) first-quarter adjusted earnings per share of 17 cents were in
line with the Zacks Consensus Estimate but soared 49% year over
year. Increased adjusted EBITDA, lower depreciation, amortization
costs as well as interest expense led to the growth.
Burger King's total revenue plunged 42.5% year over year to
$327.7 million due to the adverse impact of refranchising and
comparable sales decline. However, the reported revenues beat the
Zacks Consensus Estimate of $300 million. Organically, revenues
dipped 2.0% in the quarter hurt by a decline in comps in the U.S.
and Canada and Latin America and the Caribbean (LAC) region.
Comparable sales in the quarter fell 1.4%, reflecting tough
year-over-year comparison and negative comps in the U.S. &
Canada (3.0%) and LAC (1.3%). However, comps grew 0.8% in Europe,
the Middle East, and Africa (EMEA) and 2.7% in Asia-Pacific
An anemic macroeconomic environment and stiff competition led
to the decline in U.S. and Canada comps. However, Burger King
remains steadfast in executing its Four Pillars strategy in this
region that includes menu improvements, marketing initiatives,
operational efficiency and re-imaging in the U.S. and Canada.
Continued success of "King of the Day" promotions in the UK,
stronger performance in the Russian market and the success of
Steakhouse Gold premium burgers along with the "Trial Weeks"
value promotion in Germany facilitated comps growth in the EMEA
region. Although business in Spain was sluggish owing to ongoing
economic crisis in southern Europe, a sequential improvement was
noticed attributable to some value products and deals.
Poor performance in Mexico and Puerto Rico marred the LAC
region comps. However, positive results in Brazil, Argentina, and
Venezuela contained the downfall in comps to some extent.
Better results in Australia owing to successful value
promotions such as "Shake and Win" and "Penny Pinchers" and the
acceptance of the new value program in Korea benefited APAC
results. However, Japan and New Zealand were the laggards in the
The Miami-based company also stated that organic adjusted
EBITDA grew 4.5% driven by net restaurant growth and cost
During the first quarter of 2013, Burger King completed
refranchising in the US. It also completed its refranchising
initiatives in Canada and Mexico in April. Burger King seeks to
finish its refranchising initiative in 2013.
Management expects to see slight acceleration in net
restaurant growth in the second quarter of 2013, which will
further gain momentum in the latter half of the year.
Burger King seeks to re-image at least 40% of its restaurants
by 2015. In 2012, Burger King completed around 600 re-images,
thus refurbishing 19% of the system. So far re-imaged restaurants
have delivered an average sales lift of 10% to 15%, thus
providing an attractive return to franchisees.
Burger King currently carries a Zacks Rank #2 (Buy). One of
) missed on both lines while two other restaurateurs
Yum! Brands Inc.
Brinker International Inc.
) beat earnings and missed revenues in the quarter.
BURGER KING WWD (BKW): Free Stock Analysis
BRINKER INTL (EAT): Free Stock Analysis
MCDONALDS CORP (MCD): Free Stock Analysis
YUM! BRANDS INC (YUM): Free Stock Analysis
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