Analyst Note| Rebecca Scheuneman, CFA |
Narrow-moat Restaurant Brands International reported fourth-quarter results that were just short of our expectations, with comps declining 11.0%, 7.9%, and 5.8% for Tim Hortons, Burger King, and Popeyes, respectively. Total reported revenue for the year fell 11.3%, with growth in Popeyes (17.7%) offset by sales declines at Tim Hortons (down 17.5%) and Burger King (down 11.1%). The firm posted a 36.9% adjusted EBITDA margin for the quarter, more than 400 basis points below our expectation due to higher operating costs from implementing strategic projects and fixed-cost deleveraging. We expect strong comparable sales results (mid- to high-single-digit growth across all three brands) in 2021 as the firm laps COVID-19 disruptions.