DALLAS, Oct. 25 /PRNewswire-FirstCall/ -- Brinker International,
Inc. (NYSE:EAT) reported net income of $31.8 million, or $0.36
diluted earnings per share, for the company's first quarter ended
Sept. 28, 2005. Exclusive of certain special items, diluted
earnings per share increased 35 percent to $0.50. For the same
quarter of fiscal 2005, the company reported net income of $13.9
million, or $0.15 diluted earnings per share. Excluding special
items, fiscal 2005 first quarter diluted earnings per share were
$0.37. A reconciliation of reported net income to net income before
special items is included in Table 2 below. Doug Brooks, Brinker's
Chairman and CEO, said, "The effectiveness of Chili's marketing and
operating initiatives, paired with strong brand equity and a
competitive value proposition, continue to drive excellent sales
performance." Highlights for the quarter include: * Declaration of
the company's first quarterly dividend of $0.10 per share, payable
in December. * Quarterly comparable store sales at Chili's of 6.1
percent. * 44 new store openings. * The company continues to be
active in its share repurchase program, purchasing 3.6 million
shares during the quarter. Revenue Growth Brinker reported revenues
for the 13-week period of $975.9 million, an increase of 12.0
percent compared with $871.0 million reported for the same period
of fiscal 2005(1). These revenue gains were primarily driven by a
3.7 percent increase in comparable store sales (see Table 1) and
restaurant capacity growth of 7.1 percent. The company and its
franchisees opened 44 restaurants in the first quarter. Table 1: Q1
Comparable store sales Q1 06 and Q1 05, company and four reported
brands; Percentage Q1 06 Q1 05 Q1 06 Comp-Store Comp-Store Price Q1
06 Sales Sales Increase Mix-Shift Brinker International 3.7 0.3 2.8
1.6 Chili's 6.1 (0.3) 3.3 2.4 Macaroni Grill (1.6) (2.4) 2.3 0.4 On
The Border (0.7) 7.7 1.7 (0.6) Maggiano's 2.7 0.4 1.5 1.2 Operating
Performance, Before Tax Cost of sales, as a percent of revenues,
increased from 27.9 percent to 28.2 percent or 30 basis points for
the quarter. The increase was due to product mix-shift offset by
menu price changes. Restaurant expenses, as a percent of revenues,
increased from 55.4 percent to 55.6 percent, driven by higher
utilities and equity-based compensation of $2.4 million.
Depreciation and amortization for the first quarter 2006 compared
to 2005, as a percent of revenues, declined from 5.0 percent to 4.8
percent, or 20 basis points. The change was driven by store
closures and a declining depreciable asset base for older stores
partially offset by new restaurants. General and administrative
expense increased approximately $10.9 million for the quarter,
which included $4.6 million related to equity-based compensation in
2006 and an increase in performance-based incentives period over
period. Share Repurchases The company repurchased approximately 3.6
million shares during the first quarter. At the end of the quarter,
approximately $136.0 million was available under the company's
share repurchase authorizations. Special Items Table 2:
Reconciliation of net income and description of special items Q1 06
and Q1 05; $ millions and $ per diluted share after-tax Income
Statement Item Line Q1 06 Q1 06 Q1 05 Q1 05 Net Income 31.8 0.36
13.9 0.15 Gain on Sale of Real Estate Restaurant Expenses
(2.1)(0.02) Equity-Based Compensation Restaurant Expenses 1.8 0.02
Equity-Based Compensation General & Administrative 3.6 0.04
Corner Bakery Charge(2) Discontinued Ops 8.4 0.09 Gain on Sale of
nine Chili's Restaurant Expenses (2.6) (0.02) Restructuring Charges
Restructure & Other 0.7 0.01 Big Bowl Impairment Restructure
& Other 10.1 0.10 Rockfish Impairment Restructure & Other
14.1 0.14 Total special items 12.4 0.14 21.6 0.22 Net Income,
before special items 44.2 0.50 35.5 0.37 September 2005 Comparable
Store Sales For the four-week period ending Sept. 28, 2005,
comparable store sales increased 4.8 percent(3) (see Table 3).
Table 3: Month of September Comparable store sales Sept 06 and Sept
05; Percentage Sept 06 Sept 05 Sept 06 Comp-Store Comp-Store Price
Sept 06 Sales Sales Increase Mix-Shift Brinker International(4) 4.8
(0.6) 3.0 1.9 Chili's 8.4 (1.1) 3.6 2.3 Macaroni Grill (2.5) (5.2)
2.3 1.2 On The Border (2.5) 7.5 1.3 0.0 Maggiano's 3.8 0.8 1.5 2.9
Accounting Pronouncement The company's estimate for its full-year
fiscal 2006 earnings per diluted share reflects the non-cash,
incremental impact of FSP 13-1, "Accounting for Rental Costs
Incurred During a Construction Period," issued on Oct. 6, 2005. FSP
13-1 is effective for the third quarter of fiscal 2006 and requires
the company to prospectively expense rental costs associated with
ground or building operating leases incurred during a construction
period. Brinker previously capitalized these costs. The company
estimates that FSP 13-1 will negatively impact earnings per diluted
share $0.02 to $0.03 for fiscal 2006. Second Quarter and Full
Fiscal Year 2006 Forecast The company's initial estimate for its
second quarter fiscal 2006 earnings per diluted share from
continuing operations is $0.56 to $0.58, excluding special items.
Incremental equity-based compensation expense for the second
quarter is estimated to be approximately $11 million ($8 million
after tax), or a decrease in earnings per diluted share of $0.09.
This guidance assumes comparable store sales of 3 percent to 4
percent and weighted average shares of 89 million to 90 million.
The company anticipates full-year fiscal 2006 earnings per diluted
share from continuing operations to be $2.34 to $2.43, excluding
special items (see Table 4). Incremental equity-based compensation
expense for the year is estimated to be approximately $31 million
to $33 million ($24 million to $26 million after tax), or a
decrease in earnings per diluted share of $0.27 to $0.29. This
assumes comparable store sales of 3 percent to 4 percent and
weighted average shares of 89 million to 90 million. Table 4:
Breakdown of Forecast Components Full Year 06; $ per diluted share
Continuing Discontinued Components Operations Operations Total FY
06 EPS, before special items & FSP 13-1 2.37-2.45 0.03
2.40-2.48 Impact of FSP 13-1 (0.02)-(0.03) --- (0.02)-(0.03) EPS,
before special items 2.34-2.43 0.03 2.37-2.46 Special Items
(0.27)-(0.29) (0.07) (0.34)-(0.36) EPS 2.05-2.16 (0.04) 2.01-2.12
Web-cast Information Investors and interested parties are invited
to listen to today's conference call, as management will provide
further details of the quarter and an outlook for future periods.
The call will be broadcast live on the Brinker Web site
(http://www.brinker.com/ ) at 9 a.m. CDT today (Oct. 25). 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 Web site until the end of the day on Nov. 8, 2005. Forward
Calendar Period 4 (October) sales - Nov. 9, 2005, after the market
closes. At the end of the first quarter of fiscal 2006, Brinker
International either owned, operated, or franchised 1,603
restaurants under the names Chili's Grill & Bar (1,100 units),
Romano's Macaroni Grill (237 units), Maggiano's Little Italy (35
units), On The Border Mexican Grill & Cantina (138 units), and
Corner Bakery Cafe (93 units). 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, the impact of competition, the
impact of acquisitions and divestitures, the seasonality of the
company's business, adverse weather conditions, future commodity
prices, fuel and utility costs and availability, terrorists acts,
consumer perception of food safety, changes in consumer taste,
changes in demographic trends, availability of employees,
unfavorable publicity, the company's ability to meet its growth
plan, acts of God, governmental regulations, and inflation. (1)
Revenues exclude Corner Bakery. (2) This amount excludes
profitability from Corner Bakery for the first quarter of
approximately $1.7 million after tax, or $0.02 per diluted share.
(3) Comparable store sales exclude Corner Bakery sales. (4)
September 2005 Brinker comparable-store sales were negatively
impacted 0.6 percent by the storms in the Southeastern United
States. By reported brand, comparable-store sales were negatively
impacted 0.7 percent at Chili's, 0.3 percent at Macaroni Grill, 0.2
percent at Maggiano's and 0.4 percent at On The Border. BRINKER
INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF INCOME (In
thousands, except per share amounts) (Unaudited) Thirteen Week
Periods Ended September 28, September 29, 2005 2004 Revenues $
975,896 $ 870,965 Operating Costs and Expenses: Cost of sales
275,158 243,179 Restaurant expenses (a) 542,772 482,759
Depreciation and amortization 46,711 43,954 General and
administrative (b) 47,138 36,227 Restructure charges and other
impairments 1,167 46,704 Total operating costs and expenses 912,946
852,823 Operating income 62,950 18,142 Interest expense 5,367 7,092
Other, net (164) 442 Income before tax (expense) benefit 57,747
10,608 Income tax (expense) benefit (19,305) 5,068 Income from
continuing operations 38,442 15,676 Loss from discontinued
operations, net of tax (c) (6,688) (1,767) Net income $ 31,754 $
13,909 Basic net income per share: Income from continuing
operations $ 0.44 $ 0.17 Loss from discontinued operations $ (0.08)
$ (0.02) Net income per share $ 0.36 $ 0.15 Diluted net income per
share: Income from continuing operations $ 0.43 $ 0.17 Loss from
discontinued operations $ (0.07) $ (0.02) Net income per share $
0.36 $ 0.15 Basic weighted average shares outstanding 87,807 89,761
Diluted weighted average shares outstanding 89,233 98,730 a)
Current year restaurant expenses include: * A $3.3 million gain on
the sale of real estate. * A $2.4 million equity-based compensation
charge. Prior year restaurant expenses include: * A $3.8 million
gain as a result of the sale of nine Chili's to a franchise
partner. b) Current year general and administrative expenses
include equity-based compensation expense of $4.6 million. c)
Current year loss from discontinued operations includes an
estimated after-tax loss on the sale of $9.4 million and an
after-tax reduction in depreciation expense of $1.0 million.
BRINKER INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) September 28, June 29, 2005 2005 (Unaudited) ASSETS
Current assets of continuing operations $ 230,646 $ 233,123 Current
assets of discontinued operations 82,815 79,842 Net property and
equipment 1,668,832 1,646,466 Total other assets 195,869 196,693
Total assets $ 2,178,162 $ 2,156,124 LIABILITIES AND SHAREHOLDERS'
EQUITY Current liabilities of continuing operations $ 463,503 $
419,564 Current liabilities of discontinued operations 18,893
10,400 Long-term debt, less current installments 506,824 406,505
Other liabilities 191,276 219,373 Total shareholders' equity
997,666 1,100,282 Total liabilities and shareholders' equity $
2,178,162 $ 2,156,124 BRINKER INTERNATIONAL, INC. UNITS SUMMARY
First First Total Quarter Quarter Total Projected Units Fiscal 2006
Units Openings June 29, 2006 Sales/ Sept. 28, Fiscal 2005 Openings
Closings 2005 2006 Company-Owned Units: Chili's 811 22 (3) 830
97-100 Macaroni Grill 220 4 (1) 223 6-7 Maggiano's 33 2 --- 35 4-5
On The Border 117 2 --- 119 6-8 Corner Bakery 87 3 --- 90 7-9 1,268
33 (4) 1,297 120-129 JV/Franchise Units: Chili's 263 10 (3) 270
25-30 Macaroni Grill 15 --- (1) 14 4-5 On The Border 18 1 --- 19
3-4 Corner Bakery 3 --- --- 3 0-1 299 11 (4) 306 32-40 Total Units:
Chili's 1,074 32 (6) 1,100 122-130 Macaroni Grill 235 4 (2) 237
10-12 Maggiano's 33 2 --- 35 4-5 On The Border 135 3 --- 138 9-12
Corner Bakery 90 3 --- 93 7-10 1,567 44 (8) 1,603 152-169
DATASOURCE: Brinker International, Inc. CONTACT: media relations,
Louis Adams, +1-972-770-4967, or Chris Barnes, +1-972-770-4959, or
investor relations, Lynn Schweinfurth, +1-972-770-7228, or Laura
Conn, +1-972-770-5810, all of Brinker International, Inc. Web site:
http://www.brinker.com/
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