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

PART I – Financial Information Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for the quarterly period ended June 30, 2025, including Balance Sheets, Statements of Operations, Comprehensive Income, Shareholders' Equity, and Cash Flows, with detailed notes Condensed Consolidated Balance Sheets Total assets increased to $25.7 billion from $24.6 billion, driven by intangible assets and goodwill, while total liabilities rose to $20.6 billion and equity to $5.1 billion Condensed Consolidated Balance Sheet Highlights (in millions USD) | Account | June 30, 2025 | December 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 Operations Q2 2025 total revenues increased to $2.41 billion from $2.08 billion, but net income decreased to $189 million from $280 million due to higher costs and a non-recurring prior-year gain Q2 2025 vs Q2 2024 Statement of Operations (in millions USD, except per share data) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Revenues | $2,410 | $2,080 | | Income from Operations | $483 | $663 | | Net Income | $263 | $399 | | Net Income Attributable to Common Shareholders | $189 | $280 | | Diluted Net Income per Share | $0.57 | $0.88 | H1 2025 vs H1 2024 Statement of Operations (in millions USD, except per share data) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Total Revenues | $4,519 | $3,819 | | Income from Operations | $918 | $1,207 | | Net Income | $484 | $727 | | Net Income Attributable to Common Shareholders | $348 | $510 | | Diluted Net Income per Share | $1.06 | $1.60 | Condensed Consolidated Statements of Cash Flows Net cash from operating activities increased to $567 million, while investing activities used less cash, and financing activities used more due to higher dividends and lower debt proceeds Six Months Ended June 30 Cash Flows (in millions USD) | Cash Flow Activity | 2025 | 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) | Notes to Condensed Consolidated Financial Statements Detailed notes explain financial statements, covering business description, revenue recognition, segment reporting, recent acquisitions, debt, derivatives, equity, income taxes, and legal contingencies - As of June 30, 2025, RBI franchised or owned 32,229 restaurants across its four brands: Tim Hortons (6,075), Burger King (19,666), Popeyes (5,086), and Firehouse Subs (1,402)[26] - On February 14, 2025, RBI acquired the remaining equity interests of BK China for approximately $151 million. The business is classified as held for sale and reported as discontinued operations, with plans to find a new controlling partner within twelve months[62] - On May 16, 2024, RBI acquired the remaining 85% of Carrols Restaurant Group for $9.55 per share in a cash transaction totaling $543 million. This resulted in a $79 million gain in Q2 2024 from remeasuring the existing 15% equity interest[71][72][73] - The Board of Directors approved a new $1 billion share repurchase program effective from September 15, 2025, to September 30, 2027, replacing the prior authorization. No shares were repurchased in the first six months of 2025[116] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses performance, including the new 'Restaurant Holdings' segment, revenue growth from acquisitions, net income decline due to non-recurring gain and FX losses, and strategic investments - A new operating and reportable segment, Restaurant Holdings (RH), was established to include results from the acquired Carrols Burger King restaurants and PLK China restaurants. This separates the company-owned operations from the core franchisor segments[133][134] Consolidated Key Operating Metrics (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | System-wide Sales Growth | 5.3% | 5.0% | | Comparable Sales | 2.4% | 1.9% | | Net Restaurant Growth | 2.9% | 4.0% | - The decrease in Income from Operations in Q2 2025 was primarily driven by the non-recurrence of a $79 million gain recognized in Q2 2024 from the Carrols Acquisition and current year net losses on foreign exchange[144][151] - Burger King is executing its multi-year "Reclaim the Flame" plan, investing up to $700 million through 2028 in advertising, digital, and restaurant remodels to accelerate sales growth[187] Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes occurred in the company's market risk disclosures during the first six months of 2025 compared to the prior year's annual report - There were no material changes to the company's quantitative and qualitative disclosures about market risk during the six months ended June 30, 2025[209] Item 4. Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2025, and is integrating recently acquired businesses into the internal control framework - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[210] - The company is integrating the acquired Carrols and BK China businesses into its overall internal control over financial reporting process[211] PART II – Other Information Item 1. Legal Proceedings This section references Note 17, detailing ongoing litigation, including a class action regarding Burger King's no-hiring clause and a complaint from former Carrols shareholders - The company is defending against a consolidated class action lawsuit alleging that an employee no-solicitation and no-hiring clause in Burger King's standard franchise agreement violated Section 1 of the Sherman Act[127] - A complaint was filed by purported former shareholders of Carrols alleging breach of fiduciary duty by RBI in connection with the acquisition of Carrols. The court denied RBI's motion to dismiss in July 2025[128] Item 5. Other Information Discloses compensatory arrangements, specifically CFO Mr. Siddiqui's target award of 73,507 performance-based restricted stock units on May 15, 2025 - On May 15, 2025, CFO Sami Siddiqui received a target award of 73,507 performance-based RSUs (PSUs) to reward his strong performance since assuming the CFO position[220] Item 6. Exhibits Lists all exhibits filed with the Form 10-Q, including the CFO's Performance Award Agreement and Sarbanes-Oxley Act certifications - The report includes several exhibits, such as the CFO's Performance Award Agreement and certifications required under Sections 302 and 906 of the Sarbanes-Oxley Act[221]