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Restaurant Brands (QSR) Q1 Earnings Top Estimates, Rise Y/Y

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·5 min read
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Restaurant Brands International, Inc. QSR reported impressive first-quarter 2022 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The metrics increased on a year-over-year basis. The quarterly results benefited from a rise in comparable sales and unit growth (across Tim Hortons and Burger King) and a strong contribution from digital sales.

Earnings & Revenue Discussion

During first-quarter 2022, the company reported adjusted earnings per share (EPS) of 64 cents, beating the Zacks Consensus Estimate of 61 cents by 4.9%. The bottom line increased 16.4% year over year from an adjusted EPS of 55 cents reported in the prior-year quarter.

Quarterly net revenues of $1,451 million surpassed the consensus mark of $1,422 million. The top line increased 15.2% on a year-over-year basis. The upside was primarily driven by a rise in system-wide sales at Tim Hortons, Burger King and Popeyes. However, this was partially offset by unfavorable FX movements.

Restaurant Brands International Inc. Price, Consensus and EPS Surprise

Restaurant Brands International Inc. Price, Consensus and EPS Surprise
Restaurant Brands International Inc. Price, Consensus and EPS Surprise

Restaurant Brands International Inc. price-consensus-eps-surprise-chart | Restaurant Brands International Inc. Quote

Segmental Revenues

Restaurant Brands operates through four segments — Tim Hortons, Burger King, Popeye’s Louisiana Kitchen and Firehouse Subs.

During first-quarter 2022, revenues in Tim Hortons totaled $829 million, up 16.8% from the prior-year quarter’s levels. System-wide sales increased 12.9% year over year against a fall of 4.9% reported in the prior-year quarter. Comps in the segment rose 8.4% year over year versus a 2.3% decline reported in the year-ago quarter. In the quarter under review, net restaurant growth was recorded at 6.7% compared with 1.3% in the prior-year quarter.

Burger King’s revenues totaled $443 million in first-quarter 2022, indicating growth of 8.8% from the prior-year quarter’s levels. System-wide sales growth in the segment increased 16.5% year over year compared with 1.8% reported in the prior-year quarter. Comps rose 10.3% year over year compared with 0.7% reported in the prior-year quarter. In the first quarter, net restaurant growth was 3.1% against a 0.8% decline reported in the prior-year quarter.

Popeye’s Louisiana Kitchen generated revenues of $148 million in first-quarter 2022, up 3.5% from the prior-year quarter’s levels. System-wide sales growth came in at 4.1% year over year compared with 7% recorded in the prior-year quarter. Net restaurant growth came in at 7.9% compared with 4.8% reported in the prior-year quarter. Comps in the segment dropped 3% against 1.5% growth reported in the prior-year quarter.

During the quarter, Firehouse Subs generated revenues of $31 million. System-wide sales growth came in at 7.4% year over year compared with 27% recorded in the prior-year quarter. Net restaurant growth came in at 1.8% compared with 1.7% reported in the prior-year quarter. Comps in the segment came in at 4.2% compared with 24.2% reported in the prior-year quarter.

Operating Performance

In the quarter under review, the company’s adjusted EBITDA came in at $530 million compared with $480 million reported in the prior-year quarter. On an organic and reported basis, the upside was driven by an increase in Tim Hortons and Burger King adjusted EBITDA.

Segment-wise, Tim Horton’s adjusted EBITDA increased 11.6% year over year to $231 million. Burger King’s adjusted EBITDA rose 5.5% year over year to $229 million. Popeye’s adjusted EBITDA came in at $56 million, in line with the year-ago quarter’s levels. During the quarter, adjusted EBITDA from the Firehouse Subs came in at $14 million.

Cash and Capital

Restaurant Brands ended the first quarter with a cash and cash equivalent balance of $895 million compared with $1,563 million reported in the prior-year period. As of Mar 31, 2022, long-term debt (net of current portion) stood at $12.9 billion compared with $12.4 billion as of Mar 31, 2021.

The company’s board of directors announced a dividend payout of 54 cents per common share and partnership exchangeable unit of Restaurant Brands International Limited Partnership for second-quarter 2022. The dividend is payable on Jul 6, 2022, to shareholders of record at the close of business as of Jun 22, 2022.

Zacks Rank & Key Picks

Restaurant Brands currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

Some better-ranked stocks in the same space are BBQ Holdings, Inc. BBQ, Dave & Buster's Entertainment, Inc. PLAY and Arcos Dorados Holdings Inc. ARCO.

BBQ Holdings sports a Zacks Rank #1. BBQ Holdings has a long-term earnings growth of 14%. Shares of the company have increased 9.2% in the past year.

The Zacks Consensus Estimate for BBQ Holdings’ 2022 sales and EPS suggests growth of 40.9% and 66.2%, respectively, from the year-ago period’s levels.

Dave & Buster's sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 212%, on average. Shares of the company have increased 2.2% in the past year.

The Zacks Consensus Estimate for Dave & Buster's current-year sales and EPS suggests growth of 27.2% and 51.1%, respectively, from the year-ago period’s levels.

Arcos Dorados sports a Zacks Rank #1. Arcos Dorados has a long-term earnings growth of 31.3%. Shares of the company have risen 31.8% in the past year.

The Zacks Consensus Estimate for Arcos Dorados’ 2022 sales and EPS suggests growth of 16.6% and 66.7%, respectively, from the year-ago period’s levels.


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