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Burger King Worldwide, Inc. Reports Second Quarter 2012 Results

(2) Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Diluted Adjusted Earnings Per Share are non-GAAP financial measures. Please refer to “Non-GAAP Reconciliations” for further detail.

Organic revenue growth was 5.4%, excluding the impact of refranchising and FX headwinds. On a reported basis, total revenues decreased 9.2% to $540.8 million, compared to $595.4 million in the prior year period due to refranchising transactions in the U.S. and Canada and EMEA and unfavorable FX impact, partially offset by comparable sales growth across all segments and increased franchise and property revenues.

Organic Adjusted EBITDA growth was 19.0%, excluding the impact of refranchising and FX headwinds. On a reported basis, Adjusted EBITDA increased 14.7% to $172.0 million, compared to $149.9 million in the prior year period due to improved results in all operating segments. Results were particularly strong in the U.S. and Canada due to the positive impact from our new product launches and accompanying advertising campaign.

Adjusted net income and diluted adjusted EPS increased 31.8% and 29.5%, respectively, compared to the prior year, primarily due to an increase in income from operations, partially offset by increases in interest expense and income tax expense.

Operational and Segment Highlights

System-wide comparable sales growth was positive across all segments. The U.S. and Canada delivered 4.4% comparable sales growth driven by strong sales and product volumes from the largest expansion of menu items in BKW’s history, including smoothies, frappes, and wraps, introduced in April. Latin America and the Caribbean (“LAC”) delivered double-digit comparable sales growth of 10.5%, driven by strong performance in Brazil and Mexico. EMEA delivered comparable sales growth of 3.3%, driven by successful promotions in Germany, and APAC delivered comparable sales growth of 2.1%, primarily driven by the impact of an extra trading week in the quarter in Australia.

As part of BKW’s global refranchising strategy, the company refranchised 386 company-owned restaurants domestically and 78 company-owned restaurants internationally during the quarter. This includes 278 restaurants that were sold to Carrols Restaurant Group, BKW’s largest franchisee, in return for a 28.9% equity stake and total cash payments of approximately $16.2 million. In connection with this quarter’s refranchising transactions, BKW’s U.S. and Canadian franchisees have agreed to remodel 564 restaurants, bringing the total remodel commitment in the region to more than 1,500 restaurants as of June 30, 2012.

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