01—Abstract
Summary
Summary of the 10-Q filed November 5, 2024. Cited figures are marked; the original filing is the authoritative source.
Restaurant Brands International Inc. reported third-quarter 2024 total revenues of $2.29 billiona, up from $1.84 billion a year earlier, driven largely by the May 16, 2024 acquisition of Carrols Restaurant Group, which contributed $705 million of revenue from acquisition date through September 30, 2024.
Income from operations was $577 millionb versus $582 million, and net income was $357 million versus $364 million. Nine-month net income rose to $1.08 billion from $992 million, helped by a $79 million step acquisition gain on Carrols, while diluted earnings per share were $2.39 versus $2.16. Adjusted Operating Income, a non-GAAP measure, was $652 million for the quarter versus $609 million, with Tim Hortons segment income up to $284 million from $269 million.
Total debt, net, rose to $13.66 billionc at September 30, 2024 from $12.92 billion at December 31, 2023, reflecting $750 million of incremental term loan borrowings, a $1.2 billion 6.125% first lien senior notes issuance due 2029, and a $500 million 5.625% first lien senior notes issuance due 2029 used to redeem the 5.75% notes due 2025. Cash and cash equivalents were $1.18 billion, and borrowing availability under the Revolving Credit Facility was $1.25 billion. Net cash provided by operating activities was $1.02 billion for the nine months, compared with $920 million a year earlier, while cash used for investing activities rose to $616 million, including $508 million for the Carrols purchase, net of cash acquired.
System-wide sales grew 3.2% on a consolidated basis for the quarter, with comparable sales up 0.3%. The company reported that approximately 95% of system-wide restaurants are franchised, and it had 31,525 restaurants as of September 30, 2024. Management also disclosed a $0.58d per share quarterly dividend declared for payment on January 3, 2025, and noted that the company faces a lawsuit filed October 7, 2024 in Delaware alleging breaches of fiduciary duty related to the Carrols transaction.
02—Key points
Key Highlights
- Total revenues were $2.29 billion for the quarter, up from $1.84 billion, with Company restaurant sales rising to $567 million from $65 million, largely reflecting the Carrols Acquisition.
- Net income attributable to common shareholders was $252 million for the quarter, flat with the prior year, while nine-month diluted EPS rose to $2.39 from $2.16.
- Adjusted Operating Income increased to $652 million from $609 million, with Tim Hortons segment income of $284 million versus $269 million and Restaurant Holdings segment income of $16 million.
- Consolidated system-wide sales growth was 3.2% for the quarter, with comparable sales of 0.3%, while Burger King system-wide sales declined 1.5% and Popeyes declined 0.6%.
- Total debt, net, increased to $13.66 billion, with issuance of $1.2 billion 6.125% notes due 2029 and $500 million 5.625% notes due 2029, and redemption of the 5.75% notes due 2025.
- Cash and cash equivalents of $1.18 billion and $1.25 billion of revolver availability were reported as of September 30, 2024, and no share repurchases were made in the nine months ended September 30, 2024.
- A quarterly dividend of $0.58 per common share was declared, payable January 3, 2025.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed November 5, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $2.29B$1.84B | +24.7% |
| Operating Expenses | $1.71B$1.25B | +36.6% |
| Operating Income | $577.00M$582.00M | −0.9% |
| Net Income | $252.00M$252.00M | 0.0% |
| EPS (Basic) | $0.79$0.80 | −1.3% |
| EPS (Diluted) | $0.79$0.79 | 0.0% |
| Shares Outstanding (Basic) | 319.00M314.00M | +1.6% |
| Shares Outstanding (Diluted) | 454.00M459.00M | −1.1% |
05—Questions
Frequently Asked Questions
What drove the increase in revenue this quarter?
Total revenues rose to $2.29 billion from $1.84 billion, mainly because Company restaurant sales increased to $567 million from $65 million following the Carrols Acquisition on May 16, 2024. Franchise and property revenues fell to $735 million from $753 million, and advertising revenues and other services declined to $290 million from $313 million, partly due to discontinued revenues from restaurants acquired from franchisees and an unfavorable FX Impact.
Why did net income decline slightly in the quarter even though operations grew?
Net income was $357 million versus $364 million. The filing attributes the decrease mainly to a $32 million unfavorable change in other operating expenses (income), net, a $13 million increase in income tax expense and a $12 million increase in franchise agreement and reacquired franchise rights amortization. These were partly offset by $16 million of Restaurant Holdings segment income and a $15 million decrease in loss on early extinguishment of debt.
How did the balance sheet and debt change?
Total assets increased to $25.07 billion from $23.39 billion, and total liabilities rose to $20.03 billion from $18.66 billion. Long-term debt, net of current portion, increased to $13.57 billion from $12.85 billion. The company received $750 million of incremental term loan borrowings and issued $1.2 billion and $500 million of first lien senior notes due 2029, while repaying $2.16 billion of long-term debt and finance leases during the nine months.
What did the company say about liquidity and capital returns?
The company stated that cash flow from operations and availability under its Revolving Credit Facility would provide sufficient liquidity over the next twelve months. It paid $767 million in common share dividends and Partnership exchangeable unit distributions during the nine months and made no share repurchases in that period, with $500 million remaining under its authorization.
What legal matters were disclosed?
The filing describes a class action in the U.S. District Court for the Southern District of Florida alleging a Sherman Act violation related to Burger King franchise agreements, which the company said it intends to vigorously defend. It also describes an October 7, 2024 complaint in Delaware Chancery Court against RBI as purported controlling shareholder of Carrols, alleging breach of fiduciary duty and unjust enrichment, which the company also intends to vigorously defend.
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