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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, 2021
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 18, 2021, there were 315,071,796 common shares of the Registrant outstanding.



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,
2021
December 31,
2020
ASSETS
Current assets:
Cash and cash equivalents$1,773 $1,560 
Accounts and notes receivable, net of allowance of $18 and $42, respectively
537 536 
Inventories, net96 96 
Prepaids and other current assets178 72 
Total current assets2,584 2,264 
Property and equipment, net of accumulated depreciation and amortization of $963 and $879, respectively
2,013 2,031 
Operating lease assets, net1,118 1,152 
Intangible assets, net10,652 10,701 
Goodwill5,743 5,739 
Net investment in property leased to franchisees79 66 
Other assets, net739 824 
Total assets$22,928 $22,777 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts and drafts payable$592 $464 
Other accrued liabilities910 835 
Gift card liability137 191 
Current portion of long-term debt and finance leases113 111 
Total current liabilities1,752 1,601 
Long-term debt, net of current portion12,379 12,397 
Finance leases, net of current portion328 315 
Operating lease liabilities, net of current portion1,056 1,082 
Other liabilities, net1,898 2,236 
Deferred income taxes, net1,407 1,425 
Total liabilities18,820 19,056 
Shareholders’ equity:
Common shares, no par value; Unlimited shares authorized at September 30, 2021 and December 31, 2020; 315,065,839 shares issued and outstanding at September 30, 2021; 304,718,749 shares issued and outstanding at December 31, 2020
2,490 2,399 
Retained earnings779 622 
Accumulated other comprehensive income (loss)(753)(854)
Total Restaurant Brands International Inc. shareholders’ equity2,516 2,167 
Noncontrolling interests1,592 1,554 
Total shareholders’ equity4,108 3,721 
Total liabilities and shareholders’ equity$22,928 $22,777 
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,
2021202020212020
Revenues:
Sales$621 $541 $1,718 $1,450 
Franchise and property revenues639 577 1,801 1,552 
Advertising revenues235 219 674 608 
Total revenues1,495 1,337 4,193 3,610 
Operating costs and expenses:
Cost of sales490 418 1,358 1,156 
Franchise and property expenses121 125 358 380 
Advertising expenses237 209 711 638 
General and administrative expenses123 96 341 292 
(Income) loss from equity method investments7 18 12 36 
Other operating expenses (income), net(16)54 (50)59 
Total operating costs and expenses962 920 2,730 2,561 
Income from operations533 417 1,463 1,049 
Interest expense, net128 129 378 376 
Loss on early extinguishment of debt11  11  
Income before income taxes394 288 1,074 673 
Income tax expense65 65 83 62 
Net income329 223 991 611 
Net income attributable to noncontrolling interests (Note 12)108 78 332 216 
Net income attributable to common shareholders$221 $145 $659 $395 
Earnings per common share
Basic$0.71 $0.48 $2.14 $1.31 
Diluted$0.70 $0.47 $2.12 $1.30 
Weighted average shares outstanding
Basic311 303 308 301 
Diluted465 470 465 469 
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,
 2021202020212020
Net income$329 $223 $991 $611 
Foreign currency translation adjustment(257)239 (62)(170)
Net change in fair value of net investment hedges, net of tax of $(31), $40, $10 and $(12)
143 (198)101 39 
Net change in fair value of cash flow hedges, net of tax of $(4), $7, $(32) and $99
13 (17)68 (268)
Amounts reclassified to earnings of cash flow hedges, net of tax of $(9), $(8), $(21) and $(18)
24 22 77 51 
Gain (loss) recognized on other, net of tax of $0, $0, $0 and $0
  2  
Other comprehensive income (loss)(77)46 186 (348)
Comprehensive income (loss)252 269 1,177 263 
Comprehensive income (loss) attributable to noncontrolling interests83 94 395 91 
Comprehensive income (loss) attributable to common shareholders$169 $175 $782 $172 
See accompanying notes to condensed consolidated financial statements.

6

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements 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, 2020304,718,749 $2,399 $622 $(854)$1,554 $3,721 
Stock option exercises530,963 20 — — — 20 
Share-based compensation— 22 — — — 22 
Issuance of shares1,636,858 9 — — — 9 
Dividends declared ($0.53 per share)
— — (163)— — (163)
Dividend equivalents declared on restricted stock units— 3 (3)— —  
Distributions declared by Partnership on Partnership exchangeable units ($0.53 per unit)
— — — — (82)(82)
Exchange of Partnership exchangeable units for RBI common shares72,671 1 — — (1) 
Restaurant VIE contributions (distributions)— — — — 1 1 
Net income— — 179 — 92 271 
Other comprehensive income (loss)— — — 135 68 203 
Balances at March 31, 2021306,959,241 $2,454 $635 $(719)$1,632 $4,002 
Stock option exercises958,671 37 — — — 37 
Share-based compensation— 18 — — — 18 
Issuance of shares34,858 — — — —  
Dividends declared ($0.53 per share)
— — (164)— — (164)
Dividend equivalents declared on restricted stock units— 2 (2)— —  
Distributions declared by Partnership on Partnership exchangeable units ($0.53 per unit)
— — — — (82)(82)
Exchange of Partnership exchangeable units for RBI common shares87,767 1 — — (1) 
Restaurant VIE contributions (distributions)— — — — (3)(3)
Net income— — 259 — 132 391 
Other comprehensive income (loss)— — — 40 20 60 
Balances at June 30, 2021308,040,537 $2,512 $728 $(679)$1,698 $4,259 
Stock option exercises93,012 4 — — — 4 
Share-based compensation— 22 — — — 22 
Issuance of shares92,888 — — — — — 
Dividends declared ($0.53 per share)
— — (167)— — (167)
Dividend equivalents declared on restricted stock units— 3 (3)— — — 
Distributions declared by Partnership on Partnership exchangeable units ($0.53 per unit)
— — — — (77)(77)
Exchange of Partnership exchangeable units for RBI common shares9,682,964 131 — (22)(109)— 
Repurchase of RBI common shares(2,843,562)(182)— — — (182)
Restaurant VIE contributions (distributions)— — — — (3)(3)
Net income— — 221 — 108 329 
Other comprehensive income (loss)— — — (52)(25)(77)
Balances at September 30, 2021315,065,839 $2,490 $779 $(753)$1,592 $4,108 
See accompanying notes to condensed consolidated financial statements.

7

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements 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, 2019298,281,081 $2,478 $775 $(763)$1,769 $4,259 
Stock option exercises1,053,264 30 — — — 30 
Share-based compensation— 19 — — — 19 
Issuance of shares255,325 6 — — — 6 
Dividends declared ($0.52 per share)
— — (156)— — (156)
Dividend equivalents declared on restricted stock units— 2 (2)— —  
Distributions declared by Partnership on Partnership exchangeable units ($0.52 per unit)
— — — — (86)(86)
Exchange of Partnership exchangeable units for RBI common shares178,046 2 — — (2) 
Restaurant VIE contributions (distributions)— — — — (1)(1)
Net income— — 144 — 80 224 
Other comprehensive income (loss)— — — (350)(193)(543)
Balances at March 31, 2020299,767,716 $2,537 $761 $(1,113)$1,567 $3,752 
Stock option exercises316,172 11 — — — 11 
Share-based compensation— 20 — — — 20 
Issuance of shares45,071 — — — —  
Dividends declared ($0.52 per share)
— — (158)— — (158)
Dividend equivalents declared on restricted stock units— 1 (1)— —  
Distributions declared by Partnership on Partnership exchangeable units ($0.52 per unit)
— — — — (85)(85)
Exchange of Partnership exchangeable units for RBI common shares2,494,854 33 — (9)(24) 
Restaurant VIE contributions (distributions)— — — — (1)(1)
Net income— — 106 — 58 164 
Other comprehensive income (loss)— — — 97 52 149 
Balances at June 30, 2020302,623,813 $2,602 $708 $(1,025)$1,567 $3,852 
Stock option exercises567,636 19 — — — 19 
Share-based compensation— 16 — — — 16 
Issuance of shares63,686 — — — —  
Dividends declared ($0.52 per share)
— — (158)— — (158)
Dividend equivalents declared on restricted stock units— 3 (3)— —  
Distributions declared by Partnership on Partnership exchangeable units ($0.52 per unit)
— — — — (84)(84)
Exchange of Partnership exchangeable units for RBI common shares622,068 8 — (2)(6) 
Restaurant VIE contributions (distributions)— — — — 1 1 
Net income— — 145 — 78 223 
Other comprehensive income (loss)— — — 30 16 46 
Balances at September 30, 2020303,877,203 $2,648 $692 $(997)$1,572 $3,915 
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,
 20212020
Cash flows from operating activities:
Net income$991 $611 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization150 139 
Premiums paid and non-cash loss on early extinguishment of debt11  
Amortization of deferred financing costs and debt issuance discount20 19 
(Income) loss from equity method investments12 36 
(Gain) loss on remeasurement of foreign denominated transactions(58)54 
Net (gains) losses on derivatives65 14 
Share-based compensation expense62 55 
Deferred income taxes35 (120)
Other(14)23 
Changes in current assets and liabilities, excluding acquisitions and dispositions:
Accounts and notes receivable11 (83)
Inventories and prepaids and other current assets(3)(21)
Accounts and drafts payable129 (110)
Other accrued liabilities and gift card liability(78)(12)
Tenant inducements paid to franchisees(5)(7)
Other long-term assets and liabilities(73)10 
Net cash provided by operating activities1,255 608 
Cash flows from investing activities:
Payments for property and equipment(70)(71)
Net proceeds from disposal of assets, restaurant closures, and refranchisings14 9 
Settlement/sale of derivatives, net2 29 
Other investing activities, net(15) 
Net cash (used for) provided by investing activities(69)(33)
Cash flows from financing activities:
Proceeds from revolving line of credit and long-term debt802 1,585 
Repayments of revolving line of credit, long-term debt and finance leases(865)(1,071)
Payment of financing costs(7)(10)
Payment of dividends on common shares and distributions on Partnership exchangeable units(730)(716)
Repurchase of common shares(182) 
Proceeds from stock option exercises60 60 
(Payments) proceeds from derivatives(45)(29)
Other financing activities, net(3)(1)
Net cash (used for) provided by financing activities(970)(182)
Effect of exchange rates on cash and cash equivalents(3)(7)
Increase (decrease) in cash and cash equivalents213 386 
Cash and cash equivalents at beginning of period1,560 1,533 
Cash and cash equivalents at end of period$1,773 $1,919 
Supplemental cash flow disclosures:
Interest paid$281 $315 
Income taxes paid$189 $163 
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” or “TH”), fast food hamburgers principally under the Burger King® brand (“Burger King” or “BK”), and chicken under the Popeyes® brand (“Popeyes” or “PLK”). 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, 2021, we franchised or owned 5,137 Tim Hortons restaurants, 18,923 Burger King restaurants, and 3,607 Popeyes restaurants, for a total of 27,667 restaurants, and operate in more than 100 countries. Approximately 100% 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 23, 2021.
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. All material intercompany balances and transactions have been eliminated in consolidation. Investments in other affiliates that are owned 50% or less where we have significant influence are accounted for by the equity method.
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 consolidated balance sheets and statements of operations with respect to the remaining economic interest in Partnership we do not hold.
We also consider for consolidation entities in which we have certain interests, where the controlling financial interest may be achieved through arrangements that do not involve voting interests. Such an entity, known as a variable interest entity (“VIE”), is required to be consolidated by its primary beneficiary. The primary beneficiary is the entity that possesses the power to direct the activities of the VIE that most significantly impact its economic performance and has the obligation to absorb losses or the right to receive benefits from the VIE that are significant to it. Our maximum exposure to loss resulting from involvement with VIEs is attributable to accounts and notes receivable balances, outstanding loan guarantees and future lease payments, where applicable.
As our franchise and master franchise arrangements provide the franchise and master franchise entities the power to direct the activities that most significantly impact their economic performance, we do not consider ourselves the primary beneficiary of any such entity that might be a VIE.
Tim Hortons has historically entered into certain arrangements in which an operator acquires the right to operate a restaurant, but Tim Hortons owns the restaurant’s assets. We perform an analysis to determine if the legal entity in which operations are conducted is a VIE and consolidate a VIE entity if we also determine Tim Hortons is the entity’s primary beneficiary (“Restaurant VIEs”). As of September 30, 2021 and December 31, 2020, we determined that we are the primary beneficiary of 49 and 38 Restaurant VIEs, respectively, and accordingly, have consolidated the results of operations, assets and liabilities, and cash flows of these Restaurant VIEs in our Financial Statements. Material intercompany accounts and transactions have been eliminated in consolidation.
10

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 amounts.
Certain prior year amounts in the accompanying Financial Statements and notes to the Financial Statements have been reclassified in order to be comparable with the current year classifications. These consist of the quarter and year to date September 30, 2020 reclassification of advertising fund contributions from Franchise and property revenues to Advertising revenues and advertising fund expenses from Selling, general and administrative expenses to Advertising expenses, with General and administrative expenses now presented separately. Depreciation and amortization expenses related to the advertising funds for the three and nine months ended September 30, 2020 have also been reclassified from Franchise and property expenses to Advertising expenses. These reclassifications did not arise as a result of any changes to accounting policies and relate entirely to presentation with no effect on previously reported net income.
Note 3. New Accounting Pronouncements
Simplifying the Accounting for Income Taxes – In December 2019, the FASB issued guidance which simplifies the accounting for income taxes by removing certain exceptions and by clarifying and amending existing guidance applicable to accounting for income taxes. The amendment is effective commencing in 2021 with early adoption permitted. The adoption of this new guidance in 2021 did not have a material impact on our Financial Statements.
Accounting Relief for the Transition Away from LIBOR and Certain other Reference Rates – In March 2020 and as clarified in January 2021, the FASB issued guidance which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. This amendment is effective as of March 12, 2020 through December 31, 2022. The expedients and exceptions provided by this new guidance do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationships. During the third quarter of 2021, we adopted certain of the expedients as it relates to hedge accounting as certain of our debt agreements and hedging relationships bear interest at variable rates, primarily US dollar LIBOR. The adoption of and future elections under this new guidance did not and are not expected to have a material impact on our Financial Statements. We will continue to monitor the discontinuance of LIBOR on our debt agreements and hedging relationships.
Lessors—Certain Leases with Variable Lease Payments – In July 2021, the FASB issued guidance that requires lessors to classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if (a) the lease would have been classified as a sales-type lease or a direct financing lease in accordance with lease classification criteria and (b) the lessor would have otherwise recognized a day-one loss. This amendment is effective in 2022 with early adoption permitted. This guidance may be applied either retrospectively to leases that commenced or were modified on or after the adoption of lease guidance we adopted in 2019 or prospectively to leases that commence or are modified on or after the date that this new guidance is applied. We are currently evaluating the impact but do not expect that the adoption of this new guidance will have a material impact on our Financial Statements.
11


Note 4. 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,
2021202020212020
Lease income - operating leases
Minimum lease payments$113 $112 $343 $333 
Variable lease payments91 82 241 191 
Amortization of favorable and unfavorable income lease contracts, net1 1 3 4 
Subtotal - lease income from operating leases205 195 587 528 
Earned income on direct financing and sales-type leases1 1 4 4 
Total property revenues$206 $196 $591 $532 

Note 5. 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 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 between December 31, 2020 and September 30, 2021 (in millions):
Contract LiabilitiesTHBKPLKConsolidated
Balance at December 31, 2020$62 $427 $39 $528 
Recognized during period and included in the contract liability balance at the beginning of the year(7)(30)(2)(39)
Increase, excluding amounts recognized as revenue during the period8 24 14 46 
Impact of foreign currency translation (10) (10)
Balance at September 30, 2021$63 $411 $51 $525 
The following table illustrates estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of September 30, 2021 (in millions):
Contract liabilities expected to be recognized inTHBKPLKConsolidated
Remainder of 2021$3 $9 $1 $13 
20229 34 4 47 
20239 33 3 45 
20248 32 3 43 
20257 32 3 42 
Thereafter27 271 37 335 
Total$63 $411 $51 $525 
12

Disaggregation of Total Revenues
Total revenues consist of the following (in millions):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Sales$621 $541 $1,718 $1,450 
Royalties412 362 1,149 968 
Property revenues206 196 591 532 
Franchise fees and other revenue21 19 61 52 
Advertising revenues235 219 674 608 
Total revenues$1,495 $1,337 $4,193