RBD - Restaurant Brands

[X-men]

Nztx...if U could predict the market..U will be a millionaire now..lol

[LaserEyeKiwi]

How is this still a $500m stock?

”RBD expects to report full year NPAT for the 2023 financial year within the provided guidance range of $12 million to $16 million.”

[Sideshow Bob]

https://www.nzx.com/announcements/425250

Restaurant Brands New Zealand Limited (“RBD”) has today released its Q4 sales results.

FY23 Q4 Sales Results

RBD total sales for the fourth quarter to 31 December 2023 increased to $341.1 million. This was up $9.1 million (+2.7%) over the equivalent period last year.
Strong sales growth in the New Zealand market offset the slowing of sales growth in other regions, as cost of living pressures, driven by inflation and rising interest rates, reduced discretionary household expenditure.

Total year sales reached $1,322.2 million (an increase of 6.7% on the prior year). Total sales were supported by the recovery from the impacts of the 2022 COVID-19 Omicron outbreak earlier in the year, and a full year of trading from new stores opened in 2022.

The business has continued to implement a strategic programme of price increases across all markets to relieve margin pressures, while balancing brand health and the financial pressures faced by our customers.

New Zealand
Fourth quarter sales for New Zealand were $151.4 million, up 8.3% in total and 7.9% on a same store basis. Sales grew across all brands.
Total year sales were $571.8 million, an increase of 8.1% on the prior year and 6.2% on a same store basis.

Store numbers increased by two to 147 stores during the quarter. In addition to the 147 company owned stores, the business has 118 Pizza Hut stores run by independent franchisees (an increase of 10 stores from December 2022).

Australia

Australia’s sales for the fourth quarter were $A72.3 million ($NZ78.0 million), an increase of 2.4% in total on the prior year (local currency). Same store sales were down 0.3% (local currency). Sales growth was lower than the first three quarters as cost of living pressures continued to impact discretionary household expenditure.
Total year sales were $A286.6 million ($NZ310.1 million). This is an increase of 10.7% on a total basis on the prior year and 6.5% on a same store basis. Mall and city store sales have recovered to near pre-COVID-19 levels.

Store numbers decreased by one during the quarter to 84 stores.

Hawaii

Sales for the fourth quarter in Hawaii were $US39.9 million ($NZ66.0 million), a decrease of 1.3% on a total basis, and up 3.0% on a same store basis (local currency). Hawaii trading continues to be solid with the decrease in total sales driven primarily by the loss of two stores during the third quarter due to the large fire on Maui.
Total year sales were $US159.5 million ($NZ259.7 million), an increase of 2.0% on a total basis and 3.5% on a same store basis.
Store numbers decreased by one during the quarter to 70 stores.

California

California’s sales in the fourth quarter were $US27.5 million ($NZ45.6 million), a decrease of 4.9% on a total basis and 6.3% on a same store basis (local currency). Sales have reduced on the prior year, as cost of living pressures continued to impact discretionary household expenditure,
Total year sales were $US110.9 million ($NZ180.7 million), a decrease of 2.0% on a total basis and 4.3% on a same store basis.
Store numbers decreased by one to 75 stores during the quarter, with the opening of new two new stores offset by closures of Azusa (fire damaged), Palm Springs and Yucca Valley stores.

Annual Trading Results

RBD will release its annual trading results for the year ended 31 December 2023 on 26 February 2024.

Despite the significant inflationary pressures faced by the Group in all markets, based on preliminary unaudited trading results, RBD expects to report full year NPAT for the 2023 financial year within the provided guidance range of $12 million to $16 million.
For more information: investor@rbd.co.nz

[Balance]

As usual, a successful NZ company with a solid track record (post the 1990s and early 2000s debacles) expands overseas (again) and comes a cropper.

And what about transfer pricing with the parent company? Are there profits from NZ being siphoned away to the parent company via the overseas operations?

"Strong sales growth in the New Zealand market offset the slowing of sales growth in other regions, as cost of living pressures, driven by inflation and rising interest rates, reduced discretionary household expenditure."

[Goob]

Since it has fallen so far I thought I'd spread the numbers on RBD today.

But can anyone explain why this had such a high multiple back in the days above $10? I.e. around 30x PE pre-COVID 2019. From a quick glance I can't see why (organic growth solid but nothing special, a fairly average ROIC).

Anyone know what the thesis was for 30x back then?

[Rawz]

Since it has fallen so far I thought I'd spread the numbers on RBD today.

But can anyone explain why this had such a high multiple back in the days above $10? I.e. around 30x PE pre-COVID 2019. From a quick glance I can't see why (organic growth solid but nothing special, a fairly average ROIC).

Anyone know what the thesis was for 30x back then?

money was free?

[Goob]

money was free?

Ha, yeah I spose. But even in 18' it had quite the ritzy multiple

[nztx]

Ha, yeah I spose. But even in 18' it had quite the ritzy multiple

Can't be many RBD shares on the loose out there which are not in the hands of the majority stakeholder ?

Last Annual Report Dec 2022 (page 100) - SSH - 75% or 93.569m shares in that notice were owned by the Foreign Restaurant Outfit from South America


The geographic distribution ion page 99 of the last AR doesn't reflect the domicile of the beneficial ownership - just of the raw holders on the share register - how can 95.38% of this outfit be NZ owned when SSH clearly points to majority owned out of South America ?

[Snoopy]

Since it has fallen so far I thought I'd spread the numbers on RBD today.

But can anyone explain why this had such a high multiple back in the days above $10? I.e. around 30x PE pre-COVID 2019. From a quick glance I can't see why (organic growth solid but nothing special, a fairly average ROIC).

Anyone know what the thesis was for 30x back then?

From someone who 'was there', my memory is it would all have been on the back of CEO at the time 'Our Russel' doing such a good job sorting out the NZ operations. It would simply be a matter of 'rinse and repeat' for Australia, Hawaii and I think California that was just coming onto the radar. at that time too. "What could possibly go wrong?". or so the Mexicans thought when they put their partial takeover offer on the table. That offer cemented a new baseline price level for the company, a level that eventually unwound when the share price once again began to match up to actual company performance.

But of course the beauty of this forum is that you can 'go back in time' and find out what everyone was saying 'at the time' for yourself.
https://www.sharetrader.co.nz/showth...l=1#post719277

SNOOPY

[Goob]

That's helpful thanks Snoopy. I scanned the forum archive but it was still a bit unclear.

FWIW I think RBD is interesting here. It's almost entirely a COGS issue (gross margins from 20% to 15%) mainly because of an idiosyncratic supply side inflation episode; no problem with sales growth, and opex has behaved (about flat as a % of sales since pre-pandemic).

As they say in commodities "The cure for high prices, is high prices". You can go line-by-line on govt Food Index CPI and Producer Price Index data from StatsNZ which all show peak to declining trend across NZ/AU/US. I'd comfortably bet food prices come down at some point, but I'm just struggling to get a feel for when. There's a pretty spicy IRR if you just assume gross margins get halfway back to pre-covid at 17.5% in two years.

I have no problems with management either. I think they've done the right moves and generally get too much flak for what was external pressures.