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BK posts profit jump, discloses secondary offering

MIAMI On the strength of longer hours, a breakfast value menu and movie promotions, Burger King Holdings Inc. reported on Monday a 23-percent jump in its first-quarter profit over the same period a year earlier, on total revenue that rose 10 percent to $602 million.

The parent company to 11,290 franchised or corporate Burger King restaurants also recorded same-store sales surges of 5.9 percent globally and 6.6 percent in the United States and Canada. Sales were driven by the chain’s value menu as well as its more indulgent items, corporate officials said, referring respectively to the value-priced Spicy Chick’N Crisp sandwich as well as the Tendercrisp sandwich limited time offering. Late-night hours, a breakfast value menu and movie tie-ins with The Simpsons Movie and Transformers also were credited as sales drivers.

Still, the company’s stock took a hit Monday as the parent to the nation’s second-largest burger chain also announced that its majority owners would sell almost one-third of its stake in a secondary offering that could gross $712.6 million. Burger King is not selling any shares in the offering, nor will it receive any proceeds.

Private-equity firms TPG Capital, Bain Capital Partners and the Goldman Sachs Funds, which currently own about 79 million Burger King shares, are slated to offer 23 million shares of common stock and an over-allotment of up to an additional 3.45 million shares. After completion of the deal, the three private-equity firms would have reduced their ownership stake from about 58 percent to between 38 percent and 41 percent, depending on the exercise of over-allotments. Burger King had said this summer it would consider additional debt to absorb the new supply of shares, but it is unclear if that is still the case considering the tightened credit markets.

For its latest quarter ended Sept. 30, Burger King reported net income of $49 million, or 35 cents a share, compared with year-earlier results of $40 million, or 30 cents a share.

During the last 12 months, Burger King continued its expansion, opening 440 new units, including 90 in the U.S. and Canada, 260 in the company’s Europe, Middle East, Africa and Asia Pacific segment and 90 in Latin America, it reported. Burger King said that it anticipates positive net restaurant growth this fiscal year in the U.S. and Canada. It would be the first time in six years the chain would not report more closures than openings in those geographic divisions.

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