01—Abstract
Summary
Summary of the 8-K filed January 8, 2024. Cited figures are marked; the original filing is the authoritative source.
Restaurant Brands International Inc. (filed as RBI; NYSE/TSX: QSR) furnished this Form 8-K on January 8, 2024 to announce revisions to its reportable segments and its segment income measure.
Beginning with the fourth quarter and year ended December 31, 2023, RBI will report five segments: Tim Hortons (TH), Burger King (BK), Popeyes Louisiana Kitchen (PLK), Firehouse Subs (FHS), and International (INTL). The company said the change reflects how its Chief Operating Decision Maker manages resource allocation and performance assessment. RBI also replaced Adjusted EBITDA as its segment income measure with Adjusted Operating Income (AOI).
Unlike Adjusted EBITDA, AOI includes depreciation and amortization (excluding franchise agreement amortization) as well as share-based compensation and non-cash incentive compensation expense. RBI will continue to report Adjusted EBITDA on a consolidated and segment basis for supplemental purposes. The filing states that these changes affect only the allocation of results across segments and do not restate previously reported consolidated financial statements or previously reported consolidated non-GAAP adjustments.
Exhibit 99.2 contains unaudited trending schedules covering 11 quarters (Q1 2021 through Q3 2023) on the new segment basis, including system-wide sales, restaurant counts, segment P&L, AOI and Adjusted EBITDA. The filing states that RBI will report under the new segments with its fourth-quarter and full-year 2023 results, expected before market open on February 13, 2024.
02—Key points
Key Highlights
- Five new reportable segments effective with Q4 and full-year 2023 reporting: Tim Hortons, Burger King, Popeyes Louisiana Kitchen, Firehouse Subs, and International.
- Segment income measure changes from Adjusted EBITDA to Adjusted Operating Income (AOI), which includes D&A excluding franchise agreement amortization and share-based compensation.
- Adjusted EBITDA will continue to be reported on a consolidated and segment basis for supplemental purposes.
- Prior results were recast on the new basis; the filing states this does not restate previously reported consolidated financial statements or consolidated non-GAAP adjustments.
- Exhibit 99.2 provides 11 quarters of unaudited trending data (Q1 2021 to Q3 2023) for the new segments.
- For the LTM period ended September 30, 2023, the filing shows total AOI of $2,197 million on revenue of $6,891 million, with International AOI of $585 million and Tim Hortons AOI of $953 million.
- CEO Josh Kobza said the structure gives segment leaders greater autonomy over strategic decisions to accelerate growth.
03—Questions
Frequently Asked Questions
Why is RBI changing its reportable segments?
According to the filing, the revised segments align with how the Chief Operating Decision Maker manages the business, including resource allocation and performance assessment. Management said the structure reflects how leadership intends to oversee the business going forward.
What is Adjusted Operating Income (AOI) and how does it differ from Adjusted EBITDA?
AOI is income from operations adjusted to exclude franchise agreement amortization from acquisition accounting, equity method investment income or loss (net of cash distributions), other operating expenses (income), net, and non-recurring or non-operating items. Unlike Adjusted EBITDA, AOI includes depreciation and amortization (excluding franchise agreement amortization) and share-based and non-cash incentive compensation expense.
Does this change affect RBI's previously reported financial results?
The filing states the changes only affect segment allocation of results and do not revise or restate previously reported consolidated financial statements or previously reported consolidated non-GAAP adjustments.
When will RBI begin reporting under the new segments?
RBI will report under the new segments and segment income definition beginning with results for the fourth quarter and year ended December 31, 2023, which the company said would be announced before market open on February 13, 2024.
Which segment contributed the most AOI on an LTM basis through September 30, 2023?
The filing's LTM September 30, 2023 table shows Tim Hortons with AOI of $953 million, the largest of the five segments, ahead of International at $585 million, Burger King at $404 million, Popeyes at $217 million and Firehouse Subs at $38 million.
04—Continue