01—Abstract
Summary
Summary of the 10-K filed February 22, 2023. Cited figures are marked; the original filing is the authoritative source.
Restaurant Brands International Inc. (QSR) reported 2022 total revenues of $6,505 milliona, up from $5,739 million in 2021, and net income of $1,482 million versus $1,253 million.
Consolidated system-wide sales were $39,751 millionb, and the company operates approximately 30,722 system-wide restaurants, with about 100% franchised as of December 31, 2022. Adjusted EBITDA rose to $2,378 million from $2,248 million, driven mainly by higher Tim Hortons segment income and a full year of Firehouse Subs. Income tax was a benefit of $117 million, reflecting a $364 million net decrease in tax reserves tied largely to expiring statutes of limitations.
The company remains highly leveraged, with total indebtedness of $13,045 millionc at year-end and cash and cash equivalents of $1,178 million. Cash from operations fell to $1,490 million from $1,726 million, and cash used for financing activities was $1,307 million, including $971 million in dividends and distributions. Management targets $2.20 in declared dividends per common share for 2023, with the first-quarter 2023 dividend set at $0.55.
Share repurchases totaled $326 milliond in 2022, with $123 million remaining under the authorization. The filing highlights risks including intense competition, reliance on franchisees, commodity and labor cost pressures, the high debt load, and potential tax and joint-employer regulatory changes. Burger King's "Reclaim the Flame" plan commits $400 million in franchisee investments over two years, and the company will exclude Russia-related results from key business metrics beginning in 2023.
02—Key points
Key Highlights
- Total revenues rose to $6,505 million in 2022 from $5,739 million in 2021; net income reached $1,482 million versus $1,253 million.
- Adjusted EBITDA increased to $2,378 million from $2,248 million, led by Tim Hortons segment income of $1,073 million (up from $997 million) and a full year of Firehouse Subs.
- Burger King segment income declined to $1,007 million from $1,021 million, and the Burger King system-wide sales were $25,482 million.
- Total indebtedness was $13,045 million at December 31, 2022, against cash and cash equivalents of $1,178 million and $998 million of revolver availability.
- Cash provided by operating activities decreased to $1,490 million from $1,726 million, citing working capital, higher interest and tax payments.
- The 2022 income tax benefit of $117 million included a $364 million net decrease in tax reserves, lowering the effective tax rate to (8.6)%.
- The board targets $2.20 in declared dividends per common share for 2023, with a $0.55 first-quarter dividend declared; $123 million remains under the share repurchase authorization.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Restaurant Brands International kept $0.15.
- Revenue$6.50B100.0%
- Cost of revenue−$2.31B35.5%
- Gross profit$4.19B64.5%
- Operating costs−$2.29B35.3%
- Operating income$1.90B29.2%
- Interest, other & tax−$890.0M13.7%
- Net income$1.01B15.5%
Where FY2022 revenue went
$6.50B- Cost of revenue: $2.31B, 36% of revenue
- Operating costs: $2.29B, 35% of revenue
- Net income: $1.01B, 15% of revenue
- Interest, other & tax: $890.0M, 14% of revenue
Kept 15% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 22, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $6.50B$5.74B | +13.3% |
| Cost of Revenue | $2.31B$1.89B | +22.3% |
| Gross Profit | $4.19B$3.85B | +8.9% |
| Operating Expenses | $4.61B$3.86B | +19.4% |
| Operating Income | $1.90B$1.88B | +1.0% |
| Net Income | $1.01B$838.00M | +20.3% |
| EPS (Basic) | $3.28$2.71 | +21.0% |
| EPS (Diluted) | $3.25$2.69 | +20.8% |
| Shares Outstanding (Basic) | 307.00M310.00M | −1.0% |
| Shares Outstanding (Diluted) | 455.00M464.00M | −1.9% |
05—Questions
Frequently Asked Questions
How did Restaurant Brands perform financially in 2022?
Total revenues grew to $6,505 million from $5,739 million, and net income increased to $1,482 million from $1,253 million. Adjusted EBITDA rose to $2,378 million from $2,248 million. Consolidated system-wide sales reached $39,751 million, up from $35,495 million.
How leveraged is the company?
As of December 31, 2022, aggregate outstanding indebtedness was $13,045 million, including $6,440 million of senior secured term loans and $6,450 million of senior secured notes. The filing states the company was in compliance with its financial debt covenants.
What drove the change in the income tax line?
The company recorded an income tax benefit of $117 million in 2022, compared with an expense of $110 million in 2021. The effective tax rate was (8.6)%, reflecting a net decrease in tax reserves of $364 million mainly from expiring statutes of limitations.
What is the dividend outlook for 2023?
The board declared a $0.55 per common share dividend for the first quarter of 2023, payable April 5, 2023. The company is targeting total declared dividends of $2.20 per common share and Partnership exchangeable unit for 2023, though it states there is no assurance this target will be achieved.
What are the key risks highlighted in the filing?
Key risks include intense competition, dependence on franchisees for growth and brand value, commodity and labor cost volatility, supply chain concentration, substantial leverage, potential tax law changes, and possible joint-employer liability under proposed NLRB standards. The company also cites COVID-19 and the war in Ukraine as ongoing uncertainties.
06—Continue