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| Here’s your daily business briefing. - 🍔 Burger King sales miss, drag Restaurant Brands revenue
- 🎬 Deep Dive: Hollywood strikes cost more than money
- 🤝 Bain acquires Guidehouse for $5B
Make sure to continue reading the Quarterly Earnings Report and the Quick Hits. Thank you!! Shriram
p/Shriram | |
| 1 | | Restaurant Brands International exceeded earnings expectations in Q3, reporting $0.90 per share, but fell short on revenue, with $1.84B. The net income attributable to shareholders decreased from $360M to $252M compared to the previous year. More: - Unfavorable currency exchange rates hurt Tim Hortons, which makes up almost 60% of the company's income, even though net sales climbed by 6.4% to $1.84B.
- Burger King's 7.2% same-store sales increase fell short of StreetAccount's projected 8.6% growth.
- Burger King saw an increase in same-store sales abroad of 7.6% and in the U.S. of 6.6%.
- Tim Hortons met Wall Street projections with a 6.8% jump in same-store sales and an 8.1% increase in same-store sales in Canada.
- With a 7% increase in same-store sales, including 5.6% growth in the U.S., Popeyes was the only chain to beat forecasts.
Zoom Out: - Popeyes is now the No.2 chicken chain in the U.S., but both Popeyes and KFC have lost market share to Chick-fil-A, while KFC's domestic business is struggling to keep up with the competition.
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| 2 | | 
What the numbers say: Los Angeles' "shoot days" have significantly decreased due to the Hollywood production freeze brought on by the strikes; in the third quarter, TV series had a 50% decrease, and feature films saw a 55% fall. In September, Los Angeles County's unemployment rate rose to 5.1%, compared to 4.5% a year ago, while the U.S. unemployment rate stood at 3.8%. Additionally, credit card balances in the Los Angeles metro area increased by nearly 9% to $7,300 between April and October, with a rise in delinquency rates to 2.44% from 2.17% for open credit cards in the area. Relevance: The strikes have severely affected small businesses and households in Los Angeles, which are closely tied to the film and TV industry. Business owners have resorted to borrowing against their homes and exploring alternative income sources like live events and commercials, creating financial challenges for families, leading to asset remortgaging and increased household debt. More data: The 2008 Writers Guild of America labor dispute contributed to an early recession in California, and this year's strikes, estimated to impact the nation by about $6B, are hitting California hard as it's a central hub for film and TV production. Rising prices and pandemic-related protocols are straining small businesses, such as catering services, which could pass on increased costs to studios when they resume operations. | | | |
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| 3 | | Bain Capital is poised to purchase Guidehouse, a government and business consulting firm, for a total value of $5.3B, encompassing debt. If the deal is finalized, Guidehouse will likely continue its emphasis on government and business services and its acquisition strategy, potentially under the ownership of Veritas Capital for four to six years. More: - Guidehouse, a consulting firm specializing in advising government organizations and businesses, is set to be acquired by Bain Capital in a $5.3B deal, including debt, with plans to maintain its focus on serving governments and businesses and potential future acquisitions.
- In 2018, PricewaterhouseCoopers (PwC)'s U.S. public-sector consulting division was acquired by Veritas Capital and renamed Guidehouse.
- In 2023, the rate of mergers and acquisitions (M&A) activity has slowed, reflecting more significant changes in the U.S. M&A landscape, notwithstanding the interest private equity companies have recently exhibited in the consulting sector.
- The consulting industry is growing slower than before; in 2022, U.S. consulting is predicted to expand by 8% to $94B, down from 10.5% the year before.
- Private equity firms executed 31 management-consulting M&A deals worth $100M in the U.S. through Nov. 2, a decrease from 37 deals totaling $1B the prior year, per Dealogic.
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| 4 | | Exxon and Chevron enjoyed a total profit of $15.6B in Q3, driven by higher oil and fuel prices. Exxon's Q3 earnings rose by 15% to $9.1B, bolstered by more substantial fuel margins and robust oil refinery performance, while Chevron reported an 8.5% increase to $6.5B in third-quarter earnings, but it declined from $11.2B in the same period last year. More: - The $59.5B acquisition of Pioneer Natural Resources by Exxon and the $53B acquisition of Hess by Chevron, both anticipated to close in the first half of next year, are now being finalized by the two firms.
- Exxon and Chevron failed analysts' quarterly earnings-per-share projections, with Exxon's stock declining by nearly 2% to $105.55 and Chevron's shares falling by 6.7% to $144.35.
- Investor doubt surrounds Exxon's Pioneer deal and its ambitious goals, while Chevron's acquisition of Hess reflects a long-term bet on offshore oil projects with more complex and extended development timelines.
- Institutional investors are wary of the oil business due to worries about price volatility, the supply of oil, and environmental effects.
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| 6 | | DraftKings, a sports betting company, outperformed expectations with Q3 2023 revenue of $790M, showing a 57% YoY growth attributed to its expansion into new markets and higher customer engagement. In Q3, the company also recorded a 40% increase in monthly unique payers, totaling 2.3 million, with each user generating an average of $114 in revenue, up 14% from the previous year. More: - In comparison, during the same period last year, DraftKings reported a loss of $450.5M, or $1 per share, as opposed to a net loss of $283.1M, or $0.61 per share.
- Following the announcement, after-hours trading on the company's shares increased by 7%.
- DraftKings, which accounted for over 31% of online gambling revenue in the third quarter, surpassed competitor FanDuel to take the lead in the U.S. online gambling market.
- DraftKings increased its revenue projection for the fiscal year 2023 from $3.46B to $3.54B to $3.67B to $3.72B.
- DraftKings projects revenue in the $4.50B to $4.80B range for the 2024 fiscal year.
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| 7 | | Quick Hits: - Upway offers discounted e-bikes from top brands with a one-year warranty and 14-day returns. Buy your e-bike by Nov. 9 for a chance to enter a giveaway and receive your money back.*
- Starbucks plans to increase its international cafes from 20,200 to 35,000 locations outside North America by 2030, aiming for a global total of 38,000 stores and an ultimate goal of 55,000 by 2030.
- Bumble CEO Whitney Wolfe Herd leaves the firm, who is known for her dating app geared toward women, will be succeeded by Lidiane Jones, the current Slack chief executive.
- Starz CEO Jeffrey Hirsch has announced layoffs, an exit from the U.K., and a separation from Lionsgate's studio in Q1, with over 10% of the staff facing job cuts.
- Chinese electric truck maker Windrose is eyeing a 2024 U.S. IPO to raise over $200M, with orders from both the U.S. and China, challenging Tesla's Semi.
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Term of the Day Lien: A lien is a legal tool that allows a lender (a lienholder) to seize and sell a property if a borrower fails to repay a loan. Question of the Week What perks would convince you to return to the office? Join the conversation |
INSIDE BUSINESS LEADERBOARD (30 DAYS) |
 | Freelance Writer | | Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. | | This newsletter was edited by Aaron Crutchfield | |
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