01—Abstract
Summary
Summary of the 10-Q filed April 30, 2024. Cited figures are marked; the original filing is the authoritative source.
Restaurant Brands International Inc. (QSR) reported first-quarter 2024 results with total revenues of $1,739 milliona, up from $1,590 million in the first quarter of 2023, and net income of $328 million versus $277 million a year earlier.
Net income attributable to common shareholders was $230 millionb, or $0.72 per diluted share, compared with $0.61 per diluted share in the prior-year period. Income from operations rose to $544 million from $447 million, and Adjusted Operating Income increased to $540 million from $505 million, with segment income higher in every segment. Consolidated system-wide sales grew 8.1% and comparable sales rose 4.6%, though both decelerated from 14.7% and 10.3% in the prior-year quarter.
Cash flow from operations was $148 millionc, compared with $95 million a year earlier, and cash and cash equivalents ended the quarter at $1,049 million. Total debt, net was $12,907 million, and the company had $1,248 million of borrowing availability under its Revolving Credit Facility. Management cited commodity, labor and energy cost increases, rising interest rates, and a softer consumer environment as pressures on the business.
The company did not repurchase shares in the quarter and had $500 milliond remaining under its authorization. The pending acquisition of Carrols Restaurant Group, announced January 16, 2024 at $9.55 per share in cash (an aggregate total enterprise value of approximately $1.0 billion), is expected to close in the second quarter of 2024 and will be funded with about $230 million of cash on hand and an additional $750 million of Term Loan B loans. A shareholder complaint filed on April 23, 2024 challenges the transaction, and the company intends to defend it vigorously.
02—Key points
Key Highlights
- Total revenues rose to $1,739 million from $1,590 million, and net income increased to $328 million from $277 million for the three months ended March 31, 2024.
- Diluted earnings per share were $0.72, compared with $0.61 in the prior-year quarter.
- Adjusted Operating Income increased to $540 million from $505 million, with segment income up in all five operating segments; TH segment income was $224 million versus $212 million.
- Consolidated system-wide sales growth was 8.1% and comparable sales were 4.6%, both lower than the 14.7% and 10.3% reported for the prior-year quarter.
- Cash provided by operating activities was $148 million versus $95 million, and cash and cash equivalents were $1,049 million at March 31, 2024.
- Carrols Restaurant Group acquisition, at $9.55 per share in cash (about $1.0 billion aggregate enterprise value), is expected to close in the second quarter of 2024, financed with about $230 million of cash on hand and $750 million of additional Term Loan B loans.
- No common shares were repurchased in the quarter; $500 million remained under the $1,000 million share repurchase authorization, and the quarterly dividend was $0.58 per share.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, Restaurant Brands International kept $0.13.
- Revenue$1.74B100.0%
- Cost of revenue−$606.0M34.8%
- Gross profit$1.13B65.2%
- Operating costs−$589.0M33.9%
- Operating income$544.0M31.3%
- Interest, other & tax−$314.0M18.1%
- Net income$230.0M13.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed April 30, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $1.74B$1.59B | +9.4% |
| Cost of Revenue | $606.00M$550.00M | +10.2% |
| Gross Profit | $1.13B$1.04B | +8.9% |
| SG&A Expenses | $173.00M$175.00M | −1.1% |
| Operating Expenses | $1.20B$1.14B | +4.5% |
| Operating Income | $544.00M$447.00M | +21.7% |
| Net Income | $230.00M$189.00M | +21.7% |
| EPS (Basic) | $0.73$0.61 | +19.7% |
| EPS (Diluted) | $0.72$0.61 | +18.0% |
| Shares Outstanding (Basic) | 314.00M309.00M | +1.6% |
| Shares Outstanding (Diluted) | 453.00M456.00M | −0.7% |
05—Questions
Frequently Asked Questions
How did Restaurant Brands International perform in the first quarter of 2024 compared with the first quarter of 2023?
Total revenues increased to $1,739 million from $1,590 million, income from operations rose to $544 million from $447 million, and net income increased to $328 million from $277 million. Diluted earnings per share were $0.72 versus $0.61 a year earlier.
What is driving the change in system-wide sales and comparable sales?
Consolidated system-wide sales growth was 8.1% and comparable sales were 4.6%, down from 14.7% and 10.3% in the first quarter of 2023. By brand, Tim Hortons system-wide sales grew 7.8%, Burger King grew 2.6%, Popeyes grew 10.4%, Firehouse Subs grew 4.3%, and International grew 11.6%.
What are the details of the pending Carrols Restaurant Group acquisition?
RBI agreed on January 16, 2024 to acquire the Carrols shares it does not already hold for $9.55 per share in cash, an aggregate total enterprise value of approximately $1.0 billion. The transaction is expected to close in the second quarter of 2024, is not subject to a financing contingency, and will be funded with about $230 million of cash on hand and term loan debt, including $750 million of additional Term Loan B loans.
How is the company's liquidity and debt position?
At March 31, 2024, RBI had cash and cash equivalents of $1,049 million and $1,248 million of borrowing availability under its Revolving Credit Facility. Long-term debt, net of current portion, was $12,832 million, and the company stated it was in compliance with all applicable financial debt covenants.
Are there any material legal proceedings or risks disclosed for investors to note?
A class action from 2018 alleging Sherman Act violations related to Burger King franchise agreements remains pending, and the company said it is unable to predict the outcome. A shareholder complaint filed April 23, 2024 by a purported Carrols shareholder seeks to enjoin the Carrols stockholder vote and/or the consummation of the sale, and RBI intends to vigorously defend it.
06—Continue