Burger King reports Q1 net earnings of US$60.4M, up 68.7% from year-ago period; total revenues fall 26.5% to US$240.9M

Nevin Barich

MIAMI , April 25, 2014 (press release) – Burger King Worldwide, Inc. (NYSE: BKW) today reported financial results for the first quarter ended March 31, 2014.

BKW Chief Executive Officer, Daniel Schwartz commented, "We started off 2014 strong by generating comparable sales growth across all four regions during the first quarter. Despite severe winter weather in the U.S. and Canada, our commitment to launching fewer, more impactful products and simplifying in-restaurant operations helped drive improved performance. Internationally, we maintained our strong sales momentum by rolling out innovative new products and accelerating net restaurant growth. Furthermore, we strengthened our global new restaurant pipeline to position ourselves for sustained growth in the months to come. We look forward to working closely with our world-class franchisees and partners to make 2014 another successful year for the BURGER KING® brand."

First Quarter 2014 Highlights:

Global comparable sales increased 2.0% in constant currency with growth across all four regions

System-wide sales increased 6.9% in constant currency

Adjusted EBITDA increased 12.5% on an organic basis to $159.7 million

Adjusted Diluted EPS increased 19.3% to $0.20 per share

Declared dividend of $0.07 per share for the second quarter of 2014

Consolidated Financial Highlights:

Results Variance

System-wide comparable sales growth and system-wide sales growth are calculated on a constant currency basis and include sales at franchise restaurants and company-owned restaurants.

Adjusted EBITDA, Adjusted EBITDA Margin, Organic Adjusted EBITDA Growth, Adjusted Net Income and Adjusted Diluted Earnings Per Share are non-GAAP financial measures. Please refer to "Non-GAAP Reconciliations" for further detail.

Key Performance Indicators:

System-wide sales grew 6.9% in the first quarter, driven by comparable sales growth across all four regions and unit growth of 676 net new restaurants over the trailing twelve month ("TTM") period, a 44.8% year-over-year increase compared to the first quarter of 2013.

Total reported revenues of $240.9 million declined (26.5%) from the prior year primarily due to the net refranchising of 327 company-owned restaurants over the TTM period. On an organic basis, excluding the impact of these global refranchising transactions and currency movements, revenue increased 6.2% year-over-year due to net restaurant growth and global comparable sales growth.

Adjusted EBITDA of $159.7 million grew 12.5% from the prior year on an organic basis, excluding the impact of refranchising transactions and currency movements, driven by double-digit organic Adjusted EBITDA growth in Europe, the Middle East, and Africa ("EMEA"), Latin America and the Caribbean ("LAC"), and Asia Pacific ("APAC").

Adjusted Net Income and Adjusted Diluted EPS increased 20.0% and 19.3%, respectively, compared to the prior year, due to an increase in Adjusted EBITDA partially offset by higher share-based compensation expense, higher interest expense, and higher income tax expense.

Operational and Segment Highlights

Despite severe winter weather across much of the region, U.S. and Canada delivered slightly positive comparable sales growth in the first quarter as a result of our strategy of launching fewer, more impactful products. The continued success of the BIG KINGTM sandwich and the introduction of our all-new Spicy Original Chicken Sandwich helped drive sales and traffic during the quarter. We also focused on delivering attractive value at the $1 price point with the launch of our KING DEALS® value menu that featured all-new products such as the Rodeo Chicken sandwich and Rodeo burger. In March, the KING DEALS® menu was further expanded to include breakfast value items, which helped to grow traffic during the morning daypart. Going forward, we remain focused on further driving franchise profitability through ongoing initiatives to simplify our menu and in-restaurant operations.

EMEA continued to deliver strong results in Q1 with comparable sales growth of 4.8%, the thirteenth consecutive quarter of comparable sales growth in the region. Performance was primarily driven by continued strength in Germany, where premium limited time offerings ("LTOs") such as the Steakhouse Gold Collection complemented the Trial Weeks value platform. In the United Kingdom, the King of the Day and KING SAVERSTM value menus helped boost traffic. We were also excited to roll out SATISFRIESTM across major European markets so that our guests could sample our first-of-its-kind better-for-you French fry. EMEA system-wide sales growth of 14.6% was primarily attributable to 340 net new restaurant openings over the TTM period.

LAC posted comparable sales growth of 4.0% in Q1, primarily due to strength in Brazil where new products such as the premium Picanha Steakhouse burger and the Double Cheddar burger resonated well with our guests. LAC system-wide sales growth of 17.1% included the positive impact of 156 TTM net new restaurant openings.

APAC comparable sales increased by 3.8% during the first quarter, the sixth consecutive quarter of comparable sales growth in the region. Growth was primarily driven by Australia, where we recently launched the Tropical WHOPPER® sandwich, and South Korea, where the Philly Steak LTO complemented our popular value menus. China also continued to perform well with a balanced mix of premium products such as the Italian Stackers LTO and attractive value offerings. APAC system-wide sales growth of 15.0% was primarily driven by 235 TTM net new restaurant openings.

Cash and Liquidity

As of quarter end, total debt was $3.0 billion and net debt was $2.2 billion. Our cash balance increased $76.2 million in the first quarter after paying down $19.1 million of debt and paying out $24.6 million in dividends. This increase in cash in conjunction with a $14.7 million year-over-year increase in Adjusted EBITDA caused the net debt to TTM Adjusted EBITDA ratio to decline (0.2x) to 3.2x.

On April 24, 2014, the company's Board of Directors declared a quarterly dividend of $0.07 per share for the second quarter. The dividend is payable on May 27, 2014, to shareholders of record at the close of business on May 12, 2014. Future dividends will be determined at the discretion of the Board of Directors.

Investor Conference Call

The company will host an investor conference call and webcast at 8:30 a.m. Eastern Time, Friday, April 25, 2014, to review financial results for the quarter ended March 31, 2014. The earnings call will be broadcast live via the company's investor relations website at http://investor.bk.com and a replay will be available for 30 days following the release. The dial-in number is (877) 317-6776 for U.S. callers and (412) 317-6776 for international callers.

Contacts
Investors
Sami Siddiqui, Investor Relations
(305) 378-7696; investor@whopper.com

Media
Julissa Bonfante, Global Communications
(305) 378-7277; mediainquiries@whopper.com

About Burger King Worldwide

Founded in 1954, BURGER KING® (NYSE: BKW) is the second largest fast food hamburger chain in the world. The original HOME OF THE WHOPPER®, the BURGER KING® system operates in over 13,000 locations serving more than 11 million guests daily in 97 countries and territories worldwide. Approximately 100 percent of BURGER KING® restaurants are owned and operated by independent franchisees, many of them family-owned operations that have been in business for decades. To learn more about Burger King Worldwide, please visit the company's website at www.bk.com or follow us on Facebook and Twitter.

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