Jose Cil | Chief Executive Officer |
Stephen Lichtner | Head of Investor Relations |
Josh Kobza | COO |
Matt Dunnigan | CFO |
Chris Carol | RBC |
Dennis Geiger | UBS |
John Glass | Morgan Stanley |
Jon Tower | Wells Fargo |
Brian Mollen | Deutsche Bank |
Lauren Silverman | Credit Suisse |
David Palmer | Evercore ISI |
Good morning, everyone and welcome to the Restaurant Brands International, Third Quarter 2021 earnings conference call. All participants will be in a listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. callers limited all one that note will to be question. Please is note that also being this Please event recorded. to over RBI's, Relations. to like Steven I'd turn Lichtner, Head the of conference call Investor ahead. go Please
to Good everyone. Call Operator. the ended Quarter XX, Third International you, Thank for And welcome 's Restaurant morning, Earnings XXXX. September Brands
be broadcast this web and investor.rbi.com, page, may reminder, available replay. accessed be will for a As of through a and the live call the Relations recording Investor
Jose which CEO, COO, today earnings set are to release Restaurant and in morning press me Matt Josh various issued the Joining the CFO, and International's Kobza, our on call call Brands contains are risks Cil, Donigan. filings. Today's SEC this in forward-looking forth statements subject
of indication release business are in sales cleaner geometric how the comparisons using sales we for Jose. the In addition, this basis growth on calculated earnings available will now, call on will comparisons disclosed comparable call the Reconciliations financial metrics. I versus the be These period. included non-GAAP includes call press system-wide website. over And and the is X-year measures. non-GAAP by Throughout our growth X-year of today, provide a stacked and referencing a measures normalized turn to XXXX are a more XXXX to financial trending
quarter our morning, I Good today's on hope well. everyone. Thank you of XXXX. third is us to discuss for call joining everyone doing
our launched quarter, Restaurant food, address our the the our an results I'd into sustainability In milestone Before we and for Good communities and planet, framework Brands Company. our to dive we serve. people like for I the important for XXXX, to highlight
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King, the we by our and this high-margin seriously. important know with brands comparable right right growing, increasingly revenue our returning Hortons, sales allowing that guests, all our brands: progress believe also while proposition planet, and we're shareholders. sustainability development resilient, in Tim restaurant takes Popeyes, because which Burger value doing streams we of who is capital through generate starts And to Beyond to by value shareholders our growth reinvest business us and really employees, doing
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to to framework, to update development a prospects, I'd our I with key growth you provide turn long-term brand-level Josh like Josh. a performance, on our also of on share driver technology. update our over Before to detailed hand an it then more
Thanks, Jose. good everyone. And morning,
are restaurant well-positioned Jose our are to grow execute. locations have goal As mentioned, XX,XXX we towards aspirations base and we to big our we of confident long-term
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the However, the the underpenetrated rest throughout brand of significantly remains world.
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record and Spain, the unit expected to from With achieve key to by and Canada, XXXX. Philippines, further growth U.S., the the on contributions including accelerate brand this year, markets track driven in
market, a also that largest platforms share see thoughts this most how some progress. when our back it digital to We've international look fastest-growing handing in at digital we is sales. how to particular, a of out discussed markets. just I key our investing key few happen important some be Before are Jose, behind also digital our to insights and And internationally, technology priority. and to we from which And building advanced is wanted driving markets
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that, continue these While to the the be key our time take to I'll will investment, they're it in With initiatives market, large priority. a and hand critical especially future and home Jose. business of back to
Thanks, Josh.
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turn Popeyes. now to Let's
As Josh highlighted, long-term the we brand. see a opportunity growth for significant Popeyes
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morning, good And everyone. Jose. Thanks,
our benefit This priorities, resilient quarter of demonstrate results a and we again model. many once and of having made diversified solid key the our progress against business
to grew our our For XX% about global system-wide X% organically EBITDA the to was year-over-year sales adjusted quarter, and third $XXX $X.X million. up billion,
historically in closer rates couple consolidated growth, While has factors a our to in were our growth been year-over-year system-wide growth that sales there difference the our quarter. this to EBITDA adjusted of contributed
people, technology digital highlighted we've in proactive investments past G&A. sizable and a continued led as segment calls, First, to our increase has on year-over-year in
XXXX. head $XX quarter, We reasonable into will expect X a we levels baseline G&A fourth-quarter that segment with fourth core sequentially as increase our roughly to in the million establishing
fund the these our of two by reflects CAD This have funds spending EBITDA our the impact reflects our to of the of Canada from supporting Additionally, end approximately negative did resulting expenses of fact deployed remainder And our Tim growth. back-to-basics QX. in $XX advertising QX, mostly the during third behind of expect XX exceeded than XX% they quarter initiatives. points commitment million year-over-year nearly in revenues million spend growth ad as this we last that to quarter the Hortons an and more year,
about in know inflation our outside I'd items turning first, impact top and in mind: of the that to we peers our others on increased growth of environment, front. industry, two are from think chain, at discuss in like Tim how the on business. current our supply seeing macroeconomic EPS, labor our you've levels commodities of the to international heard to light and quickly Before our business robust second, as supply we're On chain
be this We've relative consistent With improvement. year-to-date on we a encouraged XXXX at very helpful and recover So pretty it include bounce been thought level to in a would supply Tim. basis. year beginning a back chain Canada, sales margins hold we've to this brief to update business seen on our to see
businesses, you runway Josh XX% contributors international continue this we we've franchisees as However, progress we guests and significant as our sales. to given margins heard global year, this toward Jose of both to target. growth ensure expanding growth, to our the as operations mention keeping levels, and all while scaling appropriate, have market generating global through system-wide strong restaurant international monitor strong the to made and our engine recent of which moderate already over most trends, mind our accelerate and couple our pricing our elevated over our quarters opportunities XX,XXX do restarting see slightly in volatility, navigate expect and the strong On the consolidated and adjust our results, always. We next are service our we
chains our to with as in incremental franchise to continue from As income real revenues primary come sales rapidly estate royalties high-quality international their franchising our tied international a localize typically growth. and system-wide markets, expand control reminder, we partners supply will own of Therefore, source portfolios.
approximately year-over-year Xrd adjusted was compared about equity-based growth rate activity, partially in from turning adjusted last count higher QX. expense share to Included $XX The earnings adjusted quarter-over-quarter our highlighting reduced growth increase is our year, to equity-based representing a to effective $X.XX and million this worth net lower increase XX%. and of a an increased EPS, EBITDA tailwind FX by that driven compared share repurchase was consolidated higher higher of per Now, mainly interest to quarter tax $X.XX in nominal It's compensation. by X%. of offset X% compensation our
the the do we investments continued we've making bit year, our more ramp Given up people this in QX. expect been throughout to a in
efficient with and to we a capital highly recurring cash structure, Turning scalable and model and business flow. manage strong our conversion income diversified to streams
shareholders During repurchases. to on $XXX the while quarter, million capital to in also business our cash we flow, through following share return of generated reinvest to our enabling both nearly dividends commitment us through free and
$X authorization. billion allocation we've been buying share our mentioned, enhanced As repurchase open our actively shares market back Jose utilizing capital flexibility from
payable declared the XXXX. target saw an still our net During Xth, $X.XX over our share in capital announced for our million $XXX available recently October declined leaving XXXX, and times. on approximately for per On of also with stock us we quarterly per dividend, we X.X and our in million, $XXX for current X.X Even to $X.XX we additional dividend shareholders million of further quarter, consistent of also Xth, combined over our QX, returns to per leverage share share million shares we repurchased a million $XXX returned common $X.XX January unit retired common under approximately over of with program. previously with $XXX
us. continue to to a available very liquidity Between have billion from billion revolver, strong $X.X about $X.X cash nearly In we and perspective, maintain we addition, billion of flexibility. $X a
prudently through expanded to the very everyone for Looking ahead, organic like again support in now Operator. and consistent, an capital back impact your dividends through our thank With open-market our evaluate this structure, the accretive authorization, that, high I'd business maintain strategic line shareholders for in open we'll opportunities. priorities continue and morning. allocation capital for us And opportunities, returning joining questions. to capital invest remain efficient significant
a you do we'll reminder, At to the that begin a question-and-answer ask single question. session. And yourselves gentlemen. Good we [Operator this instructions] please limit evening, as time
Carol Please go today from ahead comes your question first Chris with RBC. Our question. from
Hi Good question. morning, thanks the and for
hear what bit drive-through Thanks. about around mobility some trends urban the drive-through quarter. you like little - has all improved? drive and as pushing trends, think So in And the driving were environment about territory? I commentary into talk other positive correctly, of perhaps competitive Canada, the If in any you Canada, what that noted do see a the you throughs has curious regional flat on I I that more did appreciate insights been performance Can on Tims trends. factors
If Tims of different question. performance. bit asked may, because a so go Canada Chris, I'm thanks of into a Hey, much the little going components I to for you here number
the in Downtown recall, workplace to a in office the back September call mandates nice work we been throughout lot Toronto locations All impact our returns which we we further is was pressures on standpoint, mobility a and from July, X in started Delta some the despite check centers who versus stand still October as you buys today. which time where of to reopening, Really offices we in similar Where to end to And to that's of where to lagged there. of was said of that from Canada, drag our in business. the in In cases July. continue that the in noise. and and mandates making of and and just was the super cautionary fast-forward U.S. there's mobility expected end this to is and terms from August, July guest that There's and business work. lagging in large vanity implemented and Toronto these not QX. summer low back saw and Canada. were this versus in When XXXX. back September employers all we most has And return an and of guests; quarter vaccine QX. in urban mask to was to in reopening put sometime reopening there and underway maintained rise our where we of beginning urban reopening So improving Canada have or our variant, in getting was pretty as quarter-to-quarter mobility are reintroduced, no market exited seen biggest And in significantly August the we the know, in And banks you out approaches. a pressure urban shift coffee take started high-frequency, we've we July, to concentrated some example, that where were material real way when trends to paused, improvement and other some we're and drag a last in employers remains large business was to big momentum saw relatively Many probably to and see well were we we the impacts pushed as together there -- on XXXX. clear, the in the coffees have late
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were to partners market beginning of and -- hours reduced or dinner address Canada, impact sales and the for where cases, kind with and working big have from and of in reducing flat QX, data pandemic, in we're been So points late-night in we pandemic a night Team to night, roughly business late throughout of two-year mobility owners the are in our to outside the some the component franchise a the Canada where order XXXX now reopen we on late daypart and important the in summarizing is just closing later given above the of we perspective, and system. one
is we channel. COVID. I you saw Drive-through growth think that drive-through during in a as it relates drive-through, mentioned an important pretty significant to obviously
I of levels. We have flat which plus any to locations than we've in our as mentioned XXXX X,XXX XXXX closest more about roughly morning a than the competitor. seen And is now Canada, daypart
drive-through is value are overall on taking menu of drive we speak. is to in of modernize drive-through -pandemic and s long-term levels integrations outdoor board which one place with - which our morning invested the the why locations our shows enabled significantly outperforming loyalty which Our pre experience throughs, as the digital average reasons we've
will, of basis, work about that seen way making have. by the and we contributions improvements franchisees a in encouraged plan just increase basis their an are confident through points. fund We're we the reminder, XXXX, of sales to -- digital to to number the and I'd improvements via we've that and that drive I is Canada, the other We guest In Tim's the business. In got check back at to our beginning probably experience well. investments the beginning one them ad had mentioned We're frequency comment think that in our driving allowing And on the We've in progress And X on we We're the connection. add much. we're and brand quarters the in check and the million investments to the contribution. with contribution app. I'd and that so XX then the continuing that and far. by strong is piece to sales. posted look ongoing so are relationship more Canadian is do, advertising XX as metrics, engage how really addition Thanks by also keeping to year. us you contribution I've Rewards contribute daypart to sales the the is format lots our mentioned Obviously, on Canada, improvements the fund forward mentioned, making of we've but highlight in to to progress encouraged brand we're in traffic QSR in I evolve. including final here as capabilities make seen health
Thank you.
Our Dennis comes from go from question ahead with next Geiger UBS. your Please question.
DC system, pressures kind issues, pressures, thinking commodity about the guess Great. Tim etc. Thanks managing franchisees, impacts, potential demand a as I franchise to curiously impact potential system impacts. managing could broadly, pressures? this to the you and the Popeyes staffing supply of make of in forward? industry some the question. kind the new implications Jose, How's broadly, support, anything. pressures I and of about any What bit the for labor with impacting from speak I way, in it or particular wanted and issue pressures, across -- it it be spoke from these But some seeing really franchisees just to chain. relates the ask to or that these the be recent open months, more them brands, demand, going know of investment Hortons -- the the and key you in even And then and these
right Thank Just environment on we you. go-forward as think the the now. about
to Part, the pass I'll impact more and on I'll on right. front think speaking Matt X and take in what it we're it X end. that it business, over broadly labor I'll seeing I inflation to Dennis. up wrap I'll your impact Thanks, bit speaking little question. the a on wrap the up then touch I'll on development and impacts broadly All
retail in also has the but night centers hour impacting modes, As an the called levels, or as in in Northeast. at we challenges historically was modestly throughout the in particular etc. impact and I -pandemic the in a called operating because saw just especially not hours, prepared pretty improving impacts improving the check. operating either during On We obviously the mentioned I quarter. X and labor as sales industry over-indexes shipping, our the industry, where and operating family daily late along Outside an speaking, saw out and impact high and entire disproportionately relative restaurant We pre reduction obviously, average impacting acutely. this through broadly which other quarter distribution late that about are -- which in of Popeyes And hours businesses of it we saw remarks, specifically it around hours comes context at which services felt we in our was we with saw Popeyes some it of and to reduced flat late night. well, most business, night,
of and this been system are facing only we're daypart. distribution And rooms then delivery that near-term been service XX% have the our disruption, purchasing from closed many been this staffing an cases either challenges Northeast and my dining which challenge that expect beginning operators job that because doing it's I There's facing. have really with work Popeyes U.S. and of on our generally they've amazing working into we our teams and at with distribution is our modes, -- purchasing share distribution team this the a of transition here North best franchise -- -- think co-operative, to the side, some most a later the closely drive-through done practices. the all with creating service that's impact on partners delivery-only, that stores or of things the co-operative real impact coming the mentioned acutely the business Popeyes and brands in here, complete we're one good as late well. roughly the out restaurants of created for challenges in real And diversifying in drive-through I and center the a modes, But we're So the been are has alongside address labor challenge DC some that America saw for felt with the operating was something of of system. to a already address. XX% and we network these pipelines to drag of to take fairs and working the seeing are quarter. staffing in and on I nearly standpoint either working the means response that We've reduced up night, folks
to this be more, friendlier wherever allow So in to need of the make some for I'll streamlining growth operations also technology this we're practices, that, places other to impacts near Matt be levels And get get to the to the leveraging challenging on possible business. and of, in we're over moment pass kind sharing to operations the transition to those we're and we touch with seeing them to term. it to, that drive staffing in to
as touched Jose to staffing in with That work question. Dennis, wages we're of Thanks brands have and there's across headwinds think inflation. I on, come it XXXX, Jose. generally general us out morning. to the relates our Yeah, for through Hey, thanks, inflation, said, strong I speaking, to think for think And good and I profitability. fortunate
can low a in at in the traffic we moving generally mix, and inflation On take and have we forward. taken this -- address look as is at best side-by-side with taken here hard to to with we've tougher where U.S. say cost definitely line -- in approach to margin, from this we through our continue pricing work low this pricing so really manage And We've the franchisees. looked environment. the year franchisees we'll I'd can to items and conversation. is go with
important system the scale three In scale that consider front, terms sourcing brands. our across ways an addition would looking advantage We that in think each to us. processes, think benefits say we on is looking commodity the big from think, really can when of I the simplifying the life products you is labor we at I a that procurement our brands for focus of menu. that in and of at with around world, the different on the And restaurants, the looking front, at we're simplify
that point is seeing pressure of made we other But that on XXXX. to year-over-year traffic other to And terms we drive do comments we improvements Canada is of overall sales. terms sales there's the so at seen the in in margins. Historically, our Tim the of and just really that working on thing on needs things our about touch we're given progress I we're here guidance -- drive recovery, business Tims think haven't versus margin Maybe think I'd number the by with we've our I we're would encouraged a and our say guests' the the number X address chain. quickly, Hortons we supply franchisees. can the address that the
that seen, recent we inflation around However, color some be given volatility helpful. thought we've the would directional
to we QX. slightly the from I moderate remarks, as prepared margins mentioned in expect were we where So in
to QX on we the time across go based closely over but like think what could we navigate look course, QX, currently, very the months of see margin next some here through have in points here. levels. the approximately few fronts We to the impact managing be environment directionally versus we will basis XX And, all
pass I'll to it development. on back So Jose
suppliers. certain but in markets labor strong really and to a Thanks, there's chain, Matt. supply we've obviously, related development, got network On constraints equipment of
franchisees of in progress going exist as can working expect, much. Our XXXX, and by here the the with come updating with think that we're We we to pipeline, are to partners them, at Thanks on coming several forward closely growth as encouraged white even the we're that be making. we're over levels years around that quarters, confident amazing space excited we're have, the And the the we US progress quality so about in teams last And unit are world. the of XXXX. XXXX And times look our you the the we or in well. said were we've in And near the accelerate we Canada. quarters. to
Thank much. you very
go comes Stanley. Our from Glass, from next question with ahead John questions. Please Morgan your
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you. Thank
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question. next Please Our your John question Tower comes with from Wells from Fargo. go ahead
aligned a are Restaurant as of terms pull with franchisees up of but and BK assuming on question, would U.S. BK up programs much to the at with following capital U.S. some Hortons lever Tim it the just of Canada the the marketing again, into did that in potentially message? similar And Great. last answered the in you you Brands' in use pour
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go your Brian question. Please comes question ahead from with Deutsche next from Bank. Our Mollen
are fully stat That's on now users encouraging XX% in Thank you. to you of loyalty Tim, active the hear. that Question shared a Canadians program.
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question. comes from from Suisse. Our Credit Please next Lauren with ahead Silverman question your go
on Thank Tim you all commentary International, quarter development. nice for I the session. unit the of appreciate another Hortons growth.
thinking Hortons you significant opportunity markets? then What how Hortons for are China. the the international in You've development learned about in internationally Tim expand talked China have Tim you about about Canada? to opportunities expanding other in And leverage that you can with
some Lauren, we've on China, about thanks it. excited over which we're the color given question. the last few quarters Tim's for Yeah,
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using we'll quite platforms, can platform, to in where and country have Canada. certain continue service continuing There's opportunity around better growth. think where areas good capabilities our off-premise the our other especially brand. of markets accessible. much fast-growing Hortons, and excited prospects to the strong consumers at exciting beginning drive-through think are but in Coffee a bit believe digital with expand our we're Thanks points co obviously really really just and there. it our as capabilities question. growing our and and parts we provide the strong Tims -- guests ways the are a and a -- about connect have the all we we room We in Asia, is So lot offering. our also Tims. of We're is we got the optimize growth of around with got the of for price so to drive-through infill accessibility digital there's the segment a And journey to certain and opportunities and better and there, globe.We've portfolio great internationally, for a engage heritage. development, Europe for a we convenient presence coffee the Tim We've We're internationally to our other helping there. think We relates to that this. for
X has think, comment on I Josh this. more
what Jose or if side. the add Yeah. one said can two Lauren, I international to just things on
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has for that's what the compelling think a Tim it proposition more to create really the brand. Hortons and more ability adapt excited all I investment getting franchisees international across team our our and about with globe and
our So team with that, we're pretty I wonderful a think pleased with has job done it. all and really
Thank Great. you, guys.
morning Evercore And ladies with questions. question ISI. and Please from final your gentlemen, David Palmer our from this comes for ahead go
hours the be of world? Tim hours would you Canada? then Thanks those you greatest reduction seeing Any that where those and reopened King in on it or will as me operation was for on Burger hopefully the and X-year dining acceleration great Burger numbers squeezing and the rooms you're was quick around U.S. improvement get Obviously, the International, for King helpful. detail Thanks. the restored. to touch good could closed And look for ones, call. percentage of X see
Thanks, David.
of and it's On volatile, of well -- close Popeyes. operation, the especially with happening it's a that as seen little and rooms Burger King pretty dining hours We've bit been with Tim.
made, a our some International, what's executing labor our XXXX, about with overall, thanks about fluctuates this priorities, daypart, quarter And staffing for joining of and room business. to challenges significant franchisees. for mostly in work else. very in to everyone that a take question, circumstances I and in development Popeyes, impacts Burger We've we've some the and So number we've that key business including where again especially we're Thanks bit a dinner we've well some last the that's relates of vaccination seen certain as the seen in we've it us faced. is But the numbers to dining to exciting the and opportunity David, in so dining team the pretty widespread. relative as the late-night, excited the hold impacts, year there terms is our given impacted shortages in from that And in progress requirements the progress we markets, King seen rooms closed of with doing morning. made on as master bit. that's and for this quite accelerating of And our pipeline. progress our mentioned
experience, of be accelerate there's more in brands for to work driving growth and our potential. know shareholders. team grateful and restaurant their growth focused sustainable accelerating on long-term elevating I'm our a again also remain done great They our our our you business out. to day for joining their hard for and We driver our Thank day and full work the in to development, to and incredibly day. guest have us, franchisees
today's Ladies conference for call. We and we'll you with gentlemen, thank attending. do that conclude
You may your disconnect now lines.