Burger King net income up for 1Q

Company sees income increase while domestic results keep same-store sales down

Burger King Holdings Inc. Tuesday reported significantly higher income for the first quarter ended Sept. 30, in large part from lower tax expenses and proceeds from refranchising.

However, the company said domestic results kept worldwide same-store sales numbers negative despite improvements overseas.

The interim financial results reported by Burger King Holdings were the last it would release for operations by a publicly traded company, as it was taken private by Investment firm 3G Capital in a $4 billion deal completed last month.

Burger King said its first-quarter net income increased by 36.1 percent to $63.4 million, or 46 cents per share, versus earnings of $46.6 million, or 34 cents a share, in the same 2009 quarter. BK said it benefited from a decrease in income tax expense of $8.8 million, an increase in other operating income, net of $6.4 million, an increase in franchise revenues of $2.9 million and a decrease in selling, general and administrative expenses of $2.1 million.

Those gains, the Miami-based company added, were partially offset by a decrease in company restaurant margin of $2.3 million.

Total revenue decreased by 5.8 percent to $600 million for the quarter. The company said nearly all of the decrease tied to lower sales resulting from the refranchising of 87 company restaurants during the trailing 12 months and a 3.1-percent decrease in company same-store sales worldwide, fueled by a 4.1-percent dip in the United States and Canada.

Burger King said it reported same-store results in constant currencies using last year’s exchange rates to minimize the impact of recent currency fluctuations.

Worldwide same-store sales for franchised Burger King restaurants were off by 1.5 percent for the quarter, compared with the same period 12 months earlier, with the 4.2-percent fall off in United States and Canada outlets more than offsetting a 7.5-percent improvement in that metric in Latin America, among other regional gains.

Systemwide same-store sales worldwide were off for the quarter by 1.7 percent, which nevertheless represented an improvement from first quarter 2009’s decrease of 2.9 percent.

In the United States and Canada, systemwide same-store sales were down 4.2 percent in the latest quarter, compared with a decline of 4.6 percent a year earlier.

Burger King said its system ended the quarter with 12,206 restaurants, of which 1,348 were company restaurants and 10,858 were franchise restaurants. That was up from 11,983 systemwide restaurants at the end of the first quarter of 2009.

Contact Alan J. Liddle at [email protected] [3].

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