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RESTAURANT BRANDS INTERNATIONAL INC.

(QSR)
  Report
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RESTAURANT BRANDS INTERNATIONAL INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

05/03/2022 | 04:08pm EST

You should read the following discussion together with our unaudited condensed consolidated financial statements and the related notes thereto included in Part I, Item 1 "Financial Statements" of this report.


The following discussion includes information regarding future financial
performance and plans, targets, aspirations, expectations, and objectives of
management, which constitute forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 and forward-looking
information within the meaning of Canadian securities laws as described in
further detail under "Special Note Regarding Forward-Looking Statements" set
forth below. Actual results may differ materially from the results discussed in
the forward-looking statements. Please refer to the risks and further discussion
in the "Special Note Regarding Forward-Looking Statements" below.

We prepare our financial statements in accordance with accounting principles
generally accepted in the United States ("U.S. GAAP" or "GAAP"). However, this
Management's Discussion and Analysis of Financial Condition and Results of
Operations also contains certain non-GAAP financial measures to assist readers
in understanding our performance. Non-GAAP financial measures either exclude or
include amounts that are not reflected in the most directly comparable measure
calculated and presented in accordance with GAAP. Where non-GAAP financial
measures are used, we have provided the most directly comparable measures
calculated and presented in accordance with U.S. GAAP, a reconciliation to GAAP
measures and a discussion of the reasons why management believes this
information is useful to it and may be useful to investors.

Operating results for any one quarter are not necessarily indicative of results
to be expected for any other quarter or for the fiscal year and our key business
measures, as discussed below, may decrease for any future period. Unless the
context otherwise requires, all references in this section to "RBI", the
"Company", "we", "us" or "our" are to Restaurant Brands International Inc. and
its subsidiaries, collectively.

Overview


We are one of the world's largest quick service restaurant ("QSR") companies
with over $35 billion in annual system-wide sales and over 29,000 restaurants in
more than 100 countries as of March 31, 2022. Our Tim Hortons®, Burger King®,
Popeyes®, and Firehouse Subs® brands have similar franchised business models
with complementary daypart mixes and product platforms. Our four iconic brands
are managed independently while benefiting from global scale and sharing of best
practices.

Tim Hortons restaurants are quick service restaurants with a menu that includes
premium blend coffee, tea, espresso-based hot and cold specialty drinks, fresh
baked goods, including donuts, Timbits®, bagels, muffins, cookies and pastries,
grilled paninis, classic sandwiches, wraps, soups, and more. Burger King
restaurants are quick service restaurants that feature flame-grilled hamburgers,
chicken, and other specialty sandwiches, french fries, soft drinks, and other
affordably-priced food items. Popeyes restaurants are quick service restaurants
featuring a unique "Louisiana" style menu that includes fried chicken, fried
shrimp, and other seafood, red beans and rice, and other regional items.
Firehouse Subs restaurants are quick service restaurants featuring hot and
hearty subs piled high with quality meats and cheese as well as chopped salads,
chili and soups, signature and other sides, soft drinks and local specialties.

Commencing upon the acquisition of Firehouse Subs in December 2021, we have four
operating and reportable segments: (1) Tim Hortons ("TH"); (2) Burger King
("BK"); (3) Popeyes Louisiana Kitchen ("PLK"); and (4) Firehouse Subs ("FHS").
Our business generates revenue from the following sources: (i) franchise and
advertising revenues and other services, consisting primarily of royalties and
advertising fund contributions based on a percentage of sales reported by
franchise restaurants and franchise fees paid by franchisees; (ii) property
revenues from properties we lease or sublease to franchisees; and (iii) sales at
restaurants owned by us ("Company restaurants"). In addition, our TH business
generates revenue from sales to franchisees related to our supply chain
operations, including manufacturing, procurement, warehousing, and distribution,
as well as sales to retailers.

In September 2021, we announced targets to reduce greenhouse gas emissions by
50% by 2030, as approved by the Science Based Targets initiative, as well as a
commitment to achieving net-zero emissions by 2050. While most of the impact is
from scope 3 emissions that are not under our direct control, reaching these
targets will require us to devote resources to support changes by suppliers and
franchisees.


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COVID-19


The global crisis resulting from the spread of coronavirus ("COVID-19") impacted
our global restaurant operations for the three months ended March 31, 2022 and
2021, though in 2022 the impact was more modest than in the prior year.

During the three months ended March 31, 2022 and 2021, substantially all
restaurants remained open, some with limited operations, such as drive-thru,
takeout and delivery (where applicable), reduced, if any, dine-in capacity,
and/or restrictions on hours of operation. Certain markets periodically required
temporary closures while implementing government mandated lockdown orders. For
example, while most regions have eased restrictions, increases in cases and new
variants at the beginning of 2022 caused certain markets to re-impose temporary
restrictions as a result of government mandates. We expect local conditions to
continue to dictate limitations on restaurant operations, capacity, and hours of
operation.

During the three months ended March 31, 2022, COVID-19 contributed to labor challenges, which in some regions resulted in reduced operating hours and service modes at select restaurants as well as supply chain pressures.


With the pandemic affecting consumer behavior, the importance of digital sales,
including delivery, has grown. We expect to continue to support enhancements of
our digital and marketing capabilities.

War in Ukraine


Burger King entered Russia ten years ago through a joint venture, of which we
own a 15% minority stake that we've recently announced intentions to dispose.
Burger King is our only brand with restaurants in Russia, and in 2021,
represented 2.0% of consolidated system-wide sales, 2.9% of consolidated
restaurant count excluding Firehouse Subs, 4.5% of consolidated net restaurant
growth, 0.6% of consolidated revenues, and 1.7% of consolidated Adjusted EBITDA.
During the first quarter of 2022, we shared a number of actions that we have
taken to date as a result of the tragic events related to Russia's military
invasion of Ukraine. We have suspended all corporate support for the Russian
market, including operations, marketing, and supply chain support in addition to
refusing approvals for new investment and expansion. While we currently include
Russia within reported key business metrics, we do not expect to recognize any
profits in 2022.

Operating Metrics

We evaluate our restaurants and assess our business based on the following operating metrics:

•System-wide sales growth refers to the percentage change in sales at all franchise restaurants and Company restaurants (referred to as system-wide sales) in one period from the same period in the prior year.


•Comparable sales refers to the percentage change in restaurant sales in one
period from the same prior year period for restaurants that have been open for
13 months or longer for TH, BK and FHS and 17 months or longer for PLK.
Additionally, if a restaurant is closed for a significant portion of a month,
the restaurant is excluded from the monthly comparable sales calculation.

•System-wide sales growth and comparable sales are measured on a constant
currency basis, which means the results exclude the effect of foreign currency
translation ("FX Impact"). For system-wide sales growth and comparable sales, we
calculate the FX Impact by translating prior year results at current year
monthly average exchange rates.

•Unless otherwise stated, system-wide sales growth, system-wide sales and
comparable sales are presented on a system-wide basis, which means they include
franchise restaurants and Company restaurants. System-wide results are driven by
our franchise restaurants, as approximately 100% of system-wide restaurants are
franchised. Franchise sales represent sales at all franchise restaurants and are
revenues to our franchisees. We do not record franchise sales as revenues;
however, our royalty revenues and advertising fund contributions are calculated
based on a percentage of franchise sales.

•Net restaurant growth refers to the net increase in restaurant count (openings,
net of permanent closures) over a trailing twelve month period, divided by the
restaurant count at the beginning of the trailing twelve month period.

These metrics are important indicators of the overall direction of our business, including trends in sales and the effectiveness of each brand's marketing, operations and growth initiatives.

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Results of Operations for the Three Months Ended March 31, 2022 and 2021

Tabular amounts in millions of U.S. dollars unless noted otherwise. Segment income may not calculate exactly due to rounding.

                                                                                                                                                Variance
                                                                              Three Months Ended                           FX Impact          Excluding FX
Consolidated                                                                       March 31,              Variance            (a)                Impact
                                                                     2022      2021               Favorable / (Unfavorable)
Revenues:
Sales                                                                                   $  609          $     507          $   102          $            -          $ 102
Franchise and property revenues                                                            615                548               67                      (8)            75
Advertising revenues and other services                                                    227                205               22                       -             22
Total revenues                                                                           1,451              1,260              191                      (8)           199
Operating costs and expenses:
Cost of sales                                                                              494                401              (93)                      -            (93)
Franchise and property expenses                                                            130                116              (14)                      -            (14)
Advertising expenses and other services                                                    247                237              (10)                      -            (10)
General and administrative expenses                                                        133                104              (29)                      1            (30)
(Income) loss from equity method investments                                                13                  2              (11)                      -            (11)
Other operating expenses (income), net                                                     (16)               (42)             (26)                     (3)           (23)
Total operating costs and expenses                                                       1,001                818             (183)                     (2)          (181)
Income from operations                                                                     450                442                8                     (10)            18
Interest expense, net                                                                      127                124               (3)                      -             (3)

Income before income taxes                                                                 323                318                5                     (10)            15
Income tax expense                                                                          53                 47               (6)                      1             (7)
Net income                                                                              $  270          $     271          $    (1)         $           (9)         $   8


(a)We calculate the FX Impact by translating prior year results at current year
monthly average exchange rates. We analyze these results on a constant currency
basis as this helps identify underlying business trends, without distortion from
the effects of currency movements.


                                                                                                                                                   Variance
                                                                             Three Months Ended                                                  Excluding FX
TH Segment                                                                       March 31,              Variance           FX Impact (a)            Impact
                                                                    2022      2021                  Favorable / (Unfavorable)
Revenues:
Sales                                                                                  $ 566          $     473          $           93          $       -          $  93
Franchise and property revenues                                                          206                190                      16                  -             16
Advertising revenues and other services                                                   57                 47                      10                  -             10
Total revenues                                                                           829                710                     119                  -            119
Cost of sales                                                                            453                370                     (83)                 -            (83)
Franchise and property expenses                                                           81                 81                       -                  -              -
Advertising expenses and other services                                                   67                 62                      (5)                 -             (5)
Segment G&A                                                                               29                 24                      (5)                 -             (5)
Segment depreciation and amortization (b)                                                 29                 31                       2                  -              2
Segment income (c)                                                                       231                207                      24                  -             24

(b)Segment depreciation and amortization consists of depreciation and amortization included in cost of sales, franchise and property expenses and advertising expenses and other services.

(c)TH segment income includes $3 million of cash distributions received from equity method investments for the three months ended March 31, 2022 and 2021.

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                                                                                                                                                 Variance
                                                                               Three Months                                                    Excluding FX
BK Segment                                                                    Ended March 31,         Variance           FX Impact (a)            Impact
                                                                    2022      2021                 Favorable / (Unfavorable)
Revenues:
Sales                                                                                  $ 16          $     16          $            -          $       -          $    -
Franchise and property revenues                                                         318               289                      29                 (8)             37
Advertising revenues and other services                                                 109               102                       7                  -               7
Total revenues                                                                          443               407                      36                 (8)             44
Cost of sales                                                                            17                16                      (1)                 -              (1)
Franchise and property expenses                                                          45                33                     (12)                 -             (12)
Advertising expenses and other services                                                 119               118                      (1)                 -              (1)
Segment G&A                                                                              45                35                     (10)                 1             (11)
Segment depreciation and amortization (b)                                                12                12                       -                  -               -
Segment income                                                                          229               217                      12                 (7)             19



                                                                                                                                                 Variance
                                                                               Three Months                                                    Excluding FX
PLK Segment                                                                   Ended March 31,         Variance           FX Impact (a)            Impact
                                                                    2022      2021                 Favorable / (Unfavorable)
Revenues:
Sales                                                                                  $ 17          $     18          $           (1)         $       -          $  (1)
Franchise and property revenues                                                          71                69                       2                  -              2
Advertising revenues and other services                                                  60                56                       4                  -              4
Total revenues                                                                          148               143                       5                  -              5
Cost of sales                                                                            16                15                      (1)                 -             (1)
Franchise and property expenses                                                           2                 2                       -                  -              -
Advertising expenses and other services                                                  61                57                      (4)                 -             (4)
Segment G&A                                                                              15                14                      (1)                 -             (1)
Segment depreciation and amortization (b)                                                 2                 2                       -                  -              -
Segment income                                                                           56                56                       -                  -              -



FHS Segment                                Three Months Ended March 31, 2022
Revenues:
Sales                                     $                               10
Franchise and property revenues                                           

20

Advertising revenues and other services                                    1
Total revenues                                                            31
Cost of sales                                                              8
Franchise and property expenses                                            2

Segment G&A                                                                8

Segment income                                                            14


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                                                    Three Months Ended
                                                        March 31,
               Key Business Metrics                                2022          2021
               System-wide sales growth
                 TH                                                12.9  %       (4.9) %
                 BK                                                16.5  %        1.8  %
                 PLK                                                4.1  %        7.0  %
                 Consolidated (a)                                  13.7  %        1.4  %
                 FHS (b)                                            7.4  %       27.0  %
               System-wide sales
                 TH                                             $ 1,556       $ 1,379
                 BK                                             $ 5,818       $ 5,173
                 PLK                                            $ 1,383       $ 1,344
                 FHS                                            $   272       $     -
                 Consolidated (a)                               $ 9,029       $ 7,896
                 FHS (b)                                        $     -       $   254
               Comparable sales
                 TH                                                 8.4  %       (2.3) %
                 BK                                                10.3  %        0.7  %
                 PLK                                               (3.0) %        1.5  %
                 FHS (b)                                            4.2  %       24.2  %

                                                                    As of March 31,
                                                                   2022          2021
               Net restaurant growth
                 TH                                                 6.7  %        1.3  %
                 BK                                                 3.1  %       (0.8) %
                 PLK                                                7.9  %        4.8  %
                 Consolidated (a)                                   4.4  %        0.2  %
                 FHS (b)                                            1.8  %        1.7  %
               Restaurant count
                 TH                                               5,320         4,987
                 BK                                              19,266        18,691
                 PLK                                              3,771         3,495
                 FHS                                              1,219             -
                 Consolidated                                    29,576        27,173
                 FHS (b)                                              -         1,198


(a) Consolidated system-wide sales growth and consolidated net restaurant growth
do not include the results of Firehouse Subs for all of the periods presented.
Consolidated system-wide sales do not include the results of Firehouse Subs for
2021.

(b) 2021 Firehouse Subs figures are shown for informational purposes only, consistent with its fiscal calendar.

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Comparable Sales


For TH and BK, restaurant operations were less impacted by COVID-19 during the
three months ended March 31, 2022 than in the same period in 2021, resulting in
significant increases in system-wide sales growth and comparable sales during
the three months ended March 31, 2022.

TH comparable sales were 8.4% during the three months ended March 31, 2022, including Canada comparable sales of 10.1%.


BK comparable sales were 10.3% during the three months ended March 31, 2022,
including rest of the world comparable sales of 20.1% and relatively flat U.S.
comparable sales.

PLK comparable sales were (3.0)% during the three months ended March 31, 2022, including U.S. comparable sales of (4.6)%.

FHS comparable sales were 4.2% during the three months ended March 31, 2022, including U.S. comparable sales of 4.5%.

Sales and Cost of Sales

Sales include TH supply chain sales and sales from Company restaurants. TH supply chain sales represent sales of products, supplies and restaurant equipment, as well as sales to retailers. Sales from Company restaurants, including sales by our consolidated TH Restaurant VIEs, represent restaurant-level sales to our guests.


Cost of sales includes costs associated with the management of our TH supply
chain, including cost of goods, direct labor and depreciation, as well as the
cost of products sold to retailers. Cost of sales also includes food, paper and
labor costs of Company restaurants, including our consolidated TH Restaurants
VIEs.

During the three months ended March 31, 2022, the increase in sales was driven
by an increase of $93 million in our TH segment and the inclusion of FHS of $10
million, partially offset by a decrease of $1 million in our PLK segment. The
increase in our TH segment was driven by an increase in supply chain sales due
to an increase in system-wide sales as well as increases in commodity prices and
an increase in sales to retailers.

During the three months ended March 31, 2022, the increase in cost of sales was
driven by an increase of $83 million in our TH segment, the inclusion of FHS of
$8 million, an increase of $1 million in our BK segment, and an increase of $1
million in our PLK segment. The increase in our TH segment was driven by an
increase in supply chain sales as well as increases in commodity prices and an
increase in sales to retailers.

Franchise and Property


Franchise and property revenues consist primarily of royalties earned on
franchise sales, rents from real estate leased or subleased to franchisees,
franchise fees, and other revenue. Franchise and property expenses consist
primarily of depreciation of properties leased to franchisees, rental expense
associated with properties subleased to franchisees, amortization of franchise
agreements, and bad debt expense (recoveries).

During the three months ended March 31, 2022, the increase in franchise and
property revenues was driven by an increase of $37 million in our BK segment,
the inclusion of FHS of $20 million, an increase of $16 million in our TH
segment, and an increase of $2 million in our PLK segment, partially offset by
an unfavorable FX Impact of $8 million. The increases were primarily driven by
increases in royalties in our TH, BK and PLK segments, and increases in rent in
our TH segment, as a result of increases in system-wide sales.

During the three months ended March 31, 2022, the increase in franchise and
property expenses was driven by an increase of $12 million in our BK segment and
the inclusion of FHS of $2 million. The increase in our BK segment was primarily
related to bad debt expenses in the current year, primarily related to Russia,
compared to bad debt recoveries in the prior year.


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Advertising and other services


Advertising revenues and other services consist primarily of advertising
contributions earned on franchise sales and are based on a percentage of
system-wide sales and intended to fund advertising expenses. Other services
consists primarily of fees that partially offset expenses related to technology
initiatives. Advertising expenses and other services consist primarily of
expenses relating to marketing, advertising and promotion, including market
research, production, advertising costs, sales promotions, social media
campaigns, technology initiatives, depreciation and amortization and other
related support functions for the respective brands. We manage advertising
expenses to equal advertising revenues in the long term, however in some periods
there may be a mismatch in the timing of revenues and expense.

During the three months ended March 31, 2022, the increase in advertising
revenues and other services was driven by an increase of $10 million in our TH
segment, an increase of $7 million in our BK segment, an increase of $4 million
in our PLK segment, and the inclusion of FHS of $1 million. The increases in our
TH, BK and PLK segments were primarily driven by increases in system-wide sales.

During the three months ended March 31, 2022, the increase in advertising
expenses and other services was driven by an increase of $5 million in our TH
segment, an increase of $4 million in our PLK segment, and an increase of $1
million in our BK segment.

General and Administrative Expenses

Our general and administrative expenses consisted of the following:

                                                                                                                       Variance
                                                                      Three Months Ended March 31,                     $                      %
                                                                                                 2022        2021             Favorable / (Unfavorable)
Segment G&A:
TH                                                                                                         $   29          $          24          $  (5)           (20.8) %
BK                                                                                                             45                     35            (10)           (28.6) %
PLK                                                                                                            15                     14             (1)            (7.1) %
FHS                                                                                                             8                      -             (8)                 NM
Share-based compensation and non-cash incentive
compensation expense                                                                                           27                     26             (1)            (3.8) %
Depreciation and amortization                                                                                   5                      4             (1)           (25.0) %
FHS Transaction costs                                                                                           1                      -             (1)                 NM
Corporate restructuring and tax advisory fees                                                                   3                      1             (2)                 NM
General and administrative expenses                                                                        $  133          $         104          $ (29)           (27.9) %


NM - not meaningful

Segment general and administrative expenses ("Segment G&A") consist primarily of
salary and employee-related costs for non-restaurant employees, professional
fees, information technology systems, and general overhead for our corporate
offices. Segment G&A excludes share-based compensation and non-cash incentive
compensation expense, depreciation and amortization, FHS Transaction costs and
Corporate restructuring and tax advisory fees.

During the three months ended March 31, 2022, the increase in Segment G&A for
our TH, BK and PLK segments was primarily driven by higher salary and
employee-related costs for non-restaurant employees, largely a result of hiring
across a number of key areas.

In connection with the Firehouse Subs acquisition, we incurred certain non-recurring fees and expenses ("FHS Transaction costs") consisting of professional fees, compensation related expenses and integration costs. We expect to incur additional FHS Transaction costs during the remainder of 2022.


In connection with certain transformational corporate restructuring initiatives
that rationalize our structure and optimize cash movement within our structure,
including services related to significant tax reform legislation, regulations
and related restructuring initiatives, we incurred expenses primarily from
professional advisory and consulting services ("Corporate
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restructuring and tax advisory fees"). We expect to incur additional Corporate restructuring and tax advisory fees during the remainder of 2022.

(Income) Loss from Equity Method Investments

(Income) loss from equity method investments reflects our share of investee net income or loss and non-cash dilution gains or losses from changes in our ownership interests in equity method investees.

The change in (income) loss from equity method investments during the three months ended March 31, 2022 was primarily driven by an increase in equity method investment net losses that we recognized during the current year.

Other Operating Expenses (Income), net

Our other operating expenses (income), net were comprised of the following:

                                                                                Three Months
                                                                               Ended March 31,
                                                                                        2022             2021

Net losses (gains) on disposal of assets, restaurant closures, and refranchisings

                                                                       $     2          $    (2)
Litigation settlements (gains) and reserves, net                                           1                2
Net losses (gains) on foreign exchange                                                   (21)             (43)
Other, net                                                                                 2                1
   Other operating expenses (income), net                                            $   (16)         $   (42)

Net losses (gains) on disposal of assets, restaurant closures, and refranchisings represent sales of properties and other costs related to restaurant closures and refranchisings. Gains and losses recognized in the current period may reflect certain costs related to closures and refranchisings that occurred in previous periods.

Net losses (gains) on foreign exchange is primarily related to revaluation of foreign denominated assets and liabilities.

Interest Expense, net

Our interest expense, net and the weighted average interest rate on our long-term debt were as follows:

                                                                             Three Months
                                                                           Ended March 31,
                                                                                    2022             2021
Interest expense, net                                                            $   127          $   124
Weighted average interest rate on long-term debt                                     4.0  %           4.2  %


During the three months ended March 31, 2022, interest expense, net was consistent year-over-year.

Income Tax Expense


Our effective tax rate was 16.6% and 14.7% for the three months ended March 31,
2022 and 2021, respectively. Our effective tax rate was unfavorably impacted by
changes to the relative mix of our income from multiple tax jurisdictions and
lower excess tax benefits from equity-based compensation, partially offset by
favorable structural changes. There may continue to be some quarter-to-quarter
volatility of our effective tax rate as our mix of income from multiple tax
jurisdictions and related income forecasts change due to the effects of
COVID-19.

On December 28, 2021, the U.S. Treasury Department released final regulations
(T.D. 9959, published in the Federal Register on January 4, 2022) restricting
the ability to credit certain foreign taxes, applicable prospectively starting
January 1, 2022. Due to these new regulations, we released discretely this
quarter a portion of the valuation allowance on our foreign tax credit
carryforwards. Based on our current analysis, we do not expect these regulations
to have a material, ongoing impact as we anticipate being in an excess credit
position prospectively.


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Net Income


We reported net income of $270 million for the three months ended March 31,
2022, compared to net income of $271 million for the three months ended March
31, 2021. The decrease in net income is primarily due to a $26 million
unfavorable change in the results from other operating expenses (income), net, a
$12 million unfavorable change from the impact of equity method investments, a
$6 million increase in income tax expense, a $3 million increase in interest
expense, net, a $2 million increase in Corporate restructuring and tax advisory
fees, a $1 million increase in share-based compensation and non-cash incentive
compensation expense and $1 million of FHS transaction costs. These factors were
partially offset by a $24 million increase in TH segment income, the inclusion
of FHS segment income of $14 million, and a $12 million increase in BK segment
income. Amounts above include a total unfavorable FX Impact to net income of $9
million.

Non-GAAP Reconciliations

The table below contains information regarding EBITDA and Adjusted EBITDA, which
are non-GAAP measures. These non-GAAP measures do not have a standardized
meaning under U.S. GAAP and may differ from similar captioned measures of other
companies in our industry. We believe that these non-GAAP measures are useful to
investors in assessing our operating performance, as they provide them with the
same tools that management uses to evaluate our performance and is responsive to
questions we receive from both investors and analysts. By disclosing these
non-GAAP measures, we intend to provide investors with a consistent comparison
of our operating results and trends for the periods presented. EBITDA is defined
as earnings (net income or loss) before interest expense, net, loss on early
extinguishment of debt, income tax (benefit) expense, and depreciation and
amortization and is used by management to measure operating performance of the
business. Adjusted EBITDA is defined as EBITDA excluding (i) the non-cash impact
of share-based compensation and non-cash incentive compensation expense, (ii)
(income) loss from equity method investments, net of cash distributions received
from equity method investments, (iii) other operating expenses (income), net
and, (iv) income/expenses from non-recurring projects and non-operating
activities. For the periods referenced, income/expenses from non-recurring
projects and non-operating activities included (i) non-recurring fees and
expense incurred in connection with the Firehouse Acquisition consisting of
professional fees, compensation related expenses and integration costs; and (ii)
costs from professional advisory and consulting services associated with certain
transformational corporate restructuring initiatives that rationalize our
structure and optimize cash movements, including services related to significant
tax reform legislation, regulations and related restructuring initiatives.
Management believes that these types of expenses are either not related to our
underlying profitability drivers or not likely to re-occur in the foreseeable
future and the varied timing, size and nature of these projects may cause
volatility in our results unrelated to the performance of our core business that
does not reflect trends of our core operations.
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Adjusted EBITDA is used by management to measure operating performance of the
business, excluding these non-cash and other specifically identified items that
management believes are not relevant to management's assessment of our operating
performance. Adjusted EBITDA, as defined above, also represents our measure of
segment income for each of our four operating segments.

                                                                                                                      Variance
                                                                      Three Months Ended March 31,                    $                      %
                                                                                                 2022        2021            Favorable / (Unfavorable)
Segment income:
TH                                                                                                         $ 231          $         207          $  24             11.7  %
BK                                                                                                           229                    217             12              5.5  %
PLK                                                                                                           56                     56              -              0.3  %
FHS                                                                                                           14                      -             14                  NM
Adjusted EBITDA                                                                                              530                    480             50             10.4  %
Share-based compensation and non-cash incentive
compensation expense                                                                                          27                     26             (1)            (3.8) %
FHS Transaction costs                                                                                          1                      -             (1)                 NM
Corporate restructuring and tax advisory fees                                                                  3                      1             (2)                 NM
Impact of equity method investments (a)                                                                       16                      4            (12)                 NM
Other operating expenses (income), net                                                                       (16)                   (42)           (26)            61.9  %
EBITDA                                                                                                       499                    491              8              1.6  %
Depreciation and amortization                                                                                 49                     49              -                -  %
Income from operations                                                                                       450                    442              8              1.8  %
Interest expense, net                                                                                        127                    124             (3)            (2.4) %

Income tax expense                                                                                            53                     47             (6)                 NM
Net income                                                                                                 $ 270          $         271          $  (1)            (0.4) %


NM - not meaningful

(a)Represents (i) (income) loss from equity method investments and (ii) cash
distributions received from our equity method investments. Cash distributions
received from our equity method investments are included in segment income.

The increase in Adjusted EBITDA for three months ended March 31, 2022 reflects
the increases in segment income in our TH and BK segments, the inclusion of FHS
and an unfavorable FX Impact of $7 million.

The increase in EBITDA for the three months ended March 31, 2022 is primarily
due to increases in segment income in our TH and BK segments and the inclusion
of FHS, partially offset by an unfavorable change from other operating expenses
(income) net, and an unfavorable change from the impact of equity method
investments. The increase in EBITDA includes an unfavorable FX Impact of $10
million.

Liquidity and Capital Resources


Our primary sources of liquidity are cash on hand, cash generated by operations
and borrowings available under our Revolving Credit Facility (as defined below).
We have used, and may in the future use, our liquidity to make required interest
and/or principal payments, to repurchase our common shares, to repurchase
Class B exchangeable limited partnership units of Partnership ("Partnership
exchangeable units"), to voluntarily prepay and repurchase our or one of our
affiliate's outstanding debt, to fund acquisitions such as the Firehouse
Acquisition and other investing activities, such as capital expenditures and
joint ventures, and to pay dividends on our common shares and make distributions
on the Partnership exchangeable units. As a result of our borrowings, we are
highly leveraged. Our liquidity requirements are significant, primarily due to
debt service requirements.
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As of March 31, 2022, we had cash and cash equivalents of $895 million and
borrowing availability of $998 million under our senior secured revolving credit
facility (the "Revolving Credit Facility"). Based on our current level of
operations and available cash, we believe our cash flow from operations,
combined with our availability under our Revolving Credit Facility, will provide
sufficient liquidity to fund our current obligations, debt service requirements
and capital spending over the next twelve months.

On July 28, 2021, our board of directors approved a share repurchase
authorization that allows us to purchase up to $1,000 million of our common
shares until August 10, 2023. On August 6, 2021, we announced that the Toronto
Stock Exchange (the "TSX") had accepted the notice of our intention to renew the
normal course issuer bid. Under this normal course issuer bid, we are permitted
to repurchase up to 30,382,519 common shares for the 12-month period commencing
on August 10, 2021 and ending on August 9, 2022, or earlier if we complete the
repurchases prior to such date. Share repurchases under the normal course issuer
bid will be made through the facilities of the TSX, the New York Stock Exchange
(the "NYSE") and/or other exchanges and alternative Canadian or foreign trading
systems, if eligible, or by such other means as may be permitted by the TSX
and/or the NYSE under applicable law. Shareholders may obtain a copy of the
prior notice, free of charge, by contacting us. During the three months ended
March 31, 2022, we repurchased and cancelled 2,860,002 RBI common shares on the
open market for $161 million and as of March 31, 2022 had $288 million remaining
under the authorization. Repurchases under the Company's authorization will be
made in the open market or through privately negotiated transactions.

We generally provide applicable deferred taxes based on the tax liability or
withholding taxes that would be due upon repatriation of cash associated with
unremitted earnings. We will continue to monitor our plans for such cash and
related foreign earnings but our expectation is to continue to provide taxes on
unremitted earnings that we expect to distribute.

Debt Instruments and Debt Service Requirements


As of March 31, 2022, our long-term debt consists primarily of borrowings under
our Credit Facilities, amounts outstanding under our 3.875% First Lien Senior
Notes due 2028, 5.75% First Lien Senior Notes due 2025, 3.50% First Lien Senior
Notes due 2029, 4.375% Second Lien Senior Notes due 2028, 4.00% Second Lien
Senior Notes due 2030 (together, the "Senior Notes"), TH Facility, RE Facility,
and obligations under finance leases. For further information about our
long-term debt, see Note 11 to the accompanying unaudited condensed consolidated
financial statements included in this report.

As of March 31, 2022, there was $6,480 million outstanding principal amount
under our senior secured term loan facilities (the "Term Loan Facilities" and
together with the Revolving Credit Facility, the "Credit Facilities") with a
weighted average interest rate of 2.10%. The interest rate applicable to
borrowings under our Term Loan A and Revolving Credit Facility is, at our
option, either (i) a base rate, subject to a floor of 1.00%, plus an applicable
margin varying from 0.00% to 0.50%, or (ii) Adjusted Term SOFR (Adjusted Term
SOFR is calculated as Term SOFR plus a 0.10% adjustment), subject to a floor of
0.00%, plus an applicable margin varying between 0.75% to 1.50%, in each case,
determined by reference to a net first lien leverage based pricing grid. The
interest rate applicable to borrowings under our Term Loan B is, at our option,
either (i) a base rate, subject to a floor of 1.00%, plus an applicable margin
of 0.75% or (ii) a Eurocurrency rate, subject to a floor of 0.00%, plus an
applicable margin of 1.75%.

Based on the amounts outstanding under the Term Loan Facilities and LIBOR/SOFR
(Secured Overnight Financing Rate) as of March 31, 2022, subject to a floor of
0.00%, required debt service for the next twelve months is estimated to be
approximately $138 million in interest payments and $61 million in principal
payments. In addition, based on LIBOR as of March 31, 2022, net cash settlements
that we expect to pay on our $4,000 million interest rate swap are estimated to
be approximately $45 million for the next twelve months. Based on the amounts
outstanding at March 31, 2022, required debt service for the next twelve months
on all of the Senior Notes outstanding is approximately $264 million in interest
payments. Based on the amounts outstanding under the TH Facility as of March 31,
2022, required debt service for the next twelve months is estimated to be
approximately $4 million in interest payments and $9 million in principal
payments.

Restrictions and Covenants

As of March 31, 2022, we were in compliance with all applicable financial debt covenants under the Credit Facilities, the TH Facility, RE Facility and the indentures governing our Senior Notes.

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Cash Dividends

On April 6, 2022, we paid a dividend of $0.54 per common share and Partnership made a distribution in respect of each Partnership exchangeable unit in the amount of $0.54 per Partnership exchangeable unit.


Our board of directors has declared a cash dividend of $0.54 per common share,
which will be paid on July 6, 2022 to common shareholders of record on June 22,
2022. Partnership will also make a distribution in respect of each Partnership
exchangeable unit in the amount of $0.54 per Partnership exchangeable unit, and
the record date and payment date for distributions on Partnership exchangeable
units are the same as the record date and payment date set forth above.

In addition, because we are a holding company, our ability to pay cash dividends
on our common shares may be limited by restrictions under our debt agreements.
Although we do not have a formal dividend policy, our board of directors may,
subject to compliance with the covenants contained in our debt agreements and
other considerations, determine to pay dividends in the future. We expect to pay
all dividends from cash generated from our operations.

Outstanding Security Data


As of April 26, 2022, we had outstanding 308,777,102 common shares and one
special voting share. The special voting share is held by a trustee, entitling
the trustee to that number of votes on matters on which holders of common shares
are entitled to vote equal to the number of Partnership exchangeable units
outstanding. The trustee is required to cast such votes in accordance with
voting instructions provided by holders of Partnership exchangeable units. At
any shareholder meeting of the Company, holders of our common shares vote
together as a single class with the special voting share except as otherwise
provided by law. For information on our share-based compensation and our
outstanding equity awards, see Note 14 to the audited consolidated financial
statements in Part II, Item 8 of our Annual Report on Form 10-K for the year
ended December 31, 2021, filed with the SEC and Canadian securities regulatory
authorities on February 23, 2022.

There were 143,460,786 Partnership exchangeable units outstanding as of
April 26, 2022. During the three months ended March 31, 2022, Partnership
exchanged 1,525,900 Partnership exchangeable units pursuant to exchange notices
received. Since December 12, 2015, the holders of Partnership exchangeable units
have had the right to require Partnership to exchange all or any portion of such
holder's Partnership exchangeable units for our common shares at a ratio of one
share for each Partnership exchangeable unit, subject to our right as the
general partner of Partnership to determine to settle any such exchange for a
cash payment in lieu of our common shares.

Comparative Cash Flows

Operating Activities


Cash provided by operating activities was $234 million for the three months
ended March 31, 2022, compared to $266 million during the same period in the
prior year. The decrease in cash provided by operating activities was driven by
an increase in cash used for working capital, partially offset by an increase in
segment income in our TH and BK segments, the inclusion of FHS segment income
and a decrease in income tax payments.

Investing Activities


Cash provided by investing activities was $1 million for the three months ended
March 31, 2022, compared to cash used for investing activities of $7 million
during the same period in the prior year. This change was driven primarily by
proceeds from other investing activities in the current year compared to
payments from other investing activities in the prior year.

Financing Activities


Cash used for financing activities was $426 million for the three months ended
March 31, 2022, compared to $261 million during the same period in the prior
year. The change in cash used for financing activities was driven primarily by
cash used to repurchase RBI common shares in the current year.

Critical Accounting Policies and Estimates


For information regarding our Critical Accounting Policies and Estimates, see
the "Critical Accounting Policies and Estimates" section of "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" in our Annual Report on Form 10-K, filed with the U.S. Securities
and Exchange Commission (the "SEC") on February 23, 2022.


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New Accounting Pronouncements

See Note 3 - New Accounting Pronouncements in the notes to the accompanying unaudited condensed consolidated financial statements.

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