Segment Reporting

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

As stated in Note 1, Description of Business and Organization, we manage three brands. Under the Tim Hortons brand, we operate in the donut/coffee/tea category of the quick service segment of the restaurant industry. Under the Burger King brand, we operate in the fast food hamburger restaurant category of the quick service segment of the restaurant industry. Under the Popeyes brand, we operate in the chicken category of the quick service segment of the restaurant industry. Our business generates revenue from the following sources: (i) franchise and advertising revenues, consisting primarily of royalties and advertising fund contributions based on a percentage of sales reported by franchise restaurants and franchise fees paid by franchisees; (ii) property revenues from properties we lease or sublease to franchisees; and (iii) sales at restaurants owned by us (“Company restaurants”). In addition, our TH business generates revenue from sales to franchisees related to our supply chain operations, including manufacturing, procurement, warehousing and distribution, as well as sales to retailers. We manage each of our brands as an operating segment and each operating segment represents a reportable segment.

The following tables present revenues, by segment and by country (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenues by operating segment:
TH	$	831	$	567	$	1,541	$	1,266
BK	459		347		866		735
PLK	148		134		291		272
Total revenues	$	1,438	$	1,048	$	2,698	$	2,273

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenues by country (a):
Canada	$	754	$	514	$	1,392	$	1,146
United States	515		443		993		893
Other	169		91		313		234
Total revenues	$	1,438	$	1,048	$	2,698	$	2,273

(a)Only Canada and the United States represented 10% or more of our total revenues in each period presented.

Our measure of segment income is Adjusted EBITDA. Adjusted EBITDA represents earnings (net income or loss) before interest expense, net, loss on early extinguishment of debt, income tax expense, and depreciation and amortization, adjusted to exclude (i) the non-cash impact of share-based compensation and non-cash incentive compensation expense, (ii) (income) loss from equity method investments, net of cash distributions received from equity method investments, (iii) other operating expenses (income), net and, (iv) income/expenses from non-recurring projects and non-operating activities. For the periods referenced, this included costs incurred from professional advisory and consulting services associated with certain transformational corporate restructuring initiatives that rationalize our structure and optimize cash movements, including services related to significant tax reform legislation, regulations and related restructuring initiatives (“Corporate restructuring and tax advisory fees”).

Adjusted EBITDA is used by management to measure operating performance of the business, excluding these non-cash and other specifically identified items that management believes are not relevant to management’s assessment of our operating business. A reconciliation of segment income to net income consists of the following (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Segment income:
TH	$	253	$	147	$	460	$	336
BK	266		160		483		360
PLK	58		51		114		106
Adjusted EBITDA	577		358		1,057		802
Share-based compensation and non-cash incentive compensation expense	20		23		46		44
Corporate restructuring and tax advisory fees	3		7		4		8
Impact of equity method investments (a)	7		18		11		22
Other operating expenses (income), net	8		21		(34)		5
EBITDA	539		289		1,030		723
Depreciation and amortization	51		46		100		91
Income from operations	488		243		930		632
Interest expense, net	126		128		250		247
Income tax (benefit) expense	(29)		(49)		18		(3)
Net income	$	391	$	164	$	662	$	388

(a)Represents (i) (income) loss from equity method investments and (ii) cash distributions received from our equity method investments. Cash distributions received from our equity method investments are included in segment income.