.

BK Segment Results


Three Months Ended

(in US$ millions)


March 31,
2021



June 30,
2021



September 30,
2021



December 31,
2021



(Unaudited)

Sales

$

16


$

17


$

16


$

15

Franchise and Property Revenues (a)

$

289


$

322


$

333


$

348

Advertising Revenues and Other Services (a)

$

102


$

120


$

118


$

117

Total Revenues

$

407


$

459


$

467


$

480













Cost of Sales

$

16


$

17


$

16


$

17

Franchise and Property Expenses

$

33


$

33


$

34


$

42

Advertising Expenses and Other Services (b)

$

118


$

115


$

118


$

123

Segment G&A (b)

$

35


$

40


$

39


$

47

Segment Depreciation and Amortization

$

12


$

12


$

12


$

12

Adjusted EBITDA

$

217


$

266


$

272


$

266

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SOURCE Restaurant Brands International Inc.