UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): May 22, 2012
Commission file number: 001-32875
BURGER KING HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware | 75-3095469 | |
(State or Other Jurisdiction of Incorporation) |
(IRS Employer Identification No.) | |
5505 Blue Lagoon Drive, Miami, Florida | 33126 | |
(Address of Principal Executive Offices) | (Zip Code) |
(305) 378-3000
(Registrants Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 7.01. | Regulation FD Disclosure |
On May 22, 2012, Burger King Worldwide Holdings, Inc. (the Company), the indirect parent of Burger King Holdings, Inc., will present material non-public information regarding the Companys last five quarters on a consolidated basis and by operating segment at an analyst meeting at the Companys Miami headquarters. A copy of the information presented at the meeting is included in this Form 8-K.
We evaluate our restaurants and assess our business based on the following operating metrics and key financial measures:
| Sales growth refers to the change in sales at all Company and franchise restaurants in one period from the same period in the prior year. We review sales growth as an operating metric to help identify and assess trends in restaurant sales for the Burger King system as a whole, without distortion from the effects of refranchised or acquired restaurants. |
| Comparable sales growth refers to the change in restaurant sales in one period from the same prior year period for restaurants that have been opened for thirteen months or longer. |
| Net restaurant growth (NRG) represents the opening of new restaurants during a stated period, net of closures. |
| Net refranchisings refer to sales of Company restaurants to franchisees, net of acquisitions of franchise restaurants by us. |
| Company restaurant margin, or CRM, is derived by subtracting Company restaurant expenses from Company restaurant revenues for a stated period, and is typically analyzed as a percentage of Company restaurant revenues, a metric we refer to as Company restaurant margin %, or CRM %. Company restaurant expenses are comprised of food, paper and product costs, payroll and employee benefits (labor costs) and occupancy and other operating costs, which include rent and depreciation and amortization related to restaurant properties (occupancy and other operating costs). Food, paper and product costs vary with sales volume, while labor and occupancy costs are primarily fixed costs with variable components. We review the relationship between our Company restaurant expenses and Company restaurant revenues in the context of how those relationships affect CRM and CRM %. |
| Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization adjusted to exclude specifically identified items that management believes do not directly reflect our core operations. These items include share-based compensation and non-cash compensation expense, other operating (income) expenses, net, and all other specifically identified costs associated with non-recurring projects; Transaction costs, global restructuring and related professional fees, field optimization project costs and global portfolio realignment project costs. We use adjusted EBITDA as our measure of segment income. |
| Adjusted net income is used by management to evaluate and forecast earnings from ongoing operations excluding the impact of unusual items. This measure is used by management to evaluate and forecast earnings from ongoing operations. |
Comparable sales and sales growth are measured on a constant currency basis, which means the results exclude the effect of foreign currency translation and are calculated by translating current year results at prior year exchange rates. We analyze certain key financial measures on a constant currency basis as this helps identify underlying business trends, without distortion from the effects of currency movements (FX impact).
2
The following tables present our financial results, including operating metrics and key financial measures for the last five quarters on a consolidated basis and by operating segment: (1) the U.S. and Canada; (2) Europe, the Middle East and Africa, or EMEA; (3) Latin America and the Caribbean, or LAC; and (4) Asia Pacific, or APAC. Tabular amounts in millions of dollars unless otherwise noted.
Consolidated
BURGER KING WORLDWIDE HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended | ||||||||||||||||||||
March
31, 2012 |
December
31, 2011 |
September
30, 2011 |
June
30, 2011 |
March
31, 2011 |
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Revenues: |
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Company restaurant revenues |
$ | 396.2 | $ | 404.4 | $ | 422.8 | $ | 419.0 | $ | 392.5 | ||||||||||
Franchise and property revenues |
173.7 | 176.2 | 184.9 | 176.4 | 159.5 | |||||||||||||||
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Total revenues |
569.9 | 580.6 | 607.7 | 595.4 | 552.0 | |||||||||||||||
Company restaurant expenses: |
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Food, paper and product costs |
130.0 | 127.4 | 134.9 | 135.4 | 127.0 | |||||||||||||||
Payroll and employee benefits |
119.5 | 116.7 | 122.3 | 122.2 | 120.0 | |||||||||||||||
Occupancy and other operating costs |
104.5 | 107.2 | 113.0 | 111.6 | 109.7 | |||||||||||||||
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Total Company restaurant expenses |
354.0 | 351.3 | 370.2 | 369.2 | 356.7 | |||||||||||||||
Franchise and property expenses |
23.8 | 25.5 | 25.3 | 23.2 | 23.1 | |||||||||||||||
Selling, general and administrative expenses |
95.0 | 114.4 | 103.3 | 99.3 | 100.4 | |||||||||||||||
Other operating (income) expenses, net |
13.0 | 1.5 | (2.7 | ) | 4.7 | 7.8 | ||||||||||||||
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Total operating costs and expenses |
485.8 | 492.7 | 496.1 | 496.4 | 488.0 | |||||||||||||||
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Income from operations |
84.1 | 87.9 | 111.6 | 99.0 | 64.0 | |||||||||||||||
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Interest expense, net |
59.1 | 61.0 | 59.4 | 56.1 | 50.2 | |||||||||||||||
Loss on early extinguishment of debt |
3.5 | 1.5 | | | 19.6 | |||||||||||||||
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Income (loss) before income taxes |
21.5 | 25.4 | 52.2 | 42.9 | (5.8 | ) | ||||||||||||||
Income tax expense |
7.2 | 0.4 | 13.4 | 12.7 | 0.1 | |||||||||||||||
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Net income (loss) |
$ | 14.3 | $ | 25.0 | $ | 38.8 | $ | 30.2 | $ | (5.9 | ) | |||||||||
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Adjusted net income |
$ | 39.8 | $ | 50.3 | $ | 54.2 | $ | 46.5 | $ | 27.6 |
3
Three Months Ended | ||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
2012 | 2011 | 2011 | 2011 | 2011 | ||||||||||||||||
Company: |
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Company restaurant revenues |
$ | 396.2 | $ | 404.4 | $ | 422.8 | $ | 419.0 | $ | 392.5 | ||||||||||
CRM |
42.2 | 53.1 | 52.6 | 49.8 | 35.8 | |||||||||||||||
CRM % |
10.7 | % | 13.1 | % | 12.4 | % | 11.9 | % | 9.1 | % | ||||||||||
Company restaurant expenses as a % of Company restaurant revenue: |
||||||||||||||||||||
Food and paper |
32.8 | % | 31.5 | % | 31.9 | % | 32.3 | % | 32.4 | % | ||||||||||
Payroll and benefits |
30.2 | % | 28.9 | % | 28.9 | % | 29.2 | % | 30.6 | % | ||||||||||
Depreciation and amortization |
5.5 | % | 5.3 | % | 5.3 | % | 5.4 | % | 5.9 | % | ||||||||||
Other occupancy and operating |
20.8 | % | 21.2 | % | 21.5 | % | 21.2 | % | 22.0 | % | ||||||||||
Franchise: |
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Franchise and property revenues |
$ | 173.7 | $ | 176.2 | $ | 184.9 | $ | 176.4 | $ | 159.5 | ||||||||||
Franchise and franchise property expenses |
23.8 | 25.5 | 25.3 | 23.2 | 23.1 | |||||||||||||||
Franchise sales (in constant currencies) (1) |
3,385.5 | 3,415.2 | 3,634.0 | 3,449.0 | 3,155.1 | |||||||||||||||
Consolidated Adjusted EBITDA |
143.2 | 154.1 | 161.0 | 149.9 | 120.0 | |||||||||||||||
Consolidated Adjusted EBITDA margin |
25.1 | % | 26.5 | % | 26.5 | % | 25.2 | % | 21.7 | % | ||||||||||
Unallocated Management G&A (2) |
26.2 | 22.8 | 25.4 | 21.9 | 31.0 |
FX Impact
Three Months Ended | ||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
2012 | 2011 | 2011 | 2011 | 2011 | ||||||||||||||||
Consolidated revenues |
$ | (6.1 | ) | $ | (2.5 | ) | $ | 15.2 | $ | 19.7 | $ | 3.2 | ||||||||
Consolidated CRM |
(0.5 | ) | (0.4 | ) | 1.4 | 1.4 | 0.2 | |||||||||||||
Consolidated adjusted EBITDA |
(1.6 | ) | (0.7 | ) | 2.8 | 2.7 | (0.3 | ) |
4
Key Business Metrics
Three Months Ended | ||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
2012 | 2011 | 2011 | 2011 | 2011 | ||||||||||||||||
Systemwide sales growth |
6.5 | % | 2.2 | % | 3.6 | % | 0.4 | % | 1.5 | % | ||||||||||
Comparable sales growth |
||||||||||||||||||||
Company |
6.1 | % | 2.3 | % | 3.2 | % | (1.6 | )% | (3.6 | )% | ||||||||||
Franchise |
4.4 | % | 1.1 | % | 1.4 | % | (2.2 | )% | (2.8 | )% | ||||||||||
System |
4.6 | % | 1.2 | % | 1.6 | % | (2.2 | )% | (2.8 | )% | ||||||||||
NRG |
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Company |
(5 | ) | 1 | | (3 | ) | (2 | ) | ||||||||||||
Franchise |
27 | 116 | 59 | 38 | 52 | |||||||||||||||
System |
22 | 117 | 59 | 35 | 50 | |||||||||||||||
Net Refranchisings |
5 | 1 | 35 | 6 | 3 | |||||||||||||||
Restaurant counts at period end |
||||||||||||||||||||
Company |
1,285 | 1,295 | 1,295 | 1,330 | 1,339 | |||||||||||||||
Franchise |
11,249 | 11,217 | 11,100 | 11,006 | 10,962 | |||||||||||||||
System |
12,534 | 12,512 | 12,395 | 12,336 | 12,301 | |||||||||||||||
CRM % |
10.7 | % | 13.1 | % | 12.4 | % | 11.9 | % | 9.1 | % |
(1) | Franchise sales represent sales at all franchise restaurants and are revenues to our franchisees. We do not record franchise sales as revenues; however, our franchise revenues include royalties based on a percentage of franchise sales. |
(2) | Unallocated Management G&A includes corporate support costs in areas such as facilities, finance, human resources, information technology, legal, marketing and supply chain management, which benefit all of our geographic segments and system-wide restaurants and are not allocated specifically to any of the geographic segments. |
5
U.S. & Canada
Three Months Ended | ||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
2012 | 2011 | 2011 | 2011 | 2011 | ||||||||||||||||
Company: |
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Company restaurant revenues |
$ | 286.3 | $ | 285.1 | $ | 302.2 | $ | 302.1 | $ | 282.6 | ||||||||||
CRM |
33.8 | 38.6 | 37.6 | 38.0 | 28.1 | |||||||||||||||
CRM % |
11.8 | % | 13.5 | % | 12.4 | % | 12.6 | % | 9.9 | % | ||||||||||
Company restaurant expenses as a % of Company restaurant revenue: |
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Food and paper |
33.1 | % | 31.5 | % | 32.2 | % | 32.8 | % | 32.8 | % | ||||||||||
Payroll and benefits |
31.1 | % | 30.2 | % | 30.1 | % | 30.0 | % | 31.5 | % | ||||||||||
Depreciation and amortization |
5.6 | % | 5.6 | % | 5.6 | % | 5.6 | % | 5.9 | % | ||||||||||
Other occupancy and operating |
18.4 | % | 19.2 | % | 19.7 | % | 19.0 | % | 19.9 | % | ||||||||||
Franchise: |
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Franchise and property revenues |
$ | 100.3 | $ | 98.1 | $ | 103.8 | $ | 102.3 | $ | 92.9 | ||||||||||
Franchise and franchise property expenses |
16.5 | 19.1 | 17.5 | 16.3 | 17.0 | |||||||||||||||
Franchise sales (in constant currencies) |
1,848.3 | 1,854.4 | 1,968.8 | 1,910.6 | 1,776.7 | |||||||||||||||
Segment income |
112.9 | 112.5 | 118.9 | 115.3 | 102.8 | |||||||||||||||
Segment margin |
29.2 | % | 29.4 | % | 29.3 | % | 28.5 | % | 27.4 | % |
FX Impact
Three Months Ended | ||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
2012 | 2011 | 2011 | 2011 | 2011 | ||||||||||||||||
Favorable / (Unfavorable) | ||||||||||||||||||||
Segment revenues |
$ | (0.5 | ) | $ | (0.3 | ) | $ | 2.2 | $ | 2.5 | $ | 2.0 | ||||||||
Segment CRM |
| | 0.2 | 0.2 | 0.2 | |||||||||||||||
Segment income |
(0.1 | ) | (0.1 | ) | (0.6 | ) | (0.8 | ) | 0.2 |
Key Business Metrics
Three Months Ended | ||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
2012 | 2011 | 2011 | 2011 | 2011 | ||||||||||||||||
Favorable / (Unfavorable) | ||||||||||||||||||||
Systemwide sales growth |
3.7 | % | (2.0 | )% | (0.3 | )% | (5.5 | )% | (5.1 | )% | ||||||||||
Comparable sales growth |
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Company |
6.0 | % | 0.5 | % | 1.8 | % | (3.7 | )% | (6.0 | )% | ||||||||||
Franchise |
4.0 | % | (2.4 | )% | (0.6 | )% | (5.5 | )% | (6.0 | )% | ||||||||||
System |
4.2 | % | (2.0 | )% | (0.3 | )% | (5.3 | )% | (6.0 | )% | ||||||||||
NRG |
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Company |
(1 | ) | (2 | ) | (1 | ) | (1 | ) | (3 | ) | ||||||||||
Franchise |
(11 | ) | (21 | ) | (4 | ) | (17 | ) | (1 | ) | ||||||||||
System |
(12 | ) | (23 | ) | (5 | ) | (18 | ) | (4 | ) | ||||||||||
Net Refranchisings |
4 | 1 | 35 | 2 | | |||||||||||||||
Restaurant counts at period end |
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Company |
934 | 939 | 942 | 978 | 981 | |||||||||||||||
Franchise |
6,554 | 6,561 | 6,581 | 6,550 | 6,565 | |||||||||||||||
System |
7,488 | 7,500 | 7,523 | 7,528 | 7,546 |
6
EMEA
Three Months Ended | ||||||||||||||||||||
March 31, 2012 |
December 31, 2011 |
September 30, 2011 |
June 30, 2011 |
March 31, 2011 |
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Company: |
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Company restaurant revenues |
$ | 77.6 | $ | 86.2 | $ | 84.9 | $ | 81.6 | $ | 78.0 | ||||||||||
CRM |
6.4 | 11.9 | 10.7 | 7.7 | 5.2 | |||||||||||||||
CRM % |
8.2 | % | 13.8 | % | 12.6 | % | 9.4 | % | 6.7 | % | ||||||||||
Company restaurant expenses as a % of Company restaurant revenue: |
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Food and paper |
30.7 | % | 29.8 | % | 29.0 | % | 29.2 | % | 29.7 | % | ||||||||||
Payroll and benefits |
32.2 | % | 29.4 | % | 30.5 | % | 32.1 | % | 33.7 | % | ||||||||||
Depreciation and amortization |
3.6 | % | 3.2 | % | 3.4 | % | 3.6 | % | 3.7 | % | ||||||||||
Other occupancy and operating |
25.3 | % | 23.7 | % | 24.6 | % | 26.0 | % | 26.2 | % | ||||||||||
Franchise: |
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Franchise and property revenues |
$ | 45.7 | $ | 48.6 | $ | 53.9 | $ | 49.3 | $ | 43.1 | ||||||||||
Franchise and franchise property expenses |
6.1 | 6.3 | 6.5 | 6.3 | 6.8 | |||||||||||||||
Franchise sales (in constant currencies) |
896.0 | 920.4 | 1,008.3 | 922.7 | 797.6 | |||||||||||||||
Segment income |
32.8 | 40.3 | 43.7 | 35.3 | 26.7 | |||||||||||||||
Segment margin |
26.6 | % | 29.9 | % | 31.5 | % | 26.9 | % | 22.0 | % |
FX Impact
Three Months Ended | ||||||||||||||||||||
March 31, 2012 |
December 31, 2011 |
September 30, 2011 |
June 30, 2011 |
March 31, 2011 |
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Favorable / (Unfavorable) | ||||||||||||||||||||
Segment revenues |
$ | (4.8 | ) | $ | (1.0 | ) | $ | 10.8 | $ | 14.4 | $ | (0.8 | ) | |||||||
Segment CRM |
(0.3 | ) | (0.1 | ) | 1.0 | 0.9 | (0.1 | ) | ||||||||||||
Segment income |
(1.4 | ) | (0.3 | ) | 3.5 | 3.7 | (0.5 | ) |
Key Business Metrics
Three Months Ended | ||||||||||||||||||||
March 31, 2012 |
December 31, 2011 |
September 30, 2011 |
June 30, 2011 |
March 31, 2011 |
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Systemwide sales growth |
10.6 | % | 9.3 | % | 5.8 | % | 3.6 | % | 7.0 | % | ||||||||||
Comparable sales growth |
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Company |
7.6 | % | 7.7 | % | 6.1 | % | 4.9 | % | 4.2 | % | ||||||||||
Franchise |
6.5 | % | 7.2 | % | 4.6 | % | 3.1 | % | 1.3 | % | ||||||||||
System |
6.6 | % | 7.3 | % | 4.7 | % | 3.2 | % | 1.5 | % | ||||||||||
NRG |
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Company |
(1 | ) | | (1 | ) | (1 | ) | (2 | ) | |||||||||||
Franchise |
35 | 47 | 40 | 32 | 39 | |||||||||||||||
System |
34 | 47 | 39 | 31 | 37 | |||||||||||||||
Net Refranchisings |
1 | | | 4 | 3 | |||||||||||||||
Restaurant counts at period end |
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Company |
190 | 192 | 192 | 193 | 198 | |||||||||||||||
Franchise |
2,726 | 2,690 | 2,643 | 2,603 | 2,567 | |||||||||||||||
System |
2,916 | 2,882 | 2,835 | 2,796 | 2,765 |
7
LAC
Three Months Ended | ||||||||||||||||||||
March 31, 2012 |
December 31, 2011 |
September 30, 2011 |
June 30, 2011 |
March 31, 2011 |
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Company: |
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Company restaurant revenues |
$ | 14.7 | $ | 15.3 | $ | 17.9 | $ | 17.6 | $ | 15.4 | ||||||||||
CRM |
2.2 | 2.9 | 3.7 | 3.4 | 2.6 | |||||||||||||||
CRM % |
15.0 | % | 18.7 | % | 20.7 | % | 19.0 | % | 16.9 | % | ||||||||||
Company restaurant expenses as a % of Company restaurant revenue: |
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Food and paper |
38.1 | % | 39.2 | % | 38.5 | % | 37.5 | % | 37.0 | % | ||||||||||
Payroll and benefits |
12.9 | % | 12.4 | % | 11.7 | % | 11.9 | % | 12.3 | % | ||||||||||
Depreciation and amortization |
10.2 | % | 9.8 | % | 8.9 | % | 9.7 | % | 10.4 | % | ||||||||||
Other occupancy and operating |
23.8 | % | 19.9 | % | 20.2 | % | 21.9 | % | 23.4 | % | ||||||||||
Franchise: |
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Franchise and property revenues |
$ | 15.8 | $ | 17.5 | $ | 16.0 | $ | 14.6 | $ | 13.8 | ||||||||||
Franchise and franchise property expenses |
0.2 | (0.4 | ) | 0.6 | | (1.3 | ) | |||||||||||||
Franchise sales (in constant currencies) |
315.8 | 318.5 | 322.7 | 295.3 | 272.2 | |||||||||||||||
Segment income |
15.9 | 18.3 | 15.9 | 14.5 | 15.2 | |||||||||||||||
Segment margin |
52.1 | % | 55.8 | % | 46.9 | % | 45.0 | % | 52.1 | % |
FX Impact
Three Months Ended | ||||||||||||||||||||
March 31, 2012 |
December 31, 2011 |
September 30, 2011 |
June 30, 2011 |
March 31, 2011 |
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Favorable / (Unfavorable) | ||||||||||||||||||||
Segment revenues |
$ | (1.1 | ) | $ | (1.5 | ) | $ | 0.7 | $ | 1.1 | $ | 0.8 | ||||||||
Segment CRM |
(0.2 | ) | (0.3 | ) | 0.2 | 0.2 | 0.1 | |||||||||||||
Segment income |
(0.1 | ) | (0.2 | ) | | 0.1 | 0.1 |
Key Business Metrics
Three Months Ended | ||||||||||||||||||||
March 31, 2012 |
December 31, 2011 |
September 30, 2011 |
June 30, 2011 |
March 31, 2011 |
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Systemwide sales growth |
15.3 | % | 8.2 | % | 15.6 | % | 16.6 | % | 18.9 | % | ||||||||||
Comparable sales growth |
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Company |
3.1 | % | 4.5 | % | 12.1 | % | 4.6 | % | (4.3 | )% | ||||||||||
Franchise |
10.3 | % | 10.0 | % | 10.5 | % | 6.9 | % | 4.5 | % | ||||||||||
System |
9.9 | % | 9.7 | % | 10.5 | % | 6.8 | % | 4.0 | % | ||||||||||
NRG |
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Company |
| | | | 1 | |||||||||||||||
Franchise |
6 | 46 | 11 | 15 | 9 | |||||||||||||||
System |
6 | 46 | 11 | 15 | 10 | |||||||||||||||
Net Refranchisings |
| | | | | |||||||||||||||
Restaurant counts at period end |
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Company |
97 | 97 | 97 | 97 | 97 | |||||||||||||||
Franchise |
1,131 | 1,125 | 1,079 | 1,068 | 1,053 | |||||||||||||||
System |
1,228 | 1,222 | 1,176 | 1,165 | 1,150 |
8
APAC
Three Months Ended | ||||||||||||||||||||
March 31, 2012 |
December 31, 2011 |
September 30, 2011 |
June 30, 2011 |
March 31, 2011 |
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Company: |
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Company restaurant revenues |
$ | 17.6 | $ | 17.8 | $ | 17.8 | $ | 17.7 | $ | 16.5 | ||||||||||
CRM |
(0.2 | ) | (0.2 | ) | 0.6 | 0.8 | (0.1 | ) | ||||||||||||
CRM % |
(1.1 | )% | (1.4 | )% | 3.5 | % | 4.8 | % | (0.6 | )% | ||||||||||
Company restaurant expenses as a % of Company restaurant revenue: |
||||||||||||||||||||
Food and paper |
33.4 | % | 33.7 | % | 34.3 | % | 33.3 | % | 33.3 | % | ||||||||||
Payroll and benefits |
20.5 | % | 18.5 | % | 19.7 | % | 18.1 | % | 17.6 | % | ||||||||||
Depreciation and amortization |
7.4 | % | 6.8 | % | 5.3 | % | 6.5 | % | 10.3 | % | ||||||||||
Other occupancy and operating |
39.8 | % | 42.4 | % | 37.2 | % | 37.3 | % | 39.4 | % | ||||||||||
Franchise: |
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Franchise and property revenues |
$ | 11.9 | $ | 12.0 | $ | 11.2 | $ | 10.2 | $ | 9.7 | ||||||||||
Franchise and franchise property expenses |
1.0 | 0.5 | 0.7 | 0.6 | 0.6 | |||||||||||||||
Franchise sales (in constant currencies) |
325.4 | 321.9 | 334.2 | 320.4 | 308.6 | |||||||||||||||
Segment income |
7.8 | 5.8 | 7.9 | 6.7 | 6.3 | |||||||||||||||
Segment margin |
26.4 | % | 19.4 | % | 27.3 | % | 24.0 | % | 24.0 | % |
FX Impact
Three Months Ended | ||||||||||||||||||||
March 31, 2012 |
December 31, 2011 |
September 30, 2011 |
June 30, 2011 |
March 31, 2011 |
||||||||||||||||
Favorable / (Unfavorable) | ||||||||||||||||||||
Segment revenues |
$ | 0.3 | $ | 0.3 | $ | 1.5 | $ | 1.7 | $ | 1.2 | ||||||||||
Segment CRM |
| | | 0.1 | | |||||||||||||||
Segment income |
| (0.1 | ) | (0.1 | ) | (0.3 | ) | (0.1 | ) |
Key Business Metrics
Three Months Ended | ||||||||||||||||||||
March 31, 2012 |
December 31, 2011 |
September 30, 2011 |
June 30, 2011 |
March 31, 2011 |
||||||||||||||||
Systemwide sales growth |
5.4 | % | 4.0 | % | 14.5 | % | 19.4 | % | 16.4 | % | ||||||||||
Comparable sales growth |
||||||||||||||||||||
Company |
3.7 | % | 7.0 | % | 7.0 | % | 7.0 | % | 7.5 | % | ||||||||||
Franchise |
(3.1 | )% | (1.6 | )% | (1.8 | )% | (0.9 | )% | 1.8 | % | ||||||||||
System |
(2.8 | )% | (1.2 | )% | (1.5 | )% | (0.6 | )% | 2.0 | % | ||||||||||
NRG |
||||||||||||||||||||
Company |
(3 | ) | 3 | 2 | (1 | ) | 2 | |||||||||||||
Franchise |
(3 | ) | 44 | 12 | 8 | 5 | ||||||||||||||
System |
(6 | ) | 47 | 14 | 7 | 7 | ||||||||||||||
Net Refranchisings |
| | | | | |||||||||||||||
Restaurant counts at period end |
||||||||||||||||||||
Company |
64 | 67 | 64 | 62 | 63 | |||||||||||||||
Franchise |
838 | 841 | 797 | 785 | 777 | |||||||||||||||
System |
902 | 908 | 861 | 847 | 840 |
9
The reconciliation of segment income to net income is as follows:
Three Months Ended | ||||||||||||||||||||
March 31, 2012 |
December 31, 2011 |
September 30, 2011 |
June 30, 2011 |
March 31, 2011 |
||||||||||||||||
Segment Income: |
||||||||||||||||||||
U.S. and Canada |
$ | 112.9 | $ | 112.5 | $ | 118.9 | $ | 115.3 | $ | 102.8 | ||||||||||
EMEA |
32.8 | 40.3 | 43.7 | 35.3 | 26.7 | |||||||||||||||
LAC |
15.9 | 18.3 | 15.9 | 14.5 | 15.2 | |||||||||||||||
APAC |
7.8 | 5.8 | 7.9 | 6.7 | 6.3 | |||||||||||||||
Unallocated Management G&A |
(26.2 | ) | (22.8 | ) | (25.4 | ) | (21.9 | ) | (31.0 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
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Adjusted EBITDA |
143.2 | 154.1 | 161.0 | 149.9 | 120.0 | |||||||||||||||
Share-based compensation |
1.4 | 5.5 | 0.3 | 0.4 | 0.2 | |||||||||||||||
Transaction costs (1) |
1.1 | 1.6 | 1.0 | 0.3 | 0.8 | |||||||||||||||
Global restructuring and related professional fees (2) |
| 13.8 | 10.5 | 10.0 | 12.2 | |||||||||||||||
Global portfolio realignment project (3) |
3.7 | 7.1 | 0.5 | | | |||||||||||||||
Field optimization project costs (4) |
| 3.4 | 5.5 | 1.7 | | |||||||||||||||
Business Combination Agreement expenses (5) |
5.9 | | | | | |||||||||||||||
Other operating (income) expenses, net |
13.0 | 1.5 | (2.7 | ) | 4.7 | 7.8 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
EBITDA |
118.1 | 121.2 | 145.9 | 132.8 | 99.0 | |||||||||||||||
Depreciation and amortization |
34.0 | 33.3 | 34.3 | 33.8 | 35.0 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income from operations |
84.1 | 87.9 | 111.6 | 99.0 | 64.0 | |||||||||||||||
Interest expense, net |
59.1 | 61.0 | 59.4 | 56.1 | 50.2 | |||||||||||||||
Loss on early extinguishment of debt |
3.5 | 1.5 | | | 19.6 | |||||||||||||||
Income tax expense |
7.2 | 0.4 | 13.4 | 12.7 | 0.1 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income (loss) |
$ | 14.3 | $ | 25.0 | $ | 38.8 | $ | 30.2 | $ | (5.9 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
The reconciliation of net income to adjusted net income is as follows:
Three Months Ended | ||||||||||||||||||||
March 31, 2012 |
December 31, 2011 |
September 30, 2011 |
June 30, 2011 |
March 31, 2011 |
||||||||||||||||
Adjusted net income |
||||||||||||||||||||
Net income |
$ | 14.3 | $ | 25.0 | $ | 38.8 | $ | 30.2 | $ | (5.9 | ) | |||||||||
Income tax expense (benefit) |
7.2 | 0.4 | 13.4 | 12.7 | 0.1 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income before income taxes |
21.5 | 25.4 | 52.2 | 42.9 | (5.8 | ) | ||||||||||||||
Adjustments: |
||||||||||||||||||||
Franchise agreement amortization |
5.2 | 5.4 | 5.3 | 5.6 | 5.5 | |||||||||||||||
Amortization of deferred financing costs and original issue discount |
3.5 | 4.0 | 3.6 | 3.5 | 3.4 | |||||||||||||||
Loss on early extinguishment of debt |
3.5 | 1.5 | | | 19.6 | |||||||||||||||
Other operating (income) expense, net |
13.0 | 1.5 | (2.7 | ) | 4.7 | 7.8 | ||||||||||||||
Transaction costs (1) |
1.1 | 1.6 | 1.0 | 0.3 | 0.8 | |||||||||||||||
Global restructuring and related professional fees (2) |
| 13.8 | 10.5 | 10.0 | 12.2 | |||||||||||||||
Global portfolio realignment project (3) |
3.7 | 7.1 | 0.5 | | | |||||||||||||||
Field optimization project costs (4) |
| 3.4 | 5.5 | 1.7 | | |||||||||||||||
Business Combination Agreement expenses (5) |
5.9 | | | | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total adjustments |
35.9 | 38.3 | 23.7 | 25.8 | 49.3 | |||||||||||||||
Adjusted income before income taxes |
57.4 | 63.7 | 75.9 | 68.7 | 43.5 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Adjusted income tax expense (6) |
17.6 | 13.4 | 21.7 | 22.2 | 15.9 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Adjusted net income |
$ | 39.8 | $ | 50.3 | $ | 54.2 | $ | 46.5 | $ | 27.6 | ||||||||||
|
|
|
|
|
|
|
|
|
|
10
(1) | Represents expenses incurred related to the acquisition of the Company. |
(2) | Represents severance benefits, other severance-related costs and related professional fees incurred in connection with the companys global restructuring efforts, the voluntary resignation severance program offered for a limited time to eligible employees based at its Miami headquarters and additional reductions in corporate and field positions in the U.S. |
(3) | Represents costs associated with an ongoing project to realign our global restaurant portfolio by refranchising our Company restaurants and establishing strategic partners and joint ventures to accelerate development. These costs primarily include severance related costs and fees for professional services. |
(4) | Represents severance-related costs, compensation costs for overlap staffing, travel expenses, consulting and training costs incurred in connection with the Companys efforts to expand and enhance its U.S. field organization. |
(5) | Represents a one-time share-based compensation expense related to awards granted during the three months ended March 31, 2012 resulting from the increase in equity value of BKWWH implied by the recently announced Business Combination Agreement with Justice Holdings Ltd. and its subsidiaries. We also expect to incur professional fees and other transaction costs associated with the planned transaction. |
(6) | Adjusted income tax expense for the last five quarters is calculated using the companys actual tax rate for all items with the exception of the adjustments listed above to which a blended statutory tax rate of 29.0%, 34.0%, 35.0%, 37.0% and 32.0%, respectively, has been applied. |
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
BURGER KING HOLDINGS, INC. |
/s/ Daniel S. Schwartz |
Daniel S. Schwartz |
Chief Financial Officer |
Date: May 22, 2012
12