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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number: 001-36786
 
 RESTAURANT BRANDS INTERNATIONAL INC.
(Exact Name of Registrant as Specified in its Charter)


Canada 98-1202754
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
130 King Street West, Suite 300 M5X 1E1
Toronto, Ontario
(Address of Principal Executive Offices) (Zip Code)
(905) 339-6011
(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class Trading SymbolsName of each exchange on which registered
Common Shares, without par value QSRNew York Stock Exchange
 Toronto Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒  Accelerated filer ☐
Non-accelerated filer ☐  Smaller reporting company ☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
As of October 30, 2024, there were 323,707,500 common shares of the Registrant outstanding. In addition, as of October 30, 2024, there were 127,048,577 Class B exchangeable limited partnership units of Restaurant Brands International Limited Partnership which are exchangeable, on a one for one basis, into common shares of the Registrant.


RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
TABLE OF CONTENTS
 
3
PART I — Financial Information
Item 1. Financial Statements
RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In millions of U.S. dollars, except share data)
(Unaudited)
 As of
September 30,
2024		December 31,
2023
ASSETS
Current assets:
Cash and cash equivalents$1,176 $1,139 
Accounts and notes receivable, net of allowance of $39 and $37, respectively
693 749 
Inventories, net169 166 
Prepaids and other current assets217 119 
Total current assets2,255 2,173 
Property and equipment, net of accumulated depreciation and amortization of $1,283 and $1,187, respectively
2,229 1,952 
Operating lease assets, net1,870 1,122 
Intangible assets, net11,347 11,107 
Goodwill6,187 5,775 
Other assets, net1,183 1,262 
Total assets$25,071 $23,391 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts and drafts payable$754 $790 
Other accrued liabilities1,158 1,005 
Gift card liability170 248 
Current portion of long-term debt and finance leases126 101 
Total current liabilities2,208 2,144 
Long-term debt, net of current portion13,571 12,854 
Finance leases, net of current portion305 312 
Operating lease liabilities, net of current portion1,775 1,059 
Other liabilities, net931 996 
Deferred income taxes, net1,242 1,296 
Total liabilities20,032 18,661 
Shareholders’ equity:
Common shares, no par value; Unlimited shares authorized at September 30, 2024 and December 31, 2023; 323,704,500 shares issued and outstanding at September 30, 2024; 312,454,851 shares issued and outstanding at December 31, 2023
2,300 1,973 
Retained earnings1,794 1,599 
Accumulated other comprehensive income (loss)(858)(706)
Total Restaurant Brands International Inc. shareholders’ equity3,236 2,866 
Noncontrolling interests1,803 1,864 
Total shareholders’ equity5,039 4,730 
Total liabilities and shareholders’ equity$25,071 $23,391 
See accompanying notes to condensed consolidated financial statements.
4
RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In millions of U.S. dollars, except per share data)
(Unaudited)

Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Revenues:
Supply chain sales$699 $706 $2,008 $1,989 
Company restaurant sales567 65 1,016 194 
Franchise and property revenues735 753 2,194 2,163 
Advertising revenues and other services290 313 892 856 
Total revenues2,291 1,837 6,110 5,202 
Operating costs and expenses:
Supply chain cost of sales559 572 1,616 1,620 
Company restaurant expenses473 58 848 172 
Franchise and property expenses134 119 394 372 
Advertising expenses and other services327 326 972 909 
General and administrative expenses176 169 534 507 
(Income) loss from equity method investments3 1 (69)19 
Other operating expenses (income), net42 10 31 20 
Total operating costs and expenses1,714 1,255 4,326 3,619 
Income from operations577 582 1,784 1,583 
Interest expense, net147 143 442 430 
Loss on early extinguishment of debt1 16 33 16 
Income before income taxes429 423 1,309 1,137 
Income tax expense72 59 225 145 
Net income357 364 1,084 992 
Net income attributable to noncontrolling interests (Note 13)105 112 322 310 
Net income attributable to common shareholders$252 $252 $762 $682 
Earnings per common share
Basic$0.79 $0.80 $2.41 $2.19 
Diluted$0.79 $0.79 $2.39 $2.16 
Weighted average shares outstanding (in millions):
Basic319 314 317 312 
Diluted454 459 453 458 
See accompanying notes to condensed consolidated financial statements.

5
RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In millions of U.S. dollars)
(Unaudited)

Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
Net income$357 $364 $1,084 $992 
Foreign currency translation adjustment180 (270)(167)(36)
Net change in fair value of net investment hedges, net of tax of $2, $4, $8 and $12
(121)182 39 67 
Net change in fair value of cash flow hedges, net of tax of $30, $(26), $(6) and $(42)
(80)71 16 114 
Amounts reclassified to earnings of cash flow hedges, net of tax of $11, $6, $29 and $17
(28)(17)(77)(47)
Gain (loss) recognized on other, net of tax of $0, $0, $0 and $0
(4)2 (4)4 
Other comprehensive income (loss)(53)(32)(193)102 
Comprehensive income (loss)304 332 891 1,094 
Comprehensive income (loss) attributable to noncontrolling interests90 103 265 342 
Comprehensive income (loss) attributable to common shareholders$214 $229 $626 $752 
See accompanying notes to condensed consolidated financial statements.

6
RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Shareholders’ Equity
(In millions of U.S. dollars, except shares and per share data)
(Unaudited)
 Issued Common SharesRetained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Noncontrolling
Interest		Total
 SharesAmount
Balances at December 31, 2023312,454,851 $1,973 $1,599 $(706)$1,864 $4,730 
Stock option exercises721,052 39 — — — 39 
Share-based compensation— 42 — — — 42 
Issuance of shares3,204,316 17 — — — 17 
Dividends declared ($0.58 per share)
— — (184)— — (184)
Dividend equivalents declared on restricted stock units— 5 (5)— — — 
Distributions declared by Partnership on Partnership exchangeable units ($0.58 per unit)
— — — — (77)(77)
Exchange of Partnership exchangeable units for RBI common shares2,220 — — — — — 
Restaurant VIE contributions (distributions)— — — — (1)(1)
Net income— — 230 — 98 328 
Other comprehensive income (loss)— — — (41)(18)(59)
Balances at March 31, 2024316,382,439 2,076 1,640 (747)1,866 4,835 
Stock option exercises464,725 21 — — — 21 
Share-based compensation— 38 — — — 38 
Issuance of shares36,411 1 — — — 1 
Dividends declared ($0.58 per share)
— — (184)— — (184)
Dividend equivalents declared on restricted stock units— 2 (2)— — — 
Distributions declared by Partnership on Partnership exchangeable units ($0.58 per unit)
— — — — (78)(78)
Exchange of Partnership exchangeable units for RBI common shares14,400 — — — — — 
Net income— — 280 — 119 399 
Other comprehensive income (loss)— — — (57)(24)(81)
Balances at June 30, 2024316,897,975 $2,138 $1,734 $(804)$1,883 $4,951 
Stock option exercises200,254 11 — — — 11 
Share-based compensation— 35 — — — 35 
Issuance of shares73,704 — — — — — 
Dividends declared ($0.58 per share)
— — (187)— — (187)
Dividend equivalents declared on restricted stock units— 5 (5)— — — 
Distributions declared by Partnership on Partnership exchangeable units ($0.58 per unit)
— — — — (74)(74)
Exchange of Partnership exchangeable units for RBI common shares6,532,567 111 — (16)(95)— 
Restaurant VIE contributions (distributions)— — — — (1)(1)
Net income— — 252 — 105 357 
Other comprehensive income (loss)— — — (38)(15)(53)
Balances at September 30, 2024323,704,500 $2,300 $1,794 $(858)$1,803 $5,039 
See accompanying notes to condensed consolidated financial statements.


7
RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Shareholders’ Equity
(In millions of U.S. dollars, except shares and per share data)
(Unaudited)
Issued Common SharesRetained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Noncontrolling
Interest		Total
SharesAmount
Balances at December 31, 2022307,142,436 $2,057 $1,121 $(679)$1,769 $4,268 
Stock option exercises124,275 6 — — — 6 
Share-based compensation— 41 — — — 41 
Issuance of shares1,690,762 15 — — — 15 
Dividends declared ($0.55 per share)
— — (171)— — (171)
Dividend equivalents declared on restricted stock units— 5 (5)— — — 
Distributions declared by Partnership on Partnership exchangeable units ($0.55 per unit)
— — — — (77)(77)
Exchange of Partnership exchangeable units for RBI common shares2,214,072 33 — (5)(28)— 
Restaurant VIE contributions (distributions)— — — — (1)(1)
Net income— — 189 — 88 277 
Other comprehensive income (loss)— — — (32)(15)(47)
Balances at March 31, 2023311,171,545 $2,157 $1,134 $(716)$1,736 $4,311 
Stock option exercises920,438 43 — — — 43 
Share-based compensation— 42 — — — 42 
Issuance of shares87,695 — — — — — 
Dividends declared ($0.55 per share)
— — (172)— — (172)
Dividend equivalents declared on restricted stock units— 5 (5)— — — 
Distributions declared by Partnership on Partnership exchangeable units ($0.55 per unit)
— — — — (77)(77)
Exchange of Partnership exchangeable units for RBI common shares23,787 — — — — — 
Restaurant VIE contributions (distributions)— — — — (1)(1)
Net income— — 241 — 110 351 
Other comprehensive income (loss)— — — 125 56 181 
Balances at June 30, 2023312,203,465 $2,247 $1,198 $(591)$1,824 $4,678 
Stock option exercises43,596 3 — — — 3 
Share-based compensation— 44 — — — 44 
Issuance of shares119,571 — — — — — 
Dividends declared ($0.55 per share)
— — (176)— — (176)
Dividend equivalents declared on restricted stock units— 6 (6)— — — 
Distributions declared by Partnership on Partnership exchangeable units ($0.55 per unit)
— — — — (74)(74)
Exchange of Partnership exchangeable units for RBI common shares7,161,017 109 — (13)(96)— 
Repurchase of RBI common shares(1,690,043)(142)— — — (142)
Restaurant VIE contributions (distributions)— — — — (1)(1)
Net income— — 252 — 112 364 
Other comprehensive income (loss)— — — (23)(9)(32)
Balances at September 30, 2023317,837,606 $2,267 $1,268 $(627)$1,756 $4,664 
See accompanying notes to condensed consolidated financial statements.
8
RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In millions of U.S. dollars)
(Unaudited)
 Nine Months Ended September 30,
 20242023
Cash flows from operating activities:
Net income$1,084 $992 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization187 142 
Non-cash loss on early extinguishment of debt23 5 
Amortization of deferred financing costs and debt issuance discount19 21 
(Income) loss from equity method investments(69)19 
(Gain) loss on remeasurement of foreign denominated transactions15 (11)
Net (gains) losses on derivatives(140)(111)
Share-based compensation and non-cash incentive compensation expense124 141 
Deferred income taxes(16)(47)
Other4 19 
Changes in current assets and liabilities, excluding acquisitions and dispositions:
Accounts and notes receivable57 (86)
Inventories and prepaids and other current assets1 (49)
Accounts and drafts payable(45)(62)
Other accrued liabilities and gift card liability(171)(62)
Tenant inducements paid to franchisees(23)(15)
Other long-term assets and liabilities(28)24 
Net cash provided by operating activities1,022 920 
Cash flows from investing activities:
Payments for property and equipment(124)(73)
Net proceeds from disposal of assets, restaurant closures, and refranchisings17 23 
Payment for purchase of Carrols Restaurant Group, net of cash acquired(508)— 
Net payments for acquisition of franchised restaurants(30)— 
Settlement/sale of derivatives, net54 40 
Other investing activities, net(25)(1)
Net cash used for investing activities(616)(11)
Cash flows from financing activities:
Proceeds from long-term debt2,450 55 
Repayments of long-term debt and finance leases(2,164)(79)
Payment of financing costs(38)(43)
Payment of common share dividends and Partnership exchangeable unit distributions(767)(741)
Repurchase of common shares— (115)
Proceeds from stock option exercises71 52 
Proceeds from derivatives85 100 
Other financing activities, net(2)(3)
Net cash used for financing activities(365)(774)
Effect of exchange rates on cash and cash equivalents(4)(3)
Increase in cash and cash equivalents37 132 
Cash and cash equivalents at beginning of period1,139 1,178 
Cash and cash equivalents at end of period$1,176 $1,310 
Supplemental cash flow disclosures:
Interest paid$569 $544 
Income taxes paid$262 $184 
See accompanying notes to condensed consolidated financial statements.
9
RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1. Description of Business and Organization
Restaurant Brands International Inc. (the “Company”, “RBI”, “we”, “us” or “our”) is a Canadian corporation that serves as the sole general partner of Restaurant Brands International Limited Partnership (“Partnership”). We franchise and operate quick service restaurants serving premium coffee and other beverage and food products under the Tim Hortons® brand (“Tim Hortons”), fast food hamburgers principally under the Burger King® brand (“Burger King”), chicken principally under the Popeyes® brand (“Popeyes”) and sandwiches under the Firehouse Subs® brand (“Firehouse”). We are one of the world’s largest quick service restaurant, or QSR, companies as measured by total number of restaurants. As of September 30, 2024, we franchised or owned 5,878 Tim Hortons restaurants, 19,509 Burger King restaurants, 4,817 Popeyes restaurants and 1,321 Firehouse Subs restaurants, for a total of 31,525 restaurants, and operate in more than 120 countries and territories. As of September 30, 2024, approximately 95% of current system-wide restaurants are franchised.
All references to “$” or “dollars” are to the currency of the United States unless otherwise indicated. All references to “Canadian dollars” or “C$” are to the currency of Canada unless otherwise indicated.
Note 2. Basis of Presentation and Consolidation
We have prepared the accompanying unaudited condensed consolidated financial statements (the “Financial Statements”) in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements. Therefore, the Financial Statements should be read in conjunction with the audited consolidated financial statements contained in our Annual Report on Form 10-K filed with the SEC and Canadian securities regulatory authorities on February 22, 2024.
The Financial Statements include our accounts and the accounts of entities in which we have a controlling financial interest, the usual condition of which is ownership of a majority voting interest. Investments in other affiliates that are owned 50% or less where we have significant influence are accounted for by the equity method. All material intercompany balances and transactions have been eliminated in consolidation.
We are the sole general partner of Partnership and, as such we have the exclusive right, power and authority to manage, control, administer and operate the business and affairs and to make decisions regarding the undertaking and business of Partnership, subject to the terms of the amended and restated limited partnership agreement of Partnership (the “partnership agreement”) and applicable laws. As a result, we consolidate the results of Partnership and record a noncontrolling interest in our condensed consolidated balance sheets and statements of operations with respect to the remaining economic interest in Partnership we do not hold.
In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation have been included in the Financial Statements. The results for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the full year.
The preparation of consolidated financial statements in conformity with U.S. GAAP and related rules and regulations of the SEC requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. Actual results could differ from these estimates.
The carrying amounts for cash and cash equivalents, accounts and notes receivable and accounts and drafts payable approximate fair value based on the short-term nature of these accounts.
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Note 3. New Accounting Pronouncements
Segment Reporting – In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance that expands segment disclosures for public entities, including requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), the title and position of the CODM and an explanation of how the CODM uses reported measures of segment profit or loss in assessing segment performance and allocating resources. The new guidance also expands disclosures about a reportable segment’s profit or loss and assets in interim periods and clarifies that a public entity may report additional measures of segment profit if the CODM uses more than one measure of a segment’s profit or loss. The new guidance does not remove existing segment disclosure requirements or change how a public entity identifies its operating segments, aggregates those operating segments, or determines its reportable segments. The guidance is effective for annual disclosures for fiscal years beginning after December 15, 2023, and subsequent interim periods with early adoption permitted, and requires retrospective application to all prior periods presented in the financial statements. We are currently evaluating the impact this new guidance will have on our disclosures upon adoption.
Improvements to Income Tax Disclosures – In December 2023, the FASB issued guidance that expands income tax disclosures for public entities, including requiring enhanced disclosures related to the rate reconciliation and income taxes paid information. The guidance is effective for annual disclosures for fiscal years beginning after December 15, 2024, with early adoption permitted. The guidance should be applied on a prospective basis, with retrospective application to all prior periods presented in the financial statements permitted. We are currently evaluating the impact this new guidance will have on our disclosures upon adoption and expect to provide additional detail and disclosures under this new guidance.


Note 4. Carrols Acquisition
Prior to May 16, 2024, we owned a 15% equity interest in Carrols Restaurant Group, Inc. (“Carrols”), which was accounted for as an equity method investment. On May 16, 2024, we acquired the remaining 85% of Carrols issued and outstanding shares that were not already held by us or our affiliates for $9.55 per share in an all cash transaction (the “Carrols Acquisition”) in order to accelerate the reimaging of more than 600 Carrols restaurants before refranchising the majority of the acquired portfolio to new or existing smaller franchise operations. The Carrols Acquisition was accounted for as a business combination by applying the acquisition method of accounting and Carrols became our wholly owned consolidated subsidiary.
The acquisition of the 85% equity interest of Carrols was accounted for as a step acquisition, which required remeasurement of our existing 15% ownership interest in Carrols to fair value. We utilized the $9.55 per share acquisition price to determine the fair value of the existing equity interest. This resulted in an increase in the value of our existing 15% equity interest and the recognition of a gain of $79 million (the “Step Acquisition Gain”), which is included in (Income) loss from equity method investments in our condensed consolidated statements of operations for the nine months ended September 30, 2024.
Total cash paid in connection with the Carrols Acquisition was $543 million. Additionally, in connection with the Carrols Acquisition, we assumed approximately $431 million of outstanding debt, all of which was fully extinguished as of June 30, 2024. The cash purchase price and extinguishment of debt assumed in the Carrols Acquisition was funded with a combination of cash on hand and $750 million of incremental borrowings under our senior secured term loan facility.
The following table summarizes the purchase price consideration in connection with the Carrols Acquisition (in millions):
Total cash paid$543 
Effective settlement of pre-existing balance sheet accounts (a)15 
Fair value of existing 15% equity interest
90 
Total consideration$648 
(a)Effective settlement of pre-existing balances with Carrols related to franchise and lease agreements prior to the date of acquisition.
Fees and expenses related to the Carrols Acquisition and related financings totaled approximately $11 million during the nine months ended September 30, 2024, consisting of professional fees and compensation related expenses which are classified as general and administrative expenses in the accompanying condensed consolidated statements of operations (the “Carrols Acquisition Costs”).
11
During the three months ended September 30, 2024, we adjusted our preliminary estimate of the fair value of net assets acquired. The preliminary allocation of consideration to the net tangible and intangible assets acquired is presented in the table below (in millions):
May 16, 2024
Total current assets$81 
Property and equipment292 
Reacquired franchise rights385 
Operating lease assets711 
Other assets14 
Accounts and drafts payable(18)
Other accrued liabilities(145)
Current portion of long-term debt and finance leases(434)
Finance leases, net of current portion(9)
Operating lease liabilities, net of current portion(684)
Other liabilities(10)
Total identifiable net assets183 
Goodwill465 
Total consideration$648 
The adjustments to the preliminary estimate of net assets acquired did not result in a change to the estimated goodwill. Below are the most significant changes to the preliminary estimates of fair values and allocation of purchase price (in millions):
Increase (Decrease) in Goodwill
Change in:
Reacquired franchise rights$(14)
Operating lease assets14 
Accounts and drafts payable6 
Other accrued liabilities(6)
Total change in goodwill$— 
The purchase price allocation reflects preliminary fair value estimates based on management's analysis, including preliminary work performed by third-party valuation specialists. During the measurement period, we will continue to obtain information to assist in determining the fair value of net assets acquired.
Reacquired franchise rights, which represent the fair value of reacquired franchise agreements determined using the excess earnings method, are amortized over the remaining term of the reacquired franchise agreement and have an estimated weighted average remaining term of 12 years.
Goodwill is considered to represent the value associated with the workforce and synergies anticipated to be realized as a combined company. Goodwill will be allocated to reporting units when the purchase price allocation is finalized during the measurement period.
Total revenues of Carrols from the acquisition date of May 16, 2024 through September 30, 2024, which have been included within Company restaurant sales in our condensed consolidated financial statements, totaled $705 million.
12
Supplemental Pro Forma Information
The following table presents unaudited supplemental pro forma consolidated revenue for the three and nine months ended September 30, 2024 and 2023, as if the Carrols Acquisition had occurred on January 1, 2023 (in millions):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Total revenues$2,291 $2,264 $6,726 $6,464 
The unaudited supplemental pro forma consolidated revenue gives effect to actual revenues prior to the Carrols Acquisition, adjusted to exclude the elimination of intercompany transactions. Other than the impact of the Step Acquisition Gain and Carrols Acquisition Costs (as discussed above), supplemental pro forma net earnings, assuming the Carrols Acquisition had occurred on January 1, 2023, would not be materially different from the results reported during the three and nine months ended September 30, 2024 and 2023.
The unaudited pro forma information has been prepared for comparative purposes only, in accordance with the acquisition method of accounting, and is not necessarily indicative of the results of operations that would have occurred if the Carrols Acquisition had been completed on the date indicated, nor is it indicative of our future operating results.

Note 5. Leases
Property revenues consist primarily of lease income from operating leases and earned income on direct financing leases and sales-type leases with franchisees as follows (in millions):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Lease income - operating leases
Minimum lease payments$92 $95 $278 $290 
Variable lease payments119 122 349 337 
Amortization of favorable and unfavorable income lease contracts, net— — 1 1 
Subtotal - lease income from operating leases211 217 628 628 
Earned income on direct financing and sales-type leases1 4 3 9 
Total property revenues$212 $221 $631 $637 

Note 6. Revenue Recognition
Contract Liabilities
Contract liabilities consist of deferred revenue resulting from initial and renewal franchise fees paid by franchisees, as well as upfront fees paid by master franchisees, which are generally recognized on a straight-line basis over the term of the underlying agreement. We may recognize unamortized franchise fees and upfront fees when a contract with a franchisee or master franchisee is modified and is accounted for as a termination of the existing contract. We classify these contract liabilities as Other liabilities, net in our condensed consolidated balance sheets. The following table reflects the change in contract liabilities on a consolidated basis between December 31, 2023 and September 30, 2024 (in millions):
13
Contract Liabilities
Balance at December 31, 2023$555 
Recognized during period and included in the contract liability balance at the beginning of the year(34)
Increase, excluding amounts recognized as revenue during the period23 
Effective settlement of pre-existing contract liabilities in connection with Carrols Acquisition(22)
Impact of foreign currency translation1 
Balance at September 30, 2024$523 
The following table illustrates estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) on a consolidated basis as of September 30, 2024 (in millions):
Contract liabilities expected to be recognized in
Remainder of 2024$14 
202554 
202651 
202747 
202844 
Thereafter313 
Total$523 

Disaggregation of Total Revenues
As described in Note 17, Segment Reporting, during the fourth quarter of 2023, we revised our internal reporting structure, which resulted in a change to our operating and reportable segments. Additionally, following the Carrols Acquisition and PLK China Acquisition (as defined below), we are reporting the operations of Burger King restaurants acquired as part of the Carrols Acquisition and the operations of PLK China restaurants in a new operating and reportable segment called Restaurant Holdings (“RH”) from the respective date of acquisition.
The following tables disaggregate revenue by segment (in millions):
Three Months Ended September 30, 2024
THBKPLKFHSINTLRHELIM (a)Total
Supply chain sales$699 $— $— $— $— $— $— $699 
Company restaurant sales12 60 44 10 — 441 — 567 
Royalties87 123 73 17 211 — (20)491 
Property revenues162 55 3 — 1 — (9)212 
Franchise fees and other revenue6 2 3 10 11 — — 32 
Advertising revenues and other services78 122 72 16 20 — (18)290 
Total revenues$1,044 $362 $195 $53 $243 $441 $(47)$2,291 
(a)Represents elimination of intersegment revenues that consists of royalties, property and advertising and other services revenue recognized by BK and INTL from intersegment transactions with RH.

14
Nine Months Ended September 30, 2024
THBKPLKFHSINTLRHELIM (a)Total
Supply chain sales$2,008 $— $— $— $— $— $— $2,008 
Company restaurant sales34 181 100 30 — 671 — 1,016 
Royalties250 361 224 53 599 — (30)1,457 
Property revenues469 163 10 — 2 — (13)631 
Franchise fees and other revenue26 8 10 26 36 — — 106 
Advertising revenues and other services226 363 223 47 61 — (28)892 
Total revenues$3,013 $1,076 $567 $156 $698 $671 $(71)$6,110 

Three Months Ended September 30, 2023
THBKPLKFHSINTLTotal
Supply chain sales$706 $— $— $— $— $706 
Company restaurant sales12 20 23 10 — 65 
Royalties87 124 75 17 200 503 
Property revenues161 57 3 — — 221 
Franchise fees and other revenue6 3 1 9 10 29 
Advertising revenues and other services81 124 75 15 18 313 
Total revenues$1,053 $328 $177 $51 $228 $1,837 

Nine Months Ended September 30, 2023
THBKPLKFHSINTLTotal
Supply chain sales$1,989 $— $— $— $— $1,989 
Company restaurant sales35 63 66 30 — 194 
Royalties241 362 216 52 565 1,436 
Property revenues456 170 10 — 1 637 
Franchise fees and other revenue17 10 8 21 34 90 
Advertising revenues and other services216 347 210 33 50 856 
Total revenues$2,954 $952 $510 $136 $650 $5,202 
15
Note 7. Earnings per Share
An economic interest in Partnership common equity is held by the holders of Class B exchangeable limited partnership units (the “Partnership exchangeable units”), which is reflected as a noncontrolling interest in our equity. See Note 13, Shareholders’ Equity.
Basic and diluted earnings per share is computed using the weighted average number of shares outstanding for the period. We apply the treasury stock method to determine the dilutive weighted average common shares represented by outstanding equity awards, unless the effect of their inclusion is anti-dilutive. The diluted earnings per share calculation assumes conversion of 100% of the Partnership exchangeable units under the “if converted” method. Accordingly, the numerator is also adjusted to include the earnings allocated to the holders of noncontrolling interests.

The following table summarizes the basic and diluted earnings per share calculations (in millions, except per share amounts):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Numerator:
Net income attributable to common shareholders - basic$252 $252 $762 $682 
Add: Net income attributable to noncontrolling interests104 111 320 307 
Net income available to common shareholders and noncontrolling interests - diluted