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Restaurant Brands International, Inc. (QSR - Free Report) reported impressive third-quarter 2022 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The metrics increased on a year-over-year basis. The quarterly results were primarily driven by solid sales growth (at Tim Hortons Canada and Burger King International businesses), development progress (at Popeyes) and a strong contribution from digital sales. Following the announcement, shares of the company moved up 1.5% during trading hours on Nov 3.
Earnings & Revenue Discussion
During third-quarter 2022, the company reported adjusted earnings per share (EPS) of 96 cents, beating the Zacks Consensus Estimate of 80 cents by 20%. The bottom line increased 26.3% year over year from an adjusted EPS of 76 cents reported in the prior-year quarter.
Quarterly net revenues of $1,726 million surpassed the consensus mark of $1,672 million. The top line increased 15.5% on a year-over-year basis. The upside was driven by a rise in system-wide sales at Tim Hortons, Burger King and Popeyes. However, this was partially offset by unfavorable FX movements. During the quarter, digital sales increased 26% year over year to approximately $3.4 billion.
Restaurant Brands International Inc. Price, Consensus and EPS Surprise
Restaurant Brands operates through four segments — Tim Hortons, Burger King, Popeye’s Louisiana Kitchen and Firehouse Subs.
In the third quarter, revenues in Tim Hortons totaled $1,033 million, up 16.6% from the prior-year quarter’s levels. System-wide sales increased 13.4% year over year compared with growth of 11.1% reported in the prior-year quarter. Comps in the segment rose 9.8% year over year compared with an 8.9% rise reported in the year-ago quarter. In the quarter under review, net restaurant growth was recorded at 5.2% compared with a rise of 4.1% reported in the prior-year quarter.
During the quarter, Burger King’s revenues totaled $491 million, indicating growth of 5% from the prior-year quarter’s levels. System-wide sales growth in the segment increased 14.5% year over year compared with a 12.3% growth reported in the prior-year quarter. Comps rose 10.3% year over year compared with growth of 7.9% reported in the prior-year quarter. In the third quarter, net restaurant growth was 2.5% compared with an increase of 1.3% reported in the prior-year quarter.
Popeye’s Louisiana Kitchen generated revenues of $164 million in third-quarter 2022, up 14.7% from the prior-year quarter’s levels. System-wide sales growth came in at 12.3% year over year compared with a 4.4% growth recorded in the prior-year quarter. Comps in the segment rose 3.1% year over year against a 2.4% decline reported in the prior-year quarter. Net restaurant growth came in at 8.9% compared with a 5.5% growth reported in the prior-year quarter.
During the quarter, Firehouse Subs generated revenues of $38 million compared with $33 million reported in the previous quarter. System-wide sales growth came in at 3.8% year over year compared with 19.3% recorded in the prior-year quarter. Net restaurant growth came in at 2.5% year over year compared with an increase of 2% reported in the prior-year quarter. Comps in the segment were flat year over year compared with a 14.9% rise reported in the prior-year quarter.
Operating Performance
In the quarter under review, the company’s adjusted EBITDA came in at $642 million compared with $607 million reported in the prior-year quarter. On a reported basis, the upside was driven by increases in TH and PLK Adjusted EBITDA and the inclusion of FHS Adjusted EBITDA. However, this was partially offset by unfavorable FX movements.
Segment-wise, Tim Horton’s adjusted EBITDA increased 9.6% year over year to $305 million. Burger King’s adjusted EBITDA fell 3.8% year over year to $262 million. Popeye’s adjusted EBITDA came in at $62 million, up 10.4% year over year. During the quarter, adjusted EBITDA from the Firehouse Subs came in at $13 million.
Cash and Capital
Restaurant Brands ended the third quarter with a cash and cash equivalent balance of $946 million compared with $838 million reported in the previous quarter. As of Sep 30, 2022, long-term debt (net of current portion) stood at $12,853 million, compared with $12,881 million reported in the previous quarter.
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 in fourth-quarter 2022. The dividend is payable on Jan 4, 2023, to shareholders of record at the close of business as of Dec 21, 2022.
Wingstop sports a Zacks Rank #1. WING has a long-term earnings growth rate of 11%. Shares of WING have declined 8.6% in the past year.
The Zacks Consensus Estimate for Wingstop’s 2023 sales and EPS suggests growth of 18.1% and 16.4%, respectively, from the comparable year-ago period’s levels.
Potbelly currently carries a Zacks Rank #2 (Buy). PBPB has a trailing four-quarter earnings surprise of 0.8%, on average. Shares of PBPB have declined 15.9% in the past year.
The Zacks Consensus Estimate for Potbelly’s 2022 sales and EPS suggests growth of 17.9% and 101.9%, respectively, from the corresponding year-ago period’s levels.
Chipotle currently carries a Zacks Rank #2. CMG has a trailing four-quarter earnings surprise of 4.1%, on average. The stock has declined 22.4% in the past year.
The Zacks Consensus Estimate for Chipotle’s 2022 sales and EPS suggests growth of 15.2% and 30.8%, respectively, from the corresponding year-ago period’s levels.
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Restaurant Brands' (QSR) Q3 Earnings Beat Estimates, Rise Y/Y
Restaurant Brands International, Inc. (QSR - Free Report) reported impressive third-quarter 2022 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The metrics increased on a year-over-year basis. The quarterly results were primarily driven by solid sales growth (at Tim Hortons Canada and Burger King International businesses), development progress (at Popeyes) and a strong contribution from digital sales. Following the announcement, shares of the company moved up 1.5% during trading hours on Nov 3.
Earnings & Revenue Discussion
During third-quarter 2022, the company reported adjusted earnings per share (EPS) of 96 cents, beating the Zacks Consensus Estimate of 80 cents by 20%. The bottom line increased 26.3% year over year from an adjusted EPS of 76 cents reported in the prior-year quarter.
Quarterly net revenues of $1,726 million surpassed the consensus mark of $1,672 million. The top line increased 15.5% on a year-over-year basis. The upside was driven by a rise in system-wide sales at Tim Hortons, Burger King and Popeyes. However, this was partially offset by unfavorable FX movements. During the quarter, digital sales increased 26% year over year to approximately $3.4 billion.
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.
In the third quarter, revenues in Tim Hortons totaled $1,033 million, up 16.6% from the prior-year quarter’s levels. System-wide sales increased 13.4% year over year compared with growth of 11.1% reported in the prior-year quarter. Comps in the segment rose 9.8% year over year compared with an 8.9% rise reported in the year-ago quarter. In the quarter under review, net restaurant growth was recorded at 5.2% compared with a rise of 4.1% reported in the prior-year quarter.
During the quarter, Burger King’s revenues totaled $491 million, indicating growth of 5% from the prior-year quarter’s levels. System-wide sales growth in the segment increased 14.5% year over year compared with a 12.3% growth reported in the prior-year quarter. Comps rose 10.3% year over year compared with growth of 7.9% reported in the prior-year quarter. In the third quarter, net restaurant growth was 2.5% compared with an increase of 1.3% reported in the prior-year quarter.
Popeye’s Louisiana Kitchen generated revenues of $164 million in third-quarter 2022, up 14.7% from the prior-year quarter’s levels. System-wide sales growth came in at 12.3% year over year compared with a 4.4% growth recorded in the prior-year quarter. Comps in the segment rose 3.1% year over year against a 2.4% decline reported in the prior-year quarter. Net restaurant growth came in at 8.9% compared with a 5.5% growth reported in the prior-year quarter.
During the quarter, Firehouse Subs generated revenues of $38 million compared with $33 million reported in the previous quarter. System-wide sales growth came in at 3.8% year over year compared with 19.3% recorded in the prior-year quarter. Net restaurant growth came in at 2.5% year over year compared with an increase of 2% reported in the prior-year quarter. Comps in the segment were flat year over year compared with a 14.9% rise reported in the prior-year quarter.
Operating Performance
In the quarter under review, the company’s adjusted EBITDA came in at $642 million compared with $607 million reported in the prior-year quarter. On a reported basis, the upside was driven by increases in TH and PLK Adjusted EBITDA and the inclusion of FHS Adjusted EBITDA. However, this was partially offset by unfavorable FX movements.
Segment-wise, Tim Horton’s adjusted EBITDA increased 9.6% year over year to $305 million. Burger King’s adjusted EBITDA fell 3.8% year over year to $262 million. Popeye’s adjusted EBITDA came in at $62 million, up 10.4% year over year. During the quarter, adjusted EBITDA from the Firehouse Subs came in at $13 million.
Cash and Capital
Restaurant Brands ended the third quarter with a cash and cash equivalent balance of $946 million compared with $838 million reported in the previous quarter. As of Sep 30, 2022, long-term debt (net of current portion) stood at $12,853 million, compared with $12,881 million reported in the previous quarter.
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 in fourth-quarter 2022. The dividend is payable on Jan 4, 2023, to shareholders of record at the close of business as of Dec 21, 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 Zacks Retail – Restaurants industry are Wingstop Inc. (WING - Free Report) , Potbelly Corporation (PBPB - Free Report) and Chipotle Mexican Grill, Inc. (CMG - Free Report) .
Wingstop sports a Zacks Rank #1. WING has a long-term earnings growth rate of 11%. Shares of WING have declined 8.6% in the past year.
The Zacks Consensus Estimate for Wingstop’s 2023 sales and EPS suggests growth of 18.1% and 16.4%, respectively, from the comparable year-ago period’s levels.
Potbelly currently carries a Zacks Rank #2 (Buy). PBPB has a trailing four-quarter earnings surprise of 0.8%, on average. Shares of PBPB have declined 15.9% in the past year.
The Zacks Consensus Estimate for Potbelly’s 2022 sales and EPS suggests growth of 17.9% and 101.9%, respectively, from the corresponding year-ago period’s levels.
Chipotle currently carries a Zacks Rank #2. CMG has a trailing four-quarter earnings surprise of 4.1%, on average. The stock has declined 22.4% in the past year.
The Zacks Consensus Estimate for Chipotle’s 2022 sales and EPS suggests growth of 15.2% and 30.8%, respectively, from the corresponding year-ago period’s levels.