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

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Restaurant Brands International, Inc. (QSR - Free Report) 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.

 

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 - Free Report) , Dave & Buster's Entertainment, Inc. (PLAY - Free Report) and Arcos Dorados Holdings Inc. (ARCO - Free Report) .

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.