Restaurant Brands International Inc. Reports Full Year and Fourth Quarter 2024 Results

TORONTO, Feb. 12, 2025

Items Affecting Comparability and Restaurant Holdings Segment Reminder

We completed the acquisitions of Carrols Restaurant Group Inc. ("Carrols") ("the Carrols Acquisition") and Popeyes China ("PLK China") ("the PLK China Acquisition") on May 16, 2024 and June 28, 2024, respectively. Our consolidated results include Carrols and PLK China revenues, expenses and segment income from their acquisition dates.

Following the Carrols and PLK China Acquisitions, RBI established a new operating and reportable segment, Restaurant Holdings (RH), which includes results from the Carrols Burger King restaurants and the PLK China restaurants. RBI reports results under six operating and reportable segments consisting of the following: Tim Hortons (TH), Burger King (BK), Popeyes Louisiana Kitchen (PLK), Firehouse Subs (FHS), International (INTL) and RH. 

RBI plans to maintain the franchisor dynamics in its TH, BK, PLK, FHS and INTL segments ("five franchisor segments") to report results consistent with how the business will be managed long-term given RBI's plans to refranchise the vast majority of the Carrols Burger King restaurants and to find a new partner for PLK China in the future. RH results include Company Restaurant Sales and expenses, including expenses associated with royalties, rent, and advertising. These expenses are recognized, as applicable, as revenues in the respective franchisor segments (BK and INTL) and eliminated upon consolidation. For more information please review the "Restaurant Holdings Intersegment Dynamics" presentation dated August 8, 2024 posted on our IR website under "Events & Presentations". 

During 2023 and the first quarter of 2024, BK also acquired restaurants from non-Carrols franchisees ("non-Carrols acquired BK restaurants"). BK owned and operated 160 Company restaurants as of December 31, 2024 as compared to 138 as of December 31, 2023, 88 of which were acquired in the fourth quarter of 2023.  The results from these restaurants are included in BK Company restaurants sales and expenses.

Beginning with our year-end 2024 results, RBI updated its presentation of Adjusting Operating Income by defining Segment Franchise and Property Expenses ("Segment F&P Expenses") which exclude Franchise Agreement Amortization and Reacquired Franchise Rights Amortization. These items were previously included in each segment's franchise and property expenses and added back as an adjustment to Adjusted Operating Income. This presentation change does not impact Adjusting Operating Income or Consolidated results.  

Supplemental Disclosures

Please review the Trending Schedules posted on the RBI Investor Relations webpage under "Financial Information" for additional disclosures, including: 

• Home Market and International KPIs by Brand and Company Restaurant Count by Segment;
• Segment Results with Disaggregated Franchise and Property Revenues (Royalties, Property Revenue and Franchise Fees and Other Revenue);
• Intersegment Revenue and Expense Eliminations; 
• Burger King US "Reclaim the Flame" Expenditures by Quarter; and
• RH Burger King Carrols Restaurant-Level EBITDA Margins.

TH Segment Results
(in US$ millions, unaudited)

The increase in Total Revenues for the full year and fourth quarter was primarily driven by an increase in system-wide sales and higher Supply Chain Sales to franchisees. For the full year, the higher Supply Chain Sales included increased equipment sales. For the fourth quarter, revenue growth also reflected the absence of a prior-year negative adjustment related to increased promotional activity and trade investments in the TH consumer-packaged goods business.

The increase in Adjusted Operating Income for the full year and fourth quarter was primarily driven by the increase in Total Revenues and a decrease in Segment G&A, largely due to lower compensation-related expenses. This was partially offset by an increase in Supply Chain Cost of Sales in local currency, driven by higher volumes, and an increase in Segment F&P Expenses.

Total Revenues and Adjusted Operating Income for both periods were impacted by unfavorable FX movements. Excluding these movements, Total Revenues and Adjusted Operating Income for 2024 increased $121 million and $98 million, respectively, and for the fourth quarter, $32 million and $39 million, respectively. 

BK Segment Results
(in US$ millions, unaudited) 

As a reminder, BK segment results are presented consistently with our franchisor model. As such, results include intersegment Franchise and Property revenues and Advertising Revenues and Other Services from the Carrols Burger King restaurants included in RH (as footnoted above).

The increase in Total Revenues for the full year and fourth quarter was primarily driven by the net impact of the non-Carrols restaurant acquisitions from franchisees and, as it relates to the full year, an increase in Advertising Revenues and Other Services driven by an increase in advertising fund contributions from vendors.

The increase in Adjusted Operating Income for both periods was primarily driven by net bad debt recoveries in 2024 compared to net bad debt expense in 2023, a decrease in Segment G&A, largely a result of lower compensation-related expenses, and the net impact of the non-Carrols restaurant acquisitions from franchisees.

Burger King U.S. Reclaim the Flame

Burger King is executing its multi-year "Reclaim the Flame" plan to accelerate sales growth and drive franchisee profitability. This plan includes investing up to $700 million through year-end 2028, comprised of advertising and digital investments ("Fuel the Flame") and high-quality remodels and relocations, restaurant technology, kitchen equipment, and building enhancements ("Royal Reset"). The Fuel the Flame investments were completed in the fourth quarter ended December 31, 2024. As of December 31, 2024, we have funded $133 million out of up to $550 million planned toward the Royal Reset investments.  

PLK Segment Results
(in US$ millions, unaudited)

The increases in Total Revenues and Adjusted Operating Income for both the full year and fourth quarter were primarily driven by the acquisition of Company restaurants as part of the Carrols acquisition and an increase in system-wide sales.

FHS Segment Results
(in US$ millions, unaudited)

The increase in Total Revenues for the full year and fourth quarter was driven by the increase in system-wide sales. In addition, for the full year, the increase in Advertising Revenues and Other Services and Advertising Expenses and Other Services reflects our modification of the Advertising fund arrangements in March 2023 to be more consistent with those of our other brands.

The increase in Adjusted Operating Income for both the full year and fourth quarter was primarily driven by a decrease in Segment G&A as a result of lower compensation-related expenses, and with respect to the full year, an increase in Franchise and Property revenues.

INTL Segment Results
(in US$ millions, unaudited)

The increase in Total Revenues for the full year and fourth quarter was primarily driven by higher royalties from Burger King and Popeyes franchisees due to increased system-wide sales. For the full year, Burger King International ("BK INTL") system-wide sales grew 8.0% and Popeyes International ("PLK INTL") system-wide sales grew 47.5%, and for the fourth quarter BK INTL and PLK INTL delivered system-wide sales growth of 9.6% and 40.3%, respectively.

The increase in Adjusted Operating Income for the full year and fourth quarter was largely driven by the increase in Total Revenues partially offset by higher Segment F&P Expenses due to increased net bad debt expenses in 2024 compared to 2023, primarily related to the Burger King China business. For the full year, higher Segment G&A, primarily driven by higher compensation-related expenses, also contributed to the offset.

Total Revenues and Adjusted Operating Income for both periods were impacted by unfavorable FX movements. Excluding these movements, Total Revenues and Adjusted Operating Income for 2024 increased $84 million and $42 million, respectively, and for the fourth quarter, $21 million and $8 million, respectively. 

RH Segment Results
(in US$ millions, unaudited)

Declaration of Dividend

The RBI board of directors has declared a dividend of $0.62 per common share and partnership exchangeable unit of RBI LP for the first quarter of 2025. The dividend will be payable on April 4, 2025 to shareholders and unitholders of record at the close of business on March 21, 2025. In connection with the declared dividend, RBI also announced that it is targeting a total of $2.48 in dividends per common share and partnership exchangeable unit of RBI LP for 2025.

2025 Financial Guidance

For 2025, RBI expects:

• Segment G&A (excluding RH) for 2025 between $650 million and $670 million;
• RH Segment G&A for 2025 of approximately $100 million;
• Adjusted Interest Expense, net between $500 million and $520 million; and
• Consolidated capital expenditures, tenant inducements and incentives (including RH) between $400 million and $450 million.

Long-Term Algorithm

On February 15, 2024, RBI announced the following long-term consolidated performance that the Company expects to achieve, on average, from 2024 to 2028:

• 3%+ Comparable Sales;
• 5%+ Net Restaurant Growth;
• 8%+ System-wide Sales growth; and
• Adjusted Operating Income growth at least as fast as system-wide sales growth. 

Net Restaurant Growth expectations may be reassessed following a resolution of the ongoing situation with the Burger King China master franchisee. 

Investor Conference Call

We will host an investor conference call and webcast at 8:30 a.m. Eastern Time on Wednesday, February 12, 2025, to review financial results for the full year and fourth quarter ended December 31, 2024. The earnings call will be broadcast live via our investor relations website at http://rbi.com/investors and a replay will be available for 30 days following the release. The dial-in number is (833) 470-1428 for U.S. callers, (833) 950-0062 for Canadian callers, and (929) 526-1599 for callers from other countries. For all dial-in numbers please use the following access code: 533174.

Contacts

Investors: investor@rbi.com
Media: media@rbi.com

About Restaurant Brands International Inc.

Restaurant Brands International Inc. ("RBI") is one of the world's largest quick service restaurant companies with nearly $45 billion in annual system-wide sales and over 30,000 restaurants in more than 120 countries and territories. RBI owns four of the world's most prominent and iconic quick service restaurant brands – TIM HORTONS^®, BURGER KING^®, POPEYES^®, and FIREHOUSE SUBS^®. These independently operated brands have been serving their respective guests, franchisees and communities for decades. Through its Restaurant Brands for Good framework, RBI is improving sustainable outcomes related to its food, the planet, and people and communities. To learn more about RBI, please visit the company's website at www.rbi.com.

Forward-Looking Statements

This press release and our investor conference call contain certain forward-looking statements and information, which reflect management's current beliefs and expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties. These forward-looking statements include statements about our expectations or beliefs regarding (i) the impact of the macro-economic pressures and currency fluctuations on our and our franchisees' results of operations and business; (ii) our digital, marketing, remodel and technology enhancement initiatives and related expenditures, including our plans to accelerate sales growth and drive franchisee profitability across our businesses; (iii) our remodel program and refranchising efforts; (iv) leverage; (v) dividends, G&A, commodity costs, capital expenditures, tenant inducements, company restaurant margins, remodel incentives, comparable sales, adjusted operating income, effective tax rate and net interest expense in 2025; (vi) a resolution for the  situation with our master franchise partner at Burger King China; and (vii) our growth opportunities, plans and strategies for each of our brands and ability to enhance operations and drive long-term, sustainable growth. The factors that could cause actual results to differ materially from RBI's expectations are detailed in filings of RBI with the Securities and Exchange Commission and applicable Canadian securities regulatory authorities, such as its annual and quarterly reports and current reports on Form 8-K, and include the following: (1) our indebtedness, which could adversely affect our financial condition; (2) global economic or other business conditions that may affect the desire or ability of our guests to purchase our products; (3) our relationship with, and the success of, our franchisees and risks related to our franchised business model; (4) our franchisees' financial stability and their ability to access and maintain the liquidity necessary to operate their businesses; (5) our supply chain operations; (6) our ownership and leasing of real estate; (7) the effectiveness of our marketing, advertising and digital programs and franchisee support of these programs; (8) fluctuations in interest rates and in the currency exchange markets and the effectiveness of our hedging activity; (9) our ability to successfully implement our domestic and international growth strategy for each of our brands and risks related to our international operations; (10) our reliance on franchisees, including subfranchisees to accelerate restaurant growth; (11) risks related to unforeseen events; (12) changes in applicable tax laws or interpretations thereof; (13) evolving legislation and regulations in the area of franchise and labor and employment law; (14) our ability to address environmental and social sustainability issues; (15) risks related to geopolitical conflicts and terrorism; (16) the ability of cash flows from the Carrols restaurants to fund our budgeted remodels and the timing of refranchising of such restaurants and (17) tariffs and their impact on economic conditions or our business. Other than as required under U.S. federal securities laws or Canadian securities laws, we do not assume a duty to update these forward-looking statements, whether as a result of new information, subsequent events or circumstances, change in expectations or otherwise.

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In millions of U.S. dollars, except per share data)
(Unaudited)