News Classic

Clinical growth reaccelerates with record analysis volume; Cash burn improves 39%

BOSTON and ROLLE, Switzerland, Nov. 5, 2024 /PRNewswire/ — SOPHiA GENETICS SOPH, a cloud-native software company and leader in data-driven medicine, today reported financial results for the third quarter ended September 30, 2024.

Third Quarter 2024 Financial Results

• Revenue was $15.9 million, down 2.8% year-over-year
• Gross margins were 67.2% on a reported basis and 73.1% on an adjusted basis, compared to 69.1% and 72.5% in the prior year period, respectively
• Operating loss was $15.4 million on a reported basis and $10.6 million on an adjusted basis, representing year-over-year improvements of 7.1% and 10.4%, respectively
• Cash burn was $9.6 million, representing a year-over-year improvement of 39.1%
• The company reiterates full-year guidance, including revenue between $65 million and $67 million, adjusted gross margin of 72.0% to 72.5%, and adjusted operating loss between $45 million and $50 million

“Record analysis volume drove a reacceleration of Clinical growth across most key geographies in Q3, with volume increasing 16% year-over-year, offset by expected softness in BioPharma,” said Jurgi Camblong, PhD., Chief Executive Officer and Co-founder. “We also delivered another quarter of strong forward-looking indicators with 20 new customer signings, including major wins in the U.S., the U.K., and Brazil. I am proud of our ability to deliver strong new business momentum, while also excelling at cost management. In Q3, we expanded adjusted gross margins to 73.1% and improved cash burn significantly by 39% year-over-year to $9.6 million, while also strengthening commercial teams and customer-facing operations.”

Camblong added, “Looking ahead, I’m excited by major growth catalysts such as our new Liquid Biopsy application MSK ACCESS^® powered with SOPHiA DDM^TM, which has already attracted an impressive 18 new customers since its launch in Q2. I am also excited by the recent launch of the application’s Solid Tumor testing counterpart, MSK-IMPACT^® powered with SOPHiA DDM^TM. These applications, which enable any institution across the globe to launch best-in-class Liquid Biopsy and Solid Tumor testing, are also igniting strong interest from BioPharma companies who can leverage the decentralized, global network to improve deployment and development of their therapies.”

Business Highlights

Expanding usage of SOPHiA DDM™ worldwide

• Reached 462 core genomics customers as of September 30, 2024, who used SOPHiA DDM™ over the past 12 months to analyze patients with cancer or rare diseases, up from 431 customers at the end of Q3 2023
• Performed a record 91,000 analyses on SOPHiA DDM^TM in Q3 2024, representing 16% year-over-year analysis volume growth or 17% growth when excluding COVID-related analyses
• Continued executing our land and expand strategy, including major successes in the U.S. and Canada with Tennessee Oncology adopting numerous additional applications in Hereditary Cancer and Solid Tumors in addition to MSK-ACCESS® powered with SOPHiA DDM^TM and Trillium Health Partners adopting SOPHiA DDM^TM for HRD in addition to Hereditary Cancer and HemOnc applications

Accelerating adoption of SOPHiA DDM™ by landing new Clinical customers

• Landed 20 new customers in Q3 2024 who will implement SOPHiA DDM^TM and begin generating revenue over the next twelve months, continuing the positive trend of solid bookings momentum year-to-date
• Signed major new customers across all key geographies including GeneView in the U.S. who is adopting SOPHiA DDM^TM for Rare and Inherited Disorders, the NHS’s Birmingham Women’s Hospital in the U.K. who is adopting SOPHiA DDM^TM for Hereditary Cancer screening, and Hospital Sírio-Libanês, one of the most prestigious hospitals in the world based in Brazil, who is adopting MSK-ACCESS® powered with SOPHiA DDM^TM

Building strong new business momentum with new applications

• Signed a total of 18 new customers to MSK-ACCESS® powered with SOPHiA DDM^TM since the Liquid Biopsy application’s launch in Q2 2024
• Saw the first cohort of 5 MSK-ACCESS® customers go-live on SOPHiA DDM^TM as institutions such as BioReference Health in the U.S., the NHS’s Synnovis Services in the U.K., and the world-renowned University of Heidelberg in Germany recently completed implementation; These institutions will ramp up their usage in Q4 2024 and into 2025
• Launched MSK-IMPACT® powered with SOPHiA DDM^TM, the 505-gene Solid Tumor Comprehensive Genomic Profiling counterpart to MSK-ACCESS®, in October 2024
• Continued to drive significant demand for MSK-ACCESS® and MSK-IMPACT® powered with SOPHiA DDM^TM as pipeline of ongoing discussions reached more than 50 opportunities

Growing sustainably by maintaining an obsession with operational excellence

• Remained laser-focused on operational excellence and improved cash burn by 39.1% year-over-year to $9.6 million, while also strengthening commercial teams and customer-facing operations
• Expanded adjusted gross margin by 61bps year-over-year to 73.1% as we continue to optimize compute costs and leverage the scale of the cloud-native SOPHiA DDM^TM platform
• Improved adjusted operating loss by 10.4% year-over-year in Q3 2024 through continuous improvement initiatives
• Reaffirmed commitment to achieve adjusted operating profitability within the next 2 years; Current cash and existing capital resources are expected to be sufficient to reach adjusted operating profitability

2024 Financial Outlook

Based on information as of today, SOPHiA GENETICS is reaffirming our previously provided guidance of:

• Full-year revenue between $65 million and $67 million, representing growth of 4% to 7% compared to FY 2023
• Adjusted gross margin between 72.0% to 72.5%, compared to 72.2% in FY 2023
• Adjusted operating loss guidance between $45 million and $50 million, compared to $55.9 million in FY 2023

Earnings Call and Webcast Information

SOPHiA GENETICS will host a conference call and live webcast to discuss the third quarter 2024 results on Tuesday, November 5, 2024, at 8:00 a.m. (08:00) Eastern Time / 2:00 p.m. (14:00) Central European Time. The call will be webcast live on the SOPHiA GENETICS Investor Relations website, ir.sophiagenetics.com. Additionally, an audio replay of the conference call will be available on the SOPHiA GENETICS website after its completion.

Non-IFRS Financial Measures

Other than with respect to revenue, the Company only provides guidance on a non-IFRS basis. The Company does not provide a reconciliation of forward-looking adjusted gross margin (non-IFRS measure) to gross margin (the most comparable IFRS financial measure), due to the inherent difficulty in forecasting and quantifying amortization of capitalized research & development expenses that are necessary for such reconciliation. In addition, the Company does not provide a reconciliation of forward-looking adjusted operating loss (non-IFRS measure) to operating loss (the most comparable IFRS financial measure), due to the inherent difficulty in forecasting and quantifying amortization of capitalized research & development expenses and intangible assets, share-based compensation expenses, and non-cash portion of pensions paid in excess of actual contributions, that are necessary for such reconciliation.

To provide investors with additional information regarding the company’s financial results, SOPHiA GENETICS has disclosed here and elsewhere in this earnings release the following non-IFRS measures:

• Adjusted gross profit, which the company calculates as revenue minus cost of revenue adjusted to exclude amortization of capitalized research and development expenses;
• Adjusted gross profit margin, which the company calculates as adjusted gross profit as a percentage of revenue;
• Adjusted operating loss, which the company calculates as operating loss adjusted to exclude amortization of capitalized research and development expenses, amortization of intangible assets, share-based compensation expense, and non-cash portion of pensions expense paid in excess of actual contributions to match the actuarial expense.

These non-IFRS measures are key measures used by SOPHiA GENETICS management and board of directors to evaluate its operating performance and generate future operating plans. The exclusion of certain expenses facilitates operating performance comparability across reporting periods by removing the effect of non-cash expenses and certain variable charges. Accordingly, the company believes that these non-IFRS measures provide useful information to investors and others in understanding and evaluating its operating results in the same manner as its management and board of directors.

These non-IFRS measures have limitations as financial measures, and you should not consider them in isolation or as a substitute for analysis of SOPHiA GENETICS’ results as reported under IFRS. Some of these limitations are:

• These non-IFRS measures exclude the impact of amortization of capitalized research and development expenses and intangible assets. Although amortization is a non-cash charge, the assets being amortized may need to be replaced in the future and these non-IFRS measures do not reflect capital expenditure requirements for such replacements or for new capital expenditures;
• These non-IFRS measures exclude the impact of share-based compensation expenses. Share-based compensation has been, and will continue to be for the foreseeable future, a recurring expense in the company’s business and an important part of its compensation strategy;
• These non-IFRS measures exclude the impact of the non-cash portion of pensions paid in excess of actual contributions to match actuarial expenses. Pension expenses have been, and will continue to be for the foreseeable future, a recurring expense in the business; and
• Other companies, including companies in the company’s industry, may calculate these non-IFRS measures differently, which reduces their usefulness as comparative measures.

Because of these limitations, you should consider these non-IFRS measures alongside other financial performance measures, including various cash flow metrics, net income and other IFRS results.

The tables below provide the reconciliation of the most comparable IFRS measures to the non-IFRS measures for the periods presented.

Presentation of Constant Currency Revenue and Excluding COVID-19-Related Revenue

SOPHiA GENETICS operates internationally, and its revenues are generated primarily in the U.S. dollar, the euro and Swiss franc and, to a lesser extent, British pound, Australian dollar, Brazilian real, Turkish lira and Canadian dollar depending on the company’s customers’ geographic locations. Changes in revenue include the impact of changes in foreign currency exchange rates. We present the non-IFRS financial measure “constant currency revenue” (or similar terms such as constant currency revenue growth) to show changes in revenue without giving effect to period-to-period currency fluctuations. Under IFRS, revenues received in local (non-U.S. dollar) currencies are translated into U.S. dollars at the average monthly exchange rate for the month in which the transaction occurred. When the company uses the term “constant currency”, it means that it has translated local currency revenues for the current reporting period into U.S. dollars using the same average foreign currency exchange rates for the conversion of revenues into U.S. dollars that we used to translate local currency revenues for the comparable reporting period of the prior year. The company then calculates the difference between the IFRS revenue and the constant currency revenue to yield the “constant currency impact” for the current period.

The company’s management and board of directors use constant currency revenue growth to evaluate growth and generate future operating plans. The exclusion of the impact of exchange rate fluctuations provides comparability across reporting periods and reflects the effects of customer acquisition efforts and land-and-expand strategy. Accordingly, it believes that this non-IFRS measure provides useful information to investors and others in understanding and evaluating revenue growth in the same manner as the management and board of directors. However, this non-IFRS measure has limitations, particularly as the exchange rate effects that are eliminated could constitute a significant element of its revenue and could significantly impact performance and prospects. Because of these limitations, you should consider this non-IFRS measure alongside other financial performance measures, including revenue and revenue growth presented in accordance with IFRS and other IFRS results.

In addition to constant currency revenue, the company presents constant currency revenue excluding COVID-19-related revenue to further remove the effects of revenues that are derived from sales of COVID-19-related offerings, including a NGS assay for COVID-19 that leverages the SOPHiA DDMTM Platform and related products and solutions analytical capabilities and COVID-19 bundled access products. SOPHiA GENETICS do not believe that these revenues reflect its core business of commercializing its platform because the company’s COVID-19 solution was offered to address specific market demand by its customers for analytical capabilities to assist with their testing operations. The company does not anticipate additional development of its COVID-19-related solution as the pandemic transitions into a more endemic phase and as customer demand continues to decline. Further, COVID-19-related revenues did not constitute, and the company does not expect COVID-19-related revenues to constitute in the future, a significant part of its revenue. Accordingly, the company believes that this non-IFRS measure provides useful information to investors and others in understanding and evaluating its revenue growth. However, this non-IFRS measure has limitations, including that COVID-19-related revenues contributed to the company’s cash position, and other companies may define COVID-19-related revenues differently. Because of these limitations, you should consider this non-IFRS measure alongside other financial performance measures, including revenue and revenue growth presented in accordance with IFRS and other IFRS results.

The table below provides the reconciliation of the most comparable IFRS growth measures to the non-IFRS growth measures for the current period.

About SOPHiA GENETICS

SOPHiA GENETICS SOPH is a cloud-native healthcare technology company on a mission to expand access to data-driven medicine by using AI to deliver world-class care to patients with cancer and rare disorders across the globe. It is the creator of SOPHiA DDM™, a platform that analyzes complex genomic and multimodal data and generates real-time, actionable insights for a broad global network of hospital, laboratory, and biopharma institutions. For more information, visit SOPHiAGENETICS.COM and connect with us on LinkedIn.

Forward-Looking Statements

This press release contains statements that constitute forward-looking statements. All statements other than statements of historical facts contained in this press release, including statements regarding SOPHiA GENETICS future results of operations and financial position, business strategy, products and technology, partnerships and collaborations, as well as plans and objectives of management for future operations, are forward-looking statements. Forward-looking statements are based on SOPHiA GENETICS’ management’s beliefs and assumptions and on information currently available to the company’s management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including those described in the company’s filings with the U.S. Securities and Exchange Commission. No assurance can be given that such future results will be achieved. Such forward-looking statements contained in this press release speak only as of its date. We expressly disclaim any obligation or undertaking to update these forward-looking statements contained in this press release to reflect any change in the company’s expectations or any change in events, conditions, or circumstances on which such statements are based, unless required to do so by applicable law. No representations or warranties (expressed or implied) are made about the accuracy of any such forward-looking statements.

 

 

 

 

 

 

 

 

 

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/sophia-genetics-reports-third-quarter-2024-results-302295865.html

SOURCE SOPHiA GENETICS

Grows Revenue by 5%, Increases Adjusted EBITDA⁽¹⁾ by 13%, and Narrows 2024 Outlook

MARKHAM, ON, Nov. 5, 2024 /CNW/ – Pet Valu Holdings Ltd. (“Pet Valu” or the “Company”) PET,  the leading Canadian specialty retailer of pet food and pet-related supplies, today announced its financial results for the third quarter ended September 28, 2024.

Third Quarter Highlights

• System-wide sales⁽²⁾ were $358.2 million, an increase of 0.3% versus Q3 2023. Same-store sales growth⁽²⁾ was -2.5%.
• Revenue was $276.0 million, up 5.2% versus Q3 2023.
• Adjusted EBITDA was $64.6 million, up 13.0% versus Q3 2023, representing 23.4% of revenue. Operating income was $40.4 million, up 8.0% versus Q3 2023.
• Net income was $23.2 million, up from $18.0 million in Q3 2023.
• Adjusted Net Income⁽¹⁾ was $29.9 million or $0.41 per diluted share, compared to $28.2 million or $0.39 per diluted share, respectively, in Q3 2023.
• Opened 6 new stores and ended the quarter with 805 stores across the network.
• Officially opened the new Metro Vancouver Region (“MVR”) distribution centre.
• The Board of Directors of the Company declared a dividend of $0.11 per common share.

2024 Outlook

• The Company expects revenue between $1.08 and $1.10 billion, supported by approximately 40 new store openings and flat same-store sales growth, Adjusted EBITDA between $243 and $246 million, and Adjusted Net Income per Diluted Share⁽³⁾ between $1.50 and $1.53.

“Third quarter performance tells a story of continued resilience and responsible execution as we delivered 5% revenue growth and 13% Adjusted EBITDA growth in a constrained demand environment,” said Richard Maltsbarger, Chief Executive Officer of Pet Valu.”We also reached an important milestone in our supply chain transformation with the successful transition and start-up of our new Surrey DC, unlocking incremental capacity and productivity in Western Canada.

“As we ramp up for the holidays, our merchandising and marketing teams have crafted an exciting slate of events delivering value and expertise to devoted pet lovers when they need it most,” continued Mr. Maltsbarger. “Supported by hundreds of local stores, a sharpened digital platform and an enhanced supply chain network, our curated offering of competitively priced premium products will help inspire magical holiday moments with pets.”

Financial Results for the Third Quarter Fiscal 2024

All comparative figures below are for the 13-week period ended September 28, 2024, compared to the 13-week period ended September 30, 2023.

Revenue was $276.0 million in Q3 2024, an increase of $13.7 million, or 5.2%, compared to $262.3 million in Q3 2023. The increase in revenue was mostly driven by growth in franchise and other revenues and partially offset by a decline in retail sales.

Same-store sales growth was -2.5% in Q3 2024 primarily driven by a 4.1% decrease in same-store transaction growth⁽²⁾ partially offset by a 1.7% increase in same-store average spend per transaction growth⁽²⁾. This is compared to same-store sales growth of 4.2% in Q3 2023, which primarily consisted of 4.0% increase in same-store average spend per transaction growth and a 0.2% increase in same-store transaction growth. 

Gross profit increased by $2.1 million, or 2.4%, to $89.4 million in Q3 2024, compared to $87.3 million in Q3 2023. Gross profit margin was 32.4% in Q3 2024, compared to 33.3% in Q3 2023. Excluding costs related to the supply chain transformation of 1.1% in Q3 2024 and 1.8% in Q3 2023, the gross profit margin was 33.5% and 35.1% in Q3 2024 and Q3 2023, respectively, and decreased by 1.6%. The decrease was primarily driven by: (i) higher distribution and occupancy costs from the new Greater Toronto Area (“GTA”) and MVR distribution centres; (ii) higher wholesale merchandise sales; and (iii) the unfavourable impact of the weaker Canadian dollar on non-domestic sourced products primarily denominated in U.S. dollars; partially offset by (iv) the allocation of promotional funding.

Selling, general and administrative (“SG&A”) expenses were $49.0 million in Q3 2024, a decrease of $0.9 million, or 1.8%, compared to $49.9 million in Q3 2023. SG&A expenses represented 17.8% and 19.0% of total revenue for Q3 2024 and Q3 2023, respectively. The decrease of $0.9 million in SG&A expenses was primarily due to: (i) higher gain on sale of assets for re-franchised stores; (ii) lower real estate related expenses; and (iii) lower technology expenditures on project-based implementation costs associated with new information technology systems; partially offset by (iv) increased compensation costs as a result of share-based compensation.

Adjusted EBITDA increased by $7.4 million, or 13.0%, to $64.6 million in Q3 2024, compared to $57.2 million in Q3 2023. The increase is explained by higher EBITDA⁽¹⁾ of $8.8 million partially offset by $1.4 million of net lower adjustments from EBITDA for Q3 2024 compared to Q3 2023 including the share of loss from an investment in associate in Q3 2023, lower information technology transformation costs, gain on foreign exchange; and higher business transformation, share-based compensation, and other professional fees. Adjusted EBITDA as a percentage of revenue⁽³⁾ was 23.4% and 21.8% in Q3 2024 and Q3 2023, respectively.

Net interest expense was $8.3 million in Q3 2024, an increase of $0.2 million, or 2.4%, compared to $8.1 million in Q3 2023. The increase was primarily driven by higher interest expense on lease liabilities resulting primarily from the new MVR distribution centre; partially offset by lower interest expense on the 2021 Term Facility (as herein defined) resulting from lower debt outstanding and lower interest rates compared to Q3 2023.

Income taxes were $9.0 million in Q3 2024 compared to $7.9 million in Q3 2023, an increase of $1.1 million year over year. The increase in income taxes was primarily the result of higher taxable earnings in Q3 2024. The effective income tax rate was 27.9% in Q3 2024 compared to 30.4% in Q3 2023. The Q3 2024 and Q3 2023 effective tax rate was higher than the blended statutory rate of 26.5% due to non-deductible expenses and, in addition for Q3 2023, due to the impairment of an investment in associate.

Net income increased by $5.2 million to $23.2 million in Q3 2024, compared to $18.0 million in Q3 2023. The increase in net income is primarily explained by the higher operating income partially offset by higher income taxes and net interest expense, as described above, and by the impairment related to an investment in associate included in Q3 2023.

Adjusted Net Income increased by $1.7 million to $29.9 million in Q3 2024, compared to $28.2 million in Q3 2023. Adjusted Net Income as a percentage of revenue⁽³⁾ was 10.8% in Q3 2024 and in Q3 2023, respectively. The year over year change results from the factors described above and the adjustment for the duplicative depreciation expense on property and equipment and right-of-use assets, and interest expense on lease liabilities related to the supply chain transformation initiatives in Q3 2024.

Adjusted Net Income per Diluted Share  increased by $0.02 to $0.41 in Q3 2024, compared to $0.39 in Q3 2023. The 5.1% year over year increase results primarily from the changes in Adjusted Net Income and the factors described above.

Cash at the end of the third quarter totaled $35.4 million.

Free Cash Flow⁽¹⁾ amounted to $30.8 million in Q3 2024 compared to $18.1 million in Q3 2023, an increase of $12.7 million primarily driven by an increase in cash from operating activities and a decrease in cash used for investing activities; partially offset by an increase in payments of principal and interest on lease liabilities due to the timing of quarter end in Q3 2023, the new GTA and MVR distribution centres and store network expansion.

Inventory at the end of Q3 2024 was $134.8 million compared to $122.1 million at the end of Q4 2023, an increase of $12.7 million primarily to support the growth of our store network, and due to timing of purchases.

Dividends

On November 4, 2024, the Board of Directors of the Company declared a dividend of $0.11 per common share payable on December 16, 2024 to holders of common shares of record as at the close of business on November 29, 2024.

Outlook

Factoring in YTD 2024 performance, together with market conditions and actions planned in the fourth quarter, the Company expects to achieve the following for full year 2024:

• Revenue between $1.08 and $1.10 billion, supported by approximately 40 new store openings, higher wholesale merchandise sales penetration with Chico franchisees, and approximately flat same-store sales growth;
• Adjusted EBITDA between $243 and $246 million, supported by operating expense leverage, partially offset by pricing investment;
• Adjusted Net Income per Diluted Share between $1.50 and $1.53, which incorporates approximately $20 million pre-tax, or $0.20 per diluted share, of incremental depreciation and lease liability interest expense associated with the new GTA and MVR distribution centres;
• Business transformation costs of approximately $17 million pre-tax, information technology costs of approximately $7 million pre-tax, and share-based compensation of approximately $10 million pre-tax, all of which are excluded from Adjusted EBITDA and Adjusted Net Income per Diluted Share; and
• Net Capital Expenditures⁽¹⁾ of approximately $50 million, roughly half of which is attributable to investments in the Company’s supply chain transformation.

Conference Call Details

A conference call to discuss the Company’s third quarter results is scheduled for November 5, 2024, at 8:30 a.m. ET. To access Pet Valu’s conference call, please dial 1-833-950-0062 (ID: 638652). A live webcast of the call will also be available through the Events & Presentations section of the Company’s website at https://investors.petvalu.com/.

For those unable to participate, a playback will be available shortly after the conclusion of the call by dialing 1-866-813-9403 (ID: 921635) and will be accessible until November 12, 2024. The webcast will also be archived and available through the Events & Presentations section of the Company’s website at https://investors.petvalu.com/.

About Pet Valu

Pet Valu is Canada’s leading retailer of pet food and pet-related supplies with over 800 corporate-owned or franchised locations across the country. For more than 45 years, Pet Valu has earned the trust and loyalty of pet parents by offering knowledgeable customer service, a premium product offering and engaging in-store services. Through its neighbourhood stores and digital platform, Pet Valu offers more than 10,000 competitively-priced products, including a broad assortment of premium, super premium, holistic and award-winning proprietary brands. The Company is headquartered in Markham, Ontario and its shares trade on the Toronto Stock Exchange (TSX: PET). To learn more, please visit: www.petvalu.ca.

Non-IFRS and Other Financial Measures

This press release makes reference to certain non-IFRS measures and non-IFRS ratios. These measures and ratios are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS. They are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS. Pet Valu uses non-IFRS measures, including “EBITDA”, “Adjusted EBITDA”, “Adjusted Net Income”, “Free Cash Flow” and “Net Capital Expenditures”, and non-IFRS ratios, including “Adjusted EBITDA as a percentage of revenue”, “Adjusted Net Income as a percentage of revenue”, and “Adjusted Net Income per Diluted Share”. This press release also makes reference to certain supplementary financial measures that are commonly used in the retail industry, including “System-wide sales”, “Same-store sales”, “Same-store sales growth”, and “Same-store average spend per transaction growth”. These non-IFRS measures, non-IFRS ratios and supplementary financial measures are used to provide investors with supplemental measures of Pet Valu’s operating performance and thus highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS financial measures. The Company also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures, non-IFRS ratios and these supplementary financial measures in the evaluation of issuers. Management uses non-IFRS measures, non-IFRS ratios and supplementary financial measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and to determine components of management compensation. Refer to the MD&A for the third quarter ended September 28, 2024 for further information on non-IFRS measures, non-IFRS ratios (including each non-IFRS measure that is used as a component of such non-IFRS ratios) and supplementary measures, including for their definition and, for non-IFRS measures, a reconciliation to the most comparable IFRS measure.

Forward-Looking Information

Some of the information contained in this press release is forward-looking information. Forward-looking information is provided as at the date of this press release and is based on management’s opinions, estimates and assumptions in light of its experience and perception of historical trends, current trends, current conditions and expected future developments, as well as other factors that management believes appropriate and reasonable in the circumstances. Such forward-looking information is intended to provide information about management’s current expectations and plans, and may not be appropriate for other purposes. Pet Valu does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable Canadian securities laws. Actual results and the timing of events may differ materially from those anticipated in the forward-looking information as a result of various factors. Particularly, information regarding our expectations of future results, targets, performance achievements, prospects or opportunities, including the information under the headings “2024 Outlook” and “Outlook” in this press release, is “future-oriented financial information” or a “financial outlook” within the meaning of applicable securities legislation, which is based on the factors and assumptions, and subject to the risks, as set out herein and in the Company’s annual information form dated March 4, 2024 (“AIF”). In some cases, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “targets”, “expects” or “does not expect”, “is expected”, “an opportunity exists”, “budget”, “scheduled”, “estimates”, “outlook”, “forecasts”, “projection”, “prospects”, “strategy”, “intends”, “anticipates”, “does not anticipate”, “believes”, “continue”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “should”, “might”, “will”, “will be taken”, “occur” or “be achieved”. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information.

Many factors could cause our actual results, level of activity, performance or achievements, future events or developments, or outlook to differ materially from those expressed or implied by the forward-looking information, including, without limitation, the factors discussed in the “Risk Factors” section of the AIF. A copy of the AIF and the Company’s other publicly filed documents can be accessed under the Company’s profile on SEDAR+ at www.sedarplus.ca.

The Company cautions that the list of risk factors and uncertainties described in the AIF is not exhaustive and other factors could also adversely affect its results. Readers are urged to consider the risks, uncertainties and assumptions carefully in evaluating forward-looking information and are cautioned not to place undue reliance on such information.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

SOURCE Pet Valu Canada Inc.

View original content to download multimedia: http://www.newswire.ca/en/releases/archive/November2024/05/c9327.html

Consolidated system-wide sales grow +3.2% year-over-year
Global comparable sales of +0.3%, including +2.7% at TH Canada and +1.8% at INTL
Five franchisor segments deliver year-over-year growth in Adjusted Operating Income
RBI on track to deliver 8%+ organic Adjusted Operating Income growth for 2024    

TORONTO, Nov. 5, 2024 /PRNewswire/ – Restaurant Brands International Inc. (“RBI”) QSR QSR QSP today reported financial results for the third quarter ended September 30, 2024. Josh Kobza, Chief Executive Officer of RBI commented, “Our results demonstrate the resilience of our business and the dedication of our teams and franchisees. We remain focused on providing great value for guests, improving franchisee profitability, and investing in our brands for the long-term. We have been pleased to see an improvement in consolidated comparable sales in October and remain confident we will achieve our 8% plus Adjusted Operating Income growth target for 2024 and beyond.”

Third Quarter 2024 Highlights:

• Consolidated comparable sales were 0.3% and net restaurants grew 3.8% versus the prior year
• System-wide sales increased 3.2% year-over-year
• Income from Operations of $577 million versus $582 million in the prior year
• Adjusted Operating Income of $652 million increased 6.1% organically (excluding FX and RH) versus the prior year
• Diluted EPS of $0.79 was consistent with the prior year
• Adjusted Diluted EPS of $0.93 increased 4.6% organically (excluding FX and RH) versus the prior year

Items Effecting Comparability and Restaurant Holdings Segment Reminder
We completed the acquisitions of Carrols Restaurant Group Inc. (“Carrols”) (“the Carrols Acquisition”) and Popeyes China (“PLK China”) (“the PLK China Acquisition”) on May 16, 2024 and June 28, 2024, respectively. Our consolidated results include Carrols and PLK China revenues, expenses and segment income from their acquisition dates.

Following the Carrols and PLK China Acquisitions, RBI established a new operating and reportable segment, Restaurant Holdings (RH), which includes results from the Carrols Burger King restaurants and the PLK China restaurants. RBI reports results under six operating and reportable segments consisting of the following: Tim Hortons (TH), Burger King (BK), Popeyes Louisiana Kitchen (PLK), Firehouse Subs (FHS), International (INTL) and RH. 

RBI plans to maintain the franchisor dynamics in its TH, INTL, BK, PLK and FHS segments (“five franchisor segments”) to report results consistent with how the business will be managed long-term given RBI’s plans to refranchise the vast majority of the Carrols Burger King restaurants and to find a new partner for PLK China in the future. RH results include Company restaurant sales and expenses, including expenses associated with royalties, rent, and advertising. These expenses are recognized, as applicable, as revenues in the respective franchisor segments (BK and INTL) and eliminated upon consolidation. For more information please review the “Restaurant Holdings Intersegment Dynamics” presentation posted on our IR website under “Events & Presentations” on August 8, 2024. 

During 2023 and the first quarter of 2024, BK also acquired restaurants from non-Carrols franchisees (“non-Carrols acquired BK restaurants”). BK owned and operated 165 Company restaurants as of September 30, 2024 as compared to 50 as of September 30, 2023.  The results from these restaurants are included in BK Company restaurants sales and expenses.

Key performances indicators are shown for RBI’s five franchisor segments. RH results for the Carrols BK restaurants and PLK China restaurants are included in the BK segment and INTL segment, respectively.

Consolidated Financial Highlights

 

Discussion of Consolidated Financial Results
The year-over-year increase in Total Revenues on an as reported basis was primarily driven by the inclusion of RH results, partially offset by the elimination of franchise and property revenues and advertising revenues and other services related to the RH restaurants.

On an organic basis, the increase in Total Revenues was largely due to the net impact of the non-Carrols acquired BK restaurants and the acquisition of PLK Carrols restaurants. Growth in organic Total Revenues was also driven by increases in system-wide sales at INTL and TH, partially offset by decreases in system-wide sales at BK, PLK and FHS. 

The year-over-year decrease in Income from Operations was primarily driven by an unfavorable change in other operating expenses (income), net, an increase in franchise agreement and reacquired franchise rights amortization, and an unfavorable FX Impact partially offset by increases in segment income at our five franchisor segments and the inclusion of RH segment income.

The year-over-year decrease in Net Income was primarily driven by the year-over-year decrease in Income from Operations, an increase in income tax expense and an increase in interest expense, net, partially offset by a favorable year-over-year decrease in loss on early extinguishment of debt.

The year-over-year increases in Adjusted Operating Income on an as reported and on an organic basis were primarily driven by increases in segment income at our five franchisor segments. On an as reported basis, the increase was also driven by the inclusion of RH Adjusted Operating Income, partially offset by unfavorable FX Impacts at TH and INTL.

The year-over-year increase in Adjusted Net Income was primarily driven by increases in segment income at our five franchisor segments and the inclusion of RH segment income, partially offset by an increase in adjusted interest expense, net, an increase in adjusted income tax expense, and an unfavorable FX Impact.

Burger King US 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. We are investing $400 million over the life of the plan, comprised 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 three months ended September 30, 2024, we funded $8 million toward the Fuel the Flame investments and $16 million toward our Royal Reset investments. As of September 30, 2024, we have funded a total of $93 million toward the Fuel the Flame investments and $107 million toward our Royal Reset investments.

On April 30, 2024, Burger King announced its Royal Reset 2.0 program and expects to invest an additional $300 million in remodels from 2025 through 2028. Together with the initial Reclaim the Flame investment and plans to remodel 600 of the recently acquired Carrols restaurants, Burger King will be on a path to achieve its goal of 85% to 90% modern image by 2028.

TH Segment Results 

For the third quarter of 2024, the increase in system-wide sales was primarily driven by comparable sales of 2.3%, including Canada comparable sales of 2.7%.

The year-over-year decrease in Total Revenues on an as reported basis was primarily due to an unfavorable FX Impact. On an organic basis, the increase in Total Revenues was primarily driven by increases in equipment sales related to restaurant renovations, partially offset by a decrease in CPG net sales.

The year-over-year increase in Adjusted Operating Income on an as reported and on an organic basis were primarily driven by a decrease in Segment G&A, largely due to lower employee-related compensation, and a decrease in supply chain cost of sales due to lower average cost of supply chain and CPG inventory, partially offset by a decrease in CPG net sales. The increase in Adjusted Operating Income on an as reported basis was partially offset by an unfavorable FX Impact.  

BK Segment Results

As a reminder, BK segment results are presented consistently with our franchisor model. As such, results include intersegment Franchise and Property revenues and Advertising Revenues and Other Services from the Carrols Burger King restaurants included in RH (as footnoted above).

For the third quarter of 2024, the decrease in system-wide sales was driven by comparable sales of (0.7)%, including US comparable sales of (0.4)%, and net restaurant growth of (1.5)%.

The year-over-year increase in Total Revenues was primarily driven by the net impact of the non-Carrols acquired BK restaurants, partially offset by a decrease in system-wide sales.

Adjusted Operating Income was relatively consistent on a year-over-year basis primarily due to a decrease in Segment G&A, largely a result of lower compensation-related expenses, and the net impact of the non-Carrols acquired BK restaurants, partially offset by the decrease in system-wide sales and an increase in Fuel the Flame spending versus the prior year period.

PLK Segment Results

For the third quarter of 2024, the decrease in system-wide sales was driven by comparable sales of (4.0)%, including US comparable sales of (3.8)%, partially offset by net restaurant growth of 4.1%.

The year-over-year increases in Total Revenues and Adjusted Operating Income were primarily driven by the acquisition of 60 Company restaurants as part of the Carrols acquisition and improvements in PLK’s underlying Company restaurant portfolio. As of September 30, 2024, PLK had 100 Company restaurants as compared to 41 in the prior year. 

FHS Segment Results

For the third quarter of 2024, the decrease in system-wide sales was driven by comparable sales of (4.8)% partially offset by net restaurant growth of 3.9%.

The year-over-year increase in Adjusted Operating Income was primarily due to a decrease in Segment G&A driven by lower compensation-related expenses.

INTL Segment Results

For the third quarter of 2024, the increase in system-wide sales was driven by net restaurant growth of 7.6%, and comparable sales of 1.8%.

The year-over-year increase in Total Revenues on an as reported and on an organic basis were primarily driven by increases in BK royalties as a result of an increase in system-wide sales. The increase in Total Revenues on an as reported basis was partially offset by an unfavorable FX Impact.

The year-over-year increase in Adjusted Operating Income on an as reported and on an organic basis were primarily driven by the increase in system-wide sales, partially offset by bad debt expenses in the current year as compared to bad debt recoveries in the prior year and higher Advertising Expenses and Other Services due to the timing of advertising campaigns. The year-over-year increase in Adjusted Operating Income on an as reported basis was partially offset by an unfavorable FX impact.

RH Segment Results

Cash and Liquidity
As of September 30, 2024, Total debt was $14.1 billion, Net debt (Total debt less Cash and cash equivalents of $1.2 billion) was $13.0 billion, Net Income Net Leverage was 7.2x and Adjusted EBITDA Net Leverage was 4.8x. As a reminder, Adjusted EBITDA only includes results from Carrols beginning May 16, 2024. 

The RBI Board of Directors has declared a dividend of $0.58 per common share and partnership exchangeable unit of Restaurant Brands International Limited Partnership for the fourth quarter of 2024. The dividend will be payable on January 3, 2025 to shareholders and unitholders of record at the close of business on December 20, 2024.

During the third quarter, we issued $500 million of 5.625% First Lien Senior Secured Notes due 2029 and used the proceeds, together with cash on hand, to redeem our outstanding 5.750% First Lien Senior Secured Notes due 2025 and pay related fees and expenses. As a result of this transaction, RBI does not have any material debt maturities until 2028. 

2024 Financial Guidance
RBI continues to expect Adjusted Interest Expense, net between $565 million and $575 million and consolidated capital expenditures, tenant inducements and incentives (excluding RH) of approximately $300 million.

RBI now expects Segment G&A (excluding RH) for 2024 between $640 million and $650 million, including share-based compensation and non-cash incentive compensation expense between $170 million and $175 million. 

Long-Term Guidance
RBI hosted an investor event on February 15, 2024 and announced the following long-term consolidated performance that the Company continues to expect to achieve, on average, from 2024 to 2028:

• 3%+ Comparable Sales;
• 5%+ Net Restaurant Growth;
• 8%+ System-wide Sales growth; and
• Adjusted Operating Income growth at least as fast as system-wide sales growth.

Investor Conference Call
We will host an investor conference call and webcast at 8:45 a.m. Eastern Time on Tuesday, November 5, 2024, to review financial results for the third quarter ended September 30, 2024. The earnings call will be broadcast live via our investor relations website at http://rbi.com/investors 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 (833)-950-0062 for Canadian callers, and 1 (929)-526-1599 for callers from other countries. For all dial-in numbers please use the following access code: 309027.

For further information: Investors: investor@rbi.com; Media: media@rbi.com

About Restaurant Brands International Inc.
Restaurant Brands International Inc. is one of the world’s largest quick service restaurant companies with over $40 billion in annual system-wide sales and over 30,000 restaurants in more than 120 countries and territories. RBI 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, RBI is improving sustainable outcomes related to its food, the planet, and people and communities. To learn more about RBI, please visit the company’s website at www.rbi.com.

Forward-Looking Statements
This press release contains certain forward-looking statements and information, which reflect management’s current beliefs and expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties.

These forward-looking statements include statements about (i) our expectations regarding the effects and continued impact of our digital, marketing, remodel and technology enhancement initiatives and expectations regarding “Reclaim the Flame” and our pace of remodels, (ii) our expectations regarding the number of Burger Kings that will be modern image by 2028, (iii) our commitment to growth opportunities and providing compelling value to guests, plans and strategies for each of our brands and ability to enhance operations and drive long-term, sustainable growth, (iv) our goals for our brands in China, (v) our expectations regarding consolidated capital expenditures, tenant inducements and incentives for 2024, (vi) our expectations regarding adjusted net interest expense, Segment G&A and share-based compensation, (vii) our expectations regarding opportunities for our brands outside of the U.S., (viii) our goals for franchise profitability by the end of 2026, (ix) our guidance for periods in 2024 through 2028 relating to system-wide sales, comparable sales, net restaurant growth, supply chain margins, adjusted effective tax rates, adjusted operating income, and organic adjusted operating income, and * our net leverage expectations.

The factors that could cause actual results to differ materially from RBI’s expectations are detailed in filings of RBI with the Securities and Exchange Commission and applicable Canadian securities regulatory authorities, such as its annual and quarterly reports and current reports on Form 8-K, and include the following risks related to (1) our substantial indebtedness, which could adversely affect our financial condition and prevent us from fulfilling our obligations; (2) global economic or other business conditions that may affect the desire or ability of our customers to purchase our products, such as inflationary pressures, high unemployment levels, declines in median income growth, consumer confidence and consumer discretionary spending and changes in consumer perceptions of dietary health and food safety; (3) our relationship with, and the success of, our franchisees and risks related to our nearly fully franchised business model; (4) our franchisees’ financial stability and their ability to access and maintain the liquidity necessary to operate their businesses; (5) our supply chain operations; (6) our ownership and leasing of real estate; (7) the effectiveness of our marketing, advertising and digital programs and franchisee support of these programs; (8) significant and rapid fluctuations in interest rates and in the currency exchange markets and the effectiveness of our hedging activity; (9) our ability to successfully implement our domestic and international growth strategy for each of our brands and risks related to our international operations; (10) our reliance on franchisees, including subfranchisees to accelerate restaurant growth; (11) unforeseen events such as pandemics; (12) the ability of the counterparties to our credit facilities’ and derivatives’ to fulfill their commitments and/or obligations; (13) changes in applicable tax laws or interpretations thereof, and our ability to accurately interpret and predict the impact of such changes or interpretations on our financial condition and results; (14) evolving legislation and regulations in the area of franchise and labor and employment law; (15) our ability to address environmental and social sustainability issues; (16) the conflict between Russia and Ukraine, and the conflict in the Middle East; and (17) softening in the consumer environment.

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In millions of U.S. dollars, except per share data)
(Unaudited)

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In millions of U.S. dollars, except share data)
(Unaudited)

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In millions of U.S. dollars)
(Unaudited)

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Key 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 franchised 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 Tim Hortons, Burger King and Firehouse and 17 months or longer for Popeyes. 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 that results exclude the effect of foreign currency translation (“FX Impact”) and are calculated by translating prior year results at current year monthly average exchange rates. We analyze key operating metrics on a constant currency basis as this helps identify underlying business trends, without distortion from the effects of currency movements.
• Unless otherwise stated, system-wide sales growth, system-wide sales and comparable sales are presented on a system-wide basis, which means they include franchised restaurants and Company restaurants. System-wide results are driven by our franchised restaurants, as nearly all system-wide restaurants are franchised. Franchise sales represent sales at all franchised 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 (“NRG”) refers to the net change 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. In determining whether a restaurant meets our definition of a restaurant that will be included in our net restaurant growth, we consider factors such as scope of operations, format and image, separate franchise agreement, and minimum sales thresholds. We refer to restaurants that do not meet our definition as “alternative formats.” These alternative formats are helpful to build brand awareness, test new concepts and provide convenience in certain markets.

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.

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Supplemental Disclosure – Home Market and International KPIs by Brand

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Supplemental Disclosure – Home Market and International KPIs by Brand

 

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Supplemental Disclosure
(Unaudited)

General and Administrative Expenses

 

Other Operating Expenses (Income), net

 

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Non-GAAP Financial Measures
(Unaudited)

Below, we define the non-GAAP financial measures, provide a reconciliation of each non-GAAP financial measure to the most directly comparable financial measure calculated in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), and discuss the reasons why we believe this information is useful to management and may be useful to investors. These measures do not have standardized meanings under GAAP and may differ from similarly captioned measures of other companies in our industry.

Non-GAAP Measures
To supplement our condensed consolidated financial statements presented on a GAAP basis, RBI reports the following non-GAAP financial measures: Adjusted Operating Income (“AOI”), EBITDA, Adjusted EBITDA (on a consolidated and a segment basis), Adjusted Net Income, Adjusted Interest Expense, net, Adjusted Diluted Earnings per Share (“Adjusted Diluted EPS”), Organic revenue growth, Organic AOI growth, Organic Adjusted EBITDA growth, Organic Net Income growth, Organic Adjusted Net Income growth, Organic Adjusted Diluted EPS growth, Restaurant-Level Margin, Free Cash Flow, Net Debt, and Adjusted EBITDA Net Leverage. We believe that these non-GAAP measures are useful to investors in assessing our operating performance or liquidity, as they provide them with the same tools that management uses to evaluate our performance or liquidity and are 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.

AOI represents income from operations adjusted to exclude (i) franchise agreement and reacquired franchise right intangible asset amortization as a result of acquisition accounting, (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 in the following financial results, 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 (“FHS Transaction costs”), (ii) non-recurring fees and expenses incurred in connection with the Carrols Acquisition and the PLK China acquisition, consisting primarily of professional fees, compensation related expenses and integration costs (“RH Transaction costs”) and (iii) non-operating costs from professional advisory and consulting services associated with certain transformational corporate restructuring initiatives that rationalize our structure and optimize cash movements as well as services related to significant tax reform legislation and regulations (“Corporate restructuring and advisory fees”). 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. AOI is used by management to measure operating performance of the business, excluding these other specifically identified items that management believes are not relevant to management’s assessment of our operating performance. AOI, as defined above, also represents our measure of segment income for each of our six operating segments.

EBITDA is defined as earnings (net income or loss) before interest expense, net, (gain) 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 or expense from non-recurring projects and non-operating activities (as described above). Adjusted EBITDA for each of the six reporting segments is defined as AOI for the respective segment operations adjusted to exclude (i) the non-cash impact of share-based compensation and non-cash incentive compensation expense associated with the segment and (ii) depreciation and amortization (excluding franchise agreement and reacquired franchise right intangible asset amortization as a result of acquisition accounting) associated with the segment.

Segment G&A (excluding RH) is defined as general and administrative expenses for our five franchisor segments excluding FHS Transaction costs, RH Transaction costs and Corporate restructuring and advisory fees.

Adjusted Net Income is defined as Net income excluding (i) franchise agreement and reacquired franchise right intangible asset amortization as a result of acquisition accounting, (ii) amortization of deferred financing costs and debt issuance discount, (iii) loss on early extinguishment of debt and interest expense, which represents non-cash interest expense related to amounts reclassified from accumulated comprehensive income (loss) into interest expense in connection with restructured interest rate swaps, (iv) (income) loss from equity method investments, net of cash distributions received from equity method investments, (v) other operating expenses (income), net, and (vi) income or expense from non-recurring projects and non-operating activities (as described above). 

Adjusted Interest Expense, net is defined as interest expense, net less (i) amortization of deferred financing costs and debt issuance discount and (ii) non-cash interest expense related to amounts reclassified from accumulated comprehensive income (loss) into interest expense in connection with restructured interest rate swaps.

Adjusted Diluted EPS is calculated by dividing Adjusted Net Income by the weighted average diluted shares outstanding of RBI during the reporting period. Adjusted Net Income and Adjusted Diluted EPS are used by management to evaluate the operating performance of the business, excluding certain non-cash and other specifically identified items that management believes are not relevant to management’s assessment of operating performance.

Net debt is defined as Total debt less cash and cash equivalents. Total debt is defined as long-term debt, net of current portion plus (i) Finance leases, net of current portion, (ii) Current portion of long-term debt and finance leases and (iii) Unamortized deferred financing costs and deferred issue discount. Net debt is used by management to evaluate the Company’s liquidity. We believe this measure is an important indicator of the Company’s ability to service its debt obligations.

Adjusted EBITDA Net Leverage is defined as Net Debt divided by Adjusted EBITDA. Net Income Net Leverage is defined as Net Debt divided by Net Income. Both of these metrics are operating performance measures that we believe provide investors a more complete understanding of our leverage position and borrowing capacity after factoring in cash and cash equivalents that eventually could be used to repay outstanding debt.

Revenue growth, Adjusted Operating Income growth, Adjusted EBITDA growth, Adjusted Net Income growth and Adjusted Diluted EPS growth on an organic basis, are non-GAAP measures that exclude the impact of FX movements and also exclude the results of our RH segment for the first four full fiscal quarters following the BK Carrols and PLK China restaurant acquisitions. With respect to Adjusted Diluted EPS, growth on an organic basis also excludes the impact of incremental debt incurred as part of the Carrols transaction. Management believes that organic growth is an important metric for measuring the operating performance of our business as it helps identify underlying business trends, without distortion from the effects of FX movements and the RH segment. We calculate the impact of FX movements by translating prior year results at current year monthly average exchange rates.

Restaurant-Level Margin is defined as (1) BK RH Adjusted Operating Income adjusted to exclude depreciation, amortization, and general and administrative expenses, divided by (2) restaurant sales. This metric is used to evaluate BK RH store-level operating performance and profitability.

Free Cash Flow is the total of Net cash provided by operating activities minus Payments for property and equipment. Free Cash Flow is a liquidity measure used by management as one factor in determining the amount of cash that is available for working capital needs or other uses of cash, however, it does not represent residual cash flows available for discretionary expenditures.

Net Interest Paid is the total of cash interest paid in the period, cash proceeds (payments) related to derivatives, net from both investing activities and financing activities and cash interest income received. This liquidity measure is used by management to understand the net effect of interest paid, received and related hedging payments and receipts.

There are important components of estimated operating income (including impact of equity method investments and other operating expenses or income, net), interest expense, net, and general and administrative expenses that we have not determined and therefore, a reconciliation of estimated AOI to operating income, Adjusted Interest Expense, net to interest expense, net and Segment G&A to general and administrative expenses cannot be provided at this time. A full reconciliation of each of these measures will be provided when actual results are released.

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Non-GAAP Financial Measures
Organic Growth
(In millions of U.S. dollars, except per share data)
(Unaudited)

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Non-GAAP Financial Measures
Reconciliation of Income from Operations to Adjusted Operating Income
(Unaudited)

 

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Non-GAAP Financial Measures
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
(Unaudited)

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Non-GAAP Financial Measures
Reconciliation of Net Income to Adjusted Net Income and Adjusted Diluted EPS
(Unaudited)

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Non-GAAP Financial Measures
Net Leverage, Reconciliation of Free Cash Flow and Net Interest Paid
(Unaudited)

 

 

 

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Non-GAAP Financial Measures
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
(Unaudited)

 

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Non-GAAP Financial Measures
Footnotes to Reconciliation Tables 

View original content to download multimedia:https://www.prnewswire.com/news-releases/restaurant-brands-international-inc-reports-third-quarter-2024-results-302296099.html

SOURCE Restaurant Brands International Inc.