UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(Mark One)


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

For the quarterly period ended ~~September 30, 2023~~March 31, 2024


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

For the transition period from to

Commission file number: 001-36786

RESTAURANT BRANDS INTERNATIONAL INC.

(Exact Name of Registrant as Specified in its Charter)



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)

(905) 339-6011

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbols

Name of each exchange on which registered

Common Shares, without par value

QSR

New York Stock Exchange

Toronto Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October 27, 2023,~~April 23, 2024, there were ~~312,028,584~~316,382,439 common shares of the Registrant outstanding.

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RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES

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PART I — Financial Information

Item 1. Financial Statements

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In millions of U.S. dollars, except share data)

(Unaudited)


		As of				As of
		September 30, 2023		December 31, 2022
	March 31, 2024						March 31, 2024	December 31, 2023
ASSETS	ASSETS
Current assets:	Current assets:
Current assets:
Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,310	$	1,178
Accounts and notes receivable, net of allowance of $35 and $36, respectively		692		614
Cash and cash equivalents
Cash and cash equivalents
Accounts and notes receivable, net of allowance of $46 and $37, respectively
Inventories, net	Inventories, net	160		133
Prepaids and other current assets	Prepaids and other current assets	221		123
Total current assets	Total current assets	2,383		2,048
Property and equipment, net of accumulated depreciation and amortization of $1,140 and $1,061, respectively		1,904		1,950
Property and equipment, net of accumulated depreciation and amortization of $1,206 and $1,187, respectively
Operating lease assets, net	Operating lease assets, net	1,060		1,082
Intangible assets, net	Intangible assets, net	10,946		10,991
Goodwill	Goodwill	5,681		5,688
Other assets, net	Other assets, net	1,103		987
Total assets	Total assets	$	23,077	$	22,746
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:	Current liabilities:
Current liabilities:
Current liabilities:
Accounts and drafts payable
Accounts and drafts payable
Accounts and drafts payable	Accounts and drafts payable	$	693	$	758
Other accrued liabilities	Other accrued liabilities	1,132		1,001
Gift card liability	Gift card liability	159		230
Current portion of long-term debt and finance leases	Current portion of long-term debt and finance leases	87		127
Total current liabilities	Total current liabilities	2,071		2,116
Long-term debt, net of current portion	Long-term debt, net of current portion	12,862		12,839
Finance leases, net of current portion	Finance leases, net of current portion	305		311
Operating lease liabilities, net of current portion	Operating lease liabilities, net of current portion	1,003		1,027
Other liabilities, net	Other liabilities, net	864		872
Deferred income taxes, net	Deferred income taxes, net	1,308		1,313
Total liabilities	Total liabilities	18,413		18,478
Shareholders’ equity:	Shareholders’ equity:
Common shares, no par value; Unlimited shares authorized at September 30, 2023 and December 31, 2022; 317,837,606 shares issued and outstanding at September 30, 2023; 307,142,436 shares issued and outstanding at December 31, 2022		2,267		2,057
Common shares, no par value; Unlimited shares authorized at March 31, 2024 and December 31, 2023; 316,382,439 shares issued and outstanding at March 31, 2024; 312,454,851 shares issued and outstanding at December 31, 2023
Common shares, no par value; Unlimited shares authorized at March 31, 2024 and December 31, 2023; 316,382,439 shares issued and outstanding at March 31, 2024; 312,454,851 shares issued and outstanding at December 31, 2023
Common shares, no par value; Unlimited shares authorized at March 31, 2024 and December 31, 2023; 316,382,439 shares issued and outstanding at March 31, 2024; 312,454,851 shares issued and outstanding at December 31, 2023
Retained earnings	Retained earnings	1,268		1,121
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(627)		(679)
Total Restaurant Brands International Inc. shareholders’ equity	Total Restaurant Brands International Inc. shareholders’ equity	2,908		2,499
Noncontrolling interests	Noncontrolling interests	1,756		1,769
Total shareholders’ equity	Total shareholders’ equity	4,664		4,268
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	23,077	$	22,746

See accompanying notes to condensed consolidated financial statements.

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RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(In millions of U.S. dollars, except per share data)

(Unaudited)


		Three Months Ended September 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024					2024	2023
Revenues:	Revenues:
Sales
Sales
Sales	Sales	$	771	$	759		$	2,183	$	2,076
Franchise and property revenues	Franchise and property revenues	753		698			2,163		1,989
Advertising revenues and other services	Advertising revenues and other services	313		269			856		751
Total revenues	Total revenues	1,837		1,726			5,202		4,816
Operating costs and expenses:	Operating costs and expenses:
Cost of sales
Cost of sales
Cost of sales	Cost of sales	630		615			1,792		1,693
Franchise and property expenses	Franchise and property expenses	119		137			372		392
Advertising expenses and other services	Advertising expenses and other services	326		276			909		782
General and administrative expenses	General and administrative expenses	169		156			507		435
(Income) loss from equity method investments	(Income) loss from equity method investments	1		8			19		30
Other operating expenses (income), net	Other operating expenses (income), net	10		(27)			20		(68)
Total operating costs and expenses	Total operating costs and expenses	1,255		1,165			3,619		3,264
Income from operations	Income from operations	582		561			1,583		1,552
Interest expense, net	Interest expense, net	143		133			430		389
Loss on early extinguishment of debt		16		—			16		—

Income before income taxes	Income before income taxes	423		428			1,137		1,163
Income tax expense (benefit)		59		(102)			145		17
Income before income taxes
Income before income taxes
Income tax expense
Net income	Net income	364		530			992		1,146
Net income attributable to noncontrolling interests (Note 12)	Net income attributable to noncontrolling interests (Note 12)	112		170			310		367
Net income attributable to common shareholders	Net income attributable to common shareholders	$	252	$	360		$	682	$	779
Earnings per common share	Earnings per common share
Basic	Basic	$	0.80	$	1.18		$	2.19	$	2.53
Basic
Basic
Diluted	Diluted	$	0.79	$	1.17		$	2.16	$	2.51
Weighted average shares outstanding (in millions):	Weighted average shares outstanding (in millions):
Basic	Basic	314		306			312		308
Basic
Basic
Diluted	Diluted	459		454			458		455

See accompanying notes to condensed consolidated financial statements.

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RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In millions of U.S. dollars)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
		2023		2022		2023		2022		2024	2023
Net income	Net income	$	364	$	530	$	992	$	1,146

Foreign currency translation adjustment	Foreign currency translation adjustment	(270)		(727)		(36)		(1,015)
Net change in fair value of net investment hedges, net of tax of $4, $(87), $12 and $(100)		182		384		67		575
Net change in fair value of cash flow hedges, net of tax of $(26), $(55), $(42) and $(145)		71		150		114		394
Amounts reclassified to earnings of cash flow hedges, net of tax of $6, $(2), $17 and $(15)		(17)		5		(47)		42
Gain (loss) recognized on other, net of tax of $0, $0, $0 and $0		2		1		4		3
Foreign currency translation adjustment
Foreign currency translation adjustment
Net change in fair value of net investment hedges, net of tax of $3 and $4
Net change in fair value of cash flow hedges, net of tax of $(26) and $15
Amounts reclassified to earnings of cash flow hedges, net of tax of $8 and $5

Other comprehensive income (loss)
Other comprehensive income (loss)
Other comprehensive income (loss)	Other comprehensive income (loss)	(32)		(187)		102		(1)
Comprehensive income (loss)	Comprehensive income (loss)	332		343		1,094		1,145
Comprehensive income (loss) attributable to noncontrolling interests	Comprehensive income (loss) attributable to noncontrolling interests	103		110		342		366
Comprehensive income (loss) attributable to common shareholders	Comprehensive income (loss) attributable to common shareholders	$	229	$	233	$	752	$	779

See accompanying notes to condensed consolidated financial statements.

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RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Shareholders’ Equity

(In millions of U.S. dollars, except shares and per share data)

(Unaudited)


		Issued Common Shares			Retained Earnings				Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interest		Total		Issued Common Shares			Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Noncontrolling Interest	Total
		Shares	Amount
Balances at December 31, 2022		307,142,436	$	2,057			$	1,121			$	(679)	$	1,769		$	4,268
Balances at December 31, 2023
Balances at December 31, 2023
Balances at December 31, 2023
Stock option exercises	Stock option exercises	124,275	6		—				—		—		6
Share-based compensation	Share-based compensation	—	41		—				—		—		41
Issuance of shares	Issuance of shares	1,690,762	15		—				—		—		15
Dividends declared ($0.55 per share)		—	—		(171)				—		—		(171)
Dividends declared ($0.58 per share)
Dividend equivalents declared on restricted stock units	Dividend equivalents declared on restricted stock units	—	5		(5)				—		—		—
Distributions declared by Partnership on Partnership exchangeable units ($0.55 per unit)		—	—		—				—		(77)		(77)
Distributions declared by Partnership on Partnership exchangeable units ($0.58 per unit)
Exchange of Partnership exchangeable units for RBI common shares	Exchange of Partnership exchangeable units for RBI common shares	2,214,072	33		—				(5)		(28)		—

Restaurant VIE contributions (distributions)	Restaurant VIE contributions (distributions)	—	—		—				—		(1)		(1)
Net income		—	—		189				—		88		277
Other comprehensive income (loss)		—	—		—				(32)		(15)		(47)
Balances at March 31, 2023		311,171,545	$	2,157	$	1,134			$	(716)	$	1,736	$	4,311
Stock option exercises		920,438	43		—				—		—		43
Share-based compensation		—	42		—				—		—		42
Issuance of shares		87,695	—		—				—		—		—
Dividends declared ($0.55 per share)		—	—		(172)				—		—		(172)
Dividend equivalents declared on restricted stock units		—	5		(5)				—		—		—
Distributions declared by Partnership on Partnership exchangeable units ($0.55 per unit)		—	—		—				—		(77)		(77)
Exchange of Partnership exchangeable units for RBI common shares		23,787	—		—				—		—		—

Restaurant VIE contributions (distributions)
Restaurant VIE contributions (distributions)	Restaurant VIE contributions (distributions)	—	—		—				—		(1)		(1)
Net income	Net income	—	—		241				—		110		351
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		—				125		56		181
Balances at June 30, 2023		312,203,465	$	2,247	$	1,198			$	(591)	$	1,824	$	4,678
Stock option exercises		43,596	3		—				—		—		3
Share-based compensation		—	44		—				—		—		44
Issuance of shares		119,571	—		—				—		—		—
Dividends declared ($0.55 per share)		—	—		(176)				—		—		(176)
Dividend equivalents declared on restricted stock units		—	6		(6)				—		—		—
Distributions declared by Partnership on Partnership exchangeable units ($0.55 per unit)		—	—		—				—		(74)		(74)
Exchange of Partnership exchangeable units for RBI common shares		7,161,017	109		—				(13)		(96)		—
Repurchase of RBI common shares		(1,690,043)	(142)		—				—		—		(142)
Restaurant VIE contributions (distributions)		—	—		—				—		(1)		(1)
Net income		—	—		252				—		112		364
Other comprehensive income (loss)		—	—		—				(23)		(9)		(32)
Balances at September 30, 2023		317,837,606	$	2,267	$	1,268			$	(627)	$	1,756	$	4,664
Balances at March 31, 2024

See accompanying notes to condensed consolidated financial statements.

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RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Shareholders’ Equity

(In millions of U.S. dollars, except shares and per share data)

(Unaudited)


	Issued Common Shares																Issued Common Shares	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Noncontrolling Interest	Total
	Shares
Balances at December 31, 2022
Balances at December 31, 2022
Balances at December 31, 2022
Stock option exercises
Share-based compensation
Issuance of shares
Dividends declared ($0.55 per share)
Dividend equivalents declared on restricted stock units
Distributions declared by Partnership on Partnership exchangeable units ($0.55 per unit)
Exchange of Partnership exchangeable units for RBI common shares

Restaurant VIE contributions (distributions)
Restaurant VIE contributions (distributions)
Restaurant VIE contributions (distributions)
Net income
Other comprehensive income (loss)
Balances at March 31, 2023

		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
Stock option exercises		25,277	1		—				—		—		1
Share-based compensation		—	29		—				—		—		29
Issuance of shares		124,065	—		—				—		—		—
Dividends declared ($0.54 per share)		—	—		(166)				—		—		(166)
Dividend equivalents declared on restricted stock units		—	3		(3)				—		—		—
Distributions declared by Partnership on Partnership exchangeable units ($0.54 per unit)		—	—		—				—		(77)		(77)
Exchange of Partnership exchangeable units for RBI common shares		151,154	2		—				—		(2)		—
Repurchase of RBI common shares		(3,241,362)	(165)		—				—		—		(165)
Restaurant VIE contributions (distributions)		—	—		—				—		(1)		(1)
Net income		—	—		236				—		110		346
Other comprehensive income (loss)		—	—		—				(13)		(6)		(19)
Balances at June 30, 2022		305,743,537	$	1,929	$	871			$	(586)	$	1,695	$	3,909
Stock option exercises		48,422	2		—				—		—		2
Share-based compensation		—	29		—				—		—		29
Issuance of shares		49,603	—		—				—		—		—
Dividends declared ($0.54 per share)		—	—		(165)				—		—		(165)
Dividend equivalents declared on restricted stock units		—	4		(4)				—		—		—
Distributions declared by Partnership on Partnership exchangeable units ($0.54 per unit)		—	—		—				—		(77)		(77)
Exchange of Partnership exchangeable units for RBI common shares		17,805	—		—				—		—		—

Restaurant VIE contributions (distributions)		—	—		—				—		(2)		(2)
Net income		—	—		360				—		170		530
Other comprehensive income (loss)		—	—		—				(127)		(60)		(187)
Balances at September 30, 2022		305,859,367	$	1,964	$	1,062			$	(713)	$	1,726	$	4,039

See accompanying notes to condensed consolidated financial statements.

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RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In millions of U.S. dollars)

(Unaudited)


		Nine Months Ended September 30,				Three Months Ended March 31,
		2023		2022		2024	2023
Cash flows from operating activities:	Cash flows from operating activities:
Net income	Net income	$	992	$	1,146
Net income
Net income
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	142		143
Non-cash loss on early extinguishment of debt		5		—
Depreciation and amortization
Depreciation and amortization

Amortization of deferred financing costs and debt issuance discount
Amortization of deferred financing costs and debt issuance discount
Amortization of deferred financing costs and debt issuance discount	Amortization of deferred financing costs and debt issuance discount	21		21
(Income) loss from equity method investments	(Income) loss from equity method investments	19		30
(Gain) loss on remeasurement of foreign denominated transactions	(Gain) loss on remeasurement of foreign denominated transactions	(11)		(82)
Net (gains) losses on derivatives	Net (gains) losses on derivatives	(111)		17
Share-based compensation and non-cash incentive compensation expense	Share-based compensation and non-cash incentive compensation expense	141		93
Deferred income taxes	Deferred income taxes	(47)		(29)
Other	Other	19		8
Changes in current assets and liabilities, excluding acquisitions and dispositions:	Changes in current assets and liabilities, excluding acquisitions and dispositions:
Accounts and notes receivable	Accounts and notes receivable	(86)		(93)
Accounts and notes receivable
Accounts and notes receivable
Inventories and prepaids and other current assets	Inventories and prepaids and other current assets	(49)		(67)
Accounts and drafts payable	Accounts and drafts payable	(62)		113
Other accrued liabilities and gift card liability	Other accrued liabilities and gift card liability	(62)		(74)
Tenant inducements paid to franchisees	Tenant inducements paid to franchisees	(15)		(13)
Other long-term assets and liabilities	Other long-term assets and liabilities	24		(146)
Net cash provided by operating activities	Net cash provided by operating activities	920		1,067
Cash flows from investing activities:	Cash flows from investing activities:
Payments for property and equipment	Payments for property and equipment	(73)		(52)
Payments for property and equipment
Payments for property and equipment
Net proceeds from disposal of assets, restaurant closures, and refranchisings	Net proceeds from disposal of assets, restaurant closures, and refranchisings	23		11
Net payments in connection with purchase of Firehouse Subs		—		(12)
Net payments from acquisition of franchised restaurants
Settlement/sale of derivatives, net	Settlement/sale of derivatives, net	40		22
Other investing activities, net		(1)		(35)

Net cash (used for) provided by investing activities
Net cash (used for) provided by investing activities
Net cash (used for) provided by investing activities	Net cash (used for) provided by investing activities	(11)		(66)
Cash flows from financing activities:	Cash flows from financing activities:
Proceeds from long-term debt		55		2

Repayments of long-term debt and finance leases	Repayments of long-term debt and finance leases	(79)		(71)
Payment of financing costs		(43)		—

Repayments of long-term debt and finance leases

Repayments of long-term debt and finance leases

Payment of dividends on common shares and distributions on Partnership exchangeable units	Payment of dividends on common shares and distributions on Partnership exchangeable units	(741)		(728)
Repurchase of common shares		(115)		(326)
Payment of dividends on common shares and distributions on Partnership exchangeable units
Payment of dividends on common shares and distributions on Partnership exchangeable units

Proceeds from stock option exercises	Proceeds from stock option exercises	52		7
(Payments) proceeds from derivatives		100		8
Proceeds from stock option exercises
Proceeds from stock option exercises
Proceeds from derivatives
Other financing activities, net	Other financing activities, net	(3)		(3)
Net cash (used for) provided by financing activities	Net cash (used for) provided by financing activities	(774)		(1,111)
Effect of exchange rates on cash and cash equivalents	Effect of exchange rates on cash and cash equivalents	(3)		(31)
Increase (decrease) in cash and cash equivalents	Increase (decrease) in cash and cash equivalents	132		(141)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	1,178		1,087
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	1,310	$	946
Supplemental cash flow disclosures:	Supplemental cash flow disclosures:
Interest paid	Interest paid	$	544	$	318
Interest paid
Interest paid
Income taxes paid	Income taxes paid	$	184	$	177

See accompanying notes to condensed consolidated financial statements.

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RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1. Description of Business and Organization

Restaurant Brands International Inc. (the “Company”, “RBI”, “we”, “us” or “our”) is a Canadian corporation that serves as the sole general partner of Restaurant Brands International Limited Partnership (“Partnership”). We franchise and operate quick service restaurants serving premium coffee and other beverage and food products under the Tim Hortons® brand (“Tim Hortons” ~~or “TH”~~), fast food hamburgers principally under the Burger King® brand (“Burger King” ~~or “BK”~~), chicken principally under the Popeyes® brand (“Popeyes” ~~or “PLK”~~) and sandwiches under the Firehouse Subs® brand (“Firehouse” ~~or “FHS”~~). We are one of the world’s largest quick service restaurant, or QSR, companies as measured by total number of restaurants. As of ~~September 30, 2023,~~March 31, 2024, we franchised or owned ~~5,701~~5,818 Tim Hortons restaurants, ~~19,035~~19,374 Burger King restaurants, ~~4,373~~4,625 Popeyes restaurants and ~~1,266~~1,296 Firehouse Subs restaurants, for a total of ~~30,375~~31,113 restaurants, and operate in more than ~~100 countries. Approximately 100%~~120 countries and territories. As of March 31, 2024, nearly all of the current system-wide restaurants are franchised.

All references to “$” or “dollars” are to the currency of the United States unless otherwise indicated. All references to “Canadian dollars” or “C$” are to the currency of Canada unless otherwise indicated.

Note 2. Basis of Presentation and Consolidation

We have prepared the accompanying unaudited condensed consolidated financial statements (the “Financial Statements”) in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements. Therefore, the Financial Statements should be read in conjunction with the audited consolidated financial statements contained in our Annual Report on Form 10-K filed with the SEC and Canadian securities regulatory authorities on February 22, ~~2023.~~2024.

The Financial Statements include our accounts and the accounts of entities in which we have a controlling financial interest, the usual condition of which is ownership of a majority voting interest. Investments in other affiliates that are owned 50% or less where we have significant influence are accounted for by the equity method. All material intercompany balances and transactions have been eliminated in consolidation.

We are the sole general partner of Partnership and, as such we have the exclusive right, power and authority to manage, control, administer and operate the business and affairs and to make decisions regarding the undertaking and business of Partnership, subject to the terms of the amended and restated limited partnership agreement of Partnership (the “partnership agreement”) and applicable laws. As a result, we consolidate the results of Partnership and record a noncontrolling interest in our condensed consolidated balance sheets and statements of operations with respect to the remaining economic interest in Partnership we do not hold.

In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation have been included in the Financial Statements. The results for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the full year.

The preparation of consolidated financial statements in conformity with U.S. GAAP and related rules and regulations of the SEC requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. Actual results could differ from these estimates.

The carrying amounts for cash and cash equivalents, accounts and notes receivable and accounts and drafts payable approximate fair value based on the short-term nature of these amounts.

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Supplier Finance Programs

Our TH business includes individually negotiated contracts with suppliers, which include payment terms that range up to 120 days. A global financial institution offers a voluntary supply chain finance (“SCF”) program to certain TH vendors, which provides suppliers that elect to participate with the ability to elect early payment, which is discounted based on the payment terms and a rate based on RBI's credit rating, which may be beneficial to the vendor. Participation in the SCF program is at the sole discretion of the suppliers and financial institution and we are not a party to the arrangements between the suppliers and the financial institution. Our obligations to suppliers are not affected by the suppliers’ decisions to participate in the SCF program and our payment terms remain the same based on the original supplier invoicing terms and conditions. No guarantees are provided by us or any of our subsidiaries in connection with the SCF Program.

Our confirmed outstanding obligations under the SCF program at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 totaled ~~$29~~$16 million and ~~$47~~$36 million, respectively, and are classified as Accounts and drafts payable in our condensed consolidated balance sheets. All activity related to the obligations is classified as Cost of sales in our condensed consolidated statements of operations and presented within cash flows from operating activities in our condensed consolidated statements of cash flows.

Note 3. New Accounting Pronouncements

~~Accounting Relief for the Transition Away from LIBOR and Certain other Reference Rates~~ Segment Reporting– In ~~March 2020 and as clarified in January 2021 and December 2022,~~November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance ~~which provides optional expedients~~that expands segment disclosures for public entities, including requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), the title and ~~exceptions for applying U.S. GAAP to contracts, hedging relationships,~~position of the CODM and ~~other transactions~~an explanation of how the CODM uses reported measures of segment profit or loss in assessing segment performance and allocating resources. The new guidance also expands disclosures about a reportable segment’s profit or loss and assets in interim periods and clarifies that ~~reference LIBOR~~a public entity may report additional measures of segment profit if the CODM uses more than one measure of a segment’s profit or ~~another reference rate expected to be discontinued because of reference rate reform. This amendment~~loss. The new guidance does not remove existing segment disclosure requirements or change how a public entity identifies its operating segments, aggregates those operating segments, or determines its reportable segments. The guidance is effective ~~as of March 12, 2020 through~~for annual disclosures for fiscal years beginning after December ~~31, 2024. The expedients~~15, 2023, and ~~exceptions provided by~~subsequent interim periods with early adoption permitted, and requires retrospective application to all prior periods presented in the financial statements. We are currently evaluating the impact this new guidance ~~do not apply~~will have on our disclosures upon adoption and expect to ~~contract modifications made~~provide additional detail and hedging relationships entered into or evaluated after December 31, 2024, except for hedging relationships existing as of December 31, 2024, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationships. During 2021, we adopted certain of the expedients as it relates to hedge accounting as certain of our debt agreements and hedging relationships bear interest at variable rates, primarily U.S. dollar LIBOR. Additionally, during the three months ended September 30, 2023, we amended the LIBOR-referencing credit agreement governing our senior secured term loan facilities to reference the Secured Overnight Financing Rate (SOFR) as further disclosed in Note 10, ~~Long-Term Debt. As of September 30, 2023, none of our debt agreements and hedging relationships make reference to LIBOR. The adoption of and future elections~~disclosures under this new ~~guidance did not and are not expected to have a material impact on our Financial Statements.~~guidance.

~~Liabilities—Supplier Finance Programs~~Improvements to Income Tax Disclosures – In ~~September 2022,~~December 2023, the FASB issued guidance that requires buyers in a supplier finance program to disclose sufficient information about the program to allow investors to understand the program's nature, activity during the period, changes from period to period, and potential magnitude. Theseexpands income tax disclosures ~~would include the key terms of the program, as well as the obligation amount that the buyer has confirmed as valid~~for public entities, including requiring enhanced disclosures related to the ~~third party that is outstanding at the end of the reporting period, a rollforward of that amount,~~rate reconciliation and ~~a description of where that amount is presented in the balance sheet. This amendment~~income taxes paid information. The guidance is effective ~~in 2023, except~~ for ~~the amendment on rollforward information which is effective in~~annual disclosures for fiscal years beginning after December 15, 2024, with early adoption permitted. ~~This~~The guidance should be applied ~~retrospectively~~on a prospective basis, with retrospective application to ~~each period~~all prior periods presented in ~~which a balance sheet is presented, except for~~ the ~~amendment~~financial statements permitted. We are currently evaluating the impact this new guidance will have on ~~rollforward information, which should be applied prospectively. During the first quarter of 2023, we adopted this guidance and added necessary~~our disclosures upon adoption ~~as disclosed in Note 2,~~ ~~Basis of Presentation~~ and ~~Consolidation~~expect to provide additional detail and disclosures under this new guidance..

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Note 4. Leases

Property revenues consist primarily of lease income from operating leases and earned income on direct financing leases and sales-type leases with franchisees as follows (in millions):


		Three Months Ended September 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024					2024	2023
Lease income - operating leases	Lease income - operating leases
Minimum lease payments	Minimum lease payments	$	95	$	100		$	290	$	314
Minimum lease payments
Minimum lease payments
Variable lease payments	Variable lease payments	122		112			337		291
Amortization of favorable and unfavorable income lease contracts, net		—		—			1		1

Subtotal - lease income from operating leases
Subtotal - lease income from operating leases
Subtotal - lease income from operating leases	Subtotal - lease income from operating leases	217		212			628		606
Earned income on direct financing and sales-type leases	Earned income on direct financing and sales-type leases	4		2			9		5
Total property revenues	Total property revenues	$	221	$	214		$	637	$	611

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Note 5. Revenue Recognition

Contract Liabilities

Contract liabilities consist of deferred revenue resulting from initial and renewal franchise fees paid by franchisees, as well as upfront fees paid by master franchisees, which are generally recognized on a straight-line basis over the term of the underlying agreement. We may recognize unamortized franchise fees and upfront fees when a contract with a franchisee or master franchisee is modified and is accounted for as a termination of the existing contract. We classify these contract liabilities as Other liabilities, net in our condensed consolidated balance sheets. The following table reflects the change in contract liabilities on a consolidated basis between December 31, ~~2022~~2023 and ~~September 30, 2023~~March 31, 2024 (in millions):


Contract Liabilities
Balance at December 31, ~~2022~~2023	$	~~540~~555

Recognized during period and included in the contract liability balance at the beginning of the year	~~(44)~~(19)
Increase, excluding amounts recognized as revenue during the period	4013
Impact of foreign currency translation	~~(2)~~(4)
Balance at ~~September 30, 2023~~March 31, 2024	$	~~534~~545

The following table illustrates estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) on a consolidated basis as of ~~September 30, 2023~~March 31, 2024 (in millions):


Contract liabilities expected to be recognized in	Contract liabilities expected to be recognized in
Remainder of 2023		$	14
2024		52
Remainder of 2024
Remainder of 2024
Remainder of 2024
2025	2025	50
2026	2026	47
2027	2027	44
2028
Thereafter	Thereafter	327
Total	Total	$	534

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Disaggregation of Total Revenues

As described in Note 16, Segment Reporting, during the fourth quarter of 2023, we revised our internal reporting structure, which resulted in a change to our operating and reportable segments. As a result, we manage each of our brands’ United States and Canada operations as an operating and reportable segment and our international operations as an operating and reportable segment.

The following tables disaggregate revenue by segment (in millions):


		Three months ended September 30, 2023
		TH		BK		PLK		FHS		Total
	Three Months Ended March 31, 2024															Three Months Ended March 31, 2024
	TH											TH	BK	PLK	FHS		INTL	Total
Sales	Sales	$	717	$	21	$	23	$	10	$	771
Royalties	Royalties	94		307		85		17		503
Property revenues	Property revenues	161		57		3		—		221
Franchise fees and other revenue	Franchise fees and other revenue	6		12		2		9		29
Advertising revenues and other services	Advertising revenues and other services	82		141		75		15		313
Total revenues	Total revenues	$	1,060	$	538	$	188	$	51	$	1,837

Nine months ended September 30, 2023
TH BK PLK FHS Total
Sales $ 2,023 $ 64 $ 66 $ 30 $ 2,183
Royalties 261 882 241 52 1,436
Property revenues 456 171 10 — 637
Franchise fees and other revenue 19 40 10 21 90
Advertising revenues and other services 217 394 211 34 856
Total revenues $ 2,976 $ 1,551 $ 538 $ 137 $ 5,202

Three months ended September 30, 2022
TH BK PLK FHS Total
Sales $ 710 $ 19 $ 21 $ 9 $ 759
Royalties 87 274 74 16 451
Property revenues 154 57 3 — 214
Franchise fees and other revenue 9 18 1 5 33
Advertising revenues and other services 73 123 65 8 269
Total revenues $ 1,033 $ 491 $ 164 $ 38 $ 1,726

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		Nine months ended September 30, 2022
		TH		BK		PLK		FHS		Total
	Three Months Ended March 31, 2023															Three Months Ended March 31, 2023
	TH											TH	BK	PLK	FHS		INTL	Total
Sales	Sales	$	1,937	$	52	$	58	$	29	$	2,076
Royalties	Royalties	239		791		213		49		1,292
Property revenues	Property revenues	433		169		9		—		611
Franchise fees and other revenue	Franchise fees and other revenue	22		42		8		14		86
Advertising revenues and other services	Advertising revenues and other services	199		353		189		10		751
Total revenues	Total revenues	$	2,830	$	1,407	$	477	$	102	$	4,816

Note 6. Earnings per Share

An economic interest in Partnership common equity is held by the holders of Class B exchangeable limited partnership units (the “Partnership exchangeable units”), which is reflected as a noncontrolling interest in our equity. See Note 12, Shareholders’ Equity.

Basic and diluted earnings per share is computed using the weighted average number of shares outstanding for the period. We apply the treasury stock method to determine the dilutive weighted average common shares represented by outstanding equity awards, unless the effect of their inclusion is anti-dilutive. The diluted earnings per share calculation assumes conversion of 100% of the Partnership exchangeable units under the “if converted” method. Accordingly, the numerator is also adjusted to include the earnings allocated to the holders of noncontrolling interests.

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The following table summarizes the basic and diluted earnings per share calculations (in millions, except per share amounts):


		Three Months Ended September 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024					2024	2023
Numerator:	Numerator:
Net income attributable to common shareholders - basic
Net income attributable to common shareholders - basic
Net income attributable to common shareholders - basic	Net income attributable to common shareholders - basic	$	252	$	360		$	682	$	779
Add: Net income attributable to noncontrolling interests	Add: Net income attributable to noncontrolling interests	111		169			307		364
Net income available to common shareholders and noncontrolling interests - diluted	Net income available to common shareholders and noncontrolling interests - diluted	$	363	$	529		$	989	$	1,143

Denominator:	Denominator:
Denominator:
Denominator:
Weighted average common shares - basic
Weighted average common shares - basic
Weighted average common shares - basic	Weighted average common shares - basic	314		306			312		308
Exchange of noncontrolling interests for common shares (Note 12)	Exchange of noncontrolling interests for common shares (Note 12)	139		143			141		144
Effect of other dilutive securities	Effect of other dilutive securities	6		5			5		3
Weighted average common shares - diluted	Weighted average common shares - diluted	459		454			458		455

Basic earnings per share (a)	Basic earnings per share (a)	$	0.80	$	1.18		$	2.19	$	2.53
Basic earnings per share (a)
Basic earnings per share (a)
Diluted earnings per share (a)	Diluted earnings per share (a)	$	0.79	$	1.17		$	2.16	$	2.51
Anti-dilutive securities outstanding	Anti-dilutive securities outstanding	6		4			6		4

(a) Earnings per share may not recalculate exactly as it is calculated based on unrounded numbers.

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Note 7. Intangible Assets, net and Goodwill

Intangible assets, net and goodwill consist of the following (in millions):

As of
September 30, 2023 December 31, 2022
Gross Accumulated Amortization Net Gross Accumulated Amortization Net
Identifiable assets subject to amortization:
   Franchise agreements $ 717 $ (335) $ 382 $ 720 $ (313) $ 407
   Favorable leases 81 (53) 28 90 (57) 33
      Subtotal 798 (388) 410 810 (370) 440
Indefinite-lived intangible assets:
   Tim Hortons brand
$ 6,285 $ — $ 6,285 $ 6,292 $ — $ 6,292
   Burger King brand
2,080 — 2,080 2,088 — 2,088
   Popeyes brand
1,355 — 1,355 1,355 — 1,355
   Firehouse Subs brand
816 — 816 816 — 816
      Subtotal 10,536 — 10,536 10,551 — 10,551
Intangible assets, net $ 10,946 $ 10,991
Goodwill:
   Tim Hortons segment $ 4,054 $ 4,059
   Burger King segment 588 590
   Popeyes segment 846 846
   Firehouse Subs segment 193 193
      Total $ 5,681 $ 5,688

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	As of
	March 31, 2024						December 31, 2023
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Identifiable assets subject to amortization:
Franchise agreements	$	735	$	(353)	$	382	$	727	$	(348)	$	379
Favorable leases	80		(54)		26		81		(54)		27
Subtotal	815		(407)		408		808		(402)		406
Indefinite-lived intangible assets:
Tim Hortons brand	$	6,299	$	—	$	6,299	$	6,423	$	—	$	6,423
Burger King brand	2,092		—		2,092		2,107		—		2,107
Popeyes brand	1,355		—		1,355		1,355		—		1,355
Firehouse Subs brand	816		—		816		816		—		816
Subtotal	10,562		—		10,562		10,701		—		10,701
Intangible assets, net					$	10,970					$	11,107

Goodwill:
TH segment	$	4,042					$	4,118
BK segment	239						232
PLK segment	844						844
FHS segment	193						193
INTL segment	384						388
Total	$	5,702					$	5,775

Amortization expense on intangible assets totaled $9 million for the three months ended ~~September 30, 2023~~March 31, 2024 and ~~2022. Amortization expense on intangible assets totaled $28 million and $29 million for the nine months ended September 30, 2023 and 2022, respectively.~~2023. The change in franchise agreements, brands and goodwill balances during the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 was primarily due to the impact of foreign currency translation.

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Note 8. Equity Method Investments

The aggregate carrying amounts of our equity method investments were ~~$135~~$160 million and ~~$167~~$163 million as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively, and are included as a component of Other assets, net in our accompanying condensed consolidated balance sheets.

Except for the following equity method investments, no quoted market prices are available for our other equity method investments. The aggregate market value of our 14.7% equity interest in Carrols Restaurant Group, Inc. (“Carrols”) based on the quoted market price on ~~September 30, 2023~~March 31, 2024 was approximately ~~$62~~$90 million. Refer to Note 15, Commitments and Contingencies, for a description of the announced Carrols acquisition. The aggregate market value of our 9.4% equity interest in BK Brasil Operação e Assessoria a Restaurantes S.A. based on the quoted market price on ~~September 30, 2023~~March 31, 2024 was approximately ~~$32~~$18 million. The aggregate market value of our 4.2% equity interest in TH International Limited based on the quoted market price on ~~September 30, 2023~~March 31, 2024 was approximately ~~$12~~$8 million.

We have equity interests in entities that own or franchise Tim Hortons, Burger King and Popeyes restaurants. Sales, franchise and property revenues recognized from franchisees that are owned or franchised by entities in which we have an equity interest consist of the following (in millions):


		Three Months Ended September 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024					2024	2023
Revenues from affiliates:	Revenues from affiliates:
Royalties
Royalties
Royalties	Royalties	$	106	$	92		$	301	$	266
Advertising revenues and other services	Advertising revenues and other services	21		20			59		54
Property revenues	Property revenues	6		8			24		23
Franchise fees and other revenue	Franchise fees and other revenue	6		3			15		12
Sales	Sales	4		4			14		12
Total	Total	$	143	$	127		$	413	$	367

At ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, we had ~~$58~~$59 million and ~~$42~~$61 million, respectively, of accounts receivable, net from our equity method investments which were recorded in Accounts and notes receivable, net in our condensed consolidated balance sheets.

With respect to our TH business, the most significant equity method investment is our 50% joint venture interest with The Wendy’s Company (the “TIMWEN Partnership”), which jointly holds real estate underlying Canadian combination restaurants. Distributions received from this joint venture were $4$3 million and $5$2 million during the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022, respectively. Distributions received from this joint venture were $9 million and $10 million during the nine months ended September 30, 2023 and 2022,~~ respectively.

Associated with the TIMWEN Partnership, we recognized $5 million and $4 million of rent expense during the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022, and $15 million and $14 million of rent expense during the nine months ended September 30, 2023 and 2022,~~ respectively.

(Income) loss from equity method investments reflects our share of investee net income or loss and non-cash dilution gains or losses from changes in our ownership interests in equity investees.

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Note 9. Other Accrued Liabilities and Other Liabilities, net

Other accrued liabilities (current) and Other liabilities, net (noncurrent) consist of the following (in millions):


		As of
		September 30, 2023		December 31, 2022
	As of						As of
	March 31, 2024					March 31, 2024		December 31, 2023
Current:	Current:
Dividend payable
Dividend payable
Dividend payable	Dividend payable	$	249	$	243
Interest payable	Interest payable	88		89
Accrued compensation and benefits	Accrued compensation and benefits	110		124
Taxes payable	Taxes payable	255		190
Deferred income	Deferred income	86		43
Accrued advertising expenses	Accrued advertising expenses	55		37
Restructuring and other provisions	Restructuring and other provisions	16		29
Current portion of operating lease liabilities	Current portion of operating lease liabilities	140		137
Other	Other	133		109
Other accrued liabilities	Other accrued liabilities	$	1,132	$	1,001
Noncurrent:	Noncurrent:
Taxes payable	Taxes payable	$	164	$	139
Taxes payable
Taxes payable
Contract liabilities	Contract liabilities	534		540
Derivatives liabilities	Derivatives liabilities	—		34
Unfavorable leases	Unfavorable leases	43		50
Accrued pension	Accrued pension	41		40
Deferred income	Deferred income	58		44
Other	Other	24		25
Other liabilities, net	Other liabilities, net	$	864	$	872

Note 10. Long-Term Debt

Long-term debt consists of the following (in millions):


		As of
		September 30, 2023		December 31, 2022
	As of						As of
	March 31, 2024					March 31, 2024		December 31, 2023
Term Loan B	Term Loan B	$	5,175	$	5,190
Term Loan A	Term Loan A	1,275		1,250

3.875% First Lien Senior Notes due 2028
3.875% First Lien Senior Notes due 2028
3.875% First Lien Senior Notes due 2028	3.875% First Lien Senior Notes due 2028	1,550		1,550
3.50% First Lien Senior Notes due 2029	3.50% First Lien Senior Notes due 2029	750		750
5.75% First Lien Senior Notes due 2025	5.75% First Lien Senior Notes due 2025	500		500
4.375% Second Lien Senior Notes due 2028	4.375% Second Lien Senior Notes due 2028	750		750
4.00% Second Lien Senior Notes due 2030	4.00% Second Lien Senior Notes due 2030	2,900		2,900
TH Facility and other	TH Facility and other	145		155
Less: unamortized deferred financing costs and deferred issue discount	Less: unamortized deferred financing costs and deferred issue discount	(128)		(111)
Total debt, net	Total debt, net	12,917		12,934
Less: current maturities of debt	Less: current maturities of debt	(55)		(95)
Total long-term debt	Total long-term debt	$	12,862	$	12,839

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~~Credit Facilities~~

On September 21, 2023, two of our subsidiaries (the “Borrowers”) entered into a seventh amendment (the “2023 Amendment”) to the credit agreement governing our senior secured term loan A facility (the “Term Loan A”), our senior secured term loan B facility (the “Term Loan B” and together with the Term Loan A the “Term Loan Facilities”) and our senior secured revolving credit facility (including revolving loans, swingline loans and letters of credit) (the “Revolving Credit Facility” and together with the Term Loan Facilities, the “Credit Facilities”). Under the 2023 Amendment we (i) amended the existing Revolving Credit Facility to increase the availability from $1,000 million to $1,250 million and extended the maturity of the facility to September 21, 2028 without changing the leverage-based spread to adjusted SOFR (Secured Overnight Financing Rate); (ii) increased the Term Loan A to $1,275 million and extended the maturity of the Term Loan A to September 21, 2028 without changing the leverage-based spread to adjusted SOFR; (iii) increased the Term Loan B to $5,175 million, extended the maturity of the Term Loan B to September 21, 2030, and changed the interest rate applicable to borrowings under our Term Loan B to term SOFR, subject to a floor of 0.00%, plus an applicable margin of 2.25%; and (iv) made certain other changes as set forth therein, including removing the 0.10% adjustment to the term SOFR rate across the facilities and changes to certain covenants to provide increased flexibility. The 2023 Amendment made no other material changes to the terms of the Credit Agreement. In connection with the 2023 Amendment, we capitalized approximately $44 million in debt issuance costs and recorded a $16 million loss on early extinguishment of debt that primarily reflects expensing of fees in connection with the 2023 Amendment and the write-off of unamortized debt issuance costs.

The principal amount of the Term Loan A amortizes in quarterly installments equal to $8 million beginning March 31, 2025 and $16 million beginning March 31, 2027 until maturity, with the balance payable at maturity. The principal amount of the Term Loan B amortizes in quarterly installments equal to $13 million beginning March 31, 2024 until maturity, with the balance payable at maturity.

Revolving Credit Facility

As of ~~September 30, 2023,~~March 31, 2024, we had no amounts outstanding under our Revolving Credit Facility, had $2 million of letters of credit issued against the Revolving Credit Facility, and our borrowing availability under our Revolving Credit Facility was $1,248 million. Funds available under the Revolving Credit Facility may be used to repay other debt, finance debt or equity repurchases, fund acquisitions or capital expenditures and for other general corporate purposes. We have a $125 million letter of credit sublimit as part of the Revolving Credit Facility, which reduces our borrowing availability thereunder by the cumulative amount of outstanding letters of credit.

TH Facility

One of our subsidiaries entered into a non-revolving delayed drawdown term credit facility in a total aggregate principal amount of C$225 million with a maturity date of October 4, 2025 (the “TH Facility”). The interest rate applicable to the TH Facility is the Canadian Bankers’ Acceptance rate plus an applicable margin equal to 1.40% or the Prime Rate plus an applicable margin equal to 0.40%, at our option. Obligations under the TH Facility are guaranteed by four of our subsidiaries, and amounts borrowed under the TH Facility are secured by certain parcels of real estate. As of ~~September 30, 2023,~~March 31, 2024, we had approximately C$~~186~~177 million outstanding under the TH Facility with a weighted average interest rate of ~~6.77%~~6.69%.

Restrictions and Covenants

As of ~~September 30, 2023,~~March 31, 2024, we were in compliance with all applicable financial debt covenants under our senior secured term loan facilities and Revolving Credit Facility (together the "Credit Facilities"), the TH Facility, and the indentures governing our Senior Notes.

Fair Value Measurement

The following table presents the fair value of our variable rate term debt and senior notes, estimated using inputs based on bid and offer prices that are Level 2 inputs, and principal carrying amount (in millions):
As of
September 30,
2023 December 31,
2022
Fair value of our variable term debt and senior notes $ 11,996 $ 11,885
Principal carrying amount of our variable term debt and senior notes 12,900 12,890

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	As of
	March 31, 2024		December 31, 2023
Fair value of our variable term debt and senior notes	$	12,343	$	12,401
Principal carrying amount of our variable term debt and senior notes	12,887		12,900

Interest Expense, net

Interest expense, net consists of the following (in millions):


		Three Months Ended September 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024					2024	2023
Debt (a)	Debt (a)	$	144	$	124		$	424	$	357
Finance lease obligations	Finance lease obligations	5		4			14		14
Amortization of deferred financing costs and debt issuance discount	Amortization of deferred financing costs and debt issuance discount	7		7			21		21
Interest income	Interest income	(13)		(2)			(29)		(3)
Interest expense, net	Interest expense, net	$	143	$	133		$	430	$	389

(a)Amount includes ~~$16~~$11 million and ~~$17~~$15 million benefit during the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022, respectively, and $47 million and $40 million benefit during the nine months ended September 30, 2023 and 2022,~~ respectively, related to the quarterly net settlements of our cross-currency rate swaps and amortization of the Excluded Component as defined in Note 13, Derivative Instruments.

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Note 11. Income Taxes

Our effective tax rate was ~~14.0% and 12.8%~~17.2% for the three ~~and nine~~ months ended ~~September 30, 2023, respectively.~~March 31, 2024. The effective tax rate during ~~these periods reflect~~this period was primarily the result of the mix of income from multiple tax jurisdictions, the impact of internal financing arrangements, equity-based compensation and ~~favorable structural changes~~recently implemented ~~in 2022.~~Organization for Economic Cooperation and Development related tax changes.

Our effective tax rate was ~~(23.8)% and 1.5%~~9.1% for the three ~~and nine~~ months ended ~~September 30, 2022, respectively.~~March 31, 2023. The effective tax rate during these periods included a net decrease in tax reserves of $171 million related primarily to expiring statutes of limitations for certain prior tax years which decreased the effective tax rate by 39.9% and 14.7% for the three and nine months ended September 30, 2022, respectively. The effective tax rate during these periods alsothis period reflects the mix of income from multiple tax jurisdictions, the impact of internal financing arrangements and favorable structural changes implemented in 2022.

Note 12. Shareholders’ Equity

Noncontrolling Interests

The holders of Partnership exchangeable units held an economic interest of approximately ~~29.6%~~29.7% and ~~31.8%~~29.9% in Partnership common equity through the ownership of ~~133,597,764~~133,595,544 and ~~142,996,640~~133,597,764 Partnership exchangeable units as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

During the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, Partnership exchanged ~~9,398,876~~2,220 Partnership exchangeable units, pursuant to exchange notices received. In accordance with the terms of the partnership agreement, Partnership satisfied the exchange notices by exchanging these Partnership exchangeable units for the same number of newly issued RBI common shares. In connection with an amendment to the partnership agreement, Partnership exchangeable units exchanged for RBI common shares subsequent to December 31, 2023 also result in the issuance of additional Partnership Class A common units to RBI in an amount equal to the number of RBI common shares exchanged. The exchanges represented increases in our ownership interest in Partnership and were accounted for as equity transactions, with no gain or loss recorded in the accompanying condensed consolidated statement of operations. Pursuant to the terms of the partnership agreement, upon the exchange of Partnership exchangeable units, each such Partnership exchangeable unit is automatically deemed cancelled concurrently with the exchange.

Share Repurchases

On August 31, 2023, our Board of Directors approved a share repurchase program that allows us to purchase up to $1,000 million of our common shares until September 30, 2025. ~~This approval follows the expiration of our prior two-year authorization to repurchase up to the same $1,000 million amount of our common shares.~~ For the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, we ~~repurchased 2,099,360~~did not repurchase any of our common shares ~~for $142 million, of which 409,317 of these repurchases had not yet settled and therefore were not cancelled as of September 30, 2023,~~ and as of ~~September 30, 2023~~March 31, 2024 had ~~$858~~$500 million remaining under the authorization.

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Accumulated Other Comprehensive Income (Loss)

The following table displays the changes in the components of accumulated other comprehensive income (loss) (“AOCI”) (in millions):


		Derivatives		Pensions		Foreign Currency Translation		Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2022		$	648	$	(17)	$	(1,310)	$	(679)
	Derivatives									Derivatives	Pensions	Foreign Currency Translation	Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2023
Foreign currency translation adjustment	Foreign currency translation adjustment	—		—		(36)		(36)
Net change in fair value of derivatives, net of tax	Net change in fair value of derivatives, net of tax	181		—		—		181
Amounts reclassified to earnings of cash flow hedges, net of tax	Amounts reclassified to earnings of cash flow hedges, net of tax	(47)		—		—		(47)
Gain (loss) recognized on other, net of tax		—		4		—		4

Amounts attributable to noncontrolling interests	Amounts attributable to noncontrolling interests	(20)		(2)		(28)		(50)
Balance at September 30, 2023		$	762	$	(15)	$	(1,374)	$	(627)
Amounts attributable to noncontrolling interests
Amounts attributable to noncontrolling interests
Balance at March 31, 2024

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Note 13. Derivative Instruments

Disclosures about Derivative Instruments and Hedging Activities

We enter into derivative instruments for risk management purposes, including derivatives designated as cash flow hedges and derivatives designated as net investment hedges. We use derivatives to manage our exposure to fluctuations in interest rates and currency exchange rates.

Interest Rate Swaps

At ~~September 30, 2023,~~March 31, 2024, we had outstanding receive-variable, pay-fixed interest rate swaps with a total notional value of $3,500 million to hedge the variability in the interest payments on a portion of our Term Loan Facilities, including any subsequent refinancing or replacement of the Term Loan Facilities, beginning August 31, 2021 through the termination date of October 31, 2028. Additionally, at ~~September 30, 2023,~~March 31, 2024, we also had outstanding receive-variable, pay-fixed interest rate swaps with a total notional value of $500 million to hedge the variability in the interest payments on a portion of our Term Loan Facilities effective September 30, 2019 through the termination date of September 30, 2026. Following the discontinuance of the U.S. dollar LIBOR after June 30, 2023, the interest rate on all these interest rate swaps transitioned from LIBOR to SOFR, with no impact to hedge effectiveness and no change in accounting treatment as a result of applicable accounting relief guidance for the transition away from LIBOR. At inception, all of these interest rate swaps were designated as cash flow hedges for hedge accounting. The unrealized changes in market value are recorded in AOCI, net of tax, and reclassified into interest expense during the period in which the hedged forecasted transaction affects earnings. The net amount of pre-tax gains in connection with these net unrealized gains in AOCI as of ~~September 30, 2023~~March 31, 2024 that we expect to be reclassified into interest expense within the next 12 months is ~~$130~~$129 million.

Cross-Currency Rate Swaps

To protect the value of our investments in our foreign operations against adverse changes in foreign currency exchange rates, we hedge a portion of our net investment in one or more of our foreign subsidiaries by using cross-currency rate swaps. At ~~September 30, 2023,~~March 31, 2024, we had outstanding cross-currency rate swap contracts between the Canadian dollar and U.S. dollar and the ~~Euro~~euro and U.S. dollar that have been designated as net investment hedges of a portion of our equity in foreign operations in those currencies. The component of the gains and losses on our net investment in these designated foreign operations driven by changes in foreign exchange rates are economically partly offset by movements in the fair value of our cross-currency swap contracts. The fair value of the swaps is calculated each period with changes in fair value reported in AOCI, net of tax. Such amounts will remain in AOCI until the complete or substantially complete liquidation of our investment in the underlying foreign operations.

At ~~September 30, 2023,~~March 31, 2024, we had outstanding cross-currency rate swaps that we entered into during 2022 to partially hedge the net investment in our Canadian subsidiaries. At inception, these cross-currency rate swaps were designated as a hedge and are accounted for as net investment hedges. These swaps are contracts in which we receive quarterly fixed-rate interest payments on the U.S. dollar notional amount of $5,000 million through the maturity date of September 30, 2028.

~~Table~~At March 31, 2024, we had outstanding cross-currency rate swap contracts between the euro and U.S. dollar in which we receive quarterly fixed-rate interest payments on the U.S. dollar aggregate amount of ~~Contents~~

$2,750 million, of which $1,400 million have a maturity date of October 31, 2026, $1,200 million have a maturity date of November 30, 2028, and $150 million have a maturity date of October 31, 2028. At ~~September 30,~~inception, these cross-currency rate swaps were designated and continue to be hedges and are accounted for as a net investment hedge. During 2023, we ~~had outstanding~~settled our previously existing cross-currency rate swaps in which we ~~pay~~paid quarterly fixed-rate interest payments on the ~~Euro~~euro notional value of €1,108 million and receive quarterly fixed-rate interest payments on the U.S. dollar notional value of $1,200 ~~million. At inception, these cross-currency rate swaps were designated as a hedge~~million and ~~are accounted for as a net investment hedge. During 2018, we extended the term of the swaps from March 31, 2021 to the~~an original maturity date of February 17, 2024. ~~The extension of the term resulted in a re-designation of the hedge and the swaps continue to be accounted for as a net investment hedge. Additionally, at September 30,~~During 2023, we also ~~had outstanding~~settled our previously existing cross-currency rate ~~swaps in which we receive quarterly fixed-rate interest payments on~~swap contracts between the euro and U.S. dollar with a notional value of ~~$400~~$900 million ~~entered during 2018,~~ and ~~$500 million, entered during 2019, through the~~an original maturity date of February 17, 2024 and $150 million, entered during 2021, through the maturity date of October 31, 2028. At inception, these cross-currency rate swaps were designated as a hedge and are accounted for as a net investment hedge.2024.

In connection with the cross-currency rate swaps hedging Canadian dollar and ~~Euro~~euro net investments, we utilize the spot method to exclude the interest component (the “Excluded Component”) from the accounting hedge without affecting net investment hedge accounting and amortize the Excluded Component over the life of the derivative instrument. The amortization of the Excluded Component is recognized in Interest expense, net in the condensed consolidated statement of operations. The change in fair value that is not related to the Excluded Component is recorded in AOCI and will be reclassified to earnings when the foreign subsidiaries are sold or substantially liquidated.

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Foreign Currency Exchange Contracts

We use foreign exchange derivative instruments to manage the impact of foreign exchange fluctuations on U.S. dollar purchases and payments, such as coffee purchases made by our Canadian Tim Hortons operations. At ~~September 30, 2023,~~March 31, 2024, we had outstanding forward currency contracts to manage this risk in which we sell Canadian dollars and buy U.S. dollars with a notional value of ~~$176~~$168 million with maturities to ~~November~~May 15, ~~2024.~~2025. We have designated these instruments as cash flow hedges, and as such, the unrealized changes in market value of effective hedges are recorded in AOCI and are reclassified into earnings during the period in which the hedged forecasted transaction affects earnings.

Credit Risk

By entering into derivative contracts, we are exposed to counterparty credit risk. Counterparty credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is in an asset position, the counterparty has a liability to us, which creates credit risk for us. We attempt to minimize this risk by selecting counterparties with investment grade credit ratings and regularly monitoring our market position with each counterparty.

Credit-Risk Related Contingent Features

Our derivative instruments do not contain any credit-risk related contingent features.

Quantitative Disclosures about Derivative Instruments and Fair Value Measurements

The following tables present the required quantitative disclosures for our derivative instruments, including their estimated fair values (all estimated using Level 2 inputs) and their location on our condensed consolidated balance sheets (in millions):


		Gain or (Loss) Recognized in Other Comprehensive Income (Loss)
		Three Months Ended September 30,						Nine Months Ended September 30,
		2023			2022			2023		2022
								Gain or (Loss) Recognized in Other Comprehensive Income (Loss)
								Gain or (Loss) Recognized in Other Comprehensive Income (Loss)
								Gain or (Loss) Recognized in Other Comprehensive Income (Loss)
				Three Months Ended March 31,								Three Months Ended March 31,
							2024						2024	2023
Derivatives designated as cash flow hedges(1)	Derivatives designated as cash flow hedges(1)
Interest rate swaps
Interest rate swaps
Interest rate swaps	Interest rate swaps	$	91		$	191		$	154	$	521
Forward-currency contracts	Forward-currency contracts	$	6		$	14		$	2	$	18
Derivatives designated as net investment hedges	Derivatives designated as net investment hedges
Cross-currency rate swaps	Cross-currency rate swaps	$	178		$	471		$	55	$	675
Cross-currency rate swaps
Cross-currency rate swaps

(1) We did not exclude any components from the cash flow hedge relationships presented in this table.


	Location of Gain or (Loss) Reclassified from AOCI into Earnings		Gain or (Loss) Reclassified from AOCI into Earnings
		Three Months Ended March 31,
			2024		2023
Derivatives designated as cash flow hedges
Interest rate swaps	Interest expense, net		$	30	$	15
Forward-currency contracts	Cost of sales		$	—	$	3

	Location of Gain or (Loss) Recognized in Earnings		Gain or (Loss) Recognized in Earnings (Amount Excluded from Effectiveness Testing)
		Three Months Ended March 31,
			2024		2023
Derivatives designated as net investment hedges
Cross-currency rate swaps	Interest expense, net		$	11	$	15

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Location of Gain or (Loss) Reclassified from AOCI into Earnings Gain or (Loss) Reclassified from
AOCI into Earnings
Three Months Ended
September 30, Nine Months Ended
September 30,
2023 2022 2023 2022
Derivatives designated as cash flow hedges
Interest rate swaps Interest expense, net $ 23 $ (8) $ 58 $ (60)
Forward-currency contracts Cost of sales $ — $ 1 $ 6 $ 3
Location of Gain or (Loss) Recognized in Earnings Gain or (Loss) Recognized in Earnings
(Amount Excluded from Effectiveness Testing)
Three Months Ended
September 30, Nine Months Ended
September 30,
2023 2022 2023 2022
Derivatives designated as net investment hedges
Cross-currency rate swaps Interest expense, net $ 16 $ 17 $ 47 $ 40

Fair Value as of
September 30,
2023 December 31, 2022 Balance Sheet Location
Assets:
Derivatives designated as cash flow hedges
Interest rate $ 339 $ 280 Other assets, net
Foreign currency 3 7 Prepaids and other current assets
Derivatives designated as net investment hedges
Foreign currency 106 78 Other assets, net
Total assets at fair value $ 448 $ 365
Liabilities:
Derivatives designated as net investment hedges
Foreign currency $ — $ 34 Other liabilities, net
Total liabilities at fair value $ — $ 34

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	Fair Value as of
	March 31, 2024		December 31, 2023		Balance Sheet Location
Assets:
Derivatives designated as cash flow hedges
Interest rate	$	248	$	190	Other assets, net
Foreign currency	1		—		Prepaids and other current assets
Derivatives designated as net investment hedges
Foreign currency	9		7		Other assets, net

Total assets at fair value	$	258	$	197

Liabilities:
Derivatives designated as cash flow hedges

Foreign currency	$	—	$	2	Other accrued liabilities
Derivatives designated as net investment hedges
Foreign currency	98		227		Other liabilities, net
Total liabilities at fair value	$	98	$	229

Note 14. Other Operating Expenses (Income), net

Other operating expenses (income), net consists of the following (in millions):


		Three Months Ended September 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024					2024	2023
Net losses (gains) on disposal of assets, restaurant closures, and refranchisings	Net losses (gains) on disposal of assets, restaurant closures, and refranchisings	$	30	$	1		$	19	$	2
Litigation settlements (gains) and reserves, net	Litigation settlements (gains) and reserves, net	1		—			(1)		3
Net losses (gains) on foreign exchange	Net losses (gains) on foreign exchange	(18)		(30)			(11)		(82)
Other, net	Other, net	(3)		2			13		9
Other operating expenses (income), net	Other operating expenses (income), net	$	10	$	(27)		$	20	$	(68)

Net losses (gains) on disposal of assets, restaurant closures, and refranchisings represent sales of properties and other costs related to 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. ~~The amount for the three and nine months ended September 30, 2023 includes asset write-offs and related costs in connection with the discontinuance of an internally developed software project.~~

Net losses (gains) on foreign exchange is primarily related to revaluation of foreign denominated assets and liabilities, primarily those denominated in ~~Euros~~euros and Canadian dollars.

Other, net for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 is primarily related to payments in connection with FHS area representative buyouts.

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Note 15. Commitments and Contingencies

Acquisition of Carrols Restaurant Group

On January 16, 2024, we announced that we have reached an agreement to acquire all of Carrols issued and outstanding shares that are not already held by RBI or its affiliates for $9.55 per share in an all cash transaction, or an aggregate total enterprise value of approximately $1.0 billion. Carrols is the largest Burger King franchisee in the U.S. today, currently operating approximately 1,020 Burger King restaurants and approximately 60 Popeyes restaurants.

The transaction is expected to be completed in the second quarter of 2024 and is subject to customary closing conditions, including approval by the holders of the majority of common stock held by Carrols stockholders excluding shares held by RBI and its affiliates and officers of Carrols in addition to approval by holders of a majority of outstanding common stock of Carrols.

The transaction is not subject to a financing contingency and is expected to be financed with cash on hand of approximately $230 million and term loan debt. We secured financing whereby lenders will provide an additional $750 million of Term Loan B loans on the same terms as the existing Term Loan B under our Credit Agreement, subject to the closing of the Carrols acquisition.

Litigation

From time to time, we are involved in legal proceedings arising in the ordinary course of business relating to matters including, but not limited to, disputes with franchisees, suppliers, employees and customers, as well as disputes over our intellectual property.

On October 5, 2018, a class action complaint was filed against Burger King Worldwide, Inc. (“BKW”) and Burger King Company, successor in interest, (“BKC”) in the U.S. District Court for the Southern District of Florida by Jarvis Arrington, individually and on behalf of all others similarly situated. On October 18, 2018, a second class action complaint was filed against RBI, BKW and BKC in the U.S. District Court for the Southern District of Florida by Monique Michel, individually and on behalf of all others similarly situated. On October 31, 2018, a third class action complaint was filed against BKC and BKW in the U.S. District Court for the Southern District of Florida by Geneva Blanchard and Tiffany Miller, individually and on behalf of all others similarly situated. On November 2, 2018, a fourth class action complaint was filed against RBI, BKW and BKC in the U.S. District Court for the Southern District of Florida by Sandra Munster, individually and on behalf of all others similarly situated. These complaints have been consolidated and allege that the defendants violated Section 1 of the Sherman Act by incorporating an employee no-solicitation and no-hiring clause in the standard form franchise agreement all Burger King franchisees are required to sign. Each plaintiff seeks injunctive relief and damages for himself or herself and other members of the class. On March 24, 2020, the Court granted BKC’s motion to dismiss for failure to state a claim and on April 20, 2020 the plaintiffs filed a motion for leave to amend their complaint. On April 27, 2020, BKC filed a motion opposing the motion for leave to amend. The court denied the plaintiffs motion for leave to amend their complaint in August 2020 and the plaintiffs appealed this ruling. In August 2022, the federal appellate court reversed the lower court's decision to dismiss the case and remanded the case to the lower court for further proceedings. While we ~~currently believe~~intend to vigorously defend these claims, ~~are without merit,~~ we are unable to predict the ultimate outcome of this case or estimate the range of possible loss, if any.

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On ~~October 26, 2020, City of Warwick Municipal Employees Pension Fund,~~April 23, 2024, a purported ~~stockholder~~shareholder of ~~RBI, individually and putatively on behalf of all other stockholders similarly situated,~~Carrols Restaurant Group, Inc. (“CRG”), filed a ~~lawsuit~~complaint against CRG, its directors, RBI and BK Cheshire Corp. (our wholly-owned merger subsidiary) in the Supreme Court of the State of New York County of New York naming RBI and certain of our officers, directors and shareholders as defendants alleging violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as amended, in connection with certain offerings of securities by an affiliate in August and September 2019.Westchester. The complaint alleges various breaches under Delaware law of fiduciary duties by the CRG directors and disclosure obligations by CRG with respect to the Agreement and Plan of Merger, dated as of January 16, 2024 among RBI, BK Cheshire Corp. and CRG (the “Merger Agreement”). In addition, the complaint alleges that RBI aided and abetted these breaches through its actions in negotiating the ~~shelf registration~~transaction and assistance in the dissemination of proxy statement ~~used in connection with such offering contained certain false and/or misleading statements or omissions.~~related to the stockholder approval of the Merger Agreement. The complaint seeks, among other ~~relief, class certification~~things, to enjoin the stockholder vote to approve the Merger Agreement and/or the consummation of the ~~lawsuit, unspecified~~sale pending resolution of the complaint as well as compensatory and/or rescissory damages ~~rescission, pre-judgement~~ and ~~post-judgement interest, costs~~fees and expenses. ~~On December 18, 2020~~We intend to vigorously defend these claims, however, we are unable to predict the ~~plaintiffs filed an amended~~ultimate outcome of this case, estimate the range of possible loss, if any, or whether such complaint ~~and on February 16, 2021 RBI filed a motion~~could adversely affect our ability to ~~dismiss~~consummate the complaint. The plaintiffs filed a brief in opposition to the motion on April 19, 2021 and RBI filed a reply in May 2021. The motion to dismiss was heard in April 2022 and the motion to dismiss was denied in May 2022. On June 6, 2022, we filed an answer to the complaint and on July 8, 2022, we filed an appealMerger Agreement.

Table of the denial of the motion to dismiss. On November 10, 2022, the appellate division reversed the trial court and ordered that the complaint be dismissed. Plaintiffs moved for leave to appeal to the Court of Appeals of the State of New York, which RBI opposed, and on March 21, 2023, the Court of Appeals denied leave to appeal. As that decision is now final, we do not anticipate any further proceedings in this matter.

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Note 16. Segment Reporting

As stated in Note 1, Description of Business and Organization, we manage four brands. Under the Tim Hortons brand, we operate in the donut/coffee/tea category of the quick service segment of the restaurant industry. Under the Burger King brand, we operate in the fast food hamburger restaurant category of the quick service segment of the restaurant industry. Under the Popeyes brand, we operate in the chicken category of the quick service segment of the restaurant industry. Under the Firehouse Subs brand, we operate in the specialty subs category of the quick service segment of the restaurant industry. ~~Our business generates revenue~~

We generate revenues from the following sources: (i) sales, consisting primarily of (1) Tim Hortons supply chain sales, which represent sales of products, supplies and restaurant equipment to franchisees, as well as sales ~~to retailers~~of consumer packaged goods (“CPG”), and (2) sales at ~~restaurants owned by us (“~~Company ~~restaurants”);~~restaurants; (ii) franchise revenues, consisting primarily of royalties based on a percentage of sales reported by ~~franchise~~franchised restaurants and franchise fees paid by franchisees; (iii) property revenues from properties we lease or sublease to franchisees; and (iv) advertising revenues and other services, consisting primarily of (1) advertising fund contributions based on a percentage of sales reported by ~~franchise restaurants. We~~franchised restaurants to fund advertising expenses and (2) tech fees and revenues that vary by market and partially offset expenses related to technology initiatives. All Tim Hortons global supply chain sales, including coffee to International franchisees, are included in the TH segment.

During the fourth quarter of 2023, we revised our internal reporting structure, which resulted in a change to our operating and reportable segments. As a result, we manage each of our ~~brands~~brands’ United States and Canada operations as an operating and reportable segment and ~~each~~our international operations as a separate operating ~~segment represents a~~and reportable segment.

Consequently, we have five operating and reportable segments: (1) TH, which includes all operations of our Tim Hortons brand in the United States and Canada, (2) BK, which includes all operations of our Burger King brand in the United States and Canada, (3) PLK, which includes all operations of our Popeyes brand in the United States and Canada, (4) FHS, which includes all operations of our Firehouse Subs brand in the United States and Canada, and (5) INTL, which includes all operations of each of our brands outside the United States and Canada. Our five operating segments represent our reportable segments. Prior year amounts presented have been reclassified to conform to this new segment presentation with no effect on previously reported consolidated results.

The following tables present revenues, by segment and by country (in millions):


		Three Months Ended September 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024					2024	2023
Revenues by operating segment:	Revenues by operating segment:
TH
TH
TH	TH	$	1,060	$	1,033		$	2,976	$	2,830
BK	BK	538		491			1,551		1,407
PLK	PLK	188		164			538		477
FHS	FHS	51		38			137		102
INTL
Total revenues	Total revenues	$	1,837	$	1,726		$	5,202	$	4,816


		Three Months Ended September 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024					2024	2023
Revenues by country (a):	Revenues by country (a):
Canada
Canada
Canada	Canada	$	956	$	940		$	2,683	$	2,565
United States	United States	645		587			1,849		1,679
Other	Other	236		199			670		572
Total revenues	Total revenues	$	1,837	$	1,726		$	5,202	$	4,816

(a)Only Canada and the United States represented 10% or more of our total revenues in each period presented.

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~~Our measure~~In connection with our change in operating and reportable segments, we also transitioned our definition of segment income ~~is Adjusted EBITDA.~~from Adjusted EBITDA to Adjusted Operating Income which represents ~~earnings (net~~ income ~~or loss) before interest expense, net, loss on early extinguishment of debt, income tax (benefit) expense, and depreciation and amortization,~~from operations adjusted to exclude (i) ~~the non-cash impact~~franchise agreement amortization as a result of ~~share-based compensation and non-cash incentive compensation expense,~~acquisition accounting, (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/expenses from non-recurring projects and non-operating activities. For the periods referenced, income/expenses from non-recurring projects and non-operating activities included (i) non-recurring fees and expense incurred in connection with the announced acquisition of Carrols consisting primarily of professional fees (“CRG Transaction costs”); (ii) non-recurring fees and expense incurred in connection with the acquisition of Firehouse consisting primarily of professional fees, compensation-related expenses and integration costs (“FHS Transaction costs”); and ~~(ii)~~(iii) non-operating costs from professional advisory and consulting services associated with certain transformational corporate restructuring initiatives that rationalize our structure and optimize cash movements as well as services related to significant tax reform legislation and regulations (“Corporate restructuring and advisory fees”). Unlike Adjusted EBITDA, our previous measure of segment income, Adjusted Operating Income includes depreciation and amortization (excluding franchise agreement amortization) as well as share-based compensation and non-cash incentive compensation expense. Prior year amounts presented have been reclassified to conform to this new segment income presentation with no effect on previously reported consolidated results.

Adjusted ~~EBITDA~~Operating Income 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. A reconciliation of segment income to net income consists of the following (in millions):


		Three Months Ended September 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024					2024	2023
Segment income:	Segment income:
TH
TH
TH	TH	$	311	$	305		$	852	$	810
BK	BK	298		262			842		761
PLK	PLK	75		62			214		179
FHS	FHS	14		13			43		40
Adjusted EBITDA		698		642			1,951		1,790
Share-based compensation and non-cash incentive compensation expense		49		34			141		93
INTL
Adjusted Operating Income
Franchise agreement amortization
CRG Transaction costs
FHS Transaction costs	FHS Transaction costs	—		3			19		8
Corporate restructuring and advisory fees	Corporate restructuring and advisory fees	5		12			17		21
Impact of equity method investments (a)	Impact of equity method investments (a)	5		13			29		41
Other operating expenses (income), net	Other operating expenses (income), net	10		(27)			20		(68)
EBITDA		629		607			1,725		1,695
Depreciation and amortization		47		46			142		143
Income from operations	Income from operations	582		561			1,583		1,552
Interest expense, net	Interest expense, net	143		133			430		389
Loss on early extinguishment of debt		16		—			16		—
Income tax expense (benefit)		59		(102)			145		17

Income tax expense
Income tax expense
Income tax expense
Net income	Net income	$	364	$	530		$	992	$	1,146

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

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Note 17. Subsequent Events

Dividends

On ~~October~~April 4, ~~2023,~~2024, we paid a cash dividend of ~~$0.55~~$0.58 per common share to common shareholders of record on ~~September 20, 2023.~~March 21, 2024. On such date, Partnership also made a distribution in respect of each Partnership exchangeable unit in the amount of ~~$0.55~~$0.58 per exchangeable unit to holders of record on ~~September 20, 2023.~~March 21, 2024.

Subsequent to ~~September 30, 2023,~~March 31, 2024, our board of directors declared a cash dividend of ~~$0.55~~$0.58 per common share, which will be paid on ~~January 4,~~July 5, 2024 to common shareholders of record on ~~December~~June 21, ~~2023.~~2024. Partnership will also make a distribution in respect of each Partnership exchangeable unit in the amount of ~~$0.55~~$0.58 per Partnership exchangeable unit, and the record date and payment date for distributions on Partnership exchangeable units are the same as the record date and payment date set forth above.

~~Derivatives~~

In October 2023, we entered into new cross-currency rate swap contracts between the Euro and U.S. dollar in which we receive quarterly fixed-rate interest payments on the U.S. dollar aggregate amount of $1,400 million through the maturity date of October 31, 2026. At inception, these cross-currency rate swaps were designated as hedges and are accounted for as net investment hedges. In connection with these new cross-currency rate swaps, we settled our existing cross-currency rate swap contracts between the Euro and U.S. dollar with a notional value of $400 million and $500 million with a maturity date of February 17, 2024 and received $59 million in cash as part of this settlement.

~~Share Repurchases~~

Subsequent to September 30, 2023 through October 31, 2023, we repurchased 5,539,777 of our common shares for $358 million and as of October 31, 2023 had $500 million remaining under the share repurchase authorization.

2524

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion together with our unaudited condensed consolidated financial statements and the related notes thereto included in Part I, Item 1 “Financial Statements” of this report.

The following discussion includes information regarding future financial performance and plans, targets, aspirations, expectations, and objectives of management, which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of Canadian securities laws as described in further detail under “Special Note Regarding Forward-Looking Statements” set forth below. Actual results may differ materially from the results discussed in the forward-looking statements. Please refer to the risks and further discussion in the “Special Note Regarding Forward-Looking Statements” below.

We prepare our financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP” or “GAAP”). However, this Management’s Discussion and Analysis of Financial Condition and Results of Operations also contains certain non-GAAP financial measures to assist readers in understanding our performance. Non-GAAP financial measures either exclude or include amounts that are not reflected in the most directly comparable measure calculated and presented in accordance with GAAP. Where non-GAAP financial measures are used, we have provided the most directly comparable measures calculated and presented in accordance with U.S. GAAP, a reconciliation to GAAP measures and a discussion of the reasons why management believes this information is useful to it and may be useful to investors.

Operating results for any one quarter are not necessarily indicative of results to be expected for any other quarter or for the fiscal year and our operating metrics, as discussed below, may decrease for any future period. Unless the context otherwise requires, all references in this section to “RBI”, the “Company”, “we”, “us” or “our” are to Restaurant Brands International Inc. and its subsidiaries, collectively and all references in this section to “Partnership” are to Restaurant Brands International Limited Partnership and its subsidiaries, collectively.

Overview

We are a Canadian corporation that serves as the indirect holding company for the entities that own and franchise the Tim Hortons®, Burger King®, Popeyes® and Firehouse Subs® brands. We are one of the world’s largest quick service restaurant (“QSR”) companies with over $40 billion in annual system-wide sales and over 30,000 restaurants in more than ~~100~~120 countries and territories as of ~~September 30, 2023.~~March 31, 2024. Our Tim Hortons®, Burger King®, Popeyes®, and Firehouse Subs® brands have similar franchised business models with complementary daypart mixes and product platforms. Our four iconic brands are managed independently while benefiting from global scale and sharing of best practices.

Tim Hortons restaurants are quick service restaurants with a menu that includes premium blend ~~coffees,~~coffee, tea, espresso-based hot and cold specialty drinks, ~~alongside breakfast sandwiches,~~ fresh baked goods, including donuts, Timbits®, bagels, muffins, cookies and pastries, sandwiches, ~~bowls,~~ wraps, soups and more. Burger King restaurants are quick service restaurants that feature flame-grilled hamburgers, chicken and other specialty sandwiches, french fries, soft drinks and other ~~affordably-priced~~ food items. Popeyes restaurants are quick service restaurants ~~featuring~~that distinguish themselves with a unique “Louisiana” style menu ~~that includes bone in~~featuring fried chicken, chicken sandwiches, chicken tenders, wings, fried shrimp and other seafood, red beans and rice and other regional items. Firehouse Subs restaurants are quick service restaurants featuring hot and hearty subs piled high with quality meats and cheese as well as chopped salads, chili and soups, signature and other sides, soft drinks and local specialties.

On January 16, 2024, we announced that we have reached an agreement to acquire all of Carrols Restaurant Group Inc. (“Carrols”) issued and outstanding shares that are not held by RBI or its affiliates. The transaction is expected to close in the second quarter of 2024 and is subject to customary closing conditions. In connection with the announced acquisition of Carrols, we incurred certain non-recurring fees and expenses (“CRG Transaction costs”) totaling $4 million during the three months ended March 31, 2024, consisting primarily of professional fees, all of which are classified as general and administrative expenses in the condensed consolidated statement of operations. We expect to incur additional CRG Transaction costs through 2024 as we complete the acquisition and the integration of the operations of Carrols.

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We ~~have four~~report results under five operating and reportable ~~segments: (1)~~ segments consisting of the following:

1.Tim Hortons – operations of our Tim Hortons brand in Canada and the U.S. (“TH”); ~~(2)~~

2.Burger King – operations of our Burger King brand in the U.S. and Canada (“BK”); ~~(3)~~

3.Popeyes Louisiana Kitchen – operations of our Popeyes brand in the U.S. and Canada (“PLK”); ~~and (4)~~

4.Firehouse Subs – operations of our Firehouse Subs brand in the U.S. and Canada (“FHS”); and

5.International – operations of each of our brands outside the U.S. and Canada (“INTL”). ~~Our business generates revenue~~

We generate revenues from the following sources: (i) sales, consisting primarily of (1) Tim Hortons supply chain sales, which represent sales of products, supplies and restaurant equipment to franchisees, as well as sales ~~to retailers~~of consumer packaged goods (“CPG”), and (2) sales at ~~restaurants owned by us (“~~Company ~~restaurants”);~~restaurants; (ii) franchise revenues, consisting primarily of royalties based on a percentage of sales reported by ~~franchise~~franchised restaurants and franchise fees paid by franchisees; (iii) property revenues from properties we lease or sublease to franchisees; and (iv) advertising revenues and other services, consisting primarily of (1) advertising fund contributions based on a percentage of sales reported by ~~franchise restaurants.~~franchised restaurants to fund advertising expenses and (2) tech fees and revenues that vary by market and partially offset expenses related to technology initiatives. All Tim Hortons global supply chain sales, including coffee to International franchisees, are included in the TH segment.

Operating costs and expenses for our segments include:

•cost of sales comprised of (i) costs associated with the management of our Tim Hortons supply chain, including cost of goods, direct labor, depreciation, and cost of CPG products sold to retailers as well as (ii) food, paper and labor costs of Company restaurants;

•franchise and property expenses comprised primarily of depreciation of properties leased to franchisees, rental expense associated with properties subleased to franchisees, amortization of franchise agreements, and bad debt expense (recoveries);

•advertising expenses and other services comprised primarily of expenses relating to marketing, advertising and promotion, including market research, production, advertising costs, sales promotions, social media campaigns, technology initiatives, depreciation and amortization and other related support functions for the respective brands. We generally manage advertising expenses to equal advertising revenues in the long term, however in some periods there may be a mismatch in the timing of revenues and expenses or higher expenses due to our support initiatives behind marketing programs; and

•segment general and administrative expenses (“Segment G&A”) comprised primarily of salary and employee-related costs for non-restaurant employees, professional fees, information technology systems, general overhead for our corporate offices, share-based compensation and non-cash incentive compensation expense, and depreciation and amortization.

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Key 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~~franchised restaurants and Company restaurants (referred to as system-wide sales) 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, BK~~Tim Hortons, Burger King and ~~FHS~~Firehouse Subs and 17 months or longer for ~~PLK.~~Popeyes. 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 the results exclude the effect of foreign currency translation (“FX Impact”). For system-wide sales growth and comparable sales, we calculate the FX Impact by translating prior year results at current year monthly average exchange rates.

•Unless otherwise stated, system-wide sales growth, system-wide sales and comparable sales are presented on a system-wide basis, which means they include ~~franchise~~franchised restaurants and Company restaurants. System-wide results are driven by our ~~franchise~~franchised restaurants, as ~~approximately 100% of~~nearly all system-wide restaurants are franchised. Franchise sales represent sales at all ~~franchise~~franchised restaurants and are revenues to our franchisees. We do not record franchise sales as revenues; however, our royalty revenues and advertising fund contributions are calculated based on a percentage of franchise sales.

•Net restaurant growth refers to the net ~~increase~~change 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. In determining whether a restaurant meets our definition of a restaurant that will be included in our net restaurant growth, we consider factors such as scope of operations, format and image, separate franchise agreement, and minimum sales thresholds. We refer to restaurants that do not meet our definition as “alternative formats.” These alternative formats are helpful to build brand awareness, test new concepts and provide convenience in certain markets.

These metrics are important indicators of the overall direction of our business, including trends in sales and the effectiveness of each brand’s marketing, operations and growth initiatives.

In our 2022 financial reports, our key operating metrics included results from our franchised Burger King restaurants in Russia, with supplemental disclosure provided excluding these restaurants. We did not generate any new profits from restaurants in Russia in 2022 and do not expect to generate any new profits in 2023. Consequently, beginning in the first quarter of 2023, our reported key operating metrics exclude the results from Russia for all periods presented.

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		Three Months Ended September 30,							Nine Months Ended September 30,
					Three Months Ended March 31,
					Three Months Ended March 31,
					Three Months Ended March 31,
Key Operating Metrics	Key Operating Metrics	2023			2022				2023			2022			Key Operating Metrics		2024			2023
System-wide sales growth	System-wide sales growth
TH
TH
TH	TH	9.7		%	13.4		%		13.9		%	14.2		%		7.8	%		16.1	%
BK	BK	10.3		%	13.6		%		12.7		%	14.3		%	BK		2.6	%		8.5	%
PLK	PLK	16.1		%	12.3		%		15.2		%	8.8		%	PLK		10.4	%		9.6	%
FHS	FHS	6.9		%	N/A				6.8		%	N/A			FHS		4.3	%		8.7	%
Consolidated (a)		10.9		%	13.4		%		13.1		%	13.4		%
FHS (b)		N/A			3.8		%		N/A			4.4		%
INTL															INTL		11.6	%		21.6	%
Consolidated															Consolidated		8.1	%		14.7	%
System-wide sales (in US$ millions)	System-wide sales (in US$ millions)
TH
TH
TH	TH	$	2,088		$	1,945			$	5,843		$	5,339
BK	BK	$	7,063		$	6,346			$	20,205		$	18,127
PLK	PLK	$	1,764		$	1,532			$	5,046		$	4,418
FHS	FHS	$	308		$	289			$	907		$	853
INTL
Consolidated	Consolidated	$	11,223		$	10,112			$	32,001		$	28,737
Comparable sales	Comparable sales
TH
TH
TH	TH	6.8		%	9.8		%		10.4		%	10.2		%		6.9	%		14.9	%
BK	BK	7.2		%	9.6		%		9.3		%	9.4		%	BK		3.8	%		8.7	%
PLK	PLK	7.0		%	3.1		%		6.3		%	0.5		%	PLK		5.7	%		3.6	%
FHS	FHS	3.4		%	N/A				3.8		%	N/A			FHS		0.3	%		6.2	%
Consolidated (a)		7.0		%	8.6		%		8.9		%	8.1		%
FHS (b)		N/A			0.0		%		N/A			0.8		%
INTL															INTL		4.2	%		12.6	%
Consolidated															Consolidated		4.6	%		10.3	%

									As of September 30,
									2023			2022
									As of March 31,
									As of March 31,
									As of March 31,
								2024														2024	2023
Net restaurant growth	Net restaurant growth
TH
TH
TH	TH								5.5		%	5.2		%		—	%		(0.9)	%
BK	BK								2.4		%	2.5		%	BK		(2.4)	%		(1.3)	%
PLK	PLK								11.3		%	8.9		%	PLK		4.7	%		6.3	%
FHS	FHS								2.6		%	N/A			FHS		3.6	%		2.2	%
Consolidated (a)									4.2		%	3.9		%
FHS (b)									N/A			2.5		%
INTL															INTL		8.4	%		8.9	%
Consolidated															Consolidated		3.9	%		4.2	%
Restaurant count	Restaurant count
TH
TH
TH	TH								5,701			5,405
BK	BK								19,035			18,581
PLK	PLK								4,373			3,928
FHS	FHS								1,266			1,234
INTL
Consolidated	Consolidated								30,375			29,148

~~(a) Consolidated system-wide sales growth, consolidated comparable sales and consolidated net restaurant growth do not include the results of Firehouse Subs for 2022.~~

~~(b) 2022 Firehouse Subs growth figures are shown for informational purposes only.~~

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~~Macro Economic Environment~~

During the three and nine months ended September 30, 2023 and 2022, there were increases in commodity, labor, and energy costs partially due to the macroeconomic impact of both the War in Ukraine and COVID-19. This has resulted in increases in inflation, foreign exchange volatility and rising interest rates which may be exacerbated by the conflict in the Middle East and could have an adverse impact on our business and results of operations if we and our franchisees are not able to adjust prices sufficiently to offset the effect of cost increases without negatively impacting consumer demand.

In addition, the global crisis resulting from the spread of COVID-19 impacted our restaurant operations during the nine months ended September 30, 2022. Certain markets, including China, were significantly impacted as a result of governments mandated lockdowns. These lockdowns, which have since been lifted, resulted in restrictions to restaurant operations, such as reduced, if any, dine-in capacity, and/or restrictions on hours of operation in those markets.

~~Sustainability~~

We have adopted science based targets to reduce greenhouse gas emissions by 50% by 2030, and are committed to achieving net-zero emissions by 2050. Starting in 2024, we will be changing our base year from 2019 to 2022, to reflect emissions from Firehouse Subs, which we acquired in December 2021, and an improved calculation methodology. While most of the impact is from scope 3 emissions that are not under our direct control, reaching these targets will require us to devote resources to support changes by suppliers and franchisees.

Results of Operations for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~

Tabular amounts in millions of U.S. dollars unless noted otherwise. Total revenues and segment income for each segment ~~and segment income~~ may not calculate exactly due to rounding.


Consolidated	Consolidated	Three Months Ended September 30,				Variance			FX Impact (a)		Variance Excluding FX Impact		Nine Months Ended September 30,				Variance		FX Impact (a)		Variance Excluding FX Impact
		2023		2022		Favorable / (Unfavorable)							2023		2022		Favorable / (Unfavorable)
Consolidated
Consolidated																							Three Months Ended March 31,			Variance		FX Impact (a)	Variance Excluding FX Impact
								2024																2024	2023		Favorable / (Unfavorable)
Revenues:	Revenues:
Sales
Sales
Sales	Sales	$	771	$	759	$	12		$	(17)	$	29	$	2,183	$	2,076	$	107	$	(77)	$	184
Franchise and property revenues	Franchise and property revenues	753		698		55			(1)		56		2,163		1,989		174		(35)		209
Advertising revenues and other services	Advertising revenues and other services	313		269		44			(1)		45		856		751		105		(7)		112
Total revenues	Total revenues	1,837		1,726		111			(19)		130		5,202		4,816		386		(119)		505
Operating costs and expenses:	Operating costs and expenses:
Cost of sales
Cost of sales
Cost of sales	Cost of sales	630		615		(15)			14		(29)		1,792		1,693		(99)		62		(161)
Franchise and property expenses	Franchise and property expenses	119		137		18			2		16		372		392		20		11		9
Advertising expenses and other services	Advertising expenses and other services	326		276		(50)			1		(51)		909		782		(127)		8		(135)
General and administrative expenses	General and administrative expenses	169		156		(13)			(1)		(12)		507		435		(72)		3		(75)
(Income) loss from equity method investments	(Income) loss from equity method investments	1		8		7			—		7		19		30		11		—		11
Other operating expenses (income), net	Other operating expenses (income), net	10		(27)		(37)			(26)		(11)		20		(68)		(88)		4		(92)
Total operating costs and expenses	Total operating costs and expenses	1,255		1,165		(90)			(10)		(80)		3,619		3,264		(355)		88		(443)
Income from operations	Income from operations	582		561		21			(29)		50		1,583		1,552		31		(31)		62
Interest expense, net	Interest expense, net	143		133		(10)			1		(11)		430		389		(41)		1		(42)
Loss on early extinguishment of debt		16		—		(16)			—		(16)		16		—		(16)		—		(16)

Income before income taxes
Income before income taxes
Income before income taxes	Income before income taxes	423		428		(5)			(28)		23		1,137		1,163		(26)		(30)		4
Income tax expense	Income tax expense	59		(102)		(161)			(2)		(159)		145		17		(128)		(1)		(127)
Net income	Net income	$	364	$	530	$	(166)		$	(30)	$	(136)	$	992	$	1,146	$	(154)	$	(31)	$	(123)

(a)We calculate the FX Impact by translating prior year results at current year monthly average exchange rates. We analyze these results on a constant currency basis as this helps identify underlying business trends, without distortion from the effects of currency movements.

~~Table of Contents~~

TH Segment Three Months Ended September 30, Variance FX Impact (a) Variance Excluding FX Impact Nine Months Ended September 30, Variance FX Impact (a) Variance Excluding FX Impact
2023 2022 Favorable / (Unfavorable) 2023 2022 Favorable / (Unfavorable)
Revenues:
Sales $ 718 $ 710 $ 8 $ (17) $ 24 $ 2,024 $ 1,937 $ 87 $ (77) $ 164
Franchise and property revenues 261 250 11 (6) 16 736 694 42 (28) 70
Advertising revenues and other services 82 73 9 (2) 11 217 199 18 (8) 26
Total revenues 1,060 1,033 27 (24) 51 2,976 2,830 146 (113) 259
Cost of sales 582 568 (14) 13 (27) 1,649 1,558 (91) 62 (152)
Franchise and property expenses 84 87 3 2 1 249 252 3 11 (7)
Advertising expenses and other services 83 73 (10) 2 (12) 226 211 (15) 9 (23)
Segment G&A 29 31 2 1 1 86 92 6 3 3
Segment depreciation and amortization (b) 24 26 2 1 1 75 83 8 3 5
Segment income (c) 311 305 6 (7) 13 852 810 42 (33) 75

~~(b)Segment depreciation and amortization consists of depreciation and amortization included in cost of sales, franchise and property expenses and advertising expenses and other services.~~

~~(c)~~TH segment income includes $4 million and $5 million of cash distributions received from equity method investments for the three months ended September 30, 2023 and 2022, respectively. TH segment income includes $10 million and $11 million of cash distributions received from equity method investments for the nine months ended September 30, 2023 and 2022, respectively.

BK Segment Three Months Ended September 30, Variance FX Impact (a) Variance Excluding FX Impact Nine Months Ended September 30, Variance FX Impact (a) Variance Excluding FX Impact
2023 2022 Favorable / (Unfavorable) 2023 2022 Favorable / (Unfavorable)
Revenues:
Sales $ 21 $ 19 $ 2 $ — $ 2 $ 64 $ 52 $ 12 $ — $ 12
Franchise and property revenues 376 349 27 5 23 1,093 1,002 91 (6) 97
Advertising revenues and other services 141 123 18 1 17 395 353 42 1 41
Total revenues 538 491 47 6 42 1,551 1,407 144 (5) 149
Cost of sales 20 19 (1) — (1) 59 55 (4) — (4)
Franchise and property expenses 30 46 17 — 17 105 125 20 — 20
Advertising expenses and other services 151 130 (21) (1) (20) 435 372 (63) (1) (62)
Segment G&A 53 45 (8) (1) (7) 148 130 (18) (1) (17)
Segment depreciation and amortization (b) 13 11 (2) — (1) 37 35 (2) — (2)
Segment income 298 262 36 4 33 842 761 81 (6) 87

~~Table of Contents~~

PLK Segment Three Months Ended September 30, Variance FX Impact (a) Variance Excluding FX Impact Nine Months Ended September 30, Variance FX Impact (a) Variance Excluding FX Impact
2023 2022 Favorable / (Unfavorable) 2023 2022 Favorable / (Unfavorable)
Revenues:
Sales $ 22 $ 21 $ 1 $ — $ 1 $ 66 $ 58 $ 8 $ — $ 8
Franchise and property revenues 90 78 12 — 12 261 230 31 (1) 33
Advertising revenues and other services 76 65 11 — 11 211 189 22 — 22
Total revenues 188 164 24 — 24 538 477 61 (1) 63
Cost of sales 20 19 (1) — (1) 59 54 (5) — (5)
Franchise and property expenses 2 2 — — — 11 9 (2) — (2)
Advertising expenses and other services 77 66 (11) — (11) 214 191 (23) — (23)
Segment G&A 16 16 — — — 47 48 1 — 1
Segment depreciation and amortization (b) 2 2 — — — 5 5 — — —
Segment income 75 62 13 — 13 214 179 35 (1) 36

FHS Segment Three Months Ended September 30, Variance FX Impact (a) Variance Excluding FX Impact Nine Months Ended September 30, Variance FX Impact (a) Variance Excluding FX Impact
2023 2022 Favorable / (Unfavorable) 2023 2022 Favorable / (Unfavorable)
Revenues:
Sales $ 10 $ 9 $ 1 $ — $ 1 $ 30 $ 29 $ 1 $ — $ 1
Franchise and property revenues 27 21 6 — 6 74 63 11 — 11
Advertising revenues and other services 15 8 7 — 7 34 10 24 — 24
Total revenues 51 38 13 — 13 137 102 35 — 35
Cost of sales 8 9 1 — 1 25 26 1 — 1
Franchise and property expenses 4 2 (2) — (2) 8 6 (2) — (2)
Advertising expenses and other services 15 7 (8) — (8) 34 8 (26) — (26)
Segment G&A 10 9 (1) — (1) 27 25 (2) — (2)
Segment depreciation and amortization (b) — 1 1 — 1 1 2 1 — 1
Segment income 14 13 1 — 1 43 40 3 — 3

~~System-wide Sales~~

For the three months ended September 30, 2023, the increase in TH system-wide sales of 9.7% was primarily driven by comparable sales of 6.8%, including Canada comparable sales of 8.1%, and net restaurant growth of 5.5%. For the nine months ended September 30, 2023, the increase in TH system-wide sales of 13.9% was primarily driven by comparable sales of 10.4%, including Canada comparable sales of 11.7%, and net restaurant growth of 5.5%.

For the three months ended September 30, 2023, the increase in BK system-wide sales of 10.3% was primarily driven by comparable sales of 7.2%, including rest of the world comparable sales of 7.6% and U.S. comparable sales of 6.6%, and net restaurant growth of 2.4%. For the nine months ended September 30, 2023, the increase in BK system-wide sales of 12.7% was primarily driven by comparable sales of 9.3%, including rest of the world comparable sales of 10.3% and U.S. comparable sales of 7.9%, and net restaurant growth of 2.4%.

For the three months ended September 30, 2023, the increase in PLK system-wide sales of 16.1% was primarily driven by net restaurant growth of 11.3% and comparable sales of 7.0%, including U.S. comparable sales of 5.6%. For the nine months ended September 30, 2023, the increase in PLK system-wide sales of 15.2% was primarily driven by net restaurant growth of 11.3% and comparable sales of 6.3%, including U.S. comparable sales of 4.4%.

~~Table of Contents~~

For the three months ended September 30, 2023, the increase in FHS system-wide sales of 6.9% was primarily driven by comparable sales of 3.4%, including U.S. comparable sales of 3.9%, and net restaurant growth of 2.6%. For the nine months ended September 30, 2023, the increase in FHS system-wide sales of 6.8% was primarily driven by comparable sales of 3.8%, including U.S. comparable sales of 4.3%, and net restaurant growth of 2.6%.

Sales and Cost of Sales

Sales include TH supply chain sales and sales from Company restaurants. TH supply chain sales represent sales of products, supplies and restaurant equipment, as well as sales to retailers. Sales from Company restaurants represent restaurant-level sales to our guests.

Cost of sales includes costs associated with the management of our TH supply chain, including cost of goods, direct labor and depreciation, as well as the cost of products sold to retailers. Cost of sales also includes food, paper and labor costs of Company restaurants.

During the three months ended ~~September 30, 2023,~~March 31, 2024, the increase in sales was primarily driven by an increase of ~~$24 million in our TH segment, an increase of $2~~$39 million in our BK segment, an increase of $1 million in our PLK segment, and an increase of $1 million in our FHS segment, partially offset by an unfavorable FX Impact of $17 million. The increase in our TH segment was primarily driven by an increase in supply chain sales due to an increase in system-wide sales and an increase in sales to retailers.

During the nine months ended September 30, 2023, the increase in sales was driven by an increase of $164 million in our TH segment, an increase of $12 million in our BK segment, an increase of $8 million in our PLK segment and an increase of $1 million in our FHS segment, partially offset by an unfavorable FX Impact of $77 million. The increase in our TH segment was primarily driven by an increase in supply chain sales due to an increase in system-wide sales as well as increases in commodity prices passed on to franchisees and an increase in sales to retailers.

During the three months ended September 30, 2023, the increase in cost of sales was driven by an increase of $27 million in our TH segment, an increase of $1 million in our BK segment and an increase of $1 million in our PLK segment, partially offset by a favorable FX Impact of $14 million and a decrease of $1 million in our FHS segment. The increase in our TH segment was primarily driven by higher average cost of inventory, an increase in supply chain sales and an increase in sales to retailers.

During the nine months ended September 30, 2023, the increase in cost of sales was driven by an increase of $152 million in our TH segment, an increase of $5 million in our PLK segment, and an increase of $4 million in our BK segment, partially offset by a favorable FX Impact of $62 million and a decrease of $1 million in our FHS segment. The increase in our TH segment was primarily driven by an increase in supply chain sales, increases in commodity prices and an increase in sales to retailers.

~~Franchise and Property~~

Franchise and property revenues consist primarily of royalties earned on franchise sales, rents from real estate leased or subleased to franchisees, franchise fees, and other revenue. Franchise and property expenses consist primarily of depreciation of properties leased to franchisees, rental expense associated with properties subleased to franchisees, amortization of franchise agreements, and bad debt expense (recoveries).

During the three months ended September 30, 2023, the increase in franchise and property revenues was driven by an increase of $23 million in our BK segment, an increase of $16 million in our TH segment, an increase of $12 million in our PLK segment, and an increase of $6 million in our FHS segment, partially offset by an unfavorable FX Impact of $1 million. The increases were primarily driven by increases in royalties in all of our segments and increases in rent in our TH segment, as a result of increases in system-wide sales.

During the nine months ended September 30, 2023, the increase in franchise and property revenues was driven by an increase of $97 million in our BK segment, an increase of $70 million in our TH segment, an increase of $33 million in our PLK segment, and an increase of $11 million in our FHS segment, partially offset by an unfavorable FX Impact of $35 million. The increases were primarily driven by increases in royalties in all of our segments and increases in rent in our TH segment, as a result of increases in system-wide sales.

~~Table of Contents~~

During the three months ended September 30, 2023, the decrease in franchise and property expenses was driven by a decrease of $17 million in our BK segment, a favorable FX Impact of $2 million and a decrease of $1 million in our TH segment, partially offset by an increase of $2 million in our FHS segment. The decrease in our BK segment was primarily driven by bad debt recoveries in the current year compared to bad debt expenses in the prior year and the timing of convention expenses, which are mostly offset by convention revenues. BK segment convention revenues and expenses were recognized in the third quarter during 2022 and will be recognized in the fourth quarter during 2023.

During the nine months ended September 30, 2023, the decrease in franchise and property expenses was driven by a decrease of $20 million in our BK segment and a favorable FX Impact of $11 million, partially offset by an increase of $7$18 million in our TH segment, an increase of $2 million in our PLK segment, and ~~an increase~~a favorable FX Impact of $2 million in our FHS segment. The decrease in our BK segment was primarily driven by bad debt recoveries in the current year compared to bad debt expenses in the prior year and the timing of convention expenses, which are mostly offset by convention revenues. BK segment convention revenues and expenses were recognized in the third quarter during 2022 and will be recognized in the fourth quarter during 2023. The increase in our TH segment was primarily driven by increases in rent expense.

~~Advertising and Other Services~~

Advertising revenues and other services consist primarily of advertising contributions earned on franchise sales and are based on a percentage of sales reported by franchise restaurants and intended to fund advertising expenses. This line item also includes other services which consist primarily of fees from digital sales that partially offset expenses related to technology initiatives. Advertising expenses and other services consist primarily of expenses relating to marketing, advertising and promotion, including market research, production, advertising costs, sales promotions, social media campaigns, technology initiatives, depreciation and amortization and other related support functions for the respective brands. We generally manage advertising expenses to equal advertising revenues in the long term, however in some periods there may be a mismatch in the timing of revenues and expense or higher expenses due to our support initiatives behind the marketing programs.million.

During the three months ended ~~September 30, 2023,~~March 31, 2024, the increase in ~~advertising revenues and other services~~cost of sales was primarily driven by an increase of ~~$17~~$35 million in our BK segment, an increase of ~~$11~~$19 million in our TH segment, and an unfavorable FX Impact of $1 million.

Franchise and Property

During the three months ended March 31, 2024, the increase in franchise and property revenues was primarily driven by an increase of $19 million in our INTL segment, an increase of $17 million in our TH segment, an increase of ~~$11~~$7 million in our PLK segment, an increase of $3 million in our BK segment, and an increase of $7$2 million in our FHS segment, partially offset by an unfavorable FX Impact of $1$3 million. ~~The increases~~

During the three months ended March 31, 2024, the increase in franchise and property expenses was primarily driven by an increase of $4 million in our INTL segment and an increase of $3 million in our TH segment, partially offset by a decrease of $3 million in our BK THsegment.

Advertising and PLK segments were primarily driven by increases in system-wide sales. The increase in our FHS segment reflects modification of the advertising fund arrangements to be more consistent with those of our other brands.Other Services

During the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, the increase in advertising revenues and other services was primarily driven by an increase of ~~$41~~$11 million in our BK segment, an increase of ~~$26~~$10 million in our FHS segment, an increase of $9 million in our PLK segment, an increase of $8 million in our TH segment, ~~an increase of $24 million in our FHS segment,~~ and an increase of ~~$22~~$5 million in our ~~PLK segment, partially offset by an unfavorable FX Impact~~INTL segment.

Table of $7 million. The increases in our BK, TH and PLK segments were primarily driven by increases in system-wide sales. The increase in our FHS segment reflects modification of the advertising fund arrangements to be more consistent with those of our other brands.Contents

During the three months ended ~~September 30, 2023,~~March 31, 2024, the increase in advertising expenses and other services was primarily driven by an increase of ~~$20~~$11 million in our FHS segment, an increase of $10 million in our PLK segment, an increase of $9 million in our BK segment, an increase of ~~$12~~$5 million in our TH segment, an increase of ~~$11~~$5 million in our ~~PLK~~INTL segment, and an ~~increase of $8 million in our FHS segment, partially offset by a favorable~~unfavorable FX Impact of $1 million. The increases in our BK, TH and PLK segments were driven primarily by increases in advertising revenues and other services. The increase in our FHS segment reflects modification of the advertising fund arrangements to be more consistent with those of our other brands.

During the nine months ended September 30, 2023, the increase in advertising expenses and other services was driven by an increase of $62 million in our BK segment, an increase of $26 million in our FHS segment, an increase of $23 million in our PLK segment, and an increase of $23 million in our TH segment, partially offset by a favorable FX Impact of $8 million. The increases in our BK, PLK and TH segments were driven primarily by increases in advertising revenues and other services. Additionally, our BK segment reflects our support behind the marketing program in the U.S. The increase in our FHS segment reflects modification of the advertising fund arrangements to be more consistent with those of our other brands.

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General and Administrative Expenses

Our general and administrative expenses consisted of the following:


		Three Months Ended September 30,						Variance									Nine Months Ended September 30,								Variance
							$				%													$				%
				2023			2022				Favorable / (Unfavorable)									2023				2022				Favorable / (Unfavorable)
Segment G&A:
								Three Months Ended March 31,
																Three Months Ended March 31,
								Three Months Ended March 31,																									Variance
																	$																											$							%
												2024																											2024						2023							Favorable / (Unfavorable)
Segment G&A (b):
TH
TH
TH	TH	$	29		$	31			$	2				6		%		$	86			$	92			$	6			7		%		$	42		$			$	37		$			$	(5)			(14)				(14)		%
BK	BK	53			45			(8)					(18)		%		148				130				(18)				(14)		%	BK			36			34				34			(2)				(2)				(6)				(6)	%
PLK	PLK	16			16			—					—		%		47				48				1				2		%	PLK			22			21				21			(1)				(1)				(5)				(5)	%
FHS	FHS	10			9			(1)					(11)		%		27				25				(2)				(8)		%	FHS			14			13				13			(1)				(1)				(8)				(8)	%
Share-based compensation and non-cash incentive compensation expense		48			34			(14)					(41)		%		140				93				(47)				(51)		%
Depreciation and amortization		8			6			(2)					(33)		%		23				18				(5)				(28)		%
INTL																																INTL			53						46						(7)							(15)		%
CRG Transaction costs																																CRG Transaction costs			4						—						(4)							NM
FHS Transaction costs	FHS Transaction costs	—			3			3					100		%		19				8				(11)				NM			FHS Transaction costs			—			19				19			19				19				100				100	%
Corporate restructuring and advisory fees	Corporate restructuring and advisory fees	5			12			7					58		%		17				21				4				19		%	Corporate restructuring and advisory fees			2			5				5			3				3				60				60	%
General and administrative expenses	General and administrative expenses	$	169		$	156		$	(13)				(8)		%		$	507			$	435			$	(72)			(17)		%	General and administrative expenses			$	173		$			$	175		$			$	2			1				1		%

NM - ~~not~~Not meaningful

Segment general and administrative expenses (“Segment G&A”) consist primarily of salary and employee-related costs for non-restaurant employees, professional fees, information technology systems, and general overhead for our corporate offices. (b)Segment G&A ~~excludes~~includes share-based compensation and non-cash incentive compensation expense ~~depreciation~~of $46 million and ~~amortization,~~$45 million for the three months ended March 31, 2024 and 2023, respectively. Segment G&A excludes income/expenses from non-recurring projects and non-operating activities, such as CRG Transaction costs, FHS Transaction costs (as defined below) and Corporate restructuring and advisory ~~fees.~~fees (as defined below).

During the three ~~and nine~~ months ended ~~September 30, 2023, Segment G&A for our BK segment increased~~March 31, 2024, the decrease in general and administrative expenses was primarily ~~due to increases in compensation related expenses. Segment G&A for our TH segment decreased primarily due to~~driven by the non-recurrence of FHS Transaction costs and a decrease in ~~professional services. Segment G&A for our PLK~~Corporate restructuring and ~~FHS segments was relatively consistent with the prior year.~~

~~During the three and nine months ended September 30, 2023, the increase in share-based compensation and non-cash incentive compensation expense was primarily due to~~advisory fees, partially offset by an increase in ~~equity awards granted during 2023~~segment G&A and 2022, including equity awards granted to our executive chairman during the fourth quarter of 2022, and increases in expenses related to previously granted performance-based equity awards. In addition, the increase in share-based compensation and non-cash incentive compensation expense was also impacted by shorter vesting periods for equity awards granted beginning in 2021.CRG Transaction costs.

In connection with the acquisition and integration of Firehouse Subs, we incurred certain non-recurring fees and expenses (“FHS Transaction costs”) consisting of professional fees, compensation related expenses and integration costs. We did not incur any additional FHS Transaction costs ~~through the three months ended~~subsequent to March 31, ~~2023. We~~2023 and do not expect to incur any additional FHS Transaction costs ~~for~~in the ~~remainder of 2023.~~future.

In connection with certain transformational corporate restructuring initiatives that rationalize our structure and optimize cash movement within our structure as well as services related to significant tax reform legislation and regulations, we incurred non-operating expenses primarily from professional advisory and consulting services (“Corporate restructuring and advisory fees”). ~~We expect to incur additional Corporate restructuring and advisory fees during the remainder of 2023.~~

(Income) Loss from Equity Method Investments

(Income) loss from equity method investments reflects our share of investee net income or loss and non-cash dilution gains or losses from changes in our ownership interests in equity method investees.

The change in (income) loss from equity method investments during the three ~~and nine~~ months ended ~~September 30, 2023 was primarily driven by decreases~~March 31, 2024 reflects changes in earnings of our equity method ~~investment net losses that we recognized~~investments during the ~~current year.~~three months ended March 31, 2024 compared to the three months ended March 31, 2023.

3430

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Other Operating Expenses (Income), net

Our other operating expenses (income), net consisted of the following:


		Three Months Ended September 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024					2024	2023
Net losses (gains) on disposal of assets, restaurant closures, and refranchisings	Net losses (gains) on disposal of assets, restaurant closures, and refranchisings	$	30	$	1		$	19	$	2
Litigation settlements (gains) and reserves, net	Litigation settlements (gains) and reserves, net	1		—			(1)		3
Net losses (gains) on foreign exchange	Net losses (gains) on foreign exchange	(18)		(30)			(11)		(82)
Other, net	Other, net	(3)		2			13		9
Other operating expenses (income), net	Other operating expenses (income), net	$	10	$	(27)		$	20	$	(68)

Net losses (gains) on foreign exchange are primarily related to revaluation of foreign denominated assets and liabilities, primarily those denominated in ~~Euros~~euros and Canadian dollars.

Other, net for ~~nine~~the three months ended ~~September 30,~~March 31, 2023 is primarily related to payments in connection with FHS area representative buyouts.

Interest Expense, net

Our interest expense, net and the weighted average interest rate on our long-term debt were as follows:


		Three Months Ended September 30,							Nine Months Ended September 30,
		2023			2022				2023			2022
					Three Months Ended March 31,
					Three Months Ended March 31,
					Three Months Ended March 31,
								2024												2024	2023
Interest expense, net	Interest expense, net	$	143		$	133			$	430		$	389
Weighted average interest rate on long-term debt	Weighted average interest rate on long-term debt	5.0		%	4.5		%		5.0		%	4.2		%	Weighted average interest rate on long-term debt	5.0	%	4.9	%

During the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, interest expense, net increased primarily due to an increase in the weighted average interest rate driven by increases in interest rates which impacts our variable rate ~~debt.~~debt and the impact of our September 2023 term loan refinancing.

Income Tax Expense

Our effective tax rate was ~~14.0%~~17.2% and ~~(23.8)%~~9.1% for the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022, respectively, and 12.8% and 1.5% for the nine months ended September 30, 2023 and 2022,~~ respectively. The ~~effective tax rate for the three and nine months ended September 30, 2022 included a net decrease~~increase in tax reserves of $171 million related primarily to expiring statutes of limitations for certain prior tax years which decreased the effective tax rate by 39.9% and 14.7% for the three and nine months ended September 30, 2022, respectively. Our effective tax rate for the three and nine months ended September 30, 2023 was favorably impacted by structural changes implemented in the latter part of 2022 and changes to the relative mix of our income from multiple tax jurisdictions. There may continue to be some quarter-to-quarter volatility of our effective tax rate ~~as our~~was primarily due to a favorable structural change benefiting 2023, unfavorable impacts of recently implemented Organization for Economic Cooperation and Development related tax changes and changes in the mix of income from multiple jurisdictions, partially offset by incremental excess tax ~~jurisdictions and related income forecast changes due to macroeconomic events.~~

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benefits on equity-based compensation.

Net Income

We reported net income of ~~$364~~$328 million for the three months ended ~~September 30, 2023,~~March 31, 2024, compared to net income of ~~$530~~$277 million for the three months ended ~~September 30, 2022.~~March 31, 2023. The ~~decrease~~increase in net income is primarily due to ~~an income tax benefit of $102~~a $35 million ~~in the prior year compared to an income tax expense of $59 million in the current year, a $37 million unfavorable~~favorable change in the results from other operating expenses (income), net, the non-recurrence of $19 million of FHS Transaction costs, a ~~$16 million loss on early extinguishment of debt in the current year, a $15~~$12 million increase in ~~share-based compensation and non-cash incentive compensation expense,~~TH segment income, a $10 ~~million increase in interest expense, net, and a $1 million increase in depreciation and amortization. These factors were partially offset by a $36~~ million increase in BK segment income, a ~~$13 million increase in PLK segment income, a $7 million decrease in Corporate restructuring and advisory fees, an $8~~$9 million favorable change from the impact of equity method investments, a $6$7 million increase in THPLK segment income, a $5 million increase in INTL segment income, a $3 million decrease in ~~FHS Transaction costs,~~Corporate restructuring and advisory fees, and a $1 million increase in FHS segment income. These factors were partially offset by a $40 million increase in income tax expense, a $6 million increase in interest expense, net and $4 million of CRG Transaction costs. Amounts above include a total unfavorable FX Impact to net income of ~~$30~~$5 million.

~~We reported net income~~

Table of ~~$992 million~~Contents

Macro Economic Environment

During the three months ended March 31, 2024 and 2023, there were increases in commodity, labor, and energy costs which have resulted in increases in inflation, foreign exchange volatility, rising interest rates and general softening in the consumer environment which have been exacerbated by conflicts in the Middle East. These pressures could have an adverse impact on our business and results of operations if we and our franchisees are not able to manage costs effectively without negatively impacting consumers.

Segment Results of Operations for the ~~nine months ended September 30,~~Three Months Ended March 31, 2024 and 2023 compared to net income of $1,146 million for the nine months ended September 30, 2022. The decrease in net income is primarily due to a $128 million increase in income tax expense, an $88 million unfavorable change in the results from other operating expenses (income), net, a $48 million increase in


TH Segment		Three Months Ended March 31,			Variance		FX Impact (a)		Variance Excluding FX Impact
	2024	2023	Favorable / (Unfavorable)
Revenues:
Sales			$	637	$	618	$	20	$	2	$	18
Franchise and property revenues			231		213		17		1		17
Advertising revenues and other services			70		62		8		—		8
Total revenues			939		893		45		2		43
Cost of sales			526		505		(20)		(1)		(19)
Franchise and property expenses			81		79		(3)		—		(3)
Advertising expenses and other services			70		65		(5)		—		(5)
Segment G&A (a)			42		37		(5)		—		(5)
Adjustments:
Franchise agreement amortization (b)			2		2		—		—		—
Cash distributions received from equity method investments			3		3		—		—		—
Segment income			224		212		12		1		11

(a)Segment G&A includes share-based compensation and non-cash incentive compensation expense ~~a $41~~of $12 million for the three months ended March 31, 2024 and 2023.

(b)Franchise agreement amortization is included in franchise and property expenses.

System-wide Sales

During the three months ended March 31, 2024, the increase in ~~interest~~TH system-wide sales of 7.8% was primarily driven by comparable sales of 6.9%, including Canada comparable sales of 7.5%.

Sales and Cost of Sales

During the three months ended March 31, 2024, the increase in sales was primarily driven by increases in supply chain sales, mainly due to increases in system-wide sales, increases in equipment sales, and a favorable FX Impact, partially offset by a decrease in CPG sales as a result of increases in promotional activity and trade investments.

During the three months ended March 31, 2024, the increase in cost of sales was primarily driven by increases in supply chain sales, increases in equipment sales, an increase in supply chain bad debt expense ~~net, a $16 million loss on early extinguishment of debt in the current year,~~ and an ~~$11~~unfavorable FX Impact.

Franchise and Property

During the three months ended March 31, 2024, the increase in franchise and property revenues was primarily driven by increases in royalties and rent, as a result of increases in system-wide sales, and a favorable FX Impact.

During the three months ended March 31, 2024, the increase in franchise and property expenses was primarily driven by an increase in rent expense as a result of increases in system-wide sales.

Advertising and Other Services

During the three months ended March 31, 2024, the increase in advertising revenues and other services was primarily driven by increases in advertising fund contributions by franchisees, as a result of increases in system-wide sales.

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During the three months ended March 31, 2024, the increase in advertising expenses and other services was driven primarily by an increases in advertising revenues and other services.

Segment G&A

During the three months ended March 31, 2024, the increase in Segment G&A was primarily driven by higher salary and employee-related costs for non-restaurant employees and an increase in professional fees.


BK Segment		Three Months Ended March 31,			Variance		FX Impact (a)		Variance Excluding FX Impact
	2024	2023	Favorable / (Unfavorable)
Revenues:
Sales			$	58	$	19	$	39	$	—	$	39
Franchise and property revenues			175		172		3		—		3
Advertising revenues and other services			117		106		11		—		11
Total revenues			350		297		53		—		53
Cost of sales			52		17		(35)		—		(35)
Franchise and property expenses			33		36		3		—		3
Advertising expenses and other services			125		117		(9)		—		(9)
Segment G&A (a)			36		34		(2)		—		(2)
Adjustments:
Franchise agreement amortization (b)			2		3		(1)		—		(1)

Segment income			106		96		10		—		10

(a)Segment G&A includes share-based compensation and non-cash incentive compensation expense of $10 million for the three months ended March 31, 2024 and 2023.

System-wide Sales

During the three months ended March 31, 2024, the increase in BK system-wide sales of 2.6% was primarily driven by comparable sales of 3.8%, including US comparable sales of 3.9%, partially offset by net restaurant growth of (2.4)%.

Sales and Cost of Sales

During the three months ended March 31, 2024, the increase in sales and cost of sales was primarily driven by increases in Company restaurants due to franchisee restaurant acquisitions during 2024 and 2023.

Franchise and Property

During the three months ended March 31, 2024, the increase in franchise and property revenues was primarily driven by increases in royalties, as a result of increases in system-wide sales.

During the three months ended March 31, 2024, the decrease in franchise and property expenses was primarily driven by bad debt recoveries in 2024 compared to bad debt expenses in 2023.

Advertising and Other Services

During the three months ended March 31, 2024, the increase in advertising revenues and other services was primarily driven by increases in advertising fund contributions from vendors and franchisees.

During the three months ended March 31, 2024, the increase in advertising expenses and other services was driven primarily by increases in advertising revenues and other services.

Segment G&A

During the three months ended March 31, 2024, the increase in Segment G&A was primarily driven by higher salary and employee-related costs for non-restaurant employees.

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PLK Segment		Three Months Ended March 31,			Variance		FX Impact (a)		Variance Excluding FX Impact
	2024	2023	Favorable / (Unfavorable)
Revenues:
Sales			$	23	$	21	$	2	$	—	$	2
Franchise and property revenues			80		73		7		—		7
Advertising revenues and other services			75		66		9		—		9
Total revenues			178		159		18		—		18
Cost of sales			19		19		—		—		—
Franchise and property expenses			2		2		—		—		—
Advertising expenses and other services			76		67		(10)		—		(10)
Segment G&A (a)			22		21		(1)		—		(1)
Adjustments:
Franchise agreement amortization (b)			1		1		—		—		—

Segment income			58		51		7		—		7

(a)Segment G&A includes share-based compensation and non-cash incentive compensation expense of $7 million and $6 million for the three months ended March 31, 2024 and 2023, respectively.

System-wide Sales

During the three months ended March 31, 2024, the increase in PLK system-wide sales of 10.4% was primarily driven by comparable sales of 5.7%, including US comparable sales of 6.2%, and net restaurant growth of 4.7%.

Sales and Cost of Sales

During the three months ended March 31, 2024, sales remained relatively consistent with the prior year.

During the three months ended March 31, 2024, cost of sales remained consistent with the prior year.

Franchise and Property

During the three months ended March 31, 2024, the increase in franchise and property revenues was primarily driven by increases in royalties, as a result of increases in system-wide sales.

During the three months ended March 31, 2024, franchise and property expenses remained consistent with the prior year.

Advertising and Other Services

During the three months ended March 31, 2024, the increase in advertising expenses and other services was primarily driven by increases in advertising revenues and other services.

Segment G&A

During the three months ended March 31, 2024, Segment G&A remained relatively consistent with the prior year.

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FHS Segment		Three Months Ended March 31,			Variance		FX Impact (a)		Variance Excluding FX Impact
	2024	2023	Favorable / (Unfavorable)
Revenues:
Sales			$	10	$	10	$	—	$	—	$	—
Franchise and property revenues			25		23		2		—		2
Advertising revenues and other services			15		4		10		—		10
Total revenues			50		37		13		—		13
Cost of sales			9		8		—		—		—
Franchise and property expenses			2		2		—		—		—
Advertising expenses and other services			15		5		(11)		—		(11)
Segment G&A (a)			14		13		(1)		—		(1)



Segment income			10		9		1		—		1

(a)Segment G&A includes share-based compensation and non-cash incentive compensation expense of $3 million for the three months ended March 31, 2024 and 2023.

System-wide Sales

During the three months ended March 31, 2024, the increase in FHS ~~Transaction costs. These factors were~~system-wide sales of 4.3% was primarily driven by net restaurant growth of 3.6% and relatively flat comparable sales of 0.3%, including US comparable sales of 0.3%.

Sales and Cost of Sales

During the three months ended March 31, 2024, sales and cost of sales remained consistent with the prior year.

Franchise and Property

During the three months ended March 31, 2024, franchise and property revenues remained relatively consistent with the prior year.

During the three months ended March 31, 2024, franchise and property expenses remained consistent with the prior year.

Advertising and Other Services

During the three months ended March 31, 2024, the increases in advertising revenues and other services and advertising expenses and other services reflect modification of the advertising fund arrangements to be more consistent with those of our other brands.

Segment G&A

During the three months ended March 31, 2024, Segment G&A remained relatively consistent with the prior year.


INTL Segment		Three Months Ended March 31,			Variance		FX Impact (a)		Variance Excluding FX Impact
	2024	2023	Favorable / (Unfavorable)
Revenues:
Sales			$	—	$	—	$	—	$	—	$	—
Franchise and property revenues			201		187		15		(4)		19
Advertising revenues and other services			21		16		5		1		5
Total revenues			222		203		20		(4)		23
Cost of sales			—		—		—		—		—
Franchise and property expenses			8		5		(4)		—		(4)
Advertising expenses and other services			23		18		(6)		(1)		(5)
Segment G&A (a)			53		46		(7)		(1)		(6)
Adjustments:
Franchise agreement amortization (b)			3		3		1		—		1

Segment income			142		137		5		(5)		10

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(a)Segment G&A includes share-based compensation and non-cash incentive compensation expense of $14 million for the three months ended March 31, 2024 and 2023.

System-wide Sales

During the three months ended March 31, 2024, the increase in INTL system-wide sales of 11.6% was primarily driven by net restaurant growth of 8.4% and comparable sales of 4.2%.

Franchise and Property

During the three months ended March 31, 2024, the increase in franchise and property revenues was primarily driven by increases in royalties, primarily at Burger King, as a result of increases in system-wide sales, partially offset by an ~~$81 million~~unfavorable FX Impact.

During the three months ended March 31, 2024, the increase in ~~BK segment income, a $42 million~~franchise and property expenses was primarily related to Tim Hortons due to an increase in ~~TH segment income, a $35 million~~bad debt expenses.

Advertising and Other Services

During the three months ended March 31, 2024, the increase in ~~PLK segment income, a $12 million favorable change~~advertising revenues and other services was primarily driven by increases in advertising fund contributions from franchisees and vendors in the ~~impact~~limited number of ~~equity method investments, a $4 million decrease~~markets where we manage the advertising funds.

During the three months ended March 31, 2024, the increases in ~~Corporate restructuring~~advertising expenses and ~~advisory fees, a $3 million~~other services were driven primarily by increases in advertising revenues.

Segment G&A

During the three months ended March 31, 2024, the increase in ~~FHS segment income~~Segment G&A was primarily driven by higher salary and ~~a $1 million decrease in depreciation and amortization. Amounts above include a total unfavorable FX Impact to net income of $31 million.~~employee-related costs for non-restaurant employees.

Non-GAAP Reconciliations

The table below contains information regarding ~~EBITDA and~~ Adjusted ~~EBITDA,~~Operating Income, which ~~are~~is a non-GAAP ~~measures. These~~measure. This non-GAAP ~~measures do~~measure does not have a standardized meaning under U.S. GAAP and may differ from a similar captioned ~~measures~~measure of other companies in our industry. We believe ~~that these~~this non-GAAP ~~measures are~~measure is useful to investors in assessing our operating performance, as ~~they provide~~it provides them with the same tools that management uses to evaluate our performance and ~~are~~is responsive to questions we receive from both investors and analysts. By disclosing ~~these~~this non-GAAP ~~measures,~~measure, we intend to provide investors with a consistent comparison of our operating results and trends for the periods presented. ~~EBITDA~~Adjusted Operating Income is defined as ~~earnings (net~~ income or loss) before interest expense, net, 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 EBITDAfrom operations excluding (i) ~~the non-cash impact~~franchise agreement amortization as a result of ~~share-based compensation and non-cash incentive compensation expense,~~acquisition accounting, (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/expenses from non-recurring projects and non-operating activities. For the periods referenced, income/expenses from non-recurring projects and non-operating activities included (i) non-recurring fees and expense incurred in connection with the announced acquisition of Carrols consisting primarily of professional fees; (ii) non-recurring fees and expense incurred in connection with the acquisition of Firehouse consisting of professional fees, compensation related expenses and integration costs; and ~~(ii)~~(iii) non-operating costs from professional advisory and consulting services associated with certain transformational corporate restructuring initiatives that rationalize our structure and optimize cash movements as well as services related to significant tax reform legislation and regulations. 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.

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Adjusted ~~EBITDA~~Operating Income 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,~~Operating Income, as defined above, also represents our measure of segment income for each of our ~~four~~five operating segments.


								Three Months Ended March 31,
														Three Months Ended March 31,
								Three Months Ended March 31,																						Variance
															$																												$							%
											2024																										2024							2023							Favorable / (Unfavorable)
		Three Months Ended September 30,							Variance							Nine Months Ended September 30,							Variance
							$			%					$								%
				2023			2022			Favorable / (Unfavorable)							2023				2022				Favorable / (Unfavorable)

Net income		$	364		$	530		$	(166)			(31)	%		$		992			$	1,146			$	(154)		(13)		%
Income tax expense (benefit)		59			(102)			(161)				NM			145			17				(128)				NM
Loss on early extinguishment of debt		16			—			(16)				NM			16			—				(16)				NM
Interest expense, net		143			133			(10)				(8)	%		430			389				(41)				(11)	%
Income from operations	Income from operations	582			561			21				4	%		1,583			1,552				31				2	%
Depreciation and amortization		47			46			(1)				(2)	%		142			143				1				1	%
EBITDA		629			607			22				4	%		1,725			1,695				30				2	%
Share-based compensation and non-cash incentive compensation expense		49			34			(15)				(44)	%		141			93				(48)				(52)	%
Income from operations
Income from operations																																	$	544						$	447						$	97						22		%
Franchise agreement amortization																												Franchise agreement amortization					8							8							—							—		%
CRG Transaction costs																												CRG Transaction costs					4							—							(4)							NM
FHS Transaction costs	FHS Transaction costs	—			3			3				NM			19			8				(11)				NM		FHS Transaction costs					—			19					19			19					19			100					100		%
Corporate restructuring and advisory fees	Corporate restructuring and advisory fees	5			12			7				58	%		17			21				4				19	%	Corporate restructuring and advisory fees					2			5					5			3					3			60					60		%
Impact of equity method investments (a)	Impact of equity method investments (a)	5			13			8				62	%		29			41				12				29	%	Impact of equity method investments (a)					—			9					9			9					9			100					100		%
Other operating expenses (income), net	Other operating expenses (income), net	10			(27)			(37)				NM			20			(68)				(88)				NM		Other operating expenses (income), net					(18)			17					17			35					35			NM						NM
Adjusted EBITDA		$	698		$	642		$	56			9	%		$	1,951		$	1,790			$	161			9	%
Adjusted Operating Income																												Adjusted Operating Income					$	540						$	505						$	35						7		%

Segment income:	Segment income:
Segment income:
Segment income:
TH
TH
TH	TH	$	311		$	305		$	6			2	%		$	852		$	810			$	42			5	%				$	224			$			$	212			$			$	12			6				6		%
BK	BK	298			262			36				14	%		842			761				81				11	%	BK					106			96					96			10					10			10					10		%
PLK	PLK	75			62			13				21	%		214			179				35				19	%	PLK					58			51					51			7					7			14					14		%
FHS	FHS	14			13			1				2	%		43			40				3				8	%	FHS					10			9					9			1					1			10					10		%
Adjusted EBITDA		698			642			56				9	%		$	1,951		$	1,790			$	161			9	%
INTL																												INTL					142							137							5							3		%
Adjusted Operating Income																												Adjusted Operating Income					$	540						$	505						$	35						7		%

NM - not meaningful

The increase in Adjusted ~~EBITDA~~Operating Income for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 reflects ~~the increases~~an increase in segment income in ~~each~~all of our segments, ~~and includes~~partially offset by an unfavorable FX Impact of ~~$4 million and $40 million for the three and nine months ended September 30, 2023, respectively.~~$5 million.

Liquidity and Capital Resources

Our primary sources of liquidity are cash on hand, cash generated by operations and borrowings available under our Revolving Credit Facility (as defined below). We have used, and may in the future use, our liquidity to make required interest and/or principal payments, to repurchase our common shares, to repurchase Class B exchangeable limited partnership units of Partnership (“Partnership exchangeable units”), to voluntarily prepay and repurchase our or one of our affiliates’ outstanding debt, to fund acquisitions and other investing activities, such as capital expenditures and joint ventures, and to pay dividends on our common shares and make distributions on the Partnership exchangeable units. Our liquidity requirements are significant, primarily due to debt service requirements.

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As of ~~September 30, 2023,~~March 31, 2024, we had cash and cash equivalents of ~~$1,310~~$1,049 million and borrowing availability of $1,248 million under our senior secured revolving credit facility (the “Revolving Credit Facility”). Based on our current level of operations and available cash, we believe our cash flow from operations, combined with our availability under our Revolving Credit Facility, will provide sufficient liquidity to fund our current obligations, debt service requirements and capital spending over the next twelve months.

In September 2022, Burger King shared the details of its “Reclaim the Flame” plan to accelerate sales growth and drive franchisee profitability. We are investing $400 million over the life of the plan, comprised of $150 million in advertising and digital investments (“Fuel the Flame”) and $250 million in high-quality remodels and relocations, restaurant technology, kitchen equipment, and building enhancements (“Royal Reset”). During the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, we funded ~~$20~~$6 million toward the Fuel the Flame investment and ~~$28~~$19 million toward our Royal Reset investment and as of ~~September 30, 2023,~~March 31, 2024, we have funded a total of ~~$33~~$79 million toward the Fuel the Flame investment and ~~$45~~$81 million toward our Royal Reset investment.

In April 2024, Burger King announced plans to extend its Long-Term Royal Reset program with plans to invest an additional $300 million in remodels from 2025 through 2028.

On January 16, 2024, we announced that we have reached an agreement to acquire all of Carrols Restaurant Group, Inc. (“Carrols”) issued and outstanding shares that are not already held by RBI or its affiliates for $9.55 per share in an all cash transaction, or an aggregate total enterprise value of approximately $1.0 billion. The transaction is expected to be completed in the second quarter of 2024 and is subject to customary closing conditions, including approval by the holders of the majority of common stock held by Carrols stockholders excluding shares held by RBI and its affiliates and officers of Carrols in addition to approval by holders of a majority of outstanding common stock of Carrols. The transaction is not subject to a financing contingency and is expected to be financed with cash on hand of approximately $230 million and term loan debt. We secured financing whereby lenders will provide an additional $750 million of Term Loan B loans on the same terms as the existing Term Loan B under our Credit Agreement, subject to the closing of the Carrols acquisition.

On August 31, 2023, our board of directors approved a share repurchase authorization of up to $1,000 million of our common shares until September 30, 2025. This approval follows the expiration of RBI's prior two-year authorization to repurchase up to the same $1,000 million of our common shares. On September 13, 2023, we announced that the Toronto Stock Exchange (the “TSX”) had accepted and approved the notice of our intention to renew the normal course issuer bid, permitting the repurchase up to 30,895,637 common shares for the 12-month period ending on September 14, 2024. Share repurchases under the normal course issuer bid will be made through the facilities of the TSX, the New York Stock Exchange (the “NYSE”) and/or other exchanges and alternative Canadian or foreign trading systems, if eligible, or by such other means as may be permitted by the TSX and/or the NYSE under applicable law. Shareholders may obtain a copy of the prior notice, free of charge, by contacting us. During the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, we ~~repurchased 2,099,360~~did not repurchase any RBI common shares on the open market ~~for $142 million~~ and as of ~~September 30, 2023, had $858 million remaining under the authorization. Subsequent to September 30, 2023 through October~~March 31, ~~2023, we repurchased 5,539,777 RBI common shares for $358 million and as of October 31, 2023~~2024, had $500 million remaining under the ~~share repurchase~~ authorization. Repurchases under the Company's authorization will be made in the open market or through privately negotiated transactions.

We generally provide applicable deferred taxes based on the tax liability or withholding taxes that would be due upon repatriation of cash associated with unremitted earnings. We will continue to monitor our plans for such cash and related foreign earnings but our expectation is to continue to provide taxes on unremitted earnings that we expect to distribute.

Debt Instruments and Debt Service Requirements

As of ~~September 30, 2023,~~March 31, 2024, our long-term debt consists primarily of borrowings under our Credit Facilities, amounts outstanding under our 3.875% First Lien Senior Notes due 2028, 5.75% First Lien Senior Notes due 2025, 3.50% First Lien Senior Notes due 2029, 4.375% Second Lien Senior Notes due 2028, 4.00% Second Lien Senior Notes due 2030 (together, the “Senior Notes”), TH Facility, and obligations under finance leases. For further information about our long-term debt, see Note 10 to the accompanying unaudited condensed consolidated financial statements included in this report.

As of ~~September 30, 2023,~~March 31, 2024, there was ~~$6,450~~$6,437 million outstanding principal amount under our Term Loan Facilities with a weighted average interest rate of ~~7.37%~~7.33%. The interest rate applicable to borrowings under our Term Loan A and Revolving Credit Facility is, at our option, either (i) a base rate, subject to a floor of 1.00%, plus an applicable margin varying from 0.00% to 0.50%, or (ii) Term SOFR (Secured Overnight Financing Rate), subject to a floor of 0.00%, plus an applicable margin varying between 0.75% to 1.50%, in each case, determined by reference to a net first lien leverage based pricing grid. The

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interest rate applicable to borrowings under our Term Loan B is, at our option, either (i) a base rate, subject to a floor of 1.00%, plus an applicable margin of 1.25%, or (ii) Term SOFR, subject to a floor of 0.00%, plus an applicable margin of 2.25%.

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Based on the amounts outstanding under the Term Loan Facilities and SOFR as of ~~September 30, 2023,~~March 31, 2024, subject to a floor of 0.00%, required debt service for the next twelve months is estimated to be approximately ~~$482~~$480 million in interest payments and ~~$39~~$60 million in principal payments. In addition, based on SOFR as of ~~September 30, 2023,~~March 31, 2024, net cash settlements that we expect to receive on our $4,000 million interest rate swaps are estimated to be approximately ~~$138~~$128 million for the next twelve months. Based on the amounts outstanding at ~~September 30, 2023,~~March 31, 2024, required debt service for the next twelve months on all of the Senior Notes outstanding is approximately $264 million in interest payments. Based on the amounts outstanding under the TH Facility as of ~~September 30, 2023,~~March 31, 2024, required debt service for the next twelve months is estimated to be approximately $9$8 million in interest payments and ~~$13~~$16 million in principal payments.

Restrictions and Covenants

As of ~~September 30, 2023,~~March 31, 2024, we were in compliance with all applicable financial debt covenants under the Credit Facilities, the TH Facility, and the indentures governing our Senior Notes.

Cash Dividends

On ~~October~~April 4, ~~2023,~~2024, we paid a dividend of ~~$0.55~~$0.58 per common share and Partnership made a distribution in respect of each Partnership exchangeable unit in the amount of ~~$0.55~~$0.58 per Partnership exchangeable unit.

Our board of directors has declared a cash dividend of ~~$0.55~~$0.58 per common share, which will be paid on ~~January 4,~~July 5, 2024 to common shareholders of record on ~~December~~June 21, ~~2023.~~2024. Partnership will also make a distribution in respect of each Partnership exchangeable unit in the amount of ~~$0.55~~$0.58 per Partnership exchangeable unit, and the record date and payment date for distributions on Partnership exchangeable units are the same as the record date and payment date set forth above.

In addition, because we are a holding company, our ability to pay cash dividends on our common shares may be limited by restrictions under our debt agreements. Although we do not have a formal dividend policy, our board of directors may, subject to compliance with the covenants contained in our debt agreements and other considerations, determine to pay dividends in the future. We expect to pay all dividends from cash generated from our operations.

Outstanding Security Data

As of ~~October 27, 2023,~~April 23, 2024, we had outstanding ~~312,028,584~~316,382,439 common shares and one special voting share. The special voting share is held by a trustee, entitling the trustee to that number of votes on matters on which holders of common shares are entitled to vote equal to the number of Partnership exchangeable units outstanding. The trustee is required to cast such votes in accordance with voting instructions provided by holders of Partnership exchangeable units. At any shareholder meeting of the Company, holders of our common shares vote together as a single class with the special voting share except as otherwise provided by law. For information on our share-based compensation and our outstanding equity awards, see Note 1413 to the audited consolidated financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023, filed with the U.S Securities and Exchange Commission (the “SEC”) and Canadian securities regulatory authorities on February 22, 2023.

There were ~~133,597,764~~133,595,544 Partnership exchangeable units outstanding as of ~~October 27, 2023.~~April 23, 2024. During the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, Partnership exchanged ~~9,398,876~~2,220 Partnership exchangeable units pursuant to exchange notices received. The holders of Partnership exchangeable units have the right to require Partnership to exchange all or any portion of such holder’s Partnership exchangeable units for our common shares at a ratio of one share for each Partnership exchangeable unit, subject to our right as the general partner of Partnership to determine to settle any such exchange for a cash payment in lieu of our common shares.

Comparative Cash Flows

Operating Activities

Cash provided by operating activities was ~~$920~~$148 million for the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, compared to ~~$1,067~~$95 million during the same period in the prior year. The ~~decrease~~increase in cash provided by operating activities was primarily driven by ~~an increase in interest payments and an increase~~a decrease in cash used for working capital ~~partially offset by~~and an increase in segment income in each of our ~~segments.~~

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segments, partially offset by an increase in income tax payments and an increase in interest payments.

Investing Activities

Cash used for investing activities was ~~$11~~$31 million for the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, compared to ~~$66 million~~no net cash provided by or used from investing activities during the same period in the prior year. This change was primarily driven by ~~a decrease in~~current year net payments ~~for other investing activities, an increase in proceeds~~ from ~~derivatives, an increase in net proceeds from disposal of assets, restaurant closures and refranchisings and the non-recurrence of payments in connection with~~ the acquisition of ~~Firehouse Subs in the prior year, partially offset by~~franchised restaurants and an increase in capital expenditures.

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Financing Activities

Cash used for financing activities was ~~$774~~$203 million for the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, compared to ~~$1,111~~$240 million during the same period in the prior year. The change in cash used for financing activities was driven primarily by ~~the decrease in RBI common share repurchases, increase in proceeds from derivatives, increase in proceeds from long-term debt, and~~ an increase in proceeds from stock option exercises ~~partially offset by payment of financing costs in the current year, an increase in payment of dividends~~ and ~~distributions, and an increase~~a decrease in long-term debt repayments.

Critical Accounting Policies and Estimates

For information regarding our Critical Accounting Policies and Estimates, see the “Critical Accounting Policies and Estimates” section of “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K, filed with the SEC on February 22, ~~2023.~~2024.

New Accounting Pronouncements

See Note 3 – New Accounting Pronouncements in the notes to the accompanying unaudited condensed consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There were no material changes during the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 to the disclosures made in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 filed with the SEC and Canadian securities regulatory authorities on February 22, ~~2023.~~2024.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

An evaluation was conducted under the supervision and with the participation of management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and Exchange Act Rules 15d-15(e)) as of ~~September 30, 2023.~~March 31, 2024. Based on that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of such date.

Internal Control Over Financial Reporting

The Company’s management, including the CEO and CFO, confirm there were no changes in the Company’s internal control over financial reporting during the three months ended ~~September 30, 2023~~March 31, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Special Note Regarding Forward-Looking Statements

Certain information contained in this report, including information regarding future financial performance and plans, targets, aspirations, expectations, and objectives of management, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of Canadian securities laws. We refer to all of these as forward-looking statements. Forward-looking statements are forward-looking in nature and, accordingly, are subject to risks and uncertainties. These forward-looking statements can generally be identified by the use of words such as “believe”, “anticipate”, “expect”, “intend”, “estimate”, “plan”, “continue”, “will”, “may”, “could”, “would”, “target”, “potential” and other similar expressions and include, without limitation, statements regarding our expectations or beliefs regarding (i) the effects and continued impact of the ~~COVID-19 pandemic, the war in Ukraine,~~ conflict in the Middle East and related macro-economic pressures, such as inflation, rising interest rates and currency fluctuations on our results of operations, business, liquidity, prospects and restaurant operations and those of our franchisees; (ii) our ~~digital, marketing, remodel and technology enhancement initiatives and expectations regarding further expenditures~~

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~~relating to these initiatives, including our “Reclaim the Flame” plan to accelerate sales growth and drive franchisee profitability at Burger King; (iii) our~~ commitment to growth opportunities, plans and strategies for each of our brands and ability to enhance operations and drive long-term, sustainable growth; ~~(iv) our discontinuation of operations in and financial results from Russia; (v)~~(iii) the amount and timing of future Corporate restructuring ~~and~~costs, (iv) advisory fees and costs associated with the ~~expectation that no additional~~ FHS ~~Transaction costs will be incurred during the remainder of 2023; (vi)~~and Carrols Transactions; (v) our future financial obligations, including annual debt service requirements, capital expenditures and dividend payments, our ability to meet such obligations and the source of funds used to satisfy such obligations; ~~(vii) our targets with respect to reduction in greenhouse gas emissions; (viii)~~(vi) our exposure to changes in interest rates and foreign currency exchange rates and the impact of changes in interest rates and foreign currency exchange rates on the amount of our interest payments, future earnings and cash flows; ~~(ix)~~(vii) certain tax matters, including our estimates with respect to tax matters and their impact on future periods; ~~(x)~~(viii) the amount of net cash settlements we expect to pay or receive on our derivative instruments; ~~and (xi)~~(ix) certain accounting ~~matters.~~matters and (x) our expectation

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that the Carrols transaction will be completed in the second quarter of 2024 and financed with cash on hand and term loan debt for which RBI has received a financing commitment.

Our forward-looking statements, included in this report and elsewhere, represent management’s expectations as of the date that they are made. Our forward-looking statements are based on assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. However, these forward-looking statements are subject to a number of risks and uncertainties and actual results may differ materially from those expressed or implied in such statements. Important factors that could cause actual results, level of activity, performance or achievements to differ materially from those expressed or implied by these forward-looking statements include, among other things, risks related to: (1) our substantial indebtedness, which could adversely affect our financial condition and prevent us from fulfilling our obligations; (2) global economic or other business conditions that may affect the desire or ability of our customers to purchase our products, such as ~~the effects of the COVID-19 pandemic,~~ inflationary pressures, high unemployment levels, declines in median income growth, consumer confidence and consumer discretionary spending and changes in consumer perceptions of dietary health and food safety; (3) our relationship with, and the success of, our franchisees and risks related to our nearly fully franchised business model; (4) our ~~franchisees’~~franchisees' financial stability and their ability to access and maintain the liquidity necessary to operate their businesses; (5) our supply chain operations; (6) our ownership and leasing of real estate; (7) the effectiveness of our marketing, advertising and digital programs and franchisee support of these programs; (8) significant and rapid fluctuations in interest rates and in the currency exchange markets and the effectiveness of our hedging activity; (9) our ability to successfully implement our domestic and international growth strategy for each of our brands and risks related to our international operations; (10) our reliance on franchisees, including subfranchisees to accelerate restaurant growth; (11) ~~risks related to the conflict between Russia and Ukraine and the conflict in the Middle East;~~unforeseen events such as pandemics; (12) the ability of the counterparties to our credit ~~facilities~~facilities’ and ~~derivatives~~derivatives’ to fulfill their commitments and/or obligations; (13) ~~evolving legislation and regulations in the area of franchise and labor and employment law; (14)~~ changes in applicable tax laws or interpretations thereof, and our ability to accurately interpret and predict the impact of such changes or interpretations on our financial condition and results; (14) evolving legislation and regulations in the area of franchise and labor and employment law; (15) our ability to address environmental and social sustainability ~~issues.~~issues; (16) the conflict between Russia and Ukraine, and the conflict in the Middle East; (17) our and Carrols ability to meet all the closing conditions such that timing of the acquisition of Carrols is consummated as anticipated; (18) our ability to utilize secured loans to fund the Carrols acquisition and (19) litigation or other regulatory matters that could impact the acquisition of Carrols.

We operate in a very competitive and rapidly changing environment and our inability to successfully manage any of the above risks may permit our competitors to increase their market share and may decrease our profitability. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Finally, our future results will depend upon various other risks and uncertainties, including, but not limited to, those detailed in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 filed with the SEC and Canadian securities regulatory authorities on February 22, ~~2023,~~2024, as well as other materials that we from time to time file with, or furnish to, the SEC or file with Canadian securities regulatory authorities. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements in this section and elsewhere in this report. Other than as required under 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, changes in expectations or otherwise.

~~Table of Contents~~

Part II – Other Information

Item 1. Legal Proceedings

See Part I, Notes to Condensed Consolidated Financial Statements, Note 15, Commitments and Contingencies.

~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds~~

~~Issuer Purchases of Equity Securities~~

~~Following are our monthly share repurchases for the third quarter of Fiscal year 2023:~~

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
July 1, 2023 - July 31, 2023 — $ — $ — — $ 1,000,000,000
August 1, 2023 - August 31, 2023 — — — — 1,000,000,000
September 1, 2023 - September 30, 2023 2,099,360 142,283,557 67.77 2,099,360 857,716,443
2,099,360 $ 142,283,557 2,099,360

~~(1)~~In August 2023, the Board of Directors authorized repurchases of up to $1.0 billion common shares through September 30, 2025 and the open market repurchases of the common shares listed in the table above were made pursuant to that authorization. Under the program, shares may be repurchased in privately negotiated or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act. Most of the purchases made during September 2023 were pursuant to a Rule 10b5-1 plan.

Item 5. Other Information

During the three months ended ~~September 30, 2023,~~March 31, 2024, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

4241

Table of Contents

Item 6. Exhibits



Exhibit Number						Description


10.88(a)*						Amendment to Offer Letter dated as of March 14, 2024 by and among David Shear, Burger King Europe GmbH, PLK Europe GmbH, Tim Hortons Restaurants International GmbH and Firehouse Subs Europe GmbH.

10.88(b)*						Separation Agreement dated as of March 14, 2024 by and among David Shear, Burger King Europe GmbH, PLK Europe GmbH, Tim Hortons Restaurants International GmbH and Firehouse Subs Europe GmbH.

10.89(a)*						Employment and Post-Employment Covenants Agreement dated as of March 14, 2024 by and between Sami Siddiqui and Restaurant Brands International Inc.

10.89(b)*						Employment and Post-Employment Covenants Agreement dated as of March 14, 2024 by and between Sami Siddiqui and Restaurant Brands International US Services LLC.

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)

* Management contract or compensatory plan or arrangement

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

RESTAURANT BRANDS INTERNATIONAL INC.

(Registrant)

Date: ~~November 3, 2023~~April 30, 2024

By:

/s/ ~~Matthew Dunnigan~~Sami Siddiqui

Name:

~~Matthew Dunnigan~~Sami Siddiqui

Title:

Chief Financial Officer
(principal financial officer)
(duly authorized officer)

4443



		Page

PART I – Financial Information
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2625
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	40

PART II – Other Information
Item 1.	Legal Proceedings	42
~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	4241
Item 5.	Other Information	4241
Item 6.	Exhibits	4342
	Signatures	4443


	Nine months ended September 30, 2023
	TH		BK		PLK		FHS		Total
Sales	$	2,023	$	64	$	66	$	30	$	2,183
Royalties	261		882		241		52		1,436
Property revenues	456		171		10		—		637
Franchise fees and other revenue	19		40		10		21		90
Advertising revenues and other services	217		394		211		34		856
Total revenues	$	2,976	$	1,551	$	538	$	137	$	5,202


	Three months ended September 30, 2022
	TH		BK		PLK		FHS		Total
Sales	$	710	$	19	$	21	$	9	$	759
Royalties	87		274		74		16		451
Property revenues	154		57		3		—		214
Franchise fees and other revenue	9		18		1		5		33
Advertising revenues and other services	73		123		65		8		269
Total revenues	$	1,033	$	491	$	164	$	38	$	1,726


	As of
	September 30, 2023						December 31, 2022
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Identifiable assets subject to amortization:
Franchise agreements	$	717	$	(335)	$	382	$	720	$	(313)	$	407
Favorable leases	81		(53)		28		90		(57)		33
Subtotal	798		(388)		410		810		(370)		440
Indefinite-lived intangible assets:
Tim Hortons brand	$	6,285	$	—	$	6,285	$	6,292	$	—	$	6,292
Burger King brand	2,080		—		2,080		2,088		—		2,088
Popeyes brand	1,355		—		1,355		1,355		—		1,355
Firehouse Subs brand	816		—		816		816		—		816
Subtotal	10,536		—		10,536		10,551		—		10,551
Intangible assets, net					$	10,946					$	10,991

Goodwill:
Tim Hortons segment	$	4,054					$	4,059
Burger King segment	588						590
Popeyes segment	846						846
Firehouse Subs segment	193						193
Total	$	5,681					$	5,688


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

July 1, 2023 - July 31, 2023	—	$	—	$	—	—	$	1,000,000,000
August 1, 2023 - August 31, 2023	—	—		—		—	1,000,000,000
September 1, 2023 - September 30, 2023	2,099,360	142,283,557		67.77		2,099,360	857,716,443
	2,099,360	$	142,283,557			2,099,360