PR Newswire | Feb 11, 2021 06:31AM EST

Results

02/11 05:30 CST

Restaurant Brands International Inc. Reports Full Year and Fourth Quarter 2020 Results TORONTO, Feb. 11, 2021

Global digital sales reach $6 billion in 2020, more than doubling in home markets

Continued strength in off-premise channels across all brands with global delivery sales also doubling in 2020

Accelerated transformation of drive-thru experience, 3,600 digital menu boards installed in home markets in 2020

RBI declares 9th consecutive dividend increase and ends 2020 with $2.6 billion of available liquidity

TORONTO, Feb. 11, 2021 /PRNewswire/ - Restaurant Brands International Inc. (TSX: QSR) (NYSE: QSR) (TSX: QSP) today reported financial results for the full year and fourth quarter ended December 31, 2020.

Jose Cil, Chief Executive Officer of Restaurant Brands International Inc. ("RBI") commented, "We are confident that our efforts in food and beverage quality, restaurant experience, digital leadership and brand building will be beneficial to returning our business to the growth we know we are capable of in all three brands. While we ended 2020 with about the same restaurant count as 2019, we have been working closely with our network of franchisees on restarting the development engine and expect to deliver net restaurant growth roughly in line with what we delivered in 2018 and 2019. Strong results in 2021 will help pave the way toward our aspiration of achieving 40,000 restaurants in the coming years."

Cil continued, "Driving rapid digital innovation has been essential to the recovery of our business. We increased support for and continued to build on our e-commerce platforms, reimagined service opportunities like curbside pickup and expanded delivery services into thousands of new restaurants. The outcome has been the more than doubling of digital sales in North America."

"The quality of our plans today is the result of a team that refused to be distracted by short-term barriers that we couldn't control and instead focused on the right long-term priorities to grow our restaurant brands for many years to come," concluded Cil."

2020 Highlights:

* System-wide Sales Growth declined (8.6)% * Net Restaurant Growth declined (0.2)% * Diluted EPS of $1.60 versus $2.37 in prior year * Adjusted Diluted EPS of $2.03 versus $2.72 in prior year * Net Income Attributable to Common Shareholders and Noncontrolling Interests of $748 million versus $1,109 million in prior year * Adjusted EBITDA of $1,864 million decreased (18.1)% organically versus the prior year * Net Cash Provided by Operating Activities of $921 million and Free Cash Flow of $804 million

2020 Corporate Highlights:

* RBI announced its Restaurant Brands for Good evergreen framework in 2020, available on the company's website and discussed in the open letter posted today by Jose Cil * RBI awarded "Great Place to Work(r)" certification and achieved 100% on Corporate Equality Index

Dividend Update:

* RBI announced that its board of directors declared a dividend of $0.53 per common share and partnership exchangeable unit of Restaurant Brands International Limited Partnership ("RBI LP") for Q1 of 2021 * In connection with the declared dividend, RBI also announced that it is targeting a total of $2.12 in dividends per common share and partnership exchangeable unit of RBI LP for 2021

Consolidated Operational Highlights

Three Months Ended December 31, Twelve Months Ended December 31,

2020 2019 2020 2019

(unaudited) (unaudited)

System-wide Sales Growth

TH (12.9)% (2.9)% (17.5)% (0.3)%

BK (8.1)% 8.4% (11.1)% 9.3%

PLK (0.9)% 42.3% 17.7% 18.5%

Consolidated (8.0)% 9.9% (8.6)% 8.3%

System-wide Sales (in US$ millions)

TH $ 1,478 $1,679 $5,488 $6,716

BK $ 5,428 $5,905 $20,038 $22,921

PLK $ 1,307 $1,327 $5,143 $4,397

Consolidated $ 8,213 $8,911 $30,669 $34,034

Net Restaurant Growth

TH 0.3% 1.8% 0.3% 1.8%

BK (1.1)% 5.9% (1.1)% 5.9%

PLK 4.1% 6.9% 4.1% 6.9%

Consolidated (0.2)% 5.2% (0.2)% 5.2%

System Restaurant Count at Period End

TH 4,949 4,932 4,949 4,932

BK 18,625 18,838 18,625 18,838

PLK 3,451 3,316 3,451 3,316

Consolidated 27,086 27,025 27,086 27,025

Comparable Sales

TH (11.0)% (4.3)% (15.7)% (1.5)%

BK (7.9)% 2.8% (7.9)% 3.4%

PLK (5.8)% 34.4% 13.8% 12.1%

Note: System-wide sales growth and comparable sales are calculated on aconstant currency basis and include sales at franchise restaurants andcompany-owned restaurants. System-wide sales are driven by sales at franchisedrestaurants, as approximately 100% of current restaurants are franchised. We donot record franchise sales as revenues; however, our franchise revenues includeroyalties based on a percentage of franchise sales. Additionally, if arestaurant is closed for a significant portion of a month, the restaurant isexcluded from the monthly comparable sales calculation.

Consolidated Financial Highlights

Three Months Ended December 31,Twelve Months Ended December 31,

(in US$ millions, except per share data) 2020 2019 2020 2019

(unaudited) (unaudited)

Total Revenues $ 1,358 $ 1,479 $ 4,968 $5,603

Net Income Attributable to Common Shareholders and$ 138 $ 255 $ 748 $1,109 Noncontrolling Interests

Diluted Earnings per Share $ 0.30 $ 0.54 $ 1.60 $2.37



TH Adjusted EBITDA^(1) $ 229 $ 297 $ 823 $1,122

BK Adjusted EBITDA^(1) $ 218 $ 266 $ 823 $994

PLK Adjusted EBITDA^(1) $ 54 $ 59 $ 218 $188

Adjusted EBITDA^(2) $ 501 $ 622 $ 1,864 $2,304



Adjusted Net Income^(2) $ 247 $ 351 $ 948 $1,274

Adjusted Diluted Earnings per Share^(2) $ 0.53 $ 0.75 $ 2.03 $2.72



As of December 31,

2020 2019

(unaudited)

Net cash provided by operating activities $ 921 $ 1,476

Net cash used for investing activities $ (79) $ (30)

Net cash used for financing activities $ (821) $ (842)



Free Cash Flow^(2) $ 804 $ 1,414

Net Debt $ 11,418 $ 10,763

Net Leverage^(2) 6.1x 4.7x

(1) TH Adjusted EBITDA, BK Adjusted EBITDA, and PLK Adjusted EBITDA are our measures of segment profitability.

Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted Earnings per Share,(2) Free Cash Flow, and Net Leverage are non-GAAP financial measures. Please refer to "Non-GAAP Financial Measures" for further detail.

The year-over-year change in Total Revenues on an as reported basis and on an organic basis for the full year was primarily driven by a decline in system-wide sales at Tim Hortons and Burger King and a decrease in supply chain sales, partially offset by an increase in system-wide sales at Popeyes. FX movements also contributed to the year-over-year decrease in Total Revenues on an as reported basis.

The year-over-year change in Total Revenues on an as reported basis and on an organic basis for the fourth quarter was primarily driven by a decline in system-wide sales at Tim Hortons, Burger King and Popeyes and a decrease in supply chain sales. Favorable FX movements partially offset the year-over-year decrease in Total Revenues on an as reported basis.

The decrease in Net Income Attributable to Common Shareholders and Noncontrolling Interests for the full year was primarily driven by a decrease in Tim Hortons and Burger King segment income, an unfavorable change in the results from other operating expenses (income), net, an unfavorable increase from the impact of equity method investments, and an increase in loss on early extinguishment of debt, partially offset by a decrease in income tax expense, an increase in Popeyes segment income, and a decrease in interest expense.

The decrease in Net Income Attributable to Common Shareholders and Noncontrolling Interests for the fourth quarter was primarily driven by a decrease in Tim Hortons and Burger King segment income, an increase in loss on early extinguishment of debt, partially offset by a decrease in income tax expense.

The year-over year change in Adjusted EBITDA on an as reported and on an organic basis for the full year was primarily driven by the decrease in Tim Hortons and Burger King Adjusted EBITDA, partially offset by an increase in Popeyes Adjusted EBITDA.

The year-over-year change in Adjusted EBITDA on an as reported and on an organic basis for the fourth quarter was primarily driven by the decrease in Tim Hortons and Burger King Adjusted EBITDA.

Our results this quarter continued to be impacted by the COVID-19 global pandemic, primarily through temporary closures of and restrictions on restaurants in various regions around the world. While certain markets have opened for dine-in guests, the capacity may be limited, and local conditions may lead to closures or increased limitations.

As of the end of December, over 96% of our restaurants were open worldwide, including substantially all of our restaurants in North America and Asia Pacific. As of the end of December, approximately 94% of our restaurants were open in Europe, Middle East and Africa.

While we do not know the future impact COVID-19 will have on our business, or when our business will fully return to normal operations, we expect to see a continued impact from COVID-19 on our results in 2021.

TH Segment Results

Three Months Ended December 31,Twelve Months Ended December 31,

(in US$ 2020 2019 2020 2019 millions)

(unaudited) (unaudited)

System-wide (12.9)% (2.9)% (17.5)% (0.3)% Sales Growth

System-wide $1,478 $1,679 $5,488 $6,716 Sales

Comparable (11.0)% (4.3)% (15.7)% (1.5)% Sales



Net Restaurant 0.3% 1.8% 0.3% 1.8% Growth

System Restaurant 4,949 4,932 4,949 4,932 Count at Period End



Sales $531 $586 $1,876 $2,204

Franchise and Property$251 $286 $934 $1,140 Revenues

Total $782 $872 $2,810 $3,344 Revenues



Cost of $423 $444 $1,484 $1,677 Sales

Franchise and Property$91 $90 $341 $358 Expenses

Segment SG&A$73 $73 $284 $309

Segment Depreciation$31 $26 $113 $106 and Amortization

Adjusted EBITDA^(1) $229 $297 $823 $1,122 (3)

TH Adjusted EBITDA includes $3 million and $5 million of cash distributions received from equity method investments for the three months ended December(3) 31, 2020 and 2019, respectively. TH Adjusted EBITDA includes $9 million and $16 million of cash distributions received from equity method investments for the twelve months ended December 31, 2020 and 2019, respectively.

For the full year and fourth quarter, the decrease in system-wide sales was primarily driven by a decrease in comparable sales of (15.7)% and (11.0)%, respectively, including Canada comparable sales of (16.5)% and (11.9)%, respectively, for the same periods.

The year-over-year change in Total Revenues and Adjusted EBITDA on an as reported and on an organic basis was primarily driven by the decrease in system-wide sales and supply chain sales. This decrease was also driven by unfavorable FX movements for the full year and partially offset by favorable FX movements for the fourth quarter on an as reported basis.

BK Segment Results

Three Months Ended December 31, Twelve Months Ended December 31,

(in US$ 2020 2019 2020 2019 millions)

(unaudited) (unaudited)

System-wide (8.1)% 8.4% (11.1)% 9.3% Sales Growth

System-wide $ 5,428 $ 5,905 $20,038 $22,921 Sales

Comparable (7.9)% 2.8% (7.9)% 3.4% Sales



Net Restaurant (1.1)% 5.9% (1.1)% 5.9% Growth

System Restaurant 18,625 18,838 18,625 18,838 Count at Period End



Sales $ 15 $ 19 $64 $76

Franchise and Property$ 419 $ 443 $1,538 $1,701 Revenues

Total $ 434 $ 462 $1,602 $1,777 Revenues



Cost of $ 16 $ 18 $65 $71 Sales

Franchise and Property$ 47 $ 44 $176 $168 Expenses

Segment SG&A$ 166 $ 151 $588 $600

Segment Depreciation$ 12 $ 12 $49 $49 and Amortization

Adjusted EBITDA^(1) $ 218 $ 266 $823 $994 (4)

BK Adjusted EBITDA includes $4 million and $6 million of cash distributions(4) received from equity method investments for the three and twelve months ended December 31, 2019, respectively. No significant cash distributions were received during 2020.

For the full year and fourth quarter, the decrease in system-wide sales was primarily driven by a decrease in comparable sales of (7.9)% in both periods, including US comparable sales growth of (5.6)% and (2.9)%, respectively.

The year-over-year change in Total Revenues and Adjusted EBITDA on an as reported and on an organic basis was primarily driven by the decrease in system-wide sales. This decrease was also driven by FX movements for the full year on an as reported basis.

PLK Segment Results

Three Months Ended December 31,Twelve Months Ended December 31,

(in US$ millions) 2020 2019 2020 2019

(unaudited) (unaudited)

System-wide Sales Growth (0.9)% 42.3% 17.7% 18.5%

System-wide Sales $ 1,307 $1,327 $ 5,143 $4,397

Comparable Sales (5.8)% 34.4% 13.8% 12.1%



Net Restaurant Growth 4.1% 6.9% 4.1% 6.9%

System Restaurant Count at Period End 3,451 3,316 3,451 3,316



Sales $ 17 $22 $ 73 $82

Franchise and Property Revenues $ 125 $123 $ 483 $400

Total Revenues $ 142 $145 $ 556 $482



Cost of Sales $ 15 $17 $ 61 $65

Franchise and Property Expenses $ 2 $5 $ 11 $14

Segment SG&A $ 72 $66 $ 273 $225

Segment Depreciation and Amortization$ 2 $3 $ 8 $11

Adjusted EBITDA^(1) $ 54 $59 $ 218 $188

For the full year, system-wide sales were primarily driven by comparable sales growth and net restaurant growth of 4.1%. For the full year, comparable sales were 13.8%, including US comparable sales of 15.7%.

For the fourth quarter, the decrease in system-wide sales was primarily driven by the decrease in comparable sales, partially offset by net restaurant growth of 4.1%. For the fourth quarter, comparable sales were (5.8)%, including US comparable sales of (6.4)%.

The change in Total Revenues and Adjusted EBITDA for the full year on an as reported and on an organic basis was primarily driven by system-wide sales growth. The change in Adjusted EBITDA was also driven by an increase in segment Selling General and Administrative expenses.

The change in Total Revenues and Adjusted EBITDA for the quarter on an as reported and on an organic basis was primarily driven by the decrease in system-wide sales.

Cash and Liquidity

As of December 31, 2020, total debt was $13.0 billion, and net debt (total debt less cash and cash equivalents of $1.6 billion) was $11.4 billion, and net leverage was 6.1x. In the fourth quarter, we took advantage of favorable market conditions to issue $2.9 billion of 4.0% Second Lien Notes due 2030 and redeemed $2.8 billion of our 5% Second Lien Notes due 2025. We also issued $750 million of 3.5% First Lien Notes due in 2029 and redeemed $725 million of 4.25% First Lien Notes due 2024.

The RBI board of directors has declared a dividend of $0.53 per common share and partnership exchangeable unit of RBI LP for the first quarter of 2021. The dividend will be payable on April 6, 2021 to shareholders and unitholders of record at the close of business on March 23, 2021. In connection with the declared dividend, RBI also announced that it is targeting a total of $2.12 in dividends per common share and partnership exchangeable unit of RBI LP for 2021.

Investor Conference Call

We will host an investor conference call and webcast at 8:30 a.m. Eastern Time on Thursday, February 11, 2021, to review financial results for the full year and fourth quarter ended December 31, 2020. The earnings call will be broadcast live via our investor relations website at http://investor.rbi.com and a replay will be available for 30 days following the release. The dial-in number is (877) 317-6711 for U.S. callers, (866) 450-4696 for Canadian callers, and (412) 317-5475 for callers from other countries.

About Restaurant Brands International Inc.

Restaurant Brands International Inc. ("RBI") is one of the world's largest quick service restaurant companies with approximately $31 billion in annual system-wide sales and 27,000 restaurants in more than 100 countries and U.S. territories. RBI owns three of the world's most prominent and iconic quick service restaurant brands - TIM HORTONS(r), BURGER KING(r), and POPEYES(r). These independently operated brands have been serving their respective guests, franchisees and communities for over 45 years. To learn more about RBI, please visit the company's website at www.rbi.com.

Forward-Looking Statements

This press release contains certain forward-looking statements and information, which reflect management's current beliefs and expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties. These forward-looking statements include statements about our expectations regarding the effects of the COVID-19 pandemic on our results of operations, liquidity and prospects and those of our franchisees and our ability to continue to navigate the impact of the pandemic, our expectations regarding our 2021 and long-term restaurant growth goals and our progress toward those goals, the impact of our strategic initiatives on the long-term growth prospects of our brands, the timing of technology roll out, our future plans with respect to our brands and our total dividend target for 2021. The factors that could cause actual results to differ materially from RBI's expectations are detailed in filings of RBI with the Securities and Exchange Commission and applicable Canadian securities regulatory authorities, such as its annual and quarterly reports and current reports on Form 8-K, and include the following: risks related to unforeseen events such as pandemics; risks related to supply chain; risks related to ownership and leasing of properties; risks related to our franchisees financial stability and their ability to access and maintain the liquidity necessary to operate their business; risks related to RBI's ability to successfully implement its domestic and international growth strategy and risks related to its international operations; risks related to RBI's ability to compete domestically and internationally in an intensely competitive industry; risks related to technology; and changes in applicable tax laws or interpretations thereof. Other than as required under U.S. federal securities laws or Canadian securities laws, we do not assume a duty to update these forward-looking statements, whether as a result of new information, subsequent events or circumstances, change in expectations or otherwise.

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIESCondensed Consolidated Statements of Operations(In millions of U.S. dollars, except per share data)(Unaudited)

Three Months Ended Twelve Months Ended December 31, December 31,

2020 2019 2020 2019

Revenues:

Sales $563 $ 627 $2,013 $2,362

Franchise and property revenues 795 852 2,955 3,241

Total revenues 1,358 1,479 4,968 5,603

Operating costs and expenses:

Cost of sales 454 479 1,610 1,813

Franchise and property expenses 140 139 528 540

Selling, general and 342 316 1,264 1,264 administrative expenses

(Income) loss from equity method3 - 39 (11) investments

Other operating expenses 46 34 105 (10) (income), net

Total operating costs and 985 968 3,546 3,596 expenses

Income from operations 373 511 1,422 2,007

Interest expense, net 132 126 508 532

Loss on early extinguishment of 98 19 98 23 debt

Income before income taxes 143 366 816 1,452

Income tax expense 4 109 66 341

Net income 139 257 750 1,111

Net income attributable to 48 92 264 468 noncontrolling interests

Net income attributable to $91 $ 165 $486 $643 common shareholders

Earnings per common share:

Basic $0.30 $ 0.55 $1.61 $2.40

Diluted $0.30 $ 0.54 $1.60 $2.37

Weighted average shares outstanding:

Basic 304 298 302 268

Diluted 464 469 468 469

Cash dividends declared per $0.52 $ 0.50 $2.08 $2.00 common share

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIESCondensed Consolidated Balance Sheets(In millions of U.S. dollars, except share data)(Unaudited)

As of

December 31, 2020December 31, 2019

ASSETS

Current assets:

Cash and cash equivalents $ 1,560 $ 1,533

Accounts and notes receivable, net of allowance of $42 and $13, respectively536 527

Inventories, net 96 84

Prepaids and other current assets 72 52

Total current assets 2,264 2,196

Property and equipment, net of accumulated depreciation and amortization of 2,031 2,007 $879 and $746, respectively

Operating lease assets, net 1,152 1,176

Intangible assets, net 10,701 10,563

Goodwill 5,739 5,651

Net investment in property leased to franchisees 66 48

Other assets, net 824 719

Total assets $ 22,777 $ 22,360

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts and drafts payable $ 464 $ 644

Other accrued liabilities 835 790

Gift card liability 191 168

Current portion of long-term debt and finance leases 111 101

Total current liabilities 1,601 1,703

Long-term debt, net of current portion 12,397 11,759

Finance leases, net of current portion 315 288

Operating lease liabilities, net of current portion 1,082 1,089

Other liabilities, net 2,236 1,698

Deferred income taxes, net 1,425 1,564

Total liabilities 19,056 18,101

Commitments and contingencies

Shareholders' equity:

Common shares, no par value; unlimited shares authorized at December 31, 2020 and December 31, 2019; 304,718,749 shares issued and outstanding at 2,399 2,478 December 31, 2020; 298,281,081 shares issued and outstanding at December 31, 2019

Retained earnings 622 775

Accumulated other comprehensive income (loss) (854) (763)

Total Restaurant Brands International Inc. shareholders' equity 2,167 2,490

Noncontrolling interests 1,554 1,769

Total shareholders' equity 3,721 4,259

Total liabilities and shareholders' equity $ 22,777 $ 22,360

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIESCondensed Consolidated Statements of Cash Flows(In millions of U.S. dollars)(Unaudited)

Twelve Months Ended December 31,

2020 2019

Cash flows from operating activities:

Net income $750 $ 1,111

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 189 185

Premiums paid and non-cash loss on early 97 16 extinguishment of debt

Amortization of deferred financing costs and26 29 debt issuance discount

(Income) loss from equity method investments39 (11)

Loss (gain) on remeasurement of foreign 100 (14) denominated transactions

Net (gains) losses on derivatives 32 (49)

Share-based compensation expense 74 68

Deferred income taxes (208) 58

Other 28 6

Changes in current assets and liabilities, excluding acquisitions and dispositions:

Accounts and notes receivable (30) (53)

Inventories and prepaids and other current (10) (15) assets

Accounts and drafts payable (183) 112

Other accrued liabilities and gift card 16 (51) liability

Tenant inducements paid to franchisees (22) (54)

Other long-term assets and liabilities 23 138

Net cash provided by operating activities 921 1,476

Cash flows from investing activities:

Payments for property and equipment (117) (62)

Net proceeds from disposal of assets, 12 8 restaurant closures and refranchisings

Settlement/sale of derivatives, net 33 24

Other investing activities, net (7) -

Net cash used for investing activities (79) (30)

Cash flows from financing activities:

Proceeds from issuance of long-term debt 5,235 2,250

Repayments of long-term debt and finance (4,708) (2,266) leases

Payment of financing costs (43) (50)

Payment of dividends on common shares and distributions on Partnership (959) (901) exchangeable units

Repurchase of Partnership exchangeable units(380) -

Proceeds from stock option exercises 82 102

(Payments) proceeds from derivatives (46) 23

Other financing activities, net (2) -

Net cash used for financing activities (821) (842)

Effect of exchange rates on cash and cash 6 16 equivalents

Increase (decrease) in cash and cash 27 620 equivalents

Cash and cash equivalents at beginning of 1,533 913 period

Cash and cash equivalents at end of period $1,560 $ 1,533

Supplemental cash flow disclosures:

Interest paid $463 $ 584

Income taxes paid $267 $ 248

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIESKey Operating Metrics

We evaluate our restaurants and assess our business based on the following operating metrics.

System-wide sales growth refers to the percentage change in sales at all franchise and company-owned restaurants in one period from the same period in the prior year. Comparable sales refers to the percentage change in restaurant sales in one period from the same prior year period for restaurants that have been open for 13 months or longer for TH and BK and 17 months or longer for PLK . Additionally, if a restaurant is closed for a significant portion of a month, the restaurant is excluded from the monthly comparable sales calculation. System-wide sales growth and comparable sales are measured on a constant currency basis, which means that results exclude the effect of foreign currency translation and are calculated by translating prior year results at current year monthly average exchange rates. We analyze key operating metrics on a constant currency basis as this helps identify underlying business trends, without distortion from the effects of currency movements.

System-wide sales represent sales at all franchise restaurants and company-owned restaurants. We do not record franchise sales as revenues; however, our franchise revenues include royalties based on a percentage of franchise sales.

Net restaurant growth refers to the net increase/(decrease) in restaurant count (openings, net of permanent closures) over a trailing twelve month period, divided by the restaurant count at the beginning of the trailing twelve month period.

Three Months Ended Twelve Months Ended December 31, December 31,

KPIs by Market 2020 2019 2020 2019

(unaudited) (unaudited)

System-wide Sales Growth

TH - Canada (14.3) % (3.3) % (18.5) % (0.4) %

TH - Rest of World (3.8) % (0.1) % (10.7) % 0.5 %

TH - Global (12.9) % (2.9) % (17.5) % (0.3) %



BK - US (3.0) % 1.4 % (5.4) % 2.7 %

BK - Rest of World (12.1) % 14.5 % (15.8) % 15.3 %

BK - Global (8.1) % 8.4 % (11.1) % 9.3 %



PLK - US (2.0) % 45.0 % 20.3 % 18.4 %

PLK - Rest of World 7.4 % 25.2 % (0.5) % 19.1 %

PLK - Global (0.9) % 42.3 % 17.7 % 18.5 %



System-wide Sales (in US$ millions)

TH - Canada $1,264 $1,457 $4,720 $5,856

TH - Rest of World $214 $222 $768 $860

TH - Global $1,478 $1,679 $5,488 $6,716



BK - US $2,489 $2,565 $9,657 $10,204

BK - Rest of World $2,939 $3,340 $10,381 $12,717

BK - Global $5,428 $5,905 $20,038 $22,921



PLK - US $1,141 $1,164 $4,587 $3,812

PLK - Rest of World $166 $163 $556 $585

PLK - Global $1,307 $1,327 $5,143 $4,397



Comparable Sales

TH - Canada (11.9) % (4.6) % (16.5) % (1.4) %

TH - Rest of World (5.4) % (2.5) % (9.9) % (2.1) %

TH - Global (11.0) % (4.3) % (15.7) % (1.5) %



BK - US (2.9) % 0.6 % (5.6) % 1.7 %

BK - Rest of World (11.9) % 4.7 % (10.1) % 4.9 %

BK - Global (7.9) % 2.8 % (7.9) % 3.4 %



PLK - US (6.4) % 37.9 % 15.7 % 13.0 %

PLK - Rest of World (1.1) % 10.3 % (2.0) % 5.7 %

PLK - Global (5.8) % 34.4 % 13.8 % 12.1 %

As of December 31,

KPIs by Market 2020 2019

(unaudited)

Net Restaurant Growth

TH - Canada (1.9)% 1.5%

TH - Rest of World 10.3% 3.0%

TH - Global 0.3% 1.8%



BK - US (3.6)% 0.2%

BK - Rest of World 0.5% 9.8%

BK - Global (1.1)% 5.9%



PLK - US 5.3% 5.5%

PLK - Rest of World 0.4% 11.3%

PLK - Global 4.1% 6.9%



Restaurant Count

TH - Canada 3,936 4,014

TH - Rest of World 1,013 918

TH - Global 4,949 4,932



BK - US 7,081 7,346

BK - Rest of World 11,544 11,492

BK - Global 18,625 18,838



PLK - US 2,608 2,476

PLK - Rest of World 843 840

PLK - Global 3,451 3,316

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIESSupplemental Disclosure(Unaudited)

Selling, General and Administrative Expenses

Three Months EndedTwelve Months Ended December 31, December 31,

(in US$ millions) 2020 2019 2020 2019

Segment SG&A TH^(1) $ 73 $73 $284 $309

Segment SG&A BK^(1) 166 151 588 600

Segment SG&A PLK^(1) 72 66 273 225

Share-based compensation and non-cash21 12 84 74 incentive compensation expense

Depreciation and amortization^(2) 5 5 19 19

Corporate restructuring and tax 5 9 16 31 advisory fees

Office centralization and relocation - - - 6 costs

Selling, general and administrative $ 342 $316 $1,264 $1,264 expenses

Segment SG&A includes segment selling expenses, including advertising fund expenses, and segment general and administrative expenses and excludes(1) share-based compensation and non-cash incentive compensation expense, depreciation and amortization, corporate restructuring and tax advisory fees, and office centralization and relocation costs.

Segment depreciation and amortization reflects depreciation and amortization included in the respective segment cost of sales and the(2) respective segment franchise and property expenses. Depreciation and amortization included in selling, general and administrative expenses reflects all other depreciation and amortization.

Other Operating Expenses (Income), net

Three Months Ended December 31,Twelve Months Ended December 31,

(in US$ millions) 2020 2019 2020 2019

Net losses (gains) on disposal of assets, restaurant$ 4 $8 $ 6 $7 closures, and refranchisings^(3)

Litigation settlements and reserves, net 2 1 7 2

Net losses (gains) on foreign exchange^(4) 46 23 100 (15)

Other, net (6) 2 (8) (4)

Other operating expenses (income), net $ 46 $34 $ 105 $(10)

Net losses (gains) on disposal of assets, restaurant closures, and refranchisings represent sales of properties and other costs related to(3) restaurant closures and refranchisings. Gains and losses recognized in the current period may reflect certain costs related to closures and refranchisings that occurred in previous periods.

(4) Net losses (gains) on foreign exchange is primarily related to revaluation of foreign denominated assets and liabilities.

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIESNon-GAAP Financial Measures(Unaudited)

Below, we define the non-GAAP financial measures, provide a reconciliation of each non-GAAP financial measure to the most directly comparable financial measure calculated in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), and discuss the reasons why we believe this information is useful to management and may be useful to investors. These measures do not have standardized meanings under GAAP and may differ from similarly captioned measures of other companies in our industry.

Non-GAAP Measures

To supplement our condensed consolidated financial statements presented on a GAAP basis, RBI reports the following non-GAAP financial measures: EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted Earnings per Share ("Adjusted Diluted EPS"), Organic revenue growth, Organic Adjusted EBITDA growth, Free Cash Flow, and Net Leverage. We believe that these non-GAAP measures are useful to investors in assessing our operating performance or liquidity, as these provide them with the same tools that management uses to evaluate our performance and is responsive to questions we receive from both investors and analysts. By disclosing these non-GAAP measures, we intend to provide investors with a consistent comparison of our operating results and trends for the periods presented.

EBITDA is defined as earnings (net income or loss) before interest expense, net, (gain) loss on early extinguishment of debt, income tax (benefit) expense, and depreciation and amortization and is used by management to measure operating performance of the business. Adjusted EBITDA is defined as EBITDA excluding (i) the non-cash impact of share-based compensation and non-cash incentive compensation expense, (ii) (income) loss from equity method investments, net of cash distributions received from equity method investments, (iii) other operating expenses (income), net, and (iv) income or expense from non-recurring projects and non-operating activities. For the periods referenced, this included costs incurred in connection with the centralization and relocation of our Canadian and U.S. restaurant support centers to new offices in Toronto, Ontario, and Miami, Florida, respectively and from professional advisory and consulting services associated with certain transformational corporate restructuring initiatives that rationalize our structure and optimize cash movements, including consulting services related to the interpretation of final and proposed regulations and guidance under the Tax Cuts and Jobs Act (the "Tax Act"). Management believes that these types of expenses are either not related to our underlying profitability drivers or not likely to re-occur in the foreseeable future and the varied timing, size and nature of these projects may cause volatility in our results unrelated to the performance of our core business that does not reflect trends of our core operations. Adjusted EBITDA is used by management to measure operating performance of the business, excluding these non-cash and other specifically identified items that management believes are not relevant to management's assessment of our operating performance. Adjusted EBITDA, as defined above, also represents our measure of segment income for each of our three operating segments.

Adjusted Net Income is defined as net income excluding (i) franchise agreement amortization as a result of acquisition accounting, (ii) amortization of deferred financing costs and debt issuance discount, (iii) loss on early extinguishment of debt and interest expense, which represents non-cash interest expense related to losses reclassified from accumulated comprehensive income (loss) into interest expense in connection with interest rate swaps de-designated in May 2015 and November 2019, (iv) (income) loss from equity method investments, net of cash distributions received from equity method investments, (v) other operating expenses (income), net, and (vi) income or expense from non-recurring projects and non-operating activities (as described above).

Adjusted Diluted EPS is calculated by dividing Adjusted Net Income by the weighted average diluted shares outstanding of RBI during the reporting period. Adjusted Net Income and Adjusted Diluted EPS are used by management to evaluate the operating performance of the business, excluding certain non-cash and other specifically identified items that management believes are not relevant to management's assessment of operating performance or the performance of an acquired business.

Net Leverage is defined as net debt (total debt less cash and cash equivalents) divided by LTM Adjusted EBITDA. Net Leverage is a performance measure that we believe provides investors a more complete understanding of our leverage position and borrowing capacity after factoring in cash and cash equivalents that eventually could be used to repay outstanding debt.

Revenue growth and Adjusted EBITDA growth, on an organic basis, are non-GAAP measures that exclude the impact of FX movements. Management believes that organic growth is an important metric for measuring the operating performance of our business as it helps identify underlying business trends, without distortion from the effects of FX movements. We calculate the impact of FX movements by translating prior year results at current year monthly average exchange rates.

Free Cash Flow is the total of Net cash provided by (used for) operating activities minus Payments for property and equipment. Free Cash Flow is a liquidity measure used by management as one factor in determining the amount of cash that is available for working capital needs or other uses of cash, however, it does not represent residual cash flows available for discretionary expenditures.

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIESNon-GAAP Financial MeasuresOrganic Growth in Revenue and Adjusted EBITDAThree and Twelve Months Ended December 31, 2020(Unaudited)

Impact of FX

Actual Q4 '20 vs. Q4 '19Movements Organic Growth

(in US$ millions)Q4 '20 Q4 '19 $ % $ $ %

Revenue

TH $782 $872 $(90) (10.4)%$ 10 $(100)(11.4)%

BK $434 $462 $(28) (6.0)% $ - $(28) (6.0)%

PLK $142 $145 $(3) (1.7)% $ - $(3) (1.5)%

Total Revenues $1,358$1,479$(121) (8.2)% $ 10 $(131)(8.8)%

Adjusted EBITDA

TH $229 $297 $(68) (23.2)%$ 3 $(71) (24.1)%

BK $218 $266 $(48) (18.2)%$ - $(48) (18.2)%

PLK $54 $59 $(5) (8.3)% $ - $(5) (7.8)%

Adjusted EBITDA $501 $622 $(121) (19.7)%$ 3 $(124)(20.1)%

Note: Percentage changes may not recalculate due to rounding.

The change in Adjusted EBITDA during the three months ended December 31, 2020 compared to the three months ended December 31, 2019 includes a decrease of $6 million related to the temporary mismatch between advertising fund revenues and expenses which had a negative impact of approximately (1.0)% on the organic Adjusted EBITDA growth rate.

Impact of FX

Actual 2020 vs. 2019 Movements Organic Growth

(in US$ millions)2020 2019 $ % $ $ %

Revenue

TH $2,810$3,344$(534)(16.0)%$ (30) $(504)(15.2)%

BK $1,602$1,777$(175)(9.8) %$ (18) $(157)(8.9) %

PLK $556 $482 $74 15.3 %$ (1) $75 15.5 %

Total Revenues $4,968$5,603$(635)(11.3)%$ (49) $(586)(10.5)%

Adjusted EBITDA

TH $823 $1,122$(299)(26.7)%$ (10) $(289)(26.0)%

BK $823 $994 $(171)(17.2)%$ (17) $(154)(15.8)%

PLK $218 $188 $30 15.8 %$ (1) $31 16.5 %

Adjusted EBITDA $1,864$2,304$(440)(19.1)%$ (28) $(412)(18.1)%

Note: Percentage changes may not recalculate due to rounding.

The change in Adjusted EBITDA during the twelve months ended December 31, 2020 compared to the twelve months ended December 31, 2019 includes a decrease of $24 million related to the temporary mismatch between advertising fund revenues and expenses which had a negative impact of approximately (1.1)% on the organic Adjusted EBITDA growth rate.

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIESNon-GAAP Financial MeasuresReconciliation of EBITDA and Adjusted EBITDA to Net Income(Unaudited)

Three Months EndedTwelve Months Ended December 31, December 31,

(in US$ millions) 2020 2019 2020 2019

Segment income:

TH $ 229 $ 297 $ 823 $1,122

BK 218 266 823 994

PLK 54 59 218 188

Adjusted EBITDA 501 622 1,864 2,304

Share-based compensation and non-cash incentive 21 12 84 74 compensation expense^(1)

Corporate restructuring and tax advisory fees^(2)5 9 16 31

Office centralization and relocation costs^(3) - - - 6

Impact of equity method investments^(4) 6 10 48 11

Other operating expenses (income), net 46 34 105 (10)

EBITDA 423 557 1,611 2,192

Depreciation and amortization 50 46 189 185

Income from operations 373 511 1,422 2,007

Interest expense, net 132 126 508 532

Loss on early extinguishment of debt 98 19 98 23

Income tax expense^(5)(6) 4 109 66 341

Net income $ 139 $ 257 $ 750 $1,111

Reconciliation of Net Income to Adjusted Net Income and Adjusted Diluted EPS(Unaudited)

Three Months EndedTwelve Months Ended December 31, December 31,

(in US$ millions, except per share data) 2020 2019 2020 2019

Net income $ 139 $ 257 $ 750 $1,111

Income tax expense^(5)(6) 4 109 66 341

Income before income taxes 143 366 816 1,452

Adjustments:

Franchise agreement amortization 8 8 33 31

Amortization of deferred financing costs and debt 7 7 26 29 issuance discount

Interest expense and loss on extinguished debt^(7)106 24 129 37

Corporate restructuring and tax advisory fees^(2) 5 9 16 31

Office centralization and relocation costs^(3) - - - 6

Impact of equity method investments^(4) 6 10 48 11

Other operating expenses (income), net 46 34 105 (10)

Total adjustments 178 92 357 135

Adjusted income before income taxes 321 458 1,173 1,587

Adjusted income tax expense^(5)(6)(8) 74 107 225 313

Adjusted net income $ 247 $ 351 $ 948 $1,274

Adjusted diluted earnings per share $ 0.53 $ 0.75 $ 2.03 $2.72

Weighted average diluted shares outstanding 464 469 468 469

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIESNon-GAAP Financial MeasuresReconciliation of Net Leverage and Free Cash Flow(Unaudited)

As of December 31,

(in US$ millions, except ratio) 2020 2019

Term debt, net of current portion $12,397$11,759

Finance leases, net of current portion 315 288

Current portion of long term debt and finance leases 111 101

Unamortized deferred financing costs and deferred issue 155 148 discount

Total debt $12,978$12,296



Cash and cash equivalents $1,560 $1,533

Net debt 11,418 10,763

Adjusted EBITDA 1,864 2,304

Net leverage 6.1x 4.7x

Twelve Months Ended December 31,

(in US$ millions) 2020 2019

Net cash provided by operating activities$921 $1,476

Payments for property and equipment (117) (62)

Free cash flow $804 $1,414

Twelve Nine Three Months Months Months Ended Ended Ended DecemberSeptemberDecember 31, 30, 31,

(in US$ millions) 2020 2020 2020

Calculation: A B A - B

Net cash provided by operating activities$ 921 $ 608 $ 313

Payments for property and equipment (117) (71) (46)

Free cash flow $ 804 $ 537 $ 267

Non-GAAP Financial MeasuresFootnotes to Reconciliation Tables

Represents share-based compensation expense associated with equity awards for the periods indicated; also includes the portion of annual non-cash(1) incentive compensation expense that eligible employees elected to receive or are expected to elect to receive as common equity in lieu of their 2019 and 2020 cash bonus, respectively.

Costs arising primarily from professional advisory and consulting services associated with certain transformational corporate restructuring(2) initiatives that rationalize our structure and optimize cash movements, including consulting services related to the interpretation of final and proposed regulations and guidance under the Tax Cuts and Jobs Act (the "Tax Act").

In connection with the centralization and relocation of our Canadian and U.S. restaurant support centers to new offices in Toronto, Ontario, and(3) Miami, Florida, respectively, we incurred certain non-operational expenses consisting primarily of duplicate rent expense, moving costs, and relocation-driven compensation expenses.

Represents (i) (income) loss from equity method investments and (ii) cash(4) distributions received from our equity method investments. Cash distributions received from our equity method investments are included in segment income.

The effective tax rate for the twelve months ended December 31, 2020 reflects a $105 million increase in deferred tax assets, consisting of $64 million related to the analysis of final guidance related to the Tax Act received during 2020 and $41 million due to Swiss tax reform transition(5) relief. This increase in deferred tax assets reduced the effective tax rate by 12.9% during 2020. The effective tax rate for the twelve months ended December 31, 2019 reflects a $37 million income tax expense provision adjustment related to a prior restructuring transaction not applicable to ongoing operations which increased our effective tax rate by 2.5% during 2019. Adjusted income tax expense excludes the impact of these adjustments.

The effective tax rate was reduced by 0.3% and 2.2% for the twelve months ended December 31, 2020 and 2019, respectively, and our adjusted effective(6) tax rate was reduced by 0.2% and 2.0% for the twelve months ended December 31, 2020 and 2019, respectively, as a result of benefits from stock option exercises.

Represents loss on early extinguishment of debt and interest expense. Interest expense included in this amount represents non-cash interest(7) expense related to losses reclassified from accumulated comprehensive income (loss) into interest expense in connection with interest rate swaps de-designated in May 2015 and November 2019.

Adjusted income tax expense includes the tax impact of the non-GAAP(8) adjustments and is calculated using our statutory tax rate in the jurisdiction in which the costs were incurred.

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SOURCE Restaurant Brands International Inc.