DALLAS, April 21, 2015 /PRNewswire/ -- Brinker
International, Inc. (NYSE: EAT) today announced results for the
fiscal third quarter ended March 25,
2015.
Highlights include the following:
- Earnings per diluted share, excluding special items, increased
11.9 percent to $0.94 compared to
$0.84 for the third quarter of fiscal
2014
- On a GAAP basis, earnings per diluted share increased 24.4
percent to $1.02 compared to
$0.82 for the third quarter of fiscal
2014
- Brinker International company sales increased 3.0 percent to
$761.7 million and comparable
restaurant sales at company-owned restaurants increased 1.7
percent. Comparable restaurant sales increased 2.6 percent
excluding the impact of Christmas Day
moving to the third quarter
- Chili's company-owned comparable restaurant sales increased 1.9
percent
- Maggiano's comparable restaurant sales increased 0.1 percent,
representing the 21st consecutive quarterly increase
- Chili's franchise comparable restaurant sales increased 2.5
percent which includes a 3.1 percent increase for U.S. franchise
restaurants and a 1.2 percent increase for international franchise
restaurants
- Restaurant operating margin,1 as a percent of
company sales, improved approximately 30 basis points to 18.9
percent compared to 18.6 percent for the third quarter of fiscal
2014
- For the first nine months of fiscal 2015, cash flows provided
by operating activities were $274.9
million and capital expenditures totaled $107.1 million. Free cash flow2 was
approximately $167.8 million
- The company repurchased approximately 1.7 million shares of its
common stock for $104.2 million in
the third quarter and a total of approximately 3.9 million shares
for $217.0 million year-to-date
- The company paid a dividend of 28
cents per share in the third quarter, an increase of 17
percent over the prior year third quarter, and declared a dividend
of 28 cents per share to be paid in
the fourth quarter
"Brinker delivered another solid quarter of double digit EPS
growth," said Wyman Roberts, Chief
Executive Officer and President. "We believe our ongoing culinary
and technology innovations will drive traffic and help us deliver a
differentiated guest experience."
1
|
Restaurant operating
margin is defined as Company sales less Cost of sales, Restaurant
Labor and Restaurant expenses.
|
2
|
Free cash flow is
defined as cash flows provided by operating activities less capital
expenditures.
|
Table 1: Q3
comparable restaurant sales
|
Q3 F15 and Q3 F14,
company-owned, reported brands and franchise;
percentage
|
|
|
|
|
|
|
Q3
15
|
|
Q3
14
|
Brinker
International
|
|
1.7
|
|
0.7
|
Chili's
Company-Owned
|
|
|
|
|
Comparable Restaurant
Sales
|
|
1.9
|
|
0.7
|
Pricing Impact
|
|
0.6
|
|
1.1
|
Mix-Shift
|
|
1.5
|
|
0.8
|
Traffic
|
|
(0.2)
|
|
(1.2)
|
Maggiano's
|
|
|
|
|
Comparable Restaurant
Sales
|
|
0.1
|
|
0.2
|
Pricing Impact
|
|
2.5
|
|
1.5
|
Mix-Shift
|
|
(1.1)
|
|
(0.4)
|
Traffic
|
|
(1.3)
|
|
(0.9)
|
|
|
|
|
|
Chili's
Franchise1
|
|
2.5
|
|
0.2
|
U.S.
Comparable Restaurant Sales
|
|
3.1
|
|
0.1
|
International
Comparable Restaurant Sales
|
|
1.2
|
|
0.6
|
|
|
|
|
|
Chili's
Domestic2
|
|
2.2
|
|
0.5
|
System-wide3
|
|
2.0
|
|
0.5
|
|
|
|
|
|
1
|
|
Revenues generated by
franchisees are not included in revenues on the consolidated
statements of comprehensive income; however, we generate royalty
revenue and advertising fees based on franchisee revenues, where
applicable. We believe including franchise comparable restaurant
sales provides investors information regarding brand performance
that is relevant to current operations and may impact future
restaurant development.
|
|
|
|
2
|
|
Chili's Domestic
comparable restaurant sales percentages are derived from sales
generated by company-owned and franchise operated Chili's
restaurants in the United States.
|
|
|
|
3
|
|
System-wide
comparable restaurant sales are derived from sales generated by
company-owned Chili's and Maggiano's restaurants in addition to the
sales generated at franchise operated restaurants.
|
Quarterly Operating Performance
CHILI'S third quarter company sales increased 2.6 percent to
$662.9 million from $645.8 million in the prior year primarily due to
increases in comparable restaurant sales and restaurant capacity.
As compared to the prior year, Chili's restaurant operating
margin1,2 improved. Restaurant expenses, as a percent of
company sales, decreased due to leverage related to higher company
sales and lower workers' compensation insurance expense, partially
offset by equipment charges associated with tabletop
devices2 and higher credit card fees. Restaurant labor,
as a percent of company sales, was favorably impacted by leverage
related to higher company sales coupled with lower health insurance
expense, partially offset by increased wage rates. Cost of sales,
as a percent of company sales, was negatively impacted by menu item
mix and unfavorable commodity pricing primarily related to burger
meat, which is market based, as well as unfavorable pricing related
to fajita beef and salmon, partially offset by favorable menu
pricing and efficiency gains related to new fryer equipment.
MAGGIANO'S third quarter company sales increased 5.8 percent to
$98.8 million from $93.4 million in the prior year primarily due to
increases in restaurant capacity. As compared to the prior year,
Maggiano's restaurant operating margin1 improved.
Restaurant expenses, as a percent of company sales, were positively
impacted by lower workers' compensation insurance expense coupled
with leverage related to higher company sales, partially offset by
higher utilities expense. Cost of sales, as a percent of company
sales, was positively impacted by menu item changes and increased
menu pricing, partially offset by unfavorable commodity pricing on
beef, seafood, cheese and produce. Restaurant labor, as a percent
of company sales, was negatively impacted by higher
performance-based compensation, partially offset by leverage
related to higher company sales.
1 Restaurant operating margin is defined as Company
sales less Cost of sales, Restaurant labor and Restaurant
expenses.
2As compared to the prior year, the Chili's
restaurant operating margin metric was negatively impacted by the
classification of revenues and expenses associated with tabletop
devices. The revenues associated with tabletop devices are included
in Franchise and other revenues while the associated equipment
charges are included in Restaurant expenses, a component of the
restaurant operating margin calculation.
FRANCHISE AND OTHER revenues increased 11.9 percent to
$22.5 million for the third quarter
compared to $20.1 million in the
prior year driven primarily by the revenues associated with
tabletop devices, royalty revenues related to Chili's new retail
food products, and higher royalty income primarily driven by
international franchise restaurant openings. U.S. franchise
comparable restaurant sales increased 3.1 percent and international
comparable restaurant sales increased 1.2 percent. Brinker
franchisees generated approximately $424
million in sales3 for the third quarter of fiscal
2015.
3Royalty revenues are recognized based on the sales
generated and reported to the company by franchisees.
Other
Depreciation and amortization expense increased $2.4 million for the quarter primarily due to
investments in the Chili's reimage program, new restaurant openings
and new fryer equipment, partially offset by an increase in fully
depreciated assets.
General and administrative expense increased $1.2 million primarily due to an increase in
technology and innovation expenditures made in support of sales
driving initiatives.
On a GAAP basis, the effective income tax rate increased to 32.1
percent in the current quarter from 30.4 percent in the prior year
quarter primarily due to increased earnings, partially offset by
the impact of tax credit changes. Excluding the impact of special
items, the effective income tax rate increased to 31.5 percent in
the current quarter compared to 30.6 percent in the prior year
primarily due to increased earnings, partially offset by the impact
of tax credit changes.
Non-GAAP Reconciliation
Brinker believes excluding special items from its financial
results provides investors with a clearer perspective of the
company's ongoing operating performance and a more relevant
comparison to prior period results. Special items in the third
quarter of fiscal 2015 consist primarily of proceeds received from
a lawsuit settlement.
Table 2:
Reconciliation of net income excluding special items
|
Q3 15 and Q3 14; $
millions and $ per diluted share after-tax
|
|
|
|
Q3
15
|
|
EPS Q3
15
|
|
Q3
14
|
|
EPS Q3
14
|
Net Income
|
|
65.4
|
|
1.02
|
|
56.3
|
|
0.82
|
Other (Gains) and
Charges, net of taxes1
|
|
(5.2)
|
|
(0.08)
|
|
1.3
|
|
0.02
|
Net Income excluding
Special Items
|
|
60.2
|
|
0.94
|
|
57.6
|
|
0.84
|
|
|
|
|
|
|
|
|
|
|
1
|
Pre-tax Other gains
and charges included a gain of $8.5 million and a charge of $2.1
million in the third quarter of fiscal 2015 and 2014, respectively.
See footnote "b" to the consolidated statements of comprehensive
income for additional details.
|
Guidance Policy
Brinker provides annual guidance as it relates to comparable
restaurant sales, earnings per diluted share, and other key line
items in the comprehensive income statement and will only provide
updates if there is a material change versus the original guidance.
Consistent with prior practice, management will not discuss
intra-period sales or other key operating results not yet reported
as the limited data may not accurately reflect the final results of
the period or quarter referenced.
Webcast Information
Investors and interested parties are invited to listen to
today's conference call, as management will provide further details
of the quarter. The call will broadcast live on the Brinker website
(www.brinker.com) at 9 a.m. CDT today
(April 21). For those who are unable
to listen to the live broadcast, a replay of the call will be
available shortly thereafter and will remain on the Brinker website
until the end of the day May 21,
2015.
Additional financial information, including statements of income
which detail operations excluding special items, franchise and
other revenues, and comparable restaurant sales trends by brand, is
also available on the Brinker website under the Financial
Information section of the Investor tab.
Forward Calendar
- SEC Form 10-Q for third quarter fiscal 2015 filing on or
before May 4, 2015; and
- Fourth quarter earnings release, before market opens,
Aug. 6, 2015.
About Brinker
Brinker International, Inc. is one of the world's leading casual
dining restaurant companies. Founded in 1975 and based in
Dallas, Texas, as of March 25, 2015, Brinker owned, operated, or
franchised 1,629 restaurants under the names Chili's®
Grill & Bar (1,580 restaurants) and Maggiano's Little
Italy® (49 restaurants).
Forward-Looking Statements
The statements contained in this release that are not historical
facts are forward-looking statements. These forward-looking
statements involve risks and uncertainties and, consequently, could
be affected by general business and economic conditions, financial
and credit market conditions, credit availability, reduced
disposable income, the impact of competition, the impact of
mergers, acquisitions, divestitures and other strategic
transactions, franchisee success, the seasonality of the company's
business, increased minimum wages, increased health care costs,
adverse weather conditions, future commodity prices, product
availability, fuel and utility costs and availability, terrorist
acts, consumer perception of food safety, changes in consumer
taste, health epidemics or pandemics, changes in demographic
trends, availability of employees, unfavorable publicity, the
company's ability to meet its business strategy plan, acts of God,
governmental regulations, inflation, technology failures, and
failure to protect the security of data of our guests and
teammates.
|
BRINKER
INTERNATIONAL, INC.
|
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
|
(In thousands,
except per share amounts)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Thirteen Week
Periods Ended
|
|
Thirty-Nine Week
Periods Ended
|
|
|
March 25,
2015
|
|
March 26,
2014
|
|
March 25,
2015
|
|
March 26,
2014
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
$
|
761,736
|
|
|
$
|
739,200
|
|
|
$
|
2,166,368
|
|
|
$
|
2,088,087
|
|
Franchise and other
revenues (a)
|
|
22,479
|
|
|
20,093
|
|
|
71,763
|
|
|
61,528
|
|
Total
revenues
|
|
784,215
|
|
|
759,293
|
|
|
2,238,131
|
|
|
2,149,615
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
|
|
Company restaurants
(excluding depreciation and amortization)
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
203,960
|
|
|
195,439
|
|
|
582,507
|
|
|
561,276
|
|
Restaurant
labor
|
|
240,105
|
|
|
233,890
|
|
|
695,114
|
|
|
672,525
|
|
Restaurant
expenses
|
|
173,611
|
|
|
172,459
|
|
|
528,047
|
|
|
511,293
|
|
Company restaurant
expenses
|
|
617,676
|
|
|
601,788
|
|
|
1,805,668
|
|
|
1,745,094
|
|
Depreciation and
amortization
|
|
36,599
|
|
|
34,218
|
|
|
108,213
|
|
|
100,912
|
|
General and
administrative
|
|
35,194
|
|
|
34,009
|
|
|
100,488
|
|
|
98,792
|
|
Other gains and
charges (b)
|
|
(8,477)
|
|
|
2,088
|
|
|
747
|
|
|
4,315
|
|
Total operating costs
and expenses
|
|
680,992
|
|
|
672,103
|
|
|
2,015,116
|
|
|
1,949,113
|
|
Operating
income
|
|
103,223
|
|
|
87,190
|
|
|
223,015
|
|
|
200,502
|
|
Interest
expense
|
|
7,361
|
|
|
7,068
|
|
|
21,709
|
|
|
21,128
|
|
Other, net
|
|
(454)
|
|
|
(693)
|
|
|
(1,568)
|
|
|
(1,736)
|
|
Income before
provision for income taxes
|
|
96,316
|
|
|
80,815
|
|
|
202,874
|
|
|
181,110
|
|
Provision for income
taxes
|
|
30,889
|
|
|
24,552
|
|
|
63,403
|
|
|
55,891
|
|
Net income
|
|
$
|
65,427
|
|
|
$
|
56,263
|
|
|
$
|
139,471
|
|
|
$
|
125,219
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per
share
|
|
$
|
1.04
|
|
|
$
|
0.85
|
|
|
$
|
2.19
|
|
|
$
|
1.88
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income
per share
|
|
$
|
1.02
|
|
|
$
|
0.82
|
|
|
$
|
2.14
|
|
|
$
|
1.83
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted
average shares outstanding
|
|
62,891
|
|
|
66,479
|
|
|
63,719
|
|
|
66,661
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares outstanding
|
|
64,091
|
|
|
68,342
|
|
|
65,108
|
|
|
68,591
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
loss:
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment (c)
|
|
$
|
(2,847)
|
|
|
$
|
(1,108)
|
|
|
$
|
(7,183)
|
|
|
$
|
(1,862)
|
|
Other comprehensive
loss
|
|
(2,847)
|
|
|
(1,108)
|
|
|
(7,183)
|
|
|
(1,862)
|
|
Comprehensive
income
|
|
$
|
62,580
|
|
|
$
|
55,155
|
|
|
$
|
132,288
|
|
|
$
|
123,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Franchise and other
revenues primarily includes royalties, development fees and
franchise fees, banquet service charge income, gift card activity
(breakage and discounts), tabletop device revenue, Chili's retail
food product royalties and delivery fee income. Beginning in fiscal
2015, income primarily related to Maggiano's delivery is included
in Franchise and other revenues on the consolidated statements of
comprehensive income. This income was previously included in
Restaurant expenses. The prior year consolidated statements of
comprehensive income has been adjusted to conform to the fiscal
2015 presentation. This adjustment has no effect on net income
previously reported.
|
|
|
(b)
|
Other gains and
charges include:
|
|
|
|
|
|
Thirteen Week
Periods Ended
|
|
Thirty-Nine Week
Periods Ended
|
|
|
|
|
|
March 25,
2015
|
|
March 26,
2014
|
|
March 25,
2015
|
|
March 26,
2014
|
Litigation
|
$
|
(8,553)
|
|
|
$
|
—
|
|
|
$
|
(2,753)
|
|
|
$
|
—
|
|
Restaurant impairment
charges
|
—
|
|
|
—
|
|
|
747
|
|
|
1,285
|
|
Restaurant closure
charges
|
76
|
|
|
1,224
|
|
|
1,457
|
|
|
2,330
|
|
Loss (Gain) on the
sale of assets, net
|
—
|
|
|
—
|
|
|
1,093
|
|
|
(579)
|
|
Impairment of liquor
licenses
|
—
|
|
|
—
|
|
|
175
|
|
|
—
|
|
Other
|
—
|
|
|
864
|
|
|
28
|
|
|
1,279
|
|
|
$
|
(8,477)
|
|
|
$
|
2,088
|
|
|
$
|
747
|
|
|
$
|
4,315
|
|
|
|
(c)
|
The foreign currency
translation adjustment included in comprehensive income on the
consolidated statements of comprehensive income represents the
unrealized impact of translating the financial statements of the
Canadian restaurants and the Mexican joint venture from their
respective functional currencies to U.S. dollars. This amount is
not included in net income and would only be realized upon
disposition of the businesses.
|
BRINKER
INTERNATIONAL, INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
thousands)
|
(Unaudited)
|
|
|
|
March 25,
2015
|
|
June 25,
2014
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current
assets
|
|
$
|
190,046
|
|
|
$
|
210,854
|
|
Net property and
equipment (a)
|
|
1,037,425
|
|
|
1,056,454
|
|
Total other
assets
|
|
209,848
|
|
|
223,296
|
|
Total
assets
|
|
$
|
1,437,319
|
|
|
$
|
1,490,604
|
|
LIABILITIES AND
SHAREHOLDERS' (DEFICIT) EQUITY
|
|
|
|
|
Current installments
of long-term debt
|
|
3,115
|
|
|
$
|
27,884
|
|
Other current
liabilities
|
|
403,526
|
|
|
438,226
|
|
Long-term debt, less
current installments
|
|
933,207
|
|
|
832,302
|
|
Other
liabilities
|
|
129,600
|
|
|
129,098
|
|
Total shareholders'
(deficit) equity
|
|
(32,129)
|
|
|
63,094
|
|
Total liabilities and
shareholders' (deficit) equity
|
|
$
|
1,437,319
|
|
|
$
|
1,490,604
|
|
|
|
(a)
|
At March 25, 2015,
the company owned the land and buildings for 189 of the 889
company-owned restaurants. The net book values of the land and
buildings associated with these restaurants totaled $142.2 million
and $115.3 million, respectively.
|
BRINKER
INTERNATIONAL, INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
Thirty-Nine Week
Periods Ended
|
|
|
March 25,
2015
|
|
March 26,
2014
|
Cash Flows From
Operating Activities:
|
|
|
|
|
Net income
|
|
$
|
139,471
|
|
|
$
|
125,219
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
108,213
|
|
|
100,912
|
|
Stock-based
compensation
|
|
11,587
|
|
|
12,990
|
|
Restructure charges
and other impairments
|
|
8,402
|
|
|
3,836
|
|
Net loss on disposal
of assets
|
|
3,819
|
|
|
3,208
|
|
Changes in assets and
liabilities
|
|
3,415
|
|
|
30,935
|
|
Net cash provided by
operating activities
|
|
274,907
|
|
|
277,100
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
Payments for property
and equipment
|
|
(107,108)
|
|
|
(113,980)
|
|
Proceeds from sale of
assets
|
|
1,950
|
|
|
833
|
|
Net cash used in
investing activities
|
|
(105,158)
|
|
|
(113,147)
|
|
Cash Flows from
Financing Activities:
|
|
|
|
|
Borrowings on
revolving credit facility
|
|
442,750
|
|
|
98,000
|
|
Purchases of treasury
stock
|
|
(217,019)
|
|
|
(191,811)
|
|
Payments on long-term
debt
|
|
(188,758)
|
|
|
(19,890)
|
|
Payments on revolving
credit facility
|
|
(177,000)
|
|
|
(40,000)
|
|
Payments of
dividends
|
|
(53,248)
|
|
|
(47,556)
|
|
Excess tax benefits
from stock-based compensation
|
|
16,920
|
|
|
17,972
|
|
Proceeds from
issuances of treasury stock
|
|
14,965
|
|
|
24,574
|
|
Payments for deferred
financing costs
|
|
(2,501)
|
|
|
—
|
|
Net cash used in
financing activities
|
|
(163,891)
|
|
|
(158,711)
|
|
Net change in cash
and cash equivalents
|
|
5,858
|
|
|
5,242
|
|
Cash and cash
equivalents at beginning of period
|
|
57,685
|
|
|
59,367
|
|
Cash and cash
equivalents at end of period
|
|
$
|
63,543
|
|
|
$
|
64,609
|
|
BRINKER
INTERNATIONAL, INC.
|
RESTAURANT
SUMMARY
|
|
|
|
Third Quarter
Openings
Fiscal
2015
|
|
Total Restaurants
March 25,
2015
|
|
Projected
Openings
Fiscal 2015
|
Company-Owned
Restaurants:
|
|
|
|
|
|
|
Chili's
Domestic
|
|
2
|
|
|
827
|
|
|
8-10
|
|
Chili's
International
|
|
—
|
|
|
13
|
|
|
1
|
|
Maggiano's
|
|
—
|
|
|
49
|
|
|
3
|
|
|
|
2
|
|
|
889
|
|
|
12-14
|
|
Franchise
Restaurants:
|
|
|
|
|
|
|
Chili's
Domestic
|
|
1
|
|
|
435
|
|
|
5
|
|
Chili's
International
|
|
2
|
|
|
305
|
|
|
28-30
|
|
|
|
3
|
|
|
740
|
|
|
33-35
|
|
Total
Restaurants:
|
|
|
|
|
|
|
Chili's
Domestic
|
|
3
|
|
|
1,262
|
|
|
13-15
|
|
Chili's
International
|
|
2
|
|
|
318
|
|
|
29-31
|
|
Maggiano's
|
|
—
|
|
|
49
|
|
|
3
|
|
|
|
5
|
|
|
1,629
|
|
|
45-49
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/brinker-international-reports-increases-in-third-quarter-fiscal-2015-eps-and-comparable-restaurant-sales-300069047.html
SOURCE Brinker International, Inc.