01—Abstract
Summary
Summary of the 10-K filed February 22, 2024. Cited figures are marked; the original filing is the authoritative source.
Restaurant Brands International Inc. (QSR) reported 2023 total revenues of $7.02 billiona, up from $6.51 billion in 2022, and net income of $1.72 billion, compared with $1.48 billion in 2022.
Income from operations rose to $2.05 billionb, and Adjusted Operating Income, the company's new segment measure, reached $2.20 billion versus $2.08 billion. The company operated 31,070 restaurants in more than 120 countries and territories as of December 31, 2023, with system-wide sales of $42.89 billion, and nearly all restaurants are franchised. System-wide sales growth was 12.2% consolidated, led by TH at 11.0%, BK at 6.9%, PLK at 10.5%, FHS at 7.1% and INTL at 17.6%.
The filing highlights a strategic shift toward company ownership of Burger King restaurants. The company agreed to acquire Carrols Restaurant Group for $9.55c per share, an aggregate enterprise value of approximately $1.0 billion, expected to close in the second quarter of 2024. The acquisition would bring roughly 1,020 Burger King and 60 Popeyes restaurants under company control, and the company plans to refranchise most of them over five to seven years.
Total indebtedness was $13,043 milliond at year-end, and cash and cash equivalents were $1,139 million. Operating cash flow was $1,323 million in 2023, down from $1,490 million in 2022. Shareholder returns included $500 million of share repurchases in 2023 and a quarterly dividend of $0.58 per common share declared for the first quarter of 2024.
The company is targeting $2.32 in declared dividends per share for 2024. Net income was boosted by a $265 million income tax benefit in 2023, driven by a $367 million increase in net deferred tax assets from intra-group reorganizations, so pre-tax income of $1.45 billion is the more comparable earnings measure.
02—Key points
Key Highlights
- Total revenues of $7,022 million in 2023, up from $6,505 million in 2022 and $5,739 million in 2021.
- Net income of $1,718 million in 2023, up from $1,482 million, with a $265 million income tax benefit that partly reflects a $367 million increase in net deferred tax assets.
- Adjusted Operating Income of $2,200 million, up from $2,084 million, with TH, PLK, FHS and INTL segment income increasing and BK segment income declining.
- Consolidated system-wide sales of $42,886 million with 12.2% growth; comparable sales rose 8.1% consolidated, led by BK at 7.4% and TH at 10.4%.
- Pending acquisition of Carrols Restaurant Group for $9.55 per share (about $1.0 billion enterprise value), expected to close in Q2 2024 and add about 1,020 BK and 60 Popeyes restaurants.
- Total debt of $13,043 million at December 31, 2023, with $1,139 million of cash, and a $1,000 million Revolving Credit Facility availability of $1,248 million.
- Operating cash flow fell to $1,323 million from $1,490 million, while the company repurchased $500 million of common shares and declared a $0.58 quarterly dividend for Q1 2024.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Restaurant Brands International kept $0.17.
- Revenue$7.02B100.0%
- Cost of revenue−$2.44B34.7%
- Gross profit$4.59B65.3%
- Operating costs−$2.54B36.1%
- Operating income$2.05B29.2%
- Interest, other & tax−$861.0M12.3%
- Net income$1.19B16.9%
Where FY2023 revenue went
$7.02B- Operating costs: $2.54B, 36% of revenue
- Cost of revenue: $2.44B, 35% of revenue
- Net income: $1.19B, 17% of revenue
- Interest, other & tax: $861.0M, 12% of revenue
Kept 17% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 22, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $7.02B$6.50B | +7.9% |
| Cost of Revenue | $2.44B$2.31B | +5.3% |
| Gross Profit | $4.59B$4.19B | +9.4% |
| Operating Expenses | $4.97B$4.61B | +7.9% |
| Operating Income | $2.05B$1.90B | +8.1% |
| Net Income | $1.19B$1.01B | +18.1% |
| EPS (Basic) | $3.82$3.28 | +16.5% |
| EPS (Diluted) | $3.76$3.25 | +15.7% |
| Shares Outstanding (Basic) | 312.00M307.00M | +1.6% |
| Shares Outstanding (Diluted) | 456.00M455.00M | +0.2% |
05—Questions
Frequently Asked Questions
What is the significance of the Carrols Restaurant Group acquisition?
RBI agreed to acquire all Carrols shares it does not already own for $9.55 per share in cash, an aggregate enterprise value of about $1.0 billion. Carrols is the largest U.S. Burger King franchisee, operating about 1,020 BK and 60 Popeyes restaurants. The deal is expected to close in Q2 2024 and will be financed with about $200 million of cash and about $750 million of term loan debt. RBI plans to remodel the acquired restaurants and refranchise most of them over five to seven years, while keeping 200 to 300 company restaurants for BK.
How did the company's profitability change in 2023?
Income from operations rose to $2,051 million from $1,898 million, and net income rose to $1,718 million from $1,482 million. Net income benefited from a $265 million income tax benefit, compared with a $117 million benefit in 2022. Interest expense, net increased to $582 million from $533 million, due to higher interest rates and the September 2023 term loan refinancing. The company's new Adjusted Operating Income measure rose to $2,200 million from $2,084 million.
Which brands drove growth and which weakened?
TH drove the most growth, with system-wide sales of $7,245 million, up 11.0%, and segment income of $958 million. INTL system-wide sales rose 17.6% to $17,087 million, and INTL segment income increased to $597 million. BK was the weakest segment. Its segment income fell to $386 million from $396 million, and its net restaurant growth was negative 3.3%, although comparable sales rose 7.4%.
What is the company's debt position and liquidity?
Total indebtedness was $13,043 million at December 31, 2023, including $6,450 million of term loan facilities, $2,800 million of first lien notes and $3,650 million of second lien notes. Cash and cash equivalents were $1,139 million, and borrowing availability under the Revolving Credit Facility was $1,248 million. Management said these sources should provide sufficient liquidity for the next twelve months. Next-twelve-month required debt service includes about $484 million of term loan interest and $52 million of term loan principal.
What is the dividend and share repurchase outlook for 2024?
The board declared a $0.58 per common share dividend for Q1 2024, payable April 4, 2024. The company is targeting total declared dividends of $2.32 per common share and Partnership exchangeable unit for 2024, but says there is no assurance this target will be met. In 2023, RBI repurchased 7,639,137 common shares for $500 million. As of December 31, 2023, $500 million remained under the $1.0 billion authorization, which runs through September 30, 2025.
06—Continue