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Restaurant Brands (QSR) Q2 Earnings & Revenues Beat Estimates

·4 min read
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Restaurant Brands International, Inc. QSR reported strong second-quarter 2021 results, wherein earnings and revenues beat the respective Zacks Consensus Estimate. Both the metrics improved on a year-over-year basis.
The company results benefited from quality menu items, robust digitalization and new restaurant openings globally by its franchisees.

Earnings & Revenues Discussion

The company’s adjusted earnings of 77 cents per share surpassed the Zacks Consensus Estimate of 62 cents. The bottom line improved 133.3% from the prior-year quarter’s figure of 33 cents.

During the second quarter, net revenues of $1,438 million outpaced the consensus mark of $1,371 million. The top line increased 37.2% on a year-over-year basis, owing to favorable FX movements and increase in system-wide sales in all of its brands.

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

Segmental Revenues

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

During second-quarter 2021, revenues in Tim Hortons totaled $831 million compared with $567 million in the prior-year quarter. System-wide sales increased 33% year over year against 33.4% fall in the prior-year quarter. Comps in the segment jumped 27.6% year over year versus 29.3% decline in the year-ago quarter. In the quarter under review, net restaurant growth was recorded at 2.7% compared with 1.3% in the prior-year quarter.

Burger King’s revenues totaled $459 million in second-quarter 2021 compared with $347 million in the prior-year quarter. The upside was primarily driven by a rise in system-wide sales along with favorable FX movements. System-wide sales growth in the segment increased 37.9% year over year against 25.2% decline in the prior-year quarter. Comps rose 18.2% year over year against 13.4% fall in the prior-year quarter. In the second quarter, net restaurant growth was 0.1% compared with 4.2% improvement in the prior-year quarter.

Popeye’s Louisiana Kitchen reported revenues of $148 million in second-quarter 2021 compared with $134 million in the prior-year quarter. System-wide sales growth came in at 10.5% year over year compared with 24% growth recorded in the prior-year quarter. Net restaurant growth came in at 5.7% compared with 6.7% growth in the prior-year quarter. Comps in the segment declined 0.3% versus 24.8% growth in the prior-year quarter.

Operating Performance

In the quarter under review, the company’s adjusted EBITDA increased 61.2% year over year to $577 million. On an organic and reported basis, the upside was driven by an increase in Tim Hortons, Burger King and Popeyes adjusted EBITDA.

Segment-wise, Tim Horton’s adjusted EBITDA increased 72.5% from the year-ago quarter’s figure. Burger King’s adjusted EBITDA rose 66.4% year over year. Popeye’s adjusted EBITDA moved up 13.2% from the year-ago quarter’s levels.

Cash and Capital

Restaurant Brands ended second quarter with cash and cash equivalent balance of $1,762 million. As of Jun 30, 2020, its net debt stood at $11.2 billion compared with $11.3 billion as on Jun 30, 2020. The company’s board of directors announced a dividend payout of 53 cents per common share and partnership exchangeable unit of Restaurant Brands International Limited Partnership for second-quarter 2021. The dividend is payable on Oct 5, 2021, to shareholders of record at the close of business as of Sep 21, 2021.

Other Updates

During the three months ended Jun 30, 2021, 96% of the company’s restaurants were open worldwide. Meanwhile, 94% of the restaurants remained open in Europe, Middle East and Africa and 91% of its restaurants remained open in Latin America. Nearly 96% of its restaurants in Asia Pacific and 97% of its restaurants in North America were open.

Zacks Rank & Other Key Picks

Restaurant Brands currently carries a Zacks Rank #2 (Buy). Some other top-ranked stocks, which warrant a look in the same space include BJ's Restaurants, Inc. BJRI, Papa John's International, Inc. PZZA and The Wendy's Company WEN. All these stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BJ's Restaurants earnings in 2021 is anticipated to witness growth of 124.1%.

Papa John's International has an impressive long-term earnings growth rate of 15%.

Wendy's has beat earnings estimates in three of the trailing four quarters and missed once, the average surprise being 17.3%.

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Restaurant Brands International Inc. (QSR) : Free Stock Analysis Report

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