Restaurant Brands International(QSR) - 2025 Q2 - Quarterly Results

Restaurant Brands International Inc. Q2 2025 Results Financial and Operational Highlights RBI's Q2 2025 consolidated system-wide sales grew 5.3%, driven by international markets and accelerating comparable sales - CEO Josh Kobza highlighted strong progress in strategic priorities, with improved sales trends led by Tim Hortons and International businesses, expressing confidence in delivering 8%+ organic Adjusted Operating Income growth in 2025[2] Q2 2025 Consolidated Financial Highlights (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | System-Wide Sales Growth | 5.3% | 5.0% | +0.3 ppt | | Comparable Sales | 2.4% | 1.9% | +0.5 ppt | | Total Revenues | $2,410M | $2,080M | +15.9% | | Income from Operations | $483M | $663M | -27.2% | | Diluted EPS | $0.58 | $0.88 | -34.1% | | Adjusted Operating Income | $668M | $632M | +5.7% | | Adjusted Diluted EPS | $0.94 | $0.86 | +9.2% | | Net Leverage | 4.6x | 5.0x | -0.4x | Key Business Updates and Reporting Changes RBI established a new 'Restaurant Holdings' segment, classified Burger King China as a discontinued operation, and updated its AOI presentation - A new operating and reportable segment, Restaurant Holdings (RH), was established to include results from the newly acquired Carrols Burger King restaurants (May 16, 2024) and Popeyes China restaurants (June 28, 2024)[4] - On February 14, 2025, RBI acquired the remaining equity in Burger King China, which is now classified as held for sale and reported as discontinued operations as the company seeks a new controlling shareholder[7][8] - The presentation of Adjusted Operating Income (AOI) was updated to exclude Franchise Agreement Amortization and Reacquired Franchise Rights Amortization from Segment Franchise and Property Expenses, a change that does not impact total AOI or consolidated results[6] Segment Performance Analysis The International segment led growth, Tim Hortons and Burger King US saw positive comparable sales, while acquisitions boosted Popeyes' results Tim Hortons (TH) Segment Results The Tim Hortons segment reported 3.9% system-wide sales growth, driven by a 3.6% comparable sales increase in Canada and higher supply chain sales TH Segment Q2 2025 Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | System-wide Sales Growth | 3.9% | 5.4% | -1.5 ppt | | Comparable Sales | 3.4% | 4.6% | -1.2 ppt | | Comparable Sales - Canada | 3.6% | 4.9% | -1.3 ppt | | Total Revenues | $1,083M | $1,031M | +5.0% | | Adjusted Operating Income | $278M | $269M | +3.3% | - The increase in Total Revenues was mainly driven by higher Supply Chain Sales, while the rise in Adjusted Operating Income was attributed to revenue growth and lower G&A expenses[12][13] Burger King (BK) Segment Results The Burger King segment's system-wide sales grew 1.0%, with US comparable sales up 1.5% amid its ongoing "Reclaim the Flame" initiative BK Segment Q2 2025 Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | System-wide Sales Growth | 1.0% | -0.7% | +1.7 ppt | | Comparable Sales | 1.3% | -0.1% | +1.4 ppt | | Comparable Sales - US | 1.5% | 0.1% | +1.4 ppt | | Total Revenues | $388M | $364M | +6.6% | | Adjusted Operating Income | $121M | $114M | +6.1% | - The company is executing its multi-year "Reclaim the Flame" plan, investing up to $700 million through 2028, with $152 million funded as of June 30, 2025[17] - The increase in Adjusted Operating Income was primarily due to the non-recurrence of $6 million in 'Fuel the Flame' expenses from the prior year and lower compensation-related G&A expenses[19] Popeyes (PLK) Segment Results Popeyes' revenue and operating income growth was driven by the acquisition of company restaurants, despite a decline in comparable sales PLK Segment Q2 2025 Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | System-wide Sales Growth | 1.6% | 4.6% | -3.0 ppt | | Comparable Sales | -1.4% | 0.5% | -1.9 ppt | | Total Revenues | $210M | $194M | +8.2% | | Adjusted Operating Income | $66M | $62M | +6.5% | - The increases in Total Revenues and Adjusted Operating Income were primarily driven by the acquisition of company restaurants as part of the Carrols Acquisition[20] Firehouse Subs (FHS) Segment Results The Firehouse Subs segment achieved 6.3% system-wide sales growth, which drove increases in both total revenues and operating income FHS Segment Q2 2025 Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | System-wide Sales Growth | 6.3% | 3.3% | +3.0 ppt | | Comparable Sales | -0.8% | -0.1% | -0.7 ppt | | Total Revenues | $59M | $53M | +11.3% | | Adjusted Operating Income | $15M | $13M | +15.4% | - The increases in Total Revenues and Adjusted Operating Income were primarily driven by the increase in System-wide Sales[21] International (INTL) Segment Results The International segment demonstrated strong performance with 9.8% system-wide sales growth, fueled by higher royalties from Burger King and Popeyes INTL Segment Q2 2025 Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | System-wide Sales Growth | 9.8% | 9.2% | +0.6 ppt | | Comparable Sales | 4.2% | 2.6% | +1.6 ppt | | Total Revenues | $250M | $232M | +7.8% | | Adjusted Operating Income | $172M | $160M | +7.5% | - Revenue and AOI growth was driven by higher royalties from Burger King and Popeyes, partially offset by the absence of $10 million in revenues from BK China, which was recognized in the prior year[23] Restaurant Holdings (RH) Segment Results The new Restaurant Holdings segment reported initial results post-acquisitions, with Burger King restaurants showing 2.9% comparable sales growth RH Segment Q2 2025 Performance | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Revenues | $469M | $230M | | Company Restaurant Expenses | $406M | $194M | | Adjusted Operating Income | $16M | $14M | | BK Comparable Sales | 2.9% | -1.6% | Capital Allocation and Shareholder Returns RBI declared a $0.62 per share dividend and approved a new $1 billion share repurchase authorization, while prioritizing debt reduction - A dividend of $0.62 per common share was declared for the third quarter of 2025, payable on October 7, 2025[27] - A new share repurchase authorization for up to $1 billion of common shares was approved, valid from September 15, 2025, to September 30, 2027[28] - While the new share repurchase authorization provides capital allocation flexibility, the company remains committed to prioritizing debt reduction in the near term[28] Financial Guidance and Outlook RBI reaffirmed its 2025 financial guidance and maintained its long-term algorithm targeting 8%+ organic Adjusted Operating Income growth annually 2025 Financial Guidance | Metric | 2025 Expectation | | :--- | :--- | | Segment G&A (excluding RH) | $600M - $620M | | RH Segment G&A | ~$100M | | Total Capex and Cash Inducements | $400M - $450M | | Adjusted Interest Expense, net | ~$520M | Long-Term Algorithm (2024-2028 Average) | Metric | Long-Term Target | | :--- | :--- | | Comparable Sales | 3%+ | | Organic Adjusted Operating Income Growth | 8%+ | | Net Restaurant Growth | Reaching 5%+ towards end of period | Consolidated Financial Statements Acquisitions drove a significant revenue increase, but higher operating costs led to a decline in net income despite strong operating cash flow Condensed Consolidated Statements of Operations Total revenues rose to $2.41 billion, but higher operating costs caused income from operations to fall to $483 million from $663 million year-over-year Q2 2025 Statement of Operations Summary | (in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Revenues | $2,410 | $2,080 | | Total operating costs and expenses | $1,927 | $1,417 | | Income from operations | $483 | $663 | | Net income from continuing operations | $264 | $399 | | Diluted EPS from continuing operations | $0.58 | $0.88 | Condensed Consolidated Balance Sheets Total assets increased to $25.69 billion as of June 30, 2025, driven by growth in intangible assets, goodwill, and assets held for sale Balance Sheet Summary | (in millions) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total current assets | $2,788 | $2,282 | | Total assets | $25,688 | $24,632 | | Total current liabilities | $2,754 | $2,364 | | Long-term debt, net | $13,428 | $13,455 | | Total liabilities | $20,598 | $19,789 | | Total shareholders' equity | $5,090 | $4,843 | Condensed Consolidated Statements of Cash Flows For the first six months of 2025, net cash from operating activities was $567 million, while financing activities were primarily used for dividend payments Six Months 2025 Cash Flow Summary | (in millions) | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $567 | $482 | | Net cash used for investing activities | ($202) | ($559) | | Net cash used for financing activities | ($555) | ($112) | | Decrease in cash and cash equivalents | ($308) | ($197) | | Cash and cash equivalents at end of period | $1,026 | $942 | Non-GAAP Financial Measures and Reconciliations RBI uses non-GAAP metrics like AOI and Organic Growth to clarify underlying performance, reporting 5.7% organic AOI growth and improved Net Leverage of 4.6x - The company uses non-GAAP measures to provide investors with a consistent comparison of operating results, excluding items that may cause volatility unrelated to core business performance[45][46][49] - Organic growth metrics for revenue, AOI, and Adjusted Diluted EPS are calculated to exclude the impact of foreign exchange movements and the results of the new RH segment[56] Net Leverage Reconciliation | (in millions, except ratio) | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total debt | $14,035 | $14,137 | | Cash and cash equivalents | $1,026 | $942 | | Net debt | $13,009 | $13,195 | | LTM Adjusted EBITDA | $2,840 | $2,649 | | Net Leverage | 4.6x | 5.0x | Q2 2025 Organic Growth Summary | Metric | Reported Growth | Organic Growth | | :--- | :--- | :--- | | Total Revenues | 15.9% | 6.6% | | Income from Operations | -27.2% | -27.4% | | Adjusted Operating Income | 5.7% | 5.7% | | Adjusted Diluted EPS | 9.2% | 10.3% |