Restaurant Brands (QSR) Q3 Earnings Top, Revenues Lag Estimates
Restaurant Brands International, Inc. QSR reported third-quarter 2023 results, with earnings beating the Zacks Consensus Estimate, but revenues missed the same. Following the results, the company’s shares are up 1% in the pre-market trading session.
The top line increased on a year-over-year basis on the back of robust system-wide sales across its segments.
Earnings & Revenue Discussion
In the quarter under review, QSR reported adjusted earnings per share (EPS) of 90 cents, surpassing the Zacks Consensus Estimate of 84 cents. Yet, the bottom line decreased 6.3% from 96 cents in the prior-year quarter.
Quarterly net revenues of $1,837 million missed the consensus mark of $1,862 million. Nonetheless, the top line increased 8.3% on a year-over-year basis. The upside was driven by a rise in system-wide sales at Tim Hortons, Burger King, Popeyes and Firehouse Subs.
During the quarter, global system-wide sales grew 10.9% year over year.
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, Popeyes Louisiana Kitchen and Firehouse Subs.
In the third quarter, revenues from Tim Hortons totaled $1,060 million, up 2.7% from the prior-year levels. System-wide sales jumped 9.7% year over year compared with 13.4% in the prior-year quarter. Comps rose 6.8% year over year compared with 9.8% a year ago. Net restaurant growth was 5.5% compared with 5.2% in the prior-year quarter.
Burger King’s revenues amounted to $538 million, indicating 9.8% growth from the year-ago levels. System-wide sales grew 10.3% year over year compared with 13.6% in the prior-year quarter. Comps climbed 7.2% year over year compared with 9.6% in the year-earlier quarter. Net restaurant growth was 2.4% compared with 2.5% in the prior-year quarter.
Popeyes Louisiana Kitchen generated revenues of $188 million, up 14% from the prior-year levels. System-wide sales growth came in at 16.1% year over year compared with 12.3% in the prior-year quarter. Comps grew 7% year over year. The metric declined 3.1% in the prior-year quarter. Net restaurant growth was 11.3% compared with 8.9% a year ago.
Firehouse Subs recorded revenues of $51 million, up 34.2% from the year-earlier levels. System-wide sales growth was 6.9% compared with 3.8% in the previous quarter. Net restaurant growth reached 2.6% compared with 2.5% in the previous quarter. Comps improved 3.4% year over year.
Operating Performance
Adjusted EBITDA amounted to $698 million compared with $642 million in the prior-year quarter. On a reported basis, the upside was driven by increases in BK, TH and PLK adjusted EBITDA.
The Tim Hortons, Burger King, Popeyes and Firehouse Subs segments’ adjusted EBITDA increased 2%, 13.7%, 21% and 7.7% year over year to $311 million, $298 million, $75 million and $14 million, respectively.
Cash and Capital
Restaurant Brands ended third-quarter 2023 with a cash and cash equivalent balance of $1,310 million compared with $1,178 million at 2022 end. As of Sep 30, 2023, long-term debt (net of current portion) was $12,862 million compared with $12,839 million at the end of 2022.
Zacks Rank
Restaurant Brands carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Retail-Wholesale Releases
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Yum China Holdings, Inc. YUMC reported third-quarter 2023 results, with earnings and revenues missing the Zacks Consensus Estimate after beating in the preceding two quarters. Consumer demand weakened in late September through October, negatively impacting the company's quarterly results.
Total system sales of Yum China grew 15% year over year. System sales at KFC and Pizza Hut jumped 15% and 13% (excluding foreign currency translation), respectively.
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