Mr. Josh Kobza reports

RESTAURANT BRANDS INTERNATIONAL INC. REPORTS FIRST QUARTER 2023 RESULTS

Restaurant Brands International Inc. has released its financial results for the first quarter ended March 31, 2023. Josh Kobza, chief executive officer of Restaurant Brands commented: "Our teams delivered a solid start to the year, with double-digit comparable sales and system-wide sales growth. Top-line sales momentum translated into bottom-line growth for our franchisees and our company. I am confident in our plans for future growth and would like to thank our teams who are focused on improving operations and delivering a great guest experience every day at our restaurants."

First quarter 2023 highlights:

• Consolidated comparable sales increased 10.3 per cent and net restaurants grew 4.2 per cent versus the prior year;
• System-wide sales increased 14.7 per cent year-over-year;
• Net income of $277-million versus $270-million in prior year;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $588-million increased 15.6 per cent organically versus the prior year;
• Diluted EPS (earnings per share) was 61 cents versus 59 cents in prior year;
• Adjusted diluted EPS of 75 cents increased 22.1 per cent organically versus the prior year.

The company has four operating segments: Tim Hortons (TH), Burger King (BK), Popeyes Louisiana Kitchen (PLK) and Firehouse Subs (FHS). The company's financial results and operational highlights are disclosed based on these segments each quarter.

The year-over-year increases in total revenues on an as-reported and on an organic basis were primarily driven by increases in system-wide sales in all of the company's segments. On an as-reported basis, the increase was partially offset by unfavourable FX (foreign exchange) movements.

The year-over-year increase in net income was primarily driven by increases in segment income in all of the company's segments, a decrease in income tax expense and a favourable change from the impact of equity method investments. These factors were partially offset by unfavourable FX movements, an unfavourable change from other operating expenses (income), net, an increase in share-based compensation and non-cash incentive compensation expense, an increase in FHS transaction costs, and an increase in interest expense, net.

The year-over-year increase in adjusted EBITDA on an as-reported basis was largely driven by increases in BK, TH and PLK adjusted EBITDA, partially offset by unfavourable FX movements which primarily impacted TH and BK adjusted EBITDA.

The year-over-year increase in adjusted EBITDA on an organic basis was primarily driven by increases in BK, TH and PLK adjusted EBITDA.

The year-over-year increase in adjusted net income was primarily driven by increases in adjusted EBITDA in the company's TH, BK and PLK brands, and a decrease in adjusted income tax expense, partially offset by unfavourable FX movements, an increase in adjusted interest expense, and an increase in share-based compensation and non-cash incentive compensation expense.

Burger King U.S. Reclaim the Flame

In September, 2022, Burger King shared the details of its "Reclaim the Flame" plan to accelerate sales growth and drive franchisee profitability. The company will be investing $400-million over the life of the plan, composed 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 quarter ended March 31, 2023, the company financed approximately $7-million toward the Fuel the Flame investment and $7-million toward the Royal Reset investment. As of March 31, 2023, the company has financed a total of $20-million toward the Fuel the Flame investment and $25-million toward the Royal Reset investment.

Macroeconomic environment

During 2022 and the first quarter of 2023, there were increases in commodity, labour and energy costs, partially due to the macroeconomic impact of both the war in Ukraine and COVID-19. Further significant increases in inflation could affect the global, Canadian and U.S. economies, resulting in foreign exchange volatility and rising interest rates, which could have an adverse impact on the company's business and results of operations if the company and its 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 the company's restaurant operations during the three months ended March 31, 2022. Certain markets, including Canada and China, were significantly impacted as a result of government-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.

TH segment results

For the first quarter of 2023, the increase in system-wide sales was primarily driven by comparable sales of 13.8 per cent, including Canada comparable sales of 15.5 per cent, and net restaurant growth of 5.6 per cent.

The year-over-year increases in total revenues on an as-reported and on an organic basis were primarily driven by an increase in system-wide sales, as well as increases in commodity prices passed on to franchisees and an increase in sales to retailers. The increase in total revenues on an as-reported basis was partially offset by unfavourable FX movements.

The year-over-year increases in adjusted EBITDA on an as-reported and on an organic basis were primarily driven by the increase in system-wide sales and by advertising expenses exceeding advertising revenues in the current-year period to a lesser extent than in the prior-year period, partially offset by an increase in cost of sales, including the impact of increases in commodity prices. The increase in adjusted EBITDA on an as-reported basis was partially offset by unfavourable FX movements.

BK segment results

For the first quarter of 2023, the increase in system-wide sales was driven by comparable sales of 10.8 per cent, including U.S. comparable sales of 8.7 per cent and rest-of-the-world comparable sales of 12.3 per cent, and net restaurant growth of 2.5 per cent.

The year-over-year increases in total revenues on an as-reported and on an organic basis were primarily driven by the increase in system-wide sales as well as an increase in sales from company restaurants. The increase in total revenues on an as-reported basis was partially offset by unfavourable FX movements.

The year-over-year changes in adjusted EBITDA on an as-reported and on an organic basis were primarily driven by the increase in system-wide sales and a decrease in bad debt expenses as compared with the prior year. This was partially offset by advertising expenses exceeding advertising revenues in the current year to a greater extent than the prior year, due to the Fuel the Flame investment, and higher segment G&A (general and administrative expenses), largely as a result of hiring across a number of key areas, including operations and franchising. The increase in adjusted EBITDA on an as-reported basis was partially offset by unfavourable FX movements.

PLK segment results

For the first quarter of 2023, the increase in system-wide sales was driven by net restaurant growth of 10.8 per cent and comparable sales of 5.6 per cent, including U.S. comparable sales of 3.4 per cent.

The year-over-year increases in total revenues on an as-reported and on an organic basis were primarily driven by the increase in system-wide sales, including an increase in sales from company restaurants. The increase in total revenues on an as-reported basis was partially offset by unfavourable FX movements.

The year-over-year increases in adjusted EBITDA on an as-reported and on an organic basis were primarily driven by the increase in system-wide sales, partially offset by an increase in cost of sales. The increase in adjusted EBITDA on an as-reported basis was partially offset by unfavourable FX movements.

FHS segment results

For the first quarter of 2023, the increase in system-wide sales was driven by comparable sales of 6.1 per cent, including U.S. comparable sales of 6.7 per cent, and net restaurant growth of 2.3 per cent.

The year-over-year increases in total revenues and adjusted EBITDA were primarily driven by the increase in system-wide sales. In addition, increases in advertising revenues and other services, and advertising expenses and other services reflect the company's continuing process to align the advertising fund arrangements to be more consistent with those of its other brands.

Cash and liquidity

As of March 31, 2023, total debt was $13.4-billion, net debt (total debt less cash and cash equivalents of $1-billion) was $12.3-billion, net income net leverage was 8.3 times and adjusted EBITDA net leverage was 5.1 times.

The Restaurant Brands board of directors has declared a dividend of 55 cents per common share and partnership exchangeable unit of Restaurant Brands International LP for the second quarter of 2023. The dividend will be payable on July 6, 2023, to shareholders and unitholders of record at the close of business on June 22, 2023.

Investor conference call

The company will host an investor conference call and webcast at 8:30 a.m. ET on Tuesday, May 2, 2023, to review financial results for the first quarter ended March 31, 2023. The earnings call will be broadcast live through the company's investor relations website and a replay will be available for 30 days following the release. The dial-in number is 1-833-470-1428 for U.S. callers, 1-226-828-7575 for Canadian callers and 1-929-526-1599 for callers from other countries. For all dial-in numbers, please use the following access code: 623742.

About Restaurant Brands International Inc.

Restaurant Brands International is one of the world's largest quick-service restaurant companies with over $35-billion in annual system-wide sales and approximately 30,000 restaurants in more than 100 countries. Restaurant Brands owns four of the world's most prominent and iconic quick service restaurant brands -- Tim Hortons, Burger King, Popeyes and Firehouse Subs. These independently operated brands have been serving their respective guests, franchisees and communities for decades. Through its Restaurant Brands for Good framework, Restaurant Brands is improving sustainable outcomes related to its food, the planet, and people and communities.

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