Restaurant Brands International (QSR) Q3 2024 earnings summary

Executive summary

• Q3 2024 delivered stable results amid challenging macro and competitive environments, with International and Tim Hortons segments driving nearly 70% of adjusted operating income.

• System-wide sales grew 3.2% year-over-year, with global comparable sales up 0.3% and net restaurant growth of 3.8%.

• Adjusted Operating Income for Q3 2024 was $652 million, up 6.1% organically, reflecting growth across all segments and the inclusion of Restaurant Holdings.

• Acquisitions of Carrols Restaurant Group and Popeyes China led to the creation of a new Restaurant Holdings segment, impacting consolidated results from their acquisition dates.

• Net income for Q3 2024 was $357 million, down from $364 million in Q3 2023, primarily due to higher expenses.

Financial highlights

• Q3 2024 total revenues were $2.29 billion, up 25% from $1.84 billion in Q3 2023, driven by acquisitions and higher company restaurant sales.

• Adjusted EPS was $0.93 per share, up from $0.90 last year, with a 4.6% organic increase, excluding FX and Restaurant Holdings impacts.

• Free cash flow for the nine months ended September 30, 2024, was $898 million, up from $847 million in the prior year period.

• Ended Q3 with $2.4 billion in liquidity, $1.2 billion in cash, and a net leverage ratio of 4.8x.

• Gross margin for Q3 2024 was approximately 25%.

Outlook and guidance

• Full-year 2024 system-wide sales growth expected in the 5%-5.5% range, slightly below prior expectations due to softer Q3 sales and net restaurant growth.

• Confident in achieving over 8% organic AOI growth for 2024, supported by improved October results and cost discipline.

• Long-term guidance (2024–2028): 3%+ comparable sales, 5%+ net restaurant growth, 8%+ system-wide sales growth, and AOI growth at least as fast as system-wide sales.

• Segment G&A (excluding Restaurant Holdings) for 2024 is now expected between $640 million and $650 million.

• Management expects to invest $500 million for Carrols-acquired restaurant remodels and $300 million for the Royal Reset program through 2028.