Restaurant Brands International Inc 10-Q for FY2022 Q1

Restaurant Brands International Inc. (QSR)

10-Q 2022-05-03 For: 2022-03-31

Added on April 12, 2026

About this 10-Q

Restaurant Brands International Inc filed this 10-Q on May 3, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).

Headline figures

Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.45B; up 15.2% from $1.26B a year earlier
Net income: $270M; down 0.4% from net income of $271M a year earlier
Diluted EPS: $0.59; up 1.7% from $0.58 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →



Canada		98-1202754
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

130 King Street West, Suite 300		M5X 1E1
Toronto,	Ontario
(Address of Principal Executive Offices)		(Zip Code)



		Page

PART I – Financial Information
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	38

PART II – Other Information
Item 1.	Legal Proceedings	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 5.	Other Information	40
Item 6.	Exhibits	41
	Signatures	42


	As of
	March 31, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	895	$	1,087
Accounts and notes receivable, net of allowance of $27 and $18, respectively	593		547
Inventories, net	108		96
Prepaids and other current assets	90		86
Total current assets	1,686		1,816
Property and equipment, net of accumulated depreciation and amortization of $1,014 and $979, respectively	2,023		2,035
Operating lease assets, net	1,137		1,130
Intangible assets, net	11,451		11,417
Goodwill	6,050		6,006
Net investment in property leased to franchisees	82		80
Other assets, net	743		762
Total assets	$	23,172	$	23,246
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts and drafts payable	$	637	$	614
Other accrued liabilities	917		947
Gift card liability	169		221
Current portion of long-term debt and finance leases	105		96
Total current liabilities	1,828		1,878
Long-term debt, net of current portion	12,903		12,916
Finance leases, net of current portion	337		333
Operating lease liabilities, net of current portion	1,074		1,070
Other liabilities, net	1,689		1,822
Deferred income taxes, net	1,380		1,374
Total liabilities	19,211		19,393
Shareholders’ equity:
Common shares, no par value; Unlimited shares authorized at March 31, 2022 and December 31, 2021; 308,684,403 shares issued and outstanding at March 31, 2022; 309,025,068 shares issued and outstanding at December 31, 2021	2,059		2,156
Retained earnings	804		791
Accumulated other comprehensive income (loss)	(573)		(710)
Total Restaurant Brands International Inc. shareholders’ equity	2,290		2,237
Noncontrolling interests	1,671		1,616
Total shareholders’ equity	3,961		3,853
Total liabilities and shareholders’ equity	$	23,172	$	23,246


	Three Months Ended March 31,
		2022		2021
Revenues:
Sales		$	609	$	507
Franchise and property revenues		615		548
Advertising revenues and other services		227		205
Total revenues		1,451		1,260
Operating costs and expenses:
Cost of sales		494		401
Franchise and property expenses		130		116
Advertising expenses and other services		247		237
General and administrative expenses		133		104
(Income) loss from equity method investments		13		2
Other operating expenses (income), net		(16)		(42)
Total operating costs and expenses		1,001		818
Income from operations		450		442
Interest expense, net		127		124

Income before income taxes		323		318
Income tax expense		53		47
Net income		270		271
Net income attributable to noncontrolling interests (Note 13)		87		92
Net income attributable to common shareholders		$	183	$	179
Earnings per common share
Basic		$	0.59	$	0.59
Diluted		$	0.59	$	0.58
Weighted average shares outstanding (in millions):
Basic		309		306
Diluted		458		465


	Three Months Ended March 31,
		2022		2021
Net income		$	270	$	271

Foreign currency translation adjustment		57		54
Net change in fair value of net investment hedges, net of tax of $25 and $20		(35)		29
Net change in fair value of cash flow hedges, net of tax of $(60) and $(33)		161		95
Amounts reclassified to earnings of cash flow hedges, net of tax of $(7) and $(8)		21		24
Gain (loss) recognized on other, net of tax of $0 and $0		1		1
Other comprehensive income (loss)		205		203
Comprehensive income (loss)		475		474
Comprehensive income (loss) attributable to noncontrolling interests		152		160
Comprehensive income (loss) attributable to common shareholders		$	323	$	314


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Issued Common Shares			Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interest		Total
	Shares	Amount
Balances at December 31, 2021	309,025,068	$	2,156	$	791	$	(710)	$	1,616	$	3,853
Stock option exercises	87,177	3		—		—		—		3
Share-based compensation	—	24		—		—		—		24
Issuance of shares	906,260	13		—		—		—		13
Dividends declared ($0.54 per share)	—	—		(167)		—		—		(167)
Dividend equivalents declared on restricted stock units	—	3		(3)		—		—		—
Distributions declared by Partnership on Partnership exchangeable units ($0.54 per unit)	—	—		—		—		(78)		(78)
Exchange of Partnership exchangeable units for RBI common shares	1,525,900	21		—		(3)		(18)		—
Repurchase of RBI common shares	(2,860,002)	(161)		—		—		—		(161)
Restaurant VIE contributions (distributions)	—	—		—		—		(1)		(1)
Net income	—	—		183		—		87		270
Other comprehensive income (loss)	—	—		—		140		65		205
Balances at March 31, 2022	308,684,403	$	2,059	$	804	$	(573)	$	1,671	$	3,961


	Three Months Ended March 31,
	2022		2021
Cash flows from operating activities:
Net income	$	270	$	271
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	49		49

Amortization of deferred financing costs and debt issuance discount	7		7
(Income) loss from equity method investments	13		2
(Gain) loss on remeasurement of foreign denominated transactions	(21)		(43)
Net (gains) losses on derivatives	18		20
Share-based compensation and non-cash incentive compensation expense	27		26
Deferred income taxes	(16)		14
Other	9		(8)
Changes in current assets and liabilities, excluding acquisitions and dispositions:
Accounts and notes receivable	(46)		24
Inventories and prepaids and other current assets	(22)		(4)
Accounts and drafts payable	18		19
Other accrued liabilities and gift card liability	(91)		(117)
Tenant inducements paid to franchisees	(2)		—
Other long-term assets and liabilities	21		6
Net cash provided by operating activities	234		266
Cash flows from investing activities:
Payments for property and equipment	(10)		(15)
Net proceeds from disposal of assets, restaurant closures, and refranchisings	4		11

Settlement/sale of derivatives, net	3		2
Other investing activities, net	4		(5)
Net cash (used for) provided by investing activities	1		(7)
Cash flows from financing activities:
Proceeds from long-term debt	1		—
Repayments of long-term debt and finance leases	(21)		(27)

Payment of dividends on common shares and distributions on Partnership exchangeable units	(241)		(239)
Repurchase of common shares	(161)		—
Proceeds from stock option exercises	3		20
(Payments) proceeds from derivatives	(6)		(16)
Other financing activities, net	(1)		1
Net cash (used for) provided by financing activities	(426)		(261)
Effect of exchange rates on cash and cash equivalents	(1)		5
Increase (decrease) in cash and cash equivalents	(192)		3
Cash and cash equivalents at beginning of period	1,087		1,560
Cash and cash equivalents at end of period	$	895	$	1,563
Supplemental cash flow disclosures:
Interest paid	$	75	$	72
Income taxes paid	$	42	$	96


	December 15, 2021
Total current assets	$	21
Property and equipment	4
Firehouse Subs brand	768
Operating lease assets	9
Total liabilities	(48)
Total identifiable net assets	754
Goodwill	264
Total consideration	$	1,018


	Increase (Decrease) in Goodwill
Change in:
Operating lease assets	$	(9)
Total liabilities	35
Total consideration	(15)
Total increase in goodwill	$	11


Contract Liabilities	TH		BK		PLK		FHS		Consolidated
Balance at December 31, 2021	$	65	$	410	$	56	$	—	$	531
Effect of business combination	—		—		—		8		8
Recognized during period and included in the contract liability balance at the beginning of the year	(2)		(11)		(2)		—		(15)
Increase, excluding amounts recognized as revenue during the period	3		9		3		—		15
Impact of foreign currency translation	—		(4)		—		—		(4)
Balance at March 31, 2022	$	66	$	404	$	57	$	8	$	535


Contract liabilities expected to be recognized in	TH		BK		PLK		FHS		Consolidated
Remainder of 2022	$	8	$	26	$	3	$	1	$	38
2023	10		33		4		2		49
2024	9		32		4		1		46
2025	8		32		4		1		45
2026	7		31		3		1		42
Thereafter	24		250		39		2		315
Total	$	66	$	404	$	57	$	8	$	535


	As of
	March 31, 2022						December 31, 2021
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Identifiable assets subject to amortization:
Franchise agreements	$	718	$	(295)	$	423	$	722	$	(290)	$	432
Favorable leases	101		(62)		39		104		(63)		41
Subtotal	819		(357)		462		826		(353)		473
Indefinite-lived intangible assets:
Tim Hortons brand	$	6,757	$	—	$	6,757	$	6,695	$	—	$	6,695
Burger King brand	2,109		—		2,109		2,126		—		2,126
Popeyes brand	1,355		—		1,355		1,355		—		1,355
Firehouse Subs brand	768		—		768		768		—		768
Subtotal	10,989		—		10,989		10,944		—		10,944
Intangible assets, net					$	11,451					$	11,417

Goodwill
Tim Hortons segment	$	4,344					$	4,306
Burger King segment	596						601
Popeyes segment	846						846
Firehouse Subs segment	264						253
Total	$	6,050					$	6,006


	Derivatives		Pensions		Foreign Currency Translation		Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2021	$	136	$	(21)	$	(825)	$	(710)
Foreign currency translation adjustment	—		—		57		57
Net change in fair value of derivatives, net of tax	126		—		—		126
Amounts reclassified to earnings of cash flow hedges, net of tax	21		—		—		21
Gain (loss) recognized on other, net of tax	—		1		—		1
Amounts attributable to noncontrolling interests	(46)		—		(22)		(68)
Balance at March 31, 2022	$	237	$	(20)	$	(790)	$	(573)


	As of
	March 31, 2022		December 31, 2021
Term Loan B	$	5,230	$	5,243
Term Loan A	1,250		1,250

3.875% First Lien Senior Notes due 2028	1,550		1,550
3.50% First Lien Senior Notes due 2029	750		750
5.75% First Lien Senior Notes due 2025	500		500
4.375% Second Lien Senior Notes due 2028	750		750
4.00% Second Lien Senior Notes due 2030	2,900		2,900
TH Facility and other	175		173
Less: unamortized deferred financing costs and deferred issue discount	(131)		(138)
Total debt, net	12,974		12,978
Less: current maturities of debt	(71)		(62)
Total long-term debt	$	12,903	$	12,916


	As of
	March 31, 2022		December 31, 2021
Fair value of our variable term debt and senior notes	$	12,370	$	12,851
Principal carrying amount of our variable term debt and senior notes	12,930		12,943


		Gain or (Loss) Recognized in Other Comprehensive Income (Loss)
	Three Months Ended March 31,
		2022		2021
Derivatives designated as cash flow hedges(1)
Interest rate swaps		$	223	$	129
Forward-currency contracts		$	(2)	$	(1)
Derivatives designated as net investment hedges
Cross-currency rate swaps		$	(60)	$	9


	Location of Gain or (Loss) Reclassified from AOCI into Earnings		Gain or (Loss) Reclassified from AOCI into Earnings
		Three Months Ended March 31,
			2022		2021
Derivatives designated as cash flow hedges
Interest rate swaps	Interest expense, net		$	(29)	$	(30)
Forward-currency contracts	Cost of sales		$	1	$	(2)

	Location of Gain or (Loss) Recognized in Earnings		Gain or (Loss) Recognized in Earnings (Amount Excluded from Effectiveness Testing)
		Three Months Ended March 31,
			2022		2021
Derivatives designated as net investment hedges
Cross-currency rate swaps	Interest expense, net		$	11	$	12


	Fair Value as of
	March 31, 2022		December 31, 2021		Balance Sheet Location
Assets:
Derivatives designated as cash flow hedges
Interest rate	$	20	$	—	Other assets, net
Foreign currency	1		2		Prepaids and other current assets
Derivatives designated as net investment hedges
Foreign currency	27		23		Other assets, net
Total assets at fair value	$	48	$	25

Liabilities:
Derivatives designated as cash flow hedges
Interest rate	$	4	$	220	Other liabilities, net
Foreign currency	2		—		Other accrued liabilities
Derivatives designated as net investment hedges
Foreign currency	418		355		Other liabilities, net
Total liabilities at fair value	$	424	$	575


Consolidated		Three Months Ended March 31,			Variance		FX Impact (a)		Variance Excluding FX Impact
	2022	2021	Favorable / (Unfavorable)
Revenues:
Sales			$	609	$	507	$	102	$	—	$	102
Franchise and property revenues			615		548		67		(8)		75
Advertising revenues and other services			227		205		22		—		22
Total revenues			1,451		1,260		191		(8)		199
Operating costs and expenses:
Cost of sales			494		401		(93)		—		(93)
Franchise and property expenses			130		116		(14)		—		(14)
Advertising expenses and other services			247		237		(10)		—		(10)
General and administrative expenses			133		104		(29)		1		(30)
(Income) loss from equity method investments			13		2		(11)		—		(11)
Other operating expenses (income), net			(16)		(42)		(26)		(3)		(23)
Total operating costs and expenses			1,001		818		(183)		(2)		(181)
Income from operations			450		442		8		(10)		18
Interest expense, net			127		124		(3)		—		(3)

Income before income taxes			323		318		5		(10)		15
Income tax expense			53		47		(6)		1		(7)
Net income			$	270	$	271	$	(1)	$	(9)	$	8


TH Segment		Three Months Ended March 31,			Variance		FX Impact (a)		Variance Excluding FX Impact
	2022	2021	Favorable / (Unfavorable)
Revenues:
Sales			$	566	$	473	$	93	$	—	$	93
Franchise and property revenues			206		190		16		—		16
Advertising revenues and other services			57		47		10		—		10
Total revenues			829		710		119		—		119
Cost of sales			453		370		(83)		—		(83)
Franchise and property expenses			81		81		—		—		—
Advertising expenses and other services			67		62		(5)		—		(5)
Segment G&A			29		24		(5)		—		(5)
Segment depreciation and amortization (b)			29		31		2		—		2
Segment income (c)			231		207		24		—		24


BK Segment		Three Months Ended March 31,			Variance		FX Impact (a)		Variance Excluding FX Impact
	2022	2021	Favorable / (Unfavorable)
Revenues:
Sales			$	16	$	16	$	—	$	—	$	—
Franchise and property revenues			318		289		29		(8)		37
Advertising revenues and other services			109		102		7		—		7
Total revenues			443		407		36		(8)		44
Cost of sales			17		16		(1)		—		(1)
Franchise and property expenses			45		33		(12)		—		(12)
Advertising expenses and other services			119		118		(1)		—		(1)
Segment G&A			45		35		(10)		1		(11)
Segment depreciation and amortization (b)			12		12		—		—		—
Segment income			229		217		12		(7)		19


PLK Segment		Three Months Ended March 31,			Variance		FX Impact (a)		Variance Excluding FX Impact
	2022	2021	Favorable / (Unfavorable)
Revenues:
Sales			$	17	$	18	$	(1)	$	—	$	(1)
Franchise and property revenues			71		69		2		—		2
Advertising revenues and other services			60		56		4		—		4
Total revenues			148		143		5		—		5
Cost of sales			16		15		(1)		—		(1)
Franchise and property expenses			2		2		—		—		—
Advertising expenses and other services			61		57		(4)		—		(4)
Segment G&A			15		14		(1)		—		(1)
Segment depreciation and amortization (b)			2		2		—		—		—
Segment income			56		56		—		—		—


FHS Segment	Three Months Ended March 31, 2022
Revenues:
Sales	$	10
Franchise and property revenues	20
Advertising revenues and other services	1
Total revenues	31
Cost of sales	8
Franchise and property expenses	2

Segment G&A	8

Segment income	14


	Three Months Ended March 31,
Key Business Metrics		2022			2021
System-wide sales growth
TH		12.9		%	(4.9)		%
BK		16.5		%	1.8		%
PLK		4.1		%	7.0		%
Consolidated (a)		13.7		%	1.4		%
FHS (b)		7.4		%	27.0		%
System-wide sales
TH		$	1,556		$	1,379
BK		$	5,818		$	5,173
PLK		$	1,383		$	1,344
FHS		$	272		$	—
Consolidated (a)		$	9,029		$	7,896
FHS (b)		$	—		$	254
Comparable sales
TH		8.4		%	(2.3)		%
BK		10.3		%	0.7		%
PLK		(3.0)		%	1.5		%
FHS (b)		4.2		%	24.2		%

		As of March 31,
		2022			2021
Net restaurant growth
TH		6.7		%	1.3		%
BK		3.1		%	(0.8)		%
PLK		7.9		%	4.8		%
Consolidated (a)		4.4		%	0.2		%
FHS (b)		1.8		%	1.7		%
Restaurant count
TH		5,320			4,987
BK		19,266			18,691
PLK		3,771			3,495
FHS		1,219			—
Consolidated		29,576			27,173
FHS (b)		—			1,198


Period	Total Number of Shares Purchased	Total Dollar Value of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs

January 1, 2022 - January 31, 2022	—	$	—	$	—	—	$	449,428,720
February 1, 2022 - February 28, 2022	868,499	48,907,829		56.31		868,499	400,520,891
March 1, 2022 - March 31, 2022	1,991,503	112,096,363		56.29		1,991,503	288,424,528
	2,860,002	$	161,004,192			2,860,002



Exhibit Number						Description

10.36(f)						Form of Performance Award Agreement (Performance Measures and TSR) under the Amended and Restated 2014 Omnibus Incentive Plan

10.80						Offer Letter dated December 8, 2020 among Burger King Europe GmbH, PLK Europe GmbH, and Tim Hortons Restaurants International GmbH and David Shear

10.81						Tax Equalization Agreement dated April 30, 2021 between Burger King Europe GmbH and David Shear

31.1						Certification of Chief Executive Officer of Restaurant Brands International Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2						Certification of Chief Financial Officer of Restaurant Brands International Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1						Certification of Chief Executive Officer of Restaurant Brands International Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2						Certification of Chief Financial Officer of Restaurant Brands International Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH						XBRL Taxonomy Extension Schema Document

101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF						XBRL Taxonomy Extension Definition Linkbase Document

101.LAB						XBRL Taxonomy Extension Label Linkbase Document

101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document

104						Cover Page Interactive File (formatted as Inline XBRL and contained in Exhibit 101)


PARTICIPANT			RESTAURANT BRANDS INTERNATIONAL INC.
____________________________			By: ______________________________
Name:			Name: Jill Granat Title: General Counsel



Performance Level			TSR Percentage Earned (% of Target)

>75th Percentile			150%
60th – 75th Percentile			Linear interpolation
40th – 60th Percentile			100%
25th – 40th Percentile			Linear interpolation
<25th Percentile			50%