Sign in
RB

Restaurant Brands International Inc. (QSR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered revenue of $2.296B (+26.2% YoY), Adjusted Operating Income (AOI) of $578M (+13.5% YoY), Adjusted EBITDA of $688M (+14.1% YoY), and Adjusted EPS of $0.81 (+8.2% YoY), while diluted EPS was $0.79 given a tough compare to last year’s large tax benefits .
  • System-wide sales grew 5.6% in Q4; global comps were +2.5%, led by International (+4.7%) and Tim Hortons (Canada) (+2.5%) .
  • 2025 guidance introduced: Segment G&A (ex-RH) $650–$670M, RH Segment G&A ~$100M, Adjusted net interest expense $500–$520M, and consolidated capex/TIs/incentives $400–$450M; dividend declared $0.62 for Q1 2025 with a $2.48 full-year target .
  • Burger King U.S. “Reclaim the Flame” ad fund investments completed; corporate ad contribution to fall off in 2025 as BK franchisee levy steps to 4.5%, a tailwind to AOI/EPS. Management guided to 8%+ organic AOI growth for 2025 despite BK China headwinds .

What Went Well and What Went Wrong

What Went Well

  • Tim Hortons crossed $1B AOI for the year, with Q4 TH Canada comps +2.5%; CEO: “successful restaurants execute the fundamentals of quality, service and convenience with excellence.” Traffic growth in Canada remains positive and drive-thru times improved to ~28 seconds at the window .
  • International continued to be a growth engine: Q4 INTL comps +4.7%, system-wide sales +11.2%. Management highlighted strong markets (Australia, Spain, U.K., Brazil) and share gains in several geographies .
  • Burger King U.S. delivered +1.5% comps in Q4 and accelerated remodels (370 in 2024, targeting ~400 in 2025) with mid-teens year-1 sales uplift from modern image; CEO emphasized whopper innovation and value balance as 2025 levers .

What Went Wrong

  • Net income declined vs prior year due to lapping 2023 tax benefits (Q4 2023 had significant tax items); diluted EPS fell to $0.79 from $1.60 .
  • BK China pressures: Q4 included $20M net bad debt expense; termination dispute ongoing. CFO quantified potential AOI/EPS impact if unresolved ($19M AOI, ~$0.03 EPS) and expects a resolution relatively soon .
  • Popeyes U.S. comps modestly negative in Q4 (global PLK comparable sales -0.2%), reflecting category value dynamics; team pivoted to value offers ($6 big box, 3-for-$5) and launched Easy-to-Run operational upgrades to restore momentum .

Financial Results

Consolidated Results vs Prior Year and Prior Quarter

MetricQ4 2023Q3 2024Q4 2024
Total Revenues ($USD Billions)$1.820 $2.291 $2.296
Income from Operations ($USD Billions)$0.468 $0.577 $0.635
Net Income ($USD Billions)$0.726 $0.357 $0.361
Diluted EPS ($USD)$1.60 $0.79 $0.79
Adjusted Diluted EPS ($USD)$0.75 $0.93 $0.81
Adjusted EBITDA ($USD Billions)$0.603 $0.748 $0.688

Key Operating Metrics

MetricQ4 2023Q3 2024Q4 2024
System-wide Sales Growth (%)9.6% 3.2% 5.6%
System-wide Sales ($USD Billions)$10.886 $11.433 $11.279
Global Comparable Sales (%)5.8% 0.3% 2.5%
Net Restaurant Growth (%)3.9% 3.8% 3.4%
System Restaurant Count31,070 31,525 32,125

Segment Breakdown (Q4 2024 vs Q4 2023)

SegmentTotal Revenues ($USD Millions) Q4 2023Total Revenues Q4 2024AOI ($USD Millions) Q4 2023AOI Q4 2024
Tim Hortons (TH)$1,018 $1,027 $231 $266
Burger King (BK)$345 $375 $69 $78
Popeyes (PLK)$182 $201 $56 $61
Firehouse Subs (FHS)$51 $58 $8 $13
International (INTL)$224 $237 $145 $146
Restaurant Holdings (RH)N/A$445 N/A$14

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Segment G&A (excluding RH) ($USD Millions)FY 2025N/A$650–$670New
RH Segment G&A ($USD Millions)FY 2025N/A~$100New
Adjusted Interest Expense, net ($USD Millions)FY 2025N/A$500–$520New
Consolidated Capex/TIs/Incentives ($USD Millions)FY 2025N/A$400–$450New
Dividend per ShareQ1 2025N/A$0.62 (declared)New
Dividend per Share (target total)FY 2025N/A$2.48 (target)New

Notes:

  • BK U.S. ad fund levy increased to 4.5% starting 2025 and corporate ad contribution falls off, creating AOI/EPS tailwind .
  • Management reiterates long-term algorithm (2024–2028): 3%+ comps, 5%+ NRG, 8%+ system-wide sales growth, AOI growth ≥ system-wide sales growth .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Burger King ChinaQ2: PLK China acquired; BK China pressures not yet detailed . Q3: BK China master franchisee termination notice; dispute resolution initiated; NRG headwind ~100bps .$20M net bad debt in Q4; expect resolution relatively soon; modeling $19M AOI/$0.03 EPS headwind if unchanged .Ongoing but moving toward resolution; modeled impact quantified.
BK U.S. “Reclaim the Flame”Q2: Fuel funded $85M; Royal Reset investments; Royal Reset 2.0 planned . Q3: Fuel funded $93M; ad fund contributions; remodel trajectory .Fuel investments completed; franchisee levy steps to 4.5% in 2025; modern image at 51% (370 remodels in 2024), targeting ~400 in 2025 .Transition from corporate support to franchise-funded ad model; remodel pace stepping up.
Tim Hortons Supply ChainQ2: Supply chain margin guided ~19% for FY; lower inventory costs aided AOI . Q3: FY margin ~19%; Q4 expected mid-18%; drive-thru speed improving .FY 2024 supply chain margin was 19.5%; Q4 organic gross profit +$20M (CPG true-up and underlying growth) .Stronger-than-guided FY margin; operational efficiencies continuing.
Popeyes Value & OpsQ2: Solid net unit growth; comps modest; Carrols company restaurants increased . Q3: Value offers ($6 big box; 3-for-$5); comps down; digital and format initiatives ramping .Franchisee alignment to raise national ad rates to 5.0%→5.5% over 3 years; $10.5M royalty credits; Easy-to-Run rollout by 2026 with tech upgrades .Strategic realignment to value and operations; medium-term growth supports AOI.
Firehouse DevelopmentQ2/Q3: Accelerating NRG; +49 net units since Q3’23; pipeline strengthening .2024 net unit growth +6.3%; momentum expected to continue into 2025 .Sustained acceleration in development.
FX/MacroQ2/Q3: FX headwinds at TH/INTL; consumer backdrop softer .2025 FX sensitivity: ~$8M AOI per 0.01 USD/CAD; ~$4M per 0.01 USD/EUR; expected ~$45M FY headwind at current rates .FX risk quantified; planning for headwind.

Management Commentary

  • CEO (Josh Kobza): “Reflecting on 2024… our focus on delivering these fundamentals enabled us to… outperform most of our global QSR peers from both the top line and bottom line perspective.” He highlighted menu innovation, operational upgrades, and modern image as pillars across brands .
  • CFO (Sami Siddiqui): “We are on track to achieve our guidance for 8% plus organic AOI growth… [and] expect adjusted net interest expense to improve to the $500 million to $520 million range…” He outlined BK China modeling impacts and FX sensitivities .
  • Executive Chairman (Patrick Doyle): “Franchisee profitability… remains a top priority… Tims has exceeded our CAD 300,000 goal and Popeyes continues making strides toward reaching USD 300,000… Burger King U.S. was relatively stable” .

Q&A Highlights

  • Growth outlook: Management reiterated an “on-algorithm” 8%+ organic AOI growth for 2025 without quantifying same-store sales, citing balanced marketing and operational improvements to achieve targets .
  • BK China: Team expects a resolution relatively soon; will update NRG expectations after resolution .
  • Capex & remodels: 2025 capex/TIs/incentives guided to $400–$450M; BK U.S. remodels targeted at ~400 in 2025, stepping up toward 85–90% modern image by 2028 .
  • Taxes/interest: 2025 adjusted effective tax rate expected ~18–19%; adjusted net interest expense guided to $500–$520M with benefits from cross-currency swaps and refinancings .
  • Ad fund shift: BK U.S. franchisees increased levy to 4.5% for 2025–2026, removing ~$58–$60M corporate contribution tailwind to AOI/EPS .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable due to SPGI retrieval limitations at time of analysis. Values retrieved from S&P Global were not accessible; therefore, no estimate comparison is provided.*

Key Takeaways for Investors

  • Mix shift to durable bottom-line growth: Despite modest comps (+2.5%), AOI (+13.5% YoY) and Adjusted EPS (+8.2% YoY) advanced, reflecting cost discipline and segment-level operational progress .
  • BK U.S. tailwinds in 2025: Corporate ad contribution rolls off as franchisee levy steps up; remodel cadence rising, with proven mid-teens sales uplift and improved franchisee profitability—supportive of AOI/EPS growth .
  • International resilience: Broad-based growth (BK INTL +9.6% system-wide sales in Q4; PLK INTL +40.3%) continues to anchor earnings mix, though FX headwinds are non-trivial .
  • Tim Hortons execution: Strong Canadian traffic and supply chain margin outperformance (19.5% FY) underpin AOI strength; continued daypart and beverage innovation sustain momentum .
  • Popeyes strategic reset: System-wide value offers, ad rate alignment, and Easy-to-Run upgrade roadmap aim to lift comps and franchisee economics through 2026 .
  • BK China watch item: Modeled $19M AOI/~$0.03 EPS headwind if unresolved; a resolution could relieve NRG drag and estimates risk .
  • Trading setup: 2025 guidance and BK ad fund shift create visibility for AOI/EPS; FX quantified as a ~$45M headwind baseline, suggesting upside if USD weakens .
*Estimates note: S&P Global consensus data could not be retrieved due to request limits at the time of analysis; hence comparisons vs consensus are not included.

All non-GAAP references (AOI, Adjusted EBITDA/EPS) follow company definitions; see reconciliations and footnotes in the cited filings.