Restaurant Brands International, Inc. QSR reported second-quarter 2020 results, wherein earnings and revenues beat the Zacks Consensus Estimate. However, the top and the bottom line declined on a year-over-year basis.
The company’s adjusted earnings of 33 cents per share beat the Zacks Consensus Estimate of 29 cents by 13.8%. However, the bottom line fell 53.5% from the prior-year quarter’s figure of 71 cents.
Quarterly revenues of $1,048 million surpassed the consensus mark of $1,019 million by 2.8%. However, the top line declined 25.1% on a year-over-year basis, primarily due to a drop in system-wide sales at Tim Hortons and Burger King segments. This along with a decrease in supply chain sales was partially offset by an increase in system-wide sales at Popeye’s Louisiana Kitchen. Also, unfavorable foreign exchange (FX) movements added to the downside. Following the results, the company’s shares declined 4.4% during trading hours on Aug 6.
Restaurant Brands International Inc. Price, Consensus and EPS Surprise
Restaurant Brands International Inc. price-consensus-eps-surprise-chart | Restaurant Brands International Inc. Quote
Restaurant Brands operates through three segments — Tim Hortons, Burger King and Popeye’s Louisiana Kitchen.
During the second quarter, revenues at Tim Hortons totaled $567 million compared with $842 million in the prior-year quarter. System-wide sales declined 33.4% against 1.6% growth in the prior-year quarter. Comps at this segment declined 29.3% against 0.5% growth in the prior-year quarter. The decline was primarily led by a decrease in system-wide sales. It was also negatively impacted by FX movements on a reported basis. In the second quarter, net restaurant growth was recorded at 1.3% compared with 1.6% in the prior-year quarter.
Burger King’s revenues totaled $347 million in second-quarter 2020, compared with $447 million in the prior-year quarter. The decline was primarily because of decrease in system-wide sales along with negative FX movements on a GAAP basis. Also, system-wide sales declined 25.2% against 9.8% growth in the prior-year quarter. Comps in this segment also declined 13.4% against 3.6% growth in the prior-year quarter. In the second quarter, net restaurant growth was recorded at 4.2% compared with 5.8% in the prior-year quarter.
Popeye’s Louisiana Kitchen reported revenues of $134 million in the second quarter of 2020, compared with $111 million in the prior-year quarter. System-wide sales rose 24% from the prior-year quarter’s level owing to net restaurant growth of 6.7% and 24.8% rise in comps. Notably, system-wide sales grew 24% compared with the prior-year quarter’s 8.8% increase.
In the quarter under review, the company’s adjusted EBITDA declined 38.3% year over year to $358 million primarily due to lower sales at Tim Hortons and Burger King, partially offset by an increase in Popeye’s sales. Segment-wise, Tim Horton’s adjusted EBITDA declined 48.9% from the year-ago quarter’s tally. Burger King’s adjusted EBITDA decreased 36.7% year over year. However, Popeye’s adjusted EBITDA surged 23.9% from the year-ago quarter.
Cash and Capital
Restaurant Brands ended the second quarter with cash and cash equivalent balance of $1,540 million. As of Jun 30, 2020, its total debt was $12.9 billion compared with $12.2 billion as on Jun 30, 2019. The company’s board of directors announced a dividend of 52 cents per common share and partnership exchangeable unit of RBI LP for third-quarter 2020. The dividend is payable on Oct 2, to shareholders of record at the close of business as of Sep 18, 2020.
During second-quarter 2020, digital sales across brands grew over 120% year over year and more than 30% quarter over quarter.
The company reopened 4500 stores during the quarter, resulting in the operation of 93% of its restaurants globally. Nonetheless, it continues to focus on its pipeline to deliver solid net restaurant growth in 2021.
Zacks Rank & Key Picks
Restaurant Brands currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A few better-ranked stocks in the same space include Domino's Pizza, Inc. DPZ, Jack in the Box Inc. JACK and El Pollo Loco Holdings, Inc. LOCO, each carrying a Zacks Rank #2 (Buy).
Domino's has a trailing four-quarter earnings surprise of 18.6%, on average.
Jack in the Box has a three-five year earnings per share growth rate of 9.2%.
Earnings in 2021 for El Pollo Loco are expected to rise 7.9%.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.3% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Jack In The Box Inc. (JACK) : Free Stock Analysis Report
Dominos Pizza Inc (DPZ) : Free Stock Analysis Report
El Pollo Loco Holdings, Inc. (LOCO) : Free Stock Analysis Report
Restaurant Brands International Inc. (QSR) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research