01—Abstract
Summary
Summary of the 10-K filed February 23, 2022. Cited figures are marked; the original filing is the authoritative source.
Restaurant Brands International Inc. (QSR) reported 2021 total revenues of $5.74 billiona, up from $4.97 billion in 2020, and net income of $1.25 billion, up from $750 million.
Income from operations rose to $1.88 billionb from $1.42 billion. Segment income (Adjusted EBITDA) was $2.25 billion versus $1.86 billion, led by Burger King at $1.02 billion and Tim Hortons at $997 million. System-wide sales reached $35.5 billion, and the company operated 29,456 system-wide restaurants as of December 31, 2021, with approximately 100% franchised.
The company acquired Firehouse Subs on December 15, 2021 for total consideration of about $1.03 billionc. Leverage remains significant. Aggregate outstanding indebtedness was $13.12 billion at year-end, and cash and cash equivalents were $1.09 billion, with $998 million of revolver availability.
Cash from operating activities rose to $1.73 billiond from $921 million. The company repurchased 9,247,648 common shares for $551 million during 2021, and declared a first-quarter 2022 dividend of $0.54 per share, targeting $2.16 for 2022. The filing notes an expected approximately $100 million payment in 2022 to resolve disputes with master franchisees in China, of which $72 million was recorded in 2021.
Key risks flagged include COVID-19 effects on restaurant operations and labor, commodity and supply-chain exposure, pending litigation including class actions over no-hiring clauses and Canadian mobile-app geolocation privacy claims, and a 3G RBH voting stake of approximately 29%. Pending tax changes, including Canadian interest-deductibility limits and a proposed 15% global minimum tax, could raise future tax costs.
02—Key points
Key Highlights
- Total revenues rose to $5,739 million in 2021 from $4,968 million in 2020, and net income increased to $1,253 million from $750 million.
- Segment income (Adjusted EBITDA) was $2,248 million in 2021 versus $1,864 million in 2020, with BK at $1,021 million, TH at $997 million, PLK at $228 million and FHS at $2 million.
- Consolidated system-wide sales were $35,495 million in 2021, with system-wide sales growth of 13.8% and comparable sales of 10.6% at Tim Hortons and 9.3% at Burger King.
- Firehouse Subs was acquired on December 15, 2021 for total consideration of approximately $1,033 million, funded by cash on hand and $533 million of incremental Term Loan borrowings.
- Aggregate indebtedness was $13,116 million at December 31, 2021, with cash and cash equivalents of $1,087 million and $998 million of Revolving Credit Facility availability.
- Cash provided by operating activities was $1,726 million in 2021 compared with $921 million in 2020, and the company repurchased $551 million of common shares during the year.
- The Board declared a first-quarter 2022 dividend of $0.54 per common share and is targeting $2.16 in declared dividends per share for 2022.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Restaurant Brands International kept $0.15.
- Revenue$5.74B100.0%
- Cost of revenue−$1.89B32.9%
- Gross profit$3.85B67.1%
- Operating costs−$1.97B34.3%
- Operating income$1.88B32.7%
- Interest, other & tax−$1.04B18.1%
- Net income$838.0M14.6%
Where FY2021 revenue went
$5.74B- Operating costs: $1.97B, 34% of revenue
- Cost of revenue: $1.89B, 33% of revenue
- Interest, other & tax: $1.04B, 18% of revenue
- Net income: $838.0M, 15% of revenue
Kept 15% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 23, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $5.74B$4.97B | +15.5% |
| Cost of Revenue | $1.89B$1.61B | +17.4% |
| Gross Profit | $3.85B$3.36B | +14.6% |
| Operating Expenses | $3.86B$3.55B | +8.9% |
| Operating Income | $1.88B$1.42B | +32.1% |
| Net Income | $838.00M$486.00M | +72.4% |
| EPS (Basic) | $2.71$1.61 | +68.3% |
| EPS (Diluted) | $2.69$1.60 | +68.1% |
| Shares Outstanding (Basic) | 310.00M302.00M | +2.6% |
| Shares Outstanding (Diluted) | 464.00M468.00M | −0.9% |
05—Questions
Frequently Asked Questions
How did Restaurant Brands International perform financially in 2021?
Total revenues were $5,739 million, up from $4,968 million in 2020. Income from operations was $1,879 million versus $1,422 million, and net income was $1,253 million versus $750 million. Diluted earnings per share were $2.69, compared with $1.60 in 2020. The filing attributes much of the increase to higher BK and TH segment income and lower other operating expenses.
What drove the increase in segment income?
Burger King segment income rose to $1,021 million from $823 million, and Tim Hortons segment income rose to $997 million from $823 million. The filing cites higher system-wide sales, increased royalties, and rent increases at TH, with FX adding $55 million to Adjusted EBITDA.
What is the company's debt position?
Aggregate outstanding indebtedness was $13,116 million at December 31, 2021, including $6,493 million of senior secured term loan facilities. The company had no revolver borrowings outstanding and was in compliance with its financial covenants. The filing states that 2022 required debt service includes about $119 million of interest and $54 million of principal on the term loans.
What are the main risks highlighted in the filing?
Key risks include the continuing impact of COVID-19 on restaurant operations and labor, commodity and supply-chain volatility, reliance on franchisees, and substantial leverage. Other flagged risks are pending class action litigation, privacy claims over Tim Hortons mobile app geolocation data, and the influence of 3G RBH, which holds approximately 29% of combined voting power.
What capital return and commitments did the company announce?
The company repurchased 9,247,648 common shares for $551 million in 2021 and had $449 million remaining under its $1.0 billion authorization through August 2023. It declared a $0.54 quarterly dividend for Q1 2022 and is targeting $2.16 in declared dividends per share for 2022. It also expects to pay about $100 million in 2022 to resolve China master franchise disputes.
06—Continue