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TheStreet Open House

Burger King Worldwide, Inc. Reports Third Quarter 2012 Results

We evaluate our restaurants and assess our business based on the following operating metrics.

System sales growth refers to the change in sales at all company-owned and franchise restaurants in one period from the same period in the prior year. Comparable sales growth refers to the change in restaurant sales in one period from the same prior year period for restaurants that have been open for thirteen months or longer. Company-owned restaurants refranchised during a quarterly period are included with franchise restaurants for the purpose of calculating comparable sales growth for the quarter. Comparable sales and sales growth are measured on a constant currency basis, which means that results exclude the effect of foreign currency translation and are calculated by translating current year results at prior year 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 (“FX Impact”).

Franchise sales represent sales at all franchise restaurants and are revenues to our franchisees. We do not record franchise sales as revenues; however, our franchise revenues include royalties based on a percentage of franchise sales. Average restaurant sales refer to the total sales divided by total store months for all company-owned and franchise restaurants open during the period. Net refranchisings refer to sales of company-owned restaurants to franchisees, net of acquisitions of franchise restaurants by us.

Consolidated BKW    
 

Key Business Metrics

 

Three Months Ended September 30,

2012 2011
 
System sales growth (1) 3.9 % 3.6 %
Franchise sales (2) $ 3,830.0 $ 3,634.0
Comparable sales growth (3)
Company 0.4 % 3.2 %
Franchise 1.5 % 1.4 %
System 1.4 % 1.6 %
Average restaurant sales (in thousands) (4) $ 326.4 $ 331.2
Net Restaurant Growth (NRG)
Company (2 ) -
Franchise 65 59
System 63 59
Net refranchisings (5) 221 35
Restaurant counts at period end
Company 595 1,295
Franchise 12,072 11,100
System 12,667 12,395
CRM % 11.6 % 12.4 %
 
     
U.S. & Canada
 

Key Business Metrics

 
Three Months Ended
September 30,
2012 2011
Favorable / (Unfavorable)
Systemwide sales growth 1.3 % (0.4 )%
Comparable sales growth
Company 0.7 % 1.8 %
Franchise 1.7 % (0.6 )%
System 1.6 % (0.3 )%
NRG
Company (3 ) (1 )
Franchise (13 ) (4 )
System (16 ) (5 )
Net Refranchisings 182 35
Restaurant counts at period end
Company 361 942
Franchise 7,092 6,581
System 7,453 7,523
 
 
Three Months Ended Variance
September 30, Favorable/
2012 2011 (Unfavorable)
 
Company:
Company restaurant revenues $ 159.9 $ 302.2 $ (142.3 )
CRM 18.3 37.6 (19.3 )
CRM % 11.4 % 12.4 % (1.0 )%

Company restaurant expenses as a % of Company restaurant revenue:

Food and paper 32.9 % 32.2 % (0.7 )%
Payroll and benefits 30.2 % 30.1 % (0.1 )%
Depreciation and amortization 5.5 % 5.6 % 0.1 %
Other occupancy and operating 20.0 % 19.7 % (0.3 )%
 
Franchise:
Franchise and property revenues $ 123.5 $ 103.8 $ 19.7
Franchise and property expenses 26.4 17.5 (8.9 )
Franchise sales 2,139.0 1,968.8 170.2
Segment SG&A 23.8 27.8 4.0
Segment depreciation and amortization 21.9 25.3 3.4
Segment income 113.5 121.4 (7.9 )
Segment margin 40.0 % 29.9 % 10.1 %
 
     
EMEA
 

Key Business Metrics

 
Three Months Ended
September 30,
2012 2011
Favorable / (Unfavorable)
Systemwide sales growth 11.0 % 5.8 %
Comparable sales growth
Company 2.1 % 6.1 %
Franchise 1.8 % 4.6 %
System 1.8 % 4.7 %
NRG
Company - (1 )
Franchise 33 40
System 33 39
Net Refranchisings 1 0
Restaurant counts at period end
Company 133 192
Franchise 2,861 2,643
System 2,994 2,835
 
 
Three Months Ended Variance
September 30, Favorable/
2012 2011 (Unfavorable)
 
Company:
Company restaurant revenues $ 57.9 $ 84.8 $ (26.9 )
CRM 7.3 10.6 (3.3 )
CRM % 12.6 % 12.5 % 0.1 %

Company restaurant expenses as a % of Company restaurant revenue:

Food and paper 29.9 % 29.1 % (0.8 )%
Payroll and benefits 33.6 % 30.5 % (3.1 )%
Depreciation and amortization 2.4 % 3.4 % 1.0 %
Other occupancy and operating 21.5 % 24.5 % 3.0 %
 
Franchise:
Franchise and property revenues $ 53.8 $ 54.0 $ (0.2 )
Franchise and property expenses 7.8 6.5 (1.3 )
Franchise sales 1,017.2 1,008.3 8.9
Segment SG&A 14.5 19.9 5.4
Segment depreciation and amortization 4.0 5.5 1.5
Segment income 42.8 43.7 (0.9 )
Segment margin 38.3 % 31.5 % 6.8 %
 
     
LAC
 

Key Business Metrics

 
Three Months Ended
September 30,
2012 2011
Favorable / (Unfavorable)
Systemwide sales growth 4.3 % 15.6 %
Comparable sales growth
Company (5.5 )% 12.1 %
Franchise 3.1 % 10.5 %
System 2.7 % 10.5 %
NRG
Company 1 -
Franchise 24 11
System 25 11
Net Refranchisings - -
Restaurant counts at period end
Company 98 97
Franchise 1,182 1,079
System 1,280 1,176
 
 
Three Months Ended Variance
September 30, Favorable/
2012 2011 (Unfavorable)
 
Company:
Company restaurant revenues $ 15.8 $ 17.9 $ (2.1 )
CRM 2.1 3.7 (1.6 )
CRM % 13.3 % 20.7 % (7.4 )%

Company restaurant expenses as a % of Company restaurant revenue:

Food and paper 39.7 % 38.7 % (1.0 )%
Payroll and benefits 12.9 % 11.8 % (1.1 )%
Depreciation and amortization 9.9 % 8.9 % (1.0 )%
Other occupancy and operating 24.2 % 19.9 % (4.3 )%
 
Franchise:
Franchise and property revenues $ 17.7 $ 16.0 $ 1.7
Franchise and property expenses - 0.5 0.5
Franchise sales 338.5 322.7 15.8
Segment SG&A 4.2 5.0 0.8
Segment depreciation and amortization 1.6 1.7 0.1
Segment income 17.2 15.9 1.3
Segment margin 51.3 % 46.9 % 4.4 %
 
     
APAC
 

Key Business Metrics

 
Three Months Ended
September 30,
2012 2011
Favorable / (Unfavorable)
Systemwide sales growth (1.5 )% 14.5 %
Comparable sales growth
Company (2.4 )% 7.0 %
Franchise (2.2 )% (1.8 )%
System (2.2 )% (1.5 )%
NRG
Company - 2
Franchise 21 12
System 21 14
Net Refranchisings 38 -
Restaurant counts at period end
Company 3 64
Franchise 937 797
System 940 861
 
 
Three Months Ended Variance
September 30, Favorable/
2012 2011 (Unfavorable)
 
Company:
Company restaurant revenues $ 11.0 $ 17.9 $ (6.9 )
CRM 0.6 0.7 (0.1 )
CRM % 5.5 % 3.9 % 1.6 %

Company restaurant expenses as a % of Company restaurant revenue:

Food and paper 31.8 % 33.9 % 2.1 %
Payroll and benefits 19.6 % 19.3 % (0.3 )%
Depreciation and amortization 4.7 % 6.0 % 1.3 %
Other occupancy and operating 38.4 % 36.9 % (1.5 )%
 
Franchise:
Franchise and property revenues $ 11.4 $ 11.1 $ 0.3
Franchise and property expenses 0.5 0.8 0.3
Franchise sales 335.3 334.2 1.1
Segment SG&A 2.7 4.9 2.2
Segment depreciation and amortization 1.1 1.8 0.7
Segment income 9.9 7.9 2.0
Segment margin 44.2 % 27.2 % 17.0 %
 
       

BURGER KING WORLDWIDE, INC. AND SUBSIDIARIES

Supplemental Disclosure

 
Other Operating (Income) Expense, net
 
Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
Net (gains) losses on disposal of assets, restaurant closures and refranchisings $ 14.1 $ (2.7 ) $ 15.2 $ -
Litigation settlements and reserves, net 0.8 0.1 1.3 0.7
Foreign exchange net (gains) losses 1.5 (0.1 ) (5.3 ) 6.7
Loss on termination of interest rate cap 8.7 - 8.7 -
Equity in net (income) loss from unconsolidated affiliates (0.4 ) 0.2 1.4 0.9
Other, net   5.6     (0.2 )   4.9     1.5
Other operating (income) expense, net $ 30.3   $ (2.7 ) $ 26.2   $ 9.8
 
       
Selling, general and administrative expenses
 
 
Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
 
Selling expenses $ 10.4 $ 18.7 $ 40.5 $ 58.1
Management general and administrative expenses 52.2 62.7 164.3 189.6
Share-based compensation 1.7 0.3 3.4 0.9
Depreciation and amortization 4.1 4.1 12.8 11.9
2010 Transaction costs - 1.0 - 2.1
Global restructuring and related professional fees - 10.5 - 32.7
Field optimization project costs - 5.5 - 7.2
Global portfolio realignment project costs 7.0 0.5 20.1 0.5
Business combination agreement expenses   0.6   -   25.7   -
Total general and administrative expenses   65.6   84.6   226.3   244.9
Selling, general and administrative expenses $ 76.0 $ 103.3 $ 266.8 $ 303.0
 

BURGER KING WORLDWIDE, INC. AND SUBSIDIARIES

Non-GAAP Financial Measures

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