Restaurant Brands International, Inc. QSR reported first-quarter 2025 results with earnings and revenues missing the Zacks Consensus Estimate. However, both top and bottom lines increased on a year-over-year basis.
Following the results, shares of this quick service restaurant company declined 0.5% during yesterday’s trading session.
The company reported a slow start to the year but noted steady progress in executing its business plans. It expects improvement in the second quarter, supported by growth initiatives across brands and stable coordination with franchisees. With a focus on managing costs, the company aims to deliver stronger performance through the rest of the year.
QSR’s Q1 Earnings & Revenue Discussion
QSR reported adjusted earnings per share (EPS) of 75 cents, missing the Zacks Consensus Estimate of 78 cents. However, the bottom line grew 9.9% year over year organically. (Find the latest earnings estimates and surprises on Zacks Earnings Calendar.)
Quarterly net revenues of $2.11 billion missed the consensus mark by 2.1%. Nonetheless, the top line increased 21.3% on a year-over-year basis. This upside was driven by strong system-wide sales growth at Firehouse Subs (“FHS”) and International (“INTL”) segments.
Restaurant Brands International Inc. Price, Consensus and EPS Surprise
Restaurant Brands International Inc. Price, Consensus and EPS Surprise
Restaurant Brands International Inc. price-consensus-eps-surprise-chart | Restaurant Brands International Inc. Quote
During the quarter, consolidated comparable (comps) and net restaurant sales increased 0.1% and 3.3%, respectively, year over year. Global system-wide sales rose 2.8% year over year.
QSR Segmental Details
Restaurant Brands operates through six segments, Tim Hortons (TH), Burger King (BK), Popeyes Louisiana Kitchen (PLK), FHS, INTL and Restaurant Holdings (RH).
TH business reported revenues of $903 million, down 3.7% from the prior-year quarter’s levels. Organically, revenues were up 1.6% year over year. This downside was due to unfavorable foreign exchange. On an organic basis, the company saw a higher supply chain driven by increased CPG sales and commodity pricing. System-wide sales were flat, in contrast to the 7.8% growth reported in the prior-year quarter. Comps declined 0.1% against a 6.9% rise reported in the year-ago period.
BK’s revenues amounted to $356 million, up 1.8% from the year-ago period (up 2% organically). The increase can be attributed to higher advertising and service revenues. This was partly offset by lower franchise and property revenues due to prior-year acquisitions. System-wide sales fell 1.7% against the 2.6% growth reported in the prior-year quarter. Comps fell 1.3% against 3.8% growth in the year-earlier quarter. Net restaurant growth was down 1.1% compared with a 2.4% decline reported in the prior-year quarter.
PLK generated revenues of $194 million, up 9% year over year (9.1% organically). The upside was driven by the acquisition of company restaurants as part of the Carrols acquisition. System-wide sales fell 2.4% against the 10.4% rise reported in the prior-year quarter. Comps fell 4% year over year against the 5.7% growth. Net restaurant growth was 3% compared with 4.7% rise a year ago.
FHS’ revenues totaled $54 million, up 7.9% from the year-ago levels (8.1% organically). System-wide sales increased 7.3% compared with a 3.7% rise reported in the prior-year quarter. Net restaurant growth was 5.9% compared with 3.6% reported in the prior-year quarter. Comps inched up 0.6% year over year compared with 0.2% growth.
INTL segment revenues were $218 million, down 2.1% year over year (but up 2.3% organically). The decline was mainly due to the foreign exchange impact and the absence of BK China revenues recognized last year. However, higher royalties from Burger King and Popeyes supported the organic growth. System-wide sales growth was 8.6% compared with the 11.6% rise reported in the prior-year quarter. Comps rose 2.6% year over year compared with the 4.2% growth. Net restaurant growth was 6.2% compared with an 8.4% increase a year ago.
During the quarter, RH segment revenues were $432 million.
Operating Performance
During the quarter, adjusted operating income decreased 0.2% year over year to $539 million. Our projection for the metric was $583.4 million.
Adjusted EBITDA of $642 million was up 2.4% from $627 million reported in the prior-year quarter. Our estimate for the metric was $688.6 million.
Cash and Capital of QSR
Restaurant Brands ended first-quarter 2025 with a cash and cash equivalent balance of $899 million compared with $1.33 billion at 2024-end. As of March 31, 2025, long-term debt (net of current portion) was $13.4 billion compared with $13.5 billion as of 2024-end.
Net cash provided by operating activities in the first quarter was $118 million compared with $148 million in the year-ago period. Adjusted EBITDA net leverage ratio was 4.7 compared with 4.8 in the prior-year period.
QSR’s board of directors announced a dividend payout of 62 cents per common share and a partnership exchangeable unit of Restaurant Brands International Limited Partnership in the second quarter of 2025. The dividend is payable on July 8, 2025, to its shareholders of record at the close of business as of June 24.
QSR’s 2025 Guidance Updated
The company expects adjusted net interest expense in the band of $500-$520 million. Meanwhile, QSR now expects segment G&A (excluding RH) in the range of $600-$620 million, down from the $650-$670 million band expected earlier. It expects RH Segment G&A to be approximately $100 million in 2025.
QSR expects capital expenditures, tenant inducements and incentives (including RH) to be in the range of $400-$450 million.
QSR Maintained Long-Term Guidance (2024-2028)
The company unveiled its long-term consolidated performance expectations from 2024 to 2028. It anticipates achieving more than 3% growth in comparable sales and at least 5% net restaurant growth. QSR predicts system-wide sales growth exceeding 8%, with adjusted operating income expected to grow at a rate equal to or greater than the system-wide sales growth.
QSR’s Zacks Rank
Restaurant Brands currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
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